How Labor Revisions Could Impact Equities

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I'm a laddy with us right now. I had of active equity in Milwaukee with Allspring Global Investments. All the value heritage is strong over the decades as well. I'm going to cut to the chase people that like the New York Yankees, would kill for the adult responsibility of the Milwaukee Brewers. The Brewers are twenty three out of thirty in payroll. Their total payroll is less than Juan Soto or Aaron Judge make it's like the capital of Vailue.

I'm you know, that's a great question, Tom, and we're working on it. I would say that's exactly where our managers are focused is outside of the meg seven and probably the popular areas of the market. We are continuing to search for where the value lies.

Give me a sector.

Yeah, from a sector standpoint, I think you know one of the most probably hated sectors has been healthcare. I think there are some real attractive areas in diagnostics in the tool space. I know there's been regulatory pressures and uncertainty and pharma and in healthcare services.

Those are you know, less favorable areas for us.

But as we think about change in the future, I think the diagnostics space looks pretty attractive.

I mean, David, I got you and h off the bottom. What a train wreck that's been. It's up twenty eight it's up twenty eight percent off the bottom. It's not even anywhere near breaching resistance and doc talk.

That I appreciate. That I appreciate.

That's man.

How should investors look at or think about valuation you mentioned just just a moment ago. What is it an indicator of How should they be thinking of it in this broader context.

It's a great question, David, Like, look, when I look at just the market averages and valuation, it is not lost on me that we are near historic eyes on almost any valuation metric. But when you search underneath the broader markets and you look at relative value in certain sectors and certain areas, even market caps and different regions, there still are attractive areas, and that's what we're kind

I'm very curious just how you were thinking about the policy picture, the background to all of this, and there was at the beginning of President Trump's second term a lot of anxiety and apprehension about the way this terist policy is can affect a lot of these companies. You've sifted through earning supports and listened to calls and thought

I think we haven't seen the full effect yet. And when you listen to conference calls and when I talk to our portfolio managers, it's clear that company managements are still trying to figure it out. I think it's been less impactful than.

They had thought it would be.

But there's a timing issue right where you know, people built up inventory ahead of time. That inventory has been worked down. There's been pauses and tariffs along the way. Consumer behavior has adjusted for it as well, and so I think, you know, the jury's still out on how much impact they still have, but to your point, it's been less concerning than I would have believed it to be.

How do you respond into Q three here and into Q four. I don't need to do the securitious analyst bit, but how do you respond to the idea that the growthiness stocks will grow the denominator and catch up to a value three years out, four years out, five years out. How do you respond to our new terminal value of Meg seven?

You know, Tom is a great question, and look, we're doing all right.

You know, it's the million dollar question in some ways because in where I've been wrong, in many cases we haven't been absent the Meg seven. But I had thought for some time that you'd have the rest of the market catch up sooner. And the reality is that the cash flow production from those Meg seven have been quite good. But the law of large numbers does come into play at a certain point, and we've seen some hiccups along

Okay, you got a stunning track record, and the Allspring Global Dividend Fund and at the top is in video Microsoft broadcame. The usual victims is, well you got you own a credit down below it's a global fund and Italian Bank? Are you levining in the m Meletti stacks into MEGS seven portfolios?

I think that's exactly what you have to do.

It's about risk versus reward.

And while you don't want to be absent some of those names that do have strong fundamentals, including the Meg seven, you do have to diversify the risk, especially at this point in the market. The market, you know, is not priced or sorry, is price for perfection in some ways, and you know you want to diversify your risk and you have to do that. Outside of those names.

Tom talks about levining, and I'm curious just how much dollar weakness is affecting the overall picture here, especially when you look at stocks like Tom brings up this Italian bank. Is it making stocks like that more appealing less appealing?

Haws?

It shapen your kind of wider aperture of investment now.

