Capital Costs Rise as Markets Eye Midterms

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Can I rip up the script with George Noble? I mean, we got to go there. I mean, he's got some conference coming up or something. It's a bunch of low-rent people with nothing to do. And they're going to be doing something like David Keller's going to show up. Do you know that David Keller has an original edition of 1978 Wells Wilder? Is that right? That's like the Gutenberg Bible of technical research. None of that matters. Louise Yamada will be with you. George, you are rocketed. Explain the majesty of Louise Yamada.

Thanks so much. Louise belongs in the Hall of Fame for technical analysis. along with Ralph Acampora and the whole bunch. And Louisa, she's still pitching. And we're so delighted that she'll be joining us next week, Tuesday and Wednesday. 20 of the leading technicians' names you would know. This is the Varsity team. Over two days, 10 to 4, and we're really trying to democratize finance. Thanks for letting me mention it. It's only $ 199, and it will all be available on replay. $ 199 is what a used Wells Wilder.

Book costs, if you're lucky to find it. I can't say enough about the quadrants, including John Rook will be there. It's okay, let's get down. I need you to explain this. You sent it out on Twitter where you get a lot of hate mail. You're making it both ways. Your longs are going up and your shorts are going down.

How rare is that, that you're making money both ways?

Well, I guarantee you our results next year will not be as good as they've been this year. I mean, it's obscene. I don't want to mention it, but just go on our Twitter feed or on our sub stack. As Peter Lynch always taught us, it's a market of stocks. You know, the lazy, easy, seductive thing to do is sit around and call and try to call the market.

It's a market of stocks. Some companies are doing well. Others are not doing so well. And so, look, these are challenging times. I've refrained from making a big market call. I am leading more bearishly with each passing day. But I have much higher conviction in what's working, what will work, and what won't work. And, you know, last time around, we talked a lot about the AI trade. It just goes from bad to worse. Tom, it's kind of funny.

I come in this morning. I was thinking on the train on the way in. What are we going to talk about today? It's like you get up to bat and Pedro Martinez is pitching. And it's like you know he's going to bring you his cutter or whatever it is. But I got Kane on the mound. And he's got such an arsenal. I don't know if he's going to hit me with energy, AI, French elections. It's like the stories write themselves. There's just so much going on. And so we've talked a lot the last couple times you had me on about the AI trade. Who knew that today was going to be the day I show up again?

But that's going from bad to worse. Energy, your colleague just mentioned it deleted. Oil price is up again, despite the fact we've had, what, our 77th truce or whatever it is. There's a lot going on.

There's a lot going on.

And so if you're a hedge fund guy, if you're a stock picker, just remember, the economy is not the market.

The market is not the economy.

And this is nirvana because there's a lot to do on both sides.

Of the ledger.

All right, folks, just if you want to get the 30-second call on AI, here it is. This is according to our guest here. AI is the biggest misallocation of capital in history. Complete disaster.

No ROI.

Stay short. What do you think of AI?

What do we do here?

Why not? I'm surprised.

I thought you would never ask. You know, as we all like to study history and we stand on the shoulders of giants, I was reminded of this quote. I pulled it out coming in here today. Widely attributed to Mark Twain, although it's not clear he ever said it. It's easier to fool people than to convince them that they have been fooled. All right. Or that's another version of what Soros once said. The real way to make big money in the market is try to figure out what is it the market believes it's not true. But more importantly, identify when you think they're going to realize they've been had. And I think we're in the throes of that right now. And if you don't believe me.

Just look at the CDS on Oracle and CoreWeave and everything else. And so, you know, Paul, it doesn't matter what you think, what Tom thinks, what I think.

It's what Mr.

Market thinks, right? And the market's starting to go our way. The force is with us. You know, we've been short CoreWeave. It's our biggest position. And we doubled down on it actually two weeks ago. As Peter would always say, can you upgrade the story or downgrade the story? People oftentimes result on price. Oh, it's up. You must sell it.

It's down.

Sorry, it's up. You must sell it.

You're down.

You must buy it.

No, no, no.

CoreWeave, I would argue, is a better short today at 60 or wherever it is than it was 107 because they're circling the drain in terms of the pricing of their fixed income stuff. Ditto for Oracle. And so, no, I think we've got a real situation here.

If AI is the biggest misallocation of capital, we have a global economic challenge.

Everybody's all in. I mean, the total dollar amount's being invested.

The ripple effects, I'm going to go get some safety in utility stocks. No, you're not, because utility stocks have been bid up on.

