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Speaker 1: This is the Bloomberg Surveillance Podcast.

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Speaker 2: I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz.

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Speaker 2: Join us each day for insight from the best an economics, geopolitics,

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Speaker 2: finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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Speaker 2: Spotify and anywhere you get your podcasts, and always on

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Speaker 2: Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app.

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Speaker 2: Right now, we're going to go to Henry Hoaternet in

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Speaker 2: Japan and with her is Admiral John Kirby's National Security

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Speaker 2: Council Coordinator for Strategic Communications. This for America at the

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Speaker 2: G seven meetings.

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Speaker 3: Thanks Tom, And that's right.

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Speaker 4: He's on the ground less than four hours and Admiral

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Speaker 4: Kirby is joining Bloomberg first here as he lands with

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Speaker 4: the President for this really important G seven summit. But

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Speaker 4: of course the President is scrapping the remainder of this

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Speaker 4: forum trip. You was supposed to have Papa New Guinea

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Speaker 4: and Australia. How much I think that domestic policy concerns

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Speaker 4: are undermining the foreign policy goals of this administration.

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Speaker 5: It's not about undermining our foreign policy goals. I mean

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Speaker 5: the President has really revitalized. He's really put a lot

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Speaker 5: of energy, particularly into this part of the world. I mean,

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Speaker 5: here we are in Japan for the G seven. You know,

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Speaker 5: just a few weeks ago in San Diego, we were

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Speaker 5: standing next to Prime Minister Arabanas and Prime Minister Sunak

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Speaker 5: to unveil the next phase of the Akas Agreement. And

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Speaker 5: of course he's already had a chance to meet with

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Speaker 5: all the Pacific Island leaders at the White House last year.

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Speaker 5: We'll do another one here in the near future. So

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Speaker 5: we have invested a lot of time and energy into

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Speaker 5: this particular part of the world. And today's today's visit,

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Speaker 5: this G seven, I think is just further proof of that.

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Speaker 4: But at the same time, the President loves to use

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Speaker 4: these moments like a G seven.

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Speaker 3: He reminds the world America is back.

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Speaker 4: He tries to draw parallels for democracy visa the autocracies,

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Speaker 4: what's going on in terms of Beijing, what happens in Russia.

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Speaker 6: How hard is it for him to.

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Speaker 4: Deliver that message to other leaders.

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Speaker 3: When he was supposed to be the first.

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Speaker 4: US president to go to Papua New Guinea, he was

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Speaker 4: supposed to go meet the Quad in Australia, and this

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Speaker 4: is where he wants to spend his time, like you said,

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Speaker 4: in the Asia Pacific.

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Speaker 5: But the president knows and so do these leaders leaders

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Speaker 5: of democratic democratic nations, that if you don't, if you

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Speaker 5: don't take care of the nation's dead, if you allow

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Speaker 5: the United States to default, virtually nothing else matters in

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Speaker 5: terms of what you're trying to do around the world.

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Speaker 5: You know, I heard comments to know BI analysts that

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Speaker 5: our credibility in the region is suffering because you know,

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Speaker 5: we're not going on two other stops, but the credibility

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Speaker 5: really suffers if we end up, you know, being a

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Speaker 5: debtor nation if we default.

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Speaker 4: That was the message I got in Nagata from the

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Speaker 4: foreign ministers.

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Speaker 5: Well, a president, I'm a deadbeat nation that our international

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Speaker 5: credibility standing suffers. So the President is doing the right

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Speaker 5: thing here. He's obviously the G seven is important. A

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Speaker 5: lot of things to discuss while we're here in Japan.

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Speaker 5: We can reschedule a trip to Australia, we can reschedule

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Speaker 5: a trip to Papula, Nigina, which you can't reschedule. You

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Speaker 5: can't reschedule the looming debt ceiling deadline. That is a

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Speaker 5: hard fixed thing, and we've got to make sure we

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Speaker 5: get these negotiations through.

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Speaker 4: Critics will say, then the President didn't manage this correctly.

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Speaker 4: He should have been speaking to Speaker McCarthy earlier so

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Speaker 4: he didn't have to cancel his foreign trip. But do

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Speaker 4: you think the president here in the g set will

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Speaker 4: be able to say to leaders, well, West will not

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Speaker 4: default on its debt.

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Speaker 5: Well, the president's optimistic. He said that before we left.

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Speaker 5: He said that he's optimistic that we'll get there. And

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Speaker 5: so that's one of the reasons why we're going home

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Speaker 5: a little bit early, so that he can be there

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Speaker 5: to make sure the Congress does its job. But let's

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Speaker 5: go back a little second on the talking to Speaker McCarthy.

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Speaker 5: Not defaulting is a congressional duty. It's in the constitution.

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Speaker 5: There didn't need to be negotiations over the debt. Now

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Speaker 5: the President is willing to sit down and talk to

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Speaker 5: Speaker McCarthy about the budget and appropriations, and we'll do that.

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Speaker 5: But when it comes to raising the debt ceiling, that

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Speaker 5: is something that has been done seventy eight times under

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Speaker 5: democratic and Republican administrations, without negotiations, without having to have

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Speaker 5: an argument about it. So there's no reason for I mean,

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Speaker 5: the argument that we should have talked to X number

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Speaker 5: of days ago, this should be this is a congressional

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Speaker 5: duty there. They should just simply do their job.

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Speaker 4: This is something we're going to be closely watching here

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Speaker 4: from the sidelines of the G seven when it comes

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Speaker 4: to of course, one of the biggest elephants in the

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Speaker 4: room is going to be China. We know the US

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Speaker 4: wants to go after economic coersion that's coming out of China. Also,

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Speaker 4: the Papua New Guinea trip was about deterring Beijing. Is

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Speaker 4: there a concern from the White House that potentially when

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Speaker 4: it comes to say, Papa New Guinea, that Beijing is

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Speaker 4: trying to do a security agreement like they did with

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Speaker 4: the Solomon Islands. How concerned is it about making sure

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Speaker 4: that countries like that are on board what the US

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Speaker 4: is doing well.

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Speaker 5: The trip in Papua New Guinea was not about deterring China.

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Speaker 5: It was about again revitalizing, reinvigorating our vast network of

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Speaker 5: alliances and partnerships in this region, a network by the way,

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Speaker 5: that China can't even close to match, just can't get there.

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Speaker 5: Five of our seven Treaty alliances are in this part

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Speaker 5: of the world, and a lot of people don't realize that.

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Speaker 5: So I mean there's a lot of a lot of

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Speaker 5: network of partnerships and alliances here that we're trying to

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Speaker 5: try to bolster. And we will still have discussions and

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Speaker 5: some deliverables with Papua New Guinea. You'll see that even

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Speaker 5: though we're not making that stop, we'll see.

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Speaker 1: Those move forward.

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Speaker 5: I can't speak for what China's doing with each individual

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Speaker 5: Pacific Island nation. They have used a mix of intimidation

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Speaker 5: and coersion economic and security wise to try to have

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Speaker 5: their way in this part of the world. We are

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Speaker 5: not asking countries to choose between the United States and China.

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Speaker 5: They get to decide what their bilateral relationships look like

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Speaker 5: and who they associate with and what that association looks like.

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Speaker 5: What we are doing is trying to show in demonstrable

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Speaker 5: way in ways that the United States is a reliable, stable,

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Speaker 5: credible partner in this part of the world and around

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Speaker 5: the world, and to give people alternatives to the coercion

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Speaker 5: and the intimidation that the Chinese tend to demonstrate.

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Speaker 4: How close are g seven leaders aligned on this point

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Speaker 4: on making sure they are deemed risking from China, most notably,

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Speaker 4: I'm thinking of Europe and Emmanuel Malcaran after his visit

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Speaker 4: where he said that Europe actually has strategic autonomy when

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Speaker 4: it comes to China.

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Speaker 5: China is going to be key on the agenda here

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Speaker 5: in Japan, and I think you're going to see the

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Speaker 5: G seven leaders all speak with one voice about the

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Speaker 5: challenges that China poses here in the Endo Pacific and

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Speaker 5: around the world, but also what some of the opportunities

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Speaker 5: are as the G seven nations are to compete, to

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Speaker 5: compete fairly, but to compete well with China.

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Speaker 3: Broad strokes of.

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Speaker 4: Words, though, will there be any action visa E China

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Speaker 4: and the G seven.

