WEBVTT - Markets, EMEA, Real Estate, and Work-from-Home 0:00:00.840 --> 0:00:04.000 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:05.240 my co host Matt Miller. 0:00:05.640 --> 0:00:09.600 Every business day, we bring you interviews from CEOs, market pros, 0:00:09.720 --> 0:00:13.600 and Bloomberg experts, along with essential market moven news. 0:00:14.160 --> 0:00:17.279 Find the Bloomberg Markets Podcast on Apple Podcasts or wherever 0:00:17.400 --> 0:00:20.520 you listen to podcasts, and at Bloomberg dot com slash podcast. 0:00:21.239 --> 0:00:24.680 I mean, today's tape basically unchanged. It kind of feels 0:00:25.280 --> 0:00:27.680 kind of like where we are overall in these markets 0:00:27.680 --> 0:00:30.600 here feels range bound, as we've heard from some guests 0:00:30.680 --> 0:00:32.960 kind of to suggest, and the question is, you know, 0:00:33.000 --> 0:00:35.720 kind of what moves you out of that range. Maybe 0:00:35.720 --> 0:00:38.200 our next guest has some thoughts here. Joe Mazzola, he's 0:00:38.320 --> 0:00:41.400 over at Schwab. He is the managing director of Trading 0:00:41.520 --> 0:00:43.320 Education at Charles Schwab. 0:00:44.280 --> 0:00:46.199 I mean, Joe, you're at Schwab. 0:00:46.280 --> 0:00:50.200 You guys see everybody, You see everything out there because 0:00:50.240 --> 0:00:53.640 you have so many clients out there. What do you 0:00:53.680 --> 0:00:57.720 feel like investors are kind of the biggest issue for 0:00:57.760 --> 0:00:58.640 investors right here. 0:01:00.320 --> 0:01:03.120 I think there's probably three things that investors that are 0:01:03.160 --> 0:01:05.800 really kind of keying on right now, you know, interest 0:01:05.880 --> 0:01:07.960 rates being number one, you guys just kind of let 0:01:08.040 --> 0:01:10.520 into that, you know, back around four and a half percent, 0:01:10.560 --> 0:01:12.679 four point five to five and the tenure. I don't 0:01:12.720 --> 0:01:15.600 think it's it's the it's the move itself. It's the 0:01:15.640 --> 0:01:18.400 magnitude and how quickly it moved. I think that's shaken 0:01:18.959 --> 0:01:22.080 markets up quite a bit. I think the second thing 0:01:22.280 --> 0:01:25.319 is the political landscape, and you know, there is more 0:01:25.480 --> 0:01:28.920 risks around a government shutdown. We you know, I think 0:01:28.959 --> 0:01:31.280 maybe we sit back and say, wow, you know this 0:01:31.280 --> 0:01:33.679 this will work itself out, but there's real risk that 0:01:33.720 --> 0:01:35.800 this could this could carry on for a while and 0:01:35.880 --> 0:01:38.800 could have some economic impacts. I think the last thing, 0:01:38.880 --> 0:01:41.840 and probably maybe front and center and investors' minds, is 0:01:41.880 --> 0:01:42.959 inflation data. 0:01:43.120 --> 0:01:45.080 It did seem like it was subdued over the summer. 0:01:45.160 --> 0:01:47.480 It seemed like, you know, people were kind of able 0:01:47.480 --> 0:01:49.920 to kind of get ahead of it and see the 0:01:50.080 --> 0:01:50.720 end in sight. 0:01:50.880 --> 0:01:52.600 But we started to see it kind of tick back up. 0:01:52.640 --> 0:01:53.920 We get PC data. 0:01:53.720 --> 0:01:55.480 On Friday, so it'll give us a little bit more 0:01:55.520 --> 0:01:58.240 of an indication on where we're at. But that's absolutely 0:01:58.280 --> 0:01:59.960 front and center for our investor's mind. 0:02:00.200 --> 0:02:02.720 Gabagail do little, Abigail do a little looks at the 0:02:03.760 --> 0:02:08.320 technical analysis and she thinks we could float down below 0:02:08.480 --> 0:02:11.200 forty two hundred on the S and P five hundred. 0:02:11.280 --> 0:02:15.040 I guess I would imagine that retail investors look at 0:02:15.040 --> 0:02:20.720 these yields and find them attractive, especially versus stocks. Right now, 0:02:21.000 --> 0:02:22.760 how are your clients trading it? 0:02:23.680 --> 0:02:25.120 So we look at a couple of things, right we 0:02:25.160 --> 0:02:29.160 look at the S ANDP earnings yield versus the tenure yield. 