WEBVTT - Traders Ready for Jackson Hole and DNC 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen, and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.880 the Bloomberg Terminal, and the Bloomberg Business App. Lori Kelvisina 0:00:47.960 --> 0:00:50.800 joins us this morning with all of our good work. 0:00:50.880 --> 0:00:54.360 Lori Kelvisina, of course with RBC Laurie. I'm gonna I've 0:00:54.400 --> 0:00:57.120 just cut to the chase, many would say, in this 0:00:57.320 --> 0:01:00.920 odd rebound, this ten day hillacious horror, and through that 0:01:00.960 --> 0:01:04.120 there's been a massive shortcover on small caps. Are you 0:01:04.720 --> 0:01:08.840 committed to small caps this morning? Hi? 0:01:08.920 --> 0:01:11.120 Tom? So, Look, you know, I hate to say it, 0:01:11.160 --> 0:01:13.759 but I still feel pretty neutral on the small caps. Now, 0:01:13.760 --> 0:01:16.440 that's in regards to a relative call versus large. I 0:01:16.440 --> 0:01:19.240 do think the market is at large small caps included 0:01:19.600 --> 0:01:22.319 probably did see the lows for the pullback we experienced 0:01:22.319 --> 0:01:27.080 on August fifth. But when I think about relative performance, look, 0:01:27.200 --> 0:01:29.319 I think one of the things that's really been pushing 0:01:29.680 --> 0:01:32.640 people into small caps, and that's been generating some of 0:01:32.640 --> 0:01:35.520 these short term out performance pops is when the absolute 0:01:35.600 --> 0:01:37.960 valuations of the Russell two thousand or cheap, so that 0:01:38.000 --> 0:01:41.200 weighted media and forward pe is below average. And guess what, 0:01:41.480 --> 0:01:43.400 as we updated the weekly at the end of last week, 0:01:43.400 --> 0:01:45.640 it was sitting right smack dab on top of the average. 0:01:45.680 --> 0:01:47.800 So we don't have, you know, sort of the same 0:01:47.920 --> 0:01:51.480 kind of compelling valuation set up. Similarly, if I look 0:01:51.480 --> 0:01:54.960 at positioning on the CFTC data, we recently pulled up 0:01:55.000 --> 0:01:57.760 to three year highs kind of post COVID hives, and 0:01:57.800 --> 0:01:59.800 we've started to ease back from those, but they don't 0:01:59.840 --> 0:02:01.680 look under owned at this point in time. And then 0:02:01.720 --> 0:02:04.840 I layer in the economy, I neither think we're about 0:02:04.920 --> 0:02:07.280 to tip into a recession that's usually a really big 0:02:07.320 --> 0:02:09.560 springboard for small caps. And I also don't really see 0:02:09.560 --> 0:02:11.800 a hot economy. I see kind of a you know, 0:02:11.880 --> 0:02:14.960 a good, solid, fine economy, But small caps really either 0:02:15.000 --> 0:02:17.520 need the springboard coming out of recession where you get 0:02:17.600 --> 0:02:19.680 really fast growth rates off the bottom, or you need 0:02:19.720 --> 0:02:22.360 a really kind of hot, above average economy to outperform it. 0:02:22.480 --> 0:02:23.360 I just don't have that right. 0:02:23.360 --> 0:02:25.760 I have fourteen questions of Paul jump in here. I 0:02:26.160 --> 0:02:28.080 just I just don't get it. 0:02:28.120 --> 0:02:30.480 Hey, Lourie, I mean, we're pretty much through the earnings 0:02:30.840 --> 0:02:33.639 season here, We've got some retailers are reporting this week. 0:02:33.680 --> 0:02:35.919 What did you take away from this earning cycle? Good, bad, 0:02:36.000 --> 0:02:36.480 or and different? 