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Speaker 2: Twenty five at North Cachet Street, Jackson, Wyoming is home
Speaker 2: to the million Dollar Cowboy Bar. And I'm here and
Speaker 2: it's quite the hop and spot. Like that's where the
Speaker 2: economists go to say, you know, marginal revenue equals marginal
Speaker 2: cost and all that kind of stuff and have those debates.
Speaker 3: I actually met Lil Wayne at the million Dollar Cowboy Bar.
Speaker 4: Yeah, about ten years ago.
Speaker 3: Yeah, he was in Jackson Hole doing a concert for
Speaker 3: the snowboarders.
Speaker 4: Very cool. See Lisa, you hang with Matt Miller and
Speaker 4: the stuff. You'll look. Did you get a picture? I did.
Speaker 4: I did a new.
Speaker 3: Picture of me, Lil Wayne and my dad doing the
Speaker 3: ski shot exactly.
Speaker 4: All right, Let's go to from Lil Wayne to Tom Keene.
Speaker 2: Host of Bloomberg Survellance on radio and YouTube. Tom talk
Speaker 2: to us about Jackson Hole. Here, give us the vibe
Speaker 2: of Jackson Hole this week.
Speaker 5: The Vibe is really different. When I walked in yesterday,
Speaker 5: Paul Sweeney and doing this for some eighteen years, I
Speaker 5: was really thunderstruck, how quiet, how subdued everything is. I
Speaker 5: think there's a huge number of distractions into the speech
Speaker 5: this morning at ten am Wall Street time, and all
Speaker 5: devolved down to a line by line read of this
Speaker 5: final speech of your own, Powell. I would assume it'll
Speaker 5: be a little more active today, a lot more international
Speaker 5: media coming in as well as the Bloomberg world turning
Speaker 5: to the attention of Powell's speech. All in all, what
Speaker 5: I would say is it's an international community here. But yes,
Speaker 5: it is about what the FED will do up to
Speaker 5: the September meeting.
Speaker 3: You know, Tom the Wall Street Journal says the Fed's
Speaker 3: going to make change to its framework. They had decided
Speaker 3: in twenty nineteen, twenty twenty to let inflation run hot,
Speaker 3: and they sure as hell did that. But I guess
Speaker 3: to me, it seems like the important change is no
Speaker 3: more averaging, right, because if they really want to average
Speaker 3: two percent, they would have to keep inflation low, and
Speaker 3: lord knows they want to keep it high so we
Speaker 3: can work off this debt.
Speaker 5: Well, I'm not going to go with that, Matt, But
Speaker 5: I am going to say that Nick's article in the
Speaker 5: Wall Street Journal was really prescient. At the back end
Speaker 5: of the article Nick featured Jonathan Farrow's interview was Secretary Bessant.
Speaker 5: And the backstory here is when the Treasury Secretary makes
Speaker 5: what most people would consider outrageous calls for a dramatically
Speaker 5: lower interest rate, how does that upset the American equilibrium
Speaker 5: and the global equilibrium. I think some of the nuances
Speaker 5: here will be to stabilize the dialogue and try to
Speaker 5: get this central bank back on track, to look at inflation,
Speaker 5: to look jobs, and get to the next meeting.
Speaker 3: I'm going to say, you know, I was listening to
Speaker 3: that interview on Survey Vance with John Keene and Scott
Speaker 3: Bessen and when he said rates should be one hundred
Speaker 3: and fifty two hundred and seventy files would support that, Well,
Speaker 3: he's at any model would support it, and I know
Speaker 3: every economist is shot back with no model. But I
Speaker 3: just typed WIRP on my Bloomberg terminal and noticed what
Speaker 3: he was saying was exactly, literally to the basis point,
Speaker 3: what the market was predicting anyway, So it wasn't that crazy.
Speaker 3: Now we've come back from that a little bit. Are
Speaker 3: the odds now is the risk I should say, Tom,
Speaker 3: that there's no cut in September, rather than the risk
Speaker 3: of a fifty basis point cut that we may have
Speaker 3: seen two weeks ago.
