1 00:00:02,320 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:06,960 --> 00:00:10,520 Speaker 2: Robert Doll joins us right now this morning. 3 00:00:10,560 --> 00:00:12,799 Speaker 3: Bob, thank you so much for joining us. 4 00:00:12,840 --> 00:00:16,560 Speaker 4: How do you link price down, yield up into a 5 00:00:16,600 --> 00:00:19,160 Speaker 4: belief of conviction in the equity market? 6 00:00:20,360 --> 00:00:21,400 Speaker 3: Hard to do, Tom. 7 00:00:21,840 --> 00:00:24,320 Speaker 1: The market has been fighting at several issues, but it's 8 00:00:24,320 --> 00:00:27,680 Speaker 1: got a new one the bond market. Although bond yields 9 00:00:27,720 --> 00:00:31,200 Speaker 1: have been creeping up, as you know, inflation concerns, tariff 10 00:00:31,240 --> 00:00:34,600 Speaker 1: concerns and sort of the four to sixty level on 11 00:00:34,640 --> 00:00:37,600 Speaker 1: the ten year and the five percent level on the 12 00:00:37,640 --> 00:00:41,560 Speaker 1: thirty year, which we've now broken, have been technicians and nightmares. 13 00:00:42,159 --> 00:00:45,040 Speaker 3: And we've crossed one, will we cross the other? Just 14 00:00:45,080 --> 00:00:48,680 Speaker 3: a hurdle for shots, particularly at these valuation levels. 15 00:00:48,720 --> 00:00:50,559 Speaker 2: But Bob, you and I are enough of a fossil 16 00:00:51,200 --> 00:00:54,360 Speaker 2: a credit all weekend starting with the secondary of treasury 17 00:00:54,800 --> 00:00:58,600 Speaker 2: I got. It doesn't matter, Are you kidding me? Back 18 00:00:58,640 --> 00:01:04,000 Speaker 2: to nineteen seventy one to seven World War One? Moody's 19 00:01:04,000 --> 00:01:06,360 Speaker 2: has been looking at this. To me, it was like, 20 00:01:06,880 --> 00:01:07,520 Speaker 2: am I wrong? 21 00:01:07,600 --> 00:01:07,839 Speaker 1: Bob? 22 00:01:07,920 --> 00:01:11,039 Speaker 3: This is like big news? Right? Absolutely? 23 00:01:11,080 --> 00:01:13,920 Speaker 1: Look, some would say this is the third credit agency 24 00:01:14,040 --> 00:01:14,839 Speaker 1: to downgrade. 25 00:01:14,880 --> 00:01:18,200 Speaker 3: What's the big deal? The big deal is the bond market. 26 00:01:18,480 --> 00:01:20,920 Speaker 1: And the big deal is the bill that's sitting in 27 00:01:20,959 --> 00:01:25,959 Speaker 1: Congress that's gonna exacerbate the deficit yet some more so, 28 00:01:26,160 --> 00:01:29,520 Speaker 1: as long as those things keep happening, we will be 29 00:01:29,680 --> 00:01:32,560 Speaker 1: decreasing the number of degrees of freedom. We have to 30 00:01:32,600 --> 00:01:35,880 Speaker 1: fix this thing before it really strangles us. 31 00:01:36,520 --> 00:01:36,720 Speaker 3: Bob. 32 00:01:36,760 --> 00:01:38,480 Speaker 5: A lot of people will come into this studio and 33 00:01:38,520 --> 00:01:41,280 Speaker 5: tell Tom and I that, Hey, as long as investors, 34 00:01:41,600 --> 00:01:45,080 Speaker 5: both domestic international, continue to show up and buy US treasuries, 35 00:01:45,560 --> 00:01:48,800 Speaker 5: it just doesn't matter what do you say to them. 36 00:01:48,960 --> 00:01:52,280 Speaker 1: Well, you know, if they're gonna keep buying them and 37 00:01:52,320 --> 00:01:54,640 Speaker 1: the level is not gonna change, I guess they're right. 38 00:01:54,720 --> 00:01:58,200 Speaker 1: But the problem is the level the interest rates going up. 39 00:01:58,760 --> 00:02:02,920 Speaker 1: We've got an economy that is slowing down. We have 40 00:02:03,080 --> 00:02:05,760 Speaker 1: inflation that a lot of people want to argue. 41 00:02:05,560 --> 00:02:06,720 Speaker 3: Has been solved. 42 00:02:07,360 --> 00:02:11,280 Speaker 1: And why are bond yields moving up because we haven't 43 00:02:11,320 --> 00:02:15,880 Speaker 1: solved the inflation problem? Because we've got Look, the alternative 44 00:02:16,000 --> 00:02:19,400 Speaker 1: is the biggest tax increase in US history on December 45 00:02:19,440 --> 00:02:22,560 Speaker 1: thirty first. So that's not a pleasant alternative. Simply to 46 00:02:22,600 --> 00:02:25,560 Speaker 1: say no to the build it's a city in Congress. 47 00:02:26,000 --> 00:02:28,280 Speaker 3: We've got a lot of work to do. I'm gonna 48 00:02:28,320 --> 00:02:29,359 Speaker 3: have the longer way. 49 00:02:29,440 --> 00:02:33,639 Speaker 1: Wait, as you know, Paul, the fewer choices we're gonna have. 50 00:02:34,240 --> 00:02:38,440 Speaker 5: So, Bob, given that backdrop here, what is your what 51 00:02:38,560 --> 00:02:40,480 Speaker 5: kinds of discussions are you having with your clients as 52 00:02:40,520 --> 00:02:44,400 Speaker 5: it relates to stocks, bonds, alternatives? Where do you go here? 53 00:02:45,200 --> 00:02:49,239 Speaker 3: Yeah, with great difficulty. Look, I think, look, you can still. 54 00:02:49,040 --> 00:02:51,320 Speaker 1: Buy on weakness, and we've had a lot of strength 55 00:02:51,360 --> 00:02:52,600 Speaker 1: in the US equity market. 56 00:02:52,880 --> 00:02:54,840 Speaker 3: So you're hearing me. I'm a big canscious. 57 00:02:55,840 --> 00:02:58,440 Speaker 1: We get a few days like today and some prices 58 00:02:58,480 --> 00:02:59,520 Speaker 1: will get interesting again. 59 00:03:00,080 --> 00:03:02,120 Speaker 3: The pe ratio on the stock market, as you. 60 00:03:02,080 --> 00:03:06,320 Speaker 1: Know, got down to almost eighteen in the tariff selloff, 61 00:03:07,000 --> 00:03:10,440 Speaker 1: but now we're twenty one twenty two. Not that eighteen's cheap, 62 00:03:10,480 --> 00:03:12,840 Speaker 1: but twenty one twenty two is certainly expensive. 63 00:03:12,919 --> 00:03:15,480 Speaker 3: So you just have to be cautious. You have to 64 00:03:15,520 --> 00:03:20,040 Speaker 3: focus on companies that have a strong free cash flow, that. 65 00:03:20,040 --> 00:03:23,560 Speaker 1: Have improving return on equity so they can weather these 66 00:03:23,639 --> 00:03:24,600 Speaker 1: valuation storms. 67 00:03:24,760 --> 00:03:27,040 Speaker 2: See, but one find a question. We gotta run with 68 00:03:27,080 --> 00:03:28,480 Speaker 2: all that's going on, particularly in. 69 00:03:28,400 --> 00:03:34,240 Speaker 4: Europe, Bob Dall, we got a higher real rate, does 70 00:03:34,280 --> 00:03:37,280 Speaker 4: that just make it harder to do business or is 71 00:03:37,320 --> 00:03:41,040 Speaker 4: it ambiguous where a higher real rate shows a spirit 72 00:03:41,160 --> 00:03:42,920 Speaker 4: of the American corporate economy. 73 00:03:43,680 --> 00:03:44,400 Speaker 3: I wish it was. 74 00:03:44,400 --> 00:03:47,400 Speaker 1: The latter, but sadly, in reality, it's the former. It 75 00:03:47,640 --> 00:03:50,560 Speaker 1: just makes it tougher to do business. And you know, 76 00:03:50,640 --> 00:03:53,280 Speaker 1: you hear, like the jawboning of Walmart. 77 00:03:54,080 --> 00:03:56,280 Speaker 3: They have to run a business with low margins. 78 00:03:56,520 --> 00:04:00,320 Speaker 1: If they're gonna have cost increases, they're going to increase prices, period, 79 00:04:00,360 --> 00:04:00,920 Speaker 1: full stop. 80 00:04:02,000 --> 00:04:02,640 Speaker 3: Thank you so much.