US equities finished mixed, ending near worst levels in Wednesday trading, with the Dow Jones closing up 4bps, while the S&P500 and Nasdaq finished down 9bps and 16bps respectively. Lower yield backdrop remained the big story, and better software earnings were another bright spot. Fed's latest Beige Book reported economic activity declining in six of 12 Fed districts. Latest headlines suggesting Saudis pushing an output cut for tomorrow's OPEC+ meeting.
It's getting worse for Deadspin and the writer that portrayed a young Chiefs fan as racist for painting half of his face black. Now, Holden Armenta's mom is attacking the writer and defending her family's long heritage of leadership and exceptionalism in the Chumash Indian tribe. This was so predictable. There's something perfectly symbolic about Joe Biden's Christmas Tree at the White House falling over. It's even worse than his birthday cake that was on fire. Jackson County officials now say the actual cost to county tax payers for a new stadium for the Royals is $1.2 billion less than they thought after "formula error" was discovered. Is it the same error they have with property taxes? This stadium debacle just gets uglier every week. Tiger Woods returns to the golf course this week after a long layoff due to injury. So he had a news conference and spilled all the beans on the PGA Tour not working with players and saying he's open to a partnership with the Saudis or anyone else that wants to invest in the tour. Where's the outrage now that it's not Phil Mickelson or Brooks Koepka saying these things? Dallas Mavericks owner Mark Cuban is either having a midlife crisis or is planning something big and new. Looks like he's selling his basketball team and leaving the tv show Shark Tank. Could he be planning a run for the White House in 2028? Warren Buffett's longtime investing partner Charlie Munger dies at age 99 after a life well lived. We'll give you the details on why Buffett wouldn't be Buffett with Charlie. And our Final Final is a low speed chase on Thanksgiving Day in Excelsior Springs.
This is the web version of Foreign Exchanges, but did you know you can get it delivered right to your inbox? Sign up today:TODAY IN HISTORYNovember 28, 1814: The Times of London is published via a new steam-powered printing press, making it the first major newspaper so produced. The use of the faster steam press took newspapers from a niche business to a mass market one, in the process boosting efforts to increase literacy.November 28, 1943: Winston Churchill, Franklin Roosevelt, and Joseph Stalin begin the Tehran Conference, the first of three major World War II meetings between the leaders of the UK, US, and USSR. The main outcome of Tehran was that Roosevelt and Stalin managed to get Churchill to commit to an invasion of France, in part to force Germany to pull forces away from their eastern front with the Soviets. They also discussed the eventual partition of Germany and creation of the United Nations.MIDDLE EASTISRAEL-PALESTINEHamas and the Israeli government, thanks primarily to Qatari mediation, finally agreed on the terms of a detainee exchange and temporary ceasefire deal last week. The accord, which went into effect on Friday morning, was originally intended to involve the release of some 50 hostages being held by Hamas and other Gazan militant groups and some 150 Palestinians in Israeli custody. Hamas has also been releasing a number of Thai and Filipino nationals under a separate arrangement negotiated by the Qataris. The arrangement was to have been implemented in stages over four days, ending Tuesday morning local time. The process appeared to be faltering on Saturday, as Hamas delayed its hostage release while accusing the Israelis of violating the terms of the agreement, before some additional Qatari diplomacy apparently salvaged things.The reason I referred above to what the deal “originally” involved is because it's since been extended. The Israelis and Hamas have agreed to continue the ceasefire and daily detainee releases for at least two more days, though Thursday morning, albeit amid new accusations from both sides about ceasefire violations. I'm not entirely certain about the details but Israeli officials have said they're expecting Hamas to release at least 10 hostages per day, which at current exchange rates suggests around 30 Palestinians released per day. Efforts are underway to extend this arrangement beyond Thursday morning, though it goes without saying that at some point all the hostages will be released and it's unclear what will happen then. It's true that conflicts at rest have a tendency to stay at rest, but Israeli rhetoric has indicated a clear intention to resume pulverizing Gaza once the detainee exchanges are no longer part of the equation.In other items:* Some of the freed Israeli hostages have talked to media and describe being treated poorly, which is not surprising. There have been claims of treatment that seems outright cruel though I'm unaware (which to be clear does not mean they haven't been made) of any claims of physical cruelty (apart from the cruelty of their initial abductions, of course). Several of the hostages seem to indicate that their access to food and water diminished over time but that may be related to deprivations across Gaza caused by the Israeli blockade and the minimal amount of aid that has entered the territory. Palestinians released from Israeli custody, who have been described as “prisoners” though many of them have never been charged with anything under the West Bank's rigged military justice system, have described harrowing treatment including torture. This is consistent with claims made by Palestinians swept up in Israeli mass arrest operations since the October 7 attacks and subsequently released.* On the subject of aid, the ceasefire is/was intended in part to facilitate a surge of aid into Gaza and its distribution throughout the territory—including across the heavily battered northern area. That effort does appear to have been successful, though as United Nations officials have said even this temporary surge isn't enough to meet the need. The Biden administration is sending three military planeloads of humanitarian aid to Egypt this week for distribution into Gaza.* Over the four days of the initial detainee exchange, under which Israeli authorities released somewhere around 150 Palestinians, they detained 133 Palestinians in the West Bank. Make of that what you will. As Spencer Ackerman noted yesterday, with events in Gaza getting most of the attention the Israeli government and its settler proxies are continuing to kill (including at least two more on Tuesday), arrest, and displace Palestinians in the West Bank at unprecedented rates. Unlike Gaza, where Israeli leaders have at least articulated the barest inkling of a goal (the “destruction of Hamas,” ostensibly), there's no indication what, if anything, might stop the violence in the West Bank.* The Biden administration has dispatched CIA Director and de facto Secretary of State William Burns to Qatar to participate, along with Egyptian, Israeli, and Qatari officials, in talks on extending the current “pause” (the administration is still refusing to call it a “ceasefire”). Burns is there mostly so that the administration can claim credit for the ceasefire/exchange deal even though its embrace of the Israeli military campaign in Gaza has left it unable to contribute all that much to this diplomatic process. Actual Secretary of State Antony Blinken is undertaking another European-Middle Eastern tour this week, mostly (from what I can tell) in order to look busy.* One message the administration is now ostensibly delivering to the Israeli government is that any eventual Israeli military (IDF) incursion into southern Gaza has to be more circumspect than its obliteration of northern Gaza. In particular the administration says it's insisting that a southern operation must not cause “significant further displacement of persons.” With most of the territory's population already displaced into the south (where the IDF has continued bombing them), it's unclear where they would go anyway. And with the IDF already having killed over 15,000 people (probably well over, given that it's been at least a couple of weeks since Gazan authorities could issue a reliable casualty update), the optics of this situation may finally be testing the administration's capacity for indulging Israeli war aims.* Israeli media outlets have gotten hold of leaked emails demonstrating that “a highly respected career military intelligence NCO” in the IDF had warned her superiors over the summer that Hamas fighters were training for what looked like an attack on an Israeli kibbutz. Those warnings were, according to the emails, subsequently corroborated but then dismissed further up the chain of command with arguments that the training was nothing more than a staged demonstration. The emails may increase public anger toward the IDF but seemingly give Israeli Prime Minister Benjamin Netanyahu evidence to bolster his claim that any failure to prevent the October 7 attacks rests with Israeli security forces rather than with his government. Perhaps that's why they were leaked.YEMENYemen's Houthi rebels escalated their attacks on Israeli interests when they hijacked the cargo vessel Galaxy Leader in the Red Sea on November 19. That ship is apparently part-owned by an Israeli businessman, though there was no other immediately apparent connection to Israel and none of the 25 people who were on board—and who are now in Houthi custody—are thought to have been Israeli. The USS Mason, a naval destroyer, reportedly prevented the hijacking of another cargo ship in the Red Sea on Sunday, but US officials now believe the would-be hijackers were Somali pirates rather than Houthi fighters. They have not ruled out the possibility of some sort of Houthi connection. Some Israeli shipping now appears to be diverting around Africa to avoid the Red Sea, which needless to say makes for a significantly longer journey.TURKEYTurkish President Recep Tayyip Erdoğan had told reporters earlier this month that his Iranian counterpart, Ebrahim Raisi, would visit Ankara on Tuesday. Turkish media reported on the planned summit for more than two weeks, even as late as Monday evening, but Tuesday came and Raisi was, uh, not there. It's unclear whether this was an intentional snub or a miscommunication, particularly since the Iranian government never mentioned any planned summit. Either way it's somewhat bizarre.UNITED ARAB EMIRATESThe BBC is reporting, based on “leaked briefing documents,” that UAE officials are hoping to use the COP28 climate change summit, which they're hosting later this week, as a forum for concluding some new oil and natural gas deals. UAE officials haven't denied the report but they have said their focus is on achieving “meaningful climate action” at the summit—efforts to undermine that action notwithstanding.SAUDI ARABIAAnother investigative report suggests that the Saudi government is pursuing its own oil-forward agenda, something called the “oil demand sustainability program.” This effort aims to use the kingdom's massive public investment fund and some of its largest companies to sell developing nations on an array of fossil fuel-heavy technologies, including supersonic aircraft, gas-fueled cars, and oil and natural gas fueled power plants. The initiative is primarily aimed at emerging African economies and, as the name suggests, is intended to sustain oil demand even as developed countries move increasingly toward renewable energy. This is completely incompatible with the kingdom's stated adherence to the international climate agenda, though if you think the Saudis actually mean what they say when they talk about reducing carbon emissions you're a far more trusting person than I.ASIAMYANMARThe rebel “Brotherhood Alliance” claimed on Monday that its fighters had seized control of another significant commercial outpost close to the Chinese border in northern Myanmar's Shan state. In that sense the rebels seem to have picked up right where we left them prior to Thanksgiving, on the advance in Shan and several other provinces across the country. With Myanmar's ruling junta promising to stem those advances without actually demonstrating any ability to do so, the Chinese military conducted multi-day exercises near the border over the weekend. There's no indication that Beijing is planning to intervene here but it would need to respond to any instability along the border itself. PHILIPPINESThe Philippine government and communist New People's Army rebels announced on Tuesday that they will reopen peace talks, under Norwegian mediation. Former Philippine President Rodrigo Duterte broke off the last round of talks in 2017 but the basic outlines are still in place for a deal that would see the NPA transition from militant to political movement in return for amnesty for its fighters.NORTH KOREAThe North Korean military finally succeeded in putting a spy satellite in orbit last week, sparking an immediate security crisis along the Korean Demilitarized Zone. The South Korean government announced shortly after the launch that it was suspending part of the intra-Korean Comprehensive Military Agreement in order to increase its surveillance capabilities along the border, which Pyongyang took as an invitation to scrap the rest of the deal and begin restoring border guard posts and moving heavy armaments into the border region. The CMA bans “aerial surveillance,” a category that the South Korean government has decided includes satellites as well as sub-orbital aircraft so they're accusing North Korea of having violated the accord first. North Korean state media reported on Tuesday that the satellite had taken photographs of the White House and the Pentagon, which puts Pyongyang roughly on par with Wikipedia in terms of its new surveillance capabilities.JAPANJapanese Prime Minister Kishida Fumio hosted Vietnamese President Võ Văn Thưởng on Monday, at which time the two agreed to upgrade their bilateral relationship to the level of “comprehensive strategic partnership.” That means strengthening economic as well as military ties, which could pull Vietnam further toward the US axis despite its still-strong relationship with China. Tokyo has in the past helped to support Vietnamese activity in the South China Sea, in waters whose ownership Hanoi disputes with China. The upgrade puts Japan's relationship with Vietnam on an equal footing with China, India, and the US.AFRICASUDANThe deputy commander of the Sudanese military, Yassir al-Atta, delivered a speech to the Sudanese General Intelligence Service in Omdurman on Tuesday in which he openly accused the UAE government of supporting the paramilitary Rapid Support Forces group. This is the first time a senior member of the Sudanese military/de facto government has leveled that accusation directly and it charges the UAE with complicity in a growing list of (alleged) RSF atrocities, particularly in the Darfur region. Atta further accused the governments of the Central African Republic, Chad, and Uganda of acting as conduits for UAE-supplied arms.In response, Emirati officials denied supporting the RSF and insisted that they have “consistently called for de-escalation, a ceasefire, and the initiation of diplomatic dialogue” since the military and RSF went to war with one another back in April. Observers have noted that the RSF is using more sophisticated weaponry, especially drones, than it had at the start of the conflict, but the paramilitaries insist they've seized those arms from Sudanese military bases rather than obtaining them from abroad. The Ugandan government also responded to Atta's charges, similarly rejecting them.SIERRA LEONESierra Leonean authorities say that unrest in Freetown early Sunday morning was the result of a “failed attempted coup” involving a number of active duty and retired members of the country's military and police forces. According to Al Jazeera, they've arrested “13 military officers and one civilian” and “have published photographs of 32 men and two women…being sought in connection with the unrest.” The alleged coup plotters attacked a military barracks and two prisons in the capital, killing at least 20 people and releasing some 2200 detainees, an unknown number of whom have been recaptured. Authorities imposed a curfew in the city that they've since relaxed. Like most failed coups the rationale behind this one remains unclear, though it presumably involved some combination of political and economic resentment. President Julius Maada Bio's narrow and heavily disputed victory in June's presidential election may have ratcheted up some of those resentments.LIBERIAThe official results came out while I was on break, but challenger Joseph Boakai did in fact defeat incumbent George Weah in Liberia's presidential runoff earlier this month. Weah, to his credit, conceded without incident even before the release of those official numbers.BURKINA FASOSome 3000 jihadist fighters attacked the town of Djibo in northern Burkina Faso on Sunday, according to Burkinabé state media. Details are very spotty but authorities are claiming that security forces killed at least 400 attackers from the al-Qaeda aligned Jamaʿat Nusrat al-Islam wa'l-Muslimin group, which has kept Djibo blockaded and largely cut off from the rest of the country for more than a year. There's no definitive word on casualties among security forces or civilians, though the UN says it's confirmed at least 40 civilians killed and more than 42 wounded.EUROPERUSSIAA Russian court on Tuesday extended the detention of Wall Street Journal reporter Evan Gershkovich through at least January 30. Russian authorities arrested Gershkovich in March on spying charges that they've never fully explained, contending that the details are classified. He will presumably be traded back to the US at some point, but Russian officials have said they won't discuss a prisoner swap until after Gershkovich stands trial, and they continue to delay that process.A new report from the Carnegie Russia Eurasia Center and the Levada Center shows that domestic support for Russia's war in Ukraine has not diminished, even as Russians show increasing weariness for the conflict and for the economic hardships caused by Western sanctions. Indeed, the hardship appears to be hardening attitudes toward negotiations, with a number of focus group subjects expressing the view that Russia has sacrificed too much to give up any of the Ukrainian territory it has seized. I bet more sanctions will solve that problem.UKRAINEThe Ukrainian military's commander in Avdiivka, Vitaliy Barabash, told a media outlet on Tuesday that the Russian military has intensified its assault there and is now “attempting to storm the city from all directions.” It's unclear whether the Russians would be able to use Avdiivka as a staging ground for further offensives, particularly in the short term giving the impending onset of winter, but taking the city would at the very least further secure Russian-controlled parts of Donetsk oblast. Elsewhere, Marianna Budanova, the wife of Ukrainian military intelligence head Kyrylo Budanov, has reportedly been hospitalized for heavy metal poisoning and there are indications that a number of officials in the military intelligence service (GUR) have also been poisoned. I'll leave it to the reader to speculate as to potential suspects.The Ukrainian government will later this week reportedly unveil a number of changes to its military mobilization system in an effort to reduce the incidence of both draft dodging and of forced conscription. Full details aren't yet known, but one part of the reform will involve the use of “commercial recruitment companies” to identify potential conscripts who have needed skills (mechanics, for example). These individuals will then somehow be given assurances that they won't be deployed to the front but will instead be put to work in support roles. Given Ukraine's need for more front-line soldiers, however, there must be more to it than that.POLANDPolish President Andrzej Duda on Monday swore in a new government led by incumbent Prime Minister Mateusz Morawiecki in a move that has opposition leaders crying foul. Morawiecki has two weeks to form a government that can pass a parliamentary confirmation vote, a task even he acknowledges he's almost certain to fail given the results of last month's election. So Duda, who favors Morawiecki's right wing Law and Justice Party, is simply delaying the opposition's inevitable takeover for another two weeks. Why, you ask? Well, it seems fairly clear at this point that he's delaying in order to give Law and Justice more time to appoint party loyalists to important state positions, which could create problems for the government that will presumably take office after this two week period is up.FINLANDThe Finnish government, which had already closed all but one of its checkpoints along the Russian border, is planning to close the entire border for the next two weeks in hopes of stemming the flow of asylum seekers attempting to enter Finland. Authorities say that 900 such people have tried to cross the border from Russia this month, a hefty increase that they say is the product of a deliberate effort by the Russian government to funnel people to the border.NETHERLANDSConfounding polling that suggested a narrow race, the far right Party for Freedom (PVV) handily won last week's Dutch parliamentary election. PVV came away with 37 seats in the 150 seat House of Representatives, 12 ahead of the second place GreenLeft-Labour alliance. The victory may put party boss Geert Wilders in line to become the next Dutch prime minister, assuming he can moderate his extremist agenda enough to attract coalition partners. That may be easier said than done.AMERICASARGENTINASpeaking of far right election victories, libertarian extremist Javier Milei won Argentina's presidential runoff on November 19. Polling, which had been wrong at every stage of this election, was wrong again, having predicted a tight race only to see Milei win an 11 point victory over Finance Minister Sergio Massa. Milei, whose agenda includes dissolving Argentina's central bank and ditching the peso in favor of the US dollar, may find himself struggling against a relatively unfavorable Congress once he takes office next month.UNITED STATESFinally, The Nation's Mohammad Alsaafin finds both US and Israeli plans for the future of Gaza to fall short, for one seemingly basic reason:Speaking to reporters last week, US Secretary of State Antony Blinken suggested that the territory's governance should be unified with the West Bank, and laid out a series of edits for the future of Palestine.“Gaza cannot continue to be run by Hamas,” Blinken said. “It's also clear that Israel cannot occupy Gaza…. it is imperative that the Palestinian people be central to the governance of Gaza and the West Bank.Blinken's parameters were defied days later by Israel's Prime Minister Benjamin Netanyahu, who declared, “IDF forces will remain in control of the Strip,” and made clear that he will not allow the Palestinian Authority to play a role there. (Netanyahu then told Fox News that Israel “does not seek to occupy” Gaza, though, given the facts on the ground, it is hard to know how Israel defines “occupation.”)The back-and-forth over what comes next in Gaza has prompted headlines like this one from NBC News: “The gap between the Biden administration and Netanyahu government over Gaza's future is widening.”But there is a glaringly absent party in these conversations: the Palestinian people themselves. Nobody seems particularly interested in what they might have to say about the future of their land.Thanks for reading! Foreign Exchanges is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.foreignexchanges.news/subscribe
Maria Valetta, certified sommelier and wine educator and Robert Tas review the wine list at Via Carota, a quaint Italian restaurant inspired by Chef Saudis 17th century family country house in the hills of Florence. The passion for all things italian is clear here. Relax in the rustic ambience and enjoy authentic pasta dishes and savor an adventurous selection of wines from all regions on the all-Italian wine list. Wines reviewed include: 2018 Brunello di Montelcino Fanti 2019 Chianti Classico Riserva Felcina 2022 Vermintino di Gallura Serenata Silvio Carta For more information on today's episode and the wines you love to love, visit www.corkrules.com.
