May 13, 2025 • 56 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 13th, 2025
Featuring:
1) Constance Hunter, Chief Economist at EIU, Matt Miskin, Co-Chief Investment Strategist John Hancock Investment Management, and Kathy Jones, Chief Fixed Income Strategist at Charles Schwab, react to CPI. Before today's CPI reading, the S&P 500 and Nasdaq showed further gains, in spite of some investors feeling wary about the lack of detail in Monday's US-China tariff announcement and the risk of another flare-up between Beijing and Washington, with trade pressures already hitting businesses.
2) Brian Belski, Chief Investment Strategist at BMO Capital Markets, brings us into the market open and discusses his bullish equity stance. The easing of trade tensions between the US and China gives investors hope that the US economy can avoid a recession, with traders now expecting the Federal Reserve to lower rates just twice in 2025.
3) Nancy Tengler, CEO and CIO at Laffer Tengler investments, talks about the potential for renewed bullishness (or bearishness) in equities, and why she believes now is a time to turn to mid caps. Many investors are signaling the shift in trade sentiment will be enough to drive a recovery in global markets, despite some concerns.
4) John Lipsky, former managing director of the International Monetary Fund and distinguished visiting scholar at Johns Hopkins, on the US economy, global economic risks, and the Fed reversing its "red line" approach. With hopes riding high that the US economy can avoid a recession, traders now expect the Federal Reserve to lower rates just twice in 2025.
5) Brian Wieser, Principal at Madison and Wall, talks about trends as upfronts kick off for advertisers, ad spending amid economic uncertainty, and implications of Google and Apple search trial.
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 as we slide into this CPI report,
this important report. Constance Hunter, Senior Advisor Macro Policy Perspectives
and of course always with the Economist Intelligence Unit, joins
us today. I guess it's sort of like a mysterious report,
to say the least. But is disinflation in place? If
(00:48):
I see US and global yields moving.
Speaker 3 (00:51):
Higher, Well, the yields are probably moving higher for a
number of reasons. But I think what we've seen is
the disinflation and deeplyation in goods that's about to end, right,
And I agree with Anna Wong. We're seeing softness and
transportation services. That's about six percent of the waiting of CPI,
and so the question is is that are the increases
(01:12):
in goods and the fall and transportation going to offset
each other When we look at core services though, we're
still running a little bit above four percent year over year,
So if we can.
Speaker 4 (01:22):
See what vets churche not yet, not yet, No.
Speaker 2 (01:26):
I will vets. They're way about four.
Speaker 5 (01:29):
Way about four percent? All right?
Speaker 6 (01:31):
So CPI ex food x energy year on year, and
since this is two point eight percent, isn't that okay?
Speaker 7 (01:40):
Well, so I can live with that. So if we
go back to that.
Speaker 3 (01:44):
So I was listening early this morning, and I forget
the name of the guest you had on who was
talking about the post nineties, the late nineties equity market, right,
And in the nineties we had potential GDP was a
bit higher, we had inflation between two and a half
and three percent, and because growth was humming along, actually
only two point eight percent was okay. The big question
mark here is we are coming into potentially softer growth
(02:07):
and even higher inflation going forward as a result of
the tariffs.
Speaker 2 (02:11):
How could you forget? Julian and Manuel have everquor?
Speaker 7 (02:14):
I'm so sorry, Julian.
Speaker 2 (02:17):
Forgettable?
Speaker 5 (02:19):
My bad?
Speaker 7 (02:19):
You're right, Tom.
Speaker 5 (02:20):
So what do we do here?
Speaker 6 (02:21):
If you're the Federal Reserve, you see a print like
two point eight percent, let's say it comes in there today.
Speaker 5 (02:26):
Do you feel like you've got more work to do?
Do you feel like you can sit on your hands,
do you need to cut rates?
Speaker 3 (02:31):
So what everybody is going to be looking for, and
it's going to be challenging, right because these are lagging indicators.
But what everybody's going to be looking for what are
the clues not just about what it says where we
would be going if we weren't having tariffs, but we're
looking for clues about what is going to be inflation
in May, June, July as a result of the tariffs.
And so the details of this goods pricing is going
(02:55):
to be really critical. And we have the amazing work
by Cavallo and his colleagues on the real prices index, right,
and if you look since March, we've seen import prices
go up. But of course this allows domestic producers to say, well,
I can also afford to raise my prices because my
competition is raising their prices. Right, so you import overall inflation, I.
Speaker 2 (03:15):
Get forty two seconds, just as simple as I can.
And this goes to Economics Intelligence Unit, all the wonderful
work of ANA one here, your work with macro policy
perspectives and Julia Cornado in your head, where is CPI
twelve months out? Not your end, but just is it
to Paul's point, is it three ish? Is it two
(03:36):
point xi ish? You're going to make some news here
four ish?
Speaker 8 (03:41):
No.
Speaker 3 (03:41):
I think the news here is that the growth shock
is going to overtake the inflation shock. So you've asked
the critical question, and I think twelve months out we
could be looking at a two and a half percent inflation,
provided that all of those core services that have been
sticky continue to begin a little bit downward.
Speaker 6 (04:02):
Constin Hunter chief economists at the economist intelligence units still
what it's in our Bloomberg Interactive Broker studio constants. We've
had so much discussion about tariffs this year, has it
impacted your GDP outlook at all? Because I'm not sure,
actually I'm not even sure where we are with tariffs
right now, but it seems like it's not as bad
as it was maybe a couple of days ago.
Speaker 5 (04:22):
Has it impacted your GDP outlook?
Speaker 3 (04:24):
So what impacted our GDP outlook is the uncertainty that
the the back and forth on tariff policy has caused.
And of course this is intertwined with a bunch of
dispersion regarding economists forecasts, and so it is that uncertainty
that we think is going to drive the pullback in growth,
and that's going to come from firms reducing capex because
(04:46):
they're not quite sure where there where it.
Speaker 7 (04:49):
Makes sense to spend.
Speaker 3 (04:50):
We see from a we have a corporate network that
are around the world. We have it in different cities
and we've surveyed them and we ask them about in
this tear for war, who are you going to choose
to align with?
Speaker 9 (05:03):
You?
Speaker 3 (05:04):
You're going to choose to align with the US. Are
you going to choose to align with China? Or are
you going to try to stay neutral? And you know
japan executive Japanese executives, yes, they want to align with
the US. You look at executives at country companies based
in other countries and they're reconsidering whether they want to
align with the United States. That's going to impact capex.
Speaker 2 (05:22):
Here to your global view and constance hunters known for
always taking things globally. My first chart of the day
was generic forty years Japan yields are slipping away here, there,
and everywhere. To me, that's lower fixed income prices. Do
we underestimate the drift of the US ten year yield,
(05:45):
the drift of Japan and other nations debt now.
Speaker 3 (05:49):
I think I think we shouldn't underestimate it.
Speaker 10 (05:52):
Right.
Speaker 7 (05:52):
We are seeing term premium come back.
Speaker 3 (05:55):
And if we go back to this nineties world we
were talking about earlier, that is fine if you have
stronger growth, stronger productivity. It has a dampening effect on
growth if you don't have those things. If it's because
of increased debt levels. And when we think about what's happening,
we're looking at China really doing a huge stimulus to
try to make up for this, increasing its debt levels.
(06:16):
We're looking at Germany, you know, ending its debt break,
increasing its debt levels. So there is a good reason
that we are seeing term premium go higher here and
around the world.
Speaker 2 (06:25):
A terrific work again always by the Top Live blog.
It's one of the great premium products of the Bloomberg
at Terminal Top Live and Chris Ansy driving forward all
of that covered some of these We got to kind
of says you got to react to some of these headlines.
The annual gain and a headline CPI what our audience
cares about at two point three percent is the smallest
(06:47):
since February of twenty twenty one. In other words, before
the big inflation surge of spring of twenty twenty one,
but the trademard may reverse.
Speaker 7 (06:58):
That because of God, we're not seeing that yet.
Speaker 3 (07:01):
I was just glancing at the goods inflation from the
release and from what they've the sort of top line numbers,
and we're really not seeing any goods. We saw apparel
continue to decline, we saw used cars continue to decline.
It's not there yet, and the question is sort of
when does that come? Does it come in May? And
all indications are that it will be coming. And so
(07:24):
we really go back to what's happening with Core, which
was two point eight.
Speaker 2 (07:27):
Well, thank you, you drove the vics under eighteen. You're
killing a constants hunter with us with the Economic Intelligence
Unit today and Juliet Cornado of a micropolicy perspective seventeen
point nine zero on the VIX. That's a whow statistic
futures up nine down, futures off of UNC United Health
showing a negative statistic nasdack up a solid four tenths
(07:51):
of a percent. Paul I had a tantrum. He said, Tom,
I'm sick and tired of John Lipsky and Constance Hunter
and all these people at sixty thousand feet. Let's get
the landing gear out with Matt Miskin Manual Life. Johnny
Andcock Investments are co chief investment strategy. Matt tough question,
what is your strategy this second third week of May.
Speaker 4 (08:15):
Well, we've gone from risk off to risk one in
a matter of weeks, and it's been incredibly volatile for us.
It's about just being patient here. We leaned a little
bit into markets on the equity side amidst that drawdown
because we didn't think it was that fundamental. But now frankly,
we're back to the bond market and looking at disinflationary
forces that CPI report did miss again. We actually had
(08:38):
egg deflation, which is nice to see, and so we
actually think you got to be patient here. Now things
are back to being expensive on the risk side. Look
to get some high quality income.
Speaker 2 (08:50):
He's too modest. Emily Rowland has nailed it with buy
American by large cap. Stay the course, don't go to cash, Paul.
Speaker 6 (08:59):
Matt, What do we doing it in a fixed income
space here? That to your treasures yielding during your four
percent these days?
Speaker 5 (09:05):
Do you just hide out there? Do you try to
take some credit risk here?
Speaker 4 (09:08):
We the short end, we don't mind. I mean, it's
if that is attractive yields, you know, you can't you
can't dismiss that. But also in the intermediate part of
the curve, we just think it's completely hypnotized right now
by political developments. It's so odd to us that the
terror risk has come down and inflation's coming down, and
yet the ten year treasure yield is accelerating higher. So
(09:30):
it really has not been pricing in any disinflation in
our view, and you're getting this really nice income stream
again available to you in the bond market, and it's
not it's blowing through all the risk issues that could
be playing out. I mean, if you look at the
risk assets right now, well back to twenty one times
on the pe ratio of the SMP, high yield spreads
(09:51):
are back to three percent. Industrials are the best performing
sector now year to date, and financials are close behind
risk assets. A price for perfection, high quality income has
a lot of ability to run here. If this other
side of the market gets a bit of a rotation
or bid, again, what.
Speaker 6 (10:09):
Did you make of earnings there, Matt? Did they give
you any confidence? Is it reflecting I guess the uncertainty
of the tires situation we're in. What did you take
away from earnings?
Speaker 2 (10:18):
You know, the US earning season has been great.
Speaker 4 (10:21):
It's just amazing how little that has been of attention
from investors. So the US earning season is going out
about fourteen percent year of the year growth clip, which
is one of the best we've seen in years. And
US equities are significantly underperforming their foreign counterparts. On the
MSCIIFA earnings are down six percent year of a year,
(10:44):
and that's the best performing part of the global equity market.
So stocks are not following profits, they're following politics, and
it's a lot of sentiment and to us, we're not
going to be whip sawed by sentiment. We're going to
follow the earnings. And even though the earnings have been good,
the negative side of the story is that the earnings
revisions have been coming down. So we started the year
(11:04):
with nearly a fourteen percent earnings growth estimate for twenty
twenty five. The streets view now it's nine. So our
view is that's going to keep getting trimmed. S and
p multiples just got expensive again. We want to look
for high quality income and be patient here.
Speaker 2 (11:20):
Johnny Hancock was involved in all sorts of deals and
negotiations at the Founding Fathers and you know, getting things
done in the eighteenth century. He would have loved a big,
beautiful tax bill. How does the tax bill coming? This
is really the first time Paul I brought this up
on the show. All of a sudden, folks, it's a
summer legislative season. Matt Michigan. What's that going to do
(11:40):
to the bond market. What's going to do to Emily
Rowland's call in the equity market?
Speaker 4 (11:45):
You know, coming from Boston, we dislike taxes, just like
almost all Americans. I mean, we're still getting over t
tax over here, Tom, you know, legacy of Boston and
ancestors here. But you know, in terms of Paul's see,
it's been a give and take, and you know, tariffs
we're going to be a negative on margins. They we're
going to print margins. That's diminishing. Now we got a
(12:08):
potential tax bill. At the end of the day, what
we are seeing is that growth in profit margins are
probably going to be limited. We just don't see much
of a tax cut. We just see an extension of
the current tax regime regime more likely, and it's just
going to be one that you know, I think it's
if you did a pie chart, it's ninety percent of
(12:29):
investor intention right. Ten percent is everything else. But in
our view, investors should be more attentive to global growth
and fundamentals. And to us it's okay, but it is
a decelerating growth environment We're likely to see over the
course of the year.
Speaker 2 (12:42):
Where we in sixty forty somebody, I am sorry, I
can't cite it, folks. Somebody had a great article this
weekend on the death of sixty forty sixty percent equities,
forty percent bonds go play golf outside Babson at the
Wellesley Country Club. Matt miss can help me here is
sixty forty still, Jermaine.
