1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yea. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:32,559 Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. The 5 00:00:32,600 --> 00:00:34,720 Speaker 1: big news is the big sell off last week, the 6 00:00:34,760 --> 00:00:38,880 Speaker 1: biggest weekly drop on sp in more than two years, 7 00:00:38,920 --> 00:00:41,159 Speaker 1: and a big backup in treasury yields as well well 8 00:00:41,240 --> 00:00:43,479 Speaker 1: three three percent on ten year treasuries. Tom and the 9 00:00:43,520 --> 00:00:46,720 Speaker 1: equity market very much softer through the whole of last week. 10 00:00:46,720 --> 00:00:48,400 Speaker 1: I want to bring the guest show. We Marcus Ashworth, 11 00:00:48,440 --> 00:00:52,800 Speaker 1: Bloomberg Gaffly columnist and Chris Faron, Strategous Research Partners, Head 12 00:00:52,840 --> 00:00:56,040 Speaker 1: of Technical Analysis. Chris, let's begin with you. Was that 13 00:00:56,120 --> 00:01:00,280 Speaker 1: a short term sentiment shift, a regime change, or none 14 00:01:00,280 --> 00:01:03,400 Speaker 1: of the above of yet? I think the longer term 15 00:01:03,480 --> 00:01:05,759 Speaker 1: regime is still very much intact. But in the very 16 00:01:05,760 --> 00:01:09,120 Speaker 1: short term, I'm not convinced sentiment is as flushed out 17 00:01:09,680 --> 00:01:11,760 Speaker 1: or as stressed as it needs to be. I'm not 18 00:01:11,800 --> 00:01:15,280 Speaker 1: convinced this market has cleared yet. While Friday was certainly 19 00:01:15,319 --> 00:01:19,880 Speaker 1: bad in terms of the headline numbers, volume wasn't terribly pronounced. Um, 20 00:01:20,000 --> 00:01:22,479 Speaker 1: the internals weren't as stressed as we'd like to see. 21 00:01:22,480 --> 00:01:24,920 Speaker 1: That often marks interim low, So I think it's too 22 00:01:24,920 --> 00:01:27,679 Speaker 1: early to say that we're quote there just yet. Something 23 00:01:27,760 --> 00:01:29,840 Speaker 1: that you've touched on is something I was questioning through 24 00:01:29,840 --> 00:01:32,360 Speaker 1: the whole of lost week. Typically, if things are really 25 00:01:32,480 --> 00:01:35,640 Speaker 1: ugly high yield, it's got something to scream about. We 26 00:01:35,680 --> 00:01:38,640 Speaker 1: didn't see that in a huge, huge white Chris. Yeah. 27 00:01:38,680 --> 00:01:40,760 Speaker 1: I mean, hi yeld was down last week, but it 28 00:01:40,800 --> 00:01:43,600 Speaker 1: didn't lead lower. So I think ultimately, if we're going 29 00:01:43,640 --> 00:01:47,119 Speaker 1: to see a major shift in this regime, credit likely 30 00:01:47,200 --> 00:01:49,480 Speaker 1: has to weaken. The fact that we're not seeing that 31 00:01:49,560 --> 00:01:52,720 Speaker 1: yet actually gives us some confidence that the longer term 32 00:01:52,720 --> 00:01:55,840 Speaker 1: picture is still intact. Here now, that doesn't help us 33 00:01:55,840 --> 00:01:57,280 Speaker 1: in the short term, and I think in the short 34 00:01:57,360 --> 00:02:00,160 Speaker 1: term there's probably more pain or more weakness before this 35 00:02:00,280 --> 00:02:03,000 Speaker 1: is over. But so long as credit remains at least 36 00:02:03,040 --> 00:02:06,800 Speaker 1: reasonably contained, I'm reluctant to say that the longer term 37 00:02:06,840 --> 00:02:09,919 Speaker 1: picture is changing meaningfully. Marcus Ashworth, when you were trying 38 00:02:09,919 --> 00:02:12,520 Speaker 1: to explain the cell off to some individuals maybe not 39 00:02:12,639 --> 00:02:15,000 Speaker 1: that closely affiliated with Wall Street, and you explained to 40 00:02:15,040 --> 00:02:17,959 Speaker 1: them that it's off the back of better economic data, 41 00:02:18,320 --> 00:02:21,079 Speaker 1: better wage growth in the United States. It's just meant 42 00:02:21,120 --> 00:02:23,280 Speaker 1: the bond market has finally had to catch up. What 43 00:02:23,320 --> 00:02:26,360 Speaker 1: are your thoughts, Marcus, Yeah, High, I think it's very 44 00:02:26,440 --> 00:02:29,080 Speaker 1: much that the two year yield has been telling us 45 00:02:29,080 --> 00:02:32,320 Speaker 1: something loud and clear, shouting at us for for months now, 46 00:02:32,760 --> 00:02:35,600 Speaker 1: and the ten year and thirty years has really not responded, 47 00:02:35,760 --> 00:02:37,280 Speaker 1: and it's led some people to be in this sort 48 00:02:37,320 --> 00:02:40,639 Speaker 1: of false belief that this is a harbinger of impending recession. 49 00:02:40,680 --> 00:02:43,160 Speaker 1: It's quite the reverse. You know, we've finally seen the 50 00:02:43,639 --> 00:02:47,280 Speaker 1: wage print that everyone has been expecting to see, and 51 00:02:47,320 --> 00:02:50,800 Speaker 1: that has led to the realization that inflation and the 52 00:02:50,800 --> 00:02:53,720 Speaker 1: Philips curve is going to come come up up into 53 00:02:53,800 --> 00:02:56,400 Speaker 1: view um in hiding behind. As it has been a 54 00:02:56,480 --> 00:03:00,280 Speaker 1: very strong economy with very little obvious signs of of 55 00:03:00,680 --> 00:03:03,639 Speaker 1: real strength and inflation that now it looks to be normalizing. 