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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 got her. Montgomery Connick.
She called me up.
She said, you know, I want to be on, and they said send me your note and I'm like, yeah, you know whatever. Ts Lombard and they do brilliant work. She's director of macro Strategy there and they're in the middle of her research note.
I don't know how many pages it is, fifteen sixteen page is the absolute single best chart of the months, Skyler. Montgomery Knic joins us right now, macro Strategy ts lomberd Skyler, you got a scattered dot chart which compares a GDP of different nations and their economics Surprise Index, And basically it underscores how the US exceptionalism is all alone with massive GDP, but even Sterling, where the election being called is coming on as well.
What does that chart look like in a year?
What does a scattered ot chart of our expectations versus actual GDP look like in twelve months?
Yeah, I mean it's really interesting, right because that chart tells you two things. It tells you that the US is outperforming on an absolute basis, and I expect in a year's time that you still have that outperformance because if you think about what the two global growth engines of the world are, the US and China. China stimulating, but it's not the kind of stimulus that you did before, and it's not the kind of stimulus that's going to be able to make countries like Europe and the UK
compete with the US. So in a year's time, I think you still have US exceptionalism. But right now the story is very interesting because you're having convergence because of growth surprises, because we've had these massive upside surprises in US growth consensus that's chased that upside surprise, right, So we're now getting downside surprises.
Well, we're getting downside surprises, so they say, but I'm looking at Atlanta GDP now, or look at domestic final sales and these are actually pretty good numbers. When does the party end?
Well, this is what's really interesting is we're getting downside surprises, but we actually care where the surprises are coming from as well. So if you look at Bloomberg's Economic Surprise and dex it very handily gives you all of the components, and what surprising to the downside is sentiment. And I think that's largely related to the level of inflation as well as being a pretty politically charged year, and so
I'm not as worried about the growth outlook. If it's sentiment, that's the reason where surprising to the downside.
Skyler, I'd love to hear your thoughts here on king dollar. I mean, you mentioned back at mid month that the dollar was vulnerable over the short term. These still feel that way. I mean, how quickly do those views on the dollar change and where are we headed from here?
Yeah?
Sure, So, I mean for the dollar, you know, in the short term, I'm still a bit cautious. We're seeing more growth conversions with global growth kind of catching up to US growth. At the same time, the FED has had an asymmetric reaction function, where because we know they don't want to hike, the market is looking for a reason to be dubbish at the same time positioning you know, it's come off of it, but it's still stretched along the dollar. However, I am more positive in the medium term.
You know, growth is converging, but as I said, US growth is still outperforming on an absolute basis. And the key point is that we still need to price policy diversions. Yes, the market is looking for the ECB to cut before the FED, but over the next year and over the next five years, policy pricing is pretty identical. So I think you need to price in more dubbishness in Europe and especially the UK, and that should be supportive for the dollar.
Do you think euro dollar heads from here? I mean, do you have a target there?
Yeah?
Sure, I mean I think one oh five is kind of the next point you're looking for. On the downside, you know, people are talking about parody because you get these massive policy divergence. I don't think we're quite there because the divergence is limited by the fact that you know, the FED does want to cut at some point, and so.
You're talking about yield differentials here, right, and I believe you're absolutely right spot on that they have been a huge, huge driver of currency movement. We can see that just the high carry currencies versus the low carrier you know. But you know, talk to me a little bit about dollar yen here. Something's going on there. Tom's talking about it all week long. Bojing.
You're going to be over the barbecue.
You know, Skyler's going to be, you know, gaming out the British election, and you're going to have a massive intervention the third time here.
Euro yen right now, Damien one's seventy point.
Four to seven of Skyler. I don't want time to quote euro yen anymore. He's going to start quoting, quoting peso yen for us. Talk to us a little bit about the yen here. Is it's still a funding currency and what other funding currency sort of stand out to you in this environment.
I mean, it's absolutely still a funding currency for carry trades to work, well, you need three things. You need an interest rate differential with you have with the end. You need low volatility because you don't want to lose your shirt if you're only gaining five percent in income, and you need positive resentment. And so it's certainly being used as a funding currency. And what you see over and over again is that unilateral intervention does not work.
So while they may be intervening, it's just kind of stopping the bleeding rather than creating a reversal. For reversal, you need that.
