May 7, 2025 • 40 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 7th, 2025
Featuring:
1) Mike Green, Chief Strategist at Simplify Asset Management, joins for an extended discussion on the outlook for equities, what's behind the jobs report figures, the "ETF-ification" of the market, and talks about why he believes the "obsession" with inflation is overblown. US stock futures rose and the dollar gained as China and the US prepared to hold their first confirmed trade talks since President Trump unleashed his global tariff war.
2) Christel Rendu de Lint, co-CEO at Vontobel Asset Management, joins to discuss the global economic outlook amid the tariff environment and favorable asset classes post-tariff announcement. With China and the US preparing for trade talks, the meeting will focus on de-escalation rather than reaching a deal, and Treasury Secretary Scott Bessent said the current tariff rates aren’t sustainable.
3) Frances Donald, Chief Economist at RBC Capital Markets, on slower growth and higher prices in the US economy. The Federal Reserve’s meeting on Wednesday is next up for investors, with traders looking for clues on how soon the central bank could embark on policy easing and how deep the rate-cutting cycle might be.
4) Vishal Khanduja, Head of Broad Markets Fixed Income at Morgan Stanley Investment Management, on why today's Fed meeting won't be about a rate move, but decoding the Powell puzzle. US Treasuries slipped ahead of the Federal Reserve's interest-rate decision, with investors betting on a slower pace of monetary easing due to data suggesting economic resilience. The Fed's decision and comments from Chair Jay Powell to be closely scrutinized for insight into officials' interpretation of recent data.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including a WSJ story on high-schoolers with $70,000-a-year job offers and the FT's story on sandals in the workplace.Eric Mollo
See omnystudio.com/listener for privacy information.
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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.
Speaker 2 (00:12):
This is the.
Speaker 1 (00:13):
Bloomberg Surveillance Podcast. Catch us live weekdays at seven am
Eastern on Apple CarPlay or Android Auto with the Bloomberg
Business App, Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 3 (00:27):
Please to start with Mike Green with a good view
of the FED in economics and the system. Sort of
a total all in look at what we're doing. But
today we have to celebrate that is simplify asset management.
High yield ETF has five stars from morning Star and
that's That's what's unusual in the category that Mike plays
(00:49):
in the pond, six hundred and thirty one investments, and
I don't think I've ever seen this in umpteen years.
Your single percentile, what are you doing? I mean you're
not offered death style, You're to date you're one percent
tile a year ago twenty two percentile, which is phenomenal.
What are you doing different than others in the highyeld sandbox?
Speaker 4 (01:13):
Well, first of all, thank you for saying that. It's
really kind of you. We are doing a couple of
different things. We've designed the product to take advantage of
many of the theories you've heard me talk about the
impact passive investing, the strategies that are out there. The
product is the way we access the high yield market.
We're using a synthetic exposure all sorts of credit funds
short the HyG in order to amplify their single security picks.
(01:35):
We relieve the balance sheet from the banks when they
do that, so we get the securities lending fees, so
we pick up out one hundred and fifty basis points
of excess returns simply by doing that.
Speaker 3 (01:44):
We then apply an.
Speaker 4 (01:45):
Overlay that I've used for the past decade that is
designed to smooth out credit hedges and just find designed
to smooth out credit spread widening. The impact of that
in this year has been fantastic. That's really what accounts
for our.
Speaker 3 (01:57):
Is it a one offer, is it something you can
persist over three, five or ten years? We've been using it.
Speaker 4 (02:01):
I've been using this strategy for about ten years. The
Simplify strategy has been live now. It just hit his
three year track record, which is what was required to
get that five star rating, and it's managed to deliver
in twelve separate tightening and widening cycles. Now for credit
so we've actually been really fortunate.
Speaker 5 (02:20):
You come out of Teal Macro as well, you know,
the manage the assets of Peter Teal a few years ago.
What did you learn there? What did you learn from him?
Speaker 4 (02:30):
Well, you know, Peter is incredibly famous for asking the
key question, what do you believe that nobody else believes?
Or what you believe is true that nobody else believes
is true? Or what do you believe is false that
everybody else believes is false? And when I met Peter
several years ago, I introduced him to my ideas around
the impact of passive investing, and honestly, that I think
was one of the most important things that he encountered
his influence, I think the dynamics of how he's taken
(02:52):
his company's public and how he's behaved.
Speaker 5 (02:54):
When you say passive, do you mean traditional the way
that retail investors think about passive investing? Five hundred index
funds two basis points to buy vo.
Speaker 4 (03:04):
Absolutely, So that's really what we're hitting on. Unfortunately, there
are incredible flaws in the construction and understanding of this.
I've actually spoken on Bloomberg with Arry Ritholtz about this
dynamic passive is not passive. The actual definition of passive
is you never trade.
Speaker 3 (03:18):
You always hold. That means it's impossible to get in.
It means it's impossible to get out.
Speaker 4 (03:23):
In around twenty sixteen, a very smart individual, Loss Peterson
at AQR wrote a paper called Sharpening the Arithmetic of
Active Management, which you noted on index reconstitution that they
had to trade and therefore that created an opportunity. My
contribution was to recognize that every time you, as an
individual investor contributing to your four oh one K, you
are creating a trading environment. So it turns out that
(03:43):
passive is not passive at all. It's a systematic, algorithmic
strategy that simply says, if you give me cash, then buy.
Speaker 3 (03:50):
So translate this into what our listeners and viewers are
living when they buy a passive fund on a zero
to one hundred scale, how active is it? Is it
ten percent active?
Speaker 4 (04:02):
Well, it really depends on what you defind. So the
minute you're putting that money in, you are one hundred
percent active. Once you've transitioned in short position, you become passive.
That in and of itself, though, creates its own dynamics
because you're not really passive in the classic sense. You
are hoddling, right. It's the same phenomenon we saw on bitcoin.
If you're not willing to sell, the next player has
to pay a higher price. And because what we have
(04:24):
seen is just an extraordinary inflow into passive strategies, which
now represent about forty five percent of the market cap
of the United States, we've actually just seen a continual
upward pressure in valuation and prices that a lot of us,
unfortunately think is the up and to the right phenomenon
in markets.
Speaker 3 (04:40):
And your community across the nation. And this fad day,
a lot of good voices coming up. Kati Kaminski will
be with us the absolute best on trend investing of
the shattering of trends. Right now, as Tim Stenovick mentioned
that we've got a nice lift to the market off
a bombshell Switzerland announcement, the United States and China will
meet and they will speak. Futures up thirty seven points
(05:02):
right now, we said good morning on YouTube, Tim.
Speaker 5 (05:05):
Does that mean we're all handling our retirement incorrectly? If
we're thinking about funds that are based on age, based
on retirement, these target date funds that are mostly passive Unfortunately.
Speaker 4 (05:17):
I think that's correct, and I think that the first
of all, I want to be very clear, all and
incorrectly are very broad and subjective terms. Right, it's a
system that has worked extraordinarily well, but unfortunately has Ponzi characteristics.
The new entrance into the system are inflating the wealth
of the existing holders. What we don't know yet and
(05:38):
unfortunately you mentioned when we're from Peter Teel, the trade
that gave me notoriety was the Vollmageddon events the XIV.
What became very clear there was that was a systematic
algorithmic strategy that had become too large for the market.
We're seeing similar characteristics in the broader market with the
S and P today. The way that that manifested itself
is when a significant outflow occurred a crash.
Speaker 3 (06:00):
Hey, where's the shadow right now? I mean those of
us of a certain vintage understand we learned how to
spell portfolio insurance in October of nineteen eighty seven. There
was a leverage of LTCM in that where's the shadow
in the system? Now? Is it just simply and I'm
speaking folks on a physics basis, the mass of the
(06:21):
passive market that has.
Speaker 4 (06:23):
A huge component to it. So when I did the
XIV trade the Volmageddon event, I had done the analysis
that basically suggested that the passive or systematic algorithmic strategies
had risen to about seventy percent of the daily trading volume.
If we look at the impact of passive today and
the broader market, it's very, very similar. Once you factor
in the way money the way market making is done,
(06:44):
which is effectively index arbitrage. We're trying to make ETF's work,
we're trying to keep prices tight.
Speaker 3 (06:51):
All of that trading is tied.
Speaker 4 (06:52):
Around many of the same phenomenon and so you know, unfortunately,
my work suggests that we're getting closer and closer to
a point at which it becomes an inevitability rather than
a probability.
Speaker 3 (07:01):
And would tell I would say, is you set yourself
up for not a three standard deviation but a four
or six standard deviation, surprise, some form of shock, and
that's a trigger. Is it as simple as that there
will be a trigger point outside our beliefs and certitudes
that will allow for the magnitude move.
Speaker 4 (07:21):
Will you hit on a really key phase a belief?
And I would argue that a key component of what
we're experiencing right now is that belief right. So the
up unto the right phenomenon encourages people to put money
in when it's down right now, they're putting it into
the industries. We saw this very specifically in the events
coming after April eighth, when the market made its recent low.
A trigger was hit what's called a threshold trigger within
(07:43):
many target date funds that forced them to rebalance.
Speaker 3 (07:46):
When they rebalance, what do they do?
Speaker 4 (07:48):
They have to sell bonds by equities, And unfortunately, when
that coincides with Trump making a speech, President Trump making
a speech saying it's a good time to buy, it's
a force Listen.
Speaker 3 (07:58):
Would you get the surveillance cork and it at my mouth?
So Tim save me. Well, I can't say enough, folks,
how I agree with mister Green. I'm rebail. It's like
deaf to go. Mike.
Speaker 5 (08:11):
You have just a fascinating post out from your newsletter
earlier this week. It talks about President Trump in the
historic context of other leaders in the past. Franklin Roosevelt.
You even bring up Roman leaders in there, in the
context of where we are as a country, where we
are as perhaps an empire. Where do you see it?
(08:32):
What do you see this moment? As well?
Speaker 4 (08:34):
I've been talking about this for a long time, and
as you know, I think all American men think about
Rome at least five times a day, so.
Speaker 5 (08:39):
We've heard that.
