WEBVTT - Arm Holdings US Trading Debut, UAW Deadline

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Bonnie Quinn and I'm Doug Krisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 1>SoftBank owned ARM Holdings made quite the splash in its

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<v Speaker 1>Wall Street debut. Shares of the UK based chip designer

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<v Speaker 1>jumped to get this twenty five percent. ARM raised more

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<v Speaker 1>than four point eight billion dollars in the biggest initial

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<v Speaker 1>public offering this year. CEO Renee has told us what

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<v Speaker 1>the current artificial intelligence boom means for the company.

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<v Speaker 3>AI is everywhere, and if it's your edge device like

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<v Speaker 3>the Assistant or the Alexa, or your autonomous vehicle, that's

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<v Speaker 3>all AI. And now we're seeing it in the cloud,

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<v Speaker 3>in the data center, and all the growth of Nvidia

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<v Speaker 3>in Vida announcing one of their newest products, grace Hopper,

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<v Speaker 3>that is based on ARM. So ARM is everywhere relative

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<v Speaker 3>to AI that.

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<v Speaker 1>Was ARM at CEO rene has. ARM shares opened at

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<v Speaker 1>fifty six dollars and ten cents and closed in the

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<v Speaker 1>regular session at sixty three dollars and fifty nine cents.

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<v Speaker 4>We're hearing Walt Disney has held exploratory talks about selling

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<v Speaker 4>the ABC network and the ABC TV stations to Nextstar

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<v Speaker 4>Media Group. Now these discussions apparently are preliminary, and sources

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<v Speaker 4>telling us Nextstar would only be interested at the right price.

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<v Speaker 4>Here's Bloomberg's Chris Palmery.

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<v Speaker 5>Rumors about a deal like this have been going on

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<v Speaker 5>quite a while. You know. The difference is, you know,

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<v Speaker 5>we saw in July Bob Biker coming out and saying, hey,

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<v Speaker 5>you know, this is probably a business we don't want

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<v Speaker 5>to be in long term. The legacy media networks, we know,

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<v Speaker 5>they've basically been up for sale.

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<v Speaker 4>That is a Bloomberg'schris palm Mary. By the way, Disney

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<v Speaker 4>saying today no decision has been made on selling ABC

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<v Speaker 4>and it's open to options. And separately, we're hearing that

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<v Speaker 4>Disney is cutting it's target for subscribers for the Disney

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<v Speaker 4>Plus streaming service for twenty twenty four. The company is

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<v Speaker 4>expecting I basically a shortfall by tens of millions of subscribers.

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<v Speaker 4>You know, Disney Plus has been loose using customers, largely

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<v Speaker 4>because of some hefty price increases, and it's also been

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<v Speaker 4>impacting or impacted by collapsing demand in India. That's after

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<v Speaker 4>the company failed to win cricket streaming rights.

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<v Speaker 1>Funny United Auto Workers president Sean fein Doug is preparing

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<v Speaker 1>to hit all three Detroit carmakers with targeted walkouts at

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<v Speaker 1>strategic locations in several states. Now, a workstopage could still

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<v Speaker 1>be avoided, but the UAW and General Motors Ford and

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<v Speaker 1>Stillantas are approaching a deadline to agree on a new contract.

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<v Speaker 1>Let's get more from Bloomberg's David Welsh.

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<v Speaker 6>The vibe coming out of the union right now is

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<v Speaker 6>the president is itching destroyed. He says he's not, but

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<v Speaker 6>he's making plans. The writer has still really strong against

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<v Speaker 6>the car companies, against rich executives, all that stuff, so

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<v Speaker 6>he's getting people riled up. He says they're far apart.

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<v Speaker 6>It doesn't sound like they are if you look at

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<v Speaker 6>the numbers. So I think they will, and look, it

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<v Speaker 6>could go on for a while. I don't think it'll

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<v Speaker 6>be something like three months, but I could see strake

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<v Speaker 6>going on for weeks, and it could vary by car

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<v Speaker 6>company too.

