July 25, 2025 • 32 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyJuly 25th, 2025
Featuring:
1) David Rosenberg, Founder and President Rosenberg Research & Associates, joins for a discussion on rates, US inflation, and the importance of Fed independence. Federal Reserve Chair Jerome Powell is under attack by President Trump, who is using a "flood the zone" strategy to pressure the Fed to lower interest rates. Trump's approach involves personally attacking Powell, questioning the Fed's spending, and discussing potential replacements, according to the article.
2) Brian Wieser, Principal at Madison & Wall, talks about the Skydance-Paramount deal getting FCC approval. The US Federal Communications Commission approved Paramount Global's merger with Skydance Media after the Trump administration extracted concessions on the news and entertainment company's political coverage and diversity practices. As part of the accord, Skydance vowed to ensure that the new company's programming embodies a diversity of viewpoints from across the political and ideological spectrum, according to FCC Chairman Brendan Carr.
3) Alicia Levine, Head of Investment Strategy and Equities at BNY, discusses her S&P 500 target and talks the pain trade and surprises to the upside. Stocks dipped at the end of a record-setting week after lackluster results from Volkswagen AG and Puma SE. Goldman's trading desk wrote in a note to clients "If you are nervous, the market is making it very easy to rent hedges" as a slew of risks loom over the market's record advance.
4) Marta Norton, Chief Investment Strategist at Empower, on asset allocation and potential for market volatility in the second half of 2025.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including an NYT story on the divided New York family, as young voters who supported Zohran Mamdani persuade their parents to do the same, as well as Business Insider's story on how people can Venmo the US government to help pay down the debt.
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):
Joining us now from Torno. David Rosenberg writing his important note.
Speaker 3 (00:31):
Into the weekend.
Speaker 4 (00:33):
David, there just seems to be a vacillation. You're almost
a two part discussion of sustained higher inflation. Look at
grocery prices or the idea of a disinflationary tendency if
real estate levels out, do we maintain in Rosenberg disinflationary tendency?
Speaker 5 (00:51):
Well, just arithmetically, Tom, if real estate flattens out, And
actually I think the risk is at real estate price
are going to be going down as opposed to up.
When you look at the latest stunt sold inventory numbers
in the new and existing market, you know, when you
look at the CPI, you know a third of the
(01:11):
index is related to residential real estate. Forty percent of
the core is related to residential real estate. So it
is actually very important, and I think it's going to
act as a very powerful antidote to the inflation we're
going to get on the goods prices side from all
the tariffs.
Speaker 6 (01:29):
Dick, and I'm very curious as you look ahead to
the next week, and this is an extremely pivotal week
in terms of economic data, in terms of earnings. We've
got the FED meeting as well. Of course, Friday of
next week the deadline of that extension of the ninety
day pause that President Trump put in place on those
reciprocal tears. What are you watching for as that week unfolds?
What's going to give you the best sense here of
the relative health of the US economy?
Speaker 5 (01:51):
And light of all I just mentioned, the most important
thing next week is going to be the employment report,
because that is going to tell all the tail as
to you know, whether the FED is going to start
to rekindle the rate cuts at the September meeting. That's
really what we're waiting for. If we see cracks emerge
(02:12):
in the labor market, and we see a loosening up
in a labor market, the FED is going to feel
quite a bit more relaxed that the goods inflation that
we are seeing on the terrifile. If it doesn't feed
into wages. That's going to be a comforting sign. So
I'd say that the employment number in its entirety, you know,
(02:35):
the headline, the revisions, what the unemployment rate does, the
participation rate, but also keep a fermoil on the wage number,
because what's really important here, and everybody's waxing on about
how great the US economy is doing, I think it's
rather mixed, is that real work based income and inflation
adjusted terms is actually contracting. And that is going to
(02:58):
be where you know, the from the tariffs is going
to hit the wall on the labor market. So nothing,
we know. The Fed's not going to do anything. I
think they'll be they'll keep their cards close to their
vest in terms of any guidance. The key is really
going to be the labor market. That's what we're waiting
for in terms of what it's going to mean for
interest rates over the next few months.
Speaker 4 (03:18):
Well, then, David, on that real way analysis, the inflation
adjusted way analysis, Let's go to eggs.
Speaker 2 (03:23):
Lisa Mateo is going to Costco in the next.
Speaker 4 (03:27):
Twelve eighteen hours to buy forty two dozen eggs just
to get through the week. David, I'm looking at grocery
prices it ain't happen.
Speaker 2 (03:35):
They're not Grocery prices are not coming down.
Speaker 5 (03:39):
Well, that's actually a global phenomenon. I mean, the fact
that agricultural prices are going up so much is global
in nature and is actually more related to climate change
issues and the dramatic shifts and weather patterns than it
has to really do with the tariffs. It's not just
it's not just food, Tom. You know you've got furniture appliances.
(04:03):
I think you'll start to start seeing it in the
auto sector. Like goods prices in general, the next few
months are going to be rising. The question is the
persistence and as I said earlier, the extent to which
the service sector and we mentioned real estate. The question
will be the extent to which the service sector is
going to act as a offset towards seeing in the
(04:24):
goods part. But it's not just eggs. You're seeing more
broadly based pressure coming on goods. You mentioned food. That's
weather patterns for the most part, and disruptions from climate change.
But the tariffs haven't had an impact yet. A big
impact on the good side that's coming in the next
few months. I'm not convinced it's going to be sustainable,
(04:44):
but more on top of that, And it came down
to the earlier question. Sixty percent of the CPI is
in services, okay, and service sector is disinflating. The question
is you're going to win that tug of war?
Speaker 4 (04:57):
I mean, Dave, you had that brilliant question earlier. Why
did you get the last question, mister Rosenberg?
Speaker 6 (05:02):
David, I've been watching the closed circuit television from the
Eckles Building looking at FED Chair Jerome Powell with his
hard hat on and the President with his hard hat on.
And I was reminded Tom, actually at the time we
were in London touring the yet unfinished Bloomberg European Headquarters
and you and I don hard hats. I'm going to
dig up that photo for our YouTube viewers because it
looks very similar what we're seeing here on. But David,
(05:25):
to that point, as you watched those theatrics unfold yesterday,
does it signal to you the end of this, you know,
very confrontational ballet we've seen from the President and the
FED Chair. Do you think that this story the effort
on his part to put the FED Chair in a
difficult position, to say the least, talk about firing him
getting him out of that position has ended as a
result of that grand tour that we saw of the
(05:46):
Eckles Building yesterday afternoon.
Speaker 5 (05:48):
Well, I mean President Trump did say that he's no
longer in a hurry to fire Trump, but clearly he's
still exerting all the pressure publicly possible to get the
Fed to cut interest rates. I would say prematurely. I
think the Fed will cut rates, but at the right time,
(06:08):
the President seems to be in a very big hurry.
And you know what's troubling me is less the President
and more that you're seeing all corners of the White
House coming out and radically pressuring j. Powell to cut rates.
We've got to keep in mind that J. Powell has
the most powerful vote, but it's just one vote. I mean,
it's the committee, it's the FMC that sets interest rates.
(06:32):
I was more troubled actually by an interview that Kevin
worsh gave yesterday where he said that he would cut
rates immediately, starting at the at the next MC meeting,
you know, next week. And I'm just you know, I
cannot believe that you would cut rates. The market's not
priced for it, and right now it's it seems unnecessary.
(06:52):
So I'm still concerned about who the next chairman is
going to be, and how politically influenced that chairman is
going to be, and how that is going to create
instability on the FOMC. Like what if there's a mutiny
on the FED because the need is an institution, right,
it's not one person, and they're going to defend their
independence vigorously.
Speaker 4 (07:13):
Well said David, and I really want to emphasize, folks,
when he gave you your civics lesson there, it's not
just the chairman.
Speaker 2 (07:19):
Ala Green Spans standing on the podium of years ago.
Speaker 4 (07:22):
David Rosenberg, great brief on a Friday, Thank you so much.
Up in Toronto with the first Place Toronto Blue Jays
David Rosenberg.