So to both of you, Damien Pickett, this is important folks. Pick it up here within the trilemma. If you're going to have a unilateral intervention which never works. I agree with Skyler on that, Damien. What works And the only thing that works is interest rates the central banks to allow ten and thirty years to blow up much higher than one percent.
When I look at my FX models, Tom, and it's certainly real yield differentials that have driven done the heavy lifting at least over the better part of the last one t three year period in terms of currencies. But Skyler, you know, take me through that. You know, what are you looking at here? You know, as we push into the summer slow down, I mean, what's going to drive currency currency performance?
Well, this is the thing. I think it's gonna be a summer slow down, it's gonna be low volatility continued. We're having the push out of the cuts from the FED, and so that means it's a continued carry environment, and so carry can be quite positive.
Still, I look Skylar at the summation of all this, and I slip in one more question here the election suddenly in your United Kingdom? Is it really called just because everyone thinks this as good as it gets for the British economy.
I mean, I'm not sure. I have a huge commentary on why it was called. I think from a market's perspective, it doesn't really matter. And I see two reasons for why it doesn't matter. The first is that labor has been in the lead by a significant margin for a very long time. Markets are good at pricing risk, and so if there was anything to price, it would be priced already. And the second is there's such limited fiscal
space in the UK. We've all kind of been scarred by what happened with Liz Trust and neither party really wants to play with that fiscal space, and so there's not a lot of change that can be made that can affect the economy and in turn rocket that's.
Great that you really steered around that for your general counsel, Skylar Montgomery coning there on Liz Truss as the chief political correspondent for Ts Lombard. Right now, where the markets open, the Dow up seventy three points, I guess I should quote gold. That would be a good way to start with. Exel Mark twenty three two, three hundred and sixty nine. Exel Mark there were gold bugs and silver rights, William McKinley and William Jennings Bryan, and then in the seventies
when I had wider lapels, there were gold bugs. Where are the gold bugs now? Is it just about central banking buying or is there a retail enthusiasm for gold?
He a good morning. I thought the golf talk was the interview of the day. But let's let's talk gold here. The until just recently it appeared that the US retail investor was absent, at least on the exchange s head of products. I've been buying physical gold, but not so much on the ats. Mostly the Chinese retelled bias, and obviously the Chinese Central Bank as well and the like had been buying of late. That might have changed, I see, might because a week or so doesn't make a trend yet.
But yes, much of the gold rally has happened without broad retail participation in the US.
What does that signal to you?
That's a excellent question. I mean, if you are a gold bug, then it means there's a lot of upside potential when those folks finally come in. If you are on the barrier side, you can say, well, it's been Lukewalm, it's only the Chinese I've been buying. At some point the Chinese Central Bank will stop buying. And by the way, the FED is going to be more hawkish and so forth. So with any of these things, gold is this one asset that you're always glad you had, but never quite
know why you want to have it for tomorrow. And so people put different spins on these stories. Is I think your way. I've been a gold invest of for many years and thuty ups and downs, and it's it's about the psychology of gold investing is a completely different.
So I look at gold back twenty years. You can do this on the Bloomberg folks. I'm doing this semi log or percentage change matters. You know, there was a quiet two to gold from twenty twelve ash on over actually went down some, but it's amazing on a large shirt. Damien Sasaur gold with his leg up to twenty three forty six back twenty years is a legitimate trend and really isn't extended.
I didn't know that.
Well for me, it's really what does drive gold and axel. My question for you is, I've always been taught that really yields are probably the best driver of the price of gold. But you know, is it in he supplying the man at this point? I mean, is it really central bank buying this asymmetric sort of return profile for gold that hey, you know now that these central banks own it, they're not going to be selling it, and you know the price only has up to go from here. Is that kind of what I'm hearing?