56 00:03:03,800 --> 00:03:06,080 Speaker 1: The curve therefore needs to normalize, which means it should 57 00:03:06,120 --> 00:03:08,480 Speaker 1: be steeper. And I think I can agree with Chris that, 58 00:03:09,000 --> 00:03:10,720 Speaker 1: you know, having trade bonds for the best part of 59 00:03:10,760 --> 00:03:13,839 Speaker 1: thirty years and being on the wrong end of many 60 00:03:13,840 --> 00:03:15,840 Speaker 1: a bear market from time to time, you know, you 61 00:03:15,919 --> 00:03:17,600 Speaker 1: have to sense whether or not this has got some 62 00:03:17,680 --> 00:03:19,560 Speaker 1: legs to it. And I still don't think we're quite 63 00:03:19,560 --> 00:03:22,200 Speaker 1: fully flushed out. And he's spot on to say that 64 00:03:22,280 --> 00:03:24,519 Speaker 1: the fact that credit hasn't moved means that the market 65 00:03:24,520 --> 00:03:26,720 Speaker 1: sentiment hasn't really shifted. Here. We're not talking about a 66 00:03:26,720 --> 00:03:29,120 Speaker 1: bond route. We might get to get three percent in 67 00:03:29,280 --> 00:03:32,240 Speaker 1: ten year yields. We might get to UM. I think 68 00:03:32,320 --> 00:03:34,640 Speaker 1: in some ways more importantly three three point three just 69 00:03:34,680 --> 00:03:37,480 Speaker 1: around the era for thirty years where from whence it 70 00:03:37,560 --> 00:03:41,480 Speaker 1: came in sixteen. That's really why I think we need 71 00:03:41,520 --> 00:03:44,000 Speaker 1: to be and test, and I think we'll probably bounce 72 00:03:44,040 --> 00:03:47,120 Speaker 1: before then. Um. Europe is doing better this morning, is 73 00:03:47,120 --> 00:03:49,320 Speaker 1: the reason why Treasury is on following on with their 74 00:03:49,360 --> 00:03:51,920 Speaker 1: sell off. And the key thing in Europe is peripherals. 75 00:03:51,960 --> 00:03:53,320 Speaker 1: Its ly, he's got an election in less than a 76 00:03:53,360 --> 00:03:55,880 Speaker 1: month's time. They're actually doing better, they're tightening. So that's 77 00:03:55,880 --> 00:03:57,360 Speaker 1: why I think, give me a little bit of stability 78 00:03:57,400 --> 00:04:00,960 Speaker 1: just as we walk into the US market. However, if 79 00:04:01,080 --> 00:04:03,560 Speaker 1: US treasuries want to go in high and yield out, 80 00:04:03,600 --> 00:04:06,400 Speaker 1: they'll go Christopher, Yeah, you know, I think, UM, we're 81 00:04:06,440 --> 00:04:08,680 Speaker 1: spot on when we talk about three five as a 82 00:04:08,720 --> 00:04:11,320 Speaker 1: target for ten year yields over the next number of months. 83 00:04:11,320 --> 00:04:14,160 Speaker 1: Here it doesn't mean they won't see to sixty or 84 00:04:14,200 --> 00:04:17,839 Speaker 1: two seventy first, but I think ultimately higher is the 85 00:04:17,880 --> 00:04:20,680 Speaker 1: path that we're heading now. I would frankly be more 86 00:04:20,720 --> 00:04:24,520 Speaker 1: worried if equities were selling off and bond yields were 87 00:04:24,520 --> 00:04:26,839 Speaker 1: moving materially lower. I think that would be a sign 88 00:04:26,880 --> 00:04:29,520 Speaker 1: that we're still stuck in that old regime. So higher 89 00:04:29,520 --> 00:04:32,400 Speaker 1: bond yields what tactically it's probably a source of stress. 90 00:04:32,600 --> 00:04:35,160 Speaker 1: I think structurally it's a decent signal. One of these 91 00:04:35,240 --> 00:04:38,160 Speaker 1: Christopher and you and I do in technical analysis is 92 00:04:38,240 --> 00:04:40,240 Speaker 1: we have a great respect for people that do a 93 00:04:40,240 --> 00:04:43,039 Speaker 1: lot of back testing. And the back testing is a 94 00:04:43,080 --> 00:04:46,560 Speaker 1: correction is ten percent down. A bear market is eighteen 95 00:04:46,560 --> 00:04:49,520 Speaker 1: percent down. We're down four point six percent from the 96 00:04:49,560 --> 00:04:54,560 Speaker 1: peak on SMP futures. Is a correction still minus ten percent? 97 00:04:54,960 --> 00:04:56,960 Speaker 1: Or is there a new number in your head for 98 00:04:57,000 --> 00:04:59,760 Speaker 1: a correction. I'm I'm in the old school. It's still 99 00:04:59,800 --> 00:05:03,280 Speaker 1: ten We look at these things very simply. A bull 100 00:05:03,279 --> 00:05:06,400 Speaker 1: market you're making money, a bear market you're losing money. 101 00:05:06,440 --> 00:05:08,760 Speaker 1: And a correction. You're not sure yet. Uh. And I 102 00:05:08,839 --> 00:05:11,960 Speaker 1: think at the end of the day, um SMP down 103 00:05:12,000 --> 00:05:14,600 Speaker 1: four or four and a half. While it sounds pronounced 104 00:05:14,720 --> 00:05:17,600 Speaker 1: and it sounds meaningful, it hasn't happened in two years, 105 00:05:17,600 --> 00:05:21,680 Speaker 1: and it's not John, This is really important. Yeah, I mean, 106 00:05:21,720 --> 00:05:24,600 Speaker 1: I'm sorry. Four point used to be a day at 107 00:05:24,600 --> 00:05:27,320 Speaker 1: the race. And I think we need to remember there 108 00:05:27,360 --> 00:05:32,560 Speaker 1: are countless examples of exceptional years where there's some meaningful drawnouts. 109 00:05:33,480 --> 00:05:36,520 Speaker 1: Is an example exceptional year, SMP up thirty, but you 110 00:05:36,560 --> 00:05:39,280 Speaker 1: have to seven percent pullbacks during the best year for 111 00:05:39,320 --> 00:05:41,719 Speaker 1: the bull market in this bull market was one of 112 00:05:41,720 --> 00:05:44,320 Speaker 1: the worst yearest fits right races precisely. Uh. And I 113 00:05:44,320 --> 00:05:47,840 Speaker 1: think from that perspective is a useful roadmap. But it's 114 00:05:47,880 --> 00:05:50,360 Speaker 1: not the perfect roadmap, but it's a useful roadmap. I 115 00:05:50,400 --> 00:05:53,960 Speaker 1: think seven is also pretty interesting here. Now, let's remember 116 00:05:54,240 --> 00:05:57,480 Speaker 1: for the last six years the SMP has done better 117 00:05:57,520 --> 00:06:00,560 Speaker 1: than earnings have done. The street right now is looking 118 00:06:00,600 --> 00:06:04,640 Speaker 1: for about out of earnings and is this the year 119 00:06:04,920 --> 00:06:08,680 Speaker 1: where the market underperformed the economy. It's possible. Looking at 120 00:06:08,680 --> 00:06:11,960 Speaker 1: the screen right now, the pullback to steepens tom the 121 00:06:12,000 --> 00:06:18,480 Speaker 1: down down body the SMP negative twenty points have you're 122 00:06:18,520 --> 00:06:20,880 Speaker 1: looking for some stability in the equity market is not 123 00:06:20,920 --> 00:06:23,880 Speaker 1: there yet. So Marcus Ashworth, thank you so much. Writing 124 00:06:23,880 --> 00:06:27,080 Speaker 1: for Bloomberg Gatfi. Look for his good work chart paragraph, chart, 125 00:06:27,120 --> 00:06:30,240 Speaker 1: paragraph out on Bloomberg gat Flight today. Mr Ashworth in 126 00:06:30,320 --> 00:06:34,719 Speaker 1: her studios in London, Christopher her own strategous research as well. 127 00:06:49,920 --> 00:06:52,560 Speaker 1: There were seven thousand, three d and twelve books of 128 00:06:52,600 --> 00:06:56,400 Speaker 1: the crisis in fed. We trust was one that actually 129 00:06:56,560 --> 00:07:00,000 Speaker 1: site sliced through the zeitgeist and the added serious value 130 00:07:00,040 --> 00:07:02,960 Speaker 1: you Ben Bernanke's wore on the Great Panic. David Wessell, 131 00:07:03,320 --> 00:07:06,800 Speaker 1: writing for years with a journal, who landed happy in 132 00:07:06,920 --> 00:07:10,440 Speaker 1: Washington when Glenn Hutchens said, Okay, we got to set 133 00:07:10,480 --> 00:07:13,960 Speaker 1: up a fiscal and Monetary policy division at Brookings and 134 00:07:14,000 --> 00:07:16,520 Speaker 1: the tour to force of Mr Wessell has been the 135 00:07:16,560 --> 00:07:20,280 Speaker 1: signing of Chairman Bernankey and announced a few days ago 136 00:07:20,400 --> 00:07:24,520 Speaker 1: that Chair Yelling today will join Mr Wessell at the 137 00:07:24,520 --> 00:07:28,760 Speaker 1: Brookings Institute. David Wessel joins us right now. David, congratulations 138 00:07:28,880 --> 00:07:32,520 Speaker 1: on this. How do you attract with your charm, Chairman 139 00:07:32,520 --> 00:07:37,280 Speaker 1: Bernankey and Chair Yelling together. That's a good question. I 140 00:07:37,280 --> 00:07:39,400 Speaker 1: think you probably should ask them. I think what we've 141 00:07:39,440 --> 00:07:41,840 Speaker 1: tried to do is create an environment at Brookings where 142 00:07:41,920 --> 00:07:44,040 Speaker 1: they can continue the kind of work they did as 143 00:07:44,080 --> 00:07:47,600 Speaker 1: public servants, but in a more academic atmosphere. It is 144 00:07:47,600 --> 00:07:50,600 Speaker 1: pretty exciting and we're really looking forward to seeing what 145 00:07:50,720 --> 00:07:53,120 Speaker 1: kind of book Jannet Yellen will right. I think it'll 146 00:07:53,160 --> 00:07:55,640 Speaker 1: be very different than the one Ben Bernanke wrote, because 147 00:07:56,120 --> 00:07:58,440 Speaker 1: for four years as fetcher have been quite different than 148 00:07:58,480 --> 00:08:01,400 Speaker 1: his eight years. Absolutely, maybe you could toilet slack and 149 00:08:01,400 --> 00:08:05,119 Speaker 1: that will get some attention as as as well. David 150 00:08:05,160 --> 00:08:08,760 Speaker 1: Will they will? They be down the hallway from get 151 00:08:08,800 --> 00:08:11,960 Speaker 1: paint us the picture of the physical structure here is it? 152 00:08:12,280 --> 00:08:14,840 Speaker 1: Is it a hallway and they've got one office here 153 00:08:14,840 --> 00:08:16,240 Speaker 1: in one office there? Or do you have to keep 154 00:08:16,280 --> 00:08:19,960 Speaker 1: them apart? Uh. We're on the eighth floor of the 155 00:08:20,040 --> 00:08:24,160 Speaker 1: Brookings Building on Massages this Avenue near DuPont Circle, and 156 00:08:24,480 --> 00:08:28,559 Speaker 1: Ben Bernanke got the corner office. I had the really 157 00:08:28,640 --> 00:08:32,320 Speaker 1: nice spatience office next to him, but I traded it 158 00:08:32,360 --> 00:08:34,560 Speaker 1: for Janet Yellen, so she'll be right next door to him, 159 00:08:34,559 --> 00:08:36,439 Speaker 1: and I'm a couple of doors down in a more 160 00:08:36,760 --> 00:08:39,720 Speaker 1: more modest Brooking scholar office. What is the one I deserve, 161 00:08:39,880 --> 00:08:42,320 Speaker 1: and when Chairman Powell joined you, you'll be down in 162 00:08:42,360 --> 00:08:46,920 Speaker 1: the basement next to the heat maxt. That would be 163 00:08:47,040 --> 00:08:49,480 Speaker 1: very good. We'll look forward to that. David, let's turn 164 00:08:49,520 --> 00:08:53,280 Speaker 1: the monetary policy. Chairman Powell is not a monetary PhD. 165 00:08:53,320 --> 00:08:58,160 Speaker 1: What kind of vice chairman does Chairman Powell need? Well? 166 00:08:58,160 --> 00:09:00,640 Speaker 1: I think it would be fantastic if Chairman how got 167 00:09:00,640 --> 00:09:03,719 Speaker 1: a monetary economy ast, somebody who has a PhD in 168 00:09:03,800 --> 00:09:07,480 Speaker 1: economics and has some experience. We'll have to see whether 169 00:09:07,520 --> 00:09:10,240 Speaker 1: the Trump White House agrees with that. I think, as 170 00:09:10,280 --> 00:09:12,320 Speaker 1: you know, the other big job up for grabs is 171 00:09:12,360 --> 00:09:15,160 Speaker 1: the New York Fed job, and so the presidency of 172 00:09:15,160 --> 00:09:18,000 Speaker 1: the New York Fed. So it's important. It seems to 173 00:09:18,000 --> 00:09:20,240 Speaker 1: me that one of those two jobs go to someone 174 00:09:20,400 --> 00:09:23,200 Speaker 1: who has some experience of monetary policy and David, it 175 00:09:23,240 --> 00:09:26,120 Speaker 1: was really interesting the final act of Chair Yelling on 176 00:09:26,200 --> 00:09:31,640 Speaker 1: Friday to cap the Wells Fargo assets, essentially capping its growth. 177 00:09:32,120 --> 00:09:35,600 Speaker 1: Do you see the Federal Reserve under Chair Chair Powell 178 00:09:36,000 --> 00:09:39,400 Speaker 1: as relatively different to under Chair Yelling? Do we see 179 00:09:39,400 --> 00:09:42,439 Speaker 1: a different regulatory regime? It's that the first of many 180 00:09:42,520 --> 00:09:44,240 Speaker 1: more acts to come from the Fed, or was that 181 00:09:44,360 --> 00:09:48,640 Speaker 1: really the top of the regulatory curve. I think the 182 00:09:48,679 --> 00:09:51,560 Speaker 1: FEDS had a pretty powerful signal on Friday that they're 183 00:09:51,559 --> 00:09:54,200 Speaker 1: going to hold directors of the banks accountable when the 184 00:09:54,240 --> 00:09:58,079 Speaker 1: banks screw up. Of course, Powell was part of that decision. 