WEBVTT - The Latest On Infrastructure And Oil And Previewing Jobs Day 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.720 at Bloomberg dot com slash podcast. All right, let's bring 0:00:22.800 --> 0:00:25.960 in Sophia Song Matt. She's global cities leader for Gensler. 0:00:26.200 --> 0:00:29.160 Get a sense of kind of what this big infrastructure 0:00:29.200 --> 0:00:33.519 plan means for the cities in this country. Sophia, thank 0:00:33.560 --> 0:00:36.600 so much for joining us here again A big, big 0:00:36.720 --> 0:00:41.760 number on that bipartisan infrastructure plan. What does it mean 0:00:41.880 --> 0:00:48.200 for big and small cities across the United States. First 0:00:48.200 --> 0:00:51.280 of all, thanks so much for having me. Uh. I 0:00:51.320 --> 0:00:53.960 think the bill is a great first step towards being 0:00:54.120 --> 0:00:57.920 really being transformational for for cities. I think the impact 0:00:57.920 --> 0:01:00.840 will be seen differently depending on the city that we're 0:01:00.880 --> 0:01:03.080 talking about. Um but I think we need to keep 0:01:03.080 --> 0:01:06.040 in mind that only only half of the infrastructure bid 0:01:06.120 --> 0:01:08.920 is actually new spending, while the other half is what 0:01:09.000 --> 0:01:11.920 we've already been spending just to keep it keep up 0:01:11.920 --> 0:01:16.240 with maintenance and backlog of projects. And so it's still 0:01:16.360 --> 0:01:19.080 not enough to close that two and a half trillion 0:01:19.120 --> 0:01:22.640 dollar infrastructure investment gap that's been growing since the seventies. 0:01:23.319 --> 0:01:26.679 It won't solve all of our infrastructure problems across the nation, 0:01:26.720 --> 0:01:30.440 but it's a great first step to closing, uh, that 0:01:30.560 --> 0:01:34.720 massive gap beyond what is what is the answer, Sophia. 0:01:34.880 --> 0:01:38.280 You know, I talked to a lot of people, um, 0:01:38.319 --> 0:01:41.840 you know Wall Street women and men, but from both 0:01:41.880 --> 0:01:44.280 sides of the aisle or even a political and they 0:01:44.440 --> 0:01:49.080 all say we need to spend a lot more on infrastructure. 0:01:49.160 --> 0:01:53.160 But you know it can't all come directly from the 0:01:53.520 --> 0:01:56.160 m Jerome Palell's printing presses, right, There's got to be 0:01:56.200 --> 0:02:01.880 another way. Yeah, it's not the feed this infrastructure bill alone. 0:02:02.200 --> 0:02:05.600 You know, since the nineteen seventies, it's actually been an 0:02:05.760 --> 0:02:11.079 under investment in the US. The you know, in infrastructure 0:02:11.080 --> 0:02:13.760 investment in the US has been declining since the seventies, 0:02:13.919 --> 0:02:17.679 which is very different from other countries, especially wealthier nations. 0:02:17.800 --> 0:02:21.520 We invest less in infrastructure as a percentage of our 0:02:21.560 --> 0:02:26.000 GDP than many other first world countries. Um. And so 0:02:26.240 --> 0:02:30.639 when we're talking about you know, the impact on these cities. 0:02:30.800 --> 0:02:33.880 You know, some cities will see greater impact than others. 0:02:34.280 --> 0:02:37.760 You know, our most recent Gunsler City Pulse, which we 0:02:37.919 --> 0:02:41.960 actually released just yesterday, it shows that cities, these emergency 0:02:42.320 --> 0:02:46.720 cities like Austin, Atlanta, Denver, and Charlotte, these cities have 0:02:46.840 --> 0:02:51.080 seen explosive growth but don't have the infrastructure to keep up, 0:02:51.120 --> 0:02:53.960 and so that growth is coming out of cost. They're 0:02:53.960 --> 0:02:58.360 dealing with traffic congestion, bad roads, bad bridges, and airports 0:02:58.400 --> 0:03:01.600 that need to be modernized. And so the bill provides 0:03:01.840 --> 0:03:05.400 rising cities an opportunity to address these issues. But to 0:03:05.560 --> 0:03:08.240 close that gap, I mean, we're we're going to need, 0:03:08.639 --> 0:03:10.880 you know, a lot more investment, but this is a 0:03:10.919 --> 0:03:14.280 great first step. Sophia talked to us about a something 0:03:14.560 --> 0:03:19.680 