WEBVTT - Bloomberg Surveillance TV: December 18, 2024 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.120 Terminal and the Bloomberg Business App. Going into the FED 0:00:37.120 --> 0:00:40.240 decision with a quarter point cut expected, the path forward 0:00:40.560 --> 0:00:44.040 is much much murkier, Lisa Shalladan Morgan Stanley saying, the 0:00:44.040 --> 0:00:46.519 implication of twenty twenty five is that it will be 0:00:46.560 --> 0:00:49.800 tough for more cuts and disinflationary growth acceleration to both 0:00:49.840 --> 0:00:53.680 play out. We believe that growth will likely disappoint first, 0:00:53.960 --> 0:00:57.920 and further FED action will be constrained. Lisa joins us, 0:00:57.960 --> 0:00:59.520 now for more. Lisa, It's good to see you. 0:00:59.800 --> 0:01:00.920 Great to see you, Jonathan. 0:01:01.080 --> 0:01:03.320 Let's build on that. Why will further FAT action be 0:01:03.440 --> 0:01:04.920 constrained in twenty twenty five? 0:01:05.000 --> 0:01:09.080 So our perspective is we're already seeing inflationary pressures built. 0:01:09.760 --> 0:01:13.760 You know again, I know that the traditional economists among 0:01:13.840 --> 0:01:15.840 us like to you know, take apart the data to 0:01:15.840 --> 0:01:19.800 fit the narrative that you know that they've assumed. But 0:01:19.959 --> 0:01:21.800 when we just look at the top line data, we've 0:01:21.800 --> 0:01:27.479 had four months of accelerating core CPI data, flat flat out. 0:01:28.160 --> 0:01:32.440 And that's with the advantage and the tailwind of a 0:01:32.480 --> 0:01:36.679 twenty percent drop in oil prices year over year. If 0:01:36.720 --> 0:01:39.919 in fact, oil prices have bottomed out because global growth 0:01:39.959 --> 0:01:43.080 has bottomed out, and that if we assume that some 0:01:43.160 --> 0:01:45.440 of the cuts that have been put put into the 0:01:45.440 --> 0:01:48.880 global system start to take effect in twenty twenty six, 0:01:48.920 --> 0:01:51.120 if we get a little bit of stimulus out of China, 0:01:51.480 --> 0:01:54.200 if oil starts coming back, and we look at some 0:01:54.320 --> 0:01:59.120 of the dynamics and inflation, we could have very sticky inflation. 0:01:59.240 --> 0:01:59.640 Last year. 0:01:59.640 --> 0:02:02.360 I mean this last print, you had goods prices up, 0:02:02.560 --> 0:02:05.280 and food and grocery prices led the way. 0:02:05.720 --> 0:02:08.400 Bigger not hatsa was a thing for twenty twenty four. Yes, 0:02:08.520 --> 0:02:10.480 you've referenced that in your note. Yes, why do you 0:02:10.480 --> 0:02:13.280 think that changes? What underpins that change going into next year? 0:02:13.320 --> 0:02:14.800 Bigger and hatsa. 0:02:14.880 --> 0:02:15.200 Yeah. 0:02:15.240 --> 0:02:20.519 So you know, our senses that animal spirits are real clearly, 0:02:20.720 --> 0:02:24.000 you know, there's an enthusiasm and an expectation. 0:02:24.440 --> 0:02:26.640 You know that folks should be investing. 0:02:27.560 --> 0:02:31.400 But at the same time our senses that demand can 0:02:31.400 --> 0:02:35.240 out strip supply. Here we continue to have this have 0:02:35.360 --> 0:02:41.080 and have not economy where you know, the the largest corporations, 0:02:41.280 --> 0:02:45.880 the richest households are somewhat you know, interest rate insensitive, 0:02:46.240 --> 0:02:49.640 and they've been powering consumption in this economy really for 0:02:49.720 --> 0:02:52.239 two and a half to three years now. And the 0:02:53.080 --> 0:02:56.440 sentiment among those two cohorts is pretty strong right now. 0:02:56.720 --> 0:02:58.840 So when you start to talk about this idea that 0:02:58.880 --> 0:03:02.160 we could see downside to growth and that we could 0:03:02.200 --> 0:03:06.240 see more weakness than people expect with ongoing stickiness to inflation, 0:03:06.320 --> 0:03:09.280 I mean that kind of sounds like dreaded stagflation. Is 0:03:09.320 --> 0:03:11.160 that kind of where you're going with us? 0:03:11.280 --> 0:03:14.120 It is, and it's one of the things you know 0:03:14.160 --> 0:03:16.359 that we've kind of said a sequencing will matter. 