0:02:37.639 --> 0:02:39.919 So I was pretty solid, you know, I do think 0:02:40.000 --> 0:02:42.280 in some ways it got ignored with all these sort 0:02:42.280 --> 0:02:45.080 of macro gyrations, you know, sort of debates over the 0:02:45.080 --> 0:02:48.840 consumer and the jobs, and then the yen carry trade unwined, 0:02:48.840 --> 0:02:50.320 which I know we'd all kind of like to forget 0:02:50.360 --> 0:02:53.160 right now. But I do think if you looked at 0:02:53.160 --> 0:02:55.880 the stats, we saw an uptick on the percent beating 0:02:55.919 --> 0:02:58.960 consensus earnings estimates. The revenue beats also picked up. The 0:02:58.960 --> 0:03:01.400 earnings beats kept out pacing the sales beats, and that 0:03:01.480 --> 0:03:03.840 just means companies are doing a good job of, you know, 0:03:03.919 --> 0:03:07.840 kind of defying gravity so to speak, and really managing margins. 0:03:08.160 --> 0:03:09.240 So that was all good. 0:03:09.320 --> 0:03:09.760 I thought the. 0:03:09.760 --> 0:03:14.320 Commentary was pretty balanced. You know, there was maybe a 0:03:14.560 --> 0:03:16.919 bit more negativity on the consumer than what we saw 0:03:17.040 --> 0:03:20.520 last reporting season, But I came away with the impression 0:03:20.560 --> 0:03:23.799 that while the pressures from rates and inflation, consumers are 0:03:24.720 --> 0:03:27.160 reacting to that in a more profound way. Companies went 0:03:27.160 --> 0:03:28.440 out of their way to sort of say, you know, 0:03:28.480 --> 0:03:30.400 we think the consumer is still healthy and that they're 0:03:30.400 --> 0:03:33.400 managing through. So I thought it was I thought it 0:03:33.440 --> 0:03:35.240 was pretty solid, to be honest. 0:03:35.400 --> 0:03:38.360 Solid enough to support the valuation where we are in 0:03:38.360 --> 0:03:41.000 this market. How do you guys think about valuation of 0:03:41.040 --> 0:03:41.960 this market these days? 0:03:43.080 --> 0:03:45.320 So we look at valuations a lot of different ways. 0:03:45.760 --> 0:03:48.640 If I'm looking at, you know, sort of a forward pe, 0:03:48.680 --> 0:03:50.520 what I really like to do is separate the top 0:03:50.560 --> 0:03:53.200 ten names and look at a bymarket cap and look 0:03:53.200 --> 0:03:56.760 at a medium pe there that's still trading around twenty 0:03:56.760 --> 0:03:58.840 six times. It got as low as twenty four, It 0:03:58.880 --> 0:04:01.840 was up round thirty two one point. Doesn't look great, 0:04:01.840 --> 0:04:04.920 but it's off the boil. If I look at, you know, 0:04:04.960 --> 0:04:06.640 sort of the rest of the market, we've been sort of, 0:04:06.680 --> 0:04:09.880 you know, really trading closely around kind of the seventeen 0:04:09.960 --> 0:04:12.880 times mark. The average is around, you know, sort of 0:04:12.920 --> 0:04:14.840 I think around like fifteen or so, so we're a 0:04:14.880 --> 0:04:17.120 bit above average, but we're way below pass peak. So 0:04:17.120 --> 0:04:19.200 I think valuations, you know, look pretty good for the 0:04:19.200 --> 0:04:21.360 rest of the market. If I look at a trailing 0:04:21.400 --> 0:04:23.800 PE analysis, that's where I kind of come away with 0:04:23.839 --> 0:04:27.000 the idea valuations are full. And I'll spare you all 0:04:27.040 --> 0:04:29.400 the details on the model, but I basically take inflation 0:04:29.480 --> 0:04:32.440 and interest rates in the FED, do regressions with with 0:04:32.600 --> 0:04:34.960 trailing pees going back to the sixties, and we figure 0:04:34.960 --> 0:04:36.360 out where should the PE be at the end of 0:04:36.400 --> 0:04:37.800 the year. If you think X, y and Z is 0:04:37.800 --> 0:04:40.640 going to happen on rates and inflation, fifty six hundred 0:04:40.680 --> 0:04:43.120 is already baking in, you know, sort of three or 0:04:43.120 --> 0:04:46.039 four FED cuts and PCE down around two. So I 0:04:46.040 --> 0:04:47.760 feel like we've already baked in a lot of good 0:04:47.760 --> 0:04:50.320 news on the rates and inflation front, know, on the 0:04:50.400 --> 0:04:52.120 s and P multiple itself in. 0:04:52.000 --> 0:04:56.000 That regression equation, how do you plug in and presumed 0:04:56.320 --> 0:05:00.599 lower real rate the oomph the economy gets from a 0:05:00.680 --> 0:05:02.280 lower real yield. 