Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market crows, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Matt, we are so
Speaker 1: fortunate for our next guest here to help us with context.
Speaker 1: Here um one of our all time favorites as we
Speaker 1: think about these geopolitical military issues around the world. James Travitas,
Speaker 1: Admiral the United States Navies retired adam all the US
Speaker 1: Navies in the U S Navy thirty seven years, served
Speaker 1: as a fifteen commander in US European Command and NATO's
Speaker 1: sixteen Supreme Allied Commander. In your, Admiral, thank you so
Speaker 1: much for joining us Right now, we just heard from
Speaker 1: President Zelenski's chief of staff taking a very very hard
Speaker 1: line about how far the people of Ukraine will take
Speaker 1: this fight to Russia. What is your view of what
Speaker 1: you're seeing on the ground. Well, first of all, what
Speaker 1: we are learning is that the center of gravity in
Speaker 1: this fight is not the Russian army and it's not
Speaker 1: really the Ukrainian military arms. The center of gravity is
Speaker 1: the spirit, the will of these Ukrainians. It's become remarkable
Speaker 1: and it's personified by President Zelinski. And I agree with you.
Speaker 1: I caught the tail end of the interview. The chief
Speaker 1: of staff does a great job channeling his boss, who
Speaker 1: is marching around the world doing these inspirational speeches at
Speaker 1: every major parliament and congress in the world. Um so
Speaker 1: there's a great deal to admire on the Ukrainian side
Speaker 1: of this. In terms of his comments about negotiation, Hey,
Speaker 1: it's Bloomberg right. We're a business network. We know how
Speaker 1: you negotiate, and you negotiate in two ways. One is
Speaker 1: you been as much positive of momentum for your side
Speaker 1: as you possibly can. At number two, you start with
Speaker 1: a hardline position, recognizing you're going to have to negotiated
Speaker 1: in from that. And I think both those are true
Speaker 1: in this case. In terms of the Russian response, Admiral,
Speaker 1: we've seen UM more and more destructive weapons used. There
Speaker 1: was a lot of criticism when the hypersonic missiles UM
Speaker 1: were put into action, but isn't that to be expected,
Speaker 1: as uh war rages on this long. Of course, they
Speaker 1: expected to march in and you know, be greeted much
Speaker 1: the way Hitler's troops were greeted when they um completed
Speaker 1: on Schlis of Austria. That didn't happen, So they're going
Speaker 1: to use bigger force. Indeed, they were expecting bouquets of
Speaker 1: flowers and bottles of vodka, and what they got were
Speaker 1: bottles of gas lead with rags, stuff to the top
Speaker 1: Molotov cocktails. UM. It has been extraordinary to watch the
Speaker 1: fit alire of Russian intelligence and the isolation of Vladimir
Speaker 1: Putin personally, who clearly had no clue what this was
Speaker 1: going to look like, and his people, uh failed miserably
Speaker 1: at least thus far. So Plan A, you're exactly right,
Speaker 1: was unchlus. It was sweep across the country, blitz creeb,
Speaker 1: a little bit of fighting, find Zalinsky sued him and
Speaker 1: put a public government in Kiev that was planned in UM.
Speaker 1: That is over. Plan B, you're also correct, is kind
Speaker 1: of looking like fifteenth century siege warfare. Bring all your
Speaker 1: cannons around the city and just pounded to dirt, terrorized
Speaker 1: the population, and UM at the end of the day,
Speaker 1: then you can gain strength for negotiations. That's what Putin's
Speaker 1: doing on his side of the coin. None of this
Speaker 1: is unexpected in the way that worth typically unfold but
Speaker 1: has got But Admiral concern is that Plan C is
Speaker 1: a biological weapon and possibly tactical nukes. It certainly is
Speaker 1: a deep concern, and you saw it addressed yesterday by
Speaker 1: President Biden and the heads of NATO. UM. And so
Speaker 1: what are we doing about it? We are send Putent
Speaker 1: signals that if he crosses that kind of weapon of
Speaker 1: mass destruction line, there will be serious consequences. What I
Speaker 1: suspect would happen. That's what would finally lead NATO to
Speaker 1: put a doe flies on up. That's very risky, very
Speaker 1: potential confrontation between ducle ron pounds. But we've got to
Speaker 1: tell Putin that if he does that, if he uses
Speaker 1: a tactical nuke of biologic a chemical weapon, UM, he
Speaker 1: will face the full might of the alliance. UM boy,
Speaker 1: I hope we don't go there, because it is a
Speaker 1: potential for real miscalculation at a higher level conflict. Admiral
Speaker 1: I got to ask about not a day goes by
Speaker 1: in this conflict when I'm not reminded of your novel.
