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Joining us now.
From Morgan Stanley Mike Wilson, their CEO and chief US equity strategist, thrilled that he will be with us for this extensive half hour, and say good morning to Global Wall Street. Mike Wilson, I'm going to do this in a classy way and I'm not going to mince words about it.
I'm death on.
Fan distribution analysis where you So I've talked to Dominic Constant and Credit Sweee and Amozoa about this. You set up a single point now and you do a set of what ifs three years out, five years obtained years, and you come up with a pretty little fan of what ifs. I don't see that in Mike Wilson research. I see guestimates, the rigor of an Excel spreadsheet. I see single points, scattered dot charts. Can fam distributions like one of your competitors came up with this week to
give us a three percent SPX. Can fan distributions work.
Well?
I think it depends on how you utilize them. I mean we we do a bullbear based case. We've done that for you know, the duration of as long as we've had this job, and I think every investor does that. It's called a risk reward. It's what's my upside, what's my downside? And then you basically skew your you know, your positioning based on whether you think the downside or upside case is more likely. Whether we're talking about a single stock or the S and P five hundred, So it's no different.
I don't think that's a unique approach.
I think that's the way most investors think about how to put money to work, and so I think I think it works.
But I mean doesn't mean you're going to be right. That's the That's the thing.
Like like do you bet on the bull case or you've been on the barcase at any given time?
Depends on how they go out. Is it play out the way you think it plays out?
Paul, you live this it credits suite where Dominique was sitting there trying to do extrapolations in future forecasts of interest rates, and he and Irid Jersey have these wispy little charts that they.
Enjoyed being wrong on for over a decade.
Exactly right. And so, Mike, you know, one of the things I think a lot of investors are thinking about here is we think about it kind of what's the next leg to this market in any direction? Is what's going to lead us? There is you know, kind of for most of our listeners and viewers, technology has been the sector that's led this market for you know, positive or negative. How do you think about technology and the
tech sector? And I don't know if that that's just AI or broader in terms of a leadership position for this market.
Well, I think that's a little bit of of a mistake to say it's just been tech, because the reality is that if you look at the technology sector in an equal weight basis, or just look at the average technology stock, it's actually underperformed the S and P five hundred, which really worked in the last i'd.
Say two years and really the last ten years.
Is high quality, large cap stocks that can operate in the environment that we're been given and the environment we've described this very clearly, which is we're in a situation where you're in a fiscal dominance where the government is just getting bigger and bigger every year, and in doing so, they're essentially crowding out a good chunk of the private economy.
And so who benefits in the world that we live in Large cap companies with scale, who can operate in this environment, and that's what's working.
So it's not just tech companies.
I mean, it's consumer discretionary companies, it's healthcare companies, it's even some energy companies. Okay, Like, if you have scale and you're operating well, that's what's driving the index Hired, that's what has been driving the index higher. That's starting to change a little bit here recently with the mag seven underperforming since July and there's a bit of a
broadening out going on. But the broadening out is still happening at the kind of quality level, meaning the market still doesn't really want to go down the quality curve or two companies that have bad balance sheets, etc. They're still they're just going into different high quality stocks across the complex.
Mike, we're kind of just starting to get into the teeth of this earning season. We've had some really good numbers coming out of global wall streets so far. What do you think the market needs to see out of corporate America over the next couple of weeks in terms.
Of earnings, Well, you're right, I mean, like as usual, companies have managed the numbers lower going into the quarter.
That's not unusual.
This quarter was a little bit more negative in terms of the revision. So that the bar has been lowered, they're going to jump over the bar and with the market, like what investors are going to what they're going to buy or companies that not only beat the lower bar, but then give you some confidence that there's actually some
acceleration coming. The thing that's been missing in the last three or four quarters is we don't have any broad acceleration and order growth or or you know, where's the exogenous positive gross shock going to come that's going to ride you know, lift all rising boats. And so that's why it's become very idiosyncratic, right that there's a lot of winners and there's a lot of losers right now, and if there's share gains going on, and those are
the things that investors are keying off of. Who's operating well in this environment? And I think that's going to continue to be the game it's played.
