1
00:00:00,120 --> 00:00:06,800
Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

2
00:00:11,640 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,480 --> 00:00:18,720
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

4
00:00:18,720 --> 00:00:22,280
Speaker 2: for insight from the best in markets, economics, and geopolitics

5
00:00:22,400 --> 00:00:24,920
Speaker 2: from our global headquarters in New York City. We are

6
00:00:24,920 --> 00:00:27,680
Speaker 2: live on Bloomberg Television weekday mornings from six to nine

7
00:00:27,720 --> 00:00:31,240
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

8
00:00:31,320 --> 00:00:33,960
Speaker 2: anywhere else you listen, and as always, on the Bloomberg

9
00:00:34,040 --> 00:00:37,239
Speaker 2: Terminal and the Bloomberg Business App for everybody else. We'll

10
00:00:37,240 --> 00:00:39,400
Speaker 2: be looking at a tree of central bank decisions on deck.

11
00:00:39,440 --> 00:00:41,840
Speaker 2: The Fed and BOJ on Wednesday, the Bank of England

12
00:00:41,880 --> 00:00:44,840
Speaker 2: JEW on Thursday. Steve England are of standard charted saying

13
00:00:44,880 --> 00:00:47,040
Speaker 2: the Bank of Japan may be teeing up for a

14
00:00:47,120 --> 00:00:49,960
Speaker 2: rate hike in September, saying the market will be happy

15
00:00:50,080 --> 00:00:52,840
Speaker 2: enough if they give a wink and a nod. Steve

16
00:00:52,920 --> 00:00:54,680
Speaker 2: joins us now for more. Steve, is that what we're

17
00:00:54,720 --> 00:00:57,880
Speaker 2: looking for this week? Winks and nods to September for

18
00:00:57,920 --> 00:01:04,200
Speaker 2: both the BOJ and the Federal Reserve go in opposite directions, exactly.

19
00:01:03,720 --> 00:01:07,120
Speaker 3: One doing the left eye, the other doing the right eye.

20
00:01:07,480 --> 00:01:09,520
Speaker 3: You know, I think the FED is going to leave

21
00:01:09,600 --> 00:01:13,040
Speaker 3: the door open and sound encouraging, but they certainly don't

22
00:01:13,040 --> 00:01:16,200
Speaker 3: want to sound committal. You know, they're going to wait

23
00:01:16,319 --> 00:01:20,000
Speaker 3: and make sure that the data kind of are reasonably consistent.

24
00:01:20,240 --> 00:01:22,400
Speaker 3: But you know, it does sound as if they would

25
00:01:22,480 --> 00:01:26,840
Speaker 3: like to cut in September and justify the market's views, so,

26
00:01:28,120 --> 00:01:30,679
Speaker 3: you know, with a lot of trepidation. I you know,

27
00:01:30,720 --> 00:01:33,639
Speaker 3: this looks like a layup in terms of meeting market

28
00:01:33,680 --> 00:01:39,080
Speaker 3: expectations and not jarring the market too much, So I

29
00:01:39,080 --> 00:01:40,400
Speaker 3: wouldn't expect too much.

30
00:01:40,200 --> 00:01:41,280
Speaker 4: Fireworks out of it.

31
00:01:42,240 --> 00:01:45,120
Speaker 3: Boj you know, more interesting, We don't think they're going

32
00:01:45,160 --> 00:01:49,000
Speaker 3: to cut, but sorry, we don't think they're going to hike.

33
00:01:49,960 --> 00:01:52,760
Speaker 3: But the market only has like twelve basis points priced

34
00:01:52,760 --> 00:01:54,520
Speaker 3: in for September.

35
00:01:54,680 --> 00:01:57,360
Speaker 4: So if they give enough of an indication yeah that.

36
00:01:57,560 --> 00:02:00,680
Speaker 3: We just don't want to talk about tapering and do

37
00:02:00,760 --> 00:02:02,640
Speaker 3: a rate hike at the same meeting, we think the

38
00:02:02,640 --> 00:02:05,080
Speaker 3: market will be comfortable with it as long as they

39
00:02:05,080 --> 00:02:06,560
Speaker 3: don't low ball the papering.

40
00:02:06,880 --> 00:02:09,000
Speaker 2: So Steve, let's take Dolly yen just short of one

41
00:02:09,080 --> 00:02:11,680
Speaker 2: fifty four, a wink and knots on both sides of

42
00:02:11,680 --> 00:02:14,359
Speaker 2: that currency pair sufficient to keep this trend in TAC,

43
00:02:14,919 --> 00:02:19,760
Speaker 2: maintain this journey back towards one fifty and maybe below, you.

44
00:02:19,720 --> 00:02:22,760
Speaker 3: Know, to really get it moving, you know, they would

45
00:02:22,760 --> 00:02:24,960
Speaker 3: have to hike We don't expect that, but that's the

46
00:02:25,080 --> 00:02:27,960
Speaker 3: risk I think to keep it where it is. And

47
00:02:28,040 --> 00:02:31,040
Speaker 3: given that they've upped the importance of the exchange rate

48
00:02:32,080 --> 00:02:33,519
Speaker 3: and you know, I think the kind of wink and

49
00:02:33,600 --> 00:02:36,640
Speaker 3: nod that you know you alluded to, I think that

50
00:02:36,639 --> 00:02:39,320
Speaker 3: that's going to be enough, you know, maybe to keep

51
00:02:39,360 --> 00:02:44,160
Speaker 3: the end sort of slightly stronger, you know, not enormously stronger.

52
00:02:44,400 --> 00:02:47,400
Speaker 3: I think for that we would need them to show that,

53
00:02:48,400 --> 00:02:50,840
Speaker 3: you know, they are moving, and that they're moving, like,

54
00:02:51,040 --> 00:02:53,080
Speaker 3: you know, more aggressively than it is now priced in,

55
00:02:53,400 --> 00:02:53,680
Speaker 3: just to.

56
00:02:53,600 --> 00:02:56,040
Speaker 1: Sort of underscore that, Steve, are you saying that they

57
00:02:56,040 --> 00:02:59,600
Speaker 1: are not going to hike rates and that will sort

58
00:02:59,600 --> 00:03:01,680
Speaker 1: of feel hey for the currency market, or they're not

59
00:03:01,680 --> 00:03:04,520
Speaker 1: going to hike rates and that's going to be devastating

60
00:03:04,800 --> 00:03:06,359
Speaker 1: for the end and it's going to go back to

61
00:03:06,400 --> 00:03:08,840
Speaker 1: where it was versus the dollars say two weeks ago.

62
00:03:10,200 --> 00:03:12,359
Speaker 3: Look to devastate the end, they would have to put

63
00:03:12,360 --> 00:03:15,639
Speaker 3: September in question, and I don't think that's going to

64
00:03:15,680 --> 00:03:19,400
Speaker 3: happen to to sort of you know, but given that

65
00:03:19,400 --> 00:03:21,839
Speaker 3: the you know, if you look at the market pricing, yes,

66
00:03:21,880 --> 00:03:25,120
Speaker 3: they have like five or six basis points priced in

67
00:03:25,200 --> 00:03:28,639
Speaker 3: for this week, but they only have twelve in total

68
00:03:28,720 --> 00:03:31,480
Speaker 3: for September. So I think if they if the market

69
00:03:31,520 --> 00:03:34,040
Speaker 3: walks away saying, yeah, they didn't like we didn't really

70
00:03:34,080 --> 00:03:36,360
Speaker 3: expect them to, but they're good for September, I think

71
00:03:36,400 --> 00:03:39,200
Speaker 3: that's going to be fine for the end. You know,

72
00:03:39,360 --> 00:03:42,120
Speaker 3: like a bunt single, it's not going to be a

73
00:03:42,200 --> 00:03:44,080
Speaker 3: you know, a triple or a home run.

