Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News, Sweeney with makeup.
Speaker 2: I have no makeup, No, as Yard Denny said, I'm
Speaker 2: not wearing makeup in this hour, mister Yardanny and Studio.
Speaker 2: A gift for you from Team Surveillance. Dana Telsey on
Speaker 2: Retail America, Julia Coronado.
Speaker 3: I think to be the key thing with the FED
Speaker 3: is now are they going to raise cut raids? But
Speaker 3: are they going to do it two? Three, four times?
Speaker 3: A major mystery.
Speaker 4: I'm looking at the WORP function here. Got an eighty
Speaker 4: percent chance of a rate cut here in December. That's
Speaker 4: good enough for I think the market. You'll see what
Speaker 4: they do in the new year.
Speaker 2: Futures Futures up eleven now after the CNE squire that
Speaker 2: we've had this morning, the vix I still have a
Speaker 2: good print. Yeah, we'll have to see you see if
Speaker 2: we get under doing a sixteen and Oliver Chen on
Speaker 2: Madison Avenue Luxury here coming up as well with TD
Speaker 2: at Cowen right to it for the Interactive Broker Studios
Speaker 2: for you worldwide.
Speaker 5: Lisa Mittego, you said a futures Yeah, advancing on this
Speaker 5: day after Thanksgiving, but it's an early close don't forget.
Speaker 5: The stock market closes one pm Wall Street time, the
Speaker 5: bond market open until two pm Wall Street time. SMB
Speaker 5: Future is rising a tenth of a percent. Same for
Speaker 5: Dow futures. Nazak Future is up to ten percent. Over
Speaker 5: to the yield space a two year three point four
Speaker 5: to seven percent, that's little change, and the yield on
Speaker 5: the tenure three point nine to nine percent, and that
Speaker 5: is little change. The Bloomberg Dollar Spot Index not much
Speaker 5: movement there. Bitcoin up about one percent at just above
Speaker 5: ninety two thousand.
Speaker 4: Few stocks to.
Speaker 5: Check in with, Alphabet at more than one percent, Amazona up,
Speaker 5: Amazon up nearly one percent. Black Friday Shopping moving into
Speaker 5: full swing. That is your Bloomberg business flash. Paul and Tom.
Speaker 2: Listen, Materia, thanks so much. This is our Thanksgiving gift
Speaker 2: to you. And it is not only the question of
Speaker 2: nailing this bull market ed yard.
Speaker 3: Denny lonely, I'm going to give real fan compora.
Speaker 2: Joy as well a few octobers ago saying get on board.
Speaker 2: But it is someone who's taken yell economics and folded
Speaker 2: it into his strategy for participating in the American experience.
Speaker 2: No one has done this in the last three four
Speaker 2: years post COVID, like Edward Jardenny, where ANRETI joins US
Speaker 2: Center studio today. Are you here just as an excuse
Speaker 2: before shopping?
Speaker 4: Shopping?
Speaker 3: Are we shopping?
Speaker 4: No?
Speaker 1: No, no, no, I came just for you. And not
Speaker 1: only that, I figured it wouldn't be much of a
Speaker 1: traffic jam on the Islands ways.
Speaker 3: True.
Speaker 1: So it's a combination of your requests and as a
Speaker 1: perfect data commute.
Speaker 2: How do you extrapolate? The first question for Global Wall
Speaker 2: Street is to say your Denny as an audacious call
Speaker 2: that everyone's catching up to SPX is.
Speaker 3: Now fifty three thousand whatever.
Speaker 2: What is the ther Denny process to extrapolate out?
Speaker 1: Well, I think that what we've gotten right over the
Speaker 1: past few years is the resilience of the economy, which
Speaker 1: is then of course related to the resilience of the consumer.
