August 13, 2025 • 43 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyAugust 13th, 2025
Featuring:
1) Jens Nordvig, founder & CEO at Exante Data, joins for an extended discussion about FX opportunities and President Trump's strategy to weaken the dollar.
2) David Seif, Chief Economist for Developed Markets at Nomura, joins to discuss recent eco data and why September may mark the beginning of a Fed easing cycle. Equity markets are swept up in a risk-on rally as a modest rise in US goods prices has tempered fears over the impact of tariffs, bolstering bets that the Fed will resume rate cuts.
3) Brian Belski, Chief Investment Strategist at BMO Capital Markets, joins to discuss his S&P target and why he remains extra bullish in the second half of 2025. A rally in global stocks persisted as expectations for Federal Reserve interest rate cuts stoked risk-on sentiment and drove bond yields lower.
4) Stephanie Baker, Senior Writer with Bloomberg News, previews the Trump-Putin Summit. Vladimir Putin is heading to a summit with President Trump confident that Russia is in a dominant position on the battlefield as his military advances in Ukraine. Putin has repeatedly rejected calls for a ceasefire and is likely to seek major territorial concessions in return for one, according to the article.
5) Brent Schutte, Chief Investment Officer at Northwestern Mutual, brings us into the market open and talks about a potential equity boon from rate cuts.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. 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):
Ms Nordvig his book on the euro was outright courageous
over a decade ago, acclaimed on Wall Street and now
at exeenting data. Can dollar weakness continue?
Speaker 3 (00:40):
I think it can? It can. It's we were talking
about a couple of months ago, and what happened a
couple of months ago is we had this pretty big
dramatic shift in how people think about asset location. So
a lot of our clients have been taken down the
dollar exposure from Cana that to Europe, to Asian countries.
(01:03):
So I think we're well and we're sort of well
into that process. People have done a lot of that.
So I think we're going into a new phase. And
I would echo what you're saying. I think then that
that's got best. An interview was fantastic, very transparent. But
I think we're going into a new phase where it's
it's more about the FED again, like it's the FED
(01:25):
going to do something.
Speaker 4 (01:26):
Right.
Speaker 3 (01:27):
Is the pressure on the FED going to have an
influence on the dollar? I think actually what you're seeing
this week is that the dollar is kind of leaking.
Speaker 2 (01:37):
And exactly perfect.
Speaker 3 (01:39):
It's kind of because investors are a little bit uncomfortable
with this pressure, and I think that's adding to a
new phase here that's not just about you know, FX hedging,
but it's think about what the FED is going to
do in coming quarters.
Speaker 5 (01:54):
So I mean, all right, you're selling the dollar. We've
seen other risk assets come back to uses and ps
come back and so on. You're selling a dollar. What
are you buying? So I mean, am I getting better
growth than the US?
Speaker 3 (02:09):
Yeah? So I get this question. I would say, not
every day, not every week, but regularly get this question
like what else? What else is there to buy?
Speaker 6 (02:19):
Right?
Speaker 3 (02:19):
So you look around the world, and the point I
would make is the following, Right, We're not in a
zero interest rate global environment anymore. Like there are fixed
income instruments you can own in Europe other places in
the world right where you can get some yield. Right,
So from a yield perspective, it's not as one sided
(02:41):
as it was where the US was the only place
in the world you can get any yield, right, So
there is some competition from a yield perspective, and we
obviously we've seen in equity markets, even though you've had
the big bounce in you as stocks, they're actually still
lagging relative to a number of global markets. Right. So
I think there's a lot of equity investors that after
(03:02):
several years where you had to be focused on the US,
there are alternatives, right. So people are looking at European banks,
like there's something going on with European investments where European
banks are going to play an important role, right, So
I think that's one place that people are looking.
Speaker 7 (03:21):
Assets are still relatively cheap.
Speaker 3 (03:23):
Around the world, right, So if you believe that valuation
has any role in as a location, that's an argument.
But there's also basic diversification argument. Bloomberg had a good
story yesterday about how some of the big Canadian pension
funds have diversified out of the dollar. It's very consistent
with the conversations we have with chief investments officers around
(03:46):
the world. Right, Dollar exposure has been taken down from
a very elevated level going into this year.
Speaker 5 (03:52):
So inflation here we got to I think most people
feel like was kind of a benign reading yesterday, a
little bit of up depending upon it. How do you
want to look at it? But I think less than
maybe some people expected. Are are tariff's going to find
their way into the inflation data?
Speaker 3 (04:08):
Do you think this has become a quite controversial topic
as you've seeing that. I was in touch with Jan
Hatzius yesterday, like he's obviously feeling some heat from having
put out views on this.
Speaker 2 (04:21):
His badge works, his badge works downtown this morning. We
gotta we got to recapitulate this, folks and slow down here.
This is important. Yan's nord been working for years with
a younger Y Hatzias. Jim O'Neil set up Modern Goldman
sex Economics with a guy named Bill Dudley and Ed
mc kelvey. Mister Dudley, of course, went on to the
New York Fed. They had all these young whipper snappers
(04:44):
walking around, and one of them was a guy from
Germany named Jan Hatzias, who single handidly codified mortgage equity
withdrawal within Global Wall Street. That's how I first came
to know Jana Hatzias and Jan's nord Big was absolutely
this guy out of Copenhagen, like he knew every restaurant
(05:04):
in Copenhagen, and they and others they put together this
just incredibly eclectic and original team under Jim O'Neill and
Bill Dudley leaderships. Nordvik went off to do other things
including founding and excited Data, and mister Hatzius at some
point was promoted up the food chain to get the
(05:26):
radar of Donald Trump.
Speaker 3 (05:28):
It's a good summary.
Speaker 6 (05:30):
It sounds like actually like when I'm.
Speaker 3 (05:34):
Well, it's a it's it's it's rare that you have
a situation where the president of the United States, like
is involved in some kind of tension with an economist
at a bank, right, So we're in an unusual situation.
So I think is going to continue to do his research,
continue to do his forecasting, and and hopefully the management
(05:56):
will be dealing with that appropriately.
Speaker 2 (05:58):
But going back to the.
Speaker 3 (06:00):
Question that the tariffs are coming through in the numbers,
but we should also be very aware, right that the
tariffs have not been going up linearly. We had a
huge tariff shock, and then the tariffs actually went down,
like the Chinese tariffs went up above one hundred percent
(06:22):
and then they went down. So when we analyzed the
monthly inflation reports, we have to be very precise about
was this a month where teriffs actually went up or down?
And I will argue that the report we had yesterday
was actually reflecting that the tariff rates on China came
down into that report. Right. So when we look into
(06:43):
the coming months, which is obviously what investors care about
the future, not the past, we are looking at a
new shock from the reciprocal tariffs kicking in here August tenth.
That's going to be in the inflation numbers mostly in
September and October, and it's not going to make the
fetch job easier.
Speaker 2 (07:03):
I want you to take the microeconomic foundations at Bill
Dudley and Company demanded and you were expert at, and
walk through the X axis of tariffs in your study
in America, we would go back to William McKinley. I'm
going to say eighteen ninety nine off the top of
my head, the exporter adapts, the importer at the shore adapts,
(07:26):
and then it's passed on to the consumer. What's that
X axis look like.
Speaker 6 (07:33):
Well, we we had an initial shock right in April
that only lasts a couple of days, So that's kind
of noise, Like, so where did we settle in April?
Speaker 3 (07:45):
We had a shock in the region thirteen percent, right,
So if we put that thirteen percent in the context
of having had one or two percent before, it is
a dramatic shift, and companies are adjusting at different speed.
So there's some goods categories where companies have passed it
(08:06):
through already, and then there are sectors where companies have
a lot of influence on their price. Apple has a
lot of influence on their price. They don't have that
much competition for iPhones, right, so they can set it
and they have not passed it through.
Speaker 5 (08:24):
In the auto.
Speaker 3 (08:24):
Sector, Toyota is a very important company, very important company,
and they have not passed it through other companies in
that sector. Then waiting what's Toyota eventually going to do.
If Toyota moves, we're going to move as well, right,
So it really depends on what good it is, what
that passed through has been. It would be surprising if
there's not more passed through over time, especially since tariff
(08:47):
rates and no going going back up. But I think
what is also tricky is like how much should the
FED look through because like it used to be the
case that the FED viewed as kid's a one off
shift to the price level. We have to mostly look
through it. And I don't I don't want to be
(09:08):
too critical of Powell, but I do think there has
been a bit of an odd shift within the FED
where they're focusing very much on realized inflation, what is
the inflation next couple of months, as opposed to saying
there's an element of the pricelift the level shifting in
a one off way, and it used to be the
case that they want to look through that, and I think.
Speaker 2 (09:28):
Yeah, Best alluded to that.
Speaker 3 (09:30):
Yeah, I mean I think I actually agree with that criticism,
to be honest.
Speaker 2 (09:33):
Yep.
Speaker 5 (09:34):
And so so inflation is one thing we've got. We
got some data yesterday. How about the labor market? They
are also FED is also looking at the labor market,
and again we had some odd data with some revisions
last week. You know, it just kind of puts that
front and center once again.
Speaker 3 (09:49):
Yeah, Like like when we looked at the labor data,
not in the last report, but in the before that,
it looked really odd that there was the surge in
governmental hiring like it was totally in conflict with all
the anecdotes we're getting right, So the data did look odd,
(10:09):
and now we have like a big revision to what's
happening in the government sector that actually makes it look
less odd. The private sector is probably.
Speaker 7 (10:20):
Where we really should focus, right, because it's deliberate that
we're reducing the public sector employment, right, it's like an
actual policy steps that's very deliberate.