You know, for certain, dollar weakness has been a tailwind for international and EM stocks, and it is a theme that we stressed late last year headed into this year that we believed that that would be the case, just given tariffs and other things that we could see coming. I don't think it's over. You could have a balance

And a Luddie thank us so much. Ahead of Milwaukee Brewer Baseball, Active Equity, all Spring Global, thank you so much. Stay with us. More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.

Right now. It's important. Nancy Tangler talk talk talk people do. Nancy Tangler does it. Laugh for Tangler where she puts money to where you have the most twisted portfolio in your ETF up twenty four percent. You're getting nastagg response from a much more cautious portfolio. You have the tech company JP Morgan, the tech company ABV, the tech company RTX. Here's one home dpot it's you've got the room. We

Thank you? That is this so kind?

No, but I'm serious.

Well, I own the poor man's Nvidia tom and that's Broadcom, and that's that's been a workhorse.

So that's a secret is by the poor man's whatever.

Yeah, and then Oracle the poor man's Hyperscaler. So we're focused on dividend growth in that portfolio. We have a growth portfolio that owns all the darlings like Nvidia, paths here, blah blah. But this strategy is a workhorse, and it's over the last ten years. It's just kind of thirteen and a half percent annualized with.

Three bear markets.

So I learned it from the great Tony Spare when Art Laffer owned a piece of our company, and we we just focus on valuation and then we do the work the research.

You mentioned Oracle today a big day for announcing earnings after the bell. What are you looking for there? We were talking earlier just about the need for cloud computing because of AI, Lisa giving us a brief on a Dutch company that's doing business now with with with Microsoft. What does Oracle have to prove when it has that call today?

They need to continue the sales growth projector hitting the numbers. Yeah, and they have a huge backlog, but the company is pretty spotty on hitting their numbers. So if we get a sell off, we've been trimming it back because it's become a huge part of our portfolio. If we get a sell off, we may step back in. But you know, it's it's it's the company that everyone loves to hate. And the CEO or now the chairman that everyone loves to hate. He lives where I live up in Lake

He's doing it right, Tom between this portfolio and the Tahoe residents, I feel, continued David. You mentioned the history the bear markets that we've had. Here we are in this book, and I wonder where you think we are in that as you survey this market today, as we note day in and day out, the records that we keep coming close to or hitting, your sense of how long that's likely to continue, and the indicators that you're looking to that we'll give you some sense of that.

Yeah, So, David, I've drawn the analogy to the nineties when I was not just alive, but I was managing portfolios, and there are a lot of similarities. We had high inflation three percent, we had a higher ten year at seven to eight, and FED funds are eight five to six. So what we know is when productivity is driving growth, you can sustain robust stock price performance for some time. We're just young in this new bull market. The nineties had one hundred and twenty month expansion with over four

I want to get in trouble. I've had some wonderful conversations with Art Laugher. I think he's been criticized in an uninformed way. We've talked about the tangential dynamics first and second derivative, the acclaimed Laugher curve in that what does Laffer and what does Tangler think of Trump fiscal and monetary theory.

So I think doctor Laffer is always diplomatic, and as a former member of not just Reagan but Nixon and an advisor to Trump one point zero, I think they're doing a lot of things correctly. But I hate this takeover of private sector company and doctor Laffer's come out and said, well, if anyone can do it, it's President Trump. And that may well be, but I think it's bad precedent and I think they're overstepping the executive.

Then respond to the gloom crew that says there'll be a jump condition where the smooth curves of our equity bolishness break. How do you invest given the shock potential of a Trump policy gone wrong.

Well, we'll do what we did in April.

We'll buy more.

So were you know we were stepping in on April third, April first, and March. Because you see these dislocations and you say it is the AI trade over, it isn't. I've heard so many people say, oh, well there's that MIT study.

Nobody's making money with AI.

That is not what we're hearing from the companies on the conference calls. We're seeing margin expansion, We're seeing less hiring, which I think is a paradigm shift that is distorting.

Things like the ism manufacturing numbers.

