Bloomberg Audio Studios, Podcasts, radio news.

Bloomberg Audio Studios, Podcasts, radio news.

This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along with Tom Keene. Join us each day for insight from the best in economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern Remark Global Headquarters at New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. The FED cut rates fifty basis points? Was that the right move was twenty five?

This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along with Tom Keene. Join us each day for insight from the best in economics, geopolitics, finance, and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern Remark Global Headquarters at New York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business App. The FED cut rates fifty basis points? Was that the right move was twenty five?

I don't know.

I don't know.

Let's talk to somebody who does this stuff for a living. Lauren Goodman at Chief market Strategist and Economists at New York Life. She joins us here in studio. Thank you very much, Lauren for coming in our studio.

Let's talk to somebody who does this stuff for a living. Lauren Goodman at Chief market Strategist and Economists at New York Life. She joins us here in studio. Thank you very much, Lauren for coming in our studio.

What do you think?

What do you think?

What do you make of the FED? Was that the right move at fifty basis points?

What do you make of the FED? Was that the right move at fifty basis points?

Yeah?

Yeah?

I do think it was the right move. I mean, this first cut, it's really just the first step back to neutral and so moving as quickly back to neutral, where the FED policy isn't constraining the economy is the right move if the economy is what you're thinking about, and and a labor market that has slowed significantly starting to move in that direction, I think makes sense. Now when it comes to what is then the next question for the markets, I think how far can the FED go?

I do think it was the right move. I mean, this first cut, it's really just the first step back to neutral and so moving as quickly back to neutral, where the FED policy isn't constraining the economy is the right move if the economy is what you're thinking about, and and a labor market that has slowed significantly starting to move in that direction, I think makes sense. Now when it comes to what is then the next question for the markets, I think how far can the FED go?

What is neutral?

What is neutral?

Is really the next question? And the statement of economic projections had a range of just about two to four percent. That is the entire range of the US economy, and so it's a lot of uncertainty around what happens next.

Is really the next question? And the statement of economic projections had a range of just about two to four percent. That is the entire range of the US economy, and so it's a lot of uncertainty around what happens next.

And then if you just take a look at that, So if you go to four percent, what's the next cycle look like? If you get a two percent, what's the next cycle look like? And those are very different economies.

And then if you just take a look at that, So if you go to four percent, what's the next cycle look like? If you get a two percent, what's the next cycle look like? And those are very different economies.

Very different economies. And what I'm seeing among our clients is that fifty basis point cut reinvestment risk is now the most important, most urgent thing that investors need to be thinking about for everything else, Why would you make a ton of moves, including FED voting members who are making these estimates until you know the outcome of the election. Now, election isn't typically the pivot point on how to invest. But what we're looking at is an environment where a sweep in either direction is likely to mean more spending, more inflation, probably more durable rates, also probably more volatility as markets are concerned about the level of deficit in the US economy. A mixed congress again with whoever's on top, that economic trajectory over the next four years looks really different, and so the rates environment looks really different.

Very different economies. And what I'm seeing among our clients is that fifty basis point cut reinvestment risk is now the most important, most urgent thing that investors need to be thinking about for everything else, Why would you make a ton of moves, including FED voting members who are making these estimates until you know the outcome of the election. Now, election isn't typically the pivot point on how to invest. But what we're looking at is an environment where a sweep in either direction is likely to mean more spending, more inflation, probably more durable rates, also probably more volatility as markets are concerned about the level of deficit in the US economy. A mixed congress again with whoever's on top, that economic trajectory over the next four years looks really different, and so the rates environment looks really different.

All right, So I've got a FED that's cutting What do I do to my asset?

All right, So I've got a FED that's cutting What do I do to my asset?

A patient?

A patient?

Am I still sixty forty? What am I doing here?

Am I still sixty forty? What am I doing here?

From my perspective fifty basis point cut? The FED has started an easing cycle, and as I mentioned, reinvestment risk is an investor's number one priority. So the first thing you're doing is thinking about moving out of cash, where five five and a half percent easy earning just isn't going to be the case anymore, and so moving from cash into short duration fixed income really just buying bonds in general, I think is where most investors will be focused when it comes to equity, though, do you take equity risk off the table and also activate that in bonds? I think it can make sense for investors who are concerned about valuations, you know which sectors are likely to win as a result of the election, whatever the case may be, taking some of that equity risk and activating it in high yield, which is equity like where you have a coup bus.

From my perspective fifty basis point cut? The FED has started an easing cycle, and as I mentioned, reinvestment risk is an investor's number one priority. So the first thing you're doing is thinking about moving out of cash, where five five and a half percent easy earning just isn't going to be the case anymore, and so moving from cash into short duration fixed income really just buying bonds in general, I think is where most investors will be focused when it comes to equity, though, do you take equity risk off the table and also activate that in bonds? I think it can make sense for investors who are concerned about valuations, you know which sectors are likely to win as a result of the election, whatever the case may be, taking some of that equity risk and activating it in high yield, which is equity like where you have a coup bus.

It's performing fix the come sector this year right.

It's performing fix the come sector this year right.

Well, precisely, and it's it's because you have an economic environment that's constructive and asset class that's higher quality. And again investors that are concerned about both valuations and cash rates, which are liable to move lower.

Well, precisely, and it's it's because you have an economic environment that's constructive and asset class that's higher quality. And again investors that are concerned about both valuations and cash rates, which are liable to move lower.

So you've mentioned high yield, but like where on the like, how low do you go?

So you've mentioned high yield, but like where on the like, how low do you go?

Oh, strictly high quality?

Oh, strictly high quality?

When it come high quality high yield precisely, Okay, So then what kind of distress might we see in the low end. And that's just my other way of asking what kind of fault cycle we going to look like? Or has that been saved or slash pushed off?

