In short
Markets and tech leadership amid Fed-chair speculation; plus segments on Alphabet/AI competition, Ukraine-Russia peace talks, and cyber risk from AI.
Guests (backgrounds)
- Stuart Kaiser, head of equity trading strategy at Citi; focuses on market positioning and macro drivers.
- Sarah Fryer, Bloomberg News big-tech team leader; author of No Filter: the inside story of Instagram.
- Jennifer Welch, geoeconomics analyst at Bloomberg Economics.
- Jennifer Eubank, founder of Adaman Strategic Advisors; former CIA deputy for digital innovation.
- Ryan Kelly, chief investment officer and portfolio manager at Hennessy Funds.
Key claims
- Kevin Hassett is emerging as Fed chair front-runner; likely more aligned with Trump’s preference for faster rate cuts, but still expected to respect the Fed’s dual mandate and data.
- Markets are “unsettled” due to weaker retail, shifting AI “reaction functions,” cautious retail earnings, and Fed uncertainty; base case is higher into year-end, with key risk around labor/inflation data.
- Alphabet’s momentum: Gemini coding strength, TPUs, and AI overviews in search; Google’s incumbency may pressure ChatGPT usage, though ChatGPT won’t disappear.
- Ukraine-Russia: a U.S.-Russia peace plan reportedly shifted terms; Russia likely won’t accept changes favorably; Europe worries about long-term Moscow leverage and frozen-asset use.
- Cyber: China-led, AI-powered cyber campaigns are increasingly automated; defenses must incorporate AI and strong controls like MFA.
Notable examples
- Dec. 16 dual payrolls as the single most important market date; inflation print on Dec. 18.
- Meta reportedly wants Google TPUs in its data centers.
- AI “recipe slop” examples: Frankensteined recipes and specific failures like a cake cooked 3–4 hours leading to charcoal; tamales sauce on husks.
- Cyber example: Anthropic report describing an AI-powered campaign that automated 80–90% of actions and exfiltration.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VODiscussion on Kevin Hassett's Fed Chair Potential
1:00 to 1:31
A discussion about Kevin Hassett emerging as a frontrunner for the Fed chair position and market reactions.
“When you're running a business, the best days are the ones where priorities stay on track.”
Discussion on Kevin Hassett's Fed Chair Potential
2:28 to 8:56
A discussion about Kevin Hassett emerging as a frontrunner for the Fed chair position and market reactions.
“OK, well, let's talk about the big tech trade and where we go from here with our next guest who sees markets remaining unsettled with core leaders coming under pressure.”
Market Trends and AI Developments
8:56 to 14:01
Exploration of market conditions, AI technology advancements, and Google's performance.
“Stu Kaiser, head of equity trading strategy over at Citi.”
Google's AI Innovations Outpace Rivals
14:01 to 24:01
Learn how Google is leading the AI space and its implications for competitors.
“Gemini is outperforming a lot of other models, especially when it comes to coding.”
Google's AI Innovations Outpace Rivals
25:30 to 26:36
Learn how Google is leading the AI space and its implications for competitors.
“I don't know if you knew this, but anyone can get the same premium wireless for$15 a month plan that I've been enjoying.”
Negotiations in Ukraine and Russia Conflict
26:36 to 28:00
Understand the dynamics of U.S. involvement in Ukraine-Russia peace talks.
“You're listening to the Bloomberg Business Week Daily Podcast.”
Challenges in U.S.-Russia Peace Negotiations
28:00 to 30:06
Explore the complexities of the U.S. and Russia's negotiations regarding Ukraine and the implications for peace.
“But our assessment is that Russia is unlikely to receive in a positive way those altered terms based on how things have gone earlier this year in prior rounds of negotiations.”
Concerns Over a Favorable Agreement for Putin
30:06 to 32:12
Discuss the fears that a peace agreement may embolden Putin, leading to further aggression.
“Is there still a feeling here in the United States and obviously elsewhere in Europe?”
U.S.-China Relations and Trade Tensions
32:12 to 34:15
Analyze the fragile nature of U.S.-China relations amidst escalating tensions over Taiwan.
“President Trump, we know, held back to back calls with the leaders of China and Japan.”
Cybersecurity Threats: China's Growing Influence
34:15 to 38:16
Understand the current cybersecurity threats posed by China and the evolution of AI in cyber warfare.
“and clients on cyber resilience, digital transformation, geopolitical risk.”
Show all 16 chapters
Cybersecurity Threats: China's Growing Influence
38:53 to 39:28
Understand the current cybersecurity threats posed by China and the evolution of AI in cyber warfare.
“Lately, it feels like there are two types of investing platforms.”
Market Overview and Sector Performance
42:12 to 43:39
Discussion of current market trends, sector performances, and key indices.
“We are just about 18 minutes away from the closing bell on this Tuesday.”
Ryan Kelly on Fed Chair Speculation
43:39 to 46:06
Interview with Ryan Kelly discussing Kevin Hassett's candidacy for Fed chair and market impacts.
“I'm just curious about how you view a development such as that.”
Mid-Cap Investments Strategy
46:06 to 48:55
Ryan Kelly shares insights on mid-cap investments and the performance of his fund.
“in the 16th percentile against your peers.”
Retail Sector Insights and Earnings
48:55 to 50:15
Discussion on retail sector performance ahead of earnings reports, focusing on Macy's and Wayfair.
“Yeah, I was just going to bring that up.”