74
00:03:44,440 --> 00:03:46,040
Speaker 5: How much it does a balance team matter.

75
00:03:46,680 --> 00:03:49,560
Speaker 1: Pantheon Macro talking about how that could placate the market

76
00:03:49,600 --> 00:03:54,000
Speaker 1: if they just stop buying as many bonds, do you agree, Well.

77
00:03:54,040 --> 00:03:56,800
Speaker 3: I think they have to, given that they sort of

78
00:03:56,960 --> 00:04:00,960
Speaker 3: justified doing nothing last time by promising that they're going

79
00:04:01,000 --> 00:04:04,200
Speaker 3: to lay out their path, and they do have to

80
00:04:04,240 --> 00:04:07,040
Speaker 3: sort of announce a significant cut if they you know,

81
00:04:07,440 --> 00:04:11,440
Speaker 3: the other down or risk for yen weakening is if

82
00:04:11,920 --> 00:04:17,240
Speaker 3: is if the you know, the pace of balancing reduction

83
00:04:17,400 --> 00:04:19,919
Speaker 3: is so slow that the market says it's not meaningful.

84
00:04:20,360 --> 00:04:23,240
Speaker 3: But again, we think that they will give enough of

85
00:04:23,279 --> 00:04:26,760
Speaker 3: a you know, indication of the pace on the balance

86
00:04:26,760 --> 00:04:29,800
Speaker 3: sheet front loaded enough that should be all right.

87
00:04:29,600 --> 00:04:31,440
Speaker 4: For the end. I think that it's going to be

88
00:04:31,480 --> 00:04:33,120
Speaker 4: consistent with market expectations.

89
00:04:33,279 --> 00:04:35,839
Speaker 2: Steve. That's bond buying in Japan. It could have some

90
00:04:35,880 --> 00:04:38,360
Speaker 2: implications for the kind of buying that takes place here

91
00:04:38,360 --> 00:04:40,880
Speaker 2: in the United States as the supply starts to ramp up.

92
00:04:40,880 --> 00:04:41,159
Speaker 4: Steve.

93
00:04:41,200 --> 00:04:43,599
Speaker 2: You've seen all the articles or the studies on the

94
00:04:43,640 --> 00:04:48,400
Speaker 2: so called activist Treasury issuance. Steve, what's your understanding of

95
00:04:48,400 --> 00:04:51,200
Speaker 2: what ATI actually is and how much weight do you

96
00:04:51,240 --> 00:04:51,680
Speaker 2: put on it.

97
00:04:53,880 --> 00:04:56,440
Speaker 3: I think ATI is a modern version of, you know,

98
00:04:57,520 --> 00:04:59,880
Speaker 3: what was done sixty years ago in terms of operation

99
00:05:00,080 --> 00:05:02,360
Speaker 3: twists that you kind of reduced issue and set the

100
00:05:02,400 --> 00:05:05,840
Speaker 3: long end, takes the pressure off the long end of

101
00:05:05,880 --> 00:05:07,840
Speaker 3: the bond market. You issue at the short end, and

102
00:05:08,320 --> 00:05:11,280
Speaker 3: that's you know, kind of you end up with a

103
00:05:11,320 --> 00:05:15,080
Speaker 3: flatter yield curve. And you can kind of see that

104
00:05:15,080 --> 00:05:17,600
Speaker 3: that's what they've been doing the last couple of years,

105
00:05:18,839 --> 00:05:21,239
Speaker 3: except that they haven't been doing it the last couple

106
00:05:21,240 --> 00:05:24,719
Speaker 3: of months. So it's one thing to say that they're

107
00:05:24,760 --> 00:05:26,719
Speaker 3: trying to take the pressure off the long end.

108
00:05:27,360 --> 00:05:30,440
Speaker 4: But given that they haven't been doing.

109
00:05:30,160 --> 00:05:33,400
Speaker 3: That kind of issuing this year, it's not an explanation

110
00:05:33,600 --> 00:05:36,240
Speaker 3: for why, you know, ten year bond yields are four

111
00:05:36,360 --> 00:05:39,520
Speaker 3: fifteen now, down from four to seventy at the end

112
00:05:39,520 --> 00:05:41,279
Speaker 3: of at the end of April.

113
00:05:42,400 --> 00:05:44,800
Speaker 4: Also, I think that they overstate the.

114
00:05:44,839 --> 00:05:48,839
Speaker 3: Impact or some you know, commentary overstates the impact in

115
00:05:48,839 --> 00:05:50,560
Speaker 3: the sense of talking about it being equal to one

116
00:05:50,600 --> 00:05:57,200
Speaker 3: hundred basis points of cuts. You know, I think that

117
00:05:57,200 --> 00:06:00,560
Speaker 3: that's not quite there because what we've seen VAI that's

118
00:06:00,600 --> 00:06:03,320
Speaker 3: being grown even if you assume twenty five basis points

119
00:06:03,320 --> 00:06:06,039
Speaker 3: at the long end, is what if the long yield

120
00:06:06,080 --> 00:06:08,680
Speaker 3: goes down by twenty five basis points and FED funds

121
00:06:08,800 --> 00:06:11,600
Speaker 3: is held flat, it's not that's cut FED funds by

122
00:06:11,600 --> 00:06:14,160
Speaker 3: one hundred that's going to take the long end by

123
00:06:14,200 --> 00:06:16,360
Speaker 3: twenty five and that's going to have a big impact.

124
00:06:16,480 --> 00:06:20,279
Speaker 3: I mean, intuitively, we've had the long end swing twenty

125
00:06:20,279 --> 00:06:23,520
Speaker 3: five basis points four or five times this year, and

126
00:06:23,560 --> 00:06:26,080
Speaker 3: we haven't seen any trauma in the market.

127
00:06:26,279 --> 00:06:28,359
Speaker 4: You know, people like us have trauma. You know, people

128
00:06:28,520 --> 00:06:30,840
Speaker 4: you know and asset markets worry about it.

129
00:06:30,880 --> 00:06:34,240
Speaker 3: But it's not as if economic activity seems to be

130
00:06:34,360 --> 00:06:38,760
Speaker 3: visibly affected by that kind of move at the long

131
00:06:38,880 --> 00:06:41,800
Speaker 3: end as long as the Fed isn't actually moving and

132
00:06:41,839 --> 00:06:43,680
Speaker 3: now the market's waiting for the Fed to move.

133
00:06:43,839 --> 00:06:45,880
Speaker 5: Well, see, let's put this on his head.

134
00:06:46,040 --> 00:06:48,720
Speaker 1: What if the Treasury comes out this week and says

135
00:06:48,720 --> 00:06:51,599
Speaker 1: that they're much more heavily waiting the issue is going forward.

