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Speaker 2: This is a joy.
Speaker 1: Every research report is the character of the individual. Stephen
Speaker 1: Schork knows every valve in the Northeast on oil. He's
Speaker 1: gone out there, He's turned them. When you say what's
Speaker 1: Harbor doing, he could give you six flavors of the
Speaker 1: price of oil in New York Harbor. It is an
Speaker 1: acuity on oil and gas like we've never seen.
Speaker 2: He's a shark. Report.
Speaker 1: Can't say enough about his work, Stephen, Good morning. As
Speaker 1: simple as I can. Are we energy independent?
Speaker 2: Now? Within the holistic Shark report? Is this nation energy independent?
Speaker 3: Absolutely not? Tom, We were up until a few years ago.
Speaker 3: That is to say, we were reducing a tremendous amount
Speaker 3: of oil. Now we're back to those levels, and actually
Speaker 3: we're at record levels. But the investments that we are
Speaker 3: seeing have certainly held us back. And there is a
Speaker 3: misnomer out there when people hear energy independent, they kind
Speaker 3: of think, well, hey, we're not reliant on imports or
Speaker 3: so forth.
Speaker 4: We are.
Speaker 3: We do export a considerable amount of products gasoline, diesel,
Speaker 3: jet fuels, so forth. And we're also at Tom's signific
Speaker 3: exporters of crude oil. That was never the case up
Speaker 3: until a few years ago. This is Ina Davian.
Speaker 1: I just want to say on YouTube, all the secrets
Speaker 1: are given away. Steve Short is coming to us from
Speaker 1: right off the ninth at the Ocean Forest Golf Club,
Speaker 1: Sea Island, Georgia this morning.
Speaker 2: You know, we getting them in the middle of his games.
Speaker 5: That's a good Sea Island. You should be going shooting
Speaker 5: ski shooting down in Sea Island.
Speaker 3: Stephen, No, no, no, no, I'm actually doing market research
Speaker 3: in working this quarter from cursu So and we're on
Speaker 3: the south part of the island with direct sidelines to
Speaker 3: the Venezuelan shipping lanes. It's been very interesting. So I
Speaker 3: was watching the tankers go back and forth. So this
Speaker 3: is all work related.
Speaker 2: There's an umbrella in his tank.
Speaker 5: Yeah, sure, Steve, and I have to ask you. We
Speaker 5: have Brent here at seventy nine oh six grappling with
Speaker 5: the psychological eighty dollars a hour level, you know, level
Speaker 5: it hasn't seen since November. Quite honestly, my question for
Speaker 5: you is in the futures complex, you mentioned open interest
Speaker 5: on the rise, volumes rise, What are you getting from sentiment?
Speaker 5: What are options markets telling you?
Speaker 3: It's so right now we're starting to see some activity
Speaker 3: building up. We've had we've been in this significant downturn
Speaker 3: and oil prices since October, since the start of and
Speaker 3: I'm going to call it a RAN's war with the West,
Speaker 3: and we've only seen prices go lower at this time.
Speaker 3: And I'm of the opinion that really traders are whistling
Speaker 3: past the graveyard here. But what we're seeing now in
Speaker 3: the complex, the futures complex is first and foremost, open
Speaker 3: interest is rising now algebraic notation and prices are falling.
Speaker 3: That's a negative. Multiply that by rising positive you have
Speaker 3: a lot of money that's been coming into the market
Speaker 3: that's been short yep.
Speaker 4: And in fact, when.
Speaker 3: We look at the large speculators, they are short the
Speaker 3: equivalent of about six hundred and seventy million barrels of oil.
Speaker 3: That's about ninety five percent of the strategic patroller deserve equivalent.
Speaker 3: So you have a tremendous amount of bearish and volume
Speaker 3: intensity has been building now just based on I just
Speaker 3: looked at the numbers coming in up until this point, volatility,
Speaker 3: price variance has been falling. That's starting to rise now
Speaker 3: and the spreads. You're starting to see a premium being
Speaker 3: placed into this spot market. So this is clearly a
Speaker 3: sign that the market's getting ready to potentially explode. You
Speaker 3: have a lot of money in the market, A lot
Speaker 3: of that money is short. Trading volume has been intense
Speaker 3: now volatility is picking up. All you need is hence
Speaker 3: one more headline, I e. Something out of the Middle East.