When it come high quality high yield precisely, Okay, So then what kind of distress might we see in the low end. And that's just my other way of asking what kind of fault cycle we going to look like? Or has that been saved or slash pushed off?

Again, I'm not convinced that we've reset the cycle. And so when it comes to what does a default cycle look like for the consumer for companies, mild as a result of the support that the economy is seen over the past four years, and by that I don't just mean strong economic growth, but also the pandemic era programs. But in order for lower quality elements of the market, your triple c's, and also for small caps asset classes that really need a cyclical overturn to outperform, I don't think we have seen that reset in the cycle that will stoke durable performance.

Again, I'm not convinced that we've reset the cycle. And so when it comes to what does a default cycle look like for the consumer for companies, mild as a result of the support that the economy is seen over the past four years, and by that I don't just mean strong economic growth, but also the pandemic era programs. But in order for lower quality elements of the market, your triple c's, and also for small caps asset classes that really need a cyclical overturn to outperform, I don't think we have seen that reset in the cycle that will stoke durable performance.

In these asset classes.

In these asset classes.

Doesn't mean you won't get boosts on days when you know, good economic news is good news, but the fact that the FED is now focused on the labor market over inflation means that we are going to continue to see a reactive market where out performance in those asset classes I think is short lived.

Doesn't mean you won't get boosts on days when you know, good economic news is good news, but the fact that the FED is now focused on the labor market over inflation means that we are going to continue to see a reactive market where out performance in those asset classes I think is short lived.

All Right, So, as a chief market strategist and economists at an insurance company, how much risk do you guys take in your equity portfolio or do you just stick with the really blue chips? How do you guys allocate?

All Right, So, as a chief market strategist and economists at an insurance company, how much risk do you guys take in your equity portfolio or do you just stick with the really blue chips? How do you guys allocate?

Well, just to clarify, I work in the asset manager of the insurance company, and so we look, you know, we're really looking at a broad client based, institutional, retail, et cetera. But when it comes to how do you think about you know, let's say, twenty thirty year risks this is an environment where you know, you have to expect the best you can do. That interest rates inflation have reset themselves as a result of the pandemic. That's a seed chain, a major change when it comes to asset management relative to the conversations we were having five years ago. And so the dynamic of you know, in a phase of reglobalization, capital intensivity, electrification, that's an environment that over the next ten years is likely to lean higher inflation, higher rates than.

Well, just to clarify, I work in the asset manager of the insurance company, and so we look, you know, we're really looking at a broad client based, institutional, retail, et cetera. But when it comes to how do you think about you know, let's say, twenty thirty year risks this is an environment where you know, you have to expect the best you can do. That interest rates inflation have reset themselves as a result of the pandemic. That's a seed chain, a major change when it comes to asset management relative to the conversations we were having five years ago. And so the dynamic of you know, in a phase of reglobalization, capital intensivity, electrification, that's an environment that over the next ten years is likely to lean higher inflation, higher rates than.

That, which also raises the question in the short term though, do we expect a resurgence of inflation or demand because of the cuts, Like I appreciate that one side of the economy will still be struggling, but on the other side, does that kind of reignite.

That, which also raises the question in the short term though, do we expect a resurgence of inflation or demand because of the cuts, Like I appreciate that one side of the economy will still be struggling, but on the other side, does that kind of reignite.

It's one of the key risk to the market activity that we're seeing today, but it's not one that I'm worried about yet. And there's a couple of reasons for that. The first, you know, the Fed's cutting but still restrictive. They weigh, if anything, they may be a little bit behind the curve they see inflation really under control. But also when I think about you know, we can all name different catalysts for growth going sideways or downward. But when I think about what would be the catalyst for really reaccelerating the economy, We've had revenge spending. We've had an incredibly tight labor market. We've had a housing market that, despite higher rates, house prices are really high. And so though I can see an enormous benefit of rates moving lower four variable rate borrowers, household and companies, if you're sitting on the precipice of trouble, maybe not even default, but just trouble, rates moving lower don't send you off on a spending or a capital investments free They have you feeling a little bit of relief.

It's one of the key risk to the market activity that we're seeing today, but it's not one that I'm worried about yet. And there's a couple of reasons for that. The first, you know, the Fed's cutting but still restrictive. They weigh, if anything, they may be a little bit behind the curve they see inflation really under control. But also when I think about you know, we can all name different catalysts for growth going sideways or downward. But when I think about what would be the catalyst for really reaccelerating the economy, We've had revenge spending. We've had an incredibly tight labor market. We've had a housing market that, despite higher rates, house prices are really high. And so though I can see an enormous benefit of rates moving lower four variable rate borrowers, household and companies, if you're sitting on the precipice of trouble, maybe not even default, but just trouble, rates moving lower don't send you off on a spending or a capital investments free They have you feeling a little bit of relief.

I don't like fire everybody and like pair back on my spending program exactly.

I don't like fire everybody and like pair back on my spending program exactly.

But the source of reacceleration from my perspective is elusive.

But the source of reacceleration from my perspective is elusive.

Do you think that?

Do you think that?

Do you?

Do you?

Guys? Look outside of the US and so.

Guys? Look outside of the US and so.

Where everywhere globally Until the Bank of Japan started its rate hiking cycle, this is one of the areas where we were the most focused because we see such interesting structural change there happening after a couple of decades. Reinvigorating capital investment from their companies really a beneficiary of reglobalization. But when it comes to the broader global perspective, what I think is most important is that here in the US and globally, how we think about supply chains. It's not a new story, but it's a really, really important one because it's one where not just technology, which has been such a huge beneficiary of capital investment over the last couple of years, but increasingly building repetitive supply chain has been a big surge in construction in many countries as a result. This is one of the themes. Really it's about infrastructure that we're highly interested in globally.

