WEBVTT - Bloomberg Surveillance TV: September 11, 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 --> 0:00:18.439 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:18.520 --> 0:00:21.400 day for insight from the best in markets, economics, and 0:00:21.440 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.800 --> 0:00:27.440 are live on Bloomberg Television weekday mornings from six to 0:00:27.520 --> 0:00:31.040 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.520 --> 0:00:36.880 Bloomberg Terminal and the Bloomberg Business app. Mike, Good morning, 0:00:36.920 --> 0:00:38.559 see you, set, Good morning, how are you. I want 0:00:38.600 --> 0:00:40.400 to pick up on that quote and we're doing great. 0:00:40.400 --> 0:00:41.720 I want to pick up on a line that you're 0:00:41.760 --> 0:00:44.920 focused on the difference between FED funds and the front 0:00:44.960 --> 0:00:46.559 end of the York curve FED funds in a two 0:00:46.640 --> 0:00:49.199 year and that quote, how important is that? 0:00:49.920 --> 0:00:51.920 Well, that's a signal that we're getting from the Bomber. 0:00:52.000 --> 0:00:54.600 The by market has historically been a pretty good indicator 0:00:54.760 --> 0:00:57.320 where the FED is relative to kind of what they 0:00:57.360 --> 0:00:59.120 need to be doing. And we saw this, by the way, 0:00:59.120 --> 0:01:01.520 on the upside too. Right in the twenty twenty one 0:01:01.560 --> 0:01:03.080 time frame, the two year got a head on the 0:01:03.160 --> 0:01:05.160 f side. So it's the same picture just on the 0:01:05.200 --> 0:01:08.240 other side. And you know, people's complain, Oh the complain. 0:01:08.319 --> 0:01:10.920 They say, we're looking stock market is behaving fine, but 0:01:10.959 --> 0:01:12.360 that's not true internally. 0:01:12.480 --> 0:01:16.199 Once again, you know, defensive stocks are really doing extremely well. 0:01:16.680 --> 0:01:18.880 So I think I think the stock market is taking 0:01:18.880 --> 0:01:21.240 its cues from what the bomb market is saying. It's 0:01:21.240 --> 0:01:23.480 not saying hard landing yet. What it's saying is that 0:01:23.600 --> 0:01:25.800 growth has continued to disappoint it. So since April, and 0:01:25.840 --> 0:01:27.920 we've been on this program many times since then, I 0:01:27.959 --> 0:01:32.520 would say that the data has been und distinguishedly negative 0:01:32.520 --> 0:01:34.560 in terms of growth data. Also, the labor day has 0:01:34.600 --> 0:01:36.840 been much worse. So how is the equity market dealt 0:01:36.840 --> 0:01:38.880 with that? Well, it's pivoted from what I call quality 0:01:38.959 --> 0:01:42.000 growth to quality defensives and we made that pivot in 0:01:42.600 --> 0:01:45.840 May and that's classic late cycle behavior. 0:01:45.920 --> 0:01:49.400 So I think everything kind of sinks. It's just we're waiting. 0:01:49.120 --> 0:01:51.320 For the you know, like, can somebody give us the 0:01:51.400 --> 0:01:53.640 keys to the test, you know, the cliff notes whatever 0:01:53.640 --> 0:01:55.200 it is, and how's this going to end? 0:01:55.720 --> 0:01:58.600 And we don't know, but the market I'm going to 0:01:58.680 --> 0:02:01.160 losk you face. You've said one of two things. Either 0:02:01.160 --> 0:02:04.480 the FED cuts aggressively or the labor market starts to 0:02:04.480 --> 0:02:07.560 improve and improve quickly. That's right, Equity markets to perform well. 0:02:07.640 --> 0:02:08.959 So if you've got a base cases that one of 0:02:08.960 --> 0:02:10.480 the others, we get one or the other. 0:02:10.800 --> 0:02:12.799 Well, what I would say is that the FED could 0:02:12.880 --> 0:02:14.920 get ahead of the curves they decide. But the problem 0:02:14.919 --> 0:02:17.800 they're constrained. Okay, they're constrained by two things. Not inflation, 0:02:17.919 --> 0:02:20.239 by the way, inflation's over, as far as I'm concerned. 0:02:20.320 --> 0:02:20.720 Inflation. 