1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,600 Speaker 2: Terminal and the Bloomberg Business app. Stephanie Roth of Wolf 10 00:00:37,600 --> 00:00:40,320 Speaker 2: for Research right in this data this week has been disappointing. 11 00:00:40,560 --> 00:00:43,239 Speaker 2: The labor market has decelerated, but it's not clear it's 12 00:00:43,240 --> 00:00:46,040 Speaker 2: getting worse. Stephanie joins us now for more. Steph goodmonic, 13 00:00:46,159 --> 00:00:47,920 Speaker 2: Good morning. Any signs of stabilization. 14 00:00:48,560 --> 00:00:50,680 Speaker 3: Yeah, I mean we saw ADP looks better than where 15 00:00:50,720 --> 00:00:53,560 Speaker 3: it's been. Of course, we're all now focusing on Tier 16 00:00:53,640 --> 00:00:55,800 Speaker 3: three data because that's all we have to focus on. 17 00:00:56,040 --> 00:00:56,520 Speaker 4: The challenge. 18 00:00:56,600 --> 00:00:58,760 Speaker 3: Numbers have swooped a lot of people, but I have 19 00:00:58,840 --> 00:01:01,280 Speaker 3: to say that is is based on headlines and we 20 00:01:01,320 --> 00:01:03,720 Speaker 3: knew that ups for example, that was a big driver 21 00:01:03,800 --> 00:01:06,200 Speaker 3: of the warehousing number that has happened throughout the course 22 00:01:06,200 --> 00:01:08,720 Speaker 3: of this year, largely through attrition. We knew the Amazon 23 00:01:08,800 --> 00:01:11,679 Speaker 3: number had come out, that was part of that the 24 00:01:11,720 --> 00:01:12,520 Speaker 3: October data. 25 00:01:12,920 --> 00:01:13,959 Speaker 5: So our sense is. 26 00:01:13,920 --> 00:01:16,320 Speaker 3: That the land market has decelerated, that's what we're picking 27 00:01:16,360 --> 00:01:18,480 Speaker 3: up here, but it doesn't appear to be actually necessarily 28 00:01:18,480 --> 00:01:20,760 Speaker 3: getting worse. And then the picture for the economy on 29 00:01:20,800 --> 00:01:23,160 Speaker 3: that go forward basis is actually pretty decent. We have 30 00:01:23,840 --> 00:01:26,440 Speaker 3: likely tariff and certainty is fading to some extent. 31 00:01:26,480 --> 00:01:27,520 Speaker 4: We know that we kind of. 32 00:01:27,480 --> 00:01:30,200 Speaker 3: Have a floor in terms of tariffs. We have financial 33 00:01:30,240 --> 00:01:33,560 Speaker 3: conditions have eased, we have fiscal stimulus is going to 34 00:01:33,600 --> 00:01:36,120 Speaker 3: have a supporting impact on the low end consumer. 35 00:01:36,400 --> 00:01:37,399 Speaker 6: So even though we're in. 36 00:01:37,440 --> 00:01:39,520 Speaker 3: A place where the economy is kind of sluggish, the 37 00:01:39,720 --> 00:01:42,240 Speaker 3: factors are looking pretty decent For twenty twenty six. 38 00:01:42,319 --> 00:01:44,880 Speaker 1: You said something about the challenger job announcements or layoff 39 00:01:45,400 --> 00:01:47,600 Speaker 1: planned cuts, and I think that it's really important the 40 00:01:47,640 --> 00:01:50,520 Speaker 1: idea that a bulk of this could come from UPS 41 00:01:50,600 --> 00:01:53,440 Speaker 1: and Amazon, both of which were reported, and has to 42 00:01:53,440 --> 00:01:56,880 Speaker 1: do with warehousing on the UPS side and artificial intelligence 43 00:01:57,000 --> 00:02:00,160 Speaker 1: on the Amazon side. How much are we conflating a 44 00:02:00,240 --> 00:02:04,040 Speaker 1: single name story with a broader market trend where AI 45 00:02:04,120 --> 00:02:05,520 Speaker 1: has already taking people's jobs. 46 00:02:05,800 --> 00:02:07,560 Speaker 3: Yeah, I mean, I think that's the case of someone 47 00:02:07,800 --> 00:02:10,000 Speaker 3: and the Amazon numbers aren't that large relative to the 48 00:02:10,040 --> 00:02:12,840 Speaker 3: size of its workforce. So even though we've seen some 49 00:02:12,880 --> 00:02:15,600 Speaker 3: of these layoff announcements that are tied to AI, some 50 00:02:15,680 --> 00:02:19,000 Speaker 3: of this ends up coming out through attrition like the ups, 51 00:02:19,639 --> 00:02:24,880 Speaker 3: and it's not entirely clear that AI has really been 52 00:02:24,880 --> 00:02:27,680 Speaker 3: taking that many jobs so far. Looking forward, it might be, 53 00:02:28,000 --> 00:02:31,360 Speaker 3: but if you look at a correlation between AI usage 54 00:02:31,400 --> 00:02:33,720 Speaker 3: by industry and the slowdown in payrolls growth, you don't 55 00:02:33,720 --> 00:02:37,040 Speaker 3: see much of a correlation outside of tech, professional services 56 00:02:37,080 --> 00:02:39,040 Speaker 3: and then a little bit of finance. So it's not 57 00:02:39,240 --> 00:02:40,880 Speaker 3: necessarily the explanatory story. 58 00:02:40,960 --> 00:02:43,639 Speaker 1: Yet in the absence of non figm payrolls data, a 59 00:02:43,680 --> 00:02:46,959 Speaker 1: lot of people are thinking big, asking large questions, filling 60 00:02:47,000 --> 00:02:49,840 Speaker 1: time with other things. I'm just wondering how much people 61 00:02:49,880 --> 00:02:53,440 Speaker 1: are trying to understand the AI growth story and how 62 00:02:53,560 --> 00:02:56,440 Speaker 1: much it's propping up and frankly masking the weakness that 63 00:02:56,480 --> 00:02:59,919 Speaker 1: we're seeing in other pockets, particularly from and we keep 64 00:03:00,040 --> 00:03:03,480 Speaker 1: talking about fast casual restaurants just simply because that's the 65 00:03:03,560 --> 00:03:05,440 Speaker 1: data that we have, but you know, it sort of 66 00:03:05,440 --> 00:03:08,920 Speaker 1: speaks to a really lopsided economy heavily weighted to the 67 00:03:08,919 --> 00:03:09,680 Speaker 1: AI story. 68 00:03:10,280 --> 00:03:12,880 Speaker 3: So I mean, I think the case shaped economy story 69 00:03:12,960 --> 00:03:15,240 Speaker 3: is right, but it's not necessarily the bottom part of 70 00:03:15,240 --> 00:03:17,320 Speaker 3: that k is getting that much worse. We're just hearing 71 00:03:17,360 --> 00:03:19,800 Speaker 3: a lot of company announcements related to that, and we 72 00:03:19,800 --> 00:03:21,800 Speaker 3: don't have any other data to the up to the 73 00:03:21,800 --> 00:03:24,680 Speaker 3: other side, which tends to capture the broader picture of 74 00:03:24,680 --> 00:03:27,679 Speaker 3: the consumer. And then the AI story is driving a 75 00:03:27,919 --> 00:03:30,600 Speaker 3: decent portion of growth, as R estimates or that it's 76 00:03:31,040 --> 00:03:33,120 Speaker 3: nearly a quarter of the growth of not maybe a 77 00:03:33,120 --> 00:03:35,280 Speaker 3: tiny bit less than that, but it's certainly not half 78 00:03:35,320 --> 00:03:37,360 Speaker 3: of the growth, and it is part of the economy. 