1 00:00:02,520 --> 00:00:07,000 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:12,560 --> 00:00:13,240 Speaker 2: This is the. 3 00:00:13,200 --> 00:00:17,440 Speaker 1: Bloomberg Surveillance Podcast. Catch us live weekdays at seven am 4 00:00:17,480 --> 00:00:21,240 Speaker 1: Eastern on Apple CarPlay or Android Auto with the Bloomberg 5 00:00:21,320 --> 00:00:24,880 Speaker 1: Business App, Listen on demand wherever you get your podcasts, 6 00:00:25,280 --> 00:00:26,960 Speaker 1: or watch us live on YouTube. 7 00:00:27,160 --> 00:00:30,120 Speaker 3: Please to start with Mike Green with a good view 8 00:00:30,120 --> 00:00:33,440 Speaker 3: of the FED in economics and the system. Sort of 9 00:00:33,440 --> 00:00:35,440 Speaker 3: a total all in look at what we're doing. But 10 00:00:35,479 --> 00:00:39,480 Speaker 3: today we have to celebrate that is simplify asset management. 11 00:00:40,200 --> 00:00:45,839 Speaker 3: High yield ETF has five stars from morning Star and 12 00:00:45,880 --> 00:00:49,240 Speaker 3: that's That's what's unusual in the category that Mike plays 13 00:00:49,280 --> 00:00:54,040 Speaker 3: in the pond, six hundred and thirty one investments, and 14 00:00:54,320 --> 00:00:56,600 Speaker 3: I don't think I've ever seen this in umpteen years. 15 00:00:56,840 --> 00:01:00,720 Speaker 3: Your single percentile, what are you doing? I mean you're 16 00:01:00,760 --> 00:01:04,520 Speaker 3: not offered death style, You're to date you're one percent 17 00:01:04,680 --> 00:01:08,319 Speaker 3: tile a year ago twenty two percentile, which is phenomenal. 18 00:01:09,120 --> 00:01:12,240 Speaker 3: What are you doing different than others in the highyeld sandbox? 19 00:01:13,040 --> 00:01:14,720 Speaker 4: Well, first of all, thank you for saying that. It's 20 00:01:14,760 --> 00:01:17,440 Speaker 4: really kind of you. We are doing a couple of 21 00:01:17,480 --> 00:01:19,880 Speaker 4: different things. We've designed the product to take advantage of 22 00:01:19,920 --> 00:01:21,480 Speaker 4: many of the theories you've heard me talk about the 23 00:01:21,520 --> 00:01:24,680 Speaker 4: impact passive investing, the strategies that are out there. The 24 00:01:24,760 --> 00:01:27,240 Speaker 4: product is the way we access the high yield market. 25 00:01:27,800 --> 00:01:31,279 Speaker 4: We're using a synthetic exposure all sorts of credit funds 26 00:01:31,520 --> 00:01:34,839 Speaker 4: short the HyG in order to amplify their single security picks. 27 00:01:35,680 --> 00:01:38,520 Speaker 4: We relieve the balance sheet from the banks when they 28 00:01:38,600 --> 00:01:40,240 Speaker 4: do that, so we get the securities lending fees, so 29 00:01:40,280 --> 00:01:42,119 Speaker 4: we pick up out one hundred and fifty basis points 30 00:01:42,120 --> 00:01:43,920 Speaker 4: of excess returns simply by doing that. 31 00:01:44,600 --> 00:01:45,399 Speaker 3: We then apply an. 32 00:01:45,360 --> 00:01:48,080 Speaker 4: Overlay that I've used for the past decade that is 33 00:01:48,160 --> 00:01:51,120 Speaker 4: designed to smooth out credit hedges and just find designed 34 00:01:51,200 --> 00:01:54,280 Speaker 4: to smooth out credit spread widening. The impact of that 35 00:01:54,400 --> 00:01:56,760 Speaker 4: in this year has been fantastic. That's really what accounts 36 00:01:56,760 --> 00:01:57,080 Speaker 4: for our. 37 00:01:57,120 --> 00:01:58,760 Speaker 3: Is it a one offer, is it something you can 38 00:01:58,880 --> 00:02:01,800 Speaker 3: persist over three, five or ten years? We've been using it. 39 00:02:01,960 --> 00:02:05,160 Speaker 4: I've been using this strategy for about ten years. The 40 00:02:05,240 --> 00:02:07,840 Speaker 4: Simplify strategy has been live now. It just hit his 41 00:02:07,880 --> 00:02:09,760 Speaker 4: three year track record, which is what was required to 42 00:02:09,800 --> 00:02:12,800 Speaker 4: get that five star rating, and it's managed to deliver 43 00:02:13,000 --> 00:02:18,040 Speaker 4: in twelve separate tightening and widening cycles. Now for credit 44 00:02:18,160 --> 00:02:19,760 Speaker 4: so we've actually been really fortunate. 45 00:02:20,040 --> 00:02:22,560 Speaker 5: You come out of Teal Macro as well, you know, 46 00:02:22,680 --> 00:02:27,720 Speaker 5: the manage the assets of Peter Teal a few years ago. 47 00:02:27,800 --> 00:02:29,760 Speaker 5: What did you learn there? What did you learn from him? 48 00:02:30,120 --> 00:02:32,239 Speaker 4: Well, you know, Peter is incredibly famous for asking the 49 00:02:32,320 --> 00:02:34,600 Speaker 4: key question, what do you believe that nobody else believes? 50 00:02:34,680 --> 00:02:36,400 Speaker 4: Or what you believe is true that nobody else believes 51 00:02:36,400 --> 00:02:37,600 Speaker 4: is true? Or what do you believe is false that 52 00:02:37,639 --> 00:02:40,520 Speaker 4: everybody else believes is false? And when I met Peter 53 00:02:40,680 --> 00:02:43,560 Speaker 4: several years ago, I introduced him to my ideas around 54 00:02:43,560 --> 00:02:46,880 Speaker 4: the impact of passive investing, and honestly, that I think 55 00:02:47,040 --> 00:02:49,919 Speaker 4: was one of the most important things that he encountered 56 00:02:49,960 --> 00:02:52,200 Speaker 4: his influence, I think the dynamics of how he's taken 57 00:02:52,240 --> 00:02:53,840 Speaker 4: his company's public and how he's behaved. 58 00:02:54,160 --> 00:02:57,120 Speaker 5: When you say passive, do you mean traditional the way 59 00:02:57,160 --> 00:03:01,160 Speaker 5: that retail investors think about passive investing? Five hundred index 60 00:03:01,240 --> 00:03:04,079 Speaker 5: funds two basis points to buy vo. 61 00:03:04,560 --> 00:03:07,800 Speaker 4: Absolutely, So that's really what we're hitting on. Unfortunately, there 62 00:03:07,800 --> 00:03:10,480 Speaker 4: are incredible flaws in the construction and understanding of this. 63 00:03:10,520 --> 00:03:12,840 Speaker 4: I've actually spoken on Bloomberg with Arry Ritholtz about this 64 00:03:13,000 --> 00:03:16,600 Speaker 4: dynamic passive is not passive. The actual definition of passive 65 00:03:16,720 --> 00:03:18,239 Speaker 4: is you never trade. 66 00:03:18,000 --> 00:03:20,760 Speaker 3: You always hold. That means it's impossible to get in. 67 00:03:21,160 --> 00:03:22,600 Speaker 3: It means it's impossible to get out. 68 00:03:23,080 --> 00:03:26,240 Speaker 4: In around twenty sixteen, a very smart individual, Loss Peterson 69 00:03:26,280 --> 00:03:28,600 Speaker 4: at AQR wrote a paper called Sharpening the Arithmetic of 70 00:03:28,639 --> 00:03:32,280 Speaker 4: Active Management, which you noted on index reconstitution that they 71 00:03:32,360 --> 00:03:35,400 Speaker 4: had to trade and therefore that created an opportunity. My 72 00:03:35,600 --> 00:03:38,320 Speaker 4: contribution was to recognize that every time you, as an 73 00:03:38,360 --> 00:03:40,920 Speaker 4: individual investor contributing to your four oh one K, you 74 00:03:41,000 --> 00:03:43,520 Speaker 4: are creating a trading environment. So it turns out that 75 00:03:43,600 --> 00:03:46,960 Speaker 4: passive is not passive at all. It's a systematic, algorithmic 76 00:03:47,040 --> 00:03:50,600 Speaker 4: strategy that simply says, if you give me cash, then buy. 77 00:03:50,800 --> 00:03:54,000 Speaker 3: So translate this into what our listeners and viewers are 78 00:03:54,080 --> 00:03:57,520 Speaker 3: living when they buy a passive fund on a zero 79 00:03:57,640 --> 00:04:00,720 Speaker 3: to one hundred scale, how active is it? Is it 80 00:04:00,960 --> 00:04:02,040 Speaker 3: ten percent active? 81 00:04:02,600 --> 00:04:04,680 Speaker 4: Well, it really depends on what you defind. So the 82 00:04:04,720 --> 00:04:06,480 Speaker 4: minute you're putting that money in, you are one hundred 83 00:04:06,520 --> 00:04:10,400 Speaker 4: percent active. Once you've transitioned in short position, you become passive. 84 00:04:10,920 --> 00:04:13,280 Speaker 4: That in and of itself, though, creates its own dynamics 85 00:04:13,320 --> 00:04:15,920 Speaker 4: because you're not really passive in the classic sense. You 86 00:04:16,000 --> 00:04:19,240 Speaker 4: are hoddling, right. It's the same phenomenon we saw on bitcoin. 87 00:04:19,360 --> 00:04:22,200 Speaker 4: If you're not willing to sell, the next player has 88 00:04:22,240 --> 00:04:24,560 Speaker 4: to pay a higher price. And because what we have 89 00:04:24,640 --> 00:04:27,880 Speaker 4: seen is just an extraordinary inflow into passive strategies, which 90 00:04:27,960 --> 00:04:30,240 Speaker 4: now represent about forty five percent of the market cap 91 00:04:30,320 --> 00:04:33,480 Speaker 4: of the United States, we've actually just seen a continual 92 00:04:33,640 --> 00:04:37,080 Speaker 4: upward pressure in valuation and prices that a lot of us, 93 00:04:37,160 --> 00:04:39,400 Speaker 4: unfortunately think is the up and to the right phenomenon 94 00:04:39,480 --> 00:04:40,240 Speaker 4: in markets. 95 00:04:40,040 --> 00:04:42,600 Speaker 3: And your community across the nation. And this fad day, 96 00:04:42,600 --> 00:04:45,000 Speaker 3: a lot of good voices coming up. Kati Kaminski will 97 00:04:45,000 --> 00:04:48,120 Speaker 3: be with us the absolute best on trend investing of 98 00:04:48,200 --> 00:04:51,720 Speaker 3: the shattering of trends. Right now, as Tim Stenovick mentioned 99 00:04:52,120 --> 00:04:54,480 Speaker 3: that we've got a nice lift to the market off 100 00:04:54,560 --> 00:04:59,479 Speaker 3: a bombshell Switzerland announcement, the United States and China will 101 00:04:59,560 --> 00:05:02,599 Speaker 3: meet and they will speak. Futures up thirty seven points 102 00:05:02,680 --> 00:05:05,400 Speaker 3: right now, we said good morning on YouTube, Tim. 103 00:05:05,600 --> 00:05:09,160 Speaker 5: Does that mean we're all handling our retirement incorrectly? If 104 00:05:09,200 --> 00:05:13,720 Speaker 5: we're thinking about funds that are based on age, based 105 00:05:13,760 --> 00:05:17,760 Speaker 5: on retirement, these target date funds that are mostly passive Unfortunately. 