WEBVTT - Markets, Job Cuts, And Vaccines (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 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.280 at Bloomberg dot com slash podcast. All right, in business school, 0:00:23.280 --> 0:00:25.880 I learned when you get GDP contractions two quarters in 0:00:25.880 --> 0:00:28.080 a row, that's a recession. Now people are telling me, 0:00:28.720 --> 0:00:31.520 not so fast. We've got a strong consumer. We've got 0:00:31.520 --> 0:00:33.639 everybody's kind of got a job if they want one. 0:00:33.720 --> 0:00:36.320 The wages are going up a little bit. I don't know, 0:00:36.360 --> 0:00:37.839 but let's bring it up. Someone who does this for 0:00:37.840 --> 0:00:40.400 a living, Russell Price. He's a chief economist, used to 0:00:40.400 --> 0:00:42.720 have a real job as an equity research annels. We'll 0:00:42.720 --> 0:00:44.519 get to that in a minute. But now I was 0:00:44.560 --> 0:00:46.800 going over to we should point out that Bloomberg Financial 0:00:46.880 --> 0:00:51.199 has picked him as the best, um well, one of 0:00:51.240 --> 0:00:54.160 the best, one of the most accurate economic forecasters in 0:00:54.360 --> 0:00:58.440 our benchmark consensus certain he's ameret Price Financial, and most importantly, 0:00:58.560 --> 0:01:01.120 he joins us live here in a Bloomberg Interactive Broker Studios. 0:01:01.120 --> 0:01:03.880 So Russell the economy. I, I know we've got a 0:01:03.880 --> 0:01:06.280 lot of headwinds out there, and I know we've got 0:01:06.280 --> 0:01:08.920 some GDP data that's just we're in a recession. But 0:01:09.000 --> 0:01:10.600 some people are telling me not so fast. How do 0:01:10.640 --> 0:01:12.600 you think about it? You know, I think it's much 0:01:12.640 --> 0:01:14.760 more important just to look at the overall data rather 0:01:14.800 --> 0:01:17.120 than trying to label it whether it's a recession or 0:01:17.120 --> 0:01:19.440 not a recession. Either way you look at it, the 0:01:19.480 --> 0:01:23.319 economy is, it's slowed down and it's likely to slow further. 0:01:23.680 --> 0:01:26.080 So I think we'll probably be right around the break 0:01:26.120 --> 0:01:29.360 even point for a couple of quarters. We could slip 0:01:29.400 --> 0:01:34.640 into uh, portions where consumer activity and business investment spending 0:01:34.680 --> 0:01:38.680 are actually negative. Uh, they haven't been there quite yet. 0:01:38.920 --> 0:01:42.920 Consumers have are very strong. So UM, I think it's 0:01:42.920 --> 0:01:46.440 really based on the numbers. Were not in a recession yet, 0:01:46.600 --> 0:01:50.720 but we could yet still be it. Uh. You know, 0:01:51.000 --> 0:01:55.960 to me, it's highlighted the difference in real and nominal GDP. 0:01:56.240 --> 0:01:59.480 So my whole life, we've focused on real GDP, but 0:01:59.560 --> 0:02:03.120 apparently in my dad's day, you know, they focused on 0:02:03.240 --> 0:02:07.120 nominal GDP. And I realized that, Um, you can the 0:02:07.200 --> 0:02:11.000 distinction is elementary. It's just inflation. But you can also 0:02:11.040 --> 0:02:14.600 interpret um nominal GDP growth to mean, you know, we 0:02:14.639 --> 0:02:17.480 have an incredible amount of demand here. You know, Paul 0:02:17.520 --> 0:02:20.960 and I have been hearing all year that this inflation 0:02:21.240 --> 0:02:23.839 is all caused by the supply side and the FED 0:02:23.880 --> 0:02:26.720 can't do anything about it. And lately economists have been 0:02:26.760 --> 0:02:30.400 telling us, you know, maybe this still strong nominal growth 0:02:30.440 --> 0:02:34.239 means that there's a pretty big demand component to this inflation. Yeah. 0:02:34.280 --> 0:02:37.160 I would agree with that. I think demand is very strong. 