Speaker 1 (07:29):
This morning, you're listening to the Bloomberg Surveillance Podcast. Catch
us live weekday afternoons from seven to ten am. E's
durn Listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 4 (07:49):
We now turn to the media and it's really an
auspicious day to have Brian Weezer with us. Madison and
Wall We welcome all over you in your commute across
the nation. I noticed, Brian the Paramount comes in and
I'm talking here without notes folks, that they began calling
WBZTV in Boston.
Speaker 2 (08:11):
They took out six engineers, six photographers.
Speaker 4 (08:15):
Brian, is that twenty twenty six for the media business,
where all the deck chairs move on the Titanic and
they just start cutting jobs.
Speaker 7 (08:25):
I think that's accurate. You know.
Speaker 8 (08:27):
I think that the ongoing cost cuts are the apath forward,
but not maybe the best one. I think that there
are opportunities for growth, but the reality.
Speaker 7 (08:39):
Is that they keep doing what they're doing. There is
no growth. We'll stop.
Speaker 6 (08:43):
I'm curious about the leadership structure of this new company.
So you have one David Ellison, the son, of course
of a very famous and a rich tech entrepreneur. He's
forty two years old, David Ellison is and I look
at her. Who's going to remain with this company? George Cheeks,
I gather he's going to stick around. And then you've
got Jeff Shell, who is it NBC Universe that left
under a cloud of difficulty? How do you see them
(09:05):
reorienting this company? So just again picking up on that
notion of difficulty, how do they make this company work
after this deal goes through.
Speaker 9 (09:13):
You know, they seem to be really focused on the
studio for you know, maybe Ellison's reasons and just credit.
Speaker 10 (09:19):
I think Skydance has actually done pretty well as studios go.
Speaker 7 (09:22):
The problem is, studio.
Speaker 10 (09:23):
Business isn't the greatest business right now, and I don't
know that that trajectory changes by much, but that does
seem to be.
Speaker 7 (09:31):
The primary area and focus.
Speaker 11 (09:34):
Certainly they do some successful businesses, you know, I think
is a positive as positive trajectory in the US and
many countries.
Speaker 7 (09:41):
But the reality is that most.
Speaker 11 (09:43):
Of the legacy cable networks are just on a declining path.
Speaker 8 (09:48):
The broadcast network is durable, but it's facing certain challenges.
Speaker 11 (09:52):
The cost of content rights, sports in particular, it's just
going up and up and up and up, and investment
and news are important, but they're also being there political
perspective to.
Speaker 4 (10:03):
Little surveillance history or Brian Reeser, I'm going to say
ten years ago, way out front saying no, there won't
be a death of TV. There's just going to be
this slow attrition. So I saw a chart yesterday of
basically Netflix flat with a dominant eight percent share, but
YouTube with an upward slope.
Speaker 3 (10:20):
Do you just extrapolate that out?
Speaker 4 (10:22):
I mean, with all your wisdom, Brian, is YouTube just
a linear or log linear extrapolation of growth into the future.
Speaker 10 (10:31):
I think that reflects that people are getting used to
the idea that you can consume YouTube on your television set.
Speaker 7 (10:38):
Netflix is doing really well. The fact that they might
be flat.
Speaker 3 (10:41):
I think they're.
Speaker 10 (10:43):
Ignored that there's an underlying growth trend for consumption, subscriptions
and everything else.
Speaker 7 (10:48):
So Netflix is in a great position.
Speaker 10 (10:51):
YouTube is just different, and it happens to be consumed
on television set with increasing volumes.
Speaker 7 (10:56):
That's maybe way to think about it.
Speaker 6 (10:58):
Rian, How should we look at what happened here regulatorily
over the last few months leading up to this deal.
So of course we're all fixated on Stephen Colbert losing
his position in a matter of months here, the chair
of the FCC was on Fox yesterday. I wouldn't answer the
question directly if that was a result of conversations that
he had with with David Ellison and others, but suffice
(11:19):
to say that the political climate here is shaping a
lot of the regulatory appetite for making deals like this one.
Going forward, we see the vice that a lot of
companies are under media companies are under. How do you
look at that environment and what does it portend for
you about further consolidation and what's going to happen to
these legacy networks going forward?
Speaker 9 (11:38):
Yeah, well, I mean the political angle is going to
be front and center for any company. It's not just
the Paramount. We look at the inner public Omnicom transaction.
Speaker 10 (11:48):
The consent decree they had to sign is a remarkable,
be ridiculous, but the point is that that's going to
be the normal way of things for the foreseeable future.
Speaker 7 (12:00):
So it is when it is when it comes to
media now.
Speaker 10 (12:02):
I did think it was kind of interesting and amusing
that they noted a one point five billion dollar investment
that Skuydance is making into the into the new entity.
I don't know if you saw the news about Paramount
comming to agree with the south Park books with a
one point five billion dollar commitment. EI are not related,
but kind of funny in context of the south Park
episode that if.
Speaker 6 (12:23):
Yeah, I watched the clips, Tom, did you see the
south Park? We want to air them, we want to
air them here. We don't rea air them here on
Bloomberg surveillance.
Speaker 7 (12:29):
But that's unusual. Those brave that they got that out.
Speaker 6 (12:33):
Yes, no, I completely agree it was brave.
Speaker 3 (12:35):
I'm not that pale. You're not get one more question.
It's a family network. Come on, girl, Sweeney would never
bring that up. No, you wouldn't.
Speaker 6 (12:45):
I'll ask you lastly, just about this ombudsman. That's part
of this deal that the paramount's not going to have
when they're kind of monitoring what what what what this
company is doing when it comes to diversity efforts and
what kind of politics are being evinced on on the air.
Is this a template that we're going to see going forward?
Are we going to see the government play or insisting
upon a greater role for that kind of check on
what programming is Brian?
Speaker 9 (13:05):
Yeah, absolutely, and that's obviously for the worst.
Speaker 7 (13:08):
I think that again, look to the inner public.
Speaker 12 (13:10):
Omnicom to consent to cruise maybe didn't get as much attention,
but again, the fact that agencies cannot provide their clients
with recommendations for brand safety, including things like whether or
not there's inappropriate content politically speaking on a site. There's
all sorts of restrictions that limit freedom of speech and
companies that are coming through in these rooments now, so
(13:32):
I think that is the path forward.
Speaker 4 (13:33):
Unfortunately, Brian, thank you so much, greatly, greatly appreciate it.
If David Rosenberg, Brian Weezer get us started here on
a Friday is a wonderful mister Weezer Madison.
Speaker 3 (13:43):
Wall on Media.
Speaker 2 (13:44):
He has nailed the durability of a television.
Speaker 1 (13:48):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Coarplay and Android
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Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (14:05):
Alicia Levine basically says, you don't go up, you.
Speaker 3 (14:09):
Don't win if you don't play.
Speaker 4 (14:10):
She's been in the market, would be in why we're
thrilled she could join this morning. How has the character
of the gloom Crew changed in the last six weeks.
It's you know, you're too young to know this, but
you go back to like some of the things eighty
seven and ninety eight.
Speaker 3 (14:27):
This is an odd time for the gloom crew.
Speaker 13 (14:30):
It's a tough time for the Gloom crew. Look, their
recovery to the old high is historic. Fifty five days
from the low on April eighth to recover the old
high in the SMP the second best time within you know,
ninety eight, and we remember what happened then, and I
think there are some parallels to the late nineties to
(14:53):
what's happening here in the sense that we feel like
we have a technological revolution on our hands, and it's investible.
It's investible.
Speaker 3 (15:02):
I brought this up eight times this week, David. I
hope I haven't bored you with it.
Speaker 4 (15:06):
It feels so much now like late ninety four, early
nineteen ninety five.
Speaker 2 (15:11):
I've never said that in thirty years.
Speaker 6 (15:14):
How are you looking at the earning season that's underway here?
We saw estimates that were markedly lower. The bar was
much lower, I think, than we've seen in the past.
We've had what one hundred and sixty plus companies report
so far, I think eighty percent or more of them
have beat those estimates. How are you framing it? How
are you thinking about what these companies are reporting? What
is not telling you about valuations in the future of
this market?
