WEBVTT - Bloomberg Surveillance TV: August 21, 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 0:00:22.440 --> 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 --> 0:00:37.600 Terminal and the Bloomberg Business App. We begin with our 0:00:37.680 --> 0:00:39.800 top story, the S and P five hundred Snapping and 0:00:39.840 --> 0:00:43.800 eight day winnistry. As traders await payrolls, revisions and fed minutes, 0:00:43.960 --> 0:00:47.000 seem as Shaff Prince Balassa management seeing stocks grinding higher, 0:00:47.040 --> 0:00:50.760 writing this this backdrop is still constructive for risk and 0:00:50.840 --> 0:00:53.760 a six trillion dollar mountain of cash is ready to 0:00:53.840 --> 0:00:57.360 fuel risk assets. Seeman joins us now for more, so, Seama, 0:00:57.480 --> 0:01:00.400 let's go to the punchline. A six trillion dollar mountain cash? 0:01:00.440 --> 0:01:01.920 What is that match in a cash and why do 0:01:01.920 --> 0:01:03.920 you think it's going to be unlocked anytime soon? 0:01:05.319 --> 0:01:07.120 Hey? John, Well, look I think there's a couple of 0:01:07.200 --> 0:01:09.039 reasons we've seen for the last couple of years, and 0:01:09.040 --> 0:01:11.319 investor has become cautious. We know the reasons why there's 0:01:11.360 --> 0:01:14.600 been COVID, there's a regional banking crosis. But also potentially 0:01:14.640 --> 0:01:17.200 the most important is that people have been able to 0:01:17.240 --> 0:01:20.679 actually make some kind of really interest on those savings. 0:01:21.000 --> 0:01:24.480 We are on the verge of FED cuts likely to 0:01:24.480 --> 0:01:26.800 move in a slightly faster pac certainly than what people 0:01:26.800 --> 0:01:29.560 are anticipating just a few months ago. So sitting in 0:01:29.600 --> 0:01:32.520 cash is no longer going to be attractive. And I 0:01:32.520 --> 0:01:34.560 do think investors, of course, you need to take into 0:01:34.600 --> 0:01:38.080 account the entire backdrop. What are we expecting for risk assets? 0:01:38.080 --> 0:01:40.080 But we do still think there's opportunities and there's a 0:01:40.080 --> 0:01:41.720 lot of reinvestment risk Satman. 0:01:41.760 --> 0:01:43.920 This is the important question. What is the backdrop? Because 0:01:43.920 --> 0:01:46.039 you can have a situation where people pile into cash 0:01:46.080 --> 0:01:48.800 even more even as rates come down, because they're looking 0:01:48.840 --> 0:01:51.800 to de risk away from risk assets. What makes you 0:01:51.800 --> 0:01:53.360 think they're going to go in the other direction as 0:01:53.400 --> 0:01:55.520 rate cuts start to come in. What is it about 0:01:55.560 --> 0:01:57.560 the growth backdrop that tells you things are going to 0:01:57.560 --> 0:02:00.400 remain pretty strong? Yeah, and I. 0:02:00.360 --> 0:02:02.000 Would say that. I think in the last couple of 0:02:02.040 --> 0:02:04.480 weeks there, of course, there's been a lot of revisions 0:02:04.560 --> 0:02:07.160 and I think it's FED, so there's increasing uncertainty at 0:02:07.200 --> 0:02:10.920 the moment. We're still in that soft landing camp like 0:02:11.000 --> 0:02:13.040 everyone else. We've spent the last two weeks pouring over 0:02:13.160 --> 0:02:15.640 all the data, the Magro data, the consumer the labor 0:02:16.040 --> 0:02:18.360 balance sheets, et cetera, and we're not really seeing any 0:02:18.480 --> 0:02:21.120 clear signs of weakness. We know that there's an economic 0:02:21.160 --> 0:02:23.480 slowdown that should be of no surprise to anyone. It's 0:02:23.520 --> 0:02:26.600 been underway, I think since the beginning of Q two 0:02:26.680 --> 0:02:29.920 of this year, but a slowdown doesn't necessarily need to 0:02:29.960 --> 0:02:33.239 transition to recession. We think that the FED has got 0:02:33.280 --> 0:02:36.520 a lot of room to cut rates. So actually, for us, 0:02:36.520 --> 0:02:39.799 the risk of recession is fairly low, and against that backdrop, 