1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,480 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,280 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg with 5 00:00:33,479 --> 00:00:37,120 Speaker 1: Ust Karen Heart of Bloomberg Intelligence. Karen, you have followed 6 00:00:37,120 --> 00:00:40,479 Speaker 1: the collapse of General Electric. Mr Corp. Has to rebuild? 7 00:00:40,800 --> 00:00:43,600 Speaker 1: What is order number one for Lawrence Copp to Danner 8 00:00:43,680 --> 00:00:46,680 Speaker 1: highs General Electric. I think the first thing he's gonna 9 00:00:46,760 --> 00:00:48,960 Speaker 1: try to take care of the cash bleeding, and he 10 00:00:49,000 --> 00:00:50,879 Speaker 1: did that with the announcement of dividend, which was not 11 00:00:50,960 --> 00:00:54,760 Speaker 1: a surprise. Um. He's gonna work on de leveraging. Um. 12 00:00:54,800 --> 00:00:56,960 Speaker 1: The big problem is power and he's got to move 13 00:00:57,680 --> 00:01:03,960 Speaker 1: on the strategy of power, the business plan of failed decisions. Um, 14 00:01:04,000 --> 00:01:06,200 Speaker 1: he's going to split it into two businesses. There are 15 00:01:06,240 --> 00:01:08,640 Speaker 1: a couple of small businesses. I think he might divest. 16 00:01:08,760 --> 00:01:10,959 Speaker 1: That's not the big problem. Gas is a big problem. 17 00:01:11,080 --> 00:01:12,760 Speaker 1: He's got to shrink it and shrink it fast. It's 18 00:01:12,800 --> 00:01:15,320 Speaker 1: fixed costs primarily. I want to go right now over 19 00:01:15,360 --> 00:01:17,720 Speaker 1: to the power point. This is the most simplistic power 20 00:01:17,760 --> 00:01:19,959 Speaker 1: point and what you need to know. Folks just forget 21 00:01:20,000 --> 00:01:22,840 Speaker 1: about the headlines of dividends or that a little hard 22 00:01:22,880 --> 00:01:25,240 Speaker 1: to see, but this is what adults look at on 23 00:01:25,400 --> 00:01:29,080 Speaker 1: Global Wall Street. The idea of cash flows and the 24 00:01:29,240 --> 00:01:35,280 Speaker 1: cash balance walk that g has to do more than anything. Frankly, 25 00:01:35,360 --> 00:01:38,440 Speaker 1: like Jenny Rometti at IBM, he has to maintain an 26 00:01:38,480 --> 00:01:42,160 Speaker 1: a credit rating. Is that it risk if he doesn't 27 00:01:42,160 --> 00:01:46,440 Speaker 1: get his cash use right, it is it is at risk. 28 00:01:46,640 --> 00:01:49,400 Speaker 1: Um he's got to get UH and I and the 29 00:01:49,520 --> 00:01:53,240 Speaker 1: rating agencies have signaled that they're concerned. The dividend is 30 00:01:53,280 --> 00:01:56,360 Speaker 1: a big statement, it's frankly, you know he'll save about 31 00:01:56,440 --> 00:02:00,080 Speaker 1: almost four billion dollars. What does the revenue persistency? It 32 00:02:00,080 --> 00:02:03,640 Speaker 1: will lead to stability in cash flows that keeps in 33 00:02:03,840 --> 00:02:08,040 Speaker 1: a rating. Well, he's they're doing better than expected in aerospace, 34 00:02:08,080 --> 00:02:13,919 Speaker 1: that's a very big business, remember very straw well almost okay, yeah, yeah, 35 00:02:14,160 --> 00:02:17,679 Speaker 1: that's stabilizing. And the other big businesses healthcare which did 36 00:02:17,800 --> 00:02:21,600 Speaker 1: very well that they're going to Jack watch loved organic 37 00:02:21,639 --> 00:02:24,839 Speaker 1: revenue growth. What's the organic revenue growth Karen uble Heart 38 00:02:24,840 --> 00:02:27,440 Speaker 1: can do on g E right now, you know they're 39 00:02:27,480 --> 00:02:32,120 Speaker 1: gonna do overall low single digits to three four percent. 40 00:02:32,240 --> 00:02:34,240 Speaker 1: I don't know. I didn't look at the actual nothing yet, 41 00:02:34,280 --> 00:02:36,480 Speaker 1: but the answer is it's going to be one to three, 42 00:02:36,880 --> 00:02:39,200 Speaker 1: not going to be. Is that enough for Lawrence cop 43 00:02:39,360 --> 00:02:42,280 Speaker 1: to get this thing out to two years? Well, Aerospace 44 00:02:42,360 --> 00:02:44,799 Speaker 1: it's got its own cycle. It's it's doing very well, 45 00:02:44,800 --> 00:02:47,600 Speaker 1: and it's got margins, and healthcare does too, so there's 46 00:02:47,600 --> 00:02:50,359 Speaker 1: not that much. Those two big businesses where they're making 47 00:02:50,400 --> 00:02:52,840 Speaker 1: their money now, we're not really economically. Charence, thank you 48 00:02:52,880 --> 00:02:54,760 Speaker 1: so much. You're good briefing here on the news of 49 00:02:54,800 --> 00:02:58,280 Speaker 1: General Electric, of course one of the iconic American companies. 50 00:02:58,280 --> 00:03:00,320 Speaker 1: And what you need to know is a headline the 51 00:03:00,400 --> 00:03:17,880 Speaker 1: dividend from twelve cents to one cent, as well defining 52 00:03:17,919 --> 00:03:19,639 Speaker 1: the month of October though you can do it many 53 00:03:19,639 --> 00:03:22,320 Speaker 1: many ways. But it has been volatile, that is for sure, 54 00:03:22,400 --> 00:03:25,800 Speaker 1: and yesterday was no different as US equity market stage 55 00:03:25,840 --> 00:03:30,280 Speaker 1: their sharpest reversal since leaving the SMP five dred very 56 00:03:30,320 --> 00:03:33,480 Speaker 1: much on the brink of its second ten percent correction. 57 00:03:35,000 --> 00:03:36,840 Speaker 1: So what is going on? Let's talk to Jason trentit 58 00:03:36,880 --> 00:03:41,440 Speaker 1: show we Strategous Research chairman and chief executive officer. Good 59 00:03:41,440 --> 00:03:45,440 Speaker 1: morning to Jason, what are your talent clients this morning. Well, listen, 60 00:03:45,480 --> 00:03:47,840 Speaker 1: I think we're telling them that it's probably in some 61 00:03:47,880 --> 00:03:50,560 Speaker 1: ways it's probably too too late to sell, might be 62 00:03:50,560 --> 00:03:53,920 Speaker 1: a little too early to buy. Uh, if you're a trader, 63 00:03:54,280 --> 00:03:57,080 Speaker 1: I think if your an investor, My own opinion is 64 00:03:57,120 --> 00:04:02,280 Speaker 1: that there are some very attractive uh, you know, evaluations 65 00:04:02,320 --> 00:04:05,080 Speaker 1: in the cyclical parts of the market. And there's nothing 66 00:04:05,160 --> 00:04:09,040 Speaker 1: that we've seen that's changed as far as the fundamental 67 00:04:09,120 --> 00:04:14,920 Speaker 1: equity uh, fundamental backdrop for the economy or equities. So, um, again, 68 00:04:14,960 --> 00:04:16,240 Speaker 1: this thing has a little bit of a life of 69 00:04:16,240 --> 00:04:19,520 Speaker 1: its own. We're watching technicals probably more than we we 70 00:04:19,640 --> 00:04:21,599 Speaker 1: normally would. We do a very good job here with 71 00:04:21,680 --> 00:04:24,320 Speaker 1: Chrispheron and doing that, but I'm watching them a little 72 00:04:24,320 --> 00:04:27,800 Speaker 1: bit more closely than I normally would. Um. So fundamental 73 00:04:27,800 --> 00:04:31,400 Speaker 1: is still very strong. But h this again, this correction 74 00:04:31,440 --> 00:04:32,800 Speaker 1: has a little bit of the life of its own. 75 00:04:32,920 --> 00:04:35,239 Speaker 1: Right now, let's just talk about technicals a little bit, Jason, 76 00:04:35,240 --> 00:04:39,040 Speaker 1: what kind of levels are key for you at the moment? Well, again, 77 00:04:39,120 --> 00:04:42,120 Speaker 1: Chris Barron, uh, who does our technical analysis here, he's 78 00:04:42,120 --> 00:04:47,440 Speaker 1: looking at using round numbers, is kind of his his 79 00:04:47,600 --> 00:04:50,680 Speaker 1: number where he'd be an aggressive buyer. Uh. That seems 80 00:04:50,680 --> 00:04:55,360 Speaker 1: to make some sense. Uh for for me. For me again, 81 00:04:55,480 --> 00:04:58,440 Speaker 1: you know, I'm more of a fundamental person that uses technicals. 