Is This the End of the US Exceptionalism Trade?

For years and years now, there has been one winning trade: Go long the US versus the rest of the world. Thanks to tech dynamism and general pro-growth US macro policies, American assets have far outstripped their global peers. Of course, there have been some bumps along the way, but they've usually been global bumps. The financial crisis in 2008-2009 was global. Covid was a shock for the entire world. But with Trump's tariffs, we are now looking at a story that has the potential to be US-specific, even if a trade war will be felt internationally. And so investors are asking the question of whether US exceptionalism has come to an end, and there may be better opportunities elsewhere. On this episode we speak with Ozan Tarman, vice chair of global macro at Deutsche Bank. He tells us what his clients are thinking about and the various scenarios whereby US assets continue to underperform. We also discuss the implications of the US becoming more EM-like in its politics, and its financial markets. Read More: End of 'America First' Trade Is Boosting Europe's MarketsThe World Is Finding a Plausible Alternative to TreasuriesOnly Bloomberg.com subscribers can get the Odd Lots newsletter in their inbox — now delivered every weekday — plus unlimited access to the site and app. Subscribe at bloomberg.com/subscriptions/oddlotsSee omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  Finance is increasingly being built on digital rails. But as the adoption of virtual assets, tokenization and stable coins grows, can regulation not only keep pace but help accelerate it? Find out more later in the podcast.

• 0:16Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 0:58Speaker 01

  and hiring practices, but according to recruiters, advisors and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at chatgpt.com.

• 1:41Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 1:57Joe Weisenthal?

  Hello and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

• 2:02Tracy Alloway?

  And I'm Tracy Allaway.

• 2:03Joe Weisenthal?

  Tracy, US exceptionalist. Like, to my mind, the big question for investors is like, we've had this 15-year-plus run of where it's like, the only game in town has been you invest in the US. You did not get paid for diversification. Arguably, you didn't even get paid for diversification within the US because you should have just been in tech stocks the entire time.

• 2:27Tracy Alloway?

  Yeah.

• 2:27Joe Weisenthal?

  But I really feel like this is the moment where people are asking, like, is this one trade that's worked out so well, is it coming to an end?

• 2:36Tracy Alloway?

  You know what I really like? I like talking about US exceptionalism in markets because no one immediately starts debating, like, the definition of US exceptionalism. That drives me crazy.

• 2:46Joe Weisenthal?

  Right. Because in the broader realm of like, just sort of politics, or society, or life, like, is the US exceptional?

• 2:53Tracy Alloway?

  I hate that conversation.

• 2:54Joe Weisenthal?

  But in markets, it's unambiguous.

• 2:55Tracy Alloway?

  Yes.

• 2:56Joe Weisenthal?

  In markets, it's unambiguous that US assets have just been where you want to be for a long time.

• 3:01Tracy Alloway?

  So not only have US equities outperformed recently, but they've really come to dominate the market as a whole.

• 3:08Joe Weisenthal?

  As a whole.

• 3:08Tracy Alloway?

  Like, as a proportion of the market. So the entire world, you know, even with US stocks falling recently, the entire world basically still has an overweight on America, right?

• 3:18Joe Weisenthal?

  The world is overweight. No, I mean, it's true. And if you're a global manager and your benchmark is the MSCI, AWS, or whatever, you know, it's still a large part of US trade. By the way, I was looking at the Bank of America Fund Manager Survey today, which is one of my favorites. And after two straight years of long MAG7 being identified by fund managers as the perceived most crowded trade, and this most recent month was gold, which was really interesting.

• 3:45Tracy Alloway?

  Oh, so it's finally changed.

• 3:46Joe Weisenthal?

  Very after, yeah.

• 3:47Tracy Alloway?

  That was the thing, because like, for years and years and years, everyone was like, oh, FAANGs, like, big tech, so crowded, like, and the suggestion was, don't even bother buying because the valuation is just so eye-watering at the moment. But in actuality, If you wanted to not not even outperform, but like meet your benchmark, that was the only trade was buy tech.

• 4:07Joe Weisenthal?

  This is the true pain trade, right? Because it's like, everybody is long tech. Everybody is overweight tech. How could you make money buying tech? And yet you still had to buy tech just to keep up. And so now there's the question of is the pain trade reversed? Because if there's so many people are so into tech and so into the US, can they actually make the risk and take the move of like, you know what? I'm going to overweight Germany or I'm going to buy Chinese stocks or whatever it is. And these are, I think, this is the moment where like, you have to get this call right. And this is the call of the moment.

• 4:39Tracy Alloway?

  And you haven't really had to do that before. Now things are getting interesting.

• 4:43Joe Weisenthal?

