June 25, 2025 • 28 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyJune 25th, 2025
Featuring:
1) Brian Levitt, Global Market Strategist at Invesco, joins to discuss his outlook for equities and the economy in the second half of 2025. Fed Chair Jay Powell told lawmakers that if inflation pressures remain contained, the Fed will cut rates sooner rather than later, but didn't point to a particular meeting, and markets are telling Powell that he will be lowering rates more quickly than he portrayed.
2) Fred Neuman, Chief Asia Economist at HSBC, joins for a discussion on how an oil spike could lead to an inflation spike, and why the Israel-Iran conflict's impact on oil is crucial to China and Asian economies. It comes as President Trump announced on social media that China can continue to purchase oil from Iran, potentially undermining years of US sanctions on Iran. The announcement surprised oil traders and officials in Trump's own government, and it is unclear how the US Treasury and State Department will interpret and enforce related sanctions.
3) Ali Vaez, Iran Project Director of the Crisis Group's Iran Project, joins to discuss the conflicting views about the whether the US destroyed Iran's nuclear capabilities and whether there is any room for diplomacy in the Israel-Iran conflict. President Trump disputed an intelligence report that found the airstrikes he ordered on Iran had only a limited impact on its nuclear program. The ceasefire between Israel and Iran remains fragile, with a focus on nuclear diplomacy and assessments of how much damage was done to Iran's nuclear program.
4) Alicia Levine, Head of Investment Strategy and Equities at BNY, joins to talk about volatility in equities and offers her S&P target. Traders are shifting their focus to the US economy and how trade risks and fiscal pressures could affect corporate earnings and growth, with a fragile ceasefire between Israel and Iran appearing to hold.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
It has been too long. Brian Levitt joins us right
now with Invesco with a really interesting and holistic view
of tying it together to have confidence to invest. Parktrin
from the University of Michigan. Can you write a midyear
review right now? June thirty becons, July onet becons. Is
it possible to do an Invesco midyear review? Yeah?
Speaker 3 (00:49):
I would say the midyear review is set up for
the economy was good. We got policy on certainty. Policy
uncertainty got worse than it was expected, led to some
recession fee, and then policymakers generally backing off at least
pauses with regards to tariff's federal reserve, perhaps sounding maybe
(01:09):
a little bit more dubbish. And so the market is
now set up for expectation of incrementally continued improvements with
regards to policy.
Speaker 4 (01:20):
How about the federal reserve?
Speaker 5 (01:21):
What kind of policies should we expect from the Federal
Reserve here today? It feels like the economic data that
they rely upon suggest that maybe they kind of sit
on their hands a little bit here.
Speaker 2 (01:32):
Yeah, they may sit on their hands.
Speaker 3 (01:33):
I think ultimately we're going to see rate cuts, and
so the market, whether that comes in a month or
six months, the market believes that interest rates on the
short end are going lower, and I suspect that's ray.
I mean, we all know the Feds in a little
bit of a bind because growth is likely to slow,
prices are likely to rise as the tariff's effect starts
(01:54):
to hit. But if you look at leading indicators for
the employment market and for the inflation story, you've got
jobless claims ticking up a bit, You've got inflation expectations
very stable in the bond market, and so the Fed
is likely to the air on the side of easing.
Speaker 2 (02:13):
What I really this is really important question, folks. Everybody
out there go to cash and market timing and that
what is the Levitt prescription to get back in the market.
When you know you blew it, you feel terrible, you're
not telling your spouse, loved one what really happened. You've
(02:33):
missed the boat to a record NASDAC high. How do
you get back in the game.
Speaker 3 (02:38):
Yeah, it's always a challenge. If you look historically, I
mean people will talk about dollar cost averaging, or people
will talk about, you know, slowly moving back into these markets.
Historically you're better off. Even if you're investing at the
market high, you're still better off historically than sitting in
cash or or even dollar cost averaging. So I would
(02:59):
advise and investors to be in these markets. What you
can do rather than have it tom be all or nothing,
I'm in or I'm out, and you can focus if
you're concerned, you focus more on quality. You focus more
on businesses that are able to withstand some of the
challenges that we're dealing with, which is really why Nasdaq
is back leading again. Could we see an environment where
(03:21):
market's broaden out, where you want to be more small cap,
more value, All that sure probably requires some easing and
a pickup an economic activity.
Speaker 5 (03:30):
So Brian, if the Fed's going to cut maybe once,
maybe twice this year, that's about it. So it feels
like if the market's going to move higher, earning is
are going to come to.
Speaker 4 (03:39):
The forefront yet again.
Speaker 5 (03:41):
Yet I think most investors feel like there might be
some earnings risk out there. How do you think about
the earnings outlook here?
Speaker 3 (03:46):
Yeah, there is some earnings risk with regards to what
we're grappling with with tariffs. I mean everybody's talking about will.
Speaker 4 (03:55):
We see some price shocks?
Speaker 3 (03:56):
Will the consumer feel it? I think we sort of
hope so, because if not, that these businesses are absorbing
all of it, which will be a hit to profitability.
But look, it's still a good backdrop. I mean, if
you think of the nominal growth environment, you're you're looking
at you somewhere around four four and a half percent.
Speaker 2 (04:11):
So that's the mist call of the first six months.
Speaker 3 (04:15):
Is nominal GDP nominal GDP state substinate. I mean that's
why I say the set of coming into the year
was good. The economy was resilient, inflation was stable, and
inflation was stable at the upper end of the Fed's
comfort zone. We hadn't seen that in years. That's a
good nominal growth backdrop for corporate profitability. Policy can shift that,
and that's why you had a twenty percent decline following
(04:39):
going into and following Liberation Day. I think the reality
with regards to tariffs, is that consumers and businesses can
make changes, we can adjust. We're really just looking for clarity.
Speaker 5 (04:50):
Brian, talk to just about is there anything that screens
well for you guys sector wise, factor wise?
Speaker 4 (04:56):
Were you guys having your conversations these days?
Speaker 3 (04:58):
Yeah, I would, I would say on the fact their side,
it's still a quality story. So we're still in an
environment where leading indicators are pointing lower, and typically when
the leading indicators are pointing lower, you're waiting for the
policy response, and so right now it's a it's more
of a quality environment. I think we'll get back to
(05:18):
more of a recovery feel where we get policy response
and leading indicators pick up, but that that may take
a bit. On the income side. I still like credit
thirty seconds. We didn't have you any of your talk markets.