0:02:29.200 --> 0:02:30.880 Then you look at that spread, and we're back at 0:02:30.919 --> 0:02:32.959 levels that we really haven't seen since prior to the 0:02:33.000 --> 0:02:36.280 Great Financial Crisis. Meaning look that whole Tina talk that 0:02:36.320 --> 0:02:38.280 we've had for what fifteen years? I mean, that's out 0:02:38.280 --> 0:02:40.480 the window. There is an alternative, there's an alternative. And 0:02:40.480 --> 0:02:43.680 fixed income, there's an alternative. In money markets. A lot 0:02:43.720 --> 0:02:46.399 of investors are comfortable just kind of sitting in five 0:02:46.400 --> 0:02:49.799 percent yield and waiting for the market to work itself out. 0:02:50.280 --> 0:02:52.120 I agree one hundred percent. And looking at some of 0:02:52.160 --> 0:02:55.720 these technical levels right now, it does seem like, you know, 0:02:55.760 --> 0:02:58.080 we've moved into a bit of a lower range. And 0:02:58.120 --> 0:03:00.280 the reason I say that is because you know, we 0:03:00.320 --> 0:03:02.160 broke that forty three to fifty range. I think we 0:03:02.280 --> 0:03:05.440 have some some room to potentially go maybe down to 0:03:05.440 --> 0:03:07.720 about forty two to ten, where you might see a 0:03:07.720 --> 0:03:11.160 bit of a bounce. That's kind of that intersection of 0:03:11.200 --> 0:03:13.560 where the two hundre day moving average is sitting right 0:03:13.560 --> 0:03:16.360 around forty two hundred. But we also have a Fibinacci 0:03:16.440 --> 0:03:18.760 retracem the level from the one year highs right around 0:03:18.760 --> 0:03:19.520 that level as well. 0:03:19.600 --> 0:03:19.799 Two. 0:03:20.680 --> 0:03:22.560 But a couple of things that I've been paying attention to, 0:03:22.639 --> 0:03:24.880 and you know a lot of our traders and investors 0:03:24.880 --> 0:03:26.920 been talking to us about, is this idea of the 0:03:26.919 --> 0:03:28.320 market breadth and. 0:03:28.280 --> 0:03:29.600 How it's really weakening. 0:03:30.400 --> 0:03:33.880 We're just not seeing a bounce, and we're not seeing 0:03:33.919 --> 0:03:37.400 it across the whole spectrum, if anything. Really, the only 0:03:37.400 --> 0:03:40.920 sector that's held up well is energy, with about ninety 0:03:40.960 --> 0:03:43.400 percent of its components in the S and P five 0:03:43.480 --> 0:03:45.880 hundred up above its fifty day moving average. But when 0:03:45.880 --> 0:03:47.280 you look at the S and P five hundred as 0:03:47.320 --> 0:03:49.760 a whole, we're around twenty five percent of the S 0:03:49.800 --> 0:03:52.720 and P five hundred up above its fifty day moving average. 0:03:53.600 --> 0:03:56.600 And that's just not it's not at a level that 0:03:56.720 --> 0:03:59.720 supports a bounds. Now, what I'd like to see is 0:03:59.720 --> 0:04:01.520 I'd like to see a little bit more of a washout. 0:04:01.560 --> 0:04:04.480 I'd like to see us get down maybe around that 0:04:04.560 --> 0:04:07.320 ten or twelve percent level to see if we get 0:04:07.320 --> 0:04:09.240 a bounce from there. At that point, maybe you know, 0:04:09.280 --> 0:04:12.160 some of that polishness kind of fades from the market. 0:04:12.200 --> 0:04:14.200 You might start to see some you know, that that 0:04:14.520 --> 0:04:18.280 washout occur where buyers might start step back in. 0:04:19.279 --> 0:04:22.080 Hey, Joe, you know when you when you talk to 0:04:22.320 --> 0:04:24.640 the bloom the shrub customers, what are some of the 0:04:24.720 --> 0:04:26.880 sectors that they like right here? I mean it was 0:04:26.920 --> 0:04:28.600 if you just kind of look back at this year 0:04:28.680 --> 0:04:31.440 to date, if you owned you know, the Magnificent seven, boy, 0:04:31.560 --> 0:04:34.520 this has been a great year. What are they most 0:04:35.080 --> 0:04:36.720 bullsh on at this point? Or maybe what are they 0:04:36.720 --> 0:04:37.480 most concerned about? 