WEBVTT - Jay Powell, Markets, and CVS (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple podcast or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.959 at Bloomberg dot com slash podcast. Anyways, let's talk about 0:00:22.000 --> 0:00:23.720 this market here, because we do have a little bit 0:00:23.720 --> 0:00:26.200 of red on the screen. How much of this is 0:00:26.239 --> 0:00:28.280 really the market's kind of bracing for all the FED 0:00:28.360 --> 0:00:30.040 speak that we're going to get today. I think it's 0:00:30.080 --> 0:00:33.319 like just a slew of FED speakers. I don't even 0:00:33.320 --> 0:00:35.720 remember what the count is, but it's like William's Boston Cook, 0:00:35.840 --> 0:00:38.600 Neil Cash Carrion's all today. I think it's too much. 0:00:39.080 --> 0:00:40.560 It's a lot. Well, I would agree with you. I 0:00:40.600 --> 0:00:43.880 think that I think transparency is actually a bad idea. 0:00:44.400 --> 0:00:48.159 Bring back Alan Greenspan. I think I think that they 0:00:48.200 --> 0:00:52.320 tried so hard to eliminate the idea of any risk 0:00:53.240 --> 0:00:56.639 and risk analytics and your decision making when you when 0:00:56.640 --> 0:00:58.640 you make an investment or trade. I think it's a 0:00:58.720 --> 0:01:01.360 very bad thing. I think it acts He's functionally. We 0:01:01.400 --> 0:01:05.199 have so shortened the time frame on analysis it's actually 0:01:05.280 --> 0:01:07.840 quite unhealthy in many ways. So the markets are hunting 0:01:07.880 --> 0:01:12.640 for this devishnus. The signals out there is anybody pushing 0:01:13.000 --> 0:01:16.840 poun didn't sound like he's pushing back. Well. Yesterday at Boston, 0:01:16.959 --> 0:01:19.600 Raphael I think, came out and said, you know, look, 0:01:19.640 --> 0:01:21.679 I think I'm pushing up where I may need to 0:01:21.720 --> 0:01:24.959 push up, where I think my peak rate is. Mr 0:01:25.040 --> 0:01:29.959 Kashkari was pretty clear yesterday that he said is where 0:01:29.959 --> 0:01:33.880 he thinks we're going. Um. You know, I suspect it's 0:01:33.880 --> 0:01:36.600 going to be very hard from the litany of other 0:01:36.640 --> 0:01:38.640 members of the FMC to have much more of an 0:01:38.680 --> 0:01:44.440 impact UM right now, given um what Powell said yesterday, 0:01:44.480 --> 0:01:46.959 I would have, you know, and last week I was 0:01:46.959 --> 0:01:50.520 a little shocked last week. Look, as a general matter, 0:01:51.640 --> 0:01:55.000 I think the biggest problem they have is liquid is 0:01:55.040 --> 0:01:59.320 too much liquidity. And every time they allow the stock market, 0:01:59.360 --> 0:02:02.400 which they seem to ignore and the definition of liquidity, 0:02:02.440 --> 0:02:06.000 to go rallying a lot, they're throwing more liquidity into 0:02:06.040 --> 0:02:08.280 a market. It's putting a little bit of you know, 0:02:08.400 --> 0:02:11.560 of of oil into a fire, and it raises the 0:02:11.639 --> 0:02:14.880 risk that they have to do more, and it it 0:02:14.960 --> 0:02:18.240 impedes with their impedes their efforts to try and achieve 0:02:18.280 --> 0:02:21.160 a lower rate of inflation in a short period of time. 0:02:21.520 --> 0:02:23.839 And when I think people also, just as a gentle matter, 0:02:23.919 --> 0:02:27.480 missed to my my perspective, it's not just getting to 0:02:27.600 --> 0:02:31.160 two percent, it's getting to a stable, ambient two percent level. 0:02:31.720 --> 0:02:35.840 So you know, that's to me the bigger problem. I 0:02:35.880 --> 0:02:38.000 don't know how fast they'll get to two percent. I mean, 0:02:38.040 --> 0:02:40.560 I think Powell said it yesterday that they're hoping it 0:02:40.560 --> 0:02:43.560 will be some time next year. But you know, you 0:02:43.560 --> 0:02:45.400 could hit two percent in a day and then find 0:02:45.400 --> 0:02:47.799 out six weeks later you're at six percent. That's not 0:02:47.840 --> 0:02:51.320 what he wants. And so I think the liquidity issues 0:02:51.360 --> 0:02:54.280 and constraints that the that the equity market seems to 