0:02:39.919 --> 0:02:43.200 equities can still perform fairly well. We're not looking at 0:02:43.240 --> 0:02:46.280 bumper games like you saw in twenty twenty three or 0:02:46.320 --> 0:02:48.480 sethy in Q one of this year, but that's still 0:02:48.520 --> 0:02:49.960 some positive gains to be made. 0:02:50.160 --> 0:02:52.760 Sima. I love that you go here because Trason McMillian 0:02:52.840 --> 0:02:56.079 yesterday was saying of Wes Fargo that she sees the 0:02:56.160 --> 0:02:59.440 six trillion dollars in money market assets heading into equities, 0:02:59.480 --> 0:03:01.959 maybe a bit more than longer term bonds, Bob Michael 0:03:02.160 --> 0:03:04.800 of JP Morgan Asset Management saying it will flood into 0:03:04.840 --> 0:03:07.560 all sorts of core bond funds, leading ten year treasure 0:03:07.639 --> 0:03:11.240 yields at three percent are potentially lower. Do you agree 0:03:11.240 --> 0:03:12.480 with that type of assessment. 0:03:14.000 --> 0:03:17.040 So, I think there's a lot of opportunities across the 0:03:17.080 --> 0:03:19.399 equity set. You know, you just look outside the US 0:03:19.440 --> 0:03:21.200 as well, and I think there's a lot of opportunities 0:03:21.480 --> 0:03:24.919 on the bond side. You know, I don't know if 0:03:24.919 --> 0:03:27.040 we're going to see ten years quite that low. I 0:03:27.040 --> 0:03:29.120 think there's so many other factors that play at the moment, 0:03:29.520 --> 0:03:31.720 particularly in an election year, that at least for the 0:03:31.760 --> 0:03:35.280 time being, that downder pressure is probably somewhat limited. But 0:03:35.320 --> 0:03:36.960 certainly I do think there's a lot to go into 0:03:37.000 --> 0:03:39.920 those core bond funds. There are question marks around high yield, 0:03:39.920 --> 0:03:42.320 around an economic slowdown, which is why there's still so 0:03:42.480 --> 0:03:46.200 much interest in that investment grade market. So actually, we 0:03:46.200 --> 0:03:48.440 think there's an opportunity set across not just equities and 0:03:48.480 --> 0:03:51.320 not just fixed income, but even across real assets. And 0:03:51.360 --> 0:03:53.720 I so that's the reason why. You know, yes, the 0:03:53.760 --> 0:03:55.680 economic backdrop is a little bit more uncertain than it 0:03:55.800 --> 0:03:57.920 was two or three weeks ago, but it's still really 0:03:57.960 --> 0:03:59.920 important that investors do start to think they look one 0:04:00.040 --> 0:04:03.280 fed cut start cash is no longer attractive, and actually 0:04:03.280 --> 0:04:05.240 staying in cash is probably going to be your biggest risk. 0:04:05.520 --> 0:04:07.840 Going back to where we started, John talking about a 0:04:07.840 --> 0:04:09.640 good kind of ray cut and a bad kind of 0:04:09.760 --> 0:04:12.720 ray cut in terms of what the backdrop is in 0:04:12.800 --> 0:04:15.640 terms of a good economy or a bad economy. Today 0:04:15.680 --> 0:04:19.560 we do get those payrolls revisions, the initial payrolls revisions 0:04:19.640 --> 0:04:22.880 in the year ended in March. Expectation is fuzzy, it's 0:04:22.880 --> 0:04:24.839 all over the place. But if we see a revision 0:04:24.880 --> 0:04:28.520 of say a million fewer jobs as reported initially in 0:04:28.560 --> 0:04:30.840 that period of time, does that change review. 0:04:32.400 --> 0:04:34.400 It doesn't change the view, but of course it's going 0:04:34.440 --> 0:04:36.159 to add to the impression that the third is behind 0:04:36.160 --> 0:04:37.920 the cut, and the third is going to have to 0:04:37.960 --> 0:04:41.839 accelerate its movement somewhat more. It's really tough, though, you know, 0:04:41.880 --> 0:04:43.440 you were just saying that there's a lot of difficulty, 0:04:43.480 --> 0:04:46.600 a lot of risk in focusing on one just one 0:04:46.680 --> 0:04:49.200 data point. We know that payrolls are all over the place. 