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We're going to look at a a spread right

now of the market in terms of asset

allocation and tone of a given house.

This would be JP Morgan. Madison Fowler

joins us, global investment strategist

JP Morgan private bank uh this morning.

Madison, what have you adjusted? How

many days are we into the war, Paul?

>> 31, I believe. Right.

>> Madison, 32.

>> What has the bank the private bank

adjusted over 32 days?

>> Good morning. Um, so I I I do want to be

clear that heading into 2026, we did

have an outlook centered on upon three

predominant themes, which were global

fragmentation, a shift towards

structurally higher inflation, and the

proliferation of AI. And I think so far

this year, these themes are very much

accelerating, and markets are working to

price in all three at once. So in my

mind when I go back to that beginning of

the year outlook which was focused on

both promise for investors and also the

pressure points and the challenges um

that thesis hasn't changed. I think the

urgency has so of course there are

challenges and we are stress testing our

base case outlook but I think under the

assumption that you know we do see a

deescalation within within um you know

oil markets and even if we do let's say

move to a higher average of call it $80

a barrel over the next three to six

months um if we do continue to see a

recovery from there we do think that's

still a benign you know impact for both

growth and inflation and still a

constructive one for risk assets

>> on the bond market here um fixed income

market. We're looking at the 10-year

Treasury. Uh you know, yields have have

come in here a little bit, but we're

still in that trading range kind of 375

to 4.5%. What's your fixed income call

here today? How much credit risk should

do you think investors should be taking

in this environment?

>> So, when it comes to fixed income, I

think there's a really uh compelling

entry point specifically on the shorter

end of the curve. So, think one to five

years in. Um I think you know when we

look at how investors have been

responding to to this conflict we have

seen a rebuilding of cash positions um

selling stocks, bonds and gold all at

once. Um and to your point rates have

surged even if they have come back a

little bit over the course of the last

24 hours. Um especially on the front end

um and that's been predominantly around

inflation risk and we think that's an

opportunity to lock in elevated levels

of of yield. So we do think that the

market may have gone too far in that

initial repricing. um we don't think

this is long-term inflation expectations

are still anchored and so I think bond

markets are are underestimating you know

some of some of this

>> I think I know what you're going to say

about the duration of a conflict a war

the press conference again coming up

folks in less than an hour with the

secretary of defense Madison on a really

on a private bank global basis what are

you hearing from your clients what's the

actual granular mood out there among JP

Morgan investors who choose to place

their money with your private bank.

I think broadly speaking there there is

a degree of worry especially as we you

know continue to move forward in this

conflict the longer it lasts um the

greater the duration the greater the

impact on you know the economy and

markets broadly and so I do think that

when we're looking and speaking with our

client base there is a degree of of

hesitancy um in terms of you know how

how to participate in a market like this

uh we came into the year very much

focused on portfolio resilience and uh

bolstering port uh portfolios with

assets and strategies that we felt could

uh you know provide a degree of um

resiliency through cycles. And so when

we're speaking with our clients today, I

think we're also talking about managing

through this volatility and taking

advantage of some of these um uh you

know swings that we're seeing in

markets. And that could, you know, range

from, you know, a more bullish client

that's looking to, you know, dip into

some of these high conviction sectors

that we have, whether that be, you know,

technology, industrials, financials that

have pulled back a bit. um or you know

thinking through strategies that can

actually play that volatility like

structured nodes or like hedge funds um

to navigate through this this period of

time.

>> Madison, what do you think about gold

here? We had it surging above $5,000 an

ounce. Now we've pulled back here to

4500. Not really sure how investors are

viewing uh gold at this moment.

>> A lot of investors are, you know,

frustrated about gold. It's pulled back

over 15% um from its highs. has been a

combination um of a result of you know

stronger dollar higher rates some profit

taking uh but what I would really stress

is that gold is not meant to be a point

in time hedge uh we view this as a you

know it as a diversifier for the bigger

picture structural risks so higher

deficits a world that is gradually you

know fragmenting those factors haven't

gone away if anything they are

accelerating um so we do have conviction

um

from here Um, and so I do think it's

really important to keep that in mind.

And so even if we have nudged our uh

base case outlook down from north of

6,000 to, you know, the high 5,000s,

that's still 20% upside from here.

>> Madison, thank you so much. Really,

really appreciate uh your efforts.

Madison Fer with JP Morgan Private Bank.

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 10:00 a.m.

Eastern.

>> Listen on Apple CarPlay and Android Auto

with the Bloomberg Business App or watch

us live on YouTube.