Retail Sector Insights and Earnings
50:46 to 51:13
Discussion on retail sector performance ahead of earnings reports, focusing on Macy's and Wayfair.
“Ask yourself, what are your best people spending their time on right now?”
Transcript
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1:57Carol Massar:Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies and trends shaping today's complex economy. Plus, global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast. with Carol Masser and Tim Stenevek on Bloomberg Radio. OK, well, let's talk about the big tech trade and where we go from here with our next guest who sees markets remaining unsettled with core leaders coming under pressure. We've got Stuart Kaiser with us, head of equity trading strategy over at Citi.
2:38He joins us here in the Bloomberg Businessweek studio. We're going to talk tech, but just about two hours and 11 minutes ago, our Bloomberg News team broke a story about Kevin Hassett of the National Economic Council, or White House Economic Council, becoming the key emerging person who could become the next Fed chair. We saw markets react. We saw yields on twos and tens move lower. We saw stocks go higher. What's your reaction to the possibility of a Fed chair HACET? I think HACET has been on sort of the short list with Kevin Walsh and maybe Rick Reeder and Waller maybe for a period of time now.
3:12So not too surprising that someone out of that core group is sort of being called the favorite. I'd probably tamp the brakes on exactly knowing what the outcome here is, because, you know, President Trump has tended to bounce around back and forth between the various candidates. But I think, look, I think Warsh, Hassett, Reeder are all considered, you know, very credible economists, you know, very, very deeply understand macro markets.
3:33Carol Massar:Is Hassett credible? Yeah, I think Hassett is, from an economics perspective, on the credible side of things, without a doubt. And if that's the case, then, you know, you're, It's not too big an issue, you know, depending on who they settle from from that group. But would Kevin Hassett be a good and independent Fed chair? He is certainly seen as somebody who would bring President Trump's approach to interest rates and cutting specifically to the Fed, which President Trump has long wanted to control, at least according to those folks who we've been talking to in all of our reporting. And so maybe that is why he is coming out as the front runner.
4:07Carol Massar:So I guess the question is, would Kevin Hassett be independent? Would he lower or raise rates based on the Fed's mandate and not on the president's preference? I mean, you have to assume so. I mean, remember, Trump appointed Powell, and now he doesn't consider Powell to be dovish enough. So, you know, I would say, you know, Supreme Court justices, Fed chairs. I mean, these people are generally pretty reputable people that respect the value and the independence of the organization. And you would hope he's going to make decisions based on the incoming data. Clearly, a president is going to pick a chair that is consistent with their view.
4:38So, you know, it wouldn't surprise you that maybe Trump would settle on someone that skews a touch more dovish. But the fact is that whoever the chair is, is walking into what's basically a split FOMC right now. That FOMC is also filled with 12 other people who are very reputable economists who are not simply going to be kind of pushed around. And I think we're going to respect the data, respect the dual mandate as well. So it's not as if you're appointing someone that goes in and just, you know, makes the decision. Right. So, again, I think all the three or four of the core candidates, I think, are pretty well-respected economists.
5:10They're entering an institution which you would assume they would respect and support. Every chair is going to have a little bit of a hawkish or a dovish tilt or maybe a little more focus on inflation versus a little more focus on the growth mandate. And that's fine. I don't think that that's particularly offsides or inconsistent with history. So, yeah, I mean, I think any of those core would be fine. Let's talk markets. Yeah, let's talk markets.
5:35Carol Massar:I mean, we just talked about with our Ian King about what's going on in terms of Alphabet versus NVIDIA, who wins, who not. I mean, Alphabet's been on a tear this year, Stu. I mean, it's up about 70 % year to date. You do see the markets remaining unsettled with core leaders under pressure. How do you define unsettled when it comes to markets? What are you looking at? And what does this mean maybe over the next six months, 12 months? Yeah, I think unsettled is kind of what we've seen really for the last month or so, which is four kind of key things have changed in our view that have made the markets a little squishier.
6:05The first is that retail has pulled back considerably. And whether you believe or don't believe that retail is driving the market, certainly institutional investors are aware of that shift in supply and demand. So, again, that's created a little bit of uncertainty. AI, the reaction function of AI has clearly shifted, whether that is Meta or Palantir or Oracle or NVIDIA. And you can't ignore that. The third thing is retail. Retail earnings were soft, and the commentary from management was very, very cautious. We just got a pretty weak retail sales number as well. So regardless of all the rest of it, people are saying, wait a second, this U.S.
6:39consumer has been the white knight of the economy and global economy probably for multiple years, and now it seems a little bit under pressure. And there will also be the Fed. Some uncertainty there. So not all of those uncertainties. It's a lot. Yeah. And in and of themselves, each one of these might not be an issue. but you put them all together and they've created some uncertainty. You're also in a tricky time of the calendar. You have portfolio managers who have had a really tough year. If you're up year to date, you're not going to play hero ball between now and the end of the year as well.
7:08So I think you've made people a little more cautious for a lot of reasons. So I think right now it's hard to have a really, really strong tactical view. If we had to pick one, we're going to pick higher into year end. We do think ultimately you get a rate cut and the seasonality pushes you there. But the risk reward around that is not nearly what it was a couple months ago. What changes your view between now and the year end where you'd say, actually, we're not thinking higher till year end now? Yeah, the data, you know, probably December 16th would probably be the single most important date on the calendar, which is going to be, you know, dual payrolls reports.