82 00:04:58,720 --> 00:05:01,600 Speaker 1: It's very important part of my process. But UM, I 83 00:05:02,120 --> 00:05:06,159 Speaker 1: think again, given what's happening from a fundamental perspective, UM, 84 00:05:06,240 --> 00:05:09,640 Speaker 1: you want to probably be an aggressive buyer. Uh. Probably 85 00:05:09,680 --> 00:05:15,480 Speaker 1: anywhere between where we are today, which is about can 86 00:05:15,520 --> 00:05:17,360 Speaker 1: we talk about the pockets of the equity market that 87 00:05:17,400 --> 00:05:19,360 Speaker 1: you would be buying which sector is because tech has 88 00:05:19,400 --> 00:05:21,480 Speaker 1: been really beaten up and that's where the leadership came 89 00:05:21,560 --> 00:05:26,480 Speaker 1: from over the last few years. Jason, Yeah, and it depends, Johnathan, 90 00:05:26,520 --> 00:05:28,600 Speaker 1: I would make a distinction between you know, what kinds 91 00:05:28,600 --> 00:05:31,960 Speaker 1: of tech that you're you're talking about. I think that 92 00:05:32,000 --> 00:05:35,719 Speaker 1: there are real opportunities in what is now just considered 93 00:05:35,720 --> 00:05:41,360 Speaker 1: the tech GIS sector, which is really more more has 94 00:05:41,400 --> 00:05:44,880 Speaker 1: to do in my opinion, with enterprise spending on technology, 95 00:05:44,920 --> 00:05:47,680 Speaker 1: as opposed to let's say, the new communication sector, which 96 00:05:47,760 --> 00:05:50,640 Speaker 1: was just created at the end of last month just 97 00:05:50,720 --> 00:05:53,800 Speaker 1: in time for all this, which is more social media. Uh. 98 00:05:53,800 --> 00:05:58,200 Speaker 1: In my opinion, the more we're quite bullish on capital spending. Uh, 99 00:05:58,200 --> 00:06:00,680 Speaker 1: and we don't think that we're in late in the 100 00:06:00,720 --> 00:06:03,400 Speaker 1: business cycle at all. Uh So I have more of 101 00:06:03,400 --> 00:06:07,640 Speaker 1: a focus on places where businesses are going to be spending. 102 00:06:07,839 --> 00:06:11,440 Speaker 1: So semi conductors in particular look to me really beating up, 103 00:06:11,520 --> 00:06:14,920 Speaker 1: and I think they're really attractive opportunities there. Jason, one 104 00:06:14,920 --> 00:06:17,680 Speaker 1: of your charms, he doesn't have that many charms, John, 105 00:06:17,720 --> 00:06:21,479 Speaker 1: But Jason Tronner has a few charms. Well one of 106 00:06:21,480 --> 00:06:24,320 Speaker 1: the charming charms, does he like a C Milan? I 107 00:06:24,320 --> 00:06:34,320 Speaker 1: didn't even think of Roma. Roma, that's south of Milon right, Okay, Jason, 108 00:06:34,360 --> 00:06:36,960 Speaker 1: one of your charms is a student of history. In 109 00:06:37,000 --> 00:06:41,080 Speaker 1: the last twenty eight hours, I'm gonna say thirty hours, 110 00:06:41,560 --> 00:06:45,880 Speaker 1: we have seen two massive blue chip stocks begin to 111 00:06:45,920 --> 00:06:50,120 Speaker 1: think about not having an a credit rating, International Business 112 00:06:50,160 --> 00:06:54,280 Speaker 1: Machines and a small electric company from Schenectady. How do 113 00:06:54,360 --> 00:06:58,360 Speaker 1: you avoid those debaccles? How does how do our listeners 114 00:06:58,720 --> 00:07:03,640 Speaker 1: avoid excell of years of IBM mediocrity or the collapse 115 00:07:03,680 --> 00:07:07,120 Speaker 1: of generous electric How do you do it? Well? You know? 116 00:07:07,200 --> 00:07:10,800 Speaker 1: And and I would add you know another another icon 117 00:07:10,880 --> 00:07:13,480 Speaker 1: American icon from a couple of weeks ago, which was 118 00:07:13,920 --> 00:07:17,480 Speaker 1: which is sears? Uh? Okay, I'll go there. Have you 119 00:07:17,480 --> 00:07:20,080 Speaker 1: know so we have and and of course you know 120 00:07:20,240 --> 00:07:26,080 Speaker 1: general general electric uh is not uh is not Sears. Right, So, UM, 121 00:07:26,160 --> 00:07:29,720 Speaker 1: there's nothing, um, you know, nothing close to those things. 122 00:07:30,000 --> 00:07:34,120 Speaker 1: Having said that, I think there's it's not causal, but 123 00:07:34,200 --> 00:07:38,680 Speaker 1: it's more than coincidence in my opinion, UH that Sears 124 00:07:38,840 --> 00:07:42,320 Speaker 1: went out of business or declared bankruptcy at roughly the 125 00:07:42,360 --> 00:07:46,600 Speaker 1: same time the Fed stopped having negative real Fed negative 126 00:07:46,600 --> 00:07:50,480 Speaker 1: real Fed funds right, UH stopped having a negative interest rate. 127 00:07:50,840 --> 00:07:53,400 Speaker 1: And to me, I think we've been Um, we've been 128 00:07:53,440 --> 00:07:57,120 Speaker 1: spoiled in some ways by the new normal. Uh, we've 129 00:07:57,160 --> 00:07:59,400 Speaker 1: been spoiled to the extent to which there's not there 130 00:07:59,400 --> 00:08:02,160 Speaker 1: hasn't been a lot out of volatility, and there it's 131 00:08:02,200 --> 00:08:06,320 Speaker 1: been and everyone gets a trophy type of capital market. 132 00:08:06,880 --> 00:08:09,760 Speaker 1: That's going to change now. And I think the mistakes 133 00:08:09,800 --> 00:08:13,000 Speaker 1: of the past in terms of UM, in terms of 134 00:08:13,040 --> 00:08:16,320 Speaker 1: empire building and exactly that's debt, are are going are 135 00:08:16,400 --> 00:08:18,560 Speaker 1: going to come home. You know they're going to come 136 00:08:18,600 --> 00:08:21,000 Speaker 1: home and have a problem now, John, I knew a 137 00:08:21,000 --> 00:08:24,360 Speaker 1: guy that likes Romo would talk about empire building. That's 138 00:08:24,400 --> 00:08:27,000 Speaker 1: what this is all about. It. I talked to Hildebrand 139 00:08:27,080 --> 00:08:30,040 Speaker 1: about this of black Rock it's about davos Man. Yeah, 140 00:08:30,040 --> 00:08:32,720 Speaker 1: but let's stop talking the American icons of yesterday and 141 00:08:32,720 --> 00:08:36,360 Speaker 1: talk about the American icons of today, the likes of Netflix, 142 00:08:36,400 --> 00:08:38,440 Speaker 1: who have got used to an environment where you can 143 00:08:38,520 --> 00:08:41,120 Speaker 1: borrow from the debt market very very cheaply, you can 144 00:08:41,120 --> 00:08:43,360 Speaker 1: burn through cash, and you can just aim for growth. 145 00:08:43,960 --> 00:08:45,800 Speaker 1: Is that story going to change and not just affect 146 00:08:45,800 --> 00:08:48,480 Speaker 1: the American icons of yesterday. Forget the cities of this world. 