WEBVTT - Putin Ready for Ukraine Truce, Jobs Report 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.560 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.600 --> 0:00:18.520 Eastern on Applecarclay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.880 Listen on demand wherever you get your podcasts, or watch 0:00:21.960 --> 0:00:23.480 us live on YouTube. 0:00:24.040 --> 0:00:26.079 Alex Steel and Paul Sweeney live here in our Bloomberg 0:00:26.120 --> 0:00:29.160 Interactive Broker Studio streaming live on YouTube. Sohead every to 0:00:29.200 --> 0:00:31.960 YouTube dot com search Bloomberg podcast now and that's where 0:00:32.000 --> 0:00:36.320 you'll find us. Geopolitical news coming out of Ukraine and Russia. 0:00:36.360 --> 0:00:40.600 Russia is willing to discuss a temporary Trucian truth in Ukraine, 0:00:40.640 --> 0:00:44.080 provided there is progress toward a final peace settlement. That's 0:00:44.080 --> 0:00:46.840 according to people familiar with the matter in Moscow. Let's 0:00:46.840 --> 0:00:48.800 come more reporting on that. Ross Mathis and joins us 0:00:48.800 --> 0:00:52.400 Bloomberg News Director for Europe, the Middle East and Africa, 0:00:53.520 --> 0:00:55.840 Ros What do you make of this news coming from 0:00:55.880 --> 0:00:56.520 mister Putin? 0:00:56.600 --> 0:00:58.080 How significant could it be? 0:00:59.440 --> 0:01:02.280 Well, it is significant, As you were saying, we've had 0:01:02.520 --> 0:01:06.720 the exclusive information that Vladimir Putin has indicated is open 0:01:07.280 --> 0:01:11.280 to a short term truce on Ukraine with conditions, and 0:01:11.280 --> 0:01:14.520 that this offer has been in fact conveyed to the Americans. 0:01:14.560 --> 0:01:16.760 It was conveyed that meeting that was held in Saudi 0:01:16.800 --> 0:01:20.160 Arabia last month, and it comes before there's talks between 0:01:20.200 --> 0:01:24.640 the US and Ukraine also in Saudi Arabia early next week, 0:01:24.680 --> 0:01:27.680 and the possibility after that of a direct meeting perhaps 0:01:27.720 --> 0:01:30.520 between the presidents of the US and Russia. So what 0:01:30.560 --> 0:01:34.440 this really indicates is that Vladimir Putin does is amenable 0:01:34.480 --> 0:01:35.360 at least. 0:01:35.240 --> 0:01:37.720 To looking at a sea spa in Ukraine. 0:01:37.760 --> 0:01:40.319 He just wants to understand how that fits into the 0:01:40.360 --> 0:01:45.240 broader trajectory towards a longer term piece in Ukraine. And 0:01:45.280 --> 0:01:48.000 so he's got some conditions there that we've reported in 0:01:48.040 --> 0:01:49.520 our story just out a short time ago. 0:01:49.800 --> 0:01:52.800 So we just spoke quite a bit about potential peace 0:01:52.840 --> 0:01:55.240 in Ukraine with no mention of Zelenski. So where is 0:01:55.320 --> 0:01:57.520 Zelenski and Europe been on this potential seaspire. 0:01:58.640 --> 0:01:59.360 Well, that's right. 0:01:59.520 --> 0:02:03.480 Again, this may serve to feed concerns that Ukraine is 0:02:03.560 --> 0:02:07.600 really a recipient in this case in terms of being 0:02:07.640 --> 0:02:10.520 told this is what we're all talking about when it 0:02:10.560 --> 0:02:13.280 comes to their own country, and that's been a concern 0:02:13.360 --> 0:02:16.480 for weeks for Ukraine. But also for many a leader 0:02:16.840 --> 0:02:19.600 in Europe, and the hope is that by having you know, 0:02:19.680 --> 0:02:23.720 Zelinsky express regret for how things went down in that 0:02:23.800 --> 0:02:26.880 recent Oval Office meeting with Donald Trump, that they can 0:02:26.919 --> 0:02:29.480 reset a bit, get towards that minerals deal that was 0:02:29.520 --> 0:02:32.200 supposed to be signed and wasn't signed, and then get 0:02:32.280 --> 0:02:35.800 Ukraine back in the room in the conversation about a ceasefire, 0:02:35.919 --> 0:02:38.800 because again the concern is, does this get driven very 0:02:38.880 --> 0:02:42.040 much by the US and Russia and then Ukraine essentially 0:02:42.080 --> 0:02:44.560 gets told what the parameters of this are and that's 0:02:44.600 --> 0:02:47.679 got to be still a concern for Ukraine at this point. 