They're all AI places. I mean, the only hedge I know for AI is gold.

Bingo.

So, I mean, if there is an AI misallocation of capital in history, the greatest, that has huge ramifications.

For the global economy.

100%.

I'm looking at the CoreWeave stock, and it's on support, folks. If it breaks down, George Noble's a genius. I'm looking at the bond, which is a beyond elegant. This is the 32 six-year piece with a coupon of nine and five-eighths. The technical chart of this, David Keller would break into a sweat if he saw this. It is beyond elegant, David Keller. Good morning, one of our heroes from Bloomberg years ago. George Noble, Paul and I mentioned this yesterday. 99-2000, we learned there wasn't a profit model. The fallback for the bulls is now we have a select group of AI types that generate huge revenue, huge high margin profit.

Is it different this time, at least for a select few? No.

If you read carefully, and you folks read the same stuff I do, there have been stories coming out of late. I think 1% of the users account for 80% of the revenue, yada, yada, yada. and some ungodly portion that's funded by money-losing VC firms. And then more importantly, as one of my dear friends pointed out to me, he follows industrials globally. He's been asking every company that he speaks with, what are you doing about AI? And here's the real shocker, Tom. Almost to a man, they all say they will not use these LLMs. Why? Because of compliance reasons, security reasons. Once you put your stuff out there, it's a property of Sam Altman. And no, they're just not going to do it. So not only for those

of us, I'm too cheap to pay $ 200 a month, as I suspect Paul and you, Tom, We'll pay $ 20 a month. And so not only the union economics of that all upside down where they'd have to charge $ 200 a month just to justify the cost of the compute and the energy. the idea that there's going to be a small number of companies that are going to pay for this, not happening.

Early morning for Global Wall Street. We welcome all of you across America the way you choose to listen to us. Good morning on Spotify on the Pacific Rim. They gave me the numbers on it. It really dazzled.

Oh, is that right?

But dazzled by Spotify podcast listenership on the Pacific Rim. Good morning, the continent of Europe. We'll have much more in France now blowing out 18 basis points on the spread. All you need to know is it's ugly in Paris this morning. Paul Sweeney with the legend, George Noble.

Elon Musk.

That past 24 hours, we have a lot of Elon Musk in Tesla earnings, SpaceX earnings.

We've had a few months to digest SpaceX here.

What's your thoughts? I look like a genius and I look like an idiot. Right now, the jury is out on SpaceX. I think SpaceX is the most egregiously overpriced company at scale in the history of capital markets. People talk about, oh, the beat and this and that and everything else. I mean, when you've got a $ 2. 2 trillion market cap or whatever it is today, does it really matter whether the revenue is $ 40 billion or $ 60 billion or whatever they are? It's insane. And liars figure, but figures don't lie. We all recall how Scott McNeely, some of the microsystems in years past, pointed out the folly of buying companies on 10 times revenues. Well, here we have something which is like on 100 times revenues, all right?

You can't get from here to there. And I'll remind everyone of the very dangerous unlock schedule. I think there's a billion and three shares coming unlocked in the next week or two, and it just keeps on coming. Look, SpaceX may be the one that breaks the mold, but history would suggest that you buy SpaceX right here, it's like putting up a three-pointer from just beyond midcourt.

Yep, yep, okay.

You like energy stocks, though, when we got, boy, Brent Crude, as Tom was just quoting, darn near $ 112 a barrel.

Arguably too high.

If you go down to an oil patch, they'll be saying, we don't need oil at this high level. But what do you think about oil here?

So the reason for being bullish on oil is really a little to do with the straights of our moves. In fact, we turned bullish in the last year. It really had to do with undervaluation, positioning, sentiment. There was this narrative running around that the world's awash in crude.

Not true.

And then along comes the straights of our moves nonsense, Star on February 28th, which kind of messed up the whole picture because the shiny object now, everyone says, oh, what happens if we have peace breaks out and the world's going to collapse? The bull case for energy is not about that. The bull case for energy is energy accounts for 3.5% of the S & P. It generates, I think, 12 on its way, 20% of free cash flow.

Stocks are very cheap. We have depletion of 4% or 5% a year. We have years and years of underinvestment, trillions of dollars of CapEx that was not spent, which needs to be spent to find more energy. And the thing with the lasting impact of straight-sover moves is going to be that people, many economic actors are now going to realize, well, wait a second, maybe that's not a secure source of oil.

