Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube's a thrill.
They have been laidler with us over the years, with HSBC and others, now with Bradesco BBI, adding equity strategy value each and every day. Ben, I just did the math here. I can do this off the Bloomberg Professional Service seventeen point five percent per year from Christmas Eve twenty eighteen. I think a Gartman on gold in Yen. There's Ladler on get into the market now Christmas Eve of twenty eighteen. Recapitulate that calm now, Are you as
bullish now as you were then? Or is there a different cast to it?
Definitely bullish equities, just maybe less bullish US equities. I mean, obviously it's been a sort of juggernaut since then. We've just had a twenty percent reminder in the last couple of months of why you shouldn't bet against US equities. But I do think this bill market is sort of broadening out. I do think the sort of genies out of the bottle a little bit this year, we got very crowded on sort of how big US was positioning,
got very crowded. I think that was the what drove US a little bit into this cell off we had, and I think the rest of the world now now gets a bit of a look in. I think this is the healthy broadening. You have a double discount in the rest of the world, cheap currencies, cheaper cheap equity evaluations, and you know, some some positive policy, whether that's fiscal stimulus out of China or Germany.
So bullish on equities.
I'm looking for a more average US return from here, but stronger returns in the.
Rest of the world.
So we did see that move, as you mentioned, into the rest of the world earlier this year out of the US. My question is, was that a short term trade, the smart money just trying to be smart, or is that something different?
Do you think, well, you certainly have history against you on that trade. I mean, the rest of the world's underperformed for fifteen years. So I feel like I'm standing in front of this sort of US freight train, you know, But these things do move in cycles. And I do just think that the genie is out of the bottle a little bit on the US. I mean, the US is sixty five percent of global equities, It's twenty five percent of global GDP.
You know, I do a lot of Latin right, latam seven percent of global GDP.
It's seventy basis points of global market cap, right, And you have that narrative in the rest of the world. So I do think a little bit of love goes
a very long way. You do have this double currency and an equity discount, and I don't need to be very right, and I do just think that, you know, the cell off we've had in the US is at least sensitized people to the risks they're running in the US on twenty times earning sixty five percent of global market cap, and I think you get a little bit of reallocation to the rest of the world regard wardless.
You mentioned Latham, I know, and you're previously if you spent a lot of time looking at the Latin American market, where do you see opportunities today in Latin America.
So Brazil's the cheapest market in the world.
Brazil is the cheapest thing.
Anyway, you were looking at dividend yield eight times pe highest real.
Interest rates in the world. As I say, a.
Fraction the size of sort of of GDP, a little bit of reallocation goes a very long way.
Is a value TP well, it certainly has been for a long time.
I think again, we're about to get maybe rate cuts coming in Brazil at the end of the year, which I think will begin to bring those real rates down, allow those P multiples to rise, and I think more broadly across Brazil, across emerging markets, there are no tourists left right, There's no one out there telling you that you.
Know, this has been a great place to be.
So again I think a little bit of reallocation and these asset class that people have forgotten about for fifteen years could to come back.
The magic of your career then is an incredible respect. The corporations are just life goes on. I want you to discuss the onslaught of market timing. Go to cash opinionated punditry that our listeners and viewers here each and every day they're overwhelmed with do this, do that, and you just say shut up and believe in capitalism.
So turn the radio off and do nothing.
No, we know that's not the way we were all here, but yes, there's definitely advantage sitting in your hands are doing nothing, And I don't want to, you know, I don't want to be down on the US here.
I mean, this is not an anti US trade. This is just more average double digit US returns, not the you know this juggern order of riskless feeling riskless twenty percent a year. You know, Tech just delivered three times the earnings going through the S and P five hundred on twenty five thirty times earnings. That seems pretty good to me. Can it get dramatically more than that? You know, no, maybe not, But I certainly wouldn't want to be betting against that.
And you've just had that in the last quarter.
Well we've had I mean since most of our listeners and viewers can remember, Tech has been the narrative of the US stock market.
Is that still the case?
Do you think?
I think so? As I say they're delivering the goods.
You have three times the earnings going through anyone else the S and P five hundred evaluations of de rated you know you're not paying three times the multiple the s and P five hundred for these stocks, so I can absolutely.
Make the case for owning them.
I'm just arguing that you're not going to get the degree of our performance that you've had in recent years, and that gives the rest of the world and other sectors, you know, maybe a look in that they haven't had.
