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This is the Bloomberg Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join us each day for insight from 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 global 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. David Bianco over this right now, CEO America's DWS.
How'd your view change after last week?
Not much a little bit of a surprise with the overall reaction on the legendary yen care trade and you know the way it really hit Japanese stocks. We do think there's a buy an opportunity in Japan and I think, you know, the yen carry trade is important, but American investors, particularly American technology investors, they really shouldn't be scared off
by that phenomenon. I would tell you that while we were watching global markets and all kinds of other issues in the world, we were paying attention to earning season. I'm going to say right up front that I have a different take on the second quarter earning season than
what many are saying. While it's true that the growth overall is strong ten percent year on year, and even excluding the Magnificent seven Grade eight it's up about four percent, and we haven't seen growth outside of the magate Magnificent seven Grade eight for a while, there's no rotation or change in earnings growth leadership, and I don't think we
should have a change in performance leadership either. Actually, the earnings growth is still really mostly tech and communications and still the same leading very big companies out of financials, certain ones that are healthcare. Really it's been mixed elsewhere, and it's been still weak at consumer goods, and it's
getting weaker at consumer services now. So I have to say we have not seen a broadening of earning strength at the SMP, not at the wrust of two thousand and either are still sluggish.
So as we think about performance in a stock market going forward, will it be the same old leaders the big tech names and some of the other sectorship, Is that still going to be what's going to lead this market higher.
Yeah, and it's hard to get a change in leadership without a little bit of volatility along the way. Regime chains changes don't tend to be entirely peaceful. But I think the market overall has a little bit more downside into the autumn, about five percent. I think this is still a good time to lighten up and prepare for some better opportunities in the autumn. But financials, healthcare, those are things we still like. We still like utilities too.
That's doing very well. Defense stocks, But when it comes to auto retailers, transportation, we don't see it yet.
Well, I haven't asked this question in age is up one bent crewed eighty dollars fifty four cents.
Nobody's talking energy all my radars.
Yeah, it's been quiet there. The energy sector was not an earnings growth contributor during the second quarter. But now the energy sector is no longer that big of a sector, not even that big of an earnings contributor anymore. Like, I think energy earnings will be flatish for the rest
of the year and for possibly quite a long time. Nevertheless, it does represent value, it does it's cheap, It represents a geopolitical hedge that could be useful in the coming months and years, but it's not exactly the most promising high return industry.
So how about valuation here? I'm just looking.
You know, when we did trough that Monday morning last week, we were down eight nine percent on S ANDP. That's recent high. We've bounced back a little bit here. How do you think that valuation.
Still very demanding even with the little bit of a retreat in ten year yields and ten year tips yields, which is welcome. It's very welcome to see tenure yields drop during an equity sell off rather than climb and be a cause of inequity sell off. So we're getting
that diversification across asset classes. But it also then leaves us with, well, is this decline in yields temporary on the idea that people are still nervous about things like getting carry trade online or geopolitical It's hard to know, and I'm still doubtful that the tenure yield is going to stay under four percent outside of our session.
Okay, So I guess the questionnaire is what are we doing on the fixed income space here? Do we sit in my two year treasury at four point zero six percent, or do I take some credit risk here?
Do someone? Yeah?
So up until recently, there are really good opportunities at the two year three year duration point. I might even go shorter than that now to year. I still think there are opportunities in muni markets.
Nice, that's what we're talking about.
Yeah, yeah, I know it's not like but and there you I think. I think in the muni market you can take some credit risk and even some maturity, longer duration risk. And for those who believe that tax rates are going up, but you'll you'll value that part of the portfolio.
You have a confidence like you're not a strategy sure, a guy that runs real money. But the answer is people have a confidence when they say the SMP are your twelve month target is fifty six hundred? Was that confidence shattered last week?
There's been plenty of things to be not confident about the past year and a few years. And thank you. I you know, we we do run real money at d WS, and I still think of myself as a macro minded intrinsic investor and spend a lot of time focused on the S and P five hundred and it's fundamental drivers like earnings, and you know, trying to give indications sort portfolio managers with sector industry references. But the point is this is not a time to be confident
about anything. There's a lot of uncertainty out there from the basics, will earnings, will we have a recession or not? Will there be a change in earnings leadership, performance leadership or not? And we do have an important election ahead and still an uncertain world.