0:02:21.000 --> 0:02:23.760 They beat that. They're What the issue is now is 0:02:23.800 --> 0:02:26.600 the currency market. If they come in and start cutting aggressively, 0:02:27.160 --> 0:02:30.280 the end dollar relationship is going to create some stress, 0:02:30.280 --> 0:02:32.000 so they gotta be careful with that. The other thing 0:02:32.040 --> 0:02:33.920 I went through out there is we've looked at this. 0:02:34.320 --> 0:02:37.000 When the FED starts a cutting cycle with fifty basis 0:02:37.000 --> 0:02:39.519 points as opposed to twenty five, the chance of soft 0:02:39.600 --> 0:02:42.280 landing goes down materially. And they noticed, they know this data, 0:02:42.280 --> 0:02:43.400 they don't want to signal that. 0:02:43.600 --> 0:02:45.840 So they're in a tough spot. The Fed's in a 0:02:45.840 --> 0:02:48.760 difficult spot. They've They've done you a good job. 0:02:48.639 --> 0:02:52.119 Of trying to navigate this challenging different environment that we've 0:02:52.120 --> 0:02:54.880 been in for the last several years. But now the 0:02:54.919 --> 0:02:57.960 markets are pressing them, and so next week, I don't 0:02:57.960 --> 0:02:59.400 really care what they do next week. What I care 0:02:59.400 --> 0:03:01.600 about is how the markets react, how do the markets 0:03:01.639 --> 0:03:05.320 behave after they don't They're going to do twenty five probably, 0:03:05.440 --> 0:03:06.799 and then where do they stay in the press. 0:03:06.560 --> 0:03:08.960 Conference the vibes, whether they actually work for the market 0:03:09.040 --> 0:03:11.440 or not. I'm curious though, before we go into quality 0:03:11.440 --> 0:03:13.520 growth and quality defensive and what that actually means. You 0:03:13.520 --> 0:03:16.880 say something about the currency differential. Are there certain target 0:03:17.040 --> 0:03:20.480 levels that you see sort of unwinding some of the 0:03:20.520 --> 0:03:22.760 longs that still remain out there. Do you have a 0:03:22.800 --> 0:03:25.760 sense of just how disruptive the ongoing long trade for 0:03:25.800 --> 0:03:28.440 the dollar really will be potentially eight down the road. 0:03:28.520 --> 0:03:30.080 Yeah, I mean I don't have a specific level, but 0:03:30.120 --> 0:03:31.880 I do feel like they're trying to defend this low 0:03:31.919 --> 0:03:34.760 one forties level between yen dollars, so call it one 0:03:34.800 --> 0:03:37.600 forty two. If we start to you know, one thirty ish, 0:03:37.640 --> 0:03:39.240 you know, one thirty eight, one thirty nine, I think 0:03:39.280 --> 0:03:42.000 that could cause some stress in other markets. 0:03:42.520 --> 0:03:45.760 Meanwhile, you talk about shifting from quality growth to quality defensive. 0:03:46.480 --> 0:03:50.440 I've struggled with these monikers quite a bit simply because 0:03:50.600 --> 0:03:53.720 what does defensive? What does growth mean? Where does Nvidia 0:03:53.720 --> 0:03:56.480 fit into this, or does a tech trade go Given 0:03:56.480 --> 0:03:58.480 the fact that people have gotten an AI trade that 0:03:58.600 --> 0:04:03.480 is so inflated in terms of expectations and timing, what 0:04:03.520 --> 0:04:05.400 does that mean to you? Quality defensive? 0:04:05.600 --> 0:04:09.920 You know, defensives are your classic defensive sectors, whether it's utilities, staples, healthcare, 0:04:10.200 --> 0:04:13.720 things that are positively correlated to bonds. Okay, they and 0:04:13.760 --> 0:04:15.960 they did not trade well by the way up until 0:04:16.040 --> 0:04:16.719 sort of April. 0:04:17.000 --> 0:04:18.440 It was really the quality gross stacks. 0:04:18.480 --> 0:04:21.640 Now the other thing that's happened is the AI dream 0:04:22.160 --> 0:04:23.599 has taken you know, a little bit of that luster 0:04:23.640 --> 0:04:26.000 has come off, and I really gazed up by what 0:04:26.040 --> 0:04:27.000 semi conductors are doing. 