WEBVTT - Traders Price in CPI and Trump's Tariff Pause 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.160 us live on YouTube. 0:00:27.400 --> 0:00:30.320 We're up on CPI. I can think of no major 0:00:30.400 --> 0:00:35.000 economic report that I've ignored the last number of days 0:00:35.120 --> 0:00:39.160 like this important inflation study. Greg Bottle of BMP, Perry 0:00:39.240 --> 0:00:41.440 Bob will be with us. Tiffany Wild will really give 0:00:41.520 --> 0:00:45.760 us direction her wonderful work at PIMCO. But first, with 0:00:45.840 --> 0:00:49.080 his incredible schedule, we had to squeeze in your Patrick Armstrong, 0:00:49.080 --> 0:00:52.680 He's plurring me wealth for years with Templeton in Toronto, 0:00:52.720 --> 0:00:56.360 which is a magical place for me. Patrick Armstrong in 0:00:56.400 --> 0:00:59.640 the United Kingdom, thank you so much for joining us today. 0:01:00.200 --> 0:01:02.960 Are we at a point where the foreigners won't buy 0:01:03.600 --> 0:01:09.399 American stocks and bonds? Is something radically changed here? I 0:01:09.400 --> 0:01:10.520 don't you. 0:01:10.520 --> 0:01:13.200 Say won't, but I do think the winds are pushing 0:01:13.319 --> 0:01:17.959 against it, and Trump's tariffs are going to carve out 0:01:18.040 --> 0:01:21.039 some economic winds in the short term because Europe isn't 0:01:21.040 --> 0:01:23.440 going to respond immediately. To the tariffs that have been 0:01:23.480 --> 0:01:25.920 put on them. But they it is a risk for 0:01:25.959 --> 0:01:29.840 the United States that you've got global trade xus and 0:01:30.160 --> 0:01:32.480 it turns into that kind of thing. And there's going 0:01:32.520 --> 0:01:35.479 to be really strong rhetoric from the White House because 0:01:35.520 --> 0:01:37.840 they know that's a real risk that they just get 0:01:37.920 --> 0:01:42.880 basically disintermediated and their dollar becomes disintermediated. Is the global 0:01:42.920 --> 0:01:46.360 reserve currency if you push things to extremes. So I 0:01:46.400 --> 0:01:50.360 do think there's risks for this. I'm confident Trump is 0:01:50.400 --> 0:01:52.560 going to carve oute some economic wins from this, but 0:01:52.600 --> 0:01:55.320 I think the consequences maybe far greater, and it may 0:01:55.360 --> 0:01:57.480 be a sort of backhanded win for Europe and the 0:01:57.520 --> 0:01:58.200 rest of the world. 0:01:58.240 --> 0:02:00.840 Even let's get out of the front of Tiffany Wilder. 0:02:01.040 --> 0:02:04.160 We want to talk to you Patrick. After this inflation report, 0:02:04.800 --> 0:02:08.959 the Jobs Economy analysis waits for May or June. Does 0:02:09.000 --> 0:02:12.920 this CPI report a current measure of inflation? 0:02:14.560 --> 0:02:17.080 Well, it's last month, and we're in a different world, 0:02:17.200 --> 0:02:20.360 and some months go by and nothing happens. Some days 0:02:20.400 --> 0:02:22.600 go by, and months and years happen, and that's where 0:02:22.600 --> 0:02:25.079 it feels like we are right now. The one thing 0:02:25.120 --> 0:02:27.560 the CPAI may be able to do is it may 0:02:27.560 --> 0:02:31.279 give Powell an excuse to cut rates. He'll view transitory 0:02:31.320 --> 0:02:35.440 inflation as transitory, and he does have inflation probably on 0:02:35.480 --> 0:02:38.000 a downward trend with this print, so it may give 0:02:38.080 --> 0:02:40.239 him the impetus if he wants to to cut a 0:02:40.280 --> 0:02:42.520 little bit more aggressively, where his hands may be tied 0:02:42.600 --> 0:02:45.840 later in the year if we do have stagflationary consequences. 