7:38Our view is the unemployment rate is if you had to pick one thing is the single most important thing for the market. So that's going to be a very important day. Before we get there, you know, Black Friday, Cyber Monday will be important. But the single biggest day is December 16th. And to remind everybody, that comes six days after we hear from Fed Chair Jay Powell. And the entire Federal Reserve, the FOMC, is going at this without the typical data that it has ahead of a Fed decision. Yeah, 100%. And you're also getting the inflation print on the 18th. So you can imagine a situation where the Fed cuts 25 basis points, tells you they're data dependent in 2026, and then boom, you get hit with really weak labor markets the next week and vice versa.
8:15So I'm not saying either or is going to happen, but our view at this point is the logic behind the rate decision is as important as whether they cut or not. If they don't cut and it's because the labor market looks solid and the beige book comes in very positive, that's good. If they do cut and the market's like, wait, you all look like you might be behind the curve a little bit because the next week we get weak labor markets, less good. So really, we are data dependent, probably meeting before we expect it to be. But if you're asking what could change my view into year-end and become more bearish, it should be we get some weak holiday spending data.
8:49And then that labor market report is unfriendly to the markets.
8:52Carol Massar:Yeah, that would certainly do it. And because you'd be looking at both sides of the mandate right there for the Fed. Hey, Stu, thank you so much. Really appreciate it. Stu Kaiser, head of equity trading strategy over at Citi. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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11:55Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Well, since the launch of ChatGPT, three years, can you believe it was three years ago? No, I'm like, I feel like GLP-1 and AI are like all we've talked about in the last three years. I guess there was an election in there too. There was, and there's wars and there's more stuff, but I'm just saying in terms of investment trends or theses. Did you just go and get chocolate for everybody?
12:31Wow. i love these i am not mrs good bar over here mr she's holding up a bunch of mr good bars they're so good it's like a little bit of chocolate and peanuts okay well i'm off i'm off track a little
12:44Carol Massar:bit go to the west coast and they have really good snacks they do have good snacks out there that's where we find sarah fryer she's bloomberg news big tech team leader and the author of no filter the inside story of instagram she joins us from the bloomberg san francisco bureau so sarah The new AI software and deals with Google, the chip tie up with Anthropic. We're talking about this because Google owner Alphabet shares are up more than 70 % this year. The company's on track at a$4 trillion market cap for the first time. It really seems to be firing on all cylinders, whether we're talking about the cloud business, the multipurpose LLM Gemini 3, and the new AI software.
13:24What's going on? So we have this really big piece, even just in the beginning of this year, about how Google was this company that had failed to really capitalize on its own innovations. They were the ones that wrote the paper that spurred this technology that underpins large language models, which is like the basis of ChatGPT. And when OpenAI launched ChatGPT, Google could have done that months earlier, and they didn't. And so they've really had this reckoning at the company and haven't really been able to get their momentum until this year. And we're seeing it happen across all these dimensions of their business.
14:05Gemini is outperforming a lot of other models, especially when it comes to coding. TPUs, the chips that Google makes internally, are really the only alternative to NVIDIA's GPUs. They are transforming the Internet with the way they've put AI answers in search. They are now probably most consumers first brush with AI. If they haven't already downloaded ChatGPT, they see those Google AI answers at the top. So they're becoming the cultural leader in AI as well. So I think that there are a lot of really interesting things happening for this company that have come to fruition this year. The company seems to be shipping products faster and doing it in a way that is high quality.
14:49You have other companies like Meta, which seemed to be a leader in the race when it was first getting started, but have since lagged behind. Google's opposite. They're gaining momentum. They are gaining share. And that is what investors like to see.
15:04Carol Massar:Why is it, though? Why does it feel like it was so under the radar? Like, I always feel like when when enduring earnings seasons, we've talked about how, you know, Alphabet, Google has so many different platforms. They have data like they can really. it seems like monetize it. It's where we all go for search. It's where we all go for search, but it just feels like they've just come out of nowhere. You know, they've come out of nowhere, but don't forget that they started this. I know. Intellectually, they started this and then they were unable to capitalize on it. So a lot of people kind of wrote them off as like this bureaucratic, you know, stuck in its ways, big tech company that really couldn't be expected to move at the pace of ChachiBT, of Claude, and yet they have been able to do that.
15:55And so the tipping point is sort of happening now where we're starting to wonder, does this mean that corporate customers that have started to sign these big deals with Anthropic and OpenAI, are they going to be seeing Google as a better pick because they have this longer history? it seems a little bit safer. So there are all sorts of things that can happen at this tipping point. Also, with TPUs, the big deal that Anthropic had with TPUs, we're now seeing the information just reported that Meta wants to have Google's TPUs in its data centers. So a major competitor accepting Google's innovations to run its products, it is a big deal.
16:38Yeah, a big part of the narrative today is, you know, NVIDIA shares after this report from the information took a hit. They're still down 3.2%. They were down as much as 7 % Alphabet shares higher earlier in the session. But the question I have for you, and we don't know what this does to a private company like OpenAI of ChatGPT fame, because it's a private company. Is Gemini coming for ChatGPT? Oh, yeah. Yeah, absolutely. I mean, I don't think that I don't think that it's coming forward in terms of like it'll it'll cause it to fade or anything like that. But I think that the use case, the idea of of, you know, I have a question to ask and I'm going to go ask AI for that answer.
