1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwoz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:36,879 Speaker 2: Terminal and the Bloomberg Business app. I pleased to say 10 00:00:36,880 --> 00:00:39,080 Speaker 2: that joining us around the table is the CEO of 11 00:00:39,120 --> 00:00:42,560 Speaker 2: Barclay's cs Van Kama Krishnan Benkat. Great to see you, sir, 12 00:00:42,840 --> 00:00:44,800 Speaker 2: Very good to see you, particularly here in New York City. 13 00:00:44,840 --> 00:00:46,600 Speaker 2: The stock is doing really nicely, so let's start with 14 00:00:46,680 --> 00:00:49,480 Speaker 2: some good news. We've rallied since the mid of February 15 00:00:49,520 --> 00:00:52,120 Speaker 2: pretty aggressively, I would say, up by something like twenty 16 00:00:52,120 --> 00:00:54,400 Speaker 2: percent last time I looked yesterday evening. Do you think 17 00:00:54,440 --> 00:00:57,120 Speaker 2: that's evidence that shareholders are buying into your vision. 18 00:00:57,840 --> 00:01:01,520 Speaker 3: It's the earliest stage of that evidence. What's most important 19 00:01:01,560 --> 00:01:04,840 Speaker 3: for us is this plan, and it's a plan to 20 00:01:04,880 --> 00:01:07,840 Speaker 3: increase our rote to twelve percent from the tennis it 21 00:01:08,000 --> 00:01:10,840 Speaker 3: is now. It's a plan to return about ten billion 22 00:01:10,880 --> 00:01:14,880 Speaker 3: pounds to shareholders and capital distributions, and it's a plan 23 00:01:15,360 --> 00:01:19,440 Speaker 3: to have a broad diversified bank that's a global banking 24 00:01:19,520 --> 00:01:22,720 Speaker 3: leader centered in the UK, with an investment bank that 25 00:01:22,880 --> 00:01:25,400 Speaker 3: is going to fifty percent of the bank from around 26 00:01:25,400 --> 00:01:28,560 Speaker 3: the sixty percent it's now. So our job is to 27 00:01:28,880 --> 00:01:31,679 Speaker 3: having created the plans to execute it, and the share 28 00:01:31,720 --> 00:01:32,760 Speaker 3: price hopefully will follow. 29 00:01:32,880 --> 00:01:34,920 Speaker 2: Can we get into the investment bank and you talk 30 00:01:34,959 --> 00:01:39,560 Speaker 2: about diversifying revenue and leaning maybe more into advisory phase. 31 00:01:40,120 --> 00:01:42,440 Speaker 2: Is the talent there on board in the investment bank 32 00:01:42,480 --> 00:01:44,240 Speaker 2: all ready to make that shift or do you need 33 00:01:44,280 --> 00:01:45,800 Speaker 2: to hire to make that happen? 34 00:01:46,280 --> 00:01:49,360 Speaker 3: It is substantially there. You know, we made some organizational 35 00:01:49,440 --> 00:01:52,520 Speaker 3: changes last year. We have new leadership in the investment bank. 36 00:01:52,800 --> 00:01:57,080 Speaker 3: We hired a bunch of very you know, very skilled 37 00:01:57,120 --> 00:02:02,520 Speaker 3: bankers in healthcare, in technology, in the energy transition, and 38 00:02:03,720 --> 00:02:07,240 Speaker 3: that has already started to have its effect. Last week 39 00:02:07,280 --> 00:02:11,079 Speaker 3: we announced eqt's sale. We advised EQT on its sale 40 00:02:11,080 --> 00:02:15,160 Speaker 3: to ecuotrans ecotansit and its sale to EQT and so 41 00:02:15,240 --> 00:02:17,680 Speaker 3: we're beginning to feel the momentum from those HighRes. 42 00:02:18,120 --> 00:02:20,480 Speaker 4: What do you think it is about investment banking in 43 00:02:20,520 --> 00:02:23,679 Speaker 4: and of itself that makes it a less attractive proposition 44 00:02:23,840 --> 00:02:27,079 Speaker 4: to remain it the same size versus say, advisory fees. 45 00:02:29,160 --> 00:02:30,959 Speaker 3: Well, one of the things is when you move into 46 00:02:30,960 --> 00:02:34,280 Speaker 3: advisory fees, you start getting a better return on your 47 00:02:34,280 --> 00:02:37,560 Speaker 3: capital because you're not outlaying as much capital per unit 48 00:02:37,600 --> 00:02:40,480 Speaker 3: of revenue as you do if you're purely lending. Now, 49 00:02:40,560 --> 00:02:43,480 Speaker 3: lending is an important part of what we do. We 50 00:02:43,520 --> 00:02:45,799 Speaker 3: are a very big player in the fixed income markets, 51 00:02:46,040 --> 00:02:48,560 Speaker 3: in the debt capital markets as well as fixed income trading, 52 00:02:49,000 --> 00:02:50,520 Speaker 3: So lending is a part of what we do, but 53 00:02:50,560 --> 00:02:52,640 Speaker 3: we are just trying to broaden it into more advisory 54 00:02:52,680 --> 00:02:54,160 Speaker 3: and more equity related revenues. 