Were welcome all of you acrassination and an eventful Monday. Futures are eight right now, futures of forty if I have a constructive tape here into the Key inflation report and Wednesday in the less than an hour, a conversation an extended conversation with Andrew Cromo, the former governor of the Empire State. He has chosen to run from mayor. We've been interviewing the different may world candidates and this really heated primary of the Democratic Party towards the November
for election. We'll do that here in about fifty minutes. Ben Laidler with us here with Bradesco BBI. We welcome all of you across the nation. Serious ExM Apple car play, it's Apple day to day.
Sure there sleep this week now he's out, he's all set.
Ye, there's Apple day to day and all the busy week ahead. Pump yep.
So absolutely, ben, So, how do we think about just valuation in this market? Here in the US? We've had this boy, yeah, a big twenty percent decline. We've retraced most of that here. Yes, we had a good first quarter earnings, but earnings estimates for twenty twenty five have come down. Is this an expensive market? Once again?
I have no problem with these multiples, I guess I have a problem arguing though they're gonna got a lot higher. Okay, you are on twenty one times earnings, that's still above short and long term averages. It's still the most expensive market in the world. I think that's justified by these
double digit earnings numbers. I have a trouble problem arguing that it's going to be dramatically higher than that, which is why I say, you know, US is fine, but it's well, you know, we're looking at a more average sort of ten percent return, which.
Feels terrible when we got used to twenty. But you know, it's actually fine.
It's got Cronner emails in from City Group right now. He's got it with his MIDI it's mid year. It's not American. How is Krunner doing mid year here doesn't feel like mid year. Definitely, Ben Ladlor pc he goes up, they go to sixty three hundred and SPX with a mid twenty six first take of a below Ladler sixty five hundred. I am afraid to ask Ben Laydlor middle of next year, where is your SPX? Can you give me a seven thousand?
I think we can have reasonably close what's that? That's you know, fifteen ten to fifty percent from here again, I think we're going back to average. Average is good, It's just.
Not what we've got used to, the last couple of years.
Ben talk to us about the earnings out there, because I feel like the Fed's not going to do a whole lot for us, maybe one or two rate cuts in the foreseeable future. So I think I need earnings to really move this market higher. Seven percent earning growth this year, maybe eleven twelve percent next year. Are those numbers solid or do you think there's risk to those numbers or maybe even upside.
I don't know.
Yeah, I think they're reasonably solid, right. I think what we've lived through is this recession scare. I don't think we're going to get a recession. I do think we're going to get more pedestrian growth. But to Tom's earlier point, you know the survivorship bias here. The stocks that we're looking at are the best in class. They are global. There's a reason why, you know, year after year they've been able to push up margins.
They're just very good at what they do. So I wouldn't want to.
Get better against corporate America. I think sort of normalize growth.
They're going to be out.
A doctor s out on live chat and YouTube. Thank you for the live chat and YouTube. Really smart. Subscribe to Bloomberg podcasts. There to Ben Laydler, he says, look, anything over thirteen times is expensive. When we buy a twenty eight times Apple or whatever, are are we just rationalizing out the terminal value out farther where we're saying we're willing to own Apple and we really don't care about the next twenty four months. We're buying it for twenty twenty eight.
As I say, forget about the future. Just look at what you've delivered in the last quarter. Three times the earnings go with the S and P five hundred.
Only two times earnings versus eight ish as the numbers were working. It is amazing.
I think you can justify current valuations. I'm not sure you can justify much higher, which I guess is my point for a more average US return. I totally agree on the thirteen times. Thirteen times is what you pay for the rest of the world. That's why I'm sort of bullish on the rest of the world. Again, you know, a little bit of a little bit of love goes a very long way. Maybe you just need a little bit less bad news and you get the valuation rewriting.
You've already had that valuation rewriting in the US. To your point, you need earnings to keep delivering. I think they are. But you know, how do you get more upside in the US when valuations are high? In earning so already resonably high.
What screens well for you guys this year? I mean that probably has changed two or three times this year. Given we've had we started the unership level, we sold off twenty percent, we've regained most of that. What's screens well for you guys these days?
Again, the rest of the world I think is where you get the risk reward. Okay, growth is firming up. Interest rates have been cut you're getting some fiscal stimulus, and again you're pushing on an open door because currencies are cheap and valuations are cheat and you're getting again, you don't need a lot of money coming out of the US because the US has just got so supersized. These other markets have got so small, you know, a
little bit of ferry dust. And I think that's the driver of this of this rest of the world out performance. And again I only need to be half right there. I'm not betting against the US. I'm just arguing it's a more average ten percent environment to.
Finish ben And this goes to your parchment from London School of Economics and under the University of Cambridge. I think all of our listeners and viewers in America look at the cacophony of the United Kingdom right now and go what I'm talking about in newspapers. They can't fund the police. A week ago, ten days ago, it was
migrants across the Channel. The election dynamics of labor reform in the United Kingdom is there is there a point out there to get to to some form of economic post Brexits stability and growth.