0:02:46.480 --> 0:02:49.160 Patrick, where are you on the risk profile here? We've 0:02:49.200 --> 0:02:51.680 had just such a volatile number of days, capped by 0:02:51.760 --> 0:02:55.000 yesterday's big, big rally, but boy, we had to vix 0:02:55.040 --> 0:02:57.440 it close to sixty just a couple of days ago. 0:02:57.480 --> 0:02:59.240 Where are you going to risk profile these days? 0:02:59.800 --> 0:03:02.000 So I don't think it's a time to be a hero, 0:03:02.120 --> 0:03:04.800 but it was the time to incrementally increase equities. We 0:03:04.880 --> 0:03:07.400 decided on Monday, So we had a bad Tuesday when 0:03:07.400 --> 0:03:10.760 we added it, but had a really nice bounce yesterday. 0:03:10.880 --> 0:03:14.520 And anytime you're buying equities after a twenty percent sell off, 0:03:14.960 --> 0:03:18.200 you're skewing the odds to your favor. And what we 0:03:18.240 --> 0:03:20.359 looked at the VIX when it was at sixty, we said, 0:03:20.360 --> 0:03:22.480 the only two times it's been like that before was 0:03:22.480 --> 0:03:25.560 the COVID crash, and the financial crisis and the VIX 0:03:25.600 --> 0:03:28.440 at sixty on Monday. This was a man made crisis 0:03:28.480 --> 0:03:31.400 and we knew and about turn could be not the 0:03:31.520 --> 0:03:34.119 end of the crisis, but really diminished the risks there. 0:03:34.120 --> 0:03:36.360 And that's why we felt a little bit confident to 0:03:36.400 --> 0:03:38.920 add risk. We actually started shorting a VIX in our 0:03:38.920 --> 0:03:41.640 macro fund on Monday with that premise. 0:03:41.760 --> 0:03:45.200 Patrick Armstrong with us here for one more good question, Patrick, 0:03:45.320 --> 0:03:47.880 just to cut to the chase. If I see the 0:03:48.000 --> 0:03:54.280 shock of a negative statistic ONCPI, is that China exporting 0:03:54.840 --> 0:03:57.640 deflation there? 0:03:57.680 --> 0:03:59.680 Actually I hadn't thought about it, but for that one 0:03:59.760 --> 0:04:03.400 month there may have been a big jump in Chinese 0:04:03.480 --> 0:04:06.120 imports at lower prices. Is China wanted to get them 0:04:06.120 --> 0:04:07.920 into the US buyers wanted to get them in the 0:04:07.960 --> 0:04:10.440 head of tariffs, and that may have been a bit 0:04:10.440 --> 0:04:13.800 of a disinflationary and deflationary impact that's come out of it. 0:04:14.920 --> 0:04:17.000 Powell's going to treat it how he wants to treat it. 0:04:17.000 --> 0:04:19.480 It may give him the excuse to cut a little 0:04:19.480 --> 0:04:22.360 bit more than he would have otherwise. So I think 0:04:22.440 --> 0:04:25.039 if you are an equity bull, you'll welcome this news. 0:04:25.120 --> 0:04:27.640 I mean, it's interesting see Patrick, one final question. We 0:04:27.680 --> 0:04:29.680 can do this, folks when we're coming to your commercial 0:04:29.720 --> 0:04:33.359 free has ede done at Tottenham? I mean Tottenham is 0:04:33.360 --> 0:04:35.919 not going to be relegated, but I mean it's pretty ugly. 0:04:36.000 --> 0:04:36.719 What do you think. 0:04:37.320 --> 0:04:40.000 I'm a Man United fan and that's the only team 0:04:40.040 --> 0:04:43.520 that's doing as poorly as we are, so right, yeah, 0:04:43.600 --> 0:04:45.680 I can't throw stones when I live in a glasshouse. 0:04:45.920 --> 0:04:49.520 Comfort is Man United and Tottenham go down in flames 0:04:50.080 --> 0:04:53.120 this year. Patrick Armstrong, thank you so much from London. 0:04:53.160 --> 0:04:56.080 We'll get him on again for a much longer discussion. 0:04:56.440 --> 0:04:59.080 Now to the economics of the moment. Greg Bodill, be 0:04:59.120 --> 0:05:02.160 MP Pariba with it, cinemam of a Tiffany wild of 0:05:02.200 --> 0:05:07.520 Pimco was a Tiffany month over month? Is that negative statistic? 0:05:07.640 --> 0:05:13.760 Simply this crazy tariff driven wall of unit import volume. 