David, get one more in here. But I want to make this clear, folks. People look at Nancy Tangler and they're like, she's out at Lake Tihoe like a starter home. Your homestead is like twelve million dollars and she's retired. How many hours a day are you working? Me? I work about twelve to fourteen.

She's as nuts as she was, or she was, or he's nuts. Eighty five says he's going to live to one hundred and thirty.

I can't resist going back to something you said, which is that you are wary of or you don't like the fact that the government is getting involved with these private companies. What does it mean as you sort of think through the ramifications of this, If you have the US government taking a stake in, say in Intella, what does that do to your or an investor's appetite for that company? Does it provide a sense of security that

I mean, I was, I was alive.

I wasn't managing money when the Chrysler deal where we bailed them out for a billion and a half Jimmy Carter nineteen seventy nine. Then we had to bail them out again, and that was in two thousand and eight, two thousand and nine for twelve and a half minens. It doesn't work and there's nothing in it for the taxpayer. So what happened to Intel shareholders? They got diluted. The government also has warrants, so that could further deleute them and they have no business.

They're not good at it.

Obama Clindra, I mean, I don't know what else to say, but bad, bad policy, very bad answer.

Don't be a stranger. Nancy Tangler. Thanks so I can see the remote. She'll do a remote like in January, will be out in her Dad love that before we too below zero. Nancy Tanglar, thank you so much. Huge performance out of some of her ETF portfolio's. Check that out. Stay with us. More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance podcast. Catch US live weekday afternoons from seven to ten am e's durn Listen on Applecarplay and Android Otto with the Bloomberg Business app, or watch US live on YouTube.

Joining us from Trinity the PhD in economics, Colin, how would you like to chime in, sir? On US economic data?

We avoid the US is at a very instant juncture.

You obviously have an increase in inflation pressures, the signs of the labor market is weakening. So this is a uncomfortable moment for policymakers. I suspect We're welcome you.

From Allied Irish Bank. Colin Hunt with us here and of course with all of his trinity economics. Let's first identify AIB right now. Is is safe to say you're owned by the Irish government. How do you answer that question? We were owned by the Irish government.

The Irish government came to our rescue post to the GFC, and for a period of about fifteen years, the Irish government had a presence on our share register. And in June just gone, we marked the Irish government's exit. And once again the organization is one hundred percent privately owned. And in fact one of the reasons that I'm here this week with the Barclay's Financials Conference yesterday and meeting

Well, this is very important. We'd like to have some news here. Jennifer Dugan's waiting in Dublin for this. Can we suggest that there would be some form of public offering of shares of Allied Irish Bank in the coming weeks quarters Can you make an announcement today?

There's certainly no announcement to be made because we are a we're one hundred percent free floating at this stage. So the government has exited the register. They came to our rescue with about twenty almost twenty one billion euro. We repaid that and now we are one hundred percent privately owned.

This started well, it started very well, doctor, How do you give us some perspective ons of the appetite for cross border transactions at this point in time. So here we're living this day in day out, the ambiguity or uncertainty about trade policy and economic policy. More broadly, what do companies domiciled outside of the United States think of this environment and how's that affecting business as you see it?

Well, I suppose the environment we had a period of uncertainty earlier on this year, very very warmly welcomed the fact that we have come to an agreement between President Trump and President vonder lyin which was announced in Scotland a few weeks ago. Businesses, you know, hates uncertainty. We have certainty.

Now.

Would you pick a twer level of fifteen percent? You wouldn't necessarily, but that's the reality.

That's what we're dealing with.

And at least the uncertainty now has been has been eliminated. The United States is a hugely important market for Arland, not only as a source for our exports, but also as a place where Irish businesses invests. So typically Irish businesses when they outgrow a market that is growing quite robustly but still quite small, they typically go to the UK first and then they go to the United States.

It's a really important.

Place from us from an investment perspective, but it's also a really important country for deployment of our loan book. And of course other Irish businesses followed us as well, So you have the likes of c RH, the likes of Smurfoot, WestRock, the likes of Kerry Group, all having very.

Significant exposures to the United States.

