WEBVTT - Bloomberg Surveillance TV: September 10, 2024 0:00:00.120 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.640 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.400 Terminal and the Bloomberg Business App. Peter Cheer of Academy 0:00:37.640 --> 0:00:40.400 saying there is still risk ahead, writing quote, I'm looking 0:00:40.440 --> 0:00:42.919 to take out the August lows. I really think there 0:00:42.920 --> 0:00:45.599 has been a major disconnect between people believing that we 0:00:45.640 --> 0:00:50.680 had capitulation versus having seen any actual capitulation. Pete joins 0:00:50.720 --> 0:00:53.040 us now for more pink and monitor. Taking out the 0:00:53.080 --> 0:00:55.160 August lows seems absolutely terrible. And then I look at 0:00:55.160 --> 0:00:58.360 the August lows on August fifth, of about fifty one hundred, 0:00:58.400 --> 0:01:01.280 about eight percent south of right now, it doesn't sound 0:01:01.560 --> 0:01:03.600 so bad. What was it about August fifth that you 0:01:03.600 --> 0:01:05.560 wouldn't describe as capitulation? 0:01:05.680 --> 0:01:05.840 You know. 0:01:05.920 --> 0:01:07.360 I think a lot of people looked at the VIC 0:01:07.480 --> 0:01:10.120 hit sixty five at eight thirty in the morning. It 0:01:10.200 --> 0:01:12.440 was a calculation, right, It's no one actually traded Vic's 0:01:12.440 --> 0:01:15.520 futures much above forty. So I think people really took comfort, 0:01:15.520 --> 0:01:19.040 Oh we had this VIC hit sixty five, everything calmed down. 0:01:19.200 --> 0:01:21.520 There was never really panic in the futures market. There 0:01:21.520 --> 0:01:23.640 was never panic during the actual trading hours of the 0:01:23.720 --> 0:01:26.680 US market. So I think people started reloading the boat 0:01:26.720 --> 0:01:29.199 and saying, Oh, we're good. We've had this wash out trade, 0:01:29.280 --> 0:01:31.200 we had the capituation. I don't think we've got that. 0:01:31.440 --> 0:01:33.400 And as we start hearing this, the Nasdaq one hundred 0:01:33.440 --> 0:01:35.880 is already back close to those August lows. I think 0:01:35.920 --> 0:01:38.880 we pushed through this. We've got another maybe ten percent downside. 0:01:38.880 --> 0:01:40.520 I don't think we get back to the March lows, 0:01:40.720 --> 0:01:42.520 but I think there is room for further downside. 0:01:42.600 --> 0:01:44.600 You suggest there was no panic, I would suggest in 0:01:44.680 --> 0:01:47.080 Japan there was panic. The biggest one day moved since 0:01:47.120 --> 0:01:49.920 eighty seven. At one point that morning, Dolly Enna dropped 0:01:49.920 --> 0:01:52.040 down to about one forty one seven set. That was 0:01:52.040 --> 0:01:54.960 a three percent move. We suggesting for the global picture, 0:01:55.120 --> 0:01:57.760 that was the tremor and not the earthquake correct. 0:01:57.520 --> 0:01:59.400 I think really it's the US market that matters, and 0:01:59.440 --> 0:02:02.640 the US we watched what happened in Tokyo overnight. We 0:02:02.720 --> 0:02:04.640 got that little bit of panic in the morning, futures 0:02:04.640 --> 0:02:07.440 are down, but it actually opened fairly stable, started turning 0:02:07.440 --> 0:02:09.480 around by the end of the day. Then next day 0:02:09.520 --> 0:02:11.840 we rallied, went probably further than I think we should have, 0:02:12.080 --> 0:02:14.400 but that was kind of obvious. But that everyone just 0:02:14.480 --> 0:02:17.000 feels like, Oh, we've washed out all the bad longs, 0:02:17.240 --> 0:02:19.320 this is all good. We can really rebuild from there. 0:02:19.440 --> 0:02:20.720 And I don't think we had that sort of a 0:02:20.880 --> 0:02:22.840 wash out trade, and I don't think we can rally 0:02:22.919 --> 0:02:24.880 much further until we get that wash out trade. 0:02:24.960 --> 0:02:27.480 What's the catalyst for that, for that ten percent downside 0:02:27.560 --> 0:02:29.080 and for that wash out of those lungs. 