Speaker 13 (15:33):
So if you look over all on the aggregate, as
you know, earnings dropped precipitously, you know, February, March, April,
May stabilizing in June. For twenty twenty five and twenty
twenty six, we brought our earnings estimates down as well,
and then in early May we brought our earnings estimates
back up because it seemed very clear that the policy
(15:54):
that was going to come out of tariffs was just
not going to be as onerous as what we had
heard in any early eight. With that, we brought our
S and B targets up as well. Overall, the aggregate
earnings are starting to hook upwards again. For twenty twenty
five and twenty twenty six. We know the second quarter
is there to beat, right, a four percent year over
year growth will come in higher than that. The first
(16:16):
quarter was a six percent beat. We probably beat by
two or three percent in the second quarter here, and
then the question really remains, you know, what happens with
the tariffs?
Speaker 14 (16:26):
Who's eating the tariffs now?
Speaker 13 (16:27):
The Wall Street Journal has an article this morning that
corporates are eating the terriffs, but we don't see it
really yet in earnings estimates. I think that's the big question.
If there is some dispersion over who is paying the tariffs. Okay,
a little bit consumer, a little bit corporate, a little
bit exporter eats it. Then you have your earnings estimates
(16:48):
staying higher. And then the multiple moved the market in
the last three or four months. We went from eighteen
times forward to twenty two times forward. Now earnings have
to do the lifting, and.
Speaker 14 (16:58):
If earnings to come.
Speaker 13 (17:00):
Up, the denominator has to come up.
Speaker 3 (17:02):
Denominators the bottom bottom, bottom of the down back. Oh,
very good. You noticed Chicago to learn that, David.
Speaker 6 (17:09):
Continue uh, let me pick up on that. We saw
this note from Michael Harte at a Bank of America
this morning. But there's still so much concentration in this market.
What's your sense of when that's going to broaden out,
what's going to be the catalytic factor that's going to
get us sort of a broader move here in the
SP five hundred.
Speaker 13 (17:25):
So let's just say that the top ten stocks in
the SMP, you know, are about thirty percent of the SMP,
which actually is on the low side as a percentage
if you look at other global markets. So in Germany
the top ten is over fifty percent. France the same.
So if you look at other global markets, the concentration
in the US is not unusual. What I will say
(17:48):
is this is cyclicals or outperforming defensives here because you're
the industrials are working. The financials are really working, because
with a deregulatory agenda, you have other parts of the
market working, and the mag seven is sort of breaking apart.
Speaker 14 (18:01):
Right, We're gonna have wind up with a new acronym here.
Speaker 13 (18:04):
So, but you need tech to work, and it must
work because the behemoths of cash flow and margin growth
are driving the rest of the SMP margin.
Speaker 3 (18:13):
Right.
Speaker 13 (18:14):
The margins of the Magnificent seven are double the margins
of the rest of the S and P. So that
has to work, and the cap X spend must produce earnings.
Must It cannot just go into a black hole on
a Friday.
Speaker 4 (18:28):
We're going to digress here with Alicia Levina being why
we can do that. Our math skills are prodigious. I'm
gonna do a little bit of technical stuff here for
Global Wall Street.
Speaker 3 (18:35):
Cat me go get a coffee. Noh no, no.
Speaker 4 (18:38):
Take notes on the Intel it went seven to seventy.
There were some challenging years recently in the pandemic Intel
was near seventy my cell signal. This is log exponential
moving averages. Just as a general statement, I didn't sell
at the peak, but I got out at fifty three
(18:59):
or fifty four when sixty seven down to fifty three
and I was able to get out.
Speaker 2 (19:05):
That's technical analysis.
Speaker 4 (19:07):
How do you know when to get out of a
treasured blue chip stock?
Speaker 13 (19:12):
So, as you know, I can't discuss individual stocks. This
will be as this will be a generic discussion.
Speaker 3 (19:17):
But who tells what we're talking about?
Speaker 13 (19:18):
Well, I mean, you know, in the end, you're looking
for signs of weakness, slightly slower growth quarter over quarter,
you're looking.
Speaker 11 (19:26):
More CEO tone.
Speaker 13 (19:28):
You're looking You're looking at the top line slowing and
margins compressing.
Speaker 14 (19:33):
And that's enough.
Speaker 13 (19:34):
And that's why you know, even if if a fast,
if a growth stock misses its growth target, it gets
destroyed because the story, you know, the wall streem moves
it forward and you see the slower growth and it
can't sustain the multiple.
Speaker 3 (19:50):
Good morning, Tom Galvin, iconic of Donaldson, Lufkin Jenrette.
Speaker 2 (19:53):
Glvin's the one that taught me to go up the
income statement.
Speaker 4 (19:56):
Alicia, what you just said the first and second derivative
study of revenue and ready for this, folks, David take
notes partial derivatives of unit dynamics and price dynamics at
the revenue line.
Speaker 14 (20:10):
You're freaking me out hard of the matter.
Speaker 3 (20:12):
No, seriously, is at the heart of the matter. Yes,
is a revenue dynamic.
Speaker 13 (20:16):
It's actually much simpler than that. I'll say it for
those who didn't understand what you just said, which is
that the growth socks have to continue to exhibit the
growth growthiness and it's very hard to meet elevated expectations.
I mean, we're all married, right, very hard to meet
at elevated expectations, and that's that's what you're looking for.
(20:42):
So even a one to two percent miss on the
revenue line creates an outsize downside move because it's the signal. Right,
it seems to be irrational, but it's not because you're
probably at a higher multiple and you have to start
thinking about earnings.
Speaker 14 (20:56):
So and three years forward, that's the issue.
Speaker 13 (20:59):
Having said that, we're all in right, our team, our
team is all in on AI. We think this is real.
We think it's the beginning of the revolution. All of
the corporate sector will have to incorporate these tools. We
see the financials already doing it, and you're going to
see it in healthcare as well. Any company that is
data driven will be doing this, and that means for
(21:20):
the foreseeable future it's there.
Speaker 14 (21:22):
One day it won't be there.
Speaker 13 (21:23):
But for now it's there.
Speaker 6 (21:24):
Even Tom Keen doing AI as we.
Speaker 4 (21:26):
Learn, I'm doing I'm gemin no idea what I'm doing.
I'm learning and I'm using it one more, I'm using
search less.
Speaker 3 (21:33):
That's it.
Speaker 4 (21:34):
That's the head Alicia being bottled that. Thank you so
much as being where they're on the importance of looking
up the income statement to revenue dynamics.
Speaker 1 (21:50):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 4 (22:04):
Martin Norton joins us right now an actual allocations using empowered.
Speaker 3 (22:09):
They're Canadian.
Speaker 4 (22:10):
They're ginormous, full disclosure and power handles my puny four
owin k. You know, I didn't start until it was
like eighty, you know, sixty something.
Speaker 6 (22:20):
Yeah, Well I'm catting it's growing mightily. That grows.
Speaker 2 (22:24):
It was a triple average all cash from Roger's signature fund.
Marta joins us on the strategy for Marta.
Speaker 4 (22:31):
What do you tell the people who have a fund
that is now forty percent or dare I say fifty
percent in their top ten stocks?
Speaker 15 (22:43):
I mean it's the concentration problem has been a problem
in the US at least for the past several years,
where there is this concern about how much people have
in those top few names. And we know that a
lot of investors, retirement investors included, have this preference for
US equities, so there has been this kind of doubling
down on that exposure. I think there's a few things
(23:04):
that have shifted here. One is that the mag seven
aren't quite as overvalued as they were at the start
of the year. They had the one two punch, they
had the deep seek sell off, then they had the
sell off related to tariffs. So we have seen this
tremendous move higher in the markets, as you all have
been covering. We've seen technology in particular up forty five percent.
We see valuations and technology look expensive, but the mag
(23:25):
seven look a bit cheaper. They have idiosyncratic issues that
are also going on. So I almost think that the
concentration risk is less extreme than it was because it's
not combined without valuation concern.
Speaker 4 (23:36):
The thud you heard up in Winnipeg or wherever was
compliance falling off the chair.
Speaker 3 (23:42):
Why did you continue?
Speaker 2 (23:43):
Why did you continue the conversation? David Martin?
