WEBVTT - Bloomberg Surveillance TV: December 4, 2024

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<v Speaker 1>Boo, Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amrie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>live on Bloomberg Television weekday mornings from six to nine

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<v Speaker 2>am Eastern. Subscribe to the podcast on Apple, Spotify or

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business app. Black Rock releasing their

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<v Speaker 2>twenty twenty five global outlook, writing we stay in risk

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<v Speaker 2>on as we look for transformation beneficiaries and go further

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<v Speaker 2>over weight US stocks as the AI theme broadens out.

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<v Speaker 2>Waeley of Black Rock is with us here in New

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<v Speaker 2>York Way. It's good to see you.

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<v Speaker 3>As always, Thanks for having me.

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<v Speaker 2>AI beneficiaries. At the moment, it's been the big AI enabler,

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<v Speaker 2>the likes of video, which has been the big winner.

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<v Speaker 2>How does that story change? What's the next phase of

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<v Speaker 2>this trend?

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<v Speaker 4>We continue to like the big tech part of the

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<v Speaker 4>AI beneficiary. So far this year they've been carrying the

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<v Speaker 4>way in terms of earnings growth. Looking at twelve months trailing,

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<v Speaker 4>Magnificent seven grew their earnings on a forty grew their

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<v Speaker 4>earnings by forty five percent a year on year basis

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<v Speaker 4>versus the rest of the market actually growing only four percent.

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<v Speaker 4>So there's a significant difference. Continues to be very, very concentrated,

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<v Speaker 4>but over time we do expect the beneficiaries through broaden out.

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<v Speaker 4>We're looking at energy, We're looking at utility, We're looking

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<v Speaker 4>at industrials as we build and finance the transformation right sources,

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<v Speaker 4>and we will have to look at the combination of

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<v Speaker 4>public and private market as the theme plays out. We

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<v Speaker 4>continue to think that this is an environment of transformation

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<v Speaker 4>rather than environment of your typical cycle. So, given all

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<v Speaker 4>these magaphorics, not just AI but also low carbon transition,

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<v Speaker 4>geopolitical fragmentation, we're learning real time what the longer term

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<v Speaker 4>trend is heading towards instead of the fluctuations around a typical, stable,

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<v Speaker 4>longer term trend, and that has significant implications on investing

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<v Speaker 4>over the long term. What is neutral in this environment?

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<v Speaker 1>Right way, You can't talk specifically about this deal that

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<v Speaker 1>Black Croc announced yesterday about buying this credit fud manager.

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<v Speaker 1>But you talked about the convergence of public and private markets,

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<v Speaker 1>how much you're increasing your allocation to private markets as

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<v Speaker 1>part of the sort of extra over overweight of this

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<v Speaker 1>broader theme.

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<v Speaker 4>While private market has been growing significantly in recent years,

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<v Speaker 4>and looking ahead, a private market is expected to double

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<v Speaker 4>in AM by the end of the decade from the

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<v Speaker 4>twenty twenty three level. And with in that, actually infrastructure

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<v Speaker 4>and private credits are likely going to play a big

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<v Speaker 4>role both as we think about building the transformation and

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<v Speaker 4>also as we think about financing the transformation. And so far,

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<v Speaker 4>if you look at allocation to markets for a lot

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<v Speaker 4>of investors, they are quite heavily in real estate in

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<v Speaker 4>private equities. So private credit and infrastructure are really exposures

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<v Speaker 4>that we do think will grow both in terms of

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<v Speaker 4>the asset base but also in terms of their allocation

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<v Speaker 4>in investor portfolios.

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<v Speaker 1>That's where I wanted to go this question of what

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<v Speaker 1>it means to be even more bullish on US equitism in.

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<v Speaker 3>The story of AI.

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<v Speaker 1>Where are you focusing and getting more bullish and have

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<v Speaker 1>you ever been more bullish on some.

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<v Speaker 3>Of these names?