I mean, I mean, you know, I look at Mike Wilson, like in video you got Joe Moore, Joseph Moore covering. I know you guys are not speaking terms, but when you listen to a guy like Joseph Moore on Nvidia, you're more than Stantley. How far out is your terminal value on megs seven and on the rocket stock?
In Vidia?
Do you have to justify its existence by going out not three years but seven? Or dare I say a decade?
Actually, Joe and I had dinner last night with some clients, so we are speaking.
Okay, Well, tell us about the dinner. Stop stop, this is too much. Tell us about the dinner. Mike will soon give.
Us something very enjoyable.
It's a very enjoyable dinner with about twenty clients. It's excellent food and great conversation. But Joe, I mean, look, Joe has had the right view. He's been very bullish on the AI winners, and he hasn't been very bullish on the broader semi conductor complex.
Right, and this this is a perfect.
Microcosm what we're just talking about. Even within semiconductors. Okay, you have the big winners, which everybody knows, and then you have a bunch of companies that really just aren't seeing any acceleration in their business because the global economy is kind of and that's what we got. And so in the case of a video, I mean, Joe's had a great call. I mean, he's not looking seven years out, because it's silly to try and predict that, but he
is looking out probably several years. We talked about that last night, which is there's a lot of visibility for twenty five and then twenty six is when the visibility starts to come down. So at the stock we'll start to discount that at some point. Right now, you know, the momentum is quite good.
I mean, Mike Wilson, I got to ask this question. We got to go to break and we're ready to come back with mister Wilson Teams two. Mike Wilson, when you heard that James Gorman was going to Disney you know, were you like, you know, like the football player leaving the field, We're going to Disneyland. I mean, what were your thoughts when your fearless leader who changed your company announced he's going to wander over and help mister Eiger at Disney.
Well that was a while ago, and he's now the chairman of the board. It doesn't surprise me at all, James. It's really really good at this, you know, managing companies. He did a great job here. I wish him the best and I think it's exciting for him. So it's the next great chapter for him.
Mike Wilson, Morgan Stanley with us. Mike, the clearest memories of the right of passage of Ready Graham Dodd where they started with railroad stocks in the nineteen thirties. And the one thing that has not changed from Graham, Dodd and Coddle is ratio analysis. So whether it's pe P, d ebadah P to this P this, the answer is there's movement of the numerator and movement of the denominator. Let us begin the discussion. Mike Wilson, is the market rich? Is the market overpriced?
Well, that's an easy question and it's definitely rich. The better question is isn't overpriced? And that is in the eye of the beholder.
I mean, who am I to say that it's overpriced?
If something happens in the future that we don't expect, however, your odds of success. And here's one thing about valuation, tom As you well know, valuation in the short term is useless, okay, but valuation in the long term, meaning seven plus years, is perfect.
So it's pretty easy to sit.
Back and say that stocks are overpriced and rich and your expected returns over seven to ten year period are probably pretty modest, but.
That doesn't mean you shouldn't be invested.
And there are many stocks within the stock market that are not expensive. So you know, it's like I said, it's a market of stocks, not a stock market. And that's the way we've been approaching it for the last year. As you know, we've been less focused on the index level and much more focused on trying to be in the right places and try to help people outperform the index, which is really our job.
And Mike, you recently upgraded the financials and we saw some good earnings just a few days ago from some of the big financial players. What's the call there on financials these days?
Well, that was definitely part of it.
So, you know, we noticed that going into earning season, expectations had come down a lot of the bigger institutions had lowered expectations.
So it was an easy bar to jump over, easier.
Than others even and you know, with the bull steepener just going on in rates since the labor market came out, that's actually quite positive for big banks, and so just that was an easy call in many ways, it's worked out so far, knock on wood. We do think there's follow through because from our data it shows anyways that most institutional investors are still underweight to sector, and I think so financials, at least large cap quality financials look to be a good place to be.
Still.
You may have noticed we've got an election coming up in two weeks. When you talk to your clients, how do you kind of frame that in in the short term here and maybe even intermediate term.
Yeah, I mean the election has definitely taken a lot of the era out of the room, as it usually does at this time of the contest. It's you know, it's very closely measured by the polls, not as closely measured by the bending sites. As you know, it's sort of sixty sixty five percent Trump now, and the market has kind of taken notice to that.