like a public private partnership. What's the role for private 0:03:19.800 --> 0:03:23.800 enterprise in infrastructure? It can't just be the U. S. 0:03:23.840 --> 0:03:29.799 Government kind of doing everything. Kennett, Yes. So, so what's 0:03:29.840 --> 0:03:33.919 interesting about this particular bill is that it actually creates 0:03:33.960 --> 0:03:39.040 space for private investors UM to join government efforts, especially 0:03:39.040 --> 0:03:42.640 projects that are over seven hundred fifty million dollars. And 0:03:42.680 --> 0:03:46.520 so when you include the private sector, you actually you 0:03:46.560 --> 0:03:52.400 actually build in efficiencies UM where you know, greater efficiencies 0:03:52.400 --> 0:03:56.200 than than contracts that where the government is stuck with 0:03:56.360 --> 0:04:01.400 greater efficiencies than no efficiency at all. Like, right, exactly 0:04:02.680 --> 0:04:04.960 what do you think about? You know? To me? And 0:04:05.000 --> 0:04:08.160 I don't I'm gonna get flamed probably on Twitter. Um. 0:04:08.600 --> 0:04:10.920 People have been calling me a bleeding heart liberal lately. 0:04:10.960 --> 0:04:14.360 But to me, it makes sense to support you know, 0:04:14.640 --> 0:04:20.040 something like childcare as infrastructure because you know, working parents 0:04:20.200 --> 0:04:23.479 need to put their kids somewhere if they want to 0:04:23.520 --> 0:04:25.039 be able to get in a car and drive on 0:04:25.080 --> 0:04:27.360 a highway to a job at an airport or whatever. 0:04:27.800 --> 0:04:33.200 Does does that make sense to everyone? Or no? I 0:04:33.520 --> 0:04:35.320 mean it makes sense to me. But that's not in 0:04:35.360 --> 0:04:37.800 the bill. That's in that No, it's in the new 0:04:37.880 --> 0:04:40.280 Build Back Better Bill. But I mean there are a 0:04:40.320 --> 0:04:43.200 lot of things now that we talk about its infrastructure 0:04:43.240 --> 0:04:48.640 that are not just roads, bridges, ports, airports. Right. Um 0:04:49.240 --> 0:04:52.200 even goes as far as to say, you know, like 0:04:52.279 --> 0:04:57.520 nutrition counts as infrastructure. Yeah, I mean that's what's what's 0:04:57.560 --> 0:05:00.960 so unique about this Build Back Better because they are 0:05:01.080 --> 0:05:10.440 specifically outlining a social equity infrastructure UM infrastructure bill. All right, Sophia, 0:05:10.480 --> 0:05:12.400 thank you so much. We appreciate that. As always so 0:05:12.400 --> 0:05:20.600 if your song Global Cities leader for against again, I 0:05:20.640 --> 0:05:22.920 don't know what the heck is going on with oil 0:05:23.000 --> 0:05:26.080 here up one point three percent today after being down 0:05:26.760 --> 0:05:29.159 as much as four percent earlier this morning says some 0:05:29.200 --> 0:05:31.359 big big swings. Let's bring in somebody who does this 0:05:32.000 --> 0:05:35.360 commodity stuff. Will Ryan, the chief executive officer for granted 0:05:35.400 --> 0:05:41.320 chair as Advisors. Well, what's going on with the oil today? Well, um, 0:05:41.360 --> 0:05:44.760 I think it's really just a reaction to what we 0:05:44.880 --> 0:05:47.320 saw over the last couple of days, which is a 0:05:47.320 --> 0:05:51.440 pretty significant down leg on the back of the the 0:05:51.600 --> 0:05:56.400 new COVID variant. Um and I think that you know that, 0:05:56.560 --> 0:05:59.039 coupled with probably the news out of OPEC plus that 0:05:59.080 --> 0:06:02.440 they continue or will continue with their plan to put 0:06:02.440 --> 0:06:06.039 the four hundred thousand barrels on the market per month 0:06:06.080 --> 0:06:09.320 start in January, gives a bit more stability to any 0:06:09.360 --> 0:06:11.800 concern that there might be more barrels put onto the 0:06:11.839 --> 0:06:15.640 market than that is there any you know, Critty was 0:06:15.640 --> 0:06:18.880 talking to us earlier about a market that looks like 0:06:19.440 --> 0:06:25.279 investors will use any excuse to sell, and granted COVID 0:06:25.400 --> 0:06:27.440 is very serious. We don't want to make light of 0:06:27.480 --> 0:06:30.320 any of the