Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Robert Doll joins us right now this morning.
Speaker 3: Bob, thank you so much for joining us.
Speaker 4: How do you link price down, yield up into a
Speaker 4: belief of conviction in the equity market?
Speaker 3: Hard to do, Tom.
Speaker 1: The market has been fighting at several issues, but it's
Speaker 1: got a new one the bond market. Although bond yields
Speaker 1: have been creeping up, as you know, inflation concerns, tariff
Speaker 1: concerns and sort of the four to sixty level on
Speaker 1: the ten year and the five percent level on the
Speaker 1: thirty year, which we've now broken, have been technicians and nightmares.
Speaker 3: And we've crossed one, will we cross the other? Just
Speaker 3: a hurdle for shots, particularly at these valuation levels.
Speaker 2: But Bob, you and I are enough of a fossil
Speaker 2: a credit all weekend starting with the secondary of treasury
Speaker 2: I got. It doesn't matter, Are you kidding me? Back
Speaker 2: to nineteen seventy one to seven World War One? Moody's
Speaker 2: has been looking at this. To me, it was like,
Speaker 2: am I wrong?
Speaker 1: Bob?
Speaker 3: This is like big news? Right? Absolutely?
Speaker 1: Look, some would say this is the third credit agency
Speaker 1: to downgrade.
Speaker 3: What's the big deal? The big deal is the bond market.
Speaker 1: And the big deal is the bill that's sitting in
Speaker 1: Congress that's gonna exacerbate the deficit yet some more so,
Speaker 1: as long as those things keep happening, we will be
Speaker 1: decreasing the number of degrees of freedom. We have to
Speaker 1: fix this thing before it really strangles us.
Speaker 3: Bob.
Speaker 5: A lot of people will come into this studio and
Speaker 5: tell Tom and I that, Hey, as long as investors,
Speaker 5: both domestic international, continue to show up and buy US treasuries,
Speaker 5: it just doesn't matter what do you say to them.
Speaker 1: Well, you know, if they're gonna keep buying them and
Speaker 1: the level is not gonna change, I guess they're right.
Speaker 1: But the problem is the level the interest rates going up.
Speaker 1: We've got an economy that is slowing down. We have
Speaker 1: inflation that a lot of people want to argue.
Speaker 3: Has been solved.
Speaker 1: And why are bond yields moving up because we haven't
Speaker 1: solved the inflation problem? Because we've got Look, the alternative
Speaker 1: is the biggest tax increase in US history on December
Speaker 1: thirty first. So that's not a pleasant alternative. Simply to
Speaker 1: say no to the build it's a city in Congress.
Speaker 3: We've got a lot of work to do. I'm gonna
Speaker 3: have the longer way.
Speaker 1: Wait, as you know, Paul, the fewer choices we're gonna have.
Speaker 5: So, Bob, given that backdrop here, what is your what
Speaker 5: kinds of discussions are you having with your clients as
Speaker 5: it relates to stocks, bonds, alternatives? Where do you go here?
Speaker 3: Yeah, with great difficulty. Look, I think, look, you can still.
Speaker 1: Buy on weakness, and we've had a lot of strength
Speaker 1: in the US equity market.
Speaker 3: So you're hearing me. I'm a big canscious.
Speaker 1: We get a few days like today and some prices
Speaker 1: will get interesting again.
Speaker 3: The pe ratio on the stock market, as you.
Speaker 1: Know, got down to almost eighteen in the tariff selloff,
Speaker 1: but now we're twenty one twenty two. Not that eighteen's cheap,
Speaker 1: but twenty one twenty two is certainly expensive.
Speaker 3: So you just have to be cautious. You have to
Speaker 3: focus on companies that have a strong free cash flow, that.
Speaker 1: Have improving return on equity so they can weather these
Speaker 1: valuation storms.
Speaker 2: See, but one find a question. We gotta run with
Speaker 2: all that's going on, particularly in.
Speaker 4: Europe, Bob Dall, we got a higher real rate, does
Speaker 4: that just make it harder to do business or is
Speaker 4: it ambiguous where a higher real rate shows a spirit
Speaker 4: of the American corporate economy.
Speaker 3: I wish it was.
Speaker 1: The latter, but sadly, in reality, it's the former. It
Speaker 1: just makes it tougher to do business. And you know,
Speaker 1: you hear, like the jawboning of Walmart.
Speaker 3: They have to run a business with low margins.
Speaker 1: If they're gonna have cost increases, they're going to increase prices, period,
Speaker 1: full stop.
Speaker 3: Thank you so much.