Speaker 1: How is future proof?
Speaker 2: It was awesome.
Speaker 1: He had to quite the interview with Bill Gross. I
Speaker 1: was listening to it. I mean it was I feel
Speaker 1: like everyone's kind of known that he hates good luck.
Speaker 2: Yeah, I kind of love it. Like I saw a
Speaker 2: bunch of people talking about like this crazy old guy.
Speaker 2: I feel sorry for him, and I was like, I
Speaker 2: got the sense he's living his best life. He's just
Speaker 2: like on stage settling old scores because he can like
Speaker 2: to lose. Yeah, I did think it was funny. He
Speaker 2: went off on Peter Lynch though, like I've never did
Speaker 2: you hear that?
Speaker 1: Bet?
Speaker 2: He like made fun of Peter Lynch too, and it
Speaker 2: was like, I've never heard anyone take issue with Peter Lynch.
Speaker 3: I did a deadlift one two three, Jimmy, okay, uh barges.
Speaker 3: This isn't after school Special, except.
Speaker 2: I've decided I'm going to base my entire personality going
Speaker 2: forward on campaigning for a strategic pork reserve in the US.
Speaker 3: Where's the best in posta?
Speaker 2: These are the important question? Is that robots taking over
Speaker 2: the world.
Speaker 1: No.
Speaker 3: I think that like in a couple of years, the
Speaker 3: AI will do a really good job of making the
Speaker 3: odd lots podcast and people today, I don't really need
Speaker 3: to listen to Joe and Tracy anymore. We do have
Speaker 3: the perfect beast.
Speaker 2: Well, in the meantime, this is lots more an odd
Speaker 2: Lot spin off, and we do have the perfect guest.
Speaker 3: Neil Dutta hanging out with us in studio, Tracy. That
Speaker 3: was fun out in California, wasn't it?
Speaker 2: California is lovely. We should we should live there. No,
Speaker 2: it was a fun conference. So we were at the
Speaker 2: future Proof conference in Huntington Beach. I think there were
Speaker 2: three thousand people there, mostly financial advisors, and uh we
Speaker 2: did a live interview with Bill.
Speaker 3: Gross We Uh, I love going out to southern California.
Speaker 3: It's always fun when you can create controversy and rivalry
Speaker 3: between two asset managers bond managers who are like rivals
Speaker 3: and create drama. We created the drama at the event.
Speaker 2: Well, I feel like we didn't actually have to do
Speaker 2: much to create it. I'm I mean Bill kind of
Speaker 2: went off on his own.
Speaker 3: You do. Is there any reason to own a bond
Speaker 3: right now?
Speaker 1: Yeah? Absolutely? I mean it is fixed income, okay, so
Speaker 1: I would you could?
Speaker 3: You could get that. But Tracy gets that in her
Speaker 3: Marcus account.
Speaker 1: I mean, I just told my parents to buy a
Speaker 1: bunch of Treasury bills because it's the easiest. Really, yeah,
Speaker 1: why not? I mean it's just like clipping, uh five
Speaker 1: percent return a month after month.
Speaker 2: And you know, Bill Gross disagrees with you.
Speaker 1: Well, I'm not saying rates can't go higher, but if
Speaker 1: you're not a sophisticated investor, yes, there's probably reasons to own,
Speaker 1: you know, treasury.
Speaker 3: You know, Bill Gross started his career clipping. He told
Speaker 3: us the story when we interviewed him, and he was
Speaker 3: hired at Pimpko in nineteen seventy one and that part
Speaker 3: of his new part of his job was to literally
Speaker 3: go down to the vault that Pimpko had every I
Speaker 3: don't know how often he went down there and clip
Speaker 3: the physical coupons off of paper bonds that they had,
Speaker 3: and he was that was part of his job, was like,
Speaker 3: go do that clipping.
Speaker 1: Well, he's clearly older than we are.
Speaker 2: Well he was also talking about how he used to
Speaker 2: trade on Quotron machines instead of Bloomberg terminals. So yes, absolutely,
Speaker 2: but it was a it was a fun interview.
Speaker 3: But wait, why not just I'm sorry, I'm hung upbout this.
