WEBVTT - Bloomberg Surveillance TV: September 30, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.160 Terminal and the Bloomberg Business app. Bran Weinstein and Morgan 0:00:37.200 --> 0:00:39.240 Stanley writs in the FED is now seen as a 0:00:39.280 --> 0:00:41.360 head of the curve. The door is totally open for 0:00:41.360 --> 0:00:43.880 another fifty, but the bar is high. The FED is 0:00:43.960 --> 0:00:46.760 better off dragging this one out from here, having gotten 0:00:46.800 --> 0:00:48.839 off to a good start. Brian joins us now for 0:00:48.920 --> 0:00:51.440 more so. Brian easing in China rake US in the 0:00:51.520 --> 0:00:54.520 United States. The prospect of some inflationary prolcies in DC 0:00:54.960 --> 0:00:56.880 dependent on the outcome of the US election. A lot 0:00:56.880 --> 0:00:59.280 of people ask him the same question, why aren't bond 0:00:59.320 --> 0:01:01.120 yields higher, not lower? 0:01:02.880 --> 0:01:04.920 I think we'll get there. It's going to take a 0:01:04.959 --> 0:01:05.400 little while. 0:01:05.640 --> 0:01:08.040 If the playbook says when the feed is easing, you 0:01:08.120 --> 0:01:09.960 buy bonds, right, people want to lock in rates. 0:01:10.440 --> 0:01:11.200 It's very rare. 0:01:11.280 --> 0:01:13.520 In fact, it's never happened before that we've come from 0:01:13.560 --> 0:01:17.399 such an inverted deal curve right right into an easing cycle. 0:01:17.720 --> 0:01:19.959 And so I think people are missing that the trades 0:01:20.280 --> 0:01:22.960 more or less already happened. But in the meantime, any 0:01:23.000 --> 0:01:25.959 weaker data, you know, any FED easing, people will buy bonds. 0:01:26.000 --> 0:01:28.720 So I believe bond yields will be meaningfully higher than here. 0:01:29.200 --> 0:01:30.760 I think it's going to take a little while to 0:01:30.840 --> 0:01:31.120 get there. 0:01:31.319 --> 0:01:34.240 Let's just take into that word meaningful. Can we talk 0:01:34.280 --> 0:01:35.800 about that? And you think we're at the bottom of 0:01:35.840 --> 0:01:37.840 a much bigger range. How big is that range? What 0:01:37.959 --> 0:01:38.840 is meaningfully higher? 0:01:39.360 --> 0:01:39.480 You know? 0:01:39.680 --> 0:01:42.000 So I came into this year saying three ninety to five, 0:01:42.080 --> 0:01:44.319 and obviously I'm a little bit off on the low side. 0:01:44.360 --> 0:01:45.840 So let's say it could be even a little lower 0:01:46.280 --> 0:01:49.000 twenty five three fifty. I think when you look at 0:01:49.000 --> 0:01:51.240 a FED with a terminal fund rate near three, the 0:01:51.280 --> 0:01:53.320 eald curve should be at least one hundred and fifty 0:01:53.320 --> 0:01:55.560 basis points steep. So that puts us at four to fifty. 0:01:55.880 --> 0:01:58.120 If the Turmo rates three and a half or four, well, 0:01:58.320 --> 0:02:00.600 then you go a lot higher. And I don't think 0:02:00.640 --> 0:02:03.880 we've seen the highs and yields for this longer cycle yet. 0:02:04.160 --> 0:02:06.160 So if we touch just short of of five percent, 0:02:06.240 --> 0:02:07.520 I think you could see a five and a half 0:02:07.560 --> 0:02:10.640 percent tenure note if the Fed does everything right, if 0:02:10.680 --> 0:02:13.280 the data it gets better, and China easing is a 0:02:13.280 --> 0:02:15.400 big part of that story. So you need more stimulus, 0:02:15.639 --> 0:02:17.720 more spending, all the things we're going to get. I 0:02:17.800 --> 0:02:19.919 think you can get ten year notes outside the range 0:02:19.919 --> 0:02:22.600 of which we've seen to the high side much later 0:02:22.800 --> 0:02:23.200 next year. 0:02:23.520 --> 0:02:26.560 This is counter consensus in terms of how high the 0:02:26.639 --> 0:02:29.480 yield could potentially be in this cycle. It is not 0:02:29.639 --> 0:02:33.200 counter consensus when it comes to just volatility expected, especially 0:02:33.280 --> 0:02:34.239 heading into the election. 