0:02:55.680 --> 0:02:59.919 apply or a problem for them. Well, I'm still wondering, though, 0:03:00.240 --> 0:03:02.000 how much more we really even need to hear from 0:03:02.000 --> 0:03:04.960 the Fed. Look, I asked Alan Blinder, the former vice 0:03:05.040 --> 0:03:08.120 chair under Alan Greensman about this yesterday. He is the 0:03:08.160 --> 0:03:10.959 Fed over communicating? He said, Look, they're not over communicating 0:03:11.000 --> 0:03:14.080 at all, But how much of this do we do 0:03:14.120 --> 0:03:16.000 the markets really need to hear? When the message is 0:03:16.040 --> 0:03:18.280 repeatedly the same. We don't know what the end terminal 0:03:18.360 --> 0:03:19.840 rate is, we don't know how much we need to 0:03:19.919 --> 0:03:23.720 hike or data dependent. How much value are you really 0:03:23.760 --> 0:03:26.359 getting from from that? Me? I think very little. I 0:03:26.400 --> 0:03:28.600 think the biggest question, again, let's take a different issue, 0:03:28.720 --> 0:03:32.480 is not just what the terminal rate is um. I 0:03:32.520 --> 0:03:35.080 think the market and if you look at the forward 0:03:35.120 --> 0:03:37.360 curve and the your dollar futures, it's been clear for 0:03:37.400 --> 0:03:38.960 a while. The market just thinks we're going to hit 0:03:38.960 --> 0:03:41.400 a peak and then go right back down right. I 0:03:41.440 --> 0:03:44.200 think the fault. You know, the forward live or rates 0:03:44.200 --> 0:03:46.400 are three and a half or so, not very far out, 0:03:47.080 --> 0:03:50.400 and I think that seems to be a big mistake. 0:03:51.200 --> 0:03:53.240 The only thing to first of all, look how well 0:03:53.280 --> 0:03:56.880 the economy is still performing functionally. Certainly when you look 0:03:56.920 --> 0:04:00.480 at employment, even with the FED having raised rates four 0:04:00.520 --> 0:04:04.400 percentage points, give it take half percentage points in seven months, 0:04:05.120 --> 0:04:08.520 why does anyone think that if we're going to slowly 0:04:08.600 --> 0:04:12.680 glide into a trajectory towards lower inflation, but we're still 0:04:12.680 --> 0:04:15.000 at functionally near full employment, that the FETE has to 0:04:15.040 --> 0:04:18.080 do anything but just stay where they are for a 0:04:18.240 --> 0:04:21.520 very very long time. All right, What's what's the lag? Then? 0:04:21.600 --> 0:04:23.760 I mean, hell, you know what, what are you going 0:04:23.800 --> 0:04:26.359 to tell Jerome Powell? Well, first off, why do you 0:04:26.360 --> 0:04:30.000 assume there's a lagnus? I mean, look, I've been I've 0:04:30.040 --> 0:04:32.159 been on the show with or on Bloomberg now almost 0:04:32.160 --> 0:04:37.200 twenty years, and I've been suggesting for actually this goes 0:04:37.240 --> 0:04:41.000 back to the late nineties, that zero interest rates are 0:04:41.040 --> 0:04:45.520 actually antithetical to growth and two very too good economic 0:04:45.520 --> 0:04:48.479 and financial decision making, and that at an ambient level 0:04:48.480 --> 0:04:50.600 of interest rates, say between two and a half and 0:04:50.680 --> 0:04:55.480 five percent, is actually a very healthy environment and this 0:04:55.560 --> 0:04:58.520 economy will perform just fine at that level once you've 0:04:58.560 --> 0:05:02.960 gone through the transition of leaving ultra low behind you. 0:05:03.040 --> 0:05:05.279 And I think what you're seeing in many ways is 0:05:05.320 --> 0:05:08.440 exactly that there are parts of the economy that are 0:05:08.480 --> 0:05:12.039 responding to the to the upward movement in rates. But 0:05:12.120 --> 0:05:14.600 even now you're already seeing where two percentage points lower 0:05:14.640 --> 0:05:18.240 in mortgages and the mortgage markets coming back to life. Yeah, 0:05:18.440 --> 0:05:20.680 is it? So? Is is it working here? I mean, 0:05:20.720 --> 0:05:22.960 in the last about thirty seconds that we have is 0:05:23.560 --> 0:05:27.240 the FEDS tightening policy? Are we seeing effects of it already? 