Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course, on the Bloomberg terminal. Right now, McKee
Speaker 1: begins his work at Jackson Hall. The number one issue
Speaker 1: is taper. No, not the economic taper, the taper of
Speaker 1: my waist. After three meals at the Pioneer Grill, guess
Speaker 1: what It's not gonna happen because we've gone virtual. McKee's virtual,
Speaker 1: and the distinguished esther George is virtual. Let's listen. We
Speaker 1: uh had hoped for an in person meeting. We had
Speaker 1: planned that way, knowing in the back of our mind
Speaker 1: that that would be a function of how the virus
Speaker 1: unfull it and as we saw last week, risk levels
Speaker 1: went up and in the interest of our guests, we
Speaker 1: pivoted to a virtual platform. So disappointed, but still looking
Speaker 1: forward to a great conference. We've got a great lineup
Speaker 1: of speakers and papers that I think are going to
Speaker 1: bring insight to an important topic. Well, you lead into
Speaker 1: an important question. The latest COVID spike. How do you
Speaker 1: think that is going to affect the economy? Well, I
Speaker 1: think it's a risk to the outlook. But what we've
Speaker 1: seen so far, and what I hear from contacts in
Speaker 1: our region, is the economy continues to grow at a
Speaker 1: strong rate. Consumers are still spending, the labor market is
Speaker 1: continuing to heal. We saw a good job gains last month,
Speaker 1: and so the outlook I think remains a positive one.
Speaker 1: We will have to see what impact this flare up
Speaker 1: in the virus might ring. So you can imagine that
Speaker 1: it might slow down some of the returns to the
Speaker 1: labor market, but I don't expect at this point that
Speaker 1: it will derail the economy as we saw last year
Speaker 1: when we first had to deal with the virus. Do
Speaker 1: you think it slows down your time table for when
Speaker 1: you might want a taper, because you might want to
Speaker 1: wait and get more data. I think for me, as
Speaker 1: I look at the progress that the economy has made
Speaker 1: so far, it really does suggest that we've come to
Speaker 1: a point where we can begin to ease up on
Speaker 1: the amount of accommodation provided to the economy. That's different
Speaker 1: than suggesting that we have arrived at the objectives that
Speaker 1: we have in terms of full employment and price stability.
Speaker 1: So I don't think that it changes my own calculus
Speaker 1: that it is time to begin to make those adjustments.
Speaker 1: Given the gains we've seen so far, have you gained
Speaker 1: enough on the elements side, especially in the diversity area.
Speaker 1: Have we seen enough progress in terms of getting minority
Speaker 1: unemployment down? What's the labor market picture like? Well, clearly
Speaker 1: we have not seen the labor market fully recover, and
Speaker 1: there's still slack there when you look at millions of
Speaker 1: people that have not come back into the workforce, not
Speaker 1: yet resumed working yet. And as you noted, when you
Speaker 1: begin to drill down into who's recovering who's not recovering,
Speaker 1: we know that there is a disproportionate outcomes right now
Speaker 1: for black and Hispanic workers. That I think is a
Speaker 1: function again of watching how the labor markets heal and
Speaker 1: how the economy recovers, and to the extent some of
Speaker 1: those contact intensive sectors can continue to break jobs back
Speaker 1: on and we saw that last month. We saw leisure
Speaker 1: and hospitality UH come in pretty well. If those kinds
Speaker 1: of gains can continue at a healthy pace. Then my
Speaker 1: expectations we will continue to see, uh the impacts begin
Speaker 1: to narrow across many dimensions of the labor market, and
Speaker 1: that would be a good sign. Is there any division
Speaker 1: on the Open Market Committee about when did taper at
Speaker 1: Wall Streets? Making a lot out of the fact that
Speaker 1: some people think we should wait till the end of
Speaker 1: the year, and some say we haven't seen enough progress,
Speaker 1: And then there are people like you and other colleagues
Speaker 1: who say we've made enough progress to begin thinking about
Speaker 1: So this is a big committee, as you know, and
Speaker 1: one of its real strengths is the diversity of us.
Speaker 1: It brings to looking at a common set of data.
Speaker 1: That's a healthy discussion, and um, you often see those
Speaker 1: differences emerged at the point that the economy is turning.
