1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,520 --> 00:00:15,560 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,200 Speaker 1: at Bloomberg dot com slash podcast. Looking at my e 7 00:00:22,440 --> 00:00:25,720 Speaker 1: c O go function for the economic calendar, lots of 8 00:00:25,760 --> 00:00:28,800 Speaker 1: stuff going on. We got the I s M manufacturing 9 00:00:28,840 --> 00:00:31,920 Speaker 1: stuff tomorrow, the jolts number still looking at a ten 10 00:00:32,000 --> 00:00:34,879 Speaker 1: million uh job open to go figure that fed me 11 00:00:35,120 --> 00:00:39,120 Speaker 1: minutes tomorrow. We got initial claims Thursday. Then of course 12 00:00:39,159 --> 00:00:43,160 Speaker 1: the non farm pay rolls, the big labor and number 13 00:00:43,159 --> 00:00:46,559 Speaker 1: comes out Friday. Still look for two adds down two 14 00:00:46,640 --> 00:00:49,560 Speaker 1: hundred sixty three thousand the week before, so certainly slowing, 15 00:00:49,560 --> 00:00:51,960 Speaker 1: but still pretty healthy. But that's a lot of stuff 16 00:00:52,000 --> 00:00:55,080 Speaker 1: for IRA Jersey's filled to reserve to kind of digest there. 17 00:00:55,120 --> 00:00:58,000 Speaker 1: So our Jersey joins as Chief US Interest Rate Strategies 18 00:00:58,040 --> 00:01:00,920 Speaker 1: for Bloomberg Intelligence. I what do you think that the 19 00:01:00,960 --> 00:01:03,720 Speaker 1: FEDS really looking at these days as they think about 20 00:01:03,760 --> 00:01:08,640 Speaker 1: their next meeting and their next messaging here for this market. Yeah, 21 00:01:08,680 --> 00:01:11,280 Speaker 1: so I think the messaging that you just mentioned, Paul 22 00:01:11,360 --> 00:01:13,800 Speaker 1: is probably going to be more important to the direction 23 00:01:13,880 --> 00:01:16,880 Speaker 1: of treasury yields than is UM. You know, what they 24 00:01:16,920 --> 00:01:19,280 Speaker 1: do at the next meeting, whether they go twenty five 25 00:01:19,360 --> 00:01:22,200 Speaker 1: or fifty at the next meeting, probably is less relevant 26 00:01:22,240 --> 00:01:28,000 Speaker 1: than UM them describing what they're react. It's the market 27 00:01:28,040 --> 00:01:31,600 Speaker 1: is pricing fifty. I suspect, uh it it will be fifty, 28 00:01:31,720 --> 00:01:34,760 Speaker 1: but UM. But but there's a non trivial chance that 29 00:01:35,080 --> 00:01:37,399 Speaker 1: they could do less. So for example, when you look 30 00:01:37,440 --> 00:01:41,039 Speaker 1: at some of those data that are coming out this week, UM, 31 00:01:41,080 --> 00:01:42,840 Speaker 1: you know, the Fed will get get the full run 32 00:01:42,880 --> 00:01:45,480 Speaker 1: of this month's data. UM, the I S M new 33 00:01:45,560 --> 00:01:49,040 Speaker 1: orders numbers which we get tomorrow are That's my favorite 34 00:01:49,040 --> 00:01:53,040 Speaker 1: indicator for the future path of the economy real right 35 00:01:53,840 --> 00:01:56,240 Speaker 1: it Yeah, it is for a number of reasons. One 36 00:01:56,360 --> 00:01:59,400 Speaker 1: is that it tends to be the best predictor of 37 00:01:59,440 --> 00:02:02,080 Speaker 1: what the overall business sector is going to do, not 38 00:02:02,120 --> 00:02:05,520 Speaker 1: necessarily the job sector, but but certainly the um the 39 00:02:05,800 --> 00:02:09,080 Speaker 1: business sector. And we're at the level right now where 40 00:02:09,120 --> 00:02:11,680 Speaker 1: we're either showing a mid cycle slowdown like we had 41 00:02:12,639 --> 00:02:16,359 Speaker 1: we had in or where if we go lower, we're 42 00:02:16,440 --> 00:02:19,480 Speaker 1: going to be near recessionary levels. So so I think 43 00:02:19,520 --> 00:02:22,040 Speaker 1: that that can be a really important indicator if we 44 00:02:22,240 --> 00:02:24,560 Speaker 1: if it stays at forty seven ish, then that's fine. 45 00:02:24,600 --> 00:02:29,359 Speaker 1: If it goes below forty five, that's typically recession type levels. Um. 46 00:02:29,480 --> 00:02:31,880 Speaker 1: So I think that there's going to be some interesting, 47 00:02:31,919 --> 00:02:34,120 Speaker 1: you know, fireworks that could come depending on how that 48 00:02:34,520 --> 00:02:37,200 Speaker 1: data shows shows tomorrow. And of course the jobs numbers, right, 49 00:02:37,200 --> 00:02:41,000 Speaker 1: we'll be watching wages will be right now, Um, the 50 00:02:41,000 --> 00:02:45,240 Speaker 1: FED is focused on services wages and um and and 51 00:02:45,280 --> 00:02:47,960 Speaker 1: that's going to be a key focus then for us 52 00:02:48,000 --> 00:02:49,920 Speaker 1: and for the rest of the market is do those 53 00:02:49,919 --> 00:02:52,960 Speaker 1: continue to run at six percent year on year? And 54 00:02:53,000 --> 00:02:55,760 Speaker 1: if they do, then you know, that's when a fifty 55 00:02:55,800 --> 00:02:58,480 Speaker 1: basis point it's probably I don't want to say assured, 56 00:02:58,600 --> 00:03:01,000 Speaker 1: but certainly more like if if we do to get 57 00:03:01,000 --> 00:03:03,640 Speaker 1: those kind of numbers, I mean, twenty five basis points 58 00:03:03,639 --> 00:03:05,960 Speaker 1: would be pretty weak sauce that would be a signal 59 00:03:06,400 --> 00:03:10,080 Speaker 1: that this is no vulgar Powell we're watching right, more 60 00:03:10,200 --> 00:03:13,400 Speaker 1: of Burns and Powell. Well, the way that I look 61 00:03:13,440 --> 00:03:15,800 Speaker 1: at it, mat is is the FED is trying to 62 00:03:15,800 --> 00:03:19,240 Speaker 1: get into calibration mode, right and and because they can 63 00:03:19,280 --> 00:03:21,840 Speaker 1: go more and they can still do the same amount 64 00:03:21,919 --> 00:03:24,120 Speaker 1: if they go fifty or twenty five, they just might 65 00:03:24,200 --> 00:03:27,480 Speaker 1: have to go an extra five kind of at the end, right. So, 66 00:03:27,480 --> 00:03:29,960 Speaker 1: so so they know at some point over the next 67 00:03:30,040 --> 00:03:32,600 Speaker 1: six months they want to stop hiking and are likely 68 00:03:32,919 --> 00:03:34,600 Speaker 1: to stop hiking. You just look at the dots. You 69 00:03:34,760 --> 00:03:37,480 Speaker 1: just you know, you hear what J. Powell and other 70 00:03:37,600 --> 00:03:41,840 Speaker 1: members of the feders saying. And the FED is interested 71 00:03:42,000 --> 00:03:44,920 Speaker 1: in getting towards the end and waiting and seeing if 72 00:03:45,280 --> 00:03:48,440 Speaker 1: the hikes that they've already done feed through the economy. Right. 73 00:03:48,480 --> 00:03:50,640 Speaker 1: We always talk about long and variable legs. So we're 74 00:03:50,680 --> 00:03:52,600 Speaker 1: at the point where, you know, if they if they 75 00:03:52,680 --> 00:03:56,960 Speaker 1: hike another seventy five or take another hundreds, so maybe 76 00:03:55,560 --> 00:04:00,400 Speaker 1: five for example, by by May, then uh, then they're 77 00:04:00,400 --> 00:04:02,280 Speaker 1: in a wait and see mode. And given that just 78 00:04:02,320 --> 00:04:04,600 Speaker 1: about every forecaster thinks that the second half of the 79 00:04:04,680 --> 00:04:07,280 Speaker 1: year we're going to have, you know, the near recession. 80 00:04:07,320 --> 00:04:10,640 Speaker 1: If not in recession, then you know, they can probably 81 00:04:10,640 --> 00:04:15,440 Speaker 1: say job done in that situation, because recessions typically come 82 00:04:15,600 --> 00:04:20,400 Speaker 1: with significantly lower inflation, right, but also typically with tighter 83 00:04:20,520 --> 00:04:25,520 Speaker 1: uh financial constraints, right, And we don't have that. So Uh, 84 00:04:26,240 --> 00:04:28,920 Speaker 1: giving us twenty five basis point hikes isn't exactly going 85 00:04:28,960 --> 00:04:31,760 Speaker 1: to get us there? By the way, I was wondering, 86 00:04:31,880 --> 00:04:34,839 Speaker 1: you know, we were at nine c p i um 87 00:04:34,839 --> 00:04:38,800 Speaker 1: what in June last year, and if the Fed gets 88 00:04:38,880 --> 00:04:41,840 Speaker 1: us closer to two, that would be a drop of 89 00:04:42,000 --> 00:04:47,200 Speaker 1: seven percentage points in headline cp I scoured the terminal 90 00:04:47,240 --> 00:04:49,560 Speaker 1: for the last time we saw that happen such a 91 00:04:49,640 --> 00:04:52,080 Speaker 1: huge drop in such a short period of time, and 92 00:04:52,120 --> 00:04:55,320 Speaker 1: it was from July of two thousand eight to July 93 00:04:55,400 --> 00:04:58,719 Speaker 1: of two thou nine. Uh, you don't want to be 94 00:04:58,760 --> 00:05:02,479 Speaker 1: in that situation, do you? Or or do they? Well, 95 00:05:02,680 --> 00:05:05,120 Speaker 1: it's so you know, they don't necessarily want to be 96 00:05:05,120 --> 00:05:06,719 Speaker 1: a two percent but you know, why do you get 97 00:05:06,760 --> 00:05:08,520 Speaker 1: to two percent? Right? If you get to two percent 98 00:05:08,600 --> 00:05:11,960 Speaker 1: because oil prices fall to thirty bucks of barrel, then 99 00:05:12,160 --> 00:05:14,400 Speaker 1: that's a great situation for the Fed, right because you 100 00:05:14,440 --> 00:05:18,400 Speaker 1: have inflation. Inflation expectations would likely be significantly lowered. At 101 00:05:18,400 --> 00:05:20,800 Speaker 1: the same time, that's kind of a tax cut on 102 00:05:20,839 --> 00:05:24,039 Speaker 1: the consumer, and the consumer would then have more discretionary spending, 103 00:05:24,240 --> 00:05:27,320 Speaker 1: you know, non energy discretionary spending to to help boost 104 00:05:27,320 --> 00:05:30,480 Speaker 1: the economy. So so that's a scenario where you might 105 00:05:30,560 --> 00:05:33,960 Speaker 1: actually um with lower energy prices, where you might actually 106 00:05:34,040 --> 00:05:36,520 Speaker 1: avoid a recession. UM. You know that being said, I 107 00:05:37,000 --> 00:05:39,760 Speaker 1: think that that seems pretty unlikely that you get that 108 00:05:39,839 --> 00:05:43,200 Speaker 1: type of move in in energy prices. And and because 109 00:05:43,240 --> 00:05:45,880 Speaker 1: of that, um, you know, a fault to two percent 110 00:05:45,920 --> 00:05:48,000 Speaker 1: would mean that you'd have to have wages go down 111 00:05:48,120 --> 00:05:52,120 Speaker 1: or massive marching compression, particularly in the services sector. UM. 112 00:05:52,160 --> 00:05:55,159 Speaker 1: And that that's not necessarily public companies, right, because most 113 00:05:55,160 --> 00:05:59,360 Speaker 1: services are provided by small businesses, not public companies. Um. 114 00:05:59,720 --> 00:06:02,520 Speaker 1: And and that means things like proprietors income, which which 115 00:06:02,520 --> 00:06:05,400 Speaker 1: we also look at for for the health of the 116 00:06:05,440 --> 00:06:08,880 Speaker 1: economy overall, would have to would have to shrink massively. 