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 Remarked Global headquarters in 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. Neil Grossman, co founder at former CIO founder TKNG Capital, joins us here in studio. He's also owns a vineyard. Where's your vineyard, Neil?

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 Remarked Global headquarters in 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. Neil Grossman, co founder at former CIO founder TKNG Capital, joins us here in studio. He's also owns a vineyard. Where's your vineyard, Neil?

It's in the Milbrook area, up state New York.

It's in the Milbrook area, up state New York.

State, in ther beautiful names. He always comes in bearing a bottle wine. We appreciate that. It's yes, that's yeh. Now you know Carol, you know Carol Master and Tim Senovik. Occasionally in there after in Bloomberg Business Weeks, I'll see bottles open Data studio. That that's how they play, that's how they.

State, in ther beautiful names. He always comes in bearing a bottle wine. We appreciate that. It's yes, that's yeh. Now you know Carol, you know Carol Master and Tim Senovik. Occasionally in there after in Bloomberg Business Weeks, I'll see bottles open Data studio. That that's how they play, that's how they.

It adds a clarity to the way it does.

It adds a clarity to the way it does.

It does. Hey, we had a bunch of economic data. We just got through an earning season. What's your view of the world here. I mean, we've got a market selling off a little bit today, but I mean we've got a market that's S and P five hundred up, double digits, yields coming in. What do you make of this world we're in?

It does. Hey, we had a bunch of economic data. We just got through an earning season. What's your view of the world here. I mean, we've got a market selling off a little bit today, but I mean we've got a market that's S and P five hundred up, double digits, yields coming in. What do you make of this world we're in?

I'm more on the this but feels bubbleish a little bit. I mean, let's take a look at Apple. I mean, wonderful company, don't get me wrong, but somebody added three to four hundred billion dollars in value on an announcement that they're going into something. I mean, it's pretty staggering when you think about it. I think when you watch the internals a little bit, the size of the moves of stocks based on a little miss, a little hit, or a little expectation. I don't remember stuff like this very much in the forty years I've been doing this.

I'm more on the this but feels bubbleish a little bit. I mean, let's take a look at Apple. I mean, wonderful company, don't get me wrong, but somebody added three to four hundred billion dollars in value on an announcement that they're going into something. I mean, it's pretty staggering when you think about it. I think when you watch the internals a little bit, the size of the moves of stocks based on a little miss, a little hit, or a little expectation. I don't remember stuff like this very much in the forty years I've been doing this.

Paul referring to the the FED meeting this week, and I wonder how you were processing what we heard from the FED, share what we saw in the dot plot and the SEP. How are you navigating those data points, and how's that sort of shaping your perpective.

Paul referring to the the FED meeting this week, and I wonder how you were processing what we heard from the FED, share what we saw in the dot plot and the SEP. How are you navigating those data points, and how's that sort of shaping your perpective.

I'm a little lighter than normal right now. I would say there was one thing I actually heard in powell statement, which you know, is something I think we have even talked about. He made the comment that the annualization of inflation data is going to be very hard to continue to see improvement. I think we're in a range of let's say, three and a quarter to four and a half percent number one, number two inflation. Wow, I'm looking. I use CPI, the PCE, and some of the other stuff the FED uses to me is a slice. And I understand somewhat why they like to eliminate a little bit of volatility of things. But I think the discussions in the large of why people don't feel good is it's the bigger numbers that affect them. And there are a lot of really interesting things. I mean, the cost of ensuring things, as you know, the cost of buying cars, some of the food costs, they're pretty staggering. And for the average person, airfares hotels are off the charts, and so you know the concept that maybe you're getting a little bit of a slowing in the rate of growth inflation if inflation, remember we're not we're still at three to four five percent wherever it is three six I think people are feeling it still, and I think that's one of the issues. I did want to mention something which I've been thinking about. I mean, there's been a lot of talk for the last two years basically about the inverted yield curve and why it has not indic you know, lived up to the expectations as an indicator of bad things to come. And I've been spending a lot of time thinking about this. The idea may well be that the inverted yield curve, given the structure of the economy now, is actually stimulative more than not. There are areas of the economy, obviously, like real estate, where hurts, but if you think about it, long term meals are still relatively low. In corporate America, if it wants to borrow using a four percent base with very tight spreads, long term borring costs so lower, So that's not a negative. Short term money money for the average investor is throwing off tons of yields. But on the other side, the real cost of money, the large borrowing is coming out of the government of the United States. So they're borrowing staggering quantities, they're short funding it, and then they're taking that money and it's running through the economy. So I think there is some interesting dynamics which have helped us support the economy a bit. We'll see as it goes right now, but.

I'm a little lighter than normal right now. I would say there was one thing I actually heard in powell statement, which you know, is something I think we have even talked about. He made the comment that the annualization of inflation data is going to be very hard to continue to see improvement. I think we're in a range of let's say, three and a quarter to four and a half percent number one, number two inflation. Wow, I'm looking. I use CPI, the PCE, and some of the other stuff the FED uses to me is a slice. And I understand somewhat why they like to eliminate a little bit of volatility of things. But I think the discussions in the large of why people don't feel good is it's the bigger numbers that affect them. And there are a lot of really interesting things. I mean, the cost of ensuring things, as you know, the cost of buying cars, some of the food costs, they're pretty staggering. And for the average person, airfares hotels are off the charts, and so you know the concept that maybe you're getting a little bit of a slowing in the rate of growth inflation if inflation, remember we're not we're still at three to four five percent wherever it is three six I think people are feeling it still, and I think that's one of the issues. I did want to mention something which I've been thinking about. I mean, there's been a lot of talk for the last two years basically about the inverted yield curve and why it has not indic you know, lived up to the expectations as an indicator of bad things to come. And I've been spending a lot of time thinking about this. The idea may well be that the inverted yield curve, given the structure of the economy now, is actually stimulative more than not. There are areas of the economy, obviously, like real estate, where hurts, but if you think about it, long term meals are still relatively low. In corporate America, if it wants to borrow using a four percent base with very tight spreads, long term borring costs so lower, So that's not a negative. Short term money money for the average investor is throwing off tons of yields. But on the other side, the real cost of money, the large borrowing is coming out of the government of the United States. So they're borrowing staggering quantities, they're short funding it, and then they're taking that money and it's running through the economy. So I think there is some interesting dynamics which have helped us support the economy a bit. We'll see as it goes right now, but.