0:05:16.880 --> 0:05:19.040 Well, just having a quick look at some of the details, 0:05:19.040 --> 0:05:23.040 it actually looked like the services side of the goods basket, 0:05:23.200 --> 0:05:25.479 or of the consumer price basket was was what was 0:05:25.480 --> 0:05:27.880 weaker in this report. And I think that that just 0:05:27.920 --> 0:05:32.000 really speaks to the broader uncertainty that we had, you know, 0:05:32.040 --> 0:05:34.839 even before these latest news. This latest news, So travel 0:05:34.880 --> 0:05:39.400 services categories hotels, airfares. You know, people are There's been 0:05:39.440 --> 0:05:41.720 a lot of anecdotal reports about how you know, folks 0:05:41.760 --> 0:05:44.240 that were thinking about traveling to the United States are 0:05:44.680 --> 0:05:45.799 canceling those plans. 0:05:46.080 --> 0:05:46.440 Yeah. 0:05:46.480 --> 0:05:48.080 So I think it's it's a little bit of a 0:05:48.080 --> 0:05:51.640 calm before the storm, and you had heighther uncertainty that 0:05:51.760 --> 0:05:54.719 was reducing demand for services in the US. 0:05:54.839 --> 0:05:57.400 The tape improves. The VIX was up three big figures 0:05:57.440 --> 0:06:00.040 now up to thirty five point five to three. The 0:06:00.360 --> 0:06:02.760 futures of negative seventy seven, they were a negative one 0:06:02.880 --> 0:06:05.520 hundred here a bit agoes, So a little better tape. 0:06:05.560 --> 0:06:10.040 Is that because Tiffany this gives talking points or chat 0:06:10.240 --> 0:06:14.240 for Jerown Powell to ease rates without the pressure from 0:06:14.279 --> 0:06:14.880 the president. 0:06:16.800 --> 0:06:19.520 Yeah, well, I mean we still think there will be 0:06:19.600 --> 0:06:22.479 a price level adjustment that will have to happen. On 0:06:22.520 --> 0:06:25.320 the good side, you know, there will be some pass 0:06:25.400 --> 0:06:27.880 through from this, and I think the question is just 0:06:28.000 --> 0:06:29.080 how big will that be? 0:06:30.040 --> 0:06:30.240 You know? 0:06:30.240 --> 0:06:32.920 And then the other question on that is is how 0:06:33.040 --> 0:06:36.080 much weakness do you see on the services side of 0:06:36.120 --> 0:06:39.960 the economy as a result of these actions, you know 0:06:40.000 --> 0:06:43.360 that are impacting the prices of goods and you know, 0:06:43.360 --> 0:06:46.600 maybe what this CPI suggests is that you will have 0:06:46.680 --> 0:06:50.440 a weakening economy on the services side that will contain 0:06:50.480 --> 0:06:54.440 some of this inflationary pressure that obviously will allow the 0:06:54.440 --> 0:06:57.240 Fed and make it less awkward for the Fed whenever 0:06:57.240 --> 0:06:58.240 they're cutting interest rates. 0:06:58.240 --> 0:07:01.200 Tiffany, have you guys over there go taking down your 0:07:01.200 --> 0:07:03.159 GDP forecast for twenty twenty five. 0:07:03.000 --> 0:07:06.160 And if so, why we think there's a fifty to 0:07:06.200 --> 0:07:09.240 fifty chance of recession. You know, and even with this 0:07:09.360 --> 0:07:12.000 latest reprieve. You know, if you just take a step back, 0:07:12.160 --> 0:07:16.040 the effective tariff rate in the United States, just assuming 0:07:16.040 --> 0:07:19.120 that imports stay unchanged, has gone back to levels that 0:07:19.160 --> 0:07:21.320 we have not seen since the nineteen thirties. And that's 0:07:21.360 --> 0:07:24.520 even with this ninety day reprieve. So you have a 0:07:24.720 --> 0:07:27.880 very big tear off shock that is impacting the US economy. 0:07:28.440 --> 0:07:30.400 And we do think there will be some disruption on that, 0:07:31.000 --> 0:07:33.480 you know, over the near term, and that will slow 0:07:33.520 --> 0:07:36.080 growth quite dramatically. And again we think there's kind of 0:07:36.080 --> 0:07:38.440 a fifty to fifty chance of recession here. We think 0:07:38.480 --> 0:07:40.400 growth grinds to a halt later this year. 0:07:40.560 --> 0:07:43.080 One of the great distinction here, folks, and I think 0:07:43.120 --> 0:07:46.280 in the chaos that we're living. I need to partition this. 0:07:46.440 --> 0:07:51.240 Tiffany Wilding is with specific investment management company PIMCO, and 0:07:51.320 --> 0:07:56.920 a responsibility is to a broad asset manager versus a 0:07:57.080 --> 0:08:01.200 market economists and frankly, derivatives expert like Greg Boudele. So 0:08:01.240 --> 0:08:05.000 we get two different not views, but two different mandates. 