WEBVTT - Bloomberg Surveillance TV: September 19, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.280 Terminal and the Bloomberg Business app. Gargy Shawdry of Black 0:00:37.360 --> 0:00:40.600 Rock writing this mid term volatility aside, this will create 0:00:40.640 --> 0:00:43.760 a fabulous opportunity for investors to move out from cash 0:00:43.800 --> 0:00:45.320 and lock in yield and the belly of the curve 0:00:45.400 --> 0:00:48.120 for equities. A brief pullback is likely, but eventually a 0:00:48.200 --> 0:00:50.960 rake Cunning cycle that ends without a recession tends to 0:00:51.040 --> 0:00:54.080 bode well for stocks. Gage joined us for more. Gargiy, 0:00:54.120 --> 0:00:56.280 Good monic, Good morning. Imagine you've had tons of cours. 0:00:56.440 --> 0:00:58.800 I'm sitting in cash, the cup fifty on where they're 0:00:58.800 --> 0:01:00.680 going again and again, again and again? 0:01:00.840 --> 0:01:02.160 What do I take? What do I take? 0:01:02.640 --> 0:01:07.280 You step out of cash? I think that the signs 0:01:07.480 --> 0:01:10.679 that this FED meeting showed us all beyond the twenty 0:01:10.720 --> 0:01:14.160 five to fifty debate hawkish not hawkish, et cetera. Once 0:01:14.200 --> 0:01:16.520 we go past all of that, I think one thing 0:01:16.600 --> 0:01:19.240 is clear. This is a FED that is going to 0:01:19.640 --> 0:01:22.000 that is willing to surprise the market, that is going 0:01:22.040 --> 0:01:24.200 to do what it thinks it needs to do to 0:01:24.360 --> 0:01:26.920 make sure that the labor market and the broader economy 0:01:26.959 --> 0:01:30.440 remains strong. And they will cut fifty basis points and 0:01:30.480 --> 0:01:33.200 maybe another fifty more or perhaps even more than that 0:01:33.240 --> 0:01:36.800 if they need to while growth remains solid. Right, while 0:01:37.000 --> 0:01:40.119 growth remains at two percent, And that is an amazing 0:01:40.160 --> 0:01:43.960 opportunity to own risk assets. So own risk assets in 0:01:44.000 --> 0:01:47.720 the fixingcume markets, own fixed assets or risk assets in 0:01:48.120 --> 0:01:51.400 the equity markets. I think seasonalities can get a little 0:01:51.400 --> 0:01:53.400 bit tough, but this is a great time to step 0:01:53.440 --> 0:01:53.840 out of cash. 0:01:53.960 --> 0:01:55.960 Let's break cut the asset classes. To start with bonds. 0:01:56.000 --> 0:01:57.960 We'll move to stocks in fixed income. When you say 0:01:58.000 --> 0:02:00.200 take risk in fixed in cup and bonds, what do 0:02:00.240 --> 0:02:00.520 you mean? 0:02:00.800 --> 0:02:03.560 So, first of all, I think making sure that you're 0:02:03.680 --> 0:02:06.400 very precise about where you want to target your interest 0:02:06.480 --> 0:02:09.920 rates sensitive at your duration risk. That's really important. We've 0:02:09.919 --> 0:02:12.200 been here before and talked about owning the belly of 0:02:12.200 --> 0:02:14.760 the curve. What we've meant by that is really looking 0:02:14.800 --> 0:02:16.720 at that three to seven year part of the curve 0:02:17.240 --> 0:02:20.560 and not just owning treasuries, but owning high yield, owning 0:02:20.600 --> 0:02:25.840 securitized assets, owning income, really taking this opportunity of still 0:02:26.280 --> 0:02:30.560 locking in yields, especially when cashields are dropping fast, and 0:02:30.720 --> 0:02:33.680 earning income in the fixed income markets. And there are 0:02:33.720 --> 0:02:36.560 products that allow you to do that in an active manner, 0:02:36.560 --> 0:02:39.280 in an index manner. But the time is here, the 0:02:39.360 --> 0:02:42.000 time has been here, but you're not too late. 0:02:42.440 --> 0:02:44.480 Let's have a therapy session because a lot of people 0:02:44.480 --> 0:02:46.400 are feeling like they missed it, and a