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<v Speaker 4>Well, right now, as you know, we have been bullish

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<v Speaker 4>on US equities for all of this year, so we're

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<v Speaker 4>dialing up risk taking even more because we do believe

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<v Speaker 4>that earnings can broaden out. Right, we talked about this

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<v Speaker 4>year being still quite concentrated in terms of Big Tech

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<v Speaker 4>doing the heavy lifting. Next year, Big Tech Magnificent seven

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<v Speaker 4>expected to grow their earnings like eighteen percent versus the

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<v Speaker 4>rest of the market a high single digit. You do

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<v Speaker 4>see the gap closing and that broadening out is one

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<v Speaker 4>reason that we believe there is more momentum for US

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<v Speaker 4>acodes to run higher. Another reason is that people look

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<v Speaker 4>at how expensive US athletes are, how concentrated US equities are.

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<v Speaker 4>Our study shows that if there are good reasons mega

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<v Speaker 4>forces structural forces that could potentially change the longer term trend,

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<v Speaker 4>the mean revert doesn't quite apply. Mean reverts to what

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<v Speaker 4>if the destination and the makeup of the destination is changing,

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<v Speaker 4>Which is why we're not over indexing on the current

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<v Speaker 4>valuation level, especially as we look at investing over the

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<v Speaker 4>tactical horizon of twenty twenty five and the near term.

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<v Speaker 4>Text cuts and deregulation talks can drive sentiment further, which

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<v Speaker 4>is why we're leaning into it.

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<v Speaker 5>When you look at your global outlook, you talk about

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<v Speaker 5>the focus on the United States and what you're seeing

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<v Speaker 5>in terms of security priorities, national economic priorities at the

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<v Speaker 5>expense of others. Who is the US winning at the

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<v Speaker 5>expensive when you look at it the biggest.

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<v Speaker 4>Well, when we look at twenty twenty five, US exceptionalism

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<v Speaker 4>is a theme that we expect to to play out

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<v Speaker 4>for the entirety of this year. Within equities. That means

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<v Speaker 4>that we prefer US accolades versus the rest of the world.

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<v Speaker 3>We use a.

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<v Speaker 4>UK aqualitly downgrade to fund our US aquity upgrade, so

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<v Speaker 4>there is a bit of a kind of leaning back

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<v Speaker 4>into US aquilas. But within duration within government bonds. Because

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<v Speaker 4>the US exceptionalism also is associated with greater fiscal spent,

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<v Speaker 4>we actually prefer international duration like UK guilts market over

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<v Speaker 4>government bond the US duration, where we expect term premier

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<v Speaker 4>to come back even more reflecting the higher fiscal trajectory.

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<v Speaker 4>We also continue to like quality income within a credit.

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<v Speaker 4>Even though spread is very very tight from a total

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<v Speaker 4>yield perspective, it is reasonable and the tighter spread really

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<v Speaker 4>reflect the fact that the government have become more indebted

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<v Speaker 4>and private sector has been actually managing their leverage somewhat

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<v Speaker 4>more reasonably.

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<v Speaker 2>Well, it's good to say thanks joining us here in

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<v Speaker 2>New York City. Thank you, Thank you very much, Willy

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<v Speaker 2>there of black Clok, the team over at Stay Street

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<v Speaker 2>right in the following. We expect the narrative of rake

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<v Speaker 2>cuts and resilience to hold in twenty twenty five and

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<v Speaker 2>for our projective soft landing to materialize. This landscape extends

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<v Speaker 2>our favorable outlook for equity markets. Lori Handel's Stay Street

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<v Speaker 2>joined us now for more. Laurie, welcome to the program.

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<v Speaker 2>Do you not think that the policy changes that we

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<v Speaker 2>could see in the next twelve months would be potent

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<v Speaker 2>enough to disrupt the kind of resilience that you're looking for.

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<v Speaker 3>Well, it's too early to tell.

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<v Speaker 6>I mean, obviously there are a number of cross currents

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<v Speaker 6>and what the Trump administration is proposing that could be

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<v Speaker 6>a threat to what we've seen as a soft landing

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<v Speaker 6>so far.

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<v Speaker 3>But until we.

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<v Speaker 6>Actually have the ink dried on some of those policies,

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<v Speaker 6>it's hard to know how those cross winds will actually

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<v Speaker 6>impact real economy.