Got a big question. I'm not going to do this justice in thirty seconds. I don't know. At least the sunshines.
No, I don't know, it's at least it's priced for that. I guess it is my point. You know, the trouble in the UK is UK stocks have really know you do the UK Seventy percent of UK stock market revenues come from outside the UK, so in some ways UK companies are sort of voted with their feet a long time ago, and you know plays on the rest of the world.
But my broader point, if you are on eleven twelve.
Times earnings, which is what UK stocks are, you don't need good news. You just need a little bit less bad news and I will be down in the UK. But I think that's probably the narrative. You know, everybody is negative on the UK emerging market. I mean the same thing is internationally. I think that is just a broader narrative. We just end up with a little bit less find news.
Things very right, Ben Laylor, we don't care. The only reason you're here is a transition from clay to grass. Can Coco do as well at Wimbledon as she did at the French Open.
We're talking cricket here, No, we don't do cricket. I tried cricket with Johan writing eight years ago. No, the tenants, I mean it was it was really exciting to see Coco take take Roland girls some sports in the UK. That's something you definitely don't want to bet against.
Okay, Ben Laylor, this is a joking being studio more often. Yeah, you know, talk about over how often do you get to Brazil for Bradesca.
Once a quarter, once a quarter every term nation?
Really interesting, Ben Laylor, thank you, thank you so much. Really one of the iconic calls in the history of Bloomberg Surveillance. On a lonely December twenty fourth of twenty eighteen, he whispered Tom by America, Ben Layler, thank you so much.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Atto with the Bloomberg Business app, or watch us live on YouTube.
We're wonder something different here with Henrietta Treys Theveda Partners. Henriette, I want to note the surprise in an Omaha mayoral race this weekend, the surprise in a San Antonio mayoral race. There seems to be a trend afoot, and I want to bring it back to the mystery of ha Kim Jeffries is a potential leader of the Democratic Party nationally. Is that possible that the gentleman from New York and from New York City would be the party leader.
I wouldn't say it's just possible. I'd say it's quite likely. Ordinarily, when you have one chamber control, one party control all every chambers of Congress, you switch twenty five seats in the House of Representatives in any cycle, and that goes
in both directions, Democrats and Republicans. And what happens is Americans tend to vote for change and then they don't like it when they get so when you have one party control like we have right now with Republicans and President Trump in office, we've seen how the President galvanizes the Democratic base gets turned out to go through the roof in a midterm election cycle. And so I very much expect what happened in twenty eighteen to happen here
again next November. And that's what Republicans will start to pivot to as we start here.
Why are the Democrats winning in Omaha, San Antonio, and percolating in other areas as well.
That one was fascinating in Omaha as well. You know, they've been trying to unseat the incumbent Republican for four straight cycles, so that came as, you know, a huge thing to cheer for the Democratic Party, and they're going to continue to try to do that. I think Rammanuel
made some really good points over the weekend. You know, he's obviously telegraphing that he might run for president, but have a targeting campaign, Go after individual seats and races that you think you can win with a well known candidate in that particular district, however small it is, and whether it's in San Antonio or Nebraska, go for it.
Henrietta, We've seen some news coming out over the weekend from Los Angeles as it relates to immigration deportations and then protests and then President ordering the National Guard into Los Angeles. How's all of this broader immigration policy from President Trump, which has been very effective from his perspective and very quick in terms of implementation. How's that playing on Capitol Hill and in DC.
I'm glad you asked. I was actually with some former members of Republican leadership at a conference we were all speaking at a few weeks back, and one of the remarks that really stuck with me was a sentiment from a former Speaker of the House or Republican member saying, the trouble with the president's immigration agenda is that he was too successful, too quickly. And it's interesting to look
at the data. There's a leak shut off of flow of migrants at the southern border, and the President was just extraordinarily effective in getting his you know, close the border's tactics in place.
And what that.
Did, and we saw just before the situation in LA erupted, is that immigration had proceeded as a major focus of conversation on Capitol Hill, and we'd lost sight of the fact that this one big, beautiful bill includes one hundred and seventy five billion dollars just for the Judiciary Committee, which is immigration enforcement, to roll out over the next couple of years. And I think what the dynamic in LA does is it shifts the narrative away from Medicaid cuts,
Medicare cuts, snap cuts, the deficit increases and positions. It's squarely where there is going to be a con certed focus and new legislation this week from the United States Senate Judiciary Committee on exactly these immigration issues. So it gives an opening for the President to revert back to something that he promised on the campaign trail has already delivered and now needs to resuscitate to our mind motors that he in fact handled it and now has to address another dust up.