lot of 0:02:46.400 --> 0:02:50.760 people feel like you know, they're watching as valuations get 0:02:50.800 --> 0:02:53.160 that much more expensive, in stocks, in bands and working 0:02:53.200 --> 0:02:56.320 right now, credit spreads tightening even more, and the heels 0:02:56.360 --> 0:03:01.000 of this decision, how do you convince people after discussions 0:03:01.280 --> 0:03:04.520 the things have gotten so frothy and so expensive that 0:03:04.680 --> 0:03:07.120 now as things are even more expensive, it's the right 0:03:07.160 --> 0:03:07.919 time to buy. 0:03:08.280 --> 0:03:10.959 So okay, separating out bonds and stocks again, I think 0:03:10.960 --> 0:03:14.359 for equity markets, this is a seasonally week period, we're 0:03:14.400 --> 0:03:16.560 going to have a couple of risk events. We're obviously 0:03:16.600 --> 0:03:19.280 going to have the election in a couple in six 0:03:19.320 --> 0:03:22.079 weeks or so, but more importantly before that, we're going 0:03:22.120 --> 0:03:26.320 to have earning season, and I think it could maybe 0:03:26.360 --> 0:03:28.800 make sense for equities to pull back just a little bit. 0:03:28.840 --> 0:03:31.000 I don't think you're supposed to step away. I think 0:03:31.000 --> 0:03:34.280 you're supposed to add downside protection with buffer strategies. That's 0:03:34.280 --> 0:03:37.440 what we're telling investors, or move a little bit further 0:03:37.600 --> 0:03:40.120 up in quality. We've sort of told investors to stay 0:03:40.160 --> 0:03:43.440 away from the small cap trade. Obviously that's doing very well. 0:03:43.440 --> 0:03:47.080 It's hard for me to imagine that does well sustainably 0:03:47.240 --> 0:03:50.560 for the next eight to twelve weeks. Having said that, 0:03:50.600 --> 0:03:53.760 in the FIXTIONCME market, Pleace, I hear you. Yes, spreads 0:03:53.800 --> 0:03:56.640 are very very tight, but I think what investors have 0:03:56.760 --> 0:03:59.360 gravitated towards. If we look at fixed and come flows 0:03:59.400 --> 0:04:02.960 this year, it is around yields that are available. So 0:04:03.000 --> 0:04:05.840 when we compare the yields today to what we were 0:04:05.840 --> 0:04:08.119 getting ten years ago, yes it's come down, but it's 0:04:08.160 --> 0:04:11.680 still very positive, and I think investors do want to 0:04:11.720 --> 0:04:15.800 lock that in, especially if we slow down even slightly 0:04:15.840 --> 0:04:16.279 from here. 0:04:16.440 --> 0:04:19.560 You talked about some risk events, including the politics, and 0:04:19.600 --> 0:04:21.360 I know Emory is going to go there a bit 0:04:21.440 --> 0:04:24.680 in a second. There is this issue that every candidate 0:04:24.920 --> 0:04:26.719 is going to promise more and more and more to 0:04:26.800 --> 0:04:29.359 increase the deficit more and more and more. Does this 0:04:29.440 --> 0:04:32.200 create something of a risk event that is longer term, 0:04:32.240 --> 0:04:33.960 particularly for the long end of. 0:04:34.000 --> 0:04:36.040 A I think it does. You've hit the nail right 0:04:36.080 --> 0:04:38.360 on the head. I think that's why being very precise 0:04:38.760 --> 0:04:41.840 about where you want to own duration is really important. 0:04:42.120 --> 0:04:45.479 So regardless of what happens in November, regardless of who's 0:04:45.520 --> 0:04:48.640 president in January, I think one thing that we can 0:04:48.720 --> 0:04:51.760 be sure of is that deficits aren't coming down in 0:04:51.800 --> 0:04:54.440 a rapid manner. And one of the ways in which 0:04:54.480 --> 0:04:56.360 that can play out in our markets, in the bond 0:04:56.400 --> 0:04:58.480 market is really in the very long end of the curve. 