Bloomberg Audio Studios, Podcasts, radio news.
This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global
headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.
This is a joy.
We're gonna get this out of the way right now. That's a seasonal traditionary. We go to David blench Flower. He is in Hannover, New Hampshire, or he's in Florida, or he's in where he's traveling in Wales or that David Danny blenched Flower described as we get to the job economy, describe the black full season in Handover, New Hampshire.
It's like worse than the planet, isn't it it is?
We we're now in mud season and we've had frozen ground for a very long time.
I came back it from Florida.
We've had two snowstorms since, and then what happens eventually is the frozen stuff in the ground eventually melts and water flows down and the black flies appear. So this is this is not the greatest month to be in Hannovany, Hampshire, but it's great to be with the students and it's been great. And when it stops snowing, it's been raining every day. So it makes you yearn for Florida and yearn for New York City. But you know, you do what you do.
Right, David.
I want to go back to the wage curve, and you're a correct study of the agony the pain of wage dynamics in the labor economy. The biggest single debate that I get in mail is people with bow tie saying the economy is pretty good, And thousands of people are telling me, Tom, you don't know what you're talking about.
In three zip codes in.
Manhattan, the labor economy is really weak, Professor Blanche Flower, Which is it?
Well, obviously there's kind of two worlds, but I think the story actually, if you'd go back to the wage curve and subsequent stuff. The unemployment rate actually no longer tells you much of anything about the economy. Just to put it technically, it's unrelated to wages. So I think people give you the wrong steer from that. The right thing to look at is basically employment, and the US has a really big puzzle.
Unlike every other.
Country in the world, in the employment rate in the US today is below what it was in two thousand and eight and below what it was in two thousand, So that's an element of weakness. The other thing to say in that bas to back the conversation that you just had, if you look at what's happened on the employment on the household account, the decline in jobs in the last eight months or so is greater than it was in the months from February two thousand and eight
through two thousand and seven. So there's conflicting evidence. Some people are really feeling weakness, other people are seeing strength. And I was just looking to think about that question, Tom. Obviously you look at the non van pails and it looks really good, and obviously the economy has been pretty resilient.
But I was just looking at it in front of me as the conference Board, consumer confidence surveys, the Expectations Index, which basically predicts recession, is essentially saying we're in recession and been in recession for quite a long time. So there's this conflict, and obviously part of it is a political conflict. Republicans say the economy is doing pretty badly, and the Democrats say is doing pretty well. So it's
a really pretty confusing picture. I think the answer is the economy has been more resilient, but we've had to put up with with an inflation shop. So it's a kind of poised answer. But I think, and I have a new paper that people can go and see in Economica where Phillips published his original paper, showing you that there's much more weakness here than you would have thought for the strength of the economy.
Professor blanche are casting shade on the household survey Tom. I mean, it's clear he's an establishment survey kind of guy, but.
No cruel and unusual.
The big question facing markets, Professor Blanchard, for me anyway, isn't you know whether the Fed will cut reads?
But why talk to us a little.
Bit about whether or not you feel below target inflation is enough of a case for the FED to justify rate cuts this year, Well.
It's probably not enough.
I mean the analogy I.
Always like to give is go back to think where you were in the say eightpril May June July two thousand and eight, and the discussion was much like this one, saying, you know our rate the cuts coming inflation is five percent, you know where it's going to be eight percent in the future. Well that story was clearly wrong. So the answer is, well, what is the FED going to do? I mean, I think the answer is we're waiting for some data. I mean I think the really important data
is spent. Despite the consumer confidence there I've just talked about, people have continued to spend on services they coause, continue to go to the Broadway shows, the question is is there anything that's going to prevent that. The other thing I would say Damian to Tom And is that it always strikes me as kind of funny. I mean, I always thought when you said interest rates, your job was to think about what inflation was going to be in
eighteen months time. So what the inflation print was this month or next month or the month after was only relevant if it was a surprise. So I just find it really hard to understand for someone who said interest rates thirty six times, why people think that a single data point is going to impact what the FED does.