0:08:05.000 --> 0:08:07.160 Here from BNP Perry Bay with us in a bit, 0:08:07.560 --> 0:08:10.280 and right now we stay with Tiffany wild Here we 0:08:10.280 --> 0:08:14.760 welcome all of you across the nation. Frankly, futures worsened 0:08:14.800 --> 0:08:17.640 out off the joy of twenty of five minutes ago. 0:08:17.680 --> 0:08:20.560 I got the vix out two point seven seven figures 0:08:20.600 --> 0:08:25.320 thirty six point thirty nine. Tiffany, if you've seen it, 0:08:25.320 --> 0:08:27.000 and I don't want you to give away the secrets 0:08:27.000 --> 0:08:30.200 of PIMCOH But is it sort of steady as she 0:08:30.320 --> 0:08:33.920 goes as they listen to you, the managers, or is 0:08:33.960 --> 0:08:37.079 this a time for a radical reset of PIMCO. 0:08:40.600 --> 0:08:43.640 Well, you know what I think that we have. You know, 0:08:43.679 --> 0:08:46.000 we have been arguing. I think we've been on the 0:08:46.320 --> 0:08:49.760 right side of the recent volatility, you know, because we 0:08:49.760 --> 0:08:53.960 were arguing like late last year that the markets just 0:08:54.040 --> 0:08:58.000 you know, weren't focused enough on the sort of radical 0:08:58.160 --> 0:09:01.000 changes that the Trump administration was taught about, you know, 0:09:01.040 --> 0:09:04.240 and I think that they've been actually quite clear about 0:09:04.360 --> 0:09:07.760 what they're trying to do. And I think everybody was 0:09:08.000 --> 0:09:12.280 just focused on various constraints, whether political, economic, or even 0:09:12.360 --> 0:09:16.439 legal constraints that would maybe impin their ability to implement 0:09:16.480 --> 0:09:19.040 their policy. But they've just blown through all those constraints 0:09:19.200 --> 0:09:21.599 and you are seeing the president basically do what he 0:09:21.640 --> 0:09:24.280 said he would do on the campaign trail. You know, 0:09:24.280 --> 0:09:27.480 we think the ten percent tariff across the board, you know, 0:09:27.559 --> 0:09:31.240 that's that's sticking, higher tariffs on China is sticking. I mean, 0:09:31.280 --> 0:09:34.160 we are you know, they are very effectively trying to 0:09:34.200 --> 0:09:37.120 decouple the US economy from China. And that's exactly what 0:09:37.160 --> 0:09:39.160 they said they would do, you know, And so I think, 0:09:39.240 --> 0:09:40.280 you know, take them literally. 0:09:40.600 --> 0:09:43.600 So Tiffany, I mean, we report a lot of stuff 0:09:43.640 --> 0:09:46.320 from China and a big tariff there. What does that 0:09:46.360 --> 0:09:47.560 mean for inflation for the US? 0:09:47.600 --> 0:09:48.000 Do you think? 0:09:49.920 --> 0:09:50.160 Yeah? 0:09:50.240 --> 0:09:51.800 I mean, we do think there's going to be a 0:09:51.800 --> 0:09:55.480 big price level adjustment that happens as a result of this, 0:09:56.160 --> 0:09:59.000 you know. Now, I think from the CPI report this morning, 0:09:59.200 --> 0:10:01.640 you know, one thing that it does suggest is that 0:10:01.720 --> 0:10:05.439 even if you're getting getting goods prices that are being 0:10:05.480 --> 0:10:08.400 set higher as some of the cost at least is 0:10:08.400 --> 0:10:11.120 passed on to consumers, the services side, you know, might 0:10:11.120 --> 0:10:13.800 be weakening at the same time offsetting that. So I 0:10:13.800 --> 0:10:16.600 think it's you know, again, how much price level adjustment 0:10:16.640 --> 0:10:18.480 we get here? I think is the key question for 0:10:18.520 --> 0:10:20.439 the next you know, call it six months and in. 0:10:20.400 --> 0:10:22.920 Folks, unfair question Like if you asked me this question, 0:10:23.000 --> 0:10:25.720 you saw me, you know, having a beverage of my choice, 0:10:25.720 --> 0:10:28.120 and you said Tom when I'd say, I don't know. 0:10:28.280 --> 0:10:32.240 So let's as Tiffany Wilding. When Tiffany Wilding, when does 0:10:32.280 --> 0:10:38.280 the slow down of tariffs at Walmart, tariffs at Duke's bookstore? 