55 00:02:54,440 --> 00:02:56,520 Speaker 4: How much is this sort of a new model of 56 00:02:56,560 --> 00:02:59,400 Speaker 4: banking that's basically taking all of Wall Street and a 57 00:02:59,440 --> 00:03:01,720 Speaker 4: lot of the global banks too, which is trying to 58 00:03:01,760 --> 00:03:05,359 Speaker 4: cater to the whole client rather than say, go after 59 00:03:05,440 --> 00:03:08,920 Speaker 4: specific deals and be focused on, for example, being at 60 00:03:08,919 --> 00:03:10,000 Speaker 4: the top of a league table. 61 00:03:10,360 --> 00:03:12,959 Speaker 3: Yeah, I think it's an important part of the shift 62 00:03:13,000 --> 00:03:18,720 Speaker 3: that's happening, and it's happening because Previously in the investment 63 00:03:18,760 --> 00:03:23,840 Speaker 3: banking side, we were working with corporations, and since then 64 00:03:23,960 --> 00:03:26,280 Speaker 3: we still work with corporations in a very big way. 65 00:03:26,600 --> 00:03:29,000 Speaker 3: But in addition to that, you've got the financial sponsors 66 00:03:29,000 --> 00:03:32,279 Speaker 3: and the sovereign wealth funds, So the growth of concentrated 67 00:03:32,320 --> 00:03:35,320 Speaker 3: pools of capital makes it important to have that full 68 00:03:35,360 --> 00:03:37,720 Speaker 3: relationship with those players in the market. 69 00:03:38,240 --> 00:03:40,160 Speaker 2: Every time we sit across the Barclay spouse, I think 70 00:03:40,200 --> 00:03:42,000 Speaker 2: we asked the same question. I can think of that 71 00:03:42,120 --> 00:03:44,880 Speaker 2: when Bob Diamond left that morning. Then Anthony Jenkins came 72 00:03:44,920 --> 00:03:47,160 Speaker 2: in our Remember I was actually at Barclay's HQ the 73 00:03:47,160 --> 00:03:49,480 Speaker 2: morning Jenkins got fired. I was sitting down with the chairman, 74 00:03:49,640 --> 00:03:52,040 Speaker 2: and we talked about the same thing, the investment bank, 75 00:03:52,080 --> 00:03:54,000 Speaker 2: the future of the investment bank. Do you find that's 76 00:03:54,040 --> 00:03:56,400 Speaker 2: more of a media obsession than it is an obsession 77 00:03:56,440 --> 00:03:58,840 Speaker 2: with investors. Where does that question come from? 78 00:03:59,240 --> 00:04:03,880 Speaker 3: It's a legitimate question, and in our Invested Day four 79 00:04:03,880 --> 00:04:06,080 Speaker 3: weeks ago, I tried to address it directly as well. 80 00:04:06,760 --> 00:04:09,760 Speaker 3: I think, first of all, it's important for Barclays to 81 00:04:09,760 --> 00:04:11,800 Speaker 3: have an investment bank. We are good at it. We 82 00:04:11,840 --> 00:04:14,040 Speaker 3: are the largest investment bank outside the top five in 83 00:04:14,080 --> 00:04:16,480 Speaker 3: the US. I think it's an important for the world 84 00:04:16,920 --> 00:04:20,040 Speaker 3: to have a counterparty that's not just a US bank, 85 00:04:20,040 --> 00:04:22,880 Speaker 3: and they would prefer a UK bank when they do it. 86 00:04:22,880 --> 00:04:24,920 Speaker 3: It's an important source of revenue for US, and as 87 00:04:24,920 --> 00:04:25,960 Speaker 3: I said, we are good at it. 88 00:04:26,640 --> 00:04:28,919 Speaker 2: Why is it important and why do they prefer a 89 00:04:29,000 --> 00:04:31,279 Speaker 2: UK bank? Why is it important to have a bank 90 00:04:31,320 --> 00:04:33,440 Speaker 2: outside of the US. What are the benefits of that? 91 00:04:33,920 --> 00:04:37,560 Speaker 3: Well, you're diversifying your counterparty exposure in a national way 92 00:04:38,040 --> 00:04:40,880 Speaker 3: as the world is becoming a little more deglobalized. You know, 93 00:04:40,920 --> 00:04:44,800 Speaker 3: London has been historically a great financial center and remains one, 94 00:04:44,880 --> 00:04:48,120 Speaker 3: so and it's a very important one. And then UK 95 00:04:48,200 --> 00:04:51,160 Speaker 3: law governs a lot of financial contracts. So all those 96 00:04:51,200 --> 00:04:53,599 Speaker 3: three things make it very attractive to work with a 97 00:04:53,680 --> 00:04:54,239 Speaker 3: UK bank. 98 00:04:54,360 --> 00:04:57,120 Speaker 4: Does it also make it incredibly difficult to compete outside 99 00:04:57,120 --> 00:04:59,120 Speaker 4: of the UK, or say in the US, when you've 100 00:04:59,120 --> 00:05:01,400 Speaker 4: got a JP Morgan that's dominating absolutely everything. 