November 25, 2025 • 41 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
White House National Economic Council Director Kevin Hassett is seen by advisers and allies of President Donald Trump as the frontrunner to be the next Federal Reserve chair, according to people familiar with the matter, as the search for a new central bank leader enters its final weeks.
With Hassett, Trump would have a close ally whom the president knows well and trusts installed at the independent central bank, the people said, speaking on the condition of anonymity. Hassett is seen as someone who would bring the president’s approach to interest-rate cutting to the Fed, which Trump has long wanted to control, some of the people said.
Still, Trump is known to make surprise personnel and policy decisions, meaning a nomination is not final until it’s made public, they said.
White House Press Secretary Karoline Leavitt in a statement said, “nobody actually knows what President Trump will do until he does it. Stay tuned!”
Fed chair and governor picks are historically the most direct way a president can influence the central bank. Trump nominated current Chair Jerome Powell during his first term. He came to regret the decision when Powell didn’t push for lower interest rates at the pace Trump wanted.
Today's show features:
- Stuart Kaiser, Head of US Equity Trading Strategy at Citi, on the tug-of-war between market momentum and seasonal trends
- Bloomberg News Big Tech Team Leader Sarah Frier on Google’s major leap forward in the global AI race
- Bloomberg Economics Chief Geoeconomics Analyst Jennifer Welch on the latest White House optimism around efforts to negotiate a peace deal between Ukraine and Russia, and whether there is hope for a lasting US-China trade truce
- Jennifer Ewbank, Founder of Andaman Strategic Advisors, on the recent cyber-attack on the Congressional Budget Office, and the risks of broader cyber-warfare with China
- Ryan Kelley, Chief Investment Officer and Portfolio Manager at Hennessy Funds, on investment opportunities in small- and mid-cap stocks
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 (00:00):
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Okay, well, let's talk about the big tech trade and
where we go from here with our next guest. J
sees markets remaining unselled with core leaders coming under pressure.
We've got Stor Kaiser with us set of equity trading
strategy over at City. He joins us here in the
Bloomberg Business Week Studio. We're going to talk tech. But
just about two hours and eleven minutes ago, our Bloomberg
News team broke a story about Kevin Hassett of the
(00:52):
National Economic Council White House Economic Council becoming the key
emerging person who could become the next FED share. We
saw markets react, We saw yields on twos and tens
move lower, we saw stocks go higher. What's your reaction
to the possibility of a FED share?
Speaker 3 (01:09):
Has it look I think has has been on sort
of the short list with Kevin Warsh and maybe Rick
Reader and you know, well or maybe for a period
of time now, so you know, not too surprising that
you know, somewhat out of that core group is sort
of being called a favorite. I'd probably tamp the brakes
on exactly knowing what the outcome here is, because you know,
President Trump has has tended to bounce around back and
forth between the various candidates. But I think, look, I
(01:30):
think Warsh, has It, Reader are all considered, you know,
very credible economists, you know, very very deeply understand macro markets.
Speaker 4 (01:37):
It credible.
Speaker 3 (01:38):
Yeah, I think I think hastids up from an economics
perspective on on the credible side of things without a doubt.
And if that's the case, then you know, you're it's
not too big an issue, you know, depending on who
they settle from from that group.
Speaker 4 (01:51):
But would Kevin has It be a good and independent
FED chair? He is certainly seen as somebody who would
bring President Trump's approach to interest rates and cutting specifically
to the FED, which President Trump has long wanted to control.
At least according to those folks who we've been talking
to in all of our reporting, and so maybe that
is why he is coming out as the front runner.
(02:11):
So I guess the question is, is Kevin has to
be independent? Would he lower or raise rates based on
the Fed's mandate and not on the president's preference?
Speaker 5 (02:20):
I mean you have to assume.
Speaker 3 (02:21):
So I mean, remember Trump reported appointed Pal and now
he doesn't consider Pal to be dubbish en off. So
you know, I would say, you know, Supreme Court justices,
FED chairs, I mean, these people are generally pretty pretty
reputable people that respect the value and the independence of
the organization, and you would hope he's going to make
decisions based on the incoming data. Clearly a president is
going to pick a chair that is consistent with their view.
(02:43):
So you know, it wouldn't surprise you that maybe Trump
would settle on someone that that skews a touch more dubvish.
But the fact is that whoever the chair is is
walking into what's basically a split f OMC right now.
That's the WEBC is also filled with twelve other people
who are very reputable economists who are not simply going
to be kind of pushed around. And I think we're
going to respect the data, respect the dual mandate as well,
(03:04):
So it's not as if you're appointing someone that goes
in and just you know, makes the decision right. So again,
I think all the three of the three or four
of the core candidates I think are pretty well respected economists.
They're entering an institution which you would assume they would
you know, respect and support. You know, every chair is
going to have a little bit of a hawkish or
a Dubvish tilt there, maybe a little more focused on
(03:25):
inflation versus a little more focus on focus on the
growth mandate, and that's fine. I don't think that that
is that that's particularly off side or inconsistent with history.
Speaker 6 (03:34):
So yeah, I mean I think any of those core
will be fine.
Speaker 5 (03:37):
Let's talk markets.
Speaker 7 (03:38):
Yeah, let's talk markets.
Speaker 4 (03:39):
I mean we just talked about with our Ian king
about what's going on in terms of Alphabet versus Nvidio,
who wins to not. I mean, Alphabet's been on tear
this year, is too. I mean it's up about seventy
percent year to date. You do see the markets remaining
unsettled with core leaders under pressure. How do you define
unsettled when it comes to markets? What are you looking
at what does this mean maybe over the next six months.
Speaker 3 (04:00):
Yeah, I think unsettled is kind of what we've seen
really for the last month or so, which is for
four kind of key things have changed in our view
that have made the markets a little squish here. The
first is that retail is pulled back considerably, and whether
you believe or don't believe that retail is driving the market,
certainly institutional investors are aware of that shift in supplied demand.
So again that's created a little bit uncertainty AI. The
(04:22):
reaction function of AI has clearly shifted, whether that is
Meta or Palanteer, Oracle or Nvidia, and you can't ignore that.
Speaker 5 (04:30):
The third thing is retail.
Speaker 3 (04:31):
You know, retail earnings were soft and the commentary for
managements was very, very cautious. We just got a pretty
weak retail sales number as well, So regardless of all
the rest of it, people are staying Wait a second,
This US consumer has been the white night of the economy,
and you know, global economy probably for multiple years and
now seems a little bit under pressure. And that will
also be the FED some certainty there, so not all
(04:53):
of those uncertainty a lot. Yeah, and like in and
of themselves. Each one of these might not be, you know,
an issue, but you put them all to together and
they've created some uncertainty. You're also in a tricky time
of the calendar. You have portfolio managers who have portfolio
managers excuse me, you've had a really tough year. If
you're up here to date, you're not going to play
hero ball between now and the end of the year
as well. So I think you've made people a little
(05:14):
more cautious for a lot of reasons. So I think
right now it's hard to have a really really strong
tactical view. You know, if we had to pick one,
we're going to pick higher into your end. We do
think ultimately you get a rate cut and the seasonality
pushes you there, but the risk reward around that is
not nearly what it was a couple months ago.
Speaker 2 (05:29):
What changes your view between now and the year end
where you'd say, actually, we're not thinking higher till the
year end.
Speaker 5 (05:34):
Now?
Speaker 3 (05:34):
Yeah, the data, you know, probably December sixteenth and probably
be the single most important date in the calendar, which
is going to be you know, dual payrolls reports. Our
view is the unemployment rate is if you had to
pick one thing is the single most important thing for
the market. So that's going to be a very important
day before we get there. You know, Black Friday, Cyber
Monday will be important, but the single biggest day is
(05:55):
December sixteenth.
Speaker 2 (05:56):
And to remind everybody that comes six days after we
hear from FETJJ Powell and the entire Federal Reserve, the
FOMC is going at this without the typical data that
it has ahead of a FED decision one.
Speaker 3 (06:07):
Hundred percent of me and you're also getting the inflation
print on the eighteenth. So you could imagine a situation
where the Fed cuts twenty five basis points, tells you
their data dependent in twenty twenty six, and then boom,
you get hit with really weak labor markets the next week,
and vice versa. Somebody like, I'm not saying you know
either or is going to happen. But our view at
this point is the logic behind the rate decision is
(06:27):
as important as whether they cut or not.
Speaker 4 (06:29):
Right.
Speaker 3 (06:29):
If they don't cut, and it's because the labor market
looks solid and the beige books are very positive, that's good.
If they do cut in the market, it's like, wait,
you all look like you might be behind the curve
a little bit because the next week we get week
labor markets less good. So really we are data dependent,
probably meeting before we expect it to be. But if
you're asking what could change my view into year round
(06:50):
and become more bear, should be we get some weak
holiday spending data and then that labor market report is
unfriendly to the markets.
Speaker 4 (06:57):
Yeah, that would certainly do it. And because you'd be
looking at both sides of the mandate right there for
the Fed. Hey, Stu, thank you so much, really appreciate it.
Stu Keiser, head of Equity Trading Strategy over at City.
Speaker 5 (07:08):
Stay with us.
Speaker 2 (07:09):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (07:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Apple Karplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 5 (07:31):
Well since the Lobject Chat GPT, can you believe it
was three years?
Speaker 4 (07:34):
Yeah, I'm like, I feel like GLP one and AI
are like all we've talked about in the last three years.
Speaker 5 (07:41):
I guess there was an election in there too.
Speaker 4 (07:43):
There was, and there's wars and yeah, there's more stuff,
but I'm just saying in terms of investment trends or PCs.
Speaker 5 (07:50):
Did you get chocolate for everybody? Wow? I love these.
Speaker 2 (07:55):
I am not missus Goodbar over here, mister She's hold
enough much of mister Goodbar.
Speaker 7 (08:00):
They're so good.
Speaker 4 (08:01):
It's like a little bit of chocolate and peanuts.
Speaker 5 (08:03):
Okay, Well I'm off I'm off track a little bit.
Speaker 4 (08:06):
Yeah, go to the West coast and they have really good.