Speaker 1: And I think I sort of had insight information. I'm
Speaker 1: a baby boomer and I'm seeing all my friends retiring,
Speaker 1: and then I'm looking at the data from the FED
Speaker 1: and it shows that the baby boomers have eighty trillion
Speaker 1: dollars of net worth. It's the wealthiest generation ever to retire.
Speaker 1: Thank you, And you know, I guess some of them
Speaker 1: intend to spend it all because the kids didn't listen,
Speaker 1: you know, they didn't clean up the room, whatever. But
Speaker 1: it's a lot of money. And I also see a
Speaker 1: lot of my friends helping out their adult kids with
Speaker 1: mortgage down payments, with mortgage payments and with the kids,
Speaker 1: you know, after school activities. So there's a lot of
Speaker 1: trickling down going on, and I think the consumer has
Speaker 1: been residient. I've also been talking about the digital revolution
Speaker 1: with the technology boom. I mean, it was back in
Speaker 1: twenty twenty that I started to posit that this could
Speaker 1: very well be the Roaring twenty twenties, and so far,
Speaker 1: so good.
Speaker 4: So far, so good. And on that front, I've told
Speaker 4: my kids the last check I write is going to bounce,
Speaker 4: so you get to work. So given that backdrop here,
Speaker 4: what is your view of this economy here? I mean
Speaker 4: the labor market. People are little concerned about the labor market.
Speaker 4: How do you think about that?
Speaker 3: Well, one of.
Speaker 1: The reasons we talked about the Roaring twenty twenties is
Speaker 1: we anticipated that there would be a slowdown in the
Speaker 1: availability of labor. Baby boomers will be retiring, and we
Speaker 1: also would find that as a result of that, companies
Speaker 1: would be under a lot of pressure to increase their productivity.
Speaker 1: And perceived that there are a lot of technologies that
Speaker 1: existed in not too long ago, in twenty twenty and
Speaker 1: that we did spotlight that AI could be an important technology.
Speaker 1: Never expected it would just come out of the blue
Speaker 1: in twenty twenty two, but it did. And so we
Speaker 1: think that technologies are there to increase the productivity of workers.
Speaker 1: And we're seeing that just even now, I mean, second
Speaker 1: and third quarters looks like real GDPs up almost four
Speaker 1: percent each of those quarters. At the same time, the
Speaker 1: BLS has been reducing the forecasts and anticipation of what
Speaker 1: the labor force will be. That adds up to tremendous productivity,
Speaker 1: which is great for real purchasing power of consumers.
Speaker 2: By the way, Edvard Denning with us folks, the celebration
Speaker 2: is Friday after Thanksgiving.
Speaker 3: We welcome all of you. Paul help me.
Speaker 2: One PM is equities, yes, two PM bonds.
Speaker 3: It's nuts. Why do they do two separates?
Speaker 4: I don't know who's in charge of this stuff.
Speaker 2: We welcome all of you across the surveillance Nation on
Speaker 2: all the ways you listen to us on YouTube, subscribe
Speaker 2: to Bloomberg Podcast, and of course we welcome Bloomberg Television worldwide.
Speaker 2: A special good morning Jamana PRESETSI in Dubai, killing it
Speaker 2: on the horizons.
Speaker 3: Good morning in the Middle.
Speaker 2: East on this special day for America. Futures up eleven down,
Speaker 2: Futures of forty eight ed Yard Denny with us as well.
Speaker 2: I want to describe as said, because I think it's important.
Speaker 2: James Tobin came out of Harvard studying under Chumpaer basically
Speaker 2: the Nobel Prize is your folks, was a Nobel Prize
Speaker 2: Chumpaider never got went down to his school in New Haven, Connecticut,
Speaker 2: and under him was Villain Bouder, Edmund Phelps, a young
Speaker 2: lady Janet Yellen as well.
Speaker 1: Philim and I were there at the same time getting
Speaker 1: our graduate degrees.