0:02:37.280 --> 0:02:40.160 It it goes to show, um, just how strong it 0:02:40.280 --> 0:02:43.600 is that the real consumer spending data in the GDP 0:02:43.800 --> 0:02:47.240 report has still been positive. So in other words, what 0:02:47.280 --> 0:02:50.519 that means is consumers are spending above and beyond the 0:02:50.560 --> 0:02:54.959 increase in prices that they're experiencing via inflation. So again 0:02:55.000 --> 0:02:57.720 it goes to show just how strong consumers are. And 0:02:57.960 --> 0:03:00.360 so I always spend as much as I can, Yeah, 0:03:00.480 --> 0:03:05.080 usually about more than I earned. That's my that's my 0:03:05.639 --> 0:03:08.280 that's a strategy. Yeah, that's my rule. Personal. Well, look, 0:03:08.280 --> 0:03:11.320 you know Mary Daily at the San Francisco Fed UM 0:03:11.360 --> 0:03:13.800 the other day, I think she was in an interview 0:03:13.800 --> 0:03:16.840 with Reuters. She said, Um, I don't feel the pain 0:03:16.880 --> 0:03:19.200 of inflation anymore. This is a direct quote, by the way, Paul. 0:03:19.600 --> 0:03:22.560 She said, I see prices rising, but I have enough 0:03:22.680 --> 0:03:25.680 that I can make substitutions. I can do things. Um, 0:03:25.720 --> 0:03:28.600 you know, she saying she makes enough, but of course 0:03:28.639 --> 0:03:31.080 she gets paid for in two thousand dollars and then 0:03:31.120 --> 0:03:33.640 has some pretty good investments as well. Are there people 0:03:33.639 --> 0:03:35.480 in this country who are really being hit hard and 0:03:35.560 --> 0:03:38.760 hurt by inflation? Oh? Sure, absolutely, the people that spend 0:03:39.040 --> 0:03:43.880 the bulk of their UH or income on daily necessities, 0:03:43.920 --> 0:03:48.320 and certainly for housing if UH for rent, and certainly 0:03:48.360 --> 0:03:52.800 for gasoline and household utilities. Household utilities is kind of 0:03:52.840 --> 0:03:57.160 a under the radar inflation component because it's been going 0:03:57.240 --> 0:03:59.160 up at a strong pace and is likely to go 0:03:59.240 --> 0:04:02.360 up even further because natural gas prices are rising. In 0:04:02.760 --> 0:04:06.080 about thirty eight percent of the United the United States, 0:04:06.080 --> 0:04:12.120 households get UH electricity is generated via natural gas. So 0:04:12.680 --> 0:04:14.720 no matter how you heat your home coming in the 0:04:14.720 --> 0:04:17.120 winter is still going to be a higher price, and 0:04:17.160 --> 0:04:20.520 that's gonna squeeze people still. Yet, I'd say this is 0:04:20.520 --> 0:04:23.320 gonna be a huge story, mat and you're coming up 0:04:23.320 --> 0:04:25.799 with this energy. I mean, we gotta stay on topic. 0:04:27.000 --> 0:04:30.479 My My electric bill last month was fifteen hundred dollars 0:04:30.680 --> 0:04:33.520 electric and gas. But if you were in Berlin like 0:04:33.720 --> 0:04:36.440 you were recently, it's gonna be really ugly coming up 0:04:36.480 --> 0:04:39.680 this well. And if Berliner has had air conditioners, it 0:04:39.720 --> 0:04:41.880 would already be bad. That's right, because they choose not 0:04:41.920 --> 0:04:44.200 to live well, that's right, Russell. Talk to us about 0:04:44.240 --> 0:04:46.839 the jobs market. We get a big data point tomorrow. 0:04:47.240 --> 0:04:50.480 We had jobs claims came in, uh, you know inline today, 0:04:50.520 --> 0:04:53.320 but you know, showing some some pickup in jobs claims. 0:04:53.320 --> 0:04:55.640 How do you think about the labor market. Yeah, I 0:04:55.640 --> 0:04:58.920 think there's pockets where we are seeing some actual layoffs, 0:04:59.120 --> 0:05:02.640 but there's still relatively modest the overall pocket. I don't 0:05:02.640 --> 0:05:06.560 think we're seeing broad scale um uh cuts by any means, 0:05:06.720 --> 0:05:10.640 but we are seeing slow down in the pace of hiring. Uh. 0:05:10.720 --> 0:05:12.640 That was evidenced what the other day the other day 0:05:12.640 --> 0:05:16.080 of the jobs the Jolts report. So um, I think 0:05:16.160 --> 0:05:17.960 that we're going to slow down for the month of 0:05:18.040 --> 0:05:20.839 July when it's reported, well, I'm looking for a gain 0:05:20.880 --> 0:05:24.400 of about two thousand. I do expect the unemployment rate 0:05:24.440 --> 0:05:27.479 to tick down to three point five percent because the 0:05:27.480 --> 0:05:30.240 household survey