Speaker 6 (23:46):
What have you seen so far in this earning season?
We were talking just a moment ago about the busyness
of the upcoming week when it comes to earnings.
Speaker 7 (23:53):
What are you looking for?
Speaker 3 (23:54):
What are you hoping to.
Speaker 6 (23:55):
Learn as we have I think many dozens of companies
reporting in the week ahead.
Speaker 15 (23:59):
Well, first, I mean, just to level set on the
earnings conversation, and I know you've had several guys who've
weighed on this. We have kind of this low bar
in terms of what to expect with this earning season,
and companies are clearing it with ease simply because expectations
are low. But there's also some trends out there, the
AI trend being a strong proponent as we go forward.
(24:20):
I think what we want to see, particularly as it
pertains to these technology companies the Max seven that continue
to report, is how this AI theme is continuing to
play out, of course the capital investments that they're making,
but also are they realizing it, And we've had some
green shoots in that regard. We're seeing some of the
cost savings that some of these companies have reported. We're
(24:41):
also seeing some broadening out of the AI trend, and
I think that's something to keep an eye on. I'm
not sure, though, and I think this is important. I'm
not sure that the earning season this go around is
going to reveal its entire hand as it attains to
tariffs and as it pertains to AI.
Speaker 3 (24:58):
Martin.
Speaker 4 (24:59):
I got to get this, Martin. I think it's too important.
Girl wants to ask a smart question. I'm going to
be dumb. If you're going to be in equities in
this great bullmarket, which has basically been NonStop since nine,
a few hiccups like COVID along the way, you needed to.
Speaker 2 (25:14):
Withstand three draw downs.
Speaker 4 (25:16):
Negative thirty eight percent of the Dow Marta, the Dow
Jones Industrial Average is the index Michael Barr and I
follow negative thirty eight percent down, yep OH seven negative
fifty three percent down, and recently COVID negative thirty eight percent.
Now serious question, with your morning Star and power work.
(25:37):
What percentage of people in equities and empower are ready
for a thirty five percent draw down that's normal?
Speaker 15 (25:46):
Yeah, I think it's it's the magnitude of the draw
dow you know that scale, that thirty five percent idea,
and also the duration. I think investors got conditioned on
this idea, especially with COVID, is that the snapback can
be and will be always in meet. I'm not sure
necessarily that that's the case always. Of course, with the GFC,
we had a much longer duration. People had to weather
(26:08):
that for much longer. I think that's the concern. If
you get a massive pullback, I think the inclination of
most investors is going to be like, oh, it's a
great hashtag by the dip moment. I think if you
have that extended, that's when you start to shake loose
kind of the weak need of the group. And that's
the concern.
Speaker 3 (26:24):
We haven't had this stated in the ages.
Speaker 6 (26:26):
No, that's very true.
Speaker 4 (26:27):
Like the Carter malaise, get one more in here. Carter
was a broker from Georgia.
Speaker 6 (26:32):
Thank you very much, pena former, etcetera, etcetera.
Speaker 3 (26:34):
Marta.
Speaker 6 (26:35):
I wanted to ask you just on a sector by
sector basis where you see opportunity. Now he's looking through
your notes healthcare as something that you flagged, but it,
like many of these sectors, does have the potential here
for there will be some sort of regulatory weight on it.
Speaker 15 (26:48):
I mean, it's a really tricky question on the sector
basis because if you look across the board at the
sectors in the US, all of them, it feels like
almost all of them, of course, calling out healthcare are
extreme valuations. And so when we're talking about extreme valuations,
we're taking the price to forward earnings, we're breaking it
into deaciles for that sector's history, they're in those ninth
(27:09):
tenth deaciles, and that's when that tends to suggest foward
three year returns not quite a strong. Healthcare is one
of those few areas that's especially cheap. But of course
you don't have cheap for no reason. There's always some
measure of hair. And we have concerns around the regulatory questions.
We have concerns around tariffs. We're talking about massive tariffs
on pharmaceuticals and so a lot of shifts that those
(27:32):
companies are going to have to deal with. But I
think the value of these valuations is that there's something
already in the price. There's concern in the price, and
there's not much concern any of these other sectors in
the price.
Speaker 2 (27:44):
Martin Norton, thank you so much, Chief Investments.
Speaker 3 (27:46):
Createitis to poll.
Speaker 1 (27:47):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa Play Bloomberg eleven thirty.
Speaker 3 (28:04):
Oh the newspapers, are we not your free today?
Speaker 14 (28:07):
We are, yes, but we're cafine infused.
Speaker 6 (28:11):
It's just green tea, isn't it?
Speaker 14 (28:13):
Green tea and espresso shots.
Speaker 6 (28:15):
I see together? Good dar, all right, the newspaper won't
waste any more time, you got it.
Speaker 14 (28:20):
This first article stood out to me. It's in the
New York Times. It's about the division among New York
families and the mayoral race. Because you have the young
voters who supported Zormondami trying to persuade their parents now
to do the same thing. And now the parents are
starting to listen, so they're telling the New York Times,
the moms and dad that even though they may not
(28:41):
have supported Mumdammi initially because his lack of experience or
his policies, they say that their move because how enthusiastic
their kids are about this. They say the future belongs
to them. So they also say they hear stories of
their kids getting shamed by other people for supporting and
they want to back their kids up and say, you
know what, I'm going to stand behind my child and
(29:02):
I'm going to go with them on this one. But
it's weird because you're seeing this shift because usually it's
the kids who inherit from the parents these views, but
experts are saying the reason it's starting to change is
because the parents want this better relationship with the kids,
a better relationship than they had with their parents.
Speaker 6 (29:18):
Fascinating piece Genia Belafante's column in The Times, and this
stood out to me. She says, in statistical terms, the
young don't dominate in this city, the City of New York.
They're roughly half a million more New Yorkers over fifty
than those between the ages of twenty and thirty nine.
The city's population, she writes, like its infrastructure is simply
getting older and older.
Speaker 14 (29:37):
So this is just something.
Speaker 6 (29:38):
Really interesting to watch a lot of the folks with
whom she spoke, not outright endorsing Mamdani in this race,
but looking at their kids, seeing their enthusiasm for it,
thinking about generational change, and it sounds like maybe tossing
a little money towards this campaign.
Speaker 14 (29:51):
It is some of them have been donating. You're correct
about that. Okay, So if speaking of giving money, okay,
if you're feeling a little generous, did you know you
can venmo the US government to help pay down the debt.
Speaker 6 (30:02):
You don't veno time to you don't.
Speaker 4 (30:06):
He's Brian wining a growled at me and Davos once.
Speaker 14 (30:10):
Time you got a zeld, I do the zel thing too.
But you can use venmo, you know, like what you
use to pay back your friends when you're splitting the
check at dinner. You can use that to help pay
down the debt. Business insider says it's it's started there
earlier this year, but it's just starting to gain some
traction because they've done it for years.
Speaker 7 (30:29):
Right.
Speaker 14 (30:29):
You can put your credit card, you can do you know,
your bank account, your debit card. But this is just
a new way for them to bring in someone.
Speaker 6 (30:36):
There's only getting more to pay down, right, it's only
getting bigger.
Speaker 14 (30:41):
The four digits of the number. Okay, next, okay, and
finally this one. There is an app that lets women
anonymously post reviews about the guys they're dating. And it's
soaring to the top of Apple's app store. It's called
Tea and you think about it meaning like the gossip,
like you spill the tea about somebody.
Speaker 6 (31:02):
So that's it's.
Speaker 14 (31:05):
Termed Tom Beyond It. But it launched in twenty twenty three,
and it was launched by a man, if you believe
it or not. His name is Sean Cook, and he
started it because his mom was calfished and he wants
women to have more transparency and talk about, you know,
if anyone has been a criminal and kind of how
this works. Okay, let me just put it out there.
So basically, you post about a man. You can put
(31:28):
his name, his age, his location, and you can include
captions photos, and then there's red flags and green flags, no,
no flags and green flags, and you could add comments.
It's because that's a good one, and you can add comments.