0:02:29.120 --> 0:02:30.520 You know, I think as usual, part of it's just 0:02:30.520 --> 0:02:33.239 going to be positioning. People have got them positions very long. 0:02:33.280 --> 0:02:35.799 People have been reloading in the all sorts of ball 0:02:35.919 --> 0:02:36.880 selling strategies. 0:02:37.000 --> 0:02:37.520 You know. 0:02:37.560 --> 0:02:40.200 The one thing I keep watching is ENVDL, which is 0:02:40.200 --> 0:02:43.600 a two times levered Nvidia ETF. I don't understand why 0:02:43.600 --> 0:02:45.880 we have leverage single stock ETFs to make no sense 0:02:45.919 --> 0:02:48.280 to me, there's a huge drag on performance just the 0:02:48.280 --> 0:02:50.639 way they're set up, and yet that keeps getting inflows, 0:02:50.760 --> 0:02:52.880 and to me, until we see something kind of shake 0:02:52.919 --> 0:02:55.240 the faith of that trading crowd, that's when I think 0:02:55.240 --> 0:02:57.880 we kind of see the bottom and it's not getting 0:02:57.919 --> 0:03:00.000 the inflows now, and we're having a lot more questions 0:03:00.200 --> 0:03:02.840 about AI. I think that's going to be the catalyst, 0:03:02.880 --> 0:03:05.320 Like is the promise got ahead of itself? 0:03:05.520 --> 0:03:07.000 So this is going to be led by big tech? 0:03:07.040 --> 0:03:08.519 From what you're saying that you think that this is 0:03:08.560 --> 0:03:11.800 going to be an ongoing kind of deterioration from the 0:03:11.840 --> 0:03:14.800 beta trade that we saw earlier. I'm just wondering what 0:03:14.919 --> 0:03:17.720 the economic backdrop is for this, because some people might 0:03:17.760 --> 0:03:21.320 say overly bullish, overly complacent. You're saying the Skuy's falling 0:03:21.360 --> 0:03:22.320 and a recession is imminent. 0:03:22.400 --> 0:03:23.000 Is that the case? 0:03:23.120 --> 0:03:24.960 No, I think we're kind of I think the one 0:03:24.960 --> 0:03:27.080 thing we've now done is actually priced out. The soft 0:03:27.160 --> 0:03:29.200 landing is guaranteed, right, so now I think there's at 0:03:29.280 --> 0:03:33.000 least some possibility of a harder landing. So I've been 0:03:33.000 --> 0:03:34.560 looking for a bumpy landing. I think you're going to 0:03:34.639 --> 0:03:37.800 see bits and pieces of data showing you know, positives negatives. 0:03:37.920 --> 0:03:39.560 It's going to be by industry, it's going to be 0:03:39.680 --> 0:03:41.800 you know, regional. This to me is really again just 0:03:41.880 --> 0:03:45.000 about valuations. You know, when I started on Wall Street, 0:03:45.080 --> 0:03:47.720 we first training day, they talked about options. They said, 0:03:47.720 --> 0:03:48.960 you know, if you buy an option, it gives you 0:03:49.040 --> 0:03:50.960 the right to sell high, right to buy low. You 0:03:50.960 --> 0:03:52.840 get to trade the gam and like, what's everyone want 0:03:52.880 --> 0:03:54.680 to do? And like we all raise our hand buy options. 0:03:54.920 --> 0:03:57.200 They're like, no, it depends on the price, right, depending 0:03:57.200 --> 0:03:59.160 on the price you want to sell those options because 0:03:59.200 --> 0:04:01.080 you're getting paid more than that. So I think that's 0:04:01.080 --> 0:04:03.040 where we've hit on a lot of these stocks. We've 0:04:03.040 --> 0:04:05.720 moved beyond what's rational in terms of what they can generate. 0:04:05.920 --> 0:04:09.160 And it's disappointing and sadly we talk about markets and 0:04:09.240 --> 0:04:11.680 these broad markets, but fifty percent of the indices are 0:04:11.680 --> 0:04:13.760 really just a handful of companies. So it really does 0:04:13.840 --> 0:04:16.160 matter what these tend to twenty companies do. 0:04:16.400 --> 0:04:19.520 Where's this concern about the election and politics play into 0:04:19.520 --> 0:04:20.360 your bumpy landing? 0:04:20.640 --> 0:04:24.880 You know, I'm kind of really concerned, confused, what are 0:04:24.920 --> 0:04:26.719 we even going to see tonight? Like at this point. 