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Speaker 2: We speak with Claudia sam chief Economist, News Century Advisors.
Speaker 2: Maybe we'll get her back here for Wednesday when we
Speaker 2: get the actual reported government shutdown and all that's three
Speaker 2: or four days delayed. There's been all sorts of responsible
Speaker 2: and irresponsible writing thinking blathering on our new Chairman of
Speaker 2: the Federal Reserve. The nominee is Kevin Worsh. At the
Speaker 2: top of the responsible pile is Claudia sam Ace, academics
Speaker 2: from Michigan, Real fed Credit bill, changing the dialogue of
Speaker 2: recession in America. She has been careful and respectful about
Speaker 2: discussing the pros the cons of this new chairman. Claudia
Speaker 2: sim if we get a Chairman Worsh, what would you be?
Speaker 2: You said, your advice to Chairman Worsh to get through
Speaker 2: the first six months.
Speaker 3: Unfortunately, I think Kevin Walsh may need to start with
Speaker 3: an apology. He's been pretty tough on the staff and
Speaker 3: on current FED officials. You know, it's maybe the campaign
Speaker 3: to get the job. And I am wholeheartedly agree the
Speaker 3: FED can always do better and has made mistakes in
Speaker 3: the past, and there's ways to change the institution. But
Speaker 3: he said some pretty fiery stuff about people whose help
Speaker 3: he's going to need very soon, and I suspect he'll
Speaker 3: come in and be like, hey, you know we were collegues,
Speaker 3: ones for colleagues again, let's get to it, and I
Speaker 3: think the page will turn and off we go if
Speaker 3: some of his and pain promises of you know, breaking
Speaker 3: heads and laying off a bunch of people. If that happens,
Speaker 3: I think you'll have a pretty tough first six months.
Speaker 3: So that's not my anticipation. But you know, the leadership
Speaker 3: style changes, and Kevin worsh is trying to do something
Speaker 3: really difficult. He has big ideas about how to change
Speaker 3: the FED. Change is very hard at the FED.
Speaker 4: I mean I know that from being inside the building.
Speaker 4: So you know, good back to.
Speaker 5: Him, Claudia.
Speaker 6: We did not get the non pump payroll data today,
Speaker 6: but we have gotten some data in the less couple
Speaker 6: of days. Challenger job cuts high since two thousand and nine.
Speaker 6: Initial job as claims came in a little higher than expected,
Speaker 6: jolts openings fell to the LOWES level. So I think
Speaker 6: since twenty twenty, what is your view of kind of
Speaker 6: this labor market right now?
Speaker 4: So, even with.
Speaker 3: The data that we've gone this week, I agree with
Speaker 3: the assessment we heard from the FED at their last
Speaker 3: meeting that there are signs of stabilization, you know, the
Speaker 3: downside risk employment look a little bit less now. I think,
Speaker 3: you know, the data flow shows that this is still bumpy.
Speaker 3: We are not out of the woods yet. I would
Speaker 3: downplay the message from the Challenger data.
Speaker 4: It absolutely is.
Speaker 3: Important for every single person that's covering that data that
Speaker 3: got a pink slip, but it's it doesn't give us
Speaker 3: the flavor of like the whole set of businesses across
Speaker 3: the country. Honestly, the DROLT data, the job openings and
Speaker 3: labor turnover statistics that came out was much more upbeat.
Speaker 3: And the layoff rate nationally is still very low. It's
Speaker 3: like pre pandemic levels of low.
Speaker 4: So I think on.
Speaker 3: Layoffs, it's the pictures is okay, Actually it's actually pretty good.
Speaker 3: It's the hiring rate that is still very low, and
Speaker 3: that is a problem. Even if it's not recessionary. It
Speaker 3: is a real drain and a gradual increase in say unemployment.
Speaker 6: Is the low higher low fire phenomena. Is that okay
Speaker 6: for this economy? Is that shockingly unusual? How do you
Speaker 6: think about that?
Speaker 3: So what we're seeing right now is very unusual. We
Speaker 3: have a low hiring rate, which that happens from time
Speaker 3: to time. What makes it so unusual is we have
Speaker 3: an economy that is expanding it a pretty good clip.
Speaker 3: You know, do GDP numbers may be a little on
Speaker 3: the high side, but in genuc consumer spending is moving ahead,
Speaker 3: business investment, capital expenditures are happening right like. This economy
Speaker 3: is moving forward but not adding jobs.
Speaker 4: And that is that is unusual.
Speaker 3: And I think there are probably some reasons why that
Speaker 3: might be happening right now, like a lot, but it's
Speaker 3: this is not typical, and frankly, that makes it kind
Speaker 3: of not It makes it hard to read, and I
Speaker 3: don't think it's really sustainable. But it could go either way.
Speaker 3: Hiring could pick up or activity could slack off.
Speaker 2: Claudia, you know an undergraduate, You get there and you go, okay,
Speaker 2: labor economics junior here this is going to be a breeze,
Speaker 2: and then you get the textbooks like whoa, this has
Speaker 2: got a little bit of ambiguity to it and sophistication.
Speaker 2: The hiring di ynamic. We had one guest earlier this
Speaker 2: week say, the lack the dearth of hiring models out
Speaker 2: at a near eight percent unemployment rate, is our unemployment
Speaker 2: rate worser than the four point x percent we were quoting?