147 00:08:48,679 --> 00:08:50,560 Speaker 1: I want to talk about the Netflix of this world, 148 00:08:50,800 --> 00:08:55,000 Speaker 1: the Tesla's of this world. Your thoughts on that, Jason, Yeah, No, Jonathan, 149 00:08:55,040 --> 00:08:57,360 Speaker 1: I think it's a great point. And I think again 150 00:08:57,960 --> 00:08:59,760 Speaker 1: this has been and I think the said with the 151 00:08:59,760 --> 00:09:03,480 Speaker 1: best of intentions, absolutely the best of intentions, I think 152 00:09:03,520 --> 00:09:07,440 Speaker 1: created an enormous distortion in both the economy and the 153 00:09:07,559 --> 00:09:11,080 Speaker 1: and the capital markets. Um. The The interesting thing to 154 00:09:11,120 --> 00:09:14,400 Speaker 1: me is that a lot of the Netflix and Tesla 155 00:09:14,480 --> 00:09:17,200 Speaker 1: obviously are public companies. To me, a lot of the 156 00:09:17,200 --> 00:09:19,480 Speaker 1: the excesses, believe it or not, are more in the 157 00:09:19,520 --> 00:09:22,800 Speaker 1: private markets than the than the than the public markets, 158 00:09:22,840 --> 00:09:26,640 Speaker 1: because the vast majority of of of the public markets 159 00:09:26,880 --> 00:09:30,600 Speaker 1: are in very very good shape from a financial perspective. 160 00:09:30,880 --> 00:09:33,920 Speaker 1: Having said that, I think the cost of capital is 161 00:09:34,080 --> 00:09:36,240 Speaker 1: the capital is going to be raction and the cost 162 00:09:36,240 --> 00:09:40,320 Speaker 1: of capital is clearly going to be higher, uh, in 163 00:09:40,400 --> 00:09:44,640 Speaker 1: the midst of a lack of a combinative monetary policy 164 00:09:44,960 --> 00:09:48,240 Speaker 1: and a very expansive fiscal and regulatory policy. To me, 165 00:09:48,320 --> 00:09:51,240 Speaker 1: it's it's um, it's going to go back to you know, 166 00:09:51,280 --> 00:09:54,200 Speaker 1: investing being more of an art form as opposed to 167 00:09:54,280 --> 00:09:58,240 Speaker 1: just plowing money into paths of investments. Which conglomerate do 168 00:09:58,280 --> 00:10:02,599 Speaker 1: you like right now? Which you know big company consulted 169 00:10:02,600 --> 00:10:06,240 Speaker 1: by three consultancies on buying the next big thing? Is 170 00:10:06,280 --> 00:10:09,360 Speaker 1: there a name you actually like? Mr Trent Well, I'm 171 00:10:09,360 --> 00:10:12,760 Speaker 1: gonna I'm gonna pass on that, uh for for the 172 00:10:12,760 --> 00:10:16,560 Speaker 1: benefit of your listeners, h and myself and you guys too. 173 00:10:16,600 --> 00:10:19,560 Speaker 1: I'm gonna I'm not much of a stock picker and 174 00:10:19,559 --> 00:10:22,360 Speaker 1: and I probably have to get regulatory compliance to do that. 175 00:10:22,760 --> 00:10:26,920 Speaker 1: But listen, I'll tell you this. The places where um, 176 00:10:27,200 --> 00:10:30,720 Speaker 1: I'm I have money to work personally, and um, whether 177 00:10:30,760 --> 00:10:34,560 Speaker 1: I feel strongly about the sectors. I like our industrials. 178 00:10:34,640 --> 00:10:38,520 Speaker 1: I like technology, as we said, more enterprise oriented capital 179 00:10:38,559 --> 00:10:42,520 Speaker 1: spending technology. I like energy quite a bit. Uh and 180 00:10:42,720 --> 00:10:48,040 Speaker 1: uh we like financials. So industrial's energy, Uh, Financials and 181 00:10:48,080 --> 00:10:50,520 Speaker 1: Technology wants to get one more thing, John wants to 182 00:10:50,520 --> 00:10:52,720 Speaker 1: get one more thing in here of non importance. Go ahead, 183 00:10:52,760 --> 00:10:54,320 Speaker 1: what actually has to pick up on something he said 184 00:10:54,360 --> 00:10:58,280 Speaker 1: that you missed, which was active management, the days of 185 00:10:58,360 --> 00:11:01,600 Speaker 1: participating and winning or out? Jason, is that essentially what 186 00:11:01,600 --> 00:11:03,719 Speaker 1: you're saying, because this year is the first year in 187 00:11:03,720 --> 00:11:06,960 Speaker 1: a long time where cross Asset was set to see 188 00:11:07,400 --> 00:11:10,400 Speaker 1: losses across the board, and I just wondered the days 189 00:11:10,440 --> 00:11:13,000 Speaker 1: of getting the participation award. As my colleague Cameron christ 190 00:11:13,040 --> 00:11:15,520 Speaker 1: have said, of the last twenty four hours, it is done. 191 00:11:15,520 --> 00:11:20,199 Speaker 1: It's over. Yeah, No, I think that's that's that's absolutely true. 192 00:11:20,240 --> 00:11:23,120 Speaker 1: And again I think you've created a lot of Again, 193 00:11:23,200 --> 00:11:26,160 Speaker 1: the FED with the best intentions, created a lot of distortions. 194 00:11:26,559 --> 00:11:30,360 Speaker 1: Uh there, and you're going to have very divergent um. 195 00:11:30,400 --> 00:11:33,400 Speaker 1: You're gonna have a lot um, a lot more dispersion 196 00:11:33,440 --> 00:11:39,040 Speaker 1: in returns, a lot less correlation returns as capital becomes rationed. 197 00:11:39,320 --> 00:11:41,760 Speaker 1: All I can focus on is not the Red Sox 198 00:11:41,800 --> 00:11:47,000 Speaker 1: parade tomorrow, but February third, two thousand nineteen, Roma visits 199 00:11:47,040 --> 00:11:49,320 Speaker 1: a C. Milan. Yeah. I think the two of you, 200 00:11:49,760 --> 00:11:53,400 Speaker 1: I'm fairly comfion alone, fairly confident. Roma's got We love 201 00:11:53,440 --> 00:11:55,240 Speaker 1: to be there. Can we like set that up for 202 00:11:55,280 --> 00:11:58,840 Speaker 1: a remote? It's February and you know I'll be if 203 00:11:58,840 --> 00:12:01,400 Speaker 1: you guys are paying well. I was thinking of expensing 204 00:12:01,440 --> 00:12:07,080 Speaker 1: it to frtiguus keeper of the says Jason, thank us 205 00:12:07,080 --> 00:12:10,280 Speaker 1: so much. Jason Troynard has to go with fatiguas research 206 00:12:10,360 --> 00:12:24,800 Speaker 1: or partners. Why don't you bring in Handsome? But he's 207 00:12:24,800 --> 00:12:27,520 Speaker 1: an elder statesman. We decided that earlier. He is a 208 00:12:27,640 --> 00:12:31,640 Speaker 1: fantastic states No more, he is a fantastic guest. Bob 209 00:12:31,679 --> 00:12:34,680 Speaker 1: Janguar joining us now and more a senior independent client 210 00:12:34,800 --> 00:12:38,079 Speaker 1: advisor almost two markets. Can we call you an out 211 00:12:38,080 --> 00:12:40,280 Speaker 1: of states? Do you like that? Do you approve of that? 212 00:12:42,960 --> 00:12:45,400 Speaker 1: I'm not sure if my wife would approve of it. Yeah, 213 00:12:45,480 --> 00:12:47,319 Speaker 1: I don't think she would either. I don't think we 214 00:12:47,320 --> 00:12:49,240 Speaker 1: should do this to Bob Tom she might be listening. 215 00:12:49,600 --> 00:12:52,640 Speaker 1: Let's jump in, so Bob, let's talk about this market. 216 00:12:52,760 --> 00:12:55,240 Speaker 1: We do face the very real prospect of two ten 217 00:12:55,320 --> 00:12:58,440 Speaker 1: percent corrections in a given year and pretty much every 218 00:12:58,440 --> 00:13:01,760 Speaker 1: single asset class in the red by the end outside 219 00:13:01,760 --> 00:13:04,160 Speaker 1: of recessionary conditions. What's the signal that comes from there 220 00:13:04,160 --> 00:13:07,880 Speaker 1: for you, Bob. Yeah. Look, I mean I think that 221 00:13:08,120 --> 00:13:10,000 Speaker 1: there's two things. I think. First of all, I think, 222 00:13:10,040 --> 00:13:13,000 Speaker 1: maybe looking backwards a little bit, I think perhaps the 223 00:13:13,720 --> 00:13:21,319 Speaker 1: run up in seventeen uh, particularly post the Trump victory day, UM, 224 00:13:21,400 --> 00:13:23,320 Speaker 1: I think was perhaps that had gotten a little bit 225 00:13:23,320 --> 00:13:24,960 Speaker 1: ahead of itself. And I think we took some of 226 00:13:25,000 --> 00:13:27,480 Speaker 1: that out at the beginning of the year. I think 227 00:13:27,559 --> 00:13:30,160 Speaker 1: since then, I think what we're beginning to do is 228 00:13:30,200 --> 00:13:33,480 Speaker 1: price in future policy and future trends. And I think 229 00:13:33,480 --> 00:13:36,000 Speaker 1: the issues are around you know, obviously the fair DCB, 230 00:13:36,800 --> 00:13:39,640 Speaker 1: not just the cost of money, but the availability of money. 231 00:13:40,120 --> 00:13:43,120 Speaker 1: The trade issue is playing out a lot more, a 232 00:13:43,160 --> 00:13:48,280 Speaker 1: lot more harshly and more difficulty than people had anticipated initially. Um. 233 00:13:48,320 --> 00:13:50,760 Speaker 1: And of course you've got this uncertainty not just in 234 00:13:50,800 --> 00:13:53,120 Speaker 1: Europe but also around the midterms in the US. So 235 00:13:53,160 --> 00:13:55,400 Speaker 1: I think I think there's two different things. They're one 236 00:13:55,480 --> 00:13:58,240 Speaker 1: is somewhat backward looking taking out some of the excesses. 237 00:13:58,640 --> 00:14:01,280 Speaker 1: But now forward looking, I think we're beginning to worry 238 00:14:01,280 --> 00:14:06,000 Speaker 1: about perhaps the post easy money world. So let's talk 239 00:14:06,040 --> 00:14:10,160 Speaker 1: about that. The cost and availability of money. Typically the towel, 240 00:14:10,520 --> 00:14:13,440 Speaker 1: so to speak, is incredit and sort of the last 241 00:14:13,520 --> 00:14:16,440 Speaker 1: bastion of stability or resiliency in the U S at 242 00:14:16,520 --> 00:14:19,360 Speaker 1: least has been USI yield. You're starting to see some 243 00:14:19,400 --> 00:14:23,840 Speaker 1: tracks there, Bob. Yeah. Look, I think I think initially 244 00:14:24,360 --> 00:14:28,160 Speaker 1: and we can almost say this to some extent, for 245 00:14:28,160 --> 00:14:31,240 Speaker 1: for the global HI your market, I EM and europe 246 00:14:31,240 --> 00:14:33,400 Speaker 1: a clear m as more systemic. I think we've had 247 00:14:33,880 --> 00:14:36,400 Speaker 1: a bunch of videosyncratic issues which I think over the 248 00:14:36,400 --> 00:14:39,720 Speaker 1: course of this year, most market players were keen to 249 00:14:39,960 --> 00:14:45,160 Speaker 1: kind of uh sign up as purely idiosyncratic. I think 250 00:14:45,400 --> 00:14:47,680 Speaker 1: as the year has gone on, as we're as we're 251 00:14:47,680 --> 00:14:51,480 Speaker 1: beginning to see generalize squeezes around global growth, global orders, 252 00:14:51,520 --> 00:14:54,520 Speaker 1: all these kind of things, UM, we're now beginning to 253 00:14:54,560 --> 00:14:57,120 Speaker 1: the into the realms of perhaps likely more systemic issues. 254 00:14:57,760 --> 00:15:00,520 Speaker 1: And I think in this context the person for me, 255 00:15:00,960 --> 00:15:03,440 Speaker 1: I think European high yield, despite the fact that I'm 256 00:15:03,440 --> 00:15:06,360 Speaker 1: more white about Europe as a place, European high yield 257 00:15:06,360 --> 00:15:09,120 Speaker 1: looks okay because the issue of the quality of issues 258 00:15:09,160 --> 00:15:13,160 Speaker 1: has generally been pretty good. UM. I think US high 259 00:15:13,240 --> 00:15:17,240 Speaker 1: yield UM and e M high yield where we've had 260 00:15:17,400 --> 00:15:21,040 Speaker 1: I think very speculative issuance uh and that's the part 261 00:15:21,040 --> 00:15:24,880 Speaker 1: of one that worries me going forward. How do glide 262 00:15:24,880 --> 00:15:29,520 Speaker 1: tests change when we have tangible real rates? I would 263 00:15:29,520 --> 00:15:33,400 Speaker 1: suggest we're not even to the word tangible real rates 264 00:15:34,000 --> 00:15:38,320 Speaker 1: when we get there. A lot of changes, doesn't it. Yeah? 265 00:15:38,320 --> 00:15:40,120 Speaker 1: For sure? For sure. I mean I think I think 266 00:15:40,120 --> 00:15:42,880 Speaker 1: we're getting there. I think obviously the market is trying 267 00:15:42,920 --> 00:15:45,200 Speaker 1: to figure out whether what Mr Palel has told us, 268 00:15:45,680 --> 00:15:47,960 Speaker 1: you're gonna take us into that, into that zone of 269 00:15:48,560 --> 00:15:52,200 Speaker 1: positive world rates. Um. Look what historically when we get 270 00:15:52,200 --> 00:15:55,760 Speaker 1: this kind of period of positive world rates. Um. You know, 271 00:15:55,800 --> 00:15:58,240 Speaker 1: initially we kind of sign it off as as as 272 00:15:58,240 --> 00:16:01,480 Speaker 1: a positive because it must mean of me thriving. But 273 00:16:01,560 --> 00:16:03,880 Speaker 1: I think clearly we all know that since two thousand 274 00:16:03,920 --> 00:16:07,680 Speaker 1: and six seven we've been in a different kind of cycle. UM. 275 00:16:07,720 --> 00:16:12,000 Speaker 1: And I think going forward, as the price of money 276 00:16:12,040 --> 00:16:17,480 Speaker 1: becomes real and as the availability continues to squeeze more, 277 00:16:17,720 --> 00:16:21,520 Speaker 1: the most speculative business models, whether you're an individual, a company, 278 00:16:21,640 --> 00:16:25,600 Speaker 1: or a government, become vulnerable. Um. And we've seen that 279 00:16:25,640 --> 00:16:27,080 Speaker 1: kind of play out a little bit, you know, this 280 00:16:27,160 --> 00:16:31,040 Speaker 1: year with parts of Argentina, Venezuela, Turkey, part of them world. 281 00:16:31,560 --> 00:16:33,680 Speaker 1: But I think as that trend continues, We're going to 282 00:16:33,800 --> 00:16:37,320 Speaker 1: expose more and more of the vulnerable business models that 283 00:16:37,440 --> 00:16:40,400 Speaker 1: are thrived in this last ten years because money was 284 00:16:40,440 --> 00:16:42,960 Speaker 1: free or less the free and John was so important 285 00:16:42,960 --> 00:16:46,000 Speaker 1: there that Mr Jenner has said is the word price, 286 00:16:46,360 --> 00:16:50,200 Speaker 1: in that we don't look at yields price, but pros 287 00:16:50,240 --> 00:16:53,080 Speaker 1: look at it is the price of money, which is 288 00:16:53,120 --> 00:16:56,120 Speaker 1: not a small thing, and it is evaporated over the 289 00:16:56,200 --> 00:16:58,520 Speaker 1: last some nine years. But like the concept of a 290 00:16:58,560 --> 00:17:02,840 Speaker 1: speculative business at all. And then you talked about sovereigns, 291 00:17:03,160 --> 00:17:05,760 Speaker 1: are there any speak of the business models in the 292 00:17:05,800 --> 00:17:08,800 Speaker 1: developed world that you do think could actually be exposed 293 00:17:09,119 --> 00:17:13,400 Speaker 1: that central banks can't contain? Well, Look, I mean I think, 294 00:17:13,560 --> 00:17:15,960 Speaker 1: I think obviously the emerging world is a bit different. 295 00:17:16,000 --> 00:17:17,879 Speaker 1: I think in the developed world. Let me let me 296 00:17:17,880 --> 00:17:22,600 Speaker 1: put it this way. I'm probably less concerned about Japan, 297 00:17:22,880 --> 00:17:24,600 Speaker 1: and not because I work at the World, but because 298 00:17:24,600 --> 00:17:27,119 Speaker 1: I've spent a lot more of my career thinking about 299 00:17:27,160 --> 00:17:30,000 Speaker 1: Japan and how it's going to end. I'm probably less 300 00:17:30,000 --> 00:17:35,120 Speaker 1: concerned about japan endgame um right now than I used 301 00:17:35,119 --> 00:17:39,280 Speaker 1: to be UM, and I'm probably more concerned about the 302 00:17:39,440 --> 00:17:42,399 Speaker 1: endgame for parts of Europe. I think in terms of 303 00:17:42,400 --> 00:17:47,320 Speaker 1: the US um the dollar by the US an awful 304 00:17:47,359 --> 00:17:50,439 Speaker 1: lot of senior each UM. So you know, the idea 305 00:17:50,520 --> 00:17:53,440 Speaker 1: that the US credit quality is at serious risk into 306 00:17:53,480 --> 00:17:57,480 Speaker 1: the next recession, I can buy the argument. But actually, ultimately, 307 00:17:57,520 --> 00:18:00,280 Speaker 1: because the whole world is always short dollars, think the 308 00:18:00,320 --> 00:18:02,800 Speaker 1: US can get away with it. I think you're European 309 00:18:02,840 --> 00:18:05,199 Speaker 1: parts of the Eurozone, of the bunderable Club. Still, I 310 00:18:05,200 --> 00:18:08,320 Speaker 1: mean technically, and I'm looking at the Bloomberg Dollar Index, folks, 311 00:18:08,320 --> 00:18:10,680 Speaker 1: which is an aggregation of a lot of different series 312 00:18:10,680 --> 00:18:14,159 Speaker 1: and pairs, and what what is the what is the 313 00:18:14,359 --> 00:18:18,920 Speaker 1: ability to go through the early two thousand seventeen peaks 314 00:18:18,920 --> 00:18:21,280 Speaker 1: in strong dollar? I mean, I know it's not the 315 00:18:21,320 --> 00:18:26,000 Speaker 1: official numerical, but Bob Genuay, if we get that strong dollar, 316 00:18:26,840 --> 00:18:31,439 Speaker 1: what does that signal to markets? Yeah? Looks so I 317 00:18:31,440 --> 00:18:34,000 Speaker 1: think I think I do. I personally think the dollar 318 00:18:34,040 --> 00:18:37,800 Speaker 1: will keep strengthening over the next three to six months. UM. 319 00:18:37,880 --> 00:18:41,840 Speaker 1: I think that will be partly driven by the relative 320 00:18:41,880 --> 00:18:44,000 Speaker 1: tightening story in the U S which I think will 321 00:18:44,000 --> 00:18:49,560 Speaker 1: continue describe pressure Mr pou Um with relatively loose polity 322 00:18:49,560 --> 00:18:53,320 Speaker 1: settings elsewhere, I notably in Japan. UM. But I think 323 00:18:53,560 --> 00:18:55,960 Speaker 1: you know, not as loose as they were, and obviously 324 00:18:56,000 --> 00:19:00,400 Speaker 1: Europe is moving moving slightly tighter UM. I think going 325 00:19:00,600 --> 00:19:06,879 Speaker 1: forward U dollar strength may not be as sustainable UM, 326 00:19:07,359 --> 00:19:10,240 Speaker 1: but look for the period that the dollar is strong. Ultimately, 327 00:19:10,240 --> 00:19:12,080 Speaker 1: what this is telling me is that there's a lot 328 00:19:12,160 --> 00:19:16,159 Speaker 1: more demand for dollars than there is supply UM. And 329 00:19:16,240 --> 00:19:19,840 Speaker 1: in that world, you know, US entities will always get 330 00:19:19,920 --> 00:19:23,360 Speaker 1: I think, access to dollars over and above the ability 331 00:19:23,480 --> 00:19:26,720 Speaker 1: for foreign entities to get access to those dollars. Hence 332 00:19:26,760 --> 00:19:30,000 Speaker 1: the concerns around the M and perhaps hence the growing 333 00:19:30,000 --> 00:19:34,040 Speaker 1: concerns around some of the non US How your markets, Bob, 334 00:19:34,040 --> 00:19:35,960 Speaker 1: Your time to us is really valuable. But one final 335 00:19:36,040 --> 00:19:37,560 Speaker 1: quick question if you can in a minute, we have 336 00:19:37,680 --> 00:19:40,280 Speaker 1: left your number one conviction call right now, Bob, what 337 00:19:40,400 --> 00:19:43,919 Speaker 1: is it for next year or for this year, for 338 00:19:43,960 --> 00:19:47,879 Speaker 1: the next twelve months? As that for the next twelve months, 339 00:19:47,920 --> 00:19:50,600 Speaker 1: we are going to get I think a fantastic opportunity 340 00:19:50,720 --> 00:19:55,560 Speaker 1: to buy duration in the US at levels which may 341 00:19:55,600 --> 00:19:58,360 Speaker 1: not be attractive on a historical basis, but in this 342 00:19:58,440 --> 00:20:01,119 Speaker 1: new world that we're in, I think by tenure treasuries 343 00:20:01,520 --> 00:20:06,080 Speaker 1: at something around three and a half percent, I think, well, 344 00:20:06,119 --> 00:20:07,720 Speaker 1: I think we'll see tenure. I think the risk is 345 00:20:07,760 --> 00:20:11,240 Speaker 1: tenure treasuries are trading closer to two and a half 346 00:20:11,240 --> 00:20:14,560 Speaker 1: percent twelve to eight months forward. Well, January, I wish 347 00:20:14,560 --> 00:20:16,760 Speaker 1: we'd started with that. That's my fault. The more senior 348 00:20:16,760 --> 00:20:20,080 Speaker 1: independent of client advice of global markets have failed. But 349 00:20:20,119 --> 00:20:22,080 Speaker 1: a great conversation with Bob, always great to get his 350 00:20:22,119 --> 00:20:25,080 Speaker 1: insights on financial markets. Well, yeah, and you know there 351 00:20:25,160 --> 00:20:27,119 Speaker 1: was what we I love about this was earlier with 352 00:20:27,200 --> 00:20:29,280 Speaker 1: Chris Turner of I n G. I mean there's a 353 00:20:29,359 --> 00:20:32,760 Speaker 1: real difference of opinion out there. Is the global proxy 354 00:20:32,840 --> 00:20:35,120 Speaker 1: dollar yen. I mean, do a lot of our listeners, 355 00:20:35,200 --> 00:20:38,320 Speaker 1: it's like, okay, dollar again, So what that's like the 356 00:20:38,400 --> 00:20:41,600 Speaker 1: litmus paper of the system? And John, there's some real 357 00:20:41,960 --> 00:20:44,880 Speaker 1: variants of I've heard this argument that Bob just made 358 00:20:44,920 --> 00:20:47,960 Speaker 1: though on duration before, and I think it's really interesting 359 00:20:48,040 --> 00:20:51,440 Speaker 1: that your opportunity to get duration in the United States 360 00:20:51,480 --> 00:20:54,040 Speaker 1: with a coupon north to three percent might not be 361 00:20:54,080 --> 00:20:56,199 Speaker 1: there over the next ten years. I've heard that, and 362 00:20:56,240 --> 00:20:58,480 Speaker 1: I think it's really really interesting that in the lower 363 00:20:58,480 --> 00:21:01,320 Speaker 1: one historical levels, of course, but over the next ten 364 00:21:01,400 --> 00:21:04,240 Speaker 1: years this might look high. And I find that fascinating. 365 00:21:18,560 --> 00:21:20,280 Speaker 1: Right now, John could you believe it was a job 366 00:21:20,359 --> 00:21:23,440 Speaker 1: stay on Friday? You know, it's like it's almost November. 367 00:21:23,560 --> 00:21:26,679 Speaker 1: The news flow is extraordinary. The October has been wild. 368 00:21:26,680 --> 00:21:30,760 Speaker 1: I mean, what is it? Down? Nine? On course for 369 00:21:30,800 --> 00:21:35,400 Speaker 1: our biggest month, we drop on the span and nine. Yeah, 370 00:21:35,560 --> 00:21:37,440 Speaker 1: So it's a good time to catch up with Jim 371 00:21:37,480 --> 00:21:41,960 Speaker 1: O'Sullivan high Frequency Economics. Is we really tilt the job today? Jim? 372 00:21:42,000 --> 00:21:43,600 Speaker 1: I think the first thing I do when I look 373 00:21:43,640 --> 00:21:48,399 Speaker 1: at the screen, we're really not mentally used to three 374 00:21:48,480 --> 00:21:54,000 Speaker 1: points seven percent unemployment? Are we? Um? Hi? Tom, good morning. Well, 375 00:21:54,800 --> 00:21:57,040 Speaker 1: if you were around in the nineteen sixties, I guess 376 00:21:57,080 --> 00:21:59,560 Speaker 1: you might remember it. But other than that, no, this 377 00:21:59,680 --> 00:22:03,320 Speaker 1: is back to that period. I mean, John, I just 378 00:22:04,000 --> 00:22:07,600 Speaker 1: three point seven percent, it's it's it's Eisenhower like, Yeah, 379 00:22:07,600 --> 00:22:09,920 Speaker 1: and we still haven't seen the wage growthic saturait in 380 00:22:09,960 --> 00:22:15,840 Speaker 1: the way that people I recall from my my history lessons. 381 00:22:16,560 --> 00:22:19,840 Speaker 1: Unlike you, I wasn't there for the Yeah you know 382 00:22:19,920 --> 00:22:22,840 Speaker 1: I was there. Yeah, jim My Sullivan, We've got to 383 00:22:22,840 --> 00:22:25,320 Speaker 1: say that you are one of the most accurate forecasts 384 00:22:25,320 --> 00:22:27,360 Speaker 1: on payrolls out there, and I'm just wondering from our 385 00:22:27,400 --> 00:22:31,080 Speaker 1: listeners what you look for in the data that allows 386 00:22:31,080 --> 00:22:36,840 Speaker 1: you to anticipate a very volatile jobs number. And well, John, 387 00:22:36,960 --> 00:22:39,600 Speaker 1: I mean, yes, it does jump around a lot month 388 00:22:39,640 --> 00:22:41,479 Speaker 1: to month. Although when you put it in perspective, when 389 00:22:41,480 --> 00:22:45,320 Speaker 1: there's hundred forty million jobs out there are one hundred 390 00:22:45,400 --> 00:22:48,800 Speaker 1: thousand miss is is a point one percent. And you 391 00:22:48,800 --> 00:22:50,399 Speaker 1: think some of the other numbers we see, like durable 392 00:22:50,400 --> 00:22:52,879 Speaker 1: goods I'm in, or even retail sales, how much they 393 00:22:52,920 --> 00:22:55,320 Speaker 1: jump around month to month. But yeah, miss, people do 394 00:22:55,400 --> 00:22:57,880 Speaker 1: get excited about a hundred thousand MISS even though it's 395 00:22:57,880 --> 00:23:01,119 Speaker 1: pretty small. But I mean, in general, I mean I 396 00:23:01,160 --> 00:23:04,639 Speaker 1: always come back to, certainly the underlying trend being signaled 397 00:23:05,240 --> 00:23:07,960 Speaker 1: by jobless claims, and to the extent they're still very low. 398 00:23:08,000 --> 00:23:10,600 Speaker 1: I think the broad message is that the trend and 399 00:23:10,640 --> 00:23:13,240 Speaker 1: employment growth hasn't really changed significantly. And of course the 400 00:23:13,240 --> 00:23:16,359 Speaker 1: trend has been basically two hundred thousand per month, which 401 00:23:16,400 --> 00:23:19,040 Speaker 1: is quite strong relative to demographics, more than enough to 402 00:23:19,560 --> 00:23:22,000 Speaker 1: keep that unemployment rate coming down. It's really strong, gim 403 00:23:22,040 --> 00:23:26,240 Speaker 1: and it's very much anticipated by the consensus economist view. 404 00:23:26,359 --> 00:23:28,560 Speaker 1: I mean, several years ago, many people would say to 405 00:23:28,600 --> 00:23:30,879 Speaker 1: Tom and I that this can't carry on. It has 406 00:23:31,080 --> 00:23:35,400 Speaker 1: how and well, of course ultimately it I mean, what's 407 00:23:35,760 --> 00:23:39,680 Speaker 1: has the economist service Stain used to say that? I'm 408 00:23:39,720 --> 00:23:42,960 Speaker 1: paraphrasing that what's not sustainable will not be sustained, and 409 00:23:43,040 --> 00:23:45,119 Speaker 1: ultimately we can't keep growing tw hundred thousand a month 410 00:23:45,119 --> 00:23:47,960 Speaker 1: and employment can't keep on falling, and ultimately it will slow. 411 00:23:48,000 --> 00:23:49,720 Speaker 1: I mean the question is what what does it take 412 00:23:50,000 --> 00:23:52,159 Speaker 1: for that to happen? And I think that's what the 413 00:23:52,160 --> 00:23:54,280 Speaker 1: FT is trying to figure out. The FT's trying to 414 00:23:54,280 --> 00:23:57,120 Speaker 1: slow down employment growth, so they're trying to get financial 415 00:23:57,119 --> 00:23:59,600 Speaker 1: conditions less accommodative. I mean, they want to do that 416 00:23:59,680 --> 00:24:01,359 Speaker 1: kind of a smooth way. They don't want to suddenly 417 00:24:01,359 --> 00:24:05,080 Speaker 1: see the but they want to slow down employment growth. 418 00:24:05,119 --> 00:24:07,360 Speaker 1: And it hasn't happened yet. I mean, there's that dreaded 419 00:24:07,400 --> 00:24:10,720 Speaker 1: word that we talked to Bob Janjua about me in 420 00:24:10,760 --> 00:24:16,000 Speaker 1: a less graceful way than Jim Sullivan. Smooth is your economics? 421 00:24:16,080 --> 00:24:20,600 Speaker 1: Jim O. Sullivan gonna give us smooth reaction functions? Or 422 00:24:20,640 --> 00:24:25,200 Speaker 1: do we get jump conditions around rising real rates? Well, 423 00:24:25,240 --> 00:24:27,280 Speaker 1: I mean there's always going to be volatility. Of course, 424 00:24:27,359 --> 00:24:29,359 Speaker 1: it's gonna not gonna be possible to forecast that on 425 00:24:29,440 --> 00:24:32,520 Speaker 1: a month to month basis, but ultimately, ultimately the FED 426 00:24:32,560 --> 00:24:34,639 Speaker 1: will get the economy to slow. I mean the question 427 00:24:34,760 --> 00:24:37,439 Speaker 1: is it more of a soft landing or hard landing, 428 00:24:37,480 --> 00:24:41,159 Speaker 1: And the quick the sooner it slows, I think, the 429 00:24:41,240 --> 00:24:43,479 Speaker 1: less of a risk of a hard landing. But at 430 00:24:43,480 --> 00:24:45,880 Speaker 1: this point that's the goal to slow it down, and 431 00:24:46,280 --> 00:24:48,640 Speaker 1: it's not clear to me that they've accomplished their call 432 00:24:48,720 --> 00:24:51,560 Speaker 1: at this point. So certainly, the trending employment growth still 433 00:24:51,560 --> 00:24:54,000 Speaker 1: looks quite strong. I think we'll probably get another pretty 434 00:24:54,000 --> 00:24:57,320 Speaker 1: strong employment report on Friday, and I mean, John, in 435 00:24:57,440 --> 00:25:00,280 Speaker 1: terms of the the wage numbers, yeah, there's still tame, 436 00:25:00,359 --> 00:25:02,760 Speaker 1: but they are they are moving up. I think we 437 00:25:02,800 --> 00:25:05,320 Speaker 1: are seeing evidence here that the tight labor market is 438 00:25:05,359 --> 00:25:07,840 Speaker 1: putting upward pressure. And we'll probably see a three handle 439 00:25:08,320 --> 00:25:10,359 Speaker 1: on the average early earnings number in terms of year 440 00:25:10,400 --> 00:25:12,320 Speaker 1: over year on Friday, which we haven't seen during this 441 00:25:12,359 --> 00:25:15,040 Speaker 1: cycle so far, which I imagine might not be taken 442 00:25:15,080 --> 00:25:17,600 Speaker 1: well by financial markets, Jim, because we're in this weird 443 00:25:17,640 --> 00:25:21,400 Speaker 1: position now where the markets starting to view the FED 444 00:25:21,920 --> 00:25:25,040 Speaker 1: as if it will carry on until something breaks, and 445 00:25:25,080 --> 00:25:27,720 Speaker 1: I think this is pretty fascinating at the moment, Jim. 446 00:25:28,080 --> 00:25:29,800 Speaker 1: Ridden between the lines at the moment. You don't think 447 00:25:29,800 --> 00:25:32,760 Speaker 1: that fed's going to back off in with this volatility. Well, 448 00:25:32,800 --> 00:25:35,760 Speaker 1: I mean, obviously there's no plan in doing anything next week, 449 00:25:35,800 --> 00:25:38,239 Speaker 1: of course. So I mean the question is what are 450 00:25:38,240 --> 00:25:41,120 Speaker 1: they looking at in December. If they're looking at an 451 00:25:41,160 --> 00:25:43,600 Speaker 1: S ANDP that's down ten percent from the high, I'd 452 00:25:43,640 --> 00:25:46,920 Speaker 1: say big deal. I mean, obviously, if it's that's a 453 00:25:46,960 --> 00:25:50,520 Speaker 1: different story. But I mean, so we'll see where it 454 00:25:50,520 --> 00:25:52,520 Speaker 1: all ends up. But I mean, I think they're quite 455 00:25:52,560 --> 00:25:54,440 Speaker 1: happy for the equity market to be flat to down 456 00:25:54,440 --> 00:25:57,560 Speaker 1: ten percent and just stop there. But we'll we'll see 457 00:25:57,600 --> 00:25:59,359 Speaker 1: what happens by December. I mean, there's no expectation, of 458 00:25:59,400 --> 00:26:01,960 Speaker 1: course they doing thing next week. Jim Sullivan, thank you 459 00:26:02,040 --> 00:26:04,159 Speaker 1: so much for getting us started on our job to 460 00:26:04,200 --> 00:26:23,119 Speaker 1: day coverage right now, Kevin, surreally are Chief Washington, corresponded Kevin. 461 00:26:23,240 --> 00:26:26,359 Speaker 1: All of us wandered through dread Scott eighteen fifty seven. 462 00:26:26,920 --> 00:26:31,560 Speaker 1: We watched Daniel day Lewis in the movie Lincoln, and 463 00:26:31,600 --> 00:26:36,280 Speaker 1: then we vault forward in the fourteenth Amendment into the century. 464 00:26:36,480 --> 00:26:39,240 Speaker 1: We're now in the century and the President United States 465 00:26:39,240 --> 00:26:43,120 Speaker 1: really went after it. Uh this morning with axios. Are 466 00:26:43,160 --> 00:26:46,200 Speaker 1: we all gonna have to brush up on the fourteenth Amendment. Yeah, 467 00:26:46,200 --> 00:26:47,800 Speaker 1: and I think we should all pull out doors Karen's 468 00:26:47,800 --> 00:26:49,720 Speaker 1: Goodwin's book, you know, I mean I think I think 469 00:26:49,720 --> 00:26:51,880 Speaker 1: it really has a lot of good examples. Look, um, 470 00:26:52,119 --> 00:26:54,080 Speaker 1: I just left the White House, and here's what I 471 00:26:54,080 --> 00:26:58,080 Speaker 1: can say. This was a question that caught the President 472 00:26:58,240 --> 00:27:02,160 Speaker 1: off guard, but it wasn't something that's new. And I 473 00:27:02,240 --> 00:27:05,639 Speaker 1: don't agree in the short term that you're gonna hear 474 00:27:05,920 --> 00:27:11,080 Speaker 1: the the administration talking about some elaborate rollout of this 475 00:27:11,160 --> 00:27:14,280 Speaker 1: policy change. I mean, you gotta go back to tom 476 00:27:14,359 --> 00:27:17,760 Speaker 1: when the President made these controversial comments to begin with, 477 00:27:17,960 --> 00:27:21,359 Speaker 1: after the Escalator speech, when he announces candidacy, to drive 478 00:27:21,440 --> 00:27:24,960 Speaker 1: this issue as a wedge issue from the other Republicans, 479 00:27:24,960 --> 00:27:27,720 Speaker 1: to put former Florida Governor Jeb Bush on defense and 480 00:27:27,880 --> 00:27:29,720 Speaker 1: very quickly, I would just notebook for a week out 481 00:27:29,720 --> 00:27:32,119 Speaker 1: from the mid terms, he's trying to rally the base, 482 00:27:32,600 --> 00:27:35,120 Speaker 1: rally folks to get to the polls, and they think 483 00:27:35,200 --> 00:27:37,959 Speaker 1: this immigration issue is going to help them in rural 484 00:27:38,000 --> 00:27:42,320 Speaker 1: conservative district. Do you anticipate in executive order at some 485 00:27:42,440 --> 00:27:45,280 Speaker 1: point by the president the people standing behind the desk 486 00:27:45,320 --> 00:27:47,000 Speaker 1: and he does a thing where he holds it up. 487 00:27:47,359 --> 00:27:49,960 Speaker 1: Is he going to do that on birthright? It's not 488 00:27:49,960 --> 00:27:51,680 Speaker 1: gonna happen today, and I would be stunned if it 489 00:27:51,760 --> 00:27:55,399 Speaker 1: happens tomorrow. But I think eventually something like that could happen. 490 00:27:55,800 --> 00:27:57,359 Speaker 1: But on the flip side of that, go back to 491 00:27:57,440 --> 00:27:59,520 Speaker 1: the earlier in his term and what happened at the 492 00:27:59,520 --> 00:28:03,440 Speaker 1: airport following his executive orders in the Stephen Miller Executive 493 00:28:03,560 --> 00:28:06,720 Speaker 1: Orders of of yesteryear, and go back to you know. 494 00:28:06,760 --> 00:28:08,399 Speaker 1: The second point that I would make is that the 495 00:28:08,400 --> 00:28:10,320 Speaker 1: impact this is going to have the Supreme Court. This 496 00:28:10,920 --> 00:28:13,000 Speaker 1: would ultimately end up in the Supreme Court. And what's 497 00:28:13,080 --> 00:28:17,520 Speaker 1: Justice Kavanaugh gonna say about this? Kevin CURRELLI could you 498 00:28:17,560 --> 00:28:21,919 Speaker 1: speak a little bit about the deployment of troops on 499 00:28:22,000 --> 00:28:27,400 Speaker 1: the Mexico US because I was I mean, I'm sure 500 00:28:27,440 --> 00:28:29,680 Speaker 1: I've got this wrong, but I was under the impression 501 00:28:29,760 --> 00:28:33,640 Speaker 1: that there is a law that specifically relates to the 502 00:28:33,760 --> 00:28:40,400 Speaker 1: use of active duty US military operating on US soil. Well. 503 00:28:40,480 --> 00:28:44,040 Speaker 1: President Trump is set to deploys fifty two hundred troops 504 00:28:44,080 --> 00:28:48,560 Speaker 1: to the southern border UH and the southwest border specifically, 505 00:28:48,720 --> 00:28:52,360 Speaker 1: and this is with specific regards to this caravan that 506 00:28:52,440 --> 00:28:55,840 Speaker 1: has gone on. And look, I mean, this is the 507 00:28:55,960 --> 00:28:59,800 Speaker 1: largest largest deployment of active duty U. S troops since 508 00:28:59,840 --> 00:29:03,840 Speaker 1: the response to the earthquake in Haiti. So there is 509 00:29:03,880 --> 00:29:07,720 Speaker 1: some precedent when there is a type of yeah, but 510 00:29:07,760 --> 00:29:12,080 Speaker 1: that was a humanitarian I hear you, but but correct. 511 00:29:12,120 --> 00:29:14,600 Speaker 1: And so the critics of this are suggesting that because 512 00:29:14,600 --> 00:29:16,880 Speaker 1: of that, they should you know, that this would need 513 00:29:16,960 --> 00:29:19,680 Speaker 1: some type of approval. The bottom line is that again, 514 00:29:20,040 --> 00:29:22,440 Speaker 1: one week from the mid terms, the President trying to 515 00:29:22,440 --> 00:29:25,320 Speaker 1: to strike what he is now even calling a nationalistic 516 00:29:25,360 --> 00:29:28,200 Speaker 1: tone on the issue of immigration. And that's why you're 517 00:29:28,240 --> 00:29:32,040 Speaker 1: seeing this aggressive rhetoric on immigration. It's why you're seeing 518 00:29:32,080 --> 00:29:34,200 Speaker 1: in his rallies, eight of which he's going to have 519 00:29:34,280 --> 00:29:37,680 Speaker 1: between now and election day. Uh, the signs that say 520 00:29:37,880 --> 00:29:40,160 Speaker 1: finished the wall, not just build the wall now, but 521 00:29:40,240 --> 00:29:42,880 Speaker 1: finished the wall. This is a rallying cry for conservatives 522 00:29:42,920 --> 00:29:44,880 Speaker 1: and and you know, we were reporting on this yesterday 523 00:29:44,880 --> 00:29:49,560 Speaker 1: in the Kentucky third district about the sixth district. I apologize, 524 00:29:49,600 --> 00:29:53,000 Speaker 1: I said it wrong again. Kentucky sixth district, where you 525 00:29:53,080 --> 00:29:56,240 Speaker 1: have a neck and neck race between a three time 526 00:29:56,240 --> 00:29:59,680 Speaker 1: incumbent Andy Barr in rural Kentucky against the four A 527 00:29:59,720 --> 00:30:02,960 Speaker 1: four or Fighter pilot Amy McGrath is a Democrat, and 528 00:30:03,080 --> 00:30:06,240 Speaker 1: this nationalization of the race and the issue of immigration 529 00:30:06,320 --> 00:30:09,520 Speaker 1: is something that they're trying to seize on right now. 530 00:30:09,600 --> 00:30:13,040 Speaker 1: I understand all that, and I understand the political dynamics, 531 00:30:13,080 --> 00:30:16,640 Speaker 1: but I was under the impression, maybe you can disabuse 532 00:30:16,720 --> 00:30:20,640 Speaker 1: me of this, but there's a federal statute statute posy 533 00:30:20,720 --> 00:30:25,920 Speaker 1: comatas right, yes, yes, uh and and this is why again, 534 00:30:25,960 --> 00:30:29,080 Speaker 1: I think you're being criticism from from Democrats as well 535 00:30:29,080 --> 00:30:33,440 Speaker 1: as others who are are really trying to to really 536 00:30:33,640 --> 00:30:37,000 Speaker 1: raise these concerns. Pozzy Comas. That was on Santana's third album, 537 00:30:37,320 --> 00:30:42,040 Speaker 1: Caravan Um. Kevin Sireali, I want to talk about Doylestown, Pennsylvania. 538 00:30:42,560 --> 00:30:45,080 Speaker 1: Kevin Robolari rights this up in a hof post. It's 539 00:30:45,120 --> 00:30:48,640 Speaker 1: a great race Democrats, Scott Wallace actually may win and 540 00:30:48,680 --> 00:30:51,280 Speaker 1: this is on the edge of Horty Torty Bucks County. 541 00:30:51,560 --> 00:30:53,880 Speaker 1: He talks about there's a Panera bread there, there's a 542 00:30:53,880 --> 00:30:58,040 Speaker 1: Whole Foods eight team miles. I know that's why I'm 543 00:30:58,040 --> 00:31:01,080 Speaker 1: bringing it up. I mean, tell me about home, Sireally, 544 00:31:01,240 --> 00:31:03,680 Speaker 1: turf is it going to be if I'm elected? Free 545 00:31:03,800 --> 00:31:06,880 Speaker 1: Rolling Rock well, I could talk Pennsylvania politics toil. I'm 546 00:31:06,880 --> 00:31:09,640 Speaker 1: blue in the face quite literally. And look, Pennsylvania's first 547 00:31:09,640 --> 00:31:13,320 Speaker 1: district is really really you know, it could be a 548 00:31:13,360 --> 00:31:17,440 Speaker 1: bell Weather resorts because you've got uh Fitzpatrick against Wallace 549 00:31:17,680 --> 00:31:20,240 Speaker 1: and this is more of the collar counties as they're 550 00:31:20,280 --> 00:31:22,960 Speaker 1: called outside of Philadelphia. I'm from Delko. Then you've got 551 00:31:22,960 --> 00:31:25,960 Speaker 1: bucks Coo, Bucks County, Montgomery County. Those are the more 552 00:31:25,960 --> 00:31:29,800 Speaker 1: elite ones, uh, more so than than Delco. So this 553 00:31:29,880 --> 00:31:32,440 Speaker 1: is interesting because of what we've seen in the redistricting. 554 00:31:32,880 --> 00:31:36,600 Speaker 1: And it's also interesting because, look, if a Democrat wants 555 00:31:36,600 --> 00:31:38,880 Speaker 1: to be in the White House, there is no way 556 00:31:38,920 --> 00:31:42,400 Speaker 1: they can lose Pennsylvania the way that Hillary Clinton lost 557 00:31:42,440 --> 00:31:45,200 Speaker 1: Pennsylvania for the first time. What's the dynamic right now? 558 00:31:45,240 --> 00:31:46,960 Speaker 1: Come on, you're going home on the weekend and you're 559 00:31:47,000 --> 00:31:50,000 Speaker 1: only going home to get mom's cooking and free Philadelphia 560 00:31:50,040 --> 00:31:55,720 Speaker 1: Eagles get the laundry as well. Okay, what's what do 561 00:31:55,800 --> 00:31:59,560 Speaker 1: you see on the ground trade? I mean, you've got 562 00:31:59,560 --> 00:32:02,719 Speaker 1: to remember that there's refineries in south and southeastern Pennsylvania. 563 00:32:03,000 --> 00:32:05,320 Speaker 1: You've got to remember that the energy sector and so 564 00:32:05,440 --> 00:32:07,920 Speaker 1: these are the type of workers. Quite frankly that decided 565 00:32:07,960 --> 00:32:11,400 Speaker 1: between UH that previously voted for Barack Obama and then 566 00:32:11,480 --> 00:32:14,800 Speaker 1: voted for Donald Trump. And so for someone like Scott 567 00:32:14,840 --> 00:32:19,560 Speaker 1: Wallace UH to really a Democrat to be really honing 568 00:32:19,560 --> 00:32:23,080 Speaker 1: in on the issue of being a bit more um 569 00:32:23,480 --> 00:32:26,800 Speaker 1: level headed in terms of his rhetoric against someone like Fitzpatrick. 570 00:32:27,240 --> 00:32:29,840 Speaker 1: You know, I think that that's really then that they're 571 00:32:29,920 --> 00:32:33,520 Speaker 1: that they're that they're striking UH to see. Yeah, listen 572 00:32:33,520 --> 00:32:36,360 Speaker 1: to Santana's third album. It was awesome. Kevin Scowley, Thank 573 00:32:36,360 --> 00:32:45,800 Speaker 1: you so much, greatly appreciate it. Thanks for listening to 574 00:32:45,840 --> 00:32:50,360 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 575 00:32:50,440 --> 00:32:56,280 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 576 00:32:56,320 --> 00:32:59,600 Speaker 1: on Twitter at Tom Keane before the podcast. You can 577 00:32:59,640 --> 00:33:02,840 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.