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All right, let's switch our attention back to the geopolitics, the story of the really the last forty eight seventy two hours of what's happening in the Middle East. Aaron David Miller joins us. He's a senior fellow with the Carnegian Downmond for International Piece, joining us from Washington, DC via zoom. Aaron, thanks so much for taking the time here. Again, it's front and center here for not just geo politics,
but also for financial markets. And that's why we hear Bloomberger paying close attention to what's happening in the Middle East.
Here.
We had the Iranian attack yesterday. Love for you to put that attack into context of what is happening in the Middle overall. What's next for Israel?
Yeah, you know you got thanks for having me here. You've got three wars of attrition going on. One greatest role in the moss is one's ball on Israel and Iran, which is the premiere event here and over the last several weeks. As a consequence of Israeli actions in Isabella, the balance of power in these three wars of attrition, it's fundamentally been altered.
His Boula is a ver shadow of itself.
Israeli's estimate, they've they've eliminated half of its high trajectory weapons inventory, and those weapons were designed by Iran in order to provide a contingency in the event Israel or the US attacked around the nuclear sides. Well that's more or less degraded. So the Iranians needed to find a way to respond both to the Israeli assassination of Ismaila
ne on July thirty one, leader of Amas. It was really didn't think responsibility for that yet, and of course the most recent hit on Hassan Azula, the head of as a publish So they looked for a response that did more than what they did mid April, you recall, and they landlu three hundred high trajectory weapons of Israel. Most didn't even impact Israeli airspace, but not to trigger a major Israeli escalation. I don't think they found the
sweet spot one hundred and eighty Creuse missiles. Even though Iron Dome David slang Arrow intercepted a lot of them. US Navy two destroyers took down twelve. The Jordanians participated too many got through and two Israelis were lightly wounded, and ironically, a Palestinian man from Gaza who was in
Jericho was killed. But even though there were no casualties of a consequential nature other than the unfortunate death of the Palestinian man, the Israelis now have to respond in and at least portraying their thinking to avoid creating a new normal.
A second time.
The running substruct Israeli territory, and they're going to respond. Biden's going to talk to Ntayahu today before the Rosa Chana holidays. But I think these really responses are going to be heavy, multiple targets, oil export facilities, running revolutionary Guard, core command and control, conventional military sites.
The nuclear piece fascinating, yep.
I'm sure the argument's being made that now is the time for any number of reasons. I'm thinking, though, coordinating with the Americans, I don't think the Israelis are going to go after the enrichment facilities, very deep underground.
But we'll see.
Well, you mentioned that you have the Richmond facilities under mountains. In fact, is that even targetable at this point with just with airstrikes right.
Where you need bunker busters, you need shock and awe, which only the US military can actually need deliver. You need a degree of saturation and redundancy. Despite israel skill and operational capacity, he's really stone half. Nonetheless, I mean, I still wouldn't rule it out as part of the target set.
And then the question is.
Of course how and in what fashion will will the
Runnings respond? I mean, without much imagination, you could, you know, you could envision a hopskip and a jump to something the Middle East has never experienced before, which is a multi front walk, not with employment of thousands of ground forces, but UAVs AI, cyber cruise missiles, ballistic missiles, one way attack groans where Iran if it said badly enough going after Saudi oil bruising facilities, which they did as you were calling twenty nineteen.
So we're closer.
I'm still not convinced we're going to get there. Iron's weak and it understands the symmetry of power which I.
Fa So, Aaron, I look for you to kind of give us maybe your assessment of where President Prime Minister Netanyahu is in terms of his thinking these days. I guess we started this war almost a year ago with the attacks on Israel, and I guess at that point Yah said, Hey, our goal is to incapacitate Hamas and get our hostages back. That scope seems to have broadened dramatically now to include, you know, maybe some war aims in Lebanon, to deal with Iran more broadly. Where is he now?
Look, I think you know, don't never write this guy off.
I mean, it was unimaginable that a prime Minister or presider or the single body of stayed for Jews since the liberation of the Nazi death camps, the worst intelligence failure in the history of State of Israel, antrial for brid re fraud and breach of trust in.