0:02:48.360 --> 0:02:50.200 Hi, Roz, thank you so much. We appreciate that. 0:02:50.320 --> 0:02:53.520 Roz Matheson, Bloomberg News Director for Europe, the Middle East 0:02:53.560 --> 0:02:57.160 and Africa, on President Putin said to be ready to 0:02:57.200 --> 0:03:01.240 agree to a Ukraine truce with canitions want further reporting 0:03:01.360 --> 0:03:02.000 on that round. 0:03:03.480 --> 0:03:07.160 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:03:07.240 --> 0:03:10.640 weekdays at ten am Eastern on Applecarcklay and Android Auto 0:03:10.720 --> 0:03:13.800 with the Bloomberg Business Up. Listen on demand wherever you 0:03:13.840 --> 0:03:17.040 get your podcasts, or watch us live on YouTube. 0:03:17.639 --> 0:03:19.760 These markets are up there down and that's just in 0:03:19.800 --> 0:03:22.560 the morning and trading. We've got yields coming in here, 0:03:22.560 --> 0:03:25.200 the tenure Treasury four point two five percent yields are 0:03:25.240 --> 0:03:28.720 moving as well. So again another volatle day for a 0:03:28.800 --> 0:03:31.520 volatile week as the market tries to discount a lot 0:03:31.560 --> 0:03:32.320 of policy coming on. 0:03:32.520 --> 0:03:34.079 Washington, DC. Emily Rowland, she. 0:03:34.000 --> 0:03:36.880 Gets paid to do this stuff, co chief investment strategist 0:03:36.920 --> 0:03:41.520 at John Hancock Investment Management up there in Boston. Emily, 0:03:41.600 --> 0:03:43.840 how do you kind of put all these cross currents? 0:03:45.040 --> 0:03:46.760 How do you keep them straight and try to keep 0:03:46.800 --> 0:03:49.680 the eye on the prize, which is longer term performance 0:03:49.720 --> 0:03:50.800 for your funds. 0:03:52.000 --> 0:03:54.680 Yeah, it's tough right now. The macro is really in 0:03:54.720 --> 0:03:58.480 the driver's seed and investors are largely ignoring the fundamental 0:03:58.520 --> 0:04:02.640 backdrop in particular of course, drivings a lot of the 0:04:02.680 --> 0:04:03.720 cross asset action. 0:04:03.880 --> 0:04:05.800 So it can be tough, you know, right now. 0:04:05.840 --> 0:04:08.760 Admittedly, the US is experiencing a bit of a soft 0:04:08.760 --> 0:04:10.320 patch economically speaking. 0:04:10.440 --> 0:04:12.040 The data haven't been great. 0:04:12.080 --> 0:04:16.080 But there have been some bright spots, certainly ism services 0:04:16.120 --> 0:04:18.919 on Wednesday coming in at fifty three and a half 0:04:19.200 --> 0:04:21.719 and the US Jobs report this morning coming in at 0:04:21.760 --> 0:04:25.760 one hundred and fifty one thousand, very modest provisions. 0:04:25.240 --> 0:04:28.120 To the last couple of months, so for now, the labor. 0:04:27.839 --> 0:04:31.279 Market is actually on pretty solid footing. Of course, the 0:04:31.400 --> 0:04:35.279 DOGE announcements around government layoffs haven't been factored into the data, 0:04:35.320 --> 0:04:37.640 so we might need to sort of enjoy it while 0:04:37.680 --> 0:04:40.640 we can, But the US labor market continues to be 0:04:40.720 --> 0:04:43.480 the bright spot here as it relates to the economy. 0:04:44.160 --> 0:04:46.480 What's interesting though, is today we have the Treasury Secretary 0:04:46.800 --> 0:04:49.919 speaking on CNBC saying that there's going to be a 0:04:50.000 --> 0:04:53.400 detox period for the market, that the market, the economy 0:04:53.440 --> 0:04:55.640 has become hooked and we just got addicted to government 0:04:55.640 --> 0:04:58.120 spending and now we're going to detox it. If that 0:04:58.240 --> 0:05:02.239 indeed is the plan, right, we spending off of government spending, 0:05:02.320 --> 0:05:05.080 put it on the private sector, lower rates in order 0:05:05.080 --> 0:05:08.160 to incentivize spending, and then lower taxes as the kicker. 