WEBVTT - Supply Chain, Interest Rates, And Trading Sentiment (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.360 at Bloomberg dot com slash podcast. Matt and I have 0:00:23.480 --> 0:00:26.280 really been focusing on during this whole pandemic, the global 0:00:26.320 --> 0:00:28.840 supply chain issue, because that affects so many companies in 0:00:29.000 --> 0:00:32.000 so many industries on a global scale, and weekend we 0:00:32.040 --> 0:00:34.360 still don't. We heard about it again today from Targets, 0:00:34.400 --> 0:00:36.879 so huge issue. The New York Federal Reserve Bank is 0:00:36.880 --> 0:00:38.840 weighing in now and they've got what I'm what they're 0:00:38.880 --> 0:00:42.640 calling today the New York Federal New York Fed Global 0:00:42.720 --> 0:00:46.040 Supply Chain Pressure Index. That's what we need. I need 0:00:46.080 --> 0:00:48.520 a picture, I need some numbers, and Dr John grown 0:00:48.880 --> 0:00:51.800 joins us here. He is Economic Research Advisor for the 0:00:51.840 --> 0:00:53.840 Federal Reserve Bank of New York. Dr Groan, thanks so 0:00:53.920 --> 0:00:56.440 much for joining us here. Supply cham I'm looking at 0:00:56.480 --> 0:00:59.360 your graph. Tell me what your index is. What it 0:00:59.440 --> 0:01:03.360 tries to measure and what it's telling you, sure, good morning, 0:01:03.400 --> 0:01:05.840 and thank you for having me on. So what we're 0:01:05.880 --> 0:01:09.160 launching you to this this morning is what we've denoted 0:01:09.200 --> 0:01:12.000 as the Global Supply Chain Pressure Index or g s 0:01:12.040 --> 0:01:14.960 c p I, and it's a it's a single measure 0:01:15.319 --> 0:01:19.240 of global supply chain pressures, uh, and it's it's can 0:01:19.240 --> 0:01:23.280 be used to gauge the importance of the disruptions to 0:01:23.360 --> 0:01:27.800 global supply chains and how they infect economic conditions and 0:01:28.000 --> 0:01:33.880 how they these constrains uh evolve over time. Basically, all right, 0:01:33.920 --> 0:01:37.959 so I'm looking for the folks on radio. I'm looking 0:01:37.959 --> 0:01:39.840 at a graph here and it just kind of shows 0:01:39.840 --> 0:01:43.240 the standard deviations from the average supply chain time goes 0:01:43.280 --> 0:01:47.800 back to it's usually plus one minus one. We're up 0:01:47.920 --> 0:01:51.400 like plus three, four or five. I mean, give us 0:01:51.400 --> 0:01:53.680 a sense of kind of the the magnitude of the 0:01:53.720 --> 0:01:58.760 supply chain shock we're experiencing right now. Yeah, So basically 0:01:58.840 --> 0:02:03.480 what we've seen since to e twenties, essentially precious has 0:02:03.520 --> 0:02:06.639 been like at the peak, it was like five times 0:02:06.640 --> 0:02:10.000 as high as the average level of the whole sample. Right, 0:02:10.040 --> 0:02:16.120 so starting from to twenty two, uh so before twenty 0:02:16.600 --> 0:02:20.280 really we haven't seen anything even closer that. I mean, 0:02:20.360 --> 0:02:23.240 what what what has been closes was what happened during 0:02:23.280 --> 0:02:26.520 twenty eleven, you know, when we had the Fukushima earthquake 0:02:26.639 --> 0:02:30.360 that hit a lot of the Japanese supply chains, and 0:02:30.400 --> 0:02:33.919 then later that year the flow floodings in Thailands, which 0:02:34.120 --> 0:02:38.160 which had hit a lot of like companies that you 0:02:38.200 --> 0:02:43.440 know were supplying electric components to you know, electronic electronic 0:02:44.400 --> 0:02:50.840 producers and auto producers. So this is like completely unprecedented. Uh, 0:02:50.880 --> 0:02:54.480 and yeah, that's it's it's a new unique phase in 0:02:55.040 --> 0:02:58.160 the global economy. So what is it taking into account? Exactly? 0:02:58.240 --> 0:03:01.680 Is these transportation cost is this raw input coast um? 0:03:01.720 --> 0:03:03.960 What are we looking at in terms of the contributors 0:03:04.000 --> 0:03:08.760 to this index? Right, So basically the index summarizes developments 0:03:08.800 --> 0:03:14.200 in twenty seven series and basically there are two main 0:03:14.320 --> 0:03:20.720 categories of global transportation costs and then regional surveys about 0:03:20.760 --> 0:03:25.040 the state of manufacturing in in in seven inter linked economy. 