A Jerusalem dis re court now four years running, would.
Have gotten himself into a situation where his credibility and even some of the numbers.
In the latest Israeli polls have gone.
Up, not surprisingly because of the last several weeks and what I think we're on the cuspbol with respect to an Israeli strike against Iran. So he still does if elected were held today, he still doesn't have enough seats to put together a coalition.
But there's no effective opposition.
And the fact is the kanesstants out of resist until the end of October. Benjamin Nataniell will will make an assessment on November five with the next President of the United States is and he'll adjust his tactics. Importingly, I don't see new elections in Israel at the earliest, and the government could go to term twenty twenty six. I don't see new elections in Israel until sometime in twenty twenty five.
Well what's the response from the rest of the Mid East to Saudi Arabia et cetera.
Well, there's the public and the private response, right, I mean, nobody is going to miss other than Hezbollah. Certainly, among the Sunnis in the region, no one's going to miss Ausun Ocella, certainly, the Saudis won't uh and Sunnis in Syria that have prosecuted a terrible war against Sunni populations isn't going to miss Nuzula either, So and that goes by the way, also for Jakna Sinoir, the pre eminent Palestinian leader who's hiding in a bunker somewhere meters below ground,
probably surrounded by hostages the low Raunis. I think the Arab States really understand what they didn't in the way to October seventh, when Israeli military capacities seemed to be not just diluted, but somehow defeated. The last several weeks, the operational effectiveness, the tactical ingenuity of the Israelis has restored. I think their street cred comes to the to the
air world. That's particularly true for the Bobrani societies and the Amorates will all have above ground and below ground security and intelligence relationships.
With Israel. But again it's the Middle East. Nobody ever lost money.
Against the peace and stability, and I think that we have to still be three sober here. Yeah, yes, can the can what the Israelis have done be translated somehow into political arrangements lead to greater prosperity instability.
That's the core question, and.
You know it's one of the many questions I just don't have an answer to you.
All right, Aaron, thank you so much for joining us. We really appreciate getting some of your time to share in your expertise. Aaron David Miller. He's a senior fellow at the Carnegian Down for International Piece, has decades of experience in that part of the world. You appreciate getting some of his time.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar 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, playing Bloomberg eleven thirty.
Alex deeal here alongside Paul Sweeni and John Tucker. This is Bloomberg Intelligence Radio. We are broadcasting to live for Interactive Brokers Studio right here in Midtown Manhattan. So last night, Democratic Governor Tim Watson Republican Senator JD Vans sparred during the CBS News vice presidential debate in New York that featured fireworks over abortion rights, the economy, and foreign policy, in part in an appeal to Midwestern voters.
One thing that Joe Biden did is he continued some of the Trump tariffs that protected American manufacturing jobs. It's the one issue where Kamala Harris has run away from Joe Biden's record.
Well, Kamala Harris is Day one was Donald Trump's failure on COVID that led to the collapse for our economies.
If Kamala Harris has such great plans for how to address middle class problems, then she ought to do them. Now, how is it fair.
That you're paying your taxes every year and Donald Trump hasn't paid any federal text in the last fifteen years.
Well, joining us now is Henry Natrez, Managing partner and director of Economic Policy at Beta Partners. Henrietta, did we learn anything last night.
Well, we learned that maybe both parties candidates have the potential to improve their standing with the American voter. The surprise to me was that flash poles that came out right after the debate showed that viewers considered the two men effectively tied in the race. I thought personally that Vance had exceeded Waltz, but that's not what we saw
in the flash polls. And most importantly, amongst unaffiliated voters, not Democrats, not Republicans, but sort of third party voters, the majority of them thought that Waltz in a better job. And you have to think of that as probably some of the last moments of the campaign, you know, the sort of the debate, the last sort of fifteen minutes when they talked about January sixth again. But in general, net net, both candidates standing improved materially with voters. I
want to say that jd. Vance went from a negative twenty two percent, a negative thirteen percent rating to a negative two percent rating, and Tim Walls also improved from his plus three favorability rating to something like plus thirty four after last night's debate. So both men did what they wanted to do, introduce themselves to the American public, and the American public like what they saw.
