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Here are the latest headlines on the Bloomberg. The fierce winds expended to continue in southern California, exacerbating wildfires and putting lives at risk. And the number of dead that we know about right now, it is up to twenty four and that's expected to climb. Let's get the update on all this. Will Wade is the Bloomberg Energy and climate reporter here at Bloomberg. Will put things into perspective for those of us on the East Coast. How much has burned?
A lot? I mean a whole lot. We're up to about forty thousand acres. I know that sounds like kind of a random number. So here's some perspective. Forty thousand acres is a little bit bigger than Staten Island.
Wow.
Well, what do we know so far about the origins of these fires?
Oh?
It started, and.
You know what we don't know a whole lot about that. I was just talking to my teammates. We cover utilities, so obviously we've seen in the past a lot of power lines get blamed for fires, and so often it's the case we Pgenie went bankrupt a few years ago because they started a terrible fire. Today we don't know that utility in Southern California, Southern California Edison, and they
are looking at their power lines. There's no evidence now, but they've fielded some of these requests to retain evidence. So that's definitely where people are checking.
First, we've heard a lot of blame being pointed at the mayor, at the governor. Is there any legitimacy to any of that at all? As far as you.
Can tell, As far as I can tell, it seems like a lot of politicization. I may turn out to be wrong on that, but for today, I'd say, don't pay too much attention to that stuff.
So you're the energy and climate reporter for us folks out here in New York. Help us kind of understand the climate in California.
Not only the geography, but just the winds.
And the weather that they have that kind of propelled this fire and is causing it to spread so quickly.
Sure, I mean, I know this really well. I grew up in California the fall and winter months, the Santa Ana winds. They come every year. But what's happened in the past several years is, you know, with climate change, we've got longer, hotter summers. We've been had droughts, so you've get these hillsides that are just baked dry all summer long, all fall long. There's nothing there but dry
bush and trees, and it's fuel for fires. And then the winds come and any tiny spark can trigger it, and the winds are going to just blow these blazes all over the place. That's was the problem. A week ago when there were like ninety mile an hour winds. They died down for a few days, but they started back up again. Now it's supposed to last through Wednesday, could be more after that. I think they're up to
seventy mile per hour gusts coming this week. So it blows sparks, it fans the flames, it makes it harder to put them out.
What is the What do we know in terms of the economic damage so far?
Oh, it's a big number. I just saw a number this morning. We're looking at two hundred and fifty to two hundred and seventy five billion dollars in damages. That's from damages, lost wages, supply chain disruptions, sort of the whole package. But that's that's a lot of money.
That would place this at I mean, correct me if I'm wrong, it would be the in terms of the cost, the worst natural disaster in history in the US history. I suspect it could be.
I haven't seen a ranking on that, but certainly it's going to be up there. This is a this is a big fire, and we're not done yet. I mean, the two main fires are the Palisades Fire and the Eaten Fire. Palisades is about fourteen percent contained. Eton is about thirty something percent contained.
Okay, what does that mean?
Like fourteen percent contained?
Does that mean that.
It's likely to just continue to keep spreading? Like what is the definition of a contained fire?
You know what?
I don't know exactly what it means, but it certainly means that they are not even close to under control yet They're probably going to get bigger.
That's the economic toll the damage is. There's also a psychological aspect of it. You know people out there, you're from that area, I do what's going through their minds.
Well, I'll tell you about my aunt because I was texting with her yesterday. Her house is about two and a half blocks from the front lines of the Eton Fire in North Pasadena. She evacuated a week ago last Tuesday night. She was allowed to go home briefly to pick up some stuff over the weekend, but she is just really rattled. It looks like her house might be safe, at least from what I've been looking at today. It hasn't encroached on it anymore in the past several days,
and I hope that stays true. But if she loses her house, it's going to be really serious for her.
And this is an area where it's just like you grow up, you live there, and then the landscape just like in a few days, completely changes. That's going to have a tremendous impact on your psyche.
Oh yeah, I mean I know this area. I was there last summer. My mom texted me last week, She's like, remember that place we went for brunch last June when you were here. Yeah, it's gone.
Yeah, even the I've seen photos of some houses on blocks are the one house left standing, which, in that sense, I guess you can feel lucky if that was your house. But then what happens Then you move back into your house and all your neighbors are gone, and then you're just on an empty block.
I mean that's devastating. I would think that would really be hard to live there, just to look around at the community that you used to know, and now it's gone, and it'll rebuild, but it'll be different.
What is your sense of what has to happen in terms of rebuilding and what happens in the future. I mean, can you really make your house and your property fire proof?
I mean, you can build it out of concrete. But the thing is, I've been writing about climate change for years and it just gets worse and people more people talk about it now, but we still need to see behavioral changes. There are places that are no longer as safe as they used to be.
Well, I mean behavioral changes in terms of what.
In terms of thinking should I live here? Should I not live here? You know, there's a lot of coastal communities that are you know, the local agencies are saying we're not going to pay to keep rebuilding the roads when the oceans overturn it every summer, and you're going to have to think about how you want to live there.