Speaker 3: You got really see oil take off from this point.
Speaker 5: You're taking the words right out of my mouth, Steven Opik.
Speaker 5: Plus can they keep the supply cuts up? Are you
Speaker 5: expecting them to be able to hold fast in the
Speaker 5: face of brincrude below eighty dollars?
Speaker 3: I know I'm not, and I think with OPEC. People
Speaker 3: kind of think it's it's not a corporation. It's not that, Okay,
Speaker 3: the board or the CEO makes a decision and.
Speaker 4: The company carries it out.
Speaker 3: No, it is an organization that is a multifaceted, all
Speaker 3: different countries, all acting on their own self interest. And
Speaker 3: of course Saudi Arabia they're trying to our rate in production,
Speaker 3: but mainly your African producers need the cash at this point,
Speaker 3: so it's really difficult now for OPRAT i e.
Speaker 4: Saudi Arabia to keep control of production.
Speaker 1: One find a question Stephen Short and I look at
Speaker 1: this with a gale and a guest, John Tucker's down.
Speaker 1: You're gonna give us a gal and a gas update
Speaker 1: with a hummer. But are we are we anywhere near
Speaker 1: a gallon of gas where we shift to electric vehicles?
Speaker 1: What are six months it's been in the electric vehicle debate.
Speaker 1: You've provided real leadership here. Electric vehicles need a higher
Speaker 1: gallon of gas price to succeed.
Speaker 4: Yeah.
Speaker 3: Absolutely, and Tom, as you know, in economics, there are
Speaker 3: two variables that drive prices and demand, and that's essentially
Speaker 3: price shocks, which since the Arab oil and margo in.
Speaker 4: The early seventies.
Speaker 3: We've had plenty of shocks to the market, but we've
Speaker 3: never had that secondariable until recently.
Speaker 4: I eat the substitute.
Speaker 3: But the problem now with substitutes or or with evs
Speaker 3: is technology. And I'm only to speaking, you know, from
Speaker 3: my own perspective anecdotally. I have an electric high bred
Speaker 3: plug in and I love the garden thing. But the
Speaker 3: problem is I'm not buying them. I'm just leasing them
Speaker 3: because every three years they technology improved. So now and
Speaker 3: I'm not the only one, so there's this overhang of
Speaker 3: used evs that's no one's buying.
Speaker 4: So no one's buying those. It's going to be very difficult.
Speaker 3: So prices right now under that four dollar gallon are
Speaker 3: not high enough to really push consumers back to complete ev.
Speaker 1: Steven Shark thank you so much for short report coming
Speaker 1: from his studios and.
Speaker 2: Play a lagoton curse out. We literally have research notes.
Speaker 1: It's say, Doc Electaco, I mean mister doct.
Speaker 2: Ed to see here Mark, and you know people like
Speaker 2: Mark Crumpton.
Speaker 1: He knows everybody's name cold and I'm like useless.
Speaker 2: So they got a big flashing billboard here. Gregory daka
Speaker 2: like Taco wonderful to have you here with Ernst in
Speaker 2: young Ey he's our chief economist. And it's more than
Speaker 2: just like market economics, what's GDP going to do. It's
Speaker 2: like the fabric the makeup of our economics as well.
Speaker 2: And Greg, I've got to go seriously here to this
Speaker 2: analysis of the new productivity? Do you and e Y,
Speaker 2: with all of your abilities in corporate America have any
Speaker 2: understanding of the new productivity? Or do we have to
Speaker 2: wait five years to find out what it is?
Speaker 6: Do we have to wait until it happens to actually
Speaker 6: talk about it now? I think we can talk about
Speaker 6: it today. I think what's very interesting in our insights
Speaker 6: that we gather at e WHY is that we talked
Speaker 6: to a lot of CEOs. We talked to a lot
Speaker 6: of business leaders as to how they're navigating things highly
Speaker 6: uncertain environment where inflation and cost fatigue remained very much
Speaker 6: constraint on economic activity and where supply remains very much fragile.
Speaker 6: And there's a lot of effort happening from CEOs across
Speaker 6: the different sectors of the US economy that are trying
Speaker 6: to alleviate some of these pressures. They're looking at ways
Speaker 6: to improve processes and stimulate efficiency gains via these process improvements.