The FED should be thinking about what inflation is going to be in eighteen months, and as far as I can tell, all the indication are that it's going to be well below the target, which actually says you should be doing rate cuts. So that's the really big debate. Why does the FED think that a inflation print next month is going to severely change their feel about what interest rates will be an eighteen months.
I mean, the reason being.
That it takes eighteen months for anything for you to do to have an impact. So I find this discussion wholly disheartening. And in a sense it's like, well, well, why do they think changing interest rates will affect inflation in a week's time. It doesn't make any sense.
Then we got to go, don't be a stranger.
Thank you so much there, But I really wanted to get Professor Blanchet around with this huge response to time.
You don't know what you're talking about.
We're you're in a really eventful friday, JP Morgan, I'm with Alison Miller. I'm looking below you know I'm looking below the headline data rich is JP Morgan still down like four percent or something? Is it still like you know, underperformance City group was up one two as well.
We'll see it's sort of a stew in futures toteriorate negative at thirty four.
The conversation of the day, if not the week, on China Leland Miller is definitive China basebook. He's out of Darden, Charlottesville, absolutely a student of the microdata.
China is Leland. As simple as I can thumb up or thumb down on China nominal GDP.
I think thumbs up. But everything is relative. What are we basing this off of. I'd say, look, things are going relatively well early in the year, particularly compared to some of the disappointing data last year. But remember their goal is not to rock at GDP skyward. They're not trying to hit some high figure. They probably aren't even
trying to hit the GDP growth target this year. What they're trying to do is establish some stabil some upward momentum, bring back a little bit of consumer confidence which has been crushed for the last several years. If they can do that, then this year will be a success even if they missed the GDP growth target.
Leland all of Yon sold off this week. It's rallied a bit, but I mean it's now down one point seven percent this year, I think twelve point nine percent since twenty twenty one.
It's been down in each of the last two years.
We have claims of outright fraud at China Evergrand now you know, I think China Bank communicator, they're trying to go after Chimeo. You know, talk to us about the property sector, talk to us about Chinese deflation, what is going on there and how can investors take advantage?
Well, first point is deflation. Everyone's been talking about Chinese deflation. China is not in broad deflation. You know, there's there have been you know, there has been a close calls at the end of last year. There is deflationary pressure, but there's not broad deflation in China. You're still seeing gains even though they've been much much slower than everywhere else in the world. So you know, that's reflection the
fact that Chinese economy hasn't been doing particularly well. So you've got problems there, but you don't yet have this you know, deflationary way that's being exported out, like a lot of people are claiming. You know, property is interesting because it was an disaster last year. It's it's not going to be great at any time soon, but they
have stabilized it in the first quarter. And I think the most important thing to take into consideration when you're talking about property is this is not a one year, two year, three year battle. This is a decade plus long battle. And what they need to do is essentially make sure that they're you know, lessening the impact of
property as a growth driver. They want to take it down from twenty five percent of the economy or so down to much much lower, but at the same time not do it so precipitously that they shock the rest of the economy that they send it to a doom loop of confidence. This is really really tough to do. So they're being you know, they're tightening, they're tightening, they're tightening credit, and then when things get bad and cash flow freezes up, contagionous, threatened, then they step in and
ease conditions a little bit, then they start over. So this is a long cycle and it's a really difficult one.
Leland President, she hosted Business execs out of the US C suite executives just last week, trying to entice them, tell them, hey, China is open for business. Then just today China's telling telco carriers to phase out the use of foreign chips. Intel A MD. You know, what should we believe here? I mean, it's China really open for business from the perspective of a foreign investor.
No, of course, not always watch what they do, not what they say. You know, we joke about that. On the stimulus front. They talk about stimulus every day of the week, but they're not stimulating in a big.
Way, you know.
So this, you know, it's the same thing applies to foreign investment. Twenty twenty three was the year of foreign investment in China, and how did they celebrate it by cracking down on foreign businesses, by shutting down external data sources, by shutting down internal data sources. Now, this is this is the incoherence that that characterizes China policy these days.
Lela.
