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This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week podcast with Carol Messer and Tim Stenebek from Bloomberg Radio.
To get some economic data this morning. US retail sales increased at a firm pace in the month of November, bolstered by a surge in car purchases and solid online shopping that masked more mixed spending elsewhere. This has came
from the US Census Bureau. It' said the value of retail purchases not adjusted for inflation increased seven tens of a percent after upward revisions to the prior to months, and if you back out autos, sales climbed a more modest two tens of a percent timp That was for a second month, okay.
Separate data today showed US industrial production unexpectedly declined for a third month in November on decreases in utility output and bing manufacturing output rows less than forecasts. With more on the US economic backdrop and what to expect from the Fed tomorrow. Back with us is Steven Skanky, chief
economic advisor at the Wealth Advisor Keell Point. Steve also a former US Treasury and White House National Security Council staff member, serving during the Nixon, Ford, Carter, and Reagan administrations.
He joins us this afternoon from Washington, d C.
Steve, Good as always to see you on the day before we hear from the Fed chair. This most recent data that Carol and I just mentioned certainly something that the members of the Federal Reserve Board of Governors are looking at today is today, is tomorrow certainly decided the big picture of what comes in January, February, March. That's what has investors focused.
Well, first, thanks thanks for inviting me on as sorry, it's great to be with you and answering your question. The Marcus certainly think that it's decided as to what they're going to do tomorrow, and when you look at all the things that they've said, I think it'd be a big surprise if they if they didn't cut tomorrow. They basically indicated that, and the economic data has been
supportive of that as well. I mean, the estimate for personal consumption expenditure, the Core Index that's come down that that's really good news. The employment data was okay but not overly strong. And and what you just said about retail sales very positive, even with gasoline sales down and industrial production more tepet, which which gives the FED a little bit more latitude to be confident about not having to not cut rates tomorrow.
Well, and I guess though, to that point, Steve, some would suggest, wait, why do we even need a rate cut. We've got growth in the United States. The economy still seems to be humming along, so why do we need it.
Well, the biggest concern, Carol, is in the in the employment side. You know, the at rate ticked up a little bit. The fence projection is that it will it will go higher. We'll see what they're some economic projections is for tomorrow in terms of the unemployment rate going into twenty twenty five. But that's where the fedce principal
concern is. They're okay with where inflation is, especially since it looks like it's starting to come down a little bit again, but they don't want to see job losses or a weak employment market get ahead of them.
I also wonder how much of the concern. Though again, maybe the argument for not cutting rates is that we still have inflationary pressures and there are some concerns about policies, tax policies and other by president like Donald Trump that could essentially feel some growth and also feel some inflation.
Well, Carol, you're absolutely right about that. And interestingly, that's that's a little bit why I believe that the Fed. The FED would be reluctant not to cut when they announce tomorrow. They don't want to be seen as anticipating the economic result of some of the policies that President
elect Trump has announced. Obviously tightening up the border deporting posts, which was wages up create instability in the jobs market and will also send up prices, not only the one time price site from the tariff, but also the instability that is created in the supply chain, which then contributes to ongoing inflation.
Steve the summary of economic projections. I know certainly investors will be focused on that tomorrow.
What do you expect, Well, I expect that the Fed is going to be pretty steady on that. They've they've been a little bit more, a little bit less optimistic along the way than we would have thought. But certainly for the unemployment number to trend toward five percent as we get into twenty twenty five. I think that's very realistic, even in the labor market that we have right now, and on inflation, I think they're just going to go Their assumption is going to be as if there were
no changes in economic policy going forward. And that's just part of the dance that they need to be in right now so as not to be walking in or anticipating or trying to have any commentary about what the new Trump administration is likely to do.
Well, So should we take should we take the summary of economic projections tomorrow with an even bigger grain of salt than we usually do, just because we don't know what the new administration will be able to implement in what timeline.
They're also slippery, right, They can put them out there and then they're out there, and then the next day something could happen and they just don't apply anymore.
Right, That's exactly right. And so yes, what they put out tomorrow is their thought about if nothing changed, where would we be? Yeah, And that's I mean, that's fair for what their job is, But in terms of practical application or actionable information, it's not particularly helpful.