Speaker 1: And I was telling Paul earlier, I think you know,
Speaker 1: in terms of a fictional entertaining work, it's up there
Speaker 1: with anything that Jack Carr or or Lee Child has
Speaker 1: ever written. But um, the problem with your book is
Speaker 1: that it's so realistic, and it's ringing true truer and
Speaker 1: truer as days go by. Here, how much of a
Speaker 1: problem is China? And what what do you think President
Speaker 1: She is thinking and doing here? Yeah, novel in the
Speaker 1: Next World War, of course, has about a potential war
Speaker 1: between the US and China, And I agree with you,
Speaker 1: what's happening in front of us ought to act as
Speaker 1: a real cautionary tale because if you think this is
Speaker 1: destructive picture of war between US and China, what President
Speaker 1: She is trying to do is kind of keep the
Speaker 1: ball on the middle of the fairway. He doesn't want
Speaker 1: to completely align his nation with Russia, partly because he
Speaker 1: thinks Russia is looking weaker by the minute and it's
Speaker 1: looking like a losing bet to do so. On the
Speaker 1: other hand, doesn't want to align with the West and
Speaker 1: fall in completely on these sanctions because he objects to
Speaker 1: a great deal of how Russia and China, in his view,
Speaker 1: are treated by the way, so he'll try and play
Speaker 1: the ball down the middle of the field. He will violate.
Speaker 1: I suspect some of the sanctions, perhaps about oil and gas,
Speaker 1: will allow Russian banks that come off the Swift system
Speaker 1: to go on his SIPs system, a kind of binib
Speaker 1: version of the Swift system. He'll say some generally supportive things,
Speaker 1: but on the other hand, he's given humanitarian aid to Ukraine,
Speaker 1: he has spoken against invading other sovereign countries. Um. He
Speaker 1: is also finally watching Taiwan and thinking how does this
Speaker 1: play with my calculus? I think, interestingly, Matt, it makes
Speaker 1: him less enthusiastic about an attack on Taiwan because he's
Speaker 1: watching what happened to Russia not going so well. All Right,
Speaker 1: we're speaking with James Travitas, Admiral United States Navy, and
Speaker 1: most importantly for this conversation, and I think NATO's sixteen
Speaker 1: supreme Allied Commander in Europe certainly has the you know,
Speaker 1: informed opinion. Admiral, if you were advising President Biden right
Speaker 1: now today, what would you tell him about what we
Speaker 1: should do, what NATO should do over the coming days
Speaker 1: and weeks, and maybe months. First, I'd say it's gone
Speaker 1: as well as could be expected at this point. The
Speaker 1: unity of the NATO alliance has been quite extraordinary. Continue
Speaker 1: to encourage the Germans to increase their defense spending, which
Speaker 1: they've done. Move NATO troops to the borders. The thing
Speaker 1: I would say to do that we're not doing. I
Speaker 1: would say, Mr President, We've got to look again at
Speaker 1: giving the Ukrainians tactical aircraft Big twenty nine and others.