Speaker 2 (08:07):
Say they two have good snacks out there. That's where
we find Sarah Fryer. She's Bloomberg News Big Tech team
leader and the author of No Filter, The inside story
of Instagram. She joins us from the Bloomberg San Francisco bureau. So, Sarah,
the new AI software and deals with Google that chip
tie up with Anthropic. We're talking about this because Google
owner Alphabet shares are at more than seventy percent. This year,
(08:30):
the company's on tracted a four trillion dollars market cap
for the first time. It really seems to be firing
on all cylinders, whether we're talking about the cloud business,
the multipurpose llm Gemini three and the new AI software.
Speaker 5 (08:45):
What's going on?
Speaker 8 (08:47):
We have this really big piece even just in the
beginning of this year about how Google was this company
that had failed to really capitalize on its own innovations.
They were the ones that wrote the paper that that
spurred this technology that underpins large language models, which is
like the basis of CHATCHYBT. And when OpenAI launched chat GBT,
(09:10):
Google could have done that months earlier and they didn't,
And so they've really had this reckoning at the company
and haven't really been able to get their momentum until
this year, and we're seeing it happen across all these
dimensions of their business. Gemini is outperforming a lot of
other models, especially when it comes to coding TPUs, the
(09:32):
chips that Google makes internally are really the only alternative
to Nvidia's GPUs. They are transforming the Internet with the
way they've put AI answers in search. They are now
probably most consumers first brush with AI, if they haven't
already downloaded chat gybt. They see those Google AI answers
(09:53):
at the top. So they're becoming the cultural leader in
AI as well. So I think that there are a
lot of really interesting things happening for this company that
have come to fruition this year. The company seems to
be shipping products faster and doing it in a way
that is high quality. You have other companies like Meta,
(10:13):
which seemed to be a leader in the race when
it was first getting started, but have sense lagged behind.
Google's opposite. They're gaining momentum, they are gaining share, and
that is what investors like to see.
Speaker 4 (10:26):
Why is it though, Why does it feel like it
was so under the radar, Like I always feel like
when enduring earning seasons. We've talked about how you know alphabet.
Speaker 6 (10:36):
Google has so many.
Speaker 4 (10:37):
Different platforms, they have data like they can really it
seems like monetized for search. It's where we all go
for search. But it just feels like they've just come
out of nowhere.
Speaker 8 (10:50):
You know, they've come out of nowhere. But don't forget
that they started this. I know intellectually they started this
and then they were unable to capitalize on it. So
a lot of people kind of wrote them off as
like this bureaucratic, uh, you know, stuck in its ways,
big tech company that that really couldn't be expected to
move at the pace of chatchybt of Claude, and and
(11:15):
yet they have been able to do that, and so
the tipping point is sort of happening now where we're
starting to wonder does this mean that corporate customers that
have started to sign these big deals with with Anthropic
and open Ai, are they going to be seeing Google
as a as a better pick because they have this
longer history. It is a little it seems a little
(11:35):
bit safer. So there are all sorts of things that
can happen at this tipping point. Also with TPUs, the
big deal that Anthropic had with TPUs. Right now you
seeing the Information just reported that Meta wants to have
Google's TPUs in its data centers. So a major competitor
accepting Google's innovations to run its products. It is a
(11:58):
it is a big It is a big deal.
Speaker 5 (12:00):
Yeah.
Speaker 2 (12:01):
A big part of the narrative today is, you know,
Nvidia shares after this report from the Information took a hit.
There's still down three point two percent. They were down
as much as seven percent. Alphabet shares higher earlier in
the session. But the question I have for you, and
we don't know what this does to a private company
like open Ai of chat GPT fame because it's a
(12:23):
private company. Does Gemini is Gemini coming for chat GPT.
Speaker 8 (12:30):
Oh yeah, yeah, absolutely. I mean I don't think that.
I don't think that it's coming forward in terms of
like it'll it'll cause it to fade or anything like that.
But I think that the use case the idea of
of you know, I have a question to ask and
I'm going to go ask Ai for that answer. People
are doing that with with Google Search already naturally when
(12:53):
they have questions.
Speaker 7 (12:55):
It's hard to move that behavior all.
Speaker 8 (12:58):
To chat GPT, and Opening Eye has been very successful
at doing that over time. But if Google already has
the ability to answer the questions with as much you know, accuracy, innovation,
et cetera, then then people may not make that switch.
So it's definitely going to be hard for the upstarts
(13:19):
to battle with Google, but it's also going to be
I don't think we should write them off because this
is such a fast moving market, right yeah, still very
early in so it's too early to say, oh, Google's
just going to win it all there. It's still very
much depends on their continuing to execute, continuing to get
products out faster than rivals, and those things changed by
(13:44):
the day.
Speaker 2 (13:45):
But it does seem like there is an incumbency advantage
when it comes to Google and the way that it's
reshaped its own search and BusinessWeek has written a lot
about this, but I to be honest, I haven't played
with it much until recently. So if you do a
traditional Google search, you can, you know, see the AI overview,
which I think answers a lot of people's questions. But
then you can just click, and this is on a desktop,
(14:07):
you can say, dive in deeper with AI and then
it looks Carol like an LM, like exactly like something
like it is. Yeah, yeah, it's pretty remarkable. I mean,
if people are changing their behavior Sarah with search and
going to chat GPT to ask questions, what's to stop
them from just using Google and Google's AI mode If
it's as good as open as chat GPT, well, I think.
Speaker 8 (14:31):
I think there are some who say it's also a
dangerous game because search is Google's big money maker. It
is the place, it is the engine for the entire company.
And as Google directs more people to AI answers, AI
overviews and diving deeper in AI mode, that means traffic
(14:53):
is diverted away from websites and towards AI answers. And
then it can actually cause the entire Internet to crumple
in a way because the people who are creating information
that goes on the Internet don't get to pay their
bills anymore. And we have a really interesting story out
today on that effect with what Else Thanksgiving Recipes, where
(15:14):
these recipe bloggers that have built up a business over
many years telling people how to make their turkey, how
to make their Christmas cakes are not seeing that traffic anymore.
It's going to AI, so they're not too confident about
continuing to do this kind of work. And then you
might end up in a future where AI is just
(15:36):
building its answers off of content that is created by AI,
and then we're in a place where the information may
not be as valuable or accurate.
Speaker 2 (15:45):
Okay, I love this story from your team. By the way,
we're speaking with Sarah Fryer right now. She's Bloomberg News
Big Tech team leader. She's the author of No Filter,
The Inside Story of Instagram. The team her team out
and she edited this story. The story that you're referring to,
the aslock recipes are taking over the Internet and Thanksgiving dinner.
I mean, I think we've all been there in recent
years where we've noticed that if you're looking up a
(16:07):
recipe online and going too the actual website, you have
to basically read some sort of like novel or memoir.
Speaker 5 (16:14):
As Carol also fault.
Speaker 8 (16:15):
By the way, that was for search engine optimization, that
people would write their entire life story before posting a
recipe because Google was more likely to index pages that
had longer text content, which was so we can also
blame Google for that.
Speaker 2 (16:30):
But yes, so now, I mean what people are doing
is they're like just doing like, show me a slow
cooker recipe for a butternut squash soup, you know, and
chat GPT just comes up with it and you don't
have to read anything about the life story, right, And
that's an issue.
Speaker 5 (16:43):
Where does that information comes from?
Speaker 7 (16:44):
An issue?
Speaker 8 (16:45):
It's an issue. But it's also like maybe they're going
to tell you to put like horse radish in your
butteret squash soup, you know, make it, mix it up,
make it a little weird. Because what the AI is
usually doing, it could be good, but what AI is
usually doing is is cribbing from multiple websites at once,
creating what these AI recipe bloggers call Frankenstein recipes that
(17:10):
may not actually work. And one of the creators told
us that Google mixed up one of her cake recipes
and told people to cook this six inch cake for
three to four hours so you'd get you'd get charcoal, right.
Another food blogger told us AI was having people put
sauce onto Molly's while the husks are still on. You
(17:31):
don't want to eat those husks. You're wasting a lot
of sauce by doing that. So so the AI is is,
you know, presenting these these great images to novice cooks, saying,
look at your beautiful future results with this recipe, but
the recipe doesn't actually create that glossy image, and and
people are are getting led astray, so beware before you
(17:52):
make your Thanksgiving cooking plans.
Speaker 5 (17:54):
Yeah, it's My wife gives me such a hard time.
She's like, I feel like you're at it all the time. Right. Well,
she's like she's like, recipe are you using?
Speaker 2 (18:01):
And I'm like uh, And she's like, do not use
chat GPT. She's like, we have a subscription to the
New York Times, you know, cocaine and everything, and it's
like it's great.
Speaker 4 (18:12):
Well, you know, I just went into Google and I
was like what's the best recipe for pecan pecan pie?
Because it's like my favorite and it actually came up
with and then I said take out corn syrup because
I don't want to use corn syrup, and it came
up with the recipe I think from the New York Times,
which I.
Speaker 7 (18:25):
Really like to use.
Speaker 5 (18:25):
Does it link to it?
Speaker 7 (18:27):
That's a good question.
Speaker 4 (18:28):
I have to see if it's linking to it. Hey,
thirty seconds. Does Google alphabet that have an advantage, Sarah,
because we're all on Google searching.
Speaker 6 (18:37):
They have so much.
Speaker 4 (18:39):
Data on their platform and years, Yes.
Speaker 7 (18:42):
I mean they have.
Speaker 8 (18:43):
They have this history of indexing the entire web, and
we have this history of going to Google for anything
we want to know. So if you're in this this
economy that's going to be driven by people getting answers
on their questions faster, Google's a really great place to start.
And they're starting to really take over in other aspects
(19:05):
of the market that we didn't expect as it would
necessarily be successes like TPUs.
Speaker 4 (19:10):
All right, good stuff, and note to everybody, do not
Google recipes for Thanksgiving.
Speaker 5 (19:14):
She just got the TPU, the tent processing unit in.
Speaker 4 (19:17):
There at the end, Sarah Fire Bloomberg News Big Tech
team Leader.
Speaker 7 (19:20):
This is Bloomberg.