0:04:58.800 --> 0:05:00.880 So I was saying earlier to on about you know, 0:05:00.960 --> 0:05:03.520 owning duration in that three to seven year part of 0:05:03.520 --> 0:05:05.600 the curve. You kind of want to stay away from 0:05:05.640 --> 0:05:08.320 them a very long and for now you're not getting 0:05:08.400 --> 0:05:11.440 that additional pickup and yield, So stick in the value 0:05:11.440 --> 0:05:13.680 of the curve and harvest some of the income that 0:05:13.760 --> 0:05:17.159 you're getting, and frankly, that's where investors are moving to 0:05:17.320 --> 0:05:19.919 as well. I mean, when I have client conversations, people 0:05:19.960 --> 0:05:22.120 want to hear about the agg people want to hear 0:05:22.160 --> 0:05:26.160 about bank people want to hear about, you know, quality equities. 0:05:26.640 --> 0:05:29.039 That's what we're telling them to do because that's the 0:05:29.080 --> 0:05:29.720 regime for this. 0:05:29.800 --> 0:05:32.480 Henrietta was just talking about how investors she's talking to you, 0:05:32.560 --> 0:05:36.120 especially those in the fixed income space, we're or interested 0:05:36.160 --> 0:05:38.839 to see what happens in Washington based on the timeline. 0:05:38.880 --> 0:05:39.680 If you get some of these. 0:05:39.600 --> 0:05:41.720 Tax cuts three four years out or if they go 0:05:41.800 --> 0:05:44.839 for say ten years, do you think it makes a difference. 0:05:45.480 --> 0:05:48.000 For bond markets And I think it all makes a 0:05:48.000 --> 0:05:51.040 difference absolutely. I think we're in this period for the 0:05:51.080 --> 0:05:53.520 next six to eight weeks where we just won't know 0:05:53.600 --> 0:05:56.240 too much. We obviously won't know the outcome, and I 0:05:56.279 --> 0:06:00.520 think markets like certainty the most they want, which is 0:06:00.520 --> 0:06:02.520 why I feel like over the next couple of weeks, 0:06:02.520 --> 0:06:04.600 I think a little bit of a pullback despite this 0:06:05.080 --> 0:06:08.840 fifty basis point cut could come. And I think that's fine. 0:06:08.839 --> 0:06:12.560 You're supposed to stay invested, protect your downside. But I think, 0:06:12.600 --> 0:06:15.320 of course it matters in the long term. Will it 0:06:15.440 --> 0:06:18.720 matter whether we get something for four years or ten years. Absolutely, 0:06:18.960 --> 0:06:21.760 I think the market can only pay attention to recruitter 0:06:21.839 --> 0:06:24.760 who's you know, as you guys know likes to say this, 0:06:24.880 --> 0:06:27.800 markets pay attention to one thing at a time. Right now, 0:06:27.839 --> 0:06:31.280 we're paying attention to all of the amazing opportunities that 0:06:31.320 --> 0:06:33.000 the FED cut has brought you. 0:06:33.200 --> 0:06:34.919 Well, I know, but next we're going to be focused 0:06:34.960 --> 0:06:38.520 on the election and this idea of fiscal sustainability. Henriette 0:06:38.600 --> 0:06:40.480 also brought up the fact that maybe we'll see another 0:06:40.520 --> 0:06:43.600 Simpson Bowls commission. Does the market care about that or 0:06:43.680 --> 0:06:46.239 is that just all noise and talk for now? 0:06:46.320 --> 0:06:49.400 I think the market won't really focus too much on that. 0:06:49.880 --> 0:06:52.320 I think we're going to focus a little bit more on, 0:06:52.800 --> 0:06:55.240 you know, what is the data telling us. What are 0:06:55.279 --> 0:06:57.360 some of the policies that we're going to get. What 0:06:57.440 --> 0:06:59.839 are some of the ways in which the earning seasons 0:06:59.839 --> 0:07:01.480 go to play out. I think that's going to be 0:07:01.480 --> 0:07:05.799 something that we're not talking about yet. We did see earnings, okay, 0:07:05.920 --> 0:07:08.680 we didn't see you know, there were companies weren't doing 0:07:08.720 --> 0:07:10.680 as well on revenue. So I think we have to 0:07:10.680 --> 0:07:14.320 see where the companies can still