0:05:27.320 --> 0:05:29.440 Or are we so to wait. But you've seen you've 0:05:29.440 --> 0:05:32.640 seen some effects on certain areas of economy, and you've 0:05:32.680 --> 0:05:36.919 certainly seen some effect on prices, although again some of 0:05:36.960 --> 0:05:39.160 that is as much due to the year on your 0:05:39.200 --> 0:05:42.400 comparisons to very very high rate levels. But what the 0:05:42.480 --> 0:05:44.680 longer term effects are we don't know yet. But I 0:05:44.680 --> 0:05:48.680 wouldn't rush to judgment that that a three and a 0:05:48.720 --> 0:05:51.960 half to four percent or four and a half interest 0:05:52.000 --> 0:05:54.360 rate level is going to be catastrophic, which everyone seems 0:05:54.360 --> 0:05:56.840 to be working on. I'm just now reading his bio 0:05:57.000 --> 0:06:01.200 the University of Cambridge Department of Applied Mathematics and Theoretical 0:06:01.279 --> 0:06:06.800 Physics fusion. How far off fusions exists already in terms 0:06:06.839 --> 0:06:10.200 of well, you're talking about energy, what you're talking about 0:06:10.600 --> 0:06:13.520 on the planet of it, I would bet it's forty 0:06:13.600 --> 0:06:17.960 years off. That the mechanisms for containing the plasma are 0:06:18.000 --> 0:06:20.599 a problem, but it's the first time they've actually gotten 0:06:20.640 --> 0:06:22.440 more energy out and man, and as soon as they 0:06:22.480 --> 0:06:26.400 get it working, of course, that's a tremendous step for humanity. 0:06:26.400 --> 0:06:28.600 Although I don't think I don't think the President is 0:06:28.600 --> 0:06:31.880 gonna be able to complain about too much profitability for oil, 0:06:32.120 --> 0:06:36.840 the amount the amount of previous nuclear fusion vision whatever 0:06:36.960 --> 0:06:41.040 people that are now in the financial sector is hilarious. Anyways, 0:06:41.080 --> 0:06:49.080 Neil Grossman, former CIO with t k NG capitals down 0:06:49.160 --> 0:06:52.840 four tents of one percent, down down one NASTAC only 0:06:52.880 --> 0:06:56.600 down half a percent, which that's like not the volatility 0:06:56.640 --> 0:06:59.359 that we're used to in last year. What do you think, um, 0:06:59.520 --> 0:07:01.960 do you are you attention to VIX? I know you're 0:07:01.960 --> 0:07:04.400 going to make it, Tom Cain, that's my point. Mentioned 0:07:05.120 --> 0:07:08.880 eighteen sixty seven right now, Now we remember back when 0:07:08.920 --> 0:07:11.960 it was seventies eighties. Yeah, it was I think in 0:07:12.280 --> 0:07:16.080 Pete COVID it hit eighty three. That was the highest volatility. 0:07:16.080 --> 0:07:18.760 But look you were getting eight, like seven eight swings 0:07:18.760 --> 0:07:20.800 in either direction. Um, but you know, that's a really 0:07:20.800 --> 0:07:24.559 good question to ask. Our next guest, Michael Cogito joins 0:07:24.600 --> 0:07:27.960 US president and portfolio manager of the Permanent Portfolio family 0:07:28.000 --> 0:07:30.680 of funds, and he joins, of course, the program to 0:07:30.720 --> 0:07:33.600 talk about this market. Michael, thank he was always for joining. 0:07:34.080 --> 0:07:36.760 What do you do with the VIX right now? Sure? 0:07:36.800 --> 0:07:40.480 Good morning. Um, Well, it's an indicator of volatility and 0:07:40.640 --> 0:07:44.400 concern or fear, but it isn't an indicator of alatility. 0:07:44.560 --> 0:07:51.440 Really I think, well, I mean right now, the numbers 0:07:51.520 --> 0:07:54.240 loaves and there's a lack of volatility, So yes, it 0:07:54.560 --> 0:07:57.440 isn't it's an indicator at the moment or a byproduct 0:07:57.520 --> 0:08:01.200 of a lack of vulatility. As as you guys mentioned, Um, 0:08:01.240 --> 0:08:03.760 you know, you're not seeing white swings like you saw 0:08:03.840 --> 0:08:07.480 last year, at least right now, and the market appears 0:08:07.520 --> 0:08:11.320 to be a little bit more calmer um and UM, 0:08:11.360 --> 0:08:13.200 you know, we'll see what happens. It's a long year, 0:08:13.280 --> 0:08:15.720 but but that's what you see right now. Okay, So 0:08:15.760 --> 0:08:18.640 a stupid question for what