Equities, Bonds, and Geopolitics

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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. Right now, Secretary Page. joins us. Sebastian that page has had a global multi-Bashar al-Assad definitive on diversification here at

T-Rowe price. Sebastian, after this non-breadth rally, this lack of dispersion, I think it's three stocks is the reason we're going up. How do you re-diversify? How do you rebalance or do you just stay with it? You know, Tom, when you're at a cocktail party and someone finds out you're in the business, they always want advice, right? And I always feel like you don't have enough time to do this. So I always say stay invested, stay diversified. Right now I would say, stay invested, stay diversified, hedge inflation risk. I think it's important investors to diversify their hedges, not just treasuries, but holds some cash, some hedged equities, some tips, some real asset equities. You know, I look, Sebastian, at the card to rule here, the technology doesn't play like an

industrial. If yields go up, what does the technology sector typically do? You know, I think the typical is hard to describe because its duration, its sensitivity to interest rate moves, has been highly unstable historically. You know what matters right now, Tom, is the earnings. The earnings growth projected for the next 12 months for U.S. large-cap growth stocks are at 28%. That's the highest it's been in my 25-year chart. Now, you could say that's a high bar, but those are companies that tend to meet that high bar. So, Tom, we're still along the broadening trade, but we've taken about half the profits, and we've been moving money from international back to the U.S. U.S. ultimately is a net exporter of oil. Europe is much more exposed. Those earnings are phenomenal.

And the valuations for large-cap growth stocks, they're actually lower than their five-year average. So that's the move we're doing. Now, it doesn't mean to your introduction that we're concentrating the portfolio. It just boils down to balancing, taking a little bit of risk, active risk, off the table. and I go back to stay invested, stay diversified hedge inflation risk. Tom more neutral between stocks and bonds right now. Sebastian, inflation, it's there, and a lot of folks are saying it's going to become even more pronounced in the back half of 2026. How does one hedge that?

You can diversify the hedges. One way is to have a short duration position, so hold some cash. You can also hold some short-term tips. Of course, a lot of people like to. buy gold or metals, we like to do that through stocks. So metal stocks and energy stocks, I think there's still time to establish those hedges, even though it's already happened, right? The oil shock has already happened. I think the risk is still there on the table. So that's another way. Another way we like is just to hedge equities. You know, hedged equities give you a little bit of asymmetry.

You give up some of the upside, but you hedge your tail risk. And in a portfolio, where treasuries might not hedge you really well if you get an inflation shock, you start building some positions that help you make up for the failure of treasuries and inflation shock. And Sebastian, you called out earnings and we're just finishing up what's turned out to be a really solid earnings season for corporate America. Are there earnings and earnings forecasts enough to support this market? I think so. And I think this can continue. The earnings momentum is remarkably strong. The last estimate I saw for AI CapEx is $3 trillion by 2028. Of course, it sets a high bar and chips are more cyclical than other sectors. Of course, there's a lot of this that's

priced in. Look, I don't like the bubble comparisons, the tech bubble, the internet. But, you know, if you look at trailing price to cash, trailing price to sales, those metrics are actually higher than during the dot com. But I will say this Paul, but margins are double. Sebastian Page, thank you so much. Sebastian, you think Montreal can do it. If they get past the savers, you think Montreal can take out the Carolinas? I'm all in on Montreal all the time, Tom, given my French-Canadian heritage. Completely unbiased. I do tear up. I get misty-eyed. like Taylor Kendall and I would be misty-eyed. If Sebastian, Tyler Kendra, excuse me,

if Sebastian brought in the torch, you know, walked in the torch to 20,000 people at the Bell Center. Sebastian, that would be great. Sebastian Page, thank you so much from Sherbrook, and of always, T-Rote, Price is well. Stay with us. More from Bloomberg's surveillance coming up after this. Let's talk about health care for a second.

It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system. So care is connected, not complicated, for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even, even in-home care, and then using technology to make sure they all work together.

Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions, Optum is working to bring costs down, save patients' money, and make it easier to get refills. Little by little, Optum is helping make health care work as one for everyone. Head to business.optim.com to see how. These days, it seems like AI agents are just about everywhere you turn. every filled and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Octa helps you get identity right by securing your AI agent's identities,

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Cards are issued by J.P. Morgan Chase Bank, N.A. Member FDIC. 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. Ian Lincoln taught me this. Price down, yield up. But it's the rate of change. I've got a 5.1030 year. I've got a 4.4.4.4.

I'm rounding this up, Ian. Ian Lingen wouldn't do this, but it's entertainment. Come on, Ian, stay with me. 4.56% and the 10-year yield, 4.06 in the Sweeney, two-year yield. The interview of the day for Global Wall Street, Ian Lingen of the Bank of Montreal, BMO Capital Markets, the tickets you got me for Saturday, I almost teared up. Thank you. The AA box right at the goal line, I looked those up on StubHub, two tickets, $8,500,

Thank you, Bank of Montreal. I'm glad you appreciate it. What's the first and second derivative of this bond move? The convexity we say, what's the rate of change that we need to know about? So I'm really worried that what we're seeing in the equity market is going to accelerate. We haven't seen a breakout of yields to these levels in quite some time. And that 5% level for the long bond, that matters. And it has in the past for equities. So I'm keeping an eye on what happens in the stock market today, frankly. What is pushing rates higher?

Again, you mentioned the 30 year at 5.10%. That really gets people's attention. The 10 year at 455, that breaks out a little bit. What's going on there? Well, I think we're still trading the conflict in the Middle East. We're still worried about the energy complex. We're coming off of a series of inflation prints that have demonstrated that we're already starting to see some pass through to core.

There were a few technical adjustments from the BLS that propped up the core numbers. We weren't particularly surprised or worried, but the market clearly is. And we just went through the 10 and 30 year auctions. And so they're still in the process of being redistributed. And as we have seen in the run-up to pretty much every weekend, we're worried about the event risk of those two days in the Middle East because, frankly, anything can happen. You don't want to hold a risk position over the weekend? Exactly.

I mean, this is telling me, I'm an equity guy, so, but, you know, I try to stay away from the bond market. When I see rates move higher like this, that just, This shows me angst in the marketplace. And I guess the angst is more persistent, more stickier inflation. Is that what we're seeing? I think that's part of it. There's also a fiscal concern.

So the inflation argument is fed into by the notion that the labor market remains on solid footing. We had a higher than expected but still low initial jobless claims number. Inflation is moving along fine, but not to the levels that are troubling yet. if the unemployment rate had been materially higher or we hadn't had strong payrolls, I think we'd be in a much different macro environment. Ian Lingen with his BMO Capital Markets. He's taken every trophy there is in fixed income. It's no dense and extremely red on the morning hours, get that from the Bank of Montreal

BMO capital markets, BMO capital markets. So I look at the real yield. There's a number of ways to look at this. I've seen a leap here from a 190 out to a 2.0. I got some history at 2.11. What are the ramifications if the 10-year real yield breaks out the new territory? Well, I think that it depends on how that occurs. If it occurs with a compression of break-evens because inflation expectations have moderated,

then I think that the real economy can absorb that in it. It's a more buoyant economy, productivity, innovation, and that. But if it's a flip side and you see widening of break-evens and higher real-reliven. rates, that is a vote of non-confidence of the treasuries as an answer. Nicely explain. Now, you're a grizzle pro at this. He's got three Bloomberg. You should see it. I know. I mean, Tuval Rivera darkens, what he tunes in his Bloomberg. Okay, so you've got a bond market complexity. And the answer is there have to be trip points. What's the Ian Lingen trip point? Is it the five-year yield, the 10-year yield? Is it something esoteric? Well, I think that

the world looks at 10-year yields. I look at the two-year yield. There's nothing more than reflection of near-term monetary policy expectations. And so anytime we're over 4% in this environment, that means that we're really contemplating rate hikes, which I don't think should be on the table. The long bond is more of an inflation story. And as we see, five-handle on the 30-year is troubling for a lot of different asset classes. So I do think that the shape of the curve is going to be the story to follow this year. Kevin Warsh can be stepping into the big chair at the Fed. That's going to be a little uncomfortable given some of the data we're seeing here.