Speaker 1: Let's give them the tools to implement a dough fly's
Speaker 1: So that's a big advantage for Russia. It's a whole
Speaker 1: in our strategy. Beyond that single point, I think we're
Speaker 1: doing a reasonably good job. I wonder what you think about, UM,
Speaker 1: the Middle East in this scenario, Uh, you know, because
Speaker 1: this White House has snubbed Crown Prince Mohammed been Salmon
Speaker 1: for understandable reasons. His humanitarian record and Yemen is not good,
Speaker 1: and he allegedly dismembered a journalist. UM. On the other hand,
Speaker 1: you know, Saudi Arabia is so important strategically for the
Speaker 1: US as far as I understand it. What's your thought?
Speaker 1: I agree with your assessment, and we um if we're
Speaker 1: going to make up Russian oil and gas in the markets,
Speaker 1: which we want to do because we don't want to
Speaker 1: see inflationary pressures jump even more. We have got to
Speaker 1: get not just the Saudis, but the Gulf States. You
Speaker 1: a guitar, et cetera. UM, that is where you have
Speaker 1: for capacity. Um. Last thought on the Middle East, by
Speaker 1: the way, I think the events of this war in
Speaker 1: Ukraine have elevated the chances of a deal with Iran.
Speaker 1: And we could go back and forth on whether that's
Speaker 1: a good deal or a bad deal, but it would
Speaker 1: certainly also add capacity into the hydrocarbon marketplaces. I think
Speaker 1: that puts upward pressure on concluding the deal. I would
Speaker 1: say that is probably in the realm of that deal
Speaker 1: will occur, sanctions will come off of the Iran and
Speaker 1: Iran will rejoin global energy markets. How do you think,
Speaker 1: Admiral we judge how does history judge? Angelomericle and kind
Speaker 1: of the German appeasement of Putin, because I remember when
Speaker 1: the US was over there begging them to put in
Speaker 1: l en G terminals, and they didn't want to hear
Speaker 1: it because they were so excited about Nordstream too. UM.
Speaker 1: And believe me, I was part of that whole effort.
Speaker 1: As Supreme elect's manner, I would talk to Chncellor Merkel
Speaker 1: constantly about not only that but also defense spending. We
Speaker 1: got nowhere. Vladimir Putin in four weeks has managed to
Speaker 1: close those arguments and now Germany has going to the
Speaker 1: right place. But Angela Merkel was chancellor for sixteen years,
Speaker 1: elected four times. She has a very strong record overall.
Speaker 1: But she'll look back. I hope she would look back
Speaker 1: and say I made a mistake there. Nord Street two
Speaker 1: was a mistake. Trust in Russia in any capacity was
Speaker 1: a mistake. I think Germany gets yeah, and not raising
Speaker 1: defense spending. I remember when I lived over there for
Speaker 1: years as well. There military was practicing with broomsticks because
Speaker 1: they didn't have enough rifles. They had one working sub
Speaker 1: and like you know, twenty five working tanks. Um, it's
Speaker 1: not going to be an easy you know, just like
Speaker 1: getting l n G over there. It's not gonna happen
Speaker 1: overnight or this year, next year, the year after building
Speaker 1: their army back is going to take a decade. I
Speaker 1: don't think it'll take a decade because there is a
Speaker 1: reasonable base inside the German military. In my experience having
Speaker 1: commanded those troops in combat. But you're absolutely correct that
Speaker 1: it does not turn on a dime. So where do
Speaker 1: I score it. I think it's a three to five
Speaker 1: year project, and they made a great down payment on
Speaker 1: it by effectively doubling their defense budget. UM. Think of
Speaker 1: it this way. It's kind of like when Carter was
Speaker 1: defeated and Ronald Reagan came in. It took us three
Speaker 1: to five years to get the U. S. Military back
Speaker 1: where it needed to be. That's what I think we're
Speaker 1: going to see in Germany. Admiral, just lastly here thirty seconds.
