WEBVTT - Bloomberg Surveillance TV: August 20, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.240 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.080 Terminal and the Bloomberg Business app. We begin with our 0:00:37.080 --> 0:00:39.680 top story stocks on pause, with all eyes on Jackson 0:00:39.720 --> 0:00:42.360 Hole traders looking for ray cut clues from fed share 0:00:42.440 --> 0:00:45.479 Jay Powell when he speaks tomorrow, Muhammad al Erin of 0:00:45.520 --> 0:00:48.360 Queen's College, Cambridge, saying the stakes are high, writing in 0:00:48.360 --> 0:00:51.680 a Bloomberg opinion piece quote, it is critical for Powell 0:00:51.720 --> 0:00:54.240 to take advantage of the golden opportunity he has this 0:00:54.320 --> 0:00:58.520 Friday to regain control of the economic and policy narrative. 0:00:58.800 --> 0:01:00.800 Muhammed joins us now from more Mohammed, good morning. 0:01:00.800 --> 0:01:01.400 It's good to see you. 0:01:01.440 --> 0:01:02.000 Good morning, John. 0:01:02.040 --> 0:01:03.560 Thanks for that is for the next ninety minutes, so 0:01:03.560 --> 0:01:05.440 We've got plenty of time to work through these issues. 0:01:05.680 --> 0:01:08.720 I went through the piece on Bloomberg Opinion, pretty extensive, 0:01:08.840 --> 0:01:11.600 and a long list of ours for Chairman Power Tomorrow. 0:01:11.680 --> 0:01:13.959 I'm going to go through another quote that you wrote. 0:01:14.080 --> 0:01:16.759 It is particularly critical that people come away from Wyoming 0:01:16.800 --> 0:01:20.080 with a clearer picture of the new equilibrium policy rate 0:01:20.480 --> 0:01:23.360 that neither restraints nor fuels economic activity, the path to 0:01:23.400 --> 0:01:27.000 that rate, and what a sustainable two percent inflation target 0:01:27.040 --> 0:01:30.600 means in practice. Now that's what you want you expecting 0:01:30.680 --> 0:01:31.959 to get it this week. 0:01:32.319 --> 0:01:35.520 I hope I'll get one of those three, if not two, John. 0:01:35.520 --> 0:01:37.480 It is critical because, as you and Danny have been 0:01:37.480 --> 0:01:40.520 discussing this morning, it's not just about price volatility. It 0:01:40.600 --> 0:01:45.160 has been narrative volatility. People have moved violently in terms 0:01:45.160 --> 0:01:46.880 of their narrative of the economy in terms of what 0:01:46.920 --> 0:01:49.960 the FED should do on the basis of high frequency 0:01:50.120 --> 0:01:53.520 noisy data, and that tells you that we're lacking anchors 0:01:53.560 --> 0:01:57.240 in this economy. We're lacking a robust growth anchor, lacking 0:01:57.280 --> 0:02:01.400 a robust policy forward guidance, and we're lacking a robust 0:02:01.400 --> 0:02:04.240 technical anchor. So we should hope for the fair to 0:02:04.320 --> 0:02:08.160 start restoring the policy anchor. The way you do that 0:02:08.360 --> 0:02:12.000 is you tell people where you see the destination and 0:02:12.080 --> 0:02:14.799 how you think you're going to get there. That's what 0:02:14.880 --> 0:02:17.000 I think he should do. Whether he does or not, 0:02:17.120 --> 0:02:19.120 I'm not sure. Well, let's talk about what complicates it. 0:02:19.480 --> 0:02:22.680 The second anchor, forward guidance. You yourself, this is your 0:02:22.720 --> 0:02:24.560 language and your pace. You call it an ocean of 0:02:24.600 --> 0:02:28.840 genuine uncertainty. How do you provide forward guidance in an 0:02:28.840 --> 0:02:32.240 ocean of genuine uncertainty? The same way we do everything 0:02:32.280 --> 0:02:34.200 in life is that you say, this is where I 0:02:34.240 --> 0:02:36.320 think it is right now. This is why I think 0:02:36.360 --> 0:02:38.640 our star is as opposed to saying I'm not going 0:02:38.680 --> 0:02:40.920 to talk about it. This is why I think it is. 0:02:41.280 --> 0:02:44.880 It is dependent on these variables, and I will modify 0:02:44.919 --> 0:02:47.280 it if in mid course correction is needed. 