Speaker 3: Yeah, you know, it's one of there's a lot of
Speaker 3: reasons why the unemployment rate can move around. I think
Speaker 3: if you have the perspective of kind of bottoms up
Speaker 3: on the labor market, A lot of it's demographic. The
Speaker 3: population aging is one of the biggest pieces that means
Speaker 3: that we should have lower unemployment rates right now.
Speaker 1: Now.
Speaker 3: It is a cottage industries, particularly within kind of the FED,
Speaker 3: trying to figure out what's the unemployment rate that like
Speaker 3: is so low that it like sets off inflation, or
Speaker 3: is so high that it really is a sign that
Speaker 3: the FED needs.
Speaker 4: To step in and be aggressively cutting rates.
Speaker 3: So and that's that's really tricky because again it's not
Speaker 3: just like I said, with the jobless expansion, you when
Speaker 3: you're really trying to get a sense of what's happening
Speaker 3: in the economy. You got to take the unemployment rate
Speaker 3: and then go look at activity. You got to take
Speaker 3: the unemployment rate and go look at the demographics and
Speaker 3: what's happening with labor supply. So it's there's a lot
Speaker 3: of pieces that come together. So there's no one number
Speaker 3: that we should.
Speaker 4: Look for the unemployment rate.
Speaker 3: What I've always said, and this, you know, this shows
Speaker 3: with the dynamics, watch how it's moving. If the unemployment
Speaker 3: rate starts rising and it gets going more quickly, then
Speaker 3: we have a big problem.
Speaker 5: Claudia.
Speaker 6: President Trump really made good on his campaign pledge to
Speaker 6: a stop immigration, increased deportations. What effect has that had
Speaker 6: on the labor market. I haven't really seen it too much.
Speaker 3: Well, we've been seeing it, and actually I think, you know,
Speaker 3: with the job report being delayed, I think it's a
Speaker 3: good time to kind of emotionally prepare people for next Wednesday.
Speaker 3: We're going to get the annual revisions to the payrolls,
Speaker 3: and there we know from some preliminary estimates they're going
Speaker 3: to be downward and they're going to be big again,
Speaker 3: starting actually back into the spring of twenty twenty four.
Speaker 3: So it's not gonna fit nice through political narratives because
Speaker 3: we go across administrations, like it takes a long time
Speaker 3: to get all this data together, and we're gonna see
Speaker 3: a lot of red because because payroll increases in places
Speaker 3: we're low enough already that with the revisions, we expect
Speaker 3: we're gonna flip more months to payroll gains and the
Speaker 3: green to payroll decignely red and that will rattle people.
Speaker 3: Even though this goes back to your question, we shouldn't
Speaker 3: take the recession signed to it, like we really have
Speaker 3: had a slowdown in the labor's supply and immigration is
Speaker 3: an important piece of that, and that just means these
Speaker 3: payroll numbers.
Speaker 2: Okay, So at the Echos building, you got your unedible
Speaker 2: coffee from Michelle Smith. We're sitting at the desk doctor
Speaker 2: some and some wise guy goes, Okay, Claudia, how red
Speaker 2: is red gonna be? Do you have a revision statistic
Speaker 2: in your head? Oh?
Speaker 4: I do, but I don't. I actually think in terms
Speaker 4: of people watch.
Speaker 5: Nobody's listening, So let's go no.
Speaker 3: But we know that the preliminary estimate was going to
Speaker 3: take something like sixty seventy thousand out a month over
Speaker 3: the period from the spring of March twenty twenty four
Speaker 3: to March twenty twenty five, and then after that we
Speaker 3: may have some additional downward revisions. And frankly, I think
Speaker 3: some of there's a potential even to get some surprise
Speaker 3: on the latest numbers because the BLS, and they're in
Speaker 3: their pledge to always do better with with their estimates.
Speaker 2: Have this.
Speaker 3: They will be unveiling their new birth death model and
Speaker 3: it's probably going to have a little less lift. So
Speaker 3: I think payrolls could be pretty unsettling. And again I
Speaker 3: don't I think there's a lot going on, and keep
Speaker 3: an eye on the unemployment, which I expect to say
Speaker 3: flat and maybe even tick down.
Speaker 2: She's seldom this.
Speaker 5: Yeah, I mean that's great.
Speaker 2: We don't have to promote anything. If doctor some sells
Speaker 2: on Wednesday this Jobs Day, four minutes after the jobs
Speaker 2: the Job's non report, Claudia, Sam, thank you, thank you,
Speaker 2: thank you. Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
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Speaker 2: This is a joy Sean Simmons joys us right now.
Speaker 2: I pretty strategies at ubs, but I want to talk
Speaker 2: about and I remember this when Barok, I mean NYU
Speaker 2: was rocking on Peter Karr and Bruno de Pierre and
Speaker 2: all at KURRNT and Barok had the courage to come
Speaker 2: out with a huge venerable finance program they had and
Speaker 2: Dance Stefonica started the Quant program like twenty years ago
Speaker 2: at Brooke. How did you survive the Quant program at Brooke?
Speaker 2: It's a grind.
Speaker 7: It was definitely challenging, set us up to, you know,
Speaker 7: work very hard when we left bruth though. That's always
Speaker 7: the feedback that I hear every Brook studio.
Speaker 2: Apply it to this madness that you have to deal
Speaker 2: with with every day at ubs? How do you how
Speaker 2: do you deal with bitdog or or or anthropic? Is
Speaker 2: that what happened yesterday? I don't know. I don't know
Speaker 2: what clat is, But how do you apply quant academics
Speaker 2: to this madness we're living?
