1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,239 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. From Chicago. 11 00:00:47,360 --> 00:00:50,639 Speaker 2: Anderra Gar and it joins us Bloomberg Intelligence Anrok, Thank 12 00:00:50,680 --> 00:00:52,960 Speaker 2: you so much for joining us. Is this a tech 13 00:00:53,120 --> 00:00:56,240 Speaker 2: pullback or is that just one part of the equation 14 00:00:56,360 --> 00:00:57,360 Speaker 2: you see in the market. 15 00:00:58,720 --> 00:01:00,520 Speaker 3: Yeah, I mean it is a minor tech pull back, 16 00:01:00,760 --> 00:01:03,040 Speaker 3: but that's sometimes a healthy thing because if you look 17 00:01:03,080 --> 00:01:05,440 Speaker 3: at it, over the last one and a half two years, 18 00:01:05,480 --> 00:01:08,200 Speaker 3: we have seen a massive rally in all these technology 19 00:01:08,200 --> 00:01:11,040 Speaker 3: stocks because of AI and right now we are a 20 00:01:11,120 --> 00:01:14,080 Speaker 3: face of consolidation where the companies are spending a lot 21 00:01:14,120 --> 00:01:16,959 Speaker 3: of money to expand capacity with the hope that they 22 00:01:17,000 --> 00:01:19,240 Speaker 3: get more AI workloads down the road. So I think 23 00:01:19,280 --> 00:01:21,240 Speaker 3: that's where we are right now. We're going to see 24 00:01:21,240 --> 00:01:24,840 Speaker 3: this for a few quotos and see we think it's 25 00:01:24,840 --> 00:01:26,240 Speaker 3: going to be a good twenty twenty five. 26 00:01:26,440 --> 00:01:29,000 Speaker 2: I went to the inner Agrana FA screen today on 27 00:01:29,200 --> 00:01:31,800 Speaker 2: Apple and I noticed that Apple in the last ten 28 00:01:31,880 --> 00:01:37,000 Speaker 2: years has retired thirty seven percent of their diluted shares. 29 00:01:37,880 --> 00:01:41,800 Speaker 2: I think historically, I can say anarag it's never happened before. 30 00:01:42,200 --> 00:01:44,360 Speaker 2: Are we going to see this trend of massive free 31 00:01:44,440 --> 00:01:47,160 Speaker 2: cash flow from these companies where all the noise of 32 00:01:47,200 --> 00:01:50,720 Speaker 2: AI and all really doesn't matter. Yeah. 33 00:01:50,800 --> 00:01:52,800 Speaker 3: When you see you know, all the tech companies, I 34 00:01:52,800 --> 00:01:55,640 Speaker 3: think Apple really stands out because their AI policy or 35 00:01:55,760 --> 00:01:59,360 Speaker 3: strategy is different than the other tech firms. Last night, 36 00:01:59,440 --> 00:02:03,280 Speaker 3: they actually brought back about twenty six billion and shares 37 00:02:03,320 --> 00:02:05,800 Speaker 3: that quarter. This is the highest we have seen. And 38 00:02:05,880 --> 00:02:07,920 Speaker 3: this is a company that's not going to be spending 39 00:02:07,960 --> 00:02:11,000 Speaker 3: billions in terms of expanding their data centers because they're 40 00:02:11,000 --> 00:02:13,320 Speaker 3: rented from others. They're going to rent a large language 41 00:02:13,320 --> 00:02:16,119 Speaker 3: model from everybody else, so they're tent to free cash 42 00:02:16,120 --> 00:02:17,959 Speaker 3: flow is not going to be as much as it's. 43 00:02:17,800 --> 00:02:19,480 Speaker 2: Going to be for Microsoft and Amazon. 44 00:02:19,760 --> 00:02:22,200 Speaker 4: And you're only a five and a half percent pullback 45 00:02:22,200 --> 00:02:23,799 Speaker 4: in the S and P I T index over the 46 00:02:23,880 --> 00:02:26,600 Speaker 4: last week, So you're right, not so strong. But you know, 47 00:02:26,680 --> 00:02:28,440 Speaker 4: talk to me about you know what we're seeing here? 48 00:02:28,480 --> 00:02:30,920 Speaker 4: I mean, is this is this the beginning of I mean, 49 00:02:30,960 --> 00:02:33,200 Speaker 4: should we be doubling down on growth? Should we shifting 50 00:02:33,200 --> 00:02:35,840 Speaker 4: into quality here? I mean, what are your thoughts, so. 51 00:02:35,840 --> 00:02:37,480 Speaker 3: Daman, when you look at it, there are two things 52 00:02:37,480 --> 00:02:39,240 Speaker 3: that are played right now. Right now, we are at 53 00:02:39,280 --> 00:02:41,519 Speaker 3: a phase when these companies are spending so much money 54 00:02:41,720 --> 00:02:44,040 Speaker 3: and they cannot show a lot of the air revenue, 55 00:02:44,120 --> 00:02:46,720 Speaker 3: so to investors are questioning whether that's going to happen. 56 00:02:47,080 --> 00:02:50,200 Speaker 3: The second thing that you just mentioned is the rotation 57 00:02:50,320 --> 00:02:53,320 Speaker 3: into value and rotation into small caps. And I think 58 00:02:53,360 --> 00:02:55,919 Speaker 3: that's another play that's going to happen over the next 59 00:02:56,400 --> 00:02:59,800 Speaker 3: several quarters because the disparity between the large cap in 60 00:02:59,840 --> 00:03:01,880 Speaker 3: the hech world and the small companies in the deck 61 00:03:01,919 --> 00:03:03,480 Speaker 3: world is massive at this point. 62 00:03:03,639 --> 00:03:05,520 Speaker 2: I got to leave it there. Anerog I'm so sorry 63 00:03:05,520 --> 00:03:08,040 Speaker 2: to short you this morning. The news flow just exceptional. 64 00:03:08,400 --> 00:03:12,560 Speaker 2: He is a definitive on the cloud. Look for aniog 65 00:03:12,760 --> 00:03:27,160 Speaker 2: Rana at Bloomberg Intelligence writing up Cloud Forward a couple 66 00:03:27,120 --> 00:03:32,680 Speaker 2: of years ago. Here's the abstract. This chapter proposes a 67 00:03:32,760 --> 00:03:37,040 Speaker 2: direct payment to individuals that would automatically be paid out 68 00:03:37,080 --> 00:03:41,080 Speaker 2: early in a recession and then continue annually when the 69 00:03:41,160 --> 00:03:45,360 Speaker 2: recession is severe. The outcome of this paper direct stimulus 70 00:03:45,360 --> 00:03:49,320 Speaker 2: payments to individuals will be she will be hounded forever 71 00:03:49,800 --> 00:03:52,560 Speaker 2: about the samb rule. We are honored on this job 72 00:03:52,640 --> 00:03:56,040 Speaker 2: today to have Claudia Sum join us out of Michigan, 73 00:03:56,200 --> 00:04:01,040 Speaker 2: off the Fed, of course, with new Sentry advisor definitive, 74 00:04:01,120 --> 00:04:06,680 Speaker 2: and with a question the most followed economist in America today, Claudia, 75 00:04:06,720 --> 00:04:08,760 Speaker 2: I don't want to get into cute, trite stuff. I'm 76 00:04:08,760 --> 00:04:11,760 Speaker 2: not going to do the usual media interview. But what 77 00:04:12,080 --> 00:04:17,200 Speaker 2: is the use of your rule? The wiggle room that 78 00:04:17,279 --> 00:04:19,599 Speaker 2: it has. I think of DSGE, which you can go 79 00:04:19,680 --> 00:04:22,920 Speaker 2: eight ways. How many ways can the sum rule go? 80 00:04:23,680 --> 00:04:26,320 Speaker 2: Or is it ultra rigorous? 81 00:04:27,839 --> 00:04:30,479 Speaker 5: It's it's a tool. It was part of a policy 82 00:04:30,680 --> 00:04:36,320 Speaker 5: proposal and an idea to do more fiscal policy. Put 83 00:04:36,360 --> 00:04:38,680 Speaker 5: it up, put it together ahead of time, design it 84 00:04:38,720 --> 00:04:42,880 Speaker 5: well tied economic conditions, take some of the politics out 85 00:04:42,920 --> 00:04:46,039 Speaker 5: in the crisis, and hit go right. This it was 86 00:04:46,080 --> 00:04:48,159 Speaker 5: a tool to solve a problem. In the past, we 87 00:04:48,240 --> 00:04:52,159 Speaker 5: haven't fought receptions as vigorously. It was developed before COVID 88 00:04:52,800 --> 00:04:56,000 Speaker 5: and and so that's that's the idea of it. It's 89 00:04:56,160 --> 00:05:00,200 Speaker 5: not and it's a tool. It needed to be simp well. 90 00:05:00,240 --> 00:05:02,279 Speaker 5: It needed to summarize a lot that was going on 91 00:05:02,279 --> 00:05:04,160 Speaker 5: in the economy. Frankly, we have an economy right now 92 00:05:04,160 --> 00:05:07,400 Speaker 5: that's extremely hard to summarize. So it's having a rough 93 00:05:07,480 --> 00:05:11,280 Speaker 5: go of it. And yet I'm glad it's help being 94 00:05:11,279 --> 00:05:13,560 Speaker 5: helpful I think useful to some extent in the conversation 95 00:05:13,680 --> 00:05:14,080 Speaker 5: right now. 96 00:05:14,160 --> 00:05:18,160 Speaker 2: Let us look now at the jobs report of America 97 00:05:18,640 --> 00:05:21,960 Speaker 2: coming out now, and it is a whoa huge depression. 