new variants, but it does look like 0:06:30.360 --> 0:06:34.120 a very strong reaction to something um we don't know 0:06:34.160 --> 0:06:38.560 a lot about yet. No, absolutely, I think that that 0:06:38.760 --> 0:06:42.279 was You could arguably say that across the market, but 0:06:42.320 --> 0:06:45.279 whether you're talking about you know, stocks, or whether you're 0:06:45.279 --> 0:06:49.400 talking about UM commodities. But it was just abroad, I 0:06:49.440 --> 0:06:54.640 think rejection of risk um while the uncertainty was there 0:06:55.680 --> 0:06:58.680 around news of this new variant. But I think as 0:06:58.720 --> 0:07:01.039 we start to get more data on it, and like 0:07:01.080 --> 0:07:02.640 you said, you don't want to make light of it, 0:07:02.720 --> 0:07:06.520 but the more that I think people get comfortable that 0:07:07.320 --> 0:07:10.240 it's not gonna end in a little lockdown. Of course 0:07:10.240 --> 0:07:13.000 we don't know that yet, but if the assumptions it's 0:07:13.040 --> 0:07:15.240 not gonna we're not going to go back to where 0:07:15.280 --> 0:07:19.080 we were, then I think that you know, the oil price, 0:07:19.360 --> 0:07:23.600 commodities and the global economy and continue to track on here. 0:07:24.840 --> 0:07:27.080 So we'll give us a sense of you know, kind 0:07:27.080 --> 0:07:32.160 of opec um again, where is Russia Viasa the Opeque plus? 0:07:32.160 --> 0:07:34.360 So there are they still kind of a wild card 0:07:34.400 --> 0:07:37.880 out there? Or is Saudi Arabia still kind of really 0:07:38.040 --> 0:07:43.360 directing things? Saudi Arabia definitely is the main player. I 0:07:43.400 --> 0:07:45.600 think that you know, like I said that the four 0:07:45.640 --> 0:07:49.240 hundred thousand barrels that were telegraphed we put onto the market. 0:07:49.360 --> 0:07:53.880 This is a gradually increasing production from the record cuts 0:07:53.920 --> 0:07:55.920 that we saw last year with they cut ten million 0:07:55.920 --> 0:08:00.200 barrels a day from production. And so clearly, you know, 0:08:00.240 --> 0:08:03.200 with the prices at these levels, UM not just okay, 0:08:03.240 --> 0:08:05.960 but other oil producing countries would like to put more 0:08:06.000 --> 0:08:08.560 production on the market, but they've obviously got to balance 0:08:08.640 --> 0:08:12.360 that with the demand UM that we're seeing. So right now, 0:08:12.400 --> 0:08:16.040 the robust the demand is robust, and you know, we've 0:08:16.040 --> 0:08:18.720 gotten to a position where we had eighty dollar oil, 0:08:19.240 --> 0:08:22.080 you know, in a world that's still not open. I 0:08:22.080 --> 0:08:26.480 mean people forget sometimes that major countries like China other 0:08:26.560 --> 0:08:29.680 Asian countries still not open really for all terms and purposes. 0:08:29.760 --> 0:08:32.680 So I think if we're talking about getting back to 0:08:32.720 --> 0:08:35.520 a world which is looks more like two thousand and 0:08:35.640 --> 0:08:38.959 nine team where we could travel everywhere and we had 0:08:39.000 --> 0:08:42.600 the same kind of you know, free flowing commerce and trade, 0:08:42.679 --> 0:08:44.679 and I think we're talking about an other price that's 0:08:45.000 --> 0:08:48.760 materially higher than where we are today. What about the 0:08:48.760 --> 0:08:52.360 other moves that we're seeing in UM energy commodities. I 0:08:52.360 --> 0:08:55.599 mean I'm here in the heart of Europe where is 0:08:55.600 --> 0:09:00.880 getting colder and gas prices are extraordinarily high. Um. Is 0:09:00.920 --> 0:09:04.760 that linked to the oil issue or is it all 0:09:04.840 --> 0:09:09.840 about you know, nords dream and a lack of electricity generation? 