Speaker 1: So it's a healthy sign for the Committee to be
Speaker 1: again to debate and deliberate on those issues as we
Speaker 1: judge when we've made progress towards the objectives that we've
Speaker 1: set out for the economy. Yeah, I'm just wondering if
Speaker 1: if Wall Streets making too much of it. You know,
Speaker 1: the idea of whether you say something in September or November,
Speaker 1: is that cutting the policy to Finally, I think what
Speaker 1: we've been focused on and you've seen is a commitment
Speaker 1: to communicate clearly, to make sure that we are being
Speaker 1: transparent about the factors that are being considered for that
Speaker 1: transition as it relates to asset purchases. And I think
Speaker 1: that's what's been happening um the the markets, the public
Speaker 1: has been hearing those communications, and of course we're coming
Speaker 1: into a meeting in September where we will continue to
Speaker 1: talk about how the economy has unfolded and the timing
Speaker 1: for adjustments to those asset purchases. Interesting story today about
Speaker 1: how Wall Street doesn't care as much about when you
Speaker 1: begin the taper as when you ended. Uh, what's your
Speaker 1: view on how fast you would want to get out
Speaker 1: of the QUEUEI business, So I think it's important to
Speaker 1: get started and the conditions of pace, timing of when
Speaker 1: we end. I think I'm open minded to listening to
Speaker 1: the debates around that, but I am less interested in
Speaker 1: deferring that decision. So I think it's important to really
Speaker 1: center on when we believe the progress in the economy
Speaker 1: is sufficient to start that process, And that's really where
Speaker 1: I'm focused in that sense, I think we should get
Speaker 1: started this year, uh, so that we can begin to
Speaker 1: uh pair back the amount of accommodation, watch to see
Speaker 1: how the economy unfolds after that, and then down the
Speaker 1: road be in a position to make decisions as the
Speaker 1: economy changes on what we need to do with our policy. Right,
Speaker 1: I'm gonna guess that you would agree with the Chairman
Speaker 1: Powell that tapering is not tightening and that the two
Speaker 1: are not connected. But the way traders see it, you
Speaker 1: at this point, because of what the Chairman has said,
Speaker 1: aren't going to start tightening until you're done with tapering.
Speaker 1: So uh, there is a bit of a connection on
Speaker 1: the back end. And I'm wondering if you agree with
Speaker 1: the members of the committee who say we should get
Speaker 1: it done faster than we did last time. I think
Speaker 1: there's good arguments for that, um again depending on how
Speaker 1: the economy unfolds. Uh. The arguments that ending the asset
Speaker 1: purchases will give the committee some flexibility to judge the
Speaker 1: progress in the economy. But I don't think that's in
Speaker 1: any way a mechanical decision and one that we can
Speaker 1: lay out today. Whether it's a certain amount of months,
Speaker 1: the conditions really that have been laid out in the
Speaker 1: guidance from the Committee has been that we will have
Speaker 1: achieved maximum employment and price stability objectives when that rate
Speaker 1: decision is made, whatever decision you make about the pace
Speaker 1: of taporing, you're doing a hundred and twenty billion a
Speaker 1: month right now. At what point would anybody even notice
Speaker 1: in the economy. Well, I'll be watching for that um
Speaker 1: at the point that begins, because it is a tremendous
Speaker 1: amount of accommodation going into the economy right now. And
Speaker 1: assuming communications have been laid out and the committees um
Speaker 1: response to how the economy is unfolding is clear, Uh,
Speaker 1: you would expect the economy to be able to work
Speaker 1: through that. And that is my expectation that with good communication,
Speaker 1: with clarity around the factors that we judge are pushing
Speaker 1: us toward our mandates, UH, that that will all work
Speaker 1: out in terms of the omy's ability to absorb that.