0:03:17.240 --> 0:03:19.440 You know, we expect that that we're. 0:03:19.240 --> 0:03:22.800 Going to get a barrage literally a machine gun of 0:03:22.919 --> 0:03:27.640 policy proposals, right you guys, you know, as journalists are 0:03:27.680 --> 0:03:31.640 accustomed to the ten headlines a day and he tries 0:03:31.680 --> 0:03:34.360 to figure out, okay, which four stick of the ten, 0:03:34.800 --> 0:03:36.880 and then he goes with those four in another six 0:03:36.960 --> 0:03:37.600 the next day. 0:03:38.560 --> 0:03:42.200 Our best guess is that that barrage. 0:03:41.760 --> 0:03:45.520 Is going to create a level of noise that does 0:03:45.840 --> 0:03:49.320 undermine some of that animal spirits and creates uncertainty for 0:03:49.360 --> 0:03:53.000 the other sixty percent of the economy, the low end consumer, 0:03:53.280 --> 0:03:56.280 the smaller cap companies, because they can't figure it out. 0:03:57.080 --> 0:03:59.120 And so I think it's that that we're going to 0:03:59.160 --> 0:04:03.280 see early in year. There's an unbelievable, you know sense that, hey, 0:04:03.320 --> 0:04:06.200 consumers are going to get tax cuts now, they're not 0:04:06.200 --> 0:04:08.440 not in twenty twenty five, where it's going to be 0:04:08.520 --> 0:04:11.360 on a on a on a derivative basis, on you know, 0:04:11.400 --> 0:04:14.880 the first and second derivative or the rates of change. 0:04:15.120 --> 0:04:17.960 Right, your taxes are going to be exactly the same. 0:04:17.720 --> 0:04:21.760 In twenty twenty five. Right, there's no talwind. Right, that's 0:04:21.800 --> 0:04:23.159 all coming in twenty twenty six. 0:04:23.240 --> 0:04:25.240 And this is the reason why in some ways you're 0:04:25.279 --> 0:04:29.080 advocating to unwind some of the Trump trades that. 0:04:29.000 --> 0:04:30.040 People have put on. 0:04:30.200 --> 0:04:31.320 Can you talk about. 0:04:31.080 --> 0:04:34.279 Which you think are most vulnerable to the reality check 0:04:34.400 --> 0:04:37.320 of sequencing to the reality check of the delay of 0:04:37.360 --> 0:04:38.840 how long it will take to implement. 0:04:39.160 --> 0:04:41.560 So look, I think that you know, some of these 0:04:41.600 --> 0:04:45.720 Trump trades have been so staggering it's almost obvious. 0:04:46.240 --> 0:04:48.839 Uh So, uh, you know, the the. 0:04:49.200 --> 0:04:54.800 Cryptocurrency trades, you know, up fifty percent in fifty trading days, extraordinary. 0:04:55.360 --> 0:04:55.560 Uh. 0:04:55.800 --> 0:05:01.799 You know, we have you know, Taesla similar type of move. 0:05:03.520 --> 0:05:03.839 Uh. 0:05:04.240 --> 0:05:06.080 You know, I think some of the small cap move 0:05:06.160 --> 0:05:07.560 has begun to fade. 0:05:08.160 --> 0:05:08.360 Uh. 0:05:08.600 --> 0:05:10.800 You know, in the last ten days. 0:05:11.320 --> 0:05:14.800 Our best gas is that that will that's the fading 0:05:14.880 --> 0:05:18.080 of that small cap trade is what reflects this potential 0:05:18.120 --> 0:05:21.599 stagflation that hey, wait a minute, everything's great, but maybe 0:05:21.640 --> 0:05:25.840 it's not great for us, you know, because we're still 0:05:25.960 --> 0:05:29.000 you know, broadly a set of unprofitable companies that have 0:05:29.160 --> 0:05:32.320 you know, struggled to deliver upside surprise and earnings. 