WEBVTT - Reaction to the Fed's Rate Cut 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always i Bloomberg Radio, 0:00:43.080 --> 0:00:47.080 the Bloomberg Terminal, and the Bloomberg Business App. The first 0:00:47.120 --> 0:00:49.760 print here off Lisa's Great data check is up five 0:00:49.920 --> 0:00:53.360 ninety five on the doll. What a perfect moment to 0:00:53.360 --> 0:00:57.080 speak to mister Eisman with Newberger Berman acclaimed in a 0:00:57.120 --> 0:00:59.240 movie of a few years ago. Look for the new 0:00:59.440 --> 0:01:04.240 Eisman Hollywood property. I think it's a Memorial Day, Paul. 0:01:04.400 --> 0:01:06.480 You know, Memorial Day's a good open. Sure, you know, yes, 0:01:06.560 --> 0:01:09.240 it's very good. Look for Bear Squeeze. You're gonna see 0:01:09.240 --> 0:01:13.520 that Memorial Day twenty twenty five, Steve, is this just 0:01:13.560 --> 0:01:15.839 one big short cover? We got the wall of money 0:01:15.840 --> 0:01:18.440 out there. Lawrence McDonald, who has been brilliant on this 0:01:18.560 --> 0:01:22.520 with the action yesterday. Is it an indirect short cover 0:01:22.680 --> 0:01:22.960 going on? 0:01:24.760 --> 0:01:28.240 That's too sophisticated for me. I mean, I find the 0:01:28.319 --> 0:01:33.280 whole incredible amount of energy that people spend on the 0:01:33.319 --> 0:01:38.560 FED day more amusing than informative. You know, think about 0:01:38.600 --> 0:01:40.880 it for a second. How much ink was spilt about 0:01:40.880 --> 0:01:43.600 whether the Fed with lower twenty five or fifty? All right, 0:01:43.600 --> 0:01:46.160 so they lowered fifty, and then what happened? The market 0:01:46.240 --> 0:01:49.600 had no reaction, just went up and down. Nobody knew 0:01:49.640 --> 0:01:55.000 what to do. And today the market's up huge, but 0:01:55.160 --> 0:01:59.680 rates are higher, so you know, you put it all together. 0:02:00.840 --> 0:02:02.840 I tried not to spend too much time trying to 0:02:02.880 --> 0:02:06.160 figure it out. All I care about is the general 0:02:06.200 --> 0:02:09.840 direction of the FED is lower. How much lower? I 0:02:09.840 --> 0:02:12.880 don't particularly care. I don't think that's particularly important. The 0:02:12.919 --> 0:02:16.480 more important question is how's the economy. Economy is slowed, 0:02:16.480 --> 0:02:18.919 But the data seems to indicate that the economy is fine, 0:02:18.960 --> 0:02:20.919 and that's all that really matters. 0:02:21.080 --> 0:02:23.480 So what other than you or I guess in the 0:02:23.520 --> 0:02:26.200 context of the economy, what are the drivers for kind 0:02:26.240 --> 0:02:29.000 of whether you're bullish or bearish, what's some of the 0:02:29.040 --> 0:02:30.040 big variables that you've find. 0:02:30.360 --> 0:02:35.400 I've gotten thematic more thematic in the last bunch of years. 0:02:35.480 --> 0:02:40.360 And I think that there are two great equity themes 0:02:40.400 --> 0:02:44.639 of our time, and we try and focus our portfolios 0:02:44.680 --> 0:02:48.080 as much as reasonable on those themes, and those are AI, 0:02:48.200 --> 0:02:55.720 slash tech and infrastructure. And I think those themes will 0:02:55.800 --> 0:02:58.200 last for years. They'll be variations, you know, on the 0:02:58.200 --> 0:03:01.480 infrastructure side there you know, politics do matter, but the 0:03:01.560 --> 0:03:02.800 overall theme will continue. 