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<v Speaker 1>That's Bloomberg's David Welsh. If no agreement is reached, this

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<v Speaker 1>could be the first time the union takes action against

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<v Speaker 1>all three companies. At the same time, UAW President Sean

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<v Speaker 1>Fain will be holding a news conference at ten pm

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<v Speaker 1>wool Street time.

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<v Speaker 4>We go to China next, where the PBOC cut its

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<v Speaker 4>bank reserve requirements for the second time this year. We

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<v Speaker 4>have more from Bloomberg's Yvonne Men.

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<v Speaker 7>In Hong Kong, the People's Bank of China has lowered

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<v Speaker 7>the triple R for most banks by twenty five basis points.

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<v Speaker 7>The way that average triple R for banks will be

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<v Speaker 7>seven point four percent after the reduction, and knafas say

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<v Speaker 7>a triple R cut was expected because the large amount

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<v Speaker 7>of special bond supply is said to hit the market

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<v Speaker 7>this month. The central Bank said the cut will help

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<v Speaker 7>maintain reasonably ample liquidity in the banking system. Economs estimate

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<v Speaker 7>that the production could free up fifty five to sixty

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<v Speaker 7>nine billion dollars. Bloomberg Economics say the PAOC could still

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<v Speaker 7>trim its policy rate by ten basis points later on today.

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<v Speaker 7>For the consensus is for a hold at two and

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<v Speaker 7>a half percent. In Hong Kong. I'm yvon Mann Bloomberg Radio.

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<v Speaker 4>Well GOP lawmakers have been pressing the Biden administration to

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<v Speaker 4>completely cut off Huawei Technologies and the Chinese chip makers

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<v Speaker 4>MICK from their American suppliers. Now this comes after Huawei

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<v Speaker 4>launched a new phone. It uses highly advanced technology that

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<v Speaker 4>the US has been trying to keep out of China's hands.

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<v Speaker 4>This phone is or utilizes, i should say, a Chinese

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<v Speaker 4>made seven nanimeter chip. It appears to rely on US

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<v Speaker 4>technology and it's really stoked a lot of debate in

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<v Speaker 4>Washington over the effectiveness of US attempts to curtail China's

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<v Speaker 4>technological and military prowess. Daybreak Asia and an update on

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<v Speaker 4>Global News is next. As we have been reporting, we

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<v Speaker 4>shall find out a lot more tonight about the uaw's

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<v Speaker 4>plans for its labor dispute, how this may play out.

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<v Speaker 4>It will unfold at ten o'clock Eastern time in the US.

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<v Speaker 4>At Baxter has been covering this story also with an

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<v Speaker 4>eye to what we may get out of the White House.

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<v Speaker 8>And yeah, that's right, Doug. Question a major question today

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<v Speaker 8>will can President Joe Biden get involved in the UAW

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<v Speaker 8>auto industry labor dispute. Well Bloomber's Gabriel Coppola says he

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<v Speaker 8>has imaged himself as a friend of the middle class

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<v Speaker 8>and organized later labor.

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<v Speaker 9>But I think that you know, he's limited in what

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<v Speaker 9>he can do. You know, both legally and you know,

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<v Speaker 9>but I think he can. He can't. You know, he

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<v Speaker 9>needs the success of the automakers just as much, right

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<v Speaker 9>because if the automakers don't have a deal that's sustainable,

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<v Speaker 9>then they're not going to support these jobs of the future.

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<v Speaker 8>And a sad reality. Ford CEO Jim Farley has just

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<v Speaker 8>come out with an interview saying that things, you know,

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<v Speaker 8>whatever is being said in public are just not moving.

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<v Speaker 3>What the UAW is offering us is a choice between

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<v Speaker 3>going out of business and bankruptcy.

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<v Speaker 8>Again, the workers are set to target strike at midnight

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<v Speaker 8>unless there is an eleventh hour agreement of some kind.

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<v Speaker 8>House Speaker Kevin McCarthy today sending a clear message to

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<v Speaker 8>the right wing of his party, no government shut down.