Notwithstanding the uncertainty we had earlier this year, it's still a hugely important market and it's a hugely important provider of external capital.

How is the Irish economy doing today when you look at the housing market, commercial investments through what's the relative health of the Irish economy in twenty twenty five.

College is doing quite well. Like Irish GDP numbers.

Because of the scale of the international sector in the economy can be wild and volatile, so we tend not to look at GDP. We tend to look at modified domestic demand. So this year we're talking about growth summer of the order about two point three two five percent in real terms, unemployment about four percent, and total employment in the state now running a two point eight million. That sounds small, but when I was in college all those many many years ago, thirty five years ago, so we.

Had one million people at work.

So this is an economy usherly transformed right and now one of the best of forming in Europe.

Colin hunt with us with the aled Irish Bank, and we continue. We're commercial free with you across America, in Ireland and around the world. Here is through this important economic report. In fourteen minutes ed Ludlow's schedule to be with us here in a bit on the important Apple meetings. I was talking with Olivia Fletcher. She calls me up. Olivia calls Kay, she just did I wait you It's three am. I'm like Olivia tiny hey, Colin, I got like an hour conversation with you, and I think frankly

So the commercial real estate market had a very good run, and then once we had the turn in the official rate cycle, you began to see valuations coming back.

Quite a bit.

Of course, you had the COVID impact and the impact on commercial valuations because of working from home that would have added it led to a dumbward adjustment as well. But we have seen quite a different step back in valuation market clearing. I think the market is clearing, and certainly we're beginning to see signs of people of higher degrees of interest in the market. There are trades taking place.

But I do think we are at the bottom of the cycling through it.

A related question, perhaps closer to home. I'm wondering what your office is are are looking like. I remember reading you're trying to get employees back three days a week. Some pushback to that, as I know, there was here in the States with a number of financial institutions and other businesses. Here we are at the end of the summer looking to the fall. Where does that process stand? Were you surprised by the reaction? Folks didn't want to come in three days?

So we want to hear this question.

I will answer there's no question. I don't want to hear it. I'm more than comfortable in answering that.

Look we had.

We have a situation where we have effectively three types of work patterns inside in the organization. Our branch staff are in five days a week. Our call center staff are in five days a week. Our security people in five days a week. We have some people who work from home two days a week. We currently have a group of people who work from home three days a week, and we're asking that group of our colleagues to come into the office an additional day. I think it is

I question to Nicholas Booth at Stanford's Wonder four. You've given me the best explanation of this i've heard. Are you down road believing that you're going to compensate people who are in five days a week versus the work from home crew?

Well, the contracts that people have layout in great detail their base of employment, We're not. We incentivize our staff to come to work through a salary check that arise.

In their account on the twenty fifth every month, just.

Because of time. I've got to get to this. There's a back and forth on trade and everything within Ireland with America and tariffs, and Trump comes down to the pharmaceutical industry. Give give us a state that Allied Irish Bank sees of Yes, the weight loss drugs. I'm not using Gurris, just cut and Chisels. Help us with the pharmaceutical dynamic that will change given decisions by President Trump.

So some of the biggest farmer names here in the United States have have had a physical presence in Ireland for over fifty years.

ARND is very attractive.

Location for US in gives you open, unfettered access to the largest single market in the world in the European Union, common law English speaking, and we have of course a cultural and perhaps fraternal affinity.

With one another across the Atlantic.

So we have very the deep rooted US pharmaceutical companies in Ireland. They are it's it's a big driver over exports to the United States. We did go through a period of grave uncertainty earlier on this year, but I'm very happy that that has been eliminated. Now we have some certain humulation to tariffs in that sector.

Thank you for getting life flat beds on air Lingus is doing. I used to be a director of er Lingus.

I was.

I was the one that pushed it through. I don't know who told you that, but City psy Icelandic Airways back. You brought an entourage with you, oh with Guinness too. What is air Lingus is all of a sudden got a buzz to it, doesn't it?