Speaker 4 (08:40):
There's nothing particularly unique about my insights there. Look, we
often talk about the fall of the Roman Empire. We're
not an empire. We're a republic, and where we seem
to sit, unfortunately, is towards the fall of the republic,
And if anyone really wants to dig into it, I
would strongly encourage them to read Mike Duncan's book The
Storm Before the Storm, which is about that transition period
between the Roman Republic and the Roman Empire. I draw
(09:04):
analogies to the idea that Trump could be viewed as
a graucus, could be viewed as the Grocy Brothers, etc.
As a reformer. Unfortunately, I just think he lacks the
mental plasticity at the advanced stage that he's at that
a Franklin Roosevelt had. Franklin Roosevelt was not a communist
and was not a socialist, and was not a redistributionist
in his early stage. It was only after he saw
(09:26):
the effects of the Great Depression in the late nineteen
twenties early nineteen thirties that he saw a different path
and he redefined the relationship. Now, I'm not suggesting that
the answer to this is more government. The answer is
more effective government, and that is a very hard challenge
in this current environment.
Speaker 3 (09:42):
I just put it on Twitter, The Storm before the Storm,
the book by Mike Green Robert T. Caplan with a
book somewhat equivalent to that written last year off of
Yale University Press. I'll try to get that out as well.
My answers watched the what was it like fifteen twenty
years ago? They had a whole It was like when
they invented streamings serials and they add a TV show
called Rome. You know, I don't have to read the book,
(10:05):
do I can just watch just now.
Speaker 5 (10:06):
You just open chat GPT and ask it whatever you
want and then it'll do it for you.
Speaker 3 (10:10):
Well, yeah, that's a whole separate story, you know, Mike,
I think this is really really interesting. I want you
to fold it over to how people should prosecute something
as boring as a retirement plan. How do you bring
this over to the mundane?
Speaker 4 (10:25):
But Tom, we could have an hour long discussion before
I get it.
Speaker 3 (10:28):
Can we clear the deck here? Are you willing to
give up newspapers for Mike Green?
Speaker 5 (10:34):
That's the right answer.
Speaker 3 (10:35):
That is the right answer. How do we bring this
over to we mere mortals trying to decide what percentage
to be in the market.
Speaker 4 (10:44):
The quick answer is there is no right percentage, right,
It's going to depend on everyone's individual component. The key
thing that I would highlight is that when you think
about investing for retirement, when you think about those, focus
on what you need, not what your neighbor wants, right,
And this is a really key component. We tend to
get ourselves caught up in the fomo type framework. We're
in an environment in which you can if you're worried
(11:06):
about inflation, you can buy real yielding tips with a
positive yield for the first time in over a decade.
Speaker 6 (11:12):
Right.
Speaker 4 (11:12):
That is something that would argue people are ignoring. I
would broadly suggest that fixed income in a lot of ways,
because it has what I refer to as indogenous liquidity,
significant coupon payments, and an ultimate payment of at maturity,
has very different characteristics than the Ponzi like characteristics associated
with equities, where you are always getting your value from
what somebody else pays, and so those are ways that
(11:34):
you can separate yourselves. They're not immune.
Speaker 5 (11:36):
I have to be clear.
Speaker 4 (11:37):
This is a systemic issue. But they are a better
way to think about the opportunity.
Speaker 3 (11:41):
So brilliant, Mike Green, thank you so much. She's chief
strategy to Simplified asset Management.
Speaker 1 (11:53):
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 3 (12:05):
We continue forward with some huge academics from the London
Business School, her doctor at Crystal Rondo. The Linz stops
by when she is in America. She's a Vauntabelle asset
Management of Europe. You walked in the room and you said,
I don't talk about it as fed stuff. I want
to talk about allocation, which is great because I don't
talk enough about allocation. What's the biggest mistake, given chaos,
(12:29):
given day to day uncertainty, what's the biggest mistake people
make an allocation?
Speaker 7 (12:36):
Do you think that they know to be honest? Having
been an active investment manager for all my Caurier before
becoming the because just like.
Speaker 3 (12:43):
That in the English, because it wasn't there having been
an active manager in enjoying losing money.
Speaker 7 (12:49):
And not at all, not at all, actually not at all,
my friends should still be on your Bloombergh platform. No,
but very seriously, there's a lot of uncertainty, and what
it means is there's a lot that we don't know,
and you need to recognize that and not go for
extreme allocation. So neither extreme bullish, which nobody is tempted,
(13:10):
nor extreme verish. That is the number one mistake is
to actually go on the limb.
Speaker 5 (13:16):
Are we passed a little bit of the chaos, a
little bit of the uncertainty Given what we found out yesterday,
a US China meeting will take place this weekend in Switzerland.
It will center on de escalation.
Speaker 7 (13:28):
No, I don't think we passed the uncertainty. Yeah, morehead,
I think so. I think it will continue because you know,
this is not a straight path to a deal, nor
is it a straight path economically with the political environment,
so uncertainty is here to stay.
Speaker 5 (13:44):
Breathing a sigh of relief that the conversations are at
least happening.
Speaker 7 (13:46):
Yes, definitely, definitely for growth and for inflation. Right, the
one thing that we do know, so let's start with
what we do know now is everything else equal. If
you put on tariff, however low they are, but on
a large scale, you will get lower growth and higher inflation.
So that is one part we know, and that again
has implication for Ustelic nation.
Speaker 3 (14:05):
Nine point two five percent of our audience, particularly here
in America Good Morning, around the world and on YouTube,
looks at Europe and has basically mentally discarded it for
I'll say five years or ten years in investment. Is
there a new Europe?
Speaker 7 (14:25):
I hope I can answer yes, there's Certainly Europe has
certainly gotten a wake up call. I think the proof
is in the pudding. Europe has disappointed for quite a
long time. So what's changing is the fiscal spending. I
do believe it will happen, indeed in Germany. So that's
a positive and relative term for growth. But look, some
of the weakness of Europe has been the inability at
(14:47):
times to act together and that.
Speaker 3 (14:51):
But then on a micro basis at the company and level,
are the CEOs thinking differently in whether it's two boards
in Germany or one board wherever that they have supported
the board to be. You know, the stereotype is to
be more anglocentric. Are we are we seeing that now?
Speaker 7 (15:08):
I'm not sure I understood your question.
Speaker 3 (15:10):
I think because you don't want to hear it.
Speaker 8 (15:12):
Yeah, no, no, no, no, no I do.
Speaker 7 (15:14):
But I mean Europe has always been quite looking towards
the west, right, so Anglo centric if you want to
go with that.
Speaker 3 (15:19):
But yeah, the stereotype of our global Wall Street audience, yes,
is there's a there's a locking individual take on CEOs.
Let's go at Disney at Uber this morning. Tim Uh,
They're out there, they're going, let's go, let's fix this,
let's fix our margins. Let's go, let's go, let's go,
and everybody in years going at a slower speed. Is
(15:42):
there a change there or is it business as usual? No?
Speaker 7 (15:45):
I think there is a change. I think there is
a change. Whether it delivers, I don't know. That's why
I said proof is in the proof is in the pudding.
Is that you now we now need to go get
it in Europe in a sense a line?
Speaker 3 (15:59):
You know the other day, fall off my chair, Royal
Duchess once again looking at a British patrolum talk about dinosaurs.
Speaker 5 (16:05):
What's all as new again?
Speaker 3 (16:07):
You know?
Speaker 5 (16:07):
I wonder to what extent this idea of Europe being
pushed close together or becoming closer is the result of
the US in this America First policy? Is that what's
happening here? The US is saying essentially, okay, America First
is not America alone. Investors don't necessarily agree with that,
but it makes Europe say, okay, we have to rely
(16:29):
on each other more for defense spending, we have to
become closer together, and we have to unite more. Is
that what happening?
Speaker 7 (16:35):
I think that's part of it. That definitely part of
it is just like I mean, that's with everything in life.
You get adversity and that pulls you together. Right, So
the adversity. The first thing that brought Europe together was COVID.
That Ino sense really helped from that perspective in bringing
the countries to pools it together. And I think, yes,
there's a reaconing that that they better pull together.
Speaker 5 (16:59):
It didn't happen from a fiscal perspective during COVID that
was a huge issue. I mean, you saw Europe as
a whole recover in a more slow way than the
US did. The US sort of stood out over the
last three years. Yes, in its quote unquote exceptionalism compared
to the rest of the world. Is that era behind us?
Speaker 7 (17:19):
No, I think there's I mean, there's a few things
that are impacting right now. I don't think it's I mean,
let's say I've been structurally bullish on the US economy.
I continue to believe it's the strongest economy, but a
few things are denting or impacting US assets right now.
The pressure that we're seeing on the dollar, I think
is a structural downward pressure. Europe has a chance to
pick itself together by uniting. They see the need and
(17:44):
that's why I come back to we need to see
the proof in the pudding. Is it happening and is
it delivering?
Speaker 3 (17:50):
With us from Vulntable this morning, thrilled with this crystal
under the land all I've lived and I was in
Switzerland I was fifteen years old. Magical is the appreciation
of the Swiss franc. Tell us how Switzerland adapts to
the new strength of Swiss franc. Will there be a
different approach among the cantons and among the federal government.
Speaker 7 (18:14):
Well, look, I mean as a Swiss, it's almost like
you're born with it, with the chocolates and the mountains,
you're born with a strong Swiss franc. So it's part
of it. So the SNB, it's the I mean, it's
a headache for the SNB, for the companies. They've learned
to be competitive, to be honest. So this this is
one aspect because it's part of it. Nominally it appreciates
because inflation is low and for the foreseeable future that's
(18:36):
still going to be happening. On the real level, you
see less of an appreciation trend, but you know, in
the end, nominally is is a lot of what matters.
Speaker 3 (18:44):
You're too, unimputed deflation in Switzerland because of the appreciation.
Speaker 7 (18:50):
Yeah, we could drink, yes we could.
Speaker 3 (18:53):
We could. Apple did a coupon a couple of years
ago three quarters of a percent for like a zillion year.
Speaker 5 (19:00):
We're all pretty much free.
Speaker 3 (19:03):
Are you seeing travel to Switzerland changing with the trade wars,
with the terror force?
Speaker 7 (19:07):
Well, I mean I'm not. Let's say, I'm not on
a line post to see people coming in and out,
but we do read, including from from esteemed Bloomberg, that yes,
we do see more, you know, more asks for for Switzerland,
for people looking to come over, whether it's traveling, whether
it's relocating. So that's wait for numbers.