is in the driver's seat 0:08:18.880 --> 0:08:24.160 fed uh FED speak earnings? What I would say the 0:08:24.200 --> 0:08:26.800 primary driver is the FED, and probably a second concern 0:08:26.880 --> 0:08:30.040 with the earnings. Um. You know, I think that the 0:08:30.080 --> 0:08:33.120 FED is story one and has been and will continue 0:08:33.120 --> 0:08:35.680 to be, and you know it was earlier this week 0:08:35.720 --> 0:08:38.560 as well. I think what you've had with the FED 0:08:39.000 --> 0:08:43.240 is the what you're hearing out of the FED is 0:08:43.280 --> 0:08:48.040 consistent with the markets expectations, and as a result, the 0:08:48.080 --> 0:08:52.920 market is okay generally speaking with UM FED speak and 0:08:52.960 --> 0:08:55.439 where we're at and where we might be going, and 0:08:55.520 --> 0:08:58.160 so you know you've got kind of a quieter trade 0:08:58.200 --> 0:09:00.520 going on now. That could all be up ended, you know, 0:09:00.559 --> 0:09:03.720 an hour from now with some new information, But for 0:09:03.800 --> 0:09:06.160 the moment of the last few days, that's what you've had. 0:09:06.320 --> 0:09:10.280 And even this week with Powell's UH uh d C, 0:09:10.760 --> 0:09:13.040 you know, one on one Q and A yesterday, I mean, 0:09:13.320 --> 0:09:16.760 there were no surprises there. UM. Earlier in the week 0:09:16.760 --> 0:09:20.080 there were no surprises. Or last week's meeting, there were 0:09:20.080 --> 0:09:22.640 no surprises. And so as a result, the market is 0:09:23.160 --> 0:09:27.600 settling down to more on fundamentals and UM and maybe 0:09:28.000 --> 0:09:30.440 UH selling off a little bit after the big run 0:09:30.640 --> 0:09:33.160 based on earnings, based on maybe a little too far, 0:09:33.200 --> 0:09:36.839 too fast. But but you know, stocks were very oversold 0:09:36.880 --> 0:09:39.199 coming out of December, so that's why you haven't seen 0:09:39.240 --> 0:09:41.360 a big sell off either. I mean, it's settled into 0:09:41.400 --> 0:09:43.760 some sort of valuation that makes sense given the Fed 0:09:43.800 --> 0:09:46.959 and everything else right now. We were always told don't 0:09:47.000 --> 0:09:49.679 fight the Fed, but we're fighting the Fed. Why is 0:09:49.720 --> 0:09:53.120 there such a disconnect between the market pricing and uh 0:09:53.640 --> 0:09:59.000 the Fed speak. I'm not so sure we're fighting the Fed. 0:09:59.200 --> 0:10:03.640 I mean, value relations have adjusted from December that some 0:10:03.679 --> 0:10:06.360 would argue they're a little even I might argue they're 0:10:06.360 --> 0:10:08.760 a little higher than maybe they should be given the 0:10:09.559 --> 0:10:14.760 macro with potentially a slowing economy. Um. In terms of 0:10:14.800 --> 0:10:17.920 how far they came in January, although you had such 0:10:17.920 --> 0:10:21.640 a strong jobs number last week that really I think 0:10:21.760 --> 0:10:25.080 was so strong it was a surprise. Um. And it 0:10:25.080 --> 0:10:27.559 remains to be seen whether there's some novelies and that 0:10:27.640 --> 0:10:30.840 it will kick out and in further months. But you know, 0:10:30.920 --> 0:10:35.520 honestly speaking, it's very difficult to have a recession with 0:10:35.640 --> 0:10:39.040 the job market so strong, and so what that's done, 0:10:39.160 --> 0:10:42.680 what that's done is that's kept the soft landing scenario 0:10:43.360 --> 0:10:46.520 very much alive and the market is comfortable with that. 0:10:46.600 --> 0:10:49.760 So again getting back to the first question, Um, you know, 0:10:50.000 --> 0:10:54.200 think think the market perceives things to be okay. Um. 0:10:54.679 --> 0:10:58.120 And and as a result of voltio is little muted. Well, 0:10:58.120 --> 0:11:00.480 does that mean that when it comes to the catalyst 0:11:00.520 --> 0:11:03.040 that then move the stock market on an inter day basis, 0:11:03.080 --> 0:11:07.280 You were then seeing more emphasis put on initial jobless 0:11:07.280 --> 0:11:14.320 claims the payrolls report as opposed to say the earnings picture. Um. Well, 