Speaker 7: You know, shifting sands? We got to we have to
Speaker 7: be creative on how we think about things. And uh,
Speaker 7: you know, applied statistical processes to all of it.
Speaker 6: Sean, I think for the you know, so for such
Speaker 6: a long period of time, for so many years, tech
Speaker 6: has led the equity markets, particularly in the US, less
Speaker 6: so in Europe.
Speaker 5: Is that still the case?
Speaker 6: Do you think we've had such a rotation of software
Speaker 6: and some other tech spaces over the last several weeks here?
Speaker 5: How do you think about that?
Speaker 7: Yeah, it's been interesting, and we talked about this last time,
Speaker 7: but going into this year, we were I moved tech
Speaker 7: into neutral for our full year outlook. Okay, part of
Speaker 7: that thesis was, you know, just general increase competition between
Speaker 7: the different companies in the cohort, as well as kind
Speaker 7: of technical rotations within the space overall. So it wasn't
Speaker 7: just a general text going to lift rising tides, right,
Speaker 7: that is what's seemingly playing out right now. We still
Speaker 7: hold it as a neutral in our view for the year.
Speaker 7: So I do think there's going to be some opportunity
Speaker 7: opportunities with in tech, but it's not necessarily going to
Speaker 7: be the stalwart driver of the overall market.
Speaker 6: So we saw a rotation a lot of folks will say,
Speaker 6: kind of beginning early November, we saw rotation from some
Speaker 6: of the tech to some other areas of the market,
Speaker 6: some maybe some more value oriented sectors industrials and consumer
Speaker 6: stables and maybe even small and mid caps.
Speaker 5: Is that a thing for twenty six?
Speaker 7: You know, I think I would push back on that
Speaker 7: a bit. You know, we again this idea of breath.
Speaker 7: What we had coming into this year was kind of
Speaker 7: a more and more consensus idea of breadth within the
Speaker 7: market as a whole. But we really saw that being
Speaker 7: led by IWN, by small caps, by speculative growth. So
Speaker 7: it wasn't necessarily pure value or the quality group that
Speaker 7: we had expected this year. You know, I think the
Speaker 7: market got a bit ahead of its skis. From that perspective,
Speaker 7: we are kind of now starting to see that quality rotation.
Speaker 7: Quality improved yesterday. Value has clearly done very well, and
Speaker 7: we're seeing that speculative side come in.
Speaker 2: Sean Seimers as we continue. We welcome all of you
Speaker 2: across the nation. Is good football that weekend? So Duke
Speaker 2: unc when is it Saturday?
Speaker 5: Saturday? Are you going to I had a lot of
Speaker 5: offers to go, but no, it's okay.
Speaker 6: It might be you know, they're thinking about closing down
Speaker 6: the Dean Dome and moving the basketball court somewhere different
Speaker 6: than chopoil.
Speaker 5: Big issue in chap oil.
Speaker 2: Well, we'll discuss it. Come look for that, folks in
Speaker 2: the nine o'clock hour this morning. We welcome all of
Speaker 2: you on YouTube and of course subscribe to Bloomberg Podcast
Speaker 2: program announcement Bloomberg finally coalescing all of our video platform together.
Speaker 2: Look at that at the hub at Bloomberg dot com.
Speaker 2: Sean you mentioned value. Okay, nobody out there, including Alexis Christopherus,
Speaker 2: knows that John Deere has popped a twenty two point
Speaker 2: nine percent per year return for the last ten years.
Speaker 2: Have we been a sleep that boring? As Gartman would say,
Speaker 2: things that fall on your feet are doing Apple like returns.
Speaker 7: I think there is part of that lack of awareness,
Speaker 7: and that's part of the thesis from Breadth right. If
Speaker 7: we don't have these kind of highlight tech names driving
Speaker 7: the overall market, and we are starting to see some
Speaker 7: improvement for those names from a fundamental standpoint, that's going
Speaker 7: to lead to some more improvement. We have a neutral
Speaker 7: positive on materials industrials for that. I think there is
Speaker 7: a bit of the bleed of just the overall AI
Speaker 7: narrative in some of these spaces, you know, utilities under
Speaker 7: performance right now is something that we would flag there
Speaker 7: where we think that is a bit of the AI
Speaker 7: kind of exposure that utilities have. In that general thought,
Speaker 7: even though those fundamentals still appear quite attractive.
Speaker 6: We're I guess, a little more than halfway through earnings
Speaker 6: season here, almost sixty percent of the way through the
Speaker 6: S and P five hundred, some pretty solid earnings this quarter,
Speaker 6: which support.
Speaker 5: What we saw in twenty twenty five. Is it enough
Speaker 5: to support this market going forward?
Speaker 2: I think so.
Speaker 7: I think one of the interesting things from a performance
Speaker 7: perspective on the back of reporting, there's kind of two
Speaker 7: key areas that I'm watching right now. One, falling margins
Speaker 7: or those margins that have been hurt have been the
Speaker 7: kind of pocket of results that are getting most penalized,
Speaker 7: so that kind of supports the overall quality idea through
Speaker 7: this year. The second is, you know, aside from consumer
Speaker 7: staples and industrials and one other, the median stock in
Speaker 7: all of these sectors is outperforming the aggregate or the
Speaker 7: you know, the whole average, which is pretty interesting, and
Speaker 7: again that earning's breadth idea.