I mean, what do you think the messaging that's going to come out of this new Fed chair will be, should be, because we're going to hear from them in the next few days probably. So he has been given a very difficult Fed to take over at the moment. Jerome Powell's still going to be in the room. He's coming in with three dissents against some of the language within the statement. It's interesting that the dissents were against the language. and not against the move itself, as is typically the case. I suspect that he's going to have a very hard time building consensus over the summer to do anything

outside of potentially scale back some of the forward guidance. Normally, I would say one of his objectives is to talk less in terms of being a Fed leader, and that could mean at some point reducing the SEPs or the dot plot, but I don't think anything's happening to sign. I mentioned this earlier. Governor Myron on yesterday, Farrell, grilled him. I thought John did a great job on the interview. And the distinction there is the inflation not so much a one-off, but is it various supply side, even demand side shocks, or is there a fiscal

persistency finally to it? How do you parse that when you look at the dynamics of the Ian Lingen bond market? It does feel as though forward inflation expectations are moving higher for the average consumer and the average household. And that's what the Fed needs to worry about. Because you can drill down into CPI and you can see that in April core goods were effectively flat. And that's what everyone was worried about last year. The tariff passed through. So we're beyond the tariff story, but now we're worried about airfares, energy prices flowing through to products at the end of the day. But that takes months to actually see. Zero. I get a nice summary of a Goldman Sachs note where they triangle it out to a 4.60% 10-year yield being important.

Do you have in your head that trip point on the 10-year where things change for the stock market? I would say that we're right up against it. I would say 475, but right now we're just chopping around in a range that is reasonably well-defined. And again, the level of conviction that is in this market is so low right now. When we talk to clients and make the rounds,

people just don't know in fixed income space. 10 year at 456? I mean, the year end, are we higher from here, do you think? I think we're lower, but the floor has certainly been increased, given the events of the last eight weeks. I mean, I'm pounding to Bloomberg here. I'm trying to pretend like I'm Ian Lincoln. Triple high top at the 30-year bond poll to 5.10, 5.11, we're, you know,

they're there, there. Now, if I go CT30, Ian Lingen taught me how to do this. went to bond camp with Ian Lingin. Okay. You should say, kumbaya, and I spring tears to your eyes. If I look at the current 30-year bond, I don't know if it's going to give me much information here. Let me see if I can get it up.

But I believe there's a price decline involved. If yields go up, prices go down. Nailed it. Is it hard for institutions? Forget about all this financial media stuff. Like Alexis, the way you quote the yield, it brings tears to my eyes. Nobody cares. It's about price down, right?

Is there pain out there into this weekend? Into this weekend, I would say less so than we saw at the beginning of the conflict. There were a lot of position stopouts when this all started. People were caught the wrong direction on the curve. People were caught the wrong direction on duration. Now positions have been paired back. And frankly, there's plenty of shorts in the market. So this run-up could actually be benefiting certain holders.

But again, as you mentioned, the two-year, well above 4% now. And we don't typically see that in the last, I don't, however long, but I mean, is that, I mean, again, that kind of tells me that the Fed is more as likely to raise rates than the cut rates the next time they move. So I think that the two year is very interesting at this moment, because if you believe what the Fed has been saying, which is we're pausing on the way to further normalization, then two-year yields should be at or below effective Fed funds. And that's in the mid-360s. And we're well above that.

So the market is saying either we know that Scott Bessent's going to do a lot of borrowing in the front end. Come on. It's a hope and a prayer that the Hormuz opens up, right? I mean, that's all we're down. It seems unlikely. On Air Force One flying back right now, Bimo has a golf stream. You should see it. It's Montreal Canadiens.

It's wonderful. Red, le blue Todd Blanche rouge. Okay. So whatever airplane you're on and you're fancy like Ian Lingen, this is just a hope and a prayer that Iran gets over, oil breaks and we all go back to Fed normal, right? I do think that there's a lot of optimism implied in the notion that's going to reopen. And you also see it in oil futures. Oil futures should be higher and inventors are going to draw down over the summer.

You know, when I took the BMO summer camp with the in-legging course, you don't look at the CT30. You look at the old old. Like there's different old old bonds. Paul, since the end of February, the 30-year bond on price, Not yield folks, not the way bow tie people talk. And we're down 7.55% 31% annualized. Is that a bare market in bonds?