0:11:14.360 --> 0:11:18.040 I mean everybody has expected the earnings estimates to come 0:11:18.080 --> 0:11:21.679 down and and so far the earnings we're still you know, 0:11:21.920 --> 0:11:23.600 in the middle of ear each season so we don't 0:11:23.600 --> 0:11:25.480 really have the data on where they ended up, but 0:11:25.880 --> 0:11:28.880 that wouldn't be a surprise now given the run and 0:11:28.960 --> 0:11:31.480 stocks multiples have expanded during that time a little bit, 0:11:31.520 --> 0:11:34.520 which is a little bit interesting given the macro story 0:11:34.520 --> 0:11:38.800 of a possible slowdown. Um, but while we may have 0:11:38.840 --> 0:11:41.280 a slowdown, you're not seeing it in the labor and 0:11:41.280 --> 0:11:43.920 and so you know, if people are working and spending, 0:11:44.600 --> 0:11:47.560 then it's very hard to have a deep recession. And 0:11:47.679 --> 0:11:50.640 as long as that's true, now, labors lagging indicators, so 0:11:50.880 --> 0:11:53.840 you know that could change, and and then you know, 0:11:53.880 --> 0:11:56.320 the labor just gets added to the other macro negatives. 0:11:56.320 --> 0:11:58.960 But at the moment that hasn't happened. And and as 0:11:58.960 --> 0:12:03.680 a result, people like the economy, um, you know, soft landing, 0:12:03.760 --> 0:12:08.679 maybe shallow recession, etcetera, etcetera, And and equities are okay 0:12:08.679 --> 0:12:11.080 with that for the moment um. I think the one 0:12:11.200 --> 0:12:14.080 risk factor there in that story though, is that there 0:12:14.160 --> 0:12:16.640 was such a move and interest late last year and 0:12:16.640 --> 0:12:20.959 the feat is tapering, but still um, that move hasn't 0:12:21.000 --> 0:12:23.520 been fully factored in. It hasn't worked its way through 0:12:23.520 --> 0:12:28.400 the economy yet, and so it's possible that there's more 0:12:28.520 --> 0:12:30.960 negative and increasingly negative news to come out in the 0:12:31.000 --> 0:12:33.959 future as those interest rates work their way through and 0:12:34.000 --> 0:12:36.160 actually slow things down. We haven't seen that yet, but 0:12:36.200 --> 0:12:39.400 that's still a distinct possibility. Just back to earnings for 0:12:39.400 --> 0:12:42.520 a second. That is margin pressure going to go away 0:12:42.520 --> 0:12:50.160 anytime soon? Um? Well, in theory, if inflation alleviates, that 0:12:50.200 --> 0:12:54.920 would decrease the pressure on margins um and you know 0:12:55.000 --> 0:13:00.200 other cost factors. So yeah, the answer is yes, maybe, um, 0:13:00.200 --> 0:13:03.400 but we don't know that either. And the inflation has 0:13:03.440 --> 0:13:06.559 been coming down. I personally don't think it's going to 0:13:06.640 --> 0:13:09.120 come down to the fetes two percent. I think it's 0:13:09.120 --> 0:13:12.120 gonna settle somewhere at three, four or five percent when 0:13:12.160 --> 0:13:15.400 all of a a sudden done, And then the question becomes, well, 0:13:15.480 --> 0:13:19.200 you know, can the U. S. Economy uh grow really 0:13:19.280 --> 0:13:22.040 you know readjusting to inflation rate at that level at 0:13:22.120 --> 0:13:25.920 least where we are you know right now. So you 0:13:25.960 --> 0:13:29.120 know that's not the The U. S. Economy has grown 0:13:29.200 --> 0:13:31.120 with inflation at those levels. I mean you can look 0:13:31.160 --> 0:13:33.640 to the nineteen eighties for that, and you know the 0:13:33.640 --> 0:13:36.440 inflation rate took ten plus years to come down from 0:13:36.440 --> 0:13:38.120 where it was in the early eighties, Yet you had 0:13:38.320 --> 0:13:40.760 a good economic growth decade in the eighties for the 0:13:40.760 --> 0:13:44.400 most parts. So so it can do that, and you 0:13:44.400 --> 0:13:47.000 know that maybe where we're at the other factor, I 0:13:47.040 --> 0:13:49.960 think you have to consider with inflation that again we 0:13:50.000 --> 0:13:52.600 don't know the effects yet. But you know, we passed 0:13:52.640 --> 0:13:57.200 three something trillion dollars in in fiscal