Speaker 6: What's screening well for you guys these days, is are
Speaker 6: certain industry sectors there a certain factor out there that
Speaker 6: you guys are focusing on.
Speaker 7: Yeah, I mean, I mean it sounds like a broken record.
Speaker 7: We're still focused on that quality area. You know, we
Speaker 7: want to be away from kind of more speculative growers.
Speaker 7: We want to be looking at equal weight in disease,
Speaker 7: especially kind of those larger cap And I would say
Speaker 7: just kind of overall, you know, we do have a
Speaker 7: bias towards industrials versus kind of the overall consumer landscape.
Speaker 2: Can I go NERD?
Speaker 5: Yeah, definitely.
Speaker 2: Okay, Now seeing telab would talk about tail distributions and
Speaker 2: and the rest of it. What is the shadow out
Speaker 2: there you see? Is it a margin build up? Is
Speaker 2: it a leverage build up? Is if you look at
Speaker 2: all the sleepiness of a Gaussian belt curve distribution and
Speaker 2: you and I know that's not reality when you look
Speaker 2: at the quant reality. What's your number one worry right now?
Speaker 7: I you know, there's a lot of discussion at the
Speaker 7: end of last year about the cockroaches in high yield.
Speaker 7: I'm not the credit strategist, but I know Matt Mish
Speaker 7: has put out some great work in that front.
Speaker 2: He's got a little experience, it's got a.
Speaker 7: Little experience, and I would you know, I would lean
Speaker 7: that direction. One of my key models kind of uses
Speaker 7: high yield spreads as an input. That has been a
Speaker 7: very positive sport for the equities markets over the past
Speaker 7: few years and always kind of when we see that
Speaker 7: rattle that that normally.
Speaker 2: So how do you handle the fact is our four
Speaker 2: ohe case are grossly non diversified compared to any sense
Speaker 2: of a recent nineteen seventy four.
Speaker 7: Yeah, I think there's kind of two sides to that.
Speaker 7: One is that has been very supportive of equity valuations
Speaker 7: over the past number of years, right kind of price
Speaker 7: ins and discriminate flows just into equity buckets and equity
Speaker 7: indices has been supportive of, you know, higher valuations over
Speaker 7: the past couple of years. From the other side, you know,
Speaker 7: that's if you have options, you can always take a
Speaker 7: look at them. If not, you know, always talk to
Speaker 7: a financial advisor.
Speaker 5: Valuation a couple of ways to look at it. You
Speaker 5: just look at the SMP.
Speaker 6: You could argue that it's expensive you strip out some
Speaker 6: of the big camp names, maybe less So.
Speaker 5: How do you guys think about just the market valuation.
Speaker 7: I'll say we do break out kind of the tech
Speaker 7: plus code, where from the rest of the S and
Speaker 7: B five hundred it still does appear a bit expensive. However,
Speaker 7: you know, when we're talking about those pricing discriment flows,
Speaker 7: when you have this constant bid to equities overall, that's
Speaker 7: going to drive a higher evaluation. So it really is
Speaker 7: going to become a flows dynamic supportive of margins. If
Speaker 7: we can see the consensus margin growth over the next
Speaker 7: couple of years, should.
Speaker 2: We get them in trouble with ubs complainants? Oh yeah,
Speaker 2: it's Friday. Let's do that. Sean Simons with the Union
Speaker 2: Bank of Switzerland. The best research I know on bitcoin
Speaker 2: is a bank of International Settlements in Geneva. Sean Simon's
Speaker 2: on bitcoin. You're young enough this weekend, Alexis. Come on.
Speaker 2: Sean's going to be in a bar somewhere downtown where
Speaker 2: I never go, and fourteen kids are going to lean
Speaker 2: forward and say, hey, brain, o bitcoin, what do you
Speaker 2: think go.
Speaker 7: I'm a pass fan. I'm gonna be sitting on my
Speaker 7: couch on Sunday. I want to be very clear about that. Yeah,
Speaker 7: you know, one of the things when we see risk
Speaker 7: and you can talk about Bitcoin, you can talk about
Speaker 7: what silver has done, you can talk about any of
Speaker 7: the speculative growers where retail participation has been. You know,
Speaker 7: there is a fear right when when your personal value
Speaker 7: has moved that lower. You know, if we see a
Speaker 7: reduced retail bid into equities, that is a low dynamic
Speaker 7: that has been kind of a stalwart in the market
Speaker 7: over the past number of years, and that could be
Speaker 7: a shift. You know, if there's not that by the
Speaker 7: dip mentality from retail institutions having to sell or reposition
Speaker 7: causes some of the large moves that we've seen and
Speaker 7: kind of have used to not seeing.
Speaker 2: And there's the key phrase, folks having to sell. Selz
Speaker 2: Simon's thank you so much equity where in quantit ubs
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
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Speaker 2: It is a perfect time to talk to the gentle
Speaker 2: lady from Texas Danielle di Martino Booth is definitive feeder
Speaker 2: Reserve Bank Texas, working for President Fisher years ago over
Speaker 2: their academics out of the different universities of Texas, She's
Speaker 2: always taken a different tact and I wanted to get
Speaker 2: her on for one simple reason. Danielle, how will Chairman
Speaker 2: worsh be greeted by the presidents not only Boston, Chicago,
Speaker 2: New York, but the fractious crew of Kansas City and Dallas.