0:05:32.360 --> 0:05:33.360 So do you still like gold? 0:05:34.080 --> 0:05:38.039 We still do like gold here and and and the 0:05:38.360 --> 0:05:41.760 for us, the gold story really is about inflation and 0:05:41.880 --> 0:05:45.120 dollar debasement. It's it's a lot about this debt and 0:05:45.200 --> 0:05:49.479 deficit story. Again, the bond market it has sniffed out 0:05:49.920 --> 0:05:53.599 this joke and on various days, you see, you know, 0:05:54.680 --> 0:05:58.600 you know, uh, some folks trying to express a desire 0:05:58.640 --> 0:06:00.600 for term premium in the long end to the curve. 0:06:01.560 --> 0:06:05.320 Our best guess is, as these debates get underway, the 0:06:05.360 --> 0:06:10.400 debt and deficit storyline is going to have to So 0:06:10.480 --> 0:06:11.920 do you think get higher probra. 0:06:12.000 --> 0:06:13.800 The peak dollar right now? 0:06:14.600 --> 0:06:17.920 I don't know if we're probably close to peak dollar, 0:06:18.839 --> 0:06:21.200 but look, I think a lot of things are at 0:06:21.240 --> 0:06:23.520 play here, and one of the things that I think 0:06:23.600 --> 0:06:26.120 is a profound risk. Again, this is not a market 0:06:26.120 --> 0:06:30.560 that's pricing many risks, but we have an extraordinarily bifurcated 0:06:30.640 --> 0:06:34.160 currency market around the world where the dollar is strong 0:06:34.720 --> 0:06:37.000 versus virtually every other currency. 0:06:37.640 --> 0:06:41.040 If in fact, you know, we come out, you know. 0:06:41.000 --> 0:06:45.839 On day one after the inauguration and are extraordinarily aggressive 0:06:45.880 --> 0:06:49.760 with China. I think that there's a non zero risk 0:06:49.880 --> 0:06:53.640 that China could come back and say, okay, we're devaluating. 0:06:54.000 --> 0:06:55.040 A devaluation of. 0:06:55.000 --> 0:06:59.240 The room and bee would be hugely destabilizing across the 0:06:59.240 --> 0:07:02.960 global trade. And you know, those types of risks are 0:07:03.000 --> 0:07:05.599 just not being priced right here. So, you know, is 0:07:05.640 --> 0:07:09.400 the dollar at peak at peak strength? I'm not sure, 0:07:10.680 --> 0:07:12.920 but I think we're getting close and we're just at 0:07:12.920 --> 0:07:15.640 this very fragile and unstable place. 0:07:15.840 --> 0:07:17.520 If someone were to hear everything that you put together, 0:07:17.520 --> 0:07:19.720 they would say, wow, what a raging bear. Oh my god, 0:07:19.800 --> 0:07:22.160 you must be predicting forty two hundred for next year. 0:07:22.280 --> 0:07:23.040 You're out at all. 0:07:23.160 --> 0:07:26.360 Okay, So let's talk about why not, because basically you're 0:07:26.360 --> 0:07:28.960 talking about debasement of the dollar and the end of 0:07:29.000 --> 0:07:31.440 the Trump trade and sagflationd. 0:07:30.680 --> 0:07:32.840 So give us where you really are with this. 0:07:33.120 --> 0:07:36.240 So look, I think that there are risks out there 0:07:36.280 --> 0:07:38.360 that we want to see priced. At the same time, 0:07:38.400 --> 0:07:42.560 there is value because this is an extraordinarily bifurcated market. 0:07:43.440 --> 0:07:45.600 So we're saying that this is going to be an 0:07:45.680 --> 0:07:48.440 environment where there are winners and losers. So we do 0:07:48.480 --> 0:07:52.119 see some winners, right, So we see financials, we see 0:07:52.160 --> 0:07:56.880 domestic industrials, We see portions of consumer services that again 0:07:56.920 --> 0:08:01.040 are domestically based as big winners here. We recently upgraded 0:08:01.640 --> 0:08:06.640 mid cap growth companies as areas. We're you know, we've 0:08:06.680 --> 0:08:10.880 built some diversification. We're owning, you know, Japan, we're owning 0:08:11.720 --> 0:08:14.640 some parts of emerging markets. So we think that there 0:08:14.640 --> 0:08:16.760 are things to do out there. We think that this 0:08:16.880 --> 0:08:20.920 is a index that next year can chug along at 0:08:21.120 --> 0:08:25.239 at the index level, maybe give you five to seven percent. 