0:04:50.120 --> 0:04:52.320 Even if you think back just at April of this year, 0:04:52.360 --> 0:04:54.800 where you had a revision down to I think it 0:04:54.839 --> 0:04:56.840 was a one sixteen mark, and then the next month 0:04:56.880 --> 0:04:59.800 it was back to above two hundred. So it's really 0:05:00.080 --> 0:05:02.839 that you look across a broad set of data across 0:05:02.880 --> 0:05:05.839 the consumer space, also really focusing on what is the 0:05:05.839 --> 0:05:09.359 balancie strength of households and companies, and I think that's 0:05:09.520 --> 0:05:12.719 probably going to be very important for building up that's 0:05:12.839 --> 0:05:16.279 the overall picture of the underlying strength of the economy. Bertainly, 0:05:16.279 --> 0:05:18.279 I think it will impact FED pricing. 0:05:18.560 --> 0:05:20.720 Same, let's turn to gold. Some big moves so far 0:05:20.800 --> 0:05:23.800 this year, gold up by something like twenty percent around 0:05:23.800 --> 0:05:25.760 about that. The move this morning we down about a 0:05:25.800 --> 0:05:28.119 quarter of one percent, pulling back from all time highs. 0:05:28.120 --> 0:05:30.479 CBS came out with a note recently and they're looking 0:05:30.480 --> 0:05:32.760 form a move to twenty seven hundred by the middle 0:05:32.760 --> 0:05:34.480 of twenty twenty five, the middle of next year, and 0:05:34.480 --> 0:05:36.279 they give a long list of reasons for this move, 0:05:36.640 --> 0:05:40.479 the FED shift, central bank buying, portfolio hedges. What do 0:05:40.520 --> 0:05:43.400 you think the strongest tail winds behind this move actually are? 0:05:45.720 --> 0:05:47.880 So look, I think the goal the goal movement has 0:05:47.920 --> 0:05:50.240 been it's probably been one of the more interesting areas 0:05:50.279 --> 0:05:52.560 we've had. We've actually maintained a long term exposure to 0:05:52.600 --> 0:05:55.560 that gold in expectation. Then, as you said, the number 0:05:55.600 --> 0:05:57.400 of the factors all the play You've got the FED carts, 0:05:57.440 --> 0:05:59.360 You've got the Central Bank buying, You've got a lot 0:05:59.360 --> 0:06:01.360 of bit the risk, the risky environment at the moment 0:06:01.400 --> 0:06:04.760 as well playing in for us at the moment. I 0:06:04.800 --> 0:06:08.080 think the concerns around the slowdown, they're probably not going 0:06:08.120 --> 0:06:09.320 to go away. They're not going to be cleared up 0:06:09.320 --> 0:06:12.720 in the near term. So I think that upward movement 0:06:12.839 --> 0:06:14.960 for gold is probably here to stay a little bit longer. 0:06:15.120 --> 0:06:17.720 What do you think is should substitute in a portfolio 0:06:17.920 --> 0:06:19.560 at the moment? Are you thinking about that? Where it 0:06:19.600 --> 0:06:24.240 fits in? What are you telling people the gold? Yeah? 0:06:24.360 --> 0:06:26.080 Yeah, I mean I look, I think I think having 0:06:26.120 --> 0:06:29.000 that exposure to real asss is really important. Something around 0:06:29.040 --> 0:06:32.320 the inflation mitigation. To me, that is where gold also 0:06:32.440 --> 0:06:34.120 fits in. So I think it takes a lot of 0:06:34.120 --> 0:06:37.839 different boxes somewhere along, you know, having some kind of 0:06:38.480 --> 0:06:43.279 downward protection but also focusing on what happens if inflation 0:06:43.360 --> 0:06:45.320 does turn out to be sticky. I know we talk 0:06:45.360 --> 0:06:48.200 a lot about recession risk, but to ask, one of 0:06:48.200 --> 0:06:50.240 the key concerns that we're thinking about over the next 0:06:50.279 --> 0:06:52.520 two years or so is what if actually inflation does 0:06:52.560 --> 0:06:54.480 start to take off again once you've got a number 0:06:54.480 --> 0:06:56.919 of FED cards, and then that that becomes more of 0:06:56.920 --> 0:06:59.520 a wire. So I think having that real asset exposure, commodities, 0:07:00.120 --> 0:07:02.680 anything which is a bit of inflation mitigation, still deserves 0:07:02.720 --> 0:07:04.080 to be a core part of any portfolio. 