A lot of folks, Neil are saying that this FED is already behind the curve that they should be cutting. Now are you in that camp?

A lot of folks, Neil are saying that this FED is already behind the curve that they should be cutting. Now are you in that camp?

You know?

You know?

Look number one, they again there's an asymmetry to what they do. One piece of data that looks good, and they training the markets to go crazy. Six months. I mean we're six months or a year from where we were. The economy hasn't slowed, this argument. I know, you have built Bill Dudley on who's an old friend of mine, talking about about the neutral rate of interest rates and yeah, wherever that falls. And again, I think this goes back to some of the other questions. You know, central bankers, and as you know, I was one for a while, tend to look at the liability side of the economy. They've never really, in my view, fully incorporated the asset side. And I think we are in an asset positive environment so you know, and every time that Fred opens its mouth, of the market seems to get that it's, you know, it's expectations up. What happens yields have hard yields fall in the last couple of days, where one hundred basis points lower and long term meals over a year, the dollar starts to weaken. Stocks are throwing off value, and so every time you liquefy it works against the idea that you're going to get this sort of significant improvement and inflation. So I think we're going to be waiting. The last point is and I don't I know everyone's talking about September. I think Powell went off on a tangent last year because he was hoping he could get something done before the election. I do not know unless you get a significant downgrading in this economy how and or a staggering drop in the prices, which I don't see. I don't know how in front of this election, given the polarization that that the FED really and I know that this is not a political argument per se, but the meeting immediately before a major, maybe one of the most important elections for them to be doing that, I think is going to be a very difficult thing, all.

Look number one, they again there's an asymmetry to what they do. One piece of data that looks good, and they training the markets to go crazy. Six months. I mean we're six months or a year from where we were. The economy hasn't slowed, this argument. I know, you have built Bill Dudley on who's an old friend of mine, talking about about the neutral rate of interest rates and yeah, wherever that falls. And again, I think this goes back to some of the other questions. You know, central bankers, and as you know, I was one for a while, tend to look at the liability side of the economy. They've never really, in my view, fully incorporated the asset side. And I think we are in an asset positive environment so you know, and every time that Fred opens its mouth, of the market seems to get that it's, you know, it's expectations up. What happens yields have hard yields fall in the last couple of days, where one hundred basis points lower and long term meals over a year, the dollar starts to weaken. Stocks are throwing off value, and so every time you liquefy it works against the idea that you're going to get this sort of significant improvement and inflation. So I think we're going to be waiting. The last point is and I don't I know everyone's talking about September. I think Powell went off on a tangent last year because he was hoping he could get something done before the election. I do not know unless you get a significant downgrading in this economy how and or a staggering drop in the prices, which I don't see. I don't know how in front of this election, given the polarization that that the FED really and I know that this is not a political argument per se, but the meeting immediately before a major, maybe one of the most important elections for them to be doing that, I think is going to be a very difficult thing, all.

Right, Neil, thanks so much for joining us in studio. Neil Grossman, he is a co founder of former CIO of t k n G Capital. Give him some thoughts on these markets on this federal reserve. He is a fed hawk. Let's just be clean and simple here. I try to tee him up to kind of soften it up a little bit, and nothing happening. Tech stocks continue to be the story. I mean, I love when my tech stocks are leading the market. I feel like that's all we've known for the last this is it. I'm all in, but I get a little nervous when like that's kind of it. You know, there's not that breath you like to see in the market. Let's talk to a person kind of an expert in this stuff. Melissa Auto, head of TMT research at Visible Alpha. Melissa, what's your tech call these days? Are you comfortable with where these companies are, with where their multiples are, with where their earnings are? How do you think about it?

Right, Neil, thanks so much for joining us in studio. Neil Grossman, he is a co founder of former CIO of t k n G Capital. Give him some thoughts on these markets on this federal reserve. He is a fed hawk. Let's just be clean and simple here. I try to tee him up to kind of soften it up a little bit, and nothing happening. Tech stocks continue to be the story. I mean, I love when my tech stocks are leading the market. I feel like that's all we've known for the last this is it. I'm all in, but I get a little nervous when like that's kind of it. You know, there's not that breath you like to see in the market. Let's talk to a person kind of an expert in this stuff. Melissa Auto, head of TMT research at Visible Alpha. Melissa, what's your tech call these days? Are you comfortable with where these companies are, with where their multiples are, with where their earnings are? How do you think about it?

Thank you. I mean it's a really interesting time right now for the tech stocks. I think what we're seeing is that essentially garb is kind of worked growth.

Thank you. I mean it's a really interesting time right now for the tech stocks. I think what we're seeing is that essentially garb is kind of worked growth.

At a reasonable price. Those of us old enough to remember.

At a reasonable price. Those of us old enough to remember.

That taking out my pencil.

That taking out my pencil.