You know, Damie and I really like to talk. We went to China. We're experts on China. We go to the Mandarin in Hong Kong, we go to the Piece Hotel in Shanghai. You know's sometimes it's Saint Regis in Beijing and we say we went deep into China. Leland Miller, what's China's consumer like right now, away from the madness of Global Wall Street, going to three zip codes in mainland China.
That's exactly the right way to characterize it. Cyclically, March, the first quarter looked better than it has been for a while. We were seeing retail pickup services pick up, So cyclically speaking, you know, the consumer was better off in the first quarter. You know, spent more than they had in a long time. So that's it's it's it's bullish cyclically, but the most important backdrop is always the structural backdrop consumpt There is no consumer wave, there is
no consumption push. There is no shift from investment to consumption happening in China because the Chinese economic model disincentivizes households, it disincentivizes consumer spending. So you're not going to see any big time shift. Structurally speaking, China is slowing down massively. There's enormous pressure on consumption. But look sickly speaking, we had a nice month in March and we had a solid first quarter.
Leel, I've got some pretty weak data on the trade front overnight, but I'm looking ahead to Tuesday of next week. Property prices, activity data, retail sales IP, you get your GDP print.
What are you looking for there? What data point is most important to you?
Well, most of these things were ignoring the trade for instance. You know the numbers are weak, but it's off a pretty high base from last year. This makes it somewhat difficult. I think the most important thing to keep in mind is how are retail and services doing. How's the consumption side of the economy doing compared to last year. The answer is it's doing better so far. Has property stabilized? Property is stabilized so far this year. How's manufacturing doing.
Manufacturing did well in March, it didn't do well in January February, but everyone thought it was collapsing last year, and I think we were the only people in the world saying no, it's actually doing fine, and it is doing fine. So the economy's up from last year, and I think that's positive, but you just have to have mild expectations in terms of where that's going.
Leland, thank you so much. Never enough time.
We've got to get you on for three hours at some point the Leland Miller Show. She was at Harvard and went downstreamed the Massachusetts Institute of Technology, one of the most prestigious professorships in economics, the gramlk Professor of Public Policy at Michigan and now holding court at the Boston Fed. It is a perfect time for Susan Collins to speak to our Michael McKee.
Let's listen, let's start with the elephant in the room.
CPI came in hotter than expected this past month, and now you have yourself and others suggesting we're not in any hurry to cut interest rates. Market seemed to be taking this as a policy turning point, is it?
I wouldn't characterize it as a turning point. So let me you're absolutely right that the inflation numbers that came in this week were on what I would call a high end of what was expected, and if you look at the first quarter, certainly inflation is elevated compared to where it was as we ended twenty twenty three. At the same time, it doesn't change my baseline outlook that inflation will continue to come down with a healthy labor market.
I just think it will take more time, and it's premature to tell whether the elevated numbers that we just saw are a bump along that path or something more concerning. So I don't see it as a significant turn, but important to continue to look at the data holistically and let the data tell us what's really going on.
The markets to go back to them have priced out everything except maybe one and a half rate cuts by the end of the year. Is it fair to say that, unlike them, you really don't know what.
You're going to do well.
Policy is not on a preset path, and I think that's important. I think there's a maybe understand and desire to have us map out exactly what's going to happen. But in the current environment, what's really called for is patients being very methodical and looking at the whole constellation of information, not just focusing on one data reading or another one. And so what I would say is that we're continuing to form our outlook, recognizing that there are
lots there are uncertainties in their risks. So I call myself a realistic optimist in that sense, realistic about those risks and uncertainties, but still for lots of reasons, very optimistic that we will see inflation come back down and that labor markets will remain healthy.
Well, how unconvinced are you that inflation is not going to come down as rapidly as you might have thought.
So I do think that we're going to have to be patient and it may take more time. That is one of my takeaways from some of the data that we've seen. You know, at the same time, the data are mixed, Mike. So, yes, the most recent inflation numbers have been elevated compared to what I might have hoped for.