Maybe we have to develop oil elsewhere. And so I remain very positive on energy. In fact, to your point, Paul, I hope oil does not go up a lot.

Why?

If oil screams to 150 or 200, as some charters are suggesting, then the next time I'm on here, we'll be talking about are we having a recession or not. I don't want that. It's more higher for longer at last point. Look at the deferred contracts on oil. That started to move up. That's the tell for Angie Stux.

I went back. Thank you, YouTube. We love YouTube. It's making Paul and me go forward every day. I found a George Noble video with Louis Rukeyser from years ago. He would go down Newbury Street. to see Mr. Bishop at Brooks Brothers and get fitted out by Mr. Bishop. And the tailor would go, move the buttons. That's exactly how they rolled at Brooks Brothers on Newbury Street. That was a long time ago. How do these disasters clear?

I mean, I get it. Price goes down. It's simplistic. But on a capitalized basis, debt down, equity ugly, founders miserable. How does this happen? You know, the disaster you see coming, how does it clear?

You can do it one of two ways. You can either have the debt deflation to which you're referring, or we can have the soft default. We can devalue the debt. We can print money like crazy, which is what you were talking about, Paul II, about the price of gold. The policymakers always opt for door number two, which is less painful than door number one. But what's happening now is narrative and dreams are meeting lack of cash flow and debt And that's what, you know, the Oracle, CDS are telling you. That's what the Corby bonds are telling you.

And so in a world of Washington liquidity, pigs fly. As a matter of fact, the guy's got the most indebted balance sheet, the highest operating leverage, the least attractive operator fundamentally is the one you want to own. But when the tide goes out, that's who gets shot first, which is why Corweave goes to the front of the bus.

And so to answer your question, Tom, and there's a line from Hemingway, how do they go bankrupt? Slowly and then suddenly. I'm full of quotes this morning, but there's the other line too. I can't remember who said it. It was Soros or somebody. Give people a time and a price, but never the two together. Like we were on a month ago. I had no idea this was going to happen. But, you know, the market's telling us.

All right.

So whether this is it or it's six months from now, it's happening.

OK, so what's your advice? A wise one. Let me see. There's that young Turk at Fidelity. Will Danoff. Will. He's a young Turk.

Thank you.

Even younger. These guys can barely shave. These guys didn't even go to walkovers. Jason Weiner and Asher Analik. They're running ContraFun, and they're up to their eyeballs in this stuff. He's an institutional guy with a bet on Mag7. How do you George Noble exit?

Will's fantastic, and I know you know this, but I think Will's stepping down at the end of the year after a very great career.

I mean.

He is just done a phenomenal job.

He is my 401k.

He's managed over $ 200 billion. It's insane what he's done. He's done a great job. But I think to a certain extent, he's a victim of his own success. When you imagine that kind of size, you can't go into Paul Sweeney oil and gas. It's just not going to happen.

It's a huge deal.

And to be fair, look, Will's killed it. These stocks have been really well for a long period of time. When you imagine that kind of size, it takes you months to get out of it.

We've got to go. But I look at this, and this goes not only for Contra Fund, FCMTX, but many, many other iconic funds. I watch a portfolio turnover rate. Their portfolio turnover rate. is going up.

What's that tell you, Tom?

What's that tell you? Ask it for a friend.

George Noble, thank you so much. Good morning, 92.9 FM and George Noble's Boston. Stay with us.

More from Bloomberg Surveillance coming up after this.

You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube.

He rides a beautiful purse. Research note, Daniel Tenenbaum joins partner Oliver and Wyman, expert on sanctions, senior fellow Atlantic Council as well. Dan, I got eight ways to go here. The note is so sharp, but I want to begin to talk about the expansion of Mr. Putin's military efforts. You say he's getting close to battling in territorial waters of NATO. Is it that much tension out there? I mean, Tom.

Putin is really trying to take this war certainly beyond just Ukraine. There's been hybrid conflict across Europe. There's been incursions into NATO territory. We're already there with Putin trying to make this war more about Europe than it is about Ukraine, which is obviously a significant challenge as we enter nearly the fifth year of this conflict.

So, Dan, is there any sense that Mr. Putin, President Putin, wants to move forward with any type of meaningful truce talks here with the U.S., maybe even with Ukraine?

You mean the great humanitarian Vladimir Putin?

That's right. I think there are some.

Questions about this real earnest interest in entering into any sort of peace deal. I mean, there's been no evidence that Russia is interested in winding this conflict down, despite what President Trump has said. We've seen an increase in escalation, an increase in violence in Ukraine.