0:05:03.640 --> 0:05:05.600 So you know, we've got kind of all the bits 0:05:05.600 --> 0:05:08.000 and pieces there, right, We've got the ten year, We've 0:05:08.040 --> 0:05:11.120 got the FED funds, we've got the inflation rate. I'll 0:05:11.120 --> 0:05:13.480 tell you Tom and this, I may lose some of 0:05:13.520 --> 0:05:15.640 your viewers right now, so I apologize if we do that. 0:05:15.800 --> 0:05:19.000 But I did experiment with this model at one point 0:05:19.000 --> 0:05:21.919 in time, having GDP baked into the model. I finally, 0:05:22.000 --> 0:05:23.839 you know, sort of threw it out of the model. 0:05:23.880 --> 0:05:26.200 It didn't have a huge impact on the outcome. But 0:05:26.240 --> 0:05:30.240 I found GDP behaves differently relative to interest rates in 0:05:30.320 --> 0:05:34.559 different decades. So inflation, the FED ten year yields pretty 0:05:34.600 --> 0:05:39.719 much always inversely correlated GDP, sometimes inverse, sometimes positive. I 0:05:39.720 --> 0:05:40.640 don't want to mess with that. 0:05:41.120 --> 0:05:43.760 Yeah, Lurie, thank you too much, math Lori, Kelvis, thank 0:05:43.800 --> 0:05:57.560 you so much. Kelsey Burou joins US executive director Fixed 0:05:57.600 --> 0:06:01.240 Income and JP Morgan thrilled with us today your arch 0:06:01.360 --> 0:06:07.240 call with Bob Michael is yields are coming in tenure yield. 0:06:07.320 --> 0:06:09.600 You know you're talking below. I mean Ian Lincoln's out 0:06:09.640 --> 0:06:12.320 there and the other strategists with calls. But the basic 0:06:12.360 --> 0:06:15.120 ideas we come down, Paul. I'm looking at the corporate 0:06:15.200 --> 0:06:21.240 chart yield the worst back to vulgar. It's the great moderation, 0:06:21.680 --> 0:06:27.159 the great disinflation. We're out three standard deviations right now, folks, 0:06:27.200 --> 0:06:31.279 which means we've never been here, and a regression to 0:06:31.360 --> 0:06:35.120 the mean Kelsey Barrow, just get your price up yield down? 0:06:35.560 --> 0:06:38.760 Is that all JP Morgan's talking about is a regression 0:06:39.120 --> 0:06:40.279 to a great moderation? 0:06:40.480 --> 0:06:44.359 Mean, So I'm looking at the same chart you you 0:06:44.480 --> 0:06:49.800 are in terms of investment grade deals right now, five 0:06:49.839 --> 0:06:52.760 percent right a yield to maturity on the on the 0:06:52.880 --> 0:06:55.560 investment grade index right now. You know, I think what's 0:06:55.600 --> 0:06:59.960 amazing about that? And that's come down pretty significantly. You know, 0:07:00.120 --> 0:07:03.080 from the highs was above six percent. That's actually still 0:07:03.080 --> 0:07:05.479 in the eightieth percentile of the last ten years. 0:07:05.640 --> 0:07:09.360 On the show, we call that three standard deviations right, 0:07:09.440 --> 0:07:10.400 another way of saying it. 0:07:10.840 --> 0:07:13.640 So, you know, I think the big question people are 0:07:13.680 --> 0:07:16.720 asking now is, you know, have we missed the move? 0:07:17.600 --> 0:07:21.200 Because you know, we're now thirteen months from the last 0:07:21.280 --> 0:07:24.640 rate hike and if you look at one to five 0:07:24.720 --> 0:07:28.240 year credit for example, that's about two hundred basis points 0:07:28.240 --> 0:07:30.880 ahead of cash right now and the Fed hasn't even 0:07:30.880 --> 0:07:33.240 started cutting rates. But that we do also know that 0:07:33.240 --> 0:07:37.320 the market is pricing in significant amount of rate cuts, 0:07:37.360 --> 0:07:41.080 eight to nine rate cuts. So you know the question 0:07:41.200 --> 0:07:44.440 is what's the risk reward from here? Now there's two 0:07:44.480 --> 0:07:47.760 tails that I'm thinking about. One is the reacceleration risk. 0:07:48.120 --> 0:07:50.440 One is the risk that we go into a harder landing. 