79 00:03:37,360 --> 00:03:38,840 Speaker 3: There are a lot of people who are employed and 80 00:03:39,320 --> 00:03:42,520 Speaker 3: investing in CAPBAX and that is a support for growth 81 00:03:42,560 --> 00:03:43,360 Speaker 3: that is durable. 82 00:03:43,800 --> 00:03:45,520 Speaker 7: Stephanie, I want to pick up here on your point 83 00:03:45,520 --> 00:03:47,960 Speaker 7: that the market has kind of an investors have kind 84 00:03:47,960 --> 00:03:51,200 Speaker 7: of moved past the tariff story. What if IEPA, though, 85 00:03:51,280 --> 00:03:53,280 Speaker 7: does get struck down by the Supreme Court. 86 00:03:53,760 --> 00:03:54,760 Speaker 4: Then they'll recreate it. 87 00:03:54,800 --> 00:03:58,720 Speaker 3: So we're really talking about here is about one hundred 88 00:03:58,800 --> 00:04:02,640 Speaker 3: billion dollars windfall to companies potentially depending on how this 89 00:04:02,720 --> 00:04:05,280 Speaker 3: all plays out in terms of Terraff refunds. 90 00:04:04,920 --> 00:04:06,160 Speaker 6: They might be eligible to get. 91 00:04:06,400 --> 00:04:09,280 Speaker 3: Otherwise, on a forward looking basis, the Administration is likely 92 00:04:09,280 --> 00:04:12,240 Speaker 3: to recreate the Terraff structure very similar to how it 93 00:04:12,280 --> 00:04:15,560 Speaker 3: stands today, which is why the bond market doesn't necessarily 94 00:04:15,600 --> 00:04:16,800 Speaker 3: have to react so significantly. 95 00:04:16,839 --> 00:04:19,279 Speaker 7: But it will take a lot longer to recreate that 96 00:04:19,320 --> 00:04:22,120 Speaker 7: structure using two thirty, twos, three or ones. When would 97 00:04:22,160 --> 00:04:25,440 Speaker 7: the hit beyond consumers if they have to recreate that structure. 98 00:04:26,880 --> 00:04:28,799 Speaker 6: I don't know if it will end up being that big. 99 00:04:28,640 --> 00:04:30,799 Speaker 3: Of a hit on consumers in the sense that companies 100 00:04:30,800 --> 00:04:33,080 Speaker 3: have raised the prices, they're not going to lower the 101 00:04:33,160 --> 00:04:34,560 Speaker 3: prices as the worst. We're not going to see much 102 00:04:34,640 --> 00:04:37,880 Speaker 3: volatility depending on how the terra structure works. So companies 103 00:04:37,920 --> 00:04:41,920 Speaker 3: have slowly moved their pricing mechanism higher. They know, especially 104 00:04:41,960 --> 00:04:43,960 Speaker 3: if it ends up getting struck down, they know that 105 00:04:44,240 --> 00:04:47,320 Speaker 3: it will largely be recreated. The Administration will certainly communicate that, 106 00:04:47,640 --> 00:04:51,160 Speaker 3: in which case the pricing effects will continue to kind 107 00:04:51,160 --> 00:04:53,120 Speaker 3: of be the case, and then companies will maybe more 108 00:04:53,120 --> 00:04:56,359 Speaker 3: slowly pass through the price increases. Our estimates suggests that 109 00:04:56,400 --> 00:04:59,600 Speaker 3: about sixty a little above sixty percent of the tariffs 110 00:04:59,600 --> 00:05:02,679 Speaker 3: that we that are implemented and expected have been absorbed 111 00:05:02,680 --> 00:05:05,320 Speaker 3: by parts of the supply chain, so it's the exporter, 112 00:05:05,520 --> 00:05:07,680 Speaker 3: the retailer, and the consumer. So we've already gone through 113 00:05:07,720 --> 00:05:09,520 Speaker 3: a lot of it. There is certainly more to come, 114 00:05:09,560 --> 00:05:11,679 Speaker 3: which is why we should see upper pressure un prices 115 00:05:11,720 --> 00:05:12,760 Speaker 3: for the next six months. 116 00:05:12,920 --> 00:05:15,240 Speaker 6: Was oktober Chairpound's last right cut? 117 00:05:15,760 --> 00:05:18,520 Speaker 3: No, I think he'll probably do one more, Yeah, just 118 00:05:18,560 --> 00:05:20,040 Speaker 3: the one. I think he'll do one more, and then 119 00:05:20,040 --> 00:05:23,040 Speaker 3: we'll probably get an additional one to two beyond that. 120 00:05:23,440 --> 00:05:25,039 Speaker 6: You see a difference between the leadership. 121 00:05:25,040 --> 00:05:26,800 Speaker 2: Once he's gone, we're gonna have a more damage fed 122 00:05:27,200 --> 00:05:28,640 Speaker 2: after may or do you think it's going to be 123 00:05:28,720 --> 00:05:31,680 Speaker 2: just as conflicted, just as readlocks, just as goodlocked. 124 00:05:31,760 --> 00:05:33,760 Speaker 3: I think we'll see, of course that the chair may 125 00:05:33,800 --> 00:05:36,240 Speaker 3: be dubbished themselves, but that doesn't mean the committee is 126 00:05:36,279 --> 00:05:38,159 Speaker 3: going to go alongside that. We've seen a committee that 127 00:05:38,320 --> 00:05:40,760 Speaker 3: is certainly divided. That's been quite clear over the past 128 00:05:40,800 --> 00:05:43,240 Speaker 3: couple of months. So our expectation is they're not going 129 00:05:43,279 --> 00:05:46,520 Speaker 3: to really change policy that much as a result, and yes, 130 00:05:46,560 --> 00:05:48,440 Speaker 3: they probably will want to cut a couple more times 131 00:05:48,480 --> 00:05:50,680 Speaker 3: beyond that, just to get to something that they think 132 00:05:50,760 --> 00:05:53,880 Speaker 3: is closer to neutral, and the economy will probably be 133 00:05:54,600 --> 00:05:56,640 Speaker 3: in a decent place throughout. 134 00:05:56,400 --> 00:05:57,080 Speaker 8: Much of next year. 135 00:05:57,760 --> 00:06:10,200 Speaker 2: Stay with us, mul Bloomberg saving up after this. Bran 136 00:06:10,279 --> 00:06:13,400 Speaker 2: Gandra Stifel rights the following. Some Democrats will likely see 137 00:06:13,400 --> 00:06:16,800 Speaker 2: Tuesday's election as a validation of that shutdown strategy. The 138 00:06:16,920 --> 00:06:18,719 Speaker 2: chances of the shutdown last thing it to the next 139 00:06:18,720 --> 00:06:22,039 Speaker 2: week and be umed have increased. Brian, Welcome to the program. 140 00:06:22,080 --> 00:06:24,640 Speaker 2: Are you suggesting that those wins are more relevant than 141 00:06:24,640 --> 00:06:27,280 Speaker 2: the potential chaos across the country's airports. 