Is that where we are? Certainly has been a bear market in the 30-year sector. There's no question about that. There you know. Movements in the bond market. We're talking bond market. I'm all fired up. Where's Lisa Romowitz?

I just started going, she's off the door. She's going, she's rocking it. She's going skiing somewhere. Oh, somewhere. Like way like north. Okay. Like Banff or something. Okay.

Can I do one more question? I mean, they didn't pull Doebusch last night. I mean, Montereau took out Buffalo. It was enough. It was just magical to see. Explain the culture. I mean, we're all witnessing this as outsiders.

20,000 mental people in the Bell Center. 20,000 mental people outside the Bell Mentor. They have a portrait of Leonard Cohen on a Bank of Montreal building, and they got up dressed in a hampshire. Explain the culture of the Montreal Canadians to the Bank of Montreal and all of the city. I do think there's a lot of history, and they're very proud of that history.

I think you can see it in the sports, you can see it in the culture, you can see it in the music. So I do think that the Bank of Montreal is a very good representation of that culture as well. Can you get rush tickets for this summer? Ian, thank you so much. I love busting his chops because Ian plays it.

so straight and he is so excellent with his work over the years with BMO at Capital Markets. Stay with us, more from Bloomberg's surveillance coming up after this. Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every. day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system, so care is connected, not complicated, for patients

and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions? Optum is working to bring costs down, save patients' money, and make it easier to get refills. Little by little, Optum is helping make health care work as one for everyone. Head to business.optim.com to see how. These days, it seems like AI agents are just about everywhere you turn, every filled

and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Octa helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single standard of trust. So whether an AI agent supports a single user or your entire enterprise, with ACTA, you'll turn risk into opportunity. Secure every agent. Secure any agent. Octa secures AI. When you own your own business, you own every decision.

Now own the card that rewards you for it. The Chase Sapphire Reserve for Business Card brings the best Sapphire Reserve benefits to business owners who expect hardworking rewards. Designed to meet the needs of business owners at scale, this pay-in-full card elevates your travel experience and offers premium benefits and value toward business services that will take your business to the next level. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits, and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges. whether you're looking for pre-flight productivity or time to rest and recharge. Chase Sapphire Reserve for Business. It's the card that gives back all you put in.

Learn more at chase.com forward slash reserve business. Chase for business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by J.P. Morgan Chase Bank, N.A., member FDIC.

You're listening to the Bloomberg Surveillance Podcast. Watch 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. What we're going to do here, which a lot of people don't know, is how did we get here? And I don't mean Kissinger sitting in the Peace Hotel in Shanghai or on the way to Beijing. And for all of us fossils, the shock of 72 in Nixon. With us, Robert Horvats, some people talk.

people do. You and Winston Lord got this going. Back then, there had to be literally like Columbus looking over the horizon. Tell us about what Winston Lord, with your assistance on economics, Ambassador, what was the Shanghai communique like to jumpstart this new Asia-U.S. Nexus? It's a great question. And I wrote a piece about it in foreign affairs to document this. the goal at that point was to try to make the relationship more normal to deal with a whole series of problems that had been built up over 25 years of no communication, no trade, no investment. And of course, the key issue on the minds of both the Chinese and the Americans

was Taiwan. And Joe N. Lai, who was the Premier of China, who was their negotiator, and Henry Kissinger, who was Nixon's negotiator, and both formidable people on their own, decided they would need some compromise language. And the Shanghai Declaration, that still is the centerpiece of China-U.S. relations on that issue, was worked out between the two of them.

And that opened the way to a building up of confidence, and then after that we came up with a few economic issues that we can use to normalize. relations to increase trade incrementally. And it built from there. But it was trust and confidence and precise planning that were critical to this and trust. Which, of course, the Trump administration is wonderful. And just because of time, and Paul wants to get in here with some real questions. I've got to ask you this. President Xi Jinping seems to venerate the pre-cho and light China. He wants to go back to Mao. He wants to go back to a more rigid, tougher China. When you see the turrets,

turmoil with their defense leaders, their generals, their admins, when you see just the clock ticking, is there any chance President Xi Jinping can pull back and become more like the China, Robert Hormantz, new? Well, I think he's, I know him quite well because I've worked with them since he was, the party secretary in Zhezong province, which was in the 90s. He's a very methodical person, and he does sort of venerate Mao, but he also realizes Mao had a number of issues that made him controversial. But there are two parts of the Mao background that are extremely important to understand.

