WEBVTT - Fed Survey, Cisco Cuts, US Election 0:00:00.600 --> 0:00:07.240 Bloomberg Audio Studios, podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.920 --> 0:00:17.000 weekdays at ten am Eastern on Apple Cardplay and Android 0:00:17.000 --> 0:00:20.120 Auto with the Bloomberg Business App. Listen on demand wherever 0:00:20.160 --> 0:00:24.480 you get your podcasts, or watch us live on YouTube. 0:00:25.000 --> 0:00:27.320 The other main mover of this week is what's going 0:00:27.360 --> 0:00:29.640 to be happening with the Fed. We got Jackson Hall 0:00:29.760 --> 0:00:33.320 in a couple weeks, FED Susan Collins coming out today 0:00:33.320 --> 0:00:37.000 saying that rakecuts could be soon if inflation keeps falling. 0:00:37.040 --> 0:00:40.320 She says, my outlook for continued gradual reduction back to 0:00:40.320 --> 0:00:43.120 our two percent target amid a healthy labor market. That 0:00:43.120 --> 0:00:44.920 doesn't says to me. That does not say to me 0:00:44.920 --> 0:00:47.520 a fifty basis point cut in September or an emergency 0:00:47.600 --> 0:00:50.159 rate cut. So let's go to Steve Matthews Bloomberg, a 0:00:50.159 --> 0:00:54.240 Federal Preserve reporter. Steve, are we still thinking about a 0:00:54.280 --> 0:00:57.560 fifty basis point cut or an inter meeting cut because 0:00:57.560 --> 0:01:00.160 I have not seen the information from the FED to 0:01:00.200 --> 0:01:00.800 back that up. 0:01:01.720 --> 0:01:05.000 Yeah, you are exactly correct. I mean the markets are 0:01:05.120 --> 0:01:08.679 pricing in the likelihood of a fifty basis point cut 0:01:08.720 --> 0:01:12.720 in September. We have heard from you know, the Kansas 0:01:12.760 --> 0:01:18.720 City FED president last night, the Chicago FED president, Boston 0:01:18.800 --> 0:01:23.440 FED President Richmond. None of them are saying, you know, 0:01:23.920 --> 0:01:26.880 anything that would indicate that we're going to get fifty 0:01:26.920 --> 0:01:27.600 basis points. 0:01:27.640 --> 0:01:30.000 And of course there is a lot of data. 0:01:30.880 --> 0:01:34.080 We get CPI next week, we'll have another I mean, 0:01:34.120 --> 0:01:37.520 the meeting is not until mid September. We'll get another 0:01:38.040 --> 0:01:41.840 jobs report, We'll get another CPI report. I mean, we'll 0:01:41.880 --> 0:01:44.959 get two CPI reports. So there's a lot of data 0:01:45.000 --> 0:01:48.320 that could sway things. But from what we've been hearing 0:01:48.360 --> 0:01:51.640 so far, there's no indication that the Fed is interested. 0:01:51.920 --> 0:01:55.480 And in fact, what Powell said Chair Powell at the 0:01:55.560 --> 0:02:00.720 last press conference, which was just last week, was that 0:02:01.080 --> 0:02:03.840 they were not thinking about fifty basis points, and there's 0:02:03.880 --> 0:02:05.840 no reason to believe that that's changed. 0:02:06.440 --> 0:02:09.080 I found that fascinating the extent to which the calls 0:02:09.080 --> 0:02:12.000 for fifty basis points developed their own momentum. But it's 0:02:12.080 --> 0:02:14.480 interesting now to see this survey that really sort of 0:02:15.240 --> 0:02:17.080 puts that to rest in a certain sort of way. 0:02:17.120 --> 0:02:19.200 But I guess I wondered if you could talk a 0:02:19.200 --> 0:02:22.000 little bit about the remarks from the Fed recently that 0:02:22.000 --> 0:02:24.359 they're going to be putting increased weight on the full 0:02:24.400 --> 0:02:27.160 employment mandate. What does that mean as a practical matter, 0:02:27.200 --> 0:02:29.320 and what should investors be looking for between now and 0:02:29.360 --> 0:02:29.760 the meeting. 0:02:30.840 --> 0:02:34.800 Well, what that means is really for the last two years. 