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Speaker 5: Well, I'm not going to get ahead of the of

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Speaker 5: the discussions, and the G seven leaders will absolutely spend

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Speaker 5: quite a bit of time here as you would expect

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Speaker 5: they would certainly here in Japan talking about the challenges

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Speaker 5: that the PRC represents. They will think, I'm convinced of

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Speaker 5: it that you'll see at the end of those discussions

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Speaker 5: that they'll all speak with one voice about about how

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Speaker 5: we need to treat that particular competition from not just

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Speaker 5: from a security perspective, from an economic perspective, from a

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Speaker 5: diplomatic perspective.

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Speaker 4: Adamal John Kirby, thank you so much for joining Bloomberg TV.

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Speaker 4: That was, of course, the National Security counselor Strategic Communications

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Speaker 4: Director John Kirby, his first interview on the ground. He's

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Speaker 4: been here for under four hours here and here as Shima, Japan.

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Speaker 6: Spend most of that traffling from the airport. So to

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Speaker 6: an interview with an Marie mh great work. Has always

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Speaker 6: looking forward to converridge to the G seven.

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Speaker 2: Ellen Ze joins us now quarters on from a transitory

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Speaker 2: economics and Ellen, in your note today, you are framing

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Speaker 2: out a.

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Speaker 1: New job economy.

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Speaker 2: We are at a two hundred and fifty thousand run

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Speaker 2: rate on non farm payrolls, and you have a stunning

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Speaker 2: observation of a path to forty thousand non farm payrolls.

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Speaker 2: How close are we do that?

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Speaker 1: Yeah?

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Speaker 7: So I think we can hit that late summer tom

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Speaker 7: And you know, look, you want to assume that things

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Speaker 7: are linear, which they're never linear. Then if you look

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Speaker 7: at the slowdown that we've had and just project that

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Speaker 7: forward and say, knowing nothing else, let's just assume that continues,

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Speaker 7: you would be down below one hundred thousand within a

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Speaker 7: couple of prints. So, look, we see a slowing path

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Speaker 7: for job gains here, but we don't see a cliff,

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Speaker 7: And I think that's very important. Claims are still low,

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Speaker 7: companies are still doing more labor hoarding than they are

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Speaker 7: laying off. We see an employment gap that still needs

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Speaker 7: to get filled, and so I think there's a lot

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Speaker 7: of support here that, Yeah, let's be realistic. Things are slowing,

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Speaker 7: but this is not a cliff that we're headed toward

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Speaker 7: for job gains.

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Speaker 2: This is, Lisa, to me, the conundrum for you, me

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Speaker 2: and John into May into June into July is we

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Speaker 2: don't have a clue what the is. Ellen mentions the

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Speaker 2: linear flows here on labor no.

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Speaker 8: Clue given the fact that it is slow. How does

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Speaker 8: a feder respond to a slow burn, Given the fact

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Speaker 8: that they are continuing to say inflations are pre eminent

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Speaker 8: concern and inflation has been sticky, Ellen, can they afford

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Speaker 8: to not hike rates again if we continue to see

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Speaker 8: just a slow grind lower but not that quickly and

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Speaker 8: inflation is still higher.

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Speaker 7: Yeah, So, Lisa, I think it's a good question. Inflation

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Speaker 7: is moving in the right direction, but very stubbornly so,

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Speaker 7: and it's not moved down clearly and convincingly as Chair

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Speaker 7: pal has wanted. But that was not a prerequisite to

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Speaker 7: them stopping hiking, right that is a prerequisite to when

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Speaker 7: they make adjustments, say normalizing policies. Inflation has down a lot,

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Speaker 7: So right now we think they're at the point where, yes,

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Speaker 7: it's arguable on the FED whether they are in restrictive territory.

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Speaker 7: How far are they in restrictive territory? Are they close enough?

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Speaker 7: We think that they're close enough. But the arguments that

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Speaker 7: you are, the points that you make, would suggest that

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Speaker 7: you need to keep that peak rate.

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Speaker 3: There for quite some time.

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Speaker 7: And I think that's the argument that the FED will

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Speaker 7: lean on that as inflation slowly comes down.

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Speaker 3: But they're holding rates high.

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Speaker 7: Policy actually maintains its restrictive territory, and in fact it's

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Speaker 7: even more restrictive throughout the year, and I think that's

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Speaker 7: what policymakers ultimately will lean on.

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Speaker 8: Ell And we were talking about this earlier and Tom

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Speaker 8: asked the question, do we have a sense of what

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Speaker 8: the new neutral really is? Do we have a sense

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Speaker 8: of what it takes to really take some of the

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Speaker 8: momentum out of an economy? That has defied all expectations

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Speaker 8: that were incredibly gloomy heading into the year. What's your view,

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Speaker 8: Do we have a better sense of what that neutral

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Speaker 8: rate is?

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Speaker 7: So I would say that, you know, very cynical of

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Speaker 7: me to say that neutral does not exist.

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Speaker 3: We're never at neutral.

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Speaker 7: We pass it up and you know in hindsight whether

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Speaker 7: you're at neutral, below neutral, above neutral. But we're always

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Speaker 7: reaching for these sort of fictitious metrics or goals. What

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Speaker 7: the Fed does know or can see is that things

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Speaker 7: are slowing. We think they're going to be very slow

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Speaker 7: in the middle of this the middle two quarters of

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Speaker 7: this year. And that's an economy with a backdrop of

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Speaker 7: banking pressures, of ball financial conditions that you might not

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Speaker 7: want to push it further, but you want to maintain

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Speaker 7: the option to hike.

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Speaker 3: Again if you need to.

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Speaker 7: And I think that's that's something that we have to consider.

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Speaker 7: There are two sided risks. After the pause here, I

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Speaker 7: got to rip.

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Speaker 1: Up the script. You've done it with me before.

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Speaker 2: Don't panic here, And the answer is that we're going

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Speaker 2: to talk to Ellen Zenner foreign exchange strategist. Moments ago,

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Speaker 2: Euro dollar solid one ten forever just breached through a

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Speaker 2: one oh eight to a weaker euro one oh seven

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Speaker 2: point ninety nine right now on YU dollar. To me,

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Speaker 2: the great unspoken, along with your idea of NFP down

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Speaker 2: well under one hundred thousand, is resilient to stronger dollar.

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Speaker 2: Dovetail that into your call, do we get a resilient

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Speaker 2: dollar again with the certitude out there the consensus of

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Speaker 2: dollar weakness.

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Speaker 7: Look, I think that you know, currency movements are very important,

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Speaker 7: and of course where strategists are, you know, shorter term

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Speaker 7: tactical tactically on the dollar matter a good deal. But

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Speaker 7: I think there's going to be a realization here that

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Speaker 7: the economy is not collapsing, and in fact a realization that, yes,

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Speaker 7: we think the FED is paused here, but there are

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Speaker 7: meread options for policy after that. Right, It's very easy

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Speaker 7: to get inflation down from seven percent to four percent,

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Speaker 7: is very difficult to get inflation down from four percent

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Speaker 7: to two percent, and that might take more work from

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Speaker 7: the FED after they pause. So I think it's more

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Speaker 7: of that realization creeping in that five point one percent

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Speaker 7: is the peak now, but they may have to move

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Speaker 7: higher at some point.

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Speaker 2: At least to me, this is so important. Dovetailing in

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Speaker 2: what Ian Lincoln said, with what Ellen Zender said and

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Speaker 2: the idea of the asymmetric call, and this is frankly

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Speaker 2: Hollendhorst as well. Do you get a symmetric call where

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Speaker 2: you get rates up or the Zenner pause and we

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Speaker 2: don't understand the duration of that pause, and that's where

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Speaker 2: you get the dollar.

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Speaker 8: Dynamic to come in well, and we also have the

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Speaker 8: sense that Europe perhaps has seen the bulk of the

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Speaker 8: gains and perhaps their signs that the other side of

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Speaker 8: the trade isn't doing as well as the resilience of

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Speaker 8: the US economy. Ellen to that point. We were talking

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Speaker 8: with Jim Bianco of Bianco Research earlier and one of

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Speaker 8: the big fears about the US was the banking crisis

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Speaker 8: that wasn't or the banking crisis that hasn't yet materialized,

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Speaker 8: and he said it's too soon to say all clear,

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Speaker 8: which a lot of people have been saying. Do you

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Speaker 8: agree with this idea of a bank walk of sort

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Speaker 8: of assets just kind of tiptoeing out the door over

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Speaker 8: a longer period of time, more akin to the nineteen

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Speaker 8: eighties SNL crisis that still hasn't fully transpired.