Speaker 1: Do you think President Putin ever resorts to nuclear and
Speaker 1: or chemical weapons? I think not nuclear. He recognizes the
Speaker 1: immense downside of that in every dimension. I think it's
Speaker 1: possible he would attempt something with chemical weapons, try and
Speaker 1: blame it on the Ukrainians and further terrorize the population
Speaker 1: of Ukraine. He is a dark figure and I would
Speaker 1: not put it past him. Adamal Sevidiz, thank you so
Speaker 1: much for joining us. We've got a couple of extra
Speaker 1: minutes with you, which we really appreciate. We really love
Speaker 1: getting your perspective here, given your experiences in Europe and
Speaker 1: with our military and NATO. They have a federal reserve
Speaker 1: that's taken a very hawkish pivot, and City Group was
Speaker 1: out this morning with an economics piece talking about multiple
Speaker 1: fifty basis point rate increases from this federal reserve over
Speaker 1: the next several months, getting even more hawkish. But there's
Speaker 1: still some people that say, despite all that, the feed
Speaker 1: is behind the curve? Is that a thing? We'll joining
Speaker 1: us right now? Is Matt Winkler, Editor in Chief Emeritus
Speaker 1: Bloomberg News, the founder of Bloomberg News. He joins us
Speaker 1: here in our Bloomberg Interactive studio. He ain't phoning it
Speaker 1: in from some of New Jersey. He is here, Matt,
Speaker 1: Thanks for joining us here. Is the facts still behind
Speaker 1: the curve? They seem pretty aggressive to me. And by
Speaker 1: the way, we've heard people say this now, Matt, almost
Speaker 1: every day. It's become um, it's become rope to say
Speaker 1: the Fed is behind the curve. Well, that's that's really
Speaker 1: the point, which is that you have this massive group
Speaker 1: think uh with everyone if you like, led by Larry Summers,
Speaker 1: probably the most prominent saying the FETE is behind the curb,
Speaker 1: and uh, there are a handful of people very smart
Speaker 1: people like Brad DeLong Is, an economist at Berkeley who
Speaker 1: recently asked the question somewhat rhetorically, Um, okay, if the
Speaker 1: FETE is behind the curb, then who are who are
Speaker 1: the people who are the authorities who are supposed to
Speaker 1: be directing us? And the evidence is there is nothing
Speaker 1: out there other than the bond market, which in fact
Speaker 1: shows that the FETE actually is not behind the curve.
Speaker 1: The FETE is following in its data driven way what
Speaker 1: the bond market is telling it. And so to assert
Speaker 1: that the FETE is, you know, behind the curve, is
Speaker 1: to assert that the bond market, which as you know,
Speaker 1: is thirty trillion dollars and millions of people, is meaningless.
Speaker 1: And of course it isn't meaningless because that's where people
Speaker 1: have their reputations and everything that they have at stake
Speaker 1: is on the line. And you're historically a bondman. Um
Speaker 1: wrote about bonds for the Journal before you came and
Speaker 1: created Bloomberg News. And at least as at least once
Speaker 1: I've heard you mentioned Nick from The Great Gats He
Speaker 1: was he a bond trader as well? Uh yeah, he was,
Speaker 1: and uh very much so. I was gonna I was
Speaker 1: gonna ask, so, so, what's the data that the bond
Speaker 1: market provides us with um to help us decide, you know,
Speaker 1: how how far behind the curve or or with um
Speaker 1: the picture the FED is what inflation is expected to be? Like,
Speaker 1: I guess the break evens are the best way to
Speaker 1: look at this. So what the bond market does is
Speaker 1: it's a huge bazaar, a global bazaar, and in that bazaar,
Speaker 1: you have every kind of point of view, every kind
Speaker 1: of activity that's possible, and it's all UH cataloged by
Speaker 1: price and yield. And the bond market shows you every day,
Speaker 1: going back in time to the present, what expectations are.
Speaker 1: That's why it's so valuable. And what you just referred
Speaker 1: to as what we call break even. If you want
Speaker 1: to know what is the expectation of inflation, for example,
Speaker 1: thirty years out, the bond market can show you that
Speaker 1: what is the expectation of inflation ten years out and
Speaker 1: five years out? UH, That is the measure that you
Speaker 1: referred to called break even, and the break even rates
Speaker 1: show sure enough, UH, people who are buying and selling
Speaker 1: securities every day into the future expect inflation to surge
Speaker 1: robustly over the next two years. But at some point
Speaker 1: over the next eight years, uh, that will change and
Speaker 1: there will be a precipitous decline in the expectation of inflation.