Where everywhere globally Until the Bank of Japan started its rate hiking cycle, this is one of the areas where we were the most focused because we see such interesting structural change there happening after a couple of decades. Reinvigorating capital investment from their companies really a beneficiary of reglobalization. But when it comes to the broader global perspective, what I think is most important is that here in the US and globally, how we think about supply chains. It's not a new story, but it's a really, really important one because it's one where not just technology, which has been such a huge beneficiary of capital investment over the last couple of years, but increasingly building repetitive supply chain has been a big surge in construction in many countries as a result. This is one of the themes. Really it's about infrastructure that we're highly interested in globally.

How bad is China right now? It's not looking great. The Mercedes news yesterday really got to me.

How bad is China right now? It's not looking great. The Mercedes news yesterday really got to me.

Yeah, it's the Chinese economic model is struggling. It's very, very difficult to do what the Chinese government is trying to do, which is switch from capital intensivity and more towards a consumer driven economy. It takes time, and the idea that that could happen without any sort of ebbs and flows is unlikely, and we're seeing one of those ebbs at the moment. It's a It's one of the reasons why when we think about inflation risk especially for countries like Europe or regions rather like you up. It's difficult to see where that real reacceleration comes from when you have a disinflationary or even deflationary pressure from one of your, if not your biggest buyer.

Yeah, it's the Chinese economic model is struggling. It's very, very difficult to do what the Chinese government is trying to do, which is switch from capital intensivity and more towards a consumer driven economy. It takes time, and the idea that that could happen without any sort of ebbs and flows is unlikely, and we're seeing one of those ebbs at the moment. It's a It's one of the reasons why when we think about inflation risk especially for countries like Europe or regions rather like you up. It's difficult to see where that real reacceleration comes from when you have a disinflationary or even deflationary pressure from one of your, if not your biggest buyer.

All right, Lauren, thank you so much for joining us. Really appreciate it. Lauren Goodwin, chief markets strategists and economist at New York Liith. They're not in Madison Square Park where I used to work down there, so pretty my first shake check I wrote was Madison Square Park.

All right, Lauren, thank you so much for joining us. Really appreciate it. Lauren Goodwin, chief markets strategists and economist at New York Liith. They're not in Madison Square Park where I used to work down there, so pretty my first shake check I wrote was Madison Square Park.

It all comes full circle fulla.

It all comes full circle fulla.

I love focusing on oil as well as the energy transition, and the next guest is well positioned to talk about both, joining us as Jonathan Maxwell, CEO and co founder of Sustainable Development Capital. That firm was found in two thousand and seven and is really associated in the sustainability markets and it's dedication to move unefficient and decentralized energy solutions. My take away in that is that it's investing in the energy transition and trying to do all of that profitably, which a lot of firms and companies are having a hard time doing.

I love focusing on oil as well as the energy transition, and the next guest is well positioned to talk about both, joining us as Jonathan Maxwell, CEO and co founder of Sustainable Development Capital. That firm was found in two thousand and seven and is really associated in the sustainability markets and it's dedication to move unefficient and decentralized energy solutions. My take away in that is that it's investing in the energy transition and trying to do all of that profitably, which a lot of firms and companies are having a hard time doing.

Jonathan, it's great to have you here. Thanks for joining us.

Jonathan, it's great to have you here. Thanks for joining us.

You guys have projects pretty much everywhere. You've led energy efficiency project investment funds in the UK, Ireland, Singapore, and New York, and you operate across many regions of the world. What's the favorite thing that you have right now in the space that you're most excited about?

You guys have projects pretty much everywhere. You've led energy efficiency project investment funds in the UK, Ireland, Singapore, and New York, and you operate across many regions of the world. What's the favorite thing that you have right now in the space that you're most excited about?

Right So, first of all, great thanks for having me on. The favorite thing I have is dealing with the world's biggest problem in the energy sector, the dirtiest secrets it is that most of it's wasted, Paul, and I've spoken about this many times before. So in the US, just to give you the numbers, roughly two third, seventy sixty seven percent of the US's energy is rejected somewhere through the generation of energy, the transmission, the distribution. So things I like to do the best is to basically to solve that problem. And what we do, for example, most of that energy gets lost as heat. So we take when we go into industrial process It's like steel mills in Indiana. We capture the waste heat that's coming out of industrial processes and we recycle it back into power and steam so that those that heat doesn't go to waste but is instead recycled. We put we instead of just capturing carbon from natural gas facilities, we capture the heat and we use that to provide heat services. The world needs as much heat as it does electricity, in fact quite a lot more. So that's my favorite type of project. It's basically generating energy for buildings, industry, and transport, largely using waste heat or waste gas. And we've got, as you say, investments now in ten countries about fifty five thousand buildings and industrial facilities connected to our projects. It works, it's profitable, and the fuel is effectively recycled waste a lot of the time, and that for me is one of the greatest, largest, fastest, cheapest sources of greenhouse gas emission reductions and sustainable investment.

Right So, first of all, great thanks for having me on. The favorite thing I have is dealing with the world's biggest problem in the energy sector, the dirtiest secrets it is that most of it's wasted, Paul, and I've spoken about this many times before. So in the US, just to give you the numbers, roughly two third, seventy sixty seven percent of the US's energy is rejected somewhere through the generation of energy, the transmission, the distribution. So things I like to do the best is to basically to solve that problem. And what we do, for example, most of that energy gets lost as heat. So we take when we go into industrial process It's like steel mills in Indiana. We capture the waste heat that's coming out of industrial processes and we recycle it back into power and steam so that those that heat doesn't go to waste but is instead recycled. We put we instead of just capturing carbon from natural gas facilities, we capture the heat and we use that to provide heat services. The world needs as much heat as it does electricity, in fact quite a lot more. So that's my favorite type of project. It's basically generating energy for buildings, industry, and transport, largely using waste heat or waste gas. And we've got, as you say, investments now in ten countries about fifty five thousand buildings and industrial facilities connected to our projects. It works, it's profitable, and the fuel is effectively recycled waste a lot of the time, and that for me is one of the greatest, largest, fastest, cheapest sources of greenhouse gas emission reductions and sustainable investment.

