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Fed Survey, Cisco Cuts, US Election · Bloomberg Intelligence

• 0:00
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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• 0:25
  Speaker 3: The other main mover of this week is what's going
• 0:27
  Speaker 3: to be happening with the Fed. We got Jackson Hall
• 0:29
  Speaker 3: in a couple weeks, FED Susan Collins coming out today
• 0:33
  Speaker 3: saying that rakecuts could be soon if inflation keeps falling.
• 0:37
  Speaker 3: She says, my outlook for continued gradual reduction back to
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  Speaker 3: our two percent target amid a healthy labor market. That
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  Speaker 3: doesn't says to me. That does not say to me
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  Speaker 3: a fifty basis point cut in September or an emergency
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  Speaker 3: rate cut. So let's go to Steve Matthews Bloomberg, a
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  Speaker 3: Federal Preserve reporter. Steve, are we still thinking about a
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  Speaker 3: fifty basis point cut or an inter meeting cut because
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  Speaker 3: I have not seen the information from the FED to
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  Speaker 3: back that up.
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  Speaker 4: Yeah, you are exactly correct. I mean the markets are
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  Speaker 4: pricing in the likelihood of a fifty basis point cut
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  Speaker 4: in September. We have heard from you know, the Kansas
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  Speaker 4: City FED president last night, the Chicago FED president, Boston
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  Speaker 4: FED President Richmond. None of them are saying, you know,
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  Speaker 4: anything that would indicate that we're going to get fifty
• 1:26
  Speaker 4: basis points.
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  Speaker 5: And of course there is a lot of data.
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  Speaker 4: We get CPI next week, we'll have another I mean,
• 1:34
  Speaker 4: the meeting is not until mid September. We'll get another
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  Speaker 4: jobs report, We'll get another CPI report. I mean, we'll
• 1:41
  Speaker 4: get two CPI reports. So there's a lot of data
• 1:45
  Speaker 4: that could sway things. But from what we've been hearing
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  Speaker 4: so far, there's no indication that the Fed is interested.
• 1:51
  Speaker 4: And in fact, what Powell said Chair Powell at the
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  Speaker 4: last press conference, which was just last week, was that
• 2:01
  Speaker 4: they were not thinking about fifty basis points, and there's
• 2:03
  Speaker 4: no reason to believe that that's changed.
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  Speaker 1: I found that fascinating the extent to which the calls
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  Speaker 1: for fifty basis points developed their own momentum. But it's
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  Speaker 1: interesting now to see this survey that really sort of
• 2:15
  Speaker 1: puts that to rest in a certain sort of way.
• 2:17
  Speaker 1: But I guess I wondered if you could talk a
• 2:19
  Speaker 1: little bit about the remarks from the Fed recently that
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  Speaker 1: they're going to be putting increased weight on the full
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  Speaker 1: employment mandate. What does that mean as a practical matter,
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  Speaker 1: and what should investors be looking for between now and
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  Speaker 1: the meeting.
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  Speaker 4: Well, what that means is really for the last two years.
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  Speaker 4: I mean, inflation peaked two years ago at if you
• 2:39
  Speaker 4: look at CPI, it was over nine percent. By the
• 2:41
  Speaker 4: Fed's measure, it was over seven percent. And at that
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  Speaker 4: point they were focused strictly on what can they do
• 2:49
  Speaker 4: to bring inflation down? And you also had the unemployment
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  Speaker 4: rate under four percent. Now you have the unemployment rate
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  Speaker 4: which has risen to four point three percent and has
• 3:01
  Speaker 4: been rising, you know, somewhat unexpectedly more than the Fed
• 3:06
  Speaker 4: expected anyway, And therefore they're saying, we're going to be
• 3:10
  Speaker 4: paying attention to both sides or our mandate. We're not
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  Speaker 4: just focused on inflation, even though inflation hasn't quite come
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  Speaker 4: down to two percent. So it's not just the inflation
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  Speaker 4: figures it will matter. It will be the employment figures
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  Speaker 4: it will matter. And those that are predicting fifty basis points.
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  Speaker 4: And they change a couple of big firms, JP Morgan's
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  Speaker 4: City Corp City Group changed their calls to fifty basis
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  Speaker 4: points after the last jobs report, and that was because
• 3:40
  Speaker 4: the job's report was very disappointing.
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  Speaker 5: But they're kind of making the.
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  Speaker 4: Assumption that that is not just an outlier, that that's
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  Speaker 4: going to continue.
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  Speaker 5: So we'll see if they're right.
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  Speaker 3: So to that point, we only have about a minute left.
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  Speaker 3: But if the Fed wants to walk back market expectations
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  Speaker 3: while also acknowledging they're going to have to cut in
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  Speaker 3: the econ of he's not as great, how do they
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  Speaker 3: do that.
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  Speaker 4: Well, you've seen pushback from a bunch of FED presidents.
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  Speaker 4: In two weeks we will get presumably it's not been
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  Speaker 4: formally announced, but every year Jerome Powell speaks at Jackson Hole,
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  Speaker 4: so presumably he will be speaking and in two weeks
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  Speaker 4: at the king City FED conference in Jackson Hole, and
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  Speaker 4: that will be a key event where he can push
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  Speaker 4: back against expectations if he chooses to, and if not,
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  Speaker 4: you know, you have Vice Jared Jefferson. It's like sometimes
• 4:37
  Speaker 4: he will come out and give speeches or TV interviews,
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  Speaker 4: and you.
• 4:42
  Speaker 5: Also have a Chris Waller, the governor is very.
• 4:44
  Speaker 4: Influential and you could hear him be speaking between now
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  Speaker 4: and then as well.
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  Speaker 3: All right, we appreciate that, Thank you very much. Joining
• 4:53
  Speaker 3: us with Steve Matthews, a Bloomberg a Federal Reserve reporter.
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  Speaker 3: So I have to wonder, Jen, is it just going
• 4:58
  Speaker 3: to be like sit tight see you and Jack? Is
• 5:00
  Speaker 3: that what we're dealing with here?
• 5:02
  Speaker 1: You say sit tight, but I mean anyone who was
• 5:04
  Speaker 1: on their quote unquote vacation this week will come back
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  Speaker 1: to find that there had been a nasty market surprise
• 5:09
  Speaker 1: come back.
• 5:10
  Speaker 3: They came back already and there were definitely us sitting
• 5:12
  Speaker 3: in there desk training there at that point.
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  Speaker 6: It's true.
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  Speaker 3: We do get CPI next week, so let's not totally
• 5:16
  Speaker 3: forget about that. Plus retail earnings, which should be quite fun.
• 5:21
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• 5:39
  Speaker 3: All right, this was quite a week in the market.