Speaker 5 (19:22):
Stay with us.
Speaker 2 (19:23):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (19:30):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
US Live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 4 (19:44):
Well, the White House signaled optimism around efforts to negotiate
a peace deal excuse me, between Ukraine and Russia, while
warning that additional negotiations to address remaining sticking points would
be necessary, despite reports earlier suggesting tim a deal was
a foot.
Speaker 2 (19:58):
With an update on this and more, Back with with us.
As Jennifer Welch, geoeconomics analyst at Bloomberg Economics, She joins
us from the Bloomberg Washington DC Bureau. Jenny Bloomberg Economics
out with a new report. It notes that the US
Ukraine policy whiplash is benefiting Moscow.
Speaker 5 (20:12):
What do we know?
Speaker 9 (20:14):
So it's been quite the roller coaster for the last
few days. What emerged last week was a plan that
seemed to be negotiated between the US and Russia, largely
favorable to Moscow. In terms of, for example, capping Ukraine's
military ensuring that it would never be a part of
NATO in return for pretty ambiguous security guarantees. Since then,
there's been a scramble by Ukraine and it's European partners
(20:37):
to engage Washington and try and alter those terms, and
now looks like at least nine of the points from
that original twenty eight point piece plan have been adjusted
or removed, including some of the ones that Ukraine felt
across its redlines. And weird things stand is finalizing those
terms and then pitching them back to Moscow. But our
assessment is that Russia is unlikely to receive in a
(21:00):
positive way those altered terms based on how things have
gone earlier this year in prior rounds of negotiations.
Speaker 4 (21:06):
Wait, so you know what, I keep thinking, who's calling
the shots of a possible truth?
Speaker 7 (21:10):
Is it us? Is it you're a visit Ukraine? Or
is it.
Speaker 4 (21:14):
President Putin of Russia or maybe a little bit of
all of them?
Speaker 9 (21:19):
Or who even in Washington is involved in this? It
seemed last week when this plan first emerged, that some
members of the President Trump's own administration weren't even entirely
sure where this peace plan came from, and whether it
had been fully coordinated and agreed to by the US side,
But then it quickly moved from that to the US
setting and ultimadium on Ukraine to agree to it, and
now we're renegotiating the terms of it. So it's been
(21:42):
a lot of twists and turns here. But this isn't
an entirely news story. This is something we've seen earlier
this year. If you think back to August when President
Trump met with President Putin and then immediately rushed into
a summit with Ukraine and European allies. This feels very
much like a familiar pattern and one I think is
likely to produce the same outcome, which is no peace plan.
Speaker 2 (22:02):
Well, okay, so on that European allies a sort of
another group here that we need to focus on.
Speaker 5 (22:08):
What do they want?
Speaker 9 (22:09):
I think European allies are primarily concerned about first making
sure that this deal isn't so heavily weighted in Moscow's
favor that, for example, it doesn't end up preserving peace
for the long haul, that for example, it leaves Ukraine
in a weakened position that could allow Moscow to just
reconstitute its forces and reattack that not only has implications
for Ukraine's security, but ultimately for Europe's, So that's going
(22:32):
to be a major area of concern. The second major
area of concern is one of the elements of that
original peace plan was around the frozen Russian assets and
how they would be leveraged, and in particular how they
might be leveraged to essentially pay the US back for
security commitments to Ukraine. That's something that Europeans have a
stake in as well, and they would want to have
a say in how those frozen assets are used, particularly
(22:54):
as they're debating internally whether or not to use them
to support Ukraine in the short to near term.
Speaker 4 (23:00):
I want to move on to US to China. But
one last question, is there still a feeling here in
the United States and obviously elsewhere in Europe. I think
Europe is a safe yes, but here in the US
that if this is a much more favorable agreement to
President putin that he may in another few years you
(23:22):
create another war and go after another land reb I
just wonder how much of that fear is still out there.
Speaker 9 (23:28):
I think that's certainly a concern among foreign policy analysts,
especially having watched Putin play this playbook before we saw
with Krainia back in twenty fourteen, he played out the
peace process, he drew out negotiations and pretended to be
genuinely interested in peace, and then he essentially snagged and
pocketed the results of that peace process, reconstituted his forces
(23:49):
and launched a full scale assault on Ukraine just years later.
And I think certainly leaders in Europe and Ukraine, but
also in the United States many are concerned about the
possibility of that happening again.
Speaker 2 (23:59):
So if just thinking about possible endings for this, as
we do get close to the fourth year of this conflict,
what would an end look like that Russia would be
okay with in Ukraine and Europe would be okay with.
Speaker 9 (24:13):
It's hard to see at this point a potential compromise
position because Moscow seems to be betting on more battlefield
gains and essentially seeing that time is on its side,
it really doesn't have an incentive to negotiate for peace
because it thinks it can just continue.
Speaker 7 (24:26):
To win territory. The West is support for.
Speaker 9 (24:28):
Ukraine will continue to dip, Ukraine will continue to have
some of the internal issues we're seeing like with corruption
scandals and losing political domestic unity, and it will just
have to bide its time and continue to push for
the offensive. I think what could change Moscow's calculus is
stricter Western sanctions that brings some of its economic troubles
more the forefront. That might pruss it into a position
(24:50):
where it realizes it's not a war that it can
continue to afford.
Speaker 2 (24:53):
And just to clarify, we're in the fourth year. It'll
be four full years of this war in February.
Speaker 4 (24:58):
Yeah, I mean, it's just even hard to believe that
that's where we are. Hey, I want to just quickly
one question to you on US China. President Trump. We
know held back to back calls with the leaders of
China and Japan. We've seen escalating tensions over Taiwan, threatening
to derail his week's old trade truce with Beijing. It
always feels so fragile that relationship US and China always complicated.
(25:20):
Will a US China truce last?
Speaker 7 (25:24):
I think my prediction is for the short ten year term.
Speaker 9 (25:27):
Again, with President Trump, you kind of always have to
have an asters because you don't really know exactly what
he's going to do. But my prediction is, at the moment, yes,
I think it will last. I think the Trump administration
is very focused on maintaining it. I think the calls
that we saw yesterday were more about an effort to
manage this China Japan feud and avoid drawing the United
States into it and avoid it upsetting that existing truth.
(25:48):
I think the questions that we have for the longer
durability of that plan are things that are, for example,
outside the scope of that truce. Actions by Congress that
Beijing could see is violating the spirit, if not the
least of the truth. Actions that the US might take
as sort of its normal expert control policy updates that
might violate it. So there are definitely a lot of
potential speed bumps in the future for this truth. But
(26:10):
at the moment, Washington seems very focused on maintaining it
and keeping it in place.
Speaker 4 (26:15):
All right, good to leave it there, Hey, gent, thank
you so much. Jenny Welch, She's chief geoeconomics analyst at
Bloomberger Economics. All right, geopolitics, relationships among allies and friends
between enemies. I mean, this makes me think about cybersecurity
and national security issues.
Speaker 2 (26:30):
Well, the recent Bloomberg opinion piece by the editors wrote,
America's enemies are growing bolder and more sophisticated in cyberspace, Carol.
To fend them off, the government must stop unilaterally disarming,
all right, So.
Speaker 4 (26:42):
We want to get into the state of readiness when
it comes to cyber threats. Keep in mind that we've
had two recent reports underscoring some of the danger that's
out there. Mid October, Seattle based cybersecurity firm F five
acknowledge a catastrophic breach of its systems which may have
allowed Chinese hackers to penetrate networks used by federal agencies
and Fortune five hundred companies. There's, of course, other stuff
that has happened as well. Back with us is Jennifer Ubank.
(27:04):
She's founder of Adaman Strategic Advisors. She advises companies and
clients on cyber resilience, digital transformation, geopolitical risk. She is
a former CIA Deputy for Digital Innovation. She joins us
from Virginia. Jennifer, good to have you back with us
when it comes to the most urgent national security tech issues.
And I want to go with China right now.
Speaker 5 (27:26):
Is it threats from China? Is it threats from Russia.
I mean, like, what is.
Speaker 4 (27:30):
It in terms of the United States.
Speaker 10 (27:34):
Great to be back with you, Carol, Tim, thank you.
If we're talking about cyberspace, it's really about the People's
Republic of China. Of course, Russia remains a very active
actor in cyberspace. We can see that in Ukraine, we
can see that regionally and occasionally here in the US.
But in terms of sophistication, scale and ambition, it's really
all about China right now.
Speaker 2 (27:53):
How sophisticated has China gotten?
Speaker 7 (27:56):
Oh? Incredibly so.
Speaker 10 (27:58):
You may have seen a report came out recently from
Anthropic where they documented the first essentially AI powered cyber
campaign from inception to expiltrating data that was almost exclusively
conducted by AI agents. The agents would timpally come back
occasionally and ask the operator is this what you want?
Speaker 7 (28:19):
Or would you like this instead? Do you like that?
Speaker 10 (28:22):
And eighty ninety percent was automated and that came out
of China and state sponsored actors.
Speaker 5 (28:27):
I don't love this, Carol, Okay, no, I wouldn't you know.
Speaker 2 (28:31):
It's not like the people who are doing the infiltrating
have to be only so smart, right and you only
have to outsmart them. Now we have to outsmart the machines.
Speaker 7 (28:39):
God, that's terrifying.
Speaker 5 (28:41):
Don't love this?
Speaker 3 (28:42):
Yeah?
Speaker 5 (28:42):
How do we keep?
Speaker 3 (28:43):
Get it?
Speaker 8 (28:43):
Wait?
Speaker 7 (28:43):
Go ahead?
Speaker 10 (28:45):
Oh no, I'm just going to say. It really does
signal a major shift, right. We all knew this was coming.
At least those of us in cyber realm knew that
this was coming. When you see the confluence of AI
and cyber you knew we'd be facing this. And so
really we have to be an position where machines could
start fighting and defending against machines. There's a certain risk
(29:05):
in that as well, because you know, machines are not humans.
They don't exercise our judgment. All sorts of things can
can maybe go awry. But as a start, we're just
going to have to be bringing more AI into our
cyber defenses if we are going to actually harden our
perimeters and protect our data.