106 00:05:17,880 --> 00:05:20,640 Speaker 4: I think that's correct, and I think that the first 107 00:05:20,640 --> 00:05:22,920 Speaker 4: of all, I want to be very clear, all and 108 00:05:23,320 --> 00:05:27,560 Speaker 4: incorrectly are very broad and subjective terms. Right, it's a 109 00:05:27,640 --> 00:05:32,000 Speaker 4: system that has worked extraordinarily well, but unfortunately has Ponzi characteristics. 110 00:05:32,480 --> 00:05:35,080 Speaker 4: The new entrance into the system are inflating the wealth 111 00:05:35,160 --> 00:05:37,960 Speaker 4: of the existing holders. What we don't know yet and 112 00:05:38,080 --> 00:05:40,640 Speaker 4: unfortunately you mentioned when we're from Peter Teel, the trade 113 00:05:40,680 --> 00:05:44,159 Speaker 4: that gave me notoriety was the Vollmageddon events the XIV. 114 00:05:45,200 --> 00:05:47,720 Speaker 4: What became very clear there was that was a systematic 115 00:05:47,839 --> 00:05:51,000 Speaker 4: algorithmic strategy that had become too large for the market. 116 00:05:51,520 --> 00:05:54,360 Speaker 4: We're seeing similar characteristics in the broader market with the 117 00:05:54,520 --> 00:05:57,480 Speaker 4: S and P today. The way that that manifested itself 118 00:05:57,560 --> 00:06:00,440 Speaker 4: is when a significant outflow occurred a crash. 119 00:06:00,520 --> 00:06:03,080 Speaker 3: Hey, where's the shadow right now? I mean those of 120 00:06:03,240 --> 00:06:06,200 Speaker 3: us of a certain vintage understand we learned how to 121 00:06:06,279 --> 00:06:11,560 Speaker 3: spell portfolio insurance in October of nineteen eighty seven. There 122 00:06:11,680 --> 00:06:15,320 Speaker 3: was a leverage of LTCM in that where's the shadow 123 00:06:15,400 --> 00:06:18,080 Speaker 3: in the system? Now? Is it just simply and I'm 124 00:06:18,120 --> 00:06:21,120 Speaker 3: speaking folks on a physics basis, the mass of the 125 00:06:21,240 --> 00:06:23,320 Speaker 3: passive market that has. 126 00:06:23,200 --> 00:06:25,160 Speaker 4: A huge component to it. So when I did the 127 00:06:25,360 --> 00:06:30,680 Speaker 4: XIV trade the Volmageddon event, I had done the analysis 128 00:06:30,720 --> 00:06:34,000 Speaker 4: that basically suggested that the passive or systematic algorithmic strategies 129 00:06:34,040 --> 00:06:36,920 Speaker 4: had risen to about seventy percent of the daily trading volume. 130 00:06:37,440 --> 00:06:39,680 Speaker 4: If we look at the impact of passive today and 131 00:06:39,720 --> 00:06:42,240 Speaker 4: the broader market, it's very, very similar. Once you factor 132 00:06:42,320 --> 00:06:44,640 Speaker 4: in the way money the way market making is done, 133 00:06:44,720 --> 00:06:49,320 Speaker 4: which is effectively index arbitrage. We're trying to make ETF's work, 134 00:06:49,360 --> 00:06:50,880 Speaker 4: we're trying to keep prices tight. 135 00:06:51,400 --> 00:06:52,839 Speaker 3: All of that trading is tied. 136 00:06:52,680 --> 00:06:56,040 Speaker 4: Around many of the same phenomenon and so you know, unfortunately, 137 00:06:56,120 --> 00:06:58,160 Speaker 4: my work suggests that we're getting closer and closer to 138 00:06:58,240 --> 00:07:01,280 Speaker 4: a point at which it becomes an inevitability rather than 139 00:07:01,279 --> 00:07:01,880 Speaker 4: a probability. 140 00:07:01,920 --> 00:07:03,920 Speaker 3: And would tell I would say, is you set yourself 141 00:07:04,000 --> 00:07:06,880 Speaker 3: up for not a three standard deviation but a four 142 00:07:06,960 --> 00:07:11,440 Speaker 3: or six standard deviation, surprise, some form of shock, and 143 00:07:11,560 --> 00:07:13,800 Speaker 3: that's a trigger. Is it as simple as that there 144 00:07:13,880 --> 00:07:18,360 Speaker 3: will be a trigger point outside our beliefs and certitudes 145 00:07:18,800 --> 00:07:21,120 Speaker 3: that will allow for the magnitude move. 146 00:07:21,400 --> 00:07:23,680 Speaker 4: Will you hit on a really key phase a belief? 147 00:07:23,960 --> 00:07:26,000 Speaker 4: And I would argue that a key component of what 148 00:07:26,080 --> 00:07:29,080 Speaker 4: we're experiencing right now is that belief right. So the 149 00:07:29,200 --> 00:07:32,520 Speaker 4: up unto the right phenomenon encourages people to put money 150 00:07:32,560 --> 00:07:35,080 Speaker 4: in when it's down right now, they're putting it into 151 00:07:35,080 --> 00:07:38,160 Speaker 4: the industries. We saw this very specifically in the events 152 00:07:38,240 --> 00:07:40,680 Speaker 4: coming after April eighth, when the market made its recent low. 153 00:07:41,360 --> 00:07:43,680 Speaker 4: A trigger was hit what's called a threshold trigger within 154 00:07:43,800 --> 00:07:46,240 Speaker 4: many target date funds that forced them to rebalance. 155 00:07:46,640 --> 00:07:47,880 Speaker 3: When they rebalance, what do they do? 156 00:07:48,040 --> 00:07:51,480 Speaker 4: They have to sell bonds by equities, And unfortunately, when 157 00:07:51,560 --> 00:07:54,920 Speaker 4: that coincides with Trump making a speech, President Trump making 158 00:07:54,960 --> 00:07:57,360 Speaker 4: a speech saying it's a good time to buy, it's 159 00:07:57,400 --> 00:07:58,200 Speaker 4: a force Listen. 160 00:07:58,240 --> 00:08:00,720 Speaker 3: Would you get the surveillance cork and it at my mouth? 161 00:08:00,840 --> 00:08:06,480 Speaker 3: So Tim save me. Well, I can't say enough, folks, 162 00:08:06,680 --> 00:08:09,640 Speaker 3: how I agree with mister Green. I'm rebail. It's like 163 00:08:09,800 --> 00:08:11,160 Speaker 3: deaf to go. Mike. 164 00:08:11,280 --> 00:08:15,080 Speaker 5: You have just a fascinating post out from your newsletter 165 00:08:15,840 --> 00:08:18,640 Speaker 5: earlier this week. It talks about President Trump in the 166 00:08:18,800 --> 00:08:22,480 Speaker 5: historic context of other leaders in the past. Franklin Roosevelt. 167 00:08:23,640 --> 00:08:26,600 Speaker 5: You even bring up Roman leaders in there, in the 168 00:08:26,680 --> 00:08:29,840 Speaker 5: context of where we are as a country, where we 169 00:08:29,920 --> 00:08:32,480 Speaker 5: are as perhaps an empire. Where do you see it? 170 00:08:32,559 --> 00:08:34,520 Speaker 5: What do you see this moment? As well? 171 00:08:34,720 --> 00:08:36,199 Speaker 4: I've been talking about this for a long time, and 172 00:08:36,280 --> 00:08:38,200 Speaker 4: as you know, I think all American men think about 173 00:08:38,280 --> 00:08:39,680 Speaker 4: Rome at least five times a day, so. 174 00:08:39,760 --> 00:08:40,199 Speaker 5: We've heard that. 175 00:08:40,720 --> 00:08:44,559 Speaker 4: There's nothing particularly unique about my insights there. Look, we 176 00:08:44,679 --> 00:08:47,160 Speaker 4: often talk about the fall of the Roman Empire. We're 177 00:08:47,240 --> 00:08:49,840 Speaker 4: not an empire. We're a republic, and where we seem 178 00:08:49,880 --> 00:08:52,240 Speaker 4: to sit, unfortunately, is towards the fall of the republic, 179 00:08:52,559 --> 00:08:54,319 Speaker 4: And if anyone really wants to dig into it, I 180 00:08:54,360 --> 00:08:56,679 Speaker 4: would strongly encourage them to read Mike Duncan's book The 181 00:08:56,800 --> 00:08:59,640 Speaker 4: Storm Before the Storm, which is about that transition period 182 00:09:00,400 --> 00:09:04,600 Speaker 4: between the Roman Republic and the Roman Empire. I draw 183 00:09:04,640 --> 00:09:07,600 Speaker 4: analogies to the idea that Trump could be viewed as 184 00:09:07,640 --> 00:09:10,400 Speaker 4: a graucus, could be viewed as the Grocy Brothers, etc. 185 00:09:10,760 --> 00:09:13,559 Speaker 4: As a reformer. Unfortunately, I just think he lacks the 186 00:09:13,600 --> 00:09:16,079 Speaker 4: mental plasticity at the advanced stage that he's at that 187 00:09:16,160 --> 00:09:20,600 Speaker 4: a Franklin Roosevelt had. Franklin Roosevelt was not a communist 188 00:09:20,679 --> 00:09:23,360 Speaker 4: and was not a socialist, and was not a redistributionist 189 00:09:23,440 --> 00:09:25,880 Speaker 4: in his early stage. It was only after he saw 190 00:09:26,000 --> 00:09:28,640 Speaker 4: the effects of the Great Depression in the late nineteen 191 00:09:28,640 --> 00:09:31,680 Speaker 4: twenties early nineteen thirties that he saw a different path 192 00:09:32,040 --> 00:09:34,800 Speaker 4: and he redefined the relationship. Now, I'm not suggesting that 193 00:09:34,920 --> 00:09:37,640 Speaker 4: the answer to this is more government. The answer is 194 00:09:37,720 --> 00:09:40,720 Speaker 4: more effective government, and that is a very hard challenge 195 00:09:40,800 --> 00:09:41,960 Speaker 4: in this current environment. 