WEBVTT - Key Inflation Data and Equity Outlook 0:00:00.080 --> 0:00:12.879 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:12.960 --> 0:00:16.960 Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join 0:00:17.079 --> 0:00:20.960 us each day for insight from the best in economics, finance, investment, 0:00:21.200 --> 0:00:24.840 and international relations. You can also watch the show live 0:00:25.079 --> 0:00:29.400 on YouTube. Visit the Bloomberg Podcast channel on YouTube to 0:00:29.520 --> 0:00:32.920 see the show weekday mornings from seven to ten am 0:00:32.960 --> 0:00:37.000 Eastern from our global headquarters in New York City. Subscribe 0:00:37.000 --> 0:00:40.360 to the podcast on Apple, Spotify, or anywhere else you 0:00:40.440 --> 0:00:44.600 listen and always I'm Bloomberg Radio, the Bloomberg Terminal, and 0:00:44.640 --> 0:00:46.320 the Bloomberg Business app. 0:00:46.840 --> 0:00:48.280 This is some of my ute folks. 0:00:48.840 --> 0:00:54.040 Good morning, Samuel Coffin, the fabulous Mary Harris of Uboso 0:00:54.080 --> 0:00:57.160 built all the foundation there, and whoever originally he hired 0:00:57.280 --> 0:01:00.800 years ago, this young whipper snapper Drew Madis. And what's 0:01:00.840 --> 0:01:03.600 cool here is someone like maddest folks now over it 0:01:03.680 --> 0:01:07.080 meant life. It's like it's like it's like one soda. 0:01:07.400 --> 0:01:09.280 He went from the Padres to the Yankees. 0:01:09.640 --> 0:01:10.920 Over with the New York Yankees. 0:01:11.000 --> 0:01:14.759 Drew Madis gives me a research report from eight years ago. 0:01:14.920 --> 0:01:17.759 Drew Madis, why are you pulling out a UBS report 0:01:18.000 --> 0:01:21.839 from eight years ago my three favorite canaries tweet for us. 0:01:23.440 --> 0:01:26.039 Well, it's there's still some of the best things to 0:01:26.120 --> 0:01:28.640 look at in terms of whether the economy is improving 0:01:28.800 --> 0:01:32.720 or getting worse. And unfortunately, what we're seeing in those 0:01:33.280 --> 0:01:38.040 in those indicators, which are claims, the ism reports, and 0:01:38.120 --> 0:01:41.520 core bank loans are all signs that the economy is 0:01:41.520 --> 0:01:44.400 beginning to weaken, which I think has become more evident 0:01:44.440 --> 0:01:47.360 in things. But you know, with the idea of kind 0:01:47.360 --> 0:01:49.760 of the soft landing having taken hold or the no 0:01:49.960 --> 0:01:53.040 landing having taken hold, this is just something that I 0:01:53.040 --> 0:01:55.880 think points in the opposite direction and maybe suggests that, 0:01:56.160 --> 0:01:58.240 you know, weakness is going to be forthcoming. 0:01:58.480 --> 0:02:00.960 Well, we finally see it in the job report coming 0:02:01.040 --> 0:02:03.160 up here early June. 0:02:04.680 --> 0:02:07.080 I think we're going to see some weekend the jobs report. 0:02:07.120 --> 0:02:10.760 Our expectation is you're going to see the unemployment rate 0:02:10.880 --> 0:02:15.120 move higher over time. And you know, once again, you know, 0:02:15.160 --> 0:02:17.120 we do expect the FED to cut interest rates, but 0:02:17.160 --> 0:02:19.200 we expect the FED to cut interest rates because we 0:02:19.240 --> 0:02:21.800 expect the economy is going to be weakening. They're going 0:02:21.840 --> 0:02:23.760 to be cutting with inflation above their target. 0:02:24.600 --> 0:02:28.399 June seven, Elate Jobs report Paul Sweeney Change in non 0:02:28.440 --> 0:02:30.880 firm payables now one hundred and eighty thousand. 0:02:30.639 --> 0:02:33.760 Okay, survey. So, Drew, do you think the FED here? 0:02:34.680 --> 0:02:36.440 Do you think the Fed's kind of behind the curve 0:02:36.480 --> 0:02:39.040 a little bit here in terms of cutting interest rates? 