136
00:06:51,320 --> 00:06:52,000
Speaker 5: To the long end.

137
00:06:52,400 --> 00:06:54,680
Speaker 1: How big would the reaction be in terms of yields

138
00:06:54,760 --> 00:06:57,160
Speaker 1: rising on the tenure on the thirty year.

139
00:06:59,600 --> 00:07:02,680
Speaker 3: Well, you know, I think the market kind of expects,

140
00:07:02,760 --> 00:07:06,640
Speaker 3: you know, to continue in the direction that they've been going.

141
00:07:07,800 --> 00:07:08,200
Speaker 4: Lately.

142
00:07:08,360 --> 00:07:10,880
Speaker 3: They I mean, if they do issue at the long end,

143
00:07:11,360 --> 00:07:14,800
Speaker 3: you know, a locked I think it could matter, but

144
00:07:15,360 --> 00:07:18,520
Speaker 3: I actually think it's more second order. I mean, it matters,

145
00:07:18,640 --> 00:07:20,960
Speaker 3: but it's not you know, and it's going to matter

146
00:07:21,040 --> 00:07:24,440
Speaker 3: in terms of you know, do yield stay where I

147
00:07:24,600 --> 00:07:28,440
Speaker 3: just saw them like four fifteen, four seventeen, Probably not,

148
00:07:28,720 --> 00:07:31,120
Speaker 3: but it's not going to take them to four seventy.

149
00:07:31,600 --> 00:07:36,680
Speaker 3: It's going you know, ten basis points, twenty basis points maximum. Again,

150
00:07:36,720 --> 00:07:39,520
Speaker 3: it matters, but it's it's a second order in terms

151
00:07:39,520 --> 00:07:40,280
Speaker 3: of the economy.

152
00:07:40,560 --> 00:07:43,080
Speaker 2: That's what about four sixty eight this morning? State it's

153
00:07:43,120 --> 00:07:56,240
Speaker 2: going to catch up State England and standard chartage. So

154
00:07:56,280 --> 00:07:58,520
Speaker 2: here's the latest coming into this way, Donald Trump and

155
00:07:58,600 --> 00:08:01,560
Speaker 2: Kamala Harris hitting the campaign trail, Harris heading to Georgia

156
00:08:01,600 --> 00:08:05,320
Speaker 2: tomorrow and Trump returning to Butler, Pennsylvania on Wednesday. The

157
00:08:05,400 --> 00:08:09,280
Speaker 2: latest Wall Street Journal poll showing Harrison Trump neck and neck.

158
00:08:09,520 --> 00:08:13,040
Speaker 2: Jeanette larstatigue it's a bed company joined us now for more, Janet.

159
00:08:13,080 --> 00:08:15,320
Speaker 2: If the Democratic ticket was a stark, we'd call this

160
00:08:15,400 --> 00:08:17,760
Speaker 2: a post Biden relief rally, and we'd all be asking

161
00:08:17,840 --> 00:08:19,880
Speaker 2: questions about the earnings releases in the quarters to come,

162
00:08:19,920 --> 00:08:22,080
Speaker 2: and I'd be sitting here saying, what makes it durable?

163
00:08:22,160 --> 00:08:25,520
Speaker 2: Tell me the fundamentals that supports this going forward from here?

164
00:08:25,560 --> 00:08:28,040
Speaker 2: Can you point to what those fundamentals would be for

165
00:08:28,120 --> 00:08:28,880
Speaker 2: Kamala Harris?

166
00:08:30,040 --> 00:08:31,800
Speaker 6: Well, I think the biggest thing that we've seen in

167
00:08:31,840 --> 00:08:35,760
Speaker 6: this race is you know that there was this absolutely

168
00:08:35,880 --> 00:08:40,120
Speaker 6: lack of momentum or enthusiasm from most Americans about the

169
00:08:40,120 --> 00:08:42,959
Speaker 6: two candidates they have, and so Biden getting out of

170
00:08:43,000 --> 00:08:45,599
Speaker 6: the race, we were really starting to see his numbers

171
00:08:45,640 --> 00:08:48,040
Speaker 6: go down since the debate. He was really starting to

172
00:08:48,080 --> 00:08:51,480
Speaker 6: go impact down ballot races across the country and that's

173
00:08:51,520 --> 00:08:54,080
Speaker 6: really where we're starting to see the change. With Kamala

174
00:08:54,120 --> 00:08:56,120
Speaker 6: Harris at the top of the ticket, you're seeing the

175
00:08:56,160 --> 00:08:57,480
Speaker 6: pulling revert.

176
00:08:57,080 --> 00:08:58,880
Speaker 5: Back to where it was pre debates.

177
00:08:59,000 --> 00:09:02,199
Speaker 6: You have state it's like Pennsylvania, Wisconsin, and Michigan all

178
00:09:02,240 --> 00:09:02,840
Speaker 6: within the.

179
00:09:04,400 --> 00:09:05,280
Speaker 5: Margin of error.

180
00:09:05,440 --> 00:09:08,480
Speaker 6: You have an enthusiasm, a gap closing, which you saw

181
00:09:08,520 --> 00:09:10,760
Speaker 6: that in a poll over the weekend, and you're starting

182
00:09:10,760 --> 00:09:12,960
Speaker 6: to really see people just engage all of the calls

183
00:09:12,960 --> 00:09:15,880
Speaker 6: that happened over the past few days of people really

184
00:09:15,920 --> 00:09:18,880
Speaker 6: getting engaged back into the campaign and the Democratic side.

185
00:09:19,000 --> 00:09:21,800
Speaker 6: That's what's really changed. Obviously, it's just been one week,

186
00:09:21,960 --> 00:09:23,520
Speaker 6: so we still have a lot more to see what

187
00:09:23,600 --> 00:09:26,480
Speaker 6: actually happens. How does this messaging start to play out.

188
00:09:26,559 --> 00:09:29,160
Speaker 6: If we do have a new debate in September between

189
00:09:29,160 --> 00:09:32,079
Speaker 6: Trump and Harris, does that change the dynamic just because

190
00:09:32,080 --> 00:09:34,959
Speaker 6: then you'll now actually see the policy differences between the

191
00:09:35,000 --> 00:09:37,440
Speaker 6: two candidates, and that'll be important to see. But the

192
00:09:37,480 --> 00:09:40,120
Speaker 6: momentum factor has really what's kind of changed the race.

193
00:09:39,960 --> 00:09:42,040
Speaker 2: Here, Jeannette. With Biden at the top of the ticket,

194
00:09:42,200 --> 00:09:45,480
Speaker 2: we were talking almost exclusively as one path, one path

195
00:09:45,520 --> 00:09:48,480
Speaker 2: towards victory potentially, and that path was narrowing and it

196
00:09:48,480 --> 00:09:50,240
Speaker 2: was a russ bout and you just alluded to it.

197
00:09:50,440 --> 00:09:53,200
Speaker 2: Politico reporting over the weekend that maybe, and I think

198
00:09:53,240 --> 00:09:55,880
Speaker 2: you might agree with this, we've reopened the conversation about

199
00:09:55,920 --> 00:09:58,320
Speaker 2: some bout states. Would you agree with that?