0:02:34.840 --> 0:02:39.040 I mean, inflation peaked two years ago at if you 0:02:39.040 --> 0:02:41.720 look at CPI, it was over nine percent. By the 0:02:41.720 --> 0:02:45.560 Fed's measure, it was over seven percent. And at that 0:02:45.800 --> 0:02:49.600 point they were focused strictly on what can they do 0:02:49.680 --> 0:02:52.920 to bring inflation down? And you also had the unemployment 0:02:53.000 --> 0:02:56.400 rate under four percent. Now you have the unemployment rate 0:02:56.440 --> 0:03:01.000 which has risen to four point three percent and has 0:03:01.040 --> 0:03:05.959 been rising, you know, somewhat unexpectedly more than the Fed 0:03:06.080 --> 0:03:10.440 expected anyway, And therefore they're saying, we're going to be 0:03:10.480 --> 0:03:12.840 paying attention to both sides or our mandate. We're not 0:03:12.960 --> 0:03:17.040 just focused on inflation, even though inflation hasn't quite come 0:03:17.080 --> 0:03:21.480 down to two percent. So it's not just the inflation 0:03:22.040 --> 0:03:24.720 figures it will matter. It will be the employment figures 0:03:24.760 --> 0:03:28.600 it will matter. And those that are predicting fifty basis points. 0:03:28.720 --> 0:03:32.079 And they change a couple of big firms, JP Morgan's 0:03:32.080 --> 0:03:36.560 City Corp City Group changed their calls to fifty basis 0:03:36.560 --> 0:03:40.360 points after the last jobs report, and that was because 0:03:40.360 --> 0:03:43.040 the job's report was very disappointing. 0:03:43.440 --> 0:03:45.000 But they're kind of making the. 0:03:45.000 --> 0:03:48.480 Assumption that that is not just an outlier, that that's 0:03:48.520 --> 0:03:49.320 going to continue. 0:03:49.440 --> 0:03:51.200 So we'll see if they're right. 0:03:52.160 --> 0:03:54.600 So to that point, we only have about a minute left. 0:03:54.640 --> 0:03:57.760 But if the Fed wants to walk back market expectations 0:03:57.800 --> 0:03:59.520 while also acknowledging they're going to have to cut in 0:03:59.560 --> 0:04:01.600 the econ of he's not as great, how do they 0:04:01.640 --> 0:04:01.960 do that. 0:04:03.160 --> 0:04:07.200 Well, you've seen pushback from a bunch of FED presidents. 0:04:07.960 --> 0:04:10.720 In two weeks we will get presumably it's not been 0:04:10.720 --> 0:04:15.720 formally announced, but every year Jerome Powell speaks at Jackson Hole, 0:04:15.840 --> 0:04:19.120 so presumably he will be speaking and in two weeks 0:04:19.720 --> 0:04:24.200 at the king City FED conference in Jackson Hole, and 0:04:24.760 --> 0:04:28.000 that will be a key event where he can push 0:04:28.080 --> 0:04:32.479 back against expectations if he chooses to, and if not, 0:04:32.880 --> 0:04:37.000 you know, you have Vice Jared Jefferson. It's like sometimes 0:04:37.200 --> 0:04:41.280 he will come out and give speeches or TV interviews, 0:04:41.640 --> 0:04:42.000 and you. 0:04:42.000 --> 0:04:45.040 Also have a Chris Waller, the governor is very. 0:04:44.920 --> 0:04:48.720 Influential and you could hear him be speaking between now 0:04:48.760 --> 0:04:49.479 and then as well. 0:04:50.000 --> 0:04:53.440 All right, we appreciate that, Thank you very much. Joining 0:04:53.480 --> 0:04:56.520 us with Steve Matthews, a Bloomberg a Federal Reserve reporter. 0:04:56.640 --> 0:04:57.960 So I have to wonder, Jen, is it just going 0:04:58.040 --> 0:05:00.840 to be like sit tight see you and Jack? Is 0:05:00.880 --> 0:05:02.320 that what we're dealing with here? 0:05:02.480 --> 0:05:04.839 You say sit tight, but I mean anyone who was 0:05:04.880 --> 0:05:07.480 on their quote unquote vacation this week will come back 0:05:07.520 --> 0:05:09.400 to find that there had been a nasty market surprise 0:05:09.520 --> 0:05:09.920 come back. 0:05:10.279 --> 0:05:12.400 They came back already and there were definitely us sitting 0:05:12.400 --> 0:05:14.040 in there desk training there at that point. 