0:03:25.160 --> 0:03:28.320 So in terms of the transportation cost you know, they're 0:03:28.360 --> 0:03:31.080 looking we're looking at you know, the b d I 0:03:31.200 --> 0:03:34.720 for example, which is a measure of just war war 0:03:35.040 --> 0:03:38.680 raw good shipping transportation, and we're also looking at the 0:03:38.760 --> 0:03:43.200 container shipping rates. And then in terms of you know, 0:03:43.280 --> 0:03:47.520 the manufacturing data, we we we really heavily rely on 0:03:47.680 --> 0:03:51.080 p m I surveys and especially data about you know, 0:03:51.200 --> 0:03:58.200 supply supply delivery times, backlogs and inventories of manufacturing firms 0:03:58.280 --> 0:04:04.160 in UH in the US, in China and Taiwan, South Korea, Japan, 0:04:04.680 --> 0:04:08.600 the Ara area, and in the UK. So DR going 0:04:08.680 --> 0:04:11.040 a lot of investors, you know, I think as they 0:04:11.080 --> 0:04:12.920 think about inflation, they want to get a sense of 0:04:13.560 --> 0:04:16.960 has it peaked to what extent and what you know, 0:04:17.080 --> 0:04:19.640 kind of rate will it decline? What is has your 0:04:19.720 --> 0:04:25.080 data indicated to you that perhaps the supply chain bottlenecks 0:04:26.080 --> 0:04:31.560 have peaked, well, so what the what the index really 0:04:31.600 --> 0:04:34.880 shows that the peak up to now was kind of 0:04:34.880 --> 0:04:37.719 reach in December, So then we reased you know a 0:04:37.800 --> 0:04:41.960 level of like five times higher disruptions than than the average. 0:04:42.640 --> 0:04:47.520 And between December and basically April, we've seen a steady 0:04:47.560 --> 0:04:51.159 decline I mean at the motor pace, but quite steady, 0:04:51.920 --> 0:04:55.520 but still well made that historically historically high level. So 0:04:55.560 --> 0:04:58.520 it still was about you know, less than three three 0:04:58.560 --> 0:05:01.760 times the average level. What we've seen having in April 0:05:01.920 --> 0:05:05.120 is kind of a little bit of a resurgence in disruptions. 0:05:05.200 --> 0:05:08.160 So pastures went up again on the back of you know, 0:05:08.240 --> 0:05:13.320 the geopolitical tensions in Europe due to the Ukraine Russia 0:05:13.400 --> 0:05:16.800 conflict as well as the COVID lockdowns in China. So 0:05:16.839 --> 0:05:19.599 it went back up to just over three times the 0:05:19.640 --> 0:05:25.720 average levels. So yes, we speak, but it seems to 0:05:25.760 --> 0:05:28.119 do at the moment, seems to botton out and maybe 0:05:28.400 --> 0:05:31.039 become a little bit worse again. I mean going forward. 0:05:31.160 --> 0:05:35.600 This measure is not a forecasting measure for future supply 0:05:35.680 --> 0:05:38.760 chain pressures. I mean it's more like where we are 0:05:38.839 --> 0:05:41.640 now at the moment. But it would be interesting to see, 0:05:41.760 --> 0:05:45.560 you know how how it involved going forward. Alright, good stuff, 0:05:45.720 --> 0:05:49.039 very interesting that to young grown economic research advisor for 0:05:49.080 --> 0:05:51.320 the Federal Reserve Bank of New York, the New York 0:05:51.360 --> 0:05:55.080 Fed releasing today a brand new index that tries to 0:05:55.160 --> 0:05:57.640 measure the supply chain is called the New York Fed 0:05:57.640 --> 0:06:02.000 Global Supply Chain Pressure Index. Fascinating stuff because again it 0:06:02.080 --> 0:06:04.479 is an issue that really has come to the fore 0:06:05.000 --> 0:06:07.360 and made all of us, i think, kind of experts 0:06:07.360 --> 0:06:09.880 at logistics and supply chain and all that type of stuff. 0:06:09.880 --> 0:06:12.400 Because Curtty we hear about it from all different types 0:06:12.440 --> 0:06:14.400 of companies. Yeah, we really do. I mean we're talking 0:06:14.400 --> 0:06:17.120 about retailers heavily in focus right now. But wasn't this 0:06:17.200 --> 0:06:19.600 the story for Tactics a couple of weeks earlier. I mean, 0:06:19.720 --> 0:06:21.680 some of these chip shortages that we've been talking about 0:06:21.720 --> 0:06:24.600 for going on two years now, they are still there. 