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Joining us now with the best newsletter. Note in the street is Kellye Cox. She is a privilege of working at Ritzhold Wealth Management for surviving their senior management. Kelly joins us right now, and the note is optimist. Kelly. Let's start there, Kelly Cox, how do you avoid the pessivit pessimism that forces people into safety when they've got actual assumptions that say they need growth.
The notes name Tom. I have to give a shout out to senior management because that was Josh Brown's idea. But I think it's a good reflection of how we at rid hoolts and personally how I view you know, markets and the economy. And I think you have to do that based on the burden of proof, right evidence throughout history that US stocks and the stock market has been the only game in town to build wealth and
beat infletion. So my newsletter is all about processing the headlines that we see day after day in the context of that super important context.
Do the layoffs that you feature today great charts, by the way, see that at Redholts Wealth Management, Kelly Cox to the layoffs the trauma of inside the Beltway, Washington. Does that lead to diminished consumption which finally slows the stock market?
You know, I think we have to take a few steps back here. And I have been on the record for years saying that the job market is the engine of the economy. So when you see one of the biggest job cuts or mass layoffs in history, you have to talk about it no matter where you are in the political spectrum. You know these layoffs, and we're also
getting a sense of how big they are. But the reports right now are that you know, most, if not all, of probationary workers in the federal government could have been affected. That's two hundred thousand people, you know, if that's true, plus the buyouts we've seen, plus the hiring freezes we've seen in the federal government, that could have a huge impact on the job market in DC and consequently on
the job market in America. And yeah, if you think about Americans, you know, we when we make money, we spend money. Consumer spending is seventy percent of the economy. You should be worried about this.
And Tom on that issue. Torsten slock Are from the Apollo is out with the note tracking the employment rate in the Creator DC area and I starting to see a tick up a little bit. So he's going to and it comes to that every every Thursday morning for the district in northern parts of Virginia and southern Maryland.
So we'll keep an eye on that. Kelly. So you know, you talked about, you know, kind of the equity markets being that the real driver of wealth creation historically, and actually within the epuity markets, it's been the tech names that have been really the sources of our performance here. Can that still be the case going forward, whether it's MAG seven or some broader definition of tech, is that still going to be a leader?
Well?
Another concept we like talking about at rid Holts a lot, and we serve long term clients, right, We're not making trades for a month or even a quarter or a year ahead. We're thinking five to ten years down the road. But you know something that we preach at rid Holts and that I personally believe in is portfolio balance, and I think portfolio balance is going to be the phrase of the year heading into twenty twenty five, and we're already seeing it right. You know, tech is lagging the
S and P five hundred. The magnificent seven hasn't been so magnificent, and it hasn't necessarily been because of fundamental developments. Profits are still growing at a strong pace among big tech companies in the tech sector in general, but expectations are really high for tech companies right now, and it's becoming clear that, you know, they're not the obvious winners of this AI story that's propelled them for so long.
Kelly Cox of Redults Wealth Management, what's the cocks Exubert meter look like? Kiley? It's been our theme this morning, huge divergence amongst strategists. But is there a retail exuberants out there? Redults is very good at that, aren't you.
Ah.
So we look at a few different gauges here. The one that's my favorite gauge is the AAII gauge of sentiment, which was looking a little for toward the end of last year, but there's actually been a big swing from euphora to euphoria. To you know, some of the biggest pessimism we've seen in a year and a half, which I think speaks to the policy uncertainty that we're under right now, you know, the selloff or the relative weakness
we've seen in tech. You know, I think it's one of the interesting, most interesting stories on the market right now, because these past few years have been propelled by fear and pessimism and now it's coming back.
Kelly, we're almost eighty percent the way through the earning season this season. Is there enough earnings growth out there to support this market? Based upon what you've seen and maybe some some of the guidance we've heard, I think so.
And you have to keep this in mind when you're talking about how the market is overvalued. Yes, valuations are quite high, especially in tech, especially in these more growthy names. But we are seeing strong profit growth and i'd say the strongest profit growth in growth names right now. That may not continue. You know, if you look at Wall Street analysts essments, there are expectations that this earnings growth will broaden out to other sectors, in fact as soon
as this quarter and the next earning season. So if that's the case, then I would expect other sectors to play catch up in markets, and that's one of the reasons why we're preaching portfolio balance.
But it's not broadened out. What it's really about is a huge body of people that aren't in the market. What do you advise to the cash crowd?