So what I would say is that the market has definitely moved.
Into sort of a Trump victory, if not a Republican sweep victory, and the stocks and areas of the market that would do better, and financials is part of that, by the way, under a Trump win has started to perform.
And so I think the setup now is.
Such that if the market plays out, or if the election plays out the way the market's expecting, there's probably limited upside in those areas that will do well under a Trump victory. And I think the surprise would be as the Paris wins and some of these trades are going to have to unwind. So this is really front and center right now for the next two to three weeks. I think this is probably fifty to six percent of
the conversations we have. People are trying to just manage this, and then once the election's over, I think then the market will look forward to, Okay, what should I be owning now now that this event is behind us into twenty twenty five.
Mike Wilson, the heart of the matter, which is you were cautious on the market while we had a leg up in this two year whatever it is bullmarket. But the great Mike Wilson reality is you were invested. I didn't see Mike Wilson timing the market in this bull market. Forget about shorts. I mean, trust me, folks, I've been short and wrong. I've enjoyed that feeling. Good morning, Jim Chanos, the giant of all this. But Mike Wilson on market timing.
If one thing we've seen here, Mike, it's just a brutal exercise, isn't it.
Oh yeah, there's you know, there's a whole graveyard of people of market timers. You know, we we do it as part of our job.
We have to.
We asked, we're asked by clients that kind of you know, whether it's the S and P five hundred or or sectors or stocks. I mean, that's our job, and that's it's most you know, asset manager's job is to try and time when to buy certain stocks or do certain things with their investments. And I mean, look, sometimes we get to right, sometimes we get it wrong. I would say we had a stretch where I felt like we
got everything right, and of course that never lasts. The good news about investing is you can always change your mind, which we've done, and we've you know, raised our targets, and we've changed our strategy to to deal with what the market's giving us. And that's really the game is just take what the market gives you. Don't fight what the market's telling you. That's the best analyst in the world is what the market internals are saying. We use it as part of our process, actually, and I think
that's that's the best way to be. Just be humble about it, and and you know, don't don't be afraid to say, hey, we're wrong. I mean, like I think some of you are expected to be right all the time and nobody is. And being wrong is not a sin. It's just you know, staying on the wrong side of things for too long as it is a problem.
But Paul, the heart of this is Wilson's playing.
He's participating in the market with Gina mar and Adams and Brian Belski coming up in all these people that are going to go to cash, I mean, come on, in this.
Bull market, they've been wiped out, yeah.
I absolutely, And don't try to time the markets. What we've heard from the pros, including Mike Mike Wilson, Mike, as we think about, you know, going into twenty twenty five should we be focusing I mean, what's going to drive this market? Is it going to be the fed in the parlor game to Tom hates the play, or is it going to be good old fundamental earnings and fundamentals and that kind of thing.
Well, it's all the above.
But I think the thing that we're going to focus, that we're focused on right now anyways, is Look, we've been in this world of fiscal dominance for a while. We've gotten that right from twenty twenty one. We traded it really well at the beginning. We didn't trade it well so so to speak, in twenty two, twenty three, or in twenty three in particular and even into this year. But I think the consequences of that now are going
to come front and center. And what I mean by that is what we're focused on is, you know, the dollar and rates. Does that come back into the picture again, which then makes equities you know, vulnerable to a.
Correction at the at the macro level.
We'll see, but I think that's going to be like right now, what we saw in the last couple of days is rates are breaking out about the two in or day moving average.
We're seeing actually turn premium come back.
Into the market. The dollar has been very strong, and that's a governor on liquidity. So I think that's the thing we're going to be watching going in twenty twenty five. And of course what we've been waiting for is this reacceleration. It seems to be elusive, and so what we need to see is we need to see growth accelerate next year. We have acceleration in our forecast twelve percent urach growth for next year after about probably seven or eight this year.
So that is good, but that's price.
I think we need to see more than twelve percent aries growth next year to get this market to really power higher at the index level.
Yeah, Mike, I'm supposed to ask now Dodgers or Yankees, but I realize for you that's a secondary effort. Michigan State or Michigan. I mean, what do you think there in a rebuilding year at ann Arbor.