Jonathan, We've spoken to you several times now about this, you know, kind of recapturing or just limiting wasted energy. Where do you find the most receptivity to your arguments, to your business thoughts.

Jonathan, We've spoken to you several times now about this, you know, kind of recapturing or just limiting wasted energy. Where do you find the most receptivity to your arguments, to your business thoughts.

Here, So, the biggest market in the world for US is actually the United States. It might sound counterfactual because you know, I think there is obviously a split debate over this. You know, do you go green or the United States is the world's largest oil and gas producer in the world, now bigger than Saudi or Iran. But the reason I think it works well in the United States is because of the economic focus, right, you know why cutting waste in other words, doing the same or more just using less energy, not because you're trying to skimp and save or degrowth. It because you're just being more competitive and more productive. It's a basic American commercial value. So we see huge take up to try and deliver energy services cheaper, cleaner, more reliable, so on site generation being more efficient. The America is by miles our biggest market. Europe after the Rushi Ukraine crisis having said that suddenly had to wake up to energy security crisis, very high prices and trying to do something about carbon and the European Commission came up with a policity three words energy efficiency first. So I think we're starting to see the the idea catch on, not just in America but around now around the world.

Here, So, the biggest market in the world for US is actually the United States. It might sound counterfactual because you know, I think there is obviously a split debate over this. You know, do you go green or the United States is the world's largest oil and gas producer in the world, now bigger than Saudi or Iran. But the reason I think it works well in the United States is because of the economic focus, right, you know why cutting waste in other words, doing the same or more just using less energy, not because you're trying to skimp and save or degrowth. It because you're just being more competitive and more productive. It's a basic American commercial value. So we see huge take up to try and deliver energy services cheaper, cleaner, more reliable, so on site generation being more efficient. The America is by miles our biggest market. Europe after the Rushi Ukraine crisis having said that suddenly had to wake up to energy security crisis, very high prices and trying to do something about carbon and the European Commission came up with a policity three words energy efficiency first. So I think we're starting to see the the idea catch on, not just in America but around now around the world.

What part of this, though, is dictated on policy, because clearly this is most definitely in the crosshairs for the US presidential election. How much of what you do is dependent on what governments do.

What part of this, though, is dictated on policy, because clearly this is most definitely in the crosshairs for the US presidential election. How much of what you do is dependent on what governments do.

So what we do typically is focus on projects that are commercially sustainable. So, going back to the point I made, if the grid is wasting two thirds of the energy, and we can solve that problem by building energy services at the point of use and actually being efficient, it's cheaper. It's not just cleaner and more reliable, it's also cheaper. Now, these are again fundamental core values, right, energy security, cost, efficiency. And you know, if you're into it decarbonization and you say that we're in the cross hairs, well, you know there are things that are in the cross hairs. You know, the Republican movement now looking at potentially getting rid of the power plant Rule, the vehicle efficiency Rule, the Inflation Reduction Act, and so on coming out of the Paris Agreement. That will set back renewable energy production. But renewable energy is a relatively small part of the US economy energy economy. The biggest part, which I think is we're not in the cross hairs. The biggest part is what's going on still today. Most of it's fossil fuels and most of it's being wasted. So I think this is a bipartisan basic commercial imperative. In fact, what an Earth is going on if companies as well as governments are wasting so much energy.

So what we do typically is focus on projects that are commercially sustainable. So, going back to the point I made, if the grid is wasting two thirds of the energy, and we can solve that problem by building energy services at the point of use and actually being efficient, it's cheaper. It's not just cleaner and more reliable, it's also cheaper. Now, these are again fundamental core values, right, energy security, cost, efficiency. And you know, if you're into it decarbonization and you say that we're in the cross hairs, well, you know there are things that are in the cross hairs. You know, the Republican movement now looking at potentially getting rid of the power plant Rule, the vehicle efficiency Rule, the Inflation Reduction Act, and so on coming out of the Paris Agreement. That will set back renewable energy production. But renewable energy is a relatively small part of the US economy energy economy. The biggest part, which I think is we're not in the cross hairs. The biggest part is what's going on still today. Most of it's fossil fuels and most of it's being wasted. So I think this is a bipartisan basic commercial imperative. In fact, what an Earth is going on if companies as well as governments are wasting so much energy.

So Johnson, what's a typical client for your firm? Is it an oil and gas companies, that utility.

So Johnson, what's a typical client for your firm? Is it an oil and gas companies, that utility.

Or big office building?

Or big office building?

Exactly?

Exactly?

I am. So most energy is used by buildings, industry, and transport. Most people think of the energy sector as if it's a big utility or the grid, which is the customer, But actually they're not the customers. The customers are buildings, industry and transport. That's where the energy goes. So those are our customers. Now who are customers? The biggest, fastest growing sector, and this is interesting, is obviously the data center market, particularly given the rise of AI. Why does AI matter because it requires eight to ten times as much energy as the data center, typical cloud data center, and these things are growing, proliferating. It's a very fast moving market, one of the largest demand centers for energy in the world and very very fast growing. So that's one key area. By the way, recent report this week saying that potentially that could increase overall electricity consumption in the US by nine percent of the next four years. Second big area is commercial sorry, public buildings, government forty forty five percent of GDP. Typically in most countries like the United States or government is a massive energy zer, hospitals, universities, municipalities, and then the last is steel, cement, chemicals, plastics, ie the industry. So it's actually heavy industry. It's public buildings and its data centers. That's where most of the action is. But that's where you can create investible deals and investible solutions that cut costs, improve productivity, and deliver investment returns.