0:04:26.760 --> 0:04:29.000 I haven't bothered spending any time really trying to figure 0:04:29.000 --> 0:04:32.440 out what either party's policies are going to be, because 0:04:32.560 --> 0:04:34.400 I don't think we've had any sort of definition. Where 0:04:34.400 --> 0:04:35.960 I've been working is what I think is going to 0:04:35.960 --> 0:04:38.080 stay the same, and that is really going to be 0:04:38.279 --> 0:04:41.040 no matter who wins. This friction with China, this tech 0:04:41.080 --> 0:04:43.240 battle is going to continue. We are going to see 0:04:43.240 --> 0:04:46.880 more and more protectionism around AI, the semiconductor business. I 0:04:46.880 --> 0:04:48.680 think it goes back to one thing you were talking 0:04:48.680 --> 0:04:51.039 about earlier. Europe. Europe is not going to be good 0:04:51.040 --> 0:04:53.080 for AI. Europe's not going to be a good investment 0:04:53.160 --> 0:04:56.920 vehicle because it's all about constricting and constraint and rules 0:04:56.960 --> 0:04:59.200 and regulations. So I don't think that's going to be 0:04:59.200 --> 0:05:01.040 a hotbed of this. I think ultimately the US is 0:05:01.040 --> 0:05:02.479 going to do well, but we are going to see 0:05:02.480 --> 0:05:04.799 friction with China on that, and I think whoever wins 0:05:04.839 --> 0:05:08.160 is going to have to rebuild Europe, the US's reputation globally. 0:05:08.400 --> 0:05:10.520 Where do we stand with our enemies and more importantly, 0:05:10.560 --> 0:05:12.200 where do we stand with our allies? Do we have 0:05:12.320 --> 0:05:14.880 ten twenty year thirty year commitments or do we live 0:05:14.960 --> 0:05:17.760 election cycle through election cycle. So I don't think anything 0:05:17.800 --> 0:05:20.000 that is going to come out tonight on that, but 0:05:20.040 --> 0:05:21.479 those are things I'm going to start looking for as 0:05:21.520 --> 0:05:22.240 we near the election. 0:05:22.480 --> 0:05:25.040 A lot of people's base cases is gridlock in Washington. 0:05:25.160 --> 0:05:27.720 But some of the issues that Trump talks about, like terror, 0:05:27.720 --> 0:05:29.440 spent a lot of time in this program talking about 0:05:29.480 --> 0:05:32.320 that he could do unilaterally on day one so have 0:05:32.360 --> 0:05:34.680 a massive impact on what's going on in China. Do 0:05:34.720 --> 0:05:37.800 you think China is basically waiting to find out what 0:05:37.839 --> 0:05:41.440 happens with the election because their economy is suffering before 0:05:41.480 --> 0:05:43.440 they really have set policy moves. 0:05:43.480 --> 0:05:45.120 I think everyone's on hold a little bit. They want 0:05:45.120 --> 0:05:46.720 to see how this plays out. I think everyone has 0:05:46.720 --> 0:05:49.039 a decent understanding of what Trump does or doesn't do. 0:05:49.279 --> 0:05:51.520 He says a lot and then he tends to back down. 0:05:51.720 --> 0:05:53.320 We're not sure what Kama is going to do. I 0:05:53.320 --> 0:05:55.039 think people want to see what's going to be like 0:05:55.480 --> 0:05:57.720 and will she be easier to negotiate with right Will 0:05:57.760 --> 0:05:59.960 people prefer to negotiate with her or will they prefer 0:06:00.000 --> 0:06:01.680 to stick to Trump? So right now, I'm kind of 0:06:01.680 --> 0:06:04.919 discounting everything both sides say, and that is probably I 0:06:04.920 --> 0:06:06.960 think you One thing is we are kind of assuming 0:06:07.000 --> 0:06:09.400 split tickets. If there's something that comes out that one 0:06:09.480 --> 0:06:12.880 side is really going to, you know, win completely, then 0:06:12.920 --> 0:06:14.760 I think that changes the narrative for Wall Street. Then 0:06:14.760 --> 0:06:16.760 we have to pay a lot closer attention to the risks. 