>> Andrew Slimman joins us right now with

uh Morgan Stanley here just to

recalibrate and reset. Andrew, uh, we

have seen this before where there is a

corrective type event. Is this one

different than the other 42 you've

witnessed in your career?

>> 42 is exactly right, Tom. Look, yeah,

it's different because the narrative is

different, but the narrative was

different last year, the tariffs, but it

caused a correction. And I'm not sure

we'll have a 19% correction, but I just

feel like we started this year with a

lot of optimism on Wall Street, which is

classic late cycle, just as we did last

year, and the tariffs came along and

washed away a lot of that optimism. And

now, you know, we have three narratives:

AI disruption, private credit concerns,

and more. And uh will one of those cause

the same type of correction? No. But I

think it's washing out some of that

excessive optimism and I think that's

healthy.

>> Paul, I just noticed this buried in the

Bloomberg launchpad. The 10-year

inflation adjusted yield has driven

under a 2% to a 1.9 handle. Paul, that's

a big deal of the shift in the last oh,

I'll call it 72 hours.

>> 72 hours. Uh Andrew, are you surprised

that the S&P is not down more than 7%.

>> I am. And I think Paul, one of the

reasons for that is that a lot of people

really got burned last year by turning

bearish uh on the market. Now, sentiment

has really washed out and we've had a

lot of, you know, bad days and the

market really, you know, really even

into this correction wasn't really

higher than it was last fall. So uh but

but I think I think it has a lot to do

with the fact that uh Wall Street is is

very hesitant about turning negative

after doing that last year and you know

being being wrong.

So prior to the war here uh Andrew we

had a profound rotation taking place in

the markets maybe out of some of the uh

more growthier higher multiple uh

sectors of the market into maybe more um

lower valuation maybe a little bit more

cyclical smaller midcaps were actually

getting a little bit of a move there.

How do you think about that rotation

given what's happened?

>> Let me ask you a question Paul.

>> Sure. Would the would a recession be

around the corner if the market was

pivoting into value smaller cap stocks?

The market is screaming to you that all

these problems will not cause an

economic downturn. We're not seeing the

market, you know, consumer staples,

healthcare, they're not outperforming.

They always outperform before downturn.

Financials uh aren't getting killed.

They usually get killed right in front

of a economic downturn. the market is

saying we might be a little bit more

worried about inflation uh but we don't

think it's a uh economic commentary.

>> So, you know, the earnings out there

still look pretty strong. We'll start

hearing from uh the companies in a

couple of weeks, but I mean earnings

have been pretty strong. Are they strong

enough to kind of forge through uh some

of the uncertainty that maybe is a black

swan event like a a war? I I think

that's another reason Paul why uh the

market isn't trading off is because

basically for the last four quarters the

market has beaten estimates and Wall

Street's been forced to raise and I

think that's going to happen uh again

the only com the only question will be

will the commentary be cautious enough

that you know people will look through

it look right now there's a real great o

in my opinion a great opportunity in the

market which is companies with the

strongest earnings revisions haven't

necessarily done the best because

there's a multiple, you know, macro

stories out there that are causing

unease. So, you know, whether it's again

AI disruption or the war, private credit

issues, the market is focusing on macro,

not the micro and that's that could be a

great setup going into quarterly

earnings. Andrew Slimman with his head

of applied equity advisors, Morgan

Stanley with decades of experience.

Well, into the quarterly report. Um, you

know, I noticed Andrew UBS head out. It

happened to be on luxury stocks and they

said, you know what, our channel checks

are it's pretty good. What's the Andrew

uh slim and channel check look right

look like right now into another double

digit earnings growth.

>> Well, I think it's it's strong. I would,

you know, as it pertains to retail, look

at the the real strong stocks or the

luxury stocks are in the toilet. It's

the it's the gray down uh stocks. Uh

they are doing very very well. So I

think I'm not sure it's a comment on you

know the K economy is not as bad as

people think. I think people are grading

down uh in their retail. So I'm I'm

pretty optimistic on on the quarterly

earnings. I think you stick with what's

working. I see uh I'm changing my tune

in terms of I think these mega cap tech

stocks. They've been creamed and I think

they're going to all come in with good

numbers and the multiples are very very

cheap. So I think the market we need the

market to get back to focusing on

fundamentals and when they do I think

the groups that have worked the last

year or so financials tech industrials I

think they'll come they'll come back.