17:27People are doing that with Google search already naturally when they have questions. It's hard to move that behavior all to ChatGPT. And OpenAI has been very successful at doing that over time. But if Google already has the ability to answer the questions with as much accuracy, innovation, et cetera, then people may not make that switch. So it's definitely going to be hard for the upstarts to battle with Google, but it's also going to be, I don't think we should write them off because this is such a fast moving market, right? We're still very early in. So it's too early to say, oh, Google's just going to win it all.
18:12It still very much depends on their continuing to execute, continuing to get products out faster than rivals. and those things change by the day. But it does seem like there is an incumbency advantage when it comes to Google and the way that it's reshaped its own search. And Business Week has written a lot about this, but to be honest, I haven't played with it much until recently. So if you do a traditional Google search, you can see the AI overview, which I think answers a lot of people's questions, but then you can just click, and this is on a desktop, you can say dive in deeper with AI, and then it looks, Carol, like an LLM, like exactly like something like - It is, yeah, it is an LLM.
18:52Yeah, it's pretty remarkable. I mean, if people are changing their behavior, Sarah, with search and going to chat GPT to ask questions, what's to stop them from just using Google and Google's AI mode if it's as good as open AI's chat GPT? Well, I think there are some who say it's also a dangerous game because search is Google's big moneymaker. It is the place, it is the engine for the entire company. And as Google directs more people to AI answers, AI overviews, and diving deeper in AI mode, that means traffic is diverted away from websites and towards AI answers. And then it can actually cause the entire internet to crumple in a way.
19:40Because the people who are creating information that goes on the internet don't get to pay their bills anymore. And we have a really interesting story out today on that effect with what else? Thanksgiving recipes where these recipe bloggers that have built up a business over many years telling people how to make their turkey, how to make their Christmas cakes are not seeing that traffic anymore. It's going to AI. So they're not they're not too confident about continuing to do this kind of work. And then you might end up in a future where AI is just building its answers off of content that is created by AI.
20:19And then we're in a place where the information may not be as valuable or accurate. OK, I love this story from your team, by the way, we're speaking with Sarah Fryer right now. She's Bloomberg News, big tech team leader. She's the author of No Filter, the inside story of Instagram. uh the team uh her team out and she edited this story the story that you're referring to sarah ai slop recipes are taking over the internet and thanksgiving dinner i mean i think we've all been there in recent years where we've noticed that if you're looking up a recipe online and going to the actual website you have to basically read some sort of like novel or memoir as carol also google's fault by the way that was that was for search engine optimization that people would write their entire life story before posting a recipe because Google was more likely to index pages that had longer text content, which was so we can also blame Google for that.
21:08But yes. So now, I mean, what people are doing is they're like just doing like, show me a slow cooker recipe for butternut squash soup, you know, and, and chat GPT just comes up with it and you don't have to read anything about the life story. Right. And that's an issue. Where does that information come from? It's an issue, it's an issue, but it's also like, maybe they're going to tell you to put like horseradish in your butternut squash soup, you know, make it mix it up, make it a little weird because what the AI is usually doing, it could be good. But what AI is usually doing is, is cribbing from multiple websites at once, creating what these AI recipe bloggers call Frankenstein recipes that may not actually work.
21:50And one of the creators told us that Google mixed up one of her cake recipes and told people to cook this six inch cake for three to four hours. You'd get you'd get charcoal. Right. Another food blogger told us I was having people put sauce on tamales while the husks are still on. You don't want to eat those husks. You're wasting a lot of sauce by doing that. So so the AI is, you know, presenting these these great images to novice cooks saying, look at your beautiful future results with this recipe, but the recipe doesn't actually create that glossy image. And people are getting led astray. So beware before you make your Thanksgiving cooking plans.
22:32Carol Massar:Yeah. My wife gives me such a hard time. She's like, I have to like, you're on it all the time, aren't you? She's like, she's like, well, what recipe are you using? And I'm like, uh, and she's like, do not use chat GPT. She's like, we have a subscription to the New York Times, you know, cooking and everything. And it's like, it's great. Well, you know, I just went into Google and I was like, what's the best recipe for pecan pie? Because it's like my favorite. And it actually came up with, and then I said, take out corn syrup because I don't want to use corn syrup. And it came up with the recipe, I think, from the New York Times, which I really like to use.
23:04Does it link to it?
Read the full transcript
23:06Carol Massar:That's a good question. I have to see if it's linking to it. Hey, 30 seconds. Does Google Alphabet though have an advantage, Sarah? because we're all on Google searching. They have so much data on their platform and years of it. Yes, I mean, they have this history of indexing the entire web, and we have this history of going to Google for anything we want to know. So if you're in this economy that's going to be driven by people getting answers on their questions faster, Google's a really great place to start, And they're starting to really take over in other aspects of the market that we didn't expect would necessarily be successes like TPUs.
23:48Carol Massar:All right. Good stuff. And note to everybody, do not Google recipes for Thanksgiving. She just got the TPU, the tensile processing unit in there at the end. Sour fire, Bloomberg News, big tech team leader. This is Bloomberg. Stay with us. More from Bloomberg Business Week Daily coming up after this.
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26:33Carol Massar:Taxes and fees extra. Default terms at mintmobile.com. You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. While the White House signaled optimism, around efforts to negotiate a peace deal between Ukraine and Russia, while warning that additional negotiations to address remaining sticking points would be necessary, despite reports earlier suggesting, Tim, a deal was afoot. With an update on this and more back with us is Jennifer Welch, Geoeconomics Analyst at Bloomberg Economics.
