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Speaker 2: read story on the Bloomberg Terminal, here's about this Bank
Speaker 2: of Japan and raising rates, scrapping the world's last negative
Speaker 2: interest rate and the most aggressive monetar Steller's program in
Speaker 2: modern history, but also indicating that financial conditions may stay
Speaker 2: accommative for now. This is big. It's the most read.
Speaker 2: I'm trying to get a sense of how important it is.
Speaker 2: Maybe our next guests can help out here. Jennifer Lee,
Speaker 2: Senior economists and Managing director at BMO Capital Markets. Jennifer,
Speaker 2: thanks so much for joining us. Can you put into
Speaker 2: context what we what the Bank of Japan did today
Speaker 2: and what it means because again most red story on
Speaker 2: the Bloomberg terminal for sure.
Speaker 1: Good morning everyone, thanks for having me on. You know,
Speaker 1: I think this first of all, I have to think
Speaker 1: all the local Japanese media for leaking out all the
Speaker 1: all the mooths ahead of time. So I mean, you
Speaker 1: can see from the reaction of the market, I wasn't
Speaker 1: a huge change in terms of reaction, I guess. But
Speaker 1: what this basically means is that, you know, as you
Speaker 1: just pointed out, the last era of negative rates and
Speaker 1: now we're turning to something more normal. You know, try
Speaker 1: to explain to anyone out there, you know what the
Speaker 1: heck does negative rates mean? You know, and you know
Speaker 1: Japan's have had this for so many years now, so
Speaker 1: now they're flowing back to normal, peaking above. You know,
Speaker 1: we're back in positive territory. Although at zero to zero
Speaker 1: point one percent range, it's still extremely extremely accommodative. But
Speaker 1: again it shows that the make Japan is no longer
Speaker 1: asleep at the wheel and is finally moving toward a
Speaker 1: more normal condition.
Speaker 3: And Jennifer, I'm looking at some of the market reaction
Speaker 3: from analysts and strategists basically saying that the forward guidance
Speaker 3: doesn't close the door on another hike. Is that something
Speaker 3: that you agree with? What's your read on what could
Speaker 3: be next?
Speaker 1: So you know, I did see you know, some people penciling,
Speaker 1: you know, a series of rate hikes. I think it's
Speaker 1: you know, way way too soon. I mean, this bank
Speaker 1: is very deliberate and very careful of what their moves are. Obviously,
Speaker 1: you know, we've had inflation well above the two percent
Speaker 1: target for you know, over two years now, and now
Speaker 1: they're finally moving. But you know, I think it's way
Speaker 1: too early to say that this is the beginning of
Speaker 1: a series of rate hikes. You know, I wouldn't be
Speaker 1: shocked if we see one more move. But you know,
Speaker 1: as you just pointed out, like the statements still said
Speaker 1: that they're going to be very accommodative for some time.
Speaker 1: They're still buying jgb's, They're going to buy more if
Speaker 1: you see some sort of a big abrupt move in
Speaker 1: the JGB JGB market, which we're not seeing this morning,
Speaker 1: So it all depends, but there's still there, there's still
Speaker 1: keeping rates very very low. Again not negative, but at
Speaker 1: least it's you know that's still very close to zero,
Speaker 1: so still very accommodative. I think it's too soon to
Speaker 1: say that there will be a series of rate hikes,
Speaker 1: but I wouldn't be surprised, would be kind of nudged
Speaker 1: it up a little bit further, depending on obviously how
Speaker 1: things play out. Everything it's data dependent and not calendar dependent,
Speaker 1: you know, to use all the famous words that various
Speaker 1: central bankers use these days.
Speaker 2: Yep, busy week here for central bankers to be sure,
Speaker 2: not just as the Bank of Japan, but tomorrow with
Speaker 2: the United States Federal Reserve, what do you think we're
Speaker 2: going to hear from FED chairman j Palle. I mean,
Speaker 2: obviously most people don't expect any movement in rage tomorrow,
Speaker 2: but what kind of commentary do you think we'll hear?
Speaker 1: He is going to stay uber cautious, I think, especially
Speaker 1: after what we saw the last week with the sticky
Speaker 1: inflation numbers both for CPI and PPI and the still
Speaker 1: you know, in my opinion, a little bit questionable retail
Speaker 1: sales data shows that you know, we're again it's we
Speaker 1: have still to be very cautious with what we say.
Speaker 1: You know that, Jane, I have just have to briefly
Speaker 1: about retail sales. You know, I was kind of disappointed
Speaker 1: to see you know that I'm going to say crappy,
Speaker 1: you know, January retail sales results, you know, even lower
Speaker 1: and even crappier, even though we did see the bounce
Speaker 1: back in February. So it's it's sort of interesting to
Speaker 1: see how that's going to play out. But definitely sticky
Speaker 1: inflation is what they're going to be worried about, and
Speaker 1: the FED chair is going to be extremely, extremely cautious.