200
00:09:59,280 --> 00:10:01,560
Speaker 6: I would you know, we did see there was an

201
00:10:01,600 --> 00:10:04,960
Speaker 6: Emerson poll that came out last week that showed Harris

202
00:10:05,000 --> 00:10:07,679
Speaker 6: really closing the gap, particularly in Georgia.

203
00:10:07,960 --> 00:10:08,920
Speaker 5: So that's important.

204
00:10:09,160 --> 00:10:10,520
Speaker 6: So I think that's one of the states that she's

205
00:10:10,559 --> 00:10:12,240
Speaker 6: really going to be looking to. We haven't seen a

206
00:10:12,280 --> 00:10:14,600
Speaker 6: lot of polling coming out of North Carolina yet, but

207
00:10:14,640 --> 00:10:16,520
Speaker 6: I know that that's another state that she would like

208
00:10:16,600 --> 00:10:17,000
Speaker 6: to target.

209
00:10:17,040 --> 00:10:17,640
Speaker 5: The Democrats.

210
00:10:17,679 --> 00:10:19,959
Speaker 6: I've been targeting that for quite some time a couple

211
00:10:20,000 --> 00:10:21,560
Speaker 6: of cycles, trying to see if they could flip that

212
00:10:21,679 --> 00:10:24,720
Speaker 6: state from red to blue. So she does actually open

213
00:10:24,840 --> 00:10:27,680
Speaker 6: up the map, she has more options if she were

214
00:10:27,720 --> 00:10:30,199
Speaker 6: to win or sorry, if she were to lose one

215
00:10:30,240 --> 00:10:32,440
Speaker 6: of the Blue Wall states, she could potentially win one

216
00:10:32,480 --> 00:10:34,320
Speaker 6: of the Sun Belt states and that could actually still

217
00:10:34,320 --> 00:10:35,640
Speaker 6: help her get over the finish line.

218
00:10:35,720 --> 00:10:38,960
Speaker 1: Jenett, how important will be her running mate to determine

219
00:10:39,080 --> 00:10:41,840
Speaker 1: how much she can really gain in the Sunbelts, especially

220
00:10:41,920 --> 00:10:44,280
Speaker 1: given that we now have a shortlist of about three

221
00:10:44,480 --> 00:10:48,640
Speaker 1: Arizona Senator Mark Kelly, Pennsylvania Governor Josh Shapiro, and Minnesota

222
00:10:48,679 --> 00:10:51,600
Speaker 1: Governor Tim Waltz, Right, So, I.

223
00:10:51,600 --> 00:10:53,240
Speaker 6: Mean, I think one of the things that's interesting is

224
00:10:53,280 --> 00:10:57,040
Speaker 6: that general vice presidential canon does not do a lot

225
00:10:57,080 --> 00:11:01,000
Speaker 6: for the presidential ticket. They can only usually but they

226
00:11:01,000 --> 00:11:03,560
Speaker 6: can also subtract, but they don't usually add very much.

227
00:11:04,240 --> 00:11:06,560
Speaker 6: In the past, it's been easier for a vice presidential

228
00:11:06,600 --> 00:11:09,280
Speaker 6: candidate to actually win their state. That's been less true

229
00:11:09,280 --> 00:11:11,720
Speaker 6: and more recent cycles. But I think Harris has some

230
00:11:11,800 --> 00:11:14,440
Speaker 6: options here. She's has been looking at more of the

231
00:11:14,480 --> 00:11:16,640
Speaker 6: moderate candidates along the lines of.

232
00:11:16,600 --> 00:11:17,880
Speaker 5: Mark Kelly or Josh Shapiro.

233
00:11:18,320 --> 00:11:20,400
Speaker 6: Tim Walls would be a little bit more progressive than

234
00:11:20,400 --> 00:11:22,720
Speaker 6: the other two, so that would be a potential change

235
00:11:22,760 --> 00:11:24,960
Speaker 6: if she's going to now have more of a progressive

236
00:11:24,960 --> 00:11:28,320
Speaker 6: ticket than a progressive moderate ticket. But Arizona is one

237
00:11:28,360 --> 00:11:30,880
Speaker 6: of the states where she's not doing particularly well based

238
00:11:30,880 --> 00:11:33,480
Speaker 6: on current polling, so Mark Kelly can certainly help her

239
00:11:33,480 --> 00:11:33,680
Speaker 6: with that.

240
00:11:34,000 --> 00:11:35,280
Speaker 5: He also provides this.

241
00:11:35,240 --> 00:11:38,800
Speaker 6: National security, this defense component that she may be lacking,

242
00:11:39,200 --> 00:11:41,599
Speaker 6: which can be very helpful to her. Jos Shapiro, I

243
00:11:41,640 --> 00:11:44,240
Speaker 6: think can help her deliver Pennsylvania, so she's worried at

244
00:11:44,240 --> 00:11:47,560
Speaker 6: all about getting that. That is a key attribute of him,

245
00:11:47,720 --> 00:11:49,440
Speaker 6: and he can also help her in the other blue

246
00:11:49,480 --> 00:11:52,240
Speaker 6: Wall states like Michigan and Wisconsin. But I think that

247
00:11:52,280 --> 00:11:54,240
Speaker 6: they're also thinking that Tim Walls is going to be

248
00:11:54,280 --> 00:11:56,880
Speaker 6: a really good bulldog on this stage. That is something

249
00:11:56,920 --> 00:11:58,959
Speaker 6: that you generally do look for and a vice president.

250
00:11:59,480 --> 00:12:01,600
Speaker 6: And also he is from a state that Trump is

251
00:12:01,640 --> 00:12:04,480
Speaker 6: targeting in Minnesota, and so that can help make sure

252
00:12:04,480 --> 00:12:06,560
Speaker 6: that that state is shorn up, but then also help

253
00:12:06,600 --> 00:12:07,960
Speaker 6: in other Midwestern states.

254
00:12:08,440 --> 00:12:10,719
Speaker 1: Jenna Libby Cantrell of PIMCO came on here and said

255
00:12:10,720 --> 00:12:13,000
Speaker 1: we should all just have cocktails, go away for August,

256
00:12:13,000 --> 00:12:14,720
Speaker 1: to come back in September and take a look at

257
00:12:14,720 --> 00:12:16,840
Speaker 1: the polls, so then we can actually discuss who is

258
00:12:16,840 --> 00:12:19,640
Speaker 1: in the front seat to really be the front leader

259
00:12:19,720 --> 00:12:22,640
Speaker 1: heading into the election. Michael Visus of Mark and Stanley

260
00:12:22,679 --> 00:12:24,800
Speaker 1: over the weekend, the business cycle is likely to matter

261
00:12:24,840 --> 00:12:27,480
Speaker 1: mortar markets in the election cycle the next few months.

262
00:12:27,760 --> 00:12:31,640
Speaker 1: Jeanette from a policy perspective, why is it so important

263
00:12:31,640 --> 00:12:33,920
Speaker 1: to really watch the policies at a time where you

264
00:12:33,960 --> 00:12:37,000
Speaker 1: said this election is still a referendum on the speed

265
00:12:37,000 --> 00:12:38,000
Speaker 1: of deglobalization.