0:04:27.000 --> 0:04:28.640 It's not just videots, it's semi. 0:04:28.400 --> 0:04:30.320 Connectors writ large, and a lot of those stocks have 0:04:30.400 --> 0:04:32.600 really come off, and that makes sense to me. 0:04:32.600 --> 0:04:35.640 We just we just got overcooked on the whole AI theme. 0:04:35.720 --> 0:04:36.479 Doesn't mean it's over. 0:04:36.520 --> 0:04:39.080 We've written about this extensively, like we're not believers that 0:04:39.120 --> 0:04:42.000 this is going to change productivity materially in the short term. 0:04:42.040 --> 0:04:44.440 That's a long term story, and everything kind of got 0:04:44.440 --> 0:04:47.520 bit up on that. So with that theme now gone, 0:04:47.880 --> 0:04:49.679 the market is looking for a new theme. 0:04:49.800 --> 0:04:50.880 On a gross side, there. 0:04:50.760 --> 0:04:54.440 Isn't one, So it does it hunkers down into defensive, 0:04:54.600 --> 0:04:57.599 high quality assets until we get the next thing, whether 0:04:57.640 --> 0:05:00.320 that's a bad outcome or a positive out come. 0:05:00.520 --> 0:05:02.000 They're going to hide out in these areas. 0:05:02.200 --> 0:05:05.440 Mike, you say inflation's over. We do have CPI data 0:05:05.440 --> 0:05:07.200 though today, So I'm curious to know, how do you 0:05:07.200 --> 0:05:09.240 think the market would trade if we get say a 0:05:09.240 --> 0:05:12.760 hotter print says is it too volatile or softer print? 0:05:12.800 --> 0:05:15.200 Would the markets start pricing in fifty or look at 0:05:15.200 --> 0:05:18.000 a softer print and say, wow, we are cooling down 0:05:18.120 --> 0:05:20.640 faster than even the FED was expecting. And bad news 0:05:20.680 --> 0:05:21.600 really is bad news. 0:05:21.720 --> 0:05:21.880 Yeah. 0:05:21.920 --> 0:05:23.640 Well, when I send inflation's over, I mean the ry 0:05:23.680 --> 0:05:25.800 to change on inflation is over, and it's kind of 0:05:25.839 --> 0:05:27.839 over for equity markets, and quite frankly it's over for 0:05:27.880 --> 0:05:31.640 the FED. Where inflation is not over is the price level, right, 0:05:31.720 --> 0:05:35.080 The price level is absolutely squeezing the heck out of 0:05:35.240 --> 0:05:38.240 businesses and consumers, and so it's like a vice. 0:05:38.640 --> 0:05:40.239 And so I don't think inflation's over. An ergar. 0:05:40.240 --> 0:05:42.159 But what I would say is that, you know, hot 0:05:42.240 --> 0:05:44.960 number I think is probably pretty bad for the stock 0:05:45.000 --> 0:05:45.520 market today. 0:05:45.520 --> 0:05:46.200 I'm not expecting that. 0:05:46.240 --> 0:05:48.720 But if we've got hot number today, then all of 0:05:48.760 --> 0:05:50.719 a sudden, the FED is going to stay behind the curve. 0:05:50.720 --> 0:05:51.680 They're kind of stuck. 0:05:52.000 --> 0:05:54.560 If we get a really soft number, then we go 0:05:54.600 --> 0:05:57.279 back to our old thesis, which is pricing power is gone. Okay, 0:05:57.279 --> 0:05:58.720 so we kind of need to thread the needle here 0:05:58.760 --> 0:06:01.040 a little bit too. I mean, break evens are at 0:06:01.080 --> 0:06:04.000 two percent now breaking away, So what are we talking about. 0:06:04.040 --> 0:06:06.159 We're already at two percent and it's not like these 0:06:06.160 --> 0:06:09.039 things stop on a dime. You know, there's a risk 0:06:09.040 --> 0:06:11.960 that we undershoot on the downside. That's good for bonds 0:06:12.080 --> 0:06:14.440 and it's bad for stocks typically, And by the way, 0:06:14.480 --> 0:06:16.760 that's how the stock market, that's how the markets are trading. 0:06:16.800 --> 0:06:19.040 So I think I think the market's already understand all 0:06:19.080 --> 0:06:20.479 of this. Once again. 0:06:20.800 --> 0:06:22.680 They're going to do something next week to try and 0:06:23.080 --> 0:06:25.680 manage the situation. Twenty five is what we think, and 0:06:25.720 --> 0:06:28.719 they'll signal for more twenty fives, not fifties, and then 0:06:28.920 --> 0:06:29.880 what do they do at the balance? 