101 00:05:01,760 --> 00:05:05,200 Speaker 3: Well, look, there are very large banks that are in 102 00:05:05,240 --> 00:05:07,760 Speaker 3: the US. The world is big enough for all of us. 103 00:05:08,560 --> 00:05:10,479 Speaker 3: We act like a US bank when we are in 104 00:05:10,520 --> 00:05:10,919 Speaker 3: the US. 105 00:05:11,800 --> 00:05:13,560 Speaker 4: Well, when you act like a US bank with a 106 00:05:13,640 --> 00:05:16,599 Speaker 4: very specific focus you've talked about in the Pillars the 107 00:05:16,640 --> 00:05:21,039 Speaker 4: five pillars in reorganization, the importance on focusing on consumer 108 00:05:21,400 --> 00:05:25,320 Speaker 4: lending consumer spending. Recently, you offset some risks from your 109 00:05:25,320 --> 00:05:29,800 Speaker 4: credit card portfolio. There is a real question here about 110 00:05:29,839 --> 00:05:32,280 Speaker 4: where you see an opportunity to consumer to lend in 111 00:05:32,320 --> 00:05:36,320 Speaker 4: the consumer space at a time of uncertainty in the cycle. 112 00:05:37,120 --> 00:05:39,680 Speaker 3: So we view the consumer space in two ways. In 113 00:05:39,720 --> 00:05:42,760 Speaker 3: the US, we've got a great credit card for business, 114 00:05:42,760 --> 00:05:46,159 Speaker 3: but it's very specialized on partnership cards. We've got twenty 115 00:05:46,200 --> 00:05:50,400 Speaker 3: corporate partners, very blue chip corporations, twenty million underlying customers. 116 00:05:50,720 --> 00:05:54,200 Speaker 3: We're looking to continue to grow that partnership card business 117 00:05:54,240 --> 00:05:57,320 Speaker 3: in the US in a measured way because it has 118 00:05:57,360 --> 00:06:01,440 Speaker 3: great synergies with our investment bank and a great overall 119 00:06:01,480 --> 00:06:05,000 Speaker 3: business for US. In the UK, we have strength across 120 00:06:05,000 --> 00:06:08,839 Speaker 3: the consumer franchise and in small business banking, in corporates 121 00:06:09,240 --> 00:06:12,039 Speaker 3: and there it's sort of you know, it's our homeland, 122 00:06:12,440 --> 00:06:14,760 Speaker 3: it is our home turf, and we are very strong 123 00:06:14,800 --> 00:06:16,880 Speaker 3: and we look to increase that strength. 124 00:06:16,880 --> 00:06:19,560 Speaker 4: Well, I guess here's a question. Is there basically more 125 00:06:19,600 --> 00:06:22,800 Speaker 4: emphasis on growing in the United Kingdom outside of the US, 126 00:06:23,120 --> 00:06:24,800 Speaker 4: and the US effort is going to be much more 127 00:06:24,800 --> 00:06:29,120 Speaker 4: bespoke focused on very clear sort of verticals rather than 128 00:06:29,400 --> 00:06:31,039 Speaker 4: the whole picture in the same kind of way as 129 00:06:31,080 --> 00:06:32,080 Speaker 4: the UK or elsewhere. 130 00:06:32,400 --> 00:06:35,039 Speaker 3: Yeah, So the way I think about it is that 131 00:06:35,080 --> 00:06:38,120 Speaker 3: we've got a complete banking presence in the UK, touching 132 00:06:38,200 --> 00:06:42,320 Speaker 3: customers from the very largest corporations down to individuals and 133 00:06:42,440 --> 00:06:45,240 Speaker 3: offering them the full range of financial services. In the 134 00:06:45,400 --> 00:06:49,800 Speaker 3: US we offer investment banking services very well trading and 135 00:06:49,839 --> 00:06:54,440 Speaker 3: for banking, and as I said, a very good specialized 136 00:06:54,520 --> 00:06:55,920 Speaker 3: partnership credit card business. 137 00:06:56,320 --> 00:06:58,560 Speaker 2: We had a right shock big time on both side 138 00:06:58,560 --> 00:07:01,440 Speaker 2: of the Atlantic in the last twelve eighteen months. What 139 00:07:01,520 --> 00:07:03,320 Speaker 2: we haven't seen is the credit stress off the back 140 00:07:03,360 --> 00:07:07,600 Speaker 2: of that. As you look across the business at the moment, corporates, consumers, 141 00:07:07,720 --> 00:07:10,160 Speaker 2: the US, the UK, you see any of that emerge 142 00:07:10,320 --> 00:07:10,800 Speaker 2: at all. 143 00:07:12,040 --> 00:07:15,960 Speaker 3: You're seeing small signs of it in the consumer side, 144 00:07:16,600 --> 00:07:19,920 Speaker 3: with just a take up of delinquencies off the COVID lows. 145 00:07:20,320 --> 00:07:24,320 Speaker 3: And I think, look, employment remains extremely strong or unemployment 146 00:07:24,400 --> 00:07:27,120 Speaker 3: is low. You're seeing the effects of inflation, and you're 147 00:07:27,120 --> 00:07:30,440 Speaker 3: seeing the effects of the r you know, the wearing 148 00:07:30,480 --> 00:07:32,960 Speaker 3: off of the consumer stimulus that you had during COVID, 149 00:07:33,240 --> 00:07:36,320 Speaker 3: and so you're seeing a small increase in delinquencies in 150 00:07:36,360 --> 00:07:37,280 Speaker 3: the consumer business. 