WEBVTT - Bloomberg Surveillance TV: November 13th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 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 --> 0:00:37.560 Terminal and the Bloomberg Business App. Keith Lerner of truest 0:00:37.560 --> 0:00:40.000 writing the S and P five hundred Ballmarket, just marked 0:00:40.000 --> 0:00:43.680 his third anniversary and delivered the sixth strongest six month 0:00:43.760 --> 0:00:46.560 rebound inner history. As we enter the final two months 0:00:46.560 --> 0:00:48.800 of the year, history is on a bull side. Keith 0:00:48.840 --> 0:00:50.559 joins us now for more. Keith, good morning, good more. 0:00:50.600 --> 0:00:51.239 I'm ready to be here. 0:00:51.280 --> 0:00:51.920 Great to see you. 0:00:51.960 --> 0:00:52.080 One. 0:00:52.080 --> 0:00:54.400 Are the toawl winds that you're so confident about right now? 0:00:54.560 --> 0:00:56.880 Well, I think the main thing, Rob Front, I think 0:00:56.880 --> 0:00:59.080 this board market deserves the benefit of the data, and 0:00:59.120 --> 0:01:02.400 we have all these of concerns. As one concern receives, 0:01:02.400 --> 0:01:04.880 we have another one to talk about, which makes it interesting. 0:01:05.440 --> 0:01:08.600 But the north storrow of this bull market has been simple. 0:01:08.600 --> 0:01:10.959 It's been profits, in our view, and those profit trends 0:01:10.959 --> 0:01:13.400 are still moving higher. Forward twelve month estimates for the 0:01:13.480 --> 0:01:15.440 S and P are moving higher, but they're also moving 0:01:15.520 --> 0:01:17.360 higher for the average stock. They're moving higher for the 0:01:17.400 --> 0:01:19.399 small caps as well. And we also have a global 0:01:19.400 --> 0:01:22.240 bull market. It's not just the SMP. We have ninety 0:01:22.280 --> 0:01:24.959 percent of global markets in up trends, and we're seeing, 0:01:25.360 --> 0:01:27.440 you know, the e fee maker of fresh fifty two 0:01:27.480 --> 0:01:29.840 week high emerging markets make fifty two weeks high. 0:01:29.880 --> 0:01:30.880 And then even as we get. 0:01:30.760 --> 0:01:34.920 Some kind of uncomfortable or some headlines around the tech trade, 0:01:35.080 --> 0:01:35.839 money's not leaving. 0:01:35.880 --> 0:01:36.600 It's rotating. 0:01:36.640 --> 0:01:40.679 And then lastly, this morning, look at the AAII sentiment 0:01:41.000 --> 0:01:43.520 this morning, it's up to forty nine percent barishness. 0:01:43.640 --> 0:01:44.920 That's the highest since May. 0:01:45.319 --> 0:01:47.400 And we're still as we're talking this morning, the downs 0:01:47.400 --> 0:01:48.240 at an all time high. 0:01:48.440 --> 0:01:51.360 I've asked this question fifty different ways. Earning it's a 0:01:51.400 --> 0:01:53.760 great job States for is not? When does the job 0:01:53.760 --> 0:01:55.480 States is stunt to matter to this market? 0:01:55.760 --> 0:01:57.440 It's a good question. I mean, you know, we. 0:01:57.440 --> 0:01:59.400 All talk about people talking about the y shaped. 0:01:59.160 --> 0:02:00.520 Economy we're talking talking about. 0:02:00.600 --> 0:02:02.720 We talk about the two speed economy and the two 0:02:02.760 --> 0:02:07.040 speed stock markets. So you know, at some point, you know, 0:02:07.040 --> 0:02:11.440 when you think about it, profit margins can benefit from 0:02:11.520 --> 0:02:14.000 wage growth slowing, but at some point you need that 0:02:14.040 --> 0:02:16.799 consumer spending to help the economy move forward. So I 0:02:16.800 --> 0:02:18.480 don't know the exact date, but I think that's part 0:02:18.520 --> 0:02:21.520 of the reason why you've seen moral weakness in some 0:02:21.560 --> 0:02:24.440 of the consumer discretion a space, the retail space. But 0:02:24.480 --> 0:02:27.520 we also have to remember the large cap market in 0:02:27.560 --> 0:02:30.440 particular is not driven by the low end consumer. 