policy with the 0:13:57.240 --> 0:14:02.080 Inflation Reduction Act and the Budget Deal late December. That 0:14:02.120 --> 0:14:04.679 money hasn't been spent, It hasn't cycled its way through 0:14:04.679 --> 0:14:09.120 the economy yet, um And so will that reduce the 0:14:09.200 --> 0:14:13.000 decline and inflation once that money starts to work its 0:14:13.000 --> 0:14:15.439 way through the economy and and so that would be 0:14:15.520 --> 0:14:18.800 a factor that would maybe mitigate the decline and inflation 0:14:18.920 --> 0:14:20.760 that we haven't seen. So you've got a lot of 0:14:20.760 --> 0:14:24.440 cross currents right now going in both directions, and it 0:14:24.520 --> 0:14:27.480 remains to be seen where we settle. But but I 0:14:27.560 --> 0:14:30.280 think you know we're settling somewhere near at least in 0:14:30.320 --> 0:14:34.000 the short term where the FED maybe tapering and waiting, 0:14:34.000 --> 0:14:36.040 and that would be around that five percent number. Okay, 0:14:36.080 --> 0:14:40.560 So what's your investment thesis given all that, Well, we 0:14:40.600 --> 0:14:44.360 would be pretty diversified right now under the theory. There's 0:14:44.360 --> 0:14:47.760 a lot of question marks and um, A lot of 0:14:47.840 --> 0:14:50.200 unknowns and there really is there's a lot of things 0:14:50.280 --> 0:14:53.080 we just can't answer at the moment. So we're uh, 0:14:53.680 --> 0:14:57.000 we we run a strategy that that you know, invest 0:14:57.080 --> 0:15:00.040 in a variety of different non correlated asset class to 0:15:00.200 --> 0:15:03.720 so precious metals, real estate, US and non US equities, 0:15:03.760 --> 0:15:06.440 and US and non US fixed income. And and we 0:15:06.480 --> 0:15:10.280 would add to advocate a strategy that does that. UM. 0:15:10.440 --> 0:15:14.160 We think with inflation risk, with the uncertainty factor UM, 0:15:14.200 --> 0:15:16.280 and the amount of equity has been created over the 0:15:16.360 --> 0:15:21.040 last you know, several years, healthy investment in gold would 0:15:21.040 --> 0:15:23.440 make sense, especially if the fet IS is slowing down 0:15:23.440 --> 0:15:25.880 and stopping or maybe cutting at some point in the future. 0:15:26.480 --> 0:15:29.640 Over as well, UM equities were not negative on them, 0:15:29.640 --> 0:15:33.680 but we're sensitive to valuation. We would recommend a variety 0:15:33.760 --> 0:15:36.360 of stocks and different asset classes so that you're not 0:15:36.480 --> 0:15:40.520 wedded to any one sector UM. And then on the 0:15:40.560 --> 0:15:44.680 fixed income side, well, lengthening duration probably makes sense at 0:15:44.720 --> 0:15:47.760 some point. We're not quite there yet, so we would 0:15:47.760 --> 0:15:51.080 advocate high quality and short duration fixed income, especially on 0:15:51.120 --> 0:15:54.239 the on the corporate side. And we've found some opportunities 0:15:54.280 --> 0:15:58.720 in you know, pretty short term investment grade paper UM 0:15:58.840 --> 0:16:01.240 and then a health the doe so hard assets like 0:16:01.280 --> 0:16:04.000 real estate, commodities, so the equities of those businesses which 0:16:04.480 --> 0:16:06.440 you think on the commodity side, there's a there's a 0:16:06.480 --> 0:16:10.160 longer cycle at play in that space energy, you know, 0:16:10.640 --> 0:16:14.240 commodity metals, those sorts of things UM, and real estate 0:16:14.280 --> 0:16:17.960 as a hedge and and also potentially uh, you know, 0:16:18.160 --> 0:16:21.320 rising rentals and all that stuff. Certainly something we're gonna 0:16:21.360 --> 0:16:22.880 keep our eye on. Brent Crude. Of course at eighty 0:16:22.960 --> 0:16:27.640 three as we speak, Michael Codino over at President portfolio 0:16:27.680 --> 0:16:29.840 manager sees me of the permanent portfolio family of funds, 0:16:29.840 --> 0:16:36.400 we thank you. As always, a lot of uncertainty around 0:16:36.400 --> 0:16:39.960 the inflation. Look, he says, Uh, if this situation changes, 0:16:40.200 --> 0:16:44.160 big surprise, the centerment could move