0:07:04.279 --> 0:07:06.120 Just to put a line under that seam. Are you 0:07:06.240 --> 0:07:09.920 saying on the margins real asses should replace long duration bonds? 0:07:11.560 --> 0:07:13.560 I don't think that they should replace. I think that 0:07:13.640 --> 0:07:15.760 there is an area which they are taking a box 0:07:15.800 --> 0:07:18.520 for long duration bonds are important if you know you 0:07:18.560 --> 0:07:21.480 want to have that downward or su I should say 0:07:21.520 --> 0:07:24.640 that protection against downward economic risk. Gold is a slightly 0:07:24.640 --> 0:07:27.440 different element. But I do think that across equities, across 0:07:27.440 --> 0:07:30.960 the fixed income and the alternative space, that does need 0:07:31.000 --> 0:07:33.760 to be exposure across all three because you are ticking 0:07:33.920 --> 0:07:36.440 all your boxes in terms of the risk environment in 0:07:36.440 --> 0:07:37.080 front of us. 0:07:37.080 --> 0:07:39.280 Interesting same as shaff of principle as a management stinger, 0:07:39.320 --> 0:07:50.520 thank yous and slack of apollo shaking off the weakness 0:07:50.520 --> 0:07:53.360 and focusing on the strength. Daily and weekly data shows 0:07:53.360 --> 0:07:56.520 that retail sales are strong, jobless claims are falling, restaurant 0:07:56.560 --> 0:07:59.400 bookings are strong, and their travel is strong. The bottom 0:07:59.440 --> 0:08:01.720 line is that there are no signs of a recession 0:08:02.040 --> 0:08:04.920 in the incoming data. Torson joins us now for more so. 0:08:04.960 --> 0:08:06.000 I think, good morning to here. 0:08:05.960 --> 0:08:06.800 Sir, Monday morning. 0:08:06.920 --> 0:08:08.680 Let's start with these revisions that come in a few 0:08:08.680 --> 0:08:10.880 hours time, and I'll share the estimates that come from Goldman. 0:08:10.960 --> 0:08:14.040 And the range is this wide. Okay, it's anywhere from 0:08:14.040 --> 0:08:18.080 something like three hundred thousand, six hundred thousand or a million, 0:08:18.360 --> 0:08:21.840 anywhere from fifty to eighty five thousand per month. What 0:08:21.880 --> 0:08:22.920 do you make of these numbers? 0:08:23.000 --> 0:08:23.240 JP? 0:08:23.320 --> 0:08:25.560 Morgan three hundred and some think Goldman six hundred to 0:08:26.080 --> 0:08:28.080 a million revised a little bit later this morning. 0:08:28.280 --> 0:08:30.840 I think this is important for the economist, and this 0:08:30.880 --> 0:08:32.960 is important also for the fad, but it really is 0:08:32.960 --> 0:08:35.240 not important for markets. This is looking back in history 0:08:35.440 --> 0:08:38.680 and trying to figure out how much did employment grow, 0:08:38.760 --> 0:08:41.800 and if employment grew a little bit less, then yes, 0:08:41.960 --> 0:08:44.800 of course overall that does send a little bit different 0:08:44.800 --> 0:08:46.640 signal about where we are in the business cycle. But 0:08:46.640 --> 0:08:48.839 broadly speaking, I don't think this will get much weight 0:08:48.880 --> 0:08:49.720 in financial markets. 0:08:49.800 --> 0:08:51.839 What do you think is normal? What's the normal run 0:08:51.960 --> 0:08:54.040 right now for jobs growth? Is it the one fourteen 0:08:54.080 --> 0:08:54.880 of the previous month? 0:08:55.000 --> 0:08:58.000 Well, so, there was a very important paper by Tara 0:08:58.040 --> 0:09:02.920 Watson and Wendy Eelberg from brook Or the Institute that 0:09:03.320 --> 0:09:06.480 produced some estimates that says that we will probably have 0:09:06.679 --> 0:09:09.600 employment growth for the new term at around two hundred thousand, 0:09:09.640 --> 0:09:12.040 a little bit low. So if that's the case, because 0:09:12.040 --> 0:09:14.560 of immigration playing such a big role, we should also 0:09:14.600 --> 0:09:17.000 see a boost to non fun pay rules, but that's 0:09:17.000 --> 0:09:19.520 probably going to overtime fate, so we'll probably get down 0:09:19.559 --> 0:09:22.560 to the long run estimate, which we would to be 0:09:22.559 --> 0:09:23.520 around one hundred thousand. 