But at the same time, if you look at things like wage rates, so wage growth has been faster than it was pre pandemic, But once you factor in the past price increases and importantly the productivity gains we've seen, the wage growth that we're seeing is consistent with that trajectory back down to two percent inflation, and I think
that's good news for workers as well. But my point is that you need to look at the range of data and not focus too much on one piece and take the time to really see what the takeaways should be.
Well, you said yesterday that the danger of overtightening is kind of moved out of the picture at this point. Growth is strong, unemployment remains low, inflation is at least sticky. If nothing else, why cut rates at all.
So I wouldn't say that that there is no risk of us, you know, waiting too long. I do think that it's two sided. But to your point, I certainly do see more reason to focus on making sure that we don't start easing too quickly.
We're resolute.
I'm certainly resolute about that commitment to bring inflation back down to two percent. You know, I do see policy as being moderately restrictive at this point, and in my.
View, will be appropriate.
As we get closer to that trajectory, it will be appropriate to begin easing. But we're not there yet, so I don't think that we would definitely certainly want to stay where we are. My baseline would still have us starting to ease later this year. But when I see as likely to be later than I had been previously thinking, I.
Have to ask, because everybody's going to bring up the question is does the election interfere with.
Absolutely not? You know, as I've said a number of times, focusing holistically on the data is really what determines appropriate policy, and I have to say there's enough of that to keep us very busy. So that is my focus and that's the focus of the committee.
You mentioned policy is moderately restrictive. What tells you that and how do you know what level of restrictiveness you need?
So in terms of the last piece, that's where watching the data comes from. Are we seeing the balance of performance that we're looking for over time? You know, certainly there's evidence of some restriction. We've seen housing market reactions, We've seen some increase in delinquencies, We've seen some declines in capital spending, and so there clearly is evidence in a variety of places labor markets are coming into better balance,
and that's a really important one. At the same time, consumption and demand have remained perhaps surprisingly strong given where interest rates are and what we might have thought based on history. But you know, we've seen in a lot of contexts the ways that the current context is somewhat different.
So I would characterize where we are as policy is having a restrictive effect, which is what we want, but it's perhaps moderately restrictive, and that calls again for patients and being methodical as we look at all of the data.
We've now got pricing basically for a December right cut as markets move back and forth. But my nerdy economist friends have spent the last two days putting PPI and CPI into the PCE calculations, and everybody is saying PCE is going to come in much milder than both of those. If that's the case, can we say June might be back on the table.
So I don't want to speculate again, you know, not a preset path, and I think we have to wait to se see what the data tell us. But to my earlier point, the data have been mixed, and CPI and PCE don't always move in lockstep. They certainly are very closely related, and so I think we have to
wait and let the data tell us what's happening. And again, it's not just the PCE, although that is certainly the preferred measure that we are focusing on when we look at our two percent target, it's all of it and how it comes together collectively. So wage data will be important.
When I look at the price data, I also want to disaggregate and look at what's happening to the different components, because the dynamics there are different, and that's informative for trying to understand where we might be going, not just where we've been. Key question is where are we going and what's that outlook like, and trying to get to greater confidence before we change the policy stance for Saint Lewis.
FED President Jim Bullard once said, during the aftermath of the financial crisis, whatever you think the right rate for the country is, this isn't it. Are you anxious to cut? Do you want to cut? Do we need a cut? Or can we live with rates at this level?
Well, in the near term, I don't see urgency. I had been a bit concerned earlier in the year, very early in the year, that there might be some signs of labor market fragility. I'm seeing much less reason for concern. But that again is why I see the risks as being too cited. So I don't see urgency, and I see lots of reasons for patients. And over the longer term, I think we'll My expectation is that we will ease and that over the longer term inflation interest rates will
be at lower levels. But exactly what that looks like, it's really premature to be too specific.
The data may be mixed, but what are CEOs in your district saying about both employment growth and also about whether or not they're still having to raise salaries and whether they're going to have to raise prices.