Speaker 1: The minutes of the last couple of meetings suggests that
Speaker 1: you've all basically agreed that you've essentially reached your mandate
Speaker 1: on the inflation side. So I'm wondering where Esther George,
Speaker 1: the inflation hawk is at this point. What do you
Speaker 1: think about the progress of inflation, and do you have
Speaker 1: some concerns that maybe it's not transitory. Well, I think
Speaker 1: watching the level of inflation right now certainly has gotten
Speaker 1: my attention. It's gotten the attention of many households and
Speaker 1: businesses in my region that frankly hadn't had to think
Speaker 1: about inflation for many years in their decision making, So
Speaker 1: it's not something to ignore by any means. Having said that,
Speaker 1: I do think that it is reasonable to assume that
Speaker 1: what we're seeing right now is coming from the combination
Speaker 1: of robust demand running up against supply constraints, and that
Speaker 1: of course is keeping upward pressure on prices over time.
Speaker 1: I would expect that to moderate, and that I think
Speaker 1: is a reasonable assumption to make. But that, of course
Speaker 1: will depend on a variety of other factors. To what extent, UH,
Speaker 1: does risk from the virus affect those supply chains, will
Speaker 1: they become more persistent? Will it begin to build into
Speaker 1: people's expectations in a way that will cause us to
Speaker 1: have to rethink that policy accommodation UH different than we
Speaker 1: are today. You've always been on the lookout for inflation
Speaker 1: and one of the first to warn about the possibilities.
Speaker 1: So I'm wondering if you think we would have time
Speaker 1: or you would have time since I don't have a vote,
Speaker 1: you would have time to react if inflation proved not
Speaker 1: to be transitory and that you're not behind the curve.
Speaker 1: So it's hard to say today, given where we are
Speaker 1: in this recovery, Certainly the Committee has the tools it
Speaker 1: needs to respond to inflation. That, of course, is always
Speaker 1: a function of understanding what's going on in the broader economy,
Speaker 1: and it's hard to judge, but I think, uh, no
Speaker 1: one should question that the Committee is committed that I'm
Speaker 1: committed to a two percent inflation objective over the long
Speaker 1: run for the economy, and we'll just have to see
Speaker 1: how this transition in the economy from a terrible pandemic
Speaker 1: shock to beginning to recover from that unfold. I have
Speaker 1: to ask you one last question on a fiscal side, uh,
Speaker 1: leaving aside the merits and the partisan issues involved in
Speaker 1: the budget that was just passed by Congress, do you
Speaker 1: worry that billions more, hundreds of billions of more in
Speaker 1: UH spending would be inflationary? So I think the question
Speaker 1: of fiscal spending is one that I'm going to defer
Speaker 1: to fiscal policy makers. UH, to a judge, I think
Speaker 1: as a monetary policy maker, I will be watching carefully
Speaker 1: any number of impacts our economy, including fiscal spending, to
Speaker 1: understand how it might change the dynamics for how we
Speaker 1: achieve the objectives that Congress has given us. I actually
Speaker 1: have one more question, and that is you talked about
Speaker 1: the great guest lineup you have. There's one in particular
Speaker 1: that everybody wants to hear from. UH. The minutes of
Speaker 1: the last meeting said no decisions were made. So I'm
Speaker 1: wondering what we should expect from the chairman. Is he
Speaker 1: going to be giving us guidance or opinion? Well, the
Speaker 1: Chairman has not shared his remarks with me, so I
Speaker 1: could not honestly tell you what he'll be offering, but
Speaker 1: I'm sure it will be worth listening to. From the Midwest,
Speaker 1: esther George and the Kansas City Fed and a decidedly
Speaker 1: different president. Of fact, she does not have a PhD
Speaker 1: in economics. Think James Bullard and many others who do,
Speaker 1: but just to simply do front path replacing Thomas Hunting.
Speaker 1: Do we start strong at this hour of surveillance with
Speaker 1: Russ coaster Ridge, with black Rock Global Allocation fund portfolio manager,
Speaker 1: someone who really can synthesize the moment. Russ, why do
Speaker 1: I want to own bonds? I just don't get it.
Speaker 1: When I see where yields are your short duration, I
Speaker 1: get that, But what is the waiting of bonds right now?
Speaker 1: Or do you just run to dividend growth? You know,
Speaker 1: if you're talking about traditional treasury bombs, there not a
Speaker 1: lot of reasons. Uh. You know, obviously the income is
Speaker 1: not there, and what we think yields are gonna back
Speaker 1: up a little bit by your end, you're still getting
Speaker 1: a very paltry yield. The reason you held them for
Speaker 1: much the last ten twenty years was they act as
Speaker 1: a risk ntigant. They had a reliably negative correlation with stocks.