151 00:07:37,280 --> 00:07:39,160 Speaker 2: It's the a popular risk that you're being super vigilant 152 00:07:39,160 --> 00:07:41,320 Speaker 2: at about at the moment that maybe you're pulling back 153 00:07:41,560 --> 00:07:44,000 Speaker 2: on lending around that particular area of the economy. 154 00:07:44,520 --> 00:07:47,040 Speaker 3: Not really. I mean, I think as an overall matter, 155 00:07:48,120 --> 00:07:51,240 Speaker 3: taking the very big picture, the economy is stabilizing. It 156 00:07:51,240 --> 00:07:53,520 Speaker 3: looks like on both sides of the Atlantic you're having 157 00:07:53,920 --> 00:07:57,840 Speaker 3: a softish landing. Uh employment, as I said, remains strong 158 00:07:57,880 --> 00:08:00,880 Speaker 3: in overall credit statistics and the corporate it's remained strong. 159 00:08:01,280 --> 00:08:04,600 Speaker 3: So generally we are constructive towards lending. 160 00:08:04,800 --> 00:08:06,880 Speaker 2: I wanted to finish on the City of London if 161 00:08:06,920 --> 00:08:09,840 Speaker 2: I can, if you'll indulge me. Barclay's and its roots 162 00:08:09,840 --> 00:08:11,520 Speaker 2: of Barclays go all the way back to the late 163 00:08:11,560 --> 00:08:16,000 Speaker 2: sixteen hundreds, early seventeen hundreds. We're talking about centuries the 164 00:08:16,040 --> 00:08:18,160 Speaker 2: city of London for a long long time. It's been 165 00:08:18,160 --> 00:08:21,200 Speaker 2: at the epicenter of global finance. Do you see that 166 00:08:21,440 --> 00:08:23,560 Speaker 2: as under threat in any way, shape or form. Do 167 00:08:23,560 --> 00:08:25,960 Speaker 2: you think the UK has taken that for granted over 168 00:08:25,960 --> 00:08:27,080 Speaker 2: the last several years. 169 00:08:27,640 --> 00:08:30,240 Speaker 3: I don't think the UK has taken it for granted. 170 00:08:30,280 --> 00:08:32,679 Speaker 3: I think it's very important for the UK. I think 171 00:08:32,679 --> 00:08:36,720 Speaker 3: the UK understands that. I think politicians on both sides 172 00:08:36,720 --> 00:08:40,200 Speaker 3: in the UK understand that extremely well. So No, I 173 00:08:40,240 --> 00:08:42,160 Speaker 3: think there's a lot of support for the City of London. 174 00:08:42,440 --> 00:08:44,240 Speaker 4: This raises a question of where we are in the 175 00:08:44,240 --> 00:08:47,200 Speaker 4: economic cycle, where it is strongest, and this week would 176 00:08:47,200 --> 00:08:49,800 Speaker 4: you get a Bank of England decision is it beneficial 177 00:08:49,840 --> 00:08:51,800 Speaker 4: of rate stay higher for longer or do you want 178 00:08:51,840 --> 00:08:54,880 Speaker 4: them to come down to support the economic growth and 179 00:08:54,920 --> 00:08:56,800 Speaker 4: maybe some of the engine that John was talking about. 180 00:08:57,200 --> 00:09:00,120 Speaker 3: So ultimately that's a decision they have to make. It's 181 00:09:00,200 --> 00:09:04,920 Speaker 3: very important to balance, you know. I actually think, I 182 00:09:05,520 --> 00:09:08,520 Speaker 3: actually think a little prudence and waiting a little is 183 00:09:08,559 --> 00:09:09,160 Speaker 3: not a bad thing. 184 00:09:10,400 --> 00:09:11,920 Speaker 2: You think there is an option that's a wait a 185 00:09:11,960 --> 00:09:13,880 Speaker 2: little longer than why do you think? So why is 186 00:09:14,040 --> 00:09:16,280 Speaker 2: the bigger risk? Maybe the cut too soon and not 187 00:09:16,320 --> 00:09:17,040 Speaker 2: to hold too long. 188 00:09:18,480 --> 00:09:23,160 Speaker 3: Well, I think that the economy is stabilizing, employment is 189 00:09:23,200 --> 00:09:28,000 Speaker 3: still robust, inflation is coming down, so I think on 190 00:09:28,040 --> 00:09:30,760 Speaker 3: the balance it might be more prudent to wait a 191 00:09:30,840 --> 00:09:34,120 Speaker 3: little longer. Now our house view and that of many others, 192 00:09:34,320 --> 00:09:35,880 Speaker 3: is for more rate cuts over. 193 00:09:35,760 --> 00:09:38,240 Speaker 2: This year, with the same applied to the US the 194 00:09:38,280 --> 00:09:39,960 Speaker 2: same characterization of the situation. 195 00:09:40,559 --> 00:09:43,240 Speaker 4: I think so yeah, but just would that be good 196 00:09:43,240 --> 00:09:45,800 Speaker 4: for you? Are high rates good for banks or are 197 00:09:45,800 --> 00:09:47,800 Speaker 4: they bad for banks? This has been a preennial question. 198 00:09:48,400 --> 00:09:49,840 Speaker 3: Stable rates are good for banks. 