142 00:06:29,200 --> 00:06:31,280 Speaker 9: In the minds of some Democrats? Yes, I mean not 143 00:06:31,320 --> 00:06:34,159 Speaker 9: all Democrats. I don't think, Jonathan, that you can paint 144 00:06:34,200 --> 00:06:37,400 Speaker 9: with too broader brush. I think there are some more 145 00:06:37,680 --> 00:06:42,919 Speaker 9: aggressive Democrats, some more firebrand type Democrats, who see Tuesday's 146 00:06:42,960 --> 00:06:45,880 Speaker 9: results of a validation of their strategy and they think 147 00:06:45,920 --> 00:06:47,600 Speaker 9: they have the wind at their back and they are 148 00:06:47,600 --> 00:06:49,480 Speaker 9: going to double down and push for more. 149 00:06:49,839 --> 00:06:53,600 Speaker 4: Then you do have some moderates who want a solution. 150 00:06:53,800 --> 00:06:56,640 Speaker 9: And look, I think you can argue that you know, 151 00:06:56,720 --> 00:06:59,279 Speaker 9: Tuesday's election results gave us a split view of the 152 00:06:59,279 --> 00:07:03,080 Speaker 9: Democratic part nationally. Uh the firebrands one in New York, 153 00:07:03,120 --> 00:07:07,159 Speaker 9: but the more moderates one in Virginia in New Jersey. 154 00:07:07,200 --> 00:07:08,000 Speaker 4: So there is a bit of. 155 00:07:07,920 --> 00:07:11,200 Speaker 9: A split among Democrats about what their strategy is going forward. 156 00:07:11,320 --> 00:07:13,920 Speaker 7: And in Virginia, the exit polls said that the shutdown 157 00:07:14,240 --> 00:07:17,960 Speaker 7: was weighing on the workers, those individuals that went out 158 00:07:18,000 --> 00:07:20,960 Speaker 7: to vote. Obviously, they house so many of these federal workers. 159 00:07:21,040 --> 00:07:24,760 Speaker 7: Can you see Virginia senators signing up for clean resolution? 160 00:07:26,560 --> 00:07:28,160 Speaker 4: You know, it's a great question, Amory. 161 00:07:28,200 --> 00:07:31,520 Speaker 9: I mean, because Virginia is, you know, among the two 162 00:07:31,800 --> 00:07:34,320 Speaker 9: one of the two states that's grand zero along with 163 00:07:34,360 --> 00:07:37,960 Speaker 9: Maryland in terms of government workers. But the two Democratic 164 00:07:38,040 --> 00:07:42,720 Speaker 9: senators have have pretty much held strong. I haven't detected 165 00:07:42,720 --> 00:07:45,920 Speaker 9: that they're breaking from the rest of the group yet 166 00:07:45,960 --> 00:07:49,320 Speaker 9: and joining the more moderates who are are pushing for 167 00:07:49,360 --> 00:07:50,240 Speaker 9: a reopening. 168 00:07:50,280 --> 00:07:52,920 Speaker 4: I may be missing something on that, but they are. 169 00:07:52,960 --> 00:07:53,840 Speaker 4: Those are two. 170 00:07:53,680 --> 00:07:56,320 Speaker 9: People that I would I would look to very closely 171 00:07:56,400 --> 00:07:59,720 Speaker 9: to see if there's going to be a break among Democrats, 172 00:07:59,760 --> 00:08:02,840 Speaker 9: if they're is going to be real progress in these talks. 173 00:08:03,160 --> 00:08:07,120 Speaker 4: You would think that Senators Kine and Warner would be front. 174 00:08:06,920 --> 00:08:09,600 Speaker 7: And the center wouldn't just be enough as an off 175 00:08:09,680 --> 00:08:12,600 Speaker 7: ramp for the Democrats to get a vote Senate majority 176 00:08:12,640 --> 00:08:14,840 Speaker 7: Leader Foon put a vote on the floor for the 177 00:08:15,000 --> 00:08:18,400 Speaker 7: enhanced expiring healthcare subsidies or do they actually need a 178 00:08:18,440 --> 00:08:20,040 Speaker 7: plan to extend them. 179 00:08:21,080 --> 00:08:25,000 Speaker 4: That's the big question again. I think it shows the 180 00:08:25,040 --> 00:08:27,280 Speaker 4: split in the Democratic Party. I think this. 181 00:08:27,520 --> 00:08:30,680 Speaker 9: I think for some Centrists they would be okay with it, 182 00:08:30,800 --> 00:08:35,080 Speaker 9: but the firebrands for now are pressuring them not to 183 00:08:35,120 --> 00:08:38,280 Speaker 9: not to give in on that. And so so far, 184 00:08:39,160 --> 00:08:42,000 Speaker 9: I think the louder voices in the party, the more 185 00:08:42,040 --> 00:08:45,280 Speaker 9: aggressive voices are in the party, are winning out, you know, 186 00:08:45,600 --> 00:08:49,120 Speaker 9: in terms of party unity and keeping everybody on the 187 00:08:49,160 --> 00:08:52,280 Speaker 9: same page. At some point, though, if we get into 188 00:08:52,320 --> 00:08:54,760 Speaker 9: the weekend or next week and we have those those 189 00:08:54,800 --> 00:08:59,720 Speaker 9: airline delays and the cuts in social safety net programs 190 00:08:59,800 --> 00:09:03,600 Speaker 9: really start to get to the bone, maybe then you'll 191 00:09:03,600 --> 00:09:07,320 Speaker 9: see a change in uh in tactics and strategy among 192 00:09:07,360 --> 00:09:09,440 Speaker 9: the Democrats. But I gotta say, I mean, it's been 193 00:09:09,480 --> 00:09:13,400 Speaker 9: impressive to watch them stay unified, whether you agree with 194 00:09:13,440 --> 00:09:17,720 Speaker 9: their policy or not. Their their sense of unity has 195 00:09:17,760 --> 00:09:19,160 Speaker 9: been pretty impressive throughout this. 196 00:09:19,520 --> 00:09:22,440 Speaker 1: What's your sense about the reduction in flights that we 197 00:09:22,480 --> 00:09:24,920 Speaker 1: are seeing right now in the mandate coming from the FAA. 198 00:09:24,960 --> 00:09:27,079 Speaker 1: Do you think that this is actually a safety issue 199 00:09:27,120 --> 00:09:28,440 Speaker 1: or do you think this is trying to raise the 200 00:09:28,440 --> 00:09:30,720 Speaker 1: pressure to get some sort of conclusion sooner. 201 00:09:31,080 --> 00:09:35,680 Speaker 4: Oh, I wouldn't be that cynical, Lisa. I mean, look, 202 00:09:35,800 --> 00:09:37,240 Speaker 4: and I'm somebody who you know. 203 00:09:37,440 --> 00:09:39,520 Speaker 9: My flight was in canceled last night, but I ran 204 00:09:39,559 --> 00:09:41,400 Speaker 9: into a bunch of delays, So I mean, I think 205 00:09:41,440 --> 00:09:44,240 Speaker 9: travelers are really going to start to feel it. But no, 206 00:09:44,800 --> 00:09:47,199 Speaker 9: there's politics going on here. You know, let's go back 207 00:09:47,240 --> 00:09:50,040 Speaker 9: to Casavlonica. Shock that there's gambling going on. I'm shocked 208 00:09:50,040 --> 00:09:53,280 Speaker 9: that there's that there's politics going on here. I'm sure 209 00:09:53,320 --> 00:09:57,720 Speaker 9: there is a level of safety uh at work here, 210 00:09:58,000 --> 00:09:59,880 Speaker 9: but there's a level of politics as well. 211 00:10:00,040 --> 00:10:02,120 Speaker 1: So you're not that cynical, but it could be true, right, 212 00:10:02,160 --> 00:10:05,199 Speaker 1: I am curious, but I am curious. You know, there 213 00:10:05,280 --> 00:10:07,319 Speaker 1: was this move yesterday that I thought was pretty telling 