185 00:09:58,120 --> 00:10:00,520 Speaker 1: I think it would have happened this week they hadn't 186 00:10:00,520 --> 00:10:02,800 Speaker 1: got the paperwork done and Wells Fargo ahead and agreed 187 00:10:02,840 --> 00:10:06,000 Speaker 1: to it on Friday. My gut is that Powell will 188 00:10:06,080 --> 00:10:09,400 Speaker 1: be just as aggressive at yelling at the enforcement side, 189 00:10:09,960 --> 00:10:12,559 Speaker 1: but he may not be quite as resistant to changes 190 00:10:12,600 --> 00:10:17,080 Speaker 1: in Dodd Frank as she would have been. But so far, 191 00:10:17,480 --> 00:10:20,480 Speaker 1: you know, the Trump administration has talked a lot of 192 00:10:20,800 --> 00:10:23,640 Speaker 1: talk about doing away with dot frank, and there's some 193 00:10:23,679 --> 00:10:25,880 Speaker 1: House Republicans to want to do it. But when you 194 00:10:25,880 --> 00:10:28,960 Speaker 1: look at what they've actually proposed in the administration, the 195 00:10:29,040 --> 00:10:32,719 Speaker 1: National Economic Council and the Treasury, they've been pretty modest reforms. 196 00:10:33,400 --> 00:10:35,400 Speaker 1: What's the base case of Brookings? What do you expecting, 197 00:10:35,520 --> 00:10:41,199 Speaker 1: David about what regulatory change? Oh? I expect that this 198 00:10:41,240 --> 00:10:45,439 Speaker 1: is the high water mark of regulator regulatory uh enforcement. 199 00:10:45,480 --> 00:10:48,199 Speaker 1: After I think that across the government, you see the 200 00:10:48,760 --> 00:10:52,320 Speaker 1: government pulling back. I think the Fed maybe the break 201 00:10:52,400 --> 00:10:54,920 Speaker 1: the resistance on stuff going on in the rest of 202 00:10:54,920 --> 00:10:59,079 Speaker 1: the government. Tell us David about what Chairman Bernanke has 203 00:10:59,120 --> 00:11:02,400 Speaker 1: been writing out and what you would like to see 204 00:11:02,480 --> 00:11:06,280 Speaker 1: Cherry Yellen right about. She's more than independent minded. She'll 205 00:11:06,360 --> 00:11:08,640 Speaker 1: donro white about what she wants to write about. But 206 00:11:08,720 --> 00:11:15,120 Speaker 1: what does the curiosity you have in her first essays? Well, 207 00:11:15,240 --> 00:11:19,240 Speaker 1: Chairman Bernanke has been quite focused on what led to 208 00:11:19,280 --> 00:11:21,800 Speaker 1: the financial crisis and how we got out of it. 209 00:11:22,120 --> 00:11:25,439 Speaker 1: After all, he cut his academic teats on writing about 210 00:11:25,440 --> 00:11:28,200 Speaker 1: the Great Depression, and so he's long been interested in 211 00:11:28,200 --> 00:11:31,400 Speaker 1: this stuff. I expect that I'm interested to see what 212 00:11:31,520 --> 00:11:34,480 Speaker 1: Janet Yellen writes about two things. One, She's long been 213 00:11:34,520 --> 00:11:37,439 Speaker 1: interested in the labor market. Why does it work the 214 00:11:37,480 --> 00:11:40,640 Speaker 1: way it does? Why does some firms pay more wages 215 00:11:40,679 --> 00:11:44,040 Speaker 1: than they have to? Why has labor force participation been 216 00:11:44,040 --> 00:11:47,079 Speaker 1: so disappointing lately? What's the role of women in the 217 00:11:47,160 --> 00:11:49,920 Speaker 1: labor market? So I would imagine that that would be 218 00:11:50,240 --> 00:11:53,120 Speaker 1: continue to hear interest. And then, of course it's hard 219 00:11:53,160 --> 00:11:56,600 Speaker 1: to escape, uh, the fact that she's the first woman 220 00:11:56,840 --> 00:12:01,040 Speaker 1: FED chair in an economics profession where women are really 221 00:12:01,040 --> 00:12:04,959 Speaker 1: willfully underrepresented. So I think that people will be interested, 222 00:12:05,000 --> 00:12:07,120 Speaker 1: whether she wants to write about that or not, what 223 00:12:07,240 --> 00:12:10,400 Speaker 1: her experiences have been the only woman in her class 224 00:12:10,400 --> 00:12:12,959 Speaker 1: of PhDs at Yale and so forth. Yeah, I mean 225 00:12:13,040 --> 00:12:16,880 Speaker 1: these are huge, huge issues that we see right now. 226 00:12:17,000 --> 00:12:19,160 Speaker 1: Are we free and clear from where you said? I 227 00:12:19,240 --> 00:12:21,800 Speaker 1: use a chart, David Wessel all the time? Would you 228 00:12:21,840 --> 00:12:24,960 Speaker 1: just the FED funds target rateed justif for inflation and 229 00:12:25,000 --> 00:12:29,400 Speaker 1: we're still on the edge of ultra accommodative via Taylor rule. Uh, proxy, 230 00:12:29,520 --> 00:12:34,440 Speaker 1: we're still accommodative ultracommendative. How far does the FED have 231 00:12:34,600 --> 00:12:39,800 Speaker 1: to move to get anywhere near a neutral rate? Well, 232 00:12:39,840 --> 00:12:42,320 Speaker 1: I think the conventional wisdom is something close to three. 233 00:12:43,960 --> 00:12:47,199 Speaker 1: I think it's been a bit baffling. My wages haven't 234 00:12:47,240 --> 00:12:50,720 Speaker 1: grown gone up more given how low unemployment is, So 235 00:12:50,720 --> 00:12:52,520 Speaker 1: I think the FED will be watching that carefully. And 236 00:12:52,559 --> 00:12:54,839 Speaker 1: of course there was this new evidence on Friday that 237 00:12:54,880 --> 00:12:57,439 Speaker 1: wages are beginning to rise. But as you know, Tom, 238 00:12:57,559 --> 00:13:01,040 Speaker 1: the consensus among the con him as, including those in 239 00:13:01,080 --> 00:13:03,880 Speaker 1: the FED, is the neutral real rate, that rate that 240 00:13:03,920 --> 00:13:07,160 Speaker 1: will prevail when all is calm in the economy has 241 00:13:07,200 --> 00:13:09,280 Speaker 1: come down quite a bit, and so I think that 242 00:13:09,360 --> 00:13:12,520 Speaker 1: will affect the Fed's judgment. In the time we've got 243 00:13:12,600 --> 00:13:14,439 Speaker 1: left to you, I want you to talk about what 244 00:13:14,559 --> 00:13:18,440 Speaker 1: Mr Hutchins did. You're at Brookings, it's an acclaimed think tank. 245 00:13:19,120 --> 00:13:21,680 Speaker 1: You go over and set up this economic tank. You 246 00:13:21,679 --> 00:13:25,720 Speaker 1: have this huge announcement of Bernankey and Yelling joining you 247 00:13:26,440 --> 00:13:29,760 Speaker 1: as well. What did Mr Hutchins want to accomplish when 248 00:13:29,760 --> 00:13:35,080 Speaker 1: he donated money large two Brookings? UM? I think I 249 00:13:35,080 --> 00:13:38,840 Speaker 1: think Glenn Hutchins wanted to improve the amount of research 250 00:13:38,920 --> 00:13:41,600 