1 00:00:00,800 --> 00:00:04,040 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 2 00:00:04,040 --> 00:00:06,920 Speaker 1: my co host Matt Miller. Every business day we bring 3 00:00:06,960 --> 00:00:11,520 Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along 4 00:00:11,560 --> 00:00:15,520 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,560 --> 00:00:18,479 Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and 6 00:00:18,480 --> 00:00:22,720 Speaker 1: at Bloomberg dot com slash podcast. All right, let's bring 7 00:00:22,800 --> 00:00:25,960 Speaker 1: in Sophia Song Matt. She's global cities leader for Gensler. 8 00:00:26,200 --> 00:00:29,160 Speaker 1: Get a sense of kind of what this big infrastructure 9 00:00:29,200 --> 00:00:33,519 Speaker 1: plan means for the cities in this country. Sophia, thank 10 00:00:33,560 --> 00:00:36,600 Speaker 1: so much for joining us here again A big, big 11 00:00:36,720 --> 00:00:41,760 Speaker 1: number on that bipartisan infrastructure plan. What does it mean 12 00:00:41,880 --> 00:00:48,200 Speaker 1: for big and small cities across the United States. First 13 00:00:48,200 --> 00:00:51,280 Speaker 1: of all, thanks so much for having me. Uh. I 14 00:00:51,320 --> 00:00:53,960 Speaker 1: think the bill is a great first step towards being 15 00:00:54,120 --> 00:00:57,920 Speaker 1: really being transformational for for cities. I think the impact 16 00:00:57,920 --> 00:01:00,840 Speaker 1: will be seen differently depending on the city that we're 17 00:01:00,880 --> 00:01:03,080 Speaker 1: talking about. Um but I think we need to keep 18 00:01:03,080 --> 00:01:06,040 Speaker 1: in mind that only only half of the infrastructure bid 19 00:01:06,120 --> 00:01:08,920 Speaker 1: is actually new spending, while the other half is what 20 00:01:09,000 --> 00:01:11,920 Speaker 1: we've already been spending just to keep it keep up 21 00:01:11,920 --> 00:01:16,240 Speaker 1: with maintenance and backlog of projects. And so it's still 22 00:01:16,360 --> 00:01:19,080 Speaker 1: not enough to close that two and a half trillion 23 00:01:19,120 --> 00:01:22,640 Speaker 1: dollar infrastructure investment gap that's been growing since the seventies. 24 00:01:23,319 --> 00:01:26,679 Speaker 1: It won't solve all of our infrastructure problems across the nation, 25 00:01:26,720 --> 00:01:30,440 Speaker 1: but it's a great first step to closing, uh, that 26 00:01:30,560 --> 00:01:34,720 Speaker 1: massive gap beyond what is what is the answer, Sophia. 27 00:01:34,880 --> 00:01:38,280 Speaker 1: You know, I talked to a lot of people, um, 28 00:01:38,319 --> 00:01:41,840 Speaker 1: you know Wall Street women and men, but from both 29 00:01:41,880 --> 00:01:44,280 Speaker 1: sides of the aisle or even a political and they 30 00:01:44,440 --> 00:01:49,080 Speaker 1: all say we need to spend a lot more on infrastructure. 31 00:01:49,160 --> 00:01:53,160 Speaker 1: But you know it can't all come directly from the 32 00:01:53,520 --> 00:01:56,160 Speaker 1: m Jerome Palell's printing presses, right, There's got to be 33 00:01:56,200 --> 00:02:01,880 Speaker 1: another way. Yeah, it's not the feed this infrastructure bill alone. 34 00:02:02,200 --> 00:02:05,600 Speaker 1: You know, since the nineteen seventies, it's actually been an 35 00:02:05,760 --> 00:02:11,079 Speaker 1: under investment in the US. The you know, in infrastructure 36 00:02:11,080 --> 00:02:13,760 Speaker 1: investment in the US has been declining since the seventies, 37 00:02:13,919 --> 00:02:17,679 Speaker 1: which is very different from other countries, especially wealthier nations. 38 00:02:17,800 --> 00:02:21,520 Speaker 1: We invest less in infrastructure as a percentage of our 39 00:02:21,560 --> 00:02:26,000 Speaker 1: GDP than many other first world countries. Um. And so 40 00:02:26,240 --> 00:02:30,639 Speaker 1: when we're talking about you know, the impact on these cities. 41 00:02:30,800 --> 00:02:33,880 Speaker 1: You know, some cities will see greater impact than others. 42 00:02:34,280 --> 00:02:37,760 Speaker 1: You know, our most recent Gunsler City Pulse, which we 43 00:02:37,919 --> 00:02:41,960 Speaker 1: actually released just yesterday, it shows that cities, these emergency 44 00:02:42,320 --> 00:02:46,720 Speaker 1: cities like Austin, Atlanta, Denver, and Charlotte, these cities have 45 00:02:46,840 --> 00:02:51,080 Speaker 1: seen explosive growth but don't have the infrastructure to keep up, 46 00:02:51,120 --> 00:02:53,960 Speaker 1: and so that growth is coming out of cost. They're 47 00:02:53,960 --> 00:02:58,360 Speaker 1: dealing with traffic congestion, bad roads, bad bridges, and airports 48 00:02:58,400 --> 00:03:01,600 Speaker 1: that need to be modernized. And so the bill provides 49 00:03:01,840 --> 00:03:05,400 Speaker 1: rising cities an opportunity to address these issues. But to 50 00:03:05,560 --> 00:03:08,240 Speaker 1: close that gap, I mean, we're we're going to need, 51 00:03:08,639 --> 00:03:10,880 Speaker 1: you know, a lot more investment, but this is a 52 00:03:10,919 --> 00:03:14,280 Speaker 1: great first step. Sophia talked to us about a something 53 00:03:14,560 --> 00:03:19,680 Speaker 1: like a public private partnership. What's the role for private 54 00:03:19,800 --> 00:03:23,800 Speaker 1: enterprise in infrastructure? It can't just be the U. S. 55 00:03:23,840 --> 00:03:29,799 Speaker 1: Government kind of doing everything. Kennett, Yes. So, so what's 56 00:03:29,840 --> 00:03:33,919 Speaker 1: interesting about this particular bill is that it actually creates 57 00:03:33,960 --> 00:03:39,040 Speaker 1: space for private investors UM to join government efforts, especially 58 00:03:39,040 --> 00:03:42,640 Speaker 1: projects that are over seven hundred fifty million dollars. And 59 00:03:42,680 --> 00:03:46,520 Speaker 1: so when you include the private sector, you actually you 60 00:03:46,560 --> 00:03:52,400 Speaker 1: actually build in efficiencies UM where you know, greater efficiencies 61 00:03:52,400 --> 00:03:56,200 Speaker 1: than than contracts that where the government is stuck with 62 00:03:56,360 --> 00:04:01,400 Speaker 1: greater efficiencies than no efficiency at all. Like, right, exactly 63 00:04:02,680 --> 00:04:04,960 Speaker 1: what do you think about? You know? To me? And 64 00:04:05,000 --> 00:04:08,160 Speaker 1: I don't I'm gonna get flamed probably on Twitter. Um. 65 00:04:08,600 --> 00:04:10,920 Speaker 1: People have been calling me a bleeding heart liberal lately. 66 00:04:10,960 --> 00:04:14,360 Speaker 1: But to me, it makes sense to support you know, 67 00:04:14,640 --> 00:04:20,040 Speaker 1: something like childcare as infrastructure because you know, working parents 68 00:04:20,200 --> 00:04:23,479 Speaker 1: need to put their kids somewhere if they want to 69 00:04:23,520 --> 00:04:25,039 Speaker 1: be able to get in a car and drive on 70 00:04:25,080 --> 00:04:27,360 Speaker 1: a highway to a job at an airport or whatever. 71 00:04:27,800 --> 00:04:33,200 Speaker 1: Does does that make sense to everyone? Or no? I 72 00:04:33,520 --> 00:04:35,320 Speaker 1: mean it makes sense to me. But that's not in 73 00:04:35,360 --> 00:04:37,800 Speaker 1: the bill. That's in that No, it's in the new 74 00:04:37,880 --> 00:04:40,280 Speaker 1: Build Back Better Bill. But I mean there are a 75 00:04:40,320 --> 00:04:43,200 Speaker 1: lot of things now that we talk about its infrastructure 76 00:04:43,240 --> 00:04:48,640 Speaker 1: that are not just roads, bridges, ports, airports. Right. Um 77 00:04:49,240 --> 00:04:52,200 Speaker 1: even goes as far as to say, you know, like 78 00:04:52,279 --> 00:04:57,520 Speaker 1: nutrition counts as infrastructure. Yeah, I mean that's what's what's 79 00:04:57,560 --> 00:05:00,960 Speaker 1: so unique about this Build Back Better because they are 80 00:05:01,080 --> 00:05:10,440 Speaker 1: specifically outlining a social equity infrastructure UM infrastructure bill. All right, Sophia, 81 00:05:10,480 --> 00:05:12,400 Speaker 1: thank you so much. We appreciate that. As always so 82 00:05:12,400 --> 00:05:20,600 Speaker 1: if your song Global Cities leader for against again, I 83 00:05:20,640 --> 00:05:22,920 Speaker 1: don't know what the heck is going on with oil 84 00:05:23,000 --> 00:05:26,080 Speaker 1: here up one point three percent today after being down 85 00:05:26,760 --> 00:05:29,159 Speaker 1: as much as four percent earlier this morning says some 86 00:05:29,200 --> 00:05:31,359 Speaker 1: big big swings. Let's bring in somebody who does this 87 00:05:32,000 --> 00:05:35,360 Speaker 1: commodity stuff. Will Ryan, the chief executive officer for granted 88 00:05:35,400 --> 00:05:41,320 Speaker 1: chair as Advisors. Well, what's going on with the oil today? Well, um, 89 00:05:41,360 --> 00:05:44,760 Speaker 1: I think it's really just a reaction to what we 90 00:05:44,880 --> 00:05:47,320 Speaker 1: saw over the last couple of days, which is a 91 00:05:47,320 --> 00:05:51,440 Speaker 1: pretty significant down leg on the back of the the 92 00:05:51,600 --> 00:05:56,400 Speaker 1: new COVID variant. Um and I think that you know that, 93 00:05:56,560 --> 00:05:59,039 Speaker 1: coupled with probably the news out of OPEC plus that 94 00:05:59,080 --> 00:06:02,440 Speaker 1: they continue or will continue with their plan to put 95 00:06:02,440 --> 00:06:06,039 Speaker 1: the four hundred thousand barrels on the market per month 96 00:06:06,080 --> 00:06:09,320 Speaker 1: start in January, gives a bit more stability to any 97 00:06:09,360 --> 00:06:11,800 Speaker 1: concern that there might be more barrels put onto the 98 00:06:11,839 --> 00:06:15,640 Speaker 1: market than that is there any you know, Critty was 99 00:06:15,640 --> 00:06:18,880 Speaker 1: talking to us earlier about a market that looks like 100 00:06:19,440 --> 00:06:25,279 Speaker 1: investors will use any excuse to sell, and granted COVID 101 00:06:25,400 --> 00:06:27,440 Speaker 1: is very serious. We don't want to make light of 102 00:06:27,480 --> 00:06:30,320 Speaker 1: any of the new variants, but it does look like 103 00:06:30,360 --> 00:06:34,120 Speaker 1: a very strong reaction to something um we don't know 104 00:06:34,160 --> 00:06:38,560 Speaker 1: a lot about yet. No, absolutely, I think that that 105 00:06:38,760 --> 00:06:42,279 