214 00:10:07,640 --> 00:10:10,840 Speaker 1: when senators, Republican senators push back against President Trump, and 215 00:10:10,880 --> 00:10:13,880 Speaker 1: after that breakfast they signaled that they were not going 216 00:10:13,920 --> 00:10:17,560 Speaker 1: to nuke the filibuster akin to what he was looking for. 217 00:10:17,760 --> 00:10:18,720 Speaker 10: How big of a deal is that? 218 00:10:20,720 --> 00:10:23,920 Speaker 9: In longer term, it's a big deal because it has 219 00:10:24,040 --> 00:10:28,000 Speaker 9: ramifications for both parties going forward in the short term. 220 00:10:29,280 --> 00:10:32,480 Speaker 4: You know, I think it's starting to signal that and 221 00:10:32,640 --> 00:10:33,600 Speaker 4: we have to read this in the. 222 00:10:33,520 --> 00:10:37,200 Speaker 9: Context of Tuesday's results, that some Republicans are going to 223 00:10:37,200 --> 00:10:39,560 Speaker 9: start to look in terms of self preservation and they're 224 00:10:39,600 --> 00:10:42,040 Speaker 9: not going to be as locked up with the White 225 00:10:42,040 --> 00:10:44,440 Speaker 9: House as they have been, and they probably are going 226 00:10:44,480 --> 00:10:48,840 Speaker 9: to feel a little bit more looking longer term to 227 00:10:48,920 --> 00:10:52,560 Speaker 9: what's in their best interest, not just what their relationship 228 00:10:52,600 --> 00:10:54,439 Speaker 9: is like with the White House at any given moment. 229 00:10:54,559 --> 00:10:56,600 Speaker 6: Brian, if you go to hotel, it's the one on 230 00:10:56,640 --> 00:10:57,200 Speaker 6: the Canada. 231 00:10:58,679 --> 00:10:58,760 Speaker 1: No. 232 00:10:59,160 --> 00:11:02,400 Speaker 9: I mean, Jonathan, I could, I could give you, you know, 233 00:11:02,800 --> 00:11:05,400 Speaker 9: Monday or Tuesday. But you know, I was so wrong 234 00:11:05,440 --> 00:11:07,640 Speaker 9: at the beginning of the shutdown when I really thought 235 00:11:07,679 --> 00:11:11,320 Speaker 9: it was going to be a shorter uh stalemate than 236 00:11:11,360 --> 00:11:11,800 Speaker 9: it has. 237 00:11:11,720 --> 00:11:12,280 Speaker 4: Proven to be. 238 00:11:13,400 --> 00:11:16,000 Speaker 9: And I think, not just me, but talking to people 239 00:11:16,080 --> 00:11:17,480 Speaker 9: up on the hill, I think they've given up on 240 00:11:17,559 --> 00:11:21,120 Speaker 9: trying to handicap this as well. I thought it, you know, 241 00:11:21,160 --> 00:11:23,240 Speaker 9: after Tuesday, I thought it would go into the weekend. 242 00:11:25,040 --> 00:11:28,000 Speaker 9: I think maybe we get into early next week and 243 00:11:28,040 --> 00:11:30,040 Speaker 9: there's an out, but you know, who knows. 244 00:11:30,040 --> 00:11:30,520 Speaker 4: At this point. 245 00:11:30,559 --> 00:11:32,000 Speaker 9: I think I think a lot of us have been 246 00:11:32,440 --> 00:11:33,920 Speaker 9: I have underestimated how long this. 247 00:11:33,880 --> 00:11:34,280 Speaker 4: Would go on. 248 00:11:35,080 --> 00:11:38,600 Speaker 2: Stay with us multiple IMPERG surveillance coming up after this. 249 00:11:47,760 --> 00:11:50,000 Speaker 2: Not the level of you Bes Global Weath's management rightting 250 00:11:50,000 --> 00:11:53,320 Speaker 2: well Alephated valuations continue to raise concerns and could lead 251 00:11:53,559 --> 00:11:57,480 Speaker 2: to increased volatility. We believe the underlying fundamentals remain strong 252 00:11:57,720 --> 00:12:00,720 Speaker 2: and consider market pullbacks as bank up two Now they 253 00:12:00,720 --> 00:12:01,400 Speaker 2: get joined us now. 254 00:12:01,360 --> 00:12:03,880 Speaker 6: For more Nadia, good morning, good morning. What happened to 255 00:12:03,920 --> 00:12:05,800 Speaker 6: the year? Und mounts up? Where did it go? What 256 00:12:05,920 --> 00:12:06,320 Speaker 6: went wrong? 257 00:12:07,280 --> 00:12:12,360 Speaker 8: It's only been a week, John, We think that it's 258 00:12:12,400 --> 00:12:16,320 Speaker 8: still there. Right of course, investors are again confronted with 259 00:12:16,480 --> 00:12:19,440 Speaker 8: this wall of worry. Just we have the government shut down, 260 00:12:19,480 --> 00:12:22,760 Speaker 8: we have concerns around AI spending. We have hawkish you know, 261 00:12:23,040 --> 00:12:27,400 Speaker 8: rhetoric from the fad but that could cost some volatility 262 00:12:27,440 --> 00:12:28,520 Speaker 8: in the near term as we know it. 263 00:12:28,760 --> 00:12:29,840 Speaker 6: But we do think. 264 00:12:29,640 --> 00:12:32,720 Speaker 8: That that wall of warry will be climbed because the 265 00:12:32,760 --> 00:12:35,320 Speaker 8: fundamentals are there. When you look at the urning season, 266 00:12:36,280 --> 00:12:39,839 Speaker 8: you know, above expectations, even our elevated expectations for ten 267 00:12:39,880 --> 00:12:42,360 Speaker 8: percent EPs growth through the quarter. When it's all said 268 00:12:42,400 --> 00:12:45,040 Speaker 8: and done, we could get something in the midteen. So 269 00:12:45,120 --> 00:12:47,880 Speaker 8: we think that that will continue to support the market 270 00:12:48,120 --> 00:12:50,520 Speaker 8: once we get through this shoppiness. And now, so why 271 00:12:50,520 --> 00:12:52,760 Speaker 8: we think that there's not going to be any sort 272 00:12:52,760 --> 00:12:55,440 Speaker 8: of significant pull box because we do think that, particularly 273 00:12:55,480 --> 00:12:57,359 Speaker 8: on the institutional side, we'll step. 274 00:12:57,120 --> 00:12:58,240 Speaker 6: In and buy. I'm with you. 275 00:12:58,360 --> 00:12:59,880 Speaker 2: It tells you something about the market when you get 276 00:12:59,880 --> 00:13:01,760 Speaker 2: to three percent move on tech stocks and the best 277 00:13:01,840 --> 00:13:04,719 Speaker 2: not pumping champagne. They've had a tough year, particularly off 278 00:13:04,720 --> 00:13:06,960 Speaker 2: the loads of April. Let's talk about the move into 279 00:13:07,040 --> 00:13:08,679 Speaker 2: year end and the subtle science we're getting from the 280 00:13:08,720 --> 00:13:11,520 Speaker 2: price section in response to earnings, Lisa's going through a 281 00:13:11,600 --> 00:13:14,559 Speaker 2: range of equities that we've seen report earnings, decent earnings, 282 00:13:14,640 --> 00:13:15,839 Speaker 2: and this market is pushed back. 283 00:13:15,920 --> 00:13:16,400 Speaker 6: That's new. 284 00:13:16,840 --> 00:13:19,080 Speaker 2: We haven't been seeing that over previous quarters. They've been 285 00:13:19,080 --> 00:13:21,280 Speaker 2: rewarded for decent earnings. What's changed. 