Yes, right, So I mean stocks that are trading at say twenty to thirty times are actually generating decent growth. So when you think about the multiple that they're they're generating or the ratio from that, it looks pretty reasonable, So it doesn't seem like it's out of proportion. And I mean, just coming out of the WWDC this week, I mean Apple trades at a range of twenty seven to say thirty two times based on forelooking estimates, you know, And I think what we've observed is that, you know, based on visible alpha consensus, there is a trajectory getting essentially built into the market that is looking like there could be a really compelling replacement cycle, which I think you know, essentially took Apple up this week. So I think when you think about what where the growth trajectory is going and where AI is potentially taking it, the landscape looks really interesting.

Yes, right, So I mean stocks that are trading at say twenty to thirty times are actually generating decent growth. So when you think about the multiple that they're they're generating or the ratio from that, it looks pretty reasonable, So it doesn't seem like it's out of proportion. And I mean, just coming out of the WWDC this week, I mean Apple trades at a range of twenty seven to say thirty two times based on forelooking estimates, you know, And I think what we've observed is that, you know, based on visible alpha consensus, there is a trajectory getting essentially built into the market that is looking like there could be a really compelling replacement cycle, which I think you know, essentially took Apple up this week. So I think when you think about what where the growth trajectory is going and where AI is potentially taking it, the landscape looks really interesting.

That's where I.

That's where I.

Want to go. So you mentioned that Apple Worldwide Developers Conference and the deal that it broke with open ai, and we talk a lot about open AI, we talk a lot about in video as well. So these are the two kind of marquee names. I'm curious sort of how you see that landscape shifting and evening out. So there's so much obvious promise and faith in in video, for instance, when do we begin to see that sort of trickle down and sort of what does it look like when mile beneath in video?

Want to go. So you mentioned that Apple Worldwide Developers Conference and the deal that it broke with open ai, and we talk a lot about open AI, we talk a lot about in video as well. So these are the two kind of marquee names. I'm curious sort of how you see that landscape shifting and evening out. So there's so much obvious promise and faith in in video, for instance, when do we begin to see that sort of trickle down and sort of what does it look like when mile beneath in video?

I mean in videos, definitely a loadstar. I mean a holy back roll. I mean they just I mean, based on visible Aphican census we see in the data. This year, the data center revenues are expected to generate over one hundred billion dollars, but looking forward several years, it's.

I mean in videos, definitely a loadstar. I mean a holy back roll. I mean they just I mean, based on visible Aphican census we see in the data. This year, the data center revenues are expected to generate over one hundred billion dollars, but looking forward several years, it's.

Going to over two hundred. One hundred billion dollars in revenue. Growth for one segment is expected in the market. That is astonishing growth. And so you know, I think when we look at that, it just tells us, Wow, there's something interesting coming down the pike, right, And so I think, you know, for Apple, you know, they're sort of the consumer end of that, they're the end user of that. What Nvidia does is they're essentially building the infrastructure that's enabling all of this generative AI to even happen, you know, to make it so that you know, users like you and I and organizations can actually have the compute power to do the generative AI things that are so productive and interesting.

Going to over two hundred. One hundred billion dollars in revenue. Growth for one segment is expected in the market. That is astonishing growth. And so you know, I think when we look at that, it just tells us, Wow, there's something interesting coming down the pike, right, And so I think, you know, for Apple, you know, they're sort of the consumer end of that, they're the end user of that. What Nvidia does is they're essentially building the infrastructure that's enabling all of this generative AI to even happen, you know, to make it so that you know, users like you and I and organizations can actually have the compute power to do the generative AI things that are so productive and interesting.

So in Vidia obviously, I think for most lay people that is their AI play, even though there's a lot more on the software side. I hear Microsoft mentioned as a way if you want exposure to kind of the next wave of technology, whether it's AI, whatever you like. I call it a big data two years ago and now now it's AI. Microsoft is a story. How do you think about that?

So in Vidia obviously, I think for most lay people that is their AI play, even though there's a lot more on the software side. I hear Microsoft mentioned as a way if you want exposure to kind of the next wave of technology, whether it's AI, whatever you like. I call it a big data two years ago and now now it's AI. Microsoft is a story. How do you think about that?

I mean, Microsoft is another monster. I'm based on visible African census there Azure cloud business is expected to go from seventy five billion dollars and then over the next couple of years to one hundred and fifty billion. I mean, so between in Video and Microsoft together, you're talking about one hundred and seventy five billion dollars in expected new revenue growth. That's incredible.

I mean, Microsoft is another monster. I'm based on visible African census there Azure cloud business is expected to go from seventy five billion dollars and then over the next couple of years to one hundred and fifty billion. I mean, so between in Video and Microsoft together, you're talking about one hundred and seventy five billion dollars in expected new revenue growth. That's incredible.

We had this news this week Bloomberg reporting that two regulators are looking into Microsoft and Video when it comes to AI, and I wonder stif what that tells you, not necessarily about those cases as they might be unfolding, but about where we are in this cycle. Again, we talk about the promise of AI. It things are moving so quickly. You talk about doubling revenue rents Quint saying like the in the s few that you're talking about. But you know, then you have news like this and you wonder sort of what what are the things that might slow this down or might bring this to a more normal pace. Is that even likely to happen?

We had this news this week Bloomberg reporting that two regulators are looking into Microsoft and Video when it comes to AI, and I wonder stif what that tells you, not necessarily about those cases as they might be unfolding, but about where we are in this cycle. Again, we talk about the promise of AI. It things are moving so quickly. You talk about doubling revenue rents Quint saying like the in the s few that you're talking about. But you know, then you have news like this and you wonder sort of what what are the things that might slow this down or might bring this to a more normal pace. Is that even likely to happen?

Do you think?

Do you think?

I mean, it's a question that keeps me up at night. I'm like, what what happens if the consumer just doesn't adopt?

I mean, it's a question that keeps me up at night. I'm like, what what happens if the consumer just doesn't adopt?

If it doesn't click generative aidea.

If it doesn't click generative aidea.