0:06:16.800 --> 0:06:18.480 Let's just park the politics just for a moment, just 0:06:18.520 --> 0:06:20.760 to wrap this up. When I walk away from listening 0:06:20.760 --> 0:06:23.920 to this conversation, Lisa correctly identified that you see tech 0:06:23.960 --> 0:06:26.320 and the AI trade, it's the biggest risk a fighting 0:06:26.320 --> 0:06:28.760 hat to demonstrate whether this return on investment is going 0:06:28.800 --> 0:06:30.600 to come from. Was the Apple and Vanu in the 0:06:30.640 --> 0:06:33.000 beginning of that yesterday do you think it was? 0:06:33.440 --> 0:06:35.719 You know, it did not seem to give that excitement. 0:06:35.760 --> 0:06:37.720 But you've seen some of the earnings come out. Oracle 0:06:37.720 --> 0:06:39.440 had great earnings last night. They're up, but yet the 0:06:39.520 --> 0:06:41.560 Nasdaq one hundreds down a little Futures are down a 0:06:41.600 --> 0:06:43.280 little bit this morning. So I think it's taking more 0:06:43.279 --> 0:06:45.360 and more to get that story. The one positive thing 0:06:45.360 --> 0:06:47.160 I'll say that I keep an eye on is Walmart 0:06:47.279 --> 0:06:50.160 did come out and say that AI really helped them 0:06:50.160 --> 0:06:52.520 with their quarter and then they're planning. So I need 0:06:52.520 --> 0:06:54.479 to see more of that to believe in right now, 0:06:54.839 --> 0:06:56.320 you know, what I'm seeing is a lot more people 0:06:56.320 --> 0:06:59.359 I think we've been struggling through using these lams or 0:06:59.400 --> 0:07:02.359 generative AI and I'll keep coming back like, oh, is 0:07:02.400 --> 0:07:05.679 it there yet? And since the cost rose so quickly 0:07:05.680 --> 0:07:08.760 with the cost of chips, the cost of getting data centers, electricity, 0:07:09.200 --> 0:07:12.280 that I think the risk reward or the cost benefits 0:07:12.320 --> 0:07:13.880 not there right now. And I think that's what we'll 0:07:13.880 --> 0:07:14.920 see some slowing down on. 0:07:15.000 --> 0:07:17.240 Peter Cheer looking to take out the August Low's Peter 0:07:17.320 --> 0:07:29.520 Cheer Acountaby Securities paid to tank you. Evan ross Smith 0:07:29.520 --> 0:07:33.080 of Slinkstart Strategies, writing Harris heads into Tuesday's debates, still 0:07:33.120 --> 0:07:36.040 searching for a durable advantage in the states that will 0:07:36.040 --> 0:07:39.280 decide the election, but with important openings she can press. 0:07:39.520 --> 0:07:41.720 Evan joined us now for more. Evan, good morning, sir. 0:07:41.720 --> 0:07:42.200 Good morning. 0:07:42.280 --> 0:07:45.600 Let's talk about the very specific, highly specific pre debate 0:07:45.640 --> 0:07:48.040 polling that you've been conducting. Can you just walk us 0:07:48.040 --> 0:07:49.240 through it to begin, Well. 0:07:49.160 --> 0:07:52.080 The selection is increasingly becoming focused on the handful of 0:07:52.160 --> 0:07:54.320 voters really only about five hundred thousand voters who are 0:07:54.320 --> 0:07:56.680 going to decide the outcome. Right, These are swing voters, 0:07:56.960 --> 0:08:00.600 largely independent in six states right, swing states in the 0:08:00.640 --> 0:08:02.480 Ross Belt and the Sun Belt that we all know about, 0:08:03.280 --> 0:08:05.600 and this debate is largely about them. What do they 0:08:05.640 --> 0:08:07.600 want to hear, what do they need to hear, and 0:08:07.880 --> 0:08:10.240 particularly what does Kamala Harris need to tell them to 0:08:10.240 --> 0:08:12.000 get them over the edge and make this more than 0:08:12.080 --> 0:08:14.840 just a knife sedge election where she's clawed back out 0:08:14.840 --> 0:08:17.600 of the hole that Joe Biden was in and reached 0:08:17.920 --> 0:08:21.200 basically parody with Donald Trump, where this election could go 0:08:21.280 --> 0:08:23.680 either way, as just about any analyst or polster would 0:08:23.680 --> 0:08:27.160 tell you. And really, what these swing voters in these 0:08:27.160 --> 0:08:29.600 swing states want to hear, at least in our polling 0:08:29.600 --> 0:08:32.480 that that we just released this week, is you know, 0:08:32.520 --> 0:08:34.920 they want to hear her continue to gain ground on 0:08:34.960 --> 0:08:39.040 the economy to press her advantage on prices. Right, Donald 0:08:39.080 --> 