Speaker 4 (29:23):
Yeah, aase, Well, I was just thinking about President Trump
signing that executive order yesterday, Genesis Mission. It's a federal
effort to boost innovation using AI, and so it's all
about promoting a technology and its adoption. As more AI
is incorporated into the US government, all governments, I mean,
does that just increase the cyber risks, or does AI
(29:44):
also help us fight these risks.
Speaker 7 (29:47):
It's both. It's like any new technology, it's both shield
and sword. It's both.
Speaker 10 (29:51):
And yesterday's announcement is actually pretty pretty exciting in a
way because it's it represents a moment where you know,
the administration is trying to, let's say, big on AI's
ability to help us discover new breakthroughs in all sorts
of very scientific fields, not specifically about cybersecurity, but about
(30:11):
quantum and biotech and space and lots of other things.
And so one of the issues, and I'll tie that
back to cybersecurity, one of the things that people are
going to be watching with that effort.
Speaker 7 (30:23):
Is how do we protect the data?
Speaker 10 (30:25):
Because this is going to be a tremendously attractive target
for addressaries. If you're talking about bringing together our national labs,
supercomputing capabilities, sensitive federal data sets on science, and then
the America's leading technology companies, that's going to be right
in the crosshairs of our adversaries targeting.
Speaker 5 (30:44):
So then what is the right way just very briefly,
do protect this data?
Speaker 10 (30:48):
Oh well, I think you know they're going to have
to be locking down in every possible way they can,
and kind of the chapter and verse on that will
have to be worked out because this is all still
information at the moment, and I think people are going
to be watching to see how the Department of Energy
implements this intention, this order, if you will, So a
(31:08):
lot to be determined right now.
Speaker 4 (31:10):
I'm just gonna plug everything throughout my phone.
Speaker 7 (31:12):
How's that is that? Okay? Does that enough?
Speaker 5 (31:15):
Or that's not enough?
Speaker 8 (31:17):
Uh?
Speaker 7 (31:17):
Okay?
Speaker 10 (31:17):
One realtrow tip. Put multi factor authentication on any account
that will allow it, and that will stop virtually all
a nefarious activity.
Speaker 5 (31:27):
And you need your phone for that, Carol, sorry to.
Speaker 7 (31:29):
Tell you, I do.
Speaker 10 (31:30):
I do.
Speaker 5 (31:30):
Throw it away.
Speaker 4 (31:31):
Jennifer you Bank always good to catch up, founder of Adaman,
Strategic Advisor's former CIA Deputy for Digital Innovation.
Speaker 2 (31:38):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (31:47):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five these during
this listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 7 (32:04):
Baby jo here, let's.
Speaker 6 (32:07):
Get the.
Speaker 1 (32:10):
Well dry. Do I look like I drive?
Speaker 10 (32:14):
A Mini vash.
Speaker 3 (32:15):
Shut up and go drive angry, Go drive angry.
Speaker 5 (32:26):
I'll drive jo.
Speaker 7 (32:28):
This is the drive to the clothes.
Speaker 6 (32:30):
If you had access to a car like this, would
you take it back right away?
Speaker 4 (32:33):
On Bloomberg Radio, All right, everybody, we are just about
eighteen minutes away from the closing bell on this Tuesday,
Carol Master, Tim Steneveek live in our Bloomberg Interactive Broker studio.
Speaker 7 (32:45):
Just looking at the trade.
Speaker 4 (32:46):
I mean, we are pretty much at our highs of
the session when it comes to the equity trade. We
just heard from Amy Morrison, Bill Maloney, and I'm looking
at most about eight of the major eight of the
eleven major industry groups, the S and P five hundred
are higher today. One is unchanged, Information tech is flat unchanged.
Healthcare is at the top two point two percent to
(33:08):
the upside. Consumer Discretionary AP nearly two percent. That might
be because of some of those retail names. Consumer staples
also doing well one and a half percent. At the
bottom of the pack, you've got utilities and energy both
down about four tens an percent.
Speaker 5 (33:21):
How about those small caps. I know you keep looking
at those.
Speaker 4 (33:23):
Yeah, you're getting ready for Romain because he loves that small.
Speaker 5 (33:26):
Does he like small cops? It does?
Speaker 2 (33:28):
Okay, Well, they're up two point three percent. It's the
biggest gain in a single day for the RUSS two thousand,
going all the way back to Friday when the RUSS
two thousand was up two point role.
Speaker 4 (33:39):
Please, no, no needed.
Speaker 2 (33:41):
Let's se what Ryan Kelly has to say about this.
He's chief investment Officer and portfolio manager at Hennessey Funds.
He joins us from Chapel Hill, North Carolina. We did
see a real shift in the trade. I think conviction
is fair to say. After we after our colleagues at
Bloomberg News reported that Kevin Hassett is the front runner
(34:03):
for the new FED chair to be new FED chair
picked by President Trump. I'm just curious about how you
view a development such as that. Look, we should note
that the President has not made a final decision, and
the Treasure Secretary did say that a decision could happen
by Christmas, so about a month away at this point.
How do you view a name like him?
Speaker 6 (34:21):
Ryan, Well, thanks again for having me on with you guys.
Good to see you. Yeah, you know, big development today.
Obviously there's been different names being thrown around for the
next FED president. This is somewhat expected. His name, Kevin
was already in sort of the front running for this,
(34:42):
but he really is. He does sort of promote a
lot of you know, what the president would like as
far as interest rates, namely having them go lower faster.
So I think that this is obviously going to be,
at least for a stock market, a pretty pret positive development.
And we saw that change you know mid day to day.
Speaker 4 (35:03):
Is that because you assume that he is going to
be pushing for more rate cuts, even if policy or
even if mandates, be it in the labor market or
for inflation, tell him otherwise or no? Do you assume
that he will be like other FED chairs if indeed
he gets that position, that he will look at the
data do what's best for US monetary policy.
Speaker 6 (35:25):
Well, really, that's that's probably you know, the biggest question
out there, and it's a great question, you know, how
will he actually push the FED once he's if he
ends up being the FED president? You know, so much
of this current FED and what we've had for the
last few years has been very data dependent. It looked
like we weren't going to have potentially a rate cut
(35:47):
this coming December. You know, it's just a couple of
weeks away. That has changed pretty dramatically. It looks like
probabilities are up in the seventy or eighty percent that
that's going to happen when we start to see some
of this data coming out. So you know, well, will
a new president of a FED working you differently? I
(36:07):
would suspect data is still going to be very important.
It has to be. It has to drive that, but
there's always some influence as well, and you could see
that potentially coming to play as well.
Speaker 4 (36:17):
Hey, Ryan, I want to talk about your universe, the
mid caps. You're a mid cap Hennessy Cornerstone, cornerstone, excuse me,
MidCap thirty fun which you're to dates down about one
and a quarter percent, putting it at least according to
Bloomber data, in the sixteenth percentile against your peers go
back five years and on average annually you've returned almost
nineteen percent, putting it in the ninety ninth percentile. Is
(36:41):
it hard being a MidCap investor right now?
Speaker 6 (36:45):
It is? And it's funny you just mentioned small caps
doing very well today. Small caps have definitely outperformed. When
we start to hear more about potentials for rate cuts
coming off some of the bottoms near you know, the
beginning of the summer till you know, now they performed
a lot better than mid caps. It is a tougher space.
(37:09):
You know, evaluations are much cheaper in the mid cap space.
These are companies that are that are for many reasons,
we really like them. They're big enough to have a
good track record, They're big enough to you know, still
be able to grow organically and yet also be attractive
to larger buyers to actually move the needle, and then
(37:30):
they can also acquire as well. And we have seen
a lot more M and A in the space this year.
But yeah, as far as this fund goes, this year
is is not as relatively a good performance that we've had.
But the five year numbers kind of speak for themselves,
and that's that we are patient. We will have some
years that we're sort of out of favor and our
protect protectial style just doesn't work as well. But that
(37:52):
five year number, which is you know, we're pretty proud of.
The great thing about it is we got there without
any AI, without any you know, mag seven, without any
large cap tech and actually, you know, I just we
like to tell investors that you can make money outside
of just the mag seven.
Speaker 4 (38:10):
Well, let's talk about it, because you know, retail is
certainly front and center right now because they've all been
reporting earnings. Macy's it's a big week, right We've got
the Macy's Thanksgiving Day parade, You've got Black Friday. That's
a big deal for them certainly, and as it is
for other retailers. They do report earnings next week. Stock
is up almost thirty percent year to date. That's a
(38:30):
big holding for you, and you continue to hold it.
Speaker 6 (38:34):
Yes, absolutely, we do have traditionally on this fund, we
do have a lot of industrials and consumer discretionary type companies.
We do have a lot of the traditionally you know,
sort of your your mainstay brick and mortar type retail stores.
Macy's has done well, It's done well for us since
(38:55):
it's actually a new purchase since September. I think it's
up about twenty five percent since that time. And you
know they always, not always, but a lot of times
going into a holiday season, you see a lot of
these retail even the traditional ones, really move as we
start to get more data coming out for Black Friday,
for cyber Monday, So we'll be keeping an eye on
(39:16):
that on that for sure. We also own Wayfair for us.
Speaker 5 (39:19):
Yeah, it's just going to bring that up.
Speaker 6 (39:21):
Yeah, that's a very different company.
Speaker 5 (39:23):
See also quite frequently.
Speaker 6 (39:26):
Yes, absolutely, so this is a very different company, you know,
nowhere near as heavy in the storefront space. And they're
really they're potentially going to be one of the early
adopters that really benefit from AI in using AI to
help them make their business better, be able to get
(39:46):
to customers, you know, in a more effective way, potentially
to reduce costs for themselves. So that has been what's
also moving the stock as well as it's just you know,
performing pretty well this year.
Speaker 2 (39:58):
Yeah, one hundred and forty eight point five percent. Performing
pretty well is an understatement, but you know I'm not editorializing.
Speaker 5 (40:05):
Go ahead, Carol, listen.
Speaker 4 (40:06):
Sixty percent of the float is short. Is there any
reason to take some money off the table? Or how
long have you owned it? And forgive me just about
twenty twenty five seconds, just real quick.