0:05:14.279 --> 0:05:14.640 It's true. 0:05:14.640 --> 0:05:16.880 We do get CPI next week, so let's not totally 0:05:16.920 --> 0:05:19.680 forget about that. Plus retail earnings, which should be quite fun. 0:05:21.080 --> 0:05:25.000 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:05:25.080 --> 0:05:28.600 weekdays at ten am Eastern on applecar Play and Android 0:05:28.600 --> 0:05:31.400 Auto with the Bloomberg Business Act. You can also listen 0:05:31.520 --> 0:05:34.600 live on Amazon Alexa from our flagship New York station 0:05:34.960 --> 0:05:37.719 Just Say Alexa playing Bloomberg eleven thirty. 0:05:39.240 --> 0:05:41.240 All right, this was quite a week in the market. 0:05:41.240 --> 0:05:44.679 Here's some superlatives for you. The SMP has now fallen 0:05:44.680 --> 0:05:46.720 for four weeks in a row, the longest weeks since 0:05:46.720 --> 0:05:49.960 September of twenty twenty three, the Nasdaq one hundred is 0:05:49.960 --> 0:05:53.000 down five weeks, the work Streek since May of twenty 0:05:53.040 --> 0:05:54.960 twenty two. I could do this for a while, So 0:05:55.040 --> 0:05:57.560 let's just get to someone professional here, Adam Kuhne's chief 0:05:57.600 --> 0:06:01.679 portfolio manager. I went through a capital manager joins us. Now, hey, Adam, 0:06:02.240 --> 0:06:05.279 what has How do you categorize Maybe this is a 0:06:05.279 --> 0:06:07.520 better question, how do you categorize the last week in 0:06:07.560 --> 0:06:10.440 the market chaotic? 0:06:11.320 --> 0:06:14.520 I mean, you know, I think the market has spent 0:06:14.600 --> 0:06:18.560 the last year or so trying to look into a 0:06:18.600 --> 0:06:20.800 crystal ball and determine what the FED is going to do, 0:06:21.080 --> 0:06:23.400 and they keep getting it wrong. I think this is 0:06:23.400 --> 0:06:26.200 probably another case where a little bit of a knee 0:06:26.279 --> 0:06:29.680 jerk reaction to just a couple of data points, and 0:06:29.720 --> 0:06:31.080 I think we're going to need to see a lot 0:06:31.120 --> 0:06:33.960 more for the FED to really take any action to 0:06:34.440 --> 0:06:36.320 decrease interest rates at this point. 0:06:37.160 --> 0:06:40.320 So what's your call on how people should be thinking 0:06:40.320 --> 0:06:42.720 about this? Is it something where people should just sit tight, 0:06:42.839 --> 0:06:45.119 or is there some positioning recommendations you've got? 0:06:46.400 --> 0:06:49.960 Well, I mean, the data is still real least showing 0:06:50.200 --> 0:06:53.640 that things are slowing and things are deteriorating to a degree. 0:06:53.640 --> 0:06:56.280 I think just the you know, magnitude of it is 0:06:56.320 --> 0:07:00.520 still uncertain. And really it's the point about the determining 0:07:00.520 --> 0:07:02.880 what the FED is going to do with the data 0:07:02.960 --> 0:07:04.680 in the next couple of months. And so I think 0:07:04.880 --> 0:07:08.719 when you look at how to position a portfolio right now, 0:07:09.200 --> 0:07:11.160 it is still wise to start to. 0:07:11.440 --> 0:07:12.840 You know, position more defensively. 0:07:12.840 --> 0:07:17.080 You've got to look at maybe not necessarily decreasing your 0:07:17.080 --> 0:07:21.600 equity allocation, but maybe increasing to things like quality. You know, 0:07:21.600 --> 0:07:24.520 if you're looking at the factor exposures, you're increasing quality, 0:07:24.800 --> 0:07:28.239 You're decreasing some of your high beta growth, maybe looking 0:07:28.240 --> 0:07:31.880 at you know, more dividend paying type stocks, and maybe 0:07:31.920 --> 0:07:34.120 even looking at some value. So I think you want 0:07:34.160 --> 0:07:36.600 to start to just start to tilt towards what what 0:07:36.720 --> 0:07:40.840 most would kind of consider lower vall you know, somewhat 0:07:40.920 --> 0:07:45.000 defensive names within an equity strategy. But ultimately, I mean, 0:07:45.040 --> 0:07:48.600 I think the best trade right now still are long 0:07:48.680 --> 0:07:51.360 duration bonds. I mean, no matter what the FED does, 0:07:52.240 --> 0:07:54.560 I think when you look