0:02:39.160 --> 0:02:40.800 Or you know a lot of folks will come in 0:02:40.840 --> 0:02:42.440 here and talk to Tom and I and say, hey, 0:02:43.240 --> 0:02:45.079 they should just wait here. How do you think about it? 0:02:46.760 --> 0:02:48.840 I mean, I think there's an argument for waiting. But 0:02:48.919 --> 0:02:51.000 at the same point, you know, the Fen's pretty much 0:02:51.000 --> 0:02:55.080 always behind the curve. I mean, you know, there's no 0:02:55.200 --> 0:02:59.239 point in putting, you know, a doghound, you know, against 0:02:59.240 --> 0:03:01.760 the greyhound and backing the outcome to be any different, right, 0:03:01.840 --> 0:03:03.639 you know that the FED is the animal that they are, 0:03:04.200 --> 0:03:06.800 and they're going to be behind the curve. And the 0:03:06.880 --> 0:03:10.000 question is, you know, how, you know, how aggressive can 0:03:10.040 --> 0:03:11.919 they be when they don't know where things are going? 0:03:13.000 --> 0:03:14.800 And I think the answer is that they need to 0:03:14.840 --> 0:03:17.320 have a little bit more humility, which you know, I 0:03:17.360 --> 0:03:19.000 think if they had had that in the first place, 0:03:19.240 --> 0:03:21.480 we probably wouldn't have had the inflation rates that we've had. 0:03:22.480 --> 0:03:26.800 All right, So given that backdrop here again, rates likely 0:03:26.840 --> 0:03:30.079 coming down at some point earning seem to be pretty 0:03:30.120 --> 0:03:34.119 solid here. That seems to be pretty constructive background for equities. 0:03:34.120 --> 0:03:35.520 How do you guys think about that? 0:03:37.920 --> 0:03:40.560 Yeah, you know the problem is kind of you know, 0:03:40.800 --> 0:03:42.400 how much risk do you want to take when it 0:03:42.440 --> 0:03:45.120 seems like we're on the verge of a turn, and 0:03:45.320 --> 0:03:47.520 where will that turn show up? And will we be 0:03:48.080 --> 0:03:50.720 will it be as obvious to everyone when it happens. 0:03:51.920 --> 0:03:55.280 So you know, we've been in kind of a risk 0:03:55.320 --> 0:03:57.400 off mode for a while now, and I think that 0:03:57.520 --> 0:03:59.840 that's that surved us well. And I think you know 0:04:00.960 --> 0:04:03.839 probably where I would still be, although I will say, 0:04:03.880 --> 0:04:06.640 you know, when you're when you're trying to figure out 0:04:07.120 --> 0:04:08.760 at the turn where you're going to be, you know 0:04:08.800 --> 0:04:13.760 there are there are places you can be where you 0:04:14.360 --> 0:04:16.240 actually as soon as the turn happens, you want to 0:04:16.279 --> 0:04:18.760 be looking at those places. And so you know, we're 0:04:18.800 --> 0:04:21.240 trying to be or thinking about things in a more 0:04:21.320 --> 0:04:25.320 nimble way and see, you know where the greatest missed 0:04:25.320 --> 0:04:27.200 pricings are in the economy. 0:04:27.400 --> 0:04:30.560 Drew back to Colby College economics of a few years ago. 0:04:30.600 --> 0:04:34.320 In your sterling career. There's a whole idea of aggregating 0:04:34.400 --> 0:04:39.200 all the data together versus two, three, or even four Americas. 0:04:39.279 --> 0:04:42.560 Are you disaggregating now? Are you looking at an America 0:04:42.600 --> 0:04:44.120 of haves and have nots? 0:04:45.800 --> 0:04:48.600 You know, I've always been a fan of keeping the aggregate, 0:04:49.760 --> 0:04:52.680 and the reason being is because you know, if you 0:04:52.839 --> 0:04:55.200 if you disaggregate in that way, you're basically saying that 0:04:55.279 --> 0:04:57.320 one group of people can't do a job another group 0:04:57.360 --> 0:05:00.920 of people can do. And I think increasingly, uh, you know, 0:05:01.720 --> 0:05:04.719 we're seeing actually that you know, with new technologies, you know, 0:05:04.760 --> 0:05:07.120 people can do things that you know, maybe they weren't 0:05:07.560 --> 0:05:12.760 weren't possible before. The only reason to disaggregate now is 0:05:12.760 --> 0:05:15.640 is because it seems like, you know, the savings rate 0:05:16.000 --> 0:05:19.760 among one group of the higher end cohort income cohort 0:05:21.279 --> 0:05:25.200 is really strong. Uh and and there's some excess money there. 