So and we do have many conversations with people throughout our district, large firms, small firms throughout New England. And what I'm hearing is a couple of things. One is quite a bit of optimism in terms of the economy's performance overall. I'm hearing information consistent with labor markets really coming into better balance, being easier to hire, except in a couple of sectors like healthcare, where that can still
be quite a challenge. So you know, it's their differences across different sectors and localities, but that firms have not been expecting the same kinds of wage increases that they had needed before to retain workers, quit rates or way down, much less turnover, and that helps with productivity, right because if you are focused continually on having to fill those gaps because people are leaving and then you have to train people to come up to speed, it's hard to
maintain that productivity that that firms really need. And that's part of the good productivity story that we've seen that has helped with economic growth and helped us to bring inflation down as much as we did in twenty twenty three, despite the fact that growth has been continued to be so robust. So there's a strong supply side story there as well.
Well.
Productivity is one half of potential growth, and you're talking about productivity being good. A lot of argument these days that we're seeing more immigration than we're really accounting for, and that basically potential growth is higher than we thought it was.
Do you agree with that?
So I certainly have seen increases and labor supply as being a key part of that supply improvement story that has certainly benefited the economy. And the labor supply increases have included immigration, and there's been a lot of work which has come from different people finding similar stories in
terms of the increase in immigration playing a role. But we've also seen an increase in labor force participation, particularly in prime age workers that was not anticipated, and really notably among prime age women, even though we know that the childcare challenges continue and those are really quite stark. So there have been some surprising supply improvement news, and we'll have to see the extent to which those continue, but it's certainly been an important part of the story so far.
One last question for our money market desk friends is you had a staff briefing in a discussion of whether or not and when to taper quantitative tightening. The agreement, apparently according to the minutes, was that you should announce it fairly soon. Can we expect something like that at the June meeting, So.
No decisions were made.
The minutes.
Summarized the discussion that we had, and it really draws from lessons from the past period of quant tative tightening from twenty seventeen to twenty nineteen, and some of the key lessons from that experience are the importance of doing the you know, the tightening, in other words, run off of the balance sheet in a way that is smooth and does not cause stresses. You know that proverbial should be like watching paint dry, right, It shouldn't be unexpected.
And so there was broad agreement that slowing the pace, which is currently about twice as fast as it had been in that earlier period, and doing so sooner to ensure that it continues to be quiet and orderly and passive in the backgrounds. Broad agreement for that and also to start that sooner, but no specific decisions have been made yet, so we could.
Get taper before we get a rit cut.
Those things are I see them as being independent, so that could happen.
Susan Collins, thank you very much for joining us today here at Bloomberg on Bloomberg Radio, on top of and World.
What will send it back to? Michael mckeeth, Thank you so much.
With a gentle lady from the Boston said.
This is really important.
I'll put out a tweet and it'll be like some announcement. I'll go dot dot dot anticipated. This is the anticipated book of the fall. Christopher Whalen and his staff are knee deep and through the summer rewrites of his classic Inflated How Money and Debt Built the American Dream first edition. We're gonna give you a front run on the second edition right now. Your book's got to be radically different given the debt and deficit mess we're in right now.
Oh, certainly, Tom, and thank you for that wonderful plug. The last two chapters have to be rewritten. In the past, we were more worried about the dollar.
Does the election matter to you?
No?
Not In the grand scheme of things. I think it's we're nearing the end of the progressive wave of the past century, which was largely driven by my ancestory. So it's no, it's just when a society takes on too much. Eventually the demographics tell you what's going to happen. And we have fewer and fewer workers and more and more old people, so we're going to be consuming capital.
You know.
Bob dougger the retired partner at Tudor, wrote a great piece about the coming drought of savings in International Economy magazine, and that's that's what's going to drive policy.
Bob Douggar is one of the most original, outfront thinkers I've known in the act for years. Yes, he's like really twisted in different Damian dives.
Well, Tom, I mean, I appreciate you. Plug. I'm gonna plug another book.
I'm gonna take you back to twenty fourteen, Chris Well, and let's talk about financial stability, fraud, confidence in the wealth of the nations your book back then, let's think about the lessons learned from the last global financial crisis and now what we're seeing today with these markets.
I mean, how should investors be.