So it's kind of like this forum it's free until
(31:49):
you want to do like more than five searches. Then
you gotta pay fifteen bucks a month. But it's really
starting to gain traction. But the controversy is because you
know what guys are saying, Hey, that's my privacy, Like
what if there are some false acts usations out there?
And then I'm getting a bad rap for you know,
you posting about me on this forum. So it is
the new thing in dating. I'm just glad I'm saying yeah.
I mean, I'm not saying tea and catfish.
Speaker 3 (32:12):
Potato.
Speaker 7 (32:14):
I'm glad I'm not single.
Speaker 3 (32:17):
God at LEASTAO the newspapers here. Thank you.
Speaker 1 (32:19):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(32:40):
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):
Joining us now from Torno. David Rosenberg writing his important note.
Speaker 3 (00:31):
Into the weekend.
Speaker 4 (00:33):
David, there just seems to be a vacillation. You're almost
a two part discussion of sustained higher inflation. Look at
grocery prices or the idea of a disinflationary tendency if
real estate levels out, do we maintain in Rosenberg disinflationary tendency?
Speaker 5 (00:51):
Well, just arithmetically, Tom, if real estate flattens out, And
actually I think the risk is at real estate price
are going to be going down as opposed to up.
When you look at the latest stunt sold inventory numbers
in the new and existing market, you know, when you
look at the CPI, you know a third of the
(01:11):
index is related to residential real estate. Forty percent of
the core is related to residential real estate. So it
is actually very important, and I think it's going to
act as a very powerful antidote to the inflation we're
going to get on the goods prices side from all
the tariffs.
Speaker 6 (01:29):
Dick, and I'm very curious as you look ahead to
the next week, and this is an extremely pivotal week
in terms of economic data, in terms of earnings. We've
got the FED meeting as well. Of course, Friday of
next week the deadline of that extension of the ninety
day pause that President Trump put in place on those
reciprocal tears. What are you watching for as that week unfolds?
What's going to give you the best sense here of
the relative health of the US economy?
Speaker 5 (01:51):
And light of all I just mentioned, the most important
thing next week is going to be the employment report,
because that is going to tell all the tail as
to you know, whether the FED is going to start
to rekindle the rate cuts at the September meeting. That's
really what we're waiting for. If we see cracks emerge
(02:12):
in the labor market, and we see a loosening up
in a labor market, the FED is going to feel
quite a bit more relaxed that the goods inflation that
we are seeing on the terrifile. If it doesn't feed
into wages. That's going to be a comforting sign. So
I'd say that the employment number in its entirety, you know,
(02:35):
the headline, the revisions, what the unemployment rate does, the
participation rate, but also keep a fermoil on the wage number,
because what's really important here, and everybody's waxing on about
how great the US economy is doing, I think it's
rather mixed, is that real work based income and inflation
adjusted terms is actually contracting. And that is going to
(02:58):
be where you know, the from the tariffs is going
to hit the wall on the labor market. So nothing,
we know. The Fed's not going to do anything. I
think they'll be they'll keep their cards close to their
vest in terms of any guidance. The key is really
going to be the labor market. That's what we're waiting
for in terms of what it's going to mean for
interest rates over the next few months.
Speaker 4 (03:18):
Well, then, David, on that real way analysis, the inflation
adjusted way analysis, Let's go to eggs.
Speaker 2 (03:23):
Lisa Mateo is going to Costco in the next.
Speaker 4 (03:27):
Twelve eighteen hours to buy forty two dozen eggs just
to get through the week. David, I'm looking at grocery
prices it ain't happen.
Speaker 2 (03:35):
They're not Grocery prices are not coming down.
Speaker 5 (03:39):
Well, that's actually a global phenomenon. I mean, the fact
that agricultural prices are going up so much is global
in nature and is actually more related to climate change
issues and the dramatic shifts and weather patterns than it
has to really do with the tariffs. It's not just
it's not just food, Tom. You know you've got furniture appliances.
(04:03):
I think you'll start to start seeing it in the
auto sector. Like goods prices in general, the next few
months are going to be rising. The question is the
persistence and as I said earlier, the extent to which
the service sector and we mentioned real estate. The question
will be the extent to which the service sector is
going to act as a offset towards seeing in the
(04:24):
goods part. But it's not just eggs. You're seeing more
broadly based pressure coming on goods. You mentioned food. That's
weather patterns for the most part, and disruptions from climate change.
But the tariffs haven't had an impact yet. A big
impact on the good side that's coming in the next
few months. I'm not convinced it's going to be sustainable,
(04:44):
but more on top of that, And it came down
to the earlier question. Sixty percent of the CPI is
in services, okay, and service sector is disinflating. The question
is you're going to win that tug of war?
Speaker 4 (04:57):
I mean, Dave, you had that brilliant question earlier. Why
did you get the last question, mister Rosenberg?
Speaker 6 (05:02):
David, I've been watching the closed circuit television from the
Eckles Building looking at FED Chair Jerome Powell with his
hard hat on and the President with his hard hat on.
And I was reminded Tom, actually at the time we
were in London touring the yet unfinished Bloomberg European Headquarters
and you and I don hard hats. I'm going to
dig up that photo for our YouTube viewers because it
looks very similar what we're seeing here on. But David,
(05:25):
to that point, as you watched those theatrics unfold yesterday,
does it signal to you the end of this, you know,
very confrontational ballet we've seen from the President and the
FED Chair. Do you think that this story the effort
on his part to put the FED Chair in a
difficult position, to say the least, talk about firing him
getting him out of that position has ended as a
result of that grand tour that we saw of the
(05:46):
Eckles Building yesterday afternoon.
Speaker 5 (05:48):
Well, I mean President Trump did say that he's no
longer in a hurry to fire Trump, but clearly he's
still exerting all the pressure publicly possible to get the
Fed to cut interest rates. I would say prematurely. I
think the Fed will cut rates, but at the right time,
(06:08):
the President seems to be in a very big hurry.
And you know what's troubling me is less the President
and more that you're seeing all corners of the White
House coming out and radically pressuring j. Powell to cut rates.
We've got to keep in mind that J. Powell has
the most powerful vote, but it's just one vote. I mean,
it's the committee, it's the FMC that sets interest rates.
(06:32):
I was more troubled actually by an interview that Kevin
worsh gave yesterday where he said that he would cut
rates immediately, starting at the at the next MC meeting,
you know, next week. And I'm just you know, I
cannot believe that you would cut rates. The market's not
priced for it, and right now it's it seems unnecessary.
(06:52):
So I'm still concerned about who the next chairman is
going to be, and how politically influenced that chairman is
going to be, and how that is going to create
instability on the FOMC. Like what if there's a mutiny
on the FED because the need is an institution, right,
it's not one person, and they're going to defend their
independence vigorously.
Speaker 4 (07:13):
Well said David, and I really want to emphasize, folks,
when he gave you your civics lesson there, it's not
just the chairman.
Speaker 2 (07:19):
Ala Green Spans standing on the podium of years ago.
Speaker 4 (07:22):
David Rosenberg, great brief on a Friday, Thank you so much.
Up in Toronto with the first Place Toronto Blue Jays
David Rosenberg.
Speaker 1 (07:29):
This morning, you're listening to the Bloomberg Surveillance Podcast. Catch
us live weekday afternoons from seven to ten am. E's
durn Listen on Applecarplay and Android Otto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 4 (07:49):
We now turn to the media and it's really an
auspicious day to have Brian Weezer with us. Madison and
Wall We welcome all over you in your commute across
the nation. I noticed, Brian the Paramount comes in and
I'm talking here without notes folks, that they began calling
WBZTV in Boston.
Speaker 2 (08:11):
They took out six engineers, six photographers.
Speaker 4 (08:15):
Brian, is that twenty twenty six for the media business,
where all the deck chairs move on the Titanic and
they just start cutting jobs.
Speaker 7 (08:25):
I think that's accurate. You know.
Speaker 8 (08:27):
I think that the ongoing cost cuts are the apath forward,
but not maybe the best one. I think that there
are opportunities for growth, but the reality.
Speaker 7 (08:39):
Is that they keep doing what they're doing. There is
no growth. We'll stop.