As you point out, Hey, listen, one last question before you go, you guys kill Points of Wealth Advisor. I am curious since the election, as we get ready to wrap up the year, which plain vanilla old US docs have done just fine for a second year in a row. What are you hearing from your clients? Are the kill Point clients, what's top of mind for them? Is it the new administration?
Is it?
I don't know, moving cash into equities? I don't know what is it?
Well, there's a generally positive expectation for twenty twenty five, and the data support that as we look forward absent some monumental or tectonic change, So that's a positive thing. But we certainly encourage clients to have available sooner rather than later the amount of cash they think that they're going to need to spend in twenty twenty five, so that if there is a correction, even if it's short lived, that they're not in a position having to sell assets when the prices are down.
All right, Good to know and always good to check in with you. Be well, Happy holidays, Marry Christmas. Steve Skanky, Chief Economic advisor at the Wealth Advisor, keell Point. Steve is a former US Treasury in White House National Security Council staff member, and yeah, giving us some insight on tomorrow's ED.
Meeting and looking past tomorrow.
On Friday morning, we'll hear from Mary Daily seven thirty am Wall Street time of the San Francisco Federal Reserve. It'll be her first TV interview since the FED meeting, so be sure to tune into that Friday morning, seven thirty Wall Street Time.
On Bloomberg TV and radio.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter Listen on Apple car Play and then Broud Auto with a Bloomberg Business app, or watch us live on YouTube.
Well, the US, in case you hadn't noticed, is experiencing a surge and power demand, with electricity consumption expected to climb almost sixteen percent over the next five years. Why, you may ask.
A few factors?
Is it because we're all getting EV's I don't think so.
I could have soon to do with it.
A few factors and drivers of that demand, including data centers evs AI welcome everybody to the New Economy with more on what may be the next supply demanded. Balance are two killer members of our Bloomberg News team who reported out this story. They are Bloomberg Newspower and Renewable Energy editor Will Wade, also with Bloomberg News Energy and Climate Disasters reporter Josh Saul, both here in our Bloomberg
BusinessWeek studio. Well, I want to start with you and get an idea for consumption and where it exactly is coming from. Is it all AI or the push to move away from natural gas.
Or heating and cooling? Is that part of it? You know what's coming from?
It's all of it, and it's all happening all of a sudden. So we've seen cloud computing, you know, everyone wants to put all your photos and your files up in the cloud. That's driving data centers, a lot of data centers. And then all of a sudden, the same big tech companies are starting to do AI and that's an enormous use of power. So we've got data centers and then AI data centers, and then we've got the push to electrify everything. We want to use electric heating
in your house instead of gas. We want to use electricity for your instead of gasoline. Where you've got factory these that are trying to use electricity for industrial heat instead of gas or coal. So it's just coming from every direction. But the crazy thing is we didn't really see this coming until about a year ago. So the utilities that build power plants, which takes years, weren't really planning for it that effectively. So now there's a potential looming shortage of electricity.
Which makes me wonder should we just stop talking about the promise of AI and basically because we're not going to have enough power to meet the demand, Like, should we just stop it already? Because the expectations, the euphoria will is not going to be able to be met so easily or quickly, you know what the power demands.
I'm not so worried about running out of power, like you turn on the light switch and there's no electricity for the lights. What I'm worried about is people not working for clean energy, so we're going to see electricity from anywhere they.
Can get it.
We've got people building more gas plants than we've seen in a long time. We got people that promised to shut down coal plants, now they're going let's keep those open a little longer. Yeah, Joshua about the gas plants a lot.
Well, tell us about that, right, So there's a concept I wanted to bring up because I want to get I want to get listeners familiar with it. And it's baseload power. So the deal with wind and solar power is that it's intermittent, right, It's when the when the wind is blowing, when the sun is up, and it's very complicated to arrange a grid with a lot of clean energy sources because you have to balance the grid
at all times. And when people wake up in the morning, they need the electricity running so they can run their appliances and get ready for their day. And sometimes if the sun isn't up at that point, that makes it tougher. What gas is really good at a big gas power plant is that it's baseload power just produces pretty close to the same amount of power all the time. Gas also produces carbon, which makes it a climate issue, which
is what Will's talking about. But we had the CEO of g Vernova in recently and he basically said, as yeah, our wind sales are pretty flat, but our gas business is going bananas because they build the big gas turbines that uh, that power plants use to generate generate the power, and they've increased manufacturing and they're selling huge amounts of these gas turbines because that's what data centers want.