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Speaker 7: Yeah, So I think, look, we've had a shock to

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Speaker 7: the system that takes time to flow through. I don't

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Speaker 7: believe this is a credit crunch where we've just choked

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Speaker 7: off the flow of credit to the economy, but it's

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Speaker 7: clearly a credit cycle, and it's coming also from a

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Speaker 7: drop in loan demand. So I agree we can't assume

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Speaker 7: that we're past sort of these evils lurking around the corner.

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Speaker 7: But I think one of the difficult things here, which

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Speaker 7: is very different from the eighties, is that banks are

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Speaker 7: now having to contend with sentiment. So think of a

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Speaker 7: bank that's had an equity event, right, and equity investor

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Speaker 7: does not want to own that stock, so the stock

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Speaker 7: goes down, and then like clockwork, within days outflows of

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Speaker 7: deposits because you're suspicious of is that bank where I'm

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Speaker 7: holding my money safe.

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Speaker 3: So it's a sentiment.

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Speaker 7: And then you've got bank runs that move at the

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Speaker 7: speed of light, that are electronic now. And so this

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Speaker 7: is all something that the banking system has to contend

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Speaker 7: with and I think will continue to weigh on credit

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Speaker 7: availability and lending for some time.

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Speaker 8: Ellen when you talk about the bank walk and later

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Speaker 8: this year, does it become that much more sort of

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Speaker 8: pronounced as a result of the FED remaining on hold

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Speaker 8: if the economy is also slowing in a commensurate level.

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Speaker 8: So basically the relative yield that you're getting on those

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Speaker 8: T bills is that much better.

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Speaker 7: Yeah, So look, I think for banks it comes down

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Speaker 7: to liquidity. And you know, you can look at it

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Speaker 7: one way and say, well, banks are accessing the facility

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Speaker 7: that the FED is put in place, or they might

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Speaker 7: be accessing the discount window. But ultimately the other side

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Speaker 7: is the way I would look at That's a good thing.

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Speaker 7: Banks need liquidity and they're accessing it, and so that

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Speaker 7: alone will help banks work through this.

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Speaker 1: Ellen. I wanted one fine question.

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Speaker 2: There's a guy named Gorman, I think it's the first

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Speaker 2: name is James Gorman, and he said a number of

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Speaker 2: months ago something like and he said it with that accent.

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Speaker 2: He's got that, you know, that Australian thing going. He said,

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Speaker 2: with some fury. If they can eat in a restaurant

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Speaker 2: and so they can come to work. I'm fascinated what

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Speaker 2: you see nationwide on back to work. It's a big

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Speaker 2: debate in Manhattan, but are we going to go back

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Speaker 2: to work?

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Speaker 1: In America?

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Speaker 3: So we are going back to work?

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Speaker 7: I think when I've traveled around the country, I find

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Speaker 7: a good deal of regional differences in terms of people

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Speaker 7: that are back to work full time almost full time.

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Speaker 3: Look, why does this need to be a worry?

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Speaker 7: I mean, yes, office space for commercial real estate is

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Speaker 7: working through problems resizing. It's more of a Tier B

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Speaker 7: and Tier C market than a Tier A problem. But still,

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Speaker 7: we don't have to be in five days a week.

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Speaker 7: That's not what new work arrangements need to look like.

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Speaker 3: We do need to connect.

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Speaker 2: See in a restaurant in Soho. We'll try to ignore

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Speaker 2: mister Gorman if we can. Ellen Zatner with Morgan Stanley

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Speaker 2: working for the James.

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Speaker 6: Gorman, we've found a bill. She joins us around a tangle.

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Speaker 6: Bamba rhin Hop, the head of USA allocation at Voye

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Speaker 6: Investment Management, Barbara, good morning, Good morning, your bullish Why.

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Speaker 9: Well, Look, we think there are a couple of things

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Speaker 9: that are likely to go right. Inflation is still going

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Speaker 9: in the right direction. Yields are very supportive but have

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Speaker 9: come off of their highs. That gives the pe multiple

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Speaker 9: for the S and P five hundred a little bit

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Speaker 9: of wind at its back. But mostly we think that

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Speaker 9: it's going to be the economic data is slowing enough

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Speaker 9: that the FED is able to take their foot off

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Speaker 9: of the brakes and maybe take a break or a

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Speaker 9: pause in their hiking cycle, and that is a very

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Speaker 9: good tailwind for the equity market.

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Speaker 10: At this point, you've.

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Speaker 8: Been perhaps painfully along the US over the rest of

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Speaker 8: the world, and this is been sort of a contrarian trade.

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Speaker 8: Is everyone piled into Europe and the rest of the

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Speaker 8: world that's harding to shift around the margins at least

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Speaker 8: this week. What gives you confidence that has staying power

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Speaker 8: and that you'll basically be able to say.

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Speaker 10: I was right all along, It just took a little bit.

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Speaker 9: We never say that, Lisa, But nonetheless, look, we think

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Speaker 9: that the US has some really good qualities to it right,

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Speaker 9: So the Federal Reserve was one of the first central

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Speaker 9: banks to start raising interest rates. Inflation in the US

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Speaker 9: peaked a number of months ago. It's on the right

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Speaker 9: trajectory and going in the right direction, if not fast

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Speaker 9: enough for all market participants. But in Europe, think about this,

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Speaker 9: A lot of bad news had been in the price

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Speaker 9: in the.

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Speaker 10: Fourth quarter of last year.

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Speaker 9: A lot of things didn't happen, so not necessarily incrementally

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Speaker 9: good news, but the disaster scenario didn't happen. You need

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Speaker 9: things to go in the right direction for Europe to

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Speaker 9: continue to work. A lot of fund managers are indeed

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Speaker 9: putting assets out there. We're seeing asset allocators start to

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Speaker 9: put money overseas. That's generally when the data to really

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Speaker 9: start breaking your way. If you think the US has

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Speaker 9: an information problem, Europe has a much bigger one and

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Speaker 9: a much stickier one, and their central bank is much

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Speaker 9: further behind the curve than the US is. So at

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Speaker 9: the margin, we think that the US is likely to

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Speaker 9: outpace the rest of the world.

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Speaker 1: The US to talk place.

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Speaker 2: Let's be blunt more than anyone we talk to. Voya

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Speaker 2: is America first? Which five does a dollar fold into that?

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Speaker 2: I mean to me the big surprise here. No one

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Speaker 2: is looking for resilient.

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Speaker 1: Or strong dollar. John dxy A one.

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Speaker 2: Oh three level BBDXY twelve thirty.

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Speaker 1: Six, All of a sudden resilient dollar.

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Speaker 2: Is that part of the America first story?

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Speaker 9: Well, look, you don't necessarily need the currency going in

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Speaker 9: your direction in order for the US to do well.

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Speaker 9: I think part of it also is the visibility that

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Speaker 9: you have on the US is actually quite good. The

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Speaker 9: US consumer is holding in there quite well, even in

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Speaker 9: the face of job openings coming down in some rebalance

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Speaker 9: in the labor market. So the US just has more

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Speaker 9: strength to it, and we think that's what the margin

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Speaker 9: a relatively good thing.

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Speaker 2: So you inter meeting with retailer high net worth individuals

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Speaker 2: with Voya and they go, we own eighty five five

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Speaker 2: percent of our portfolios Apple.

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Speaker 1: What else do we do?

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Speaker 2: Come on, we all own Apple, and as an outrage,

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Speaker 2: what do we do after Apple?

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Speaker 9: Well, the good news is when you saw some like

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Speaker 9: relatively good news on the debt ceiling yesterday, you saw

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Speaker 9: some of those other parts of the market that haven't

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Speaker 9: done relatively well start to pick up. So midcaps, small caps,

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Speaker 9: even real estate investment trust yesterday did a bit better.

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Speaker 1: Exxon is a mid cap in case you're.

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Speaker 9: Taking announce John, But I would say the thing is

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Speaker 9: if you can see some broadening of the leadership, that

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Speaker 9: is a relatively good thing. But you've had now a

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Speaker 9: leadership across the entire globe, right, So what's been doing

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Speaker 9: well over the past five months has been US tech

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Speaker 9: and European luxury goods, right, So seeing a broadening out

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Speaker 9: of the strength of the market is a good sign.