find ways to cut expenses, 0:07:14.360 --> 0:07:16.000 and that's something we're going to be looking at. So 0:07:16.040 --> 0:07:18.360 for the near term, I think all of that is 0:07:18.400 --> 0:07:21.320 going to be much more important than if we get 0:07:21.360 --> 0:07:24.800 a commission, you know, twelve weeks down or twenty weeks 0:07:24.800 --> 0:07:25.400 down the lane. 0:07:25.520 --> 0:07:27.320 Can we say that for now more Strata's sake of 0:07:27.360 --> 0:07:28.000 talking of the FED. 0:07:28.600 --> 0:07:29.040 I think so. 0:07:29.280 --> 0:07:31.960 I think I'm really excited that we can now focus 0:07:32.000 --> 0:07:36.280 on what's really important, which is the election. No, actually, 0:07:36.280 --> 0:07:39.960 because the opportunities that exist in the market for our 0:07:40.000 --> 0:07:43.760 investors to be invested and have a better financial outcome. 0:07:44.240 --> 0:07:46.200 Katie, thank you one of the best the US. Enjoy it. 0:07:46.280 --> 0:07:47.400 Kuki Chantry of blank. 0:07:47.280 --> 0:07:59.440 Rod, John Varlet now, John, it's going to see you, 0:07:59.520 --> 0:08:00.000 going to be here. 0:08:00.040 --> 0:08:01.640 Thanks for having me. What does that right cut today? 0:08:01.720 --> 0:08:02.400 For this mark it? 0:08:02.760 --> 0:08:05.680 I mean, I think look, rates are down ninety basis 0:08:05.680 --> 0:08:08.720 points from when Lennard last reported earnings in mid June. 0:08:08.960 --> 0:08:12.120 We know that demand has picked up. Toll Brothers reported 0:08:12.160 --> 0:08:15.200 in August that July was this is their may through 0:08:15.320 --> 0:08:17.840 a July quarter, that July was the strongest month, with 0:08:17.920 --> 0:08:20.560 strength continuing into August. Other builders have said the same 0:08:20.920 --> 0:08:24.480 our private builder channel checks have been very bullish. Demand 0:08:24.640 --> 0:08:27.200 is better than seasonal averages at this point. 0:08:27.800 --> 0:08:29.080 Things are moving in the right direction. 0:08:29.480 --> 0:08:32.000 So I think that you know that, coupled with think 0:08:32.040 --> 0:08:34.480 about new home sales in July up eleven percent month 0:08:34.520 --> 0:08:37.000 over month to seven hundred and thirty nine thousand single 0:08:37.000 --> 0:08:39.800 family starts yesterday nine hundred and ninety two thousand, up 0:08:39.880 --> 0:08:42.880 sixteen percent. Activity is picking up and that's a good thing. 0:08:43.120 --> 0:08:44.960 So I think demand is moving in the right direction. 0:08:45.080 --> 0:08:46.480 Tell Brothers is for the fancy payper. 0:08:46.559 --> 0:08:47.440 They don't need mortgages. 0:08:47.520 --> 0:08:49.600 That's so cash. Can we talk about who this already helps? 0:08:49.640 --> 0:08:51.040 Which build is does this ready help? 0:08:51.200 --> 0:08:52.160 I think it helps all. 0:08:52.200 --> 0:08:54.880 You're right now thirty percent of TOLD tolls buyers pay 0:08:54.920 --> 0:08:57.280 all cash, So you could argue perhaps a little bit 0:08:57.400 --> 0:09:02.200 less of stimulus there. The lower end probably benefits the most. 0:09:02.280 --> 0:09:06.320 Drhort in lenar companies that really focus on that probably 0:09:06.360 --> 0:09:09.080 dart in the most on that entry level first time, 0:09:09.360 --> 0:09:11.600 those buyers are going to have more dollars in their pocket. 0:09:11.640 --> 0:09:13.560 But keep in mind that the builders have been buying 0:09:13.600 --> 0:09:16.720 down mortgage rates all along, and so demand has been 0:09:16.760 --> 0:09:19.840 pretty good for the public builders all throughout this kind 0:09:19.880 --> 0:09:21.720 of interest rate volatility. 0:09:22.000 --> 0:09:23.000 That's where I wanted to go. 0:09:23.120 --> 0:09:24.439 Yeah, I don't get this market. 