You're right, Tom, you know there's a lot of cash on the sidelines right now, in an unusual amount considering how well the stock market has done over the past two years. I get it. If you're getting four percent on your savings account right now and the world feels uncertain, then yeah, you probably like the comfort of cash right now. But I think you have to be very intentional with
your cash balances. At the moment, I think cash looks like more of an attractive hedge than it did possibly a year ago, because it looks like rates will stay relatively sturdy. But again, stocks are your path to building wealth and beeting inflation. You can't forget that.
Optimist Kelly. Thank you so much. Kelly Cox with Rutult's wealth manager.
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Mark Champion with Bloomberg Opinion and of course Encyclopedic on the continent of Europe. Mark, I want you to give me an arc of the moment in Europe. I take great of events, whatever anyone's in politics with a British newspaper giving me Neville Chamberlain at Munich and whatever is going on. Now, what's your analogue with all your excellent smart Champion to where we are right now?
Well, I think the better analogue is what President Putin did in two thousand and seven at the very same conference in Munich that Vice President Vance spoke at, and you know this weekend, and you know what he did there was to just you know, put the West in general, Europe and the United States unnoticed that he was not going to play by their rules anymore. That he felt that you know, Russia had been cheated and that he was going to assert Russian interests from now on any
way that he felt was necessary. And you know, you've a year later you had war in Georgia, You've then had you know, war was in Crime, et cetera. So it was very consequential what happened this time was essentially the United States saying to Europe, we are no longer
on the same page. We are, you know, no longer going to give you the sort of you know, total security guarantees that you have enjoyed since the end of the Cold War, since before, you know, during the Cold War, and you know, we're going to move on from here. He also talked about, you know, why it is that he thought that, you know, Europe and the US were no longer you know, shared values, and he got involved in trying to you know, determine who the next you know,
leaders of Germany should be. So it was a big shock for Europe and may well prove you know, consequential as two thouven thousand and seven did.
And listen this language, Paul, this is from memory Horden. This is a state department readout established a consultation mechanism to address irritants to our bilateral relationship. Now that sounds like I'm talking to a seventeen year old daughter named after that, But you know, I mean that language, Paul, is so vague to address irritants exactly.
So Mark, where does that leave NATO?
Well, I mean, you know, so NATO is is you know, at the same time, you know, as people always say, the most successful alliance in history, et cetera. But it is based on something that was always very fragile, which is the faith in Article five. The faith that you know, if one country is attacked, no matter how small that member of NATO, if it's attacked, then you know, the rest of NATO and that you know, most importantly, the
United States would pile in to defend them. And so what you the real kind of worry for Europe in this kind of talk is that, you know, what you're really saying is we're not sure about Article five. And you know, it's not just whether Estonia or Poland believes in you know, that that's the case, and that they know not. They start to be worried about whether they really the US really has their back if Russia was
ever to attack them. It also, even more importantly, is where the Russia believes that that security guarantee remains, because it is it's you know, the most importantly, it is a deterrent. It was you know, the whole purpose of nature was never had to have to fight the former Soviet Union or you know, anyone else after the fall of the Soviet Union. So that is what really worries people in Europe.
So Mark, if that were to be the case, is there a belief within the European Union that the states the countries can in fact step up their defense spending and make up for some of the American support.
Well, I mean that's what they're talking about trying to do now. It's always been possible. The problem is that they've known that they needed to do this for more than a decade. They have increased their defense spending a lot in recent years, but nowhere near enough, and they started far too late. They've also are not very efficient in the way that they do it, and therefore they have to recognize they do recognize that they still are not able to defend themselves without the US.
Mark. I got to squeeze this in. I think it's too important. One of the fourteen threads of this over the weekend is that the US or whoever will exit the Baltic Region, the Baltic States, defense of the three Estonia, Latvia, Lithuania, that we will hold Finland less protected. How will mister Putin respond to that? Is that, like the gift of gods to the Tsar of Russia.
Yes, in a word, you know, it's slightly more complicated than that. He's I think quite unlikely to go after Finland. Finland's actually quite well protected. You know, it has more artillery pieces than Germany, France and the UK combined, for example. And so but if you know, the Baltic States are
another matter. You know, they in terms of sort of share of GDP, one could say that they you know, they spend pretty decently, but they are tiny, and they are definitely you know, in what Putin considers as the proper sphere of influence of Russia. So you know, if it succeeds in Ukraine, he will be interested in Moldova, for example, he will be interested in the Baltic States.