Speaker 2: It's just really, really, really austere. In the heart of
Speaker 2: Tobin and his wonderful eclectic economics of the twentieth century
Speaker 2: was pay attention to nominal GDP. To me, the great
Speaker 2: missed call here to bring it over to corporate is
Speaker 2: animal spirit. Does your bullmarket extrapolation hinge just simply a
Speaker 2: nominal GDP?
Speaker 1: Well, it does certainly a nominal GDP runs profits, and
Speaker 1: profits run nominal GDP and runs revenues runnues at the
Speaker 1: top of the income statement, right, And you know profits
Speaker 1: typically lead to companies expanding their operations in both the
Speaker 1: labor and in capital. In the current situation, as we
Speaker 1: just discussed as a shortage of labor, so we're seeing
Speaker 1: a lot more spending on capital to increase the productivity
Speaker 1: of labor. And it's all good. Productivity is like ferry dust.
Speaker 1: It makes everything better, It makes real GDP better, it
Speaker 1: makes inflation lower, and so you still get an increased
Speaker 1: nominal GDP, but it's the right mix.
Speaker 3: Let me get one morning here, because Paul's got like
Speaker 3: eight questions.
Speaker 2: With that said, when you look at MAG seven, which
Speaker 2: you have dealed, they're not under the same microeconomics of
Speaker 2: traditional corporations.
Speaker 3: Are they discuss that? Well, they have.
Speaker 1: Some of them have motes around them and it's kind
Speaker 1: of like game of thrones where you know, whe is
Speaker 1: rising and another one's falling, and it's a very dynamic situation.
Speaker 1: But they do account for thirty percent of the market
Speaker 1: cap of the S and P five hundred, but they
Speaker 1: also account for something like five percent of the earnings.
Speaker 2: Paul, can you see Zuckerberg going cue the dragons exactly?
Speaker 4: So, Yes, as we think about what a lot of
Speaker 4: people have called concentration risk in this marketplace, is that
Speaker 4: a risk to you? How concerned are you about it?
Speaker 1: Well, that's not a concern to me, because these companies
Speaker 1: are earning a lot of money, and they have a
Speaker 1: tremendous amount of cash flow, and they also basically have
Speaker 1: internal investment banking departments where they are able to find
Speaker 1: small companies that they can leverage up and their businesses.
Speaker 1: I think it's one of the reasons that smidcap, small
Speaker 1: and MidCap managers have been frustrated because anytime that they
Speaker 1: put in the next Microsoft in their portfolio, it gets
Speaker 1: bought out.
Speaker 3: Exactly.
Speaker 4: Well, how about for the small and MidCap investors out there?
Speaker 4: Presumably lower interest rates should help those companies. Is that enough?
Speaker 1: I think we can see it in the way things trade.
Speaker 1: Whenever there's expectations that the federal lower rates, the Russell
Speaker 1: two thousand that does better. The problem is the Russell
Speaker 1: two thousand and has what something like forty percent of
Speaker 1: companies that don't have any earnings. That's a little bit
Speaker 1: of a problem. But when people are excited and you
Speaker 1: risk on, they're willing to buy those kind of companies.
Speaker 1: But my preference is I call them the impress of
Speaker 1: four ninety three. Everybody's focusing on the Magnificent seven. There's
Speaker 1: four hundred and ninety three companies in the S and
Speaker 1: P five hundred that are going to benefit are benefiting
Speaker 1: from what the Magnificent seven are creating. These companies the
Speaker 1: Magnificent seven aren't going to continue to do well unless
Speaker 1: the products really do improve productivity for the four ninety three.
Speaker 1: I think that's happening, and I do expect that the
Speaker 1: market will broaden out.
Speaker 4: What is our Federal Reserve going to do here? I
Speaker 4: think the market's saying December, we're going to get a
Speaker 4: rate cut. After that?