0:06:24.640 --> 0:06:26.320 That chip shortage is still there. You hear it in 0:06:26.400 --> 0:06:29.200 automakers even trying to get their hands on metals. So 0:06:29.240 --> 0:06:31.920 this isn't a a right now story. But I think 0:06:31.920 --> 0:06:34.200 he made a very apt point in the nine o'clock 0:06:34.360 --> 0:06:36.440 is we've been talking about this for ages, why is 0:06:36.440 --> 0:06:39.320 the market still not pricing it in? Yeah, it's interesting, 0:06:39.360 --> 0:06:41.200 and um, you know, part of it is China and 0:06:41.279 --> 0:06:43.560 getting those factories open on a consistent basis. And we're 0:06:43.560 --> 0:06:46.120 starting to hear some news that parts of China are 0:06:46.120 --> 0:06:49.479 starting to reopen, and most notably in the Shanghai region, 0:06:49.560 --> 0:06:51.960 So maybe that will help things. And we had the 0:06:52.000 --> 0:06:54.159 head of the l A Ports on yesterday he sees 0:06:54.200 --> 0:07:00.600 the backlog of ships off the port coming down. You've 0:07:00.600 --> 0:07:03.720 got gasoline prices at the pump uh at or near 0:07:03.800 --> 0:07:05.880 a record high. I think about Matt having to flow 0:07:05.920 --> 0:07:08.160 up that twenty three gallon. I don't know what is it, 0:07:08.279 --> 0:07:11.600 Chevy Silverado pickup truck, gas tank that's gonna be You're 0:07:11.600 --> 0:07:13.680 gonna take out a mortgage to do that? All right, 0:07:13.760 --> 0:07:16.240 Let's check in on the consumer here. We've had a 0:07:16.280 --> 0:07:19.120 lot of retail sales numbers, We've had a lot of 0:07:19.600 --> 0:07:23.040 retailers report quarterly earnings. Uh, A mixed back here, but 0:07:23.080 --> 0:07:28.320 inflation is the number one story we had earlier President 0:07:28.400 --> 0:07:31.680 of Chicago FED, President Charles Evanson with Michael McKee talking 0:07:31.680 --> 0:07:35.400 about the offensibility to impact and lower inflation. Let's check 0:07:35.440 --> 0:07:38.080 in with Jennifer Leasing, your economist and managing director for 0:07:38.160 --> 0:07:43.840 BMO Capital Markets. Uh. Jennifer, again, the Federal Reserve seems 0:07:43.880 --> 0:07:49.360 to be laser focused on inflation. In reality, how much 0:07:49.400 --> 0:07:52.560 can they impact inflation when some of the inflation we're 0:07:52.560 --> 0:07:56.080 seeing is just kind of commodity driven, whether it's gasoline 0:07:56.160 --> 0:07:59.200 or food prices. How do you think about its ability 0:07:59.240 --> 0:08:03.800 to impact and good morning? UM. I think they have 0:08:04.160 --> 0:08:08.040 a pretty good way of a pretty as strong UM handle. 0:08:08.080 --> 0:08:10.240 I think on on what they or their tools of 0:08:10.280 --> 0:08:13.400 what they can do to UM to to curb inflation 0:08:13.480 --> 0:08:16.160 or to rein up back to the two percent a target. 0:08:16.720 --> 0:08:19.680 But it's going to be painful as that share Powell 0:08:19.760 --> 0:08:22.320 has has said, and you know, it's just going to 0:08:22.360 --> 0:08:25.840 be using higher rates and they're going to keep going higher. 0:08:25.840 --> 0:08:27.520 And it's like you just said that they're almost very 0:08:27.600 --> 0:08:30.280 much laser focused now it was. It's kind of funny. 0:08:30.280 --> 0:08:31.880 It's like last year it was almost like they were 0:08:31.880 --> 0:08:34.959 looking for a reason to tighten, and now it's almost 0:08:35.000 --> 0:08:37.360 like they're looking for a reason to stop. You know, 0:08:37.360 --> 0:08:40.320 they're going to keep going faster and higher, and they're 0:08:40.360 --> 0:08:42.360 just going to go beyond neutral before they stop and 0:08:42.640 --> 0:08:46.679 take a break. Jennifer, there's a difference between an outright recession, 0:08:46.800 --> 0:08:50.520 a contraction of the economy and to slow down. And 0:08:50.559 --> 0:08:54.199 it feels like, if you are listening to the market