Danny Wolf of Michigan. Is he the real deal?
Speaker 2 (05:34):
Sure? In the draft tonight.
Speaker 3 (05:35):
I think he's the real deal. You can never go
wrong having seven footers, right, you know.
Speaker 2 (05:42):
How tall is the guy from Duke six short? Okay,
Brian Levi, thank you so much. Thank you with the investo.
Speaker 1 (05:55):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from se into ten AMI's Durn. Listen on Apple,
Karplay and Android Otto with the Bloomberg Business up, or
watch us live on YouTube.
Speaker 2 (06:07):
This is a joy in our studios in New York.
Is someone definitive in Hong Kong. He's never gotten over
the redo of the Mandarin mbar where they ruined the
top of the Mandarin Hotel in Hong Kong. Frederick Newman
is Chief Asia Economists at HSBC with wonderful Johns Hopkins Academics.
I'm gonna steal from Paul here. You walked in the
studio and Paul said, is Hong Kong changed? What is
(06:30):
the state of Hong Kong today?
Speaker 6 (06:32):
So the economy is still a bit soft. We have
very high interest rates. We got us interest rates chauness.
Economy is not doing that well at the moment. But
there is a real buzz there because we have equity
markets coming alive, and we had about five years of
down markets and the kind of the heart.
Speaker 2 (06:50):
Of the city's equities.
Speaker 6 (06:51):
You see cab drivers with their four phones playing, you know,
equities all day long. And so if you get the
market come up, you got ipo pine. I'm being full again,
that really adds a bit of a buzz. So it
does feel really there's optimism coming back into the Hong
Kong Financial Center.
Speaker 5 (07:07):
How does this world of trade, tariff's, trade policy uncertainty,
how's that impacting Asia Pacific region.
Speaker 6 (07:15):
Well, it's a huge headache, right that the region was
built on exports and a lot of exports to the US,
and so there's a lot of apprehension. And it's not
just the exports we worry about. It is also the
cap X that's associated with it, right, and so that's
the worry. But on the other hand, if you look
at China, for example, owned China's exports to the United
States are only two point five percent of China's economy.
(07:37):
It's not the end of the world.
Speaker 2 (07:39):
And that slows down again, it's so important.
Speaker 6 (07:42):
China's exports to the United States are only two point
five percent of China's economy. Now many people intuitively would
say it's a much larger share, but actually, if you
add direct and indirect exports, about two and a half percent,
maybe three if you not everything is statistically captured, but
it's not more than a three percent.
Speaker 2 (08:01):
I'll give you a statistic. Paul one hundred and twelve
percent of Americans don't know what.
Speaker 5 (08:05):
For exactly said, So, how are you guys thinking about
China here in the short term and also that maybe
intermediate two to three year term.
Speaker 6 (08:15):
So look, even if only two point five percent of
your experts go to the US, if you're not fifty
percent of that off, that takes a percentage point off
your GDP. That hurts in the short run, right, no
doubt about it. But there's about two and a half
percent of GDP fiscal stimulus in the pipeline this year,
and you see a bit of that getting traction. So,
for example, the past couple of months, you see retail
(08:37):
sales suddenly accelerating. You see at the companies we speak
with are actually saying sales are picking up, and so
there's a bit more stabilization coming through on the domestic side.
Speaker 4 (08:48):
Actually ex China here.
Speaker 5 (08:52):
You know, everybody here in the US, we've become a
lot smarter about tariffs and kind of where our goods
come from. And we've learned really since that pandemic that
a lot of stuff is coming from Vietnam, from Malaysia.
Speaker 4 (09:03):
Other parts of Asia.
Speaker 3 (09:05):
Here.
Speaker 4 (09:05):
Talk to us, ex China, how is Asia doing.
Speaker 6 (09:08):
So big a problem for the other countries. So if
you take Vietnam, for example, eleven percent of Vietnam's depend
in the Vietnam Cup depends on American shoppers compared to
two point five percent in China, So Vietnam is potentially
much more disruption. Soda is Thailand, sodaes, Korea, sodas Malaysia,
and so these countries worry a lot about the tariff
(09:29):
deadlines coming up.
Speaker 2 (09:30):
Frederick Newman with this, will they just see their chief
economists their voice of Asia this morning. The zeitgeist, I'm
sure when you're on the plane here, is that the
tariff pain is being swallowed by Asian manufacturers, particularly Japanese
car exports and such. They're eating that large new tariff.
(09:51):
Do you buy it? And will that sustain.
Speaker 6 (09:54):
Only to some extent? Because the Japanese yennas depreciated a
lot over recent years, right, it seems like they're swallowing it,
but really only back to twenty twenty one levels in
terms of your profit margins. Perhaps, so I don't think
necessarily it's that big a burden for Asia to carry
in other areas. Actually, Asia will pass on these costs
(10:14):
because China is the single producer of many, many critical items.
There's nobody else who can tell you certain medical sort
of pharmaceutical ingredients. For example, vitamins right can mostly out
of China these days.
Speaker 5 (10:27):
How do other I'm just I'm looking at your research
report because it's got a table of your forecast for HSBC.
In the countries I don't think about as often as
I do, maybe European, Malaysia, Philippines, Singapore, Indonesia. How did
those countries interact with China?
Speaker 6 (10:44):
Likely they're in some ways on trade caught to an
I rock and hard place. China for them, in many
ways is a larger market than the US, yes, right,
And so when the US is we don't want your
good or we're going to put terrius on you, then
they turned to China. And and so it's in some
ways if we push these countries too much, essentially it
(11:04):
drives them, probably economically more into the Chinese orbit. Now
they also face Chinese competition, so it's really tough for
them to find the right path.
Speaker 2 (11:14):
And look at your work, Fred Newman at HSBC and folks,
it is the Hong Kong and Shanghai Banking Corporation with
a heritage that truly goes back centuries. The only equivalent
was John Anderson years ago at UBS. And the basic
idea here is our misunderstanding of what's going on in China.
And the heart of the matter to me is we
(11:35):
have a president who thinks it's deal making or unilateral
or bilateral discussions. But it's truly a multilateral Asia, isn't it.