0:02:30.680 --> 0:02:33.160 Well, and frankly, I mean, we've got Kevin Gordon coming 0:02:33.160 --> 0:02:35.320 on later, and I love his comment in a note 0:02:35.360 --> 0:02:37.680 where he said we're transitioning from a vibe session to 0:02:37.760 --> 0:02:39.880 a vibe pression and how there seems to be this 0:02:39.960 --> 0:02:42.880 increasingly negative view of the economy, but it has not 0:02:43.000 --> 0:02:44.680 translated into what people actually do. 0:02:44.919 --> 0:02:47.000 Retail therapy seems to be the solution to everything. 0:02:47.040 --> 0:02:49.239 So at what point do you just ignore this and 0:02:49.280 --> 0:02:51.360 take a look at what companies are saying, whether it's 0:02:51.360 --> 0:02:53.720 the airlines, whether it's the retailers, especially on the high end, 0:02:53.720 --> 0:02:55.160 consumers are still spending. 0:02:54.919 --> 0:02:56.840 And that's right, and we're seeing it still leaving the 0:02:56.840 --> 0:02:59.120 credit data that we follow also, so you're right. I mean, 0:02:59.160 --> 0:03:01.160 if you look at the headline, so the consumer's sentiment, 0:03:01.240 --> 0:03:04.400 we just had sentiment really just at really low levels. 0:03:04.400 --> 0:03:05.800 But when you test that out from a stock market 0:03:05.840 --> 0:03:08.000 perspective a year later, the market tends to be up 0:03:08.000 --> 0:03:10.720 in a meaningful way. So I mean, I don't want 0:03:10.720 --> 0:03:13.960 to dismiss it because it is a two tiered economy, 0:03:14.000 --> 0:03:17.280 two tiered market, but a big pisture if you're investing 0:03:17.280 --> 0:03:19.200 in the S and P five hundred and you're investing 0:03:19.200 --> 0:03:21.360 in these tex stocks, and as I mentioned, even globally 0:03:21.400 --> 0:03:23.800 we're seeing some good activity as well. So when that 0:03:23.880 --> 0:03:26.160 turning point is it's hard to say. But in the 0:03:26.200 --> 0:03:27.920 first quarter we will see a little bit of a 0:03:27.919 --> 0:03:29.600 boost with some of the tax refunds. 0:03:29.600 --> 0:03:30.040 We're going to. 0:03:29.960 --> 0:03:33.079 See maybe hopefully more clarity on the terriff side, and 0:03:33.120 --> 0:03:35.040 maybe some more incentives on the business side. So I 0:03:35.040 --> 0:03:36.480 do think we'll see a little bit of an uptake, 0:03:36.560 --> 0:03:39.160 maybe on the marginal people feel a little bit better. 0:03:39.320 --> 0:03:40.560 Is it going to be inflationary? 0:03:40.640 --> 0:03:42.480 And this is really what FED officials are grappling with, 0:03:42.520 --> 0:03:45.120 and honestly, I don't envy them, given the fact that 0:03:45.160 --> 0:03:48.920 they are grappling between potentially allowing inflation to become unmoored 0:03:49.040 --> 0:03:52.760 or causing permanent scarring to the labor market. How much 0:03:52.800 --> 0:03:55.240 can they really cut if you do get that boost 0:03:55.360 --> 0:03:57.080 to consumption in the early part of next year. 0:03:57.120 --> 0:03:58.680 Yeah, it's a good question. 0:03:58.720 --> 0:04:00.680 It's a tricky situation for them as a lot of 0:04:00.720 --> 0:04:02.720 these different cross currents. But I will say there are 0:04:02.720 --> 0:04:04.720 maybe you know, a little bit of an uptick because 0:04:04.760 --> 0:04:06.920 of the AI spending because of the terrorists. But on 0:04:06.960 --> 0:04:10.280 the other side, we do have wages cooling somewhere. We 0:04:10.320 --> 0:04:12.839 have oil prices in the sixties, and what we led 0:04:12.840 --> 0:04:15.960 the program with was housing. Housing prices are softening as well, 0:04:15.960 --> 0:04:17.839 So that doesn't seem to me like a runaway inflation 0:04:18.360 --> 0:04:20.719 environment as a whole. And I would also say, you know, 0:04:20.760 --> 0:04:23.800 we still think the Fed ultimately moves towards three percent 0:04:23.839 --> 0:04:25.440 on the FED funds by the end of next year, 0:04:25.520 --> 0:04:27.320 whether they do it in December or January, I think 0:04:27.320 --> 0:04:30.279 people will kind of overfixiate on that. We also have 0:04:30.320 --> 0:04:32.240 to remember that, you know, on the way up, the 0:04:32.440 --> 0:04:35.000 economy was somewhat less interest rates sensitive, and it may 0:04:35.000 --> 0:04:37.080 be a little bit less interest rate sensitive as they cut. 0:04:37.080 --> 0:04:38.840 So I don't think that's the most important thing by 0:04:38.880 --> 0:04:40.000 far by for the markets. 0:04:40.120 --> 0:04:43.120 Do tax rebates change your outlook? Two thousand dollars checks? 0:04:43.720 --> 0:04:43.880 You know? 0:04:44.080 --> 0:04:45.640 I think what it does on the margin is it 0:04:45.680 --> 0:04:48.760 lifts up maybe a slight uptick on GDP? 0:04:48.920 --> 0:04:49.960 Is it a game change? 0:04:49.960 --> 0:04:50.160 And know? 0:04:50.279 --> 0:04:52.040 But I mean that's one of our main thesis as 0:04:52.040 --> 0:04:53.640 we move into next year, is getting a little bit 0:04:53.640 --> 0:04:56.800 more clarity and having a slight uptick in the overall economy. 0:04:56.800 --> 0:05:00.880 And you know, those tax stimulus checks do help out 0:05:00.880 --> 0:05:01.400 on the margins. 0:05:01.400 --> 0:05:03.040 The focus of the White House, you can fill the shift. 0:05:03.360 --> 0:05:05.440 It's all about a fullibility right now. The President said 0:05:05.480 --> 0:05:08.360 it almost directly yesterday following the rear of putting into 0:05:08.360 --> 0:05:10.440 the government shutdown. So when you look out to twenty 0:05:10.480 --> 0:05:13.800 twenty six and you've got a very narrow concentrated equity 0:05:13.839 --> 0:05:16.680 market and a consumer that's been struggling, and a president 0:05:16.720 --> 0:05:19.000 determined to do something about it going into the midterms 0:05:19.240 --> 0:05:21.400 next year, it's not going to be the trend for 0:05:21.480 --> 0:05:21.960 next year. 0:05:22.320 --> 0:05:24.720 Well, you know, a lot of the question right now 0:05:24.800 --> 0:05:26.000 is do we move out of tech? 0:05:26.040 --> 0:05:27.880 And we're still sticking with tech. 0:05:28.320 --> 0:05:30.920 I'm waiting for confirmation on some of the things we 0:05:30.920 --> 0:05:33.760 look at, relative price trends, relative earning trends, to go 0:05:33.800 --> 0:05:35.640 into this broading trade. We have to remember we came 0:05:35.640 --> 0:05:37.320 into this year and what was the big theme? It 0:05:37.400 --> 0:05:41.000 was the broading theme hasn't worked out. In fact, part 0:05:41.000 --> 0:05:43.360 of the even the movement over the last couple days 0:05:43.360 --> 0:05:45.920 of rotation back there is because they've underperformed so much 0:05:45.960 --> 0:05:48.880 so the one brand got stretched too much. So I 0:05:48.880 --> 0:05:51.279 think there's a case to be made for the broadening 0:05:51.520 --> 0:05:54.880 story again next year because of the uptick, because of 0:05:55.000 --> 0:05:58.760 the fedgelable cutting rates, and we've had such outperformance by tech. 0:05:59.080 --> 0:06:01.160 But I also look back at different cycles. I look 0:06:01.240 --> 0:06:04.800 back at the nineties, I look back on the two thousands, 0:06:05.040 --> 0:06:07.680 and the leaders of bull markets tend to lead to 0:06:07.760 --> 0:06:09.880 the end. Doesn't mean there's not some you know, intimated 0:06:10.440 --> 0:06:13.520 mean reversion periods, But Tech was the leader until most 0:06:13.520 --> 0:06:17.359 of two thousand and Emerging markets were the leader into 0:06:17.680 --> 0:06:20.680 two thousand and seven. So I expect, even though there's 0:06:20.720 --> 0:06:23.040 these worries in these concerns, I think tech will ultimately 0:06:23.200 --> 0:06:23.719 still lead. 0:06:23.760 --> 0:06:25.480 If you believe you're in a bull market, I think. 