Speaker 1: and thoughtful policy work that goes on in fiscal and 251 00:13:41,640 --> 00:13:44,760 Speaker 1: monetary policy. And you know Yelling and Bernankey are clearly 252 00:13:44,800 --> 00:13:47,640 Speaker 1: our stars, but there's a lot of us stuff going on. UM. 253 00:13:47,679 --> 00:13:50,120 Speaker 1: But I think the thing that's impressed me about Glenn 254 00:13:50,280 --> 00:13:53,640 Speaker 1: is he's really the model donor. He gave us a 255 00:13:53,679 --> 00:13:56,640 Speaker 1: substantial sum of money to get us off for five 256 00:13:56,720 --> 00:14:00,199 Speaker 1: years and said I want people who I risk back 257 00:14:00,280 --> 00:14:04,160 Speaker 1: to stay. You're doing good work. Um. He's not one 258 00:14:04,160 --> 00:14:06,959 Speaker 1: of these donors who has a particular agenda, either on 259 00:14:07,080 --> 00:14:09,839 Speaker 1: his personal pocketbook or his political agenda. He's trying to 260 00:14:09,920 --> 00:14:12,960 Speaker 1: influence that. So it's been really remarkable and as you know, 261 00:14:13,080 --> 00:14:15,760 Speaker 1: that's not always the norm, and think thanks sometimes donors 262 00:14:15,800 --> 00:14:19,200 Speaker 1: really want to tie down their their their centers to 263 00:14:19,280 --> 00:14:21,840 Speaker 1: pursue their own particular interest. David Russell for all of 264 00:14:21,920 --> 00:14:25,200 Speaker 1: US and economics. Just congratulations Cheer yell And joining Chairman 265 00:14:25,240 --> 00:14:29,000 Speaker 1: Bernankia Mr Wessell's hutch and Center the Brookings Institution. Just 266 00:14:29,080 --> 00:14:32,600 Speaker 1: absolutely uh an extraordina announcement. Really looking forward to Cheer 267 00:14:32,680 --> 00:14:36,360 Speaker 1: Yellin's first essays. Mr Wessell again with the Brookings Institutions. 268 00:14:48,720 --> 00:14:52,160 Speaker 1: We sure now to Morgan Stanley's Chief of US Public Policy, 269 00:14:53,000 --> 00:14:55,680 Speaker 1: Michael Zess, who has got a really interesting pedigree. Not 270 00:14:55,760 --> 00:14:57,520 Speaker 1: only is he a cf A, but he's done the 271 00:14:57,600 --> 00:15:01,480 Speaker 1: usual political credit as well. And who including the LBJ 272 00:15:01,600 --> 00:15:04,600 Speaker 1: School of Public Affairs. Did you study with James K. Galbraith? 273 00:15:05,560 --> 00:15:07,840 Speaker 1: He was, He was not one of my I never 274 00:15:07,880 --> 00:15:10,360 Speaker 1: had class with him, but here, Yeah. I mean that's 275 00:15:10,360 --> 00:15:12,880 Speaker 1: a really interesting and twisted program as well, and really 276 00:15:12,920 --> 00:15:17,600 Speaker 1: fits it right now with what we're seeing within public policy. 277 00:15:17,760 --> 00:15:21,560 Speaker 1: What is the public policy and after after the meetings 278 00:15:21,600 --> 00:15:26,760 Speaker 1: in Montreal, Well, I think that remains to be seen explicitly, 279 00:15:26,880 --> 00:15:31,400 Speaker 1: but umly, what the US is asking for um is 280 00:15:31,480 --> 00:15:34,280 Speaker 1: something that I think really is focus around the bottom 281 00:15:34,320 --> 00:15:36,120 Speaker 1: line of kind of shrinking trade deficits, and I think 282 00:15:36,120 --> 00:15:38,800 Speaker 1: it's unclear what both sides are willing to accept that 283 00:15:38,840 --> 00:15:42,080 Speaker 1: would actually practically do that. Uh, you know, in our view, 284 00:15:42,200 --> 00:15:45,240 Speaker 1: there's something ultimately that can be delivered to kind of, um, 285 00:15:45,280 --> 00:15:47,760 Speaker 1: get the negotiation across the finish line, which I think 286 00:15:47,760 --> 00:15:51,680 Speaker 1: can allow the US to talk about trade deficits perspectively 287 00:15:51,760 --> 00:15:55,560 Speaker 1: being shrunk. Something like upping the destination of origin rules 288 00:15:55,560 --> 00:15:58,440 Speaker 1: around autos for example, where the U s thinks it's 289 00:15:58,440 --> 00:16:03,160 Speaker 1: got a competitive advantage around auto labor and manufacturing. Um, 290 00:16:03,360 --> 00:16:05,920 Speaker 1: something like that, which you know, ultimately, in game theory terms, 291 00:16:06,000 --> 00:16:08,320 Speaker 1: is is something where both sides can kind of claim victory. 292 00:16:08,400 --> 00:16:11,280 Speaker 1: But you know it's not evident yet precisely what that is. 293 00:16:11,880 --> 00:16:14,400 Speaker 1: The public policy is to say face and after for 294 00:16:14,480 --> 00:16:17,840 Speaker 1: all three parties, right, yeah, I mean more or less. 295 00:16:18,160 --> 00:16:21,280 Speaker 1: Uh you know what the or what what the US 296 00:16:21,360 --> 00:16:23,240 Speaker 1: wants here? If you were to kind of take the 297 00:16:23,240 --> 00:16:26,160 Speaker 1: President at his word, uh, you know, it's free and 298 00:16:26,240 --> 00:16:28,480 Speaker 1: fair trade, and he tends to always define it in 299 00:16:28,600 --> 00:16:32,520 Speaker 1: terms of shrinking the trade deficit. So I think whatever 300 00:16:32,560 --> 00:16:35,360 Speaker 1: has to be delivered is something that you can feel 301 00:16:35,440 --> 00:16:37,720 Speaker 1: like you can credibly tell your base supporters that this 302 00:16:37,760 --> 00:16:39,640 Speaker 1: is something that's going to shrink the trade deficit, as 303 00:16:39,640 --> 00:16:42,200 Speaker 1: opposed to something where when they're talking about the border 304 00:16:42,200 --> 00:16:44,840 Speaker 1: adjustment tax or some other type of tariffing regime which 305 00:16:44,840 --> 00:16:48,560 Speaker 1: could demonstrably actually shrink a trade deficit, at least in 306 00:16:48,880 --> 00:16:51,600 Speaker 1: mathematical terms, those things seem to be off the table. 307 00:16:51,640 --> 00:16:53,480 Speaker 1: It's something you need to be able to credibly make 308 00:16:53,480 --> 00:16:55,880 Speaker 1: the argument, as opposed to put it on paper. So 309 00:16:55,920 --> 00:16:59,080 Speaker 1: we call these big significant issues that need to be addressed, 310 00:16:59,120 --> 00:17:01,880 Speaker 1: and to address them thanktively, you would hope for stability elsewhere. 