Get essential news on the people and companies pushing the tech sector to new frontiers. Hi, I'm Ed Ludlow. Join me for Bloomberg Tech, a daily podcast focused exclusively on technology, innovation and the future of business. Every weekday, we bring you the latest insights on Silicon Valley's top companies and conversations with tech's biggest decision makers. Listen to Bloomberg Tech on your commute home and stay ahead of the news cycle. Subscribe today on Apple, Spotify or anywhere you listen. Bloomberg Audio Studios, podcasts, radio, news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts or watch us live on YouTube. Joining us now, Kay here. She's been very patient here watching the festivities. Again, Sarah will show images of the iconic Buckingham Palace, so we await some news from there. With the instabilities of British politics, I love you. You have a pro paragraph. I'm not going to waste time and read. But you talk about the dispersion within investment-grade bonds. They're winners and losers now. Who's who? Say good morning. Lovely to be with you, too. I mean, the fun thing is I never know what we're going to talk about. Me neither. And I never know. Tom, I never would have imagined you'd be wearing a Red Sox jersey. I've been watching the World Cup. I know. That's why I might have thought Spain, something. Oh, no, we're doing Spanish music here. You know. Claro que sí. They're killing me. Yes, folks, we will play Macarena. You should have seen Kair doing a Macarena years ago. Tell me about the spread in IG right now. There's winners and losers. There's absolutely winners and losers. And I think the two things that people should be focused on are, number one, the fundamentals. So we're moving away from last week, which was an economic heavy week. If you had tier one data and you had a lot of Fed speak, a lot of focus on Warsh. This week, we're moving solidly into earnings season. We're in the Fed blackout period. So don't expect any Fed commentary. We've got a lot of earnings this week and next week. And I think the two drivers are the fundamentals. Investors are looking at what are the earnings? What are the returns going to be from these investments that companies are making? And then the second is the supply side. Tom, as you and Paul know, the issuance in the investment grade corporate bond market can be very lumpy. So last week, investment grade bond market priced $45 billion. Interestingly, four times oversubscribed, something like a 2.3 new issue concession. But if you look at those deals from last week alone, and there wasn't any hyperscaler issuance, the best performing deals, 10 tighter, the worst performing deals, 10 wider. It's really a function of what are expectations. So the market's healthy. The market's healthy. I think there's a little bit of indigestion. You look at some of this issuance, we had nine issues that are greater than $20 billion each this year. That's a big deal. You know, go back last year, there was one of those. So the market's got to process. But you've had 12 consecutive weeks of inflows into the investment-grade corporate bond market. And I agree with you. The market's healthy. Where do you guys find the cash to buy all these new deals? Like, where does it come from, literally? When Morgan Stanley calls you, your desk, and you take down a big chunk, and all your peers take it. We have had steady inflows into our mutual funds, into our ETFs, our ETFs in particular. We've also seen strong inflows into our institutional accounts. There's strong demand for fixed income here. And I think the answer, Paul, is people like the yields here. You know, north of five and a quarter in investment grade, high sixes, low sevens for high yield bonds. You can get attractive yields and securitized credit as well. So I think investors are back to realizing there's yield and fixed income, and that's what drives the inflows. So talk to us about the high yield. If I want to take more credit risk, do you guys support that? Or how do you guys think about the high yield and leveraged loans and all that kind of stuff? Yeah, again, I think, so yes, absolutely. If I look at across our portfolios, you know, in our core plus strategies, we've got about 8% in high yield corporate bonds. So absolutely. But again, I think what's really interesting, and I think this is another sign of the health of the market, triple Cs are lagging this year. So there's a lot of focus on individual credit analysis. Okay, forward, into the end of the year, even into 2027. And this is a really important question for me. Are you investing for the coupon, or is it actually a total return forward vision? So I think both. When you think about fixed income in general, the majority of your returns come from that carry or that coupon. So the carry is the biggest predictor of what your future returns are. And you're looking at these yields right now. I mean, my expectation would be fixed