0:05:08.640 --> 0:05:10.160 Do you need a transition for that. 0:05:11.600 --> 0:05:14.080 Yeah, I mean it's a pretty remarkable shift from the 0:05:14.240 --> 0:05:17.880 relentless amount of fiscal spending that we've done over the 0:05:17.920 --> 0:05:20.720 past couple of years. So, Alex, the starting points is 0:05:20.800 --> 0:05:23.800 really high if you look at the jobs have been added. 0:05:23.880 --> 0:05:26.760 Nancy Lazar's got some great statistics on this from Piper 0:05:26.839 --> 0:05:29.159 Sandler about ninety five percent of the jobs that have 0:05:29.200 --> 0:05:31.560 been added over the past year have been in government 0:05:31.640 --> 0:05:32.400 and healthcare. 0:05:32.440 --> 0:05:33.880 That's a massive amount. 0:05:34.200 --> 0:05:36.480 So we're starting from a really tricky point here as 0:05:36.520 --> 0:05:39.760 we impose some of this fiscal austerity, and you're seeing 0:05:39.839 --> 0:05:44.200 it happen really across markets. Meanwhile, overseas, you've actually got 0:05:44.200 --> 0:05:49.000 policy makers in areas like Germany that are proposing. 0:05:48.520 --> 0:05:49.720 Spending measures there. 0:05:49.839 --> 0:05:52.200 So we're seeing a bit of an opposite day play 0:05:52.240 --> 0:05:54.919 out here in terms of less fiscal support in the 0:05:55.040 --> 0:05:58.560 US and more fiscal support and areas that have previously 0:05:58.600 --> 0:06:00.880 been very austere so Emily. 0:06:00.920 --> 0:06:03.800 We had Gina Martin Adams from Bloomberg Intelligence on earlier 0:06:03.800 --> 0:06:07.240 talking about she's seeing some rotation from the US equity 0:06:07.240 --> 0:06:11.239 markets into Europe for just those reasons, concerns about growth here, 0:06:11.520 --> 0:06:15.240 maybe some better expectations for your How are you guys 0:06:15.279 --> 0:06:18.160 thinking about allocation geography geographically? 0:06:19.279 --> 0:06:22.279 I mean, it is just remarkable to see some of 0:06:22.320 --> 0:06:25.280 the moves that we've seen and the huge capital shift 0:06:26.000 --> 0:06:30.480 to areas overseas. International markets just on a tear this year, 0:06:30.640 --> 0:06:35.239 the European you know, the euro surging, so it's quite 0:06:35.279 --> 0:06:39.440 notable we always don't look for a fundamental catalyst right now. 0:06:39.480 --> 0:06:41.480 I think a lot of these moves are based on 0:06:41.600 --> 0:06:45.839 political developments that we talked about. They're based on momentum 0:06:45.880 --> 0:06:50.520 short covering potentially kind of sentiment and optimism driving those moves, 0:06:50.520 --> 0:06:53.520 And when we look underneath the surface, we're really not 0:06:53.760 --> 0:06:57.080 finding a meaningful shift in terms of the earning narrative. 0:06:57.640 --> 0:07:00.920 Analysts are penciling in about twelve percent earning growth in 0:07:00.960 --> 0:07:03.440 the United States this year. It's a little bit off 0:07:03.480 --> 0:07:06.120 fifteen percent that was penciled in a couple of months ago, 0:07:06.200 --> 0:07:09.760 but it's still pretty darn good. Meanwhile, you look overseas 0:07:10.080 --> 0:07:13.880 at EFA and emerging market estimates, they're. 0:07:13.720 --> 0:07:16.200 Not that great. They're in the low single digits. 0:07:16.200 --> 0:07:19.800 So we're just not finding that catalyst from a fundamental standpoint. 0:07:20.200 --> 0:07:23.760 You know, European markets right now, we're pricing in just 0:07:23.920 --> 0:07:28.120 exceptional economic growth and exceptional earnings growth, and we just 0:07:28.160 --> 0:07:30.480 don't see things looking that exceptional. 0:07:30.760 --> 0:07:33.000 So does that mean that the amount of spending that 0:07:33.040 --> 0:07:35.640 Germany is going to do you don't buy it or 0:07:35.720 --> 0:07:37.560 you just don't see it to be immediate? 