A Shutdown Looms as Markets Move Forward

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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple car Player, Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Katie Kaminski joins us.

She's a chief research strategist Alpha Simplex got way way too many degrees from MIT to even go over. So you do all this electrical engineering stuff, operations research.

What do you do?

You go to Wall Street?

I don't figure it out.

But anyway, Katie, thank you so much for joining us. We always appreciate talking to you. You really give us some really great insight. Here we heard from the Federal Reserve here. How are you guys approaching twenty twenty five?

Well, this is a good question because I feel like this week sent changed quite a bit, but it hasn't changed the long term signals that we see. We still see positive signals for equity markets, so there's still sort of positive momentum there, especially in the US versus other regions.

So let's unpack that a little bit.

It feels like it's still a US exceptionalism theme, and you you kind of say that versus you know, the rest of the world, for example. But Mary Daily, the San Francisco FED president, just spoke on our errand said that she is not comfortable with the rate of inflation at two and a half percent. That really does imply that, no joke, if inflation doesn't come down, the Fed's going.

To cut us full stop. Does that change the US exceptionalism feel? It definitely could.

And you know, when people have asked me, what are

Narrative, Katie, I know you guys at off of Simplex. You guys do everything, you trade everything, you look at everything. How about commodities here your commodities play for twenty twenty five.

Well, this is I mean, commodities have been difficult because what you've seen this month is that weaker economic data has put downward pressure on commodities.

So you've definitely seen.

Some negative signals, particularly post selection and even this month, but we also have seen some pockets of interesting supplied demand opportunities. So take a look at coffee, which has been you know, a really big mover things like cocoa, other sort of more sort of baseline commodities but much more esoteric that have provided interesting opportunities so far.

Oil is going to be a tricky one.

It's been tricky this year, and energy is going to be in the debate. So I think that's something to watch and consider for opportunities.

But also in the debate, though, if you add to that, are the tariff discussions, and we saw in the last Trump administration what that did to corn and soybeans and wheat in terms of the trade routes in Brazil and China and the US in terms of exporting and importing. Are you expecting that to occur this time round?

Definitely?

And you know, in the last Trump presidency we saw a lot of volatility around things like metals particularly, and we studied this and if you take a look at sort of tariff threats versus expectations, they can be very different. And so I think what's going to be tricky for markets is how much of those discussions actually come to fruition. And I think that's going to take time for the markets to understand sort of what of these tariffs are.

Actually going to happen.

And how much of that is going to bake into prices over long term and create opportunities for positioning and things like copper oil, et cetera over the next year.

So I'm looking at the yield curve, Katie. I think I've got a positive yield curve. I'm not a bond person, but I see a positive, stapening yield curve here, none of this inverted stuff.

What does that tell you?

So usually for me, when I'm thinking about the yield curve, I'm thinking about people pricing in long term expectations for inflation. And if you think about that, what that means is that we might have finally stabilized. We've been looking for that steeper yield curve for over a year the beginning of twenty twenty four. That was the big call, like, oh, steeper yield curve now that we're done with the cycle.

You know, you know, I wonder if the dysfunction in DC, particularly wrapping the debt ceiling debate into a continuing resolution or budget is also kind of de anchoring that back end.

I mean, because I think when you add the volatility to inflation, it you know, kind of increases the ranges of outcomes. And so if there's a probability out there that we will have a lot of spending and that there could be a tumultuous path to that, that suggests that there's a lot more uncertainty around long term bonds.

And we've definitely seen that.

Since twenty twenty two, we've seen increased volatility in bonds, and I'd expect this year, especially as we have those those discussions, that the long term volatility for long term bonds will stay elevated.

All right, Katie, thank you so much for joining us. We always appreciate getting some of your time. Katiekiminski, Chief Research strategists at Alpha Simplex.

You're listening to the Bloomberg surveillance podcast. Catch US live weekday afternoons from seven to ten am. Easter Listen on Apple car Play and Android Auto with a Bloomberg Business app, or watch US live on YouTube.