0:02:47.960 --> 0:02:50.920 Do you think it's important that they discuss how they 0:02:51.040 --> 0:02:53.519 view the size of cuts, how they view twenty five 0:02:53.639 --> 0:02:54.960 versus fifty basis points? 0:02:55.520 --> 0:02:58.079 I think it is important, but the second order importance, 0:02:58.320 --> 0:03:01.080 So the first one is what is the destination look like? 0:03:01.440 --> 0:03:03.640 And secondly, how are we going to get there? It 0:03:03.720 --> 0:03:06.520 is problematic in my mind that the market is pricing 0:03:06.560 --> 0:03:10.320 in so many weight cuts right now, and Danny said 0:03:10.320 --> 0:03:13.200 it right this morning, is that there's this contrast between 0:03:13.240 --> 0:03:15.440 what the bond market thinks and what the equity market thinks. 0:03:15.639 --> 0:03:18.200 And this notion, and I love the way both of 0:03:18.240 --> 0:03:21.840 you have framed it of a hard landing policy response 0:03:21.919 --> 0:03:25.040 to achieve a soft landing that has got to be 0:03:25.080 --> 0:03:28.160 reconciled one way or the other. So I think the 0:03:28.240 --> 0:03:30.240 problem the market is overdoing it. I don't think we're 0:03:30.240 --> 0:03:33.400 going to get two hundred basis points of cuts in 0:03:33.440 --> 0:03:34.960 twelve months. I don't think we're gonna get a hundred 0:03:34.960 --> 0:03:36.840 basis point of cuts this year. I think we're going 0:03:36.880 --> 0:03:39.240 to get seventy five and one hundred and fifteen total. 0:03:39.640 --> 0:03:41.080 But the market is going to have to adjust at 0:03:41.120 --> 0:03:41.360 some point. 0:03:41.640 --> 0:03:43.920 A few people looked at the minutes that WILL released yesterday, 0:03:43.920 --> 0:03:45.920 and so the fact that several of them discussed cutting 0:03:45.960 --> 0:03:49.360 in July, maybe is them implicitly realizing that they are 0:03:49.440 --> 0:03:51.520 behind and that they need to be more. Did you 0:03:51.560 --> 0:03:53.560 come away with that from with the same idea. 0:03:53.960 --> 0:03:56.440 So when I read the notion that several several, not 0:03:56.600 --> 0:04:00.840 some several thought that in July cut was plaus and 0:04:00.880 --> 0:04:03.800 I thought to myself, what about the press conference? What 0:04:03.920 --> 0:04:06.120 happened in the press conference? Why didn't we hear that? 0:04:06.160 --> 0:04:08.000 And then when I heard both of you discuss the 0:04:08.080 --> 0:04:10.480 fact that a lot of people are discussing is are 0:04:10.520 --> 0:04:14.160 the minutes massage in some way after the meeting to 0:04:14.240 --> 0:04:17.479 reflect what has happened, since we won't know until we 0:04:17.480 --> 0:04:20.880 get the transcripts. Okay, but it is interesting that they 0:04:20.960 --> 0:04:21.800 put that in the minutes. 0:04:21.960 --> 0:04:24.400 Well, there's two options. Either the fedschaed does allows each 0:04:24.440 --> 0:04:26.760 job of reflecting consensus in the news conference, or they 0:04:27.200 --> 0:04:30.039 massage the minutes. You're quite critical, more critical than me 0:04:30.320 --> 0:04:35.000 of this federal reserve, poor forecasting, confusing communication, and lapses 0:04:35.040 --> 0:04:38.200 in bank regulation as well across those three things, and 0:04:38.320 --> 0:04:41.480 you think that maybe this could have some really large consequences. 0:04:41.480 --> 0:04:42.960 There's a quote in this piece that jumped off the 0:04:42.960 --> 0:04:46.000 page to me, Mohammad. The FED could further risk, damaging 0:04:46.080 --> 0:04:49.239 its policy effectiveness and reputation, and countries around the world 0:04:49.440 --> 0:04:51.480 would look for more ways to de risk both their 0:04:51.520 --> 0:04:54.520 economies and their financial systems from a FED that no 0:04:54.600 --> 0:04:58.960 longer responsibly anchors what is still a dollar dominated international 0:04:59.000 --> 0:05:03.160 monetary system. Now that's not something you just write lighthearted 0:05:03.360 --> 0:05:05.440 that's not just you sort of writing that down and 0:05:05.680 --> 0:05:08.120 expecting us to ignore it. That's important. Do you think 0:05:08.120 --> 0:05:09.039 that's what's a risk here? 0:05:09.400 --> 0:05:13.159 I do, and I really worry about it. John, The US, 0:05:13.160 --> 0:05:15.719 at the core of the system, has been able to 0:05:15.800 --> 0:05:19.280 inform and influence outcomes all over the world, and it 0:05:19.320 --> 0:05:23.000 has been able to lead policy coordination where needed. Why 0:05:23.279 --> 0:05:29.560 Because the US seem to be a responsible steward of 0:05:29.600 --> 0:05:34.200 the global economy that started to be undermined in two 0:05:34.240 --> 0:05:37.720 thousand and eight, it was undermined even more in twenty seventeen, 0:05:38.040 --> 0:05:40.599 has been undermined even more in twenty twenty one twenty 0:05:40.600 --> 0:05:44.159 two with the transitory inflation mistake. And what we're seeing 0:05:44.600 --> 0:05:47.360 is are people starting to hedge away from the dollar. 0:05:47.560 --> 0:05:51.080 Look at the price of gold, record after record after record, 0:05:51.520 --> 0:05:54.240 Look at central bank buying of gold around the world. 0:05:54.240 --> 0:05:57.560 They're divers flying away from the dollar. So I do 0:05:57.640 --> 0:06:02.560 worry that unless we gain policy credibility, that you're going 0:06:02.600 --> 0:06:07.200 to start seeing the system fragment, not just for geopolitical reasons, 0:06:07.240 --> 0:06:10.559 which we know is fragmenting, but fragmenting because there's less 0:06:10.640 --> 0:06:12.839 trust in the way the system is managed. 0:06:12.839 --> 0:06:14.440 Well, that's why I actually wanted to ask you when 0:06:14.480 --> 0:06:17.200 that exactly where I wanted to go. Is that driven 0:06:17.320 --> 0:06:19.640 by one half of day, say, or the other or both? 0:06:19.760 --> 0:06:21.320 And how much of it is driven by one and 0:06:21.440 --> 0:06:24.080 maybe not the other, because in my mind another paper's minds, 0:06:24.080 --> 0:06:25.520 they might be listening to this and saying, well, that's 0:06:25.560 --> 0:06:28.200 about sanctions, that's coming from the government, that's coming from 0:06:28.400 --> 0:06:30.480 outside of the world of monetary policy. How much of 0:06:30.480 --> 0:06:32.599 it is about that versus say, the things we're talking 0:06:32.640 --> 0:06:33.359 about right now. 0:06:33.480 --> 0:06:36.000 We have never seen the amount of volatilating the two 0:06:36.080 --> 0:06:39.560 year that we have seen recently. The two years supposed 0:06:39.560 --> 0:06:43.359 to be anchored by the FED forward policy guidance. The 0:06:43.400 --> 0:06:45.080 longer end can do all sorts of things, but at 0:06:45.160 --> 0:06:48.120 least you know the which the two to five year, 0:06:48.360 --> 0:06:50.839 lots and lots of stuff gets fries off that internationally 0:06:51.320 --> 0:06:55.360 and it has been a roller coaster. So jaeopolitics has 0:06:55.360 --> 0:06:58.600 a big influence. But what we have to minimize is 0:06:58.680 --> 0:07:01.800 giving you another reason for PEP to diversify away from 0:07:01.839 --> 0:07:06.440 the system, because they're diversifying not to another system, they're 0:07:06.440 --> 0:07:10.360 diversifying to fragmentation. They're diversifying to a system that builds 0:07:10.400 --> 0:07:14.240 little pipes around the center and doesn't solve as well 0:07:14.240 --> 0:07:16.920 as it should otherwise, and the world will suffer as 0:07:16.960 --> 0:07:17.320 a result. 