Henrietta, can you give us a sense, I'm trying to get a handle on this particular number, how many independent voters are each candidate trying to get at each campaign, Trenting, Do we have a sense of how many they are?
Well?
The independent voter base is actually a huge chunk of the pie.
As America has gotten polarized and voters have, you know, flocked to the far left of the far right within their parties, a big chunk of America now qualifies themselves as independ voters. That's different than undecided. Undecided is now like four percent seven percent of the electorate.
Most people have picked a horse and they're moving forward.
Unfortunately, most likely the people who are undecided did not even watch last night's debate, So they're going to be getting their internals from what they see on the internet today, and it's probably not going to move the needle too much. If you have to think about the presidential debate not moving the needle a whole lot, you know, a couple points to Kamala Harris, it's very unlikely to mean that the vice presidential debate last night is going to really change things for either ticket.
So it's October second, if I'm not mistaken, and typically we talked about in an October surprise when it comes to the election. Is the Iran Israel conflict right now that October surprise?
You know, I want to say yes.
Obviously, the escalation that we're looking at right now and potential for the Middle East disruption is explosive to the point where we haven't seen it in decades and you know, rapidly escalating and just waiting for Israel's response now. But the you know, the question last night was the first one on the gate about how to respond to Iran.
And I think what was interesting is that the electorate as a whole in America doesn't consider this a near term issue or even something that ranks in the top five areas that they care about.
It's you know, the economy followed by some.
Combination of abortion and immigration and then everything else sort of way underneath that. Foreign policy is just not a forte of American voters.
Henrietta Kamala Harris has been out fundraising former President Trump and in past elections like goes that would be really big news. Is that big news this time around?
I think it is. And I want to tie in a couple of different components here.
You know, we have Hurricane Heleen that went straight through Trump country in the Panhandle, Florida, Georgia, and North Carolina with the exception of Ashville, and like a couple of blue pockets. But the turnout campaign, not just on the day of the election, but right now as early voting has started, is something that all this fundraising is able
to actually do. Kamala Harris's campaign has you know, a dozen field offices in certain states, that are going to be pivotal to this election, where Trump has almost none. There are campaign volunteers that are getting paid twenty dollars an hour to go out into the field and make sure that they're knocking on doors and getting people to the polls, getting their.
Mail in ballots.
Said, that's the kind of money that's being spent right now, and you're seeing it trickle down into the state races, which are now expanding the Democratic map into places they have no business being, you know, Texas, Florida, Nebraska, and then also on the House side with an expansion of the race sort of exponentially in the last couple of weeks. And that's because of the massive fundraising campaign that the
Harris campaign has generated. I think I could think it's if my Memory Service two hundred and eighty seven million in August to Trump's eighty four million.
So they're tripling their numbers.
Twenty bucks an hour for volunteer. That's that's pretty solid, like that something that.
Doesn't make them a volunteers.
It is true that feels odd, but you know, maybe it's for profit volunteering. Henrietta. When we take a look at the broader race in terms of Congress, Senate, and the House. Where do we stand? What are some races that you're watching?
Well, I mean, my favorite part of this election is that we have the benefit of every single swing state also having a Senate race happening. I want to lay out two that I think are really important today and maybe the VP debate can move the needle.
In Arizona and Nevada.
You see Kamala Harris's strength coming from the fact that she's pulling thirteen to fifteen percent of the Republican voter base. So in Arizona, fifteen percent of voters that identify as Republicans are saying, you know what, not today, not for Trump, not for Carrie Lake, who is the Republican Senate candidate there. They're going for Galleo and they're going for Kamala Harris. And that's why she is even playing ball in a
state like Arizona that used to be deep red. And that's translating just next door to Nevada, where you're seeing strength for Kamala Harris amongst Republican voters, and that's translating down ballot to Jackie Rosen in that Senate seat, who's ahead by ten in the latest polls on average, if
I'm not mistaken something like that. So the Senate candidates down ballot for the Democratic Party are pulling so far ahead of Kamala Harris, so far ahead of their Republican challengers, and not all of them are incumbents, you know, whether
that's in Michigan or other states. There are Democratic Senate races being held in all these pivotal states that Kamala Harris must win and I think get four tens either a massive split election or additional votes that Kamala Harris can get in the final days of the campaign.