In recent weeks.

And all that's come in the form of pressure has been the release valves being hit in the form of an oil deal or an energy deal being.

Struck between the U.S.

And Russia.

Which really is about half a day's worth of diesel in the U.S., and waiving the sanctions and other restrictions that would come in under the Graham Act late Friday night. So I think President Putin feels like he's getting kind of a flag to continue rather than the pressure he likely needs to be seeing.

Dan, do we have any sense that President Putin is facing any internal pressure from his people, from the Russian people, to end this conflict?

That's the problem is obviously the reporting in Russia is state controlled. There's really not a lot of independent journalism getting out there. But the longer this goes on, the more deaths that are being seen at home, it does become unavoidable. And the domestic economic challenges where it is challenging to really take the word of the Central Bank of Russia's reporting. But there is no real domestic challenger.

We saw what happened when people have tried to rise up against Putin. It doesn't end well for them. So there's really no indication of how much domestic strife and where that could lead in the form of trying to stop this from within.

Dan, I want you to help us with like the manpower. You're expert at this. I see a real estate guy, Mr. Witkoff, working long hours, no doubt. trying to do what the president wants to do. And I compare that to Tillerson and Pompeo in the first Trump administration, who had the advantage of John J. Sullivan, deputy secretary of state. I mean, the manpower comparison of this administration and the first Trump administration is stark, isn't it?

There's a lot of people that were around historically Democrat and Republican administration, people that served in Trump one that understood the region, there's not a lot of returning cast members, so to speak. So this is kind of a newer team, a different team than we saw that was dealing with Russia in the first Trump term. I think that manpower is a real question in terms of who understands this region well enough to advise them. And Vladimir Putin has been in power for a very long time. There's a lot of people who understand Russia. How integrated are they on this team? That I can't say.

We got to go to the midterms here, Dan. But just one final question is what's the relationship of Mr. Putin to the people? I'm being facetious, folks, to the electorate of Russia.

I mean, they have elections, but I mean, I don't think there's any real evidence that those have true outcomes. And I think they just had an election recently where people don't really bother on reporting. I mean, let's be clear. Vladimir Putin is a dictator. I mean, who's raging a brutal war on an innocent neighbor and sovereign. I'm not sure that this is really a true democracy anymore, nor has it been for quite some time, which is really why there needs to still be so much pressure from the West. What I still don't understand is any talk of preemptive deals between the U.S.

And Russia.

There's really little private sector appetite because of all the things we're talking about to re-engage in Russia. Those who remained have seen their assets nationalized. So I'm not sure I understand this attempt to try and reintegrate. You'll see potentially Putin in Miami at the G20 in December. I'm not sure who this is for exactly.

Dan, thank you so much. Dan Tannenbaum, Oliver Wyman there on the foreign issues. Stay with us.

More from Bloomberg Surveillance coming up after this.

Let's get started right away on the ETF. Man, Paul's better at this than I am. I mean, Steve Lately, you and I are thinking like a thousands.

No, no.

Most people in ETFs are thinking in... millions, lately, like the B word, billions is what he's looking at in terms of flows.

I mean, at BlackRock, it just doesn't get any bigger. So, Steve, thanks for joining us here again. I just got to ask you, just give us the updated year-to-date global flows into your BlackRock.

Fixed income ITF.

We're at 200 globally, about 155 US. The industry US is about half a trillion. It flows globally. It's around 700. So yeah, it's a record breaking year again.

Are people going, like Tom, super duper short term?

Or are they taking credit risk? Are they looking for duration? Where are they going with this?

Yeah, so Most of the flows are in treasuries. And most of that has been in the front end. So as an example, WestGov is close to $ 50 billion in flows here today.

Your short end treasury ETF flows into.

It $ 50 billion. Yes, approaching that. $ 40 odd. So it's been a very significant flow. But then you do have broad-based flows into multi-sector investment grades. So I think what's really interesting, you know, is this recent decoupling of treasuries from from the oil dynamic. And we're seeing more of that today.

Right.

So I think a lot of investors have been really wrestling with, you know, how did we get to three percent real yields on the back end? How did we get, you know, all the way up into the fives so quickly? And the narrative for a long time was, oh, it's oil, oil, oil. And then it was, no, it's actually deficits. And no, it's the AI CapEx, right? And probably all of the above.