0:08:25.640 --> 0:08:27.440 But at the same time, what we're saying is, if 0:08:27.440 --> 0:08:30.240 you're getting five to seven percent in a stock market 0:08:30.240 --> 0:08:35.960 that is extraordinarily richly priced on extraordinarily ambitious expectations, why 0:08:36.040 --> 0:08:38.480 not own a better risk adjusted return and an investment 0:08:38.520 --> 0:08:41.880 grade bond and clip the coup and just you know, 0:08:43.200 --> 0:08:44.280 make it to the end of the year. 0:08:44.760 --> 0:08:47.280 You mentioned them what you like in the m which you. 0:08:47.600 --> 0:08:52.079 So so so we've we've been long bulls on India. 0:08:52.160 --> 0:08:53.640 We know India has stalled out. 0:08:54.600 --> 0:08:57.719 We think Mexico is way over sold, and that by 0:08:57.720 --> 0:08:59.880 the end of the year, you know, we're going to 0:09:00.200 --> 0:09:02.840 a better footing there and some of the tensions. 0:09:02.400 --> 0:09:04.800 With the US will be mitigated. 0:09:05.480 --> 0:09:05.679 You know. 0:09:05.760 --> 0:09:13.199 Brazil obviously, you know now significantly tightening. We believe that 0:09:13.200 --> 0:09:15.640 that's going to get priced and that there's going to 0:09:15.679 --> 0:09:19.000 be opportunities, you know, to buy some value in Brazil. 0:09:19.040 --> 0:09:21.120 I've got the foreign exchange screen in front of me. 0:09:21.320 --> 0:09:26.200 Yees today, imagine markets. It's amazing. The peso in Mexico. 0:09:26.400 --> 0:09:29.400 You have sixteen percent in Brazil, the currency down by 0:09:29.440 --> 0:09:32.959 more than twenty Likewise, in Argentina go up to Russia 0:09:33.400 --> 0:09:38.080 down thirteen percent, in Hungary down eleven, Colombia down eleven, 0:09:38.200 --> 0:09:40.640 double digit moves in foreign exchange in AM. 0:09:40.760 --> 0:09:42.319 You have to wonder at what point you hit sort 0:09:42.320 --> 0:09:43.360 of a bottom. 0:09:43.160 --> 0:09:45.480 Given the fact that you have a lot of. 0:09:45.400 --> 0:09:47.480 Potential trade wars being priced in. 0:09:47.760 --> 0:09:49.959 Yeah, Lisa Schanott, it's going to see it as We 0:09:50.400 --> 0:09:52.760 appreciate your time. Thank you, Thank you, Lisa Shanott. There 0:09:52.760 --> 0:10:05.240 of Morgan Stanley, we began at this hour, which stocks 0:10:05.280 --> 0:10:07.200 hire ahead of the final FED decision of the year. 0:10:07.280 --> 0:10:09.840 Victoria fanatis a cross mark, saying the problem is that 0:10:09.880 --> 0:10:12.360 both sides of the dual mandate are hating up. The 0:10:12.480 --> 0:10:15.520 question comes down to is the Fed still restrictive? And 0:10:15.559 --> 0:10:18.559 according to Powell, the answer is yes. Victoria joins us 0:10:18.559 --> 0:10:20.840 now for more. What's the answer, recording. 0:10:20.480 --> 0:10:24.560 To you, I don't think we're as restrictive as the 0:10:24.559 --> 0:10:25.880 FED wants us to believe. 0:10:25.920 --> 0:10:27.240 I mean, you look at growth. 0:10:27.240 --> 0:10:29.000 You've got Atlanta Fed GDP. 0:10:29.120 --> 0:10:31.640 Now what three point three percent? You've got inflation? 0:10:31.760 --> 0:10:35.760 We had CPI and PPI reports come out, big revisions there, 0:10:35.840 --> 0:10:39.800 inflation being sticky, and you have really high centiment right now. 0:10:40.000 --> 0:10:44.040 Look at NFIB small business three year high on cinniment. 