faster than uh basis 0:16:44.240 --> 0:16:47.840 point pace. Uh. He also said that it's a reasonable 0:16:47.920 --> 0:16:51.320 view most officials for a cast rates UH in the 0:16:51.400 --> 0:16:54.240 range of five and five and a quarter percent. That's 0:16:54.240 --> 0:16:57.600 what he's calling a reasonable view at this point. Thank 0:16:57.640 --> 0:17:00.600 you for rescuing me. I appreciate that. Well, well, let's 0:17:00.600 --> 0:17:02.680 ask if it is a reasonable view to someone who 0:17:02.680 --> 0:17:04.640 has a lot more experience than either one of us 0:17:04.720 --> 0:17:07.280 on on this front, and Yale. DiMartino Booth joins us. 0:17:07.440 --> 0:17:10.280 She's a CEO, Chief strategist of Quill Intelligence. I believe 0:17:10.400 --> 0:17:13.800 worked for the former Dallas FED as well, so she 0:17:13.880 --> 0:17:18.119 has the capacity Daniel inside knowledge. Um. I was. I 0:17:18.200 --> 0:17:22.320 was kind of uh Richard Fisher's senior adviser on all 0:17:22.400 --> 0:17:26.159 things markets at the intersection of macroeconomic data. So I 0:17:26.240 --> 0:17:28.520 was I was a role that no longer exists at 0:17:28.520 --> 0:17:34.119 the Dallas head It's they eliminated the position Anthony left. Yeah, clearly. Yeah, 0:17:34.560 --> 0:17:37.240 they're like, we can't replace it. End of story, Like 0:17:37.359 --> 0:17:40.120 we're just giving up. Um. But it was pretty fascinating 0:17:40.160 --> 0:17:43.639 throughout the crisis, especially drawing parallels between now and then 0:17:44.320 --> 0:17:49.679 when Bernanke wanted to foment certainty and Powell and his 0:17:49.800 --> 0:17:56.040 closest confidence Waller Williams, they want to foment uncertainty. So 0:17:56.119 --> 0:17:57.919 they don't want to they don't want from markets to 0:17:58.040 --> 0:18:00.720 lock anything in. And I think that that's why they're 0:18:00.760 --> 0:18:04.160 having such a difficult time communicating because that's not how 0:18:04.200 --> 0:18:06.880 we view the FED. It's not how we've been trained 0:18:06.960 --> 0:18:11.880 for forty years to view communications from the FED. Well, 0:18:11.920 --> 0:18:13.880 I mean, we didn't get much communication a law when 0:18:13.920 --> 0:18:17.760 we had individual's law worth, we couldn't understand it when 0:18:17.760 --> 0:18:21.600 we had green Span. I mean, what, why is there 0:18:21.640 --> 0:18:25.399 the drive towards uncertainty at this point? I think they 0:18:25.480 --> 0:18:30.119 really do want to keep the window open to be 0:18:30.400 --> 0:18:33.960 higher for longer. And again, the only thing we've ever 0:18:33.960 --> 0:18:36.600 known is lower for longer. But I think they're they're 0:18:36.640 --> 0:18:41.320 they're desperately trying to say we want to maintain rates 0:18:41.359 --> 0:18:44.760 at a high level that gives them license to continue 0:18:45.240 --> 0:18:49.399 conducting quantitative tightening quote unquote in the background, what nobody 0:18:49.440 --> 0:18:51.600 in the media ever asks him about, and what he 0:18:51.640 --> 0:18:54.480 doesn't really talk about very much. Uh, you know, he 0:18:54.520 --> 0:18:56.879 was asked about mortgage backed securities, would you ever consider 0:18:56.920 --> 0:18:59.840 selling them, obviously for a big loss in this kind 0:18:59.840 --> 0:19:02.240 of high interest rate environment, to purchase him at two 0:19:02.240 --> 0:19:04.920 to and alf percent cuban Now mortgage rights are north 0:19:04.920 --> 0:19:07.800 of six um. You know, when when he was asked directly, 0:19:07.840 --> 0:19:09.680 he said, you know, it's not really something that we're 0:19:09.680 --> 0:19:13.480 talking about right now. Next more uncertainty, And I think 0:19:13.480 --> 0:19:17.080 that I think that that's his goal, uncertainty. Yeah, it's 0:19:17.080 --> 0:19:19.240 interesting you bring that up with it the titening, because 0:19:19.480 --> 0:19:22.080 I just says an aside Europe. I mean, that's the 0:19:22.200 --> 0:19:26.240 big story I think for or potentially could be with 0:19:26.359 --> 0:19:29.000 