Speaker 3 (19:25):
Yeah, rto keeper of the MX. Yeah, it is very
big on Switzerland. He wants me there on twenty four
to seven.
Speaker 5 (19:32):
One more question there, see I want to start and
where we started. It has to do with asked allocation.
Tom asked about the number one mistake people are making.
If people are saying, okay, I should go look at
my portfolio right now, think about its construction. Yes, where
should people look closely? Is it in the equity side,
is in the fixed income side? Is in the alternative side?
Speaker 7 (19:52):
I think it's it's across everything. I think you do
want to be diversified. If you don't know what you
don't know and how things are going to pan out, again,
don't lean out of the window. So you do want
to make sure that you're diversified, that you're sticking to
what you are trying to achieve. You obviously go for
stuff that is less sicklical sectors that have all pricing power,
because if you all things equal, lower grow bigre inflation.
(20:15):
Infrastructure to me is a segment that stands out right
less cyclical, has cash flows that are normally indexed to inflation.
And you want to think about the dollar, and particular
in the asset classes that have lower volatility. If you're unhedged,
I'd look at a hedge, to be honest. So these
other things that are on my mind.
Speaker 3 (20:36):
Thank you, Thank you so much for visiting Crystal Ronde.
Where this is Vanderbilt Zurich in today with this whole
new view of Europe.
Speaker 2 (20:43):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (20:45):
Listen live each weekday starting at seven am Eastern on
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Speaker 9 (20:49):
And Android Auto with the Bloomberg Business app.
Speaker 1 (20:52):
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Speaker 3 (21:00):
More than any other guest when she is on, I
will get emails. Who was that? Who was that? Who's
she with? With RBC Capital Markets. Francis Donald on the
economics of the moment of America. Francis into this FED meeting.
Do we have looking at the dual mandate looking at growth?
(21:21):
Do you have vectors in place? Is there a Francis
Donald inflation vector, an unemployment rate vector, a real GDP vector.
Do they exist?
Speaker 10 (21:34):
I mean, sure, they just look very different than they
have historically.
Speaker 11 (21:37):
But I got to tell you Tom listening to come
into this segment, he said, it's FED day, and I
had to say, oh, yes, it's FED day. Which is
not because I'm sleeping at the wheel. It's because I
spent the morning doing things I've never done on FED
days before, which is scan geographic photos for ships on
the West coast to see if we're still getting supply
(21:58):
to come in. I'm looking at some old school pandemic charts,
open table restaurant reservations. Are we seeing any week to
week change in the data there? And of course reading
every headline we can see for insights into are we
going to see some trade de escalation from China? And
my sense is that probably the Federal Reserve is doing
very similar things this morning, and that is because they
(22:19):
are trying to determine their own vectors for inflation and
employment and they just don't have enough data or insights,
just like most economists don't right now to determine.
Speaker 10 (22:29):
The path ahead.
Speaker 11 (22:30):
So extraordinary and certainty heading into this meaning it is
going to be a fold of course, We're always looking
for any type of insight from FED share Powell as
to how they would react to certain situations and what
they think will happen next. But the data is going
to leave the Fed, as it always does, and we
have very limited visibility from traditional data points.
Speaker 5 (22:49):
Right now, I hear you talking about the alternative data
such as open table reservations, looking at satellite images of
ships that are coming into port. It sounds like we're
talking in twenty twenty one one. Save for the China
comment that you made about potential progress on a trade deal.
The Federal Reserve has a very limited toolbox when it
comes to what it can do to achieve its dual mandate.
(23:11):
How does it navigate a situation of uncertainty such as this, Well.
Speaker 11 (23:16):
It doesn't, or it waits for the data to turn,
and for that reason, they will by necessity be late.
I think their issue is going to be a sequencing issue,
which is that the inflation data is likely.
Speaker 10 (23:26):
To pop much earlier than the labor data.
Speaker 11 (23:29):
And I've been on the show many times to talk
about how even though we see a very weak economic environment,
we only have the unemployment rate rising to.
Speaker 10 (23:37):
About four to eight or high fours. Traditionally, that would
be a very strong labor market.
Speaker 11 (23:42):
That would be something we associate with a boom time,
not a recessionary type period. And that's because this labor market, well,
America does not need jobs. America needs workers. It's going
to keep this labor market very tight. That's very different
than what we saw in twenty eighteen, the first time
that we saw tariffs coming through. It's going to make
the FEDCE job a lot harder because I don't think
(24:03):
they're going to see a material weakness in traditional indicators
of unemployment over the course of twenty twenty five, even
as the economy software.
Speaker 3 (24:11):
So here's the core question. Francis, back at Queen's University,
I mean, you were fourteen or whatever taking your undergraduate there.
But Francis, back at Queen's University then, was a six
percent unemployment rate the same as a six percent unemployment
rate now? I don't think that the same? Am I wrong?
Speaker 10 (24:30):
One hundred percent?
Speaker 11 (24:31):
And just a little plug here, Queen's University in Canada,
we call it the Harvard of the North, just so
you know, just caliber.
Speaker 3 (24:37):
I thought Harvard was a Queen's of the South.
Speaker 11 (24:41):
We'll go with that one too, so that's exactly right.
The nature of this job market is changing. We have
the most amount of those over the age of sixty
five the US has ever seen. Over one in five
Americans is over the age of sixty five, most amount
of retirees ever, and so economists.
Speaker 10 (24:57):
Are scratching their head.
Speaker 11 (24:58):
Why are higher rates but also fire rates down and
quick rates down. This is a job market that is
acclimating to a demographic bus that's occurring in real time.
Demographics are traditionally something that you look at when you're
five or ten year forecast, when you're forced to do
something that difficult.
Speaker 10 (25:15):
They're not something we take to hear now.
Speaker 11 (25:17):
And this is why when I talk about uncertainty, a
lot of folks are saying we're going to get more
certainty on trade in the coming week. But a lot
of the customers, a lot of the folks that we
talk to in the United States are also paying very
close attention to immigration policies that come through and how
this government is going to support or not support what
is a very shifting labor dynamic.
Speaker 10 (25:36):
Now.
Speaker 11 (25:36):
Ftter Reserve is going to have to talk about this
at some point, probably not today, when they're looking at
something like a high fours unemployment rate, and that's going
to be enough for them to start cutting.
Speaker 3 (25:46):
Well, you just heard their folks bottle it, because that's
the discussion of the next eighteen months. I'm sorry when
I look at the kids having trouble getting jobs, on
and on and on, this is a new unemployment rate
where it's not equivalent to our memory of what that
number is.
Speaker 5 (26:02):
Yeah, I think Tom brings up a good point, which
is who is having trouble getting jobs right now? And
given in the context of the president's immigration policy, this
administration's immigration policy, how are you looking at the job
market given that we've heard anecdotally challenges from new graduates
in those folks looking for jobs, versus some emptiness in
(26:22):
the pipeline when it comes to folks in the trade,
for example, you.
Speaker 11 (26:27):
Got to go sector bisector more than we have in
the past. So think about three sectors that have driven
a lot of job growth. Healthcare, well, there's a skills
matching issue happening there. Government, we know that's going to
be declined. That's the one area where you will see
shedding of activity. And then retail and accommodation that's where
traditionally you would see what economists called new entrance or
(26:47):
immigrants being more impactful there. So sector bisector stories are
going to become incredibly important.
Speaker 10 (26:52):
But underlying the.
Speaker 11 (26:53):
Surface here, a lot of folks will say, well, the
labor force participation rate is quite low. It's been falling
since two thousand and one. Could prime age workers in
the United States twenty five to fifty four. They have
one of the highest labor forced participation rates we've ever seen.
So the labor market is very tight. This is very
different than twenty eighteen. It's even different than twenty twenty two.
It's going to change a dynamic of this recessionary conversation.
(27:16):
We don't have a formal recession in our outlook, although
I really begrudged that recession or no recession call. It's
still a very problematic outlook for the US. And part
of that is we think the labor market is actually
going to in old school terms, stay strong, but it's
not strong in the traditional ways.
Speaker 10 (27:31):
Tom. That's the problem.
Speaker 11 (27:32):
This is a labor market that we're going to have
to reassess and measure with different types of instruments than
we have historically.
Speaker 3 (27:38):
We got to get you out again. So soon soon,
Francis Donald, thank you so much. I got like eight
more questions as well with RBC Capital Markets. Francis Donald.
Speaker 2 (27:51):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (27:54):
Listen live each weekday starting at seven am Eastern on
Apple Corplay.
Speaker 9 (27:57):
And Android Auto with the Bloomberg Business.
Speaker 1 (28:00):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Speaker 3 (28:05):
Which starts Strong, Strong Strong. Vishal Kanjuja joins us now
from Morgan Stanley had a broad market's fixed in Kim.
I love the first sentence of your note. Jobs Day
stole the thunder from the Fed completely. What did we
learn in the buoyant Jobs Day that adjusts this meeting
this afternoon.
Speaker 6 (28:24):
Morning, Tom, thanks for having me on completely stole the thunder.
Hot data is not at all anywhere close to the
soft data which we've been talking about, you guys have
been talking about very clearly. As while the FED knows
this very clearly, I think today the market is going
to be very clearly looking for a repeat from the
(28:47):
Fed for their reaction function that they are still focused
on growth.
Speaker 8 (28:50):
Down sites and they are willing to take.
Speaker 6 (28:56):
Less of a deeper look into the inflation upsides that
we are talking about.
Speaker 3 (28:59):
Synthesizes with Seth Carpenter's team, Allen Zentner over at Wealth Management,
and the others. I guess we got a nominal GDP,
it's actually pretty good because of stagflation, But then do
you see nominal and real GDP coming out.
Speaker 8 (29:13):
Through the year exactly?
Speaker 6 (29:15):
So I think that is where we think that the
demand destruction on the back half, and we are talking
about quite a bit of uncertainty. We've seen it in
the base report, We've seen it from all the earnings
that we've seen through the corporations as well. But the
persistence of uncertainty the time period that we are going
to sustain here is going to definitely show up with
(29:35):
that demand destruction on the back half of the year.
Speaker 5 (29:37):
So then what does the FED do if it knows
demand destruction is coming given its dual mandate.