286 00:13:21,840 --> 00:13:24,920 Speaker 8: I think what's changed is that you know, evaluations, people 287 00:13:25,160 --> 00:13:28,160 Speaker 8: are focused on the valuations. Also, you're seeing some weakness 288 00:13:28,200 --> 00:13:32,600 Speaker 8: in tech and that's causing some nervousness. And it's fair 289 00:13:32,720 --> 00:13:35,400 Speaker 8: for you know, tech investors to start to say, where's 290 00:13:35,440 --> 00:13:38,840 Speaker 8: the monetization of this? But realistically it will take some 291 00:13:38,920 --> 00:13:40,560 Speaker 8: time to get there, but I think you're starting to 292 00:13:40,559 --> 00:13:43,080 Speaker 8: see evidence of that. If you look at the earning 293 00:13:43,160 --> 00:13:46,439 Speaker 8: seas and particularly around cloud growth, right that's where you're 294 00:13:46,440 --> 00:13:50,720 Speaker 8: seeing the monetization. You've see a AWS printed twelve twenty 295 00:13:50,760 --> 00:13:53,480 Speaker 8: percent year over year growth on acceleration of two hundred 296 00:13:53,559 --> 00:13:56,040 Speaker 8: basis points from the last quarter. You've seen a similar 297 00:13:56,080 --> 00:14:00,640 Speaker 8: acceleration from Google thirty four percent, and then micros off also, 298 00:14:00,800 --> 00:14:03,680 Speaker 8: you know forty percent in terms of the Azure revenue growth. 299 00:14:04,559 --> 00:14:07,920 Speaker 8: Ultimately is a supply constraint that's holding back even those 300 00:14:08,000 --> 00:14:11,959 Speaker 8: high growth. So we do think that investors will come back, 301 00:14:12,080 --> 00:14:15,240 Speaker 8: you know, and reassess some of these fundamentals and realize 302 00:14:15,240 --> 00:14:17,480 Speaker 8: that they actually have been quite strong. 303 00:14:17,640 --> 00:14:20,480 Speaker 1: Jonathan, you can dismiss the pullback that we've seen over 304 00:14:20,520 --> 00:14:22,280 Speaker 1: the past week is just saying, okay, it's just been 305 00:14:22,320 --> 00:14:25,080 Speaker 1: one week. That said, you have seen a shift where 306 00:14:25,240 --> 00:14:26,720 Speaker 1: momentum and that whole. 307 00:14:26,440 --> 00:14:27,520 Speaker 10: Trade has been unwinding. 308 00:14:27,560 --> 00:14:29,720 Speaker 1: We've seen that meme stocks, We've seen that with bitcoin, 309 00:14:29,800 --> 00:14:32,120 Speaker 1: We've seen that even on the peripherez of gold. We've 310 00:14:32,120 --> 00:14:34,880 Speaker 1: seen that with a number of some non profitable techniques 311 00:14:34,920 --> 00:14:36,000 Speaker 1: that also got bid up. 312 00:14:36,360 --> 00:14:38,520 Speaker 10: What do you think is behind that look. 313 00:14:38,800 --> 00:14:43,120 Speaker 8: Reality is, did the market run fast too fast, too 314 00:14:43,200 --> 00:14:46,200 Speaker 8: quickly in the last month. You can make that argument, yes, 315 00:14:46,280 --> 00:14:47,280 Speaker 8: and so taking. 316 00:14:47,000 --> 00:14:47,920 Speaker 10: Some off the table. 317 00:14:48,200 --> 00:14:50,760 Speaker 8: It's a natural sort of course in terms of, you know, 318 00:14:50,800 --> 00:14:53,400 Speaker 8: a pullback. We haven't even gotten to five percent, and 319 00:14:53,440 --> 00:14:55,120 Speaker 8: I think once you get to that five or six 320 00:14:55,280 --> 00:14:57,400 Speaker 8: is or even seven percent, which you don't think you're 321 00:14:57,440 --> 00:14:59,040 Speaker 8: going to get to, then you're going to see money 322 00:14:59,160 --> 00:15:01,440 Speaker 8: start to come back into the market. So I think 323 00:15:01,480 --> 00:15:04,800 Speaker 8: it's just sort of a reallocation and looking for those 324 00:15:04,840 --> 00:15:09,600 Speaker 8: opportunities where particularly some on the laguer side, even in healthcare, 325 00:15:09,640 --> 00:15:11,320 Speaker 8: I think the money will start to flow into that. 326 00:15:11,520 --> 00:15:13,720 Speaker 8: And so it's taken a little bit all over the 327 00:15:13,760 --> 00:15:15,680 Speaker 8: table on some of the winners, and then I think 328 00:15:15,720 --> 00:15:17,520 Speaker 8: in the year end you start to see some of 329 00:15:17,560 --> 00:15:18,520 Speaker 8: the laggers get a bit. 330 00:15:18,720 --> 00:15:19,880 Speaker 10: On the index level. 331 00:15:19,880 --> 00:15:21,440 Speaker 1: It hasn't been that big of a drawdown, and you 332 00:15:21,440 --> 00:15:23,560 Speaker 1: take a look at an index of MEME stocks. It 333 00:15:23,600 --> 00:15:26,480 Speaker 1: was down five percent yesterday, it's down seventeen percent from 334 00:15:26,520 --> 00:15:28,760 Speaker 1: the peak. At what point do you think that some 335 00:15:28,840 --> 00:15:33,280 Speaker 1: of these losses will affect retail appetite and retail psychology. 336 00:15:32,960 --> 00:15:34,560 Speaker 6: Given what a big role they've played. 337 00:15:34,560 --> 00:15:37,440 Speaker 1: Maybe not in the overall total market cap, but certainly 338 00:15:37,440 --> 00:15:39,160 Speaker 1: when it came to comes to trading volumes. 339 00:15:39,680 --> 00:15:42,360 Speaker 8: Yes, you're absolutely right. The retails of investors have been 340 00:15:42,400 --> 00:15:44,800 Speaker 8: a big buyer of this market. But again, I think 341 00:15:44,840 --> 00:15:48,720 Speaker 8: it goes back to reallocating some of those resources to 342 00:15:48,760 --> 00:15:52,320 Speaker 8: other parts of the market, the main stocks. At the 343 00:15:52,400 --> 00:15:53,880 Speaker 8: end of the day, it's going to be the earners 344 00:15:53,960 --> 00:15:55,720 Speaker 8: that is going to drive this market, and so I 345 00:15:55,760 --> 00:15:58,000 Speaker 8: think that you are going to see those quality names 346 00:15:58,320 --> 00:16:01,080 Speaker 8: start to get a bit again. Taking out some of 347 00:16:01,080 --> 00:16:03,120 Speaker 8: the front of the market is a healthy part of 348 00:16:03,160 --> 00:16:06,200 Speaker 8: the process, Lisa. In our view, we don't want this 349 00:16:06,400 --> 00:16:09,440 Speaker 8: market to run up too quickly. As we were discussing earlier. 350 00:16:09,640 --> 00:16:11,440 Speaker 8: It's given those people who have been waiting on the 351 00:16:11,480 --> 00:16:13,480 Speaker 8: sideline and an opportunity, and there is a lot of 352 00:16:13,520 --> 00:16:17,040 Speaker 8: cash still on the sideline, particularly those institutional investors that 353 00:16:17,080 --> 00:16:19,080 Speaker 8: has missed some of this rally that we think that 354 00:16:19,200 --> 00:16:21,400 Speaker 8: we'll make up just kind of close that on the 355 00:16:21,440 --> 00:16:23,640 Speaker 8: performance gap into year end, that we'll come back into 356 00:16:23,680 --> 00:16:26,800 Speaker 8: this market, but again focusing on those more quality areas, 357 00:16:26,960 --> 00:16:29,360 Speaker 8: and that's sort of the mean nonprofitable areas of the market. 358 00:16:29,400 --> 00:16:32,400 Speaker 7: Nadia, the government shut down continues to drag on any 359 00:16:32,440 --> 00:16:34,520 Speaker 7: of this. What's going on the market being driven at 360 00:16:34,520 --> 00:16:37,560 Speaker 7: this moment a little bit right by policy uncertainty in Washington. 361 00:16:37,800 --> 00:16:39,960 Speaker 8: I think, so particularly around what it could do to 362 00:16:40,040 --> 00:16:43,400 Speaker 8: consumer sentiments and what it could do to spend spending 363 00:16:43,600 --> 00:16:47,080 Speaker 8: going forward. Reality is people aren't getting paid and if 364 00:16:47,080 --> 00:16:50,080 Speaker 8: that weighs on the sentiment, particularly into the holiday season, 365 00:16:50,440 --> 00:16:52,840 Speaker 8: you could see some pullback, particularly in some of the 366 00:16:52,920 --> 00:16:56,600 Speaker 8: consumer names, So that starting to drag on the market 367 00:16:56,720 --> 00:16:58,920 Speaker 8: on the margin. But I think, you know, as we've 368 00:16:58,920 --> 00:17:02,000 Speaker 8: been discussing this more in that as we approach the 369 00:17:02,280 --> 00:17:06,439 Speaker 8: holiday season, particularly Thanksgiving, you're likely to see the government 370 00:17:06,520 --> 00:17:08,760 Speaker 8: start to take this a little bit more seriously in 371 00:17:08,840 --> 00:17:11,679 Speaker 8: terms of what is doing to the American consumer and 372 00:17:11,720 --> 00:17:14,080 Speaker 8: reopen the government. I mean, I hear from my mom 373 00:17:14,119 --> 00:17:17,000 Speaker 8: who runs our church pantry that the reality is you're 374 00:17:17,000 --> 00:17:20,159 Speaker 8: seeing long lines there. So people are suffering, right and 375 00:17:20,240 --> 00:17:23,040 Speaker 8: I think that there are will there are calling their 376 00:17:23,119 --> 00:17:25,520 Speaker 8: representative just sort of reopen the stuff. 377 00:17:25,520 --> 00:17:25,840 Speaker 10: I think the. 378 00:17:25,840 --> 00:17:27,440 Speaker 7: Government reopens before Thanksgiving. 379 00:17:27,760 --> 00:17:28,399 Speaker 6: I do, I do. 380 00:17:28,520 --> 00:17:31,439 Speaker 8: We do think that it's not a guaranteed. Look, you know, 381 00:17:32,240 --> 00:17:34,640 Speaker 8: nothing is ever guaranteed, but it does feel that way 382 00:17:34,680 --> 00:17:36,960 Speaker 8: that momentum is building to reopen this government in the 383 00:17:37,040 --> 00:17:37,879 Speaker 8: next couple of weeks. 384 00:17:38,840 --> 00:17:39,480 Speaker 6: Stay with us. 385 00:17:39,800 --> 00:17:42,480 Speaker 2: More Blomberg surveillance coming up after this. 386 00:17:51,359 --> 00:17:51,679 Speaker 6: Infest. 387 00:17:51,760 --> 00:17:53,720 Speaker 2: The struggling to reach consensus on the state of the 388 00:17:53,760 --> 00:17:56,920 Speaker 2: economy with alternative dake to sending mixed signals. Premiser of 389 00:17:57,000 --> 00:17:59,439 Speaker 2: JP Morgan writing, we remained in a self lending but 390 00:17:59,520 --> 00:18:03,080 Speaker 2: I don't see any scientific economy reaccelerating and resuscue to 391 00:18:03,119 --> 00:18:05,560 Speaker 2: the downside. On the labor market, Prayer joints us now 392 00:18:05,560 --> 00:18:08,000 Speaker 2: for more preaking Monic Marning. No payroll dates are eight 393 00:18:08,040 --> 00:18:10,800 Speaker 2: thirty Eastern times, so when they're talking about challenger job cuts. 394 00:18:10,880 --> 00:18:13,960 Speaker 2: Now typically we dignore challenger job cuts. How much is 395 00:18:13,960 --> 00:18:15,040 Speaker 2: that takes are actually worth? 396 00:18:15,800 --> 00:18:16,560 Speaker 10: So I mean a. 397 00:18:16,520 --> 00:18:18,840 Speaker 5: Lot of this ADP. You have to look at the 398 00:18:18,840 --> 00:18:21,919 Speaker 5: totality of data. I do miss payrolls. Let's spend a 399 00:18:21,960 --> 00:18:25,639 Speaker 5: second saying it was good data. I just never thanked 400 00:18:25,680 --> 00:18:28,000 Speaker 5: it before, and now two months in hero we haven't 401 00:18:28,000 --> 00:18:31,040 Speaker 5: had It's not just the header we asked, well, we 402 00:18:31,160 --> 00:18:32,800 Speaker 5: have a lot of data. Like somebody asked me the 403 00:18:32,840 --> 00:18:34,440 Speaker 5: other day, you probably have nothing to do, I said, 404 00:18:34,640 --> 00:18:38,200 Speaker 5: I have more work because I'm now looking at the totalities. 405 00:18:38,240 --> 00:18:41,879 Speaker 5: You have to look at ADP, the details challenger. We 406 00:18:42,040 --> 00:18:44,160 Speaker 5: always looked at it, but you had like the king 407 00:18:44,240 --> 00:18:45,800 Speaker 5: of all data with payrolls, and we. 408 00:18:45,720 --> 00:18:47,120 Speaker 10: Don't have that. But we are looking. 409 00:18:47,160 --> 00:18:51,200 Speaker 5: We're looking at earnings releases. We're still in that soft landing, 410 00:18:51,680 --> 00:18:52,760 Speaker 5: and I think that's why. 411 00:18:52,600 --> 00:18:54,960 Speaker 10: The Fed's been cutting and now the FEDS saying. 412 00:18:54,680 --> 00:18:57,360 Speaker 5: Well, we need more data, so you know, data dependent 413 00:18:57,400 --> 00:19:01,480 Speaker 5: FED data dependent market is now looking at more creative 414 00:19:01,480 --> 00:19:04,280 Speaker 5: ways of data. But I think there's a fairly consistent 415 00:19:04,320 --> 00:19:07,159 Speaker 5: picture of there are these structural positives, right you talk 416 00:19:07,200 --> 00:19:11,119 Speaker 5: about the soft landing. Companies are solid and they're adapting 417 00:19:11,119 --> 00:19:15,000 Speaker 5: to all these macroshocks, tariffs, immigration, they're managing and that's 418 00:19:15,000 --> 00:19:18,040 Speaker 5: why earnings have been rock solid. We haven't even seen 419 00:19:18,480 --> 00:19:21,480 Speaker 5: the you know, like leverage go up, so it's not 420 00:19:21,560 --> 00:19:26,080 Speaker 5: as if they're they're borrowing to make ends meet. The 421 00:19:26,440 --> 00:19:29,760 Speaker 5: margins are strange, staying strong. Consumer spending is strong, but 422 00:19:29,960 --> 00:19:32,840 Speaker 5: we have that case shape consumer, case shape corporate sector 423 00:19:33,320 --> 00:19:36,520 Speaker 5: and that's the consistent theme. But the labor market is 424 00:19:36,560 --> 00:19:39,240 Speaker 5: slowing and we're still in that low higher low fire. 425 00:19:39,320 --> 00:19:42,640 Speaker 5: But how long can that last? As the labor supply grows. 