  Right, we all know the backdrop of all this. So we don't really have to do that in the intro. But I'm very excited about our guest. We're still here in London. We are going to be speaking with Ozan Terman. He is the vice chair of global macro at Deutsche Bank. And he talks and thinks about all of these questions with his clients all the time. So we're going to get a slice of what he's thinking about. Ozan, thank you so much. Great to be here with you in person.

• 5:06Speaker 04

  Wonderful to be here. Honestly, I'm a big fan. I listen to you guys all the time. My clients and friends are big fans. So it's great to be here in my hometown.

• 5:14Joe Weisenthal?

  This is very important to us when I say that. Or sorry, when guests say this on the episode. We hate when they say it before the recording starts. Because like, that was a total waste. Do you agree with the premise that I set up? That this is essentially the big question that everyone has to grapple with right now in markets?

• 5:32Speaker 04

  We fought it out and quite tiringly.

• 5:36Joe Weisenthal?

  Sorry to exhaust it. We're exhausted too.

• 5:38Speaker 04

  I mean, even we're very exhausted after the liberation day. But even before all that, we're exhausted from how wrong the whole gen two, gen 20 consensus went. Everybody and their brother were believing S and P would go anywhere between 7,000 to 6,500. And T Y U S 10 year would go to 5%. It kind of did, but for all the wrong reasons. And then Euro dollar, right? And then everybody who's saying parity, believe me politely, deep inside, they were believing 0.95, that dollar C N H would go to 8. I can go on and on. And why, right? First of all, this US exceptionalism, we can go into tech as well. But first and foremost, it was about fiscal expansion.

• 6:22Speaker 04

  US was the one, the big one, printing the most, especially after Omricon. And on top, yes, the magnificent seven, the wonderful Silicon Valley story. And the belief that Germany, Europe and China, for different reasons, would never match the same fiscal ambitions. All these three things I mentioned are completely turned on their head. From deep sea to Germany's one, in fact, one point one trillion, to China, holding on to their currency and choosing more fiscal. All the consensus traits and views are thrown into the water.

• 7:02Tracy Alloway?

  It is true, in January, we recorded that episode with the ECB's chief economist. And it was basically about all the challenges facing Europe. And then like two months later, European stocks are surging. Everyone's getting very excited about that market. I have what I imagine might be a difficult question, but maybe it's not for you. How much of this has to do with things being really bad in the States versus things actually going well in Europe?

• 7:31Speaker 04

  I really like that question. It's not a difficult question, actually. It's a key question. At the very beginning of the year, it was more about rest of the world doing much better than expected. Germany step is a huge step. After the election, I held a micro dinner in Frankfurt, as you do. And both our big cheeses and some of our key clients really did not see this coming. Maybe three hundred billion, maybe four hundred billion, mainly on defense after the shock in Munich. But infrastructure, health, education was hardly mentioned, something like one point one trillion. My head of rates rating was throwing that out as an idea, which was quickly pushed back. Then the Hamburg local elections happened and right away, Merz came up with that number.

• 8:15Speaker 04

  And before the new parliament sets in. That's sometimes these words, hyperbole are used too much, but that was a, that was a historic step. On top China, deep sea, that was a big, big development. I mean, I was jumping up and down on my Bloomberg on Saturday and Sunday of that weekend. Whatever you want to believe, I mean, maybe they'll do it for five, maybe they do it for fifty. They definitely don't do it for two billion or one trillion, right? So deep sea will change the world for magnificent seven and all of us consumers. But then to trace his question recently, it's becoming more about US hurting itself. US hurting its soft power, US creating a confidence crisis in a way.

• 8:56Speaker 04

  With full respect to Scott Besant, who's been a dear client friend as well, who's been to some of my New York Mac readers. When he says what Mac seven goes through, a quote, has got nothing to do with mega. It's more about a deep sea issue. I would kindly disagree with that. Of course, deep sea, as I told you, has got many factors to do with it. But tariffs, much more than people expected, ended up shooting US on its own leg.

• 9:26Joe Weisenthal?

  Is deep sea about deep sea or is it a metonym for the rise of competitive Chinese tech?

• 9:33Speaker 04

  I think more for the latter, but my friends that I do trust in beyond the market mind yours. From the start, believe that it was, it was real. Some think it did much better than chat G P T. And I think US, since it has given me my education as well. The first reaction to it was the US I know, this is for real, it may help all of us, let's compete. So in that sense, it was good for humanity as well. But yes, that was the first step in the, in this year in which China said, hey, I'm here. Then the second big step was last Wednesday. I mean, Joe and Tracy, last Wednesday, unfortunately, five, six hours before this. When I woke up to see the China fix, to see if they devalued big or not. And when I was leave to see they haven't.

• 10:18Speaker 04

  Then I looked at US ten year, as you do, and Euro dollar and then. I didn't unfortunately sleep. Why?

• 10:24Joe Weisenthal?

  I didn't sleep that night either. I was on my couch updating my Bloomberg app on my phone, just looking at 10 year yields.