0:10:44.200 --> 0:10:47.839 You've got bull bear ratios very strong on the bulls. Now, 0:10:47.880 --> 0:10:50.200 that can be a contrarian signal. I get that, but 0:10:50.320 --> 0:10:52.559 you still have really strong sentiment that. 0:10:52.640 --> 0:10:53.280 Is out there. 0:10:53.440 --> 0:10:55.800 With these elements, I don't know how you can say 0:10:55.960 --> 0:11:00.600 this economy feels restrictive. I say, yes, there are underlying 0:11:00.640 --> 0:11:03.080 elements right under the surface that I think will start 0:11:03.120 --> 0:11:05.520 bubbling up that I don't think it will be until 0:11:05.600 --> 0:11:06.319 early next year. 0:11:06.559 --> 0:11:08.560 Isn't that disconnect just super boolished So long as the 0:11:08.559 --> 0:11:10.760 Federal Reserve chair thinks they're restrictive and keeps kind of 0:11:10.760 --> 0:11:12.520 interest rights, isn't that just the green light just to 0:11:12.559 --> 0:11:13.360 keep on buying? 0:11:13.480 --> 0:11:15.520 It is for now, and I think that's why you're 0:11:15.559 --> 0:11:17.040 seeing the market. 0:11:16.760 --> 0:11:17.600 Continue to move up. 0:11:17.679 --> 0:11:19.480 Yes, the past few days we've had a little bit 0:11:19.520 --> 0:11:22.520 more volatility in play, but the market is going and 0:11:22.559 --> 0:11:23.000 you've got. 0:11:22.920 --> 0:11:26.960 The seasonality along with it. You've got earnings. 0:11:26.280 --> 0:11:29.680 Expectations that people think, I think a little optimistic, but 0:11:29.760 --> 0:11:30.840 double digit growth. 0:11:30.679 --> 0:11:32.640 Again next year in earnings. 0:11:32.679 --> 0:11:35.920 You're not having the labor market completely fall apart. So 0:11:35.960 --> 0:11:38.240 I do think there's elements that are tail winds to 0:11:38.320 --> 0:11:41.160 this economy, and you add Powell in which I know 0:11:41.200 --> 0:11:43.120 you said you think it'll be boring Amory, but I 0:11:43.120 --> 0:11:44.480 do think he's going to come out and say the 0:11:44.480 --> 0:11:48.520 same we're data dependent, recalibration, blah blah blah, and everyone's 0:11:48.559 --> 0:11:50.680 just going to look to the dot plot. Regardless of 0:11:50.720 --> 0:11:53.120 what Jim Bullard said earlier. They're going to look to 0:11:53.160 --> 0:11:55.000 that dot plot and go, what are you really thinking. 0:11:55.200 --> 0:11:56.640 I don't think it's going to be boring. I think 0:11:56.679 --> 0:11:57.640 it's going to be fascinating. 0:11:57.640 --> 0:11:59.480 And I cannot wait for the meeting and the dot 0:11:59.480 --> 0:12:01.319 plot and the press conference afterwards. 0:12:01.320 --> 0:12:03.280 In particular because. 0:12:03.040 --> 0:12:05.680 As you're saying that this is a tailwind essentially the 0:12:05.720 --> 0:12:07.240 idea of a FED cutting. 0:12:07.200 --> 0:12:09.560 There is a question of for what assets. 0:12:09.800 --> 0:12:10.240 Is it a. 0:12:10.160 --> 0:12:13.680 Tailwind for stocks, is it a tailwind for bonds at 0:12:13.679 --> 0:12:16.480 a time or you have a real discussion longer term 0:12:16.600 --> 0:12:20.320 about whether this actually increases the chance of stickier inflation 0:12:20.440 --> 0:12:23.120 over twenty twenty five and twenty twenty six. What do 0:12:23.160 --> 0:12:25.600 you expect to be the reaction in the bond market, 0:12:25.640 --> 0:12:26.920 particularly the longer end. 0:12:27.200 --> 0:12:29.760 Should this be a FED that does lean more. 0:12:29.760 --> 0:12:32.240 Duvish than say, what the market is expecting Yeah. 0:12:32.080 --> 0:12:35.040 If you get a more duvish feel to the press conference, 0:12:35.080 --> 0:12:37.520 I do think you'll have equity markets rally a little 0:12:37.520 --> 0:12:40.960 bit and bond yields will probably come down, at least 0:12:41.040 --> 0:12:43.240 in the near term. I think they come down a 0:12:43.280 --> 0:12:45.480 little bit with the expectation that the Fed will continue 0:12:45.520 --> 0:12:48.960 to cut. However, bond vigilanes are not going to be 0:12:49.000 --> 0:12:51.319 happy with that, so let's give it a little bit 0:12:51.360 --> 0:12:53.720 of time. I think they'll come in, they'll start singing, 0:12:54.160 --> 0:12:57.560 and we'll see yields move up intermediate term from there. 