• 5:41
  Speaker 3: Here's some superlatives for you. The SMP has now fallen
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  Speaker 3: for four weeks in a row, the longest weeks since
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  Speaker 3: September of twenty twenty three, the Nasdaq one hundred is
• 5:49
  Speaker 3: down five weeks, the work Streek since May of twenty
• 5:53
  Speaker 3: twenty two. I could do this for a while, So
• 5:55
  Speaker 3: let's just get to someone professional here, Adam Kuhne's chief
• 5:57
  Speaker 3: portfolio manager. I went through a capital manager joins us. Now, hey, Adam,
• 6:02
  Speaker 3: what has How do you categorize Maybe this is a
• 6:05
  Speaker 3: better question, how do you categorize the last week in
• 6:07
  Speaker 3: the market chaotic?
• 6:11
  Speaker 7: I mean, you know, I think the market has spent
• 6:14
  Speaker 7: the last year or so trying to look into a
• 6:18
  Speaker 7: crystal ball and determine what the FED is going to do,
• 6:21
  Speaker 7: and they keep getting it wrong. I think this is
• 6:23
  Speaker 7: probably another case where a little bit of a knee
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  Speaker 7: jerk reaction to just a couple of data points, and
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  Speaker 7: I think we're going to need to see a lot
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  Speaker 7: more for the FED to really take any action to
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  Speaker 7: decrease interest rates at this point.
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  Speaker 1: So what's your call on how people should be thinking
• 6:40
  Speaker 1: about this? Is it something where people should just sit tight,
• 6:42
  Speaker 1: or is there some positioning recommendations you've got?
• 6:46
  Speaker 7: Well, I mean, the data is still real least showing
• 6:50
  Speaker 7: that things are slowing and things are deteriorating to a degree.
• 6:53
  Speaker 7: I think just the you know, magnitude of it is
• 6:56
  Speaker 7: still uncertain. And really it's the point about the determining
• 7:00
  Speaker 7: what the FED is going to do with the data
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  Speaker 7: in the next couple of months. And so I think
• 7:04
  Speaker 7: when you look at how to position a portfolio right now,
• 7:09
  Speaker 7: it is still wise to start to.
• 7:11
  Speaker 8: You know, position more defensively.
• 7:12
  Speaker 7: You've got to look at maybe not necessarily decreasing your
• 7:17
  Speaker 7: equity allocation, but maybe increasing to things like quality. You know,
• 7:21
  Speaker 7: if you're looking at the factor exposures, you're increasing quality,
• 7:24
  Speaker 7: You're decreasing some of your high beta growth, maybe looking
• 7:28
  Speaker 7: at you know, more dividend paying type stocks, and maybe
• 7:31
  Speaker 7: even looking at some value. So I think you want
• 7:34
  Speaker 7: to start to just start to tilt towards what what
• 7:36
  Speaker 7: most would kind of consider lower vall you know, somewhat
• 7:40
  Speaker 7: defensive names within an equity strategy. But ultimately, I mean,
• 7:45
  Speaker 7: I think the best trade right now still are long
• 7:48
  Speaker 7: duration bonds. I mean, no matter what the FED does,
• 7:52
  Speaker 7: I think when you look at, you know, what trade
• 7:54
  Speaker 7: has an asymmetric restor reward profile, it's still that very
• 7:59
  Speaker 7: seemingly boring trade. Because if the FED sits tight. Most
• 8:03
  Speaker 7: likely they're going to really kind of push the economy
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  Speaker 7: to further downside because they've held off too long. But
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  Speaker 7: then if they do start to decrease rates, you'll start
• 8:12
  Speaker 7: to see interest rates come down and you'll benefit from
• 8:14
  Speaker 7: that too. So I think those are two different ways,
• 8:17
  Speaker 7: whether you're in the fixed income space or whether you're
• 8:18
  Speaker 7: in the equity space.
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  Speaker 8: How we're playing it right now, is.
• 8:21
  Speaker 3: It also an opportunity to buy the dip? I mean,
• 8:23
  Speaker 3: I mentioned that the Nastaq one hundred has its worst
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  Speaker 3: streak now since May of twenty twenty two, because it's
• 8:28
  Speaker 3: down about five straight weeks. A truist said, look, you
• 8:32
  Speaker 3: know there's a double dig percentage sell off. Let's go
• 8:34
  Speaker 3: buy some technology sector. Let's move it to overweight. Is
• 8:37
  Speaker 3: that all supposed to ategy here?
• 8:39
  Speaker 8: I do, And it's kind of in that same category.
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  Speaker 7: Is I would buy the dip, especially in tech, but
• 8:46
  Speaker 7: particularly in the higher quality tech. And once again it
• 8:49
  Speaker 7: probably is more of a you know, somewhat of a
• 8:51
  Speaker 7: boring trade. But looking at your names like Alphabet, Meta, Microsoft,
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  Speaker 7: that's where you.
• 8:58
  Speaker 8: Want to buy the dip. Where I wouldn't buy the dip.
• 9:00
  Speaker 7: Up our names like Tesla, I'd still be cautious on
• 9:03
  Speaker 7: the video here, even though there is still momentum. I'd
• 9:05
  Speaker 7: really look at the companies that have a strong business
• 9:08
  Speaker 7: model that can sustain some level of growth, some level
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  Speaker 7: of free cash flow, even if we do see the
• 9:15
  Speaker 7: economy rollover. So I think would be particular in where
• 9:18
  Speaker 7: you're buying the dip and not just outright buying you know,
• 9:21
  Speaker 7: the market or just buying the Nasdaq.
• 9:23
  Speaker 8: You want to find, you know, pockets of value.
• 9:26
  Speaker 7: Within the SMP or you know, where you're looking to
• 9:30
  Speaker 7: buy stocks.
• 9:31
  Speaker 1: Can you talk a little bit more, just to dig
• 9:32
  Speaker 1: in a bit to your views on in Vidio, because
• 9:34
  Speaker 1: I remember the last quarter when I was on this
• 9:37
  Speaker 1: show and we spoke so much about Invidia and they
• 9:39
  Speaker 1: were just such a bell weather for the AI mania,
• 9:42
  Speaker 1: for the enthusiasm for tech. You know there's still to come.
• 9:46
  Speaker 1: What is your read on what we're going to see
• 9:48
  Speaker 1: from them?
• 9:51
  Speaker 7: Yeah, I mean I think, look, big tech is starting
• 9:54
  Speaker 7: to decelerate their spend on things like semiconductors and so
• 9:59
  Speaker 7: that it will be somewhat of a weight headwind per
• 10:04
  Speaker 7: se to the substantial growth at Navidia scene. So I
• 10:07
  Speaker 7: think this earnings will be a little bit of a
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  Speaker 7: tell of what we're going to see in the next
• 10:10
  Speaker 7: few quarters.
• 10:12
  Speaker 8: This quarter will probably be just fined. I don't think
• 10:14
  Speaker 8: you're going to see the results of that.