Speaker 3 (10:31):
What's happening in the private sector is more important, and
I think the data there is very tricky. We have
a real time labor indicator that we're tracking right, where
we look at everything that is a second labor market,
and it's not falling off a cliff, that's for sure.
There's some gradual deterioration, and then recently it's actually not
(10:51):
obvious that it's getting worse. So the FED is dealing
with this thing where the revisions look very bad, but
it's not obvious that the momentum is getting worse.
Speaker 5 (11:01):
It's tricky for the fact.
Speaker 2 (11:02):
One final question, this is from Paul from New Jersey.
Your book is the follow the Euro? Can you get
the Euro to parody? Before the third week of September
when Paul's.
Speaker 3 (11:12):
Going to Europe. My book was written a few years ago,
and we did have some problems with the euro in
the meantime. But as I think you you texted me
the other day, Tom, you said, don't why don't you
write the fall of the dollar instead, like the dollar
has some issues as well, and.
Speaker 2 (11:31):
They get some news here can you give? Are we
going to get a new book?
Speaker 3 (11:35):
I would I would like to write about the dollar.
I have to get approval from my wife before I
write another books. But the idea is that the administration
wants the dollar weekend right. So it's not like it's
not just like it's something that happened by action. It's
actually something that the administration wants by design. So there's
(11:57):
some structural changes here that we not under estimate. And
this is why I think we're going through these phases
where the dollar was weakening due to the capital flows
in the first half. Now we're going through the FED phase.
And we've been through such a long bull run for
the dollar up until this year that we can have
(12:19):
multiple phases of dollar weakness from here.
Speaker 2 (12:21):
Yes, thank you, thank you, thank you, thank you for
waiting for after the best and comments. Well, yes, nord
Vic with Vick Sante Data.
Speaker 1 (12:33):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern. Listen on
Apple Karplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (12:46):
Data Seef joins the Namura the ear lead economist, and
I do this because I can't convey to you, folks
the intimidation of this list of people. Harvey Rosen, Lawrence Summer's,
Jeffries Sachs, a guy named Almandorf who was pretty good
at CBO. As I recall Stephen Mirin very much in
(13:08):
the news with President Trump and David Cef. You had
the honor of studying with Martin Feldstein, who was such
a supporter of it. And let's start there. Do you worry,
with all the heritage of Marty Feldstein about our debt
and our deficit?
Speaker 3 (13:24):
Oh?
Speaker 8 (13:24):
Absolutely. I think this is a very indebted country that
we have, and there isn't much prospect of that closing
anytime soon. We're not running deficits right now in order
to stimulate an economy that's in recession. This is just
a very large structural deficit that has developed over decades,
and there's no sign of it going down at home.
Speaker 2 (13:46):
Soon without getting you in trouble with compliance at namurra
Ken Rogoff in my book of the Summer our dollar
year Problem makes clear we could see the long end
of raids go priced down, yield up and burst through.
Is that I don't want to get in trouble at
the Murah? But is that an outcome that's possible not probable?
Speaker 8 (14:06):
Unfortunately we've already written about that, so I'm not at
risk of getting controlla fer opine one.
Speaker 6 (14:11):
Yeah.
Speaker 8 (14:11):
I think this is I think this is an increasing
investor concern, and I would say a concern of mine
as well. Over the past couple of months, we've seen
i'd say, really starting in April with the sort of
post Liberation Day announcement and then you know, events in
the UK, events in exactly we've seen, crisis happens, the
(14:31):
back end sells off, the crisis then is resolved and
the back end doesn't come back, so the yield spikes,
and then when the crisis is solved, it just sort
of stays there.
Speaker 5 (14:41):
It doesn't get any worse.
Speaker 8 (14:42):
But we've seen the steady steepening of the curve and
it's not the good kind of steepening. It's not the
kind of steepening where people are like, oh, you know,
the economy is going to be growing better, and therefore longer.
Speaker 5 (14:54):
Longer term rate should be or yield should be higher.
Speaker 8 (14:57):
It's the kind of steepening where people are like, oh,
I'm a little worried about what inflation is going to be.
Like globally, I'm a little worried about, you know, what
the future holds in terms of risk, and therefore I
demand a higher risk premium for locking my money up,
even with these very safe developed market economies like in
the US, UK, Japan.
Speaker 5 (15:18):
David, are you surprised that we haven't seen more inflation
in this US economy yet or is it just a
matter of time or maybe the corporations are just taking
it in the margin, we're not going to see it.
Speaker 8 (15:29):
Well, I mean, you know, you can't argue with the
data from yesterday, we did not really see the signs
of tariff induced inflation that we had been expecting. You know, inflation,
core inflation did tick up a little bit, but really,
when when you broke it down, it was things that
were not related to the tariffs that happened yesterday, and
that was actually in contrast to a month prior where
(15:51):
you did see some signs, there wasn't the follow through
in the data yesterday, and I think that does open
the door for the Fed to certainly be cutting in
STIP at its next meeting as a result.
Speaker 5 (16:01):
And I guess we went It seems like in the
space of twenty four hours, we went from saying okay,
I guess a twenty five basis point cut is locked
in for September. Now, the rhetoric over the past twelve
eighteen hours has been maybe fifty basic way drinking game.
How do you think about that?
Speaker 8 (16:19):
You know, it certainly can't roll it out, but it's
not our view that it's going to happen right now.
There are a couple of things. The first thing is
that the economy still looks like it's okay. The economy
is still growing. We had, you know, a decently robust
second quarter GDP print, not perfect, but the labor market,
(16:40):
despite having a big negative downgrade, we still have a
four point two percent unemployment rate. And then on top
of that, I think that the Fed probably remembers last
year it looked like it overreacted by going fifty in
September last year, Paul, can.
Speaker 2 (16:53):
I go theoretical, go it's Wednesday and no economic data.
If you have nominal GDP and it's an impulse from
real GDP less lesser inflation as compared to an impulse
of inflation rising with a lesser real GDP, are they equal?
(17:13):
Are they are they efficaciously benefit to society? Or is
there a difference in those two nominal GDPs.
Speaker 8 (17:20):
I think that's a big difference. I mean, I think
we we we certainly would always hope that it's being
driven not by prices rising but by by real actual
production of stuff.
Speaker 5 (17:29):
Right, that's what real gas.
Speaker 2 (17:30):
Which you see right now. Yeah, well, right now.
Speaker 8 (17:32):
We see a little bit of both, right, and and
so that's not necessarily quite as good as before, but
where we had more of it coming from the real
GDP growth side. But I would also say it's pretty
far from a disaster. However, companies, you know, companies are
trying to hit nominal targets and it's not as important
for them. And I think you know, when we had
(17:53):
the inflation you know episode in twenty two twenty three,
following COVID, a lot of companies did really well, just
because their nominal earnings were going.
Speaker 5 (18:03):
Up as a result of that.
Speaker 8 (18:05):
So I do think that for you know, going back
to what you were saying before about the stoff market,
a little bit of an increase in inflation, whatever the
cause may be, is probably you know, good for these
companies over the shorter run.
Speaker 2 (18:18):
This is Phil Correy, a pioneer years ago. The bread
lights of inflation help everybody.
Speaker 5 (18:23):
Exactly Friday, We're gonna get retail sales, David, how's the
consumer hanging in there?
Speaker 2 (18:27):
Do you think the consumer?
Speaker 8 (18:28):
We actually still think is pretty good. And you know,
we've seen retail sales growing slower than earnings have been growing.
And I think on top of that, one key thing,
and this does go back to the labor market. Even
though we're seeing we've seen now several months of relatively
weak job growth on a net basis, on a growth basis,
(18:49):
there's very few layoffs, right And what really kills retail
sales is not a lack of net jobs, but people
being laid off. Right and right now, job security remains
very high, almost as high as it's ever been, So
your odds of being laid off if you have a
job are extremely low.
Speaker 2 (19:09):
I can't tell you how many of our listeners and
viewers disagree with what you just said. Yeah, I get
the mail on it. Well, Dan, same, job security is okay.
Speaker 8 (19:18):
Job security is a lot better than it would typically
be with these level of NFP.
Speaker 2 (19:24):
Absolutely, don't be a stranger, David C. Thank you so
much this morning. Really wonderful to have him in with
the privilege of studying with Martin Feldstein at Harvard years ago.
Speaker 1 (19:35):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
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Speaker 2 (19:51):
Everybody's going rationalize, rationalized, rationalize. What Brian Belski does at
Female Capital Markets is he just seven pages and you
hate them because you have to read usually ice skin
like the first paragraph and you know, move on shore.
I can't do it with Belski. You can't do that.
What's your paragraph for? Say right now, Brian Belski about
(20:12):
the fact there isn't exuberance like I look at some
of the major houses analysis of the hedge fun enthusiasm
the market l long only it's not a roaring bull market.
It is, but it's not.
Speaker 4 (20:31):
WELLO, good morning. We've run out of ways to try
to explain this, whether or not we're climbing the walla
Werry or the most hated bullmarket ever, which we've talked
about ten years ago.
Speaker 2 (20:42):
And I think it's just.
Speaker 4 (20:43):
This notion of so many investors from the institutional perspective.
Tom just love making binary opinions, meaning I'm out, I'm in,
I'm bullish, I'm bearish.
Speaker 2 (20:52):
There's no but you mean I studied it wasn't like that.
Speaker 4 (20:55):
It wasn't like it wasn't like that. And there's so
much talk of small caps will never work again. Oh,
by the way, now everybody thinks we're going to cut rates,
so small caps are up today. I mean, that's not
investing right. And so we really believe that this big
secular bull market has had several different.