0:05:25.720 --> 0:05:28.159 Uh And so we need to be if we're going 0:05:28.240 --> 0:05:30.560 to see weakness, it's going to be there first. Right. 0:05:30.640 --> 0:05:34.160 We already know there's weakness in certain other areas. But 0:05:34.200 --> 0:05:36.560 the people who drive the economy or the people who 0:05:36.560 --> 0:05:40.080 can change their savings rate. So you know, if if 0:05:40.080 --> 0:05:43.360 people are going in and they're getting either government support 0:05:43.520 --> 0:05:45.360 or they're spending one hundred percent of what they make, 0:05:45.920 --> 0:05:48.320 you know, those people don't have the ability to adjust 0:05:48.360 --> 0:05:51.000 their their spending. They just adjust what they're spending on. 0:05:52.839 --> 0:05:56.720 The higher income cohorts have the ability to actually, you know, 0:05:57.320 --> 0:06:00.760 increase savings, decrease savings, which then boost the economy or 0:06:00.800 --> 0:06:04.240 reduces the economy. The good news for the FED, quite 0:06:04.240 --> 0:06:07.440 frankly is tenure yields are basically at the optimal point 0:06:07.480 --> 0:06:08.719 to maximize spending. 0:06:09.720 --> 0:06:12.479 Interesting, where are they going to be in twelve months? 0:06:12.520 --> 0:06:14.279 I mean, I mean that's the ultimate calling. 0:06:15.200 --> 0:06:18.520 So we actually, like ski relatively stable around here. But 0:06:18.680 --> 0:06:21.559 you know, once again, though, if they go higher, people 0:06:21.600 --> 0:06:24.640 begin to save because they feel the need to. If 0:06:24.680 --> 0:06:27.880 they go lower, they actually need to save more because 0:06:28.320 --> 0:06:30.800 people think about retirement and they think about the yield 0:06:30.800 --> 0:06:33.080 they are going to get in retirement, and so they 0:06:33.160 --> 0:06:36.039 adjust to try to basically get to an income stream 0:06:36.080 --> 0:06:38.920 and retirement. And that's the failure of the zero rate 0:06:38.960 --> 0:06:41.479 policy is that if you push rates too low, train 0:06:41.440 --> 0:06:42.320 inhibit spending. 0:06:43.320 --> 0:06:44.599 Doramatis, thank you so much. 0:06:44.720 --> 0:06:58.920 With MetLife, Greg Daco joins right now, e y parthenon. 0:06:59.680 --> 0:06:59.960 Greg. 0:07:00.120 --> 0:07:04.000 It's a you know, quiescent maybe doesn't capture it. It's 0:07:04.040 --> 0:07:07.920 sort of an on plan report, but one point three 0:07:08.000 --> 0:07:12.280 percent real GDP is that on the edge of stagflation. 0:07:13.960 --> 0:07:16.080 Now, I don't think it's on the edge of stagflation 0:07:16.280 --> 0:07:18.840 because of the composition of this GDP print. 0:07:19.200 --> 0:07:20.040 What we saw was. 0:07:20.040 --> 0:07:23.880 Again a very large trade drag, a drag from higher 0:07:24.040 --> 0:07:27.240 net imports. That is not necessarily a bad thing. It 0:07:27.320 --> 0:07:30.720 indicates that there was still demand from a consumption perspective, 0:07:30.760 --> 0:07:33.440 from a business investment perspective, So I think I would 0:07:33.480 --> 0:07:37.040 fade the headline GDP print, which is soft at one 0:07:37.080 --> 0:07:40.320 point three percent, and focus on final demand from private 0:07:40.440 --> 0:07:44.440 purchasers that is still trending around three percent. It's still 0:07:44.440 --> 0:07:46.880 a robust economy, but we're seeing a little bit more 0:07:46.880 --> 0:07:49.720 scrutiny on the part of consumers in this high cost environment. 0:07:49.760 --> 0:07:51.400 Yeah, but this is religion to me, folks. 