0:02:34.919 --> 0:02:36.920 How do you trade around this? How do you position 0:02:37.400 --> 0:02:38.600 for that type of whipsaw? 0:02:39.480 --> 0:02:41.880 Yeah, what's amazing is nothing's happening, right, We're kind of 0:02:41.919 --> 0:02:44.440 stuck in this three seventy to three ninety range, and 0:02:44.560 --> 0:02:47.560 this is the tightest range. The rally happened over five 0:02:47.639 --> 0:02:49.840 months and now now we're stuck. So I think the 0:02:49.919 --> 0:02:51.959 answer may be, don't expect what I just said to 0:02:52.000 --> 0:02:55.720 happen anytime soon again. People like fixed income, they want 0:02:55.760 --> 0:02:59.400 to buy bonds. As the FED eases and listen to 0:02:59.440 --> 0:03:01.760 the election, I don't know that unless there's a red 0:03:01.840 --> 0:03:04.560 sweep or a blue sweep and there's a big outcome 0:03:04.600 --> 0:03:07.440 that's unexpected, I'm not sure the market isn't ready for right. 0:03:07.480 --> 0:03:09.839 We know we're going to get some more stimulus after 0:03:10.200 --> 0:03:11.880 we know we're going to help out the hurricane victims. 0:03:11.880 --> 0:03:14.440 It's a little slower than we'd like, and so they'll 0:03:14.480 --> 0:03:16.760 be more spending, but there's also going to be an 0:03:16.760 --> 0:03:18.680 economic slowdown, right, I mean, I don't think it's going 0:03:18.760 --> 0:03:21.240 to be huge from here, but inflation is still falling. 0:03:21.480 --> 0:03:22.679 So I think we're stuck in a bit of a 0:03:22.760 --> 0:03:24.040 range maybe for stocks. Two. 0:03:24.800 --> 0:03:26.280 And then when we get through this, when we get 0:03:26.320 --> 0:03:29.320 into January February of next year and you see the 0:03:29.360 --> 0:03:32.320 effects of the FED easing, I think you start to 0:03:32.320 --> 0:03:33.040 see higher rates. 0:03:33.040 --> 0:03:34.840 But it seems a little bit boring for right now. 0:03:35.040 --> 0:03:36.760 Well, see, this is what I was really struck with, 0:03:36.880 --> 0:03:38.160 And over the weekend I spend a lot of time 0:03:38.200 --> 0:03:41.800 thinking about the idea of how you navigate bifurcated tails. 0:03:41.840 --> 0:03:45.480 This idea that you have potential hotter than expected economy 0:03:45.640 --> 0:03:48.400 or you have a potential weaker than expected economy, and 0:03:48.560 --> 0:03:50.360 right now people aren't willing to make any kind of 0:03:50.400 --> 0:03:52.840 best so they're just betting on perfection in the middle 0:03:53.040 --> 0:03:55.680 for the foreseeable future. You're saying that we're not going 0:03:55.760 --> 0:03:57.760 to get a catalyst to change that until next year, 0:03:57.960 --> 0:03:59.560 that even though we're saying that Friday is the most 0:03:59.560 --> 0:04:02.760 importants ever, that that's not necessarily going to tip the 0:04:02.840 --> 0:04:03.960 tide one way or another. 0:04:04.680 --> 0:04:06.240 I think it's by the way. I think you're right. 0:04:06.280 --> 0:04:08.160 I think were priced for perfection, and I think the 0:04:08.240 --> 0:04:11.120 tails are in play. The problem with say Friday's payroll 0:04:11.520 --> 0:04:13.360 is if the FED hadn't gone fifty, right, if the 0:04:13.440 --> 0:04:16.080 FED had been stubborn, the payroll would matter a lot. 0:04:16.440 --> 0:04:18.120 The fact that they're ahead of the curve. Now we 0:04:18.200 --> 0:04:19.960 know if it's weaker, they can go fifty again, so 0:04:20.000 --> 0:04:22.360 you can get a response. If it's not weak and 0:04:22.440 --> 0:04:24.000 they did a little too much, the curve might bear 0:04:24.080 --> 0:04:27.000 steep in a little bit, or maybe even bear flatten. Right, 0:04:27.040 --> 0:04:29.440 maybe we take out an extra ease, But at the 0:04:29.520 --> 0:04:30.920 end of the day, is it going to change the 0:04:31.000 --> 0:04:32.000 course of what they're doing. 