at, you know, what trade 0:07:54.640 --> 0:07:59.280 has an asymmetric restor reward profile, it's still that very 0:07:59.440 --> 0:08:03.679 seemingly boring trade. Because if the FED sits tight. Most 0:08:03.840 --> 0:08:07.240 likely they're going to really kind of push the economy 0:08:07.600 --> 0:08:11.040 to further downside because they've held off too long. But 0:08:11.040 --> 0:08:12.840 then if they do start to decrease rates, you'll start 0:08:12.840 --> 0:08:14.920 to see interest rates come down and you'll benefit from 0:08:14.920 --> 0:08:16.920 that too. So I think those are two different ways, 0:08:17.000 --> 0:08:18.800 whether you're in the fixed income space or whether you're 0:08:18.840 --> 0:08:19.600 in the equity space. 0:08:19.800 --> 0:08:21.880 How we're playing it right now, is. 0:08:21.840 --> 0:08:23.800 It also an opportunity to buy the dip? I mean, 0:08:23.840 --> 0:08:25.800 I mentioned that the Nastaq one hundred has its worst 0:08:25.840 --> 0:08:28.840 streak now since May of twenty twenty two, because it's 0:08:28.880 --> 0:08:32.440 down about five straight weeks. A truist said, look, you 0:08:32.440 --> 0:08:34.720 know there's a double dig percentage sell off. Let's go 0:08:34.800 --> 0:08:37.480 buy some technology sector. Let's move it to overweight. Is 0:08:37.480 --> 0:08:38.720 that all supposed to ategy here? 0:08:39.840 --> 0:08:42.280 I do, And it's kind of in that same category. 0:08:42.720 --> 0:08:46.040 Is I would buy the dip, especially in tech, but 0:08:46.240 --> 0:08:49.719 particularly in the higher quality tech. And once again it 0:08:49.760 --> 0:08:51.680 probably is more of a you know, somewhat of a 0:08:51.720 --> 0:08:56.800 boring trade. But looking at your names like Alphabet, Meta, Microsoft, 0:08:57.679 --> 0:08:58.199 that's where you. 0:08:58.160 --> 0:09:00.199 Want to buy the dip. Where I wouldn't buy the dip. 0:09:00.120 --> 0:09:03.080 Up our names like Tesla, I'd still be cautious on 0:09:03.120 --> 0:09:05.800 the video here, even though there is still momentum. I'd 0:09:05.880 --> 0:09:08.080 really look at the companies that have a strong business 0:09:08.080 --> 0:09:12.240 model that can sustain some level of growth, some level 0:09:12.280 --> 0:09:15.120 of free cash flow, even if we do see the 0:09:15.200 --> 0:09:18.600 economy rollover. So I think would be particular in where 0:09:18.640 --> 0:09:21.160 you're buying the dip and not just outright buying you know, 0:09:21.200 --> 0:09:22.880 the market or just buying the Nasdaq. 0:09:23.200 --> 0:09:26.400 You want to find, you know, pockets of value. 0:09:26.640 --> 0:09:29.839 Within the SMP or you know, where you're looking to 0:09:30.080 --> 0:09:30.760 buy stocks. 0:09:31.120 --> 0:09:32.760 Can you talk a little bit more, just to dig 0:09:32.800 --> 0:09:34.560 in a bit to your views on in Vidio, because 0:09:34.600 --> 0:09:36.920 I remember the last quarter when I was on this 0:09:37.000 --> 0:09:39.760 show and we spoke so much about Invidia and they 0:09:39.760 --> 0:09:42.640 were just such a bell weather for the AI mania, 0:09:42.840 --> 0:09:46.120 for the enthusiasm for tech. You know there's still to come. 0:09:46.440 --> 0:09:48.560 What is your read on what we're going to see 0:09:48.559 --> 0:09:49.200 from them? 0:09:51.160 --> 0:09:54.760 Yeah, I mean I think, look, big tech is starting 0:09:54.800 --> 0:09:59.760 to decelerate their spend on things like semiconductors and so 0:09:59.800 --> 0:10:04.480 that it will be somewhat of a weight headwind per 0:10:04.520 --> 0:10:07.800 se to the substantial growth at Navidia scene. So I 0:10:07.840 --> 0:10:09.480 think this earnings will be a little bit of a 0:10:09.480 --> 0:10:10.679 tell of what we're going to see in the next 0:10:10.760 --> 0:10:11.480 few quarters. 