0:07:51.440 --> 0:07:54.400 We're talking domestic final sales as a general statement. It's 0:07:54.400 --> 0:07:57.240 something you flunk any kind one oh one, Greg doctor 0:07:57.280 --> 0:07:59.840 didn't flunk it. But the answer is you peel out 0:07:59.880 --> 0:08:02.880 a sports you peel out the noise, maybe appeel out 0:08:02.880 --> 0:08:06.160 the silliness of inventory dynamics, and you got a run 0:08:06.240 --> 0:08:09.320 rate in America that Paul Sweeney sees every weekend of 0:08:09.400 --> 0:08:11.680 like a three percent GDP, right, Greg. 0:08:12.440 --> 0:08:15.040 Yeah, you've got about three percent GDP growth when you 0:08:15.080 --> 0:08:17.960 peel out to all those factors. I would also note 0:08:18.000 --> 0:08:20.760 that today we got the GDI report that gross domestic 0:08:20.800 --> 0:08:24.400 income number which rows one point five percent. So even 0:08:24.440 --> 0:08:27.920 though you have to nuance some of the underlying factors 0:08:27.960 --> 0:08:30.920 in terms of the headline GDP print, gross domestic income 0:08:30.960 --> 0:08:34.640 continues to point towards that softening momentum in terms of 0:08:34.679 --> 0:08:35.280 the economy. 0:08:35.400 --> 0:08:36.719 If you look at consumer. 0:08:36.360 --> 0:08:40.760 Spending data, also showing consumers exorciving more scrutiny, being more 0:08:40.760 --> 0:08:43.360 careful as to what they spend on, and you're seeing 0:08:43.480 --> 0:08:47.880 the lower income consumers, younger generations, consumers that are more 0:08:47.880 --> 0:08:51.080 indebted that are feeling the pressure at high interest rates 0:08:51.120 --> 0:08:54.720 and high prices and curbing their outlays in this environment. 0:08:54.760 --> 0:08:57.040 So that's what I would expect to see as we 0:08:57.120 --> 0:08:58.200 navigate into the second parl. 0:08:58.320 --> 0:09:00.640 As we do on surveillance, we go to the younger generation. 0:09:00.920 --> 0:09:03.400 Lisa Matteo, are you curbing your consumption? 0:09:04.120 --> 0:09:08.319 I'm trying my very best. 0:09:07.320 --> 0:09:09.880 Going down in flames out. Thank you. That's the last 0:09:09.880 --> 0:09:12.240 time we'll speak to the generation today. 0:09:12.360 --> 0:09:14.800 Paul, Hey, Greg talk to us about kind of your 0:09:14.880 --> 0:09:16.640 view of the consumer here. I'm just looking at some 0:09:16.720 --> 0:09:20.240 Cohal's numbers that came in weaker than expected. Target was 0:09:20.280 --> 0:09:22.400 also a little bit weak, but Walmart was okay. So 0:09:22.480 --> 0:09:25.640 I mean, how are you guys viewing the consumer out there? 0:09:26.640 --> 0:09:28.679 I think we have to depart a little bit from 0:09:28.679 --> 0:09:30.959 this view of the consumer. I think there are multiple 0:09:30.960 --> 0:09:34.360 types of consumers, and we're increasingly seeing a bifurcation in 0:09:34.400 --> 0:09:37.400 the economy. We're seeing individuals at the lower end of 0:09:37.440 --> 0:09:40.160 the income spectrum, those as I just mentioned, that have 0:09:40.320 --> 0:09:43.719 higher debt burdens, that are perhaps maxing out on their 0:09:43.760 --> 0:09:47.760 credit lines, that have larger debt amounts and perhaps less 0:09:47.800 --> 0:09:50.760 savings to buffer any type of slowdown in the labor market. 0:09:51.000 --> 0:09:54.480 Those are the ones that are a little bit more careful, 0:09:54.600 --> 0:09:58.280 more prudent with how they spend, that is gradually moving 0:09:58.360 --> 0:10:01.560 up into the income labd And if we do see 0:10:01.679 --> 0:10:04.120 and I'm not saying this will materialize, but if we 0:10:04.160 --> 0:10:07.880 do see more pronounced slow down in the labor market, 0:10:08.160 --> 0:10:11.480 that could pretend to slower income momentum and in turn 0:10:11.800 --> 0:10:15.840 force even a more pronounced slowdown in consumer spending activity, 0:10:16.040 --> 0:10:18.960 which by itself would actually be a good thing. On 0:10:19.000 --> 0:10:22.000 the inflation front, because it would promote those dift inflationary 0:10:22.040 --> 0:10:23.080 burnts that we've been seeing. 0:10:23.280 --> 0:10:25.559 All Right, Greg, given that that backdrop, do you think 0:10:25.559 --> 0:10:29.440 the SPED should be cutting rates now or like a 0:10:29.440 --> 0:10:31.559 lot of folks say, they should just be sitting on 0:10:31.600 --> 0:10:33.040 the sidelines and wait, what do you think? 