27:10She joins us from the Bloomberg, Washington, D.C. Bureau. Jenny, Bloomberg Economics out with a new report. It notes that the U.S.-Ukraine policy whiplash is benefiting Moscow, what do we know? So it's been quite the roller coaster for the last few days. What emerged last week was a plan that seemed to be negotiated between the U.S. and Russia, largely favorable to Moscow in terms of, for example, capping Ukraine's military, ensuring that it would never be a part of NATO in return for pretty ambiguous security guarantees. Since then, there's been a scramble by Ukraine and its European partners to engage Washington and try and alter those terms.
27:47And now it looks like at least nine of the points from that original 28-point peace plan have been adjusted or removed, including some of the ones that Ukraine felt crossed its red lines. And where things stand is finalizing those terms and then pitching them back to Moscow. But our assessment is that Russia is unlikely to receive in a positive way those altered terms based on how things have gone earlier this year in prior rounds of negotiations.
28:12Carol Massar:Wait, so you know what I keep thinking? Who's calling the shots of a possible truce? Is it U.S.? Is it Europe? Is it Ukraine? Or is it President Putin of Russia? Or maybe a little bit of all of them? Or who even in Washington is involved in this? It seemed last week when this plan first emerged that some members of the President Trump's own administration weren't even entirely sure where this peace plan came from and whether it had been fully coordinated and agreed to by the U.S. side. But then it quickly moved from that to the U.S. setting an ultimatum on Ukraine to agree to it. And now we're renegotiating the terms of it.
28:47So it's been a lot of twists and turns here. But this isn't an entirely new story. This is something we've seen earlier this year. If you think back to August when President Trump met with President Putin and then immediately rushed into a summit with Ukraine and European allies, this feels very much like a familiar pattern. And one, I think, is likely to produce the same outcome, which is no peace plan. Well, OK, so on that European allies, sort of another group here that we need to focus on, what do they want? I think European allies are primarily concerned about first making sure that this deal isn't so heavily weighted in Moscow's favor that, for example, it doesn't end up preserving peace for the long haul.
29:26That, for example, it leaves Ukraine in a weakened position that could allow Moscow to just reconstitute its forces and reattack. That not only has implications for Ukraine's security, but ultimately for Europe's. So that's going to be a major area of concern. Second major area of concern is one of the elements of that original peace plan was around the frozen Russian assets and how they would be leveraged. And in particular, how they might be leveraged to essentially pay the U.S. back for security commitments to Ukraine. That's something that Europeans have a stake in as well. And they would want to have a say in how those frozen assets are used, particularly as they're debating internally whether or not to use them to support Ukraine in the short to near term.
30:06Carol Massar:Hey, Jenny, I want to move on to U.S. and China. But one last question. Is there still a feeling here in the United States and obviously elsewhere in Europe? I think Europe, it's a safe yes. But here in the U.S., that if if this is a much more favorable agreement to President Putin, that he may in another few years, you know, create another war and go after another land grab. I just wonder how much of that fear is still out there. I think that's certainly a concern among foreign policy analysts, especially having watched Putin play this playbook before. We saw with Crimea back in 2014, he played out the peace process.
30:45He drew out negotiations and pretended to be genuinely interested in peace. And then he essentially snagged and pocketed the results of that peace process, reconstituted his forces and launched a full scale assault on Ukraine just years later. And I think certainly leaders in Europe and Ukraine, but also in the United States, many are concerned about the possibility of that happening again. So in terms of just thinking about possible endings for this, as we do get close to the fourth year of this conflict, what would an end look like that Russia would be OK with and Ukraine and Europe would be OK with?
31:19It's hard to see at this point a potential compromise position because Moscow seems to be betting on more battlefield gains and essentially seeing that time is on its side. It really doesn't have an incentive to negotiate for peace because it thinks it can just continue to win territory. The West's support for Ukraine will continue to dip. Ukraine will continue to have some of the internal issues we're seeing, like with corruption scandals and losing political domestic unity. And it will just have to bide its time and continue to push for the offensive. I think what could change Moscow's calculus is stricter Western sanctions that bring some of its economic troubles more to the forefront.
31:55That might press it into a position where it realizes it's not a war that it can continue to afford. And just to clarify, we're in the fourth year. It'll be four full years of this war in February.
32:05Carol Massar:Yeah, I mean, it's just even hard to believe that that's where we are. Hey, I want to just quickly one question to you on U.S. China. President Trump, we know, held back to back calls with the leaders of China and Japan. We've seen escalating tensions over Taiwan, threatening to derail his weeks old trade truce with Beijing. It always feels so fragile. That relationship, U.S. and China, always complicated. Will a U.S.-China truce last? I think my prediction is for the short to near term. Again, with President Trump, you kind of always have to have an asterisk because you don't really know exactly what he's going to do.
32:38But my prediction is at the moment, yes, I think it will last. I think the Trump administration is very focused on maintaining it. I think the calls that we saw yesterday were more about an effort to manage this China-Japan feud and avoid drawing the United States into it and avoid it upsetting that existing truce. I think the questions that we have for the longer durability of that plan are things that are, for example, outside the scope of that truce. Actions by Congress that Beijing could see as violating the spirit, if not the letter of the truce. Actions that the U.S. might take as sort of its normal export control policy updates that might violate it.
