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 00:00:11,520 --> 00:00:15,600 Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast 5 00:00:15,600 --> 00:00:18,439 Speaker 1: on 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. Look at a little 7 00:00:22,760 --> 00:00:24,479 Speaker 1: bit of a review of kind of what we just 8 00:00:24,560 --> 00:00:27,320 Speaker 1: heard from some of the world's central bankers here again, 9 00:00:27,360 --> 00:00:32,560 Speaker 1: inflation front and center at their ECB form in Central Portugal. 10 00:00:32,800 --> 00:00:36,760 Speaker 1: When welcome Steve Matthews, US economy reporter for Bloomberg News. Steve, 11 00:00:36,760 --> 00:00:38,600 Speaker 1: thanks so much for joining us here. It seems to 12 00:00:38,640 --> 00:00:42,600 Speaker 1: be the theme, obviously for central bankers around the world 13 00:00:42,640 --> 00:00:47,400 Speaker 1: to try to rain in inflation, which is a global story, 14 00:00:47,400 --> 00:00:50,120 Speaker 1: while not pushing the world's economy into a recession. That's 15 00:00:50,120 --> 00:00:54,160 Speaker 1: certainly been h the balancing after fit Chairman j Pow, 16 00:00:54,280 --> 00:00:57,000 Speaker 1: What did you take away? Yeah, I thought it was 17 00:00:57,040 --> 00:01:00,520 Speaker 1: really an interesting discussion. There was a discussion and about 18 00:01:00,680 --> 00:01:03,320 Speaker 1: you know what the central banks got wrong, you know 19 00:01:03,360 --> 00:01:06,840 Speaker 1: how they might get things better in the future. Uh 20 00:01:07,000 --> 00:01:11,920 Speaker 1: poal was very clear that inflation is the priority. He said, 21 00:01:12,120 --> 00:01:15,080 Speaker 1: you know, getting it down will cause some pain, but 22 00:01:15,280 --> 00:01:19,760 Speaker 1: the pain of not getting inflation down would be worse. UH. 23 00:01:19,959 --> 00:01:24,319 Speaker 1: He's asked about comments by Paul Krugman, the Noble Prize 24 00:01:24,360 --> 00:01:28,680 Speaker 1: winning economists and your Times columnists, UH that you know, 25 00:01:28,720 --> 00:01:31,120 Speaker 1: the biggest risk to the economy would be the FED 26 00:01:31,280 --> 00:01:34,759 Speaker 1: overdoing it, and certainly a lot of the folks predicting 27 00:01:34,800 --> 00:01:38,040 Speaker 1: a recession right now of you know, fear that the 28 00:01:38,080 --> 00:01:40,720 Speaker 1: FED is going to do too much, you know, move 29 00:01:40,800 --> 00:01:43,800 Speaker 1: too too far, too fast. And he said, no, he 30 00:01:43,920 --> 00:01:48,240 Speaker 1: disagreed with that the bigger risk is that they don't 31 00:01:48,320 --> 00:01:51,160 Speaker 1: do it enough, and that that they don't get inflation 32 00:01:51,200 --> 00:01:54,720 Speaker 1: under control, so that you know, that's clearly where their 33 00:01:55,080 --> 00:02:00,200 Speaker 1: their head is. He He also endorsed market expectations for eight. 34 00:02:00,560 --> 00:02:04,280 Speaker 1: He cited the summary of economic projections of a couple 35 00:02:04,320 --> 00:02:07,800 Speaker 1: of weeks ago which have the FMC raising rights to 36 00:02:08,240 --> 00:02:10,600 Speaker 1: three and a half percent this year, around four percent 37 00:02:10,760 --> 00:02:17,239 Speaker 1: next year. So you know, it was definitely a hawkish 38 00:02:16,480 --> 00:02:22,040 Speaker 1: UH panel and interestingly there was not any disagreement with 39 00:02:22,120 --> 00:02:26,120 Speaker 1: the other central bankers uh UM and from from the 40 00:02:26,160 --> 00:02:30,720 Speaker 1: Bank of England e c B. Everybody is viewing inflation 41 00:02:30,840 --> 00:02:34,040 Speaker 1: the same way as kind of a top priority. And 42 00:02:34,080 --> 00:02:36,840 Speaker 1: Steve Matt Miller's not here today but not to work 43 00:02:36,880 --> 00:02:39,920 Speaker 1: because we have pretty GROUPDA in our studio. But uh 44 00:02:39,960 --> 00:02:42,240 Speaker 1: and pretty thanks so much for joining us. But you know, Steve, 45 00:02:42,280 --> 00:02:44,960 Speaker 1: it's interesting here. It seems like, you know, he's FED 46 00:02:45,040 --> 00:02:48,200 Speaker 1: chairman pals kind of falling or you know, calling out 47 00:02:48,280 --> 00:02:51,480 Speaker 1: that the U S consumers in in good shape. Here 48 00:02:51,520 --> 00:02:54,040 Speaker 1: it kind of suggesting to me that they're in good 49 00:02:54,120 --> 00:02:57,440 Speaker 1: enough shape that they can endure the FED being maybe 50 00:02:57,440 --> 00:02:59,440 Speaker 1: as aggressive as they need to be. Do you think 51 00:02:59,440 --> 00:03:02,120 Speaker 1: that's a message he's trying to get across. Yeah, I 52 00:03:02,160 --> 00:03:05,000 Speaker 1: do think that. You know, there's been lots of concern 53 00:03:05,040 --> 00:03:07,679 Speaker 1: about you know, what is the shape of the consumer. 54 00:03:08,160 --> 00:03:12,720 Speaker 1: He's saying, Uh, they're still pent up savings out there, 55 00:03:13,320 --> 00:03:18,520 Speaker 1: the labor department, the labor market is extremely strong. Uh. 56 00:03:18,720 --> 00:03:21,799 Speaker 1: You know that the idea is that growth will come 57 00:03:21,840 --> 00:03:25,600 Speaker 1: down from the really overheated growth of the last year 58 00:03:26,240 --> 00:03:32,920 Speaker 1: to something more sustainable. And he's sounded not entirely confident 59 00:03:33,000 --> 00:03:36,840 Speaker 1: that they can achieve a soft landing, but that's definitely 60 00:03:36,920 --> 00:03:40,080 Speaker 1: the goal. And he says there's still an avenue out there. 61 00:03:40,120 --> 00:03:43,400 Speaker 1: He said it's made more difficult, more challenging by the 62 00:03:43,400 --> 00:03:48,000 Speaker 1: events of the last several um several um months with 63 00:03:48,080 --> 00:03:52,720 Speaker 1: the war in Ukraine, but it's still very feasible, Steve. 