Looking more importantly, what indicators should they be looking at to say, you know, hey, things aren't right here, Things.
Don't smell it well the way I look at banks. You know, we published some bank indices earlier this year and we weighted quality versus size. Now you can't ignore size. But my attitude is if you want to be safe with banks, you want to own the top twenty five out of the top one hundred. So that's a pretty harsh cut. You're basically saying you want to avoid two thirds of them or three quarters of them.
Daman, JP Morgan one ninety six under one eighty eight.
Oh well, let's just talk about that, Chris. It's unpacked that a bit.
You're talking about owning from an investors standpoint, right, you're not talking about keeping your deposits with bak no.
But whether you care about income or alpha, you want to know where the good ones are. And so, for example, we just wrote a piece about BANKO'ZK George Gleeson. Well, George is a little bank, but he produces a lot of construction and development loans. People make the mistake of thinking he's in commercial real estate lending. He's not in the beginning of the life cycle of the asset. Then he gets out very smart.
So talk to us about the big bank little bank, you know, talk to us about that dynamic you know, I mean, is that not going away soon? Do you see that wedge, that divergence in the performance between big and small banks continue well?
In terms of financial performance, the smaller banks do better. They have more pricing power. They tend to have much more operating leverage, too much lower efficiency ratios. And this is why Jamie Timon is so remarkable. Since he bought First Republic, his efficiency ratio has been in the mid fifties, which is painful for everyone else because they're in the sixties low seventies. If you want to compete with Jamie, you've got to have a five handle on efficiency.
Inflated is a twisted book chapter to chapter chapter. It's the only one I know that comes close to you is Marianna Mosicado, who's doing a Marxist thing over in England, and Masakado and Ugo chapter the chapter to say, hey, you can't understand Bloomberg surveillance unless you know your history.
Are we in and towards the.
Fifth Nash Bank of the United States in a combo of JP Morgan and Bank of America.
I think America is headed to a large restructuring that is very similar to the nineteen thirties when the Reconstruction Finance Corp essentially restructured everything that wasn't solving, right.
I got a shift gearser Damien, I want you to climb on board this insight. CIRE and Wayland's led the discussion on this is different now because we have Twitter.
So you're at home or whatever, you're out on the road.
I'm walking vet Bill and I got Twitter up and it's one guy with a genius walk through about something that was one hundred million is now eighteen million in real estate, I mean social media, Damien has changed a CRI tobacco.
No, I agree with that. And look, I mean there's been a lot of talk about the death of cre and clos and other securitized products for that matter in this environment, and so you know, just to move away from that, I really just want to kind of focus more on this concept of the big banks and how you know, the big twenty and those are the ones you want to focus on.
That's still twenty banks, right, and there's a big difference between.
City Group and JP Morgan. So yeah, help educate you need, Like, what are you looking for? How do you differentiate between those big banks in terms of making an investment gape one way or the other.
Well, you know, I've been doing this for a while. We've been building bank analytics for thirty years, and over time you decide what's important. So equity returns, total market return, operating leverage, price to book, all of those things tell you a kind of sort of the same thing, but from a different perspective. You know, for example, George's got one of the best performing banks in the country at Banko's EK, but he's still trading around book. Yeah, American
expresses five times book. Okay, very different, right franchises?
Well, if you're a market update here, Damien, get ready for another question with Christopher. Well, we're down two eleven in the Dow, negative thirty two, pretty much lows here where the market open fifty one sixty seven SPX.
We are moments away from ninety two, Brent, We're not there yet.
Ninety one eighty four just made a dash, didn't get there eighty seven and change on Imax Gold twenty four sixteen, and I sound that this sounds like a data chet from twenty years ago.
You know when you look at banks that I mean just coming back, I mean you look at an interest rate sensitive sector, right and so you know, I guess for me, you know, if I'm believing all this kool aid that's going on in the market right now, and I want to get defensive. You know, Chris, walk me through, how do you think about protecting investor assets in this market?
Is it gold?
Is it cash? Is it money markets? Is it something else?