• 10:30Speaker 04

  Imagine if we did this one week before. So because US 10 year had gone to 455. And at the same time, dollar was weakening. So even that Sunday, three days ago, I kind of knew this was the vibe. Some people were really worried about it, but I didn't see. I didn't see in two days, dollar melting like that. And at the same time, US long end being basically lost 10 and 30 year. That is my terroir. I grew up in emerging markets. My first responsibility was emerging markets. Again, no hyperbole. That was emerging markets like trading. That stage, eh, you know, I almost wanted to shout out responsibility, like almost like an emcee to the market. Somebody needs to blink. Somebody needs to come.

• 11:16Speaker 04

  I thought it could be fed and right that afternoon, president blinked for the first time.

• 11:21Joe Weisenthal?

  Yeah.

• 11:22Tracy Alloway?

  You know what else was very emerging markets-y that week? You know, having policymakers calling for rate cuts when the dollar was falling and yields were going up. Like that is classic EM, right?

• 11:32Joe Weisenthal?

  Well, I was thinking that if we were classic EM, wouldn't the IMF peoples be calling for rate hikes and not rate cuts? In that environment, would they say, oh, you know, you need an independent central bank that like is committed to sort of orthodoxy. You got to hike in these environments.

• 11:47Speaker 04

  That, my friends, you guys are in London. We're honored. That unfortunately is the trust moment. We went through that in this island just three years ago. But even then, at the height of the panic, when quite justifiably some were calling for a hike, Bank of England instead chose QE. At that time as well, people said, oh, that may be inflationary at the end, et cetera, but that ended up calming things down. I do believe, first of all, last week, if president didn't blink and 10 year and 30 year continue to sell off with the dollar selling off, EM style. I think Fed would have come definitely and the QT, I mean that's we can talk about that. I think they will do that right away in May anyway. But I think they would do QE as well, not cut.

• 12:32Speaker 04

  I think Powell really doesn't want to cut because of all the inflation growth dynamics. But they would have done that. And I don't agree with some of my dear client friends who say even QE inflationary wouldn't wouldn't long and react to that even more. Maybe they are kindly talking their book. If we have, if you go through that kind of episode, a QE may calm things down. But Trump blinked two or three times. So I'm not too sure. Famous last words, we'll go through that Fed QE stage. Now, there's a big, big, big debate already in the market, even though my dear friends are tired and wounded. Do you play for the next leg to come?

• 13:14Speaker 04

  One more quote unquote attack towards four fifty and higher in US 10 year, much more importantly, five percent and higher in 30 years? Or do recession worries and growth worries always outweigh? Is it now when worries peak? Is it now time to receive? I kind of have a lean towards this, the latter. And it has won by 25 basis points as I speak. So something may have begun.

• 13:55Speaker 00

  What's next for virtual assets? I'm Jacob Greece, host of Economy Scale, a series exploring growth in key global sectors. And in this episode, we're diving into the digital forces shaping finance. Sean McHugh from Dubai-based Virtual Assets Regulatory Authority has this to say.

• 14:11Speaker 05

  We're seeing a lot of institutional players come in, digital asset dedicated hedge funds, high frequency traders and that sort of thing, and folks who service institutional clients.

• 14:20Speaker 00

  As more capital enters the market, adaptive regulation is likely to become increasingly key. Reese Merrick of Ripple says.

• 14:28Speaker 06

  A lot of regulators globally would like to keep the industry at arm's length. That's the opposite. Sit here. I think also what you'll find is that regulation and frameworks can come out, but some of them are maybe a slight iteration on some 80 year old policy and not actually in line with what the technology can do and offer. And again, that's very different in Dubai.

• 14:47Speaker 00

  Listen to the full episode wherever you get your podcasts. This series is brought to you by Bloomberg Media Studios and the Dubai Department of Economy and Tourism.

• 14:57Speaker 01

  This is the Bloomberg Tech Minute brought to you by Chat GPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting

• 15:39Speaker 01

  and hiring practices, but according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote must be willing to work extended hours and weekends as needed. One major perk for all that hard work? Employees access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by Chat GPT. Get started at chatgpt.com.

• 16:20Tracy Alloway?

  One of the reasons we wanted to talk to you is because you are constantly speaking and arguing over these trading ideas with your clients. And I guess I'm curious about

• 16:30Speaker 04

  I like the arguing.

• 16:31Tracy Alloway?

  Yes, I guess I'm curious, is anyone buying the Trump administration argument that like, okay, we're taking some short-term pain in exchange for longer-term, better economic growth? Is that something that people like are actually positioning for? Or is that resonating at all with your clients?

• 16:50Speaker 04

  Again, very good question. Up until mid-February, end of February.