117 00:06:09,080 --> 00:06:12,280 Speaker 1: And and you know that that could still mean a recession. Right, 118 00:06:12,320 --> 00:06:14,919 Speaker 1: So you can wind up with a situation where you 119 00:06:15,000 --> 00:06:19,960 Speaker 1: do get significantly slower consumer spending, you get prices falling 120 00:06:20,000 --> 00:06:22,680 Speaker 1: in some sectors. And keep in mind, prices in the 121 00:06:22,680 --> 00:06:26,799 Speaker 1: good sector are already falling um now, not in every sector, 122 00:06:26,880 --> 00:06:30,080 Speaker 1: but in many sectors. So with good prices going down, 123 00:06:30,120 --> 00:06:33,320 Speaker 1: the question now is how quickly do services prices UH 124 00:06:33,400 --> 00:06:36,480 Speaker 1: stop increasing? And um, you know it's hard to it's 125 00:06:36,480 --> 00:06:38,400 Speaker 1: hard to know that and that's going to be driven 126 00:06:38,440 --> 00:06:42,000 Speaker 1: again by by the wage data that we get this Friday. Hey, 127 00:06:42,680 --> 00:06:45,480 Speaker 1: is quantitative tightening still a thing? Like if I'm a 128 00:06:45,520 --> 00:06:49,680 Speaker 1: mortgage backed security trader or government bond trader, Morgan Stanley, 129 00:06:49,720 --> 00:06:52,880 Speaker 1: is the Fed call me up to buy my bonds? Um? 130 00:06:53,120 --> 00:06:55,640 Speaker 1: Well they are a little bit, but only well not 131 00:06:55,640 --> 00:06:58,880 Speaker 1: not mortgages for sure. For treasuries, they do buy some 132 00:06:58,960 --> 00:07:02,719 Speaker 1: treasuries on refunding months, so they'll buy some treasuries in 133 00:07:02,960 --> 00:07:07,400 Speaker 1: UH at auction UH in February because they have more 134 00:07:07,920 --> 00:07:11,960 Speaker 1: UM maturing treasuries in February than UH than they are 135 00:07:12,120 --> 00:07:13,760 Speaker 1: are allowing to run off in the balance sheet. But 136 00:07:13,800 --> 00:07:17,000 Speaker 1: the mortgages were not even close because there's very very 137 00:07:17,000 --> 00:07:21,120 Speaker 1: few refinancings going on right now because mortgage rates are 138 00:07:21,160 --> 00:07:24,040 Speaker 1: so high compared to the mortgage rates that most people have, 139 00:07:24,640 --> 00:07:28,440 Speaker 1: So there's significant volatility in that market, in part because 140 00:07:28,440 --> 00:07:30,640 Speaker 1: there's not a lot of supply, which is a little 141 00:07:30,640 --> 00:07:34,920 Speaker 1: bit ironic, but it's also the UM. The Fed isn't 142 00:07:34,960 --> 00:07:38,480 Speaker 1: buying everything that's cheap, so UM, you're at You're at 143 00:07:38,480 --> 00:07:41,200 Speaker 1: a point now where you're going to see continued volatility 144 00:07:41,240 --> 00:07:44,800 Speaker 1: I think in mortgage spreads. UM but the mortgage rate 145 00:07:44,880 --> 00:07:48,200 Speaker 1: probably is peaked, um, both in terms of spread and 146 00:07:48,400 --> 00:07:51,640 Speaker 1: also in rate, and that's due in at least in 147 00:07:51,640 --> 00:07:55,440 Speaker 1: our view, because tenure treasury yields we think peaked around 148 00:07:55,440 --> 00:07:59,480 Speaker 1: that that three three point facing me four point um, 149 00:07:59,600 --> 00:08:01,680 Speaker 1: and we're out likely to get back up there um. 150 00:08:01,920 --> 00:08:05,680 Speaker 1: So we're we're looking for mortgage rates kind of stabilize here. 151 00:08:05,920 --> 00:08:08,360 Speaker 1: But that's still you know, there's still a massive sticker 152 00:08:08,400 --> 00:08:10,840 Speaker 1: shot going on. People aren't used to paying six or 153 00:08:10,880 --> 00:08:13,000 Speaker 1: six and a half percent. I always joked because twenty 154 00:08:13,040 --> 00:08:15,080 Speaker 1: five years ago when I got my first mortgage, I 155 00:08:15,080 --> 00:08:17,320 Speaker 1: had a seven percent mortgage. So for me, it's like, okay, 156 00:08:17,320 --> 00:08:18,960 Speaker 1: this is kind of like, you know, the high end 157 00:08:19,000 --> 00:08:23,240 Speaker 1: of the range, back to square one exactly. Hey, you know, 158 00:08:23,280 --> 00:08:26,480 Speaker 1: when Pale came into my consciousness, it was probably in 159 00:08:26,480 --> 00:08:28,640 Speaker 1: the mid seventies when he came over for the New 160 00:08:28,720 --> 00:08:30,920 Speaker 1: York Cosmos. But as we think about look back on 161 00:08:31,000 --> 00:08:33,440 Speaker 1: his life, holy cow, he had a Hall of Fame 162 00:08:33,480 --> 00:08:36,600 Speaker 1: career the way before that, with all the World Cup 163 00:08:36,640 --> 00:08:38,480 Speaker 1: stuff in his in his club stuff. But I'm just 164 00:08:38,559 --> 00:08:41,120 Speaker 1: looking at some live footage here on the Bloomberg video 165 00:08:41,160 --> 00:08:43,319 Speaker 1: screen of Brazil as they continue to more in Pale, 166 00:08:43,440 --> 00:08:46,880 Speaker 1: but wow, what a name within the sport. Yeah, he was, 167 00:08:46,960 --> 00:08:49,840 Speaker 1: And I have to say his playing for the Cosmos 168 00:08:49,960 --> 00:08:52,200 Speaker 1: is the reason why I am so into soccer because 169 00:08:52,200 --> 00:08:54,920 Speaker 1: it came to my little tiny soccer club on Long 170 00:08:54,920 --> 00:08:57,520 Speaker 1: Island where I played four back in the nineteen seventies 171 00:08:57,520 --> 00:09:00,080 Speaker 1: six or seventy seven, and did some things with a 172 00:09:00,120 --> 00:09:02,280 Speaker 1: ball that just amazed us and shocked us. And I 173 00:09:02,360 --> 00:09:04,559 Speaker 1: just fell in love with the sport in part because 174 00:09:04,600 --> 00:09:06,200 Speaker 1: of what Paley did in front of us. You know, 175 00:09:06,360 --> 00:09:08,719 Speaker 1: forget the fact that like Franz Beckenbauer was also there, 176 00:09:08,720 --> 00:09:11,000 Speaker 1: I had no idea who he was, but Pale had 177 00:09:11,040 --> 00:09:14,720 Speaker 1: such a big personality and his his fame transcended the 178 00:09:14,760 --> 00:09:17,920 Speaker 1: sport right where in the nineteen seventies, you know, no 179 00:09:18,000 --> 00:09:21,560 Speaker 1: one could name any professional soccer player in the United States, 180 00:09:21,679 --> 00:09:24,080 Speaker 1: but they could all name Pale, right, So I think 181 00:09:24,080 --> 00:09:26,440 Speaker 1: that that was just a massive uh. He was just 182 00:09:26,480 --> 00:09:28,760 Speaker 1: a massive figure in the sport and helped grow the 183 00:09:28,760 --> 00:09:32,079 Speaker 1: sport both here and abroad. Um created, you know, purveyor 184 00:09:32,080 --> 00:09:35,000 Speaker 1: of the beautiful game, which which Brazil to this day 185 00:09:35,040 --> 00:09:37,480 Speaker 1: tries to continue to live up to his legacy and 186 00:09:37,559 --> 00:09:41,199 Speaker 1: beloved as well right and without the kind of tarnished 187 00:09:41,480 --> 00:09:46,400 Speaker 1: You know, other soccer greats have been involved in taking 188 00:09:46,480 --> 00:09:50,120 Speaker 1: bribes for putting the World Cup in places it doesn't belong. 189 00:09:50,480 --> 00:09:54,440 Speaker 1: I want to mention any names, or or doing drugs, right, 190 00:09:54,520 --> 00:09:56,800 Speaker 1: so and and you know, even at well, I was 191 00:09:56,800 --> 00:10:01,200 Speaker 1: thinking of Beckenbauer. Yeah, I was thinking of Diego Maradonna. 192 00:10:01,280 --> 00:10:04,920 Speaker 1: But um, yeah, I think you know Pale. You know, 193 00:10:04,920 --> 00:10:06,880 Speaker 1: Pale was a class act. And I think just about 194 00:10:06,880 --> 00:10:10,320 Speaker 1: everyone who's ever so, Chef Messing, who has been a 195 00:10:10,360 --> 00:10:12,199 Speaker 1: commentator for the New York Red Bulls for a very 196 00:10:12,200 --> 00:10:16,480 Speaker 1: long time. Um, and and who's who who I know, Um, 197 00:10:16,600 --> 00:10:19,199 Speaker 1: you know he he stayed in touch with Pale. Pale 198 00:10:19,240 --> 00:10:21,320 Speaker 1: stayed in touch with Bob Smith, a guy from down 199 00:10:21,320 --> 00:10:24,240 Speaker 1: here in Central Jersey, um, who is also a professional 200 00:10:24,240 --> 00:10:26,720 Speaker 1: soccer player. Pale kept in touch with all these guys 201 00:10:26,720 --> 00:10:28,960 Speaker 1: and was just everyone that I've talked to about Pale 202 00:10:29,160 --> 00:10:32,000 Speaker 1: just says he's such a regular guy. You know, he's 203 00:10:32,000 --> 00:10:34,440 Speaker 1: super famous. Good stuff. I were Jersey Chief US Interest 204 00:10:34,520 --> 00:10:40,280 Speaker 1: rate strategist. Thanks so much for joining us. Well. The 205 00:10:40,320 --> 00:10:43,760 Speaker 1: story over the last several weeks has been the reopening 206 00:10:43,840 --> 00:10:46,680 Speaker 1: of China, the dropping, if you will of the zero 207 00:10:46,760 --> 00:10:50,880 Speaker 1: COVID policy and the pace at which China is reopening, 208 00:10:50,880 --> 00:10:53,600 Speaker 1: taking a lot of people around the world by surprise. 209 00:10:53,640 --> 00:10:55,200 Speaker 1: What does it mean for the global economy? What does 210 00:10:55,200 --> 00:10:57,440 Speaker 1: it mean for the people of China? Um, just a 211 00:10:57,480 --> 00:11:01,240 Speaker 1: Bloomberg story out here today China's biggest cities see subway 212 00:11:01,320 --> 00:11:05,240 Speaker 1: use rebound as COVID peaks. We want to check in 213 00:11:05,280 --> 00:11:07,560 Speaker 1: with all things China. When we want to do that, 214 00:11:07,600 --> 00:11:09,600 Speaker 1: we check in with Leland Miller. He's the CEO of 215 00:11:09,679 --> 00:11:14,520 Speaker 1: China beige Book International, just extraordinary data analysis on all 216 00:11:14,559 --> 00:11:17,880 Speaker 1: things China. So, Leland, We've had a couple of weeks 217 00:11:17,880 --> 00:11:20,520 Speaker 1: here where we've had been able to digest you know, 218 00:11:20,600 --> 00:11:23,240 Speaker 1: this this reopening of China. What do you think are 219 00:11:23,280 --> 00:11:26,120 Speaker 1: some of the key takeaways here as they continue to 220 00:11:26,120 --> 00:11:30,040 Speaker 1: reopen and pretty aggressively. Yeah, well, there's certainly just letting 221 00:11:30,040 --> 00:11:33,400 Speaker 1: it rip. Um. You know, there's there's several different stories 222 00:11:33,440 --> 00:11:36,240 Speaker 1: and they focus on on different parts of this of 223 00:11:36,320 --> 00:11:39,360 Speaker 1: this so called recovery. Uh. The first is, you know 224 00:11:39,400 --> 00:11:42,160 Speaker 1: what happened in Q four, what happened specifically in December, 225 00:11:42,200 --> 00:11:44,760 Speaker 1: And I think everyone's come around the idea that December 226 00:11:44,840 --> 00:11:47,960 Speaker 1: was very, very bad. You know, everyone was talking about reopening, 227 00:11:48,160 --> 00:11:50,920 Speaker 1: but there wasn't actually reopening because everybody was hiding either 228 00:11:50,960 --> 00:11:52,720 Speaker 1: getting COVID or they were hiding in their rooms trying 229 00:11:52,720 --> 00:11:55,240 Speaker 1: not to get COVID. So so nothing good happened December. 230 00:11:55,280 --> 00:11:56,720 Speaker 1: Our dad are some of the worst you know, we've 231 00:11:56,720 --> 00:11:59,760 Speaker 1: seen in many, many, many years. Uh. Then there's a 232 00:11:59,800 --> 00:12:01,720 Speaker 1: quite what's going to happen later in Q one? And 233 00:12:01,720 --> 00:12:05,200 Speaker 1: I think people are optimistic that when COVID's passed, then 234 00:12:05,280 --> 00:12:06,560 Speaker 1: then there was going to be a bounce back in 235 00:12:06,559 --> 00:12:09,480 Speaker 1: the recovery because in the in the economy. So then 236 00:12:09,520 --> 00:12:12,600 Speaker 1: the question is like what happens in January, February and March. 237 00:12:12,720 --> 00:12:14,439 Speaker 1: You know, how do you time this? And I think 238 00:12:14,480 --> 00:12:16,840 Speaker 1: that that's really the question market should be focusing on. 239 00:12:17,160 --> 00:12:19,400 Speaker 1: There's a lot of focus on COVID peaking in the 240 00:12:19,440 --> 00:12:23,160 Speaker 1: big cities right now, subway indicators, etcetera. But you're talking 241 00:12:23,160 --> 00:12:26,040 Speaker 1: about a very small all be an important part of China. 