Yeah, I mean, this is this is one that's more important to Michigan fans than than than you might think. I mean, house state of Michigan State. You cannot lose those games. It doesn't matter, no excuses. You got to show up. And I'm confident that Big Blue will show up this weekend.
Nice, oh Big Blue. See you got the Dodgers in there.
You know, we got the Dodgers in Mike Wilson, thank you so much with Morgan Stanley.
Huge response from mister Wilson.
You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten, or wan't just live on YouTube.
Neither you nor Alex Steele will go Lulu Lemmon right now.
Now.
It's a little bit, a little bit too much.
I was so old. We had, you know, for our socks.
We had garter straps, you know, like the garter beilt things.
And then they went away from that.
I wonder are they doing Lululemon now, you know the hold the shin pads on them. I don't know.
There are you duneks Bloomberg Savannahs. This morning.
All of our economic coverage just brought you by Commonwealth, supporting more than two thousand independent financial advisors, a two to one advisor to staff ratio, small firm attentiveness, big advisor impact. Go to Commonwealth dot com to learn about their consultative support in technology. When we invented this act years ago we knew it was singularly the conversation of our guests and the honor of going from Mike Wilson of Morgan Stanley to Brian Belski of BEMO Capital Markets
is what the show is all about. We welcome all of you across the nation and we'll get the Minnesota in a moment. Brian, you have killed it on this bull market. Let's get back to first principles. What's a gloom crew get wrong?
Stay invested? You know, going back to the hockey thing.
Do you remember the silver things that we connected to your sock that sometimes you got get them wet they bring or they'd rust that I'm not old.
Or they broke off and you'd have to get a dime exactly to do it exactly, and.
You hoped it wasn't so, you know, at least it's like blushing. I mean, it's hockey talk. We're not going to talk about taking showers and six no no, no, no, no, no, no, no road game. What does a gloom crew get wrong?
I think stay invested.
I think trying not to time. I think people have become so afraid to be wrong they don't want to be right. I think part of this is a function of what happened during the tech wreck that was exacerbated during the Great Financial Crisis, which created the generational buying opportunity. In two thousand and nine, when we came out with our twenty five year Secular Bowl, Maarkt called twenty ten.
So we remain resolute on this. We're entering year three of the Bowl, and I think you know, going forward, our longer term trend has been normalization. We've been talking about it for three years.
But I've been dying to get you on. I'm so happy, Thank you so much from Europe.
And Paul's got a million questions. Let me go right here. You're a research note. Is one of hyper acuity. A competitive firm is just done a fan distribution exercise out ten years. I look at it with my math knowledge and I'm like, Okay, I get it's a marketing exercise. But what is the value of a ten year fan distribution extrapolation? Your Denny's on the top of the green line. It's seven percent. Roaring twenties. I just I lost Brian acuity. Tell us about.
Fan distributions of ten years. We're on radio, keep it clean.
We're on the radio, keep it clean, you know, listen the ten year spectrum and any anytime when you're talking about those kind of things, I think people all of a sudden get glossy eyed, because it's really more about ten days now right now or ten weeks and the ten year thing. If you look at just the compounding and your growthry of the stock market just historically, let's say it's let's just give it thirteen percent, twelve to thirteen percent, I think we're heading back into that. What
we see recently is out of the norm. So I think over the next ten years we can clearly get up to that seven percent line easy with a dividend, and then with just cash flow appreciation, I think we can get low double digits, which also will be in line with where we're going to see earnings growth as well.
And so I think there's several.
Areas of the US market that are understated and earnings that people are kind of missing right now, and so I think that's what's really going to drive us for at least the next three to five years.
What do we need sector leadership here? Do we need tech to lead this market? Because I think a lot of investors have become accustomed to tech leading. Yes, whether it's just broadly tech or AI, this technique to lead us over the next several years.