Andrew, it doesn't seem like the Fed's

going to lend a hand here this year. I'm

looking at the WP function and the

market's kind of not looking for any

rate cuts, not looking for any rate

hikes on on the other hand, but is is

that okay for this market?

>> Yeah. I mean again I

doubt the the Fed will be raising rates

but I think you know one of the reasons

why I think the war is going to be short

is you know how in the heck are you

going to get a a Fed rate cut which the

president wants if oil's at these

levels. So uh you know I I I think the

market can survive. It would do a lot

better if we were to get a rate cut at

some point in in the future. But, you

know, keep in mind the midterm year is

never all that great a year till after

the midterms and uh then it is a very

powerful next 12 months post the

midterms. I wouldn't be surprised we see

the setup yet again.

>> Andrew, too much optimism. Go away.

Andrew Slimman with us. Morgan Stanley.

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 10:00 a.m.

Eastern.

>> Listen on Apple CarPlay and Android Auto

with the Bloomberg Business App or watch

us live on YouTube.

>> Lindsay Newman is shockingly expert at

thinking about the war. The the the

resume, I won't go into it just because

of time, but just extraordinary.

geopolitical risk expert at GZero Media

and of course always affiliated with

King's College. They are definitive in

London in the study of war. Lindsay,

you've got a single sentence

in your report on the president. He has

squared these ideals with a pathway to

peace through war. I think we all see

that. Is that original or is Mr. Trump,

President Trump repeating a history?

Thanks Tom for having me on. I you know

he started his administration the second

term saying that he visions himself as

the peacemaker and unifiar that's going

to be his greatest legacy. That was from

his inaugural address. We all know of

course that he has these incredible

ambitions around the Nobel Peace Prize

long-standing ambitions. And you know,

one of the questions I get asked most is

how could Trump have run a campaign on

ending forever wars and being this

peacemaker and unifier and yet find

himself throughout the world really, not

just in Iran, but of course what we're

watching right now is Iran pursuing

force and force posturing. How do you

square that? And I I truly think that he

envisions the way through to lasting

peace in the Middle East, a rewriting of

Middle East history is through this uh

Operation Epic Fury that they have been

pursuing for the last 5 weeks.

>> Uh Dr. Newman, if if President Trump

were your client, what would you tell

him here about how to proceed from here?

>> Well, what I tell him first is you are

confusing everybody and nobody knows

what's coming next and everybody wants

to know what are the offramps. Are we

going to see an off-ramp in the four to

six week window that the US

administration had initially anticipated

or is there some slippage in the

timeline? Look, what I would say is that

he has now uh owned the war in Iran and

the idea that we're hearing the

overnight that the US could actually

leave the region without u pursuing some

sort of reestablishment of deterrence in

the straight of Hormuz is not really

feasible. Um in a sense they broke it,

they bought it. We need to resolve this

conflict now because the idea that uh

the Middle East and the rest of the

world will now have to face uh rising

energy prices, energy costs, uh supply

chain disruption, and it's not just to

oil and energy. Uh although we know

overnight that gas pumps at home are now

$4 a gallon. Uh but it's also to

aluminum as well as helium. So these are

these are actually um components that

Trump himself should be caring about.

It's to that AI revolution that's

happening. So the idea here is they have

to reestablish some sort of deterrence

over the straight of Hormuse. Whether

that is a blockade of Car Island, an

invasion of Car Island, something more

uh military intensive. Uh in a in a

sense, this is this is the states that

that are now here. And there are this is

the zone of risk because those

operations are all incredibly incredibly

risky and would involve potential loss

of life.

>> So Dr. Dr. Newman, just even by the

tweet this morning from President Trump

about uh talking to other European

countries about, hey, if you need if you

have jet fuel shortages, that's your

problem. We've done the heavy lifting in

Iran. We've uh you know, decimated their

military, taken out their leadership. Um

if you need energy out of the straits,

you got to either deal with it yourself

or come take it. That suggests that

maybe he's laying the groundwork for

maybe pulling back from that part of the

world and letting the world figure out

how to deal with the straight of horror

movies. Is that a potential takeaway?