0:10:38.480 --> 0:10:41.199 When we got to we gotta text, somebody said, stop 0:10:41.240 --> 0:10:45.000 talking about Duke. We're double in the Duke conversation right 0:10:45.040 --> 0:10:48.800 now this morning, Tiffany Wilder, When for the consumer, does 0:10:48.800 --> 0:10:50.240 all this agony click in? 0:10:53.400 --> 0:10:53.679 Yeah? 0:10:53.800 --> 0:10:55.600 I mean, you know, I think it's clicking in for 0:10:55.720 --> 0:10:59.959 businesses already and they're trying to figure out what to do. 0:11:00.840 --> 0:11:03.320 And I think that you will have, you know, you 0:11:03.320 --> 0:11:05.920 will have to have businesses that are raising prices at 0:11:06.000 --> 0:11:08.360 least somewhat. It will be you know, there will be 0:11:08.440 --> 0:11:12.160 margin compression, there will be and there will be price 0:11:12.240 --> 0:11:15.760 increases and that will hit the consumer because they will 0:11:15.800 --> 0:11:18.600 their real incomes will just go down as a result 0:11:18.679 --> 0:11:22.640 of that. So so I think you will see consumers 0:11:23.040 --> 0:11:24.600 that are are getting hit from this. You know. The 0:11:24.640 --> 0:11:27.240 other thing is just it's creating a lot of uncertainty. 0:11:28.200 --> 0:11:30.600 You know, people could be more fearful of their jobs 0:11:30.920 --> 0:11:32.679 and things like that, and that could just result in 0:11:33.080 --> 0:11:35.160 more of a general pullback and consumption as well. 0:11:35.320 --> 0:11:38.520 Good morning Montreal. Major shout out to Bears and the 0:11:38.559 --> 0:11:42.640 team at Bank Credit Analyst. It's like ed your Danny CJ. 0:11:42.760 --> 0:11:46.080 Lawrence with Edheiman years ago. B c A is venerable 0:11:46.120 --> 0:11:49.040 and Paul they had a chart on labor yesterday yeh 0:11:49.200 --> 0:11:53.520 out of BCA that was just shocking the rapid deterioration. 0:11:53.880 --> 0:11:56.560 Tiffany Wild, thank you so much. Great to talk to 0:11:56.559 --> 0:11:59.760 you on this day of CPI. The tape was a 0:12:00.120 --> 0:12:02.760 VIX was up three big figures. We had a little 0:12:02.760 --> 0:12:06.120 bit of a Paul would say, quiescent move here. We've 0:12:06.160 --> 0:12:08.400 given it back a little bit. The VICS thirty six 0:12:08.400 --> 0:12:11.160 point four or five future is now back negative one hundred. 0:12:11.200 --> 0:12:14.880 This is standard in Poores futures negative one hundred. John 0:12:14.880 --> 0:12:17.560 Farrell tells me the Dow futures negative six oh eight 0:12:17.920 --> 0:12:22.240 are worth noting as well. Even bitdog down one thousand, 0:12:22.280 --> 0:12:25.360 down twelve hundred points rather eighty one thousand. There's a 0:12:25.360 --> 0:12:28.480 little bit of tension here to say the least. We 0:12:28.480 --> 0:12:33.400 welcome all of you on YouTube worldwide, including in Paris 0:12:33.480 --> 0:12:36.959 Bloomberg Surveillance. It's brought to you by ibk R. Well 0:12:36.960 --> 0:12:41.160 the US consumer Sentiment Index. Will it exceed seventy in 0:12:41.200 --> 0:12:46.720 April twenty twenty five at IBKR forecast Trader that yes, 0:12:46.960 --> 0:12:50.880 was recently at twenty nine percent. Start predicting today at 0:12:50.880 --> 0:12:54.880 ibkr dot com slash forecast. Last trading day for this 0:12:54.960 --> 0:13:01.080 contract May thirteen. Thank you IBKR for your support this. 0:13:01.320 --> 0:13:04.880 I've really anticipated this because Greg Battle takes equity strategy, 0:13:05.360 --> 0:13:08.240 folds it into the derivative space, wraps it around a 0:13:08.280 --> 0:13:13.520 true international view for the bank Pariba is that like 0:13:13.559 --> 0:13:16.040 the French way to say it, They'll come closer. 