1
00:00:00,080 --> 00:00:01,160
Speaker 1: How is future proof?

2
00:00:01,600 --> 00:00:02,440
Speaker 2: It was awesome.

3
00:00:02,680 --> 00:00:05,000
Speaker 1: He had to quite the interview with Bill Gross. I

4
00:00:05,040 --> 00:00:07,360
Speaker 1: was listening to it. I mean it was I feel

5
00:00:07,400 --> 00:00:09,200
Speaker 1: like everyone's kind of known that he hates good luck.

6
00:00:09,360 --> 00:00:12,119
Speaker 2: Yeah, I kind of love it. Like I saw a

7
00:00:12,119 --> 00:00:15,480
Speaker 2: bunch of people talking about like this crazy old guy.

8
00:00:15,520 --> 00:00:17,239
Speaker 2: I feel sorry for him, and I was like, I

9
00:00:17,239 --> 00:00:19,600
Speaker 2: got the sense he's living his best life. He's just

10
00:00:19,640 --> 00:00:23,119
Speaker 2: like on stage settling old scores because he can like

11
00:00:24,040 --> 00:00:26,279
Speaker 2: to lose. Yeah, I did think it was funny. He

12
00:00:26,320 --> 00:00:29,160
Speaker 2: went off on Peter Lynch though, like I've never did

13
00:00:29,200 --> 00:00:29,640
Speaker 2: you hear that?

14
00:00:29,640 --> 00:00:29,840
Speaker 1: Bet?

15
00:00:30,400 --> 00:00:33,000
Speaker 2: He like made fun of Peter Lynch too, and it

16
00:00:33,120 --> 00:00:37,480
Speaker 2: was like, I've never heard anyone take issue with Peter Lynch.

17
00:00:40,400 --> 00:00:47,440
Speaker 3: I did a deadlift one two three, Jimmy, okay, uh barges.

18
00:00:47,600 --> 00:00:49,760
Speaker 3: This isn't after school Special, except.

19
00:00:49,360 --> 00:00:51,920
Speaker 2: I've decided I'm going to base my entire personality going

20
00:00:51,920 --> 00:00:55,160
Speaker 2: forward on campaigning for a strategic pork reserve in the US.

21
00:00:55,280 --> 00:00:57,000
Speaker 3: Where's the best in posta?

22
00:00:57,160 --> 00:00:59,680
Speaker 2: These are the important question? Is that robots taking over

23
00:00:59,720 --> 00:00:59,960
Speaker 2: the world.

24
00:01:00,240 --> 00:01:00,360
Speaker 1: No.

25
00:01:00,440 --> 00:01:03,320
Speaker 3: I think that like in a couple of years, the

26
00:01:03,400 --> 00:01:05,600
Speaker 3: AI will do a really good job of making the

27
00:01:05,600 --> 00:01:09,080
Speaker 3: odd lots podcast and people today, I don't really need

28
00:01:09,120 --> 00:01:11,720
Speaker 3: to listen to Joe and Tracy anymore. We do have

29
00:01:12,720 --> 00:01:14,120
Speaker 3: the perfect beast.

30
00:01:15,520 --> 00:01:18,480
Speaker 2: Well, in the meantime, this is lots more an odd

31
00:01:18,480 --> 00:01:21,440
Speaker 2: Lot spin off, and we do have the perfect guest.

32
00:01:21,720 --> 00:01:24,720
Speaker 3: Neil Dutta hanging out with us in studio, Tracy. That

33
00:01:24,800 --> 00:01:26,280
Speaker 3: was fun out in California, wasn't it?

34
00:01:26,640 --> 00:01:30,480
Speaker 2: California is lovely. We should we should live there. No,

35
00:01:30,640 --> 00:01:32,320
Speaker 2: it was a fun conference. So we were at the

36
00:01:32,440 --> 00:01:35,520
Speaker 2: future Proof conference in Huntington Beach. I think there were

37
00:01:35,600 --> 00:01:39,760
Speaker 2: three thousand people there, mostly financial advisors, and uh we

38
00:01:39,840 --> 00:01:41,400
Speaker 2: did a live interview with Bill.

39
00:01:41,200 --> 00:01:44,680
Speaker 3: Gross We Uh, I love going out to southern California.

40
00:01:44,720 --> 00:01:48,640
Speaker 3: It's always fun when you can create controversy and rivalry

41
00:01:49,040 --> 00:01:53,600
Speaker 3: between two asset managers bond managers who are like rivals

42
00:01:53,640 --> 00:01:55,880
Speaker 3: and create drama. We created the drama at the event.

43
00:01:56,080 --> 00:01:58,240
Speaker 2: Well, I feel like we didn't actually have to do

44
00:01:58,400 --> 00:02:01,000
Speaker 2: much to create it. I'm I mean Bill kind of

45
00:02:01,080 --> 00:02:02,760
Speaker 2: went off on his own.

46
00:02:02,600 --> 00:02:04,720
Speaker 3: You do. Is there any reason to own a bond

47
00:02:04,800 --> 00:02:05,200
Speaker 3: right now?

48
00:02:06,640 --> 00:02:11,480
Speaker 1: Yeah? Absolutely? I mean it is fixed income, okay, so

49
00:02:11,560 --> 00:02:12,280
Speaker 1: I would you could?

50
00:02:12,320 --> 00:02:14,320
Speaker 3: You could get that. But Tracy gets that in her

51
00:02:14,320 --> 00:02:15,080
Speaker 3: Marcus account.

52
00:02:15,320 --> 00:02:17,200
Speaker 1: I mean, I just told my parents to buy a

53
00:02:17,240 --> 00:02:19,880
Speaker 1: bunch of Treasury bills because it's the easiest. Really, yeah,

54
00:02:19,919 --> 00:02:23,080
Speaker 1: why not? I mean it's just like clipping, uh five

55
00:02:23,120 --> 00:02:25,080
Speaker 1: percent return a month after month.

56
00:02:25,120 --> 00:02:27,320
Speaker 2: And you know, Bill Gross disagrees with you.

57
00:02:27,840 --> 00:02:29,680
Speaker 1: Well, I'm not saying rates can't go higher, but if

58
00:02:29,680 --> 00:02:32,799
Speaker 1: you're not a sophisticated investor, yes, there's probably reasons to own,

59
00:02:33,320 --> 00:02:34,600
Speaker 1: you know, treasury.

60
00:02:35,080 --> 00:02:38,200
Speaker 3: You know, Bill Gross started his career clipping. He told

61
00:02:38,240 --> 00:02:40,720
Speaker 3: us the story when we interviewed him, and he was

62
00:02:40,800 --> 00:02:43,119
Speaker 3: hired at Pimpko in nineteen seventy one and that part

63
00:02:43,160 --> 00:02:46,280
Speaker 3: of his new part of his job was to literally

64
00:02:46,320 --> 00:02:49,239
Speaker 3: go down to the vault that Pimpko had every I

65
00:02:49,240 --> 00:02:51,880
Speaker 3: don't know how often he went down there and clip

66
00:02:51,960 --> 00:02:55,520
Speaker 3: the physical coupons off of paper bonds that they had,

67
00:02:55,639 --> 00:02:57,400
Speaker 3: and he was that was part of his job, was like,

68
00:02:57,440 --> 00:02:58,280
Speaker 3: go do that clipping.

69
00:02:58,720 --> 00:03:00,280
Speaker 1: Well, he's clearly older than we are.

70
00:03:01,360 --> 00:03:03,079
Speaker 2: Well he was also talking about how he used to

71
00:03:03,120 --> 00:03:07,880
Speaker 2: trade on Quotron machines instead of Bloomberg terminals. So yes, absolutely,

72
00:03:08,120 --> 00:03:09,600
Speaker 2: but it was a it was a fun interview.

73
00:03:09,800 --> 00:03:12,440
Speaker 3: But wait, why not just I'm sorry, I'm hung upbout this.