Speaker 5: You make a really good point for people that are
Speaker 5: not sophisticates of this. The story changes literally now. Data
Speaker 5: point by data point. There's been an unbalanced set of
Speaker 5: inflation data, but the fact is there are selective inflation
Speaker 5: data that's shown new prices up. I love Paul Krugman's
Speaker 5: new sub stack where he talks about the surge and
Speaker 5: electricity prices, including Sweeney's bill out in a Jersey, which
Speaker 5: is out. I think it's four or five figures. But
Speaker 5: inflation is back is part of the debate here, along
Speaker 5: with a tepid I should say the weak claims number
Speaker 5: that we saw yesterday.
Speaker 2: So, Tom, is the expectation here that FED Chairman j
Speaker 2: Pala Is he gonna try to frame his legacy in
Speaker 2: the speech in any way?
Speaker 6: Tom?
Speaker 4: Or do you think it's going to be focusing on
Speaker 4: the task at hand?
Speaker 5: The answer is nobody knows. I've heard so many It's
Speaker 5: like looking at red Sox Yankees, where I note the
Speaker 5: Red Sox took the game last night. There's a bunch
Speaker 5: of pundits. Okay, everybody's got an angle of what this
Speaker 5: speech is. Nobody has a clue. I do think he
Speaker 5: will touch on the legacy. But rather than guess what
Speaker 5: the speech is, I think more productive is to tune
Speaker 5: in at ten am, Bram and I'll be giving you
Speaker 5: coverage on that. And literally we're gonna go lining by
Speaker 5: line through the speech.
Speaker 4: I've gone line through line through your bio, Tom Keane.
Speaker 3: We got your bio for this interview in our notes,
Speaker 3: and I note that you survived an interview at Davos,
Speaker 3: a joint interview of Ken Rogoff and Joseph Stieglitz.
Speaker 4: Yeah, if those.
Speaker 3: Guys were at Jackson Hole, and honestly they probably they
Speaker 3: probably are, which view would you take?
Speaker 5: This is absolutely a brilliant question. That was really quite
Speaker 5: an historic interview. They had a massive, massive argument in
Speaker 5: economics twenty years ago. They're on different sides of the fence.
Speaker 5: Joe Stiglitz is going to say half of America's flat
Speaker 5: on their back and they need some easing of pain
Speaker 5: by redkuts Ken Rogoff in my book of the summer,
Speaker 5: our dollar year problem. Whether you disagree or agree with
Speaker 5: Professor Rogoff, he is looking at rates nudging up. There's
Speaker 5: a backstory here, and Paul, I know you've been watching
Speaker 5: this carefully. Twenty year and thirty year Japanese bonds are
Speaker 5: breaking out to new higher yields. Literally as we speak.
Speaker 5: The international community here is focused on this.
Speaker 4: Tom nine E. M.
Speaker 2: Wall Street Time you, Lisa Bromwich, Michael McKee will have
Speaker 2: a program from jacksonvill tell us about kind of where
Speaker 2: you're gonna be covering.
Speaker 5: Well, we're going to be covering with some wonderful guests
Speaker 5: with our question. The interview of the day for me
Speaker 5: here at Jackson Hall is James Buller, the former president
Speaker 5: of the Saint Louis fed now at Purdue at University.
Speaker 5: He is on the trump list to become a chairman.
Speaker 5: Jim Buller likes low rates, always has. His dot was
Speaker 5: always down at the bottom of the dot plot. We've
Speaker 5: got a number of other good because Kate Moore will
Speaker 5: be with City Group as well. But Matt, the really
Speaker 5: important thing quickly is after the show, I'm getting on
Speaker 5: my Harley Road Glide and I'm going right up Wyoming
Speaker 5: one ninety one to Jellystone.
Speaker 4: That is a dream. That would be a dream come
Speaker 4: true for me. What a place to be.
Speaker 3: I love the Teton Village to ski, but in the
Speaker 3: summer I think I'd have even more fun in Wyoming.
Speaker 2: So the question is Tom, are we going to get
Speaker 2: a sighting of Lisa A. Bramwit's on a horse?
Speaker 4: Is that possible?
Speaker 5: I don't know. We may do a horse shoot here
Speaker 5: later with Joe and Tracycy. I don't know if Bramo's
Speaker 5: involve There is a rumor Tracy Alloway survived the Wyoming
Speaker 5: horseback ride across the Teetons are all They're not getting
Speaker 5: me on a horse.