Next guest here, he began his career as a stockbroker. Listen to this firm, EF Hutton and Company. If you wanted to sling stock back in the day, you went to EF Hutton and Company, then Bash and Company, then Prudential Bash. Some of the best research analysts for generations came out of Bash in Company. Then he goes American Stock Exchanged Chicago Board of Options is Exchange. Oh yeah, he did some duty in the US Navy. Our next guest, George Ball, has seen it all. He's the chairman now

The interesting part about the stock markets is that most of the so called experts, which I pretend to be in them not spend the majority of our time talking about what was and explaining it rather than taking the risk of talking about what is going to be. Twenty twenty four was a remarkable year, even with the declines in the last few days in terms of equity returns, and therefore the question is what is going to happen and what's going to cause it next year.

Two important points.

One is when the Fed came out with its comparative late Hawker's stance the other day, the market clearly interpreted it negatively.

The Fed's not going to cut rates that much.

We look at Fed funds rate as a barometer for the market. Let's sell that's upside down. The Fed is taking its more cautious stance in terms of future rate cuts because of a belief that the underlying economy is very strong. If the economy weren't strong, the Fed would not be comfortable mitigating the number of the size of rate cuts that are coming up. Strong economy, high earnings.

How defensive in that do you want to be?

George In terms of equity exposures, not particularly defensive at all. The best mitigator of risk is cash and going beyond cash to shorter duration fixed income securities. Therefore, I think that the smart investor, the but not a craven investor, is going to hold more cash than normal or cash like things as a mitigant against risk. But their equity exposures will be comparatively daring.

The staples.

The defensive stocks utilities which have some AI exposure are probably not the right place to be. You want to be looking for the higher growth type of items and probably continue at least something close to marketway to exposure to the magnificent seven.

So with your equity.

Holdings, be a little bit smaller in terms of the percentage allocation to stocks, but be comparatively higher risk in terms of which stocks you own.

Lisa Alex When I started on Wall Street in June sixteenth, nineteen eighty six, Georgia Ball was a leader of Global Wall Street than at Prudential Based Security is one of the greatest firms on Wall Street.

George, I got to ask you.

He's really fan boying on you right now, Georgia in eighty.

Six years of age, Dude, can you give us a sac Just give us your perspective?

How is Global Wall Street?

How's your Wall Street changed from when you were starting in the business to right now, because you're still a leader on Wall Street, House it changed to.

Those of you who may be actually watching this on a string version behind me right here is a ticker tape, then a ticker that ran in the crash of twenty nine.

It's original ticker. It's got tape from that day. I'm not better.

Back back in the day when I began, the people on the floor of the New York Stock Exchange were the rulers of finance. It's where big events took place. It's where the people were legends. They were towering figures. And today the New York Stock Exchanged floor is a movie set. Uh there, Yeah, there are those stocks traded there, but people have a lot of pancake makeup, makeup up.

That's a big difference. Uh.

Wall Street has spread to all corners of.

Our nation in the world, which is good and bad.

The bad part is the personal relationships between people, the non technology driven relationships, the non AI fabricated relationships. Uh created trusts and bonds that are much less strong and really much less confining in terms of the standards of personal behavior that existed back then. So I regret that I think we've so we suffer some from from the impersonalization of the financial world and the financial markets.

Yeah.

Yeah, technology lets us do things that that even.

That old codure like me could not have believed back.

In the day.

George, thanks so much for joining us.

Always appreciate getting the value of your perspective on these markets here. George Baul, He's the chairman of Sanders Mars. He has been on Wall Street. I can't even don't even know when he started, but way back in the day. But again, some of the greatest firms in the history of Wall Street. George has Let's we appreciate getting his perspective here on these markets.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven 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 Bitcoin.

I'm calling out for Tom Kean because he is obviously a huge fan of of the cryptocurrencies. It was one hundred and seven thousand, just like a cup of coffee goes. Tom Kean would say, here we are at ninety two thousand. To me, I view this, I'm just my personal view. I viewed as a commodity. Okay, gold, it's just supplying dement That's what to me.