Speaker 4 (12:59):
It's great foundation still. In our view, it's just that
the equity side of the portfolio, we think is going
to have as a long term investor less return potential.
We're coming off of amazing ten year fifteen year type
returns out of the equity side, and the bond side
has been brutal for like the last five years, and
we just think that the bond side is going to
(13:20):
take on more of a return driver over the next decade,
the yields are a lot higher than they were five
ten years ago. And then on the equity side, look
if you want to look at credit or private debt
or other things. Income as a return driver is our
big theme over the next several years.
Speaker 2 (13:39):
Are buybacks, our share buybacks and income driver.
Speaker 4 (13:43):
It's okay, we'll take it as a capital return. It
does help obviously, you know, reduce shares, increase earnings power.
But at the end of the day, we've already done
a lot of that. That has been a significant return driver.
Capital appreciation. But good old dividends and income and.
Speaker 2 (14:03):
Yeah, thank you, Yeah, payments. Man, I got to go there,
Thank you so much. Man Miskin with his manual life
at Johnny Hancock running jug here folks. Paul Sweeney says,
where's the beef, where's the dividend?
Speaker 6 (14:14):
Yep, exactly right. I've been asking Tim Cook that for
a long time at Apple. Let's talk about the fixed
income market, Tom, I'm.
Speaker 5 (14:20):
Looking at the ten year treasury. We're in about.
Speaker 6 (14:23):
Three basis points four point four to three percent and
two people are talking about people are talking about it.
I mean, you can actually talk to somebody in fixed
income this days and have a reasonably interesting conversation.
Speaker 5 (14:33):
Years ago, you just get like zero percent return on
the bond market. Whos to talk to these people?
Speaker 6 (14:38):
Kathy Jones, for example, she fixed income strategist that Charles
Schwap nobody wanted to talk to her for like a decade.
Speaker 5 (14:45):
Now real yield in the fixed income space.
Speaker 6 (14:49):
Kathy, How are you guys at Charles Shwap thinking about
the bond market these days.
Speaker 2 (14:57):
Now?
Speaker 5 (14:57):
I'm Paul.
Speaker 11 (14:58):
I think the key is that at the long end
you still have some risk to the upside. We didn't
see a tariff effect in this CPI report, which is great,
but we do expect to see some impacts. Tariffs, even
at a lower level, are still four or five times
as high as they were before, so we'll probably see
(15:18):
some tariff effect coming through towards the end of the year,
and then we have all the budget talks to go through.
So we think that the long end, the intermediate to
long end, stays elevated. It doesn't necessarily have to go
a lot higher here, but stays elevated because the term
premium is going to stay up until we see some
of those policy issues resolved.
Speaker 2 (15:39):
Hey, Kathy Jones review for our listeners and our viewers
here this is important question, folks out the yield curve,
Where does your own Powell and Company have impact? Don't
give me it's just in the short term, belogny. Can
they affect the belly of the curve? Cand your own
power effect the price of the ten year note?
Speaker 11 (16:01):
Yeah, certainly, because they focus a lot on inflation expectations,
and that's where you get the FED policy focus that
moves out the yield curve. So the FED effects the
yield curve certainly, very strongly out to two years, maybe
three to five years, But when it comes to ten year,
(16:21):
then you have to incorporate the inflation outlook and a
bunch of other stuff. But keeping inflation expectations anchored, which
I would say right now, I'm not sure they are
fully anchored, but keeping those anchored is a big focus
for the FED because that's what keeps the long end
down relative to the short end.
Speaker 6 (16:43):
Tom, here's some inflation news that you can use. Eggs
were down twelve point seven percent on the month, the
biggest tumbles since nineteen eighty four. That's after the surgeon
egg presses do the Avian flu. Of course, that's a
coordinated Chris answer, seen editor for Bloomberg News. That's news
you can use. I'll defer to call, of course.
Speaker 2 (17:00):
But that's why are they back to where they used
to know? I took the photo of Kirkland eggs here.
I'll get it out on social for Lisa Matteos. I
know she's hanging on every word this morning. Yep. But
the bottom line is, if you're paying seven forty nine
a dozen for fancy eggs that were handpicked, you know,
in a field in Connecticut, and you get your what is.
Speaker 5 (17:22):
A twelve point seven percent decline, then there's.
Speaker 2 (17:24):
Six dollars fifty nine. This is not happening. I can
assure you. This is I'm reporting, folks, that's not happening.
Speaker 5 (17:33):
Kathy Jones have credit quality out there.
Speaker 6 (17:35):
I mean, with all this tariff talk and I'm concerned
and some economic concerning that's bringing into the marketplace are
fixing comp Infession is starting to worry about credit quality.
Speaker 11 (17:46):
We saw a little bit of windening of spreads, a
fairly substantial widening of spreads as the tariff talk ratcheted up.
They've come back a bit from there. We haven't seen
them skyrocket, yet because of the economic data keep keep
holding in pretty pretty well. So I think credit quality
is peaked for the cycle, but it's definitely an investment rate,
(18:08):
it's still pretty strong. I think in high yield it
is kind of a mixed bag from here, but we
haven't seen that downturn in the economy that would cause
credit spreads to really widen significantly.
Speaker 2 (18:20):
From me, how do YouTube live chat? I mean, you
know they don't care about you, they don't care about me. Well,
one guy goes, I really don't care about John Tucker,
But twenty four eggs it's shop right? Nine two doesn't?
That's like five bucks? Yeah, it doesn't. I'm shopping at
the wrong.
Speaker 12 (18:39):
Story, exactly right, kathyw Are there some sectors here that
that kind of screen well for you guys here when
you when you think about credit risk here, you.
Speaker 7 (18:50):
Know, we tend to look at it and aggregate.
Speaker 11 (18:53):
But I would say the areas that have held up
well are still financials. Financials continue to be in very
good shape.
Speaker 4 (19:00):
And those are.
Speaker 11 (19:01):
Issuers of not only investment grade bonds, but we're also
issuers of say, preferreds, So you get to play either
the higher risk, longer duration version of that in financials
or the kind of intermedia term basic bond aspect of
that the financials. But they're holding up pretty well.
Speaker 2 (19:23):
In this in this cacophony of news of international relations
of Rianda and arrest. Kathy Jones, What is CFO is
going to do on issuance? Do they say, let's go,
let's go, let's go.
Speaker 11 (19:38):
You know, issuance is still holding up, But the opportunity
set isn't that great, right because the curve sort of
flattens out. You don't get a lot of advantage right
now in issuing beyond maybe a little bit in the
belly of the curve. So issuance is going to keep pace.
(19:58):
But I don't think that these yields are so attractive
that any CFO who hadn't already extended duration or hadn't
already taken advantage of financing, would jump at these yields.
Speaker 2 (20:09):
Katy, thank you so much, greatly, greatly appreciate it. Kathy
Jones with Charles Schwaber.
Speaker 1 (20:21):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
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Speaker 2 (20:33):
Joining us in the studio now, Brian Belski, He's here
for two reasons. One is after the shock of yesterday.
And also finally, the Minnesota Twins one eight games in
a row and it's up there on a roll.
Speaker 8 (20:46):
It's amazing. I was there for one of them. Was
a beautiful night in Minneapolis.
Speaker 2 (20:49):
It was well, are there blackflies at the Twins stadium
in May? And is it like Cleveland where there's.
Speaker 8 (21:00):
We call them ganats? Yeah, yeah, yeah, it's uh.
Speaker 13 (21:04):
I went to several spring training games down at Fort
Myers and then was up in Many for business last week,
so I was able to catch a ball.
Speaker 2 (21:10):
Withhold says a book out, I'm not to invest and
I'm not to invest is the panic and this is
the modern disease that Brian and I are so against him,
which is goady cash. How do you get back in
the market if you're part of the goady cash crew?
Speaker 13 (21:25):
You buye and I think you try not to outsmart yourself.
You know, We've been talking about this for years, Tom
and everyone tries to time the market and try to
be smarter than the market.
Speaker 8 (21:33):
The market is what the market is.
Speaker 13 (21:35):
And and thanks for sticking with us in terms of
our view because many people did not, and we took
a lot of heat in the media and a lot
of heat internally, and a lot of heat from our clients.
Speaker 8 (21:45):
For all build Ian is such a lovely guy.
Speaker 13 (21:49):
I just did the ReConference keynote and he followed me,
so I love that guy.
Speaker 8 (21:55):
Plus Minnesota guy. So you know, of course, but you know,
and we we do what we do for a reason.
Speaker 13 (22:02):
We're investors. We're not going to react fear sells. People
were making binary decisions based on emotion without having analysis,
and the analysis said that, you know, the markets were
not going to be as broken as everybody thought, and
I think everyone was kind of once again jumping to conclusions.
I really think, guys, that what's happening is we've kind
of shocked ourselves into.
Speaker 8 (22:24):
A period of normalization, believe it or not.
Speaker 13 (22:26):
And so the periods that we've seen really for all
intents and purposes, Tom and Paul since two thousand and
seven have not been normal, not been normal. So we've
been said saying for the last couple of years that
we're entering normalization.
Speaker 6 (22:38):
So normalization is at a high single digit return expectation
for equity markets.
Speaker 8 (22:44):
Yeah.
Speaker 13 (22:45):
I mean, if you go back historically, it's nine point
six percent or nine point eight percent, they're all divided
on there. So I think high single digit, low double
digits for both the S and P five hundred and
earnings growth. We said this in our year ahead piece
for twenty twenty three that we published in November of
twenty twenty two. At that report, guys, we said the
new cyclical bull market has begun, part of our twenty
(23:05):
five year secular ballmarket theme, which remains intact. We are
now in year three of that cyclical bowl. And so
at the end of the day, we think that you
answer Tom's questions, don't try to outsmart yourself, be an investor.
Stocks are higher twelve months from now, stocks are higher
six months from now in this two shell pass.
Speaker 8 (23:23):
And oh, by the way, it looks like it's passed.
Speaker 2 (23:24):
Our financials a comfort stock for people's scared stiff.
Speaker 13 (23:29):
I think they are, Tom, because you know, a lot
of people talk about deregulation going forward, but we talk
about we think about how from a portfolio perspective, small
men and large, we think there's massive under owning, under
ownership of financials, and we think our major theme in
large cap money would be scale in small cap moneys
by small those small cat banks that have existing fantastic
(23:51):
relationships and clean balance sheets. But we think it's the
regional banks that are going to be interesting because they
absolutely positively have to either get smaller or get bigger.
And we think there's going to be a lot of
consolidation twenty six to twenty seven.
Speaker 6 (24:05):
Hey, Brian, what did you make of earnings this cycle?
Because we had a lot of companies kind of pulling guidance.
It's kind of I guess at the height of this
tariff uncertainty here, what did you make of earnings? Would
you make of the guidance? How much can we hang
or out on that?
Speaker 13 (24:19):
Well, the only difference now versus COVID where everybody pulled
their guidance, they pulled on actually their forecast too. They
haven't pulled their forecast. They just they came out with
great earnings the majority above the long term trend in
terms of.
Speaker 8 (24:31):
The first quarter.
Speaker 13 (24:33):
What we looked at as twenty twenty six numbers relative
to twenty twenty five numbers, and we saw what we'd
like to call this earnings revision low, meaning everyone.
Speaker 8 (24:42):
Dropped their numbers at once.
Speaker 13 (24:43):
So I think that at the end of the day,
earnings are kind of tracking high single digit, low double
digit increases for the S and P five hundred. We
think small cap in MidCap can actually potentially do a
little bit better, Paul. But I think this uncertainty with
respect to what has occurred the first six months of
the year five months of the year, I'm sorry with
respect to the tariffs, is starting to unwind and you'll
(25:06):
start to see more kind of consistent earnings. But again,
I think earnings are set up to be under promise
and over deliver, which is that's the kind of period
that you want to be in.
Speaker 5 (25:16):
So, I mean, I'm trying to figure out. I'm reading
all the bluebird stuff.
Speaker 8 (25:20):
I can't. Yeah, we are on terrors.
Speaker 5 (25:22):
I know we're higher. I don't know how much, but
I know we're higher.
Speaker 6 (25:26):
So that's got to impact earnings margins, that kind of stuff.
Speaker 5 (25:29):
Is that reflected in the stocks?
Speaker 2 (25:30):
Do you think? Well?
Speaker 13 (25:31):
I think the one thing that people don't know is
who's going to take on the cost. Is it going
to come out of margins? It's going to be the
consumer or the producer. I think so many people rush
to judgments Paul that it was going to be the consumer.
But what we're seeing is we're seeing that the consumer
discretionary sector, I think from a bottoming perspective, looks very
(25:52):
well in terms of earnings. That's exactly when you want
to buy them quickly.
Speaker 2 (25:55):
Here the revenue persistency of MAG seven. I mean even
if it's high single digit, which is pretty gloomy, but
they if they sum up to a high single digit
revenue persistency, that's constructive. Right. Yeah.
Speaker 8 (26:09):
Two things, actually three.
Speaker 13 (26:10):
You know, following me is one of the greatest stock
pickers I've ever met, Nancy Tangler. I'm a great friend
of mine, and I think we're entering into this period
of stock picking and it means matter and you need.
Speaker 8 (26:18):
To have a lot of experience doing that. Number one.