0:09:10.000 --> 0:09:13.600 How do you see that? Yeah, it's not so much. Actually, 0:09:13.640 --> 0:09:15.719 funny enough, it's not so much linked to oil at all. 0:09:15.840 --> 0:09:19.880 It's much more of a UM, much more of a 0:09:19.920 --> 0:09:23.920 phenomenon or European based phenomenon regarding supplies and constraint of 0:09:23.960 --> 0:09:29.920 supplies UM that are specific to some of these European countries. UM. 0:09:30.200 --> 0:09:36.079 You know. Throw in also the move to renewable power 0:09:36.720 --> 0:09:39.920 and perhaps you know, some of that happening maybe too quickly, 0:09:40.640 --> 0:09:44.560 resulting in a situation where there's just not enough energy 0:09:44.640 --> 0:09:49.040 that's been generated from renewable sources and so governments are 0:09:49.040 --> 0:09:54.640 having to rely more on fossil fuels. But that's sort 0:09:54.640 --> 0:09:59.559 of colliding with this perfect storm of supply not being 0:09:59.600 --> 0:10:03.120 there um as expected as as we sort of recover 0:10:03.360 --> 0:10:06.040 from COVID. By the way, well, do you you know 0:10:06.080 --> 0:10:08.920 ad grant share advisors, Do you like this kind of 0:10:09.000 --> 0:10:13.640 volatility because you're in demand as well right now. People 0:10:13.679 --> 0:10:17.760 need your advice. That's right. I mean I think that there, 0:10:17.800 --> 0:10:21.280 you know, I would say we probably favor volatility up 0:10:21.320 --> 0:10:24.320 until a point. I mean, clearly we don't want or 0:10:24.360 --> 0:10:26.559 I think for anybody that manages money, you know, I I 0:10:26.640 --> 0:10:30.079 don't want anything to be too volatile. But like you say, 0:10:30.160 --> 0:10:33.600 I mean that there's a point where the market is 0:10:33.679 --> 0:10:37.760 moving around and people do want exposure to these types 0:10:37.800 --> 0:10:40.160 of assets, and certainly they do want to know, you know, 0:10:40.240 --> 0:10:43.400 what's going on, because understanding you know, what's happening in 0:10:43.640 --> 0:10:46.880 modity market, I think that sort of underpinned everything. It's 0:10:46.920 --> 0:10:50.840 underpinning the inflation that we're seeing in the global economy, 0:10:50.840 --> 0:10:53.720 and so really kind of understanding the direction of travel 0:10:53.800 --> 0:10:57.120 is key for not just commodities, but I think for 0:10:57.120 --> 0:10:59.319 for everything people are doing. All right, Well, thanks so 0:10:59.400 --> 0:11:01.560 much for joining us again. We always appreciate your thoughts. 0:11:01.600 --> 0:11:08.240 Will Ryan, Chief investment Officer, Granted Shairs Advisors, Matt, I mean, 0:11:08.320 --> 0:11:12.080 for lack of a better scenario analysis, I'm calling it 0:11:12.800 --> 0:11:16.199 by the dip. I don't know, yeah, I mean, by 0:11:16.240 --> 0:11:18.800 the dip is a strategy that seems to work, but 0:11:18.840 --> 0:11:22.400 it looks like sell the news is something investors really 0:11:22.440 --> 0:11:24.120 want to do. I think pretty Gooda made a great 0:11:24.120 --> 0:11:28.680 point earlier when she uh, when she talked about the 0:11:28.760 --> 0:11:31.640 drops that we've seen, the drama of the drops that 0:11:31.679 --> 0:11:35.440 we've seen compared to you know, news that seemed to 0:11:35.559 --> 0:11:39.440 lack that drama. Again, not to underplay the virus or 0:11:39.480 --> 0:11:41.960 the new variant, because we don't know enough about it yet. 0:11:41.960 --> 0:11:47.640 It could be you know, terribly damaging variant, but so 0:11:47.720 --> 0:11:51.440 far it doesn't look um like something that's going to 0:11:51.520 --> 0:11:55.080 affect the global economy that much. And yet we had 0:11:55.360 --> 0:11:58.520 a nine hundred points sell off on the Dow on Friday. 0:11:58.559 --> 0:12:03.080 We had um a huge turnaround yesterday. So the question 0:12:03.160 --> 0:12:06.840 I think is why are investors taking advantage of any headline, 0:12:06.960 --> 0:12:09.760 especially you know, yesterday we sold off after the headline 0:12:10.160 --> 0:12:13.960 across the Bloomberg terminal at I think it was one 0:12:14.040 --> 0:12:17.120 forty two pm New York time, we had a headline 0:12:17.520 --> 0:12:22.920 that said, we've discovered one case of omicron in California. 