98 00:05:22,320 --> 00:05:25,400 Speaker 2: It is a woe statistic as well. I'm going to 99 00:05:25,440 --> 00:05:27,440 Speaker 2: go through this for a bit before we go to 100 00:05:27,520 --> 00:05:31,599 Speaker 2: Claudia Sam, and we're going to see major major market 101 00:05:32,160 --> 00:05:36,800 Speaker 2: moves here. S ANDP down seventy five points right now, 102 00:05:36,960 --> 00:05:43,000 Speaker 2: Nastack down one, three eighty two. The tenure yield off 103 00:05:43,040 --> 00:05:45,440 Speaker 2: of the numbers, which I'll give you in a moment, folks, 104 00:05:45,440 --> 00:05:49,400 Speaker 2: the ten years in seventeen basis points for Global Wall Street, 105 00:05:50,000 --> 00:05:53,720 Speaker 2: I'm not kidding. Ginormous fits the Friday morning tone three 106 00:05:53,760 --> 00:05:56,880 Speaker 2: point eight zero percent. Here are the numbers, and I 107 00:05:56,920 --> 00:05:59,960 Speaker 2: have the revisions. Now. The revision is a weaker statistic 108 00:06:00,000 --> 00:06:03,400 Speaker 2: stick from two oh six down to one seventy nine. 109 00:06:03,839 --> 00:06:07,560 Speaker 2: The summed revision is negative twenty nine thousand. The non 110 00:06:07,600 --> 00:06:12,040 Speaker 2: farm payrolls is one hundred and fourteen thousand below doctor 111 00:06:12,080 --> 00:06:15,919 Speaker 2: Wong statistic below the survey of one seventy five. The 112 00:06:16,120 --> 00:06:19,880 Speaker 2: unemployment rate explodes is too much, but I am in 113 00:06:19,920 --> 00:06:23,440 Speaker 2: the media four point one percent to a higher level 114 00:06:23,520 --> 00:06:26,719 Speaker 2: four point three percent. We'll have Claudiusom speak on this 115 00:06:26,839 --> 00:06:30,920 Speaker 2: here in a moment. Tepe earnings on a month over 116 00:06:31,040 --> 00:06:33,960 Speaker 2: month basis, which is what IRA Jersey looks at, it 117 00:06:34,000 --> 00:06:38,840 Speaker 2: comes in weaker point three becomes point two weekly earnings, 118 00:06:39,080 --> 00:06:43,839 Speaker 2: a revision weaker, the actual statistic three point seven becomes 119 00:06:43,880 --> 00:06:46,479 Speaker 2: three point six. You get the tone that we see 120 00:06:46,520 --> 00:06:51,680 Speaker 2: out there. Labor participation actually is somewhat constructive. The underemployment rate, 121 00:06:51,760 --> 00:06:56,240 Speaker 2: Alan green SPAN's favorite statistic explodes is the correct word, 122 00:06:56,880 --> 00:07:00,159 Speaker 2: seven point four percent to seven point eight percent. The 123 00:07:00,240 --> 00:07:04,000 Speaker 2: vics out two big figures two point twenty nine. That's 124 00:07:04,000 --> 00:07:07,280 Speaker 2: some p futures at negative eighty seven Claudia Sam I've 125 00:07:07,279 --> 00:07:10,640 Speaker 2: got to ask the media question, is this some rule 126 00:07:11,520 --> 00:07:13,440 Speaker 2: in a force at this. 127 00:07:13,440 --> 00:07:16,080 Speaker 5: Moment get triggered? 128 00:07:16,680 --> 00:07:17,080 Speaker 6: Yeah? 129 00:07:17,320 --> 00:07:19,800 Speaker 5: Wow, Yeah, So that puts it up over it's half 130 00:07:19,840 --> 00:07:24,160 Speaker 5: a percentage point threshold. Noting that comes off of historical experience. 131 00:07:24,160 --> 00:07:26,640 Speaker 5: That doesn't necessarily tell us where you know, we are 132 00:07:27,120 --> 00:07:31,400 Speaker 5: right at this moment saying a recession. This has seen 133 00:07:31,720 --> 00:07:36,320 Speaker 5: way too much momentum in the unemployment rate in recent months, 134 00:07:36,600 --> 00:07:39,280 Speaker 5: I mean four point three percent. Right, this is not 135 00:07:40,120 --> 00:07:43,520 Speaker 5: so whether we are at that moment of a recession 136 00:07:43,640 --> 00:07:47,280 Speaker 5: or not. This is your build into substantial weakening in 137 00:07:47,320 --> 00:07:50,960 Speaker 5: the labor market, right like we have seen. Potentially all 138 00:07:51,040 --> 00:07:53,160 Speaker 5: is not lost. We are you know, the bottom's offing out. 139 00:07:53,160 --> 00:07:55,360 Speaker 5: We should never panic. There are policy tools, there are 140 00:07:55,440 --> 00:07:58,440 Speaker 5: levers and and you know, again I don't overread one 141 00:07:58,520 --> 00:08:02,440 Speaker 5: data point, but this isn't one data point. So I 142 00:08:02,480 --> 00:08:05,960 Speaker 5: think the case now for hey, we're normalizing. We didn't 143 00:08:05,960 --> 00:08:09,640 Speaker 5: need to slow things down some probably generally speaking. But 144 00:08:09,800 --> 00:08:13,360 Speaker 5: now the question is, okay, so we've had enough slowing here, 145 00:08:13,680 --> 00:08:17,239 Speaker 5: what levels this out? And that I think I don't 146 00:08:17,240 --> 00:08:18,040 Speaker 5: have the answer for that. 147 00:08:18,240 --> 00:08:22,520 Speaker 2: Claudius big One, an economist of Merit Claudia Sam by 148 00:08:22,520 --> 00:08:26,880 Speaker 2: the name of Stanley Fisher once lectured me and otherworthies 149 00:08:27,400 --> 00:08:32,280 Speaker 2: that the percentage move is important. The fact is we've 150 00:08:32,280 --> 00:08:35,600 Speaker 2: gone up zero point nine percent from a three point 151 00:08:35,720 --> 00:08:40,200 Speaker 2: four percent unemployment to a four point three percent, and 152 00:08:40,240 --> 00:08:42,800 Speaker 2: that percentage change is ginormous. I'm going to give that 153 00:08:42,840 --> 00:08:45,000 Speaker 2: to you folks in a moment. This is something you 154 00:08:45,040 --> 00:08:48,040 Speaker 2: can do on the Bloomberg. It's actually way way cool, 155 00:08:48,640 --> 00:08:51,360 Speaker 2: to say the least. We've had a twenty six percent 156 00:08:51,480 --> 00:08:55,920 Speaker 2: increase in the unemployment rate pandemic adjusted. I get it. 157 00:08:56,400 --> 00:08:59,600 Speaker 2: How does that fit into your historical perspective, doctor somem 158 00:09:00,200 --> 00:09:02,880 Speaker 2: on a move in the unemployment rate. 159 00:09:05,200 --> 00:09:09,680 Speaker 5: We have had a lot of disruptions in the labor force, 160 00:09:09,960 --> 00:09:12,000 Speaker 5: so the supply of workers even go back to beginning 161 00:09:12,000 --> 00:09:14,160 Speaker 5: of the pandemic, millions of people dropping out, and then 162 00:09:14,160 --> 00:09:18,439 Speaker 5: we had labor shortages, and then we had larger immigration 163 00:09:18,600 --> 00:09:20,240 Speaker 5: coming in. Like this has just been a lot and 164 00:09:20,320 --> 00:09:22,800 Speaker 5: we all know personally, and then also in the economy, 165 00:09:22,840 --> 00:09:25,280 Speaker 5: adjustments can be hard if they are big and sunny, 166 00:09:25,320 --> 00:09:27,160 Speaker 5: and we've had a lot of that, and so this 167 00:09:27,320 --> 00:09:31,360 Speaker 5: is absolutely in there. In these increases in the unemployment rate, 168 00:09:31,440 --> 00:09:34,880 Speaker 5: we are still working through disruptions, and yet it's some 169 00:09:35,559 --> 00:09:40,920 Speaker 5: like underneath that is also a much more typical, pernicious, 170 00:09:41,320 --> 00:09:44,680 Speaker 5: not good increase in the unemployment rate of just there's 171 00:09:44,760 --> 00:09:47,680 Speaker 5: less demand for workers, and if workers don't have paychecks, 172 00:09:47,720 --> 00:09:51,240 Speaker 5: they can't spend, and then that's the momentum that gets going. 173 00:09:51,280 --> 00:09:54,320 Speaker 5: So it's you know, there's it's it's the volume is 174 00:09:54,360 --> 00:09:57,800 Speaker 5: turned up louder than usual on them rule. So I 175 00:09:57,840 --> 00:10:00,160 Speaker 5: don't look at this and big pictures say we or 176 00:10:00,200 --> 00:10:03,080 Speaker 5: in a recession. But I look at this and I say, 177 00:10:03,200 --> 00:10:06,040 Speaker 5: we're We're not in a good We're not headed in 178 00:10:06,080 --> 00:10:06,480 Speaker 5: a good drug. 179 00:10:06,559 --> 00:10:08,520 Speaker 2: Does you mean get one more question in here? She 180 00:10:08,559 --> 00:10:10,199 Speaker 2: has to speak to President Biden. 181 00:10:10,080 --> 00:10:11,280 Speaker 6: Or no, Claudia. 182 00:10:11,320 --> 00:10:12,920 Speaker 4: You know, I'm a huge Guns and Roses fan, and 183 00:10:12,960 --> 00:10:15,040 Speaker 4: I love the song Patients, But I mean, waiting for 184 00:10:15,080 --> 00:10:17,240 Speaker 4: waiting sake is no way to conduct policy. That's not me, 185 00:10:17,320 --> 00:10:19,840 Speaker 4: that's Neil Dudda. Talk to us about what happens in September. Now, 186 00:10:19,880 --> 00:10:21,120 Speaker 4: is this enough for the FED to move. 187 00:10:22,800 --> 00:10:25,040 Speaker 6: That should have moved, should have moved already. 188 00:10:25,920 --> 00:10:28,520 Speaker 5: Yeah, this was a discussion. It's a discussion I have 189 00:10:28,640 --> 00:10:31,440 Speaker 5: been in. The FED needs to start the rest of 190 00:10:31,440 --> 00:10:33,560 Speaker 5: the economy was normalizing, the rest of the economy was 191 00:10:33,559 --> 00:10:35,360 Speaker 5: cooling off. The FED needed to do the same thing. 192 00:10:35,600 --> 00:10:37,680 Speaker 2: Okay, but Claudia, Okay, I'm gonna go Claudia. 193 00:10:38,080 --> 00:10:38,680 Speaker 7: But they can. 194 00:10:39,559 --> 00:10:41,520 Speaker 5: It's not lost and they have a lot of life. 195 00:10:42,040 --> 00:10:46,439 Speaker 2: Claudia got Neil Dudda coming up. Okay, Damien nailed it. Okay, 196 00:10:47,679 --> 00:10:52,360 Speaker 2: let's just forget process. We're out of a pandemic. Everybody. 