Speaker 3: Hey, Tom, Well, what are you hearing about this? This
Speaker 3: pressure on Lisa Cook and this administration has used mortgage
Speaker 3: fraud well in its business, in Donald Trump's business, but
Speaker 3: also to try and attack political opponents.
Speaker 5: Oh, I think it's out there. It's percolating. Every news
Speaker 5: organization has picked it up. Our John Elmarte really advanced
Speaker 5: the story yesterday. What I would emphasize, as there's not
Speaker 5: been enough discussion about doctor Cook's credentials. She's out of
Speaker 5: Michigan State. She studied directly under Berry Keen Green at Berkeley.
Speaker 5: She's a world class economist, and you know, we'll have
Speaker 5: to see how the back and forth goes within this.
Speaker 5: There's a lot of allegations in very few charges.
Speaker 2: Tom, thanks so much, appreciate it, getting a few mentions
Speaker 2: of your time out there.
Speaker 4: Ian Jackson Hall Tom Keen.
Speaker 2: He's the host of Bloomberg Sevan, so we all know him,
Speaker 2: love him, Bloomberg Radio and on TV and YouTube and
Speaker 2: all that kind of stuff.
Speaker 4: Stay with us.
Speaker 5: More from Bloomberg Surveillance coming up after this.
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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
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Speaker 2: Christina Hooper, chief market strategist at Man Group, Christina at
Speaker 2: the thanks so much for joining us here today. You've
Speaker 2: been doing this a long time, Christina. You've seen lots
Speaker 2: of discussions around the FED for through many cycles. What
Speaker 2: do you expect to hear What do you think you
Speaker 2: might hear from FED Chairman J Powell today?
Speaker 6: So, Paul, I think we may very well hear that
Speaker 6: there's at least some kind of change in focus on
Speaker 6: the part of the FED, some kind of tweaking to
Speaker 6: the framework. But I think at the end of the day,
Speaker 6: what we're likely to get is very little in terms
Speaker 6: of substantive direction for September, and that is by design.
Speaker 6: I think Chair Powell does not want to reveal his cards,
Speaker 6: but I do believe the pressure is building, and I
Speaker 6: do think we'll actually see a ray cut of twenty
Speaker 6: five basis points. I know that sounds like it flies
Speaker 6: in the face of that altered framework and more of
Speaker 6: an emphasis on inflation, But as we've heard from a
Speaker 6: number of FED officials in recent weeks, the labor market
Speaker 6: can deteriorate quickly, and once it starts, it can fall sharply,
Speaker 6: and so I think there really is a lot of
Speaker 6: concern about that, regardless of what we hear from Chair Powell.
Speaker 6: Another point I would make is that Chair Powell has
Speaker 6: to be thinking about history and how history views his
Speaker 6: time as the FED Chair, and so I think he'll
Speaker 6: be focused on or at least try to make the
Speaker 6: case for the importance of FED independence. That's not what
Speaker 6: investors want to hear or really care about.
Speaker 4: I think right now.
Speaker 6: But I think he's going to focus or at least
Speaker 6: try to give a nod to that.
Speaker 3: So a couple of the different I think subjects there
Speaker 3: to talk about FED independence. Let's put aside for a
Speaker 3: second and talk about what the FED is going to
Speaker 3: do in September. Why in a rising inflation environment, we
Speaker 3: saw three point one percent on the core CPI, three
Speaker 3: point seven percent on the core PPI, it's going the
Speaker 3: wrong way, more than sixty percent away from their goal.
Speaker 4: Why in that situation, especially with.
Speaker 3: Unemployment at four point two percent and earning's growth at
Speaker 3: ten percent, would the FED cut rates?
Speaker 6: Because I think the FED will make the determination that
Speaker 6: this is likely to be something of a one off
Speaker 6: price shock, that tariffs can be at least somewhat dismissed
Speaker 6: because it's not going to create continued sustained inflation. Now,
Speaker 6: that could very well be wrong, but I think that
Speaker 6: that is the Fed's perspective at this point. Certainly that's
Speaker 6: what we've heard from Chair Powell and a few other
Speaker 6: members of the FMC in recent months, as they've talked
Speaker 6: about and you know, hypothesized about the impact of tariff
Speaker 6: driven inflation. Now, having said that, I think what we
Speaker 6: could get as a FED that after a few months says,
Speaker 6: you know, we think we may be wrong about that.