Well, it's always supplying the man with with any asset, and yes, the real yield is what we have been quote unquote taught. But the one thing about gold is correlations aren't stable. Whenever you think do you find a correlation, it starts to break down. Take a correlation to equities. Correlation to equity is in the long run is zero, But it doesn't mean it's never correlated. It sometimes goes with the s opinion, sometimes against the always just enough
to frustrate people. But indeed it has the coupled, so to speak, from real yields. And most of what we look at is longer term. It's like a seven or ten year but those have broken down as well. Now keep in mind that there are plenty of reasons to be a gold bug. I mean, it's a and you just mentioned some sad geopolitics. I happen to think that what we see in in in gaza ors in Ukraine are just symptoms of a new era. And and similarly, of course the Chinese, they know that the dollar has
been used more as a financial weapon. So all these things, if you want to be the glass of full guy, that is it. But at the same time, right in a short run, anything can happen. Gold a fantastic run.
Well, Axel, tell to us about the broader precious metals complex. I mean, are there opportunities for silver here, for platinum, palladium.
Well, the silver folks have finally a day to celebrate. I mean that's the silver for long, long period lags. The price of gold and silver seems to have broken out from that a little bit. I'm a simpleton. I focus on gold because it doesn't I call it the purest indicator of the mania of policymakers at the FED and other central banks around the world. The moment you go to other medals, it's industrial dynamics that play a
much bigger role. And it may be in part that the manufacturing pmis around the world are picking up, suggesting that on the manufacturing side we are not entering a recession. And that's why Silva's been doing things better, because the Silva doesn't do so well in a recession usually.
In the time we got left with you, you've done a lot of work on dollar, and of course the shock here has been strong strong dollar reaffirm the case that the dollar could fall apart.
Well, we're talking on a Friday, so I might as well speculate. I just mentioned the manufacturing pmis. The rest of the world is more manufacturing heavy than the US. They are strong, so the rest of the world, maybe the central banks won't be easing quite as much, will be more hawkish. We don't see that that speculation. In
the US. We are more services driven, the low end consumers weakening the interest rate hikes are taking a bite very slowly, so they're not biting really at the high end consumer in front of because of the equity rally, and so maybe the US is going to be more dabbagh, especially with COLS bias. And on the day like today, that story makes sense, but I think that's just speculation.
No one's listening. Twelve months from now, where's gold? Excelle got to run Where's golden? Twelve months?
Well, we have a new administration and last time that Trump was elected to to get elected again, and you talked about the gold bugs earlier, all the problems were solved, and then suddenly there was no interest in gold anymore until late in the administration. And obviously it's it's usually not just who was in office, but beyond the line drive US. But the storyline may well change early next year.
Excel Mark, thank you so much on gold. These is merk investments. Right now, Louis Costa joins US. He's global ahead of the it's City Group in a really important position for City Group with all of their foreign reach. In that Louise, I want to go to something you've brought up as a run Niss moment that I've now.
Heard you're the third person, and I'll say eight days that I have said, finally, Turkey, why is it now finally after the massive tobaccle, the depreciation of Turkish leer, or the chaos within their two tier domestic strategy, why now finally Turkey?
A hi, thanks for having media, you know, finally because finally, uh, they are trying really hard to converge to more orthodox economic policy. And we know that that was the past, that was the issue in the past, and but now you know, after meeting so many policy makers from the central Bank and even the wooding coming out of the government,
it feels like there's intention. They've been pursuing it for at least a quarter or so, and this is the starting basically to show in the effects in the in the micro nobles genermy speak global.
Wall streetcause the name so many people know moments Simsek And in the time that I spent an instant bull I really got to know him quite well. Is this a moment sim Sack? I mean, ex Merrill Lynch now working with eerdo one in Turkey? Is this a sim Sck revolution we're seeing in Turkey?
I wouldn't say you know shimshak revolution, but is we have a very capable person at the helm of the economic policy now and he's absolutely determined, right so if politics allows, he will continue basically to develop this orthodox economic agenda which means spider monetary conditions, which means some degree of deceleration and economy. But all we know, if you put this all together, it's very positive for the Takeshlidra hence Hola Longa the leader.
So Louis, I mean, this is incredible. I mean, this is first of all great to speak with you again. I mean I open the show this morning talking about the concept of idiosyncratic carry and how emerging markets can kind of fill that gap. I know you mentioned Turkey here, but talk to me about some of these other local emerging markets like, for example, Egypt, Nigeria, I'm hearing about, Dome Rep. I'm hearing about Uraguay. I mean, are those viable markets for institutions to carry in the short end.