Speaker 6 (29:42):
I think it has two precedents that it has laid
out in the past of but it intervenes or comes in.
One very clearly their dual mandate is at.
Speaker 8 (29:50):
Risk and data shows it they step in.
Speaker 6 (29:53):
Or the second is that the financial market functionality is
breaking down that they have to intervene none of that
has happened right now, so they need to be patient,
look through the data, and they have quite a bit
in the toolkit to act.
Speaker 5 (30:04):
What do you what's in the toolkit to act?
Speaker 8 (30:06):
Four hundred and fifty basis points? Vase still about if.
Speaker 5 (30:09):
We're in a stackflationary environment, then what do we do?
What do they do?
Speaker 6 (30:13):
I think, in principle, tariffs are going to be one
time price increases. Consumers and corporations are going to adjust.
I know we've already seen that supply and demandshock play
out in twenty twenty two. This is the opposite of
that that is happening here.
Speaker 5 (30:29):
He almost said transitory, Tom, but he didn't say transitory.
You said one time price increases. What makes you confident
that that will be the case? And I should I
should look, Actually, I'm going to change my question. I
don't think we don't do that in the morning. I
don't think consumers. I don't think consumers understand how inflation
is measured. I think they understand inflation in the context
(30:50):
of gas prices going up and then coming back down.
They'd understand that it's change in price over a period
of time. They think high prices come down they don't
come down.
Speaker 8 (31:00):
I think that's what it is this time.
Speaker 6 (31:02):
I think the balance sheets, yes, are very very strong
in terms of consumer and corporates, but I think the
moment you start to see margin compression in corporates meaning
consumers pushing back on services or small business pushing back
on prices, that's where I think you start to see
the hit on labor.
Speaker 8 (31:19):
That's when you start to see the demand destruction show up.
And that's why we have quite high degree of confidence.
But we've covered our.
Speaker 6 (31:27):
Underweights and credit. We've covered some of our underweights and
duration during this time, but we are not long. We
still think that spreads could be widening out as that's
tax platary freear could go through in the next two months.
Speaker 3 (31:37):
I'm sorry, well, I mean I go back to Mary
Poppins and the famous bank scene with Dick Van Dyke
and the tuxedos. We are always to India, but you know,
I go back to librar or ois. I don't know
why we got rid of library. I thought it was great.
Now I got something fancy called so for sof R.
When you look at sofur swaps, which is what Arid
Jersey tells me to look at a little bit of
(32:00):
deterioration the last five days. Is the short term market
getting out front of the joy and saying at some
point this becomes difficult.
Speaker 8 (32:10):
It does, absolutely it does. I think we are less focused.
Speaker 6 (32:14):
I think our conviction level with the amount of information
that we are getting at the moment is much lower
to call the exact date that these guys can.
Speaker 8 (32:23):
Cut the FEN. But our conviction level increases as we
go out the next eighteen months.
Speaker 6 (32:28):
And that's why I think our focal point of duration
is still that three to five year mark.
Speaker 3 (32:32):
So what is full faith and credit ten year ye'd
do out eighteen months?
Speaker 8 (32:36):
I think it's lower. I think we breached that.
Speaker 3 (32:38):
For me, three point sixty five percent is my recollection
for the ten year yield? Can you get a nicely
under four percent?
Speaker 8 (32:46):
Nicely under four percent?
Speaker 6 (32:47):
I think we were four to five percent when we
wrote our outlooks in November, and we thought that it
will travel that range, and it did almost travel that entirely.
Speaker 3 (32:56):
The dynamic ASCO forobose one on one on a dynamic basis,
if I get price up yield down, does that signal
a good or bad event for our listeners or viewers.
Speaker 6 (33:07):
That means the fixed income has served its dual mandate price,
total return and negative correlation to risky assets, and it
will be poised to deliver.
Speaker 5 (33:16):
How much of what you're saying depends on the US
successfully negotiating trade deals in the next eighteen months.
Speaker 8 (33:22):
Quite a bit of the long end depends on that.
Speaker 6 (33:24):
The twenty and the thirty year we need a sustainable, credible,
bought into deficit reduction plan, and then that will decide
the demand and supply of the twenty and thirty year
part of the market as well. I think that is
one part of the market that we are nauseous about,
to be very honest and staying away from on that part.
Coming back to your question on demand destruction, quite a
(33:44):
bit depends on the next probably ninety two hundred days,
maybe this weekend as well.
Speaker 3 (33:49):
Does things get funded. We're going to move on now
to the airport, the airline catastrophe in America, But does
infrastructure get funded? Does Morgan Stanley see businesses u usual
for the issues of megapaper.
Speaker 6 (34:04):
Businesses are getting funded very comfortably throughout this entire April
volatility that we had seen. The markers that we see
for liquidity for funding for corporations and healthy balance sheets.
We're still in the green. Treasuries were getting issued very clearly.
Concessions we're building up but then getting bought into. Yesterday
also we had one of them, and then IG Corporate.
(34:25):
We exceeded the supply marker over subscribe books and deals
went really well.
Speaker 3 (34:29):
When Tim Cook issues bonds, does he call you? But
do you get a phone call from Tim Cook?
Speaker 8 (34:34):
Definitely? Our traders are getting the phone call from the healers.
Speaker 3 (34:37):
Thank you so much. Rasha Ken jud with us with
Morgan Stanley driving all of their fixed gun Learn a
lot there that was very, very informative.
Speaker 2 (34:46):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (34:49):
Listen live each weekday starting at seven am Eastern on
Apple Corplay.
Speaker 9 (34:53):
And Android Auto with the Bloomberg Business app.
Speaker 1 (34:55):
You can also listen live on Amazon Alexa from our
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eleven thirty.
Speaker 3 (35:03):
We're gonna do the newspaper, so I had to shot
up missus Keane all over it last night, she said.
Lisa Matteoe nailed it by getting Zandaia front and center
and then met Gala. Missus Kean agree with you.
Speaker 12 (35:14):
Zandia just was the That's why I wore my full
white yesterday. But we do hat and everything.
Speaker 13 (35:19):
I mean, who topped it off?
Speaker 11 (35:21):
It was very good.
Speaker 3 (35:22):
Congratulations again to all to Anna Wintour and all at
the Metropolitan Museum of Art Spectacular event in New York City.
What do you got this morning?
Speaker 12 (35:30):
Okay, we've heard a lot of stories about the tough
job market out there, right, but the Wall Street Journal
has this article saying that high school juniors they're getting
close to seventy thousand dollars a year job offers. And
you asked, okay, and what, Well, it's the skilled trades.
It's companies looking to shop class to find new hires
because the baby boomers are retiring, so that's the issue.
Speaker 13 (35:50):
So they're looking to this kids. And this kids say they.
Speaker 12 (35:52):
Feel like top athletes like being recruited by you know,
pro teams, like they feel.
Speaker 3 (35:56):
Like Rockstar's a huge deal.
Speaker 13 (35:57):
It's a huge deal.
Speaker 12 (35:58):
And the high schooler noticing because they're investing more money
into their shop classes, they're teaming up with companies to
offer you know, to come in the classroom and talk
with the kids too, offer them part time work credits.
Speaker 3 (36:10):
I grew up in a house hugely supportive. It was
called vocational or something I can't remember back a million
years ago. But Ian Why yesterday with Huntington National Bank
Shers was brilliant about how the younger cohort there's no
skilled workers, and they're going to really incentivize it quickly. Right,
they don't have a choice.
Speaker 12 (36:31):
Right, they're going to either how much seventy seventy thousand starting,
but you have consolation energy, which we all know they
offer high school graduates without four year degrees as much
as six figures started.
Speaker 5 (36:43):
I love this. I mean, I think this is also
something that's lost in the conversation about immigration, when you
think about the skilled trades and who's coming in and
doing these jobs. We haven't had a pipeline here in
the US to these careers because so much emphasis has
been placed over the past couple of generations on college.
I think we're starting to have that conversation now.
Speaker 3 (37:01):
I love it.
Speaker 12 (37:02):
That's an amazing point I think about that one. Okay,
So men is Mark Zuckerberg. He's been making the Rounds podcast, interviews, conferences,
and there seems to be a theme when he looks
into the future.
Speaker 13 (37:12):
So he says that most of your friends will be AI.
Speaker 5 (37:16):
Hey, come on, okay, speak for yourself, Mark, most of
your friends will be AI.
Speaker 13 (37:22):
But you also have AI therapists and AI business agents.
So we're gonna be talking to real people less.
Speaker 3 (37:29):
I know.
Speaker 5 (37:32):
Okay, I'm gonna be the contrarian here. I've been using
dual Lingo a lot, which is the language learning. There's
an AI agent in there, Lily, and you can practice
conversation with her, and it makes what I'm doing Spanish
with my son, he thinks it's he and and because
he's only six, he thinks that Lily is a real person,
(37:53):
which is weird to me.
Speaker 13 (37:55):
That's what the next generation is gonna think.
Speaker 3 (37:57):
I think, so, I mean music AI. But the idea
that AI is going to replace a business agent, yes, nuts.
Speaker 13 (38:05):
Next, it can source all this information and it knows
you so well.
Speaker 8 (38:11):
Yeah, okay.
Speaker 12 (38:12):
So, after seventeen years underground, the annual Cicada Cousins says
Brood fourteen, they are ready to emerge. Yes, these are
the cicadas. The Boston Globe says. They started making their
way out of the ground in April from down South.
They've started coming out in Massachusetts, Cape Cod, Plymouth County.
A few fun facts if you didn't know about this specific.
Speaker 13 (38:34):
Group of cicadas.
Speaker 12 (38:35):
They come out in the thousands, right, They come out
in the evening after dark. They don't sting or bite,
so you don't have to be scared of them.
Speaker 13 (38:41):
Even though they look a little bit scary.
Speaker 10 (38:43):
They do uh.
Speaker 13 (38:44):
They're not dangerous to plants and trees. And they die
about three to four weeks after they come out of
the ground.
Speaker 5 (38:49):
Every so I thought this, I feel like we hear
this story every three or four year.
Speaker 13 (38:53):
Yes, well those are the annual ones.
Speaker 12 (38:54):
These are the cousins, the brude ex that comes after
like about seventeen fifteen to seventeen years.
Speaker 8 (39:00):
So they emerge.