Speaker 6: We think inflation is going to be sustained and we're
Speaker 6: going to have to make some alterations. This really underscores
Speaker 6: the difficulty of having a dual mandate.
Speaker 2: So Christina, following up on Matt's comments about inflation, torched
Speaker 2: and Slock from Apollos out with a note this morning
Speaker 2: and just saying, hey, you know what, inflation's moving higher, folks.
Speaker 2: It's goods inflation, it's services inflation started to move a
Speaker 2: little bit higher.
Speaker 4: Again.
Speaker 2: That creates a challenge for the FED here. So Christina,
Speaker 2: given that backdrop here, have you guys kind of changed
Speaker 2: the way you're viewing just markets in general, whether it's
Speaker 2: asset allocation US versus rest of the world, as your
Speaker 2: view changed over the last several months.
Speaker 6: It hasn't. I mean, I've expected higher inflation, and I
Speaker 6: think it's not just going to be goods inflation. I
Speaker 6: think it's also going to be services inflation caused by
Speaker 6: policy changes, like, for example, the new approach to immigration.
Speaker 6: I think that's going to create a shrinking labor pool
Speaker 6: in certain industries. That's going to exert upward pressure on costs.
Speaker 6: So so I don't think, certainly for me, nothing has
Speaker 6: changed in terms of my outlook. I think it is
Speaker 6: coming to fruition, but I think it will take longer
Speaker 6: for the FED to get there, and I think it's
Speaker 6: going to be a scenario where the FED is looking
Speaker 6: at inflation today and is very focused on tariffs and
Speaker 6: can certainly try to make the argument that this is
Speaker 6: a one time price shock.
Speaker 3: Christine, let's talk about how much it matters what the
Speaker 3: FED does at the very front end of the curve,
Speaker 3: the ten year to the thirty year. You've said in
Speaker 3: your note something I've been waiting for so long to
Speaker 3: hear from a professional, which is that we need not
Speaker 3: believe in the fairy tale that the FED cuts equal
Speaker 3: lower long term yields. And this is something that the President,
Speaker 3: the treasure Secretary of the administration has been pushing. They want
Speaker 3: the FED to cut so that ten year yields come down.
Speaker 3: That makes it easier to pay off the massive amount
Speaker 3: of debt there trying to rack up. Here, you're saying
Speaker 3: it doesn't always work that way, and you've got historic examples.
Speaker 4: Yeah.
Speaker 6: Absolutely, there have been a number of cases really in
Speaker 6: the last twenty five years where we have not seen
Speaker 6: the ten year the rates on the long end behave
Speaker 6: as would be expected when rates are cut. There have
Speaker 6: been times where expectations about growth have caused yields to
Speaker 6: go up. There have been times when expectations about inflation
Speaker 6: going higher have caused yields to go up. And of
Speaker 6: course there have been times where concerns about an out
Speaker 6: of control or growing fiscal deficit have caused yields on
Speaker 6: the long end to go up. So it could very
Speaker 6: well happen. I think we're seeing it happen, and it
Speaker 6: could be a longer period phenomenon this time around. Keep
Speaker 6: in mind we've never really seen bond vigilantes come out
Speaker 6: in full force for an extended period of time. We
Speaker 6: might be getting to that point soon.
Speaker 4: Christina, thank you so much. We appreciate that.
Speaker 2: Christina Hooper, chief market strategists at The Man Group.
Speaker 5: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app or
Speaker 1: watch us live on YouTube.
Speaker 2: All right, let's talk about the bond market. All I
Speaker 2: know about bonds is when interest rates go up, bond
Speaker 2: prices go down to mean, what else do you need
Speaker 2: to know?
Speaker 4: Karen Mann?
Speaker 2: But some people make a career out of this fix
Speaker 2: income stuff. I'm shocked when I meet these people. Karen
Speaker 2: Mann is one of them, investment director Fixed and come
Speaker 2: at Federator Hermes. Karen, thanks so much for joining us here.