has been flat for a few months, and 0:05:30.240 --> 0:05:31.920 I think we'll get a little bit of a gain there, 0:05:32.440 --> 0:05:35.520 which could momentarily drop the unemployment rate, but I think 0:05:35.560 --> 0:05:38.919 it will probably rise slightly over the second half, so 0:05:39.000 --> 0:05:41.320 that can that gives the FED basically more ammunition to 0:05:41.360 --> 0:05:43.880 raise rates. Jim Bullard yesterday said he wants to see 0:05:44.440 --> 0:05:46.479 um the rates of the FED rates at the end 0:05:46.520 --> 0:05:49.240 of this year at three seventy five to four, and 0:05:49.520 --> 0:05:52.599 we're hearing people forecasting terminal rates at five to six. 0:05:53.520 --> 0:05:56.200 They were outliers, but that group is getting bigger and bigger. 0:05:56.240 --> 0:05:58.200 Is that what you think as well? No, we think 0:05:58.240 --> 0:06:01.239 that the terminal rate will probably be around somewhere between 0:06:01.240 --> 0:06:03.719 three and a half and four, so we're a little 0:06:03.720 --> 0:06:06.719 bit more optimistic. What pause or do they go back down? 0:06:06.839 --> 0:06:08.880 I think a pause. I think the pause will be 0:06:09.240 --> 0:06:11.560 a period of time. I don't think they'll next year. 0:06:11.600 --> 0:06:15.279 I do not expect them to start to cut once again. 0:06:15.600 --> 0:06:17.920 But I think over the second half of the year 0:06:18.160 --> 0:06:21.320 we will start to see inflation data. More broadly, we're 0:06:21.320 --> 0:06:24.960 already seeing any commodities and and UH lumber prices, things 0:06:25.000 --> 0:06:26.599 like that we're always seeing and a pair all of 0:06:26.640 --> 0:06:29.400 things like that. We're already seeing those declines, but we 0:06:29.600 --> 0:06:32.279 need to see it more broadly in the CPI and 0:06:32.360 --> 0:06:35.000 PCE numbers, and I think by the end of the 0:06:35.040 --> 0:06:37.680 year we are going to be seeing that with a 0:06:37.720 --> 0:06:40.039 couple of months under our belt. All right, Russell, great, 0:06:40.040 --> 0:06:42.679 great stuff, Thanks very much for coming in. Russell Price, 0:06:42.720 --> 0:06:46.679 chief economists for Mayor Price Financial based in Troy, Michigan, 0:06:46.680 --> 0:06:50.000 which is a very nice burb of Detroit, and russells 0:06:50.000 --> 0:06:51.240 just giving us some I think a little bit of 0:06:51.240 --> 0:06:53.800 an upbeat outlook for those Detroit lions coming out, So 0:06:53.880 --> 0:06:59.960 go figure that right now, let's get back to the 0:07:00.120 --> 0:07:03.080 markets here. The SNP off just slightly off about two 0:07:03.160 --> 0:07:05.080 tents of one percent. I want to bring in Shawn Snyder, 0:07:05.240 --> 0:07:09.760 he's head of investment strategy at City US Wealth Management. Sean, 0:07:09.920 --> 0:07:12.280 I mean, boy, we had the SNP off, you know, 0:07:12.320 --> 0:07:15.040 a little more than and it's nader. We had the 0:07:15.160 --> 0:07:18.080 um nastack off a little bit more than thirty. But boy, 0:07:18.080 --> 0:07:21.720 they've bounced back pretty well. I guess the question that 0:07:21.800 --> 0:07:24.239 we ask a lot is simply, I'm sure you're hearing 0:07:24.280 --> 0:07:27.160 from your clients, is is this bounce back for real 0:07:27.320 --> 0:07:28.920 or is this just the head fake? What do you think? 0:07:30.360 --> 0:07:32.200 First off, good morning, Thank you for having me. I 0:07:32.320 --> 0:07:35.360 very much appreciate it. Listen, I think there's a solid 0:07:35.400 --> 0:07:38.440 reason why the markets are up since mid June. You 0:07:38.520 --> 0:07:42.000 have better than expected earnings. You have increasing confidence that 0:07:42.040 --> 0:07:45.200 inflation is maybe finally peaked. Um. I know we've been 0:07:45.280 --> 0:07:46.960 a little bit like the Boy who Cried Wolf with 0:07:47.040 --> 0:07:48.960 peak inflation, but it looks like it might actually be 0:07:49.000 --> 0:07:53.000 here this time. You have a noticeable decline in treasury yields. 