74
00:03:12,480 --> 00:03:14,520
Speaker 3: Why not just like okay, yes, I get that you

75
00:03:14,520 --> 00:03:16,680
Speaker 3: can earn like five percent somewhere, but like you can

76
00:03:16,800 --> 00:03:19,560
Speaker 3: can't you earn like four percent like basically risk free

77
00:03:19,560 --> 00:03:21,919
Speaker 3: at this like with no duration or anything like.

78
00:03:22,000 --> 00:03:24,079
Speaker 2: Four and a half percent in Marcus and like a,

79
00:03:24,480 --> 00:03:24,920
Speaker 2: you're right.

80
00:03:24,840 --> 00:03:27,560
Speaker 3: And like yeah, just can't cash? Yeah, what's wrong with that?

81
00:03:28,240 --> 00:03:30,840
Speaker 1: Well? Five is more than four. And my parents have

82
00:03:30,840 --> 00:03:32,919
Speaker 1: no need for the money right now, Okay, all right,

83
00:03:33,200 --> 00:03:34,880
Speaker 1: And I mean they're not trying to trade for the

84
00:03:35,640 --> 00:03:37,920
Speaker 1: you know, to get you know, to actually make money

85
00:03:37,920 --> 00:03:38,760
Speaker 1: on the bond itself.

86
00:03:38,840 --> 00:03:48,680
Speaker 3: So all right, all right, well let's talk. Okay, we

87
00:03:48,720 --> 00:03:50,520
Speaker 3: don't know, no one knows your rates are going. So

88
00:03:50,680 --> 00:03:53,400
Speaker 3: we got an inflation a CPI print this week. You've

89
00:03:53,400 --> 00:03:56,520
Speaker 3: been saying, Neil for a while that inflation we haven't

90
00:03:56,520 --> 00:03:58,560
Speaker 3: defeated it yet, that either we have a recession and

91
00:03:58,640 --> 00:04:00,280
Speaker 3: we don't have a recession that's going to pick backup.

92
00:04:00,680 --> 00:04:02,360
Speaker 3: Is this the first sign of it? Did we sort

93
00:04:02,360 --> 00:04:04,440
Speaker 3: of like bottom out on the inflation front?

94
00:04:04,920 --> 00:04:08,360
Speaker 1: I mean, some of the progress is definitely stalling. I mean,

95
00:04:08,400 --> 00:04:10,680
Speaker 1: for me, it's just if you don't believe that there's

96
00:04:10,720 --> 00:04:13,520
Speaker 1: a recession it's hard to believe that inflation has been resolved.

97
00:04:13,560 --> 00:04:15,440
Speaker 1: To me, it's really that that's sort of how I

98
00:04:15,480 --> 00:04:19,000
Speaker 1: think about it. I know others may disagree, but I

99
00:04:19,040 --> 00:04:21,400
Speaker 1: think demand is still pretty strong and you saw that

100
00:04:21,440 --> 00:04:23,080
Speaker 1: with retail sales today also.

101
00:04:23,040 --> 00:04:25,800
Speaker 2: So wait, isn't the consensus on CPI that it was

102
00:04:25,880 --> 00:04:29,120
Speaker 2: mostly gas prices because I remember when gas started going

103
00:04:29,200 --> 00:04:31,240
Speaker 2: up in I guess it would have been July or

104
00:04:31,279 --> 00:04:34,520
Speaker 2: early August. O Mayor Sharif, who's been on this podcast

105
00:04:34,520 --> 00:04:37,760
Speaker 2: a number of times now, basically said yeah, and he said, like,

106
00:04:37,839 --> 00:04:41,120
Speaker 2: this is gonna mean CPI coming in in August at

107
00:04:41,160 --> 00:04:44,000
Speaker 2: like three point five or three point six percent ended

108
00:04:44,080 --> 00:04:46,479
Speaker 2: up at three point seven year on year, But it

109
00:04:46,520 --> 00:04:47,919
Speaker 2: seems like it was someonet expected.

110
00:04:49,720 --> 00:04:52,800
Speaker 1: Well. I mean, I think for me, what's interesting about

111
00:04:52,839 --> 00:04:56,599
Speaker 1: this is that when you look at core goods, right,

112
00:04:56,720 --> 00:05:00,000
Speaker 1: like things you know, like furniture, and that's actually gone

113
00:05:00,000 --> 00:05:03,720
Speaker 1: going back up, excluding cars, right. So I think that's

114
00:05:03,760 --> 00:05:06,240
Speaker 1: interesting because to me, that was sort of the linchpin

115
00:05:06,360 --> 00:05:09,200
Speaker 1: for a lot of the weaker inflation story. That kind

116
00:05:09,240 --> 00:05:12,160
Speaker 1: of people hadn't going into the year and that's going away.

117
00:05:12,160 --> 00:05:13,560
Speaker 1: And I think part of the reason why it's going

118
00:05:13,600 --> 00:05:17,760
Speaker 1: away is that supplier delivery times are no longer. I

119
00:05:17,760 --> 00:05:20,160
Speaker 1: mean it's taking longer for factories to move product out

120
00:05:20,200 --> 00:05:22,320
Speaker 1: the door. So the supply chain issue isn't improving. And

121
00:05:22,400 --> 00:05:27,040
Speaker 1: if that's the case, then I think one area of

122
00:05:27,080 --> 00:05:29,520
Speaker 1: disinflationary pressure is going away. And so I think that

123
00:05:29,560 --> 00:05:32,000
Speaker 1: there's probably some upside to core goods prices between now

124
00:05:32,040 --> 00:05:34,040
Speaker 1: and the end of the year. There's also some upside

125
00:05:34,040 --> 00:05:36,159
Speaker 1: to food prices.

126
00:05:36,200 --> 00:05:38,800
Speaker 2: I think, Joe, I have a pet theory that a

127
00:05:38,839 --> 00:05:41,360
Speaker 2: lot of the strong consumption is just down to like

128
00:05:41,560 --> 00:05:44,839
Speaker 2: economic nihilism where people are just like, screw it, I

129
00:05:44,839 --> 00:05:46,560
Speaker 2: don't need to save any more. That's you're just going

130
00:05:46,640 --> 00:05:49,000
Speaker 2: to spend everything, go out, go to restaurants.

131
00:05:49,400 --> 00:05:51,920
Speaker 3: Right, there's really if that's true, that's really bad because

132
00:05:52,000 --> 00:05:56,800
Speaker 3: isn't that like the sort of like classic precursor to hyperinflation,

133
00:05:56,920 --> 00:05:58,440
Speaker 3: like people just go out and the like, oh, I

134
00:05:58,480 --> 00:06:00,280
Speaker 3: have a little cash, so I can like go out

135
00:06:00,279 --> 00:06:02,440
Speaker 3: and buy TVs like I seem to recall like reading

136
00:06:02,440 --> 00:06:05,960
Speaker 3: stories about that before, like episodes of like Russian hyperinflation.

137
00:06:06,040 --> 00:06:08,080
Speaker 3: I hope you're wrong. I hope that's not what all

138
00:06:08,120 --> 00:06:08,560
Speaker 3: this concern.

139
00:06:08,720 --> 00:06:10,960
Speaker 2: I think there's a natural limit to how many TVs

140
00:06:11,000 --> 00:06:12,840
Speaker 2: you can actually go out and buy. But I do

141
00:06:12,920 --> 00:06:16,200
Speaker 2: think the like psychological impulse behind a lot of the

142
00:06:16,240 --> 00:06:20,359
Speaker 2: spending hasn't necessarily been appreciated by a lot of economists.

143
00:06:20,400 --> 00:06:22,400
Speaker 2: Let's put it that way, Neil, didn't you write something

144
00:06:22,400 --> 00:06:23,640
Speaker 2: about savings.

145
00:06:24,000 --> 00:06:25,920
Speaker 1: Yeah, I mean I think that to me, there's nothing

146
00:06:25,920 --> 00:06:28,200
Speaker 1: inherently wrong with the savings right where it is. I mean,

147
00:06:28,240 --> 00:06:30,600
Speaker 1: it's certainly lower than it was a few months ago.