It doesn't click? Because I really remember covering Apple back in the day, pre iPhone, and I remember a lot of us in the investment community debating, oh is this thing going to take off? Or people going to like these touch screens or like there's no keyp head, you know what about the flip phone? Remember those days? And I remember there were two really distinct moments when I thought, Okay, this thing is going to be huge. The first was when I saw my one year old child taking her finger on an iPad and very engaging with this. Couldn't walk or talk really, but can engage with an iPad. I was like, Wow, this is really interesting. Wow, this could create a whole generation of users that are not really baked into expectations. And the second was my mom, widow and retiree saying, you know, I think I want to, you know, convert from a flip phone to an iPhone. What do you think should I do it? And then it really revolutionizing her life things like GPS takes her the way she engages with us and her friends, really making her life a lot more fun and easy. And so if generative AI is able to do that, I think it could be really interesting.

It doesn't click? Because I really remember covering Apple back in the day, pre iPhone, and I remember a lot of us in the investment community debating, oh is this thing going to take off? Or people going to like these touch screens or like there's no keyp head, you know what about the flip phone? Remember those days? And I remember there were two really distinct moments when I thought, Okay, this thing is going to be huge. The first was when I saw my one year old child taking her finger on an iPad and very engaging with this. Couldn't walk or talk really, but can engage with an iPad. I was like, Wow, this is really interesting. Wow, this could create a whole generation of users that are not really baked into expectations. And the second was my mom, widow and retiree saying, you know, I think I want to, you know, convert from a flip phone to an iPhone. What do you think should I do it? And then it really revolutionizing her life things like GPS takes her the way she engages with us and her friends, really making her life a lot more fun and easy. And so if generative AI is able to do that, I think it could be really interesting.

Melissa thirty seconds left Amazon. What's your takeaway from Amazon?

Melissa thirty seconds left Amazon. What's your takeaway from Amazon?

Amazon is in a really interesting position right now. We just I was just actually at the Amazon AWS Financial Services Symposium. There was a lot of discussion around how generative AI is being brought into organizations, and I think the big takeaway from that is that, you know, it's really going to move more to the cloud and companies are really feeling that FOMO trade. And so when I look at the Amazon expectations for the AWS business, we have seen the visible AFRIC consensus numbers for AWS margin go up one hundred and twenty basis points into Q two. So I think there's some interesting momentum coming in there.

Amazon is in a really interesting position right now. We just I was just actually at the Amazon AWS Financial Services Symposium. There was a lot of discussion around how generative AI is being brought into organizations, and I think the big takeaway from that is that, you know, it's really going to move more to the cloud and companies are really feeling that FOMO trade. And so when I look at the Amazon expectations for the AWS business, we have seen the visible AFRIC consensus numbers for AWS margin go up one hundred and twenty basis points into Q two. So I think there's some interesting momentum coming in there.

Melissa, thank you so much for joining us, Melissa Otto, she said of TMT research at Visible Alpha. Getting a little tech discussion this morning. David, you're a worldly guy. Let's talk US sanctions, Let's talk US industrial policy, US protectionism, US monetary policy. Are these good? Are they bad? Are they working? Or are they not working? I have no idea. I did pay attention when I was a duke to some of my economics classes, but I just don't know. Steve Hanke knows. He's professor at Johns Hopkins University. You know, Steve, thanks much for joining us here. This is an election year. I'm starting to hear a lot more discussion about global industrial policy, US industrial policy. Let's just start with you know, tariffs. Are tariffs good? Are tariffs protectionism? Are they good? Are they needed? Safe for the electrical v vehicle market? What do you think?

Melissa, thank you so much for joining us, Melissa Otto, she said of TMT research at Visible Alpha. Getting a little tech discussion this morning. David, you're a worldly guy. Let's talk US sanctions, Let's talk US industrial policy, US protectionism, US monetary policy. Are these good? Are they bad? Are they working? Or are they not working? I have no idea. I did pay attention when I was a duke to some of my economics classes, but I just don't know. Steve Hanke knows. He's professor at Johns Hopkins University. You know, Steve, thanks much for joining us here. This is an election year. I'm starting to hear a lot more discussion about global industrial policy, US industrial policy. Let's just start with you know, tariffs. Are tariffs good? Are tariffs protectionism? Are they good? Are they needed? Safe for the electrical v vehicle market? What do you think?

I think they're terrible?

I think they're terrible?

Nobody.

Nobody.

And we just keep getting getting all the major political players in the game, doubling down and proposing even more nutty, terrify ideas with each passing day. You know, we we had Trump yesterday. He's got some idea. He's he's going to replace the income tax with revenues from terrorists.

And we just keep getting getting all the major political players in the game, doubling down and proposing even more nutty, terrify ideas with each passing day. You know, we we had Trump yesterday. He's got some idea. He's he's going to replace the income tax with revenues from terrorists.

Do we get we don't get revenues from tariffs, do we?

Do we get we don't get revenues from tariffs, do we?

Well?

Well?

We we we we do get revenues from tariffs, but the revenues there are actually a tax that come out of the height of American consumers and businesses.

We we we we do get revenues from tariffs, but the revenues there are actually a tax that come out of the height of American consumers and businesses.

So that's that.

So that's that.

The terriffs thing is is really unbelievable because it's part of a larger picture. And sanctions are actually a form of protectionism. This is all really David under the umbrella of protectionism. So you have sanctions, and since two thousand, the United States has increased the number of sanctions that we've put on various individuals and countries by nine hundred percent.

The terriffs thing is is really unbelievable because it's part of a larger picture. And sanctions are actually a form of protectionism. This is all really David under the umbrella of protectionism. So you have sanctions, and since two thousand, the United States has increased the number of sanctions that we've put on various individuals and countries by nine hundred percent.