And then, of course, you have to throw in that magical plug we all talk about, term premium. That's when people can't explain anything, right? So that's all in the mix. But now you're seeing a pretty sharp retracement. TLT was down about 8% for the year. It's recovered half of that already in the last couple of weeks. And we're set to rally again today.

So you have something in here called flexible income. What's that?

Well, that's this idea, right? So the interesting thing, when you tie together the sharp increase in yields, all the volatility, you would think that flows would have come off, right? That investors would have pulled back. I think what investors are focused on, and they're very, very resolved, they're staring down this volatility, is on the income part. So Bink, right, would be an example of flexible opportunity. It's targeting the income part, not so much worrying about The price action.

And so investors look at that and they're saying, you know what? Yields go up, they go down, they go sideways. But this income is better than I've seen in years.

This is completely unfair. Can I do an audible here? We can do that with Steve Lately. I don't want to get you in trouble with compliance. I saw a social media thing, which is basically private credit removed from BlackRock, not involved with BlackRock. courting wealth managers. Like, we want you to give private credit money, and it's the usual, you know, cocktails, beverages, and all that. Are ETFs so successful now you're done having cocktail parties? I mean, seriously.

I mean, I remember when there was Horace DeVores and Barclays would, you know, want you to buy and eat. You're like, what? But it's like a juggernaut now. You don't need to do the dog and pony like private credit, right?

Well, I think ETFs are pretty well known and established.

Pretty well known?

Yeah, meaning bond ETFs. There was this sort of period of time where everybody was like, I don't understand. Is this a good thing?

Is it a bad thing?

I think we've gotten to a place now where pretty much universally people believe that they've been very good for liquidity in the bond market itself. And that was a change. But Tom, yeah, we still like cocktail parties. We do. We really do.

I'm sure BlackRock knows how to throw a good cocktail party.

So how about just inflows into BlackRock, the complex, equities versus fixed income, are you sensing any changes there?

Are people maybe saying, boy, the yields of fixed income Interesting. So you're seeing maybe a little bit more flows.

I mean, as you know, there's a narrative there. Right. So when yields get to a certain level, people really do start thinking about what's the tradeoff. Where should equities be versus fixed income? Some of the I've heard some of that going on. I do think that what's actually happened more than that is just this idea that people are incredibly under allocated to fixed income or sitting in cash.

We've talked about that a lot on the show. And now they're starting to really, really try to true up where they probably should have been in fixed income for a while.

Does your flows, do they fluctuate based upon where people think the Fed is going to go? Because right now we're higher rates for longer, higher rates. The question is how much longer. But we've got a Fed that presumably is still going to raise some rates some more. Does that impact kind of what you see?

I mean, the composition of flows can change, right? So, again, you know, when the Fed becomes, you know, hawkish, when that's in play, you will see stuff in the front end and in floating rate product, right? When things are calmer, it's more out in the curve.

Steve Lapley, thank you so much. Love having you in on an often basis. He's co-head of iShares Fixed Income at BlackRock. Stay with us.

More from Bloomberg Surveillance coming up after this.

We go domestic now. Gautam Mukunda with Bloomberg Opinion and the Yale School of Management and wonderful books on the span of our presidency. Gautam, I was up all night trying to figure out How to frame this question. I was thunderstruck yesterday by the highly respected New York Times-Santa College poll. And, you know, I thought that, you know, the Times, you know, Jess Bidgood at the New York Times went below the headlines. The rating or the poll of the Democratic Party as a whole was shockingly low.

What does the Democrats do to reattach to the American electorate?

So if you break out the numbers on that, the people– most of that differential between sort of Republicans and Democrats where people who are really unhappy is Democrats who are unhappy with the Democratic Party. And so if there's one thing that they need to do, Tom, it's real simple.

It's win.

If the Democratic Party wins a resounding victory in the midterms, that number will shoot up because Democrats, the average Democrat, what they really want to do is see their party win, and that will change those opinions quite a lot.

It's brilliant. I mean, it's just so simple. He makes it so simple.

He does. So, Gautam, talk to us about the midterms.

We're 12 days out, 10 days out, whatever it is. What's the expectation here, particularly as it relates to the Senate?

Yeah, so.

Let me if you just took the polling averages and I'm not making this as a prediction, I'm just saying if all you did was take the polling averages and just read them out, you would expect Democrats to win 54 seats in the Senate. And it's kind of hard to emphasize how mad that is. Six months ago, if you had bet on 54 seats, Democrats taking 54 seats, people would have, you know, they would have thought you were insane. It's just a combination of Trump's just abominable numbers and and a bunch.