Speaker 8: Well, first of all, thank you for having me on
Speaker 8: this morning, Tom, And that's a really good question. We
Speaker 8: have seen a much more hawkish tilt come out of
Speaker 8: the Central Bank district presidents. Lori Logan Bloomberg did a
Speaker 8: great feature on her recently. She's kind of got her
Speaker 8: own mark. It's deest that I started in Dallas. She
Speaker 8: keeps that up and running and she has some very
Speaker 8: definitive ideas about the balance sheet. I think she would
Speaker 8: be of the same mind as a future chairsh We
Speaker 8: need to shrink that balance r right. I think that
Speaker 8: most districts presidents would concur with that.
Speaker 4: The trick will be execution, Tom, you know.
Speaker 2: It's going to be execution. But folks, this is great
Speaker 2: because you know, Paul, we get people on from London.
Speaker 2: Bank of England comes out five to four vote and
Speaker 2: everybody's like, well, well, well, Daniel Di Martino Booth is
Speaker 2: not well, well well, Daniel, are we going to see
Speaker 2: five to four votes? Like the Supreme Court with Chairman.
Speaker 8: Warsh It's entirely feasible. And again it's going to depend
Speaker 8: on where he wants to go with the balance sheet.
Speaker 8: But you know, I'll be keen to listen to Christopher Waller,
Speaker 8: he's speaking on Monday. I think he should be doing
Speaker 8: a victory lab given some of the alternative labor market
Speaker 8: data that we've had over the last few days, and
Speaker 8: I think that there'll be initial concurrence that the Fed
Speaker 8: needs to play catch up and do an unusually large
Speaker 8: rate cut, maybe go fifty bases points in June.
Speaker 2: Oh, listen to you. Wait, wait, that's the first we've
Speaker 2: heard of this. Come on, we've got a chicken, wings
Speaker 2: of blue cheese here getting ready for the Super Bowl.
Speaker 2: Are you modeling, Danielle, a fifty beep.
Speaker 5: Cut in June?
Speaker 8: Oh, certainly, I am. And you saw yesterday when financial
Speaker 8: conditions and volatility became really acute that the work function
Speaker 8: on the terminal showed you that we'd gotten all the
Speaker 8: way up to twenty seven percent probability of a March
Speaker 8: rate cut. So a lot's going to depend on non
Speaker 8: farm payrolls Wednesday and CPI next Friday. A lot's going
Speaker 8: to depend on the upcoming data that we've got coming out.
Speaker 8: We've also got a second non farm payroll report before
Speaker 8: the Fed meets again March eighteenth.
Speaker 5: And add a little bit of extra.
Speaker 4: Spice to your chicken wings.
Speaker 8: How she still has a sixty nine percent probability that
Speaker 8: Powell's going to leave after his chair term ends in May,
Speaker 8: but that the flip side is that there's a thirty
Speaker 8: one percent chance that he'll stay. We don't know, and
Speaker 8: Powell does not have a scheduled speech until that March.
Speaker 6: Fmc danielle again, Today was supposed to be jobs Day,
Speaker 6: but it's not. But we yesterday we got Challenger job
Speaker 6: cuts largest since I think two thousand and nine, we
Speaker 6: got initial jobs claims came in higher than expected.
Speaker 5: Do you read anything to that data, because.
Speaker 6: That would suggest that maybe this labor market perhaps is
Speaker 6: even weaker than we think.
Speaker 8: I think that there are definite warning signs there was
Speaker 8: a lot of nay saying yesterday that it was concentrated
Speaker 8: in three companies, But even if you netit those three
Speaker 8: companies out of the Challenger data, we still had a
Speaker 8: higher number than we had last January, on top of
Speaker 8: the lowest January for hiring in data to two thousand
Speaker 8: and nine. And if you look at the not statistically
Speaker 8: adjusted initial claims that hopefully weed out a lot of
Speaker 8: the weather effect, they were also up appreciably on the week.
Speaker 8: So we'll see continuing pop up in the following week
Speaker 8: and let's see what the survey week.
Speaker 5: Holds to come.
Speaker 8: But companies are definitely more aggressive with the earnings calls.
Speaker 8: You know, if they feel like they're going to miss
Speaker 8: in any aspect of that earnings calls, boy they're going
Speaker 8: to have a layoff announcement that accompanies it.
Speaker 6: Interesting, does mister Walsh how does he think about the data?
Speaker 6: Do you think, I mean one of the concerns that
Speaker 6: you've voiced and many others in voice that that way
Speaker 6: this fed is, yes, it's data dependent, but the data
Speaker 6: that it's dependent upon is really old and backwards looking.
Speaker 6: Is mister Warsh does he have a different view about that?
Speaker 2: Well?
Speaker 8: We have to remember that when mister Walsh came on
Speaker 8: initially as a governor, he was the youngest governor in
Speaker 8: the history of the FED. So he remains something of
Speaker 8: a younger, certainly a young chair compared to what we've
Speaker 8: grown accustomed to.
Speaker 4: I say this because he's.
Speaker 8: Going to be more open to alternative data sets, and
Speaker 8: the same way that Christopher Waller has been more open
Speaker 8: to alternative data sets. He's going to pay attention to
Speaker 8: the private core in payrolls, which nets out education and healthcare,
Speaker 8: to see what the real underlying momentum is in the
Speaker 8: labor market when you net out those recession proof industries that,
Speaker 8: by the way, completely carried ADP yesterday. Had it not
Speaker 8: been for that, we'd have had a negative, a much
Speaker 8: deeper print. Sorry on Tuesday, Yeah.