0:09:23.720 --> 0:09:26.120 That's the question why we took last month so seriously. 0:09:26.160 --> 0:09:28.280 If you don't think we should take the revisions, that 0:09:28.360 --> 0:09:29.199 seriously well. 0:09:29.200 --> 0:09:31.199 But that's also why jobless claims for the last few 0:09:31.240 --> 0:09:34.160 weeks have been signaling that everything is just fine. If 0:09:34.160 --> 0:09:36.439 you also look at a broad range of other indicators, 0:09:36.440 --> 0:09:39.040 as we just ran through both with travel, with the 0:09:39.120 --> 0:09:43.079 restaurant bookings hotel bookings. Also look broadly speaking at how 0:09:43.080 --> 0:09:45.400 many companies going to default as Wiki data also for that. 0:09:45.720 --> 0:09:48.160 We also have a general picture that the economy is 0:09:48.200 --> 0:09:50.360 just not slowing down. This whole narrative as you just 0:09:50.400 --> 0:09:54.240 spoke about, we'll target Walmart, TJ Max, this whole narrative 0:09:54.280 --> 0:09:56.360 that we are slowing down is just not evident in 0:09:56.400 --> 0:09:58.800 the data. So that's why I think that we should 0:09:58.800 --> 0:10:00.880 in markets think about the outdoor for the FED. 0:10:01.120 --> 0:10:04.280 With that background, you've said in the past, over the 0:10:04.280 --> 0:10:06.319 past few months that you didn't think that any rate 0:10:06.360 --> 0:10:09.040 cuts were necessary. This comes at a time, at least 0:10:09.080 --> 0:10:10.640 not this year. This comes at a time we've got 0:10:10.640 --> 0:10:12.840 one hundred basis points of ray cuts being baked into 0:10:12.840 --> 0:10:15.240 the market. You're saying that it's likely most likely that 0:10:15.240 --> 0:10:17.400 the FED is going to go next month. What do 0:10:17.440 --> 0:10:19.600 you think the consequence will be of a FED that 0:10:19.640 --> 0:10:22.280 starts cutting next month at a time when you still 0:10:22.800 --> 0:10:24.599 sounds like don't think it's necessary. 0:10:24.679 --> 0:10:26.559 Well, that's why, as Neil Dadna was just saying, there 0:10:26.600 --> 0:10:29.920 is this whole concept that we are way way too restrictive. 0:10:30.320 --> 0:10:32.839 But that is only if you have our star or 0:10:32.880 --> 0:10:35.000 whether the FIT is going at a much lower level, 0:10:35.080 --> 0:10:37.000 maybe say two and a half or two point eight, 0:10:37.080 --> 0:10:39.280 as the long run Dot says, then it's true that 0:10:39.320 --> 0:10:41.000 we are restrictive, then you need to see the FED 0:10:41.040 --> 0:10:43.640 cutting rates quickly. But what if our star what where 0:10:43.640 --> 0:10:46.360 we're going is more close to four four and a half, 0:10:46.559 --> 0:10:48.920 then we're not in a hurry. So the main test 0:10:49.000 --> 0:10:50.800 of the answer to your question is what is the 0:10:50.800 --> 0:10:54.079 incoming data telling us the FED last height rates in 0:10:54.160 --> 0:10:57.880 July of twenty twenty three, and still now twelve thirteen 0:10:57.880 --> 0:11:00.280 months later, we're still waiting for the data to slow down, 0:11:00.320 --> 0:11:01.960 and it's not having in any meaningful way. So if 0:11:02.000 --> 0:11:06.080 Godeau didn't arrive, here were the last that really eighteen 0:11:06.320 --> 0:11:09.000 twenty four months, why should Godo arrive in August of 0:11:09.000 --> 0:11:09.960 twenty twenty four. 0:11:10.040 --> 0:11:12.400 Some people say Goodo is leaving his sort of remnants 0:11:12.400 --> 0:11:14.440 in different places and giving us a sense that maybe 0:11:14.440 --> 0:11:17.040 he's more present than we previously thought, and more pointing 0:11:17.040 --> 0:11:19.520 to potentially some of the retail sales or some of 0:11:19.559 --> 0:11:22.400 the negative readings into the non firm payrolls that we 0:11:22.480 --> 0:11:25.440 got a couple of weeks ago. At what point do 0:11:25.480 --> 0:11:27.520 you say we still do not need rate cuts, that 0:11:27.559 --> 0:11:29.840 you have conviction based on all the strength you were 0:11:29.880 --> 0:11:33.120 just talking about that Goodou is not around, Goodou is 0:11:33.160 --> 0:11:35.800 not coming, and actually this is a very different environmental 0:11:36.480 --> 0:11:37.960 environment for the economy. 