Biden: “I cannot prove what I'm about to say,” but Hamas attacked Israel because I was working very closely with Saudis and others to bring peace to the region by having recognition of Israel. Riot police clashed with civilians armed with metal bars in Dublin Thursday night as violence erupted hours after a stabbing incident near an Irish school. Mitt Romney says he would vote for Democrats over Vivek and Trump... Big surprise! WITW, users of the AI girlfriend service CarynAI are facing a unique disruption: their digital companion has gone offline following the arrest of the service's CEO on charges of arson. Plus more on today's episode.
Phones: 1-213-267-7787 (USA), +44 2081 036051 (UK) On episode 364 of The Neutral Corner Boxing Podcast, host Michael Montero catches up on a ton of recent news in the fight game. The WBC is beefing with The Ring and cutting ties with BoxRec, Andre Ward has a Twitter spat with journalist Dan Rafael, the IBF strips Bud Crawford after protected Errol Spence for years, and the Saudis announce numerous fight cards loaded with heavyweight action. Are they saving boxing from extinction? https://youtube.com/live/Xj1AcOQV4Xo
We talk Shakur's marketability after his lackluster win. Is anyone excited about the Heavyweight card the Saudis have put together? Benavidez-Andrade is upon us. Something has got to give. And news and notes from the world of boxing...
Mohamed El-Erian, Bloomberg Opinion Columnist, guests hosts the show and says the 'enormous volatility' in the bond market needs to be corrected in order to restore the Fed's credibility. Stephanie Kelton, Stony Brook University Professor of Public Policy & Economics, says the Fed has effectively put fiscal policy on autopilot. Steve Chiavarone, Federated Hermes Head of Multi-Asset Solutions, describes the Fed's policy trajectory as headed for a "rocky landing." Stephen Schork, The Schork Group Principal, says traders have become skeptical about supply levels of oil and jet fuel heading into a major travel season. Jeannette Lowe, Strategas Managing Director of Policy Research, says the meeting between President Biden and Xi Jinping won't change the dynamic between the two countries in a major way. Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrell and Lisa Abramowitz. Join us each day for insight from the best an economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. Why don't we move on to what doctor Olrium cares Mohammed, We've got to sit on crude, the idea that crude has essentially collapsed into a bear market, down more than twenty percent from the September highs. We spent this week talking about soft lending, hopes and dreams. Do we have to start thinking about an economic downturn in the not too distant future, well some of them. Some people are talking about this. I mean to see oil prices down more than twenty percent from the highs at the time that there's a conflict going on in the Middle East. It's quite quite and that's feeding into the soft landing. And we're going to talk a lot about this. But the market has now fully embraced not just that the fat has finished this hiking cycle, which I think is correct, but that we're going to see deeper and deeper cuts next year without a recession, and that's the critical assumption that's now built in across markets. I want to get the money question out of the way right away. As CEO of a major two million employee company in America called Walmart, yesterday brought up a d word deflation seared into the fabric of Cambridge, Oxford in the London School of Economics as a study a British deflation of the thirties and forties. America has never faced that have they They haven't, and we've had Japan recently. And the problem with deflation is it discourages people from buying today. However, I want to stress the US is deflation in certain products, food being the primary example, and that's why Walmart we decited it. We don't have general deflation, and I doubt we're going to have general deflation. I mean, I look at the an inflation question and it is a vector of disinflation in place. Clearly we see that. What is your optimism of getting back to John Williams two point zero percent? Richard claired is two point x percent. I think Richard is more likely to be right than John. I think we're going to get stuck in the high twos, and the FED is going to have to make a very difficult decision. Does it live with inflation higher than target because the target itself is too low, or alternatively, does it acknowledge that two percent is the right target and then crushes the economy. I think that's the choice the FED is going to have to make. What's your best guess right now? I think it's going to go for the format. I think the FED will understand that pressing two percent inflation in a world where there's insufficient structural supply is not the right thing to do. So where do you think it leaves this bond market? Let's go through this course right now. We've got a two year at the moment at about four eighty, a ten year at about four forty. Think about where we've been in the last month of Summerhammet had a two year pushing five twenty five high set of cycle, ten year through five percent high set of cycle. How are you thinking about what we come back down to, bearing in mind what we're pricing for right cuts next year. I think we've come down too far to tell your truth. I understand why some people think that we're going further, but if you look at the inflation dynamics, that's harder to get unless we go into recession. If we go into a recession, then the stock market is mispriced, so you can't have both at the same time. Has something changed? I think this is what it goes back to. Has something changed post pandemic? That means we don't go back to the pre pandemic world. That debate, I think is still on going. Mohammed, where'd you come down on it? I think the pre pandemic world was exceptional. It was a world of qui. It was a world of insufficient aggregate demand. And when you have insufficient aggregate demand, you can push into the economy as much liquidity as you want because you won't get inflation. That world is gone. We're in a world now of efficient, inflexible supply, and that's a very different world. Sometimes talk about over the two hours with doctor Olian is growth economics. I've been telling a lot of people to remind themselves of a guy named Solo at MIT in nineteen fifty six and the near religious experience of trusting and growth. Can you state that we have a new American growth economics of what some people are indicating is improved productivity, improved efficiency. So you know, I listened carefully to our friend Mike Spence, the Nobel Prize winner, because he spent so much of his career studying studying with John Hicks, I mean correct majesty of that alone, and he is incredible and his insights are really valuable. And his bottom line is that most countries have to evolve to a new growth model. The US is the most advanced in that evolution. I think the three important piece of legislation that the administration passed last year were critical in that perspective. So if you look around the world, whether it is the US, Europe, or China, all three have the challenge of evolving the growth model, and only the US is doing it seriosly right now, too gloomy? We no, Lisa isn't here, so we're not too blooming. No. I think we recognize that the world is evolving. This is a different global economy, this is a different domestic economy, and policies have to evolve accordingly. What worries me and I think the concern of a lot of people listening to this conversation on going at home is you just have to go about forty eight hours and we're talking about disinflation, soft landing, hopes and dreams, and then twenty four hours, forty eight hours later, you look to Burberry a collapse in luxury. You look to Walmart a warning about the US consumer. You look to Crew entering a bear market, and all of a sudden, we're talking about a slowdown and maybe even recession. Mohammed. The bond market is stuck between all of this. We're seeing double digit moves day after day in either direction. You've written about this extensively in the last few months, about a bond market that's lost its anchors. Is an economic slowdown sufficient to regain some stability in fixed incoming treasury specifically? No, I mean I was really struck yesterday. I was watching you when you said, guess what, we had the same level of the tenure as we were a week ago, and my reaction is, how could that be? So I looked it up and you were right. Now. Most people feel that this week is very different from last week because of the inflation print that we've had. We still lack one of the three anchors. You either need an economic anchor, or a policy anchor, or a technical anchor to the bond market, and we've lost all three. So these moves are going to continue. The thing that has really impressed me is that nothing has broken. If you had told me a year ago we're going to see this incredible volatility and the most important market in the world is the benchmark for so much else, and yet nothing will break, I would have said that's impossible. So the resilience of the functioning of the market has really impressed me. The financial system, and of course we had the shock and the United Kingdom off a derivative structure in the pension plans, but to lead to this and measured in standard deviations, which is how fancy people like Alarian think. We had a six seven eighth standard deviation and thereat moderation. There's a hope in prayer we get back to that trend line that's in years. How many years are do you think we heal this great bond tobacco. I think it's going to take time. Remember we've had ten exceptional years where the bond market was distorted, so I must say back to vulgar We've had, you know, thirty exceptional years. But the shift to an artificially low interest rate and ample and predictable injections of liquidity fundamentally changed the bond market and that is going to take time to recover from. Did you and Bill Gross get a free ride because you were within the Great Moderation? Was that such a structural like a free life? But the PIMCO when you build it, you invented it with Bill? Was it? Was it easier because you had the Great Moderation? Or just just think of investor. Investors care about three things, returns, volatility, and correlations. And we went through a period that because liquidity was being injected into the economy over and over again, we got high returns, we got virtually no volatility, and the correlations broke down. But in your favor, you made money on your risky assets and you made money on your risk free acids. At the same time, there was a great time. We took it to be normal, but it was truly exceptional. And we're going back to a world that I think is more like what we had before the Global financial crisis. It's going to be so hard to shake this, Mohammed, because we've got a whole generation, in fact, a couple of generations conditioned by two major shocks, the financial crisis and the pandemic. And we know how the FED response to major shocks. What we've all forgotten is how it responds to just normal economic downturns and upside pressure on inflation. How do we start to get into that all over again? Yeah, And this is where FED credibility and better communication is better. John, It's really striking that the market is willing to take on the FED on a price that the FED controls. The FED totally controls the policy rate, and yet the market does not believe what the FED is is telling us. And it is really striking because we have got to restore FED credibility otherwise we're going to continue with this enormous volatility. Your thoughts on what's percolating into the end of the year in the Q one twenty twenty four. Are there shadows in private equity? Are there shadows in the new non traditional finance? Yeah? So, one thing that I don't think is pricing enough is that when you move from the banking system to the non banks, you change the lags in the system. So you see this with commercial real estate. Everybody recognizes that the re financing of a trillion plus of assets is going to be tricky, but because it's over time, we don't worry about it. Everybody recognizes it as a maturity wall in the corporates out there, but because it's over time, we don't worry about it. If it were all within the banking system, we would have worried about it really quickly. So the move from the banks to the non banks has extended this Michael Spencer's shore. The regulatory lag here is tangible. This is the uncomfortable calm note as well, just to borrow that phrase from a long time ago from the Bank of International Settlements, This maturity wall is out there in twenty twenty five, and it's just this feeling mohammed that we don't have to think about it. But at some point we have to start thinking about it, don't we, right? But you know what, you enjoyed the journey before you get to a destination. Oh, here we go, and you want to give us some good news bad news, bradmos out here, No, no, I totally understand, you know, because momentum is really important, and you want to be exposed to this market. And I think most people have much more of a tactical mindset than they do of a strategic or structural mindset, and investment has become very tactical. Mohammed's set in the Town's great to have you with us, by the way, it is without questions, through the pandemic and literally over the last five years she has had a greater influence on the debate of our American economics and anyone out there. Out of Sacramento, Cambridge and a tour of duty at the very liberal New School of Social Research, Stephanie Kelton joins us now from Stonybrook University. The book is a deficit myth. In the three letters, are MMT professor honored to have you on Bloomberg's surveillance? Are we unraveled? Stephanie? The worry here of the annual interest expense the return of a real interest rate? Are we unraveling as we roll into twenty twenty four? No, I mean we are. The Fed is effectively in a sense, putting fiscal policy, a big part of the federal government's budget on autopilot. And it's really tantamount to running, you know, a pretty regressive fiscal stimulus. That's what the rate hikes are actually doing. If we don't like it, Tom, there's a pretty easy way out of it, which is to say, if the rate high are pushing up the amount of money the federal government is spending to service the debt, interest expenditure up by hundreds of billions and trillions of dollars over time, remittances from the Fed to the treasury have collapsed. All of this is adding to the deficit, which triggers more issuance of treasuries, which puts you in what is essentially just a cycle now of higher rates, higher deficits, higher debt, and it will continue for as long as the Federal Reserve holds in this position with a deficit. The debt and the deficit is from the new school Heilbrunner and Bernstein classically talked about years ago. But the arch MMT criticism is, you're handing monetary decision making from the acuity and date driven data dependency of a FED over to the legislative branch. Can we trust the legislative branch to prosecute MMT given where we are right now? Well, okay, I'm glad you mentioned hal Brunner. He was a professor of mine when I was there in a really terrifically bright person Tom. MMT is a description of the monetary system that we have today. It is a floating exchange rate fiat currency. Love it or hate it, it's what we have. MMT describes the monetary system that we have and the mechanics of government finance. It's not a policy proposal. It doesn't propose changing anything. It's describing how things already work. So think about what Congress did with the onset of the pandemic, drafting first the Cares Act that two point two trillion and then the big Omnibus Bill, a nine hundred billion dollar package, and then the Democrats came in and did their one point nine trillion dollar American Rescue Plan Act. All of that was deficit spending. We didn't give Congress any new permission to do anything. We just described how it all works. And it helps to unders stand why Congress was able to muster that kind of fiscal firepower when so many economists had previously said that when the next crisis came, we would be unable to act. People like Larry Summers said because of the Republican tax cuts in twenty seventeen, that we would be living on a shoe string for decades to come. Those were his words. That we wouldn't have the ability to spend money because of the deficits, because of the debt. That was wrong. Congress has the power of the purse. MMT recognizes that, and MMT says, listen, this is an extraordinary power they have. They need to use it responsibly, and that means thinking before you move forward with bold spending programs about the inflation risk that's associated with those spending proposals. And that's the piece that was missing. The one thing you didn't mention in you know, my tour of going through my education and so forth, was the time I spent in the US Senate as the chief economist for the Demomocrats. And I'll just say very quickly and i'll stop that. When I was in the Senate, my great frustration was being surrounded by members of the Senate on both the Republican and the Democratic side, who were drafting bills trillion dollars of infrastructure, talking about medicare for all and all these other things without ever mentioning inflation risk, I couldn't believe it. So MMT would have us do things very differently when it comes to the way we approach the federal budgeting process. It's inflation that you have to watch for, Stephanie, it's Mike McKee. If wishes were horses, then beggars would ride. The idea that Congress is going to think about anything before these start passing bills is probably not going to happen. So I'm wondering, after all this is there a limit in the sense that at some point we aren't going to be able to respond fiscally, for one reason or another, to some sort of crisis because all the money is going into debt payment instead of instead of going into additional spending, and the way we're set up now, we got to pay those bills. Okay, So two things I'll say. One, I've been hearing this my entire life. You'll remember that Chairman Volker had into straights up pretty high. And meanwhile, you know Ronald Reagan did two massive tax cuts and massively built up the military. So again, if Congress has the will to pass legislation, the votes are there, the money is there, and I'll just say I don't think it's right to say, actually that we can't trust Congress to rein it in. Remember, the so called Inflation Reduction Act was Congress's effort to say, listen, we don't want to continue passing legislation given the inflationary environment. So we want to get revenues up, we want to control costs. We're going to negotiate prescription drug prices. That was all Congress taking, you know, careful steps. I think are you would you suggest, Stephanie, whether it's a Republican or Democratic, to houses that we can have budget responsibility. Do you see displayed budget responsibility in the modern Congress and Senate? Well, Tom, what I'm saying is that if we were doing things the way I'd like to see them done, instead of handing proposed spending bills to let's say, the Congressional Budget Office and saying, give me feedback on this legislation I have drafted. Tell me if it's going to increase the deficit, tell me whether it adds to the debt. I don't think that is the most important feedback. I think it would be much better to have CBO and or other agencies evaluate proposed legislation on the basis of inflation risk. But we don't do it that way, right, So I think that that would put us much closer to having a Congress that operates with fiscal responsibility, i e. Inflation risk at the heart of what it is. Okay, can you and say a critic of yours, John Cochrane, the great conservative economists, Can you and John Cochrane get on the same page and say we need a Simpson Bulls reducts where in the initiation of that panel we actually demand that we get something done. No? Uh, sorry, sorry, but no is the answer to the question. You would have to first convince me that there is some sort of looming crisis that necessitates the formulation of a fiscal commission. And I don't believe that we are facing that kind of crisis. Inflation is coming down. So if you approach things the way I do, which is to say, you know, are we at risk? Is the budget posing and inflation problem, then let's get at it and let's figure out what adjustments need to be made to ensure that we aren't putting ourselves at risk of trenched inflation well above the Fed's target. I don't think that's the future facing fascinating and controversial Professor Calton. Thank you so much, Stephanie Calton. I can't say enough about how refreshing to any and all her book. The deficit myth is she is at Stonybrook and you know her from the phrase MMT right now with us and Mohammedalarian with us is a great thrill today. He is at Queen's College in Cambridge and he's interested in the asset allocation of their endowment. That's the campus that Steve chiveron had a multi Asset Solutions that federated him as Steve. This is a lonely bull market. How do you reallocate into the end of