0:06:25.400 --> 0:06:28.960 Ultimately tech has to participate and likely lead, even if 0:06:28.960 --> 0:06:30.560 there's some bounts of underperformance. 0:06:30.680 --> 0:06:33.120 How much is this for tech heads? 0:06:33.120 --> 0:06:35.919 I win tails you lose in the sense that either 0:06:36.160 --> 0:06:38.960 they do really well and they continue to boom and 0:06:39.000 --> 0:06:40.760 the fedce cutting rates because the rest of the world's 0:06:40.800 --> 0:06:42.600 not doing so well, and so then they continue to 0:06:42.640 --> 0:06:44.680 boom even more because there's more cash looking to go 0:06:44.720 --> 0:06:47.480 to work, or you know, the whole world gets better 0:06:47.480 --> 0:06:50.480 and adapts to some sort of AI paradigm and they 0:06:50.520 --> 0:06:53.159 also benefit. So how much is that the reason why 0:06:53.560 --> 0:06:56.520 it's sort of in some ways the riskier free bet 0:06:56.560 --> 0:06:58.320 for a lot of people and their portfolios. 0:06:58.560 --> 0:07:00.960 Well, I think what happens with all these macro cross 0:07:00.960 --> 0:07:03.599 currents the news headlines from day to day. You see 0:07:03.600 --> 0:07:05.720 these kind of short term rotations in other areas, and 0:07:05.720 --> 0:07:07.880 then they when people feel uncomfortable where they go, they 0:07:07.880 --> 0:07:10.160 go right back to tech. So, but you raise a 0:07:10.200 --> 0:07:12.559 good point too. One of the main questions I'm getting 0:07:12.560 --> 0:07:14.600 today is are we in a tech bubble? And the 0:07:14.640 --> 0:07:16.320 other thing that keep in mind, going back with the FED, 0:07:16.400 --> 0:07:18.640 is the FED was raising rates in the late nineties 0:07:18.640 --> 0:07:19.200 two thousand. 0:07:19.200 --> 0:07:19.680 We're not doing that. 0:07:19.760 --> 0:07:22.360 We're still on a trajectory of actually moving lower. So 0:07:22.920 --> 0:07:25.160 I think I'd like to see a boarding I like 0:07:25.200 --> 0:07:26.960 to see, not a tree speed economy. I think most 0:07:26.960 --> 0:07:28.240 of us would like to see that as well. But 0:07:28.280 --> 0:07:31.440 I think you're right. I think if if things slowed down, 0:07:31.560 --> 0:07:34.800 money moves back to tech, and if things if the 0:07:34.840 --> 0:07:37.240 FED cuts rates, people still stick with tech because of 0:07:37.280 --> 0:07:39.360 the finance inside in the secular growth. 0:07:39.600 --> 0:07:42.240 If the FED is cutting in the face of inflation 0:07:42.320 --> 0:07:44.360 that has remained above the two percent target for more 0:07:44.400 --> 0:07:46.560 than five years, does that mean you should invest in 0:07:46.560 --> 0:07:48.600 the rest of the world and not necessarily the US. 0:07:49.400 --> 0:07:52.360 We're still team in USA. We've been Team USA for 0:07:52.440 --> 0:07:55.080 a long time. I think you know we did last fall. 0:07:55.120 --> 0:07:58.680 We increased our exposure to em we increase exposure to 0:07:59.080 --> 0:08:00.920 national develop and I think a lot of times people 0:08:00.960 --> 0:08:02.600 just think about, hey, it has to be either or, 0:08:02.840 --> 0:08:05.160 and I say this both with a bias, and our 0:08:05.200 --> 0:08:07.040 bias is still with the US. We still think that's 0:08:07.080 --> 0:08:10.040 the innovation. What we also look at is when we 0:08:10.040 --> 0:08:12.920 look at the last decade of international and the performance, 0:08:13.120 --> 0:08:15.880 you can overlay that with earning trends, and the earner's 0:08:15.920 --> 0:08:18.080 momentum for the US has been stronger that whole time. 0:08:18.120 --> 0:08:20.239 So what we're looking forward to, really say it's time 0:08:20.280 --> 0:08:23.280 to go even heavier into the international markets is to 0:08:23.320 --> 0:08:24.840 see those earning trends move up. 0:08:24.880 --> 0:08:27.160 We have seen better price action, valuations are cheap. 