0:07:50.880 --> 0:07:53.320 I think what the data has been telling us more recently. 0:07:53.840 --> 0:07:56.120 You know, we can debate about the risk of recession, 0:07:56.240 --> 0:07:58.720 the risk of rolling over. The data is very mixed 0:07:58.760 --> 0:08:01.320 on that. But the one place where it's really clear 0:08:01.920 --> 0:08:05.840 is that the reacceleration tail risk has come down quite 0:08:05.840 --> 0:08:09.760 a lot. And that's really the big risk for bond investors. 0:08:10.280 --> 0:08:13.160 And that's the good news for fixed income is that 0:08:13.200 --> 0:08:17.240 we've really been able to credibly reduce that tail risk 0:08:17.280 --> 0:08:18.800 of a reacceleration in inflation. 0:08:20.000 --> 0:08:23.480 So if I'm the FED, I go out to Jackson 0:08:23.480 --> 0:08:25.600 Hole with all the you know, the monkey MUCKs end 0:08:25.640 --> 0:08:27.120 of this week, including mister Tom Keen. 0:08:27.680 --> 0:08:28.360 What do I say? 0:08:29.480 --> 0:08:31.040 I mean, I don't think you really need to say 0:08:31.040 --> 0:08:33.680 that much. I mean, it's really interesting you think about 0:08:33.720 --> 0:08:36.920 the price action this year, and it's really not been 0:08:37.000 --> 0:08:39.400 driven by the FED speak. It's been driven by the data. 0:08:39.520 --> 0:08:39.840 Right. 0:08:40.200 --> 0:08:43.000 The market has reacted to the data. When the data 0:08:43.120 --> 0:08:47.360 suggests that there's risk of upside on inflation, the market 0:08:47.440 --> 0:08:50.120 reduces the amount of rate cuts for this year. When 0:08:50.160 --> 0:08:53.640 that unwinds, the market prices in more rate cuts. 0:08:53.720 --> 0:08:55.079 So I actually don't think that. 0:08:55.120 --> 0:08:59.360 Chair Palal needs to say that much. That being said, though, 0:08:59.640 --> 0:09:01.880 I think it should be clear that if you look 0:09:01.920 --> 0:09:05.000 at simple policy rules, they would suggest, and this is 0:09:05.120 --> 0:09:07.800 regardless of your view on the labor market, simple policy 0:09:07.880 --> 0:09:11.240 rules would suggest that the appropriate policy rate right now 0:09:11.320 --> 0:09:13.680 is probably about one hundred basis points lower than it 0:09:13.720 --> 0:09:16.760 is today. And that's just onflation coming down alone. Because 0:09:16.800 --> 0:09:20.040 the Fed, they don't see the Fed funds rate static 0:09:20.080 --> 0:09:22.600 for the last thirteen months. They actually see the real 0:09:22.640 --> 0:09:24.960 Fed funds rate has risen one hundred and fifty basis 0:09:24.960 --> 0:09:26.400 points in the last thirteen months. 0:09:26.400 --> 0:09:27.520 That's equivalent to. 0:09:27.559 --> 0:09:31.160 Five more rate hikes. So policy has been getting incrementally 0:09:31.240 --> 0:09:34.400 tighter for the last year, and they recognize that it's 0:09:34.559 --> 0:09:38.120 time to kind of start to move away from that regime. 0:09:38.640 --> 0:09:41.720 So when the Fed begins to cut rates, let's say 0:09:41.720 --> 0:09:45.200 it's September, as the market discounting, how did they do it? 0:09:45.320 --> 0:09:48.079 They do it every meeting, every other meeting, twenty five 0:09:48.120 --> 0:09:50.280 basis points fifty basis points to their front load. 0:09:50.800 --> 0:09:51.880 How are you guys thinking about that? 0:09:52.200 --> 0:09:55.040 So I think for now it's still a gradual adjustment. 0:09:55.840 --> 0:09:58.960 So you could plug in those simple tailor rules on 0:09:59.000 --> 0:10:02.960 your Bloomberg term all and see that. Okay, you know 0:10:03.360 --> 0:10:05.280 the policy rate maybe should be closer to three and 0:10:05.280 --> 0:10:06.680 a half to four. But they're not going to do 0:10:06.720 --> 0:10:09.679 that instantaneously, right I don't. I actually think that they 0:10:09.679 --> 0:10:12.640 are more likely to go twenty five basis points per 0:10:12.720 --> 0:10:16.000 meeting maybe for the next few meetings and then switched 0:10:16.000 --> 0:10:18.880 to quarterly. But you know that's all assuming status quo, 0:10:19.440 --> 0:10:22.200 and we don't know where the economies going to go next. 0:10:22.200 --> 0:10:24.400 Crystal Ball, do you have a crystal Ball in your office? 