0:11:38.000 --> 0:11:40.360 Well, I think we see that reflected in speeches by 0:11:40.480 --> 0:11:43.480 different Airform C members. Some Airfirm C members, including Niga Boeman, 0:11:43.520 --> 0:11:46.400 have been saying, well, hold on, I need more evidence 0:11:46.480 --> 0:11:49.199 that we should cut interest rates. Others are more convinced. 0:11:49.440 --> 0:11:52.400 So getting the committee together for JPAL and making sure 0:11:52.440 --> 0:11:55.440 that the committee is moving gradually in the direction of 0:11:55.480 --> 0:11:57.920 interest rates moving Loah, that does take some time. So 0:11:57.960 --> 0:12:00.280 I think they have agreed now that they will cut 0:12:00.280 --> 0:12:03.200 interest rates twenty five basis points in September. But after that, 0:12:03.480 --> 0:12:05.959 I think everything is open because the data it's not 0:12:06.120 --> 0:12:10.360 slowing down. And again the retailers reporting earnings directly, the 0:12:10.480 --> 0:12:13.600 Walmart CEO said, we're not seeing broad based slow down 0:12:13.679 --> 0:12:16.040 for the consumer. We need to take that seriously when 0:12:16.080 --> 0:12:18.600 that's seventy percent of GDP. So yes, I do understand 0:12:18.600 --> 0:12:21.079 that in markets, we quote unquote want the economies to 0:12:21.120 --> 0:12:23.640 slow down, and we're so hooked on the narrative from 0:12:23.679 --> 0:12:26.200 the FIT that interest rates need to normalize. But we 0:12:26.320 --> 0:12:29.000 have plenty of time for normalizing interest rates. So that's 0:12:29.000 --> 0:12:31.600 why let's get that rate cut here on the September 0:12:31.640 --> 0:12:33.640 the eighteenth, and that's what JAPO will see here at 0:12:33.679 --> 0:12:36.160 Jackson Hall. But after that, I still think that they 0:12:36.160 --> 0:12:38.760 are open to well, let's wait and see exactly how 0:12:38.800 --> 0:12:39.559 the data plays out. 0:12:39.600 --> 0:12:41.480 It's also it just seems to me and to most people, 0:12:41.559 --> 0:12:43.199 the focus has shifted to the other side of the 0:12:43.280 --> 0:12:45.880 jill mandate. There's a focus now on the labor market. 0:12:45.880 --> 0:12:48.360 And even if you're confident constructive about the future for 0:12:48.480 --> 0:12:51.760 risk mitigation, risk management purposes, you want to achieve interest 0:12:51.840 --> 0:12:53.600 rates a little bit from here. Maybe you go twenty 0:12:53.600 --> 0:12:55.640 five and you go twenty five again. But it's the 0:12:55.679 --> 0:12:58.120 other side of the mandate that has been completely neglected 0:12:58.120 --> 0:13:00.840 over the last two months. I would say inflation. You 0:13:00.880 --> 0:13:04.480 mentioned Governor Bowmen. Governor Bowman talked about upside risk to inflation, 0:13:04.600 --> 0:13:07.280 reiterating her concerns, went through a long list of things, 0:13:07.720 --> 0:13:12.160 increasing geopolitical tensions, additional fiscal stimulus, and increased demand for 0:13:12.200 --> 0:13:15.000 housing due to integration. Do you think we should be 0:13:15.000 --> 0:13:16.720 a little bit more focused on the thing We've been 0:13:16.760 --> 0:13:18.240 ignorant for the last couple of months. 0:13:18.240 --> 0:13:21.440 So let's be of course clear that inflation did peak 0:13:21.480 --> 0:13:24.400 at nine point one. Now we're two point nine, so 0:13:24.440 --> 0:13:26.600 we are a lot closer to their two percent target. 