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Speaker 2: You're a confident guy, John.
Speaker 3: The consumer confidence numbers just coming out from a conference board,
Speaker 3: man spot right on the forecast came in at one
Speaker 3: fourteen point eight. That was right in line with expectations,
Speaker 3: and notably it was a lot higher than last month,
Speaker 3: which was revised down to one zero eight.
Speaker 2: So nice pick up there.
Speaker 3: Let's break it down with somebody who kind of knows
Speaker 3: what's happening here, Dana Peterson, chief economist at the conference Board.
Speaker 3: It joins us via Zoom Data. It looks like a
Speaker 3: solid number. Put it in context for.
Speaker 4: Us, absolutely, we have the highest reading on consumer confidence
Speaker 4: in two years. A lot of it was led by
Speaker 4: the present situation where consumers are feeling good about their jobs,
Speaker 4: they're feeling good about the business situation, but also consumers
Speaker 4: are thinking that maybe we won't have a recession, and
Speaker 4: that also contributed to expectations which were above that threshold
Speaker 4: that usually signals or session.
Speaker 5: Yeah, before you came on, Dana, we did the Joelt's
Speaker 5: Job Opening survey, more evidence the labor market is just
Speaker 5: cooking along. How much does that play into this?
Speaker 4: We think it plays a huge role. Consumers continue to
Speaker 4: say that the labor market is good. Even most of
Speaker 4: last year they said the present situation was fine with
Speaker 4: regards to the labor market. Many of them are working.
Speaker 4: Companies are not letting people go because they're concerned about
Speaker 4: labor shortages, and so that's been benefiting the consumer and
Speaker 4: definitely supporting their finances and their incomes.
Speaker 3: And Dan, it's interesting here we're getting you know, as
Speaker 3: interest rates come down, Like just take the mortgage rate.
Speaker 3: Mortgage rates are coming down off their peak. They are
Speaker 3: still a lot higher than probably people would like though,
Speaker 3: but everybody's.
Speaker 2: Got a job.
Speaker 3: But once one, where are you looking at this economy
Speaker 3: to get a sense of really where it is and
Speaker 3: where it might be going here?
Speaker 4: Sure, So, I mean you have to look at the
Speaker 4: economy and look under the hood. So they're definitely areas
Speaker 4: of weakness. The housing market is still pretty weak as
Speaker 4: mortgage rates have come off, but there's still much higher,
Speaker 4: almost double what we saw a pre pandemic or even
Speaker 4: during the worst of the pandemic. Businesses are not investing
Speaker 4: that much, and we don't think government is going to
Speaker 4: be as big of a stimulator. But when you look
Speaker 4: at consumers, many of them are working. As we said,
Speaker 4: their real incomes are rising as inflation is falling, and
Speaker 4: so that's definitely propping up spending. But the key issue
Speaker 4: is can they continue to do so, and we're not
Speaker 4: sure about that given the amount of debt that's being
Speaker 4: piled up right now.
Speaker 5: Okay, and these numbers also to some extent, because they
Speaker 5: are good numbers, might actually be inflationary. You did mention
Speaker 5: consumer spending.
Speaker 4: Right, Well, the interesting thing is that in the right ends,
Speaker 4: consumers continue to complain about inflation and prices, so the
Speaker 4: price level is high even though inflation prices aren't rising
Speaker 4: as quickly as they were. But the good news is
Speaker 4: that inflation expectations continue to fall in our measure, and
Speaker 4: that's a signal that consumers are thinking that inflation is
Speaker 4: going to continue to decline, and so it might not
Speaker 4: be inflationary. Despite the fact that we have seen some
Speaker 4: pretty strong consumption, especially in the second half of last
Speaker 4: year and in the last few months of last year.
Speaker 5: Can you explain why those inflation expectations are important? I mean,
Speaker 5: do they tend to be sort of self fulfilling prophecies?
Speaker 4: Well, it can be. If inflation expectations are too high,
Speaker 4: then people say, well, you know, I'm just not going
Speaker 4: to spat and because I can't afford it, and I
Speaker 4: probably won't be able to afford things in the future.
Speaker 6: So with the.
Speaker 4: Expectations falling, that means consumers are thinking, oh, I'm going
Speaker 4: to get some relief later on. So that means I
Speaker 4: don't have to put my life on hold while I
Speaker 4: watch prices rise even faster.
Speaker 3: So, Dana at the conference board, are you guys thinking
Speaker 3: there's going to be a recession in twenty twenty four
Speaker 3: or or not?
Speaker 2: How do you think about that?
Speaker 4: Well, we do think the likelihood of a soft landing
Speaker 4: has definitely increased, but we're still there's still risks out
Speaker 4: there that you could have a recession. It's probably going
Speaker 4: to be short, it's probably going to be shallow. Why
Speaker 4: do we think that? Again, consumers do no longer have
Speaker 4: the massive supports from the stimulus checks. Also, many consumers
Speaker 4: are financing their purchases with debt. At some point that's
Speaker 4: going to come due and they have to pay it back.
Speaker 4: We also think that some businesses may come under pressure
Speaker 4: and start letting people go, and that will definitely put
Speaker 4: a debt in confidence and also spending. But the key
Speaker 4: thing is the labor market. If the labor market doesn't
Speaker 4: weaken much further, then you're probably going to see people
Speaker 4: continue to spend and we'll have that soft landing that
Speaker 4: the fet is hoping for.
Speaker 5: Are all consumers created equal or do you break this
Speaker 5: down into certain groups geographically or income wise?
Speaker 4: Yes, we do, and in fact every income group, with
Speaker 4: the exception of the wealthiest group, we're more optimistic in January,
Speaker 4: so that's definitely good news. Not sure what's going on
Speaker 4: with the wealthier folks spically, but the thing is that
Speaker 4: for the most part, consumers expect interest rates to be
Speaker 4: lower and they expect the stock market to be higher
Speaker 4: going forward. So you know, the folks who tend to
Speaker 4: have stocks are the wealthier folks. But the point is
Speaker 4: that every age group was feeling better in the month,
Speaker 4: so for the most part, consumers are much more optimistic
Speaker 4: now than they were a few months ago.
Speaker 5: Can I just real quick the political implications, What does
Speaker 5: it mean for a Joe Biden presidency.
Speaker 4: Well, I will say the election is months away, and
Speaker 4: that's kind of like an eternity right in terms of
Speaker 4: political terms. But you know, the key thing is, you know,
Speaker 4: it's probably gonna be domestic issues and things like the
Speaker 4: border and spending that may cause consumers to come out
Speaker 4: there and vote one way or the other. But certainly,
Speaker 4: if you know, the economy does take a bit of
Speaker 4: a swoon, we think it's going to be in the
Speaker 4: middle of this year and by the time we get
Speaker 4: to the election season, the economy should be recovering. And
Speaker 4: that's that's good for either candidate.