0:07:39.360 --> 0:07:40.520 I think some of both. 0:07:40.600 --> 0:07:42.520 I mean, we always come into this with a little 0:07:42.520 --> 0:07:45.920 bit of skepticism, and its actual size of the spending 0:07:46.040 --> 0:07:48.040 is still much less than what we spend here in 0:07:48.080 --> 0:07:51.760 the United States, especially from a defense perspective. So we're 0:07:51.800 --> 0:07:53.800 going to need to see how this plays out. We're 0:07:53.800 --> 0:07:56.160 going to need to see if Germany can come out 0:07:56.200 --> 0:07:58.680 of the slump that it's been in for some time 0:07:58.800 --> 0:08:01.600 based on these measures once they get put into place. 0:08:01.680 --> 0:08:04.440 But for now, we've got to focus on the fundamental trends, 0:08:04.640 --> 0:08:07.080 and they're better here in the United States, especially for 0:08:07.240 --> 0:08:11.280 US value stocks, where we're seeing meaningful acceleration in terms 0:08:11.280 --> 0:08:13.360 of earnings estimates into twenty twenty five. 0:08:14.440 --> 0:08:17.240 All right, so back here in the US here, talk 0:08:17.240 --> 0:08:19.720 to us about opportunities and fixed income. I'm hearing more 0:08:19.760 --> 0:08:22.360 and more people say, boy, with this uncertainty out there, 0:08:22.400 --> 0:08:24.080 I'm just going to go clip a coupon, you know, 0:08:24.080 --> 0:08:26.000 and I'll come back in six or twelve months. 0:08:26.880 --> 0:08:29.640 Yeah, we really like the income that's available in high 0:08:29.720 --> 0:08:32.920 quality bonds right now, with the aggregate bond index yielding 0:08:32.960 --> 0:08:36.640 about four and a half percent, it's really competitive versus equities. 0:08:36.679 --> 0:08:39.640 So you know, we're sitting at elevated valuations around twenty 0:08:39.640 --> 0:08:42.760 one and a half times forward earnings on the equity market, 0:08:42.800 --> 0:08:47.120 I mean, still not terrible, but not great. And meanwhile 0:08:47.160 --> 0:08:50.000 you're getting a discount on bonds. We saw a pretty 0:08:50.000 --> 0:08:53.160 meaningful backup this week as bonds traded in sympathy with 0:08:53.280 --> 0:08:56.120 German boons, which just saw the big about a forty 0:08:56.160 --> 0:08:58.560 basis point increase over the course of the week, which 0:08:58.600 --> 0:09:01.200 is the biggest over twenty years. 0:09:01.280 --> 0:09:02.360 But we would look at. 0:09:02.240 --> 0:09:05.720 Those backups as opportunities to lean in if the economic 0:09:05.800 --> 0:09:08.960 data continue to disappoint at the margin, if this soft 0:09:09.000 --> 0:09:12.800 patch continues, we think US bonds here get a bid 0:09:13.080 --> 0:09:16.840 they can benefit. And listen, the dividend yield on the 0:09:16.880 --> 0:09:19.360 S and P five hundreds like one point three percent 0:09:19.480 --> 0:09:22.120 right now. So equity income ain't what it used to 0:09:22.160 --> 0:09:25.640 be as it relates to finding income and the equity market, 0:09:25.679 --> 0:09:27.720 we prefer to do that in bonds. We think there's 0:09:27.760 --> 0:09:30.560 more relative value there as we head into the remainder 0:09:30.600 --> 0:09:31.000 of the year. 0:09:31.280 --> 0:09:33.240 All right, Emily, great to catch up. Thank you so much, 0:09:33.240 --> 0:09:37.840 Emily rolland Co, Chief investment strategist for John Hancock Investment Management. 0:09:39.480 --> 0:09:43.199 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:43.280 --> 0:09:45.960 weekdays at ten am Eastern on Apple, Colock Play and 0:09:45.960 --> 0:09:49.240 Android Auto with the Bloomberg Business app. Listen on demand 0:09:49.280 --> 0:09:52.840 wherever you get your podcasts, or watch us live on YouTube. 0:09:54.080 --> 0:09:56.960 Also in studio on Fridays. This is getting It's not. 0:09:57.480 --> 0:09:59.079 We're seeing more and more people in on Fridays. I 0:09:59.120 --> 0:10:01.720 guess is what I'm trying to say, what you are 0:10:01.800 --> 0:10:03.000 seeding this? 0:10:03.120 --> 0:10:04.760 It's but I think it's happening. 