income delivers the yields. I'm not looking for massive capital appreciation from it. But you pick up your carry. Maybe that's not attractive if the equity market goes up 30% every year. But 6%, 7%, 8% returns in fixed income are, I think, very attractive. Paul, my dumb math is you make a coupon 5.5%, 6%, and you drop 2% on top of that total return, and you're way above nominal GDP. That's fine. That works out just nicely. I'm looking at the WIRP function. Kay, I guess the market's pricing in maybe one rate hike, and that's kind of it. How do you guys think about it? Sue, that's a great question. I think there's been so much focus on the inflation data. And last week we saw some softness, finally, of some deflation and disinflation and an expectation that PCE is moving down in the direction closer to the Fed's target. On the other hand, inflation hasn't been at the Fed's target for the last five years. So the Fed's been reluctant to call this bout of inflation transitory because they missed that last time. So that's a, yeah, I hear you grumbling. That's a bad word, Tom. But so the Fed's been reluctant. But this actually does feel more transitory. And we think the Fed's on hold. How do you interpret Ferole, Kassman and company here? There was a wonderful tweet this week in her LinkedIn. I can't remember which, which said, you know, since time began, we're running near a four percent inflation rate. I'll cut them some slack. They had covid. You know, they had a medical event. But are we supposed to get used to three and a half or four percent inflation? I just see that in my textbooks. No, I don't think we get used to 3.5% or 4%, but is it 2% or 2.5%? Yeah, I think that's more likely. So how are you guys looking at the markets these days? I mean, are you trying to screen for sectors, for factors? Where do you guys look for value these days? Yeah, we tend to do both top-down and bottom-up. From a top-down perspective, we're looking at return expectations and where we can find yield. From a bottom-up perspective, If it gets to my earlier point on dispersion and returns, we're looking for, you know, broadly across corporate America, look at the investment grade corporate market. Margins are at 25 year highs. So we're going to see what earnings look like this week and next week. Last week from the banks, they were very strong. So we found opportunities in banks. We find some some opportunities in some of these tech issuance. But a lot of it's really old fashioned roll up your sleeves, bottom up issuance. You know, consumer debt. We find a lot of opportunity in securitized credit. So thank you so much to JP Morgan. Stay with us. More from Bloomberg surveillance coming up after this. Capitalization of Africa is going to power its growth. Breeding the world of something like HIV is possible. Population growth is so enormous in Africa. Listen to Next Africa on Apple, Spotify, or wherever you get your podcasts. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. Joining us right now, this is really timey. This came up three times this week. And Scott Diamond on Municipal Bonds, co-head of Municipal Fixed Income Goldman Sachs Asset Management. Can you form an easily diversified portfolio of double tax or triple tax free bonds? Or is it just finally the institutions on the market? It's a little bit of both. So to answer your first question, yes, you can do it. But it's going to help if you have an institution behind you. I think about the execution side from an institutional perspective. And I think very importantly, from the credit research side, from the institutional perspective. Talk to us about new issuance. I mean, your market's been crazy. Record years of issuance in 2024, 25. How 26 been We going to do it again Wow We going to do it again we running about 5 ahead of what we had last year and as you said a record year in 25 We're seeing it in new money issuance. We're seeing an increase in refinancings. We're seeing it across multiple, multiple sectors. I don't look at this as a big concern. I actually think it's probably long overdue. We have municipalities that maybe haven't been investing as much as they should have been in infrastructure. They've had other things they've had to deal with. So it's good to see us kind of finally catching up. The big question in my mind is, how's demand and will it be sufficient to take down that supply? Does all this supply weigh on the performance of municipal bonds or has the demand been out there? It's impressively been out there so far year to date. If I think about commingled vehicles, and that's mutual funds, that's ETFs, whether it's passive ETF, active ETF, they've taken in over $50 billion in inflows year to date. That's impressive. However, we still have another half a year to get through, right? We've got some 300 plus billion so far. When I pull the street, they're all saying the same thing. Second half is going to be heavy. So in my mind, is