0:12:23.120 --> 0:12:26.319 We knew that there would be a case or dozens, 0:12:26.480 --> 0:12:29.079 or hundreds or maybe even thousands of cases of oh 0:12:29.080 --> 0:12:33.400 macron in the US, and yet mr Market took advantage 0:12:33.440 --> 0:12:36.960 of that and sold hard right and then here we 0:12:37.000 --> 0:12:40.880 are today and you you mentioned uh, Bloomberg Markets, corresponding, Cretty, 0:12:41.280 --> 0:12:45.720 guess what meant? She's back in the Bloomberg Interactive Brooker studio. So, Cretty, 0:12:45.760 --> 0:12:48.040 what are you seeing at there? I mean again a 0:12:48.040 --> 0:12:49.959 couple I went to business squad, spent a lot of 0:12:50.000 --> 0:12:52.520 time on Wall Street, and I got nothing better than 0:12:53.120 --> 0:12:56.560 by the dip um Well sometimes, Paul, So I've learned. 0:12:56.640 --> 0:12:58.320 This was one of the first lessons I learned when 0:12:58.360 --> 0:13:00.880 I was on the Markets Live team e former traders. 0:13:00.880 --> 0:13:04.800 They said, sometimes the answer isn't fundamental. Sometimes it's literally 0:13:04.880 --> 0:13:06.920 people are trading because they trade, and they want to 0:13:06.960 --> 0:13:10.200 trade like and and not to simplify too much, but 0:13:10.240 --> 0:13:12.280 it quite literally is by the dip because and here's 0:13:12.320 --> 0:13:14.360 why we're not just saying that to get out of 0:13:14.360 --> 0:13:16.920 a reason. But your your tell here is going to 0:13:17.000 --> 0:13:19.520 be the VIX because you haven't had a spike in 0:13:19.559 --> 0:13:21.320 the VIX like this too. I think a thirty two 0:13:21.320 --> 0:13:23.840 handle going all the way back to January when they 0:13:23.840 --> 0:13:25.960 were starting to see some of those hedge funds getting 0:13:26.200 --> 0:13:28.760 really burned by those shorts against the retail trader and 0:13:28.800 --> 0:13:31.320 the entire kind of me mania that was happening. And 0:13:31.360 --> 0:13:33.600 if you remember going back then or even going back 0:13:33.600 --> 0:13:35.960 to March on a bigger scale, is that when you 0:13:35.960 --> 0:13:39.360 see volatility, one day it's green, the next day it's read. 0:13:39.720 --> 0:13:42.760 This is a very normal reaction on that front, and 0:13:42.840 --> 0:13:45.640 especially as we go into the holly season where a 0:13:45.679 --> 0:13:48.400 lot of people are essentially closing out their books, they're rebalancing. 0:13:48.600 --> 0:13:50.880 You're also waiting for I think about two weeks for 0:13:50.880 --> 0:13:53.040 the next FMC meeting, and on top of that, you're 0:13:53.080 --> 0:13:57.000 waiting once again for two weeks for more data and 0:13:57.080 --> 0:13:59.880 more information on this variant in particular, which we are 0:14:00.000 --> 0:14:04.000 still getting contradicting information on. So right now and I 0:14:04.040 --> 0:14:05.920 think for the foreseeable future, and I mean for the 0:14:05.960 --> 0:14:07.800 next couple of days, you're going to continue to see 0:14:07.800 --> 0:14:10.160 this volatility where you see moves in the market that 0:14:10.320 --> 0:14:12.600 just don't make sense. But then eventually, when we do 0:14:12.679 --> 0:14:14.640 have more information, those correlations are going to come back 0:14:14.679 --> 0:14:17.080 together and there will be a very clear risk on 0:14:17.240 --> 0:14:19.600 or risk off narrative. Right now, we're just not there. 0:14:19.880 --> 0:14:23.760 It was also interesting that the FED didn't react as 0:14:23.800 --> 0:14:25.840 devish lee at least in the Q and a portion 0:14:26.080 --> 0:14:30.160 of um Jerome pal senate testimony, as maybe the market 0:14:30.200 --> 0:14:33.800 had anticipated, right because we got that hawkish pivot at 0:14:33.840 --> 0:14:37.400 the same time as the market seemed to be a 0:14:37.440 --> 0:14:41.200 little bit on edge about coronavirus. Again. Yeah, and you know, 0:14:41.240 --> 0:14:44.560 I actually went back and read the exact wording of j. 0:14:44.680 --> 0:14:47.920 Powell this morning, and he used a lot of maybes 0:14:48.040 --> 0:14:51.640 and cood's and really a hedged response. He didn't say 0:14:51.840 --> 0:14:54.640 we are tapering at a faster pace. He said we 0:14:54.720 --> 0:14:57.480 could and we might. And that isn't something that we 0:14:57.600 --> 0:15:00.160 didn't know from the last FMC meeting. In fact, we 0:15:00.200 --> 0:15:03.880 haven't actually gotten the actual number or the actual asset 0:15:03.920 --> 0:15:06.240 purchases for January, so we knew there was always going 0:15:06.280 --> 0:15:08.640 to be this question mark that the pace from for 0:15:08.840 --> 0:15:11.680 January would completely change, and he's just reiterated that in 0:15:11.720 --> 0:15:14.160 his testimony, So once again, it's not new. I think 0:15:14.200 --> 0:15:16.920 what is new, though, is the way the bond market 0:15:16.920 --> 0:15:18.960 in particular is pricing it. And the biggest part of 0:15:18.960 --> 0:15:22.080 that is the curve flattening you've seen really accelerated in 0:15:22.080 --> 0:15:24.160 the past couple of days because you saw essentially the 0:15:24.160 --> 0:15:26.840 five thirties curve uh kind of come down, kind of 0:15:26.840 --> 0:15:29.120 flatten a little bit for the last really I think 0:15:29.120 --> 0:15:30.960 two wish months. If you look at the chart. But 0:15:31.160 --> 0:15:33.800 if you compare that to what you're seeing and say, 0:15:33.840 --> 0:15:37.560 the equity market, this is a really important comparison because essentially, 0:15:37.720 --> 0:15:40.800 when for those folks who aren't tuned into the bond market, 0:15:40.880 --> 0:15:43.200 the curve flattening just means that you are not paid 0:15:43.320 --> 0:15:46.120 as much of a premium for taking on that extra 0:15:46.280 --> 0:15:48.480 time risk. If you apply that logic to big tech, 0:15:48.520 --> 0:15:51.880 which is also a very long duration asset essentially or 0:15:51.920 --> 0:15:54.680 has been trading as such, that's not exactly a good sign. 0:15:54.680 --> 0:15:57.960 And right now you do have that disconnect between stocks 0:15:58.000 --> 0:16:00.680 in that regard and tech stocks in particular, as well 0:16:00.720 --> 0:16:03.800 as the bond market. The question is when those two connect, 0:16:03.960 --> 0:16:06.240 is it the bond market that kind of becomes more 0:16:06.320 --> 0:16:08.440 risk on more and steepens a little bit, or is 0:16:08.480 --> 0:16:11.920 it the equity market that gets dragged down by big tech? Yeah, 0:16:11.920 --> 0:16:14.480 and it's interesting to see how the markets are reacting 0:16:14.480 --> 0:16:17.960 to that big, big pivot um by FED chairman Powell 0:16:18.720 --> 0:16:22.400 earlier this week. Again we had that sell off um. 0:16:22.440 --> 0:16:25.520 But again, if you're the market was looking for just 0:16:26.040 --> 0:16:29.960 reasonable signaling to get you to a spot of okay, 0:16:29.960 --> 0:16:31.600 I kind of have a feeling of how this thing 0:16:31.640 --> 0:16:34.080 is going to go. He certainly gave it to you. Yeah, 0:16:34.080 --> 0:16:37.520 it really did. And and what's tricky about right now though, 0:16:37.600 --> 0:16:39.400 is that And I think this is why there's so 0:16:39.440 --> 0:16:43.120 much emphasis on tomorrow's payrolls report in particulars because anything 0:16:43.120 --> 0:16:44.720 could happen. And if you start to see the payer's 0:16:44.760 --> 0:16:47.200 report come in, the market is planning on interpreting this 0:16:47.360 --> 0:16:50.160 as well. This is permission for for J. Powell and 0:16:50.200 --> 0:16:52.480 the Fed to just say all eyes are on inflation 0:16:52.520 --> 0:16:54.200 and that means tapering, and that means right, Hicks. And 0:16:54.240 --> 0:16:57.760 that's a narrative that can spiral very very quickly on 0:16:57.760 --> 0:16:59.800 one data point. So that's going to be a spot 0:16:59.800 --> 0:17:03.440 where where you might see some pretty drastic moves. All right. Interesting. 0:17:03.480 --> 0:17:05.560 We will certainly have wall to wall coverage of the 0:17:05.640 --> 0:17:08.680 job report, as we do every month here on Bloomberg 0:17:08.760 --> 0:17:11.919 Radio and Bloomberg TV. We live for that kind of stuff. 