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Speaker 6: Just to be glad. Do you expect that to continue

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Speaker 6: that boarding out?

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Speaker 10: We would certainly hope.

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Speaker 9: So the inflation data in the US we think is

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Speaker 9: likely to go our way, and we also see that

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Speaker 9: potentially getting through this debt sealing problem is good. I

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Speaker 9: would note if the US economy tends to be too strong,

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Speaker 9: or if the inflation data starts to break higher, that

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Speaker 9: goes right in the face of how we're positioned in

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Speaker 9: our portfolios. But we think at least for the next

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Speaker 9: couple of months, things are going to go our way.

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Speaker 6: Just to be super super clear and specific here, we

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Speaker 6: know the most crowded triads at least indicated by the

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Speaker 6: Bank of American Film Manager Survey, long tech short banks. Right,

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Speaker 6: are you leaning in the other direction?

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Speaker 11: Then?

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Speaker 9: Look, I think you've got to be a real, real

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Speaker 9: brave person to buy the banks at this point. But

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Speaker 9: remember we're top down global, so I'm not making sector decisions,

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Speaker 9: compositioning more in terms of countries and in terms of

442
00:21:27,280 --> 00:21:30,399
Speaker 9: style tilts. So, but we think that the US is

443
00:21:30,440 --> 00:21:32,359
Speaker 9: probably the strongest place to be. I mean, you know,

444
00:21:32,400 --> 00:21:35,439
Speaker 9: at this point, thinking about the rest of the world,

445
00:21:35,520 --> 00:21:37,440
Speaker 9: the only other place that I would probably really think

446
00:21:37,440 --> 00:21:40,320
Speaker 9: about allocating to might be parts of Japan because it

447
00:21:40,320 --> 00:21:42,800
Speaker 9: looks like it's so cheap and it has a big

448
00:21:42,840 --> 00:21:45,440
Speaker 9: benefit to it from the currency at this point.

449
00:21:45,480 --> 00:21:47,440
Speaker 10: But for US, the US is probably the place to be.

450
00:21:47,680 --> 00:21:49,479
Speaker 8: Just to tie this conversation back to what we were

451
00:21:49,480 --> 00:21:53,480
Speaker 8: speaking about with Max Kettner of HSBC earlier, he was saying,

452
00:21:53,600 --> 00:21:56,080
Speaker 8: it's not really a sector kind of market, it's and

453
00:21:56,119 --> 00:21:58,320
Speaker 8: everything on or everything off kind of market. This is

454
00:21:58,320 --> 00:22:01,520
Speaker 8: why acid allocators are their hair out right now. Are

455
00:22:01,520 --> 00:22:04,160
Speaker 8: you finding that it's the same thing, but it's country

456
00:22:04,200 --> 00:22:07,960
Speaker 8: specific everything on in one country or one region everything

457
00:22:08,000 --> 00:22:09,040
Speaker 8: off in that region.

458
00:22:09,200 --> 00:22:12,480
Speaker 9: Yeah, I think it's more regional probably than specific countries.

459
00:22:12,560 --> 00:22:16,000
Speaker 9: Right these markets can be very thin. When you have

460
00:22:16,080 --> 00:22:18,520
Speaker 9: narrow leadership, you have to be on the right side

461
00:22:18,520 --> 00:22:21,120
Speaker 9: of pretty much everything. It's very difficult to go into

462
00:22:21,520 --> 00:22:23,760
Speaker 9: risk on and risk off positions. You have to really

463
00:22:23,800 --> 00:22:26,280
Speaker 9: pick where you see the best visibility, and the best

464
00:22:26,359 --> 00:22:28,240
Speaker 9: visibility for our part is.

465
00:22:28,240 --> 00:22:29,960
Speaker 10: In the US right now.

466
00:22:30,280 --> 00:22:33,480
Speaker 8: Is big tech sort of a necessary play within that

467
00:22:33,480 --> 00:22:35,920
Speaker 8: that basically you have to kind of ride the big

468
00:22:35,960 --> 00:22:38,600
Speaker 8: tech wave, and that's basically what's going to distinguish the

469
00:22:38,720 --> 00:22:39,840
Speaker 8: US from the rest of the world.

470
00:22:40,080 --> 00:22:42,040
Speaker 9: Well, we think that big tech actually did a couple

471
00:22:42,080 --> 00:22:44,639
Speaker 9: of things right. Also, remember last year all of the

472
00:22:44,720 --> 00:22:48,200
Speaker 9: layoff headlines were in big tech firms, right, So big

473
00:22:48,240 --> 00:22:52,320
Speaker 9: tech took a very big view in terms of trying

474
00:22:52,320 --> 00:22:54,960
Speaker 9: to right size some of their cost measurements for the

475
00:22:55,119 --> 00:22:58,359
Speaker 9: difficult investment environment that specifically that segment of the market

476
00:22:58,400 --> 00:22:59,359
Speaker 9: was feeling last year.

477
00:22:59,720 --> 00:23:01,639
Speaker 10: So they took some of their medicine early.

478
00:23:02,040 --> 00:23:04,080
Speaker 9: And then of course they have the benefit of this

479
00:23:04,119 --> 00:23:05,680
Speaker 9: whole AI big.

480
00:23:05,480 --> 00:23:06,879
Speaker 10: Boom that's going on right now.

481
00:23:07,720 --> 00:23:11,520
Speaker 9: So look, could tech take a breather, Absolutely, But I

482
00:23:11,560 --> 00:23:14,199
Speaker 9: would say that probably the best part of it is

483
00:23:14,240 --> 00:23:16,359
Speaker 9: the dynamics for them are probably a bit stronger than

484
00:23:16,400 --> 00:23:18,280
Speaker 9: the rest of because they took their medicine last year.

485
00:23:18,320 --> 00:23:20,960
Speaker 2: I'm looking to a small cap United Health Group and

486
00:23:21,000 --> 00:23:24,840
Speaker 2: everybody keeps talking medicine, medicine, medical health, whatever the sector

487
00:23:24,920 --> 00:23:27,919
Speaker 2: categories are. Is that part of an American play.

488
00:23:28,600 --> 00:23:32,320
Speaker 9: Look, small caps have really been beaten down post sv base.

489
00:23:32,440 --> 00:23:34,960
Speaker 10: Small caps have really taken it on the chin.

490
00:23:35,920 --> 00:23:38,280
Speaker 9: You probably need to get some of these recession fears

491
00:23:38,320 --> 00:23:41,000
Speaker 9: off of the table in order to go very long small.

492
00:23:40,800 --> 00:23:43,960
Speaker 2: What about medical across small mid and large cap as well.

493
00:23:44,080 --> 00:23:46,159
Speaker 9: Again, I can't talk to sectors that we don't invest

494
00:23:46,160 --> 00:23:46,960
Speaker 9: that way in our funds.

495
00:23:49,440 --> 00:23:50,720
Speaker 1: You can't talk sectors.

496
00:23:51,000 --> 00:23:54,520
Speaker 9: I can't. I really we invest more so in terms

497
00:23:54,600 --> 00:23:57,399
Speaker 9: of top down global macro. Look, I do think that

498
00:23:57,440 --> 00:24:00,360
Speaker 9: there are I can't talk United, I can talk health care,

499
00:24:00,359 --> 00:24:01,320
Speaker 9: I can talk utilities.

500
00:24:01,320 --> 00:24:02,639
Speaker 10: I can talk technology.

501
00:24:02,720 --> 00:24:05,760
Speaker 2: I don't want yousar United, but talk to me about medicine, healthcare.

502
00:24:05,760 --> 00:24:08,240
Speaker 1: We're all getting older, we are going to work.

503
00:24:08,320 --> 00:24:08,439
Speaker 8: Well.

504
00:24:08,480 --> 00:24:09,359
Speaker 10: Look at the place.

505
00:24:10,080 --> 00:24:11,800
Speaker 9: Look at the cover of the Financial Times. It was

506
00:24:11,920 --> 00:24:14,879
Speaker 9: all of this morning about you know that you have

507
00:24:14,920 --> 00:24:18,080
Speaker 9: to right size pensions, public pensions because you have an

508
00:24:18,119 --> 00:24:21,000
Speaker 9: aging population. If it's not healthcare, I don't know where

509
00:24:21,000 --> 00:24:21,400
Speaker 9: it is.