Speaker 1: was You could arguably say that across the market, but 106 00:06:42,320 --> 00:06:45,279 Speaker 1: whether you're talking about you know, stocks, or whether you're 107 00:06:45,279 --> 00:06:49,400 Speaker 1: talking about UM commodities. But it was just abroad, I 108 00:06:49,440 --> 00:06:54,640 Speaker 1: think rejection of risk um while the uncertainty was there 109 00:06:55,680 --> 00:06:58,680 Speaker 1: around news of this new variant. But I think as 110 00:06:58,720 --> 00:07:01,039 Speaker 1: we start to get more data on it, and like 111 00:07:01,080 --> 00:07:02,640 Speaker 1: you said, you don't want to make light of it, 112 00:07:02,720 --> 00:07:06,520 Speaker 1: but the more that I think people get comfortable that 113 00:07:07,320 --> 00:07:10,240 Speaker 1: it's not gonna end in a little lockdown. Of course 114 00:07:10,240 --> 00:07:13,000 Speaker 1: we don't know that yet, but if the assumptions it's 115 00:07:13,040 --> 00:07:15,240 Speaker 1: not gonna we're not going to go back to where 116 00:07:15,280 --> 00:07:19,080 Speaker 1: we were, then I think that you know, the oil price, 117 00:07:19,360 --> 00:07:23,600 Speaker 1: commodities and the global economy and continue to track on here. 118 00:07:24,840 --> 00:07:27,080 Speaker 1: So we'll give us a sense of you know, kind 119 00:07:27,080 --> 00:07:32,160 Speaker 1: of opec um again, where is Russia Viasa the Opeque plus? 120 00:07:32,160 --> 00:07:34,360 Speaker 1: So there are they still kind of a wild card 121 00:07:34,400 --> 00:07:37,880 Speaker 1: out there? Or is Saudi Arabia still kind of really 122 00:07:38,040 --> 00:07:43,360 Speaker 1: directing things? Saudi Arabia definitely is the main player. I 123 00:07:43,400 --> 00:07:45,600 Speaker 1: think that you know, like I said that the four 124 00:07:45,640 --> 00:07:49,240 Speaker 1: hundred thousand barrels that were telegraphed we put onto the market. 125 00:07:49,360 --> 00:07:53,880 Speaker 1: This is a gradually increasing production from the record cuts 126 00:07:53,920 --> 00:07:55,920 Speaker 1: that we saw last year with they cut ten million 127 00:07:55,920 --> 00:08:00,200 Speaker 1: barrels a day from production. And so clearly, you know, 128 00:08:00,240 --> 00:08:03,200 Speaker 1: with the prices at these levels, UM not just okay, 129 00:08:03,240 --> 00:08:05,960 Speaker 1: but other oil producing countries would like to put more 130 00:08:06,000 --> 00:08:08,560 Speaker 1: production on the market, but they've obviously got to balance 131 00:08:08,640 --> 00:08:12,360 Speaker 1: that with the demand UM that we're seeing. So right now, 132 00:08:12,400 --> 00:08:16,040 Speaker 1: the robust the demand is robust, and you know, we've 133 00:08:16,040 --> 00:08:18,720 Speaker 1: gotten to a position where we had eighty dollar oil, 134 00:08:19,240 --> 00:08:22,080 Speaker 1: you know, in a world that's still not open. I 135 00:08:22,080 --> 00:08:26,480 Speaker 1: mean people forget sometimes that major countries like China other 136 00:08:26,560 --> 00:08:29,680 Speaker 1: Asian countries still not open really for all terms and purposes. 137 00:08:29,760 --> 00:08:32,680 Speaker 1: So I think if we're talking about getting back to 138 00:08:32,720 --> 00:08:35,520 Speaker 1: a world which is looks more like two thousand and 139 00:08:35,640 --> 00:08:38,959 Speaker 1: nine team where we could travel everywhere and we had 140 00:08:39,000 --> 00:08:42,600 Speaker 1: the same kind of you know, free flowing commerce and trade, 141 00:08:42,679 --> 00:08:44,679 Speaker 1: and I think we're talking about an other price that's 142 00:08:45,000 --> 00:08:48,760 Speaker 1: materially higher than where we are today. What about the 143 00:08:48,760 --> 00:08:52,360 Speaker 1: other moves that we're seeing in UM energy commodities. I 144 00:08:52,360 --> 00:08:55,599 Speaker 1: mean I'm here in the heart of Europe where is 145 00:08:55,600 --> 00:09:00,880 Speaker 1: getting colder and gas prices are extraordinarily high. Um. Is 146 00:09:00,920 --> 00:09:04,760 Speaker 1: that linked to the oil issue or is it all 147 00:09:04,840 --> 00:09:09,840 Speaker 1: about you know, nords dream and a lack of electricity generation? 148 00:09:10,000 --> 00:09:13,600 Speaker 1: How do you see that? Yeah, it's not so much. Actually, 149 00:09:13,640 --> 00:09:15,719 Speaker 1: funny enough, it's not so much linked to oil at all. 150 00:09:15,840 --> 00:09:19,880 Speaker 1: It's much more of a UM, much more of a 151 00:09:19,920 --> 00:09:23,920 Speaker 1: phenomenon or European based phenomenon regarding supplies and constraint of 152 00:09:23,960 --> 00:09:29,920 Speaker 1: supplies UM that are specific to some of these European countries. UM. 153 00:09:30,200 --> 00:09:36,079 Speaker 1: You know. Throw in also the move to renewable power 154 00:09:36,720 --> 00:09:39,920 Speaker 1: and perhaps you know, some of that happening maybe too quickly, 155 00:09:40,640 --> 00:09:44,560 Speaker 1: resulting in a situation where there's just not enough energy 156 00:09:44,640 --> 00:09:49,040 Speaker 1: that's been generated from renewable sources and so governments are 157 00:09:49,040 --> 00:09:54,640 Speaker 1: having to rely more on fossil fuels. But that's sort 158 00:09:54,640 --> 00:09:59,559 Speaker 1: of colliding with this perfect storm of supply not being 159 00:09:59,600 --> 00:10:03,120 Speaker 1: there um as expected as as we sort of recover 160 00:10:03,360 --> 00:10:06,040 Speaker 1: from COVID. By the way, well, do you you know 161 00:10:06,080 --> 00:10:08,920 Speaker 1: ad grant share advisors, Do you like this kind of 162 00:10:09,000 --> 00:10:13,640 Speaker 1: volatility because you're in demand as well right now. People 163 00:10:13,679 --> 00:10:17,760 Speaker 1: need your advice. That's right. I mean I think that there, 164 00:10:17,800 --> 00:10:21,280 Speaker 1: you know, I would say we probably favor volatility up 165 00:10:21,320 --> 00:10:24,320 Speaker 1: until a point. I mean, clearly we don't want or 166 00:10:24,360 --> 00:10:26,559 Speaker 1: I think for anybody that manages money, you know, I I 167 00:10:26,640 --> 00:10:30,079 Speaker 1: don't want anything to be too volatile. But like you say, 168 00:10:30,160 --> 00:10:33,600 Speaker 1: I mean that there's a point where the market is 169 00:10:33,679 --> 00:10:37,760 Speaker 1: moving around and people do want exposure to these types 170 00:10:37,800 --> 00:10:40,160 Speaker 1: of assets, and certainly they do want to know, you know, 171 00:10:40,240 --> 00:10:43,400 Speaker 1: what's going on, because understanding you know, what's happening in 172 00:10:43,640 --> 00:10:46,880 Speaker 1: modity market, I think that sort of underpinned everything. It's 173 00:10:46,920 --> 00:10:50,840 Speaker 1: underpinning the inflation that we're seeing in the global economy, 174 00:10:50,840 --> 00:10:53,720 Speaker 1: and so really kind of understanding the direction of travel 175 00:10:53,800 --> 00:10:57,120 Speaker 1: is key for not just commodities, but I think for 176 00:10:57,120 --> 00:10:59,319 Speaker 1: for everything people are doing. All right, Well, thanks so 177 00:10:59,400 --> 00:11:01,560 Speaker 1: much for joining us again. We always appreciate your thoughts. 178 00:11:01,600 --> 00:11:08,240 Speaker 1: Will Ryan, Chief investment Officer, Granted Shairs Advisors, Matt, I mean, 179 00:11:08,320 --> 00:11:12,080 Speaker 1: for lack of a better scenario analysis, I'm calling it 180 00:11:12,800 --> 00:11:16,199 Speaker 1: by the dip. I don't know, yeah, I mean, by 181 00:11:16,240 --> 00:11:18,800 Speaker 1: the dip is a strategy that seems to work, but 182 00:11:18,840 --> 00:11:22,400 Speaker 1: it looks like sell the news is something investors really 183 00:11:22,440 --> 00:11:24,120 Speaker 1: want to do. I think pretty Gooda made a great 184 00:11:24,120 --> 00:11:28,680 Speaker 1: point earlier when she uh, when she talked about the 185 00:11:28,760 --> 00:11:31,640 Speaker 1: drops that we've seen, the drama of the drops that 186 00:11:31,679 --> 00:11:35,440 Speaker 1: we've seen compared to you know, news that seemed to 187 00:11:35,559 --> 00:11:39,440 Speaker 1: lack that drama. Again, not to underplay the virus or 188 00:11:39,480 --> 00:11:41,960 Speaker 1: the new variant, because we don't know enough about it yet. 189 00:11:41,960 --> 00:11:47,640 Speaker 1: It could be you know, terribly damaging variant, but so 190 00:11:47,720 --> 00:11:51,440 Speaker 1: far it doesn't look um like something that's going to 191 00:11:51,520 --> 00:11:55,080 Speaker 1: affect the global economy that much. And yet we had 192 00:11:55,360 --> 00:11:58,520 Speaker 1: a nine hundred points sell off on the Dow on Friday. 193 00:11:58,559 --> 00:12:03,080 Speaker 1: We had um a huge turnaround yesterday. So the question 194 00:12:03,160 --> 00:12:06,840 Speaker 1: I think is why are investors taking advantage of any headline, 195 00:12:06,960 --> 00:12:09,760 Speaker 1: especially you know, yesterday we sold off after the headline 196 00:12:10,160 --> 00:12:13,960 Speaker 1: across the Bloomberg terminal at I think it was one 197 00:12:14,040 --> 00:12:17,120 Speaker 1: forty two pm New York time, we had a headline 198 00:12:17,520 --> 00:12:22,920 Speaker 1: that said, we've discovered one case of omicron in California. 199 00:12:23,120 --> 00:12:26,319 Speaker 1: We knew that there would be a case or dozens, 200 00:12:26,480 --> 00:12:29,079 Speaker 1: or hundreds or maybe even thousands of cases of oh 201 00:12:29,080 --> 00:12:33,400 Speaker 1: macron in the US, and yet mr Market took advantage 202 00:12:33,440 --> 00:12:36,960 Speaker 1: of that and sold hard right and then here we 203 00:12:37,000 --> 00:12:40,880 Speaker 1: are today and you you mentioned uh, Bloomberg Markets, corresponding, Cretty, 204 00:12:41,280 --> 00:12:45,720 Speaker 1: guess what meant? She's back in the Bloomberg Interactive Brooker studio. So, Cretty, 205 00:12:45,760 --> 00:12:48,040 Speaker 1: what are you seeing at there? I mean again a 206 00:12:48,040 --> 00:12:49,959 Speaker 1: couple I went to business squad, spent a lot of 207 00:12:50,000 --> 00:12:52,520 Speaker 1: time on Wall Street, and I got nothing better than 208 00:12:53,120 --> 00:12:56,560 Speaker 1: by the dip um Well sometimes, Paul, So I've learned. 209 00:12:56,640 --> 00:12:58,320 Speaker 1: This was one of the first lessons I learned when 210 00:12:58,360 --> 00:13:00,880 Speaker 1: I was on the Markets Live team e former traders. 211 00:13:00,880 --> 00:13:04,800 Speaker 1: They said, sometimes the answer isn't fundamental. Sometimes it's literally 212 00:13:04,880 --> 00:13:06,920 Speaker 1: people are trading because they trade, and they want to 213 00:13:06,960 --> 00:13:10,200 Speaker 1: trade like and and not to simplify too much, but 214 00:13:10,240 --> 00:13:12,280 Speaker 1: it quite literally is by the dip because and here's 215 00:13:12,320 --> 00:13:14,360 Speaker 1: why we're not just saying that to get out of 216 00:13:14,360 --> 00:13:16,920 Speaker 1: a reason. But your your tell here is going to 217 00:13:17,000 --> 00:13:19,520 Speaker 1: be the VIX because you haven't had a spike in 218 00:13:19,559 --> 00:13:21,320 Speaker 1: the VIX like this too. I think a thirty two 219 00:13:21,320 --> 00:13:23,840 Speaker 1: handle going all the way back to January when they 220 00:13:23,840 --> 00:13:25,960 Speaker 1: were starting to see some of those hedge funds getting 221 00:13:26,200 --> 00:13:28,760 Speaker 1: really burned by those shorts against the retail trader and 222 00:13:28,800 --> 00:13:31,320 Speaker 1: the entire kind of me mania that was happening. And 223 00:13:31,360 --> 00:13:33,600 Speaker 1: if you remember going back then or even going back 224 00:13:33,600 --> 00:13:35,960 Speaker 1: to March on a bigger scale, is that when you 225 00:13:35,960 --> 00:13:39,360 Speaker 1: see volatility, one day it's green, the next day it's read. 226 00:13:39,720 --> 00:13:42,760 Speaker 1: This is a very normal reaction on that front, and 227 00:13:42,840 --> 00:13:45,640 Speaker 1: especially as we go into the holly season where a 228 00:13:45,679 --> 00:13:48,400 Speaker 1: lot of people are essentially closing out their books, they're rebalancing. 229 00:13:48,600 --> 00:13:50,880 Speaker 1: You're also waiting for I think about two weeks for 230 00:13:50,880 --> 00:13:53,040 Speaker 1: the next FMC meeting, and on top of that, you're 231 00:13:53,080 --> 00:13:57,000 Speaker 1: waiting once again for two weeks for more data and 232 00:13:57,080 --> 00:13:59,880 Speaker 1: more information on this variant in particular, which we are 233 00:14:00,000 --> 00:14:04,000 Speaker 1: still getting contradicting information on. So right now and I 234 00:14:04,040 --> 00:14:05,920 Speaker 1: think for the foreseeable future, and I mean for the 235 00:14:05,960 --> 00:14:07,800 Speaker 1: next couple of days, you're going to continue to see 236 00:14:07,800 --> 00:14:10,160 Speaker 1: this volatility where you see moves in the market that 237 00:14:10,320 --> 00:14:12,600 Speaker 1: just don't make sense. But then eventually, when we do 238 00:14:12,679 --> 00:14:14,640 Speaker 1: have more information, those correlations are going to come back 239 00:14:14,679 --> 00:14:17,080 Speaker 1: together and there will be a very clear risk on 240 00:14:17,240 --> 00:14:19,600 Speaker 1: or risk off narrative. Right now, we're just not there. 241 00:14:19,880 --> 00:14:23,760 Speaker 1: It was also interesting that the FED didn't react as 242 00:14:23,800 --> 00:14:25,840 Speaker 1: devish lee at least in the Q and a portion 243 00:14:26,080 --> 00:14:30,160 Speaker 1: of um Jerome pal senate testimony, as maybe the market 244 00:14:30,200 --> 00:14:33,800 Speaker 1: had anticipated, right because we got that hawkish pivot at 245 00:14:33,840 --> 00:14:37,400 Speaker 1: the same time as the market seemed to be a 246 00:14:37,440 --> 00:14:41,200 Speaker 1: little bit on edge about coronavirus. Again. Yeah, and you know, 247 00:14:41,240 --> 00:14:44,560 Speaker 1: I actually went back and read the exact wording of j. 248 00:14:44,680 --> 00:14:47,920 Speaker 1: Powell this morning, and he used a lot of maybes 249 00:14:48,040 --> 00:14:51,640 Speaker 1: and cood's and really a hedged response. He didn't say 250 00:14:51,840 --> 00:14:54,640 Speaker 1: we are tapering at a faster pace. He said we 251 00:14:54,720 --> 00:14:57,480 Speaker 1: could and we might. And that isn't something that we 252 00:14:57,600 --> 00:15:00,160 Speaker 1: didn't know from the last FMC meeting. In fact, we 253 00:15:00,200 --> 00:15:03,880 Speaker 1: haven't actually gotten the actual number or the actual asset 254 00:15:03,920 --> 00:15:06,240 Speaker 1: purchases for January, so we knew there was always going 255 00:15:06,280 --> 00:15:08,640 Speaker 1: to be this question mark that the pace from for 256 00:15:08,840 --> 00:15:11,680 Speaker 1: January would completely change, and he's just reiterated that in 257 00:15:11,720 --> 00:15:14,160 Speaker 1: his testimony, So once again, it's not new. I think 258 00:15:14,200 --> 00:15:16,920 Speaker 1: what is new, though, is the way the bond market 259 00:15:16,920 --> 00:15:18,960 Speaker 1: in particular is pricing it. And the biggest part of 260 00:15:18,960 --> 00:15:22,080 Speaker 1: that is the curve flattening you've seen really accelerated in 261 00:15:22,080 --> 00:15:24,160 Speaker 1: the past couple of days because you saw