199 00:09:50,559 --> 00:09:52,920 Speaker 2: Thank camp, very diplomatic. We appreciate your time. So it's 200 00:09:52,920 --> 00:09:54,680 Speaker 2: fantastic catch up and thank you see here in New 201 00:09:54,760 --> 00:10:07,000 Speaker 2: York City. Thanks for being able to see you, Baby 202 00:10:07,000 --> 00:10:09,200 Speaker 2: Morgan's Monica to sense so saying this, we need to 203 00:10:09,240 --> 00:10:11,360 Speaker 2: acknowledge the strong starts of the year, with the S 204 00:10:11,400 --> 00:10:14,160 Speaker 2: and P five hundred now only a few percent away 205 00:10:14,160 --> 00:10:16,760 Speaker 2: from our year round twenty twenty four price target. This 206 00:10:16,840 --> 00:10:20,400 Speaker 2: also argues for more selectivity and being thoughtful if you 207 00:10:20,440 --> 00:10:22,760 Speaker 2: are still sitting on too much cash. We believe stocks 208 00:10:22,760 --> 00:10:25,800 Speaker 2: will continue to make new highs. Monica joins us now 209 00:10:26,040 --> 00:10:28,520 Speaker 2: in New York. Monica cand morning to year warning, we 210 00:10:28,559 --> 00:10:31,560 Speaker 2: will make new highs in this sancraity market. Talk to 211 00:10:31,559 --> 00:10:33,560 Speaker 2: me about how you put cash to work right now? 212 00:10:33,600 --> 00:10:36,719 Speaker 1: Then, the challenge has been everyone's waiting for certainty. You 213 00:10:36,840 --> 00:10:38,400 Speaker 1: just talked about that. I don't think we're going to 214 00:10:38,480 --> 00:10:39,800 Speaker 1: get it. The FED is never going to tell us 215 00:10:39,800 --> 00:10:41,000 Speaker 1: what the path is going to look like, and so 216 00:10:41,120 --> 00:10:43,160 Speaker 1: the challenge becomes, then what do I do do I 217 00:10:43,200 --> 00:10:45,439 Speaker 1: wait for certainty? Well, anyone who tried that the last 218 00:10:45,480 --> 00:10:47,679 Speaker 1: couple of years has missed out on a massive rally. 219 00:10:47,720 --> 00:10:50,240 Speaker 1: And so what we've been advocating to clients is just 220 00:10:50,360 --> 00:10:53,720 Speaker 1: look at what we can see earnings inflecting right. Put 221 00:10:53,720 --> 00:10:56,439 Speaker 1: the mag seven aside. The other four ninety three earnings 222 00:10:56,440 --> 00:10:58,400 Speaker 1: were down last year. We think they'll be up this year. 223 00:10:58,640 --> 00:11:01,400 Speaker 1: You do have a modist inflictioneryronment, probably some cuts at 224 00:11:01,400 --> 00:11:03,280 Speaker 1: some point. That is all good for stocks. 225 00:11:03,520 --> 00:11:03,760 Speaker 3: Now. 226 00:11:03,840 --> 00:11:05,800 Speaker 1: I don't think it means another twenty five percent rally, 227 00:11:06,080 --> 00:11:08,079 Speaker 1: but it is the path to saying maybe five six 228 00:11:08,120 --> 00:11:10,360 Speaker 1: seven percent from here, which is pretty good after we've 229 00:11:10,360 --> 00:11:11,040 Speaker 1: already run something. 230 00:11:11,040 --> 00:11:12,400 Speaker 2: How would you play that? Is that an equal way? 231 00:11:12,480 --> 00:11:15,360 Speaker 2: SMP five hundred? Is there a sect the preference underpinning 232 00:11:15,400 --> 00:11:16,559 Speaker 2: that in any hy shape or form. 233 00:11:16,640 --> 00:11:18,960 Speaker 1: I mean, the temptations to say we'll see the broadening 234 00:11:19,040 --> 00:11:21,360 Speaker 1: you've got to go outside of the magnificent seven. I 235 00:11:21,360 --> 00:11:23,640 Speaker 1: think it depends where you're starting from. Many people just 236 00:11:23,640 --> 00:11:25,520 Speaker 1: don't have enough risk on full stop. So if you 237 00:11:25,559 --> 00:11:27,160 Speaker 1: don't have an ef equities full stop, you should be 238 00:11:27,160 --> 00:11:30,040 Speaker 1: buying broad. If you are over levered to tech, then 239 00:11:30,040 --> 00:11:32,240 Speaker 1: that's where I start looking to things like MidCap, where 240 00:11:32,280 --> 00:11:34,640 Speaker 1: you have valuations that are significantly lower than the SMP 241 00:11:35,000 --> 00:11:37,160 Speaker 1: and you have better earnings growth always you've leverage to 242 00:11:37,200 --> 00:11:38,080 Speaker 1: things like industrials. 243 00:11:38,160 --> 00:11:40,080 Speaker 4: I was looking at your notes and it was amazing 244 00:11:40,120 --> 00:11:42,880 Speaker 4: because there's sort of this clarion call from all different 245 00:11:42,880 --> 00:11:44,520 Speaker 4: financial advisors saying. 246 00:11:44,600 --> 00:11:46,360 Speaker 5: Get out of your cash. Why are you in so 247 00:11:46,440 --> 00:11:46,920 Speaker 5: much cash? 248 00:11:47,040 --> 00:11:49,360 Speaker 4: Rotate out? You're going to miss out. But you talk 249 00:11:49,400 --> 00:11:51,760 Speaker 4: about keeping a buffer. What's the buffer? 