Speaker 1: Not sure, Well, the Fed really frustrates me. For the
Speaker 1: past few years. Every now and then, I've written that
Speaker 1: I be more than happy to do what the Fed
Speaker 1: does for half the price, and my condition is a
Speaker 1: continue if they allow me to work from home. I
Speaker 1: would regulation or supervision, just macroeconomic policy. But a year
Speaker 1: ago when they started cutting rates, you know, they're down
Speaker 1: one hundred and fifty basis points since September of last year.
Speaker 1: I said, I don't think that's a good idea because
Speaker 1: the economy is doing pretty well and inflation is still
Speaker 1: above three percent. But they just wouldn't listen to me.
Speaker 1: They did it anyways, and you know what, the bondial
Speaker 1: went up last year. Remember they cut the FED funds
Speaker 1: rate by one hundred basis points. My friends, the bond
Speaker 1: Vigelanis took it up one hundred basis points.
Speaker 2: So Taylor rule with plugins, I can go eight ways here, folks,
Speaker 2: on the plugins of Taylor rule. I'm going to say this,
Speaker 2: doctor you Denny, as clearly as I can. With the
Speaker 2: pandemic and with this original productivity experiment we're working, they're
Speaker 2: flying blind if I'm blind, they're making I mean, you
Speaker 2: know with me, Pharaoh Bramo sitting on the set, the
Speaker 2: fedicides were making it up as we go.
Speaker 1: Well, they basically admit admit as much in their fair
Speaker 1: and their dot plot. In the dot plot, you know,
Speaker 1: when he asked what is the neutral rates? Oh, on average,
Speaker 1: we think it's three percent, But then when you look
Speaker 1: at the dot plot, it's be told between four percent
Speaker 1: is the kind of range, you guess, So they have
Speaker 1: no idea what the neutral rate is. I think you
Speaker 1: have to look at the neutral rate at right post
Speaker 1: after the fact.
Speaker 3: I got one final question.
Speaker 2: Kurt Soup is out in Indianapolis for Creative Financial Group
Speaker 2: and he's writing up these brilliant mistakes you make in
Speaker 2: retirement tweets Real value ed. Kurt Soup Supe can't say
Speaker 2: enough about how he gets you thinking.
Speaker 3: How is ed? You're Denny saying we.
Speaker 2: Should invest if we're all going to live forever?
Speaker 1: Well, I think the baby Boomers especially were raised by Spock,
Speaker 1: and I know doctor Spock has some influence on our
Speaker 1: mother's but Spock from Star Trek basically told us live
Speaker 1: long and prosper and that's what we've been doing. So
Speaker 1: I think, you know, all investors should assume they're going
Speaker 1: to live long and along the way should let the
Speaker 1: magic of compounding really make the retirement very, very prosperous.
Speaker 2: Michael Barr emails in he's already on the way back
Speaker 2: to pick up the pieces after the lion's lost.
Speaker 3: Ed your Denny ask him about his dog? Did you
Speaker 3: bring your dog today?
Speaker 2: No?
Speaker 1: I you know we have four King Charles Cavaliers and
Speaker 1: Max always likes to take a snooze on my couch
Speaker 1: in my office. So Max is very, very famous.
Speaker 2: I watched the Dog Show yesterday, did you great?
Speaker 1: Yeah?
Speaker 3: That was great.
Speaker 4: Yeah yep, so some beautiful dog shined show.
Speaker 2: I forget I forget that.
Speaker 1: But it really is true. If you want a friend,
Speaker 1: get a dog.
Speaker 2: I put puppy sweaters from Canines Styles Manhattan yesterday. I
Speaker 2: had to re mortgage the Middle Child.
Speaker 3: Yep, they're expensive.
Speaker 1: They are expensive.
Speaker 3: It's outrageous.
Speaker 1: If you get if you get a dog, make sure
Speaker 1: you get health insurance.
Speaker 3: And short well with Kemelfy. It's hopeless.
Speaker 2: Edgar Denny, thank you for joining us today.
Speaker 3: Just a real treat Thanksgiving