Speaker 1: Really.
Speaker 3: All right, Dan, I thank you so much. We appreciate that.
Speaker 3: Dan Peterson at the conference board.
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Speaker 3: In addition to all the economic data we have this week,
Speaker 3: in addition to all the earnings we have this week
Speaker 3: from some big tech companies, we also have a FEDER
Speaker 3: Reserve meeting tomorrow. I think I saw Michael Barr, I
Speaker 3: mean Michael McKee with his bag heading down to the
Speaker 3: cellar station.
Speaker 5: There's a Michael Barr on the FED too.
Speaker 2: I know exactly we're all at the one you were thinking.
Speaker 3: Of now, exactly, Bloomberg and tell Legence, Chief US Interest
Speaker 3: Rates strategis Ira Jersey joins us from Princeton, New Jersey
Speaker 3: via zoom So, Ira, I guess tomorrow. You know, obviously
Speaker 3: the rate, any movement in the rates is not expected tomorrow.
Speaker 3: What are you looking for in tomorrow's release and in
Speaker 3: the commentary from FED Chairman J Powell.
Speaker 7: Yeah, tomorrow is going to be a very busy day
Speaker 7: for those of us in rates land. We not only
Speaker 7: have that FED meeting, but also the quarterly refunding announcement
Speaker 7: from the Treasury Department in the morning before that. So
Speaker 7: at the Fed, you know, we're going to be looking
Speaker 7: at listening for nuance. I think the statement probably doesn't
Speaker 7: change very much. But Jay Powell, I think will probably
Speaker 7: you know, need to guide the market as to whether
Speaker 7: or not they think there's going to be a cut
Speaker 7: in March or not. He was going to probably say
Speaker 7: every meeting is live, but at the same time, you know,
Speaker 7: some meetings are more alive than others. I would say so,
Speaker 7: so I think that if the FED is thinking about
Speaker 7: cutting in March, he really has to make that not
Speaker 7: abundantly clear, but I think he has to make it
Speaker 7: a little bit more clear that they're going to be
Speaker 7: going to be cutting in March.
Speaker 8: The other thing that.
Speaker 7: I think that Jay to listen for for j Powell
Speaker 7: is what's the path thereafter? So the market is not
Speaker 7: pricing for what Governor Waller mentioned a week and a
Speaker 7: half ago or so, which is we're not going to
Speaker 7: necessarily go at every meeting.
Speaker 8: We're going to go slow.
Speaker 7: We might only cut three times this year. The market
Speaker 7: doesn't believe that they're going to do that. The market
Speaker 7: things that the FED going slow is cutting twenty five
Speaker 7: basis points every meeting once they start, and so you
Speaker 7: know it's going to be hard maybe to jaw bone that,
Speaker 7: but I think Jay Powell will try to tomorrow.
Speaker 5: What's the big worry at the FED some sort of
Speaker 5: I don't know, Arthur Burns bumbled. You cut now and
Speaker 5: then inflation comes roaring back and you look like a moron.
Speaker 8: I think that's part of it.
Speaker 7: I think that the other issue that the Fed has
Speaker 7: is they're trying as they try to calibrate the Fed
Speaker 7: Fund rate is there's a feeling among a lot of
Speaker 7: economists and I think a lot of people the Federal
Speaker 7: Reserve that as inflation comes down, you have the real
Speaker 7: Fed fund rates of the Fed funds rate after adjusting
Speaker 7: for inflation, continues to rise, and that that will be
Speaker 7: too restrictive and tighten financial conditions. But I think the
Speaker 7: bigger issue that the Fed has right now is that
Speaker 7: financial conditions, instead of being tighter, even though that real
Speaker 7: Fed fund rate has been going up, they've actually been easing.
Speaker 7: So you have credit spreads that are very tight. You
Speaker 7: have consumer lending rates that, while they're much higher than
Speaker 7: they were, they've come down significantly from their peak. And
Speaker 7: in large part that's because the market is expecting the
Speaker 7: Federal Reserve to cut interest rates very aggressively starting in
Speaker 7: May and then continuing to cut into twenty twenty five.
Speaker 7: And that's adjusted a lot of the different borrowing rates
Speaker 7: and a lot of the other things that go into
Speaker 7: different financial conditions measures. And because of that, that's one
Speaker 7: reason why I think that the Fed wants to say, Okay,
Speaker 7: we're going to go slow because they don't want to
Speaker 7: ease financial conditions even more and have another inflationary impulse.
Speaker 8: So, like you said, John, like.
Speaker 7: That's really the fear that the FED has is that
Speaker 7: they might be the cause of yet more inflation in
Speaker 7: the future and that the job's not done. And you're
Speaker 7: going to hear that again, the job's not quite done,
Speaker 7: but we're happy with the progress made so far. That's
Speaker 7: that's going to be probably the opening line from Jay
Speaker 7: Powell when he talks about monetary policy and inflation.
Speaker 3: Hey, Iriti, earlier this morning, we had a cloudi assam
Speaker 3: on some consulting and formerly the Fed. She says, the
Speaker 3: Fed's already too late. They should have already started cutting rates.
Speaker 3: Is that widely held out there? How do you think
Speaker 3: about that?
Speaker 7: Yeah, there were some people who, certainly and some investors
Speaker 7: that think that they should be just because the economy
Speaker 7: has slowed significantly, and you have seen that, you know,
Speaker 7: that gap widened between inflation and the FED fundt rate.
Speaker 7: But then there's a whole slew of others who look
Speaker 7: at the real economy and look at what happened with
Speaker 7: retail sales. You had the Jolts data that was just
Speaker 7: out a couple of minutes ago that showed that job
Speaker 7: openings actually increased in December.
Speaker 8: The quick rate, though, kept on falling.
Speaker 7: So I think that there was kind of a mixed
Speaker 7: picture there in terms of the job market from that reading.
Speaker 7: But the but nonetheless, the the economy seems to be
Speaker 7: holding up decently right now. So so again, like if
Speaker 7: if the Federal Reserve is behind the curve, as Missam suggested,
Speaker 7: h then you know, certainly we don't see that in
Speaker 7: the hard data. We do see it in other things
Speaker 7: like some of the some of the survey data. But again,
Speaker 7: like you just had on data from the UH from
Speaker 7: the Conference Board, the Conference Board survey of consumer confidence
Speaker 7: was decent today. So again there's all these mixed signals
Speaker 7: right now. Mixed signals usually do lead to a turn
Speaker 7: in the economy, but it's much slower this time than
Speaker 7: you might have expected it during prior cycles. And I
Speaker 7: think a large part of that is we still have
Speaker 7: a big fiscal impulse rate.