510
00:24:21,760 --> 00:24:23,480
Speaker 6: That we got the answer to your question.

511
00:24:23,600 --> 00:24:25,600
Speaker 1: It took like four questions to get it over.

512
00:24:26,080 --> 00:24:26,919
Speaker 6: Sorry, I don't know, Bob.

513
00:24:28,560 --> 00:24:32,119
Speaker 10: We'll get tough crowd this morning.

514
00:24:35,720 --> 00:24:38,280
Speaker 2: Give us perspective here working with Dana Telsea always as

515
00:24:38,359 --> 00:24:42,680
Speaker 2: Joseph Feldman, just really quite good Terse Terse reports.

516
00:24:43,119 --> 00:24:43,679
Speaker 1: What did you do?

517
00:24:43,880 --> 00:24:45,600
Speaker 2: I mean, let's get out front of your research. I

518
00:24:45,640 --> 00:24:48,159
Speaker 2: need to front run you and Dana this morning. Do

519
00:24:48,280 --> 00:24:51,400
Speaker 2: you change your view on Walmart with this optimism we're

520
00:24:51,400 --> 00:24:52,840
Speaker 2: getting in the last hour.

521
00:24:54,160 --> 00:24:55,080
Speaker 1: I don't think so.

522
00:24:55,240 --> 00:24:57,399
Speaker 12: I think you want to stick with Walmart here, especially

523
00:24:57,440 --> 00:25:00,199
Speaker 12: in the environment where we're in at the moment, and

524
00:25:00,240 --> 00:25:02,280
Speaker 12: you know, we're hearing from so many of the retailers

525
00:25:02,320 --> 00:25:04,560
Speaker 12: that there's a lot more concern about the second quarter,

526
00:25:04,960 --> 00:25:07,000
Speaker 12: concern about the economy, what it's going to look like

527
00:25:07,040 --> 00:25:11,280
Speaker 12: in the second half, and for times, Walmart tens to shine.

528
00:25:11,440 --> 00:25:14,159
Speaker 2: Data was legendary Bergdorf Goodman as a kid, she was

529
00:25:14,200 --> 00:25:16,800
Speaker 2: like twelve years old, and if somebody who's caught shoplifting,

530
00:25:17,040 --> 00:25:20,440
Speaker 2: they had the babysit Danta, you know, for years. Joe

531
00:25:20,400 --> 00:25:24,400
Speaker 2: Feldman on shrink, on the theft we saw with Target yesterday.

532
00:25:24,720 --> 00:25:26,359
Speaker 1: Is there a shrink at Walmart?

533
00:25:28,040 --> 00:25:31,080
Speaker 12: Yeah, there's absolutely shrink happening at Walmart. They haven't called

534
00:25:31,119 --> 00:25:33,679
Speaker 12: it out quite the same way Target has, but you know,

535
00:25:33,760 --> 00:25:38,159
Speaker 12: all the retailers are dealing with the shrink issue, the theft,

536
00:25:38,320 --> 00:25:41,800
Speaker 12: organized crime. It's a big deal, and I think it's

537
00:25:41,800 --> 00:25:43,800
Speaker 12: a big part of the equation for a lot of

538
00:25:43,800 --> 00:25:47,080
Speaker 12: the retailers. It's a big number, maybe less as a

539
00:25:47,119 --> 00:25:50,280
Speaker 12: percentage of the overall total sales for Walmart, but the

540
00:25:50,400 --> 00:25:52,679
Speaker 12: dollar amount might be as high or if not higher,

541
00:25:53,000 --> 00:25:55,320
Speaker 12: I would think at a Walmart relative to Target. And

542
00:25:55,359 --> 00:25:57,359
Speaker 12: it's not just these two. Again, this is a cross

543
00:25:57,400 --> 00:26:00,359
Speaker 12: retail and the retailers really need to work work with

544
00:26:00,760 --> 00:26:04,000
Speaker 12: local authorities to find ways to try to stop this

545
00:26:04,240 --> 00:26:07,080
Speaker 12: because the current way to do it is you have

546
00:26:07,119 --> 00:26:08,960
Speaker 12: to lock down a lot of products in the stores

547
00:26:09,000 --> 00:26:11,680
Speaker 12: and it makes it for not the great shopping experience

548
00:26:11,680 --> 00:26:14,159
Speaker 12: for the consumer. It really feels uncomfortable for those that

549
00:26:14,600 --> 00:26:16,760
Speaker 12: are not there for theft, they just want to buy stuff.

550
00:26:17,160 --> 00:26:19,119
Speaker 8: Putting that aside and giving the fact that this is

551
00:26:19,160 --> 00:26:22,840
Speaker 8: going to be a policy consideration going forward, there is

552
00:26:22,880 --> 00:26:25,320
Speaker 8: a question about what period we're in. You said these

553
00:26:25,359 --> 00:26:27,720
Speaker 8: times that we're in, what times are we in? Are

554
00:26:27,720 --> 00:26:30,199
Speaker 8: they at one of strength with the consumer having spending

555
00:26:30,240 --> 00:26:31,159
Speaker 8: power or not.

556
00:26:32,640 --> 00:26:36,680
Speaker 12: So it's been very confusing. We're getting lots of mixed signals.

557
00:26:37,080 --> 00:26:41,160
Speaker 12: We believe the consumer is a bit stronger than most

558
00:26:41,880 --> 00:26:45,479
Speaker 12: belit may otherwise believe. The reason I say that is

559
00:26:45,880 --> 00:26:51,600
Speaker 12: you're seeing spending on consumables, household essentials, basic items. People

560
00:26:51,600 --> 00:26:54,639
Speaker 12: are keeping their food on the table and keeping the

561
00:26:54,640 --> 00:26:57,879
Speaker 12: house running. At the same time, you're continuing to see

562
00:26:58,520 --> 00:27:05,639
Speaker 12: increases in sales dining out entertainment, going to sporting events, travel,

563
00:27:05,920 --> 00:27:10,000
Speaker 12: all of those service oriented economy is still actually doing

564
00:27:10,080 --> 00:27:12,920
Speaker 12: fairly well. I do think we're going to see spending

565
00:27:13,200 --> 00:27:17,199
Speaker 12: slow a bit, broadly speaking, but those pockets of the

566
00:27:17,240 --> 00:27:20,840
Speaker 12: economy right now would sort of indicate that the consumer

567
00:27:21,359 --> 00:27:23,480
Speaker 12: still has some money to spend.

568
00:27:23,840 --> 00:27:24,080
Speaker 6: Now.

569
00:27:24,680 --> 00:27:27,240
Speaker 12: I agree, they're not spending on discretionary goods, and we

570
00:27:27,320 --> 00:27:29,560
Speaker 12: don't expect that to pick up much this year. I

571
00:27:29,600 --> 00:27:31,919
Speaker 12: think you're going to see more of the same where

572
00:27:32,320 --> 00:27:34,280
Speaker 12: and then you could start to parse it out by

573
00:27:34,320 --> 00:27:37,200
Speaker 12: income level, where the higher income people are the ones

574
00:27:37,240 --> 00:27:40,040
Speaker 12: that are really spending on the services the load to

575
00:27:40,080 --> 00:27:42,800
Speaker 12: middle income they're the ones just focus on getting food

576
00:27:42,840 --> 00:27:45,280
Speaker 12: on the table, keeping the household afloat.

577
00:27:45,560 --> 00:27:48,760
Speaker 8: In Walmart's earnings, it's kind of a microcosm of the

578
00:27:48,800 --> 00:27:50,720
Speaker 8: broader story. At a lot of fronts, you've got people

579
00:27:50,760 --> 00:27:54,719
Speaker 8: who are downshifting perhaps to grocery, and grocery certainly does

580
00:27:54,800 --> 00:27:57,959
Speaker 8: account for a significant amount of volume, but the profit

581
00:27:58,000 --> 00:28:00,480
Speaker 8: really comes from the other areas, and you can see

582
00:28:00,480 --> 00:28:02,600
Speaker 8: that the margin is expanding there like it is at

583
00:28:02,640 --> 00:28:05,240
Speaker 8: other companies as well. In other words, the imput prices

584
00:28:05,280 --> 00:28:07,639
Speaker 8: that they experience they can pass that all along and

585
00:28:07,680 --> 00:28:10,480
Speaker 8: then some and consumers will keep buying and buying more

586
00:28:10,520 --> 00:28:14,040
Speaker 8: than expected. How long can this last that they actually

587
00:28:14,160 --> 00:28:17,119
Speaker 8: just can increase their profit margins and just expect the

588
00:28:17,160 --> 00:28:19,160
Speaker 8: consumer will eat the price increase.