0:10:34.000 --> 0:10:36.319 I think a lot of attention, perhaps too much attention, 0:10:36.400 --> 0:10:39.120 has been given to this first rate cut. Nothing says 0:10:39.120 --> 0:10:41.240 that once the FED starts to cut, or the ECB 0:10:41.400 --> 0:10:43.160 or the Bank of England or the Bank of Canada, 0:10:43.240 --> 0:10:45.800 they have to cut at every meeting or every other meeting. 0:10:45.840 --> 0:10:48.600 Nothing is predetermined in this environment. But I do think 0:10:48.640 --> 0:10:50.400 that if you look at the broader picture and have 0:10:50.440 --> 0:10:54.080 more of a forward looking perspective, with this view of 0:10:54.120 --> 0:10:58.720 the economy gradually slowing disinflationary pressures fill in the works, 0:10:59.000 --> 0:11:02.040 the FED could very well start easing monetary policy. 0:11:02.080 --> 0:11:02.280 Now. 0:11:02.640 --> 0:11:06.040 Takes some time to evaluate how the economy is evolving. 0:11:05.880 --> 0:11:07.320 But be on the right step. 0:11:07.559 --> 0:11:10.520 In the case the economy slows faster than what has 0:11:10.559 --> 0:11:13.560 been expected. We've been riding this good wave of robust 0:11:13.640 --> 0:11:16.960 economic data, painless disinflation. I think we have to be 0:11:17.080 --> 0:11:19.720 very careful to assume that this will continue forever. We 0:11:19.840 --> 0:11:23.520 are seeing signs of cost fatigue, high interest rates, more 0:11:23.559 --> 0:11:27.120 cautious business investment starting to weigh in the economy, and 0:11:27.120 --> 0:11:28.000 we have to be prepared. 0:11:28.600 --> 0:11:32.920 And now, folks home economics with Gregory doco, Ey, greg 0:11:33.160 --> 0:11:35.320 this isn't the zeitgeist right now, and some of us 0:11:35.320 --> 0:11:35.880 are living it. 0:11:36.240 --> 0:11:37.640 I'm going to be an amateur here. 0:11:38.400 --> 0:11:44.120 Renter's insurance is in CPI, but homeowner's insurance sort of 0:11:44.200 --> 0:11:48.800 kind of like is not calculated in CPI. And I 0:11:48.840 --> 0:11:51.880 go to CPS reporting four or five, six months ago. 0:11:52.640 --> 0:11:55.240 The basic idea that ninety percent of the homes in 0:11:55.280 --> 0:11:58.800 New Jersey's Ocean County and nearly sixty percent of the 0:11:58.840 --> 0:12:02.839 homes in Monmouth County all right risk of higher insurance premiums. 0:12:03.080 --> 0:12:06.640 We go to our New Jersey premium expert, Paul Sweeney. 0:12:07.280 --> 0:12:11.240 What premium is homeowners premium right now in the premium 0:12:11.360 --> 0:12:12.360 state of New Jersey. 0:12:12.400 --> 0:12:15.839 And I'm a solid five blocks from the beach, so 0:12:16.120 --> 0:12:19.520 I'm paying my fair share. My former home in California toime, 0:12:19.880 --> 0:12:23.360 it was in a fire area, so I was covered 0:12:23.360 --> 0:12:25.760 with regular insurance until about three or four years ago, 0:12:25.760 --> 0:12:28.720 and they said nope, you're now in the fire area. 0:12:29.040 --> 0:12:30.880 So I had to go to Lloyd's of London to 0:12:30.920 --> 0:12:32.599 get insurance, did you yeah? I mean those are the 0:12:32.600 --> 0:12:36.000 people that ensure ships that go like in the Red Sea. 0:12:36.679 --> 0:12:38.800 Did you stop by Gregs and Heaven and the Chase? 0:12:39.480 --> 0:12:42.800 Craig Doco, this is ridiculous homeowner's insurance. A guy like 0:12:42.920 --> 0:12:45.400 Michael Barr has been play crushed. 0:12:45.559 --> 0:12:48.559 Was six deer in the backyard from a homeowner's insurance? 