Speaker 2: What do you think you're going to hear? What should
Speaker 2: you hear? What should we all expect to hear from
Speaker 2: the FED chairman here out in Jackson Hole today?
Speaker 7: Well, good morning, and thank you for having me, despite
Speaker 7: me being a person that made my career out of fixing,
Speaker 7: so similar to your first guest, I think that we
Speaker 7: may initially be disappointed. I don't think that share Powell
Speaker 7: is going to give us clear direction as to what
Speaker 7: the FED is going to do in mid September. And
Speaker 7: I had to go back and remind myself that somewhat
Speaker 7: out of character he did last August at Jackson Hole.
Speaker 4: But I don't expect that this year.
Speaker 7: And I think that the Wall Street Journal article that
Speaker 7: came out late last night really gave us an indication
Speaker 7: that this is going to be about the FED going forward,
Speaker 7: that five year review, that revision of the framework, that
Speaker 7: adjusting the average out of how the view inflation in overall,
Speaker 7: perhaps a little bit more of an academic approach. I
Speaker 7: also think that the schedule or agenda for the remainder
Speaker 7: of the meeting is rather interesting and gives us perhaps
Speaker 7: a tell or a signal as to which of the
Speaker 7: feds dual mandate elements will be the priority. Because the
Speaker 7: rest of today is about labor. It's about technology and labor,
Speaker 7: It's about shifts in labor supply, and I think the
Speaker 7: acknowledgment there is labor has been exceptionally difficult to forecast,
Speaker 7: always is, but particularly coming out of this post pandemic environment,
Speaker 7: extraordinarily difficult, and they're going to put.
Speaker 4: Some time to that topic.
Speaker 3: At what point, Karen, does labor start to become a problem.
Speaker 3: I mean, four point two percent unemployment, at least in
Speaker 3: my lifetime.
Speaker 4: Is extraordinarily low.
Speaker 3: In fact, I think I've never seen unemployment really this low.
Speaker 7: Agreed, we have a robust economic environment led by labor.
Speaker 7: The old adages, if you have a job, you'll spend right,
Speaker 7: and you don't stop spending until you see a job
Speaker 7: lost closer to your circle of friends or family, and
Speaker 7: then you might close the wallet. But the wallets have
Speaker 7: by and large been open. So I think if we
Speaker 7: saw that unemployment rate really start to tick up approach
Speaker 7: four point five percent, that's the number that the FED
Speaker 7: has told us. But we're all very much in the
Speaker 7: weeds seeking out the nuances, attempting to find the clues
Speaker 7: as to you know, what will break this strong and
Speaker 7: resilient economy. And I think it's going to take a
Speaker 7: crisis of confidence. And what prompts that. Who knows. However,
Speaker 7: we've known that companies have been on hold. They aren't firing,
Speaker 7: but they aren't hiring either. But what shifts that and
Speaker 7: what is really the change going for We're difficult to see.
Speaker 2: Hey, Karen, So in the fixed income space here, I mean,
Speaker 2: I could sit in my two year treasury get three
Speaker 2: point eight percent. That is a solid living right there.
Speaker 2: I need to take credit risk above and beyond that.
Speaker 7: We're not advocates for taking credit risk right now. Spreads
Speaker 7: that's the way we measure risk. The difference in the
Speaker 7: yield on a spread instrument relative to its underlying treasury rate.
Speaker 7: That's how we measure things. Those are razor thin rate.
Speaker 7: Now in high yield, give you a ballpark number. We're
Speaker 7: about three hundred basis points on the average. If I
Speaker 7: go down to median, which is more important, that average
Speaker 7: includes those companies that no one thinks are going to
Speaker 7: pay on their bonds. They're priced a something like thirty
Speaker 7: cents on the daughter dollar.
Speaker 4: You know that median is one eighty. That's far too low.
Speaker 7: The spread between the lowest investment grade bucket and the
Speaker 7: highest high yield bucket is something in the magnitude of
Speaker 7: forty to fifty basis points. That's not adequate compensation. Now
Speaker 7: in investment grade bonds, that's an area where I like
Speaker 7: the credit quality. I like the fundamentals. They're much akin
Speaker 7: to the S and P five hundred names. We've been
Speaker 7: through a solid earning season, but here too, spreads are
Speaker 7: striking near record lows. We are inside of levels that
Speaker 7: we haven't seen over the past twenty five years. Can
Speaker 7: we grind along here?