Speaker 1: And what he says, he doesn't want to, you know,
Speaker 1: cause any undo you know, hoop law, I guess and
Speaker 1: markets to say, you know, to cause everyone to speculate
Speaker 1: that they're going to be cutting earlier or whatever. But
Speaker 1: I think he's probably gone to pushback again on expectations
Speaker 1: of when the feder will finally cut rates. We're sticking
Speaker 1: to our July call. I think it'd be very interesting
Speaker 1: to see what the dot plot does, you know, whether
Speaker 1: or not they're going to stick with those three cuts.
Speaker 1: I think that they have penciled in for this year.
Speaker 3: Jennifer looking at the warp function wi RP on the terminal.
Speaker 3: The first full cut fully priced in in July to
Speaker 3: your point, with potentially three at least according to our
Speaker 3: data through the end of the year early twenty twenty five.
Speaker 3: What can j Powell s say from a hawkish perspective
Speaker 3: that could make investors reshape expectations.
Speaker 1: He can talk about being very worried, or he won't
Speaker 1: feel very but he will say that, you know, we're
Speaker 1: still concerned about how inflation is still sticky, services in inflation,
Speaker 1: the supercore measurer and all that, you know. Again, just
Speaker 1: sounding a little bit more concerned, I think would would
Speaker 1: cause markets to push back the timing I think a
Speaker 1: little bit more. But again, he's been saying this, you know,
Speaker 1: for for some time now, and I think he's just
Speaker 1: going to stick to that script. And he sort of
Speaker 1: swaying away from from from his usual wording will, I
Speaker 1: think will cause markets to pounce as well. So he
Speaker 1: has to be so careful of what he says. You know,
Speaker 1: how many times he says, oh, how many times blinks,
Speaker 1: you know, and everyone will be focusing on every little
Speaker 1: new ones that he does, anything that's different.
Speaker 4: From what he has been, you know, doing in the past.
Speaker 1: In the past few months.
Speaker 2: Jennifer, what's your thoughts about the overall just looking at
Speaker 2: the US economy here, looks like inflation is trending in
Speaker 2: the right direction. There's still moderate economic growth that looks
Speaker 2: like the employment pictures pretty steady. What's your overall view
Speaker 2: of the US economy here?
Speaker 1: Still and I'm going to use the word that you know,
Speaker 1: your you're a couple of guests Ago was kept kept
Speaker 1: saying as well, you know, it's still quite resilient. I
Speaker 1: don't think anyone can or should be arguing that. I mean,
Speaker 1: after you know, five hundred twenty five basis points of
Speaker 1: great hikes, you know, the economy is still growing at
Speaker 1: a at a at a solid pace, and that's extremely impressive.
Speaker 1: And people are still hiring. You know, there may be
Speaker 1: some evidence of boarding, you know, as we talked about
Speaker 1: in the past, but at the same time, you know,
Speaker 1: we're not seeing mass layoffs either, which is very good news.
Speaker 1: And it just speaks to again the resilience of the
Speaker 1: US economy, the resilience of the labor market. The consumer
Speaker 1: is still has you know, a little bit of cash
Speaker 1: sashed away for a rainy day, and even though you
Speaker 1: know the consumers are also you know, quite volatile. Terms
Speaker 1: of the confidence lelveolst. They still have stuff in the
Speaker 1: bank to spend if needed, and it's okay to take
Speaker 1: a breather once in a while, you know, you don't
Speaker 1: just spend everything that you earn. But again, it speaks
Speaker 1: to overall broader resilience, and I think it's still about
Speaker 1: the US economy overall for this year.
Speaker 3: And Jennifer, we have BOJ, FED and BOE, but there's
Speaker 3: this company called Nvidia having their GtC conference.
Speaker 2: I talk to investors.
Speaker 3: They're more focused on in video than anything related to
Speaker 3: central banks. Is that concerning, Well, it's.
Speaker 1: Definitely more interesting. I personally wish I owned it, but
Speaker 1: I think, you know, but of course everything is going
Speaker 1: to you know, we're all going to be hinging on.
Speaker 1: Not only are the earnings and all that, but of
Speaker 1: course you know what monetary policy is going to be,
Speaker 1: how it's going to be playing out over the over
Speaker 1: the next year, how much easier it's going to be,
Speaker 1: or or less easy or less tight it's going to be.
Speaker 1: I think it's all going to go back to what
Speaker 1: the FED chair is going to say or not say,
Speaker 1: and how they're going to act for the.
Speaker 5: Rest of the year.
Speaker 2: At this labor market, Jennifer. In the US, we saw
Speaker 2: we did see unemployment tick up to I guess three
Speaker 2: point nine percent, three point seven percent, But still it
Speaker 2: feels like this is a fully employed economy here. What
Speaker 2: do you how do you think about the labor market,
Speaker 2: how do you think the Federal Reserve things about the
Speaker 2: labor market?
Speaker 1: You know this it's it's still you know tight. I mean,
Speaker 1: you know, yes, we have seen the unemployment rate tick up.