0:10:24.600 --> 0:10:26.600 No, we don't have a Cristal the new. 0:10:26.520 --> 0:10:28.360 Office, Tom and to go into the new offices, the. 0:10:28.320 --> 0:10:32.360 New offices of a crystal ball. Yep, what. I got 0:10:32.360 --> 0:10:34.319 a huge response to this out of YouTube. The basic 0:10:34.760 --> 0:10:37.439 The basic idea here is if I get Abob Michael 0:10:37.520 --> 0:10:40.600 Kelsey Barrow Market, and I don't get down to reversion 0:10:40.640 --> 0:10:42.600 to the mean, I just get down to a long 0:10:42.679 --> 0:10:48.320 term trend one standard deviation above the mean. I have 0:10:48.400 --> 0:10:52.199 a total return vehicle at JP Morgan. Are you investing 0:10:52.280 --> 0:10:55.720 in fixed income for an assumed total return or are 0:10:55.720 --> 0:10:56.760 you clipping a coupon? 0:10:57.679 --> 0:11:00.440 Well, so far, it's been a little bit of both, 0:11:00.840 --> 0:11:02.760 is what we've gotten so far. Right, you got a 0:11:02.760 --> 0:11:06.360 little bit of total return more recently and then more 0:11:06.679 --> 0:11:09.679 more so, the majority of what you're vetting is clipping 0:11:09.679 --> 0:11:12.240 the coupon. But I do think you know, over time 0:11:12.360 --> 0:11:15.200 you are going to see that fixed income is going 0:11:15.280 --> 0:11:19.120 to continue to outperform cash as the FED continues and 0:11:19.160 --> 0:11:20.200 starts that easing cycle. 0:11:20.320 --> 0:11:22.440 I mean, Paul, to me, this is huge. Nobody has 0:11:22.480 --> 0:11:26.240 in their minds fixed income is a total the giant 0:11:26.360 --> 0:11:30.320 damn fuss at Luma's sales. Nobody's thinking as a damn manner. 0:11:30.400 --> 0:11:32.640 Yep, I'm looking at Kelsey. 0:11:32.720 --> 0:11:35.320 I end going a Bloomberg terminal Bloomberg Index browser the 0:11:35.360 --> 0:11:37.319 best returning fixed income space. 0:11:37.559 --> 0:11:39.800 US corporate high Yield. Where did that come from? I 0:11:39.840 --> 0:11:42.040 thought we were having a recession. I mean, how's high 0:11:42.080 --> 0:11:42.839 gild doing so well? 0:11:43.080 --> 0:11:43.360 Yeah? 0:11:43.400 --> 0:11:46.240 So, I mean, I think really that's that's a combination 0:11:46.400 --> 0:11:50.160 of the fact that the economy has continued to do well, 0:11:50.360 --> 0:11:54.080 and that's really a story of clipping coupons. The index 0:11:54.120 --> 0:11:57.600 with the highest yields has performed with the greatest total 0:11:57.640 --> 0:12:00.920 return so far, and that's because spreads have been relatively stable. 0:12:01.160 --> 0:12:03.360 So if you think about what our core thesis was 0:12:03.440 --> 0:12:06.000 for this year in terms of base case for investing, 0:12:06.400 --> 0:12:09.640 it was soft landing and the key part of that 0:12:09.800 --> 0:12:13.440 was inflation coming down. You need inflation to come down 0:12:13.559 --> 0:12:15.360 for any of these things to work right in the 0:12:15.360 --> 0:12:19.400 box market with about that, you can't have you can't 0:12:19.400 --> 0:12:19.920 have any of it. 0:12:20.240 --> 0:12:21.760 What's for really telling you? 0:12:22.640 --> 0:12:25.760 Well, you know, I think what we're seeing in the 0:12:25.840 --> 0:12:28.800 data is that the disinflation is becoming much more broad 0:12:28.840 --> 0:12:32.400 based and outside really two categories left in inflation, which 0:12:32.440 --> 0:12:35.679 is a shelter and auto insurance. Pretty much the rest 0:12:35.720 --> 0:12:38.200 of the CPI basket is running like it was pre COVID. 0:12:38.280 --> 0:12:40.240 One final question, because you've got to throw you out 0:12:40.240 --> 0:12:44.360 because of Detroit Tiger's at the Yankees, Kelsey. The heart 0:12:44.400 --> 0:12:46.520 of the matter is what are people doing with their 0:12:46.520 --> 0:12:49.840 money right now? Is any of the cash being deplored 0:12:49.920 --> 0:12:53.760 into the Michael Barrel world or same thing? Are people 0:12:53.800 --> 0:12:54.720 extending duration? 0:12:55.080 --> 0:12:57.640 I think they are, and I think the ways you 0:12:57.640 --> 0:12:59.400 can see it you can see it in fun flows, 0:12:59.440 --> 0:13:01.000 but I think you could also see it in the 0:13:01.440 --> 0:13:05.480 continued demand for corporate credit. You know, supply has really 0:13:05.480 --> 0:13:08.280 been pulled forward this year ahead of the elections. 0:13:07.760 --> 0:13:09.920 And that's like the fourth time we've heard football. 0:13:10.240 --> 0:13:11.240 Yeah, people. 0:13:12.760 --> 0:13:17.840 And people are very interested in extending and you know, 0:13:17.960 --> 0:13:21.520 snapping up that credit because companies in general, they were 0:13:21.559 --> 0:13:22.600 preparing for a recession. 0:13:22.640 --> 0:13:23.679 The recession didn't happen. 0:13:23.720 --> 0:13:25.959 But the good news is is that their balance sheets 0:13:25.960 --> 0:13:26.960 are in a very good place. 0:13:27.760 --> 0:13:30.040 Help me here, why is it big Tech? They make 0:13:30.200 --> 0:13:33.720 one phone call. They don't call James Diamond, They called 0:13:33.760 --> 0:13:36.440 Bob Michael. Let's be honest, they're going to make Big 0:13:36.480 --> 0:13:39.400 Tech's going to make one phone call and they're going 0:13:39.480 --> 0:13:43.400 to do gazillions of debt issuance. And how many people 0:13:43.440 --> 0:13:45.120 does JP More gonna have to call to get that 0:13:45.200 --> 0:13:45.640 deal done? 0:13:45.760 --> 0:13:49.280 Like for people, well, they just call upstairs the devestment 0:13:49.320 --> 0:13:52.280 manager people and then they say the demand. 0:13:53.080 --> 0:13:55.200 I think it's going to be a frenzy if we 0:13:55.320 --> 0:13:58.600 get some form of reversion to the Great moderation. Do 0:13:58.640 --> 0:13:59.640 you see that? Yeah? 0:13:59.679 --> 0:14:02.400 I mean, and you think about it. You know, you've 0:14:02.440 --> 0:14:08.040 already seen institutional investors, you know, exten duration. But this 0:14:08.120 --> 0:14:12.560 has happened without an actual cut, right, Like money market 0:14:12.600 --> 0:14:15.720 rates have not moved yet. But I think when they move, 0:14:15.880 --> 0:14:17.520 you're going to see a lot more people start to know. 0:14:17.880 --> 0:14:20.480 Okay, Kelsey Barrow, thank you. So I'm a terrific brief 0:14:20.560 --> 0:14:23.320 Kelsey Barrow working with Bob Mike on the team at 0:14:23.320 --> 0:14:26.040 fixed income at a small bank on Park Evan. I 0:14:26.040 --> 0:14:40.400 greatly appreciate her attendance. We're doing audible here with Henrietta Trece. 0:14:40.920 --> 0:14:42.920 Thrilled that she's with us today. She's been a huge 0:14:42.920 --> 0:14:47.200 help to Bloomberg's surveillance and identifying the trends. Henry, I 0:14:47.360 --> 0:14:49.720 usually start with some you know, mumbo jumbo in the 0:14:49.800 --> 0:14:52.760 zeitgeist in that, but I think we have to address 0:14:52.800 --> 0:14:57.840 the Chicago protests. And the difference is in nineteen sixty eight, 0:14:57.920 --> 0:15:03.040 after the Ted offensive, there were clear, visible The word 0:15:03.080 --> 0:15:07.720 I use is substantial divisions within America. To you is 0:15:07.760 --> 0:15:14.480 a grizzled pro How narrow is the Palestinian Israeli debate 0:15:15.400 --> 0:15:20.600 in the Palestinian protests talked about in Chicago? It's not 0:15:20.760 --> 0:15:23.800 nineteen