266
00:12:39,600 --> 00:12:41,520
Speaker 6: Yeah, so, I mean, I think this is really important

267
00:12:41,520 --> 00:12:43,760
Speaker 6: that for one thing, that this race, now that we

268
00:12:43,800 --> 00:12:45,520
Speaker 6: have Harris at the top of the ticket, it's moved

269
00:12:45,520 --> 00:12:48,680
Speaker 6: from less of a referendum on Biden and his acuity

270
00:12:48,720 --> 00:12:51,600
Speaker 6: to its choice about policy and so over the you know,

271
00:12:51,720 --> 00:12:54,040
Speaker 6: we have less than one hundred days to go, and

272
00:12:54,400 --> 00:12:56,240
Speaker 6: Harris still kind of needs to figure out some of

273
00:12:56,280 --> 00:12:59,160
Speaker 6: her policy positions. Is she going to continue the policies

274
00:12:59,160 --> 00:13:01,800
Speaker 6: that she had as twenty nineteen twenty twenty candidate? Is

275
00:13:01,840 --> 00:13:04,360
Speaker 6: she going to potentially moderate some of those positions? And

276
00:13:04,400 --> 00:13:06,200
Speaker 6: this is going to be a race to the finish line.

277
00:13:06,240 --> 00:13:08,679
Speaker 6: This is much less like what you would normally see

278
00:13:08,679 --> 00:13:11,320
Speaker 6: in a US election, where we have nine months of campaigning.

279
00:13:11,600 --> 00:13:13,320
Speaker 6: So I do think that the next couple of weeks

280
00:13:13,320 --> 00:13:15,960
Speaker 6: will be quite important. What happens at the DNC, what

281
00:13:16,000 --> 00:13:19,160
Speaker 6: happens at that convention, What kind of policy proposals are

282
00:13:19,200 --> 00:13:21,559
Speaker 6: you seeing, are you seeing momentum That is going to

283
00:13:21,600 --> 00:13:24,400
Speaker 6: be a key component of this. But there is still

284
00:13:24,559 --> 00:13:28,680
Speaker 6: vast differences between the two candidates on trade, on taxes,

285
00:13:28,840 --> 00:13:31,920
Speaker 6: on regulation policy, and that's going to be really important

286
00:13:31,920 --> 00:13:32,600
Speaker 6: for this election.

287
00:13:32,720 --> 00:13:34,719
Speaker 5: That's what investors are really focused on.

288
00:13:35,080 --> 00:13:37,480
Speaker 6: What does Trump versus Harris mean for trade, what do

289
00:13:37,480 --> 00:13:39,080
Speaker 6: they mean for tax policy, and what do they mean

290
00:13:39,120 --> 00:13:41,320
Speaker 6: for regulation? And I think that's where we really have

291
00:13:41,400 --> 00:13:44,200
Speaker 6: to be kind of focused over the next couple of months,

292
00:13:44,400 --> 00:13:46,720
Speaker 6: and you do start to see the elections start to

293
00:13:46,760 --> 00:13:48,640
Speaker 6: price in. You know, we do have a metric that

294
00:13:48,720 --> 00:13:52,520
Speaker 6: shows that the market can actually predict some about eighty

295
00:13:52,559 --> 00:13:55,600
Speaker 6: percent of the time whether or not the incumbent party

296
00:13:55,640 --> 00:13:58,079
Speaker 6: is going to win or the party out of power

297
00:13:58,120 --> 00:13:58,719
Speaker 6: is going to win.

298
00:13:58,920 --> 00:14:00,839
Speaker 5: And that starts around August fifth.

299
00:14:01,120 --> 00:14:03,360
Speaker 2: We should do this every time, just one hundred days,

300
00:14:03,400 --> 00:14:05,679
Speaker 2: just a sprint to the finish, Jeanette low as you

301
00:14:05,760 --> 00:14:17,120
Speaker 2: take us, Janette, thanks you. Big week of central bank

302
00:14:17,120 --> 00:14:19,360
Speaker 2: decisions coming right up with the Fed very much in focus.

303
00:14:19,440 --> 00:14:22,840
Speaker 2: The FMC widely expected to keep rates on hold this Wednesday,

304
00:14:23,080 --> 00:14:25,720
Speaker 2: but set the States for a September rate cup. Joining

305
00:14:25,760 --> 00:14:27,920
Speaker 2: us now to discuss is James Camp of Eagle Asset

306
00:14:27,960 --> 00:14:30,800
Speaker 2: Management alongside Zach Griff. It's a credit site, Jent. It's

307
00:14:30,800 --> 00:14:32,280
Speaker 2: great to catch up with you both. Zach. I want

308
00:14:32,320 --> 00:14:34,240
Speaker 2: to come to you first, give us a read on

309
00:14:34,320 --> 00:14:36,480
Speaker 2: what you expecting this Wednesday and how it might set

310
00:14:36,560 --> 00:14:38,400
Speaker 2: us up for what could happen in September.

311
00:14:40,080 --> 00:14:40,680
Speaker 5: Yeah, John, we.

312
00:14:40,680 --> 00:14:43,160
Speaker 7: Are looking for the Fed to make adjustments to its

313
00:14:43,200 --> 00:14:46,480
Speaker 7: policy statement to indicate more of a concern in terms

314
00:14:46,520 --> 00:14:49,160
Speaker 7: of the labor market, or at least dial back their

315
00:14:49,200 --> 00:14:51,920
Speaker 7: assessment of strength in the labor market and continue to

316
00:14:51,960 --> 00:14:55,520
Speaker 7: emphasize progress on the inflation front. We expect Sherman Pole

317
00:14:55,680 --> 00:14:58,760
Speaker 7: to indicate a willingness to cut in September. We don't

318
00:14:58,760 --> 00:15:01,280
Speaker 7: think he'll be very explicit and saying that they will cut,

319
00:15:01,400 --> 00:15:05,160
Speaker 7: but keep options open, keep that data dependent, Mantra. We

320
00:15:05,200 --> 00:15:07,520
Speaker 7: think that data supports a cut in September.

321
00:15:07,760 --> 00:15:09,840
Speaker 2: James, Of course, we're all much more interested in the

322
00:15:09,840 --> 00:15:12,680
Speaker 2: one hundred basis points after that. If the risk one

323
00:15:12,720 --> 00:15:15,760
Speaker 2: hundred basis points after that, what is the destination you

324
00:15:15,800 --> 00:15:18,280
Speaker 2: think this Fed is heading towards? And what kind of

325
00:15:18,280 --> 00:15:21,240
Speaker 2: economic regime do you think we're in? The guides that.

326
00:15:22,920 --> 00:15:24,560
Speaker 4: Well, good morning, good to be with you.

327
00:15:24,880 --> 00:15:27,040
Speaker 8: We're in a reflation regime, right, but the anchoring that

328
00:15:27,080 --> 00:15:29,160
Speaker 8: we had in the post financial crisis period up to

329
00:15:29,200 --> 00:15:31,120
Speaker 8: COVID is gone, and we have a new economy, and

330
00:15:31,120 --> 00:15:34,480
Speaker 8: that new economy has more stubborn inflation and we've written

331
00:15:34,520 --> 00:15:37,040
Speaker 8: about on shore, We've written about pricing power, We've written

332
00:15:37,040 --> 00:15:39,360
Speaker 8: about a tighter labor market. I think the FED does

333
00:15:39,400 --> 00:15:41,560
Speaker 8: cut in September. This is the clearest data that they're

334
00:15:41,560 --> 00:15:43,840
Speaker 8: going to have to give them that opportunity. But the

335
00:15:43,880 --> 00:15:46,280
Speaker 8: base effects and some of the inflation in NURSO is

336
00:15:46,280 --> 00:15:47,680
Speaker 8: going to come back in the fourth quarter.