Speaker 1: They provided some downside protection the portfolio, Thomas, you know
Speaker 1: they're not doing that right now. We've seen at the
Speaker 1: correlation has been somewhere between positive and zero for much
Speaker 1: of the last six to nine months. And honestly, there
Speaker 1: are other ways to think about risk mitigation, whether it's
Speaker 1: being long the dollar, whether it's using volatilities and asset
Speaker 1: class So the short answer your questions, I think today
Speaker 1: other than parts of the bond market, whether you're talking
Speaker 1: about e M debt or securitized that offers some yield,
Speaker 1: you own a lot less bonds than you used to.
Speaker 1: RUSS ten Equity markets continue to rally if treasury yields
Speaker 1: ten year treasure yields go up to one point five
Speaker 1: one in short order. Absolutely, I mean, I think you
Speaker 1: know this, this is the big question. But if you
Speaker 1: go back and you look at history, you've actually seen,
Speaker 1: you know, contrary to what a textbook would tell you,
Speaker 1: that multiples in real rates in the US have tended
Speaker 1: to co move together. And there's a simple reason for that.
Speaker 1: It's because when you see that modest rise and really yields,
Speaker 1: particularly from these you know, absurdly low levels, it's come
Speaker 1: in the context of a better economy, better earnings growth,
Speaker 1: and that's environment where both equities and multiples tend to
Speaker 1: be solid. So I don't think the ten year in
Speaker 1: one five, one six, one seven is a big threat
Speaker 1: to the equity rally. If anything, I think the tenure
Speaker 1: one five, one six, one seven tells you monetary policy
Speaker 1: is getting a bit more rational and the economy solid
Speaker 1: and ermine's growth it's likely to remain strong. RUS what
Speaker 1: does a policy mistake look like right now? From the FED?
Speaker 1: So there's an interesting HSBC notes saying, actually, the inflation
Speaker 1: is transitory, but it's the biggest danger at and that
Speaker 1: now that at any point since the central banks became
Speaker 1: independent in the nine nineties. You know, I think there
Speaker 1: is this question about you know, inflation I believe is transitory.
Speaker 1: But because we've spoken about in the past, transitory can
Speaker 1: be a long time. Transitory can last six, nine, twelve months,
Speaker 1: given the inflationary pressures you have. So getting some clarity
Speaker 1: about tapering, getting some clarity about how long that's going
Speaker 1: to last. I think the FED would do well to
Speaker 1: start soon, give themselves the optionality to be able to
Speaker 1: raise rates in late two thousand twenty two if inflation
Speaker 1: remains more persistent than they think that would be healthy
Speaker 1: at this point in the cycle. Whereas very quickly here
Speaker 1: I've lost track and I'm fascinated with what you think.
Speaker 1: What's the bet of the street right now? Are we
Speaker 1: way overweighted in equities? Are we are hedgephones loading the
Speaker 1: boat on equities? What's that tone in the malaise of August?
Speaker 1: It's Tim's really interesting. We spend a lot of time
Speaker 1: on this and you come to different conclusions. Up, clearly,
Speaker 1: people have been buying stocks. The flows have been very strong,
Speaker 1: but there was a very long periods we know, when
Speaker 1: flows were persistently negative in stocks and people were buying bombs.
Speaker 1: We look at other measures, We look at some of
Speaker 1: the surveys, Uh, some of the retail surveys. They're not
Speaker 1: that bullosh. So look, I think people are long equities.
Speaker 1: It's not obvious that you have the extreme crowding that
Speaker 1: you had earlier in the year. And the reasons of
Speaker 1: that is we've seen these violent rotations. You know, in
Speaker 1: most of two thousand twenty when stocks were rebounded, it
Speaker 1: was all about secular growth. Then it moved to cyclicals.
Speaker 1: Now it's tilted about a little bit back towards growth.
