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It's always important to have a worse weather in Milwaukee. We do that now. They have Maleetti of Allspring Global Investments, head of Equity where winter is really winter, and I really want to talk about the future of value investing. I know Allspring is a venerable I think of John Carriet pioneer, or I mentioned John Templeton earlier with this measurement of the Templeton Global Growth Fund years ago. What's the future look like of value investing for Ann Maleetti?

It's a great question, Tom, thanks for having me on and Merry Christmas to you and Paul. Look, I think that I like underdogs, not just the Green Bay packers. I also I also like a small and mid cap here and I think when we look toward the future, that's where I really see the most value. Certainly those indexes have more financials in them and more you know, cyclical names, but they also have some very profitable companies that have been kind of just ignored by the rest of the market.

As the Meg seven areas really taken off.

I mentioned John Carrey and back at Pioneer of Boston to the Phil creat Or, you'd have a value fund with one hundred and one hundred and fifty dare I say two hundred stocks? Are you less diversified now in trying to succeed at value versus zoning for growth stocks?

Yeah, I think we're focused on trying to get investors to think more about diversification now.

We still are really cautious.

You don't want to be everywhere in this market, but there are some really high quality companies out there. And one of the things, you know, I followed small and mid cap stocks for most of my career, which is dating me much longer than I want right now. But what people will often associate what small cap companies with is that they're unprofitable.

But there's a lot of.

Small and mid cap companies that are quite profitable. And when you look at the earnings multiples of those companies versus the SMP five hundred, they are almost at trough levels and So it's those types of companies tom cash flow positive in many cases earnings positives, really good management teams operating these companies, but just can't get out of their own way. So diversific, but looking for high quality still.

And I know you and your teams at all Spring you do a lot of real bottoms up research analysis. Are there sectors that screen well for you guys in that small to mid cap world?

There definitely are, Paul, And we have seen financials start to outperform. That is one of the areas that our managers were highlighting earlier, certainly with rates coming down, other pressures coming off that area, and not just the banks, but more broadly other financials as well.

But I would also.

Say healthcare, and this is an area that a lot of the market has been kind of scared away from. But the tools in diagnostic space in particular is an area that has been underutilized. Where you see earnings expected to really ramp in twenty five and twenty six, and so where you see that earnings acceleration that can actually bring really good returns for shareholders as well.

We get lucky, as we did yesterday with Dana Telsey on Nordstrom's going private. We have a Malletti with us from all Spring and Strong and Milwaukee, and this is Joshua Franklin in the Financial Times. Pretty much moments ago this was rumored and now the ft reports. The US Banking Lobby Group has said they filed a lawsuit against the FED over the Central banks stress testing, and of course the quote here from Greg Bear. We appreciate the

When you look?

I mean, I get JP Morgan's wonderful, but come on, if you look at the top twenty banks after what we went through eighteen months ago, can we really get beyond stress tests? Stress tests? That's a mouthful. Stress tests of our banking lobby?

You know, Thomas is a really interesting article in a comment as well as you know, where have we seen concentration grow. It's with banks, and there may be more risk out there longer term than less. But I think others would point to private credit and private equity soaking up some of the slack on the other ends, and those areas also funding many businesses.

But I don't know. We'll have to see what happens with that lawsuit.

Hey, and a lot of folks with the new Trump administration coming and are expecting mn A to really pick up. Is that something you guys thematically think about for twenty twenty five maybe beyond.

Absolutely, I think we're already starting to see it. You know, the IPO market is starting to show signs of opening up. But I think M and A is real there. You know, as you both know, company balance sheets are strong, there's a lot of cash on the sidelines when it comes to what companies have been kind of holding out, waiting to do, waiting to see what the future looks like.

It will be being into twenty five.

You Paul Sweeney, I look at we mentioned Ben Laidler and Christmas Eve twenty eighteen with this great bullmarket call at the time at HSBC. I think I set up one hundred and fifty four percent. I can't remember the number, folks, but I got JP Morgan from that same holiday season six years ago. Fortress Diamond is up one hundred and sixty one percent, seventeen percent per year. I thought banks made nominal GDP and you went home.

Now great returns and they're building a phenomenal headquarters on Park Avenue, which I can't wait to see. Hey, And one of the things I'm trying to figure out where the performance in twenty twenty five could come from. After two just stellar years of north with twenty percent returns, I feel like it's got to be driven by earnings. And sure enough, you know, the earnings growth out there is twelve to fourteen percent.

But boy, that seems yeah, pretty high?

Is Is there earnings risk out there for you guys? Are you thinking about that?

Paul?

I agree with you, it seems high.

It.

I would have probably said that coming into last year although or this past year, but we didn't see tremendous earnings growth outside of you know, a real concentrated number of.

Names this year.

I think we need to see real earnings growth in order to get the market to accelerate. But you know, the equity market will continue to surprise. I looked at some data going back to nineteen twenty six, so ninety nine years. Seventy one of those years, if we can count this year, which hopefully we can, have produced positive returns, seventy one of ninety six years and thirty two of those years have produced returns of over twenty percent. Five years in a row of twenty percent. Ernian's Paul, you

Emlodious Apple of value stuck, you know, Tom.

The way I love to think about this is value is what you gain, not what you pay. And so I think it all depends on what you paid for Apple and how much more game we can get.

I'm going to use the old buffet phrase for that one.

Didn't you mention, Paul, like this year, I still I need to buy my first year thirty three percent, thirty three percent This year I thought they were doing terrible. It's like tim kone, you know, it's terrible. Stop the road show? Remember those, Yeah, the developer shows.

Yeah, they still haven't. They're still big, big, big events.

So is this like a home run for Dan and I?

He's had a lot of home runs this year.

He can be sitting back in this ugly clothing that he tends to wear, or loud clothing that he.

Tends to wear for him.

I know I'm all over him on that, but he's a Penn State fan, So okay, we forgive him.

Okay, So there you go, am Melodia on value, Let us continue a couple more questions here on television and radio worldwide, Emilidi, I go back to value, and on an international basis, the number one failure has been strong dollar, resilient dollar international stocks. At some point it's going to be a moonshot. When is that?

You know? Tom?

I think if we had to pick a dark horse going into twenty five and twenty six, we'd probably take a shot at having some allocation toward emerging markets. And it's exactly you know what you're pointing out. The dollar has been so strong it's really pushed back ourmerging markets.

You know, on top of other things.

But you know, I think there is real value to be had when you look at the MSCI em and index versus the S and P five hundred. We're at a twenty year trough, and so any kind of positive surprise or weakness in the dollar could really cause that area of the marketing surge.

Okay, im Altdi, thank you so much. You have a wonderful season. Merry Christmas. Q m Aletti. Is it all spring in Milwaukee?

You're listening to the Bloomberg Surveillance podcast. Catch us Live weekday afternoons from seven to ten am. Easter. Listen on Apple car Play and Android Auto with a Bloomberg Business app, or watch US live on YouTube.

Joining us now, someone who has tried many agnes. Stuart Kaiser joins Uskin American Airlines down four percent is well, thank you so much for joining us in study on Christmas. Really really appreciate it.

Good morning.

The number one thing we got wrong was growthiness. You had the image of Andrew Hollenhorst saying we will have growthiness, we will have higher rates. Does the growthiness continue and make your life in equity markets better?

I certainly hope so.

The Fed seems to think so too, which I think was was, you know, a friendly reminder from the SEP that it wasn't all about inflation risks that they also think the unemployment ra is going to calm down and growth is going to remain solid.

But to be honest, I think that's the biggest risk.

Early next year with that unemployment report on January tenth, we're going to get a very quick test of whether the Fed's view of flattening out of unemployment.

Is the case or not.

If we do get it, then look, I think equity markets are in good shape. If we get an inflection point higher, it's going to be a tough start of the year.

I think.

So what is the twenty twenty five call? Here, we had twenty twenty three, twenty twenty four, twenty percent plus gains in each.

Of those years.

How often do we get a thirty year of a performance after that.

I've seen people say it's only happened once, that doesn't mean it can't happen again.

But look, I think I think the issue is.

You have about call it fifteen fourteen to fifteen percent EPs growth price for next year, which is a pretty solid number.

Is that seems almost aggressive to me?

But yeah, you're gonna need to see a broadening out. I think for that to happen, you've got valuation that's obviously quite extended. So I think if you take those two things together, you're gonna say, yes, I might have another double digit year. But the risk reward around that forecast is really really tricky here going into going into twenty twenty five.

What are some of the sectors? How are you playing it? Either from sector perspective a factor perspective. Are we looking for broadening out of performance in twenty twenty five?

I think sector wise, the area we've seen the most consistent sponsorship is in financials and banks, so that seems to be the easier trade. You know, obviously tech, you need to be in tech. Then you've got things like healthcare and energy, which I think have a lot more moving parts and are a lot more tricky and you need to be nuanced about it.

From a factor perspective.

If you believe the Fed's forecast, which is kind of a higher for longer profile did well in the first half of twenty twenty four. When we traded higher for longer, it was large cap, it was tech, and it was growth. So I think that has to be your base case to start the year, and to get the broadening, you're gonna need to see that in earnings like we did back in the third quarter.

My tweet of the day here, everybody's working on Christmas Eve. They're all at home having their Kirklin eggnug with a twenty nine proof. According to Lisa Mateo's reporting, Lawrence McDonald, who had my essay two years ago walking through the wall of money that's out there, the six trillion, whatever

Yeah, we have been a little bit.

And I do think the term premium, particularly that thirty year point in the yield.

To find that for people like Lisa Mantaeo having your third Kirkland Egnie, what God's name.

Is term previous term premium, just how steep the bond term structure is. So in this case, a steepening of the term structure, and our view would mean the thirty year yield is rising substantially. I think if that happens, it's a significant risk for US equity markets. And the reason is this. We could talk about the ten year yield,

It's very hard to come up.

With a positive reason the thirty year yield would really move higher. So that is probably going to come from inflation and deficit spending and things of that nature. So if there's a part of the yield curve that we are concerned about, it would definitely be really at the very long end of things.

What are your clients telling you about this new Trump administration coming in later in January?

Are they positioning around that?

Are they treating it as a non event or are they becoming more bullish on the margin.

What are you hearing from your clients.

I would say definitely not treating it some non event.

You know.

I would say, if you think of the election, you had a sentiment response early, then you had a response to kind of policy proposals next year is implementation, and the implementation part I think carris a.

Lot of risk to it.

Right.

You know, it's easy to talk about tariffs, but now let's implement tariffs. It's easy to talk about, you know, reigning and government spending. We saw with the Continuing Resolution the market got a little bit concerned with that, and I think I think the market's response to that Continuing Resolution is a shot across the bow that when you actually go to implement these policies, it can create volatility.

Is there anything that concerns you in terms of valuation here? I'm just not sure how to get comfortable with evaluation. Maybe I can pull out the mag seven get a little bit more comfortable there. I mean, what are you guys doing on your desk, your clients thinking about, you.

Know, valuation? That we think of that as potential energy.

So yeah, there is a risk you can sell off from a high valuation point, but you need a catalyst to do it.

You know.

The other thing about valuation is unless you have a holding period of twenty four months or beyond, valuation probably shouldn't be your number one consideration. So I would say right here, if you get the earnings growth that the market's forecasting, the valuation is going to be fine. If you start to get Ernie's growth decelerated, unemployment rate rising all of a sudden, now you're selling off from a much higher level. So I think it's a risk reward discussion.

And Stuart, thank you so much for coming in. I love your segments on industry. I just think they're really really great when they show you in the trading before keeping the young Turks come, mister Kaiser, is the city Grilled?

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern Our play in 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 going to spend some time here on the politics of the moment. There's no one better to do that with a Gautamcunda, yes, a professor at Yale's School of Management, but far more his book Picking Presidents really alludes to the follow up I'm kidding in jest picking Billionaires. Gotta mccundan now on Elon Musk into twenty twenty five. Professor, thank you so much for joining in one of your

It's hard to see how that won't happen.

I mean, the big chunk of the Trump administration is people who have defined their foreign policy stance around conflict with China, hopefully not armed, but still remark levels of hostility, though they are just a new part of the relationship, and some of the major players in the Trump administration, Elon Musk in particular, more than anyone else, are enormously dependent on trade with China. Must wants to put billions of dollars of investment into China, and most of Jesscol's

What do you think, how do you think this is going to play out here? I mean, I think a lot of folks in Washington, DC, a lot of folks who think about policy matters for this incoming administration trying to figure out what role Elon Musk is going to play and for how long do you have any insight into that?

So this is something new in American politics. There has never been a civilian as powerful as Elon Musk. For in American history. It's hard to find anyone in sort of like British history or who's most comparable. If we go through he's not just the wealthiest person in the world and maybe the single most important media figure, he's also America's single most irreplaceable defense contractor. Right, you could swap out going for Locke Martin, You couldn't swap out

But at the.

Same time, at the same time, he's sort of showed a willingness to kind of conduct his own foreign policy.

He's you know, he had pair.

Peers to speak with Vladimir Putin on a regular basis and then turns around and kind of tweets out stuff that looks a lot like Russian propaganda. He has enormous financial interests in China that swamp. You know, they may be larger financial interests in China than those of any other person in the United States.

Yep.

And so at the same time, if you're Marco Rubio or Bridge Bolby, I mean, what you've been talking about for ten years is we need to prepare against China. And I'll just note right now, in the sort of the conflict over the government shutdown, the most interesting thing that happened was the initial bill was killed because of Mosque. The bill that finally passed did not address any of Musk's confirmed with the original bill. If anything, it was worse by his standard que measure. He was by the

That was gone, and.

Somehow the bill passed the second time, which suggests that maybe must go exactly what he wanted.

So what are some of the takeaways from that funding bill practice that we saw a week or so ago. It seems like maybe Congress, in particular the Senate, kind of trying to assert its independence of its branch of government. Does that suggests how maybe these first one hundred days will go for the Trump administration.

It doesn't.

I think what it suggests is that senators and congressmen are realizing that, however much Americans might admire Elon Musk's.

Business success, they didn't elect him to run the country.

And you know, no matter how that, there's been some focus groups where even hardcore Trump supporters are sort of looking at Musk's role and going, we did not vote for this guy. So it's not clear what's going on here.

But what I.

Would draw back on is I think we should American politics look more like court politics right now than they do traditional politics.

I keep drawing on sort of stuff from the Roman.

Empire and the Byzantine Empire, because there's this clashes of personalities. So the person who springs to mind for me, for Elon Musk is Crassus, the richest of all the Romans, the figure who was in the first Triumvirate with Pompey and Caesar. I mean, he was a crucial figure in the transition of the Roman Republic to the Roman Empire. And Crassus sort of he bankrolled other people until and

Professor were weaned on. You know, you get to city history. March second, eighteen sixty one, Lincoln's first inauguration, and I'm sure they had a whole frenzy about pecking order, about who would sit where and all that. Where should Elon Musk sit at the second inauguration of Donald Trump?

I mean, judging by his level of influence, he should be right up on stage, hold on.

The Bible, the Trump.

Right, but I mean with his hand right on Trump's shoulders as the as the oh come on, It's going to.

Be seriously like, is he on stage? Does he sit two rows behind President Biden? Is he out in the cheap seats, you know, halfway back to the Lincoln Memorial? Which is it.

So his thing?

I would never underestimate Musk savvy, right like he has. He spent two hundred and fifty million dollars to make himself the second most powerful person in the United States. So if I were giving Musk advice, I would tell him he should be so far away the cameras can't find him on the zoo. That was a smart play for him, is to be as slow he as possible,

Professor, thank you so much. Scott A. McCunn has been a huge, huge advantage for Bloomberg Surveillance this year. We greatly appreciate his efforts readable and advanced picking presidents. Is the book really really quite something? As well?

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on applecar Play and Android Auto with Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

Your daily look at the front pages the Christmas Eve edition. It's brought to you by IBKR Financial Advisor. Switch to interact to brokers for lowest cost global trading and turnkey custody solutions. No ticket charges, no conflicts of your interests at ibkr dot com. Slasha, IBKR, Thank you for you many gifts to us this year. Put the Kirklan egg bag down.

Please, what do you got? I got it.

We'll start at the financial time. So they're saying this is interesting. Chief executives publicly traded US companies they're leaving in record numbers. This is despite different paint bonuses that they're getting. The reason why they have this fear of turmoil in twenty twenty five. They're looking ahead to the next year. This is according to Challenger Gray. So here

Let's also think it's probably the fact that we've had two monster years in the stock market where their stockholdings, their personal stockholdings are probably at all time highs, and they're like, I'm done, you know what, I want to deal with this stuff anymore. My stock is worth a jillion dollars. I'm going to just step aside and go down to Boca.

I love the phrase we heard yesterday going back to Harvey Schwartz, who they talked about protail, which is professional retail YEP, protail exactly know there it is, what do you got next?

The next is about Apple that they could be Uh, it could be means some big money for Apple. This is from web Bush, you know, Dan ives yes. Estimates three hundred million iPhones are over four years old, so that means it could lead to record upgrade, so more people are gonna need the new one and that's gonna help push Apple to a four trillion dollar market cap

Is anybody here used AI capabilities? I wouldn't know what if it was looking at.

It pops up on your on your Google search.

Now is that before you kind of get to like the generic Wikipedia answer to whatever you're acquering, it'll it'll pop up there. So they're they're force feeding you it and it's it's helpful. I mean it's it's helpful, but I'm not fully engaging with it.

That's something that's going to take time.

But I'm looking at you know, Apple, It's got a market cap in three point eighty six billion dollars right now.

So just to whisper away from four trillion.

Yeah, a three point eight six trillion market cap, close to Fortullion.

I just googled American Air grounded and I got no way.

I forgot no, I didn't have anything.

I'm still very this morning.

Next good point, Okay, are you ready for football on Christmas?

With Netflix?

A huge steal? Well, it went wrong a couple of days ago. Somebody had out it was. It was not successful.

It's not okay, So hopefully you have the Netflix subscription stand will bring that for you. Two NFL games, right, you got the Chiefs and the Steelers one pm, Eastern Ravens at the Texans four thirty pm. You can though, you know, watch it for you over the AIRTV and the whole markets for the team. So just want to put that out there. But two questions, is it okay to watch seven hours of football on TV on Christmas? And the second one, you know you had the glitches

Not as forgiving.

So we'll see if that can stand up to the test there. And then you have the debate too, because it's kind of taking the spotlight off the NBA, which is really you know, had their whole Christmas summary. So there's that debate too. And then the players, I mean, now they got to play four teams. They're going to play three games in eleven days, so that means they're playing more real injury.

Yeah, I mean, and this is the biggest thing for Netflix here is to from a technical perspective, no glitches.

The bar is super high on the NFL.

It's one thing to do, you know, like a tennis match or something, and it doesn't really work or there's you know, technical problems.

You cannot do that with the NFL.

So this is a big, big deal.

Let's be optimistic. It succeeds what's Paul Sweeney's timeline where CBS loses football.

You know what's gonna happen the NFL. There, there's nobody better in the world of this. There are going to have their product on every single distribution platform out there. Traditional broadcasts, networks, cable networks, streaming, multiple streaming, multiple streamings, they're gonna because why then you get more and more people bidding on the rights for your product. And it's up to CBS whether you want to put it on

So I have to see it's good to squeeze one more. Okay, one more.

This is the big social media debate. It's called gentle parenting. Okay, this is hashtag gentle. I know you're gonna love this.

Okay.

So there's four rules. Empathy, understanding, respect, and boundaries. Okay, you have to talk about feelings, you know, when they're having a tantrum. You got to get down to their level, make eye contact, validate their concerns. Say it's okay, I understand. Okay, if they hit another kid, you say, don't hit you say, use gentle hands. Okay, though that's the learning now, and you're I'm not supposed to count to three. Remember that used to be the thing, like I'm going to count to three.

I did that.

I got to say, is this working?

I haven't done it.

I haven't done the gentle.

Her house If I know that the case.

You talk about tantrums in the kitchen. When I hear this stuff rested, got news.

Here on the American airlines nationwide ground stop cancel, every a says, so good.

News for everybody else.

They think they got it fixed.

Okay, good, Yes, yeah, when you have the crying kid in the airline, yes, how do you handle that with the gentle I'm flowing back.

In a coast to coast for twenty years with little kids, so I have empathy for those parents, so I try to be the you know, empathety. That's at some point I turn around, I'm like, mom, Dad, get a hold of your kid.

Here.

You're in charge, You're the boss, hear it.

I feel sad for it. I just really, you know, I mean, you had all the right phrases, Lisa, of what this thing is.

Yeah, and you know what it is. They're saying it's bigger now because now the adults are starting to be more aware of their mental health. So now they're passing that down onto their kids. I mean, it wasn't a thing when when my kids were younger, there was no such thing as gentle parents.

If you don't next generation go to that in the next fifteen minutes, you don't get a sip because Santa is not showing up and I'm gonna play Andy Williams.

For the entire Christmas Day. Stay with us on this Christmas Eve post me Tom Keen, Michael Barr, and Lisa Matteo with that Dog. This is the Bloomberg.

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