148
00:06:30,800 --> 00:06:33,080
Speaker 1: But if you think about, you know, the period from

149
00:06:33,240 --> 00:06:36,679
Speaker 1: let's say the early nineteen eighties through two thousand and seven,

150
00:06:36,760 --> 00:06:40,600
Speaker 1: I mean, there was a fairly notable inverse relationship between

151
00:06:40,839 --> 00:06:43,360
Speaker 1: your assets relative to your income and savings.

152
00:06:43,440 --> 00:06:46,599
Speaker 2: Right, So when assets go up in value, the savings grow.

153
00:06:46,520 --> 00:06:49,440
Speaker 1: Downtown, which makes sense, right, because people are looking at

154
00:06:49,960 --> 00:06:52,400
Speaker 1: rising wealth as sort of a low risk form of

155
00:06:52,800 --> 00:06:56,000
Speaker 1: income and so you know, you feel better about things,

156
00:06:56,040 --> 00:06:59,239
Speaker 1: you don't need to save as much. The financial crisis

157
00:06:59,279 --> 00:07:01,640
Speaker 1: period kind of up ended that, right, So we went

158
00:07:01,640 --> 00:07:04,560
Speaker 1: through a you know, nearly decade long period where the

159
00:07:04,600 --> 00:07:07,200
Speaker 1: savings rate rose. By the time we got I mean,

160
00:07:07,240 --> 00:07:09,479
Speaker 1: even before the pandemic, I think the savings rate was

161
00:07:09,480 --> 00:07:14,480
Speaker 1: like eight or nine percent, right, and so there's no

162
00:07:14,560 --> 00:07:17,240
Speaker 1: reason for that to happen again. And I think that's

163
00:07:17,280 --> 00:07:19,160
Speaker 1: something that's not well appreciated by people.

164
00:07:19,200 --> 00:07:21,120
Speaker 3: And again talk about this little more so. All right,

165
00:07:21,160 --> 00:07:22,840
Speaker 3: I just pulled up the chart on the terminal, and

166
00:07:23,240 --> 00:07:24,720
Speaker 3: I hadn't really looked at this chart in law.

167
00:07:24,840 --> 00:07:27,080
Speaker 2: So we had been wait, what's the tickers?

168
00:07:27,120 --> 00:07:31,400
Speaker 3: How PID sps? It was personal disas at least the

169
00:07:31,440 --> 00:07:34,440
Speaker 3: savings rate is a percentage of disposable income. That's the start,

170
00:07:34,520 --> 00:07:39,440
Speaker 3: that's measure looking. So I hadn't realized January twenty twenty

171
00:07:39,480 --> 00:07:41,680
Speaker 3: we were at nine point one on that Today were

172
00:07:41,720 --> 00:07:43,520
Speaker 3: at three point five percent. So we go back. What

173
00:07:43,520 --> 00:07:45,240
Speaker 3: does that tell you that nine point one that we

174
00:07:45,280 --> 00:07:45,880
Speaker 3: had pre.

175
00:07:45,880 --> 00:07:50,280
Speaker 1: COVID there was sort of a maybe more caution, okay,

176
00:07:50,440 --> 00:07:54,440
Speaker 1: maybe balance sheet repair. It could have just also been fluky.

177
00:07:54,600 --> 00:07:56,080
Speaker 1: You know, we had maybe a couple of months a

178
00:07:56,080 --> 00:08:00,120
Speaker 1: week of consumer spending and we you know, before of

179
00:08:00,120 --> 00:08:02,560
Speaker 1: the pandemic. But at any rate, I mean to me,

180
00:08:02,640 --> 00:08:04,240
Speaker 1: I think the bigger stories that the trend and the

181
00:08:04,240 --> 00:08:06,520
Speaker 1: savings right over that entire period was a function of

182
00:08:06,840 --> 00:08:08,640
Speaker 1: continued household balance sheet adjustment.

183
00:08:08,720 --> 00:08:11,920
Speaker 3: All right, So right now, going back to the present, tent.

184
00:08:12,120 --> 00:08:15,280
Speaker 3: What's your what's the FED going to do the next

185
00:08:15,280 --> 00:08:17,360
Speaker 3: few meetings? Pause and pause in September?

186
00:08:17,440 --> 00:08:20,600
Speaker 1: Right, Yeah, I don't think they're going to do anything

187
00:08:20,760 --> 00:08:23,120
Speaker 1: at least until December if they do anything.

188
00:08:23,440 --> 00:08:25,960
Speaker 3: So nothing in November and then maybe a hike in

189
00:08:26,000 --> 00:08:26,760
Speaker 3: de maybe.

190
00:08:27,200 --> 00:08:29,600
Speaker 1: Yeah. I mean, I think part of me feels now

191
00:08:29,720 --> 00:08:36,600
Speaker 1: increasingly that they'll just keep pushing back on cuts because well,

192
00:08:36,679 --> 00:08:38,400
Speaker 1: I mean that that could be considered like a de

193
00:08:38,480 --> 00:08:41,240
Speaker 1: facto tightening and if the market expects cuts next year

194
00:08:41,280 --> 00:08:44,120
Speaker 1: and I think is still right, well, pushing back the cuts,

195
00:08:44,480 --> 00:08:46,600
Speaker 1: it's basically pushing back against the other they're cutting, So

196
00:08:46,600 --> 00:08:49,920
Speaker 1: they just keep an extended on hold policy, like you know.

197
00:08:50,440 --> 00:08:51,840
Speaker 1: The thing is at this point, I feel like if

198
00:08:51,880 --> 00:08:53,480
Speaker 1: they're I mean, because we're talking right, and now you

199
00:08:53,520 --> 00:08:56,160
Speaker 1: saw the journal article like fine tuning, they're using these

200
00:08:56,000 --> 00:08:58,240
Speaker 1: these words, right, so if you're going to hike, like

201
00:08:58,240 --> 00:09:01,080
Speaker 1: what's the point of hiking once more? Right, So, if

202
00:09:01,080 --> 00:09:02,880
Speaker 1: you're gonna hike, it has to be at least a

203
00:09:02,920 --> 00:09:05,560
Speaker 1: few you know, like I mean, I mean, it's very

204
00:09:05,640 --> 00:09:08,480
Speaker 1: rare to see the FED do like an abort like yeah,

205
00:09:08,640 --> 00:09:11,240
Speaker 1: mission right, I mean, maybe in the mid nineties that happened, right,

206
00:09:11,240 --> 00:09:12,680
Speaker 1: They hiked and then they kind of just left it

207
00:09:12,679 --> 00:09:14,600
Speaker 1: there and they never did anything again, and then the

208
00:09:14,600 --> 00:09:17,400
Speaker 1: next move was cuts it after the lt TCM thing.

209
00:09:17,800 --> 00:09:20,400
Speaker 1: So that's sort of how I'm thinking about it. But

210
00:09:20,440 --> 00:09:26,160
Speaker 1: I think the risk to them doing this is it's

211
00:09:26,200 --> 00:09:29,240
Speaker 1: happening at potentially a time of cyclical momentum in the economy,

212
00:09:29,320 --> 00:09:31,840
Speaker 1: and that to me is what kind of kind of

213
00:09:31,880 --> 00:09:32,440
Speaker 1: concerns me.

214
00:09:32,600 --> 00:09:35,720
Speaker 3: You mentioned that there are these maybe that the momentum

215
00:09:35,760 --> 00:09:39,160
Speaker 3: on disinflation has stalled. So like big picture, and look,

216
00:09:39,160 --> 00:09:41,680
Speaker 3: there's always gonna be month to month noise, but big picture,

217
00:09:41,720 --> 00:09:43,880
Speaker 3: if you just sort of zoom out, it still looks

218
00:09:43,920 --> 00:09:50,360
Speaker 3: like various measures CPI, PPI, PCE, quit rates, things like that.

219
00:09:50,400 --> 00:09:53,080
Speaker 3: It's still basically seems like lines are trending down.