0:06:30.000 --> 0:06:31.800 I think that's probably the bigger wildcard. 0:06:31.839 --> 0:06:35.360 Do they talk more aggressively about ending Q team more quickly, 0:06:35.640 --> 0:06:38.680 do they find other other provisions to provide liquidity. That's 0:06:38.760 --> 0:06:40.440 the bold case in my view. That's where we could 0:06:40.480 --> 0:06:42.440 be surprised on the f side. Is there more liquidity 0:06:42.480 --> 0:06:44.200 coming into the system from other sources? 0:06:44.560 --> 0:06:46.760 And after next week, then everyone's going to really be 0:06:46.760 --> 0:06:49.840 focused on the US election. Goldman Sachs RBC. They talk 0:06:49.880 --> 0:06:52.480 about how earnings will be much higher potentially under Trump 0:06:52.480 --> 0:06:56.039 administration if he gets his tax cut plan rather than 0:06:56.120 --> 0:06:58.680 Harris who's calling for twenty eight percent. How do you 0:06:58.839 --> 0:07:03.559 view next year earnings growth based on these two proposals. 0:07:03.279 --> 0:07:06.080 Assuming that the economy is in a soft landing, okay, 0:07:06.760 --> 0:07:08.720 if it hasn't overstated, it's welcome. And by the way, 0:07:08.720 --> 0:07:10.600 I think that risk is still on the table. We're 0:07:10.640 --> 0:07:12.560 in the soft landing camp, but it's that to me 0:07:12.760 --> 0:07:15.920 is way more important than the outcomist election in the 0:07:15.960 --> 0:07:18.400 next six to twelve months. So let's assume we're in 0:07:18.400 --> 0:07:19.080 a soft landing. 0:07:19.760 --> 0:07:20.480 Our views the same. 0:07:20.560 --> 0:07:23.440 We think that basically Trump is kind of pro growth, 0:07:23.760 --> 0:07:26.200 kind of bad for bonds, good for stocks, okay, And 0:07:26.240 --> 0:07:28.280 that's how we would look at it. And by the way, 0:07:28.360 --> 0:07:32.040 last night, when the debate was going on, the betting 0:07:32.040 --> 0:07:34.960 markets kind of went in favor of Harris, and the 0:07:35.000 --> 0:07:37.520 stock market futures kind of trade a little bit okay, 0:07:37.600 --> 0:07:41.080 But I do think the stock market is pro Trump. 0:07:41.200 --> 0:07:44.120 I mean, the stock market has traded better when his 0:07:44.200 --> 0:07:46.200 odds go up and vice versa. 0:07:46.320 --> 0:07:49.680 So Bonsaw good unto Harris and stock's a bad unto. 0:07:49.440 --> 0:07:52.960 Harris in theory, I mean, at the margin, I would 0:07:53.000 --> 0:07:54.320 say that's the setup, and. 0:07:54.280 --> 0:07:56.080 The reason being is really taxes. 0:07:56.160 --> 0:07:59.880 Taxes is the one thing that requires some congressional support too. 0:08:00.080 --> 0:08:02.400 But to me, that's the big issue, not tear so much, 0:08:02.480 --> 0:08:06.440 both administrations of tariffed and then immigration. I think both 0:08:06.480 --> 0:08:08.360 parties are going to deal with that in some way. 0:08:08.760 --> 0:08:11.920 So taxes is the issue. Obviously Trump is talking about 0:08:11.960 --> 0:08:13.880 cutting parents, is talking about raising them. 0:08:14.080 --> 0:08:15.800 That's bad for stocks, good for bonds. 0:08:15.840 --> 0:08:17.360 I wanted to ask you this question. I want to 0:08:17.360 --> 0:08:19.040 squeeze it into the very end. Least was knocking on 0:08:19.080 --> 0:08:22.240 the door. Utility is actually defensive. They're up like twenty 0:08:22.280 --> 0:08:24.400 percent this year, and it feels like everyone's getting whatever 0:08:24.440 --> 0:08:26.720 they want from utilities. It's defensive. It's at touched to 0:08:26.800 --> 0:08:28.160 AI what are utilities? 0:08:28.520 --> 0:08:30.400 So this is a very interesting question. So you know, 0:08:30.480 --> 0:08:33.400 we agree. I mean, we don't think we were one 0:08:33.440 --> 0:08:34.360 of the first ones to talk. 0:08:34.240 --> 0:08:37.640 About utilities as an AI beneficiary back in February March. 0:08:37.920 --> 0:08:39.080 I think that's probably gotten. 