But it's amazing.

But it's amazing.

Because the scholarly literature shows us that these things don't work. They always end up backfiring, creating a lot of unintended consequences, and the sanctioned countries and individuals always find workarounds one way or another to get out of them. But in the end, when I say they don't work, they usually create what's called a rally around the flag effect that keeps the targeted leaders or elites in countries in the Saddle Valley Naessa, one of my colleagues at Johns Hopkins and experienced diplomat Iranian of origin, just did a big study with three other colleagues on Iran and basically the sanctions we put on Iran have really created this rally around the flag effect because the idea was the US thought, well, we'll put the sanctions on that will put a lot of pressure on the middle class, and the middle class in Iran will come to our side. Well, no, the middle class either went to the sidelines or went on the side of the regime because they view those who imposed sanctions on as enemies.

Because the scholarly literature shows us that these things don't work. They always end up backfiring, creating a lot of unintended consequences, and the sanctioned countries and individuals always find workarounds one way or another to get out of them. But in the end, when I say they don't work, they usually create what's called a rally around the flag effect that keeps the targeted leaders or elites in countries in the Saddle Valley Naessa, one of my colleagues at Johns Hopkins and experienced diplomat Iranian of origin, just did a big study with three other colleagues on Iran and basically the sanctions we put on Iran have really created this rally around the flag effect because the idea was the US thought, well, we'll put the sanctions on that will put a lot of pressure on the middle class, and the middle class in Iran will come to our side. Well, no, the middle class either went to the sidelines or went on the side of the regime because they view those who imposed sanctions on as enemies.

Steve, let me ask you a little bit more about that. And I think it's a rare day when I don't see in my inbox and message from the Treasury Department about a new sanction, particularly with regard to to Russia's invasion of Ukraine. And so we have the G Seven meetings unfolding now in Italy and the Treasury or Jennet Yellen announcing a new raft of sanctions against Russia I think tied to semiconductors. But you're gonna get something I wanted to ask you about, and that is this kind of recent history of the weaponization of sanctions, the Treasury Department, the administration, this and previous ones really relying on them as a tool. I mean, Jennet Yellen not shy about saying she thinks these are effective. You talk about hern as we pivot to Russia. Are they any more effective when there is an actual military war, when you see the kind of ratcheting up that we've seen here in recent years.

Steve, let me ask you a little bit more about that. And I think it's a rare day when I don't see in my inbox and message from the Treasury Department about a new sanction, particularly with regard to to Russia's invasion of Ukraine. And so we have the G Seven meetings unfolding now in Italy and the Treasury or Jennet Yellen announcing a new raft of sanctions against Russia I think tied to semiconductors. But you're gonna get something I wanted to ask you about, and that is this kind of recent history of the weaponization of sanctions, the Treasury Department, the administration, this and previous ones really relying on them as a tool. I mean, Jennet Yellen not shy about saying she thinks these are effective. You talk about hern as we pivot to Russia. Are they any more effective when there is an actual military war, when you see the kind of ratcheting up that we've seen here in recent years.

The answer is no.

The answer is no.

If you read all of the scholarly literature tells exactly the same story, starting in World War One, and that's all. These almost never achieve their desired objectives. And let me give you, let me give you one. Let's go back to the nineteen seventies. You know when the Soviets invaded Afghanistan and nineteen seventy nine, Jimmy Carter was in the White House, of course, in Brazinski was a National Security advisor, and they put a ban on agricultural exports from the US to the Soviet Union. And what happened is what Bob Mandel called the Afghan effect, and that is the Soviets went.

If you read all of the scholarly literature tells exactly the same story, starting in World War One, and that's all. These almost never achieve their desired objectives. And let me give you, let me give you one. Let's go back to the nineteen seventies. You know when the Soviets invaded Afghanistan and nineteen seventy nine, Jimmy Carter was in the White House, of course, in Brazinski was a National Security advisor, and they put a ban on agricultural exports from the US to the Soviet Union. And what happened is what Bob Mandel called the Afghan effect, and that is the Soviets went.

To Argentina right away and cut a deal for grain.

To Argentina right away and cut a deal for grain.

US farmers, of course, were prohibited from sending an exporting grain to the Soviet Union, so that Argentines made out like bandits.

US farmers, of course, were prohibited from sending an exporting grain to the Soviet Union, so that Argentines made out like bandits.

The Soviets weren't hurt at all.

The Soviets weren't hurt at all.

And ironically, who was in power in Argentina at the time, well, Hunt was in power.

And ironically, who was in power in Argentina at the time, well, Hunt was in power.

They were supposedly the bad guys.

They were supposedly the bad guys.

So this is law, the kind of law of unintended consequences, this Afghan kind of effect.

So this is law, the kind of law of unintended consequences, this Afghan kind of effect.

I guess we're seeing that now with with China. You see that that relationship between Russian and China has grown in warmth, shall we say, since the start of that.

I guess we're seeing that now with with China. You see that that relationship between Russian and China has grown in warmth, shall we say, since the start of that.

Well, yeah, this is absolutely they are blocked at the hip, and then it's because of these sanctions. And now we put even further batchel of sanctions on as you indicated with the G seven.

Well, yeah, this is absolutely they are blocked at the hip, and then it's because of these sanctions. And now we put even further batchel of sanctions on as you indicated with the G seven.

So it's just.

So it's just.

Something that doesn't work. But the problem is it's part of this protectionist thing. We the public thinks somehow they work, They have the impression that they work, they and they become familiar with, they think sanctions and comfortable with sisms. So if we're sanctioning somebody, why not put a quota on them or a terrif on them, so you get in out into the broader sphere of other kinds of government intervention.