0:04:38.279 --> 0:04:40.560 Yeah, as rob customers for sure are looking at really 0:04:40.560 --> 0:04:44.279 two sectors right now, Energy and they've done well in 0:04:44.320 --> 0:04:44.800 that over. 0:04:44.680 --> 0:04:45.479 The last couple of months. 0:04:45.520 --> 0:04:47.000 I think, you know, if you look at a sector 0:04:47.040 --> 0:04:49.120 as a whole over the last month, it's over double 0:04:49.160 --> 0:04:52.920 digits and then information technology. So it so they continue 0:04:52.920 --> 0:04:55.600 to be buyers there. They're looking for opportunities on selloffs 0:04:55.600 --> 0:04:58.440 to kind of step in and buy at those levels. 0:04:58.600 --> 0:05:00.440 But those are the two right now that they're really 0:05:00.440 --> 0:05:02.320 looking at the ones that they are really shying away 0:05:02.320 --> 0:05:03.680 from our real estate utilities. 0:05:03.680 --> 0:05:05.080 Those are the ones that they're very pay or shoun 0:05:05.160 --> 0:05:05.760 right now. 0:05:06.760 --> 0:05:08.640 In terms of real estate. 0:05:09.320 --> 0:05:12.880 Is it a problem, you know, with these higher rates, 0:05:12.880 --> 0:05:15.960 with higher mortgages, with refinancings coming to I mean both 0:05:15.960 --> 0:05:20.679 on the retail and sorry residential and on the commercial side, 0:05:20.680 --> 0:05:23.360 there are some big question marks there now. 0:05:23.880 --> 0:05:25.120 I think you hit a nail on the head. 0:05:25.160 --> 0:05:26.479 I think when you're starting to look at a thirty 0:05:26.560 --> 0:05:29.240 year fixed mortgage up above seven percent, you know, seven 0:05:29.279 --> 0:05:31.240 point one, seven point one five percent at this point 0:05:31.279 --> 0:05:33.640 right now, I mean, just look at look at what 0:05:33.640 --> 0:05:36.479 we've seen in existing homes. I think ninety percent of 0:05:36.520 --> 0:05:39.960 the US has a mortgage under five percent. What's the 0:05:39.960 --> 0:05:41.720 impetus to move to a new home. I think they're 0:05:41.800 --> 0:05:44.560 kind of sitting still, and that's cut down on supply, 0:05:44.600 --> 0:05:47.200 which you know, to a certain extent, is held housing 0:05:47.279 --> 0:05:50.479 prices in check. It hasn't. We haven't really seen a 0:05:50.520 --> 0:05:53.200 big decrease in housing price. At the same time, it's 0:05:53.360 --> 0:05:56.000 just not really providing the catalyst for people to move now, 0:05:56.120 --> 0:05:57.800 until you start to see a real break there. I 0:05:57.880 --> 0:06:00.320 know there is some pent of demand and supply apply 0:06:00.440 --> 0:06:01.920 is starting to hit. We've seen that on the new 0:06:01.920 --> 0:06:05.120 home sales exceeding existing home sales, and we've seen that 0:06:05.240 --> 0:06:09.920 spread continue now for basically a year. But until you 0:06:10.000 --> 0:06:12.800 start to see those mortgage rates kind of take back down, 0:06:12.839 --> 0:06:14.240 I don't think you're going to see a lot of 0:06:14.279 --> 0:06:15.440 buying momentum there. 0:06:16.800 --> 0:06:19.239 So, Joe, the good folks at SCHWAP, are you, guys, 0:06:19.560 --> 0:06:21.359 is it your base case that we're going to have 0:06:21.440 --> 0:06:23.640 a recession and if so, when or what do you 0:06:23.680 --> 0:06:25.080 think we can skatee past one? 0:06:26.120 --> 0:06:28.040 Well, I could tell you what our investors and what 0:06:28.040 --> 0:06:29.919 our trade is telling us about sixty nine percent of 0:06:29.920 --> 0:06:32.000 them do believe that a recession is coming. 