Speaker 12 (39:01):
So they've been underground like.
Speaker 3 (39:03):
And they're gonna be like in Central Park.
Speaker 13 (39:05):
Well eventually, yes, but they're in mass Chusetts right now.
They've been down south. Now they're mass Chusetts. So yeah,
they'll start to make and that at nighttime they'll start
to like come out this.
Speaker 5 (39:14):
Summer in New York. It sounds like, okay, you've been
watched Wild Kingdom.
Speaker 3 (39:18):
With you look at the videos.
Speaker 13 (39:22):
Oh no, there's a katas they're they're not, Oh the
Curtus looking things.
Speaker 3 (39:27):
Listen Mateo. Thank you so much for the newspapers as well.
Speaker 1 (39:30):
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, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(39:51):
always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news.
Speaker 2 (00:12):
This is the.
Speaker 1 (00:13):
Bloomberg Surveillance Podcast. Catch us live weekdays at seven am
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Speaker 3 (00:27):
Please to start with Mike Green with a good view
of the FED in economics and the system. Sort of
a total all in look at what we're doing. But
today we have to celebrate that is simplify asset management.
High yield ETF has five stars from morning Star and
that's That's what's unusual in the category that Mike plays
(00:49):
in the pond, six hundred and thirty one investments, and
I don't think I've ever seen this in umpteen years.
Your single percentile, what are you doing? I mean you're
not offered death style, You're to date you're one percent
tile a year ago twenty two percentile, which is phenomenal.
What are you doing different than others in the highyeld sandbox?
Speaker 4 (01:13):
Well, first of all, thank you for saying that. It's
really kind of you. We are doing a couple of
different things. We've designed the product to take advantage of
many of the theories you've heard me talk about the
impact passive investing, the strategies that are out there. The
product is the way we access the high yield market.
We're using a synthetic exposure all sorts of credit funds
short the HyG in order to amplify their single security picks.
(01:35):
We relieve the balance sheet from the banks when they
do that, so we get the securities lending fees, so
we pick up out one hundred and fifty basis points
of excess returns simply by doing that.
Speaker 3 (01:44):
We then apply an.
Speaker 4 (01:45):
Overlay that I've used for the past decade that is
designed to smooth out credit hedges and just find designed
to smooth out credit spread widening. The impact of that
in this year has been fantastic. That's really what accounts
for our.
Speaker 3 (01:57):
Is it a one offer, is it something you can
persist over three, five or ten years? We've been using it.
Speaker 4 (02:01):
I've been using this strategy for about ten years. The
Simplify strategy has been live now. It just hit his
three year track record, which is what was required to
get that five star rating, and it's managed to deliver
in twelve separate tightening and widening cycles. Now for credit
so we've actually been really fortunate.
Speaker 5 (02:20):
You come out of Teal Macro as well, you know,
the manage the assets of Peter Teal a few years ago.
What did you learn there? What did you learn from him?
Speaker 4 (02:30):
Well, you know, Peter is incredibly famous for asking the
key question, what do you believe that nobody else believes?
Or what you believe is true that nobody else believes
is true? Or what do you believe is false that
everybody else believes is false? And when I met Peter
several years ago, I introduced him to my ideas around
the impact of passive investing, and honestly, that I think
was one of the most important things that he encountered
his influence, I think the dynamics of how he's taken
(02:52):
his company's public and how he's behaved.
Speaker 5 (02:54):
When you say passive, do you mean traditional the way
that retail investors think about passive investing? Five hundred index
funds two basis points to buy vo.
Speaker 4 (03:04):
Absolutely, So that's really what we're hitting on. Unfortunately, there
are incredible flaws in the construction and understanding of this.
I've actually spoken on Bloomberg with Arry Ritholtz about this
dynamic passive is not passive. The actual definition of passive
is you never trade.
Speaker 3 (03:18):
You always hold. That means it's impossible to get in.
It means it's impossible to get out.
Speaker 4 (03:23):
In around twenty sixteen, a very smart individual, Loss Peterson
at AQR wrote a paper called Sharpening the Arithmetic of
Active Management, which you noted on index reconstitution that they
had to trade and therefore that created an opportunity. My
contribution was to recognize that every time you, as an
individual investor contributing to your four oh one K, you
are creating a trading environment. So it turns out that
(03:43):
passive is not passive at all. It's a systematic, algorithmic
strategy that simply says, if you give me cash, then buy.
Speaker 3 (03:50):
So translate this into what our listeners and viewers are
living when they buy a passive fund on a zero
to one hundred scale, how active is it? Is it
ten percent active?
Speaker 4 (04:02):
Well, it really depends on what you defind. So the
minute you're putting that money in, you are one hundred
percent active. Once you've transitioned in short position, you become passive.
That in and of itself, though, creates its own dynamics
because you're not really passive in the classic sense. You
are hoddling, right. It's the same phenomenon we saw on bitcoin.
If you're not willing to sell, the next player has
to pay a higher price. And because what we have
(04:24):
seen is just an extraordinary inflow into passive strategies, which
now represent about forty five percent of the market cap
of the United States, we've actually just seen a continual
upward pressure in valuation and prices that a lot of us,
unfortunately think is the up and to the right phenomenon
in markets.
Speaker 3 (04:40):
And your community across the nation. And this fad day,
a lot of good voices coming up. Kati Kaminski will
be with us the absolute best on trend investing of
the shattering of trends. Right now, as Tim Stenovick mentioned
that we've got a nice lift to the market off
a bombshell Switzerland announcement, the United States and China will
meet and they will speak. Futures up thirty seven points
(05:02):
right now, we said good morning on YouTube, Tim.
Speaker 5 (05:05):
Does that mean we're all handling our retirement incorrectly? If
we're thinking about funds that are based on age, based
on retirement, these target date funds that are mostly passive Unfortunately.
Speaker 4 (05:17):
I think that's correct, and I think that the first
of all, I want to be very clear, all and
incorrectly are very broad and subjective terms. Right, it's a
system that has worked extraordinarily well, but unfortunately has Ponzi characteristics.
The new entrance into the system are inflating the wealth
of the existing holders. What we don't know yet and
(05:38):
unfortunately you mentioned when we're from Peter Teel, the trade
that gave me notoriety was the Vollmageddon events the XIV.
What became very clear there was that was a systematic
algorithmic strategy that had become too large for the market.
We're seeing similar characteristics in the broader market with the
S and P today. The way that that manifested itself
is when a significant outflow occurred a crash.
Speaker 3 (06:00):
Hey, where's the shadow right now? I mean those of
us of a certain vintage understand we learned how to
spell portfolio insurance in October of nineteen eighty seven. There
was a leverage of LTCM in that where's the shadow
in the system? Now? Is it just simply and I'm
speaking folks on a physics basis, the mass of the
(06:21):
passive market that has.
Speaker 4 (06:23):
A huge component to it. So when I did the
XIV trade the Volmageddon event, I had done the analysis
that basically suggested that the passive or systematic algorithmic strategies
had risen to about seventy percent of the daily trading volume.
If we look at the impact of passive today and
the broader market, it's very, very similar. Once you factor
in the way money the way market making is done,
(06:44):
which is effectively index arbitrage. We're trying to make ETF's work,
we're trying to keep prices tight.
Speaker 3 (06:51):
All of that trading is tied.
Speaker 4 (06:52):
Around many of the same phenomenon and so you know, unfortunately,
my work suggests that we're getting closer and closer to
a point at which it becomes an inevitability rather than
a probability.
Speaker 3 (07:01):
And would tell I would say, is you set yourself
up for not a three standard deviation but a four
or six standard deviation, surprise, some form of shock, and
that's a trigger. Is it as simple as that there
will be a trigger point outside our beliefs and certitudes
that will allow for the magnitude move.
Speaker 4 (07:21):
Will you hit on a really key phase a belief?
And I would argue that a key component of what
we're experiencing right now is that belief right. So the
up unto the right phenomenon encourages people to put money
in when it's down right now, they're putting it into
the industries. We saw this very specifically in the events
coming after April eighth, when the market made its recent low.
A trigger was hit what's called a threshold trigger within
(07:43):
many target date funds that forced them to rebalance.
Speaker 3 (07:46):
When they rebalance, what do they do?
Speaker 4 (07:48):
They have to sell bonds by equities, And unfortunately, when
that coincides with Trump making a speech, President Trump making
a speech saying it's a good time to buy, it's
a force Listen.
Speaker 3 (07:58):
Would you get the surveillance cork and it at my mouth?
So Tim save me. Well, I can't say enough, folks,
how I agree with mister Green. I'm rebail. It's like
deaf to go. Mike.
Speaker 5 (08:11):
You have just a fascinating post out from your newsletter
earlier this week. It talks about President Trump in the
historic context of other leaders in the past. Franklin Roosevelt.
You even bring up Roman leaders in there, in the
context of where we are as a country, where we
are as perhaps an empire. Where do you see it?
(08:32):
What do you see this moment? As well?
Speaker 4 (08:34):
I've been talking about this for a long time, and
as you know, I think all American men think about
Rome at least five times a day, so.
Speaker 5 (08:39):
We've heard that.
Speaker 4 (08:40):
There's nothing particularly unique about my insights there. Look, we
often talk about the fall of the Roman Empire. We're
not an empire. We're a republic, and where we seem
to sit, unfortunately, is towards the fall of the republic,
And if anyone really wants to dig into it, I
would strongly encourage them to read Mike Duncan's book The
Storm Before the Storm, which is about that transition period
between the Roman Republic and the Roman Empire. I draw
(09:04):
analogies to the idea that Trump could be viewed as
a graucus, could be viewed as the Grocy Brothers, etc.
As a reformer. Unfortunately, I just think he lacks the
mental plasticity at the advanced stage that he's at that
a Franklin Roosevelt had. Franklin Roosevelt was not a communist
and was not a socialist, and was not a redistributionist
in his early stage. It was only after he saw
(09:26):
the effects of the Great Depression in the late nineteen
twenties early nineteen thirties that he saw a different path
and he redefined the relationship. Now, I'm not suggesting that
the answer to this is more government. The answer is
more effective government, and that is a very hard challenge
in this current environment.
Speaker 3 (09:42):
I just put it on Twitter, The Storm before the Storm,
the book by Mike Green Robert T. Caplan with a
book somewhat equivalent to that written last year off of
Yale University Press. I'll try to get that out as well.