0:07:53.280 --> 0:07:55.800 You know, tech stocks were reacting to rising treasury yields 0:07:55.800 --> 0:07:57.480 and now they're reacting to them on the way down 0:07:57.520 --> 0:07:59.680 as well. Uh, And then you have the potential for 0:07:59.760 --> 0:08:02.239 less coggressive FED. So I do think that makes sense 0:08:02.280 --> 0:08:06.360 for markets to move higher. Now. The real question to 0:08:06.480 --> 0:08:08.880 me is, you know is the bottom in? And to me, 0:08:09.040 --> 0:08:12.360 that really depends upon whether we have a recession or not. 0:08:12.400 --> 0:08:15.960 And I think this idea that we've already seen the 0:08:16.000 --> 0:08:20.280 worst maybe wrong if you ask yourself. You know, recessions 0:08:20.320 --> 0:08:23.800 tend to last about eleven months on average, unemployment rate 0:08:23.840 --> 0:08:26.720 tends to rise by about two points six percent when 0:08:26.720 --> 0:08:29.960 you have a recession. Our stocks appropriately priced right now 0:08:30.320 --> 0:08:33.480 for that type of environment. I would argue maybe not, 0:08:33.880 --> 0:08:36.160 but it's gonna take some time for this to play out, 0:08:36.160 --> 0:08:37.600 and we have to see what the FED does and 0:08:37.720 --> 0:08:41.120 monetary policy operates with the lag, so we have to 0:08:41.120 --> 0:08:43.840 see what happens economic DATAE and I think this is 0:08:43.840 --> 0:08:46.000 just gonna be one of those times where we have 0:08:46.040 --> 0:08:49.080 to be really patient as investors. What do you think 0:08:49.240 --> 0:08:52.839 QT means? I mean, when do we start it in earnest? 0:08:53.120 --> 0:08:56.880 And how much that tightened up financial conditions because they've 0:08:56.920 --> 0:09:00.920 just gotten looser over the past few weeks. Well, that's right, 0:09:01.000 --> 0:09:03.520 so with the stock market actually going up, that loosens 0:09:03.559 --> 0:09:06.200 financial conditions, and financial conditions are about as loose as 0:09:06.200 --> 0:09:08.520 they were back in March. So in some regards, that 0:09:08.600 --> 0:09:11.440 actually makes the Fed's job a bit more difficult, and 0:09:11.480 --> 0:09:13.960 would actually argue for them to continue to tighten, even 0:09:13.960 --> 0:09:16.720 though they may wish to kind of pivot at some point. 0:09:16.760 --> 0:09:20.120 So that does make things difficult. Uh, you know, really 0:09:20.280 --> 0:09:23.200 is a question about three. You know, we head into 0:09:23.040 --> 0:09:26.839 twenty three, inflation is on a downtrend, the economy is 0:09:26.880 --> 0:09:28.760 holding up. You know, I think the FED can maybe 0:09:28.760 --> 0:09:31.120 dial back a little bit hope that things are you know, 0:09:31.200 --> 0:09:34.360 on track for that soft landing. But you know, it's 0:09:34.360 --> 0:09:37.720 really gonna be difficult if core inflation doesn't start to 0:09:37.720 --> 0:09:41.400 calm down, if shelter prices stay elevated, we continue to 0:09:41.440 --> 0:09:44.000 see wage growth, and I think the Fed may feel 0:09:44.520 --> 0:09:47.360 that it has to continue to raise rates into three. 0:09:47.400 --> 0:09:49.640 And I think it's gonna be really interesting story in 0:09:50.480 --> 0:09:53.680 because these dual mandates will become dueling mandates. Where what 0:09:53.720 --> 0:09:56.079 does the FED do at that point if unemployment is 0:09:56.160 --> 0:09:59.439 rising while inflation is staying hot, you know, hotter than 0:09:59.440 --> 0:10:02.600 hope for which one takes precedence, and that could add 0:10:02.640 --> 0:10:05.720 the market flatility, But we'll have to wait and see. Sean, 0:10:05.760 --> 0:10:08.240 we're about eighty percent of the way through earning season 0:10:08.240 --> 0:10:10.600 in terms of the SMP five hundred here, a little 0:10:10.640 --> 0:10:13.160 bit better than expected. I think, what are your takeaways? 