0:13:27.000 --> 0:13:29.720 But last time we look, two point nine is not two. 0:13:29.800 --> 0:13:31.920 So that's why I think she's highlighting, and several other 0:13:31.960 --> 0:13:34.760 INFORMC members are bringing up the same points and saying, well, 0:13:34.880 --> 0:13:36.959 let's wait a little bit and just make one hundred 0:13:36.960 --> 0:13:39.600 percent sure that we're still moving down towards two percent, 0:13:39.880 --> 0:13:41.920 because the risk is, of course, that if inflation does 0:13:41.920 --> 0:13:44.120 start to move either sideways or on the worst case, 0:13:44.120 --> 0:13:47.000 move higher, then they will need to go back and 0:13:47.000 --> 0:13:49.280 revise their strong just like they did in the beginning 0:13:49.320 --> 0:13:51.000 of the year they said we have three cuts. Now 0:13:51.040 --> 0:13:53.440 it was just one cut. So now the market is 0:13:53.440 --> 0:13:56.000 really getting ahead of its other imboso. During the Viks 0:13:56.080 --> 0:13:59.040 episode and the carry trade on wine from Japan, the 0:13:59.080 --> 0:14:01.040 market was prising up moday that the FED were cut 0:14:01.080 --> 0:14:04.360 six times. So that's why the roller coaster ride here. 0:14:04.400 --> 0:14:07.040 In terms of what the market is pricing, it's important 0:14:07.040 --> 0:14:10.280 to anchor your expectations around what's the incoming data actually showing. 0:14:10.600 --> 0:14:12.600 So we talked to you a couple of months ago. 0:14:12.640 --> 0:14:14.640 You were saying that you could see the strength of 0:14:14.720 --> 0:14:17.280 the market certainly continuing through the end of the year 0:14:17.360 --> 0:14:19.280 on the heels of data that continue to be more 0:14:19.320 --> 0:14:22.320 resilient and stronger than people expect, but that next year 0:14:22.640 --> 0:14:24.200 it could be a problem that you could see that 0:14:24.240 --> 0:14:27.280 fall off a cliff. Have you changed your view as 0:14:27.320 --> 0:14:30.000 you see a greater likelihood of a FED rate cut 0:14:30.400 --> 0:14:34.080 and the potential for maybe some of the pressure to 0:14:34.080 --> 0:14:35.040 be eased before. 0:14:34.760 --> 0:14:37.320 Next year, because I do think that the main reason 0:14:37.320 --> 0:14:39.160 why the economy is holding up so well at the 0:14:39.200 --> 0:14:42.800 moment is that there's a significant tailwind from broadly speaking, 0:14:42.800 --> 0:14:46.280 a higher stock market, tieder credit spreads and easy financial 0:14:46.320 --> 0:14:49.440 conditions across the board, supporting the economy in a very 0:14:49.440 --> 0:14:52.120 broad way. And because of that, that does mean that 0:14:52.160 --> 0:14:54.920 now we have had some correction in the Magnificent seven, 0:14:55.120 --> 0:14:57.480 now that stock markets are beginning to show some signs 0:14:57.480 --> 0:15:00.160 of wabbling a little bit more rallied of course here 0:15:00.200 --> 0:15:03.120 after the carricter right online. But if there is any 0:15:03.200 --> 0:15:05.800 reversal in the strong till wind from the stock market, 0:15:05.920 --> 0:15:08.400 then it would begin to have simplifications in particular for 0:15:08.480 --> 0:15:11.160 middle income and high income consumers, both those who own 0:15:11.280 --> 0:15:13.320 bas in p. Five hundred and own their home, but 0:15:13.400 --> 0:15:16.600 also those who own credit private credit included where the 0:15:16.680 --> 0:15:19.720 cash flows have been basically the best levels in decades. 0:15:20.000 --> 0:15:22.680 Anyone who owns FicT income are seeing cash flows on 0:15:22.720 --> 0:15:24.880 the consumer side that are very, very strong, and that 0:15:25.040 --> 0:15:27.200 continues to be a very important till wind to the 0:15:27.200 --> 0:15:27.960 economic outlook. 