0:04:32.080 --> 0:04:33.120 I don't think so. Right. 0:04:33.160 --> 0:04:35.320 We know inflation went from a to close to two. 0:04:35.680 --> 0:04:37.720 We know that employment is weaker than it has been, 0:04:38.240 --> 0:04:41.480 maybe not super weak. So it leaves me thinking, as 0:04:41.560 --> 0:04:43.760 much as I don't like it, as someone who wants 0:04:43.800 --> 0:04:46.080 to help their clients make money, you're stuck in a 0:04:46.160 --> 0:04:48.600 range for a little bit longer, despite the fact that 0:04:48.680 --> 0:04:50.839 you do have these tail risks, and if we overreact 0:04:50.839 --> 0:04:52.320 to one, you probably want to fade it right, which 0:04:52.360 --> 0:04:54.479 puts you right back into that range concept. 0:04:54.800 --> 0:04:56.920 Does this remind you of the inverse of pre twenty 0:04:57.000 --> 0:04:59.360 twenty The line that really got that going in my 0:04:59.480 --> 0:05:02.080 mind was we're a long way for neutral. I remember 0:05:02.160 --> 0:05:04.760 that line, and they ended up being a lot closer 0:05:04.760 --> 0:05:06.560 to it than they realized. Are we going to see 0:05:06.560 --> 0:05:09.520 a repeat of that? But on the other side, I. 0:05:09.520 --> 0:05:11.760 Think it's possible, right, I mean, it feels like we're 0:05:11.800 --> 0:05:13.640 a long way from neutral, but we don't know where 0:05:13.680 --> 0:05:15.840 neutral is and we didn't expect five and a half 0:05:15.920 --> 0:05:18.800 to be necessary and it was, which suggests that neutral 0:05:18.880 --> 0:05:19.240 is higher. 0:05:19.600 --> 0:05:19.720 Right. 0:05:19.760 --> 0:05:21.520 The economy did not fall off the cliff when we 0:05:21.600 --> 0:05:23.560 got to five and a half, and we're easing, not 0:05:23.720 --> 0:05:26.520 because we are in danger, but because we don't want 0:05:26.600 --> 0:05:28.840 to be, and that's why I'm so embolden with a 0:05:28.920 --> 0:05:31.560 higher rate call for later. I don't think neutral is 0:05:31.560 --> 0:05:33.160 going to be two point eight or three. I think 0:05:33.160 --> 0:05:36.120 it could be three point five or four. And so yes, 0:05:36.279 --> 0:05:39.520 Johnny ditch where we are right. I think it looks 0:05:39.560 --> 0:05:41.960 like we're far from neutral, and we won't know until 0:05:41.960 --> 0:05:43.720 it's a little bit too late. And the impact of 0:05:43.760 --> 0:05:46.040 the eases won't be known until the middle. 0:05:45.800 --> 0:05:46.400 Of next year. 0:05:46.760 --> 0:05:49.080 So a lot to learn, a lot to get through, 0:05:49.800 --> 0:05:52.119 and I would be thinking not about what this easing 0:05:52.160 --> 0:05:53.680 cycle looks like in the next couple of months. 0:05:53.680 --> 0:05:55.640 I think it might be boring. It's what's on the 0:05:55.680 --> 0:05:56.320 other side of that. 0:05:56.680 --> 0:05:58.600 A great Brian is going to catch up. Thanks for 0:05:58.680 --> 0:06:00.760 catching up with us, Brian. Wise that of more fen 0:06:00.800 --> 0:06:13.800 standing Venu Krishner Barclays is staying Courtius, saying we would 0:06:13.839 --> 0:06:17.360 note that despite upbeach sentiment in financial markets, our macro 0:06:17.560 --> 0:06:20.960 research colleagues believe that impacts the Chinese real economy are 0:06:21.160 --> 0:06:24.400 likely to be limited. Vena Joints napomorph Any it's good 0:06:24.440 --> 0:06:26.400 to see you, good to see you, and you're not 0:06:26.480 --> 0:06:28.640 buying the happy talk out of China in the last week. 0:06:29.400 --> 0:06:32.240 I think in the short term all these measures could work, 0:06:32.800 --> 0:06:36.520 given how negative the positioning has been in the sentiment. 