Well, I would be very careful with financials because we're still coming out of the COVID period when we had zero interest rates. This both helped and hurt. It caused problems and it also solved problems. But going forward, you know, everyone was fixated on net interest margin. You guys had a piece on the Bloomberg this morning. No, it's about spreads and guess what is totally flat rest of the year.
What's so important, folks of Bloomberg surveyllance worldwide.
What you just heard from mister Whylan is a.
Completely different way world from Gina Martin Adams, and yet that came to the same conclusion on financials.
That's really important to.
Twisted orinery different views, and the same conclusion is to be careful out there.
Yeah, and dividan.
The yields are now, I mean, earning yields are now far less than fixing the fields you can get in fixed income, right, So I mean, you know, it's got that mountain to climb. Also, if we go into sort of a risk off environment, you know, last question, Chris, I mean talk to us a little bit about you know, when you do look at equities and you take a step back, how do you approach that? Are you looking at big versus small caps? Are you looking at tech
versus other sectors? I mean we talk about the banking sector, but what else is out there?
Well, look, half of my book is either preferred or debt. The other half is equity. I rode in Vidia UP. I kept stepping off because it was too big. It was a third in my portfolio at one point, and finally I got out a couple months ago. So there are opportunities. I owned Chevron, I owned some other things, but in terms of the banks, I own US Bank, Common and Wells. That's it. Everything else is a preferred.
So if you want exposure to financials, look at the preferreds because there's a lot less folatility in Paris.
Are the real controversial book out who says we got to get back to the time we remember where dividends matter. Are stock buybacks a dividend equivalent, Chris Whaler?
No, No, it's a it's a different to discuss that. Stock buybacks are basically about feeding the street. It's kind of the big you have to pay to the guy on the corner, you know who works for Blackstone or you know whatever. So to me, dividends are a more honest way to return cash to shareholders because I don't have to pay a fee, right you know.
Yeah, we're trying to get you here in ninety two a barrel to create something.
I'm with you talk, Come on, give me the tick.
Guys, triple digits, but I need Are you predicting triple digit.
Oil when that missile flies and hits real estate in Israel? Yes, Look, the world is at war. We never talk about this. The world is in a low intensity conflict that's about to get honor. And that's why Jamie Dumman, by the way, is talking about geopolitical when everybody else wants to talk about Neil.
Let me think about what Chris is saying here.
Since the October seventh invasion, right and Hamas spreads are tighter, oil is relatively I'm going to be a little bit higher now, but really the dollars weaker data.
We can stay in the script, Damen. We got to go to the news here.
There's a lot of news that Chris Whalen, I know you're in from Mono video, Don't be a Stranger, Chris Whalen with a book album that will be must must read.
Now I'll look at the front pages.
What's making news around the world?
Your daily roundup of today's headlines from major publications. Bloomberg Surveillance our daily newspaper segment, The Lisa Matteo Hour, brought you by Interactive Brookers. Interactive Brookers they charge dollar margin load rates from five point eight three percent to six point eight three percent rates subject to change. Learn more at ibkr dot com slash compare. I thought the newspapers were thick with stories today? What did you choose?
Lisa?
All right, so we're starting with the Wall Street Journal.
Have you noticed around the office we have them a lot here at Bloomberg Couches, Right, they're everywhere.
Everyone loves the couches.
Companies trying to make the offices seem a little bit less stuffy to get people to come back in. Okay, So workers are saying they're more comfortable. Managers are saying it helps.
Them think of these big ideas, you.
Know, but experts are saying it's actually bad for your back.
And this is the issue with you know, you're.
Balancing this laptop as you're trying to sit on the sofa.
And then you know that can be an issue.
And then it's also becoming more expensive in a way because people are not taking care of their sofas, so they're spilling their coffee, they're eating their food.
So now the companies have to make this expense and have this so it's cleaned every so often. Your pretzels are all over the place.
And I'm on the Jesus, yes, and you know I clean up after myself with the Jesus.
This is the same, Damien, What do you think here?
I think companies have long tried to make the office a little b less stuffy. They do, uh, you know, restaurants out to terraces, they have signature sense, you know, these little diffusers in the office to make it smell nice.