Speaker 3: Why not just like okay, yes, I get that you
Speaker 3: can earn like five percent somewhere, but like you can
Speaker 3: can't you earn like four percent like basically risk free
Speaker 3: at this like with no duration or anything like.
Speaker 2: Four and a half percent in Marcus and like a,
Speaker 2: you're right.
Speaker 3: And like yeah, just can't cash? Yeah, what's wrong with that?
Speaker 1: Well? Five is more than four. And my parents have
Speaker 1: no need for the money right now, Okay, all right,
Speaker 1: And I mean they're not trying to trade for the
Speaker 1: you know, to get you know, to actually make money
Speaker 1: on the bond itself.
Speaker 3: So all right, all right, well let's talk. Okay, we
Speaker 3: don't know, no one knows your rates are going. So
Speaker 3: we got an inflation a CPI print this week. You've
Speaker 3: been saying, Neil for a while that inflation we haven't
Speaker 3: defeated it yet, that either we have a recession and
Speaker 3: we don't have a recession that's going to pick backup.
Speaker 3: Is this the first sign of it? Did we sort
Speaker 3: of like bottom out on the inflation front?
Speaker 1: I mean, some of the progress is definitely stalling. I mean,
Speaker 1: for me, it's just if you don't believe that there's
Speaker 1: a recession it's hard to believe that inflation has been resolved.
Speaker 1: To me, it's really that that's sort of how I
Speaker 1: think about it. I know others may disagree, but I
Speaker 1: think demand is still pretty strong and you saw that
Speaker 1: with retail sales today also.
Speaker 2: So wait, isn't the consensus on CPI that it was
Speaker 2: mostly gas prices because I remember when gas started going
Speaker 2: up in I guess it would have been July or
Speaker 2: early August. O Mayor Sharif, who's been on this podcast
Speaker 2: a number of times now, basically said yeah, and he said, like,
Speaker 2: this is gonna mean CPI coming in in August at
Speaker 2: like three point five or three point six percent ended
Speaker 2: up at three point seven year on year, But it
Speaker 2: seems like it was someonet expected.
Speaker 1: Well. I mean, I think for me, what's interesting about
Speaker 1: this is that when you look at core goods, right,
Speaker 1: like things you know, like furniture, and that's actually gone
Speaker 1: going back up, excluding cars, right. So I think that's
Speaker 1: interesting because to me, that was sort of the linchpin
Speaker 1: for a lot of the weaker inflation story. That kind
Speaker 1: of people hadn't going into the year and that's going away.
Speaker 1: And I think part of the reason why it's going
Speaker 1: away is that supplier delivery times are no longer. I
Speaker 1: mean it's taking longer for factories to move product out
Speaker 1: the door. So the supply chain issue isn't improving. And
Speaker 1: if that's the case, then I think one area of
Speaker 1: disinflationary pressure is going away. And so I think that
Speaker 1: there's probably some upside to core goods prices between now
Speaker 1: and the end of the year. There's also some upside
Speaker 1: to food prices.
Speaker 2: I think, Joe, I have a pet theory that a
Speaker 2: lot of the strong consumption is just down to like
Speaker 2: economic nihilism where people are just like, screw it, I
Speaker 2: don't need to save any more. That's you're just going
Speaker 2: to spend everything, go out, go to restaurants.
Speaker 3: Right, there's really if that's true, that's really bad because
Speaker 3: isn't that like the sort of like classic precursor to hyperinflation,
Speaker 3: like people just go out and the like, oh, I
Speaker 3: have a little cash, so I can like go out
Speaker 3: and buy TVs like I seem to recall like reading
Speaker 3: stories about that before, like episodes of like Russian hyperinflation.
Speaker 3: I hope you're wrong. I hope that's not what all
Speaker 3: this concern.
Speaker 2: I think there's a natural limit to how many TVs
Speaker 2: you can actually go out and buy. But I do
Speaker 2: think the like psychological impulse behind a lot of the
Speaker 2: spending hasn't necessarily been appreciated by a lot of economists.
Speaker 2: Let's put it that way, Neil, didn't you write something
Speaker 2: about savings.
Speaker 1: Yeah, I mean I think that to me, there's nothing
Speaker 1: inherently wrong with the savings right where it is. I mean,
Speaker 1: it's certainly lower than it was a few months ago.