That is certainly what the message is

being relayed today. He's saying, "Look,

you can buy it from the US or go take it

yourself. It's an easy job now because

we have now hit 11,000 targets within

Iran itself." That that's not really um

sort of the endgame here, the of this of

the statement. It is sort of the the

pretext, but you know, I think we need

to dig in a little bit more. Trump is

trying to pressure Europe and pressure

the region itself to get more involved

to support any any mission, any

operation that remains to reestablish

deterrence over the over the region. Um

but again the issue is that they can't

you know to leave it to leave a straight

of hormuz as it currently stands is just

a status quo that means signals the

world that Iran has the potential to be

a more volatile a more impactful actor

after this conflict than it was before

the conflict itself despite all of the

personnel changes and all the strikes

and the reduction in drone missile

capabilities and production that's

happened in Iran. Uh Lindseay Newman

with us and we continue. Geopolitical

risk expert, GZERO Media, visiting

research fellow, King's College, barely

describes her holistic ability of law

and war and a study of uh these

conflicts. Uh she joins us now before

the press conference of uh Secretary of

Defense Hexith uh here uh in a bit top

of the hour for that about 15 minutes

away. Uh, Professor Newman, I I I look

at where we are and I do think, you

know, and it's part of my act is to know

the history, but I I want to know the

emotional linkages of, say, an ally, the

United Kingdom, who the president went

after this morning. I assume the

president's not aware of the crucial

states. I assume he's not aware of this

real lovehate relationship of the

British Empire with the Persian Gulf and

the Arab tribes. How attached is the

United Kingdom to assisting the United

Arab Emirates?

>> The UK is really, you know, what you're

pointing to, Tom, which is quite

interesting and doesn't get highlighted

enough is how much of geopolitics is

actually affected not just by foreign

policy, but also about domestic

politics. And there is just not an

appetite right now within the UK to get

involved in this conflict. And we know

that the government itself is facing its

own various financial fiscal issues here

in the UK. And so, you know, the idea

that the UK is just going to throw their

hat in quite quite uh sort of robustly

towards supporting any sort of

operation. Um, you know, we've seen the

writing on the wall from the very

beginning. Kier Stormer did not want to

allow the US military to re to redeploy

from Diego Garcia and then interestingly

enough Diego Garcia became a target of

Iran action. This is a clear signal um

from the UK government of how hesitant

that they are in getting involved even

even if they too want to see the

straight of reopen. um like regional

states, you know, we're hearing behind

the scenes these act, you know, these

regional leaders are pushing the US to

remain involved to continue to finish

the job in in Trump's language. Um but

they too are not yet at the position

where they are willing to put um sort of

their own resources behind it.

>> Uh Dr. Newman, it seems like perhaps in

one scenario, Iran is even has stronger

now than it was before the war in terms

of having influence on the straight of

horses. Um how does that get resolved?

Yeah, I mean I absolutely agree with

that Paul in the sense that this

conflict Iran's strategy throughout this

conflict has been to deploy horizontal

escalation to make this conflict not

just Iran's problem but to make the

conflict the region's problem. So it's

in a way in it has leveraged this

massive asymmetry and might and

capabilities to its advantage um quite

effectively and what that means now is

that Iran has learned some key lessons

in this conflict right to to how to be

sustainable how to stay in the conflict

and so to in order to um if this

conflict were to end today as I said the

status quo is not sustainable because

Iran has learned that it's potentially

can subject all of the regional states

and the world to the it going forward.

>> Lindsay, I read very carefully Robert D.

Kaplan, my book of the summer three,

four summers ago, The Loom of Time, this

changeable path from Morocco over to

Persia. And Robert D. Kaplan talks about

America's affinity for middle wars, not

little wars, not world wars, but

middlesize wars. How does a sec

secretary defense prosecute a sort of

kind of like middle war? Yeah, I have

not read that one. Of course, I've heard

about a lot of conversation around the

middle concept. I mean, we're expecting

in the next few minutes that we're going

to hear from Secretary Hexath as well as

Joint Chiefs Kaine. And what they're

going to tell us is that the objectives

that the US administration set forth a

couple weeks ago, which were to degrade

Iran's naval, missile, and nuclear

capabilities, as well as its leadership

structure, that job has been done.

That's what they're going to tell us.