Speaker 1: We have seen job creations slow, but you know, one
Speaker 1: hundred nine, two hundred thousand or whatever, it's still you know,
Speaker 1: during normal times, this is still a very decent figure.
Speaker 1: And again you're not seeing mass layoffs. And this is
Speaker 1: like a situation that's playing out around the world, even
Speaker 1: like in the Euro Area where we saw labor costs
Speaker 1: take down. But meantime, you've got the jobless rate. It's
Speaker 1: still at a record low of six point four percent
Speaker 1: in the Euro Area. So this is, you know, again
Speaker 1: a bigger picture thing. You know, when you've got you know,
Speaker 1: demographics playing out, You've got all the people who are
Speaker 1: you know, in the sixty five general sixty five age
Speaker 1: bracket all getting ready to retire, you know, the silver wave.
Speaker 1: I think they're calling it, you know, and we're still
Speaker 1: seeing shortages in certain areas, certain industries, and because labor
Speaker 1: markets again globally are still quite tight, this is what's
Speaker 1: going to I think it's good news for the economy.
Speaker 1: I think it's good news for consumers, it's good news
Speaker 1: for workers. But at the same time, it's bad news
Speaker 1: for businesses who are still trying you know, some of
Speaker 1: them are still trying to find qualify because of that.
Speaker 1: That titles of the labor market. That's what's going to
Speaker 1: cause the FED. That's awesome contributed to some of the
Speaker 1: Fed's concerns I think over inflation and the economy in general.
Speaker 2: All right, Jennifer, thank you so much for joining us.
Speaker 2: Always appreciate getting some of your time and your thoughts.
Speaker 2: Jennifer Lee. She's a senior e commumist and managing director
Speaker 2: over at a Demo Capital Markets. What kind of kind
Speaker 2: of body language do we get from the FED here
Speaker 2: about interest rates? Alex Chaloff, I'm sure he'll be paying attention.
Speaker 2: He's the CIO of Bernstein Private Wealth Management. Alex, thanks
Speaker 2: so much for joining us here. I don't know what
Speaker 2: are you going to be looking for tomorrow From FED
Speaker 2: chairman J. Powell.
Speaker 6: Think you said it body language.
Speaker 7: It's highly likely that the dot plots change, that the
Speaker 7: language changes, that we go from this beginning of the
Speaker 7: year idea that we might have as many as fives, six,
Speaker 7: seven cuts down to probably two to four, and wouldn't
Speaker 7: be surprised to see some emphasis on two. So our
Speaker 7: view is that there's no action taken, but that the
Speaker 7: language changes and to be much more cautious and signaling
Speaker 7: to the market that we've got some time to wait.
Speaker 3: And if we do see a push towards potentially two
Speaker 3: on the dot, how do you think markets are going
Speaker 3: to react to that.
Speaker 7: I think it's been like a slow leak the last
Speaker 7: couple of months. I mean part of what's happened this
Speaker 7: year in equity markets. We've moved nicely, but there has
Speaker 7: been some reluctance to move a lot higher because I
Speaker 7: think this is the worst kept secret on the planet
Speaker 7: that they're not going to cut as aggressively as many
Speaker 7: thought they would. So I think the market will be disappointed,
Speaker 7: but it won't be a disaster.
Speaker 2: So what are you telling clients these days? Alex just
Speaker 2: kind of stepping back from the Bernstein Private Wealth folks
Speaker 2: here sixty forty portfolio is still something you guys talk about.
Speaker 2: Where do alternatives fit into that? I mean, again, if
Speaker 2: we're cutting rates, what's kind of the overall positioning here
Speaker 2: for you guys.
Speaker 7: We haven't been sixty forty people for probably six years
Speaker 7: at this point, so we're throwing darts at sixty forty.
Speaker 7: A big chunk of that has moved into alternative investments,
Speaker 7: both on the income alternative side as well as the
Speaker 7: growth alternative side, So investors looking at private equity, real estate,
Speaker 7: private credit, alternative credit of all types. That's really been
Speaker 7: the norm for our clients. And what we're talking about
Speaker 7: is a more accommodative environment to really invest across the
Speaker 7: board once we get past this peak and rates. We're
Speaker 7: not there yet, so it's a little bit of the
Speaker 7: waiting game, but we're getting close.
Speaker 3: And when you look at the expectations for the full
Speaker 3: year you mentioned that two to four range, What data
Speaker 3: what data points could draw that to go closer to two?
Speaker 3: If not one? If apparently Vince Cignarella is calling for.
Speaker 7: Nine, right, I think there's two that we focus on
Speaker 7: most One is CPI, that's obvious, but we've had some
Speaker 7: volatility in the month to month CPI readings, while the
Speaker 7: longer term trend is still intact that we're dropping, that
Speaker 7: inflation is coming down, you could get those fights in
Speaker 7: monthly CPI. So that would be one, and then two
Speaker 7: is labor. You know, the jobs market has been so
Speaker 7: impressive throughout this cycle that if we got a real
Speaker 7: disruption there, that would be nerve racking.
Speaker 6: Because there's some of.