0:10:12.000 --> 0:10:14.000 This quarter will probably be just fined. I don't think 0:10:14.000 --> 0:10:15.160 you're going to see the results of that. 0:10:15.240 --> 0:10:19.120 It's really the go for the four guidance kind of 0:10:19.120 --> 0:10:23.400 how the conversation goes with management on what they're seeing 0:10:23.559 --> 0:10:25.880 coming up. And I think we're going to see some 0:10:26.120 --> 0:10:30.840 level of deceleration. And unfortunately, because of the way Navidia's 0:10:30.880 --> 0:10:34.920 price the high valuation, that sets it up for potentially 0:10:35.559 --> 0:10:38.640 a bigger downside. We obviously saw it with Intel, and 0:10:38.640 --> 0:10:40.120 I think that's a little bit of a different story. 0:10:40.160 --> 0:10:42.800 That's just a mess altogether. But the fact that you 0:10:42.800 --> 0:10:45.760 could see a name like Intel down twenty five percent 0:10:46.640 --> 0:10:49.640 in one day on earnings, I don't think Navidia is 0:10:50.360 --> 0:10:53.960 at least they're not immune from that. If the growth 0:10:54.040 --> 0:10:57.280 story shows some level of slowing, I think you can 0:10:57.320 --> 0:10:59.880 see investors move away from that type of name really quickly. 0:11:00.080 --> 0:11:02.320 Yeah, those ticks aren't supposed to move like that, and 0:11:02.320 --> 0:11:05.880 that was a really intense move. So we're definitely setting 0:11:05.880 --> 0:11:08.679 ourselves up for a very big last week of August, 0:11:08.679 --> 0:11:10.720 that's for sure. There's been some question over the last 0:11:10.720 --> 0:11:12.400 couple of days as to if the sell off we 0:11:12.440 --> 0:11:16.880 saw was technical in nature, spurred buy were overbought, the 0:11:16.960 --> 0:11:19.520 carrier trades unwinding a little bit, We triggered some technical 0:11:19.600 --> 0:11:22.680 levels versus an actual growth scare. 0:11:23.320 --> 0:11:24.520 Where do you come down on that? 0:11:24.600 --> 0:11:26.520 And I asked that because it also depends on how 0:11:26.559 --> 0:11:28.560 you look at things like bonds, how you look at 0:11:28.600 --> 0:11:29.760 things like corporate credit. 0:11:31.679 --> 0:11:33.680 Yeah, so I think you want to look a little 0:11:33.720 --> 0:11:35.880 bit deeper than just what the market did. And you 0:11:35.960 --> 0:11:39.320 got to look at what volatility did and the volatility 0:11:39.360 --> 0:11:41.080 of that volatility. So you know, when you look at 0:11:41.080 --> 0:11:44.240 the Vicks spiking the way it did, or if you 0:11:44.280 --> 0:11:45.600 look at you know, if you're a bond trader, if 0:11:45.600 --> 0:11:47.320 you're looking at the move indection, you look at interest 0:11:47.360 --> 0:11:51.080 rate volatility. Both had significant moves to the upside. And 0:11:51.080 --> 0:11:53.760 that tells me this was more than just a technical trade. 0:11:53.880 --> 0:11:56.920 This was this was really people starting to become fearful 0:11:57.480 --> 0:12:00.480 of because this market has had so much much, so 0:12:00.600 --> 0:12:05.319 much momentum to the upside, and because valuations are somewhat stretched, 0:12:05.760 --> 0:12:08.360 you know, it's hard to know where the bottom is, 0:12:08.400 --> 0:12:12.440 and so investors tend to during those periods of time, 0:12:12.480 --> 0:12:15.600 they tend to be more reactive, and I think that's 0:12:15.600 --> 0:12:17.679 what we saw last week, was it was more that 0:12:17.840 --> 0:12:21.880 kind of emotional reaction to Okay, is this, it is this? 0:12:22.000 --> 0:12:23.960 And I think everyone's still a little bit scarred from 0:12:24.080 --> 0:12:27.320 you know, seven o eight and how destructive that was. 0:12:27.400 --> 0:12:29.880 And by no means is this that type of scenario. 