He told us.
Nobody's planning for anything other than twenty four to seven power usage.
Is there a way that we can offload and by we, I mean the United States can offload some of this electricity usage, Josh outside of the country where electricity is more abundant in the sense, build some of these server farms in other places where there isn't an issue on the grid.
It's it's complicated, it's hard to do. I mean with with data centers. It's hard because some things that are operating on the data center is certainly any anything related to national security. And even lots of companies they want their they want their data in the US, even in you know, you imagine then.
They're shoring on.
Shoring is like certainly something that you see with the day to centers. They want it nearby.
Yeah, I mean, imagine a healthcare company. They don't want all their data stored in some country that they don't necessarily trust, so you run into issues with that. And as far as moving other users of power. Can't really move homes overseas without moving the family there, obviously, that's complicated. And then a big factory. You know, we want the big factory here because we want the jobs and we want the stuff produced here, so those power demands are also on shore.
There's so many these that are coming to mind. Remind us guys about the rules and regulations that are in place in terms of carbon emissions, that the kind of commitments that companies and individuals or institutions have to abide by under the current administration or under the current rules, and how a new administration might change some of that.
Okay, Well, when Biden came into office, he said he wanted to have a one clean power grid by twenty thirty five, and they set a twenty fifty net zero target. But these aren't really binding. These were goals, and I'm seeing increasing pessimism about reaching those goals, and.
They don't even seem very close in the sense of years like those are pretty far.
Up anyway, right, Yeah, But yeah, And we had so many companies, especially in like maybe the last five years, come out with their own internal net zero goals, and a lot of them are like really impressive and really ambitious. We're going to you know, utilities that promise to stop burning coal, big tech companies that said all of our operations are going to be carbon free.
Yeah, that was before chat GPT.
That's the problems. So these things were not binding, and now we're seeing a lot of companies kind of going radio silence on their goals, or some of them are just straight out saying, yeah, we're not going to make that.
Does it matter if it's a global company in other words, because it's got a deal by global rules and global regulations, or no, not necessarily in terms of hitting carbon emissions, you know, reductions.
The utilities, so the power companies actually producing their power, they're here, so their goals are here. We're already seeing those get kind of a little eroded around the edges. You know, companies saying, well, we said we're going to be done with coal by twenty thirty, we're actually going to be running these coal plants a little longer, but we're still sticking to our twenty fifty net zero goal.
We're kind of seeing those eroded a little bit. But the way one one energy analyst put it to me recently, as he said, I mean, unless unless the company's goals are tied to some kind of state law, they're not really worth the paper they're written on, because they'll just keep getting eroded, and then as it gets closer to twenty fifty, they'll get you know, maybe maybe completely tossed out the window.
Hey Will, what about nuclear? Where does nuclear come into this?
Which is something like I feel like in the last two years, we all of a sudden here everybody talking about nuclear.
Yeah, but I mean you've spent a lot of time business career facilities. Not so easy to just put a whole put a shuffle.
In the ground and build one.
No, nuclear is great.
I mean Josh was talking about baseload power. You know it's even better for baseload nuclear it runs like ninety seven ninety nine percent of the time over the course of a year. You know, what's to not create about.
Nuclear takes years to build. So we've got all of these companies seriously, Like the last couple of months, a lot of the big temp, big tech companies have announced these really big deals to use nuclear power to power their data centers in twenty thirty something when they're built, because there aren't any extra nuclear power plants laying around and it's going to take years to build them, and they're working with companies that are developing new technologies, so
they hope they'll be ready in the next five years, but it's you know, there's always the chance they can get delayed, so in the meantime there's gonna be a lot of gas.
It's kind of ironic, right, the move to clean energy is kind of complicating this process, right in terms of wanting as you said, the electrification of so much that it's making it difficult to kind of hit these targets. And I'm looking at, you know, a headline from today California reeling from extreme weathers, the wildfire risks return, and they also talk about another atmospheric river up in northern California.
I mean, as we are talking about this, we continue to see it firsthand and increasingly the impact of climate change. So I just wonder kind of where this all leads us.