0:06:32.000 --> 0:06:34.040 But they do believe that it'll last. 0:06:33.920 --> 0:06:35.320 Less than a year and it might not be as 0:06:35.360 --> 0:06:38.400 deep as as maybe some are predicting. I think that 0:06:39.400 --> 0:06:42.080 the belief is that, you know, it'll happen in twenty 0:06:42.120 --> 0:06:45.360 twenty four, and they're kind of they're constantly looking at 0:06:45.360 --> 0:06:50.640 this battle between the soft landing a scenario in a recession, 0:06:50.680 --> 0:06:52.240 and I think they're probably skewing a little bit more 0:06:52.240 --> 0:06:54.120 towards recession side at this point. 0:06:54.440 --> 0:07:01.400 So do people back up into these rates do you buy, uh, 0:07:01.720 --> 0:07:05.600 you know, treasuries and even maybe go along a little 0:07:05.600 --> 0:07:08.240 bit duration if you're if you're worried about a recession. 0:07:09.480 --> 0:07:11.120 Well, I'm not a fixed income guy, but I can 0:07:11.160 --> 0:07:12.840 tell you, you know what our traders are. 0:07:12.720 --> 0:07:15.240 Telling us, and they have been bearish on but they, 0:07:15.760 --> 0:07:17.400 let me rephrase that, they've been a little bit more 0:07:17.400 --> 0:07:19.880 bearish on bonds and then than they were in Q two. 0:07:19.960 --> 0:07:22.920 So the Q three survey, they pull back some of 0:07:22.960 --> 0:07:25.840 that excitement towards bonds. But I think that what we're 0:07:25.840 --> 0:07:28.120 starting to see now is maybe a little bit movement 0:07:28.200 --> 0:07:30.800 back into that into that sector. And we're starting to 0:07:30.800 --> 0:07:32.320 see it, of course on the money market side as 0:07:32.360 --> 0:07:34.400 well too, as people are kind of waiting for a 0:07:34.440 --> 0:07:37.760 correction in the market. I think the thing that's frustrating 0:07:37.800 --> 0:07:40.680 for investors right now is it's kind of a slow 0:07:40.760 --> 0:07:42.960 grind down, right. I mean, we're not really seeing a 0:07:43.000 --> 0:07:45.880 big pop in the VIX. You know, we're still below twenty. 0:07:45.920 --> 0:07:47.720 We haven't really seen a big pop in the move 0:07:47.800 --> 0:07:50.760 index on the fixed income side, which is showing that 0:07:51.800 --> 0:07:55.480 you know, investors and traders not they're not comfortable at 0:07:55.480 --> 0:07:55.920 this level. 0:07:55.960 --> 0:07:58.080 But at the same time they're not panicking either. That's 0:07:58.080 --> 0:07:59.320 why I talk about that wash out. 0:07:59.400 --> 0:08:01.440 Until we see that wash out, I think we just 0:08:01.480 --> 0:08:05.680 can continue to see this grind down within this lower range. 0:08:05.880 --> 0:08:08.040 Hey, Joe, thanks so much for joining us. Really appreciate it. 0:08:08.120 --> 0:08:11.480 Joe Mazzola. He's a managing director and trading education at 0:08:11.640 --> 0:08:12.920 Charles Schwab. 0:08:14.120 --> 0:08:17.520 You're listening to the team Ken's are Live program Bloomberg 0:08:17.560 --> 0:08:20.920 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:08:21.040 --> 0:08:24.160 the iHeartRadio app, and the Bloomberg Business App, or listen 0:08:24.240 --> 0:08:26.520 on demand wherever you get your podcasts. 0:08:28.640 --> 0:08:29.640 Jackie Bowie joins us. 0:08:29.640 --> 0:08:32.280 She's a managing partner and head of e m EA 0:08:32.720 --> 0:08:36.760 at Chatham Financial. Jackie, you know investors here and folks 0:08:36.760 --> 0:08:38.360 here in the States, we kind of feel like our 0:08:38.360 --> 0:08:41.840 economy's okay. You know, inflation with like inflation to come 0:08:41.880 --> 0:08:44.559 down a little bit more. Higher rates are hurting, like 0:08:44.600 --> 0:08:45.880 if you want to go out and buy a house. 