Speaker 2: We'll have to see on that. We'll get to Wednesday.
Speaker 2: We'll see when you got a slot for you for
Speaker 2: the Jobs Day and Wednesday. Daniel Di Martino Booth writing
Speaker 2: up a storm. Thank you, Thank you so much for that.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Atto with the Bloomberg Business app, or
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Speaker 2: It's Jobs Day, but it's not. We decided to keep
Speaker 2: our stellar lineup of Jobs Day on a regular Friday.
Speaker 2: Oldrag Pria miserback here on Wednesday. I believe when we
Speaker 2: get the work. She's with JP Morgan, who we're thrilled
Speaker 2: she joined us this morning. Holistic question to Ferole's Weekly
Speaker 2: Prospects tonight at seven pm, is this a wash affected market?
Speaker 2: From where you sit in the turret at JP Morgan?
Speaker 9: Great question because we've only heard about the wash nomination
Speaker 9: just a week ago and the market's been extremely volatile.
Speaker 10: You know.
Speaker 9: I think there was some knee jerk reaction. I mean,
Speaker 9: he's highly qualified, but it is a committee he's going
Speaker 9: to he's been very critical about FED policy for the
Speaker 9: last fifteen years. He's going to have to build consensus.
Speaker 9: So did we change portfolio positioning because of Wash?
Speaker 11: No, we are going to the data rush affected market.
Speaker 2: I think that is it's a world turned upside down.
Speaker 11: For a lot of people, right.
Speaker 9: I think the market, at least on Friday looked at
Speaker 9: the front end and said, oh, Wash might be more
Speaker 9: open to cutting rates because he's in the supply side
Speaker 9: pickup in productivity. The long end got a little nervous,
Speaker 9: and that I would only pushed back against. I know
Speaker 9: he's been critical of the balance sheet expansion and QE
Speaker 9: by the Fed, but a lot of that QI is
Speaker 9: to provide reserves to the banking system and the FED
Speaker 9: understands it.
Speaker 11: I think when if Wash comes in, he's.
Speaker 9: Going to look at the analysis and actually not be
Speaker 9: able to cut the balance sheet. I don't think he
Speaker 9: has votes on the committee. So if the market got
Speaker 9: nervous about the unwind of the FED balance sheet, I
Speaker 9: think that we can fade. There are other issues this week.
Speaker 9: Is the AI capex too much, which last year everyone
Speaker 9: wanted AI capex and now they're saying this might be
Speaker 9: too much of a good thing. And then is their
Speaker 9: displacement in the software sector.
Speaker 11: So I think the fears have morphed. We've dealt with
Speaker 11: a lot this.
Speaker 6: Year, and just in the equity markets concerned about the capex.
Speaker 6: As you mentioned, we had Rob Schiffman in yesterday. He
Speaker 6: covers the TMT space off from a credit perspective. For
Speaker 6: Bloomberg Intelligence. He says, the bond market's fine with this capex,
Speaker 6: and the bond market's taken all the paper that's coming
Speaker 6: at that spreads remain tight on all these deals. So
Speaker 6: the bond markets saying we're okay with this capex, but
Speaker 6: the markets not so sure.
Speaker 9: Right, So I think a lot will depend if it's
Speaker 9: six hundred and fifty billion, how much is financed in
Speaker 9: the bond market.
Speaker 11: We saw this with Oracle.
Speaker 9: They actually came in with much lower than that fifty
Speaker 9: billion number, and the books were very well subscribed. But
Speaker 9: I'm glad you talk about with credit spreads are looking
Speaker 9: at fundamentals. The fundamentals of the companies that are doing
Speaker 9: the AI capex are very solid, all those software companies
Speaker 9: which were all the news this week. You look at
Speaker 9: the high level of subscriptions, high margins. But I think
Speaker 9: the question is how much of displacemental versus disruption is
Speaker 9: going to happen with AI. What are their earnings? But
Speaker 9: I think we look at fundamentals of earnings, of leverage ratio,
Speaker 9: and I think that's why these spreads are where they are.
Speaker 9: And I think yesterday showed you that fixed income does
Speaker 9: provide you that ballas to portfolios, and that's why you
Speaker 9: saw rates fall. And so actually, if I want to
Speaker 9: be somewhere which is safer, maybe the bonds of those
Speaker 9: companies might be the safe place.
Speaker 2: Oh, listeners selling bands, She's she's taking a kool aid
Speaker 2: from Bob Michael. There's no question about a priam miser.
Speaker 2: JP Morgan with us the great lineup this morning, and
Speaker 2: we welcome all you ninety nine to one FM snack
Speaker 2: bound Nathan Hager getting ready for the Super Bowl. Good morning,
Speaker 2: ninety to nine FM. If you can focus this morning
Speaker 2: in Bloomberg eleven three zero A, New York, across the nation,
Speaker 2: major major shout out, Serious XM Channel one twenty one
Speaker 2: across Canada and across all of America. We really appreciate
Speaker 2: your support this morning. Let's get back to full faith
Speaker 2: and credit. Priam isra right now. The first thing I
Speaker 2: did this morning, I walked in because you told me
Speaker 2: one day a stupid look at the five years compared
Speaker 2: to the thirty year bond. It's buttressed up against resistance.
Speaker 2: Translated in the question what happens if these spreads break
Speaker 2: out to new steepness? What is that signal?
Speaker 11: The spreads are the credit spreads or the curve the curve?
Speaker 11: Excuse me, So the curve does steep in down.