242 00:12:26,120 --> 00:12:29,319 Speaker 1: There's plenty of China left to left to left the 243 00:12:29,360 --> 00:12:31,319 Speaker 1: infection to spread. So I think this is gonna be 244 00:12:31,360 --> 00:12:35,600 Speaker 1: a slower economic recovery than people think. You know, albeit, uh, 245 00:12:35,640 --> 00:12:38,760 Speaker 1: you know, the economy should be back in Q two. 246 00:12:38,960 --> 00:12:42,760 Speaker 1: Well so, but as China really investable? I mean, I 247 00:12:42,800 --> 00:12:44,920 Speaker 1: know the market has a very short memory, but it 248 00:12:44,960 --> 00:12:47,400 Speaker 1: was only a few months ago that jack Ma was 249 00:12:47,480 --> 00:12:50,520 Speaker 1: nowhere to be seen. Um, you know, if if this 250 00:12:50,600 --> 00:12:55,040 Speaker 1: is a country that takes company leaders and puts them 251 00:12:55,080 --> 00:12:58,320 Speaker 1: into some sort of isolation. I don't know the details 252 00:12:58,320 --> 00:13:00,719 Speaker 1: of what happened there, but that isn't the only thing 253 00:13:00,720 --> 00:13:04,600 Speaker 1: that we saw and the most recent incident of China 254 00:13:04,720 --> 00:13:10,240 Speaker 1: interfering with investor assets. Um, what do we expect in 255 00:13:10,240 --> 00:13:14,480 Speaker 1: the future. Well, obviously there's there's plenty of reason to 256 00:13:14,600 --> 00:13:17,560 Speaker 1: be to be worried about investing in China. You know, 257 00:13:17,640 --> 00:13:21,200 Speaker 1: you there's limited rule of law. You know, you don't 258 00:13:21,200 --> 00:13:24,480 Speaker 1: always know what you're investing in. But the landscape has 259 00:13:24,559 --> 00:13:27,080 Speaker 1: changed from you know, six months ago and twelve months ago. 260 00:13:27,160 --> 00:13:31,199 Speaker 1: People are looking at these, you know, incredibly low valuations 261 00:13:31,200 --> 00:13:33,640 Speaker 1: for Chinese stocks. They're not liking what they're seeing. Around 262 00:13:33,640 --> 00:13:36,280 Speaker 1: the rest of the world. There's an emerging market investment 263 00:13:36,360 --> 00:13:38,880 Speaker 1: story that people want to buy into, and there's a 264 00:13:38,920 --> 00:13:42,320 Speaker 1: COVID recovery story and a pullback of COVID zero recovery story. 265 00:13:42,440 --> 00:13:46,160 Speaker 1: So everyone went from being very embarished on China uninvestable 266 00:13:46,200 --> 00:13:50,040 Speaker 1: to being absolutely you know, all in, let's let's do this. 267 00:13:50,200 --> 00:13:52,880 Speaker 1: And it's interesting because when you talk to funds investing 268 00:13:52,920 --> 00:13:55,240 Speaker 1: in China, they say, we don't really care what happens 269 00:13:55,240 --> 00:13:57,600 Speaker 1: in the next you know, months, or even three months 270 00:13:57,720 --> 00:14:00,280 Speaker 1: or sometimes even six months, just as long as talks 271 00:14:00,320 --> 00:14:02,800 Speaker 1: go up for us, you know, by mid year, you know, 272 00:14:02,840 --> 00:14:04,600 Speaker 1: we're going in, and we don't care what happens in 273 00:14:04,600 --> 00:14:07,839 Speaker 1: the meantime. Leland, I know, you know, I'm just thinking 274 00:14:07,880 --> 00:14:10,320 Speaker 1: about kind of what we experienced here in the U. 275 00:14:10,440 --> 00:14:13,920 Speaker 1: S and the West, you know, as the pandemic initially, 276 00:14:13,960 --> 00:14:16,200 Speaker 1: as the virus initially went through the population, and the 277 00:14:16,320 --> 00:14:19,320 Speaker 1: terrible numbers. I guess we have some anecdotal data coming 278 00:14:19,360 --> 00:14:20,840 Speaker 1: out of China, but we don't really have any good 279 00:14:20,920 --> 00:14:25,480 Speaker 1: data about hospitalization's death rates, that type of thing. Is 280 00:14:25,480 --> 00:14:30,080 Speaker 1: there any good guesses you're using. Well, look, there's been 281 00:14:30,160 --> 00:14:32,360 Speaker 1: model after model that said China was going to hit 282 00:14:32,360 --> 00:14:35,400 Speaker 1: you know, a million plus and million plus deaths, and 283 00:14:36,160 --> 00:14:38,840 Speaker 1: I don't think anything has changed. Due to the fact 284 00:14:38,840 --> 00:14:41,800 Speaker 1: that they're that they're getting infected much faster than anyone 285 00:14:41,840 --> 00:14:44,600 Speaker 1: thought possible. So you know, it is a black box. 286 00:14:44,640 --> 00:14:46,360 Speaker 1: We don't know the death ray. We don't know the 287 00:14:46,440 --> 00:14:49,840 Speaker 1: cases either, although we assume just about everybody's getting COVID 288 00:14:50,080 --> 00:14:52,200 Speaker 1: in the big cities and that will eventually spread to 289 00:14:52,240 --> 00:14:54,920 Speaker 1: the countryside. So we don't and it has it's a 290 00:14:54,920 --> 00:14:56,800 Speaker 1: black box. But I think what it has done is 291 00:14:56,840 --> 00:15:00,400 Speaker 1: it is made investors a little bit more opt mystic, 292 00:15:00,400 --> 00:15:04,240 Speaker 1: oddly because they're seeing low reported deaths or or very 293 00:15:04,240 --> 00:15:07,600 Speaker 1: little reporting on deaths, but they know everyone's getting infected. 294 00:15:07,600 --> 00:15:10,040 Speaker 1: So there's this idea, okay, world, we're just weeks away 295 00:15:10,160 --> 00:15:13,200 Speaker 1: from COVID peaking in China. That's actually not what the 296 00:15:13,280 --> 00:15:16,400 Speaker 1: numbers say. There may be COVID peaks in some of 297 00:15:16,400 --> 00:15:18,320 Speaker 1: the larger cities, but you've got a lot more to spread. 298 00:15:18,440 --> 00:15:20,480 Speaker 1: So the fact that this is such a black box 299 00:15:20,520 --> 00:15:22,880 Speaker 1: I think is making it hard for investors. But you know, 300 00:15:22,960 --> 00:15:24,920 Speaker 1: there will be a recovery, it just may not be 301 00:15:24,960 --> 00:15:27,720 Speaker 1: as quickly as people are assuming. Leland In terms of 302 00:15:27,760 --> 00:15:30,680 Speaker 1: the timing, here was this simply a case of President 303 00:15:30,800 --> 00:15:32,920 Speaker 1: she wanting to get through the party Congress, get his 304 00:15:33,960 --> 00:15:37,320 Speaker 1: you know, next term, before he just pulled the band 305 00:15:37,320 --> 00:15:40,720 Speaker 1: aid off here. I don't think so, but I'll tell 306 00:15:40,760 --> 00:15:42,640 Speaker 1: you what I don't know anybody who knows who can 307 00:15:42,680 --> 00:15:45,040 Speaker 1: explain what happened other than the fact that that she 308 00:15:45,240 --> 00:15:48,680 Speaker 1: just sort of, you know, flipped on something that that 309 00:15:49,080 --> 00:15:51,840 Speaker 1: you know, he seemed pretty passionate about for three years. 310 00:15:52,200 --> 00:15:54,600 Speaker 1: Obviously that the economy was near a breaking point. We've 311 00:15:54,600 --> 00:15:57,000 Speaker 1: been reporting on that for for for not just months, 312 00:15:57,080 --> 00:16:00,280 Speaker 1: but years. Uh, you know, the the situa age with 313 00:16:00,320 --> 00:16:02,920 Speaker 1: the protests pressured him. But the fact that they had 314 00:16:03,000 --> 00:16:06,040 Speaker 1: multiple years to prepare for COVID zero coming off and 315 00:16:06,080 --> 00:16:09,040 Speaker 1: instead of you know, waiting after COVID spread season in 316 00:16:09,080 --> 00:16:12,560 Speaker 1: the winter, or preparing with m RNA vaccinations or or 317 00:16:12,760 --> 00:16:17,560 Speaker 1: therapeutics campaign or vaccinating the elderly, they just pulled it back. 318 00:16:17,680 --> 00:16:21,640 Speaker 1: And it's very hard to imagine this was well thought out, 319 00:16:21,720 --> 00:16:26,040 Speaker 1: so huge mystery, but it doesn't it doesn't speak very 320 00:16:26,120 --> 00:16:29,400 Speaker 1: highly of their you know, long term strategic prowess. What 321 00:16:29,440 --> 00:16:34,640 Speaker 1: do you think about the UM conflict with Taiwan UM 322 00:16:35,320 --> 00:16:39,640 Speaker 1: How bad could it get in terms of you know, 323 00:16:39,720 --> 00:16:43,320 Speaker 1: military intervention because they still are reliant on that economy 324 00:16:43,360 --> 00:16:46,880 Speaker 1: for chips to run their own right. Yeah, Look, taiwan 325 00:16:47,000 --> 00:16:49,000 Speaker 1: Is is hovering in the background. I don't think it's 326 00:16:49,000 --> 00:16:52,360 Speaker 1: a near term issue. But obviously they're gearing up their 327 00:16:52,720 --> 00:16:56,400 Speaker 1: military capabilities. The United States is doing similarly. You know, 328 00:16:56,440 --> 00:16:59,840 Speaker 1: Taiwan just reinstituted year long conscription. So this is something 329 00:17:00,040 --> 00:17:03,000 Speaker 1: it should be on hand everyone's mind. But I think 330 00:17:03,000 --> 00:17:05,200 Speaker 1: that the state of the global economy, the state of 331 00:17:05,280 --> 00:17:07,760 Speaker 1: China's economy right now, being so weak and and and 332 00:17:07,800 --> 00:17:09,840 Speaker 1: in the midst of this COVID wave, I don't think 333 00:17:09,880 --> 00:17:13,120 Speaker 1: anything is is on the minds of the leadership right now. 334 00:17:12,960 --> 00:17:16,280 Speaker 1: But this certainly should be a discussion topic as we go, 335 00:17:16,600 --> 00:17:18,280 Speaker 1: you know, a year or two in the future, because 336 00:17:18,320 --> 00:17:20,439 Speaker 1: by the end of this decade, you do have some 337 00:17:20,480 --> 00:17:24,920 Speaker 1: pretty pretty nasty, uh, pretty nasty challenges coming forward. And 338 00:17:24,920 --> 00:17:27,280 Speaker 1: and uh, you know, people have to be aware of 339 00:17:27,280 --> 00:17:29,639 Speaker 1: the possibility that this is something that that Beijing is 340 00:17:29,640 --> 00:17:32,240 Speaker 1: going to want to do before not too long. Leland, 341 00:17:32,480 --> 00:17:36,080 Speaker 1: do we have any good data or about the support 342 00:17:36,119 --> 00:17:39,879 Speaker 1: that she still has with his people, given maybe the 343 00:17:39,920 --> 00:17:43,280 Speaker 1: last few weeks with the COVID outbreak, You know, no, 344 00:17:43,520 --> 00:17:45,760 Speaker 1: we don't. There's there's no way of getting attitudes. I 345 00:17:45,800 --> 00:17:48,280 Speaker 1: think anyone who answered that survey negatively would put their 346 00:17:48,320 --> 00:17:50,760 Speaker 1: life at risk. But look, I think that the reality 347 00:17:50,800 --> 00:17:52,600 Speaker 1: here is that this has definitely been a ding to 348 00:17:52,640 --> 00:17:56,119 Speaker 1: the leadership, but that doesn't mean that the leadership is fracturing. 349 00:17:56,160 --> 00:17:58,359 Speaker 1: It doesn't mean that chij and Ping, you know, is 350 00:17:58,440 --> 00:18:01,240 Speaker 1: has has weakened dramatically. We just don't know. So a 351 00:18:01,280 --> 00:18:03,240 Speaker 1: lot of it will depend on how fast they can 352 00:18:03,240 --> 00:18:05,119 Speaker 1: get out of this current COVID wave and back to 353 00:18:05,240 --> 00:18:08,040 Speaker 1: an economy that's actually working. And then I think we 354 00:18:08,119 --> 00:18:10,200 Speaker 1: have to revaluate about six months and see where we 355 00:18:10,200 --> 00:18:13,080 Speaker 1: are there. Alright, great stuff. Leland Miller. He's the CEO 356 00:18:13,119 --> 00:18:16,439 Speaker 1: of China beij Book International. Uh really one of our 357 00:18:16,440 --> 00:18:18,200 Speaker 1: goat two voices when we want to get the what's 358 00:18:18,200 --> 00:18:23,479 Speaker 1: going on on the ground there in China. In our 359 00:18:24,040 --> 00:18:26,320 Speaker 1: Suitet conversation today, we want to check in with air 360 00:18:26,680 --> 00:18:31,320 Speaker 1: nor Limb CEO at Exaction No sorry, Evaccion Biotech. The 361 00:18:31,359 --> 00:18:34,960 Speaker 1: symbols e v A x on trades on nastac. You 362 00:18:34,960 --> 00:18:37,639 Speaker 1: can punch it into your Bloomberg Professional service. Take a 363 00:18:37,680 --> 00:18:39,919 Speaker 1: look at that. Stocks pretty flat today, but they've got 364 00:18:39,960 --> 00:18:43,600 Speaker 1: some big now. Yeah, but it was the open I know, 365 00:18:44,160 --> 00:18:47,040 Speaker 1: crazy stuff. So um part thanks so much for joining 366 00:18:47,080 --> 00:18:48,760 Speaker 1: us here. Talk to us about your news in the 367 00:18:48,800 --> 00:18:54,160 Speaker 1: cancer space today. What did you guys disclose. Yeah, thanks 368 00:18:54,160 --> 00:18:56,879 Speaker 1: so much for calling on. What we've done today is 369 00:18:57,240 --> 00:19:00,160 Speaker 1: just releasing the news. But the FDA has accepted will 370 00:19:00,240 --> 00:19:04,160 Speaker 1: giving a green light to our clinical trial, our phase 371 00:19:04,240 --> 00:19:09,600 Speaker 1: two clinical trial for a personalized cancer vaccine. So what 372 00:19:10,280 --> 00:19:13,040 Speaker 1: exactly is this? There's a lot of different kinds of cancer. 373 00:19:13,200 --> 00:19:17,840 Speaker 1: I've read on UM your website that it's melanoma treatment. 374 00:19:17,840 --> 00:19:20,640 Speaker 1: But explain it to us, you know, obviously not so 375 00:19:20,680 --> 00:19:22,399 Speaker 1: complicated that we need a doctor to understand it a 376 00:19:22,440 --> 00:19:26,080 Speaker 1: little bit more in depth. Yeah, well, it's it's pretty 377 00:19:26,160 --> 00:19:28,240 Speaker 1: similar to what was in the news about a month 378 00:19:28,240 --> 00:19:31,920 Speaker 1: ago from Moderna and Murphy with our a Morna vaccine. 379 00:19:31,960 --> 00:19:35,240 Speaker 1: So this is a similar vaccine where we essentially make 380 00:19:35,400 --> 00:19:39,359 Speaker 1: a new product for each patient. So very simply, we 381 00:19:39,480 --> 00:19:43,240 Speaker 1: take a sample from the patient, we use artificial intelligence 382 00:19:43,320 --> 00:19:46,399 Speaker 1: to see where the mutations are, and then we create 383 00:19:46,440 --> 00:19:50,480 Speaker 1: a vaccine that is tailored for just that patient. And 384 00:19:50,600 --> 00:19:53,159 Speaker 1: all is just to make sure that we get a 385 00:19:53,200 --> 00:19:57,159 Speaker 1: strong immune response towards that. Very humor, So when you 386 00:19:57,240 --> 00:20:00,720 Speaker 1: say vaccine, I think of something that's preventative. Um, does 387 00:20:00,760 --> 00:20:08,120 Speaker 1: that mean this won't treat someone who already has metastasized melanoma? Oh, yes, 388 00:20:08,480 --> 00:20:13,360 Speaker 1: and that's it's usually called therapeutic vaccines or indeed personalized 389 00:20:13,440 --> 00:20:19,360 Speaker 1: cancer immunotherapies. So these are patients at with advanced metastatic 390 00:20:19,440 --> 00:20:22,920 Speaker 1: cancer where we can look at the tumors and through 391 00:20:23,000 --> 00:20:27,880 Speaker 1: artificial intelligence identify the different mutations in that very tumor 392 00:20:28,240 --> 00:20:31,600 Speaker 1: and that is the basis for this immunotherapy. Or well, 393 00:20:31,600 --> 00:20:36,920 Speaker 1: that's incredible news. And um, what does this mean for 394 00:20:37,160 --> 00:20:41,040 Speaker 1: you know, maybe patients listening? Um, is there a possibility 395 00:20:41,160 --> 00:20:44,320 Speaker 1: that anyone's going to be able to get access to 396 00:20:44,400 --> 00:20:48,840 Speaker 1: this in the near in the near future, Well, I 397 00:20:48,880 --> 00:20:51,600 Speaker 1: definitely think this is the future. How long it will 398 00:20:51,640 --> 00:20:54,840 Speaker 1: take that depends because it is challenging. We need to 399 00:20:54,880 --> 00:20:59,159 Speaker 1: make it right for every patient. But given that it 400 00:20:59,200 --> 00:21:02,399 Speaker 1: can be done, we also know today that the sects 401 00:21:02,560 --> 00:21:06,080 Speaker 1: are better. We already have a phase one trial that 402 00:21:06,119 --> 00:21:09,600 Speaker 1: has been presenting most of the results where we can 403 00:21:09,600 --> 00:21:12,159 Speaker 1: show that we have two thirds of the patients responding 404 00:21:12,200 --> 00:21:15,800 Speaker 1: to the therapy in the late stage metastatic melanoma. So 405 00:21:15,880 --> 00:21:20,159 Speaker 1: that's quite the very promising results, I would say, And 406 00:21:20,480 --> 00:21:23,359 Speaker 1: so from our perspective, we are really confident it works 407 00:21:23,440 --> 00:21:27,000 Speaker 1: and it will provide better results. But again, you need 408 00:21:27,040 --> 00:21:29,399 Speaker 1: to make a drug for each patient, so it is 409 00:21:29,440 --> 00:21:32,560 Speaker 1: more complicated, and I would think it would be extreme, 410 00:21:32,680 --> 00:21:35,960 Speaker 1: extraordinarily difficult to get this to market in scale. If 411 00:21:36,000 --> 00:21:40,280 Speaker 1: every vaccine is personalized for an individual patient, how do 412 00:21:40,359 --> 00:21:43,080 Speaker 1: you in fact distributed in scale or get it to 413 00:21:43,119 --> 00:21:49,000 Speaker 1: the patients. Yeah, today we have a peptide based platform, 414 00:21:49,720 --> 00:21:52,280 Speaker 1: you know Modern and Murky. They are developing their own 415 00:21:52,280 --> 00:21:55,800 Speaker 1: in an m RNA based platform, and we have ourselves 416 00:21:55,960 --> 00:22:00,160 Speaker 1: a new DNA based platform coming up and we needse platform. 417 00:22:00,880 --> 00:22:04,760 Speaker 1: Once you have proven that is effective, you can definitely 418 00:22:04,800 --> 00:22:09,160 Speaker 1: streamline all the processes and make this very quick. Today 419 00:22:09,280 --> 00:22:12,080 Speaker 1: we can do it with a peptide based platform in 420 00:22:12,119 --> 00:22:16,199 Speaker 1: about two months. We foresee that in a couple of 421 00:22:16,280 --> 00:22:18,119 Speaker 1: years we would be able to do it with a 422 00:22:18,240 --> 00:22:21,560 Speaker 1: DNA based platform in maybe two weeks and then bring 423 00:22:21,600 --> 00:22:25,240 Speaker 1: down the cost tremendously. So it can definitely be done, 424 00:22:25,520 --> 00:22:28,800 Speaker 1: be done. It's just we need the engagement or bigger 425 00:22:28,840 --> 00:22:32,280 Speaker 1: players like the formats. But as I said that Mark 426 00:22:32,400 --> 00:22:36,200 Speaker 1: is already there and also other formats like growth, so 427 00:22:36,440 --> 00:22:39,600 Speaker 1: they are taking it very seriously enough. So what does 428 00:22:39,680 --> 00:22:44,640 Speaker 1: your capital structure look like? We just mentioned your depositary 429 00:22:44,800 --> 00:22:48,600 Speaker 1: seats trading here e v a X is the ticker. 430 00:22:49,280 --> 00:22:51,640 Speaker 1: I see a market cap of forty two million dollars, 431 00:22:51,640 --> 00:22:56,359 Speaker 1: which is fairly small, um, but I guess you're in 432 00:22:56,400 --> 00:22:59,680 Speaker 1: the position to to exponentially grow that. What is the 433 00:22:59,680 --> 00:23:03,920 Speaker 1: structure look look like now? Yes, and so we are 434 00:23:04,000 --> 00:23:06,399 Speaker 1: a Danish company coming from a private setting. And then 435 00:23:06,440 --> 00:23:08,840 Speaker 1: we were listening in New York about two years ago, 436 00:23:09,119 --> 00:23:12,119 Speaker 1: and at the start there was a lot of the 437 00:23:12,160 --> 00:23:16,560 Speaker 1: institutions they have over the last year many of them 438 00:23:16,800 --> 00:23:21,359 Speaker 1: actually left the company in the quite depressing market that 439 00:23:21,400 --> 00:23:26,320 Speaker 1: has been here. We see now that hopefully there is 440 00:23:26,359 --> 00:23:29,960 Speaker 1: coming more interesting back into this field, especially into personalized 441 00:23:30,000 --> 00:23:33,680 Speaker 1: cancer mini therapy. But that's that very still quite a 442 00:23:33,760 --> 00:23:39,399 Speaker 1: significant part of retail and the Scandinavian retails and also 443 00:23:40,040 --> 00:23:44,920 Speaker 1: smaller US investors. Alright, great stuff. Pair Pear Norland, he's 444 00:23:44,920 --> 00:23:48,359 Speaker 1: the CEO of Evaccition, the symbols e v a X. 445 00:23:48,920 --> 00:23:51,640 Speaker 1: I was some promising news on some of their drug therapies. 446 00:23:51,760 --> 00:23:54,119 Speaker 1: We wanted to check in there because it seems like 447 00:23:54,240 --> 00:23:58,199 Speaker 1: here with the m r n A vaccine technology and 448 00:23:58,280 --> 00:24:01,800 Speaker 1: others starting to move pretty quickly here, so we want 449 00:24:01,800 --> 00:24:07,400 Speaker 1: to always stay on top of that. Let's get to Washington, 450 00:24:07,480 --> 00:24:10,600 Speaker 1: d C. Because apparently the rumor is Connress is going 451 00:24:10,640 --> 00:24:12,520 Speaker 1: back to work here, so we want to see what 452 00:24:12,640 --> 00:24:15,280 Speaker 1: it will be up. I don't know, we'll see Nathan Dean, 453 00:24:15,560 --> 00:24:19,040 Speaker 1: Senior US POSSI annalso Bloomberg Intelligence Joints US here, Nathan. 454 00:24:19,520 --> 00:24:22,840 Speaker 1: All right, the folks done, Congress are getting back to work. 455 00:24:23,359 --> 00:24:25,920 Speaker 1: I think the first order of businesses doesn't the Republican 456 00:24:25,960 --> 00:24:29,240 Speaker 1: Party have to get uh speaker or something. What's the 457 00:24:29,280 --> 00:24:31,680 Speaker 1: latest on that? That's absolutely right, you know, right now 458 00:24:31,760 --> 00:24:34,600 Speaker 1: the Republican caucus is actually debating about who's going to 459 00:24:34,600 --> 00:24:36,399 Speaker 1: be the next Speaker of the House. And it's actually 460 00:24:36,520 --> 00:24:38,680 Speaker 1: uh fairly good for those of us who want to 461 00:24:38,680 --> 00:24:42,159 Speaker 1: watch popcorn and uh, you know, politics intrigue right now 462 00:24:42,240 --> 00:24:45,200 Speaker 1: Speaker McCarthy is struggling to get those votes. Now. From 463 00:24:45,200 --> 00:24:47,639 Speaker 1: a market perspective, really this is just a delay of 464 00:24:47,680 --> 00:24:51,040 Speaker 1: a few weeks. I mean, eventually whoever becomes speaker, you know, 465 00:24:51,080 --> 00:24:54,080 Speaker 1: we we anticipate that to be resolved in the next 466 00:24:54,119 --> 00:24:57,360 Speaker 1: week or so. But the Republicans need this because they 467 00:24:57,359 --> 00:25:00,080 Speaker 1: already have like five or seven bills just ready to 468 00:25:00,160 --> 00:25:04,960 Speaker 1: go on repealing I R S funds, abortions, immigration, border security. 469 00:25:05,200 --> 00:25:06,879 Speaker 1: None of these bills are really going to pass. But 470 00:25:07,760 --> 00:25:11,200 Speaker 1: usually when we're a new Congress comes in, whoever is 471 00:25:11,240 --> 00:25:13,800 Speaker 1: the Speaker of the House needs those few weeks to say, Okay, 472 00:25:13,840 --> 00:25:16,160 Speaker 1: these are our policy goals and this is how we're 473 00:25:16,160 --> 00:25:19,000 Speaker 1: gonna move forward, and any further intrigue, if you will, 474 00:25:19,080 --> 00:25:22,159 Speaker 1: is just going to delay that. Um, what are the 475 00:25:22,240 --> 00:25:27,639 Speaker 1: chances that we see uh, George Santos elected speaker? Well, 476 00:25:27,680 --> 00:25:30,520 Speaker 1: you know that's actually that's another issue that's obviously that's 477 00:25:30,520 --> 00:25:32,679 Speaker 1: playing out right now. I mean the Bloomberg newss have 478 00:25:32,720 --> 00:25:35,600 Speaker 1: reported that you know, he's under investigation and so forth. 479 00:25:35,640 --> 00:25:39,080 Speaker 1: But what I will say in multiple jurisdictions in different 480 00:25:39,119 --> 00:25:42,600 Speaker 1: countries on different continents exactly. I mean, we we saw 481 00:25:42,640 --> 00:25:45,159 Speaker 1: the news out of Brazil that you know, they dusted 482 00:25:45,160 --> 00:25:48,239 Speaker 1: off an investigation as well, but you know, because they 483 00:25:48,240 --> 00:25:51,800 Speaker 1: couldn't find him, right he was a scoff law. Well, 484 00:25:51,840 --> 00:25:54,320 Speaker 1: you know, it just signals though that the problem that 485 00:25:54,359 --> 00:25:55,879 Speaker 1: the Republicans are going to have with the House of 486 00:25:55,960 --> 00:25:59,640 Speaker 1: Representatives because they have such a thin majority, and if 487 00:25:59,880 --> 00:26:02,639 Speaker 1: they were to lose George Santos and there's another runoff, 488 00:26:02,680 --> 00:26:04,520 Speaker 1: that's just another person that you know, it can make 489 00:26:04,520 --> 00:26:07,720 Speaker 1: that margin even slimmer. So you know, as this plays 490 00:26:07,760 --> 00:26:12,439 Speaker 1: out through twenty four, I just also remind people is that, 491 00:26:13,000 --> 00:26:16,119 Speaker 1: you know, you always have like five to seven retirements 492 00:26:16,200 --> 00:26:18,880 Speaker 1: or deaths or so forth in the house, and so, uh, 493 00:26:18,880 --> 00:26:20,800 Speaker 1: you know, with such a slim margin, you know, obviously 494 00:26:20,840 --> 00:26:25,159 Speaker 1: things could change. Dude, I mean, Kevin McCarthy and the 495 00:26:25,200 --> 00:26:29,479 Speaker 1: speaker bid is nothing on you know, popcorn drama compared 496 00:26:29,520 --> 00:26:33,240 Speaker 1: to what's going on with Santos. Is there a possibility 497 00:26:33,320 --> 00:26:35,720 Speaker 1: that this guy, I mean the Post. I was reading 498 00:26:35,680 --> 00:26:39,320 Speaker 1: a story in the Post. So he lied about graduating 499 00:26:39,359 --> 00:26:42,880 Speaker 1: from college, not just where, but graduating at all. Uh. 500 00:26:42,880 --> 00:26:46,920 Speaker 1: He lied about working for Goldman Sachs and city where's 501 00:26:46,920 --> 00:26:50,280 Speaker 1: the OPO research before he got here. He lied about 502 00:26:50,440 --> 00:26:52,959 Speaker 1: he's at He owned thirteen properties, he lives with his 503 00:26:52,960 --> 00:26:55,879 Speaker 1: sister and doesn't own one, but he's thinking about buying one. UM. 504 00:26:55,960 --> 00:27:00,119 Speaker 1: Maybe more damning is the fact that he may have 505 00:27:00,320 --> 00:27:06,520 Speaker 1: spent campaign funds on personal travel and rent um and 506 00:27:06,560 --> 00:27:10,560 Speaker 1: now we find out that Brazil is reopening UM an 507 00:27:10,560 --> 00:27:14,800 Speaker 1: investigation into him. He's apparently stole a checkbook and then 508 00:27:15,720 --> 00:27:19,320 Speaker 1: went and used the stolen checks to buy stuff, admitting 509 00:27:19,440 --> 00:27:21,800 Speaker 1: later that he did it, but now he denies it. 510 00:27:21,840 --> 00:27:25,280 Speaker 1: I mean, can this guy really stay i mean even 511 00:27:25,359 --> 00:27:29,639 Speaker 1: start in office. So you know, obviously members of members 512 00:27:29,640 --> 00:27:32,000 Speaker 1: in Congress under investigation is not a new thing. I mean, 513 00:27:32,480 --> 00:27:35,439 Speaker 1: there's there's always a member of Congress who's under investigation 514 00:27:35,480 --> 00:27:38,040 Speaker 1: for something. Um. You know, it will just be interesting 515 00:27:38,080 --> 00:27:41,199 Speaker 1: to see though, do the Republicans actually embrace him or 516 00:27:41,240 --> 00:27:43,800 Speaker 1: do they keep him aside. You know, we saw statements 517 00:27:43,800 --> 00:27:45,920 Speaker 1: over the weekend saying that, you know, it wouldn't be 518 00:27:46,440 --> 00:27:51,159 Speaker 1: and I'm paraphrasing here, essentially saying, uh, you know, resigning 519 00:27:51,240 --> 00:27:53,520 Speaker 1: is not a bad thing for him. Um to your 520 00:27:53,560 --> 00:27:56,040 Speaker 1: earlier point about the opposition research, that is a question 521 00:27:56,080 --> 00:27:58,480 Speaker 1: that the Democrats are going to be asking themselves. Why 522 00:27:58,520 --> 00:28:02,480 Speaker 1: didn't we actually discover this until the reporters did so? Uh, 523 00:28:02,520 --> 00:28:04,480 Speaker 1: you know, this process is going to play out. It's 524 00:28:04,520 --> 00:28:06,560 Speaker 1: not going to happen fairly soon, I don't think. But 525 00:28:06,640 --> 00:28:09,240 Speaker 1: even if it does, if he were to just resign 526 00:28:09,280 --> 00:28:10,840 Speaker 1: in the next week or so, you would have a 527 00:28:10,840 --> 00:28:13,560 Speaker 1: special election and so forth. But the damonamics of Congress 528 00:28:13,600 --> 00:28:15,679 Speaker 1: wouldn't change. Paul, I'm gonna ask a question that may 529 00:28:15,720 --> 00:28:18,639 Speaker 1: be controversial. Okay, what does this say about people in 530 00:28:18,680 --> 00:28:22,679 Speaker 1: Long Island that they would elect this guy. I don't know. 531 00:28:22,880 --> 00:28:26,680 Speaker 1: I don't know, uh, Nathan. I mean as I think about, 532 00:28:27,280 --> 00:28:29,879 Speaker 1: you know, the Republicans and their inability to get a 533 00:28:29,880 --> 00:28:32,640 Speaker 1: speaker done in a timely basis, does that just highlight 534 00:28:33,640 --> 00:28:37,360 Speaker 1: that this is a party that really is maybe more 535 00:28:37,480 --> 00:28:41,600 Speaker 1: divided than maybe we initially thought. No. I mean, look, 536 00:28:41,840 --> 00:28:45,400 Speaker 1: you always you always have, you know, wings of certain 537 00:28:45,440 --> 00:28:48,200 Speaker 1: parties that are always going to be you know, challenging 538 00:28:48,240 --> 00:28:51,480 Speaker 1: the speaker and challenging leadership to take their position. Uh. 539 00:28:51,520 --> 00:28:53,440 Speaker 1: You know, we saw this under Speaker Baner, and we 540 00:28:53,480 --> 00:28:56,600 Speaker 1: saw this under Speaker Pelosi. So that's always out there. 541 00:28:56,600 --> 00:28:59,600 Speaker 1: The question is that can they come together and unify 542 00:29:00,360 --> 00:29:03,320 Speaker 1: for an agenda because you know, this is a divided Congress. 543 00:29:03,360 --> 00:29:06,080 Speaker 1: So the Republicans understand that there's not going to be 544 00:29:06,080 --> 00:29:08,160 Speaker 1: a lot of policy wins here. I mean, this is 545 00:29:08,200 --> 00:29:10,120 Speaker 1: going to be one of those where where they're gonna 546 00:29:10,120 --> 00:29:11,880 Speaker 1: have to pick their fights, you know, the leverage points 547 00:29:11,880 --> 00:29:14,320 Speaker 1: of government funding bills and the debt ceiling and so forth. 548 00:29:14,600 --> 00:29:17,840 Speaker 1: From the market perspective, though, you know, the most concerning 549 00:29:17,880 --> 00:29:20,760 Speaker 1: thing for us in terms of whether the Republicans are 550 00:29:20,840 --> 00:29:23,640 Speaker 1: unified or not comes to the debt ceiling. Fortunately that's 551 00:29:23,640 --> 00:29:25,320 Speaker 1: going to be in September, so a lot of things 552 00:29:25,360 --> 00:29:27,840 Speaker 1: are going to happen between now and then. But uh, 553 00:29:27,880 --> 00:29:30,400 Speaker 1: you know, we still anticipate that this session may actually 554 00:29:30,480 --> 00:29:33,840 Speaker 1: be somewhat fruitful for legislation to get across some some legislation, 555 00:29:33,920 --> 00:29:35,840 Speaker 1: not a lot. I gotta ask you about something that 556 00:29:35,960 --> 00:29:40,040 Speaker 1: isn't being legislated anymore, but I guess worked out at Treasury, 557 00:29:40,080 --> 00:29:44,480 Speaker 1: and that is um the tax credits for evs from 558 00:29:44,520 --> 00:29:47,880 Speaker 1: the I r A. This is absolutely fascinating because the 559 00:29:48,000 --> 00:29:53,920 Speaker 1: law um as it stands, I mean, most electric vehicles, 560 00:29:53,920 --> 00:29:56,960 Speaker 1: if not all, are gonna be will no longer be 561 00:29:57,040 --> 00:30:00,920 Speaker 1: eligible in a couple of months for dollar tax credit. 562 00:30:00,920 --> 00:30:04,600 Speaker 1: But I guess it's up to Treasury to decide which vehicles, 563 00:30:05,120 --> 00:30:07,960 Speaker 1: uh you know how lacks they are um when they 564 00:30:08,000 --> 00:30:12,600 Speaker 1: try and adhere to the legislation because battery has to 565 00:30:12,600 --> 00:30:17,640 Speaker 1: have of its components coming from a trading ally and 566 00:30:17,640 --> 00:30:19,520 Speaker 1: we're not even sure what a trading ally is. How 567 00:30:19,560 --> 00:30:21,560 Speaker 1: we're going to figure this out, you know. And it 568 00:30:21,600 --> 00:30:23,840 Speaker 1: was funny I was reading about how like the certain 569 00:30:24,160 --> 00:30:27,760 Speaker 1: you know, the the uh, the height of your base 570 00:30:28,480 --> 00:30:31,719 Speaker 1: of the car determines how Sometimes it's an suv, sometimes 571 00:30:31,720 --> 00:30:34,560 Speaker 1: it's not, and so forth like that. Yeah, the Tesla model, why, 572 00:30:34,680 --> 00:30:37,600 Speaker 1: for example, is two hundred thirty eight pounds too heavy 573 00:30:37,640 --> 00:30:41,040 Speaker 1: to qualify, sorry, too light to qualify for the suv 574 00:30:41,160 --> 00:30:44,320 Speaker 1: tacked credit, so it won't get it. And someone suggested 575 00:30:44,360 --> 00:30:46,920 Speaker 1: on Twitter that Elon must just added two fifty pound 576 00:30:47,000 --> 00:30:49,680 Speaker 1: weight to the trunk that you know, drivers can remove 577 00:30:49,760 --> 00:30:52,080 Speaker 1: after they buy the car. But you know, but there's 578 00:30:52,120 --> 00:30:54,600 Speaker 1: nothing new. So I mean, obviously the IRA comes out, 579 00:30:54,640 --> 00:30:57,320 Speaker 1: it's thousands of pages and so forth, but it's written 580 00:30:57,360 --> 00:31:00,240 Speaker 1: at the you know, hundred thousand foot view level, and 581 00:31:00,360 --> 00:31:04,320 Speaker 1: most legislation actually directs the uh, you know, the executive branch, 582 00:31:04,440 --> 00:31:07,320 Speaker 1: via the regulators or the agencies and so forth, to 583 00:31:07,400 --> 00:31:10,160 Speaker 1: actually put that down at the ten foot branch. And 584 00:31:10,240 --> 00:31:12,800 Speaker 1: so as Treasury actually jumps into this, they're gonna look 585 00:31:12,840 --> 00:31:15,760 Speaker 1: at the discrepancies and discrepancies in Congress is nothing new. 586 00:31:15,840 --> 00:31:18,960 Speaker 1: This happens all the time, and so you know, as 587 00:31:19,000 --> 00:31:21,920 Speaker 1: this as your Treasury moves forward to actually implement this stuff, 588 00:31:22,160 --> 00:31:25,040 Speaker 1: if they see certain discrepancies where they think it's just 589 00:31:25,160 --> 00:31:27,120 Speaker 1: not going to work out, or so forth, like that 590 00:31:27,320 --> 00:31:29,120 Speaker 1: they always have the ability to go back to Congress 591 00:31:29,160 --> 00:31:32,239 Speaker 1: and saying, hey, fix this. And if Congress doesn't do this, 592 00:31:32,320 --> 00:31:34,520 Speaker 1: then you know, they can look within their statute to 593 00:31:34,560 --> 00:31:36,680 Speaker 1: see is there any wiggle room that they can use 594 00:31:36,760 --> 00:31:39,760 Speaker 1: issue A via the rulemaking process. Nathan, the State of 595 00:31:39,760 --> 00:31:43,160 Speaker 1: the Union is coming up from not mistake in any 596 00:31:43,200 --> 00:31:45,680 Speaker 1: preview of what we may hear, what we should be 597 00:31:45,680 --> 00:31:47,600 Speaker 1: in to look out for. So the two things that 598 00:31:47,640 --> 00:31:50,080 Speaker 1: I'm looking for, you know, obviously we're still a month 599 00:31:50,080 --> 00:31:54,280 Speaker 1: and so away, is geopolitical issues, so essentially Russia and China. 