Speaker 6: But they're also looking at technology as an avenue to
Speaker 6: stimulate stronger growth and less inflation.
Speaker 1: And that's where to me, this is the heart of
Speaker 1: the matter. Is we go tech and we say ai
Speaker 1: AI and it's all ei eio.
Speaker 2: It's all technology. And the answer is what matters is
Speaker 2: tech on Monsanto right exactly? Or tech on DuPont it
Speaker 2: matters just as much.
Speaker 5: Well, Greg, first of all, let me apologize your father
Speaker 5: for butchering for computing the doctor last name. But you know,
Speaker 5: in your most recent macropulsey you're talking about the disinflationary
Speaker 5: winds that are still blowing. And I wonder if you
Speaker 5: could just help us understand why the market is so
Speaker 5: hyper focused on next Friday's PCE print. What's so important
Speaker 5: about it? What should be looking for?
Speaker 6: Well, the simple answer is that the FED will be
Speaker 6: reacting mechanically to inflation developments over the course of this year,
Speaker 6: and that's why there's a lot of focus on the
Speaker 6: next data print.
Speaker 5: And I think, now, what are we expecting there?
Speaker 6: Is it? We'll show, We'll show you know, lower inflation.
Speaker 6: We're going to see this ongoing disinflationary momentum. We'll likely
Speaker 6: have core inflation ending twenty twenty three below three percent,
Speaker 6: which is something that very few.
Speaker 5: Four only three and a half. Two and a half
Speaker 5: is the number we're looking for.
Speaker 6: There well, core inflation under three percent, which is quite
Speaker 6: the feat. I think the disinflationary currents will continue. We
Speaker 6: have an environment where we're seeing gradually moderating final demand growth.
Speaker 6: We're seeing supply that is relatively well served. We're seeing
Speaker 6: an environment where businesses are looking for wage growth compression
Speaker 6: as an avenue to limit costs. We're also seeing an
Speaker 6: environment where there is less pressing power and much more
Speaker 6: sensitivity to increases in prices. And then rent disinflation is
Speaker 6: still very much in the pipeline. So that's the right
Speaker 6: combo to get more disinflation.
Speaker 1: You know, look ahead in the next week into February
Speaker 1: into twenty twenty four.
Speaker 2: Rent disinflation to.
Speaker 5: Me is absolutely of course, it is, of course, But
Speaker 5: you know, I mean, we could talk about shelter, and
Speaker 5: we could talk about inflation until we're blue in the face, Greg.
Speaker 5: But you know, one of the interesting pieces you just
Speaker 5: put out is on Genai, and you know, Tom is
Speaker 5: not convinced on Ai. Okay, I'm just gonna preface that,
Speaker 5: and yet I'm reading this wonderful piece about the productivity
Speaker 5: boost and you know what the impact of it is
Speaker 5: and job reshuffling. Talk to us a little bit about
Speaker 5: what you believe the economic impact of Jenai is going
Speaker 5: to be.
Speaker 6: I think the economic impact of Jenai is going to
Speaker 6: be felt across most sectors. It may not necessarily be
Speaker 6: a game changer in the sense that it multiplies the
Speaker 6: pace of growth by a factor of two or three,
Speaker 6: but it is going to have a significant impact. The
Speaker 6: way we look at it is that there's going to
Speaker 6: be a need and a desire to invest a lot
Speaker 6: in Genai. There is a need to invest in the infrastructure,
Speaker 6: the software, the company adoption that is going to lead
Speaker 6: to a boost of GDP. After that, we're also going
Speaker 6: to see significant productivity gains. We estimate that over the
Speaker 6: next decade for the US economy, we could have a
Speaker 6: boost of three and a half percent of gend.
Speaker 1: Okay, guys like you and fancy you see how Greg
Speaker 1: is dressing now, He said, Ey, he used to dress
Speaker 1: like a market economist. Now this looks like he's consulting
Speaker 1: to somebody at ten thousand.
Speaker 2: Dollars an hour down in Dallas, flying in.
Speaker 5: We're in contacts. Now you ditch the ditch the glasses.
Speaker 2: That's the heart of the matter.