I am. So most energy is used by buildings, industry, and transport. Most people think of the energy sector as if it's a big utility or the grid, which is the customer, But actually they're not the customers. The customers are buildings, industry and transport. That's where the energy goes. So those are our customers. Now who are customers? The biggest, fastest growing sector, and this is interesting, is obviously the data center market, particularly given the rise of AI. Why does AI matter because it requires eight to ten times as much energy as the data center, typical cloud data center, and these things are growing, proliferating. It's a very fast moving market, one of the largest demand centers for energy in the world and very very fast growing. So that's one key area. By the way, recent report this week saying that potentially that could increase overall electricity consumption in the US by nine percent of the next four years. Second big area is commercial sorry, public buildings, government forty forty five percent of GDP. Typically in most countries like the United States or government is a massive energy zer, hospitals, universities, municipalities, and then the last is steel, cement, chemicals, plastics, ie the industry. So it's actually heavy industry. It's public buildings and its data centers. That's where most of the action is. But that's where you can create investible deals and investible solutions that cut costs, improve productivity, and deliver investment returns.

All right, Jonathan, thanks a lot.

All right, Jonathan, thanks a lot.

We very much appreciated Jonathan Maxwell's CEO and co founder of Sustainable Development Capital. I've be't told it's forty sixties until the US presidential election. Bloomberg Television, Emory Hordern will be live in North Carolina. She's speaking to the governor later on today at three thirties. Who don't miss that interview. But it's a good time to check in with Wendy Schiller. She is a Brown professor, Brown University professor, and she joins US now. She covers political sounds, international and public affairs, et cetera. Hey, Wendy, we had this really interesting town hall with Vice presidential Vice President Kamala Harris along with Oprah and all other Hollywood AID listers. Is that the tact that her campaign is going to take versus like a formal sit down, meet the press kind of interview.

We very much appreciated Jonathan Maxwell's CEO and co founder of Sustainable Development Capital. I've be't told it's forty sixties until the US presidential election. Bloomberg Television, Emory Hordern will be live in North Carolina. She's speaking to the governor later on today at three thirties. Who don't miss that interview. But it's a good time to check in with Wendy Schiller. She is a Brown professor, Brown University professor, and she joins US now. She covers political sounds, international and public affairs, et cetera. Hey, Wendy, we had this really interesting town hall with Vice presidential Vice President Kamala Harris along with Oprah and all other Hollywood AID listers. Is that the tact that her campaign is going to take versus like a formal sit down, meet the press kind of interview.

Well, I mean, I think the Harris campaign in that particular instance recognizes the vital importance of the black vote to the success of that campaign. We saw that it underperformed for Hillary Clinton, got out a little bit better for Joe Biden, but still, you know, has.

Well, I mean, I think the Harris campaign in that particular instance recognizes the vital importance of the black vote to the success of that campaign. We saw that it underperformed for Hillary Clinton, got out a little bit better for Joe Biden, but still, you know, has.

Not reached the Obama turnout levels.

Not reached the Obama turnout levels.

And you know, if you want to win North Carolina, which looks much tighter than it did even for Biden and Trump.

And you know, if you want to win North Carolina, which looks much tighter than it did even for Biden and Trump.

In twenty twenty, you're going to need, you know, a really good portion of those million black voters to get out the door.

In twenty twenty, you're going to need, you know, a really good portion of those million black voters to get out the door.

So I don't know if the format was really the most important thing about that interview as much as really appealing to a core constituency in this election for the Democrat Party, Wendy.

So I don't know if the format was really the most important thing about that interview as much as really appealing to a core constituency in this election for the Democrat Party, Wendy.

For the I guess the middle of the road investors that each campaign is trying to get to their side, is there an issue or two that is the most important, do you think, Well, it's interesting.

For the I guess the middle of the road investors that each campaign is trying to get to their side, is there an issue or two that is the most important, do you think, Well, it's interesting.

While that you say investor, right, you know, we can think about all no, I mean it's it's not a slip up. It's actually that's what that's how we think about politics.

While that you say investor, right, you know, we can think about all no, I mean it's it's not a slip up. It's actually that's what that's how we think about politics.

You know, voters think, I am giving my commodity, my vote to a candidate, and I'm investing in what I think they're going to do.

You know, voters think, I am giving my commodity, my vote to a candidate, and I'm investing in what I think they're going to do.

For the next four years.

For the next four years.

And to the point about interviewing, the problem for Harris among independent voters or you know, educated investors is that she hasn't given quite enough detail about what she'll do.

And to the point about interviewing, the problem for Harris among independent voters or you know, educated investors is that she hasn't given quite enough detail about what she'll do.

She's getting a little.

She's getting a little.

Bit better, and that's where you know, some of these smaller but high profile interviews would help her define her message on taxes, on the economy, even gun control, which you know she's been emphasizing a little bit more that she's a gun owner and that she would use.

Bit better, and that's where you know, some of these smaller but high profile interviews would help her define her message on taxes, on the economy, even gun control, which you know she's been emphasizing a little bit more that she's a gun owner and that she would use.

Her gun in certain circumstances.

Her gun in certain circumstances.

This, you know, this strategy of avoiding that can also loser the opportunity to really shape her, you know, her policy, what what she's selling to voters who want to invest in her.

This, you know, this strategy of avoiding that can also loser the opportunity to really shape her, you know, her policy, what what she's selling to voters who want to invest in her.

So then the fifty basis point cut from the FED and sort of the trajectory as we go here, who does that help slash hurt it?