337
00:15:47,800 --> 00:15:49,800
Speaker 4: So I don't consider this a FED pivot.

338
00:15:50,040 --> 00:15:53,440
Speaker 8: I consider this effect sort of getting back to sort

339
00:15:53,480 --> 00:15:54,800
Speaker 8: of more normal.

340
00:15:54,680 --> 00:15:55,520
Speaker 4: On the funds rate.

341
00:15:55,720 --> 00:15:58,640
Speaker 8: But I wouldn't extrapolate this September meeting, which is likely

342
00:15:58,680 --> 00:16:01,480
Speaker 8: to be at maybe even fifty by points, into a

343
00:16:01,520 --> 00:16:04,960
Speaker 8: protracted policy adjustment over the next couple of quarters. This

344
00:16:05,000 --> 00:16:09,080
Speaker 8: is a late twenty twenty five kind of phenomenon where we'll.

345
00:16:08,960 --> 00:16:11,680
Speaker 4: See what the terminal rate will actually be, but that

346
00:16:12,160 --> 00:16:13,000
Speaker 4: number is not immited.

347
00:16:13,120 --> 00:16:14,720
Speaker 1: Well, ont a second, James, did you just say that

348
00:16:14,760 --> 00:16:17,160
Speaker 1: there's a real possibility that the FED will cut by

349
00:16:17,160 --> 00:16:18,840
Speaker 1: fifty basis points in September.

350
00:16:19,520 --> 00:16:19,720
Speaker 4: Yeah.

351
00:16:19,720 --> 00:16:21,880
Speaker 8: I do think that's the case, Lisa, because I think

352
00:16:21,920 --> 00:16:24,560
Speaker 8: that this is going to be the clearest data that

353
00:16:24,600 --> 00:16:27,480
Speaker 8: they'll have to give them the inflation cover and I

354
00:16:27,480 --> 00:16:30,040
Speaker 8: think they've wanted to move the last couple of hikes

355
00:16:30,080 --> 00:16:30,800
Speaker 8: off the table.

356
00:16:31,080 --> 00:16:32,320
Speaker 4: So I think this is the window.

357
00:16:32,440 --> 00:16:35,080
Speaker 8: This is kind of a little bit of spinballing with

358
00:16:35,120 --> 00:16:38,160
Speaker 8: the inflation data, but we know if we look at

359
00:16:38,200 --> 00:16:40,720
Speaker 8: the data series, it's not going to get easier to

360
00:16:40,760 --> 00:16:43,200
Speaker 8: make the inflation case in the back half of twenty

361
00:16:43,240 --> 00:16:43,760
Speaker 8: twenty four.

362
00:16:44,200 --> 00:16:46,320
Speaker 1: Okay, So this is basically they have an opening. So

363
00:16:46,400 --> 00:16:47,480
Speaker 1: let's go let's go full.

364
00:16:47,600 --> 00:16:48,960
Speaker 5: I mean, Zach, what do you make of that?

365
00:16:49,120 --> 00:16:51,040
Speaker 1: Do you think that that's a feasible possibility that the

366
00:16:51,040 --> 00:16:53,040
Speaker 1: Fed's going to cut by a half a percentage point?

367
00:16:54,280 --> 00:16:56,760
Speaker 7: That's not our base case, Lisa, and I think that

368
00:16:56,840 --> 00:17:00,320
Speaker 7: would perhaps spook the market a little bit and terms

369
00:17:00,360 --> 00:17:02,640
Speaker 7: of that big of an adjustment when just a couple

370
00:17:02,720 --> 00:17:05,440
Speaker 7: weeks ago, policy makers were saying they need to see

371
00:17:05,440 --> 00:17:08,520
Speaker 7: a lot more data in terms of being confident we're

372
00:17:08,560 --> 00:17:11,680
Speaker 7: sustainably moving back to two percent. So I'd almost think

373
00:17:11,720 --> 00:17:14,160
Speaker 7: of that as having the same impact as cutting this week,

374
00:17:14,240 --> 00:17:17,280
Speaker 7: showing the market perhaps there's more to be concerned about.

375
00:17:17,280 --> 00:17:18,400
Speaker 4: So that's not our base case.

376
00:17:18,440 --> 00:17:20,840
Speaker 7: We do think the FED is going to be easing

377
00:17:21,080 --> 00:17:24,480
Speaker 7: at a steady clip once they go in September, really

378
00:17:24,480 --> 00:17:27,080
Speaker 7: trying to bring that policy rate back towards something that

379
00:17:27,119 --> 00:17:27,960
Speaker 7: looks at least.

380
00:17:27,840 --> 00:17:29,600
Speaker 5: A little bit more like neutral.

381
00:17:29,640 --> 00:17:32,040
Speaker 7: We think we're coming from a pretty restrictive rate now,

382
00:17:32,200 --> 00:17:34,760
Speaker 7: which is not what the economy needs. We're seeing signs

383
00:17:34,760 --> 00:17:37,320
Speaker 7: of slowing, especially in the consumer. We expect that to

384
00:17:37,320 --> 00:17:39,280
Speaker 7: be a bigger market driver in the second half of

385
00:17:39,320 --> 00:17:40,840
Speaker 7: this year and into twenty twenty five.

386
00:17:41,000 --> 00:17:42,840
Speaker 2: Is that just to be super clear, are you making

387
00:17:43,000 --> 00:17:45,560
Speaker 2: a growth call here, non inflation coal.

388
00:17:47,560 --> 00:17:50,119
Speaker 7: Well, that was a call on growth coming down. We

389
00:17:50,160 --> 00:17:52,719
Speaker 7: think moving back toward below potential is what you're going

390
00:17:52,760 --> 00:17:55,280
Speaker 7: to see over the next twelve months. We've had extremely

391
00:17:55,320 --> 00:17:58,440
Speaker 7: strong growth and still had inflation come down quite a bit.

392
00:17:58,520 --> 00:18:01,119
Speaker 7: So we think with inflation where it is, the Feds

393
00:18:01,160 --> 00:18:04,960
Speaker 7: starting to ease, we're already seeing signs that the economy

394
00:18:05,040 --> 00:18:07,359
Speaker 7: is cooling. We think that continues and starts to have

395
00:18:07,400 --> 00:18:10,680
Speaker 7: a bigger impact from a fundamental perspective on where credit

396
00:18:10,680 --> 00:18:12,879
Speaker 7: spreads go from here, which is why we're in a

397
00:18:12,920 --> 00:18:14,880
Speaker 7: bit more of a defensive camp than we have been

398
00:18:14,920 --> 00:18:16,440
Speaker 7: for much of the past two years.

399
00:18:16,520 --> 00:18:18,760
Speaker 2: You've set us up with the market conversation. Let's go there.