commentary, 0:08:54.320 --> 0:08:57.480 we've gone very quickly from a deceleration and growth to 0:08:57.520 --> 0:09:02.240 an outright recession. Is that justify? So this is where 0:09:02.240 --> 0:09:05.000 it gets a little dicey, Okay. So in in you know, 0:09:05.040 --> 0:09:08.960 your textbook term of recession is two consecutive quarters of decline, 0:09:09.400 --> 0:09:12.160 and we've already had one quarter on the headline drop 0:09:12.160 --> 0:09:14.840 in GP at one point four percent annualized. Again in 0:09:14.920 --> 0:09:17.800 Q one and um, you know Q two's I don't 0:09:17.800 --> 0:09:19.640 think it's gonna be a decline, but I mean it 0:09:19.679 --> 0:09:22.800 certainly does feel like a recession. But again I'm just 0:09:22.800 --> 0:09:24.920 gonna focus now on the first quarter, Like what dropped, 0:09:25.480 --> 0:09:29.120 what caused GDP to slow down? It was all imports, 0:09:29.120 --> 0:09:32.319 like a huge surgeon imports, which speaks to very strong 0:09:32.480 --> 0:09:37.199 domestic demand and less or slower inventory accumulation. Businesses are 0:09:37.200 --> 0:09:39.680 still trying to you know, stock the shelves, but they're 0:09:39.679 --> 0:09:41.400 doing it at a slower pace because they can't get 0:09:41.520 --> 0:09:44.439 enough stuff to stuff to to stock their shelves with. 0:09:45.120 --> 0:09:48.160 So you know, again the headline figure is because suggest 0:09:48.200 --> 0:09:51.040 that there is recession, but again I don't think it's 0:09:51.440 --> 0:09:53.920 the true true definition. Um. And I'm going to point to, 0:09:54.520 --> 0:09:56.120 you know, the fact that we still had a really 0:09:56.200 --> 0:09:59.600 solid retail sales figure for April, which do you guys 0:09:59.600 --> 0:10:02.040 are all talking about yesterday? Um, And even though it's 0:10:02.040 --> 0:10:04.199 a nominal terms, you know, in real terms, it was 0:10:04.240 --> 0:10:06.160 sort of flat from ugal levels. But the still fact 0:10:06.160 --> 0:10:09.520 that consumers are still well, they're buying, I think speaks volumes. 0:10:09.520 --> 0:10:11.480 In the fact that there's still a very strong labor 0:10:11.520 --> 0:10:14.400 market for now, and that guarantees that you know if 0:10:14.400 --> 0:10:15.719 you have ever wage, if you sort off, you have 0:10:15.760 --> 0:10:17.079 a job, then that means you're going to get a 0:10:17.080 --> 0:10:19.880 study paycheck, which I think is um the key factor 0:10:19.920 --> 0:10:23.240 to all of this. You mentioned inventories. That's a really 0:10:23.400 --> 0:10:26.040 key piece. I wanted to kind of harp on and on. 0:10:26.920 --> 0:10:30.040 In Target earnings today, you heard that one of the 0:10:30.160 --> 0:10:33.959 costs from or when the margin pressures was coming not 0:10:34.160 --> 0:10:36.840 from headcount of compensation in their stores, but in their 0:10:36.840 --> 0:10:40.000 distribution centers. And I've actually chart this. You can do 0:10:40.040 --> 0:10:42.920 this folks on the terminal and chart the inventory to 0:10:43.040 --> 0:10:45.240 sales spread of a lot of these major retailers. It's 0:10:45.320 --> 0:10:48.439 essentially spiking to a twenty year high, which I believe 0:10:48.480 --> 0:10:51.280 is as far as the data goes. Jennifer, I have 0:10:51.360 --> 0:10:54.000 to ask you if you see this inventory build up 0:10:54.080 --> 0:10:57.400 doesn't create more reasons for the economy to slow down. 0:10:57.440 --> 0:10:59.880 The idea being that if you see demand slow down, 0:11:00.040 --> 0:11:01.920 even demand increase for that matter, and you have this 0:11:02.000 --> 0:11:05.400 inventory build up, there's less incentive to produce more things 0:11:05.480 --> 0:11:10.240 or even import more things. Does that add to the slowdown? Well, 0:11:10.320 --> 0:11:12.640 right now, it's um. The fact that you're adding to 0:11:12.720 --> 0:11:15.520 their inventories you know, um, you know, from on a 0:11:15.559 --> 0:11:18.360 trend basis, I guess that is actually adding um to 0:11:18.559 --> 0:11:21.839 growth and that's not potentially slowing it down. But you know, 0:11:21.880 --> 0:11:23.439 of course you've got it's like you just pointed out, 0:11:23.440 --> 0:11:26.360 you just have to look at the the demand side, 0:11:26.880 --> 0:11:29.000 and so far there is still and I'm going to say, 0:11:29.040 --> 0:11:30.880 there's still a lot of strong demand. There's still a 0:11:30.920 --> 0:11:33.520 lot of people, a lot of businesses waiting for items 0:11:33.559 --> 0:11:36.079 to come through. Um. You know, I I love to 0:11:36.120 --> 0:11:38.160 look at the I s M surveys not for the headlines, 0:11:38.200 --> 0:11:40.400 but for the comments, and for these are the people 0:11:40.440 --> 0:11:43.320 that are directly working you know, Um, they're they're they're 0:11:43.320 --> 0:11:45.360 are you know, in the factories, and they're the ones 0:11:45.360 --> 0:11:47.160 who are counting all the widgets that are coming in. 0:11:47.200 --> 0:11:49.360 And all the comments still point to the fact that 0:11:49.400 --> 0:11:51.880 they are running low on materials and that which is 0:11:51.960 --> 0:11:55.000 driving costs higher. Um. And still you know, there's still 0:11:55.000 --> 0:11:57.319 a lot of demand. But the interesting thing to all 0:11:57.360 --> 0:12:00.360 of this is that businesses are actually turning down orders 0:12:00.679 --> 0:12:02.760 still because you know, it's like it's almost like your 0:12:02.760 --> 0:12:05.040 money is don't go here, right you um, uh, your 0:12:05.120 --> 0:12:07.160 orders are coming in, but sorry, we can't fulfill it 0:12:07.160 --> 0:12:09.440 out of reasonable time, so you know, we we can't 0:12:09.440 --> 0:12:11.880 take your order right now, which is a very weird 0:12:11.920 --> 0:12:14.280 place to be at right now. But I still think 0:12:14.280 --> 0:12:17.080 that there is demand out there. As long as there 0:12:17.320 --> 0:12:19.480 is demand, the inventory levels, you know, they're just trying 0:12:19.480 --> 0:12:22.040 to build it up in order to meet that, all right. 0:12:22.120 --> 0:12:24.560 Jennifer Lee, thank you so much for joining us giving 0:12:24.559 --> 0:12:27.240 your thoughts here on these markets, on this federal reserve, 0:12:27.400 --> 0:12:31.679 and on inflation that is rife in this economy. Jennifer Lee, 0:12:31.800 --> 0:12:35.120 Senior economist and Managing director for BMO Capita Markets. Looking 0:12:35.160 --> 0:12:38.079 at the markets here, rolling over yet again, we're down 0:12:38.120 --> 0:12:41.560 about two percent here on the SMP five, a little 0:12:41.559 --> 0:12:45.280 more than two percent on nastack. Looking at the tenure treasury, Uh, 0:12:45.320 --> 0:12:47.240 there's a bit out there for the tenure treasure. Yields 0:12:47.280 --> 0:12:49.959 are coming back. We have the tenure yielding two point 0:12:50.040 --> 0:12:53.160 nine three percent. We were about three percent uh this morning, 0:12:53.160 --> 0:12:56.800 so yields really coming in. Oil. Crew to oil was 0:12:56.880 --> 0:12:59.080 up a little bit earlier, but the off just slegged 0:12:59.120 --> 0:13:00.960 off about a half percent for w t I crude 0:13:00.960 --> 0:13:05.959 oil that's called twelve dollars a barrel, still way elevated. 0:13:09.320 --> 0:13:11.160 Do we have a bottom in this market. I don't 0:13:11.320 --> 0:13:13.679 think so, and not by today's trading hill off another 0:13:13.679 --> 0:13:16.560 one point eight percent on the smp UH five hundred. 0:13:16.600 --> 0:13:18.280 But let's talk to somebody who does this for a 0:13:18.320 --> 0:13:20.520 living and talks to traders for a living. Barry metzger 0:13:20.840 --> 0:13:23.560 managing director and head of Trading and Education at Charles Schwab, 0:13:23.640 --> 0:13:25.240 joins us here in our Bloomberg in our actor Broker 0:13:25.320 --> 0:13:29.040 studio Live. He's in town in the Bloomberg headquarters for 0:13:29.080 --> 0:13:32.560 a Bloomberg Intelligence Investor conference today. Barry, thanks so much 0:13:32.559 --> 0:13:34.880 for joining us here. You know, I think the question 0:13:35.120 --> 0:13:37.839 that I started hearing more and more in the last 0:13:38.040 --> 0:13:41.480 week or two is are we at the bottom? How 0:13:41.480 --> 0:13:43.880 do I identify a bottom? When you talk to your traders, 0:13:43.880 --> 0:13:47.520 when you do your surveys, our traders thinking about calling 0:13:47.559 --> 0:13:50.559 a bottom anytime soon? Well, first of all, Paul, it's 0:13:50.600 --> 0:13:52.880 great to be here live, so thanks for having me. 0:13:52.920 --> 0:13:55.840 You know, our traders are very vocal, and you know, 0:13:56.240 --> 0:13:58.560 when it comes to calling a bottom, that's always tough. 