0:08:41.800 Trump still has a very narrow advantage, a two point 0:08:41.840 --> 0:08:46.120 advantage and overall in these swing states on inflation and jobs, 0:08:46.160 --> 0:08:48.640 but with independence in these swing states, Harris has a 0:08:48.640 --> 0:08:51.319 four point advantage. These are very close to margin of error, 0:08:51.360 --> 0:08:54.679 but it means these critical voters are looking to hear 0:08:54.720 --> 0:08:58.040 on the economy and here on prices specifically, and she 0:08:58.080 --> 0:09:00.720 has to mitigate concerns on immigration, where she still down 0:09:00.960 --> 0:09:03.360 in these swing states to Donald Trump. 0:09:03.400 --> 0:09:04.559 And then when you look at the New York Times 0:09:04.600 --> 0:09:06.600 Santa Paul for the weekend, more than sixty percent of 0:09:06.760 --> 0:09:09.520 likely voters. So the next present represent a major change 0:09:09.520 --> 0:09:12.440 from Biden. Do you see that in this polling group 0:09:12.440 --> 0:09:14.080 that you're going after in the swing states? 0:09:14.160 --> 0:09:17.440 So it's interesting we pulled this with independent voters in 0:09:17.480 --> 0:09:20.800 swing states, who represents change, who represents the right kind 0:09:20.840 --> 0:09:24.160 of change? And voters in these swing states independent voters 0:09:24.400 --> 0:09:26.959 by ten points say that Kamala Harris is a breath 0:09:26.960 --> 0:09:29.240 of fresh air, and she is. It's undeniable. She has 0:09:29.240 --> 0:09:32.319 a breath of fresh air in this race, but by 0:09:32.400 --> 0:09:34.720 only about seven points to voters say that she's the 0:09:34.800 --> 0:09:37.920 right kind of change. She's still more or less more 0:09:38.040 --> 0:09:40.640 or less tied with Donald Trump on being a change candidate. 0:09:40.920 --> 0:09:45.040 And that's because she hasn't yet broken in a meaningful 0:09:45.040 --> 0:09:48.959 way rhetorical or policy wise with the administration. She isn't 0:09:49.000 --> 0:09:51.960 a change candidate beyond the literal change of who the 0:09:52.000 --> 0:09:56.040 candidate is. And now that slight advantage on the right 0:09:56.120 --> 0:09:59.240 kind of change with independent swing state voters is very good, 0:10:00.200 --> 0:10:02.400 but she needs to do more. She can do more. 0:10:02.440 --> 0:10:04.959 Does she need to completely break with Biden in your 0:10:05.000 --> 0:10:06.840 polling to win over those voters. 0:10:07.679 --> 0:10:09.480 I don't know that it's a complete break with Biden. 0:10:09.520 --> 0:10:10.000 She doesn't need to. 0:10:10.120 --> 0:10:13.200 He's the sitting present, he's her sitting president, her running 0:10:13.240 --> 0:10:16.880 mate in twenty twenty. You know, there is some merit 0:10:16.920 --> 0:10:18.840 to the idea that she could draw a greater distance, 0:10:19.400 --> 0:10:23.559 particularly on immigration. There's very little downside to drawing distance. 0:10:23.840 --> 0:10:26.520 But on policy, most of the Biden policy agenda, when 0:10:26.520 --> 0:10:29.439 it's not tied to Joe Biden, is very popular when 0:10:29.440 --> 0:10:32.960 you pull it. So how do you break with the present. 0:10:33.000 --> 0:10:35.080 You can't break with him on policy. You have to 0:10:35.080 --> 0:10:38.640 break with him in more subtle rhetorical ways, and we'll 0:10:38.640 --> 0:10:41.120 see what she does. We'll see how she manages that. 0:10:41.160 --> 0:10:42.400 And you also want to continue to be able to 0:10:42.440 --> 0:10:44.880 take credit for things that the administration does that is 0:10:44.960 --> 0:10:49.080 very popular, like Medicare and negotiation and prescription drug prices, 0:10:49.120 --> 0:10:52.520 which is enormously popular, including in these swing states. With 0:10:52.559 --> 0:10:53.280 these swing. 0:10:53.120 --> 0:10:56.720 Voters, how engaged are some of the independents and perspective voters, 0:10:56.880 --> 0:10:58.920 those five hundred thousand people that are going to determine 0:10:58.920 --> 0:11:01.760 the election I mean, awmuch. Are they watching every iteration 0:11:01.920 --> 0:11:04.679 looking for policy, trying to understand the two candidates. 