Speaker 1: Now, did you get wonky or I'm looking at productivity
Speaker 1: and we, of course we lost this year the giant
Speaker 1: of productivities, Robert Solo of MIT I got capital dynamics,
Speaker 1: I got labor dynamics, and I got this.
Speaker 2: Wackle thing called total factor productivity. Which of those three
Speaker 2: is the shock forward to our new American productivity?
Speaker 6: Well, it's it's a timing issue, right. Initially you have
Speaker 6: to invest. So initially the boost to economic activity actually
Speaker 6: comes from the additional investment capital deepening in the capital
Speaker 6: deepening and capital investment generally in technology. After that you
Speaker 6: get the benefits in terms of productivity growth, and it's
Speaker 6: not going to be some magical number that comes out
Speaker 6: of nowhere. It's actually going to be more efficiency in
Speaker 6: the way we do our jobs, and it's going to
Speaker 6: be across sectors. And I think we have to step
Speaker 6: away from this notion that it's only going to be
Speaker 6: low skilled jobs. Actually, high skilled jobs can be augmented
Speaker 6: quite tremendously by Jenai.
Speaker 5: Let me quantify this for our audience here. Greg estimates
Speaker 5: and the team D and Y estimate that the lift
Speaker 5: to global GDP from stronger productivity to total Are you
Speaker 5: ready for this? Between one point two and two point
Speaker 5: four trillion dollars over the next decade. But that's not
Speaker 5: just the US now, is it? Where do you think
Speaker 5: the impact of that productivity boost is going to be
Speaker 5: felt most? Is it going to be the US? Is
Speaker 5: it Europe? Is at Asia?
Speaker 6: I think the US is going to benefit most from
Speaker 6: that because the US is essentially leading the way when
Speaker 6: it comes to these new technologies. But Europe is investing
Speaker 6: a lot. And then after that you have China and
Speaker 6: the rest of Asia that's also falling very closely. So
Speaker 6: that's going to be a positive booth in terms of
Speaker 6: global economics.
Speaker 1: How do you an eye treat China hang saying is greatering,
Speaker 1: et cetera, et cetera.
Speaker 2: What is the ey summary of how China will recover?
Speaker 3: Well?
Speaker 6: I think we have to understand that China is no
Speaker 6: longer going to be the global engine of growth that
Speaker 6: it once was. We're going to be in an environment
Speaker 6: where there are cyclical headwinds in terms of economic activity.
Speaker 6: We're seeing less spending in terms of retail sales, industrials activity,
Speaker 6: the real estate sector. But we're also and very importantly,
Speaker 6: seeing structural headwinds. The population is not only aging, it's
Speaker 6: also shrinking. That is a big drag on the economy's
Speaker 6: potential growth. And I wouldn't be surprised that in the
Speaker 6: next five to ten years China grows at an advanced
Speaker 6: economy pace rather than as an emerging economy.
Speaker 2: Pervidak with Ey just really really valuable in a lot
Speaker 2: of different You get a whole different perspective from the
Speaker 2: major accountancies and consultants than you do from people going,
Speaker 2: you know what's.
Speaker 5: GDP got no skin in the game. That's right, it's
Speaker 5: an unfiltered, unbiased opinion.
Speaker 1: Now, Brian Lovett with Invesco, Brian, I got some chit chat.
Speaker 1: But because the time, let's get right to it now.
Speaker 1: Is cash an asset for Invesco?
Speaker 7: Well, investors are clearly viewing it as an asset, and
Speaker 7: I think it does hold the place at certain times.
Speaker 7: The challenges Right now with yields above five percent, investors
Speaker 7: are loving it. The risks that they have is reinvestment.
Speaker 7: And so if we're right, and the Federal Reserve is
Speaker 7: going to be normalizing the yield curve, well, then those
Speaker 7: yields will come down. We've been telling people lock it in.
Speaker 7: If you like yields for thirty days, you'll probably love
Speaker 7: them for five or ten years.
Speaker 5: Brian, I want you to put on your foreign exchange
Speaker 5: hat for me for a second. I'm going to talk
Speaker 5: about one of your close colleagues, Alethio de Longez, who's
Speaker 5: a senior PM head of Global Tactical Asset Allocation at Investco,
Speaker 5: and his work on factor investment in foreign exchange. Talk
Speaker 5: to us about the beta regime that we're coming out of,
Speaker 5: one where FX performance has really been driven by rate differentials.
Speaker 5: Are we moving into a new regime where value is
Speaker 5: going to take control of that?
Speaker 7: Talk to us well, I think over the next couple
Speaker 7: of year years we will Typically what happens is the
Speaker 7: FED normalizes, the ye'll curb. You start to unlock some
Speaker 7: of the value that exists in the world, whether that's
Speaker 7: in US value stocks, whether that's in right now international market.
Speaker 7: The challenge we have in the near term is that
Speaker 7: we got a lot of returns in November and December.
Speaker 7: I wish we would have taste them out over a
Speaker 7: longer period of time. So you've growth below trend right now.
Speaker 7: The market recalibrating where the Fed's going to be in
Speaker 7: March and by the end of the year, so you
Speaker 7: may see a little bit of a quality growthy trade
Speaker 7: again in here. But if you're an intermediate term investor
Speaker 7: expecting the FED to normalize the yelk curb, then yeah,
Speaker 7: value oriented investments should perform well over the next couple
Speaker 7: of years.
Speaker 5: And talk to us a little bit about the the
Speaker 5: end of QT. I mean there's been some talk that's
Speaker 5: going to end early. Talk to us about central bank runoff.
Speaker 5: Does this have the potential to crowd out other fixed
Speaker 5: and comac and classes.
Speaker 7: I don't think it does. I mean the fixed and
Speaker 7: cume market has been behaving, I would say appropriately. If
Speaker 7: you look at where the tenure treasury has been, it's
Speaker 7: now hovering around what the nominal growth potential of this
Speaker 7: country likely is. So I don't think that this is
Speaker 7: being significantly manipulated one way or the other. And as
Speaker 7: the FED has wound down its balance sheet, the markets
Speaker 7: have operated. The markets have operated just fine. I think
Speaker 7: it makes sense right now. Policy is just too tight,
Speaker 7: you know, five and a quarter on the funds rate,
Speaker 7: slowly winding down the balance sheet when growth is slowing.
Speaker 7: Policy is too tight, so we should expect an easier
Speaker 7: environment going forward.
Speaker 1: Brian Levitt, thank you so much. Too short of visit.
Speaker 1: We'll do it again soon, sin soon. Brian Levits with
Speaker 1: Invesco there with a more holistic view on your asset allocation.
Speaker 2: Now joining us a gentleman of inherent optimism.
Speaker 1: There's points where he can wax philosophical and get gloomy.
Speaker 2: But Neil Dutta with.
Speaker 1: Us with run back, and I made very clear he
Speaker 1: was out front with optimism amid the gloom.
Speaker 2: I'm gonna call it fourteen months ago or so. I
Speaker 2: just looked at Atlanta GDP and.
Speaker 1: After a four point x percent Q three, we're modeling
Speaker 1: out somewhere in the vicinity of a normal American economy.
Speaker 1: Two point three percent. That seems better than good versus
Speaker 1: a gloom of recession. Neil Dutta, thank you so much
Speaker 1: for joining us. Is two point three percent a run
Speaker 1: rate for the American economy?
Speaker 4: Yeah, I think so.
Speaker 8: I mean, I think we're probably in a range of
Speaker 8: around two to two and a half percent. I mean,
Speaker 8: it's important to note, as you did, that we're coming
Speaker 8: off of a very strong quarter in the third quarter,
Speaker 8: so it was I think inevitable that the economy would
Speaker 8: buckle a little bit under its own weight. I mean,
Speaker 8: you can't sustain that kind of momentum. But I think
Speaker 8: what's important, Tom, is that you know that estimate you mentioned,
Speaker 8: you know, Atlanta fed around you know, let's say two percent.
Speaker 8: I mean that's despite a pretty significant decline in inventory investment.
Speaker 8: In other words, inventories are cutting GDP growth, and so
Speaker 8: final sales look pretty healthy. And you know, I think
Speaker 8: that's important because you know, ultimately firms are going to
Speaker 8: replenish inventories, and when that happens, supports the local areas
Speaker 8: of the economy.