the year. Well, you had to get ahead of it a little bit. We were adding over the course of the summer when it was uncomfortable on the idea that markets like FED pauses and they price in soft landings even if a soft landing doesn't materialize, because when the FED pauses, invariably it's on suspicion they've gone too far, not on confirmation. And so the data that's available to you is a FED that's no longer hiking and an unemployment rate that's still low, and that's been the case throughout history and it's the case today. And so finally, with the bond market having broken, we're getting that FED pause rally and that can be powerful, Tom. You know, historically those are nine month events, and you can see the equity market up fifteen twenty percent. And interestingly enough, and this is something that's been on our mind, the equity market has hit an all time high each of the last five times that the FED has paused. Now four of those ended in tiers, but it still happened either way, and we think this rally has legs. I think the jury on whether or not, you know, how soft this landing is next year, is still very much out or for the time being, we think this rally continues. Steve, what are you looking at to determine this whole macro question of has the FED not just paused, but it's going to stop cutting and kind to do so within a soft What are the key variables you look at. We're calling them the five Games of Chicken, and it's that corporate refinancing wall. You're going to have about sixty percent of corporate debt come due between twenty four and twenty eight, So what percentage of that is going to face materially higher rates, and what does that do to company earnings? That's number one. Number two for small businesses, they've already seen their debt repriced because it's variable rate bank debt. So how many quarters of high rates can they survive? On the consumer negative or I'm sorry, real income growth is finally turned positive, But how positive does it get? And does it allow a consumer to de lever again, rebuild savings and continue to spend eight hundred and seventy seven billion dollars of bank deposit outflow? What does that do to restrict lending? And then what percentage of the federal debt, a third of which becomes due this year reprices to a significantly higher rate. Those five things we think, if they were to all go perfectly, you'd get this immaculate soft landing. I think that's unlike we think what's more likely is a kind of rocky landing where inflation stays stuck at three rates, stay hi, there's some slow down, and it's a kind of malaise. It's a single digit equity environment with a real risk that something breaks and you get into a classic recession. So it's really between that rocky landing and then a kind of a classic recession break that we think is most likely to happen. We're in the rocky landing camp at least for now. And what do you say to those who say, of your five factors, it's one in five. It's all about supply. It's all about who's going to buy all the supply. I think that's big. But where I would focus more acutely is on the nexus between banks and small businesses. The banks. Again, if there's eight hundred and seventy billion dollars less of deposits, that's eight hundred and seventy seven billion less of loans that can be made. And small businesses are reliant on that, and they're not facing a maturity wall. They've already seen it, and so if something's going to break, we would look there. So we're spending a lot of time focused there. It also has a bias towards larger cap companies within our asset allocation. Steve, let's get to the quote that shook up this market in the last twenty four hours. TK talked about it at the start of the program. It came from the Walmart CEO. We may be managing through a period of deflation in the months to come. Steve, when you heard those words yesterday, what was your response. I think the word deflation is probably a little strong, But I do think that there could be a lot more disinflation than what we've what we're expecting. If you look at the areas of the economy where you've seen disinflation so far, it's goods prices, it's food prices, its energy prices, It's a lot of stuff that quite frankly, can be explained by COVID normalization. Big interest rate sensitive purchases have not really seen the big deflation that you'd expect r. I mean, home prices are still relatively buoyant. Go and try to buy a car. It's not exactly a value exercise these days. And so I think as the rate heights filter through the economy, there is more disinflation in the pipeline, and I think you could see a at some point in twenty four go very quickly from worrying primarily about inflation to worrying very much about growth and the employment markets. And that could switch on a dime. And it's something that keeps us in a kind of humble position. Well states is the same true for investors just to jump in. You mentioned that as a federal reserve can make that switch. I just wonder how quickly investor start to make that switch, and whether we can get some divergence between what's happening with bonds and what's happening with stocks. I think what you do is you pull up some charts and you look at them. Historically, you know, unemployment takes stares down and elevators up. The equity market takes stairs up and elevators down. Particularly if you are headed towards a recession. You don't gradually shift your view in the late part of a cycle. It happens very, very swiftly, and that's why as an investor you have to prepare for that. You start to lengthen duration, you start to upgrade the quality of your equities. We like companies right now that have strong balance sheets, strong cash flow generation, low external financing, and you move in that direction so that if it does move on a dime, which historically it does, you know you're you're not left out in the coal stave. What if I get you thoughts, it's going to catch up. Have a good weekend, my stave Chevron the Federated terms, Stephen Schory, So principle of the short group saves us. Now, oil disinflation, Stephen, how does New York Harbor adjust to oil deflation? All the little idy busy things jet fuel, diesel, distillate, how do they adjust as collapse in oil. Yeah, it's a really interesting question, Tom. We're trying to figure it out as we speak right now. When you look at the spread action between gasoline on the flub with curb and inventories, seemingly there is enough oil power, enough gasoline in your harbor. The neok Carver just want to point out is important because that is the delivery hub for the mercantiles, diesel and gasoline contracts. Now, when we look at overall supplies relative to demand, we're looking at about twenty four days worth of supply of gasoline. Now. That is normal, That is spot on to the five year average, and it's slightly above a year ago. The problem now is that traders are skeptical. They are pricing in a premium on the front end of the curve, which is a clear signal that someone out there is concerned about these supplies, regardless of the fact that we do have all of this space worth to supply? The other big issue here is jet fuel. Right now, we don't have enough jet fuel stocks are extremely low and as we look forward to next week, we expect this or I should say Triple A expects us to be one of the busiest travel seasons for Thanksgiving of the past twenty odd years. So when we look at the rising demand, when we look at the spread action, something here is afoot. It doesn't line up that the spreads are saying one thing, ie, there's not enough supply, regardless of what we're actually seeing in a weekly inventory reports from the EIA. So Stephen, the SANDI is a frustrated with the price section, as you can imagine. I just wonder if they're frustrated enough to change policy again, do you think they are? It's really interesting and it is really conundrum that, to be honest, I am perplexed that the market never really priced in any sort of risk premium with regard to what is happening now in the Middle East. And let's be clear on this. This is a war not between Israel and Hamas, but it is effectively a war between Israel and Iran. Given that we're fighting that is to say, Israel's fighting Amas has Blah and the Huti's all backed by Iran. Now that is a pretty scary proposition with Iran's ability to halt the flow of oil coming out of the Persian go free straight her moves. So yes, there clearly is a head scratcher here that we have this huge risk on supply, but the market refuses the price that in regardless, we're focusing now on the demand picture. And yes, if you're Sali Radio, if hey, if you're a Texas and you are trying to produce and you're looking at this price action, yeah you are frustrated at this point. But I want to say here, based on our modeling, we're likely at the bottom of the market right now, given this situation around the globe and the inbalance now between supply and demand. So, Stephen, do you think that the Saudis will weight this out or do you think the Saudis will be on the phone to the Russians and any other ORPAC plus member that's willing to participate in another cut in production. Yeah, I do think that there is a concern that we'll see further cuts Already the Saudis, Russia, have extended their cuts of volunteer cuts to the end of the year. We've seen now in oil prices, unlike the product prices, we've seen an absolute collapse in the front end of the curve. So we've now actually on the noomics. We've moved into a situation called contango, meaning that prices for nearer term delivery are now below that of prices for longer term delivery. So this is a clear takeaway that right now from an oil standpoint, fundamentals are extremely weak, and I would suspect that we'll see the chances are going into the quarter OPEC plus either extending the cuts or increasing those cuts into the new year. Steven Shark over the arc of Bloomberg surveillance twenty years. One of the great shocks has been America's success with hydrocarbons into the new year. Are we energy independent? No, not at this point. Now. I want to point out that we were energy independent a few years ago. In keeping in mind, energy independence does not mean we do not have to import a BTU from anywhere around the world. We wore a fluid trader in the world. We wore the dominant krudeoil producer in the world, and we wore the swing producer. That is so for all intents and purposes, we wore an energy independent when it comes to hydrocarbons, and that is just a shout out to how well how efficient the industry has grown over the past fifteen to twenty years. But given current policy right now, no, we're not energy independent and going into the new year, big risk is that we are playing a zero sum game. That is to say that we are taking off dispatchable BTUs natural gas, nukes, coal faster than we can replace them renewables. That's not opinion, that is fact. The regulators are telling the government this is so, and yet the government is still going ahead enforcing these retirements where we don't have enough power. So everyone out there get used to this and get ready. There's going to be a huge jump in volatility over the next two years, a huge jump in pricing for electricity and for other alternative BTUs because we're quite not ready for the transition that the government is forced in upon the industry. Stephen with a big one is Stephen Schork at the Short Group. A lot of happy talk this week. Jeanette low Strtigas wrang in on this meeting between Biden and Jain, saying this the meeting does not change the trajectory of US Chinese relations. Tom the US will continue to push for de risking or decoupling with China in order to protect this national security interest, and China will continue to push to develop a multi polar world against US interest. Janet Low there join us now from strtigis MS Lord, Jeannette. I look at where we are, and of course the major question is what's the next step. What is the next step. Should we look for President Biden to visit China. Yeah, that's probably, to somewhat extent unlikely. I think maybe if we look back at last year, we had a meeting between Biden and She in November of twenty twenty two, and you know, not much occurred out of that. After that, a couple months later, we had that spy balloon flying over Montana, which then ruptured relations again. So I don't necessarily think that there's going to be a lot more steps moving forward. It was also very interesting to have the Defense Secretary at the exact same time in the Philippines talking about continued coordination while this APEC and the Biden She summit was happening in San Francisco. So I think this is going to be about trying to lower the temperature, trying to make sure we have continued communications. As you guys have mentioned, having she he wanted to he's having some domestic issues. This is also a good opportunity for him to kind of have a reset. But ultimately, I think that the two sides are going to continue on their trajectories and this is not going to change the overall path. What it is going to do is just make things a little bit easier in the short term. We have an election coming up in the US. We don't want to continue tensions with the China. But at the same time, if Biden was to be too conciliatory towards China, we have a whole lot of hawks in Congress who would then pounce him on that. So Janetta, I very much agree with your analysis. Can you take it one step further? How easy is it to de risk without decoupling? Right? And I think that this is part of the issue too. I mean, you have the US has been trying to make strides to de risk from China, but it's going to take quite a bit of time. Obviously, We're quite reliant on China for supply chains, for critical minerals, for a whole host of things, and so it's going to be very difficult to actually move those pieces away. And so I think that trend is in place and you're going to see it continue over the next couple of years. But that also means that to some extent, you almost need a daytunt at the highest level so that you can build these pieces out from the bottom and ultimately get to that de risking. I don't think decoupling is probably where the ultimate goal is, but it is really about trying to protect US national security interests and making sure there is reduced dependency on China. And I do think that you are seeing that you regardless of the fact that you have to make choices between how you align with US and China, there is an effort or there is a realization across the globe that having too much dependency on China is not a good thing either. And from Chrona's perspective, de risking involves building little pipes around the US at the core of the system. How far can they go into building basically an alternative global system. So this is obviously something that they have been working on, and they would like to continue to accelerate that. I think the one thing that is important is I think the fact that the US is not doing this alone is important that they will actually be more successful and actually trying to at least move supply chains. China is still going to be involved, China is still going to try to work with their partners in Asia to get around some of those pieces. But the other thing is that is if you look at China trying to build this multipolar world, they have been doing that over the course of a couple of years. They're trying to obviously move away from the US dollar, They're trying to get other countries to do the same. But if you are looking at China also being in a place of having economic weakness, that also is not necessarily conducive to them actually being the leader of that movement. So there's a lot of things that have to be worked out on both sides to actually reach their ultimately ultimate goal. And I think that's why we're going to kind of see a I don't want us to use the term muddle through, but kind of a muddle through scenario where they continue down their path but there is obviously some need to be conciliatory in the interim quickly, here Jin ed and I've been guilty of this all week. I have failed and taken my eye off Ukraine, Ukraine in this cold December. What will that debate, that study look like. Right, So this is the US does not have a lot of military aid left to provide to Ukraine at the moment unless Congress appropriates more funding. And so the spring offensive has not necessarily produced the results that the both sides were looking for. We're going into the winter, which makes it more difficult for there to be progress on the battlefield. Think that you will see an effort in Congress to try to come back from a Thanksgiving holiday and pass Biden's National Security Supplemental, which would provide aid for Ukraine as well as Israel and Taiwan and the border. But that is something that they still are trying to find a solution on. They need to figure out whether or not they can add border policy changes in order to get Republican support for that bill. But if we don't get aid to Ukraine over the next couple of weeks, there is probably going to be a strong hole put into Ukraine's defenses because they really do need more money. You obviously have Europe also supporting them, but Europe has been struggling to get some aid packages passed, some munitions given to them as well, so it's it's been put on the back burner. But I think you might start to see more discussion over over the next month in Congress. At least this is a fine We're going to seek out it to the new year. Jeanette low A shatigas Jeanette, thank you. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Easter. I'm Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and this is BloombergSee omnystudio.com/listener for privacy information.
Saudi Arabia reportedly wants to move IPL into a holding company and acquire a significant stake in it. And that stake's worth could be as high as 5billion Dollars. Reports also claim that the kingdom's de-facto ruler wants to expand IPL into other countries, on the lines of the English Premier League. But why do Saudis want a piece of IPL pie? Any discussion on IPL would be incomplete without the mention of Virat Kohli. The star batter who has scored maximum runs in this format. And in T20 too. Just last week, Kohli scored his 49th ODI century, equalling the record of his cricketing role model Sachin Tendulkar. In our next segment, find out if Kohli is the greatest ODI batter? Like its cricket team, India's financial markets too are on a roll. Despite aggressive interest rate hikes worldwide, and geopolitical crisis, Indian markets are ending Samvat 2079 with sparkling returns. The benchmark indices are up about 10% each, while the broader market indices have zoomed over 30%. Here's a wrap on the outgoing Samvat, highlighting key events that unfolded during the year, and the biggest wealth builders and destroyers during the period. After stocks, let us see what is happening in the crypto space. Erstwhile crypto king Sam Bankman-Fried was convicted of wire fraud and conspiracy to launder money last week. He now faces up to 115 years in prison. Bankman-Fried was the founder of the now-bankrupt crypto exchange FTX. Here's the entire Bankman-Fried-FTX saga and more.
The October 7 atrocities committed against Israel and by Hamas terrorists with support from the Islamic Republic of Iran has frozen the rapprochement between Saudi Arabia and Israel, as the clerical regime in Tehran doubtless anticipated. Now, the future of Saudi-Israeli relations may well depend on the outcome of Israel's war against Hamas. Host Cliff May is joined by top experts Bernard Haykel and Mark Dubowitz to discuss the status of Israeli-Saudi relations on October 6 versus now, including just how close the U.S. was to reaching a deal between Israel and Saudi Arabia — and the likelihood of those talks resuming; why these normalization efforts motivated Tehran to unleash Hamas on October 7; and how those who correctly decried the Khashoggi murder remain silent on the October 7 butchering of Americans in Israel. They consider the future of Israel's war against Hamas, including day-after scenarios for when Israel cripples Hamas — will this war really be over after that? And what future role might the Saudis play in a post-war Gaza and West Bank?They also break down the ways in which Saudi Crown Prince Mohammed bin Salman's Vision 2030 expands beyond economics as a broader vision for the Middle East and Saudi Arabia's role in it; the importance of Vision 2030 building Saudi Arabia as a nation — and why this contradicts the Islamist vision of expansion held by the Islamic Republic of Iran.Bernard HaykelBernard is a professor of Near Eastern Studies at Princeton University. His research focuses on the “political and social tensions that arise from questions about religious identity and authority” with a particular emphasis on Islam, history, and the countries of the Arabian Peninsula. His books include “Saudi Arabia in Transition” and “Revival and Reform in Islam.”Mark DubowitzMark is FDD's chief executive officer. He has conducted extensive research in Saudi Arabia and in Israel and on (not in!) the Islamic Republic of Iran. Indeed, he has been both sanctioned and threatened by Tehran's rulers. He has also been sanctioned by Russia and blacklisted by Turkey.