• 10:15
  Speaker 7: It's really the go for the four guidance kind of
• 10:19
  Speaker 7: how the conversation goes with management on what they're seeing
• 10:23
  Speaker 7: coming up. And I think we're going to see some
• 10:26
  Speaker 7: level of deceleration. And unfortunately, because of the way Navidia's
• 10:30
  Speaker 7: price the high valuation, that sets it up for potentially
• 10:35
  Speaker 7: a bigger downside. We obviously saw it with Intel, and
• 10:38
  Speaker 7: I think that's a little bit of a different story.
• 10:40
  Speaker 7: That's just a mess altogether. But the fact that you
• 10:42
  Speaker 7: could see a name like Intel down twenty five percent
• 10:46
  Speaker 7: in one day on earnings, I don't think Navidia is
• 10:50
  Speaker 7: at least they're not immune from that. If the growth
• 10:54
  Speaker 7: story shows some level of slowing, I think you can
• 10:57
  Speaker 7: see investors move away from that type of name really quickly.
• 11:00
  Speaker 3: Yeah, those ticks aren't supposed to move like that, and
• 11:02
  Speaker 3: that was a really intense move. So we're definitely setting
• 11:05
  Speaker 3: ourselves up for a very big last week of August,
• 11:08
  Speaker 3: that's for sure. There's been some question over the last
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  Speaker 3: couple of days as to if the sell off we
• 11:12
  Speaker 3: saw was technical in nature, spurred buy were overbought, the
• 11:16
  Speaker 3: carrier trades unwinding a little bit, We triggered some technical
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  Speaker 3: levels versus an actual growth scare.
• 11:23
  Speaker 6: Where do you come down on that?
• 11:24
  Speaker 3: And I asked that because it also depends on how
• 11:26
  Speaker 3: you look at things like bonds, how you look at
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  Speaker 3: things like corporate credit.
• 11:31
  Speaker 7: Yeah, so I think you want to look a little
• 11:33
  Speaker 7: bit deeper than just what the market did. And you
• 11:35
  Speaker 7: got to look at what volatility did and the volatility
• 11:39
  Speaker 7: of that volatility. So you know, when you look at
• 11:41
  Speaker 7: the Vicks spiking the way it did, or if you
• 11:44
  Speaker 7: look at you know, if you're a bond trader, if
• 11:45
  Speaker 7: you're looking at the move indection, you look at interest
• 11:47
  Speaker 7: rate volatility. Both had significant moves to the upside. And
• 11:51
  Speaker 7: that tells me this was more than just a technical trade.
• 11:53
  Speaker 7: This was this was really people starting to become fearful
• 11:57
  Speaker 7: of because this market has had so much much, so
• 12:00
  Speaker 7: much momentum to the upside, and because valuations are somewhat stretched,
• 12:05
  Speaker 7: you know, it's hard to know where the bottom is,
• 12:08
  Speaker 7: and so investors tend to during those periods of time,
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  Speaker 7: they tend to be more reactive, and I think that's
• 12:15
  Speaker 7: what we saw last week, was it was more that
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  Speaker 7: kind of emotional reaction to Okay, is this, it is this?
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  Speaker 7: And I think everyone's still a little bit scarred from
• 12:24
  Speaker 7: you know, seven o eight and how destructive that was.
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  Speaker 7: And by no means is this that type of scenario.
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  Speaker 7: But I think you see investors that are quick to
• 12:31
  Speaker 7: want to get out of harm's way, you know, when
• 12:34
  Speaker 7: they start to see the data or the markets somewhat deteriorate,
• 12:38
  Speaker 7: they they're quicker to get out.
• 12:40
  Speaker 8: I think that's what we saw.
• 12:41
  Speaker 7: So there's probably a technical piece of it, but I
• 12:43
  Speaker 7: do think it was emotional somewhat fundamental, because people are
• 12:50
  Speaker 7: just scared of, you know, where it could go, and
• 12:54
  Speaker 7: especially if the FED. You know, if the FED is
• 12:58
  Speaker 7: going to be slow to react, I think that will
• 13:00
  Speaker 7: increase the fears even more because we have seen a
• 13:04
  Speaker 7: FED that's somewhat you know, they were slow to increase
• 13:07
  Speaker 7: interest rates on the bat, you know, at the front
• 13:10
  Speaker 7: end of the cycle, when we start it was queer
• 13:12
  Speaker 7: that inflation was picking up, and they used the transitory narratives,
• 13:15
  Speaker 7: they were slow to increase interest rates. There is a
• 13:18
  Speaker 7: fear that they're going to be slow to decrease interest rates,
• 13:21
  Speaker 7: and maybe they wait too long.
• 13:23
  Speaker 8: And so that's what we're.
• 13:24
  Speaker 7: Starting to see, that the market trying to just digest
• 13:26
  Speaker 7: all of that information coming to them at once, and
• 13:29
  Speaker 7: that's why you saw such a big reaction just on
• 13:31
  Speaker 7: a couple of data voids.
• 13:32
  Speaker 1: Can we shift the conversation a little bit over to
• 13:35
  Speaker 1: corporate credit and other areas of the credit markets, because
• 13:38
  Speaker 1: I've been looking at this over the whole year, and
• 13:40
  Speaker 1: we've just seen corporate spreads grind tighter and tighter and tighter,
• 13:44
  Speaker 1: but also at the same time, a lot of money
• 13:46
  Speaker 1: go into other safety plays like mortgage backed securities. So
• 13:50
  Speaker 1: can you talk a little bit about what the relative
• 13:52
  Speaker 1: value is there though, because I was looking at a
• 13:54
  Speaker 1: chart earlier this week and the returns for corporate credit
• 13:57
  Speaker 1: have just absolutely fallen off a cliff, whereas more have
• 14:00
  Speaker 1: really held up.
• 14:03
  Speaker 7: Yeah, So I mean part of that is that's the
• 14:06
  Speaker 7: risk portion of where you are in the kind of
• 14:08
  Speaker 7: bond spectrum, whether you're in a treasury or mortgage or
• 14:12
  Speaker 7: just flat out credit. And I think what we've seen
• 14:14
  Speaker 7: what you're seeing with like you said, credit returns falling
• 14:17
  Speaker 7: off a cliff really is that they're not immune to
• 14:21
  Speaker 7: the reactions of the market like you saw in the
• 14:22
  Speaker 7: equity markets, especially in high yield bonds. They become quite
• 14:27
  Speaker 7: correlated when things are moving to the downside and volatility
• 14:30
  Speaker 7: picks up. So it's no different here when you're looking
• 14:33
  Speaker 7: at a mortgage backed security. These are still very high
• 14:35
  Speaker 7: quality assets. They don't have the duration moves that like
• 14:39
  Speaker 7: a treasury would, but they tend to be very stable
• 14:42
  Speaker 7: during periods like this where there is heightened volatility. So
• 14:44
  Speaker 7: that's why we like these in a portfolio because you
• 14:47
  Speaker 7: pick up that additional yield coupon over a treasury, but
• 14:52
  Speaker 7: you have more stability like you would see out of
• 14:54
  Speaker 7: a treasury.