0:03:02.919 --> 0:03:04.800 Paul, let me interrupt with the data check here as 0:03:04.840 --> 0:03:07.320 a market surge, Dow up five hundred and sixty six 0:03:07.360 --> 0:03:10.600 points on a percentage basis, the market lifts here at 0:03:10.680 --> 0:03:14.480 nine thirty three, greater than futures NaSTA cup two point 0:03:14.480 --> 0:03:17.720 three percent as Paul predicted, the vis comes in sixteen 0:03:18.200 --> 0:03:19.440 point four zero on. 0:03:19.400 --> 0:03:22.840 The AI trade, Steve, how do you suggest people play it? 0:03:22.880 --> 0:03:24.600 I think the first name people kind of jumped on 0:03:24.720 --> 0:03:26.680 was in Vidia for good reason, because they put up 0:03:26.480 --> 0:03:29.320 that big revenue prints a couple of years ago. How 0:03:29.360 --> 0:03:30.720 else are you trying to play this? 0:03:31.560 --> 0:03:34.480 So, I mean the way we play it is where 0:03:34.520 --> 0:03:37.440 most people are playing it. In Vidia, some other chip companies, 0:03:39.240 --> 0:03:44.440 the very large companies with massive databases, you know, then 0:03:44.480 --> 0:03:47.760 the question becomes, you know, what apps and who's going 0:03:47.800 --> 0:03:49.560 to create them are going to work? And I think 0:03:49.560 --> 0:03:52.320 that is so early right now that it's really not 0:03:52.400 --> 0:03:53.200 worth talking about. 0:03:53.320 --> 0:03:53.480 You know. 0:03:53.600 --> 0:03:57.240 Just as an example, the part of the business of 0:03:57.360 --> 0:04:01.000 accenture that is doing extremely well is not the consulting side, 0:04:01.040 --> 0:04:03.640 which would do when companies are spending a lot of 0:04:03.680 --> 0:04:07.480 money on AI. It's the outsourcing side. And the reason 0:04:07.480 --> 0:04:11.400 why the outsourcing side is doing well is that most 0:04:11.440 --> 0:04:15.760 S and P companies do not have their data sufficiently 0:04:16.040 --> 0:04:19.160 in one place, structured appropriately to even do anything with 0:04:19.200 --> 0:04:22.359 respect to AI. So it's very very early in the 0:04:22.400 --> 0:04:28.240 AI story. The one longer term theme that we've been 0:04:28.240 --> 0:04:31.760 thinking about, although it's so long term I don't know 0:04:31.839 --> 0:04:33.760 quite what to do with it yet, is I think 0:04:33.760 --> 0:04:37.640 there's a good argument to be made that we have 0:04:37.800 --> 0:04:43.200 seen hardware rerate up and software somewhat de rate, and 0:04:43.279 --> 0:04:46.600 I think it's possible that AI could cause that to continue, 0:04:46.800 --> 0:04:51.080 because it's possible that the cost of creating software because 0:04:51.120 --> 0:04:54.239 of AI is going to plummet. And if that's the case, 0:04:54.600 --> 0:04:58.680 some of the iconic software companies out there may not 0:04:58.800 --> 0:05:01.000 have motes around their business that are quite as high 0:05:01.040 --> 0:05:01.400 as they. 0:05:01.360 --> 0:05:04.000 Used to be within the skill set that you've earned. 0:05:04.320 --> 0:05:08.640 And at Newburger Berman, do you people believe the capex 0:05:08.760 --> 0:05:15.320 expenditure of technology is being done intelligently and efficiently or 0:05:15.400 --> 0:05:18.480 is there wasted money being squandered away on AI? 0:05:20.080 --> 0:05:22.800 I mean, I'm sure both. It's you know, we won't know. 0:05:22.960 --> 0:05:24.960 We won't know the answer to that question for years, 0:05:24.960 --> 0:05:27.120 so I don't think it's worth trying to figure that 0:05:27.120 --> 0:05:27.839 out at this point. 0:05:28.560 --> 0:05:30.520 So how else do you think? I mean, it's. 0:05:32.040 --> 0:05:34.039 Are you A lot of folks are concerned about this 0:05:34.080 --> 0:05:35.560 mag seven is concentration risk? 0:05:35.640 --> 0:05:37.000 Just as a market concern? 0:05:37.240 --> 0:05:39.480 Do you have this market structure concern that so much 0:05:39.520 --> 0:05:42.000 of this market is weighted towards these MAG seven ors 0:05:42.000 --> 0:05:44.400 that beyond kind of well, I think. 