426 00:19:43,440 --> 00:19:46,399 Speaker 5: You know, people graduate from college, you need jobs. So 427 00:19:46,480 --> 00:19:48,119 Speaker 5: I don't know if it can last forever. 428 00:19:48,400 --> 00:19:49,600 Speaker 10: For now, we're in a soft landing. 429 00:19:49,640 --> 00:19:51,800 Speaker 5: I think owning credit fixed and comes doing what it's 430 00:19:51,800 --> 00:19:54,439 Speaker 5: supposed to do. So I think you know that's how 431 00:19:54,480 --> 00:19:55,200 Speaker 5: we're sort of position. 432 00:19:55,280 --> 00:19:57,040 Speaker 6: You mentioned a feder reserve. The consensus view of the 433 00:19:57,040 --> 00:19:59,359 Speaker 6: FED at least a month ago. The bias of the FED. 434 00:19:59,480 --> 00:20:02,080 Speaker 2: People believe if the spies existed anyway, is that they 435 00:20:02,080 --> 00:20:04,840 Speaker 2: wouldn't deviate from the top club, even if they didn't 436 00:20:04,840 --> 00:20:07,520 Speaker 2: get the economic data. You mentioned the FED and maybe 437 00:20:07,520 --> 00:20:09,720 Speaker 2: that view changing. Is that just usting goes to be 438 00:20:09,760 --> 00:20:11,240 Speaker 2: at the Chicago Fed, or is that the core of 439 00:20:11,240 --> 00:20:11,760 Speaker 2: the committee? 440 00:20:11,800 --> 00:20:14,320 Speaker 5: Now? I think there is no core. I think there's 441 00:20:14,359 --> 00:20:16,639 Speaker 5: a huge division in the FED. And it's not just 442 00:20:16,720 --> 00:20:19,479 Speaker 5: in terms of risks around the labor market, risks around inflation. 443 00:20:19,680 --> 00:20:21,000 Speaker 10: It's also on the neutral rate. 444 00:20:21,359 --> 00:20:23,520 Speaker 5: I mean, I was concerned about this debate that we're 445 00:20:23,560 --> 00:20:26,000 Speaker 5: having at the FED maybe six months from now. 446 00:20:26,040 --> 00:20:27,280 Speaker 10: It's happening a little earlier. 447 00:20:27,359 --> 00:20:28,879 Speaker 5: But if you look at the neutral rate, there are 448 00:20:28,880 --> 00:20:31,000 Speaker 5: people saying it's two seventy five and four. 449 00:20:31,280 --> 00:20:32,240 Speaker 10: We're right at four. 450 00:20:32,560 --> 00:20:35,240 Speaker 5: So I think what Chapao said, because we need data 451 00:20:35,800 --> 00:20:38,679 Speaker 5: to tell us which way to lean. I think both 452 00:20:38,720 --> 00:20:42,359 Speaker 5: sides at the FED the division both are equally vocal. 453 00:20:42,680 --> 00:20:44,120 Speaker 10: There are those that are highlighting. 454 00:20:43,800 --> 00:20:46,080 Speaker 5: That the labor market's slowing, and then there are those 455 00:20:46,080 --> 00:20:47,399 Speaker 5: that are single inflation. 456 00:20:47,080 --> 00:20:49,160 Speaker 10: Still above target and we don't know what's neutral. 457 00:20:49,600 --> 00:20:52,879 Speaker 5: Financial conditions are easy, and so you can almost argue 458 00:20:52,920 --> 00:20:55,920 Speaker 5: will FED cuts make a difference. They do make a difference, 459 00:20:55,960 --> 00:20:59,119 Speaker 5: particularly if that neutral rate is at three. So I 460 00:20:59,160 --> 00:21:02,080 Speaker 5: think that to real action function. I think the chip 461 00:21:02,160 --> 00:21:04,520 Speaker 5: out said there is no clear reaction function. I think 462 00:21:04,560 --> 00:21:07,440 Speaker 5: there was a slight shift the data. Lack of data. 463 00:21:07,640 --> 00:21:09,159 Speaker 5: You can tell that the FED might be on my 464 00:21:09,280 --> 00:21:12,600 Speaker 5: camp like Stott of data and missing it. So if 465 00:21:12,600 --> 00:21:14,600 Speaker 5: we don't get data, I think they might even pause. 466 00:21:14,640 --> 00:21:18,600 Speaker 5: But I do think economy outlook matters as much as 467 00:21:18,720 --> 00:21:20,960 Speaker 5: the reaction function. We got a sense of a more 468 00:21:21,000 --> 00:21:24,800 Speaker 5: hawkish reaction function. But if the economic data continues Challenger 469 00:21:24,800 --> 00:21:27,679 Speaker 5: as part of it, If the layoffs start, this is 470 00:21:27,760 --> 00:21:30,879 Speaker 5: not a job market where layoffs will get absorbed quickly, 471 00:21:30,920 --> 00:21:33,239 Speaker 5: and I think that's where the FED. Then maybe they 472 00:21:33,280 --> 00:21:35,359 Speaker 5: don't cut in December, and then they cut more aggressively 473 00:21:35,400 --> 00:21:37,320 Speaker 5: next year if the economy continues to slow. 474 00:21:37,440 --> 00:21:40,160 Speaker 1: I put a put into chatchipt write a poem about 475 00:21:40,200 --> 00:21:42,760 Speaker 1: non farm pails, and I think it broke chatcheapts. It 476 00:21:42,760 --> 00:21:44,840 Speaker 1: still hasn't come up with the poem, so hopefully we 477 00:21:44,880 --> 00:21:45,399 Speaker 1: can get. 478 00:21:45,240 --> 00:21:45,840 Speaker 10: That for you. 479 00:21:45,920 --> 00:21:47,879 Speaker 1: I am curious, though, do you think that if the 480 00:21:47,880 --> 00:21:51,040 Speaker 1: Fed does not cut rates in December because of a 481 00:21:51,119 --> 00:21:53,439 Speaker 1: lack of data, that it will prompt you to want 482 00:21:53,480 --> 00:21:55,960 Speaker 1: to go into longer term bonds On the margins, it 483 00:21:56,000 --> 00:22:00,720 Speaker 1: will hamper growth more significantly and tamp down any inflation risk. 484 00:22:01,320 --> 00:22:04,040 Speaker 5: I do think if they don't cut, and they suggest 485 00:22:04,119 --> 00:22:07,359 Speaker 5: that this is it, then you can have concerns around 486 00:22:07,359 --> 00:22:09,800 Speaker 5: maybe long end bonds we're supposed to price in a 487 00:22:09,840 --> 00:22:12,919 Speaker 5: weaker economic outlook. You'll get some froth out of the market. 488 00:22:13,080 --> 00:22:15,600 Speaker 5: People who have only bought an acid because they think 489 00:22:15,640 --> 00:22:17,960 Speaker 5: the Fed's going to cut rates, then they start to 490 00:22:17,960 --> 00:22:20,040 Speaker 5: move away. But I do think if they don't cut, 491 00:22:20,119 --> 00:22:22,960 Speaker 5: they're still going to keep that put alive, meaning they're 492 00:22:23,000 --> 00:22:25,080 Speaker 5: going to say, look, as the economy slows, now we're 493 00:22:25,160 --> 00:22:28,159 Speaker 5: data dependent, we can cut aggressively. This FED has not 494 00:22:28,240 --> 00:22:32,280 Speaker 5: been shy under Chepaul. They've hiked at seventy five increments. 