Speaker 8: We still have deficits that are.
Speaker 7: Going to be approaching two trillion dollars this fiscal year
Speaker 7: and over the next couple of fiscal years, so that
Speaker 7: will keep the economy a little bit more robust than
Speaker 7: it would be normally. And then secondly, you still have
Speaker 7: consumers that don't have any lack of appetite to spend.
Speaker 7: So I think that there's a lot of good things
Speaker 7: still going on in the economy that are going to
Speaker 7: delay I think a recession and a major downturn until
Speaker 7: much later this year and maybe even into twenty twenty five.
Speaker 5: All Right, you brought up fiscal iris, so let's talk
Speaker 5: about the Treasury cut. What do they do yesterday? They
Speaker 5: cut their quarterly borrowing estimate, which I mean to me,
Speaker 5: on the surface, that sounds pretty good.
Speaker 8: Yeah, so it's a good thing.
Speaker 7: They cut it by a by about fifty five billion dollars.
Speaker 7: The Treasury Department, what they do is they have a
Speaker 7: forecast for a quarter ahead, and they almost always get
Speaker 7: it at least a little bit wrong. Right, we all
Speaker 7: don't forecast perfectly what's going to happen. So they cut
Speaker 7: the borrowing estimate for this quarter primarily because it looks
Speaker 7: like revenue has been coming in a little bit stronger.
Speaker 7: Speaning tax revenue has been coming and a little bit
Speaker 7: stronger than they anticipated. And spending has been you know
Speaker 7: about about flat and the fact that so we can
Speaker 7: spend more, Well that's maybe that's part of it, but
Speaker 7: it does mean that deficits are running going to be
Speaker 7: running a little bit lower than we initiatively anticipated.
Speaker 8: It was pretty close to our estimates. We were actually
Speaker 8: a little bit lower than that. We were one of
Speaker 8: the lower people within the consensus.
Speaker 7: A lot of people thought that they were going to
Speaker 7: be around eight hundred billion dollars in net borrowing. We
Speaker 7: thought it would be under closer to seven hundred. It
Speaker 7: kind of came in the middle of that. So, yeah,
Speaker 7: so that means that the Treasury Department probably won't issue
Speaker 7: as many tea bills as we thought, but they still,
Speaker 7: we think, will increase the amount of two year notes,
Speaker 7: three year notes, all the way out to thirty year
Speaker 7: debt issue a little bit more of that because right
Speaker 7: now they're issuing a ton of tea bills compared to
Speaker 7: how much they were issuing of other debt. And you know,
Speaker 7: there's only so much appetite that's going to be out
Speaker 7: there for short end paper, especially once the Federal Reserve
Speaker 7: gets going and starts to start to lower interest rates, and.
Speaker 3: I rich just you know, on these auctions remind us
Speaker 3: again like who's buying this stuff?
Speaker 7: So it's mostly domestic investment funds. When you look at
Speaker 7: at at treasury auctions, like last week we had the
Speaker 7: five year and the seven year, so you have investors
Speaker 7: who are just saying, Okay, look we're not going to
Speaker 7: buy the seven year. The seven year went terribly. Excuse me,
Speaker 7: the five year went terribly, The seven year did okay.
Speaker 7: Because I think people are getting preparing themselves for the
Speaker 7: Federal Reserve cutting interest rates, and usually longer term debt
Speaker 7: does better when the Fed's cutting interest rates. So you
Speaker 7: have you know, people going out and buying that. Look,
Speaker 7: savings is still high. There's still relatively high savings rates
Speaker 7: compared to what we had, you know, a decade or
Speaker 7: so ago, So there's still people that have money to
Speaker 7: put to work. And with interest rates closer to four
Speaker 7: percent instead of zero, treasuries are an attractive option instead
Speaker 7: of buying maybe riskier assets that have the chance of
Speaker 7: the fault. Maybe if revenues slip or profitability slips because
Speaker 7: you think that there's going to be a recession, then
Speaker 7: you rotate out of other fixed income instruments, into treasuries
Speaker 7: and also just you know, put your incremental savings into
Speaker 7: treasury securities.
Speaker 5: All right, put on your politics hat, you guys in
Speaker 5: the treasury markets, you must game all sorts of things,
Speaker 5: like if there's something unexpectedly happens in the election that
Speaker 5: you know your candidate doesn't win but the other guy does,
Speaker 5: have you gained that what are all the different possibilities?
Speaker 7: Yeah, it's interesting because, yeah, you know, the conventional wisdom
Speaker 7: might be that if there's a Republican in the White
Speaker 7: House in Congress, that maybe there'll be somewhat more fiscally responsible.
Speaker 7: That actually, historically has not been the case. That typically
Speaker 7: when you have one party that controls the White House
Speaker 7: and both houses of Congress, deficits go up. Right, Democrats
Speaker 7: spend more money, Republicans cut taxes, But both of those
Speaker 7: have the same net effect of increasing budget deficits and
Speaker 7: increasing the amount of treasury supply that needs to come out.
Speaker 7: And quite frankly, you know, there's probably very little at
Speaker 7: this point, over the next year or two that can
Speaker 7: be done to quell the two trillion ish dollars of
Speaker 7: deficit that's coming.
Speaker 8: Regardless of who's in the White House. You know our expectation.
Speaker 7: I think the most important thing that's going to come
Speaker 7: out of this election is not even the fiscal stuff.
Speaker 7: It's really who's going to be the next FED chair? Right,
Speaker 7: if Joe Biden wins the presidency again, maybe J Powell
Speaker 7: will be reappointed. I think that's pretty unlikely if Donald
Speaker 7: Trump or another Republican were to win the White House,
Speaker 7: that J Powell would wind up staying in a seat.
Speaker 5: I mean, we have to remind everybody J Powell was
Speaker 5: Donald Trump's pick, right.
Speaker 7: And quite frankly, when that came out, I was pretty
Speaker 7: surprised that Donald Trump picked him because J. Powell is
Speaker 7: kind of a mainstream Federal Reserve governor was at the time,
Speaker 7: I had expected Donald Trump to pick someone who would
Speaker 7: be more definitively doubvish than that a mainstream economy or
Speaker 7: mainstream person.
Speaker 8: I can't call J. Powell an economists, but nonetheless, you know,
Speaker 8: the next the.
Speaker 7: Next FED chair might be the most important thing from
Speaker 7: a treasury market and from a rates market point of
Speaker 7: view that's going to come out of the election cycle.