So then the fifty basis point cut from the FED and sort of the trajectory as we go here, who does that help slash hurt it?

Certainly?

Certainly?

I mean we expect you know it takes a little while for credit card rates to adjust, and they're pretty high when you carry a balance.

I mean we expect you know it takes a little while for credit card rates to adjust, and they're pretty high when you carry a balance.

But of course if you have a high balance.

But of course if you have a high balance.

And that cuts, you know, that's going to save you some money, either in your minimum payment or you know how you're trying to catch up and really pay down that debt.

And that cuts, you know, that's going to save you some money, either in your minimum payment or you know how you're trying to catch up and really pay down that debt.

So voters will see that, but will they see it in time? You know, we're getting, as you said, very close selection day.

So voters will see that, but will they see it in time? You know, we're getting, as you said, very close selection day.

Early voting starts in a lot of states just in a couple of weeks.

Early voting starts in a lot of states just in a couple of weeks.

It's already started in a couple of states now.

It's already started in a couple of states now.

So that's the problem for the you know, sort of the economic outlook, which looks really pretty good with inflation and unemployment right now, is that the window is closing for people to feel the sort of upswing the economy before they cast their vote.

So that's the problem for the you know, sort of the economic outlook, which looks really pretty good with inflation and unemployment right now, is that the window is closing for people to feel the sort of upswing the economy before they cast their vote.

When you were gonna have a vice presidential debate coming up, should people pay attention to that?

When you were gonna have a vice presidential debate coming up, should people pay attention to that?

You know, it's an interesting thing with this debate because you've got Tim Waltz and you've got jd Vance and now Trump's age is still an issue with some voters. You know, he's seventy eight, and he's always projected more energy than Biden did. But you still have to consider the possibility that he may not serve out his entire term, and that means jd.

You know, it's an interesting thing with this debate because you've got Tim Waltz and you've got jd Vance and now Trump's age is still an issue with some voters. You know, he's seventy eight, and he's always projected more energy than Biden did. But you still have to consider the possibility that he may not serve out his entire term, and that means jd.

Vance will be president of the United States.

Vance will be president of the United States.

So I think the Democrats want to really emphasize that isn't just VP, it's that this guy could be president of the United States sooner than you think.

So I think the Democrats want to really emphasize that isn't just VP, it's that this guy could be president of the United States sooner than you think.

Do you really want that? And that's I think going to the aim of the Waltz team to.

Do you really want that? And that's I think going to the aim of the Waltz team to.

Really push that that theme that jd Vance could become president.

Really push that that theme that jd Vance could become president.

And you know, is that a Sarah Palin effect from two thousand and eight is that is he ready? And will he be good?

And you know, is that a Sarah Palin effect from two thousand and eight is that is he ready? And will he be good?

I wonder how much we're gonna hear about cats and dogs. I'm actually not entirely kidding on that.

I wonder how much we're gonna hear about cats and dogs. I'm actually not entirely kidding on that.

And also, but in those seriousness, like Trump said he he wants to go to Springfield, like how much of this really? Is this an actual important issue in the way that swing voters need to be looking at these candidates.

And also, but in those seriousness, like Trump said he he wants to go to Springfield, like how much of this really? Is this an actual important issue in the way that swing voters need to be looking at these candidates.

Well, you know, the Trump campaign, I have to say, seems to be a little bit zig zaggy this past week, and you know, thinking, oh, maybe I do want to reinstate, state and local tax deductions, which you know, you can argue Trump, you know, punitively put in the tax bill to punish states like Illinois and California, New York because they didn't vote for him.

Well, you know, the Trump campaign, I have to say, seems to be a little bit zig zaggy this past week, and you know, thinking, oh, maybe I do want to reinstate, state and local tax deductions, which you know, you can argue Trump, you know, punitively put in the tax bill to punish states like Illinois and California, New York because they didn't vote for him.

So it's just and now he's like, he wants to go to Springfield. You're not gonna win Illinois. You know, you should be in Pennsylvania and.

So it's just and now he's like, he wants to go to Springfield. You're not gonna win Illinois. You know, you should be in Pennsylvania and.

North Carolina, in Arizona, Nevada, and Wisconsin, not Illinois.

North Carolina, in Arizona, Nevada, and Wisconsin, not Illinois.

So I don't know what's going on with the Trump.

So I don't know what's going on with the Trump.

Campaign thinking, but you know, these are not the states he needs to be And he doesn't even have to get involved in this.

Campaign thinking, but you know, these are not the states he needs to be And he doesn't even have to get involved in this.

His rhetoric can be inflammatory.

His rhetoric can be inflammatory.

And the one thing Independence you know, did when they didn't vote for him in twenty twenty was get turned off by his rhetoric. So I think it's the exact wrong thing to do for the Trump camp. Not that they'll necessarily listen to me.

And the one thing Independence you know, did when they didn't vote for him in twenty twenty was get turned off by his rhetoric. So I think it's the exact wrong thing to do for the Trump camp. Not that they'll necessarily listen to me.

All Right, Wendy, thank you so much. We appreciate it as always. Wendy Shulder, professor at Brown University.

All Right, Wendy, thank you so much. We appreciate it as always. Wendy Shulder, professor at Brown University.

Remember options, expiration index rebalancing, this is all going to add to the flow, particularly within the tech market today, So watching those things. Melissa Auto is head of TMT research over Visible Alpha and she joins US now. Melissa I know it's like a moment of question, but with the index rebalancing and then you get the options expiration, like, how seriously am I taking the moves in tech?

Remember options, expiration index rebalancing, this is all going to add to the flow, particularly within the tech market today, So watching those things. Melissa Auto is head of TMT research over Visible Alpha and she joins US now. Melissa I know it's like a moment of question, but with the index rebalancing and then you get the options expiration, like, how seriously am I taking the moves in tech?