Speaker 2: You're just going to see minus.
Speaker 9: There a lot of spreads we spend all day looking at.
Speaker 9: If the yield curve steepens a lot, I think you
Speaker 9: should pay attention to that because that's telling you that
Speaker 9: the economy might be slower or weaker.
Speaker 11: We may be transitioning from a low.
Speaker 9: Fire low higher to a high fire low higher.
Speaker 11: And I think without payrolls it's really hard.
Speaker 9: But we did see some data this week that made
Speaker 9: the market a little nervous about the job market. I mean,
Speaker 9: we know there's low hiring. If the firing starts to
Speaker 9: pick up, then the FED is cutting a lot more
Speaker 9: than what is priced. And we're currently only pricing in
Speaker 9: two rate cuts this year, so that front end. If
Speaker 9: the curve steepens, because the front end rates fall, that's
Speaker 9: a sign that the job market is much weaker.
Speaker 11: The FED will.
Speaker 9: Absolutely respond, but I would get more nervous about the economy.
Speaker 2: Well, that's what we're doing. We're just sitting around waiting
Speaker 2: for the labor economy to decide what to do.
Speaker 6: Yeah, and I don't know I mean, there are some
Speaker 6: concerns out there, but boy, the headline numbers still look
Speaker 6: pretty decent.
Speaker 5: Here in the fix the comes space here, I see
Speaker 5: a lot.
Speaker 6: Of green on my screen here in year to performance here,
Speaker 6: following up a strong twenty twenty five.
Speaker 5: Where is value in the credits? How much credit risk
Speaker 5: are you.
Speaker 6: Taking versus just sitting on a two year ten year
Speaker 6: treasury bill.
Speaker 9: So we are taking credit risks because we think the
Speaker 9: economy to your earlier point, there's a lot of cross currents,
Speaker 9: there's always risks, but the economy looks to be in
Speaker 9: a strong position. You look at private sector balance sheets,
Speaker 9: whether it's the consumer side or the corporate side, the
Speaker 9: fundamentals are very strong, and so we like credit risks, diversified,
Speaker 9: high quality. We haven't really gone down to the triple
Speaker 9: C part of the market. Spreads are so tight that
Speaker 9: they're not giving you cushion for if things get worse.
Speaker 9: But I think you know, whether it's investment, great corporate,
Speaker 9: even high quality, high yield is very attractive in our mind,
Speaker 9: double be even some single bee staying away from loans
Speaker 9: given the software exposure. But you know, whether it's securitized credit,
Speaker 9: mortgage spreads. We love that a year ago they've tightened
Speaker 9: a lot. We're not going underweight, but we're not adding
Speaker 9: to mortgages here securitized credit.
Speaker 11: So I think you.
Speaker 9: Shouldn't some diversified, high quality credit. Just buy some treasuries
Speaker 9: as well as a hedge. If the economy is closed.
Speaker 2: Down, unfair, it's off your remit. But I'll go there
Speaker 2: because you're just so damn good at this. The basic
Speaker 2: idea of everyone is oracle did X billions dollars of paper?
Speaker 2: What do you presume after the first, the second, the
Speaker 2: third company puts out billions of dollars of paper? Is
Speaker 2: the market there to pick it up? Or does it
Speaker 2: sit on buy Michael's desk.
Speaker 9: So I think a lot depends on spreads. So if
Speaker 9: there's a lot of supply, we expect spreads to widen,
Speaker 9: and then it might be contractive, you know, given the
Speaker 9: demand and the books the demand in So I think
Speaker 9: we're talking ten to fifteen basis points. But I would
Speaker 9: watch for what are they spending the money on? Are
Speaker 9: they spending it on productive users? I mean, these are
Speaker 9: the big questions. We're going to grapple it with oliar
Speaker 9: and what is the use case you know, is it.
Speaker 9: Are we still waiting for that use case or are
Speaker 9: these companies putting money in and the rest of corporate
Speaker 9: America is using it. I think that's if that happens,
Speaker 9: I don't think you'll see much widening in spreads.
Speaker 11: But I'm hoping that all.
Speaker 9: These CEOs are listening to the discipline of the market,
Speaker 9: so you have to be careful about how you fund
Speaker 9: and where you invest this money. Patriots, I'm a Pats fan,
Speaker 9: but I would.
Speaker 2: Say that apologize here for that.
Speaker 9: They're both great teams. I'll be watching that along with
Speaker 9: the Japanese election, but.
Speaker 2: Hopefully, oh you are kind of halftime. You're not going
Speaker 2: to watch bad but now you're going to look at
Speaker 2: the Japanese election.
Speaker 11: I will be well. Fortunately it's a different time zone,
Speaker 11: so it will.
Speaker 9: Be a long day, but it should be fun and
Speaker 9: hopefully nothing else happens.
Speaker 2: Pre Miser, thank you, thank you so much on this job.
Speaker 2: Say pre miser with us with JP Morgan Asset Management.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the bloombergs Lens podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Atto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Boose favorites Alexis Christophers Here, we're very heavy on artificial intelligence. Today.
Speaker 2: We've covered blue cheese, We've covered chicken wings. Now best
Speaker 2: for wings high heat, the ninja FOOTI air fryer, Alexis
Speaker 2: Christopher says it. Let's to talk about.
Speaker 11: This hard to beat that?
Speaker 10: Now, how do you follow the air friar story?
Speaker 5: I think you do it with this.