197 00:10:52,440 --> 00:10:55,640 Speaker 2: Krugman's going now now, now, dud is going now now, now, 198 00:10:55,840 --> 00:10:58,760 Speaker 2: Sim's going now now now. Do they have to save 199 00:10:58,920 --> 00:11:01,480 Speaker 2: face and wait till something Chember twenty one, or can 200 00:11:01,520 --> 00:11:03,800 Speaker 2: they come out and go you know, when the facts change, 201 00:11:03,880 --> 00:11:07,080 Speaker 2: we change, like Bill Dudley and I'm sorry, make the 202 00:11:07,120 --> 00:11:11,360 Speaker 2: adjustment at four point thirty pm this afternoon. Why not, 203 00:11:11,559 --> 00:11:14,600 Speaker 2: doctor Somem. 204 00:11:14,920 --> 00:11:17,719 Speaker 5: They have an ability to do whatever they think is appropriate. 205 00:11:17,840 --> 00:11:19,959 Speaker 5: In no way, shape or form. Do I think panic 206 00:11:20,040 --> 00:11:22,800 Speaker 5: should be the theme for today or for any day 207 00:11:22,840 --> 00:11:26,720 Speaker 5: of the Federal Reserve? Frankly, and they will need to 208 00:11:26,720 --> 00:11:30,840 Speaker 5: assess the situation. And this was not this was not 209 00:11:30,920 --> 00:11:35,160 Speaker 5: good data in the let's wait. But again, this is 210 00:11:36,040 --> 00:11:38,880 Speaker 5: again not overreacting. Not you can't go back and redo 211 00:11:38,960 --> 00:11:41,360 Speaker 5: policy decisions. They have a lot of tools at their disposal, 212 00:11:41,400 --> 00:11:44,120 Speaker 5: and we should be very thankful that there are these 213 00:11:44,160 --> 00:11:48,640 Speaker 5: policy adjustments that can be made that will help Claudia. 214 00:11:48,880 --> 00:11:51,120 Speaker 2: Thank you so much, honored you could attend this morning. 215 00:11:51,160 --> 00:11:55,920 Speaker 2: Doctor Somem without question the most influential economist in America 216 00:11:56,080 --> 00:11:58,800 Speaker 2: right now. With New Century Advisors. We turned to Neil 217 00:11:58,840 --> 00:12:01,640 Speaker 2: Dudda who's lost patient. He has an optimism on the 218 00:12:01,679 --> 00:12:05,040 Speaker 2: American economy, and he's really pulled back and said, let's go, 219 00:12:05,440 --> 00:12:08,960 Speaker 2: how where is the dota optimism this morning? NEI help 220 00:12:09,040 --> 00:12:11,920 Speaker 2: me out here. I need to be optimistic. Where are 221 00:12:11,960 --> 00:12:14,760 Speaker 2: you optimistic on the American economy? 222 00:12:15,400 --> 00:12:18,600 Speaker 8: Well, if you wanted me to say something optimistic, guy, 223 00:12:18,679 --> 00:12:23,400 Speaker 8: that go what Paul Claudia said, So thankful to be 224 00:12:23,440 --> 00:12:26,880 Speaker 8: on after her. Quite an act to follow, Thanks Tom. 225 00:12:26,880 --> 00:12:29,760 Speaker 8: But you know I would just I would just say 226 00:12:29,880 --> 00:12:34,640 Speaker 8: that we don't need a troubled asset relief program, we 227 00:12:34,720 --> 00:12:38,319 Speaker 8: don't need a resolution Trust Corporation. I mean, the problem 228 00:12:38,520 --> 00:12:42,440 Speaker 8: with the economy is that monetary policy is too tight, 229 00:12:43,200 --> 00:12:46,520 Speaker 8: and that means the looser monetary policy can help resolve 230 00:12:46,559 --> 00:12:51,040 Speaker 8: the problem. And so you know, from my perspective, the 231 00:12:51,080 --> 00:12:54,320 Speaker 8: Fed can just keep cutting until the economy turns, and 232 00:12:54,360 --> 00:12:56,400 Speaker 8: there's a lot of room for them to do so. 233 00:12:56,400 --> 00:13:00,280 Speaker 8: So I think that would be the optimistic sort of 234 00:13:00,320 --> 00:13:02,559 Speaker 8: spin on things, is that, you know, the FED has 235 00:13:02,600 --> 00:13:07,680 Speaker 8: plenty of ammunition to kind of you know, course correct here. 236 00:13:08,120 --> 00:13:11,560 Speaker 8: I think they'll use it. And you know, this isn't 237 00:13:11,600 --> 00:13:16,319 Speaker 8: about household balance sheet deflation. This isn't about corporate balance 238 00:13:16,360 --> 00:13:19,079 Speaker 8: sheet recessions like oh one, This isn't about an asset 239 00:13:19,679 --> 00:13:23,800 Speaker 8: bubble bursting. This is just about monetary policy being too tight. 240 00:13:24,200 --> 00:13:29,120 Speaker 8: You know, the writing has been on the wall for months. Okay, 241 00:13:29,160 --> 00:13:32,640 Speaker 8: I mean this sort of let's wait, you know, we 242 00:13:32,760 --> 00:13:36,240 Speaker 8: get you know, spooked by first quarter data and waiting 243 00:13:36,280 --> 00:13:38,760 Speaker 8: for the sake of waiting. I mean, this is what 244 00:13:38,880 --> 00:13:43,600 Speaker 8: happens when you play that game. Okay, And look, I 245 00:13:43,600 --> 00:13:45,960 Speaker 8: mean I agree that it's not worth panicking. And I 246 00:13:45,960 --> 00:13:47,959 Speaker 8: don't think that this means that the feed should move 247 00:13:48,000 --> 00:13:51,319 Speaker 8: inter meeting or anything like that. But let's be absolutely 248 00:13:51,400 --> 00:13:53,760 Speaker 8: clear about why this is happening. The writing has been 249 00:13:53,800 --> 00:13:55,640 Speaker 8: on the wall for months. They didn't have a story 250 00:13:55,640 --> 00:13:58,720 Speaker 8: to tell for why inflation would pick up. Every single 251 00:13:58,760 --> 00:14:01,320 Speaker 8: monetary policy ruled that they look at. That's in their 252 00:14:01,360 --> 00:14:04,600 Speaker 8: Monetary Policy report every time they go before Congress has 253 00:14:04,640 --> 00:14:07,200 Speaker 8: been saying the same thing for months, which is a 254 00:14:07,280 --> 00:14:10,600 Speaker 8: less restrictive policy stances required. Now we're going to act 255 00:14:10,640 --> 00:14:13,520 Speaker 8: all surprised when you know the labor markets slong in 256 00:14:13,559 --> 00:14:15,800 Speaker 8: a more material way. And I will say, I mean, 257 00:14:15,840 --> 00:14:18,720 Speaker 8: I do think it's going to get worse before it 258 00:14:18,760 --> 00:14:20,800 Speaker 8: gets better, because when you look at some of the 259 00:14:20,840 --> 00:14:26,680 Speaker 8: details within this report, you know, goods producing industries saw 260 00:14:26,680 --> 00:14:30,560 Speaker 8: a pickup over the month, tom construction employment rose over 261 00:14:30,600 --> 00:14:33,000 Speaker 8: the month. What do we know about residential investment over 262 00:14:33,040 --> 00:14:37,640 Speaker 8: the summer. It's going nowhere. So the Fed's been kind 263 00:14:37,640 --> 00:14:39,960 Speaker 8: of playing this game of chicken with the corporate sector, 264 00:14:40,000 --> 00:14:43,320 Speaker 8: where you know, the data has been strong, and so 265 00:14:43,440 --> 00:14:45,640 Speaker 8: the FED feels like they don't need to move, but 266 00:14:45,680 --> 00:14:48,080 Speaker 8: the data has also been strong because the corporate sector 267 00:14:48,120 --> 00:14:49,240 Speaker 8: thinks it's going to move. 268 00:14:49,600 --> 00:14:51,200 Speaker 2: Let me get it, let me know, let me get 269 00:14:51,200 --> 00:14:53,160 Speaker 2: a data check in here. And Damien wants to crush you. 270 00:14:53,560 --> 00:14:55,960 Speaker 2: The VICS folks at twenty level up to a twenty 271 00:14:55,960 --> 00:14:59,040 Speaker 2: one point twenty six Anileti's aged off that two point 272 00:14:59,080 --> 00:15:03,160 Speaker 2: sixty seven full points here on the VICS were now 273 00:15:03,280 --> 00:15:07,320 Speaker 2: negative ninety seven on the Standard Ports five hundred eight 274 00:15:07,360 --> 00:15:11,840 Speaker 2: percent down, Nasdaq down two point five seven up percent. 275 00:15:12,120 --> 00:15:14,040 Speaker 2: Damien says, I don't care about the equity market. 276 00:15:14,120 --> 00:15:16,520 Speaker 6: I'm looking at that's right, that's right, ten year yield. 277 00:15:16,280 --> 00:15:19,320 Speaker 2: For three point I'm looking at the thirty year bond 278 00:15:19,400 --> 00:15:20,400 Speaker 2: thinking it's a ten yere. 279 00:15:20,520 --> 00:15:22,320 Speaker 4: You're missing the big one here, You're missing the big 280 00:15:22,360 --> 00:15:24,880 Speaker 4: one here. Dollar yen down two and a half, big 281 00:15:24,920 --> 00:15:28,520 Speaker 4: figures to one forty, a stronger yen, dollar. 282 00:15:28,320 --> 00:15:30,400 Speaker 2: Weaker because they think the Fed's gonna cut. 283 00:15:30,480 --> 00:15:33,200 Speaker 4: So, Neil, I have to ask you this traditional seave havens. 284 00:15:33,240 --> 00:15:35,520 Speaker 4: No one likes bonds, no one likes gold, no one 285 00:15:35,600 --> 00:15:37,520 Speaker 4: likes the end. But look at what's happening here in 286 00:15:37,560 --> 00:15:40,320 Speaker 4: this market. But some of these moves are pretty pretty big, 287 00:15:40,360 --> 00:15:42,080 Speaker 4: and it is obviously an illiquid summer. 