Something that doesn't work. But the problem is it's part of this protectionist thing. We the public thinks somehow they work, They have the impression that they work, they and they become familiar with, they think sanctions and comfortable with sisms. So if we're sanctioning somebody, why not put a quota on them or a terrif on them, so you get in out into the broader sphere of other kinds of government intervention.

And Dan Steve David brought up China. I'd love to get your here because I think there's a founded concern on many Americans view about China, whether it's a technology cold war between China and the West. We're concerned about, you know, TikTok being so pervasive here in the US. What do you think the US policy should be about China in terms of trade and just overall relations there, because there are some significant, I would say meaningful concerns.

And Dan Steve David brought up China. I'd love to get your here because I think there's a founded concern on many Americans view about China, whether it's a technology cold war between China and the West. We're concerned about, you know, TikTok being so pervasive here in the US. What do you think the US policy should be about China in terms of trade and just overall relations there, because there are some significant, I would say meaningful concerns.

Well, we have a lot of the S and B five hundred companies that are very involved in China and deriving considerable profits from China, And as far as I'm concerned, that's a good, good idea. Trade is always good. Once you start cutting trade off, you increase the chance that you're going to get into a hot war of some sort. And with the current administration, and this started of course with Trump and the former administration, we've essentially continued to escalate. Really what is an open commercial trade war with China, which I think is a very bad policy.

Well, we have a lot of the S and B five hundred companies that are very involved in China and deriving considerable profits from China, And as far as I'm concerned, that's a good, good idea. Trade is always good. Once you start cutting trade off, you increase the chance that you're going to get into a hot war of some sort. And with the current administration, and this started of course with Trump and the former administration, we've essentially continued to escalate. Really what is an open commercial trade war with China, which I think is a very bad policy.

Steeve, you mentioned Argentina moment ago. Maybe I can ask you about what's been going on there. Lastly, so we were talking about Argentina in the seventies, how about Argentina today? And you have President me like pushing really hard for this legislation that would make pretty radical changes and cuts to the Argentine economy, as he, i think, is going to Italy to meet with the IMF to try to renegotiate some of that country's debt once again. But we've seen the protests in the street. At the same time, we've seen Parliament in Argentina pass a kind of lighter version of that omnibus build that was designed to kind of rework the economy there. What's your read on that as you look to that part of the world. Do you see him as making progress despite it all? What's your sense of what Pemula is doing in Argentina.

Steeve, you mentioned Argentina moment ago. Maybe I can ask you about what's been going on there. Lastly, so we were talking about Argentina in the seventies, how about Argentina today? And you have President me like pushing really hard for this legislation that would make pretty radical changes and cuts to the Argentine economy, as he, i think, is going to Italy to meet with the IMF to try to renegotiate some of that country's debt once again. But we've seen the protests in the street. At the same time, we've seen Parliament in Argentina pass a kind of lighter version of that omnibus build that was designed to kind of rework the economy there. What's your read on that as you look to that part of the world. Do you see him as making progress despite it all? What's your sense of what Pemula is doing in Argentina.

The passage two days of that omnibus bill was a big win for Malay.

The passage two days of that omnibus bill was a big win for Malay.

It was a squeaker he barely got passed, but it's that.

It was a squeaker he barely got passed, but it's that.

That's a good policy move and a good thing for Malay. His problem is, and his achilles heel, is that he hasn't delivered on dollarization and getting rid of the Central Bank. And he campaigned on that promise. He hasn't done it, and as a result, they're really not getting inflation under control, and and and the pace that just keeps sliding. And I think this will essense will make him extremely vulnerable as time passes.

That's a good policy move and a good thing for Malay. His problem is, and his achilles heel, is that he hasn't delivered on dollarization and getting rid of the Central Bank. And he campaigned on that promise. He hasn't done it, and as a result, they're really not getting inflation under control, and and and the pace that just keeps sliding. And I think this will essense will make him extremely vulnerable as time passes.

He's quite popular right now.

He's quite popular right now.

There's he's if you look at the polls, he's doing pretty well. In the passage of this bill by the Senate two days ago.

There's he's if you look at the polls, he's doing pretty well. In the passage of this bill by the Senate two days ago.

Certain it was a help.

Certain it was a help.

But I think I think that without dollarization, I think the story is going to be pretty much over in Argentina. All right, Steve, they have they have a long history of just not being able to do it as long as they have that central bank there. It's it's like a recovering alcoholic with a bottle of whiskey in.

But I think I think that without dollarization, I think the story is going to be pretty much over in Argentina. All right, Steve, they have they have a long history of just not being able to do it as long as they have that central bank there. It's it's like a recovering alcoholic with a bottle of whiskey in.

Front of it.

Front of it.

Right, all right, Hey, Steve, thanks so much for joording us. Always appreciate getting your informed thought. Steve Hankey, Professor of Johns Hopkins University and of course a proud graduate of the University of Colorado. With Boulder the Buffs scope Buffs.

Right, all right, Hey, Steve, thanks so much for joording us. Always appreciate getting your informed thought. Steve Hankey, Professor of Johns Hopkins University and of course a proud graduate of the University of Colorado. With Boulder the Buffs scope Buffs.

How about that.

How about that.

I used to live in North Jersey and right across the street was the Short Hills Mall, which is Jabled famous Babled. It is just it was packed. It's packed all the time. I mean, and people were talking about the death of malls. I'm like, not where I look. I mean, I don't I would never set foot in there, but everybody else was going to stay does. But I mean, I don't know how to think about this, the whole retail business now everybody's kind of shopping online. I don't know how this whole thing works. Angelae Slank, she knows how this stuff works. National Director of Retail Services for the US for Colliers and give us a stay here another where, you know, on the thankfully on the backside of this pandemic, and maybe consumers are getting back to normal behavior if you will talk to us about how, you know, the balance between you know, having the bricks and mortar store kind of works with the e commerce side of the retail equation. How are retailers making that balance these days?