That's how I view it, so that a safe haven call.

Then I we don't know. I don't know. It's oil, it's gold, I don't know.

But our next guest is a professional on this stuff, Ayesha KEI. She's a COO of mnn C group. I'm not sure what they do, but that sounds good. Can you talk to us about how we should think about crypto in general?

How do you think about it?

How do I think about it?

I mean I I put it on a pedestal because we are a hedge fund that trades it.

So that's what we do. We make liquid markets for it. The second time I was on this show, I called.

Bitcoin a one hundred thousand yeah, and Tom laughed at like that go ahead, yeah yeah. Tom left at me, he's you're a professor, Like should you be serious? And I said, I'm very serious because we see it at that value, and this is before even the election, right before the election results. Yes, we view it as a commodity. It is setting, you know, a ground work for digital assets. And I think that you know, that's where the economies,

Of groundwork being done.

The only reason we've seen that kind of price action just recently is because the administration, the upcoming administration is pro crypto.

So that's why the market markets rallied.

So MNNC Group is a quantitative digital asset investment firm, So it's not just bitcoin, it's with digital assets, which is a huge step in technological advancements.

I get that.

So how do you look at an asset that's crypto related? And then you got like fart coin, you know what I mean? Like, how do I love it? I love my knowledge on it.

I love it fantastic. So fart coin is a weave coin, Howard Stern.

No, No, this Bloomer Surveillance Radio seven Friday, and.

I have to go and teach my kids at nay you after this.

So I imagine if like any one of them ended up catch like you know, catching this on TV. But meme coin, right, even though these are just useless tokens that are being traded in the liquid markets. In my very personal opinion, and I talk about this like in my class.

Look guys, these tokens are literally putting blockchains to work. Right.

So if this is if this token is based on Solana or this token is based on coin basis base, that is just making sure that the blockchain actually works for that kind.

Of fast buy and sell transaction. That's the youth. I mean, that's just like touch up.

Kind of testing the technology if it works or not. But yes, does part coin has an underlying value? Absolutely? Now does it make sense to exist, Absolutely no, But it is actually just showing everyone that, look, we can create assets on a very decentralized market.

You're also Adjunct Professor of Blockchain and Distributed Ledger Tech at NYU.

Somebody actually created that title. Uh, yes, that is awesome.

I was thinking the same thing. I was like, wow, okay, I.

Mean and again it has to be at n YU in my sense because they kind of cover everything that's cutting edge there. In my opinion, What do you think about this new administration? What does it mean for crypto in general? Because my thought is I'm not sure this president would know a cryptocurrency if he tripped over it.

But that's probably true for everybody out there in the world.

There's a select few that really understand what's going on out there. But what do you think this administration means for cryptotechnology?

Maybe from a regulatory.

Perspective or from regulatory perspective, yes, right, like change of administration, change of SEC, change of CFTC, just more more or understanding you know how digital currency works. That's the number one fact. Even Department of Treasury is pro crypto. And when we say pro crypto, it's just that they understand what digital assets are, right. And then you know, the same same thing with the upcoming president. He may not know,

This, or Eric, or Eric taught me that.

And we've seen Eric, you know, at a couple of you know, blockchain conferences. Okay, So I think like that's where the word I guess is coming from.

Okay, distinguished for viewers like myself, the distinction that we make between a digital token and then blockchain, and then what the importance is to make sure that blockchain works.

Fart Coin is testing that right, right, But what does that mean?

That basically means that you can use a blockchain, which is a decentralized ledger where you and I transact and then you know, Paul gets to see it, right, And that's that's to make sure that the blockchain is working, the technology is working.

And we need the technology because why.

Because it's open source.

Everyone can see the two people transacting and everyone can see you know, who's sending who, and then faster. The reason it's it's faster. It's like super quick, like a couple of seconds for instant settlement and finalization of that settlement. Right like I cannot ask you for your money back once.

I've sent that to you. He would like to see that.