0:10:04.760 --> 0:10:05.640 Okay, okay. 0:10:05.720 --> 0:10:08.600 Catherine Dugherty Joint is a financial reporter Bloomberg News joints 0:10:08.640 --> 0:10:10.800 us again here in studio and a story that quite 0:10:10.840 --> 0:10:14.480 frankly concerns me. Nastak joins Exchange is seeking to offer 0:10:14.520 --> 0:10:16.680 around the clock trading. 0:10:17.360 --> 0:10:19.720 I don't know, is it tell us about this, Paul, I. 0:10:19.720 --> 0:10:21.760 Don't know if you need to be concerned right away. 0:10:22.640 --> 0:10:26.600 They made this announcement about their intention to extend their 0:10:26.640 --> 0:10:27.679 trading hour, so it. 0:10:27.679 --> 0:10:30.160 Would tend to go on vacation at some point exactly. 0:10:30.360 --> 0:10:33.440 But let's take a step back to say that these 0:10:33.559 --> 0:10:35.520 plans are far out. 0:10:35.600 --> 0:10:39.320 So Nasdaq gave some indication that they don't expect this 0:10:39.400 --> 0:10:42.559 to actually start happening until the second half of twenty 0:10:42.600 --> 0:10:45.360 twenty six, So this is not even a twenty twenty 0:10:45.400 --> 0:10:49.480 five story, but specifically for the exchanges, and the reason 0:10:49.559 --> 0:10:53.360 being the numbers that we're seeing right now, anything that 0:10:53.440 --> 0:10:57.440 is trading actively on any of the public exchanges, that 0:10:57.640 --> 0:11:01.559 data is all going to one feed, and feed cannot. 0:11:01.160 --> 0:11:03.120 Accommodate overnight trading right now. 0:11:03.320 --> 0:11:06.120 So in order for this to actually move forward in 0:11:06.160 --> 0:11:09.439 a meaningful way and for Nasdaq, Nicey, Cebo, any of 0:11:09.480 --> 0:11:13.480 the exchanges to offer overnight trading, that data feed needs 0:11:13.520 --> 0:11:15.520 to be updated and they need to work together to 0:11:15.600 --> 0:11:16.400 make sure that it can. 0:11:16.440 --> 0:11:17.800 All all right, this is this, all right? 0:11:17.840 --> 0:11:18.960 This is the way it works. When I was on 0:11:19.000 --> 0:11:21.040 the trading desk, you get in at seven, that's the 0:11:21.080 --> 0:11:23.480 bed is a little early, particularly you're out late the 0:11:23.559 --> 0:11:24.440 night or four with client. 0:11:25.160 --> 0:11:26.520 Trading starts at nine point thirty. 0:11:26.760 --> 0:11:29.240 Bell goes off at four o'clock four fifteen year at 0:11:29.320 --> 0:11:30.440 Faros across the street. 0:11:30.679 --> 0:11:32.840 Sure, having a couple of cocktails. That's the way it's 0:11:32.840 --> 0:11:34.959 supposed to be. None of this like stay late in 0:11:35.040 --> 0:11:35.920 trade late kind of thing. 0:11:36.000 --> 0:11:38.880 Right, So, okay, great point. So why do they want 0:11:38.880 --> 0:11:39.400 to even do this? 0:11:39.800 --> 0:11:44.240 So they are saying that the demand for US stocks 0:11:44.280 --> 0:11:48.640 that they see, particularly abroad, is enough to start offering 0:11:48.880 --> 0:11:52.600 this to their clients. But when you talk about the 0:11:52.760 --> 0:11:56.720 actual demand and who it is that's actually behind these trades, 0:11:56.960 --> 0:11:59.280 a lot of it is coming from retail investors. It's 0:11:59.320 --> 0:12:02.800 not the big institutional block trades that are coming through 0:12:02.880 --> 0:12:08.560 at four in the morning. Particularly for the instance that 0:12:08.600 --> 0:12:12.000 you're describing Paul of showing up, you're at your desk, 0:12:12.280 --> 0:12:16.840 those parameters are likely to stay in place, but you 0:12:16.880 --> 0:12:19.440 want to have some flexibility. If you're have an office 0:12:19.640 --> 0:12:22.360 that's in Asia, I think what's going to happen is 0:12:22.400 --> 0:12:24.680 that the staffing is what's going to change. 