288 00:15:42,480 --> 00:15:43,920 Speaker 6: Are some of these moves over done or is then 289 00:15:43,920 --> 00:15:44,280 Speaker 6: more to go? 290 00:15:46,880 --> 00:15:49,160 Speaker 8: I mean, I think it's probably overdone for now. But 291 00:15:49,200 --> 00:15:53,640 Speaker 8: I wouldn't be like selling a fixed income here just 292 00:15:53,680 --> 00:15:55,560 Speaker 8: because we had a sharp move. I mean, I think 293 00:15:56,040 --> 00:15:59,320 Speaker 8: you know, you probably take opportunities with yields going up 294 00:15:59,360 --> 00:16:01,880 Speaker 8: to kind of build on your on your position. I 295 00:16:02,160 --> 00:16:04,000 Speaker 8: do think that, like I said, I think the data 296 00:16:04,040 --> 00:16:06,120 Speaker 8: is going to dictate a lot of these sort of 297 00:16:06,680 --> 00:16:09,160 Speaker 8: you know, high frequency lows. And like I said, I 298 00:16:09,160 --> 00:16:11,840 Speaker 8: think that data is going to look worse before it 299 00:16:12,240 --> 00:16:14,640 Speaker 8: looks better. And so I think for me that means, 300 00:16:15,360 --> 00:16:17,240 Speaker 8: you know, there's additional moment I mean like something like 301 00:16:17,280 --> 00:16:19,960 Speaker 8: downward revision, something Time's been talking about. You know, we 302 00:16:20,000 --> 00:16:22,600 Speaker 8: know that downward revisions have a momentum to them, right, 303 00:16:22,640 --> 00:16:24,800 Speaker 8: So the fact that the numbers are being revised down 304 00:16:25,120 --> 00:16:27,120 Speaker 8: kind of sets the table for the sort of direction 305 00:16:27,400 --> 00:16:28,600 Speaker 8: travel data. 306 00:16:28,680 --> 00:16:30,840 Speaker 2: Yeah, we heard that from Claudia Sama as well and 307 00:16:31,120 --> 00:16:33,560 Speaker 2: Sam and Dudda with us is great. Let me tell you, folks, 308 00:16:33,760 --> 00:16:36,520 Speaker 2: we are commercial free across the nation to the end 309 00:16:36,680 --> 00:16:39,520 Speaker 2: of the hour. Ira Jersey will join us now he's 310 00:16:39,560 --> 00:16:43,760 Speaker 2: publishing Bloomberg Intelligence. They're interest rate outlook. We are thrilled 311 00:16:43,880 --> 00:16:46,760 Speaker 2: in moments all the m Moletti with us, from all 312 00:16:46,800 --> 00:16:50,240 Speaker 2: Spring Global Investments on the value that's out there is 313 00:16:50,320 --> 00:16:54,320 Speaker 2: we see a dearth of growthiness this morning and with 314 00:16:54,480 --> 00:16:57,400 Speaker 2: us right now Neil Dutta futures at negative one hundred 315 00:16:57,480 --> 00:17:01,280 Speaker 2: on the standard reports down futures at negative five an 316 00:17:01,400 --> 00:17:04,880 Speaker 2: give the VIC twenty one point fourth Street. Damien to mister. 317 00:17:04,720 --> 00:17:07,360 Speaker 4: Dutter, I'd like to ask you about that dearth of growthiness, Neil. 318 00:17:07,400 --> 00:17:08,800 Speaker 4: I mean, that's a great way of putting at the 319 00:17:08,840 --> 00:17:11,720 Speaker 4: ten year real yield down to one point six nine percent, 320 00:17:11,760 --> 00:17:14,439 Speaker 4: off another seven basis points on this news. Talk to 321 00:17:14,480 --> 00:17:16,680 Speaker 4: us a little bit about I mean, it's sticky here 322 00:17:16,680 --> 00:17:19,440 Speaker 4: in New York, right, it's hot outside, but sticky inflation 323 00:17:19,480 --> 00:17:20,840 Speaker 4: seems like it's the thing of the past. 324 00:17:20,840 --> 00:17:21,000 Speaker 6: Now. 325 00:17:21,000 --> 00:17:23,520 Speaker 4: If I never hear sticky again, that might be too soon. 326 00:17:23,560 --> 00:17:25,639 Speaker 4: Talk to us about inflation. Is that something we have 327 00:17:25,920 --> 00:17:28,600 Speaker 4: just no interest in anymore? Is it all about growth 328 00:17:28,600 --> 00:17:29,240 Speaker 4: in this market? 329 00:17:30,240 --> 00:17:32,440 Speaker 8: Well, I don't have any interest in inflation anymore. I 330 00:17:32,480 --> 00:17:35,040 Speaker 8: think that was that was last year's story. It's a 331 00:17:35,040 --> 00:17:38,840 Speaker 8: bit ridiculous again, Damien. It has to do with what's 332 00:17:38,880 --> 00:17:42,120 Speaker 8: the mechanism, right, unit labor costs have been below one 333 00:17:42,160 --> 00:17:43,240 Speaker 8: percent for the last. 334 00:17:43,000 --> 00:17:43,760 Speaker 2: Couple of quarters. 335 00:17:43,840 --> 00:17:46,399 Speaker 8: I mean, for crying out loud, where the where's the 336 00:17:46,400 --> 00:17:50,199 Speaker 8: inflationary impulse? The inflationary impulse from the labor market has 337 00:17:50,240 --> 00:17:54,200 Speaker 8: been non existence, in my opinion, for at least three 338 00:17:54,280 --> 00:17:57,520 Speaker 8: quarters two to three quarters. Okay, the Fed is just 339 00:17:57,680 --> 00:18:01,520 Speaker 8: now saying that, So you know, I think this is 340 00:18:01,560 --> 00:18:04,320 Speaker 8: really a function of number one. They were spooked by 341 00:18:04,359 --> 00:18:06,760 Speaker 8: the first quarter data, even though data, they didn't understand 342 00:18:06,800 --> 00:18:09,280 Speaker 8: why it rose. It rose, and they kind of they 343 00:18:09,320 --> 00:18:11,879 Speaker 8: sort of took more signal from that than they should have. 344 00:18:12,000 --> 00:18:17,159 Speaker 8: It was more noise than signal. And they're allowing, you know, 345 00:18:17,280 --> 00:18:20,399 Speaker 8: the specter of the nineteen seventies to haunt them. But 346 00:18:20,480 --> 00:18:23,359 Speaker 8: the difference, the key distinction between this period and that 347 00:18:23,400 --> 00:18:26,040 Speaker 8: period is that was a period of falling productivity growth. 348 00:18:26,040 --> 00:18:28,520 Speaker 8: This has been one where productivity has largely been normalizing. 349 00:18:28,720 --> 00:18:31,320 Speaker 2: That's the key. That's that's you know, I gotta interrupt 350 00:18:31,320 --> 00:18:34,840 Speaker 2: because that's the absolute key insight right now. I don't 351 00:18:34,840 --> 00:18:37,920 Speaker 2: know which war they're reliving, but they're reliving a new 352 00:18:37,960 --> 00:18:41,000 Speaker 2: war because we have new productivity. We talked to Clarida. 353 00:18:41,560 --> 00:18:45,679 Speaker 2: It's pretty good. You have Richard Clarida, Bill Dudley, Claudius, 354 00:18:45,720 --> 00:18:48,200 Speaker 2: Sam and Neil Dudda. I mean that's a group of 355 00:18:48,280 --> 00:18:50,639 Speaker 2: well anymous give one more to Duddy here before he 356 00:18:50,680 --> 00:18:51,480 Speaker 2: goes and works. Well. 357 00:18:51,560 --> 00:18:53,639 Speaker 4: No, it's a new beta regime for sure, but you know, 358 00:18:53,680 --> 00:18:55,880 Speaker 4: the old playbook seems to be kind of working here. 359 00:18:56,040 --> 00:18:59,120 Speaker 4: Investment Grade credit just crushing on this move in US 360 00:18:59,160 --> 00:19:01,320 Speaker 4: treasury yields. And if you're right and there's you know, 361 00:19:01,440 --> 00:19:03,320 Speaker 4: not that much wrong with the corporate sector here in 362 00:19:03,359 --> 00:19:05,360 Speaker 4: the US, is that is that a fixed in comassa 363 00:19:05,359 --> 00:19:06,600 Speaker 4: class that you want to own right now? 364 00:19:08,400 --> 00:19:11,600 Speaker 8: Yeah? I mean, look like I said, I think just 365 00:19:11,640 --> 00:19:14,959 Speaker 8: to take it back, it's we have a period of 366 00:19:15,040 --> 00:19:17,840 Speaker 8: pain I think ahead of us. I mean, the next 367 00:19:17,960 --> 00:19:20,159 Speaker 8: few weeks could get bumpy unless there's some kind of 368 00:19:20,200 --> 00:19:22,800 Speaker 8: surprise FED meeting. I don't think they'll do that because 369 00:19:22,840 --> 00:19:25,800 Speaker 8: I think that might invite more panic than than it's worth. 370 00:19:26,520 --> 00:19:29,840 Speaker 8: But the FED is going to get eventually on the 371 00:19:29,920 --> 00:19:33,199 Speaker 8: right side of the eight ball here. This is this, 372 00:19:33,560 --> 00:19:36,960 Speaker 8: there's absolutely no reason to worry about inflation at the moment, 373 00:19:37,280 --> 00:19:41,000 Speaker 8: with the unemployment rate rising, unit labor costs slowing, oil 374 00:19:41,040 --> 00:19:44,080 Speaker 8: prices collapsing. I mean, it's just a ridiculous thing to 375 00:19:44,119 --> 00:19:48,359 Speaker 8: be even considering. So that means I think the FED 376 00:19:48,480 --> 00:19:51,479 Speaker 8: is going to you know, start to you know, unload 377 00:19:51,520 --> 00:19:54,000 Speaker 8: the cannon a little bit. And you know, for for 378 00:19:54,080 --> 00:19:57,240 Speaker 8: Wall Street, I think what I'll be telling my clients 379 00:19:57,320 --> 00:20:01,119 Speaker 8: is fifty twenty five, twenty five, one hundred basis points 380 00:20:01,119 --> 00:20:03,480 Speaker 8: of rape cuts straight out the gate I think the 381 00:20:03,560 --> 00:20:05,160 Speaker 8: FED has the space to do it, and I think 382 00:20:05,200 --> 00:20:06,680 Speaker 8: that's the prudent approach at the moment. 