Speaker 7: Us believe that just as the FED has tightened and
Speaker 7: we're starting to see it play out in the labor market,
Speaker 7: some companies are getting out in front of this to
Speaker 7: really start to change their hiring intentions and even reduce headcount.
Speaker 7: And so, even though the FED is working so hard
Speaker 7: to avoid causing a recession, if we stay at these
Speaker 7: rates for much longer, we may end there.
Speaker 2: So Alex, my colleague here, Bailey, he's a young Turk.
Speaker 2: He can go out and take all kinds of equity risk.
Speaker 2: I'm thinking about the two year treasury four point what's
Speaker 2: wrong with that trade?
Speaker 7: There's nothing wrong with a two year treasury as long
Speaker 7: as you don't have anything to do in two years.
Speaker 7: Our view is that it's better to build a buttonnew
Speaker 7: I don't know maybe you don't have been anything to
Speaker 7: do in two years.
Speaker 6: But our view is it's.
Speaker 7: Better to build a portfolio that has a variable maturity
Speaker 7: structure to it.
Speaker 6: We favor municipals.
Speaker 7: For taxable investors over treasuries, a little bit of a
Speaker 7: tactical allocation to some shorter treasuries just because short unis
Speaker 7: are so rich. But I would be in a muni
Speaker 7: portfolio much faster than I would start to build a
Speaker 7: treasury portfolio.
Speaker 2: Today you're preaching to the choir ax and say I'm bored.
Speaker 3: With munis, but apparently that's where I should be putting
Speaker 3: money to work. But talking about alex interesting riskier opportunities,
Speaker 3: how are you thinking about XUS investing.
Speaker 7: That's where we start to get excited, only because it
Speaker 7: that's the next right, US US large cap, US megacap,
Speaker 7: Max seven, et cetera.
Speaker 6: That's now.
Speaker 7: What's next is really our challenge that Bernstein investors look
Speaker 7: to us for advice on, and our view is next
Speaker 7: could be Europe. Next could be some part of emerging markets.
Speaker 7: I think when you look at Europe, you have to
Speaker 7: acknowledge that EPs growth there will not keep up with
Speaker 7: the US. So it's more of a valuation play and
Speaker 7: em you have to be okay with taking some macro
Speaker 7: risk of China. I think that the numbers out of
Speaker 7: China have started to slowly improve.
Speaker 6: But that's a long path out.
Speaker 7: So number one, you've got to be a long term investor,
Speaker 7: and number two, you've got to size it correctly, because
Speaker 7: even though we think it will work, it's going to
Speaker 7: have some volatility around it.
Speaker 2: So Alex at Burnstein Private Wealth, to what extent of
Speaker 2: do your clients come to you and say, I really
Speaker 2: want exposure to alternatives, whether it's hedge funds or private
Speaker 2: equity or private credit, And if so, what do you
Speaker 2: think is a reasonable allocation to alternative investments.
Speaker 7: Our investors have expres both a desire to invest in
Speaker 7: alternative investments, but even in larger numbers, they want to
Speaker 7: move away from public markets. I think the experience of
Speaker 7: the last few years twenty twenty COVID was really scary
Speaker 7: in public even though we ended up in a good place.
Speaker 7: Twenty one was terrific, but it never felt terrific. Twenty
Speaker 7: two is really hard. Twenty three was another year where
Speaker 7: at the end of the year you couldn't believe how
Speaker 7: much money you've made that year because it just didn't
Speaker 7: feel that way. So they're looking to get away from
Speaker 7: public market volatility, both equity and fixed income volatility by
Speaker 7: the way, So I think some of it is absolute
Speaker 7: attraction to alternatives, but a bigger chunk is this idea
Speaker 7: of how do I get out of the publics, And
Speaker 7: so we have been investing heavily in private equity, both
Speaker 7: primaries and secondaries, really excited about fresh capital right.
Speaker 6: Now getting put to work in real estate.
Speaker 7: One of the things I would say across the board
Speaker 7: in longer dated alternative investments is that you don't have
Speaker 7: this big flood of other big institutional LPs applying capital.
Speaker 7: There's been some reluctance because of the twenty twenty two
Speaker 7: public market experience and how these big LPs are trying
Speaker 7: to right size their liquid versus ill liquid. So they're
Speaker 7: taking a year off, maybe two. They've definitely hit the
Speaker 7: timeout button, and so we're able to step in. Other
Speaker 7: groups like US are able to step in and acquire
Speaker 7: assets at a much lower price because it isn't as
Speaker 7: heavily traffic.
Speaker 3: Alex To quickly touch on that, I cover equity, capital
Speaker 3: markets and IPOs. You're talking about the private markets and
Speaker 3: some of the issues for LPs and gps. Where do
Speaker 3: you see opportunities within the private market given the disconnect
Speaker 3: that you're talking about.
Speaker 6: I would first point to real estate.