• 14:55
  Speaker 6: All right, Adam, golly it there, thanks a lot. Appreciate it.
• 14:57
  Speaker 3: Adam Kuhn's chief portfolio manager. When Thrope Capital Management.
• 15:02
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• 15:17
  Speaker 3: Let's get to the tech news here. So Cisco potentially
• 15:20
  Speaker 3: laying off thousands of workers. This is reporting from Reuters.
• 15:24
  Speaker 3: It could look very similar to what we heard back
• 15:26
  Speaker 3: earlier in this year when they laid off about five
• 15:28
  Speaker 3: percent of its workforce. Dan, I've stand up leaf for
• 15:31
  Speaker 3: us managing director and senior equity analyst at Wedbush Securities.
• 15:34
  Speaker 3: He's in Tokyo. He's been a real trooper, staying up
• 15:38
  Speaker 3: quite late. Hey Dan, what do you make of this
• 15:40
  Speaker 3: headline from Reiters that Cisco could lay off thousands in
• 15:43
  Speaker 3: their second job cut this year.
• 15:45
  Speaker 9: Look, I mean they continue to have struggles Somewhere's what
• 15:48
  Speaker 9: we see with Intel, and I think you're really seeing
• 15:52
  Speaker 9: almost a have and a have nots in tech and
• 15:54
  Speaker 9: I think Cisco is struggling and this just speaks to
• 15:59
  Speaker 9: some of the I think issues they're gonna have a Look,
• 16:01
  Speaker 9: you cannot cut your way to growth, and that's going
• 16:05
  Speaker 9: to be the issue for Cisco going forward.
• 16:09
  Speaker 1: Well, you know, just looking a little bit more at
• 16:11
  Speaker 1: that point that you can't cut your way to growth.
• 16:13
  Speaker 1: I mean, this is not obviously the only company that's
• 16:15
  Speaker 1: doing job cuts. I mean, what's your Alex was just
• 16:18
  Speaker 1: talking about this at the start of the hour. What's
• 16:20
  Speaker 1: your take on how what the legs are, what the
• 16:22
  Speaker 1: momentum is for job cuts in the industry. Are these
• 16:25
  Speaker 1: all one offs? Or is this something that we're going
• 16:27
  Speaker 1: to be seeing more of.
• 16:29
  Speaker 9: Look, Cisco is in the right lane going to forty
• 16:31
  Speaker 9: five miles an hour, and so many of the rest
• 16:34
  Speaker 9: of tech and AI they're in Bugatti going one hundred
• 16:37
  Speaker 9: miles an hour in the left lane. And I think
• 16:39
  Speaker 9: what's going to happen here is you'll continue to see
• 16:42
  Speaker 9: a layouts being Look, if you looked up disaster and
• 16:44
  Speaker 9: the dictionary, see Intel, look at Cisco. It's having to
• 16:49
  Speaker 9: have nots. There's actually a lot of growth that's happening
• 16:52
  Speaker 9: in tech in terms of what we're seeing from hiring,
• 16:55
  Speaker 9: but it's really the strong they're getting stronger. But look,
• 16:57
  Speaker 9: that's why Cisco did Spunk acquisition. They're gonna have to
• 17:01
  Speaker 9: really do that through M and A.
• 17:02
  Speaker 3: Well to that point, then, is this just basically companies
• 17:05
  Speaker 3: are diverting a lot of their spending to AI stuff,
• 17:08
  Speaker 3: so their other stuff is not being spent on, which
• 17:10
  Speaker 3: hurts guys like Cisco. You can also make an argument
• 17:12
  Speaker 3: that it hurt five to nine, for example, the software company,
• 17:15
  Speaker 3: Like is that what we're seeing?
• 17:18
  Speaker 9: Look, I think to some extent, book. Cisco's had struggles
• 17:22
  Speaker 9: for decades. I mean, it's really been on the wrong
• 17:25
  Speaker 9: side of trends. They're trying to get into the right
• 17:26
  Speaker 9: side of the trend. Book AI is disrupting sales, it's
• 17:31
  Speaker 9: taking spending from other areas. And that's why the strength
• 17:35
  Speaker 9: we see in Microsoft and now bat Amazon of course
• 17:38
  Speaker 9: godfather of AI, Jensen Navinni and others, you also see
• 17:42
  Speaker 9: weakness in others and that's why intact, it's really you're
• 17:45
  Speaker 9: either on one side or the other, and right now,
• 17:48
  Speaker 9: unfortunately Cisco's on the outside looking in.
• 17:51
  Speaker 1: Can you talk a little bit about the equity sell off,
• 17:53
  Speaker 1: and you know, I've seen some comments that this is
• 17:55
  Speaker 1: remove some of the froth in big tech and maybe
• 17:58
  Speaker 1: it's a time to get back in. What do you
• 17:59
  Speaker 1: make that.
• 18:01
  Speaker 9: I think this is a golden fine opportune. I mean
• 18:04
  Speaker 9: that's always been our view in terms of these macro
• 18:08
  Speaker 9: fear white knockle events. The AI party is still nine
• 18:12
  Speaker 9: pm in a part that goes to four am, and
• 18:15
  Speaker 9: we're gonna have scares. I'm not gonna say it's gonna
• 18:18
  Speaker 9: be one hundred percent smooth, but everything we're seeing fundamentally
• 18:22
  Speaker 9: and what we're seeing from our chests continue to show
• 18:24
  Speaker 9: growth is gonna be there, and I think we're gonna
• 18:27
  Speaker 9: see this technical market it has sea legs, but look
• 18:30
  Speaker 9: the bears they've been rought. You know, bears have been
• 18:33
  Speaker 9: and obviously has it on this and they'll continue to
• 18:36
  Speaker 9: come out. In terms of fears like we saw this week.
• 18:41
  Speaker 3: Do you think what kind of risk event do you
• 18:43
  Speaker 3: think in video earnings at the end of the month
• 18:44
  Speaker 3: is going to because I think we have Jackson Hole
• 18:46
  Speaker 3: in the same week, so it's gonna be a lot.
• 18:48
  Speaker 3: Plus it's the last week in August right into Labor
• 18:50
  Speaker 3: Day weekend. What risk event are we set.
• 18:52
  Speaker 5: Up for here?