it going to be that same steady demand that we've seen in the first half? And if not, if it falters, then it could cause some good volatility in the muni space. Describe the actual track record of passive versus active municipal bond management. I think all of our listeners and viewers sort of get the equity dynamic there. What in muni bonds is the difference between a passive active performance? You know what? It can be quite meaningful leaning into active. You know, there are, we all know, 50 states, right? And all those states have lots of towns. So that means a lot of different issuers. To take a passive approach to that, in our view, you're leaving a lot of money on the table. If you look at the performance of active over passive, so far, year-to-date active is very much ahead of the passive options. How's credit quality out in the municipal bond market? I don't read anything too much anymore about Illinois or Chicago. I was going to say, that 11% Illinois I bought, it was 18% formal tax-free. It was. So how is credit quality out there in municipal America? Let's see. Overall, it's going to be really sound. We're coming out of COVID where a lot of monies were handed out. We have rainy day funds that remain at all-time highs. They're starting to get tapped, as we would expect. We expect them to get tapped this year and into next year. But quite frankly, even if they do, they're still going to be probably well above where they were pre-COVID level. So for now, credit looks really sound. Bloomberg Surveillance across America, around the world, the way you choose to listen to us. Thank you so much for a wonderful June. We're deep into July with Scott Diamond of Goldman Sachs, co-head of Municipal Fixed Income. James Wilcock is at 10 Downing Street, the new prime minister at Buckingham Palace. After seeing King Charles III, we have word he may speak shortly. We'll continue to monitor the festivities in London. Paul Sweeney with Scott Diamond. I'm looking at your notes here, Scott. You say you now have an 11-person researcher team. What do these people look at? What's your research team looking at? How do they go out and look at, I mean, some municipality in the middle of Nebraska? What do they know about that? We love those municipalities in the middle of Nebraska. Listen, we have 11 folks. They are what I'm going to call generalists. So we have each of them assigned specific states and their municipalities. That's important when you think about municipals. A lot of it comes down to politics and local politics. So let's make sure we keep our team focused on that. And then we've also asked them to get very deep in a specific sector. So one of them is going to be our expert in hospitals. One will be our expert in student housing or universities. That's how we kind of canvas the entire market for opportunities. How about talk to us about taxable municipal, because I own municipal bonds in New Jersey because I live in a high tax jurisdiction, but I do it for the triple tax-free treatment. Now you tell me there's a taxable municipal bond market. What do those people do? There is a taxable municipal bond market. It's probably eight to 10% of the overall muni market. If you think about munis, I suspect the IRS is not a big fan. And so you have to check the boxes on what you're using the money for to issue tax exempt. If you don't check the box, issue taxable munis. So they're quite popular with our institutional clients, think insurance or pension funds. And in some cases, for some of our U.S. residents, they may make sense there as well. So what's the area you're staying away from? I hear sometimes higher education. Talk to us about that part of the world, because I know it's facing funding pressures from the government. Yeah. Research funding and all that type of stuff. And maybe not as many kids are going to college. Talk to that high ed. Yeah, it's very much a focus area for us. I hesitate to say we're staying away from it because, as I mentioned, there's a lot of issuers. There's a lot of universities. So it comes down to, can you pick the right ones? State universities, I think they're doing just fine. The top tier AAA ivies, also doing just fine despite some of the political pressure. Where we're seeing pressure is, think of it as a smaller, maybe liberal arts school, somewhere around 1,000, 2,000 kids, and they're having a tough time drawing those applicants in from a smaller applicant pool. So what's the sector here that screens particularly well for you guys? I tell you, we're finding value in a number of different spots. One, from a sector perspective, I would say school districts are starting to come under pressure, headline pressure, but if you find the right school district, you can get a lot of extra yield. For example, in New York last week in our New York ETF, a non-rated school ban. Not many individuals will want to do the homework on a non-rated offering. But for us, if we can get 3% for a one-year piece of paper for a New York resident, that's like you suggested earlier. How many holdings are in the New York ETF? How diversified is it? Quite diversified. We've probably got about 45 to 50 in a... No, you're right. Actually, it's 100. I'm wrong again. It's 100. Yeah. That's near 100 items in a portfolio. Yeah. With a research team that will go through and make sure that they earn the right to stay in that portfolio. There you go. Thank you so much, Scott Diamond. Greatly appreciate it. With Goldman Sachs. Stay with us. More from Bloomberg Surveillance coming up after this. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. The American political landscape, it is tons of fun right now. Henrietta Trez joins us for a wonderful morning brief. Are we closer to the midterm elections than we think? Oh, we are right up on it. Absolutely. Especially when you think that they're leaving on Friday. They'll be gone for five weeks. They come back in for just a couple of days and then they leave again for the entire month of October. So I think the legislative days are like 12. How important is Senator McConnell's illness? It's extremely important. When you think about the reconciliation package that they may want to pass as the war perpetuates, as gas exceeds four dollars a gallon nationally and consumers continue to express that the president's war is unpopular. The tariffs are unpopular. Inflation is a problem. they're going to want to do something to show voters that they're paying attention. We all saw what happened with the housing bill. They're going to have a last bite at this in September. And if McConnell is not there and able to vote, that makes it really tough on members like Susan Collins and the other at-risk members. What do you know about Senator McConnell, his case? And then what happens if he's unable to vote or participate? What do we know about all that? Well, there's a couple options. I mean, certainly you could have a situation where Andy Beshear, the governor in Kentucky provides a stand-in in the event of a vacancy. But anybody who's worked in the Senate or anybody who's been there for the last 30 years knows that Mitch McConnell is not going to go out voluntarily. So this is going to be a longstanding issue as long as he makes that choice. I mean, it seems like the news flow for President Trump, the polling for President Trump are really, really headwinds here. What's the Republican National Committee, how are they kind of framing this out? What do they hope will happen? What do they think will happen? Because this could be difficult for them. Yeah, well, the hope is to just talk about Democrats as communists, as any word that they can throw at it. They talk about the far left. They talk about the populist wing of the party. And it's interesting because you see some very real similarities between those candidates and some of the agenda items that President Trump has So it a sort of a mixed bag I would say that we should expect the congressman on the Republican conference to trickle back into immigration and crime as core issues going into the election. And if you're the Democrats, I don't know. I guess I feel like I'm surprised they haven't taken this. It seems like it's on a silver platter for them here to just step up their rhetoric. I don't hear it. I don't see it. I don't feel it. I'm shocked that they haven't because every poll says they should just be, you know, really on the offensive here. Oh, absolutely. The president is inordinately unpopular. But both the Republican and the Democratic parties are also extremely unpopular. And Democrats are even less popular than Republicans. They've closed the gap instead of, you know, eight or nine points more unpopular. It's three or four. But they don't have a core leader. And so there's no direct. Equate the upset of France with Le Pen coming back and an amazing presidential election coming up or what we're witnessing right now. Sarah, give me the images of London right now as you can on YouTube. Seven prime ministers in 10 years, which harkens back to Peel. And I think a canning died. And my history tells me Peel is before Disraeli and Gladstone. OK, it was it was before that it was back when the tots last won. That's when it was total disarray in the United Kingdom. We're no different, are we? We're no different, but you are like a human computer. That is an amazing recollection of all of it. Yeah, no, we're no different. And people, the American public swings back and forth. I mean, what happens is you get these big change elections. Voters vote for change. And then they realize once they get it, they don't actually like it. And they go back right in the other direction. It's sort of like 1890. Like Grover Cleveland Alexander was president twice. It's like, that was a joke, Paul. Grover Cleveland, pitcher. Okay, I used to call him Grover Cleveland Alexander. Anyways, it's like the 