400
00:18:18,840 --> 00:18:22,199
Speaker 2: Let's say on it, Zach. If you're looking for wider spreads. Potentially,

401
00:18:22,680 --> 00:18:24,680
Speaker 2: where's the ten year what kind of level of credit

402
00:18:24,760 --> 00:18:27,359
Speaker 2: spreads are you looking for into the growth slow down

403
00:18:27,720 --> 00:18:29,680
Speaker 2: your expect and is going to trigger quite an easy

404
00:18:29,960 --> 00:18:30,919
Speaker 2: from this feder reserve.

405
00:18:32,440 --> 00:18:34,280
Speaker 7: So we're looking for the ten year to go back

406
00:18:34,280 --> 00:18:36,080
Speaker 7: to three and a quarter at the end of the

407
00:18:36,080 --> 00:18:38,240
Speaker 7: first half of twenty twenty five, John, So that's a

408
00:18:38,280 --> 00:18:40,720
Speaker 7: pretty big move lower from where we are today, and

409
00:18:40,760 --> 00:18:43,240
Speaker 7: we have investment grade credit spreads going to one hundred

410
00:18:43,240 --> 00:18:46,320
Speaker 7: and twenty basis points, high yield to four hundred basis points,

411
00:18:46,320 --> 00:18:49,000
Speaker 7: So not a terribly huge move in terms of spread widening.

412
00:18:49,040 --> 00:18:52,200
Speaker 7: As we think the technicals, the cash on the sideline

413
00:18:52,240 --> 00:18:54,439
Speaker 7: and plenty of cash that we think wants to be

414
00:18:54,440 --> 00:18:57,400
Speaker 7: put to work in other asset classes provides an offset

415
00:18:57,440 --> 00:18:59,960
Speaker 7: to more of this fundamental concern we're expecting to be

416
00:19:00,200 --> 00:19:04,040
Speaker 7: driven by a more notable economic slowdown than what's currently

417
00:19:04,080 --> 00:19:07,440
Speaker 7: priced into consensus expectations at this point.

418
00:19:07,560 --> 00:19:09,640
Speaker 1: This is great because both of you kind of highlight

419
00:19:09,920 --> 00:19:11,600
Speaker 1: the two sides of the debate right now, and then

420
00:19:11,640 --> 00:19:13,280
Speaker 1: I think is a wonderful thing to have. James, it

421
00:19:13,280 --> 00:19:15,000
Speaker 1: seems like you're more constructive. You think that the FED

422
00:19:15,080 --> 00:19:16,879
Speaker 1: is going to cut for the right reasons. They have

423
00:19:16,920 --> 00:19:19,720
Speaker 1: an opening to do so to prolong the economic cycles Act.

424
00:19:19,760 --> 00:19:22,560
Speaker 1: You seem a little bit less constructive, James. What makes

425
00:19:22,600 --> 00:19:24,480
Speaker 1: you think that this is going to be a good

426
00:19:24,600 --> 00:19:26,919
Speaker 1: kind of rate cut in the sense that it's just

427
00:19:26,920 --> 00:19:31,800
Speaker 1: simply to adjust policy mid cycle to allow growth to continue.

428
00:19:32,920 --> 00:19:35,320
Speaker 8: I think there's two There's two financial conditions we have

429
00:19:35,400 --> 00:19:37,800
Speaker 8: to look at. For you, for large cap big companies,

430
00:19:37,800 --> 00:19:41,359
Speaker 8: financial conditions are extremely loose. For down market consumer, this

431
00:19:41,400 --> 00:19:44,399
Speaker 8: is the bottom eighty percent of our income strata. Credit

432
00:19:44,440 --> 00:19:47,800
Speaker 8: card debt is high, credit card payments are high, and

433
00:19:47,880 --> 00:19:52,400
Speaker 8: the federal reserve policy has directly impacted those downmarket consumers.

434
00:19:52,680 --> 00:19:55,080
Speaker 4: The credit conditions in the capital markets are still loose.

435
00:19:55,080 --> 00:19:57,920
Speaker 8: You know, equities at all time lies, the vislow credit

436
00:19:57,960 --> 00:20:00,480
Speaker 8: spreads is you're the guests just mentioned very tight.

437
00:20:00,760 --> 00:20:03,119
Speaker 4: We have a very bifurcated economy, and I think the

438
00:20:03,119 --> 00:20:04,160
Speaker 4: centers are has to be.

439
00:20:04,160 --> 00:20:07,280
Speaker 8: Mindful of the fact that housing affordabilities in forty year

440
00:20:07,320 --> 00:20:10,280
Speaker 8: lows that the downmarket consumer is under significance train and

441
00:20:10,359 --> 00:20:13,600
Speaker 8: we saw that with some consumer discretionary earnings this morning.

442
00:20:14,000 --> 00:20:15,880
Speaker 4: So I think this is more.

443
00:20:15,720 --> 00:20:18,680
Speaker 8: An opportunity to window to kind of get right or

444
00:20:18,960 --> 00:20:21,840
Speaker 8: closer to where the policy should be. But I will

445
00:20:21,840 --> 00:20:23,960
Speaker 8: tell you that the inflation data is not going to

446
00:20:23,960 --> 00:20:26,280
Speaker 8: be constructive in the back half, and they're not going

447
00:20:26,320 --> 00:20:29,639
Speaker 8: to have this sort of wide open field to begin

448
00:20:30,000 --> 00:20:33,200
Speaker 8: a real significant easing cycle for the next couple of quarters.

449
00:20:33,480 --> 00:20:35,679
Speaker 1: Well, James, so do you agree with Zach that that

450
00:20:35,880 --> 00:20:38,760
Speaker 1: means probably a wider credit spreads than you could end

451
00:20:38,800 --> 00:20:41,760
Speaker 1: up seeing. Maybe a little bit And I'm just extrapolating here,

452
00:20:41,840 --> 00:20:44,119
Speaker 1: putting words in Zach's mouth, he can correct me. But

453
00:20:44,280 --> 00:20:47,800
Speaker 1: basically potentially a reversal of the small caps and a

454
00:20:47,880 --> 00:20:50,199
Speaker 1: sort of reversal of just sort of this belief in

455
00:20:50,240 --> 00:20:51,399
Speaker 1: a cyclical trend.

456
00:20:51,840 --> 00:20:53,280
Speaker 5: Do you think that we're going to see that kind

457
00:20:53,320 --> 00:20:54,720
Speaker 5: of response.

458
00:20:54,400 --> 00:20:56,560
Speaker 1: Or do you think that people are going to welcome

459
00:20:56,640 --> 00:20:59,600
Speaker 1: some sort of adjustment by the FED as allowing that

460
00:20:59,640 --> 00:21:01,879
Speaker 1: to sort of right size itself to allowing the cycle

461
00:21:01,920 --> 00:21:02,639
Speaker 1: to continue.

462
00:21:03,320 --> 00:21:05,400
Speaker 8: Yeah, I think it's the latter, And I don't think

463
00:21:05,440 --> 00:21:08,520
Speaker 8: corporate spreads are bound much much wider from here. There's

464
00:21:08,600 --> 00:21:11,560
Speaker 8: a lot of demand. We know that at peak FED,

465
00:21:11,600 --> 00:21:13,280
Speaker 8: which we certainly can both agree, I think we're in

466
00:21:13,359 --> 00:21:17,800
Speaker 8: teak FED. That corporate credit that municipal credit that bonds

467
00:21:17,880 --> 00:21:21,639
Speaker 8: outperform every time. Go back to nineteen eighty nine, you

468
00:21:21,640 --> 00:21:24,720
Speaker 8: have five FED tightening cycles, and at peak FED you

469
00:21:24,800 --> 00:21:27,240
Speaker 8: have great returns to fixed income and you have great

470
00:21:27,280 --> 00:21:28,840
Speaker 8: returns to dividend dibbit growers.