• 18:54
  Speaker 9: I think that's again at the popcorn moment in terms
• 18:57
  Speaker 9: in video. I mean, even if you have a TSMC
• 18:59
  Speaker 9: in some the breadcrumbs going on to this robust demand
• 19:03
  Speaker 9: in terms of what we see and I think right
• 19:06
  Speaker 9: now the street needs to see that to just give
• 19:09
  Speaker 9: further creates what we saw in Microsoft Polunteer Alphabet Service
• 19:14
  Speaker 9: now and others in terms of monization happen AI. But
• 19:17
  Speaker 9: that's me one of the most anticipated earnings calls for
• 19:21
  Speaker 9: hearing from Jensen and Nvidio probably in the last four
• 19:24
  Speaker 9: or five years, So.
• 19:26
  Speaker 1: Let's look past that earning call and we're looking at
• 19:29
  Speaker 1: late September. We've had perhaps of twenty five basis point
• 19:32
  Speaker 1: fed Reid cut, maybe even fifty. But what we're also
• 19:36
  Speaker 1: going to be seeing is probably more evidence that the
• 19:38
  Speaker 1: economy is slowing. So what does that do to the
• 19:41
  Speaker 1: demand story for all of this AI?
• 19:46
  Speaker 9: Look but right now, I mean balance treat is healthy
• 19:49
  Speaker 9: is they probably have ever been. I mean if you
• 19:50
  Speaker 9: go back to the last decade or more and you
• 19:53
  Speaker 9: look at a once in a forty year cycle in
• 19:56
  Speaker 9: terms of AI spend, and as this sort of colm
• 20:00
  Speaker 9: as a Goldilock scenario plays out, we get through September,
• 20:05
  Speaker 9: I think twenty twenty five numbers come up in terms
• 20:08
  Speaker 9: of tech, and you're gonna have more and more investors
• 20:12
  Speaker 9: needing to play these names going into the next year
• 20:15
  Speaker 9: because of where the growth is. And I think that
• 20:18
  Speaker 9: continues to be the issue. Growth is in tech and
• 20:22
  Speaker 9: that's why I'd rather pay up to play these names
• 20:26
  Speaker 9: that continue to outperform.
• 20:28
  Speaker 6: Let's go to TSMC.
• 20:30
  Speaker 3: You mentioned that so sales sord forty five percent in July,
• 20:35
  Speaker 3: accelerating his pace of growth from that June quarter, and
• 20:39
  Speaker 3: that's all about this on demands for AI. Just walk
• 20:44
  Speaker 3: me through when you see these kind of numbers, like
• 20:46
  Speaker 3: what goes through your head?
• 20:48
  Speaker 9: Look, it goes back to any of the bears that
• 20:50
  Speaker 9: have been sitting in those caves in hibernation mode the
• 20:54
  Speaker 9: last eighteen months when they say AI is hype, Look
• 20:57
  Speaker 9: at those numbers. It goes these sacktops and then I
• 21:01
  Speaker 9: think we'll see the same with Nvidia. We saw Microsoft
• 21:03
  Speaker 9: and others. That is eye popping growth. That speaks to
• 21:08
  Speaker 9: the demand story that's happening. You contrast that with Cisco
• 21:12
  Speaker 9: and others. That's where the growth is. That just gets
• 21:15
  Speaker 9: further in further credence to the AI revolution playing out.
• 21:21
  Speaker 1: So looking further ahead, Oh, she's like going like twenty
• 21:24
  Speaker 1: twenty five.
• 21:25
  Speaker 6: No, No, you went to the ray gut.
• 21:26
  Speaker 1: I went to the cut. No, there's one more event
• 21:28
  Speaker 1: into twenty four that I would like to discuss. Presidential election.
• 21:32
  Speaker 1: Is this something that the AI play even cares about
• 21:34
  Speaker 1: or is it just kind of let's just make sure
• 21:36
  Speaker 1: everything goes smoothly and then we can continue with business
• 21:39
  Speaker 1: as normal.
• 21:41
  Speaker 9: Well, I think it does because ultimately if a Trump
• 21:45
  Speaker 9: you know, presidency, if that ultimately happened, I mean that
• 21:48
  Speaker 9: you could argue that would be maybe negative for the
• 21:50
  Speaker 9: AI trade in terms the tariffs. What that could do
• 21:53
  Speaker 9: China US China could tech war. A Harris ticket getting
• 21:58
  Speaker 9: in would probably be more bullish for tech and especially
• 22:01
  Speaker 9: even on tech M and A. I think it would
• 22:03
  Speaker 9: be probably positive there. And depending what happens a FTC
• 22:07
  Speaker 9: and CON So you could argue that that's something that
• 22:10
  Speaker 9: the mark is trying to figure out in terms of
• 22:12
  Speaker 9: there's Trump trade tension reversing and now what that means
• 22:15
  Speaker 9: A Harris in terms of AI, the biggest issue comes
• 22:18
  Speaker 9: down to China. Harris ultimately would probably be a little
• 22:21
  Speaker 9: more bullish relative to that some of what we've seen
• 22:25
  Speaker 9: Trump would be negative.
• 22:27
  Speaker 3: Before I let you go down when you take a
• 22:30
  Speaker 3: look at the winners, right just hit me up with
• 22:32
  Speaker 3: some of the losers right now.
• 22:35
  Speaker 9: I mean losers are Intel, m H, Cisco. I think
• 22:40
  Speaker 9: a lot of the legacy tech You could argue, like
• 22:43
  Speaker 9: even some of the IT services are probably net losers here.
• 22:48
  Speaker 9: And in terms of the winners, I think that's clear.
• 22:51
  Speaker 9: But that's why it's a having to have nots and
• 22:54
  Speaker 9: I think it's becoming more and more evident. And also
• 22:56
  Speaker 9: just could you say Ai forty times in our conference calls.
• 22:59
  Speaker 9: I mean you're an AII.
• 23:00
  Speaker 3: Player, right right, And I feel like we learned that soon.
• 23:04
  Speaker 3: I feel like the first quarter when in video had
• 23:05
  Speaker 3: that breakout. Okay, if you said the word Ai, that
• 23:07
  Speaker 3: was cool, and after that we changed.
• 23:10
  Speaker 6: Dan. Another question, do you sleep when you're there?
• 23:12
  Speaker 3: Because I say that because I've seen you on TV
• 23:15
  Speaker 3: at like six am and then I've seen you on
• 23:17
  Speaker 3: the clothes with me at like four pm and you're
• 23:19
  Speaker 3: in Tokyo and there's a time change, Like do you
• 23:20
  Speaker 3: sleep when you're there or what happens?
• 23:23
  Speaker 9: I do sleep. It's been an unusual week, given you
• 23:28
  Speaker 9: know what's happened here in Tokyo and across the markets.
• 23:31
  Speaker 9: But yeah, I do sleep, and I'll be sleeping a
• 23:34
  Speaker 9: lot this week.
• 23:35
  Speaker 6: Okay, that you will?
• 23:36
  Speaker 5: All right?
• 23:37
  Speaker 3: Damn we appreciate it. Dan, i'ves joining us from Tokyo,
• 23:40
  Speaker 3: joined us from Webbush.