All right, Henrietta, thanks so much. We really appreciate it. Henrita trans managing partner and director of Economic Policy at Vita Partners joining us there. You early vootered already, didn't you?
I did?
I just mad, I think yesterday early and often. I'm a big believer in that. And I'm also happy that we are not I'm not in a swing state, John, We're not in a swing state?
Are we in New Jersey? Well, don't say your vote doesn't every single vote Council's inphasized. So I dropped it early on even though we're in New Jersey.
So, but in New Jersey, we're not as state, so we're not getting crushed by the political ads yet. But even the national buys are noticeable, you know. But I mean, you get in a swing state, every local buy is on every station.
You can go.
I can't imagine. I mean, I've always lived in New York, so I literally can't imagine.
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Looking at the markets here, I mean again you could say, given the geopolitical tensions, maybe this market's behaving fairly well, you know, over the past a couple of days. As John has just mentioned, we do have a little bit of a sell off here, off just on about two
ten percent on the SMP five earner. But the question is kind of, how do you thinking a little bit more long term as you try to think about the geopolitics, maybe even the strike of the dock workers in the economic impact that could have, how does that impact intermediate to longer term views. Let's check them with somebody who does this stuff for a living. Mary and Bartel's chief investments. It just for Sanctuary Wealth. Marion with a name like
Sanctuary Wealth. I'm thinking you guys think long term, maybe relatively low levels of risk. What's your investment view of markets these days?
Oh, I can't get more bullish. And I understand that there's a lot of geopolitical risks. We have a port strike, we have an unpresidented presidential election. But what I've learned in my forty years is that liquidity trumps everything, and the Federal Reserve is on an aggressive path in my view of now easing monetary policy at a time when our economy is growing, We're growing at least about two percent. I would argue, we're still at full employment, and we
still have corporate profits growth. We're not even a recession for corporate profits. That this is going to ignite our economy, maintain in employment. And I'm pretty bullish.
Now.
That's not to say that the markets can't be a little tricky or spooky in the month of October. But what the month of October has that most people don't talk about is we make important market bottoms that allow the market to have its strong year end rally.
Where do you think the best opportunities are now? I mean we've had some rotation in this marketplace. It's no longer the big tech stocks that are leading us higher. We've had some rotation some other sectors. How are you positioned?
So that's really a bullish thing that we have the breath of the market expanding. So when we recently had new record highs in the market, breath hit a new high, we got volume expanding. That tells us we're in a very strong market or very strong tape. I haven't given up on tech. I think tech is in a consolidation. It's have an extraordinary move, but it's allowed other pockets of the markets to move. Can you believe that utilities
could rally twenty percent this year? As the market is expecting rates to come down, they're seeking out yield within the equity market, You've seen moves in reads and it might be possible next year that the phrase or word tina comes back. There is no other alternative as the market continues to seek out yield as the baby boomers move into retirement.
So I mean we've seen some volatility. I mean we have the VIX now just still below twenty. But it feels like there's been some volatility in these markets. When you talk to a lot of pros out there, how do you deal with that? Are there sectors maybe protect you from that, or are there other ways to look at maybe getting a little bit of stability in a portfolio.
So, I mean, the.
True way to get stability in a portfolio, if you really want to be very defensive, is to own cash. And the market's already positioned there. We have six six point four trillion dollars in money market funds. Many clients have tried to lock in that five five and a half percent. I would argue that the market is extremely defensive, but you know, pockets of utilities tend to be very
defensive also within the marketplace. Enough bright spot is we have gold that's recently been hitting record all time highs, So you know you can put a little bit of gold in the portfolio. Because I do think over time we are more in an inflationary environment. Although we're seeing inflation come down now and I think into next year, I think we already have the ingredients for inflation to come back.