0:12:48.559 --> 0:12:49.160 Greig Doco? 0:12:49.559 --> 0:12:52.200 How do we put homeowners insurance that we're all getting 0:12:52.280 --> 0:12:54.119 killed on into CPI? 0:12:55.360 --> 0:12:57.360 I think we have to be very careful with insurance 0:12:57.400 --> 0:13:02.400 in general, both homeowner insurance and car insurance. And wonder 0:13:02.559 --> 0:13:05.080 whether these are the types of pressures that the FED 0:13:05.120 --> 0:13:08.320 should be fighting. Should the FED be focused on these 0:13:08.360 --> 0:13:13.120 components of CPI, inflation of inflation in general as to 0:13:13.320 --> 0:13:16.600 essentially try to curb inflation and bring inflation back towards 0:13:16.679 --> 0:13:19.880 that two percent target. There are open questions as to 0:13:19.920 --> 0:13:23.480 whether the FED wants to squeeze other components to offset 0:13:23.520 --> 0:13:25.160 the fact that they can't control that. 0:13:26.360 --> 0:13:29.880 There's no textbook you or I studied that says the 0:13:29.960 --> 0:13:34.480 FED can surgically control selected inflation items. 0:13:35.200 --> 0:13:38.439 Exactly, and you've probably given the blunt tools and the 0:13:38.520 --> 0:13:41.319 uncertain lags in terms of monetary policy. That's why I'm 0:13:41.360 --> 0:13:44.440 not necessarily sure that you want to have monetary palsy 0:13:44.520 --> 0:13:47.600 remain higher for longer, tighter for longer. In this type 0:13:47.600 --> 0:13:50.679 of environment where a lot a large part of what's 0:13:50.760 --> 0:13:54.800 driving inflation today is structural by nature. Homeowner insurance prices 0:13:54.840 --> 0:13:58.880 are not rising because of inflationary dynamics, rather because you 0:13:59.000 --> 0:14:02.320 have climate change, you have conditions that are shifting. Same 0:14:02.400 --> 0:14:05.320 on the automotive front, not necessarily sure that the fact 0:14:05.360 --> 0:14:07.480 can do much about these types of inflation dynamics. 0:14:07.559 --> 0:14:09.800 On the anniversary of the release of Just What I 0:14:09.880 --> 0:14:14.480 Needed by the Cars from Boston University and Ey Craig Daco, 0:14:14.600 --> 0:14:17.439 thank you so much, just absolutely brilliant different. 0:14:21.600 --> 0:14:23.080 This timely interview coming. 0:14:22.960 --> 0:14:26.720 Up, we are going to consider the legal issues of 0:14:26.800 --> 0:14:30.200 Lower Manhattan. David Gerr there, I think June Grosso's is 0:14:30.280 --> 0:14:31.840 June's scheduled to be with us as well. 0:14:31.880 --> 0:14:32.960 Did we talk to her people? 0:14:34.040 --> 0:14:36.280 I think do you think she does the afternoon shift? 0:14:36.400 --> 0:14:36.760 I don't know. 0:14:38.520 --> 0:14:39.400 Studio here right now. 0:14:39.440 --> 0:14:43.320 Ethan Devit joins Chief Global Strategist Manetta Group, with a 0:14:43.400 --> 0:14:47.880 really really solid understanding of the turn of markets out 0:14:47.880 --> 0:14:51.440 of the United Kingdom. Thank you so much for joining 0:14:51.520 --> 0:14:55.920 right now. Can we sustain global nominal GDP? Can we 0:14:56.000 --> 0:14:57.600 keep this good feeling going? 0:14:58.040 --> 0:15:01.160 It's going to be difficult to sustain that. I mean, 0:15:01.200 --> 0:15:04.960 we clearly have exceeded expectations in terms of where GDP 0:15:05.120 --> 0:15:07.880 has been, coming down to one point three percent. I'd 0:15:07.880 --> 0:15:09.840 say that's in the category of nothing to write home 0:15:09.880 --> 0:15:13.280 about right now. So it's definitely is more muted and 0:15:13.320 --> 0:15:16.200 perhaps more in line with how the economy should feel 0:15:16.480 --> 0:15:19.520 after it's just experienced a soft landing. We know that 0:15:19.600 --> 0:15:22.560 it's quite mixed. That number as a top line number 0:15:22.920 --> 0:15:26.640 will perhaps distort quite a bit of variability behind the 0:15:26.640 --> 0:15:30.200 scenes among different sectors. So no, I'd say we're pretty 0:15:30.280 --> 0:15:32.720 much holding on by the skin of our teeth to 0:15:32.760 --> 0:15:34.040 a positive number right now. 0:15:34.320 --> 0:15:37.760 How do you define stagflation? Do we know how Jamie 0:15:37.840 --> 0:15:38.760 Diamond defines it? 0:15:38.800 --> 0:15:39.440 Paul, I don't think. 