Say over forty eight hours?

Say over forty eight hours?

Happy Friday, Happy Friday. It's been an exciting week. With the FED fifty basis points is significant. It will be interesting to see what the path is and how the market starts to think about rate cuts into the rest of this year and into next year. Ultimately, I think it's going to be very interesting to see what happens in the FX markets and how our non US investors start to think about potentially taking profits in some of these megacap tech stocks that have done very well this year and really in the past twelve months.

Happy Friday, Happy Friday. It's been an exciting week. With the FED fifty basis points is significant. It will be interesting to see what the path is and how the market starts to think about rate cuts into the rest of this year and into next year. Ultimately, I think it's going to be very interesting to see what happens in the FX markets and how our non US investors start to think about potentially taking profits in some of these megacap tech stocks that have done very well this year and really in the past twelve months.

So, Melissa, I think we've all kind of seems like growing up over the last decade plus with technology really being the market leader as goes tech as goes the market. Is that still the case from your perspective.

So, Melissa, I think we've all kind of seems like growing up over the last decade plus with technology really being the market leader as goes tech as goes the market. Is that still the case from your perspective.

It's something we're watching very closely because we have been in a macro environment that has been very supportive of growth, and there you know, there is a question, is you know, what about the rest of the economy, the rest of the industries and sectors out there. You know, how do we, you know, support and get the fundamentals of those companies going in a way that excites the invent community, And that is an open question. It's hard to resist the fundamentals of these megacap text dogs. I mean some of them are generating margins north of fifty percent and growing at double digits.

It's something we're watching very closely because we have been in a macro environment that has been very supportive of growth, and there you know, there is a question, is you know, what about the rest of the economy, the rest of the industries and sectors out there. You know, how do we, you know, support and get the fundamentals of those companies going in a way that excites the invent community, And that is an open question. It's hard to resist the fundamentals of these megacap text dogs. I mean some of them are generating margins north of fifty percent and growing at double digits.

Those are fantastic numbers.

Those are fantastic numbers.

What about like mid cap small cap tech stocks.

What about like mid cap small cap tech stocks.

Yes, so that's that's an interesting area. You know, as as interest rates come down, there may be some rotation out of large cap megacap into smaller mid cap names. We have seen some evidence of that in the Visible Alpha AI monitor. Since July, we've seen an uptake and performance in the smaller and MidCap stocks in our monitor.

Yes, so that's that's an interesting area. You know, as as interest rates come down, there may be some rotation out of large cap megacap into smaller mid cap names. We have seen some evidence of that in the Visible Alpha AI monitor. Since July, we've seen an uptake and performance in the smaller and MidCap stocks in our monitor.

So I'm pre ordered my iPhone sixteen, Melissa, How important is any new product launch for Apple these days? It just seems like it's not the needle mover it used to be.

So I'm pre ordered my iPhone sixteen, Melissa, How important is any new product launch for Apple these days? It just seems like it's not the needle mover it used to be.

Yeah, I think you're right about that.

Yeah, I think you're right about that.

You know, the September ninth event, I have to admit it was a bit underwhelming, and we've certainly seen that reflected in the consensus data where iPhone units for Q four and four next year have ticked down for next year. Actually they've ticked down by almost ten percent, So that indicates that overall sentiment is, you know, being a little bit more conservative around that outlook for the iPhone.

You know, the September ninth event, I have to admit it was a bit underwhelming, and we've certainly seen that reflected in the consensus data where iPhone units for Q four and four next year have ticked down for next year. Actually they've ticked down by almost ten percent, So that indicates that overall sentiment is, you know, being a little bit more conservative around that outlook for the iPhone.

Yeah. And you saw though, Paul, that we had that report from an analyst over in Asia that said that is channel text and Apple got hit pretty hard as well as its suppliers. So it's like, I guess it still winds it mattering if we're looking at a supercycle on that end. The other thing that's interesting right now in the market that I haven't talked about with as much clarity as i'd like to is the dollar, and it feels like the direction of travel is just a weeker dollar as the FED wine up cutting rates. What does that mean for mega tech multinational companies.

Yeah. And you saw though, Paul, that we had that report from an analyst over in Asia that said that is channel text and Apple got hit pretty hard as well as its suppliers. So it's like, I guess it still winds it mattering if we're looking at a supercycle on that end. The other thing that's interesting right now in the market that I haven't talked about with as much clarity as i'd like to is the dollar, and it feels like the direction of travel is just a weeker dollar as the FED wine up cutting rates. What does that mean for mega tech multinational companies.

Yeah, I mean the megacap tech names are pretty significantly held overseas, and it's been a fantastic investment because not only have non US investors benefited from a strengthening dollars since early twenty twenty three, they've also benefited from the extraordinary growth coming from AI and the cloud. So I think, you know, they may be looking at their portfolios and saying, Okay, we've had a fantastic twenty four months, maybe it's time to take a little bit off the table.

Yeah, I mean the megacap tech names are pretty significantly held overseas, and it's been a fantastic investment because not only have non US investors benefited from a strengthening dollars since early twenty twenty three, they've also benefited from the extraordinary growth coming from AI and the cloud. So I think, you know, they may be looking at their portfolios and saying, Okay, we've had a fantastic twenty four months, maybe it's time to take a little bit off the table.

So Melissa, in your coverage area here, what's the best what's what's your top call right here? These days?

So Melissa, in your coverage area here, what's the best what's what's your top call right here? These days?

Yeah, we're really looking at the next six to twelve months and really trying to understand what companies are going to dominate the application of AI.

Yeah, we're really looking at the next six to twelve months and really trying to understand what companies are going to dominate the application of AI.

So we've seen a lot of innovation in the.

So we've seen a lot of innovation in the.