Well, maybe you know, we should all move to Vermont. Oh, but wait, part of it was washed out because of the heavy rains. Maybe I should move to Florida. But oh, I'm going to get hit with you know, where'd he go? What's safe?
Now?
I wish I had a better answer for you. What I know is that climate change is real and it's a bigger threat than it ever was.
Do you get a lot of pushback when you say something like that.
Sometimes when I talk to my relatives in the South.
Yeah, well, always a pleasure. Thanks Will Wait, Bloomberg Energy and Climate Reporter, the Los Angeles wildfires.
You're listening to the Bloomberg Intelligence Podcast. Catch the program lives a ten am Eastern on Apple, Cocklay 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 Tech.
Heavy NASDAK down another one percent in today's trading. So what's next. Let's put that question to Kim Forrest, a founder at thee Cio Boca Capital Partners. It's kind of safe to describe you as something of a tech geek considering your background. What's on your Bingo card right now?
Sure, well, let's just make a mixed metaphor here my Bingo card, and I was a software engineer. I became a cell side analyst that followed computer company.
I didn't mean that as a pejorative, but you know, I know, no.
No nervous like a good thing.
Man, I love it, okay, But anyhow, just giving people background, and so I do look at tech and tech you know it drove the market. Actually, one company really drove the market last year. I was looking at some statistics. Do you know that the S and P five hundred is fifteen percent in Vidia?
Holy cow? How'd that get to be there?
Well, because in Vidia grew, right, But going to is in Vidia going to grow this year?
Probably a little.
Bit, but not like it did in twenty three for sure, and maybe not as it did in twenty four. So but should you throw out tech? I don't think so. I think there's a lot of smaller companies and probably companies that you don't think are in the bullseye of.
AI that you could take a look at.
So that's what I do if you are a tech investor, But I'd also be very, very concerned about what's happening in bonds. And you don't expect a computer person or a software person to be concerned with that. But it really will affect the market if bond rates go higher from here.
Because the text in particular depend on future earnings and yields are going to put it into that party pretty quickly.
I suppose, yes, yes, I would love to be able to escape you know, math and math modeling, but it really does limit earnings whenever, you know, rates go up. It is the thing that the tenure is the number that everybody discounts forward cash flows at. So the higher that goes, the lower multiple that you can expect. Is it really that easy?
Sadly it is, okay, But you know, I'm just trying to think about years where you know, in the last maybe two years or so, there was a lot of talk about higher rates and how that was going to dent textocs and it hasn't yet.
I'm wondering if something has changed now that we're in what could be I guess a good news for the economy means bad news for textiles because rates are higher because you know, we were kind of saying that last year and it didn't actually play out that way.
Right, And I agree with you one hundred percent that things change and we should never ever just accept like those old sayings of Wall Street because every year is different. We have different investors, we have different companies, we have a different rate environment. There's so much going on. So
at the basis I agree with you on that. I believe if you would have taken out the Magnificent seven, which are all growing well mostly you know, we'll kick out Netflix and Apple are mostly growing on AI, right, the theory that AI is going to drive these things higher in perpetuity.
I think most of tech was down.
And remember tech spending used to equal business it spending, so that's where the higher rates kind of come into play. It was businesses are not going to spend on it, and you know, because they're going to pull back and just not build for the future. So that's kind of one driver there. But I also think in Nvidia has had such an outweighed emphasis on the market on tech and specifically for the last two years. If you go and look at their quarterly earnings and just look at
the revenue. That tells you the entire reason why everybody has piled into in Vidia and why it became, you know, a less than trillion dollar company surely and now the biggest company in the S and P five hundred right by market waiting and.
Price.
So it's been a completely outsized move because it had a completely outside moved in its revenues.
Okay, so what's a spending going to look like from here on out?
Right? Well, you get you get a kind of a picture.
Looking at Microsoft, they say they're going to They said they're going to spend eighty billion dollars this year, this fiscal year. I think it was JP Morgan did a quick assessment on how much Meta, Google, Amazon, and Microsoft is spent. It looks like Microsoft was on track to spend about eighty billion dollars last year because they did it from January to August, and I just annualized, you know, whatever the run rate was, So that brings us to
eighty billion. Now, let's not sneeze at eighty billion dollars. That's a lot of money, but it's going from eighty seventy eight billion in twenty twenty four to eighty billion. So I don't know that the big spenders in AI are going to increase like they did in the last couple of years again because they could. Right they were spending zero on it and now they're spending a lot on it. But I don't know that they're going to double it again.