Mao made one point that we've been bullied by the foreigners over the last hundred years, and we're not going to be bullied again. And she is very much of the view that that must be a critical part of China's strategy, to be invulnerable to bullying or pressure or leverage by the foreigners. The second is that Mao understood, and she understands, that the fall of the Soviet Union was in part because they did not have a lot of trading partners. They were confined to very few products that they produced and a very few countries to sell them to.

And he, Xi Jinping was going to make sure that China had a broad range of trading partners and had a very diversified economy and therefore could not be leveraged by the United States or anyone else. Those were really two key points that he draws from the Mal period and the fall of the Soviet Union. And let me make one other point that follows up your point, Tom, and that is if we learned anything from this summit, it is that for the first time in nearly 100 years,

the U.S. has a piece. peer competitor, a peer competitor on military issues, political issues, technology issues, and economic issues, and appear both in scale and in skill. We have, if we didn't know that before, we know it now. And Paul, David Weston had a brilliant insight. I think it was yesterday or the day before on how we, we're back in the time of Robert Hormats, and there's old new China out there as well. There is.

And but also, so the people in Washington wanted a statement or something that was clear that said we would toughen up our support for Taiwan. Right. And she wanted to make sure that that issue did not arise and that the United States did not use the summit to make any statements that were pro-Taiwan or gave Taiwan additional power in terms of at least verbal support from the United States. Trump, she wanted to avoid that. Right. That's why he made the statement very early on. Don't mess around with Taiwan.

Yeah, the first two readouts of the first day were very different. President Trump brought a plain load of American CEOs over to Beijing here. Do you think Beijing as wants to do business with the U.S. with the West here? Yes. I think that they realize that they have a need. They see a lot of companies looking for new supply chains, diversifying away from China. They want to make sure that that does not continue,

and therefore I think it was smart to bring those CEOs, and every one of them has the potential to make a deal that can actually enhance our capability, and maybe theirs. The problem is a lot of them encounter, a lot of complex difficulties on regulatory issues, intellectual property issues. So they had an opportunity to work. Oh, come on. You're killing me. Bob Horace knows I'm going to interrupt here. So we brought over a boatload of billionaires.

See, you there were, what's the shoes of the white souls? Yeah. They're all decked out in the Laura Piano shoes. Hormats would be called deninos. We didn't take Nicholas Burns. We didn't take William Burns. We didn't take Robert Hormats. We didn't take the Dictreus of James Baker out of Rice University.

Can we rebuild your work? world, it's state? Not in the way we're doing it now. If you look at the number of diplomats who Trump took over, relative to the number of CEOs he took over, the latter vastly outnumbered the former. And I think that China is a matter of building trust. And China trusts a few people who've worked on China, not that they always agree with them. But there are a lot of, there are several diplomats and Nick Burns is certainly one. I think I'm another and there's several others who have a long history with China. I think he would have done well to consult with those people and bring them over to show continuity with the China, the knowledgeable people about

China from the past. Not necessarily they agree with them, but that would be a way. I got to run. Can we do a once a month thing with you? Can your people talk to my people so we can figure out a once a month. Stay with us. More from Bloomberg's surveillance coming up after this. Let's talk about health care for a second. It doesn't always work the way people expect it to. If you've ever waited on a prescription refill or had a hard time getting the care you needed, you know the feeling. The system should just work better for everyone. That's exactly what the people at Optum are trying to do every day. They're a health care company linking patient care and pharmacy services and using data and technology to drive the whole system. So care is connected, not complicated,

for patients and providers. Things like making it easier to get care that looks at the whole person, from primary care doctors to mental health support and even in-home care, and then using technology to make sure they all work together. Technology designed to help doctors spend less time on busy work and more time with their patients. And those prescriptions, Optum is working to bring costs down, save patients money and make it easier to get refills. Little by little, Optum is helping make health care work as one for everyone. Head to business.optim.com to see how. These days, it seems like AI agents are just about everywhere you turn,