I mean, that's the great misconception in America.
Speaker 6 (11:48):
It is a multilateral Asia. The supply chains are completely
interconnected across the region. Most of the goods coming from
Vietnam have a very significant component to Chinese share in them,
so from Malaysia. China is a dominant Asian producer and
it kind of it's interweaved with all the other economy.
Speaker 2 (12:08):
So, you know, we're weaned on Japan as the foundation
capitalist society of Asia. Are they still? Is Japan still
the dominant provider of finance?
Speaker 6 (12:19):
No, no longer. It is an important finance provider, but
China exports twice as much capital than Japan does, so
in terms of financing the world economy, it's now China
that stepped in in.
Speaker 2 (12:34):
The Mandarin Hotel is a little cafe. Remember downstairs. Yeah,
the little cafe. It was like something out of a
Bond movie. People in there. I would read five newspapers
in there is that little cafe still there on bottom.
Speaker 6 (12:50):
They have refurbished it, but they rebuilt that pretty much
the same way was before. So you little cafe sixties,
it's still very fifty six. He has been redone, but
it's still in that old island at cafe. You're still
there and you still welcome to come and read your newspapers.
Speaker 2 (13:04):
When you When you go to the Imperial Hotel in Tokyo,
they have a huge lobby which is like a TV
set for a dream of genie from the nineteen sixties.
It's actually unbelievable some of the We won't talk about
Fullerton's Bar in Singapore, now, will we, Fred, Yes, no,
we won't. Have a few guys, Fred Newman, this has
been wonderful. Please don't be a honor to have you here.
(13:26):
He's with HSBC Hong Kong with Perspective. They're really good
perspective there.
Speaker 1 (13:31):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2 (13:49):
This is a really important conversation right now. He is
steeped in the international relations of Persia with all sorts
of abilities as well. His book How Sanctions Work Iran
in the impact of economic warfare is noted with important economics,
including the University of Geneva. Oliveez joins us right now, Ali,
(14:12):
what is a number one thing Americans get wrong about
the culture, the fabric the people of Persia.
Speaker 7 (14:21):
Well, I think the number one thing is that Persia
is an ancient nation. It's a country that has seven
thousand years of history. It had a government three thousand
years ago, and you know, it is surprisingly still to
this day, despite having an anti American government in the
past nearly five decades, a very pro American population, which
(14:46):
is almost the reverse of what we get in the
rest of the region, which is we have pro American
governments but anti American population.
Speaker 5 (14:53):
How representative is the government of Iran of its people.
Then that's kind of something that I think most Americans
really don't understand.
Speaker 7 (15:02):
Well, it's not a democratic government. It is an authoritarian government,
and even its own surveys show that it's eighty five
percent of the Runian population do not like this regime
and would like to see it's back, But it has
ten to fifteen percent of its core constituents who are
(15:24):
true believers in this system, either for ideological reasons or
because they have vested economic interest in it, and in
a way they are very committed to make sure that
the system survives.
Speaker 5 (15:37):
So I guess one of the issues as we think
about the conflict between Israel and Iran and then the
US involvement over the past weekend, people have been talking
about discussing regime change. Is that something that should be discussed.
Is it even of a remote possibility in the near
to intermediate term.
Speaker 7 (15:59):
Well, first thing I would say is that we have
to look at our track record of bringing about regime
change in that part of the world, and it has
been an abject failure after an abject failure. So engineering
from the outside is not really something that we should
be looking forward to because of our track record. Second, internally,
(16:20):
there is right now no viable organized discipline alternative opposition
inside the country or even outside of the country that
is able to push US regime over and take power.
This is not Syria in twenty twenty four, when you
have rebel group in control of parts of the country
that could just march into Damascus.
Speaker 2 (16:41):
Your essay in Foreign Affairs, don't give up on diplomacy
with Iran. Just so important to me is the idea
of who are we speaking to? Are we speaking to
the theocracy? Are we speaking to the military that I
believe supports the theocracy or uses the theocracy?
Speaker 7 (17:00):
You're absolutely right, there's really not much difference. This is
a militarized theocracy and talking to you know, like Ron's
FIGN minister, for instance, was formerly a member of the
Revolutionary Guards. There is really a coexistence between the clerical
establishment and the revolutionary Guards. It's like the Deep States,
(17:23):
basically Ali.
Speaker 5 (17:25):
Just since the US attack on around over the weekend,
there's been conflicting reports from various sources, including the Trump
administration officials, about the effectiveness of and the damage inflicted
by the Americans on the nuclear sites.
Speaker 4 (17:41):
What are your sources telling you?
Speaker 7 (17:45):
Look, the reality is, at the end of the day,
there's only so much we can all know. Whether it's
intelligence services or DoD or whichever government agency you look at,
even the IAA, the un clear watchdog, they really cannot
judge much by just looking at satellite images. The only
(18:08):
way to get a full picture is to get the
inspectors back on the ground, to be able to go
into these tunnels and see the degree of damage that
has been done. But there are two things we know
for sure. One, as Vice President jd. Evan said the
other day, the Iranians had moved the stockpile of near
bomb grade and rich uranium that they had about four
(18:29):
hundred kilograms. And also they have a stockpile of advanced centrifutures,
and those two things still provide them with a pathway
to a bomb.
Speaker 2 (18:38):
So that tells me Alivice that the determinant here is
Israeli intelligence. I think we can all agree that the
Israeli intelligence into Iran has been extraordinary and making this
up folks, but stay with me, but Ali vas I
mean that's that we don't learn this from a presidential
(18:58):
statement in front of Marine one. We're going to learn
this from traditional espionage and intelligence by Israel.
Speaker 7 (19:05):
Right, that is correct, But there is also the reality
that this kind of intelligence, when you go all out
and using it the way Israel used it in its
opening salvo of its strike on Iran. You also lose
a lot of your assets on the ground, so it
becomes harder to do this again and again. And in
(19:27):
any case, even Israeli intelligence had admitted that the military
solution would set back Iran's nuclear program by a few
months to maybe one to two years at max. Remember
we had a nuclear deal with Iran in twenty fifteen.
That agreement sets back Iran's nuclear program by fifteen years
without firing a shot. So it's a simple math calculation
(19:48):
of which one is more beneficial.