How he does that, whether by hybrid means, you know, by different kinds of coercion, whether he just invades that, you know, But I think the real concern for them would be that that the logical place if he wants to test whether Article five really exists anymore.
Not enough time, merch champions, Thank you for your work. Twenty four hours seven work to explain all of this for all of us across America is just huge value added with opinion. Look for Mark Champion. I'll get his work out on social here as I can through the morning.
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 listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
This is important and that we have Tobin Marcus with us. He's had a policy at Wolf Research, but far more than that, we stood the White House within the Biden administration, providing policy and economic perspective. He's qualified, given the way your head spinning in my head spinning because he's out of physics at Brown University. I remember sitting in quantum mechanics surviving Schroeder equations, and then Heisenberg showed up. How
dare he? And there's an uncertainty principle. Now, if you have two particles, you can focus on one, but the moment you focus on one, you lose sight of the other. A whole important idea within the magic of quantum mechanics. Tell me the quantum mechanics now of our diplomatic efforts in America. We can focus on one thing, but then the other things drift away, as seems instantly.
Yeah, I mean, look, the focus is I think shifting rapidly. The Europeans trying to get their their heads around it. But I mean, coming out of the Trump administration, we're seeing certainly an attempt to move forward on a lot of different dimensions. Simultaneously, we have obviously this diplomatic effort out of Ukraine. You know, the Europeans simultaneously are very very concerned about what Trump's terif role out last week could mean for them. You know, it's a lot of moving pieces.
So you were with a Biden administration, would you suggest that the Biden administration did not move forward?
I was, I worked for Biden the Obama administration, so somewhat longer ago, Oka.
But did they not move forward? I mean is what we're going now is initiative. If I'm a Trump supporter, I'm saying, look, we've got an initiative now.
Yes, I mean, certainly, I think the latter stages of the divided administration were somewhat listless. You know, they came in with a lot of ideas. Were you know, faced a challenging global landscape, but you know, certainly you look at places like Ukraine, I don't think that we saw a lot of progress over the course of the past couple of years, sort of theory of the case after the big you know, counter offensive that they tried to
prepare the Ukrainians for, which didn't really succeed. You know, I think mostly we were kind of holding ground for the past few years.
So I guess one of the bigger issues that we're all coming to grips with over the last couple of days is just kind of transatlantic relationship that has been in place since the end of World War Two, you know, against maybe you know, to challenge the USSR now Russia. Is that fundamentally changing now right before our eyes.
Yeah, certainly the incoming administration does not look very you know, trans atlanticist. They're you know, they're looking at our alliances in Europe through a lens of American self interest, and I think they're not convinced that the current set of structures that we have in places is really serving us.
So where does Europe go from here?
Do you think?
Because it appears like the US policy seems to be pretty clear here in terms of we're going to drive this ship and if you want to come on board, great. So how does Europe respond?
Do you think, Yeah, they're really I don't know that the Europeans have the level of internal cohesion that they need to formulate and sort of alternative strategy. I mean, there's been lots of talk for years now about the European Union emerging as a full spectrum geopolitical actor, but you know, thus far they've not really been able to get out of their own way.
My essay the Weekend off Mario Dragy's Chathamhouse work of six seven months ago was a brilliant essay in the Ft where he said Europe has self inflicted service sector tariffs with all their regulation, which he and his team calculate out to thirty forty even forty five percent tariffs. The zeitgeist this morning is the markets are okay because tariffs don't affects. Do you agree with that summary?
Well, they certainly haven't affected markets a lot so far. It's been striking the extent to which markets have looked through them, even you know the China piece that actually already happened. It's equivalent in scale to the entire twenty eighteen twenty nineteen China trade war, and we shrugged it off completely in markets because we didn't simultaneously do twenty five percent on Canada and Mexico. But you look forward, the reciprocal tariff rollout last week was greeted with relief
because it wasn't taking effect right away. We never thought it was going to take effect right away. But the numbers that we could get spin out if we're looking at vats alongside tariffs, are incredibly high. I mean they're north of what Trump was talking about on the campaign trail. You're looking at twenty thirty percent tariffs all in on a lot of these countries if you're just adding up their tariffs and their vats. So I think it's a little premature to be too too relieved.
So what are you telling your clients these days about the inflation risk associated potentially with tariffs with changes in immigration law?
Forgether?