Speaker 13 (26:21):
Number two, I've said this for a long time now,
for at least ten plus years, that the MAG seven
or the big cap tech stocks are.
Speaker 8 (26:27):
The new consumer staples.
Speaker 13 (26:28):
You go back to the nineties, we went to liquidity
and where there was consistency, and maybe maybe their business
models are changing a little bit. We're going to see
that in Google clearly but I think the consistency of
the of the revenue growth going forward and the liquidity
that it offers investors, that's why you have to own
some of these names.
Speaker 2 (26:45):
Brian, Thank you so much. Brian Belt, thanks with Speama
Capital Markets. I got a tape safe somewhere if you
when it was terrible out just saying just stay the course,
just just be in there. We'll play that, you know,
h end of the year, the vik the Vikings will
be six and zero before they break the Northwest hearts
one more time they've.
Speaker 8 (27:05):
Been doing that, and then finish seven in ten, seven
in ten.
Speaker 2 (27:10):
Brian Belski, thank you so much. As he mentioned, Nancy
Tegler coming up. This is what we like to do, folks,
just back to back excellence.
Speaker 1 (27:17):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay.
Speaker 10 (27:23):
And Android Auto with the Bloomberg Business app.
Speaker 1 (27:26):
You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (27:34):
Nancy Tangler, like Brian Belski, what's the market going to do? Boring? Okay?
If you roll like Nancy Tangler, and eleven years ago
you write the introduction to your classic book, I'm looking
at three beds four bass, seven thousand square feet Paradise
Valley eight five two five three Arizona, three beds four
(27:57):
bass for twenty five million dollars. Okay, Paradise Valley, And
there you were.
Speaker 5 (28:03):
Nancy says, we.
Speaker 2 (28:04):
Got to interrupt. The Women's Guide to Successful Investing was
important with Paul Gray McMillan, and then it became even
more important. What was it like fighting to get that
book published? Do you have to yell and screen? Did
Laffler have to call up and beat on someone?
Speaker 14 (28:21):
Thank you for that, Tom, No, No, not at all.
It was I think we were early on the whole
issue of women, transfer of wealth to women.
Speaker 2 (28:28):
This a huge deal.
Speaker 14 (28:30):
And then the second edition, you know, happily they came
to me and just I mean, you've written a ton.
Speaker 10 (28:36):
You know.
Speaker 14 (28:36):
It's harder to write a second edition than the first
edition because you have to edit and then you have
to add in topical stuff.
Speaker 7 (28:42):
But it's been it's been fun and important.
Speaker 2 (28:45):
Nobody cares. We want a third edition right now. I
want you to talk to women after three months in
a lifetime events and all the stereotypes out there that
still exist. Yeah, how do women get hurted to understand equities?
Speaker 10 (29:03):
Yeah?
Speaker 14 (29:03):
Well, I think the research shows women make better investors
than men. Let's just say we're as good of investors,
because I just followed one of the greats.
Speaker 7 (29:11):
Brian Belski.
Speaker 14 (29:12):
But they need to give themselves permission, because women have
excused themselves from the conversation. Average age of a widow
is fifty nine in the US. I was fifty nine.
Happily I'd been managing all the family wealth. But most
that's a bad time to start learning. So they need
to read my book, and then they need to listen
to your show, and they need to read barons.
Speaker 2 (29:32):
The stereotypes are there's just like an auto ad or
something I can't remember, and the guys worried about like
three tuitions mortgages in that and the woman wants to
figure out where to get a diet of coke. It's
not funny, Paul. This is like, this is like the
most important conversation we can have.
Speaker 6 (29:49):
Nancy, what did you What were you telling your clients
when we actually had a market a couple of weeks ago,
down twenty percent from it's in recent highs.
Speaker 5 (29:57):
That's a bear market for a lot of people. A
lot of folks aren't.
Speaker 6 (30:00):
That experience with that, right, What kind of conversations were
we having with them then and now?
Speaker 14 (30:04):
Well again, like Brian, we're long term investors, so we
were buying okay, and you know, we were able to
pick off a number of names like Microsoft, Talenteer twenty
percent ago, just.
Speaker 7 (30:15):
A few weeks ago.
Speaker 14 (30:16):
So I think I've been hearing that the tech trade
is over for the last three years.
Speaker 2 (30:22):
I was gonna say three decades.
Speaker 14 (30:23):
Or maybe three decades, but certainly the last three were
every summer we get a bear market in technology because
that's it.
Speaker 7 (30:29):
We're done.
Speaker 14 (30:30):
We're doing and we've just been in buying it and
it's been great for our clients. And we also have
a lot of history of outperformance, so that gives them
confidence in a period like that.
Speaker 5 (30:39):
So what do we do now?
Speaker 6 (30:40):
I mean, I think tariffs are going to be lower
than maybe we initially feared, but they're still higher than
they were before. I guess that's a drag on economic growth.
I'm not sure how much I think everybody's trying to
do the math right now? What do you do in
this kind of environment.
Speaker 14 (30:55):
Yeah, So, I mean I'm long for the days when
we had a FED that used price level targeting like
Wayne Angel, remember him, the.
Speaker 2 (31:04):
Late Waite Angel who just died. We just lost Wayne Angel.
Explain his contribution off of Milton Friedman to our economic thoughts.
Speaker 7 (31:15):
Yeah, well he was forward looking, as you know.
Speaker 14 (31:16):
I mean he was looking at the currency exchange rates,
commodity prices to really guide FED policy instead of looking
at last month's data, which is what we have right now.
And so I think when you when you have a
FED that says tariffs, I can't do anything until I.
Speaker 7 (31:32):
Know what they are.
Speaker 14 (31:33):
That's not how this works. And so I think you
have to be looking at things that are relevant.
Speaker 2 (31:38):
Is we have Paul mentioned it eloquently, if we have
this walk back on the trade war? We had John
Lipsky on earlier, it was much more apolitical and you
know than the Laffler Tangler Republican heritage. Where is your group?
Where is your tribe in Pleasant what's it called Pleasant Valley?
(32:00):
Where is your tribe? Post Trump? Is it like we
revert back to what we knew? Or do we go
on to something different? Within a conservative economic ethos.
Speaker 8 (32:11):
Yeah.
Speaker 14 (32:11):
Well, I mean I personally think tariffs are bad. They're
an indirect tax on the consumer tax. So I do
think it would be much more constructive to focus on
growth and focus on reasonable tax levels. So you know,
if we get the extension of the TCJA and additional
tax cuts which are in there, the salt deduction goes up,
(32:34):
you get no tax on tips and social security. Potentially
in overtime that will be I think helpful to growth.
But we as a nation need to focus on spending discipline.
We have none. This bill looks like it's going to
be additive to the deficit, and we have to focus
on growth and sent people. I love this idea of
(32:56):
opening an account for every newborn in America where they
learn to invest at a very young age and they
see the power of compounding.
Speaker 6 (33:06):
Well, my daughter's gotten her three brothers to focus on
this stuff.
Speaker 5 (33:09):
She's the only one that's got her.
Speaker 6 (33:10):
At Austria, see women exactly, she's she does the taxes
for them as well.
Speaker 5 (33:16):
She saw some turbo tax. What do you think about
the consumer? We're going to hear about the consumer on
Thursday year.
Speaker 14 (33:21):
Yea, Paul, they are I mean, I think you know,
we saw some pull forward. Custom duties in April were
over sixteen billion versus eight billion the month before, So
we didn't see it in first quarter earnings, but we
are going to see it, I think in second quarter.
But that said, I think the consumer continues to spend.
The great eddi Ard Denny's comment that they.
Speaker 2 (33:40):
Spend there yesterday never he lifted, Yeah, I think off
the top of my man's sixty five hundred.
Speaker 14 (33:47):
Yeah he did, and Boldman just raised theirs to sixty one.
I don't live in that world, like I have to
produce performance and so I can't change and wiggle. But yeah,
and he said they spend when they're depressed because it
produces dopamine. So I think we'll continue to see the
consumer spent.
Speaker 2 (34:03):
I need your opinion on this. I think it's really important.
I put out in a lovely, lovely small village in Massachusetts,
somebody has a barbie garden. They have like hundreds of barbies.
We've actually donated to it. I think we donated Barbie
Ferrari with Ken and the whole thing. But like it's
like hundreds of Barbies in their yard. People come by
(34:24):
and stare at it. How many your thoughts on thirty
barbies or three barbies? Is this what we've come to
an American consumption? I'll bet you out of you know
where you were at Point Loman before that you had
what forty or fifty barbies.
Speaker 7 (34:42):
I wasn't really a barbie gal.
Speaker 2 (34:45):
No.
Speaker 7 (34:45):
I wanted to be a pilot in the Navy.
Speaker 2 (34:47):
So well they had Barbie top time.
Speaker 14 (34:52):
I think sometimes our administration, I'm gonna say it this way,
has an unfortunate way with words.
Speaker 7 (34:58):
And that was just that was a statement I think
to make.
Speaker 14 (35:02):
And I think we don't want that kind of We
want growth, we don't want that kind of Well, we'll
have to pull back on our own personal consumption, but
the government doesn't have to. So I think we have
to get some of this stuff right sized. I think,
you know, once you get to Washington, you just lose touch.
I interviewed for a position at the BED and the
guy said to me, look what we've done for America.
Speaker 7 (35:22):
He was ex Goldman Sachs. We lowered rates.
Speaker 14 (35:25):
And I said, well, that's great if you if you
are invested in risk assets, but not if you're retired
with a certain assumption of interest rate, you know, income
on your investments and now you're a greeter at Walmart.
So they need perspective like I think they need to
do time in Mid America.
Speaker 2 (35:42):
Can you come back again? We need a third edition
of successful investigation, Nancy Tegler with this.
Speaker 1 (35:55):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay.
Speaker 10 (36:02):
And Android Auto with the Bloomberg Business app.
Speaker 1 (36:04):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Speaker 2 (36:10):
This is a joy. What we do on surveillance around
the busy schedule of our guests is wait till we
can talk to them for an extended moment. And we
have that with John Lipsky out of Iowa years ago
in Wesleyan in Connecticut, and of course forever identified with Stanford.
He attended the recent John Taylor conference with Michael McKee.
(36:31):
John Lipsky's contribution to our public policy scheduled and less
than scheduled, has been profound. At the International Monetary Fund
and of course forever identified with JP Morgan Economics. John
Lipsky thrilled to have you with us today.
Speaker 9 (36:50):
You're too kind, but it's a pleasure to be here.
Speaker 2 (36:53):
I got to start with the great loss of Joseph Nye.
I want you to explain in the trenches of the IMF,
you're speaking Illinois, You're working with a guard to write
the ship. What Joseph ny contributed to international relations.
Speaker 9 (37:11):
Well, I've ran across him in a couple of ways. One,
of course, the renowned for his inceptualization of the idea
of soft power in international relations as opposed to simply
hard power. And of course, in the context of the IMF,
(37:32):
which was a foundational institution creating the post World War
two order that restored the global economy and produced in
the sixty years after World War Two the fastest sustained
global economic growth probably ever, that the United States leadership
(37:55):
in creating the institutional grid that was the foundation of
the so called rules based international order was a reflection
and a powerful and reflection of the US soft power.
Joe was for many years also as widely as a
(38:15):
professor at Kennedy School at Harvard and an essayist. Also
was the US head of the Trilateral Commission, and so
took an active but behind the scenes.
Speaker 2 (38:29):
In a way role of.
Speaker 9 (38:32):
Keeping certainly an international foreign policy elite together.
Speaker 2 (38:36):
John, let's ski let me ask you the money question
that all listening to us across this nation want to know.
After Trump, do we revert back to Ellipsky international relations
and structure or do we go on to something new?
Speaker 9 (38:53):
Well, I don't know what Ellipsky structure would be, but
the really, Tom, you know, at the in the in
the first Trump administration, when there was already a degree
of let's let's say, shock and uncertainty created about where
the US policy was going. Uh, it was commonplace for
(39:16):
Americans to tell foreigners, well, it's it's it's gonna it's
gonna be even if Trump is gone, it's not going
to be back to being the same again. And people
would say, well, what do you mean exactly, and the
answer would be I'm not sure either. Now we would
be doubling down on that. Uh, let's let's look at
(39:36):
the many ways that we would take a look at
try to figure out what comes next. Right now, the
President is enunciating and acting act acting energetically to pursue
what he would call American First, America First. But Secretary
of the Treasury Scott Bessen describes as America first doesn't
(39:57):
mean America alone. Well, that that's good, but what exactly
does it mean? And it's obvious that we don't know
the answer, so we don't yet know what Trump two
point zero is actually going to be. For example, let's
take this in relation to the kind of question you
were asking Tom the US and the World Trade Organization?
(40:23):
Where are we on that reciprocal tariffs appear to be
not a policy that's not compliant with one of the
fundamental aspects of the World Trade Organization agreements, which is
the principle of most favored nation. In other words, you
don't go around discriminating country by country with differential tariff
(40:48):
rates on the same product. That creates that inhibits international trade,
creates a mess. Well, we seem to be pursuing that.
So what does that mean with regard to such fundamental
things as our support for the wt O.
Speaker 2 (41:04):
Well, forgive me John Lipsky with us here, folks, who
welcome all of you across the nation on YouTube around
the world. Good morning as well. In one of the
great charms, here is ages ago in the Salmon Brothers Building,
Building seven. Ye, Paul Sweeney got to walk the halls
of John Lipsky.