0:06:37.200 --> 0:06:40.360 But I think the issue with China is much bigger. 0:06:40.680 --> 0:06:48.960 It's structural demographics, the property market, consumer sentiment, a host 0:06:49.040 --> 0:06:54.760 of things, domestic consumption, which is you can't export your 0:06:54.800 --> 0:06:58.400 way out forever, which is what they're trying even now. 0:06:59.839 --> 0:07:00.880 I think that is the question. 0:07:01.080 --> 0:07:03.360 So I think in the short term it's tough because 0:07:04.120 --> 0:07:05.640 the questions of what is it a gun or is 0:07:05.680 --> 0:07:09.360 it a bazooka or whatever? Right, so you fine, you 0:07:09.440 --> 0:07:13.560 bring your bozuga and that what structurally over the longer term. 0:07:13.840 --> 0:07:14.520 What changes? 0:07:14.720 --> 0:07:16.520 How would you just write to move over the last week, 0:07:16.640 --> 0:07:18.960 is that your shorts coming off new long scoing garn 0:07:19.040 --> 0:07:21.120 a positioning squeeze that turns into a bit of a 0:07:21.160 --> 0:07:22.760 mount up and a short term what would you call this? 0:07:23.240 --> 0:07:23.880 It's a combination. 0:07:23.960 --> 0:07:27.080 It's a big relief as well, because so far the 0:07:27.160 --> 0:07:30.480 concern has been that in the past, you know, they've 0:07:30.720 --> 0:07:33.160 thrown in a huge amount of stimulus, they weren't doing 0:07:33.240 --> 0:07:35.920 it this time, and so the concern was that they 0:07:35.960 --> 0:07:39.200 don't care as much. But now the opinion is that 0:07:39.720 --> 0:07:43.040 they do care, and now they're saying that this is 0:07:43.160 --> 0:07:45.920 very important and they're won't to do something about it. Right, 0:07:46.040 --> 0:07:49.000 So I think it's a combination of all those and 0:07:49.480 --> 0:07:53.080 perhaps it has some staying power. But I take a 0:07:53.120 --> 0:07:55.840 step back and say, just at the US economy. The 0:07:55.920 --> 0:07:58.760 reason you're optimistic is structurally, the a lot of things 0:07:58.840 --> 0:08:02.680 different in the US. It's not the same in China. 0:08:02.880 --> 0:08:06.080 So when you put all those facts together, I think 0:08:06.120 --> 0:08:06.920 it's a wait and say. 0:08:07.440 --> 0:08:09.480 So, you said that there are some structural things in 0:08:09.480 --> 0:08:11.480 the US that are good, So you're bullish on the US. 0:08:11.800 --> 0:08:14.920 Yes, I'm still bullish on the US, though I'm a 0:08:14.920 --> 0:08:17.200 little concerned in the pace at which we are going ahead. 0:08:17.880 --> 0:08:19.520 I think it looks too fast, too soon. 0:08:20.040 --> 0:08:23.200 But structurally, for example, you know, I mean, the US 0:08:23.720 --> 0:08:28.320 remains at the forefront of the technology front unparalleled. We 0:08:29.640 --> 0:08:33.679 you know, are still you know the world's biggest economy, right, 0:08:34.160 --> 0:08:38.120 we are the world's biggest oil producer now, uh, and 0:08:38.679 --> 0:08:41.240 we still are the center, are probably the leader of 0:08:41.240 --> 0:08:45.319 the global financial architecture. And the dollar still remains a 0:08:45.360 --> 0:08:48.000 reserve currency unlikely to change. So I think when you 0:08:48.080 --> 0:08:50.319 start putting all that together, mainly, I would say in 0:08:50.480 --> 0:08:55.120 tech because the secular shift in the market's rightnised around technology, 0:08:55.720 --> 0:08:58.440 and the shift in technology, if you take a step back, 0:08:58.640 --> 0:09:01.079 is not something which is new. It's been going on 0:09:01.200 --> 0:09:03.840 for about three to four decades now, from the PC 0:09:04.040 --> 0:09:07.239 cycle to the internet to mobile devices. 