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<v Speaker 2>The political changes elsewhere have been a threat to markets elsewhere,

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<v Speaker 2>and that's for sure. Check out the Euro holding onto

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<v Speaker 2>one of five. Briefly looking at one of four again

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<v Speaker 2>this morning over in South Korea. We've seen the disruption

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<v Speaker 2>there as well. Laurie is their scope for some performance

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<v Speaker 2>x US at a time when a lot of people

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<v Speaker 2>are on this program saying buy one thing by America.

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<v Speaker 6>Yeah, well, right now, we still are on the momentum Bandwig.

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<v Speaker 6>And also, I mean what worked well in twenty twenty

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<v Speaker 6>four is likely to persist in twenty twenty five, and

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<v Speaker 6>that suggests that US large cap in particular has room

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<v Speaker 6>to run here. But what we've also been talking about

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<v Speaker 6>is broadening out. So it's not just about the high

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<v Speaker 6>flying mag seven tech names. It's about financials, it's about

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<v Speaker 6>potentially energy, it's about other places like consumer discretionary that

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<v Speaker 6>may benefit from an upgrading of the US economic prospect.

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<v Speaker 3>So it's a little bit of a nuanced story.

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<v Speaker 6>But yes, sadly or not so sadly, we're still by

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<v Speaker 6>American large cap is our primary call.

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<v Speaker 1>I can't find one person who's not Laurie, And this,

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<v Speaker 1>to me is really a key question. How do you

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<v Speaker 1>hedge against the idea that at some point the moment

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<v Speaker 1>does run out?

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<v Speaker 3>Yeah, well, I think there are a couple of things

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<v Speaker 3>that we're doing.

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<v Speaker 6>I mean, first and foremost is we are trying to

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<v Speaker 6>avoid those higher, high flying names and looking at quality

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<v Speaker 6>or companies that can be a bit more durable through

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<v Speaker 6>this kind of cycle. The other thing is broadening out

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<v Speaker 6>a little bit, looking at small cap us for example,

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<v Speaker 6>which might have a little bit less vulnerability to some

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<v Speaker 6>of these global cross winds, and to look for a diversifiers.

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<v Speaker 6>So we have had a position in gold in our

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<v Speaker 6>portfolio because, as you've seen over the last couple of years,

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<v Speaker 6>stocks and bonds are often moving in locksteps. So getting

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<v Speaker 6>some diversification into the portfolio so that you have something

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<v Speaker 6>that's going to zig when the rest of the world's

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<v Speaker 6>eggs is very important for us as well.

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<v Speaker 3>This is important.

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<v Speaker 1>Are you basically saying that sixty forty and the concept

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<v Speaker 1>behind it has been upended that essentially we are looking

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<v Speaker 1>at bonds that no longer are the diversifier you're looking

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<v Speaker 1>at moving out into other types of companies and goals.

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<v Speaker 1>You didn't mention bonds once within that So at a

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<v Speaker 1>certain point does this have to fundamentally upend the way

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<v Speaker 1>people construct their portfolios?

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<v Speaker 3>Necessarily?

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<v Speaker 6>And in fact, I think in some ways we're in

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<v Speaker 6>a better position than we were a few years ago

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<v Speaker 6>when interest rates were zero. So at that point in time,

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<v Speaker 6>we were very much in the camp that bonds just

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<v Speaker 6>weren't providing into kinds of benefits that investors typically needed

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<v Speaker 6>to enjoy from them.

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<v Speaker 3>But we do now have some income in bonds.

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<v Speaker 6>So despite the fact that equities have powered forward, you

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<v Speaker 6>know s and p up twenty five percent or so

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<v Speaker 6>on a year to day basis with fixed incomes, kind

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<v Speaker 6>of earning a coupon, it's still earning a coupon. So

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<v Speaker 6>it's really more about.

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<v Speaker 3>A nuanced positioning.

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<v Speaker 6>So definitely still retain that allocation of bonds we think

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<v Speaker 6>that they're going to return at least coupon perhaps plus.

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<v Speaker 3>But looking for other things, especially if we have some

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<v Speaker 3>you know, draw down risk in the equity markets.

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<v Speaker 5>Well, when you look at potential draw down risks in

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<v Speaker 5>the equity market next year, is it policy coming from Washington.