Speaker 6 (40:15):
Sure, so this fun We will own stocks for about
a year. That's our time horizon. We just added this
in September. Okay, you know there's still I think a
lot to play out here, so no, we wouldn't be
getting rid of it anytime soon, all right.
Speaker 4 (40:26):
Always love to talk names with you, Ryan, have a
great Thanksgiving holiday and hopefully we talk to you real
soon again. He is Ryan Kelly, Chief Investment Officer Portfolio
manager at Hennessy Funds.
Speaker 1 (40:38):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
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You can also watch us live every weekday on YouTube
(41:00):
and always on the Bloomberg terminal
Speaker 2 (41:09):
MHM
Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business
Weekdaily reporting from the magazine that helps global leaders stay
ahead with insight on the people, companies, and trends shaping
today's complex economy. Plus global business, finance and tech news
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
Okay, well, let's talk about the big tech trade and
where we go from here with our next guest. J
sees markets remaining unselled with core leaders coming under pressure.
We've got Stor Kaiser with us set of equity trading
strategy over at City. He joins us here in the
Bloomberg Business Week Studio. We're going to talk tech. But
just about two hours and eleven minutes ago, our Bloomberg
News team broke a story about Kevin Hassett of the
(00:52):
National Economic Council White House Economic Council becoming the key
emerging person who could become the next FED share. We
saw markets react, We saw yields on twos and tens
move lower, we saw stocks go higher. What's your reaction
to the possibility of a FED share?
Speaker 3 (01:09):
Has it look I think has has been on sort
of the short list with Kevin Warsh and maybe Rick
Reader and you know, well or maybe for a period
of time now, so you know, not too surprising that
you know, somewhat out of that core group is sort
of being called a favorite. I'd probably tamp the brakes
on exactly knowing what the outcome here is, because you know,
President Trump has has tended to bounce around back and
forth between the various candidates. But I think, look, I
(01:30):
think Warsh, has It, Reader are all considered, you know,
very credible economists, you know, very very deeply understand macro markets.
Speaker 4 (01:37):
It credible.
Speaker 3 (01:38):
Yeah, I think I think hastids up from an economics
perspective on on the credible side of things without a doubt.
And if that's the case, then you know, you're it's
not too big an issue, you know, depending on who
they settle from from that group.
Speaker 4 (01:51):
But would Kevin has It be a good and independent
FED chair? He is certainly seen as somebody who would
bring President Trump's approach to interest rates and cutting specifically
to the FED, which President Trump has long wanted to control.
At least according to those folks who we've been talking
to in all of our reporting, and so maybe that
is why he is coming out as the front runner.
(02:11):
So I guess the question is, is Kevin has to
be independent? Would he lower or raise rates based on
the Fed's mandate and not on the president's preference?
Speaker 5 (02:20):
I mean you have to assume.
Speaker 3 (02:21):
So I mean, remember Trump reported appointed Pal and now
he doesn't consider Pal to be dubbish en off. So
you know, I would say, you know, Supreme Court justices,
FED chairs, I mean, these people are generally pretty pretty
reputable people that respect the value and the independence of
the organization, and you would hope he's going to make
decisions based on the incoming data. Clearly a president is
going to pick a chair that is consistent with their view.
(02:43):
So you know, it wouldn't surprise you that maybe Trump
would settle on someone that that skews a touch more dubvish.
But the fact is that whoever the chair is is
walking into what's basically a split f OMC right now.
That's the WEBC is also filled with twelve other people
who are very reputable economists who are not simply going
to be kind of pushed around. And I think we're
going to respect the data, respect the dual mandate as well,
(03:04):
So it's not as if you're appointing someone that goes
in and just you know, makes the decision right. So again,
I think all the three of the three or four
of the core candidates I think are pretty well respected economists.
They're entering an institution which you would assume they would
you know, respect and support. You know, every chair is
going to have a little bit of a hawkish or
a Dubvish tilt there, maybe a little more focused on
(03:25):
inflation versus a little more focus on focus on the
growth mandate, and that's fine. I don't think that that
is that that's particularly off side or inconsistent with history.
Speaker 6 (03:34):
So yeah, I mean I think any of those core
will be fine.
Speaker 5 (03:37):
Let's talk markets.
Speaker 7 (03:38):
Yeah, let's talk markets.
Speaker 4 (03:39):
I mean we just talked about with our Ian king
about what's going on in terms of Alphabet versus Nvidio,
who wins to not. I mean, Alphabet's been on tear
this year, is too. I mean it's up about seventy
percent year to date. You do see the markets remaining
unsettled with core leaders under pressure. How do you define
unsettled when it comes to markets? What are you looking
at what does this mean maybe over the next six months.
Speaker 3 (04:00):
Yeah, I think unsettled is kind of what we've seen
really for the last month or so, which is for
four kind of key things have changed in our view
that have made the markets a little squish here. The
first is that retail is pulled back considerably, and whether
you believe or don't believe that retail is driving the market,
certainly institutional investors are aware of that shift in supplied demand.
So again that's created a little bit uncertainty AI. The
(04:22):
reaction function of AI has clearly shifted, whether that is
Meta or Palanteer, Oracle or Nvidia, and you can't ignore that.
Speaker 5 (04:30):
The third thing is retail.
Speaker 3 (04:31):
You know, retail earnings were soft and the commentary for
managements was very, very cautious. We just got a pretty
weak retail sales number as well, So regardless of all
the rest of it, people are staying Wait a second,
This US consumer has been the white night of the economy,
and you know, global economy probably for multiple years and
now seems a little bit under pressure. And that will
also be the FED some certainty there, so not all
(04:53):
of those uncertainty a lot. Yeah, and like in and
of themselves. Each one of these might not be, you know,
an issue, but you put them all to together and
they've created some uncertainty. You're also in a tricky time
of the calendar. You have portfolio managers who have portfolio
managers excuse me, you've had a really tough year. If
you're up here to date, you're not going to play
hero ball between now and the end of the year
as well. So I think you've made people a little
(05:14):
more cautious for a lot of reasons. So I think
right now it's hard to have a really really strong
tactical view. You know, if we had to pick one,
we're going to pick higher into your end. We do
think ultimately you get a rate cut and the seasonality
pushes you there, but the risk reward around that is
not nearly what it was a couple months ago.
Speaker 2 (05:29):
What changes your view between now and the year end
where you'd say, actually, we're not thinking higher till the
year end.
Speaker 5 (05:34):
Now?
Speaker 3 (05:34):
Yeah, the data, you know, probably December sixteenth and probably
be the single most important date in the calendar, which
is going to be you know, dual payrolls reports. Our
view is the unemployment rate is if you had to
pick one thing is the single most important thing for
the market. So that's going to be a very important
day before we get there. You know, Black Friday, Cyber
Monday will be important, but the single biggest day is
(05:55):
December sixteenth.
Speaker 2 (05:56):
And to remind everybody that comes six days after we
hear from FETJJ Powell and the entire Federal Reserve, the
FOMC is going at this without the typical data that
it has ahead of a FED decision one.
Speaker 3 (06:07):
Hundred percent of me and you're also getting the inflation
print on the eighteenth. So you could imagine a situation
where the Fed cuts twenty five basis points, tells you
their data dependent in twenty twenty six, and then boom,
you get hit with really weak labor markets the next week,
and vice versa. Somebody like, I'm not saying you know
either or is going to happen. But our view at
this point is the logic behind the rate decision is
(06:27):
as important as whether they cut or not.
Speaker 4 (06:29):
Right.
Speaker 3 (06:29):
If they don't cut, and it's because the labor market
looks solid and the beige books are very positive, that's good.
If they do cut in the market, it's like, wait,
you all look like you might be behind the curve
a little bit because the next week we get week
labor markets less good. So really we are data dependent,
probably meeting before we expect it to be. But if
you're asking what could change my view into year round
(06:50):
and become more bear, should be we get some weak
holiday spending data and then that labor market report is
unfriendly to the markets.
Speaker 4 (06:57):
Yeah, that would certainly do it. And because you'd be
looking at both sides of the mandate right there for
the Fed. Hey, Stu, thank you so much, really appreciate it.
Stu Keiser, head of Equity Trading Strategy over at City.
Speaker 5 (07:08):
Stay with us.
Speaker 2 (07:09):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (07:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five e's during
Listen on Apple Karplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 5 (07:31):
Well since the Lobject Chat GPT, can you believe it
was three years?
Speaker 4 (07:34):
Yeah, I'm like, I feel like GLP one and AI
are like all we've talked about in the last three years.
Speaker 5 (07:41):
I guess there was an election in there too.
Speaker 4 (07:43):
There was, and there's wars and yeah, there's more stuff,
but I'm just saying in terms of investment trends or PCs.
Speaker 5 (07:50):
Did you get chocolate for everybody? Wow? I love these.
Speaker 2 (07:55):
I am not missus Goodbar over here, mister She's hold
enough much of mister Goodbar.
Speaker 7 (08:00):
They're so good.
Speaker 4 (08:01):
It's like a little bit of chocolate and peanuts.
Speaker 5 (08:03):
Okay, Well I'm off I'm off track a little bit.
Speaker 4 (08:06):
Yeah, go to the West coast and they have really good.
Speaker 2 (08:07):
Say they two have good snacks out there. That's where
we find Sarah Fryer. She's Bloomberg News Big Tech team
leader and the author of No Filter, The inside story
of Instagram. She joins us from the Bloomberg San Francisco bureau. So, Sarah,
the new AI software and deals with Google that chip
tie up with Anthropic. We're talking about this because Google
owner Alphabet shares are at more than seventy percent. This year,
(08:30):
the company's on tracted a four trillion dollars market cap
for the first time. It really seems to be firing
on all cylinders, whether we're talking about the cloud business,
the multipurpose llm Gemini three and the new AI software.
Speaker 5 (08:45):
What's going on?
Speaker 8 (08:47):
We have this really big piece even just in the
beginning of this year about how Google was this company
that had failed to really capitalize on its own innovations.
They were the ones that wrote the paper that that
spurred this technology that underpins large language models, which is
like the basis of CHATCHYBT. And when OpenAI launched chat GBT,
(09:10):
Google could have done that months earlier and they didn't,
And so they've really had this reckoning at the company
and haven't really been able to get their momentum until
this year, and we're seeing it happen across all these
dimensions of their business. Gemini is outperforming a lot of
other models, especially when it comes to coding TPUs, the
(09:32):
chips that Google makes internally are really the only alternative
to Nvidia's GPUs. They are transforming the Internet with the
way they've put AI answers in search. They are now
probably most consumers first brush with AI, if they haven't
already downloaded chat gybt. They see those Google AI answers
(09:53):
at the top. So they're becoming the cultural leader in
AI as well. So I think that there are a
lot of really interesting things happening for this company that
have come to fruition this year. The company seems to
be shipping products faster and doing it in a way
that is high quality. You have other companies like Meta,
(10:13):
which seemed to be a leader in the race when
it was first getting started, but have sense lagged behind.
Google's opposite. They're gaining momentum, they are gaining share, and
that is what investors like to see.
Speaker 4 (10:26):
Why is it though, Why does it feel like it
was so under the radar, Like I always feel like
when enduring earning seasons. We've talked about how you know alphabet.
Speaker 6 (10:36):
Google has so many.
Speaker 4 (10:37):
Different platforms, they have data like they can really it
seems like monetized for search. It's where we all go
for search. But it just feels like they've just come
out of nowhere.
Speaker 8 (10:50):
You know, they've come out of nowhere. But don't forget
that they started this. I know intellectually they started this
and then they were unable to capitalize on it. So
a lot of people kind of wrote them off as
like this bureaucratic, uh, you know, stuck in its ways,
big tech company that that really couldn't be expected to
move at the pace of chatchybt of Claude, and and
(11:15):
yet they have been able to do that, and so
the tipping point is sort of happening now where we're
starting to wonder does this mean that corporate customers that
have started to sign these big deals with with Anthropic
and open Ai, are they going to be seeing Google
as a as a better pick because they have this
longer history. It is a little it seems a little
(11:35):
bit safer. So there are all sorts of things that
can happen at this tipping point. Also with TPUs, the
big deal that Anthropic had with TPUs. Right now you
seeing the Information just reported that Meta wants to have
Google's TPUs in its data centers. So a major competitor
accepting Google's innovations to run its products. It is a
(11:58):
it is a big It is a big deal.
Speaker 5 (12:00):
Yeah.
Speaker 2 (12:01):
A big part of the narrative today is, you know,
Nvidia shares after this report from the Information took a hit.
There's still down three point two percent. They were down
as much as seven percent. Alphabet shares higher earlier in
the session. But the question I have for you, and
we don't know what this does to a private company
like open Ai of chat GPT fame because it's a
(12:23):
private company. Does Gemini is Gemini coming for chat GPT.
Speaker 8 (12:30):
Oh yeah, yeah, absolutely. I mean I don't think that.
I don't think that it's coming forward in terms of
like it'll it'll cause it to fade or anything like that.
But I think that the use case the idea of
of you know, I have a question to ask and
I'm going to go ask Ai for that answer. People
are doing that with with Google Search already naturally when
(12:53):
they have questions.
Speaker 7 (12:55):
It's hard to move that behavior all.
Speaker 8 (12:58):
To chat GPT, and Opening Eye has been very successful
at doing that over time. But if Google already has
the ability to answer the questions with as much you know, accuracy, innovation,
et cetera, then then people may not make that switch.
So it's definitely going to be hard for the upstarts
(13:19):
to battle with Google, but it's also going to be
I don't think we should write them off because this
is such a fast moving market, right yeah, still very
early in so it's too early to say, oh, Google's
just going to win it all there. It's still very
much depends on their continuing to execute, continuing to get
products out faster than rivals, and those things changed by
(13:44):
the day.
Speaker 2 (13:45):
But it does seem like there is an incumbency advantage
when it comes to Google and the way that it's
reshaped its own search and BusinessWeek has written a lot
about this, but I to be honest, I haven't played
with it much until recently. So if you do a
traditional Google search, you can, you know, see the AI overview,
which I think answers a lot of people's questions. But
then you can just click, and this is on a desktop,
(14:07):
you can say, dive in deeper with AI and then
it looks Carol like an LM, like exactly like something
like it is. Yeah, yeah, it's pretty remarkable. I mean,
if people are changing their behavior Sarah with search and
going to chat GPT to ask questions, what's to stop
them from just using Google and Google's AI mode If
it's as good as open as chat GPT, well, I think.
Speaker 8 (14:31):
I think there are some who say it's also a
dangerous game because search is Google's big money maker. It
is the place, it is the engine for the entire company.
And as Google directs more people to AI answers, AI
overviews and diving deeper in AI mode, that means traffic
(14:53):
is diverted away from websites and towards AI answers. And
then it can actually cause the entire Internet to crumple
in a way because the people who are creating information
that goes on the Internet don't get to pay their
bills anymore. And we have a really interesting story out
today on that effect with what Else Thanksgiving Recipes, where
(15:14):
these recipe bloggers that have built up a business over
many years telling people how to make their turkey, how
to make their Christmas cakes are not seeing that traffic anymore.
It's going to AI, so they're not too confident about
continuing to do this kind of work. And then you
might end up in a future where AI is just
(15:36):
building its answers off of content that is created by AI,
and then we're in a place where the information may
not be as valuable or accurate.
Speaker 2 (15:45):
Okay, I love this story from your team. By the way,
we're speaking with Sarah Fryer right now. She's Bloomberg News
Big Tech team leader. She's the author of No Filter,
The Inside Story of Instagram. The team her team out
and she edited this story. The story that you're referring to,
the aslock recipes are taking over the Internet and Thanksgiving dinner.
I mean, I think we've all been there in recent
years where we've noticed that if you're looking up a
(16:07):
recipe online and going too the actual website, you have
to basically read some sort of like novel or memoir.
Speaker 5 (16:14):
As Carol also fault.
Speaker 8 (16:15):
By the way, that was for search engine optimization, that
people would write their entire life story before posting a
recipe because Google was more likely to index pages that
had longer text content, which was so we can also
blame Google for that.
Speaker 2 (16:30):
But yes, so now, I mean what people are doing
is they're like just doing like, show me a slow
cooker recipe for a butternut squash soup, you know, and
chat GPT just comes up with it and you don't
have to read anything about the life story, right, And
that's an issue.
Speaker 5 (16:43):
Where does that information comes from?
Speaker 7 (16:44):
An issue?
Speaker 8 (16:45):
It's an issue. But it's also like maybe they're going
to tell you to put like horse radish in your
butteret squash soup, you know, make it, mix it up,
make it a little weird. Because what the AI is
usually doing, it could be good, but what AI is
usually doing is is cribbing from multiple websites at once,
creating what these AI recipe bloggers call Frankenstein recipes that
(17:10):
may not actually work. And one of the creators told
us that Google mixed up one of her cake recipes
and told people to cook this six inch cake for
three to four hours so you'd get you'd get charcoal, right.
Another food blogger told us AI was having people put
sauce onto Molly's while the husks are still on. You
(17:31):
don't want to eat those husks. You're wasting a lot
of sauce by doing that. So so the AI is is,
you know, presenting these these great images to novice cooks, saying,
look at your beautiful future results with this recipe, but
the recipe doesn't actually create that glossy image, and and
people are are getting led astray, so beware before you
(17:52):
make your Thanksgiving cooking plans.
Speaker 5 (17:54):
Yeah, it's My wife gives me such a hard time.
She's like, I feel like you're at it all the time. Right. Well,
she's like she's like, recipe are you using?
Speaker 2 (18:01):
And I'm like uh, And she's like, do not use
chat GPT. She's like, we have a subscription to the
New York Times, you know, cocaine and everything, and it's
like it's great.
Speaker 4 (18:12):
Well, you know, I just went into Google and I
was like what's the best recipe for pecan pecan pie?
Because it's like my favorite and it actually came up
with and then I said take out corn syrup because
I don't want to use corn syrup, and it came
up with the recipe I think from the New York Times,
which I.
Speaker 7 (18:25):
Really like to use.
Speaker 5 (18:25):
Does it link to it?
Speaker 7 (18:27):
That's a good question.
Speaker 4 (18:28):
I have to see if it's linking to it. Hey,
thirty seconds. Does Google alphabet that have an advantage, Sarah,
because we're all on Google searching.
Speaker 6 (18:37):
They have so much.
Speaker 4 (18:39):
Data on their platform and years, Yes.
Speaker 7 (18:42):
I mean they have.
Speaker 8 (18:43):
They have this history of indexing the entire web, and
we have this history of going to Google for anything
we want to know. So if you're in this this
economy that's going to be driven by people getting answers
on their questions faster, Google's a really great place to start.
And they're starting to really take over in other aspects
(19:05):
of the market that we didn't expect as it would
necessarily be successes like TPUs.
Speaker 4 (19:10):
All right, good stuff, and note to everybody, do not
Google recipes for Thanksgiving.
Speaker 5 (19:14):
She just got the TPU, the tent processing unit in.
Speaker 4 (19:17):
There at the end, Sarah Fire Bloomberg News Big Tech
team Leader.
Speaker 7 (19:20):
This is Bloomberg.
Speaker 5 (19:22):
Stay with us.
Speaker 2 (19:23):
More from Bloomberg Business Week Daily coming up after this.
Speaker 1 (19:30):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
US Live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch US Live on YouTube.
Speaker 4 (19:44):
Well, the White House signaled optimism around efforts to negotiate
a peace deal excuse me, between Ukraine and Russia, while
warning that additional negotiations to address remaining sticking points would
be necessary, despite reports earlier suggesting tim a deal was
a foot.
Speaker 2 (19:58):
With an update on this and more, Back with with us.
As Jennifer Welch, geoeconomics analyst at Bloomberg Economics, She joins
us from the Bloomberg Washington DC Bureau. Jenny Bloomberg Economics
out with a new report. It notes that the US
Ukraine policy whiplash is benefiting Moscow.
Speaker 5 (20:12):
What do we know?