0:09:07.559 --> 0:09:08.920 We were in the middle of a cloud. 0:09:08.679 --> 0:09:10.719 Transition and then they've got AI on top of that. 0:09:11.480 --> 0:09:14.439 And at the center of it is the action is 0:09:14.480 --> 0:09:17.199 coming from the US and the ecosystem we have in 0:09:17.240 --> 0:09:21.640 the US, mainly around the Valley is unparalleled and cannot 0:09:21.640 --> 0:09:23.720 be replicated just by infusing capital. 0:09:24.040 --> 0:09:26.680 That's a great story. You expect losses by the year end. 0:09:27.120 --> 0:09:29.559 How much short term do you expect this story to 0:09:29.679 --> 0:09:32.959 have been overplayed? And basically, uh, everything is to really 0:09:33.040 --> 0:09:37.040 face a whole lot of volatility based on potential growth, headwinds, 0:09:37.520 --> 0:09:40.240 potential regulation, potential geopolitics. 0:09:41.120 --> 0:09:44.320 The election absolutely raise a lot of right points. 0:09:44.360 --> 0:09:46.800 And that's why if a C my base case price 0:09:46.840 --> 0:09:49.640 target is fifty six hundred already about that, but we 0:09:49.760 --> 0:09:51.880 do have an upside case of sixty one hundred and 0:09:52.280 --> 0:09:55.040 in all fairness a downside case of close to five thousand. 0:09:55.400 --> 0:09:56.080 So I think the way to. 0:09:56.120 --> 0:10:00.600 Think about it is Bittech has corrected reasonably healthily multiples 0:10:00.640 --> 0:10:02.720 which had gone to about thirty four times and now 0:10:02.800 --> 0:10:04.679 back to what twenty nine times, so just about the 0:10:04.840 --> 0:10:07.959 threshold where we feel comfortable. I think anything in the 0:10:08.040 --> 0:10:11.040 mid twenties to twenty nine in the range is reasonable 0:10:11.120 --> 0:10:15.120 because their growth is decelerating, so they are comping the 0:10:15.240 --> 0:10:19.080 comp In other words, now they are looking at sixty 0:10:19.120 --> 0:10:22.559 percent plus growth rate to sort of match against in 0:10:22.600 --> 0:10:25.400 the coming quarters, and the expectation is that their growth 0:10:25.440 --> 0:10:28.640 will decelebrate to around the twenty percent range, so pretty healthy. 0:10:28.640 --> 0:10:31.000 You're paying a PEG ratio of one point three one 0:10:31.040 --> 0:10:35.560 point four, which is quite full, but it's not broken. 0:10:36.600 --> 0:10:39.280 But for the rest of SMP, the comps get easier, 0:10:39.520 --> 0:10:42.800 so you had bad numbers. Now the streete expectation is 0:10:42.840 --> 0:10:44.280 it goes up fifteen sixteen percent. 0:10:44.720 --> 0:10:45.480 I am skeptical. 0:10:45.720 --> 0:10:47.640 I think it's going to be less than that, but 0:10:47.760 --> 0:10:50.679 still they're Actually what's happened is the composition of growth 0:10:50.920 --> 0:10:55.800 has changed, so Bittech still leading but moderating, reasonably priced, 0:10:56.679 --> 0:10:59.319 and the rest of their SMP quite fully valued or 0:10:59.440 --> 0:11:03.280 argue but growing at you know, expected to grow in 0:11:03.360 --> 0:11:05.640 my view maybe around ten ish percent. Which is not 0:11:05.720 --> 0:11:09.760 a bad combination. It leaves me to your question that 0:11:10.080 --> 0:11:12.400 what about the levels right now? I think we probably 0:11:12.480 --> 0:11:14.599 need to take a little bit of a breather. And 0:11:14.679 --> 0:11:16.079 I don't know what the catalyst is going to be. 0:11:16.280 --> 0:11:19.560 Maybe it's elections, maybe it's some geopolitical event. 0:11:19.720 --> 0:11:20.800 But we haven't cared. 