196 00:09:42,080 --> 00:09:44,480 Speaker 3: I just put it on Twitter, The Storm before the Storm, 197 00:09:44,600 --> 00:09:47,079 Speaker 3: the book by Mike Green Robert T. Caplan with a 198 00:09:47,400 --> 00:09:49,959 Speaker 3: book somewhat equivalent to that written last year off of 199 00:09:50,080 --> 00:09:53,839 Speaker 3: Yale University Press. I'll try to get that out as well. 200 00:09:53,920 --> 00:09:56,640 Speaker 3: My answers watched the what was it like fifteen twenty 201 00:09:56,760 --> 00:09:58,679 Speaker 3: years ago? They had a whole It was like when 202 00:09:58,720 --> 00:10:02,040 Speaker 3: they invented streamings serials and they add a TV show 203 00:10:02,080 --> 00:10:05,040 Speaker 3: called Rome. You know, I don't have to read the book, 204 00:10:05,080 --> 00:10:06,920 Speaker 3: do I can just watch just now. 205 00:10:06,960 --> 00:10:09,040 Speaker 5: You just open chat GPT and ask it whatever you 206 00:10:09,120 --> 00:10:10,199 Speaker 5: want and then it'll do it for you. 207 00:10:10,480 --> 00:10:12,880 Speaker 3: Well, yeah, that's a whole separate story, you know, Mike, 208 00:10:13,440 --> 00:10:16,079 Speaker 3: I think this is really really interesting. I want you 209 00:10:16,200 --> 00:10:20,240 Speaker 3: to fold it over to how people should prosecute something 210 00:10:20,280 --> 00:10:23,079 Speaker 3: as boring as a retirement plan. How do you bring 211 00:10:23,160 --> 00:10:24,280 Speaker 3: this over to the mundane? 212 00:10:25,600 --> 00:10:28,120 Speaker 4: But Tom, we could have an hour long discussion before 213 00:10:28,120 --> 00:10:28,360 Speaker 4: I get it. 214 00:10:28,840 --> 00:10:30,760 Speaker 3: Can we clear the deck here? Are you willing to 215 00:10:30,800 --> 00:10:32,600 Speaker 3: give up newspapers for Mike Green? 216 00:10:34,480 --> 00:10:35,360 Speaker 5: That's the right answer. 217 00:10:35,480 --> 00:10:38,640 Speaker 3: That is the right answer. How do we bring this 218 00:10:38,960 --> 00:10:43,199 Speaker 3: over to we mere mortals trying to decide what percentage 219 00:10:43,320 --> 00:10:44,120 Speaker 3: to be in the market. 220 00:10:44,960 --> 00:10:47,480 Speaker 4: The quick answer is there is no right percentage, right, 221 00:10:47,520 --> 00:10:50,600 Speaker 4: It's going to depend on everyone's individual component. The key 222 00:10:50,679 --> 00:10:53,040 Speaker 4: thing that I would highlight is that when you think 223 00:10:53,080 --> 00:10:56,200 Speaker 4: about investing for retirement, when you think about those, focus 224 00:10:56,280 --> 00:10:59,559 Speaker 4: on what you need, not what your neighbor wants, right, 225 00:10:59,640 --> 00:11:01,679 Speaker 4: And this is a really key component. We tend to 226 00:11:01,720 --> 00:11:04,319 Speaker 4: get ourselves caught up in the fomo type framework. We're 227 00:11:04,400 --> 00:11:06,720 Speaker 4: in an environment in which you can if you're worried 228 00:11:06,720 --> 00:11:09,199 Speaker 4: about inflation, you can buy real yielding tips with a 229 00:11:09,280 --> 00:11:12,280 Speaker 4: positive yield for the first time in over a decade. 230 00:11:12,520 --> 00:11:12,640 Speaker 6: Right. 231 00:11:12,920 --> 00:11:14,920 Speaker 4: That is something that would argue people are ignoring. I 232 00:11:14,960 --> 00:11:18,120 Speaker 4: would broadly suggest that fixed income in a lot of ways, 233 00:11:18,160 --> 00:11:20,760 Speaker 4: because it has what I refer to as indogenous liquidity, 234 00:11:20,920 --> 00:11:24,560 Speaker 4: significant coupon payments, and an ultimate payment of at maturity, 235 00:11:25,280 --> 00:11:29,400 Speaker 4: has very different characteristics than the Ponzi like characteristics associated 236 00:11:29,440 --> 00:11:31,960 Speaker 4: with equities, where you are always getting your value from 237 00:11:32,000 --> 00:11:34,760 Speaker 4: what somebody else pays, and so those are ways that 238 00:11:34,840 --> 00:11:36,600 Speaker 4: you can separate yourselves. They're not immune. 239 00:11:36,760 --> 00:11:37,400 Speaker 5: I have to be clear. 240 00:11:37,480 --> 00:11:40,200 Speaker 4: This is a systemic issue. But they are a better 241 00:11:40,320 --> 00:11:41,920 Speaker 4: way to think about the opportunity. 242 00:11:41,960 --> 00:11:44,400 Speaker 3: So brilliant, Mike Green, thank you so much. She's chief 243 00:11:44,400 --> 00:11:46,800 Speaker 3: strategy to Simplified asset Management. 244 00:11:53,080 --> 00:11:56,640 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 245 00:11:56,760 --> 00:11:59,800 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 246 00:12:00,000 --> 00:12:03,599 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 247 00:12:03,800 --> 00:12:05,240 Speaker 1: watch us live on YouTube. 248 00:12:05,360 --> 00:12:09,440 Speaker 3: We continue forward with some huge academics from the London 249 00:12:09,520 --> 00:12:13,120 Speaker 3: Business School, her doctor at Crystal Rondo. The Linz stops 250 00:12:13,160 --> 00:12:15,680 Speaker 3: by when she is in America. She's a Vauntabelle asset 251 00:12:15,800 --> 00:12:19,200 Speaker 3: Management of Europe. You walked in the room and you said, 252 00:12:19,200 --> 00:12:21,040 Speaker 3: I don't talk about it as fed stuff. I want 253 00:12:21,080 --> 00:12:23,840 Speaker 3: to talk about allocation, which is great because I don't 254 00:12:23,880 --> 00:12:29,240 Speaker 3: talk enough about allocation. What's the biggest mistake, given chaos, 255 00:12:29,840 --> 00:12:33,920 Speaker 3: given day to day uncertainty, what's the biggest mistake people 256 00:12:34,040 --> 00:12:34,920 Speaker 3: make an allocation? 257 00:12:36,000 --> 00:12:38,160 Speaker 7: Do you think that they know to be honest? Having 258 00:12:38,200 --> 00:12:41,200 Speaker 7: been an active investment manager for all my Caurier before 259 00:12:41,240 --> 00:12:43,200 Speaker 7: becoming the because just like. 260 00:12:43,200 --> 00:12:45,840 Speaker 3: That in the English, because it wasn't there having been 261 00:12:45,920 --> 00:12:49,079 Speaker 3: an active manager in enjoying losing money. 262 00:12:49,120 --> 00:12:52,800 Speaker 7: And not at all, not at all, actually not at all, 263 00:12:52,960 --> 00:12:56,520 Speaker 7: my friends should still be on your Bloombergh platform. No, 264 00:12:56,720 --> 00:13:00,160 Speaker 7: but very seriously, there's a lot of uncertainty, and what 265 00:13:00,280 --> 00:13:02,800 Speaker 7: it means is there's a lot that we don't know, 266 00:13:02,920 --> 00:13:05,439 Speaker 7: and you need to recognize that and not go for 267 00:13:05,600 --> 00:13:10,280 Speaker 7: extreme allocation. So neither extreme bullish, which nobody is tempted, 268 00:13:10,559 --> 00:13:14,079 Speaker 7: nor extreme verish. That is the number one mistake is 269 00:13:14,160 --> 00:13:16,320 Speaker 7: to actually go on the limb. 270 00:13:16,559 --> 00:13:18,360 Speaker 5: Are we passed a little bit of the chaos, a 271 00:13:18,440 --> 00:13:22,000 Speaker 5: little bit of the uncertainty Given what we found out yesterday, 272 00:13:22,080 --> 00:13:25,320 Speaker 5: a US China meeting will take place this weekend in Switzerland. 273 00:13:25,360 --> 00:13:27,480 Speaker 5: It will center on de escalation. 274 00:13:28,360 --> 00:13:32,000 Speaker 7: No, I don't think we passed the uncertainty. Yeah, morehead, 275 00:13:32,080 --> 00:13:34,280 Speaker 7: I think so. I think it will continue because you know, 276 00:13:34,360 --> 00:13:37,160 Speaker 7: this is not a straight path to a deal, nor 277 00:13:37,280 --> 00:13:41,520 Speaker 7: is it a straight path economically with the political environment, 278 00:13:41,880 --> 00:13:43,440 Speaker 7: so uncertainty is here to stay. 279 00:13:44,160 --> 00:13:46,120 Speaker 5: Breathing a sigh of relief that the conversations are at 280 00:13:46,200 --> 00:13:46,680 Speaker 5: least happening. 281 00:13:46,840 --> 00:13:51,280 Speaker 7: Yes, definitely, definitely for growth and for inflation. Right, the 282 00:13:51,360 --> 00:13:53,400 Speaker 7: one thing that we do know, so let's start with 283 00:13:53,480 --> 00:13:56,440 Speaker 7: what we do know now is everything else equal. If 284 00:13:56,480 --> 00:13:58,839 Speaker 7: you put on tariff, however low they are, but on 285 00:13:58,920 --> 00:14:01,720 Speaker 7: a large scale, you will get lower growth and higher inflation. 286 00:14:01,960 --> 00:14:03,680 Speaker 7: So that is one part we know, and that again 287 00:14:03,760 --> 00:14:05,320 Speaker 7: has implication for Ustelic nation. 288 00:14:05,480 --> 00:14:08,560 Speaker 3: Nine point two five percent of our audience, particularly here 289 00:14:08,600 --> 00:14:12,120 Speaker 3: in America Good Morning, around the world and on YouTube, 290 00:14:12,800 --> 00:14:16,760 Speaker 3: looks at Europe and has basically mentally discarded it for 291 00:14:16,880 --> 00:14:21,560 Speaker 3: I'll say five years or ten years in investment. Is 292 00:14:21,640 --> 00:14:22,880 Speaker 3: there a new Europe? 293 00:14:25,400 --> 00:14:28,080 Speaker 7: I hope I can answer yes, there's Certainly Europe has 294 00:14:28,120 --> 00:14:31,400 Speaker 7: certainly gotten a wake up call. I think the proof 295 00:14:31,480 --> 00:14:34,800 Speaker 7: is in the pudding. Europe has disappointed for quite a 296 00:14:34,880 --> 00:14:37,920 Speaker 7: long time. So what's changing is the fiscal spending. I 297 00:14:38,040 --> 00:14:41,280 Speaker 7: do believe it will happen, indeed in Germany. So that's 298 00:14:41,320 --> 00:14:45,000 Speaker 7: a positive and relative term for growth. But look, some 299 00:14:45,120 --> 00:14:47,560 Speaker 7: of the weakness of Europe has been the inability at 300 00:14:47,640 --> 00:14:50,920 Speaker 7: times to act together and that. 301 00:14:51,320 --> 00:14:53,760 Speaker 3: But then on a micro basis at the company and level, 302 00:14:53,880 --> 00:14:57,920 Speaker 3: are the CEOs thinking differently in whether it's two boards 303 00:14:57,960 --> 00:15:01,200 Speaker 3: in Germany or one board wherever that they have supported 304 00:15:01,240 --> 00:15:04,120 Speaker 3: the board to be. You know, the stereotype is to 305 00:15:04,240 --> 00:15:07,560 Speaker 3: be more anglocentric. Are we are we seeing that now? 306 00:15:08,320 --> 00:15:10,040 Speaker 7: I'm not sure I understood your question. 