383 00:20:06,720 --> 00:20:10,000 Speaker 2: That's the prude twenty seconds, Neil data because the Mledi's 384 00:20:10,040 --> 00:20:11,600 Speaker 2: going to walk out of the studio if I don't 385 00:20:11,600 --> 00:20:14,160 Speaker 2: get to her. When you say fifty, you're the first 386 00:20:14,200 --> 00:20:17,480 Speaker 2: person to say this. Do they signal fifty, Neil Datta 387 00:20:17,840 --> 00:20:20,160 Speaker 2: or do they keep it a surprise and shock us? 388 00:20:20,359 --> 00:20:21,440 Speaker 2: September twenty one. 389 00:20:21,680 --> 00:20:25,080 Speaker 9: I say they signal, I mean they should signal it, 390 00:20:25,400 --> 00:20:27,920 Speaker 9: and but I think more importantly is the guidance they said, 391 00:20:28,000 --> 00:20:29,919 Speaker 9: say that they're willing to do what it takes to 392 00:20:29,920 --> 00:20:33,359 Speaker 9: stabilize the count right provide that inflation continues to slow. 393 00:20:33,480 --> 00:20:35,640 Speaker 2: Neil, thank you so much. It's great to have Claudius 394 00:20:35,680 --> 00:20:38,280 Speaker 2: sim and Neil Dudda with us with this report and again, 395 00:20:38,400 --> 00:20:41,760 Speaker 2: futures at negative ninety three down, futures negative four sixty six. 396 00:20:42,600 --> 00:20:45,359 Speaker 2: Mletti with us here. She wanted to go. You know, 397 00:20:45,400 --> 00:20:48,560 Speaker 2: she's in Milwaukee. Did you survive the convention in Milwaukee? 398 00:20:48,600 --> 00:20:48,920 Speaker 6: I did. 399 00:20:48,920 --> 00:20:51,640 Speaker 1: I stayed kind of far away from it, so far for. 400 00:20:52,160 --> 00:20:53,880 Speaker 2: Like you couldn't even get to your offices right. 401 00:20:54,480 --> 00:20:57,639 Speaker 1: Well, luckily we are still in the suburbs in monomoally calls, 402 00:20:57,680 --> 00:20:59,760 Speaker 1: so I didn't have to, but we're moving downtown. 403 00:21:00,119 --> 00:21:03,720 Speaker 2: How do you I'm so honored you're here today because 404 00:21:04,280 --> 00:21:08,040 Speaker 2: we're doing traditional long only byside, we're trying to do 405 00:21:08,119 --> 00:21:10,920 Speaker 2: a short term, three year view. And you can hear 406 00:21:10,960 --> 00:21:16,040 Speaker 2: the cacophony here from doctor s and mister Dutta. How 407 00:21:16,080 --> 00:21:18,640 Speaker 2: do you use what you're hearing right now? 408 00:21:18,960 --> 00:21:21,480 Speaker 1: Yeah, well, you've had you know, some of the smartest 409 00:21:21,520 --> 00:21:23,600 Speaker 1: people on the show already this morning, and it's really 410 00:21:23,600 --> 00:21:26,520 Speaker 1: interesting to hear what they had to say. And certainly 411 00:21:26,560 --> 00:21:29,000 Speaker 1: we pay attention to the macro to the top down, 412 00:21:29,560 --> 00:21:32,919 Speaker 1: but what's been maybe more interesting to me as an 413 00:21:32,920 --> 00:21:35,960 Speaker 1: investor is the signals that we've been seeing from the 414 00:21:35,960 --> 00:21:40,000 Speaker 1: bottom up right looking at companies, listening to what they've 415 00:21:40,040 --> 00:21:43,520 Speaker 1: been saying and telling us. And there certainly has been signals, 416 00:21:43,560 --> 00:21:45,679 Speaker 1: and you know, we're seeing it in the reporting season. 417 00:21:46,080 --> 00:21:48,400 Speaker 1: We've seen it not just in the numbers, but more 418 00:21:48,440 --> 00:21:52,520 Speaker 1: importantly in the outlook and those cracks really are real. 419 00:21:52,680 --> 00:21:54,600 Speaker 4: Yeah, well, consumer spending and whatnot. You but you know, 420 00:21:54,720 --> 00:21:56,440 Speaker 4: I'm looking at other data points. It depends which data 421 00:21:56,440 --> 00:21:57,840 Speaker 4: points you look at. Tom, you know this credit card 422 00:21:57,880 --> 00:21:59,920 Speaker 4: delinquencies look fine. I mean, I know, can the consumers 423 00:22:00,080 --> 00:22:01,760 Speaker 4: ur you know, kind of taking it on the chin 424 00:22:01,800 --> 00:22:03,919 Speaker 4: and bit here, but you know, fundamentally things seem to 425 00:22:03,920 --> 00:22:05,639 Speaker 4: be fine here in the US. You know, is there 426 00:22:05,760 --> 00:22:07,320 Speaker 4: room for people to buy the dip here? 427 00:22:08,560 --> 00:22:08,800 Speaker 6: You know? 428 00:22:08,920 --> 00:22:11,919 Speaker 1: One, I think people tend to panic when they see 429 00:22:12,200 --> 00:22:16,600 Speaker 1: moves like these. I think it's actually healthy because you 430 00:22:16,840 --> 00:22:20,880 Speaker 1: had something priced into the market that likely was not sustainable. 431 00:22:21,240 --> 00:22:24,440 Speaker 1: And the more we take out here, the better chance 432 00:22:24,440 --> 00:22:28,959 Speaker 1: we have of not having a big disaster when things change. 433 00:22:29,080 --> 00:22:33,560 Speaker 1: And so there are opportunities. Volatility brings opportuntunity. We're going 434 00:22:33,600 --> 00:22:34,600 Speaker 1: to see more volatility. 435 00:22:34,880 --> 00:22:37,200 Speaker 2: Well, okay, we see more volatility. We've got to VIX 436 00:22:37,280 --> 00:22:39,439 Speaker 2: up twenty one point four to one right now, folks 437 00:22:39,480 --> 00:22:42,320 Speaker 2: back to almost an August normal given the sweat of 438 00:22:42,359 --> 00:22:46,920 Speaker 2: August over three decades, anim letty, Intel's adjusting. Okay, let's 439 00:22:46,960 --> 00:22:49,440 Speaker 2: call it a train wreck to be polite. But within 440 00:22:49,480 --> 00:22:53,639 Speaker 2: the securities analysis at all Spring and the legacy of 441 00:22:53,720 --> 00:22:58,600 Speaker 2: Milwaukee strong, how do you adapt to the revenue shortfall? 442 00:22:59,000 --> 00:23:04,560 Speaker 2: Church and Dwight Toothpaste baking soda came in with OSG 443 00:23:04,760 --> 00:23:07,879 Speaker 2: organic sales growth a little like today's City Group went 444 00:23:07,960 --> 00:23:11,480 Speaker 2: to a sell on an iconic New Jersey company. How 445 00:23:11,480 --> 00:23:13,960 Speaker 2: do you adapt to the new revenue tepidness? 446 00:23:14,320 --> 00:23:16,199 Speaker 1: You know, I mean tem I think one of the 447 00:23:16,240 --> 00:23:18,800 Speaker 1: things that you talk about a lot, which I think 448 00:23:18,880 --> 00:23:23,480 Speaker 1: is really important. It's more than just earnings, right, It's 449 00:23:23,520 --> 00:23:26,119 Speaker 1: been top line growth. Top line growth has been tep it, 450 00:23:26,560 --> 00:23:29,480 Speaker 1: to say the least for the majority of the market, 451 00:23:29,680 --> 00:23:32,440 Speaker 1: except for we're kind of those concentrated names that we've seen, 452 00:23:33,000 --> 00:23:36,639 Speaker 1: and you know, so when you see decceleration of growth, 453 00:23:36,720 --> 00:23:38,480 Speaker 1: it's a sign. That's what I meant from those bottom 454 00:23:38,560 --> 00:23:44,879 Speaker 1: up cycles or the bottom up signals. The opportunity set though, 455 00:23:45,119 --> 00:23:48,760 Speaker 1: that lies in front of us is there's still names 456 00:23:49,200 --> 00:23:53,639 Speaker 1: in each sector, not at all, but like most sectors 457 00:23:54,280 --> 00:24:00,439 Speaker 1: that have been washed away, that still can outperform in 458 00:24:00,480 --> 00:24:01,399 Speaker 1: a changing market. 459 00:24:01,800 --> 00:24:03,840 Speaker 2: Let me do a reset here, folks, if you're just 460 00:24:03,960 --> 00:24:08,040 Speaker 2: joining us a difficult and challenging jobs report you heard 461 00:24:08,119 --> 00:24:11,879 Speaker 2: on Bloomberg Surveillance. Claudia Sam, formerly with the FED the 462 00:24:11,880 --> 00:24:16,560 Speaker 2: Brookings Institution, Claudia Sam's saying her sum rule is in effect. 463 00:24:16,640 --> 00:24:19,520 Speaker 2: She said that the moment after this job's report with 464 00:24:19,560 --> 00:24:23,080 Speaker 2: Reek revisions as well, futures not as bad as they 465 00:24:23,080 --> 00:24:26,000 Speaker 2: were ten minutes ago, negative eighty five. The VIX is 466 00:24:26,000 --> 00:24:28,400 Speaker 2: going to give me three big figures right now, two 467 00:24:28,520 --> 00:24:31,800 Speaker 2: point seven to one figures, twenty one point twenty four 468 00:24:32,240 --> 00:24:34,920 Speaker 2: on the VIX as well. The ten year yield is 469 00:24:34,960 --> 00:24:38,840 Speaker 2: what Damien Sasaur noticed in ten basis points. Now, excuse me, 470 00:24:39,200 --> 00:24:41,960 Speaker 2: I'm still looking at the thirty year mod Damien, my 471 00:24:42,119 --> 00:24:46,119 Speaker 2: brain's failing back three point eight four percent on a 472 00:24:46,240 --> 00:24:49,200 Speaker 2: ten year yield right now, Damien sas Hour to En 473 00:24:49,280 --> 00:24:50,800 Speaker 2: Maletti of all Spring. 