Yeah, that's that's that's the right question, and the answer is, we don't know. We are seeing climate disasters in real time. In the summer it's too hot now in the fall and the winter, we're getting too much rain, and you're NK City, which are like unheard of, like yeah, make for great sunsets, but it smells bad and it Yeah,
we're seeing the climate really has been affected. And that's the right question to ask, because yeah, all these factories are trying to decarbonize, but then where do you get the electricity? You know, the people to point out, Oh, you think you're so green because you've got an EV, but you're powering it with coal power. So there's a lot that has to happen. It's not an easy switch.
Well, Josh, this is your beat, I mean, your energy and climate disasters reporter. So what is the fundamental connection between these two things?
I see it. I see it that of course, the factories that produce the things we need for clean energy require power, but anything that we produce requires power. So I think overall that transition is still good for decarbonization, is still good for putting less carbon into the atmosphere and hopefully at least not accelerating those kinds of wildfires and those other things we're talking about. And I think that's more important.
Than yeah, well, okay, so we'll come on in here because you mentioned the grid, and this is something that we haven't spent a lot of time talking about the health of the grid, and it's sort of this patchwork at least here in the United States, where you know you have Texas always comes to mind, for example, given the freeze that they saw a few years ago in the failure of the grid, where does the stability of the grid come into the conversation?
That's another huge issue. A lot of the grid is not so stable, you know, a lot of the wires have been standing there for years and when a hurricane comes through, they get knocked down, saying they want to underground the wires because it's more reliable, which is a great idea, but expensive. You use the word patchwork. I think that's a pretty good word, especially because it's multiple systems operated by so many different companies and so many
different jurisdictions with different rules. It's complicated.
Well, we know it's like.
That, Josh.
I also do wonder is there something else within the all the energy space or new energy space that we're not talking about. My husband constantly is like, what about hydrogen fuel cells? Like that makes sense to me, Like I'm just curious, is there something that I don't know whether it's in the next year, or next six months or next two years that we start talking about that might help the situation. And just got about twenty five seconds.
I think a lot of those things, fusion, hydrogen, a lot of those things are pretty far off. I think right now it kind of is just back to the basics that wind and solar takes a lot of takes some pressure off of the grid. Yeah, but yeah, right now it just looks like the next year looks like just more gas.
I want to say, are you guys optimistic?
No, no, no, but you'll be.
Busy no Thanksgiving, my family asks me, like, what about this climate thing? Are we going to solve it? I'm like, I hope so, but I'm not optimistic.
You're just there with the bad news.
It gets worrisome. Hey guys, you keep us though up to speed. Thank you both so much. Will Wade Power Renewable Energy editor, and of course Josh Saw Energy and Climate Disasters reporter. Here at Bloomberg News, you're.
Listening to the Bloomberg Business Week podcast. Listen live each weekday starting at two pm Eastern on Apple car Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa, from our flagship New York station. Just say Alexa, play Bloomberg eleven thirty.
It is time for another edition of Bloomberg Plugged in your weekly look at evs and Carol has always no shortage of goings on when it comes to the world at bev's, it's so much going on.
You pointed out this story to me earlier today. You were like, did you see this?
I'm kind of blown away by this.
HANDA Nissa are preparing to start negotiations on any possible merger, which could ultimately be expanded to include Mitsubishi Motors. This is according to a report from the Nick and Japan merger designed to help the companies compete against rivals and evs such as Tesla and Chinese automakers.
Listen, I think about this right, What kind of consolidation might have to happen in order for all of these auto companies to be competitive. We also do want to point out that Peter Navarro, who is set to become the top trade advisor to President elect Donald Trump, saying earlier today on CNBC that policies that have been favorable to the EV space may not be around during a second Trump White.
House and then on the demand poll side, what we have is first of all those green mandate, that EV mandate that is gone.
That's gone, like the win.
That's going to help new prices at the price level.
That of course is Peter Navarro earlier on CNBC. That was earlier today on CNBC. Just a reminder, President Biden has put into place policies that support the electric vehicle space and has called for reductions in carbon emissions. So that is some of what the President elect, Donald Trump calls the Biden EV mandate.