0:13:58.600 --> 0:14:01.920 But certainly what we seen in this recent survey as 0:14:02.000 --> 0:14:06.600 clients are very bearish. They are definitely bearish given the UH, 0:14:06.840 --> 0:14:10.079 given the events inflation is absolutely on their mind. I 0:14:10.080 --> 0:14:14.160 would say issues one, two, and three are inflation, inflation, inflation. 0:14:14.280 --> 0:14:17.040 So when you take that into account, and we listened 0:14:17.080 --> 0:14:20.120 to the survey from our clients, you know that inflation 0:14:20.160 --> 0:14:23.080 issues the biggest one. And I would say from the data, 0:14:23.480 --> 0:14:25.520 a third of our clients stint inflation is going to 0:14:25.600 --> 0:14:28.760 stick around for a little bit. But um, excuse me, 0:14:28.760 --> 0:14:31.440 a third of them think it's gonna last until so 0:14:31.480 --> 0:14:34.120 based on that sunament, that's that could be quite well too. 0:14:34.200 --> 0:14:36.360 Thirds thinks it's a little bit more of a shorter term. 0:14:36.400 --> 0:14:38.840 But um, certainly our clients are looking at what we're 0:14:38.840 --> 0:14:41.520 calling a Russian Bear Russian Bear meeting. All the three 0:14:41.560 --> 0:14:44.320 major industries are down in Bear territory by the end 0:14:44.320 --> 0:14:49.840 of two a Russian Bear, a Russian Bear tie to Ukraine. 0:14:49.880 --> 0:14:54.400 Of course. Um, you know it's interesting. I camera christ 0:14:54.520 --> 0:14:57.320 our Macroman strategist. Always he was when my teachers used 0:14:57.360 --> 0:14:59.560 to tell me find the historical precedents that I've been 0:14:59.560 --> 0:15:03.320 obset with the nineteen sixty two President Cuban missile crisis, 0:15:03.560 --> 0:15:06.320 the market just slid for nine months straight and didn't 0:15:06.360 --> 0:15:08.840 recover until the Cuban missile crisis was over. So I 0:15:08.840 --> 0:15:11.200 have to ask, we're painting a lot of the sell 0:15:11.240 --> 0:15:13.640 off on inflation, We're painting it on supply chain issues, 0:15:13.680 --> 0:15:17.960 even COVID. The minute the war in Ukraine ends, whenever 0:15:18.000 --> 0:15:21.400 that might be, is that when we see a complete turnaround. Yeah, 0:15:21.520 --> 0:15:24.520 certainly our clients are very much looking at the geopolitical 0:15:24.600 --> 0:15:27.680 roosts in Ukraine. So, as I mentioned, inflation is number one, 0:15:28.360 --> 0:15:30.560 Ukraine is absolutely number two. So could you see a 0:15:30.600 --> 0:15:32.960 bump based on what our clients are saying once that ends, 0:15:32.960 --> 0:15:35.720 and what does that look like? It depends, But I 0:15:35.720 --> 0:15:37.920 would certainly think there would be positive news based on 0:15:37.920 --> 0:15:40.000 what we're seeing, But a lot more goes into it 0:15:40.040 --> 0:15:43.360 as well. You know, it is inflation, it is Ukraine, 0:15:43.520 --> 0:15:46.120 but it is you know, obviously the prices that they're seeing. 