250 00:11:52,800 --> 00:11:54,960 Speaker 1: It depends on what your goals are, right, Like, I 251 00:11:54,960 --> 00:11:57,400 Speaker 1: work with clients across the wealth spectrum, and so you 252 00:11:57,480 --> 00:11:58,880 Speaker 1: have to just have a plan. I think that's the 253 00:11:58,880 --> 00:12:01,800 Speaker 1: biggest challenge. Has felt good, but the problem is I've 254 00:12:01,840 --> 00:12:04,880 Speaker 1: seen balance is go twenty thirty percent plus of a portfolio. 255 00:12:04,960 --> 00:12:07,040 Speaker 1: I think that's too much really, whoever you are, and 256 00:12:07,080 --> 00:12:08,600 Speaker 1: so it comes down to what is my plan. If 257 00:12:08,600 --> 00:12:10,800 Speaker 1: I'm trying to work towards a ten percent buffer, you 258 00:12:10,840 --> 00:12:13,120 Speaker 1: probably have some wood to chob most people. I would 259 00:12:13,120 --> 00:12:15,360 Speaker 1: also argue, you look at what the market's giving you. 260 00:12:15,480 --> 00:12:18,040 Speaker 1: Volatility is still exceptionally low. So if you're really that 261 00:12:18,200 --> 00:12:21,160 Speaker 1: scared about going into equities and risk assets. I would say, 262 00:12:21,200 --> 00:12:22,800 Speaker 1: dip a toe in and then buy a little protection. 263 00:12:22,960 --> 00:12:24,960 Speaker 1: You're earning a lot on your cash, spend a little 264 00:12:25,000 --> 00:12:26,760 Speaker 1: bit of that to buy some pots or something like that, 265 00:12:26,840 --> 00:12:27,760 Speaker 1: just to keep you invested. 266 00:12:27,920 --> 00:12:31,000 Speaker 4: There is this issue that the winners have won a lot, 267 00:12:31,040 --> 00:12:34,320 Speaker 4: the losers really haven't gone anywhere. You start looking at 268 00:12:34,320 --> 00:12:37,720 Speaker 4: the winners. I think, for example, Japanese equities, do you 269 00:12:38,000 --> 00:12:40,160 Speaker 4: pile on or do you sort of say, you know, 270 00:12:40,440 --> 00:12:43,559 Speaker 4: there's more downside risk here just based on potential surprises 271 00:12:43,559 --> 00:12:45,000 Speaker 4: in the Bank of Japan and elsewhere. 272 00:12:45,480 --> 00:12:45,599 Speaker 5: You know. 273 00:12:45,600 --> 00:12:46,920 Speaker 1: It's funny at the beginning of the year we did 274 00:12:47,000 --> 00:12:49,920 Speaker 1: see some rotation out of Japan into areas that looked cheap, 275 00:12:50,080 --> 00:12:53,640 Speaker 1: like China. I get that just as a tactical trade. 276 00:12:53,960 --> 00:12:56,240 Speaker 1: But if you are heavily levered to the US from 277 00:12:56,240 --> 00:12:58,920 Speaker 1: a risk asset standpoint, and Japan has been underinvested in 278 00:12:58,920 --> 00:13:01,120 Speaker 1: for decades, I think it's okay to say and need 279 00:13:01,160 --> 00:13:02,800 Speaker 1: to have a little bit of Japan as a longer 280 00:13:02,880 --> 00:13:04,560 Speaker 1: term bet. Hard to make a call for one to 281 00:13:04,600 --> 00:13:06,480 Speaker 1: two weeks or even a couple months, but I do 282 00:13:06,520 --> 00:13:09,880 Speaker 1: think there's some reasons to own Japan again. Very cheap valuations. 283 00:13:09,960 --> 00:13:11,640 Speaker 1: I think it's like twenty five percent of the topics 284 00:13:11,720 --> 00:13:14,680 Speaker 1: is under one times book value, which seems kind of crazy. 285 00:13:14,840 --> 00:13:18,840 Speaker 1: And then obviously you have policy shifts coming, reforms coming. Again, 286 00:13:18,880 --> 00:13:20,560 Speaker 1: that doesn't happen overnight, but it's a reason to have 287 00:13:20,600 --> 00:13:21,200 Speaker 1: some allocation. 288 00:13:21,280 --> 00:13:23,160 Speaker 2: We've been trying to work out what happens to Japanese 289 00:13:23,200 --> 00:13:25,200 Speaker 2: equities if you do get this move in the Japanese 290 00:13:25,280 --> 00:13:27,800 Speaker 2: Yet certainly things have been pretty contained because we've had 291 00:13:27,840 --> 00:13:30,160 Speaker 2: five days of again weakness going and gets to this decision. 292 00:13:30,200 --> 00:13:32,320 Speaker 2: Dolly En is still in and around one fifty. But 293 00:13:32,440 --> 00:13:34,520 Speaker 2: just a little bit of scenario analysis, what would happen 294 00:13:34,559 --> 00:13:36,760 Speaker 2: if we went from one to fifty forty one thirty 295 00:13:36,800 --> 00:13:38,480 Speaker 2: one twenty Where does that leave equacies? 