Julian Emanuel, Evercore ISI Chief Equity & Quantitative Strategist, expects consolidation in the streaming industry in the coming years. Greg Valliere, AGF Investments Chief US Policy Strategist, discusses the third Republican primary debate. Cameron Dawson, Newedge Wealth Chief Investment Officer, says it's too early to know if the uplift in unemployment will barrel higher into next year. Geetha Ranganathan, Bloomberg Intelligence US Media Analyst, breaks down Disney's better-than-expected 4Q earnings. Ellen Wald, Atlantic Council Senior Fellow, discusses the global oil market as crude prices remain low.Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full transcript: I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on app, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. Jitting a manuel jointed to surround a table Chief Equity just over at evercor SI jitting Good mornings here, Good morning. Have you been participating in this wonderful, beautiful thing that is an eight day winning streak. Yeah, we have, you know, several weeks ago we just felt that when you backed off of that five percent yield, And I know we've been talking about it, but it is the fact that in this world now for the last year and a half, where stocks and bonds have been positive correlated, if bond yields go down, stocks go up, and backing off of five percent was huge for the psychology. And now we've got this unexpected oil price plunge, which is even bigger for Cheryl, I'm with you. Those two points yesterday stood out for me. Break a four to fifty on a ten year break of eighty on Brent crude. At what point do these correlations start to break the other way? What brings up hot that change? Well, we are watching that very closely. And guess what, the high frequency data is really important because that chart you were talking about a few moments ago, with the unemployment rate rising from three to four to three nine in the past, when that starts to happen, it tends to snowball. But where we're going to get the initial read on that is that eight thirty jobless claims number starts edging over two hundred and fifty thousand, we get a little bit cautious. Three hundred thousand is where we know the economy is going to turn down. I'm supposed to fold in now A question on Ed Hyman's Hicksy and Islm theory and his disinflation theory into your stock babble, forget about it. I love the single sentence you have which pushes against all that malarkey by saying price is paramount. Right now, when you talk to Ed Hyman, how does a respond to you telling them your economics doesn't matter, price is paramount. I'll tell you how five weeks ago Ed Heyman started putting out in almost daily the act that gasoline lean prices started falling as the conflict was erupting. You already had the turn in gasoline prices completely, you know, devoid of real sort of prosperity with Hymen's disinflationary tendency or outright deflation in China. Look, if you look at the last fifteen years, you've had episodic times of that from again. Obviously the financial crisis is one of those times. But ultimately what it comes back to again for equity investors, for bond investors. First of all, the whole idea of getting a real return on money in this world now is actually a positive for financial assets. It's a positive for capital allocation, and long term, it's a positive for growth. And that's you know, that's part of the equity investing mindset. Do you need a long term view right now or do you just trade the short term. It's really difficult to have a long term view because of what we're talking about the inflection in the economy potentially happening. But if you take the super long term view, is that even if you get the recession that Ed's thinking we're going to get, that it's going to be mild in twenty twenty four. What you're left with is a labor market that has rebalanced. What you're left with is again a real cost of money, better capital allocation, and frankly, we've talked about this before, you have new technological developments like generative AI that is going to improve the productivity of corporate America over the long term. One of the main frustrations of this year was that pretty much everything everyone said at the beginning of the year has proven to be wrong, including that this would be the year that tech stocks would fade more meaningfully and you start to see a broadening out in the rally. Energy stocks would start to be the true leaders. You just actually moved away from an overweight and energy and are talking more about generative AI. It seems like the theme just keeps on being that the leaders will keep leading. Everything else will just have to figure out where they fit in. Well, look, again, the recession will probably, you know, to the extent that it does arrive in the next twelve months or so, rationalize some of this, but ultimately what it's going to do, and look, part of the consternation on equity investors' minds is the fact that the Russell two thousand is making new lows. Ultimately, you're going to get to a point where there will be an attractive price for the other four hundred and ninety three stocks away from the Magnificent seven, and you will get to an earnings reset. We think that's part of next year's narrative. This is the difficult question I think people have got to confront at the moment. Do I want to buy the recovery to the recession I've not had yet, given the damage we've seen in the small camps. You can pick up various places to back up the consumer discretionary story. Allines, for instance, which have come way off the peak back of the summer. Do I want to start picking up the pieces going into what could be a slow down next year. We think you need to be balanced. It's one of those things where again, given the lack of visibility into next year, what we always say, we've had a very nice run in recent weeks, and if you go back over the last year, it's been a very nice run off the October lows. You need to be comfortable with the fact that if the market comes in ten or fifteen percent, which it does in any typical year, as it did several weeks ago, that you're a buyer of the dips and whatever that asset allocation is to you. That's the kind of discipline you need to employ. Goldman speak to this as well. We've gone through their note this morning a few times. It's worth doing it again. The hard part's over. More disinflation is in store over the next year. On growth, they see limited risk of a recession, and they say this on central bank policy. Then this is a really really interesting point. An increased willingness of central banks to deliver insurance cuts it grows slows. Earlier this week, Ben later on this program of E Toro, was saying the FED put was back. Lisa and I looked at each other and almost spat out our water. The FED put is back insures cuts of growth slows. Is the old fetch story returning? No? Why are they wrong? No? Look, because there is an assumption that there is a reflex reaction to a minus GDP quarter. Thankfully we didn't see it in twenty twenty two when we had that, because if you had interrupted the rate hiking program, you wouldn't have gotten to where you are. And you can argue both sides of this case, but frankly, for US, there is a commitment, given the fact that core PCE is still solidly with a three handle, that you just can't go down that road unless it really looks like there's a severe economic downturn. And we still think there's enough savings left over so that won't be the case. Judy and awesome as a was Emmanuel have et a court joining us now to brief off the GOP debate. Last night, Gregory Vliate, US policy strategist at AGF Investments. Gregory stood on the floor of the GOP convention of two thousand and four, and it was a different Republican Party. George Bush Junior wanted a more hopeful America. What's going to be that slogan this summer for the Republicans? Well, I think they'll emphasize the economy. They'll state that Biden has not done a good job. Frankly I would disagree, but I think that they'll make it more about the economy than anything else. The really intriguing issues are abortion number one, number two. How much more involved are we going to get in Ukraine and Israel? What about the idea that they're losing elections, not doing as well in certain elections. It going to be the mix of that we just saw it can be from a year ago, November, etc. How do they start winning again? Well, I don't think you talk like Ramaswami. I think he talked himself off the boat last night. I don't see much of a future for him. Probably not much of a future for Tim Scott. So it's dwindling. You've really only got three challengers. DeSantis, who was okay last night but made a strategic error he didn't mention the governor of Iowa had endorsed him. I can't believe he didn't talk about that. And then you've got Nicky Haley. He'll stick around for a while, maybe Chris Christy, but we'll begin at twenty twenty four. I think with just two challengers to Trump, that would be DeSantis and Haley. Do you think either of them have a chance of taking Trump off the ticket? Who would either of them? Oh? No, not at all. I mean Trump would have to do something really egregious, and he's pretty much filled the role on that for the last couple of years. So no, I don't see anything, you know, barring a health issue, that will keep Trump from being the nominee. Meanwhile, President Biden is going to meet with the UAW leader today and the there's a real question of what he can do to shore up the image of bignomics, of what's happened in the economy, which some people are saying on paper doesn't look so bad, yet in practice, has a lot of people feeling like they want something different. Well, it's a good question, Liza. I'm told that within the White House, Trump Biden is angry, he feels he's done a pretty good job in the economy and gets no credit. So he's going to hit the road and try to make his case. The problem is an awful lot of Americans fear that we're not out of the woods, and there's still more inflation threats, food, gasoline still to come. Greg Valier one oh one. Folks, this is a great course to take in politics. You get it off the back of a matchbook. You can take Valier one oh one. Greg, Your value one oh one is fiscal issues at the day of the election don't matter. Are you telling me the debt and the deficit don't matter the first Tuesday of November, Well, when you look at net inter cost, you look at borrowing costs, this is becoming a major crisis for the bond market, and there's no mood in Congress whatsoever to dramatically cut the deficit. However, I think that once we get through Labor Day of this coming year, this stuff will be irrelevant. I think attitudes harden during the summer. If Trump is well ahead, he could pull us out. But I have a feeling that Biden will come back. I have a feeling that the Democrats all of a sudden are motivated because of what happened in Kentucky. Is a path of least resistance for the former president. Another tax cut that's going to be on the agenda. You're absolutely right, Tom, and I think with the Senate probably flipping, in the House probably flipping, you're going to have a climate that will be ripe for a huge argument on whether we extend the Trump tax cuts. I think we will. I think Trump will talk about tax cutting even though the deficit is enormous. Greg, I have to wonder whether this time is different. A lot of people come on the show. We'll say dysfunction in Washington, DC is the reason why yields have been flipping and flopping and going all over the place, and then they talk about a potential government shutdown and say markets won't care. Have we reached the point where market dysfunction is going to result from political dysfunction in DC in a more material way. Well, we're going to see probably another alleged crisis on November seventeenth if there's no budget. I don't think the markets will be all that concerned about it. I do worry about the credit agencies, you know, fitch S and p downgrading US debt, not just because of the size of our debt, but because things are so dysfunctional in getting a budget. Great to catch up, Greg, appreciate your input. Greg Vally. THEFJEFF investment's gone into next year, as Ed Marangi and Emmanuel. So are you a confirmed bull? Cameron? I think that given the setup into your end, we can expect some kind of Santa claus rally just because of tax loss dynamics into the end of the year. The largest weights in the index are up the most this year, which means that you don't have eager sellers to recognize tax games. This is very different than last year, where the largest weights in the index were down a lot people sold them and you effectively puked into the end of the year. What it's the proverbial puke into the end of the year? Okay, thank you? Can we say that on radio? We just did, Cameron seriously our Warner Brothers discovery yesterday. Puke as you call it. Okay, how does that handle by tax saw selling? Well? I think that it will magnify as we go into the end of the year. You look at the areas that are down the most. This is small caps, This is cyclicals, This is healthcare some of your defensives. These are the areas where people are looking for tax sace harvesting opportunities. The key point though, is that they're smaller weights in the index or they're not part of the index. So when we just look at the S and P five hundred, that could be something that supports it into end year. So help me here. Am I buying the index the S and P five hundred? And am I looking for buying opportunities in small camps? The financials, things that have struggled? What am I doing? I think that you have to look for opportunities and things that have struggled as you go into twenty twenty four, because we know that pain trades usually are reversal trades in leadership and just at the point where everybody throws in the towel and says, well, you can't own anything but the magnificent seven. These are the names that give you optionality on AI and they have the best earnings growth. Everybody crowds into them, that's typically the moment that that's when they start to lag. And so I think we have to have the imagination that other things could do well in twenty twenty four. Other than just the narrow leadership that we've had this year, the Tilson Slock of Apollo's writing questions for us this morning. This is the question he's asking in its most recent note. Everyone who's bullish on equities and lower rated credit should ask them sound where they think the labor market will be in three months. With the Fed on hold and not showing any signs of cutting anytime soon, what's your labor market bed With that in mind, we are having the ultimate debate is if we're seeing normalization or we're seeing weakening. And the challenge is that normalization is usually the gateway drug two weakening, meaning that you see a little easing that turns into a lot of easing. But we're not yet seeing definitive data yet to say that the uplift we've had in unemployment is going to barrel higher. The key thing to remember, though, the Fed itself in its SEP the Summary Economic Projections has unemployment going to four point one percent next year and they're not forecasting a recession. So that's going to be a key question of if we get that four point one percent, does that justify them easing policy? Is it okay to sort of say we don't care for now. Down the line, whatever happens will happen. In the meantime, we can dance in the head of a pin with oil prices coming off, yield coming lower, and risk appetite still available. Yeah, because if we think going into CPI next week, remember that gasoline prices are down ten percent over the month of October. That's very different over the summer months where gas prices were up a lot. It pinched consumer spending maybe a little bit at the margin. So that does create this beneficial environment. But I think it's important to remember twenty twenty two, we priced in the earnings recession. In twenty twenty three, twenty three, we priced in the earnings recovery in twenty four. What are we going to price in twenty twenty four as we looked at twenty twenty five, are we still confident that this entire economic setup can remain very strong, that unemployment won't be an issue, consumer spending can remain robust Given the lack of certainty around some of the outcomes, the potential outcomes with the economy, How nimble are you remaining How are you remaining nimble? To be able to adjust quickly. I think we have to remain completely nimble. We saw that over thet last couple of weeks where we went from deeply oversold to deeply over to getting close to being overbought. It means that technicals become really important. We can't get too lodged into narratives because narratives would have told you everything's ending back a couple of weeks ago. Be scared. Now the narratives are saying everything is fantastic. The thing is that we are at resistance when we look at technical levels forty four hundred very important for the s and P five hundred four and a half percent very important support for the tenure. How we interact with those resistance and support levels will be very indicative of the next couple of months. Speak to the people who listened to you and said, Okay, I'm really nervous, but I'm going to participate in this market and they own tech which literally on an hourly basis, has a bid right now. What's the character of that bid on the Magnificent seven. Well, it's extraordinarily strong. But then think about the difference in the setup going into twenty twenty two Magnificent seven earnings had been cut by about twenty percent over the course of the year. Now going into twenty twenty three, over the course of twenty three, Magnificent seven earnings had been revised higher by sixty seventy percent sent on average because of the better growth that they've had. So it's a much higher bar and I think that's where the discipline is is not trying to extrapolate too much of the experience of twenty three, get too crowded, and instead look for opportunities and areas that might be more left behind. You've been talking, Cameron about how difficult it is to follow the mood because it swings so massively from week to week. How much has the move that we've seen in yields underpinned your conviction that you can lean into the rally heading into your end. It certainly has helped. We've seen it play out in the valuation and now valuations are back to about eighteen and a half time's earnings. The question is is that the right valuation even given where yields are at four and a half percent, where that equity risk premium is The challenge with valuations though, is they are terrible timing tools and that they have no predictive power on a one year forward basis. So we can look at the market and say, hey, it's expensive here, expensive there, but that may not actually show up in price action for two, three, four years. And that's where that discipline of not chasing very high valuations comes in. When you have a longer holding period, you go breaking news TK on donuts? Is that where you want to go? DONI plural don't I? Yeah? Yeah, longer going far away the way a prime broker attracted a hedge fund. We can get you shares of krispy Kreme short. There's a in the East Coast, particularly in the krispy Kreme's more southern thing, and they're a different don I than what you get from Dunkin Donuts, which is, you know, there's cultures here. John, It's like it's like Greg's, but it's like American. Okay, all of a sudden, krispy Kreme nice video on radio. You are missing the making of the Magnificent. And the answer here is krispy Kreme is looking for a partnership with McDonald's. John Tower out with this and it's a mixed story of Ibada out there. But John Tower, a city group says first bite on d n ut. It's a McDonald's partnership that we may see. Do you know what you don't know? And I know this story already because Bramo shared it with me before Bramo breaking into the news industry and Fargo years and years ago for the first Crispy Kreme shop tre Tree story, true story. I covered it and people lined up. They camped out overnight to get the first Krispy krama. I went to interview that. You can't imagine that Bramo was what Bradma was like in local news, right, just get into a fluff. It was like, it's an investive piece. What are they doing with that? Money? Is unreal? Bramo and Farco, Yeah, I'm enough of a dunkin donut, which Krispy Kreme is just two sugary and sweet. Like camera doesn't help us out here, Krispy Kreamer duncan, he's never had a donut. There is nothing better than a hot, fresh Krispy Kreme donut straight from the friar. Nothing better, all right? The scripting at me in the control room shot there. Please let's make sure we're running at nine o'clock today. Look for Cameron Dawson had Krispy Creekdnie. What you need to know is it's April of twenty eleven. There was a show then Game of Thrones Winter Is Coming was the first episode. And that's where we are right now. With the screaming success in days of Blue Eye Samurai on Netflix. I'm watching it. I can't say enough about the shocking beauty of it. It is overwhelming, how it is game changing for streaming. Keitha Raganathan knows this. She's US media analyst at Bloomberg Intelligence. And I would suggest Disney knows this as well. Githa boyd A's Disney need a Blue Eye Samurai. They certainly do. And that's one thing Tom that Bob Iger really emphasized yesterday. He said he is looking to reinvent the studio. Those are the words he used, and he really emphasized quality over quantity. So you spoke about how spectacular Blue Eyed summariz that's exactly what Disney is going to go after. You know, they talked about, you know, the studio having some kind of franchise fatigue. Too many TV series created for the streaming service. They're really kind of streaming down or cutting down, I would say, pairing down on a lot of the content costs. You know, Lisa was talking about where those savings are going to come from, a lot of that is them just really cutting down on content costs. So they took down content costs from thirty billion to twenty seven billion. For fiscal twenty twenty three, they're taking that down further to twenty five billion, and that is where you get that big, big free cash flow number for them as well. Eight billion dollars is what they're projecting for twenty twenty four, or sixty percent increase from this year. Now I get it, it's anime, it's animation, but the basic idea is blue Eyed Samurai is is non diversity as we could get in twenty twenty three. Is Disney moving on from the tone and temperament of the last three or four years. Is Eiger going back to something or new to something different? I think it's a it's a combination of everything, a tom because you know, he needs to go back to the drawing board. He knows that there hasn't really been a new Star Wars or a lucasfilm movie since twenty nineteen. Obviously, the Marvels is in its next kind of iteration, if you will. So there's a lot of things that he needs to do. But the biggest thing I think for them for the Disney studio, and this has kind of been a little bit shocking. And you bring up animation, and that's a really good point because a lot of their recent animated movies have actually not performed as well as you know, some of us would have expected. And the Pixar has kind of been, you know, has had kind of this string of misfires, if you will. And the studio that is really kind of giving them a run for the money is Universal with Illumination. We had, you know, you have Super Mario, you had