307 00:15:10,240 --> 00:15:12,080 Speaker 3: I think because you don't want to hear it. 308 00:15:12,200 --> 00:15:14,040 Speaker 8: Yeah, no, no, no, no, no I do. 309 00:15:14,240 --> 00:15:16,840 Speaker 7: But I mean Europe has always been quite looking towards 310 00:15:16,920 --> 00:15:19,240 Speaker 7: the west, right, so Anglo centric if you want to 311 00:15:19,280 --> 00:15:19,640 Speaker 7: go with that. 312 00:15:19,840 --> 00:15:24,000 Speaker 3: But yeah, the stereotype of our global Wall Street audience, yes, 313 00:15:24,520 --> 00:15:29,960 Speaker 3: is there's a there's a locking individual take on CEOs. 314 00:15:30,040 --> 00:15:33,640 Speaker 3: Let's go at Disney at Uber this morning. Tim Uh, 315 00:15:34,200 --> 00:15:36,200 Speaker 3: They're out there, they're going, let's go, let's fix this, 316 00:15:36,360 --> 00:15:38,640 Speaker 3: let's fix our margins. Let's go, let's go, let's go, 317 00:15:39,320 --> 00:15:42,120 Speaker 3: and everybody in years going at a slower speed. Is 318 00:15:42,200 --> 00:15:45,840 Speaker 3: there a change there or is it business as usual? No? 319 00:15:45,920 --> 00:15:47,520 Speaker 7: I think there is a change. I think there is 320 00:15:47,560 --> 00:15:50,600 Speaker 7: a change. Whether it delivers, I don't know. That's why 321 00:15:50,640 --> 00:15:53,480 Speaker 7: I said proof is in the proof is in the pudding. 322 00:15:53,760 --> 00:15:55,840 Speaker 7: Is that you now we now need to go get 323 00:15:55,880 --> 00:15:57,680 Speaker 7: it in Europe in a sense a line? 324 00:15:59,000 --> 00:16:01,040 Speaker 3: You know the other day, fall off my chair, Royal 325 00:16:01,160 --> 00:16:05,080 Speaker 3: Duchess once again looking at a British patrolum talk about dinosaurs. 326 00:16:05,160 --> 00:16:06,080 Speaker 5: What's all as new again? 327 00:16:07,160 --> 00:16:07,320 Speaker 3: You know? 328 00:16:07,520 --> 00:16:11,280 Speaker 5: I wonder to what extent this idea of Europe being 329 00:16:11,360 --> 00:16:15,640 Speaker 5: pushed close together or becoming closer is the result of 330 00:16:15,720 --> 00:16:19,960 Speaker 5: the US in this America First policy? Is that what's 331 00:16:20,000 --> 00:16:23,080 Speaker 5: happening here? The US is saying essentially, okay, America First 332 00:16:23,120 --> 00:16:25,680 Speaker 5: is not America alone. Investors don't necessarily agree with that, 333 00:16:26,480 --> 00:16:29,360 Speaker 5: but it makes Europe say, okay, we have to rely 334 00:16:29,680 --> 00:16:31,800 Speaker 5: on each other more for defense spending, we have to 335 00:16:31,840 --> 00:16:34,280 Speaker 5: become closer together, and we have to unite more. Is 336 00:16:34,320 --> 00:16:34,920 Speaker 5: that what happening? 337 00:16:35,320 --> 00:16:37,520 Speaker 7: I think that's part of it. That definitely part of 338 00:16:37,560 --> 00:16:39,840 Speaker 7: it is just like I mean, that's with everything in life. 339 00:16:39,920 --> 00:16:42,520 Speaker 7: You get adversity and that pulls you together. Right, So 340 00:16:43,720 --> 00:16:47,200 Speaker 7: the adversity. The first thing that brought Europe together was COVID. 341 00:16:47,800 --> 00:16:50,880 Speaker 7: That Ino sense really helped from that perspective in bringing 342 00:16:51,400 --> 00:16:53,520 Speaker 7: the countries to pools it together. And I think, yes, 343 00:16:53,640 --> 00:16:57,960 Speaker 7: there's a reaconing that that they better pull together. 344 00:16:59,080 --> 00:17:03,800 Speaker 5: It didn't happen from a fiscal perspective during COVID that 345 00:17:03,960 --> 00:17:06,480 Speaker 5: was a huge issue. I mean, you saw Europe as 346 00:17:06,480 --> 00:17:10,320 Speaker 5: a whole recover in a more slow way than the 347 00:17:10,480 --> 00:17:12,520 Speaker 5: US did. The US sort of stood out over the 348 00:17:12,600 --> 00:17:16,280 Speaker 5: last three years. Yes, in its quote unquote exceptionalism compared 349 00:17:16,280 --> 00:17:18,239 Speaker 5: to the rest of the world. Is that era behind us? 350 00:17:19,960 --> 00:17:21,800 Speaker 7: No, I think there's I mean, there's a few things 351 00:17:21,840 --> 00:17:24,280 Speaker 7: that are impacting right now. I don't think it's I mean, 352 00:17:24,400 --> 00:17:26,880 Speaker 7: let's say I've been structurally bullish on the US economy. 353 00:17:27,000 --> 00:17:30,840 Speaker 7: I continue to believe it's the strongest economy, but a 354 00:17:30,920 --> 00:17:34,040 Speaker 7: few things are denting or impacting US assets right now. 355 00:17:34,160 --> 00:17:35,960 Speaker 7: The pressure that we're seeing on the dollar, I think 356 00:17:36,080 --> 00:17:39,240 Speaker 7: is a structural downward pressure. Europe has a chance to 357 00:17:39,359 --> 00:17:44,280 Speaker 7: pick itself together by uniting. They see the need and 358 00:17:44,400 --> 00:17:46,360 Speaker 7: that's why I come back to we need to see 359 00:17:46,400 --> 00:17:48,720 Speaker 7: the proof in the pudding. Is it happening and is 360 00:17:48,760 --> 00:17:49,320 Speaker 7: it delivering? 361 00:17:50,960 --> 00:17:54,600 Speaker 3: With us from Vulntable this morning, thrilled with this crystal 362 00:17:54,800 --> 00:17:58,080 Speaker 3: under the land all I've lived and I was in 363 00:17:58,200 --> 00:18:02,360 Speaker 3: Switzerland I was fifteen years old. Magical is the appreciation 364 00:18:02,560 --> 00:18:07,119 Speaker 3: of the Swiss franc. Tell us how Switzerland adapts to 365 00:18:07,240 --> 00:18:10,800 Speaker 3: the new strength of Swiss franc. Will there be a 366 00:18:10,880 --> 00:18:14,480 Speaker 3: different approach among the cantons and among the federal government. 367 00:18:14,680 --> 00:18:16,240 Speaker 7: Well, look, I mean as a Swiss, it's almost like 368 00:18:16,280 --> 00:18:18,240 Speaker 7: you're born with it, with the chocolates and the mountains, 369 00:18:18,280 --> 00:18:21,440 Speaker 7: you're born with a strong Swiss franc. So it's part 370 00:18:21,480 --> 00:18:23,520 Speaker 7: of it. So the SNB, it's the I mean, it's 371 00:18:23,560 --> 00:18:26,800 Speaker 7: a headache for the SNB, for the companies. They've learned 372 00:18:26,840 --> 00:18:29,080 Speaker 7: to be competitive, to be honest. So this this is 373 00:18:29,160 --> 00:18:32,399 Speaker 7: one aspect because it's part of it. Nominally it appreciates 374 00:18:32,440 --> 00:18:36,120 Speaker 7: because inflation is low and for the foreseeable future that's 375 00:18:36,160 --> 00:18:39,000 Speaker 7: still going to be happening. On the real level, you 376 00:18:39,080 --> 00:18:42,080 Speaker 7: see less of an appreciation trend, but you know, in 377 00:18:42,160 --> 00:18:44,479 Speaker 7: the end, nominally is is a lot of what matters. 378 00:18:44,600 --> 00:18:50,360 Speaker 3: You're too, unimputed deflation in Switzerland because of the appreciation. 379 00:18:50,440 --> 00:18:51,960 Speaker 7: Yeah, we could drink, yes we could. 380 00:18:53,119 --> 00:18:56,560 Speaker 3: We could. Apple did a coupon a couple of years 381 00:18:56,560 --> 00:18:59,880 Speaker 3: ago three quarters of a percent for like a zillion year. 382 00:19:00,960 --> 00:19:02,840 Speaker 5: We're all pretty much free. 383 00:19:03,000 --> 00:19:06,160 Speaker 3: Are you seeing travel to Switzerland changing with the trade wars, 384 00:19:06,280 --> 00:19:07,120 Speaker 3: with the terror force? 385 00:19:07,280 --> 00:19:08,920 Speaker 7: Well, I mean I'm not. Let's say, I'm not on 386 00:19:09,000 --> 00:19:11,159 Speaker 7: a line post to see people coming in and out, 387 00:19:11,240 --> 00:19:15,440 Speaker 7: but we do read, including from from esteemed Bloomberg, that yes, 388 00:19:15,560 --> 00:19:19,040 Speaker 7: we do see more, you know, more asks for for Switzerland, 389 00:19:19,160 --> 00:19:22,720 Speaker 7: for people looking to come over, whether it's traveling, whether 390 00:19:22,840 --> 00:19:25,639 Speaker 7: it's relocating. So that's wait for numbers. 391 00:19:25,760 --> 00:19:28,280 Speaker 3: Yeah, rto keeper of the MX. Yeah, it is very 392 00:19:28,320 --> 00:19:30,760 Speaker 3: big on Switzerland. He wants me there on twenty four 393 00:19:30,760 --> 00:19:31,120 Speaker 3: to seven. 394 00:19:32,560 --> 00:19:36,879 Speaker 5: One more question there, see I want to start and 395 00:19:37,040 --> 00:19:39,160 Speaker 5: where we started. It has to do with asked allocation. 396 00:19:39,280 --> 00:19:41,480 Speaker 5: Tom asked about the number one mistake people are making. 397 00:19:41,560 --> 00:19:43,439 Speaker 5: If people are saying, okay, I should go look at 398 00:19:43,480 --> 00:19:47,320 Speaker 5: my portfolio right now, think about its construction. Yes, where 399 00:19:47,320 --> 00:19:49,920 Speaker 5: should people look closely? Is it in the equity side, 400 00:19:50,000 --> 00:19:52,200 Speaker 5: is in the fixed income side? Is in the alternative side? 401 00:19:52,400 --> 00:19:54,560 Speaker 7: I think it's it's across everything. I think you do 402 00:19:54,640 --> 00:19:56,520 Speaker 7: want to be diversified. If you don't know what you 403 00:19:56,600 --> 00:19:59,359 Speaker 7: don't know and how things are going to pan out, again, 404 00:19:59,520 --> 00:20:01,520 Speaker 7: don't lean out of the window. So you do want 405 00:20:01,560 --> 00:20:03,680 Speaker 7: to make sure that you're diversified, that you're sticking to 406 00:20:03,840 --> 00:20:06,720 Speaker 7: what you are trying to achieve. You obviously go for 407 00:20:06,960 --> 00:20:12,000 Speaker 7: stuff that is less sicklical sectors that have all pricing power, 408 00:20:12,160 --> 00:20:15,000 Speaker 7: because if you all things equal, lower grow bigre inflation. 