Speaker 1: Bob Burgess, Sir Robert Burgess of Bloomberg News, as my
Speaker 1: chart of the week, folks, it's a log regression of
Speaker 1: retail sales since time began. I think he goes back
Speaker 1: to the War of eighteen twelve, And the answer is,
Speaker 1: with the noise around the Great Financial Crisis and noise
Speaker 1: around COVID, with the stimulus, we've had a massive retail boom.
Speaker 2: Money questioned Neil data. Does retail consumption sales do they
Speaker 2: come back to trend line or do we assume at
Speaker 2: some point we see diminished consumption off long term trend.
Speaker 8: Well, I don't think it's coming back to that trend line.
Speaker 8: I mean absence some kind of a recession. You know,
Speaker 8: people tend to keep on spending money so long as
Speaker 8: the economy and employment are growing, and that's what's happening,
Speaker 8: you know, I do. I mean, you mentioned a lot
Speaker 8: about the stimulus, but I really think that that's you know,
Speaker 8: yesterday's story. I mean, ultimately, what's driving consumers spending at
Speaker 8: this point is a revival in real incomes. Right, So
Speaker 8: inflation has slowed, the labor markets are steady, and as
Speaker 8: a result, real incomes have been accelerating. So that's ultimately
Speaker 8: what's driving consumer spending. And I think that that's poised
Speaker 8: to continue. It's one of the reasons why consumers are
Speaker 8: a bit more confident. I mean, the fact that prices
Speaker 8: have come down and that'll likely continue over the next
Speaker 8: couple of quarters.
Speaker 4: That's important.
Speaker 8: And you know that decline in price inflation lifts in
Speaker 8: real incomes obviously, and that in turn supports consumer spending.
Speaker 8: This story you know, the excess savings, fiscal stimulus. You know,
Speaker 8: these arguments I think have really outlived their usefulness.
Speaker 5: Neo financial markets appear infatuated, infatuated with next week's GDP
Speaker 5: sorry PCE deflator print. Talk to us about that. What
Speaker 5: are you looking for next week?
Speaker 8: Well, I think it'll be a soft point two. I
Speaker 8: think the Bloomberg News consensus is point two. I think
Speaker 8: it's a soft point too. But you know, what I
Speaker 8: would say is that, you know, for all this talk
Speaker 8: about the last mile of inflation is the hardest. It's
Speaker 8: a bumpy road back to two percent. It's important for
Speaker 8: people to know that core PCEE inflation over the last
Speaker 8: six months is already running below two percent. Right It's
Speaker 8: at one point nine percent at an annual rate. So
Speaker 8: you know, keep in mind that, you know, the Fed
Speaker 8: believes that core inflation this year is going to be
Speaker 8: two point four percent a year over year. In the
Speaker 8: fourth quarter, we're running below that. So I think by
Speaker 8: the time the Fed meets in March going to have
Speaker 8: to revise down their core inflation estimates yet again. And
Speaker 8: I think it's going to be very difficult for them to,
Speaker 8: you know, push back on raid cuts at that point.
Speaker 8: I mean, so they may they may either their cutting
Speaker 8: in March or they're using the March meeting to set
Speaker 8: up a raid cut.
Speaker 5: In by Neil Tom is right, you called it looking
Speaker 5: back some You know, a year and a half ago,
Speaker 5: you were fading the hard landing scenario. You were calling
Speaker 5: for the soft landing and materialized. And here we are
Speaker 5: today and the markets are still looking for soft landing.
Speaker 5: Do you agree with that?
Speaker 8: Yes? I do. I mean I think, you know, I
Speaker 8: think the markets are right to anticipate a benign scenario.
Speaker 8: I mean there's a lot of inertia behind the disinflation process.
Speaker 8: I mean I think this time last year, I mean
Speaker 8: Powell probably in my view was probably was prematurely, frankly
Speaker 8: declaring the start of a disinflation process. I mean at
Speaker 8: the time, I wasn't arguing for soft landing. I was
Speaker 8: arguing for no.
Speaker 2: Landing, right right.