Speaker 7: So who do people say might be their pick for
Speaker 7: for FED chair might be one of the more interesting
Speaker 7: things that comes out of the election. If people are
Speaker 7: askedt out of debate or in a town hall or
Speaker 7: something like that, I would certainly be interested to know
Speaker 7: is J. Powell likely to be reappointed or if not him,
Speaker 7: then who else?
Speaker 5: But I always thought, I mean, my conventional wisdom was that, yeah,
Speaker 5: the president makes the pick on the advice of well
Speaker 5: pretty much everybody on Wall Street, because if he gets
Speaker 5: that wrong, you know, you can just kiss your you
Speaker 5: know what, goodbye.
Speaker 7: Yeah, but there are a number of people who I
Speaker 7: think Wall Street would be okay with. But there's people
Speaker 7: along the spectrum, right, Like, you know, if you chose
Speaker 7: someone like Lyle Brainerd over Powell, then you know, you
Speaker 7: get a slightly different outlook on there, you know, Governor Waller.
Speaker 8: Versus versus J.
Speaker 7: Powell again, like you'd have just some nuanced differences in
Speaker 7: the policy outcomes that you might actually get just because
Speaker 7: those those people have different opinions. So you know, if
Speaker 7: you wind up with you go through a whole slew
Speaker 7: of former governors or former Fed president, you know, Federal
Speaker 7: Federal Reserve, regional FED Bank chairs like you know, James
Speaker 7: Bullard for examples out there, and he might have even
Speaker 7: a different take and uh, you know, might be more
Speaker 7: hawkish or dubvish and some.
Speaker 8: Of the other potential picks.
Speaker 7: So but but and I think all of those, if
Speaker 7: they're known quantities could probably Wall Street would probably be
Speaker 7: okay with them. Uh, it's just a matter of you know,
Speaker 7: what what price level you get. If you pick a
Speaker 7: more hawkish person, then maybe, you know, stocks go down.
Speaker 7: But it's not that the market's not going to function,
Speaker 7: and it's not that you know, the treasury market is
Speaker 7: suddenly going to implode because you picked you know, one
Speaker 7: person who was more more or less a duvish mainstream
Speaker 7: person or a hawkish mainstream person.
Speaker 3: All right, Ira, great stuff has always really appreciate you
Speaker 3: checking in with us. Ira Jersey, chief US interest rate
Speaker 3: strategist for Bloomberg Intelligence.
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Speaker 2: Are ups.
Speaker 3: Had some I know, just some disappointments, as Nora was
Speaker 3: just reporting, laying off some people. Ben Elgin, Bloomberg News
Speaker 3: has got a great story today, FedEx UPS struggle on
Speaker 3: ev transition as delivery demand grows, costs, the electric trucks
Speaker 3: and charging complications are hampering progress. I didn't even think
Speaker 3: about that, Like, they got to go electra too, And
Speaker 3: if they can't get the trucks and all that kind
Speaker 3: of stuff, how they're going to get that package to
Speaker 3: me in fifteen minutes.
Speaker 5: They're going electric because there it's good for the environment,
Speaker 5: or they're trying to save money.
Speaker 8: I don't know.
Speaker 3: Let's check in with somebody who actually we pay this
Speaker 3: guy to think about this stuff. Lee Clascal, Senior Transport
Speaker 3: Logistics and Shipping Animals, is one of the best on
Speaker 3: the street. We got them at Bloomberg Intelligencies down from
Speaker 3: our Princeton bureau. Hey, Lee, first, let's just start with
Speaker 3: the news at UPS. I love UPS. I love the
Speaker 3: brown trucks. They deliver this stuff great.
Speaker 2: What's going on? The stock hasn't done much in a while.
Speaker 3: And I know they've got some union issues which they
Speaker 3: resolved earlier, and now they're laying off some people and
Speaker 3: forcing everybody to come back to work. What's happening in
Speaker 3: our good friends at UPS?
Speaker 9: Yeah, I mean they're really just reeling from the impact
Speaker 9: from the labor negotiations they had last year. So running
Speaker 9: up ahead of those negotiations, a lot of shippers were like,
Speaker 9: you know something, I'm not going to use you, use
Speaker 9: UPS because I might want to use one of their
Speaker 9: competitors like FedEx or even the postal service, because I
Speaker 9: don't know if my stuff is going to be able
Speaker 9: to get where it needs to go on time. So
Speaker 9: a lot of that diverted freight, you know, is kind
Speaker 9: of deleveraging effect on the network, which really weighs on margins.
Speaker 9: And then you know, they had the negotiations, they have
Speaker 9: a contract in place, which is fantastic for UPS and
Speaker 9: also for the teams stairs, you know, but a lot
Speaker 9: of the cost the initial costs of that new contract
Speaker 9: are in year one and so that's like a real
Speaker 9: big hit to margins. That coupled with the fact it's
Speaker 9: taking some time for them to win back some of
Speaker 9: that share. You know, on today's earnings call, management noted
Speaker 9: that they've won back about sixty percent of that share.
Speaker 9: It's going to take time for them to get that
Speaker 9: share back to where.
Speaker 8: It needs to be.
Speaker 9: And again, these are networks and when you're talking about
Speaker 9: freight transportation. It's all about building density because the more
Speaker 9: stuff you can deliver at the same time, you know,
Speaker 9: the better the margins are. And that's what they're really
Speaker 9: working through right now. And you know, and what I
Speaker 9: thought was kind of one of the more interesting little
Speaker 9: tidbits in the call this morning is that they think
Speaker 9: that this year that the small package volume from an
Speaker 9: industry standpoint, is only going to increase like one percent,
Speaker 9: which to me I thought was a little pessimistic. But
Speaker 9: you know, all in all, they're really dealing with tepid demand,
Speaker 9: the dealing with rising costs, and you know, they're obviously
Speaker 9: taking those costs pretty seriously. As you know you mentioned earlier,
Speaker 9: they're they're laying off or planning the layoff or reduce
Speaker 9: heads however nicely you want to say it, twelve thousand people.
Speaker 9: And then also they're looking to get there. They're putting
Speaker 9: their brokerage business, which is called Coyote, under a strategic review.
Speaker 9: Coyote is the third largest freight broker out there. So
Speaker 9: one of the largest publicly traded ones are c H.
Speaker 8: Robinson.
Speaker 9: People might not know that, might may know that name. Also,
Speaker 9: RXO is another pure play brokerage as land Star. There's
Speaker 9: a couple of private ones. A lot of large companies
Speaker 9: like JBI Hunt have their own brokerage business in house.
Speaker 5: You get sorry for a series of stupid questions, but
Speaker 5: this is who you're talking to. What is a freight
Speaker 5: what's their role on what do they do a freight brokerage?