• 23:42
  Speaker 2: There you're listening to the Bloomberg Intelligence Podcast. Catch us
• 23:48
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• 23:51
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• 23:54
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• 23:58
  Speaker 2: Just say Alexa play he Bloomberg eleven.
• 24:02
  Speaker 3: I'm Alex Steele alongside Jen Ryan. Paul Sweeney is non
• 24:05
  Speaker 3: sunning himself on the beach on this Friday. This is
• 24:08
  Speaker 3: Bloomberg Intelligence Radio. We bring you all the news in business,
• 24:11
  Speaker 3: economic and finance through our lens of our Bloomberg Intelligence folks.
• 24:13
  Speaker 3: They cover two thousand companies and one hundred and thirty
• 24:16
  Speaker 3: industries worldwide. We also love checking with Bloomberg News. They
• 24:19
  Speaker 3: do amazing work, in particular the Big Take. They really
• 24:23
  Speaker 3: go deep into stories that we need to know that
• 24:25
  Speaker 3: are really important, whether you're in the markets or whether
• 24:28
  Speaker 3: you just live in the world as a person. And
• 24:30
  Speaker 3: one of them really deals with the election here in
• 24:33
  Speaker 3: the United States, but from an economic point of view.
• 24:36
  Speaker 3: Shaan don and Bloomberg News senior economics writer is joining
• 24:39
  Speaker 3: us and this Big Take is the swing state economic
• 24:42
  Speaker 3: realities shaping the US election. We can talk about the
• 24:45
  Speaker 3: drama that's unfolded over the last month all we want,
• 24:48
  Speaker 3: but the economics are going to win. Sean, what did
• 24:50
  Speaker 3: you guys find in this exploration for the Big Take?
• 24:54
  Speaker 10: Yeah, look, poll after poll shows the economy is the
• 24:57
  Speaker 10: top issue on voters' minds, even as we're talking all
• 25:00
  Speaker 10: the turmoil in the candidate ranks in recent weeks, So
• 25:04
  Speaker 10: we took a deep dive into the seven swing states
• 25:07
  Speaker 10: that are really going to decide a selection and look
• 25:09
  Speaker 10: at the economy there, and what you find is that
• 25:13
  Speaker 10: as a group, that battleground economy as we call it,
• 25:16
  Speaker 10: has been growing more slowly than the rest of the
• 25:21
  Speaker 10: United States since twenty nineteen. Effectively, in other words, as
• 25:27
  Speaker 10: a group, it's had a slower recovery from the pandemic
• 25:30
  Speaker 10: recession than the rest of the United States. Now there
• 25:32
  Speaker 10: are outliers within that. Arizona is a much happier story
• 25:36
  Speaker 10: on the economy than a place like Wisconsin. But really,
• 25:40
  Speaker 10: when we think about what we get from voters is
• 25:44
  Speaker 10: that they care about the economy. We look at the
• 25:47
  Speaker 10: states that are going to matter most in the election,
• 25:49
  Speaker 10: these swing states, and we look at what's happening in
• 25:51
  Speaker 10: the economy there, and the reality is it's a different
• 25:54
  Speaker 10: economic picture than what you've seen in the rest of
• 25:56
  Speaker 10: the United States. And that could be an obstacle for
• 26:00
  Speaker 10: Kamala Harris Vice President Harris as she kind of wears
• 26:04
  Speaker 10: the legacy of the Biden administration in the last few
• 26:06
  Speaker 10: years in the economy and takes that into November.
• 26:10
  Speaker 1: Are there any common threads that tie these swing states
• 26:14
  Speaker 1: together that would explain why it is that they're struggling
• 26:18
  Speaker 1: so much with growth versus the rest of the nation.
• 26:21
  Speaker 1: I mean, they'll all have their own unique stories, but
• 26:24
  Speaker 1: is there anything that they've got in common.
• 26:27
  Speaker 10: Look, I mean the thing that they have in common
• 26:29
  Speaker 10: this year is simply politics, right. I mean, these are
• 26:31
  Speaker 10: for different reasons. These are the seven swinging states that
• 26:34
  Speaker 10: both sides see as the real battleground. But if you
• 26:38
  Speaker 10: can split the states into the seven into two different groups,
• 26:42
  Speaker 10: you have what are called the Blue All States, the
• 26:44
  Speaker 10: old industrial states, and the common theme there is a
• 26:48
  Speaker 10: higher dependency on manufacturing. They have not seen the big
• 26:52
  Speaker 10: boost in manufacturing jobs that some other states have seen
• 26:56
  Speaker 10: in recent years, and they've seen much lower growth as
• 27:00
  Speaker 10: a group. In fact, that those Blue Wall states grew
• 27:04
  Speaker 10: at just a third of the rate of the rest
• 27:06
  Speaker 10: of the United States when you count for population changes
• 27:09
  Speaker 10: and inflation changes and look at what we call real
• 27:11
  Speaker 10: GDP per capita. On the other side, you have the
• 27:15
  Speaker 10: Sun Belt states like Arizona and Nevada and places like
• 27:20
  Speaker 10: North Carolina and Georgia, which have seen a much happier
• 27:23
  Speaker 10: story in terms of manufacturing employment. We've seen semiconductor plants
• 27:27
  Speaker 10: go into Arizona. We've seen new manufacturing jobs go into
• 27:31
  Speaker 10: Nevada and North Carolina and Georgia, which is a big
• 27:34
  Speaker 10: beneficiary of big electric vehicle investments. But you see another
• 27:39
  Speaker 10: thing dragging on the economies. There are certainly on voters'
• 27:42
  Speaker 10: mines there and that is housing prices in those places
• 27:46
  Speaker 10: are really going for crazy. We went to Washoe County, Nevada,
• 27:49
  Speaker 10: which is up where Reno is and Nevada is a
• 27:52
  Speaker 10: state where you would spend a medium household in Nevada
• 27:57
  Speaker 10: would spend nineteen percent of its inc come on a
• 28:00
  Speaker 10: median house in twenty nineteen. That's now up close to
• 28:04
  Speaker 10: thirty seven percent, wow of m And that's just a
• 28:08
  Speaker 10: huge change in people's realities. Rents are higher, it's just
• 28:13
  Speaker 10: a whole different level of problems. Those are very different
• 28:17
  Speaker 10: from what you see in the Blue Wall states. But
• 28:19
  Speaker 10: the you know, again, these are states that have been
• 28:21
  Speaker 10: brought together and that really are a group only because
• 28:24
  Speaker 10: they're the ones that matter in this election.
• 28:26
  Speaker 6: So Georgia in particular, it's focused there. For a second.