0:05:44.200 --> 0:05:48.039 One interesting aspect of that it'll come to that is 0:05:48.080 --> 0:05:54.279 that many active managers, probably more on the institutional side, 0:05:55.839 --> 0:06:00.520 underperform because their risk parameters don't allow them to overweight 0:06:00.640 --> 0:06:07.240 the MEG seven because the megs so big, and it's 0:06:07.279 --> 0:06:10.520 probably going to continue. I don't think we will really 0:06:10.560 --> 0:06:14.880 see a broadening out until we see apps come out 0:06:15.120 --> 0:06:17.240 so that some of the middle more middle companies can 0:06:17.279 --> 0:06:18.640 do that. But that's we're ways away from that. 0:06:18.800 --> 0:06:20.719 Do you have a favorite mag seven? 0:06:21.040 --> 0:06:22.480 Is there one where you I don't want to talk 0:06:22.520 --> 0:06:25.839 about individual stocks. I'm just not gonna do that, right, 0:06:25.880 --> 0:06:27.560 I get into my firm gets me into trouble. 0:06:28.440 --> 0:06:30.320 The firm gets you into trouble. You don't get yourself 0:06:30.360 --> 0:06:33.200 into trouble. Okay, I got it on the list. 0:06:34.880 --> 0:06:37.760 On the infrastructure theme, yes, do I go out there 0:06:37.800 --> 0:06:40.600 and just buy like Cummings and engines and. 0:06:40.800 --> 0:06:44.120 Well, let's let me talk about that because politics are important. Okay. 0:06:44.960 --> 0:06:48.480 So I think that there are four mega infrastructure themes, 0:06:48.600 --> 0:06:53.960 and then there's a fifth. The four are on shoring. 0:06:54.920 --> 0:06:59.720 The second is you know, improvement of the grid yep. 0:07:00.160 --> 0:07:03.000 Third is everything having to do with actually building the 0:07:03.040 --> 0:07:06.040 data centers and that is overlapp there with the grid. 0:07:06.520 --> 0:07:09.000 And then there's then there's gratification, and then there's all 0:07:09.000 --> 0:07:12.040 the bills that Guiden passed to shove money into all 0:07:12.080 --> 0:07:16.680 four boxes. You know where the politics can become important 0:07:17.000 --> 0:07:21.120 is you know I'll do to extreme cases. If Trump sweeps, 0:07:21.760 --> 0:07:26.600 gratifications are going to get de emphasized, and if Harris sweeps, 0:07:26.960 --> 0:07:30.400 you know, gratification will get re emphasized. So that's important. 0:07:30.560 --> 0:07:32.040 So the politics here are important. 0:07:32.320 --> 0:07:34.560 Steve Weisman with us, and we will continue here. Let 0:07:34.640 --> 0:07:36.240 me do a data check here with the markets and 0:07:36.280 --> 0:07:41.200 the move SPX, Dow records, Dow up five and forty 0:07:41.240 --> 0:07:44.360 points to the solid forty two thousand print in the 0:07:44.400 --> 0:07:49.040 Dow fifty seven hundred, SPX up eighty six points, Nasdaq 0:07:49.200 --> 0:07:52.440 one two point with Steve Weison. 0:07:52.600 --> 0:07:55.320 Steve, how you, how concerned are you if at all? 0:07:55.520 --> 0:07:58.080 We're not on right now? What's on? We're We're on, 0:07:58.080 --> 0:07:59.880 We're on Ali's far radio. It's hard to tell you. 0:08:00.040 --> 0:08:02.520 Yeah, with the red light. You make it easy. The 0:08:02.520 --> 0:08:05.840 red light. Yes, that's for me. 0:08:06.120 --> 0:08:07.400 I've just learned something. 0:08:07.200 --> 0:08:08.960 Exactly, all right, valuation. 0:08:09.080 --> 0:08:12.400 How concerned are you, if at all about this market broadly? 0:08:13.000 --> 0:08:17.320 You know, I think I learned this lesson in the 0:08:17.360 --> 0:08:20.440 dot com bust. So you know, when when dot com 0:08:20.520 --> 0:08:23.400 was rocking and rolling, everybody was yelling and screaming about evaluation. 0:08:24.080 --> 0:08:29.640 But that didn't matter until there was a recession and 0:08:29.720 --> 0:08:31.640 it turned out that a lot of these companies had 0:08:31.640 --> 0:08:36.960 actually fundamental problems. So I don't spend I mean, generally speaking, 0:08:37.040 --> 0:08:38.800 I'm not going to invest in a company that sells 0:08:38.800 --> 0:08:41.000 at a thousand PE. That's just not what I do. 0:08:41.520 --> 0:08:46.040 But we'll invest in some high PE stocks. I just 0:08:46.120 --> 0:08:49.680 don't feel like it's as long as the economy is fine. 0:08:49.720 --> 0:08:53.440 It's not. It's more of an academic exercise than anything else. 0:08:53.760 --> 0:08:55.760 So the economy, I mean, from what we're hearing from you, 0:08:55.920 --> 0:09:00.439 the economy really is underpinning almost everything you foundation. I 0:09:00.480 --> 0:09:03.520 guess of how you view investments correct? Okay, how about 0:09:03.559 --> 0:09:05.440 on the fixed income side, what do we do there? 0:09:05.640 --> 0:09:07.160 I mean I can sit in it to your treasury. 0:09:07.200 --> 0:09:09.600 I used to get five percent. I'm still getting three 0:09:09.600 --> 0:09:12.240 point six percent. That's not bad for you know, like 0:09:12.320 --> 0:09:12.880 no risk? 0:09:13.240 --> 0:09:14.760 What do I got there? And takes my credit risk? 0:09:14.800 --> 0:09:15.200 Do you think? 0:09:16.920 --> 0:09:21.120 Look, we do some corporate bond investing, but mostly what 0:09:21.200 --> 0:09:24.600 we do is equities. Okay, I'm I don't have a 0:09:24.679 --> 0:09:27.640 strong view on fixed income right now, one way or 0:09:27.640 --> 0:09:28.640 the other. I really don't. 0:09:28.920 --> 0:09:31.320 You have alternatives in your portfolio. 0:09:31.360 --> 0:09:34.160 I don't have alternatives either. I'm just a stock jockey, 0:09:34.200 --> 0:09:36.800 stock jobs, stock and I always have been. 0:09:36.880 --> 0:09:39.120 Okay, we got to talk banks here in Financial with 0:09:39.200 --> 0:09:42.920 Steve Iceman. Here's a quote. So, yeah, I met with 0:09:42.960 --> 0:09:45.760 this retail banker yesterday, and I'm supposed to be getting 0:09:45.800 --> 0:09:48.560 him to invest in her fun but instead I start 0:09:48.600 --> 0:09:51.800 grilling him about our overdraft penalties. And now was bank, 0:09:51.880 --> 0:09:55.040 let's a customer write ten twelve checks before they tell 0:09:55.120 --> 0:09:58.199 them they're overdrawn. And this creep is making billions off 0:09:58.240 --> 0:09:59.440 of screwing over people. 0:09:59.760 --> 0:10:03.120 This way script that sounds like a much younger version 0:10:03.160 --> 0:10:07.080 of me. It's from the script A very angry young man, 0:10:07.360 --> 0:10:08.480 A very angry. 0:10:08.200 --> 0:10:12.199 Young man from twenty fifteen. Can you buy New York 0:10:12.400 --> 0:10:16.080 big bank? Can you buy the future of Bank of America? 0:10:16.120 --> 0:10:18.840 You know, not individual stocks, but can you buy the 0:10:18.840 --> 0:10:20.520 big bank success of the future. 0:10:22.080 --> 0:10:24.959 So let's talk about what the positives are. The positives 0:10:25.000 --> 0:10:29.040 are that the regulators did a very very good job 0:10:29.280 --> 0:10:34.720 post Dodd Frank led by vice chair Daniel Torulo, truly 0:10:34.760 --> 0:10:39.760 one of the unsung heroes of the financial system. The 0:10:39.880 --> 0:10:42.880 leverage in the banks is cut by more than half. 0:10:43.240 --> 0:10:47.400 Even within that leverage, they have been de risked. So 0:10:47.640 --> 0:10:50.560 the financial system of the United States, as far as 0:10:50.640 --> 0:10:53.199 I'm concerned, is very very safe, and I don't lose 0:10:53.240 --> 0:10:54.920 any sleep about it. And by the way, I sleep 0:10:55.000 --> 0:11:00.559 very well. But do I think there's a great story 0:11:00.640 --> 0:11:04.160 to invest in some of the very large banks. Not really. 0:11:04.559 --> 0:11:07.000 I just don't think there's a story there one way 0:11:07.040 --> 0:11:07.280 or the other. 