Patrick Sullivan as CEO at ev Realty, he watches this stuff closely. He's back with us from San Francisco. A reminder, ev Realty has seven thousand EV chargers installed. It's built seventy supercharger hubs. The focus is on powering commercial fleet's. Patrick, good to have you back with us. Remind everybody where exactly you play when it comes to the EV ecosystem and specifically what types of trucks you're hoping are electrified.
Sure, well, Carolyn, tim it's nice to be back. It's been really quiet on the Western front for DS since we spoke in Marsh.
I'm surprised to be here.
And tim just to I, I appreciate the flattery. Members of my team have built seventy superchargers, superchargers or Tesla's product, So I would love to say that I built seventy super hubs, but.
You wouldn't be here right now. You'd be out in the field.
But just as a reminder for what EV reality is focused on, we build large scale EV charging hubs principally for commercial fleets, so fleets operating medium and heavy duty electric trucks are approached. And it's really been consistent from the start is to find places on the grid that have all the power that those large fleets need to secure the power to secure those pieces of property, and then to develop them into these logistics hubs.
And principally well remind us who has the fleets right now, because here in New York you see a lot of the Amazon Rivian vans. You can see it on the screen right now, perfect timing driving around is that a customer of yours.
They are as are the larger trucks.
And so here in California, where my company is based, a lot of the heavier duty or tucks that are transitioning first are what's referred to as drayage trucks. So these are trucks picking up a container from one of the many seaborn or railports in the state taking them to warehouses.
Our hubs also charge sort.
Of last mile delivery vans and vehicles that are going out to a home or a place of business for delivery.
If people haven't seen a lot of I just want to jump in. I'm sorry to keep interrupting, but I have so many questions and I'm not going to get them all because now Carol has a lot of questions too. Who manufactures some of these trucks? If we haven't seen them out on the road, who makes.
These So you're starting to really see them out on the road. Here in California. There's over fifteen hundred medium and heavy duty sorry, Class seven and Class eight electric trucks operating. Some of the biggest manufacturers for those vehicles or companies like Volvo, Daimler International pack Car, These are
the companies that also manufacture the vast majority. I think those four in particular are over eighty percent the market share for for Class eight trucks, and so these are long term established companies that are also now delivering ev trucks into the market.
Patrick, I got to say, I've been listening to you. You sound rather subdued. Tell me what your outlook is on the EV world. I think we're all trying to assess what a new administration means. Joe Biden and his administration have certainly put initiatives in place, including capital and spending infrastructure that is very supportive of the EV world. But how are you looking at a new administration and what that might mean for this space and for you specifically in your company.
Sure, so it's look, elections have consequences both sort of for individuals as well as companies and industries, and I think that certainly the change in the administration is going to affect the conversation around EV's. We're seeing it already. I think the reality is that we're well past the sort of the tipping point for evs generally, but really thinking about the larger scale commercial trucks that do the work that move sort of the freight's movement, and so
my philosophy is certainly sitting here in California. Forty percent of the seabound freight containerized freight into the United States comes through the Port of La and Long Beach. That's almost twenty million TuS a year. Half of that is consumed here in the state of California. There's a whole lot of focus on sort of cleaning up and making that supply chain more efficient. That doesn't just mean electric trucks. That means more efficient sort of logistics and routing and
timing for report. But there's a whole lot of really important work that is well on its way, certainly here in California and frankly across the country. It's just not politically in vogue to talk about it too much, right.
All right?
So still up, be just real quickly. You're still okay, positive at least for the commercial Yeah.
Do I think that this is certainly going to have consequences?
Absolutely?
I think the broader question and it sounds like you guys have covered this even earlier today, and some of the pieces the implications to seating leadership in EV's generally for the US, that's what's consequential. We currently have the largest EV manufacturing company on the planet here in the US.
Why stop now?
We invented mass production of the vehicle one hundred and sixteen years ago. I think it's pretty telling when the CEO of Ford Motor Company didn't want to give back the EV that he's been driving for the last six months, the Chinese EV that he has been driving for the last six months because it was fundamentally superior product and they're going to eat our lunch.
Patrick. So I do think, you know, it's interesting listening to you. As you said, we've been covering this, we've been thinking about alternative energy, what it means under a new administration, combat change goals and so on and so forth.