All Right, we're speaking with Marion Bartel's chief investment strategist at shank Sanctuary Wealth. Thankfully, Alex Steele has made it back from her sojourn out to Calgary and she's back in our studio.
I mean, you say that now, but wait until it comes out of my mouth the next how and a very good So anyway, I just got back, literally just got into the studio. Marian I noticed obviously that you were talking about being bullish and being positive and liquidity, et cetera. How does China factor into this because you're already feeling bullish about liquidity regardless of what China is actually doing. Could that be a catalyst?
Yes, it can, and.
It's not just China.
We have central banks around the world that are cutting interest rates. It is very possible as we move into next year that we get monetary stimulus that we haven't seen since COVID in two thousand and eight, in two thousand and nine.
And that's what I've.
Learned throughout the years. Even though some bad things can be happening around you, the most important thing to the market is can companies grow their corporate profits. Markets trade on profits, not on potentials of potential risk. Now, what would change my view? Because we do have a lot of risks out there. If crude oil spiked very sharply and especially got to one hundred and stayed over one hundred, I would view that to be extremely negative. I mean,
my bullishness would turn pretty much to bearishness. But you know, as you mentioned China, I think what China is doing seems very unprecedented. I'm not an expert on China, but the one thing I've learned is when central banks allow you to buy the stock market, you should buy bye bye We soart Japan do that near its lows?
In fact, the central bank.
Actually outright bought its market. So when a central bank is allowing buying of the market, I think you should own it. I think part of the reason you've seen such a sharp move up in China is so many traders were short the market, right, so we've had this major shortcovering.
But most fund.
Managers that manage money, either globally or in the marging markets are underweight. We have a lot of room to actually move money into China.
All right, Maria, and thank you so much for joining us. Always appreciate getting your thoughts there. Remaining clearly bullish there, Marion Bartel's chief investment Strategies for Sanctuary.
Welcome.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am on applecar Play and Android Auto with the Bloomberg Business Act. You can also listen live on Amazon Alexa from our flagship New York station Just say Alexa playing Bloomberg eleven thirty.
One of the names it's under pressure here to take off about five six percent is Tesla, the company's first quarter sales gains this year. They come up short the vehicle deliveries. They did rise six point four percent, which is good, but they were trailing analyst estimates here. So again is stock selling off a little bit. Let's get the latest with Keith Norton. He's a Bloomberg's Auto reporter. Keith, what are you hearing out there about Tesla and their earnings here?
Yeah, there's a little disappointment on the vehicle sales. They came in just under analysts expectations about one thousand vehicles under They sold four hundred and sixty two thousand and four hundred and sixty three was more of the it was a consensus. But more to the point, they kind of missed the whisper expectation, which was maybe as high as for seventy seems like there's some softness in the
cyber truck. There also were high expectations for sort of a cash for Clunger's sort of promotion going on in China. They've doubled the incentive for EV sales if you turn in an older model there. That was expected to give more tailwind to Tesla, and that didn't quite materialize the way that investors expected.
So the stock is down, you know, just in terms of ubers. For example, every Uber I'm in now feels like it's a Tesla. I don't know if you guys experienced the same thing. And I feel like, is that a good or bad sign for Tesla? Because yeah, okay, it's promotional, But I feel like the reason why all the ubers are now Tesla is is because it's a promotion like get this off my lot. Are we at the trough with that?
Yeah?
You know, Model three and Model why that is the volume of the company, which are their you know, mainstream cars, their luxury model sque does not sell very well anymore. It's getting pretty long in the tooth. And cyber truck, you know, is priced sort of around one hundred thousand, and that limits its volume under twenty thousand probably for the quarter. So they are becoming a more mainstream brand and when that happens, they become ubers.
So mail Matt from Westchester emails in here and says, is Tesla ever gonna have a new model? We haven't had a new model like ever, really like just it upgraded model.
Yeah.
This is you know, sort of a long standing issue that the product lineup, with the exception of cyber Truck, which for now is a niche vehicle, that the lineup is getting stale. But you know, Elon Musk is really focusing more on Tesla as an AI company. They have this event coming up next week to unveil the Robotaxi that he's really been talking up. And that's actually talk moved up the stock from the way he's positioning the company.