Speaker 6 (41:23):
I was a lowly investment banking grunt that John Lipsky
as a night there.
Speaker 5 (41:27):
So hey, John, what does it mean? I'm looking at
the US dollar here.
Speaker 6 (41:32):
Stocks have bounced back, bonds have bounced, yields to come back, but.
Speaker 5 (41:36):
The dollar is still kind of under pressure here. What
do you make of the US dollar here in the
global economy?
Speaker 9 (41:43):
Well, it seems to me obviously markets are trying to
find their way here. But I would I would say
that there's there's little doubt that there has been a
substantial reassessment of the outlook for the US economy that
involves not just domestics, not just foreign investors, but domestic investors.
(42:03):
But it has had an impact on the dollar. And
I would say to roll the tape back to last
fall when or even at Dobbos in January, the dominant
theme was US exceptionalism. How is it that the US
has faster productivity growth, more new business formation, stronger growth
(42:26):
in business investment, etcetera. And entirely positive, not entirely, but
substantially in positive view of the US economy, especially in
differentiated form, it's that the US is doing It's not
perfect a long way, but doing better than everybody else
that has been fundamentally reassessed by policy developments that have
(42:50):
caused investors everywhere to number one, look at to reassess
US growth downwards, reassess inflation outlook upwards, and create more
institutional uncertainty. Tom had mentioned earlier that I was last
(43:11):
week in attending last week attending two conferences at Stanford University,
and we heard presentation from Stanford professors who are measuring
what they call the convenience premium for US Treasury securities
that was formed one of the evidence of the investors
(43:32):
of viewing not just the US economy but US markets
is exceptional, and that seemingly has disappeared. So in other words,
you could say a loss of safe haven or diminishment
diminishment of the safe haven aspects of the US market.
But I would say what you've seen in the dollar
(43:54):
is again a fundamental reassessment of the differential view of
the US economy, and not in a favorable way, to
say the least. Hey John added on to that last word. Here,
the degree of uncertainty about where policy is going. Since
this has essentially been a policy driven upset, it remains
(44:17):
pretty substantial.
Speaker 6 (44:20):
Hey John, I think you and I and most of
our listeners, most of our viewers, we grew up in a.
Speaker 5 (44:24):
World where globalization was the story.
Speaker 6 (44:28):
You had to do your time in Tokyo, you had
to do your time in London. This is a global economy,
global market.
Speaker 5 (44:34):
Is that over?
Speaker 9 (44:36):
Oh no, not at all. As you see, the rest
of the world is still obviously has to take important
account of what the world's largest economy is doing, especially
since it seems intent on altering at the very least,
(44:58):
if not disrupting, the institutional frameworks that were created largely
with the support of the United States. The rest of
the world is continuing to trade. In other words, for example,
within Asia, the growth of interregional trade continues to outstrip
(45:18):
that of trade with the between regions. Especially in the US. Also,
trade and services has continued to grow rapidly, and our
trade policies that have caused so much upset have exclusively
looked at trade in goods. But it's trades and services
that forms part of the most interesting opportunity for the
(45:42):
global economy.
Speaker 2 (45:43):
John, I want to get this in. I think it's
just too important. Your heart and soul is of Iowa.
Your mother's public office in Iowa, ages Ago, I have
family on the Mississippi River in western Illinois, et cetera.
And the basic idea and I go back to Smaller's
classic essay in the fifties of isolationism in America, and
(46:05):
it comes from Iowa. It comes from the Midwest. When
you and I were kids. It was led by the
Chicago Tribune. I want you to speak to the new
breed of American isolationism. Now, how does that on the end? Now?
Speaker 9 (46:21):
Yeah, Tom, It's an excellent question, and it's a puzzlement
to me thinking, let's let's keep it with Iowa.
Speaker 2 (46:31):
Iowa.
Speaker 9 (46:32):
Iowa remains an agricultural state in the sense of its products,
even though actually direct direct farming is a very now
is a very very small part of the labor force.
But still US agricultural exports are an absolutely vital part
(46:54):
of the Midwest farming and for Iowa, and for exact ample,
the last time there was in Trump number one, when
there was a big upset with agricultural trade with China,
the administration ended up having to spend tens of billions
of dollars in compensation, among others, to Iowa farmers for
(47:17):
their lost income, and at the same time there has been.
When I was growing up, Tom, let's just say what
you would call there very there weren't very many folks
of color around. But today at my old high school,
I think it's it's considered exceptional if the valedictorian is
(47:40):
one of those those very talented Asian kids who have
settled in the wake, especially in the wake of the
Vietnam War. And you can find in the construction industrial
and let's see what's happening now and in the packing
industry in Iowa a huge influx of Latin workers who
(48:03):
are viewed as really very much multi the work, hard
working folks. So it's and yet I was voted overwhelmingly
for Trump, So it's as you would say, if call
it isolationist seems jarring. But still it's certainly more nationalists
and buying into the idea that the US has been
(48:26):
taken advantage of by foreigners and by the elites.
Speaker 2 (48:30):
Thank you so much. And just as one example there
of the change of the Middle West is of course
the wonderful Jim Young Kim, who was at Dartmouth College
and then the World Bank, serving right when John Lipsky
was serving as well. John Lipsky, thank you for extended
comments today, remembering Paul Sweeney a few years ago.
Speaker 8 (48:49):
Back to Brothers exactly as well.
Speaker 1 (48:52):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay.
Speaker 10 (48:59):
And Android Auto with the Bloomberg Business app.
Speaker 1 (49:01):
You can also listen live on Amazon Alexa from our
flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
Speaker 6 (49:09):
Brian used a principal at Madison Wall. Brian, you're based
in Portland, Oregon.
Speaker 5 (49:14):
I have no idea why you were there. I love
the town, but you're.
Speaker 2 (49:18):
In New York.
Speaker 5 (49:19):
I am Laura Martin, our good friend from Needham. She's
in New York. Why are all you media mobiles in
New York this week?
Speaker 2 (49:26):
You don't like to hang out together?
Speaker 5 (49:27):
And it's upfront? Oh that that yeah? Tell us what
upfront is? And why do we even have an upfront
season anymore? Tell us what upfront is?
Speaker 2 (49:35):
Right? Well?
Speaker 15 (49:36):
The upfront is this period of time where the world's
largest advertisers and the largest sellers of advertising in the
United States and TV in particular, come together. The TV
network owners and YouTube and Amazon all do big song
and dances I think Lady Gaga is going to be
at YouTube's broadcast tomorrow.
Speaker 5 (49:54):
Wow.
Speaker 2 (49:55):
And yeah.
Speaker 15 (49:56):
Basically they show what they're they've got planned for the
next year and then and it's the time. Once they've
done that, then everyone can forecast what they think audiences
are going to be and then budgets basically start getting negotiated.
That's what the whole upfront period is about.
Speaker 2 (50:08):
Bring us up to date with your historic call that
TV will not go away. Well, we're brilliant on that.
What's a new view from Brian Weezer.
Speaker 15 (50:17):
Well, it's a gradual erosion. I mean, I still think
that the overall industry can grow the top line by
let's say one percent. If you included streaming growth of
call it ten percent, and you assume that subscription fees
from PATV declines by call it six or seven percent,
and ad revenue declines by call it three percent, the
overall medium grows.
Speaker 2 (50:36):
By about a percent. So it doesn't die.
Speaker 15 (50:39):
It just evolves, and the profit margins might shrink, but
it doesn't go away.
Speaker 5 (50:45):
If I'm CBS and Tom, some of these after parties
for these upfronts, legendary stories I cannot tell.
Speaker 15 (50:52):
But that's what the NewYork Post is for exactly?
Speaker 5 (50:55):
Talk to just about I mean, what are the networks
where they allocant? Are they spending money on their CBS
television network programming? Are they putting everything on streaming these days? Well?
Speaker 15 (51:06):
I think that when you look at some of the
networks like NBCU, it's kind of surprising, if not shocking,
just the share of the content budget going to peacock
versus going to the broadcast creative budget. Yeah, exactly, we're
we're paying for content other than sports. Now, sports rights
continues to be heavily skewed towards broadcast networks and cable networks,
and that's primarily because you can get people to pay
(51:26):
for the services right to access it, and the leagues
want the reret and the reach of broadcast.
Speaker 2 (51:32):
Still. So if I go over to Michael's today for
lunchare the calcald and all that they put me in
the way back? And I'm back with the D class
celebrities upfront? Are the fancy people you talk to leading
the upfront charge? What are they talking about? Is it
like one? They're talking about YouTube? What's the theme in
the hallways? Here's the fun thing?
Speaker 15 (51:54):
Even though YouTube may very well have the biggest single
event this week, it's really not part of the upfront
CAN conversation, which is kind of weird, right. They want
to be part of those conversations. They might be bigger
than NBCU and Disney and Paramount combined, but they're not
really part of the overall TV budget process because most
marketers don't think of them as TV yet.
Speaker 6 (52:14):
See, that is so odd because that's where the I
used to just say to people, wherever the eyeballs go,
that's where ad.
Speaker 2 (52:20):
Dollars will go.
Speaker 5 (52:21):
And it's so slow, right, it's because it's different.
Speaker 15 (52:24):
Though in the eyes of the typical marketer, mister Beast
might be comparable, but mister Beast by himself, Beast by himself,
mister beat is relatively small. And so because you're buying audiences,
not programs, when it comes to YouTube, it's hard to
wrap your head around what you're getting. That's part of
the issue.
Speaker 2 (52:43):
We're living this every day, folks, and we really treasure
that you're on YouTube where there's good around the world,
particularly in the Pacific. Rim evening, Good morning to your
New York time on YouTube. Subscribe to Bloomberg Podcast if
Brian Weezer saw our numbers, he'd be calling us exact
beast exactly.
Speaker 6 (53:01):
So, Brian, how are advertisers thinking about broadcast television and
cable television today?
Speaker 2 (53:07):
Yeah? Right now?
Speaker 15 (53:08):
Well today as in what may something? Right, I think
they're still freaking out. Notwithstanding the yesterday's press conference. I
think that there's still a lot of concerns and uncertainty
about what their budgets are going to be, and so
I think there's gonna be a lot of reluctance to
put down money. That's the first thing, right.
Speaker 6 (53:25):
I think it's just general political economic issues.
Speaker 15 (53:28):
Uncertainty is a real issue because it's already a challenge
when you're making these commitments for a period from say
October to September of the following year, when you don't
even know what economic policy is going to be in
about thirty days, let alone sixty nine and twenty. So
I think that that uncertainty is the first top of
mind thing, and that's going to be a huge feature
of this upfront in terms of reluctance to commit without
(53:51):
a lot of flexibility. So that's the first in top
of their mind. But digital platforms are even more important, right,
So the TV budgets have a negative trajectory. Digital budgets
continue to have a growing trajectory for large brands.
Speaker 2 (54:03):
Like single digit growing.
Speaker 15 (54:05):
I think this your single digit yeah, and I think
that the double digits is the thing of the past.
Speaker 2 (54:09):
I mentioned you're in Portland. From Portland up to Vancouver,
is the new Hollywood maybe through the Toronto and the
rest that mister President Trump, mister President went after a
good morning, Marilyn Monroe, thanks for listening. But the bottom
line is the future of Hollywood if they're exporting ever
labor transaction outside California.
Speaker 15 (54:30):
Yeah, Well, the smart thing if you're in the production
business outside of the United States is to make sure
you're doubling down your productions for outside of the United States.
Speaker 5 (54:37):
The United States is as.
Speaker 15 (54:38):
You guys follow as well as anywhere more pushing towards autarchy.
I mean, the reality is that if you want to
produce a content or any business or product for the
United States, you, Kanye are going to need to have
a US based operation. I think that Vancouver in particular
where I'm from, and Toronto are heavily dependent on American productions,
but if they focus on the rest of the world,
huge opportunity.
Speaker 5 (54:58):
So what do we doing today on the upfront? What's
the party today today?
Speaker 15 (55:02):
Disney is later today, so I'll be there.
Speaker 6 (55:06):
And so where we want getting this ESPN app that's
going to have everything we all want?
Speaker 2 (55:11):
Yeah, well I don't coming.
Speaker 15 (55:13):
I don't know the specific schedule. But I think that
the sports specific apps really have a limited audience because
the number of people who are willing to pay only
for that product are going to be limited. That's why
the whole concept of having like a bundle of services is.
Speaker 5 (55:26):
A better business. Yest or charter, Oh no, would never
pay for that.
Speaker 2 (55:31):
When you were Sterling Draper, did you ever beat did
you ever beat Yodah Holloway? Oh? No's that?
Speaker 8 (55:37):
No?
Speaker 5 (55:38):
Yeah, I certainly no.
Speaker 15 (55:40):
I've said some I've got some people from that era.
Speaker 2 (55:43):
Was that was that when they.
Speaker 5 (55:44):
Sit they send the biggest Yeah?
Speaker 15 (55:48):
Remember I replaced the guy started in nineteen forty eight. Yes,
and it was Bob Cohen.
Speaker 5 (55:52):
Bob Cohen, that's right. Bob Cohen was the definitive voice
on Madison Avenue.
Speaker 2 (55:59):
What happens to not West Point Peperol WPP.