Speaker 1: And that's why the bond market is so useful and
Speaker 1: valuable because the FED, in its activity, can use the
Speaker 1: bond market as a way to keep the economy stable. Actually,
Speaker 1: how reliable are I mean, I'm looking at the break
Speaker 1: evens I type I l B on the Bloomberg TERMAO,
Speaker 1: I'm looking at the two year break even, and I
Speaker 1: see it's almost five percent. I then here from people
Speaker 1: like Michael McKee who covers economics for us, that that's
Speaker 1: hardly likely considering we're going to be moving off of
Speaker 1: base effects at that point. So this isn't saying it's
Speaker 1: going to be five percent two years out right. So
Speaker 1: what what is valuable about the bond market is people
Speaker 1: are literally taking their wherewithal their assets, and they're making
Speaker 1: bets about where things are today, where they're going to
Speaker 1: be five years from now, where they're going to be
Speaker 1: thirty years from now, and that's all reflected in price
Speaker 1: and yield, And of course it could change. The point
Speaker 1: here is that and it will change the point here
Speaker 1: is that the FED is not behind the curve. If
Speaker 1: what it's doing today is following what the data shows
Speaker 1: us from the bond market, the FETE is simply doing
Speaker 1: what's appropriate. And the argument, if you will, against the
Speaker 1: people who are asserting that the FETE is behind the
Speaker 1: curve is okay, Well, if it's not the bond market
Speaker 1: where all this data exists, what is it and nobody
Speaker 1: can say what it is? And as Brad DeLong has suggested,
Speaker 1: what is it? The bond market is a bunch of
Speaker 1: weirdos now and the bond vigilantes don't count. I mean,
Speaker 1: no one is asserting that, so, uh, you can't have
Speaker 1: it both ways. Um. This is why the criticism of
Speaker 1: the FED seems to be unfounded, because there's no evidence
Speaker 1: to suggest that there's an alternative for what the FET
Speaker 1: is doing. As I mentioned earlier, Matt City came out
Speaker 1: so research report this morning talking about, you know, multiple
Speaker 1: fifty basis point rate hikes this year going into next year.
Speaker 1: Is there a risk that this FED gets too aggressive
Speaker 1: and does in fact push us into a recession and
Speaker 1: the interest of trying to cool inflation, Well, there are
Speaker 1: plenty of people who would suggest that and are suggesting that.
Speaker 1: Having said that, UM, again, if you look at the
Speaker 1: market right now, what might be surprising to people is
Speaker 1: why is the stock market seemingly becalmed UH in the
Speaker 1: face of it And if you look at something else
Speaker 1: that is worth paying a lot of attention to. The
Speaker 1: Bloomberg Financial Conditions Measure Index. Yeah, very valuable tool. If
Speaker 1: we were suddenly de anchored, and if we had, you know,
Speaker 1: the FED had lost its way, you would expect financial
Speaker 1: markets to be turbulent, and you would expect great volatility.