0:07:18.040 --> 0:07:21.040 The things you're talking about, they are structural changes that 0:07:21.160 --> 0:07:24.360 central banks are undergoing. And I just wonder if Powell 0:07:24.400 --> 0:07:27.800 is able to wrestle back control, if government concerned doesn't 0:07:27.800 --> 0:07:30.240 erode it further. Can it be undone or is this 0:07:30.280 --> 0:07:33.000 point we're at, has the damage already been done and 0:07:33.480 --> 0:07:35.760 you basically can't put the pace back in the tube. 0:07:35.840 --> 0:07:38.440 So I think the economic side can be undone. You 0:07:38.480 --> 0:07:40.880 can go back, You can put the pace back into 0:07:40.880 --> 0:07:44.080 the tube. As you said it, it's a matter of 0:07:44.280 --> 0:07:49.360 being somewhat less backward looking and having the courage to 0:07:49.360 --> 0:07:53.200 be strategic as well. We are excessively data dependent. In fact, 0:07:53.240 --> 0:07:56.240 the FED being excessively data but dependent has led the 0:07:56.360 --> 0:07:59.240 analyst community to be excessive data dependent. Look at how 0:07:59.320 --> 0:08:03.280 probabilities are recession have moved on high frequency, noisy data 0:08:03.760 --> 0:08:07.320 that shouldn't happen, you said earlier, jobless claims has suddenly 0:08:07.320 --> 0:08:10.480 become this incredible number. Anybody who has been following that 0:08:10.600 --> 0:08:13.800 series for a long time knows it is incredibly noisy, 0:08:14.200 --> 0:08:17.520 and yet it can turn markets, and it can turn narratives. 0:08:19.600 --> 0:08:21.720 Are you confident the federal change though, I mean the 0:08:21.840 --> 0:08:25.200 language that we've heard it still is one of data dependents. 0:08:25.440 --> 0:08:27.520 It still is one of looking for the next payrolls 0:08:27.520 --> 0:08:28.920 print to try to get an idea of where they 0:08:28.920 --> 0:08:30.880 should go. How much confidence do you have that they'll 0:08:30.880 --> 0:08:33.000 actually adopt what you're recommending? 0:08:33.080 --> 0:08:35.360 And the word confidence is so important because it's in 0:08:35.440 --> 0:08:38.720 every FED narrative the word confidence. My confidence is growing. 0:08:38.800 --> 0:08:42.160 I mean they are now willing to shift their focus 0:08:42.240 --> 0:08:45.760 on both elements of their mandate. I think a little 0:08:45.760 --> 0:08:47.800 bit worried that the market has forgotten about the inflation 0:08:47.960 --> 0:08:50.360 part of the mandate and the market is only worried 0:08:50.360 --> 0:08:52.440 about the employment part. So I think they're a little 0:08:52.480 --> 0:08:54.960 bit worried about that, but they're willing to shift the man. 0:08:55.160 --> 0:08:56.400 I think they're going to get that. I think they're 0:08:56.400 --> 0:08:59.680 getting more confidence now that inflation is below three percent 0:08:59.720 --> 0:09:01.840 on this CPI, and I know that that's not what 0:09:01.880 --> 0:09:03.719 they look at, but that's what everybody else looks at. 0:09:04.360 --> 0:09:07.839 So I think they're gaining more confidence. So I am, too, 0:09:07.920 --> 0:09:09.560 gaining confidence that they're going to be able to get 0:09:09.600 --> 0:09:12.480 out of this phase of excessive data dependence that were 0:09:12.720 --> 0:09:14.240 caused by the big policy mistaken. 0:09:14.240 --> 0:09:27.840 Twenty twenty one, Victoria Fernandez of Crossmark Global Investments joined us. Victoria, 0:09:28.040 --> 0:09:30.320 last time we caught up, you were worried about a 0:09:30.360 --> 0:09:33.920 slowdown in the second half. Are you seeing evidence of 0:09:33.960 --> 0:09:36.040 that or evidence to the country. 0:09:37.160 --> 0:09:37.319 Now. 0:09:37.360 --> 0:09:39.880 I think we're still looking at signs that are telling 0:09:39.960 --> 0:09:42.880 us a slowdown could be coming. I know that the 0:09:43.200 --> 0:09:46.280 idea of a recession has really been taken off the 0:09:46.320 --> 0:09:48.920 table for most people, but I think a slowdown in 0:09:48.960 --> 0:09:51.800 the economy is there. I mean, look, you've got small 0:09:51.800 --> 0:09:55.480 caps outperforming large yesterday, but yet forty percent of the 0:09:55.480 --> 0:09:57.480 wrestle two thousand hasn't even. 0:09:57.320 --> 0:09:57.960 Had a profit. 