Speaker 2 (21:12):
Versions of it.
Speaker 4 (21:13):
We think we're entering a new version of it that
could last another ten years. Part of our twenty to
twenty five year secular bull market theme and theory that
we've been consistent on in the marketplace since two thousand
and nine to twenty ten. So this what's going on
right now. And to answer your question on hedge funds, remember,
hedge funds have had terrible performance, terrible performance the last
(21:34):
three to five years. Long only have been late to
come in. But people that have been right in terms
of investing have been private wealth and family offices because
they have maintained their investment perspective and been much more disciplined.
Speaker 5 (21:49):
Y s and P five hundred futures just below sixty
five hundred is Thomas mentioning? You say your sixty seven
hundred target is too low. Why is that?
Speaker 4 (21:57):
Well, I mean our bolcases is seventy seven seventy two hundred.
We think that earnings are going to be a little
bit better than everybody thinks.
Speaker 2 (22:05):
And rolling forward three months.
Speaker 4 (22:07):
Very much, Well, I think it's three to six months, Tom,
I really do. And I think where the big kick
is gonna come from our financials, uh, you know, the
financial strength in terms of the really big banks, but
also the brokers. I think we're gonna have a bang
on second half, especially fourth quarter, in terms of investment banking.
Tom mentioned the word exuberance, Paul, if you think about
irrational exuberance. Not everybody's making money yet, So the more
(22:30):
the more you talk about a bubble, there's no bubba though.
Just because things go up doesn't mean there's a bubble
when everybody's making money. So what do I mean by that?
Financial services big banks aren't making a lot of money
in terms of the tech trade or the AI trade
because we're not seeing massive amounts of IPOs. But more importantly,
we're not seeing quote unquote silly types of mergers, like
(22:50):
big company mergers done with stock. When we see that
type of stuff, then we're getting closer to the end.
But we're nowhere near that.
Speaker 5 (22:58):
So are we sticking with what goddess here? Tech comm services,
that kind of thing.
Speaker 4 (23:04):
You know what's interesting is that back in the nineties
we bought big cap stocks in nifty to fifty and
the rational exuberants that mister Greenspan talked about was that
actually about stocks like Procter and Gamble and Gillette and
Coca Cola. But you know what those stocks are now,
they're Google, Apple, Microsoft, their liquidity and so what happens
when people get worried is they come back right back
(23:25):
into liquidity because they can participate in the market. So
as the market kind of gets a little bit lofty here,
we're gonna see more broadening out. Then we'll get some
sort of a pullback. This is all very normal. And
guess what's gonna lead coming.
Speaker 2 (23:36):
Out of the pullback?
Speaker 4 (23:38):
Large cap tech again. So we think from a secular basis,
there's several areas of tech, not all of tech, right,
but there's several areas within tech that you can will
and should be more stockpicking oriented.
Speaker 5 (23:48):
All Right, we got some data over the last couple
of days that seems to solidified a twenty five point
basis point cut. I don't know the last twelve hours.
I woke up to my scroll was saying, hey, how
about fifty basis points? What are we doing there?
Speaker 4 (24:02):
Yeah, I think that's kind of wishful thinking. I think
that that that inn rview would be jumping the gun
at fifty. I think there's been an increased talk about
that quite frankly. And what we've said is that the
market's trend is not dependent not dependent on the FED cutting.
This is all about earnings and all about the market
recovering and actually people getting reinvested again after missing this move.
Speaker 2 (24:26):
I want to get back to what our listeners and
viewers should do that don't speculate. I mean, they watched
the parlor game as I call it, and you know
they're entertained by it, but they just want to there's
a wall, as Larry McDonald says, there's a wall of
money out there and it's going to go in. Is
the money going into the market by conservative family office,
(24:46):
private wealth in that? Is that forever money that's going in.
You just assume they're buying at the margin, whatever sect
or whatever stuck whatever and it's like forever.
Speaker 4 (24:56):
I well, I think what's happening is you obviously if
you have a lot of of baby boomers that are retiring,
and then with their retirement and that four oh one
k money, they're able to roll it over in an IRA.
I think a lot of people aren't talking enough about
that number one, number two in terms of this forever money.
Remember too, that because of the binary decisions of a
lot of people selling bonds quite frankly at the low,
(25:18):
I think that there's still an opportunity to be in
sixty forty and be more diversified on the forever money.
I think what we've encountered in our great private wealth
platform at BIMO in terms of not only private wealth
but asset management. They've been very consistent and more disciplined
in terms of when the market goes down, they add
they average back in and where the institutional world usually
(25:41):
has to sell because either they're getting a call from
their compliance department, they're over they're oversized in video, or
something where a private wealth person could say, well, I
need to mark the market.
Speaker 2 (25:50):
So I think the forever money.
Speaker 4 (25:52):
It's difficult to say forever, but I think the more consistent,
more deliberate type of strategies. Whatever your value growth or whatever,
all right.
Speaker 2 (26:00):
I don't care. Here's what I care about. A kid is,
you know, like he's sort of recruited. He's not like
a star, he's not like, you know whatever, they call him,
five star high school kid. He ends up at Louisville.
So he grows up at Louisville, ends up at Florida,
and then through three teams he ends up making seventy
six million dollars with the Minnesota Vikings. This guy Jonathan
(26:23):
Greenard is like the real deal. Who is this guy
out of nowhere?
Speaker 4 (26:27):
But you got to remember too that that coaches put
people in the right position. And we have an amazing
defensive coordinator Brian Flores that is basically a co head coach,
and I think he might be one of the highest
paid assistant coaches in the league. But this guy's amazing.
He can take anybody. He took Andrew Grinkell. He's got
a cool name from the Miami Dolphins last year. It
(26:48):
made him a superstar.
Speaker 2 (26:49):
I do you think this is a like I had?
It almost like goosebumps here. This guy Greenard, you know,
was really sort of struggling bam with the Vikings. He's
a Pro Bowl superstar with mega money.
Speaker 4 (27:00):
Vikings are Vikings are I mean you know this is
coming from a Minnesota Viking Minnesota fan. Really, I just
went through it time getting crushed by the Yankees again.
But but you're welcome. The Yankees need a little pick
me up. But at the end of the day, I
think the Vikings are well positioned within within a within
a division. As you know, I think the Lions are
gonna be down. I think the Packers are gonna be down.
Speaker 2 (27:20):
JJ McCarthy against the Detroit Lions November three, I know
you'll be there. Can he can he do it? He
look good, and we look in the pre season. Finally, Brian,
you gotta understand, folks. Belski walks in with an entourage
of like seven people, and one of the interns whispered
to me talk about the Viking. Brian, thank you so much,
(27:41):
makes man, I can't you know, folks, we keep scoring here.
We really want to listen to the people that have
gotten it wrong. Okay, you can learn more from them,
but the people that we identify that have gotten this
bull market right, we want to listen to them now.
With futures sixty five hundred down, futures pushing up on
forty five five thousand. Brian Belski, BMO Capital.
Speaker 1 (28:07):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Cocklay, 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 (28:21):
Stephanie Baker, we're thrilled joins us here before Alaska. Stephanie,
thank you so much for joining us. And now we've
been gyrating around with some wire stories this morning. In
your book, you talk about capping Putin's war premium what
are we doing in Alaska? Are we trying to cap
(28:43):
the hopes in dreams of Vladimer Putin?
Speaker 9 (28:47):
No, it does not look like that's what Trump's going
to do. You know, this summit of itself is a
huge victory for Putin. He's an indicted war criminal under
US sanctions being welcomed on US soil, and the symbolism
of holding this in Alaska is not lost on anyone.
Speaker 5 (29:06):
You know, they.
Speaker 9 (29:09):
Very close to the United States. They're going to sit
down at a military base. You know, the Friday deadline
of severe sanctions if Putin doesn't agree to a ceasefire
has come and gone, and we still don't have any
additional sanctions by the US. Trump hasn't imposed any additional
(29:30):
sanctions since he entered the White House. This additional tariffon
India of twenty five percent doesn't actually come into force
for several weeks, so you know, it really remains to
be seen whether or not we will be back at
the debate about, you know, whether to sanction Russia additionally.
Speaker 2 (29:47):
You know, after Friday, Putin's been in office longer than
Peter the Great or Cat's in the Great. Stephanie Baker,
we're aware of, you know, with good spirit, how President
Trump is aged, how is edit or Putin age towards
this meeting from Helsinki and from his early years out
of the KGB.
Speaker 9 (30:10):
Well, you know, Putina obviously has staying power, and the
war is part of his gambit to stay in power
until he dies. There's been a lot of speculation about
Putin's health and you know, rumors, wild rumors of body
doubles being seen, you know, you know, Putin lookalikes going
(30:33):
to visit troops, you know, with the border close to
the border with Ukraine. I think Putin, from all accounts
that I've familiar with, Putin is in fairly good health
for a Russian man of his age. So I don't
think he's aged in any material sense. In that sense
since twenty eighteen, you know, I am bracing myself for
(30:57):
what will inevitably be a very bizarre press conference after
this summit, because as we remember the twenty eighteen Helsinki summit,
it was a very bizarre and depressing, you know, press
conference afterwards where he Trump questioned the legitimacy of US
intelligence that Russia interfered in the twenty sixteen election. You know,
(31:21):
this is not going to be a straightforward press conference afterwards,
so I think that you know it'll be We'll be
watching the words very carefully as to what they agree on,
if anything.
Speaker 2 (31:31):
Stephanie Vladimer Putin, does he have the support of the
elites of Russia or the Russian people.