0:09:24.600 --> 0:09:27.079 Basically, you have high rates, and that's good for home 0:09:27.120 --> 0:09:29.760 builders because nobody can move, no one wants to sell, 0:09:30.080 --> 0:09:32.120 so you know, if anyone actually wants to buy a home, 0:09:32.280 --> 0:09:34.720 you have to build it from scratch. Lower rates help 0:09:34.760 --> 0:09:36.720 them too, because lower rates are better and people can 0:09:36.760 --> 0:09:37.400 borrow money. 0:09:37.760 --> 0:09:39.760 Which is it at what point is it just price 0:09:39.800 --> 0:09:40.679 go up period? 0:09:41.440 --> 0:09:43.839 Lower rates are good for housing lease of regardless. I 0:09:43.840 --> 0:09:46.920 mean I think that that's kind of where we sit now. 0:09:47.040 --> 0:09:49.480 Your point's well taken, though, right. I think the lock 0:09:49.559 --> 0:09:52.960 in effect that has kept people from moving in reduced 0:09:53.559 --> 0:09:54.360 existing home. 0:09:54.160 --> 0:09:56.439 Turnover has helped the builders, no question about it. 0:09:56.640 --> 0:09:58.720 Now, lower rates are going to bring some more inventory 0:09:58.720 --> 0:10:00.880 back to the market, but keep in mind eighty percent 0:10:00.880 --> 0:10:03.720 of mortgages are below five percent, sixty percent of below 0:10:03.760 --> 0:10:05.640 four so there is still a lock in effect. 0:10:05.760 --> 0:10:08.920 There's this question about if lower rates unlock a great 0:10:08.960 --> 0:10:12.479 deal of supply from existing homes but also from potentially 0:10:12.520 --> 0:10:17.480 home builders, won't that cause prices to potentially go down, 0:10:17.880 --> 0:10:21.160 not up, especially if mortgage rates are still well above 0:10:21.559 --> 0:10:24.080 the average that people are paying. Right now in their homes. 0:10:24.600 --> 0:10:27.040 I think it would take an economic shock to bring 0:10:27.080 --> 0:10:29.640 back a glutt of inventory. I think the inventory return 0:10:29.760 --> 0:10:33.080 is going to be more sort of orderly, if you will, 0:10:33.240 --> 0:10:35.120 just given that lock and effect that I talked about. 0:10:35.240 --> 0:10:37.680 Now there will be more existing home inventory. But you 0:10:37.679 --> 0:10:40.400 know what, that also opens the pool of potential buyers, 0:10:40.640 --> 0:10:42.760 and so we think the supply demand from that standpoint 0:10:42.760 --> 0:10:46.160 will still remain strong enough where prices are not going 0:10:46.160 --> 0:10:47.040 to drop dramatically. 0:10:47.200 --> 0:10:49.440 Jumpry, I was going to say, what do you make 0:10:49.480 --> 0:10:51.800 of all this being discussed on the campaign trail, potentially 0:10:51.840 --> 0:10:54.560 supply coming because of policy in Washington. 0:10:55.080 --> 0:10:56.640 It's an interesting question. I think. 0:10:57.640 --> 0:10:59.880 I think the Harris campaign's head is in the right 0:11:00.160 --> 0:11:02.600 spot that we need more supply, we need more housing. 0:11:03.160 --> 0:11:06.120 The actual execution of that is very challenging because it 0:11:06.160 --> 0:11:08.560 can't be done at the federal level. It's really the 0:11:08.640 --> 0:11:12.400 municipal and state and local you know kind of supply 0:11:12.480 --> 0:11:18.280 constraints in terms of land development, you know, entitlement, zoning, permitting, 0:11:18.320 --> 0:11:20.800 things of that nature that just can't be controlled at 0:11:20.840 --> 0:11:21.600 the federal level. 0:11:21.800 --> 0:11:23.240 That that's where the real problem is. 0:11:23.440 --> 0:11:25.720 And so you know, while they're you know, it's a 0:11:25.720 --> 0:11:27.959 good idea, very hard to execute a mole. 0:11:28.080 --> 0:11:29.880 So some of these incentives you hit on the campaign 0:11:29.920 --> 0:11:32.360 trail you just believe ultimately going to lead to hut prices. 0:11:32.440 --> 0:11:32.839 Is that fair? 0:11:33.559 --> 0:11:35.160 I mean, I think, you know, putting more money in 0:11:35.200 --> 0:11:38.600 people's pockets. So twenty five thousand dollars tax incentive, it 0:11:38.640 --> 0:11:42.000 will help demand, couldn't push up prices a bit? Perhaps 0:11:42.200 --> 0:11:44.240 I just don't see anything on the supply side really 0:11:44.240 --> 0:11:45.199 moving the needle. 0:11:45.400 --> 0:11:48.000 At this point. What are you looking for in terms 0:11:48.080 --> 0:11:50.880 of taxes as well? We talk about the salt tax 0:11:51.120 --> 0:11:53.520 and what that does to property buying in places in 0:11:53.559 --> 0:11:56.400 the Northeast. We saw people leave the Northeast in response 0:11:56.440 --> 0:11:59.079 to that. Do you get the sense that if that 0:11:59.240 --> 0:12:03.880 salt cap was removed that you'd actually get more buying 0:12:03.880 --> 0:12:04.640 in those regions? 0:12:05.640 --> 0:12:07.440 Yes, I think that that would certainly help. 0:12:07.800 --> 0:12:10.920 That said, the offset is that there's just an in 0:12:11.040 --> 0:12:13.600 migration trend in the US that's occurring because that's where 0:12:13.640 --> 0:12:14.520 job growth is happening. 0:12:14.559 --> 0:12:16.840 And think about the sun belop right, that's where the 0:12:16.840 --> 0:12:17.880 employment growth is. 0:12:18.160 --> 0:12:20.120 The weather's a little bit better, folks are moving in 0:12:20.120 --> 0:12:23.680 that direction anyway. I like seasons, but going so I 0:12:23.679 --> 0:12:26.560 think yes, it would certainly, it would certainly help, But 0:12:26.840 --> 0:12:28.960 I think that the trend is still well ingrained. 0:12:28.960 --> 0:12:30.400 So what's the number one market right now and to 0:12:30.440 --> 0:12:31.360 start building. 0:12:31.920 --> 0:12:34.520 It's you know, I think, look, there's great markets in Florida, 0:12:34.600 --> 0:12:37.920 the Carolinas are very strong. Texas, most parts of Texas 0:12:37.920 --> 0:12:38.600 are very good. 0:12:38.760 --> 0:12:39.360 So really the. 0:12:39.320 --> 0:12:42.760 Traditional kind of you know, golden horseshoe states are still 0:12:42.800 --> 0:12:43.720 really positive. 0:12:43.880 --> 0:12:44.040 Now. 0:12:44.040 --> 0:12:46.640 It is market by market within each of those states, 0:12:46.679 --> 0:12:49.760 but I would say generally speaking that hasn't changed. Where 0:12:49.800 --> 0:12:51.000 those are where you want to be, and that's where 0:12:51.000 --> 0:12:51.839 the public builders are. 0:12:51.960 --> 0:12:53.640 Just to wrap things up, the Voet's get a Mulke's 0:12:53.679 --> 0:12:57.520 right now thirty six around six percent effective mulke It's rights. 0:12:57.559 --> 0:13:00.640 So the average right on the which is out there 0:13:00.720 --> 0:13:03.120 right now, it's just short of four percent, still quite 0:13:03.120 --> 0:13:05.679 a big spread there of about two hundred basis points. 0:13:06.120 --> 0:13:08.520 How much of a difference does six make to the 0:13:08.800 --> 0:13:11.200 unlocking the lock in effect that we've seen grip this 0:13:11.240 --> 0:13:13.440 housing market over the last few years. 0:13:14.120 --> 0:13:14.520 I don't. 0:13:14.559 --> 0:13:16.720 I don't think it moves the needle all that much 0:13:16.760 --> 0:13:18.760 in the existing home side. It will help, for sure, 0:13:19.080 --> 0:13:20.800 but I think you know what the builders have talked 0:13:20.840 --> 0:13:23.000 about is five five and a half percent kind of 0:13:23.000 --> 0:13:25.080 being the sweet spot of where they're buying rates down to. 0:13:25.440 --> 0:13:27.400 So there's no magic number, but I think that that's 0:13:27.440 --> 0:13:30.440 probably a fairly good indication of where of where you 0:13:30.520 --> 0:13:31.000 have to be. 0:13:31.000 --> 0:13:32.719 Just quickly for people who an't formiliar when you say 0:13:32.720 --> 0:13:34.360 buying rates down to, what do you mean? 0:13:34.520 --> 0:13:35.040 What is that? 0:13:35.280 --> 0:13:37.920 So the public builders are actually going out into the 0:13:37.960 --> 0:13:41.960 mortgage market securing forward commitments to buy down mortgages are 0:13:41.480 --> 0:13:46.600 below mortgage or average rates, which is allowing buyers to 0:13:46.600 --> 0:13:49.600 step into homes at much more affordable levels. 