0:12:30.280 --> 0:12:31.920 But I think you see investors that are quick to 0:12:31.960 --> 0:12:34.760 want to get out of harm's way, you know, when 0:12:34.800 --> 0:12:38.400 they start to see the data or the markets somewhat deteriorate, 0:12:38.559 --> 0:12:40.120 they they're quicker to get out. 0:12:40.160 --> 0:12:41.080 I think that's what we saw. 0:12:41.160 --> 0:12:43.680 So there's probably a technical piece of it, but I 0:12:43.720 --> 0:12:49.960 do think it was emotional somewhat fundamental, because people are 0:12:50.280 --> 0:12:54.800 just scared of, you know, where it could go, and 0:12:54.960 --> 0:12:58.400 especially if the FED. You know, if the FED is 0:12:58.440 --> 0:13:00.760 going to be slow to react, I think that will 0:13:00.760 --> 0:13:04.000 increase the fears even more because we have seen a 0:13:04.040 --> 0:13:07.720 FED that's somewhat you know, they were slow to increase 0:13:07.760 --> 0:13:10.280 interest rates on the bat, you know, at the front 0:13:10.360 --> 0:13:12.360 end of the cycle, when we start it was queer 0:13:12.440 --> 0:13:15.880 that inflation was picking up, and they used the transitory narratives, 0:13:15.880 --> 0:13:18.480 they were slow to increase interest rates. There is a 0:13:18.520 --> 0:13:21.520 fear that they're going to be slow to decrease interest rates, 0:13:21.520 --> 0:13:22.920 and maybe they wait too long. 0:13:23.000 --> 0:13:24.160 And so that's what we're. 0:13:24.000 --> 0:13:26.480 Starting to see, that the market trying to just digest 0:13:26.640 --> 0:13:29.120 all of that information coming to them at once, and 0:13:29.160 --> 0:13:31.280 that's why you saw such a big reaction just on 0:13:31.320 --> 0:13:32.320 a couple of data voids. 0:13:32.720 --> 0:13:35.000 Can we shift the conversation a little bit over to 0:13:35.080 --> 0:13:37.920 corporate credit and other areas of the credit markets, because 0:13:38.200 --> 0:13:40.720 I've been looking at this over the whole year, and 0:13:40.760 --> 0:13:43.760 we've just seen corporate spreads grind tighter and tighter and tighter, 0:13:44.200 --> 0:13:46.400 but also at the same time, a lot of money 0:13:46.440 --> 0:13:50.360 go into other safety plays like mortgage backed securities. So 0:13:50.480 --> 0:13:52.559 can you talk a little bit about what the relative 0:13:52.600 --> 0:13:54.319 value is there though, because I was looking at a 0:13:54.400 --> 0:13:57.319 chart earlier this week and the returns for corporate credit 0:13:57.400 --> 0:14:00.480 have just absolutely fallen off a cliff, whereas more have 0:14:00.520 --> 0:14:01.240 really held up. 0:14:03.400 --> 0:14:06.400 Yeah, So I mean part of that is that's the 0:14:06.520 --> 0:14:08.960 risk portion of where you are in the kind of 0:14:08.960 --> 0:14:11.719 bond spectrum, whether you're in a treasury or mortgage or 0:14:12.200 --> 0:14:14.319 just flat out credit. And I think what we've seen 0:14:14.600 --> 0:14:17.680 what you're seeing with like you said, credit returns falling 0:14:17.720 --> 0:14:21.160 off a cliff really is that they're not immune to 0:14:21.280 --> 0:14:22.920 the reactions of the market like you saw in the 0:14:22.920 --> 0:14:27.240 equity markets, especially in high yield bonds. They become quite 0:14:27.280 --> 0:14:30.600 correlated when things are moving to the downside and volatility 0:14:30.600 --> 0:14:33.200 picks up. So it's no different here when you're looking 0:14:33.200 --> 0:14:35.760 at a mortgage backed security. These are still very high 0:14:35.840 --> 0:14:39.200 quality assets. They don't have the duration moves that like 0:14:39.240 --> 0:14:42.240 a treasury would, but they tend to be very stable 0:14:42.360 --> 0:14:44.840 during periods like this where there is heightened volatility. So 0:14:44.880 --> 0:14:47.600 that's why we like these in a portfolio because you 0:14:47.640 --> 0:14:52.080 pick up that additional yield coupon over a treasury, but 0:14:52.240 --> 0:14:54.960 you have more stability like you would see out of 0:14:54.960 --> 0:14:55.480 a treasury. 0:14:55.600 --> 0:14:57.720 All right, Adam, golly it there, thanks a lot. Appreciate it. 0:14:57.760 --> 0:15:02.680 Adam Kuhn's chief portfolio manager. When Thrope Capital Management. 