Speaker 6 (08:43):
I'm curious about the leadership structure of this new company.
So you have one David Ellison, the son, of course
of a very famous and a rich tech entrepreneur. He's
forty two years old, David Ellison is and I look
at her. Who's going to remain with this company? George Cheeks,
I gather he's going to stick around. And then you've
got Jeff Shell, who is it NBC Universe that left
under a cloud of difficulty? How do you see them
(09:05):
reorienting this company? So just again picking up on that
notion of difficulty, how do they make this company work
after this deal goes through.
Speaker 9 (09:13):
You know, they seem to be really focused on the
studio for you know, maybe Ellison's reasons and just credit.
Speaker 10 (09:19):
I think Skydance has actually done pretty well as studios go.
Speaker 7 (09:22):
The problem is, studio.
Speaker 10 (09:23):
Business isn't the greatest business right now, and I don't
know that that trajectory changes by much, but that does
seem to be.
Speaker 7 (09:31):
The primary area and focus.
Speaker 11 (09:34):
Certainly they do some successful businesses, you know, I think
is a positive as positive trajectory in the US and
many countries.
Speaker 7 (09:41):
But the reality is that most.
Speaker 11 (09:43):
Of the legacy cable networks are just on a declining path.
Speaker 8 (09:48):
The broadcast network is durable, but it's facing certain challenges.
Speaker 11 (09:52):
The cost of content rights, sports in particular, it's just
going up and up and up and up, and investment
and news are important, but they're also being there political
perspective to.
Speaker 4 (10:03):
Little surveillance history or Brian Reeser, I'm going to say
ten years ago, way out front saying no, there won't
be a death of TV. There's just going to be
this slow attrition. So I saw a chart yesterday of
basically Netflix flat with a dominant eight percent share, but
YouTube with an upward slope.
Speaker 3 (10:20):
Do you just extrapolate that out?
Speaker 4 (10:22):
I mean, with all your wisdom, Brian, is YouTube just
a linear or log linear extrapolation of growth into the future.
Speaker 10 (10:31):
I think that reflects that people are getting used to
the idea that you can consume YouTube on your television set.
Speaker 7 (10:38):
Netflix is doing really well. The fact that they might
be flat.
Speaker 3 (10:41):
I think they're.
Speaker 10 (10:43):
Ignored that there's an underlying growth trend for consumption, subscriptions
and everything else.
Speaker 7 (10:48):
So Netflix is in a great position.
Speaker 10 (10:51):
YouTube is just different, and it happens to be consumed
on television set with increasing volumes.
Speaker 7 (10:56):
That's maybe way to think about it.
Speaker 6 (10:58):
Rian, How should we look at what happened here regulatorily
over the last few months leading up to this deal.
So of course we're all fixated on Stephen Colbert losing
his position in a matter of months here, the chair
of the FCC was on Fox yesterday. I wouldn't answer the
question directly if that was a result of conversations that
he had with with David Ellison and others, but suffice
(11:19):
to say that the political climate here is shaping a
lot of the regulatory appetite for making deals like this one.
Going forward, we see the vice that a lot of
companies are under media companies are under. How do you
look at that environment and what does it portend for
you about further consolidation and what's going to happen to
these legacy networks going forward?
Speaker 9 (11:38):
Yeah, well, I mean the political angle is going to
be front and center for any company. It's not just
the Paramount. We look at the inner public Omnicom transaction.
Speaker 10 (11:48):
The consent decree they had to sign is a remarkable,
be ridiculous, but the point is that that's going to
be the normal way of things for the foreseeable future.
Speaker 7 (12:00):
So it is when it is when it comes to
media now.
Speaker 10 (12:02):
I did think it was kind of interesting and amusing
that they noted a one point five billion dollar investment
that Skuydance is making into the into the new entity.
I don't know if you saw the news about Paramount
comming to agree with the south Park books with a
one point five billion dollar commitment. EI are not related,
but kind of funny in context of the south Park
episode that if.
Speaker 6 (12:23):
Yeah, I watched the clips, Tom, did you see the
south Park? We want to air them, we want to
air them here. We don't rea air them here on
Bloomberg surveillance.
Speaker 7 (12:29):
But that's unusual. Those brave that they got that out.
Speaker 6 (12:33):
Yes, no, I completely agree it was brave.
Speaker 3 (12:35):
I'm not that pale. You're not get one more question.
It's a family network. Come on, girl, Sweeney would never
bring that up. No, you wouldn't.
Speaker 6 (12:45):
I'll ask you lastly, just about this ombudsman. That's part
of this deal that the paramount's not going to have
when they're kind of monitoring what what what what this
company is doing when it comes to diversity efforts and
what kind of politics are being evinced on on the air.
Is this a template that we're going to see going forward?
Are we going to see the government play or insisting
upon a greater role for that kind of check on
what programming is Brian?
Speaker 9 (13:05):
Yeah, absolutely, and that's obviously for the worst.
Speaker 7 (13:08):
I think that again, look to the inner public.
Speaker 12 (13:10):
Omnicom to consent to cruise maybe didn't get as much attention,
but again, the fact that agencies cannot provide their clients
with recommendations for brand safety, including things like whether or
not there's inappropriate content politically speaking on a site. There's
all sorts of restrictions that limit freedom of speech and
companies that are coming through in these rooments now, so
(13:32):
I think that is the path forward.
Speaker 4 (13:33):
Unfortunately, Brian, thank you so much, greatly, greatly appreciate it.
If David Rosenberg, Brian Weezer get us started here on
a Friday is a wonderful mister Weezer Madison.
Speaker 3 (13:43):
Wall on Media.
Speaker 2 (13:44):
He has nailed the durability of a television.
Speaker 1 (13:48):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Coarplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Aloe from our flagship New York station,
Just say Alexa play Bloomberg eleven thirty.
Speaker 4 (14:05):
Alicia Levine basically says, you don't go up, you.
Speaker 3 (14:09):
Don't win if you don't play.
Speaker 4 (14:10):
She's been in the market, would be in why we're
thrilled she could join this morning. How has the character
of the gloom Crew changed in the last six weeks.
It's you know, you're too young to know this, but
you go back to like some of the things eighty
seven and ninety eight.
Speaker 3 (14:27):
This is an odd time for the gloom crew.
Speaker 13 (14:30):
It's a tough time for the Gloom crew. Look, their
recovery to the old high is historic. Fifty five days
from the low on April eighth to recover the old
high in the SMP the second best time within you know,
ninety eight, and we remember what happened then, and I
think there are some parallels to the late nineties to
(14:53):
what's happening here in the sense that we feel like
we have a technological revolution on our hands, and it's investible.
It's investible.
Speaker 3 (15:02):
I brought this up eight times this week, David. I
hope I haven't bored you with it.
Speaker 4 (15:06):
It feels so much now like late ninety four, early
nineteen ninety five.
Speaker 2 (15:11):
I've never said that in thirty years.
Speaker 6 (15:14):
How are you looking at the earning season that's underway here?
We saw estimates that were markedly lower. The bar was
much lower, I think, than we've seen in the past.
We've had what one hundred and sixty plus companies report
so far, I think eighty percent or more of them
have beat those estimates. How are you framing it? How
are you thinking about what these companies are reporting? What
is not telling you about valuations in the future of
this market?
Speaker 13 (15:33):
So if you look over all on the aggregate, as
you know, earnings dropped precipitously, you know, February, March, April,
May stabilizing in June. For twenty twenty five and twenty
twenty six, we brought our earnings estimates down as well,
and then in early May we brought our earnings estimates
back up because it seemed very clear that the policy
(15:54):
that was going to come out of tariffs was just
not going to be as onerous as what we had
heard in any early eight. With that, we brought our
S and B targets up as well. Overall, the aggregate
earnings are starting to hook upwards again. For twenty twenty
five and twenty twenty six. We know the second quarter
is there to beat, right, a four percent year over
year growth will come in higher than that. The first
(16:16):
quarter was a six percent beat. We probably beat by
two or three percent in the second quarter here, and
then the question really remains, you know, what happens with
the tariffs?
Speaker 14 (16:26):
Who's eating the tariffs now?