0:09:58.000 --> 0:10:00.480 They haven't reported a profit over the last twelve months. 0:10:00.760 --> 0:10:03.040 You've got the difference between the two year and the 0:10:03.080 --> 0:10:06.760 FED funds at extreme levels typically that you only see 0:10:07.280 --> 0:10:10.120 when you're in a recession. You have saving rates coming 0:10:10.160 --> 0:10:14.000 down while delinquencies are going up. We know the consumer, 0:10:14.120 --> 0:10:17.160 even though they're spending or being very cautious and what 0:10:17.200 --> 0:10:17.880 they're spending. 0:10:17.920 --> 0:10:19.719 And I think when we look at the. 0:10:19.720 --> 0:10:23.760 Labor market and wages and earnings and margins for corporations, 0:10:23.840 --> 0:10:25.959 we could see that start to tighten up a little bit, 0:10:26.240 --> 0:10:27.559 and I think a good sign. 0:10:27.760 --> 0:10:29.520 You were just talking about the housing market. 0:10:29.760 --> 0:10:32.880 Mortgage rates are down eighty basis points and we aren't 0:10:32.880 --> 0:10:35.880 even seeing a bump in the housing market. We've seen 0:10:36.240 --> 0:10:39.960 refies go up applications, but not home buyers. So I 0:10:40.040 --> 0:10:43.000 still think there's some struggling going on in this economy, 0:10:43.160 --> 0:10:44.880 and I think we'll continue to see it in the 0:10:44.920 --> 0:10:45.520 second half of. 0:10:45.440 --> 0:10:47.920 The year, enough of a struggle to validate what's been 0:10:47.960 --> 0:10:51.240 priced into Federal Reserve rate cut expectations. 0:10:52.760 --> 0:10:55.040 Look, the Fed, in my opinion, is going to go 0:10:55.320 --> 0:10:58.160 very slowly. So your last guest talked about two rate 0:10:58.200 --> 0:11:01.160 cuts this year. That's where wes mark are as well. 0:11:01.200 --> 0:11:04.800 Twenty five in September, twenty five in December. I don't 0:11:04.800 --> 0:11:06.880 think they're going to go more than that, which means 0:11:06.920 --> 0:11:08.760 we may see a little bit of a repricing in 0:11:08.760 --> 0:11:11.160 the bond market. Two years you were just mentioning a 0:11:11.240 --> 0:11:14.440 rite back up close to four percent. We could see 0:11:14.520 --> 0:11:16.960 yields start to go back up as some of that 0:11:17.360 --> 0:11:19.400 is priced out of the market, some of the cuts 0:11:19.400 --> 0:11:21.240 people are expecting. I mean, what are they pricing in 0:11:21.320 --> 0:11:23.280 now three and a half four cuts. 0:11:23.520 --> 0:11:24.720 It's similar to what we saw. 0:11:24.600 --> 0:11:26.760 At the beginning of the year when everyone was expecting 0:11:26.880 --> 0:11:29.920 five or six, they had to come back and reprice 0:11:30.000 --> 0:11:33.199 the market. So in our fixed income portfolios, we've gone 0:11:33.320 --> 0:11:34.520 close to neutral duration. 0:11:34.600 --> 0:11:36.800 We're not ready to go long yet at this point. 0:11:37.280 --> 0:11:40.640 Victoria's a said that goes slow with data that's getting 0:11:40.679 --> 0:11:43.360 weaker but not necessarily weak. Is that also consistent with 0:11:43.559 --> 0:11:45.920 gold priced twenty five hundred dollars an ounce? 0:11:46.960 --> 0:11:49.960 You know, it's very interesting data because you're seeing this 0:11:50.520 --> 0:11:54.880 differentiation coming now between gold and bitcoin, where they had 0:11:54.920 --> 0:11:57.760 been going together for quite a long period of time. 0:11:58.080 --> 0:12:00.800 So I think people are going to You're seeing the 0:12:00.840 --> 0:12:03.120 dollar come down. I know it had a little bit 0:12:03.120 --> 0:12:05.880 of a bounce yesterday, but the dollars down pretty significantly. 