Speaker 15 (56:03):
I think that agencies generally are more likely twenty years
from now you'll be able to recognize today's agencies in
some form with a higher probability than meta will be around.
Speaker 2 (56:13):
Okay, mark our words.
Speaker 15 (56:15):
Mata is just heart probability.
Speaker 5 (56:16):
Probability.
Speaker 2 (56:17):
Yeah, don't be a stranger's thing. Can we get who
should get live reporting from the upfronts? Joining the stem
YEP upfront corresponding Brian, exactly right, very quit fun, Brian,
thank you.
Speaker 1 (56:28):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(56:48):
and always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Joining us now as we slide into this CPI report,
this important report. Constance Hunter, Senior Advisor Macro Policy Perspectives
and of course always with the Economist Intelligence Unit, joins
us today. I guess it's sort of like a mysterious report,
to say the least. But is disinflation in place? If
(00:48):
I see US and global yields moving.
Speaker 3 (00:51):
Higher, Well, the yields are probably moving higher for a
number of reasons. But I think what we've seen is
the disinflation and deeplyation in goods that's about to end, right,
And I agree with Anna Wong. We're seeing softness and
transportation services. That's about six percent of the waiting of CPI,
and so the question is is that are the increases
(01:12):
in goods and the fall and transportation going to offset
each other When we look at core services though, we're
still running a little bit above four percent year over year,
So if we can.
Speaker 4 (01:22):
See what vets churche not yet, not yet, No.
Speaker 2 (01:26):
I will vets. They're way about four.
Speaker 5 (01:29):
Way about four percent? All right?
Speaker 6 (01:31):
So CPI ex food x energy year on year, and
since this is two point eight percent, isn't that okay?
Speaker 7 (01:40):
Well, so I can live with that. So if we
go back to that.
Speaker 3 (01:44):
So I was listening early this morning, and I forget
the name of the guest you had on who was
talking about the post nineties, the late nineties equity market, right,
And in the nineties we had potential GDP was a
bit higher, we had inflation between two and a half
and three percent, and because growth was humming along, actually
only two point eight percent was okay. The big question
mark here is we are coming into potentially softer growth
(02:07):
and even higher inflation going forward as a result of
the tariffs.
Speaker 2 (02:11):
How could you forget? Julian and Manuel have everquor?
Speaker 7 (02:14):
I'm so sorry, Julian.
Speaker 2 (02:17):
Forgettable?
Speaker 5 (02:19):
My bad?
Speaker 7 (02:19):
You're right, Tom.
Speaker 5 (02:20):
So what do we do here?
Speaker 6 (02:21):
If you're the Federal Reserve, you see a print like
two point eight percent, let's say it comes in there today.
Speaker 5 (02:26):
Do you feel like you've got more work to do?
Do you feel like you can sit on your hands,
do you need to cut rates?
Speaker 3 (02:31):
So what everybody is going to be looking for, and
it's going to be challenging, right because these are lagging indicators.
But what everybody's going to be looking for what are
the clues not just about what it says where we
would be going if we weren't having tariffs, but we're
looking for clues about what is going to be inflation
in May, June, July as a result of the tariffs.
And so the details of this goods pricing is going
(02:55):
to be really critical. And we have the amazing work
by Cavallo and his colleagues on the real prices index, right,
and if you look since March, we've seen import prices
go up. But of course this allows domestic producers to say, well,
I can also afford to raise my prices because my
competition is raising their prices. Right, so you import overall inflation, I.
Speaker 2 (03:15):
Get forty two seconds, just as simple as I can.
And this goes to Economics Intelligence Unit, all the wonderful
work of ANA one here, your work with macro policy
perspectives and Julia Cornado in your head, where is CPI
twelve months out? Not your end, but just is it
to Paul's point, is it three ish? Is it two
(03:36):
point xi ish? You're going to make some news here
four ish?
Speaker 8 (03:41):
No.
Speaker 3 (03:41):
I think the news here is that the growth shock
is going to overtake the inflation shock. So you've asked
the critical question, and I think twelve months out we
could be looking at a two and a half percent inflation,
provided that all of those core services that have been
sticky continue to begin a little bit downward.
Speaker 6 (04:02):
Constin Hunter chief economists at the economist intelligence units still
what it's in our Bloomberg Interactive Broker studio constants. We've
had so much discussion about tariffs this year, has it
impacted your GDP outlook at all? Because I'm not sure,
actually I'm not even sure where we are with tariffs
right now, but it seems like it's not as bad
as it was maybe a couple of days ago.
Speaker 5 (04:22):
Has it impacted your GDP outlook?
Speaker 3 (04:24):
So what impacted our GDP outlook is the uncertainty that
the the back and forth on tariff policy has caused.
And of course this is intertwined with a bunch of
dispersion regarding economists forecasts, and so it is that uncertainty
that we think is going to drive the pullback in growth,
and that's going to come from firms reducing capex because
(04:46):
they're not quite sure where there where it.
Speaker 7 (04:49):
Makes sense to spend.
Speaker 3 (04:50):
We see from a we have a corporate network that
are around the world. We have it in different cities
and we've surveyed them and we ask them about in
this tear for war, who are you going to choose
to align with?
Speaker 9 (05:03):
You?
Speaker 3 (05:04):
You're going to choose to align with the US. Are
you going to choose to align with China? Or are
you going to try to stay neutral? And you know
japan executive Japanese executives, yes, they want to align with
the US. You look at executives at country companies based
in other countries and they're reconsidering whether they want to
align with the United States. That's going to impact capex.
Speaker 2 (05:22):
Here to your global view and constance hunters known for
always taking things globally. My first chart of the day
was generic forty years Japan yields are slipping away here, there,
and everywhere. To me, that's lower fixed income prices. Do
we underestimate the drift of the US ten year yield,
(05:45):
the drift of Japan and other nations debt now.
Speaker 3 (05:49):
I think I think we shouldn't underestimate it.
Speaker 10 (05:52):
Right.
Speaker 7 (05:52):
We are seeing term premium come back.
Speaker 3 (05:55):
And if we go back to this nineties world we
were talking about earlier, that is fine if you have
stronger growth, stronger productivity. It has a dampening effect on
growth if you don't have those things. If it's because
of increased debt levels. And when we think about what's happening,
we're looking at China really doing a huge stimulus to
try to make up for this, increasing its debt levels.
(06:16):
We're looking at Germany, you know, ending its debt break,
increasing its debt levels. So there is a good reason
that we are seeing term premium go higher here and
around the world.
Speaker 2 (06:25):
A terrific work again always by the Top Live blog.
It's one of the great premium products of the Bloomberg
at Terminal Top Live and Chris Ansy driving forward all
of that covered some of these We got to kind
of says you got to react to some of these headlines.
The annual gain and a headline CPI what our audience
cares about at two point three percent is the smallest
(06:47):
since February of twenty twenty one. In other words, before
the big inflation surge of spring of twenty twenty one,
but the trademard may reverse.
Speaker 7 (06:58):
That because of God, we're not seeing that yet.
Speaker 3 (07:01):
I was just glancing at the goods inflation from the
release and from what they've the sort of top line numbers,
and we're really not seeing any goods. We saw apparel
continue to decline, we saw used cars continue to decline.
It's not there yet, and the question is sort of
when does that come? Does it come in May? And
all indications are that it will be coming. And so
(07:24):
we really go back to what's happening with Core, which
was two point eight.
Speaker 2 (07:27):
Well, thank you, you drove the vics under eighteen. You're
killing a constants hunter with us with the Economic Intelligence
Unit today and Juliet Cornado of a micropolicy perspective seventeen
point nine zero on the VIX. That's a whow statistic
futures up nine down, futures off of UNC United Health
showing a negative statistic nasdack up a solid four tenths
(07:51):
of a percent. Paul I had a tantrum. He said, Tom,
I'm sick and tired of John Lipsky and Constance Hunter
and all these people at sixty thousand feet. Let's get
the landing gear out with Matt Miskin Manual Life. Johnny
Andcock Investments are co chief investment strategy. Matt tough question,
what is your strategy this second third week of May.
Speaker 4 (08:15):
Well, we've gone from risk off to risk one in
a matter of weeks, and it's been incredibly volatile for us.
It's about just being patient here. We leaned a little
bit into markets on the equity side amidst that drawdown
because we didn't think it was that fundamental. But now frankly,
we're back to the bond market and looking at disinflationary
forces that CPI report did miss again. We actually had
(08:38):
egg deflation, which is nice to see, and so we
actually think you got to be patient here. Now things
are back to being expensive on the risk side. Look
to get some high quality income.
Speaker 2 (08:50):
He's too modest. Emily Rowland has nailed it with buy
American by large cap. Stay the course, don't go to cash, Paul.
Speaker 6 (08:59):
Matt, What do we doing it in a fixed income
space here? That to your treasures yielding during your four
percent these days?
Speaker 5 (09:05):
Do you just hide out there? Do you try to
take some credit risk here?
Speaker 4 (09:08):
We the short end, we don't mind. I mean, it's
if that is attractive yields, you know, you can't you
can't dismiss that. But also in the intermediate part of
the curve, we just think it's completely hypnotized right now
by political developments. It's so odd to us that the
terror risk has come down and inflation's coming down, and
yet the ten year treasure yield is accelerating higher. So
(09:30):
it really has not been pricing in any disinflation in
our view, and you're getting this really nice income stream
again available to you in the bond market, and it's
not it's blowing through all the risk issues that could
be playing out. I mean, if you look at the
risk assets right now, well back to twenty one times
on the pe ratio of the SMP, high yield spreads
(09:51):
are back to three percent. Industrials are the best performing
sector now year to date, and financials are close behind
risk assets. A price for perfection, high quality income has
a lot of ability to run here. If this other
side of the market gets a bit of a rotation
or bid, again, what.
Speaker 6 (10:09):
Did you make of earnings there, Matt? Did they give
you any confidence? Is it reflecting I guess the uncertainty
of the tires situation we're in. What did you take
away from earnings?
Speaker 2 (10:18):
You know, the US earning season has been great.
Speaker 4 (10:21):
It's just amazing how little that has been of attention
from investors. So the US earning season is going out
about fourteen percent year of the year growth clip, which
is one of the best we've seen in years. And
US equities are significantly underperforming their foreign counterparts. On the
MSCIIFA earnings are down six percent year of a year,
(10:44):
and that's the best performing part of the global equity market.
So stocks are not following profits, they're following politics, and
it's a lot of sentiment and to us, we're not
going to be whip sawed by sentiment. We're going to
follow the earnings. And even though the earnings have been good,
the negative side of the story is that the earnings
revisions have been coming down. So we started the year
(11:04):
with nearly a fourteen percent earnings growth estimate for twenty
twenty five. The streets view now it's nine. So our
view is that's going to keep getting trimmed. S and
p multiples just got expensive again. We want to look
for high quality income and be patient here.
Speaker 2 (11:20):
Johnny Hancock was involved in all sorts of deals and
negotiations at the Founding Fathers and you know, getting things
done in the eighteenth century. He would have loved a big,
beautiful tax bill. How does the tax bill coming? This
is really the first time Paul I brought this up
on the show. All of a sudden, folks, it's a
summer legislative season. Matt Michigan. What's that going to do
(11:40):
to the bond market. What's going to do to Emily
Rowland's call in the equity market?
Speaker 4 (11:45):
You know, coming from Boston, we dislike taxes, just like
almost all Americans. I mean, we're still getting over t
tax over here, Tom, you know, legacy of Boston and
ancestors here. But you know, in terms of Paul's see,
it's been a give and take, and you know, tariffs
we're going to be a negative on margins. They we're
going to print margins. That's diminishing. Now we got a
(12:08):
potential tax bill. At the end of the day, what
we are seeing is that growth in profit margins are
probably going to be limited. We just don't see much
of a tax cut. We just see an extension of
the current tax regime regime more likely, and it's just
going to be one that you know, I think it's
if you did a pie chart, it's ninety percent of
(12:29):
investor intention right. Ten percent is everything else. But in
our view, investors should be more attentive to global growth
and fundamentals. And to us it's okay, but it is
a decelerating growth environment We're likely to see over the
course of the year.
Speaker 2 (12:42):
Where we in sixty forty somebody, I am sorry, I
can't cite it, folks. Somebody had a great article this
weekend on the death of sixty forty sixty percent equities,
forty percent bonds go play golf outside Babson at the
Wellesley Country Club. Matt miss can help me here is
sixty forty still, Jermaine.
Speaker 4 (12:59):
It's great foundation still. In our view, it's just that
the equity side of the portfolio, we think is going
to have as a long term investor less return potential.
We're coming off of amazing ten year fifteen year type
returns out of the equity side, and the bond side
has been brutal for like the last five years, and
we just think that the bond side is going to
(13:20):
take on more of a return driver over the next decade,
the yields are a lot higher than they were five
ten years ago. And then on the equity side, look
if you want to look at credit or private debt
or other things. Income as a return driver is our
big theme over the next several years.
Speaker 2 (13:39):
Are buybacks, our share buybacks and income driver.
Speaker 4 (13:43):
It's okay, we'll take it as a capital return. It
does help obviously, you know, reduce shares, increase earnings power.
But at the end of the day, we've already done
a lot of that. That has been a significant return driver.
Capital appreciation. But good old dividends and income and.