Speaker 1: But if you think about, you know, the period from
Speaker 1: let's say the early nineteen eighties through two thousand and seven,
Speaker 1: I mean, there was a fairly notable inverse relationship between
Speaker 1: your assets relative to your income and savings.
Speaker 2: Right, So when assets go up in value, the savings grow.
Speaker 1: Downtown, which makes sense, right, because people are looking at
Speaker 1: rising wealth as sort of a low risk form of
Speaker 1: income and so you know, you feel better about things,
Speaker 1: you don't need to save as much. The financial crisis
Speaker 1: period kind of up ended that, right, So we went
Speaker 1: through a you know, nearly decade long period where the
Speaker 1: savings rate rose. By the time we got I mean,
Speaker 1: even before the pandemic, I think the savings rate was
Speaker 1: like eight or nine percent, right, and so there's no
Speaker 1: reason for that to happen again. And I think that's
Speaker 1: something that's not well appreciated by people.
Speaker 3: And again talk about this little more so. All right,
Speaker 3: I just pulled up the chart on the terminal, and
Speaker 3: I hadn't really looked at this chart in law.
Speaker 2: So we had been wait, what's the tickers?
Speaker 3: How PID sps? It was personal disas at least the
Speaker 3: savings rate is a percentage of disposable income. That's the start,
Speaker 3: that's measure looking. So I hadn't realized January twenty twenty
Speaker 3: we were at nine point one on that Today were
Speaker 3: at three point five percent. So we go back. What
Speaker 3: does that tell you that nine point one that we
Speaker 3: had pre.
Speaker 1: COVID there was sort of a maybe more caution, okay,
Speaker 1: maybe balance sheet repair. It could have just also been fluky.
Speaker 1: You know, we had maybe a couple of months a
Speaker 1: week of consumer spending and we you know, before of
Speaker 1: the pandemic. But at any rate, I mean to me,
Speaker 1: I think the bigger stories that the trend and the
Speaker 1: savings right over that entire period was a function of
Speaker 1: continued household balance sheet adjustment.
Speaker 3: All right, So right now, going back to the present, tent.
Speaker 3: What's your what's the FED going to do the next
Speaker 3: few meetings? Pause and pause in September?
Speaker 1: Right, Yeah, I don't think they're going to do anything
Speaker 1: at least until December if they do anything.
Speaker 3: So nothing in November and then maybe a hike in
Speaker 3: de maybe.
Speaker 1: Yeah. I mean, I think part of me feels now
Speaker 1: increasingly that they'll just keep pushing back on cuts because well,
Speaker 1: I mean that that could be considered like a de
Speaker 1: facto tightening and if the market expects cuts next year
Speaker 1: and I think is still right, well, pushing back the cuts,
Speaker 1: it's basically pushing back against the other they're cutting, So
Speaker 1: they just keep an extended on hold policy, like you know.
Speaker 1: The thing is at this point, I feel like if
Speaker 1: they're I mean, because we're talking right, and now you
Speaker 1: saw the journal article like fine tuning, they're using these
Speaker 1: these words, right, so if you're going to hike, like
Speaker 1: what's the point of hiking once more? Right, So, if
Speaker 1: you're gonna hike, it has to be at least a
Speaker 1: few you know, like I mean, I mean, it's very
Speaker 1: rare to see the FED do like an abort like yeah,
Speaker 1: mission right, I mean, maybe in the mid nineties that happened, right,
Speaker 1: They hiked and then they kind of just left it
Speaker 1: there and they never did anything again, and then the
Speaker 1: next move was cuts it after the lt TCM thing.
Speaker 1: So that's sort of how I'm thinking about it. But
Speaker 1: I think the risk to them doing this is it's
Speaker 1: happening at potentially a time of cyclical momentum in the economy,
Speaker 1: and that to me is what kind of kind of
Speaker 1: concerns me.
Speaker 3: You mentioned that there are these maybe that the momentum
Speaker 3: on disinflation has stalled. So like big picture, and look,
Speaker 3: there's always gonna be month to month noise, but big picture,
Speaker 3: if you just sort of zoom out, it still looks
Speaker 3: like various measures CPI, PPI, PCE, quit rates, things like that.