0:12:24.679 --> 0:12:27.080 So you might not have the trader in New. 0:12:27.000 --> 0:12:29.920 York that has to stay much past four o'clock like 0:12:29.960 --> 0:12:32.959 they normally do, but you might have to hire another 0:12:33.040 --> 0:12:37.439 trader in Asia. Maybe you're hiring a team in Europe 0:12:37.480 --> 0:12:40.160 to accommodate for the earlier hours in the US. 0:12:40.840 --> 0:12:41.760 There's ways to do this. 0:12:41.880 --> 0:12:45.600 That doesn't mean those of us in the US and 0:12:45.640 --> 0:12:48.720 particularly in New York, are going to have to stay 0:12:49.200 --> 0:12:50.920 stay late or wake up earlier. 0:12:52.240 --> 0:12:52.560 Wow. 0:12:52.720 --> 0:12:56.199 Okay, that's fine, but we can. But the funds they 0:12:56.240 --> 0:12:58.480 don't do this trading though, right It's like big funds 0:12:58.480 --> 0:13:01.840 like the CTAs of all controlled funds, like they don't trade, 0:13:02.360 --> 0:13:05.760 They wouldn't trade overnight right now they can't, But would 0:13:05.760 --> 0:13:07.959 they if usually just trade in the cash market. 0:13:08.040 --> 0:13:09.280 That is the big question. 0:13:09.559 --> 0:13:12.800 So once that would be something, Once Nasdaq and NICY 0:13:12.880 --> 0:13:16.199 and all them start to offer this, the question is 0:13:16.200 --> 0:13:19.640 who's going to take the advantage per se, who's going 0:13:19.679 --> 0:13:22.320 to actually be the ones that are trading overnight and 0:13:22.320 --> 0:13:24.440 who is a first because when one person starts and 0:13:24.440 --> 0:13:27.600 then they all have to go right right, and really 0:13:27.640 --> 0:13:31.280 what is the There's a lot of speculation that. 0:13:32.720 --> 0:13:36.679 The retail trades that are being made there's not enough liquidity, 0:13:36.760 --> 0:13:40.079 so therefore the experience and the price that they're actually getting, 0:13:40.080 --> 0:13:43.880 the execution quality suffers because of that. But if there's 0:13:44.080 --> 0:13:48.200 more trading that happens, that could start to improve the quality, 0:13:48.320 --> 0:13:51.640 and thus there might be even more trading that starts 0:13:51.679 --> 0:13:53.400 to happen because of that would. 0:13:53.160 --> 0:13:56.040 Just be like no closing bill at four o'clock. That's 0:13:56.040 --> 0:13:58.080 something that the industry needs to decide on. 0:13:58.360 --> 0:14:00.719 It could because I think about it, think about it, 0:14:00.760 --> 0:14:03.200 if they're spiting opening or closing bell, you need to 0:14:03.200 --> 0:14:06.320 actually decide at what point are we into the next 0:14:06.760 --> 0:14:07.440 trading day? 0:14:07.520 --> 0:14:10.920 Bitcoin doing blown. I don't know. I don't know how bitcoin. 0:14:11.040 --> 0:14:13.720 It's a different market structure. But it's funny. 0:14:13.760 --> 0:14:17.200 I saw a lot of posts on x today from 0:14:17.360 --> 0:14:19.800 the crypto community saying, oh, nice of you to join 0:14:19.880 --> 0:14:21.320 us equity exchanges. 0:14:21.800 --> 0:14:25.520 We've been doing this and come along. The water is warm. 0:14:26.080 --> 0:14:26.520 I don't know. 0:14:26.720 --> 0:14:29.520 All right, well, we'll see it's progress. You can't stand 0:14:29.520 --> 0:14:30.600 in the way progress, Alex. 0:14:31.080 --> 0:14:32.680 You need to shows the guy who doesn't want to 0:14:32.720 --> 0:14:34.800 do it anymore in the same way. All right, Thanks 0:14:34.840 --> 0:14:37.480 so much, Catherine, really appreciate Katherine already Bloomberg Finance reporter 0:14:37.880 --> 0:14:40.520 joining us, the nastak joining an offer to. 0:14:40.560 --> 0:14:41.480 Go around the clock. 0:14:43.200 --> 0:14:46.880 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:14:46.960 --> 0:14:50.320 weekdays at ten am Eastern on Applecarlay and Android Auto 0:14:50.440 --> 0:14:53.520 with the Bloomberg Business app. Listen on demand wherever you 0:14:53.560 --> 0:14:56.960 get your podcasts, or watch us live on YouTube. 