My answers watched the what was it like fifteen twenty
years ago? They had a whole It was like when
they invented streamings serials and they add a TV show
called Rome. You know, I don't have to read the book,
(10:05):
do I can just watch just now.
Speaker 5 (10:06):
You just open chat GPT and ask it whatever you
want and then it'll do it for you.
Speaker 3 (10:10):
Well, yeah, that's a whole separate story, you know, Mike,
I think this is really really interesting. I want you
to fold it over to how people should prosecute something
as boring as a retirement plan. How do you bring
this over to the mundane?
Speaker 4 (10:25):
But Tom, we could have an hour long discussion before
I get it.
Speaker 3 (10:28):
Can we clear the deck here? Are you willing to
give up newspapers for Mike Green?
Speaker 5 (10:34):
That's the right answer.
Speaker 3 (10:35):
That is the right answer. How do we bring this
over to we mere mortals trying to decide what percentage
to be in the market.
Speaker 4 (10:44):
The quick answer is there is no right percentage, right,
It's going to depend on everyone's individual component. The key
thing that I would highlight is that when you think
about investing for retirement, when you think about those, focus
on what you need, not what your neighbor wants, right,
And this is a really key component. We tend to
get ourselves caught up in the fomo type framework. We're
in an environment in which you can if you're worried
(11:06):
about inflation, you can buy real yielding tips with a
positive yield for the first time in over a decade.
Speaker 6 (11:12):
Right.
Speaker 4 (11:12):
That is something that would argue people are ignoring. I
would broadly suggest that fixed income in a lot of ways,
because it has what I refer to as indogenous liquidity,
significant coupon payments, and an ultimate payment of at maturity,
has very different characteristics than the Ponzi like characteristics associated
with equities, where you are always getting your value from
what somebody else pays, and so those are ways that
(11:34):
you can separate yourselves. They're not immune.
Speaker 5 (11:36):
I have to be clear.
Speaker 4 (11:37):
This is a systemic issue. But they are a better
way to think about the opportunity.
Speaker 3 (11:41):
So brilliant, Mike Green, thank you so much. She's chief
strategy to Simplified asset Management.
Speaker 1 (11:53):
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 3 (12:05):
We continue forward with some huge academics from the London
Business School, her doctor at Crystal Rondo. The Linz stops
by when she is in America. She's a Vauntabelle asset
Management of Europe. You walked in the room and you said,
I don't talk about it as fed stuff. I want
to talk about allocation, which is great because I don't
talk enough about allocation. What's the biggest mistake, given chaos,
(12:29):
given day to day uncertainty, what's the biggest mistake people
make an allocation?
Speaker 7 (12:36):
Do you think that they know to be honest? Having
been an active investment manager for all my Caurier before
becoming the because just like.
Speaker 3 (12:43):
That in the English, because it wasn't there having been
an active manager in enjoying losing money.
Speaker 7 (12:49):
And not at all, not at all, actually not at all,
my friends should still be on your Bloombergh platform. No,
but very seriously, there's a lot of uncertainty, and what
it means is there's a lot that we don't know,
and you need to recognize that and not go for
extreme allocation. So neither extreme bullish, which nobody is tempted,
(13:10):
nor extreme verish. That is the number one mistake is
to actually go on the limb.
Speaker 5 (13:16):
Are we passed a little bit of the chaos, a
little bit of the uncertainty Given what we found out yesterday,
a US China meeting will take place this weekend in Switzerland.
It will center on de escalation.
Speaker 7 (13:28):
No, I don't think we passed the uncertainty. Yeah, morehead,
I think so. I think it will continue because you know,
this is not a straight path to a deal, nor
is it a straight path economically with the political environment,
so uncertainty is here to stay.
Speaker 5 (13:44):
Breathing a sigh of relief that the conversations are at
least happening.
Speaker 7 (13:46):
Yes, definitely, definitely for growth and for inflation. Right, the
one thing that we do know, so let's start with
what we do know now is everything else equal. If
you put on tariff, however low they are, but on
a large scale, you will get lower growth and higher inflation.
So that is one part we know, and that again
has implication for Ustelic nation.
Speaker 3 (14:05):
Nine point two five percent of our audience, particularly here
in America Good Morning, around the world and on YouTube,
looks at Europe and has basically mentally discarded it for
I'll say five years or ten years in investment. Is
there a new Europe?
Speaker 7 (14:25):
I hope I can answer yes, there's Certainly Europe has
certainly gotten a wake up call. I think the proof
is in the pudding. Europe has disappointed for quite a
long time. So what's changing is the fiscal spending. I
do believe it will happen, indeed in Germany. So that's
a positive and relative term for growth. But look, some
of the weakness of Europe has been the inability at
(14:47):
times to act together and that.
Speaker 3 (14:51):
But then on a micro basis at the company and level,
are the CEOs thinking differently in whether it's two boards
in Germany or one board wherever that they have supported
the board to be. You know, the stereotype is to
be more anglocentric. Are we are we seeing that now?
Speaker 7 (15:08):
I'm not sure I understood your question.
Speaker 3 (15:10):
I think because you don't want to hear it.
Speaker 8 (15:12):
Yeah, no, no, no, no, no I do.
Speaker 7 (15:14):
But I mean Europe has always been quite looking towards
the west, right, so Anglo centric if you want to
go with that.
Speaker 3 (15:19):
But yeah, the stereotype of our global Wall Street audience, yes,
is there's a there's a locking individual take on CEOs.
Let's go at Disney at Uber this morning. Tim Uh,
They're out there, they're going, let's go, let's fix this,
let's fix our margins. Let's go, let's go, let's go,
and everybody in years going at a slower speed. Is
(15:42):
there a change there or is it business as usual? No?
Speaker 7 (15:45):
I think there is a change. I think there is
a change. Whether it delivers, I don't know. That's why
I said proof is in the proof is in the pudding.
Is that you now we now need to go get
it in Europe in a sense a line?
Speaker 3 (15:59):
You know the other day, fall off my chair, Royal
Duchess once again looking at a British patrolum talk about dinosaurs.
Speaker 5 (16:05):
What's all as new again?
Speaker 3 (16:07):
You know?
Speaker 5 (16:07):
I wonder to what extent this idea of Europe being
pushed close together or becoming closer is the result of
the US in this America First policy? Is that what's
happening here? The US is saying essentially, okay, America First
is not America alone. Investors don't necessarily agree with that,
but it makes Europe say, okay, we have to rely
(16:29):
on each other more for defense spending, we have to
become closer together, and we have to unite more. Is
that what happening?
Speaker 7 (16:35):
I think that's part of it. That definitely part of
it is just like I mean, that's with everything in life.
You get adversity and that pulls you together. Right, So
the adversity. The first thing that brought Europe together was COVID.
That Ino sense really helped from that perspective in bringing
the countries to pools it together. And I think, yes,
there's a reaconing that that they better pull together.
Speaker 5 (16:59):
It didn't happen from a fiscal perspective during COVID that
was a huge issue. I mean, you saw Europe as
a whole recover in a more slow way than the
US did. The US sort of stood out over the
last three years. Yes, in its quote unquote exceptionalism compared
to the rest of the world. Is that era behind us?
Speaker 7 (17:19):
No, I think there's I mean, there's a few things
that are impacting right now. I don't think it's I mean,
let's say I've been structurally bullish on the US economy.
I continue to believe it's the strongest economy, but a
few things are denting or impacting US assets right now.
The pressure that we're seeing on the dollar, I think
is a structural downward pressure. Europe has a chance to
pick itself together by uniting. They see the need and
(17:44):
that's why I come back to we need to see
the proof in the pudding. Is it happening and is
it delivering?
Speaker 3 (17:50):
With us from Vulntable this morning, thrilled with this crystal
under the land all I've lived and I was in
Switzerland I was fifteen years old. Magical is the appreciation
of the Swiss franc. Tell us how Switzerland adapts to
the new strength of Swiss franc. Will there be a
different approach among the cantons and among the federal government.
Speaker 7 (18:14):
Well, look, I mean as a Swiss, it's almost like
you're born with it, with the chocolates and the mountains,
you're born with a strong Swiss franc. So it's part
of it. So the SNB, it's the I mean, it's
a headache for the SNB, for the companies. They've learned
to be competitive, to be honest. So this this is
one aspect because it's part of it. Nominally it appreciates
because inflation is low and for the foreseeable future that's
(18:36):
still going to be happening. On the real level, you
see less of an appreciation trend, but you know, in
the end, nominally is is a lot of what matters.
Speaker 3 (18:44):
You're too, unimputed deflation in Switzerland because of the appreciation.
Speaker 7 (18:50):
Yeah, we could drink, yes we could.
Speaker 3 (18:53):
We could. Apple did a coupon a couple of years
ago three quarters of a percent for like a zillion year.
Speaker 5 (19:00):
We're all pretty much free.
Speaker 3 (19:03):
Are you seeing travel to Switzerland changing with the trade wars,
with the terror force?
Speaker 7 (19:07):
Well, I mean I'm not. Let's say, I'm not on
a line post to see people coming in and out,
but we do read, including from from esteemed Bloomberg, that yes,
we do see more, you know, more asks for for Switzerland,
for people looking to come over, whether it's traveling, whether
it's relocating. So that's wait for numbers.
Speaker 3 (19:25):
Yeah, rto keeper of the MX. Yeah, it is very
big on Switzerland. He wants me there on twenty four
to seven.
Speaker 5 (19:32):
One more question there, see I want to start and
where we started. It has to do with asked allocation.
Tom asked about the number one mistake people are making.
If people are saying, okay, I should go look at
my portfolio right now, think about its construction. Yes, where
should people look closely? Is it in the equity side,
is in the fixed income side? Is in the alternative side?
Speaker 7 (19:52):
I think it's it's across everything. I think you do
want to be diversified. If you don't know what you
don't know and how things are going to pan out, again,
don't lean out of the window. So you do want
to make sure that you're diversified, that you're sticking to
what you are trying to achieve. You obviously go for
stuff that is less sicklical sectors that have all pricing power,
because if you all things equal, lower grow bigre inflation.
(20:15):
Infrastructure to me is a segment that stands out right
less cyclical, has cash flows that are normally indexed to inflation.