0:13:49.679 --> 0:13:51.320 They've been working around this for the last couple of 0:13:51.360 --> 0:13:54.200 years then they've been very successful. Yeah, I know, John, 0:13:54.240 --> 0:13:55.559 Thank you, Seth. It's going to see you extra. I 0:13:55.600 --> 0:13:58.280 appreciate it. Johnavala, the of ubs On, relates to the 0:13:58.280 --> 0:14:10.680 housing market. Jot to us now to discuss this, Mark 0:14:10.720 --> 0:14:14.280 Sandy of Moody's Analytics Mark looking forward to getting into 0:14:14.280 --> 0:14:14.640 this with you. 0:14:14.720 --> 0:14:15.600 So let's get to it. 0:14:15.960 --> 0:14:18.960 How strong is this job's market still even with that 0:14:19.040 --> 0:14:19.440 rate cup? 0:14:19.520 --> 0:14:21.720 Was it even needed? Oh? 0:14:21.800 --> 0:14:24.000 Yeah, no, it was needed. I mean the job market's good, 0:14:24.040 --> 0:14:24.720 no doubt about it. 0:14:24.800 --> 0:14:28.200 Recruiting well, a lot of jobs unemployment is very low, 0:14:28.840 --> 0:14:31.800 but all the trend lines were showing softness. I mean 0:14:31.920 --> 0:14:35.160 hiring us off, hours worked are down, tempt jobs are down. 0:14:35.600 --> 0:14:37.480 You know, the only thing that's really kept the job 0:14:37.520 --> 0:14:40.360 market together is those lay low layoffs. As you point out, 0:14:40.360 --> 0:14:42.640 the UI claim suggests that continue. So that's good news, 0:14:42.680 --> 0:14:46.920 but the trend lines here we are still a bit disconcerting. 0:14:47.080 --> 0:14:49.920 So I think, you know, every sense in the world 0:14:49.960 --> 0:14:52.160 for the Fed to start cutting interest rates now, I 0:14:52.160 --> 0:14:56.320 mean more fundamentally, the Fed did what it needed to do. 0:14:56.600 --> 0:14:59.160 It got us back to full employment with inflation effectively 0:14:59.200 --> 0:15:02.960 at target. So if that they've hit their mandate, then 0:15:03.120 --> 0:15:05.840 why a five and a half percent fund rate target? 0:15:05.920 --> 0:15:07.600 I mean, I think everyone can agree. You know, a 0:15:07.640 --> 0:15:10.160 lot of debate, reasonable debate about you know, what is 0:15:10.160 --> 0:15:12.880 the so called neutral rate, that rate where policies neither 0:15:13.000 --> 0:15:14.200 restraining or supporting growth. 0:15:14.240 --> 0:15:15.720 But it's not five and a half percent. 0:15:15.880 --> 0:15:18.800 So time to get that down and get that normalized 0:15:18.800 --> 0:15:21.120 as fast as possible, because you know, if you keep 0:15:21.160 --> 0:15:24.120 it there, something could break, and when something breaks, very 0:15:24.120 --> 0:15:25.960 difficult to get that back together. 0:15:26.160 --> 0:15:29.800 And this is the reason why recalibrate, recalibrating and recalibrated 0:15:30.280 --> 0:15:32.440 were the words of the day yesterday when we heard j. 0:15:32.600 --> 0:15:34.880 Powell take the stand. A real question when you say, 0:15:34.960 --> 0:15:38.360 concerning trend lines in the labor market, do they fly 0:15:38.480 --> 0:15:41.280 on the face those trends of some of the enthusiasm 0:15:41.320 --> 0:15:44.680 that you're seeing in certain risk markets. Is people project 0:15:44.760 --> 0:15:49.680 this strength to the future, regardless of some of the 0:15:49.680 --> 0:15:51.560 clouds that maybe the FED is responding to. 0:15:52.520 --> 0:15:56.440 Well, the markets investors are doing what they do. They forecast, 0:15:56.520 --> 0:16:01.240 they're forecasting, and they're saying, hey, look, you know, before 0:16:01.280 --> 0:16:02.360 the FED started cutting. 