Speaker 2 (14:03):
Yeah, thank you, Yeah, payments. Man, I got to go there,
Thank you so much. Man Miskin with his manual life
at Johnny Hancock running jug here folks. Paul Sweeney says,
where's the beef, where's the dividend?
Speaker 6 (14:14):
Yep, exactly right. I've been asking Tim Cook that for
a long time at Apple. Let's talk about the fixed
income market, Tom, I'm.
Speaker 5 (14:20):
Looking at the ten year treasury. We're in about.
Speaker 6 (14:23):
Three basis points four point four to three percent and
two people are talking about people are talking about it.
I mean, you can actually talk to somebody in fixed
income this days and have a reasonably interesting conversation.
Speaker 5 (14:33):
Years ago, you just get like zero percent return on
the bond market. Whos to talk to these people?
Speaker 6 (14:38):
Kathy Jones, for example, she fixed income strategist that Charles
Schwap nobody wanted to talk to her for like a decade.
Speaker 5 (14:45):
Now real yield in the fixed income space.
Speaker 6 (14:49):
Kathy, How are you guys at Charles Shwap thinking about
the bond market these days.
Speaker 2 (14:57):
Now?
Speaker 5 (14:57):
I'm Paul.
Speaker 11 (14:58):
I think the key is that at the long end
you still have some risk to the upside. We didn't
see a tariff effect in this CPI report, which is great,
but we do expect to see some impacts. Tariffs, even
at a lower level, are still four or five times
as high as they were before, so we'll probably see
(15:18):
some tariff effect coming through towards the end of the year,
and then we have all the budget talks to go through.
So we think that the long end, the intermediate to
long end, stays elevated. It doesn't necessarily have to go
a lot higher here, but stays elevated because the term
premium is going to stay up until we see some
of those policy issues resolved.
Speaker 2 (15:39):
Hey, Kathy Jones review for our listeners and our viewers
here this is important question, folks out the yield curve,
Where does your own Powell and Company have impact? Don't
give me it's just in the short term, belogny. Can
they affect the belly of the curve? Cand your own
power effect the price of the ten year note?
Speaker 11 (16:01):
Yeah, certainly, because they focus a lot on inflation expectations,
and that's where you get the FED policy focus that
moves out the yield curve. So the FED effects the
yield curve certainly, very strongly out to two years, maybe
three to five years, But when it comes to ten year,
(16:21):
then you have to incorporate the inflation outlook and a
bunch of other stuff. But keeping inflation expectations anchored, which
I would say right now, I'm not sure they are
fully anchored, but keeping those anchored is a big focus
for the FED because that's what keeps the long end
down relative to the short end.
Speaker 6 (16:43):
Tom, here's some inflation news that you can use. Eggs
were down twelve point seven percent on the month, the
biggest tumbles since nineteen eighty four. That's after the surgeon
egg presses do the Avian flu. Of course, that's a
coordinated Chris answer, seen editor for Bloomberg News. That's news
you can use. I'll defer to call, of course.
Speaker 2 (17:00):
But that's why are they back to where they used
to know? I took the photo of Kirkland eggs here.
I'll get it out on social for Lisa Matteos. I
know she's hanging on every word this morning. Yep. But
the bottom line is, if you're paying seven forty nine
a dozen for fancy eggs that were handpicked, you know,
in a field in Connecticut, and you get your what is.
Speaker 5 (17:22):
A twelve point seven percent decline, then there's.
Speaker 2 (17:24):
Six dollars fifty nine. This is not happening. I can
assure you. This is I'm reporting, folks, that's not happening.
Speaker 5 (17:33):
Kathy Jones have credit quality out there.
Speaker 6 (17:35):
I mean, with all this tariff talk and I'm concerned
and some economic concerning that's bringing into the marketplace are
fixing comp Infession is starting to worry about credit quality.
Speaker 11 (17:46):
We saw a little bit of windening of spreads, a
fairly substantial widening of spreads as the tariff talk ratcheted up.
They've come back a bit from there. We haven't seen
them skyrocket, yet because of the economic data keep keep
holding in pretty pretty well. So I think credit quality
is peaked for the cycle, but it's definitely an investment rate,
(18:08):
it's still pretty strong. I think in high yield it
is kind of a mixed bag from here, but we
haven't seen that downturn in the economy that would cause
credit spreads to really widen significantly.
Speaker 2 (18:20):
From me, how do YouTube live chat? I mean, you
know they don't care about you, they don't care about me. Well,
one guy goes, I really don't care about John Tucker,
But twenty four eggs it's shop right? Nine two doesn't?
That's like five bucks? Yeah, it doesn't. I'm shopping at
the wrong.
Speaker 12 (18:39):
Story, exactly right, kathyw Are there some sectors here that
that kind of screen well for you guys here when
you when you think about credit risk here, you.
Speaker 7 (18:50):
Know, we tend to look at it and aggregate.
Speaker 11 (18:53):
But I would say the areas that have held up
well are still financials. Financials continue to be in very
good shape.
Speaker 4 (19:00):
And those are.
Speaker 11 (19:01):
Issuers of not only investment grade bonds, but we're also
issuers of say, preferreds, So you get to play either
the higher risk, longer duration version of that in financials
or the kind of intermedia term basic bond aspect of
that the financials. But they're holding up pretty well.
Speaker 2 (19:23):
In this in this cacophony of news of international relations
of Rianda and arrest. Kathy Jones, What is CFO is
going to do on issuance? Do they say, let's go,
let's go, let's go.
Speaker 11 (19:38):
You know, issuance is still holding up, But the opportunity
set isn't that great, right because the curve sort of
flattens out. You don't get a lot of advantage right
now in issuing beyond maybe a little bit in the
belly of the curve. So issuance is going to keep pace.
(19:58):
But I don't think that these yields are so attractive
that any CFO who hadn't already extended duration or hadn't
already taken advantage of financing, would jump at these yields.
Speaker 2 (20:09):
Katy, thank you so much, greatly, greatly appreciate it. Kathy
Jones with Charles Schwaber.
Speaker 1 (20:21):
You're listening to the Bloomberg Surveillance podcast. Catch us Live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Auto with the Bloomberg Business app or
watch us live on YouTube.
Speaker 2 (20:33):
Joining us in the studio now, Brian Belski, He's here
for two reasons. One is after the shock of yesterday.
And also finally, the Minnesota Twins one eight games in
a row and it's up there on a roll.
Speaker 8 (20:46):
It's amazing. I was there for one of them. Was
a beautiful night in Minneapolis.
Speaker 2 (20:49):
It was well, are there blackflies at the Twins stadium
in May? And is it like Cleveland where there's.
Speaker 8 (21:00):
We call them ganats? Yeah, yeah, yeah, it's uh.
Speaker 13 (21:04):
I went to several spring training games down at Fort
Myers and then was up in Many for business last week,
so I was able to catch a ball.
Speaker 2 (21:10):
Withhold says a book out, I'm not to invest and
I'm not to invest is the panic and this is
the modern disease that Brian and I are so against him,
which is goady cash. How do you get back in
the market if you're part of the goady cash crew?
Speaker 13 (21:25):
You buye and I think you try not to outsmart yourself.
You know, We've been talking about this for years, Tom
and everyone tries to time the market and try to
be smarter than the market.
Speaker 8 (21:33):
The market is what the market is.
Speaker 13 (21:35):
And and thanks for sticking with us in terms of
our view because many people did not, and we took
a lot of heat in the media and a lot
of heat internally, and a lot of heat from our clients.
Speaker 8 (21:45):
For all build Ian is such a lovely guy.
Speaker 13 (21:49):
I just did the ReConference keynote and he followed me,
so I love that guy.
Speaker 8 (21:55):
Plus Minnesota guy. So you know, of course, but you know,
and we we do what we do for a reason.
Speaker 13 (22:02):
We're investors. We're not going to react fear sells. People
were making binary decisions based on emotion without having analysis,
and the analysis said that, you know, the markets were
not going to be as broken as everybody thought, and
I think everyone was kind of once again jumping to conclusions.
I really think, guys, that what's happening is we've kind
of shocked ourselves into.
Speaker 8 (22:24):
A period of normalization, believe it or not.
Speaker 13 (22:26):
And so the periods that we've seen really for all
intents and purposes, Tom and Paul since two thousand and
seven have not been normal, not been normal. So we've
been said saying for the last couple of years that
we're entering normalization.
Speaker 6 (22:38):
So normalization is at a high single digit return expectation
for equity markets.
Speaker 8 (22:44):
Yeah.
Speaker 13 (22:45):
I mean, if you go back historically, it's nine point
six percent or nine point eight percent, they're all divided
on there. So I think high single digit, low double
digits for both the S and P five hundred and
earnings growth. We said this in our year ahead piece
for twenty twenty three that we published in November of
twenty twenty two. At that report, guys, we said the
new cyclical bull market has begun, part of our twenty
(23:05):
five year secular ballmarket theme, which remains intact. We are
now in year three of that cyclical bowl. And so
at the end of the day, we think that you
answer Tom's questions, don't try to outsmart yourself, be an investor.
Stocks are higher twelve months from now, stocks are higher
six months from now in this two shell pass.
Speaker 8 (23:23):
And oh, by the way, it looks like it's passed.
Speaker 2 (23:24):
Our financials a comfort stock for people's scared stiff.
Speaker 13 (23:29):
I think they are, Tom, because you know, a lot
of people talk about deregulation going forward, but we talk
about we think about how from a portfolio perspective, small
men and large, we think there's massive under owning, under
ownership of financials, and we think our major theme in
large cap money would be scale in small cap moneys
by small those small cat banks that have existing fantastic
(23:51):
relationships and clean balance sheets. But we think it's the
regional banks that are going to be interesting because they
absolutely positively have to either get smaller or get bigger.
And we think there's going to be a lot of
consolidation twenty six to twenty seven.
Speaker 6 (24:05):
Hey, Brian, what did you make of earnings this cycle?
Because we had a lot of companies kind of pulling guidance.
It's kind of I guess at the height of this
tariff uncertainty here, what did you make of earnings? Would
you make of the guidance? How much can we hang
or out on that?
Speaker 13 (24:19):
Well, the only difference now versus COVID where everybody pulled
their guidance, they pulled on actually their forecast too. They
haven't pulled their forecast. They just they came out with
great earnings the majority above the long term trend in
terms of.
Speaker 8 (24:31):
The first quarter.
Speaker 13 (24:33):
What we looked at as twenty twenty six numbers relative
to twenty twenty five numbers, and we saw what we'd
like to call this earnings revision low, meaning everyone.
Speaker 8 (24:42):
Dropped their numbers at once.
Speaker 13 (24:43):
So I think that at the end of the day,
earnings are kind of tracking high single digit, low double
digit increases for the S and P five hundred. We
think small cap in MidCap can actually potentially do a
little bit better, Paul. But I think this uncertainty with
respect to what has occurred the first six months of
the year five months of the year, I'm sorry with
respect to the tariffs, is starting to unwind and you'll
(25:06):
start to see more kind of consistent earnings. But again,
I think earnings are set up to be under promise
and over deliver, which is that's the kind of period
that you want to be in.
Speaker 5 (25:16):
So, I mean, I'm trying to figure out. I'm reading
all the bluebird stuff.
Speaker 8 (25:20):
I can't. Yeah, we are on terrors.
Speaker 5 (25:22):
I know we're higher. I don't know how much, but
I know we're higher.
Speaker 6 (25:26):
So that's got to impact earnings margins, that kind of stuff.
Speaker 5 (25:29):
Is that reflected in the stocks?
Speaker 2 (25:30):
Do you think? Well?
Speaker 13 (25:31):
I think the one thing that people don't know is
who's going to take on the cost. Is it going
to come out of margins? It's going to be the
consumer or the producer. I think so many people rush
to judgments Paul that it was going to be the consumer.
But what we're seeing is we're seeing that the consumer
discretionary sector, I think from a bottoming perspective, looks very
(25:52):
well in terms of earnings. That's exactly when you want
to buy them quickly.
Speaker 2 (25:55):
Here the revenue persistency of MAG seven. I mean even
if it's high single digit, which is pretty gloomy, but
they if they sum up to a high single digit
revenue persistency, that's constructive. Right. Yeah.
Speaker 8 (26:09):
Two things, actually three.
Speaker 13 (26:10):
You know, following me is one of the greatest stock
pickers I've ever met, Nancy Tangler. I'm a great friend
of mine, and I think we're entering into this period
of stock picking and it means matter and you need.
Speaker 8 (26:18):
To have a lot of experience doing that. Number one.
Speaker 13 (26:21):
Number two, I've said this for a long time now,
for at least ten plus years, that the MAG seven
or the big cap tech stocks are.
Speaker 8 (26:27):
The new consumer staples.
Speaker 13 (26:28):
You go back to the nineties, we went to liquidity
and where there was consistency, and maybe maybe their business
models are changing a little bit. We're going to see
that in Google clearly but I think the consistency of
the of the revenue growth going forward and the liquidity
that it offers investors, that's why you have to own
some of these names.
Speaker 2 (26:45):
Brian, Thank you so much. Brian Belt, thanks with Speama
Capital Markets. I got a tape safe somewhere if you
when it was terrible out just saying just stay the course,
just just be in there. We'll play that, you know,
h end of the year, the vik the Vikings will
be six and zero before they break the Northwest hearts
one more time they've.