0:15:46.160 --> 0:15:49.080 And frankly, the question I get after often a lot is, Okay, 0:15:49.080 --> 0:15:51.040 if if I were to hand you ten thousand dollars, 0:15:51.080 --> 0:15:53.320 what would you do with that? You know, that decision 0:15:53.360 --> 0:15:55.120 was pretty easy a couple of years ago. You could 0:15:55.120 --> 0:15:57.520 put in your megacap socks and be happy. Now all 0:15:57.520 --> 0:15:59.520 of a sudden, you gotta pause, you have to think 0:15:59.560 --> 0:16:02.160 about it. And our clients are actually looking more towards 0:16:02.200 --> 0:16:06.760 real estate, um oil, gold, and even crypto as potential 0:16:06.960 --> 0:16:09.880 other investments besides the typical ones that we've seen. Yeah, 0:16:09.880 --> 0:16:13.480 it's interesting. I mean the we had the Chicago FED 0:16:13.520 --> 0:16:16.520 President Charles Evans on Bloomberg Radio television earlier this morning, 0:16:16.520 --> 0:16:18.760 and you know, he was saying, as you were saying, 0:16:18.800 --> 0:16:22.840 that the Fed is absolutely laser focused on inflation. Um. 0:16:22.920 --> 0:16:24.920 That kind of goes to the point they're going to 0:16:25.000 --> 0:16:27.960 be aggressive here and they've already shown to be aggressive. 0:16:28.000 --> 0:16:31.080 And it kind of begs a question, what risk assets 0:16:31.080 --> 0:16:34.680 can perform well in that type of environment. Yeah, great question. 0:16:34.760 --> 0:16:37.280 And in fact, when we looked at the survey, clients 0:16:37.320 --> 0:16:39.920 did address this. And you know, when the survey was taken, 0:16:39.920 --> 0:16:41.960 I think most of our clients were thinking twenty five 0:16:41.960 --> 0:16:44.840 basis point increase was kind of the norm. If we 0:16:44.920 --> 0:16:47.520 had that survey taken today, they would probably be more 0:16:47.560 --> 0:16:50.160 a half or even you know, three quarters, So maybe 0:16:50.160 --> 0:16:53.640 even a different pump um. You know, it's it's hard 0:16:53.640 --> 0:16:56.400 to say. I think this speaks to having a diversified portfolio. 0:16:56.640 --> 0:16:58.400 I think this gets back to some of the basics 0:16:58.440 --> 0:17:01.480 of having a financial plan, understand your goals. Look, I 0:17:01.560 --> 0:17:04.080 leave the trading business. But I'm still a believer in 0:17:04.160 --> 0:17:06.760 your wealth management principles of having a plan tied your 0:17:06.800 --> 0:17:10.840 goals and objectives, having an asset allocated portfolio. And there's 0:17:11.000 --> 0:17:13.280 times when you need to ignore the noise um. And 0:17:13.320 --> 0:17:16.040 we've heard that many, many times, and so this, you know, 0:17:16.119 --> 0:17:18.200 for many investors, I think it is playing a little 0:17:18.200 --> 0:17:20.639 bit of the long game versus trying to get you know, 0:17:20.960 --> 0:17:23.200 swept up in some of these short term markets, which 0:17:23.240 --> 0:17:26.040 I think is really really important. I'm glad you mentioned 0:17:26.080 --> 0:17:28.960 a short term markets because you also said the conversation 0:17:29.160 --> 0:17:31.560 on where you spend your ten thousand dollars is really 0:17:32.480 --> 0:17:35.200 easy two years ago, but not so easy now. So 0:17:35.560 --> 0:17:37.800 let's put this to you. You have ten thousand dollars, 0:17:37.840 --> 0:17:39.600 You've got a three month time horizon. Where do you 0:17:39.640 --> 0:17:41.919 put it? So I'm not going to leave it in 0:17:41.960 --> 0:17:43.200 bank in the bank, I'm not going to leave it 0:17:43.240 --> 0:17:46.640 in cash. Listen. I still go to the the the 0:17:46.640 --> 0:17:49.119 philosophy of you know, if you walk past the store 0:17:49.600 --> 0:17:51.919 and you see an item that you wanted me to 0:17:51.920 --> 0:17:54.520 buy that was thirty or off, you're gonna buy it 0:17:54.600 --> 0:17:57.040 right away, like wow, such a deal. But when it's 0:17:57.040 --> 0:17:59.440 the market um for some reason, people are hesitant to 0:17:59.440 --> 0:18:02.440 take advantage that. So I would still look for opportunities 0:18:02.440 --> 0:18:05.399 that are tied to my objectives. Do a little dollar 0:18:05.440 --> 0:18:08.439 cost averaging, maybe not all once, but look at different 0:18:08.440 --> 0:18:10.760 sectors that I believe in more for the long term 0:18:11.119 --> 0:18:13.280 and start buying them on a discount. So that could 0:18:13.320 --> 0:18:15.840 be you know, your typical large cap sectors as well. 0:18:15.880 --> 0:18:19.080 And but I think there are opportunities for alternative investments, 0:18:19.119 --> 0:18:21.040 like I said earlier, and I do think there's some 0:18:21.040 --> 0:18:23.719 other opportunities specifically in rates, just like our clients are 0:18:23.720 --> 0:18:26.879 suggesting that do look opportunistic, you know, we're you know. 0:18:26.880 --> 0:18:28.919 There's one of the stock stories of the day today. 