600 00:31:54,600 --> 00:31:57,720 Speaker 1: How does the President going to take those issues on, 601 00:31:57,760 --> 00:31:59,920 Speaker 1: what's his vision and so forth? When it comes to 602 00:32:00,000 --> 00:32:02,520 Speaker 1: domestic policy, it's nice to hear what he says, but 603 00:32:03,000 --> 00:32:05,040 Speaker 1: you know, Congress more often than not just says, thank you, 604 00:32:05,120 --> 00:32:07,480 Speaker 1: Mr President, but we're gonna do whatever we want anyway. 605 00:32:07,760 --> 00:32:09,320 Speaker 1: The second thing that I'm going to look for into 606 00:32:09,360 --> 00:32:11,200 Speaker 1: the State of the Union is whether or not he 607 00:32:11,240 --> 00:32:13,680 Speaker 1: announces that he uses it as a catalyst to run 608 00:32:13,720 --> 00:32:16,120 Speaker 1: for re election or not. I'm not sure he will. 609 00:32:16,160 --> 00:32:18,040 Speaker 1: I think that decision will come outside of the State 610 00:32:18,040 --> 00:32:20,360 Speaker 1: of the Union. But you know, if he were to 611 00:32:20,480 --> 00:32:22,280 Speaker 1: decide that, I'm not going to run for re election. 612 00:32:22,360 --> 00:32:24,600 Speaker 1: He's going to lose a lot of political capital, and 613 00:32:24,600 --> 00:32:26,719 Speaker 1: that state of the Union may fall flat. So I 614 00:32:26,760 --> 00:32:29,600 Speaker 1: think that decision will come afterwards, but there's always the 615 00:32:29,680 --> 00:32:33,360 Speaker 1: chance it could. All right, good stuff. Nathan Dean coming 616 00:32:33,440 --> 00:32:36,760 Speaker 1: to us from Washington, d C. He's all he's knee 617 00:32:36,800 --> 00:32:39,160 Speaker 1: deep in all this Congress and policies. You know, the 618 00:32:39,160 --> 00:32:42,880 Speaker 1: best thing for me is about three We're one year 619 00:32:42,960 --> 00:32:47,440 Speaker 1: closer to getting my salt deduction back. Is that right? 620 00:32:47,520 --> 00:32:51,120 Speaker 1: When I think, Nathan, by the way, isn't it is 621 00:32:51,160 --> 00:32:55,560 Speaker 1: he still there? Isn't it? When we get the salt back? Well, 622 00:32:55,680 --> 00:32:58,640 Speaker 1: you know the Trump tax cuts expiring five and so 623 00:32:58,720 --> 00:33:01,120 Speaker 1: I think that the eight I'm bringing the salt back 624 00:33:01,160 --> 00:33:04,440 Speaker 1: will actually be uh be a lot more. Uh. We'll 625 00:33:04,480 --> 00:33:06,840 Speaker 1: take place later this year and earlier next year. And 626 00:33:06,840 --> 00:33:08,520 Speaker 1: for those of you living in New York and New Jersey, 627 00:33:09,080 --> 00:33:10,880 Speaker 1: hopefully it works out on the positive side for you. 628 00:33:11,520 --> 00:33:14,240 Speaker 1: See Matt smiling, he's hoping. Nathan Dean, senior ys policy 629 00:33:14,280 --> 00:33:18,040 Speaker 1: analyst with Bloomberg Intelligence, thanks so much for joining us 630 00:33:18,080 --> 00:33:21,120 Speaker 1: here again. I guess I gotta get a speaker there 631 00:33:21,120 --> 00:33:23,040 Speaker 1: for the Republican Party. That's kind of the first order 632 00:33:23,080 --> 00:33:26,120 Speaker 1: business before they can move anything forward. So apparently that 633 00:33:26,240 --> 00:33:28,720 Speaker 1: they're still kind of negotiating. I kind of envisioned backroom 634 00:33:28,800 --> 00:33:32,760 Speaker 1: deals getting cut here between various factions, kind of like 635 00:33:32,760 --> 00:33:39,080 Speaker 1: like the old days. Here, let's talk commodities. Let's talk 636 00:33:39,160 --> 00:33:42,160 Speaker 1: E T F S. Let's talk commodity E T S. 637 00:33:42,240 --> 00:33:44,400 Speaker 1: We can do that. Bob Inter, director of ETF Investment 638 00:33:44,400 --> 00:33:47,320 Speaker 1: Strategy at Aberdeen, joins us live here in the Bloomberg 639 00:33:47,320 --> 00:33:52,240 Speaker 1: Interactive Broker studio. Bob, we're throwing out it's it's in 640 00:33:52,280 --> 00:33:55,720 Speaker 1: the rear view mirror. Three. What are some of the 641 00:33:55,760 --> 00:33:58,880 Speaker 1: ideas that you're thinking about for your clients. Sure, so 642 00:33:58,920 --> 00:34:01,640 Speaker 1: we look at the act drop coming into this year, 643 00:34:02,280 --> 00:34:05,560 Speaker 1: and we see that the US dollar long positioning it 644 00:34:05,640 --> 00:34:07,760 Speaker 1: still looks pretty crowded. Started to come off at the 645 00:34:07,800 --> 00:34:09,640 Speaker 1: end of last year, but it still looks crowded. If 646 00:34:09,640 --> 00:34:11,919 Speaker 1: we start to get a reversal of that, we could 647 00:34:11,960 --> 00:34:15,960 Speaker 1: see some dollar weakness that's generally speaking, really very good 648 00:34:16,000 --> 00:34:21,040 Speaker 1: for precious medals. Second thing, we have commodity inventories which 649 00:34:21,040 --> 00:34:25,320 Speaker 1: are really incredibly low. No one's paying attention to it. Um. 650 00:34:25,440 --> 00:34:29,480 Speaker 1: The London Medals Exchange just announced twenty five year low 651 00:34:29,960 --> 00:34:37,560 Speaker 1: in the six major medals inventories. Why yeah, why is that? Why? Well, 652 00:34:37,719 --> 00:34:42,920 Speaker 1: it some of it is because there are labor strikes 653 00:34:42,920 --> 00:34:47,200 Speaker 1: in South America that have reduced supply. UM. At one point, 654 00:34:47,320 --> 00:34:52,880 Speaker 1: natural gas was the equivalent of apparel for an oil equivalent. 655 00:34:53,640 --> 00:34:56,680 Speaker 1: So those are costs that go into the manufacture of 656 00:34:56,719 --> 00:35:01,040 Speaker 1: these very energy intense medals. So if you can't if 657 00:35:01,080 --> 00:35:03,200 Speaker 1: you compete in the global marketplace, you don't make it 658 00:35:03,239 --> 00:35:06,000 Speaker 1: in Europe, you make it somewhere else. So is that why? 659 00:35:06,000 --> 00:35:07,960 Speaker 1: I mean? I was looking at gold this morning. Right now, 660 00:35:08,000 --> 00:35:11,600 Speaker 1: it's trading eighteen thirty a troy ounce, and I thought, 661 00:35:11,600 --> 00:35:16,120 Speaker 1: why is gold on a tear to the upside when 662 00:35:16,719 --> 00:35:19,439 Speaker 1: you know we're still dealing with runaway inflation. The Fed 663 00:35:19,480 --> 00:35:22,200 Speaker 1: has raised four or fifty basis points in one year 664 00:35:22,239 --> 00:35:24,719 Speaker 1: and is going to keep going this year. Um, it 665 00:35:24,760 --> 00:35:28,200 Speaker 1: just doesn't make much sense add into the at in 666 00:35:28,280 --> 00:35:30,680 Speaker 1: the fact that inflation is coming down, right, So it's 667 00:35:30,760 --> 00:35:33,279 Speaker 1: if it's really a hedge, why buy it now? It 668 00:35:33,880 --> 00:35:36,120 Speaker 1: absolutely stood out to us going into the end of 669 00:35:36,120 --> 00:35:39,000 Speaker 1: the year last year we said something's the market is 670 00:35:39,040 --> 00:35:42,799 Speaker 1: fundamentally looking at gold differently than than it did before. 671 00:35:42,840 --> 00:35:46,240 Speaker 1: At one point last year, eighteen trillion dollars of negative 672 00:35:46,280 --> 00:35:51,280 Speaker 1: yielding bonds across the world. Now it's about a trillion 673 00:35:51,480 --> 00:35:55,440 Speaker 1: just what's left. In Japan. Real yields rose, they came 674 00:35:55,440 --> 00:35:57,600 Speaker 1: back a little bit, but they rose at one point 675 00:35:57,640 --> 00:36:01,759 Speaker 1: that the real yield equivalent, it would tell you the 676 00:36:01,800 --> 00:36:04,520 Speaker 1: gold should be seven an ounce, and here it is 677 00:36:04,560 --> 00:36:07,680 Speaker 1: at eight hundred. So something different is going on. What 678 00:36:07,840 --> 00:36:12,640 Speaker 1: the something different is that in the third quarter official 679 00:36:12,800 --> 00:36:16,480 Speaker 1: gold purchases from central banks and the like, we're four 680 00:36:16,560 --> 00:36:22,120 Speaker 1: hundred tons now. That is more than double the last 681 00:36:22,719 --> 00:36:27,200 Speaker 1: roughly double the last the next closest largest purchase in 682 00:36:27,239 --> 00:36:30,960 Speaker 1: a quarter, and it's the largest since they've been keeping records. 683 00:36:31,000 --> 00:36:36,080 Speaker 1: And there they're stocking up, they're diversifying their reserves away 684 00:36:36,120 --> 00:36:39,439 Speaker 1: from U S dollars. That's big, that's a big deal. 685 00:36:39,640 --> 00:36:42,080 Speaker 1: Talk to us about China. They're reopening. We've been talking 686 00:36:42,080 --> 00:36:43,839 Speaker 1: about it for the last few weeks now. And if 687 00:36:43,840 --> 00:36:47,400 Speaker 1: I'm a commodity guy and I'm thinking about my demand model, 688 00:36:47,520 --> 00:36:51,279 Speaker 1: my supply model, wow, i gotta recalibrate now. It's it's 689 00:36:51,320 --> 00:36:53,520 Speaker 1: actually a little bit bigger than just than just China. 690 00:36:53,560 --> 00:36:57,120 Speaker 1: If you think about it, we're returning the calendar here. 691 00:36:57,560 --> 00:37:01,640 Speaker 1: It's been three years since we've seen what global demand 692 00:37:01,719 --> 00:37:05,200 Speaker 1: really looks like. The whole world hasn't been open simultaneously 693 00:37:05,239 --> 00:37:08,000 Speaker 1: for three years. We can't predict the next three months. 694 00:37:08,400 --> 00:37:11,520 Speaker 1: And now we're trying to say exactly what demand is 695 00:37:11,520 --> 00:37:13,319 Speaker 1: going to look like, and we haven't seen to come 696 00:37:13,360 --> 00:37:15,200 Speaker 1: on and say that. You know, we continue to ask 697 00:37:15,280 --> 00:37:21,080 Speaker 1: these questions and everybody posits of forecast anyway, but it's 698 00:37:21,120 --> 00:37:24,279 Speaker 1: fair to say there's zero visibility, dude, Like we're in 699 00:37:24,360 --> 00:37:28,360 Speaker 1: completely unprecedented, unchartered territory, so we don't know what's going 700 00:37:28,400 --> 00:37:33,280 Speaker 1: to happen. Correct. Um, it is uh also a massive 701 00:37:33,320 --> 00:37:38,800 Speaker 1: economy coming online. So even if um, you have tens 702 00:37:38,800 --> 00:37:41,280 Speaker 1: of millions of infections a day, you've got to figure 703 00:37:41,600 --> 00:37:43,920 Speaker 1: more people are going to be filling up their cars, 704 00:37:44,000 --> 00:37:47,880 Speaker 1: more people are gonna want to be using um, you know, 705 00:37:47,960 --> 00:37:51,480 Speaker 1: natural resources. Considering the high frequency data we saw, apparently 706 00:37:51,480 --> 00:37:54,240 Speaker 1: more people are using the subway in China, that's correct. 707 00:37:54,280 --> 00:37:57,520 Speaker 1: Just very recently we've started to see an uptick in 708 00:37:57,560 --> 00:38:02,160 Speaker 1: the mobility data, and um, you know it's kind of 709 00:38:03,000 --> 00:38:06,760 Speaker 1: there's the mobility restrictions, the official mobility restrictions were dropped, 710 00:38:06,960 --> 00:38:11,800 Speaker 1: and then mobility absolutely plummeted because it was voluntarily restricted. 