Speaker 1: So while the markets continue to grind higher in this
Speaker 1: very steady fashion, you know, as you as you well know,
Speaker 1: under the surface, you've had some very violent rotations which
Speaker 1: in my opinion, have kept parts of the market from
Speaker 1: getting as crowded as they might be. Russ, How concerned
Speaker 1: are you that we saw the first decline in leveraged
Speaker 1: and borrow money to buy stocks going back to the
Speaker 1: beginning of the pandemic, the idea that suddenly people are
Speaker 1: reducing their riskiness or at least how leverage their speculative
Speaker 1: positions are. Honestly, I think it's healthy. I was probably
Speaker 1: a bit more concerned earlier in the year when leverage
Speaker 1: levels were were extremely high, when you had, you know,
Speaker 1: these enormous surges in volume for small and MidCap names
Speaker 1: that were trading not on fundamentals but purely un momentum,
Speaker 1: When you saw all of the meme stocks just erupting
Speaker 1: higher without any good reason. Uh. If anything, the market
Speaker 1: has actually calmed down a bit. And one of the
Speaker 1: really interesting things is if you look at again, what's
Speaker 1: been working, uh, since February, since March, since yields peaked,
Speaker 1: he moved away from some of the more speculative parts
Speaker 1: of the market, and you've actually moved towards quality. You know,
Speaker 1: what's worked in the last six months has been companies
Speaker 1: that are profitable that if consistent earnings with modest leverage.
Speaker 1: To me, that's a healthy sign that fundamentals all reasserting themselves. Russ,
Speaker 1: thank you so much. Russ Coster to us with black
Speaker 1: Rock on a global allocation fund portfolio manager. This is
Speaker 1: the important conversation today of your emotion of what to do?
Speaker 1: You know the cliche, there's a wall of worry, and
Speaker 1: Darryl Cronk is esteemed and able to write about it
Speaker 1: wells Fargo, here is there, Investment Officer, Darryl, I love, love,
Speaker 1: love your note because you go to the emotion of this.
Speaker 1: Forget about Fabozzi, forget about the textbooks, forget about all
Speaker 1: the fancy stuff you say. Here are the worries. You
Speaker 1: gotta fade these, You gotta follow closely these, and you
Speaker 1: gotta fear these. Let's start with fade. What do I
Speaker 1: fade here? And the worries that I can ignore? Well,
Speaker 1: I think there's a good morning Tom first of all,
Speaker 1: and good morning Lisa and Francy. So I think there's
Speaker 1: a number of them that you can actually fade. This
Speaker 1: one may be a little controversial, but I think from
Speaker 1: an economic and capital market standpoint, delta is one of those.
Speaker 1: You can't fade it from a health standpoint, but I
Speaker 1: think you can fade it from the economy. Uh. Just
Speaker 1: note the up in the SMP fifty one new eyes
Speaker 1: um that was just discussed. You know, there's just there's
Speaker 1: some violent rotation under the surface from growth to um
Speaker 1: cyclicals to bond proxies and back again. But beyond that
Speaker 1: market still move higher. I would watch the debt ceiling.
Speaker 1: I think you've got to fear the debt ceiling. UM. Yeah,
Speaker 1: September is going to be a white knuckle events. I mean,
Speaker 1: you've got a whole bunch of things going on there
Speaker 1: with the budget resolution, You've got perhaps the uh, certainly
Speaker 1: the debt ceiling, and we're in extraordinary measures. You've got
Speaker 1: the reinstatement of Powell, Darryl. This is important. I want
Speaker 1: to underscore this September is going to be a white
Speaker 1: knuckle month at a time when we have all bears
Speaker 1: basically blown out of the water and everyone trying to
Speaker 1: get more bullish and absolutely everything. Do you think that
Speaker 1: this is a problem setting up for sort of a
Speaker 1: perfect storm, if you will, in the next few weeks. Yeah,
Speaker 1: I do think it. I think it's going to be
Speaker 1: a lot of headlines. I guess that's what i'd say.