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<v Speaker 5>I know you're bullish in the fact that potentially we're

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<v Speaker 5>going to have these tax cuts looking at your research,

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<v Speaker 5>but how do you look at tax cuts potentially next

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<v Speaker 5>to the walls going up and higher tariffs.

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<v Speaker 3>I mean, this is the thing.

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<v Speaker 6>There are crosswins even within the stated policy objectives, right,

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<v Speaker 6>So if you think about immigration, potentially it takes labor

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<v Speaker 6>away from sectors that are already a little bit vulnerable.

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<v Speaker 6>Think housing, if you look at tariffs, obviously, that creates

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<v Speaker 6>vulnerability around the inflation front. We do think that the

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<v Speaker 6>Fed is going to cut here in December, but we

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<v Speaker 6>think that next year's cuts are a bit in jeopardy

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<v Speaker 6>as we wait for this agenda to kind.

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<v Speaker 3>Of play through.

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<v Speaker 6>So that's what's really tricky for investors right now is

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<v Speaker 6>it's hard to know precisely where the dost settles.

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<v Speaker 5>If investors wanted a base case for next year and

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<v Speaker 5>how potential Trump policies might impact the FED, would you say,

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<v Speaker 5>there's this idea of pauses for twenty twenty five or

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<v Speaker 5>even potentially a hike.

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<v Speaker 4>Yeah.

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<v Speaker 6>So we had originally penciled in four rate cuts in

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<v Speaker 6>twenty twenty five, and we're now really lowering that, looking

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<v Speaker 6>at maybe two, probably a pause around the beginning of

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<v Speaker 6>the year, in part to see how these policies do

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<v Speaker 6>shape up. And by the way, the Fed, if they

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<v Speaker 6>do cut this month and especial they cut for twenty

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<v Speaker 6>five business points still have kind one hundred basis points.

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<v Speaker 3>So while we think that's that there's more to.

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<v Speaker 6>Be done and we'd like to see them do more,

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<v Speaker 6>we think that it's likely that a pause in early

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<v Speaker 6>twenty twenty five is warranted.

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<v Speaker 2>Luriy all the FED speak over the last few days,

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<v Speaker 2>just giving us the impression that they believe, these Fed

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<v Speaker 2>officials believe there's a long way to neutral. I was

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<v Speaker 2>going through some of what Fed Mary Mary Daily had

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<v Speaker 2>to say, Well, the Fed, Chicago Fed president goals, We

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<v Speaker 2>had to say Governor Waller more recently as well, where

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<v Speaker 2>are you on that? Just how far away are we

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<v Speaker 2>from what they consider neutral to be?

0:11:31.000 --> 0:11:32.840
<v Speaker 6>Oh, we agree there is a long way to go

0:11:32.960 --> 0:11:35.640
<v Speaker 6>for neutral, But the problem is that we could have

0:11:35.720 --> 0:11:39.760
<v Speaker 6>some inflationary pressures budding in the early part of twenty

0:11:39.880 --> 0:11:41.840
<v Speaker 6>twenty five, and so one of the things that they

0:11:41.960 --> 0:11:44.199
<v Speaker 6>also have to be very mindful of is that they

0:11:44.200 --> 0:11:47.480
<v Speaker 6>don't cut so aggressively that they're in a position of

0:11:47.520 --> 0:11:49.760
<v Speaker 6>having to hike more rapidly than they would have liked.

0:11:49.760 --> 0:11:52.720
<v Speaker 6>So we've always said that this inflation trajectory was not

0:11:52.920 --> 0:11:56.240
<v Speaker 6>going to be a sort of smooth one way direction.

0:11:56.679 --> 0:11:58.520
<v Speaker 6>There was likely to be able to bumps along the way.

0:11:58.559 --> 0:12:00.040
<v Speaker 3>So it's more a question.

0:11:59.840 --> 0:12:02.760
<v Speaker 6>Of timing, but we do think that neutral is quite

0:12:02.760 --> 0:12:03.600
<v Speaker 6>a bit lower from here.

0:12:03.800 --> 0:12:06.319
<v Speaker 2>Jim and Pound speaking at one forty later on this

0:12:06.360 --> 0:12:09.640
<v Speaker 2>south afternoon, Lurie, appreciate your time, enjoyed the outlook. Thank you.