Speaker 13 (16:27):
The Wall Street Journal has an article this morning that
corporates are eating the terriffs, but we don't see it
really yet in earnings estimates. I think that's the big question.
If there is some dispersion over who is paying the tariffs. Okay,
a little bit consumer, a little bit corporate, a little
bit exporter eats it. Then you have your earnings estimates
(16:48):
staying higher. And then the multiple moved the market in
the last three or four months. We went from eighteen
times forward to twenty two times forward. Now earnings have
to do the lifting, and.
Speaker 14 (16:58):
If earnings to come.
Speaker 13 (17:00):
Up, the denominator has to come up.
Speaker 3 (17:02):
Denominators the bottom bottom, bottom of the down back. Oh,
very good. You noticed Chicago to learn that, David.
Speaker 6 (17:09):
Continue uh, let me pick up on that. We saw
this note from Michael Harte at a Bank of America
this morning. But there's still so much concentration in this market.
What's your sense of when that's going to broaden out,
what's going to be the catalytic factor that's going to
get us sort of a broader move here in the
SP five hundred.
Speaker 13 (17:25):
So let's just say that the top ten stocks in
the SMP, you know, are about thirty percent of the SMP,
which actually is on the low side as a percentage
if you look at other global markets. So in Germany
the top ten is over fifty percent. France the same.
So if you look at other global markets, the concentration
in the US is not unusual. What I will say
(17:48):
is this is cyclicals or outperforming defensives here because you're
the industrials are working. The financials are really working, because
with a deregulatory agenda, you have other parts of the
market working, and the mag seven is sort of breaking apart.
Speaker 14 (18:01):
Right, We're gonna have wind up with a new acronym here.
Speaker 13 (18:04):
So, but you need tech to work, and it must
work because the behemoths of cash flow and margin growth
are driving the rest of the SMP margin.
Speaker 3 (18:13):
Right.
Speaker 13 (18:14):
The margins of the Magnificent seven are double the margins
of the rest of the S and P. So that
has to work, and the cap X spend must produce earnings.
Must It cannot just go into a black hole on
a Friday.
Speaker 4 (18:28):
We're going to digress here with Alicia Levina being why
we can do that. Our math skills are prodigious. I'm
gonna do a little bit of technical stuff here for
Global Wall Street.
Speaker 3 (18:35):
Cat me go get a coffee. Noh no, no.
Speaker 4 (18:38):
Take notes on the Intel it went seven to seventy.
There were some challenging years recently in the pandemic Intel
was near seventy my cell signal. This is log exponential
moving averages. Just as a general statement, I didn't sell
at the peak, but I got out at fifty three
(18:59):
or fifty four when sixty seven down to fifty three
and I was able to get out.
Speaker 2 (19:05):
That's technical analysis.
Speaker 4 (19:07):
How do you know when to get out of a
treasured blue chip stock?
Speaker 13 (19:12):
So, as you know, I can't discuss individual stocks. This
will be as this will be a generic discussion.
Speaker 3 (19:17):
But who tells what we're talking about?
Speaker 13 (19:18):
Well, I mean, you know, in the end, you're looking
for signs of weakness, slightly slower growth quarter over quarter,
you're looking.
Speaker 11 (19:26):
More CEO tone.
Speaker 13 (19:28):
You're looking You're looking at the top line slowing and
margins compressing.
Speaker 14 (19:33):
And that's enough.
Speaker 13 (19:34):
And that's why you know, even if if a fast,
if a growth stock misses its growth target, it gets
destroyed because the story, you know, the wall streem moves
it forward and you see the slower growth and it
can't sustain the multiple.
Speaker 3 (19:50):
Good morning, Tom Galvin, iconic of Donaldson, Lufkin Jenrette.
Speaker 2 (19:53):
Glvin's the one that taught me to go up the
income statement.
Speaker 4 (19:56):
Alicia, what you just said the first and second derivative
study of revenue and ready for this, folks, David take
notes partial derivatives of unit dynamics and price dynamics at
the revenue line.
Speaker 14 (20:10):
You're freaking me out hard of the matter.
Speaker 3 (20:12):
No, seriously, is at the heart of the matter. Yes,
is a revenue dynamic.
Speaker 13 (20:16):
It's actually much simpler than that. I'll say it for
those who didn't understand what you just said, which is
that the growth socks have to continue to exhibit the
growth growthiness and it's very hard to meet elevated expectations.
I mean, we're all married, right, very hard to meet
at elevated expectations, and that's that's what you're looking for.
(20:42):
So even a one to two percent miss on the
revenue line creates an outsize downside move because it's the signal. Right,
it seems to be irrational, but it's not because you're
probably at a higher multiple and you have to start
thinking about earnings.
Speaker 14 (20:56):
So and three years forward, that's the issue.
Speaker 13 (20:59):
Having said that, we're all in right, our team, our
team is all in on AI. We think this is real.
We think it's the beginning of the revolution. All of
the corporate sector will have to incorporate these tools. We
see the financials already doing it, and you're going to
see it in healthcare as well. Any company that is
data driven will be doing this, and that means for
(21:20):
the foreseeable future it's there.
Speaker 14 (21:22):
One day it won't be there.
Speaker 13 (21:23):
But for now it's there.
Speaker 6 (21:24):
Even Tom Keen doing AI as we.
Speaker 4 (21:26):
Learn, I'm doing I'm gemin no idea what I'm doing.
I'm learning and I'm using it one more, I'm using
search less.
Speaker 3 (21:33):
That's it.
Speaker 4 (21:34):
That's the head Alicia being bottled that. Thank you so
much as being where they're on the importance of looking
up the income statement to revenue dynamics.
Speaker 1 (21:50):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 4 (22:04):
Martin Norton joins us right now an actual allocations using empowered.
Speaker 3 (22:09):
They're Canadian.
Speaker 4 (22:10):
They're ginormous, full disclosure and power handles my puny four
owin k. You know, I didn't start until it was
like eighty, you know, sixty something.
Speaker 6 (22:20):
Yeah, Well I'm catting it's growing mightily. That grows.
Speaker 2 (22:24):
It was a triple average all cash from Roger's signature fund.
Marta joins us on the strategy for Marta.
Speaker 4 (22:31):
What do you tell the people who have a fund
that is now forty percent or dare I say fifty
percent in their top ten stocks?
Speaker 15 (22:43):
I mean it's the concentration problem has been a problem
in the US at least for the past several years,
where there is this concern about how much people have
in those top few names. And we know that a
lot of investors, retirement investors included, have this preference for
US equities, so there has been this kind of doubling
down on that exposure. I think there's a few things
(23:04):
that have shifted here. One is that the mag seven
aren't quite as overvalued as they were at the start
of the year. They had the one two punch, they
had the deep seek sell off, then they had the
sell off related to tariffs. So we have seen this
tremendous move higher in the markets, as you all have
been covering. We've seen technology in particular up forty five percent.
We see valuations and technology look expensive, but the mag
(23:25):
seven look a bit cheaper. They have idiosyncratic issues that
are also going on. So I almost think that the
concentration risk is less extreme than it was because it's
not combined without valuation concern.
Speaker 4 (23:36):
The thud you heard up in Winnipeg or wherever was
compliance falling off the chair.
Speaker 3 (23:42):
Why did you continue?
Speaker 2 (23:43):
Why did you continue the conversation? David Martin?
Speaker 6 (23:46):
What have you seen so far in this earning season?
We were talking just a moment ago about the busyness
of the upcoming week when it comes to earnings.
Speaker 7 (23:53):
What are you looking for?
Speaker 3 (23:54):
What are you hoping to.
Speaker 6 (23:55):
Learn as we have I think many dozens of companies
reporting in the week ahead.
Speaker 15 (23:59):
Well, first, I mean, just to level set on the
earnings conversation, and I know you've had several guys who've
weighed on this. We have kind of this low bar
in terms of what to expect with this earning season,
and companies are clearing it with ease simply because expectations
are low. But there's also some trends out there, the
AI trend being a strong proponent as we go forward.