Speaker 3: It's still basically seems like lines are trending down.
Speaker 1: But what are you doing technical analysis? Economic? I mean,
Speaker 1: it's just.
Speaker 3: I'm just saying, like, no, no, what I'm more saying,
Speaker 3: it's like it's just like zoom ountain look big picture,
Speaker 3: Like yes, like I get things month to month that
Speaker 3: we could say like oh like stripbout gasoline, et cetera,
Speaker 3: it still looks like most lines, especially you know, I know,
Speaker 3: like one of the theses of like persistent inflation is
Speaker 3: going to be the wage growth and the labor market's
Speaker 3: still robust. But even that's like, don't you.
Speaker 1: Find it amazing that the folks that were like that
Speaker 1: are now talking about the quits rate as this sort
Speaker 1: of magic like and at wage inflation indicator. During the
Speaker 1: twenty tens, they were the ones that were propping up
Speaker 1: the prime age employment rate as the as the best
Speaker 1: measure for wages, and that number is actually still going
Speaker 1: up because the labor markets are in fact still tightening.
Speaker 3: I've always been a quits rate fan anyway, No, I
Speaker 3: always have been.
Speaker 1: But but I what if the quits rates going down
Speaker 1: because people are getting paid more in the jobs that
Speaker 1: they have. Is it more or less likely that someone
Speaker 1: at at UPS is going to quit their job after
Speaker 1: striking a deal, after the union struck a deal with
Speaker 1: the company? Is more Is it going to be more
Speaker 1: or less likely that for GM, you know, the folks
Speaker 1: that make jeep vehicles, Are they going to be more
Speaker 1: or less likely to quit their job and in the
Speaker 1: next couple of in the next couple of months. So
Speaker 1: I wonder a little bit about that. I mean so,
Speaker 1: but to me, isn't it it's a confidence game, right,
Speaker 1: I mean ultimately, and I think that's how policy works too.
Speaker 1: I mean, this is something that Waller was talking about,
Speaker 1: is expectations. Right, Businesses, I hate to tell you, no
Speaker 1: longer think there's going to be a recession. And if
Speaker 1: they think that, then they're going to be more likely
Speaker 1: to post job openings, They're going to be more likely
Speaker 1: to higher so hiring rates and opening rates probably pick up,
Speaker 1: and that probably means stronger employment. And so yes, I
Speaker 1: agree with you that that there has been improvement in
Speaker 1: a lot of these metrics that you're pointing to, right,
Speaker 1: I mean the quids. But if you had to ask me,
Speaker 1: are these measures going to be higher or lower than
Speaker 1: they are right now? I would say higher? And to
Speaker 1: me that's I mean, we'll keep the FED awake. I think.
Speaker 2: Well, the other thing that's happening is, you know, you
Speaker 2: mentioned the UAW strike and we are getting like close
Speaker 2: to that. It's sort of like triggering and I guess
Speaker 2: I guess from a production perspective, it feels like we
Speaker 2: could get into another situation where supply chains start to
Speaker 2: be affected, which could also maybe start to impact inflation.
Speaker 1: It's a negative supply shock. Right. I mean that's one
Speaker 1: of the way. I mean, I don't think we're anything
Speaker 1: close to the seventies obviously, but one of the ways
Speaker 1: that happened was basically you had these sort of persistent
Speaker 1: supply shocks you had. I mean, it was just bad luck,
Speaker 1: I mean, on top of bad policy.
Speaker 3: Neil, I posted in our discord, I think you've hung
Speaker 3: out in there a couple of depths, right, I posted
Speaker 3: in their discord. Have any questions for Neil? And from
Speaker 3: JG fifty three? Does rising long bond yields? Like how
Speaker 3: far can that go? And at what point does that
Speaker 3: like really start to impair acid valuations in another area?
Speaker 3: I think we're pretty I mean four and three quarters
Speaker 3: were sort of hitting the ceiling, and I think the
Speaker 3: market's kind.