Speaker 1: You've got You've got the bipartisan infrastructure package, You've got
Speaker 1: a three and a half trillion dollar spending budget legislation,
Speaker 1: You've got a potential government shutdown, You've got the debt ceiling,
Speaker 1: and you've got the reappointment of uh FED chair Powell,
Speaker 1: all of which has to get somehow resolved in progress
Speaker 1: in September. We know where the politics are, so this
Speaker 1: is a real risk. You'll remember, you know, ten years
Speaker 1: ago this month was it was August two thousand eleven
Speaker 1: when we downgraded the U S debt as a result
Speaker 1: of the standoff. So um that had a decline in
Speaker 1: consumer confidence, in a decline in the SMP. So. Look,
Speaker 1: I think at the end they do find some resolution,
Speaker 1: but it's not going to be without some of those
Speaker 1: white knuckle events. And I think it's going to create
Speaker 1: a September to remember out of Washington. I like that
Speaker 1: September to remember how much white knuckle events will come
Speaker 1: from currency volatility and actually, how will that if we
Speaker 1: have a volatile dollar going into a FED meeting, how
Speaker 1: much will that wipen it up? Um. We actually think
Speaker 1: the dollar is is kind of in a near term peak.
Speaker 1: We think it's in a longer term kind of channel
Speaker 1: sideways trend, but a near term peak with some weakening here,
Speaker 1: which is part of the reason you're getting a little
Speaker 1: bit of that bullish sentiment. People are turning things back on.
Speaker 1: I think what's interesting here, though, is if you get
Speaker 1: under the surface, right, pay attention. I'm paying attention to
Speaker 1: high yield spreads and credit oss. They're up fifty basis
Speaker 1: points in the last six weeks, right, there's they're quietly
Speaker 1: leaking higher, right, so we need to pay attention to that.
Speaker 1: You've got merging markets are now negative year to date,
Speaker 1: and you've got copper and oil both off double digits
Speaker 1: from their previous highs. So there are some things we
Speaker 1: gotta pay attention to there. Darryl Cronic, thank you so much.
Speaker 1: Too short of visit. We got to this longer next time.
Speaker 1: With Wells Fargo, their chief investment officer, what you want
Speaker 1: to hear about is the equity market dowty thousand, four
Speaker 1: zero five. Sam stove All a few years ago was
Speaker 1: sitting on an acclaimed father's lap considering the Dow at
Speaker 1: three fifty or whatever it was back then. With CFRE
Speaker 1: and their chief investment strategies, Sam, we get heated mail
Speaker 1: when we talked to bulls. What's the level of your
Speaker 1: bullish belief right now? Well, good morning, Tom, and thank
Speaker 1: you for that intro yeah, I never crushed my father's lap,
Speaker 1: but uh, good thing I haven't sat on it in
Speaker 1: a while. Uh. Anyway, you know, the feeling is that
Speaker 1: the path of least resistance continues to be higher. Even
Speaker 1: though we have seen a creeping up of the ten
Speaker 1: year yield, we're still seeing investors gravitating toward the growth
Speaker 1: side of the equation, also looking toward real estate, etcetera. So, uh,
Speaker 1: twenty is our target? You have you have at least
Speaker 1: a Please go ahead. I'm sorry my fault. No, no,
Speaker 1: I mean Sam and no, no worries. It's just you know,
Speaker 1: I got to jump in because you talk about forty hundred.
Speaker 1: You sound like a bear. I mean, honestly, this is
Speaker 1: a market where people can't get bullish enough. And are
Speaker 1: you also thinking five thousand, six thousand, seven thousand and
Speaker 1: projecting out incredible earnings and returns for the foreseeable future. Well,
Speaker 1: what's the old saying? You you target a price but
Speaker 1: not a date, or you pet forecast a date but
Speaker 1: not a rice. Uh so, yes, those numbers that you
Speaker 1: mentioned will be attained at sometime down the road. But
Speaker 1: I think we also have to make sure that we
Speaker 1: are risk mitigators at the same time, we've gone three
Speaker 1: times as long as we normally have between declines of
Speaker 1: five percent or more. I think that the market is
Speaker 1: vulnerable to some sort of an upset, whether it comes
Speaker 1: from a policy misstep, whether it comes from geopolitical factors, etcetera.