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<v Speaker 10>I told my conference, I know tomorrow is the Jewish holiday,

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<v Speaker 10>will be out of session, but when we come back,

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<v Speaker 10>we're not going to leave.

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<v Speaker 8>Meanwhile, House Minority Leader how Came Jeffrey says the threat

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<v Speaker 8>is still there.

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<v Speaker 11>House Republicans have made clear that they are determined to

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<v Speaker 11>shut down the government and try to jam the extreme

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<v Speaker 11>right wing ideology down the throats of the American people.

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<v Speaker 8>So first there'll be a showdown between McCarthy and the

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<v Speaker 8>right wing of his party.

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<v Speaker 10>Threats don't matter, and sometimes people do those things because

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<v Speaker 10>of personal things, and that's all fine.

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<v Speaker 8>Oh yeah, and then he'll have to fight with the Democrats.

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<v Speaker 8>After a deal broke down earlier this summer, a plea deal.

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<v Speaker 8>Hunter Biden has been indicted on federal charges. Bloomberg's Nancy

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<v Speaker 8>Lyons has the very latest.

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<v Speaker 12>Hunter Biden is charged with three counts related to the

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<v Speaker 12>as of a cult revolver in twenty eighteen. He allegedly

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<v Speaker 12>lied on the form that's required to buy the gun

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<v Speaker 12>that he was not using drugs, but that was a

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<v Speaker 12>period when the younger Biden had acknowledged struggling with an

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<v Speaker 12>addiction to crack cocaine following his divorce and the death

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<v Speaker 12>of his brother. The felonies carry maximum sentences between five

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<v Speaker 12>and ten years in prison. A special council is still

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<v Speaker 12>investigating Hunter Biden and could file additional tax charges in Washington.

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<v Speaker 12>Nancy Lyons Bloomberg Radio.

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<v Speaker 8>All Right, Nancy, thank you. At Hong Kong has kicked

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<v Speaker 8>off a campaign to stimulate its nightlife. Life is official

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<v Speaker 8>seek to bolster the city's attractiveness and revive an economy

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<v Speaker 8>battered by years of pandemic isolation. The promotion, called Night

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<v Speaker 8>Vibes Hong Kong, will feature three evening bazaars at waterfront

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<v Speaker 8>locations next to Victoria Harbor. All right on a jet

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<v Speaker 8>and going global news powered by more than twenty seven

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<v Speaker 8>hundred journalists and analysts in over one hundred twenty countries.

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<v Speaker 8>In San Francisco, Baxter in This is Bloomberg Now.

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<v Speaker 4>You can get the latest news whenever you want it

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<v Speaker 4>with Bloomberg News Now. It's the top stories from our

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<v Speaker 4>global team of reporters at the click of a button.

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<v Speaker 4>Get Bloomberg News Now on the Bloomberg Business app or

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<v Speaker 4>at Bloomberg dot com or anywhere you get your podcast

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<v Speaker 4>Daybreak Asia. And our special guest it is a former

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<v Speaker 4>head of the Dallas Fedbank, Rob Kaplan, is with us.

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<v Speaker 4>Rob's also CEO and president of the Draper Richards Kaplan's Foundation.

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<v Speaker 4>It's a pleasure to see you once again.

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<v Speaker 2>Thank you so much.

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<v Speaker 4>We've got this FED meeting coming up next week. I'm

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<v Speaker 4>less concerned about what you think may or may not happen,

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<v Speaker 4>and I'm more interested in getting your perspective on how

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<v Speaker 4>difficult it is it is when you get to the

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<v Speaker 4>end of a tightening cycle to kind of engineer this

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<v Speaker 4>and allow markets to kind of adjust, but not to

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<v Speaker 4>become overly enthusiastic that we're necessarily done with tightening.

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<v Speaker 13>Well, every cycle is different, and this one is different.