Speaker 7: I think there's a number of real estate funds, big
Speaker 7: multi billion dollar funds that were raised ten twelve years
Speaker 7: ago that still won't assets they need to sell, whether
Speaker 7: they restructure in a continuation fund or they're looking to
Speaker 7: do off market secondary like transactions. I think you're going
Speaker 7: to see some significant deal flow there. You know, last
Speaker 7: year twenty twenty three was the lowest deal volume in
Speaker 7: commercial real estate and twenty five years yep.
Speaker 6: So we have to see the other side there.
Speaker 7: And then I think in private equity and venture capital,
Speaker 7: you're just not seeing the valuations that you had to
Speaker 7: pay three or four years ago. In those private markets,
Speaker 7: you're already seeing the lack of big capital investors.
Speaker 6: They're bringing valuations down.
Speaker 2: Alex great Stuff is always appreciate getting a few minutes
Speaker 2: of your times, Alex Chaloff, He's the CEO of Bernstein
Speaker 2: Private Well Management. So when I think about flailing around
Speaker 2: in the dark, I think at Vince Signorella, macro strategists
Speaker 2: for Bloomberg News The Master of working from home, Vince,
Speaker 2: what are the traders telling me out there? You talk
Speaker 2: to these guys and gals all the time. What are
Speaker 2: they telling you?
Speaker 5: Well, I think now that we're you know, realistically, we're
Speaker 5: pushing the rate cuts back now out to July. So
Speaker 5: every month or so, we seem to be pushing them
Speaker 5: further and further back. And you know, we're bumping up
Speaker 5: against the presidential election at the same time. You can't
Speaker 5: rule out that influence on power. Remember his interview with
Speaker 5: sixty Minutes. The big mic drop moment for him was
Speaker 5: to make sure that people understood that the independence of
Speaker 5: the Federal Reserve was parent and he's not going to
Speaker 5: want to play into politicians' hands, you know, basically trying
Speaker 5: to make him escapegoat as if he were picking, you know,
Speaker 5: a horse in the race, because he doesn't and won't.
Speaker 5: So if we get to July, and that's the first
Speaker 5: rate cut, and Bostic has mentioned that they're not going
Speaker 5: to be back to back, and I think he speaks
Speaker 5: for the committee. You're not going to see one in August,
Speaker 5: possibly even September. I don't see how you get three
Speaker 5: in and even more importantly, in all my years at
Speaker 5: watching the Fed, and it goes back to the late seventies,
Speaker 5: I can never remember a Fed cutting interest rates when
Speaker 5: the economy was growing, when inflation was either stagnant or
Speaker 5: ticking potentially.
Speaker 8: Higher, and jobs growth was strong.
Speaker 5: I realized there's a gap between where the FED funds
Speaker 5: rate is and where the inflation rate is. But that
Speaker 5: doesn't necessarily mean the Fed has to close that in
Speaker 5: the heartbeat because of the fear that that potentially turned.
Speaker 5: There's no reason to believe that that gap is going
Speaker 5: to remain at roughly the two percent spread that it
Speaker 5: is right now.
Speaker 8: And I think the traders are over their speeds on this.
Speaker 2: Hey, Vincent, but you know, the longest time you were
Speaker 2: saying that the Fed should be rating cutting rates, that
Speaker 2: they were behind, that they should be cutting rates, that's changed.
Speaker 8: Well. I think what happened is they missed the boat.
Speaker 8: They took too long.
Speaker 5: You know, as inflation was coming down from that five
Speaker 5: and a half level to the three and a half level,
Speaker 5: they had every opportunity to cut rates.
Speaker 8: They had two years to cut rates.
Speaker 5: It's so afraid that they were going to be behind
Speaker 5: the curve again as they were in the transient story
Speaker 5: when they forgot to raise rates, that fear kept them
Speaker 5: back from cutting. Now we're in a situation where inflation
Speaker 5: is stopped going down, so now they have the worry that, wow,
Speaker 5: if they cut rates now, could they fuel inflation?
Speaker 8: Could they cause inflation to tick higher? You know, as
Speaker 8: inflation was coming down, and inflation is just.
Speaker 5: As much a psychological influence on consumers as it is
Speaker 5: a factual influence. As inflation was coming down, had they
Speaker 5: started to cut rates back then, maybe eighteen months or
Speaker 5: so ago, that would have fed into consumer expectations that
Speaker 5: things were getting better, Prices might be coming down, and
Speaker 5: you might have seen prices come down a little bit
Speaker 5: as consumers change by and habits. But with the Fed
Speaker 5: holding rates where they were and keeping mortgage rates as
Speaker 5: high as they are, that's changed consumer behavior and change
Speaker 5: consumer sentiment.
Speaker 8: And now I think is a point where it's too late. Now.
Speaker 5: They need to see inflation begin to start slowly once
Speaker 5: again before they can pull the trigger, and that's not
Speaker 5: what we're seeing.
Speaker 3: By Vince, your former trader, how would you be positioning
Speaker 3: right now me if.