They are viable. They are vibal of course, I mean different strokes for different folks, but they are you know, depending on the jurisdiction, depending on the markets this place, they tend to be more in liquid, so not every client, not every global investor, will have the appetites to being in liquid markets like this. But you mentioned something very important,
which is the search for carry. We are in this environment where global financial volatility is at almost as cyclical notes right, so, and in an environment where we are still seeing some degree of deceleration coming from the developer markets, although the US is definitely hotter than what we expected
it to be by now. But if you put this all together, all we know it feels like a market where you're going to be looking for carry opportunities front end of the a high yield carry or high ut biles and from tier now after so much correction in their economic policy Egypt you mentioned right, they let the currency goal, they high trades, So some of these juridictions are offering very interesting opportunities for investors now.
And another high yoda that's getting a lot of play in recent weeks is of course South Africa. And we have an election coming up next week on Wednesday. Talk to us a little bit about as an investor, I mean the rand is rallied into this election. Talk to us a little bit about how you can invest in South Africa. Is it just the metals and mining play on the equity side, is it really a carry play on the fixed income side? I mean our sagb's back in vogue.
Yeah, as I said, GB's back in vogue. That's right. We love the bonds. We love the bonds now and we have an overweight in the bonds. We have an overweight in the currency as well. And you mentioned this commodity rarely we had recently over the past three months, I mean in terms of trade for South Africa, they have reached a new highs. So we continue to it is and that future is true, the currency that futures
for the markets. Ahead of the elections, there was a lot of investment premium price in when you know that this political premium is finally receding. So we continue to like South African bones now. We believe that that's where most of the premium is located on the bones.
To both you and let me go to you Damien for mere mortals. Listen to this Babbel and em can they acquire what is easily acquireable in et F the captures so called carry.
You know, I don't know of one, Luis, do you know of any you know a vehicle for a retail investor here in the US to really kind of isolate the carry trade and really invest in it. I don't know of any.
Well that many.
I'm not going to recommend that ETF now it's they're not paying for that, but it's up that there is, that there are many ETFs are there right, so that the options are available and they are plenty.
I want to get you in trouble with your general counsel here, Lewis you know, I know you're doing an em thing. Let's look at the emerging market Japan. The fact is on a Friday, I'm looking at one seventy euro yen just a two day exponential moving average. I'm well through the intervention levels of.
What or two weeks ago, three weeks ago?
As well off of the City Group desk. Do you look for Japan intervention action into our Sunday evening their Monday morning.
It's very tough to pinpoint the timing and the last times the markets tried to pinpoint the exact timing they were wrong, right, or the boj was actually a law more sensible and careful and not necessarily impacting the markets much. We know that there was there was a lot of selling of dollars in the past when they felt uncomfortable
with certain levels. But most importantly, this frenzy on the end continues to impose investors towards carry baskets right over, we know, using the yen as one important funding currency. So if that continues, that continues basically to support the ivery basket trade out there.
Louis, thank you so much, Louis costin sitting Girl. Today's front page is a daily look of the front pages pumped for Memorial Day.
Lisa my tech I am.
I'm already a much checking out, all right. So yesterday we told your Live Nation yeah thanks being sued by the DOJ. So the Wall Street Journal has this good breakdown of who is making money off of your concert tickets. So it gave the example of one hundred dollars ticket, which I think is really cheap for a ticket bud ninety dollars goes to the artist, ten dollars goes to the promoter like Live Nation, and then customers typically pay
fees on top of it. Right, you know, when you're done, you get the fees or twenty percent or more of a ticket's face value. So a ticket selling platform like Ticketmaster would collect about five dollars of those fees. The rest goes to the venue, and then the venue also collects for things like parking, food, alcohol, spending. Live Nation
owns and operates the venues nationwide. And then finally the merchandise you have because the artists partner with merchandisers who covers the twenty five dollar cost of making the item, and then they split the profit, so they keep seven passing. It came to the artists, you know, you see, you see, and then how much the venue gets too.
This isn't the heart of this debate. Yeah, the most concerts you want to go to, you can't get tickets that's sold out.
No, I mean I'm trying to get the tickets for the Stones there MetLife on Sunday night. You know, two hundred and fifty bucks a ticket, Tom, I mean that's pretty expensive. Pretty expensive.
Yeah, you can wave to Pennsylvania on that.