I used to live in North Jersey and right across the street was the Short Hills Mall, which is Jabled famous Babled. It is just it was packed. It's packed all the time. I mean, and people were talking about the death of malls. I'm like, not where I look. I mean, I don't I would never set foot in there, but everybody else was going to stay does. But I mean, I don't know how to think about this, the whole retail business now everybody's kind of shopping online. I don't know how this whole thing works. Angelae Slank, she knows how this stuff works. National Director of Retail Services for the US for Colliers and give us a stay here another where, you know, on the thankfully on the backside of this pandemic, and maybe consumers are getting back to normal behavior if you will talk to us about how, you know, the balance between you know, having the bricks and mortar store kind of works with the e commerce side of the retail equation. How are retailers making that balance these days?

Oh, it's a great question, and thanks for having me. Honestly, it's really working well. They're really both integrated. So retailers right now have invested quite a bit of money over the past call it ten years, as it relates to the infrastructure for online So they really are harmonious. We're seeing you know, online sales from most retailers, roughly around eighteen to twenty percent is online, whereas in store still is the dominant place to sell. People still want to touch, feel, smell, so we're and be educated. So I think, you know, brick and mortar is far from being completely forgotten.

Oh, it's a great question, and thanks for having me. Honestly, it's really working well. They're really both integrated. So retailers right now have invested quite a bit of money over the past call it ten years, as it relates to the infrastructure for online So they really are harmonious. We're seeing you know, online sales from most retailers, roughly around eighteen to twenty percent is online, whereas in store still is the dominant place to sell. People still want to touch, feel, smell, so we're and be educated. So I think, you know, brick and mortar is far from being completely forgotten.

When you look at how retail is navigating this macroeconomic moment, what are companies prioritized. I know there was this push for expansion. Has that been scaled back? So how are they thinking about growing that footprint in the way that you're describing, both with brick and mortar and online as well.

When you look at how retail is navigating this macroeconomic moment, what are companies prioritized. I know there was this push for expansion. Has that been scaled back? So how are they thinking about growing that footprint in the way that you're describing, both with brick and mortar and online as well.

Definitely, you know, there is definitely still a high demand as it relates to you know, site expansion and growth. As you look at the very mature brands that are out there that have been quite successful year over year, they're continuing to look at the US as a great opportunity for more sites. And you know, in speaking to a lot of these brands looking at not just fifty locations, some are looking at one hundred per year. And so when we're seeing that and most of those segments are going to be your junior boxes, your big box type tenants, your grocery those are call it more mainstay stable, you know, sectors within our industry, and therefore we're really going to continue to see that. What the challenge is is that we have a lack of supply. The lack of supply is really what's hurting us because there hasn't been call it, new construction and a growth in new construction throughout the US.

Definitely, you know, there is definitely still a high demand as it relates to you know, site expansion and growth. As you look at the very mature brands that are out there that have been quite successful year over year, they're continuing to look at the US as a great opportunity for more sites. And you know, in speaking to a lot of these brands looking at not just fifty locations, some are looking at one hundred per year. And so when we're seeing that and most of those segments are going to be your junior boxes, your big box type tenants, your grocery those are call it more mainstay stable, you know, sectors within our industry, and therefore we're really going to continue to see that. What the challenge is is that we have a lack of supply. The lack of supply is really what's hurting us because there hasn't been call it, new construction and a growth in new construction throughout the US.

So I guess on the other side of the question, how was the retailer or how is the consumer doing? What are the retailers telling you about what the consumers buying, how they're buying, how much promotion they need to buy? What are you seeing out there these days?

So I guess on the other side of the question, how was the retailer or how is the consumer doing? What are the retailers telling you about what the consumers buying, how they're buying, how much promotion they need to buy? What are you seeing out there these days?

Yeah, it's been a really interesting kind of a little bit of a mixed bag. You know, we are seeing a bit of a gradual slowing. We anticipate that when we forecast for the end of the year that will still be slightly up compared to last year. However, we are going to see a gradual slow down. Now the areas that we're going to see a slow down, we're going to see some slow down. Of course, in high luxury spend. We are still continuing to see a good spend in the discount category, but people are really paying attention to where they're placing their dollars. So even though we're seeing you know, spend occur in you know, the health and personal care, we're still we're starting to see a bit of a slow down and call it beverage spend FMB spend. Prices have increase in that sector purely because wages have increased. I think the overall wage increase has been roughly what about four percent, So people still are making a healthy, decent amount of money, but they are being very cautious on where and how. We are seeing One interesting thing, and that is in the entertainment sector. So people still want to have that joy and that experience. So when we stop and think about, you know, the concert. You know, there's been plenty of concerts that have been going on, but the cost of a concert versus the cost of going to either whether it's just going out for a small dinner with friends or to see a movie. Even though the movie industry, you know, is the cinema industry is still you know, you know, you know, softly kind of treading here, people still want to have this call it entertainment experience.

Yeah, it's been a really interesting kind of a little bit of a mixed bag. You know, we are seeing a bit of a gradual slowing. We anticipate that when we forecast for the end of the year that will still be slightly up compared to last year. However, we are going to see a gradual slow down. Now the areas that we're going to see a slow down, we're going to see some slow down. Of course, in high luxury spend. We are still continuing to see a good spend in the discount category, but people are really paying attention to where they're placing their dollars. So even though we're seeing you know, spend occur in you know, the health and personal care, we're still we're starting to see a bit of a slow down and call it beverage spend FMB spend. Prices have increase in that sector purely because wages have increased. I think the overall wage increase has been roughly what about four percent, So people still are making a healthy, decent amount of money, but they are being very cautious on where and how. We are seeing One interesting thing, and that is in the entertainment sector. So people still want to have that joy and that experience. So when we stop and think about, you know, the concert. You know, there's been plenty of concerts that have been going on, but the cost of a concert versus the cost of going to either whether it's just going out for a small dinner with friends or to see a movie. Even though the movie industry, you know, is the cinema industry is still you know, you know, you know, softly kind of treading here, people still want to have this call it entertainment experience.