And that's what the open source technology, the open source distributed ledgers.

Shows ETFs have been a major story for crypto and bitcoin in particular.

What does it mean to you? How do you guys use bitcoin ETFs?

We don't, don't, We don't.

It's it's mainly an institutional product for investors who were like access to bitcoin, but don't want to actually touch the bitcoin or you know, ethereum. It's an institutional product for them.

So how do you guys, do you trade in straight?

We trade straight bitcoin and straight ethereum and straight other coins.

Who's been buying the bitcoin is a micro strategy.

Microstoftic micro Strategy.

Yeah, what's up with that?

I mean, he went from his twenty five million dollars to I think like twenty.

Five billion at this point.

He just he just kept buying bitcoin and bitcoin and bitcoin, and he's about to get listed on NASTAC I think December twenty first, and his largest.

Holding is bitcoin.

He's one of the largest holder, if not the largest holder of bitcoin.

Is that a good thing?

It's a very interesting thing, absolutely right.

It is a thing. I guess it is a thing, right thing.

Yeah, I mean, I guess though, I guess. I just wonder if it perpetuates fraud on blockchain?

Is that happen a lot? Because that is a risk too, right.

That is absolutely a risk.

We've seen like companies emerged like chain and chain analysis TRM labs that kind of prevent it or that kind of trace it.

It has gone better over the years.

It's you know, you can easily trace the transaction that is fraudulent, very much less on bitcoin or ethereum, but we have solutions.

Aisha Kiyani, CEO n C Group, also at check professor Blockchain and Distributed Ledger Tech at New York University NYU.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

All right, folks, you're daily look at the front pages around the world. Lease Smith tayo. What do you have worst today with newspapers?

Well, it's probably not gonna be much for you, but more for.

Alie up yep, I feel that's coming. She feels like coming. Okay, new hair color, yay.

It's called recession blonde or maybe mouse brown. Hairstyles say that their clients are a little bit budget, you know, conscious, so they're asking for a new color that it's a little bit low more and low maintenance because it's been a lot of time money blonde hair highlights.

I know it.

I've tried it.

Okay, it takes a while.

Sometimes you can sit there for hours. You can pay up to four hundred dollars a visit. And celebrities like Taylor Swift. You see her hair change. Yeah, like she went from the blonde blonde leak pan and now it's like, you know, toned it down a little.

This is my life too.

This is my trajectory with hair color and Taylor Swift are very similar because basically, if you see any blonde over the age of thirty, like, you know that there's color in that hair corre.

Yeah.

Yeah, So like a lot of my hair color is natural, and I do the highlights. I'm like in and out in twenty minutes.

Because you're short hair well yeah, but.

But even if I wasn't, I mean the style of just paints the highlights on and then we're done, like twenty minutes in.

The little heating thing and we're out of here.

Versus like when I used to go more like platinum, it was a lot more labor intensive and a lot more expensive.

So you know, I feel this. We're going for contrast, contrast color in the hair.

I like it.

Both of you guys natural great, it works. I work hard on this.

But actually, my mom has amazing platinum hair. She doesn't diet.

It's just like her natural hair. So I'm like, let's go, like when that moment happens, we're going to be all in on that.

But it's expensive for you.

Guys, it is, Yeah, it's very expensive and it's often like sometimes you have to do it four months or so during the pandemic, I did my own. I did the box.

I was very much a mouse brown brunette with some like love. Actually, no, I think I went in pretty early because I was back on TV in like January June of twenty twenty, so I think that they opened the salon and it was just like, you know, everyone's masked up.

I was at like CBS, Walgreens, Get in the box.

What I was doing?

All right?

So the next one, Toys, the chief executive of Toys r US Asia separate from the US parent company, tells a financial time it's looking beyond kid toys this holiday, it's moving to k adults. So that's because you know falling birth rates in Asia, right, So they're focused on the gen z kitdults, which is people in their like twenty early twenties to late twenties, that kind of group. They're spending counts for about one eighth of the company's revenue,

That's the thing is that is that?