0:13:16.320 --> 0:13:17.640 My French isn't outstanding. 0:13:17.679 --> 0:13:19.720 If I'm honest, they have the best lunch in Manhattan, 0:13:19.800 --> 0:13:22.679 is what I know. Please advise us here how you 0:13:22.760 --> 0:13:27.120 prepare for a Monday research note. A completely unfair question. 0:13:27.160 --> 0:13:29.720 It could change three times. But how are you framing 0:13:29.760 --> 0:13:32.000 the tone of your weekend note? 0:13:32.080 --> 0:13:33.800 Well, I think you have to be prepared to write 0:13:33.800 --> 0:13:35.959 to it and then rewrite it three times in between 0:13:36.000 --> 0:13:37.600 now and then. So I think the thing that which 0:13:37.600 --> 0:13:39.880 one I do is put in context some of the 0:13:39.920 --> 0:13:42.280 moves around, some of the flows, and then think about 0:13:42.280 --> 0:13:44.559 some of the headline risks. But then ultimately, how does 0:13:44.600 --> 0:13:46.679 that translate into what we're going to see over earning season? 0:13:47.520 --> 0:13:51.319 Okay, earning season, it's tomorrow, right, ye, indeed, come out. 0:13:51.360 --> 0:13:53.320 We don't have I guess we sort of do on 0:13:53.400 --> 0:13:56.640 this earning season, but there'll be no guidance. 0:13:56.240 --> 0:13:59.400 Right, No, So I think like the backwards looking data, 0:13:59.480 --> 0:14:02.080 whether it's this we've just seen payrolls from last week 0:14:02.200 --> 0:14:04.800 or the earnings prints themselves, hold little value I. 0:14:04.720 --> 0:14:05.440 Think at this point. 0:14:05.480 --> 0:14:09.360 But any qualitative read commentary tone from management is going 0:14:09.440 --> 0:14:10.600 to be looked at very closely. 0:14:11.360 --> 0:14:14.120 So what did you see on your trading desk? What 0:14:14.160 --> 0:14:16.160 did you hear from your clients over the last I 0:14:16.200 --> 0:14:19.040 don't know twenty four to forty eight hours, because yesterday 0:14:19.040 --> 0:14:21.360 it was just crazy. The bond market the night before 0:14:22.360 --> 0:14:23.840 was just incredible. 0:14:23.960 --> 0:14:26.520 Do you know you can't get hired at BMP Periba 0:14:27.000 --> 0:14:31.080 unless you know all the Greek letters Gamma, that's what 0:14:31.120 --> 0:14:34.920 I want, the row derivative, sam, the whole thing. 0:14:35.040 --> 0:14:37.240 So we think some of those Greek letters were certainly 0:14:37.320 --> 0:14:40.800 responsible for some of the magnitude of the moves yesterday. 0:14:41.040 --> 0:14:43.480 So obviously the move itself is triggered by the headline 0:14:43.480 --> 0:14:45.960 of the tweet, but the magnitude of that move is 0:14:46.080 --> 0:14:47.800 driven by the fact that we do have a short 0:14:47.880 --> 0:14:50.240 Gamma complex in the market. What this means is that 0:14:50.280 --> 0:14:53.440 there's rehadging needs for when the market moved both lower 0:14:53.480 --> 0:14:53.920 and hyer. 0:14:54.440 --> 0:14:57.120 I opened the show this morning on this people got 0:14:57.160 --> 0:14:59.360 to go out and rehatch folks. You and I are 0:14:59.480 --> 0:15:01.600 not you know, and we're trying to pay the rent. 0:15:01.920 --> 0:15:06.200 But in the institutional space, people are protecting themselves and 0:15:06.240 --> 0:15:10.480 now it's so expensive to protect yourself you really can't 0:15:10.520 --> 0:15:12.240 reheedge Kenya. How you doing that? Well? 0:15:12.240 --> 0:15:14.320 I do you think there are opportunities to use the 0:15:14.360 --> 0:15:16.600 optionality complex? We look at the headline levels of the 0:15:16.640 --> 0:15:18.640 vics and certainly where it peaked and they got incredibly 0:15:18.640 --> 0:15:21.600 elevated but one anecdote that I would give you, Please, 0:15:21.800 --> 0:15:24.440 at the close yesterday, you could look at the Nasdaq 0:15:24.560 --> 0:15:28.920 and the market options implied probability of it getting back 0:15:28.960 --> 0:15:31.200 down to yesterday's lows by the end of next week 0:15:31.320 --> 0:15:33.960 was more than a ten to one payout. So I 0:15:34.000 --> 0:15:36.320 think there are interesting asymmetries that you can find. 0:15:37.200 --> 0:15:40.680 So where where did you see on your desk yesterday 0:15:40.760 --> 0:15:44.040 the buying or where did you see the activity yesterday? 