• 16:55Speaker 04

  A lot of them did. Now, we don't think about it, but you know, you're at one thirteen, one fifteen. Back then, to talk even one ten euro was like, come on, you know, calm down, etc. Because people did believe tariffs have to be inflationary. Market is not believing, market is not pricing it, that's why it's not happening, etc., etc. Then credibility started to become an issue. When you start with Canada and Mexico, and when you don't mention China that much. Then you decide to do something on Canada and Mexico, even though market and most economists are revolting. You immediately step back, delayed for one month, you start losing credibility. Then people start relaxing about the liberation day.

• 17:35Joe Weisenthal?

  Yeah.

• 17:36Speaker 04

  You come up with this big sign with very, you know, let's say, creative way of calculating it. And you hit China and Asia the most. Then people say there's a credibility issue.

• 17:47Joe Weisenthal?

  Actually, this reminds me, because you and I met for coffee in New York City, like, three or four weeks ago. And I think one of the comments at the time, and now that, you know, this seems like ancient history. But the thinking at the time was like, oh, it's interesting. Trump is hammering Canada and Mexico a lot more rhetorically than he has China. Maybe he's gonna go easy on China. And I had forgotten that that was actually in the discourse even like three weeks ago.

• 18:13Speaker 04

  I do remember our conversation as well, and you made me think too, because when I said, I still believe, like. Look, I think for this year, this, uh, yours, US exceptionalism trade is here to stay. It's not just a one-quarter thing, because that I heard a lot as well. Ozan, good call. We like your blue mega hat, but this is just one month, this is just two months, this is just three months.

• 18:32Joe Weisenthal?

  Yeah.

• 18:33Speaker 04

  Oh, now it's one fifteen, etc. But then you told me, look, uh, China, they're doing a lot better in EV and solar. They're starting to do better in tech, in fiscal. So maybe we are not that exceptional, after all, you had told me. And then also on that going easy on China, he was trying to hide his cards.

• 18:52Joe Weisenthal?

  Yeah, he was.

• 18:52Speaker 04

  Then he went seventh gear. But China is playing a good one. If a lot of people, back to that Wednesday when we didn't sleep, a lot of people fear that either that Wednesday or that Thursday, China would devalue big. To be fair, to both my research and trading, Perry, Malika, we really believe that people shouldn't exaggerate. They would hold, they would hold the ground and it was to their advantage to choose fiscal more, so far, so right. That, and that also proving, making things quite difficult for, for the president, like even this morning, right? I opened up, okay, it's more colorful for Tracy and Joe. One, you know, not wonderful, but S and P down seventy, Nasdaq down three hundred fifty. And then as I was walking to the tube,

• 19:36Speaker 04

  China may talk to you guys if you show respect. Immediately S and P reduced seventy points.

• 19:41Joe Weisenthal?

  By the way, for listeners, we are recording this Wednesday, April sixteenth. It is ten fifty-eight London time, five fifty-eight New York City time. We always have to get these in, in our market conversations.

• 19:52Tracy Alloway?

  Yeah, I think it's so funny, we actually have to include the, the exact time now, which we didn't have to do before.

• 19:57Joe Weisenthal?

  We used to just do dates.

• 19:58Speaker 04

  I like that. Before ECB, before Powell speaks in Chicago.

• 20:01Tracy Alloway?

  Yeah, exactly. Well, okay, so on the tech front, one thing I don't get is so much of the American exceptionalism trade has been about AI enthusiasm and this idea that America has a head start and no real competitors, at least up until the unleashing slash arrival of DeepSeek. In Europe, we still haven't really seen a real contender in the AI space. I think that's fair to say. And there has been this long-running disappointment that Europe is just not where other places like the US and China are when it comes to cutting-edge technology. That hasn't changed as far as I can tell, but it seems like investors are kind of willing to overlook that or maybe they think that.

• 20:46Tracy Alloway?

  US isolationist political policy and the idea that Europe is going to have to come together to fight Russia and, you know, make up for a less active US. Maybe that's going to be the thing that sparks technological advance?

• 20:59Speaker 04

  A bit of both. I think first of all, especially Germany, but Europe can reinvent itself. That's going to take a little bit of time. In the meantime, things like ARNIVEDIA, so things like LVMH Hermes have to carry us, which didn't happen yesterday because of what's going on with China. So it will need time. At the moment, Europe does AI, but does the chips, like the part of the chips that helps the ASMLs and the TSMCs of the world. Germany doesn't necessarily have its own ASML. So, but at the same time, yeah, this is a country, at least the country, Germany, but overall continent that has shown that it can reinvent itself. It's not going to happen in two, three months, but all these

• 21:43Speaker 04

  FODPAS, all these unforced errors America is making is giving the old continent some time.

• 21:51Joe Weisenthal?