0:15:39.440 --> 0:15:39.840 I don't. 0:15:41.560 --> 0:15:43.880 People throw this thing around, and I mean we're talking 0:15:43.920 --> 0:15:48.240 here with somebody with some qualifications including Trinity College, Dublin, 0:15:48.640 --> 0:15:51.680 a school called Oxford. You know, it's just done pretty 0:15:52.400 --> 0:15:57.160 pretty insient in France. I mean, how do you define stagflation? 0:15:58.560 --> 0:16:00.240 Well, at So's I would like to say, I was 0:16:00.280 --> 0:16:03.960 born in the era when it was last popular. It's 0:16:03.960 --> 0:16:07.560 stagnation plus inflation. That's my understanding. It's been forecast for 0:16:07.600 --> 0:16:10.640 most of my life, but it hasn't actually transpired. And 0:16:10.680 --> 0:16:14.520 I'd say now we're hardly on either side of it. 0:16:14.720 --> 0:16:19.000 We're seeing neither stagnation nor are we seeing persistent inflation 0:16:19.040 --> 0:16:22.360 any longer. So I'd say that term has perhaps lost 0:16:22.400 --> 0:16:25.680 its purpose just at the moment. We have other problems 0:16:25.680 --> 0:16:28.320 certainly ahead of us, and that is is how we 0:16:28.640 --> 0:16:31.880 deal with perhaps not having had this fallout, not having 0:16:31.880 --> 0:16:35.160 had this recession. You know, how real essentially is this 0:16:35.240 --> 0:16:38.960 growth you mean, and how sustainable is that? But I'd 0:16:39.000 --> 0:16:41.560 say inflation for now somewhat in the rear view mirror. 0:16:42.320 --> 0:16:45.480 All right, If that's in the rearview mirror. Even as 0:16:45.520 --> 0:16:49.520 a chief global market strategist, where do you see opportunities 0:16:49.520 --> 0:16:51.080 on a global scale. 0:16:52.240 --> 0:16:52.880 Well, it's interesting. 0:16:52.920 --> 0:16:55.040 We've always been global investors, and that has been a 0:16:55.080 --> 0:16:57.920 very difficult position to maintain because we have had high 0:16:57.960 --> 0:17:00.880 conviction outside the US, even at a time when the 0:17:00.880 --> 0:17:03.520 dollar was strong and there was persistent under performance. So 0:17:03.600 --> 0:17:05.560 what we are cheered to see is that there has 0:17:05.600 --> 0:17:08.160 been this broadening of the market strength, and we still 0:17:08.200 --> 0:17:10.199 see that even though that there is there's been a 0:17:10.760 --> 0:17:12.880 come back in the last few days. We can see 0:17:12.880 --> 0:17:15.440 that there has been a broadening beyond tech, a broadening 0:17:15.560 --> 0:17:18.399 beyond large cap only into mid cap and small cap, 0:17:18.720 --> 0:17:21.880 and certainly beyond the US. We've seen some decent performance 0:17:21.880 --> 0:17:24.400 out of Europe, decent performance out of the UK finally 0:17:24.760 --> 0:17:27.560 after lagging for about fourteen months there, and then of 0:17:27.560 --> 0:17:32.040 course stellar performance from Japan, and a resurrection of hope 0:17:32.080 --> 0:17:35.440 and expectation around China post COVID and post some of 0:17:35.480 --> 0:17:38.280 that overhang. So I'd say we're seeing this kind of 0:17:38.400 --> 0:17:42.800 commonality now of themes on a global basis. Where do 0:17:42.840 --> 0:17:45.600 we see opportunity. We see it in the divergence in 0:17:45.640 --> 0:17:48.160 the fact that the dollar cannot stay long forever. We've 0:17:48.200 --> 0:17:51.160 seen some weakening there. We start to see divergence among 0:17:51.280 --> 0:17:54.080 central banks and how they're likely to perform. Who's going 0:17:54.119 --> 0:17:55.840 to go quickly on as a perform I mean, what 0:17:55.880 --> 0:17:57.840 they're likely to do in terms of the interest rates. 