0:10:14.880 --> 0:10:17.400 It is better than expected. I think we were expecting 0:10:17.400 --> 0:10:20.920 about five and a half percent EPs growth year on year. 0:10:20.920 --> 0:10:23.800 It's tracking above that full percentage point, probably six and 0:10:23.800 --> 0:10:26.920 a half seven percent, So that's certainly good. My takeaway 0:10:26.920 --> 0:10:29.880 from earnings and economic data that we're seeing this week 0:10:29.960 --> 0:10:32.360 under the market rallied on an uptick in i s 0:10:32.480 --> 0:10:35.280 M Services Index, is that to me, it's telling us 0:10:35.320 --> 0:10:38.199 that we're not in a recession yet, it doesn't confirm 0:10:38.240 --> 0:10:40.400 to me that one will ultimately be avoided. So I 0:10:40.440 --> 0:10:43.560 still think I'm being a big cautious here. But so far, 0:10:44.040 --> 0:10:46.800 I think the economy is holding up. Okay, we're continuing 0:10:46.840 --> 0:10:50.160 to see job growth. I think we'll see that again tomorrow, 0:10:50.200 --> 0:10:52.760 and I think that's positive news and kind of gives 0:10:52.760 --> 0:10:55.400 the Fed the green lights to you know, tighten a 0:10:55.440 --> 0:10:59.240 bit more. But you know, getting towards the end of two, 0:10:59.440 --> 0:11:03.920 I think it might be a bit more difficult. Sorry, 0:11:03.960 --> 0:11:07.360 we've heard that a lot of people UM are holding cash. 0:11:07.960 --> 0:11:10.520 Is that the case for you and your clients as well? 0:11:12.320 --> 0:11:14.600 Some of our clients maybe holding cash. But as a 0:11:14.840 --> 0:11:18.400 you know firm, our Global Investment Committee is fully invested. 0:11:19.200 --> 0:11:24.360 We're defensively positioned. So we're in areas like dividend growers, healthcare, 0:11:24.520 --> 0:11:29.120 consumer staples. UM. We also like natural resource stocks. We 0:11:29.160 --> 0:11:31.920 think that's kind of an inflation hedge. And then you know, 0:11:31.960 --> 0:11:36.679 certain pockets of fixed income US municipals, intermediate duration, investment 0:11:36.720 --> 0:11:41.600 grade credits, and we're basically looking for pockets of opportunity 0:11:41.880 --> 0:11:44.600 rather than sitting in cash. And you know, the problem 0:11:44.640 --> 0:11:47.240 was sitting in cash is in an inflationary environment. It's 0:11:47.240 --> 0:11:50.400 inflations running at nine point one percent, and you're in cash. 0:11:50.440 --> 0:11:53.720 That means you're losing nine point one percent at least 0:11:53.760 --> 0:11:55.640 if you're in equities, you know, you get some sort 0:11:55.640 --> 0:11:57.840 of dividend yield or fixed income, you get some sort 0:11:57.840 --> 0:12:00.680 of dividend um. So I think there's better alternatives, and 0:12:00.679 --> 0:12:02.960 it really really do think bonds are back. We think 0:12:02.960 --> 0:12:06.199 we saw the peak and yields probably earlier this year. 0:12:06.559 --> 0:12:09.280 So we think fixed income, you know, presents an opportunity 0:12:09.280 --> 0:12:12.360 here that's at least better than sitting in cash. All right, Sean, 0:12:12.400 --> 0:12:15.240 good stuff. Really appreciate getting a few minutes of your time. 0:12:15.280 --> 0:12:17.959 Shawn Snyder, he's head of an investment strategy at this 0:12:18.000 --> 0:12:21.440 little bank in New York City called City, the US 0:12:21.480 --> 0:12:25.000 wealth management side of that business here. So bonds are back, 0:12:25.240 --> 0:12:29.400 so says Mr Snyder. H And they're fully invested there 0:12:29.440 --> 0:12:35.640 at City. Vince Singarella, he's global macro strategist for Bloomberg News. 0:12:35.679 --> 0:12:38.960 Traded currencies back in a day, traded bonds back in 0:12:39.000 --> 0:12:42.960 the day. Um Now he is firmly ensconced in his 0:12:43.040 --> 0:12:45.719 work from home office set up which he has set 0:12:45.800 --> 0:12:48.040 up like no one else. He doesn't eat anybody because 0:12:48.040 --> 0:12:50.000 he's just done it all. And we love it when 0:12:50.000 --> 0:12:52.160 he checks in because he has some very interesting calls 0:12:52.160 --> 0:12:55.040 on these markets. Vince, I know you've been the way 0:12:55.080 --> 0:12:58.000 I phrased the people's Vince signal has got a very 0:12:58.000 --> 0:13:01.079 positive kind of view on risk ascid and boy for 0:13:01.080 --> 0:13:03.960 the last couple of months, you've been so spot on there. Uh, 0:13:04.000 --> 0:13:06.360 and I think it was kind of predicated upon the 0:13:06.480 --> 0:13:08.480 FET's not going to raise as much as people think. 0:13:08.840 --> 0:13:11.280 Do you still feel that way? Yeah, I feel very 0:13:11.280 --> 0:13:14.520 strongly that way. I mean I've still you know, as 0:13:14.559 --> 0:13:18.520 I've as you guys probably remember back from I've been 0:13:18.840 --> 0:13:21.640 fed watchers since my college days. I traded through Voker. 0:13:22.520 --> 0:13:25.440 I met Paul Woker. This is not Voker's inflation that 0:13:25.600 --> 0:13:29.959 we're fighting. UM, it's um, you know, the consumers getting 0:13:29.960 --> 0:13:34.400 tapped out revolving credits at up their team percent this year, 0:13:34.920 --> 0:13:38.400 uh wages up five inflations of nine percent. It's not 0:13:38.520 --> 0:13:42.640 keeping chasing their tail a little bit there. They made 0:13:42.640 --> 0:13:46.920 a huge era um with their transient call. Uh. They're 0:13:46.920 --> 0:13:50.079 trying to correct that save some credibility. And I'm I'm 0:13:50.120 --> 0:13:52.960 afraid they're just gonna make another another policy mistake because 0:13:53.000 --> 0:13:55.680 the consumer is just gonna the consumer is gonna taper 0:13:55.720 --> 0:13:58.480 going into the third and fourth quarter, so demand is 0:13:58.480 --> 0:14:00.599 going to drop to meet supply. We're not going to 0:14:00.720 --> 0:14:03.800 get this runaway inflation that said seems to think that's 0:14:03.800 --> 0:14:06.480 going to continue. It's already starting to roll over, dude. 0:14:06.559 --> 0:14:09.400 And when that happens. When that happens, I think equities, 0:14:09.520 --> 0:14:12.319 especially in the nastack and the tech sector are gonna rock. 0:14:12.360 --> 0:14:14.080 And the short end of the Treasury card was going 0:14:14.120 --> 0:14:18.120 to be brilliant because when those expectations dropped, those bonds 0:14:18.160 --> 0:14:20.640 are gonna sore. They're they're up to levels where they 0:14:20.680 --> 0:14:24.400 see inflation at three d percent rates at three percent, 0:14:25.360 --> 0:14:26.920 you need to get on a conference call with the 0:14:26.960 --> 0:14:32.440 bond market man because, um, the result on POSAR, because 0:14:32.800 --> 0:14:36.000 you know, it seems like that narrative of the Fed, 0:14:36.560 --> 0:14:38.360 you know, going to three and a half or four 0:14:38.520 --> 0:14:41.200 and then cutting in like even the first half of 0:14:41.960 --> 0:14:45.360 three has been flipped on its head over the last week. Now, 0:14:45.400 --> 0:14:47.880 all of a sudden, everybody is talking about five percent 0:14:47.960 --> 0:14:51.840 for a terminal rate, even six and those who are 0:14:51.880 --> 0:14:55.840 more conservative, um, still think that the FED is at 0:14:55.880 --> 0:14:59.760 least gonna pause for the year and not cut. Well, 0:14:59.800 --> 0:15:02.000 I'm not so sure they're going to cut necessarily. Um, 0:15:02.280 --> 0:15:04.720 you know, let's let's say, say if they raise rights 0:15:04.760 --> 0:15:07.240 to three to three and a half percent and you 0:15:07.280 --> 0:15:09.280 have inflation coming down, inflation is not going to come 0:15:09.320 --> 0:15:10.840 down at three to three and a half percent by 0:15:10.960 --> 0:15:13.920 year end. So they're perfectly, you know, in a situation 0:15:13.960 --> 0:15:16.080 to stay where they are and pause. But I mean, 0:15:16.200 --> 0:15:19.160 let's let's you know, look at the yel curve. The 0:15:19.560 --> 0:15:24.000 ten uere yield is not pricing in five FED interest 0:15:24.040 --> 0:15:28.040 rates or or maintaining inflation with thirty eight basis points 0:15:28.040 --> 0:15:31.360 inverted from the twos. The twos are pricing in three 0:15:31.360 --> 0:15:33.440 to twent and a half percent, said with being just 0:15:33.520 --> 0:15:36.560 over three percent, but the rest of the curves inverted 0:15:36.600 --> 0:15:38.920 for a reason that the bond market doesn't believe this, 0:15:38.920 --> 0:15:43.120 this trend for past this year is going to continue 0:15:43.200 --> 0:15:48.920 very much. So what I haven't heard recently is stagflation. 0:15:48.960 --> 0:15:50.720 That was kind of a thing that I had to 0:15:50.720 --> 0:15:53.000 go back into my little TechBook and check it out. 0:15:53.040 --> 0:15:55.680 And we haven't been talking about that much recently. Had 0:15:55.960 --> 0:16:00.320 why not, Well, you know, the reason again. And when 0:16:00.360 --> 0:16:03.480 I say this is in poker's inflation, I sat in 0:16:03.520 --> 0:16:06.120 those gas lines with the odd and even license plate. 0:16:06.440 --> 0:16:09.080 What are you driving? Back to n Vince oh Man, 0:16:09.200 --> 0:16:12.400 It was a nineteen seventy one bulick was saber that 0:16:12.440 --> 0:16:19.200 got eleven miles to was I was enough a lot um. 0:16:19.360 --> 0:16:22.160 The reason why we had that and and hopefully the 0:16:22.200 --> 0:16:27.040 Inflation Reduction Act won't repeat this is the the White 0:16:27.040 --> 0:16:31.120 House and Nixon administration in post price controls, and they 0:16:31.160 --> 0:16:33.880 thought that they could put a cap on prices and 0:16:33.920 --> 0:16:36.320 therefore a cap inflation. But what they did it wasn't 0:16:36.320 --> 0:16:40.040 across the board. So for instance, you had a cap 0:16:40.120 --> 0:16:43.120 on beef prices to keep you know, meat prices down 0:16:43.120 --> 0:16:45.880 for the consumer, but they didn't cap the grain prices 0:16:46.920 --> 0:16:50.480 for the ranchers, so they could no longer raise cattle 0:16:50.520 --> 0:16:53.320 out of profit, so they stopped. And what happened, prices 0:16:53.400 --> 0:16:56.240 went through the roof because of the supply demand issue. 0:16:56.440 --> 0:16:59.400 So unless the administration makes the same foolish mistake as 0:16:59.440 --> 0:17:02.160 they did in the seventies, this isn't that that kind 0:17:02.160 --> 0:17:04.960 of inflation. The demand will slow and it will come 0:17:04.960 --> 0:17:07.000 back to balance. We're already starting, by the way, that's 0:17:07.000 --> 0:17:09.360 an interesting point, Vince. You know, so many people at 0:17:09.400 --> 0:17:12.480 the UM well for the last you know, six months, 0:17:12.480 --> 0:17:15.320 have been saying this is all about the supply side, 0:17:15.520 --> 0:17:18.480 and the FED can't do anything about it, and then 0:17:18.480 --> 0:17:21.040 they heard UM. I believe Paul and Tom were talking 0:17:21.040 --> 0:17:23.240 to Michael Darta a couple of days ago and he said, look, 0:17:23.680 --> 0:17:26.000 nominal growth is really high and to meet that signals 0:17:26.040 --> 0:17:28.320 that demand is a huge part of the problem. Do 0:17:28.359 --> 0:17:31.000 you think that's the case. Yeah, but I think it's 0:17:31.000 --> 0:17:33.040 gonna slow. I mean, we saw mortgage rates today, you 0:17:33.119 --> 0:17:36.000 drop about five percent from the first time in April. UM. 0:17:36.040 --> 0:17:38.080 You know, the housing markets beginning to slow, and that's 0:17:38.080 --> 0:17:39.879 where I think that You know, what people miss is 0:17:40.200 --> 0:17:43.200 the consumer's real wealth is in their homes these days, 0:17:43.240 --> 0:17:45.720 most of them aren't invested in the stock market. So 0:17:45.920 --> 0:17:48.800 if prices start to come down or or we're starting 0:17:48.800 --> 0:17:51.040 to see in the real estate market here in the Northeast, 0:17:51.480 --> 0:17:53.520 what we're seeing as sales decline. So we're not really 0:17:53.520 --> 0:17:55.760 seeing prices come down yet, but we're starting to see 0:17:55.760 --> 0:17:58.240 a decline in sales. Naturally, what will follow is a 0:17:58.320 --> 0:18:01.320 decline in prices, and in the US, consumers see that 0:18:01.359 --> 0:18:03.720 and they see that their wages aren't keeping up with inflation. 0:18:04.000 --> 0:18:05.960 I mean, no one's getting a nine percent raids this 0:18:06.040 --> 0:18:08.680 year to stay with stay to keep up with that 0:18:08.680 --> 0:18:11.480 that pace, and it's likely going to be pretty high 0:18:11.520 --> 0:18:13.879 next year as well. So at some point when you 0:18:13.920 --> 0:18:18.320 see revolving credit up on in a year, that's a 0:18:18.359 --> 0:18:21.160 consumer that's really tapped out. And I just don't see 0:18:21.200 --> 0:18:23.600 that as lasting for a very very long time. Vince. 0:18:23.680 --> 0:18:25.600 You know here at Bloomberg Radio and TV we make 0:18:25.640 --> 0:18:28.080 a big day out of jobs Day and tomorrow's Job's Day. 0:18:28.119 --> 0:18:30.320 What are you looking for when the granddaddy of all 0:18:30.359 --> 0:18:33.240 economic statistics? Exactly, that's how you guys play it. I'm in, 0:18:33.320 --> 0:18:35.000 I'm all in, what are you what are you looking for? Vince? 0:18:35.320 --> 0:18:37.119 We'll see this is the thing, and I have I 0:18:37.200 --> 0:18:41.399 disagree once again with the majority opinion on this. The 0:18:41.520 --> 0:18:45.480 jobs numbers are will definitely begin to slow, and that's 0:18:45.520 --> 0:18:47.760 because they're a lagging indicator. And when I keep seeing 0:18:47.800 --> 0:18:50.600 the FED talk about a strong job market, I want 0:18:50.600 --> 0:18:53.600 to go back and like throw my economic textbooks at somebody, 0:18:53.680 --> 0:18:55.600 because we are going to see jobs slow, but it's 0:18:55.600 --> 0:18:59.040 gonna lag the rest of the economy. Inevitable. We're starting 0:18:59.040 --> 0:19:01.320 to see the job cut are left it right from 0:19:01.320 --> 0:19:04.200 some of the major corporations. It was an announcement again 0:19:04.280 --> 0:19:07.520 this morning of another major corporation cutting jobs. It is 0:19:07.560 --> 0:19:10.600 gonna slow, and my fear is that the fet is 0:19:10.640 --> 0:19:13.680 walking into some kind of like a bear trap where 0:19:13.960 --> 0:19:17.840 you're gonna raise risk alow but jobs slow and being 0:19:17.840 --> 0:19:20.200 a legging indicator, it's already gonna be too late. You 0:19:20.920 --> 0:19:24.760 gonna roll over right, all right, Vince, good stuff. As always. 0:19:24.800 --> 0:19:28.040 We got the bullish call on stocks and risk assets. 0:19:28.119 --> 0:19:31.080 He's been consistently making a call for the last a 0:19:31.280 --> 0:19:34.280 couple of months there um and he's been right. So 0:19:34.640 --> 0:19:36.919 he's sticking with He's you know, no no waiver in 0:19:36.920 --> 0:19:42.520 that voice. You know. Some of the news that's coming 0:19:42.520 --> 0:19:44.239 across the tape over the last few days just kind 0:19:44.240 --> 0:19:46.040 of makes me chuck a little bit coming out of 0:19:46.040 --> 0:19:48.879 Wallster because it just seems like it was just weeks 0:19:48.960 --> 0:19:51.240 lash months ago that we were seeing stories about how 0:19:51.240 --> 0:19:53.800 Wall Street couldn't hire people fast enough and they couldn't 0:19:53.840 --> 0:19:58.040 pay their incoming analysts and associates enough and raising uh, 0:19:58.200 --> 0:20:00.359 you know, salaries every other week. It's se were like 0:20:00.680 --> 0:20:02.560 you were asking every banker that came on the show, 0:20:02.600 --> 0:20:04.800 like did you go into your manager's office and demand 0:20:05.560 --> 0:20:08.280 double double bonus? You know? And now we've got stories 0:20:08.320 --> 0:20:10.719 like the exact opposit. We we're talking about cutting jobs, 0:20:10.920 --> 0:20:13.840 plunging bonus pools. Um. I got to get to the 0:20:13.840 --> 0:20:15.800 bottom of this. We can do that with Hannah Levitt, 0:20:15.960 --> 0:20:19.920 financial reporter for Bloomberg New She joins us live, Yes 0:20:20.040 --> 0:20:23.560 Live on Bloomberg Interactive Broker Studio. We appreciate that, Hannah. 0:20:23.600 --> 0:20:25.400 What's going on Wall Street? I mean, I know it's 0:20:25.400 --> 0:20:28.800 a yo yo ball, pay pay a lot, pay terrible, 0:20:28.800 --> 0:20:30.879 pay a lot. Where are we now? And what are 0:20:30.880 --> 0:20:33.879 the banks telling you? Hey, yeah, thank you for having me. Um. 0:20:33.920 --> 0:20:37.360