0:11:07.360 --> 0:11:09.160 It's too important. I got to get this in lex 0:11:09.440 --> 0:11:13.320 in the Ft today, blistering about private equity and the 0:11:13.360 --> 0:11:17.600 ability not to cash out. Do you see potential problems 0:11:17.640 --> 0:11:19.840 within the illiquidity of private equity? 0:11:22.160 --> 0:11:24.000 You know, you could spend any bad tail you want. 0:11:24.040 --> 0:11:26.520 I don't know. There's just not enough data on what's 0:11:26.559 --> 0:11:29.320 in private expert to really know one way or the other. 0:11:29.880 --> 0:11:30.520 You can't make that. 0:11:30.760 --> 0:11:31.800 I can't make that judgment. 0:11:31.960 --> 0:11:36.600 See that. You know his lawyers love him, you know, 0:11:36.640 --> 0:11:37.440 won't do individuals. 0:11:37.800 --> 0:11:38.720 My lawyers love me. 0:11:38.800 --> 0:11:38.960 You know. 0:11:39.520 --> 0:11:42.640 One time, in this quick story in the nineties, Oppenheimer 0:11:42.720 --> 0:11:44.880 got I was a Oppenheimer, and Oppenheimer got sued over 0:11:44.960 --> 0:11:48.560 something that I had written, and and there was you know, 0:11:48.559 --> 0:11:50.920 it was discovery, and the lawyers called me and said, 0:11:50.920 --> 0:11:52.920 send us everything you have on this company that you 0:11:52.960 --> 0:11:55.480 wrote about. And I sent it to them, which was 0:11:55.520 --> 0:11:58.480 only the reports that I had written. And the lawyer 0:11:58.520 --> 0:12:01.080 called me and said, what about your notes? And I said, 0:12:01.640 --> 0:12:04.280 I don't have notes. I don't take notes. He goes, 0:12:04.400 --> 0:12:08.120 I love you. 0:12:06.520 --> 0:12:08.760 Guys, thank you so much. We love you too. I 0:12:08.880 --> 0:12:12.960 greatly appreciate it. Streisman is with Newburger Berman some perspectives 0:12:12.960 --> 0:12:28.800 there given most interesting times. Julian Emmanuel joins us. Right now, 0:12:28.960 --> 0:12:32.200 can you send thanks to Edward Heiman ed Heiman and 0:12:32.280 --> 0:12:36.240 tell him thank you for appearing generously ten eleven, twelve 0:12:36.320 --> 0:12:38.520 days ago and then coming in with your redo call 0:12:39.240 --> 0:12:42.080 he cast aspersion on you. What did you say to 0:12:42.360 --> 0:12:45.280 ed Heyman to get him to switch a view from 0:12:45.920 --> 0:12:50.520 recession difficulty into the soft landing we're celebrating this morning. 0:12:50.720 --> 0:12:52.840 Well, I think if you go back and think about it, Tom, 0:12:52.920 --> 0:12:56.040 what it does is, you know our business first of all, 0:12:56.080 --> 0:12:59.680 forecasting things is difficult whether you're an economist or a strategist. 0:13:00.120 --> 0:13:02.840 But as part of the process again, you know, Kin's 0:13:02.920 --> 0:13:06.400 is famous for the statement when the facts change, I change, 0:13:06.440 --> 0:13:07.080 what do you do? 0:13:07.240 --> 0:13:07.440 Sir? 0:13:08.559 --> 0:13:11.400 We went through that same thing ourselves at midyear in 0:13:11.520 --> 0:13:14.000 terms of taking our price target up to six thousand, 0:13:15.280 --> 0:13:21.320 essentially recognizing that this environment is totally different than anything 0:13:21.520 --> 0:13:23.000 right any of us have ever seen. 0:13:23.080 --> 0:13:26.840 And with immense respect to CJ. Lawrence and what Edheimen 0:13:26.960 --> 0:13:33.320 invented years ago is the distinction pandemic, fiscal stimuli or 0:13:33.400 --> 0:13:36.839 is it a new productivity we don't understand well? 0:13:36.880 --> 0:13:40.880 And the kicker is is that it could well be 0:13:41.520 --> 0:13:45.320 the new productivity we don't understand. And clearly, you know, 0:13:46.000 --> 0:13:49.439 you wouldn't have seen the announcement of this massive deal 0:13:49.960 --> 0:13:54.920 for building AI, you know, power plant type build out 0:13:55.280 --> 0:13:57.960 that we've seen in the last couple of days