471
00:21:28,840 --> 00:21:30,720
Speaker 4: And as you mentioned, that rotation that.

472
00:21:30,720 --> 00:21:34,120
Speaker 8: Began July eleventh with the more benign inflation data into

473
00:21:34,160 --> 00:21:37,520
Speaker 8: small cap out of megatech that is also boo the

474
00:21:37,560 --> 00:21:38,200
Speaker 8: dividend trades.

475
00:21:38,240 --> 00:21:39,359
Speaker 4: So what we have now is a.

476
00:21:39,359 --> 00:21:42,639
Speaker 8: Very generous income market for investors, and we also have

477
00:21:43,000 --> 00:21:45,760
Speaker 8: a market that will be underproductive for cash.

478
00:21:46,200 --> 00:21:47,640
Speaker 4: Cash hields today will not.

479
00:21:47,600 --> 00:21:50,000
Speaker 8: Be cash returns over the next twelve months, and clients

480
00:21:50,480 --> 00:21:53,280
Speaker 8: and investors that have money to invest, the income space

481
00:21:53,320 --> 00:21:56,040
Speaker 8: looks extremely generous, both on the dividend and on.

482
00:21:56,000 --> 00:21:56,840
Speaker 4: The dead side.

483
00:21:57,080 --> 00:21:58,399
Speaker 2: Zach, I want to give you the final words. You

484
00:21:58,440 --> 00:21:59,960
Speaker 2: can use your own words.

485
00:22:00,080 --> 00:22:04,520
Speaker 7: Your response, well, I think the huge differentiator here is

486
00:22:04,560 --> 00:22:07,360
Speaker 7: are you a total return or access return focused investor.

487
00:22:07,400 --> 00:22:09,679
Speaker 7: We think the next twelve months look very solid from

488
00:22:09,720 --> 00:22:12,600
Speaker 7: a total return perspective. If you're focused on that access

489
00:22:12,640 --> 00:22:16,000
Speaker 7: return and that credit spread component, it's a little more difficult,

490
00:22:16,040 --> 00:22:18,640
Speaker 7: and so overall we do think it is a positive

491
00:22:18,680 --> 00:22:22,080
Speaker 7: environment for fixed income, but starting to see that spread widening.

492
00:22:22,080 --> 00:22:25,200
Speaker 7: If you're a credit an access return focused investor, you

493
00:22:25,240 --> 00:22:26,400
Speaker 7: need to keep an eye out for that.

494
00:22:26,760 --> 00:22:29,160
Speaker 2: Gents, this was great. Zacharrith is a credit sized James

495
00:22:29,200 --> 00:22:31,960
Speaker 2: Camp of Vego Asset Management, thank you very much, looking

496
00:22:31,960 --> 00:22:33,920
Speaker 2: ahead to a massive week with the Federal Reserve and

497
00:22:33,960 --> 00:22:35,199
Speaker 2: all that day to come and right up.

498
00:22:35,240 --> 00:22:38,440
Speaker 1: You know, we didn't even get to the quarterly refunding announcement.

499
00:22:38,480 --> 00:22:39,800
Speaker 1: And you know who is going to talk about that,

500
00:22:39,960 --> 00:22:41,840
Speaker 1: Zach Griffith. So we'll have to have him back sometime

501
00:22:41,840 --> 00:22:44,760
Speaker 1: because he was saying espectionally yeah, really significant. He said

502
00:22:44,760 --> 00:22:47,520
Speaker 1: that actually could be you know market, Look, okay, is.

503
00:22:47,520 --> 00:22:50,000
Speaker 2: Zach still there? Can I find out? Is he still there?

504
00:22:50,119 --> 00:22:51,560
Speaker 2: If we let him go, they're going to find out

505
00:22:51,600 --> 00:22:53,200
Speaker 2: for you. All right, we can do this in real time,

506
00:22:53,640 --> 00:22:55,280
Speaker 2: chase the home all right, all right?

507
00:22:55,280 --> 00:22:55,560
Speaker 6: We good?

508
00:22:55,640 --> 00:22:55,920
Speaker 2: Letting go?

509
00:22:56,160 --> 00:22:56,520
Speaker 4: Yes?

510
00:22:56,600 --> 00:22:58,360
Speaker 2: You say right now is yeah, I've got it back

511
00:22:58,400 --> 00:22:59,639
Speaker 2: in you want to forgive it?

512
00:22:59,760 --> 00:23:00,160
Speaker 5: Yez?

513
00:23:00,320 --> 00:23:02,200
Speaker 1: Just quickly before we let you go and we brought

514
00:23:02,200 --> 00:23:04,439
Speaker 1: you back on just for this. How important is the

515
00:23:04,480 --> 00:23:05,800
Speaker 1: quarterly your funding announcement?

516
00:23:07,359 --> 00:23:09,800
Speaker 7: We think it's important, but we're not expecting any major

517
00:23:09,920 --> 00:23:10,760
Speaker 7: changes this week.

518
00:23:10,800 --> 00:23:12,280
Speaker 4: I'd be focused on.

519
00:23:12,080 --> 00:23:15,760
Speaker 7: What happens this afternoon with the quarterly borrowing estimates. I

520
00:23:15,760 --> 00:23:17,879
Speaker 7: think that's more likely to surprise the market than what

521
00:23:17,920 --> 00:23:21,160
Speaker 7: we hear on Wednesday morning. But that's going to be huge.

522
00:23:21,160 --> 00:23:22,960
Speaker 7: There's a lot of focus on it now. It's something

523
00:23:23,000 --> 00:23:25,280
Speaker 7: I've focused on for many years. I'm surprised to see

524
00:23:25,280 --> 00:23:28,880
Speaker 7: how much it's in the market overall, no change. We're

525
00:23:28,880 --> 00:23:32,160
Speaker 7: not expecting that to outweigh the shift in monetary policy

526
00:23:32,440 --> 00:23:34,720
Speaker 7: and the economic landscape which pulls yields lower.

527
00:23:34,800 --> 00:23:37,160
Speaker 2: Well, that was anti climac Thanks for jumping back, Sack,

528
00:23:37,359 --> 00:23:41,119
Speaker 2: appreciate it. Thank you, zach Ri. It's there a credit size.

529
00:23:41,600 --> 00:23:45,160
Speaker 2: This is the Bloomberg Sevenans podcast, bringing you the best

530
00:23:45,200 --> 00:23:48,520
Speaker 2: in markets, economics, anchia politics. You can watch the show

531
00:23:48,560 --> 00:23:51,520
Speaker 2: live on bloombag TV weekday mornings from six am to

532
00:23:51,640 --> 00:23:55,400
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

533
00:23:55,560 --> 00:23:57,760
Speaker 2: or anywhere else you listen, and as always on the

534
00:23:57,800 --> 00:24:01,480
Speaker 2: bloom Black Terminal and the Bloombag Business pu