0:12:09.720 --> 0:12:22.640
<v Speaker 2>Lori Heineld of State Street. Most Ian Lincoln with this

0:12:22.760 --> 0:12:25.520
<v Speaker 2>to say, the incoming federatric has been consistent in the

0:12:25.559 --> 0:12:28.000
<v Speaker 2>messaging that wild Rake Cup decisions are being made on

0:12:28.040 --> 0:12:31.360
<v Speaker 2>a meeting by meeting basis. There is appetite among committee

0:12:31.360 --> 0:12:33.640
<v Speaker 2>members for another move this month. Ian joins us now

0:12:33.640 --> 0:12:36.280
<v Speaker 2>for more Ian, good morning, good to see you. You've

0:12:36.320 --> 0:12:38.080
<v Speaker 2>identified this and I want to go straight to it.

0:12:38.200 --> 0:12:40.000
<v Speaker 2>Let's not bury the lead. What's the two year at

0:12:40.000 --> 0:12:42.679
<v Speaker 2>four twenty? Fed's coming out and saying we're all confident,

0:12:42.679 --> 0:12:44.360
<v Speaker 2>we're above neutral. We've got a long way to go.

0:12:44.400 --> 0:12:46.520
<v Speaker 2>They want to reduce interest rates. Yeah, we've got this

0:12:46.600 --> 0:12:49.600
<v Speaker 2>two year yield that has just stubbornly above four percent,

0:12:49.920 --> 0:12:52.439
<v Speaker 2>just sort of stuck there at four twenty. What's that about.

0:12:52.720 --> 0:12:55.280
<v Speaker 7>I think that the market at the moment is trading

0:12:55.640 --> 0:12:58.480
<v Speaker 7>is still treading the result of the election. They're more

0:12:58.520 --> 0:13:02.360
<v Speaker 7>worried about inflution or a surge of reflation. They're more

0:13:02.440 --> 0:13:05.760
<v Speaker 7>worried about what happens when there's a renewed trade war.

0:13:05.840 --> 0:13:08.960
<v Speaker 7>They're not listening to the Fed. They're not worried about

0:13:09.000 --> 0:13:12.120
<v Speaker 7>the FED cutting in December then going again in Q

0:13:12.240 --> 0:13:15.439
<v Speaker 7>one and Q two. In a typical environment, one would

0:13:15.440 --> 0:13:18.960
<v Speaker 7>expect effective FED funds, which on December eighteenth will be

0:13:19.320 --> 0:13:22.880
<v Speaker 7>four thirty three, to function as a ceiling phenomenal rates.

0:13:22.880 --> 0:13:25.960
<v Speaker 7>When the FED is cutting right now, we could very

0:13:25.960 --> 0:13:29.480
<v Speaker 7>easily find that uninverted sooner rather than later, which I

0:13:29.480 --> 0:13:32.600
<v Speaker 7>think would create an interesting dynamic for the market for sure.

0:13:32.800 --> 0:13:34.800
<v Speaker 3>So who's right? Is a FED right or is the

0:13:34.840 --> 0:13:35.319
<v Speaker 3>market right?

0:13:36.120 --> 0:13:39.040
<v Speaker 7>At this moment, I think that the FED is correct

0:13:39.080 --> 0:13:43.040
<v Speaker 7>in continuing to normalize rates because they're normalizing rates, not

0:13:43.360 --> 0:13:47.640
<v Speaker 7>because the economy is slowing, not because the jobs market

0:13:47.679 --> 0:13:50.800
<v Speaker 7>has turned over, but because they believe they have won

0:13:50.840 --> 0:13:53.160
<v Speaker 7>the war on inflation. And I think that's a nuance

0:13:53.160 --> 0:13:57.160
<v Speaker 7>that we as at market often overlook. Normalization is not easying,

0:13:57.320 --> 0:14:00.400
<v Speaker 7>it's just cutting back to neutral time.