When Erlingas had a buzz to it going all the way back to its privatization. Really two thousand and six, have you got much flatbed's fine?

The life bad?

You need to fly more often with Urlingas said they've had life flat beds for the best part of a decade.

If not more, well you know they have. But there there went. Now they're really pushing it. Conrad, can you come back again? Are you going to be in New York in the next five years? I hope you here in the next five weeks. All right? Led Irish Bank and we said good morning to Boston, the new Elied Irish Bank years ago. Colin and thank you so much, doctor own of led Irish Bank, their chief executive for sir, stay with us. More from Bloomberg Surveillance coming up after this.

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 watch us live every weekday on YouTube and always on the Bloomberg terminal.

David Gerry and for Paul Sweeny. Lisa Matteo is here. She's been seen with a healthy breakfast. I should point out as well, she has newspapers this morning. What do you start with?

Okay, we were talking about AI, so we're going to start there. We're going to go there. People begin to use it more and more, right, so much so open AI. Sam Altman is saying that people are starting to talk like AI, so he posted about it on x He didn't say what particular terms people are using, but he did say it's they have similar writing styles. He says, it feels fake. It wasn't like that one or two

So, I've got too for perplexity here and I'm going to type it in right now because this is the AI we need to know. When does Paul Sweeney return? See it?

Perplexity?

No, it's all sweeting, Yeah, you take My people are saying as well, that changes you let me know, but you have people well anyway, I think all of this is leading to I think what can be characterize is AI slop. So if you look at social media, no I know you do, Tom, there's a lot more of these kind of you know, a lot of dog roll on the.

And that's what they're saying. It's all kind of sounding the same, like it's just kind of recouraged hit.

And yeah, seriously, it's an unknown yeah, expectly.

Okay, this is what we were talking about before. High school math reading scores hit a new low in the US. This is part of the National Assessment for Education Progress. You call it the National the Nation's report Card. So here are the numbers. So a record high forty five percent of high school seniors scored below basic in math. Nearly one in three seniors were below basic in reading. That's also a record. So this was given to students

Just I talked to an educator the other day who said, we're now beyond the pandemic, but at the same time, it's still.

Still dealing with a lot of the residual stuff. I'm struck by how much of this is still online, Like having kids now that mouth on the computer is nothing to do and put the stylist down and pick up the pencil.

They do.

Put the Saint teaser online now.

Right, absolutely, all these year the year siting I think are online.

They are online.

Next.

Okay, So we go from high school to college and have you heard of rush talk? Okay, this is the sorority craze.

It's coming from I've seen documentary.

Yes, okay, so rush talk, it's part of TikTok that's devoted to sorority rush and it's big.

Yes.

Down South. You have the documentaries, you have the Lifetime reality series, you have brand collaborations going on with these girls. But the Boston Globe, what they said was interesting is that the craze is coming from Massachusetts girls, not because they're doing it at universities in New England. They're going more to southern schools because of crazes like this, schools like in Georgia, Alabama. And the Globe took a look into what goes into rush talk. Okay, are you ready

To get girls to get restaurant rush time. Yes, so consultancy such a gif.

Yes, I'm telling you these girls are having mental breakdowns. There's scandals, there's spray hands gone wild.

It's a little crazy test score linked to.

The test court, but it's it's a huge thing. I mean, some girls are making their decisions for college based on these things they see on social media.

Could we have a moment of silence please? Good morning to the tri Delts. Delta Delta Delta, Boulder, Colorado, ten twenty five, fifteenth Street. I have an agent shoulder. One too many screwdrivers. I fell into a rose bushy delta on a hill and boulder.

I noted here there are five bees to avoid according to this article, boys, Biden, politics in general, Bucks, booze, and the Bible.

Yes, because you have to watch.

You before you rush where you rush.

You got to erase stuff from the past.

I mean, she looks a whole New World Show. Yeah, she looks like Lisa, looks like destined for.

Goodness.

She doesn't have to you.

Could see it. Thank you, Lisa Matteo the Newspapers.

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