220
00:09:54,160 --> 00:09:58,600
Speaker 1: But what are you doing technical analysis? Economic? I mean,

221
00:09:58,640 --> 00:09:59,080
Speaker 1: it's just.

222
00:09:59,440 --> 00:10:02,200
Speaker 3: I'm just saying, like, no, no, what I'm more saying,

223
00:10:02,200 --> 00:10:05,120
Speaker 3: it's like it's just like zoom ountain look big picture,

224
00:10:05,320 --> 00:10:08,560
Speaker 3: Like yes, like I get things month to month that

225
00:10:08,600 --> 00:10:10,760
Speaker 3: we could say like oh like stripbout gasoline, et cetera,

226
00:10:10,840 --> 00:10:14,680
Speaker 3: it still looks like most lines, especially you know, I know,

227
00:10:14,840 --> 00:10:18,320
Speaker 3: like one of the theses of like persistent inflation is

228
00:10:18,360 --> 00:10:20,360
Speaker 3: going to be the wage growth and the labor market's

229
00:10:20,360 --> 00:10:22,520
Speaker 3: still robust. But even that's like, don't you.

230
00:10:22,480 --> 00:10:24,840
Speaker 1: Find it amazing that the folks that were like that

231
00:10:24,880 --> 00:10:26,760
Speaker 1: are now talking about the quits rate as this sort

232
00:10:26,800 --> 00:10:29,960
Speaker 1: of magic like and at wage inflation indicator. During the

233
00:10:29,960 --> 00:10:32,080
Speaker 1: twenty tens, they were the ones that were propping up

234
00:10:32,120 --> 00:10:34,160
Speaker 1: the prime age employment rate as the as the best

235
00:10:34,200 --> 00:10:36,959
Speaker 1: measure for wages, and that number is actually still going

236
00:10:37,040 --> 00:10:39,760
Speaker 1: up because the labor markets are in fact still tightening.

237
00:10:39,800 --> 00:10:42,320
Speaker 3: I've always been a quits rate fan anyway, No, I

238
00:10:42,320 --> 00:10:43,720
Speaker 3: always have been.

239
00:10:43,280 --> 00:10:46,559
Speaker 1: But but I what if the quits rates going down

240
00:10:46,800 --> 00:10:49,080
Speaker 1: because people are getting paid more in the jobs that

241
00:10:49,120 --> 00:10:52,600
Speaker 1: they have. Is it more or less likely that someone

242
00:10:53,280 --> 00:10:55,560
Speaker 1: at at UPS is going to quit their job after

243
00:10:55,600 --> 00:10:58,040
Speaker 1: striking a deal, after the union struck a deal with

244
00:10:58,240 --> 00:11:01,040
Speaker 1: the company? Is more Is it going to be more

245
00:11:01,160 --> 00:11:04,440
Speaker 1: or less likely that for GM, you know, the folks

246
00:11:04,520 --> 00:11:06,640
Speaker 1: that make jeep vehicles, Are they going to be more

247
00:11:06,720 --> 00:11:08,560
Speaker 1: or less likely to quit their job and in the

248
00:11:08,600 --> 00:11:11,679
Speaker 1: next couple of in the next couple of months. So

249
00:11:11,760 --> 00:11:14,040
Speaker 1: I wonder a little bit about that. I mean so,

250
00:11:15,240 --> 00:11:17,880
Speaker 1: but to me, isn't it it's a confidence game, right,

251
00:11:17,920 --> 00:11:21,480
Speaker 1: I mean ultimately, and I think that's how policy works too.

252
00:11:21,520 --> 00:11:23,120
Speaker 1: I mean, this is something that Waller was talking about,

253
00:11:23,200 --> 00:11:27,559
Speaker 1: is expectations. Right, Businesses, I hate to tell you, no

254
00:11:27,640 --> 00:11:30,319
Speaker 1: longer think there's going to be a recession. And if

255
00:11:30,360 --> 00:11:33,640
Speaker 1: they think that, then they're going to be more likely

256
00:11:33,679 --> 00:11:36,240
Speaker 1: to post job openings, They're going to be more likely

257
00:11:36,400 --> 00:11:40,959
Speaker 1: to higher so hiring rates and opening rates probably pick up,

258
00:11:41,720 --> 00:11:46,040
Speaker 1: and that probably means stronger employment. And so yes, I

259
00:11:46,120 --> 00:11:48,480
Speaker 1: agree with you that that there has been improvement in

260
00:11:48,520 --> 00:11:51,280
Speaker 1: a lot of these metrics that you're pointing to, right,

261
00:11:51,360 --> 00:11:54,640
Speaker 1: I mean the quids. But if you had to ask me,

262
00:11:54,880 --> 00:11:57,520
Speaker 1: are these measures going to be higher or lower than

263
00:11:57,559 --> 00:12:00,280
Speaker 1: they are right now? I would say higher? And to

264
00:12:00,320 --> 00:12:03,360
Speaker 1: me that's I mean, we'll keep the FED awake. I think.

265
00:12:03,520 --> 00:12:06,120
Speaker 2: Well, the other thing that's happening is, you know, you

266
00:12:06,200 --> 00:12:10,559
Speaker 2: mentioned the UAW strike and we are getting like close

267
00:12:10,640 --> 00:12:14,000
Speaker 2: to that. It's sort of like triggering and I guess

268
00:12:14,240 --> 00:12:17,240
Speaker 2: I guess from a production perspective, it feels like we

269
00:12:17,280 --> 00:12:21,400
Speaker 2: could get into another situation where supply chains start to

270
00:12:21,440 --> 00:12:25,120
Speaker 2: be affected, which could also maybe start to impact inflation.

271
00:12:25,800 --> 00:12:28,160
Speaker 1: It's a negative supply shock. Right. I mean that's one

272
00:12:28,200 --> 00:12:31,120
Speaker 1: of the way. I mean, I don't think we're anything

273
00:12:31,120 --> 00:12:33,520
Speaker 1: close to the seventies obviously, but one of the ways

274
00:12:33,520 --> 00:12:36,520
Speaker 1: that happened was basically you had these sort of persistent

275
00:12:36,600 --> 00:12:39,080
Speaker 1: supply shocks you had. I mean, it was just bad luck,

276
00:12:39,320 --> 00:13:07,160
Speaker 1: I mean, on top of bad policy.

277
00:12:54,160 --> 00:12:57,679
Speaker 3: Neil, I posted in our discord, I think you've hung

278
00:12:57,720 --> 00:12:59,080
Speaker 3: out in there a couple of depths, right, I posted

279
00:12:59,080 --> 00:13:02,160
Speaker 3: in their discord. Have any questions for Neil? And from

280
00:13:02,240 --> 00:13:07,800
Speaker 3: JG fifty three? Does rising long bond yields? Like how

281
00:13:07,840 --> 00:13:10,040
Speaker 3: far can that go? And at what point does that

282
00:13:10,080 --> 00:13:12,840
Speaker 3: like really start to impair acid valuations in another area?

283
00:13:12,920 --> 00:13:15,280
Speaker 3: I think we're pretty I mean four and three quarters

284
00:13:15,280 --> 00:13:17,800
Speaker 3: were sort of hitting the ceiling, and I think the

285
00:13:17,800 --> 00:13:18,640
Speaker 3: market's kind.