0:08:38.840 --> 0:08:42.120 A little overdone, to be honest. But now utilities are 0:08:42.120 --> 0:08:44.320 definitely trading with the bomb market, so they are the 0:08:44.400 --> 0:08:48.280 defensive properties of utilities are I think, dominating their performance 0:08:48.280 --> 0:08:51.839 in the near term. Here's the interesting about utilities. Their 0:08:51.880 --> 0:08:54.760 balancees are typically are not great. Okay, so you gotta 0:08:54.760 --> 0:08:56.839 be really careful with utilities. If it's going to be 0:08:56.920 --> 0:08:59.600 hard landing, these things are going to start trading really poorly. 0:09:00.240 --> 0:09:04.480 Caution listeners. If you totally start treating really poorly and 0:09:04.520 --> 0:09:07.960 the stock market's not ripping, that's a bad sign. That 0:09:07.960 --> 0:09:10.319 would be a sign that, oh, we are actually getting 0:09:10.320 --> 0:09:12.640 closer to potentially hard landing risks. 0:09:12.720 --> 0:09:14.079 That hasn't happened yet. 0:09:14.240 --> 0:09:16.880 But if you look at things like low volatility parts 0:09:16.880 --> 0:09:19.640 of the of the stock market or defensive, they've gone 0:09:19.640 --> 0:09:22.840 almost parabolic, and if they start to sell off hard 0:09:23.480 --> 0:09:26.480 without a stock market rally, then I get concerned about 0:09:26.480 --> 0:09:27.160 hard landing risk. 0:09:27.200 --> 0:09:28.359 That's not the case today. 0:09:28.160 --> 0:09:30.440 Interest in This was great clinic, hanzill West, Thank you, sir, 0:09:30.520 --> 0:09:42.360 Mike Wilson that it's the late says coming on. How 0:09:42.480 --> 0:09:45.079 is challenging Donald Trump to a second debate? With the 0:09:45.240 --> 0:09:49.000 eight weeks remaining until election day, Trump sang on Fox 0:09:49.000 --> 0:09:52.600 News earlier he is less inclined to debate Harris once again. 0:09:52.880 --> 0:09:56.200 Rob Casey of Signum Global writing this, Harris had a 0:09:56.320 --> 0:09:58.959 very good night. She did not land any knockout punches. 0:09:59.040 --> 0:10:01.199 This is going to be a close race tomorrow as 0:10:01.240 --> 0:10:03.440 it is today. But Harris carried us off with great 0:10:03.480 --> 0:10:07.960 composure and successfully defined a stark comparison between her policies 0:10:08.240 --> 0:10:10.400 and those of Trump. Rops with us around the table, Rob, 0:10:10.400 --> 0:10:11.199 good morning to you, sir. 0:10:11.360 --> 0:10:11.680 Morning. 0:10:11.800 --> 0:10:13.280 You said she had the edge going into this. She 0:10:13.320 --> 0:10:17.040 base cases that Harris wins this election. Did anything change overnight? 0:10:17.320 --> 0:10:19.080 You know, I don't think a lot changed. I think 0:10:19.120 --> 0:10:22.480 Harris had a good night. But how voters feel about 0:10:22.520 --> 0:10:24.439 Kamala Harris and how voters feel about Donald Trump. I 0:10:24.440 --> 0:10:27.200 think yesterday into today not a whole lot different. You know, 0:10:27.360 --> 0:10:30.640 Harris did introduce herself to more voters, voters who maybe 0:10:30.679 --> 0:10:32.680 didn't know much about her as she was a senator 0:10:32.679 --> 0:10:35.680 and VP maybe didn't turn into the Democratic National Convention. 0:10:36.080 --> 0:10:37.360 So I think in that sense, you know. 0:10:37.320 --> 0:10:40.719 Harris proved that what proved once again she can be 0:10:40.800 --> 0:10:42.960 on that stage. She deserves to be on that stage, 0:10:43.000 --> 0:10:46.480 even though she didn't win any primary votes. But that 0:10:46.600 --> 0:10:49.080 being said, this was not a debate to change people's minds. 