0:17:12.119 --> 0:17:15.840 Pretty Gupta, Bloomberg Markets correspondent joining us here in our 0:17:15.880 --> 0:17:20.160 Bloomberg Interactive Broker studio. UH and again full coverage tomorrow 0:17:20.160 --> 0:17:22.840 of that job's data, which is pretty mentioned, will be 0:17:22.920 --> 0:17:31.080 a key data point for this federal Reserve. Let's check 0:17:31.119 --> 0:17:35.359 in with a longtime contributor to Bloomberg Markets, Hugh Johnson Chairman, 0:17:35.440 --> 0:17:37.639 Chief Economists A Great Point LLC. First of all, you 0:17:38.800 --> 0:17:41.200 what is the Great Point LLC? What happened to Hugh 0:17:41.280 --> 0:17:45.520 Johnson Advisors for like a gazillion years? Well, well that's 0:17:45.520 --> 0:17:48.960 a good question. We merged our company with a company 0:17:49.000 --> 0:17:51.480 called Bender Lane, which was a family office business, and 0:17:51.520 --> 0:17:53.359 then we decided to have a give it one name 0:17:53.400 --> 0:17:56.800 for the two. But we've kept Hugh Johnson Advisors as 0:17:56.840 --> 0:18:00.280 a as a division of and I'm sort of the 0:18:00.359 --> 0:18:04.040 chairman emeritus of Great Point and the Chief Economists A 0:18:04.119 --> 0:18:06.679 Great Point, and I'm also the is the best I 0:18:06.800 --> 0:18:10.439 understand it, the chairman of Hugh Johnson Advisors and the 0:18:10.520 --> 0:18:14.320 chief economists the Hugh Johnson Advisors, and the chief chief 0:18:14.800 --> 0:18:16.919 investment officer a huge Johnsen. Well, all right, we're just 0:18:16.920 --> 0:18:20.360 gonna go, chairman. Yeah, we're just gonna go the chairman, um, 0:18:20.440 --> 0:18:24.600 and everybody knows you're buying your chairman, Yeah, Mr Chairman, Yeah, 0:18:24.600 --> 0:18:27.760 that's good. Mr. So who what do you make of 0:18:27.800 --> 0:18:30.480 this world we're living in now? I mean, it's been 0:18:30.520 --> 0:18:34.560 such a crazy twenty months here with the pandemic and 0:18:34.600 --> 0:18:37.679 the economic disruption and now they reopening. But it just 0:18:37.720 --> 0:18:41.000 seems like, you know, there's one monkey wrench thrown in 0:18:41.040 --> 0:18:43.200 after another, and it's got to be tough to kind 0:18:43.200 --> 0:18:46.640 of forecast where this economy is going. What are your 0:18:46.720 --> 0:18:50.000 best thoughts at the moment, Well, the best thoughts are 0:18:50.040 --> 0:18:53.200 really number one. As you get some surprises thrown at us, 0:18:53.600 --> 0:18:55.679 and that's a part of financial market history. And of 0:18:55.720 --> 0:18:58.879 course with the the COVID nineteen is kind of surprised 0:18:58.880 --> 0:19:01.920 we've been sent with a macron right now. That's a surprise. 0:19:02.480 --> 0:19:05.560 Very causes a great deal of volatility. That's one surprise. 0:19:05.600 --> 0:19:07.879 And the second surprise, of course, is some of the 0:19:07.920 --> 0:19:10.600 comments made by Gairman Paul which seemed to move up 0:19:10.920 --> 0:19:12.639 the time in which is gonna be gin the taper, 0:19:12.680 --> 0:19:14.520 and then of course the time they're gonna begin to 0:19:14.560 --> 0:19:17.680 start to raise interest rates. These are surprises, create great, 0:19:18.040 --> 0:19:20.960 great level of volatility, and I would just urge all 0:19:21.000 --> 0:19:24.239 investors to just try to look through all of that 0:19:24.359 --> 0:19:27.320 volatility and we'll start to get some real answers on COVID, 0:19:27.359 --> 0:19:30.520 we'll get some real answers on monetary policy over the 0:19:30.560 --> 0:19:32.960 course of a little bit of time now. But let's 0:19:33.040 --> 0:19:35.920 let those things settle out and recognize, and the more 0:19:35.920 --> 0:19:39.720 important thing is to recognize, Look, we are in a cycle, 0:19:39.840 --> 0:19:43.760 a stock market, economic, interest rate cycle. It's very normal 0:19:43.840 --> 0:19:46.600 by past cycles. We're at the twenty month mark. We're 0:19:46.640 --> 0:19:49.119 really not far into it, and really all of the 0:19:49.320 --> 0:19:51.480 kind of the levers. When you look at leading indicators 0:19:51.480 --> 0:19:53.520 for the economy, you look at the yield curve and 0:19:53.560 --> 0:19:55.480 what it tells you about what the economy has in 0:19:55.560 --> 0:19:59.040 store for the next twelve months. Um, it's still very positive. 