Speaker 1: Uh So, I think that we really have to just
Speaker 1: not assume that the sky is the limit. Sam, How
Speaker 1: do currencies actually play into sonder? Equity calls? Good morning, Francine. Well,
Speaker 1: currency is an important part when we look at the
Speaker 1: technicals of the Euro versus the US dollar. Uh. The
Speaker 1: weakening that has been experienced over the intermediate term implies
Speaker 1: that investors do expect interest rates here in the US
Speaker 1: to be picking up, possibly because of the FED initiating
Speaker 1: their tapering in the fourth quarter of this year, possibly
Speaker 1: because of the continued improvement in economic activity, and maybe
Speaker 1: even the peaking of the delta variant. SAMs. So you
Speaker 1: are acclaimed for understanding the vogue of the moment, the fad.
Speaker 1: Remember Tick. Everybody in the world stopped like fourteen times
Speaker 1: a day to look at the TICK data and there
Speaker 1: was this a put color ratio went on. What's the
Speaker 1: fad right now? Where you say, get your radar up
Speaker 1: and be cautious. Wow, no pressure there, Hunt Tom, No none. Well,
Speaker 1: and I think the fad really is growth versus value.
Speaker 1: What kind of a rotation are we possibly going to
Speaker 1: be seeing right now? Investors are chopped full of growth
Speaker 1: stocks once again, whether it's tech, consumer, discretionary, communications services,
Speaker 1: And the real question is when or if, and I
Speaker 1: think it's more in none and if that we see
Speaker 1: a rotation back into the value side of the equation.
Speaker 1: Because the economy is expected to be improving, we are
Speaker 1: likely to be seeing passage of one or both infrastructure
Speaker 1: packages and we will start to see the tenure yield
Speaker 1: creep up once again. Meanwhile, Jim Bianco was on Bloomberg
Speaker 1: Television yesterday and he was talking about the FED put
Speaker 1: that's sort of implied in markets that there is this
Speaker 1: belief in stock investments that if there is a big
Speaker 1: draw down, and big draw down could be five to
Speaker 1: the FED will step in, they will decelerate their tapering,
Speaker 1: they will become even more accommodative. Do you agree that
Speaker 1: there is sort of this implicit backstop baked into valuations
Speaker 1: where they are inequities right now? I think that could
Speaker 1: be a mistake to assume that the FED will be
Speaker 1: stepping in should we see a five or even a
Speaker 1: ten percent to climb, because those are fairly natural in
Speaker 1: the stock market. And I think that, if, however, we
Speaker 1: do start to see the stock market fall into a
Speaker 1: market territory and that there is an astual risk to
Speaker 1: our financial system, then by all means the FED will
Speaker 1: step in. But I don't really think that the FED
Speaker 1: is going to be stepping in, you know, if we
Speaker 1: trip fall and just scrape our knee. Sam so far.
Speaker 1: We spoke the other day of the tenth anniversary of
Speaker 1: Steve Jobs resigning from Apple. Everybody, including me, got that wrong.
Speaker 1: What was me? Steve Jobs he died tragically on October five,
Speaker 1: ten years ago. And this guy Tim Cook, he can't
Speaker 1: do it. And as you have chronicled Apple to the moon,
Speaker 1: how do you know when to get off these stocks
Speaker 1: that just go and go and go and go. Well,
Speaker 1: you look at the fundamentals, you look at the technicals,
Speaker 1: and you listen to here analysts. Um, what's the old saying? Uh,
Speaker 1: the analysts do the work, but the investment strategists take
Speaker 1: the credit. Uh. So you know I love that. Here
Speaker 1: I hear what Angelo Zeno says about Apple, uh and
Speaker 1: and wait for his commentary. From a fundamental perspective, what's
Speaker 1: he say? What's he say? Right now? Right now? Still
Speaker 1: a favorable outlook for Apple. We have it ranked four stars,
Speaker 1: so it will in a better bonus on it. I folks,
Speaker 1: so much of this is not making money, it's not
Speaker 1: losing money. And when I lecture on this and Stowall
Speaker 1: doesn't get a royalty, I say, nothing helps you not
Speaker 1: lose money like the star system of cf r A.
Speaker 1: It is a great and beautiful thing. Mr Stovall, go away.
Speaker 1: Thank you. That was a clinic. Thank you so much.
Speaker 1: Sam Stolaw just I can't say enough about his work.
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Speaker 1: on the terminal. I'm Tom keene In. This is Bloomberg
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