711 00:38:11,960 --> 00:38:14,160 Speaker 1: But we're starting to see that bounce back, and again 712 00:38:14,360 --> 00:38:18,040 Speaker 1: I think I think it's we're fundamentally see similar things 713 00:38:18,080 --> 00:38:20,840 Speaker 1: like what we see in New York where the easy 714 00:38:20,840 --> 00:38:23,719 Speaker 1: past data for bridges and tunnels went right back to 715 00:38:23,920 --> 00:38:27,480 Speaker 1: pre pandemic levels, and the subways and the trains are 716 00:38:27,680 --> 00:38:31,640 Speaker 1: not anywhere near that. I'm doing my part. I'm on 717 00:38:31,680 --> 00:38:34,360 Speaker 1: the trains and subway every Yeah, but you're alone. I'm alone, 718 00:38:34,640 --> 00:38:36,719 Speaker 1: well except on the weekends. Then they're pack. You can't. 719 00:38:36,719 --> 00:38:38,640 Speaker 1: It's standing your moan because people are coming in the 720 00:38:38,680 --> 00:38:40,560 Speaker 1: party in the city, but god forbid they come into 721 00:38:40,560 --> 00:38:43,359 Speaker 1: their offices. Silver. What do I do with a work 722 00:38:43,440 --> 00:38:46,600 Speaker 1: from home acts to grind? Yes? I do? What do 723 00:38:46,640 --> 00:38:48,040 Speaker 1: we do? What do we do with silver? Here? We 724 00:38:48,040 --> 00:38:50,480 Speaker 1: talk a lot about gold, but what's your calling silver? 725 00:38:51,200 --> 00:38:54,040 Speaker 1: So we we like to break it down a little simply. 726 00:38:54,719 --> 00:38:59,120 Speaker 1: Silver has two main demand drivers. One is industrial, right, 727 00:38:59,160 --> 00:39:02,520 Speaker 1: so that's in all sorts of medical instruments, it's in 728 00:39:02,680 --> 00:39:05,759 Speaker 1: solar panels. But it's also used by investors in the 729 00:39:05,800 --> 00:39:09,520 Speaker 1: same way that it would um be used like that 730 00:39:09,600 --> 00:39:11,680 Speaker 1: someone would use gold, so we think of baby gold, 731 00:39:12,040 --> 00:39:14,320 Speaker 1: so we think of it as half copper and half gold, 732 00:39:14,480 --> 00:39:16,040 Speaker 1: which isn't the right way to look at it, but 733 00:39:16,360 --> 00:39:18,600 Speaker 1: in shorthand that's the way we look at it. It's 734 00:39:18,640 --> 00:39:24,319 Speaker 1: more industrial used in industrial than gold. Absolutely, yes, And 735 00:39:24,560 --> 00:39:29,560 Speaker 1: you're not concerned about the market being sort of owned 736 00:39:29,600 --> 00:39:33,759 Speaker 1: by a couple of big players silver because I know 737 00:39:33,800 --> 00:39:35,399 Speaker 1: that for a long time it was a real zero 738 00:39:35,440 --> 00:39:38,120 Speaker 1: hedge like conspiracy theory thing that some big bank was 739 00:39:38,200 --> 00:39:40,799 Speaker 1: running the silver market all over the place. I won't 740 00:39:40,840 --> 00:39:44,640 Speaker 1: say which one. Palladium is that something that we care 741 00:39:44,640 --> 00:39:48,040 Speaker 1: about for if you if you uh, you know, I'm 742 00:39:48,080 --> 00:39:51,240 Speaker 1: glad I want everyone else to have a catalytic converter. 743 00:39:53,239 --> 00:39:55,480 Speaker 1: Why is that? I don't love it for me, you know? 744 00:39:55,560 --> 00:39:57,880 Speaker 1: And it really stuffs up the exhaust. I want the 745 00:39:57,880 --> 00:39:59,759 Speaker 1: engine to be able to breathe. But yes, palladium is 746 00:39:59,840 --> 00:40:02,360 Speaker 1: used catalytic converters and that's a good thing. Absolutely, And 747 00:40:02,400 --> 00:40:05,480 Speaker 1: it's actually there are sort of poster child for this 748 00:40:05,680 --> 00:40:09,759 Speaker 1: environmental trade that we have for metals. Is that, you know, 749 00:40:09,960 --> 00:40:13,080 Speaker 1: you're just not economists scratch their head when they look 750 00:40:13,080 --> 00:40:17,040 Speaker 1: at palladium because it's had tremendous returns over tremendous yearly 751 00:40:17,080 --> 00:40:19,280 Speaker 1: returns over a long period of time. That's not supposed 752 00:40:19,320 --> 00:40:21,720 Speaker 1: to happen. The price is supposed to go up, supply 753 00:40:21,800 --> 00:40:23,839 Speaker 1: is supposed to respond, the price is supposed to come down, 754 00:40:24,200 --> 00:40:26,920 Speaker 1: and that just hasn't happened for a number of reasons. 755 00:40:27,120 --> 00:40:29,640 Speaker 1: There's no such thing as that pure palladium. Mind, the 756 00:40:29,680 --> 00:40:31,520 Speaker 1: rest of the metals that come out of it have 757 00:40:31,600 --> 00:40:36,440 Speaker 1: to also work and be profitable. But the sheer increase 758 00:40:37,080 --> 00:40:40,719 Speaker 1: in the Chinese environmental regulations year over year, it was 759 00:40:40,840 --> 00:40:43,640 Speaker 1: China's called China three, than China four, than China four 760 00:40:43,680 --> 00:40:47,359 Speaker 1: A China four B meant that a car in China 761 00:40:47,440 --> 00:40:50,759 Speaker 1: went from having roughly a gram of palladium in it 762 00:40:50,920 --> 00:40:54,560 Speaker 1: in this catalytic converter to having three grams. You don't 763 00:40:54,600 --> 00:40:57,840 Speaker 1: care how many cars are getting sold when the actual 764 00:40:58,480 --> 00:41:01,800 Speaker 1: loading of the metal triples. Yeah, and supply just couldn't react. 765 00:41:02,200 --> 00:41:07,319 Speaker 1: And so it's those sort of environmental regulations that tell 766 00:41:07,440 --> 00:41:13,840 Speaker 1: us that an environmental metal can perform well over a 767 00:41:13,840 --> 00:41:19,080 Speaker 1: long period of time, can exponentially growing. Bob, you are 768 00:41:19,480 --> 00:41:21,399 Speaker 1: director of E t F Investment Strategy, So we're talking 769 00:41:21,400 --> 00:41:22,960 Speaker 1: a lot about commodities, but I want to get to 770 00:41:23,000 --> 00:41:24,640 Speaker 1: the E t F part of this because I have 771 00:41:24,640 --> 00:41:27,680 Speaker 1: a program that's dedicated to E t F s. What 772 00:41:27,760 --> 00:41:32,439 Speaker 1: an incredible year two was for issuance um, for new 773 00:41:32,480 --> 00:41:34,879 Speaker 1: E t s, for thematic E t f s, and 774 00:41:35,000 --> 00:41:37,160 Speaker 1: even any year when there were no I, P O 775 00:41:37,280 --> 00:41:40,520 Speaker 1: S and M and A was dead. What does look 776 00:41:40,560 --> 00:41:50,120 Speaker 1: like to you SOE for for us, we think that 777 00:41:50,120 --> 00:41:55,080 Speaker 1: that backdrop going into twenty leaving two coming into three 778 00:41:55,560 --> 00:41:59,880 Speaker 1: really sets us up for some some nice um return 779 00:42:00,280 --> 00:42:04,880 Speaker 1: in in a few areas, and one of them is UH. 780 00:42:05,239 --> 00:42:09,440 Speaker 1: We we have a an E t F The ticker 781 00:42:09,520 --> 00:42:11,759 Speaker 1: is g L t R. It's called Glitter. It's a 782 00:42:11,920 --> 00:42:16,520 Speaker 1: precious metals basket. These are physically held there in a vault. 783 00:42:17,160 --> 00:42:20,600 Speaker 1: We list the serial numbers of the bars of all 784 00:42:20,640 --> 00:42:23,319 Speaker 1: of the metals on our website. You can go in, 785 00:42:23,440 --> 00:42:27,480 Speaker 1: you can see it. There's no roll yield problems UM 786 00:42:27,560 --> 00:42:31,400 Speaker 1: and it is roughly allocated. It is a market UH. 787 00:42:32,160 --> 00:42:36,040 Speaker 1: The allocation fluctuates based on market value and UH and 788 00:42:36,080 --> 00:42:40,560 Speaker 1: it started in so it's fluctuated away from its original weight. 789 00:42:40,680 --> 00:42:44,160 Speaker 1: But right now it's about fifty seven percent goal, seven 790 00:42:44,200 --> 00:42:50,000 Speaker 1: percent over four platinum and twelve percent palladium. We talked 791 00:42:50,000 --> 00:42:53,000 Speaker 1: about palladium. Platinum is what you use in a cut 792 00:42:53,080 --> 00:43:00,040 Speaker 1: cataly converter for a diesel powered boo, yeah yeah, and 793 00:43:00,040 --> 00:43:02,440 Speaker 1: and uh we we talked about gold and silver and 794 00:43:02,480 --> 00:43:05,320 Speaker 1: so okay, we think the backdrop that we spoke about 795 00:43:06,160 --> 00:43:09,600 Speaker 1: is positive for for for glitter, for glitter, g L 796 00:43:09,640 --> 00:43:13,000 Speaker 1: t R g LTR Bob Mentor, Director of ETF Investment Strategy, 797 00:43:13,000 --> 00:43:15,200 Speaker 1: thanks so much for joining us here. The firm is Aberdeen. 798 00:43:15,680 --> 00:43:18,520 Speaker 1: He got his bachelor's in economics from Rutgers. Rutgers men's 799 00:43:18,520 --> 00:43:21,399 Speaker 1: basketball had a huge win yesterday they beat number one 800 00:43:21,719 --> 00:43:25,600 Speaker 1: per Du. That is a signature wind that come times March, 801 00:43:26,320 --> 00:43:29,320 Speaker 1: that is gonna be a big for the committee they're on. 802 00:43:29,320 --> 00:43:33,400 Speaker 1: They're picking teams for the big dance, talking commodities, talking metals, 803 00:43:33,920 --> 00:43:36,800 Speaker 1: and lots of ways to play it on the precious metals, 804 00:43:37,200 --> 00:43:39,520 Speaker 1: the base metals, all that kind of stuff. And there's 805 00:43:39,560 --> 00:43:45,920 Speaker 1: certainly et F plays there alrightwo ugly, it's in the 806 00:43:46,000 --> 00:43:48,600 Speaker 1: rear view folks here at Bloomberg Market. So we look 807 00:43:48,800 --> 00:43:51,440 Speaker 1: forward and we do that with Gina Martin Adams today, 808 00:43:51,480 --> 00:43:54,600 Speaker 1: chief equity strategist for Bloomberg Intelligence. All right, geane a. 809 00:43:54,920 --> 00:43:57,319 Speaker 1: You know, I could put on my chief equity strategist hat, 810 00:43:57,360 --> 00:43:59,840 Speaker 1: and if I do that, I say I've seen peak inflation. 811 00:44:00,400 --> 00:44:02,319 Speaker 1: I can see the end of rate hikes at some 812 00:44:02,440 --> 00:44:05,160 Speaker 1: point in the next you know, certainly the next six months. 813 00:44:05,200 --> 00:44:08,799 Speaker 1: Maybe I feel like, Okay, I've got some earnings risk, 814 00:44:08,880 --> 00:44:10,600 Speaker 1: but that's not too bad. I think I can take 815 00:44:10,640 --> 00:44:13,000 Speaker 1: some risk here. But people keep coming back to me 816 00:44:13,040 --> 00:44:15,520 Speaker 1: and saying, whoa, whoa, whoa. The earnings risk is bigger 817 00:44:15,560 --> 00:44:19,040 Speaker 1: than you think. What's your call there as we start up? 818 00:44:21,440 --> 00:44:25,400 Speaker 1: So our call is, yes, there is some likely downward 819 00:44:25,480 --> 00:44:29,920 Speaker 1: estimate revision pressure to continue. But looking at past estimate 820 00:44:30,080 --> 00:44:33,120 Speaker 1: or past recessions for guidance in the upcoming year is 821 00:44:33,200 --> 00:44:37,080 Speaker 1: probably going to prove a faulty strategy. And what I 822 00:44:37,080 --> 00:44:40,160 Speaker 1: mean by that is our most most likely sort of 823 00:44:40,200 --> 00:44:43,480 Speaker 1: behavioral pattern as investors is to look at pastor recessions 824 00:44:43,560 --> 00:44:45,800 Speaker 1: as guidance as to what to expect in the recession 825 00:44:45,800 --> 00:44:50,279 Speaker 1: that is emerging in the US. But the reality is 826 00:44:50,280 --> 00:44:52,759 Speaker 1: all recessions look very different, and the recession in the 827 00:44:52,880 --> 00:44:59,800 Speaker 1: environment where inflation has piqued inflation was largely supply based, 828 00:45:00,040 --> 00:45:02,800 Speaker 1: and some of those supply constraints are easy going forward 829 00:45:03,360 --> 00:45:06,880 Speaker 1: creates a very different profit outlook than your typical recession, 830 00:45:06,920 --> 00:45:09,840 Speaker 1: and certainly very different than the two thousand eight recession, 831 00:45:10,600 --> 00:45:12,960 Speaker 1: where we were in the midst of a financial crisis 832 00:45:13,000 --> 00:45:16,839 Speaker 1: which created that really big down draft in earnings. So 833 00:45:16,960 --> 00:45:19,320 Speaker 1: we do think that we have some downward