1890s. So we're just going to bounce around for the next decade. Well, I mean, I think it's very normal to see that in a midterm, especially when one party has such control over D.C. The problem for Republicans here is not that Democrats are popular. It's that their margins are so slim. So, you know, my black swan event for this entire year has been what if one of the chambers flips hands just through attrition? You've got 69 members retiring or moving on next year. They're going to be younger. They're going to be focused on A.I. we're going to go through, we are going through a decade of very real change. Funding the war, does Congress have any say here? Excuse me, the prime minister coming out right now with Mrs. Burnham, obligatory London waves. I mean, Henry, it is a pomp and circumstance. I remember the day Prime Minister Cameron, after Brexit, staggered out of the door of 10 Downing Street with Lawrence the cat to his right. And from that moment on, I would say John Farrell leading our coverage in London. From that moment on, it's been chaos in the United Kingdom. It really has. And it's a constant turnover. And how can anybody really hit their stride? This is an unpopular opinion, but I don't like turn limits because you need that institutional memory. You need that knowledge of how to work a room, create a deal. I mean, Paul, the Range Rover, there's like 14 of those where you live in New Jersey. Yeah, sure. It's like hot and cold running Range Rover's down there. Absolutely. On the Jersey Shore. So I guess no comments here, we would presume. I'm guessing, they'll help me in the control room, our royal correspondent, Robert Bragg, is on top of this. We look for comments at 10 Downing Street with our James Wolcock at 10 Downing Street. It's about a mile back, coming out of the Acclaim Gate. My grandfather had a puzzle of Buckingham Palace. Oh, yeah? Okay. We would sit there. He'd sit there with his third old-fashioned, and I would complete the puzzle. But it's coming down. Now, we'll see here, folks. For those of you on radio, it's as beautiful as you can imagine, thanks to the royal drone that's helping out with the camera. Do they go down the mall, or I don't think they worry about traffic on one way or the other. No, I think they're good. I think, yes, we're going down the Acclaim Mall, down towards the arch, and all the symbolism of 18th and 19th century London. And of course, we remember this from the funeral for Queen Elizabeth II as well. We'll continue to monitor that. And we continue with Duchess Henrietta Trace with us as well. Is it a special relationship with London? I don't sense it right now. It's hard to sense right now. One thing that I think about a lot is the fact that we're currently in violation of our trade deal with the UK. I think this is underappreciated. But as tariffs are set to expire this week and the president has to migrate into new rates, One of the things that we agreed to with the UK because of our special relationship was a very low 10% reciprocal tariff rate. But now, of course, every other nation on Earth also has a 10% tariff rate, which means we are in violation of our own trade deal that we reached with the UK to give them preferential treatment. They don't have that right now. They're staying calm about it for the last 150 days. But come Friday, we're going to have a different landscape on the trade front. And that's not even on the on the burner anywhere for most folks, I think, at this point. You say there's 12 effective working days for this Congress in the remainder of the year. Did they have any agenda to get anything done here? I mean, is there something that has to get done? Well, the one thing that has to get done is that we do need to avoid a shutdown on October 1st. OK, we're back to a shutdown. Basically, yeah, we are. And last time you saw what Dems did, they shut down the government for, what, 43 days or something. So they're playing with fire. Republicans are trying to get out in front of that. They have a bill that they introduced very early to pass a CR that will extend us past the election. So they know to be anxious about it. That's the one thing we really have to pass. There's an optimistic hope that we would get a reconciliation bill, but I'm only at 30 percent on that. So what is your summary right now? Middle July, as you say, they're taking off five years or whatever coming up here. Do the Democrats still take the House? Yeah, I'm at 90 percent that Dems take the House. Really, that large? Yes, I feel pretty comfortable with it. And it's just historically correct to think that one party control would alienate. So how do you respond to Terry Haynes articulate essays at Pangaea saying Henrietta Trace is right. That's the zeitgeist. But are the Democrats that fragile with the Terry Haynes? But I think if you want to say, but the better way to do it is to talk about what the margins are going to be. So Democrats are not