0:19:59.080 --> 0:20:01.439 The cycle has further to go, and it's gonna have 0:20:01.640 --> 0:20:04.320 a little bit of volatility created by these issues, these 0:20:04.359 --> 0:20:08.040 exogenous unexpected issues along the way. You just gotta just 0:20:08.080 --> 0:20:11.359 gotta put those on the back burner and make sure 0:20:11.400 --> 0:20:14.239 you pay attention to the fact the underlying cycle and 0:20:14.280 --> 0:20:16.399 where we are in that cycle, and then make your 0:20:16.440 --> 0:20:19.840 investment decisions asset allocation on the basis of that. Yeah, 0:20:19.880 --> 0:20:22.320 we had a great story by Matthew Bosler a couple 0:20:22.359 --> 0:20:25.240 of days ago about how fat corporate profit margins are. 0:20:25.320 --> 0:20:28.840 We haven't seen margins this fat since the fifties, and 0:20:28.960 --> 0:20:33.440 yet it looks like investors, uh current. So you've got 0:20:33.440 --> 0:20:37.199 the pajama investors, the pajama traders who buy the dip 0:20:37.359 --> 0:20:39.960 for us every night, but it does look like um 0:20:40.280 --> 0:20:45.679 sell first ask questions later is the afternoon mantra. You know, 0:20:45.760 --> 0:20:48.840 you get you have a group of investors, there's very volatile, 0:20:48.840 --> 0:20:51.840 price sensitive investors, and that's not all of them. That's 0:20:51.960 --> 0:20:53.919 really a small group of them. I mean, they were 0:20:53.920 --> 0:20:56.480 talking about ten percent of all the investors that are 0:20:56.520 --> 0:21:00.359 involved in these markets that are just extremely edgy and 0:21:00.400 --> 0:21:02.600 they create a lot of the volatility that you're seeing 0:21:02.640 --> 0:21:05.160 because they respond to all of the news that comes out. 0:21:05.680 --> 0:21:08.080 And I'm just saying, you know, okay, that's fine. They're 0:21:08.119 --> 0:21:10.400 going to be investors like that. There always have been, 0:21:10.720 --> 0:21:13.520 there always will be. But I think the majority of investors, 0:21:13.600 --> 0:21:16.040 quite frankly of are a little bit more sensible, are 0:21:16.119 --> 0:21:18.240 not caught up in that kind of alatili And that's 0:21:18.280 --> 0:21:21.359 exactly what they should do. They should, you know, basically 0:21:21.359 --> 0:21:24.439 set their portfolios on the basis of what is really 0:21:24.480 --> 0:21:27.680 going on or what the underlying fundamentals, the underlying cycle 0:21:28.200 --> 0:21:30.960 is doing, and that's really the most important thing. So 0:21:31.600 --> 0:21:33.879 don't get caught up in that day to day volatility, 0:21:33.920 --> 0:21:36.400 even though I'm sure all of us kind of emotionally 0:21:36.440 --> 0:21:38.560 do get caught up in it all right. Here, you've 0:21:38.600 --> 0:21:41.080 got more than forty years of experience in this game. Here, 0:21:41.760 --> 0:21:47.520 what's your outlook for Uh, it's positive, But you've got 0:21:47.520 --> 0:21:49.400 to keep in mind. I think one thing that's sort 0:21:49.440 --> 0:21:52.119 of a basic fact, and that is since the bottom 0:21:52.119 --> 0:21:54.639 in two thousand and nine, the average annualized rate of 0:21:54.720 --> 0:21:58.959 return has been over eight. Look, that's just's that's just 0:21:59.040 --> 0:22:01.440 a big number, and that's not going to continue. So 0:22:02.040 --> 0:22:04.280 my outlook is positive. In other words, I think the 0:22:04.320 --> 0:22:08.240 economy is going to continue to expand, although it's gonna slow. 0:22:08.400 --> 0:22:10.600 I think the same thing is true of earnings, and 0:22:10.680 --> 0:22:14.480 so you should maintain you should maintain a positive view 0:22:14.480 --> 0:22:17.080 of the equity markets, in other words, a meaningful allocation 0:22:17.160 --> 0:22:21.320 to equities. But recognize one important fact, and that is 0:22:21.359 --> 0:22:24.719 we're going from a high return environment that's two thousand 0:22:24.760 --> 0:22:27.920 twenty for sure, um, and we're going to a low 0:22:28.000 --> 0:22:31.600 return environment. My outlook or prospects for two thousand and 0:22:31.640 --> 0:22:36.080