589
00:28:20,280 --> 00:28:22,960
Speaker 12: I think what we're seeing a lot of the profit

590
00:28:23,000 --> 00:28:26,479
Speaker 12: margin increase from Walmart and some of the others, it

591
00:28:26,520 --> 00:28:30,639
Speaker 12: actually relates to greater efficiencies and getting better leverage. And

592
00:28:30,680 --> 00:28:33,719
Speaker 12: if you look at comparisons from a year ago, supply

593
00:28:33,840 --> 00:28:37,560
Speaker 12: chain costs through the roof, those have come down pretty significantly,

594
00:28:37,600 --> 00:28:40,760
Speaker 12: so that is providing some cushion. I think, you know,

595
00:28:40,840 --> 00:28:44,600
Speaker 12: as far as food and consumables and basics go, Walmart

596
00:28:45,040 --> 00:28:48,200
Speaker 12: especially passes things through pretty quickly. So as prices have

597
00:28:48,240 --> 00:28:51,360
Speaker 12: been moderating, which we're hearing inflation is starting to moderate

598
00:28:51,400 --> 00:28:53,040
Speaker 12: on that side, they're passing that through.

599
00:28:53,520 --> 00:28:56,240
Speaker 2: Joe c Ifa one oh one, you got a single

600
00:28:56,320 --> 00:29:00,040
Speaker 2: digit nomenal GDP grower. They're bringing pennies down to the

601
00:29:00,080 --> 00:29:03,800
Speaker 2: bottom line. And I'm joining enjoying a forward view on

602
00:29:03,960 --> 00:29:07,760
Speaker 2: Walmart of a twenty four multiple. You got to be

603
00:29:08,000 --> 00:29:11,840
Speaker 2: kidding me, how do you, really, with great respect, how

604
00:29:11,840 --> 00:29:16,280
Speaker 2: do you and Dana adapt to a twenty four multiple

605
00:29:16,760 --> 00:29:19,840
Speaker 2: on the biggest aircraft carry in the water going through

606
00:29:19,840 --> 00:29:22,120
Speaker 2: the water at four knots.

607
00:29:22,680 --> 00:29:27,440
Speaker 12: Well, it's a big aircraft carrier that's becoming sleeker. They're

608
00:29:27,920 --> 00:29:35,040
Speaker 12: doing more with higher margin businesses advertising online. They're transforming there.

609
00:29:34,800 --> 00:29:37,480
Speaker 12: They're kind of meeting in the middle with Amazon. If

610
00:29:37,480 --> 00:29:39,760
Speaker 12: you think about it, think about the valuation that Amazon

611
00:29:39,800 --> 00:29:42,680
Speaker 12: trades at. You know, Walmart has gotten a lot more

612
00:29:42,720 --> 00:29:45,400
Speaker 12: efficient with their online business. They've grown that they have

613
00:29:45,440 --> 00:29:48,959
Speaker 12: a marketplace very much like Amazon, which is highly profitable.

614
00:29:49,800 --> 00:29:52,760
Speaker 12: They've got more third party sellers coming on. So there's

615
00:29:52,800 --> 00:29:56,120
Speaker 12: a lot that Walmart's doing to kind of borrow from

616
00:29:56,160 --> 00:29:59,880
Speaker 12: the Amazon playbook that would argue that they are becoming

617
00:30:00,080 --> 00:30:04,480
Speaker 12: a more dominant and more important retailer, building their ecosystem

618
00:30:04,640 --> 00:30:08,840
Speaker 12: in more profitable ways and therefore require or what Warren

619
00:30:09,040 --> 00:30:11,320
Speaker 12: maybe not require, but Warren's a higher valuation.

620
00:30:11,640 --> 00:30:13,760
Speaker 6: Interesting. JII, We've got to leave it that, Thank you, sir.

621
00:30:14,000 --> 00:30:16,240
Speaker 6: I've found that that's how seafans recruit.

622
00:30:26,760 --> 00:30:30,160
Speaker 2: Who does give me information as James bionco president and

623
00:30:30,160 --> 00:30:34,000
Speaker 2: founder of Bianco Research, who does a really allegic effort

624
00:30:34,080 --> 00:30:36,960
Speaker 2: here on economics and dovetailing it into the state we're

625
00:30:36,960 --> 00:30:40,360
Speaker 2: in and then, as John mentioned, there's the debt and

626
00:30:40,400 --> 00:30:43,400
Speaker 2: the deficit. I read Hail Bronner Bernstein years ago, just

627
00:30:43,440 --> 00:30:46,440
Speaker 2: the Bible on all the sum of our fears here.

628
00:30:46,680 --> 00:30:48,880
Speaker 2: How a fear are you of the debt debate?

629
00:30:49,320 --> 00:30:52,160
Speaker 11: I'm probably more aligned with Wall Street. I mean, there's

630
00:30:52,200 --> 00:30:55,000
Speaker 11: two types of people when you talk about the debt debate.

631
00:30:55,400 --> 00:30:58,280
Speaker 11: There's those put it in Bloomberg terms that Anne Marie

632
00:30:58,280 --> 00:31:00,240
Speaker 11: Harton would interview, that would tell you there's a forty

633
00:31:00,320 --> 00:31:02,480
Speaker 11: or fifty percent chance that we're going to default. And

634
00:31:02,520 --> 00:31:04,080
Speaker 11: then there's the Wall Street types that will tell you

635
00:31:04,160 --> 00:31:06,360
Speaker 11: that there's a three or four percent chance that we're

636
00:31:06,400 --> 00:31:08,400
Speaker 11: going to default. I'm probably in the three or four

637
00:31:08,440 --> 00:31:10,920
Speaker 11: percent chance that we're actually going to see a default.

638
00:31:10,920 --> 00:31:12,960
Speaker 11: We're going to see a lot of political theater. And

639
00:31:13,040 --> 00:31:16,400
Speaker 11: I think what the markets heard from Speaker McCarthy the

640
00:31:16,440 --> 00:31:20,680
Speaker 11: other day was that the President has appointed somebody to

641
00:31:20,760 --> 00:31:23,080
Speaker 11: negotiate with him. So that means we're going to get

642
00:31:23,080 --> 00:31:25,800
Speaker 11: a deal. And I think that a deal is largely

643
00:31:25,800 --> 00:31:28,240
Speaker 11: expected in the market, and if there was not a deal,

644
00:31:28,640 --> 00:31:29,680
Speaker 11: that would be the surprise.

645
00:31:29,880 --> 00:31:32,040
Speaker 6: So there's a market call to make as well. In

646
00:31:32,120 --> 00:31:35,840
Speaker 6: that what is your market call around the story.

647
00:31:35,840 --> 00:31:37,120
Speaker 3: You mean around the debt ceiling.

648
00:31:37,280 --> 00:31:39,680
Speaker 6: Well, if you believe it's not price, then you also

649
00:31:39,800 --> 00:31:42,480
Speaker 6: believe you acknowledge to some degree there is some risk here.

650
00:31:42,560 --> 00:31:43,080
Speaker 3: There is risk.

651
00:31:43,160 --> 00:31:45,200
Speaker 11: Do you think that risk is I think, well, I

652
00:31:45,240 --> 00:31:48,200
Speaker 11: think that risk is really in the short term bill market,

653
00:31:48,800 --> 00:31:52,040
Speaker 11: and I think that that risk is potentially in the

654
00:31:52,080 --> 00:31:57,000
Speaker 11: banking system. Remember that treasury bills treasury securities are used

655
00:31:57,000 --> 00:31:59,280
Speaker 11: as reserves. That's a fancy way saying there are another

656
00:31:59,320 --> 00:32:02,400
Speaker 11: form of money, is what they are. And if we

657
00:32:02,400 --> 00:32:04,880
Speaker 11: were to default on those, we would throw the banking

658
00:32:04,920 --> 00:32:08,880
Speaker 11: system into complete chaos because their reserves that they use

659
00:32:08,920 --> 00:32:11,280
Speaker 11: would no longer be worth anything, at least for the

660
00:32:11,360 --> 00:32:13,760
Speaker 11: day or two or three or however long we didn't

661
00:32:13,800 --> 00:32:16,880
Speaker 11: pay them. That's the risk that you would face if

662
00:32:16,920 --> 00:32:19,600
Speaker 11: we were to have a default. And there is a

663
00:32:19,680 --> 00:32:24,680
Speaker 11: risk out there right now that if this negotiation falls apart.