if 0:13:58.000 --> 0:14:01.319 there were not the belief and we share that belief 0:14:01.720 --> 0:14:06.520 that AI is absolutely going to underpin productivity in the 0:14:06.559 --> 0:14:07.120 long run. 0:14:07.120 --> 0:14:09.800 Here, what did you make yesterday of our fetter reserve 0:14:09.840 --> 0:14:12.360 and kind of what they're messaging was, what'd you take 0:14:12.360 --> 0:14:12.800 away from that? 0:14:13.160 --> 0:14:18.160 Well, it really was an example of again getting the 0:14:18.240 --> 0:14:23.400 dual mandate back squarely in focus, but also reinforcing the 0:14:23.440 --> 0:14:28.040 message we're cutting because we can not because we have to, 0:14:28.160 --> 0:14:32.280 and this whole idea that they know something that we 0:14:32.400 --> 0:14:37.600 don't with regard to economic weakness completely discredit that. But 0:14:37.680 --> 0:14:40.880 yet at the same time it's also an implicit message 0:14:41.040 --> 0:14:44.720 that if the data does weaken, and particularly if we 0:14:44.840 --> 0:14:49.080 have the kind of election volatility that we had, say 0:14:49.160 --> 0:14:53.240 in the Hanging Chad year of two thousand, where stocks 0:14:53.280 --> 0:14:57.960 were similarly expensive, the economy was starting to slow and 0:14:58.000 --> 0:14:59.800 then all of a sudden you couldn't figure out who 0:14:59.800 --> 0:15:03.680 the resident was, and that soured the mood and soured 0:15:03.680 --> 0:15:06.960 asset markets. The FED is prepared to act. The FED 0:15:07.080 --> 0:15:09.880 did not act in two thousand and that's part of 0:15:09.880 --> 0:15:12.480 why you got a recession in early one. 0:15:13.280 --> 0:15:16.120 So, given what we've heard from the Fed yesterday, given 0:15:16.160 --> 0:15:18.280 what we know about I guess earnings, is it full 0:15:18.320 --> 0:15:20.200 speed ahead on risk assets? 0:15:20.200 --> 0:15:22.800 And if so, or do you see the opportunities? 0:15:23.280 --> 0:15:29.600 So we do continue to be very positive into year end, 0:15:29.640 --> 0:15:33.360 and so far twenty five looks good to us as well. 0:15:34.720 --> 0:15:38.840 You know, part of this narrative again is the FEDS 0:15:38.920 --> 0:15:43.680 behind us. We have earnings that will once again when 0:15:43.840 --> 0:15:47.480 the reports start in a couple of weeks, confirm the 0:15:47.520 --> 0:15:50.760 fact that second quarter was not an anomaly. That yes, 0:15:51.280 --> 0:15:53.800 the other four hundred and ninety three stocks in the 0:15:53.840 --> 0:15:57.320 S and P five hundred are growing their earnings. And 0:15:57.680 --> 0:16:02.160 that combination along with the statistic that we quote and 0:16:02.440 --> 0:16:06.240 we really like six out of six presidential election years 0:16:06.440 --> 0:16:10.200 where you were up double digits on labor day, every 0:16:10.240 --> 0:16:12.240 single one of them finished higher by year end. 0:16:12.320 --> 0:16:14.080 What does the I do to go to you know, 0:16:14.320 --> 0:16:16.880 Edwards in and of course I start with trucking statistics 0:16:16.920 --> 0:16:20.160 because that's what he's doing. But what what is the 0:16:20.280 --> 0:16:25.240 dynamics of corporate and business investment given the madness of 0:16:25.280 --> 0:16:27.880 the last twenty four hours, Well. 0:16:27.760 --> 0:16:32.040 It's got to be plus plus it is. And again 0:16:33.240 --> 0:16:35.960 we've been doing this while and we try to tempt 0:16:36.040 --> 0:16:40.240 you know, it's curb your enthusiasm the legendary comedy show, 0:16:40.640 --> 0:16:43.680 because part of what you don't ever really want to 0:16:43.720 --> 0:16:46.640 do emotionally in the last twenty four hours is a 0:16:46.680 --> 0:16:51.600 perfect example of this, because the initial reaction was disappointment 0:16:52.040 --> 0:16:54.880 to weigh to way the market traded, and then all 0:16:54.920 --> 0:16:58.240 of a sudden this morning we've reassessed and it's full 0:16:58.280 --> 0:17:01.360 steam ahead. We want to be temp but the fact 0:17:01.480 --> 0:17:05.199 is is that we are in one of those unique 0:17:05.280 --> 0:17:09.280 situations where because the economy looks like it's going to 0:17:09.400 --> 0:17:13.440 soft land at having changed his forecast, you are in 0:17:13.600 --> 0:17:17.520 one of these win win scenarios where companies are likely 0:17:17.680 --> 0:17:22.880 going to be more incentivized to increase cappex, to take 0:17:22.960 --> 0:17:26.160 on M and A, you know, regardless of the fact 0:17:26.240 --> 0:17:27.400 that valuation. 0:17:27.400 --> 0:17:30.240 To take on new technology, yep, it's understated. 0:17:30.320 --> 0:17:32.040 How about old technology I mean here in a two 0:17:32.080 --> 0:17:34.280 year treasure, we've gone from five percent yield down to 0:17:34.320 --> 0:17:38.240 three sixty During that period of time, stuff like utilities 0:17:38.280 --> 0:17:40.480 and roots have done well. Are they more to go 0:17:40.600 --> 0:17:42.080 or to take some profits there? 0:17:42.160 --> 0:17:46.320 So so from our point of view, we've trusted in 0:17:46.359 --> 0:17:49.840 what we call the Fed rate cut Playbook, and basically 0:17:50.320 --> 0:17:53.800 what it says is that a lot of the move 0:17:54.359 --> 0:17:58.720 on the long end of yields is done. You know, frankly, 0:17:59.160 --> 0:18:02.120 you've come in one hundred basis points on the ten 0:18:02.200 --> 0:18:05.200 year yield. If you're not having a recession. We don't 0:18:05.200 --> 0:18:09.879 think you're having a recession. And the best of inflation 0:18:10.600 --> 0:18:13.360 is just recently passed. Not to say that inflation won't 0:18:13.359 --> 0:18:18.320 continue lower. That to us means the yield story is 0:18:18.480 --> 0:18:20.840 likely higher, and that's where you want to sort of 0:18:20.880 --> 0:18:24.440 trim your holdings on places like rets and utility. 0:18:24.160 --> 0:18:26.040 Single point SPX twelve months. 0:18:25.840 --> 0:18:30.000 Out, well, come on, I can't do that until we 0:18:30.040 --> 0:18:34.080 put out the year ahead. But frankly, you know, we 0:18:34.160 --> 0:18:39.200 do think, particularly if you think about past valuation paradigms, 0:18:39.480 --> 0:18:42.760 we're expensive at twenty four times, but we're nowhere near 0:18:43.080 --> 0:18:45.880 the twenty eight to thirty times. We've seen in prior peaks, 0:18:46.000 --> 0:18:48.879 and the feed is with us and productivity is with us. 0:18:48.920 --> 0:18:51.360 Juan Emmanuel, thank you so much for that. Hymen Evercoret 0:18:52.680 --> 0:19:00.440 this morning, let's talk to a bond guy. Sure that's great. 0:19:00.600 --> 0:19:03.640 What an equity response we see here? Joining us now, 0:19:03.720 --> 0:19:06.359 Jim Caron, he's at Morgan Stanley for an extended period. 0:19:06.400 --> 0:19:10.400 He'll join us across his half hour. So Jason Furman's 0:19:10.440 --> 0:19:16.080 out yesterday and he's got his offspring, a teenager, emailing 0:19:16.200 --> 0:19:18.280 dad in the middle of the FED meetings saying you 0:19:18.320 --> 0:19:21.560 were wrong. I was wrong. I didn't say what my 0:19:21.600 --> 0:19:25.200 opinion was because nobody cares full disclosure. I was looking 0:19:25.240 --> 0:19:28.920 for twenty five I was wrong. You were wrong. Why 0:19:28.960 --> 0:19:29.720 were we wrong? 