  Europe is arguably now the leading, I mean, clearly the most advanced place in the world for aerospace technology. And we had those headlines today, or sorry, yesterday about China halting deliveries of Boeing. Already Boeing was falling behind Airbus largely due to operational problems. There is clearly still some just sort of like classical industrial might on the continent, much of it aerospace, probably, you know, engines, other parts that feel like areas for potential further growth.

• 22:28Speaker 04

  Agreed. Look, I go back and forth between three categories, two categories, really. Category one is, you know, after having a great four months, I'll be wrong. US exceptionalism will be fully back. This was all a joke. America, America.

• 22:42Joe Weisenthal?

  Yeah.

• 22:42Speaker 04

  Category two, for reasons like you outlined, Europe, European industrialism, China will continue to lead the pack. To be honest, it's going much better than I would have thought. This much outperformance didn't happen since 1980, etc. It's going to be continued team and category three USA Inc. America will take everything down. It will be such a serious confidence and market crisis that with all due respect to European aerospace, this, that, the Danish. True global recession.

• 23:11Tracy Alloway?

  No place to hide.

• 23:13Speaker 04

  I go back and forth. How can you not? Yeah. You go, you go, you go back and forth these three or two categories. My gut feel and reasoning still is that category two, the broad theme of 2025 will win because why? I think President will continue to blink. And also I have a backstop now. I do believe if things get very ugly, five percent and more US, 30 year ugly in US Fed will come with, with Q yet this. Collins, last Friday, she gave a hint. She said the one more word, we are ambitious, whatever the word. She, she didn't just say watching. We're definitely watching. She was the first one to give most investors belief that they could come with more steps.

• 23:56Speaker 04

  And then Waller, I know that now Waller, people are half joking about, is he really saying it or is he lobbying for the job? Is he interviewing? Yeah, yeah. But he's, you know, he, he's, I, I think he does believe it. He's a respected man and he did hint that cuts can be front loaded if things get uglier. So first of all, I believe blinks will continue from the White House, but even if they don't, I think we have the backing of the, of, of the Fed.

• 24:21Tracy Alloway?

  You know, I mentioned in the intro, this idea that the world is sort of de facto overweight the US just because of the, it's the market size and it's weighting in a bunch of different benchmarks. Does that provide like some cushion for US equities selling off? Like the fact that you do have index investors, passive investors that have to be hugging a certain benchmark, which happens to be filled with a lot of American equities?

• 24:48Speaker 04

  Completely agreed, exactly. Tracy, in a simple way of putting it, I was discussing with a senior colleague yesterday. This is great because let's go right into that reallocation, the big team, right? If big players were really in the big sense of the world with a big R, reallocating away from the US, there will be a lot of circuit breakers in SMP. I don't want to sound, but that is, you know, it would be, I'm not sure how SMP would open tomorrow morning. So there's a difference between even these big real money, so wealth funds, trading in their own time zone and making much bigger, much longer dated decisions. So I think this latter,

• 25:30Speaker 04

  it's more, we do want headlines, especially us emerging markets FX people, we do get excited. But true, true, true, big reallocation, I don't think we're there yet. That being said, there are trades. So these big, it's not just my wonderful hedge fund friends, fast money, getting, what's the word Trump used, quizzie. It's beyond, it's yippy. It's more serious than that.

• 25:56Joe Weisenthal?

  Yeah, no, Tracy wrote a great note about that yesterday or the day before, I can't track. It was like, there's like real money, real money actually moving away. You know, everyone looks for analogies to past experiences and this like, is this like, is this like great financial crisis? Is there like a run element? Is this like COVID where it's a supply shock? A Nixon shock. Is this like the Liz Truss moment where, I don't really like the term because I don't like insulting people, but you hear that term moron risk premium exist. The other, you know, when you describe, okay, what if the Fed comes in to backstop? Another possibility is a Brexit analogy in which there's not an immediate crisis really,

• 26:41Joe Weisenthal?

  is just the start of a slow degradation of the economy. It sounds like when you're in that number two spot where it's like, okay, there's some blinking going on, there's some Fed backstopping going on, that it maybe that is the analogy perhaps that we should be thinking of.

• 26:56Speaker 04

  Spot on. I mean, soft power is Being eroded, my alma mater, I'm biased on the issue, but Harvard headlines, right? That doesn't help the global perception, whatever your politics is. So in that sense, in fact, when I was trying to get some sympathy from some clients via, you know, forwarding around the Harvard headlines, one of them did say, did say, immediate answer, US is Brexit moment. Yeah. To your point. So for it to get more serious, uglier and GFC like that than that is the big word. DM credit, DM credit, that needs to shake for it to become, you know, God forbid more O eight, O nine like.

• 27:35Tracy Alloway?

  What's the trade? Because we can all sit here and talk about these big macro themes like American exceptionalism. But like, you know, given some of the restrictions on large investors and given the reality of trading in certain markets, like, you know, Chinese assets, what exactly do you do here?