Speaker 8: But but but I think, but I think at this point,
Speaker 8: you know, we have a soft landing unfolding right before
Speaker 8: our eyes. I mean, I have a fair degree of
Speaker 8: confidence that inflation is cooling off. Keep in mind that
Speaker 8: used car prices will probably decline quite sharply over the
Speaker 8: next several months. That's not something that we saw in
Speaker 8: either November or December, but it's it's likely something we're
Speaker 8: going to see a part of the year. And we
Speaker 8: know that housing rents are moderating, Well that's growing.
Speaker 1: Yeah, that's where I wanted to go because to me,
Speaker 1: that's the theme for the day. Julia Coronado out with
Speaker 1: a chart on this. Joe Lavorn I thought it was
Speaker 1: quite good this morning. Let's hear from Neil Dota of
Speaker 1: Renmack and Neil, the fact is shelter wrapped around rent
Speaker 1: and not this goofy oe er, which I have no
Speaker 1: idea how it's calculated. But what's the actual countable disinflation
Speaker 1: you see across multifamily, across single home rentals like what
Speaker 1: Blackstone's doing, and across home ownership in America.
Speaker 8: Well, it's interesting you mentioned Oeer. I mean, one reason
Speaker 8: why that number is looking a little bit firmer, Tom,
Speaker 8: because the owned housing stock obviously is more single family
Speaker 8: than multifamily, right, and so single family residential rents have
Speaker 8: been holding up a little bit firmer than multi than
Speaker 8: apartment rents. You know, we saw yesterday as an example
Speaker 8: that multi family completions jump sharply, and so we do
Speaker 8: have a lot of apartments supply coming on. But I
Speaker 8: think what's important is that new tenant rents, which is
Speaker 8: what the BLS released yesterday. That index is down about
Speaker 8: four and a half percent against against last year. Now,
Speaker 8: it probably overstates things, you know, that is clear in
Speaker 8: the data. It tends to over exaggerate the swings in
Speaker 8: the CPI number, but it does tell you fairly clearly
Speaker 8: what the direction of travel is lower. And so you know,
Speaker 8: I think housing and rental inflation will continue to melt
Speaker 8: over the next couple of quarters. And again I mean
Speaker 8: that will support a recalibration of monetary policy this year.
Speaker 2: I got one final question is really important? Do we
Speaker 2: need to model out.
Speaker 1: After pictures and coutches, Like if we get out in
Speaker 1: your opening day where the Detroit Targers starts strong, they're
Speaker 1: going to be playing one thousand.
Speaker 2: Ball by you know they're gonna win opening day and
Speaker 2: then it's down from there.
Speaker 1: Neil Daughta, When we get up to April, are we
Speaker 1: going to have some form of inflation series one point
Speaker 1: x percent?
Speaker 2: Can it get below two?
Speaker 8: I mean, it's it's plausible as I mentioned. I mean,
Speaker 8: we're there, We're already there on a six month basis,
Speaker 8: and you know, you still have some distance in front
Speaker 8: of us. So it's certainly plausible that you'll be you
Speaker 8: on a path Damien's trying to make.
Speaker 5: Someone I mean, yeah, you know, I mean, Tom John Lesa.
Speaker 5: They always want to know from you, because you know,
Speaker 5: they want to know about the US economy. What I
Speaker 5: want to know is, I want to know your thoughts
Speaker 5: on China. I want you to talk to me about
Speaker 5: China deflation. I want to talk about dollar you on.
Speaker 5: I want you to talk to me about the property
Speaker 5: sector and this economy that's so clearly on its back,
Speaker 5: And forget about investing in China. What's the impact on
Speaker 5: global financial markets and valuations here?
Speaker 8: I mean, I don't I mean to me, China is
Speaker 8: a bit of a black box. I don't follow it
Speaker 8: very closely. What I can tell you is that for
Speaker 8: all the weakness in China, it's important to note that,
Speaker 8: you know, the emerging markets outside of China had been
Speaker 8: holding up reasonably well, yes, during this period, So I
Speaker 8: think that's that's notable.
Speaker 4: So maybe you know the.
Speaker 8: Two thousands were all about how China was sort of
Speaker 8: the mental driver of demand globally, and maybe that's not
Speaker 8: as much the case anymore.
Speaker 1: Here's your valuable Neil Dutta, Thank you so much. A
Speaker 1: lot to chew on there, folks, with optimism on the
Speaker 1: American economy wrapped around a better than good real wage.
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