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<v Speaker 13>And here's how it's different. A lot of the key

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<v Speaker 13>drivers of what we're seeing right now are happening away

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<v Speaker 13>from the FED. What do I mean by that? Government

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<v Speaker 13>spending unspent ARPA money, which is in the hundreds of

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<v Speaker 13>billions of dollars at the local level, the Infrastructure Act money,

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<v Speaker 13>Inflation Reduction Act money is all being spent in significant

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<v Speaker 13>size in the US economy that is helping to stabilize

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<v Speaker 13>and give resiliency to the US economy.

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<v Speaker 11>In my view.

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<v Speaker 13>Without those three sources of spending, my guess is the

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<v Speaker 13>FED would have stopped raising rates maybe a couple of

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<v Speaker 13>moves ago, might be at four and a half and

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<v Speaker 13>four and three quarters, and we might even be in

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<v Speaker 13>a downturn right now. So that's significant. And the second

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<v Speaker 13>thing that's significant is because of the energy transition that

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<v Speaker 13>we're executing here and around the world world. We're limiting

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<v Speaker 13>fossil fuel production in the United States, We're undersupplied globally,

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<v Speaker 13>and oil prices are very significant elements of inflation directly

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<v Speaker 13>and indirectly. And so the challenge for the FED now

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<v Speaker 13>is if you'd told people a year ago they'd get

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<v Speaker 13>to five and a quarter five and a half, you'd say,

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<v Speaker 13>oh my god, we may not need to go that far,

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<v Speaker 13>and the economy would be very slow. It's instead very

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<v Speaker 13>resilient and inflation is still sticky. But I would argue

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<v Speaker 13>there are structural drivers away from the FED. So the

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<v Speaker 13>decision for the FED is how do you end this

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<v Speaker 13>cycle when you have this amount of stimulus fiscally and

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<v Speaker 13>should you talk about it right now? They've chosen not

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<v Speaker 13>to talk about it, thinking it's out of their lane.

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<v Speaker 13>But without it, they're going to need to keep their

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<v Speaker 13>options open that they may still need to do more.

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<v Speaker 13>Even though I don't think they'll do anything in this

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<v Speaker 13>septem meeting.

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<v Speaker 1>How many more times will they need to go? The

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<v Speaker 1>situation sounds a little more dire when you put it

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<v Speaker 1>the way you just put it.

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<v Speaker 13>I don't know the answer to that. I do know

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<v Speaker 13>that anything interest rates sensitive right now is very weak.

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<v Speaker 13>If you're a small mid sized business, it is very

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<v Speaker 13>difficult to get a loan if you're in the goods sector.

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<v Speaker 13>Business is very weak. So there's number of sectors of

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<v Speaker 13>the economy that are affected by the FED funds rate

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<v Speaker 13>feel like they're in a recession right now. Then you've

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<v Speaker 13>got this counterforce I just talked about of government spending

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<v Speaker 13>that's going into construction and is really going into services,

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<v Speaker 13>Meaning if you have workers that are working at these

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<v Speaker 13>new projects, they spend money in restaurants and they fly

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<v Speaker 13>and all that other. And so the truth is, if

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<v Speaker 13>I were at the FED right now, I wouldn't act

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<v Speaker 13>in the September meeting. I'd probably be inclined to be

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<v Speaker 13>more more patient than even November before I acted, but

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<v Speaker 13>I would certainly leave open the option that I might

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<v Speaker 13>have to act. The thing that would bother me is

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<v Speaker 13>I'm not raising rates because the organic strength in the economy.

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<v Speaker 13>I'm raising rates because of the artificial extra stimulus being

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<v Speaker 13>created by government spending. And the thing that would scare

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<v Speaker 13>me and worry me is when the government spending starts

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<v Speaker 13>to dry up, not in twenty three or twenty four,

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<v Speaker 13>but into twenty five, we may have a lot more

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<v Speaker 13>fundamental weakness than I would like. But that's the reality

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<v Speaker 13>I'm dealing with if I'm at the FED, so.

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<v Speaker 4>Many things to talk about too. The balance sheet roll

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<v Speaker 4>off seems to have been done pretty well so far.