And you want to think about the dollar, and particular
in the asset classes that have lower volatility. If you're unhedged,
I'd look at a hedge, to be honest. So these
other things that are on my mind.
Speaker 3 (20:36):
Thank you, Thank you so much for visiting Crystal Ronde.
Where this is Vanderbilt Zurich in today with this whole
new view of Europe.
Speaker 2 (20:43):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (20:45):
Listen live each weekday starting at seven am Eastern on
Apple Corplay.
Speaker 9 (20:49):
And Android Auto with the Bloomberg Business app.
Speaker 1 (20:52):
You can also listen live on Amazon Alexa from our
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Speaker 3 (21:00):
More than any other guest when she is on, I
will get emails. Who was that? Who was that? Who's
she with? With RBC Capital Markets. Francis Donald on the
economics of the moment of America. Francis into this FED meeting.
Do we have looking at the dual mandate looking at growth?
(21:21):
Do you have vectors in place? Is there a Francis
Donald inflation vector, an unemployment rate vector, a real GDP vector.
Do they exist?
Speaker 10 (21:34):
I mean, sure, they just look very different than they
have historically.
Speaker 11 (21:37):
But I got to tell you Tom listening to come
into this segment, he said, it's FED day, and I
had to say, oh, yes, it's FED day. Which is
not because I'm sleeping at the wheel. It's because I
spent the morning doing things I've never done on FED
days before, which is scan geographic photos for ships on
the West coast to see if we're still getting supply
(21:58):
to come in. I'm looking at some old school pandemic charts,
open table restaurant reservations. Are we seeing any week to
week change in the data there? And of course reading
every headline we can see for insights into are we
going to see some trade de escalation from China? And
my sense is that probably the Federal Reserve is doing
very similar things this morning, and that is because they
(22:19):
are trying to determine their own vectors for inflation and
employment and they just don't have enough data or insights,
just like most economists don't right now to determine.
Speaker 10 (22:29):
The path ahead.
Speaker 11 (22:30):
So extraordinary and certainty heading into this meaning it is
going to be a fold of course, We're always looking
for any type of insight from FED share Powell as
to how they would react to certain situations and what
they think will happen next. But the data is going
to leave the Fed, as it always does, and we
have very limited visibility from traditional data points.
Speaker 5 (22:49):
Right now, I hear you talking about the alternative data
such as open table reservations, looking at satellite images of
ships that are coming into port. It sounds like we're
talking in twenty twenty one one. Save for the China
comment that you made about potential progress on a trade deal.
The Federal Reserve has a very limited toolbox when it
comes to what it can do to achieve its dual mandate.
(23:11):
How does it navigate a situation of uncertainty such as this, Well.
Speaker 11 (23:16):
It doesn't, or it waits for the data to turn,
and for that reason, they will by necessity be late.
I think their issue is going to be a sequencing issue,
which is that the inflation data is likely.
Speaker 10 (23:26):
To pop much earlier than the labor data.
Speaker 11 (23:29):
And I've been on the show many times to talk
about how even though we see a very weak economic environment,
we only have the unemployment rate rising to.
Speaker 10 (23:37):
About four to eight or high fours. Traditionally, that would
be a very strong labor market.
Speaker 11 (23:42):
That would be something we associate with a boom time,
not a recessionary type period. And that's because this labor market, well,
America does not need jobs. America needs workers. It's going
to keep this labor market very tight. That's very different
than what we saw in twenty eighteen, the first time
that we saw tariffs coming through. It's going to make
the FEDCE job a lot harder because I don't think
(24:03):
they're going to see a material weakness in traditional indicators
of unemployment over the course of twenty twenty five, even
as the economy software.
Speaker 3 (24:11):
So here's the core question. Francis, back at Queen's University,
I mean, you were fourteen or whatever taking your undergraduate there.
But Francis, back at Queen's University then, was a six
percent unemployment rate the same as a six percent unemployment
rate now? I don't think that the same? Am I wrong?
Speaker 10 (24:30):
One hundred percent?
Speaker 11 (24:31):
And just a little plug here, Queen's University in Canada,
we call it the Harvard of the North, just so
you know, just caliber.
Speaker 3 (24:37):
I thought Harvard was a Queen's of the South.
Speaker 11 (24:41):
We'll go with that one too, so that's exactly right.
The nature of this job market is changing. We have
the most amount of those over the age of sixty
five the US has ever seen. Over one in five
Americans is over the age of sixty five, most amount
of retirees ever, and so economists.
Speaker 10 (24:57):
Are scratching their head.
Speaker 11 (24:58):
Why are higher rates but also fire rates down and
quick rates down. This is a job market that is
acclimating to a demographic bus that's occurring in real time.
Demographics are traditionally something that you look at when you're
five or ten year forecast, when you're forced to do
something that difficult.
Speaker 10 (25:15):
They're not something we take to hear now.
Speaker 11 (25:17):
And this is why when I talk about uncertainty, a
lot of folks are saying we're going to get more
certainty on trade in the coming week. But a lot
of the customers, a lot of the folks that we
talk to in the United States are also paying very
close attention to immigration policies that come through and how
this government is going to support or not support what
is a very shifting labor dynamic.
Speaker 10 (25:36):
Now.
Speaker 11 (25:36):
Ftter Reserve is going to have to talk about this
at some point, probably not today, when they're looking at
something like a high fours unemployment rate, and that's going
to be enough for them to start cutting.
Speaker 3 (25:46):
Well, you just heard their folks bottle it, because that's
the discussion of the next eighteen months. I'm sorry when
I look at the kids having trouble getting jobs, on
and on and on, this is a new unemployment rate
where it's not equivalent to our memory of what that
number is.
Speaker 5 (26:02):
Yeah, I think Tom brings up a good point, which
is who is having trouble getting jobs right now? And
given in the context of the president's immigration policy, this
administration's immigration policy, how are you looking at the job
market given that we've heard anecdotally challenges from new graduates
in those folks looking for jobs, versus some emptiness in
(26:22):
the pipeline when it comes to folks in the trade,
for example, you.
Speaker 11 (26:27):
Got to go sector bisector more than we have in
the past. So think about three sectors that have driven
a lot of job growth. Healthcare, well, there's a skills
matching issue happening there. Government, we know that's going to
be declined. That's the one area where you will see
shedding of activity. And then retail and accommodation that's where
traditionally you would see what economists called new entrance or
(26:47):
immigrants being more impactful there. So sector bisector stories are
going to become incredibly important.
Speaker 10 (26:52):
But underlying the.
Speaker 11 (26:53):
Surface here, a lot of folks will say, well, the
labor force participation rate is quite low. It's been falling
since two thousand and one. Could prime age workers in
the United States twenty five to fifty four. They have
one of the highest labor forced participation rates we've ever seen.
So the labor market is very tight. This is very
different than twenty eighteen. It's even different than twenty twenty two.
It's going to change a dynamic of this recessionary conversation.
(27:16):
We don't have a formal recession in our outlook, although
I really begrudged that recession or no recession call. It's
still a very problematic outlook for the US. And part
of that is we think the labor market is actually
going to in old school terms, stay strong, but it's
not strong in the traditional ways.
Speaker 10 (27:31):
Tom. That's the problem.
Speaker 11 (27:32):
This is a labor market that we're going to have
to reassess and measure with different types of instruments than
we have historically.
Speaker 3 (27:38):
We got to get you out again. So soon soon,
Francis Donald, thank you so much. I got like eight
more questions as well with RBC Capital Markets. Francis Donald.
Speaker 2 (27:51):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (27:54):
Listen live each weekday starting at seven am Eastern on
Apple Corplay.
Speaker 9 (27:57):
And Android Auto with the Bloomberg Business.
Speaker 1 (28:00):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Speaker 3 (28:05):
Which starts Strong, Strong Strong. Vishal Kanjuja joins us now
from Morgan Stanley had a broad market's fixed in Kim.
I love the first sentence of your note. Jobs Day
stole the thunder from the Fed completely. What did we
learn in the buoyant Jobs Day that adjusts this meeting
this afternoon.
Speaker 6 (28:24):
Morning, Tom, thanks for having me on completely stole the thunder.
Hot data is not at all anywhere close to the
soft data which we've been talking about, you guys have
been talking about very clearly. As while the FED knows
this very clearly, I think today the market is going
to be very clearly looking for a repeat from the
(28:47):
Fed for their reaction function that they are still focused
on growth.
Speaker 8 (28:50):
Down sites and they are willing to take.
Speaker 6 (28:56):
Less of a deeper look into the inflation upsides that
we are talking about.
Speaker 3 (28:59):
Synthesizes with Seth Carpenter's team, Allen Zentner over at Wealth Management,
and the others. I guess we got a nominal GDP,
it's actually pretty good because of stagflation, But then do
you see nominal and real GDP coming out.
Speaker 8 (29:13):
Through the year exactly?
Speaker 6 (29:15):
So I think that is where we think that the
demand destruction on the back half, and we are talking
about quite a bit of uncertainty. We've seen it in
the base report, We've seen it from all the earnings
that we've seen through the corporations as well. But the
persistence of uncertainty the time period that we are going
to sustain here is going to definitely show up with
(29:35):
that demand destruction on the back half of the year.
Speaker 5 (29:37):
So then what does the FED do if it knows
demand destruction is coming given its dual mandate.
Speaker 6 (29:42):
I think it has two precedents that it has laid
out in the past of but it intervenes or comes in.
One very clearly their dual mandate is at.
Speaker 8 (29:50):
Risk and data shows it they step in.
Speaker 6 (29:53):
Or the second is that the financial market functionality is
breaking down that they have to intervene none of that
has happened right now, so they need to be patient,
look through the data, and they have quite a bit
in the toolkit to act.
Speaker 5 (30:04):
What do you what's in the toolkit to act?
Speaker 8 (30:06):
Four hundred and fifty basis points? Vase still about if.
Speaker 5 (30:09):
We're in a stackflationary environment, then what do we do?
What do they do?
Speaker 6 (30:13):
I think, in principle, tariffs are going to be one
time price increases. Consumers and corporations are going to adjust.
I know we've already seen that supply and demandshock play
out in twenty twenty two. This is the opposite of
that that is happening here.
Speaker 5 (30:29):
He almost said transitory, Tom, but he didn't say transitory.
You said one time price increases. What makes you confident
that that will be the case? And I should I
should look, Actually, I'm going to change my question. I
don't think we don't do that in the morning. I
don't think consumers. I don't think consumers understand how inflation
is measured. I think they understand inflation in the context
(30:50):
of gas prices going up and then coming back down.
They'd understand that it's change in price over a period
of time. They think high prices come down they don't
come down.
Speaker 8 (31:00):
I think that's what it is this time.
Speaker 6 (31:02):
I think the balance sheets, yes, are very very strong
in terms of consumer and corporates, but I think the
moment you start to see margin compression in corporates meaning
consumers pushing back on services or small business pushing back
on prices, that's where I think you start to see
the hit on labor.
Speaker 8 (31:19):
That's when you start to see the demand destruction show up.
And that's why we have quite high degree of confidence.
But we've covered our.
Speaker 6 (31:27):
Underweights and credit. We've covered some of our underweights and
duration during this time, but we are not long. We
still think that spreads could be widening out as that's
tax platary freear could go through in the next two months.
Speaker 3 (31:37):
I'm sorry, well, I mean I go back to Mary
Poppins and the famous bank scene with Dick Van Dyke
and the tuxedos. We are always to India, but you know,
I go back to librar or ois. I don't know
why we got rid of library. I thought it was great.
Now I got something fancy called so for sof R.
When you look at sofur swaps, which is what Arid
Jersey tells me to look at a little bit of
(32:00):
deterioration the last five days. Is the short term market
getting out front of the joy and saying at some
point this becomes difficult.
Speaker 8 (32:10):
It does, absolutely it does. I think we are less focused.
Speaker 6 (32:14):
I think our conviction level with the amount of information
that we are getting at the moment is much lower
to call the exact date that these guys can.
Speaker 8 (32:23):
Cut the FEN. But our conviction level increases as we
go out the next eighteen months.
Speaker 6 (32:28):
And that's why I think our focal point of duration
is still that three to five year mark.
Speaker 3 (32:32):
So what is full faith and credit ten year ye'd
do out eighteen months?
Speaker 8 (32:36):
I think it's lower. I think we breached that.
Speaker 3 (32:38):
For me, three point sixty five percent is my recollection
for the ten year yield? Can you get a nicely
under four percent?
Speaker 8 (32:46):
Nicely under four percent?
Speaker 6 (32:47):
I think we were four to five percent when we
wrote our outlooks in November, and we thought that it
will travel that range, and it did almost travel that entirely.
Speaker 3 (32:56):
The dynamic ASCO forobose one on one on a dynamic basis,
if I get price up yield down, does that signal
a good or bad event for our listeners or viewers.
Speaker 6 (33:07):
That means the fixed income has served its dual mandate price,
total return and negative correlation to risky assets, and it
will be poised to deliver.
Speaker 5 (33:16):
How much of what you're saying depends on the US
successfully negotiating trade deals in the next eighteen months.
Speaker 8 (33:22):
Quite a bit of the long end depends on that.
Speaker 6 (33:24):
The twenty and the thirty year we need a sustainable, credible,
bought into deficit reduction plan, and then that will decide
the demand and supply of the twenty and thirty year
part of the market as well. I think that is
one part of the market that we are nauseous about,
to be very honest and staying away from on that part.
Coming back to your question on demand destruction, quite a
(33:44):
bit depends on the next probably ninety two hundred days,
maybe this weekend as well.
Speaker 3 (33:49):
Does things get funded. We're going to move on now
to the airport, the airline catastrophe in America, But does
infrastructure get funded? Does Morgan Stanley see businesses u usual
for the issues of megapaper.
Speaker 6 (34:04):
Businesses are getting funded very comfortably throughout this entire April
volatility that we had seen. The markers that we see
for liquidity for funding for corporations and healthy balance sheets.
We're still in the green. Treasuries were getting issued very clearly.
Concessions we're building up but then getting bought into. Yesterday
also we had one of them, and then IG Corporate.
(34:25):
We exceeded the supply marker over subscribe books and deals
went really well.
Speaker 3 (34:29):
When Tim Cook issues bonds, does he call you? But
do you get a phone call from Tim Cook?
Speaker 8 (34:34):
Definitely? Our traders are getting the phone call from the healers.
Speaker 3 (34:37):
Thank you so much. Rasha Ken jud with us with
Morgan Stanley driving all of their fixed gun Learn a
lot there that was very, very informative.
Speaker 2 (34:46):
This is the Bloomberg Surveillance Podcast.
Speaker 1 (34:49):
Listen live each weekday starting at seven am Eastern on
Apple Corplay.
Speaker 9 (34:53):
And Android Auto with the Bloomberg Business app.
Speaker 1 (34:55):
You can also listen live on Amazon Alexa from our
flagship New York station and just say Alexa play Bloomberg
eleven thirty.
Speaker 3 (35:03):
We're gonna do the newspaper, so I had to shot
up missus Keane all over it last night, she said.
Lisa Matteoe nailed it by getting Zandaia front and center
and then met Gala. Missus Kean agree with you.
Speaker 12 (35:14):
Zandia just was the That's why I wore my full
white yesterday. But we do hat and everything.
Speaker 13 (35:19):
I mean, who topped it off?
Speaker 11 (35:21):
It was very good.
Speaker 3 (35:22):
Congratulations again to all to Anna Wintour and all at
the Metropolitan Museum of Art Spectacular event in New York City.
What do you got this morning?
Speaker 12 (35:30):
Okay, we've heard a lot of stories about the tough
job market out there, right, but the Wall Street Journal
has this article saying that high school juniors they're getting
close to seventy thousand dollars a year job offers. And
you asked, okay, and what, Well, it's the skilled trades.
It's companies looking to shop class to find new hires
because the baby boomers are retiring, so that's the issue.
Speaker 13 (35:50):
So they're looking to this kids. And this kids say they.
Speaker 12 (35:52):
Feel like top athletes like being recruited by you know,
pro teams, like they feel.
Speaker 3 (35:56):
Like Rockstar's a huge deal.
Speaker 13 (35:57):
It's a huge deal.
Speaker 12 (35:58):
And the high schooler noticing because they're investing more money
into their shop classes, they're teaming up with companies to
offer you know, to come in the classroom and talk
with the kids too, offer them part time work credits.
Speaker 3 (36:10):
I grew up in a house hugely supportive. It was
called vocational or something I can't remember back a million
years ago. But Ian Why yesterday with Huntington National Bank
Shers was brilliant about how the younger cohort there's no
skilled workers, and they're going to really incentivize it quickly. Right,
they don't have a choice.
Speaker 12 (36:31):
Right, they're going to either how much seventy seventy thousand starting,
but you have consolation energy, which we all know they
offer high school graduates without four year degrees as much
as six figures started.
Speaker 5 (36:43):
I love this. I mean, I think this is also
something that's lost in the conversation about immigration, when you
think about the skilled trades and who's coming in and
doing these jobs. We haven't had a pipeline here in
the US to these careers because so much emphasis has
been placed over the past couple of generations on college.
I think we're starting to have that conversation now.
Speaker 3 (37:01):
I love it.
Speaker 12 (37:02):
That's an amazing point I think about that one. Okay,
So men is Mark Zuckerberg. He's been making the Rounds podcast, interviews, conferences,
and there seems to be a theme when he looks
into the future.
Speaker 13 (37:12):
So he says that most of your friends will be AI.
Speaker 5 (37:16):
Hey, come on, okay, speak for yourself, Mark, most of
your friends will be AI.
Speaker 13 (37:22):
But you also have AI therapists and AI business agents.
So we're gonna be talking to real people less.
Speaker 3 (37:29):
I know.
Speaker 5 (37:32):
Okay, I'm gonna be the contrarian here. I've been using
dual Lingo a lot, which is the language learning. There's
an AI agent in there, Lily, and you can practice
conversation with her, and it makes what I'm doing Spanish
with my son, he thinks it's he and and because
he's only six, he thinks that Lily is a real person,
(37:53):
which is weird to me.
Speaker 13 (37:55):
That's what the next generation is gonna think.
Speaker 3 (37:57):
I think, so, I mean music AI. But the idea
that AI is going to replace a business agent, yes, nuts.
Speaker 13 (38:05):
Next, it can source all this information and it knows
you so well.
Speaker 8 (38:11):
Yeah, okay.
Speaker 12 (38:12):
So, after seventeen years underground, the annual Cicada Cousins says
Brood fourteen, they are ready to emerge. Yes, these are
the cicadas. The Boston Globe says. They started making their
way out of the ground in April from down South.
They've started coming out in Massachusetts, Cape Cod, Plymouth County.
A few fun facts if you didn't know about this specific.
Speaker 13 (38:34):
Group of cicadas.
Speaker 12 (38:35):
They come out in the thousands, right, They come out
in the evening after dark. They don't sting or bite,
so you don't have to be scared of them.
Speaker 13 (38:41):
Even though they look a little bit scary.
Speaker 10 (38:43):
They do uh.
Speaker 13 (38:44):
They're not dangerous to plants and trees. And they die
about three to four weeks after they come out of
the ground.
Speaker 5 (38:49):
Every so I thought this, I feel like we hear
this story every three or four year.
Speaker 13 (38:53):
Yes, well those are the annual ones.
Speaker 12 (38:54):
These are the cousins, the brude ex that comes after
like about seventeen fifteen to seventeen years.
Speaker 8 (39:00):
So they emerge.
Speaker 12 (39:01):
So they've been underground like.
Speaker 3 (39:03):
And they're gonna be like in Central Park.
Speaker 13 (39:05):
Well eventually, yes, but they're in mass Chusetts right now.
They've been down south. Now they're mass Chusetts. So yeah,
they'll start to make and that at nighttime they'll start
to like come out this.
Speaker 5 (39:14):
Summer in New York. It sounds like, okay, you've been
watched Wild Kingdom.
Speaker 3 (39:18):
With you look at the videos.
Speaker 13 (39:22):
Oh no, there's a katas they're they're not, Oh the
Curtus looking things.
Speaker 3 (39:27):
Listen Mateo. Thank you so much for the newspapers as well.
Speaker 1 (39:30):
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, the
iHeartRadio app tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(39:51):
always on the Bloomberg terminal
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