Speaker 9 (31:42):
You know, Putin runs Russia with an iron fist, and
there's no real room for dissent. You know, the fear
of being thrown into prison for even the slightest offense
is extremely high. So I think the elites would love
to see a deal here. They want the sanctions lifted
(32:05):
because for all the talk and the bravado of Putin
that Russia is doing just fine under the sanctions, in reality,
the Russian economy is in a real bind right now.
The economy is slowing, Inflation is high at almost ten percent,
high interest rates, the banking sector, as we have reported,
(32:27):
is worried about rising bad loans. And I think that
the elite is really counting on sanctions relief, so they
want him to do some kind of a deal. Of course,
he's got their support because if any of them, any
of these oligarchs, go against him, they will have their
assets taken and they will be thrown in jail at
(32:50):
the very least.
Speaker 2 (32:50):
To the market opening. And we're thrilled to bring in
from Queen Victoria Street Stephanie Baker. The book is punishing Putin.
It's definitive. She is most up to speed and the
economic and political consequences of Russia. As we go to
this summit. Our Anne Marie Horden will be an anchorage.
Speaker 5 (33:07):
Paul, Stephanie, are there any reasonable expectations for this meeting
between mister Trump and mister Putin? Can anything materiality get done?
Do you think?
Speaker 9 (33:18):
I'm quite skeptical, because you know, usually with these big
US Russia summits, they are months of preparations ahead of time.
There's some kind of an agreement that is, you know,
worked out ahead of time, and that the leaders come
to just kind of seal the deal and sign it.
This time, Trump has billed it as a kind of
(33:41):
feel out summit, which is a very bizarre way of
going into the first US summit in four years and
the first time Putin has been welcomed on US soil
since two thousand and seven, So he doesn't have a
lot of Russia expertise at his side because they fired
so many people from the State Department, and they don't
have of the kind of Russia expertise in the National
(34:02):
Security a Council either. So the idea that He's going
to go into a meeting with Putin and come out
with some sort of detailed landswap is really unrealistic. I
think at best they will come out and say they're
going to kick this to working level groups and it
will continue to drag out, which is in Putin's interest
because actually Russian troops are gaining territory slowly and it's
(34:27):
a grind, huge enormous costs. But Putin's goals here have
not changed fundamentally. He does not want Ukraine to be
part of NATO. He wants caps on Ukrainian military and
his central demand is that he wants the remainder of
Dnetsk that he does not Russian forces do not control
(34:47):
on the ground, and that is a non starter for
Ukraine because that's where they have their strongest defenses protecting
other Ukrainian territory. If that goes, then that leaves Crane
very vulnerable for additional Russian attacks towards Kharkiv and other areas.
Speaker 5 (35:05):
Stephanie, what role if any will President Zelenski play on Friday.
Speaker 9 (35:11):
Well, he hasn't been invited to the table, which has
led to a lot of people comparing this to a
kind of modern day Munich. I think there's fear in
Ukraine that land will be handed over to Russia without
them even being at the table. Trump has said he
will call Zelenski right after the summit. They're having a
(35:33):
call today between Trump and European leaders, as well as
Jdvan and Zelensky, and I think they're trying to present
a united front warning Trump of the dangers of, you know,
legitimizing Russian territorial gains in Ukraine at this summit, that
(35:56):
they need to agree to ceasefire before any broader negotia
ciations actually begin. So whether or not that message gets through,
whether or not listens to it, I'm quite skeptical. But
I'm also quite skeptical that they're going to be able
to come up with anything meaningful out of this summit.
Speaker 2 (36:12):
We'll say goodbye to Stephanie Baker and we'll get around again.
Speaker 1 (36:15):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty saving.
Speaker 2 (36:33):
Us this morning. We're not worried about a cable no
to Milwauk. Well we should be because the rain there
has been so bad. Her Lucky Brent Shooty's with us.
Brent shooting chief investment Strategies at Northwestern Brent quickly year
before the market opening, the flooding in Milwaukee. I did
the math. Fourteen inches of rain? Is that true? That
is absolutely true.
Speaker 10 (36:53):
Unfortunately around my house we got about thirteen inches of rain,
which was quite a lot, and more than I've ever
seen in my life.
Speaker 2 (36:59):
Absolutely man, with some real hardship from Milwaukee. We say
good morning to everybody in the mid Midwest brand. The
market grinding higher, almost a melt up. Are we just
looking out to more buoyant earnings? If Northwestern Mutual looks
at the pulse of the nation, is this about an
earnings driven new belief or is it fed driven bull market?
(37:24):
I think it's a combination of everything.
Speaker 10 (37:25):
I mean, my big worry is where three to four
months into tariffs and we're all concluding at least investors are,
but they know exactly how this is going to end.
Speaker 2 (37:33):
I think the tails are wider.
Speaker 10 (37:34):
I think it's unlikely you have the same type of
economic environment that you had before, which led to that
market leadership that was pretty narrow. I think the biggest
thing for investors to me, is just diversify. That's how
you admit you don't know exactly what's going to happen
as you go from tariff rate it's a two and
a half percent to something probably over eighteen, which we
haven't done in one hundred years. And I think if
you think about that common alone, to me, that means
(37:55):
that everything that we're talking about potentially coming to fruition
is based upon economic theory, not actual reality in a
lab as large as the United States or the globe.
And so I do think there are opportunities out there
in small caps. I still think international stocks will hold
value because I do think the administration would like the
dollar lower, and so there are still opportunities. But I
would encourage investors to not get too far over their
(38:18):
skis and to maintain their asset allocation, which their financial
plan guides them towards because they're trying to meet their
long term goals and objectives.
Speaker 5 (38:26):
Brett, We've I guess the twenty five basis point FED
cut for September is kind of locked in, is what
I've read off of the street over the past twenty
four hours. But now even here's some discussion about a
fifty point basis cut. Fifty basis point cut hit in September,
what do you think.
Speaker 10 (38:43):
Tell me what the jobs market does in September. All
this CPI stuff is noise right now. Tell me what
the jobs market does and thats September print, and I'll
tell you whether it's twenty five or fifty or nothing
at all.
Speaker 2 (38:52):
And that's where I think.
Speaker 10 (38:53):
The reality is. Most FED members are more concerned about
the labor market. That's where if both policy sides of
the policy are disagreement or are moving in the wrong direction,
they will probably airr more towards the labor side equation.
And that's where I think is important. I don't think
the CPI report gave the Fed any room to cut rates,
but that's not the narrative right now. And even the
Treasury Secretary on your show this morning talked about his
(39:15):
belief they should cut by one hundred fifty basis points
because if they would have known what the labor market
numbers were, they would have cut. That is I think
it's all on that.
Speaker 2 (39:23):
I mean, we got to get to the market, open
your brand good to tell you there's greed in the screen.
But isn't that just stimulus. Aren't we really just talking
about a fiscal pop and maybe a monetary pop driving
us forward? Absolutely?
Speaker 10 (39:38):
I mean you're you're stimulating a later cycle economy, and
that's what I worry about. The good side of the equation.
The inflation has moved up, and I think that's where
people are suggesting that it's only point two percent with
tariffs being on right now for the second month in
a row. My concern is more what's happening on the
services side, and all the different inflation indicators we at
least have looked at in the past don't suggest that
inflation is going lower. They suggests it's going higher.
Speaker 2 (40:00):
Bread shooting with us here with Northwestern Mutual? What's great
about Bret? I mean this, seriously, folks. If you're in
quiet money like Northwestern Mutual, you have to go into
a room with compliance people and lawyers and you have
to memorize. Paul. Yeah, this phrase part of a carefully
balanced portfolio. And what I love about bread shooting is
(40:21):
he's so far, he's got like eight policemen helping him.
Police supposed to say part of a carefully balanced portfolio. Bret, Well,
we all own the Meg seven? What do we do?
Speaker 10 (40:33):
Oh, I don't think all. I'm sorry, Tom. I don't
think it's because of the policeman. I think it's because
of my beliefs. Look, I've done this for thirty years.
Towards the end of economic cycles, only certain parts of
the economy are doing well, which is why only certain
parts of the market do well. What happens on the
opposite side, at least in my thirty years of doing this,
is the market broadens out and the people who unfortunately
crowded into those areas that we're working, don't see their
(40:55):
portfolios work for years.
Speaker 2 (40:56):
And if you're thinking.
Speaker 10 (40:57):
About someone retiring and someone having cash flows and taking
money out of their portfolios, that's the enemy of that.
You can't have that happen. So I think about Japan
in the nineteen eighties, I think about the tech stocs
in two thousand. I think about financials and everything else
commodities in the two thousand and seven period. I think
about emerging markets back then. What happens is that there's
a new economic cycle. Look typically, what resets that is
(41:19):
a recession. This time, I don't know that we're going
to have one, but I think you have reset the
economic environment, and I think that means new leadership on
the opposite side of this. And that's where I encourage
investors to stay diversified. Everyone who comes on your show
and proclaims they know exactly what's going to happen. I
would have doubts they actually do, Otherwise they might not
be working. And that's where my SUCs remain diversified, and
(41:41):
to not concentrate, because it can make you spectatically rich
spectacular poor, and that's not the distribution that I want
to deal with when I deal with my clients.
Speaker 2 (41:48):
PAF of Future's Paul driving to a new high into
the opening. In the opening, they continue, Futures up twenty
now up twenty five down, futures up one eight six,
market deck up two tenths of a percent, up half
a percent now the vics fourteen point three three. We're
not letting shooty go until the VIX is a thirteen handle.
Speaker 5 (42:09):
Right real quick, about thirty seconds. How do we play
the fixed income side of the game.