0:12:44.520 --> 0:12:47.360
<v Speaker 4>I mean, it hasn't created too much disruption in markets

0:12:47.360 --> 0:12:50.840
<v Speaker 4>near as I can tell, although in March we had

0:12:51.000 --> 0:12:53.439
<v Speaker 4>a lot of stress building in the regional banking complex,

0:12:53.480 --> 0:12:56.280
<v Speaker 4>a couple of bank failures. Some people were pointing the

0:12:56.320 --> 0:12:58.720
<v Speaker 4>finger at the FED saying, this is the consequence of

0:12:58.760 --> 0:13:02.040
<v Speaker 4>aggressive tightening. We can put that aside right now. But

0:13:02.200 --> 0:13:05.160
<v Speaker 4>in the interim or intervening period, there have been calls

0:13:05.160 --> 0:13:08.200
<v Speaker 4>from a lot more capital on the part of banks,

0:13:08.240 --> 0:13:09.920
<v Speaker 4>a lot of the regulators saying, hey, you need to

0:13:09.920 --> 0:13:12.240
<v Speaker 4>put more aside in the event that there is some

0:13:12.360 --> 0:13:14.959
<v Speaker 4>stress that continues to build. Jamie Diamond, for one, is

0:13:15.000 --> 0:13:17.680
<v Speaker 4>pushed back against this. How do you see the overall

0:13:17.720 --> 0:13:19.199
<v Speaker 4>banking system right now?

0:13:19.800 --> 0:13:23.720
<v Speaker 13>So or rough estimate would be if the FED balance

0:13:23.760 --> 0:13:28.800
<v Speaker 13>sheet went from four to nine trillion pre COVID to

0:13:29.440 --> 0:13:32.080
<v Speaker 13>after COVID, it's now running it down to closer to eight.

0:13:32.480 --> 0:13:37.360
<v Speaker 13>The best estimate I've seen is half that increase went

0:13:37.400 --> 0:13:41.560
<v Speaker 13>into bank deposits. As the FED is running down the

0:13:41.559 --> 0:13:44.680
<v Speaker 13>balance sheet, as you note, it puts more pressure on

0:13:44.760 --> 0:13:49.560
<v Speaker 13>bank deposits, plus bank deposits are repricing to a higher level.

0:13:50.040 --> 0:13:55.600
<v Speaker 13>Plus the backup and longer term yields have eroded bank capital.

0:13:55.720 --> 0:14:01.120
<v Speaker 13>So most banks I talk to right now are are

0:14:01.400 --> 0:14:06.640
<v Speaker 13>very concerned, quietly concerned about further bank deposits. They're very

0:14:06.640 --> 0:14:09.760
<v Speaker 13>worried about their earnings being weak, and they need to

0:14:09.760 --> 0:14:12.839
<v Speaker 13>show good earnings for the regulators and for the depositors.

0:14:13.760 --> 0:14:17.560
<v Speaker 13>And they're being extremely careful about loans to small and

0:14:17.559 --> 0:14:22.520
<v Speaker 13>mid sized businesses, and they are. And the requirements for

0:14:22.600 --> 0:14:26.000
<v Speaker 13>more capital, meaning there are two ways to fit into

0:14:26.040 --> 0:14:29.320
<v Speaker 13>new higher capital requirements. One is to raise more money.

0:14:29.520 --> 0:14:32.920
<v Speaker 13>The other is to shrink your loan book. And what

0:14:32.960 --> 0:14:36.760
<v Speaker 13>I've seen is they're doing a little bit. They're shrinking

0:14:36.800 --> 0:14:40.160
<v Speaker 13>their loan book and being very disciplined on loans. The

0:14:40.240 --> 0:14:43.640
<v Speaker 13>thing I don't love about the requirement to raise more

0:14:43.640 --> 0:14:45.960
<v Speaker 13>bank capital. The issue we had in March was not

0:14:46.040 --> 0:14:51.200
<v Speaker 13>about bank capital. It was a supervisory lapse hiding in

0:14:51.320 --> 0:14:57.240
<v Speaker 13>plain sight, where the banks took asset liability risk. It

0:14:57.360 --> 0:15:00.680
<v Speaker 13>was well known to the FED and to the regulators,

0:15:00.800 --> 0:15:04.000
<v Speaker 13>but they didn't act to get banks to clean it up.