I think tech needs to perform. And what we've said for about a decade now, we come up with these kind of themes that people hopefully remember, and we've said that there's a certain sample of the technology sector, Paul, that is now the new consumer staples. And so I go back to nineteen ninety five ninety six on my old Dame Bosworth days, and I think that you know, we're heading back into those type of nifty to fifty goldilocks,
strong earnings growth, steady performance, cutting interest rates. In the new consumer staples, quite frankly, are Microsoft, Nvidia, Apple, Amazon, the Google machine, the Netflix machine, and I think they need to continue to perform with the market. But the new leadership in tech is going to be qualcomm AMD, those types of names.
So what do you kind of getting into the teeth of earnings right now? We had some pretty good numbers out of the Wall Street so far. What do you need to see from corporate America going forward?
I think corporate America, I think you've seen such a such a great, great secular change in terms of cash flow, distribution, balance sheet management, discernibility of earnings. I think that's what people are missing, Paul, and I think Corporate America has done a great job kind of on the cost side of things. Now we need to see more revenue growth. We're going to see cap x from technology. And here's the kicker, Tom.
Here.
I think where people are missing, and I said this before, is at financials. If you look at the average financial section earning's growth, it's way understated. Most analysts are very negative, and I think that's where the biggest kick is going to come the next few years.
Hey, it was fitzit mean And to give David Cushing credit, you did a great capex use of cash expansion in the last forty eight hours.
Sure buybacks lead the way.
I get that, But use of cash doesn't end into your gloom comments. Earlier of ninety nine, two thousand and two thousand and one, there wasn't use of cash going on then.
There wasn't if you think about that market. In that market quote unquote bubble, it was really led by chasing these deals and the majority of those deals were done with stock not cash. Where we had another M and a cycle in two thousand and seven, which was also credit. But we haven't had a big M and A cycle or a consolidation cycle. So I think that's where the use of cash going forward is going to be about dividends. Look at I mean, look at Meta, Google, Microsoft, The're
paying dividends. Apple's pain dividends, and so I think that's going to continue. But I think the key thing from a perspective of stock picking is you don't have to own the index. You want to be more concentrated. And we think stockpicking and fundamental themes are gonna win.
Is active funds gonna have their data, yes, index. Yeah. If I walk into it.
If i walk into a big account here in town, and I'm talking to these people that have been in the business less than ten or fifteen years, I talk about stockpicking.
They look scared.
I mean their eyes are glossed over because all they do is they own two hundred and fifty stocks and they're trying to They're trying to benchmark that they don't know about a company theme or management or roe or roe ROI. All they're doing is kind of swiping and reading bullet points and doing what the hedge funds are doing and that's why. Oh, by the way, the majority of active management's underperforming.
Okay, one more question we we gotta get. I want you to stay with us, Brian. I think it's important. But the basic idea of Brian is our industrials are all gonna act more tech like. That's a story I don't think is being told.
There's parts of it, especially the ones that are manufacturing more here in the United States. But from a domestic side of things, there's things.
I mean, look at Lockheed.
Martin earnings this morning. I mean, come on, I mean, this is a company twenty five straight years of increase the dividend, great cashualield. So you're gonna see some technological advancement there. But I think that's where the capex will come in.
So I'm at luck Campanna down by the Tyger River, oldest restaurant in the world, five hundred years old, and.
They having the Roman art. It chokes nice.
And we're watching the Minnesota Vikings try to do a two point play late in the game.
Brian Belski, What in God's name were the Vikings thinking it was a coaching era.
I mean, they choked, They choked on that play. I mean, you know, Minnesota, we're five and one on the way to six and eleven.
I mean, it's just.
If they're in Minnesota. Sportsman, you know what I'm talking about. So there's been a rumor, by the way that twins are for sale, the poll that family selling the twins, and there's been a remember that buffet might sound by it. Wow, Please God, if there's a God above, Lord Jesus, please.
Fifteen seconds left of the game. Jake Bate's forty four yards. Michael Barr Lions, am I even lyons Vikings.
It's glory for the essential to the North.
Is now the best division in football.
Think about that, Michael Barr, would you care to comment? Wow?
I mean, but you got a point, all seriousness, it's you know, there are other divisions out there that are tougher. But I will admit that the Vikings turned out way tougher than I thought they were going to be because they were undefeated and then we showed up.
And he's not talking about.