0:08:27.200 --> 0:08:31.320 Sentiment is has been negative coming into this year, but 0:08:31.400 --> 0:08:34.559 we still haven't seen the earnings. Now em emerging markets 0:08:34.720 --> 0:08:37.559 is more of a tech play relative to say the EFI, 0:08:37.600 --> 0:08:40.439 which is more of the kind of sickle financials, industrials 0:08:40.480 --> 0:08:41.240 and things of that nature. 0:08:41.240 --> 0:08:42.960 Okaith, can we just go through the tight set? What 0:08:43.000 --> 0:08:45.880 were you expecting to see and how quickly were you 0:08:45.920 --> 0:08:46.760 expecting to see it? 0:08:47.000 --> 0:08:49.720 I don't know that I had expectations when it was 0:08:49.760 --> 0:08:52.600 going to come through. It's listen, it's a cloudy period 0:08:52.960 --> 0:08:54.959 from our head of economics. So I feel bad for 0:08:55.040 --> 0:08:56.400 him every day, even though he had a little bit 0:08:56.400 --> 0:08:58.680 of a vacation, and for me and for what we do. 0:08:58.840 --> 0:09:00.600 I mean, I just go back to the profits. 0:09:00.640 --> 0:09:02.520 I'm focused on what the companies are saying, which tends 0:09:02.520 --> 0:09:05.240 to be more forward looking anyway. So and we also 0:09:05.280 --> 0:09:07.520 have to remember, I'd rather have data. But we also 0:09:07.559 --> 0:09:10.040 had jobs numbers earlier this year that were revised down 0:09:10.080 --> 0:09:13.520 by nine hundred thousand, so we all want the data. 0:09:13.600 --> 0:09:14.680 It's still the goal standard. 0:09:14.840 --> 0:09:16.480 It makes it cloudy, but I think we still have 0:09:17.000 --> 0:09:20.160 enough information from these private sources, along with what companies 0:09:20.160 --> 0:09:22.720 are telling us today, to say that the economy is 0:09:22.720 --> 0:09:25.040 still kind of muddling along. And then we also know 0:09:25.160 --> 0:09:27.080 some of the factors that we talked about next year 0:09:27.360 --> 0:09:29.480 why this should be potentially a little bit of of 0:09:29.559 --> 0:09:31.840 an uptake in our review. And then you know, we've 0:09:31.840 --> 0:09:34.000 talked a lot about the FED. Maybe this clouds their 0:09:34.080 --> 0:09:37.000 decision as well. I don't think the FED is the 0:09:37.000 --> 0:09:40.280 most important thing for this bull market to continue. I 0:09:40.280 --> 0:09:43.360 think it's probably more important for the rotation trade that 0:09:43.400 --> 0:09:46.600 the FED continues to cut rates and we move towards 0:09:46.640 --> 0:09:47.320 that three percent. 0:09:47.920 --> 0:09:49.720 On the tech side, it's not the main driver. 0:09:50.000 --> 0:09:51.880 So you know, all in all, we'll get through this, 0:09:52.000 --> 0:09:54.839 and you know, three or four months will be talking 0:09:54.880 --> 0:09:56.720 about something else. Maybe well, we're talking about the midterm 0:09:56.760 --> 0:09:59.559 elections by then, which will be coming as the main 0:09:59.600 --> 0:10:01.040 headline in twenty twenty six. 0:10:01.120 --> 0:10:03.559 Well, midterm elections are going to be determined by the economy, 0:10:03.600 --> 0:10:06.920 and the economy has seemed increasingly divorced from corporate earnings, 0:10:06.920 --> 0:10:09.520 which you've talked about at what point is that unsustainable? 0:10:10.480 --> 0:10:12.440 Yeah, it's I mean, it's going back to what we 0:10:12.480 --> 0:10:15.840 talked about earlier, you know, the you know, I think 0:10:16.080 --> 0:10:19.319 something else we have to think about, too, is we focused. 