Speaker 2 (19:51):
Ali, thank you so much. As with us are In Project,
director of the Crisis Groups are In Project, is le
recent essay in Foreign Affairs magazine.
Speaker 1 (20:06):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg Terminal.
Speaker 2 (20:21):
Alisia Levine, head of Investment Strategy Equities at BNY, this
is what the show's about. You got Sam Stovall, with
all that heritage. You and I this is before you
are at Brown you and I worshiped his father, Robert
stolevall years ago with lou Rukaiser and all that and
Alisia Levine. To bring it over to your rigid and
(20:41):
magical mathematics, I think is incredibly important. What is the
convexity of this pain trade right now in this new
bull market? What the accelerated force is shocking?
Speaker 8 (20:54):
It's shocking. The if I if I just wrote on
a piece of paper and that old fashioned way of
what's going on in the world, a list of facts,
dispassionate facts. The fact that the S and P is
up this year is actually extraordinary, which tells you the
pain trade is higher. The pain trade is higher because
there's so much negativity. Every conference I go to, every
(21:17):
discussion I have, is about looming inflation, the crushing of growth,
the all these terrible policies, and the market's telling you
that it's not going to be that bad, and that
we really have to quiet the noise around us in
our in our heads and look at profitability of companies,
which is what we do as investors. Right So you
(21:40):
know the reason that tariffs were such a shock to
the market and the market sold off twenty percent, essentially
pricing in two thirds of the way pricing in a
recession is that that original level of tariffs was over
two percent of us GDP at six hundred and fifty
billion dollars. Well, that sends a two percent growth economy
into recession, right, So that's why the market price in
(22:01):
the recession so quickly. As the tower's been rolled back,
you're back to a growth area of somewhere between one
and two percent, and the margins on the SMP are
going higher, on the tech companies and communication service companies,
and so the market's going higher as everybody's ringing their
hands and talking about how how terrible it all is.
Speaker 5 (22:21):
Do you think there's still earnings risk in this market?
Because I think earnings are going to have to be
a big driver of market performance. If the Fed's only
going to give you one or two rate cuts in
then this year, maybe, so I.
Speaker 8 (22:32):
Do think that to sustain the market here move higher,
you have to expect earnings moving higher, not necessarily in
the next few quarters, but for twenty twenty six, right,
because you know, over the summer investors start looking at
four or twelve months, look at twenty twenty six earnings.
I think the market is probably telling you that's what's
going to happen. The risk here is that we become
(22:52):
a little complacent from the blowout earnings of Q one
coming in at thirteen percent when seven percent was expected.
It does sterilize the rest of the year in terms
of downward pressure on earnings because you can bring that
back in for the year. But then we just kind
of go to sleep on the fact that there is
some earnings risk. And clearly on the retail side, you've
(23:14):
seen some demand destruction and you're going to have some
margin risk from the imports, like you can see that
Tony Ism.
Speaker 5 (23:21):
Numbers exactly, and the the inflation levels. You know, before
this whole process, there were you know, three percent ish
I'm sorry, the tariff levels were roughly three percentage. Now
they seem to be ten eleven, twelve, thirteen percent something
in that range, not the twenty or thirty or fifty
percent that maybe was the concern, but still they're a
lot higher.
Speaker 6 (23:39):
A lot higher.
Speaker 5 (23:39):
Is Corporate America just going to take that in the
margin because it doesn't I guess that or they can
be passed along to consumers.
Speaker 4 (23:45):
We're not really sure yet.
Speaker 8 (23:46):
I guess I think we don't really know. Okay, Like
there's some discussion that also the the exporters to us
are going to eat some of it as well. I
think we actually don't know. If I go back to
twenty eighteen, and of course the scale of the towers
are much lower, so maybe it is an perfect look back.
But actually inflation fell over twenty eighteen, really yes, because
there was a little bit of demand destruction in the
(24:07):
areas which had tariffs. So I think we don't actually know.
And in twenty eighteen the exporters eighth part of the
tariff hit. This is much more extensive. It is akin
to a consumption tax. I think there'll be rapid substitution
on whatever is being tariffed. I think you see that
fairly quickly. But it does mean that there's going to
(24:30):
be some hit to certain sectors of the economy. I
think likely tariffs wind up a little bit lower.
Speaker 2 (24:35):
Can I go nerd?
Speaker 4 (24:37):
Sure?
Speaker 2 (24:37):
So? Okay, it's like it's one hundred degrees. You know,
the beautiful Lego Starship in Alicia Levine's living room is
melting right now from the keat.
Speaker 8 (24:46):
It's got its own air.
Speaker 2 (24:48):
Doctor Levine I'm going to go back to your mathematics
at Chicago, and I'm going to take it back to
game theory. I went back and forth with Mohamed Hilarian
this morning, and he is a king of unknown unknown
and the game theory. I take them market and speech
is from the Guadalcanal low of nineteen forty two. You
take the IBOCON chart log s and p. Five hundred
and you enjoyed the leap out of seventy five. And
(25:10):
many people will say the extrapolation of a bull market
started eighty eighty one eighty two off we went. Is
that what we're missing right now is that kind of
log linear lift in equities. It was a surprise in
seventy five, a surprise in the early eighties.
Speaker 8 (25:29):
So I think it's hard for me to see us
getting to three percent growth, right. What you had in
the eighties was three percent growth. So that's really what
you need for nominal earnings, right, because earnings are nominal
and growth is nominal. The thing here is, I just
think what everybody's missing is the resiliency of corporate America
(25:51):
and the resiliency of households. Of households. I have a
chart that I use which shows the crushing of the
household's balance sheet of debt to assets. It is a
crushing from fifteen years ago of the global financial crisis.
It's basically been cut in half. Households are so resilient
(26:12):
and there are fifty three trillion dollars wealthier than they
were five years ago. So your assets, your financial assets,
are going higher and your liabilities as a percent of
assets are going lower. So you've got healthy balance sheets
in the household sector. All that debt, of course was
transferred to the government. But the households are resilient, and
(26:32):
corporate America is resilient. Large cap are resilient, less so
for small cap because they've got floating right debt, but
during a place where there's much more resiliency than the
conversation we're hearing is.
Speaker 5 (26:46):
But the concern on that side the household income. More
than fifty percent of US households don't hold assets. That's true,
So that's a problem.