0:15:04.720 --> 0:15:07.920
<v Speaker 13>In response, the response has been you need to raise

0:15:07.960 --> 0:15:09.560
<v Speaker 13>more capital, and we're going to be tougher from a

0:15:09.600 --> 0:15:11.960
<v Speaker 13>regulatory point of view. But I think a lot of

0:15:11.960 --> 0:15:14.240
<v Speaker 13>banks I talked to are frustrated. They think it was

0:15:14.280 --> 0:15:18.880
<v Speaker 13>a supervisory issue, not a bank capital issue. And I

0:15:18.920 --> 0:15:21.640
<v Speaker 13>think that's what you hear Jamie diamond saying this bank

0:15:21.680 --> 0:15:23.760
<v Speaker 13>capital is not going to help, and it isn't what

0:15:23.840 --> 0:15:27.160
<v Speaker 13>the issue was in March. The last comment I'd make

0:15:27.240 --> 0:15:30.880
<v Speaker 13>about the FED balance sheet, there is one sort of

0:15:31.280 --> 0:15:34.600
<v Speaker 13>low fever symptom of the balance sheet runoff and all

0:15:34.640 --> 0:15:37.760
<v Speaker 13>this government spending, and that's the backup in the ten year.

0:15:38.640 --> 0:15:41.120
<v Speaker 13>So we don't talk about as much as we should,

0:15:41.520 --> 0:15:45.280
<v Speaker 13>but the tenure treasury has backed up a good fifty

0:15:45.320 --> 0:15:49.520
<v Speaker 13>basis points. That is a very significant move, and I'm

0:15:49.520 --> 0:15:53.040
<v Speaker 13>not sure it's over yet. And so is there some

0:15:53.880 --> 0:15:57.160
<v Speaker 13>symptom of the bank of the runoff. We don't have

0:15:57.200 --> 0:15:59.800
<v Speaker 13>as many natural buyers for treasuries used to be FED

0:15:59.880 --> 0:16:03.040
<v Speaker 13>was one. Banks we know were one, but they're not

0:16:03.080 --> 0:16:06.440
<v Speaker 13>going to buy anymore because it created the problems in March,

0:16:07.120 --> 0:16:11.040
<v Speaker 13>and so I would be watching, and I do watch

0:16:11.400 --> 0:16:14.760
<v Speaker 13>very carefully. Right now, two things, where are the ten

0:16:14.800 --> 0:16:18.240
<v Speaker 13>years trading? And what's the price of oil, and those

0:16:18.280 --> 0:16:23.440
<v Speaker 13>are two factors away from the FED that are concerning.

0:16:23.040 --> 0:16:25.320
<v Speaker 1>Well, WTI is above a ninety dollars barrel, as you

0:16:25.320 --> 0:16:27.840
<v Speaker 1>well know today, Rob. It sounds like you're describing a

0:16:27.840 --> 0:16:30.560
<v Speaker 1>scenario where the transmission mechanism sort of works through small

0:16:30.600 --> 0:16:33.760
<v Speaker 1>businesses and next year we might get a slow down.

0:16:33.920 --> 0:16:37.320
<v Speaker 1>Will there be a drop off and employment that will

0:16:37.400 --> 0:16:39.040
<v Speaker 1>cause a recession?

0:16:39.520 --> 0:16:44.360
<v Speaker 13>So I don't think. I don't know, of course, but

0:16:44.640 --> 0:16:48.960
<v Speaker 13>I would guess there will not be a recession this

0:16:49.080 --> 0:16:53.120
<v Speaker 13>year or next year. And the reason is the amount

0:16:53.200 --> 0:16:55.720
<v Speaker 13>of government spending for the rest of this year and

0:16:55.840 --> 0:16:59.240
<v Speaker 13>next year. And by the way, you notice that that

0:16:59.360 --> 0:17:01.000
<v Speaker 13>you know, if you ask me six months ago, I

0:17:01.000 --> 0:17:03.360
<v Speaker 13>think the best estimate on the deficit for this year

0:17:03.480 --> 0:17:07.879
<v Speaker 13>was a trillion and a quarter. It's now two trillion dollars. Okay,

0:17:08.000 --> 0:17:11.440
<v Speaker 13>we're running a very high, high pre recession.