474 00:24:50,640 --> 00:24:52,840 Speaker 4: It was a lot easier on to get long the 475 00:24:52,880 --> 00:24:54,399 Speaker 4: ten year when it was at four and a quarter 476 00:24:54,480 --> 00:24:56,320 Speaker 4: just a few weeks back. Now we're at what three 477 00:24:56,520 --> 00:24:58,119 Speaker 4: eighty on the ten year. I mean, talk to us 478 00:24:58,119 --> 00:25:00,440 Speaker 4: about duration, talk to us about the demand frame incrementally 479 00:25:00,480 --> 00:25:02,600 Speaker 4: yield in the fixed income market. Does that make sense 480 00:25:02,680 --> 00:25:03,000 Speaker 4: right now? 481 00:25:03,400 --> 00:25:05,040 Speaker 1: I think it does. I mean one of the things 482 00:25:05,040 --> 00:25:08,640 Speaker 1: that we put out in our outlook piece going back 483 00:25:08,640 --> 00:25:10,680 Speaker 1: at the end of last year was this was going 484 00:25:10,720 --> 00:25:14,320 Speaker 1: to be a year for fixed income. We also kind 485 00:25:14,320 --> 00:25:17,359 Speaker 1: of warned about some softening of the economy. Now, look, 486 00:25:17,440 --> 00:25:21,359 Speaker 1: we're midsummer or of late summer, and we're starting to 487 00:25:21,359 --> 00:25:23,239 Speaker 1: see these turns. But we do think that there's been 488 00:25:23,240 --> 00:25:27,280 Speaker 1: an opportunity. Our fixed income teams have been increasing duration 489 00:25:28,880 --> 00:25:31,800 Speaker 1: and you know, kind of believe that this would be 490 00:25:31,840 --> 00:25:34,480 Speaker 1: the environment we would see. And so I think there's 491 00:25:34,480 --> 00:25:36,920 Speaker 1: still is opportunity out there. You just have to pick 492 00:25:36,960 --> 00:25:39,040 Speaker 1: your points. To Neil's point early. 493 00:25:38,800 --> 00:25:41,600 Speaker 2: One final question, I got twenty seconds. What is the 494 00:25:41,720 --> 00:25:44,440 Speaker 2: quality of a first place Milwaukee Brewers? 495 00:25:44,800 --> 00:25:47,840 Speaker 1: I mean, you know, Tom, I'll take it, but as 496 00:25:47,880 --> 00:25:50,320 Speaker 1: you know, it's still early in this season, and so 497 00:25:50,440 --> 00:25:52,520 Speaker 1: we'll just hold our breath and cross our fingers, hold 498 00:25:52,560 --> 00:25:52,960 Speaker 1: our breath. 499 00:25:53,600 --> 00:25:56,120 Speaker 6: How about that contract for Jordan Love though, huh, he's 500 00:25:56,160 --> 00:25:56,840 Speaker 6: got a Green Bay. 501 00:25:57,320 --> 00:26:02,240 Speaker 1: You know, if we could actually get three all Start 502 00:26:02,680 --> 00:26:04,520 Speaker 1: Hall of Fame quarterbacks in a row, I mean, it 503 00:26:04,560 --> 00:26:05,360 Speaker 1: would be a miracle. 504 00:26:05,480 --> 00:26:08,840 Speaker 2: But okay, there we go. What matters Amlodi of Wisconsin, 505 00:26:08,880 --> 00:26:12,159 Speaker 2: thank you so much. In Milwaukee legendary strong and of 506 00:26:12,200 --> 00:26:17,359 Speaker 2: course with Allspring investments coming up, the Secretary of Labor 507 00:26:17,440 --> 00:26:19,560 Speaker 2: Julie Sue will join us at nine oh two as 508 00:26:19,600 --> 00:26:23,040 Speaker 2: our scheduling. There Katherine Greifeld and Amory Horden leading that 509 00:26:23,400 --> 00:26:28,080 Speaker 2: conversation with the government on this difficult labor challenge joining 510 00:26:28,160 --> 00:26:29,960 Speaker 2: us now, and Damien, I want you to lead off 511 00:26:30,000 --> 00:26:32,159 Speaker 2: here with Ira Jersey of that, and I want to 512 00:26:32,200 --> 00:26:36,520 Speaker 2: explain this, folks. Lifetime ago you had on the desk 513 00:26:36,600 --> 00:26:39,560 Speaker 2: at Credit Suite a guy named Dominic Constant and a 514 00:26:39,600 --> 00:26:42,720 Speaker 2: young lad, Irid Jersey, young lad and they were read 515 00:26:43,000 --> 00:26:47,159 Speaker 2: voraciously on the street for times like this. Why did 516 00:26:47,280 --> 00:26:49,560 Speaker 2: you go to Ira Jersey on the love fest? We 517 00:26:49,600 --> 00:26:50,639 Speaker 2: see him? Fixed income? 518 00:26:50,760 --> 00:26:53,679 Speaker 4: Ira, the FED has been in a deferred asset position 519 00:26:53,720 --> 00:26:55,639 Speaker 4: for the last twenty two months. That means it receives 520 00:26:55,720 --> 00:26:58,520 Speaker 4: less coupon income than it pays out on its bond holdings. 521 00:26:58,560 --> 00:27:01,240 Speaker 4: Talk to us about this quarterly funding announcement. Talk to 522 00:27:01,320 --> 00:27:04,000 Speaker 4: us about the FED potentially issuing more or the Treasure 523 00:27:04,040 --> 00:27:06,399 Speaker 4: issuing more tea bows than coupone. Talk to us about 524 00:27:06,440 --> 00:27:08,359 Speaker 4: the reserve rep But facility talked to us about what's 525 00:27:08,400 --> 00:27:09,280 Speaker 4: going on the front end here. 526 00:27:10,760 --> 00:27:12,440 Speaker 10: Wow, Damian, I thought we were going to talk about 527 00:27:12,480 --> 00:27:15,080 Speaker 10: the three seventy eight target that we just hit on 528 00:27:15,160 --> 00:27:16,840 Speaker 10: our on one of our charts. 529 00:27:16,600 --> 00:27:18,880 Speaker 6: That we've thank you for highlighting that, Ira. 530 00:27:19,359 --> 00:27:21,280 Speaker 10: What of our cmts And we bounced right off of 531 00:27:21,320 --> 00:27:23,160 Speaker 10: that and it's right for right now. 532 00:27:23,280 --> 00:27:26,080 Speaker 2: Bolding I'll do that in a moment. But Damien's asking 533 00:27:26,119 --> 00:27:29,840 Speaker 2: the pro question into the week and iral what's liquidity 534 00:27:29,880 --> 00:27:30,280 Speaker 2: look like. 535 00:27:31,000 --> 00:27:35,280 Speaker 10: Yeah, so liquidity in the treasury market has is not terrible, 536 00:27:35,359 --> 00:27:37,920 Speaker 10: right that treasuries are still one of the most liquid assets, 537 00:27:37,960 --> 00:27:40,880 Speaker 10: but relative to where it was. You know, when Dominic 538 00:27:40,920 --> 00:27:43,040 Speaker 10: and I were were on the trading desk at Credit 539 00:27:43,080 --> 00:27:47,160 Speaker 10: Sueese a decade or so ago, it was definitely it's 540 00:27:47,200 --> 00:27:49,320 Speaker 10: definitely weekend since then. And there's a couple of reasons 541 00:27:49,320 --> 00:27:51,920 Speaker 10: for that, right. One is, yes, the Federal Reserve is 542 00:27:51,960 --> 00:27:55,000 Speaker 10: running off its balance sheet. But one of the big 543 00:27:55,880 --> 00:28:00,400 Speaker 10: changes that that's occurred in liquidity and in the front endarticular, 544 00:28:00,840 --> 00:28:03,520 Speaker 10: is the fact that you have different repo products, right, 545 00:28:03,560 --> 00:28:06,600 Speaker 10: so you just don't have a market, a funding market 546 00:28:06,600 --> 00:28:09,760 Speaker 10: that's kept up with the size and growth of the 547 00:28:09,760 --> 00:28:12,480 Speaker 10: amount of treasuries out there. Plus you have regulations like 548 00:28:12,520 --> 00:28:15,200 Speaker 10: Dodd frank is a non trivial regulation as well, because 549 00:28:15,240 --> 00:28:18,040 Speaker 10: now you have less relative value players in the market. 550 00:28:18,119 --> 00:28:20,359 Speaker 10: You don't have hedge funds who were trying to clip 551 00:28:20,400 --> 00:28:22,760 Speaker 10: a basis point and a half of relative value between 552 00:28:22,760 --> 00:28:25,000 Speaker 10: off the run and on the run treasuries in the 553 00:28:25,040 --> 00:28:27,960 Speaker 10: same size that you used to have because the leverage 554 00:28:28,000 --> 00:28:31,159 Speaker 10: just isn't available as to prime brokers and the like 555 00:28:31,520 --> 00:28:33,880 Speaker 10: not having the same balance get capacity. 