So he's trying to speak less like a traditional automaker and more like an AI tech company.
I feel like it's always been that. It's been like Tesla's a tech company, Nope, it's a car company, Nope. Now it's an AI company. How does the sales though that we're seeing for EV's because that's still the bread and butter. How is that stacking up against its peers like a GM or Forward.
Well, I mean, Tesla's still far and away leads to the market. But GM, for example, had an excellent quarter in EV sales because they've just rolled out this thirty five thousand dollars Chevy Equinox electric vehicle and that's a great price, and it's below Tesla's lowest prices. So you know, new competitors are coming in. Tesla's supposed to have a lower priced EV coming next year, but Elon hasn't really
talked much about that. So you know, as more competitors come in, as they come in at the lower end of the market, that's going to chip way a Testa's share.
All right, Keith, thanks so much. We appreciate that. As always, Keith not an auto reporter for Bloomberg News. Testa reporting numbers a little bit light relative to expectations.
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Looking at the market, it's kind of flat here today. I think the market's trying to digest kind of what we're seeing coming out of the Middle East, what the economic impacts may be from this ongoing port strike, and maybe the political landscape as well as their traditional earnings and FED watch and all those types of things. But let's go to somebody who does this stuff for a living, Colschlife, Chief Investment Officer at BIMO Family Office, and we appreciate
getting some of her time. Carol, thanks so much for joining us here. Put all that stuff together, you know, the geopolitical stuff, the domestic politics, the earnings, the fetter reserve. Where do you guys come out and just say in your communication to your clients. These days we.
Remind clients a lot. The whole reason we build durable and sturdy portfolios is to be able to absorb these headlines, because it's not at all uncommon for markets to grapple these headlines. You know, It's interesting because we end in September with many different averages at or near all time highs, and so investors are already a little nervous because there's that human bias to try to figure out where the
risk is going to come from. And when you get a day like yesterday where all of a sudden it's a one two three punch, a lot of times investors can be concerned in the short run. But it's interesting when you look through it. And the nice thing is is we're going into earning seasons, so we'll get a lot of color from companies not only about the actual earnings that they've reported, but their outlook for what's coming next and how they're going to absorb all of the
shocks from this. But in the in the when you look at the last few quarterly reports, especially the big months of quarterly report, markets have actually done well because the fundamentals have come through and our companies have proven very resilient. So having portfolios, your minding investors that we've got some fixed income in there for stability, we've got some growth bias in there. Because the underlying trends are very positive, it's been a great place to be well.
It also goes to the other point of how many bullish catalysts there are out there right now. And I'll break it down. Okay, we got margins could actually be better than expected as interest rates wind up coming down. You also have, as you point out, earnings and expectations have been revised lower, so the bar is pretty low. The Fed is cutting twenty five or fifty in November, but they are cutting stimulus from China. Definitely a fiscal spend from the US government no matter who wins the
White House. And I'm obstruct like what is the downside? Like how do you not buy equities in this market? And plus, excess liquidity is really hot.
Well, and I think that's why a lot of times it's called the Wall of Warrior, because the market keeps grudgingly hitting new highs, but you're not seeing the traditional exuberance or ebulliance you would that would mark a market top. And so from that perspective, there is a substantial amount underneath. And actually you can make an argument that a lot of business activities have actually been held in reserve because everyone for the last two years has been fearing a
recession around every corner, and interest rates were high. Now you've got a reversal of those. You've got a lot of people saying, which is maybe reaverted the recession. And oh, by the way, the GDP revisions that we just had erased that technical recession that everyone freaked out about a year or two ago, because that's not even in the numbers anymore. And it goes again to how resilient these companies have been.
Carol, how about the fixed and come space, where do you see opportunities there? And again an interest rate environment where some of the fed's going to continue to lower.