going to get 30, but they're going to get 12 seats. They'll get eight. What about in the Senate? The Senate, I'm at 60 percent that Republicans hold, as we're seeing. And to your point earlier, I mean, Democrats barely have a main candidate. We are just a couple of weeks out from the election. Early voting starts September 15th. You know, temps are needed to get this. Paul, can I ask a rude question? Sure. I actually read two articles on the Maine disaster of the Republican Susan Collins and the 47 people. It's like the traditional kind of politicians we used to have. I have such an admiration for Mr. Cohen and Mr. Mitchell of Maine, both of whom folks grew up dirt poor and achieved. It's like those people, it's like the William Cohen and George Mitchell, like me, Margaret Chase Smith, who I remember, it's gone. Yeah. Where are those candidates? Well, they're not in Maine this cycle, but they are elsewhere. You know, think about Roy Cooper in North Carolina, just doing it sort of the old fashioned way. Tons of fundraising, very popular, very moderate. And you have a similar dynamic in Kentucky, as we talked about with Andy Beshear. And those members do exist, but this one is wild. You know, for another classic candidate, look at Mary Peltola in Alaska. Couldn't make a better candidate. And it's very homegrown, native to the state, works with the local community, loves to fish. Mrs. Keene emails in. She goes, what's Henrietta's look today? What are you wearing? Who are you wearing this morning? Oh, my daughter picked this out for me. She is in the green room with me today. That's really good. Well, bring her in. We'd love to meet her as well. The cars are back at 10 Downing Street. I thought they were going to talk at New Bond Street to see the new Hermes store, the new Maison that Hermes put together of five different stores. It's the talk of London right now. But they've gone to 10 Downing Street where they will meet members of the Labour Party. For Americans, Paul, the move in, move out thing, move out, move in thing, it's shockingly abrupt. Is it? It's like literally cardboard boxes going out the back door off camera. If you're lucky, they don't take Lawrence the Cat off to see on there. But this pageantry is extraordinary. From Westminster Abbey, Downing Street is away from the traffic flow. It's, I'm going to say, I'm guessing north, about three blocks. And you're sort of, Paul, you're walking along as a tourist. And then all of a sudden? And all of a sudden it's, oh, that's it. That's it? Yep. I recognize this TV shot. Exactly. And it's two buildings. Henry have you been there Have you been to 10 Downing Street I have been to the outside I haven been to the inside Did you meet Lawrence the Cat I did not meet Lawrence the Cat but I do imagine all of the cast of Love Actually walking by You know, so do I. And it's a very unassuming kind of building. When I passed it, too, I was like, oh, is this, this is it? This is this. Okay. That's awesome. Prime Minister Burden greeting his supporters, many, of course, from his northern Great Britain. Stay with us. More from Bloomberg Surveillance coming up after this. That keeps you ahead of the competition. Subscribe to the Bloomberg Intelligence Podcast today on Apple, Spotify, or anywhere you listen. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business App. Or watch us live on YouTube. I was in term and joins us right now, vice chair, global macro, Deutsche Bank. I look, Ozan, at your note, and then I look at SPX down 2%. We've had a massive drawdown on 2%. But the angst there seems so much greater than a pullback of 2% from record highs. I hear you, Tom, and so good to be here. And this morning already we're trying to bounce a bit with these ceasefire hops. I think the major part of it is positioning, especially on tech. It's starting to get a bit crowded, a bit like the October to February periods. My big each other, his 8,000 used to be very exciting for people as a target. Now it's almost conservative. So with everything going on in the chip sector and the semis, we're questioning the whole rotation, but I think down the line will still be all right. So what is your top call right here when you think about global macro here? What are we doing here? What's your top conviction call? It's getting trickier and trickier. I think the one top goal is that the crowded trade of earlier summer, shorting US rates versus going long euro rates, that's going to continue to be unwound and there will be a pain trade there. And when Walsh first walked in, talking tough, keeping long end in control through that, people really believed that that would send US rates higher and higher and that Europe would go through summer doldrums. Well, not exactly playing out on U.S. data. On Europe, Germany, finally going through delivering key reforms. So I think that spread between German, European spreads and U.S. will continue to tighten. We kind of