Speaker 5: Sure?
Speaker 7: But I think that we are in a realm where
Speaker 7: folks are buying yield, and if something should happen that
Speaker 7: disturbs the equilibrium that we're living through right now, spreads
Speaker 7: could shoot wider pretty dramatically.
Speaker 4: Yeah.
Speaker 3: I mean, when people talk about the weakening US economy,
Speaker 3: the one thing that they point to bankruptcy filings among
Speaker 3: private companies arising to the highest level since March of
Speaker 3: twenty twenty, or since really the pandemic, I guess, and
Speaker 3: that started then. Also, personal bankruptcy filings are rising. So why, then, Karen,
Speaker 3: do you think spreads are so tight? Is it just
Speaker 3: that the kind of companies that can issue bonds, even
Speaker 3: high yield bonds, aren't yet filing for bankruptcy? Is that
Speaker 3: yet the most important word there?
Speaker 7: Likely yet, But I think that we've also seen favorable
Speaker 7: technicals as we would call them, where supply has been
Speaker 7: somewhat lower, particularly in the high yield market. And again
Speaker 7: at Federated Hermes, we are value oriented investors, so we're
Speaker 7: looking at that spread and attempting to ensure that the
Speaker 7: characteristics of the underlying entity match with that valuation. It
Speaker 7: seems that many in the market are looking at the
Speaker 7: overall yields, which are extraordinarily attractive, particularly to most of
Speaker 7: us that have lived through that zero interest rate REALM
Speaker 7: zero rates lasted for a very long time, and folks
Speaker 7: became accustomed to not earning much coupon income from their
Speaker 7: fixed income investments. Now that you can clip the coupon,
Speaker 7: it's just proven to be pretty attractive, and folks are
Speaker 7: just waving in those yields at times.
Speaker 4: Karen, thanks so much for joining us. Really appreciate it.
Speaker 2: Karen Mena investment director fixing gum for Federator at herme's.
Speaker 5: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
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Speaker 2: All right, our next guest, She went to two schools
Speaker 2: that I should have gone to. I don't know why
Speaker 2: I didn't apply to undergraduate at Vanderbilt phenomenal spandy, great,
Speaker 2: absolute love Nashville. And then she gets her NBA at
Speaker 2: University of Miami. Again, why did I not apply there?
Speaker 2: M big pull literally in the middle of the campus.
Speaker 2: You go from your get out of your psyche class,
Speaker 2: you go take a dip and then you go to
Speaker 2: like bio or something or ap you know whatever. That's
Speaker 2: how they roll down there. So anyway, ryand Mittrion, she
Speaker 2: joins his here. She's a partner Talent Family Office.
Speaker 4: Ran. What are the.
Speaker 2: Conversations with your ultra high net worth clients these days.
Speaker 2: There's been a lot of volatility in the market this year,
Speaker 2: but boy, everybody's in the green so far this year.
Speaker 4: Good morning.
Speaker 8: It has been a lot of volatility, a bit of
Speaker 8: a roller coaster, but we've ended up so far in
Speaker 8: a good spot for the year. So I think everyone
Speaker 8: is feeling a lot better now than they were.
Speaker 6: Maybe in the middle of April.
Speaker 8: And so, I mean, our clients are feeling pretty good
Speaker 8: about things. I mean, we have diversified portfolios across a
Speaker 8: number of asset classes, both public and private market exposure,
Speaker 8: and so the question really is focused on how are
Speaker 8: we positioned today and what are we seeing going forward?
Speaker 4: And you know, a lot of that.
Speaker 8: We're pretty constructive on the markets going forward. We do
Speaker 8: expect to see some more volatility, especially over the next
Speaker 8: few months around you know, labor market reports and inflation
Speaker 8: reports and what that might mean for rate cuts. But
Speaker 8: we do we are fairly constructive on the markets going forward.
Speaker 3: We do seem to be pricing in a rate cut.
Speaker 3: I know we've had down days this week. Every day
Speaker 3: looks like we could be up today. Futures a little
Speaker 3: higher here, but I've watched the interest rate probability function
Speaker 3: on the Bloomberg terminal WRP GO for the last week.