33:12So there are definitely a lot of potential speed bumps in the future for this truth. But at the moment, Washington seems very focused on maintaining it and keeping it in place.
33:22Carol Massar:All right. Going to leave it there. Hey, Jen. Thank you so much. Jenny Welch. She's chief geoeconomics analyst at Bloomberg Economics. All right. Geopolitics relationships among allies and friends between enemies. I mean, this makes me think about cybersecurity and national security issues. Well, a recent Bloomberg opinion piece by the editors wrote, But America's enemies are growing bolder and more sophisticated in cyberspace. Carol, to fend them off, the government must stop unilaterally disarming. All right. So we want to get into the state of readiness when it comes to cyber threats. Keep in mind that we've had two recent reports underscoring some of the danger that's out there.
33:56Carol Massar:Mid-October, Seattle-based cybersecurity firm F5 acknowledged a catastrophic breach of its systems, which may have allowed Chinese hackers to penetrate networks used by federal agencies and Fortune 500 companies. There's, of course, other stuff that has happened as well. Back with us is Jennifer Eubank. She's founder of Adaman Strategic Advisors. She advises companies and clients on cyber resilience, digital transformation, geopolitical risk. She is a former CIA deputy for digital innovation. She joins us from Virginia. Jennifer, good to have you back with us. When it comes to the most urgent national security and tech issues, and I want to go with China right now, is it threats from China?
34:35Carol Massar:Is it threats from Russia? I mean, like, what is it in terms of the United States? Great to be back with you, Carol and Tim. Thank you. If we're talking about cyberspace, it's really about the People's Republic of China. Of course, Russia remains a very active actor in cyberspace. We can see that in Ukraine. We can see that regionally and occasionally here in the U.S. But in terms of sophistication, scale and ambition, it's really all about China right now. How sophisticated has China gotten? Oh, incredibly so. You may have seen a report came out recently from Anthropic where they documented the first essentially AI-powered cyber campaign from inception to exfiltrating data that was almost exclusively conducted by AI agents.
35:22The agents would simply come back occasionally and ask the operator, is this what you want or would you like this instead? Do you like that? And 80-90 % was automated and that came out of China and state-sponsored actors. I don't love this, Carol. Okay. No, I wouldn't. You know, it's not like the people who are doing the infiltrating have to be only so smart, right? And you only have to outsmart them. Now we have to outsmart the machines.
35:46Carol Massar:God, that's terrifying. Yeah, don't love this. Yeah, how do we keep that? Wait, go ahead. Oh, no, I'm just going to say, it really does signal a major shift, right? We all knew this was coming. At least those of us in the cyber realm knew that this was coming. When you see the confluence of AI and cyber, you knew we'd be facing this. And so really, we have to be in a position where machines could start fighting and defending against machines. There's a certain risk in that as well, because, you know, machines are not humans. They don't exercise our judgment. All sorts of things can can maybe go awry.
36:21But as a start, we're just going to have to be bringing more AI into our cyber defenses if we are going to actually harden our perimeters and protect our data. Yeah.
36:30Carol Massar:Oh, go ahead. No, no, please. Well, I was just thinking about President Trump signing that executive order yesterday. Genesis mission. It's a federal effort to boost innovation using AI. And so it's all about promoting AI technology and its adoption. As more AI is incorporated into the U.S. government, all governments, I mean, does that just increase the cyber risks or does AI also help us fight these risks? It's both. It's like any new technology. It's both shield and sword. It's both. And yesterday's announcement is actually pretty exciting in a way, because it represents a moment where the administration is trying to, let's say, bet big on AI's ability to help us discover new breakthroughs in all sorts of various scientific fields, not specifically about cybersecurity, but about quantum and biotech and space and lots of other things.
37:22And so So one of the issues, and I'll tie that back to cybersecurity, one of the things that people are going to be watching with that effort is how do we protect the data? Because this is going to be a tremendously attractive target for adversaries. If you're talking about bringing together our national labs, super computing capabilities, sensitive federal data sets on science, and then America's leading technology companies, that's going to be right in the crosshairs of our adversaries' targeting. So then what is the right way, just very briefly, to protect this data? Oh, well, I think, you know, they're going to have to be locking down in every possible way they can.
37:59And kind of the chapter and verse on that will have to be worked out because this is all still in formation at the moment. And I think people are going to be watching to see how the Department of Energy implements this intention, this order, if you will. So a lot to be determined right now.
38:16Carol Massar:I'm just going to unplug everything and throw out my phone. How does that work? Is that okay? Does that enough or that's not enough? Okay. One pro tip, put multi-factor authentication on any account that will allow it. And that will stop virtually all nefarious activity. And you need your phone for that, Carol. Sorry to tell you. I do. I do. Don't throw it away. Jennifer Eubank, always good to catch up. Founder of Adamant Strategic Advisors, former CIA deputy for digital innovation. Stay with us. More from Bloomberg Businessweek Daily coming up after this.
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39:48complete disclosures at public.com slash disclosures. Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same premium wireless for$15 a month plan that I've been enjoying.
40:30It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do at mintmobile.com slash switch. Upfront payment of$45 for three-month plan equivalent to$15 per month required.