664
00:32:25,160 --> 00:32:27,160
Speaker 11: I don't think it will, but that is your risk.

665
00:32:27,240 --> 00:32:29,800
Speaker 11: So you've got to use a fancy word, any symmetric risk.

666
00:32:29,880 --> 00:32:32,360
Speaker 11: If there's a deal, there's gonna be very little movement

667
00:32:32,360 --> 00:32:35,400
Speaker 11: in the market. If there isn't a deal, we're going

668
00:32:35,480 --> 00:32:36,920
Speaker 11: to have to reprice the markets.

669
00:32:36,920 --> 00:32:39,960
Speaker 6: Then whether it's a problem the FED has a solution. Typically,

670
00:32:40,240 --> 00:32:41,320
Speaker 6: do they have a solution for that?

671
00:32:41,680 --> 00:32:44,200
Speaker 11: I don't think they do, nor do I think they should.

672
00:32:44,400 --> 00:32:47,640
Speaker 11: This is a political issue, is what this is. We

673
00:32:47,720 --> 00:32:52,080
Speaker 11: elected congressmen and senators to represent us, and if they're

674
00:32:52,120 --> 00:32:55,000
Speaker 11: in their infamite wisdom decide to represent us by defaulting

675
00:32:55,040 --> 00:32:56,840
Speaker 11: on its debt, we'd have to figure that out.

676
00:32:57,160 --> 00:32:59,520
Speaker 6: If that becomes a market functioning issue, doesn't the FEED

677
00:32:59,600 --> 00:33:00,800
Speaker 6: have a role to play?

678
00:33:00,840 --> 00:33:03,720
Speaker 11: It does to some extent, but you also have to

679
00:33:03,720 --> 00:33:06,080
Speaker 11: be careful that you're not undoing the will of Congress.

680
00:33:06,080 --> 00:33:08,720
Speaker 11: Where where does one and the other? That's why I

681
00:33:08,760 --> 00:33:12,080
Speaker 11: think that this will get resolved because it is all

682
00:33:12,120 --> 00:33:15,480
Speaker 11: on Congress. If this happens, if we have a debt default,

683
00:33:15,760 --> 00:33:17,560
Speaker 11: it is not on the FED for mitigating it.

684
00:33:18,000 --> 00:33:20,000
Speaker 8: What's the next crisis? Then? If this gets off the

685
00:33:20,000 --> 00:33:22,800
Speaker 8: crisis off the table, then what do people focus on next?

686
00:33:23,000 --> 00:33:24,680
Speaker 11: Well, I think we go back to focusing on the

687
00:33:24,680 --> 00:33:26,960
Speaker 11: banking crisis. And I think we go back to focusing

688
00:33:27,000 --> 00:33:29,800
Speaker 11: on you know, go back to the Senior Loan Officer survey.

689
00:33:29,960 --> 00:33:34,000
Speaker 11: Do we see lending you know, tighten up and continue

690
00:33:34,000 --> 00:33:37,600
Speaker 11: to tighten up? And do we see problems then metastasized

691
00:33:37,640 --> 00:33:40,160
Speaker 11: because lending is going to continue to tighten. And then

692
00:33:40,200 --> 00:33:42,720
Speaker 11: I think the other one would probably be, if you know,

693
00:33:42,800 --> 00:33:45,240
Speaker 11: going with my forecast, do we see a bottom of

694
00:33:45,320 --> 00:33:48,640
Speaker 11: inflation this summer, and then does the FED come up

695
00:33:48,680 --> 00:33:51,720
Speaker 11: short of their target and does all the talk of

696
00:33:52,080 --> 00:33:54,400
Speaker 11: cuts in the funds rate by the end of the

697
00:33:54,480 --> 00:33:55,520
Speaker 11: year kind of go away?

698
00:33:55,720 --> 00:33:57,720
Speaker 8: Do you feel like people are exhausted by the pessimism

699
00:33:57,800 --> 00:33:59,720
Speaker 8: that they've heard the sky is falling for so long

700
00:33:59,800 --> 00:34:02,080
Speaker 8: and it hasn't happened, that they're basically tuning it out

701
00:34:02,080 --> 00:34:04,360
Speaker 8: and basically saying, yeah, yeah, yeah, you've been wrong, which

702
00:34:04,400 --> 00:34:07,120
Speaker 8: is basically some of the messaging that I keep hearing.

703
00:34:07,360 --> 00:34:09,480
Speaker 8: How much is that really kind of prevailing?

704
00:34:09,800 --> 00:34:09,960
Speaker 2: Oh?

705
00:34:10,080 --> 00:34:12,400
Speaker 11: I think it's prevailing quite a bit. I mean, you know,

706
00:34:12,400 --> 00:34:14,120
Speaker 11: it goes all the way back to the pandemic, when

707
00:34:14,120 --> 00:34:16,719
Speaker 11: we had the ultimate pessimism we were all going to die,

708
00:34:16,840 --> 00:34:19,279
Speaker 11: that was what we had for the pandemic, and then

709
00:34:19,360 --> 00:34:22,000
Speaker 11: we all didn't die, so and then we've kind of

710
00:34:22,040 --> 00:34:26,239
Speaker 11: recovered it's yell from that. So yeah, I mean, I

711
00:34:26,239 --> 00:34:28,160
Speaker 11: think there's a lot of frustration. I'll go back to

712
00:34:28,200 --> 00:34:31,160
Speaker 11: what I said earlier. The markets haven't done anything. So

713
00:34:31,520 --> 00:34:33,759
Speaker 11: no one is right, no one is wrong. You know,

714
00:34:33,800 --> 00:34:36,680
Speaker 11: the optimists are still waiting for the breakout and the

715
00:34:36,680 --> 00:34:39,799
Speaker 11: pessimists are still waiting for the breakdown, and that this

716
00:34:40,280 --> 00:34:42,760
Speaker 11: just continues in the frustration continues to build.

717
00:34:42,880 --> 00:34:45,319
Speaker 8: If there is no debt ceiling default, right, and we

718
00:34:45,360 --> 00:34:48,239
Speaker 8: do have that sense by the next FED meeting, and

719
00:34:48,280 --> 00:34:50,839
Speaker 8: we don't really have a sense of ongoing stress that's

720
00:34:50,880 --> 00:34:54,319
Speaker 8: really coming to a head in the banking system. How

721
00:34:54,400 --> 00:34:57,080
Speaker 8: much of a disruptive force would fedbee if they actually

722
00:34:57,120 --> 00:34:58,960
Speaker 8: did hike rates at the June meeting.

723
00:34:59,160 --> 00:35:01,520
Speaker 11: Oh, I think they would be a hugely disruptive force

724
00:35:02,600 --> 00:35:05,880
Speaker 11: if they If they continued to hike rates, they would

725
00:35:06,360 --> 00:35:09,279
Speaker 11: exacerbate the bank walk. I mean, this is becoming the

726
00:35:09,360 --> 00:35:12,040
Speaker 11: national pastime right now, is pullet your phone and brag

727
00:35:12,040 --> 00:35:14,440
Speaker 11: about your money market fund. It's no longer about a

728
00:35:14,480 --> 00:35:19,080
Speaker 11: mean stock anymore. And that would just exacerbate that and

729
00:35:19,160 --> 00:35:23,200
Speaker 11: at higher rates will then definitely filter through in the economy.

730
00:35:23,239 --> 00:35:25,479
Speaker 11: I'm county for one that still thinks that rates matter

731
00:35:25,760 --> 00:35:27,359
Speaker 11: and that if the FED wants to raise I know

732
00:35:27,400 --> 00:35:30,919
Speaker 11: that's a wild thought, yeah, but if the FED wants

733
00:35:30,920 --> 00:35:33,280
Speaker 11: to raise rates, it's going to really hurt the economy.