But it does sound like from what you're saying, there's almost a separation in terms of the commercial space, which has already made its commitments and it's spending and it's going to kind of keep going when it comes to probably alt energy and EV vehicles versus maybe what we're seeing on the consumer side of things. Is that fair help me out in terms of, you know, kind of from your vantage point.
Well, I think it's both. I think really the consumer side, certainly, the impact of losing EB tax credit will be will be felt. But again, keep in mind, over one fourth of all new vehicles so over the first three quarters of the year in California have been EV. It's about nine percent nationwide, it's twenty five percent in China, it's approaching fifteen percent in Europe. I think you're going to see that continue. And frankly, those vehicles make sense economically today.
On the trucking side, I think what is going to change and really has been my company's focus from the start. You can't convince the commodity business to switch to evs if the trucks are ways too expensive and all of a sudden, moving goods becomes more expensive, and so this transition really has to be economic. It has to make sense for the companies. It has to make sense for the shippers who are paying the freight rates. It can't be done sort of as a subsidy or just because it's green.
And that's where I see.
I mean, there are freight transport companies here in California moving goods that they win on brokerage markets profitably using EV trucks. That's really positive when you think about sort of science.
For this industry growth.
How do you make sense Patrick of Donald Trump's stance on evs and what we've heard from members of the incoming administration, given that Elon Musk is so close to him right now.
Well, as you said at the start, if I had built seventy super charger stations, I probably wouldn't have been in the side of the conversation.
So far to give from me to read into.
That, look, I think at the end of the day, I think that rational, sort of clear headed thinkers are going to make smart business decisions, whether it's around like duty evs, all of the manufacturing that's been deployed. I think there's over one hundred billion dollars of EV battery factories under construction right now in places like Georgia and South Carolina and Indiana and Kansas and Ohio. I suspect those are going to be really important considerations for the administration.
And certainly mister Musk is building a couple billion dollar factory here in Sparks, Nevada to deliver the Tesla Semi, which if he does move forward with that will be another category killer, and I have to imagine that's part of his calculus as well.
So, I mean, in terms of how you see Patrick, his relationship is having the ear of the President elect Elon Musk, that is, of Donald Trump, at least for the moment, appears to be maybe a positive thing. For the EV industry overall.
I'd like to think so.
I think obviously Elon has a number of different and really interesting business interests beyond just Tesla. But Tesla is what allows all of his interests to grow. Uh and certainly with the technology that he's pioneered, Like the largest car company in the world at least.
For right now is Tesla.
That would seem to be a perch that you'd want to leverage, not not waste.
All right, we're gonna leave it there, Patrick, Thank you so much. Patrick Sullivans, CEO of ev Realty.
M brother macome.
The journal.
Now about you let me drive?
Oh no, no, no, no, he's going, Honry please gravel, I want to drive.
It's good question.
This is the drive to the clothes down.
Coming well by.
It on Blueberg Radio.
All right, TikTok, everybody about tenants left in today's trading session. Shortly we're gonna head over to our TV colleagues cutting down to the clothes on this Tuesday, December seventeenth. I just want to point out that stocks a little bit of a move to the upside in the last I don't know, ten fifteen minutes. We're still right across the board here on those major equity averages. But it seems like a little bit of buying here into the clothes.
Yeah.
The DAL though down for its longest losing streak going back to nineteen seventy eight.
Yeah, I don't know.
Does that meant something? You know?
I think all bets off until we hear from the Fed see what they have to say, and then I don't know. I think we have to get into the new year and find out more about policies. Let's see what our next guest has to see to say, Amy Magnatis, she's co chief investment officer of Atagenotice Capital out of Jete.
It's all Greek to me, I think.
I said it wrong. Say it for us, Tim and I have been going back too at a Genos. Thank you so much. It's been a little bit of a crazy day. Good to have you here with us. There is a lot going on, there's a lot of speculation about twenty twenty five. With confidence, what do you say about the current market environment? And then do you feel like you have visibility of kind of where we go in twenty twenty five.
I think we have a little bit of visibility over the near term, I think as we get into the first quarter of twenty twenty five, it's a little more unclear. I guess I would say, so we're pretty positive on equities for the short term here. I think from market seasonality perspective, it's it's a good backdrop for equities into
the year end and then also through January. But I think as we hit January and we believe the Fed, you know, we'll we'll cut here, and I think, uh uh, you know, it's to be determined next year whether we'll get the full rate cuts that we had anticipated. But as you and I think you just mentioned it to the just policy uncertainty as we hit into the new year.