Model and the chips, and what we really have not seen is the innovation in the application. And I think that's really going to be the next area where the market could get really excited. So we're watching that very closely. I mean, in theory, Apple should be front and center there, although it does seem like they're off to a bit of a slow start. Does Apple Intelligence serve as a catalyst for a replacement cycle and pause broad adoption or is it a different player? So I think that's the area that I'm looking at very carefully to see, you know, who that's going to be, what's going to be that catalyst and what's ultimately going to get the market.

Model and the chips, and what we really have not seen is the innovation in the application. And I think that's really going to be the next area where the market could get really excited. So we're watching that very closely. I mean, in theory, Apple should be front and center there, although it does seem like they're off to a bit of a slow start. Does Apple Intelligence serve as a catalyst for a replacement cycle and pause broad adoption or is it a different player? So I think that's the area that I'm looking at very carefully to see, you know, who that's going to be, what's going to be that catalyst and what's ultimately going to get the market.

Excited and what do you think.

Excited and what do you think.

We don't know yet? A collar question. There hasn't been any data or evidence suggesting it either way, but I think that's where the opportunity is. When there's when we know.

We don't know yet? A collar question. There hasn't been any data or evidence suggesting it either way, but I think that's where the opportunity is. When there's when we know.

When we see that, then the opportunity has already been fairly well understood. When we don't know, we're watching it, we're like, Okay, this is where the monitor can be really valuable. Let's take a look and see what new names start to emerge over the next couple of months, and then I think we can get really excited.

When we see that, then the opportunity has already been fairly well understood. When we don't know, we're watching it, we're like, Okay, this is where the monitor can be really valuable. Let's take a look and see what new names start to emerge over the next couple of months, and then I think we can get really excited.

Melissa.

Melissa.

One of the things as it releads to AI that I'm trying to get my hand head around is how much of that spending on AIS incremental or how much does this maybe just switched from other parts of the tech stack, like I know, information technology or something like that. How do you think about spending AI in general?

One of the things as it releads to AI that I'm trying to get my hand head around is how much of that spending on AIS incremental or how much does this maybe just switched from other parts of the tech stack, like I know, information technology or something like that. How do you think about spending AI in general?

Yeah, I mean.

Yeah, I mean.

The tapax has been absolutely incredible at the cloud service providers. I mean they have just spent billions and that ultimately has translated into great growth that companies like in Nvidia for example, as they look to transform their data centers to accelerated computing, which is ultimately what lays the groundwork for generative AI. And I think companies themselves are really trying to figure out. Okay, we we want to be first. We want to we want to make sure that we integrate generative AI into our enterprises. But it's kind of expensive, it's difficult, Our data is in a lot of different silos. We it's going to take probably longer than we originally anticipated.

The tapax has been absolutely incredible at the cloud service providers. I mean they have just spent billions and that ultimately has translated into great growth that companies like in Nvidia for example, as they look to transform their data centers to accelerated computing, which is ultimately what lays the groundwork for generative AI. And I think companies themselves are really trying to figure out. Okay, we we want to be first. We want to we want to make sure that we integrate generative AI into our enterprises. But it's kind of expensive, it's difficult, Our data is in a lot of different silos. We it's going to take probably longer than we originally anticipated.

My guess is it's going to continue to There's going to continue to be spent there.

My guess is it's going to continue to There's going to continue to be spent there.

So so do you think that the real monetization that of AI is going to come from the consumer side, like Paul finally turning on his AI features when it finally comes out in his new blackboring iPhone. Or is it going to come from more enterprise use and companies using it for efficiency. Where's going to be that big money maker?

So so do you think that the real monetization that of AI is going to come from the consumer side, like Paul finally turning on his AI features when it finally comes out in his new blackboring iPhone. Or is it going to come from more enterprise use and companies using it for efficiency. Where's going to be that big money maker?

Yeah, that's I mean, that's the MILLI you know, that's that's the question. You know, I think because we haven't seen any real.

Yeah, that's I mean, that's the MILLI you know, that's that's the question. You know, I think because we haven't seen any real.

Meaningful innovation at the application level. So you know, so who is it a chicken or the egg situation?

Meaningful innovation at the application level. So you know, so who is it a chicken or the egg situation?

Is it going to come from these enterprises that are spending so much and trying to figure it out from an internal consumer perspective, or is it going to make them more productive? Efficient in a way that helps support earnings and margins in these organizations. Or is it something like a broad adoption that comes from an installed base that already exists, something like a smartphone or an iPhone that is helping to propel that.

Is it going to come from these enterprises that are spending so much and trying to figure it out from an internal consumer perspective, or is it going to make them more productive? Efficient in a way that helps support earnings and margins in these organizations. Or is it something like a broad adoption that comes from an installed base that already exists, something like a smartphone or an iPhone that is helping to propel that.

It really isn't clear.

It really isn't clear.

Melissa, thank you so much for joining us. Really appreciate getting your thoughts here. Melissa Atto, she's head of t MT that's Technology, Media and Telecommunications. On a page, I think she's head of T and T research. This is the Bloomberg Surveillance Podcast, bringing you the best economics, geopolitics, finance and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern from our global headquarters and York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.

Melissa, thank you so much for joining us. Really appreciate getting your thoughts here. Melissa Atto, she's head of t MT that's Technology, Media and Telecommunications. On a page, I think she's head of T and T research. This is the Bloomberg Surveillance Podcast, bringing you the best economics, geopolitics, finance and investment. You can also watch the show live on YouTube. Visit the Bloomberg Podcast channel on YouTube to see the show weekday mornings from seven to ten Eastern from our global headquarters and York City. Subscribe to the podcast on Apple, Spotify, or anywhere else you listen, and as always on Bloomberg Radio, the Bloomberg Terminal, and the Bloomberg Business app.