Um, we know that the US has struck more

than 11,000 sites across Iran. That 90%

of drone and missiles leaving Iran have

now have come down. That 2/3 of Iran's

production capabilities have now been

hit. Um, and so from that from that

vantage point, uh, they're going to be

telling the US public and the world that

this operation Epic Fury has been

successful. It has achieved many of its

aims. The issue though, Tom, is that

this has been an incredibly costly

conflict for the US administration. We

know that uh there has been a request

for perhaps an additional 200 billion in

funding. We know that there is this

budget that's coming forward with a

defensive budget that could be up to 1.5

trillion ask from President Trump. And

the US administration is now facing a

position where it's wondering you know

do we finish quote unquote finish the

job as Trump has said which according to

Trump would involve uh taking back the

straight of Hormuz it would be going in

and getting the quote nuclear dust that

enriched uranium from deep within Iran

or does it is it unwilling to pay

further cost here because gas is at the

pumps $4. uh we know that threearters of

Americans already think that you know

the US is too involved in the conflict

in Iran. So the US is trying to battle

these these counterpoints about where do

they go forward. So I fully expect that

he and Kane will say look we've done

what we came to do. Um but the reality

is everybody's feeling it in the

wallets. Everybody's watching Brent

crude grow up go up um and wondering

about uh those other supply chain

impacts

>> to the extent uh Dr. Newman that the US

does at some point look to pull back

here. Is there any way that the world

can work with Iran in opening the

straight of four moves or is it simply

Iran's decision to make?

>> Yeah, I mean look, I wish I had the

answer to that. I wish I could pick out

my crystal ball right now. Um I felt

like that quite a bit over the last

couple of days. It's very hard to see

the way forward for Iran when it went

after neutral actors in the region um

that were sitting by not involved in the

conflict. You know, Europe has taken as

we discussed earlier strategic decision

not really to get involved in any in

concrete way. The Gulf States the same

and yet Iran went after those Gulf

states, those those regional um actors

uh and that has been the strategy. So

the idea that you can put this back into

Pandora's box and forget, you know, that

your neighbor wanted you dead is very

hard to anticipate. It has affected not

just global markets, but it will affect

it will have on how uh investors and

investment view the Middle East region

and how quickly they're willing to

continue to put uh you know uh invest in

their money and their personnel building

these capabilities over there.

>> I want to try to get this uh in uh uh

professor as I can. We may have to go to

the press conferences. They're so

punctual. You'd think they were in the

military. Um, and with with respect to

our service men and women, uh, Lindsay,

I look at the headline out now.

>> USIsrael air strike hits Iran's Keshum

Island in the Homer Straight. This is

directly north of the narrowest part of

the straight, buttressed right up

against Iran. I'm measuring it 100 miles

from Dubai. This is getting heated,

isn't it? into this press conference.

Professor, this is getting heated, isn't

it?

>> Yeah, I I agree with you, Tom. I think

that we're more likely in an escalatory

pathway still before we stumble upon an

offramp. Keshum Island is one of those

uh locations that the US administration

has considered taking invading. I will

say really important to note unlike Car

Island, Keshum Island is vast. It is

1500 km. Keshum Island is only about 40.

So the idea of holding and invading

Keshum Island uh which as you said is

strategically important uh that is an

incredibly uh complex and costly uh

operation that the US would be pursuing.

>> I would mention it is a UNESCO world

site folks with geog geology I should

say that looks more like Mars than

America. That's the tourist uh selling

point but of course today it's not

tourism. Paul try to get one more

question in with Lindseay Newman.

>> Doc Dr. Newman. Do we know how Israel

plans to behave over the coming days and

weeks to the extent that the US looks to

step maybe down a little bit?

>> Yeah, I think this is something that not

enough people are focused on. We know

that from the beginning of this conflict

there has been a distribution of uh sort

of ambitions and goals and objectives

here. The US has been pursuing degrading

those major programs from Iran and

Israel has been tasked with degrading

the regime, the re regime structure and

personnel. Um there is not a lot of

attention on what does it mean if the US

does fully pull back as you're saying

here does that mean that Israel also

pulls back given that they have

different objectives given that Iran is

perceived as an existential threat for

to Israel from within the Israeli

government. I would expect that there

would be some consequent rampdown as

well but I wouldn't expect that it would

be a total uh there going to move

completely in parallel completely in

tandem.

>> Lindsay thank you so much. Dr. Dr.

Newman is geopolitical risk expert,

GZERO Media, visiting research fellow at

King's College. Can't state enough uh

the value.

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 10:00 a.m.

Eastern. Listen on Apple CarPlay and

Android Auto with the Bloomberg Business

App or watch us live on YouTube.

>> You know, Meredith Whitney walks in the

studio and you know, I'm trying to keep

up. She's with Whitney Advisory Group. I

definitive within the study of finance.

She starts talking Schroigger equations.

>> Oh boy.

>> I mean, we're talking quantum mechanics

with Meredith Whitney, which is the way

you roll. And so, I'm looking here. I'm

trying to catch up here and I'm looking

at the partial derivative with respect

to time which sigues perfectly into

Meredith Whitney on how a CEO of a major

bank handles the partial derivative with

respect to time and knows when to exit.