every filled and every function. But without identity, you can't trust they'll serve your business instead of jeopardizing it. Fortunately, Octa helps you get identity right by securing your AI agents' identities, giving you a single layer of control, a single, standard of trust. So whether an AI agent supports a single user or your entire enterprise, with ACTA, you'll turn risk into opportunity. Secure every agent. Secure any agent. Octa secures AI. When you own your own business, you own every decision. Now own the card that rewards you for it. The Chase Sapphire Reserve for Business Card brings the best Sapphire Reserve benefits to business

owners who expect hardworking rewards. Designed to meet the needs of business owners at scale, this pay-in-full card elevates your travel experience and offers premium benefits and value toward business services that will take your business to the next level. Fuel your business and maximize rewards with 8x points on all purchases through Chase Travel, 3x points on social media and search engine advertising, annual partnership credits, and more. Make every journey more rewarding with a $300 annual travel credit and access to a network of airport lounges, whether you're looking for pre-flight productivity or time to rest and recharge. Chase Sapphire Reserve for Business. It's the card that gives back all you put in.

Learn more at chase.com forward slash reserve business. Chase for business. Make more of what's yours. Accounts subject to credit approval. Restrictions and limitations apply. Cards are issued by J.P. Morgan Chase Bank, N.A., member FDIC.

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. We welcome all of you across America as we try to recover from China, the pomp, the circumstance. Henrietta Trays, of course, with Veda Partners, is a fab on this. And she remembers Monday, February 28, 1972. Richard Nixon got off the airplane at Andrews Air Force Base.

And it was a ginormous deal back then. That's a big deal now. And it's amazing that the core takeaway is Taiwan and not, you know, the tariffs or soybean purchases or even AI with all those CEOs on board. It's, it's Taiwan. But Lindsey Graham's going to say, I don't care about Taiwan, even though I do. What are we going to do about gerrymandering? What are we going to do about the midterms? For these midterms, is it so messed up in a Henrietta Tre's way that the new September is May?

I mean, are we just more intense and closer to the election now that we think? We are very close to the election. You're right to point out September. People vote early more now, especially since the pandemic. And people are really engaged and ready to vote. And you can see that in the swings that we're seeing in the special elections. Unfortunately, it's disproportionately in favor of Democrats right now. They're winning the special elections by an average of 12 points.

And that's because of huge democratic engagement, independent voter engagement. And there's a new polling day. out this morning that shows that voters support their party, gerrymandering the heck out of the House of Representatives. There's huge support from Republicans and Democrats to do whatever it takes. Get your guy in. So if I were at the Republican National Committee, I don't know what to do. I'd be apoplectic. I've got tariffs not polling well. I've got higher energy prices, not polling well. The Warren Iran and not polling well. What is what do the Republicans do come to these midterms?

And I think that there's going to be a real interest in seeing whether these gerrymandering efforts are going to work because the data that they're working off of was a hugely robust Republican wave in 2024 when you got majorities in the House, the Senate and the president. But now you're hemorrhaging votes with black voters, Hispanic voters, and in particular young males, and you've lost independence precisely because of the reasons that you just listed. It's inflation, it's energy costs. Voters didn't like the tariffs and they didn't like the developments and the killings in Minnesota. and they absolutely hate the fact that they're paying more for gas right now. That being said, I'm not seeing anything out of the Democrats. I thought I'd seeing some voices just come pop up and say, this is my time. I mean, these guys, the Republicans are really at risk.

I'm going to pop up out of, you know, anywhere around the country and say, I'm the voice of the Democrats. I'm not seeing that. No, definitely not. And you have individual states where there's a member that can really pipe up, I would say, Mary Peltola in Alaska, James Talarico, and Texas. there's some interest, obviously, in Maine, but you're absolutely right. There's still a even less popular than Republicans as Democrats. In studio on a Friday, Henry out of Trays Veda Partners as well.