0:14:00.760 --> 0:14:02.560
<v Speaker 1>And this really does go to the point that I

0:14:02.600 --> 0:14:04.480
<v Speaker 1>think the sort of battle of the e ens I'm

0:14:04.480 --> 0:14:07.240
<v Speaker 1>going to call that all morning really goes to where

0:14:07.240 --> 0:14:08.679
<v Speaker 1>you can take a look at something like the Jolts

0:14:08.720 --> 0:14:12.200
<v Speaker 1>report and say it's either really solid and shows ongoing strength,

0:14:12.280 --> 0:14:15.000
<v Speaker 1>or you could see that the overall trend is downward.

0:14:15.840 --> 0:14:17.960
<v Speaker 1>What's the right signal at a time when you hear

0:14:18.000 --> 0:14:21.480
<v Speaker 1>companies that are talking about reinvesting in their businesses hiring

0:14:22.200 --> 0:14:25.880
<v Speaker 1>after the election uncertainty has been resolved, really leaning into

0:14:25.880 --> 0:14:28.240
<v Speaker 1>the whole idea of American exceptionalism.

0:14:29.040 --> 0:14:32.720
<v Speaker 7>Well, I'm very sympathetic to Ian's argument that we are

0:14:32.800 --> 0:14:35.480
<v Speaker 7>overdue for a spike in the unemployment rate. The trend

0:14:35.560 --> 0:14:39.040
<v Speaker 7>has been lower, but the reality is the data continues

0:14:39.120 --> 0:14:42.200
<v Speaker 7>to show a resilient labor market as a theme. We

0:14:42.240 --> 0:14:45.160
<v Speaker 7>have an unemployment rate at four point one percent that's

0:14:45.280 --> 0:14:48.120
<v Speaker 7>very low by historic standards. The concern, and I think

0:14:48.480 --> 0:14:50.920
<v Speaker 7>is shared among a lot of the EANs that I know,

0:14:51.520 --> 0:14:55.120
<v Speaker 7>is that there's going to be an eventual spike in

0:14:55.160 --> 0:14:58.680
<v Speaker 7>the unemployment rate that then gets the consumer on their on.

0:14:58.680 --> 0:15:00.920
<v Speaker 5>Foot when it comes to the a port on Friday.

0:15:00.960 --> 0:15:03.800
<v Speaker 5>What number would give the Fed a reason to say

0:15:03.840 --> 0:15:04.240
<v Speaker 5>we're going to.

0:15:04.240 --> 0:15:04.840
<v Speaker 3>Stay on pause.

0:15:05.640 --> 0:15:09.720
<v Speaker 7>We need to see a very significant headline print or

0:15:10.120 --> 0:15:13.320
<v Speaker 7>a three handle on the unemployment rate. You give me

0:15:13.680 --> 0:15:17.520
<v Speaker 7>three fifty headline payrolls and I drop the unemployment rate,

0:15:17.880 --> 0:15:21.400
<v Speaker 7>then the question becomes in this legitimate question is neutral

0:15:21.440 --> 0:15:24.880
<v Speaker 7>in fact higher? Have we not been as restrictive as

0:15:24.960 --> 0:15:27.600
<v Speaker 7>five point fifty might have been in prior cycles. I

0:15:27.720 --> 0:15:30.880
<v Speaker 7>really think it ultimately comes down to whether or not

0:15:31.200 --> 0:15:35.920
<v Speaker 7>we see a unexpectedly higher CPI number, not payrolls, because

0:15:36.120 --> 0:15:38.920
<v Speaker 7>again to the point, they're cutting because they believe they've

0:15:38.920 --> 0:15:41.400
<v Speaker 7>won the war on inflation, not because they're worried about jobs.

0:15:41.520 --> 0:15:41.720
<v Speaker 4>Right.

0:15:41.880 --> 0:15:43.560
<v Speaker 5>So when you look at twenty twenty five and you

0:15:43.560 --> 0:15:45.600
<v Speaker 5>alluded to this, this idea that the market is taking

0:15:45.600 --> 0:15:48.040
<v Speaker 5>the cues from the political economy, the policies that might

0:15:48.080 --> 0:15:50.280
<v Speaker 5>come out of Washington, what does that mean for the

0:15:50.280 --> 0:15:51.600
<v Speaker 5>Fed come January?