What do you presume

Mr. Moyahan or Mr. Diamond will do to

know when to exit?

>> Exit what? Okay, this is now we're

getting Witkinstein in here. Exit what?

Exit the bank job.

>> Oh. Oh. Oh, excuse me. Um, I think Jamie

loves his his job so much.

>> Agreed.

>> I would expect Moahan to leave sooner

than Jamie.

>> Really?

>> Um, but you know, Moan's done a great

job, but he's got like he's got a he's

got clear successors. It's unclear who

Jaime's successors will be, even though

he's got an incredible bench. But with

all of your, you know, bench building

and I know all the Harvard Sonnenberg's

out with a book on Trump now, the Yale

CEO chitchat. You've lived this. How do

you succeed at a major bank where you

have 20 direct reports?

>> Well, it's, you know, it's a lot of ego.

It's a lot of, you know, you can stay.

Both of them have the support of the

board. And I think that the stock, you

know, JP Morgan's stock is heavily tied

to Jaime Diamond. So that there's a risk

there. So the the theory is that when he

leaves, there's a risk um to the stock,

right? The there's a a premium risk to

the stock.

>> When President Trump came into office

for the second time here, the one of the

sectors that was thought to be a real

beneficiary would be the large financial

institutions, the banks. Has that in

fact been the case? And and what are you

expecting going forward? maybe

>> it was until it wasn't right. So, um

the remarkably read the regulatory

environment has changed and I would say

the SEC is open for business but not

open for enforcement because it's been

gutted um with Doge and anybody who

could leave and get another job at the

SEC did and so they're really that like

they're really short staffed there. So I

I think that what Mickey Bowman did

recently is take all the sub

subjectivity out of the bank ratings,

right? There was a ton of subjectivity

too to it. So there's going to be

regulatory relief. There'll be

consolidation, but nobody wants to

consolidate when your stock is, you

know, 20 30% down. So there there will

be consolidation. I don't think it's

been it certainly been a horrible time

for um anyone the non-bank financials

that are down 40 40%. But um look, the

high volatility will mean the trading

desks do very well. If there's the big

risk here is if the um SpaceX IPO does

not do well, I think the IPO market's

closed for a very long time.

>> Side can we make this a three-hour

conversation? Just, you know, continue,

Paul. I mean, it's just

>> SpaceX IPO would I mean, it should be a

moonshot to use a bad analogy there,

shouldn't it?

>> You would think so, right? You would

think so. I it just any anything goes in

this market,

>> right? So, I mean, so when you're

talking to your clients about the big

banks, what are the what's the key thing

they need to they're asking you these

days?

>> I they're not asking, they're just

saying they don't they don't want to be

caught out of their way. So, the uh most

of my clients are very bearish, maybe

very bearish, um because they weigh all

of the the factors in the market and

just think this is going to be a long

jump. And um the midterm elections I

think throw a big risk into the market

because the Save Act is not going to go

through. Most people don't have

passports. They can't show a passport at

registration and it gives the

administration a big um a a big if like

oh the elections were rigged. Like

that's not good for the markets, right?

So aside from the straight of hormos,

there's a lot of risk that will be

factored into the market. But what

clients are worried about is getting

caught on the short side. So clients

don't have short positions and they've

they've de um they

>> delever me here for too short a visit

this morning. Dow up 460 points. U Brent

crude 11845.

So you know I I I look at this Meredith

I remember going to your suare once. She

she had the best wine. Everybody else

was serving Mogan David or Gallow or

something. She's serving some vintage.

That's how I got you to come from

vintage wine. And you know you've been

in a piñata. Oh, Meredith got this

wrong. Meredith got this right. Visa

home run. Straight moonshot. Whatever

the time frame. Where's the next

Meredith Whitney Visa that will show me

persistency of cash flow around concept?

>> I still don't think Rocket Right.

Rocket's down. Oh jeez. Rocket's just

been, you know, taken out with the uh

you know, it's down what 30% this year.