(24:20):
I think what we want to see, particularly as it
pertains to these technology companies the Max seven that continue
to report, is how this AI theme is continuing to
play out, of course the capital investments that they're making,
but also are they realizing it, And we've had some
green shoots in that regard. We're seeing some of the
cost savings that some of these companies have reported. We're
(24:41):
also seeing some broadening out of the AI trend, and
I think that's something to keep an eye on. I'm
not sure, though, and I think this is important. I'm
not sure that the earning season this go around is
going to reveal its entire hand as it attains to
tariffs and as it pertains to AI.
Speaker 3 (24:58):
Martin.
Speaker 4 (24:59):
I got to get this, Martin. I think it's too important.
Girl wants to ask a smart question. I'm going to
be dumb. If you're going to be in equities in
this great bullmarket, which has basically been NonStop since nine,
a few hiccups like COVID along the way, you needed to.
Speaker 2 (25:14):
Withstand three draw downs.
Speaker 4 (25:16):
Negative thirty eight percent of the Dow Marta, the Dow
Jones Industrial Average is the index Michael Barr and I
follow negative thirty eight percent down, yep OH seven negative
fifty three percent down, and recently COVID negative thirty eight percent.
Now serious question, with your morning Star and power work.
(25:37):
What percentage of people in equities and empower are ready
for a thirty five percent draw down that's normal?
Speaker 15 (25:46):
Yeah, I think it's it's the magnitude of the draw
dow you know that scale, that thirty five percent idea,
and also the duration. I think investors got conditioned on
this idea, especially with COVID, is that the snapback can
be and will be always in meet. I'm not sure
necessarily that that's the case always. Of course, with the GFC,
we had a much longer duration. People had to weather
(26:08):
that for much longer. I think that's the concern. If
you get a massive pullback, I think the inclination of
most investors is going to be like, oh, it's a
great hashtag by the dip moment. I think if you
have that extended, that's when you start to shake loose
kind of the weak need of the group. And that's
the concern.
Speaker 3 (26:24):
We haven't had this stated in the ages.
Speaker 6 (26:26):
No, that's very true.
Speaker 4 (26:27):
Like the Carter malaise, get one more in here. Carter
was a broker from Georgia.
Speaker 6 (26:32):
Thank you very much, pena former, etcetera, etcetera.
Speaker 3 (26:34):
Marta.
Speaker 6 (26:35):
I wanted to ask you just on a sector by
sector basis where you see opportunity. Now he's looking through
your notes healthcare as something that you flagged, but it,
like many of these sectors, does have the potential here
for there will be some sort of regulatory weight on it.
Speaker 15 (26:48):
I mean, it's a really tricky question on the sector
basis because if you look across the board at the
sectors in the US, all of them, it feels like
almost all of them, of course, calling out healthcare are
extreme valuations. And so when we're talking about extreme valuations,
we're taking the price to forward earnings, we're breaking it
into deaciles for that sector's history, they're in those ninth
(27:09):
tenth deaciles, and that's when that tends to suggest foward
three year returns not quite a strong. Healthcare is one
of those few areas that's especially cheap. But of course
you don't have cheap for no reason. There's always some
measure of hair. And we have concerns around the regulatory questions.
We have concerns around tariffs. We're talking about massive tariffs
on pharmaceuticals and so a lot of shifts that those
(27:32):
companies are going to have to deal with. But I
think the value of these valuations is that there's something
already in the price. There's concern in the price, and
there's not much concern any of these other sectors in
the price.
Speaker 2 (27:44):
Martin Norton, thank you so much, Chief Investments.
Speaker 3 (27:46):
Createitis to poll.
Speaker 1 (27:47):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa Play Bloomberg eleven thirty.
Speaker 3 (28:04):
Oh the newspapers, are we not your free today?
Speaker 14 (28:07):
We are, yes, but we're cafine infused.
Speaker 6 (28:11):
It's just green tea, isn't it?
Speaker 14 (28:13):
Green tea and espresso shots.
Speaker 6 (28:15):
I see together? Good dar, all right, the newspaper won't
waste any more time, you got it.
Speaker 14 (28:20):
This first article stood out to me. It's in the
New York Times. It's about the division among New York
families and the mayoral race. Because you have the young
voters who supported Zormondami trying to persuade their parents now
to do the same thing. And now the parents are
starting to listen, so they're telling the New York Times,
the moms and dad that even though they may not
(28:41):
have supported Mumdammi initially because his lack of experience or
his policies, they say that their move because how enthusiastic
their kids are about this. They say the future belongs
to them. So they also say they hear stories of
their kids getting shamed by other people for supporting and
they want to back their kids up and say, you
know what, I'm going to stand behind my child and
(29:02):
I'm going to go with them on this one. But
it's weird because you're seeing this shift because usually it's
the kids who inherit from the parents these views, but
experts are saying the reason it's starting to change is
because the parents want this better relationship with the kids,
a better relationship than they had with their parents.
Speaker 6 (29:18):
Fascinating piece Genia Belafante's column in The Times, and this
stood out to me. She says, in statistical terms, the
young don't dominate in this city, the City of New York.
They're roughly half a million more New Yorkers over fifty
than those between the ages of twenty and thirty nine.
The city's population, she writes, like its infrastructure is simply
getting older and older.
Speaker 14 (29:37):
So this is just something.
Speaker 6 (29:38):
Really interesting to watch a lot of the folks with
whom she spoke, not outright endorsing Mamdani in this race,
but looking at their kids, seeing their enthusiasm for it,
thinking about generational change, and it sounds like maybe tossing
a little money towards this campaign.
Speaker 14 (29:51):
It is some of them have been donating. You're correct
about that. Okay, So if speaking of giving money, okay,
if you're feeling a little generous, did you know you
can venmo the US government to help pay down the debt.
Speaker 6 (30:02):
You don't veno time to you don't.
Speaker 4 (30:06):
He's Brian wining a growled at me and Davos once.
Speaker 14 (30:10):
Time you got a zeld, I do the zel thing too.
But you can use venmo, you know, like what you
use to pay back your friends when you're splitting the
check at dinner. You can use that to help pay
down the debt. Business insider says it's it's started there
earlier this year, but it's just starting to gain some
traction because they've done it for years.
Speaker 7 (30:29):
Right.
Speaker 14 (30:29):
You can put your credit card, you can do you know,
your bank account, your debit card. But this is just
a new way for them to bring in someone.
Speaker 6 (30:36):
There's only getting more to pay down, right, it's only
getting bigger.
Speaker 14 (30:41):
The four digits of the number. Okay, next, okay, and
finally this one. There is an app that lets women
anonymously post reviews about the guys they're dating. And it's
soaring to the top of Apple's app store. It's called
Tea and you think about it meaning like the gossip,
like you spill the tea about somebody.
Speaker 6 (31:02):
So that's it's.
Speaker 14 (31:05):
Termed Tom Beyond It. But it launched in twenty twenty three,
and it was launched by a man, if you believe
it or not. His name is Sean Cook, and he
started it because his mom was calfished and he wants
women to have more transparency and talk about, you know,
if anyone has been a criminal and kind of how
this works. Okay, let me just put it out there.
So basically, you post about a man. You can put
(31:28):
his name, his age, his location, and you can include
captions photos, and then there's red flags and green flags, no,
no flags and green flags, and you could add comments.
It's because that's a good one, and you can add comments.
So it's kind of like this forum it's free until
(31:49):
you want to do like more than five searches. Then
you gotta pay fifteen bucks a month. But it's really
starting to gain traction. But the controversy is because you
know what guys are saying, Hey, that's my privacy, Like
what if there are some false acts usations out there?
And then I'm getting a bad rap for you know,
you posting about me on this forum. So it is
the new thing in dating. I'm just glad I'm saying yeah.
I mean, I'm not saying tea and catfish.
Speaker 3 (32:12):
Potato.
Speaker 7 (32:14):
I'm glad I'm not single.
Speaker 3 (32:17):
God at LEASTAO the newspapers here. Thank you.
Speaker 1 (32:19):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Eastern on Bloomberg dot com, the
iHeartRadio app, tune In, and the Bloomberg Business app. You
can also watch us live every weekday on YouTube and
(32:40):
always on the Bloomberg terminal
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