40:46Carol Massar:Intro rate first three months only, then full price plan options available. Taxes and fees extra. See full terms at mintmobile.com. Aging is real. And so are the benefits of adding Vital Proteins Collagen Peptides to your daily routine. New Vital Proteins Collagen Sparkling Water. Your daily glow-up now in three fresh flavors. Strawberry Blossom, Lemon Lime, and Blood Orange. Improved skin health in as little as 30 days thanks to collagen peptides. Cheers to that. or go with our classic collagen peptides so you can stay vital, stay you. Visit vitalproteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration.
41:20This product is not intended to diagnose, treat, cure, or prevent any disease.
41:23Carol Massar:You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube.
41:41Daddy, can I drive? Yeah, sure, why not?
41:49Do I look like I drive a minivan? Don't drive angry. Don't drive angry.
42:02I'll drive!
42:04Carol Massar:This is the drive to the close. If you had access to a car like this, would you take it back right away? On Bloomberg Radio. All right, everybody. We are just about 18 minutes away from the closing bell on this Tuesday. Carol Master, Tim Stenevec, live in our Bloomberg Interactive Broker Studio. Just looking at the trade, I mean, we are, Tim, pretty much at our highs of the session when it comes to the equity trade. We just heard from Amy Morris and Bill Maloney. And I'm looking at most, about eight of the major, eight of the 11 major industry groups in the S &P 500 are higher today. One is unchanged.
42:39Carol Massar:Information tech is flat, unchanged. Healthcare is at the top, 2.2 % to the upside. Consumer discretionary up nearly 2%. That might be because of some of those retail names. Consumer staples also doing well, 1.5%. At the bottom of the pack, you've got utilities and energy, both down about four-tenths of a percent. How about those small caps? I know you keep looking at those. Yeah. They're getting ready for Romaine because he loves that small cap. Does he like small caps? He does. Okay. Well, they're up 2.3%. It's the biggest gain in a single day for the Russ 2000 going all the way back to Friday when the Russ 2000 was up 2.8%.
43:15Carol Massar:No drum roll, please. No. No needed. Let's see what Ryan Kelly has to say about this. He's chief investment officer and portfolio manager at Hennessy Funds. He joins us from Chapel Hill, North Carolina. We did see a real shift in the trade. I think conviction is fair to say after we after our colleagues at Bloomberg News reported that Kevin Hassett is the front runner for the new Fed chair to be new Fed chair picked by President Trump. I'm just curious about how you view a development such as that. Look, we should note that the president has not made a final decision. And the Treasury Secretary did say that a decision could happen by Christmas.
43:54So about a month away at this point. How do you view a name like him, Ryan? Well, thanks again for having me on with you guys. Good to see you. Yeah, you know, a big development today. Obviously, there's been different names being thrown around for the next Fed president. This is somewhat expected. Kevin was already in sort of the front running for this. But he really is, he does sort of promote a lot of, you know, what the president would like as far as interest rates, namely having them go lower faster. So I think that this is obviously going to be, at least for a stock market, a pretty positive development.
44:37And we saw that change, you know, midday today.
44:39Carol Massar:Is that because you assume that he is going to be pushing for more rate cuts, even if policy or even if mandates, be it in the labor market or for inflation, tell him otherwise or no? Do you assume that he will be like other Fed chairs if indeed he gets that position that he will look at the data and do what's best for U.S. monetary policy? Well, really, that's that's probably, you know, the biggest question out there. And it's a great question. How will he actually push the Fed if he ends up being the Fed president? So much of this current Fed and what we've had for the last few years has been very data dependent.
45:19It looked like we weren't going to have potentially a rate cut this coming December, just a couple weeks away. That has changed pretty dramatically. It looks like probabilities are up in the 70 or 80 percent that that's going to happen. when we start to see some of this data coming out. So, you know, will a new president of the Fed work any differently? I would suspect data is still going to be very important. It has to be. It has to drive that. But there's always some influence as well. And you could see that potentially come into play as well.
45:54Carol Massar:Hey, Ryan, I want to talk about your universe, the mid-caps, your mid-cap Hennessey Cornerstone, excuse me, mid-cap 30 fund, which year-to-date is down about 1.25%, putting it, at least according to Bloomberg data, in the 16th percentile against your peers. Go back five years, and on average, annually, you've returned almost 19%, putting it in the 99th percentile. Is it hard being a mid-cap investor right now? It is. It's funny. You just mentioned small caps doing very well today. Small caps have definitely outperformed when we start to hear more about potentials for rate cuts. Coming off some of the bottoms near the beginning of the summer till now, they performed a lot better than mid caps.
46:43It is a tougher space. Valuations are much cheaper in the mid cap space. These are companies that are, for many reasons, we really like them. They're big enough to have a good track record. They're big enough to, you know, still be able to grow organically and yet also be attractive to larger buyers to actually move the needle. And then they can also acquire as well. And we have seen a lot more M &A in the space this year. But yeah, as far as this fund goes, this year is not as relatively a good performance that we've had. But the five-year numbers kind of speak for themselves. And that's that we are patient.
47:22We will have some years that we're sort of out of favor and our potential style just doesn't work as well. But that five-year number, which we're pretty proud of, the great thing about it is we got there without any AI, without any MAG-7, without any large-cap tech. And actually, we like to tell investors that you can make money outside of just the MAG-7.