Speaker 9: So's they're pretty much get together buyers and sellers of freight.
Speaker 9: So if you think about it, so if you're a
Speaker 9: shipper and you have a load that you need to
Speaker 9: get from point A to point B, you might use
Speaker 9: a broker to find a truck to carry that load,
Speaker 9: and the broker kind of makes a spread in between
Speaker 9: what they're charging the shipper and what they're paying the
Speaker 9: trucking company. What's happened is, you know, it's a very
Speaker 9: cyclical business. There's there's, there's great highs and kind of
Speaker 9: depressing loads, and margins can be very volatile during this.
Speaker 5: So this this just a backup of this brokerage that
Speaker 5: they own that they're now getting rid of. That you
Speaker 5: could have gone to them and they could have picked
Speaker 5: a shipper other than you know, the company that owns
Speaker 5: them UPS.
Speaker 9: Yeah, So you know, so UPS could potentially use its
Speaker 9: own in house brokerage to move a trailer load of
Speaker 9: freight between two of their sorting facilities. Or if you're
Speaker 9: Walmart and you know you have an extra load that
Speaker 9: you need to get from your DC to you know,
Speaker 9: your Spring Lake Walmart. I don't think there's a Spring Walmart,
Speaker 9: and you know you might you might use them because
Speaker 9: either the carriers that you're contracted with don't have the capacity,
Speaker 9: or you're trying to take advantage of cheap rates in
Speaker 9: the spot market, and right now, truckload rates are extremely cheap.
Speaker 9: They've been bouncing along the bottom for quite some time,
Speaker 9: and so shippers might like to leverage that. You know,
Speaker 9: intermodal is an example, So you know the intermodal space,
Speaker 9: which is railroads. You know that's when you see like
Speaker 9: two containers on top of a railroad. You know they're
Speaker 9: facing increased competition because of the loose conditions that are
Speaker 9: on the spot market, and a lot of those shippers
Speaker 9: might use brokerage to try to find a load, I'm sorry,
Speaker 9: try to find a carrier to carry their loads.
Speaker 5: I think in there you it sounded like you just
Speaker 5: said there was a freight recession or at least that for.
Speaker 2: A long time.
Speaker 9: Well there has been for about two years.
Speaker 5: I mean, how severe is it right now?
Speaker 9: You know, the way we look at it, we're probably
Speaker 9: a little optimistic about twenty twenty four. Kind of a
Speaker 9: glass half full and it's filled with a really good cabernet.
Speaker 9: So's I'd say we're probably more optimistic than most.
Speaker 8: You know, we've been saying that.
Speaker 9: You know, we didn't feel that the economy necessarily had
Speaker 9: to go into a regular recession. And just because you
Speaker 9: go into a freight recession doesn't mean it's going to
Speaker 9: lead into a regular recession. The freight recession is really
Speaker 9: driven by a number of things. First and foremost is
Speaker 9: they had really difficult comps during the pandemic. You know,
Speaker 9: you were talking about trying to get a refrigerator. You know,
Speaker 9: everything was just commed up during the pandemic, and so
Speaker 9: capacity was in high demand, and the problem with getting
Speaker 9: capacity was that there weren't enough workers to either be
Speaker 9: in the trucks or be on the railroads or be
Speaker 9: in the air freight area. So there was there was
Speaker 9: a real issue there, and so we just saw like,
Speaker 9: you know, a backup in demand and then all of
Speaker 9: a sudden that demand got fulfilled because apply chain started
Speaker 9: loosening up. Here we are today. You know, you have
Speaker 9: moderating economic demand. You have you know, an ism and
Speaker 9: negative territories, so you know that the manufacturing economy is
Speaker 9: not great. You have some difficult comparison. So when we
Speaker 9: look at railroads, for example, not to be all over
Speaker 9: the place, but when you look at railroads, last year
Speaker 9: was a fantastic year for Canadian grain. This year is
Speaker 9: going to be a normalized crop. So that's that's a
Speaker 9: decline in volumes that the railroads are going to have
Speaker 9: to deal with. You know, railroads, a Canadian Pacific and
Speaker 9: Canadian National automotive is expected to be strong this year,
Speaker 9: continued for the railroads, but coal is probably gonna be
Speaker 9: weak because the export markets are probably going to start
Speaker 9: to cool and they have some really serious difficult comparisons.
Speaker 9: And intermodal is really a crapshoot. You know, we're pretty
Speaker 9: optimistic about the domestic demand, which is more truckload competitive,
Speaker 9: just because the rails have gotten a lot better and
Speaker 9: improving their their overall service. So we started talking about
Speaker 9: ups somehow, now we.
Speaker 2: Got all across logistics.
Speaker 3: See that's because Lee covers the railroads, he covers the
Speaker 3: trucking companies, he covers the logistics companies, he covers the
Speaker 3: you know, the shipping companies and big ships on the season.
Speaker 2: He covers a lot. So we just call them basically
Speaker 2: logistics analysts.
Speaker 3: I mean, if you've got to get a boxer point
Speaker 3: A to point B and you want to know how
Speaker 3: to do, you talk to Lee Clasgow.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: just say Alexa playing Bloomberg eleven thirty.
Speaker 3: I don't know what to do with this market because
Speaker 3: we had it just ripped there in the last couple
Speaker 3: of months of twenty twenty three on that fed pivot.
Speaker 3: We've had some pretty solid economic data so far this year.
Speaker 3: The earnings okay, we'll see with some of the big
Speaker 3: tech companies this week.
Speaker 2: But the question is where do we.
Speaker 3: Go in twenty twenty four? So let's check in with
Speaker 3: somebody who does this for a living. Nimbrit Kang Joints
Speaker 3: as she is the chief investment officer at north Star
Speaker 3: Asset Managerment joinings via zoom from the town of.
Speaker 2: Brotherly Love, Philadelphia, PA. I'm a huge fan of Philly, Nimber,
Speaker 2: thanks so much for joining us here.
Speaker 3: Again, I don't think a lot of people kind of
Speaker 3: saw that move higher in stocks in bond prices at
Speaker 3: the end of last year. You know, maybe some people
Speaker 3: thought that pulled some of the performance from twenty twenty
Speaker 3: four a little bit forward here.
Speaker 2: So as we finished out a pretty solid.
Speaker 3: January here, Nimber, what are you telling your clients for
Speaker 3: twenty twenty four.