Speaker 3: It just has come down, down, down. We were over
Speaker 3: one hundred percent until that PPI number came out. Then
Speaker 3: we were down to ninety five eighty five, seventy, and
Speaker 3: now we're below that. Does this market need to have
Speaker 3: a rate cut in September?
Speaker 8: I think the market needs to know that the rate
Speaker 8: cuts not entirely off the table. If it doesn't happen
Speaker 8: in September, maybe we see it in October. But I
Speaker 8: do think that the market would react negatively if we
Speaker 8: don't get it in September. I mean to your point.
Speaker 8: You know, when the jobs report came out a few
Speaker 8: weeks ago, it was all essentially entirely priced in, and
Speaker 8: now we've seen it come down. With some of the
Speaker 8: inflation figures and some of the commentary by Fed officials,
Speaker 8: I don't expect we'll get any clarity today from Chairman
Speaker 8: Palas speech, But as long as he doesn't take it
Speaker 8: entirely off the table, I think we'll just be very
Speaker 8: data dependent on what we see between now in that
Speaker 8: September meeting, we have another jobs report and more inflation data,
Speaker 8: and I think that will largely drive what the actual
Speaker 8: decision will be in September.
Speaker 2: Ryan, We're pretty much done the second quarter earnings period,
Speaker 2: and boy, it came in a lot better than expecting.
Speaker 2: Maybe eleven to twelve percent growth in earnings for shares,
Speaker 2: that enough to support a move higher in this market.
Speaker 4: How do you think about earnings evaluation that kind of thing.
Speaker 4: It's incredibly important. I mean what company?
Speaker 8: I mean, earnings are really what on the day to
Speaker 8: day earnings don't necessarily drive the market, but that is
Speaker 8: what drives the market over the long term. And company's
Speaker 8: balance sheets are very strong. Earnings expectations coming into the
Speaker 8: quarter where sub five percent and to your point, have
Speaker 8: come in between eleven and twelve percent, and we've seen
Speaker 8: if you look at it over the last five quarters,
Speaker 8: this has been the strongest beat rates that we've seen
Speaker 8: for the SMP the Nasdaq, and then even looking at
Speaker 8: MidCap and small cap in SMP those have been very
Speaker 8: strong as well. So the earning strength has really been
Speaker 8: broad based, and it's been broad based on a sector
Speaker 8: basis too.
Speaker 4: It's not been just technology.
Speaker 8: We've seen it in industrials and financials and consumer staples
Speaker 8: and utilities.
Speaker 4: So all of that.
Speaker 8: Like the fact that we're seeing it across the board,
Speaker 8: that's that's a huge positive and should be supportive going forward.
Speaker 3: Yeah, it sounds like a fantastic economy actually, So I'm
Speaker 3: just not seeing, aside from Paul's mortgage refinancing needs, I
Speaker 3: don't understand how these rates are restrictive when we see,
Speaker 3: you know, ten percent earning growth. Ninety five percent of
Speaker 3: the companies that reported so far have beaten expectation. And
Speaker 3: if you look at EEG on the terminal earnings revisions
Speaker 3: keep going to the upside. So where's the weakness. Why
Speaker 3: does the FED need to bring things down?
Speaker 8: I think that's just concerns around how the tariff impact
Speaker 8: will play out. I mean, we're there's still a question
Speaker 8: on really who's absorbing the costs right now? A lot
Speaker 8: of it seems to be getting absorbed by companies. Some
Speaker 8: of it hasn't really been passed on I mean, so
Speaker 8: there is maybe some concern about how all of this
Speaker 8: will play out, or if there's still holdover inventory, so
Speaker 8: the effects could pick up a little, But we're not
Speaker 8: seeing that there's any expectation, any reason to expect that
Speaker 8: there will be a significant negative impact going forward. So
Speaker 8: I would agree with you. I think we're in a
Speaker 8: pretty good spot. Both consumer and corporate balance sheets look
Speaker 8: pretty healthy right now.
Speaker 2: Ray, and thank you so much for joining us. Really
Speaker 2: appreciate getting a few minutes of your time. Mittrium, she's
Speaker 2: a partner at Callan Family Office.
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