You're I mean brown eyed girl, you know so. I mean, but seriously, I mean, like if you just look at them trying, it's amazing how many people get rallied up. I mean, there have been rallies in Washington against Live Nation. I mean it's real stuff. I mean, Senators, it's become a real kind of election talking point.
Also, no, Lisa, is there discussion Lisa in the articles you've seen that it's really about you can't get tickets because the ticket, that one hundred dollars ticket is priced too low.
They're more like what Damiens talk on Members of Congress.
Yeah, that's too And a lot of people are asking, well, why am I paying so much for this? Like where is my money going?
Yeah?
Where is where? Who's getting my dollar? That's what people want to know when they demand.
I looked at Taylor in Paris and I just you know, I mean, you know, afterthought wanted to go, but both both that knowing Canalty, you wanted to go. And yeah it was like, you know, they if we don't get the golf stream, you know, we got to put the dogs in the chairs in the plane.
It's like outrageous.
Next goodness, Okay, Paramount Global reaching a new multi year distribution agreement with Charter Communication. So this is really big for Paramount because you know, the companies and talks with Skydance Media and a blackout would have really hurt those efforts.
But now all of Paramount's networks including CBS. It's streaming services will continue on Charter Spectrum cable systems, So subscriber to charterals Spectrum, they're going to continue to get those paramount channels like Beet, Comedy Central, Paramount Plus with Showtime on top of it. And then Charters also making some services available for purchase to its Internet only customers on top of it.
That's a local story.
But I'm looking at the stock charts for PA, r A and Warner Brothers Discovery, and to be blunt, they've had a bad ten days.
Yeah.
No, I mean, you know there's a bull market, you don't know it.
Looking at those stocks.
It's a really good point in discretionary you know. I just looked at the S and P. The consumer discretionary subsector is actually now down year to date, which is kind of interesting.
Your diard.
If Warner Brothers loses TNT.
Well, I think they will. I think they will. So the NBA deal for guys is going to be seven billion dollars a year for eleven years. You want to talk about a big pot to split up. There it is, And it looks like TNT and TBS are out, so it's going to be Amazon, it's going to be Disney. It's going to be interesting.
We have to see yeah, and that's that's exactly it. So it's gonna be Walt Disney, Comcast, Amazon. This was actually in Lucashaw's news level town. He's the best, Yeah, so he had the great insights. So this is what they found that their finalized agreements with those three, they're going to pay the league and average of about seven billion a year over the next eleven years. Disney is going to get that biggest part of the package that includes the NBA finals. All three would split the other
playoffs and regular season. But what I like what Lucas did is he said that if the NBA signs, Warner Brothers can match them, but it's going to be tough because Comcast is going to put out games on NBC, which is a broadcast network. Warner Brothers doesn't have one of those. The Comcast also involves minimum number advertising oppressions. That's easy for NBC, but for Warner Brothers Turner broadcast, that's a little bit tough there. So it's a lot
to keep up with. I mean, but Warner Brothers could come back, you know, with the right to match it, but they could also go for like a smaller package of NBA game.
I miss Brent Musburger. Next, there you go.
In New York City.
You had mentioned this, Damien. Those charging stations coming to New York City. It's a company back by Google. It's called Gravity and they want to bring they They they're calling them quote unquote trees because they look they're tall, thin, slender, so they're going to fit right into the landscape in New York City. They're saying they're gonna be curb side and they can charge your car and as little as five minutes.
Wait, I thought it was going to look like a tree. I didn't. I think they were going to disguise them, because if they're just going to be metal poles, I don't like that.
It's a metal pole, but it's as thin like that. If you put it next to a tree, the trunks look the same.
Did you say there's no large charge given Tesla or whatever in five minutes?
In as little as five minutes, one will take up to thirteen minutes. The other model can take up to five minutes.
Now they're like quick.
Long, they're like forty fifty minutes.
You have to sit sometimes for like twenty five to thirty minutes. Yeah, to charge your full car, but I'll give about two hundred miles. When do we see But they're going through the city. They're asking the city if they can bring them to the city skiing. Yes, So it's going to be a process, so you might not see them for some time. They are in parking garages on West forty second Street.
There are your newspapers on this Friday at Lista Matao. Thank you so much. This is a 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
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