0:19:30.880 --> 0:19:32.679 I think we were thinking too logically about it. 0:19:32.680 --> 0:19:36.040 And by the way, Jason Furman's offspring's response is probably 0:19:36.080 --> 0:19:38.160 what my offspring would love to say to me as 0:19:38.160 --> 0:19:43.480 often as possible. So look, I mean, fifty basis points 0:19:43.520 --> 0:19:46.919 is absolutely a justifiable number. It was a close call. 0:19:47.960 --> 0:19:51.119 I think why we were wrong is that there was 0:19:51.160 --> 0:19:55.119 a component of Powell wanted to probably cut interest rates 0:19:55.200 --> 0:19:56.879 in July, and I think if you look at the 0:19:56.880 --> 0:19:59.560 dot plot and you look at the makeup of this decision. 0:19:59.600 --> 0:20:01.760 I think he kind of strong arm the committee and 0:20:01.800 --> 0:20:04.159 he said, look, we're going fifty. We didn't do July. 0:20:04.520 --> 0:20:07.320 It was a mistake and I need you guys to 0:20:07.359 --> 0:20:08.440 get behind me on this one. 0:20:08.680 --> 0:20:11.919 And I think that's that's why it was such a 0:20:11.920 --> 0:20:12.560 close call. 0:20:12.600 --> 0:20:14.439 And I think it was a judgment call, but I 0:20:14.440 --> 0:20:16.520 think there was a bit of strong arming that came 0:20:16.560 --> 0:20:17.080 through there. 0:20:17.480 --> 0:20:19.720 So that's hard. You know, that can break either way. 0:20:20.359 --> 0:20:23.119 We had a dissenting vote there, and that's no visual. 0:20:23.160 --> 0:20:25.480 What does that tell to you? Is that what does 0:20:25.480 --> 0:20:26.399 that telegres. 0:20:26.080 --> 0:20:28.400 You know, it's been like nineteen years since we've had 0:20:28.400 --> 0:20:31.600 a descent on something like this, you know, during like 0:20:31.680 --> 0:20:35.240 a rate cut. Like look, look, I mean it tells 0:20:35.280 --> 0:20:37.320 me that Again, I'm going to go back to. 0:20:37.320 --> 0:20:37.960 The dot plot. 0:20:38.119 --> 0:20:41.080 If you look at the dot plot for twenty twenty four, 0:20:41.280 --> 0:20:44.120 there's a lot of cohesiveness. Okay, we've got a contristraates, 0:20:44.119 --> 0:20:45.560 you know, we've got to get on the move here. 0:20:46.000 --> 0:20:47.840 When you start to go out to twenty twenty five 0:20:48.040 --> 0:20:50.919 and out to twenty twenty six, there's a huge amount 0:20:50.960 --> 0:20:55.280 of dispersion of opinions across the whole thing. So I 0:20:55.320 --> 0:20:57.720 don't think this is just a done deal where the 0:20:57.800 --> 0:20:59.320 Fed Okay, that's it. We don't have to worry about 0:20:59.320 --> 0:21:01.920 it anymore. Gordon cut two hundred and fifty basis points. 0:21:01.960 --> 0:21:04.120 The market's got that price. Let's all just sit back 0:21:04.119 --> 0:21:06.800 and relax. Although that's what the markets are doing today. 0:21:07.640 --> 0:21:11.440 But you know, the question for me, and the thing 0:21:11.520 --> 0:21:14.600 that gets me the most on this whole number is 0:21:14.640 --> 0:21:17.840 the unemployment rate component. Right, everything is hinged upon a 0:21:17.960 --> 0:21:21.760 number that has been so terrible over the last couple 0:21:21.800 --> 0:21:24.359 of years, really since COVID. There's not a lot of 0:21:24.359 --> 0:21:28.480 certainty in the number in the jobs reports. They're heavily revised. 0:21:28.600 --> 0:21:31.280 Yet we're basing all of this monetary policy on a 0:21:31.320 --> 0:21:35.000 four point four percent, which is offense unemployment rate target. 0:21:35.560 --> 0:21:35.960 I don't know. 0:21:36.040 --> 0:21:37.760 I mean, like, look, if the economy is really slowing, 0:21:37.760 --> 0:21:39.560 I would imagine that the employment rate goes up. 0:21:39.600 --> 0:21:42.080 And you know, you're not going to get my opinion here, folks, 0:21:42.080 --> 0:21:43.480 but I am going to say what I'm going to 0:21:44.240 --> 0:21:46.800 observe around what Jim Kurrn just said is a three 0:21:46.800 --> 0:21:50.280 month moving average of non farm payrolls. David Kelly over 0:21:50.280 --> 0:21:52.679 at JP Morgan, that's another bank. I don't know if 0:21:52.680 --> 0:21:55.199