0:11:04.880 --> 0:11:07.480 Well, that's really what's critical tonight, because those voters are 0:11:07.520 --> 0:11:13.360 looking to learn a lot of people who follow politics closely, journalists, practitioners, 0:11:13.400 --> 0:11:14.920 the kind of people who get up at six in 0:11:14.960 --> 0:11:16.440 the morning to watch the news and get a little 0:11:16.520 --> 0:11:20.560 edge on everyone else, we know a lot about what's 0:11:20.600 --> 0:11:22.440 going to come out of their mouths. These swing voters 0:11:22.480 --> 0:11:24.400 who haven't made up their mind, they're watching to learn. 0:11:24.520 --> 0:11:27.520 They're not necessarily watching for the reparte the zingers. And 0:11:27.559 --> 0:11:30.280 that's why I discount the mics being on or off 0:11:30.320 --> 0:11:32.280 or anything like that. The voters who will determine this 0:11:32.320 --> 0:11:36.120 selection really really care about what these candidates are saying. 0:11:36.120 --> 0:11:38.679 They're looking for substance, they're looking to be educated. They 0:11:38.720 --> 0:11:42.400 have open questions largely about Kamala Harris, very much less 0:11:42.400 --> 0:11:44.600 so about Donald Trump, and they want answers to those questions, 0:11:44.679 --> 0:11:47.440 particularly on the economy, particularly on her immigration policy and 0:11:47.440 --> 0:11:49.160 how she's going to be different than the status quo. 0:11:50.040 --> 0:11:53.960 And an important mission for Harris is also to raise 0:11:54.000 --> 0:11:56.920 the salience of abortion and reproductive rights in this selection. 0:11:57.000 --> 0:11:58.280 That's what I was going to say, how do you 0:11:58.320 --> 0:12:01.040 sort of pair those two ideas? Is social versus the economic? 0:12:01.160 --> 0:12:03.280 Especially to a time where frankly, there isn't that much 0:12:03.360 --> 0:12:06.800 daylight when it comes to certain policies, particularly with China 0:12:06.880 --> 0:12:11.479 versus a US and other international issues between Trump and Harris. 0:12:11.800 --> 0:12:14.000 Well in foreign policy, you know, Harris is very fortunate 0:12:14.000 --> 0:12:17.800 in that the part of the Biden administration agenda and 0:12:18.320 --> 0:12:20.840 policy said that she has tied the least to is 0:12:20.880 --> 0:12:23.200 foreign policy, so she can kind of do it and 0:12:23.240 --> 0:12:24.880 say whatever she wants and feels she needs to do 0:12:24.880 --> 0:12:27.800 and is politically advantageous. It's also true that the vice 0:12:27.840 --> 0:12:30.000 president has had very little to do with American foreign 0:12:30.040 --> 0:12:32.480 policy over the last four years, you know, sort of 0:12:32.559 --> 0:12:34.240 Dick Cheney. It's hard to find a vice president who 0:12:34.240 --> 0:12:38.319 has ivan Can we pick up on who she is too? Independence? 0:12:38.360 --> 0:12:40.480 At least? Is this the person that ran back in 0:12:40.520 --> 0:12:44.959 twenty nineteen, twenty twenty? Is she progressive? In moderates closing 0:12:45.360 --> 0:12:47.319 here in twenty twenty four, how do they see her? 0:12:48.760 --> 0:12:51.000 She's not. I mean when she ran in twenty nine teen, 0:12:51.040 --> 0:12:53.079 it was in a Democratic primary where she didn't even 0:12:53.080 --> 0:12:54.960 make it die ulis she never saw the voters in 0:12:55.000 --> 0:12:58.120 twenty twenty, she's a vice president on a presidential ticket. 