311 00:17:02,000 --> 00:17:04,880 Speaker 1: But we're talking about getting to Thursday now, never mind 312 00:17:04,880 --> 00:17:07,960 Speaker 1: getting to the next round of naftal negotiations. Can they 313 00:17:08,080 --> 00:17:10,760 Speaker 1: agree to keep the government open and can they come 314 00:17:10,760 --> 00:17:13,119 Speaker 1: to any kind of agreement around an immigration plan? Can 315 00:17:13,119 --> 00:17:15,640 Speaker 1: they do those two things? Michael, I think that they 316 00:17:15,680 --> 00:17:17,760 Speaker 1: can agree to keep the government open because I think 317 00:17:17,800 --> 00:17:20,320 Speaker 1: the base case on all these governments shutdowns because they 318 00:17:20,440 --> 00:17:23,560 Speaker 1: had so many opportunities for government shutdowns, is that they 319 00:17:23,600 --> 00:17:26,720 Speaker 1: tend the muddle through because the actual instance of shutdowns 320 00:17:26,840 --> 00:17:29,320 Speaker 1: is pretty small, and really, when you're thinking about from 321 00:17:29,320 --> 00:17:33,080 Speaker 1: a market's perspective, um a shutdown on its own to 322 00:17:33,280 --> 00:17:36,560 Speaker 1: us is not terribly consequential hasn't had a giant feed 323 00:17:36,560 --> 00:17:39,840 Speaker 1: through effected gdp UM. What matters more is what that 324 00:17:40,520 --> 00:17:43,720 Speaker 1: what is that signal telling us about other policies that 325 00:17:43,840 --> 00:17:46,000 Speaker 1: may or may not be stimulative. If this were a 326 00:17:46,080 --> 00:17:48,080 Speaker 1: year where we were getting really excited about something like 327 00:17:48,160 --> 00:17:52,320 Speaker 1: infrastructure policy, which we're not, why aren't we Well, there's 328 00:17:52,400 --> 00:17:54,760 Speaker 1: political reasons, but just I don't need to interrupt, but this, 329 00:17:54,880 --> 00:17:57,200 Speaker 1: John Ferrol, this came up like four times this weekend. 330 00:17:58,240 --> 00:18:01,680 Speaker 1: What is the why? So there's a there's a political reason, 331 00:18:01,840 --> 00:18:04,200 Speaker 1: and there's a policy reason. The political reason is that 332 00:18:04,400 --> 00:18:06,880 Speaker 1: we just don't think there's enough time for the Democrats 333 00:18:06,920 --> 00:18:09,440 Speaker 1: and Republicans to bridge their difference. They get differences on 334 00:18:09,560 --> 00:18:12,840 Speaker 1: labor issues, environmental issues, and they get differences on how 335 00:18:12,880 --> 00:18:14,919 Speaker 1: they want to fund it. Right where the Democrats are 336 00:18:14,960 --> 00:18:17,159 Speaker 1: willing to raise the gas tax or other revenues, the 337 00:18:17,640 --> 00:18:20,760 Speaker 1: Republicans want to kind of redirect money from elsewhere. But 338 00:18:20,880 --> 00:18:23,600 Speaker 1: even if that were in a problem, the policy issue 339 00:18:23,760 --> 00:18:26,199 Speaker 1: is the way it appears to be constructed right now. 340 00:18:26,480 --> 00:18:28,920 Speaker 1: It's not clear to us that this is actually a stimulus. 341 00:18:29,000 --> 00:18:31,200 Speaker 1: All it really kind of boils down to is is 342 00:18:31,200 --> 00:18:33,119 Speaker 1: there going to be net new money in the economy 343 00:18:33,320 --> 00:18:35,760 Speaker 1: after this policy. And we haven't seen a full proposal yet, 344 00:18:35,800 --> 00:18:38,440 Speaker 1: but if you're talking about something where you've got twollion 345 00:18:38,480 --> 00:18:41,199 Speaker 1: dollars from the federal government, where that's not necessarily going 346 00:18:41,280 --> 00:18:42,879 Speaker 1: to be a new money, it's gonna be redirected from 347 00:18:42,920 --> 00:18:45,520 Speaker 1: Amtrak or Tiger grants or something like that, and then 348 00:18:45,560 --> 00:18:48,600 Speaker 1: it requires state and local governments to partner um and 349 00:18:48,680 --> 00:18:51,240 Speaker 1: to sign on to certain conditions. Not clear to us 350 00:18:51,320 --> 00:18:53,920 Speaker 1: that that those governments are going to sign on. They've 351 00:18:53,920 --> 00:18:56,280 Speaker 1: got easier incentives if they just kind of go go 352 00:18:56,440 --> 00:18:59,960 Speaker 1: with the traditional funding mechanisms they've been using. Brilliantly describe 353 00:19:00,280 --> 00:19:03,000 Speaker 1: John Ferrell, I would point out to someone who tests 354 00:19:03,040 --> 00:19:06,640 Speaker 1: tatted to his brain the time from Coventry to Paddington 355 00:19:06,760 --> 00:19:10,760 Speaker 1: Station or whatever in London, that, with great respect for 356 00:19:10,800 --> 00:19:13,760 Speaker 1: the courage of first responders, we've had three major Amtrak 357 00:19:13,880 --> 00:19:17,080 Speaker 1: accidents in a cup of coffee and it's not funny. 358 00:19:17,520 --> 00:19:21,440 Speaker 1: I mean, I'm I would I would suggest Michael that 359 00:19:21,560 --> 00:19:25,520 Speaker 1: we've almost reached the point with you know, rusted bridges, 360 00:19:25,600 --> 00:19:30,119 Speaker 1: and this is not funny. This this is serious, Michael. 361 00:19:30,200 --> 00:19:32,280 Speaker 1: At the same time, though, when you break down the 362 00:19:32,400 --> 00:19:36,120 Speaker 1: country into individual states and think about where there needs 363 00:19:36,160 --> 00:19:40,280 Speaker 1: to be the biggest infrastuch just spend. Could you assume 364 00:19:40,480 --> 00:19:43,879 Speaker 1: and conclude that actually it's the Northeast and it's blue 365 00:19:44,000 --> 00:19:46,640 Speaker 1: states that probably need the most money spent on them. 366 00:19:47,359 --> 00:19:50,119 Speaker 1: I think it's fair to your higher tax jurisdictions are 367 00:19:50,119 --> 00:19:52,440 Speaker 1: the ones with the most deferred capital. You know, whether 368 00:19:52,560 --> 00:19:55,040 Speaker 1: or not that becomes a political sticking point is unclear, 369 00:19:55,080 --> 00:19:56,920 Speaker 1: But I will say that one thing that we threw 370 00:19:56,960 --> 00:19:58,760 Speaker 1: out there when we were doing our outlook for policy 371 00:19:58,800 --> 00:20:01,840 Speaker 1: for the years that when it comes the midterm election 372 00:20:01,920 --> 00:20:03,560 Speaker 1: is one of the things that can unlock this right 373 00:20:03,600 --> 00:20:07,040 Speaker 1: if the Democrats are able to take control. Arguably the 374 00:20:07,119 --> 00:20:09,919 Speaker 1: president the Democrats are on the same page with how 375 00:20:10,000 --> 00:20:13,840 Speaker 1: to fund this and not necessarily concerned as much about deficits. 376 00:20:13,920 --> 00:20:16,639 Speaker 1: Now you've got tax reform done, because Republicans seem to 377 00:20:16,720 --> 00:20:19,440 Speaker 1: be okay with deficits for tax cuts so far, they're 378 00:20:19,440 --> 00:20:22,919 Speaker 1: signaling that they're not okay with deficits for increased spending. Uh, 379 00:20:23,119 --> 00:20:26,040 Speaker 1: that view gets marginalized. Obviously, if the Democrats take control 380 00:20:26,080 --> 00:20:29,119 Speaker 1: of Congress. I would mention John that there can be 381 00:20:29,280 --> 00:20:32,440 Speaker 1: c changed things in infrastructure to change debate, and I 382 00:20:32,520 --> 00:20:37,119 Speaker 1: would go back to Staplehurst in Kent, England, in the 383 00:20:37,280 --> 00:20:40,520 Speaker 1: train derailment that Charles Dickens was in that he was 384 00:20:40,760 --> 00:20:44,440 Speaker 1: never the same after that. Radio going back sometime I'm 385 00:20:44,480 --> 00:20:48,960 Speaker 1: doing that just impressed you with actually thoroughly impressed. Not 386 00:20:49,080 --> 00:20:53,200 Speaker 1: actually to Tom Covered at the time. I said last 387 00:20:53,240 --> 00:20:59,399 Speaker 1: week that he graduated with Keynes and that's funny. Michael's like, 388 00:20:59,480 --> 00:21:01,680 Speaker 1: what are they talking about? But this, I'm sorry. These 389 00:21:01,720 --> 00:21:05,359 Speaker 1: accidents drive the conversation. We've had three m track accidents, Michael, 390 00:21:05,400 --> 00:21:08,440 Speaker 1: and we don't have infrastructure. I listen dazzled by that. 391 00:21:08,640 --> 00:21:11,640 Speaker 1: There are a lot of urgent things that you would 392 00:21:11,680 --> 00:21:13,680 Speaker 1: think would kind of spur on Congress at the moment, 393 00:21:14,040 --> 00:21:17,440 Speaker 1: and right now just don't seem to be working. I mean, obviously, 394 00:21:17,520 --> 00:21:20,720 Speaker 1: the the need to take care of the Dreamers and 395 00:21:20,760 --> 00:21:23,200 Speaker 1: the docket issue is something that kind of keeps getting 396 00:21:23,280 --> 00:21:25,760 Speaker 1: rolled forward because it is embroiled in all of these 397 00:21:25,800 --> 00:21:28,440 Speaker 1: other short term government funding fights. You've gotta come back, 398 00:21:28,560 --> 00:21:31,720 Speaker 1: but very quickly here with your cf A understanding of 399 00:21:31,760 --> 00:21:34,879 Speaker 1: the dynamics. Are we anywhere near a yield lift that 400 00:21:35,000 --> 00:21:39,120 Speaker 1: changes the calculus in Washington? I don't think so. Um 401 00:21:39,840 --> 00:21:42,960 Speaker 1: the because I think the issue with kind of yields going, 402 00:21:43,480 --> 00:21:45,960 Speaker 1: the yields increasing and kind of feeding through to the 403 00:21:46,000 --> 00:21:49,680 Speaker 1: budget and causing concerns with conservative Republicans. That seems to 404 00:21:49,720 --> 00:21:52,080 Speaker 1: be the type of thing that doesn't get reflected until 405 00:21:52,240 --> 00:21:54,439 Speaker 1: beyond the mid terms. Okay, Michael, thank you so much. 406 00:21:54,440 --> 00:22:12,280 Speaker 1: Michael Jays with Morgan Stanley with us this morning. Bond 407 00:22:12,320 --> 00:22:15,399 Speaker 1: people live in another world than the things we quote. 408 00:22:15,480 --> 00:22:18,760 Speaker 1: One would be Margie Patella Wells Capital Management, who joins 409 00:22:18,840 --> 00:22:21,920 Speaker 1: us in Margaie, I look at the Bloomberg Barkley's High 410 00:22:22,000 --> 00:22:26,359 Speaker 1: Yield Corporate Index where I get a coupon along the way, 411 00:22:27,080 --> 00:22:29,840 Speaker 1: and I'm down a lot less than just looking at 412 00:22:29,880 --> 00:22:33,320 Speaker 1: full faith and credit. Is your high yield market immune 413 00:22:33,560 --> 00:22:37,680 Speaker 1: from what we've seen in the bottom pullback. Well, it's 414 00:22:37,880 --> 00:22:41,400 Speaker 1: holding its own as I would expect because with really 415 00:22:41,520 --> 00:22:45,600 Speaker 1: the default call it two and still a big premium 416 00:22:45,680 --> 00:22:48,159 Speaker 1: three and a half percent or so more than Treasury's, 417 00:22:48,840 --> 00:22:51,280 Speaker 1: it's able to hold its value much better. And as 418 00:22:51,320 --> 00:22:54,399 Speaker 1: far as total return here today, it's slightly positive. Let 419 00:22:54,480 --> 00:22:57,080 Speaker 1: me make this clear, folcus, As miss Patel just said, 420 00:22:57,359 --> 00:23:00,760 Speaker 1: three and a half three fifty US points, three and 421 00:23:00,760 --> 00:23:04,280 Speaker 1: a half percentage points of yield along the way more 422 00:23:04,320 --> 00:23:06,639 Speaker 1: than you do with government bonds. Yes, all right, Well, 423 00:23:06,680 --> 00:23:07,920 Speaker 1: can I just I just want to switch to the 424 00:23:07,960 --> 00:23:09,639 Speaker 1: stock market because we're going to get it open in 425 00:23:09,760 --> 00:23:12,919 Speaker 1: just a moment here. And Margaret, you've been quoted as 426 00:23:12,960 --> 00:23:15,840 Speaker 1: saying that you see the bull market as continuing. Does 427 00:23:16,000 --> 00:23:18,920 Speaker 1: what happened last week changed your mind at all? No, 428 00:23:19,160 --> 00:23:22,879 Speaker 1: because it was actually rather puzzling. Is earnings reports have 429 00:23:22,960 --> 00:23:26,400 Speaker 1: been great, and even the Sagum earnings which were reported 430 00:23:26,480 --> 00:23:30,840 Speaker 1: last week, that the large camp tech companies had very 431 00:23:30,960 --> 00:23:34,879 Speaker 1: very good earnings. And before that the market spiked up, 432 00:23:34,960 --> 00:23:38,240 Speaker 1: maybe up seven percent in four weeks. So to me, 433 00:23:38,640 --> 00:23:43,000 Speaker 1: it's a natural correction of something that looked pretty speculative 434 00:23:43,080 --> 00:23:45,200 Speaker 1: to me. So I think earnings looked pretty good for 435 00:23:45,240 --> 00:23:47,360 Speaker 1: the rest of the year. That's been validated at least 436 00:23:47,400 --> 00:23:49,800 Speaker 1: so far, especially in the tech sector. So do we 437 00:23:49,920 --> 00:23:54,920 Speaker 1: have any more to give up before the bull market continues? Well, 438 00:23:55,000 --> 00:23:58,400 Speaker 1: it could. We've had three percent corrections now it looks 439 00:23:58,440 --> 00:24:02,520 Speaker 1: like we may be maximum, say a five percent correction. 440 00:24:02,560 --> 00:24:04,720 Speaker 1: I don't think there's much more than that, because the 441 00:24:04,800 --> 00:24:08,000 Speaker 1: fundamentals are good, the economies growing rates. Although the curve 442 00:24:08,119 --> 00:24:11,879 Speaker 1: lantened a lot it's still um doesn't provide much competition 443 00:24:12,040 --> 00:24:14,879 Speaker 1: compared to stocks that have earnings growth from here and 444 00:24:14,960 --> 00:24:16,760 Speaker 1: a lot too. All right, So that if you've been 445 00:24:16,800 --> 00:24:19,680 Speaker 1: planning for this, or you have sort of looked into 446 00:24:19,720 --> 00:24:21,760 Speaker 1: the future and said, you know, stocks don't grow to 447 00:24:21,880 --> 00:24:26,080 Speaker 1: the sky, would you be deploying your cash now or 448 00:24:26,160 --> 00:24:28,200 Speaker 1: maybe wait until the pull back to the fifty day 449 00:24:28,240 --> 00:24:30,800 Speaker 1: movie average, I mean now would be another fifty points 450 00:24:30,880 --> 00:24:36,120 Speaker 1: lower from where we are right now eleven. Let's say, well, 451 00:24:36,240 --> 00:24:38,639 Speaker 1: I think actually I bought a little on Friday because 452 00:24:38,680 --> 00:24:41,560 Speaker 1: I thought that provided some opportunity. I don't think there's 453 00:24:41,560 --> 00:24:43,760 Speaker 1: a lot of downside to this, and some of the 454 00:24:43,880 --> 00:24:47,919 Speaker 1: names have reacted pretty sharply, especially those that had been 455 00:24:48,000 --> 00:24:50,159 Speaker 1: up a lot. So I think now it's good at 456 00:24:50,200 --> 00:24:52,760 Speaker 1: time to get in. I noticed in the thirty year 457 00:24:52,840 --> 00:24:57,119 Speaker 1: bun that I've enjoyed losing two years of coupon in 458 00:24:57,240 --> 00:25:00,080 Speaker 1: the last number of weeks. How do you define a 459 00:25:00,280 --> 00:25:05,040 Speaker 1: bear market within full faith and credit paper market, Well, 460 00:25:05,160 --> 00:25:07,680 Speaker 1: it does appear as if we may be starting on 461 00:25:07,920 --> 00:25:10,680 Speaker 1: at least a mild bear markets, not to say Rachel 462 00:25:10,720 --> 00:25:14,720 Speaker 1: going to skyrocket up two points, but another fifty basis 463 00:25:14,800 --> 00:25:17,760 Speaker 1: points across the curve looks pretty likely because we've broken 464 00:25:17,800 --> 00:25:20,920 Speaker 1: out of that trading range. My rule of thumb PIM 465 00:25:21,080 --> 00:25:27,880 Speaker 1: is three years coupon is when spouses start screaming when 466 00:25:27,920 --> 00:25:30,960 Speaker 1: they look at the bond portfolio. Well three years, Cooper. 467 00:25:31,280 --> 00:25:33,639 Speaker 1: But clearly you don't manage long term money because you 468 00:25:33,680 --> 00:25:36,520 Speaker 1: don't have any No, that's there's that, yeah, Mark, I 469 00:25:36,560 --> 00:25:38,200 Speaker 1: mean I just want to argue I'm in the high 470 00:25:38,280 --> 00:25:41,840 Speaker 1: yield tuition funds where yeah, well showing the club. But 471 00:25:42,440 --> 00:25:45,160 Speaker 1: the reason I say that in terms of long term 472 00:25:45,240 --> 00:25:48,240 Speaker 1: is because if you're a pension plan manager and insurance 473 00:25:48,560 --> 00:25:52,520 Speaker 1: company executive, you're worried about more than the next three years, 474 00:25:53,080 --> 00:25:57,359 Speaker 1: so you're a natural buyer. Yes, and I think there's 475 00:25:57,440 --> 00:26:02,639 Speaker 1: continuing demand for long duration, long maturity bonds even at 476 00:26:02,680 --> 00:26:06,359 Speaker 1: these low levels, because they've moved up maybe fifty to 477 00:26:06,440 --> 00:26:09,880 Speaker 1: a hundred basis points in Treasury's investment grade, so that's 478 00:26:09,880 --> 00:26:11,760 Speaker 1: at least more yields. It's taken a little bit of 479 00:26:11,800 --> 00:26:14,000 Speaker 1: the pressure off those kinds of people that need to 480 00:26:14,080 --> 00:26:19,159 Speaker 1: invest every day. Are you buying this morning? Uh? Well not, 481 00:26:19,400 --> 00:26:21,560 Speaker 1: I'm just seeing how things sort them out. But yes, 482 00:26:21,600 --> 00:26:23,680 Speaker 1: I think it'd be a better day to buy on 483 00:26:23,800 --> 00:26:26,120 Speaker 1: the stock side than to sell. Sure is that because 484 00:26:26,160 --> 00:26:31,840 Speaker 1: the Patriots lost? Margaret margat Ptel, thank you so much. 485 00:26:31,880 --> 00:26:34,600 Speaker 1: She's you know, up in Boston and you know as 486 00:26:34,880 --> 00:26:37,720 Speaker 1: a wonderful listen she's probably met Tom Brady. You know, 487 00:26:38,880 --> 00:26:40,960 Speaker 1: we think margat Ptel, thank you so much for the 488 00:26:41,000 --> 00:26:54,240 Speaker 1: Wells Capital Management this morning, and thanks for listening to 489 00:26:54,320 --> 00:26:58,800 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on 490 00:26:58,880 --> 00:27:04,720 Speaker 1: Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm 491 00:27:04,800 --> 00:27:08,040 Speaker 1: on Twitter at Tom Keene before the podcast. You can 492 00:27:08,119 --> 00:27:11,320 Speaker 1: always catch us worldwide. I'm Bloomberg Radio.