Speaker 1: But in fact, the Financial Conditions Index shows us we're
Speaker 1: not too far from the average, the thirty year average,
Speaker 1: just a little bit below it UM, and that kind
Speaker 1: of suggests that UM investors worldwide, even with the invasion
Speaker 1: of creating Ukraine and Mr Putin's war against it and
Speaker 1: the sanctions against him, the market is relatively stable. So
Speaker 1: in equities, the dumb money, so to speak, has have
Speaker 1: recovered UM with strength. We were down fourteen percent from
Speaker 1: UM the beginning of the year, just a couple of
Speaker 1: weeks ago. Now we're only down five percent as the
Speaker 1: SMP comes back. Yeah, I mean, look, there's always a
Speaker 1: problem when you try to impose what happened before now
Speaker 1: on what is happening today and what what people are
Speaker 1: looking at is this period in the seventies when interest
Speaker 1: rates went up, you know, fifteen percentage points between ninete
Speaker 1: and you know, that was just a very different time
Speaker 1: in place. And Matt, thanks so much for joining us
Speaker 1: here in our Bloomberg Interactive Broker Studio. Matt Winkler, Editor,
Speaker 1: Chief Emeritus and Bloomberg News. He did not get the
Speaker 1: Friday casual memo. He's in a sharp navy blue suit
Speaker 1: with the bow tie. He and Tom Keaney can't break
Speaker 1: them of that habit. Jonathan Webb CEO and founder of
Speaker 1: app Harvest. That's a public traded company a p p
Speaker 1: u H building some of the largest greenhouses, combining conventional
Speaker 1: cultural techniques with today's technology to grow non gmo chemical
Speaker 1: free produce. Jonathan, thanks so much for joining us here.
Speaker 1: I would love to get your view here of the
Speaker 1: supply chain and the challenges that companies across so many
Speaker 1: industries are dealing with it. How are you seeing it
Speaker 1: in your business? Yeah? So uh, We're growing fruits and
Speaker 1: vegetables and the controlled environment year round with far less
Speaker 1: land and far less water and using technology. And I
Speaker 1: think the general theme right now is it's it's it's
Speaker 1: a it's a great time for us to rethink and
Speaker 1: reimagine American agriculture and reinvest in farming across the US.
Speaker 1: It's uh, you we clearly see what's been happening over
Speaker 1: the last year or two years with COVID and then
Speaker 1: now obviously you know the the very unfortunate events playing
Speaker 1: out in Ukraine. But but there's there's no reason why
Speaker 1: here in the US we're importing two thirds of our
Speaker 1: fruits and vegetables. That's just unacceptable. We're, uh, you know,
Speaker 1: one of the largest land rich, water rich regions in
Speaker 1: the world, and yet we're importing two thirds of our
Speaker 1: fruits and vegetables. And uh, you know, we can we
Speaker 1: can change that dramatically and pretty quickly overnight by using
Speaker 1: technology and creating a new innovative business models to grow
Speaker 1: here here at home in the US. And I have
Speaker 1: to say, I am married to a one from Spain,
Speaker 1: from Valencia, so she is constantly unhappy about the produce
Speaker 1: in this country. Really because where she's from, you just
Speaker 1: walk down the street and pick up tomatoes and oranges
Speaker 1: off the ground next to your neighbor's field, you know. So,
Speaker 1: but how local can we make this um production? Jonathan, Yeah,
Speaker 1: I mean hyperlocal, very local to two cities, to two
Speaker 1: regions all across the US. So we at app Harvest
Speaker 1: will have about eight million square feet operating by the
Speaker 1: end of the year. We'll be growing strawberries, leafy greens,
Speaker 1: a variety of tomatoes. But our focus is bringing that
Speaker 1: fruit and vegetable production back to the US that's been
Speaker 1: uh pushed south of the border. Uh. And yeah, Matt,
Speaker 1: I mean many of the European countries, especially the Netherlands
Speaker 1: really being kind of the world leader and in high
Speaker 1: tech agriculture, Spain has a pretty good robust agriculture system
Speaker 1: that that's utilizing technology. But uh, you know, again reshaping
Speaker 1: what farming looks like. We we you know, we we
Speaker 1: have the opportunity to grow much more nutritious, higher quality stuff. Uh.
Speaker 1: And do that with with a lot less land and
Speaker 1: a lot less water. Uh. And and that's you know,
Speaker 1: that's bringing technology to farming. Where the last big technological
Speaker 1: revolution in American farming is when the when the tractor
Speaker 1: was introduced. My concern is the concern is Jonathan that
Speaker 1: your hand, Yeah, The concern is that you displace American
Speaker 1: family farmers, who I mean, frankly have been displaced already
Speaker 1: but still managed to hang on somehow. How do you
Speaker 1: how do you work around that? Well, I mean, Matt,
Speaker 1: they've already we've already lost that. Two thirds of our
Speaker 1: fruit and vegetables are imported into the US every year.