essentially the 262 00:15:24,160 --> 00:15:26,840 Speaker 1: five thirties curve uh kind of come down, kind of 263 00:15:26,840 --> 00:15:29,120 Speaker 1: flatten a little bit for the last really I think 264 00:15:29,120 --> 00:15:30,960 Speaker 1: two wish months. If you look at the chart. But 265 00:15:31,160 --> 00:15:33,800 Speaker 1: if you compare that to what you're seeing and say, 266 00:15:33,840 --> 00:15:37,560 Speaker 1: the equity market, this is a really important comparison because essentially, 267 00:15:37,720 --> 00:15:40,800 Speaker 1: when for those folks who aren't tuned into the bond market, 268 00:15:40,880 --> 00:15:43,200 Speaker 1: the curve flattening just means that you are not paid 269 00:15:43,320 --> 00:15:46,120 Speaker 1: as much of a premium for taking on that extra 270 00:15:46,280 --> 00:15:48,480 Speaker 1: time risk. If you apply that logic to big tech, 271 00:15:48,520 --> 00:15:51,880 Speaker 1: which is also a very long duration asset essentially or 272 00:15:51,920 --> 00:15:54,680 Speaker 1: has been trading as such, that's not exactly a good sign. 273 00:15:54,680 --> 00:15:57,960 Speaker 1: And right now you do have that disconnect between stocks 274 00:15:58,000 --> 00:16:00,680 Speaker 1: in that regard and tech stocks in particular, as well 275 00:16:00,720 --> 00:16:03,800 Speaker 1: as the bond market. The question is when those two connect, 276 00:16:03,960 --> 00:16:06,240 Speaker 1: is it the bond market that kind of becomes more 277 00:16:06,320 --> 00:16:08,440 Speaker 1: risk on more and steepens a little bit, or is 278 00:16:08,480 --> 00:16:11,920 Speaker 1: it the equity market that gets dragged down by big tech? Yeah, 279 00:16:11,920 --> 00:16:14,480 Speaker 1: and it's interesting to see how the markets are reacting 280 00:16:14,480 --> 00:16:17,960 Speaker 1: to that big, big pivot um by FED chairman Powell 281 00:16:18,720 --> 00:16:22,400 Speaker 1: earlier this week. Again we had that sell off um. 282 00:16:22,440 --> 00:16:25,520 Speaker 1: But again, if you're the market was looking for just 283 00:16:26,040 --> 00:16:29,960 Speaker 1: reasonable signaling to get you to a spot of okay, 284 00:16:29,960 --> 00:16:31,600 Speaker 1: I kind of have a feeling of how this thing 285 00:16:31,640 --> 00:16:34,080 Speaker 1: is going to go. He certainly gave it to you. Yeah, 286 00:16:34,080 --> 00:16:37,520 Speaker 1: it really did. And and what's tricky about right now though, 287 00:16:37,600 --> 00:16:39,400 Speaker 1: is that And I think this is why there's so 288 00:16:39,440 --> 00:16:43,120 Speaker 1: much emphasis on tomorrow's payrolls report in particulars because anything 289 00:16:43,120 --> 00:16:44,720 Speaker 1: could happen. And if you start to see the payer's 290 00:16:44,760 --> 00:16:47,200 Speaker 1: report come in, the market is planning on interpreting this 291 00:16:47,360 --> 00:16:50,160 Speaker 1: as well. This is permission for for J. Powell and 292 00:16:50,200 --> 00:16:52,480 Speaker 1: the Fed to just say all eyes are on inflation 293 00:16:52,520 --> 00:16:54,200 Speaker 1: and that means tapering, and that means right, Hicks. And 294 00:16:54,240 --> 00:16:57,760 Speaker 1: that's a narrative that can spiral very very quickly on 295 00:16:57,760 --> 00:16:59,800 Speaker 1: one data point. So that's going to be a spot 296 00:16:59,800 --> 00:17:03,440 Speaker 1: where where you might see some pretty drastic moves. All right. Interesting. 297 00:17:03,480 --> 00:17:05,560 Speaker 1: We will certainly have wall to wall coverage of the 298 00:17:05,640 --> 00:17:08,680 Speaker 1: job report, as we do every month here on Bloomberg 299 00:17:08,760 --> 00:17:11,919 Speaker 1: Radio and Bloomberg TV. We live for that kind of stuff. 300 00:17:12,119 --> 00:17:15,840 Speaker 1: Pretty Gupta, Bloomberg Markets correspondent joining us here in our 301 00:17:15,880 --> 00:17:20,160 Speaker 1: Bloomberg Interactive Broker studio. UH and again full coverage tomorrow 302 00:17:20,160 --> 00:17:22,840 Speaker 1: of that job's data, which is pretty mentioned, will be 303 00:17:22,920 --> 00:17:31,080 Speaker 1: a key data point for this federal Reserve. Let's check 304 00:17:31,119 --> 00:17:35,359 Speaker 1: in with a longtime contributor to Bloomberg Markets, Hugh Johnson Chairman, 305 00:17:35,440 --> 00:17:37,639 Speaker 1: Chief Economists A Great Point LLC. First of all, you 306 00:17:38,800 --> 00:17:41,200 Speaker 1: what is the Great Point LLC? What happened to Hugh 307 00:17:41,280 --> 00:17:45,520 Speaker 1: Johnson Advisors for like a gazillion years? Well, well that's 308 00:17:45,520 --> 00:17:48,960 Speaker 1: a good question. We merged our company with a company 309 00:17:49,000 --> 00:17:51,480 Speaker 1: called Bender Lane, which was a family office business, and 310 00:17:51,520 --> 00:17:53,359 Speaker 1: then we decided to have a give it one name 311 00:17:53,400 --> 00:17:56,800 Speaker 1: for the two. But we've kept Hugh Johnson Advisors as 312 00:17:56,840 --> 00:18:00,280 Speaker 1: a as a division of and I'm sort of the 313 00:18:00,359 --> 00:18:04,040 Speaker 1: chairman emeritus of Great Point and the Chief Economists