0:10:49.120 --> 0:10:50.800 There's a phrase that you've used you and the team 0:10:50.800 --> 0:10:53.679 in your research, asymmetric incumbency. You get to fly on 0:10:53.720 --> 0:10:56.920 Air Force two, but without the baggage. Now, the former 0:10:56.960 --> 0:10:58.520 president seems to be doing a pretty poor job of 0:10:58.559 --> 0:11:00.679 prosecuting the case and getting people to realize that there 0:11:00.720 --> 0:11:03.480 is some bankat chair. Where is he folding shill? On 0:11:03.520 --> 0:11:04.439 that front, I. 0:11:04.360 --> 0:11:06.480 Think it's a much easier argument to make against Joe 0:11:06.520 --> 0:11:08.320 Biden than it is against Kamala Harris. You know, I 0:11:08.320 --> 0:11:11.000 think most of us in the country understand that the 0:11:11.080 --> 0:11:12.559 vice president doesn't have a whole. 0:11:12.400 --> 0:11:12.960 Lot of power. 0:11:13.440 --> 0:11:15.600 Was she tasked with the border to a certain extent? Yes, 0:11:15.880 --> 0:11:18.040 Do I think that that's a very successful attack line 0:11:18.080 --> 0:11:21.079 against Kamala Harris. Yes, and it's one that Trump made 0:11:21.160 --> 0:11:23.840 last night. But that being said, you know, she's essentially 0:11:23.920 --> 0:11:26.840 an undefined quantity. She's done a better job of defining 0:11:26.880 --> 0:11:28.600 herself than Trump has it defining her. 0:11:28.800 --> 0:11:31.720 Some individuals are going to start voting next week, especially 0:11:31.760 --> 0:11:34.400 in a swing state like Pennsylvania. Trump saying he's less 0:11:34.400 --> 0:11:37.640 inclined to debate Harris again. This morning on Fox Kamala, 0:11:37.640 --> 0:11:39.640 Harris's team came out right away and said, we want 0:11:39.640 --> 0:11:42.880 a second debate. What benefits her of having a second 0:11:42.920 --> 0:11:45.680 debate if you and many others would say, And the 0:11:45.720 --> 0:11:48.920 predict market has her up now saying she won this one. 0:11:49.080 --> 0:11:51.160 You know, I think that was a stellar decision by 0:11:51.160 --> 0:11:53.839 the Harris campaign to come out and say immediately after 0:11:54.240 --> 0:11:56.600 that she's ready to go again. Right, she won, she 0:11:56.600 --> 0:11:57.959 wants to do it again. She doesn't think it was 0:11:57.960 --> 0:12:00.600 a fluke. She's happy to step on any state anytime. 0:12:00.920 --> 0:12:03.720 That being said, you know, I don't think Trump is 0:12:03.720 --> 0:12:05.640 eager to get back on a stage. And there's a 0:12:05.640 --> 0:12:08.280 lot of back and forth about the rules and anchors 0:12:08.280 --> 0:12:10.880 and moderators, and last night maybe fairly so, so I 0:12:10.880 --> 0:12:13.199 think it'll be it'll be hard for the two campaigns 0:12:13.400 --> 0:12:16.120 to come to an agreement about a second a second debate. 0:12:16.480 --> 0:12:18.440 That being said, I think brilliant move by the Harris 0:12:18.520 --> 0:12:20.160 campaign to say that she's ready to go again. 0:12:21.280 --> 0:12:23.720 I know this wasn't actually in the debate, but Taylor 0:12:23.760 --> 0:12:26.439 Swift did come out after and endorse Kamala Harrison. The 0:12:26.480 --> 0:12:28.840 reason why I'm interested about this is because Evan wroth 0:12:28.880 --> 0:12:32.160 Smith yesterday said they're going after last night five hundred 0:12:32.200 --> 0:12:35.959 thousand people. Does Taylor Swift actually move the margins into 0:12:36.040 --> 0:12:36.720 Harris camp? 0:12:37.280 --> 0:12:39.600 You know, I think she moves the margins marginally. I mean, 0:12:39.920 --> 0:12:42.360 I don't think it's a huge change to the race. 0:12:42.559 --> 0:12:45.160 I think it's the single most important celebrity endorsement in 0:12:45.200 --> 0:12:48.760 this campaign, certainly maybe in US presidential history. And that's 0:12:48.800 --> 0:12:51.080 because you know, the Taylor Swift base, if you want 0:12:51.080 --> 0:12:54.240 to call it, is largely white, suburban women, often young women. 