Speaker 8 (26:54):
Yes, Okay, so I'm going to sound ruthless here. Okay,
but I'm going to say that they don't go into
the number of shocker, they don't go into the aggregate numbers.
It is true that the lower quartile of income has
been suffering, and they've been suffering since the rate hikes
of twenty twenty two, when the free money stopped and
those households borrow short, not long, and what sterilized households
(27:19):
and corporates is borrowing long. Rates were near zero. So
we've got three percent mortgages.
Speaker 2 (27:23):
We got to leave it here out of time. When
you come back next time, I want to do a
definitive distinction between log normal and plus on distribution.
Speaker 4 (27:31):
Oh that's going to work. Sho you to the audience.
Speaker 2 (27:33):
La Alicia Levin, Thank you so much from BNI.
Speaker 1 (27:38):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(27:58):
and always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business app.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
It has been too long. Brian Levitt joins us right
now with Invesco with a really interesting and holistic view
of tying it together to have confidence to invest. Parktrin
from the University of Michigan. Can you write a midyear
review right now? June thirty becons, July onet becons. Is
it possible to do an Invesco midyear review? Yeah?
Speaker 3 (00:49):
I would say the midyear review is set up for
the economy was good. We got policy on certainty. Policy
uncertainty got worse than it was expected, led to some
recession fee, and then policymakers generally backing off at least
pauses with regards to tariff's federal reserve, perhaps sounding maybe
(01:09):
a little bit more dubbish. And so the market is
now set up for expectation of incrementally continued improvements with
regards to policy.
Speaker 4 (01:20):
How about the federal reserve?
Speaker 5 (01:21):
What kind of policies should we expect from the Federal
Reserve here today? It feels like the economic data that
they rely upon suggest that maybe they kind of sit
on their hands a little bit here.
Speaker 2 (01:32):
Yeah, they may sit on their hands.
Speaker 3 (01:33):
I think ultimately we're going to see rate cuts, and
so the market, whether that comes in a month or
six months, the market believes that interest rates on the
short end are going lower, and I suspect that's ray.
I mean, we all know the Feds in a little
bit of a bind because growth is likely to slow,
prices are likely to rise as the tariff's effect starts
(01:54):
to hit. But if you look at leading indicators for
the employment market and for the inflation story, you've got
jobless claims ticking up a bit, You've got inflation expectations
very stable in the bond market, and so the Fed
is likely to the air on the side of easing.
Speaker 2 (02:13):
What I really this is really important question, folks. Everybody
out there go to cash and market timing and that
what is the Levitt prescription to get back in the market.
When you know you blew it, you feel terrible, you're
not telling your spouse, loved one what really happened. You've
(02:33):
missed the boat to a record NASDAC high. How do
you get back in the game.
Speaker 3 (02:38):
Yeah, it's always a challenge. If you look historically, I
mean people will talk about dollar cost averaging, or people
will talk about, you know, slowly moving back into these markets.
Historically you're better off. Even if you're investing at the
market high, you're still better off historically than sitting in
cash or or even dollar cost averaging. So I would
(02:59):
advise and investors to be in these markets. What you
can do rather than have it tom be all or nothing,
I'm in or I'm out, and you can focus if
you're concerned, you focus more on quality. You focus more
on businesses that are able to withstand some of the
challenges that we're dealing with, which is really why Nasdaq
is back leading again. Could we see an environment where
(03:21):
market's broaden out, where you want to be more small cap,
more value, All that sure probably requires some easing and
a pickup an economic activity.
Speaker 5 (03:30):
So Brian, if the Fed's going to cut maybe once,
maybe twice this year, that's about it. So it feels
like if the market's going to move higher, earning is
are going to come to.
Speaker 4 (03:39):
The forefront yet again.
Speaker 5 (03:41):
Yet I think most investors feel like there might be
some earnings risk out there. How do you think about
the earnings outlook here?
Speaker 3 (03:46):
Yeah, there is some earnings risk with regards to what
we're grappling with with tariffs. I mean everybody's talking about will.
Speaker 4 (03:55):
We see some price shocks?
Speaker 3 (03:56):
Will the consumer feel it? I think we sort of
hope so, because if not, that these businesses are absorbing
all of it, which will be a hit to profitability.
But look, it's still a good backdrop. I mean, if
you think of the nominal growth environment, you're you're looking
at you somewhere around four four and a half percent.
Speaker 2 (04:11):
So that's the mist call of the first six months.
Speaker 3 (04:15):
Is nominal GDP nominal GDP state substinate. I mean that's
why I say the set of coming into the year
was good. The economy was resilient, inflation was stable, and
inflation was stable at the upper end of the Fed's
comfort zone. We hadn't seen that in years. That's a
good nominal growth backdrop for corporate profitability. Policy can shift that,
and that's why you had a twenty percent decline following
(04:39):
going into and following Liberation Day. I think the reality
with regards to tariffs, is that consumers and businesses can
make changes, we can adjust. We're really just looking for clarity.
Speaker 5 (04:50):
Brian, talk to just about is there anything that screens
well for you guys sector wise, factor wise?
Speaker 4 (04:56):
Were you guys having your conversations these days?
Speaker 3 (04:58):
Yeah, I would, I would say on the fact their side,
it's still a quality story. So we're still in an
environment where leading indicators are pointing lower, and typically when
the leading indicators are pointing lower, you're waiting for the
policy response, and so right now it's a it's more
of a quality environment. I think we'll get back to
(05:18):
more of a recovery feel where we get policy response
and leading indicators pick up, but that that may take
a bit. On the income side. I still like credit
thirty seconds. We didn't have you any of your talk markets.
Danny Wolf of Michigan. Is he the real deal?
Speaker 2 (05:34):
Sure? In the draft tonight.
Speaker 3 (05:35):
I think he's the real deal. You can never go
wrong having seven footers, right, you know.
Speaker 2 (05:42):
How tall is the guy from Duke six short? Okay,
Brian Levi, thank you so much. Thank you with the investo.
Speaker 1 (05:55):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from se into ten AMI's Durn. Listen on Apple,
Karplay and Android Otto with the Bloomberg Business up, or
watch us live on YouTube.
Speaker 2 (06:07):
This is a joy in our studios in New York.