0:14:57.400 --> 0:14:59.720 Hey, Alex Deal Paul Swiney live here in our Bloomberg 0:14:59.760 --> 0:15:02.720 Inner broke the studio, streaming live on YouTube as well. 0:15:02.720 --> 0:15:06.800 Ola Lou Aganga joins us. She is the US chief. 0:15:06.560 --> 0:15:10.840 Investment officer for Mercer, joining us via zoom. Ola Lou 0:15:10.920 --> 0:15:12.840 John and I were just talking about this. Boy, things 0:15:12.840 --> 0:15:15.200 have changed in the last couple of months here in 0:15:15.280 --> 0:15:17.960 terms of the outlook here. When you see a trillion 0:15:18.440 --> 0:15:22.200 dollar market cap loss for a company like Nvidia, boy, 0:15:22.240 --> 0:15:23.280 that gets your attention, does it? 0:15:23.320 --> 0:15:24.520 How do you feel about these markets? 0:15:26.080 --> 0:15:28.840 So the concentration in the equity markets has been a 0:15:28.880 --> 0:15:31.720 problem for some time, and problem meaning like it's hard 0:15:31.760 --> 0:15:33.920 to be able to distinguish yourself when you have a 0:15:33.960 --> 0:15:37.440 benchmark that is moving in that positive direction. We're seeing 0:15:37.440 --> 0:15:40.120 a swing in the opposite way, right, but the concentration 0:15:40.240 --> 0:15:42.640 is still the same. So when you have a key 0:15:43.720 --> 0:15:46.720 handful of stocks that are driving markets in either direction, 0:15:47.600 --> 0:15:50.360 you know, it does create challenges now, you know, with 0:15:50.520 --> 0:15:53.600 that said, we're in a situation now where we're kind 0:15:53.600 --> 0:15:57.280 of back to pre election type of markets. But with 0:15:57.400 --> 0:16:00.600 all of the macroeconomic data that's coming up, we're looking 0:16:00.600 --> 0:16:03.560 at it. As you all mentioned on your show, economic 0:16:03.640 --> 0:16:07.120 data was okay this morning, so no surprises from an 0:16:07.160 --> 0:16:09.880 employment standpoint, but it hasn't factored in the cuts yet. 0:16:11.040 --> 0:16:13.520 So how do you manage the volatility at the end 0:16:13.560 --> 0:16:15.480 of the day. Is it defensive, is it offense? 0:16:15.640 --> 0:16:16.280 Is it cash? 0:16:16.400 --> 0:16:17.200 Is it treasuries? 0:16:18.680 --> 0:16:21.760 So the a lot of flow and it all depends 0:16:21.760 --> 0:16:24.880 on the client portfolio objective, So or some of the 0:16:24.960 --> 0:16:28.520 longer data clients, the pension clients, they're heavier in fixed 0:16:28.520 --> 0:16:31.560 income anyway, they've always, you know, historically been, so this 0:16:31.640 --> 0:16:34.720 is a boon for them. We're seeing what four or 0:16:34.760 --> 0:16:38.600 five basis points decline and yields this week last week 0:16:38.640 --> 0:16:41.640 was a pretty dramatic move, especially in longer dated bonds, 0:16:42.160 --> 0:16:44.280 and if you think of the liabilities the pension clients have, 0:16:44.400 --> 0:16:47.120 that is something to be to be mindful of. Then 0:16:47.200 --> 0:16:50.720 if you were talking about the shorter data aspect, so 0:16:51.080 --> 0:16:54.360 the yields on two year money mart like those have 0:16:54.520 --> 0:16:58.000 come down, so if you're trying to earn returns that 0:16:58.160 --> 0:17:01.200 may not necessarily be you know, the best with regards 0:17:01.160 --> 0:17:05.560 to that point. But there is a more defensive environment, yes, 0:17:05.680 --> 0:17:09.199 that has been created and some uncertainty around it. The 0:17:09.280 --> 0:17:11.960 facts are tariffs, no matter which way you look at them, 0:17:12.320 --> 0:17:15.879 are higher input costs, and input costs for corporations a 0:17:16.000 --> 0:17:18.320 fact them in one of two ways. It's either lower 0:17:18.359 --> 0:17:21.320 margins so you have to either absorb that, so we'll 0:17:21.359 --> 0:17:23.320 see that play out in the next few earnings report 0:17:23.480 --> 0:17:26.400 maybe or if you pass it on to consumers, then 0:17:26.400 --> 0:17:29.400 you run the risk of potentially lower sales. So the 0:17:29.680 --> 0:17:32.000 drawback and the drawdowns that we're seeing in the market 0:17:32.080 --> 0:17:36.879 is almost you know, by the rumor selby news. So 0:17:37.040 --> 0:17:39.880 it's proactively moving in that direction because of those two 0:17:40.000 --> 0:17:42.359 potential things that can happen as a result of higher 0:17:42.359 --> 0:17:43.760 input costs for corporations. 