So that if you think about the defense of the Vikings and just I think that Campbell's done such an amazing job with the Lions. I think the Bears are way over their skis. But the Packers too, they just keep I hate the Packers for the record, and a man with a good friend of mine later today, that's a huge Packers fan. But I despise. I love people from Wisconsin, but I hate Wisconsin sports fans. I mean when they whenever the whenever the puck drops or the
ball gets thrown, their crazy, lovely people. But when it comes to sports crazy. But I think those three teams are way understated. There's smash mouth football. It's kind of like the Olden I mean, they're all winning.
It's like a huge skew to excellence if they But the thing is, the Dodgers Yankees are big cities, big money and all that.
How does NFC Central do it the North? How do they do it rather well?
I think, first and foremost the Vikings they really scored with Kevin as a coach, just like the Packers did a great job of the floor in Campbell in the lines. All three understated coaches when they came in, and they've done a wonderful job. I think it's scheming. With Brian Flores running the defense too, it's all that scheming.
Brian Belski, thank you so much, coming This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play 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 playing Bloomberg eleven thirty.
We're gonna do something different here. Are you pulled out? Paul sure?
I am lucky completely and Bloomberg, I'm sure we'll have a world class high count poll right now.
Yeah, my head is spinning.
I'm like completely completely pulled out joining us.
Now we're not going to talk about polls.
Professor Schiller Wendy Schiller Definitive Civics Book for America of course at Brown University with all her work there and international relations. Wendy, I want to go back to Andrew Jackson, banners, Badger's parades, barbecues if I'm elected, free beer.
And while we're at a Kissing Babies, I saw President Obama kissing a baby.
Is McDonald's French Fries the new Kissing Babies?
Well, I mean, I think I'm looking forward to seeing this Madison Square Garden event. I think that former President Trump is hosting as if it's sort of a pre inaugural party and you know, sort of saying, hey, listen, I'm a winner and I'm going to win, and let's start partying and celebrating. It's really, I think, a fairly brilliant campaign move because it tells his base you know, I'm gonna win, and then it also helps fuel any
objections he has to the outcome. So so he's starting to, you know, return to that Andrew Jackson populism.
You know, you know very well that Andrew.
Jackson threw the equivalent of a keg party for his inauguration and they trashed.
The White House. They had kick everybody out.
And we miss Robert Remeny every day. I read all three volumes of his definitive work. And Jackson folks visit the Hermitage if you can Eastern Nashville. It is just you walk out the beck door the Hermitage and there's the slave cottage right there, and you just stop. Wendy Schiller, how was the vice president campaigning? Is she kissing babies?
Well, she's basically trying to plot all the stops in what will be, you know, an extraordinarily close election. It reminds me of Bush Gore, we really didn't know who was gonna win, and it turns out after election day we didn't know who's gonna win either. So I think this is where you know, you're no stone turned, no voter, lie left out, you know, the opposite sort of what Hillary Clinton did in twenty sixteen.
And I think the Harris campaign is counting on the fact that Donald.
Trump did not win in twenty twenty that in fact, you know, the last time he.
Ran, he did lose.
So they're you know, keeping the faith the polls are going in the opposite direction. I don't want to talk about that, but there are hidden things that could change things up. Like in Arizona, there is abortion on the ballot, and you know, not everybody is always truthful with a pollster when that kind of subject is on the ballot about who they're going to vote for.
So and the same thing is true Florida.
But it looks like Arizona may have a hidden surprise at the end of the day. So that's what I'm looking at, sort of where could we see a surprise outcome in one of these states that it looks like Trump.
Is doing very well In Wendy at eleven PM on election night, we know who the new president is.
Unless there is just a really big sweep tilt towards Trump, I don't think so. I mean, if Harris is going to win this election, we're not going to know that, partially because mail in ballots in some states like Pennsylvania are not opened and certified and count did fully until all of the in person balloting is counted. So that's going to take us a couple of days, as it did before. We know George is going to be very tight.
We're seeing massive early voting in person. The vast majority of early voting in North Carolina George has been in person, so those votes are counted easily. So you know, it could be that those results come in earlier than they did in twenty twenty.
So given that backdrop, is there any strategy for either candidate either then to just simply spend time in these swing states?