0:11:20.559 --> 0:11:23.640 About geopolitics forever, so I'm not too sure why we'll 0:11:23.640 --> 0:11:24.400 start caring now. 0:11:25.080 --> 0:11:26.920 You have such a big gap when it comes to 0:11:26.960 --> 0:11:30.520 the upside and the downside. Yeah, and you say, yeah, 0:11:30.520 --> 0:11:32.959 you don't know the catalyst for what could be. Is 0:11:33.000 --> 0:11:35.559 there a potential of what the catalyst though would be 0:11:35.800 --> 0:11:37.800 to the upside if you're unclear about what it would be. 0:11:38.000 --> 0:11:39.800 In terms of taking a breather. 0:11:39.800 --> 0:11:42.080 Sure, I think the catalysts are very clear. You talked 0:11:42.080 --> 0:11:44.920 about the jobs numbers just now. So the big shifting 0:11:45.000 --> 0:11:47.760 sentiment over the last call it month or two months 0:11:47.800 --> 0:11:52.040 has been this growth scare, right, and so based on 0:11:52.160 --> 0:11:55.920 historical experiences, the market is very concerned and we are 0:11:56.400 --> 0:11:58.840 that is the label market as robust as it seems, 0:11:59.600 --> 0:12:01.520 you know, is it a fact that labor market can 0:12:01.600 --> 0:12:02.640 discilerate very quickly? 0:12:02.880 --> 0:12:04.199 We don't know. We don't think so. 0:12:04.880 --> 0:12:07.199 But The point is, it is very clear that the 0:12:07.320 --> 0:12:10.640 odds of even a shallow recession have increased over the 0:12:10.720 --> 0:12:11.320 last two months. 0:12:11.400 --> 0:12:15.440 They haven't decreased, right, So that is your case downside case. 0:12:15.840 --> 0:12:18.960 If you start certainly seeing a detivation in the labor market, 0:12:19.480 --> 0:12:22.599 which nobody is expecting, including us, but it is a 0:12:22.640 --> 0:12:27.000 real possibility because the odds have increased, you could start 0:12:27.080 --> 0:12:29.920 testing the downside. On the other hand, we are still 0:12:29.960 --> 0:12:33.200 printing with robust numbers. You saw the Atlanta GDP number. 0:12:33.200 --> 0:12:36.559 It came even stronger. Consumer sentiment marginally increasing. 0:12:36.920 --> 0:12:38.199 So I think if growth. 0:12:38.080 --> 0:12:41.760 Does accelerate and there's a reasonable likelihood even though that's 0:12:41.760 --> 0:12:44.559 come down a little bit, there you have my upsideks 0:12:44.640 --> 0:12:47.439 is sixty one hundred. So I think you know, it 0:12:47.559 --> 0:12:50.160 all depends, and the derivative market is telling you that 0:12:50.280 --> 0:12:53.520 the one thing they care about is a NF piece, right, So. 0:12:55.080 --> 0:12:56.439 You know that's where the action is. 0:12:56.600 --> 0:12:58.800 So good news is good news still? That doesn't change. 0:12:59.360 --> 0:13:02.000 Yes, right now, the good news is good news. We've 0:13:02.040 --> 0:13:07.160 shifted from that paradox of flipping it back. But I 0:13:07.240 --> 0:13:09.440 think the question is good news is good news still? 0:13:09.480 --> 0:13:13.439 Something breaks? Right, and so the disconnect right now is 0:13:13.480 --> 0:13:15.480 between the raids market and the equity market. 0:13:15.880 --> 0:13:19.040 Right, And what I would suggest is that the raid's 0:13:19.080 --> 0:13:21.920 market has been all over the map for the last 0:13:21.960 --> 0:13:22.439 two years. 0:13:22.840 --> 0:13:25.960 We're expecting seven cuts, then zero, now you know, nine 0:13:26.000 --> 0:13:28.679 cuts in a middle year, middle of next year. So 0:13:29.000 --> 0:13:31.800 the equity market has been more right than wrong. Right, 0:13:32.080 --> 0:13:35.120 And so that's an interesting situation we are in. 0:13:35.240 --> 0:13:36.959 Right, you've thrown some shindy at your colleagues on the 0:13:37.000 --> 0:13:38.840 other side of the room. So the pond mark has 0:13:38.840 --> 0:13:40.360 been all over the place. Did you hear that? I 0:13:40.440 --> 0:13:40.719 heard that. 0:13:40.800 --> 0:13:41.199 I heard that. 0:13:41.760 --> 0:13:44.079 So you know, basically is that your your accusation. 