• 28:29
  Speaker 3: You write in the article that nominal GDP has grown
• 28:31
  Speaker 3: almost twenty five percent since twenty nineteen, but in real
• 28:34
  Speaker 3: per capita terms, the economy has grown by just two
• 28:36
  Speaker 3: and a half percent in that time. Now, some of
• 28:39
  Speaker 3: the things like the Chips Act, Infrastructure Act, even the
• 28:42
  Speaker 3: IRA a lot of like Georgia, for example, is getting
• 28:46
  Speaker 3: some of that money. Is that like a good thing
• 28:49
  Speaker 3: or bad thing short term because it's going to bring
• 28:51
  Speaker 3: more people to the state, But is that helpful for
• 28:54
  Speaker 3: those that actually still live there now?
• 28:57
  Speaker 10: Well, I think the way to think about what's happening
• 28:59
  Speaker 10: in Georgia is there's a bigger pie in terms of
• 29:02
  Speaker 10: the GDP in Georgia, but there's more people to share
• 29:07
  Speaker 10: that pie, which means that the slice that everyone's getting
• 29:11
  Speaker 10: is only a tiny bit bigger two and a half
• 29:14
  Speaker 10: percent bigger than it was in twenty nineteen. And you
• 29:18
  Speaker 10: see when you go to a place like Atlanta and
• 29:20
  Speaker 10: drive through cyburbs, you see, you know, the housing price
• 29:24
  Speaker 10: issues that I was talking about with Nevada, but you
• 29:27
  Speaker 10: also see any traffic, you see other issues. And I
• 29:30
  Speaker 10: went out to Jackson County, which is on the kind
• 29:33
  Speaker 10: of eastern fringe of Metro Atlanta. It's one of the
• 29:36
  Speaker 10: fastest growing counties, both in terms of population and in
• 29:40
  Speaker 10: terms of economic growth.
• 29:42
  Speaker 2: In the county.
• 29:43
  Speaker 10: It used to be a largely rural place. It's gotten
• 29:45
  Speaker 10: a big battery plant, Korean owned battery plant that's moved
• 29:50
  Speaker 10: in that's making batteries for Ford and Volkswagen. You but
• 29:56
  Speaker 10: you talk to you know, I sat down with a
• 29:57
  Speaker 10: guy called Jim Shaw. He's a former banker who runs
• 30:00
  Speaker 10: the local Chamber of Commerce and does economic development for
• 30:03
  Speaker 10: the county, and he says, you know, we're kind of
• 30:04
  Speaker 10: chasing our tails here because we're creating jobs in this county,
• 30:09
  Speaker 10: not for people who are here, but for people who
• 30:13
  Speaker 10: need to come here to fill those jobs. And there's
• 30:18
  Speaker 10: a lot of resentment locally about that growth. What's happening
• 30:22
  Speaker 10: with housing prices, what's happening with traffic. And you're starting
• 30:25
  Speaker 10: to see local communities put the pap the brakes, and
• 30:30
  Speaker 10: and and put new residential developments on hold, and and
• 30:33
  Speaker 10: and and take a pause really to kind of think
• 30:36
  Speaker 10: about the type of growth that they want. You know,
• 30:39
  Speaker 10: that's a that's in some ways that's a great position
• 30:43
  Speaker 10: to be in. You've got this incredible growth, but you're
• 30:46
  Speaker 10: starting to see a real kind of you know, some
• 30:49
  Speaker 10: real questions creep in about on the ground in these
• 30:53
  Speaker 10: places about that growth.
• 30:55
  Speaker 6: Hey, John, we really appreciate it. Thank you so much.
• 30:57
  Speaker 3: Shawn Don and Bloomberg News senior economics writer joining us
• 31:01
  Speaker 3: on The Big Take, and you can read more of
• 31:02
  Speaker 3: this story on the Bloomberg and at Bloomberg dot com
• 31:05
  Speaker 3: slash Big Take.
• 31:09
  Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
• 31:13
  Speaker 2: weekdays at ten am Eastern on applecar Play and Android
• 31:16
  Speaker 2: Auto with the Bloomberg Business App. You can also listen
• 31:19
  Speaker 2: live on Amazon Alexa from our flagship New York station,
• 31:22
  Speaker 2: Just Say Alexa Play Bloomberg eleven.
• 31:25
  Speaker 3: Thirty from Alex Stee alongside Jen Ryan. This is Bloomberg
• 31:29
  Speaker 3: Intelligence Radio. We bring you the top news and business,
• 31:33
  Speaker 3: economics and finance through our lens of our Bloomberg Intelligence Team.
• 31:35
  Speaker 3: They cover two thousand companies and one hundred and thirty
• 31:37
  Speaker 3: industries worldwide. Paul Sweeny is off setting himself. It's actually
• 31:41
  Speaker 3: a little lighter out. I don't think it's raining, and
• 31:43
  Speaker 3: he is at the beach.
• 31:44
  Speaker 1: I don't know, I can't really see some blue sky
• 31:46
  Speaker 1: from here, but I don't think I could anyway, Yeah, fair.
• 31:48
  Speaker 3: Enough, right, Well, Jen and I are here. We are
• 31:49
  Speaker 3: holding down the Ford. It was a week, obviously, a
• 31:52
  Speaker 3: week that was. Here's some stats for you. The S
• 31:55
  Speaker 3: and p's falling now for four stree week's longest streaks
• 31:58
  Speaker 3: and September twenty twenty three nas Tek one hundred down
• 32:01
  Speaker 3: five weeks worth streak since May of twenty twenty two.
• 32:03
  Speaker 3: A real divide happening within tech and the have and
• 32:06
  Speaker 3: have nots Ack of my Technology the best performing stock
• 32:09
  Speaker 3: on the S and P up by almost ten percent,
• 32:11
  Speaker 3: and Intel one of the worst, down by about four percent.
• 32:14
  Speaker 3: Obviously Cisco and the crosshairs there with those reports of
• 32:17
  Speaker 3: layoffs of thousands in a second job round, What do
• 32:20
  Speaker 3: you do?
• 32:21
  Speaker 6: How much risk do you take on?
• 32:22
  Speaker 3: Erica Mashmeyer is portfolio manager at Columbia thread Needle Investments.
• 32:26
  Speaker 3: She joins US now from Chicago, Illinois. Erica, how much
• 32:30
  Speaker 3: risk should one have on right now?
• 32:34
  Speaker 11: I think we are still in a place where you
• 32:37
  Speaker 11: benefit from having a relatively balanced portfolio, profitable companies with
• 32:43
  Speaker 11: good competitive positions growing. That said, historically, when the VIX
• 32:49
  Speaker 11: has been high, it has been a good time to
• 32:51
  Speaker 11: start to layer on risk, and I think you can
• 32:54
  Speaker 11: do that in a couple of different ways, right through
• 32:57
  Speaker 11: your growth company's software company is that have been more
• 33:02
  Speaker 11: ignored at the expense of AI hardware, and then also
• 33:06
  Speaker 11: with more cyclical construction housing related names.