0:15:52.720 --> 0:15:55.840
<v Speaker 7>Well, there are only so many things that Trump can

0:15:55.880 --> 0:15:59.560
<v Speaker 7>do when he immediately takes office without Congress. So I

0:15:59.560 --> 0:16:02.240
<v Speaker 7>think that the Fed pauses in January to see what

0:16:02.280 --> 0:16:05.400
<v Speaker 7>those things are. So they take that median off, They

0:16:05.440 --> 0:16:08.280
<v Speaker 7>reassess the situation, They see the trajectory of growth, They

0:16:08.320 --> 0:16:12.320
<v Speaker 7>see if the type of tariffs that are announced are

0:16:12.320 --> 0:16:14.560
<v Speaker 7>the type that they would characterize as a tax on

0:16:14.720 --> 0:16:18.640
<v Speaker 7>the consumer or would really trigger reflation. I suspect it

0:16:18.640 --> 0:16:21.560
<v Speaker 7>will be more of a tax on the consumer, a

0:16:21.560 --> 0:16:24.360
<v Speaker 7>one off increase in CPI, and then we just move forward.

0:16:24.480 --> 0:16:26.160
<v Speaker 1>And do you think that people are under estimating the

0:16:26.280 --> 0:16:28.400
<v Speaker 1>chance of a slowdown, a material slow down in the

0:16:28.480 --> 0:16:32.320
<v Speaker 1>US economy as everyone talks about incredible profitability and this

0:16:32.480 --> 0:16:36.160
<v Speaker 1>incredible boom in the stock market and beyond.

0:16:36.960 --> 0:16:40.480
<v Speaker 7>I would say that at this moment people are underestimating

0:16:40.520 --> 0:16:42.880
<v Speaker 7>the chance that we have a slowdown. What I'm the

0:16:42.920 --> 0:16:46.880
<v Speaker 7>most concerned about is historically the FED has been very

0:16:46.880 --> 0:16:49.560
<v Speaker 7>successful at taking the edges off of the cycle on

0:16:49.600 --> 0:16:51.600
<v Speaker 7>the upside and the cycle on the downside. This is

0:16:51.640 --> 0:16:54.240
<v Speaker 7>what central banks are designed to do, and that has

0:16:54.320 --> 0:16:58.760
<v Speaker 7>resulted in all the major corrections occurring as in the

0:16:58.760 --> 0:17:02.920
<v Speaker 7>form of a crisis. So where are the imbalances? Rucker

0:17:03.040 --> 0:17:05.600
<v Speaker 7>high stock prices speaks to this idea that there's a

0:17:05.640 --> 0:17:08.160
<v Speaker 7>lot of optimism out there, and a lot of optimism

0:17:08.280 --> 0:17:11.639
<v Speaker 7>that's overlooking the potential downside. So a little bit nervous

0:17:11.680 --> 0:17:14.320
<v Speaker 7>in terms of valuations in the equity space as well

0:17:14.359 --> 0:17:15.720
<v Speaker 7>as generally in risk assets.

0:17:15.800 --> 0:17:17.600
<v Speaker 2>Try and set policy for that. The two way risk

0:17:17.800 --> 0:17:20.399
<v Speaker 2>into twenty twenty five, both to the upside and to

0:17:20.440 --> 0:17:21.080
<v Speaker 2>the downside.

0:17:21.200 --> 0:17:23.840
<v Speaker 1>Yeah, well, I have to say I'm not a little

0:17:23.880 --> 0:17:25.720
<v Speaker 1>happy that I don't have to do it. So good

0:17:25.760 --> 0:17:27.840
<v Speaker 1>luck to all the people on the committee.

0:17:27.840 --> 0:17:30.800
<v Speaker 2>Good luck to Chairman exactly, who speaks later on this afternoon. Ian,

0:17:30.840 --> 0:17:32.400
<v Speaker 2>thank you, it's going to see it. Thank you, sir

0:17:32.520 --> 0:17:36.879
<v Speaker 2>Inlingan there of BEMO. This is the Bloomberg Sevenance podcast,

0:17:37.000 --> 0:17:40.919
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0:17:40.920 --> 0:17:43.719
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