David Bianco, thank you so much, thank you, greatly appreciate. With DWS, everybody's got to like republish. It's August, and you're like, you're supposed to wait, well, we're going to put out a big piece six days after Labor Day.
And I'm like, okay, we'll write it now after what.
We heard last week.
And you know, are you do you? Are you taking an you work for a German bank? Are you taking a month off?
A couple of weeks?
And those are Wall Street weeks. You know, I got to call it on Monday. But we're fine.
David Bianco, thank you, thank you. Ellen Wild is definitive her book Saudi. All I can say is read it. Senior fellow at the Atlanta Council. Ellen, there's a decline in commodities across the board. Obviously China slow down. How linked is your world of oil with a general commodity malaise.
So it's definitely linked, but it's definitely not one to one because as we've seen, oil is rising now and I think that has a lot to do with concerns over tensions in the Middle East and also with the news that we've got a whole bunch of draws in terms of the stockpiles in the US, and so that's a signal that consumption is doing well, that demand is doing pretty well, although there are some hints that maybe it's not quite as good as we think, mostly because
refineries are not running at full speed. There really isn't an indication that they need to, and so we're just kind of drawing more on our stock piles.
And then you've got economic data.
Recently, it seems that traders have taken the recent unemployment data as very heartening in terms of the economy, though personally I would caution against reading too much into any kind of unemployment data.
So what's really driving the show here today for global cru to Ellen, is it demand concerns. Is it supply what's really moving these markets here today?
That's that's a good question. I think it's both.
I think it's really concerns in the Middle East right now, because you've.
Got it's definitely got. Demand is always an issue.
Although you'd think that if OPAK is trimming it's uh, you know, demand forecast for the rest of the year, that that would spell problems for oil. Although it could be that people think that because OPAK is trimming a demand forecast, that the OPEC countries will then decide not to increase production ever so slightly in October, which will then help keep oil prices up.
So that's definitely a.
Possibility, and I do think that that's really a big move to keep an eye out for. Is what is OPAK going to do because they are set to increase supply, not by all that much, but definitely increased supply starting in October. But if the economic signs aren't there that the market can handle an increase, then they will be facing a lot of pressure to roll that back.
So who has power now, OPECK plus the United States with a huge oil success we've had, or the market.
I think it's definitely the market.
In this case, I think the market is really running the show here and Opek is just kind of tweaking here there.
And in terms of the United States, it's.
Kind of ignoring the market in a sense. You know, oil production is high, oil production is strong, but that has a lot to do with exports. The fact that Europe is basically sanctioning all of Russian oil has definitely been a boon for the US export market because you know, they are available, they've got oil, we can export it. And in addition, there's no impediment really other than you know, anything happening in the Gulf of Mexico potentially any kind of hurricanes to getting.
That oil to Europe, the same way there is.
In the Middle East when you've got to use thee As Canal, you've got to get through the Persian Gulf. You know, those are real hotspots right now, and we don't really see that in terms of US exports.
So Ellen has Europe effectively weaned itself completely off of Russian energy. I mean, we're a couple of years into this war here. I know there's big, big concerns that first winter, but it's they seem to have kind of found other sources.
I guess that is a really good question.
And I think that this this independence from Russian energy has not really been put to the test because we haven't seen a difficult winter. If the coming winter is somewhat more difficult, somewhat colder than I think, we'll really be putting that to the test. But really what's happened is American liquefied natural gas came to the rescue and we were able to really increase our exports of liquified
natural gas to meet that demand from Europe. And now we even see Britain thinking about putting in an LNG import terminal just so it doesn't have to rely on the rest of Europe to get natural gas.
Really, natural gas is a huge.
Issue here and I don't think that we have seen the last of this story.
So the forty seven meetings I went to forty seven years ago on LLNG and it never happened. Can you now say the LNG market is distributing and supplying and demanding what the promises were thirty and forty years ago.
I do think so.
And you know it's funny because I remember back in you know, twenty thirteen, when I was speaking of some some oil guys and they were like, Nah, this We're never going to be exporting LNG.
It's just it's not going to happen.
Well, it's happening, okay, Ellen Wild, thank you so much, greatly appreciate it.
Ellen Wild, Atlantic Council There.
I'm really excited about this conversation because I can tell you on an HR basis, you talk about a career shift, this is truly on Global Wall Street, the mother of all career shifts. She was unhappy with her corner office at the new Tower of JP Morgan, so she said, forget that, I'm going with a ute of America.
Steph Guild. What was it like your first meeting with Robinhood?
Did you walk in, like, you know, with the basic JP Morgan blazer look?
And they said what?
At first, I was like, who are you talking about? Who had the mother of all career shifts? I actually was told in advance, don't wear a suit, really make sure you put a T shirt on, and so I had to, you know, I thought about that and I said, wow, this really like it was that outfit recommendation was the reinforcing to me that this was quite a shift.
And it took me a why.
I mean, it took me a while to make the decision to tell us.
Your obser I mean, I mean, frankly, seriously, folks, this could be a three hour conversation.
For Global Wall Street.
What do you do in strategy at Robinhood that is different than doing strategy the big five banks?
Yeah?
I think, well, your clients are very different. I mean, so I spent eleven years in the private bank at JP Morgan and then ten years in the asset management business prior to that, mostly in the US equity part of it, and so I I you're working with people who either have spent their entire years getting advice from really good people or they themselves have been managing money. So when I made the switch, I my job to
me is twofold. One is contributing to bringing really strong, innovative investment products to a customer base that hasn't always had access to everything. And second is teaching there are a customer base about the markets, but in a way that isn't just explaining terms like actually using the real terms and not using all these you know, oh you're in a garden like I would rather use the term. So when they watch Bloomberg. They understand what the host this.
Is true value of the conversation for me to make jokes about you and the memes tas because Lisa's Lisa's kids are trading Robinhood off the couch.
Oh nice.
It's how do you.
Get well meaning, well intentioned people to pull out the time frame to long term thirty day investment that was a joke. How do you get them to pull out to a longer term investment perspective.
I just think it's a matter of education, meeting them where they are, and they are on social media, they are on YouTube, They're on you know, my kids, I have kids do there. They learn everything from YouTube. They know more than me about some things because of it. And I also think that you need to you need to they're gonna. I think they've all learned a lot. Actually when we when we look at like the way
that they trade and the way that they invest. We've got the Robin Hood investor index, and we get to kind of look at what they're doing regularly. They you know, our average age customer is actually increased. And I think with time to.
What fourteen out to Lisa, how old is your daughter seventy.
She's seventy. But my sons in his twenties and he's doing that. Yeah, so he's going on, but he's looking to the social media. How you're talking about So how do you find.
Like, I mean, our average age is thirty three?
Okay, okay, But what advice do you have for them? I mean a lot of these young kids who are going on what advice do you have for them? Who are going on social media and they're just believing whatever they hear.
Yeah, just be curious non stop, be like why did they say that? You know, what are they what's in it for them? Like every I mean even when I read things from analysts or even from hedgephen managers, I think, you know, what's what's in their book? Like what's helping them? Just always be curious and wondering, like why is someone saying that? And what would the other side of that say. I just think that's like who is a Peter Lynch that said, you know, if you got through fifth grade math,
like you can analyze the company. It's you can do it. You just have to spend the time doing it. And that's why we you know, I try to explain things in the context of the market.
Like I have a weekly blog and I do this.
You have a weekly blog that's really good stuff. Killed what did you learn and what would you like The.
Message to the robin Hood audience off of Vix at sixty five closing the week.
At twenty one, Well, maybe you should go to sleep on Sunday and wake up on Friday. But besides that, I think, actually, like when VIX gets to those levels, it's usually historically an opportunity. I mean, I'm not saying you should always jump in, because sometimes it is a
part of a greater problem. But if you take a step back and looked at what was happening in the world, I just think the markets was we're throwing a temper tantrum, right, just like they did in like December of twenty eighteen when the FED wanted to keep raising rates and the market said no, you should not, and they, like the FED listened and I mean, you said, you have kids. When you didn't give them what they wanted, what did
they do? They threw a temper tantrum. And you know, also the Fed I think in twenty eighteen taught the markets that like, well, we listened to you, and so I think they were trying to do that this time, like you need to cut, you need to cut, and you didn't commit enough to us.
Tell me about particularly with Robin Hood's age thirty three demo, whatever that demo was, and that's open to debate, But tell me how you, as an adult blog advise on meme stocks because we're sitting here as a comedy act making jokes about it, except there's some people making money and there's a lot of people getting crushed by the volatility.
Yeah, stocks have to know.
I mean a couple of things. One is that like I think the memestock stuff, we're the vehicle. We don't come out and say, like, go out and do this right like. But secondly, I think they're I think it's kind of interesting that you are watching a generation of people express their views and they are they fundamentally are
changing the makeup of a company. Right Like if you think about some of these companies, like they have been able to raise capital and they've been able to take down debt, and it's they could end up being like completely turned around companies because of it, because of their shareholder base believing in them and whatever that means for them. But you have to, you know, stay diversified. I always say,
like everyone's money is kind of like a pyramid. You need to have an emergency cash, you know, just so you lose your job, whatever happens. Like you've got that for at least six months. Then the next layer make sure you have some diversification and our customer base. Like we were seeing it this past you know, week of volatility. They were they weren't just buying the names that are in our robin Hood Investor index, they were also buying broad based index funds.
This is really using is like a.
Way to add to it. And then after that, you know, yes, like invest in your aspirational things because I think if you always just ever say fully diversified, you're never gonna see it. You have to take risk to get return that always comes with it.
That's the smartest thing I've heard in the show. It's Monday for the week. This has been great. Steph Wild, thank you so much with robin Hood running strategy for them in a blog.
What's the name you have some fans investors guild just like my last.
Oh I get the medieval positively medieval, very good stuff and gil with Investor skills branding. Which social is the biggest reach for Robinhood.
Well, we have just Robinhood app on social, and then I have Steph guild n y c myself.
Okay, like, are you working TikTok every day?
I don't go.
I'm on Instagram and X I heard you talking about it.
I'm just learning how to do these.
Yeah, I'm sitting over here. You know, Paul saved me today.
I'm over here trying to figure out how to put out Instagram. Don't be a stranger stuff Caill, Thank you so much.
With Robin.
You tell a look at the front pages of Lisa Matteo hour. It's brought to you by ib k R with the Interactive Brokers Forecast Trader. You can trade your views on key economic and climate indicators. Visit ibkr dot com slash forecast and get started today.
Incredibly busy weekend. Lisa. I saw her slave in a way. She had like an hour's worth of stuff.
Go.
Thank you.
Artificial intelligence. You know everybody's talking about it, right, So it wants to count your calories. So let me explain. Okay, researchers developing this technology, it's going to analyze what you eat bite by bite. So basically what you do this from the Wall Street Journal. You record yourself eating whatever as I'm eating, you know, a spoonful of chobani. It's recording the portion sizes of the spoon as it goes
into my mouth. But the only thing that is, I know, don't don't huff puff just yet.
Okay.
But what it's not recording, it's not up to date with, is what kind of food you're eating. So that they say is gonna, you know, come in the next few months or so.
But such an ai.
It's an AI thing.
So at tracks the spoon how much is in the spoons as you But you've.
Already got one of those crazy watches on your wrist. Doesn't that count everything?
No, it doesn't count calorie.
Oh, there's a lot of apps and stuff.
But I'll say, I got to solve this. I'm sitting there with a Manhattan up. We're out of cherry, so I'm just sitting there on the deck with a Manhattan.
I'm watching the sun set over Sweeney's house.
Okay, I could see him in the distance on his vestma vet bills on my lap and kennel feet is right next to vet Bill and I got a box of Whole Foods crackers.
Okay, Chrich they love.
Yes, I have one, then vet Bill has one, Then Kelfy has one.
AI is gonna keep track of that, It'll keep track of yours if it's on a spoon. They're working on the technology. Yes, next it could, it could go somewhere.
Okay.
Uh.
Disney they held the D twenty three convention over in California over the weekend, so they revealed all those details. Remember they said they were going to spend so much money on their parks, so they broke it down for you.
So stay with me.
Moms and dads take notes.
Okay, So Walt disney World's Magic Kingdom in Florida, they're going to get a new land devoted to villains. Frontier Land is getting an upgrade that includes a cars themed area. Then you have the Hollywood Studios in Florida. They're getting land based on the Pixar's Monsters franchise.
Then over an.
Animal Kingdom, they have a new Indiana Jones ride and they're recreating the house from that film Encanto. And then globally, I mean, you have Spider Man attractions coming to Disney parks in Shanghai Hong Kong Paris. The company is building a log flume ride based on the Lion King and here's the top er. They're planning four new cruise so it's not just yeah, the parks, but the cruise.
Each one of those babies cost a billion dollars. Scared. Oh my god, awesome though.
I mean, I'm not a cruise person, but I went out on an investor cruise they had for ust a bunch of years ago.
Pretty nice.
We go to surveillance. Oh he's not there. He's on his break. He's got a break. It's a union job. You know.
Side Benson is is our cruise guy, and say, you know, I wanted to ask him, which is the geography, like which cruise does he like best?
But he's on it's a it's a union break.
It's a union break.
Lots of money.
But those Disney cruise I did take a tour, you're right, and it's amazing the ships and how much stuff they have on it. But they broke it down, you know, they said how much And this is even you know, they've been talking about how the park's business is starting to slow. So it's just a little little thing. Okay, corporations that whole in and out flying on one day. It's starting to change, Like a lot of corporations are
cutting back on that. So this is the head of Global Business Travel Association tells the Financial Times the way companies traveling are different. So they're declining on those one day flight trips. Frustration with flights because they're just getting tired of being delayed and just for in and out in one day. Environmental concern so they're packing more meetings into fewer trips.
So yeah, So coming to the longest one day trip that I did on a fairly regular basis was Denver, New York.
Did Denver I would be done on a one day? Yeah, you could.
You could get in there, get two or three meetings and get back at it.
Not a crazy time. That's the max. Yeah, only for Janis Would I do that?
Yeah?
Like is zoom a replacement is the heart of the man. I don't think.
Yes, I'm in the camp on Jamie Diamonds heated about this. He's at JP Morgan. I believe he's get on the plane, go see her, Go see your clients, have lunch, talk about you know which.
I'm fully on board that you know where Emi Lisa and zoom, Yes you do? You have one for I do?
Okay, I'm not sure if you have one of these times? Do you have a pet trust or a pet direction?
I actually worked on this this weekend.
You did?
Yes?
I got one hundred and.
Fifty pages from Keith when are you going to die? Great Law Firm? And uh, Keith, when are you?
You know when where are you going to die? Dot com? And back?
You know, like there's six pages in the way back on the dog trust and it's it's there so you trust care.
Yeah, So it's not so the pet trust where like you know, when people are the millions of dollars, so they're you know, to Fido. But now it's the directives, which is basically saying who's going to care for your pet and then they'll leave money for that care.
We called a side letter in sideline.
I said to Keith, uh, I said, do you understand what dog walking costs in Manhattan?
And he had never seeing those numbers and you know it's crazy.
Well that's what they're saying, because you're spending money on that. The food is ridiculous. Healthcare, you know, the dentist isn't another one for the tea.
Yeah, well the dentists, isn't.
We're just featuring the dentist on our new Instagram account. But you know, the Horseman's School of Veterinarian Medicine just might just make the checkout tuition payments. Horse Man. But Paul, this is serious stuff and the answer is I have to write into the trust chewing.
Yeah, I mean it writes the trust demanded. So this is like a new thing.
So it's becoming more prevalent for people who are not rich, just everyday people who just have pets and they want to make sure they take care of who's taking care of their pets.
Lisa Matteo our newspapers this morning. This is the 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 global headquarters in New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg business app,