>> Why is it a Visa equivalent? because I

think it is a market disruptor. So you

have banks who do not want to be in the

mortgage space and banks that cannot be

in the mortgage space on an effective

basis because they don't have the

digital presence, right? They've

deemphasized it for so long. So it

becomes an issue of technology and

execution. Um banks don't from a home

equity standpoint, you know, uh uh

Rockets home equity closed down home

equity originations already are up 20%

year-over-year. Last year they were up

tremendously. they can execute a um a

home equity loan, a closed down home

equity loan in a matter of days. It

takes a bank a month at least. And the

fastest growing loan product within

consumer finance is home equity. Credit

card lending, which is really

interesting this cycle um is

decelerating in terms of growth. And so

it's growing at a slower pace than

inflation. And if a and the available

unused lines are at the close to$5

trillion dollars, what does that say

about the consumer? So, it says that

there's plenty of liquidity for the

consumer. The consumer's really not

stretched. I think that the um I think

the I think this economy is going to

hold in better than expected. I know

that's a little bit of a segue, but um

you're not going to see, you know,

credit losses. You're not going to see

the fundamentals are a lot better than

people seem, but I'm a big fan of rocket

over the next several years.

>> All right. So, that means you must have

a view of the US home market here.

How is the US residential home market

these days? Cuz interest rates are

moving back higher again. That can't be

good.

>> Um, well, a couple things are going on.

So, two 2025 was the slowest home market

in terms of sales

>> since on record. So, over 25 years. And

2026 is going to be just like that

because most importantly, people aren't

selling. So, people are most old people

over 60 own over 60% of homes. They're

not selling. And the more people tap

into the equity in their homes means

they don't have to sell. So you're just

going to be stuck in a a gummed up

market. And I also think that let's look

at the American dream. The key owner,

you know, first-time buyers between 35

and 44, home ownership rate has dropped

like a stone. Maybe they don't want to.

>> I got to get this in. You don't remember

this. You're too young. There was a

thing called Persian Gulf War. It was

25, 30 years ago. You weren't in the

game then. Okay. So we got a war going

on now. We got the distraction of all

this news and that how opportunistic is

that for Meredith Whitney and investing?

>> Well, I think people need a lot of

advice. I, you know, the first couple

weeks were very confusing. I I just, you

know, you don't want to catch a falling

knife, but now I think what is clear is

it's accelerated. A lot of things were

on the were on the table before, like

uranium stocks are down um, you know, 20

plus%. Like uranium is a no-brainer

here, right? It's been a I it's been a

great investment over the last several

years. Um I think that you follow the

money. Um a lot of investment is going

to go into getting around Straight of

Hormuz. So I've put a lot of research

into the middle corridor. So like there

there's a lot there's a lot to do here.

>> We've got to run. Please come back.

Don't be a stranger. Meredith Whitney

there talking up rocket.

>> 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 10:00 a.m.

Eastern.

>> Listen on Apple CarPlay and Android Auto

with the Bloomberg business app or watch

us live on YouTube.

>> Joining us now, Eric Fine, head of

Active EM Debt at Van Funds. And it

directly touches your family, right?

>> Yeah, I'm surprised you mentioned that.

I don't I don't know how you knew about

that.

>> It was spiritual when I was there.

>> My father worked for MacArthur for eight

years during the occupation of Japan um

as a the PhD economist. That was fairly

unusual at that point. And so yeah, I

know grew up with

>> hugely unusual and viscerally it gives

you your expertise across the Pacific

Rim. What does to you, not that it's em,

but what does the new Japan look like

with a shattered LDP and perhaps a more

conservative stance?

>> Interesting. I wasn't expecting a

question on Japan, but but um

>> it's an it's on this show. It's an

emerging market.

>> Yes, that I would agree with. Um the

countries that are the most em like or

highly indebted, Japan, UK, put US in

that camp. what my father told me when I

was growing up was that um one uh don't

credit the US for Japan's success as

much as you should credit uh number one

nationalism right in the US it has

generally negative conduct and female

education of course right that's you

know transformative um for a country um

he uh and he also said that the politics

always were not so much designed

although maybe um to suppress the basic

tendency which is nationalistic. So I

think that's a not unreasonable

conclusion.

>> Bring it forward. I one more question

and Paul wants to begin the interview.

One more question then. What will your

em

what will your EM in the Pacific Rim

bounce off of as they not only look to

Japan but now have to look to a China

radically different from your father's

tenure?

>> They're going to look to China. Uh they

already are. Most of my countries, not

just in Asia, but around the world,

other than basically Poland and uh

Mexico, trade more with China than they

do with the US. And what do they see as

far as I'm concerned? They see the FX.

The FX is stable to stronger, which is a

tailwind or a stabilizing factor for

them. So now, you can like that or

dislike it. That's not my job. My job is

to acknowledge it and, you know, invest

around that. But I would say that's the

biggest fact is that you know the dollar

is not going to lose its reserve status

but it could or should share it with

other deserving currencies and CNY

definitely wants to fill that role and

is slowly filling it. So I think that's

the big feature um in in Asia that's

very very different.