409 00:20:15,960 --> 00:20:18,520 Speaker 7: Infrastructure to me is a segment that stands out right 410 00:20:18,880 --> 00:20:22,400 Speaker 7: less cyclical, has cash flows that are normally indexed to inflation. 411 00:20:23,400 --> 00:20:26,399 Speaker 7: And you want to think about the dollar, and particular 412 00:20:26,640 --> 00:20:30,399 Speaker 7: in the asset classes that have lower volatility. If you're unhedged, 413 00:20:31,960 --> 00:20:34,800 Speaker 7: I'd look at a hedge, to be honest. So these 414 00:20:34,880 --> 00:20:36,000 Speaker 7: other things that are on my mind. 415 00:20:36,320 --> 00:20:38,720 Speaker 3: Thank you, Thank you so much for visiting Crystal Ronde. 416 00:20:39,040 --> 00:20:42,120 Speaker 3: Where this is Vanderbilt Zurich in today with this whole 417 00:20:42,200 --> 00:20:43,080 Speaker 3: new view of Europe. 418 00:20:43,320 --> 00:20:45,520 Speaker 2: This is the Bloomberg Surveillance Podcast. 419 00:20:45,920 --> 00:20:48,840 Speaker 1: Listen live each weekday starting at seven am Eastern on 420 00:20:48,960 --> 00:20:50,119 Speaker 1: Apple Corplay. 421 00:20:49,760 --> 00:20:52,160 Speaker 9: And Android Auto with the Bloomberg Business app. 422 00:20:52,280 --> 00:20:55,280 Speaker 1: You can also listen live on Amazon Alexa from our 423 00:20:55,359 --> 00:20:59,840 Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty. 424 00:21:00,000 --> 00:21:03,080 Speaker 3: More than any other guest when she is on, I 425 00:21:03,160 --> 00:21:06,760 Speaker 3: will get emails. Who was that? Who was that? Who's 426 00:21:06,800 --> 00:21:10,760 Speaker 3: she with? With RBC Capital Markets. Francis Donald on the 427 00:21:10,920 --> 00:21:16,399 Speaker 3: economics of the moment of America. Francis into this FED meeting. 428 00:21:17,280 --> 00:21:21,240 Speaker 3: Do we have looking at the dual mandate looking at growth? 429 00:21:21,960 --> 00:21:25,560 Speaker 3: Do you have vectors in place? Is there a Francis 430 00:21:25,640 --> 00:21:32,480 Speaker 3: Donald inflation vector, an unemployment rate vector, a real GDP vector. 431 00:21:32,600 --> 00:21:33,360 Speaker 3: Do they exist? 432 00:21:34,080 --> 00:21:36,159 Speaker 10: I mean, sure, they just look very different than they 433 00:21:36,560 --> 00:21:37,480 Speaker 10: have historically. 434 00:21:37,640 --> 00:21:40,160 Speaker 11: But I got to tell you Tom listening to come 435 00:21:40,200 --> 00:21:42,159 Speaker 11: into this segment, he said, it's FED day, and I 436 00:21:42,440 --> 00:21:44,760 Speaker 11: had to say, oh, yes, it's FED day. Which is 437 00:21:44,920 --> 00:21:47,680 Speaker 11: not because I'm sleeping at the wheel. It's because I 438 00:21:47,880 --> 00:21:50,360 Speaker 11: spent the morning doing things I've never done on FED 439 00:21:50,400 --> 00:21:55,520 Speaker 11: days before, which is scan geographic photos for ships on 440 00:21:55,640 --> 00:21:57,920 Speaker 11: the West coast to see if we're still getting supply 441 00:21:58,080 --> 00:22:01,840 Speaker 11: to come in. I'm looking at some old school pandemic charts, 442 00:22:02,359 --> 00:22:05,240 Speaker 11: open table restaurant reservations. Are we seeing any week to 443 00:22:05,320 --> 00:22:08,359 Speaker 11: week change in the data there? And of course reading 444 00:22:08,440 --> 00:22:11,320 Speaker 11: every headline we can see for insights into are we 445 00:22:11,400 --> 00:22:14,440 Speaker 11: going to see some trade de escalation from China? And 446 00:22:15,200 --> 00:22:17,440 Speaker 11: my sense is that probably the Federal Reserve is doing 447 00:22:17,520 --> 00:22:19,879 Speaker 11: very similar things this morning, and that is because they 448 00:22:19,920 --> 00:22:22,800 Speaker 11: are trying to determine their own vectors for inflation and 449 00:22:22,920 --> 00:22:26,119 Speaker 11: employment and they just don't have enough data or insights, 450 00:22:26,320 --> 00:22:29,639 Speaker 11: just like most economists don't right now to determine. 451 00:22:29,240 --> 00:22:30,080 Speaker 10: The path ahead. 452 00:22:30,680 --> 00:22:33,119 Speaker 11: So extraordinary and certainty heading into this meaning it is 453 00:22:33,200 --> 00:22:36,000 Speaker 11: going to be a fold of course, We're always looking 454 00:22:36,119 --> 00:22:38,560 Speaker 11: for any type of insight from FED share Powell as 455 00:22:38,600 --> 00:22:41,480 Speaker 11: to how they would react to certain situations and what 456 00:22:41,560 --> 00:22:43,960 Speaker 11: they think will happen next. But the data is going 457 00:22:44,000 --> 00:22:46,480 Speaker 11: to leave the Fed, as it always does, and we 458 00:22:46,560 --> 00:22:49,560 Speaker 11: have very limited visibility from traditional data points. 459 00:22:49,640 --> 00:22:51,840 Speaker 5: Right now, I hear you talking about the alternative data 460 00:22:51,920 --> 00:22:55,920 Speaker 5: such as open table reservations, looking at satellite images of 461 00:22:56,240 --> 00:22:58,240 Speaker 5: ships that are coming into port. It sounds like we're 462 00:22:58,240 --> 00:23:01,399 Speaker 5: talking in twenty twenty one one. Save for the China 463 00:23:01,440 --> 00:23:05,040 Speaker 5: comment that you made about potential progress on a trade deal. 464 00:23:05,640 --> 00:23:08,119 Speaker 5: The Federal Reserve has a very limited toolbox when it 465 00:23:08,160 --> 00:23:10,919 Speaker 5: comes to what it can do to achieve its dual mandate. 466 00:23:11,000 --> 00:23:16,720 Speaker 5: How does it navigate a situation of uncertainty such as this, Well. 467 00:23:16,960 --> 00:23:19,080 Speaker 11: It doesn't, or it waits for the data to turn, 468 00:23:19,520 --> 00:23:22,320 Speaker 11: and for that reason, they will by necessity be late. 469 00:23:22,400 --> 00:23:24,800 Speaker 11: I think their issue is going to be a sequencing issue, 470 00:23:24,800 --> 00:23:26,639 Speaker 11: which is that the inflation data is likely. 471 00:23:26,600 --> 00:23:29,000 Speaker 10: To pop much earlier than the labor data. 472 00:23:29,280 --> 00:23:31,720 Speaker 11: And I've been on the show many times to talk 473 00:23:31,760 --> 00:23:34,840 Speaker 11: about how even though we see a very weak economic environment, 474 00:23:35,160 --> 00:23:37,280 Speaker 11: we only have the unemployment rate rising to. 475 00:23:37,320 --> 00:23:40,880 Speaker 10: About four to eight or high fours. Traditionally, that would 476 00:23:40,880 --> 00:23:42,160 Speaker 10: be a very strong labor market. 477 00:23:42,200 --> 00:23:44,440 Speaker 11: That would be something we associate with a boom time, 478 00:23:44,800 --> 00:23:48,320 Speaker 11: not a recessionary type period. And that's because this labor market, well, 479 00:23:48,480 --> 00:23:52,199 Speaker 11: America does not need jobs. America needs workers. It's going 480 00:23:52,240 --> 00:23:55,200 Speaker 11: to keep this labor market very tight. That's very different 481 00:23:55,240 --> 00:23:57,560 Speaker 11: than what we saw in twenty eighteen, the first time 482 00:23:57,600 --> 00:24:00,600 Speaker 11: that we saw tariffs coming through. It's going to make 483 00:24:00,640 --> 00:24:03,400 Speaker 11: the FEDCE job a lot harder because I don't think 484 00:24:03,440 --> 00:24:06,920 Speaker 11: they're going to see a material weakness in traditional indicators 485 00:24:06,960 --> 00:24:09,880 Speaker 11: of unemployment over the course of twenty twenty five, even 486 00:24:09,920 --> 00:24:10,959 Speaker 11: as the economy software. 487 00:24:11,040 --> 00:24:14,199 Speaker 3: So here's the core question. Francis, back at Queen's University, 488 00:24:14,720 --> 00:24:17,560 Speaker 3: I mean, you were fourteen or whatever taking your undergraduate there. 489 00:24:18,080 --> 00:24:22,560 Speaker 3: But Francis, back at Queen's University then, was a six 490 00:24:22,680 --> 00:24:26,200 Speaker 3: percent unemployment rate the same as a six percent unemployment 491 00:24:26,280 --> 00:24:28,920 Speaker 3: rate now? I don't think that the same? Am I wrong? 492 00:24:30,640 --> 00:24:31,399 Speaker 10: One hundred percent? 493 00:24:31,520 --> 00:24:33,919 Speaker 11: And just a little plug here, Queen's University in Canada, 494 00:24:33,960 --> 00:24:35,879 Speaker 11: we call it the Harvard of the North, just so 495 00:24:36,040 --> 00:24:37,440 Speaker 11: you know, just caliber. 496 00:24:37,320 --> 00:24:39,480 Speaker 3: I thought Harvard was a Queen's of the South. 497 00:24:41,680 --> 00:24:45,040 Speaker 11: We'll go with that one too, so that's exactly right. 498 00:24:45,200 --> 00:24:47,920 Speaker 11: The nature of this job market is changing. We have 499 00:24:48,040 --> 00:24:50,119 Speaker 11: the most amount of those over the age of sixty 500 00:24:50,200 --> 00:24:52,600 Speaker 11: five the US has ever seen. Over one in five 501 00:24:52,640 --> 00:24:55,480 Speaker 11: Americans is over the age of sixty five, most amount 502 00:24:55,520 --> 00:24:57,840 Speaker 11: of retirees ever, and so economists. 503 00:24:57,280 --> 00:24:58,359 Speaker 10: Are scratching their head. 504 00:24:58,440 --> 00:25:02,080 Speaker 11: Why are higher rates but also fire rates down and 505 00:25:02,200 --> 00:25:04,720 Speaker 11: quick rates down. This is a job market that is 506 00:25:04,880 --> 00:25:08,760 Speaker 11: acclimating to a demographic bus that's occurring in real time. 507 00:25:09,200 --> 00:25:12,200 Speaker 11: Demographics are traditionally something that you look at when you're 508 00:25:12,280 --> 00:25:14,280 Speaker 11: five or ten year forecast, when you're forced to do 509 00:25:14,400 --> 00:25:15,800 Speaker 11: something that difficult. 