Yeah, we actually we're preferring clients not wait around in cash. Cash has been very comfortable for a lot of people that they at least go a bit out on the curb and lock in some of these yields that you're getting. Now, we're not ready to go out towards the tenure or longer because we actually think the tenure yields are lower than they'll end up being, because we do believe there's an underlying growth bias. You referenced a lot of the
fiscal spend that's out there. There's a lot of stuff that's been targeted and there's thumbtacks in it, but less based on some of the numbers, we're seeing less than twenty percent of what's been allocated is actually out there.
And one of the interesting thing is is you've got a lot of bonding bills on state and local ballots this fall, and to the extent those get passed, you've got a lot of spending teeing up that's matched by those federal funds, and so you've got the opportunity to really put some extra growth underneath a lot of these things. And so we think as that gets absorbed that you'll see that the tenure yields drift higher, not lower.
So, Paul, you'll be so proud of me. I did email my guy and I was like, Hey, so I had this money in my high heeled savings. Should I put it in munis? I'm just saying where the money should go. I thought of Paul. He likes the munis. But it does raise the question of in the equity side, where do you wind up rotating that cash. This an area that we all talked about in terms of the positive catalysts play out. Do you rotate into the cyclicals, do you stick with tech? Do you barbel it?
I think you.
Barbel it, and I also think you move down the capitalization curve because there's a lot of argument that a lot of those small caps have been very fitful at their participation. They'll participate for a week or two or a day or two, and then they'll pull it all back.
And on those pull backs, it's nice to be able to round up some of those because they have by and large, they're going to have better access, they're going to have more floating rate debt, they're going to benefit more disproportionately, if you will, from it FED bringing rates down, and they're also going to participate as the economic activities stays robust in the United States.
Ellen, I want to get your thoughts on alternative investments. How do you put them in the context of your the Bemo Family office in terms of asset allocation for your clients, whether it's private equity, private debt, hedge funds, that kind of thing.
Yep, private equity, private debt, we're probably less. We have selective spots where we use hedge funds as much, probably not as much as we might have a decade or two ago, but a lot of private capital in general. We also have other things. We are very active in doing some custom structured notes for our clients. We look at a lot of interesting non correlated asset class catastrophe bonds.
Some of the interesting niches and credit. The nice thing we have in terms of the private capital that we go after is we can go to smaller funds rather than the multi billion dollar and super big funds. Sweet spot is some smaller funds that get a lot of less attention, if you will, and are in some very niche stoff, so our clients like it a lot.
We were just talking about Nike with punam Go Oil or Bloomberg intelligence analyst, which leads me to the consumer, Right, how do you play K shaped economy At the end of the day.
It is difficult, and it's interesting because one of the pieces that I'm preparing to write is you do have this. There's a lot of angst out there that is coming through in consumer confidence numbers and also coming through in polling numbers. But you've got the odd part is is the top twenty percent of the populace produces forty percent of the GDP activity. The bottom twenty percent produces nine percent, So that top twenty percent is really going to drive.
The overall macro number.
But interestingly enough, that bottom twenty percent has a chance to drive what happens at the ballot box in five weeks and to the extent that the turnout and vote you have a chance to shape policy intermediate, longer term, and so we do a lot of talking like that because obviously our clients are going to sit at the top portion and they're going to be in a very
different scenario. But their kids, their grandkids are looking at a lot different environment because they're finding it difficult to find daycare, difficult to find houses, they're over indebted in a lot of cases with college stat things like that. So it really is difficult and we have a lot of those conversations one by one.
All Right, Kerl, thank you so much for joining us Coush Life. She's a chief investment officer for Bemo Family Office. Joining us there via the zoom thing.
Here, you're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar 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 from Alex Steel alongside Paul Sweeney. This is Bloomberg Intelligence Radio. We're broadcasting to live from Ournactive Broker studio right here. In midtown Manhattan. As Charlie was just talking about, WTI is up by about seven tens of one percent. We're treating at seventy thirty four. The latest headline that just crossed from the Wall Street Journal is it apparently key members of an alliance made of OPEC plus agreed
to ease curbs in December. This is at an online gathering that took place on Wednesday, and according to delegates in the cartel, basically OPEC plus has taken oil off the market and they need to find a time to put it back onto the market, whether it's going to be a slow drip, whether it's going to be a full stop, or whether they're going to have to cut again in order to support the oil price. All of
that surrounding the oil market right now. Ellen Wald is president of Transversal Consulting and senior Fellow at Atlanta Council, and she joins us, Now, what is your read through on that headline?