0:17:43.960 --> 0:17:45.600 But we have to see it in the earnings. 0:17:45.840 --> 0:17:48.720 Well, since the market started moving higher there in mid 0:17:48.720 --> 0:17:50.880 twenty twenty two, a lot of folks have said, boy, 0:17:51.000 --> 0:17:55.000 we just haven't seen that ten twelve, fifteen percent pullback 0:17:55.040 --> 0:17:57.639 in the market that oftentimes can be healthy for a 0:17:57.680 --> 0:18:00.960 longer term bull market. Do you think we're approaching that 0:18:01.320 --> 0:18:04.639 now or or is it maybe even something more problematic. 0:18:06.320 --> 0:18:11.520 So, yes, we haven't seen a pretty big draw down 0:18:11.520 --> 0:18:13.560 in quite some time. But if you were to analyze 0:18:13.600 --> 0:18:16.520 post financial crisis, even when we have and if you 0:18:17.000 --> 0:18:19.119 of course we all remember the COVID period where were 0:18:19.119 --> 0:18:23.080 saw even bigger drawdowns, the rebound on that it was 0:18:23.119 --> 0:18:27.520 actually fairly dramatic and fairly swift. So the challenge with that, 0:18:28.600 --> 0:18:31.680 you know, really focusing on the draw downs is because 0:18:31.720 --> 0:18:33.400 you can't time the markets. 0:18:33.640 --> 0:18:37.119 We can have it could happen Monday Tuesday, right, we. 0:18:37.240 --> 0:18:40.800 Could very much see the potential of that occurring. But 0:18:41.400 --> 0:18:43.840 positive news that could occur could cause it to move 0:18:44.000 --> 0:18:47.159 very very swiftly. So for us as you are thinking 0:18:47.200 --> 0:18:49.440 of investing and not trading, right because there is day 0:18:49.440 --> 0:18:51.240 trading and you have to be able to move with 0:18:51.320 --> 0:18:54.639 the volatility cycle if you're day trading or moving that quickly. 0:18:54.640 --> 0:18:57.280 But if you are investing, the goal is to be 0:18:57.320 --> 0:19:00.360 able to cut through the noise and go through more 0:19:00.400 --> 0:19:01.520 sustained themes. 0:19:01.560 --> 0:19:03.040 As we just talked about something like. 0:19:03.040 --> 0:19:06.120 Corporate earnings, how will that play out if we see 0:19:06.160 --> 0:19:08.119 higher input costs? So that is what we're doing a 0:19:08.119 --> 0:19:09.800 lot of work around to make sure that we can 0:19:09.840 --> 0:19:12.520 look past today, tomorrow and go. 0:19:12.520 --> 0:19:14.840 Through a quarter, two quarters, three quarters type of thing. 0:19:15.359 --> 0:19:17.159 Where does this leave then corporate credit? 0:19:19.920 --> 0:19:25.200 So she laughs at me as well, No, it's it's 0:19:25.880 --> 0:19:28.639 you know, the corporate credit just like equities, right, so 0:19:28.680 --> 0:19:32.000 two sides of the same coin, for for the corporate 0:19:32.119 --> 0:19:33.680 entity is not immune. 0:19:34.440 --> 0:19:38.000 So there we've seen a tightening of corporate credit just 0:19:38.160 --> 0:19:41.680 you know recently, but now as as we're going through 0:19:41.720 --> 0:19:44.120 a period now we're starting to see some widening that's 0:19:44.119 --> 0:19:49.119 occurring in certain pockets with rates where they are, and 0:19:49.119 --> 0:19:52.600 we're just seeing the volatility. It is difficult with regards 0:19:52.600 --> 0:19:56.359 to issuance now. When rates were much higher, it's expensive 0:19:56.359 --> 0:19:57.640 for corporations to be able to fund. 0:19:57.640 --> 0:19:59.359 So if you're issuing new debts, you're issuing them at 0:19:59.400 --> 0:20:00.479