the with a sovereign bond market. Why is it not 0:19:30.119 --> 0:19:32.880 as we do the unwind here? Why is that not 0:19:33.119 --> 0:19:38.160 a focus? You know? I think he has tried so hard, 0:19:38.240 --> 0:19:40.800 And I say he because I really do feel like 0:19:41.440 --> 0:19:46.320 the Federal Reserve is a community of speakers leaders. But 0:19:46.440 --> 0:19:48.480 at the end of the day, we really are. I mean, 0:19:48.840 --> 0:19:50.920 yesterday was like, oh my gosh, the Super Bowl starting 0:19:50.920 --> 0:19:53.520 at twelve thirty. I mean, the whole world shut down 0:19:53.560 --> 0:19:56.520 waiting to hear Powell. So he really is this this 0:19:56.600 --> 0:20:00.680 one person mechanism. And yet you know, you don't get 0:20:00.760 --> 0:20:04.199 that same type of focus when you're talking about Europe 0:20:04.200 --> 0:20:07.560 and tightening potentially faster than the United States. None of 0:20:07.600 --> 0:20:11.560 that really matters. If the Fed doesn't pause or pivot, 0:20:11.960 --> 0:20:15.440 If they really keep going, other central banks are going 0:20:15.480 --> 0:20:19.080 to have an effect on global liquidity and then the 0:20:19.160 --> 0:20:23.000 price of money. But if we maintain high rates and 0:20:23.080 --> 0:20:25.960 don't go in a different direction, if we're not the leader, 0:20:26.160 --> 0:20:28.400 if we don't follow the Bank of Canada in pausing, 0:20:28.920 --> 0:20:31.480 then it's all irrelevant, uh, you know, is Michael Burry 0:20:31.520 --> 0:20:35.560 said on on on Odd lots yesterday on Bloomberg it 0:20:35.920 --> 0:20:40.359 would be a paradigm shift. Paradigm shift. Some heavy words 0:20:40.600 --> 0:20:43.240 from Michael Burry. We don't listen to the shows, just 0:20:44.080 --> 0:20:46.919 Bloomberg Markets and John and I listen to it on 0:20:46.960 --> 0:20:50.480 repeating that is all just kidding. Danielle, I am getting 0:20:50.560 --> 0:20:52.560 a question. I b to here into me. I want 0:20:52.560 --> 0:20:54.440 to talk to you about the divergence you started seeing 0:20:54.440 --> 0:20:58.760 the Federal Reserve. It feels like, whereas there was this consensus, 0:20:58.840 --> 0:21:01.800 especially in the back half of two where it was 0:21:02.359 --> 0:21:04.720 just be as hawkish as possible, until we start to 0:21:04.720 --> 0:21:07.960 see some cracks and inflation, that seems to start diverging. 0:21:08.000 --> 0:21:10.680 Now we have Neil Kashkary on the most hawkish end um, 0:21:10.760 --> 0:21:14.600 others perhaps walking back some of the Fed's comments from 0:21:14.840 --> 0:21:17.879 last Wednesday, to what extent is that by design? To 0:21:17.920 --> 0:21:22.800 what extent is that divergence worth paying attention to? So 0:21:22.960 --> 0:21:26.920 I think, I think really to the extent that that 0:21:27.119 --> 0:21:34.480 the care Powell is guiding other speakers narratives. It's important. 0:21:34.520 --> 0:21:37.960 And when you are inside the FED, I mean, wandering 0:21:37.960 --> 0:21:42.280 off the reservation with a crazy view is looked down upon. 0:21:42.760 --> 0:21:45.359 You cannot do that. So I mean you bring up 0:21:45.680 --> 0:21:48.280 the best example of all Neil cash Cary, whose narrative 0:21:48.359 --> 0:21:50.520 is completely flipped. We used to think he was the 0:21:50.520 --> 0:21:53.360 biggest dove in the world, and now he's saying, oh, 0:21:53.400 --> 0:21:55.760 maybe five point four percent, maybe we're gonna go higher. 0:21:56.320 --> 0:21:58.919 I don't think that that that type of communication is 0:21:58.960 --> 0:22:04.000 not is on articulated and condoned at the very top 0:22:04.320 --> 0:22:07.639 of the head. Okay, with your background and experience, what 0:22:07.680 --> 0:22:12.080 should they be doing at this point? Look, I think 0:22:12.119 --> 0:22:15.000 what a few people are talking about, and hats off 0:22:15.080 --> 0:22:18.959 to Rubensteins were bringing it up. It's it's the debt ceiling. 0:22:19.400 --> 0:22:22.800 And it was yesterday it was Powell saying I'm not 0:22:22.840 --> 0:22:26.000