0:10:18.920 --> 0:10:20.719 A lot about job growth, but we still have. 0:10:20.760 --> 0:10:22.760 Almost you know, somewhere around one hundred and sixty million 0:10:22.840 --> 0:10:24.960 people work. And so I think what's also important, not 0:10:25.000 --> 0:10:28.640 just the monthly jobs numbers, is wage growth staying above inflation. 0:10:28.800 --> 0:10:31.680 And right now it is so as long as we 0:10:31.679 --> 0:10:34.439 can continue that happening, and we have those folks, you 0:10:34.440 --> 0:10:36.160 know that one hundred and sixty million people work in 0:10:36.640 --> 0:10:39.319 the consumer can still move forward, maybe not at the pace, 0:10:39.400 --> 0:10:42.439 but we still have this kind of you know, it's 0:10:42.559 --> 0:10:44.559 if you don't have a job, it's difficult. Some of 0:10:44.600 --> 0:10:46.800 the college kids we're seeing not getting a job, it's difficult. 0:10:46.920 --> 0:10:49.120 So that I think that divergence is likely to persist, 0:10:49.200 --> 0:10:50.920 especially as you throw on AI on top of that. 0:10:51.160 --> 0:10:53.440 Just real quick here going forward, what's more important to 0:10:53.440 --> 0:10:55.160 hatch against inflation or a slowdown? 0:10:55.920 --> 0:10:57.920 I think a slowdown. I think a slow down. 0:10:58.000 --> 0:11:00.120 I know our base case is for those reasons that 0:11:00.160 --> 0:11:01.319 we is a little bit of an uptick, but the 0:11:01.400 --> 0:11:04.120 labor market has been somewhat soft, and I mentioned already 0:11:04.360 --> 0:11:06.800 we are seeing some of those other factors like housing, 0:11:06.880 --> 0:11:09.520 oil prices are somewhere down, and even though wage growth 0:11:09.600 --> 0:11:12.679 is above inflation, wage growth is slowing, so you know, 0:11:13.160 --> 0:11:15.200 and that can change quickly. So I would say that 0:11:15.280 --> 0:11:17.840 the hedge against would be the slower economy. And that's 0:11:17.840 --> 0:11:20.360 why maybe you also, I mean you've seen a little 0:11:20.360 --> 0:11:23.120 bit of rotation. Maybe it's more specific, but some healthcare. 0:11:23.520 --> 0:11:23.680 You know. 0:11:23.679 --> 0:11:25.120 What I'd be looking forward to to say that the 0:11:25.120 --> 0:11:27.559 market's actually concerned about a slow down would be things 0:11:27.600 --> 0:11:29.520 like consumer staple starting to do better. We're not seeing 0:11:29.520 --> 0:11:31.640 that as of yet, but that's what we'll be watching 0:11:32.000 --> 0:11:32.920 early into the new year. 0:11:33.840 --> 0:11:46.160 Stay with US Multilomberg surveillance coming up after this. So 0:11:46.280 --> 0:11:48.960 stock rally on pause following the end of the longest 0:11:48.960 --> 0:11:52.360 government shutdown in history, Kevin Swab Kevin Gordon I was 0:11:52.440 --> 0:11:55.280 Swap likely saying it's likely we'll have to wait until 0:11:55.280 --> 0:11:57.280 the beginning at twenty six to get a clear read 0:11:57.559 --> 0:11:59.760 on the health of the labor market, raising the risk 0:11:59.800 --> 0:12:03.120 of a shocked to markets, especially if the Delight Jobs 0:12:03.120 --> 0:12:06.600 report are released all at once. Kevin Gordon joins us. 0:12:06.600 --> 0:12:08.720 Now for more, Kevin, good to see. Hello John Pharaoh, 0:12:08.800 --> 0:12:11.160 I'll get that right. Thanks for catching on withous. Let's 0:12:11.160 --> 0:12:13.080 talk about this market and the prospect of two thousand 0:12:13.080 --> 0:12:15.199 dollars checks. Has that changed the outlook for you this 0:12:15.320 --> 0:12:17.640 shift towards affordability. 