Speaker 10: Yeah, we tell our clients to focus on what they
Speaker 10: know with a lot of certainty. You know, what we've
Speaker 10: seen in the last two years, Paul, is a round
Speaker 10: trip right. Last year was a pretty strong year for
Speaker 10: the markets, but it's was on the heels of a
Speaker 10: pretty dismal twenty twenty two. So we really did a
Speaker 10: round trip here in the last two years. And you know,
Speaker 10: when we think about broadly for our clients, we expect
Speaker 10: to be in this era of heightened uncertainty and volatility
Speaker 10: in the financial markets, we are coming to a reversal
Speaker 10: of several big trends that have been in play for
Speaker 10: a number of decades almost you know, the big one
Speaker 10: is the monetary cycle reversing. So in this environment, we
Speaker 10: just want our clients to remain focused on what they
Speaker 10: know with a lot of certainty, which is understanding and
Speaker 10: clearly communicating what their financial needs are going to be
Speaker 10: over the next five ten years and then setting appropriate
Speaker 10: strategic asset allocation based on that.
Speaker 5: Okay, with a monetary cycle reversing. First of all, what's
Speaker 5: your expectation for the FED? The meeting, the two day
Speaker 5: meeting ends tomorrow.
Speaker 11: You know, John, as much as I would like to
Speaker 11: kind of speculate what is thing to be doing and
Speaker 11: how exactly they're going to say, we take a little
Speaker 11: bit of a longer term view, and we do think
Speaker 11: there's an upward pressure on the rates, right.
Speaker 10: I mean, we do have record deficits going on, record
Speaker 10: debt and at the same time our governments have to
Speaker 10: grapple with some of these big societal ecological challenges. So
Speaker 10: there's this continued upward pressure on spending, aging demographics. If
Speaker 10: we take all of that into account, we do think
Speaker 10: that you know, the ten year between the four or
Speaker 10: five percent range is a more normalized kind of an
Speaker 10: environment going forward. Now within that range, it fluctuates all
Speaker 10: the time based on every single word out of the
Speaker 10: bed about, you know, the speculation on what their next
Speaker 10: move is going to be. Just in twenty twenty three,
Speaker 10: I was looking at the data. The low point for
Speaker 10: the ten year was a three to three and a
Speaker 10: high point was five percent.
Speaker 12: That's a big move.
Speaker 10: For what's usually you know, a very stable asset class.
Speaker 3: Right, yeah, it is. It's interesting And one of the
Speaker 3: things I was thinking about, you know, putting a portfolio
Speaker 3: together for twenty twenty four is on the fixed income side.
Speaker 3: I was so surprised that the best performing fixed income
Speaker 3: category in twenty twenty three was highyield bonds. How do
Speaker 3: you think about high yield bonds in this environment where
Speaker 3: it looks like we're going to rates coming down.
Speaker 10: We take a little bit of a differentiated approach. So
Speaker 10: on the credit side, we want to be in very
Speaker 10: high quality bonds, you know, where basically there's a contractual
Speaker 10: obligation to get the money back and we take more
Speaker 10: off the credit or company risks really on the equity side.
Speaker 10: So that's how really we think about it.
Speaker 12: On the bond side.
Speaker 10: We prefer to construct a very laddered portfolio, diversified across maturities,
Speaker 10: but really in very high quality government guarantee debt.
Speaker 5: Ooh number, are you sixty forty or have you changed
Speaker 5: those allocations?
Speaker 10: Yep, John, the allocation, it really depends on every client
Speaker 10: and their individual needs and their investing horizon. So we
Speaker 10: do think that equities have a very strong role in
Speaker 10: the portfolio as long term capital appreciation. We do think
Speaker 10: fixed income here is providing a pretty nice yield income
Speaker 10: here for a lot of people who are looking for.
Speaker 12: That part as well.
Speaker 10: But the actual allocation depends on where the clients are
Speaker 10: in their journey.
Speaker 3: So my friend here, John Tucker, he started twenty twenty
Speaker 3: three long and overweight, the Magnificent seven. He's just doing
Speaker 3: this radio thing because.
Speaker 2: He loves it. The rest of us have to work
Speaker 2: on our portfolio. In twenty twenty four, Do.
Speaker 3: I chase those big tech names, and again we're going
Speaker 3: to see a lot of them start reporting earnings tonight.
Speaker 2: Do I chase them or do I just say miss
Speaker 2: that boat.
Speaker 3: Let me go look at maybe a sector that's not participated, Paul.
Speaker 10: Our approach is to really identify these long term companies
Speaker 10: that are solving some of the secular problems invested in
Speaker 10: them take opportunities like the market volatility to really size.
Speaker 12: The position appropriately.
Speaker 10: So, you know, you talked about the Magnificent seven, not
Speaker 10: all seven of them, but you know, for a very
Speaker 10: long time we have held onto some of the holdings
Speaker 10: in there from the technology because we saw them very
Speaker 10: playing a very vital role in solving some of the problems,
Speaker 10: mainly related to empowering small businesses, communities, you know, entrepreneurs
Speaker 10: all over the world. Now, when we think about, you know,
Speaker 10: the sectors that have run up, Yes, technology has far
Speaker 10: outperformed on a two year basis, though, believe it or not,
Speaker 10: Magnificent seven just on a two year basis is up
Speaker 10: only fourteen percent, So not as ridiculous as it seems,
Speaker 10: just based on twenty twenty three data. But that said,
Speaker 10: we do think there are plenty of opportunities elsewhere in
Speaker 10: other areas as well to continue to tilt the portfolio
Speaker 10: towards those types of compounders as well.
Speaker 5: I want to get to some can you do individual names?
Speaker 10: Yeah, absolutely, so one of the you know, area that
Speaker 10: we think there's a long term secular problem is related
Speaker 10: to water. You know, there's a huge issue around scarcity
Speaker 10: of water resources.
Speaker 12: But even just in the US, our water infrastructure was
Speaker 12: built in.
Speaker 10: The nineteen fifties and sixties, so there's a huge need
Speaker 10: to upgrade this water infrastructure to make sure that we're
Speaker 10: getting the safe quality drinking water that is so essential.
Speaker 10: You know, just EP estimates there're seven hundred billion of
Speaker 10: investments needed over the next twenty years. So when we
Speaker 10: have thought about that, we have tried to get exposure
Speaker 10: to a number of companies that play a very important
Speaker 10: role across the water infrastructure value chain. So specific names
Speaker 10: like Xylum. Xyleum is very prominent in valves meters, things
Speaker 10: like that, y why out YEP, and it's you know,
Speaker 10: Xylum especially has a big mare market position, leading market
Speaker 10: position in wastewater treatment, again a big area of long
Speaker 10: term growth and where we think there's major societal problems
Speaker 10: that need to be solved. Another name, a small cap
Speaker 10: only seven hundred million in revenues is Badger Meters. They
Speaker 10: make your utility meters. You know, there's a big upgrade
Speaker 10: cycle going on from upgrading that manual meter that needed
Speaker 10: to be read to more of those smart meters which
Speaker 10: can be read remotely. So that's another small cap company
Speaker 10: long term tail wins. You know, the company just reported
Speaker 10: excellent twenty twenty three numbers, double digit revenue earnings going forward,
Speaker 10: you know, we don't expect them to have that kind
Speaker 10: of a growth, but high single digit through the cycle
Speaker 10: is a.