0:16:02.200 --> 0:16:05.240 Rates, before the Jackson Hole speech and j Pell telling. 0:16:05.120 --> 0:16:09.520 Us that he was going to cut rates, it felt disconcerting, 0:16:09.560 --> 0:16:12.280 and the forecast wasn't quite as good as it is today. 0:16:12.440 --> 0:16:16.800 Today forecast is much better. You know, We've got fifty 0:16:16.800 --> 0:16:17.480 base point. 0:16:17.360 --> 0:16:20.640 Rate cut behind us, and clearly a string of rate 0:16:20.680 --> 0:16:21.520 cuts ahead of us. 0:16:21.800 --> 0:16:24.600 So you do the forecast, it feels like a soft landing. 0:16:24.680 --> 0:16:27.840 Therefore, I'm going to go buy stocks and going to 0:16:27.880 --> 0:16:31.280 buy bond So, you know, I think it's a rational response. 0:16:31.320 --> 0:16:32.040 I mean, at the end of the. 0:16:32.080 --> 0:16:34.960 Day, just think about this for a second. The economy 0:16:35.200 --> 0:16:39.160 is really fundamentally in a pretty good spot, and therefore, 0:16:39.280 --> 0:16:41.680 the stock market should be in a pretty good spot. 0:16:41.720 --> 0:16:44.400 So it's not surprising where a record highs and moving higher. 0:16:44.680 --> 0:16:47.320 So I think they're consistent. I don't think they're inconsistent. 0:16:47.520 --> 0:16:50.880 The one note of concern, perhaps you could argue in 0:16:50.920 --> 0:16:53.480 markets right now is this idea that maybe we are 0:16:53.600 --> 0:16:56.720 underpricing or under considering inflation. When you take a look 0:16:56.760 --> 0:17:00.320 at gold prices just hovering near those all time highs, 0:17:00.360 --> 0:17:01.640 and you take a look at the long end of 0:17:01.640 --> 0:17:05.040 the yield curve continuing to increase, particularly in the thirty 0:17:05.119 --> 0:17:08.360 year sector this morning, this idea that maybe we are 0:17:08.400 --> 0:17:11.399 going to see some uptick in inflation. Mark, are there 0:17:11.520 --> 0:17:14.000 signs to you, and I'm looking at housing in particular 0:17:14.280 --> 0:17:16.639 as well as potentially other sectors, are there signs to 0:17:16.680 --> 0:17:18.520 you where you could start to see that inflation start 0:17:18.560 --> 0:17:19.080 to tick up? 0:17:19.840 --> 0:17:24.680 No gold, Lisa, Gold, Really, that's that's what your pointing 0:17:24.720 --> 0:17:24.840 to do. 0:17:25.080 --> 0:17:28.639 Come on, No inflation is back in the bottle. 0:17:28.680 --> 0:17:28.879 I mean. 0:17:28.920 --> 0:17:31.720 The thing that I think the most important to look 0:17:31.720 --> 0:17:34.920 at inflation expectations, and there's lots of different ways of 0:17:35.000 --> 0:17:36.639 looking at that. You can look at the bond market 0:17:36.680 --> 0:17:40.159 and what the implied expectations are go look at the 0:17:40.160 --> 0:17:42.160 surveys that are being done by the New York Fed, 0:17:42.520 --> 0:17:44.879 the Conference Board, inflation. 0:17:44.600 --> 0:17:46.399 Expectations are all the way back in. 0:17:46.640 --> 0:17:48.560 So, you know, as long as that remains the case, 0:17:48.640 --> 0:17:50.520 and I don't see the reason why that's going to change. 0:17:51.000 --> 0:17:54.840 I'm not worried about inflation and housing, absolutely not. You know, 0:17:54.880 --> 0:17:56.920 I don't think that's going to be the issue here 0:17:56.920 --> 0:17:59.760 going forward. I mean, if anything, in the next twelve 0:18:00.400 --> 0:18:03.200 eighteen months, we should see further acceleration and the growth 0:18:03.200 --> 0:18:05.960