Speaker 9 (20:14):
So it's been quite the roller coaster for the last
few days. What emerged last week was a plan that
seemed to be negotiated between the US and Russia, largely
favorable to Moscow. In terms of, for example, capping Ukraine's
military ensuring that it would never be a part of
NATO in return for pretty ambiguous security guarantees. Since then,
there's been a scramble by Ukraine and it's European partners
(20:37):
to engage Washington and try and alter those terms, and
now looks like at least nine of the points from
that original twenty eight point piece plan have been adjusted
or removed, including some of the ones that Ukraine felt
across its redlines. And weird things stand is finalizing those
terms and then pitching them back to Moscow. But our
assessment is that Russia is unlikely to receive in a
(21:00):
positive way those altered terms based on how things have
gone earlier this year in prior rounds of negotiations.
Speaker 4 (21:06):
Wait, so you know what, I keep thinking, who's calling
the shots of a possible truth?
Speaker 7 (21:10):
Is it us? Is it you're a visit Ukraine? Or
is it.
Speaker 4 (21:14):
President Putin of Russia or maybe a little bit of
all of them?
Speaker 9 (21:19):
Or who even in Washington is involved in this? It
seemed last week when this plan first emerged, that some
members of the President Trump's own administration weren't even entirely
sure where this peace plan came from, and whether it
had been fully coordinated and agreed to by the US side,
But then it quickly moved from that to the US
setting and ultimadium on Ukraine to agree to it, and
now we're renegotiating the terms of it. So it's been
(21:42):
a lot of twists and turns here. But this isn't
an entirely news story. This is something we've seen earlier
this year. If you think back to August when President
Trump met with President Putin and then immediately rushed into
a summit with Ukraine and European allies. This feels very
much like a familiar pattern and one I think is
likely to produce the same outcome, which is no peace plan.
Speaker 2 (22:02):
Well, okay, so on that European allies a sort of
another group here that we need to focus on.
Speaker 5 (22:08):
What do they want?
Speaker 9 (22:09):
I think European allies are primarily concerned about first making
sure that this deal isn't so heavily weighted in Moscow's
favor that, for example, it doesn't end up preserving peace
for the long haul, that for example, it leaves Ukraine
in a weakened position that could allow Moscow to just
reconstitute its forces and reattack that not only has implications
for Ukraine's security, but ultimately for Europe's, So that's going
(22:32):
to be a major area of concern. The second major
area of concern is one of the elements of that
original peace plan was around the frozen Russian assets and
how they would be leveraged, and in particular how they
might be leveraged to essentially pay the US back for
security commitments to Ukraine. That's something that Europeans have a
stake in as well, and they would want to have
a say in how those frozen assets are used, particularly
(22:54):
as they're debating internally whether or not to use them
to support Ukraine in the short to near term.
Speaker 4 (23:00):
I want to move on to US to China. But
one last question, is there still a feeling here in
the United States and obviously elsewhere in Europe. I think
Europe is a safe yes, but here in the US
that if this is a much more favorable agreement to
President putin that he may in another few years you
(23:22):
create another war and go after another land reb I
just wonder how much of that fear is still out there.
Speaker 9 (23:28):
I think that's certainly a concern among foreign policy analysts,
especially having watched Putin play this playbook before we saw
with Krainia back in twenty fourteen, he played out the
peace process, he drew out negotiations and pretended to be
genuinely interested in peace, and then he essentially snagged and
pocketed the results of that peace process, reconstituted his forces
(23:49):
and launched a full scale assault on Ukraine just years later.
And I think certainly leaders in Europe and Ukraine, but
also in the United States many are concerned about the
possibility of that happening again.
Speaker 2 (23:59):
So if just thinking about possible endings for this, as
we do get close to the fourth year of this conflict,
what would an end look like that Russia would be
okay with in Ukraine and Europe would be okay with.
Speaker 9 (24:13):
It's hard to see at this point a potential compromise
position because Moscow seems to be betting on more battlefield
gains and essentially seeing that time is on its side,
it really doesn't have an incentive to negotiate for peace
because it thinks it can just continue.
Speaker 7 (24:26):
To win territory. The West is support for.
Speaker 9 (24:28):
Ukraine will continue to dip, Ukraine will continue to have
some of the internal issues we're seeing like with corruption
scandals and losing political domestic unity, and it will just
have to bide its time and continue to push for
the offensive. I think what could change Moscow's calculus is
stricter Western sanctions that brings some of its economic troubles
more the forefront. That might pruss it into a position
(24:50):
where it realizes it's not a war that it can
continue to afford.
Speaker 2 (24:53):
And just to clarify, we're in the fourth year. It'll
be four full years of this war in February.
Speaker 4 (24:58):
Yeah, I mean, it's just even hard to believe that
that's where we are. Hey, I want to just quickly
one question to you on US China. President Trump. We
know held back to back calls with the leaders of
China and Japan. We've seen escalating tensions over Taiwan, threatening
to derail his week's old trade truce with Beijing. It
always feels so fragile that relationship US and China always complicated.
(25:20):
Will a US China truce last?
Speaker 7 (25:24):
I think my prediction is for the short ten year term.
Speaker 9 (25:27):
Again, with President Trump, you kind of always have to
have an asters because you don't really know exactly what
he's going to do. But my prediction is, at the moment, yes,
I think it will last. I think the Trump administration
is very focused on maintaining it. I think the calls
that we saw yesterday were more about an effort to
manage this China Japan feud and avoid drawing the United
States into it and avoid it upsetting that existing truth.
(25:48):
I think the questions that we have for the longer
durability of that plan are things that are, for example,
outside the scope of that truce. Actions by Congress that
Beijing could see is violating the spirit, if not the
least of the truth. Actions that the US might take
as sort of its normal expert control policy updates that
might violate it. So there are definitely a lot of
potential speed bumps in the future for this truth. But
(26:10):
at the moment, Washington seems very focused on maintaining it
and keeping it in place.
Speaker 4 (26:15):
All right, good to leave it there, Hey, gent, thank
you so much. Jenny Welch, She's chief geoeconomics analyst at
Bloomberger Economics. All right, geopolitics, relationships among allies and friends
between enemies. I mean, this makes me think about cybersecurity
and national security issues.
Speaker 2 (26:30):
Well, the recent Bloomberg opinion piece by the editors wrote,
America's enemies are growing bolder and more sophisticated in cyberspace, Carol.
To fend them off, the government must stop unilaterally disarming,
all right, So.
Speaker 4 (26:42):
We want to get into the state of readiness when
it comes to cyber threats. Keep in mind that we've
had two recent reports underscoring some of the danger that's
out there. Mid October, Seattle based cybersecurity firm F five
acknowledge a catastrophic breach of its systems which may have
allowed Chinese hackers to penetrate networks used by federal agencies
and Fortune five hundred companies. There's, of course, other stuff
that has happened as well. Back with us is Jennifer Ubank.
(27:04):
She's founder of Adaman Strategic Advisors. She advises companies and
clients on cyber resilience, digital transformation, geopolitical risk. She is
a former CIA Deputy for Digital Innovation. She joins us
from Virginia. Jennifer, good to have you back with us
when it comes to the most urgent national security tech issues.
And I want to go with China right now.
Speaker 5 (27:26):
Is it threats from China? Is it threats from Russia.
I mean, like, what is.
Speaker 4 (27:30):
It in terms of the United States.
Speaker 10 (27:34):
Great to be back with you, Carol, Tim, thank you.
If we're talking about cyberspace, it's really about the People's
Republic of China. Of course, Russia remains a very active
actor in cyberspace. We can see that in Ukraine, we
can see that regionally and occasionally here in the US.
But in terms of sophistication, scale and ambition, it's really
all about China right now.
Speaker 2 (27:53):
How sophisticated has China gotten?
Speaker 7 (27:56):
Oh? Incredibly so.
Speaker 10 (27:58):
You may have seen a report came out recently from
Anthropic where they documented the first essentially AI powered cyber
campaign from inception to expiltrating data that was almost exclusively
conducted by AI agents. The agents would timpally come back
occasionally and ask the operator is this what you want?
Speaker 7 (28:19):
Or would you like this instead? Do you like that?
Speaker 10 (28:22):
And eighty ninety percent was automated and that came out
of China and state sponsored actors.
Speaker 5 (28:27):
I don't love this, Carol, Okay, no, I wouldn't you know.
Speaker 2 (28:31):
It's not like the people who are doing the infiltrating
have to be only so smart, right and you only
have to outsmart them. Now we have to outsmart the machines.
Speaker 7 (28:39):
God, that's terrifying.
Speaker 5 (28:41):
Don't love this?
Speaker 3 (28:42):
Yeah?
Speaker 5 (28:42):
How do we keep?
Speaker 3 (28:43):
Get it?
Speaker 8 (28:43):
Wait?
Speaker 7 (28:43):
Go ahead?
Speaker 10 (28:45):
Oh no, I'm just going to say. It really does
signal a major shift, right. We all knew this was coming.
At least those of us in cyber realm knew that
this was coming. When you see the confluence of AI
and cyber you knew we'd be facing this. And so
really we have to be an position where machines could
start fighting and defending against machines. There's a certain risk
(29:05):
in that as well, because you know, machines are not humans.
They don't exercise our judgment. All sorts of things can
can maybe go awry. But as a start, we're just
going to have to be bringing more AI into our
cyber defenses if we are going to actually harden our
perimeters and protect our data.
Speaker 4 (29:23):
Yeah, aase, Well, I was just thinking about President Trump
signing that executive order yesterday, Genesis Mission. It's a federal
effort to boost innovation using AI, and so it's all
about promoting a technology and its adoption. As more AI
is incorporated into the US government, all governments, I mean,
does that just increase the cyber risks, or does AI
(29:44):
also help us fight these risks.
Speaker 7 (29:47):
It's both. It's like any new technology, it's both shield
and sword. It's both.
Speaker 10 (29:51):
And yesterday's announcement is actually pretty pretty exciting in a
way because it's it represents a moment where you know,
the administration is trying to, let's say, big on AI's
ability to help us discover new breakthroughs in all sorts
of very scientific fields, not specifically about cybersecurity, but about
(30:11):
quantum and biotech and space and lots of other things.