510 00:25:15,880 --> 00:25:17,399 Speaker 10: They're not something we take to hear now. 511 00:25:17,760 --> 00:25:20,040 Speaker 11: And this is why when I talk about uncertainty, a 512 00:25:20,080 --> 00:25:22,120 Speaker 11: lot of folks are saying we're going to get more 513 00:25:22,200 --> 00:25:24,679 Speaker 11: certainty on trade in the coming week. But a lot 514 00:25:24,760 --> 00:25:26,359 Speaker 11: of the customers, a lot of the folks that we 515 00:25:26,520 --> 00:25:28,280 Speaker 11: talk to in the United States are also paying very 516 00:25:28,320 --> 00:25:31,560 Speaker 11: close attention to immigration policies that come through and how 517 00:25:31,680 --> 00:25:34,720 Speaker 11: this government is going to support or not support what 518 00:25:34,920 --> 00:25:36,520 Speaker 11: is a very shifting labor dynamic. 519 00:25:36,640 --> 00:25:36,760 Speaker 10: Now. 520 00:25:36,840 --> 00:25:39,000 Speaker 11: Ftter Reserve is going to have to talk about this 521 00:25:39,200 --> 00:25:41,879 Speaker 11: at some point, probably not today, when they're looking at 522 00:25:41,960 --> 00:25:44,639 Speaker 11: something like a high fours unemployment rate, and that's going 523 00:25:44,680 --> 00:25:46,040 Speaker 11: to be enough for them to start cutting. 524 00:25:46,160 --> 00:25:49,480 Speaker 3: Well, you just heard their folks bottle it, because that's 525 00:25:49,520 --> 00:25:52,760 Speaker 3: the discussion of the next eighteen months. I'm sorry when 526 00:25:52,760 --> 00:25:55,399 Speaker 3: I look at the kids having trouble getting jobs, on 527 00:25:55,560 --> 00:25:58,720 Speaker 3: and on and on, this is a new unemployment rate 528 00:25:58,760 --> 00:26:01,440 Speaker 3: where it's not equivalent to our memory of what that 529 00:26:01,640 --> 00:26:02,080 Speaker 3: number is. 530 00:26:02,240 --> 00:26:04,080 Speaker 5: Yeah, I think Tom brings up a good point, which 531 00:26:04,160 --> 00:26:06,480 Speaker 5: is who is having trouble getting jobs right now? And 532 00:26:06,840 --> 00:26:10,159 Speaker 5: given in the context of the president's immigration policy, this 533 00:26:10,240 --> 00:26:13,560 Speaker 5: administration's immigration policy, how are you looking at the job 534 00:26:13,640 --> 00:26:18,119 Speaker 5: market given that we've heard anecdotally challenges from new graduates 535 00:26:18,720 --> 00:26:22,840 Speaker 5: in those folks looking for jobs, versus some emptiness in 536 00:26:22,920 --> 00:26:25,160 Speaker 5: the pipeline when it comes to folks in the trade, 537 00:26:25,200 --> 00:26:27,280 Speaker 5: for example, you. 538 00:26:27,359 --> 00:26:29,760 Speaker 11: Got to go sector bisector more than we have in 539 00:26:29,840 --> 00:26:32,000 Speaker 11: the past. So think about three sectors that have driven 540 00:26:32,040 --> 00:26:34,880 Speaker 11: a lot of job growth. Healthcare, well, there's a skills 541 00:26:35,000 --> 00:26:37,920 Speaker 11: matching issue happening there. Government, we know that's going to 542 00:26:37,960 --> 00:26:40,520 Speaker 11: be declined. That's the one area where you will see 543 00:26:40,600 --> 00:26:44,240 Speaker 11: shedding of activity. And then retail and accommodation that's where 544 00:26:44,280 --> 00:26:46,960 Speaker 11: traditionally you would see what economists called new entrance or 545 00:26:47,560 --> 00:26:51,000 Speaker 11: immigrants being more impactful there. So sector bisector stories are 546 00:26:51,040 --> 00:26:52,520 Speaker 11: going to become incredibly important. 547 00:26:52,800 --> 00:26:53,520 Speaker 10: But underlying the. 548 00:26:53,560 --> 00:26:55,520 Speaker 11: Surface here, a lot of folks will say, well, the 549 00:26:55,640 --> 00:26:58,280 Speaker 11: labor force participation rate is quite low. It's been falling 550 00:26:58,320 --> 00:27:01,280 Speaker 11: since two thousand and one. Could prime age workers in 551 00:27:01,320 --> 00:27:03,680 Speaker 11: the United States twenty five to fifty four. They have 552 00:27:03,800 --> 00:27:06,920 Speaker 11: one of the highest labor forced participation rates we've ever seen. 553 00:27:07,320 --> 00:27:09,560 Speaker 11: So the labor market is very tight. This is very 554 00:27:09,600 --> 00:27:12,720 Speaker 11: different than twenty eighteen. It's even different than twenty twenty two. 555 00:27:12,760 --> 00:27:15,680 Speaker 11: It's going to change a dynamic of this recessionary conversation. 556 00:27:16,320 --> 00:27:18,960 Speaker 11: We don't have a formal recession in our outlook, although 557 00:27:19,040 --> 00:27:21,840 Speaker 11: I really begrudged that recession or no recession call. It's 558 00:27:21,880 --> 00:27:24,840 Speaker 11: still a very problematic outlook for the US. And part 559 00:27:24,880 --> 00:27:26,520 Speaker 11: of that is we think the labor market is actually 560 00:27:26,560 --> 00:27:29,760 Speaker 11: going to in old school terms, stay strong, but it's 561 00:27:29,800 --> 00:27:31,359 Speaker 11: not strong in the traditional ways. 562 00:27:31,440 --> 00:27:32,399 Speaker 10: Tom. That's the problem. 563 00:27:32,520 --> 00:27:34,159 Speaker 11: This is a labor market that we're going to have 564 00:27:34,240 --> 00:27:37,240 Speaker 11: to reassess and measure with different types of instruments than 565 00:27:37,320 --> 00:27:38,160 Speaker 11: we have historically. 566 00:27:38,280 --> 00:27:40,080 Speaker 3: We got to get you out again. So soon soon, 567 00:27:40,200 --> 00:27:42,160 Speaker 3: Francis Donald, thank you so much. I got like eight 568 00:27:42,280 --> 00:27:46,199 Speaker 3: more questions as well with RBC Capital Markets. Francis Donald. 569 00:27:51,440 --> 00:27:53,680 Speaker 2: This is the Bloomberg Surveillance Podcast. 570 00:27:54,040 --> 00:27:57,000 Speaker 1: Listen live each weekday starting at seven am Eastern on 571 00:27:57,119 --> 00:27:58,280 Speaker 1: Apple Corplay. 572 00:27:57,920 --> 00:27:59,960 Speaker 9: And Android Auto with the Bloomberg Business. 573 00:28:00,440 --> 00:28:03,280 Speaker 1: You can also watch us live every weekday on YouTube 574 00:28:03,480 --> 00:28:05,840 Speaker 1: and always on the Bloomberg terminal. 575 00:28:05,640 --> 00:28:09,560 Speaker 3: Which starts Strong, Strong Strong. Vishal Kanjuja joins us now 576 00:28:09,600 --> 00:28:12,640 Speaker 3: from Morgan Stanley had a broad market's fixed in Kim. 577 00:28:12,800 --> 00:28:16,280 Speaker 3: I love the first sentence of your note. Jobs Day 578 00:28:16,400 --> 00:28:18,960 Speaker 3: stole the thunder from the Fed completely. What did we 579 00:28:19,119 --> 00:28:23,240 Speaker 3: learn in the buoyant Jobs Day that adjusts this meeting 580 00:28:23,320 --> 00:28:24,440 Speaker 3: this afternoon. 581 00:28:24,880 --> 00:28:28,960 Speaker 6: Morning, Tom, thanks for having me on completely stole the thunder. 582 00:28:30,119 --> 00:28:33,720 Speaker 6: Hot data is not at all anywhere close to the 583 00:28:33,800 --> 00:28:36,480 Speaker 6: soft data which we've been talking about, you guys have 584 00:28:36,560 --> 00:28:39,040 Speaker 6: been talking about very clearly. As while the FED knows 585 00:28:39,120 --> 00:28:43,280 Speaker 6: this very clearly, I think today the market is going 586 00:28:43,360 --> 00:28:47,040 Speaker 6: to be very clearly looking for a repeat from the 587 00:28:47,120 --> 00:28:50,240 Speaker 6: Fed for their reaction function that they are still focused 588 00:28:50,280 --> 00:28:50,920 Speaker 6: on growth. 589 00:28:50,760 --> 00:28:54,320 Speaker 8: Down sites and they are willing to take. 590 00:28:56,200 --> 00:28:58,560 Speaker 6: Less of a deeper look into the inflation upsides that 591 00:28:58,640 --> 00:28:59,560 Speaker 6: we are talking about. 592 00:28:59,280 --> 00:29:02,840 Speaker 3: Synthesizes with Seth Carpenter's team, Allen Zentner over at Wealth Management, 593 00:29:03,120 --> 00:29:05,920 Speaker 3: and the others. I guess we got a nominal GDP, 594 00:29:06,640 --> 00:29:09,960 Speaker 3: it's actually pretty good because of stagflation, But then do 595 00:29:10,080 --> 00:29:13,760 Speaker 3: you see nominal and real GDP coming out. 596 00:29:13,680 --> 00:29:15,040 Speaker 8: Through the year exactly? 597 00:29:15,200 --> 00:29:16,960 Speaker 6: So I think that is where we think that the 598 00:29:17,080 --> 00:29:19,920 Speaker 6: demand destruction on the back half, and we are talking 599 00:29:19,960 --> 00:29:22,200 Speaker 6: about quite a bit of uncertainty. We've seen it in 600 00:29:22,280 --> 00:29:26,200 Speaker 6: the base report, We've seen it from all the earnings 601 00:29:26,200 --> 00:29:29,160 Speaker 6: that we've seen through the corporations as well. But the 602 00:29:29,320 --> 00:29:32,800 Speaker 6: persistence of uncertainty the time period that we are going 603 00:29:32,880 --> 00:29:35,280 Speaker 6: to sustain here is going to definitely show up with 604 00:29:35,360 --> 00:29:37,120 Speaker 6: that demand destruction on the back half of the year. 605 00:29:37,440 --> 00:29:39,560 Speaker 5: So then what does the FED do if it knows 606 00:29:39,640 --> 00:29:42,000 Speaker 5: demand destruction is coming given its dual mandate. 607 00:29:42,360 --> 00:29:45,080 Speaker 6: I think it has two precedents that it has laid 608 00:29:45,080 --> 00:29:47,200 Speaker 6: out in the past of but it intervenes or comes in. 609 00:29:47,400 --> 00:29:50,600 Speaker 6: One very clearly their dual mandate is at. 610 00:29:50,600 --> 00:29:52,800 Speaker 8: Risk and data shows it they step in. 611 00:29:53,360 --> 00:29:57,360 Speaker 6: Or the second is that the financial market functionality is 612 00:29:57,400 --> 00:29:59,520 Speaker 6: breaking down that they have to intervene none of that 613 00:29:59,560 --> 00:30:01,560 Speaker 6: has happened right now, so they need to be patient, 614 00:30:01,920 --> 00:30:03,719 Speaker 6: look through the data, and they have quite a bit 615 00:30:03,760 --> 00:30:04,680 Speaker 6: in the toolkit to act. 616 00:30:04,840 --> 00:30:06,240 Speaker 5: What do you what's in the toolkit to act? 617 00:30:06,800 --> 00:30:09,760 Speaker 8: Four hundred and fifty basis points? Vase still about if. 618 00:30:09,640 --> 00:30:12,240 Speaker 5: We're in a stackflationary environment, then what do we do? 619 00:30:12,600 --> 00:30:13,120 Speaker 5: What do they do? 620 00:30:13,480 --> 00:30:16,800 Speaker 6: I think, in principle, tariffs are going to be one 621 00:30:16,880 --> 00:30:21,440 Speaker 6: time price increases. Consumers and corporations are going to adjust. 