Yeah, I think that this headline it comes after a couple of interesting headlines from Saudi Arabia saying, know they're worried about oil going down maybe to fifty or they're not pursuing hundred dollars oil anymore. I think that this is really reflective of a process that OPEK has been going through over the past quarter, maybe even half a year.
At this point where they're looking at the market, they know they've got to start unwinding these cuts that they've had in place for a long time, but they're really conscious of where the market is going, what demand looks like in China, and what they have to do to kind of ease the market into accepting that, yes, they are going to be putting more oil on the market.
They've already delayed the return of this oil was supposed to start coming back on the market in October, and they're really just they're pushing it back to December, but they're saying, yes, you know, we still plan on doing this.
I do think, as you mentioned before about Iraq and Kazakhstan and some overproduction going on there, it's entirely possible that they will be excluded from this increase in output because the way that it works is each member only increases a certain percentage, So each individual member is only going to be putting on really a very minimal amount of barrels. They may exclude those members that had been overproducing from this in order to prevent you know, too much oil from flooding the market.
Hey Ellen.
Javier Blass, who is a Bloomberg opinion columnist covering the energy space. He's out with a note today saying that the oil price that matters now is fifty dollars, not that one hundred dollars fabled one hundred dollars dollars target, that's not relevant anymore. Maybe the new target's fifty. What do you think about that?
You know, that's a that's an interesting conception. I do think that there is definitely a we've kind of switched from you know, how high is it going to go? To how can we prevent you know, how can we
prevent there from being kind of a bottom. I do think that he's saying this in part because the Saudis have definitely been hinting at the prospects of you know, they have the potential and the ability to flood the market with oil and push prices down, and that's really the only leverage that they have to get other OPEC members and other OPEP plus members in line, and to keep them in line and you know, adhering to their quotas and so the Satuities say, look, you're you're not hearing.
We can flood the market. We can open the floodgates, and we can you know, increase our production up so high that prices will will go down maybe to fifty and maybe even lower as we've seen in the past, and that will have a major impact on the ability of these other countries to bring in revenue. But for the Saudis, it's really not that big a deal. Then they can take it, whereas those countries will really significantly be hurt. And so I don't think that this is
a threat that they're making idly. But I don't think it's you know, around the corner. I think you'd have to have some pretty severe actions, you know, to see the Saudis go through with this.
Yeah, and then to that point, their break even for oil price is super low, but their fiscal breaking even it is like eighty five, So they can just pairback spending domestically if they needed to support that. The last time they flooded the market, it was to hurt shale producers, and I find it interesting that this time if they wind up sort of rolling back those cuts, it's to
force compliance among its own member. It's an interesting twist before we let you go how much geopolitical risk premium is in the oil price right now and how much you think should be in the oil price right now.
So that's a great question. I do think there is some geopolitical risk premium. We've seen prices reacting to events. Maybe you know, two percent, three percent is geopolitical risk premium. I think, you know, it's hard to kind of divv
that up between the Middle East, between Russia. I think that any kind of risk premium that's associated with the idea that Iran might say close the straight of form moves is really not well founded because this is not the same environment that we saw in the nineties or the eighties or even the early two thousands. Iran is not going to close the straight of form moves. It's
not even clear that they can physically do that. But doing so would so anger China, and China is now the mean customer of it's Iran's main customer, it's Saudi Rabie's main customer, it's the mean customer of all of the Middle East oil producers, and that would so ainger China that the consequences would be such that they would be devastating, so I don't see any reason why Iran
would do that. I do think that there is an elevated risk in the Red Sea, and that's really where our analysts should be keeping an eye on in terms of the potential for some serious disruption.
All right, Ellen, thank you so much for joining us. Ellen Wald she is a president a Transversal Consulting and a senior fellow at the Atlanta Council, and she is one of our go to voices on all things global oil.
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