>> So what is the 30,000 foot call on

emerging markets here? Had a seems like

it had a nice run in 2025 partially due

to weakness in the US dollar. What's the

call right now?

>> The call is that the what's been

happening for the last 20 plus years

will continue. EM bonds, volatility

adjusted, have done better than DM

bonds. Bonds overall may have been

unexciting, but EM always did better.

Um, and that's continuing. The

straightest answer I always give is

we're most likely return our carry. Our

carry, our coupons divided by our prices

around seven. developed market bonds,

you're in the four to five range. And

some of my countries have really low

inflation, lower than the US. Malaysia's

at 1%, China's arguably one to

deflation. Um, so on their local markets

are getting a high real yield. And so

that's a good default answer. Last year

there was an explosion of interest. So

we got our carry, the currencies

rallied, and the spreads did a little

better. But um uh I think you should

expect them to continue to outperform DM

bonds because that's where the unpriced

problems are.

>> What's the EM world? How does the EM

world react to a hot war in the Middle

East?

>> Uh it depends. And the general answer is

for DM it's largely a quote unquote risk

uh via inflation essentially whereas for

EM there are plenty of winners. Um, most

of my countries in our benchmark are are

commodity exporters. And what's the big

one that isn't? China. Well, it's still

a net exporter, right? It's a it runs

current account and trade surpluses. And

so, um, uh, it's a story of many

excellent opportunities. basically all

of Latin America which is a big chunk of

our benchmark and all of subsaharan

Africa are winners is replacing um or

benefiting at least from the price or in

a longer term potentially replacing at

least Russia and others as Europe's

major supplier

>> still to bring you this morning across

America and around the world Eric Fine

head of active EM debt advanc funds

predigious abilities on emerging markets

and how they tie in uh to total return

futures up 70 earlier off the Trump

tweet, now up 62. The VIX in a full two

sticks, 28.62.

A better tape. Uh this morning we are 28

minutes away from a scheduled press

conference with the Secretary of Defense

from uh the Pentagon. I don't talk

enough about Eastern Europe. Greece was

a miracle recovery. Poland is maybe even

more so a miracle recovery adjacent to a

full-scale war. an update on the

e-midness of that's a new word emidness

of uh Eastern Europe.

>> Yeah, great framing. Um the center of

gravity's moved east. Um Poland is the

center of certainly US strategic

thinking and economic

heft. Um nuclear power plants are being

built. It's become the center of defense

industry, both manufacturing and

logistics. Romania is more about

logistics. just since you started the

the conversation. So, interestingly,

those were the kinds of things that

ended up developing Korea way more.

Is this a nent South Korea? I'm making

the number up, folks. Help me here.

1958.

>> Absolutely. I don't see why not. Um, and

it's certainly a relative uh it's in a

relatively strong position relative to

the rest of Europe. It's been able to

tolerate higher levels of debt. Now

we're generally it's not our first place

in this environment in general with

rising commodity prices but it's a

winner. Hungary's arguably a winner as

well. Both of them though have really

reasonably good central bank attitudes

compared to the developed markets though

none of the central banks really wake up

in the morning and think it's their job

to get the stock market up. Um so all of

my countries generally have that. Um

they're you know they're okay that way.

I mean, he's so I don't mean to

interrupt Paul, but he's so academic.

Exactly.

>> Schooled at the Kennedy School,

>> but what he took is he was in charge of

brackettology at Duke.

>> Yeah.

>> Years ago,

>> back in the day.

>> Can you explain the collapse of Duke

University? We're in We're baffled.

>> I have no comment. Um,

>> he's smart. He's smart. I'll go I'll

I'll opine on that for a couple minutes.

So, real quickly here, you mentioned

China. it's still a big part of your

index. Is it investable? Is it not

investable? How do we play it?

>> Um, great detailed question. I would say

to the extent that it there that an

US-based investor should cons be

concerned about investability, it would

be the doicile of custody. So you may

want to consider owning an offshore

doiciled version of the exact same thing

maybe issued by an international

financial like a big as like an Asian

development bank um uh because it gets

forgotten but the you know sanctions

risk is not zero we know that and they

can go both ways right and that's

essentially about locate custody

location and so why not if it's free

avoid that risk that would be the only

thing I'd mention in general it's a

stable currency low inflation uh and

they want it to be a reserve currency

they're creating funding markets in it

>> Eric thank you so much for joining us

today head of active EM debt at Van

Funds

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