622 00:30:21,560 --> 00:30:25,520 Speaker 6: I know we've already seen that supply and demandshock play 623 00:30:25,520 --> 00:30:28,120 Speaker 6: out in twenty twenty two. This is the opposite of 624 00:30:28,280 --> 00:30:29,280 Speaker 6: that that is happening here. 625 00:30:29,480 --> 00:30:32,120 Speaker 5: He almost said transitory, Tom, but he didn't say transitory. 626 00:30:32,240 --> 00:30:35,080 Speaker 5: You said one time price increases. What makes you confident 627 00:30:35,120 --> 00:30:37,880 Speaker 5: that that will be the case? And I should I 628 00:30:37,920 --> 00:30:40,320 Speaker 5: should look, Actually, I'm going to change my question. I 629 00:30:40,360 --> 00:30:43,000 Speaker 5: don't think we don't do that in the morning. I 630 00:30:43,040 --> 00:30:47,880 Speaker 5: don't think consumers. I don't think consumers understand how inflation 631 00:30:48,000 --> 00:30:50,160 Speaker 5: is measured. I think they understand inflation in the context 632 00:30:50,200 --> 00:30:52,840 Speaker 5: of gas prices going up and then coming back down. 633 00:30:53,160 --> 00:30:56,720 Speaker 5: They'd understand that it's change in price over a period 634 00:30:56,760 --> 00:30:59,560 Speaker 5: of time. They think high prices come down they don't 635 00:30:59,560 --> 00:30:59,920 Speaker 5: come down. 636 00:31:00,760 --> 00:31:02,120 Speaker 8: I think that's what it is this time. 637 00:31:02,160 --> 00:31:04,640 Speaker 6: I think the balance sheets, yes, are very very strong 638 00:31:04,720 --> 00:31:07,800 Speaker 6: in terms of consumer and corporates, but I think the 639 00:31:08,000 --> 00:31:12,200 Speaker 6: moment you start to see margin compression in corporates meaning 640 00:31:12,400 --> 00:31:15,680 Speaker 6: consumers pushing back on services or small business pushing back 641 00:31:15,720 --> 00:31:18,200 Speaker 6: on prices, that's where I think you start to see 642 00:31:18,440 --> 00:31:19,360 Speaker 6: the hit on labor. 643 00:31:19,560 --> 00:31:21,840 Speaker 8: That's when you start to see the demand destruction show up. 644 00:31:22,040 --> 00:31:24,760 Speaker 8: And that's why we have quite high degree of confidence. 645 00:31:25,200 --> 00:31:27,000 Speaker 8: But we've covered our. 646 00:31:27,000 --> 00:31:29,720 Speaker 6: Underweights and credit. We've covered some of our underweights and 647 00:31:29,800 --> 00:31:32,200 Speaker 6: duration during this time, but we are not long. We 648 00:31:32,360 --> 00:31:35,080 Speaker 6: still think that spreads could be widening out as that's 649 00:31:35,080 --> 00:31:37,520 Speaker 6: tax platary freear could go through in the next two months. 650 00:31:37,760 --> 00:31:39,840 Speaker 3: I'm sorry, well, I mean I go back to Mary 651 00:31:39,920 --> 00:31:42,440 Speaker 3: Poppins and the famous bank scene with Dick Van Dyke 652 00:31:42,480 --> 00:31:45,480 Speaker 3: and the tuxedos. We are always to India, but you know, 653 00:31:45,600 --> 00:31:47,880 Speaker 3: I go back to librar or ois. I don't know 654 00:31:47,920 --> 00:31:49,840 Speaker 3: why we got rid of library. I thought it was great. 655 00:31:49,920 --> 00:31:53,680 Speaker 3: Now I got something fancy called so for sof R. 656 00:31:54,200 --> 00:31:57,520 Speaker 3: When you look at sofur swaps, which is what Arid 657 00:31:57,600 --> 00:32:00,880 Speaker 3: Jersey tells me to look at a little bit of 658 00:32:00,960 --> 00:32:04,760 Speaker 3: deterioration the last five days. Is the short term market 659 00:32:04,920 --> 00:32:08,520 Speaker 3: getting out front of the joy and saying at some 660 00:32:08,680 --> 00:32:10,160 Speaker 3: point this becomes difficult. 661 00:32:10,640 --> 00:32:14,440 Speaker 8: It does, absolutely it does. I think we are less focused. 662 00:32:14,480 --> 00:32:17,520 Speaker 6: I think our conviction level with the amount of information 663 00:32:17,600 --> 00:32:20,520 Speaker 6: that we are getting at the moment is much lower 664 00:32:20,680 --> 00:32:23,040 Speaker 6: to call the exact date that these guys can. 665 00:32:23,000 --> 00:32:26,560 Speaker 8: Cut the FEN. But our conviction level increases as we 666 00:32:26,760 --> 00:32:28,400 Speaker 8: go out the next eighteen months. 667 00:32:28,480 --> 00:32:30,600 Speaker 6: And that's why I think our focal point of duration 668 00:32:30,800 --> 00:32:32,560 Speaker 6: is still that three to five year mark. 669 00:32:32,800 --> 00:32:34,720 Speaker 3: So what is full faith and credit ten year ye'd 670 00:32:34,800 --> 00:32:36,440 Speaker 3: do out eighteen months? 671 00:32:36,920 --> 00:32:38,520 Speaker 8: I think it's lower. I think we breached that. 672 00:32:38,600 --> 00:32:42,520 Speaker 3: For me, three point sixty five percent is my recollection 673 00:32:43,040 --> 00:32:45,400 Speaker 3: for the ten year yield? Can you get a nicely 674 00:32:45,520 --> 00:32:46,360 Speaker 3: under four percent? 675 00:32:46,600 --> 00:32:47,640 Speaker 8: Nicely under four percent? 676 00:32:47,680 --> 00:32:49,360 Speaker 6: I think we were four to five percent when we 677 00:32:49,440 --> 00:32:52,200 Speaker 6: wrote our outlooks in November, and we thought that it 678 00:32:52,320 --> 00:32:55,760 Speaker 6: will travel that range, and it did almost travel that entirely. 679 00:32:56,320 --> 00:32:59,600 Speaker 3: The dynamic ASCO forobose one on one on a dynamic basis, 680 00:33:00,080 --> 00:33:04,160 Speaker 3: if I get price up yield down, does that signal 681 00:33:04,280 --> 00:33:06,920 Speaker 3: a good or bad event for our listeners or viewers. 682 00:33:07,080 --> 00:33:10,960 Speaker 6: That means the fixed income has served its dual mandate price, 683 00:33:11,000 --> 00:33:13,960 Speaker 6: total return and negative correlation to risky assets, and it 684 00:33:14,120 --> 00:33:15,520 Speaker 6: will be poised to deliver. 685 00:33:16,440 --> 00:33:18,520 Speaker 5: How much of what you're saying depends on the US 686 00:33:18,640 --> 00:33:21,600 Speaker 5: successfully negotiating trade deals in the next eighteen months. 687 00:33:22,040 --> 00:33:24,360 Speaker 8: Quite a bit of the long end depends on that. 688 00:33:24,480 --> 00:33:27,760 Speaker 6: The twenty and the thirty year we need a sustainable, credible, 689 00:33:28,320 --> 00:33:32,200 Speaker 6: bought into deficit reduction plan, and then that will decide 690 00:33:32,240 --> 00:33:34,040 Speaker 6: the demand and supply of the twenty and thirty year 691 00:33:34,080 --> 00:33:36,040 Speaker 6: part of the market as well. I think that is 692 00:33:36,200 --> 00:33:39,120 Speaker 6: one part of the market that we are nauseous about, 693 00:33:39,160 --> 00:33:41,880 Speaker 6: to be very honest and staying away from on that part. 694 00:33:42,080 --> 00:33:44,680 Speaker 6: Coming back to your question on demand destruction, quite a 695 00:33:44,720 --> 00:33:47,720 Speaker 6: bit depends on the next probably ninety two hundred days, 696 00:33:47,800 --> 00:33:48,840 Speaker 6: maybe this weekend as well. 697 00:33:49,160 --> 00:33:51,040 Speaker 3: Does things get funded. We're going to move on now 698 00:33:51,120 --> 00:33:55,320 Speaker 3: to the airport, the airline catastrophe in America, But does 699 00:33:55,520 --> 00:34:00,400 Speaker 3: infrastructure get funded? Does Morgan Stanley see businesses u usual 700 00:34:00,600 --> 00:34:03,479 Speaker 3: for the issues of megapaper. 701 00:34:04,200 --> 00:34:08,520 Speaker 6: Businesses are getting funded very comfortably throughout this entire April 702 00:34:08,800 --> 00:34:11,719 Speaker 6: volatility that we had seen. The markers that we see 703 00:34:11,840 --> 00:34:15,400 Speaker 6: for liquidity for funding for corporations and healthy balance sheets. 704 00:34:15,880 --> 00:34:19,640 Speaker 6: We're still in the green. Treasuries were getting issued very clearly. 705 00:34:20,120 --> 00:34:23,360 Speaker 6: Concessions we're building up but then getting bought into. Yesterday 706 00:34:23,400 --> 00:34:25,400 Speaker 6: also we had one of them, and then IG Corporate. 707 00:34:25,719 --> 00:34:29,040 Speaker 6: We exceeded the supply marker over subscribe books and deals 708 00:34:29,080 --> 00:34:29,719 Speaker 6: went really well. 709 00:34:29,800 --> 00:34:32,320 Speaker 3: When Tim Cook issues bonds, does he call you? But 710 00:34:32,400 --> 00:34:34,040 Speaker 3: do you get a phone call from Tim Cook? 711 00:34:34,080 --> 00:34:36,840 Speaker 8: Definitely? Our traders are getting the phone call from the healers. 712 00:34:37,920 --> 00:34:40,920 Speaker 3: Thank you so much. Rasha Ken jud with us with 713 00:34:41,000 --> 00:34:43,640 Speaker 3: Morgan Stanley driving all of their fixed gun Learn a 714 00:34:43,719 --> 00:34:46,440 Speaker 3: lot there that was very, very informative. 715 00:34:46,680 --> 00:34:48,880 Speaker 2: This is the Bloomberg Surveillance Podcast. 716 00:34:49,239 --> 00:34:52,160 Speaker 1: Listen live each weekday starting at seven am Eastern on 717 00:34:52,320 --> 00:34:53,520 Speaker 1: Apple Corplay. 