286
00:13:18,440 --> 00:13:20,600
Speaker 1: Of figuring it out, but I think we're close. Our

287
00:13:20,640 --> 00:13:23,040
Speaker 1: market strategist Jeff to Graph, you know, he runs this

288
00:13:23,080 --> 00:13:25,480
Speaker 1: thing called a yield impact model, but basically he looks

289
00:13:25,480 --> 00:13:28,760
Speaker 1: at the probability that a certain level of interest rate

290
00:13:28,800 --> 00:13:31,360
Speaker 1: starts to negatively affect the stock market, and you know,

291
00:13:31,880 --> 00:13:34,199
Speaker 1: it gets worse the higher, you know, after four and

292
00:13:34,200 --> 00:13:37,280
Speaker 1: a half percent, So we're right there. To me, when

293
00:13:37,320 --> 00:13:40,240
Speaker 1: I think about equities this year. Right, the easy money

294
00:13:40,240 --> 00:13:42,960
Speaker 1: I think has largely been made because the big upturn

295
00:13:43,000 --> 00:13:46,920
Speaker 1: for stocks was basically pricing out the recession probability, right

296
00:13:46,960 --> 00:13:49,520
Speaker 1: and now. Right, So if you think about the market

297
00:13:49,600 --> 00:13:52,040
Speaker 1: as kind of or the economy as sort of like

298
00:13:52,080 --> 00:13:55,400
Speaker 1: a four potential scenarios, right, you can have your your

299
00:13:55,400 --> 00:13:57,839
Speaker 1: deflationary bus which is sort of the classic recession. You

300
00:13:57,880 --> 00:13:59,920
Speaker 1: can have stackflation, you can have soft lending, you can

301
00:14:00,120 --> 00:14:03,000
Speaker 1: an inflationary boom. Right. What you have the most or

302
00:14:03,040 --> 00:14:04,719
Speaker 1: what I have the most conviction on, is that we

303
00:14:04,760 --> 00:14:07,200
Speaker 1: won't have recession. Right. So now I think the markets

304
00:14:07,240 --> 00:14:09,240
Speaker 1: have kind of come to that view, and so you

305
00:14:09,280 --> 00:14:12,400
Speaker 1: have to if you're thinking about probabilities. Okay, so then

306
00:14:13,000 --> 00:14:15,880
Speaker 1: my odds of a negative you know, growth scenario have

307
00:14:15,960 --> 00:14:18,839
Speaker 1: come down. So where do you allocate this now? I mean,

308
00:14:18,920 --> 00:14:21,560
Speaker 1: is it stats off landing? Is it inflationary boom? And

309
00:14:21,600 --> 00:14:23,360
Speaker 1: I think the markets are kind of gyrating back and

310
00:14:23,400 --> 00:14:24,800
Speaker 1: forth between those two scenarios.

311
00:14:24,920 --> 00:14:26,160
Speaker 2: Where do you land on that?

312
00:14:27,120 --> 00:14:28,560
Speaker 1: I think we're in an inflationary boom?

313
00:14:29,760 --> 00:14:33,240
Speaker 3: Tracy, Can I say, I you know what, I think

314
00:14:33,240 --> 00:14:36,280
Speaker 3: people should pay a little more attention to than they are. No, No,

315
00:14:36,280 --> 00:14:40,520
Speaker 3: it's not a controversial one. Actually, the unemployment rate, it

316
00:14:40,560 --> 00:14:42,960
Speaker 3: ticked up to three three point eight percent last month,

317
00:14:43,080 --> 00:14:46,360
Speaker 3: and a lot of people sort of dismissed it based on, oh,

318
00:14:46,360 --> 00:14:48,520
Speaker 3: it had to do with more people in the labor force.

319
00:14:49,080 --> 00:14:51,200
Speaker 3: But on the other hand, like it is the highest

320
00:14:51,400 --> 00:14:54,520
Speaker 3: now since February twenty twenty two, so it's like the

321
00:14:54,600 --> 00:14:57,560
Speaker 3: highest in over a year and a half. Like this way,

322
00:14:57,560 --> 00:14:59,680
Speaker 3: I go back to some of these labor market indicators,

323
00:14:59,720 --> 00:15:02,360
Speaker 3: and they're not terrible clearly, and we're still adding jobs

324
00:15:02,400 --> 00:15:05,560
Speaker 3: and initial clean but like you know, Neil said job

325
00:15:05,600 --> 00:15:09,720
Speaker 3: openings down, quit rates, I think maybe I said it down.

326
00:15:10,200 --> 00:15:12,600
Speaker 3: Unemployment rate up to three point eight percent, Like it

327
00:15:12,640 --> 00:15:13,800
Speaker 3: seems like something is happening.

328
00:15:14,120 --> 00:15:16,840
Speaker 2: Sure, But to Neil's point, if we have entered a

329
00:15:16,880 --> 00:15:20,120
Speaker 2: period where it seems like recession is firmly off the table,

330
00:15:20,160 --> 00:15:22,800
Speaker 2: then it feels like that gets reversed pretty quick, especially

331
00:15:22,800 --> 00:15:25,760
Speaker 2: given that a lot of companies were already kind of

332
00:15:25,840 --> 00:15:29,880
Speaker 2: focused on being caught flat footed in an expansionary scenario.

333
00:15:29,920 --> 00:15:32,240
Speaker 2: We've talked about this, right, Yeah, Like a lot of

334
00:15:32,280 --> 00:15:35,960
Speaker 2: the survey data they're talking about like, well, we want

335
00:15:36,000 --> 00:15:38,280
Speaker 2: to hold onto people or we want to hire additional

336
00:15:38,280 --> 00:15:42,520
Speaker 2: people because we're worried about after the recession, yeah, and

337
00:15:42,680 --> 00:15:46,040
Speaker 2: expanding our capabilities, and then the recession never materialized, and

338
00:15:46,120 --> 00:15:48,880
Speaker 2: so it feels like there's more upside than downside of

339
00:15:48,920 --> 00:15:49,400
Speaker 2: the Yeah.

340
00:15:49,400 --> 00:15:51,680
Speaker 3: I love reading the comments like on like the Dallas

341
00:15:51,680 --> 00:15:54,120
Speaker 3: FED manufacturing report or some of the ism, and that

342
00:15:54,200 --> 00:15:56,400
Speaker 3: has been a thing that pops up, which is that basically,

343
00:15:57,120 --> 00:16:00,160
Speaker 3: either managers don't believe that a recession is coming, or

344
00:16:00,760 --> 00:16:03,280
Speaker 3: they see a recession as an opportunity to gain market

345
00:16:03,280 --> 00:16:06,120
Speaker 3: share from their competitors or gain employees from their competitors,

346
00:16:06,240 --> 00:16:08,520
Speaker 3: in which case, if everyone has that mentality, it's hard

347
00:16:08,560 --> 00:16:09,640
Speaker 3: to see how you get a recession.

348
00:16:10,000 --> 00:16:12,160
Speaker 2: Well, I want to ask Neil about something else you've

349
00:16:12,160 --> 00:16:15,080
Speaker 2: been writing about, which is the potential for a FED

350
00:16:15,200 --> 00:16:19,080
Speaker 2: policy error. And I've really only seen two people talking

351
00:16:19,120 --> 00:16:22,600
Speaker 2: about this, and you're coming at it from polar opposite side.

352
00:16:22,640 --> 00:16:25,960
Speaker 2: So I've seen Victor Schwetz talk about the Fed's gonna

353
00:16:26,000 --> 00:16:28,240
Speaker 2: hike into a recession and there's going to be an

354
00:16:28,280 --> 00:16:31,160
Speaker 2: error in that form. But you're talking about they're gonna

355
00:16:31,560 --> 00:16:35,840
Speaker 2: basically pause while inflation is still booming, and that's going

356
00:16:35,920 --> 00:16:36,560
Speaker 2: to be an error.

357
00:16:38,160 --> 00:16:40,680
Speaker 1: Yeah, I mean where's the evidence that they're hiking into

358
00:16:40,680 --> 00:16:43,960
Speaker 1: a slowdown? They're pausing right now. I mean, no one's

359
00:16:43,960 --> 00:16:45,760
Speaker 1: talking about them. I mean, so that's I mean, it's

360
00:16:45,760 --> 00:16:47,800
Speaker 1: just wrong. It's just that is not correct. I mean

361
00:16:47,800 --> 00:16:50,480
Speaker 1: we've had some version of that argument for so many quarters.

362
00:16:50,520 --> 00:16:52,360
Speaker 1: Now I feel like, oh, they're hiking into a slowdown.