• 27:54Speaker 04

  I think, look, first of all, I do believe forty, forty eight, fifty in S and P may, may have been a base, a floor. Even if I'm wrong on that, if we go down towards that very fast, more Fed blinking and QE will come very fast. So I think we'll bounce very, very fast that I, I will forget that I was wrong. I continue to believe Europe and China has a lot of fiscal room. So I feel at the moment quite confident that DAX, M DAX, the medium caps, and China take will continue to weigh out for, outperform US. On rates, we had started discussing with Joe, I do have sympathy that receivers from here on the long end will work, that may be, that may be a big trade actually.

• 28:39Speaker 04

  Talking about despite tiredness and wounds, a crowded trade, steepeners, still crowded. Because on paper, it does make sense, you know, for different reasons for US and Europe. But, you know, short end may, may stay, may stay lower and long end may get, may get sold off more on that one. Hmm, so I think flatteners at certain stages may give pain to people. ECB, for example, okay, she will cut tomorrow. But I don't think, there's so many unknowns, right? How the tariff negotiations will go, etc. On June, she will not blink. She will not give you the hint that this will continue on June. And if people started getting worried about a June skip, there you go. That's not gonna help your steepener.

• 29:23Speaker 04

  Our official call is that terminal rate in Europe is all the way down to 1.5. My excellent chief economist, Mark Wall, does get pushback from that in Spain's and Italy's of the world. Even before the recent developments and even before Euro went to 1.13. Soft dollar, look, we're talking big levels on euro, on yen, on Swissy, on gold. But my bias is still to sell any dollar rallies.

• 29:52Joe Weisenthal?

  So you were talking about that Wednesday night when dollar was selling off.

• 29:56Speaker 04

  Morning, Wednesday morning, last Wednesday morning.

• 29:58Joe Weisenthal?

  Actually, for me, it was Tuesday night, but I mean, it sort of depends.

• 30:01Speaker 04

  Your Tuesday night.

• 30:02Joe Weisenthal?

  It was my Tuesday night.

• 30:03Tracy Alloway?

  Oh, we all know what you're talking about, so it's fine.

• 30:05Joe Weisenthal?

  Yeah, yeah.

• 30:05Speaker 04

  Lucky are you.

• 30:06Joe Weisenthal?

  Yeah, yeah, I was up, that was the Tuesday night I didn't get any sleep. Um, the Wednesday day, and as you said, this is, you're like, this is EM-style trading, right? When you see all three equities, treasuries, and the dollar going down. If we were actually talking about the US as an EM, if you're an analyst, as a, you know, a sell-side talk, there would be a lot more, you know, there'd be a lot of talk about politics and how politics works and, you know, what is, is there an independent central bank, etc. Like, how much of the conversation is really becoming about stability of just like the sort of internal workings of the US political order?

• 30:48Tracy Alloway?

  Rule of law, institutional strength.

• 30:50Speaker 04

  Again, very, very relevant. I mean, in that kind of sense, if we half revisit that your Tuesday night, and if President sends five more tweets about Fed should cut right away, not good. Yeah. Some people even believe on the Friday speech, I don't know now, two weeks before. It's okay, we've all lost track of time. If President didn't tweet five minutes before the guy spoke, I mean, conspiracy theory, but maybe he wouldn't, he wouldn't prefer inflation that much over growth. So if you create that kind of Fed independency question mark, it's not gonna help your, it's not gonna help your trade. At this moment, talking about EM, if this thing goes like this, America needs friends.

• 31:35Speaker 04

  America Finance needs friends. Powell and Besen when they auction, need friends. So, talking about EM, right, whenever the President, these days, things can change. He's a, he's a very successful political person, needless to say. But as of now, whatever the topic is, from tariffs to Powell to Harvard, when he talks and writes too much about an issue, it doesn't help with this Tracy's capital allocation situation. Real money sells dollars. Yeah. Mathematics. And at the moment, he needs real money to buy his auctions.

• 32:27Speaker 01

  This is the Bloomberg Tech Minute, brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Businessweek's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw, innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 33:11Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company. And Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute, brought to you by ChatGPT. Get started at ChatGPT.com.

• 33:51Tracy Alloway?

  I'm not going to say that the US is an emerging market, but I am going to ask you, with all of your emerging market experience, what advice do you have for people who are trying to trade the US at the moment?

• 34:01Speaker 04

  I mean, watch the three key people. Trump, Powell, Xi. Who's going to blink? When? I think that would be my advice even a week ago. Trump already showed that maybe he has less cars. He's blinking. Then the second thing is, you know, I mentioned Collins, I mentioned Waller. Not cuts, but I do believe that QE is out there. So I think we have the backing of the Fed. And then finally, Xi, even though, okay, he has the cars, but this is not good, right? So at some stage, they need to talk. Even the basic, what we quote unquote, expected after the president rallies last year, 10% for everyone else, 60% China. Even that's much better than this.