0:13:45.280 --> 0:13:47.920 Well, my point is that everybody looks at the rates 0:13:47.960 --> 0:13:49.440 market a big barometer. 0:13:49.360 --> 0:13:50.480 Of what to extend. 0:13:51.400 --> 0:13:52.440 Yeah, so, which is true. 0:13:52.760 --> 0:13:54.599 But the point is if you tried to follow that, 0:13:54.760 --> 0:13:57.760 you're gone crazy because you will know what to do 0:13:57.880 --> 0:13:58.640 a week from week. 0:13:58.880 --> 0:13:59.800 Right, slipping all. 0:13:59.800 --> 0:14:02.720 Right, hold on a second in fairness, not a defendant 0:14:02.800 --> 0:14:04.480 pod market, but it's a defendant bond market. 0:14:04.920 --> 0:14:06.600 Equities have had s and P five. 0:14:06.520 --> 0:14:08.719 Hundred has had five straight months of gains. If we 0:14:08.840 --> 0:14:11.319 close out the month of September with a gain, it 0:14:11.440 --> 0:14:14.240 has come in tandem with to your yields having five 0:14:14.320 --> 0:14:16.719 straight months of yields going down. You're saying that that 0:14:16.800 --> 0:14:17.880 isn't directly correlated. 0:14:19.040 --> 0:14:22.200 Well, what you really care about for equities is the 0:14:22.280 --> 0:14:24.520 ten year rates, right, and if you look at ten 0:14:24.600 --> 0:14:26.720 year rates wherever, they're moving around. But that is a 0:14:26.760 --> 0:14:30.360 discount factor because we're a long duration asset, right, And 0:14:31.120 --> 0:14:34.240 we were hovering around five percent a few months ago, right, 0:14:34.520 --> 0:14:36.160 and then we went to three and a half percent. 0:14:36.680 --> 0:14:39.320 Now you're again going back towards the four percent range. 0:14:39.680 --> 0:14:43.240 So I'm not trying to sort of reduce the importance 0:14:43.240 --> 0:14:45.760 of the rate. It is very, very important because it's 0:14:45.760 --> 0:14:48.360 a discount age of factors in trying to bring back 0:14:48.400 --> 0:14:48.880 his bond. 0:14:48.800 --> 0:14:50.760 Market colleagues carry on, Can I keep going at the 0:14:50.800 --> 0:14:50.960 end of. 0:14:50.960 --> 0:14:54.680 The day, you know it's been all over the map. 0:14:54.800 --> 0:14:56.320 And let me tell you something. 0:14:56.840 --> 0:15:01.280 So everybody, everybody in the macro market is concerned about deficits, right, 0:15:01.560 --> 0:15:04.800 So you would expect that shows up in the term premium. 0:15:05.520 --> 0:15:06.040 Where is it? 0:15:07.320 --> 0:15:08.960 Some big egos on that side of the room, as 0:15:09.000 --> 0:15:11.760 you know. Y, thank you Kiney Krishna. Print of Park 0:15:11.800 --> 0:15:24.120 Please market's looking ahead to the week's biggest catalysts, including 0:15:24.160 --> 0:15:26.920 today's remarks from Fed Schad Jay Powell ahead of September 0:15:26.960 --> 0:15:29.840 payrolls on Friday at ECHA Bave of Bank of America 0:15:29.880 --> 0:15:32.480 Securities expecting a print of one hundred and fifty thousand, 0:15:32.520 --> 0:15:36.000 with unemployment holding steady at four point two percent. A 0:15:36.080 --> 0:15:37.800 details with us in a studio here in New York. 0:15:37.840 --> 0:15:39.920 A teacher, good mornits you, sir, good morning, Thanks for 0:15:39.960 --> 0:15:41.760 having me, Thank you for being here. We've heard from 0:15:41.800 --> 0:15:44.480 consumers they say jobs aren't as plentiful, they're getting harder 0:15:44.560 --> 0:15:45.880 to get. Are we going to see that in jump 0:15:45.920 --> 0:15:46.960 openings this week? 0:15:47.720 --> 0:15:49.040 It's certainly a possibility. 