Speaker 1: Of figuring it out, but I think we're close. Our
Speaker 1: market strategist Jeff to Graph, you know, he runs this
Speaker 1: thing called a yield impact model, but basically he looks
Speaker 1: at the probability that a certain level of interest rate
Speaker 1: starts to negatively affect the stock market, and you know,
Speaker 1: it gets worse the higher, you know, after four and
Speaker 1: a half percent, So we're right there. To me, when
Speaker 1: I think about equities this year. Right, the easy money
Speaker 1: I think has largely been made because the big upturn
Speaker 1: for stocks was basically pricing out the recession probability, right
Speaker 1: and now. Right, So if you think about the market
Speaker 1: as kind of or the economy as sort of like
Speaker 1: a four potential scenarios, right, you can have your your
Speaker 1: deflationary bus which is sort of the classic recession. You
Speaker 1: can have stackflation, you can have soft lending, you can
Speaker 1: an inflationary boom. Right. What you have the most or
Speaker 1: what I have the most conviction on, is that we
Speaker 1: won't have recession. Right. So now I think the markets
Speaker 1: have kind of come to that view, and so you
Speaker 1: have to if you're thinking about probabilities. Okay, so then
Speaker 1: my odds of a negative you know, growth scenario have
Speaker 1: come down. So where do you allocate this now? I mean,
Speaker 1: is it stats off landing? Is it inflationary boom? And
Speaker 1: I think the markets are kind of gyrating back and
Speaker 1: forth between those two scenarios.
Speaker 2: Where do you land on that?
Speaker 1: I think we're in an inflationary boom?
Speaker 3: Tracy, Can I say, I you know what, I think
Speaker 3: people should pay a little more attention to than they are. No, No,
Speaker 3: it's not a controversial one. Actually, the unemployment rate, it
Speaker 3: ticked up to three three point eight percent last month,
Speaker 3: and a lot of people sort of dismissed it based on, oh,
Speaker 3: it had to do with more people in the labor force.
Speaker 3: But on the other hand, like it is the highest
Speaker 3: now since February twenty twenty two, so it's like the
Speaker 3: highest in over a year and a half. Like this way,
Speaker 3: I go back to some of these labor market indicators,
Speaker 3: and they're not terrible clearly, and we're still adding jobs
Speaker 3: and initial clean but like you know, Neil said job
Speaker 3: openings down, quit rates, I think maybe I said it down.
Speaker 3: Unemployment rate up to three point eight percent, Like it
Speaker 3: seems like something is happening.
Speaker 2: Sure, But to Neil's point, if we have entered a
Speaker 2: period where it seems like recession is firmly off the table,
Speaker 2: then it feels like that gets reversed pretty quick, especially
Speaker 2: given that a lot of companies were already kind of
Speaker 2: focused on being caught flat footed in an expansionary scenario.
Speaker 2: We've talked about this, right, Yeah, Like a lot of
Speaker 2: the survey data they're talking about like, well, we want
Speaker 2: to hold onto people or we want to hire additional
Speaker 2: people because we're worried about after the recession, yeah, and
Speaker 2: expanding our capabilities, and then the recession never materialized, and
Speaker 2: so it feels like there's more upside than downside of
Speaker 2: the Yeah.
Speaker 3: I love reading the comments like on like the Dallas
Speaker 3: FED manufacturing report or some of the ism, and that
Speaker 3: has been a thing that pops up, which is that basically,
Speaker 3: either managers don't believe that a recession is coming, or
Speaker 3: they see a recession as an opportunity to gain market
Speaker 3: share from their competitors or gain employees from their competitors,
Speaker 3: in which case, if everyone has that mentality, it's hard
Speaker 3: to see how you get a recession.
Speaker 2: Well, I want to ask Neil about something else you've
Speaker 2: been writing about, which is the potential for a FED
Speaker 2: policy error. And I've really only seen two people talking
Speaker 2: about this, and you're coming at it from polar opposite side.
Speaker 2: So I've seen Victor Schwetz talk about the Fed's gonna
Speaker 2: hike into a recession and there's going to be an
Speaker 2: error in that form. But you're talking about they're gonna
Speaker 2: basically pause while inflation is still booming, and that's going
Speaker 2: to be an error.
Speaker 1: Yeah, I mean where's the evidence that they're hiking into
Speaker 1: a slowdown? They're pausing right now. I mean, no one's
Speaker 1: talking about them. I mean, so that's I mean, it's
Speaker 1: just wrong. It's just that is not correct. I mean
Speaker 1: we've had some version of that argument for so many quarters.