64 00:03:52,760 --> 00:03:54,360 Speaker 1: I want to circle back to what you said earlier 65 00:03:54,400 --> 00:03:57,520 Speaker 1: about just how hawkish some of these central bankers are. 66 00:03:57,560 --> 00:03:59,640 Speaker 1: I think the question in the markets is just how 67 00:03:59,640 --> 00:04:02,440 Speaker 1: hawk can they go and how much further do they 68 00:04:02,480 --> 00:04:04,080 Speaker 1: have to go in this And I think I want 69 00:04:04,080 --> 00:04:05,680 Speaker 1: to bring my little chart of the day here, if 70 00:04:05,680 --> 00:04:09,000 Speaker 1: you don't mind, Paul Um, which was essentially the two 71 00:04:09,080 --> 00:04:10,760 Speaker 1: year yield. We're looking at the front end of the 72 00:04:10,760 --> 00:04:13,040 Speaker 1: curve that's still in negative territory when you're looking at 73 00:04:13,120 --> 00:04:17,000 Speaker 1: real rates essentially inflation becoming so strong, whereas the rest 74 00:04:17,040 --> 00:04:19,400 Speaker 1: of the yield curve is in positive territory. This is 75 00:04:19,400 --> 00:04:22,240 Speaker 1: a part of the curve Cheer Howell has actually brought 76 00:04:22,279 --> 00:04:24,520 Speaker 1: up before in his in his June press conference. But 77 00:04:24,560 --> 00:04:26,839 Speaker 1: I have to ask, is that perhaps the signal that 78 00:04:26,880 --> 00:04:31,080 Speaker 1: they're waiting for. Cheer Powell was asked specifically about the 79 00:04:31,120 --> 00:04:33,880 Speaker 1: yield curve and he said, we're not worried about the 80 00:04:33,920 --> 00:04:37,400 Speaker 1: yield curve. That's not something we're focused on. He was 81 00:04:37,560 --> 00:04:42,840 Speaker 1: very dismissive about that that is not gonna be the 82 00:04:42,880 --> 00:04:47,800 Speaker 1: thing that really moves him. It was interesting, uh, Madame 83 00:04:47,880 --> 00:04:54,760 Speaker 1: Legarde said that Christine Legarde said that monetary policy is 84 00:04:54,839 --> 00:04:58,640 Speaker 1: more about art than science, and she did not get 85 00:04:58,680 --> 00:05:02,200 Speaker 1: any pushback about that. But the point is that all 86 00:05:02,279 --> 00:05:07,880 Speaker 1: of them see monetary policy as somewhat discretionary. So we 87 00:05:07,960 --> 00:05:12,120 Speaker 1: don't really know exactly what the metric is that's going 88 00:05:12,160 --> 00:05:14,360 Speaker 1: to change things. You know, if you get a bad 89 00:05:14,400 --> 00:05:16,839 Speaker 1: I s M number, if you get a bad employment number, 90 00:05:16,920 --> 00:05:18,920 Speaker 1: is that going to change things or is it all 91 00:05:18,960 --> 00:05:23,000 Speaker 1: about inflation. We really don't have a good sense of 92 00:05:23,040 --> 00:05:27,120 Speaker 1: the exact reaction function, and in fact, from what Leguard 93 00:05:27,240 --> 00:05:30,720 Speaker 1: was saying, they may not know. There's just some art 94 00:05:30,800 --> 00:05:35,599 Speaker 1: to it. Steve, how surprised were you that FED chairman 95 00:05:35,680 --> 00:05:38,760 Speaker 1: Chal Fed chairman Pal kind of said, hey, we blew 96 00:05:38,800 --> 00:05:41,960 Speaker 1: this one. We we kind of missed the whole inflation thing, 97 00:05:42,000 --> 00:05:45,880 Speaker 1: the duration, the supply side impacts, all that kind of stuff, 98 00:05:46,320 --> 00:05:49,160 Speaker 1: And he was pretty clear there today he was clear, 99 00:05:49,480 --> 00:05:52,640 Speaker 1: although at the same time he pointed out that if 100 00:05:52,680 --> 00:05:56,560 Speaker 1: you went back a year ago to the forecast of 101 00:05:56,839 --> 00:06:00,800 Speaker 1: all of the professional economists, all of the street economists, 102 00:06:01,040 --> 00:06:03,120 Speaker 1: they all got it wrong too. So it's like he 103 00:06:03,200 --> 00:06:05,719 Speaker 1: was making the point that yes, we got it wrong, 104 00:06:05,960 --> 00:06:09,080 Speaker 1: but we weren't alone and getting it wrong, and and 105 00:06:09,120 --> 00:06:12,480 Speaker 1: he pay to get it right. That that's certainly true. 106 00:06:12,560 --> 00:06:16,680 Speaker 1: We pay him, taxpayers pay him. Uh. He made the 107 00:06:16,720 --> 00:06:22,679 Speaker 1: point that there have been several supply issues, the disruptions 108 00:06:22,760 --> 00:06:25,240 Speaker 1: that have happened, just one on top of the other. 109 00:06:25,440 --> 00:06:28,919 Speaker 1: You had the COVID disruptions, which they thought would ease 110 00:06:29,040 --> 00:06:33,880 Speaker 1: quickly obviously still haven't eased. You had, on top of that, 111 00:06:34,400 --> 00:06:38,799 Speaker 1: labor market supply disruption with people not necessarily coming back 112 00:06:38,800 --> 00:06:41,360 Speaker 1: into the labor market, and then you have the ward 113 00:06:41,560 --> 00:06:44,160 Speaker 1: and they're all kind of piling on top of each other. 114 00:06:44,200 --> 00:06:47,680 Speaker 1: And the one note of optimism that that he pointed 115 00:06:47,680 --> 00:06:50,839 Speaker 1: out was all of these things have kind of come 116 00:06:51,000 --> 00:06:55,039 Speaker 1: and disrupted supply one after the other, and threatened to 117 00:06:55,160 --> 00:06:59,600 Speaker 1: do something with the inflation expectations. He said, there's a possibility, 118 00:07:00,200 --> 00:07:03,160 Speaker 1: you know, not necessarily their base case, but a possibility 119 00:07:03,279 --> 00:07:06,640 Speaker 1: that this unwinds faster than expected, so you could have 120 00:07:06,880 --> 00:07:11,400 Speaker 1: improvement in inflation faster than they expect. Alright, Steve, good stuff. 121 00:07:11,440 --> 00:07:15,480 Speaker 1: We always appreciate getting your perspective. St. Matthews, US economy 122 00:07:15,520 --> 00:07:23,840 Speaker 1: reporter for UH Bloomberg News. He's based on in Atlanta. Alright, 123 00:07:23,880 --> 00:07:26,880 Speaker 1: so we had an historic day on Capitol Hill in 124 00:07:26,960 --> 00:07:29,440 Speaker 1: terms of the January six UH testimony. A lot of 125 00:07:29,480 --> 00:07:31,800 Speaker 1: folks I follow on Twitter, a lot of the journalists 126 00:07:31,800 --> 00:07:34,120 Speaker 1: I follow on Twitter. We're trying to put it in context. 127 00:07:34,160 --> 00:07:36,960 Speaker 1: Sing it was probably some of the most explosive testimony 128 00:07:37,040 --> 00:07:41,200 Speaker 1: ever on Capitol Hill, and including uh, the Watergate testimony 129 00:07:41,200 --> 00:07:43,680 Speaker 1: as well. So I need we need some perspective, and 130 00:07:43,720 --> 00:07:47,400 Speaker 1: for that return to Tim O'Brien, executive editor for Bloomberger Opinion. 