0:15:49.200 --> 0:15:51.000 So if you look at the Joel's report, this will 0:15:51.040 --> 0:15:53.120 of course be for August rather than September. But if 0:15:53.120 --> 0:15:55.600 you look at the recent Joel's stata, the job opening's 0:15:55.640 --> 0:15:56.680 number has been dropping like a. 0:15:56.680 --> 0:15:59.359 Stone, and that's not sustainable. 0:15:59.400 --> 0:16:01.640 At some point, that's not going to be benign, right, 0:16:01.760 --> 0:16:04.080 It's going to start affecting the lave market. So that's 0:16:04.120 --> 0:16:07.600 something we're watching quite carefully. The openings rate now looks 0:16:07.640 --> 0:16:10.320 quite consistent with where it was before the pandemic, so 0:16:10.720 --> 0:16:13.360 further sharp decreases and openings. 0:16:13.080 --> 0:16:13.960 Will be a point of concern. 0:16:14.040 --> 0:16:17.240 There's a missing feature in the parish narrative. It's layoffs. 0:16:17.560 --> 0:16:19.000 What's happening with layoffs? Where aren't we? 0:16:19.520 --> 0:16:22.200 Layoffs are still very low, and that's the reason that 0:16:22.320 --> 0:16:25.440 we're holding on to our soft landing Outlook. If you 0:16:25.480 --> 0:16:27.800 look at the layoff rate, that's been low. If you 0:16:27.840 --> 0:16:30.200 look at jobless claims that's been low as well. And 0:16:30.400 --> 0:16:33.400 even within the unemployment data, you can look at kind 0:16:33.400 --> 0:16:37.760 of voluntary versus involuntary unemployment, where involuntary would be layoffs, right, 0:16:38.000 --> 0:16:39.800 So that only accounts for a little more than. 0:16:39.760 --> 0:16:41.360 Half of the increase in the uneployment rates. 0:16:41.400 --> 0:16:43.800 So no matter how you slice it, layoffs have been low, 0:16:43.840 --> 0:16:45.920 and that gives us more confidence about a soft landing. 0:16:46.160 --> 0:16:49.080 Also, revisions, and this is sort of counterintuitive because some 0:16:49.120 --> 0:16:52.120 people are saying the revisions to jobless claims and to 0:16:52.560 --> 0:16:56.000 the job's figures have been downward and significantly so. But 0:16:56.120 --> 0:16:59.040 the revisions to GDP and GDI were the opposite direction. 0:16:59.160 --> 0:17:02.320 It suggested a bit more growth in the couple of 0:17:02.480 --> 0:17:05.800 years in the direct aftermath of the pandemic. How much 0:17:06.040 --> 0:17:07.760 are you looking at that and saying we did to 0:17:07.840 --> 0:17:09.360 rethink the strength of the economy. 0:17:09.680 --> 0:17:13.840 Oh, absolutely, those revisions were remarkable. So there was a 0:17:13.880 --> 0:17:16.760 big gap between GDP and GDI going into the revisions, 0:17:16.760 --> 0:17:20.240 with GDPI being significantly softer. So the bearish view on 0:17:20.359 --> 0:17:23.359 that was that eventually GDP would get revised to GDI 0:17:23.520 --> 0:17:26.119 because income is more easily measured or something like that. 0:17:26.240 --> 0:17:28.520 But actually what happened was that GDP got revised up, 0:17:28.600 --> 0:17:30.840 GDI got revised up even more, and it's now basically 0:17:30.880 --> 0:17:33.560 cut up to GDP. So across the board, you look 0:17:33.600 --> 0:17:37.080 at the components of income and compensation for example, got 0:17:37.119 --> 0:17:39.080 revised up a lot. You look at the components of GDP, 0:17:39.400 --> 0:17:42.200 consumer spending capex cut revised up. So these were very 0:17:42.240 --> 0:17:45.679 positive revisions, and I think there's two potential implications, right 0:17:45.960 --> 0:17:49.600 The first one is that productivity growth has really picked 0:17:49.680 --> 0:17:53.160 up more than we expected. The other is, look, there's 0:17:53.200 --> 0:17:56.920 this Eventually there's going to be a relationship between activity 0:17:57.080 --> 0:17:59.320 and the labor market, and which way will it go. 0:17:59.440 --> 0:18:01.000 We'll activity backstop the. 0:18:01.040 --> 0:18:04.160