Is someone definitive in Hong Kong. He's never gotten over
the redo of the Mandarin mbar where they ruined the
top of the Mandarin Hotel in Hong Kong. Frederick Newman
is Chief Asia Economists at HSBC with wonderful Johns Hopkins Academics.
I'm gonna steal from Paul here. You walked in the
studio and Paul said, is Hong Kong changed? What is
(06:30):
the state of Hong Kong today?
Speaker 6 (06:32):
So the economy is still a bit soft. We have
very high interest rates. We got us interest rates chauness.
Economy is not doing that well at the moment. But
there is a real buzz there because we have equity
markets coming alive, and we had about five years of
down markets and the kind of the heart.
Speaker 2 (06:50):
Of the city's equities.
Speaker 6 (06:51):
You see cab drivers with their four phones playing, you know,
equities all day long. And so if you get the
market come up, you got ipo pine. I'm being full again,
that really adds a bit of a buzz. So it
does feel really there's optimism coming back into the Hong
Kong Financial Center.
Speaker 5 (07:07):
How does this world of trade, tariff's, trade policy uncertainty,
how's that impacting Asia Pacific region.
Speaker 6 (07:15):
Well, it's a huge headache, right that the region was
built on exports and a lot of exports to the US,
and so there's a lot of apprehension. And it's not
just the exports we worry about. It is also the
cap X that's associated with it, right, and so that's
the worry. But on the other hand, if you look
at China, for example, owned China's exports to the United
States are only two point five percent of China's economy.
(07:37):
It's not the end of the world.
Speaker 2 (07:39):
And that slows down again, it's so important.
Speaker 6 (07:42):
China's exports to the United States are only two point
five percent of China's economy. Now many people intuitively would
say it's a much larger share, but actually, if you
add direct and indirect exports, about two and a half percent,
maybe three if you not everything is statistically captured, but
it's not more than a three percent.
Speaker 2 (08:01):
I'll give you a statistic. Paul one hundred and twelve
percent of Americans don't know what.
Speaker 5 (08:05):
For exactly said, So, how are you guys thinking about
China here in the short term and also that maybe
intermediate two to three year term.
Speaker 6 (08:15):
So look, even if only two point five percent of
your experts go to the US, if you're not fifty
percent of that off, that takes a percentage point off
your GDP. That hurts in the short run, right, no
doubt about it. But there's about two and a half
percent of GDP fiscal stimulus in the pipeline this year,
and you see a bit of that getting traction. So,
for example, the past couple of months, you see retail
(08:37):
sales suddenly accelerating. You see at the companies we speak
with are actually saying sales are picking up, and so
there's a bit more stabilization coming through on the domestic side.
Speaker 4 (08:48):
Actually ex China here.
Speaker 5 (08:52):
You know, everybody here in the US, we've become a
lot smarter about tariffs and kind of where our goods
come from. And we've learned really since that pandemic that
a lot of stuff is coming from Vietnam, from Malaysia.
Speaker 4 (09:03):
Other parts of Asia.
Speaker 3 (09:05):
Here.
Speaker 4 (09:05):
Talk to us, ex China, how is Asia doing.
Speaker 6 (09:08):
So big a problem for the other countries. So if
you take Vietnam, for example, eleven percent of Vietnam's depend
in the Vietnam Cup depends on American shoppers compared to
two point five percent in China, So Vietnam is potentially
much more disruption. Soda is Thailand, sodaes, Korea, sodas Malaysia,
and so these countries worry a lot about the tariff
(09:29):
deadlines coming up.
Speaker 2 (09:30):
Frederick Newman with this, will they just see their chief
economists their voice of Asia this morning. The zeitgeist, I'm
sure when you're on the plane here, is that the
tariff pain is being swallowed by Asian manufacturers, particularly Japanese
car exports and such. They're eating that large new tariff.
(09:51):
Do you buy it? And will that sustain.
Speaker 6 (09:54):
Only to some extent? Because the Japanese yennas depreciated a
lot over recent years, right, it seems like they're swallowing it,
but really only back to twenty twenty one levels in
terms of your profit margins. Perhaps, so I don't think
necessarily it's that big a burden for Asia to carry
in other areas. Actually, Asia will pass on these costs
(10:14):
because China is the single producer of many, many critical items.
There's nobody else who can tell you certain medical sort
of pharmaceutical ingredients. For example, vitamins right can mostly out
of China these days.
Speaker 5 (10:27):
How do other I'm just I'm looking at your research
report because it's got a table of your forecast for HSBC.
In the countries I don't think about as often as
I do, maybe European, Malaysia, Philippines, Singapore, Indonesia. How did
those countries interact with China?
Speaker 6 (10:44):
Likely they're in some ways on trade caught to an
I rock and hard place. China for them, in many
ways is a larger market than the US, yes, right,
And so when the US is we don't want your
good or we're going to put terrius on you, then
they turned to China. And and so it's in some
ways if we push these countries too much, essentially it
(11:04):
drives them, probably economically more into the Chinese orbit. Now
they also face Chinese competition, so it's really tough for
them to find the right path.
Speaker 2 (11:14):
And look at your work, Fred Newman at HSBC and folks,
it is the Hong Kong and Shanghai Banking Corporation with
a heritage that truly goes back centuries. The only equivalent
was John Anderson years ago at UBS. And the basic
idea here is our misunderstanding of what's going on in China.
And the heart of the matter to me is we
(11:35):
have a president who thinks it's deal making or unilateral
or bilateral discussions. But it's truly a multilateral Asia, isn't it.
I mean, that's the great misconception in America.
Speaker 6 (11:48):
It is a multilateral Asia. The supply chains are completely
interconnected across the region. Most of the goods coming from
Vietnam have a very significant component to Chinese share in them,
so from Malaysia. China is a dominant Asian producer and
it kind of it's interweaved with all the other economy.
Speaker 2 (12:08):
So, you know, we're weaned on Japan as the foundation
capitalist society of Asia. Are they still? Is Japan still
the dominant provider of finance?
Speaker 6 (12:19):
No, no longer. It is an important finance provider, but
China exports twice as much capital than Japan does, so
in terms of financing the world economy, it's now China
that stepped in in.
Speaker 2 (12:34):
The Mandarin Hotel is a little cafe. Remember downstairs. Yeah,
the little cafe. It was like something out of a
Bond movie. People in there. I would read five newspapers
in there is that little cafe still there on bottom.