Speaker 1: Now I feel like, oh, they're hiking into a slowdown.
Speaker 1: I mean that that was something that people are saying
Speaker 1: late in twenty twenty two, right, I mean, I think
Speaker 1: I believe so. To me, we're making very I mean,
Speaker 1: job growth is slong. But I mean if you think
Speaker 1: about like potential, what is potential, what is break you?
Speaker 1: And it's around like what like one hundred thousand maybe
Speaker 1: a little bit more, and we're still still well above that.
Speaker 1: I mean, household employment is still reasonably strong. I mean
Speaker 1: that's been running like over two hundred thousand in the
Speaker 1: last few months. I saw something in the journal where
Speaker 1: one commentator was saying, oh, you know, this is like
Speaker 1: the classic FED where they're putting too much weight on
Speaker 1: lagging indicators, and now they're setting policy to lagging indicators
Speaker 1: like inflation. But they are paying a lot of attention
Speaker 1: to inflation and a lot of attention to the labor market.
Speaker 1: But that's exactly why that's wrong, is because they are
Speaker 1: lagging indicators. Yeah they have slow, that doesn't mean they
Speaker 1: will slow.
Speaker 2: Yeah. So for listeners, for listeners that don't know. One
Speaker 2: of the great things about following Neil and being on
Speaker 2: his distribution list is that he's not afraid to criticize
Speaker 2: the people who have been calling for a recession for
Speaker 2: like basically the past twelve months.
Speaker 3: Who's your Jeff good Luck? Yeah?
Speaker 2: Do you want to take a shot.
Speaker 1: At I don't like to name names with my peers
Speaker 1: on Wall Street. I always if I've worked them, I
Speaker 1: always try to prop them up or very speak highly
Speaker 1: of them. But I don't need to say anything. I mean,
Speaker 1: everyone knows who they are. I mean, they come on
Speaker 1: your program, they come on this chat, they come on
Speaker 1: Bloomberg TV, and they talk very confidently about recession. And
Speaker 1: you know, and I've talked to Joe about this many
Speaker 1: times offline, but there is a cottage industry that is
Speaker 1: just doom and gloom, right. I mean, think about the
Speaker 1: people that were like talking about the weekly Red Book
Speaker 1: sales index over the last like six months, because it's
Speaker 1: been going down and down and down, and now it's
Speaker 1: starting to pick back up. I mean, where are those
Speaker 1: people now? It's you know, it's one of our I'm
Speaker 1: sure Joe knows. I'm Sam Row. He has this great point.
Speaker 3: It's like, we went out to dinner with Sam Row
Speaker 3: in California. We went to we got a great prim
Speaker 3: and Sam ordered a smoked Old Fashion and they like
Speaker 3: it was a very fancy looking cocktail. Very good for
Speaker 3: Instagram anyway, sorry, keep going.
Speaker 1: His Instagram is great, by the way, Yes, yeah she does.
Speaker 2: He does a great job of sifting through all the
Speaker 2: tiktoks so that I don't have to join that platform.
Speaker 1: But so, for example, like with Walmart, right, like, he'll
Speaker 1: make this joke about, you know, Walmart's sales are up,
Speaker 1: so the bears say that that's bad because consumers are
Speaker 1: being stretched, but Walmart sales are now down, and then
Speaker 1: the bear say that's really really bad because that means
Speaker 1: the consumer can't even for the stuff that's on sale
Speaker 1: at Walmart. Or the credit card one is one of
Speaker 1: my favorites. It's like, oh, people are cutting back on
Speaker 1: their credit card spend because and that's bad for consumption.
Speaker 1: Or now they're spending too much on credit cards and
Speaker 1: they're stretching themselves into oblivion. So it's just you can't
Speaker 1: win with some people. And frankly, there is a cottage
Speaker 1: industry of newsletter subscription writers that make their money selling
Speaker 1: this sort of thing.
Speaker 2: We got to be careful because we also have a newsletter.