0:08:46.400 --> 0:08:48.079 But generally things are okay. 0:08:48.160 --> 0:08:48.360 Here. 0:08:48.640 --> 0:08:50.400 People feel like I think generally things are kind of 0:08:50.400 --> 0:08:53.880 in a right direction, but Europe not so much. Talk 0:08:53.920 --> 0:08:57.000 to us about kind of the the economic backdrop that 0:08:57.360 --> 0:09:01.080 European investors and investors that invest in em mea over 0:09:01.200 --> 0:09:03.040 in Europe and emerging markets, what are they dealing with? 0:09:04.720 --> 0:09:07.680 Well, I guess the trends are very similar around you know, 0:09:07.760 --> 0:09:12.160 higher inflation, higher interest rates, and a concern that those 0:09:12.240 --> 0:09:16.200 interest rates are starting to impact the real economy. I 0:09:16.240 --> 0:09:19.800 think the differences in Europe and in the UK is 0:09:19.840 --> 0:09:23.760 that getting inflation under control has not been quite as successful, 0:09:23.840 --> 0:09:26.120 you could say, as the Fed have managed to do. 0:09:26.840 --> 0:09:31.120 And there's also a huge divergence within the economies. So 0:09:31.160 --> 0:09:34.040 we think about the EU as a you know, one 0:09:34.120 --> 0:09:36.560 geographic zone, but in fact, if you look at the 0:09:36.600 --> 0:09:41.160 economic performance of Germany for example, in recession, very industrial 0:09:41.200 --> 0:09:44.800 economy not doing well, versus like Spain and Ireland who 0:09:45.120 --> 0:09:47.600 are showing decent growth. So it's hard to make a 0:09:47.679 --> 0:09:51.640 uniform statement across the board, and certainly a lot of 0:09:51.720 --> 0:09:54.319 divergence between the individual country performance. 0:09:55.559 --> 0:09:59.360 How difficult are higher commodity prices? You know, last year 0:09:59.440 --> 0:10:03.760 we were really worried about Germany and continental Europe as 0:10:03.800 --> 0:10:08.120 gas prices rose up. They managed to avoid taking a 0:10:08.200 --> 0:10:10.760 huge hit from that by storing enough. 0:10:10.800 --> 0:10:12.400 But is it still a concern? 0:10:13.840 --> 0:10:17.280 Definitely, and I think it's a real concern right down 0:10:17.320 --> 0:10:20.560 to the consumer level in terms of perception, because as 0:10:20.600 --> 0:10:23.000 soon as the headlines start to come through, you particularly 0:10:23.000 --> 0:10:27.240 about the oil price, everyone realizes how much that really 0:10:27.280 --> 0:10:30.240 impacts what they payple for energy and also the cost 0:10:30.280 --> 0:10:32.600 of fuel at the pump here in Europe in the UK, 0:10:32.760 --> 0:10:35.000 which is much higher than it is in the US. 0:10:35.280 --> 0:10:37.840 So I think there's a bit of a concern that 0:10:38.040 --> 0:10:40.640 if consumers start to see that, they will then start 0:10:40.679 --> 0:10:44.240 to renin spending as they prepare for perhaps another win 0:10:44.320 --> 0:10:47.880 to significantly higher energy costs in Germany. 0:10:48.000 --> 0:10:51.800 I mean, I guess there's such an I guess the 0:10:51.840 --> 0:10:54.800 importance of China as a trading partner, and the China 0:10:55.400 --> 0:10:58.440 reopening has been disappointing relative to I guess maybe the 0:10:58.480 --> 0:11:02.160 beginning of the year expectation. How is Germany and its 0:11:02.200 --> 0:11:03.319 economy dealing. 0:11:03.200 --> 0:11:07.360 With that, well, if you look at the headline numbers 0:11:07.360 --> 0:11:11.400 of the GDP levels, you could say not very well. 0:11:11.080 --> 0:11:13.560 So as you imply, Germany is obviously a big expert 0:11:13.640 --> 0:11:17.480 economy and pretty much reliant on a lot of those 0:11:17.520 --> 0:11:21.200 overseas markets. China is being just one of them, you know. 0:11:21.240 --> 0:11:23.679 And if we think what happened through the pandemic where 0:11:24.200 --> 0:11:28.000 we had supply chain issues, which was then impacting growth, 0:11:28.360 --> 0:11:30.960 and now we have it on the demand side. So 0:11:31.320 --> 0:11:34.200 we've gone through a full cycle with none of the 0:11:34.280 --> 0:11:37.600 upside of the upcycle because you've had a bit of 0:11:37.600 --> 0:11:40.679 a double whammy on either side of that. I mean, 0:11:40.679 --> 0:11:43.520 there are other things that are specific