0:12:05.880 --> 0:12:08.559 If the Fed is starting to lower rates, we'll see 0:12:08.640 --> 0:12:11.400 that happen more so people going into gold for a 0:12:11.480 --> 0:12:12.400 safe haven play. 0:12:12.400 --> 0:12:14.360 And we're seeing a lot of gold buying coming out 0:12:14.400 --> 0:12:15.439 of Asia as well. 0:12:15.559 --> 0:12:19.280 So not surprised gold is moving higher, not surprised we're 0:12:19.280 --> 0:12:21.440 seeing the dollar come down. I think that fits with 0:12:21.480 --> 0:12:26.120 a story of a FED slowly removing some of the 0:12:26.160 --> 0:12:28.160 tightness that's there. I think one of the things I 0:12:28.200 --> 0:12:30.560 like to say is the FED is not really being 0:12:30.720 --> 0:12:33.160 a commodative over the next few months. 0:12:33.200 --> 0:12:35.080 I think they're just going to be less restrictive. 0:12:35.360 --> 0:12:37.320 I just wonder what you think the success is in 0:12:37.360 --> 0:12:40.040 doing that. As using gold as a hedge. David Rosenberg 0:12:40.080 --> 0:12:42.640 at Rosenberg Research Things, he's it's going to go to 0:12:42.679 --> 0:12:46.040 three thousand simply because people don't trust bonds as a 0:12:46.040 --> 0:12:48.240 hedge right now. They don't trust central bank policy, they 0:12:48.280 --> 0:12:51.400 don't trust the guidance. So gold is where you hide out, Victoria. 0:12:51.440 --> 0:12:53.880 Gold hasn't had the best track record of being the 0:12:53.880 --> 0:12:56.640 place that you can hold out over long periods of time, 0:12:57.120 --> 0:12:59.440 So is it now the time? Can now be the 0:12:59.480 --> 0:13:01.800 time that you can you can hold on to Gold 0:13:01.880 --> 0:13:04.400 is something that protects you instead of something like bonds. 0:13:05.640 --> 0:13:07.440 So it hurts my heart a little bit, Danny when 0:13:07.480 --> 0:13:09.920 you say people don't like bonds, because I do manage 0:13:10.000 --> 0:13:13.080 taxable fixed income here at Crossmark, So I think you 0:13:13.200 --> 0:13:16.640 need to have some allocation to bonds in your portfolio. Look, 0:13:16.640 --> 0:13:19.920 it's a cash flow component, right, So maybe it's not 0:13:20.160 --> 0:13:22.960 a safe haven in the sense that from the time 0:13:23.000 --> 0:13:25.320 of purchase to the time of maturity, you don't. 0:13:25.080 --> 0:13:26.679 Have market value volatility. 0:13:26.760 --> 0:13:29.520 You will but you get a steady cash flow coming 0:13:29.559 --> 0:13:31.679 from that. Is it okay to have a little bit 0:13:31.679 --> 0:13:34.280 of gold as a hedge in your portfolio. I think 0:13:34.320 --> 0:13:37.679 that's fine. Do you do a huge allocation shift to that. 0:13:38.080 --> 0:13:39.880 I think that's a little much. I don't think there's 0:13:39.920 --> 0:13:42.560 anything in the economy that's telling us we have to 0:13:42.600 --> 0:13:44.000 make that drastic of a move. 0:13:44.160 --> 0:13:45.760 There is one thing that you've been saying, though, that 0:13:45.840 --> 0:13:47.520 runs contrary to what we've heard from a lot of 0:13:47.520 --> 0:13:49.760 people in fixed income, and I understand they've got something 0:13:49.800 --> 0:13:51.720 to sell. So there is sort of a bias in 0:13:51.760 --> 0:13:54.320 all of this too. You're still saying that just sit 0:13:54.360 --> 0:13:56.960 there and learn cash, earn money on cash, sit there 0:13:56.960 --> 0:13:59.720 at the front end, take you five percent, Victoria. Other people, 0:13:59.720 --> 0:14:01.240 as you know, are coming on the program, is saying 0:14:01.280 --> 0:14:02.959 you've got to lock in what's available at the long 0:14:03.080 --> 0:14:04.760 end right now, because that's not going to be there 0:14:05.040 --> 0:14:07.640 in several months time. Why's your approach a little bit different? 