0:18:28.960 --> 0:18:33.320 Barry was a target reported some numbers with some disappointing guidance, 0:18:33.359 --> 0:18:37.240 citing the cost inflation impacting their business and their consumers. 0:18:37.640 --> 0:18:40.800 Started the day a hundred billion dollar market cap. It's 0:18:40.800 --> 0:18:44.480 off twenty five percent. It is rare in my experience 0:18:44.520 --> 0:18:48.919 to see such a large company very liquidly traded. Thirty 0:18:48.920 --> 0:18:51.280 one analysts follow the stock, widely held by some of 0:18:51.280 --> 0:18:54.320 the smartest institutional investors. What does it tell you about 0:18:54.320 --> 0:18:56.560 when when you see the price action in a big 0:18:56.600 --> 0:18:59.520 cap stock like that today. Yeah, I mean we're we're 0:18:59.520 --> 0:19:01.919 seeing the in lots of different places. I think this again, 0:19:02.480 --> 0:19:04.239 ghost e fact, you certainly don't want to have all 0:19:04.280 --> 0:19:06.280 your eggs in one basket, um, because you never know 0:19:06.320 --> 0:19:08.720 what could happen with that basket. I mean, the markets 0:19:08.760 --> 0:19:12.440 can be unpredictable. I think the important thing in all 0:19:12.480 --> 0:19:15.880 sincerity is not to panic and not to make grass decisions. Uh, 0:19:15.920 --> 0:19:18.640 it's to stick to your fundamental plans and recognize that 0:19:19.359 --> 0:19:22.480 markets move, and markets can move quickly, and it always 0:19:22.520 --> 0:19:26.440 seems like, man, they fall so much quicker than they rise. Um. 0:19:26.520 --> 0:19:28.320 And so maybe a good day for those of you 0:19:28.400 --> 0:19:30.400 invest in that To turn off the screens, that's okay, 0:19:30.720 --> 0:19:34.719 but take a long view approach versus getting whipsawed by 0:19:34.720 --> 0:19:36.919 the news on a day to day basis. Are you 0:19:36.960 --> 0:19:39.919 still seeing I mean your schwab, you've got the you know, 0:19:39.960 --> 0:19:44.160 you get the greatest view on individual traders and retail 0:19:45.000 --> 0:19:47.480 What are the retail folks doing these days? Yah? So 0:19:47.520 --> 0:19:49.920 retail folks are certainly still engaged in what we see 0:19:49.920 --> 0:19:53.120 in a lot of our more active traders is um. 0:19:53.160 --> 0:19:56.680 Even though there's more volatility, more unpredictability in the markets, 0:19:56.680 --> 0:19:58.679 and maybe certain sectors that they had to invest in. 0:19:58.920 --> 0:20:01.159 They're still using this time time to stay educated. I 0:20:01.160 --> 0:20:04.640 think that's really important. In my role, it's trading and education, 0:20:04.960 --> 0:20:08.040 and education, in my opinion, has never been more important. 0:20:08.119 --> 0:20:10.720 So let's say the example you said about ten dollars, 0:20:10.760 --> 0:20:12.800 maybe I don't investor right away. Maybe I spend more 0:20:12.840 --> 0:20:16.159 time researching, spend more time understanding different strategies that I 0:20:16.160 --> 0:20:19.440 could be utilizing, maybe looking at more risk, defying strategies, 0:20:19.480 --> 0:20:22.800 utilizing options, and other areas that potentially can help my 0:20:22.920 --> 0:20:27.000 portfolio or had some risk. So I would say, by 0:20:26.760 --> 0:20:29.520 and by and large, our clients are actively staying engage, 0:20:29.680 --> 0:20:32.400 utilizing more education, and trying to get more knowledgeable about 0:20:32.400 --> 0:20:34.800 the markets. All right, verty great stuff. Really appreciate you 0:20:34.800 --> 0:20:38.040 coming into the Bloomberg studio. Barry Metzger, He's managing director 0:20:38.040 --> 0:20:45.760 and head of Trading an Education at Charles Schwab. All right, 0:20:45.800 --> 0:20:49.800 I'm looking at d X Y index here, the dollar 0:20:49.960 --> 0:20:52.880 index on a trailing twelve month basis. We started about 0:20:52.880 --> 0:20:55.880