0:15:44.400 --> 0:15:47.480 There were different pockets, so we have an active positioning 0:15:47.520 --> 0:15:50.680 indicated the tracks institutional positioning, and it got to absolutely 0:15:50.760 --> 0:15:54.000 washed out levels before yesterday, So institutional position is very clean. 0:15:54.240 --> 0:15:57.040 But what we have seen is just consistent dip buying 0:15:57.040 --> 0:15:59.240 more from the retail complex. So if you look at 0:15:59.280 --> 0:16:02.840 net ETF flows in the US yesterday, you saw more 0:16:02.840 --> 0:16:05.480 than ten billion of inflows on the day. At the 0:16:05.520 --> 0:16:08.640 same time, some of these rebalancing flows that we've talked 0:16:08.680 --> 0:16:10.760 about have been a dominant force in the market. So 0:16:10.800 --> 0:16:12.880 we think there was more than fifty five billion driven 0:16:13.080 --> 0:16:14.960 purely from the short gamma complex yesterday. 0:16:15.120 --> 0:16:20.560 Short gamma. We have seen institutional capitalization in positioning. I've 0:16:20.600 --> 0:16:22.320 been trading for forty years. I have no idea what 0:16:22.360 --> 0:16:23.040 that means? What does that mean? 0:16:23.120 --> 0:16:25.200 Yeah, So in terms of capitulation in positioning, you know, 0:16:25.280 --> 0:16:28.680 we track various metrics. Some of the systematic funds are 0:16:28.680 --> 0:16:31.920 easier to track, things like CTAs. We know that those 0:16:32.360 --> 0:16:35.720 funds moved to a net short position volatility target that 0:16:35.800 --> 0:16:39.200 manage capital based on the levels of volatility have become 0:16:39.240 --> 0:16:41.800 extremely de risked. But you can also look at things 0:16:41.840 --> 0:16:44.240 like hedge fund positioning. You can use things like the 0:16:44.240 --> 0:16:46.640 safetyc Future's data. You can see that there has been 0:16:46.680 --> 0:16:47.560 a massive degrossing. 0:16:47.960 --> 0:16:53.000 Okay, there's been a massive build degrossing. Okay, great, But 0:16:53.120 --> 0:16:55.880 the answer is where's the blood in the streets? Without 0:16:55.920 --> 0:16:57.640 getting it. I don't want to mention names here, that's 0:16:57.680 --> 0:17:01.040 not appropriate. But when somebody has the cliche there's blood 0:17:01.040 --> 0:17:03.640 in the streets, where do you and B ANDP Bury 0:17:03.680 --> 0:17:06.400 boss suggest there's been some real DiMAGE. 0:17:06.640 --> 0:17:08.440 Well, I would say that actually, like when we think 0:17:08.480 --> 0:17:12.480 about the US equity market, and particularly the volatility market, 0:17:12.520 --> 0:17:14.400 it has been maybe a little bit more orderly than 0:17:14.400 --> 0:17:16.439 it seems on the surface. So when we look at 0:17:16.440 --> 0:17:19.600 our positioning indicator, it had been trending down a long 0:17:19.680 --> 0:17:23.080 way prior to the tariff announcements, and we think about 0:17:23.080 --> 0:17:25.800 this announcement. Nobody was expecting the magnitude of the moves, 0:17:25.960 --> 0:17:28.800 but this was an unknown in terms of a catalyst 0:17:28.800 --> 0:17:30.879 that we do think people will hedged for. So when 0:17:30.960 --> 0:17:33.520 you look at the Thursday move, I think that's quite 0:17:33.520 --> 0:17:36.920 indicative of actually a calmer options market than you would expect. 