131 00:07:47,440 --> 00:07:50,800 Speaker 1: He's also an author who wrote Trump Nation, The Art 132 00:07:50,880 --> 00:07:53,400 Speaker 1: of Being the Donald. He did that in two thousand five. 133 00:07:53,440 --> 00:07:56,880 Speaker 1: It's the dinnert definitive biography of Donald Trump. So, uh, 134 00:07:57,240 --> 00:08:00,320 Speaker 1: Mr Brian has lots of perspective. Here's a it's to 135 00:08:00,720 --> 00:08:04,360 Speaker 1: all things President Trump. Tim, what did you make of 136 00:08:04,560 --> 00:08:08,080 Speaker 1: the testimony yesterday? And then I love to get your opinion? 137 00:08:08,480 --> 00:08:12,520 Speaker 1: Does it even matter? I don't know that it will, 138 00:08:12,600 --> 00:08:15,880 Speaker 1: So I think it was important testimony. My perspective haul 139 00:08:15,960 --> 00:08:20,600 Speaker 1: is that it's important testimony from a criminal exposure standpoint, 140 00:08:20,760 --> 00:08:23,080 Speaker 1: and whether or not the justice Department is going to 141 00:08:23,200 --> 00:08:27,440 Speaker 1: prosecute Donald Trump. I'm not sure these hearings as a 142 00:08:27,480 --> 00:08:33,080 Speaker 1: whole are going to change firmly committed Democrats and firmly 143 00:08:33,120 --> 00:08:36,600 Speaker 1: committed Republicans in their view of Trump or their political 144 00:08:36,600 --> 00:08:39,440 Speaker 1: allegiance as um. I do think they will have an 145 00:08:39,440 --> 00:08:43,760 Speaker 1: impact on that middle swath of independence who are going 146 00:08:43,800 --> 00:08:47,040 Speaker 1: to swing votes in swing states, so it matters there. 147 00:08:47,600 --> 00:08:50,559 Speaker 1: I think overall, I think the purposes of these hearings 148 00:08:50,559 --> 00:08:53,920 Speaker 1: are laid down a fact pattern to convince the Justice 149 00:08:53,960 --> 00:08:58,439 Speaker 1: Department that Donald Trump and a number of his advisors 150 00:08:58,920 --> 00:09:02,240 Speaker 1: orchestrated a coup, a failed coup, and they have criminal 151 00:09:02,240 --> 00:09:05,720 Speaker 1: liability because of that. And I think yesterday's hearing really 152 00:09:05,880 --> 00:09:09,520 Speaker 1: established two crucial things. Trump knew that there was going 153 00:09:09,559 --> 00:09:12,160 Speaker 1: to be violence on January six, and he went ahead 154 00:09:12,160 --> 00:09:15,360 Speaker 1: with the rally anyway. And then once the rally began 155 00:09:15,800 --> 00:09:18,000 Speaker 1: and there was evidence that people were arriving at the 156 00:09:18,080 --> 00:09:24,280 Speaker 1: rally armed, Trump tried to uh convince the Secret Service 157 00:09:24,800 --> 00:09:28,440 Speaker 1: to allow them to continue to enter the ellipse while 158 00:09:28,480 --> 00:09:30,640 Speaker 1: they were armed. And then on the top of it, 159 00:09:30,800 --> 00:09:32,600 Speaker 1: wanted to join them at the Capital to try to 160 00:09:32,640 --> 00:09:36,400 Speaker 1: disrupt the Capital building, to disrupt the certification of the 161 00:09:36,920 --> 00:09:40,160 Speaker 1: electoral account. That's pretty damning evidence from a from a 162 00:09:40,200 --> 00:09:44,439 Speaker 1: criminal ability standpoint. Can you explain to her audience is 163 00:09:44,480 --> 00:09:47,760 Speaker 1: a little bit about the significance of it going back 164 00:09:47,800 --> 00:09:51,079 Speaker 1: into an emergency meeting. This is a witness, Cassidy Hutchinson, 165 00:09:51,200 --> 00:09:54,360 Speaker 1: who had already given a lot of testimony, she already 166 00:09:54,360 --> 00:09:59,520 Speaker 1: been deposed. Why now in terms of these new revelations, 167 00:10:00,400 --> 00:10:02,880 Speaker 1: That's such a good question, Critty. I. I don't you 168 00:10:02,880 --> 00:10:07,000 Speaker 1: know they had interviewed Cassie Hutchinson previously, They had a 169 00:10:07,040 --> 00:10:09,880 Speaker 1: lot of videotape of her testimony. They have shown snippets 170 00:10:09,920 --> 00:10:15,000 Speaker 1: of that in the previous four hearings. Um. I you know, 171 00:10:15,040 --> 00:10:19,400 Speaker 1: it's been reported that there were security concerns around her 172 00:10:19,480 --> 00:10:22,560 Speaker 1: safety or possibly the hearing if it was delayed any longer, 173 00:10:22,840 --> 00:10:24,600 Speaker 1: and that's why they decided to go ahead and have 174 00:10:24,679 --> 00:10:30,040 Speaker 1: it now. Um. She switched attorneys. Her earlier attorney I 175 00:10:30,080 --> 00:10:33,400 Speaker 1: think was was advising her to not cooperate with the committee. 176 00:10:33,640 --> 00:10:37,240 Speaker 1: She's clearly someone who believes she saw things that troubled 177 00:10:37,240 --> 00:10:40,760 Speaker 1: her that needed to be made public and went forward 178 00:10:41,000 --> 00:10:44,000 Speaker 1: with it. I think not only you know, sort of 179 00:10:44,080 --> 00:10:46,520 Speaker 1: under the threat to her own reputation, but possibly to 180 00:10:46,520 --> 00:10:48,560 Speaker 1: her personal safety. I think that's why they had an 181 00:10:48,600 --> 00:10:52,320 Speaker 1: emergency hearing. But I don't know for sure tempted extent 182 00:10:52,440 --> 00:10:58,120 Speaker 1: that former President trump criminal liability may have increased yesterday 183 00:10:58,200 --> 00:11:01,280 Speaker 1: or as a result of yesterday's testimony, do you believe 184 00:11:01,280 --> 00:11:05,040 Speaker 1: the Department of Justice, you know, has a political will 185 00:11:05,120 --> 00:11:07,520 Speaker 1: to pursue anything at this point? I'm just not sure 186 00:11:07,559 --> 00:11:12,160 Speaker 1: what the you know, environment is like in Washington these days. Well, 187 00:11:12,200 --> 00:11:15,080 Speaker 1: I think it was it has been hisstory Paul as 188 00:11:15,080 --> 00:11:17,559 Speaker 1: to whether or not the d o J would go 189 00:11:17,640 --> 00:11:20,559 Speaker 1: up the food chain. They you know, they've they've esecuted 190 00:11:20,920 --> 00:11:24,560 Speaker 1: hundreds of protesters rioters who were at at the event 191 00:11:25,080 --> 00:11:26,720 Speaker 1: Um and there was a question where would they go 192 00:11:26,760 --> 00:11:30,720 Speaker 1: ahead and start to prosecute people who orchestrated that event? 193 00:11:31,200 --> 00:11:33,600 Speaker 1: And and now we see I think, you know, they're 194 00:11:33,640 --> 00:11:37,520 Speaker 1: they're clearly targeting John Eastman, for example, the advisor trup's 195 00:11:37,559 --> 00:11:40,240 Speaker 1: lawyer who encouraged him to tell my Pense not to 196 00:11:40,400 --> 00:11:42,959 Speaker 1: decide the election. They appear to be moving up the 197 00:11:43,000 --> 00:11:47,240 Speaker 1: food chain. But I think um Garland, I think doesn't 198 00:11:47,240 --> 00:11:49,360 Speaker 1: wanted to be a politicized investigation. I think he's going 199 00:11:49,440 --> 00:11:52,200 Speaker 1: to try to present this on the merits, and I 200 00:11:52,200 --> 00:11:55,040 Speaker 1: think he's being deliberate about that if if, in fact, 201 00:11:55,559 --> 00:11:57,679 Speaker 1: they keep going higher and higher on the food chain, 202 00:11:57,679 --> 00:11:59,280 Speaker 1: and it's not clear to me yet whether or not 203 00:11:59,320 --> 00:12:05,560 Speaker 1: they are. Can we talk about potential campaign for President Trump? 204 00:12:05,559 --> 00:12:09,040 Speaker 1: What are the implications here? Just walk us through it 205 00:12:09,080 --> 00:12:11,040 Speaker 1: for someone someone like me who's not familiar with the 206 00:12:11,080 --> 00:12:14,280 Speaker 1: politics of this all well critty, you know, famously, when 207 00:12:14,280 --> 00:12:17,120 Speaker 1: Trump was running in two s t he said I 208 00:12:17,120 --> 00:12:19,320 Speaker 1: could shoot somebody on Fifth Avenue and nobody would care. 209 00:12:19,880 --> 00:12:22,800 Speaker 1: And I think he's correct about that. There's I think 210 00:12:22,840 --> 00:12:27,720 Speaker 1: there's a you know, of the of the Republican base 211 00:12:28,040 --> 00:12:30,920 Speaker 1: that is firmly Trump and very maga and they don't 212 00:12:30,960 --> 00:12:34,160 Speaker 1: care what he does. Um but we've seen, you know, 213 00:12:34,280 --> 00:12:38,400 Speaker 1: in races this year in Georgia, for example, his leverage 214 00:12:38,400 --> 00:12:43,680 Speaker 1: isn't absolute, and more moderate Republican candidates have successfully run 215 00:12:44,280 --> 00:12:48,319 Speaker 1: and one and have have beaten Trump backed candidates and 216 00:12:48,400 --> 00:12:51,760 Speaker 1: other venues Trump backed candidates have one. I don't. I 217 00:12:51,800 --> 00:12:54,880 Speaker 1: think I think at the end of the day, in 218 00:12:55,040 --> 00:12:58,320 Speaker 1: terms of one, it will depend on whether or not 219 00:12:58,360 --> 00:13:01,040 Speaker 1: Trump decides to run. And even he doesn't run, I 220 00:13:01,080 --> 00:13:04,480 Speaker 1: think there are Trump like candidates waiting in the wings 221 00:13:04,880 --> 00:13:06,840 Speaker 1: to assume his mantle. I would point to people like 222 00:13:06,840 --> 00:13:11,040 Speaker 1: Granda Sciantist, the governor of Florida, or Josh Holly, Senator 223 00:13:11,040 --> 00:13:13,680 Speaker 1: from Missouri. So I don't think Trump is um is 224 00:13:13,679 --> 00:13:16,280 Speaker 1: going to go away as a political force. It just 225 00:13:16,360 --> 00:13:19,760 Speaker 1: may not be in the in the person of Donald Trump. So, Tim, 226 00:13:19,760 --> 00:13:22,920 Speaker 1: you know for President Trump as well or better than 227 00:13:22,960 --> 00:13:27,079 Speaker 1: any journalist out there. Resulting from again your work with 228 00:13:27,160 --> 00:13:30,080 Speaker 1: the former president on your book, what do you think 229 00:13:30,880 --> 00:13:33,520 Speaker 1: he really wants to do at this point of his life? 230 00:13:33,720 --> 00:13:35,960 Speaker 1: Do you think he wants to get back into the 231 00:13:36,000 --> 00:13:39,160 Speaker 1: cauldron of politics or his life at Mara Lago pretty 232 00:13:39,240 --> 00:13:42,240 Speaker 1: darn good at the moment. You know, he loves the golf, 233 00:13:42,880 --> 00:13:47,400 Speaker 1: he loves entertain himself. He's never particularly serious about policy 234 00:13:47,440 --> 00:13:52,720 Speaker 1: issues or really focusing on programmatic things, and the presidency 235 00:13:52,800 --> 00:13:55,640 Speaker 1: requires I think he was surprised as anyone that he won. 236 00:13:56,559 --> 00:13:58,600 Speaker 1: I don't think he's got a big appetite to get 237 00:13:58,600 --> 00:14:01,320 Speaker 1: back into it again. On the other hand, one of 238 00:14:01,320 --> 00:14:03,280 Speaker 1: the biggest things that drives him as being at the 239 00:14:03,320 --> 00:14:06,280 Speaker 1: center of the center of attention and and in the 240 00:14:06,360 --> 00:14:10,199 Speaker 1: media spotlight. And there's no spotlight like the presidency. I 241 00:14:10,200 --> 00:14:12,840 Speaker 1: think it's gonna be hard for him to stay away 242 00:14:12,840 --> 00:14:16,680 Speaker 1: from that because he's almost addicted to attention. Very very interesting. 243 00:14:16,720 --> 00:14:19,320 Speaker 1: All right, Tim, thanks so much, as always forgive us 244 00:14:19,360 --> 00:14:21,040 Speaker 1: a little bit of your time. Tom A Brian, executive 245 00:14:21,120 --> 00:14:23,760 Speaker 1: editor for Bloomberg Opinion. He's got a column out today 246 00:14:23,880 --> 00:14:26,200 Speaker 1: just kind of some of his takeaways from what he 247 00:14:26,560 --> 00:14:30,360 Speaker 1: observed yesterday from the testimony on Capitol Hill. And I 248 00:14:30,360 --> 00:14:33,320 Speaker 1: think the context of his book again Trump Nation, the 249 00:14:33,440 --> 00:14:35,880 Speaker 1: art of being the Donald uh and then being in 250 00:14:35,920 --> 00:14:41,000 Speaker 1: a very lengthy legal situation as a resulting from that book, uh, 251 00:14:41,240 --> 00:14:43,920 Speaker 1: with the former president, gives him some perspective there, so 252 00:14:44,400 --> 00:14:51,240 Speaker 1: very exying to get his take. Interest rates they are rising, uh, 253 00:14:51,280 --> 00:14:53,600 Speaker 1: and that is tough for a lot of business. Is 254 00:14:54,000 --> 00:14:57,920 Speaker 1: chief among them the real estate business. Lisa n she's 255 00:14:57,920 --> 00:15:01,120 Speaker 1: a partner and national tax leader for real estate practice 256 00:15:01,160 --> 00:15:04,360 Speaker 1: at Eisner Advisory Group, joins us here. Lisa, I think 257 00:15:04,400 --> 00:15:07,920 Speaker 1: about the commercial real estate business, and I think about 258 00:15:07,960 --> 00:15:10,800 Speaker 1: cap rates and you know, barrowing rates and all that 259 00:15:10,880 --> 00:15:13,920 Speaker 1: kind of stuff. But just give us a sense here, 260 00:15:13,960 --> 00:15:18,480 Speaker 1: after you know, fifteen years plus of really low rates, 261 00:15:18,520 --> 00:15:20,560 Speaker 1: we're an a rising interest rate in environment, what does 262 00:15:20,600 --> 00:15:22,680 Speaker 1: that mean, what are you seeing out there in the 263 00:15:22,720 --> 00:15:26,720 Speaker 1: real estate space? Yeah, hike, good morning, thank you. So 264 00:15:27,040 --> 00:15:29,520 Speaker 1: it's going to raise the cost of capital, and so 265 00:15:29,640 --> 00:15:32,560 Speaker 1: the capital that was really before going to the equity 266 00:15:32,640 --> 00:15:34,760 Speaker 1: the excess capital is now going to end up going 267 00:15:34,760 --> 00:15:37,360 Speaker 1: to the debt providers, and so those spreads are going 268 00:15:37,440 --> 00:15:40,160 Speaker 1: to be really hard to find. UM, and the investments 269 00:15:40,200 --> 00:15:42,800 Speaker 1: going forward, UM, if you're an investor, is going to 270 00:15:42,840 --> 00:15:44,360 Speaker 1: be a little different when you're looking at it. And 271 00:15:44,360 --> 00:15:46,680 Speaker 1: if you're a home buyer, UM, you're also going to 272 00:15:46,760 --> 00:15:49,680 Speaker 1: be looking at what you're at the future as well. 273 00:15:49,720 --> 00:15:52,000 Speaker 1: And so what you really need to look at is 274 00:15:52,320 --> 00:15:54,600 Speaker 1: the market that you're looking to be in, whether it's 275 00:15:54,640 --> 00:15:57,200 Speaker 1: you're an investor or a home buyer, and what's going 276 00:15:57,240 --> 00:15:59,720 Speaker 1: to fare well as where people are starting to move. 277 00:15:59,720 --> 00:16:01,840 Speaker 1: And it's all about growth and where do we predict 278 00:16:01,880 --> 00:16:06,080 Speaker 1: growth to go in spite of rising interest rates. So 279 00:16:06,120 --> 00:16:08,560 Speaker 1: I have to ask, though about this kind of demand 280 00:16:08,640 --> 00:16:11,400 Speaker 1: and supply issue that you have, because it kind of 281 00:16:11,400 --> 00:16:12,760 Speaker 1: seems like if you look at some of these other 282 00:16:12,800 --> 00:16:18,040 Speaker 1: inflation indicators, shipping rates, food prices, even inflation expectations, they're 283 00:16:18,040 --> 00:16:20,520 Speaker 1: coming down a little bit. And I think for a 284 00:16:20,520 --> 00:16:23,640 Speaker 1: lot of people. The assumption here was that perhaps housing 285 00:16:23,720 --> 00:16:26,760 Speaker 1: prices would follow, but the shortest just seems so dire 286 00:16:27,320 --> 00:16:30,040 Speaker 1: that even if you do have that reprieve for example, 287 00:16:30,080 --> 00:16:32,760 Speaker 1: and all these other kind of inflation drivers, the housing 288 00:16:32,800 --> 00:16:37,280 Speaker 1: market maybe exempt from that. Would you agree, I would 289 00:16:37,280 --> 00:16:39,480 Speaker 1: agree that there's parts of it that's that are absolutely 290 00:16:39,520 --> 00:16:41,720 Speaker 1: going to be exampt from that. And that's because in 291 00:16:41,880 --> 00:16:46,000 Speaker 1: oh seven, that single family uh those homes because of 292 00:16:46,040 --> 00:16:48,880 Speaker 1: what happened in the economy, then they stopped building as 293 00:16:48,880 --> 00:16:52,000 Speaker 1: many homes that that record pace. So for a single 294 00:16:52,080 --> 00:16:55,400 Speaker 1: family home there were there's always been less inventory on 295 00:16:55,440 --> 00:16:58,560 Speaker 1: the market for since two thousand and seven, and so 296 00:16:58,720 --> 00:17:03,600 Speaker 1: for that millennial now approaching into HomeBuyer, there's less product 297 00:17:03,640 --> 00:17:06,280 Speaker 1: for them, and so we've actually seen a rise in 298 00:17:06,359 --> 00:17:11,280 Speaker 1: single family rental market across the Mountain States and across 299 00:17:11,280 --> 00:17:14,119 Speaker 1: the Sun Belt to get those millennials into the homes 300 00:17:14,320 --> 00:17:16,760 Speaker 1: and feeling that they can't really purchase them there. They 301 00:17:17,080 --> 00:17:21,240 Speaker 1: can't afford those homes because with less inventory becomes higher 302 00:17:21,240 --> 00:17:24,359 Speaker 1: housing prices. And so we're going to continue to feel 303 00:17:24,400 --> 00:17:26,480 Speaker 1: that in the multi family market over the next few 304 00:17:26,560 --> 00:17:30,160 Speaker 1: years because of the lack of inventory in both single 305 00:17:30,160 --> 00:17:32,760 Speaker 1: family homes and in the multi family space and more 306 00:17:32,760 --> 00:17:38,679 Speaker 1: importantly affordable housing. As on the commercial real estate side. 307 00:17:38,880 --> 00:17:41,520 Speaker 1: You know, I work in midtown Manhattan. I see a 308 00:17:41,560 --> 00:17:44,800 Speaker 1: lot of real estate, commercial rule state on the ground 309 00:17:44,800 --> 00:17:47,880 Speaker 1: floor of these office hours empty. I live in New Jersey. 310 00:17:48,040 --> 00:17:51,320 Speaker 1: Every office park I go buy has got a first 311 00:17:51,359 --> 00:17:54,040 Speaker 1: you know lease sign up front with the jillions of 312 00:17:54,080 --> 00:17:56,639 Speaker 1: square feet. And I'm guessing that's because people are nobody's 313 00:17:56,640 --> 00:17:59,399 Speaker 1: going to the office anymore. How do you think about 314 00:18:00,119 --> 00:18:02,880 Speaker 1: just the office real estate space and the commercial real 315 00:18:02,960 --> 00:18:06,400 Speaker 1: estate space. It just feels like it's not just interest rates, 316 00:18:06,440 --> 00:18:10,360 Speaker 1: but this pandemic has changed the way we work and live. Yeah, 317 00:18:10,440 --> 00:18:12,840 Speaker 1: it's funny. There's a survey out there saying that people 318 00:18:12,960 --> 00:18:15,520 Speaker 1: are doing are saying one thing but doing another where 319 00:18:15,520 --> 00:18:17,800 Speaker 1: they're they're having a savings, they feel like their jobs 320 00:18:17,800 --> 00:18:20,440 Speaker 1: are sure, they want to go shopping again, they want 321 00:18:20,440 --> 00:18:22,520 Speaker 1: to experience ication, but they still don't want to go 322 00:18:22,560 --> 00:18:24,920 Speaker 1: back into the office. So they're willing to do everything 323 00:18:25,280 --> 00:18:27,840 Speaker 1: but that and the impact is going to take us 324 00:18:27,880 --> 00:18:30,840 Speaker 1: a lot of years to really understand how that big 325 00:18:30,840 --> 00:18:34,080 Speaker 1: picture is going to play on the commercial office space. Um, 326 00:18:34,119 --> 00:18:36,040 Speaker 1: you know, people are gonna be looking at the length 327 00:18:36,040 --> 00:18:38,480 Speaker 1: of the commute, what your job tight it type is, 328 00:18:38,920 --> 00:18:41,800 Speaker 1: and they're really gonna be puzzling together how for a 329 00:18:41,800 --> 00:18:45,560 Speaker 1: long term commercial business or commercial real estate owner, what's 330 00:18:45,560 --> 00:18:47,639 Speaker 1: going to happen with that space, not just on the 331 00:18:47,640 --> 00:18:49,399 Speaker 1: ground for retail, but all the way up on on 332 00:18:49,440 --> 00:18:53,479 Speaker 1: the vertical. That the urban properties are probably gonna get 333 00:18:53,560 --> 00:18:57,359 Speaker 1: hit harder than the suburban properties um. And remember the 334 00:18:57,400 --> 00:19:00,920 Speaker 1: suburban properties have a little bit lower qualities and those 335 00:19:00,960 --> 00:19:03,359 Speaker 1: rents have been pretty stagnant. Those are gonna start to 336 00:19:03,400 --> 00:19:04,720 Speaker 1: go up a little bit. And then we're going to 337 00:19:04,800 --> 00:19:07,760 Speaker 1: see in the urban space figuring out how to reconfigure 338 00:19:07,760 --> 00:19:10,000 Speaker 1: that space and what to do with it. And that's 339 00:19:10,040 --> 00:19:12,520 Speaker 1: really the big question is you know, you have to 340 00:19:12,560 --> 00:19:14,720 Speaker 1: have great light, you need to have flowing air and 341 00:19:14,840 --> 00:19:18,560 Speaker 1: open floor parents those amenities to attract that tenant um 342 00:19:18,800 --> 00:19:21,080 Speaker 1: But it's really going to be about where is that 343 00:19:21,160 --> 00:19:24,960 Speaker 1: commercial office space, what's that market look like, what property 344 00:19:25,000 --> 00:19:29,080 Speaker 1: type are you in, and how attractive that is to 345 00:19:29,080 --> 00:19:32,040 Speaker 1: to the tenants in the area. So she's going to 346 00:19:32,080 --> 00:19:34,680 Speaker 1: have a factor how sustainable is that is that building 347 00:19:34,680 --> 00:19:36,840 Speaker 1: going forward? So like in New York City here like 348 00:19:36,920 --> 00:19:39,439 Speaker 1: Hutson Yards for example, which is, you know, like the 349 00:19:39,480 --> 00:19:42,440 Speaker 1: whole West side of Manhattan got redeveloped over the last 350 00:19:42,480 --> 00:19:45,520 Speaker 1: decade or so and they've just got some incredible office 351 00:19:45,520 --> 00:19:49,840 Speaker 1: buildings there. I understand that's doing really well despite what 352 00:19:49,880 --> 00:19:51,879 Speaker 1: we're seeing in the overall markets. Is that just like 353 00:19:51,960 --> 00:19:54,760 Speaker 1: an example of boy, if you build really good stuff, 354 00:19:54,800 --> 00:19:57,880 Speaker 1: people will still rent it. And again it's the community 355 00:19:57,880 --> 00:20:00,480 Speaker 1: in the area around it. It's it's it's all open air, 356 00:20:00,640 --> 00:20:03,600 Speaker 1: there's open floor plan, there's tons of amenities in that 357 00:20:03,720 --> 00:20:06,800 Speaker 1: area that are attracting people to that location. And so 358 00:20:06,840 --> 00:20:09,879 Speaker 1: that's just testament to actually not just building, you know, 359 00:20:10,119 --> 00:20:12,960 Speaker 1: renovating your building, but understanding the community where you're building 360 00:20:13,040 --> 00:20:16,280 Speaker 1: is and what that experience now not just of your 361 00:20:16,560 --> 00:20:18,760 Speaker 1: not just of the residential tenant, but of the commercial 362 00:20:18,760 --> 00:20:22,280 Speaker 1: tenant within that development. They want an experience when they're 363 00:20:22,320 --> 00:20:24,560 Speaker 1: there as well. Um, and so that's really what the 364 00:20:24,600 --> 00:20:26,919 Speaker 1: trends are going to be going forward, is that the 365 00:20:27,000 --> 00:20:30,160 Speaker 1: experience of a commercial tenant as well as a residential 366 00:20:30,160 --> 00:20:35,600 Speaker 1: tenant within within that space. We have about thirty seconds 367 00:20:35,640 --> 00:20:39,080 Speaker 1: here very quickly. Warehousing is that in vogue at the 368 00:20:39,119 --> 00:20:43,720 Speaker 1: moment we're housing is definitely in vogue. It's still writing 369 00:20:43,800 --> 00:20:47,760 Speaker 1: high with the continued demand for space and storage. It's 370 00:20:47,760 --> 00:20:51,120 Speaker 1: starting to slow in a couple of markets actually, especially 371 00:20:51,160 --> 00:20:55,120 Speaker 1: those with some extensive development. So investors are really watching 372 00:20:55,160 --> 00:20:58,960 Speaker 1: that market because as because in that space the cap 373 00:20:59,000 --> 00:21:01,520 Speaker 1: rates are really really oh, you're gonna need a very, 374 00:21:01,640 --> 00:21:04,680 Speaker 1: very high rent to make those deal with work. So 375 00:21:04,720 --> 00:21:07,680 Speaker 1: there's still demand for like last mild distribution and self 376 00:21:07,720 --> 00:21:10,920 Speaker 1: storage and like the tech logistics. But you still really 377 00:21:11,000 --> 00:21:13,520 Speaker 1: need to look again at the space to see, you know, 378 00:21:13,680 --> 00:21:16,880 Speaker 1: what is in that warehousing space and what they're looking for. Lisa, great, 379 00:21:16,880 --> 00:21:19,040 Speaker 1: great stuff. Thanks so much for joining us. Really appreciate 380 00:21:19,040 --> 00:21:21,440 Speaker 1: getting your thoughts are at Leasa Knee Partner, National tax 381 00:21:21,520 --> 00:21:24,920 Speaker 1: leader for real estate practice at Eisner Advisory Group. Interest 382 00:21:25,000 --> 00:21:27,399 Speaker 1: rates are going up. That's tough for the real state 383 00:21:27,640 --> 00:21:33,240 Speaker 1: space where our opportunities. I don't know where you go 384 00:21:33,320 --> 00:21:36,200 Speaker 1: this year. I'm sitting here approaching July one. We've got 385 00:21:36,800 --> 00:21:40,240 Speaker 1: equity indices SMP down almost it's called a bear market 386 00:21:40,280 --> 00:21:42,480 Speaker 1: or thereabout. So we've got the just the most brutal 387 00:21:42,520 --> 00:21:45,399 Speaker 1: start ever to the year in the fixed income space. 388 00:21:45,400 --> 00:21:47,320 Speaker 1: We just talked to our friends at tc W about that. 389 00:21:48,080 --> 00:21:49,680 Speaker 1: I don't know where you go here? So I'm gonna 390 00:21:49,760 --> 00:21:53,200 Speaker 1: turn to professional Tracy McMillian, head of Global asset Allocation 391 00:21:53,240 --> 00:21:59,120 Speaker 1: Strategy at Wells Fargo. Tracy, where do you allocate assets 392 00:21:59,160 --> 00:22:01,119 Speaker 1: on a global base? Is? Given the start of the 393 00:22:01,160 --> 00:22:02,919 Speaker 1: year we've had so far, given maybe some of the 394 00:22:02,920 --> 00:22:07,560 Speaker 1: expectations for the rest of the year. Yeah, Yeah, it's 395 00:22:07,560 --> 00:22:11,320 Speaker 1: been a really tough start to this year for investors. UM. 396 00:22:11,359 --> 00:22:13,879 Speaker 1: As you mentioned, you know, equity markets are off to 397 00:22:14,000 --> 00:22:19,280 Speaker 1: a really terrible start. Fixed income markets are are also 398 00:22:19,359 --> 00:22:24,800 Speaker 1: down significantly, down double digits, which is highly unusual for 399 00:22:24,920 --> 00:22:30,159 Speaker 1: fixed income markets. So what we are telling investors and 400 00:22:30,640 --> 00:22:33,800 Speaker 1: in the face of you know this this difficult start, 401 00:22:34,200 --> 00:22:39,200 Speaker 1: is that, UM, first of all, that patients is important 402 00:22:39,320 --> 00:22:45,359 Speaker 1: and diversification is also still important. UM, but that uh, 403 00:22:45,400 --> 00:22:50,240 Speaker 1: this is a period where markets are likely to remain fragile. 404 00:22:50,440 --> 00:22:56,399 Speaker 1: So UM, long term investors should use diversification, use rebalancing 405 00:22:56,520 --> 00:23:00,960 Speaker 1: to manage risk. UM, they should go up in quality. 406 00:23:01,080 --> 00:23:05,240 Speaker 1: We believe in both fixed income and in equities. So 407 00:23:05,320 --> 00:23:09,520 Speaker 1: that for US means moving away from things like UH 408 00:23:09,960 --> 00:23:13,200 Speaker 1: small caps and into large and mid caps, and the 409 00:23:13,359 --> 00:23:19,080 Speaker 1: US moving towards US assets over international assets, and moving 410 00:23:19,200 --> 00:23:23,440 Speaker 1: up in quality and fixed income to to away from 411 00:23:23,760 --> 00:23:29,080 Speaker 1: things like high yield towards investment grade assets in fixed income. 412 00:23:29,480 --> 00:23:34,760 Speaker 1: Commodities is another area where diversification has really helped investors 413 00:23:34,760 --> 00:23:38,960 Speaker 1: this year. Having an allocation to commodities and having an 414 00:23:39,000 --> 00:23:43,879 Speaker 1: allocation to alternative investments like hedge funds can be helpful 415 00:23:44,040 --> 00:23:49,080 Speaker 1: for those investors, um for whom that's appropriate. Tracy, I'm 416 00:23:49,080 --> 00:23:51,760 Speaker 1: so glad you mentioned the commodities picture, because it feels 417 00:23:51,760 --> 00:23:55,240 Speaker 1: like that is the go to macro headge at the moment. 418 00:23:55,280 --> 00:23:57,359 Speaker 1: But I have to ask if your commodity trader you 419 00:23:57,440 --> 00:24:00,399 Speaker 1: know that those are some extremely volatile more kets, and 420 00:24:00,400 --> 00:24:02,719 Speaker 1: participation has actually been coming down when you look at 421 00:24:02,760 --> 00:24:05,240 Speaker 1: open interest because some people just don't want to deal 422 00:24:05,280 --> 00:24:07,760 Speaker 1: with that kind of volatility. You can lose very big. 423 00:24:07,800 --> 00:24:09,760 Speaker 1: So I have to ask, just because that's a trade 424 00:24:09,800 --> 00:24:12,640 Speaker 1: that's worked in the last two years, let's say, from 425 00:24:13,040 --> 00:24:17,320 Speaker 1: April onwards, does that necessarily mean it's a trade that's 426 00:24:17,359 --> 00:24:23,120 Speaker 1: going to work when you're still talking about recession. Yeah, 427 00:24:23,160 --> 00:24:27,040 Speaker 1: that's that's a great question creating, because, um, when you 428 00:24:27,240 --> 00:24:31,600 Speaker 1: enter a recession, essentially what's happening, as all of our 429 00:24:31,640 --> 00:24:35,439 Speaker 1: listeners know, is that we're seeing a contraction and growth. 430 00:24:35,480 --> 00:24:38,159 Speaker 1: And so you if you're seeing a contraction and growth, 431 00:24:38,160 --> 00:24:42,639 Speaker 1: then you would expect um less demand for commodities, and 432 00:24:42,760 --> 00:24:45,520 Speaker 1: so our commodities price is going to remain high and 433 00:24:45,600 --> 00:24:49,280 Speaker 1: continue to move higher. We believe they will. And the 434 00:24:49,359 --> 00:24:53,080 Speaker 1: reason why we think they will even though we are 435 00:24:53,280 --> 00:24:56,359 Speaker 1: entering this period where we we do foresee a recession 436 00:24:56,920 --> 00:25:00,560 Speaker 1: is because for years we have really anx elected the 437 00:25:00,640 --> 00:25:06,440 Speaker 1: infrastructure for energy, because there are geopolitical events um that 438 00:25:06,760 --> 00:25:10,760 Speaker 1: we think will probably persist through the winter and continue 439 00:25:10,800 --> 00:25:15,080 Speaker 1: to limit supply. And but I guess that, you know, 440 00:25:15,200 --> 00:25:17,720 Speaker 1: kind of the the big reason is because we think 441 00:25:17,760 --> 00:25:23,000 Speaker 1: we are also in a commodities bull supercycle. So we 442 00:25:23,080 --> 00:25:26,600 Speaker 1: think that this is a multi year cycle where commodities 443 00:25:26,640 --> 00:25:30,520 Speaker 1: will continue to move higher, um, you know, not a 444 00:25:30,560 --> 00:25:36,920 Speaker 1: straight line up, but will continue to trend upward. So, Tracy, 445 00:25:37,000 --> 00:25:39,439 Speaker 1: I mean, we're gonna have earning season kickoff in a 446 00:25:39,480 --> 00:25:42,000 Speaker 1: couple of weeks here led by the big banks here, 447 00:25:42,040 --> 00:25:45,120 Speaker 1: which will call into question, you know, kind of obviously 448 00:25:45,119 --> 00:25:48,560 Speaker 1: inflation impacts on margins and profitability. What are you looking 449 00:25:48,600 --> 00:25:51,680 Speaker 1: for for this earning season here? What are you mostly 450 00:25:51,720 --> 00:25:55,639 Speaker 1: tuned to? Yeah, what we're really looking for here is 451 00:25:55,800 --> 00:26:00,960 Speaker 1: forward guidance on input prices, UM, employment cause us UM 452 00:26:01,040 --> 00:26:06,600 Speaker 1: and how supply chains are remedying themselves. Uh. You know, 453 00:26:06,640 --> 00:26:10,119 Speaker 1: so we're gonna be looking for that guidance from the 454 00:26:10,240 --> 00:26:14,680 Speaker 1: management teams, and we do expect to see UM some 455 00:26:14,760 --> 00:26:20,000 Speaker 1: modest margin compression this time UM. And we also think 456 00:26:20,160 --> 00:26:24,960 Speaker 1: that earnings expectations from the bottoms up analysts are probably 457 00:26:25,040 --> 00:26:28,000 Speaker 1: too high and that they're going to be following this 458 00:26:28,160 --> 00:26:33,040 Speaker 1: forward guidance from management, so they'll follow management and actually 459 00:26:33,160 --> 00:26:36,639 Speaker 1: that could be the next too to drop as we 460 00:26:36,760 --> 00:26:40,760 Speaker 1: go through this earning season. UM analysts are probably going 461 00:26:40,800 --> 00:26:43,080 Speaker 1: to have to revise down their Q three and Q 462 00:26:43,359 --> 00:26:48,080 Speaker 1: four earnings expectations, and you know that could put and 463 00:26:48,640 --> 00:26:51,680 Speaker 1: into this rally that we've seen over the past few days. 464 00:26:52,640 --> 00:26:54,720 Speaker 1: But Tracy, to what extent is that getting priced in 465 00:26:54,840 --> 00:26:56,800 Speaker 1: right now? Because it feels like for the last year 466 00:26:56,880 --> 00:27:00,800 Speaker 1: we've been hearing these warnings about macrick and risk, about 467 00:27:00,800 --> 00:27:03,160 Speaker 1: recessionary risk. I mean, big Tech, for example, has been 468 00:27:03,160 --> 00:27:06,359 Speaker 1: warning about a slowdown. I'd argue since the first quarter 469 00:27:06,359 --> 00:27:12,200 Speaker 1: of to what extent has the market already digested those changes? 470 00:27:13,520 --> 00:27:16,240 Speaker 1: So a lot of it is in the markets. We 471 00:27:16,320 --> 00:27:20,560 Speaker 1: think a lot of the bad news has already been absorbed. 472 00:27:21,040 --> 00:27:26,280 Speaker 1: But what we think markets might be missing here is that, uh, 473 00:27:26,880 --> 00:27:30,720 Speaker 1: that they may be anticipating that the FED will not 474 00:27:31,359 --> 00:27:35,800 Speaker 1: stick to its resolve um even you know, even in 475 00:27:35,840 --> 00:27:41,439 Speaker 1: the face of a recession, a recessionary period. So we 476 00:27:41,600 --> 00:27:46,040 Speaker 1: think that the FED is going to continue to fight inflation. UM. 477 00:27:46,119 --> 00:27:50,040 Speaker 1: We don't think they will necessarily pause rate hikes even 478 00:27:50,040 --> 00:27:54,239 Speaker 1: if we do ter a period of negative growth. And 479 00:27:54,280 --> 00:27:58,760 Speaker 1: we think that markets are probably missing that aspect. They 480 00:27:58,800 --> 00:28:01,399 Speaker 1: may be to some extent still relying on that FED 481 00:28:01,560 --> 00:28:05,440 Speaker 1: put and we we just think that investors do need 482 00:28:05,480 --> 00:28:08,320 Speaker 1: to be cautious here. We could see another leg down. 483 00:28:09,720 --> 00:28:11,840 Speaker 1: Why can't I just go out and buy these big 484 00:28:11,880 --> 00:28:15,160 Speaker 1: tech stocks? Apple, Amazon, Microsoft? You know, I hear from 485 00:28:15,160 --> 00:28:17,040 Speaker 1: the kids that this intraweb thing is going to be 486 00:28:17,080 --> 00:28:19,600 Speaker 1: a big thing going forward. Can I just do that? 487 00:28:19,600 --> 00:28:21,240 Speaker 1: That's work so well for me over the last fifteen 488 00:28:21,320 --> 00:28:25,600 Speaker 1: or twenty years. It has worked really well for fifteen 489 00:28:25,640 --> 00:28:29,520 Speaker 1: to twenty years UM, And that's probably why we got 490 00:28:29,560 --> 00:28:32,200 Speaker 1: to the point where a lot of those companies were 491 00:28:32,240 --> 00:28:36,399 Speaker 1: so richly valued. And they were richly valued, remember in 492 00:28:36,720 --> 00:28:40,920 Speaker 1: an environment where UM interest rates were very low, so 493 00:28:41,080 --> 00:28:46,400 Speaker 1: we could discount that growth out on into the future 494 00:28:46,680 --> 00:28:50,600 Speaker 1: at very very low discount rates, which made higher prices, 495 00:28:50,680 --> 00:28:56,840 Speaker 1: higher valuations plausible. If we are headed into a period here, 496 00:28:57,280 --> 00:28:59,520 Speaker 1: which we believe we are, we're going to see higher 497 00:28:59,520 --> 00:29:02,680 Speaker 1: in place and higher rates, then we're we'd have to 498 00:29:02,720 --> 00:29:06,880 Speaker 1: reset that discount rate. UM. We do like information technology, 499 00:29:06,880 --> 00:29:10,600 Speaker 1: and we do think that UM here at these levels, 500 00:29:10,640 --> 00:29:14,160 Speaker 1: there are some buying opportunities, but you know, we would 501 00:29:14,200 --> 00:29:16,880 Speaker 1: not expect the kind of returns that we've seen if 502 00:29:16,880 --> 00:29:19,880 Speaker 1: in the last decade. Al Right, great, great stuff. As always, 503 00:29:19,880 --> 00:29:23,720 Speaker 1: Tracy and Chamillion, head of Global Asset Allocation Strategy at 504 00:29:23,800 --> 00:29:28,160 Speaker 1: Wells part Thanks for listening to the Bloomberg Markets podcast. 505 00:29:28,560 --> 00:29:31,760 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts 506 00:29:31,880 --> 00:29:35,800 Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm 507 00:29:35,840 --> 00:29:39,880 Speaker 1: on Twitter at Matt Miller three. Put on false Sweeney 508 00:29:39,880 --> 00:29:42,520 Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast. You 509 00:29:42,520 --> 00:29:44,920 Speaker 1: can always catch us worldwide at Bloomberg Radio.