Speaker 10 (42:14):
Look, I think longer term to two percent inflation target
is dead. But I think in the near turn there's
enough economic stress out there. You saw that in the
labor market, You've seen that in consumer delinquencies. That you
want to be just a little bit longer duration right now,
because I do think there is some sort of potential
for economic downside. I think longer term, you know, I
think things like tips will be more attractive, just because
I do think inflation is a likely outcome from all this,
(42:36):
even tying in my opening comments on the Feaer reserve
airing on the side of the labor market over inflation.
Speaker 2 (42:41):
Now bred shoot you, thank you so much. Then I'm
not supposed to be mutual. I really really appreciate that.
Speaker 1 (42:46):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot Com, the
Iheartrate a tune in, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(43:07):
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):
Ms Nordvig his book on the euro was outright courageous
over a decade ago, acclaimed on Wall Street and now
at exeenting data. Can dollar weakness continue?
Speaker 3 (00:40):
I think it can? It can. It's we were talking
about a couple of months ago, and what happened a
couple of months ago is we had this pretty big
dramatic shift in how people think about asset location. So
a lot of our clients have been taken down the
dollar exposure from Cana that to Europe, to Asian countries.
(01:03):
So I think we're well and we're sort of well
into that process. People have done a lot of that.
So I think we're going into a new phase. And
I would echo what you're saying. I think then that
that's got best. An interview was fantastic, very transparent. But
I think we're going into a new phase where it's
it's more about the FED again, like it's the FED
(01:25):
going to do something.
Speaker 4 (01:26):
Right.
Speaker 3 (01:27):
Is the pressure on the FED going to have an
influence on the dollar? I think actually what you're seeing
this week is that the dollar is kind of leaking.
Speaker 2 (01:37):
And exactly perfect.
Speaker 3 (01:39):
It's kind of because investors are a little bit uncomfortable
with this pressure, and I think that's adding to a
new phase here that's not just about you know, FX hedging,
but it's think about what the FED is going to
do in coming quarters.
Speaker 5 (01:54):
So I mean, all right, you're selling the dollar. We've
seen other risk assets come back to uses and ps
come back and so on. You're selling a dollar. What
are you buying? So I mean, am I getting better
growth than the US?
Speaker 3 (02:09):
Yeah? So I get this question. I would say, not
every day, not every week, but regularly get this question
like what else? What else is there to buy?
Speaker 6 (02:19):
Right?
Speaker 3 (02:19):
So you look around the world, and the point I
would make is the following, Right, We're not in a
zero interest rate global environment anymore. Like there are fixed
income instruments you can own in Europe other places in
the world right where you can get some yield. Right,
So from a yield perspective, it's not as one sided
(02:41):
as it was where the US was the only place
in the world you can get any yield, right, So
there is some competition from a yield perspective, and we
obviously we've seen in equity markets, even though you've had
the big bounce in you as stocks, they're actually still
lagging relative to a number of global markets. Right. So
I think there's a lot of equity investors that after
(03:02):
several years where you had to be focused on the US,
there are alternatives, right. So people are looking at European banks,
like there's something going on with European investments where European
banks are going to play an important role, right, So
I think that's one place that people are looking.
Speaker 7 (03:21):
Assets are still relatively cheap.
Speaker 3 (03:23):
Around the world, right, So if you believe that valuation
has any role in as a location, that's an argument.
But there's also basic diversification argument. Bloomberg had a good
story yesterday about how some of the big Canadian pension
funds have diversified out of the dollar. It's very consistent
with the conversations we have with chief investments officers around
(03:46):
the world. Right, Dollar exposure has been taken down from
a very elevated level going into this year.
Speaker 5 (03:52):
So inflation here we got to I think most people
feel like was kind of a benign reading yesterday, a
little bit of up depending upon it. How do you
want to look at it? But I think less than
maybe some people expected. Are are tariff's going to find
their way into the inflation data?
Speaker 3 (04:08):
Do you think this has become a quite controversial topic
as you've seeing that. I was in touch with Jan
Hatzius yesterday, like he's obviously feeling some heat from having
put out views on this.
Speaker 2 (04:21):
His badge works, his badge works downtown this morning. We
gotta we got to recapitulate this, folks and slow down here.
This is important. Yan's nord been working for years with
a younger Y Hatzias. Jim O'Neil set up Modern Goldman
sex Economics with a guy named Bill Dudley and Ed
mc kelvey. Mister Dudley, of course, went on to the
New York Fed. They had all these young whipper snappers
(04:44):
walking around, and one of them was a guy from
Germany named Jan Hatzias, who single handidly codified mortgage equity
withdrawal within Global Wall Street. That's how I first came
to know Jana Hatzias and Jan's nord Big was absolutely
this guy out of Copenhagen, like he knew every restaurant
(05:04):
in Copenhagen, and they and others they put together this
just incredibly eclectic and original team under Jim O'Neill and
Bill Dudley leaderships. Nordvik went off to do other things
including founding and excited Data, and mister Hatzius at some
point was promoted up the food chain to get the
(05:26):
radar of Donald Trump.
Speaker 3 (05:28):
It's a good summary.
Speaker 6 (05:30):
It sounds like actually like when I'm.
Speaker 3 (05:34):
Well, it's a it's it's it's rare that you have
a situation where the president of the United States, like
is involved in some kind of tension with an economist
at a bank, right, So we're in an unusual situation.
So I think is going to continue to do his research,
continue to do his forecasting, and and hopefully the management
(05:56):
will be dealing with that appropriately.
Speaker 2 (05:58):
But going back to the.
Speaker 3 (06:00):
Question that the tariffs are coming through in the numbers,
but we should also be very aware, right that the
tariffs have not been going up linearly. We had a
huge tariff shock, and then the tariffs actually went down,
like the Chinese tariffs went up above one hundred percent
(06:22):
and then they went down. So when we analyzed the
monthly inflation reports, we have to be very precise about
was this a month where teriffs actually went up or down?
And I will argue that the report we had yesterday
was actually reflecting that the tariff rates on China came
down into that report. Right. So when we look into
(06:43):
the coming months, which is obviously what investors care about
the future, not the past, we are looking at a
new shock from the reciprocal tariffs kicking in here August tenth.
That's going to be in the inflation numbers mostly in
September and October, and it's not going to make the
fetch job easier.
Speaker 2 (07:03):
I want you to take the microeconomic foundations at Bill
Dudley and Company demanded and you were expert at, and
walk through the X axis of tariffs in your study
in America, we would go back to William McKinley. I'm
going to say eighteen ninety nine off the top of
my head, the exporter adapts, the importer at the shore adapts,
(07:26):
and then it's passed on to the consumer. What's that
X axis look like.
Speaker 6 (07:33):
Well, we we had an initial shock right in April
that only lasts a couple of days, So that's kind
of noise, Like, so where did we settle in April?
Speaker 3 (07:45):
We had a shock in the region thirteen percent, right,
So if we put that thirteen percent in the context
of having had one or two percent before, it is
a dramatic shift, and companies are adjusting at different speed.
So there's some goods categories where companies have passed it
(08:06):
through already, and then there are sectors where companies have
a lot of influence on their price. Apple has a
lot of influence on their price. They don't have that
much competition for iPhones, right, so they can set it
and they have not passed it through.
Speaker 5 (08:24):
In the auto.
Speaker 3 (08:24):
Sector, Toyota is a very important company, very important company,
and they have not passed it through other companies in
that sector. Then waiting what's Toyota eventually going to do.
If Toyota moves, we're going to move as well, right,
So it really depends on what good it is, what
that passed through has been. It would be surprising if
there's not more passed through over time, especially since tariff
(08:47):
rates and no going going back up. But I think
what is also tricky is like how much should the
FED look through because like it used to be the
case that the FED viewed as kid's a one off
shift to the price level. We have to mostly look
through it. And I don't I don't want to be
(09:08):
too critical of Powell, but I do think there has
been a bit of an odd shift within the FED
where they're focusing very much on realized inflation, what is
the inflation next couple of months, as opposed to saying
there's an element of the pricelift the level shifting in
a one off way, and it used to be the
case that they want to look through that, and I think.
Speaker 2 (09:28):
Yeah, Best alluded to that.
Speaker 3 (09:30):
Yeah, I mean I think I actually agree with that criticism,
to be honest.
Speaker 2 (09:33):
Yep.
Speaker 5 (09:34):
And so so inflation is one thing we've got. We
got some data yesterday. How about the labor market? They
are also FED is also looking at the labor market,
and again we had some odd data with some revisions
last week. You know, it just kind of puts that
front and center once again.
Speaker 3 (09:49):
Yeah, Like like when we looked at the labor data,
not in the last report, but in the before that,
it looked really odd that there was the surge in
governmental hiring like it was totally in conflict with all
the anecdotes we're getting right, So the data did look odd,
(10:09):
and now we have like a big revision to what's
happening in the government sector that actually makes it look
less odd. The private sector is probably.
Speaker 7 (10:20):
Where we really should focus, right, because it's deliberate that
we're reducing the public sector employment, right, it's like an
actual policy steps that's very deliberate.
Speaker 3 (10:31):
What's happening in the private sector is more important, and
I think the data there is very tricky. We have
a real time labor indicator that we're tracking right, where
we look at everything that is a second labor market,
and it's not falling off a cliff, that's for sure.
There's some gradual deterioration, and then recently it's actually not
(10:51):
obvious that it's getting worse. So the FED is dealing
with this thing where the revisions look very bad, but
it's not obvious that the momentum is getting worse.
Speaker 5 (11:01):
It's tricky for the fact.
Speaker 2 (11:02):
One final question, this is from Paul from New Jersey.
Your book is the follow the Euro? Can you get
the Euro to parody? Before the third week of September
when Paul's.