Of really bad candidates.

And I think part of that is just you've got candidates who made their whole careers in red states where they've never had to run a competitive general election. And they've kind of forgotten how, right? I'm not sure I've ever seen a campaign as bad as Roger Marshall's in Kansas. It's just astonishing how inept it's been. And what should have been a slam dunk for them is really making it, at this point, a coin flip. They're hoping that the just tidal wave of money that's coming in on the Republican side with, you know, Elon Musk by himself accounting for about 300 million is going to make the difference.

It might.

I think it's more likely we'll make the difference. It's just, you know, partisanship is such a powerful thing in this country. Undecided voters and Republican voters just sort of coming home. But that is not that. But that's a gut instinct on my part. That is not what the polling is saying. The polling is saying the numbers are getting.

Worse for them. That's the team surveillance coverage. Matthew and Kayleigh, they're like so statistical and all that. We are gut instincts here.

Gotham, let's assume, I guess, that the Democrats maybe get, they certainly get the House. That seems to be what the polling is suggesting. Maybe even the Senate. Then what do they do?

It looks to me that since nobody thinks that they're going to be able to pass significant legislation absent some gargantuan crisis, which never off the table nowadays, my bet would be their focus is going to be investigations. And they've got what they seem– The thing is a very powerful argument that linking affordability to corruption, right? That they are really drilling down on this idea that they're going to look for corruption in the Republican Party, in the Trump administration. They have, you have to say, an enormous number of easy targets.

There's just never been anything like this.

And the political argument is you are paying too much because it's being stolen from you.

I look at them. Help us here. If you were writing a chapter for one of your books— right now. Folks, these are unbelievable books spanning the arc of American history. What would you title the 2026 chapter eight, ten days away from this election?

Actions have consequences. It's really just that simple. Donald Trump was elected, you know, making promises.

You might believe them.

You might not.

But the promises were he would take prices down immediately and he would make sure we did not have any foreign wars. And he took a bunch of actions that raised prices and he launched us into a disastrous foreign war. Even given his extraordinary charismatic hold over a large fraction of the electorate and political skills that we shouldn't underrate.

You know, I mean, I don't think they're as sharp now as they were a few years ago, but they're still formidable prices. You can't, you know, like like it's almost like he just took the list of all the things he said he campaigned on and said, let me do the opposite once I'm in power.

The public noticed.

So, Gotham, I mean, as soon as the last vote is counted for this midterms, everybody's going to look to twenty twenty eight.

Does Trumpism in the Republican Party, does.

That continue to lead the way, do you believe, as we start looking towards twenty twenty eight?

As long as his hold on the Republican Party base is as strong as it is, where he can endorse Darlene Graham in South Carolina and have her be an automatic win, or Ken Paxton in Texas, candidates that are so bad, you just sort of look at them like they're almost like museum exhibits of bad political candidates.

I think it does.

As long as Republican officeholders are more afraid of a primary than they are of a general— And just one more thing on top of that is, like, if you talk to them off the record, they're going to tell you they're not just afraid of losing elections, right? That if Donald Trump comes after them on Twitter, they get thousands of death threats, right? And there's real physical fear, too, that's part of this problem.

We are going to be here the Wednesday after the election. You know, I actually was going to be off on a family thing.

No.

They said, no, there's going to be a lot of indecision. John Tucker, are you going to be here? Oh, I'll be here. Gowda Mukunda will be here. Do I ever leave? That's true. Gowda Mukunda never leaves. You know, Professor, I look at this. If the Democrats win the House, how does Mr. Jeffries assume his speaker control a fractious Democratic Party?

Does he do that in caucus? Does he do it by assigning things?

So the committee of assignments will be fun because there's also just the problem of that the Democratic Party gerontocracy has not finished turning over, right? So you're going to have a lot of committee chairs that people are looking at being, wait, does this really make sense? Is this person really up to the job? And that's going to be a problem. But I think he will be less concerned about that fractious caucus because the caucus will be united by its hatred of Donald Trump. where that's going to become a real problem is if we get a Democratic president in 2029 and then the caucus will, you know, managing that will be a problem of coalition management that I would not wish on anybody.

It's just fabulous perspective. God, I'm going to thank you so much. We treasure your attendance. Look forward to speaking to you before and after the election.

This is the Bloomberg Surveillance Podcast, available on Apple, Spotify and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

Capital Costs Rise as Markets Eye Midterms

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