So paint this picture for us and give us your wonderful perspective. Mr. Jim Clyburn of the Carolinas, I guess, is protected from gerrymandering. The Black Caucus isn't. Does the Black Caucus go away? Does it become an artifact of the 1960s? Well, I don't know that Jim Clyburn's seat is necessarily going to be safe. I mean, South Carolina is thinking about what they want to do in terms of gerrymandering. And the response, you can see it across the country. I mean, I live in Louisiana, and they just wiped out two seats in Louisiana as well from both black representatives. It's a very heavy lift.

And it's happening right when they had been making gains with black voters. You know, you see 30% approval ratings in the conference. that won a vote, and that's a huge win amongst black voters. Let me not mince words. The tweet of the day yesterday was Gita Gopanath, Harvard, who put out the photo with a blistering note on how it was all-male in China. Everybody looked the same on the right side of the table as a stereotype. Everybody looked the same on the left side of table.

Are we going back to an all-white Congress? That's definitely the direction that you're seeing, especially on the House side. The Senate at least has... Guy I met as Congress is the House. Yeah. The House side is definitely moving away from anything that looks like a voting rights act, you know, the reason that we passed it. And that's been wiped out now. So I'm not sure if Congress is back in session because every time I talk to you, you're telling me they're either in recess or going on recess. She's working like a three-day work.

Exactly. What's on the to-do list for our Congress these days? That's a great question. And I think it provides a lot of direction about how long the street's going to be closed, what lawmakers are actually thinking. There are two bills that I would concentrate on right now. The first is the authorization of military force. There's a bill that's introduced that will allow the president to perpetuate the war through September 1st. That's the shortest version.

The longest one is Thom Tillis, which is a year. And then even more telling is the gas tax holiday. They don't have the votes for it. But in order to understand how long they think gas prices are going to be high, note that they give the president through December 15th of 2026 to suspend the gas tax. Can I do a Friday audible poll? Sure. I was talking to somebody up in a food court yesterday.

I was, you know, I think it was a mojito. Yeah, something like that. And here was his zeitgeist. Marco Rubio's going to step away after the midterms. Scott Bessent will become Secretary of State preparing to be vice president under President Marco Rubio. Are animals like you in Washington actually thinking things like that? Well, animals like me have to think about it because animals like hedge funds, have to think about it. And they definitely ask me this question all the time. Are they thinking about

those things? The question is, is it going to be JD Vance at the top of the ticket or Marco Rubio, the way that I think about it, and I'm a veteran of New Jersey politics? So we go after whoever is the least unpopular. And Marco Rubio is substantially less unpopular than JD Vance right now. I think it's about 12 points. So in the parlor game of who's at the top, I think Marco Rubio for sure. Can he raise money? Oh, absolutely. No question. From the Florida. Republican juggernaut that exists now, I think absolutely. Well, get one more here. Something more smarter than what I do is.

The midterms coming up, again, I think the consensus was building that the Democrats would have a chance to really get control of the House, maybe even the Senate. That has that changed with some of these gerrymandering or redistricting rulings? My odds are still very high. The Democrats take the House. I'm, you know, at 90% or so. The margin is going to be much smaller. So if you thought maybe Democrats with a six point average.

in the generic polling would pick up maybe 25, 30 seats due to gerrymandering. It's more like 8 to 15 at the most now. So they're still in the chamber, but it won't be by a huge majority like we saw in 2018 or 2021. Is the president maybe on campaign trail in these midterms, do you think? I mean, theoretically, he was supposed to turn to the campaign trail and affordability back in January. What I hear from Senate Republicans is that they want the president on the trail come June.

So that's coming right up. So like you're in New York. So like you have lunch with hedge funds, after lunch with hedge funds, dinner with hedge funds. All day, every day. What's the number one question they ask quickly? Right now it's on energy prices. Right now it's on $108 a barrel. Exactly.

We talk a lot about the fiscal situation, though. Debt and deficit. When is the bond market going to care? Are yields going up because of the American debt and deficit? I think so. Yeah, there's attention. It's not at a fever pitch yet, not enough to make lawmakers do anything about it. I got headlines.

I've got to go to. Henrietta's more important than the headlines, but Henry, enough thank you on behalf of Team Surveillance. Thank you for all of your wonderful at work today. 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 IHeart Radio app, tune in, and the Bloomberg business app. You can also watch us live every weekday on YouTube. and always on the Bloomberg Terminal.

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