to the German economy, 0:11:43.600 --> 0:11:46.679 a whole other topics around the green agenda and the 0:11:46.760 --> 0:11:51.000 cost for businesses to try and comply with what Germany 0:11:51.040 --> 0:11:55.679 are trying to do around sort of green and sustainable policies, 0:11:56.000 --> 0:11:58.680 which is definitely impacting the economy as well. 0:11:59.400 --> 0:12:01.760 Is that not Is the green transition not going to 0:12:01.760 --> 0:12:03.839 be a driver of growth down the road? I mean, 0:12:03.840 --> 0:12:07.880 I look at expectations for the German economy and their law. 0:12:07.960 --> 0:12:12.440 Obviously we're looking for a contraction this year and only 0:12:12.800 --> 0:12:17.400 zero point six percent GP growth next year. But is 0:12:17.440 --> 0:12:20.320 the green transition going to be a driver there? Or 0:12:20.400 --> 0:12:25.880 is Germany going to be penalized by its reliance on 0:12:26.360 --> 0:12:28.319 the internal combustion engine industry. 0:12:29.760 --> 0:12:31.720 Yeah. I think if we were to look ten years 0:12:31.760 --> 0:12:34.480 ahead and then look retrospectively, you might be able to 0:12:34.520 --> 0:12:39.360 say that the transition to green overall created jobs, created growth. 0:12:40.040 --> 0:12:43.400 I think the pain comes in the transition period. If 0:12:43.440 --> 0:12:45.200 you look at the number of people who are still 0:12:45.200 --> 0:12:50.199 employed in industries around fossil fuels, around the automotive industry 0:12:50.360 --> 0:12:53.640 as in you know, few powered cars, not electric cars. 0:12:53.679 --> 0:12:57.520 It's huge and you don't just get an automatic replacement 0:12:57.600 --> 0:13:00.520 of them, you get a displacement which impacts the economy 0:13:00.600 --> 0:13:03.959 before call it the new green economy starts to take off. 0:13:04.760 --> 0:13:06.840 And I think there are more concerns that the short 0:13:06.960 --> 0:13:11.360 term pain of pushing towards sustainable policies. The same in 0:13:11.400 --> 0:13:14.160 the UK, and you know, our prime ministers now starting 0:13:14.200 --> 0:13:17.000 to rein that in a little because they realizes that 0:13:17.120 --> 0:13:18.920 the transition period will be painful. 0:13:19.160 --> 0:13:23.480 By the way, how's Brexit been twenty sixteen? 0:13:23.600 --> 0:13:23.760 Right? 0:13:23.880 --> 0:13:25.079 Was that twenty sixteen? 0:13:26.000 --> 0:13:31.600 So seven years on are you are you just reveling 0:13:31.600 --> 0:13:34.600 in the benefits of independence? I mean, has it been 0:13:34.760 --> 0:13:39.720 just an amazing weight lifted from your shoulders, the freedom 0:13:39.800 --> 0:13:41.480 of doing it on your own, all. 0:13:41.320 --> 0:13:45.680 The incredible trade deals that you've made. I mean, what courage, 0:13:45.760 --> 0:13:46.920 What courage that took. 0:13:47.960 --> 0:13:48.200 Yeah. 0:13:48.280 --> 0:13:52.320 So I think the idea of Brexit was had lots 0:13:52.360 --> 0:13:56.400 of very positive components. The challenge for the UK government 0:13:56.440 --> 0:13:59.960 was in the execution plan and circling through for prime 0:14:00.080 --> 0:14:02.640 ministers in that time to try and execute the plan 0:14:02.960 --> 0:14:06.440 in the middle of a global pandemic meant that getting 0:14:06.600 --> 0:14:09.959 those big trade deals done was definitely more of a challenge. 0:14:10.240 --> 0:14:13.000 And of course you're partying right, they shouldn't have partied 0:14:13.040 --> 0:14:13.480 so much. 0:14:15.480 --> 0:14:17.880 Got to let their hair down. And I think the 0:14:17.920 --> 0:14:20.640 issue now, you know, just coming into the political cycle. 