0:12:57.600 --> 0:13:00.640 But the initial reaction if the Fed is devish, I 0:13:00.640 --> 0:13:02.280 think you'll see yields come down a little bit. 0:13:02.360 --> 0:13:04.880 That raises this question about whether the market does not 0:13:04.920 --> 0:13:07.960 believe inflation to actually be a real threat. 0:13:08.040 --> 0:13:09.199 I mean, which is it. 0:13:09.200 --> 0:13:12.000 It seems like there are different messages from different asset classes. 0:13:12.000 --> 0:13:13.880 In the bond market, it seems like there isn't a 0:13:13.880 --> 0:13:15.960 great deal of concern, but it's definitely a sense that 0:13:16.000 --> 0:13:18.680 things are stickier. And then the stock market, they're just saying, 0:13:18.720 --> 0:13:21.240 we don't care. If it's mildly inflationary, that's great, let's 0:13:21.280 --> 0:13:21.920 go right. 0:13:22.000 --> 0:13:24.959 And there's other elements that could cause inflation to go high. 0:13:25.040 --> 0:13:26.959 It's why it's such a difficult story right now. I mean, 0:13:27.240 --> 0:13:29.480 we don't know what tariffs are going to do exactly. 0:13:29.520 --> 0:13:32.120 We don't know what kind of corporate tax cuts or 0:13:32.160 --> 0:13:34.120 individual tax cuts are coming in, and is that going 0:13:34.160 --> 0:13:36.079 to be inflationary. I think the key to a lot 0:13:36.080 --> 0:13:39.600 of this, though, is productivity. That can really be the 0:13:39.679 --> 0:13:43.440 element that comes in and buffers inflation and helps growth 0:13:43.480 --> 0:13:46.040 move higher. So if the expectation is that you're going 0:13:46.080 --> 0:13:49.240 to get some productivity coming in, maybe that's one reason 0:13:49.280 --> 0:13:52.280 why the markets are not as concerned right now with 0:13:52.320 --> 0:13:53.280 what inflation is saying. 0:13:53.320 --> 0:13:53.559 Well, J. 0:13:53.720 --> 0:13:55.960 Powell won't assume what Trump two point zero will look like, 0:13:56.000 --> 0:13:58.280 but the market certainly is what sectors do you think 0:13:58.320 --> 0:13:59.199 will do well next year? 0:14:00.080 --> 0:14:01.960 A lot of it depends on the policies that we 0:14:02.040 --> 0:14:04.240 see come through, but I think you can imagine we'll 0:14:04.280 --> 0:14:06.000 probably have capex. 0:14:05.880 --> 0:14:07.480 Stronger going forward. 0:14:07.800 --> 0:14:10.600 If you have federal spending come down, that helps on capex, 0:14:10.640 --> 0:14:13.199 It helps corporations in regards to margin. So I think 0:14:13.200 --> 0:14:16.760 you'll see industrials do well. I've liked financials all year. 0:14:16.800 --> 0:14:19.320 It's been a story we've had. I think you'll continue 0:14:19.320 --> 0:14:21.320 to see financials do well. They've had a little bit 0:14:21.320 --> 0:14:25.160 of consolidation, but you have that deregulation story coming in. 0:14:25.400 --> 0:14:28.320 You have a positive yield curve lone growth should grow 0:14:28.720 --> 0:14:30.640 M and A should grow. So that gives you some 0:14:30.720 --> 0:14:33.920 bumps there. On financials as well. We don't invest in crypto, 0:14:34.040 --> 0:14:36.000 so I'm not going to say that, but it's been 0:14:36.000 --> 0:14:36.960 going a little crazy. 