0:15:28.080 --> 0:15:30.240 Tostin, it's been far too long. Let's do this again soon. 0:15:30.280 --> 0:15:32.800 It's going to see a Torson slock there of apolloed 0:15:43.120 --> 0:15:45.280 here's the view from Ender's person over at New Vein. 0:15:45.320 --> 0:15:47.440 He writes the following, We expect the FED to cut 0:15:47.480 --> 0:15:50.040 by twenty five basis points at each meeting through mid 0:15:50.080 --> 0:15:53.200 twenty five. Larger cuts, including a fifty basis point move 0:15:53.240 --> 0:15:57.160 in September, are possible if incoming labor market data continues 0:15:57.200 --> 0:16:00.800 to deteriorate at the same pace as the July jobs report. 0:16:01.000 --> 0:16:02.520 And this joint is now for more. And it's good 0:16:02.520 --> 0:16:02.960 morning to you. 0:16:03.400 --> 0:16:03.960 Good morning. 0:16:04.000 --> 0:16:05.880 We talked a lot about the job's revisions. We get 0:16:05.880 --> 0:16:07.880 a little bit later this morning. Talston Slot came on 0:16:07.880 --> 0:16:11.160 the program from Apollo and basically cause poor threes in 0:16:11.200 --> 0:16:13.480 cold water all over the conversation, at least from I've 0:16:13.520 --> 0:16:16.080 been having all morning. I said, it won't matter to market. 0:16:16.440 --> 0:16:18.000 Do you think this is going to matter to markets 0:16:18.000 --> 0:16:18.520 at ten am. 0:16:19.320 --> 0:16:21.640 I'm actually more in tours this camp that I don't 0:16:21.640 --> 0:16:23.200 think it's going to matter a whole lot is that 0:16:23.640 --> 0:16:26.840 I think it's it's a backward looking number. Of course, 0:16:26.920 --> 0:16:31.200 it's a year today through March, so it's slightly outdated 0:16:31.200 --> 0:16:34.600 at this point. I think it's a number of economists 0:16:34.600 --> 0:16:37.800 will definitely digest and kind of take a harder look at. 0:16:37.800 --> 0:16:40.640 But from a market perspective, I think we're really more 0:16:40.680 --> 0:16:43.360 focused on what's happening here going forward, and obviously the 0:16:43.360 --> 0:16:47.080 most recent data was more interesting, and we're more focused 0:16:47.080 --> 0:16:49.560 on what's coming here going forward. So I would say 0:16:49.880 --> 0:16:52.200 historically this has not been a number has been all 0:16:52.280 --> 0:16:55.040 our market driven. I don't anticipate it to be today. 0:16:55.080 --> 0:16:57.160 Don't you think what we've been in films where we're going? 0:16:57.680 --> 0:16:59.680 And the reason I asked that question. If Goldman's right 0:16:59.680 --> 0:17:01.920 and we get revision low of anywhere between fifty to 0:17:01.960 --> 0:17:05.200 eighty five thousand jobs per month, wouldn't we have traded 0:17:05.240 --> 0:17:06.880 on that data a little bit differently over the last 0:17:06.880 --> 0:17:07.320 twelve months. 0:17:07.359 --> 0:17:07.520 Yeah? 0:17:07.520 --> 0:17:10.399 I mean I think today this year, given the job marks, 0:17:10.400 --> 0:17:12.959 this very much front and center in terms of focus 0:17:13.080 --> 0:17:15.639 and I think the markets shifted from an inflation focus 0:17:15.680 --> 0:17:17.440 to more of a job market is focused right now, 0:17:17.480 --> 0:17:19.760 So I do think this year, at this time around, 0:17:19.800 --> 0:17:22.919 it's more of a more interesting data point. But at 0:17:22.960 --> 0:17:25.720 the same time, I think the numbers, if you look 0:17:25.800 --> 0:17:28.720 from like three hundred thousand and two million, that the 0:17:28.880 --> 0:17:32.280 estimates are very very wide, So economists can't even kind 0:17:32.280 --> 0:17:35.200 of agree on what the numbers should be here. So yeah, 0:17:35.240 --> 0:17:37.479 it's a data point. I think we have to digest it. 0:17:37.560 --> 0:17:39.679 But you know, quite frankly, I think the mark is 0:17:39.680 --> 0:17:42.159 going to be looking more forward and to certainly the 0:17:42.240 --> 0:17:44.119 NFP number coming in September. 0:17:44.200 --> 0:17:46.119 Part of the problem is that we've talked about the 0:17:46.119 --> 0:17:49.000 importance of data dependency, and then person after person comes 0:17:49.040 --> 0:17:51.480 on and says, but does the data actually matter? And 0:17:51.520 --> 0:17:54.040