Speaker 1: You know, four billion pounds of tomatoes alone are imported.
Speaker 1: Why are we not growing that in the US. Why
Speaker 1: are we not getting small farmers technology where you're using
Speaker 1: led lights, hydroponic growing less water, thirty thirty plus, uh,
Speaker 1: getting thirty times yield per acre. Uh, We've we've had
Speaker 1: a lot of meetings in DC over the last few weeks. Uh.
Speaker 1: Food resiliency has become a very high focus at the
Speaker 1: U s d A. But on the right side and
Speaker 1: left side of the aisle. And you know, if we
Speaker 1: in the US want to take this seriously, you know,
Speaker 1: there needs to be some policy around it. You look
Speaker 1: at you know, look at what renewable energy was in
Speaker 1: the US fifteen years ago. It was boutique, it was nascent,
Speaker 1: non existent, and now you know, every state has large portfolios.
Speaker 1: Look at electric vehicles. You know, you've got to put
Speaker 1: policy in place that incentivizes the private sector to lead.
Speaker 1: Uh and and we we do think that's gonna happen
Speaker 1: with c E A can Gold Environment agriculture is really
Speaker 1: a third wave of sustainable infrastructure in the US. First
Speaker 1: it was renewables, then it was evs, you know, and
Speaker 1: now it's is c A controlled environment agriculture. And you know,
Speaker 1: we're pretty hopeful that uh, you know, we'll see some
Speaker 1: policy in this new farm bill. Well, we'll see uh,
Speaker 1: some policy come out of both sides of the aisle
Speaker 1: of the next year or two to really give technology
Speaker 1: to farmers and and let them innovate and build a
Speaker 1: more resilient food system here in the US. Jonathan, really
Speaker 1: fascinating stuff. Thanks for coming on and sharing some thoughts
Speaker 1: that we'll have you back on to get an update here.
Speaker 1: Jonathan Web, CEO and founder of app Harvest Boy, We've had,
Speaker 1: as I said, a great slate of guests here today.
Speaker 1: When we finish off our two hours here with another
Speaker 1: a list in my opinion, Lizzie Saunders, chief investment strategists
Speaker 1: at Charles Schwab. You know, liz An I kind of
Speaker 1: grew up in the business with the adage don't fight
Speaker 1: the FED. So now I see the Fed, you know,
Speaker 1: raising race. City is out with a report this morning
Speaker 1: talking about multiple fifty basis point rate hikes throughout the year.
Speaker 1: What do you do in that kind of environment? By
Speaker 1: the way, I didn't just grow up in that era.
Speaker 1: I for thirteen my first thirteen years I worked for
Speaker 1: the late Great Marty's wife. Very good phrase. So um
Speaker 1: I I you know, lived and breathed it. Yes, um.
Speaker 1: I think when you look at a day like today
Speaker 1: where you saw a weakness kick in at the point
Speaker 1: where yield started to pick up, and then you know,
Speaker 1: added to the concern as you mentioned the City report
Speaker 1: saying we would get a series of fifty basis points hikes,
Speaker 1: a lot of adjustments of what the terminal rate is.