47:46Carol Massar:Well, let's talk about it because retail is certainly front and center right now because they've all been reporting earnings. Because Macy's, it's a big week, right? We've got the Macy's Thanksgiving Day Parade. You've got Black Friday. That's a big deal for them, certainly, and as it is for other retailers. They do report earnings next week. Stock is up almost 30 % year-to-date. That's a big holding for you, and you continue to hold it. Yes, absolutely. We do have, traditionally in this fund, we do have a lot of industrials and consumer discretionary type companies. We do have a lot of the traditionally, you know, sort of your mainstay brick and mortar type retail stores.
48:28Macy's has done well. It's done well for us since it's actually a new purchase since September. I think it's up about 25 % since that time. And, you know, they always, not always, but a lot of times going into the holiday season, you see a lot of these retail, even the traditional ones, really move as we start to get more data coming out for Black Friday and for Cyber Monday. So we'll be keeping an eye on that for sure. We also own Wayfair, for instance. Yeah, I was just going to bring that up. Yeah, it's a very different company. We speak to the CFO quite frequently, Kate Gulliver. Yes, absolutely.
49:04So this is a very different company, you know, nowhere near as heavy in the storefront space. And they're really, they're potentially going to be one of the early adopters that really benefit from AI in using AI to help them make their business better, be able to get to customers, you know, in a more effective way, potentially to reduce costs for themselves. So that has been what's also moving the stock as well as it's just, you know, performing pretty well this year. Yeah, 148.5 percent. Pretty well. It's like performing pretty well is an understatement. But, you know, I'm not editorializing.
49:42Go ahead, Carol.
49:43Carol Massar:Listen, 60 percent of the float is short. Is there any reason to take some money off the table or how long have you owned it? And forgive me, just about 20, 25 seconds, just real quick. Sure. So this fund, we will own stocks for about a year. That's our time horizon. We just added this in September. You know, there's still, I think, a lot to play out here. So, no, we wouldn't be getting rid of it anytime soon. All right. Always love to talk names with you, Ryan. Have a great Thanksgiving holiday, and hopefully we talk to you real soon. Again, he is Ryan Kelly, Chief Investment Officer, Portfolio Manager at Hennessey Funds.
50:15Carol Massar:This is the Bloomberg Businessweek Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.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.
50:46Ask yourself, what are your best people spending their time on right now? Expense reports, receipt chasing, month-end close that takes weeks. You become what you spend on, and that's not what you're building toward. Brex is the intelligent finance platform that eliminates that work before it starts. AI agents that handle the manual stuff automatically, so your team can spend their time on what actually compounds. It's time to get Brex AF. Learn more at brex.com slash AF. Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same premium wireless for$15 a month plan that I've been enjoying.
51:24It's not just for celebrities. So do like I did and have one of your assistant's assistants switch you to Mint Mobile today. I'm told it's super easy to do at mintmobile.com slash switch. Upfront payment of$45 for three month plan equivalent to$15 per month required.
51:40Carol Massar:Intro rate first three months only. Then full price plan options available. Taxes and fees extra. Default terms at mintmobile.com. Aging is real. And so are the benefits of adding Vital Proteins Collagen Peptides to your daily routine. Because around the age of 30, your body needs backup to keep your collagen up. To help support healthy hair, skin, nails, bones, and joints. Available in the classic collagen peptides. Collagen and protein shakes. And new Vital Proteins Collagen Sparkling Waters. So you can stay vital, stay you. Visit VitalProteins.com to learn more and where to buy. These statements have not been evaluated by the Food and Drug Administration.
52:14This product is not intended to diagnose, treat, cure, or prevent any disease. Hey, everyone, it's Cal Penn. I'm inviting you to join the best sounding book club you've ever heard with my podcast, Earsay, the Audible and iHeart Audiobook Club. Every episode, I nerd out with amazing guests and dive into the best new audiobooks available on Audible. It's the book club for your ears. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartRadio app or wherever you get your podcasts.
From the publisher
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
White House National Economic Council Director Kevin Hassett is seen by advisers and allies of President Donald Trump as the frontrunner to be the next Federal Reserve chair, according to people familiar with the matter, as the search for a new central bank leader enters its final weeks.
With Hassett, Trump would have a close ally whom the president knows well and trusts installed at the independent central bank, the people said, speaking on the condition of anonymity. Hassett is seen as someone who would bring the president’s approach to interest-rate cutting to the Fed, which Trump has long wanted to control, some of the people said.
Still, Trump is known to make surprise personnel and policy decisions, meaning a nomination is not final until it’s made public, they said.
White House Press Secretary Karoline Leavitt in a statement said, “nobody actually knows what President Trump will do until he does it. Stay tuned!”
Fed chair and governor picks are historically the most direct way a president can influence the central bank. Trump nominated current Chair Jerome Powell during his first term. He came to regret the decision when Powell didn’t push for lower interest rates at the pace Trump wanted.
Today's show features:
- Stuart Kaiser, Head of US Equity Trading Strategy at Citi, on the tug-of-war between market momentum and seasonal trends
- Bloomberg News Big Tech Team Leader Sarah Frier on Google’s major leap forward in the global AI race
- Bloomberg Economics Chief Geoeconomics Analyst Jennifer Welch on the latest White House optimism around efforts to negotiate a peace deal between Ukraine and Russia, and whether there is hope for a lasting US-China trade truce
- Jennifer Ewbank, Founder of Andaman Strategic Advisors, on the recent cyber-attack on the Congressional Budget Office, and the risks of broader cyber-warfare with China
- Ryan Kelley, Chief Investment Officer and Portfolio Manager at Hennessy Funds, on investment opportunities in small- and mid-cap stocks
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