0:12:54.760 --> 0:12:58.000 These are the voters who could decide the election. They're 0:12:58.000 --> 0:13:01.280 certainly voters motivated by abortion of other issues. And so 0:13:01.320 --> 0:13:03.720 for Taylor Swift to come out very explicitly last night 0:13:03.760 --> 0:13:06.439 following the debate in support of Vice President Harris, I 0:13:06.480 --> 0:13:09.240 think it can only help her, although maybe not that much. 0:13:09.840 --> 0:13:12.800 Just to build on something both Emory and John we're 0:13:12.840 --> 0:13:15.160 talking about, how much at this point you can the 0:13:15.160 --> 0:13:17.600 only thing that really changes the tune of this election 0:13:18.120 --> 0:13:21.000 come to turnout. Essentially, this is just a turnout game 0:13:21.040 --> 0:13:22.120 more than anything else. 0:13:22.800 --> 0:13:25.480 Yeah, it really is. And between now November, and we 0:13:25.480 --> 0:13:27.520 talked about this last week. You know, there aren't a 0:13:27.559 --> 0:13:29.040 whole lot of things that are likely to change the 0:13:29.080 --> 0:13:31.320 election a whole lot, right, We talked about October surprises 0:13:31.360 --> 0:13:34.240 all the time. The data doesn't really show that October 0:13:34.280 --> 0:13:37.560 surprises change voter's minds a whole lot. So between now 0:13:37.559 --> 0:13:39.880 and November, I think the question is can Kamala Harris 0:13:39.920 --> 0:13:43.040 sustain her momentum out of the convention. She didn't get 0:13:43.040 --> 0:13:44.920 the bump that I think she and Democrats would have 0:13:45.080 --> 0:13:47.760 liked in the past week. She's seen some polls that 0:13:47.800 --> 0:13:49.880 are not quite as positive as in the past month. 0:13:50.760 --> 0:13:52.840 But coming out of the debate and sort of this 0:13:52.880 --> 0:13:54.920 is really the sprint of the finish. The question is 0:13:54.960 --> 0:13:58.920 can't she sustain the momentum necessary to turn out Democrats 0:13:58.920 --> 0:14:01.719 across the country. Of course, she's helped by issues like 0:14:01.760 --> 0:14:04.559 abortion among others that are explicitly on the ballot. As 0:14:04.600 --> 0:14:07.000 long as she doesn't you know, stub her toe, I 0:14:07.040 --> 0:14:11.080 think the momentum is such that turnout will benefit Harris 0:14:11.080 --> 0:14:11.679 in November. 0:14:11.840 --> 0:14:14.000 From Marcus perspective, it seems like a lot of people 0:14:14.080 --> 0:14:16.600 are discounting the election to a large degree, partly because 0:14:16.600 --> 0:14:19.200 there's no visibility, but also partly because there is an 0:14:19.200 --> 0:14:21.400 assumption that there will be divided government and that nobody 0:14:21.400 --> 0:14:24.400 will actually get their agenda fully through. What gives you 0:14:24.520 --> 0:14:26.080 confidence that that's going to be the case at a 0:14:26.120 --> 0:14:29.600 time where potentially, if it comes down to turnout, then 0:14:29.800 --> 0:14:32.960 more turnout for one candidate could mean more downpellate races 0:14:33.000 --> 0:14:34.720 that people win as well. 0:14:35.120 --> 0:14:37.480 Yeah, absolutely, And I think that you know, a blue 0:14:37.480 --> 0:14:40.480 wave under a Harris campaign is more likely than it 0:14:40.520 --> 0:14:42.680 was under a Biden campaign because Biden proved to be 0:14:43.000 --> 0:14:45.720 such a drag on Senate and House races for Democrats. 0:14:46.040 --> 0:14:49.160 That being said, the Senate map essentially comes down to 0:14:49.520 --> 0:14:52.200 a few particular states that Trump is going to win 0:14:52.240 --> 0:14:54.480 by thirty thirty five points. I mean, I'm talking about 0:14:54.520 --> 0:14:58.160 Montana in particular, if John Tester can't win that seat. 0:14:58.320 --> 0:15:00.960 Of course, assuming that Republicans take Wey Virginia following Joe 0:15:01.000 --> 0:15:04.600 Mansion's departure, that leads us to a fifty to fifty 0:15:05.080 --> 0:15:08.640 or a fifty one forty nine Senate in favor of Republicans. 