A 314 00:18:04,119 --> 00:18:06,679 Speaker 1: Great Point, and I'm also the is the best I 315 00:18:06,800 --> 00:18:10,439 Speaker 1: understand it, the chairman of Hugh Johnson Advisors and the 316 00:18:10,520 --> 00:18:14,320 Speaker 1: chief economists the Hugh Johnson Advisors, and the chief chief 317 00:18:14,800 --> 00:18:16,919 Speaker 1: investment officer a huge Johnsen. Well, all right, we're just 318 00:18:16,920 --> 00:18:20,360 Speaker 1: gonna go, chairman. Yeah, we're just gonna go the chairman, um, 319 00:18:20,440 --> 00:18:24,600 Speaker 1: and everybody knows you're buying your chairman, Yeah, Mr Chairman, Yeah, 320 00:18:24,600 --> 00:18:27,760 Speaker 1: that's good. Mr. So who what do you make of 321 00:18:27,800 --> 00:18:30,480 Speaker 1: this world we're living in now? I mean, it's been 322 00:18:30,520 --> 00:18:34,560 Speaker 1: such a crazy twenty months here with the pandemic and 323 00:18:34,600 --> 00:18:37,679 Speaker 1: the economic disruption and now they reopening. But it just 324 00:18:37,720 --> 00:18:41,000 Speaker 1: seems like, you know, there's one monkey wrench thrown in 325 00:18:41,040 --> 00:18:43,200 Speaker 1: after another, and it's got to be tough to kind 326 00:18:43,200 --> 00:18:46,640 Speaker 1: of forecast where this economy is going. What are your 327 00:18:46,720 --> 00:18:50,000 Speaker 1: best thoughts at the moment, Well, the best thoughts are 328 00:18:50,040 --> 00:18:53,200 Speaker 1: really number one. As you get some surprises thrown at us, 329 00:18:53,600 --> 00:18:55,679 Speaker 1: and that's a part of financial market history. And of 330 00:18:55,720 --> 00:18:58,879 Speaker 1: course with the the COVID nineteen is kind of surprised 331 00:18:58,880 --> 00:19:01,920 Speaker 1: we've been sent with a macron right now. That's a surprise. 332 00:19:02,480 --> 00:19:05,560 Speaker 1: Very causes a great deal of volatility. That's one surprise. 333 00:19:05,600 --> 00:19:07,879 Speaker 1: And the second surprise, of course, is some of the 334 00:19:07,920 --> 00:19:10,600 Speaker 1: comments made by Gairman Paul which seemed to move up 335 00:19:10,920 --> 00:19:12,639 Speaker 1: the time in which is gonna be gin the taper, 336 00:19:12,680 --> 00:19:14,520 Speaker 1: and then of course the time they're gonna begin to 337 00:19:14,560 --> 00:19:17,680 Speaker 1: start to raise interest rates. These are surprises, create great, 338 00:19:18,040 --> 00:19:20,960 Speaker 1: great level of volatility, and I would just urge all 339 00:19:21,000 --> 00:19:24,239 Speaker 1: investors to just try to look through all of that 340 00:19:24,359 --> 00:19:27,320 Speaker 1: volatility and we'll start to get some real answers on COVID, 341 00:19:27,359 --> 00:19:30,520 Speaker 1: we'll get some real answers on monetary policy over the 342 00:19:30,560 --> 00:19:32,960 Speaker 1: course of a little bit of time now. But let's 343 00:19:33,040 --> 00:19:35,920 Speaker 1: let those things settle out and recognize, and the more 344 00:19:35,920 --> 00:19:39,720 Speaker 1: important thing is to recognize, Look, we are in a cycle, 345 00:19:39,840 --> 00:19:43,760 Speaker 1: a stock market, economic, interest rate cycle. It's very normal 346 00:19:43,840 --> 00:19:46,600 Speaker 1: by past cycles. We're at the twenty month mark. We're 347 00:19:46,640 --> 00:19:49,119 Speaker 1: really not far into it, and really all of the 348 00:19:49,320 --> 00:19:51,480 Speaker 1: kind of the levers. When you look at leading indicators 349 00:19:51,480 --> 00:19:53,520 Speaker 1: for the economy, you look at the yield curve and 350 00:19:53,560 --> 00:19:55,480 Speaker 1: what it tells you about what the economy has in 351 00:19:55,560 --> 00:19:59,040 Speaker 1: store for the next twelve months. Um, it's still very positive. 352 00:19:59,080 --> 00:20:01,439 Speaker 1: The cycle has further to go, and it's gonna have 353 00:20:01,640 --> 00:20:04,320 Speaker 1: a little bit of volatility created by these issues, these 354 00:20:04,359 --> 00:20:08,040 Speaker 1: exogenous unexpected issues along the way. You just gotta just 355 00:20:08,080 --> 00:20:11,359 Speaker 1: gotta put those on the back burner and make sure 356 00:20:11,400 --> 00:20:14,239 Speaker 1: you pay attention to the fact the underlying cycle and 357 00:20:14,280 --> 00:20:16,399 Speaker 1: where we are in that cycle, and then make your 358 00:20:16,440 --> 00:20:19,840 Speaker 1: investment decisions asset allocation on the basis of that. Yeah, 359 00:20:19,880 --> 00:20:22,320 Speaker 1: we had a great story by Matthew Bosler a couple 360 00:20:22,359 --> 00:20:25,240 Speaker 1: of days ago about how fat corporate profit margins are. 361 00:20:25,320 --> 00:20:28,840 Speaker 1: We haven't seen margins this fat since the fifties, and 362 00:20:28,960 --> 00:20:33,440 Speaker 1: yet it looks like investors, uh current. So you've got 363 00:20:33,440 --> 00:20:37,199 Speaker 1: the pajama investors, the pajama traders who buy the dip 364 00:20:37,359 --> 00:20:39,960 Speaker 1: for us every night, but it does look like um 365 00:20:40,280 --> 00:20:45,679 Speaker 1: sell first ask questions later is the afternoon mantra. You know, 366 00:20:45,760 --> 00:20:48,840 Speaker 1: you get you have a group of investors, there's very volatile, 367 00:20:48,840 --> 00:20:51,840 Speaker 1: price sensitive investors, and that's not all of them. That's 368 00:20:51,960 --> 00:20:53,919 Speaker 1: really a small group of them. I mean, they were 369 00:20:53,920 --> 00:20:56,480 Speaker 1: talking about ten percent of all the investors that are 370 00:20:56,520 --> 00:21:00,359 Speaker 1: involved in these markets that are just extremely edgy and 371 00:21:00,400 --> 00:21:02,600 Speaker 1: they create a lot of the volatility that you're seeing 372 00:21:02,640 --> 00:21:05,160 Speaker 1: because they respond to all of the news that comes out. 373 00:21:05,680 --> 00:21:08,080 Speaker 1: And I'm just saying, you know, okay, that's fine. They're 374 00:21:08,119 --> 00:21:10,400 Speaker 1: going to be investors like that. There always have been, 375 00:21:10,720 --> 00:21:13,520 Speaker 1: there always will be. But I think the majority of investors, 376 00:21:13,600 --> 00:21:16,040 Speaker 1: quite frankly of are a little bit more sensible, are 377 00:21:16,119 --> 00:21:18,240 Speaker 1: not caught up in that kind of alatili And that's 378 00:21:18,280 --> 00:21:21,359 Speaker 1: exactly what they should do. They should, you know, basically 379 00:21:21,359 --> 00:21:24,439 Speaker 1: set their portfolios on the basis of what is really 380 00:21:24,480 --> 00:21:27,680 Speaker 1: going on or what the underlying fundamentals, the underlying cycle 381 00:21:28,200 --> 00:21:30,960 Speaker 1: is doing, and that's really the most important thing. So 382 00:21:31,600 --> 00:21:33,879 Speaker 1: don't get caught up in that day to day volatility, 383 00:21:33,920 --> 00:21:36,400 Speaker 1: even though I'm sure all of us kind of emotionally 384 00:21:36,440 --> 00:21:38,560 Speaker 1: do get caught up in it all right. Here, you've 385 00:21:38,600 --> 00:21:41,080 Speaker 1: got more than forty years of experience in this game. Here, 386 00:21:41,760 --> 00:21:47,520 Speaker 1: what's your outlook for Uh, it's positive, But you've got 387 00:21:47,520 --> 00:21:49,400 Speaker 1: to keep in mind. I think one thing that's sort 388 00:21:49,440 --> 00:21:52,119 Speaker 1: of a basic fact, and that is since the bottom 389 00:21:52,119 --> 00:21:54,639 Speaker 1: in two thousand and nine, the average annualized rate of 390 00:21:54,720 --> 00:21:58,959 Speaker 1: return has been over eight. Look, that's just's that's just 391 00:21:59,040 --> 00:22:01,440 Speaker 1: a big number, and that's not going to continue. So 392 00:22:02,040 --> 00:22:04,280 Speaker 1: my outlook is positive. In other words, I think the 393 00:22:04,320 --> 00:22:08,240 Speaker 1: economy is going to continue to expand, although it's gonna slow. 394 00:22:08,400 --> 00:22:10,600 Speaker 1: I think the same thing is true of earnings, and 395 00:22:10,680 --> 00:22:14,480 Speaker 1: so you should maintain you should maintain a positive view 396 00:22:14,480 --> 00:22:17,080 Speaker 1: of the equity markets, in other words, a meaningful allocation 397 00:22:17,160 --> 00:22:21,320 Speaker 1: to equities. But recognize one important fact, and that is 398 00:22:21,359 --> 00:22:24,719 Speaker 1: we're going from a high return environment that's two thousand 399 00:22:24,760 --> 00:22:27,920 Speaker 1: twenty for sure, um, and we're going to a low 400 00:22:28,000 --> 00:22:31,600 Speaker 1: return environment. My outlook or prospects for two thousand and 401 00:22:31,640 --> 00:22:36,080 Speaker 1: twenty two are quite frankly, a low three to five 402 00:22:36,119 --> 00:22:39,639 Speaker 1: percent single digit return. Don't worry about that, because I 403 00:22:39,680 --> 00:22:41,800 Speaker 1: think you're gonna be I'm gonna be wrong on earnings. 404 00:22:41,960 --> 00:22:44,719 Speaker 1: Earnings are gonna come in higher than I'm expecting, in 405 00:22:44,760 --> 00:22:46,520 Speaker 1: which case the market will do a little bit better 406 00:22:46,560 --> 00:22:49,400 Speaker 1: than I'm expecting, but don't look for anything more than 407 00:22:49,720 --> 00:22:53,520 Speaker 1: single digit returns, and equities will outperform fixed income, so 408 00:22:53,640 --> 00:22:56,399 Speaker 1: you should overallocate the equities, all right. You thank you 409 00:22:56,440 --> 00:22:59,399 Speaker 1: so much for joining us once again. You Johnson, Chairman, 410 00:22:59,440 --> 00:23:01,959 Speaker 1: Chief Economy US, and a bunch of other stuff at 411 00:23:02,040 --> 00:23:09,040 Speaker 1: Great Point LLC over forty years in the business. Thanks 412 00:23:09,080 --> 00:23:12,520 Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe 413 00:23:12,560 --> 00:23:16,240 Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast 414 00:23:16,320 --> 00:23:19,840 Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at 415 00:23:19,880 --> 00:23:23,520 Speaker 1: Matt Miller, three pt on Fall Sweeney I'm on Twitter 416 00:23:23,600 --> 00:23:26,440 Speaker 1: at pt Sweeney Before the podcast. You can always catch 417 00:23:26,480 --> 00:23:28,320 Speaker 1: us worldwide at Bloomberg Radio.