Speaker 2: We don't sell it. It's free. It's free. But my
Speaker 2: favorite instance of this is everyone who is talking about
Speaker 2: how the inverted yield curve was going was predicting recession
Speaker 2: right within the next twelve months or something. We've now
Speaker 2: had it for months and months and months on end,
Speaker 2: so all those people have now flipped from the yield
Speaker 2: curve is a sign of impending recession to the inverted
Speaker 2: yield curve causes recession, which is a fun little transition.
Speaker 3: By the way, Tracy our producer's money, you're wrong. Actually
Speaker 3: you have to be a Bloomberg dot com paid subscriber
Speaker 3: to get the Odd Lots newsletter. So we are kind
Speaker 3: of in the business, you know you having worked now
Speaker 3: both on the a major bank on the cell side,
Speaker 3: now for Renaissance macro, why is there a demand from
Speaker 3: customers for the sort of like doom and gloom bongers, Like,
Speaker 3: why do people want that? In your view, because they couldn't.
Speaker 3: All these guys didn't make a career if there weren't
Speaker 3: an audience, if there weren't a customer base for it.
Speaker 1: I mean, the human mind is conditioned to believe that
Speaker 1: people that pitch a negative story or somehow like the nostradamis.
Speaker 1: I mean, I have a My view on things is
Speaker 1: that it usually works out. That's that and and and
Speaker 1: I think that makes me. I think that makes some
Speaker 1: people just think that I'm an idiot, right because I
Speaker 1: just think I mean it's like, oh, you're like a dope, right,
Speaker 1: you know, but things have a tendency of working out,
Speaker 1: like society heels people figure it out. Like that's what
Speaker 1: we do. I mean, we we have a relatively open
Speaker 1: society and things things work out.
Speaker 2: Isn't the sam Rose line and the long run stocks
Speaker 2: go up?
Speaker 3: Yeah? Well, I've I came around to your review several
Speaker 3: years ago because I remember people often say like, oh, Hope,
Speaker 3: isn't a strategy, Like that's a thing. I kind of
Speaker 3: think it's the only strategy because once, no, I really
Speaker 3: believe this's like once you sort of have like a
Speaker 3: crystal clear idea of how a crisis is going to
Speaker 3: resolve itself, is probably priced in. So like, for example,
Speaker 3: you know, if you wait until like after the Carezac
Speaker 3: pass and everything else already, like you were like way
Speaker 3: off the bottom on stocks if you waited until Mario
Speaker 3: drag us omt speech for the Eurozone crisis already like
Speaker 3: the market bottom, like if you wait for so in
Speaker 3: the meantime, like the only like bed is.
Speaker 1: Like, yeah, they'll probably work it out, I think. So.
Speaker 1: I mean, that doesn't mean that there aren't periods where
Speaker 1: things can be going awry, and it's important to point
Speaker 1: that out. But what I don't like, and I think
Speaker 1: this is what a lot of these doomers do, is
Speaker 1: that they start with the conclusion first and then they
Speaker 1: work backwards, and I hate that. What you need to
Speaker 1: do is taking a stute sort of observation of all
Speaker 1: the data and then lead yourself to a conclusion. Right,
Speaker 1: So that's how I think about it, and that's that's
Speaker 1: that's how we try to do our work.
Speaker 3: Okay, So you're you're optimistic sort of sunny guy. That
Speaker 3: being said, so we are recording this on Thursday. We
Speaker 3: don't know tonight there might be a strike at the
Speaker 3: UAW suppose it's possible that we wake up tomorrow morning
Speaker 3: when people are listening to this and a strike is on.
Speaker 3: We don't know, Unfortunately, it's just the timing of how
Speaker 3: recording works. But Goldman put out a note this week
Speaker 3: and they said there's three sort of risks right now
Speaker 3: and that everybody knows about, right the UAW strike, student
Speaker 3: loan payment reset, and government shutdown.
Speaker 1: Are those concern you at all? Are they like enough
Speaker 1: to move the dial? I think that those are largely priced.
Speaker 1: I mean the student loan repayment thing, may I mean
Speaker 1: part of that might be already happening. I mean it
Speaker 1: looks like if you look at the daily daily treasury data,
Speaker 1: I mean, there has been an influx of money into
Speaker 1: the into the government's coffers from student loans a little
Speaker 1: bit ahead of schedule. So maybe we frontloaded some of
Speaker 1: that drag. I don't know. I mean, I've been through
Speaker 1: so many government shutdowns now it's never seemed to matter.