Speaker 12: Pretty reasonable expectation.
Speaker 10: And the last one I'll leave you with is Viraltov
Speaker 10: lto is the ticker simple, it's it's a spin off
Speaker 10: from Danaher, very high quality company. You know, sixty percent
Speaker 10: comes from water quality type of businesses. They analyze the
Speaker 10: water quality coming out of our streams, rivers, but also
Speaker 10: have treatment solutions such as UV filtration some of the
Speaker 10: other treatment solutions as well. So again, these other companies
Speaker 10: that haven't kind of had the rip roaring returns we
Speaker 10: have seen from some of the household names, but long term,
Speaker 10: very important demand for their products and solutions.
Speaker 5: Not the sexiest names in the world, Paul, now.
Speaker 2: But those work.
Speaker 3: I mean if you so, when you identify a theme
Speaker 3: like water, for example, nimro, do you do you and
Speaker 3: your team do you screen across the sector for evaluation,
Speaker 3: sales growth? How do you then identify individual names once
Speaker 3: you've identified a theme exactly.
Speaker 10: So one of our themes in our portfolio is just
Speaker 10: related to ecological limits, right. You know, we've had years
Speaker 10: and decades of extra tractive growth and we think that's
Speaker 10: you know, our natural resources are scarcer and scarcer and
Speaker 10: we're going to have to learn to cope with these
Speaker 10: problems waterfalls under that. We identified that a long time back,
Speaker 10: and knowing that, then we're looking for high quality compounders
Speaker 10: within that that are solving for that, you know, solving
Speaker 10: that particular problem. And when we talk about high quality compounders,
Speaker 10: you know, it's your traditional companies that have strong balance sheets,
Speaker 10: revenue growth, free cash flow margins, good deployment of capital,
Speaker 10: good management track record, all of.
Speaker 12: That same kind of criteria. There.
Speaker 10: On valuation, we take a longer five to ten year
Speaker 10: view and we use cash flow based valuation to understand
Speaker 10: what is the true valuation based on the earnings potential
Speaker 10: of a company like that.
Speaker 5: Hey, what's the number one thing on the minds of
Speaker 5: your clients?
Speaker 10: You know, when we talk to clients again, it's different,
Speaker 10: but it's really around understanding that, yes, we just live
Speaker 10: in this era of a lot of uncertainty heightened volatility.
Speaker 10: You know, last year this whole thing around AI really
Speaker 10: magnified and gave a really new leash to life for
Speaker 10: these magnifist and seven names. But longer term, people just
Speaker 10: want people. You know, our investors, our clients are concerned
Speaker 10: about making sure that they have their financial assets can
Speaker 10: help them meet their financial needs and goals, right yep,
Speaker 10: and taking a balanced approach and a very risk aware
Speaker 10: approach towards constructing those portfolios for them.
Speaker 3: All right, That's how the pros do it. Nimmer Kang,
Speaker 3: thank you so much. We appreciate it as always. Nimmer Kang,
Speaker 3: Chief Investment Officer, north Star Asset Management.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 1: Auto with the Bloomberg Business. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station just
Speaker 1: say Alexa playing Bloomberg eleven.
Speaker 3: Let's talk UK stocks, Let's talk European stocks. We don't
Speaker 3: do that as much here, but we can do it
Speaker 3: today because Tim Craighead is here, and Tim Craighead is
Speaker 3: a European equity strategist for Bloomberg Intelligence. He joins his
Speaker 3: live here in a Bloomberg Interactor broker studio. That's important
Speaker 3: because he's based in London at the awesome Bloomberg European headquarters.
Speaker 2: We got to get your lead to go. It is
Speaker 2: just it is super cool. Yeah, it is just awesome.
Speaker 3: I mean, and what I like about it a it's
Speaker 3: just a phenomenal building in the city of London, right
Speaker 3: by the Bank of England. But when you know, Brexit happened,
Speaker 3: Mike was over there with the Mayor of London saying no,
Speaker 3: we're doubling down on London, which I thought was very
Speaker 3: cool because up until Brexit, a credible argument could be
Speaker 3: made that London was the world's financial capital visa via
Speaker 3: New York, A credible argument after a couple of pints
Speaker 3: at the local pub. And you could make that argument
Speaker 3: now you can.
Speaker 5: Before remind me, before he leaves, I got to ask
Speaker 5: him about congestion pricing.
Speaker 2: Okay, all right, Tim Craighead joins it.
Speaker 3: Ay, Tim, just give us a sense here. Let's start
Speaker 3: with the UK here, how did the UK trade last year?
Speaker 3: How did that market perform and what's the expectations for
Speaker 3: this year?
Speaker 6: So the UK did the same thing last year that
Speaker 6: it did in twenty twenty two, interesting enough, which is
Speaker 6: a big fat nothing. And if you think back in
Speaker 6: twenty twenty two, that was a good stellar performance, it
Speaker 6: was a hero. Twenty three not so much, especially with
Speaker 6: the rally at the end of the year. So far
Speaker 6: this year pretty much again, it's sort of status quot
Speaker 6: and our view is that's kind of where we're stuck.
Speaker 6: It's a funny thing. The UK market has this very
Speaker 6: odd composition where you've got this big basic material commodity base,
Speaker 6: and you've got medals and you've got oil. You've got
Speaker 6: a big defensive brand base of companies like Unilever and
Speaker 6: Diagio I think Whiskeys, and healthcare pharma with Glaxo Smith
Speaker 6: Klein AstraZeneca, and then you've got a big dose of
Speaker 6: financials with the big banks like HSBC. Those three. You
Speaker 6: always end up with a driver that's good for one
Speaker 6: but bad for the others, or vice versa, and quite
Speaker 6: often they just sort of nix each.
Speaker 3: Other because you don't have that technology thing, which is
Speaker 3: actually the leader of the US.
Speaker 6: Market, the entire TMT group. So you take internet and
Speaker 6: tech and the good media e commerce, the whole kaboodle
Speaker 6: about one percent of the UK market.
Speaker 5: What was the best performing stock individuals talk.
Speaker 6: Rolls Royce if memory serves correct, which.
Speaker 5: Is this is the engine maker, not the Yes car.
Speaker 6: Yes, the engine maker that feeds into the rebound in commercial,
Speaker 6: aerospace and defense.