• 34:46Speaker 04

  So at some stage, there will be that summit between them, and we will be at a better stage. So this all, this all makes sense. That's why I'm not category three. That's why I'm, you know, we will be okay. Maybe 48, 50 will hold, but the rest of the world and Europe will do better. If I believe that Trump wouldn't blink because of ideology, whatever. If I believe that Powell would say, "Your problem, not even QE." And if I believe that China would play a very, very, even a tougher hand, then I would fear, yeah, I would fear Brexit or O8 like things more. I don't.

• 35:21Joe Weisenthal?

  Yeah. I just have one last question. It's kind of a curveball, and I'm certainly not asking you to like make your call or a trade. You know, one thing that I've noticed, though, over the last couple of weeks is that Bitcoin has not actually been as tech stock like as it used. I used to joke that Bitcoin traded like three tech stocks in a trench coat. And I'm wondering, when you talk to people, we all know it's a speculative trade, whatever, that's not my point, but when you talk to people, particularly in EMs, do you get the sense that people take it for real as a monetary asset, that they want to have some allocation to it that's separate from all of this?

• 36:01Speaker 04

  Can I answer that and then add one more thing that I want to?

• 36:03Joe Weisenthal?

  Yeah.

• 36:04Speaker 04

  So Bitcoin answer is, it was just going to, it was about to become even more serious in a good, good sense. It was becoming even more of a digital gold, not just my, some of my dear client friends and their big PA portfolios, but some institutionalization was taking place because of what they believed Trump would bring to the table. But then my answer to Tracy on credibility, on tariffs, there's a reason why all these, if he did these China, Canada tariffs on Jan 20, we would probably want to trade first at 102 euro-dollar. Now we're trading at 115 because credibility is gone.

• 36:38Joe Weisenthal?

  Yeah.

• 36:38Speaker 04

  A little bit similar now with the whole Bitcoin situation, back to the back of the class, if you're a big believer on a big bounce in the market, maybe you would, you know, trade it in your own portfolio, et cetera, et cetera. But some of the funds getting, buy and sell side getting more serious about it as an asset in an institutional side, I think that took a hit. This other team that I want to bring up, so that I don't regret, tax cut.

• 37:00Joe Weisenthal?

  Oh, yeah.

• 37:01Speaker 04

  So, you know, that, again, talking about a big veteran, you know, one of us, big market player, Besen, there's a reason why he's saying, literally saying to your colleague Horden, this whole year has been tariffs, tariffs, tariffs. We need to talk, you know, he's talking to Ozan Zoglu, we need to talk tax cut, tax cut, tax cut, deregulation, deregulation. Well, you're the man, you're the one to change the narrative to that. So he's claiming that they're moving fast on that, like in Trump 1.0, that's going to be important, whether it's going to be just the extension of the existing tax cuts or will he, you know, beyond tips and stuff, will he bring something new to the table? We can discuss whether that's good or not, whether this thing, this economy needs more fiscal easing. But yes, if they, beyond words, if they can succeed on changing the narrative from tariff

• 37:43Speaker 04

  madness to more the house, tax cut, deregulation, how fast it's going, passing, can it be done before July 4th, et cetera? And that's going to help the very not the not well not what the screens are telling you now, but that would help S and P and Nasdaq.

• 37:59Tracy Alloway?

  Even there, though, we're getting confused mixed signals, right? We had a story overnight where the the Trump administration was said to be looking at tax hikes for people earning more than a million dollars a year. So I can see why people have forgotten like that part of the narrative because it is a little bit confusing at the moment.

• 38:17Speaker 04

  I completely agree with you. Look, for Trump 2.0, it has been for the economic team, it has been a stumbling start, stumbling start, like they haven't.

• 38:23Tracy Alloway?

  A stumbling start and a stumbling start.

• 38:25Speaker 04

  Exactly. It hasn't been understatement. It hasn't been a Michael Phelps start.

• 38:30Joe Weisenthal?

  Ozon Tormund, thank you so much for coming on Odd Lots. This was like the perfect moment, perfect guest. Really appreciate it.

• 38:37Tracy Alloway?

  Thanks so much. That was fun.

• 38:39Joe Weisenthal?

  That was a lot of fun.

• 38:53Joe Weisenthal?

  That was a fun conversation. I like the sort of the three, the three scenarios that he laid out and, you know, I don't like everyone else, you know, I change my view. Not that anyone should ever listen to my view because I've never gotten anything right, but whatever I feel it usually like changes by the hour at this point.

• 39:11Tracy Alloway?