Speaker 1: The market tends to look through it. It's going to
Speaker 1: be really annoying though, if they do stretch that into October,
Speaker 1: because then I won't get the September jobs number potentially,
Speaker 1: and that would be that would.
Speaker 3: Oh wait, we wouldn't get a jobs report in a
Speaker 3: government shutdown.
Speaker 1: Yeah, you don't get them.
Speaker 3: Oh man, what are.
Speaker 1: We going to do? What are we going to do
Speaker 1: on the front?
Speaker 3: Are we going to do the first Friday? Then I
Speaker 3: guess I could sleep in.
Speaker 1: I'm in the UAW strike. It's one of these things
Speaker 1: where kind of like the shutdown right where you actually
Speaker 1: have to kind of go over the cliff to get
Speaker 1: to the RESUK. You have to show them that you
Speaker 1: actually mean. But I think you know as I mean,
Speaker 1: we have very little. I mean, the inventory situation in
Speaker 1: the car market has improved somewhat, but it's still well
Speaker 1: below like if you look at day supply for cars
Speaker 1: and trucks, still well below where it was before the pandemic.
Speaker 1: So that to me probably argues for a more rapid
Speaker 1: resolution to this. Then appreciate it. But yeah, I think
Speaker 1: that they probably strike, but that the pressure will start
Speaker 1: building pretty quickly over the week to come to some
Speaker 1: kind of an agreement.
Speaker 2: Wait, what would concern you, like if you had to
Speaker 2: put on your doom and Gloomer hat if you started
Speaker 2: a newsletter today, what would be the big risk?
Speaker 1: Well, I just said it. I mean I think that.
Speaker 1: I mean, we've been talking about it, which is that
Speaker 1: inflations day stick here for longer and that's going to
Speaker 1: I mean, right, So yes, I'm optimistic, But at the
Speaker 1: same time, an optimistic economic outlook right now isn't necessarily
Speaker 1: a good one for markets. So that's kind of distinction
Speaker 1: you want to talk about. I also wonder a little
Speaker 1: bit about manufacturing competitiveness, right, I mean, if you look
Speaker 1: at manufat actoring productivity in the US, it's been very,
Speaker 1: very sluggish for the last several years. And this is
Speaker 1: now happening at a time when we are pushing up
Speaker 1: this pushing up compensation costs across a number of industries
Speaker 1: to the extent that we're not as cost competitive. That
Speaker 1: could really be challenging because remember, Joe, I mean, in
Speaker 1: the twenty tens, it was all about the US manufacturing
Speaker 1: and industrial renaissance, right, And well, I don't remember that.
Speaker 3: I thought that's the story now that like now is
Speaker 3: like the actual like domestic manufacturing investment.
Speaker 1: I mean, back then, it was about the dollar has
Speaker 1: lost so much of its value from two thousand and
Speaker 1: two to two thousand and eight, our unit, our labor costs,
Speaker 1: were right sized, and now it seems to be going
Speaker 1: the other way. We have a strong dollar, we have
Speaker 1: you know, unit labor costs have been rising relatively quickly
Speaker 1: in the manufacturing sector because productivity has been so sluggish.
Speaker 1: So that's that's something that's longer term. I mean, I
Speaker 1: don't think it changes any cyclical momentum story, but it's
Speaker 1: something to keep an eye on.
Speaker 3: Can I end this with a sort of personal statement?
Speaker 3: Is that is that Okay, you look at you, you
Speaker 3: work out this summer, you look fit.
Speaker 1: Oh, thank you, Joe. I appreciate it. I have lost
Speaker 1: weight at the old fashioned way. I would call it
Speaker 1: the Indian way, which is just fasting. Really, my people,
Speaker 1: we fasted our way to independence, and I'm doing it
Speaker 1: to a better bummy.
Speaker 2: In my day, we call this dieting.
Speaker 3: Yeah, anyway, it's working out. No need for simplic care.
Speaker 2: One thing I learned from Joe is that guys just
Speaker 2: want to be asked if they've been working out. That's
Speaker 2: like all they desire from life.
Speaker 3: This is true. Lots More is produced by Carmen Rodriguez
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