0:12:59.200 --> 0:13:01.240 And also it should be noted in a year where 0:13:01.280 --> 0:13:04.280 campaigning was different than any other presidential election in our lifetime, right, 0:13:04.280 --> 0:13:07.719 she wasn't barnstorming. The swing state's media consumption was very 0:13:07.720 --> 0:13:11.880 different during COVID, and so she is very much doing 0:13:11.880 --> 0:13:15.720 her first introduction to voters. We're now several months, a 0:13:15.720 --> 0:13:18.040 couple months into that introduction, so things are starting to 0:13:18.120 --> 0:13:20.520 firm up. But this is you know, we did this 0:13:20.679 --> 0:13:25.640 test on what policies, what campaign promises that Harris has made. 0:13:25.880 --> 0:13:28.720 Do you believe she will try and succeed on try 0:13:28.760 --> 0:13:31.319 and fail and not even try? Right? So these are 0:13:31.360 --> 0:13:33.360 all These are all policies that she is that the 0:13:33.440 --> 0:13:36.680 campaign has promised to pursue. And on some things like 0:13:36.720 --> 0:13:39.000 the child tax credit, voters really believe she will try 0:13:39.040 --> 0:13:41.760 and get it done. On other things like deficit reduction, 0:13:42.880 --> 0:13:44.480 she's underwater by a couple points. 0:13:44.640 --> 0:13:46.000 Right, She's not the only one. 0:13:46.440 --> 0:13:48.040 She's not the only one. She's not the only one. 0:13:48.080 --> 0:13:50.320 I mean, where's the candidate who hasn't promised to some 0:13:50.360 --> 0:13:53.360 form of deficit reduction? But so there are still elements 0:13:53.400 --> 0:13:55.280 of her record and the border, by the way, her 0:13:55.280 --> 0:13:58.280 promises to following up, you know, trying to get the 0:13:58.320 --> 0:14:00.760 bipartisan border deal done. Voters more or less buy that 0:14:00.800 --> 0:14:04.120 from her surging resources to the border, which is a 0:14:04.160 --> 0:14:06.880 popular idea that her campaign has promised to do, you know, 0:14:06.920 --> 0:14:10.120 more border agents. Voters aren't quite sure that she means 0:14:10.160 --> 0:14:13.559 that promise, so there's reassuring to do. It's less about 0:14:13.559 --> 0:14:16.560 new promises. It's more about affirming that the things she 0:14:16.600 --> 0:14:19.280 has promised voters are real and something she will try. 0:14:19.200 --> 0:14:21.280 As something you imagine the former president will be pushing 0:14:21.320 --> 0:14:23.280 on pretty hard. A little bit. Lengster on the Savenik. 0:14:23.400 --> 0:14:24.600 I think they're all just going to be watching the 0:14:24.600 --> 0:14:26.480 fifty eight billion dollar action at one pm. 0:14:26.600 --> 0:14:28.960 Is that right? Yeah, because the very focused exit on 0:14:29.000 --> 0:14:31.960 def sent reduction. It's great again, Evan, Thank you sir. 0:14:31.960 --> 0:14:33.600 It's going to see. Let's do it again soon, Evan 0:14:33.680 --> 0:14:46.200 rod Smith. Then the limits of this bond market rally. 0:14:46.400 --> 0:14:48.440 We've had a big move last week of almost thirty 0:14:48.440 --> 0:14:51.160 basis points lower on a two year yield. The tended 0:14:51.200 --> 0:14:53.720 year dropped by close to twenty basis points had a 0:14:53.760 --> 0:14:55.640 single week. We see a big move lower through the 0:14:55.680 --> 0:14:57.680 summer as well. Are we've reaching the limits of this 0:14:57.720 --> 0:14:58.600 bond market rally? 0:14:59.000 --> 0:15:01.960 I think so. I think we maintain models and we 0:15:02.000 --> 0:15:05.840 think it's overshot on the downside pretty much. If you 0:15:06.000 --> 0:15:09.080 have a FED funds rate of three and a half percent, 0:15:09.120 --> 0:15:11.520 which is which I think is close to the natural 0:15:11.680 --> 0:15:18.400 neutral rate on the nominal side and typically post cutting cycles, 0:15:18.440 --> 0:15:21.640 if you have the youth cur of pricing in another 0:15:21.720 --> 0:15:24.840 fifty basis points on the ten or four percent, anything 0:15:24.920 --> 0:15:27.520 lower than that seems to be like overdone. 0:15:27.680 --> 0:15:29.600 You mentioned three fifty. Do you think we're actually quite 0:15:29.640 --> 0:15:32.080 well priced already for two hundred basis points with. 0:15:32.160 --> 0:15:34.720 The basin I think on the last couple of years, 0:15:34.720 --> 0:15:39.080 the markets pricing any kind of move in the market 0:15:39.080 --> 0:15:41.600 in an extreme way. So we are really well priced 0:15:41.640 --> 0:15:44.640 on that, I think, and what I think is important. 