Speaker 6 (12:50):
They have refurbished it, but they rebuilt that pretty much
the same way was before. So you little cafe sixties,
it's still very fifty six. He has been redone, but
it's still in that old island at cafe. You're still
there and you still welcome to come and read your newspapers.
Speaker 2 (13:04):
When you When you go to the Imperial Hotel in Tokyo,
they have a huge lobby which is like a TV
set for a dream of genie from the nineteen sixties.
It's actually unbelievable some of the We won't talk about
Fullerton's Bar in Singapore, now, will we, Fred, Yes, no,
we won't. Have a few guys, Fred Newman, this has
been wonderful. Please don't be a honor to have you here.
(13:26):
He's with HSBC Hong Kong with Perspective. They're really good
perspective there.
Speaker 1 (13:31):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa play Bloomberg eleven thirty.
Speaker 2 (13:49):
This is a really important conversation right now. He is
steeped in the international relations of Persia with all sorts
of abilities as well. His book How Sanctions Work Iran
in the impact of economic warfare is noted with important economics,
including the University of Geneva. Oliveez joins us right now, Ali,
(14:12):
what is a number one thing Americans get wrong about
the culture, the fabric the people of Persia.
Speaker 7 (14:21):
Well, I think the number one thing is that Persia
is an ancient nation. It's a country that has seven
thousand years of history. It had a government three thousand
years ago, and you know, it is surprisingly still to
this day, despite having an anti American government in the
past nearly five decades, a very pro American population, which
(14:46):
is almost the reverse of what we get in the
rest of the region, which is we have pro American
governments but anti American population.
Speaker 5 (14:53):
How representative is the government of Iran of its people.
Then that's kind of something that I think most Americans
really don't understand.
Speaker 7 (15:02):
Well, it's not a democratic government. It is an authoritarian government,
and even its own surveys show that it's eighty five
percent of the Runian population do not like this regime
and would like to see it's back, But it has
ten to fifteen percent of its core constituents who are
(15:24):
true believers in this system, either for ideological reasons or
because they have vested economic interest in it, and in
a way they are very committed to make sure that
the system survives.
Speaker 5 (15:37):
So I guess one of the issues as we think
about the conflict between Israel and Iran and then the
US involvement over the past weekend, people have been talking
about discussing regime change. Is that something that should be discussed.
Is it even of a remote possibility in the near
to intermediate term.
Speaker 7 (15:59):
Well, first thing I would say is that we have
to look at our track record of bringing about regime
change in that part of the world, and it has
been an abject failure after an abject failure. So engineering
from the outside is not really something that we should
be looking forward to because of our track record. Second, internally,
(16:20):
there is right now no viable organized discipline alternative opposition
inside the country or even outside of the country that
is able to push US regime over and take power.
This is not Syria in twenty twenty four, when you
have rebel group in control of parts of the country
that could just march into Damascus.
Speaker 2 (16:41):
Your essay in Foreign Affairs, don't give up on diplomacy
with Iran. Just so important to me is the idea
of who are we speaking to? Are we speaking to
the theocracy? Are we speaking to the military that I
believe supports the theocracy or uses the theocracy?
Speaker 7 (17:00):
You're absolutely right, there's really not much difference. This is
a militarized theocracy and talking to you know, like Ron's
FIGN minister, for instance, was formerly a member of the
Revolutionary Guards. There is really a coexistence between the clerical
establishment and the revolutionary Guards. It's like the Deep States,
(17:23):
basically Ali.
Speaker 5 (17:25):
Just since the US attack on around over the weekend,
there's been conflicting reports from various sources, including the Trump
administration officials, about the effectiveness of and the damage inflicted
by the Americans on the nuclear sites.
Speaker 4 (17:41):
What are your sources telling you?
Speaker 7 (17:45):
Look, the reality is, at the end of the day,
there's only so much we can all know. Whether it's
intelligence services or DoD or whichever government agency you look at,
even the IAA, the un clear watchdog, they really cannot
judge much by just looking at satellite images. The only
(18:08):
way to get a full picture is to get the
inspectors back on the ground, to be able to go
into these tunnels and see the degree of damage that
has been done. But there are two things we know
for sure. One, as Vice President jd. Evan said the
other day, the Iranians had moved the stockpile of near
bomb grade and rich uranium that they had about four
(18:29):
hundred kilograms. And also they have a stockpile of advanced centrifutures,
and those two things still provide them with a pathway
to a bomb.
Speaker 2 (18:38):
So that tells me Alivice that the determinant here is
Israeli intelligence. I think we can all agree that the
Israeli intelligence into Iran has been extraordinary and making this
up folks, but stay with me, but Ali vas I
mean that's that we don't learn this from a presidential
(18:58):
statement in front of Marine one. We're going to learn
this from traditional espionage and intelligence by Israel.
Speaker 7 (19:05):
Right, that is correct, But there is also the reality
that this kind of intelligence, when you go all out
and using it the way Israel used it in its
opening salvo of its strike on Iran. You also lose
a lot of your assets on the ground, so it
becomes harder to do this again and again. And in
(19:27):
any case, even Israeli intelligence had admitted that the military
solution would set back Iran's nuclear program by a few
months to maybe one to two years at max. Remember
we had a nuclear deal with Iran in twenty fifteen.
That agreement sets back Iran's nuclear program by fifteen years
without firing a shot. So it's a simple math calculation
(19:48):
of which one is more beneficial.
Speaker 2 (19:51):
Ali, thank you so much. As with us are In Project,
director of the Crisis Groups are In Project, is le
recent essay in Foreign Affairs magazine.
Speaker 1 (20:06):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg Terminal.
Speaker 2 (20:21):
Alisia Levine, head of Investment Strategy Equities at BNY, this
is what the show's about. You got Sam Stovall, with
all that heritage. You and I this is before you
are at Brown you and I worshiped his father, Robert
stolevall years ago with lou Rukaiser and all that and
Alisia Levine. To bring it over to your rigid and
(20:41):
magical mathematics, I think is incredibly important. What is the
convexity of this pain trade right now in this new
bull market? What the accelerated force is shocking?