Minions, all of these animated movies from Universal doing really really well. So Disney obviously going back to the drawing board and kind of doing a lot of rethinking and as Bob Iger said, reinventing the whole franchise. If Bob Biker was the movie is this nightmare the same quote, that's that's a great knocking well. I mean, he tried his best. And if there is you know, any person for the job, any person who can actually fix and rebuild Disney. I think it definitely is Bob Biger and he, you know, kind of delivered signature Bob Biger kind of news yesterday. You know, lots of good news, lots of nuggets of you know, lots of nuggets of good good, you know, optimistic news for investors to kind of hang on to. Obviously, there is a lot of work that remains to be done, but we do know that there are some real growth drivers for Disney. Whether it's the parks business that is seventy percent of Disney's operating income, you know, throwing out about ten billion dollars in operating profits and cash flow. So that definitely is is a huge growth pillar for the company. And then of course it is streaming and how they're kind of going to manage that whole business. You know, we know that they're in the process of consolidating Hulu. You know, the big question is how they're going to manage the esp and transition. And you know, whether that then that Disney bundle, the streaming bundle, really becomes the competitor, a true competitor to Netflix. Is rebuilding a euphemism for shutting it down in terms of streamlining certain businesses and getting off selling the rest of it. Yeah, so he seemed to actually walk back a little bit of you know, the linear TV commentary. I know we've talked a lot about ABC and some of the other networks kind of being up for sale, but he also did say that there is a huge cost opportunity when it comes to you know, those linear networks, and so they've actually, you know, the Charter deal that they recently inked was was kind of a catalyst for them kind of you know, shutting down a lot of you know, the smaller networks networks that they are that they don't consider core, and I think that's what they're going to do. They are definitely going to streamline the business. You're absolutely right, Lisa. I'm not sure when or how the sale is necessarily going to happen, but he did Eigers seem to suggest that even if a sale doesn't happen right away, there are a lot of synergies and there are a lot of cost efficiencies that they can hopefully extract over the next few months. Okay, so this one's a tough one to answer, but explore the question with us if you can. Tom mentioned who's buying. If they're selling, who's buying Where did the buyers come from? So it could be private equity. I mean we know that there have there has been interest from certain parties Byron Island, but Byron Allen was one who kind of made a bid for for you know, the ABC and some of the networks. You know, again, private equity would always is interested in, you know, the TV assets because they do. Yes, it is an industry that is in secular decline, but at the end of the day, it does throughout a lot of cash and that is valuable. So yeah, again it's a little bit of a wait and watch. I mean there have been there has been some chatter about whether the leagues would be interested in kind of going and getting a broadcast asset. I mean broadcast assets like ABC don't come up for sale very often, so you know, maybe it is something that that the league and a leak can potentially consider for reach interesting. Gaitha, appreciate the update. You'll valuable. We appreciate your time. Geithor Reconnaz and the have Bloomberg Intelligence. Ellen Wall joining us now Senior Fellow at the Atlantic Council and author of Saudi Inc. Ellen to that point, Saudi's energy minister came out and said, it has nothing to do with demand, This is just price manipulation. Demand is still very strong. What did you make of that? Well, I think that he always has a bone to pick with the as he called him, the speculators, So I'm not surprised to see him talking about how, you know, this is all a financial thing and it's all due to speculators and it's not a you know, supply demand issue. But I think, you know, obviously there's always you know, speculation in the market, and we did see a whole lot of fund managers dumping oil off the futures this past week, so I'm sure he's focused on that. But the fact remains that the market is reacting to what it thinks is lower demand from China, and whether or not that's actually true, I think remains to be seen. It's always difficult to gauge what exactly is going on in China. What the market's reacting to was news that refining margins are soft, and you know, Chinese refineries aren't making as much, and so you know they're interpreting that as weak demand. Now, how does that translate into whether China reduces its imports, and there was some indication that they are going to be reducing oil imports. In fact, one of the interesting things that we've seen is that Iranian oil exports in September and October have been lower than they were in August. They hit a big high in August, but now we're seeing declines and there's some speculation that may be due to the sanctions enforcement, but it's much more likely due to declining demand from China. And we've got Saudi y A holding a million barrels a day off the market. I do think Saudi Arabia is in the best position to be able to gauge Chinese demand, and it may be that this Chinese demand is looking a bit soft now. But you know, Abdozi's been someone is looking at the longer picture and the longer game, and he sees that that is strong well. And with great respect to your book, which is definitive, we can take these tensions at least back to the Saudi Yemeni War of nineteen thirty four. The Ibn Saud family has dealt with this for pushing one hundred years the distance to the south. Give us the modern treatment of how Riodd and Jiada look at Yemen today. Yemen is basically a thorn in their side right now. They don't like the Houthies, any group like the Houthies has Bulah Hamas. All of those groups, while well, you might think that ideologically there are similarities and matchups there, they are essentially a threat to the Saudi monarchy. The Saudi monarchy is like, you know, they're they're like the stated old you know, conservative guy who always votes the same way and always says the same thing for breakfast. You know, they're they're the status quo. And any group that's looking to change the status quo, even if there are similarities in terms of say religious extremism or religious ideology, that's seen as a threat. And what's a bit disturbing is that despite prolonged military campaigns by the Saudis and the UAE, they haven't been able to dislodge the Whoi's from Yemen. In fact, if anything, they're more entrenched. And so I do think that given the fact that the who these are at least claiming to be involved in the Israel Hamas conflict, you'll be interesting to see if the Saudis maybe use this as an excuse to really try to get them out of Yemen once and for all, or if they'll be a bit embarrassed by somebody else taking them out. And then the conservative guy, as you call Saudi Arabia their treatment of the shades of Palestine, how do you interpret that, doctor Wald? Now that that is a big question, because what we've got on one hand is King Salmon, who is nominally the king of Saudi Arabia, and he is vehemently I mean vehemently anti Israel pro Palestinian. I mean, this is a guy who thinks that, you know, the Mossad was responsible for nine to eleven and has said so, you know, in public on television. So he is a huge barrier to any kind of reprochement between Saudi Arabia and Israel. That being said, his son, who's really doing most of the ruling, the day to day ruling, seems much more inclined to use rapprochemant with Israel as a way to get what he wants or what he thinks he needs from the United States. And in fact, it seemed like that was about to be a very successful deal before this latest conflict derailed all that, and I don't think that the general battle, you know, the general lines that are drawn here are going to change. But I do think, you know, if if King Solomon wasn't wasn't there, I think we'd see a much faster progression towards Saudi Israeli normalization. I don't think we're going to see quite with the UAE or Jordan has But I do think that that he that that NBS sees it as a beneficial thing or at least a really good UH tool to get other things that he needs, like support for obtaining nuclear power and military pact with the United States. Just real quick here, how does Saudi Arabia view the production in the US. It's gotten to a record level and made all of these concerns about demand. I think that they they have kind of come to terms with the fact that the US is going to produce, with the US is going to produce, and there really isn't much they can do about it. I think they were probably pretty pleased to see that there's more consolidation in the oil industry. I think that they see that as good for production and for companies who are looking at the signs of supply and demand and aren't just pumping, pumping, pumping just to stay ahead the way that we saw in twenty fifteen, twenty sixteen, and so I think that they see this as you know, this is where it is right now, and it's not always necessarily going to be this high. Ell in a wonderful brief, particularly those comments on Yemen. Thank you so much, Ellen Wald. Atlanta Council can't say enough about Saudi inc. It is absolutely definitive. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern Bloomberg dot Com, the iHeartRadio app tune In, and the Blue Bomberg Business app. You can watch us live on Bloomberg Television and always. I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and this is BloombergSee omnystudio.com/listener for privacy information.
It's a stuffed November Friday episode for Brendan and Andy, who is dreading the Bears playing in national primetime yet again. They meander from that into the lengthy Wired article on the tech and plans for TGL, which provided some of the most substantive details to date about what this is and what it might look like. This leads to a few different rants on the current silly season splash of money and the amount of oxygen it's currently taking up alongside the Tour's looming decision to get in bed with Private Equity or the Saudis. Brendan then brings back Flashback Friday to talk a bit about the Nedbank Challenge, this week's Euro Tour event, and Corey Pavin's 1995 win there as it tried to emerge from a tainted origin story. They close with SGS Golf Advice on strollers on the golf course and turning in a cheating partner that you have a close relationship with outside of golf.
Peter Tchir, Academy Securities Head of Macro Strategy, points to potential issues in the global supply chain amid ongoing geopolitical conflicts. Libby Cantrill, PIMCO Managing Director of Public Policy, says the margin of error for House Republicans to avoid a government shutdown has narrowed. Dan Ives, Wedbush Sr. Equity Research Analyst, predicts that Apple could look to buy ESPN. Alexander Goldfarb, Piper Sandler Senior Research Analyst, says the commercial real estate market is in the midst of a rare phenomenon.Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full Transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. Our guest of the Morning to synthesize all this with our question. Peter Cheers joins us. Now ahead of macro strategy at Academy Securities, you look for price up, yield down. What will that do to the equity market. I think for now it's going to be good. I think we see four thirty on tens before before we see four to seventy five. I think the pain trade is actually to lower yields. A lot of people who are bullished at five kind of got short again. I think that works until we get down about four thirty five. Equities rally on the back of that. Then we realize we're getting here because things like oil copper receding because the economy is actually slowing fast so I think at that point that's when the recession fear start getting priced back into stock. Taking Academy Securities three year view, you've got that slowing global demand. Nick bennenbrook On from Wells Fargo stunning with a two point four percent global GDP call. Can you own equities out with a three year vision? I think you could if you had a three year vision. I think right now it's more like a two to three week vision. Everything's so volatile. We don't know where this economy is turning. We don't know what's going on there. And one thing that's starting to scare me is we're having a lot of discussions about the Middle East. We're starting to hear a little bit more concerns about supply chains. I don't think it's an issue today, but if as this drags on, if there's any degree of escalation, supply chains become an issue again. So I think that will be a big drag on the economy. The Middle East crude last month is just unreal. To see a move of almost eleven percent lower on WTI, even with the heightened tension in the Middle least, A lot of people appointing to maybe demand starting to crack in a certain places around the world, Europe one, maybe even the United States gone into next year. What's your view on that. Yeah, I think the last time I was here, I said buying oil was not going to be a good hedge for escalation there because oil had been under so much pressure before, and I think that's what we're seeing again. There's just that lack of demand and the Saudis definitely have the ability to turn on the tap if they want. We're clearly trying to figure out how to work with Venezuela, and so far it looks like Aram's going to continue to pump oil despite the sanctions, despite the height intensions there. So there's not much in favor of oil right now, and I think that's a very crowded long position, so I could see that breaking lower coming into next year. You mentioned a two to three week view. I'm with you. You You know what's about to happen. Then in the next two to three weeks, we're going to get a load of people publishing their outlooks for twenty twenty four. Can you help us understand how you get any visibility whatsoever into next year? What's the strategic view going into you know, I think there's still some big themes. I think AI, how people are using AI, the efficiency that that could cause for companies. I think that's going to be a big theme still. So you can look over that. Where are we going to be on the defense spending? Where are we going to be in terms of geopolitical spending. I think the reshoring is still real. I think a reasonably healthy economy with their decent jobs is still the overriding thing. So I think markets are a little bit more volatile, volatile right now than the underlying economy is. So if you put this together to what you said earlier, that you see benchmark ten year yields getting down to four point three five percent before going back up to four point seventy five percent, or just basically they're heading lower. Does that mean that we're going to have slower growth but still the soft landing and that it basically people are going to get a little concerned about stocks, but that it sets up a rally. And I'm just trying to understand. No, I think a very convoluted range of thoughts. So I think as we move towards four thirty five, you get this, Oh, this is all good for stocks, and then as you start moving below four forty, I think people realize, oh man, we're getting there. Because things are not in the economy. The job market has changed, you know, white collar workers aren't doing as well as they were. You're seeing, i think, some potential for spending. You're seeing little cracks in the housing prices. So I think, all of a sudden, by year end, we're going to be back on a hard landing discussion and it'll be the boy who Cried Wolf, but we'll all be back talking about no more soft landing. We've overdone it. So you think that at that point, treasures will continue to be Haven's once again, even though arguably one of the biggest drivers of the yield move has been Washington, d C. And it doesn't look like that's changing. That's not changing. But again that's a three five ten year sort of pain. It's you know, we get ahead of ourselves. And I do think the one problem we all have is the bond market's so big. You talk about these numbers, two hundred and fifty billion, and it's huge, but it's you know, a fraction of twenty five trillions. So I think the ability to digest this you see corporate bonds come out twenty two billion yesterday, I believe it was you know, there's no problem digesting this, so I think the market's pretty healthy. I think people see yields as attractive. You're going to see people continue to add to that, so I think that's fine. It's going to be the risk side of things that gets people a little bit more spooked. Tell me about the November real yield shift we've seen. We've seen the ten year real yield migrate two point five zero percent to two point one nine percent. That makes things easier for everybody, right, it does. But I think the nominal yields still play a big role. They're still relatively high, and we had that move from you know, three seventy five to five, so we haven't clawed a lot of that back. I think there's this long you know, invariable lag time is really long. This time people did such a good job locking in yields. It's only now that you're hearing more and more people have to roll over their debt. Right if you issue to your debt back in the hey day, Now it's rolling over. Three year debt's not quite rolling over. So I think we're just starting to see that slow down impact. And I think one point John brings up, we've got what we've been calling this faux liquidity, this fake liquidity. It feels like the markets are super liquid at any given price point, but the ability to gap high or low is there. So I think we got pushed to five percent by people getting stopped out, pushing on yields. We're now got back to four fifty in a heartbeat because people are getting stopped out. So that's what we're trying to I think manage is like, what's the real noise versus the signal? You mentioned the Great Financinc. The Great Financinc. Of the pandemic, the huge wealth transfer we had from Treasury to the consumer. Consumer balance sheets were stronger. Everyone under the Sunny wonder House remortgage termed out that debt low rates. Corporate America did the same thing. One place didn't Treasury standrug Amit has been very critical of leadership a Treasury over the last i don't know, five years through that low interest rate period not termin out the debt. What are your thoughts on that? What do you think about that conversation? Yeah, I think they should have done what corporations did. I'm always a big believer, right, you know, borrolong it blocks in, you reduce volatility. And we're having a lot of conversation with clients. Probably a little bit hypothetical at this point, but maybe people are supposed to be under weight treasuries and T bills and way overweight whether it's commercial paper or corporations. That right, if you take a step back and talk about this as being governance, right, the US governance is offer right now in terms of our spending, in terms of we talk about not paying our bills. Right, you look at the large corporation's world. They have good corporate governance, they have global plans. They never once would ever even think about saying, oh, we're not going to pay our debt on time because we don't feel like it. So I think you're supposed to be starting to push really heavily to overweight high quality corporates, maybe in commercial paper, maybe some abs, and move really underweight T bills. So do you foresee a time when Apple can borrow at a lower rate than the US government? You know that ability to break the sovereign ceiling rarely happens, even in emerging markets. I don't think it happens here, but I do think you can see really tight spread compression, especially at the front end of the corporate bond curve. So I like that as a trade. Do you think we get convergence spread compression on governance issues alone? I think that will play a part of it. Yeah. I think the top quality companies have a ton of cash. The liquidity in the bond markets not what it once was, So whatever you have to pay up their own tea bills, maybe you don't. And I think this government issue is going to become a real thought again. If you think about it, why would you lend to someone who talks about not paying your debt because for a long time they've had the privilege of acting recklessly correct talked about this so many times there's been no consequence for it. Why is this time different. I think something we talked about before snapped in the market, and all of a sudden people are really questioning this whole you know, correlation or coalescence of events that have been on the back of everyone's mind. I don't think it cracks this time, certainly, but I think it starts setting us in stage again. I always go back to the Great Financial Crisis. It started breaking in two thousand and six, got fixed, broken in in two thousand and seven, got fixed, broken in in two thousand and seven, got fixed. So I feel now we've started this unwined and unless DC gets its act together, this is going to be Every time it rears its head, it'll get uglier. But it's not this year's story anymore. Pet love it always thoughtful Pitcher. There of academic securities. Lebby Cantrell joints Now managing director had a public policy a pinkel. You're the only one I can do this with. Can you take the election results and you can fold them into a government shutdown which happens in about three cups of coffee? Can you make that exercise happen? Yeah? Well, good morning, and thank you for not asking me a question about orgo. I did I take organic chemistry at school, so thanks thanks for testing me on that. Yeah, so I do think that the read through actually from last night, Tom So thanks thanks for a layup. Here is actually Democrats won a special election in Rhode Island. This was a is a blue race, a blue seat, this is a house seat. That means that they have two hundred and thirteen seats in the House. Republicans, however, only have two hundred and twenty one. They have a special election in Utah in a few weeks. The reason why this actually means this is important from a government shutdown perspective is that means practically that Republicans now can only lose three seats excuse me, three votes in order to pass a funding bill that they need a pass to avoid a shutdown by next Friday. So it just means that the margin of error is much more narrow for Republicans. Speaker Johnson was already needing to thread a needle, if you will, and that a needle point has just gotten even more narrow from the result from last night and threading the needle. What will moderate Republicans do? I don't have it in front of me, but I'm going to suggest on Long Island east of New York City, the Republicans had a good night. What are the moderate I guess the former president would say, Republicans in name only. How do they adapt an adjust off the selection? Yeah, I think that what we learned last night is that the abortion rights still very much resonate. That was obviously a takeaway from the twenty two, twenty twenty two midterms, where abortion really emboldened turnout. It shows last night that this really is very much an issue, especially when it is on the ballot. Now, I think for twenty twenty four, many of these folks, particularly in those districts Tom that you mentioned, where there are you