734
00:35:33,320 --> 00:35:36,040
Speaker 2: Band was everybody modeling a six percent money market fund

735
00:35:36,440 --> 00:35:37,760
Speaker 2: I mean, imagine that.

736
00:35:37,719 --> 00:35:40,120
Speaker 8: We actually think Lindsay pigs I was talking about a

737
00:35:40,160 --> 00:35:42,640
Speaker 8: six percent fed funds rate still on the table, even

738
00:35:42,680 --> 00:35:45,040
Speaker 8: though everyone's taking that off and then triple over cat.

739
00:35:46,080 --> 00:35:48,000
Speaker 1: Thank you it's worked out well.

740
00:35:48,080 --> 00:35:50,040
Speaker 2: You had a two and twenty payout last year this year,

741
00:35:50,080 --> 00:35:53,160
Speaker 2: I don't think we're gonna do it. Ralphankaport, you're a CMT.

742
00:35:53,400 --> 00:35:55,759
Speaker 2: You want to adore Ralphank. I know he was on

743
00:35:55,800 --> 00:36:00,520
Speaker 2: the show and Ralph said October was the SPX bearmark low.

744
00:36:00,880 --> 00:36:05,479
Speaker 2: We're up fourteen percent SPX off the Akompoor low.

745
00:36:06,040 --> 00:36:07,480
Speaker 1: That to me is stunning.

746
00:36:07,640 --> 00:36:11,120
Speaker 2: Nobody's talking about this, and a lot of people missed

747
00:36:11,160 --> 00:36:13,040
Speaker 2: this lift off this low, didn't they.

748
00:36:13,160 --> 00:36:15,839
Speaker 11: Yes, so we've for six months and fourteen percent off

749
00:36:15,920 --> 00:36:17,680
Speaker 11: the low. But I would also say, if you wanted

750
00:36:17,719 --> 00:36:20,160
Speaker 11: to back up and look at the January high, we've

751
00:36:20,160 --> 00:36:21,439
Speaker 11: only retraced half story.

752
00:36:21,560 --> 00:36:23,040
Speaker 1: Get me on my story here. Don't give me this

753
00:36:23,120 --> 00:36:25,200
Speaker 1: technical analysis stuff. Go with the story.

754
00:36:25,320 --> 00:36:27,520
Speaker 11: Yeah, you know, the market has lifted off the low,

755
00:36:27,560 --> 00:36:29,319
Speaker 11: but what I'm saying is it's still well away from

756
00:36:29,360 --> 00:36:33,399
Speaker 11: the highs and it's been reandering sideways. So you know,

757
00:36:33,680 --> 00:36:36,040
Speaker 11: I see a market without a conclusion right now in

758
00:36:36,120 --> 00:36:39,000
Speaker 11: terms of the sideways. It's waiting to see what comes next.

759
00:36:39,040 --> 00:36:41,239
Speaker 2: Remember the first time you read John Maggie, this is

760
00:36:41,280 --> 00:36:44,000
Speaker 2: a textbook, John, written in nineteen forty something. You read

761
00:36:44,040 --> 00:36:47,160
Speaker 2: Maggie and a support and support and resistance in the

762
00:36:47,200 --> 00:36:49,920
Speaker 2: bottom line, John is you can make up any story

763
00:36:49,920 --> 00:36:50,360
Speaker 2: you want.

764
00:36:50,520 --> 00:36:52,680
Speaker 1: So I got a story. I'm coming from the October

765
00:36:52,719 --> 00:36:55,000
Speaker 1: low and the smart guy over here is going no,

766
00:36:55,160 --> 00:36:57,000
Speaker 1: you got to bring it back further. And it's not

767
00:36:57,120 --> 00:37:00,239
Speaker 1: that glorious of a story. Technical analysis stock tr by

768
00:37:00,320 --> 00:37:00,920
Speaker 1: John Maggie.

769
00:37:00,920 --> 00:37:03,279
Speaker 6: So my favorite story right now, allow me to share

770
00:37:03,280 --> 00:37:05,720
Speaker 6: it with you. I can get behind this bill in Washington,

771
00:37:05,800 --> 00:37:08,239
Speaker 6: d C. There no pay for Congress during default or

772
00:37:08,239 --> 00:37:12,000
Speaker 6: shut down act. It's doesn't that sound great? Awesome?

773
00:37:12,280 --> 00:37:13,200
Speaker 1: Who's a sponsor?

774
00:37:13,600 --> 00:37:20,240
Speaker 6: The sponsor Representatives Abigail Spenberger Democrat, Virginia Bran Fitzpatrick Republican Pennsylvania.

775
00:37:20,520 --> 00:37:23,000
Speaker 6: Love that, Love that. So this is what NBC is saying.

776
00:37:23,000 --> 00:37:26,160
Speaker 6: A bipartisan bill set to be unveiled today with block

777
00:37:26,239 --> 00:37:28,520
Speaker 6: members of Congress from getting paid off. The US Center's

778
00:37:28,560 --> 00:37:30,680
Speaker 6: debt default or if the government shuts down. I think

779
00:37:30,680 --> 00:37:33,120
Speaker 6: we're all on board, which means one thing. If we're

780
00:37:33,120 --> 00:37:35,440
Speaker 6: all on board, they certainly aren't down in Congress.

781
00:37:36,200 --> 00:37:38,520
Speaker 8: This is revenge of the middle, this is revenge of

782
00:37:38,520 --> 00:37:41,279
Speaker 8: the sentences. Right, it's revenge of the guys. What are

783
00:37:41,280 --> 00:37:43,760
Speaker 8: we doing here trying to gain political points in holding

784
00:37:43,760 --> 00:37:45,920
Speaker 8: the US's future in hand?

785
00:37:46,000 --> 00:37:47,920
Speaker 6: Can you get behind that, gym Oh, of course I

786
00:37:48,000 --> 00:37:48,800
Speaker 6: can get behind that.

787
00:37:48,920 --> 00:37:50,319
Speaker 11: I think we should go with when we hit the

788
00:37:50,320 --> 00:37:52,319
Speaker 11: debt ceiling and retroactively stop paying him.

789
00:37:52,320 --> 00:37:55,160
Speaker 6: Since January, I've said all along, just pairm and tee bills,

790
00:37:55,880 --> 00:37:56,600
Speaker 6: pam T boats.

791
00:37:56,640 --> 00:37:58,960
Speaker 11: Pay them in January first, t bulls in January eighth,

792
00:37:59,000 --> 00:37:59,759
Speaker 11: T bulls.

793
00:38:00,120 --> 00:38:00,480
Speaker 8: To do that.

794
00:38:00,600 --> 00:38:03,160
Speaker 6: I want leader in the Eurozone debt crisis. They should.

795
00:38:03,400 --> 00:38:06,640
Speaker 6: They should have been paid in in BTPs and in

796
00:38:06,760 --> 00:38:12,680
Speaker 6: Greek debt. Pay the German politicians in Greek debt. Thanks quick.

797
00:38:12,760 --> 00:38:16,200
Speaker 2: The most important masters Bamberger is x Cia and she

798
00:38:16,320 --> 00:38:19,520
Speaker 2: won her primary fifty to forty eight percent.

799
00:38:20,000 --> 00:38:22,040
Speaker 1: She's in the middle, and that's what the middle of

800
00:38:22,080 --> 00:38:22,759
Speaker 1: Americas think.

801
00:38:22,800 --> 00:38:25,680
Speaker 6: Hey Jim, this is great. Love it you, jimp Boncov Research.

802
00:38:25,840 --> 00:38:29,680
Speaker 2: Subscribe to the Bloomberg Surveillance Podcast on Apple, Spotify, and

803
00:38:29,800 --> 00:38:34,000
Speaker 2: anywhere else you get your podcasts. Listen live every weekday,

804
00:38:34,280 --> 00:38:37,759
Speaker 2: starting at seven am Eastern, on Bloomberg dot Com, the

805
00:38:37,920 --> 00:38:42,440
Speaker 2: iHeartRadio app tune In, and the Bloomberg Business app. You

806
00:38:42,480 --> 00:38:46,520
Speaker 2: can watch us live on Bloomberg Television and always I'm

807
00:38:46,520 --> 00:38:47,600
Speaker 2: the Bloomberg Terminal.

808
00:38:48,000 --> 00:38:52,200
Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg