WEBVTT - The Path for Rate Cuts and Polling 2024 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:46.720 the Bloomberg Terminal, and the Bloomberg Business App. We thought 0:00:46.760 --> 0:00:52.519 we'd start with economics. Sema Shaw is scary good. It 0:00:52.560 --> 0:00:55.040 comes down to London School of Economics or tour of 0:00:55.080 --> 0:00:58.640 duty at the Bank of England with a huge concision 0:00:59.400 --> 0:01:02.280 about what's going on. Seema with principle. Thank you so 0:01:02.360 --> 0:01:05.200 much for joining this morning. Just to cut to the chase, 0:01:05.240 --> 0:01:09.520 Seema to the central banks and particularly the Fed. Do 0:01:09.600 --> 0:01:12.720 they have a cogent plan or are they making it 0:01:12.840 --> 0:01:15.640 up as they go? Hey? 0:01:15.760 --> 0:01:17.840 Tom, that is that is I think such a good question, 0:01:17.880 --> 0:01:20.760 because you know, we read we you know, we pour 0:01:20.880 --> 0:01:24.160 over where the commera is has it moved, what is 0:01:24.160 --> 0:01:26.360 the what is their indication? What are they thinking, how 0:01:26.400 --> 0:01:29.200 they feeling. The truth is is that they are digesting 0:01:29.200 --> 0:01:32.080 the economic data, the incoming stuff, just like we are. 0:01:32.440 --> 0:01:34.600 So I think it's right that they're making up as 0:01:34.640 --> 0:01:36.000 they go along. I mean, of course they have an 0:01:36.000 --> 0:01:38.759 idea that they just have to respond to the data 0:01:38.800 --> 0:01:41.120 because it's just unfolding, and I don't think they have 0:01:41.160 --> 0:01:43.960 a clear idea of working is going to be right. 0:01:43.880 --> 0:01:44.720 In ere England. 0:01:44.760 --> 0:01:47.080 There's been a lot of good research with respect to 0:01:47.160 --> 0:01:50.560 how hard it is to do this business, and that 0:01:51.120 --> 0:01:53.800 as a general statement, the Bank of England and other 0:01:53.880 --> 0:01:58.040 forecasters simply were too pessimistic and that we got wrong 0:01:58.440 --> 0:02:00.960 on a fractional basis. On a tenth of a percentage 0:02:00.960 --> 0:02:05.520 point basis, the growthiness was better than we expected. Do 0:02:05.560 --> 0:02:09.400 you expect that to continue? And that will underestimate growth 0:02:09.800 --> 0:02:11.320 among the three central banks? 0:02:13.480 --> 0:02:15.639 So look, it's possible. I think that, I mean all 0:02:15.680 --> 0:02:17.799 central banks have had actually maybe with the exception of 0:02:17.840 --> 0:02:20.120 the ECB, which seems like it's had a kind of 0:02:20.120 --> 0:02:23.720 a more successful forecast drink ability of the last couple 0:02:23.720 --> 0:02:25.960 of years. But I think it's it should be getting 0:02:26.000 --> 0:02:28.200 a little bit more straightforward, because I think the last 0:02:28.240 --> 0:02:30.600 couple of years have been very difficult for forecasters. And 0:02:30.639 --> 0:02:32.680 I'm going to put myself in there as well, because 0:02:32.720 --> 0:02:35.200 we've been living in you know, typically an list. We 0:02:35.240 --> 0:02:37.400 look at historic data, we use that to give us 0:02:37.440 --> 0:02:40.160 a guide forward. The thing that forecaster has missed in 0:02:40.200 --> 0:02:42.160 the last couple of years is that actually the economy 0:02:42.160 --> 0:02:45.440 has been fundamentally changed by COVID. The normal reaction function, 0:02:45.880 --> 0:02:48.760 interest rates, sensitivity all very very different. And I think 0:02:48.800 --> 0:02:51.400 it's only in the last twelve months or so that 0:02:51.639 --> 0:02:54.200 everyone has started to realize that there is maybe you know, 0:02:54.400 --> 0:02:56.560 doing a comparison to ninety five to two thousand and 0:02:56.600 --> 0:02:59.760 seven just doesn't work as well anymore. But from here 0:03:00.040 --> 0:03:04.040 you're starting to revert kind of normalization should be down 0:03:04.080 --> 0:03:06.680 the line, and that should make forecasting a bit easier. 0:03:06.960 --> 0:03:09.000 So Sama, here in the US, do you think this 0:03:09.560 --> 0:03:13.680 we are in fat today experiencing a soft landing for 0:03:13.720 --> 0:03:15.519 this economy. 0:03:16.320 --> 0:03:18.480 I think we're in the motions of a soft landing 0:03:18.800 --> 0:03:21.120 in the US. So the data is fairly good. Look, 0:03:21.120 --> 0:03:23.880 we're downshifting, which is a positive thing. The last thing 0:03:23.880 --> 0:03:26.280 that we want is actually to see economic data continuing 0:03:26.320 --> 0:03:29.760 to accelerate, because that to me ends up in hard 0:03:29.800 --> 0:03:32.360 landing later down the line. But I think the jury 0:03:32.400 --> 0:03:34.639 is still out. You know, we can't say definitively we've 0:03:34.639 --> 0:03:36.320 got the soft landing, we've achieved it, and we can 0:03:36.360 --> 0:03:39.560 be all victorious. We won't know for sure for a 0:03:39.600 --> 0:03:42.200 couple of months, and I do have worries of how 0:03:42.480 --> 0:03:45.000 the Fed genuinely lands it. I mean, let's say in 0:03:45.040 --> 0:03:47.240 the next few months, they've seen that inflation comes down, 0:03:48.080 --> 0:03:50.840 they cut interest roads, they become they start that path. 0:03:51.200 --> 0:03:53.640 I worry that, actually what's going to happen is that 0:03:53.680 --> 0:03:56.120 if you're a homeowner and you've been waiting on the sidelines, 0:03:56.160 --> 0:03:58.280 eager to move but holding back because mortgage rates are 0:03:58.320 --> 0:04:00.560 so high, you're going to get right back into the market. 0:04:00.680 --> 0:04:03.080 You're going to ease financial conditions, and you're going to 0:04:03.080 --> 0:04:05.120 see the market and the economy taking off. So I 0:04:05.160 --> 0:04:07.640 do worry about, actually, can they do a soft landing? 0:04:07.760 --> 0:04:09.520 Can they achieve it for more than just a three 0:04:09.920 --> 0:04:10.840 to six month period. 0:04:11.360 --> 0:04:14.680 So I guess if you're the Federal Reserve, you saw 0:04:14.800 --> 0:04:18.919 kind of January, February March some inflationary type of data 0:04:18.960 --> 0:04:21.080 come out and then kind of. I guess in April 0:04:21.080 --> 0:04:22.640 reversed a little bit. We got a little bit of 0:04:22.800 --> 0:04:25.440 you know, slowing down of inflation. So if you're the 0:04:25.440 --> 0:04:27.800 Federal Reserve, I guess you can make the argument that 0:04:27.839 --> 0:04:30.599 there's no reason for them to do anything other than wait. 0:04:32.120 --> 0:04:34.400 Exactly. I mean, I think after you've had I mean, 0:04:34.440 --> 0:04:36.719 just basic mass just tells you that if you've had 0:04:36.920 --> 0:04:40.679 three months of an expected inflation data, you at least 0:04:40.720 --> 0:04:45.200 need three months of inline inflation data before you could 0:04:45.200 --> 0:04:47.520 feel any kind of confidence of going back to what 0:04:47.560 --> 0:04:52.200 your initial plan was. But realistically, given the strengthy of 0:04:52.200 --> 0:04:54.520 the inflation data and the continued strength of the economy, 0:04:55.000 --> 0:04:57.000 they probably won a few more months in just three months. 0:04:57.279 --> 0:04:58.960 So and as I said before, I think they aren't 0:04:58.960 --> 0:05:01.960 digesting the economic data to the earnings numbers coming out 0:05:01.960 --> 0:05:05.680 from target certainly very important terms of figuring out where 0:05:05.680 --> 0:05:08.360 the consumer is, because that's obviously going to tie back 0:05:08.800 --> 0:05:11.160 and help them figure out what the next market. 0:05:10.920 --> 0:05:13.799 Is seeman to take the first rate economist ed Yardnny 0:05:13.880 --> 0:05:17.159 over to his market call, which is a bullmarket wrapped 0:05:17.160 --> 0:05:21.919 around his concept of a roaring twenties. To me, roaring twenties, 0:05:22.080 --> 0:05:25.719 either the twentieth century or the twenty first century is 0:05:25.760 --> 0:05:29.799 about a pop in nominal GDP. Do you, at principle 0:05:29.960 --> 0:05:34.880 see a combination of real GDP and inflation that leads 0:05:34.920 --> 0:05:38.440 to an animal spirit that gets to Yard Denny's Roaring twenties. 0:05:40.920 --> 0:05:42.400 So it's an interesting question. I mean, I can see 0:05:42.400 --> 0:05:46.280 normal GDP going up mainly because of AI and tech. 0:05:47.880 --> 0:05:50.520 The Roaring twenties, to me, was about kind of joy 0:05:50.560 --> 0:05:53.599 on the consumer side, just that relief and wanting to 0:05:54.720 --> 0:05:56.520 enjoy life and spend it. And I think we've had 0:05:56.520 --> 0:05:58.400 that for the last couple of years. Whether or not 0:05:58.440 --> 0:06:01.520 that continues, I think is very very different question. And 0:06:01.600 --> 0:06:04.040 inflation is going to play into this so much that 0:06:04.160 --> 0:06:06.440 if you have got her inflation, of course it's based 0:06:06.440 --> 0:06:09.600 in normal GDP. The consumers are already feeding that retrenchment. 0:06:09.920 --> 0:06:11.839 They are struggling with it. I'm not sure that you 0:06:11.839 --> 0:06:15.120 can actually do that initial that direct comparison to the twenties. 0:06:15.360 --> 0:06:28.040 Siema, Thank you so much. Sea Michaw the principal group. Okay, 0:06:28.080 --> 0:06:30.240 I'm gonna tell a story here. He's gonna love this. 0:06:30.880 --> 0:06:34.359 So I'm at Michael's like, this is like fifteen seventeen 0:06:34.400 --> 0:06:35.800 years ago and then you know they're giving me an 0:06:35.800 --> 0:06:38.640 overpriced saler to my third drink. And it's the art 0:06:38.640 --> 0:06:40.880 directors from my book, and they're like, Tom, we have 0:06:40.920 --> 0:06:43.240 to have an inside sleeve one of your charts, one 0:06:43.320 --> 0:06:46.760 hundred and fourteen charts, which chart would be like when 0:06:46.800 --> 0:06:48.960 you open the book, you see it, you know, inside 0:06:48.960 --> 0:06:51.440 the book charter and that, and I make the decision, 0:06:51.520 --> 0:06:53.720 Like over the olive on the martini, I said, it's 0:06:53.720 --> 0:06:57.400 got to be Malpass, mail Passes at bear Stearns. And 0:06:57.440 --> 0:06:59.520 out of all the people in the book, and these 0:06:59.520 --> 0:07:02.640 are a heavy Bill Dudley, the former Fed president, Bob 0:07:02.800 --> 0:07:06.400 the New York Fed President, Malpass had the most amazing chart, 0:07:06.880 --> 0:07:10.160 which was yen in yen and gold like what Dennis 0:07:10.200 --> 0:07:12.240 Gartman did joining us now the former head of the 0:07:12.240 --> 0:07:15.800 World Bank and iconic at bear Stearns, mister David Milpass 0:07:15.800 --> 0:07:19.320 as well. I just looked at yen in you and 0:07:19.520 --> 0:07:22.840 credit to Dennis Gartman as well. It's the call of 0:07:22.880 --> 0:07:26.600 the decade week yen that we saw, whether it's yen 0:07:26.640 --> 0:07:30.119 and gold or yen in whatever. How did Japan turn 0:07:30.200 --> 0:07:31.440 around this train wreck? 0:07:32.200 --> 0:07:35.840 Hi? Tom, you you can stabilize your currency by having 0:07:35.920 --> 0:07:39.480 a good growth plan. So Japan's got to articulate that 0:07:40.120 --> 0:07:44.040 they're not badly positioned in the world since people are 0:07:44.040 --> 0:07:47.480 trying to diversify away from China, and Japan has a 0:07:47.520 --> 0:07:50.360 lot of the things that people want, and so if 0:07:50.360 --> 0:07:54.360 they can retool the economy, it can work. 0:07:54.520 --> 0:07:58.680 It's an experiment of reflation, which is pretty you know, 0:07:58.720 --> 0:08:00.920 you're in Colorado college and it's like, you know, it's 0:08:00.920 --> 0:08:04.960 not even in the textbooks. Okay, it's an experiment in reflation, 0:08:05.280 --> 0:08:08.080 and they want to pull that back. Can they find 0:08:08.120 --> 0:08:12.440 a middle ground that works versus tripping into deflation again? 0:08:12.880 --> 0:08:15.480 They can, but they need to really think about their 0:08:15.520 --> 0:08:18.040 interest rates. You know, they're pushing up against the one 0:08:18.080 --> 0:08:23.640 percent limit on the tier. It really doesn't doesn't work 0:08:23.760 --> 0:08:25.840 to say you're going to limit your bond yield, but 0:08:25.920 --> 0:08:29.120 you want your currency to stop weakening. So right now 0:08:29.120 --> 0:08:32.560 they're intervening to try to tide that over. That can 0:08:32.800 --> 0:08:35.160 work for a little while, but at some point you 0:08:35.200 --> 0:08:37.000 have to say your interest rates are going to be 0:08:37.120 --> 0:08:39.880 more similar to the rest of the world interest rate Paul. 0:08:39.640 --> 0:08:42.520 Wants to jump in one more question and Yen, what 0:08:42.880 --> 0:08:44.240 is your call on Jeopanese? 0:08:44.280 --> 0:08:44.439 Yen? 0:08:44.520 --> 0:08:47.040 I know you're not doing FX and market economists, but 0:08:47.320 --> 0:08:50.600 do you see a big figure strengthening in Japanese yen 0:08:51.000 --> 0:08:51.880 or more of the same. 0:08:52.200 --> 0:08:54.160 I think it could settle where it is now and 0:08:54.240 --> 0:08:56.800 the world would accept that, And that is a little 0:08:56.840 --> 0:09:00.920 bit what is going on the world move through currency 0:09:00.960 --> 0:09:04.840 realignments and then tries to stabilize after that and reduce 0:09:04.920 --> 0:09:05.800 the harm from that. 0:09:06.760 --> 0:09:11.280 He's tanned and rested. I left exactly hand arrested. 0:09:11.679 --> 0:09:11.880 I know. 0:09:11.920 --> 0:09:15.000 I'm very impressed, David. We've seen come bringing it back 0:09:15.000 --> 0:09:18.160 to the US. Here my entire career, we've been talking 0:09:18.160 --> 0:09:21.240 about annual deficits in the national debt, and now we 0:09:21.320 --> 0:09:23.839 even have Jamie Diamond, David Solomon and gold and Sachs 0:09:24.440 --> 0:09:26.600 talking about the national debt. We've even got that silly 0:09:26.640 --> 0:09:29.200 thing downtown where they tally of the national debt on 0:09:29.240 --> 0:09:30.600 a daily basis. 0:09:30.320 --> 0:09:32.199 Of everybody to see is. 0:09:32.120 --> 0:09:35.320 It time to care about that stuff? Like I'm sixty, 0:09:35.640 --> 0:09:36.200 do I care? 0:09:36.880 --> 0:09:39.600 I think absolutely it is time to care. It was 0:09:39.679 --> 0:09:42.240 one thing when the US economy had a fifty percent 0:09:42.280 --> 0:09:45.520 debt to GDP ratio, you could borrow that and not 0:09:45.679 --> 0:09:50.760 really not really at tax the world's capital or or 0:09:51.920 --> 0:09:55.280 take all of the world's capital. We're the biggest economy, 0:09:55.559 --> 0:09:59.080 and we're borrowing so much that it changes capital flows 0:09:59.120 --> 0:10:01.360 around the world, and I think it's doing it in 0:10:01.360 --> 0:10:05.120 a harmful way. It's the government gets the first DIBs 0:10:05.160 --> 0:10:07.960 on all capital, and then if there's any leftover, big 0:10:08.000 --> 0:10:11.640 corporations get it through the bond market. And if there's 0:10:11.679 --> 0:10:15.800 any leftover, which there isn't really, small businesses can borrow 0:10:15.880 --> 0:10:20.240 to fund their inventory, their working capital, and countries outside 0:10:20.320 --> 0:10:22.760 the US have a little bit of capital at the 0:10:22.920 --> 0:10:25.680 end of the line. That's not a workable system for 0:10:25.720 --> 0:10:27.800 the world. So I think there has to be, both 0:10:27.880 --> 0:10:30.840 in the US and in the world, an urgency that 0:10:30.920 --> 0:10:33.720 the US government stopped growing at spending. 0:10:33.880 --> 0:10:37.319 And this is, I guess a political issue, and again 0:10:37.440 --> 0:10:40.640 in my lifetime, i've never seen the political will to 0:10:40.720 --> 0:10:43.160 address it because it doesn't sound very popular. 0:10:42.880 --> 0:10:45.360 That's right, And I think there's a big gap in 0:10:45.400 --> 0:10:48.520 our law. You know, the debt limit law is misnamed. 0:10:48.600 --> 0:10:51.680 It's really the debt increase law. So every couple of 0:10:51.760 --> 0:10:56.960 years presidents both parties sign a law to increase the 0:10:57.000 --> 0:11:02.240 debt limit. We have to replace it with something workable, strong, 0:11:02.640 --> 0:11:05.520 and it has to hurt Washington, not hurt the people 0:11:05.559 --> 0:11:08.440 of the country when we're when we have too much debt, 0:11:09.200 --> 0:11:14.560 they shut the national parks rather than reducing the staff 0:11:14.640 --> 0:11:20.040 hiring in DC. The swamp gets bigger. World Bank and 0:11:20.160 --> 0:11:23.400 it's a swamp. Now it worked in the swamp. What 0:11:23.520 --> 0:11:27.320 you learn working in the swamp? Uh So in this 0:11:27.679 --> 0:11:31.640 so Washington is a swamp. The parts, all the parts 0:11:31.720 --> 0:11:36.000 work together to make Washington bigger and more profitable. That's 0:11:36.040 --> 0:11:38.200 that's a risk. And the World Bank is part of that. 0:11:38.320 --> 0:11:43.839 It's headquartered and uh and centered in Washington. One thing 0:11:43.880 --> 0:11:46.280 I learned Tom was how hard it is to get 0:11:46.320 --> 0:11:49.120 any other country to do the right thing. It's just 0:11:49.160 --> 0:11:52.720 as hard outside the US as in the US. So 0:11:52.760 --> 0:11:56.240 if you take Nigeria, why is this oil rich country 0:11:56.360 --> 0:12:00.200 so poor? They've got a huge, extreme poverty rate. Why 0:12:00.240 --> 0:12:03.960 is that because the government takes the all the profits 0:12:04.320 --> 0:12:06.040 from oil and wastes it. 0:12:06.200 --> 0:12:08.400 This is such a better Mail pass than the World 0:12:08.400 --> 0:12:12.320 Bank and eight people standing around looking at every where. 0:12:12.440 --> 0:12:14.960 David Mail passes public service to the nation in the 0:12:14.960 --> 0:12:19.480 world with the World Bank and involved in politics as well. 0:12:23.360 --> 0:12:26.200 I'm looking here at the intellectual combine over at Schwab 0:12:26.880 --> 0:12:30.880 and I got SMP tech sectors forward price to sales 0:12:31.000 --> 0:12:34.120 ratio pushing up against this all time. I thank you 0:12:34.200 --> 0:12:38.160 Kevin Gordon for that wisdom. Joining us now, Lizzie Saunders 0:12:38.320 --> 0:12:42.240 is a privilege of working with Kevin Gordon. Lizzy, and 0:12:42.360 --> 0:12:44.760 you do the best charts on you and you're in Timmer, 0:12:44.880 --> 0:12:48.120 do the best charts on Twitter today. What's your most 0:12:48.120 --> 0:12:51.400 important chart that you're putting out for Schwab right now? 0:12:52.559 --> 0:12:58.280 Oh boy, that's a good question. There's so many. I 0:12:58.280 --> 0:13:02.520 think it's labor market data. I think it's it's claims, 0:13:02.720 --> 0:13:05.800 continuing claims, what we see in the monthly jobs report. 0:13:05.960 --> 0:13:09.560 I think that's the needle mover in terms of Fed policy. 0:13:09.760 --> 0:13:14.520 Correlating targets earnings this morning and very great disappointment on revenue. 0:13:14.920 --> 0:13:20.280 Can you coordinate that we correlate that, I should say 0:13:21.040 --> 0:13:22.120 with the labor market. 0:13:23.240 --> 0:13:28.439 Well, you know I don't cover individual stocks, including Target, 0:13:28.240 --> 0:13:32.400 but but you know you have the earnings story this 0:13:32.520 --> 0:13:35.880 quarter at the bottom line level has been better than expected, 0:13:35.920 --> 0:13:38.440 the beat rate, the percent by which companies have beaten. 0:13:38.760 --> 0:13:41.839 But you've got overall revenue growth down around in line 0:13:41.880 --> 0:13:45.400 with where inflation is. So it really has exposed the 0:13:45.440 --> 0:13:48.320 companies that actually do have pricing power and don't have 0:13:48.400 --> 0:13:52.080 pricing power. In addition, revenue beat rate has been below average. 0:13:52.120 --> 0:13:54.840 The percent by which companies have beaten on the top 0:13:54.920 --> 0:13:58.160 line has been below average. So I think this is increasingly, 0:13:58.880 --> 0:14:02.880 yet again a sign of this bifurcation happening, whether it's 0:14:02.920 --> 0:14:05.839 between nominal and real, high end consumer and low end 0:14:05.880 --> 0:14:11.679 consumer services versus the good side, discretionary versus non discretionary. 0:14:12.360 --> 0:14:15.760 And I think there's a reason why the consumer discretionary 0:14:15.840 --> 0:14:19.200 sector has been performing poorly is we're now seeing more 0:14:19.240 --> 0:14:22.360 than just cracks in the facade of the consumer. 0:14:23.200 --> 0:14:27.119 So, Lizane, I guess one of the key issues here 0:14:27.160 --> 0:14:30.000 are the earnings that we have seen and again we're 0:14:30.040 --> 0:14:32.560 going to another big one after the close tonight with Nvidia. 0:14:32.720 --> 0:14:35.360 Have they been strong enough to support this big move 0:14:35.480 --> 0:14:38.000 up and equity valuations that we've seen since October. 0:14:39.160 --> 0:14:41.920 Well, you've got about I think the blended growth rate 0:14:42.000 --> 0:14:44.800 right now is eleven percent. That's inclusive of the companies 0:14:44.800 --> 0:14:47.000 that have yet to report, and that is well better 0:14:47.040 --> 0:14:51.320 than what was expected at the beginning of reporting season. 0:14:51.560 --> 0:14:55.080 That's getting there. But I think earnings do need to 0:14:55.120 --> 0:14:58.880 continue to surprise on the upside because last year's strengthen 0:14:58.960 --> 0:15:01.800 the market was almostultiple expansion because you didn't have much 0:15:01.840 --> 0:15:04.320 in the way of earnings growth. So I think the 0:15:04.680 --> 0:15:08.000 earnings do have to play catchup. Obviously, the report out 0:15:08.000 --> 0:15:13.520 today is incredibly important, not just psychologically, which we know 0:15:13.600 --> 0:15:16.560 it's going to be important psychologically, but if you look 0:15:16.600 --> 0:15:20.920 at the overall tech sector, the earnings growth rate drops 0:15:20.960 --> 0:15:24.480 from about twenty four percent or so twenty three twenty 0:15:24.480 --> 0:15:28.160 four percent down to less than eleven excluding what is 0:15:28.200 --> 0:15:33.400 expected for Nvidia, So it is obviously the poster child. 0:15:33.520 --> 0:15:36.400 But that has been the support for the tech sector, 0:15:36.480 --> 0:15:39.680 which is the overall support for a higher valuation level. 0:15:39.680 --> 0:15:42.000 If you look around the world, one of the mistakes 0:15:42.000 --> 0:15:45.920 that investors make is they do valuation comps country to country, 0:15:45.960 --> 0:15:48.840 region or region without taking into consideration what are the 0:15:48.920 --> 0:15:51.600 underlying drivers of the local economy. And when you have 0:15:51.640 --> 0:15:55.640 more of an information tech based economy, that is support 0:15:55.680 --> 0:15:59.560 of all LSEQL of a higher valuation backdrop. The last 0:15:59.560 --> 0:16:02.080 thing I'd say is inflation as a backdrop for valuations 0:16:02.120 --> 0:16:05.040 is important, maybe not coinstantly. The sweet spot in terms 0:16:05.040 --> 0:16:08.320 of historical valuations being supported at a higher level, has 0:16:08.360 --> 0:16:10.800 been in and around that two percent inflation zone. We're 0:16:10.840 --> 0:16:13.800 obviously not there yet, even if we're directionally heading in 0:16:13.960 --> 0:16:14.520 the right way. 0:16:15.080 --> 0:16:18.320 Lizzie, what are some of the sectors that screen well 0:16:18.640 --> 0:16:19.960 for you and your team here? 0:16:21.040 --> 0:16:23.880 Yeah, So we relaunched Schwab sector views at the beginning 0:16:23.880 --> 0:16:25.760 of the year after a two year hiatus for a 0:16:25.760 --> 0:16:29.840 whole variety of reasons, and we haven't had any change 0:16:29.920 --> 0:16:32.359 in terms of the sectors on which we have outperform 0:16:32.440 --> 0:16:36.280 ratings since the beginning of the year. So it's financials, materials, 0:16:36.560 --> 0:16:40.880 and energy. Obviously a very cyclical bias in terms of 0:16:41.360 --> 0:16:46.160 where our outperforms are. The two underperforms are rates, maybe 0:16:46.160 --> 0:16:48.400 no surprise given the problems in commercial real estate, and 0:16:48.440 --> 0:16:50.960 then as we already touched on a consumat discretionary, the 0:16:51.040 --> 0:16:52.880 rest are in that neutral category. 0:16:53.360 --> 0:16:55.360 Is how do you manage a bull market across the 0:16:55.440 --> 0:16:59.640 kitchen table selling main goal away that didn't work out. 0:17:00.000 --> 0:17:02.440 It was a great chart. I don't know if Young 0:17:02.480 --> 0:17:05.000 Gordon added at Schwab, but you know, it's like we're 0:17:05.000 --> 0:17:08.200 getting back to you know, two thousand and six, ownership 0:17:08.240 --> 0:17:11.200 of equities sixty some percent, whatever the number is it's 0:17:11.240 --> 0:17:13.240 really great, We're all in on this market. 0:17:13.600 --> 0:17:14.680 How do you manage the. 0:17:14.680 --> 0:17:18.160 Emotion of a bull market on a kitchen table over a. 0:17:18.080 --> 0:17:21.680 Beverage pall, You know, Tom, that's an interesting question because 0:17:22.840 --> 0:17:26.879 you know, household exposure to equities is a behavioral measure 0:17:26.920 --> 0:17:30.480 of sentiment, for lack of a better word, But you've 0:17:30.480 --> 0:17:32.840 got attitudinal measures of the sentiment. And one of the 0:17:32.880 --> 0:17:35.520 interesting things that has occurred in the last couple of 0:17:35.640 --> 0:17:39.280 years really in this sort of post COVID bear market cycle, 0:17:39.600 --> 0:17:42.080 is that you get much bigger swings in the attitudinal 0:17:42.119 --> 0:17:45.200 measures of sentiment than you do in the behavioral measures. 0:17:45.240 --> 0:17:48.480 So if you look at just AAII American association of 0:17:48.520 --> 0:17:51.359 individual investors, you can see pretty big moves in a 0:17:51.440 --> 0:17:54.600 very short period of time up in percentage of bulls, 0:17:54.680 --> 0:17:57.480 up in percentage of bears depending on the new year 0:17:57.560 --> 0:17:59.760 term wiggles in the market. But you haven't seen much 0:17:59.800 --> 0:18:03.800 more movement in that invested exposure piece of it. So 0:18:04.240 --> 0:18:07.439 I think that there is some complacency out there as 0:18:07.520 --> 0:18:11.960 measured by the behavioral measures, but those attitudinal measures are 0:18:12.000 --> 0:18:14.800 swinging much more quickly in this environment. 0:18:14.880 --> 0:18:17.560 What do you see at Schwab What is cash doing. 0:18:18.920 --> 0:18:19.160 Well. 0:18:19.200 --> 0:18:22.359 I think for a lot of investors, cash is earning income, 0:18:22.480 --> 0:18:24.760 so you've got income and fixed income. Again, That's why 0:18:24.800 --> 0:18:27.399 I push back on this notion that the six trillion 0:18:27.440 --> 0:18:30.560 dollars in money market funds is just sitting there ripe 0:18:30.560 --> 0:18:33.320 to jump into the equity market. I think that's probably 0:18:33.359 --> 0:18:36.520 fairly sticky, and I think it's great comfort, particularly for 0:18:36.640 --> 0:18:40.119 more conservative or older investors that had to stretch for 0:18:40.200 --> 0:18:43.120 yield and move out the risk spectrum, to not have 0:18:43.240 --> 0:18:47.760 to do that. You've got implications for within the equity side, 0:18:48.920 --> 0:18:54.680 especially areas like dividend stocks that will increase in attractiveness 0:18:54.680 --> 0:18:57.040 depending on what yields are doing. But I think a 0:18:57.040 --> 0:19:00.399 lot of that sort of cash money is fairly sticky, 0:19:00.440 --> 0:19:02.840 but is turning a nice shield at this point. 0:19:02.880 --> 0:19:06.040 Lizien, it was great having your assistant Kevin Gordon on, 0:19:06.160 --> 0:19:07.239 but you know he failed in one. 0:19:07.320 --> 0:19:10.400 Oh he's more than that. But yeah, I love that interview, 0:19:10.440 --> 0:19:10.880 well done. 0:19:11.280 --> 0:19:13.159 We were coming out of it and I said to 0:19:13.240 --> 0:19:16.440 him casually, I said, let's play some Nickelback. He didn't 0:19:16.480 --> 0:19:17.720 know who nickelback was. 0:19:18.440 --> 0:19:21.080 The young law did not know who Nickelback was. 0:19:21.240 --> 0:19:25.320 I taught him. Well, he knows who is, so you 0:19:25.440 --> 0:19:26.359 better know that if. 0:19:26.240 --> 0:19:29.399 It was to cash a paycheck. Lizianne Saunders, working with 0:19:29.480 --> 0:19:31.680 the great Kevin Gordon and Schwab, thank you so much. 0:19:31.720 --> 0:19:44.560 I can't say nothing. Joining us now. 0:19:44.800 --> 0:19:47.960 The worst job in Bloomberg. She has to sort through 0:19:48.040 --> 0:19:51.399 the four hundred polls that are coming up before the 0:19:51.440 --> 0:19:55.960 first Tuesday of November. Lord Davis's deputy US Politics team 0:19:56.080 --> 0:20:00.800 lead and poll talent with Bloomberg News. He pulled out 0:20:00.920 --> 0:20:04.560 Laura and my summary of all the different polls is 0:20:04.600 --> 0:20:08.080 the White House is making very clear they don't believe 0:20:08.119 --> 0:20:08.720 the polls. 0:20:08.800 --> 0:20:09.680 Do I have that right? 0:20:10.880 --> 0:20:11.080 Yes. 0:20:11.119 --> 0:20:14.320 Biden has repeatedly said that he thinks that the polls 0:20:14.359 --> 0:20:19.600 are undercutting him and underselling his popularity. You know, of course, 0:20:19.640 --> 0:20:21.720 polls are a snapshot in time, and you know, do 0:20:21.800 --> 0:20:23.919 have a margin in air and our Navy tool that 0:20:23.920 --> 0:20:27.359 can tell us direction. But several polls, including you know, 0:20:27.600 --> 0:20:29.960 the months that we've done this Bloomberg Morning Console poll 0:20:30.200 --> 0:20:33.119 as well as others, have shown that that Trump consistently 0:20:33.160 --> 0:20:34.360 leads him in the United States. 0:20:34.600 --> 0:20:39.240 Is there a history that supports President Biden that the 0:20:39.240 --> 0:20:41.560 Poles get it wrong and he'll do better than good 0:20:41.640 --> 0:20:43.040 the first Tuesday of November. 0:20:44.160 --> 0:20:47.000 So in twenty twenty two in the midterms, there was 0:20:47.040 --> 0:20:49.960 this big red wave projected and that didn't materialize. So 0:20:50.000 --> 0:20:52.879 that is sort of what Biden is basing his you know, 0:20:52.960 --> 0:20:55.040 his his hanging his hat on there of saying, look, 0:20:55.080 --> 0:20:57.399 you know the polls that we were going to lose before, 0:20:57.760 --> 0:20:59.639 and we didn't end up, you know, kind of with 0:20:59.720 --> 0:21:02.800 quite the shri lacking we were expecting. But you know, 0:21:02.880 --> 0:21:05.439 this is uh, you know, a presidential polling is different. 0:21:05.440 --> 0:21:07.760 It is a little bit more precise than you know, 0:21:07.800 --> 0:21:09.800 congressional polling, where you've got you know, a bunch of 0:21:09.800 --> 0:21:12.399 different polls, you know, across you know, hundreds of races. 0:21:13.000 --> 0:21:15.440 But this is a consistent sign and a worrying sign 0:21:15.520 --> 0:21:16.760 for the Biden campaign that he. 0:21:17.359 --> 0:21:19.760 We're going to take a poll right now, Laura, Lisa Matteo, 0:21:19.920 --> 0:21:22.760 jump in here, Lisa Matteo. Have you ever been called 0:21:22.760 --> 0:21:26.080