0:14:08.559 --> 0:14:10.240 Well, I think they need to look at it from 0:14:10.280 --> 0:14:13.280 a Barbell approach, Jonathan. I mean, look, yes, you can 0:14:13.320 --> 0:14:15.760 get some of that locked in on the short end. 0:14:15.840 --> 0:14:17.720 We know the Fed's going to lower rates. We talked 0:14:17.720 --> 0:14:19.680 about the difference between the two year and the FED 0:14:19.720 --> 0:14:21.239 funds being quite extreme. 0:14:21.480 --> 0:14:23.200 That's going to have to narrow. 0:14:23.120 --> 0:14:25.440 At some point. So do the short end of the curve, 0:14:25.480 --> 0:14:28.240 do those yields come down? Yes, so you get in now, 0:14:28.320 --> 0:14:30.640 you get a little bit of price appreciation in that 0:14:30.960 --> 0:14:34.240 because you will have lower yields going forward, So lock some. 0:14:34.240 --> 0:14:34.600 Of that in. 0:14:34.760 --> 0:14:37.240 But I agree, go out a little bit on the curve. 0:14:37.640 --> 0:14:39.120 Add some of that on the longer end. 0:14:39.120 --> 0:14:41.120 If you can still get four four and a half 0:14:41.160 --> 0:14:44.960 five percent in quality investment grade we're talking a double 0:14:44.960 --> 0:14:47.160 A rated not even having to go into triple B 0:14:47.320 --> 0:14:51.080 rated bonds, go ahead and put that in there as well. Again, 0:14:51.200 --> 0:14:54.080 it's part of that cash flow story and sets you up, 0:14:54.320 --> 0:14:57.520 especially if you're trying to match liabilities with the assets 0:14:57.560 --> 0:14:59.800 in your portfolio, and puts you in a good place 0:15:00.080 --> 0:15:01.360 the next five to seven years. 0:15:01.480 --> 0:15:03.560 Detoria, I've also got to ask you, because I know 0:15:03.600 --> 0:15:06.200 you see wages and how it relates to consumption as 0:15:06.320 --> 0:15:09.760 one of the canaries in the coal mine for this economy. 0:15:10.040 --> 0:15:11.960 Given that, what did you make of some of these 0:15:12.000 --> 0:15:14.880 retail earnings we've gotten the success of a target and 0:15:14.920 --> 0:15:16.880 the lack of it for someone like Macy's. 0:15:18.160 --> 0:15:22.320 It's an interesting kind of bifurcation that we're seeing. Obviously, 0:15:22.360 --> 0:15:25.280 Walmart did really well. I think some of the reason 0:15:25.360 --> 0:15:27.800 you're seeing a name like Walmart do well is because 0:15:27.840 --> 0:15:29.520 they have captured a much. 0:15:29.680 --> 0:15:31.360 Larger audience than they used to have. 0:15:31.440 --> 0:15:34.000 We know that a lot of high income spenders have 0:15:34.360 --> 0:15:37.720 actually moved into Walmart, so they're gaining traction there. 0:15:38.160 --> 0:15:40.720 Target was interesting. We know that they're comps. 0:15:40.840 --> 0:15:44.080 They have pretty easy comps because they have been underperforming 0:15:44.280 --> 0:15:47.000 for quite a long period of time. Glad to see 0:15:47.040 --> 0:15:50.480 them coming back. You're seeing better pricing in some of 0:15:50.520 --> 0:15:53.400 those elements. I know they said clothing was up, so 0:15:53.480 --> 0:15:55.720 that's good, and they also had a big boost from 0:15:55.760 --> 0:15:59.920 e commerce, so again different elements that are helping support. 0:16:00.160 --> 0:16:04.120 But Macy's been struggling for a while. They are that 0:16:04.320 --> 0:16:07.720 middle income consumer that is really having to pull back 0:16:07.720 --> 0:16:12.560 on discretionary spending as some of their more non discretionary 0:16:12.640 --> 0:16:16.120 items like food continue to move higher. So definitely a 0:16:16.160 --> 0:16:19.120 bifurcation that we're seeing in retail. Some of your low 0:16:19.200 --> 0:16:23.000 cost providers are gaining share and doing better, while that 0:16:23.080 --> 0:16:26.360 middle income consumer store is really starting to struggle. 0:16:26.680 --> 0:16:30.240 It does come down to wages. Wages is the driver of. 0:16:30.280 --> 0:16:33.240 Consumption, and I think as we see margins start to 0:16:33.240 --> 0:16:35.840 compress and earnings start to come down a little bit 0:16:35.920 --> 0:16:38.520 in the next six months or so, we can see 0:16:38.560 --> 0:16:39.800 wages start to stagnate. 0:16:39.840 --> 0:16:41.000 That's going to hurt the consumer. 0:16:41.080 --> 0:16:42.960 Why did you allat us go to a Macy's, Victoria? 0:16:43.200 --> 0:16:45.240 How long ago was it? 0:16:45.240 --> 0:16:46.640 It's been a while, We'll say. 0:16:46.680 --> 0:16:49.520 I've been to Bloomingdale's across the street from you guys, 0:16:49.640 --> 0:16:52.320 but Macy's. It has been quite a few years since 0:16:52.360 --> 0:16:54.800 I have stepped foot into Macy's. And it's probably why 0:16:54.840 --> 0:16:56.600 they're closing a lot of their stores right now. 0:16:56.720 --> 0:16:59.000 Yeah, Bloomdale so close you can accidentally fall into it 0:16:59.320 --> 0:17:00.720 walking down Avenue. 0:17:00.880 --> 0:17:01.920 I get it. I get it. 0:17:01.920 --> 0:17:05.400 It's convenient, Victoria, Thank you, Victoria Fernandez cross my global investments, 0:17:05.400 --> 0:17:06.520 I feel the same. It's local. 0:17:16.400 --> 0:17:16.520 Oh. 0:17:16.560 --> 0:17:18.520 For the DNC in Chicago, the main event coming this 0:17:18.600 --> 0:17:21.280 evening with a keynote addressed from the Vice President Kamala 0:17:21.320 --> 0:17:23.600 Harris at the DNC is am Marie AMH. 0:17:23.640 --> 0:17:24.080 Kibonic. 0:17:26.359 --> 0:17:28.640 Good morning, John, And ahead of that keynote address from 0:17:28.680 --> 0:17:30.879 Kamala Harris, where we know the economy has been the 0:17:30.960 --> 0:17:33.399 top ish of this election. I'm now joined by the 0:17:33.480 --> 0:17:36.760 chairman of the Senate Finance Community, senior Senator from Oregon, 0:17:36.960 --> 0:17:39.000 Senator Ron Wyde, and thank you so much for joining. 0:17:38.840 --> 0:17:40.760 Me, Thanks for having me so sing. 0:17:40.800 --> 0:17:43.800 Your colleague, Senator Mark Warner called next year twenty twenty 0:17:43.800 --> 0:17:46.240 five tax armor, Geddon and you've been working already on 0:17:46.320 --> 0:17:48.879 tax issues. Where do you see room for compromise in 0:17:48.880 --> 0:17:49.680 twenty twenty five. 0:17:49.800 --> 0:17:53.000 Well, first of all, we showed in twenty twenty four 0:17:53.119 --> 0:17:55.840 we wanted a bipartisan approach. You know, I put together 0:17:56.200 --> 0:17:58.639 a build out, a child tax credit and hundreds of 0:17:58.640 --> 0:18:01.680 thousands of units of house and help for small business 0:18:01.720 --> 0:18:04.280 and senior Republicans just didn't want to do it. I mean, 0:18:04.400 --> 0:18:07.960 the fact was jd Vance wouldn't even show up for work. 0:18:08.320 --> 0:18:10.439 So we had a bill that was fully paid for 0:18:10.520 --> 0:18:13.200 according to the Joint Committee on Taxation, would have been 0:18:13.200 --> 0:18:16.080 a big shot in the arm for family sixteen million 0:18:16.160 --> 0:18:19.080 kids would have been helped, four million small businesses, and 0:18:19.320 --> 0:18:20.680 Republicans were just day long. 0:18:21.040 --> 0:18:21.280 Well. 0:18:21.480 --> 0:18:24.320 Jd Vance was campaigning at the time, and even many 0:18:24.320 --> 0:18:26.560 Democrats would say this was a show vote. They knew 0:18:26.560 --> 0:18:29.160 they didn't have the votes yet Republicans want to wait 0:18:29.200 --> 0:18:31.600 till twenty twenty five. So that is why I think 0:18:31.640 --> 0:18:32.880 he would say he didn't. 0:18:32.640 --> 0:18:33.080 Show up for that. 0:18:33.160 --> 0:18:35.480 I understand that if he had been there, if he'd 0:18:35.480 --> 0:18:37.520 shown up, we could have gotten this past. 0:18:37.640 --> 0:18:39.280 It would have gone to the President. Would have been 0:18:39.320 --> 0:18:41.640