556 00:28:33,680 --> 00:28:36,080 Speaker 2: Over the weekend. For our listeners and viewers, they're going 557 00:28:36,119 --> 00:28:38,040 Speaker 2: to look at their CD and say, why didn't I 558 00:28:38,120 --> 00:28:42,080 Speaker 2: lock in with this move in the tenure? Will we 559 00:28:42,240 --> 00:28:48,280 Speaker 2: see cash in America? Look for a new spot come Nday. Yeah. 560 00:28:48,480 --> 00:28:52,160 Speaker 10: I suspect that people are turning out some of their 561 00:28:52,280 --> 00:28:54,360 Speaker 10: shorter term assets and they will do that, you know, 562 00:28:54,400 --> 00:28:56,720 Speaker 10: particularly I don't want to say the smart money, but 563 00:28:57,040 --> 00:28:59,920 Speaker 10: away from retail investors. And that's one of the reasons 564 00:29:00,240 --> 00:29:02,520 Speaker 10: something like two year notes are going to catch probably 565 00:29:02,960 --> 00:29:05,880 Speaker 10: even a bigger bit than you've already seen, because you're 566 00:29:05,880 --> 00:29:08,120 Speaker 10: going to have people saying, Okay, look I'll walk in 567 00:29:08,480 --> 00:29:12,440 Speaker 10: three and a half percent now because because in the 568 00:29:12,480 --> 00:29:14,480 Speaker 10: future I might not be able to get that in 569 00:29:14,560 --> 00:29:17,880 Speaker 10: my money market. Right, So you wind up with with people, 570 00:29:18,120 --> 00:29:20,240 Speaker 10: you know, terming out their debt now interestingly, at least 571 00:29:20,240 --> 00:29:23,200 Speaker 10: in the near term, and from relative value, something like 572 00:29:23,240 --> 00:29:26,160 Speaker 10: the five year sector might actually outperform because the market's 573 00:29:26,200 --> 00:29:29,000 Speaker 10: going to keep on adjusting to where the terminal rate 574 00:29:29,000 --> 00:29:30,360 Speaker 10: of the FED is going to be. And one of 575 00:29:30,360 --> 00:29:32,320 Speaker 10: the things we've been harping on is the three and 576 00:29:32,360 --> 00:29:34,760 Speaker 10: a half percent that persisted for the last four or 577 00:29:34,760 --> 00:29:37,760 Speaker 10: five months we thought was actually too high. So that's 578 00:29:37,800 --> 00:29:40,120 Speaker 10: one reason why we think that the front end is 579 00:29:40,120 --> 00:29:42,200 Speaker 10: going to even do better than it has so far. 580 00:29:42,280 --> 00:29:43,719 Speaker 4: So you mean to get one more quick one in here, 581 00:29:43,840 --> 00:29:47,520 Speaker 4: Ira two ten's nine point four basis points negative nine 582 00:29:47,560 --> 00:29:50,360 Speaker 4: point four. We are almost to positive territory. I mean, 583 00:29:50,440 --> 00:29:51,920 Speaker 4: talk to us about the curve. What should we be 584 00:29:51,960 --> 00:29:52,560 Speaker 4: looking for there? 585 00:29:53,760 --> 00:29:56,440 Speaker 10: Yeah, so continued bull steepening in the curve. It won't 586 00:29:56,440 --> 00:29:58,160 Speaker 10: be a straight line, right, We'll wind up getting a 587 00:29:58,280 --> 00:30:01,120 Speaker 10: okay data report at some point, will probably bounce back 588 00:30:01,120 --> 00:30:03,800 Speaker 10: and people take off those treets, but we'll continue to 589 00:30:04,160 --> 00:30:06,800 Speaker 10: see that that that curve slowly uninvert. 590 00:30:07,080 --> 00:30:07,360 Speaker 6: Again. 591 00:30:07,440 --> 00:30:10,280 Speaker 10: This is like a leverage issue because right now, with 592 00:30:10,680 --> 00:30:13,520 Speaker 10: since the FED hasn't actually cut interest rates yet, right now, 593 00:30:13,560 --> 00:30:16,920 Speaker 10: those those curve trades are very negative carry. So you 594 00:30:17,000 --> 00:30:19,360 Speaker 10: have to have high conviction to stay in the bull 595 00:30:19,400 --> 00:30:21,880 Speaker 10: steepener right now. But I think you can have more 596 00:30:21,880 --> 00:30:25,000 Speaker 10: and more conviction, and that will occur, particularly after the 597 00:30:25,000 --> 00:30:27,360 Speaker 10: FED finally you know, makes its first cut and it 598 00:30:27,360 --> 00:30:31,200 Speaker 10: looks like now in September's almost a shoe in Iira. 599 00:30:31,280 --> 00:30:33,480 Speaker 2: Thank you so much, Ira Jersey, who will publish this 600 00:30:33,560 --> 00:30:37,080 Speaker 2: afternoon and look at Bloomberg Intelligence for that a required 601 00:30:37,160 --> 00:30:51,880 Speaker 2: read for a weekend Global Wall Street. We're thrilled to 602 00:30:51,960 --> 00:30:55,280 Speaker 2: doctor Harris could join us this morning. Ethan, I slotted 603 00:30:55,320 --> 00:30:58,480 Speaker 2: this in is a three hour conversation, and that got 604 00:30:58,560 --> 00:31:02,920 Speaker 2: mixed by the hair household is well, how does a 605 00:31:03,000 --> 00:31:06,400 Speaker 2: FED get out of this position? Do they wait for 606 00:31:06,440 --> 00:31:10,680 Speaker 2: September twenty one? Do they job on it in speeches? 607 00:31:11,040 --> 00:31:15,000 Speaker 2: What's the process you see with your study the history 608 00:31:15,040 --> 00:31:18,400 Speaker 2: of the FED that they put in place to September 609 00:31:18,440 --> 00:31:18,960 Speaker 2: twenty one? 610 00:31:20,520 --> 00:31:23,520 Speaker 7: Well, I mean the FED has been very lucky for 611 00:31:23,560 --> 00:31:25,720 Speaker 7: the last couple of years, and suddenly their luck has 612 00:31:25,760 --> 00:31:29,760 Speaker 7: turned dramatically against them. They were ready to cut, and 613 00:31:29,800 --> 00:31:32,320 Speaker 7: then inflation comes in in the high side and they go, 614 00:31:32,400 --> 00:31:36,360 Speaker 7: oh wait a minute. Then they have a July FMC 615 00:31:36,600 --> 00:31:40,680 Speaker 7: meeting before they see the jobs report, and jobs report 616 00:31:40,760 --> 00:31:44,920 Speaker 7: comes in very weak, and so now in hindsight they 617 00:31:44,960 --> 00:31:48,480 Speaker 7: probably wish they had cut at the July meeting, But 618 00:31:48,600 --> 00:31:53,480 Speaker 7: going into that meeting, given beforecasts or payrolls, Nope, not 619 00:31:53,520 --> 00:31:56,600 Speaker 7: going to do it. I think they have to start talking. 620 00:31:57,120 --> 00:31:59,560 Speaker 7: It's very hard in August because most of these guys 621 00:31:59,600 --> 00:32:02,960 Speaker 7: are out of vacation. I think my earlier had mentioned 622 00:32:02,960 --> 00:32:06,120 Speaker 7: that the board seems to be all out in vaiation. 623 00:32:07,320 --> 00:32:11,000 Speaker 7: But they need to start talking. They need to September's 624 00:32:11,000 --> 00:32:12,040 Speaker 7: definitely happened, Ethan. 625 00:32:12,040 --> 00:32:14,120 Speaker 2: I got to get one question in here because Damian 626 00:32:14,200 --> 00:32:16,479 Speaker 2: Sassar you should see it, folks. I'm sitting in our 627 00:32:16,560 --> 00:32:18,960 Speaker 2: radio studio here for those of you on radio, and 628 00:32:19,120 --> 00:32:24,200 Speaker 2: sas hours literally writing his must read em economic and 629 00:32:24,280 --> 00:32:27,920 Speaker 2: financial note here off of this jobs before, which is 630 00:32:27,960 --> 00:32:31,720 Speaker 2: actually it's not a sausage gets made of Bloomberg Ethan Harris. 631 00:32:31,800 --> 00:32:35,880 Speaker 2: I brought this up with Richard Clarta, Columbia Economics, and 632 00:32:36,320 --> 00:32:39,440 Speaker 2: you know it's it's simple here. I see massive regret 633 00:32:39,480 --> 00:32:42,880 Speaker 2: a version. We got comment of Taversky one oh one. 634 00:32:43,200 --> 00:32:47,120 Speaker 2: They're really really concerned about making a mistake. Do you 635 00:32:47,200 --> 00:32:49,240 Speaker 2: sense that? No? 636 00:32:49,400 --> 00:32:52,120 Speaker 7: I think I Mike had said this earlier in response 637 00:32:52,160 --> 00:32:55,959 Speaker 7: to the question that they certainly at this stage they 638 00:32:56,440 --> 00:33:02,240 Speaker 7: think they're behind the curve, but given the infra at hand, no, 639 00:33:02,400 --> 00:33:05,320 Speaker 7: I mean, you had we let's kind of forget the 640 00:33:05,360 --> 00:33:08,560 Speaker 7: first four months of this year. You had terrible inflation data. 641 00:33:08,680 --> 00:33:12,000 Speaker 7: It wasn't just a little high, it was running at 642 00:33:12,040 --> 00:33:14,680 Speaker 7: double the rate they wanted to see, and so it 643 00:33:14,760 --> 00:33:17,600 Speaker 7: put a big you know, it really put a whole 644 00:33:17,680 --> 00:33:20,720 Speaker 7: halt on the whole idea of rate cuts. Now they've 645 00:33:20,760 --> 00:33:26,600 Speaker 7: gotten the script has flipped very fast. So yeah, I 646 00:33:26,600 --> 00:33:30,400 Speaker 7: do think that they worry about the credibility of the FED. 647 00:33:30,880 --> 00:33:33,480 Speaker 7: We know that in the nineteen seventies the FED made 648 00:33:33,560 --> 00:33:38,040 Speaker 7: massive mistakes around inflation. We know that this FED started 649 00:33:38,080 --> 00:33:41,360 Speaker 7: to hike too late in twenty twenty two and had 650 00:33:41,360 --> 00:33:43,520 Speaker 7: to catch up. So yeah, there's a little bit of 651 00:33:43,520 --> 00:33:48,720 Speaker 7: that legacy. You don't want to be remembered as Arthur, 652 00:33:49,120 --> 00:33:53,000 Speaker 7: want to be remembered as Paul Volker. But you know, 653 00:33:53,080 --> 00:33:55,720 Speaker 7: within the scheme of things, they're a little behind the curve. 654 00:33:56,960 --> 00:34:00,480 Speaker 7: De'll catch up. I'm confident that. 655 00:34:00,760 --> 00:34:03,360 Speaker 2: Ethan Harris, with his folks of course, Leman in the 656 00:34:03,400 --> 00:34:07,520 Speaker 2: Bank of America for years, actively out on LinkedIn, can't 657 00:34:07,560 --> 00:34:10,320 Speaker 2: say enough about that. Damien to doctor. 