Speaker 8 (27:05):
Been doing that, and then finish seven in ten, seven
in ten.
Speaker 2 (27:10):
Brian Belski, thank you so much. As he mentioned, Nancy
Tegler coming up. This is what we like to do, folks,
just back to back excellence.
Speaker 1 (27:17):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay.
Speaker 10 (27:23):
And Android Auto with the Bloomberg Business app.
Speaker 1 (27:26):
You can also listen live on Amazon Alexa from our
flagship New York station, Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (27:34):
Nancy Tangler, like Brian Belski, what's the market going to do? Boring? Okay?
If you roll like Nancy Tangler, and eleven years ago
you write the introduction to your classic book, I'm looking
at three beds four bass, seven thousand square feet Paradise
Valley eight five two five three Arizona, three beds four
(27:57):
bass for twenty five million dollars. Okay, Paradise Valley, And
there you were.
Speaker 5 (28:03):
Nancy says, we.
Speaker 2 (28:04):
Got to interrupt. The Women's Guide to Successful Investing was
important with Paul Gray McMillan, and then it became even
more important. What was it like fighting to get that
book published? Do you have to yell and screen? Did
Laffler have to call up and beat on someone?
Speaker 14 (28:21):
Thank you for that, Tom, No, No, not at all.
It was I think we were early on the whole
issue of women, transfer of wealth to women.
Speaker 2 (28:28):
This a huge deal.
Speaker 14 (28:30):
And then the second edition, you know, happily they came
to me and just I mean, you've written a ton.
Speaker 10 (28:36):
You know.
Speaker 14 (28:36):
It's harder to write a second edition than the first
edition because you have to edit and then you have
to add in topical stuff.
Speaker 7 (28:42):
But it's been it's been fun and important.
Speaker 2 (28:45):
Nobody cares. We want a third edition right now. I
want you to talk to women after three months in
a lifetime events and all the stereotypes out there that
still exist. Yeah, how do women get hurted to understand equities?
Speaker 10 (29:03):
Yeah?
Speaker 14 (29:03):
Well, I think the research shows women make better investors
than men. Let's just say we're as good of investors,
because I just followed one of the greats.
Speaker 7 (29:11):
Brian Belski.
Speaker 14 (29:12):
But they need to give themselves permission, because women have
excused themselves from the conversation. Average age of a widow
is fifty nine in the US. I was fifty nine.
Happily I'd been managing all the family wealth. But most
that's a bad time to start learning. So they need
to read my book, and then they need to listen
to your show, and they need to read barons.
Speaker 2 (29:32):
The stereotypes are there's just like an auto ad or
something I can't remember, and the guys worried about like
three tuitions mortgages in that and the woman wants to
figure out where to get a diet of coke. It's
not funny, Paul. This is like, this is like the
most important conversation we can have.
Speaker 6 (29:49):
Nancy, what did you What were you telling your clients
when we actually had a market a couple of weeks ago,
down twenty percent from it's in recent highs.
Speaker 5 (29:57):
That's a bear market for a lot of people. A
lot of folks aren't.
Speaker 6 (30:00):
That experience with that, right, What kind of conversations were
we having with them then and now?
Speaker 14 (30:04):
Well again, like Brian, we're long term investors, so we
were buying okay, and you know, we were able to
pick off a number of names like Microsoft, Talenteer twenty
percent ago, just.
Speaker 7 (30:15):
A few weeks ago.
Speaker 14 (30:16):
So I think I've been hearing that the tech trade
is over for the last three years.
Speaker 2 (30:22):
I was gonna say three decades.
Speaker 14 (30:23):
Or maybe three decades, but certainly the last three were
every summer we get a bear market in technology because
that's it.
Speaker 7 (30:29):
We're done.
Speaker 14 (30:30):
We're doing and we've just been in buying it and
it's been great for our clients. And we also have
a lot of history of outperformance, so that gives them
confidence in a period like that.
Speaker 5 (30:39):
So what do we do now?
Speaker 6 (30:40):
I mean, I think tariffs are going to be lower
than maybe we initially feared, but they're still higher than
they were before. I guess that's a drag on economic growth.
I'm not sure how much I think everybody's trying to
do the math right now? What do you do in
this kind of environment.
Speaker 14 (30:55):
Yeah, So, I mean I'm long for the days when
we had a FED that used price level targeting like
Wayne Angel, remember him, the.
Speaker 2 (31:04):
Late Waite Angel who just died. We just lost Wayne Angel.
Explain his contribution off of Milton Friedman to our economic thoughts.
Speaker 7 (31:15):
Yeah, well he was forward looking, as you know.
Speaker 14 (31:16):
I mean he was looking at the currency exchange rates,
commodity prices to really guide FED policy instead of looking
at last month's data, which is what we have right now.
And so I think when you when you have a
FED that says tariffs, I can't do anything until I.
Speaker 7 (31:32):
Know what they are.
Speaker 14 (31:33):
That's not how this works. And so I think you
have to be looking at things that are relevant.
Speaker 2 (31:38):
Is we have Paul mentioned it eloquently, if we have
this walk back on the trade war? We had John
Lipsky on earlier, it was much more apolitical and you
know than the Laffler Tangler Republican heritage. Where is your group?
Where is your tribe in Pleasant what's it called Pleasant Valley?
(32:00):
Where is your tribe? Post Trump? Is it like we
revert back to what we knew? Or do we go
on to something different? Within a conservative economic ethos.
Speaker 8 (32:11):
Yeah.
Speaker 14 (32:11):
Well, I mean I personally think tariffs are bad. They're
an indirect tax on the consumer tax. So I do
think it would be much more constructive to focus on
growth and focus on reasonable tax levels. So you know,
if we get the extension of the TCJA and additional
tax cuts which are in there, the salt deduction goes up,
(32:34):
you get no tax on tips and social security. Potentially
in overtime that will be I think helpful to growth.
But we as a nation need to focus on spending discipline.
We have none. This bill looks like it's going to
be additive to the deficit, and we have to focus
on growth and sent people. I love this idea of
(32:56):
opening an account for every newborn in America where they
learn to invest at a very young age and they
see the power of compounding.
Speaker 6 (33:06):
Well, my daughter's gotten her three brothers to focus on
this stuff.
Speaker 5 (33:09):
She's the only one that's got her.
Speaker 6 (33:10):
At Austria, see women exactly, she's she does the taxes
for them as well.
Speaker 5 (33:16):
She saw some turbo tax. What do you think about
the consumer? We're going to hear about the consumer on
Thursday year.
Speaker 14 (33:21):
Yea, Paul, they are I mean, I think you know,
we saw some pull forward. Custom duties in April were
over sixteen billion versus eight billion the month before, So
we didn't see it in first quarter earnings, but we
are going to see it, I think in second quarter.
But that said, I think the consumer continues to spend.
The great eddi Ard Denny's comment that they.
Speaker 2 (33:40):
Spend there yesterday never he lifted, Yeah, I think off
the top of my man's sixty five hundred.
Speaker 14 (33:47):
Yeah he did, and Boldman just raised theirs to sixty one.
I don't live in that world, like I have to
produce performance and so I can't change and wiggle. But yeah,
and he said they spend when they're depressed because it
produces dopamine. So I think we'll continue to see the
consumer spent.
Speaker 2 (34:03):
I need your opinion on this. I think it's really important.
I put out in a lovely, lovely small village in Massachusetts,
somebody has a barbie garden. They have like hundreds of barbies.
We've actually donated to it. I think we donated Barbie
Ferrari with Ken and the whole thing. But like it's
like hundreds of Barbies in their yard. People come by
(34:24):
and stare at it. How many your thoughts on thirty
barbies or three barbies? Is this what we've come to
an American consumption? I'll bet you out of you know
where you were at Point Loman before that you had
what forty or fifty barbies.
Speaker 7 (34:42):
I wasn't really a barbie gal.
Speaker 2 (34:45):
No.
Speaker 7 (34:45):
I wanted to be a pilot in the Navy.
Speaker 2 (34:47):
So well they had Barbie top time.
Speaker 14 (34:52):
I think sometimes our administration, I'm gonna say it this way,
has an unfortunate way with words.
Speaker 7 (34:58):
And that was just that was a statement I think
to make.
Speaker 14 (35:02):
And I think we don't want that kind of We
want growth, we don't want that kind of Well, we'll
have to pull back on our own personal consumption, but
the government doesn't have to. So I think we have
to get some of this stuff right sized. I think,
you know, once you get to Washington, you just lose touch.
I interviewed for a position at the BED and the
guy said to me, look what we've done for America.
Speaker 7 (35:22):
He was ex Goldman Sachs. We lowered rates.
Speaker 14 (35:25):
And I said, well, that's great if you if you
are invested in risk assets, but not if you're retired
with a certain assumption of interest rate, you know, income
on your investments and now you're a greeter at Walmart.
So they need perspective like I think they need to
do time in Mid America.
Speaker 2 (35:42):
Can you come back again? We need a third edition
of successful investigation, Nancy Tegler with this.
Speaker 1 (35:55):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay.
Speaker 10 (36:02):
And Android Auto with the Bloomberg Business app.
Speaker 1 (36:04):
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal.
Speaker 2 (36:10):
This is a joy. What we do on surveillance around
the busy schedule of our guests is wait till we
can talk to them for an extended moment. And we
have that with John Lipsky out of Iowa years ago
in Wesleyan in Connecticut, and of course forever identified with Stanford.
He attended the recent John Taylor conference with Michael McKee.
(36:31):
John Lipsky's contribution to our public policy scheduled and less
than scheduled, has been profound. At the International Monetary Fund
and of course forever identified with JP Morgan Economics. John
Lipsky thrilled to have you with us today.
Speaker 9 (36:50):
You're too kind, but it's a pleasure to be here.
Speaker 2 (36:53):
I got to start with the great loss of Joseph Nye.
I want you to explain in the trenches of the IMF,
you're speaking Illinois, You're working with a guard to write
the ship. What Joseph ny contributed to international relations.
Speaker 9 (37:11):
Well, I've ran across him in a couple of ways. One,
of course, the renowned for his inceptualization of the idea
of soft power in international relations as opposed to simply
hard power. And of course, in the context of the IMF,
(37:32):
which was a foundational institution creating the post World War
two order that restored the global economy and produced in
the sixty years after World War Two the fastest sustained
global economic growth probably ever, that the United States leadership
(37:55):
in creating the institutional grid that was the foundation of
the so called rules based international order was a reflection
and a powerful and reflection of the US soft power.
Joe was for many years also as widely as a
(38:15):
professor at Kennedy School at Harvard and an essayist. Also
was the US head of the Trilateral Commission, and so
took an active but behind the scenes.
Speaker 2 (38:29):
In a way role of.
Speaker 9 (38:32):
Keeping certainly an international foreign policy elite together.
Speaker 2 (38:36):
John, let's ski let me ask you the money question
that all listening to us across this nation want to know.
After Trump, do we revert back to Ellipsky international relations
and structure or do we go on to something new?
Speaker 9 (38:53):
Well, I don't know what Ellipsky structure would be, but
the really, Tom, you know, at the in the in
the first Trump administration, when there was already a degree
of let's let's say, shock and uncertainty created about where
the US policy was going. Uh, it was commonplace for
(39:16):
Americans to tell foreigners, well, it's it's it's gonna it's
gonna be even if Trump is gone, it's not going
to be back to being the same again. And people
would say, well, what do you mean exactly, and the
answer would be I'm not sure either. Now we would
be doubling down on that. Uh, let's let's look at
(39:36):
the many ways that we would take a look at
try to figure out what comes next. Right now, the
President is enunciating and acting act acting energetically to pursue
what he would call American First, America First. But Secretary
of the Treasury Scott Bessen describes as America first doesn't
(39:57):
mean America alone. Well, that that's good, but what exactly
does it mean? And it's obvious that we don't know
the answer, so we don't yet know what Trump two
point zero is actually going to be. For example, let's
take this in relation to the kind of question you
were asking Tom the US and the World Trade Organization?
(40:23):
Where are we on that reciprocal tariffs appear to be
not a policy that's not compliant with one of the
fundamental aspects of the World Trade Organization agreements, which is
the principle of most favored nation. In other words, you
don't go around discriminating country by country with differential tariff
(40:48):
rates on the same product. That creates that inhibits international trade,
creates a mess. Well, we seem to be pursuing that.
So what does that mean with regard to such fundamental
things as our support for the wt O.
Speaker 2 (41:04):
Well, forgive me John Lipsky with us here, folks, who
welcome all of you across the nation on YouTube around
the world. Good morning as well. In one of the
great charms, here is ages ago in the Salmon Brothers Building,
Building seven. Ye, Paul Sweeney got to walk the halls
of John Lipsky.
Speaker 6 (41:23):
I was a lowly investment banking grunt that John Lipsky
as a night there.
Speaker 5 (41:27):
So hey, John, what does it mean? I'm looking at
the US dollar here.
Speaker 6 (41:32):
Stocks have bounced back, bonds have bounced, yields to come back, but.
Speaker 5 (41:36):
The dollar is still kind of under pressure here. What
do you make of the US dollar here in the
global economy?
Speaker 9 (41:43):
Well, it seems to me obviously markets are trying to
find their way here. But I would I would say
that there's there's little doubt that there has been a
substantial reassessment of the outlook for the US economy that
involves not just domestics, not just foreign investors, but domestic investors.