So where are we on this tax and spending bill, Henrietta? Obviously the House has made it its point and now it's with the Senate. What's the timing and kind of what are the big issues that we need to pay attention to.
Sure this rest of this week we're going to see four different committees roll out their respective packages. This is mostly going to be on the spending sides. As I mentioned, Judiciary gets to spend one hundred and seventy five billion dollars. I believe they'll roll out their package on Wednesday or Thursday, and then next week we'll get into the Senate Finance Committee, where the big heart of the packages. That's where the Medicaid cuts are and all the tax spending and most
deficit financing. I think the bill the last week of July.
Henry de Trace what's the question you would ask Andrew Cuomo of New York State.
Talk to me about states rights? Where does Gavin Newsom stand on states rights? I think that's what the courts are going to judge on.
Ask what you would do?
He was in opposition states rights all day.
I promise you we will ask set Henrietta Trace. Thank you so much for Vada Partners.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corplay 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.
Charles Canter, senior portfolio manager at Newburger Berman. He and I can go back and forth on the mistakes we've made in our career. It's a long conversation. Charles cantor, how do you have humility away from the Meg seven when you've got Warner Brothers, Discovery trying to piece together you know, the news this morning, it's a time to be humble. I guess with the other four hundred eighty three stocks, right.
I think so? I think that look I think we're in a market that I would describe as kind of nuanced. It frustrates us a bunch when when folks like to think about, you know, Magnificent seven and then the other four hundred and ninety three companies. I think you want to, like we've done a whole career. Is you want to kind of look at each company company by company. We've been in an environment now for a long time where all that mattered was momentum and beta. I'm not sure
we're still in that environment. I think post the election the market started to behave a little bit differently. But but I think what gets lost a little bit on the Magnificent seven is is there's good reasons why many of them, you know, are magnificent. And one thing I'd like to point out is when you look at both their R and D spend and CAPEX spend on an annual basis, these seven companies spend north of nine percent of their revenues on R and D, which is north
of two hundred and fifty billion dollars. To contextualize that amount, that's more than the entire healthcare and biotech sectors combined. Why do we pick those sectors because those sectors have to invest in R and D to replenish their pipelines.
And then on the balance.
Sheet side of the ledger, especially pronounced of the last couple of years as that built out their AI investments. Last year was the first time that they spend more than the entire materials, mining, and industrial sectors combined. Why do we pick those sectors because those are typically the most capal intensive sectors. So at the end of the day, lump together these seven companies have incredible optionality on the future.
That doesn't mean all seven are going to work. It doesn't mean we like all seven, but I and the way for example, Apple's got there versus the way Meta and Google has got there looks completely different. Apple hasn't spent any of the capex that I've just responded to. They've actually shrunk their capital base, whereas the others have invested a lot. And oh, by the way, they've done all of that without leveraging their balance sheets, which is
just astonishing. Go run a model where you spend all that money and somehow don't take on leverage.
So when you think about just big tech in general, forget the MAGS seven. I'm not even sure who's in the mag seven these days. Big tech has been, as long as anybody can remember, been driving these markets higher. It's been the leader of these markets. Is that still the case? Maybe just by the fact that they're so big in the market, it has to be. But can they still leave this market?
They enjoy tremendous scale, and they enjoy tremendous optionality. And as we know well in this room, we are in innovative lead, entrepreneurial spirit lead dynamic economy, and innovation and and entrepreneural spirit has been driving us forward for the twenty five years that I've been on the buy side. It used to be the Internet, it used to be Cisco, it's now the others. And we can get into those comparisons as well.
Do you I mean, I know you're looking at cricket stores, Charles Canter with the stupid goverment. Do you use AI? This nascent AI we have, We are.
Using it in increasingly, increasingly increasingly. Remember, all of the information I'm privileged to analyze is by law public. We have this thing called regulation fair disclosure. And since it's all public, it's all available on your favorite AI machine. We are using it aggressively at Newburger government to think about how to make better decisions. I'm using it personally in my life. It's massively productivity enhunting, I think within
our industry, within Acid Manta. More broadly, I think it's going to have a profound impact ten years from today. I think the way we think about how we crunch data will look fundamentally different. And I have wonderful folks on my team, but the speed at which we can now look at data versus what it used to look like is dramatically different.
Tom.
You know, Alex Steel and I were at a B and Y Melon conference last week down in Washington, DC. To a whole person to a person, the B and Y folks that came on our shows that AI is the most important thing in their business.
Here Charles li'sten back, you were acclaimed on Amazon Whole Foods and all that. Has that worked out for Amazon? I think it has.