Speaker 10: The Washington Post has a story today about the most
Speaker 10: dangerous sport at the Winter Olympics.
Speaker 2: I saw this thing, So what.
Speaker 10: Do you think it might be?
Speaker 2: I was wrong.
Speaker 10: Yeah, it's not what we think because you think it's
Speaker 10: the loge going down this ice track at ninety miles
Speaker 10: an hour on a skinny little you know, sled, or
Speaker 10: maybe it's the skeleton because you're doing that but just
Speaker 10: face down. No, it's not. The Number one most injury
Speaker 10: prone event is ski big air. So this debut the
Speaker 10: last Olympics. They hit a ramp and then perform high
Speaker 10: flying acrobatics. Nearly thirty percent of athletes who do it
Speaker 10: get hurt.
Speaker 6: YEP, I mean these guys are insane much how much
Speaker 6: air they get, It's crazy.
Speaker 5: The tricks they put up there are just incredible.
Speaker 10: Yeah, and Lindsay Vaughn, by the way, we know she
Speaker 10: has that torn acl she's still going to ski because
Speaker 10: she's a beast.
Speaker 6: I saw her workout video yesterday where she's lifting serious
Speaker 6: weight with her knees and stuff.
Speaker 5: So I mean, don't mess with Lindsay. No, she's tough.
Speaker 10: Also, by the way, Team USA can make history at
Speaker 10: these Italian Games. We won ten goals back in two
Speaker 10: thousand and two at the Salt Lay Games. We are
Speaker 10: we are favorite to what take home twelve golds maybe sixteen,
Speaker 10: which would be the all time record.
Speaker 2: Wow.
Speaker 5: All right, I'm excited for these games.
Speaker 10: Opening ceremonies to.
Speaker 2: The opening ceremonies are like one like Sweeney gets off
Speaker 2: the show with Scarlette to watch.
Speaker 5: Sure absolutely, you know you, Paul?
Speaker 2: All right.
Speaker 10: There's an exclusive in the Financial Times this morning, the
Speaker 10: prediction market calshi. We knew it was coming, seeking approval
Speaker 10: to offer margin trades, so you know, I don't know.
Speaker 10: I mean it started out you could bet on the oscars, yep,
Speaker 10: you know, you could bet on other little things.
Speaker 6: Like what's going to sports now that's a big issue, big.
Speaker 10: Issue, and now financial markets. So they're looking to attract
Speaker 10: institutional investors with this. Apparently they met with the Commodity
Speaker 10: Futures Trading Commission. Don't know if they're going to win approval.
Speaker 2: Probably, Well, we got a weekly thing going with Brian
Speaker 2: Eggers Bloomberg Intelligence. Yeah, seriously, for Eggers is encyclopedic on this.
Speaker 2: You know, if we can figure it out with his.
Speaker 6: People, yau got it's impacting the sports even talk to me,
Speaker 6: he's so big.
Speaker 5: Yeah, exactly.
Speaker 10: And now you can you can just bet on the teeniest,
Speaker 10: tiniest thing within.
Speaker 6: A game now that they're starting to regulate that, like
Speaker 6: well he missed this free.
Speaker 2: Throw really in the Super Bowl.
Speaker 6: So now they're not they're getting into that because people
Speaker 6: were actually gaming that situation, like a player would say, oh,
Speaker 6: I see there's a bet for me to miss his
Speaker 6: free throw.
Speaker 5: I'll make the free throw exactly.
Speaker 6: And so they're trying to get away from those in
Speaker 6: game type things.
Speaker 2: So like the betting last night Duke BC, it was
Speaker 2: like his BC to come back and it was in med. Yeah.
Speaker 10: Now it's a tangled web. And so these prediction markets. Now,
Speaker 10: of course, a new way to gamble on the Super Bowl.
Speaker 10: I read this on the terminal Traders on Calshi and Polymarket,
Speaker 10: which is its biggest rival, have swapped more than eight
Speaker 10: hundred million dollars worth of contracts tied to the Super
Speaker 10: Bowl so far. All right, let's see, let's go to
Speaker 10: Hollywood Reporter. They've got this one, and I hope it
Speaker 10: comes true. Can New York stop ticket scalpers from gouging
Speaker 10: concert goers?
Speaker 2: Oh?
Speaker 10: Please make this happen.
Speaker 5: It's so hard to do.
Speaker 10: A New York State centeror today is going to introduce
Speaker 10: legislation that, if passed, would place a cap preventing scalpers
Speaker 10: from reselling tickets for more than their face value.
Speaker 5: How about that?
Speaker 10: So California did a similar thing yesterday. Believe it or not,
Speaker 10: Maine is the only state in the US that has
Speaker 10: managed to implement price caps.
Speaker 5: Okay on ticket resales.
Speaker 6: Yeah, I mean Live Nation owns Ticketmaster, so they they
Speaker 6: betray Muster somehow. Yeah, I was right involved in that deal.
Speaker 6: But it's a surprisingly tofficult to do. With all the
Speaker 6: electronic gadgetry out there, it's tough to really control who
Speaker 6: gets the tickets now they've been trying.
Speaker 10: It's crazy, and critics have said that these resale caps
Speaker 10: stand in the way of a free market, but a
Speaker 10: lot of other people say, listen, this is not property,
Speaker 10: this is our access into a venue, and you know
Speaker 10: we should be able to pay mere value.
Speaker 2: Very good. We love to see Alexis Christopher say you
Speaker 2: so much as the newspapers.
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