Well, I mean, the Democrats do have a very strong turnout game. And the one thing that we haven't been looking at enough in the last couple of weeks the election are how Senate campaigns.
In swing states will affect turnout and voter choice.
You know, are you really going to go into the ballot booth and vote for you know, women diego in Arizona.
And then vote for Donald Trump.
Are you going to vote for you know, Tammy Baldwin Wisconsin and Donald Trump.
You know, we're seeing those Democrats holding.
Their ground by a couple of points, doing better than Kamala Harris. So how many of those voters just don't vote in the presidential election which costs Harris a vote, or do they actually ultimately say, well, I'm just going to vote for Harris too.
We just don't know they're going to tilt.
But those Senate Democrats are holding It's pretty steady in swing states, and that's a curiosity.
We haven't seen that in a couple of years.
So I guess the key issues here are down ballid as well. I mean, in addition to the presidential election, is there what's the feeling now? Is it relates to the House and the Senate?
Well, I mean, I think you know, people are saying that if Trump wins and he tells these states can be a trifecta the democ Republicans, you know, they have to win fewer seats to keep the House than the Democrats have to win to take the House and the Senate will go Republican.
The question is what's the margin. So you're looking at a trifecta.
You're looking at, you know, unified party government under Trump, that's what you're looking at. You know, if people decide they want Trump back, and I mean independent voters, disaffected Republicans, and they really don't want Harris, then you're probably going to see a trifecta.
And we'll probably see some changes.
In twenty twenty six in response to that trifecta. So it could be just a repeat of twenty sixteen and twenty eighteen what we're looking at down the road. But people should be prepared for Donald Trump presidency and unified government and a Kama Harris presidency with divided government. So there are two very different scenarios that we're facing at the pwal level.
And now, folks, And I was thinking to Wendy, you know, flying back, folks.
All of a sudden and suddenly.
It's the topic no one's really talking about. And for some of us of a certain vintage, it was the topic fifty years ago.
The gender gap.
Professor Schiller, the gender gap today, how is it distinctive from what I knew years ago with the editor at Cosmopopan.
Well, the gender gap differs by generation now, so we're seeing a bigger gender gap in older voters than we used to see, and we're seeing in very young voters a bigger gender gap.
In the opposite judge. And men are leaning towards.
The Republican Party and bigger numbers younger men than they used to And younger women have always sort of leaned democratic. Older women have been more up for grabs, and now we're seeing in some really interesting polling older women meeting over the age of sixty five are leaning more strongly Democratic. So this is just a really a change. And we're seeing the older vote, usually leaned Republican by about eight points in polling, we're seeing that's diminished a bit.
So this is just a.
Little bit of autopsy turvy demographic change in the gender gap. And remember the gender gap can be also hidden in states where abortion is controversial. We saw that in twenty twenty two in the Senate elections. We may still see that in states like Arizona. So this is really important. And then we're going to see what the Republicans do on policies that affect women. After you know, obviously word view Wade's overturned. We have the Dobb's decision. What do
they do going forward? And can they maintain any kind of legiance among women if they continue down a path of policies that do not necessarily favor women.
When do we really appreciate your commitment to Bloomberg Surveillance. She'll be with us now through and after the election is well. Wendy Schiller of Brown University can't say enough, folks about the planning for the election.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
This is a thrill.
Incredibly busy. Francisco Blanche joins US now driving commodities at Bank of American. What's great about him is it's not just Brent. What's Brent Crude going to do? Move on Francisco Blanche here now with an essay a number of days ago. Is gold a safer investment than full faith?
Think credit? The United States?
From the cash room at the treasury, treasuries, Francisco, blanche and gold. Is it going to three thousand Francisco.
That's our target for next year, tom So we expected to get there over the next fulve months.
What does it signal in particularly versus full faith and credit American debt.
Well, there's there's a few things going on. First, I would say that, as you know, two and a half years ago, the US and the European governments decided to freeze Russian center bank assets. And as you're Julio ware, central bank assets are essentially are you know, a rainy day fund, so to speak, for nations and for financial systems.