Speaker 5: The cool thing about Rolls Rice is like each of
Speaker 5: their engines has had a name like the Yeah, well
Speaker 5: going back to like World War two, Okay, the Maryland.
Speaker 5: The Maryland probably the most famous engine there ever was
Speaker 5: They stuck that in Well, the Spitfire, I digress and
Speaker 5: then fifty one D Mustang and made it the greatest
Speaker 5: plane in the world.
Speaker 3: Absolutely, still my favorite fighter plane, the P fifty one.
Speaker 3: The Spitfire is right there at fourteen's nomber three.
Speaker 2: All right, Tim, I actually think about this stuff. We
Speaker 2: digress and digress more.
Speaker 3: How about Europe here a little bit broader kind of
Speaker 3: markets in terms of the waitings here. How are your
Speaker 3: clients looking at the European market?
Speaker 6: So the European market is reasonably well positioned from the
Speaker 6: standpoint of a diverse sector base, it still doesn't have
Speaker 6: the technology opportunity set.
Speaker 2: That sap AM.
Speaker 6: You've got basically four big tech companies there. If you
Speaker 6: think about it, one five one is SAP. We all
Speaker 6: know that, and it's doing fine. Look at its earnings,
Speaker 6: look at stock price. Here is of late, it's been
Speaker 6: a really good call. That's one ASML, which is chip
Speaker 6: manufacturing equipment, absolutely a must when it comes to making
Speaker 6: things for say Nvidia with their chip set, you have
Speaker 6: to have ASML's equipment. And then you've got semiconductor companies
Speaker 6: like Infinian and st Micro and they feed into more
Speaker 6: energy transition, autose, industrial applications, things along those lines.
Speaker 5: But wait, a tech in Europe, I want to lose
Speaker 5: weight all isn't that where those weight loss drugs come from?
Speaker 5: Or initially?
Speaker 6: So that's Novo Nordis and you know obviously is coming
Speaker 6: up as a big second here. But the pharma industry.
Speaker 6: Pharma's business is a big business from a European perspective,
Speaker 6: no doubt. You've got really big consumer franchise, you've got
Speaker 6: luxury goods and the big one of the bigger businesses
Speaker 6: over there that is different from here is the big
Speaker 6: high end luxury auto companies, which are a big play
Speaker 6: on China. Another difference with Europe versus the US is
Speaker 6: China is really important over there.
Speaker 3: I mean if you big buyers of the big German
Speaker 3: industrial equipment.
Speaker 6: Well, and it's pervasive. The UK has a ton of
Speaker 6: It's actually the most exposed because you've got companies like
Speaker 6: Rio Tinto and Glencore and big medals and money that
Speaker 6: feeds in. But you've also got the autos, You've also
Speaker 6: got the industrials, You've got the luxury goods, and.
Speaker 2: All of that adds to.
Speaker 6: Roughly a four hundred and fifty billion euro revenue business
Speaker 6: from Europe selling to China. What happens in China matters
Speaker 6: a lot for Europe, which is a different story than
Speaker 6: what you have here from a US perspective. If you
Speaker 6: add all that together, Europe is okay. It's a lot
Speaker 6: cheaper from a multiple perspective than the US, but the
Speaker 6: earnings growth expectations for this year next year are not
Speaker 6: as robust as they are here in the US, and
Speaker 6: it holds it back.
Speaker 5: Do I have to worry about things? If I'm a
Speaker 5: U and US investor looking to invest in Europe? Do
Speaker 5: I have to worry about things like the currency translations?
Speaker 8: You do?
Speaker 6: And it's kind of typical with currency as a double
Speaker 6: edged sword. I think the conventional wisdom this year is
Speaker 6: if the FED cuts early and first, then you've got
Speaker 6: a week dollar scenario to be told. Now, if you're
Speaker 6: a US person and you're buying European markets, let's say
Speaker 6: all else being equal, that's going to be good for you,
Speaker 6: because you're going to be carrying, you know, Europe over
Speaker 6: to here, which is a stronger currency. It actually ends
Speaker 6: up being negative for the European companies themselves from an
Speaker 6: innings translation basis.
Speaker 5: But it's different argument.
Speaker 3: All right, tim you've lived in London a long time.
Speaker 3: You live just outside of London. So we'll get to
Speaker 3: the congestion pressing. The economy here in the US is good.
Speaker 3: You had a great GDP print, inflation's coming down. How's
Speaker 3: the economy in the UK?
Speaker 6: Yeah, Actually it feels a lot better than necessarily what
Speaker 6: the headlines might suggest. I think there are signs that
Speaker 6: housing prices are possibly stabilizing, certainly like everywhere else. If
Speaker 6: you end up seeing interest rates coming down and the
Speaker 6: expectations are for the Bank of England as well as
Speaker 6: the European Central Night to be cutting, then that could
Speaker 6: be a good thing as well. But big election cycle
Speaker 6: this year. From a UK perspective, that's going to cause
Speaker 6: a lot of noise, just like it is here in
Speaker 6: the US. And yeah, on the ground you're traveling, you're
Speaker 6: looking around, you're going places which you do feels it
Speaker 6: feels he doesn't.
Speaker 5: Go to your congestion pricing because okay, and everybody should
Speaker 5: care about this. London did it first, where cars coming
Speaker 5: into the central part of the city to reduce congestion
Speaker 5: are charged a fortune. New York City is trying to
Speaker 5: do that. But all sorts of you a fan or like.
Speaker 6: Whether you like when I'm gonna say or not, I
Speaker 6: guess we'll see. I am a fan. I think it
Speaker 6: is a good thing for you.
Speaker 2: Yeah, but and not like a mile that writes like
Speaker 2: a long way all kinds of weather.
Speaker 6: But but but it is a case where between congestion
Speaker 6: pricing and they are expanding that congestion zone as well
Speaker 6: as increasing things like cycle lanes and other elements of
Speaker 6: public transport, it is an easier place to get around
Speaker 6: unless you want to drive.
Speaker 5: I don't have a choice, though, we're gonna get I'm
Speaker 5: gonna take my bicycle. At two o'clock in the morning.
Speaker 2: It comes through the Lincoln tunnel.
Speaker 6: That's what you don't have to worry about.
Speaker 2: Now we're gonna we're.
Speaker 3: Going to work with somebody we know and get so
Speaker 3: John can expense his congestion pricing.
Speaker 2: I think I know somebody can help out with that.
Speaker 2: Tim Craigh, thanks so much for joining us.
Speaker 3: Tim Craig at European Equity Strategists know, by the way,
Speaker 3: he is also the director of research over there in Europe,
Speaker 3: so doing lots of stuff.
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