Smell nice. We have that in my house.
My wife loves that stuff. It smells beautiful in my house.
You know.
Now i'd say it's like that hotel collection.
I don't know my wife. I mean, I gotta ask my interpreter. You know, she controls my names account.
So what do you think, because I mean, this is a huge debate where people are saying. People are saying that we're coming back to the office, and Paul and I were really pushing against it.
We're not sure we see it.
Monday, we don't say it's it.
Mondays and Fridays it still seems kind of quiet around here. But you know, Tuesday through Thursday, I think everyone just needs to kind of come back.
I don't know, I'm kind of.
I have to do it.
I feel like everybody else.
What do you got next?
Okay, the battle between boomers and millennials, it's starting to cheat a shift because millennials are now going to start competing with other millennials.
Here's a reason why.
Okay, So when they first entered the adult world twenty tens, right, so they bonded. They have this against adversity because it's harder for them to say for homes, right, so they bonded together millennials. Yes, they're going against the boomers, but now it's changing, Boomers starting to evade enforce the new competition. Here's a reason millennials who have benefited from family wealth.
So you see the competition, the tension there.
So now you have these millennials who can't afford to by their home, but you have these other millennials who can because their parents gave them the money for it.
So it's his tim I think the interesting statistic here, I mean, Lisa, is the fact that the average millennial had thirty has thirty percent less wealth than the average boomer by the age of thirty five. That's an amazing statistic. And I mean boomers they owned homes, they had you know, home equity wealth, whereas you know, I mean today's millennial I don't think owns all that much.
Realistic.
This is the first time I've mentioned that we're going to feature the sub Monday with bank earnings today in a really full schedule, which you're going to slide it to Monday. Bloomberg News has done the absolutely definitive research project on majors in colleges and to me, the divide, Lisa is people that went to college like Damian Sassaur and got a real degree.
Versus a lot of.
Other people that just sort of slid through and they got this degree or that degree. And to me, that's the millennial divide is people with you know, a legit stem high energy degree. And the Bloomberg Research Paulina Kacheco has this, The Bloomberg Research is absolutely definitive. Will feature that on Monday.
And it's tough because colleges are so expensive too, So that's the science that folds that into it.
Yes, pay four hundred thousand dollars to be a major in sociology.
That's fun.
That works for you.
There you go, you.
Love radio speaking to colleges, Sorre. I want to shift to a lot more elite schools.
They're returning to those standardized tests. So now Harvard Caltech they're starting to bring back.
The SATs kind of did this backtrack.
They were going to make it optional for a few more years, but they changed their mind. Caltech did the same thing, so they're starting to bring it back. But the shift started to happen, which is interesting after the Supreme Court ruling that schools can't consider race and admissions.
And this is where things started to shift a little bit. That's what the article is saying.
Damien's living this in real time.
Oh yeah, I mean, look, I mean all I know is I'm a pan of standardized tests.
I do.
I think you need that number to kind of differentiate, you know, the cream from the crop.
And you know, so I'm a fan of it.
But at the end of the day, if I had a weaker student, who a son or daughter who wasn't a great test taker, I understand that it's it can be a pretty big ask to ask them to sit down to spend.
Hundreds of dollars on tutors.
He's gonna say, I just amount of money tutors.
Granted, COVID was in the way, but they've had too many professors to tell me it's been an unmitigated disaster. They you know, finally Harvard's catching up with Dartmouths and Brown and and there'll be a zillion.
This was like MIT and Georgetown leading away.
Yeah.
Absolutely, But the bottom line is, professor say, they got kids in class, they just can't do the work.
That's the bottom moll Criefing is donating money to the public school system down in Miami to address just this issue because the COVID kids ages, and we're in grade sixteen eight, you know, are suffering.
Lisa Mateo, thank you. Just really strong newspapers all through the week. There, Lisa Miteo with.
One of our most popular efforts.
This is the Bloomberg Surveillance Podcast, bringing you the best in economics, finance, investment, and international relations. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten am Eastern from our global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.