I think it has for sure. I think it gets them the last mile. It provided Whole Foods with lots of technology. It provided the consumer Whole Foods customer and idea that Whole Foods was no longer the most expensive ticket in town. But that size of the acquisition was I think north of south of ten billion dollars when they did it, and so when you look at the market capitalization today, it feels very small within the overall context.
The thing that always amazed me about that transaction was was I said, and I wasn't very liked for saying it at the time, that Amazon got Whole Foods for free, because at that moment when they announced the deal, Amazon's share price went up in market capitalization by more than
the totality of the purchase price of that acquisition. And when you look over in time, generally when acquisitions get announced, you know, the net present value on the day is negative, not positive to the acquiring company.
Outside of tech, what screens wat for you guys these days.
It you've got to be nuanced on that.
Again, I think we spend a lot of time thinking about how does technology produce productivity enhancements across sectors? And I truly believe we at when we look back ten years forward and we look back, I think you're going to continue to see this march upwards of operating margins in the S and P. I since I've been at Newburg, everyone said oberading margins at peak oberating Margins camp peak. If you have great management teams running great businesses with innovation in a free market.
Charles Chanter, thank you so much with Newburger Berman greatly appreciated.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
Lisa Mateo the newspapers, It is a joy.
Okay, we're starting with this ay from Bloomberg screen Time. So Lucas Charlrotte. This article about the business behind baseball really interesting because it talks about how TV ratings are up right. ESPN ratings are up twenty two percent, game attendance seven year high in twenty twenty four. I mean, Tom Kaney's going to baseball games at the Yankee Stadium.
But the league is grambling to find this buyer for the major TV package because ESPN, set in February, is going to end the broadcasting with MLB after the twenty twenty five season. And that was earlier than expected, and they were paying like five hundred and fifty million dollars a year and want to pay less than half that price.
The downside is when we sat down right behind the Red Sox dugout, Missus King turned to me, Paul and said, when's halftime. So it's a little a little difficult, folks, I tell you. Anyways, Paul, let me translate it for you. There's one hundred and sixty two games. I'm guessing the NFL at sixteen games eighteen every is it eighteen seventeen eighteen? Well, let me do sixteen games because that's my math right now. That's ten baseball games for every compressed football game of excitement.
It just doesn't work.
No, no, So it's a long season. You build over time. Uh and and baseball is a local it's a local it's not a national game. So it's all about the local.
And they said, Lucas said, the regionals, it's like really difficult except Yankees and Dodgers.
Yeah, a few of them still have some good and then and the Red Sox, but the regional sports networks are just disaster right now.
I just want to know if you did the y m c A dance at the.
Yes even walked down the road to the front Row where you know, I think Mayor Wou was there and I had to do the video of the y m c A dance in front of them. Yeah, well you're sure proud.
There's gotta be a video about their Lisa.
I love it.
I love it.
Okay, I want to go to this one college graduation season right it's starting to wind down. But what actually picked up are the scavengers that scooped up those expensive items that the graduates left behind, like in the garbage rooms and the dumpsters. So for example, like one person in an apartment building in Dorm, North Carolina says she scooped up like Valentino sneakers that are like almost one thousand dollars, incredible toaster, big, you know, tables, luxurious stuff when all the.
Duke students moved out, you know, so that's what you did.
And then you have people doing dumpster diving at Caltech and Pasadena because they're getting thousands of dollars worth of books from the recycling center.
So they're finding likely paid for exactly.
Got it that are in the dumpster from the recycling center that they're taking and then kind of reusing them and reselling that.
There's a headline this weekend. I'll go quickly because we got one more in Clark University Worcester, great school to lay off thirty percent faculty amid restructuring. It's a challenging new college year in nation wide and Morning ninety two nine FM and Worcester. What else do you have?
Get you okay quick one? Those being like paid off? Right, it used to be this mark of shane when you were laid off, but now it's kind of like this badge of honor. This is from Business Insighter. They point to a lot of things like people launching newsletters about being laid off, workers live streaming it on TikTok, layoff influencers now offering advice. LinkedIn has the hashtag open to work on top of that, and there's even layoff merch now.
So before where it was like, oh I got laid off, let me just hide, no, there's communities and everyone is kind of going around all these people who are laid off. So now they have these support groups and everything to help them out throughout the tough time. But it's like this badge of honor that they have now, like I got.
Laid off, Well, I think it's going to be a uptick in. You know, people in Starbucks, you know, sitting there at their laptop looking for jobs or gigging or whatever they do.
I think we'll cover a challenging jobs report on Friday. Lisa Mateo, the newspapers, thank you so much.
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get 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