know, Republicans who are defending Biden districts. The Democrats will make this an issue. You're going to hear a lot about abortion rights over the next year because of the results of last night, just sort of underscoring that this clearly is a resident voting issue for voters. So in terms of the government shutdown, what does that make those moderate Republicans do They are voting in lockstep here. They really are trying to give Speaker Johnson, you know, the benefit of the doubt. I think that will continue. I think the big question for markets is, though, is that enough can they actually avoid a shutdown If they pass a partisan bill, Tom, we will see a shutdown next Friday. So again kind of an open question of how this all resolves. But as of now, it looks like they are voting in a partisan way, which means that shutdown risk is you know, I think is increased over the last week or so. Do markets care though, I mean, as a shutdown basically, okay, they're going to do it for twenty four hours for effect and then we'll move on. Yeah, least, I think that's that's that's that's the real the real issue. If it is a temporary shutdown, no, this will just be more DC noise. If it's a longer, more prolonged shutdown, it does become I mean, the economic impacts of you know, lots of federal workers being furloughed not actually collecting a paycheck could matter. And also, you know, the data matters, right. If we don't get data from the Department of Labor, for instance, that makes the Fed's job, you know, a little bit a little bit harder. And we can also see, you know that this term premium that you all been talking about, we could see you know, some of the yields back up again as well on account of this. So I think you're right. If it's a short term shutdown, no, the markets probably don't care. If it's longer term, however, you know, it may it may weigh on you know. Again, I just sort of the confidence around sort of the political apparatus in Washington, d C. Just shifting from last night's elections to what we're expecting next year, a presidential election. How much of a certainty do you think that it is that we're going to President Biden versus former President Trump. How much will tonight's debate really color that discussion about potential other running candidates for the Republican Party in particular. Yeah, so, I think what we've been messaging to client Lisa is with high conviction President Biden will be the nominee for the Democratic Party. This idea that he is going to drop out, that Governor Newsom, for instance, may jump into the race, it just is not It's just not realistic at this point. Nor is there any indication from the Biden camp that he has any interest in dropping out or any intention of dropping out. So he will be the Democratic nominee again, you know, excluding or assuming there's no sort of exident health issue or what have you. On the Republican side, I President Trump obviously has an incredibly formidable lead in the polls, but this is actually a really important point. He his campaign is much more organized, i think by his own emission, than it was in twenty sixteen, and they have been systematic changing the delegate rules in the states in terms of how the state primaries allocate delegates to his benefit. So not only does he have this formidable lead in the polls, but he's also sort of changed the kind of the machinations behind the scenes in terms of how these delegates are allocated, and of course getting the nominations just a delegate game, So the fact that he's been changing these rules is to his benefit as well. So, I mean a lot would have to happen, I think tonight and over the next two months. Now. I think what we can show from even last night that voting behavior is the most important thing to look at and polls are not always right, and so particularly in Iowa and New Hampshire, Nevada, and South Carolina. Those are the four the first contests, Lisa, and how we're guiding our clients is if Trump wins all of those, then he very likely is going to be the nominee. However, if there's somebody can test one of those that it could be easily become a two person race. But again sort of remains to be seen. In terms of tonight, it's really a race for number two DeSantis between and Haley. Yeah, I think we will see it be pretty pretty nasty and pretty ugly tonight. I'm looking forward to that debt a little bit. Nice Levie, thank you going to catch out you're one of the best. You're going to catch with a pimcot the vix at fourteen point eighty four. That is a Dana Ives market you, Senior Equity Research Channal web Bush. You refuses to talk to us when Apple learnings come out. We only get them to pick up the debris and we can tell for those of you on radio, you can understand these long Lily Pulitzer as well. This morning. Great, Look, Dan, I want to talk about your two forty call on Apple. You're not lonely. There's a few other people out there with dana Ives optimism on Apple. When I saw those margins and a company managing for profit not revenue growth, can you raise your two forty estimate? Yeah? Look, I think this is just the beginning of the next fees of the Apple store. You look at margins that are historical. You look what's happening on services now mid teen growth, and I despite the haters continuing to hate, is growing even when you take out currency and you it's even growing more asps the China iPhone demise story is a fictional Netflix story, and in my opinion, this is just the start of what I ultimately view is at three and a half to four trillion dollar market. So slow day, we got to make some news here. Can you pop from two forty up to two fifty this morning for us? Look, I believe that I believe are the best case or the bowld case is probably closer to to seventy five as this all plays out, because also now you don't have AI in those numbers. This is just the get out the popcorn moment for when Apple ultimately I believe, over the next year, introduces the AI app Store, and that's just going to be you know, ultimately from a services perspective, that could be an incremental five to ten fifteen millions. You made a couple of statements, so let's stroke down on them. We can do that. Your friends, you talked about growth at the iPhone. What growth are you talking about? So if you unit growth, units are growing into the December quarter, you also if you take out currency, which is a headwind, you have basically mid single digit growth. You've been talking about a massive boom of people upgrading. I guess my questions you dan to be polite about it. Have you been right for the wrong reasons on the stock to acknowledge that? I would say that ultimately, if you look at this, what I've used a mini supercycle that's playing out. The ASP stories played out, and I think our biggest call has been China. Despite many yelling fire in a crowd theater, the China growth is actually increasing, not decreasing. But they had a down quarter right in China. Well, if you look at China, Meanli in China was actually a record for the September quarter. When you look at the overall, you know, as Keen talks about the initial reaction after sure iPads, max that and three dollars get your cup of coffee, I'm focused on iPhones where units were up in China. Well, I'm struggling with that. And you'll appreciate this. If you came on today and say margins it better they are. I'm with you, Okay, Margins are great service revenues where the growth is that deserves a high multiple. I understand that maybe you can make the case for why the stock is high this year based on those things. When you say things like iPhone supercycles, when we've had no growth for four quarters in the company, that's where I struggle. Can you have the understanding this? So it's dissect that first. When you're thinking about the card five six hundred BIPs f X headwinds, that is actually underlying growth that you're seeing an iPhone units. Just to steady state it. I also believe our whole view of the iPhone cycle is really going to be over the next three, four or five quarters. That's where you're going to have these upgrades that actually come through. I'm not saying that you don't have some maybe share minor share of Watses on the sort of mid tier, but in terms of high end as a utility, this essentially is going to be a mid to high single digit growth on iPhone, and when you start to run that through, that could be an incremental one two three dollars earnings As you look out next two three years. There's a lot of growth already baked into valuation, and a big piece of valuation is where the buyers are going to come from. And you've been traveling around the world trying to hold everyone's hand and convince them that there is still value in big tech. How much do the losses of other areas of the tech like sphere and I'm thinking of Masioshi's Sun and the more than eleven billion dollars loss on we work. How much does that play into a little ambivalence about buying the story right now. Look, I think you're definitely having winners and losers in terms of this just broader economy, and I think in terms of the Magnificent seven. In terms of big tech, I think the strong gets stronger. But he said, to my point, you know, being an easier for a few weeks, and in Europe, you know, it's very easy to sit there here in New York on your tenth floor spreadsheet being negative on Apple. What I see out in the world is a much different environment in terms of the growth that happening. And I believe tech to your point, you're going to see the strong continuing to dominate. And I think in terms of AI, we are just in the early stages of monetization. I think that's a big thing in this tech ball market. Microsoft saw it in terms of AI, you're starting now see monization data dog that's a Hall of Fame quarter in terms of what we saw there, pallenteer the messy of AI, and I believe ultimately right now the AI gold rush is actually starting. That sounds lovely on that side. On the side of how much we're paying for price monetization and monetization of AI, am looking at Apple plus in sort of the amount that though that's increased, are we going to be paying six hundred dollars a month to Apple for all of our various services? Look, I think over in there, But to your point, I think over the next year or two, I think the average Apple user is going to start to definitely increase what they're paying Apple on the services because ultimately, as it goes out, the A I technology that's gonna be in fitness health in the app store, that's just going to give them just another added growth to the monization of Coupertino. And I think part of why the stocks reacted, you know, despite you know many I think being very negative initially, as it's come through, you know, to Pharaoh's point, iPhone, you're now starting to see grow services mid teen growth margins. This is just another you know, flex and muscles moment. And I think that's on a sum of the parts, how this is a stock that Ultimate is gonna be a four trillion dollar markup by twenty twenty five. Just picking up on penalty the messy of Ai. Why why are they the messy of Ais? Because I believe they are the pures play AI name in the market period. And and look, Palenteer is one where you know, many have been negative on that story for a number of different reasons. But I think what you're seeing now happen is that they've actually parlayd enterprise success and you're seeing the use cases explode. I believe Palteerman twenty five is are a base case, but that is the golden child of AIS. I'm gonna make some news any day now. Do I see another massive, mega billion dollar Apple debt offering. Look, I think that's something that you know clearly, you know could be on the table. I think the bigger thing for Apple is I think they're finally going to look at M and A, and we've talked about I think we got to extend the in They're gonna buy Disney by by the week. I believe ESPN is the asset that Ultimate by Okay, you but for that, I think thirty five to forty billion in terms of what bates transaction, but it could not beats three and a half billion. But also it goes back to the MLS deal that was I think where the light bulb went off in terms of live streaming sports. I think ESPN is a unique ass And look right now, you look at the top of this mound, it's Nodella, it's cook, you know, it's You're really starting to see ultimately more of an opportunity where they could go on the offensive ratherland defense. Okay, it's good to see you. Thank you, buddy Dennice of web Bush. It's joining us to talk about just how bad of a time this is for this to hit. Alexander Goldfarb, Senior Research and Analystic Piper Sandler. I want to start there, Alexander. There've been talks discussions around the number of leases that we work is going to abandon. Is the pressure on commercial real estate office space in particular in New York is it overstated right now or understated? Well, good morning Lisa and Tom, and thank you for having me on you know here at Piper Sandler. When we look at what is going on in office, it's it's eerily similar to what happened with malls. You know, over the past decade. If you recall, everyone pre pandemic thought every single mall going to close because everyone was going to shop online, and in fact what happened is the dominant malls like the Roosevelt Fields or Houston Gallerias continue to excel and lesser malls fall away. The same thing is with office. So if you look at we Work, which we don't cover we Work, but if you look at some of the fallout out in San Francisco, they rejected a bunch of leases. They did not reject one lease from Boston properties. When you look in San Francisco, when you look in New York, you know, companies like s Green Bornado have zero exposure now to WE Work because they exited those we Work leases over the past number of years, and even Boston properties only as one percent. So when you look at the fallout that's going to happen, and you look at the major reats and especially the ones that we cover here at Piper Sandler, the impact is negligible. And what's really interesting is when you look at office, especially here in New York, it's gravitating around Grand Central, and actually you're seeing rents increase on Park Avenue. So just like MAUL, the dominant office will survive the lesser the generic office. That's where the trouble is. So are you saying right now that the prices have baked in a lot of that trouble or that people just haven't been discerning enough to understand the winners versus the losers. Absolutely. If you speak to the brokerage community like Newmark, they are starting, They and Cushman and the other brokerage companies are starting to discern the difference between top tier versus generic, Class A, class B, etc. So when you look at what tenants want today, tenants want, you know, great space with a lot of amenities, convenient, convenient for commuters, and they want a landlord who has the capital wherewithal to invest in the properties. And let's face it, the brokers want to get paid a commission and you're seeing that fallout. It's no different than we've seen in retail. So again I use the mall example, Simon Property Group, you know with their billion dollars a year from task, so tenants know that they can be there the same as happening in reats with companies like sl Green. That's right where I wanted to go, Alexander, you are reading my mind. What is David Simon going to do with this folks? Simon Property Group Indianapolis three thousand employees. What is the guy from Indiana University can do? He's seen this before we come down. But my history is fresh money always comes in. When does the fresh money click in? If transaction to transaction, I'm down forty percent. Well, you are speaking David's mind. He loves cash flow. So since IPO, the company's paid out thirty nine billion in dividends, and the reason they've done that is by investing shrewdly. So when you look right now, he's very focused on investing in his malls. So apart from the Tallman acquisition, which was structured before the pandemic, he hasn't bought anything on the outside. His focus has been investing in the malls like out in Northgate and Sea out Of where they're converting it into a hockey arena, or Houston Gallera where they're adding office and apartments, etc. So that's where he's focused. But let's face it, given the challenges away from Simon. He can pick and choose. But if you look, he's making a ton of money out of his portfolio, which people forget is actually small. It's only one hundred and twenty malls and only two hundred or so domestic properties in total. So he's a large company but with a small powerhouse portfolio, right, Ben Alison, I got to make some headlines here. We're in the business and news, Alexander. There's blood on the streets. We see it in New York, and I get it. New York's its own little weird place, but there's all across the nation real estate blood on the streets. Are you saying your world of reats back to when you were at Lehman, your world of reads? Is it now a screaming by because of all the agony Lisa was just framing, So it's not a screaming buy in the sense that interest rates are high. Right, we have a tenure that was approaching five percent and it's now backed off a little. But certainly the financing market, which as you guys have reported, is basically shut down, right, CNBS market is tough. You walk into a bank and try to get a construction loan, they'll call the cops on you. They're like, we don't do that right now. Right, So lending is very tough. The transaction market is almost on ice because of the widespread what's interesting people missing? Tom, You're like my first boss at Liam and David Shulman. You've been around a number of decades. Real estate right now is benefiting from a phenomena that it has not had in a long long time, which is low supply because nothing new is getting built, and low vacancy. That combination is really powerful. And you started the show by saying, how is the credit going to get worked out? Again? As you as we've spoken before, back in the GFC, everyone was panicked about the CNBS. No one can tell you where the benchmark GG ten? What happened to that famous twenty two thousand and seven feel right, stuff gets worked out, Obviously there will be pain, there will be blood, for sure. But if you look at real estate's biggest benefit right now, it's that lack of supply and low vocacy. That's a huge positive that is underappreciated by the market. Just about thirty seconds. What happens if there's for selling, akin to re work, so we work is a tenant, so you don't really have force selling from that. But to be clear, banks where everyone's focused on, they're not in the business a running real estate, right. So as long as it's a good asset with a good sponsor, they're going to work out some deal. Because, as the old adage goes, a rolling loan collects no loss. That said, there's clearly going to be assets that will go back to the lenders. And those are the assets where the economics don't exist. That's the stuff to worry about. But the big properties like the three ninety nine Parks, the one Vanderbilts, those big centers or are going to be fine. And again, when you look at where the value in real estate is, it's a crewing at the top. But you're right there will be blood, and the blood it's going to be generic assets. Alexander Brilliant, Alexander Goldfire years of work at Piper Sandler now on real estate investment trust. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern. I'm Bloomberg dot com, the iHeartRadio app. Tune in and the Bloomberg Business App. You can watch us live on Bloomberg Television and always on the Bloomberg Terminal. Thanks for listening. 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Lori Calvasina, RBC Capital Markets Head of US Equity Strategy, says confidence across all sectors in the equity market remains fragile. Andrew Sheets, Morgan Stanley Chief Cross Asset Strategist, says that fiscal support at the federal and state levels is reducing the odds of a recession. Elliot Ackerman, Former White House Fellow, US Marine Corps Veteran & Co-Author of 2034: A Novel of the Next World War, says the urban warfare environment in Gaza poses major challenges to both sides. Terry Haines, Pangaea Policy founder, expects Congress to pass spending bills on Ukraine, Israel, and the Southern border before the end of the year. Tiffany Wilding, PIMCO Economist, North America, says the Fed may opt for future rate hikes. Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full Transcript: This is the Bloomberg Surveillance Podcast. I'm Lisa Abramoids along with Tom Keane and Jonathan Ferrow, joining us each day for insight from the best in economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business app. Lori Kelvacina joining head of US Equity Strategy to RBC Capital Markets. Do you agree with that that when you look under the hood, you're seeing massive breakdowns that are reflective of a great deal of pain that people really gloss over. I think that's fair, Lisa. I mean, I think Jana hit the nail on the head when she talked about small caps making a new low. I always tell people about small caps, even if you can't buy them, they tell you a lot about what's going on in the broader market. And I think what's going on is that they're really taking the brunt of the pain as regards to the big increase in tenure yields that we've seen now. Of course, the tech stocks and the cap part of the market are getting knocked around by that as well. But small caps, it doesn't matter to how many charts I can show people suggesting that the balance sheets are not that bad. People simply don't want to hear it. And there's a view that small caps are simply not going to be able to weather the storm that's created by the surge and interest rates, whether it's ten year yields or fed funds. And again, I have so many charts, Lisa that I've been showing people for the last six months saying, hey, small caps have done a good job of shifting towards long term debt, the variable rates down, the weighted average maturities are really not that bad on average about four and a half years. People simply don't want to hear it, Lisa. There's just been a long adage that small caps don't weather higher interest rates very well, and I think that's one of the big reasons why they're getting punished right now. Laurie, can you talk about sector performance within the small caps sectors, because I do think that the sectors are telling an interesting tale in small caps that maybe we're not picking up in large cups. So if you think about you know, think about it. From evaluation perspective, I will say that most sectors in small cap look cheap relative to their low large cap counterparts. But where it gets really interesting is on some of the cyclical sectors. So it's not just small cap financials that are dragging down the rustle two thousand from evaluation perspective. Healthy sectors from a fundamental perspective, like industrials, also look pretty cheap relative to large cap. In the small cap space, consumer discretionary stocks really look kind of left for dead if you look at valuations there. They're deeply, deeply cheap, and they were actually really down around recession type flows last summer. So we're really seeing that pain very very widespread. And given we are in the midst of earning season, is there anything that you're getting out of earnings that maybe is not getting picked up by the markets, considering the markets are so captivatd like what's happening in these macro indicators, So I think people are really misunderstanding what's going on with inflation moderating and what that does to companies. One of the things that we've seen when we compare our numbers versus the street consensus and we actually, you know, we use the Bloomberg data to monitor the street consensus and it does a really good job of articulating how margin expansion is baked into a number of different sectors next year. Well, in my modeling, we actually don't have margin expansion. We kind of have margins going back to twenty twenty two type levels. And one of the reasons why is that we don't give margins a big benefit from sliding inflation. We simply haven't seen a justification to do that in our back test. And when you go through all the transcripts, what we're really noticing is that companies are picking up on this. So the pricing discussion has simply gotten much much swishier, and companies are saying it's going to be a softer pricing environment. Of course, there are a couple that are out there saying they're going to raise prices to infinity and beyond. That's not really the norm here, And what we're really seeing is that companies are acknowledging that they're not going to have an excuse to push these prices through as the cost environment moderates, and so we're not going to necessarily see this big boon to margin expansion simply from cost coming down and prices staying high. And I think that's really what's embedded in a lot of street assumptions for next year. The Laurie I'd like to build on what Gina was referring to about sectors and specifically sector dispersion amongst large cap names, right. I mean it's usually out of ties sturn periods of distressed I'm thinking two thousand and two thousand and eight. Yet sector dispersion has been very high since the pandemic started. I mean, I wonder what you take from that. I mean, certainly we look at some of the interest rate sensitive sectors and how they've underperformed. I mean, is that going to continue? I mean, what's it going to take to kind of get these correlations the right way? So I'll tell you Damian what I feel like I've noticed in the sector data over the last couple of months. And this is looking at the S and P five hundred specifically, But it feels like anytime there's a part of the market that gets a little bit of leadership, it can't sustain it for that long. And I've described it as you know, sort of this sniper that goes out. Anything good we have just gets taken away. And we saw you know, utilities, you know, for example, was having a really nice moment late in the summer and then all of a sudden, just the bottom fell out. We've also seen energy just really kind of lose that luster, and I think the problem is that the market is losing confidence in any one narrative. We really can't get a rotation going because, on the one hand, tech stocks look expensive, they look crowded, they're earning stam it is starting to fade, and hey, interest rates are not usually a good thing for those stocks, so that's starting to take a toll. But anything the market wants to rotate into just can't seem to maintain its footing for all that long from a fundamental perspective either. So it's just been a real struggle, I think, both to find something to generate intercremental excitement in the market and to really allow that rotation to play out. Well, Laurie, I'm so happy you managed you mentioned utilities, because it's been utilities and consumer staples, those traditionally low beated, defensive sectors that have underperformed. I'm wondering, you know, how do you position defensively in today's market, so I think it's very tough. I've actually got an underweight on consumer staples. I'm neutral on utilities. I'm overweight healthcare. That one's had a tough time getting going as well. But to me, it's got the nicest combination of decent valuations. At least until recently, it's had strong earnings revision trends. We've seen the medtech space sort of take a little bit of a hit, and there's been a concern about the weight loss drugs that emerged. I've been trying to tell people that happened at a time when the medtech stocks looked like they were kind of over their skis from earning revision perspective anyway. But if you look in other areas like pharm a biotech, if you look at the providers in services space, you have a really nice kind of ramp up in earning provision trends that feels like it has more room to run. It's not a perfect story by any stretch, but other than the weight loss drugs, it does feel like it has less macro hair than say, utilities and staples. With staples, I will tell you my analyst is starting to feel a little bit better there, just based on the fact that we did have this big sell loss from the weight loss drugs and valuations, I will admit to you are pretty compelling, but I do continue to worry about that sector from just a pricing perspective. I think it's right at the sort of center of the storm I mentioned in terms of not being able to pass through higher prices for much longer. We're seeing those companies actually really talk about how consumers are pushing back. Laurie, What does it tell you that you can have the right idea in terms of the solidness of a corporate balance seat, that you can have the right idea about historical valuation, and that investors just won't bite that it doesn't actually work in trading practice. I think it tells you that, you know, so, whether it's the Middle East, whether it's interest rates, we're in a sentiment driven market at this point in time, and confidence is just very, very fragile. One of the things we've talked about, Lisa a lot this year is how twenty twenty two, twenty twenty three has felt a lot like twenty ten, twenty eleven, and two thousand and two two thousand and three, which were kind of messy extended post crisis normalization periods. I lived through both of those as a strategist, and what we saw was that confidence was just very fragile. There was a constant fear of the next skeleton coming out of the closet and blowing things up, constant fear of tipping into another economic downturn. And I think that's the environment we've been in recently, and so anytime we have issues that come up, there's just not a lot of confidence that either companies or management teams, or the market as a whole, or the economy is going to be able to weather the storm. And that kind of felt like it was easing over the summer, but I feel like we're getting sucked right back into that messy normalization period again where confidence is low. Laurie Kevesy, No of RBC Capital Markets, thank you so much for being with us. Andrew Sheets, global head of credit research at Morgan Stanley, is going to be on tender hooks parsing through all of this. What's most important for you this week? Thanks? So. I think several things are important. I think that confirming that the FED is pausing, and we do think that the FED will not raise rates, and that that can kind of further reinforce the idea that they are done raising rates for this rate cycle, which we think is important for generating and stabilizing bonds. And I think the earning season remains very important. I mean, again, you had this kind of interesting dynamic where so far the underlying reported earnings are pretty decent, but the guidance has been disappointing. The market's reaction to that has generally been to punish misses pretty severely, and we've seen quite a bit of idiosyncratic risk coming out of earnings single stock risk, which also matters. So those are two things that are at the top of our list. You also mentioned at the top of your list that fiscal policy is key across the US, across Europe, across China. Fiscal policy is playing an elevated role in market dynamics this year. Tell us about your views on fiscal policy. So, I do think the fiscal story is really interesting one that affects the US, it affects Europe, it affects China, and so you know, we focus on it in a couple of ways. I mean, my colleague Chetanaya, who's are head of Asia Economics. Yous just some great charts that show just how much fiscal policy in China and the US have diverged, where China's been tightening fiscal policy while the US has been loosening it. We do think that in order to get more bullish on China, we do need to see a larger response, a larger fiscal response than what we've seen so far in the US. I think the real key is how much can the States pick up the slack on the fiscal response side. I think there's a lot of focus, a lot of right focus on you know, we have these large deficits, these unusually large deficits in the US relative the strength of the economy. But if you go below the surface, the state and municipality spending actually holds up pretty well on our four pass over the next twelve months, and that keeps we think, the US economy out of recession and stable, even as federal spending pulls back a bit. But I think that's also really important and really important of how you can get a soft landing even with so much fiscal support from the federal government. In the rearview, mirror, and then how does this fiscal landscape actually impact your corporate credit strategy. I mean, obviously, as an equity investor, we're sort of engaged in this conversation somewhat, and there is a concern in the equity universe that some crowding out may occur as a result of these extraordinary deficits in high yields. Are you seeing any evidence of that? Is the fiscal landscape impacting your corporate strategy at this point? So? I think so far, ironically, you know what's been happening on the fiscal side, as I think been helping credit, and I think that's an absolute and a relative case. And in absolute terms, the fiscal support at both the federal and state level, I think as reducing the odds of a recession, is supported the economy and that's kind of obviously helpful for credit. But I think also in a relatives I think something that's been weighing on treasury markets has been the income. The carry is low because the curves inverted, you get paid more to hold T bills than extending out the curve. And then supply has been very heavy, or expectations of supply are high. And then if you look at the corporate credit market, it's kind of the other way around that the carry on corporate credit is positive, the credit curve is positively sloped, and issuance has been really undershooting expectations as companies, which I think have more flexibility than the federal government to issue or not are looking at these yields and we think are saying this is expensive borrowing. We're going to try not to do it to the extent we can. So you've seen less supply on the corporate market, especially the investment grade market, which we think is a relatively positive technical supporting that market. Andrew, if you go back to call it late June early July, I think you'd be hard pressed to find one fixed income asse class that was down on the year. But now we look at it and it's a completely opposite pit story. Here. The one asset class that stands out to me that is still up on the air as US high Yield. I'm curious to hear your thoughts on that, what's keeping it up and whether or not to consistain its current performance. So that's that's a great point. I mean, I think US Highield has been pretty remarkable in terms of how well it's hold up on a relative and absolute basis anything. I think with hindsight, it's been helped by the fact that yield's been rising, and generally investors, you know, look to high yield is actually a better performing historical sector and in rising yields at somewhat shorter duration. And then you've seen relatively little supply out of that market, especially because it's been so expensive for these more levered issuers, and so that's also helped technicals. But you know, going forward, and I think this has been a really key part you mentioned earlier on the show. You know, you look at what's happening at breadth in the equity market, you look at the underperformance of small caps relative to large caps, and I think that's still actually a relatively troubling signal for the future performance of high yield. I think if the equity market is saying, look, we're we're getting incrementally more cautious on smaller, more levered, more cyclical stocks, as long as that's happening, I think it's much it's hard to see the catalyst to drive further compression or more compression on spreads. So we think spreads decompressed from here. We think that there's already a lot in the price of high yields relative performance, even if we avoid a recession in the US, which remains our base case. Just quickly, Andrew, how concerned are you the Japanese buyers, in particular big corporate debt buyers in the US are going to pull back, especially with some of the adjustments we're expecting from the Bank of Japan. So we think that risk so far is moderate, but we do have to watch it. Again that the return on a hedged basis for a Japanese investor in the US corporate credit is not good, so we do need to watch that. We do need to see still if the flows on an unheedged basis continue. Our base cases that they do, but I think that's something subject to what we might see this week. Andrew Sheets of Morgan Stanley, thank you. There hasn't necessarily been the hardline escalation that some people were expecting with the ground invasion. Joining us to understand all of this is Elliot Akerman, someone with on the ground moots on the ground experience in Fallujah, US Marine Corps veteran, former White House fellow and co author of the twenty thirty four a novel of the Next World War. I hope we are not entering into another World War, Elliott Akerman. I want to get your sense of what you make around the fact that we have not seen a greater escalation and what the chances are for that at this point based on the measures taken. Well, I think what we've seen is very deliberate military movements on the part of the Israelis. I mean, pretty soon, we're going to be a month since the October seventh attacks and we haven't seen them rush headlong into Gaza. And then we've also seen the United States take measures by moving two carrier battle groups and other forces into the Mediterranean to dissuade the Iranians or Hezbolah from coming in from Lebanon and to the north of Israel. So this counter offensive is playing out in a really deliberative manner, and I think that so far we're seeing that that is stopping this war from turning into a regional contagion. Yet it does seem that most of the rhetoric or statements coming out of the region, Elliott, are about the war really continuing or at least get getting started. The ground troops really getting busy now, which would suggest that there's not a lot of endgame in sight. It seems that we're getting going and the assumption is that this is going to take some time to play out. Is there any resolution in your mind in the near term or is this another war that we're going to contend with for an extended period of time and very similar fashion to what's going on in the Ukraine. I think there's a tendency when we look at wars is we focus a lot on the movements of ground troops in the real specific and that that's important, of course, but it's also important to hold in your mind at the same time, you know, the idea that war is politics. It's politics by other means, What are the politic politics of this situation? And this attack on October seventh was, you know, by all accounts, launched as a counter to the Saudis and the Israelis signing a peace deal, a peace deal that would disempower Hamas and put Aroan in a very difficult position in the region, and so by basically forcing an atrocity on the Israelis, Hamas forces an Israeli response that causes that peace deal to collapse. So that's what we're seeing right now. So this kind of poses an obvious question, which is who is the party that actually has the leverage at this point. You know, Israel doesn't have a ton of leverage because they have to respond Hamas is waiting for that response. I would say the people who have the most leverage right now are the Saudis. You know, if the Saudis were to turn around and start renegotiating this peace deal at any point, it takes away all of the leverage that Hamas and Iran have created. And I think we have to as much as where you know, there's a lot of discussion about the fatigue that the world is going to have when we start seeing the Israeli military operating in Gaza and the civilian death toll. I think there's also some fatigue that the Arab world probably has with the Palestinian question, particularly in the context in which Hamas is inflaming tensions and could we see possibly a peace resumed out of the Arab world on this question, Elliott, your former marine five tours of duty in Iraq and Afghanistan. The one question I have for you is these tunnels underneath Gaza. How do you infiltrate these tunnels? I mean, what does that look like? I mean, I'm just curious, like, is there any precedent for that? Well, I mean there is historical precedents for that, But I can't emphasize enough just how challenging that operating environment is. You know, a major urban center is the worst place that you want to be fighting. The closest analogy I can come up with based off of my experiences in Fallujahs, it's like being in a knife fight in the phone booth. Everything happens at very close quarters and very very quickly, and many of the high tech weapons systems that armies like ours and like the Israelis Army are invested in they become much less effective because of the close quarters natures of the fighting. And these tunnels make it extremely complicated for the Israelis because they have to go in, they have to map out these tunnels, figure out where they are, and you also have hostages that are being held with these tunnels. So at the tactical level, you couldn't have posed a more challenging problem to the Israeli military. I don't believe it's insurmountable, but it's going to make it very, very slow going, and it forces them to act extremely deliberatively, which I think we've seen so far. Well, you said that it's not insurmountable, and I want to really develop that point a little bit because there are a lot of people saying, what does it mean to beat Hamas ken Israel win this war? What does winning look like? From your vantage point? What does winning look like? Again? I think winning at least is the Israelis have defined it is the destruction of Hamas and then some normalization or stasis in security in the region so Israelis can continue to live in all parts of Israel and southern Israel in particular. Now, when it comes to destroying Hamas, you know that is you know it's going to take some work, but that is tactically viable. I think the question is now, what do you do in Gaza? And do you face a protracted insurgency in Gaza? And I think when it comes to this idea of normalizing relations in the region, that's when we start to get into questions of diplomacy. You can Israel and can Arab partners negotiate with whatever the inheritors are of Hamas. Whatever that palaestin and the authority is to create stability in the region. We haven't gotten there yet. But again, you know what I'm seeing is we shouldn't underestimate the fatigue that also exists in the Arab world with this conflict, because it seems that the war was predicated on Hamas blowing up the best chance for peace that it ever existed. You talked about how Saudi Arabia arguably has the most leverage in all of this. We do have a Saudi official coming to Washington, I believe this week Axios was reporting. I'm wondering what the goal is among some of the Arab nations that have the leverage, have the power. I'm thinking, yes, Saudi Arabia, but also maybe to a lesser extent cutter and also the United Arab Emirates. What do they want? I think they want to live in a region that isn't played by this systemic war in Israel between the Israelis and the Palestinians, to allow peace to finally break out in the Middle East, and to live in a region in the world that isn't When it's spoken the Middle East, we don't immediately think conflict war in a place where security isn't assured, that maybe the Middle East can start to look a little bit more like Western Europe. I think that is probably what they want. I think that's what everybody wants. And again, I think we shouldn't underestimate the fatigue that exists on all sides of this conflict. Just twenty seconds. Do you think that their goal is for Israel to survive or not to survive? I think their goal is for Israel to survive, Elliott. I think it's I think it's difficult for them to say that, but yes I do. Elliot Ackerman, thank you so much for taking the time joining us now. Terry Haynes, founder of Pangea Policy, I want to start with Mike Johnson what we heard out of him over the weekend. How surprised were you to hear some of his points that sound very much like a playbook that comes for another time. Well, I wasn't a bit surprised. Acshually, I've been writing for markets for weeks that the strategy that would get pursued is, you know, breaking all these pieces apart instead of have you know, instead of Biden's idea that they should all be rolled up together. I think what markets ought to notice too, though, is what Johnson doesn't say. What Johnson doesn't say is he's four square against Ukraine Aid. Ukraine Aid shouldn't happen. That it won't happen, none of those things. You know. What we've got here. What I was always fearful about, and I think is coming true, is that this is going to become a fight about how all these things get done, these things being Israeli Ukraine aid, border security enhancements, and that's going to take up most of the rest of the year. But I do think they all get done in the end. So they get done. We continue to fund or support these two wars. Where do we cut spending in order to accommodate them, Well, we don't. Bottom line, we don't. You know. The good news and the bad news is really is that on book spending has really been consistent for the last decade plus, off book spending in our commitments, you know, whether it be to housing or to you A variety of other things that are kind of under the under the line continue to balloon. And that's a big problem. Washington has not yet gotten the memo from the markets that that that the markets, for the first time in forty years, are very concerned about rising debt, rising deficit, and rising US fiscal spending. There isn't a politician in Washington other than Biden himself that's ever heard markets be concerned about that. And you know, Biden's not in a position to care or do anything about it because he's beholden to his left wing who think that endless spending it is the right idea. Okay, so we keep spending. What about with China. There's a lot happening with China this week, which is interesting considering so much happening geopolitically around the world, and yet China Taiwan is lingering in the background. Tell us your views on what's happening with China? Is their meaning behind the meetings this week that we should be reading into, well, Gina, as you know very well, the you know, every time the markets here anything good from a US China perspective, and the a one is the prospect that Biden and President Ju Chiming might might meet on the sidelines of the APEC meeting next month. Uh. You know, the markets think this is a good thing, you know, but in reality, what they've been very China has been very blunt about is really through the National Security Law, through kicking a lot of Western accountants out, UH, now through UH providing through a conference this week more evidence of state control in a variety of areas in financial services. UH is a