Kim boys your pleasure. Thanks for being here. I appreciate it. Kim Forrest, founder CIO Boca Capital Partners.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Matt Miller here sitting in for Alex Emily Graffeo sitting in for Paul Sweeney on a day when the markets are down again. I looked this morning at the open, Emily, we were looking at fifty seven eighty two on the S and P five hundred. You know what's interesting, that's exactly the closing level on November fifth, really, yes, the day of the US election. After that, of course we
rallied higher. I think we were in the fifty nine hundreds already by the morning the open of November sixth, but we've erased all of those games and then some since we knew that Donald Trump won the presidential election on November fifth. We were also at four twenty five on the ten year yield back on November fifth, and now we're looking at four seventy seven, So for actually no. Four seventy nine to sixty four right now on the ten year yield, so we're up a solid sixty five
points from our fifty five points from there. The Bloomberg Dollar Index also much higher right now at thirteenenty twenty two. We were closer to twelve twenty back on November fifth. So we've seen all the wrong assets rise in terms of I guess bond yields, and the dollar in the right ones fall in terms of the stocks.
I want to bring in Guarev Moleague to.
Talk a little bit about this, chief investment officer over at Palace Capital Advisors. Does this repricing make sense to you, Guarrev.
I wouldn't say that it makes sense.
I mean it's it's hard to make much sense of the markets these days, with a lot being driven by sentiment. I think if you look at fundamentals from our standpoint from November five till now, in terms of actually what has occurred, nothing much has changed. I think we still expect that we're going to see a pretty solid Q four earning season. We remain excited about earnings for twenty
twenty five. I think the places where most investors taking pause is really what's the action the incoming Trim administration is going to take on the policy front. So in some areas, I would say, yeah, a bit of a surprise to see the uprally and then the downtrended markets. But from a fundamental standpoint, I think for stocks and earnings, we haven't seen much change.
So even after Friday's jobs report and the moves that we've seen in treasury rates, you're still optimistic and it sounds like on the outlook for stocks for twenty twenty five we are.
I think that, you know, as we look at the fundamental drivers, which from a macro level we think about what's going to occur with GDP growth, I think that looks pretty solid when we think about company's own projections, and again as we get through Q four, see some will get a sense of how they're advising as we look at twenty twenty five, but again, expectation of about five to six percent revenue growth. Margins for the S and P are at all time highs, which justifies, frankly,
the multiple we're seeing at twenty one. So many things I would say that don't worry us too much. I think yes, on inflation and yields, A bit more surprised on that front since November. I mean again, you know, but the market has been so volatile with incoming macro data that you know, in the morning, I was talking
with our investment team. We're talking about what's the projection for the end of the year, and I said, you know, I'm just nervous about making a projection because the economic data that has been coming in and bond voltarty, frankly, has been in so high.
What about if we were to get I'm not making a prediction here, but a FED hike, because when you look at to your yields, that is certainly what some bond investors are expecting to come. Do we need a cut for your kind of optimistic view to continue to play out, or if we were to get a hike, could we still see stock staying resilient?
So hike seems something that would shock markets frankly, right, So now you're talking about a slightly different way to view that situation. That would indicate to us that the fact doesn't know what they're doing. Right so far, they mean guiding us towards this fact that, Okay, we think infation is going to be under control. Now again that's
been pushed off a little bit. Perhaps we're expecting a two percent number would have showed up by twenty twenty five, and I think that's looking more like twenty twenty six expectations. But direction is indicating that they're still in a mode where monetary policy is tight and they're going to keep
it at that level. So a change in direction on that side to say we're going to certainly start doing hikes to tighten it even more, I think that would send a signal marketplace the fact doesn't know what it's doing, and then you're looking certainly at a spiraling effect on stock market.
So I think that would be very concerning.
So, I mean, we get a couple of data points over the next couple of days that are going to mean a lot to the Federal Reserve, at least they mean a lot to how markets forecast what the Fed is going to do. We get PPI tomorrow and we're looking for three point eight percent on the core year over year. It's pretty high, right, And we get CPI on Wednesday and there we're still looking for three point three percent.
On the core number year over year.
The Fed wants these numbers to be two, so they're still pretty far away. Don't rates need to be restrictive.
Rates do need to be restrictive, But again, you know, when you think about the lagged effect of policy changes, both on the up and the down, still maintaining rates at a four point two five four point five handle for the Fed is still tight.
So maybe that isn't room for one more.
Rate thought, which clearly market is also icing in at most one rate cutting out of the end of the year.
I think that's still in restrictive territory.
Now.
The inflation picture is also sort of clouded by the fact that there's a huge difference between what's occurring on the services side and on the good side. You know, on the good side, we're saying disinflation. We're seeing disinflation occurring in most of the post of the world. On the good side, right, that's going to flow through to some extent, again, notwithstanding what's the bard that trumped regetation takes on datifs. But again that's an effect that is disinflationary.
So the real question that leaves us where there is what's going to court on the services side. And I think at a four point two five four point five level policy is restrictive enough that we will see a
lack of effect showed through in inflation numbers. Now again, not to say that we'll get to just retrading the fact that, not to say we'll get to a two handle in twenty twenty five, I think that's not in the cards, that we don't see that occurring, but I think it gives us some confidence to say that two is a number that's possible when you look out at the end of twenty twenty six.
All right, g thanks so much for joining us.
Appreciate your Insightguarov Malik there is the chief investment officer at Palace Capital Advisors.
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