Yeah, no, certainly. I mean they're both sacflationary shocks of different extents. On immigration, there's been a lot of spuiled about deportation. I think it's been someone underappreciated. You know, what's going to happen to people who are already here who stand to lose their work rent. So the big, big impact there. And on tariffs, I mean, look like we have what's already happened on China that's meaningful, but
not world changing. If he goes through and does exactly what he said last week underciprocolar tariffs, that's very inflation.
So quickly folded into Wolf Research is belief in the equity market. Do they take the world of Tobin Marcus and say we cannot ignore it, but we can at least prosper within this maelstream.
Yeah, No, we're not. We're not sort of market wide bears on equities. I think things can continue working. They certainly have so far. You know, from a raids perspective, we're at no FED cuts this year for sure. I think that's that's one impact that we're seeing clearly in terms of what this all adds up to. Ongoing debate.
But that's what we're fascinating. Come back tomorrow when the news completely changes. Tobin Marcus for this Wolf Research here this morning.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple Corclay and Android auto. With the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
The daily look at the front page is a Leasa Matteo hour and now a two hour newspapers because there's that much news. Slowertius start.
Well, not sure if you notice on your Google Maps, but the Gulf of Mexico now reads Gulf of America. You could see it now. Mexico though now threatening to sue Google over the name change. You know, it all started because of president from Executive Water to change the name. But during a news conference yesterday you had Mexican's president started talking about this. She said, a lot of the body of water, Yeah, it's Olexide and you see it right,
see it's in the US. You could see that. But she's saying is that a lot of the body of water lies outside the US maritime borders, in regions that are controlled by Mexico in Cuba. And she says executive orders to rename it only applied to those in the US Continental Shelf. So that's what she is arguing back and forth.
Encyclopedia Britannica said, now we're not going to do that. They didn't do it, and I think I don't know where AP is. I believe they've also said that we're not going to do that.
They have not yet.
I have no idea.
They're not allowed on air farms either.
How you do that?
I mean, I didn't know how they came up with the Gulf of Mexico versus Golf of America to do some research on that. But it is about the territorial waters. I think Mexico has more centers of.
The territorial Mexico and Cube is enormous, like Cuba goes way over to the west.
Yep.
Yeah, but now it's a battle.
It the golf of Jimmy Buffett.
That would be perfect straight went over.
We've been talking about right, the bird flew spreading from birds to chickens to cows, and now scientists are saying, well, maybe it could be coming from more humans. There's been more dairy farmers about sixty eight confirmed cases and people, but they're mostly dairy farmers, and now veterinarians who cared for the cows are contracting it. So what they're saying is that scientists are worried because it hasn't really spread from human to human transmission. So that's where they think
things could change. And if you know, it could happen because we're in the worst flu season, so you have that, it could raise it possibly this new more infectious blue bird flu strain because we're in such an infectious flu season.
Can I do something dumb? What if you get bird flow flu?
It's correct?
Is it like a three day I've got the plague? I can't go to work? Or is it more serious?
I don't know if it's more serious. But what they're saying the problem is that the Federal Gunman has this limited stockpile of vaccines if you were to get it, so that could be an issue if it starts spreading to more humans.
I'm not up to speed on this other than I can't buy eggs right? When can we not buy milk? I mean, what's you know? Does it go over to cows? Like you say milk?
It's time?
Don't do eggs right, let's go up.
The at Costco. They did have the brown eggs only, and everyone was scrambling for them.
It was like and you were you were fried because you were last.
Paul poached?
Okay last quickly? Uh?
How to say, fit past one hundred years old without going to the gym. Okay, so this take notes, Okay, because business insiders spoke to centenarians and they say that they did a couple of things. So what you have to do is you have to walk a lot more so outside up and down the hallway, go to Walmart, walk the walk the aisles, whatever you do. You have to cycle instead of driving, Okay, even if it's like a stationary bike. If you can't drive, you know at
that age, all right, you can get on the peloton, Paul. Okay, make it a social thing, so join like a club, like a bowling.
Club, Paul, Centenarians are there out there.
There is more than you think to be amaz. So they're basically saying these things because they're saying, here's what we've been doing over the past, you know, ten twenty years, and that's why we're living so long.
Paul and I are just trying to get through a Tuesday morning. It's twelve degrees outact and you just seemed glad all over. I mean, I don't know what to say, Lisa.
You just you know, she's so glad he's with them.
Yeah, you gotta keep moving.
Lisa Matteo with the newspapers. Thank you so much.
This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Easter and 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