world that you know, as you all talked about in the last hour or so, where China looks increasingly uninvestable, and so I think the UH, you know, they've kind of the cats out of the bag on China, and even markets are starting to figure out that that there's not going to be any kind of long term rapprochmont between the US and China. The best we're going to get is a situation where the where the competitor and the clashers understand each other well enough not to take the next step into a rising yet again geopolitical risk. Terry former Vice President Penance pulled out of the twenty twenty four election this past weekend. You know, Trump leads the polling in some of these early states. I mean, it's still early days, obviously, but I mean I'm curious, do you believe we're past peak Trump? Is there anyone else in the GOP who can even make a run at him. Well, you know, I'll stick to my earlier views that I think we're a little past peakd Trump. What you've got in the early primary states, Damien, is a situation where you know, the polls right now are basically fifty percent or in favor of Trump, which means fifty percenter against him. You probe into the Trump support a little bit more, and you've got another quarter to a half who can be convinced otherwise. And as you point out, it is very early days. We've got, you know, basically two and a half months before the first almost a quarter of a year before the first primary season. So you know, my advice to markets is really twofold one, stay cool on this till after the first of the year when you have some idea of what's going on. Number one, number two. I think what you do see as a continued winnowing down of the competitors. We're already basically down to three. We're down to Hayley, DeSantis and Tim Scott as the leading challengers. Pence understood he wasn't part of that, so he's very honorably bowing out early. But what you're going to get, I think is a consolidation that happens earlier and provides a much more unexpected from markets perspective challenge to Trump than is now thought. Terry Mike Johnson is Speaker of the House, but is he the leading voice for House Republicans? And you know where I'm going with this, right, I mean, you've got Scalise emor Jordan. I mean, what happens to these to these gentlemen after their unsuccessful runs for Speaker of the House. You know, people people tend to view position new people in positions based on the people that were already there, So Mark, they're very used to that this strong speaker model, this kind of super majority leader position, whether it be Nancy Pelosi or McCarthy or you know, John Bayne or somebody else. In reality, what you've got with Johnson as a situation where the party regulars Scalise Emmer Jordan are more empowered now than they were before and they're really going to be leading the party much more than Johnson. That said, you know, one of the things Johnson also said on the Sunday shows, which bears underscoring, is that you know, they're looking much more seriously at extending government funding beyond November seventeenth than they would have been, say a month ago. So you know, so I have accordingly put my own odds back down to about forty percent. But I think the political situation's volt and I'll be ready to put him back up again, you know, if and when the Republicans fall apart, just quickly. Here we're talking about the Republican side and the nominees for the election. Why was Gavin Newsom in China ostensibly to talk about economic ties and all the rest. Really what he's doing is trying to do what he can to burnish his foreign policy chops. You know, there's a lot of sharks in the water now, and wouldn't surprise me if Biden's feeling like a ramorra a little bit and should they falter. And you saw evidence of that even with Vice President Harris' sixty minutes interview last night. But you know, Newsom wants to put him out out there as the alternative, himself out there was the alternative. Republicans would love that, because Newsom wouldn't get a vote outside the solidly blue states. Terry Haynes and PANGEA Policy, thank you so much. Joining us now is Tiffany Wilding, economist and managing director at PIMCO. So glad to have you on the show. We were talking earlier and Gina made this great point about how she thinks the pain trade is actually to the upside in equity markets. Things go better than expected, earning's coming stronger than expected. Is it the same with economic projections that the economy, if it reaccelerates, that's almost the pain trade right now, given more people are situated. Yeah, I mean, I think some of that has been quote priced into the economics, communities forecasts. I mean, you saw many economists that were penciling in a recession earlier in the year, you know, and obviously if you look at the consensus numbers, those have come up. I mean, certainly that can continue. And it's definitely been a risk that we've been highlighting as well, you know, in particular the consumer. You know, it's certainly possible the consumer remains strong. The consumer did basically re accelerate their you know, their consumption and their purchases into the back half of this year. You know, it's a question of how interest rate sensitive the consumer is, and it's proving to be not that interest rate sensitive right now, which raises a question also, Tiffany, what's the connection between growth and inflation. Is there a sense that if growth accelerates, you can still see the disinflation continue that we've seen so far this year. Yeah, I mean, so this has been a point that we've been trying to really hammer home, which is that it really, you know, there'll be some continued disinflation as a result of you know, the fact that you're still getting you know, the product market side of the economy, so the side of the economy that was impacted by some of these supply chain snags. You're still getting some normalization there, but labor markets are incredibly tight, and you are still seeing a pretty decent amount of nominal income growth as a result of that labor market improvement. And so, you know, we think you probably still need some labor market softening in order to just get inflation, you know, kind of more truly back down to target. Yeah. So if you have an economy that's reaccelerating in a labor market that's strong, you know you should this services X shelter kinds of metrics that the FED is looking at, those probably will start to re accelerate. Tiffany, what is the most important economic indicator you're watching this week. You know, obviously the jobs number, you know, is going to be incredibly important. You know. Now there's going to be some noise around that because there is some strike activity. But I think you know, everybody's trying to figure out what the underlying trend in the labor market is. You know, and as I mentioned, you know, if growth, so the FED or Reserve needs to target growth that's under potential. So that call it like around one percent is what the FED is opening to target in order to cool the labor market off. You know, growth right now looks like it's running at two and a half three, so it is well above that, which suggests the labor market is going to remain strong, you know, so well, you know, obviously we'll be looking at that. The wage number within the labor market report is obviously going to be very important as well. But overall, you know, we've said, if the data flow continues to be as strong as it was in September, you know, certainly the FED is probably going to want to keep its options open to hike more. We think the SEP could maybe even take out cuts for twenty twenty four just to try to keep those financial conditions tight. And where do you think this? What is the impact on financial prices? Then, so you've got the Fed likely to pause, You've got data still coming in reasonably strong. What are financial markets to do with this kind of data? Well, you know, I think, you know, obviously, kind of good news should be bad news in some sense, right, because the Federal Reserve is trying to cool off the economy, and ultimately the way they do that is through tighter financial conditions, and whether that's you know, higher interest rates or you know, a decline in equities, you know, maybe wider credit spreads, all of those things. You know, that's how you cool off the economy. And so if the economy remains strong, you know, then that's what we need more pricing like that in order to cool things off. Tiffany, there's been a lot of focus on the quarterly refinancing announcement. You know, my question for you is a simple one. Is the supply story in US treasuries already reflected in the price? Yeah? I mean I think this is a key question, you know. Now, I think it's actually broader than the refunding. I mean, clearly Treasury has had a big refunding need. You know, they've been trying to increase coupons, you know, as a result of the fact that you know, they have this bigger need and they were really ramping up bills. Now they're moving into coupons. I think the bigger issue here is that good growth, better growth expectations, is actually increasing people's expectations for supply. And that's that's not that's counterintuitive relative to usual experience because usually you have higher tax revenues and you know that reduces financing need. But right now with you have central banks that can just continue to you know, reduce their balance sheet for longer, or you know, the Bank of Japan, which you know really pulls away from you know, from buying jgbs. That results in more expectations for supply globally, and that's increasing term premium. Yeah, you know, so I think that is going to continue with the refunding. I mean, Tiffany or you're right in the wheelhouse here talking about the crowding out effect from Japan to the US, I mean foreign buying of treasuries. Where does the demand come from the Feds no longer backstopping things, you know, talk to about demand for US treasuries on a forward basis, you know, who is that marginal buyer, who's that marginal risk taker? Yeah, I mean that's that's what everybody's trying to figure out, right And the problem, I think, well, one of the issues is is that, you know, you kind of go back to twenty fourteen, twenty fifteen, twenty sixteen, where you had a good amount of bond yields that were negative and really the US was the only game in town. Well, now with interest rates just across the world much higher, it's possible to you know, to get you know, positive yielding assets outside of the United States right now. You know, some diversification of portfolios as a result of that is probably reasonable, you know. So I think it is the question of who's the marginal buyer, But not only who's the marginal buyer, but what price are they willing to pay and what yield do they need to get in order to come back into the bond market. Tiffany Wilding of PIMCO, thank you so much for being with us. Subscribe the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern on Blueberk dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and this is BloombergSee omnystudio.com/listener for privacy information.
Turkish President Recep Tayyip Erdogan is on a collision course with its Western and Middle Eastern allies after vigorously defending Hamas, declaring it to be a "liberation movement" rather than a terrorist organisation. The statement also appears to have ended more than a year of rapprochement efforts with Israel. To the rapturous applause of his parliamentary deputies, Erdogan delivered an impassioned defence of Hamas despite the group killing more than 1,400 Israelis earlier this month."Hamas Is not a terrorist organisation but a liberation group, a group of Mujahideen that is fighting to protect its soil and its citizens," bellowed Erdogan to a standing ovation from his deputies.Erdogan went on to accuse Israel of suffering from "mental illness" for its ongoing bombardment of Gaza, which has claimed over 7,000 lives, accusing the West of ignoring human rights in Gaza because its "Muslim blood being spilled".Erdogan's use of the Islamic phrase "mujahideen," meaning spiritual resistance, is seen as unprecedented by a country's leader, says Ilam Uzgel, an analyst for the Turkish news portal Kisa Dalga."To praise Hamas to define Hamas as a mujahideen, whereas all over the world, even those who support the Palestinians in the West and the Western societies, they put a distance against Hamas and they are critical of Hamas, and they dislike Hamas," Uzgel says.Strong tiesErdogan, who is religiously conservative, has always maintained good ties with Hamas.In July, he met with the political leader of Hamas, Ismail Haniyeh. But in the initial phases of Israel's Gaza assault, Erdogan held back from his usual fiery rhetoric against Israel despite growing condemnation by many opposition parties.Erdogan initially wanted to play a mediating role in the conflict, but the Turkish president's shift in rhetoric came with the realisation his overtures were being spurned."We've noticed that Secretary (of State) Tony Blinken is not passing by Turkey, going to Turkey, or really having an intense conversation with his Turkish counterpart," says Asli Aydintasbas of the Washington-based Brookings Institution."Even though Turkey is clearly a country that has a very close relationship with Hamas leadership and can play a role in terms of releasing of hostages. President Erdogan does not like to be ignored."Support rallyWith Erdogan's overtures to mediate in the conflict ignored, no regional foreign minister has visited since the outbreak of the conflict, the Turkish leader is now seen to be seeking to reap gains domestically.Erdogan has a significant religious political base. The Turkish leader has called for a mass rally in support of Gaza for Saturday, 28 October, where he is expected to ramp up his rhetoric in support of Hamas. But Erdogan may be making a severe miscalculation."I'm not sure if it may please the Turkish audience," warns UzgeI. "I think it was a mistake, a political mistake, that it would not bring Erdogan any votes, any sympathy, domestically or externally in the region and in Erdogan ties with the United States and Israel in the future. Israeli PM eyes visit to Turkey as rapprochement efforts continue"Hamas is not liked in the Middle East either. And the Saudis don't like it, the Egyptians don't like it, so there are no regimes that like Hamas except Iran and Qatar. So probably he will pay a price for this.A recent Turkish opinion poll found the majority of Turks want the country to remain neutral in the conflict. Turkey is grappling with soaring inflation and a cost of living crisis.Erdogan has been looking to Saudi Arabia and the United Arab Emirates for financial support. That financial support could dry up if Riyadh and UAE become uneasy over Erdogan's pro-Hamas stance.End to rapprochement?At the same time, Turkey's rapprochement with Israel appears over, with Israel strongly condemning Erdogan's Hamas stance.While Israeli-Turkish relations have a long history of managing highs and lows, this latest crisis could be different."Well, we know Israel and Turkey have managed in the past to overcome such low points in their relations," says Gallia Lindenstrauss, an analyst at the Institute for National Security Studies in Tel Aviv."And we have had basically continuous relations since 1949, when Turkey recognised the state of Israel."Since this is the second normalisation attempt that basically lasted less than a year or two, I think it will have a long-term effect. And next time around, when one of the parties will want to repair relations, thaere will be very strong criticism, saying we've tried this route, it doesn't work."For now, Turkey's Western allies have largely ignored Erdogan's outbursts.Israel has confined itself to a brief statement of condemnation, as international efforts appear to try and contain the deepening crisis in Gaza, with the hope Erdogan confines himself to just angry rhetoric.
Tim, Phil Labonte, Libby Emmons (The Post Millennial), & Serge join Scott Horton for a deep discussion and analysis of the history behind the Israel-Palestine conflict, Obama's role in the war in Afghanistan, Palestinian's claim to Israeli land, & Jewish American students rallying in support of Palestinians. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chances are if you've seen any of the high-quality, professionally-produced promotional videos from Saudi government authorities or leading Saudi companies anywhere online, you've seen some incredible drone footage of Saudi Arabia. The 966 welcomes on to the program for Episode 109 Mohammed Ghazi and Abdulhadi Azouz from the aerial drone production company AZAerials, which films many of these amazing shots for high-profile public and private sector entities including the Ministry of Tourism, Ministry of Sports, Saudia Airlines, Aramco, MDLBeast, the General Entertainment Authority, Riyadh Season, Netflix, and many others. They are the Saudi-based drone operators and film producers creating the footage from the skies using state of the art drone technologies giving the world a never before seen view of a changing Kingdom. They've also worked on several of Saudi Arabia's jaw-dropping "drone light shows" at major events, creating images in the sky using hundreds or even thousands of drones for spectators below. The 966 hosts discuss their journey as Saudis growing up in America who moved to the Kingdom recently to take advantage of the significant opportunities in the filmmaking and content creation industry in Saudi Arabia and how Vision 2030 has created an opportunity for them as entrepreneurs.Before the discussion, the hosts discuss Richard's One Big Thing, which is an overview of the Kingdom's efforts to create a car industry from scratch with a diversified set of investments and initiatives that are just now gaining traction in Saudi Arabia. Then the hosts discuss Lucien's One Big Thing, which is Saudi Arabia's forecasted non-oil economic growth in 2023 and beyond. Saudi Arabia's Finance Minister Mohammed Al-Jadaan addressed Saudi Arabia's economy and fiscal situation in 2023 and beyond during his speech at the FII in Riyadh, noting that Saudi Arabia's non-oil gross domestic product (GDP) is expected to grow by around 6% this year and said it would continue to see similarly healthy growth in the years ahead.The hosts conclude as always with Yallah! 6 top storylines on Saudi Arabia to get you up to speed heading into the weekend. •A White House readout reported that President Joseph R. Biden Jr. spoke with Crown Prince and Prime Minister Mohamed bin Salman about the situation in the Middle East region.•JPMorgan CEO Jamie Dimon, Citigroup's Jane Fraser and other top names on Wall Street were in Saudi Arabia for the 7th FII investment conference as they try to look beyond risks that the Israel-Hamas war could widen into a regional conflict and deal a new blow to the global economy. •Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday that recent multi-billion dollar acquisitions by U.S. oil majors Exxon Mobil and Chevron of smaller rivals showed that hydrocarbons were "here to stay".•A “boundary-pushing” esports festival is to take place in Saudi Arabia next summer. The inaugural Esports World Cup was announced by Saudi Crown Prince Mohammed bin Salman during The New Global Sport Conference and will be held annually.•South Korea's Hyundai Engineering & Constructionand Hyundai Engineering have signed a $2.4 billion contract with oil giant Saudi Aramco to build a gas processing plant, Seoul's presidential office said on Tuesday.•NEOM has today announced the inauguration of its strategic investment arm, the NEOM Investment Fund (NIF), NEOM's wholly owned subsidiary which is set up to support the buildout and development of NEOM's 14 priority sectors and deliver long-term value while enabling creation of jobs in NEOM.
[02:44]Saudi Arabia Clings to NegotiationsUnder pressure to cut off the Jews, the Saudis refuse because of a compelling motivation.“What Iran Fears”“The Real Power Behind Hamas”[15:07]Russia and China Have Grown More EvilWith specific events and a specific comparison, Jeremiah Jacques links events in Moscow and beyond directly to their only possible source.“World Leaders Who No Longer Have a Human Mind”[27:00]Watch CyprusA somewhat unique focus of the Philadelphia Trumpet over the years is Richard Palmer's main event from Europe this week.A Strong German Leader Is ImminentHe Was Right“Why Germany Conquered Cyprus”[37:31]A Win for America?The battle for leadership of the House of Representatives hints at a certain resurgence for a certain reason.America Under Attack[44:00]Roundtable: A Certain HateA historic hatred bubbles to the surface, a leading indicator for suffering that spreads far beyond its main target.“The One Minority Society Loves to Hate”theTrumpet.com: “Anti-Semitism”Subscribe to the Trumpet Brief e-mail newsletter here.Subscribe to the Philadelphia Trumpet magazine here.E-mail the host: letters@theTrumpet.com
Byron Donalds for the win? Join Trish Regan LIVE for a look at the “over under” on the Congressman from Florida who loves Trump but hasn't yet seemed to make enemies of his colleagues. If selected, he'll make history as the first black speaker of the House. Trish sat down with him to hear his story. It's one of empowerment and success. Join Trish with her Byron Donalds interview LIVE. Plus, updates on several fronts coming from the House Oversight Committee must be discussed. ****SPECIAL CALL OUT TO MY VIEWERS**** Please join me in helping to support those in need in Israel right now. I've partnered with the International Fellowship for Christians and Jews to raise money for their emergency fund. The money goes to assist Israelis in some of the hardest-hit areas. Thanks to your generosity, we were able to provide more than 1,000 hot meals to the victims of these terror attacks, as well as some toys for the children. You can contribute by clicking this link HERE : https://bit.ly/IFCJTrish or, by CALLING: 1-800-248-8881. Also, I would like to THANK our Show Sponsor https://LegacyPMInvestments.com for offering to MATCH all of your donations. CEO Charles Thorngren texted while we were live on air and said his firm would match all dollars that you donate. So, this helps to compound our efforts. Please consider whatever you can, even if just $1. CLICK HERE TO DONATE: https://bit.ly/IFCJTrish OR CALL 1-800-248-8881 Subscribe to the whole audio show on Apple Podcasts: https://apple.co/3ZHdJOk Today's show sponsored in part by: https://LegacyPMInvestments.com Call 1-866-589-0560 00:00:00 Meet Byron Donalds - The Potential Speaker of the House 00:10:33 Biden administration faces criticism 00:16:39 Middle East conflict grows more serious 00:29:11 Ilhan Omar's controversial statements 00:33:43 Rashida Tlaib criticizes the Trump administration. 00:40:05 Obama's Iran deal criticized. 00:49:19. Iran's actions disrupt Middle East peace. 00:53:39 Media bias in reporting conflicts. 00:58:31 Media bias in Israeli-Palestinian conflict. 01:09:18 Believe in opportunity and success. 01:11:17 Stay positive and be grateful. Check out my Live Free merch! https://trishregan.shop/ Follow me on: Instagram: https://www.instagram.com/trish_regan/ Twitter: https://twitter.com/trish_regan Facebook: https://www.facebook.com/RealTrishRegan #trishregan #trishreganshow #thetrishreganshow #trish #trishreacts #exposed #business #economics #finance #economy #financialnews #news #livenews #live #breakingnewsSupport the show: https://trishregan.shop/See omnystudio.com/listener for privacy information.