came into the year thinking weak U.S. dollar. And I think that was kind of working. And then a war started in Iran. De-dollarization, yeah. And then a war started in Iran. And then we saw, and then we got the DXY index back up close to 101 here. So what's your call on the dollar here? That's a bit stuck, Paul. So on its own, it a bit depends on, yet again, the AI trade. If U.S. exceptions comes back, then all these calls of $110, $111 may be back. If we go through these choppy times, more rotation, then my official Cerebralis call of $120 has more chance. One thing a higher euro, softer dollar really needs is Asia currencies beyond China to join. Japan, Korea, Taiwan, those are way too cheap. And one Godot that may finally come is Japan repatriation. The headlines of last Friday and then Takechi emphasizing it again. If Japanese money finally flows into their own assets, that may strengthen the end. Why would that happen? That's why I quote Godot. It hasn't happened for a long time. This time, Garand is pushing it and giving some gimmick, giving some carrots. But I hear your skepticism. How can you model forward, given, just as a general statement, a war or two wars? I just, the certitude, I mean, I get the idea people have to sell a message. But how can you do it, given the headlines I'm seeing from Friday? I completely hear you. That's why as long as world growth stays as high as it is, given all this war uncertainty, etc., I think the right trade will continue to be, a bit frustratingly, sell volatility. It's not going to, the dollar won't rip to 111. It's not going to soften to 111 either. It's going to continue to chop, chop, chop, chop. FX, unfortunately, G3, G4 FX won't be the place to be. emerging markets carry, especially on high oil exporters, that may continue to work. Your Brazil's, your Mexico's, that may be the place to be in FX. We've now heard from our Federal Reserve chairman a few times here. Inflation is intolerable in his mind. The message seems to be fighting inflation is job one. How do you view kind of what we've heard from our new Fed chairman? So far, he's passing the test. First of all, these CPIs and PPIs data also helped. I think deep inside, he wants to talk tough, not talk much, get rid of forward guidance, and end up not touching it. I'm not too sure he's too keen to hike. His other hawkish members like Hammack on Friday will continue to help him as well. is if data continues to come like they did the past week, I think we may end up with no hikes at all. Though I have to respect my Matt Luzzetti as always. I have to emphasize our official call is two hikes. Okay. I mean, that's right where we're going to go. I mean, within the combine that David Fulker, it's Lando put together. There's Matthew Luzzetti. He hangs out. He's over at the, ready? The Time Warner building. Yep. They renamed it. I'm still calling it the Time Warner building. the deutsche bank building matt lozetti's over there framing out an economy with a huge bull market attached do you just say i think of binky chata do you just say forward motion and enjoy it while it's while it's going love matt respect him but uh compared to him i have a bit more more of a sympathy to the k economy arguments as well yeah so uh on its own uh you know for one percent for 0.1 percent all the ai arguments ai inflation arguments yes i do hear them but most people in this wonderful country still live paycheck to paycheck uh all this tight economy won't help won't help with their mortgages so that's why at the end of the deutsche bank is a democracy i'm not too sure about those two hikes coming in so what is in your mind or the ai trade today because we see just it used to be just buy in anybody who's spending money, who's spending the CapEx, the hyperscalers, and the chips, I guess, are still a nice way to play it. But how are you guys thinking about it? How do you think about the AI trade? Because people are trying to figure out winners and losers. Yeah, it's become like Magnet 7 doesn't necessarily cut it anymore. I think the rotation that I began with will continue. The positioning washout will continue a little bit. I'm not sure World Cup, right? I'm not sure we're in the even 65th, 70th in it yet, or my dear Tom's Red Sox. I'm not even sure in the 6th, 7th inning. This has legs. But, Paul, earnings are important. What keeps going this Binky story is earnings delivering. And this time around, SK Hynix delivered, price action didn't. TSMC delivered, price action didn't. I think this Google Wednesday is very important, followed by Microsoft and Apple. If Google again slams it, it's the winner anyway. But despite that price action is so-so, August may be a bit more nastier for Cardo's positioning than people thought. Thank you so much. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern, on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. We'll be right back. Apple, Spotify, or anywhere you listen.