0:12:17.760 --> 0:12:19.679 Well, I think the prospect of the checks, I mean, 0:12:19.720 --> 0:12:21.960 we'll see what the you know, how that actually nets 0:12:21.960 --> 0:12:24.800 out if we learned anything from the past five years 0:12:24.840 --> 0:12:28.079 of issuing out checks to Americans and directly giving them 0:12:28.080 --> 0:12:31.600 money in several rounds. Yes, you could argue it contributes 0:12:31.640 --> 0:12:34.199 to an inflation problem, but it also doesn't solve anything 0:12:34.200 --> 0:12:37.040 on the sentiment or the confidence front. As you pointed 0:12:37.040 --> 0:12:39.600 out earlier in the show, you know, alluding to this 0:12:39.760 --> 0:12:42.720 vi depression that we've started to think about. You know, 0:12:42.840 --> 0:12:45.960 cinemas only continued to get worse as inflation has remained 0:12:46.080 --> 0:12:48.640 sticky and above the FEDCE target, and price levels have 0:12:48.800 --> 0:12:52.160 been still so egregiously above where they were pre pandemic. 0:12:52.280 --> 0:12:54.679 So I'm not so sure that it's necessarily going to 0:12:54.720 --> 0:12:56.680 be an elixir for what ails a lot of the 0:12:56.720 --> 0:12:59.440 economy from a sentiment standpoint, and then I think from 0:12:59.440 --> 0:13:00.640 an inflation standpoint. 0:13:00.640 --> 0:13:02.840 More importantly, I certainly don't. 0:13:02.679 --> 0:13:05.240 Think it'll do anything to help bring inflation a little 0:13:05.240 --> 0:13:07.360 bit lower, because even if you take out what was 0:13:07.400 --> 0:13:11.000 a really strong disinflationary force in the September CPI, which 0:13:11.080 --> 0:13:13.800 was shelter. I know there's a lot of controversy around 0:13:13.920 --> 0:13:17.439 excluding certain components, but the core parts of inflation are 0:13:17.480 --> 0:13:20.640 still relatively sticky. If you do core services X, housing 0:13:20.640 --> 0:13:23.280 and CPI, you're still running above three percent on a 0:13:23.360 --> 0:13:24.280 year over year basis. 0:13:24.400 --> 0:13:27.160 That hasn't really bunched. You look at a year of a. 0:13:27.160 --> 0:13:30.080 Chart of just general year over year change in CPI 0:13:30.760 --> 0:13:33.640 that's hovering closer to three percent on average, not too so. 0:13:34.000 --> 0:13:35.760 There is a little bit of a difference in the 0:13:35.800 --> 0:13:38.000 inflation backdrop post pandemic, and we're sort of living in 0:13:38.040 --> 0:13:39.719 and experiencing at real time every day. 0:13:39.760 --> 0:13:41.959 The pass is this becomes a dated conversation because we 0:13:42.000 --> 0:13:44.440 don't have updated data. Yeah, I might not get another 0:13:44.440 --> 0:13:47.079 CPI report for quite a while. What's been the biggest 0:13:47.080 --> 0:13:49.280 problem for you the absence of data or the data 0:13:49.320 --> 0:13:49.880 we have seen. 0:13:50.520 --> 0:13:52.400 I think it's been the absence, and I think it 0:13:52.400 --> 0:13:53.560 will be the absence for a while. 0:13:53.559 --> 0:13:55.160 You know, as you alluded to in the quote. 0:13:55.559 --> 0:13:58.720 I'm getting sort of more convinced that it's going to 0:13:58.760 --> 0:14:01.520 take until probably the end of January, maybe well into 0:14:01.880 --> 0:14:03.600 to the end of the first quarter of twenty six 0:14:03.720 --> 0:14:05.440 until we get a clear read at least on something 0:14:05.480 --> 0:14:08.280 like the labor market, because we're looking at this data 0:14:08.360 --> 0:14:12.640 hole in October hol e not whol e, where you're 0:14:13.040 --> 0:14:15.560 likely going to miss. Even if you get some reports 0:14:15.559 --> 0:14:18.160 like the non farm payrolls report, it's probably not going 0:14:18.240 --> 0:14:20.760 to be clean. I mean, retroactively, you have to ask businesses, 0:14:20.840 --> 0:14:22.280 you know, for the Establishment survey, what the. 0:14:22.280 --> 0:14:23.600 Employment situation was like. 0:14:23.800 --> 0:14:25.800 I think the likelihood you get the household survey is 0:14:25.840 --> 0:14:28.400 pretty low, which that's not going to mean that the 0:14:28.400 --> 