Speaker 8 (20:54):
It's shocking. The if I if I just wrote on
a piece of paper and that old fashioned way of
what's going on in the world, a list of facts,
dispassionate facts. The fact that the S and P is
up this year is actually extraordinary, which tells you the
pain trade is higher. The pain trade is higher because
there's so much negativity. Every conference I go to, every
(21:17):
discussion I have, is about looming inflation, the crushing of growth,
the all these terrible policies, and the market's telling you
that it's not going to be that bad, and that
we really have to quiet the noise around us in
our in our heads and look at profitability of companies,
which is what we do as investors. Right So you
(21:40):
know the reason that tariffs were such a shock to
the market and the market sold off twenty percent, essentially
pricing in two thirds of the way pricing in a
recession is that that original level of tariffs was over
two percent of us GDP at six hundred and fifty
billion dollars. Well, that sends a two percent growth economy
into recession, right, So that's why the market price in
(22:01):
the recession so quickly. As the tower's been rolled back,
you're back to a growth area of somewhere between one
and two percent, and the margins on the SMP are
going higher, on the tech companies and communication service companies,
and so the market's going higher as everybody's ringing their
hands and talking about how how terrible it all is.
Speaker 5 (22:21):
Do you think there's still earnings risk in this market?
Because I think earnings are going to have to be
a big driver of market performance. If the Fed's only
going to give you one or two rate cuts in
then this year, maybe, so I.
Speaker 8 (22:32):
Do think that to sustain the market here move higher,
you have to expect earnings moving higher, not necessarily in
the next few quarters, but for twenty twenty six, right,
because you know, over the summer investors start looking at
four or twelve months, look at twenty twenty six earnings.
I think the market is probably telling you that's what's
going to happen. The risk here is that we become
(22:52):
a little complacent from the blowout earnings of Q one
coming in at thirteen percent when seven percent was expected.
It does sterilize the rest of the year in terms
of downward pressure on earnings because you can bring that
back in for the year. But then we just kind
of go to sleep on the fact that there is
some earnings risk. And clearly on the retail side, you've
(23:14):
seen some demand destruction and you're going to have some
margin risk from the imports, like you can see that
Tony Ism.
Speaker 5 (23:21):
Numbers exactly, and the the inflation levels. You know, before
this whole process, there were you know, three percent ish
I'm sorry, the tariff levels were roughly three percentage. Now
they seem to be ten eleven, twelve, thirteen percent something
in that range, not the twenty or thirty or fifty
percent that maybe was the concern, but still they're a
lot higher.
Speaker 6 (23:39):
A lot higher.
Speaker 5 (23:39):
Is Corporate America just going to take that in the
margin because it doesn't I guess that or they can
be passed along to consumers.
Speaker 4 (23:45):
We're not really sure yet.
Speaker 8 (23:46):
I guess I think we don't really know. Okay, Like
there's some discussion that also the the exporters to us
are going to eat some of it as well. I
think we actually don't know. If I go back to
twenty eighteen, and of course the scale of the towers
are much lower, so maybe it is an perfect look back.
But actually inflation fell over twenty eighteen, really yes, because
there was a little bit of demand destruction in the
(24:07):
areas which had tariffs. So I think we don't actually know.
And in twenty eighteen the exporters eighth part of the
tariff hit. This is much more extensive. It is akin
to a consumption tax. I think there'll be rapid substitution
on whatever is being tariffed. I think you see that
fairly quickly. But it does mean that there's going to
(24:30):
be some hit to certain sectors of the economy. I
think likely tariffs wind up a little bit lower.
Speaker 2 (24:35):
Can I go nerd?
Speaker 4 (24:37):
Sure?
Speaker 2 (24:37):
So? Okay, it's like it's one hundred degrees. You know,
the beautiful Lego Starship in Alicia Levine's living room is
melting right now from the keat.
Speaker 8 (24:46):
It's got its own air.
Speaker 2 (24:48):
Doctor Levine I'm going to go back to your mathematics
at Chicago, and I'm going to take it back to
game theory. I went back and forth with Mohamed Hilarian
this morning, and he is a king of unknown unknown
and the game theory. I take them market and speech
is from the Guadalcanal low of nineteen forty two. You
take the IBOCON chart log s and p. Five hundred
and you enjoyed the leap out of seventy five. And
(25:10):
many people will say the extrapolation of a bull market
started eighty eighty one eighty two off we went. Is
that what we're missing right now is that kind of
log linear lift in equities. It was a surprise in
seventy five, a surprise in the early eighties.
Speaker 8 (25:29):
So I think it's hard for me to see us
getting to three percent growth, right. What you had in
the eighties was three percent growth. So that's really what
you need for nominal earnings, right, because earnings are nominal
and growth is nominal. The thing here is, I just
think what everybody's missing is the resiliency of corporate America
(25:51):
and the resiliency of households. Of households. I have a
chart that I use which shows the crushing of the
household's balance sheet of debt to assets. It is a
crushing from fifteen years ago of the global financial crisis.
It's basically been cut in half. Households are so resilient
(26:12):
and there are fifty three trillion dollars wealthier than they
were five years ago. So your assets, your financial assets,
are going higher and your liabilities as a percent of
assets are going lower. So you've got healthy balance sheets
in the household sector. All that debt, of course was
transferred to the government. But the households are resilient, and
(26:32):
corporate America is resilient. Large cap are resilient, less so
for small cap because they've got floating right debt, but
during a place where there's much more resiliency than the
conversation we're hearing is.
Speaker 5 (26:46):
But the concern on that side the household income. More
than fifty percent of US households don't hold assets. That's true,
So that's a problem.
Speaker 8 (26:54):
Yes, Okay, so I'm going to sound ruthless here. Okay,
but I'm going to say that they don't go into
the number of shocker, they don't go into the aggregate numbers.
It is true that the lower quartile of income has
been suffering, and they've been suffering since the rate hikes
of twenty twenty two, when the free money stopped and
those households borrow short, not long, and what sterilized households
(27:19):
and corporates is borrowing long. Rates were near zero. So
we've got three percent mortgages.
Speaker 2 (27:23):
We got to leave it here out of time. When
you come back next time, I want to do a
definitive distinction between log normal and plus on distribution.
Speaker 4 (27:31):
Oh that's going to work. Sho you to the audience.
Speaker 2 (27:33):
La Alicia Levin, Thank you so much from BNI.
Speaker 1 (27:38):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(27:58):
and always on the Bloomberg terminal
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