718 00:34:53,120 --> 00:34:55,520 Speaker 9: And Android Auto with the Bloomberg Business app. 719 00:34:55,640 --> 00:34:58,600 Speaker 1: You can also listen live on Amazon Alexa from our 720 00:34:58,680 --> 00:35:02,480 Speaker 1: flagship New York station and just say Alexa play Bloomberg 721 00:35:02,520 --> 00:35:03,160 Speaker 1: eleven thirty. 722 00:35:03,320 --> 00:35:05,279 Speaker 3: We're gonna do the newspaper, so I had to shot 723 00:35:05,360 --> 00:35:07,879 Speaker 3: up missus Keane all over it last night, she said. 724 00:35:07,960 --> 00:35:12,560 Speaker 3: Lisa Matteoe nailed it by getting Zandaia front and center 725 00:35:12,640 --> 00:35:14,400 Speaker 3: and then met Gala. Missus Kean agree with you. 726 00:35:14,560 --> 00:35:17,600 Speaker 12: Zandia just was the That's why I wore my full 727 00:35:17,640 --> 00:35:19,800 Speaker 12: white yesterday. But we do hat and everything. 728 00:35:19,920 --> 00:35:21,480 Speaker 13: I mean, who topped it off? 729 00:35:21,640 --> 00:35:22,160 Speaker 11: It was very good. 730 00:35:22,280 --> 00:35:25,200 Speaker 3: Congratulations again to all to Anna Wintour and all at 731 00:35:25,239 --> 00:35:29,839 Speaker 3: the Metropolitan Museum of Art Spectacular event in New York City. 732 00:35:29,920 --> 00:35:30,799 Speaker 3: What do you got this morning? 733 00:35:30,960 --> 00:35:32,839 Speaker 12: Okay, we've heard a lot of stories about the tough 734 00:35:32,920 --> 00:35:35,080 Speaker 12: job market out there, right, but the Wall Street Journal 735 00:35:35,120 --> 00:35:37,400 Speaker 12: has this article saying that high school juniors they're getting 736 00:35:37,400 --> 00:35:41,160 Speaker 12: close to seventy thousand dollars a year job offers. And 737 00:35:41,280 --> 00:35:43,920 Speaker 12: you asked, okay, and what, Well, it's the skilled trades. 738 00:35:44,080 --> 00:35:47,200 Speaker 12: It's companies looking to shop class to find new hires 739 00:35:47,760 --> 00:35:50,240 Speaker 12: because the baby boomers are retiring, so that's the issue. 740 00:35:50,280 --> 00:35:52,680 Speaker 13: So they're looking to this kids. And this kids say they. 741 00:35:52,680 --> 00:35:55,000 Speaker 12: Feel like top athletes like being recruited by you know, 742 00:35:55,160 --> 00:35:56,560 Speaker 12: pro teams, like they feel. 743 00:35:56,400 --> 00:35:57,680 Speaker 3: Like Rockstar's a huge deal. 744 00:35:57,880 --> 00:35:58,640 Speaker 13: It's a huge deal. 745 00:35:58,920 --> 00:36:01,520 Speaker 12: And the high schooler noticing because they're investing more money 746 00:36:01,560 --> 00:36:04,400 Speaker 12: into their shop classes, they're teaming up with companies to 747 00:36:04,520 --> 00:36:07,399 Speaker 12: offer you know, to come in the classroom and talk 748 00:36:07,440 --> 00:36:10,320 Speaker 12: with the kids too, offer them part time work credits. 749 00:36:10,520 --> 00:36:13,000 Speaker 3: I grew up in a house hugely supportive. It was 750 00:36:13,040 --> 00:36:17,120 Speaker 3: called vocational or something I can't remember back a million 751 00:36:17,640 --> 00:36:20,680 Speaker 3: years ago. But Ian Why yesterday with Huntington National Bank 752 00:36:20,719 --> 00:36:25,800 Speaker 3: Shers was brilliant about how the younger cohort there's no 753 00:36:25,960 --> 00:36:29,880 Speaker 3: skilled workers, and they're going to really incentivize it quickly. Right, 754 00:36:29,960 --> 00:36:31,000 Speaker 3: they don't have a choice. 755 00:36:31,080 --> 00:36:35,280 Speaker 12: Right, they're going to either how much seventy seventy thousand starting, 756 00:36:35,360 --> 00:36:38,759 Speaker 12: but you have consolation energy, which we all know they 757 00:36:38,920 --> 00:36:41,799 Speaker 12: offer high school graduates without four year degrees as much 758 00:36:41,840 --> 00:36:43,000 Speaker 12: as six figures started. 759 00:36:43,400 --> 00:36:45,239 Speaker 5: I love this. I mean, I think this is also 760 00:36:45,360 --> 00:36:48,279 Speaker 5: something that's lost in the conversation about immigration, when you 761 00:36:48,320 --> 00:36:50,600 Speaker 5: think about the skilled trades and who's coming in and 762 00:36:51,080 --> 00:36:53,759 Speaker 5: doing these jobs. We haven't had a pipeline here in 763 00:36:53,800 --> 00:36:56,480 Speaker 5: the US to these careers because so much emphasis has 764 00:36:56,560 --> 00:36:59,240 Speaker 5: been placed over the past couple of generations on college. 765 00:36:59,400 --> 00:37:01,120 Speaker 5: I think we're starting to have that conversation now. 766 00:37:01,600 --> 00:37:02,000 Speaker 3: I love it. 767 00:37:02,040 --> 00:37:04,759 Speaker 12: That's an amazing point I think about that one. Okay, 768 00:37:04,840 --> 00:37:10,040 Speaker 12: So men is Mark Zuckerberg. He's been making the Rounds podcast, interviews, conferences, 769 00:37:10,400 --> 00:37:12,120 Speaker 12: and there seems to be a theme when he looks 770 00:37:12,160 --> 00:37:12,880 Speaker 12: into the future. 771 00:37:12,960 --> 00:37:16,320 Speaker 13: So he says that most of your friends will be AI. 772 00:37:16,600 --> 00:37:19,520 Speaker 5: Hey, come on, okay, speak for yourself, Mark, most of 773 00:37:19,640 --> 00:37:20,640 Speaker 5: your friends will be AI. 774 00:37:22,400 --> 00:37:25,880 Speaker 13: But you also have AI therapists and AI business agents. 775 00:37:26,000 --> 00:37:28,080 Speaker 13: So we're gonna be talking to real people less. 776 00:37:29,719 --> 00:37:30,000 Speaker 3: I know. 777 00:37:32,080 --> 00:37:34,399 Speaker 5: Okay, I'm gonna be the contrarian here. I've been using 778 00:37:34,480 --> 00:37:37,879 Speaker 5: dual Lingo a lot, which is the language learning. There's 779 00:37:37,920 --> 00:37:41,120 Speaker 5: an AI agent in there, Lily, and you can practice 780 00:37:41,160 --> 00:37:46,440 Speaker 5: conversation with her, and it makes what I'm doing Spanish 781 00:37:46,480 --> 00:37:49,840 Speaker 5: with my son, he thinks it's he and and because 782 00:37:49,880 --> 00:37:53,480 Speaker 5: he's only six, he thinks that Lily is a real person, 783 00:37:53,640 --> 00:37:54,520 Speaker 5: which is weird to me. 784 00:37:55,280 --> 00:37:56,960 Speaker 13: That's what the next generation is gonna think. 785 00:37:57,040 --> 00:38:01,240 Speaker 3: I think, so, I mean music AI. But the idea 786 00:38:01,280 --> 00:38:05,200 Speaker 3: that AI is going to replace a business agent, yes, nuts. 787 00:38:05,600 --> 00:38:09,759 Speaker 13: Next, it can source all this information and it knows 788 00:38:09,840 --> 00:38:10,520 Speaker 13: you so well. 789 00:38:11,080 --> 00:38:12,320 Speaker 8: Yeah, okay. 790 00:38:12,600 --> 00:38:16,680 Speaker 12: So, after seventeen years underground, the annual Cicada Cousins says 791 00:38:16,760 --> 00:38:20,480 Speaker 12: Brood fourteen, they are ready to emerge. Yes, these are 792 00:38:20,520 --> 00:38:24,080 Speaker 12: the cicadas. The Boston Globe says. They started making their 793 00:38:24,120 --> 00:38:25,919 Speaker 12: way out of the ground in April from down South. 794 00:38:26,280 --> 00:38:30,160 Speaker 12: They've started coming out in Massachusetts, Cape Cod, Plymouth County. 795 00:38:31,200 --> 00:38:34,800 Speaker 12: A few fun facts if you didn't know about this specific. 796 00:38:34,360 --> 00:38:35,239 Speaker 13: Group of cicadas. 797 00:38:35,520 --> 00:38:37,160 Speaker 12: They come out in the thousands, right, They come out 798 00:38:37,160 --> 00:38:40,040 Speaker 12: in the evening after dark. They don't sting or bite, 799 00:38:40,120 --> 00:38:41,279 Speaker 12: so you don't have to be scared of them. 800 00:38:41,280 --> 00:38:42,640 Speaker 13: Even though they look a little bit scary. 801 00:38:43,280 --> 00:38:44,440 Speaker 10: They do uh. 802 00:38:44,520 --> 00:38:47,719 Speaker 13: They're not dangerous to plants and trees. And they die 803 00:38:47,760 --> 00:38:49,360 Speaker 13: about three to four weeks after they come out of 804 00:38:49,360 --> 00:38:49,680 Speaker 13: the ground. 805 00:38:49,960 --> 00:38:51,799 Speaker 5: Every so I thought this, I feel like we hear 806 00:38:51,840 --> 00:38:53,040 Speaker 5: this story every three or four year. 807 00:38:53,120 --> 00:38:54,640 Speaker 13: Yes, well those are the annual ones. 808 00:38:54,719 --> 00:38:57,960 Speaker 12: These are the cousins, the brude ex that comes after 809 00:38:58,239 --> 00:39:00,439 Speaker 12: like about seventeen fifteen to seventeen years. 810 00:39:00,640 --> 00:39:01,320 Speaker 8: So they emerge. 811 00:39:01,400 --> 00:39:02,719 Speaker 12: So they've been underground like. 812 00:39:03,239 --> 00:39:04,799 Speaker 3: And they're gonna be like in Central Park. 813 00:39:05,520 --> 00:39:08,719 Speaker 13: Well eventually, yes, but they're in mass Chusetts right now. 814 00:39:08,760 --> 00:39:10,759 Speaker 13: They've been down south. Now they're mass Chusetts. So yeah, 815 00:39:10,760 --> 00:39:12,879 Speaker 13: they'll start to make and that at nighttime they'll start 816 00:39:12,920 --> 00:39:14,040 Speaker 13: to like come out this. 817 00:39:14,040 --> 00:39:17,239 Speaker 5: Summer in New York. It sounds like, okay, you've been 818 00:39:17,320 --> 00:39:19,160 Speaker 5: watched Wild Kingdom. 819 00:39:18,840 --> 00:39:20,920 Speaker 3: With you look at the videos. 820 00:39:22,560 --> 00:39:25,560 Speaker 13: Oh no, there's a katas they're they're not, Oh the 821 00:39:26,400 --> 00:39:27,279 Speaker 13: Curtus looking things. 822 00:39:27,480 --> 00:39:30,520 Speaker 3: Listen Mateo. Thank you so much for the newspapers as well. 823 00:39:30,760 --> 00:39:35,520 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 824 00:39:35,680 --> 00:39:39,920 Speaker 1: and anywhere else you get your podcasts. 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