Speaker 3 (11:12):
Going to Europe. My book was written a few years ago,
and we did have some problems with the euro in
the meantime. But as I think you you texted me
the other day, Tom, you said, don't why don't you
write the fall of the dollar instead, like the dollar
has some issues as well, and.
Speaker 2 (11:31):
They get some news here can you give? Are we
going to get a new book?
Speaker 3 (11:35):
I would I would like to write about the dollar.
I have to get approval from my wife before I
write another books. But the idea is that the administration
wants the dollar weekend right. So it's not like it's
not just like it's something that happened by action. It's
actually something that the administration wants by design. So there's
(11:57):
some structural changes here that we not under estimate. And
this is why I think we're going through these phases
where the dollar was weakening due to the capital flows
in the first half. Now we're going through the FED phase.
And we've been through such a long bull run for
the dollar up until this year that we can have
(12:19):
multiple phases of dollar weakness from here.
Speaker 2 (12:21):
Yes, thank you, thank you, thank you, thank you for
waiting for after the best and comments. Well, yes, nord
Vic with Vick Sante Data.
Speaker 1 (12:33):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern. Listen on
Apple Karplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (12:46):
Data Seef joins the Namura the ear lead economist, and
I do this because I can't convey to you, folks
the intimidation of this list of people. Harvey Rosen, Lawrence Summer's,
Jeffries Sachs, a guy named Almandorf who was pretty good
at CBO. As I recall Stephen Mirin very much in
(13:08):
the news with President Trump and David Cef. You had
the honor of studying with Martin Feldstein, who was such
a supporter of it. And let's start there. Do you worry,
with all the heritage of Marty Feldstein about our debt
and our deficit?
Speaker 3 (13:24):
Oh?
Speaker 8 (13:24):
Absolutely. I think this is a very indebted country that
we have, and there isn't much prospect of that closing
anytime soon. We're not running deficits right now in order
to stimulate an economy that's in recession. This is just
a very large structural deficit that has developed over decades,
and there's no sign of it going down at home.
Speaker 2 (13:46):
Soon without getting you in trouble with compliance at namurra
Ken Rogoff in my book of the Summer our dollar
year Problem makes clear we could see the long end
of raids go priced down, yield up and burst through.
Is that I don't want to get in trouble at
the Murah? But is that an outcome that's possible not probable?
Speaker 8 (14:06):
Unfortunately we've already written about that, so I'm not at
risk of getting controlla fer opine one.
Speaker 6 (14:11):
Yeah.
Speaker 8 (14:11):
I think this is I think this is an increasing
investor concern, and I would say a concern of mine
as well. Over the past couple of months, we've seen
i'd say, really starting in April with the sort of
post Liberation Day announcement and then you know, events in
the UK, events in exactly we've seen, crisis happens, the
(14:31):
back end sells off, the crisis then is resolved and
the back end doesn't come back, so the yield spikes,
and then when the crisis is solved, it just sort
of stays there.
Speaker 5 (14:41):
It doesn't get any worse.
Speaker 8 (14:42):
But we've seen the steady steepening of the curve and
it's not the good kind of steepening. It's not the
kind of steepening where people are like, oh, you know,
the economy is going to be growing better, and therefore longer.
Speaker 5 (14:54):
Longer term rate should be or yield should be higher.
Speaker 8 (14:57):
It's the kind of steepening where people are like, oh,
I'm a little worried about what inflation is going to be.
Like globally, I'm a little worried about, you know, what
the future holds in terms of risk, and therefore I
demand a higher risk premium for locking my money up,
even with these very safe developed market economies like in
the US, UK, Japan.
Speaker 5 (15:18):
David, are you surprised that we haven't seen more inflation
in this US economy yet or is it just a
matter of time or maybe the corporations are just taking
it in the margin, we're not going to see it.
Speaker 8 (15:29):
Well, I mean, you know, you can't argue with the
data from yesterday, we did not really see the signs
of tariff induced inflation that we had been expecting. You know, inflation,
core inflation did tick up a little bit, but really,
when when you broke it down, it was things that
were not related to the tariffs that happened yesterday, and
that was actually in contrast to a month prior where
(15:51):
you did see some signs, there wasn't the follow through
in the data yesterday, and I think that does open
the door for the Fed to certainly be cutting in
STIP at its next meeting as a result.
Speaker 5 (16:01):
And I guess we went It seems like in the
space of twenty four hours, we went from saying okay,
I guess a twenty five basis point cut is locked
in for September. Now, the rhetoric over the past twelve
eighteen hours has been maybe fifty basic way drinking game.
How do you think about that?
Speaker 8 (16:19):
You know, it certainly can't roll it out, but it's
not our view that it's going to happen right now.
There are a couple of things. The first thing is
that the economy still looks like it's okay. The economy
is still growing. We had, you know, a decently robust
second quarter GDP print, not perfect, but the labor market,
(16:40):
despite having a big negative downgrade, we still have a
four point two percent unemployment rate. And then on top
of that, I think that the Fed probably remembers last
year it looked like it overreacted by going fifty in
September last year, Paul, can.
Speaker 2 (16:53):
I go theoretical, go it's Wednesday and no economic data.
If you have nominal GDP and it's an impulse from
real GDP less lesser inflation as compared to an impulse
of inflation rising with a lesser real GDP, are they equal?
(17:13):
Are they are they efficaciously benefit to society? Or is
there a difference in those two nominal GDPs.
Speaker 8 (17:20):
I think that's a big difference. I mean, I think
we we we certainly would always hope that it's being
driven not by prices rising but by by real actual
production of stuff.
Speaker 5 (17:29):
Right, that's what real gas.
Speaker 2 (17:30):
Which you see right now. Yeah, well, right now.
Speaker 8 (17:32):
We see a little bit of both, right, and and
so that's not necessarily quite as good as before, but
where we had more of it coming from the real
GDP growth side. But I would also say it's pretty
far from a disaster. However, companies, you know, companies are
trying to hit nominal targets and it's not as important
for them. And I think you know, when we had
(17:53):
the inflation you know episode in twenty two twenty three,
following COVID, a lot of companies did really well, just
because their nominal earnings were going.
Speaker 5 (18:03):
Up as a result of that.
Speaker 8 (18:05):
So I do think that for you know, going back
to what you were saying before about the stoff market,
a little bit of an increase in inflation, whatever the
cause may be, is probably you know, good for these
companies over the shorter run.
Speaker 2 (18:18):
This is Phil Correy, a pioneer years ago. The bread
lights of inflation help everybody.
Speaker 5 (18:23):
Exactly Friday, We're gonna get retail sales, David, how's the
consumer hanging in there?
Speaker 2 (18:27):
Do you think the consumer?
Speaker 8 (18:28):
We actually still think is pretty good. And you know,
we've seen retail sales growing slower than earnings have been growing.
And I think on top of that, one key thing,
and this does go back to the labor market. Even
though we're seeing we've seen now several months of relatively
weak job growth on a net basis, on a growth basis,
(18:49):
there's very few layoffs, right And what really kills retail
sales is not a lack of net jobs, but people
being laid off. Right and right now, job security remains
very high, almost as high as it's ever been, So
your odds of being laid off if you have a
job are extremely low.
Speaker 2 (19:09):
I can't tell you how many of our listeners and
viewers disagree with what you just said. Yeah, I get
the mail on it. Well, Dan, same, job security is okay.
Speaker 8 (19:18):
Job security is a lot better than it would typically
be with these level of NFP.
Speaker 2 (19:24):
Absolutely, don't be a stranger, David C. Thank you so
much this morning. Really wonderful to have him in with
the privilege of studying with Martin Feldstein at Harvard years ago.
Speaker 1 (19:35):
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 (19:51):
Everybody's going rationalize, rationalized, rationalize. What Brian Belski does at
Female Capital Markets is he just seven pages and you
hate them because you have to read usually ice skin
like the first paragraph and you know, move on shore.
I can't do it with Belski. You can't do that.
What's your paragraph for? Say right now, Brian Belski about
(20:12):
the fact there isn't exuberance like I look at some
of the major houses analysis of the hedge fun enthusiasm
the market l long only it's not a roaring bull market.
It is, but it's not.
Speaker 4 (20:31):
WELLO, good morning. We've run out of ways to try
to explain this, whether or not we're climbing the walla
Werry or the most hated bullmarket ever, which we've talked
about ten years ago.
Speaker 2 (20:42):
And I think it's just.
Speaker 4 (20:43):
This notion of so many investors from the institutional perspective.
Tom just love making binary opinions, meaning I'm out, I'm in,
I'm bullish, I'm bearish.
Speaker 2 (20:52):
There's no but you mean I studied it wasn't like that.
Speaker 4 (20:55):
It wasn't like it wasn't like that. And there's so
much talk of small caps will never work again. Oh,
by the way, now everybody thinks we're going to cut rates,
so small caps are up today. I mean, that's not
investing right. And so we really believe that this big
secular bull market has had several different.
Speaker 2 (21:12):
Versions of it.
Speaker 4 (21:13):
We think we're entering a new version of it that
could last another ten years. Part of our twenty to
twenty five year secular bull market theme and theory that
we've been consistent on in the marketplace since two thousand
and nine to twenty ten. So this what's going on
right now. And to answer your question on hedge funds, remember,
hedge funds have had terrible performance, terrible performance the last
(21:34):
three to five years. Long only have been late to
come in. But people that have been right in terms
of investing have been private wealth and family offices because
they have maintained their investment perspective and been much more disciplined.
Speaker 5 (21:49):
Y s and P five hundred futures just below sixty
five hundred is Thomas mentioning? You say your sixty seven
hundred target is too low. Why is that?