0:14:32.000 payroll number is meaningless, but I think it will take 0:14:32.040 --> 0:14:34.720 down a lot of the sort of you know, the 0:14:35.080 --> 0:14:36.800 scale of it, or at least the importance of it, 0:14:36.840 --> 0:14:38.480 because if you have the payroll number but you don't 0:14:38.480 --> 0:14:40.360 have the unemployment rate, we don't really understand what the 0:14:40.360 --> 0:14:43.280 supply situation is looking like. So because of that, and 0:14:43.280 --> 0:14:45.440 because you're going to then be missing revisions, and you're 0:14:45.520 --> 0:14:48.240 also past the reference period now for November. I mean, 0:14:48.240 --> 0:14:50.200 there's a whole list and I could go on, but 0:14:50.280 --> 0:14:51.840 I think all of that adding up gets you to 0:14:51.880 --> 0:14:53.840 a point where into the first quarter of twenty six 0:14:53.920 --> 0:14:55.880 you probably have maybe a little bit of a cleaner 0:14:55.880 --> 0:14:58.640 read on labor. Plus you get the benchmark provisions towards 0:14:58.640 --> 0:15:00.280 the beginning of next year. So that's going to also 0:15:00.320 --> 0:15:01.960 be a pretty key, pretty key driver. 0:15:02.120 --> 0:15:04.600 So let's talk about the vibe session turning into a 0:15:04.720 --> 0:15:07.800 vibe pression. The idea of how much you have seen 0:15:07.840 --> 0:15:10.840 sentiment data fall off a cliff. It has recently been 0:15:10.880 --> 0:15:13.400 gut checked by the hard data coming from the government 0:15:13.720 --> 0:15:15.760 that actually things are okay, and you're seeing that gut 0:15:15.840 --> 0:15:18.680 check if there is one right now coming from the earnings. 0:15:19.160 --> 0:15:22.480 Is this something that's sustainable, the sort of breakdown between 0:15:22.640 --> 0:15:25.040 the vibes and how people feel and what actually is 0:15:25.040 --> 0:15:26.400 going on in economic activity. 0:15:26.480 --> 0:15:28.280 Well, it's sustainable in the sense and I'll give it, 0:15:28.320 --> 0:15:29.800 you know, I'll give a hat tip for a vibe 0:15:29.800 --> 0:15:32.520 session coin by my pelk Kyla Scanlon. So we're sort 0:15:32.520 --> 0:15:35.800 of building on the framework that she established. But you know, 0:15:35.920 --> 0:15:37.800 I think that it's sustainable in the sense that it's 0:15:37.840 --> 0:15:39.800 become the norm, whether you like it or not. I mean, 0:15:39.880 --> 0:15:42.240 just look at the math, look at the data. Post pandemic. 0:15:42.280 --> 0:15:44.520 In the past five years, you've only continued to see 0:15:44.560 --> 0:15:45.440 sentiment get worse. 0:15:45.800 --> 0:15:47.120 I know you missed gets a ton of. 0:15:47.040 --> 0:15:49.280 Flack because of maybe a little bit of a political 0:15:49.280 --> 0:15:50.800 bias and how much is driven by that. 0:15:51.160 --> 0:15:53.120 But the current conditions component of. 0:15:53.040 --> 0:15:55.120 The you miss sentiment and nexis at an all time low, 0:15:55.360 --> 0:15:58.360 meaning you have a base of consumers saying this is 0:15:58.560 --> 0:16:01.080 the current environment is worse than the financial crisis. That's 0:16:01.080 --> 0:16:03.320 worse than the nineteen eighties, it's worse than the late 0:16:03.400 --> 0:16:04.240 nineteen seventies. 0:16:04.600 --> 0:16:06.440 So I think it's sustainable. 0:16:05.840 --> 0:16:08.640 In the sense that sentiment in this cycle, and I 0:16:08.640 --> 0:16:10.840 think for at least the near to medium term is 0:16:10.880 --> 0:16:13.160 not going to be an indicator and a forward looking 0:16:13.160 --> 0:16:16.080 indicator for the trajectory of the economy. And I think 0:16:16.080 --> 0:16:19.200 that's somewhat consistent with how the base of growth has 0:16:19.280 --> 0:16:22.320 been shaped this year, where it's become narrower, it's become 0:16:22.320 --> 0:16:26.280