(42:03):
But it has had an impact on the dollar. And
I would say to roll the tape back to last
fall when or even at Dobbos in January, the dominant
theme was US exceptionalism. How is it that the US
has faster productivity growth, more new business formation, stronger growth
(42:26):
in business investment, etcetera. And entirely positive, not entirely, but
substantially in positive view of the US economy, especially in
differentiated form, it's that the US is doing It's not
perfect a long way, but doing better than everybody else
that has been fundamentally reassessed by policy developments that have
(42:50):
caused investors everywhere to number one, look at to reassess
US growth downwards, reassess inflation outlook upwards, and create more
institutional uncertainty. Tom had mentioned earlier that I was last
(43:11):
week in attending last week attending two conferences at Stanford University,
and we heard presentation from Stanford professors who are measuring
what they call the convenience premium for US Treasury securities
that was formed one of the evidence of the investors
(43:32):
of viewing not just the US economy but US markets
is exceptional, and that seemingly has disappeared. So in other words,
you could say a loss of safe haven or diminishment
diminishment of the safe haven aspects of the US market.
But I would say what you've seen in the dollar
(43:54):
is again a fundamental reassessment of the differential view of
the US economy, and not in a favorable way, to
say the least. Hey John added on to that last word. Here,
the degree of uncertainty about where policy is going. Since
this has essentially been a policy driven upset, it remains
(44:17):
pretty substantial.
Speaker 6 (44:20):
Hey John, I think you and I and most of
our listeners, most of our viewers, we grew up in a.
Speaker 5 (44:24):
World where globalization was the story.
Speaker 6 (44:28):
You had to do your time in Tokyo, you had
to do your time in London. This is a global economy,
global market.
Speaker 5 (44:34):
Is that over?
Speaker 9 (44:36):
Oh no, not at all. As you see, the rest
of the world is still obviously has to take important
account of what the world's largest economy is doing, especially
since it seems intent on altering at the very least,
(44:58):
if not disrupting, the institutional frameworks that were created largely
with the support of the United States. The rest of
the world is continuing to trade. In other words, for example,
within Asia, the growth of interregional trade continues to outstrip
(45:18):
that of trade with the between regions. Especially in the US. Also,
trade and services has continued to grow rapidly, and our
trade policies that have caused so much upset have exclusively
looked at trade in goods. But it's trades and services
that forms part of the most interesting opportunity for the
(45:42):
global economy.
Speaker 2 (45:43):
John, I want to get this in. I think it's
just too important. Your heart and soul is of Iowa.
Your mother's public office in Iowa, ages Ago, I have
family on the Mississippi River in western Illinois, et cetera.
And the basic idea and I go back to Smaller's
classic essay in the fifties of isolationism in America, and
(46:05):
it comes from Iowa. It comes from the Midwest. When
you and I were kids. It was led by the
Chicago Tribune. I want you to speak to the new
breed of American isolationism. Now, how does that on the end? Now?
Speaker 9 (46:21):
Yeah, Tom, It's an excellent question, and it's a puzzlement
to me thinking, let's let's keep it with Iowa.
Speaker 2 (46:31):
Iowa.
Speaker 9 (46:32):
Iowa remains an agricultural state in the sense of its products,
even though actually direct direct farming is a very now
is a very very small part of the labor force.
But still US agricultural exports are an absolutely vital part
(46:54):
of the Midwest farming and for Iowa, and for exact ample,
the last time there was in Trump number one, when
there was a big upset with agricultural trade with China,
the administration ended up having to spend tens of billions
of dollars in compensation, among others, to Iowa farmers for
(47:17):
their lost income, and at the same time there has been.
When I was growing up, Tom, let's just say what
you would call there very there weren't very many folks
of color around. But today at my old high school,
I think it's it's considered exceptional if the valedictorian is
(47:40):
one of those those very talented Asian kids who have
settled in the wake, especially in the wake of the
Vietnam War. And you can find in the construction industrial
and let's see what's happening now and in the packing
industry in Iowa a huge influx of Latin workers who
(48:03):
are viewed as really very much multi the work, hard
working folks. So it's and yet I was voted overwhelmingly
for Trump, So it's as you would say, if call
it isolationist seems jarring. But still it's certainly more nationalists
and buying into the idea that the US has been
(48:26):
taken advantage of by foreigners and by the elites.
Speaker 2 (48:30):
Thank you so much. And just as one example there
of the change of the Middle West is of course
the wonderful Jim Young Kim, who was at Dartmouth College
and then the World Bank, serving right when John Lipsky
was serving as well. John Lipsky, thank you for extended
comments today, remembering Paul Sweeney a few years ago.
Speaker 8 (48:49):
Back to Brothers exactly as well.
Speaker 1 (48:52):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay.
Speaker 10 (48:59):
And Android Auto with the Bloomberg Business app.
Speaker 1 (49:01):
You can also listen live on Amazon Alexa from our
flagship New York station. Just say Alexa Play Bloomberg eleven thirty.
Speaker 6 (49:09):
Brian used a principal at Madison Wall. Brian, you're based
in Portland, Oregon.
Speaker 5 (49:14):
I have no idea why you were there. I love
the town, but you're.
Speaker 2 (49:18):
In New York.
Speaker 5 (49:19):
I am Laura Martin, our good friend from Needham. She's
in New York. Why are all you media mobiles in
New York this week?
Speaker 2 (49:26):
You don't like to hang out together?
Speaker 5 (49:27):
And it's upfront? Oh that that yeah? Tell us what
upfront is? And why do we even have an upfront
season anymore? Tell us what upfront is?
Speaker 2 (49:35):
Right? Well?
Speaker 15 (49:36):
The upfront is this period of time where the world's
largest advertisers and the largest sellers of advertising in the
United States and TV in particular, come together. The TV
network owners and YouTube and Amazon all do big song
and dances I think Lady Gaga is going to be
at YouTube's broadcast tomorrow.
Speaker 5 (49:54):
Wow.
Speaker 2 (49:55):
And yeah.
Speaker 15 (49:56):
Basically they show what they're they've got planned for the
next year and then and it's the time. Once they've
done that, then everyone can forecast what they think audiences
are going to be and then budgets basically start getting negotiated.
That's what the whole upfront period is about.
Speaker 2 (50:08):
Bring us up to date with your historic call that
TV will not go away. Well, we're brilliant on that.
What's a new view from Brian Weezer.
Speaker 15 (50:17):
Well, it's a gradual erosion. I mean, I still think
that the overall industry can grow the top line by
let's say one percent. If you included streaming growth of
call it ten percent, and you assume that subscription fees
from PATV declines by call it six or seven percent,
and ad revenue declines by call it three percent, the
overall medium grows.
Speaker 2 (50:36):
By about a percent. So it doesn't die.
Speaker 15 (50:39):
It just evolves, and the profit margins might shrink, but
it doesn't go away.
Speaker 5 (50:45):
If I'm CBS and Tom, some of these after parties
for these upfronts, legendary stories I cannot tell.
Speaker 15 (50:52):
But that's what the NewYork Post is for exactly?
Speaker 5 (50:55):
Talk to just about I mean, what are the networks
where they allocant? Are they spending money on their CBS
television network programming? Are they putting everything on streaming these days? Well?
Speaker 15 (51:06):
I think that when you look at some of the
networks like NBCU, it's kind of surprising, if not shocking,
just the share of the content budget going to peacock
versus going to the broadcast creative budget. Yeah, exactly, we're
we're paying for content other than sports. Now, sports rights
continues to be heavily skewed towards broadcast networks and cable networks,
and that's primarily because you can get people to pay
(51:26):
for the services right to access it, and the leagues
want the reret and the reach of broadcast.
Speaker 2 (51:32):
Still. So if I go over to Michael's today for
lunchare the calcald and all that they put me in
the way back? And I'm back with the D class
celebrities upfront? Are the fancy people you talk to leading
the upfront charge? What are they talking about? Is it
like one? They're talking about YouTube? What's the theme in
the hallways? Here's the fun thing?
Speaker 15 (51:54):
Even though YouTube may very well have the biggest single
event this week, it's really not part of the upfront
CAN conversation, which is kind of weird, right. They want
to be part of those conversations. They might be bigger
than NBCU and Disney and Paramount combined, but they're not
really part of the overall TV budget process because most
marketers don't think of them as TV yet.
Speaker 6 (52:14):
See, that is so odd because that's where the I
used to just say to people, wherever the eyeballs go,
that's where ad.
Speaker 2 (52:20):
Dollars will go.
Speaker 5 (52:21):
And it's so slow, right, it's because it's different.
Speaker 15 (52:24):
Though in the eyes of the typical marketer, mister Beast
might be comparable, but mister Beast by himself, Beast by himself,
mister beat is relatively small. And so because you're buying audiences,
not programs, when it comes to YouTube, it's hard to
wrap your head around what you're getting. That's part of
the issue.
Speaker 2 (52:43):
We're living this every day, folks, and we really treasure
that you're on YouTube where there's good around the world,
particularly in the Pacific. Rim evening, Good morning to your
New York time on YouTube. Subscribe to Bloomberg Podcast if
Brian Weezer saw our numbers, he'd be calling us exact
beast exactly.
Speaker 6 (53:01):
So, Brian, how are advertisers thinking about broadcast television and
cable television today?
Speaker 2 (53:07):
Yeah? Right now?
Speaker 15 (53:08):
Well today as in what may something? Right, I think
they're still freaking out. Notwithstanding the yesterday's press conference. I
think that there's still a lot of concerns and uncertainty
about what their budgets are going to be, and so
I think there's gonna be a lot of reluctance to
put down money. That's the first thing, right.
Speaker 6 (53:25):
I think it's just general political economic issues.
Speaker 15 (53:28):
Uncertainty is a real issue because it's already a challenge
when you're making these commitments for a period from say
October to September of the following year, when you don't
even know what economic policy is going to be in
about thirty days, let alone sixty nine and twenty. So
I think that that uncertainty is the first top of
mind thing, and that's going to be a huge feature
of this upfront in terms of reluctance to commit without
(53:51):
a lot of flexibility. So that's the first in top
of their mind. But digital platforms are even more important, right,
So the TV budgets have a negative trajectory. Digital budgets
continue to have a growing trajectory for large brands.
Speaker 2 (54:03):
Like single digit growing.
Speaker 15 (54:05):
I think this your single digit yeah, and I think
that the double digits is the thing of the past.
Speaker 2 (54:09):
I mentioned you're in Portland. From Portland up to Vancouver,
is the new Hollywood maybe through the Toronto and the
rest that mister President Trump, mister President went after a
good morning, Marilyn Monroe, thanks for listening. But the bottom
line is the future of Hollywood if they're exporting ever
labor transaction outside California.
Speaker 15 (54:30):
Yeah, Well, the smart thing if you're in the production
business outside of the United States is to make sure
you're doubling down your productions for outside of the United States.
Speaker 5 (54:37):
The United States is as.
Speaker 15 (54:38):
You guys follow as well as anywhere more pushing towards autarchy.
I mean, the reality is that if you want to
produce a content or any business or product for the
United States, you, Kanye are going to need to have
a US based operation. I think that Vancouver in particular
where I'm from, and Toronto are heavily dependent on American productions,
but if they focus on the rest of the world,
huge opportunity.
Speaker 5 (54:58):
So what do we doing today on the upfront? What's
the party today today?
Speaker 15 (55:02):
Disney is later today, so I'll be there.
Speaker 6 (55:06):
And so where we want getting this ESPN app that's
going to have everything we all want?
Speaker 2 (55:11):
Yeah, well I don't coming.
Speaker 15 (55:13):
I don't know the specific schedule. But I think that
the sports specific apps really have a limited audience because
the number of people who are willing to pay only
for that product are going to be limited. That's why
the whole concept of having like a bundle of services is.
Speaker 5 (55:26):
A better business. Yest or charter, Oh no, would never
pay for that.
Speaker 2 (55:31):
When you were Sterling Draper, did you ever beat did
you ever beat Yodah Holloway? Oh? No's that?
Speaker 8 (55:37):
No?
Speaker 5 (55:38):
Yeah, I certainly no.
Speaker 15 (55:40):
I've said some I've got some people from that era.
Speaker 2 (55:43):
Was that was that when they.
Speaker 5 (55:44):
Sit they send the biggest Yeah?
Speaker 15 (55:48):
Remember I replaced the guy started in nineteen forty eight. Yes,
and it was Bob Cohen.
Speaker 5 (55:52):
Bob Cohen, that's right. Bob Cohen was the definitive voice
on Madison Avenue.
Speaker 2 (55:59):
What happens to not West Point Peperol WPP.
Speaker 15 (56:03):
I think that agencies generally are more likely twenty years
from now you'll be able to recognize today's agencies in
some form with a higher probability than meta will be around.
Speaker 2 (56:13):
Okay, mark our words.
Speaker 15 (56:15):
Mata is just heart probability.
Speaker 5 (56:16):
Probability.
Speaker 2 (56:17):
Yeah, don't be a stranger's thing. Can we get who
should get live reporting from the upfronts? Joining the stem
YEP upfront corresponding Brian, exactly right, very quit fun, Brian,
thank you.
Speaker 1 (56:28):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(56:48):
and always on the Bloomberg terminal
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