495 00:22:32,320 --> 00:22:34,920 Speaker 5: They cut fifty last year, but they are a data 496 00:22:34,920 --> 00:22:35,640 Speaker 5: dependent FED. 497 00:22:35,720 --> 00:22:38,040 Speaker 1: How much of an unwined do you expect in say, 498 00:22:38,480 --> 00:22:40,920 Speaker 1: some of the riskier assets, whether it's riskier credit or 499 00:22:40,960 --> 00:22:43,040 Speaker 1: certainly what we've seen with memestacks. I know you're not 500 00:22:43,520 --> 00:22:46,240 Speaker 1: focused on that, but I wonder how much that's a 501 00:22:46,320 --> 00:22:50,720 Speaker 1: direct response the FED might not be cutting as aggressively and. 502 00:22:50,920 --> 00:22:53,280 Speaker 10: Might be closer to dumb than people had expected. 503 00:22:53,400 --> 00:22:55,399 Speaker 5: I mean, there is a lot of liquidity in the system, 504 00:22:55,480 --> 00:22:58,160 Speaker 5: and the FED stopping QT was part of that as well. 505 00:22:58,160 --> 00:23:01,159 Speaker 5: Now they are not increasing the size of the balance sheet, 506 00:23:01,320 --> 00:23:02,920 Speaker 5: but I wonder do people look at the size of 507 00:23:02,960 --> 00:23:04,520 Speaker 5: the balance sheet growing, which I think is going to 508 00:23:04,560 --> 00:23:07,960 Speaker 5: happen either it's December or next year because of reserves. 509 00:23:08,119 --> 00:23:11,000 Speaker 5: I think reserves are close to neutral. We talk about 510 00:23:11,000 --> 00:23:13,560 Speaker 5: neutral FED funds. We should talk about neutral reserves as well. 511 00:23:13,560 --> 00:23:14,320 Speaker 10: Worth there. 512 00:23:14,520 --> 00:23:17,880 Speaker 5: So I wonder if okay, the Fed's not you know, cutting, 513 00:23:18,480 --> 00:23:20,600 Speaker 5: but the FEDS growing the balance sheet, so you might 514 00:23:20,640 --> 00:23:23,720 Speaker 5: get you know, liquidity staying high and it can. 515 00:23:23,600 --> 00:23:24,719 Speaker 10: Sort of propel more of that. 516 00:23:24,880 --> 00:23:27,440 Speaker 5: But I think in general, we talked about remember cockreatures, 517 00:23:27,480 --> 00:23:30,480 Speaker 5: just not that long ago, I mean there are excesses 518 00:23:30,680 --> 00:23:34,120 Speaker 5: in I would say every market, and our job is 519 00:23:34,240 --> 00:23:37,119 Speaker 5: to find them and make sure we minimize the cockroaches. 520 00:23:37,160 --> 00:23:40,159 Speaker 5: And that requires a lot of credit work, you know, 521 00:23:40,200 --> 00:23:43,080 Speaker 5: where you have to understand the company, and I think 522 00:23:43,119 --> 00:23:46,359 Speaker 5: it's people who maybe not doing that that might be 523 00:23:46,400 --> 00:23:48,520 Speaker 5: then at risk of some of that froth coming out 524 00:23:48,520 --> 00:23:50,879 Speaker 5: because you know, we don't know what neutral is. 525 00:23:51,000 --> 00:23:52,320 Speaker 10: I mean, I think. 526 00:23:52,119 --> 00:23:54,200 Speaker 5: It's closer to three, but what if it is closer 527 00:23:54,240 --> 00:23:57,199 Speaker 5: to four because financial conditions, liquidity is high and so 528 00:23:57,400 --> 00:24:00,000 Speaker 5: you may not get a big decline in interest rates. 529 00:24:00,000 --> 00:24:01,560 Speaker 5: That's when you want to make sure you own the 530 00:24:01,600 --> 00:24:05,360 Speaker 5: companies that don't need lower rates to make their payments. 531 00:24:05,560 --> 00:24:07,879 Speaker 7: Prayer you talk about this in your notes. How are 532 00:24:07,920 --> 00:24:10,159 Speaker 7: you thinking about the risk of what's going on at 533 00:24:10,160 --> 00:24:11,760 Speaker 7: the Supreme Court in terms of AEPA. 534 00:24:12,400 --> 00:24:14,399 Speaker 5: There was a lot of discussion. I think the bond 535 00:24:14,400 --> 00:24:17,240 Speaker 5: market got really nervous. And you know, these are large 536 00:24:17,320 --> 00:24:20,480 Speaker 5: numbers if the Supreme Court does rule these tariffs illegal. 537 00:24:20,680 --> 00:24:23,800 Speaker 5: We're talking ninety hundred billion of tariff numbers. 538 00:24:24,119 --> 00:24:25,200 Speaker 10: That's a large number. 539 00:24:25,680 --> 00:24:27,879 Speaker 5: But look at the you know, the Treasury has the 540 00:24:27,920 --> 00:24:30,359 Speaker 5: cash cash balance has been growing, so I don't see 541 00:24:30,359 --> 00:24:32,000 Speaker 5: a case where they have to suddenly come out and 542 00:24:32,080 --> 00:24:34,320 Speaker 5: issue a lot. I think interest rates rose. Saying the 543 00:24:34,359 --> 00:24:37,159 Speaker 5: deficits are problem. The deficit is a long term problem. 544 00:24:37,160 --> 00:24:38,080 Speaker 10: I mean, or at. 545 00:24:38,040 --> 00:24:40,399 Speaker 5: Seven percent deficit of GDP, that's going to go to 546 00:24:40,440 --> 00:24:44,760 Speaker 5: seven point two. I think the bond markets slightly overreacted 547 00:24:45,280 --> 00:24:48,560 Speaker 5: the president. It's the signature policy of the president. He said, 548 00:24:48,560 --> 00:24:50,640 Speaker 5: it's the most beautiful word in the dictionary for him. 549 00:24:50,880 --> 00:24:54,320 Speaker 5: So if it is struck illegal here, they've got section one, 550 00:24:54,440 --> 00:24:57,680 Speaker 5: twenty two, thirty two three or one. I mean, I'm 551 00:24:57,720 --> 00:24:59,880 Speaker 5: no constitutional lawyer or lawyer. 552 00:25:00,240 --> 00:25:02,199 Speaker 10: But I think they're going to find ways. 553 00:25:02,760 --> 00:25:05,320 Speaker 5: It's going to be harder and maybe not as blanket, 554 00:25:05,359 --> 00:25:08,160 Speaker 5: and Congress needs to be involved. But I think you're still. 555 00:25:07,960 --> 00:25:10,040 Speaker 10: Going to get those tariffs. I don't see the tariff 556 00:25:10,119 --> 00:25:11,160 Speaker 10: number really going down. 557 00:25:11,200 --> 00:25:13,480 Speaker 5: So I think if the market overreacts, I think that's 558 00:25:13,520 --> 00:25:15,600 Speaker 5: an opportunity on any Supreme Court. 559 00:25:15,600 --> 00:25:16,399 Speaker 10: Headline. 560 00:25:17,320 --> 00:25:20,879 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 561 00:25:20,880 --> 00:25:23,960 Speaker 2: in markets, economics, an gio politics. 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