Speaker 5: I were playing the yield curve, I think there's absolutely
Speaker 5: no reason to be anywhere but two years and in
Speaker 5: you're looking at roughly four point seven percent on a
Speaker 5: two year yield, looking at four point three zero zero
Speaker 5: percent on a ten year, there's no reason to pay
Speaker 5: for duration. Two things are going to happen. I'm dead wrong,
Speaker 5: and the Fed cuts rates sooner, which means the two
Speaker 5: year out rallies way better than the ten year because
Speaker 5: the curve, the curve will steep in, but it'll will
Speaker 5: steep in favor of twos. I'm right, and the Fed
Speaker 5: doesn't cut, and if they don't cut, twos will probably
Speaker 5: stay reasonably within where they are, but you'll see steepening
Speaker 5: of the curve as the back end reprices for higher
Speaker 5: inflation down the road. So there's no reason to be
Speaker 5: paying to be paying for duration right now. I would
Speaker 5: stick in the short end as far as Treasury is concerned,
Speaker 5: and I think the widow maker trade, which is everybody's
Speaker 5: been betting for five years the dollar will go down,
Speaker 5: could be exactly the opposite of that. Once again, if
Speaker 5: the Fed doesn't comply, and you know, we saw it
Speaker 5: with the Bank of Japan, we'll probably see it with
Speaker 5: the ECB. We're probably going to see it with the
Speaker 5: Bank of Canada given their better inflation numbers this morning.
Speaker 5: The last bank that will probably cut will be the FED,
Speaker 5: and that speaks to potentially higher dollars.
Speaker 2: Vince, you mentioned the Bank of Japan and again the
Speaker 2: big news this morning on the Bloomer terminals the Bank
Speaker 2: of Japan ending it's era of negative interest rates are
Speaker 2: a little bit of positive rates there. What'd you make
Speaker 2: of that? How important is that?
Speaker 8: You know?
Speaker 5: I think it's kind of a one and done story
Speaker 5: for the Bank of Japan. I think they just wanted
Speaker 5: to get on the same page as everybody else. But
Speaker 5: they're still in a situation where the problem with the
Speaker 5: economy of Japan is their immigration policy, it's not their
Speaker 5: interest rate. Paut having a very difficult time growing and
Speaker 5: growing inflation. So for the Bank of Japan to turn
Speaker 5: around and start worrying about inflation right now, I think
Speaker 5: is very very premature, and that's why you're seeing dahala
Speaker 5: yen out of a one fifty handle. I've seen some people
Speaker 5: talk about if the Fed cuts dollar, yen is going
Speaker 5: to go to one forty four. I would so take
Speaker 5: the other side of that trade. If I were playing this,
Speaker 5: I don't see that happening at all. And I think,
Speaker 5: you know, the Bank of Japan is going to be
Speaker 5: last once again, and they need to be.
Speaker 8: They're not in the same position. There's the other central
Speaker 8: Paxil and Vince.
Speaker 3: I'm going to Europe in a few months. There's a
Speaker 3: lot going on with central banks decisions and inflation data
Speaker 3: and everything else. Am I going to be in a
Speaker 3: better or worse position in June?
Speaker 8: I think you're going to be in a better position.
Speaker 5: I think if anything, if anything, there's a great debate
Speaker 5: on the ECB right now.
Speaker 8: They're all over the place.
Speaker 5: I mean, you listen to an ECB speaker on a
Speaker 5: day to day basis. One is saying no hikes, no cuts.
Speaker 5: Another is saying we need to cut right away. You
Speaker 5: know this morning there were comments from beginning do its
Speaker 5: about saying that we need to wait till the summertime
Speaker 5: to see whether or not we're going to cut rates.
Speaker 5: I think, I think for the ECB, and you look
Speaker 5: at the economy and their economic growth cycle, far more
Speaker 5: likely to cut rates sooner than the Fed. And I
Speaker 5: think that'll speak to a weaker euro and a little
Speaker 5: more inflation money in your pocket. There or the case
Speaker 5: in your pocket their value.
Speaker 2: Any Is there is there any barecase for the US dollar? Vince?
Speaker 8: Yeah, absolutely. You know.
Speaker 5: One of the things that a story I read on
Speaker 5: the terminal this morning is about the pressure we're seeing
Speaker 5: in CRE. I think the commercial real estate market and
Speaker 5: the problems in that space are very, very very underrated.
Speaker 5: You know, Powell made the comments and others have made
Speaker 5: the comments that they think the banks.
Speaker 8: Are okay, they're not worried about it.
Speaker 5: BERNANKI made the same comments about housing in two thousand
Speaker 5: and eight and wasn't quite right about that one.
Speaker 8: So I think the real estate market could.
Speaker 5: Be the black Swan event in the US, and in
Speaker 5: that then changes the entire landscape for central banks and
Speaker 5: even the governments. But we're in a very different position
Speaker 5: now in terms of how we would rescue or how
Speaker 5: we would rescue an economy.
Speaker 8: At the point, we've got thirty three trillion dollars on
Speaker 8: the books of debt in this country right now. That's
Speaker 8: not what we had in two thousand and eight.