363
00:16:52,360 --> 00:16:54,640
Speaker 1: I mean that that was something that people are saying

364
00:16:56,200 --> 00:16:58,920
Speaker 1: late in twenty twenty two, right, I mean, I think

365
00:16:58,960 --> 00:17:03,120
Speaker 1: I believe so. To me, we're making very I mean,

366
00:17:03,600 --> 00:17:05,520
Speaker 1: job growth is slong. But I mean if you think

367
00:17:05,560 --> 00:17:07,840
Speaker 1: about like potential, what is potential, what is break you?

368
00:17:07,880 --> 00:17:10,120
Speaker 1: And it's around like what like one hundred thousand maybe

369
00:17:10,160 --> 00:17:12,879
Speaker 1: a little bit more, and we're still still well above that.

370
00:17:12,920 --> 00:17:15,359
Speaker 1: I mean, household employment is still reasonably strong. I mean

371
00:17:15,440 --> 00:17:17,320
Speaker 1: that's been running like over two hundred thousand in the

372
00:17:17,400 --> 00:17:20,720
Speaker 1: last few months. I saw something in the journal where

373
00:17:20,800 --> 00:17:22,879
Speaker 1: one commentator was saying, oh, you know, this is like

374
00:17:22,920 --> 00:17:25,399
Speaker 1: the classic FED where they're putting too much weight on

375
00:17:25,480 --> 00:17:28,679
Speaker 1: lagging indicators, and now they're setting policy to lagging indicators

376
00:17:28,720 --> 00:17:34,159
Speaker 1: like inflation. But they are paying a lot of attention

377
00:17:34,200 --> 00:17:36,560
Speaker 1: to inflation and a lot of attention to the labor market.

378
00:17:36,560 --> 00:17:39,800
Speaker 1: But that's exactly why that's wrong, is because they are

379
00:17:39,880 --> 00:17:42,480
Speaker 1: lagging indicators. Yeah they have slow, that doesn't mean they

380
00:17:42,520 --> 00:17:43,040
Speaker 1: will slow.

381
00:17:43,359 --> 00:17:47,879
Speaker 2: Yeah. So for listeners, for listeners that don't know. One

382
00:17:47,920 --> 00:17:50,280
Speaker 2: of the great things about following Neil and being on

383
00:17:50,280 --> 00:17:54,840
Speaker 2: his distribution list is that he's not afraid to criticize

384
00:17:54,920 --> 00:17:57,359
Speaker 2: the people who have been calling for a recession for

385
00:17:57,440 --> 00:17:59,159
Speaker 2: like basically the past twelve months.

386
00:17:59,280 --> 00:18:01,159
Speaker 3: Who's your Jeff good Luck? Yeah?

387
00:18:01,200 --> 00:18:02,359
Speaker 2: Do you want to take a shot.

388
00:18:02,119 --> 00:18:06,199
Speaker 1: At I don't like to name names with my peers

389
00:18:06,200 --> 00:18:08,879
Speaker 1: on Wall Street. I always if I've worked them, I

390
00:18:08,920 --> 00:18:12,200
Speaker 1: always try to prop them up or very speak highly

391
00:18:12,240 --> 00:18:15,280
Speaker 1: of them. But I don't need to say anything. I mean,

392
00:18:15,560 --> 00:18:18,560
Speaker 1: everyone knows who they are. I mean, they come on

393
00:18:18,600 --> 00:18:21,000
Speaker 1: your program, they come on this chat, they come on

394
00:18:21,000 --> 00:18:25,680
Speaker 1: Bloomberg TV, and they talk very confidently about recession. And

395
00:18:25,720 --> 00:18:27,240
Speaker 1: you know, and I've talked to Joe about this many

396
00:18:27,280 --> 00:18:31,560
Speaker 1: times offline, but there is a cottage industry that is

397
00:18:31,720 --> 00:18:34,760
Speaker 1: just doom and gloom, right. I mean, think about the

398
00:18:34,800 --> 00:18:38,080
Speaker 1: people that were like talking about the weekly Red Book

399
00:18:38,119 --> 00:18:41,480
Speaker 1: sales index over the last like six months, because it's

400
00:18:41,480 --> 00:18:44,600
Speaker 1: been going down and down and down, and now it's

401
00:18:44,600 --> 00:18:46,720
Speaker 1: starting to pick back up. I mean, where are those

402
00:18:46,720 --> 00:18:49,760
Speaker 1: people now? It's you know, it's one of our I'm

403
00:18:49,800 --> 00:18:54,200
Speaker 1: sure Joe knows. I'm Sam Row. He has this great point.

404
00:18:54,200 --> 00:18:56,240
Speaker 3: It's like, we went out to dinner with Sam Row

405
00:18:56,240 --> 00:18:58,440
Speaker 3: in California. We went to we got a great prim

406
00:18:59,320 --> 00:19:03,239
Speaker 3: and Sam ordered a smoked Old Fashion and they like

407
00:19:03,800 --> 00:19:05,800
Speaker 3: it was a very fancy looking cocktail. Very good for

408
00:19:05,800 --> 00:19:07,280
Speaker 3: Instagram anyway, sorry, keep going.

409
00:19:07,359 --> 00:19:10,879
Speaker 1: His Instagram is great, by the way, Yes, yeah she does.

410
00:19:11,880 --> 00:19:13,720
Speaker 2: He does a great job of sifting through all the

411
00:19:13,760 --> 00:19:16,840
Speaker 2: tiktoks so that I don't have to join that platform.

412
00:19:17,840 --> 00:19:20,760
Speaker 1: But so, for example, like with Walmart, right, like, he'll

413
00:19:20,760 --> 00:19:23,400
Speaker 1: make this joke about, you know, Walmart's sales are up,

414
00:19:23,440 --> 00:19:25,800
Speaker 1: so the bears say that that's bad because consumers are

415
00:19:25,800 --> 00:19:27,959
Speaker 1: being stretched, but Walmart sales are now down, and then

416
00:19:28,000 --> 00:19:30,200
Speaker 1: the bear say that's really really bad because that means

417
00:19:30,200 --> 00:19:32,160
Speaker 1: the consumer can't even for the stuff that's on sale

418
00:19:32,200 --> 00:19:34,520
Speaker 1: at Walmart. Or the credit card one is one of

419
00:19:34,520 --> 00:19:38,600
Speaker 1: my favorites. It's like, oh, people are cutting back on

420
00:19:38,640 --> 00:19:42,080
Speaker 1: their credit card spend because and that's bad for consumption.

421
00:19:42,600 --> 00:19:44,800
Speaker 1: Or now they're spending too much on credit cards and

422
00:19:44,800 --> 00:19:47,600
Speaker 1: they're stretching themselves into oblivion. So it's just you can't

423
00:19:47,640 --> 00:19:50,000
Speaker 1: win with some people. And frankly, there is a cottage

424
00:19:50,040 --> 00:19:55,560
Speaker 1: industry of newsletter subscription writers that make their money selling

425
00:19:55,640 --> 00:19:56,239
Speaker 1: this sort of thing.

426
00:19:56,480 --> 00:19:58,639
Speaker 2: We got to be careful because we also have a newsletter.

427
00:19:58,760 --> 00:20:02,240
Speaker 2: We don't sell it. It's free. It's free. But my

428
00:20:02,440 --> 00:20:05,040
Speaker 2: favorite instance of this is everyone who is talking about

429
00:20:05,040 --> 00:20:08,880
Speaker 2: how the inverted yield curve was going was predicting recession

430
00:20:09,040 --> 00:20:11,200
Speaker 2: right within the next twelve months or something. We've now

431
00:20:11,240 --> 00:20:13,159
Speaker 2: had it for months and months and months on end,

432
00:20:13,440 --> 00:20:16,600
Speaker 2: so all those people have now flipped from the yield

433
00:20:16,640 --> 00:20:20,000
Speaker 2: curve is a sign of impending recession to the inverted

434
00:20:20,040 --> 00:20:24,679
Speaker 2: yield curve causes recession, which is a fun little transition.