Speaker 4 (21:57):
Well, I mean our bolcases is seventy seven seventy two hundred.
We think that earnings are going to be a little
bit better than everybody thinks.
Speaker 2 (22:05):
And rolling forward three months.
Speaker 4 (22:07):
Very much, Well, I think it's three to six months, Tom,
I really do. And I think where the big kick
is gonna come from our financials, uh, you know, the
financial strength in terms of the really big banks, but
also the brokers. I think we're gonna have a bang
on second half, especially fourth quarter, in terms of investment banking.
Tom mentioned the word exuberance, Paul, if you think about
irrational exuberance. Not everybody's making money yet, So the more
(22:30):
the more you talk about a bubble, there's no bubba though.
Just because things go up doesn't mean there's a bubble
when everybody's making money. So what do I mean by that?
Financial services big banks aren't making a lot of money
in terms of the tech trade or the AI trade
because we're not seeing massive amounts of IPOs. But more importantly,
we're not seeing quote unquote silly types of mergers, like
(22:50):
big company mergers done with stock. When we see that
type of stuff, then we're getting closer to the end.
But we're nowhere near that.
Speaker 5 (22:58):
So are we sticking with what goddess here? Tech comm services,
that kind of thing.
Speaker 4 (23:04):
You know what's interesting is that back in the nineties
we bought big cap stocks in nifty to fifty and
the rational exuberants that mister Greenspan talked about was that
actually about stocks like Procter and Gamble and Gillette and
Coca Cola. But you know what those stocks are now,
they're Google, Apple, Microsoft, their liquidity and so what happens
when people get worried is they come back right back
(23:25):
into liquidity because they can participate in the market. So
as the market kind of gets a little bit lofty here,
we're gonna see more broadening out. Then we'll get some
sort of a pullback. This is all very normal. And
guess what's gonna lead coming.
Speaker 2 (23:36):
Out of the pullback?
Speaker 4 (23:38):
Large cap tech again. So we think from a secular basis,
there's several areas of tech, not all of tech, right,
but there's several areas within tech that you can will
and should be more stockpicking oriented.
Speaker 5 (23:48):
All Right, we got some data over the last couple
of days that seems to solidified a twenty five point
basis point cut. I don't know the last twelve hours.
I woke up to my scroll was saying, hey, how
about fifty basis points? What are we doing there?
Speaker 4 (24:02):
Yeah, I think that's kind of wishful thinking. I think
that that that inn rview would be jumping the gun
at fifty. I think there's been an increased talk about
that quite frankly. And what we've said is that the
market's trend is not dependent not dependent on the FED cutting.
This is all about earnings and all about the market
recovering and actually people getting reinvested again after missing this move.
Speaker 2 (24:26):
I want to get back to what our listeners and
viewers should do that don't speculate. I mean, they watched
the parlor game as I call it, and you know
they're entertained by it, but they just want to there's
a wall, as Larry McDonald says, there's a wall of
money out there and it's going to go in. Is
the money going into the market by conservative family office,
(24:46):
private wealth in that? Is that forever money that's going in.
You just assume they're buying at the margin, whatever sect
or whatever stuck whatever and it's like forever.
Speaker 4 (24:56):
I well, I think what's happening is you obviously if
you have a lot of of baby boomers that are retiring,
and then with their retirement and that four oh one
k money, they're able to roll it over in an IRA.
I think a lot of people aren't talking enough about
that number one, number two in terms of this forever money.
Remember too, that because of the binary decisions of a
lot of people selling bonds quite frankly at the low,
(25:18):
I think that there's still an opportunity to be in
sixty forty and be more diversified on the forever money.
I think what we've encountered in our great private wealth
platform at BIMO in terms of not only private wealth
but asset management. They've been very consistent and more disciplined
in terms of when the market goes down, they add
they average back in and where the institutional world usually
(25:41):
has to sell because either they're getting a call from
their compliance department, they're over they're oversized in video, or
something where a private wealth person could say, well, I
need to mark the market.
Speaker 2 (25:50):
So I think the forever money.
Speaker 4 (25:52):
It's difficult to say forever, but I think the more consistent,
more deliberate type of strategies. Whatever your value growth or whatever,
all right.
Speaker 2 (26:00):
I don't care. Here's what I care about. A kid is,
you know, like he's sort of recruited. He's not like
a star, he's not like, you know whatever, they call him,
five star high school kid. He ends up at Louisville.
So he grows up at Louisville, ends up at Florida,
and then through three teams he ends up making seventy
six million dollars with the Minnesota Vikings. This guy Jonathan
(26:23):
Greenard is like the real deal. Who is this guy
out of nowhere?
Speaker 4 (26:27):
But you got to remember too that that coaches put
people in the right position. And we have an amazing
defensive coordinator Brian Flores that is basically a co head coach,
and I think he might be one of the highest
paid assistant coaches in the league. But this guy's amazing.
He can take anybody. He took Andrew Grinkell. He's got
a cool name from the Miami Dolphins last year. It
(26:48):
made him a superstar.
Speaker 2 (26:49):
I do you think this is a like I had?
It almost like goosebumps here. This guy Greenard, you know,
was really sort of struggling bam with the Vikings. He's
a Pro Bowl superstar with mega money.
Speaker 4 (27:00):
Vikings are Vikings are I mean you know this is
coming from a Minnesota Viking Minnesota fan. Really, I just
went through it time getting crushed by the Yankees again.
But but you're welcome. The Yankees need a little pick
me up. But at the end of the day, I
think the Vikings are well positioned within within a within
a division. As you know, I think the Lions are
gonna be down. I think the Packers are gonna be down.
Speaker 2 (27:20):
JJ McCarthy against the Detroit Lions November three, I know
you'll be there. Can he can he do it? He
look good, and we look in the pre season. Finally, Brian,
you gotta understand, folks. Belski walks in with an entourage
of like seven people, and one of the interns whispered
to me talk about the Viking. Brian, thank you so much,
(27:41):
makes man, I can't you know, folks, we keep scoring here.
We really want to listen to the people that have
gotten it wrong. Okay, you can learn more from them,
but the people that we identify that have gotten this
bull market right, we want to listen to them now.
With futures sixty five hundred down, futures pushing up on
forty five five thousand. Brian Belski, BMO Capital.
Speaker 1 (28:07):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Cocklay, 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 (28:21):
Stephanie Baker, we're thrilled joins us here before Alaska. Stephanie,
thank you so much for joining us. And now we've
been gyrating around with some wire stories this morning. In
your book, you talk about capping Putin's war premium what
are we doing in Alaska? Are we trying to cap
(28:43):
the hopes in dreams of Vladimer Putin?
Speaker 9 (28:47):
No, it does not look like that's what Trump's going
to do. You know, this summit of itself is a
huge victory for Putin. He's an indicted war criminal under
US sanctions being welcomed on US soil, and the symbolism
of holding this in Alaska is not lost on anyone.
Speaker 5 (29:06):
You know, they.
Speaker 9 (29:09):
Very close to the United States. They're going to sit
down at a military base. You know, the Friday deadline
of severe sanctions if Putin doesn't agree to a ceasefire
has come and gone, and we still don't have any
additional sanctions by the US. Trump hasn't imposed any additional
(29:30):
sanctions since he entered the White House. This additional tariffon
India of twenty five percent doesn't actually come into force
for several weeks, so you know, it really remains to
be seen whether or not we will be back at
the debate about, you know, whether to sanction Russia additionally.
Speaker 2 (29:47):
You know, after Friday, Putin's been in office longer than
Peter the Great or Cat's in the Great. Stephanie Baker,
we're aware of, you know, with good spirit, how President
Trump is aged, how is edit or Putin age towards
this meeting from Helsinki and from his early years out
of the KGB.
Speaker 9 (30:10):
Well, you know, Putina obviously has staying power, and the
war is part of his gambit to stay in power
until he dies. There's been a lot of speculation about
Putin's health and you know, rumors, wild rumors of body
doubles being seen, you know, you know, Putin lookalikes going
(30:33):
to visit troops, you know, with the border close to
the border with Ukraine. I think Putin, from all accounts
that I've familiar with, Putin is in fairly good health
for a Russian man of his age. So I don't
think he's aged in any material sense. In that sense
since twenty eighteen, you know, I am bracing myself for
(30:57):
what will inevitably be a very bizarre press conference after
this summit, because as we remember the twenty eighteen Helsinki summit,
it was a very bizarre and depressing, you know, press
conference afterwards where he Trump questioned the legitimacy of US
intelligence that Russia interfered in the twenty sixteen election. You know,
(31:21):
this is not going to be a straightforward press conference afterwards,
so I think that you know it'll be We'll be
watching the words very carefully as to what they agree on,
if anything.
Speaker 2 (31:31):
Stephanie Vladimer Putin, does he have the support of the
elites of Russia or the Russian people.
Speaker 9 (31:42):
You know, Putin runs Russia with an iron fist, and
there's no real room for dissent. You know, the fear
of being thrown into prison for even the slightest offense
is extremely high. So I think the elites would love
to see a deal here. They want the sanctions lifted
(32:05):
because for all the talk and the bravado of Putin
that Russia is doing just fine under the sanctions, in reality,
the Russian economy is in a real bind right now.
The economy is slowing, Inflation is high at almost ten percent,
high interest rates, the banking sector, as we have reported,
(32:27):
is worried about rising bad loans. And I think that
the elite is really counting on sanctions relief, so they
want him to do some kind of a deal. Of course,
he's got their support because if any of them, any
of these oligarchs, go against him, they will have their
assets taken and they will be thrown in jail at
(32:50):
the very least.