658 00:34:10,080 --> 00:34:12,400 Speaker 4: Harris, Doctor Harris, I was reading your note from earlier 659 00:34:12,400 --> 00:34:15,719 Speaker 4: this week titled slow and Steady wins the Race, and 660 00:34:15,760 --> 00:34:17,759 Speaker 4: I mentioned earlier I'm a big guns and rosens fan. 661 00:34:17,960 --> 00:34:20,760 Speaker 4: I love the song Patients. But yeah, Neil dudda talking 662 00:34:20,760 --> 00:34:23,160 Speaker 4: about fifty basis points in September, and you're saying the 663 00:34:23,200 --> 00:34:25,239 Speaker 4: Fed's behind the curve here, is there a chance that 664 00:34:25,280 --> 00:34:28,520 Speaker 4: the market start pricing that in more confidently. 665 00:34:28,880 --> 00:34:32,719 Speaker 7: Well they have, you know, by the way, Neil and 666 00:34:32,760 --> 00:34:34,640 Speaker 7: I worked together for quite a while. He's a good 667 00:34:34,719 --> 00:34:38,719 Speaker 7: friend of mine, and I think this is a good, 668 00:34:38,760 --> 00:34:41,880 Speaker 7: healthy debate. I think I was wrong. I think with 669 00:34:42,040 --> 00:34:44,640 Speaker 7: this job's number to me was a bit of a 670 00:34:45,320 --> 00:34:49,640 Speaker 7: kind of hit me pretty hard looking. It's looking on 671 00:34:50,160 --> 00:34:52,520 Speaker 7: like things are weakening fast and you'd like to see 672 00:34:52,680 --> 00:34:55,440 Speaker 7: and it's the payroll number that I'm most worried about it. 673 00:34:55,440 --> 00:35:00,520 Speaker 7: It's just started to look shaky when they go fifty. Well, 674 00:35:00,680 --> 00:35:04,320 Speaker 7: the market's now pricing in about a seventy percent chance 675 00:35:04,360 --> 00:35:07,840 Speaker 7: of a fifty basis point move at the September meeting. 676 00:35:08,680 --> 00:35:12,560 Speaker 7: That's a really high probability. You really have to believe 677 00:35:12,640 --> 00:35:15,840 Speaker 7: the economy is heading into a recession to get the 678 00:35:15,960 --> 00:35:18,920 Speaker 7: kind of cuts that are priced into the market now. 679 00:35:19,160 --> 00:35:22,000 Speaker 7: Now I think the risk of recessions rising, and that 680 00:35:22,000 --> 00:35:27,920 Speaker 7: that slow but steady story's getting is losing its its validity. 681 00:35:28,800 --> 00:35:32,160 Speaker 7: But to go fifty in September, we're going to have 682 00:35:32,160 --> 00:35:36,280 Speaker 7: to see an even worse jobs report and continued soft 683 00:35:36,320 --> 00:35:40,960 Speaker 7: inflation readings. So I think the market's overreacted. It's pricing 684 00:35:41,000 --> 00:35:44,640 Speaker 7: in FED going at every meeting, including this fifty basis 685 00:35:44,640 --> 00:35:45,440 Speaker 7: point kickoff. 686 00:35:45,480 --> 00:35:47,239 Speaker 2: Cut it. 687 00:35:47,600 --> 00:35:51,400 Speaker 7: It's just a it's you know, the buond market overreacts, 688 00:35:51,719 --> 00:35:53,359 Speaker 7: and today I think is an overreaction. 689 00:35:54,080 --> 00:35:54,319 Speaker 6: Tom. 690 00:35:54,360 --> 00:35:56,759 Speaker 4: You noticed how doctor Harris remembers working with Neil Doab. 691 00:35:56,800 --> 00:35:58,719 Speaker 4: He doesn't remember working with me at Lehman Brothers back 692 00:35:58,719 --> 00:35:59,720 Speaker 4: in the early two thousands. 693 00:35:59,719 --> 00:36:01,800 Speaker 6: Thanks about that. Thanks for that, doctor Harris. You know, 694 00:36:01,880 --> 00:36:03,480 Speaker 6: I mean trying to forget but. 695 00:36:03,560 --> 00:36:06,120 Speaker 2: His bonus in February one year and a half. 696 00:36:06,200 --> 00:36:09,279 Speaker 4: I mean, come on, did that doctor Harris talked with? 697 00:36:09,400 --> 00:36:11,200 Speaker 4: I mean, there's a lot of ambiguity here about where 698 00:36:11,280 --> 00:36:14,440 Speaker 4: US treasure yields are headed next, obviously, but when the 699 00:36:14,480 --> 00:36:16,320 Speaker 4: consensus seems to be that we're gonna have a steeper 700 00:36:16,320 --> 00:36:18,959 Speaker 4: curve certainly two tens. What are your thoughts here? Curve 701 00:36:19,040 --> 00:36:21,040 Speaker 4: is now at what negative nine basis points? I mean, 702 00:36:21,080 --> 00:36:22,520 Speaker 4: are we going to get there sooner rather than later? 703 00:36:24,000 --> 00:36:26,719 Speaker 7: I think over time the curve house is steeping. I 704 00:36:26,760 --> 00:36:30,720 Speaker 7: mean the the the risk premium priced into the bomb 705 00:36:30,719 --> 00:36:35,160 Speaker 7: market is crazy low. The bomb market's pricing again, no 706 00:36:35,360 --> 00:36:40,839 Speaker 7: risk of inflation going forward, no term premium. You know, 707 00:36:40,920 --> 00:36:42,760 Speaker 7: it's just it's just a matter of when. 708 00:36:43,600 --> 00:36:43,759 Speaker 1: Now. 709 00:36:43,760 --> 00:36:46,160 Speaker 7: Of course the Fed. When the Fed starts cutting, it 710 00:36:46,280 --> 00:36:49,719 Speaker 7: helps steep in the curve. But there's a more long 711 00:36:49,800 --> 00:36:52,000 Speaker 7: run story here, which is just that the curve doesn't 712 00:36:52,040 --> 00:36:52,840 Speaker 7: make any sense. 713 00:36:53,840 --> 00:36:56,640 Speaker 2: I meanthan they're coming out of the woodwork. Not only 714 00:36:56,719 --> 00:37:01,279 Speaker 2: is Neil Duddy email again, Robert Sink is emailing and 715 00:37:01,480 --> 00:37:04,440 Speaker 2: he's even more retired than Ethan Harris. 716 00:37:04,840 --> 00:37:06,799 Speaker 7: Bob sin should be more required than me. 717 00:37:07,840 --> 00:37:13,040 Speaker 2: Bob Cinch really makes the important observation Anawong that we 718 00:37:13,160 --> 00:37:16,560 Speaker 2: got birth death issues and let me let me quote 719 00:37:16,560 --> 00:37:21,959 Speaker 2: exactly Robert Sinch. There is a residual seasonal adjustment problem. 720 00:37:22,280 --> 00:37:24,560 Speaker 2: Ethan Harris, Are we going to have all this data 721 00:37:24,600 --> 00:37:30,120 Speaker 2: amendous down as Anawong says, thirty thousand non farm payroll? 722 00:37:30,320 --> 00:37:33,080 Speaker 7: Yeah, I think that the estimates of modest kind of 723 00:37:33,360 --> 00:37:36,560 Speaker 7: continued revisions where they go back and look at whether 724 00:37:36,600 --> 00:37:39,840 Speaker 7: they're counting workers right and taking into account pers and 725 00:37:39,960 --> 00:37:44,319 Speaker 7: deaths of companies, there'll probably be some downward revisions but 726 00:37:44,400 --> 00:37:48,680 Speaker 7: the question is are they going to justify a recession call, 727 00:37:49,360 --> 00:37:51,440 Speaker 7: and that's that's a long way. I mean, we've been 728 00:37:51,440 --> 00:37:54,839 Speaker 7: getting payroll numbers of two hundred thousand plus. I don't 729 00:37:54,840 --> 00:37:58,520 Speaker 7: think you're going to revise that away, but they could slice, 730 00:37:58,719 --> 00:38:01,240 Speaker 7: you know, some tens of thousand is off of these numbers, 731 00:38:01,680 --> 00:38:04,560 Speaker 7: and it may we may find out, with the benefit 732 00:38:04,560 --> 00:38:07,000 Speaker 7: of hindsight that the economy has slowed a lot more 733 00:38:07,000 --> 00:38:10,759 Speaker 7: than we thought. Certainly that's what the unemployment rates saying, 734 00:38:10,800 --> 00:38:13,719 Speaker 7: it's been going steadily up. Some of that may be 735 00:38:13,719 --> 00:38:16,880 Speaker 7: because the market is a lot weaker than we think, 736 00:38:17,160 --> 00:38:21,200 Speaker 7: and some of it's because of labor coming back. But yeah, 737 00:38:21,320 --> 00:38:24,040 Speaker 7: I think there'll be some downward revisions and historial show 738 00:38:24,080 --> 00:38:26,280 Speaker 7: this was a period that we thought. 739 00:38:26,480 --> 00:38:29,080 Speaker 2: Ethan Harris, my people will be in touch with your people. 740 00:38:29,120 --> 00:38:31,160 Speaker 2: We're pulling you out of retirement. We're looking for a 741 00:38:31,200 --> 00:38:35,880 Speaker 2: weekly slot. Ethan Harris, author of Bernanke's Fed. We're waiting 742 00:38:35,920 --> 00:38:40,440 Speaker 2: for Jeromes Fed, Probel's Fed as well. But Ethan Harris 743 00:38:40,440 --> 00:38:43,600 Speaker 2: there of course with the Bank of America years ago. 744 00:38:43,880 --> 00:38:47,120 Speaker 2: This is a Bloomberg Surveillance podcast bringing you the best 745 00:38:47,120 --> 00:38:51,920 Speaker 2: in economics, finance, investment, and international relations. You can also 746 00:38:51,960 --> 00:38:56,000 Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast 747 00:38:56,120 --> 00:39:00,239 Speaker 2: channel on YouTube to see the show weekday mornings from 748 00:39:00,239 --> 00:39:03,440 Speaker 2: seven to ten am Eastern from our global headquarters in 749 00:39:03,560 --> 00:39:07,239 Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify, 750 00:39:07,600 --> 00:39:11,160 Speaker 2: or anywhere else you listen, and always on Bloomberg Radio, 751 00:39:11,320 --> 00:39:14,520 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.