Speaker 5: So where the money is going to come from to
Speaker 5: save the day is going to be interesting because it's
Speaker 5: just not really there.
Speaker 2: Yep, Vince, thanks so much. For joining us. Always appreciate
Speaker 2: getting your thoughts there. Vince Cignarella, one of the Smart
Speaker 2: Voice as we talked to about how markets are moving
Speaker 2: and reacting to data. Vince Signette, mac wrote strategist for
Speaker 2: Bloomberg News. Your daily look around the front pages, Lisa Matteo,
Speaker 2: You've got some newspaper stories that we need to chat about,
Speaker 2: don't we?
Speaker 4: We do we do?
Speaker 9: Okay, So you know the Stanley water bottles, right, the
Speaker 9: ones that women love them, the tweens love them. They're
Speaker 9: like forty five Bucks that has a straw everything.
Speaker 2: And they carry him everywhere, everywhere.
Speaker 4: Everywhere you go.
Speaker 9: It has to I personally don't have Stanley's, but my
Speaker 9: team does.
Speaker 4: You know who else does? My husband? And that's what
Speaker 4: they're trying to do. He's not the demo they're trying
Speaker 4: to flip flop it.
Speaker 9: Stanley wants to get more men to start to buy these,
Speaker 9: and not the guy, the outdoorsy guys, you know who
Speaker 9: they originally wanted. They want, you know, the new guy,
Speaker 9: the one who cares about how he looks his group.
Speaker 2: Rob Bragg. We're talking about exactly.
Speaker 9: The cool guy they want the sleek water bottle. So
Speaker 9: They're gonna have some new products out like that sleek one.
Speaker 4: Maybe for you Bailly to see.
Speaker 3: More of a YETI guy, though, oh you are yet
Speaker 3: Maybe the outdoors eness to a degree much.
Speaker 2: Better Yetti or Stanley in terms of keeping it cold,
Speaker 2: because a YETI is unbelievable.
Speaker 8: I think there's Bloomberg.
Speaker 3: Should buy me both and I'll do a side by side.
Speaker 2: Okay, here Stanley and Yetti. But I do love it
Speaker 2: yet Yet.
Speaker 4: No, this is not a yetyone.
Speaker 2: This is the Bloomberg that's smer, which I didn't get.
Speaker 2: I don't know how you get olders like that. I've
Speaker 2: been here for fifteen years, like, oh nothing, what else
Speaker 2: you got?
Speaker 9: Since we're talking drinking, we're talking about dry January never Okay, yeah,
Speaker 9: you've never done it.
Speaker 4: No, we've done it.
Speaker 9: But apparently a lot of people at Soho House did.
Speaker 9: They got record sales for non alcoholic drinks in January.
Speaker 4: The CEO is saying, it's something crazy.
Speaker 9: They have, you know, virgin versions of old fashions, Moscow mules,
Speaker 9: alcohol free draft beer, non alcoholic wine. But this is
Speaker 9: all happening even as people spent less last year on
Speaker 9: food and beverages in the three months before January, so
Speaker 9: they're still into this whole dry January shene. But now
Speaker 9: it's starting to move on where people are just going
Speaker 9: non alcoholics.
Speaker 10: I want to know if the margins are higher on
Speaker 10: non alcoholic cocktails, like if you go to New York City,
Speaker 10: a mocktail as they call it, are fourteen dollars still
Speaker 10: and there's no spirit really liquor, so they're only a
Speaker 10: few dollars cheaper.
Speaker 3: I can't imagine that they're not making more money off
Speaker 3: that I have.
Speaker 2: Now that's a good point.
Speaker 7: So it is.
Speaker 3: It does come in a little bit cheaper, a little
Speaker 3: bit cheaper a couple bucks, but you're still My dad,
Speaker 3: who doesn't drink, is like, why would I spend fourteen
Speaker 3: dollars for something that kind of almost a little bit
Speaker 3: tastes like an old fashioned and it's juice to and
Speaker 3: just get.
Speaker 2: The old man of seltzer.
Speaker 6: Exactly exactly, all right.
Speaker 2: What's happening in Texas?
Speaker 9: So the eclipse is coming right April eighth, So small
Speaker 9: budget hotels in Texas, this is from Bloomberg. They are
Speaker 9: charging more than a thousand dollars a night for a
Speaker 9: room because people are flocking to these small Texas towns,
Speaker 9: and that is eight to ten times more than what
Speaker 9: they normally charge for it.
Speaker 4: So they're sparking up.
Speaker 9: These prices Texas, which I didn't know this. Why are
Speaker 9: they going to Texas. It's because it has a lower
Speaker 9: chance of cloud cover, So that's why people go to
Speaker 9: Texas to see this.
Speaker 2: There's certain parts of the country that are going to
Speaker 2: do better with the viewing of this.
Speaker 9: Rate exactly, and that's why they're saying Texas is better.
Speaker 4: But you have other hotels.
Speaker 9: Oklahoma, Arkansas, they're charging like these exorbitant prices for.