0:14:37.080 --> 0:14:40.280 You like indust Fill's because potentially the tax rate story right, 0:14:40.440 --> 0:14:42.800 tax rate in Capex, I think we continue to see 0:14:42.800 --> 0:14:43.560 growing onshoring. 0:14:43.600 --> 0:14:46.960 Well, what about tariffs, Yeah, I mean I think we. 0:14:46.960 --> 0:14:49.120 Have to separate the tariff story out, and you probably 0:14:49.160 --> 0:14:50.840 know better than I do when we look at the 0:14:50.880 --> 0:14:53.000 history of this. I think when you're talking about tariffs 0:14:53.000 --> 0:14:55.720 as it relates to China, that's one story. I think 0:14:55.760 --> 0:14:57.800 we can assume that that's going to be pretty quickly 0:14:58.080 --> 0:15:00.760 after January twentieth, we're going to see some movement there. 0:15:00.880 --> 0:15:03.240 When you're looking at tariffs for the rest of the world. 0:15:03.440 --> 0:15:04.960 I know there's been a lot of talks in the 0:15:05.080 --> 0:15:08.320 conversations with Canada and the conversations with Mexico, but I 0:15:08.360 --> 0:15:11.160 think that's a different story and I wouldn't anticipate we're 0:15:11.160 --> 0:15:13.760 going to see those come to fruition as quickly or 0:15:13.760 --> 0:15:16.320 maybe as high a level of tariff is what we're 0:15:16.320 --> 0:15:17.000 hearing right now. 0:15:17.080 --> 0:15:19.200 Let's talk about breath, bad breath. 0:15:19.320 --> 0:15:20.920 We've been seeing a lot of bad breath over the 0:15:20.920 --> 0:15:24.880 past twelve days, throughout the entire month of December, and 0:15:24.920 --> 0:15:27.000 it raises a question, is this a taste of what's 0:15:27.000 --> 0:15:29.720 to come next year or if this basically is just 0:15:29.760 --> 0:15:32.560 a breather of the Trump trade and it will reassert 0:15:32.600 --> 0:15:34.040 itself come twenty twenty five. 0:15:34.520 --> 0:15:35.520 Where do you fall on that. 0:15:35.960 --> 0:15:37.440 I think we do have to be a little bit 0:15:37.480 --> 0:15:40.120 concerned here. I know we're having a little revival here 0:15:40.120 --> 0:15:42.480 and tech names are doing well, yes, and videos pulling back, 0:15:42.520 --> 0:15:45.320 but Broadcom's stepping in, so we're seeing those go. But 0:15:45.680 --> 0:15:49.640 then you look at how much concentration there is in 0:15:49.680 --> 0:15:52.720 these names. I mean top ten names are thirty seven 0:15:52.840 --> 0:15:54.560 thirty eight percent of the weight of the S and 0:15:54.600 --> 0:15:57.960 P five hundred, so you don't have that diversification. You're 0:15:57.960 --> 0:16:00.320 seeing a little bit more breadth down cap But I 0:16:00.320 --> 0:16:02.280 think we have to be concerned when we hit next 0:16:02.360 --> 0:16:04.800 year and you have the debt sealing crisis come in 0:16:05.120 --> 0:16:08.040 and we start to see tariffs go into play. I 0:16:08.080 --> 0:16:10.960 think we have a little more volatility next year. I 0:16:11.000 --> 0:16:13.120 don't think this is just a small pause and then 0:16:13.120 --> 0:16:15.120 we're going to go full on bowl market from here. 0:16:15.240 --> 0:16:17.040 I do think there are some concerns that we have 0:16:17.120 --> 0:16:18.000 to be leary about. 0:16:18.080 --> 0:16:21.080 What's the hedge at a time where there's equal risks 0:16:21.120 --> 0:16:25.080 of both some sort of acceleration and inflation or a downturn. 0:16:26.120 --> 0:16:30.000 For us and for our clients, it's really being diversified. 0:16:30.160 --> 0:16:32.440 So not just in your stock picks that you have, 0:16:32.560 --> 0:16:34.720 but yes, we want to be in the market. You've 0:16:34.720 --> 0:16:37.040 got tail when's going right now. I mean path of 0:16:37.120 --> 0:16:39.480 least resistance is higher for now, So you don't want 0:16:39.520 --> 0:16:40.760 to ignore that you want to be. 0:16:40.720 --> 0:16:41.400 In that market. 