So I think as a result of that decision to freeze those assets, about again, about half of the Russian center bank acids, we've seen a big rotation away from from treasuries and and European government bonds into gold across the global center bank community. Remember, these chaps don't care so much about return, well, they really care about his safety. And by virtue of freezing those assets, we made them
unsafe or a little unsafe for some. Again, not unsafe for you or for me, but definitely unsafe if you are outside the US, Europe, sphere, and there's many center banks that feel a little bit trapped between this kind of US Europe and Russia China dynamic, so that's been.
A big factor.
And then of course we've also seen interest rate cuts which have finally started to grow some interest from investors as on.
One of the many reasons I like Francisco's research is he has an exhibit Exhibit six point one acronym list for all the acronyms and what they mean in his research. So thank you for that, Francisco. It helps reading your research. Talk to us about global energy here, Francisco, we've had a big risk premium put into Brent crew w TIA crud. That part of that risk premium came out, but now it's kind of creeping back. How do you think about the cost of global oil these days?
Well, so when it comes to Brent, we have a seventy five dollar average for next year, which is right around with the spot prices and a little below where for markets are, so we're not teroughly bearish. We are more in the rangebound camp. There's there's a number of number of analysts and agencies out there talking about this massive surplus evolving into twenty twenty five, particularly as we
see open plus returning barrels to the market. But in reality, we have a very very tense geo vertical situation in the Middle East. And remember, part of the reason we've seen a reversal imbalances is because from the White House we've seen a very concentrated effort to push more energy into the system after we hit ten percent of a couple of years ago in the back of the Russia Ukraine invasion, so we've seen effectively the release of the
spr forty percent of it. We've seen a big rump up in US supply, and then we've seen really Russia but also Iran and Venezuela moving up on their exports throughout the last three three and a half years. So I think once we go past the US election, that pressure to keep oil prices lower or bring them, you know, keep them below eighty or something, it kind of goes away a little bit. I think I think the focus comes to a politics really for the next government, whoever that is Harris or Trump.
Francisco on gold of three thousand, thank you out on YouTube the live chat. They're really discussing gold of three thousand Francisco Blanche. Two ideas here. One is the ETF Salisa Matteo is in the gold ETF fund where they insist on taking physical delivery. It's like bitcoin, Paul, I mean, Francisco Blanche, are we way behind in ETF's taking gold for physical delivery and that will support the price.
Well. So, so there's plenty of ETFs that take gold and physical delivery, and and that's definitely a price support point. We've we've actually run Fairmata analysis on this. We found this physically backed commater ETFs which are mostly on gold and silver, and to positively impact prices when flows go in and and the reverse is also true. And again, the way I think about this is you take you're essentially taking ounces out of circulation that would otherwise go
into jewelry or other uses. And that's why ETFs physically tfs have an impact on prices and and and again because interest rates went up so much in the last couple of years, and we were trained to get paid zero on our bank deposits and and on our safe assets like our articles. The ramp up in in in interest rates essentially encouraged investors in the West, in Europe and the US to sell their gold and buy buy texted income securities or bank.
I get you this question in Francisco. We've got time for one more and that is emerging markets. You've got a hockey stick chart of emerging markets buying gold. Will that continue six percent of value? Now up to ten percent of value? Will that vector just keep climbing?
I think I'll keep climbing over time. The biggest risk to the goal market is and we're starting to see a little bit already, if there is a move up, a very sharp move up and interest rates in the US because there's a there's a clean sweep in the election, either on the red side or on the blue side, We're likely going to see tax cuts, and again we only have a very large budget deficit. I'm afraid that may push up longer term yields and that would be a negative on goal prices. Will be also quite a
positive turn of events for the bar. And then the other issue is what happens to Russian Central bank assets if the Russian war with Ukraine ends for one reason or the other. Will Russia get their money back? This question really matters for the goal marketing.
Might view Francisco thirty seconds left. Best value in the global commodity space that you see right now.
I think in terms of upside potential, we still like copper, and we still like the industrial metals. We think China's going to put some stamas in place, and we also need the energy transition. We'll drive those markets. And we also like silver. By the way, we think silver is a really good play on both the precious theme but also on the energy transition. The best electricity conductor out there is still.
The encyclopedic Francisco watch never enough time from Madrid. Thank you so much, he said, commodities for Bank of America.
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