0:14:20.680 --> 0:14:22.240 I know it's the same in the US as we 0:14:22.320 --> 0:14:25.600 come into twenty twenty four that we're starting to see, 0:14:25.720 --> 0:14:28.600 you know, really big shifts in the sort of left 0:14:28.600 --> 0:14:31.360 to right movement or wherever way you want to look 0:14:31.400 --> 0:14:34.480 at it, in the direction of travel. Where you know, 0:14:34.560 --> 0:14:38.320 in the UK the leading party in the polls is 0:14:38.360 --> 0:14:41.800 making very clear signs about a much closer relationship with 0:14:41.840 --> 0:14:45.880 the EU Again, so just as businesses have got used 0:14:45.960 --> 0:14:48.880 to the new operating environment, you start to sort of 0:14:48.920 --> 0:14:52.440 inject more of that uncertainty back in. So we'll see 0:14:52.440 --> 0:14:54.080 how the politics shape up next year. 0:14:54.760 --> 0:14:56.960 Jackie, thanks so much for joining us. I really appreciate 0:14:57.000 --> 0:15:00.760 it getting your views. Jackie Bowie, Managing Partner and head 0:15:00.800 --> 0:15:04.640 of E M e A at Chatham Financial based in London. 0:15:05.160 --> 0:15:08.280 You're listening to the tape Cat's are live program Bloomberg 0:15:08.320 --> 0:15:11.920 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:15:12.000 --> 0:15:15.240 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:15:15.240 --> 0:15:18.080 You can also listen live on Amazon Alexa from our 0:15:18.080 --> 0:15:22.480 flagship New York station. Just say Alexa Play Bloomberg eleven thirty. 0:15:23.000 --> 0:15:26.840 Former colleague device Callie Cox back in the studio, US 0:15:26.880 --> 0:15:27.840 investment analyst with E. 0:15:28.080 --> 0:15:30.520 Touro, So, Kelly, what do. 0:15:30.480 --> 0:15:32.600 You make of this market? I mean there's people lass, 0:15:32.640 --> 0:15:34.760 you know, four or five weeks, people have gotten very 0:15:34.800 --> 0:15:37.840 nervous here about this whole interest rate environment and what 0:15:37.880 --> 0:15:40.400 it may mean a how to risk assets perform in 0:15:40.440 --> 0:15:43.560 a higher for longer environment. But does that really bring 0:15:43.640 --> 0:15:45.720 back onto the table recession? How do you guys think 0:15:45.760 --> 0:15:46.560 about that right here? 0:15:46.880 --> 0:15:49.000 Yeah, well, we see people building a wall of worry 0:15:49.040 --> 0:15:50.640 and we think that's a good thing. And I'm not 0:15:50.640 --> 0:15:53.400 trying to be overally optimistic here, but if you think 0:15:53.440 --> 0:15:56.320 about this list of worries that we're going through, student 0:15:56.360 --> 0:15:59.240 loan payments restarting, if you think about you know, higher oil, 0:15:59.360 --> 0:16:03.240 higher yield's, potential government shut down, there's a reason why 0:16:03.280 --> 0:16:06.200 people are nervous. But put them all together, and I 0:16:06.200 --> 0:16:09.160 can only count a few of those as actual systemic 0:16:09.600 --> 0:16:12.280 risks to the economy. So that's what we're telling customers. 0:16:12.400 --> 0:16:14.200 Keep an eye on oil, keep an eye on yields, 0:16:14.240 --> 0:16:16.400 even though yields are telling us a good thing. Still 0:16:16.440 --> 0:16:19.120 pressure on the economy and markets, but everything else might 0:16:19.160 --> 0:16:19.880 just be a distraction. 0:16:20.680 --> 0:16:23.120 All right, So I'm sorry, but you sound still pretty 0:16:23.240 --> 0:16:24.640 constructive on these markets here. 0:16:25.080 --> 0:16:30.120 We're I hate this phrase, but cautiously optimistic. We're constructive, 0:16:30.160 --> 0:16:33.880 but we're also asking people to really tread carefully and 0:16:33.920 --> 0:16:37.200 pick up quality risk, don't go all out here. I mean, 0:16:37.240 --> 0:16:39.920 we are in a bull market until proven otherwise, until 0:16:39.960 --> 0:16:43.040 we see that recession or that crisis. Right now, there 0:16:43.040 --> 0:16:45.200 are a few signs of that, but at the same time, 0:16:45.240 --> 0:16:47.600 we don't know what cracks could be forming underneath the surface. 0:16:48.120 --> 0:16:53.160 So how worried are you about the government shut down 0:16:53.920 --> 0:16:57.240 which is very likely to come this weekend? The strikes, 0:16:57.600 --> 0:17:01.760 the UAW strikes being prong I mean, is this a 0:17:01.800 --> 0:17:03.160 factor in your analysis? 0:17:03.680 --> 0:17:05.680 Yeah, So we think about the strikes and the shutdown 0:17:05.720 --> 0:17:08.439 a bit differently. Even though the strike the shutdown is 0:17:08.480 --> 0:17:11.880 kind of like a like a four strike from government employees, right, 0:17:12.359 --> 0:17:14.600 So the UAW strike, of course, is front and center 0:17:14.640 --> 0:17:16.399 of our minds, especially because we have a lot of 0:17:16.400 --> 0:17:19.080 investors who own auto stocks, and this is a big 0:17:19.119 --> 0:17:21.800 deal for the auto industry. I mean, luckily, we're talking 0:17:21.840 --> 0:17:24.280 about US production here, and US production is just a 0:17:24.320 --> 0:17:28.359 small share of global car production. I mean, US consumers 0:17:28.440 --> 0:17:30.720 use a lot of cars, but they don't exactly produce 0:17:30.760 --> 0:17:33.360 a lot of them, so we think global production could 0:17:33.359 --> 0:17:35.680 fill the gap there. But at the same time, I mean, 0:17:35.720 --> 0:17:38.040 this is another worry to lop on top of an 0:17:38.040 --> 0:17:41.480 economy that's under a lot of pressure. Government shutdown again. 0:17:41.800 --> 0:17:44.600 I mean, if you look historically, they haven't made much 0:17:44.600 --> 0:17:47.360 of a dent in either the economy or markets. It's 0:17:47.440 --> 0:17:51.400 usually just a distraction. But going back to systemic risk, 0:17:51.480 --> 0:17:53.679 I mean, we don't know what's happening underneath the surface, 0:17:53.800 --> 0:17:56.040 and you know, we're encouraging people to not freak out 0:17:56.080 --> 0:17:59.080 too much, but understand that this is just another you know, 0:17:59.240 --> 0:18:01.760 piece of pressure. Sure that you know investors have to 0:18:01.800 --> 0:18:02.840 think about. 0:18:02.560 --> 0:18:04.560 Well, why don't I just sit my two year treasury 0:18:04.560 --> 0:18:07.040 at five point one percent? That's pretty good. 0:18:07.680 --> 0:18:09.440 I mean a lot of people are doing that. 0:18:09.720 --> 0:18:11.480 I mean, is that something you guys I mean, is 0:18:11.480 --> 0:18:13.840 that something you guys are seeing from your clients or 0:18:13.880 --> 0:18:15.520 hearing from your clients, and what are you telling them 0:18:15.520 --> 0:18:15.840 about that? 0:18:15.920 --> 0:18:16.000 Oh? 0:18:16.080 --> 0:18:17.440 Yeah, we hear it all the time. We did a 0:18:17.480 --> 0:18:19.399 webinar with clients yesterday and that was one of the 0:18:19.440 --> 0:18:22.080 first questions that came up. And it's a very fair question. 0:18:22.119 --> 0:18:24.560 I mean, that's the five percent is the most you've 0:18:24.560 --> 0:18:27.080 been able to get on money in thirty years. So 0:18:27.760 --> 0:18:30.760 we frame it like this. I mean, timeframes matter a 0:18:30.800 --> 0:18:33.120 lot when it comes to considering whether to go into 0:18:33.160 --> 0:18:36.400 cash or go into equities, or basically when you're determining 0:18:36.400 --> 0:18:38.520 how much risk you're taking on here, because cash at 0:18:38.520 --> 0:18:41.280 five percent is great for short term goals. But remember 0:18:41.359 --> 0:18:43.640 that yields are probably not going to go much higher 0:18:43.680 --> 0:18:45.880 from here. The economy is probably going to slow down 0:18:45.920 --> 0:18:48.760 from this five percent annualized pace. People think we're growing 0:18:48.760 --> 0:18:51.600 out in the third quarter. And if that's the case, 0:18:51.680 --> 0:18:55.520 if the Fed starts cutting rates into next year, you know, 0:18:55.560 --> 0:18:57.679 that's the rate that you're getting paid on your cash 0:18:57.760 --> 0:18:59.960