revision pressure 834 00:45:19,400 --> 00:45:22,759 Speaker 1: to come. But the recession I had really unlikely to 835 00:45:22,800 --> 00:45:25,120 Speaker 1: look like any of the past several recessions will be 836 00:45:25,200 --> 00:45:28,200 Speaker 1: unique in its characteristics, and that should really drive your 837 00:45:28,239 --> 00:45:32,600 Speaker 1: investment strategy for well. Michael Burry says, um, it could 838 00:45:32,600 --> 00:45:36,120 Speaker 1: be the kind of recession that drives us from terrifying 839 00:45:36,160 --> 00:45:41,080 Speaker 1: inflation back into deflation and and requires not only the 840 00:45:41,080 --> 00:45:46,160 Speaker 1: FED to cut rates, but more fiscal stimulus from the government. Um. 841 00:45:46,200 --> 00:45:48,920 Speaker 1: What do you think of his tweet? He of the 842 00:45:48,920 --> 00:45:52,479 Speaker 1: big short Of course, you know, I'm not Michael Burry, 843 00:45:52,560 --> 00:45:55,080 Speaker 1: so I can't really speak to his strategy. But what 844 00:45:55,160 --> 00:45:58,760 Speaker 1: I will say is we absolutely are in a period 845 00:45:58,800 --> 00:46:02,960 Speaker 1: of disinflation. Definitely saw inflation peak in the summer of 846 00:46:03,040 --> 00:46:06,400 Speaker 1: last year. I frankly don't think we're going to have 847 00:46:06,520 --> 00:46:11,040 Speaker 1: a massive deflationary crisis coming in three I do think 848 00:46:11,120 --> 00:46:14,640 Speaker 1: that the monetary measures have a lot of people quite 849 00:46:14,640 --> 00:46:19,520 Speaker 1: scared as to the potential financial implications. But offsetting that 850 00:46:19,600 --> 00:46:23,120 Speaker 1: contraction in money growth, you do have very strong balance 851 00:46:23,160 --> 00:46:26,400 Speaker 1: sheets in the part of us households to offset some 852 00:46:26,480 --> 00:46:28,759 Speaker 1: of that pressure, which puts puts us in a very 853 00:46:28,760 --> 00:46:31,799 Speaker 1: different position than we were in the two thousand seven 854 00:46:31,840 --> 00:46:35,320 Speaker 1: two thou eight period. I think it's only natural for 855 00:46:35,520 --> 00:46:38,120 Speaker 1: most people to look back and say, Okay, well, what 856 00:46:38,160 --> 00:46:41,839 Speaker 1: were our recent experiences and attribute that is the most 857 00:46:41,840 --> 00:46:46,719 Speaker 1: likely um, you know, outcome. Fore, I just think, you know, 858 00:46:47,080 --> 00:46:51,120 Speaker 1: we sit in a very different position. We will see disinflation, certainly, 859 00:46:51,200 --> 00:46:53,440 Speaker 1: we will see the unemployment rates start to take a 860 00:46:53,480 --> 00:46:56,920 Speaker 1: little bit higher. But there are some you know, unique 861 00:46:56,960 --> 00:47:01,200 Speaker 1: characteristics of the economy today that didn't exist fifteen years ago. Uh. 862 00:47:01,360 --> 00:47:03,919 Speaker 1: Certainly we've been through the last fifteen years to set 863 00:47:03,960 --> 00:47:07,080 Speaker 1: us up for the next cycle, and so I want 864 00:47:07,080 --> 00:47:09,080 Speaker 1: to try to account for that when I think about 865 00:47:09,120 --> 00:47:12,279 Speaker 1: where we're headed. And I know from reading your work 866 00:47:12,320 --> 00:47:14,120 Speaker 1: over the years, you and your team you have score 867 00:47:14,160 --> 00:47:16,480 Speaker 1: cards at different sectors. You kind of like, what's your 868 00:47:16,480 --> 00:47:20,160 Speaker 1: score card telling you these days? As you as we start, Yeah, 869 00:47:20,200 --> 00:47:22,640 Speaker 1: so our scorecard last updated at the end of the 870 00:47:22,680 --> 00:47:25,000 Speaker 1: last earning season said you want to start to lean 871 00:47:25,040 --> 00:47:31,720 Speaker 1: into cyclicals, into three cyclicals being financials and industrials popped 872 00:47:31,800 --> 00:47:35,160 Speaker 1: up toward the top of our scorecard to accompany, energy 873 00:47:35,200 --> 00:47:37,799 Speaker 1: and consumer stables. So it's a little bit of a 874 00:47:37,880 --> 00:47:41,120 Speaker 1: mix right now. It would suggest to me a tiptoeing 875 00:47:41,160 --> 00:47:43,400 Speaker 1: into what are likely to be the leaders in the 876 00:47:43,480 --> 00:47:47,719 Speaker 1: next up cycle in stocks, while still hanging onto some 877 00:47:47,800 --> 00:47:51,719 Speaker 1: of the you know, strong defensive place that work in 878 00:47:51,760 --> 00:47:56,080 Speaker 1: the current environment, those being energy and consumer stables. What 879 00:47:56,120 --> 00:47:58,440 Speaker 1: do you think about I mean, in looking at equities, 880 00:47:58,520 --> 00:48:03,440 Speaker 1: you have to also, um, I guess, confer with the 881 00:48:03,480 --> 00:48:07,320 Speaker 1: credit market, and we're seeing some cracks there. Loan loss 882 00:48:07,400 --> 00:48:11,920 Speaker 1: provisions at banks surged in the last reporting quarter I 883 00:48:11,920 --> 00:48:15,280 Speaker 1: think was the amount they were raised, of course from 884 00:48:15,320 --> 00:48:19,839 Speaker 1: fairly low levels. But um, we have eight hundred and 885 00:48:20,160 --> 00:48:24,000 Speaker 1: thirty four billion dollars of leverage loan issuance in two 886 00:48:24,040 --> 00:48:26,080 Speaker 1: which is more than double the rate of two thousand seven, 887 00:48:26,160 --> 00:48:31,720 Speaker 1: And Paul Singer says that the global financial system, maybe 888 00:48:31,840 --> 00:48:35,280 Speaker 1: in contrast to the US consumer, is vastly over leveraged. 889 00:48:35,440 --> 00:48:40,040 Speaker 1: Now that could also be UM a dramatic statement, but 890 00:48:40,760 --> 00:48:42,960 Speaker 1: are you seeing these cracks in in the in the 891 00:48:42,960 --> 00:48:46,360 Speaker 1: credit side, and does it concern you. So what I 892 00:48:46,480 --> 00:48:48,880 Speaker 1: use for credit when I'm looking at the equity market 893 00:48:49,000 --> 00:48:52,160 Speaker 1: is actually really simple. It is simply, you know, what 894 00:48:52,280 --> 00:48:55,320 Speaker 1: is the corporate credit markets suggest is the likely outcome 895 00:48:55,400 --> 00:48:57,600 Speaker 1: for equities. We look at high yield and high grade 896 00:48:57,600 --> 00:49:02,120 Speaker 1: spreads as one of our prime are indicators of potential distress, 897 00:49:02,400 --> 00:49:06,080 Speaker 1: distress emerging in the credit markets. Those spreads have certainly 898 00:49:06,080 --> 00:49:09,640 Speaker 1: widened from all time low levels reached you know, in 899 00:49:09,719 --> 00:49:13,640 Speaker 1: the early stages of this recovery process, but they're at 900 00:49:13,680 --> 00:49:16,880 Speaker 1: about the same levels that we saw during the you know, 901 00:49:17,000 --> 00:49:20,960 Speaker 1: many many recessions and earnings that that emerged in two 902 00:49:21,000 --> 00:49:25,719 Speaker 1: thousand and eighteen as well as in twenty. They're not 903 00:49:25,800 --> 00:49:30,759 Speaker 1: even anywhere close pandemic peaks, nor do they look to 904 00:49:30,800 --> 00:49:34,080 Speaker 1: be going there anytime soon. They're nowhere close to two 905 00:49:34,120 --> 00:49:38,440 Speaker 1: thousand eight crisis peaks either. So I think when you suggest, 906 00:49:38,640 --> 00:49:40,799 Speaker 1: you know, some of these things are moving off of 907 00:49:40,880 --> 00:49:44,799 Speaker 1: record low levels, that's the correct characterization. We're certainly not 908 00:49:44,880 --> 00:49:48,480 Speaker 1: in an environment in which credit is easy, um, nor 909 00:49:48,560 --> 00:49:51,759 Speaker 1: are we an environment that simply lacks distress at all. 910 00:49:52,480 --> 00:49:55,239 Speaker 1: But we are moving into some form of a recession 911 00:49:55,239 --> 00:49:57,799 Speaker 1: in the US, and that's reflected in some widening and 912 00:49:57,880 --> 00:50:01,640 Speaker 1: credit spreads, which know, I think is consistent with an 913 00:50:01,719 --> 00:50:07,080 Speaker 1: environment for a relatively moderate earnings recession persisting in the 914 00:50:07,160 --> 00:50:11,800 Speaker 1: in the smp fid Gina, how about small cap stocks? 915 00:50:11,880 --> 00:50:14,960 Speaker 1: Is it time to look there or with a pending 916 00:50:14,960 --> 00:50:18,160 Speaker 1: recession that should wait. Look, I think small caps have 917 00:50:18,239 --> 00:50:21,080 Speaker 1: priced in a tremendous amount of weakness, Paul. Small caps 918 00:50:21,080 --> 00:50:24,760 Speaker 1: have been in a bear market for nearly two years now. 919 00:50:25,400 --> 00:50:29,719 Speaker 1: Small caps are trading at extraordinary discounts by comparison to 920 00:50:29,840 --> 00:50:32,960 Speaker 1: large cap stocks. So you've priced in a tremendous amount 921 00:50:32,960 --> 00:50:36,320 Speaker 1: of risk in small caps. Yes, you will have stronger 922 00:50:36,360 --> 00:50:38,960 Speaker 1: earnings declines and small caps than you do in large caps. 923 00:50:39,000 --> 00:50:44,040 Speaker 1: Certainly there's much more um likely default risk and some 924 00:50:44,120 --> 00:50:47,120 Speaker 1: degree of earnings distress and small caps. But our work 925 00:50:47,160 --> 00:50:50,640 Speaker 1: would suggest you've largely priced that in. We even have. 926 00:50:51,760 --> 00:50:54,319 Speaker 1: Our work would even suggests that we've priced in the 927 00:50:54,560 --> 00:50:57,600 Speaker 1: entirety of a FED balance sheet reduction as well as 928 00:50:57,840 --> 00:51:01,840 Speaker 1: very very tight interest rate policy invaluations for small caps. 929 00:51:02,040 --> 00:51:05,800 Speaker 1: So I would suggest small caps downside is relatively limited. 930 00:51:06,239 --> 00:51:08,880 Speaker 1: You also don't have the risk of you know, a 931 00:51:08,920 --> 00:51:11,920 Speaker 1: bubble still deflating in small caps. This is one of 932 00:51:11,920 --> 00:51:15,480 Speaker 1: the kind of underappreciated aspects of what's really happened in 933 00:51:15,520 --> 00:51:17,640 Speaker 1: the large cap index over the course of the last 934 00:51:17,680 --> 00:51:20,799 Speaker 1: year is you know, not only are we experiencing some 935 00:51:20,920 --> 00:51:24,640 Speaker 1: degree of earnings distress, but we've seen um, you know, 936 00:51:24,680 --> 00:51:27,479 Speaker 1: a bubble that emerged in large cap tech and tech 937 00:51:27,520 --> 00:51:32,040 Speaker 1: related stocks really deflates substantially over the last year. That 938 00:51:32,080 --> 00:51:34,680 Speaker 1: bubble is still in the process of deflating. In our view, 939 00:51:34,800 --> 00:51:38,280 Speaker 1: that doesn't that doesn't really plague the small cap index. Alright, 940 00:51:38,320 --> 00:51:40,840 Speaker 1: great stuff as always, Gina Martin Adams. She's the chief 941 00:51:41,719 --> 00:51:44,759 Speaker 1: equity strategist for Bloomberg Intelligence. If you have access to 942 00:51:44,760 --> 00:51:48,960 Speaker 1: the Bloomberg terminal print, offer us market three Outlook report. 943 00:51:49,080 --> 00:51:52,680 Speaker 1: It has got great stuff and it gives you the perspective. 944 00:51:54,680 --> 00:51:57,759 Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can 945 00:51:57,800 --> 00:52:01,560 Speaker 1: subscribe and listen to interviews of Apple podcasts or whatever 946 00:52:01,680 --> 00:52:05,280 Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter 947 00:52:05,600 --> 00:52:09,359 Speaker 1: at Matt Miller three. On Fall Sweeney, I'm on Twitter 948 00:52:09,480 --> 00:52:12,279 Speaker 1: at pt Sweeney. Before the podcast, you can always catch 949 00:52:12,360 --> 00:52:13,919 Speaker 1: us worldwide at Bloomberg Radio.