sixty eight, is it. 0:15:23.800 --> 0:15:27.280 It's definitely not nineteen sixty eight. Thanks for having me, Tom. 0:15:27.400 --> 0:15:29.000 I think the first thing to note is that the 0:15:29.040 --> 0:15:31.000 protest is going to be about a mile long. 0:15:31.240 --> 0:15:34.280 They have moved it away from the Convention. I'm sure 0:15:34.520 --> 0:15:34.720 you know. 0:15:34.760 --> 0:15:38.240 I know that the Democrats have anticipated these protests. I 0:15:38.360 --> 0:15:41.040 think that the biggest area of concern for them is 0:15:41.040 --> 0:15:44.120 the state of Michigan, which there is a big population 0:15:44.200 --> 0:15:47.680 about two three hundred thousand people who are even in 0:15:47.760 --> 0:15:51.080 the range of focusing on this the way that the 0:15:51.120 --> 0:15:55.400 protests would suggest. And in general, this is a really 0:15:55.440 --> 0:15:58.680 small subset of the Democratic voter base, and I don't 0:15:58.720 --> 0:16:01.040 think that it's going to move into in terms of 0:16:01.080 --> 0:16:02.280 polling or ultimate. 0:16:01.960 --> 0:16:04.200 Election outcomes, but it is there. It is present. 0:16:04.480 --> 0:16:07.080 Kama Harris making clear that she stands with Israel but 0:16:07.800 --> 0:16:10.640 doesn't have the same baggage that the Biden administration has 0:16:10.680 --> 0:16:12.320 on this, and I think that's going to help her. 0:16:12.440 --> 0:16:15.240 I mean, Paul, the reason I bring this up, besides that, 0:16:15.360 --> 0:16:17.760 you know, the analog back to nineteen sixty eight and 0:16:17.880 --> 0:16:21.400 all is I'm looking at outside adults like Q Research 0:16:21.520 --> 0:16:24.720 Trust or the great work at Cook Political Report. What 0:16:24.800 --> 0:16:29.200 Henrietta does it Vida Partners, Greg Juro at Bloomberg and 0:16:29.480 --> 0:16:33.800 is she mentions Michigan's unique Okay, But other than that, 0:16:34.160 --> 0:16:39.520 I can't find a critical mass of protest in America. 0:16:40.040 --> 0:16:42.000 I mean, we can protest the Red Sox. 0:16:41.800 --> 0:16:43.160 Middle relief exactly. 0:16:43.320 --> 0:16:48.720 That's got the biggest say Yankees losing interesting Henrietta, what 0:16:48.880 --> 0:16:51.560 would be or what will be or what could be 0:16:51.720 --> 0:16:54.760 a success for the Democrats this week in Chicago. 0:16:56.360 --> 0:16:59.240 Honestly, a continuation of the success is maybe talking about 0:16:59.240 --> 0:17:02.840 the more popular part of Kamalhiris's economic plan. Get that 0:17:03.040 --> 0:17:05.560 out there into the ether for voters who don't have 0:17:05.600 --> 0:17:08.520 a strong sense of her policy. To the extent that 0:17:08.600 --> 0:17:11.639 any concerns about her policy positions are a problem for voters, 0:17:12.000 --> 0:17:13.760 We've seen in the Poli data so far is that 0:17:14.080 --> 0:17:18.320 she's risen anywhere between five to eight points in all 0:17:18.400 --> 0:17:21.400 of these swing states. So voters aren't really concerned about 0:17:21.440 --> 0:17:23.879 the policy, and they're very primed to be opposed to 0:17:23.920 --> 0:17:26.640 Donald Trump, which is why he's lost every election since 0:17:26.680 --> 0:17:29.040 twenty sixteen. So I think getting a little bit of 0:17:29.080 --> 0:17:31.440 a message about out on policy but not too much 0:17:31.720 --> 0:17:34.760 is probably the strategy keeping the good energy going. President 0:17:34.800 --> 0:17:37.879 Biden will speak tonight, We'll keep forward with that. I 0:17:37.880 --> 0:17:39.520 think there's a lot of folks waiting to see where 0:17:39.560 --> 0:17:42.639 Michelle Obama comes out, but Barack Obama will be there, Hillary, 0:17:42.640 --> 0:17:45.119 Bill Clinton. It's just a big Rah Rah, and I 0:17:45.200 --> 0:17:48.600 expect that polling will continue to reflect the boost that 