0:17:11.040 --> 0:17:12.880
<v Speaker 1>Deficittion my election here though, Does that make a.

0:17:12.800 --> 0:17:17.399
<v Speaker 13>Difference, Well, I'll leave that to others. I think the

0:17:17.480 --> 0:17:23.200
<v Speaker 13>point of this is this amount of spending that's a

0:17:23.240 --> 0:17:26.960
<v Speaker 13>meaningful percentage of GDP is the main reason I think

0:17:27.040 --> 0:17:30.560
<v Speaker 13>that we've got stability. We don't have slower GDP growth.

0:17:30.840 --> 0:17:34.000
<v Speaker 13>It also means that the employment rate is going to

0:17:34.040 --> 0:17:40.000
<v Speaker 13>stay unemployment rate very low. There's substantial demand from every

0:17:40.040 --> 0:17:42.960
<v Speaker 13>one of these projects for jobs. There aren't enough workers

0:17:43.000 --> 0:17:45.400
<v Speaker 13>to do these jobs, and there's a lot of job

0:17:45.520 --> 0:17:49.399
<v Speaker 13>switching to fill these jobs. I think this is a

0:17:49.440 --> 0:17:52.080
<v Speaker 13>reason why the Fed, I hope they don't, may need

0:17:52.119 --> 0:17:54.520
<v Speaker 13>to do more and we'll need to keep rates higher

0:17:54.560 --> 0:17:58.200
<v Speaker 13>for longer. And that's the trade. And you may see

0:17:58.200 --> 0:17:59.800
<v Speaker 13>the tenure backup.

0:17:59.840 --> 0:18:03.120
<v Speaker 4>For so we're at four twenty eight right now. Can

0:18:03.160 --> 0:18:06.600
<v Speaker 4>you see a tenure at let's say four to seventy

0:18:06.600 --> 0:18:08.200
<v Speaker 4>five and other fifty basis points.

0:18:08.320 --> 0:18:10.720
<v Speaker 13>So I'll take you here's how I'd look at it.

0:18:10.880 --> 0:18:13.120
<v Speaker 13>People are saying, gee, when the Fed starts to cut

0:18:13.200 --> 0:18:16.879
<v Speaker 13>rates somewhere in the future in twenty twenty four, maybe

0:18:16.920 --> 0:18:19.560
<v Speaker 13>the tenure will lease off. I think the bond market

0:18:19.560 --> 0:18:23.320
<v Speaker 13>has already looked through that, and it's said if inflation

0:18:23.480 --> 0:18:26.920
<v Speaker 13>stays sticky, price of oil might be one of the reasons.

0:18:27.720 --> 0:18:29.919
<v Speaker 13>And the Fed is able to get the Fed funds

0:18:29.960 --> 0:18:34.240
<v Speaker 13>rate down to say three, for example, three percent at

0:18:34.280 --> 0:18:36.920
<v Speaker 13>one hundred and fifty basis point term premium that gets

0:18:36.960 --> 0:18:39.240
<v Speaker 13>you to four to fifty on the tenure This is

0:18:39.320 --> 0:18:42.439
<v Speaker 13>why a lot of intelligent people are saying, you know,

0:18:42.480 --> 0:18:45.280
<v Speaker 13>I know there's a been backup in rates, but I'm

0:18:45.359 --> 0:18:48.960
<v Speaker 13>not sure we're at fair value now. And that's why

0:18:50.440 --> 0:18:53.080
<v Speaker 13>I'm watching this very carefully, because it could create a

0:18:53.119 --> 0:18:58.080
<v Speaker 13>further tightening in financial conditions, assuming the Fed.

0:18:57.920 --> 0:19:01.280
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