435
00:20:24,920 --> 00:20:27,520
Speaker 3: By the way, Tracy our producer's money, you're wrong. Actually

436
00:20:27,560 --> 00:20:30,040
Speaker 3: you have to be a Bloomberg dot com paid subscriber

437
00:20:30,280 --> 00:20:33,320
Speaker 3: to get the Odd Lots newsletter. So we are kind

438
00:20:33,359 --> 00:20:44,360
Speaker 3: of in the business, you know you having worked now

439
00:20:44,480 --> 00:20:46,920
Speaker 3: both on the a major bank on the cell side,

440
00:20:47,000 --> 00:20:50,560
Speaker 3: now for Renaissance macro, why is there a demand from

441
00:20:50,600 --> 00:20:53,840
Speaker 3: customers for the sort of like doom and gloom bongers, Like,

442
00:20:54,359 --> 00:20:59,320
Speaker 3: why do people want that? In your view, because they couldn't.

443
00:20:59,359 --> 00:21:01,480
Speaker 3: All these guys didn't make a career if there weren't

444
00:21:01,520 --> 00:21:03,520
Speaker 3: an audience, if there weren't a customer base for it.

445
00:21:03,760 --> 00:21:06,160
Speaker 1: I mean, the human mind is conditioned to believe that

446
00:21:06,400 --> 00:21:09,760
Speaker 1: people that pitch a negative story or somehow like the nostradamis.

447
00:21:10,119 --> 00:21:12,919
Speaker 1: I mean, I have a My view on things is

448
00:21:12,960 --> 00:21:17,760
Speaker 1: that it usually works out. That's that and and and

449
00:21:17,800 --> 00:21:21,040
Speaker 1: I think that makes me. I think that makes some

450
00:21:21,080 --> 00:21:23,439
Speaker 1: people just think that I'm an idiot, right because I

451
00:21:23,480 --> 00:21:25,760
Speaker 1: just think I mean it's like, oh, you're like a dope, right,

452
00:21:26,119 --> 00:21:28,560
Speaker 1: you know, but things have a tendency of working out,

453
00:21:28,600 --> 00:21:31,080
Speaker 1: like society heels people figure it out. Like that's what

454
00:21:31,119 --> 00:21:33,320
Speaker 1: we do. I mean, we we have a relatively open

455
00:21:33,359 --> 00:21:35,000
Speaker 1: society and things things work out.

456
00:21:35,000 --> 00:21:37,720
Speaker 2: Isn't the sam Rose line and the long run stocks

457
00:21:37,720 --> 00:21:38,080
Speaker 2: go up?

458
00:21:38,200 --> 00:21:40,399
Speaker 3: Yeah? Well, I've I came around to your review several

459
00:21:40,520 --> 00:21:43,359
Speaker 3: years ago because I remember people often say like, oh, Hope,

460
00:21:43,400 --> 00:21:45,520
Speaker 3: isn't a strategy, Like that's a thing. I kind of

461
00:21:45,560 --> 00:21:48,120
Speaker 3: think it's the only strategy because once, no, I really

462
00:21:48,160 --> 00:21:50,479
Speaker 3: believe this's like once you sort of have like a

463
00:21:50,480 --> 00:21:53,600
Speaker 3: crystal clear idea of how a crisis is going to

464
00:21:53,640 --> 00:21:57,560
Speaker 3: resolve itself, is probably priced in. So like, for example,

465
00:21:57,640 --> 00:22:00,520
Speaker 3: you know, if you wait until like after the Carezac

466
00:22:00,600 --> 00:22:02,720
Speaker 3: pass and everything else already, like you were like way

467
00:22:02,760 --> 00:22:05,320
Speaker 3: off the bottom on stocks if you waited until Mario

468
00:22:05,440 --> 00:22:09,320
Speaker 3: drag us omt speech for the Eurozone crisis already like

469
00:22:09,400 --> 00:22:11,240
Speaker 3: the market bottom, like if you wait for so in

470
00:22:11,280 --> 00:22:12,960
Speaker 3: the meantime, like the only like bed is.

471
00:22:12,920 --> 00:22:16,119
Speaker 1: Like, yeah, they'll probably work it out, I think. So.

472
00:22:16,480 --> 00:22:18,040
Speaker 1: I mean, that doesn't mean that there aren't periods where

473
00:22:18,080 --> 00:22:21,320
Speaker 1: things can be going awry, and it's important to point

474
00:22:21,320 --> 00:22:24,120
Speaker 1: that out. But what I don't like, and I think

475
00:22:24,119 --> 00:22:26,560
Speaker 1: this is what a lot of these doomers do, is

476
00:22:26,600 --> 00:22:29,280
Speaker 1: that they start with the conclusion first and then they

477
00:22:29,320 --> 00:22:31,639
Speaker 1: work backwards, and I hate that. What you need to

478
00:22:31,640 --> 00:22:34,720
Speaker 1: do is taking a stute sort of observation of all

479
00:22:34,720 --> 00:22:37,280
Speaker 1: the data and then lead yourself to a conclusion. Right,

480
00:22:37,400 --> 00:22:40,280
Speaker 1: So that's how I think about it, and that's that's

481
00:22:40,359 --> 00:22:41,440
Speaker 1: that's how we try to do our work.

482
00:22:41,480 --> 00:22:44,199
Speaker 3: Okay, So you're you're optimistic sort of sunny guy. That

483
00:22:44,240 --> 00:22:46,760
Speaker 3: being said, so we are recording this on Thursday. We

484
00:22:46,840 --> 00:22:49,560
Speaker 3: don't know tonight there might be a strike at the

485
00:22:49,640 --> 00:22:52,560
Speaker 3: UAW suppose it's possible that we wake up tomorrow morning

486
00:22:52,640 --> 00:22:54,520
Speaker 3: when people are listening to this and a strike is on.

487
00:22:54,600 --> 00:22:57,359
Speaker 3: We don't know, Unfortunately, it's just the timing of how

488
00:22:57,480 --> 00:23:00,000
Speaker 3: recording works. But Goldman put out a note this week

489
00:23:00,240 --> 00:23:03,280
Speaker 3: and they said there's three sort of risks right now

490
00:23:03,359 --> 00:23:06,880
Speaker 3: and that everybody knows about, right the UAW strike, student

491
00:23:07,000 --> 00:23:11,720
Speaker 3: loan payment reset, and government shutdown.

492
00:23:11,920 --> 00:23:13,960
Speaker 1: Are those concern you at all? Are they like enough

493
00:23:13,960 --> 00:23:18,920
Speaker 1: to move the dial? I think that those are largely priced.

494
00:23:18,920 --> 00:23:21,520
Speaker 1: I mean the student loan repayment thing, may I mean

495
00:23:21,600 --> 00:23:24,119
Speaker 1: part of that might be already happening. I mean it

496
00:23:24,160 --> 00:23:26,920
Speaker 1: looks like if you look at the daily daily treasury data,

497
00:23:26,960 --> 00:23:29,280
Speaker 1: I mean, there has been an influx of money into

498
00:23:29,320 --> 00:23:32,640
Speaker 1: the into the government's coffers from student loans a little

499
00:23:32,640 --> 00:23:34,800
Speaker 1: bit ahead of schedule. So maybe we frontloaded some of

500
00:23:34,800 --> 00:23:37,160
Speaker 1: that drag. I don't know. I mean, I've been through

501
00:23:37,200 --> 00:23:39,960
Speaker 1: so many government shutdowns now it's never seemed to matter.

502
00:23:40,119 --> 00:23:41,840
Speaker 1: The market tends to look through it. It's going to

503
00:23:41,880 --> 00:23:44,480
Speaker 1: be really annoying though, if they do stretch that into October,

504
00:23:44,520 --> 00:23:46,800
Speaker 1: because then I won't get the September jobs number potentially,

505
00:23:46,800 --> 00:23:47,960
Speaker 1: and that would be that would.

506
00:23:47,920 --> 00:23:50,119
Speaker 3: Oh wait, we wouldn't get a jobs report in a

507
00:23:50,119 --> 00:23:50,920
Speaker 3: government shutdown.