So there's been a lot of let's say, optimism on the administration and what could come, you know from maybe deregulations pick up and investments deal activity, things like that, but we need to see some some follow through on that. There'll certainly be some uncertainty as we start debating the extension of the tax cuts that we'll have to be
dealt with at some point in the year. So I think we're positive in the short term, but a little more concerned as we look a little bit further out into twenty twenty five.
Amy, Carol brought my attention to a fund manager survey from Bank of America that says that fund managers have been reducing cash holdings to a record low, pouring money into US stocks, and that's triggering a metric that Bank of America says maybe his signal to sell equities. So this contrarian thing that's kind of happening right now.
Do you see that?
We do as well.
So that's one of the we have.
We look at a number of market indicators here at the Genos we called our signal. One of the signal factors that's flashing a little bit red for US is investor sentiment. And to your point on that report, we're seeing massive flows into equity ETF and when you look at investor survey data as well, the number of goals are increasing, So that is a bit of a red
flag for US. I do think that market seasonality outweighs that in the short term, as I mentioned, maybe through January, but that is a concern for US as we get into midway through the first quarter, and you know, will the market be able to live up to expectations.
Amy, I do wonder is there kind of a mentality out there among investors or even strategists and maybe for good reason why that US still kind of the best market in town if you look around the globe, because there is still growth. We're getting inflation. It seems like, you know, certainly way down from where it was a year ago. But growth is a big thing, right, a
big factor that's going to support corporate earnings growth. I just I wonder if that's a big part of investor thinking and with good reason, and strategist thinking and with good reason, And.
That's our positioning as well. I mean, we've been favoring the US all throughout twenty twenty four, and even we just shifted some allocations in our portfolio and November post selection and actually went underweight US international equity relative.
To the US.
And I think one of the to your point, relative growth prospects are better in the US. It's a little more clarity. I think there's a lot of political uncertainty elsewhere as well. Also, I think the administrations are going to be a little bit more pro US dollar, and so that leads us to be more focused on US over international.
What are some specific sectors that you're optimistic.
About we are don't have it currently any sector biases, I will say we like small cap US stocks right now, so that's one of our larger tilt in our portfolio. So we think small cap attractive valuations relative to US, relative to the large cap equities relative to their own history.
We small cap companies tend to be more US focused, so going to the same point about favoring US over international equities, also lower rates would benefit small caps, So we like small caps, We like active managers in that space. And then we have a couple of thematic exposures that we have in our portfolio today. I mentioned not really liking you international equities. Of international we kind of view Japan as kind of the best house in a bad
neighborhood there, so we do like Japan. Infrastructure in the US is a theme, uh. And then we recently introduced a new theme into our portfolios uranium. It's a small position. We look to build it over time, but we think that's an attractive opportunity for investors as we need increased demand for nuclear energy, not only just from just broad energy demand, but also the data center growth for AI
technology needs additional power and nuclear can provide that. And we've seen a number of large tech companies come out and talk about their plans to add to power somebody's.
Data centers spent a lot of time talking about this, not just today, the last few months.
It's pretty pretty remarkable.
I do think, right, I wonder in terms of investment plays, like I think, okay, that's going to be a big one of twenty twenty five.
Yeah, there's the energy and the energy infrastructure plays. Yeah, yeah, we'll see.
I mean there's also like the bets that on these SMRs, these small modular reactors you know, have not come to fruition at this point.
They haven't been built.
Amy But does it take a while for that to I mean, I can get I understand why people are getting excited about nuclear power and so on to power all of the AI driven demand. But having said that, thirty seconds left here, is it kind of earlier in the game to make that investment play or if you if you make a bet, you better be patient.
I think the latter.
So we are. I think we're a little bit early. It is going to take time for this to play out. It's expensive, But I do think you want to be a little bit ahead of it, but that's why we'll look to build it over time and be in positions that are i would say more diverse FI so you get explosure not only to the uranum minors, but also those small modular reactors and other components of the theme.
Amy, so appreciate checking in with you, Amy mgnatta. She's co chief investment officer at Athagenos Capital, joining us from Pennsylvania on this Tuesday.
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