Speaker 1: I think that's a recipe, especially in the aftermath of
Speaker 1: a pretty sharp rally that may have uh sent a
Speaker 1: certain technical levels to overball conditions that might have kicked
Speaker 1: in some of the quant based strategies and and al
Speaker 1: goes and the selling starts to pick back up. So
Speaker 1: it's not surprising to me at all. One of the
Speaker 1: I think most valuable things, um Lisianne about Schwab is
Speaker 1: the knowledge you have from your huge investor base. And
Speaker 1: I don't know how much assets under management you have,
Speaker 1: but I know it's trillions of dollars trillion, it's amazing,
Speaker 1: eight trillions dollars. What can you glean then from your clients,
Speaker 1: what they're doing, what's what's their mood right now? Well,
Speaker 1: because it's such a large client base, it spans this
Speaker 1: spectrum of not just retail investors, but advisors. You know,
Speaker 1: are as that are on our platform even among the
Speaker 1: retail investors, everything from short term day traders to long
Speaker 1: term advised investors. And I really think it depends on
Speaker 1: risk tolerance, time arise, and whether you are just trading
Speaker 1: on your own, whether you are taking a more disciplined approach,
Speaker 1: maybe connected to an advisor or consultant. And what we
Speaker 1: are finding in this more volatile period with it, which
Speaker 1: is consistent with other periods of volatility, is that the
Speaker 1: more longer term investors that have a plan, they've got
Speaker 1: a strategic asset allocation, they're doing regular rebalancing, they tend
Speaker 1: to ride through periods like this with a bit more
Speaker 1: sense of calm. It's it's some of the shorter term,
Speaker 1: more trading oriented folks. In some cases they look at
Speaker 1: volatility as advantageous from a trading perspective. But that's where
Speaker 1: you tend to see a little bit more of the
Speaker 1: extremes of at times, you know, panic and greeds. It
Speaker 1: really depends on what type of investor you're talking about.
Speaker 1: Haylzen Matt and I've been noticing that we've been hearing
Speaker 1: a lot more about recession in the last couple of weeks.
Speaker 1: Is that something you think is on our horizon? I
Speaker 1: think anytime you move from extremely loose monetary policy to
Speaker 1: tighter monetary policy when you already have flower growth expected,
Speaker 1: you have to dust off the recession playbook, recession checklist,
Speaker 1: you know, including the yield curve. Yes, that tends to
Speaker 1: is not the end all be all. The tense three
Speaker 1: month has been considered the more reliable recession indicator, but
Speaker 1: we've seen this flattening of the yield curve occur slowly
Speaker 1: down the spectrum of maturities. And maybe the potential inversion
Speaker 1: of the tents two doesn't signal a coming in version
Speaker 1: in the tense three months, But if the set is aggressive,
Speaker 1: as they're suggesting, they might need to be. I think
Speaker 1: that that's somewhat inevitable. Um. So, I think it's prettymature
Speaker 1: to make a recession call right now. The labor market
Speaker 1: is very strong. But should we start to look at
Speaker 1: what the typical indicators are that start to signal problems? Um? Yeah, absolutely.
Speaker 1: What do you think about alternative assets, Luzianne, I mean, um,
Speaker 1: I would think of the sixty portfolio as pretty standard
Speaker 1: for a Schwab investor. As you point out, obviously you
Speaker 1: have such a huge pool investors that you run the gamut.
Speaker 1: But are are more and more people holding UM commodities
Speaker 1: that previously wouldn't have Are people getting into digital assets
Speaker 1: in a way that you see like substantial growth? Yeah.
Speaker 1: I think that there is sort of a broader swap
Speaker 1: of asset classes that are available to individual investors, even
Speaker 1: at a relatively low portfolio size, and I think that
Speaker 1: will continue to be democratized access to all sorts of alternatives,
Speaker 1: some of which you mentioned even in areas eventually like
Speaker 1: private equity and venture. So I think the individual does
Speaker 1: have an opportunity to take a little bit more of
Speaker 1: an endowment type approach and not limit themselves to just
Speaker 1: the typical stocks, bonds, cash and in this environment where
Speaker 1: on the bond side you've seen, you know, the worst
Speaker 1: start in history. I think there is a focus on
Speaker 1: where else can I get diversification, especially in a high
Speaker 1: inflation environment. Commodities being um, you know, a perfect apple
Speaker 1: of that. Hey, Lizianne, thank you so much for joining us.
Speaker 1: Always appreciate getting your thoughts and perspective. Liz Anne Saunders,
Speaker 1: chief investment strategist at Charles Schwab. Thanks for listening to
Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
Speaker 1: interviews with Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
Speaker 1: Put on Fall Sweeney. I'm on Twitter at pt Sweeney.
Speaker 1: Before the podcast. You can always catch us worldwide at
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