508
00:23:51,160 --> 00:23:52,159
Speaker 1: Yeah, you don't get them.

509
00:23:52,400 --> 00:23:53,120
Speaker 3: Oh man, what are.

510
00:23:53,080 --> 00:23:55,399
Speaker 1: We going to do? What are we going to do

511
00:23:55,440 --> 00:23:55,880
Speaker 1: on the front?

512
00:23:56,720 --> 00:23:58,520
Speaker 3: Are we going to do the first Friday? Then I

513
00:23:58,520 --> 00:23:59,359
Speaker 3: guess I could sleep in.

514
00:23:59,760 --> 00:24:01,960
Speaker 1: I'm in the UAW strike. It's one of these things

515
00:24:02,000 --> 00:24:04,600
Speaker 1: where kind of like the shutdown right where you actually

516
00:24:04,640 --> 00:24:06,200
Speaker 1: have to kind of go over the cliff to get

517
00:24:06,240 --> 00:24:07,480
Speaker 1: to the RESUK. You have to show them that you

518
00:24:07,520 --> 00:24:12,240
Speaker 1: actually mean. But I think you know as I mean,

519
00:24:12,280 --> 00:24:14,679
Speaker 1: we have very little. I mean, the inventory situation in

520
00:24:14,720 --> 00:24:16,800
Speaker 1: the car market has improved somewhat, but it's still well

521
00:24:16,840 --> 00:24:18,720
Speaker 1: below like if you look at day supply for cars

522
00:24:18,720 --> 00:24:20,960
Speaker 1: and trucks, still well below where it was before the pandemic.

523
00:24:21,040 --> 00:24:24,159
Speaker 1: So that to me probably argues for a more rapid

524
00:24:24,200 --> 00:24:27,360
Speaker 1: resolution to this. Then appreciate it. But yeah, I think

525
00:24:27,400 --> 00:24:29,600
Speaker 1: that they probably strike, but that the pressure will start

526
00:24:29,600 --> 00:24:31,439
Speaker 1: building pretty quickly over the week to come to some

527
00:24:31,520 --> 00:24:32,320
Speaker 1: kind of an agreement.

528
00:24:32,560 --> 00:24:34,840
Speaker 2: Wait, what would concern you, like if you had to

529
00:24:34,840 --> 00:24:37,760
Speaker 2: put on your doom and Gloomer hat if you started

530
00:24:37,840 --> 00:24:40,960
Speaker 2: a newsletter today, what would be the big risk?

531
00:24:41,400 --> 00:24:42,679
Speaker 1: Well, I just said it. I mean I think that.

532
00:24:42,880 --> 00:24:44,359
Speaker 1: I mean, we've been talking about it, which is that

533
00:24:44,400 --> 00:24:46,399
Speaker 1: inflations day stick here for longer and that's going to

534
00:24:46,480 --> 00:24:48,840
Speaker 1: I mean, right, So yes, I'm optimistic, But at the

535
00:24:48,880 --> 00:24:52,680
Speaker 1: same time, an optimistic economic outlook right now isn't necessarily

536
00:24:52,760 --> 00:24:54,920
Speaker 1: a good one for markets. So that's kind of distinction

537
00:24:55,000 --> 00:24:56,800
Speaker 1: you want to talk about. I also wonder a little

538
00:24:56,800 --> 00:24:59,520
Speaker 1: bit about manufacturing competitiveness, right, I mean, if you look

539
00:24:59,520 --> 00:25:02,480
Speaker 1: at manufat actoring productivity in the US, it's been very,

540
00:25:02,560 --> 00:25:06,000
Speaker 1: very sluggish for the last several years. And this is

541
00:25:06,040 --> 00:25:08,600
Speaker 1: now happening at a time when we are pushing up

542
00:25:08,680 --> 00:25:12,600
Speaker 1: this pushing up compensation costs across a number of industries

543
00:25:12,720 --> 00:25:15,320
Speaker 1: to the extent that we're not as cost competitive. That

544
00:25:15,359 --> 00:25:17,440
Speaker 1: could really be challenging because remember, Joe, I mean, in

545
00:25:17,480 --> 00:25:20,400
Speaker 1: the twenty tens, it was all about the US manufacturing

546
00:25:20,400 --> 00:25:23,760
Speaker 1: and industrial renaissance, right, And well, I don't remember that.

547
00:25:23,880 --> 00:25:26,399
Speaker 3: I thought that's the story now that like now is

548
00:25:26,440 --> 00:25:29,360
Speaker 3: like the actual like domestic manufacturing investment.

549
00:25:29,400 --> 00:25:31,520
Speaker 1: I mean, back then, it was about the dollar has

550
00:25:31,840 --> 00:25:33,919
Speaker 1: lost so much of its value from two thousand and

551
00:25:33,920 --> 00:25:36,680
Speaker 1: two to two thousand and eight, our unit, our labor costs,

552
00:25:36,680 --> 00:25:39,920
Speaker 1: were right sized, and now it seems to be going

553
00:25:40,000 --> 00:25:42,000
Speaker 1: the other way. We have a strong dollar, we have

554
00:25:42,520 --> 00:25:45,720
Speaker 1: you know, unit labor costs have been rising relatively quickly

555
00:25:45,760 --> 00:25:48,560
Speaker 1: in the manufacturing sector because productivity has been so sluggish.

556
00:25:48,600 --> 00:25:50,399
Speaker 1: So that's that's something that's longer term. I mean, I

557
00:25:50,440 --> 00:25:53,280
Speaker 1: don't think it changes any cyclical momentum story, but it's

558
00:25:53,280 --> 00:25:54,159
Speaker 1: something to keep an eye on.

559
00:25:54,359 --> 00:25:57,520
Speaker 3: Can I end this with a sort of personal statement?

560
00:25:57,640 --> 00:26:00,639
Speaker 3: Is that is that Okay, you look at you, you

561
00:26:00,680 --> 00:26:02,320
Speaker 3: work out this summer, you look fit.

562
00:26:02,560 --> 00:26:05,320
Speaker 1: Oh, thank you, Joe. I appreciate it. I have lost

563
00:26:05,320 --> 00:26:06,960
Speaker 1: weight at the old fashioned way. I would call it

564
00:26:07,000 --> 00:26:12,560
Speaker 1: the Indian way, which is just fasting. Really, my people,

565
00:26:13,560 --> 00:26:15,560
Speaker 1: we fasted our way to independence, and I'm doing it

566
00:26:15,600 --> 00:26:16,240
Speaker 1: to a better bummy.

567
00:26:16,280 --> 00:26:17,920
Speaker 2: In my day, we call this dieting.

568
00:26:18,119 --> 00:26:21,520
Speaker 3: Yeah, anyway, it's working out. No need for simplic care.

569
00:26:21,840 --> 00:26:24,000
Speaker 2: One thing I learned from Joe is that guys just

570
00:26:24,080 --> 00:26:26,440
Speaker 2: want to be asked if they've been working out. That's

571
00:26:26,440 --> 00:26:28,200
Speaker 2: like all they desire from life.

572
00:26:29,080 --> 00:26:34,840
Speaker 3: This is true. Lots More is produced by Carmen Rodriguez

573
00:26:34,840 --> 00:26:37,440
Speaker 3: and dash Ol Bennett, with help from Moses ONEm Our.

574
00:26:37,480 --> 00:26:40,600
Speaker 2: Sound engineer is Blake Maple's Sage Bauman is our head

575
00:26:40,600 --> 00:26:41,760
Speaker 2: of Bloomberg Podcasts.

576
00:26:42,000 --> 00:26:44,919
Speaker 3: Subscribe to Odd, Lots and lots More on your favorite

577
00:26:44,960 --> 00:26:47,840
Speaker 3: podcast platform, and if you'd like to support us, please

578
00:26:47,920 --> 00:26:48,600
Speaker 3: leave us a review.

579
00:26:49,000 --> 00:26:50,000
Speaker 2: Thanks for listening.

580
00:26:50,440 --> 00:26:52,880
Speaker 3: Catch lots More next time on lots More