I want to ask you about where you're seeing growth and I'll confess I read a few of your notes before coming in here today and Paul at least having some fun talking about Brooklyn. But you you highlight the fact that Fifth Avenue in my neighborhood in Parkslope, Brooklyn, Well, the great retail stretch is now in the country, which like makes me so happy. And part of that are these kind of boba te shops that are set up and constantly packed with young people, my daughter. I mean, it's like this is a big deal now, So talk a bit about like you know, have to talk about that stretch in my neighborhood. But where we're seeing growth in retail, both in terms of geography U and also sort of where there's opportunity in food in beverage that's a little different from what we've seen before.

I want to ask you about where you're seeing growth and I'll confess I read a few of your notes before coming in here today and Paul at least having some fun talking about Brooklyn. But you you highlight the fact that Fifth Avenue in my neighborhood in Parkslope, Brooklyn, Well, the great retail stretch is now in the country, which like makes me so happy. And part of that are these kind of boba te shops that are set up and constantly packed with young people, my daughter. I mean, it's like this is a big deal now, So talk a bit about like you know, have to talk about that stretch in my neighborhood. But where we're seeing growth in retail, both in terms of geography U and also sort of where there's opportunity in food in beverage that's a little different from what we've seen before.

Yeah, it's been really fascinating on the beverage side. So I think, you know what people are starting to realize, and of course it's the younger generation that you know, alcohol doesn't have to be the beverage of choice, and so we're starting to see these very diverse type uses start to expand throughout the US, and it's it's you know, it's very interesting to see kind of that culture around it. So Boba t is one you know, we actually we're working with a group called Swig. And if you look at Swig and I think one of you know, there is a tagline, you know, dirty sodas well, you stop and think about it's really a soda mixed with whether it's lemonade or a different type of juice or different types of you know, add ons. And it's really become a great way of kind of you know, in introducing something unique and different, but enjoying it with your friends and socializing about it. So the trends that we're seeing in the beverage side have been you know, really embraced by by the younger generation and I don't see a slow down. So whether you know, I mean, Starbucks is selling boats now and it's been one of their stronger segments within the product business. So is it a is it a fad? Is it a trend? I think it's probably going to stay if we continue to see this cultural diversity. So we're going to see more of that, So stay tuned. I'm really interested to see what's happening there.

Yeah, it's been really fascinating on the beverage side. So I think, you know what people are starting to realize, and of course it's the younger generation that you know, alcohol doesn't have to be the beverage of choice, and so we're starting to see these very diverse type uses start to expand throughout the US, and it's it's you know, it's very interesting to see kind of that culture around it. So Boba t is one you know, we actually we're working with a group called Swig. And if you look at Swig and I think one of you know, there is a tagline, you know, dirty sodas well, you stop and think about it's really a soda mixed with whether it's lemonade or a different type of juice or different types of you know, add ons. And it's really become a great way of kind of you know, in introducing something unique and different, but enjoying it with your friends and socializing about it. So the trends that we're seeing in the beverage side have been you know, really embraced by by the younger generation and I don't see a slow down. So whether you know, I mean, Starbucks is selling boats now and it's been one of their stronger segments within the product business. So is it a is it a fad? Is it a trend? I think it's probably going to stay if we continue to see this cultural diversity. So we're going to see more of that, So stay tuned. I'm really interested to see what's happening there.

And Gie.

And Gie.

The next question is for Lisa Mitteo how is luxury doing.

The next question is for Lisa Mitteo how is luxury doing.

Yes, you know, it's so fascinating. I'm going to bring it right back to New York for a moment. But I mean, look LVMH. You know they're going to take down their their building on fifty seventh and rebuild. You know, there's there's there's definitely you know, a gradual slow down in terms of spend. But you have to kind of look at that number based on they had such a significant uptick you know, during the pandemic and shortly thereafter. So when we say, you know, gradual slow down in luxury, they're still you know, still up compared to pre COVID numbers. And you know, look luxury still they're expanding their buying buildings or you know, their own real estate. They want to own their kind of longevity and where they're going to be for you know, the next call it thirty years versus trying to negotiate and renew right, they just have to negotiate with themselves. So we're going to continue to see you know, that market be strategic in placement and where they expand.

Yes, you know, it's so fascinating. I'm going to bring it right back to New York for a moment. But I mean, look LVMH. You know they're going to take down their their building on fifty seventh and rebuild. You know, there's there's there's definitely you know, a gradual slow down in terms of spend. But you have to kind of look at that number based on they had such a significant uptick you know, during the pandemic and shortly thereafter. So when we say, you know, gradual slow down in luxury, they're still you know, still up compared to pre COVID numbers. And you know, look luxury still they're expanding their buying buildings or you know, their own real estate. They want to own their kind of longevity and where they're going to be for you know, the next call it thirty years versus trying to negotiate and renew right, they just have to negotiate with themselves. So we're going to continue to see you know, that market be strategic in placement and where they expand.

All right, Aunjie, thank you so much for joining us. Always appreciate getting your perspectives there on all things on the retail space. There Anjie Slanki, National director of Retail Services for the US Firmers Colliers. 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 in 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. Apple

All right, Aunjie, thank you so much for joining us. Always appreciate getting your perspectives there on all things on the retail space. There Anjie Slanki, National director of Retail Services for the US Firmers Colliers. 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 in 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. Apple