0:15:44.920 --> 0:15:47.760 On the inflation side, a lot of our work is 0:15:47.800 --> 0:15:52.160 suggesting that the next few months, INFATIONI the pace and 0:15:52.280 --> 0:15:54.640 path of inflation is going to get a little more 0:15:54.640 --> 0:15:58.200 difficult in terms of the disinflationary stent trend. So it 0:15:58.280 --> 0:16:01.680 may just stabilize, so you may not see consistent print 0:16:01.880 --> 0:16:04.920 prints down. What's going to happen beginning of next year 0:16:05.280 --> 0:16:07.920 the two thousand and four beginning had a very high 0:16:07.960 --> 0:16:11.440 base effect because of high infationion. So beginning of next 0:16:11.480 --> 0:16:13.760 year in Fatian is actually going to be better and 0:16:13.840 --> 0:16:14.560 trend down more. 0:16:14.640 --> 0:16:14.720 So. 0:16:14.720 --> 0:16:18.080 I think that's the path I'm working with. And from 0:16:18.160 --> 0:16:22.200 that perspective, you know, Treasury seem to have overdone. 0:16:22.240 --> 0:16:24.960 They might have overdone, but that doesn't mean not to 0:16:25.000 --> 0:16:26.520 earn them the same kind of way. You have an 0:16:26.520 --> 0:16:29.440 interesting point about sixty forty that we're going to see 0:16:29.480 --> 0:16:31.800 kind of a reversion back to that kind of balance 0:16:32.760 --> 0:16:37.520 in terms of opposite reaction to stocks. How much can 0:16:37.560 --> 0:16:40.320 you lean into that story, given the fact that you 0:16:40.400 --> 0:16:42.680 have already seen this huge rally, does it still stand? 0:16:43.120 --> 0:16:47.480 It still stands because the most important reason the sixty 0:16:47.480 --> 0:16:50.600 to forty did so terribly in twenty twenty three, when 0:16:50.920 --> 0:16:54.760 this combination was down seventeen percent, was because stocks and 0:16:54.840 --> 0:16:59.040 bonds correlation got positive. And history suggests that whenever inflation 0:16:59.160 --> 0:17:02.240 is above to and azo half percent, stocks and bonds 0:17:02.280 --> 0:17:04.720 this is for the last seventy five years, stocks and 0:17:04.760 --> 0:17:08.680 bonds correlation gets positive, which is taking away the diversification 0:17:08.760 --> 0:17:12.919 benefits of bonds. Now, with infasion coming down below that level, 0:17:13.440 --> 0:17:18.399 that correlation will resert its negative relationship, And I think 0:17:18.920 --> 0:17:22.399 in an overall asset allocation portfolio, that's a more structural, 0:17:22.440 --> 0:17:26.840 long term portfolio that gives you the benefit of having 0:17:26.880 --> 0:17:30.720 that hedge with the duration in case the outcome on 0:17:30.760 --> 0:17:33.639 the economy is worse than the consensus soft landing. 0:17:33.840 --> 0:17:35.879 How hard of a cell is that right now? Given 0:17:35.920 --> 0:17:38.399 how scarred people were over the past few years and 0:17:38.440 --> 0:17:40.640 some of the losses that you saw on bond portfolios, 0:17:40.640 --> 0:17:43.680 and some of the questions people have around the deficit, 0:17:43.880 --> 0:17:46.560 around some of these other sort of structurally higher inflation 0:17:46.680 --> 0:17:49.000 types of regimes that some people are talking about. 0:17:49.080 --> 0:17:51.960 Yeah, you know, I think the question on the sixty 0:17:52.080 --> 0:17:55.199 forty was a bigger question in twenty twenty four because 0:17:55.200 --> 0:17:58.679 twenty twenty three was such a worse worst outcome for 0:17:58.760 --> 0:18:02.440 that combination. I think at this point there is more 0:18:02.840 --> 0:18:05.880 recognition that that may be a good allocation. But what 0:18:05.920 --> 0:18:09.600 people are doing and what act owners are looking to 0:18:09.640 --> 0:18:12.520 do is you know, take you know, think about what 0:18:12.720 --> 0:18:16.480 in that sixty forty, right whether if it's forty in 0:18:16.960 --> 0:18:20.040