0:17:48.760 --> 0:17:51.320 either party gets from a DNC or an RNC, which 0:17:51.359 --> 0:17:54.280 is two to three points, and that point basis, once 0:17:54.280 --> 0:17:56.840 it gets tacked on the polls next week, is going 0:17:56.880 --> 0:17:58.720 to be sufficient to put her outside of the margin 0:17:58.760 --> 0:18:01.000 of error in all these states. And that's a big 0:18:01.040 --> 0:18:02.120 problem for Trump right now. 0:18:02.400 --> 0:18:05.520 How concerned is Donald Trump? And I guess more importantly 0:18:05.560 --> 0:18:07.440 the Republican Party at. 0:18:07.240 --> 0:18:11.280 This point very concerned from House members who were hoping 0:18:11.320 --> 0:18:13.480 to pick up all ten of the toss up races 0:18:13.560 --> 0:18:16.879 in the House of Representatives, the senators that are not 0:18:17.000 --> 0:18:20.479 in Ohio and Montana are really concerned. And then at 0:18:20.480 --> 0:18:21.840 the top of the ticket, I think you can see 0:18:21.840 --> 0:18:23.240 it from the change up that they're doing at the 0:18:23.280 --> 0:18:26.200 campaign staff. I think maybe they finally seized on a 0:18:26.240 --> 0:18:29.240 campaign message trying to tie kaval Harris to her economic 0:18:29.280 --> 0:18:32.479 policies that she rolled out on Friday. But one thing 0:18:32.520 --> 0:18:34.119 I'd really point out there, and where I've spending some 0:18:34.200 --> 0:18:37.040 time digging into the data, is that when inflation was 0:18:37.200 --> 0:18:41.240 nine percent a month later, Democrats went on to keep 0:18:41.440 --> 0:18:45.480 House Republicans to the lowest majority wins of any majority 0:18:45.520 --> 0:18:48.439 party excuse to be a minority party in one hundred years. 0:18:48.760 --> 0:18:50.600 So I don't know that the inflation stuff is going 0:18:50.640 --> 0:18:52.440 to beat out all the rest of it. 0:18:52.880 --> 0:18:54.879 And that's what history has suggested. In the midterms and 0:18:54.920 --> 0:18:55.840 the twenty twenty general. 0:18:56.080 --> 0:18:58.400 What do we vote? I mean, I know we don't 0:18:58.480 --> 0:19:03.480 vote on foreign policy, but do we vote on border debates, 0:19:03.600 --> 0:19:08.359 immigration debates? Do you buy the cliche it's all about economics. 0:19:08.960 --> 0:19:12.679 Man, It's really tough because twenty twenty was not about economics. 0:19:12.960 --> 0:19:16.119 I think that Biden narrowly won because of COVID and 0:19:16.119 --> 0:19:19.359 because of Donald Trump's the President Trump's response to COVID 0:19:19.400 --> 0:19:22.160 at the time, and sort of the chaos of that administration. 0:19:22.520 --> 0:19:23.640 And then in twenty twenty. 0:19:23.400 --> 0:19:26.280 Two, as I suggested, I mean, inflation was seven eight 0:19:26.520 --> 0:19:30.080 nine percent that summer, just two months a month before 0:19:30.200 --> 0:19:33.600 the actual election, and Democrats somehow still held the United 0:19:33.640 --> 0:19:36.800 States Senate, which was shocking. So I think voters are 0:19:36.840 --> 0:19:39.000 quick to say that it's the economy. It's perpetually the 0:19:39.080 --> 0:19:41.640 number one issue. Inflation is right up there, but it's 0:19:41.640 --> 0:19:45.680 followed very closely by immigration and abortion and turnout is 0:19:45.720 --> 0:19:47.159 really the name of the game. The gender gap is 0:19:47.200 --> 0:19:49.440 where you should probably pay attention to that issue. 0:19:49.600 --> 0:19:53.160 Give us a window into Florida politics. I read cook 0:19:53.200 --> 0:19:57.520 political report. Amy and David had a really interesting study 0:19:57.520 --> 0:19:59.960 of I think it was five of the districts, including 0:20:00.440 --> 0:20:03.000 the tippy tip of western Florida where it gets his 0:20:03.560 --> 0:20:08.840 but give us the red blue Henrietta Trey's view on 0:20:08.920 --> 0:20:10.480