  Yeah, which I think is fair, right? Like, that's the reasonable response to the flood of news headlines that we're getting. I should, I feel like we should just add Odd Lots does not provide any trading advice, right? This is our disclaimer. But that said, I do like one thing that seems certain to me really is the higher term premium in the treasury market and the idea of a steepener. Also, because like I think the US is just going to have to issue like even more short term over time for a variety of reasons, one of which could be foreign investors stepping away from the treasury market more than they have already been doing. So that's one to watch. And then just on the Bitcoin point that you were making. I've been thinking about this too, over the past couple of weeks. Like, I have been eagerly

• 39:56Tracy Alloway?

  waiting to see what the next big Bitcoin talking point is, because this is one of the, one of the real strengths of Bitcoin is, it always comes up with a new narrative, right? And like-

• 40:09Joe Weisenthal?

  Well, it can't be tariffed.

• 40:10Tracy Alloway?

  Yeah.

• 40:11Joe Weisenthal?

  It's kind of, people have called it gold, right?

• 40:13Tracy Alloway?

  Kind of digital gold.

• 40:14Joe Weisenthal?

  And it's actually, people should look at the chart, it's not trading as bad in its NASDAQ like it had been for a while, which makes me wonder if it's a little bit acquiring some of those safe haven properties people supposedly claim.

• 40:25Tracy Alloway?

  Yeah, but it needs something like pithy for Trump tariff world, and we're still waiting for that. And, but I'm sure there are people working on it right now.

• 40:34Joe Weisenthal?

  You know, the other thing is, when I think about all of these, so there's two things that I think about. One is, there is this scenario that I don't think gets talked about as much, which is like, the global depression trade, or the global recession trade, right? And so the idea that it's so disruptive, and the US is so important, that the idea of it just being like a sort of US recession, which many people obviously think, it actually, not that, it actually is something-

• 41:00Tracy Alloway?

  Which seems like a realistic possibility.

• 41:02Joe Weisenthal?

  And then the other thing is that, like, when everything looks sort of bleak, and there really isn't much cutting-edge tech in Europe, and US is maybe shooting itself in the foot, and there are limits to the degree to which anyone can really invest in China, it's not surprising that gold is now perceived, like, that's the one thing, right? Like, the one thing that will be there for you is if you have a yellow shiny metal in your safe, and it's not surprising that that's rallying.

• 41:33Tracy Alloway?

  Plus, gold is just shiny, as you say.

• 41:35Joe Weisenthal?

  It's really nice, it's really nice.

• 41:37Tracy Alloway?

  It has that physical attraction, that sense of comfort in times of uncertainty.

• 41:41Joe Weisenthal?

  Well, you know, we went to the jewelry, the jewelry store, I guess that was like February or March or whatever, and I tried on that $75,000 gold necklace, and I feel-

• 41:50Tracy Alloway?

  Do you regret not buying it?

• 41:51Joe Weisenthal?

  Yeah, I feel really dumb not buying it, because A, a bunch of people told it, told me it looked good on me, but B, more importantly, that'd be like an $85,000 gold necklace today.

• 41:59Tracy Alloway?

  Joe, you know, we're, we're not that far from one of London's jewelry districts. We can, we can go shopping right after this, it's about 10 minutes away.

• 42:06Joe Weisenthal?

  I'm really underweight gold, Tracy, so I might, I might have to do that.

• 42:10Tracy Alloway?

  All right. Shall we leave it there?

• 42:11Joe Weisenthal?

  Let's leave it there.

• 42:12Tracy Alloway?

  This has been another episode of the Odd Lots Podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.

• 42:17Joe Weisenthal?

  And I'm Joe Weisenthal. You can follow me at TheStalwart. Get more of Ozan's thoughts, check out his LinkedIn, Ozan Tarman. Check him out there. Follow our producers, Carmen Rodriguez at Carmen Armin, Dashell Bennett at Dashbot, and Cale Brooks at CaleBrooks. Thank you to our London producer, Moses Andam. For more Odd Lots content, go to Bloomberg.com/oddlots, where we have a daily newsletter and all of our episodes. And you can chat about all of these topics 24/7 in our Discord, discord.gg/oddlots.

• 42:47Tracy Alloway?

  And if you enjoy Odd Lots, if you like it when we talk about trading, the end of US exceptionalism, then please leave us a positive review on your favorite podcast platform. And remember, if you are a Bloomberg subscriber, you can listen to all of our episodes absolutely ad-free. All you need to do is find the Bloomberg channel on Apple Podcasts and follow the instructions there. Thanks for listening.

• 43:35Speaker 07

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• 44:07Speaker 08

  She's been thinking about this sleepover all week, but I think about her food allergies all the time. Fortunately, her doctor prescribed Zolair, omalizumab. It's proven to significantly reduce allergic reactions if a food allergy accident happens.

• 44:20Speaker 09

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• 45:04Speaker 09

  paid for by Genentech and Novartis.