0:15:08.880 --> 0:15:12.040 Of course, that's a divided government necessarily, So I think 0:15:12.080 --> 0:15:14.760 it's really the Senate math. As good as Democrats feel 0:15:14.800 --> 0:15:17.240 about the presidency, as good as they feel about the House, 0:15:17.280 --> 0:15:19.440 and they feel very very good about the House, it's 0:15:19.480 --> 0:15:22.160 the Senate math that is not in Democrats' favor. And 0:15:22.200 --> 0:15:25.000 I think Republicans are probably able to flip Montana, if 0:15:25.040 --> 0:15:26.040 not one or two other states. 0:15:26.040 --> 0:15:28.840 I know this is scenario analysis with various probabilities attached 0:15:28.840 --> 0:15:30.120 to it, and we can sit here and say it's 0:15:30.160 --> 0:15:32.560 a low probability outcome. But if we got a blue sweet, 0:15:32.560 --> 0:15:35.360 wouldn't that be absolutely terrible for equities in America? 0:15:36.480 --> 0:15:38.360 Yeah, I mean, point plank, Yes, I do think it 0:15:38.360 --> 0:15:40.960 would be a problem. There are not the moderating forces 0:15:41.000 --> 0:15:43.400 in Congress that there were under the first two years 0:15:43.400 --> 0:15:46.120 of the Biden presidency, which was, as we all remember, 0:15:46.320 --> 0:15:50.040 a blue wave, but a blue wave tempered by Joe 0:15:50.120 --> 0:15:52.880 Mansion and Kirsten Cinema. And there would not be those 0:15:52.960 --> 0:15:55.960 voices in a new Congress under Harris. I mean, you know, 0:15:56.000 --> 0:15:58.600 as we've all seen, the Wharton budget model suggests that 0:15:59.440 --> 0:16:02.000 Harris is writ large where they all to pass what 0:16:02.120 --> 0:16:05.280 would not be quite as deficit negative as trumps across 0:16:05.320 --> 0:16:08.920 the board. But that being said, you know, a blue 0:16:08.920 --> 0:16:12.120 wave without kind of the blue dog, very very moderate 0:16:12.120 --> 0:16:14.200 senators who are willing to stand up against the Party. 0:16:15.200 --> 0:16:17.360 I do think that that would be negative for equities overall. 0:16:17.440 --> 0:16:30.480 Interesting, Rob, Thank you, sir, web case of signal David Kelly, 0:16:30.600 --> 0:16:32.400 jpm molk and I said management to stay for shoots 0:16:32.440 --> 0:16:34.600 of miss wall join us now for a little bit more, David, 0:16:34.680 --> 0:16:36.960 let's get into the data first, and your reaction to it. 0:16:37.000 --> 0:16:39.400 Is this noise or news for the Federal Reserve. 0:16:41.080 --> 0:16:44.360 I think it's it's more noise than news in the 0:16:44.400 --> 0:16:48.080 fact that the core number was slightly higher than expected 0:16:48.480 --> 0:16:50.760 for the month. If you look at it, we've got 0:16:50.800 --> 0:16:53.120 a three point nine percent jump in airline pairs of 0:16:53.200 --> 0:16:54.920 very balls, so they were down last month. 0:16:55.200 --> 0:16:58.000 They're not you know, given the number of people traveling. 0:16:58.000 --> 0:17:01.120 Frankly, it's amazing that we don't have more airline inflation. 0:17:01.440 --> 0:17:03.680 We've also got to bump in tobacco prices, which are 0:17:03.680 --> 0:17:04.679 pre vols a month to month. 0:17:04.720 --> 0:17:07.480 But outside of that, it's it's very much on track, 0:17:07.760 --> 0:17:09.280 you know. And I've been talking for a long time 0:17:09.320 --> 0:17:12.280 about you know how the economy is or how inflation 0:17:12.359 --> 0:17:14.360 is cooling, it's just cooling too slowly. Well, I can 0:17:14.359 --> 0:17:16.600 say that it is now cool to room temperature. I mean, 0:17:16.640 --> 0:17:18.840 at two point five percent a year over year, there 0:17:18.880 --> 0:17:23.119 really is not a significant inflation problem. I realize that, 0:17:23.320 --> 0:17:25.000 you know, shelter is going to take a little while 0:17:25.040 --> 0:17:27.000 to come down from here, But even on things like 0:17:27.240 --> 0:17:31.120 auto insurance six tensor percent, it's this is coming away 0:17:31.160 --> 0:17:33.840 from a twenty percent year over year gain, So overall 0:17:34.080 --> 0:17:36.000 it looks very well controlled. To me, it looks like 0:17:36.080 --> 0:17:39.320