0:17:58.160 --> 0:18:01.520 ECB likely to go before either Bank of England or 0:18:01.680 --> 0:18:04.800 the fed that's leading to some divergence which will manifest 0:18:04.840 --> 0:18:07.280 in the currencies. So that's where we're seeing it. And 0:18:07.280 --> 0:18:09.840 then of course you have single stock areas like say 0:18:09.840 --> 0:18:13.080 the Novo Nordisks of this world that clearly are stellar 0:18:13.119 --> 0:18:16.320 success stories. And if you do not have global exposure, 0:18:16.359 --> 0:18:19.359 you do not have the optionality that exposure to that 0:18:19.400 --> 0:18:19.919 would give you. 0:18:20.200 --> 0:18:22.640 But I think if if I were a portfolio manager, 0:18:22.680 --> 0:18:25.159 even I think I'd be very lazy. I think what 0:18:25.200 --> 0:18:27.720 I would do is just go by big tech and 0:18:27.720 --> 0:18:29.240 then stick my head in the send and hope for 0:18:29.240 --> 0:18:31.879 the best. I mean, and that's kind of worked for me. 0:18:32.000 --> 0:18:35.399 I guess we should never underestimate what's sitting in a 0:18:35.440 --> 0:18:37.239 room and doing nothing, I think, which is always been 0:18:37.359 --> 0:18:40.119 perhaps the good response in riding out some of this volatility. 0:18:40.480 --> 0:18:42.920 The problem with that is this is a momentum trait, 0:18:42.960 --> 0:18:46.480 and chasing momentum has often ended in tears for investors. 0:18:46.920 --> 0:18:49.159 So we have not been too tactical, try to be 0:18:49.200 --> 0:18:52.399 too clever around this momentum. We're even seeing signs of 0:18:52.440 --> 0:18:55.520 that spending is highly selective right now that if we 0:18:55.560 --> 0:18:59.719 look at CAPEX beyond spending say on cybersecurity and on 0:18:59.800 --> 0:19:03.360 tech or on AI investments. Ppex is actually coming down 0:19:03.400 --> 0:19:06.120 in other areas. So that's the story for corporates, that's 0:19:06.160 --> 0:19:09.240 the story for consumers. We see that in the salesforce numbers, 0:19:09.240 --> 0:19:12.320 in the American airlines numbers, and we're going we're interesting 0:19:12.320 --> 0:19:14.240 to see what Costco comes out with today. But I 0:19:14.280 --> 0:19:16.760 suspect on the food side people are still spending well, 0:19:17.080 --> 0:19:19.600 but selective spending is the order of the day, So 0:19:19.720 --> 0:19:21.600 there will be some cracks in the AI. 0:19:21.720 --> 0:19:23.399 Theisis because quite frankly. 0:19:23.080 --> 0:19:25.560 No one really knows where we're going with this in 0:19:25.640 --> 0:19:28.320 terms of its impact. There's a lot of hype and momentum, 0:19:28.400 --> 0:19:32.280 so all in there would be a precarious position across. 0:19:31.920 --> 0:19:35.600 A kitchen table and Ethan, I mean in the United Kingdom, 0:19:35.640 --> 0:19:37.920 you've brought in some Gregs, the cheese. 0:19:37.600 --> 0:19:41.080 And the onion roll, and you're there with tea not coffee. 0:19:41.200 --> 0:19:42.879 I'm sorry, brown stuff. 0:19:43.240 --> 0:19:46.359 But if you're there across a kitchen table right now 0:19:46.440 --> 0:19:50.800 and you've missed this equity surge, how do you get 0:19:50.840 --> 0:19:54.000 into the market into the summer of twenty twenty four? 0:19:55.160 --> 0:19:57.320 Great question, Well, first question, you get in how you 0:19:57.320 --> 0:20:00.359 always get in, which is gradually and staggering, and I 0:20:00.400 --> 0:20:02.679 don't mean staggering as if you consume too much of 0:20:02.680 --> 0:20:05.600 that ale, but you know staggering and the way we 0:20:05.640 --> 0:20:07.399 all at all a cost averaging, and that that is 0:20:07.440 --> 0:20:10.919 of course how you do it. You definitely want to 0:20:10.960 --> 0:20:14.520 have that spread out around the time of a geopolitical event. 0:20:14.600 --> 0:20:17.240 We have elections in the UK on Independence Day on 0:20:17.280 --> 0:20:19.640 the fourth of July, There'll be elections here in early 0:20:19.640 --> 0:20:22.119 November in the US and early November, so clearly we 0:20:22.480 --> 0:20:25.119 need to be mindful that those events are likely to 0:20:25.160 --> 0:20:27.719 cause some volatility in markets, and we're already seeing that 0:20:28.040 --> 0:20:31.560 in the volatility and fixed income that will manifest inequity markets. 0:20:31.600 --> 0:20:34.520 So you stagger entry. You then make sure that it 0:20:34.359 --> 0:20:37.280 is broad based across sectors. You don't try to be 0:20:37.320 --> 0:20:40.600