0:17:37.040 --> 0:17:39.320 We got a big move higher in the VIX Thursday, 0:17:39.640 --> 0:17:41.720 but what we do is we look at the size 0:17:41.720 --> 0:17:43.919 of the VIX move relative to the size of the 0:17:44.000 --> 0:17:46.239 S and P move, And in normal calm markets, what 0:17:46.280 --> 0:17:47.600 you see as the VIS go up one and a 0:17:47.600 --> 0:17:49.840 half points for every one percent decline in US and 0:17:49.840 --> 0:17:52.040 Peer and that's actually what we saw on Thursday. You 0:17:52.080 --> 0:17:54.360 compare that to other pockets of risk, and that move 0:17:54.400 --> 0:17:55.360 is much more explosive. 0:17:55.680 --> 0:17:57.520 You and folks stay with us here on this. There's 0:17:57.520 --> 0:17:59.320 a little bit of jargon we're doing here, but we're 0:17:59.359 --> 0:18:05.520 thrilled bole bmp periba with us. You were cautious in 0:18:05.560 --> 0:18:09.879 the bull market emotion of the recent year or two 0:18:10.040 --> 0:18:12.760 or three, and now we've got the market back to 0:18:12.800 --> 0:18:15.840 a Greg Boudle level. H do we now have an 0:18:15.920 --> 0:18:19.520 equity value in the market where we're now where you 0:18:19.680 --> 0:18:22.960 always thought we'd be, or do you need to see 0:18:22.960 --> 0:18:26.240 some catharsis here to really step in long I. 0:18:26.160 --> 0:18:28.880 Think it really depends on ultimately, what do you think 0:18:28.880 --> 0:18:31.960 the growth outlook is. So if you believe that this 0:18:32.119 --> 0:18:35.560 volatility and this newsflow in terms of tariff isn't going 0:18:35.600 --> 0:18:39.280 to derail the growth outlook, then a twenty percent correction, 0:18:39.320 --> 0:18:41.240 which is where we got kind of highs to lows, 0:18:41.359 --> 0:18:44.520 is it the extreme of what you get without a recession. However, 0:18:44.560 --> 0:18:46.440 when we start looking at where do we think earnings 0:18:46.440 --> 0:18:48.080 could be this year, if you've got a two to 0:18:48.119 --> 0:18:50.720 fifty five number four S ANDP earnings, that's a five 0:18:50.720 --> 0:18:53.560 percent year of year growth that's not overly bearish. Put 0:18:53.600 --> 0:18:55.480 that on an eighteen times multiple that would get you 0:18:55.520 --> 0:18:58.120 around forty five hundred. So I'm not sure that there's 0:18:58.160 --> 0:19:01.359 a really obvious value case to make for US equities here. 0:19:01.280 --> 0:19:03.359 Do you have a belief in European equities? 0:19:03.560 --> 0:19:04.840 So I think one of the things we saw at 0:19:04.840 --> 0:19:07.679 the start of the year before this episode of volatility 0:19:07.840 --> 0:19:11.160 was that there was undoubtedly rotation starting to happen from 0:19:11.400 --> 0:19:14.560 US into the rest of the world. Now, clearly what 0:19:14.640 --> 0:19:16.720 has happened in terms of trade and tariff has derailed 0:19:16.720 --> 0:19:18.880 that in the short term. If we do get back 0:19:18.920 --> 0:19:22.720 to a more stable market, then I do think there 0:19:22.760 --> 0:19:25.800 is potential for that rotation to continue, but not whilst 0:19:25.800 --> 0:19:27.760 we're in a volatility environment such as this. 0:19:27.800 --> 0:19:30.360 All right, Greg, Tom, I if we take the Bloomberg 0:19:30.400 --> 0:19:32.640 surveillance show over to London, do we do a day 0:19:32.640 --> 0:19:34.400 trip to South End on Sea? 0:19:34.480 --> 0:19:36.720 I think it would be extremely What do we do there? 0:19:38.000 --> 0:19:39.919 I think you would take a walk down the seafront. 0:19:40.280 --> 0:19:43.040 Maybe you go and try and catch a game, have 0:19:43.080 --> 0:19:44.359 a bear a. 0:19:44.320 --> 0:19:46.639 Great south it's on the estuary, Tom, it is on 0:19:46.680 --> 0:19:48.440 the Thames yesterday, Thames River. 0:19:48.960 --> 0:19:50.800 It's out past Charles Dickens place. 0:19:50.680 --> 0:19:52.320 I think so. I mean it looks great. I'm look 0:19:52.320 --> 0:19:53.960 at it right here and that's where it great's from. 0:19:53.960 --> 0:19:56.120 So I figured we'd ask a local here, take a. 0:19:56.040 --> 0:19:57.000 Walk down the pair. 0:19:57.400 --> 0:20:00.600