WEBVTT - Single Best Idea with Tom Keene: Jim Caron & Peter Tchir

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

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<v Speaker 2>Single best idea are really interesting. Dare I say? Twisted

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<v Speaker 2>show today we had a real focus on fixed income.

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<v Speaker 2>My major complaint with the bond market is the media

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<v Speaker 2>focuses on yield and then they focus on spreads, the

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<v Speaker 2>difference in yield between two yields, like a ten year

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<v Speaker 2>yield a two year yield. You calculate the spread and

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<v Speaker 2>it's like half a percentage point whatever the answer is.

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<v Speaker 2>In times of emotion, in times of crisis, all of

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<v Speaker 2>a sudden you focus on price and we're there right

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<v Speaker 2>now where it's about price down. What does that do

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<v Speaker 2>to your portfolio? So it was good to talk to

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<v Speaker 2>a lot of different fixed income people today. Major shout

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<v Speaker 2>out to Neil Sutherland, the Schroeders in Hartford of Connecticut,

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<v Speaker 2>and Wayne Pennsylvania. Neil Sutherland should say and Neil was

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<v Speaker 2>really quite good about full faith and credit and finding

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<v Speaker 2>comfort in a coupon. We talked to Jim Karen Morgan

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<v Speaker 2>Stanley with all of his fixed income expertise. He linked

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<v Speaker 2>in the fixed income market to tough GDP numbers.

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<v Speaker 1>I think the risk is that the number could even

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<v Speaker 1>be weaker, So there's a lot of adjustments that really

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<v Speaker 1>took place as of yesterday just because of the trade

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<v Speaker 1>data that came in. You know, the deficit came in

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<v Speaker 1>at record levels, so that forced all the Wall Street

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<v Speaker 1>analysts to reduce or downgrade their GDP estimates for today.

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<v Speaker 1>And essentially, what we have to understand is that a

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<v Speaker 1>lot of this is coming from imports, meaning that companies

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<v Speaker 1>have pulled forward purchases, so their imports have actually gone up.

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<v Speaker 1>When you have high imports versus exports, that actually subtracts.

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<v Speaker 1>That's a negative that what we call, you know, the

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<v Speaker 1>net number, is actually subtracting from GDP. But there's a problem, Tom.

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<v Speaker 1>The problem is that what's also not beingd is that

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<v Speaker 1>these things should balance out, not only if you have

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<v Speaker 1>really big imports, you should then start to see inventory

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<v Speaker 1>build and you should also start to see spending consumption

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<v Speaker 1>on those imports that's not yet coming into the equation yet.

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<v Speaker 1>There's a quirk and the timing here, so it's almost

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<v Speaker 1>like you're going to get negative aspects, but you're going

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<v Speaker 1>to miss some of the positive and that's what's giving

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<v Speaker 1>it a big negative number.

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<v Speaker 2>Jim Carron and Morgan Stanley let me walk through that

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<v Speaker 2>right now. I had a lot of interest in this,

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<v Speaker 2>thank you for a smart tweet out there that said,

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<v Speaker 2>explain it exactly. There's domestic economic might, and then there's

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<v Speaker 2>what we do abroad. Abroad is the exports. We send

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<v Speaker 2>out a lot of its services and a lot of

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<v Speaker 2>it is the imports coming in. And think of the

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<v Speaker 2>stereotype of Mercedes Benz from Germany or all the stuff stuff,

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<v Speaker 2>stuff we bring in from China. That's imports coming in.

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<v Speaker 2>It's way more complicated than what I just said. But

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<v Speaker 2>the answer is what is the economy doing without exports dynamics,

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<v Speaker 2>without import dynamics. It's a few other things they throw

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<v Speaker 2>in as well, so you try to pass the exam.

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<v Speaker 2>And the answer is there's the domestic economy may be

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<v Speaker 2>measured by domestic final sales, other ways to do it too.

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<v Speaker 2>And then there's export imports. And the ANSWER's imports were

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<v Speaker 2>so ginormous stuff coming in to get it in front

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<v Speaker 2>of the trade war that Charles Schwab quickly said, look,

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<v Speaker 2>it's almost a five percent crater, negative four point eight percent,

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<v Speaker 2>four point six percent, negative four point six percent just

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<v Speaker 2>off imports. So pushing you against that was a pretty

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<v Speaker 2>good US economy And the answer is it was about

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<v Speaker 2>three percent GDP for the regular, old, boring domestic economy.

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<v Speaker 2>It comes out to a number, then it'll be revised

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<v Speaker 2>over the next two looks. But it was a negative

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<v Speaker 2>statistic today for GDP, but all sorts of asterisks around that.

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<v Speaker 2>What to focus on is the market took it in

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<v Speaker 2>a challenging way, joining us then on the linkage of

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<v Speaker 2>this trade wark into our economic data and our international relations.

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<v Speaker 2>Peter Cheer of Academy.

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<v Speaker 3>Securities, I can tell you quite safely that when we

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<v Speaker 3>talk to our retire generals and admirals, one of whom

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<v Speaker 3>is going to be Under Secretary of State, Undersecretary of

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<v Speaker 3>Defense for Personnel and Readiness, they've never seen a more

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<v Speaker 3>trying period of their lifetime, right they've served.

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<v Speaker 4>There is so much risk across the globe, and recently too,

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<v Speaker 4>you've had Indian Pakistan flare up a little bit. It

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<v Speaker 4>does feel like there's this real risk that everyone's going

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<v Speaker 4>to push the envelope a little bit. Whether it's there's

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<v Speaker 4>a perception, whether it's real or not, but a perception

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<v Speaker 4>that Trump is less focused on global protecting global interest.

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<v Speaker 2>Peter sheer of Academy securities this morning. What's coming up here?

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<v Speaker 2>It's an incredibly busy week. Lots of economic data today,

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<v Speaker 2>and then we go on to claims tomorrow. I think

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<v Speaker 2>that could be a surprise we'll see. And then the

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<v Speaker 2>jobs report, boy, the analys. Right now, I would love

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<v Speaker 2>to get a cup of coffee or along lunch with

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<v Speaker 2>Anna Wog right now, just to get an update on

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<v Speaker 2>Bloomberg Economics on a survey number of one hundred and

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<v Speaker 2>thirty five thousand non farm payrolls and a real mystery

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<v Speaker 2>that it could be marked down lower on your commute.

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<v Speaker 2>Acrascination Android Auto is seeing more and more talk about

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<v Speaker 2>what Google and Android are doing in cars on Apple

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<v Speaker 2>CarPlay as well and on YouTube. Subscribe to Bloomberg Podcasts

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<v Speaker 2>at YouTube podcasts. This is single best idea