Speaker 2 (32:50):
To the market opening. And we're thrilled to bring in
from Queen Victoria Street Stephanie Baker. The book is punishing Putin.
It's definitive. She is most up to speed and the
economic and political consequences of Russia. As we go to
this summit. Our Anne Marie Horden will be an anchorage.
Speaker 5 (33:07):
Paul, Stephanie, are there any reasonable expectations for this meeting
between mister Trump and mister Putin? Can anything materiality get done?
Do you think?
Speaker 9 (33:18):
I'm quite skeptical, because you know, usually with these big
US Russia summits, they are months of preparations ahead of time.
There's some kind of an agreement that is, you know,
worked out ahead of time, and that the leaders come
to just kind of seal the deal and sign it.
This time, Trump has billed it as a kind of
(33:41):
feel out summit, which is a very bizarre way of
going into the first US summit in four years and
the first time Putin has been welcomed on US soil
since two thousand and seven, So he doesn't have a
lot of Russia expertise at his side because they fired
so many people from the State Department, and they don't
have of the kind of Russia expertise in the National
(34:02):
Security a Council either. So the idea that He's going
to go into a meeting with Putin and come out
with some sort of detailed landswap is really unrealistic. I
think at best they will come out and say they're
going to kick this to working level groups and it
will continue to drag out, which is in Putin's interest
because actually Russian troops are gaining territory slowly and it's
(34:27):
a grind, huge enormous costs. But Putin's goals here have
not changed fundamentally. He does not want Ukraine to be
part of NATO. He wants caps on Ukrainian military and
his central demand is that he wants the remainder of
Dnetsk that he does not Russian forces do not control
(34:47):
on the ground, and that is a non starter for
Ukraine because that's where they have their strongest defenses protecting
other Ukrainian territory. If that goes, then that leaves Crane
very vulnerable for additional Russian attacks towards Kharkiv and other areas.
Speaker 5 (35:05):
Stephanie, what role if any will President Zelenski play on Friday.
Speaker 9 (35:11):
Well, he hasn't been invited to the table, which has
led to a lot of people comparing this to a
kind of modern day Munich. I think there's fear in
Ukraine that land will be handed over to Russia without
them even being at the table. Trump has said he
will call Zelenski right after the summit. They're having a
(35:33):
call today between Trump and European leaders, as well as
Jdvan and Zelensky, and I think they're trying to present
a united front warning Trump of the dangers of, you know,
legitimizing Russian territorial gains in Ukraine at this summit, that
(35:56):
they need to agree to ceasefire before any broader negotia
ciations actually begin. So whether or not that message gets through,
whether or not listens to it, I'm quite skeptical. But
I'm also quite skeptical that they're going to be able
to come up with anything meaningful out of this summit.
Speaker 2 (36:12):
We'll say goodbye to Stephanie Baker and we'll get around again.
Speaker 1 (36:15):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple, Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty saving.
Speaker 2 (36:33):
Us this morning. We're not worried about a cable no
to Milwauk. Well we should be because the rain there
has been so bad. Her Lucky Brent Shooty's with us.
Brent shooting chief investment Strategies at Northwestern Brent quickly year
before the market opening, the flooding in Milwaukee. I did
the math. Fourteen inches of rain? Is that true? That
is absolutely true.
Speaker 10 (36:53):
Unfortunately around my house we got about thirteen inches of rain,
which was quite a lot, and more than I've ever
seen in my life.
Speaker 2 (36:59):
Absolutely man, with some real hardship from Milwaukee. We say
good morning to everybody in the mid Midwest brand. The
market grinding higher, almost a melt up. Are we just
looking out to more buoyant earnings? If Northwestern Mutual looks
at the pulse of the nation, is this about an
earnings driven new belief or is it fed driven bull market?
(37:24):
I think it's a combination of everything.
Speaker 10 (37:25):
I mean, my big worry is where three to four
months into tariffs and we're all concluding at least investors are,
but they know exactly how this is going to end.
Speaker 2 (37:33):
I think the tails are wider.
Speaker 10 (37:34):
I think it's unlikely you have the same type of
economic environment that you had before, which led to that
market leadership that was pretty narrow. I think the biggest
thing for investors to me, is just diversify. That's how
you admit you don't know exactly what's going to happen
as you go from tariff rate it's a two and
a half percent to something probably over eighteen, which we
haven't done in one hundred years. And I think if
you think about that common alone, to me, that means
(37:55):
that everything that we're talking about potentially coming to fruition
is based upon economic theory, not actual reality in a
lab as large as the United States or the globe.
And so I do think there are opportunities out there
in small caps. I still think international stocks will hold
value because I do think the administration would like the
dollar lower, and so there are still opportunities. But I
would encourage investors to not get too far over their
(38:18):
skis and to maintain their asset allocation, which their financial
plan guides them towards because they're trying to meet their
long term goals and objectives.
Speaker 5 (38:26):
Brett, We've I guess the twenty five basis point FED
cut for September is kind of locked in, is what
I've read off of the street over the past twenty
four hours. But now even here's some discussion about a
fifty point basis cut. Fifty basis point cut hit in September,
what do you think.
Speaker 10 (38:43):
Tell me what the jobs market does in September. All
this CPI stuff is noise right now. Tell me what
the jobs market does and thats September print, and I'll
tell you whether it's twenty five or fifty or nothing
at all.
Speaker 2 (38:52):
And that's where I think.
Speaker 10 (38:53):
The reality is. Most FED members are more concerned about
the labor market. That's where if both policy sides of
the policy are disagreement or are moving in the wrong direction,
they will probably airr more towards the labor side equation.
And that's where I think is important. I don't think
the CPI report gave the Fed any room to cut rates,
but that's not the narrative right now. And even the
Treasury Secretary on your show this morning talked about his
(39:15):
belief they should cut by one hundred fifty basis points
because if they would have known what the labor market
numbers were, they would have cut. That is I think
it's all on that.
Speaker 2 (39:23):
I mean, we got to get to the market, open
your brand good to tell you there's greed in the screen.
But isn't that just stimulus. Aren't we really just talking
about a fiscal pop and maybe a monetary pop driving
us forward? Absolutely?
Speaker 10 (39:38):
I mean you're you're stimulating a later cycle economy, and
that's what I worry about. The good side of the equation.
The inflation has moved up, and I think that's where
people are suggesting that it's only point two percent with
tariffs being on right now for the second month in
a row. My concern is more what's happening on the
services side, and all the different inflation indicators we at
least have looked at in the past don't suggest that
inflation is going lower. They suggests it's going higher.
Speaker 2 (40:00):
Bread shooting with us here with Northwestern Mutual? What's great
about Bret? I mean this, seriously, folks. If you're in
quiet money like Northwestern Mutual, you have to go into
a room with compliance people and lawyers and you have
to memorize. Paul. Yeah, this phrase part of a carefully
balanced portfolio. And what I love about bread shooting is
(40:21):
he's so far, he's got like eight policemen helping him.
Police supposed to say part of a carefully balanced portfolio. Bret, Well,
we all own the Meg seven? What do we do?
Speaker 10 (40:33):
Oh, I don't think all. I'm sorry, Tom. I don't
think it's because of the policeman. I think it's because
of my beliefs. Look, I've done this for thirty years.
Towards the end of economic cycles, only certain parts of
the economy are doing well, which is why only certain
parts of the market do well. What happens on the
opposite side, at least in my thirty years of doing this,
is the market broadens out and the people who unfortunately
crowded into those areas that we're working, don't see their
(40:55):
portfolios work for years.
Speaker 2 (40:56):
And if you're thinking.
Speaker 10 (40:57):
About someone retiring and someone having cash flows and taking
money out of their portfolios, that's the enemy of that.
You can't have that happen. So I think about Japan
in the nineteen eighties, I think about the tech stocs
in two thousand. I think about financials and everything else
commodities in the two thousand and seven period. I think
about emerging markets back then. What happens is that there's
a new economic cycle. Look typically, what resets that is
(41:19):
a recession. This time, I don't know that we're going
to have one, but I think you have reset the
economic environment, and I think that means new leadership on
the opposite side of this. And that's where I encourage
investors to stay diversified. Everyone who comes on your show
and proclaims they know exactly what's going to happen. I
would have doubts they actually do, Otherwise they might not
be working. And that's where my SUCs remain diversified, and
(41:41):
to not concentrate, because it can make you spectatically rich
spectacular poor, and that's not the distribution that I want
to deal with when I deal with my clients.
Speaker 2 (41:48):
PAF of Future's Paul driving to a new high into
the opening. In the opening, they continue, Futures up twenty
now up twenty five down, futures up one eight six,
market deck up two tenths of a percent, up half
a percent now the vics fourteen point three three. We're
not letting shooty go until the VIX is a thirteen handle.
Speaker 5 (42:09):
Right real quick, about thirty seconds. How do we play
the fixed income side of the game.
Speaker 10 (42:14):
Look, I think longer term to two percent inflation target
is dead. But I think in the near turn there's
enough economic stress out there. You saw that in the
labor market, You've seen that in consumer delinquencies. That you
want to be just a little bit longer duration right now,
because I do think there is some sort of potential
for economic downside. I think longer term, you know, I
think things like tips will be more attractive, just because
I do think inflation is a likely outcome from all this,
(42:36):
even tying in my opening comments on the Feaer reserve
airing on the side of the labor market over inflation.
Speaker 2 (42:41):
Now bred shoot you, thank you so much. Then I'm
not supposed to be mutual. I really really appreciate that.
Speaker 1 (42:46):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot Com, the
Iheartrate a tune in, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(43:07):
always on the Bloomberg terminal
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