And so one of the issues, and I'll tie that
back to cybersecurity, one of the things that people are
going to be watching with that effort.
Speaker 7 (30:23):
Is how do we protect the data?
Speaker 10 (30:25):
Because this is going to be a tremendously attractive target
for addressaries. If you're talking about bringing together our national labs,
supercomputing capabilities, sensitive federal data sets on science, and then
the America's leading technology companies, that's going to be right
in the crosshairs of our adversaries targeting.
Speaker 5 (30:44):
So then what is the right way just very briefly,
do protect this data?
Speaker 10 (30:48):
Oh well, I think you know they're going to have
to be locking down in every possible way they can,
and kind of the chapter and verse on that will
have to be worked out because this is all still
information at the moment, and I think people are going
to be watching to see how the Department of Energy
implements this intention, this order, if you will, So a
(31:08):
lot to be determined right now.
Speaker 4 (31:10):
I'm just gonna plug everything throughout my phone.
Speaker 7 (31:12):
How's that is that? Okay? Does that enough?
Speaker 5 (31:15):
Or that's not enough?
Speaker 8 (31:17):
Uh?
Speaker 7 (31:17):
Okay?
Speaker 10 (31:17):
One realtrow tip. Put multi factor authentication on any account
that will allow it, and that will stop virtually all
a nefarious activity.
Speaker 5 (31:27):
And you need your phone for that, Carol, sorry to.
Speaker 7 (31:29):
Tell you, I do.
Speaker 10 (31:30):
I do.
Speaker 5 (31:30):
Throw it away.
Speaker 4 (31:31):
Jennifer you Bank always good to catch up, founder of Adaman,
Strategic Advisor's former CIA Deputy for Digital Innovation.
Speaker 2 (31:38):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (31:47):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five these during
this listen on Applecarplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 7 (32:04):
Baby jo here, let's.
Speaker 6 (32:07):
Get the.
Speaker 1 (32:10):
Well dry. Do I look like I drive?
Speaker 10 (32:14):
A Mini vash.
Speaker 3 (32:15):
Shut up and go drive angry, Go drive angry.
Speaker 5 (32:26):
I'll drive jo.
Speaker 7 (32:28):
This is the drive to the clothes.
Speaker 6 (32:30):
If you had access to a car like this, would
you take it back right away?
Speaker 4 (32:33):
On Bloomberg Radio, All right, everybody, we are just about
eighteen minutes away from the closing bell on this Tuesday,
Carol Master, Tim Steneveek live in our Bloomberg Interactive Broker studio.
Speaker 7 (32:45):
Just looking at the trade.
Speaker 4 (32:46):
I mean, we are pretty much at our highs of
the session when it comes to the equity trade. We
just heard from Amy Morrison, Bill Maloney, and I'm looking
at most about eight of the major eight of the
eleven major industry groups, the S and P five hundred
are higher today. One is unchanged, Information tech is flat unchanged.
Healthcare is at the top two point two percent to
(33:08):
the upside. Consumer Discretionary AP nearly two percent. That might
be because of some of those retail names. Consumer staples
also doing well one and a half percent. At the
bottom of the pack, you've got utilities and energy both
down about four tens an percent.
Speaker 5 (33:21):
How about those small caps. I know you keep looking
at those.
Speaker 4 (33:23):
Yeah, you're getting ready for Romain because he loves that small.
Speaker 5 (33:26):
Does he like small cops? It does?
Speaker 2 (33:28):
Okay, Well, they're up two point three percent. It's the
biggest gain in a single day for the RUSS two thousand,
going all the way back to Friday when the RUSS
two thousand was up two point role.
Speaker 4 (33:39):
Please, no, no needed.
Speaker 2 (33:41):
Let's se what Ryan Kelly has to say about this.
He's chief investment Officer and portfolio manager at Hennessey Funds.
He joins us from Chapel Hill, North Carolina. We did
see a real shift in the trade. I think conviction
is fair to say. After we after our colleagues at
Bloomberg News reported that Kevin Hassett is the front runner
(34:03):
for the new FED chair to be new FED chair
picked by President Trump. I'm just curious about how you
view a development such as that. Look, we should note
that the President has not made a final decision, and
the Treasure Secretary did say that a decision could happen
by Christmas, so about a month away at this point.
How do you view a name like him?
Speaker 6 (34:21):
Ryan, Well, thanks again for having me on with you guys.
Good to see you. Yeah, you know, big development today.
Obviously there's been different names being thrown around for the
next FED president. This is somewhat expected. His name, Kevin
was already in sort of the front running for this,
(34:42):
but he really is. He does sort of promote a
lot of you know, what the president would like as
far as interest rates, namely having them go lower faster.
So I think that this is obviously going to be,
at least for a stock market, a pretty pret positive development.
And we saw that change you know mid day to day.
Speaker 4 (35:03):
Is that because you assume that he is going to
be pushing for more rate cuts, even if policy or
even if mandates, be it in the labor market or
for inflation, tell him otherwise or no? Do you assume
that he will be like other FED chairs if indeed
he gets that position, that he will look at the
data do what's best for US monetary policy.
Speaker 6 (35:25):
Well, really, that's that's probably you know, the biggest question
out there, and it's a great question, you know, how
will he actually push the FED once he's if he
ends up being the FED president? You know, so much
of this current FED and what we've had for the
last few years has been very data dependent. It looked
like we weren't going to have potentially a rate cut
(35:47):
this coming December. You know, it's just a couple of
weeks away. That has changed pretty dramatically. It looks like
probabilities are up in the seventy or eighty percent that
that's going to happen when we start to see some
of this data coming out. So you know, well, will
a new president of a FED working you differently? I
(36:07):
would suspect data is still going to be very important.
It has to be. It has to drive that, but
there's always some influence as well, and you could see
that potentially coming to play as well.
Speaker 4 (36:17):
Hey, Ryan, I want to talk about your universe, the
mid caps. You're a mid cap Hennessy Cornerstone, cornerstone, excuse me,
MidCap thirty fun which you're to dates down about one
and a quarter percent, putting it at least according to
Bloomber data, in the sixteenth percentile against your peers go
back five years and on average annually you've returned almost
nineteen percent, putting it in the ninety ninth percentile. Is
(36:41):
it hard being a MidCap investor right now?
Speaker 6 (36:45):
It is? And it's funny you just mentioned small caps
doing very well today. Small caps have definitely outperformed. When
we start to hear more about potentials for rate cuts
coming off some of the bottoms near you know, the
beginning of the summer till you know, now they performed
a lot better than mid caps. It is a tougher space.
(37:09):
You know, evaluations are much cheaper in the mid cap space.
These are companies that are that are for many reasons,
we really like them. They're big enough to have a
good track record, They're big enough to you know, still
be able to grow organically and yet also be attractive
to larger buyers to actually move the needle, and then
(37:30):
they can also acquire as well. And we have seen
a lot more M and A in the space this year.
But yeah, as far as this fund goes, this year
is is not as relatively a good performance that we've had.
But the five year numbers kind of speak for themselves,
and that's that we are patient. We will have some
years that we're sort of out of favor and our
protect protectial style just doesn't work as well. But that
(37:52):
five year number, which is you know, we're pretty proud of.
The great thing about it is we got there without
any AI, without any you know, mag seven, without any
large cap tech and actually, you know, I just we
like to tell investors that you can make money outside
of just the mag seven.
Speaker 4 (38:10):
Well, let's talk about it, because you know, retail is
certainly front and center right now because they've all been
reporting earnings. Macy's it's a big week, right We've got
the Macy's Thanksgiving Day parade, You've got Black Friday. That's
a big deal for them certainly, and as it is
for other retailers. They do report earnings next week. Stock
is up almost thirty percent year to date. That's a
(38:30):
big holding for you, and you continue to hold it.
Speaker 6 (38:34):
Yes, absolutely, we do have traditionally on this fund, we
do have a lot of industrials and consumer discretionary type companies.
We do have a lot of the traditionally you know,
sort of your your mainstay brick and mortar type retail stores.
Macy's has done well, It's done well for us since
(38:55):
it's actually a new purchase since September. I think it's
up about twenty five percent since that time. And you
know they always, not always, but a lot of times
going into a holiday season, you see a lot of
these retail even the traditional ones, really move as we
start to get more data coming out for Black Friday,
for cyber Monday, So we'll be keeping an eye on
(39:16):
that on that for sure. We also own Wayfair for us.
Speaker 5 (39:19):
Yeah, it's just going to bring that up.
Speaker 6 (39:21):
Yeah, that's a very different company.
Speaker 5 (39:23):
See also quite frequently.
Speaker 6 (39:26):
Yes, absolutely, so this is a very different company, you know,
nowhere near as heavy in the storefront space. And they're
really they're potentially going to be one of the early
adopters that really benefit from AI in using AI to
help them make their business better, be able to get
(39:46):
to customers, you know, in a more effective way, potentially
to reduce costs for themselves. So that has been what's
also moving the stock as well as it's just you know,
performing pretty well this year.
Speaker 2 (39:58):
Yeah, one hundred and forty eight point five percent. Performing
pretty well is an understatement, but you know I'm not editorializing.
Speaker 5 (40:05):
Go ahead, Carol, listen.
Speaker 4 (40:06):
Sixty percent of the float is short. Is there any
reason to take some money off the table? Or how
long have you owned it? And forgive me just about
twenty twenty five seconds, just real quick.
Speaker 6 (40:15):
Sure, so this fun We will own stocks for about
a year. That's our time horizon. We just added this
in September. Okay, you know there's still I think a
lot to play out here, so no, we wouldn't be
getting rid of it anytime soon, all right.
Speaker 4 (40:26):
Always love to talk names with you, Ryan, have a
great Thanksgiving holiday and hopefully we talk to you real
soon again. He is Ryan Kelly, Chief Investment Officer Portfolio
manager at Hennessy Funds.
Speaker 1 (40:38):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live weekday
afternoons from two to five pm Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business App.
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(41:00):
and always on the Bloomberg terminal
Speaker 2 (41:09):
MHM
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