0:16:41.560 --> 0:16:43.480 But we like those areas we talked about put some 0:16:43.560 --> 0:16:46.360 names in financials, look at some of the industrial's longer 0:16:46.440 --> 0:16:48.760 term play. You know, I'm a fixed income person, so 0:16:48.840 --> 0:16:51.040 I think you still lock in some of these rates. 0:16:51.080 --> 0:16:53.720 We maybe go up to a four seventy five or 0:16:53.720 --> 0:16:55.840 so on the tenure. I think you can lock that 0:16:55.920 --> 0:16:58.440 in because with global rates as low as they are, 0:16:58.840 --> 0:17:01.440 I mean you look at Germany like two and a half, right, 0:17:01.440 --> 0:17:03.960 we look and see what's happening in China. 0:17:04.080 --> 0:17:06.200 I think you can capture some of that as well 0:17:06.280 --> 0:17:06.880 and have some. 0:17:06.800 --> 0:17:10.280 Exposure to SMB talking about how negative rates do work. 0:17:10.640 --> 0:17:13.480 Do you like anything when you're looking at diversifying outside 0:17:13.480 --> 0:17:16.119 of the United States, It's tough right now. 0:17:16.400 --> 0:17:18.560 I would have said a few months ago, Yes, put 0:17:18.600 --> 0:17:20.440 your toe into Europe. I think that they're going to 0:17:20.520 --> 0:17:22.720 start to see things with the ECB cutting rate. 0:17:23.119 --> 0:17:24.280 But the issues that we're. 0:17:24.160 --> 0:17:26.360 Seeing out of France, the issues that we're seeing out 0:17:26.359 --> 0:17:30.119 of Germany, the poor manufacturing there. I mean, we have 0:17:30.200 --> 0:17:32.560 it here, but it's even worse there. We're seeing a 0:17:32.600 --> 0:17:35.919 two hundred and thirty basis point differential between UK and 0:17:35.960 --> 0:17:37.240 German ten years. 0:17:37.960 --> 0:17:39.440 I think you have to be concerned. 0:17:39.440 --> 0:17:41.800 I need to see a little bit more positive movement 0:17:42.240 --> 0:17:45.240 coming out of Europe before I think you go there 0:17:45.640 --> 0:17:48.040 and Asia. I think you know there's some concerns there. 0:17:48.080 --> 0:17:51.080 In China as well, domestic demand is really slow. We 0:17:51.160 --> 0:17:53.879 saw it in retail sales. They had the highest month 0:17:54.080 --> 0:17:57.639 of outflow, its like forty six billion last month, So 0:17:57.840 --> 0:17:59.080 I think there's some concern there. 0:17:59.080 --> 0:18:00.640 I think you got to stick with you for now. 0:18:00.760 --> 0:18:03.480 Disinflation redflation rey traps are difficult to get out of. 0:18:03.560 --> 0:18:06.600 Japan lift it went through it for a while. We've 0:18:06.640 --> 0:18:08.840 seen that start to take place in China. Is that 0:18:08.920 --> 0:18:11.240 what that shot of Chinese government bond yot is all about? 0:18:11.440 --> 0:18:13.800 Somebody says, I think that's part of it. 0:18:13.840 --> 0:18:16.720 But I also think when they're looking at tariffs that 0:18:16.840 --> 0:18:19.359 could be coming, you see some flight out for that 0:18:19.520 --> 0:18:20.120 reason too. 0:18:20.160 --> 0:18:22.440 There's some concern you have China. 0:18:22.200 --> 0:18:25.480 Saying that they're going to be more proactive in regards 0:18:25.560 --> 0:18:27.119 to the stimulus that they put forward. 0:18:27.160 --> 0:18:28.640 They OpEd their federal deficit. 0:18:28.680 --> 0:18:30.680 They're saying it's going to be four percent now next 0:18:30.720 --> 0:18:33.720 year instead of three percent. Not a huge move, but 0:18:33.760 --> 0:18:36.119 they're trying to do some things. There is somewhat of 0:18:36.119 --> 0:18:37.399 a trap there. You have to be Laria. 0:18:37.520 --> 0:18:39.920 Bond market doesn't believe them, looking at that shop doesn't 0:18:39.920 --> 0:18:40.360