0:15:02.800 --> 0:15:06.680 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:15:06.760 --> 0:15:09.840 weekdays at ten am Eastern on Affo card playing Android 0:15:09.880 --> 0:15:12.960 Auto with the Bloomberg Business app. Listen on demand wherever 0:15:13.040 --> 0:15:16.160 you get your podcasts, or watch us live on YouTube. 0:15:17.560 --> 0:15:20.680 Let's get to the tech news here. So Cisco potentially 0:15:20.760 --> 0:15:23.960 laying off thousands of workers. This is reporting from Reuters. 0:15:24.000 --> 0:15:26.400 It could look very similar to what we heard back 0:15:26.480 --> 0:15:28.240 earlier in this year when they laid off about five 0:15:28.240 --> 0:15:31.280 percent of its workforce. Dan, I've stand up leaf for 0:15:31.360 --> 0:15:34.360 us managing director and senior equity analyst at Wedbush Securities. 0:15:34.360 --> 0:15:38.520 He's in Tokyo. He's been a real trooper, staying up 0:15:38.600 --> 0:15:40.400 quite late. Hey Dan, what do you make of this 0:15:40.440 --> 0:15:42.960 headline from Reiters that Cisco could lay off thousands in 0:15:43.000 --> 0:15:44.320 their second job cut this year. 0:15:45.680 --> 0:15:48.680 Look, I mean they continue to have struggles Somewhere's what 0:15:48.720 --> 0:15:52.320 we see with Intel, and I think you're really seeing 0:15:52.360 --> 0:15:54.880 almost a have and a have nots in tech and 0:15:54.920 --> 0:15:58.720 I think Cisco is struggling and this just speaks to 0:15:59.080 --> 0:16:01.720 some of the I think issues they're gonna have a Look, 0:16:01.760 --> 0:16:05.120 you cannot cut your way to growth, and that's going 0:16:05.200 --> 0:16:07.680 to be the issue for Cisco going forward. 0:16:09.560 --> 0:16:11.400 Well, you know, just looking a little bit more at 0:16:11.400 --> 0:16:13.040 that point that you can't cut your way to growth. 0:16:13.080 --> 0:16:15.200 I mean, this is not obviously the only company that's 0:16:15.240 --> 0:16:17.960 doing job cuts. I mean, what's your Alex was just 0:16:18.040 --> 0:16:20.200 talking about this at the start of the hour. What's 0:16:20.240 --> 0:16:22.720 your take on how what the legs are, what the 0:16:22.760 --> 0:16:25.040 momentum is for job cuts in the industry. Are these 0:16:25.080 --> 0:16:27.080 all one offs? Or is this something that we're going 0:16:27.160 --> 0:16:27.880 to be seeing more of. 0:16:29.080 --> 0:16:31.280 Look, Cisco is in the right lane going to forty 0:16:31.280 --> 0:16:34.080 five miles an hour, and so many of the rest 0:16:34.120 --> 0:16:37.920 of tech and AI they're in Bugatti going one hundred 0:16:37.960 --> 0:16:39.920 miles an hour in the left lane. And I think 0:16:39.960 --> 0:16:42.520 what's going to happen here is you'll continue to see 0:16:42.520 --> 0:16:44.760 a layouts being Look, if you looked up disaster and 0:16:44.760 --> 0:16:49.160 the dictionary, see Intel, look at Cisco. It's having to 0:16:49.160 --> 0:16:52.160 have nots. There's actually a lot of growth that's happening 0:16:52.280 --> 0:16:54.600 in tech in terms of what we're seeing from hiring, 0:16:55.000 --> 0:16:57.640 but it's really the strong they're getting stronger. But look, 0:16:57.640 --> 0:17:01.040 that's why Cisco did Spunk acquisition. They're gonna have to 0:17:01.080 --> 0:17:02.160 really do that through M and A. 0:17:02.640 --> 0:17:05.119 Well to that point, then, is this just basically companies 0:17:05.160 --> 0:17:07.520 are diverting a lot of their spending to AI stuff, 0:17:08.040 --> 0:17:10.280 so their other stuff is not being spent on, which 0:17:10.359 --> 0:17:12.920 hurts guys like Cisco. You can also make an argument 0:17:12.960 --> 0:17:15.960 that it hurt five to nine, for example, the software company, 0:17:15.960 --> 0:17:17.040 Like is that what we're seeing? 0:17:18.680 --> 0:17:21.600 Look, I think to some extent, book. Cisco's had struggles 0:17:22.160 --> 0:17:24.960 for decades. I mean, it's really been on the wrong 0:17:25.040 --> 0:17:26.920 side of trends. They're trying to get into the right 0:17:26.960 --> 0:17:31.440 side of the trend. Book AI is disrupting sales, it's 0:17:31.480 --> 0:17:35.360 taking spending from other areas. And that's why the strength 0:17:35.400 --> 0:17:38.480 we see in Microsoft and now bat Amazon of course 0:17:38.520 --> 0:17:42.240 godfather of AI, Jensen Navinni and others, you also see 0:17:42.240 --> 0:17:45.520 weakness in others and that's why intact, it's really you're 0:17:45.560 --> 0:17:48.560 either on one side or the other, and right now, 0:17:48.800 --> 0:17:50.760 unfortunately Cisco's on the outside looking in. 0:17:51.400 --> 0:17:53.800 Can you talk a little bit about the equity sell off, 0:17:53.840 --> 0:17:55.840 and you know, I've seen some comments that this is 0:17:55.880 --> 0:17:58.320 remove some of the froth in big tech and maybe 0:17:58.359 --> 0:17:59.800 it's a time to get back in. What do you 0:17:59.800 --> 0:18:00.400 make that. 0:18:01.840 --> 0:18:04.080 I think this is a golden fine opportune. I mean 0:18:04.119 --> 0:18:07.560 that's always been our view in terms of these macro 0:18:08.160 --> 0:18:12.640 fear white knockle events. The AI party is still nine 0:18:12.680 --> 0:18:15.359 pm in a part that goes to four am, and 0:18:15.400 --> 0:18:18.160 we're gonna have scares. I'm not gonna say it's gonna 0:18:18.160 --> 0:18:21.680 be one hundred percent smooth, but everything we're seeing fundamentally 0:18:22.000 --> 0:18:24.560 and what we're seeing from our chests continue to show 0:18:24.720 --> 0:18:27.359 growth is gonna be there, and I think we're gonna 0:18:27.359 --> 0:18:30.720 see this technical market it has sea legs, but look 0:18:30.760 --> 0:18:33.520 the bears they've been rought. You know, bears have been 0:18:33.880 --> 0:18:36.879 and obviously has it on this and they'll continue to 0:18:36.920 --> 0:18:41.119 come out. In terms of fears like we saw this week. 0:18:41.720 --> 0:18:43.280 Do you think what kind of risk event do you 0:18:43.320 --> 0:18:44.800 think in video earnings at the end of the month 0:18:44.840 --> 0:18:46.840 is going to because I think we have Jackson Hole 0:18:46.880 --> 0:18:48.400 in the same week, so it's gonna be a lot. 0:18:48.480 --> 0:18:50.720 Plus it's the last week in August right into Labor 0:18:50.800 --> 0:18:52.800 Day weekend. What risk event are we set. 0:18:52.640 --> 0:18:53.120 Up for here? 0:18:54.720 --> 0:18:57.359 I think that's again at the popcorn moment in terms 0:18:57.440 --> 0:18:59.520 in video. I mean, even if you have a TSMC 0:18:59.640 --> 0:19:03.200 in some the breadcrumbs going on to this robust demand 0:19:03.880 --> 0:19:06.120 in terms of what we see and I think right 0:19:06.160 --> 0:19:09.480 now the street needs to see that to just give 0:19:09.520 --> 0:19:14.320 further creates what we saw in Microsoft Polunteer Alphabet Service 0:19:14.359 --> 0:19:17.679 now and others in terms of monization happen AI. But 0:19:17.760 --> 0:19:20.840 that's me one of the most anticipated earnings calls for 0:19:21.080 --> 0:19:24.360 hearing from Jensen and Nvidio probably in the last four 0:19:24.400 --> 0:19:26.120 or five years, So. 0:19:26.119 --> 0:19:28.600 Let's look past that earning call and we're looking at 0:19:29.680 --> 0:19:32.920 late September. We've had perhaps of twenty five basis point 0:19:32.920 --> 0:19:36.080 fed Reid cut, maybe even fifty. But what we're also 0:19:36.119 --> 0:19:38.720 going to be seeing is probably more evidence that the 0:19:38.760 --> 0:19:41.439 economy is slowing. So what does that do to the 0:19:41.520 --> 0:19:43.879 demand story for all of this AI? 0:19:46.080 --> 0:19:48.920 Look but right now, I mean balance treat is healthy 0:19:49.160 --> 0:19:50.840