• 33:10
  Speaker 1: But before this market craziness started this week, I mean,
• 33:13
  Speaker 1: the market was already looking really quite frothy. So it's
• 33:17
  Speaker 1: been a dip for sure, but it hasn't been enough
• 33:20
  Speaker 1: of a dip that some of that froth has been
• 33:22
  Speaker 1: removed and there's really some decent room for people to
• 33:24
  Speaker 1: get in.
• 33:27
  Speaker 5: Well. I think the.
• 33:28
  Speaker 11: Froth was really more on the megacaps, right, the part
• 33:32
  Speaker 11: of the market that admittedly is the biggest part of
• 33:36
  Speaker 11: the market, and it was larger than many countries.
• 33:39
  Speaker 12: But it was a pretty bifurcated market. There was an
• 33:44
  Speaker 12: easy trade, right The easy trade was by US large
• 33:48
  Speaker 12: cap tech and short everything else out there. We started
• 33:53
  Speaker 12: to see that dispersion pick up last quarter, which I
• 33:58
  Speaker 12: think is fair because we had earnings potentially decelerating for
• 34:03
  Speaker 12: that group. I think a lot of the outperformance was
• 34:05
  Speaker 12: fair because you know, the large cap stocks were growing faster.
• 34:10
  Speaker 11: But there are more more cracks in that, and I
• 34:13
  Speaker 11: think that there are plenty of areas that don't have
• 34:17
  Speaker 11: froth at all.
• 34:18
  Speaker 6: What do you buy then if there's the there's no froth.
• 34:21
  Speaker 6: We kind of been through it.
• 34:24
  Speaker 3: Maybe the rotation into say Smiths are still still up
• 34:27
  Speaker 3: for grabs. I mean the Russell has underperformed and then
• 34:30
  Speaker 3: Slash outperformed when we had to sell off over the
• 34:32
  Speaker 3: last couple of days.
• 34:33
  Speaker 11: But nonetheless, yeah, I mean I think, right, the valuation
• 34:39
  Speaker 11: advantage for for small caps has you know, small mid
• 34:43
  Speaker 11: has has been there for a while, right, the table's
• 34:45
  Speaker 11: been set for a while, uh for for for there
• 34:48
  Speaker 11: to be a rotation there.
• 34:49
  Speaker 12: It hasn't happened for good reasons.
• 34:51
  Speaker 5: Right.
• 34:51
  Speaker 11: You need, I think a macro to be study, and
• 34:55
  Speaker 11: you need the earnings growth. We have been living through
• 34:57
  Speaker 11: this choppier macro. I you know, from our team has
• 35:01
  Speaker 11: been paying attention to the economy from a rolling recession
• 35:04
  Speaker 11: recession perspective ever since we had COVID which led to
• 35:09
  Speaker 11: big booms and bus So you know, from here we
• 35:12
  Speaker 11: think that in small mids software there are some interesting,
• 35:16
  Speaker 11: interesting names. You know, that's a group that has been
• 35:21
  Speaker 11: more ignored at the expense of AI hardware areas.
• 35:26
  Speaker 12: They've you know, admittedly.
• 35:28
  Speaker 11: Had some weaker some some weaker sales cycles because the
• 35:34
  Speaker 11: CFOs of the world are looking to get rid of
• 35:36
  Speaker 11: software at this point and not add more. But I
• 35:39
  Speaker 11: think that we're going to hit the point where, you know,
• 35:41
  Speaker 11: there are a lot of these companies that are adding
• 35:43
  Speaker 11: real value and growing. You know, we own Zeta Global,
• 35:47
  Speaker 11: which is a small cap stock that is actually up
• 35:50
  Speaker 11: over one hundred and sixty percent year to date, but
• 35:52
  Speaker 11: is still relatively cheap versus other software names. I think
• 35:57
  Speaker 11: at the same time, you have pretty much anything short
• 36:01
  Speaker 11: cycle manufacturing, industrial construction that has a lot of opportunity
• 36:09
  Speaker 11: and potential for upside as we start to get rate cuts.
• 36:13
  Speaker 11: We own top Build, which is a company that is
• 36:17
  Speaker 11: an insulation insulation distributor and supplier, and they just reported
• 36:23
  Speaker 11: this week and still a relatively inexpensive stock. They missed slightly,
• 36:30
  Speaker 11: gave a slightly worse guidance range, but stock got hit.
• 36:35
  Speaker 6: But this is one they'll.
• 36:36
  Speaker 11: Continue to take share, executing very well, and as soon
• 36:40
  Speaker 11: as we get rate cuts, some of these projects that
• 36:43
  Speaker 11: have been delayed will will start to actually happen.
• 36:47
  Speaker 1: You know, I did want to ask you about rate
• 36:49
  Speaker 1: cuts because you're mentioning a number of sectors that have
• 36:51
  Speaker 1: been overlooked and could benefit from rate cuts. But how
• 36:55
  Speaker 1: big a rate cut do they need at this point?
• 36:58
  Speaker 1: Is twenty five basis points going to be the start
• 37:00
  Speaker 1: of a firing gun that gets things moving again? Or
• 37:03
  Speaker 1: do they need the fifty basis points that some big
• 37:06
  Speaker 1: players have been calling for.
• 37:09
  Speaker 11: I don't think that we need a fifty basis point cut,
• 37:13
  Speaker 11: and frankly, I think it's low probability, and I think
• 37:17
  Speaker 11: if that happened, it would be more likely to spook.
• 37:19
  Speaker 12: The market from a macro perspective.
• 37:20
  Speaker 2: Right.
• 37:21
  Speaker 11: The Fed only does that when you have something really
• 37:24
  Speaker 11: really wrong, and so I think that would be a
• 37:25
  Speaker 11: sign that the economy is broken, which I just don't
• 37:30
  Speaker 11: think that it is. We haven't gotten that sign right
• 37:32
  Speaker 11: where everything we see says that we are in a downturn,
• 37:36
  Speaker 11: we're in a period of slow growth, we're reacting to
• 37:40
  Speaker 11: rates that are higher. All very normal things and essentially
• 37:44
  Speaker 11: what the Fed intended to do with higher rates. There's
• 37:47
  Speaker 11: nothing that's saying that, Okay, this is a disaster, we
• 37:49
  Speaker 11: need to cut fifty basis points to get things moving.
• 37:51
  Speaker 11: I think if we get a twenty five basis point cut,
• 37:54
  Speaker 11: and the path is clear. I think it's the path
• 37:57
  Speaker 11: that matters more than the magnitude.
• 38:00
  Speaker 6: To the inside. Erica, I know it's been a very
• 38:02
  Speaker 6: long week.
• 38:03
  Speaker 3: Eric Mshmeyer, portfolio manager at Columbia Threadneedle Investments, giving us
• 38:07
  Speaker 3: her outlook on this very confusing market.
• 38:10
  Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify,
• 38:15
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• 38:18
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• 38:22
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