Speaker 4: People to stay to way.
Speaker 2: So it's April eighth, So the Wine Country in in Fredericksburg,
Speaker 2: a hill country town in the zone of totality, Okay,
Speaker 2: where e clips viewing will be at its best April eighth,
Speaker 2: once eight dollars with Texas for a king. So I
Speaker 2: don't know what are we seeing here. I'm seeing like
Speaker 2: an eclipse or something climpse.
Speaker 4: Yes, but if you miss it. Here's the thing.
Speaker 9: There won't be another one covering like such a large
Speaker 9: part of the country until twenty forty five, So that's
Speaker 9: why this is like a big deal.
Speaker 2: I can still be here for that, we could rental
Speaker 2: cars sold out at Austin's Airport r V parks.
Speaker 9: We're filling them, I'm telling you, and they're charging more
Speaker 9: too for them.
Speaker 2: Maybe that's where Tom keenes. Maybe Tom Key's in an
Speaker 2: RV parking.
Speaker 4: Imagine that no research channel.
Speaker 2: Checking would not popping upen a you know a country,
Speaker 2: you know, a tall boy somewhere. Okay, I you know,
Speaker 2: I'll see it. What I mean in New Jersey? What
Speaker 2: am I going to see? New Gym. I'm looking at
Speaker 2: the map here. I don't think I'm getting much, but
Speaker 2: I'll be under too much. But it depends on the
Speaker 2: New Jersey. That's a thing, all right, very good. It
Speaker 2: looks like it's kind of the mid part of the country,
Speaker 2: you know, Texas through a western New York up there,
Speaker 2: you know, up in that whole path there. That's kind
Speaker 2: of the best big thing. Okay, very good? What else?
Speaker 3: All right?
Speaker 9: The New York posts they are reporting because you know
Speaker 9: how at the sphere, you two, they just closed their
Speaker 9: last forty shows earlier this month.
Speaker 4: You missed it.
Speaker 2: I missed it, okay.
Speaker 9: But they're reporting that someone else could be taking the
Speaker 9: place here. The Eagles, that's what they're saying reportedly agreed
Speaker 9: to residency as a sphere after they finish up what
Speaker 9: was actually their final tour this spring.
Speaker 4: But I guess it's not their final tour.
Speaker 9: It was a long goodbye tour. It ends June fifteenth
Speaker 9: of another so apparently they might be coming back ten
Speaker 9: weekends September through December. No word on you know how
Speaker 9: many shows are going to have, but it should be
Speaker 9: a pretty.
Speaker 4: I don't know.
Speaker 2: I mean I heard this. I mean, the sphere just
Speaker 2: looks phenomenal from every I mean, I've seen all the
Speaker 2: YouTube videos. It just looks extraordinary, and even from the
Speaker 2: outside during the Super Bowl, I mean, Jimmy Dolan and
Speaker 2: the folks at MSG man, they really created something.
Speaker 4: I think they paid like ten mil to you two
Speaker 4: for doing that.
Speaker 3: Just bringing yeah though, yeah, I mean it's total Vegas.
Speaker 2: It's total Vegas.
Speaker 10: Yeah.
Speaker 3: I will say I was at a charity event a
Speaker 3: couple of weeks ago and Don Feld there.
Speaker 2: One of the guitars he was performing, he absolutely shreds.
Speaker 2: You would not guess he is as old as he is.
Speaker 2: I don't actually know how old he is. I'm guessing
Speaker 2: seventies somewhere older. There's there's an eighties generation, which is
Speaker 2: the Stones and the Beatles. There's a seventies generation which
Speaker 2: is now Bruce Eagles. I guess you know those kinds
Speaker 2: of people, but that's they're getting.
Speaker 4: Up fun factor.
Speaker 2: First concert I ever saw was Aerosmith. Really that's a
Speaker 2: good one.
Speaker 3: Yeah, that is a sic semon cheap Trick. I've seen
Speaker 3: cheap Trick like six times.
Speaker 2: They open for everyone.
Speaker 3: If you're ever going to see a seventies ban or
Speaker 3: eighties band, cheap Trick probably is on the seventy six
Speaker 3: for the.
Speaker 2: For the some of the Eagles folks.
Speaker 4: So what was your first concert?
Speaker 2: Beach Boys beach Yeah, yeah, well well I saw, you know,
Speaker 2: I saw I take that back, yeah, Beach Boys. But
Speaker 2: then I saw Bruce back Man late seventies in Philadelphia.
Speaker 2: Uh so some club down in Philadelphia. So those were
Speaker 2: the days. So anyway, the spear is a big thing.
Speaker 2: MSG Jimmy Dolan make it. I wonder how much money
Speaker 2: that thing makes. I'd love to. I'll take a look
Speaker 2: at the fenders publicly traded hr Man. Ye actually all right,
Speaker 2: look at that. So all right, we got the Eagles,
Speaker 2: you know, or who's left tour here.
Speaker 3: All right.
Speaker 2: That was Lisa Matteo giving us the latest from the newspapers.
Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best
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