Do I say right into the game expert Genshan impact, and also like Hollywood movies that are coming out. So this is the shift they're doing so because they don't have as many kids in Asia, so now they have to switch to down.

It seems like I hear the story everywhere.

Now.

Yeah, they're down to as.

I mean, you know what up to the Irish Catholic family when you get like eight and kids.

That's that's not higher education.

Yeah, that's what happened.

I'm not putting like that to college. I mean I like toys, but like I don't need like a Hello Kitty thing?

Would you board games?

I would do board games okay, But other than that, I I'm not clutter. I don't like clutters. Don't like my desk. Care fool you.

I don't like clutter. I don't like stuff, doesn't ask my husband life.

I'm just getting yes, so good.

I always say that good throw stuff out yep. Okay, this one wll Street Journal, the James Bond Battle. Okay, so about here's here's the backstory. Okay, three years ago, Amazon required the rights to release Bond movies through what it purchased MGM. But the relationship between the family that oversees the Bond franchise and Amazon is pretty much falling apart. So with that new hope of a new Bond film

So I don't know if James Bond.

It's kind of in jeopardy now, don't I don't know.

You're right, we haven't seen one in a while, have we.

I mean, like I think I'm okay, I'm okay, I'm going over. But I mean Daniel.

Craig was so awesome as the last Bond and that and the whole pained like you know, spy thing, Like I don't know, Like I don't need another Superman movie either, Like I don't.

I'm good like you can.

They need to make money because they invested so much when they bought it.

That's true, and that's that's the issue. What Daniel Craig was a really good it was. It was very bond I grew up.

My bond was really I guess Roger Moore was my Oh growing up, I.

Caught the tail end of Sean Connery, Sean Connory, Yeah, Nokiars Bros.

And takers.

Mine was heres bros. And that was my bond growing up. Such a nice hair.

Yes, I did enjoy that, but that was more like cheesy fun, which incidentally is very much my jam when it some movies cheesy fun. But uh, Daniel Craig really like took it to the next.

To the next Skyfall coming out, and they came out in twenty twelve, made one point one billion globally, So yeah, he made a ton of money for that. But if you're if you're MGM, that effectively was the asset value of that company, of course, and and that's what I forgot. Amazon bought them, so yeah.

Wait, so they're trying to do an Amazon like James Bond TV show, Because I would super be down with that.

I don't know, We don't know.

It's probably just any franchise they need the green light from Barbara Brockley.

Oh and here's some of the questions in the journal article. What about a money penny spin off or TV spin off with a female double O seven? But I feel like people would going nuts if that happened.

That's that's a big money maker. Have you guys ever been to the SOHO House in the city?

Are you kidding? No, No, I've been. Paul Sweeney has not been to the That's.

A great point. What has happened exactly?

Okay, So it's this exclusive members of only social club, right, forty five club, more than quarter million members, annual membership two hundred dollars if you have to be twenty seven and over. They received apparently nearly two billion dollar takeover a new third party consortium.

That's all they said.

They didn't give a name or the parties involved, And they said the takeover back by billionaire chairman Ron Berkele. But three quarters of SOO houses common stock is owned by the company's board it's affiliates. So this year's really actually took a toime. Yesterday they were down forty seven percent. Now they're down about three. But this is the thing,

But yeah, an.

Annual membership to all of soho Houses clubs cost fifty two hundred dollars for.

Those age twenties.

Much know, there's like in New York City, there are so many good, really old, high quality clubs to join, and then there are a handful of newer clubs like the Core Club for example, which is also very good.

I don't know where Soho House fits in.

Oh No, so house is huge, is it? Yes?

Like you walk in and for the young very special like no, it's a really on the list and there's no stuffiness.

No, no, it's a whole you like, stuffy.

Is huge.

Yeah.

All right, least Matela, thank you very much. That's the newspapers with least Mitelo.

This is the Bloomberg Surveillance podcast, available on Apple, Spotify and anywhere else you get your podcasts. Listen live each weekday seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal