Bloomberg Audio Studios, Podcasts, radio News.

Bloomberg Audio Studios, Podcasts, radio News.

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Lori Calvicina of RBC saying this for a material move higher in the market by year end to be justified on the math, we think investors will need to start focusing on the outlook for twenty five, where visibility still seems a bit limited.

This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business App. Lori Calvicina of RBC saying this for a material move higher in the market by year end to be justified on the math, we think investors will need to start focusing on the outlook for twenty five, where visibility still seems a bit limited.

Laurie's with us here in New York. Lori, good morning to you.

Laurie's with us here in New York. Lori, good morning to you.

Thanks for having let's talk about twenty twenty five. I think it's so difficult to do without really knowing what happens in November.

Thanks for having let's talk about twenty twenty five. I think it's so difficult to do without really knowing what happens in November.

How hard is it to answer that question?

How hard is it to answer that question?

Well, I think that's a great point. The exact point of client I spoke with last week made And it's interesting because, on the one hand, I have equity investors US based ones at least saying, oh, you know, there's not a lot to do on the election. We're not putting on any trades, and it's like, well, but visibility is limited, and you know, what happens in November really matter?

Well, I think that's a great point. The exact point of client I spoke with last week made And it's interesting because, on the one hand, I have equity investors US based ones at least saying, oh, you know, there's not a lot to do on the election. We're not putting on any trades, and it's like, well, but visibility is limited, and you know, what happens in November really matter?

So which one is it?

So which one is it?

I think you sort of a lack of clarity about what to do is also contributing to the fog.

I think you sort of a lack of clarity about what to do is also contributing to the fog.

You had a line that we repeated over and over again on this program for the last several months. You said that talking about the election with clients was like staring at the sun.

You had a line that we repeated over and over again on this program for the last several months. You said that talking about the election with clients was like staring at the sun.

Is it still like staring at the sun?

Is it still like staring at the sun?

It shifted a little bit, and you know, my joke's not funny anymore post eclipse. But the reality is now I'm using the line safety and numbers because what I'm sensying from the US again, the US based people, not the people based outside of the US, but the US based people. They still don't really want to talk about the election all that much. And again I've heard some very impassioned defenses of I traded this in twenty sixteen, I traded this in twenty twenty. I'm not trading this again kind of coming out of the hedge fund community. The long goalies are like, yeah, I'll believe it when I see it. But the long goal only is what I'm hearing from them is that they're getting questions from their clients primarily based in Europe and Canada and Asia and other places outside the US. They're having to come up with talking points and they're having to dust off the historical playbooks and come up with something to say. Frankly, I don't think there is a lot of conviction from investors and again US based ones on which way the outcome is going to be. But there is a general sense that Congress is going to be divided and that you're going to have a split government generally, so not much is going to get done down the road. But that's really where people are right now. So we joke safety in numbers, let's talk about the charts, let's talk about the data, and we'll keep you all out of fights.

It shifted a little bit, and you know, my joke's not funny anymore post eclipse. But the reality is now I'm using the line safety and numbers because what I'm sensying from the US again, the US based people, not the people based outside of the US, but the US based people. They still don't really want to talk about the election all that much. And again I've heard some very impassioned defenses of I traded this in twenty sixteen, I traded this in twenty twenty. I'm not trading this again kind of coming out of the hedge fund community. The long goalies are like, yeah, I'll believe it when I see it. But the long goal only is what I'm hearing from them is that they're getting questions from their clients primarily based in Europe and Canada and Asia and other places outside the US. They're having to come up with talking points and they're having to dust off the historical playbooks and come up with something to say. Frankly, I don't think there is a lot of conviction from investors and again US based ones on which way the outcome is going to be. But there is a general sense that Congress is going to be divided and that you're going to have a split government generally, so not much is going to get done down the road. But that's really where people are right now. So we joke safety in numbers, let's talk about the charts, let's talk about the data, and we'll keep you all out of fights.

Well, isn't that conviction itself that there's going to be gridlock in Washington?

Well, isn't that conviction itself that there's going to be gridlock in Washington?

I think so, And look that is my base case as well. But what I've told people is if you kind of again separate the two investor bases, And if you talk to non people who don't sit in the US, they've generally been leaning into the Republican sweep idea for quite some time. So you know, it's always a question, right, what are investors expecting? What's priced in? Different parts of the market are pricing in different things, I think, but I don't think anybody's seen in the Democratic sweep. And even though that's not high on my radar either, I have been telling people you got to think about it a little bit, just because no one.

I think so, And look that is my base case as well. But what I've told people is if you kind of again separate the two investor bases, And if you talk to non people who don't sit in the US, they've generally been leaning into the Republican sweep idea for quite some time. So you know, it's always a question, right, what are investors expecting? What's priced in? Different parts of the market are pricing in different things, I think, but I don't think anybody's seen in the Democratic sweep. And even though that's not high on my radar either, I have been telling people you got to think about it a little bit, just because no one.

Is okay, So what if you do think about it and you do say to yourself, okay, this is how I would position for blue sweep versus red sweep. What's the number one trade for each?

Is okay, So what if you do think about it and you do say to yourself, okay, this is how I would position for blue sweep versus red sweep. What's the number one trade for each?

So I think, you know, I heard one comment from a non US investor, you know, when we were talking about this concept of divided government, and they said, oh, I guess no more fiscal stimulus. So I thought that was I thought that was interesting. It was a very you know, kind of kind innocent little comment. But I thought that was really, you know, just sort of interesting because there's been so much consternation about, you know, well, this market shouldn't be this high, you know, gush darn that fiscal stimulus, and you know, sort of taking that idea out from out from you know, kind of the market backdrop I think is puzzling, you know, to some investors. To be honest, though, A Marie, we did a survey, you know, back in kind of early to mid April, where we actually asked our investors what would you you know, what would you buy, what would you sell? What's your outlook for different industries under the different scenarios and the Democratic sweep scenario. I think we only had like seventeen percent of our analysts were bearish, Fewer than that were bullish. Most were in the neutral camp. Generally, it's the healthcare sectors and the energy sectors that come up as bullish or bearish under different outcomes. You talk to my healthcare analysts, they're going to downplay the impact and tell you they're not really expecting too much out of either candidate depending on who wins. And with energy, I do, frankly wonder if people are just looking back at twenty twenty and don't realize that Biden's running a very different campaign than he was back then.

So I think, you know, I heard one comment from a non US investor, you know, when we were talking about this concept of divided government, and they said, oh, I guess no more fiscal stimulus. So I thought that was I thought that was interesting. It was a very you know, kind of kind innocent little comment. But I thought that was really, you know, just sort of interesting because there's been so much consternation about, you know, well, this market shouldn't be this high, you know, gush darn that fiscal stimulus, and you know, sort of taking that idea out from out from you know, kind of the market backdrop I think is puzzling, you know, to some investors. To be honest, though, A Marie, we did a survey, you know, back in kind of early to mid April, where we actually asked our investors what would you you know, what would you buy, what would you sell? What's your outlook for different industries under the different scenarios and the Democratic sweep scenario. I think we only had like seventeen percent of our analysts were bearish, Fewer than that were bullish. Most were in the neutral camp. Generally, it's the healthcare sectors and the energy sectors that come up as bullish or bearish under different outcomes. You talk to my healthcare analysts, they're going to downplay the impact and tell you they're not really expecting too much out of either candidate depending on who wins. And with energy, I do, frankly wonder if people are just looking back at twenty twenty and don't realize that Biden's running a very different campaign than he was back then.

He said, it's a kind of innocent comment to think that there's going to be no fiscal stimulus with SAVIDI governmor are you basically saying there is going to be fiscal stimulus additional rounds regardless of who wags you know.

He said, it's a kind of innocent comment to think that there's going to be no fiscal stimulus with SAVIDI governmor are you basically saying there is going to be fiscal stimulus additional rounds regardless of who wags you know.

I don't know, but I will tell you that when I look at Trump and Biden and I look at the different issues, and you know, we kind of went through the Trump campaign website pretty closely. I know there's a lot of other stuff out there, but you know, it's sort of a struggle in our seat, frankly to figure out what to focus on and what's noise and what's real. But when I kind of go through, you know, kind of cut through the rhetoric and go through the policy ideas of different of the two different camps, it seems like they're both you know, talking about wanting to keep jobs in the US. There's a big commitment to restoring and I talk to investors, they think both these candidates are inflationary in terms of their views on trade and immigration. So I will say I think also US based investors again are struggling to come up with assalient differences from an investment perspective between the two candidates.

I don't know, but I will tell you that when I look at Trump and Biden and I look at the different issues, and you know, we kind of went through the Trump campaign website pretty closely. I know there's a lot of other stuff out there, but you know, it's sort of a struggle in our seat, frankly to figure out what to focus on and what's noise and what's real. But when I kind of go through, you know, kind of cut through the rhetoric and go through the policy ideas of different of the two different camps, it seems like they're both you know, talking about wanting to keep jobs in the US. There's a big commitment to restoring and I talk to investors, they think both these candidates are inflationary in terms of their views on trade and immigration. So I will say I think also US based investors again are struggling to come up with assalient differences from an investment perspective between the two candidates.

At this point, then why are you just neutral? Why are you feeling not that great about stocks given the fact that probably either candidate is going to try to stimulate the economy after they wig, regardless of which party.

At this point, then why are you just neutral? Why are you feeling not that great about stocks given the fact that probably either candidate is going to try to stimulate the economy after they wig, regardless of which party.

Well, again, we go back to our base case and politics one oh one, and you know my politics one o one class Larry Sabadela used to always tell us all politics is local. But he also reminded us how bills get created. And that's what I find I educate a lot of investors about. It doesn't matter what these two candidates say, right, You've actually got to have cooperation from both chambers of Congress to get anything done. And as you look at the landscape, do you really see, unless you have a United government, anybody cooperating with anybody in the next four years? Me, not so much. So you know that, frankly, I think informs our view and a lot of investors' views, Like, on the one hand, doesn't really matter, is anything actually going to be able to get done?

Well, again, we go back to our base case and politics one oh one, and you know my politics one o one class Larry Sabadela used to always tell us all politics is local. But he also reminded us how bills get created. And that's what I find I educate a lot of investors about. It doesn't matter what these two candidates say, right, You've actually got to have cooperation from both chambers of Congress to get anything done. And as you look at the landscape, do you really see, unless you have a United government, anybody cooperating with anybody in the next four years? Me, not so much. So you know that, frankly, I think informs our view and a lot of investors' views, Like, on the one hand, doesn't really matter, is anything actually going to be able to get done?

We're looking out to November because there's very little happening over the next week or so. What we saw happen last week, and I think we should go over it we saw a lot of people put a lot of weight on what most people would consider to be second tier economic data, which is an S and P global PMI in America.

We're looking out to November because there's very little happening over the next week or so. What we saw happen last week, and I think we should go over it we saw a lot of people put a lot of weight on what most people would consider to be second tier economic data, which is an S and P global PMI in America.

Surprising to the upside.

Surprising to the upside.

Ignoring in video and video was up on the week by fifteen percent S and P five hundred, dead flat.

Ignoring in video and video was up on the week by fifteen percent S and P five hundred, dead flat.

What was that about?

What was that about?

So I don't know so much about that particular data point, But if I rewind a couple weeks ago, I was out on the road and people were freaking out about the employment cost Index and I didn't even really even remember that that was a thing. And then the next week investors were making fun of the people who were freaking out about that the prior week. Sure, so I think it all goes back to if you look at twenty twenty five again, and we want to be forward looking, there's a lot of fog out there. There's a lot of clouds, not necessarily storm clouds, but just lack of visibility, and we're all just stuck.

So I don't know so much about that particular data point, But if I rewind a couple weeks ago, I was out on the road and people were freaking out about the employment cost Index and I didn't even really even remember that that was a thing. And then the next week investors were making fun of the people who were freaking out about that the prior week. Sure, so I think it all goes back to if you look at twenty twenty five again, and we want to be forward looking, there's a lot of fog out there. There's a lot of clouds, not necessarily storm clouds, but just lack of visibility, and we're all just stuck.

Talking about the FED.

Talking about the FED.

I joked with a friend of mine recently that you know, in equity land, we've all had to become rate strategists and you know, kind of make friends with the economists and so any little breadcrumb of information that can shed light on the will they won't they? When they? You know, when are they going to go? That's all people seem to care about right now. And I think investing has changed over the years. We all get access to information, you know, whether it's the terminal or these other data sources. We can analyze things much much faster. That accelerated during COVID. So people are looking for any incremental piece of data that's not widely watched to get some sort of clue on this debate.

I joked with a friend of mine recently that you know, in equity land, we've all had to become rate strategists and you know, kind of make friends with the economists and so any little breadcrumb of information that can shed light on the will they won't they? When they? You know, when are they going to go? That's all people seem to care about right now. And I think investing has changed over the years. We all get access to information, you know, whether it's the terminal or these other data sources. We can analyze things much much faster. That accelerated during COVID. So people are looking for any incremental piece of data that's not widely watched to get some sort of clue on this debate.

Do you think we are just as sensitive to upside surprises as we are downside surprises? And with that in mind, what do you advocate for inequities at the moment?

Do you think we are just as sensitive to upside surprises as we are downside surprises? And with that in mind, what do you advocate for inequities at the moment?

So in my mind, the rotation thesis still makes a lot of sense, and I actually can see that being consistent with a sideways market. If you think about the rate of upward revisions as a good gauge for earning sentiment, it's actually shifted back in favor of the top ten market cap names in the S and P five hundred, But throughout most of this reporting season, most of the upper revisions were coming for the other four hundred ninety stocks In the SMP, so I think, you know, we've seen a little bit of bumps in that, but generally that megacap growth trade is still quite expensive. It's still quite crowded, and it's got decelerating earnings growths and that always makes growth investors nervous. Now, the rotation thesis, I think it's not just about valuation, but it's also about the economic tailwinds that have been building. And if you look at twenty twenty four GDP, it's kind of stalled out around two point four percent. That's right at average. We haven't seen any movement to the twenty twenty five numbers yet, which are still sitting around.

So in my mind, the rotation thesis still makes a lot of sense, and I actually can see that being consistent with a sideways market. If you think about the rate of upward revisions as a good gauge for earning sentiment, it's actually shifted back in favor of the top ten market cap names in the S and P five hundred, But throughout most of this reporting season, most of the upper revisions were coming for the other four hundred ninety stocks In the SMP, so I think, you know, we've seen a little bit of bumps in that, but generally that megacap growth trade is still quite expensive. It's still quite crowded, and it's got decelerating earnings growths and that always makes growth investors nervous. Now, the rotation thesis, I think it's not just about valuation, but it's also about the economic tailwinds that have been building. And if you look at twenty twenty four GDP, it's kind of stalled out around two point four percent. That's right at average. We haven't seen any movement to the twenty twenty five numbers yet, which are still sitting around.

One to seven. That is weak GDP.

One to seven. That is weak GDP.

And that's why I feel a little bit stuck right now because to really get excited on twenty twenty five, I need to see that number go up, and it's not. And it's not really going down either. It's not doing anything now the downside, I think your question is brilliant, you know, sort of the tail risks on both sides. What could drive us down? I think we're pretty fairly priced for a FED that you know, kind of maybe cuts once moderating inflation, maybe a little stickier than we end surely thought. But if we start to really see inflation expectations deteriorate, you know, in terms of moving up, if we start to see the Fed narrative fall apart, again, there's a little bit of downside risk to this market, and I think that's underappreciated.

And that's why I feel a little bit stuck right now because to really get excited on twenty twenty five, I need to see that number go up, and it's not. And it's not really going down either. It's not doing anything now the downside, I think your question is brilliant, you know, sort of the tail risks on both sides. What could drive us down? I think we're pretty fairly priced for a FED that you know, kind of maybe cuts once moderating inflation, maybe a little stickier than we end surely thought. But if we start to really see inflation expectations deteriorate, you know, in terms of moving up, if we start to see the Fed narrative fall apart, again, there's a little bit of downside risk to this market, and I think that's underappreciated.

Flying blind into twenty five is becoming a little bit of a thing. Lori Cavsen and there F RPC.

Flying blind into twenty five is becoming a little bit of a thing. Lori Cavsen and there F RPC.

Joining us now.

Joining us now.

Prat s ReRAM Farcleys and Debor Cunning of Federated Hermes for a conversation about the Federal Reserve pleasure.

Prat s ReRAM Farcleys and Debor Cunning of Federated Hermes for a conversation about the Federal Reserve pleasure.

I want to start with you.

I want to start with you.

You've talked about the healthy skepticism you have about the degree of restrictiveness this Federal Reserve has with this policy rate, with this economy.

You've talked about the healthy skepticism you have about the degree of restrictiveness this Federal Reserve has with this policy rate, with this economy.

Where'd you stand on that?

Where'd you stand on that?

Now?

Now?

Hi, thanks for having me on the show.

Hi, thanks for having me on the show.

Yes, we've had our doubts.

Yes, we've had our doubts.

About if policy is restrictive enough, and I think you know, one thing that keeps fueling that doubt is just given how resilient the macroeconomic backdrob remain. You know, we've we we saw you know, pretty firm data on spending in Q one UH and honestly, our take on.

About if policy is restrictive enough, and I think you know, one thing that keeps fueling that doubt is just given how resilient the macroeconomic backdrob remain. You know, we've we we saw you know, pretty firm data on spending in Q one UH and honestly, our take on.

The retail sales.

The retail sales.

The latest retail sales print is really that maybe demand just normalized after a very big March increased, and there's you know, the fundamentals for the US consumer still looks pretty firm. And I think, you know, we we echo what we learned from the minutes that there is some uncertainty regarding the restrictiveness of monitory pantacy.

The latest retail sales print is really that maybe demand just normalized after a very big March increased, and there's you know, the fundamentals for the US consumer still looks pretty firm. And I think, you know, we we echo what we learned from the minutes that there is some uncertainty regarding the restrictiveness of monitory pantacy.

Debrah, how skeptically you you know, I'm probably not quite that skeptical.

Debrah, how skeptically you you know, I'm probably not quite that skeptical.

I do believe that even in an environment where inflation remains at three to four percent, five and a quarter to five and a half, with the YO curve fairly flat inverted to some degrees, you go further out of the curve where you know, expectations are different from a timeframe standpoint. But I do believe, given where we are from a standpoint of growth in the economy, where we are from inflationary levels having you know, come down as far as they are, but still with the ways to go, that the level that is currently being dictated in the market at five plus percent, you know, for the money markets, five minus percent small amounts for the bond markets, seems to be doing its job. And I feel like the FED rhetoric that we have been hearing for pretty much from from everyone since the last meeting has been that it's high enough, it doesn't need to go higher at this point. So I feel like we're going to don't fight the FED type of trade at this point.

I do believe that even in an environment where inflation remains at three to four percent, five and a quarter to five and a half, with the YO curve fairly flat inverted to some degrees, you go further out of the curve where you know, expectations are different from a timeframe standpoint. But I do believe, given where we are from a standpoint of growth in the economy, where we are from inflationary levels having you know, come down as far as they are, but still with the ways to go, that the level that is currently being dictated in the market at five plus percent, you know, for the money markets, five minus percent small amounts for the bond markets, seems to be doing its job. And I feel like the FED rhetoric that we have been hearing for pretty much from from everyone since the last meeting has been that it's high enough, it doesn't need to go higher at this point. So I feel like we're going to don't fight the FED type of trade at this point.

That's said.

That's said.

Dever, do you think it would be a mistake to cut race here, given the fact that so many people are seeing enough momentum in the economy to really risk the potential for reacceleration and fleetion.

Dever, do you think it would be a mistake to cut race here, given the fact that so many people are seeing enough momentum in the economy to really risk the potential for reacceleration and fleetion.

I do.

I do.

I think we're not to the most We're not to the time period that we need to see in place or touch due to inflation. Yet at this point we have seen some you know, maybe cracks in some of the data, you know, barring some of the secondsier data that that Mike was talking about earlier and that you were all speaking about. I think, you know, when you look at some of the employment statistics, if you look at you know, the Jolts data, maybe some of the broader indices. From an inflationary perspective, it certainly is not what I would call a crack that turns into you know, a big fisher or canyon. It's just something that I think probably takes the growth side of the equation down a little bit, more dependent upon the consumer, more dependent upon services than goods, and all of that plays into, you know, sort of keeping rates where they are. I don't think the Fed is at this point in any need, nor are they being compelled to move rates in either direction.

I think we're not to the most We're not to the time period that we need to see in place or touch due to inflation. Yet at this point we have seen some you know, maybe cracks in some of the data, you know, barring some of the secondsier data that that Mike was talking about earlier and that you were all speaking about. I think, you know, when you look at some of the employment statistics, if you look at you know, the Jolts data, maybe some of the broader indices. From an inflationary perspective, it certainly is not what I would call a crack that turns into you know, a big fisher or canyon. It's just something that I think probably takes the growth side of the equation down a little bit, more dependent upon the consumer, more dependent upon services than goods, and all of that plays into, you know, sort of keeping rates where they are. I don't think the Fed is at this point in any need, nor are they being compelled to move rates in either direction.

Pusha what's your take on this?

Pusha what's your take on this?

Tubsesaurius A.

Tubsesaurius A.

Strateigis was on earlier and he was saying that it would be a policy error for the Fetcher reserve to cut this year, given the fact that there is so much momentum and a lot of in the pipeline inflationary pressure that's going to come through next year.

Strateigis was on earlier and he was saying that it would be a policy error for the Fetcher reserve to cut this year, given the fact that there is so much momentum and a lot of in the pipeline inflationary pressure that's going to come through next year.

Do you agree?

Do you agree?

So?

So?

I think it really depends on how the data evolved here on. You know, our own baseline expectation is that perhaps they will find an opportunity to initiate a rate cut this year, you know, most likely in September, equally likely in December, just depending on you know, how the data, particularly the inflation prints play out, and and if we indeed, you know, get a series of point two percent month or a month on core pyce and you know that that evidence accumulates, I think it will be very hard for there would be no reason why they remain on hold. I think they can, you know, get their foot in and at least get one rate cut for it. From a from a risk management perspective, you know, policy would still be relatively restrictive in that world, but you know that will be a nod to the fact that the disinflationary progress has started.

I think it really depends on how the data evolved here on. You know, our own baseline expectation is that perhaps they will find an opportunity to initiate a rate cut this year, you know, most likely in September, equally likely in December, just depending on you know, how the data, particularly the inflation prints play out, and and if we indeed, you know, get a series of point two percent month or a month on core pyce and you know that that evidence accumulates, I think it will be very hard for there would be no reason why they remain on hold. I think they can, you know, get their foot in and at least get one rate cut for it. From a from a risk management perspective, you know, policy would still be relatively restrictive in that world, but you know that will be a nod to the fact that the disinflationary progress has started.

I'm pretty sure. I think this is the struggle we always have. We all know it's about the economic data. But what economic data? Do you ignore the solid jobless claims? Do you maybe put some emphasis on the slow down and reas house salves, do you put some weight on the.

I'm pretty sure. I think this is the struggle we always have. We all know it's about the economic data. But what economic data? Do you ignore the solid jobless claims? Do you maybe put some emphasis on the slow down and reas house salves, do you put some weight on the.

PMI from last week?

PMI from last week?

Of all things, where do you place the most emphasis right now and the incoming information? And what do you choose to discount to ignore?

Of all things, where do you place the most emphasis right now and the incoming information? And what do you choose to discount to ignore?

Well, I think at this point we can't choose to discount or ignore anything. We know that you know, the FED is highly data dependent and the data is really our only guide to give us a sense of, you know, how restrictive monetary policy is and where and how the conditions are to support the disinflation process. But you know, just in terms of what we're really looking at, you know, it's the inflation outcomes themselves, which I think are top, top of the line, very important at this point in time. And I think after that comes the labor market data and you know, prints related to consumer spending, so be it retail sales or the real personal spending estimates like we get this, I think those are the hard data that you know, we're really looking for keeping an eye out. And then again, you you know, it seems like every little data point is important, and as you rightly pointed out, you know, the market's reacted to the S and P global last week, So I think at this point in time, we can't afford to discount anything.

Well, I think at this point we can't choose to discount or ignore anything. We know that you know, the FED is highly data dependent and the data is really our only guide to give us a sense of, you know, how restrictive monetary policy is and where and how the conditions are to support the disinflation process. But you know, just in terms of what we're really looking at, you know, it's the inflation outcomes themselves, which I think are top, top of the line, very important at this point in time. And I think after that comes the labor market data and you know, prints related to consumer spending, so be it retail sales or the real personal spending estimates like we get this, I think those are the hard data that you know, we're really looking for keeping an eye out. And then again, you you know, it seems like every little data point is important, and as you rightly pointed out, you know, the market's reacted to the S and P global last week, So I think at this point in time, we can't afford to discount anything.

Deborah, what's your take on this, given the fact that it seems like literally one comment in the page book potentially that we are not aware of, could move things if it is something that confirms a sneaking suspicion or fear in the market.

Deborah, what's your take on this, given the fact that it seems like literally one comment in the page book potentially that we are not aware of, could move things if it is something that confirms a sneaking suspicion or fear in the market.

You know, I agree that it's a mosaic.

You know, I agree that it's a mosaic.

You can't it's hard to discount anything at this point, so taking in as much information as what you're being given and trying to digest it and put it into some you know, mosaic form that you can you know, theorize based on what your expectations are off of that that that collection of information and with the intention that hopefully that has something to do with you know, what what the FEDS intentions are. I think, you know, the the slow down in labor market quits, maybe the ratio of open positions to those available to be hired. Certainly the retail sales. I mean, the consumer really has been driving this economy. So really anything that has to do with the consumer in specific, but also from a broader mosaic standpoint, you can't ignore global you can't ignore you know, the non consumer.

You can't it's hard to discount anything at this point, so taking in as much information as what you're being given and trying to digest it and put it into some you know, mosaic form that you can you know, theorize based on what your expectations are off of that that that collection of information and with the intention that hopefully that has something to do with you know, what what the FEDS intentions are. I think, you know, the the slow down in labor market quits, maybe the ratio of open positions to those available to be hired. Certainly the retail sales. I mean, the consumer really has been driving this economy. So really anything that has to do with the consumer in specific, but also from a broader mosaic standpoint, you can't ignore global you can't ignore you know, the non consumer.

Aspect of the market either.

Aspect of the market either.

It all forms you know, sort of the theory that you're trying to come up with, which is higher for longer. I still think too, when we're talking about rake cuts this year, we're only in main now. Granted we're at the end of May, we're almost at the beginning of summer, but there's a lot of this year to go, more than half of it. So I think many many things can happen. And what the FED is still trying to do, it's gain confidence, and I think that takes them somewhere in the neighborhood of probably two to five months, and that still puts US in twenty twenty four end of twenty twenty, but we're there end.

It all forms you know, sort of the theory that you're trying to come up with, which is higher for longer. I still think too, when we're talking about rake cuts this year, we're only in main now. Granted we're at the end of May, we're almost at the beginning of summer, but there's a lot of this year to go, more than half of it. So I think many many things can happen. And what the FED is still trying to do, it's gain confidence, and I think that takes them somewhere in the neighborhood of probably two to five months, and that still puts US in twenty twenty four end of twenty twenty, but we're there end.

Of twenty twenty four. But Deborah, to Lisa's point earlier, a lot of guests have come on this program and talking about all the inflation and pressures potentially in twenty twenty five, is the FED potentially how do they How do you think they think about twenty twenty five when they think about inflation, and when some people are saying that they mean to hike after they cut at the end of this year.

Of twenty twenty four. But Deborah, to Lisa's point earlier, a lot of guests have come on this program and talking about all the inflation and pressures potentially in twenty twenty five, is the FED potentially how do they How do you think they think about twenty twenty five when they think about inflation, and when some people are saying that they mean to hike after they cut at the end of this year.

I think that's overthinking it. At this point.

I think that's overthinking it. At this point.

I believe that, you know, their goal is to take what's available for them now. And yes, they do give one to three year types of forecasts in their series of economic projections, But in fact, I think they're really focused on what they do need to do now, and to the extent that that has some impact on the next year, the next two years, they'll deal with that at that particular point in time. So I really think they're focusing on what happens the rest of this year and then twenty twenty five. You know, maybe energy prices stop being the deflationary trend they've been, maybe housing stops being the inflationary trend that it's been. Maybe there are offsets that are different, but I think again that's something that they will address as that happens, not as it's you know, sort of forecast in the in the next year, but rather in the next next six months or so.

I believe that, you know, their goal is to take what's available for them now. And yes, they do give one to three year types of forecasts in their series of economic projections, But in fact, I think they're really focused on what they do need to do now, and to the extent that that has some impact on the next year, the next two years, they'll deal with that at that particular point in time. So I really think they're focusing on what happens the rest of this year and then twenty twenty five. You know, maybe energy prices stop being the deflationary trend they've been, maybe housing stops being the inflationary trend that it's been. Maybe there are offsets that are different, but I think again that's something that they will address as that happens, not as it's you know, sort of forecast in the in the next year, but rather in the next next six months or so.

Fujah, we're in the business of overthinking things, so let's go there. Sorry, but it is the key thing that a lot of people are trying to game out how much we do see in November, either policy shift from either candidate actually turbo charging any kind of inflationary pressure that's in the pike. How are you gaming out how this kind of percolates, whether it's immigration changes or tariff changes that actually end up being inflationary this year.

Fujah, we're in the business of overthinking things, so let's go there. Sorry, but it is the key thing that a lot of people are trying to game out how much we do see in November, either policy shift from either candidate actually turbo charging any kind of inflationary pressure that's in the pike. How are you gaming out how this kind of percolates, whether it's immigration changes or tariff changes that actually end up being inflationary this year.

So I think in terms of being inflationary this year, I don't think those policy changes that are likely to have an immediate effect. You know, we in terms of tatiffs, we we've done some work in the past when we had the previous round of statiffs imposed. It takes time for these prices to filter through to the economy. So if there is a policy change in that direction, sure, you know it is, it will be an added impulse to inflation. But it's unlikely to be something that we feel in twenty twenty four. And of course I think the second the second step to that thinking is you know the scale of the policy, you know how many goods are we talking about, what's the share for all of that in our import basket? And even then, you know, the share of imports in the CPI or the PCE basket is fairly limited. So direct effects are limited and it'll take time for the second round effects to play out.

So I think in terms of being inflationary this year, I don't think those policy changes that are likely to have an immediate effect. You know, we in terms of tatiffs, we we've done some work in the past when we had the previous round of statiffs imposed. It takes time for these prices to filter through to the economy. So if there is a policy change in that direction, sure, you know it is, it will be an added impulse to inflation. But it's unlikely to be something that we feel in twenty twenty four. And of course I think the second the second step to that thinking is you know the scale of the policy, you know how many goods are we talking about, what's the share for all of that in our import basket? And even then, you know, the share of imports in the CPI or the PCE basket is fairly limited. So direct effects are limited and it'll take time for the second round effects to play out.

I post it, thank you, We've got to leave it there and to temper as well.

I post it, thank you, We've got to leave it there and to temper as well.

To the by for you. Thank you very much.

To the by for you. Thank you very much.

An eighteenth MBI site, So it's insight for the Boston Southex, the team advancing to their second NBA Finals in the past three years after completing a series sweep of the Indiana Pacers in the Eastern Conference finals. An NBA title would cap a successful season for co owner Steve Paliuca, who just last week saw his Italian football side at Atlanta win the Europa League. Steve, it's wonderful to catch up with you, sir. We've been talking offline. I know I was so happy for you. Congratulations to you and a team I want to begin with Atalanta, and I want to go through what this means to you. They are the underdogs of bergamow overshadowed by their glamorous counterparts of Inter and Milan out of Milan. How important was that for you, for that side, for the history of that club.

An eighteenth MBI site, So it's insight for the Boston Southex, the team advancing to their second NBA Finals in the past three years after completing a series sweep of the Indiana Pacers in the Eastern Conference finals. An NBA title would cap a successful season for co owner Steve Paliuca, who just last week saw his Italian football side at Atlanta win the Europa League. Steve, it's wonderful to catch up with you, sir. We've been talking offline. I know I was so happy for you. Congratulations to you and a team I want to begin with Atalanta, and I want to go through what this means to you. They are the underdogs of bergamow overshadowed by their glamorous counterparts of Inter and Milan out of Milan. How important was that for you, for that side, for the history of that club.

Well, I think it was huge.

Well, I think it was huge.

The Atlanta has not won the europe a couple one hundred years and the city of Bermos is just ecstatic right now. When the team came back from the game, there's a nice shot of the fans in the stands.

The Atlanta has not won the europe a couple one hundred years and the city of Bermos is just ecstatic right now. When the team came back from the game, there's a nice shot of the fans in the stands.

There's ten thousand folks from Bergamo there and when they came back, they couldn't eve get out of the airport. It was mob.

There's ten thousand folks from Bergamo there and when they came back, they couldn't eve get out of the airport. It was mob.

And then they they took a bus to the practice facility and that was also a mob. And at the field, so they're feeling great. There's Cardi Seciar goalie with the metal and it was just just a wonderful time.

And then they they took a bus to the practice facility and that was also a mob. And at the field, so they're feeling great. There's Cardi Seciar goalie with the metal and it was just just a wonderful time.

That's a big cup. By the way, two NBA championships were inside that cup.

That's a big cup. By the way, two NBA championships were inside that cup.

Steve, your approach to this club and the way this business has been run should be a case study in a lot of schools. I just want to go through some of that. So our audience really understands the background here. You've taken a chance on a lot of players that some clubs have left behind, including my own club Milan and the likes of CDK. You picked up Scamaka Lookman too. You've identified talent the likes of Coop Miners. This hasn't happened once, It's not happened twice. It's happened repeatedly. It's not an accident, Steve, where does that come from.

Steve, your approach to this club and the way this business has been run should be a case study in a lot of schools. I just want to go through some of that. So our audience really understands the background here. You've taken a chance on a lot of players that some clubs have left behind, including my own club Milan and the likes of CDK. You picked up Scamaka Lookman too. You've identified talent the likes of Coop Miners. This hasn't happened once, It's not happened twice. It's happened repeatedly. It's not an accident, Steve, where does that come from.

I've got a lot of credits to Luca Percassi and the Italian team we have on the field there. They've done a fantastic job evaluating talent and really the mainstay of Atalanta is their academy. They invested heavily in the academy in the last fifteen years and that's paid a lot of dividends. Sol Being's a twenty one year old defenseman that starts the youngest one in.

I've got a lot of credits to Luca Percassi and the Italian team we have on the field there. They've done a fantastic job evaluating talent and really the mainstay of Atalanta is their academy. They invested heavily in the academy in the last fifteen years and that's paid a lot of dividends. Sol Being's a twenty one year old defenseman that starts the youngest one in.

The entire Seria, and several others like that.

The entire Seria, and several others like that.

And then I think really really taking players and putting them into a team orian sistem like the Celtics, and having them pass the ball and putting them the right spot. So the coaching staff, Luca Percassi. The whole organization gets credit for that, and you know it's been it's been been wonderful watch.

And then I think really really taking players and putting them into a team orian sistem like the Celtics, and having them pass the ball and putting them the right spot. So the coaching staff, Luca Percassi. The whole organization gets credit for that, and you know it's been it's been been wonderful watch.

You know.

You know.

It also helped that we took a risk on Rests Finland two years ago and he's a very young player. I met him in stermn Gross Austria team that he played for, and he was eighteen and we paid I think a record sum for Roman record sums for eighteen year old that time. Twenty million in Manchester United came knocking the door of the season or we hated to lose them, but they paid.

It also helped that we took a risk on Rests Finland two years ago and he's a very young player. I met him in stermn Gross Austria team that he played for, and he was eighteen and we paid I think a record sum for Roman record sums for eighteen year old that time. Twenty million in Manchester United came knocking the door of the season or we hated to lose them, but they paid.

Eighty five million.

Eighty five million.

Then we invested in Scamaca and several other players to improve the squad and it's been a magical season.

Then we invested in Scamaca and several other players to improve the squad and it's been a magical season.

Stave.

Stave.

Could we talk a little bit about that's one of the difference between Atalanta and the Celtics. When you have a star like Highland and you get Manchester United coming and with massive money, how difficult it is to retain that talent at a club like Atalanta, and whether that is still the future, is that inevitable, whether you're going to have to sell somebody stars again to continuously reinvent yourself, reinvent the club going forward.

Could we talk a little bit about that's one of the difference between Atalanta and the Celtics. When you have a star like Highland and you get Manchester United coming and with massive money, how difficult it is to retain that talent at a club like Atalanta, and whether that is still the future, is that inevitable, whether you're going to have to sell somebody stars again to continuously reinvent yourself, reinvent the club going forward.

It's really not a different the NBAS and when you should win a championship, everybody watched your players, and so we think we can continue to prosper Atalanta with a mix of young players and a mix of players that are sold because they have great opportunities. I think we'll change that a bit. We'll play in European football. Before that win, we qualified for the Champions League and that win gives you a slide in the Champions legue as well, So that's going to be really helpful in our recruitment of players to improve the team.

It's really not a different the NBAS and when you should win a championship, everybody watched your players, and so we think we can continue to prosper Atalanta with a mix of young players and a mix of players that are sold because they have great opportunities. I think we'll change that a bit. We'll play in European football. Before that win, we qualified for the Champions League and that win gives you a slide in the Champions legue as well, So that's going to be really helpful in our recruitment of players to improve the team.

Further states, to really put you on the spot.

Further states, to really put you on the spot.

Has it been harder to run a football club or a basketball team?

Has it been harder to run a football club or a basketball team?

They both have similar challenges. You know.

They both have similar challenges. You know.

It's all about getting and retaining top talent and keeping them motivated and trying to do everything that you can to make their lives easy so they go out of the pitch or go on the court and play hard. Try to do that in both organizations, it's very similar. Atalanta is kind of the can and do team with the great culture in Italy. It's the favorite team of many in Brahma Northern Lawn, but also also it's a favorite it's probably everybody's second favorite team in Italy where I just came back from Rome, and when we went to a hotel room, my wife and I found a large cake with an Atlanta symbol on it, So it's it's stem Atlanta fever in Italy.

It's all about getting and retaining top talent and keeping them motivated and trying to do everything that you can to make their lives easy so they go out of the pitch or go on the court and play hard. Try to do that in both organizations, it's very similar. Atalanta is kind of the can and do team with the great culture in Italy. It's the favorite team of many in Brahma Northern Lawn, but also also it's a favorite it's probably everybody's second favorite team in Italy where I just came back from Rome, and when we went to a hotel room, my wife and I found a large cake with an Atlanta symbol on it, So it's it's stem Atlanta fever in Italy.

Right now, Steve, you are living pretty much everybody's dream. So congratulations for winning life. You have definitely done it. There is this idea, especially as you have two really successful team Celtics heading to their NBA finals, the second finals appearance in three seasons, how do you monetize this? And I know that that's not the reason why you do this. You're in this for the love of the sport and all the passion. Is it going direct to the distributors? Do you find it actually more compelling right now because you have the actual intellectual property in a way that has changed with new technological advancements.

Right now, Steve, you are living pretty much everybody's dream. So congratulations for winning life. You have definitely done it. There is this idea, especially as you have two really successful team Celtics heading to their NBA finals, the second finals appearance in three seasons, how do you monetize this? And I know that that's not the reason why you do this. You're in this for the love of the sport and all the passion. Is it going direct to the distributors? Do you find it actually more compelling right now because you have the actual intellectual property in a way that has changed with new technological advancements.

Absolutely.

Absolutely.

You know, when we purchased the Celtics back in two thousand and three, there was no Facebook or minimal social media, almost nothing that maybe email was the technology of the day. Now what we have is fans were counted back then in the hundreds of thousands.

You know, when we purchased the Celtics back in two thousand and three, there was no Facebook or minimal social media, almost nothing that maybe email was the technology of the day. Now what we have is fans were counted back then in the hundreds of thousands.

Now they're counting in the millions and possibly.

Now they're counting in the millions and possibly.

Five hundred million a million for you know, global soccer teams and also the NBA which is prospering in Europe and China and all the world.

Five hundred million a million for you know, global soccer teams and also the NBA which is prospering in Europe and China and all the world.

So the landscap's really changed.

So the landscap's really changed.

These teams have become teams of the world, and the Boss of Celtics certainly have that reputation. It's in terms of monetization, it's just a virtual of circle. If you get more popular, you get great players, you have more great players, you get more fans, and it's great. It's a great place to be right now with being in the files a couple of years in a row.

These teams have become teams of the world, and the Boss of Celtics certainly have that reputation. It's in terms of monetization, it's just a virtual of circle. If you get more popular, you get great players, you have more great players, you get more fans, and it's great. It's a great place to be right now with being in the files a couple of years in a row.

On that point, though, Steve, when you get a trophy, where does it immediately start to translate into money? Is it immediately in merchandise, ticket sales?

On that point, though, Steve, when you get a trophy, where does it immediately start to translate into money? Is it immediately in merchandise, ticket sales?

The main area quickly translates into his sponsorship.

The main area quickly translates into his sponsorship.

So for the for the Celtics, just the building of the brand and having a championship team gets us more sponsorship income.

So for the for the Celtics, just the building of the brand and having a championship team gets us more sponsorship income.

When we bought the club especially.

When we bought the club especially.

Was Demnimus and now it's in the tens of millions and approaching hundreds of millions. You know, brands want to be associated with the brand, like the Celtics and Atalanta as well.

Was Demnimus and now it's in the tens of millions and approaching hundreds of millions. You know, brands want to be associated with the brand, like the Celtics and Atalanta as well.

Getting the champions League gets up to lonch to more eyeballs.

Getting the champions League gets up to lonch to more eyeballs.

So having that championship culture and the brand and the reputation that that's what does it for the long term and creates value in.

So having that championship culture and the brand and the reputation that that's what does it for the long term and creates value in.

The short term.

The short term.

You went through what makes Atalanta so special and how you really transformed that team. What about the Celtics they're always winning? Why are they so good?

You went through what makes Atalanta so special and how you really transformed that team. What about the Celtics they're always winning? Why are they so good?

Well, that's one of the better questions I've ever had.

Well, that's one of the better questions I've ever had.

I guess I think they're good because we've had an incredible management team who lived by Wick Grosspec for twenty years now Rich Gothama President. It started out with Danny Age and Albrad Stevens in the basketball operation, a great coach. They all work together as a team and have been very smart and player trading and acquisitions.

I guess I think they're good because we've had an incredible management team who lived by Wick Grosspec for twenty years now Rich Gothama President. It started out with Danny Age and Albrad Stevens in the basketball operation, a great coach. They all work together as a team and have been very smart and player trading and acquisitions.

Same story in Atlanta.

Same story in Atlanta.

So it's all about tying, trying to get the top talent on the field and doing you know, in both organizations, we've lived doing more work and exploring.

So it's all about tying, trying to get the top talent on the field and doing you know, in both organizations, we've lived doing more work and exploring.

Using statistics, you know, using scouts.

Using statistics, you know, using scouts.

To see players twenty or thirty or forty times, following players from when they're eight years old into high school and college, and so that work ethic and kind of a will to win championship pervades each organization, and we've never been happier with those folks, and that's the great thing to see in both these situations. People were crying on the pitch at Atalanta after.

To see players twenty or thirty or forty times, following players from when they're eight years old into high school and college, and so that work ethic and kind of a will to win championship pervades each organization, and we've never been happier with those folks, and that's the great thing to see in both these situations. People were crying on the pitch at Atalanta after.

That victory, and last night in Indiana, which is a great basketball town.

That victory, and last night in Indiana, which is a great basketball town.

You know, there was a huge celebration after that victory, and I'm just so happy for those players who work so hard. It's just really hard to win championships, and the NBA has had different champions the last five years.

You know, there was a huge celebration after that victory, and I'm just so happy for those players who work so hard. It's just really hard to win championships, and the NBA has had different champions the last five years.

Same thing in Europe. It's just hard to get.

Same thing in Europe. It's just hard to get.

Up every night and beat these great teams and overcome injuries. So I'm just pinched myself and hopefully the dree will continue next week.

Up every night and beat these great teams and overcome injuries. So I'm just pinched myself and hopefully the dree will continue next week.

Steve, it sounded like you are a stabermetrics believer there for a second, so that seems to be part of what's going on. I will just say right now, you must be on such a high. Probably haven't slept in a.

Steve, it sounded like you are a stabermetrics believer there for a second, so that seems to be part of what's going on. I will just say right now, you must be on such a high. Probably haven't slept in a.

Couple of weeks.

Couple of weeks.

There is this question of what's next in terms of are you still interested in buying other teams? Is there still value out there or do you think that basically things have been bid up to such degree given all of the interests that pretty much the opportunities aren't there anymore.

There is this question of what's next in terms of are you still interested in buying other teams? Is there still value out there or do you think that basically things have been bid up to such degree given all of the interests that pretty much the opportunities aren't there anymore.

Well, when we bought the Celts in two thousand and three, the headline was a venture capitalist paid record price for team that was three hundred and sixty million, and now the values are counted in the four in the four billions. So that's been a question asked it every single year. I think the fact that this technology has changed.

Well, when we bought the Celts in two thousand and three, the headline was a venture capitalist paid record price for team that was three hundred and sixty million, and now the values are counted in the four in the four billions. So that's been a question asked it every single year. I think the fact that this technology has changed.

And sports are now global.

And sports are now global.

In the fight for eyeballs between the new media such as Facebook and Apple and old media, the networks continues and everyone wants properties and get eyeballs, and the properties that get eyeballs are sports property.

In the fight for eyeballs between the new media such as Facebook and Apple and old media, the networks continues and everyone wants properties and get eyeballs, and the properties that get eyeballs are sports property.

So I think there's still room to go up.

So I think there's still room to go up.

Stay before we go, we've got to talk about a loss to the basketball world over a weekend. Bill Walton, we'd love a final word from you on his legacy.

Stay before we go, we've got to talk about a loss to the basketball world over a weekend. Bill Walton, we'd love a final word from you on his legacy.

Yeah, I was devastated, Lesson. I'm so glad we won that game. I felt like Bill was looking down on it. I was very close to Bill in the twenty year run we had here.

Yeah, I was devastated, Lesson. I'm so glad we won that game. I felt like Bill was looking down on it. I was very close to Bill in the twenty year run we had here.

His son made you work for us at the Celtics, and I just texted Bill two weeks ago. He sent me his sons, I mean, I message about the winning the Europa Cup.

His son made you work for us at the Celtics, and I just texted Bill two weeks ago. He sent me his sons, I mean, I message about the winning the Europa Cup.

Yes, he was watching that.

Yes, he was watching that.

He was an avid sports fan and avid Celtics fan, and everywhere he went he proselytized that what a great experience it was to be a Celtic and be a champion.

He was an avid sports fan and avid Celtics fan, and everywhere he went he proselytized that what a great experience it was to be a Celtic and be a champion.

So the world and the NBA has had a major.

So the world and the NBA has had a major.

Loss in Bill russ In Bill Walton and two years before Bill Russell, two of the most iconic centers of the game. And we're going to really miss Bill, and hopefully our players will take extra heart into the games because of remembering Bill.

Loss in Bill russ In Bill Walton and two years before Bill Russell, two of the most iconic centers of the game. And we're going to really miss Bill, and hopefully our players will take extra heart into the games because of remembering Bill.

We appreciate you, sir. Let's catch up soon. Congratulations for all your hard work and success. Boston Celtics co owner Steve Paluka. This is the Bloomberg Surveillance podcast, bringing you the best in markets, economics, and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business app.

We appreciate you, sir. Let's catch up soon. Congratulations for all your hard work and success. Boston Celtics co owner Steve Paluka. This is the Bloomberg Surveillance podcast, bringing you the best in markets, economics, and geopolitics. You can watch the show live on Bloomberg TV weekday mornings from six am to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg Terminal and the Bloomberg Business app.