Episode summary
The US Macroeconomic Picture | Bloomberg Surveillance
Bloomberg Surveillance
· · 33 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Bob Michele, Chris Marangi, Ellen Wald, Tani Fukui
Summary
The discussion centered on a still-resilient US economy, a bond market that looks fairly priced, and a Federal Reserve that may soon be forced to act again. Bob Michele argued that the 10-year Treasury looks comfortable in a 4 1/8 to 4 5/8 range, with the market already pricing in one or two more Fed hikes and little reason for the central bank to overreact. He also said businesses are still committing capital, sovereigns are investing, and emerging markets have been surprisingly durable through higher rates, COVID, and the latest oil shock.
The conversation then turned to AI, where Michele said hyperscaler debt has been absorbed well because the companies still have pristine balance sheets and the eventual spending will be spread out over years. Chris Marangi added that value investors still see opportunity in down-market, down-cap names, while media assets remain in flux as companies split up and search for better capital structures. He described sports franchises as stores of value and said the market is still in a bubble somewhere, with capex and earnings estimates supporting equities.
On oil and trade, Ellen Wald said the market is too optimistic about a quick return to normal Gulf flows, while Tani Fukui warned that shifting trade patterns and AI-driven energy demand could keep inflation above 2% for longer. Fukui said the consumer remains strong despite complaints, and Michele’s broader point was that the economy still has enough underlying momentum to withstand higher rates for now.
Key takeaways
- Bob Michele expects the 10-year Treasury to trade between 4 1/8 and 4 5/8, implying the bond market is fairly valued rather than broken.
- Michele thinks the Fed may be forced into one or two maintenance hikes as growth and inflation pressures persist.
- Michele said hyperscaler debt has been digested well so far because the companies have pristine balance sheets and are financing over several years.
- Chris Marangi said value remains most attractive in down-market, down-cap stocks, not the mega-cap index leaders.
- Ellen Wald argued that oil markets are not returning to normal quickly and that higher transport costs and weaker China demand could keep prices volatile.
- Tani Fukui said inflation may stay above 2% longer because of supply shocks, trade disruption, and AI-related energy demand.
Notable quotes
“We expect a 10-year US Treasury to trade between 4 and 1/8 and 4 and 5/8”
“we think his hand will be forced sooner than he likes it”
“we're in a bubble everywhere somewhere. It's just a question of where we are in that bubble”
“I think that the new normal is going to look like a ferry service”
How the episode opens
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. we are advantage and particularly that we're not under the time pressure of the Fed decides to have someone that's been a foundation of our thinking about our central bank and bills notes and bonds.
Bob Michael joins us now. CIO, head of G GFIC. What?
What?
Global fixed income currency and commodities. Got them all. Got them all. G. — He attended every restaurant in the new building and they gave him that honorarium. JP Morgan Investment Management. Do you know what worse strategy is yet? — Other than to set up task forces, it's not clear. How long will it take based on the history of central bankers? Powell for example.
Um we think his hand will be forced sooner than he likes it. Clearly by having the task force come back at year end. He wants to glide into 2027 without having to do much.
But the markets move, the economy moves. Uh the summers tend to be a crucible of intensity. Uh so we think by the September meeting he's going to have a plan.
I got to get I got to get this in. It's too important. Paul's got a million smart questions.
I'm assuming James Diamond hates task forces with a passion. What do you expect to get out of a task force plural from the Fed?
Well, it depends who's leading them and who's on them. I think they'll come back with very thoughtful ideas. Um, in the end, you don't set up task forces unless you already know the answer.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- economic expansion probability
- value investing
- oil price drop
- price gouging accusations
- inflation threats and fed regime
Companies and tickers mentioned
- JPM
- MET
- JPMorgan Investment Management
- Gabelli Funds
- MetLife Investment Management
Watch the episode
Watch “The US Macroeconomic Picture | Bloomberg Surveillance” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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