296 00:13:38,600 --> 00:13:41,040 Speaker 1: Yeah, that is clearly a more challenging backdrop, and I 297 00:13:41,040 --> 00:13:43,000 Speaker 1: think that's the risk, and so some of our clients 298 00:13:43,040 --> 00:13:45,640 Speaker 1: have been doing this trying to hedge out the currency 299 00:13:45,679 --> 00:13:47,760 Speaker 1: exposure really have been added to Japan. That's a little bit 300 00:13:47,760 --> 00:13:50,160 Speaker 1: more complicated, but again I think that's why the Japan 301 00:13:50,160 --> 00:13:52,280 Speaker 1: call can't be a one month or two month trade. 302 00:13:52,400 --> 00:13:54,120 Speaker 1: You have to say I want to have an allocation 303 00:13:54,559 --> 00:13:57,160 Speaker 1: intermediate to longer term to something outside of the US, 304 00:13:57,320 --> 00:13:59,719 Speaker 1: and I think Japan does look relatively more interesting than see. 305 00:13:59,760 --> 00:14:01,000 Speaker 5: You're right now, there's. 306 00:14:00,840 --> 00:14:03,440 Speaker 4: This question right now, just taking a step back, whether 307 00:14:03,480 --> 00:14:05,719 Speaker 4: there's a shift going on under the surface. We saw 308 00:14:05,720 --> 00:14:10,360 Speaker 4: it last week with commodity stocks outperforming dramatically, and it 309 00:14:10,400 --> 00:14:12,520 Speaker 4: makes me wonder whether we are on the precipice of 310 00:14:12,559 --> 00:14:15,760 Speaker 4: a reinflating of goods and whether you see that from 311 00:14:15,800 --> 00:14:18,440 Speaker 4: the increase in activity not only Japan, but also to 312 00:14:18,440 --> 00:14:20,440 Speaker 4: some degree on the march is China and around the 313 00:14:20,440 --> 00:14:21,200 Speaker 4: rest of the world. 314 00:14:22,000 --> 00:14:23,480 Speaker 5: Do you lean into that or do. 315 00:14:23,480 --> 00:14:25,280 Speaker 4: You see that as something that has a sort of 316 00:14:25,360 --> 00:14:26,880 Speaker 4: self limiting aspect to it. 317 00:14:27,720 --> 00:14:30,560 Speaker 1: We do think, I mean our outlook for presable brent. 318 00:14:30,680 --> 00:14:32,760 Speaker 1: We do think you can see brents like mid eighties 319 00:14:32,800 --> 00:14:35,360 Speaker 1: to low nineties. So that does suggest a bit higher 320 00:14:35,360 --> 00:14:38,160 Speaker 1: from here that probably is supportive for energy equities. I 321 00:14:38,200 --> 00:14:40,680 Speaker 1: would remind you energy equities underperformed last year. That was 322 00:14:40,680 --> 00:14:42,720 Speaker 1: the one sector that did not do well, and so 323 00:14:42,840 --> 00:14:45,680 Speaker 1: I think you could see some rebalancing some addition back there. 324 00:14:45,680 --> 00:14:48,320 Speaker 1: There's always this struggle to people who want to get 325 00:14:48,360 --> 00:14:50,960 Speaker 1: on board with the ev revolution, but then you realize 326 00:14:51,000 --> 00:14:53,000 Speaker 1: we still need oil in the near to intermediate term, 327 00:14:53,000 --> 00:14:54,280 Speaker 1: and so I think that makes sense to have some 328 00:14:54,320 --> 00:14:56,760 Speaker 1: allocation there, especially as we figure out what that transition 329 00:14:56,840 --> 00:14:58,600 Speaker 1: looks like. But I'm not overly worried that we're going 330 00:14:58,640 --> 00:15:01,120 Speaker 1: to see oil north of a hunt barring some big 331 00:15:01,160 --> 00:15:04,280 Speaker 1: geopolitical shock, and so I think that from an inflationary standpoint, 332 00:15:04,280 --> 00:15:05,840 Speaker 1: is a little bit less of a risk. 333 00:15:06,040 --> 00:15:07,800 Speaker 4: To wrap it all up, I am wanting to know 334 00:15:07,880 --> 00:15:10,080 Speaker 4: what your take is on Ben Ladler's points that he 335 00:15:10,120 --> 00:15:12,080 Speaker 4: made earlier this morning. He kind of kicked off the 336 00:15:12,120 --> 00:15:14,640 Speaker 4: show at the same where he thinks that in Vidia's 337 00:15:14,960 --> 00:15:17,400 Speaker 4: conference Developer conference is going to be more important than 338 00:15:17,480 --> 00:15:21,160 Speaker 4: Ja Powell's speech. Do you think that that's true, especially 339 00:15:21,200 --> 00:15:23,520 Speaker 4: because in some ways the FED can't tell us all 340 00:15:23,520 --> 00:15:25,280 Speaker 4: that much because they don't really have a crystal ball. 341 00:15:25,640 --> 00:15:27,800 Speaker 1: I think it's probably true for equities this week. If 342 00:15:28,080 --> 00:15:31,880 Speaker 1: something cataclysmically negative were to happen today, you would see 343 00:15:31,880 --> 00:15:33,360 Speaker 1: some rotation out of some of these names that have 344 00:15:33,400 --> 00:15:36,600 Speaker 1: been so heavily owned. That said, I actually think the 345 00:15:36,600 --> 00:15:38,600 Speaker 1: tone is probably going to be pretty positive, and you're 346 00:15:38,640 --> 00:15:41,360 Speaker 1: going to hopefully hear some commentary about how this is 347 00:15:41,360 --> 00:15:43,760 Speaker 1: not just an Nvidia story. It's a broad story for 348 00:15:43,840 --> 00:15:46,240 Speaker 1: the market, for the S and P for companies that 349 00:15:46,280 --> 00:15:48,600 Speaker 1: will become more efficient. I know as a JP Morgan 350 00:15:48,680 --> 00:15:50,720 Speaker 1: we're using AI everywhere. It's a huge part of all 351 00:15:50,760 --> 00:15:53,600 Speaker 1: of our conversations and how we can become better advisors, 352 00:15:53,600 --> 00:15:56,320 Speaker 1: more efficient, quicker, faster. Doesn't mean we're not hiring. It 353 00:15:56,360 --> 00:15:57,920 Speaker 1: just means hopefully I'll get better at my job and 354 00:15:57,960 --> 00:15:58,520 Speaker 1: I can do more. 355 00:15:58,840 --> 00:16:01,520 Speaker 2: I think it ends capitalized, not today, no. 356 00:16:02,320 --> 00:16:04,920 Speaker 1: Tomorrow, longer term than it's a different question, but we'll 357 00:16:04,920 --> 00:16:05,880 Speaker 1: still be here next week. 358 00:16:05,920 --> 00:16:07,520 Speaker 2: Want I have it's going to see it. I want 359 00:16:07,520 --> 00:16:20,360 Speaker 2: to cut a sense of JP morcom Private Bank, former 360 00:16:20,400 --> 00:16:22,480 Speaker 2: fed aclumist Cladia Sal'm a good friend of this program 361 00:16:22,560 --> 00:16:24,360 Speaker 2: over the years. Joined just now for more, Claudia, I 362 00:16:24,360 --> 00:16:26,400 Speaker 2: want to put a catch up with you. As you've said, 363 00:16:26,520 --> 00:16:28,960 Speaker 2: maybe a challenge for chairman power this week is to 364 00:16:29,000 --> 00:16:32,280 Speaker 2: make sure that everyone stays around the three implied in 365 00:16:32,360 --> 00:16:34,520 Speaker 2: the Median dog. Can we just start with the dots themselves? 366 00:16:34,560 --> 00:16:37,320 Speaker 2: Because I know you have thoughts on this. When can 367 00:16:37,440 --> 00:16:40,240 Speaker 2: we and how can we get away from this? 368 00:16:42,160 --> 00:16:45,000 Speaker 5: It's hopeless at this point. I mean, everyone wants some 369 00:16:45,160 --> 00:16:47,800 Speaker 5: scrap of certainty and they look at the FED and 370 00:16:47,840 --> 00:16:50,040 Speaker 5: have a very misguided belief that the Fed is going 371 00:16:50,080 --> 00:16:52,080 Speaker 5: to give that to us. The FED would really like 372 00:16:52,120 --> 00:16:54,480 Speaker 5: a scrap of certainty about what they're going to do 373 00:16:54,600 --> 00:16:57,360 Speaker 5: later this year. My hope for this meeting. It is 374 00:16:57,400 --> 00:17:00,240 Speaker 5: the most boring meeting ever. And you have traders to 375 00:17:00,280 --> 00:17:02,800 Speaker 5: sleep at their desk, like, we know they're not going 376 00:17:02,840 --> 00:17:06,960 Speaker 5: to cut this week, and we better not see anything 377 00:17:07,000 --> 00:17:10,680 Speaker 5: material change on that summary of economic projections, in particular 378 00:17:11,320 --> 00:17:15,199 Speaker 5: the are we looking at likely three cuts or two cuts? 379 00:17:15,640 --> 00:17:19,119 Speaker 5: Jay is absolutely my reading of what he has said, 380 00:17:19,200 --> 00:17:21,960 Speaker 5: he is a let's cut in June. He's got to 381 00:17:22,080 --> 00:17:25,040 Speaker 5: keep it together. If those dots move towards July, which 382 00:17:25,040 --> 00:17:28,359 Speaker 5: I actually think that's not likely, or the longer run 383 00:17:28,480 --> 00:17:32,160 Speaker 5: estimate of where the rate should be the infamous r star, 384 00:17:32,680 --> 00:17:34,959 Speaker 5: either of those two could get people and see and 385 00:17:35,080 --> 00:17:38,600 Speaker 5: push the expectations to July in the markets. 386 00:17:38,800 --> 00:17:41,359 Speaker 4: I am a longstanding hater of the dot plot. I 387 00:17:41,400 --> 00:17:43,560 Speaker 4: love the way you write. Thank you for that, Claudia. 388 00:17:43,600 --> 00:17:45,960 Speaker 4: I am curious whether you think it's a liability though, 389 00:17:46,160 --> 00:17:48,919 Speaker 4: that the Federal Reserve isn't operating with some sort of 390 00:17:49,040 --> 00:17:52,840 Speaker 4: overarching thesis of where the economy is right now post pandemic, 391 00:17:53,080 --> 00:17:55,520 Speaker 4: about whether it is sort of a hotter and higher 392 00:17:55,560 --> 00:17:58,120 Speaker 4: inflation regime or if it is going to revert back 393 00:17:58,280 --> 00:18:00,880 Speaker 4: to something more of what we were customed to pre pandemic. 394 00:18:02,240 --> 00:18:04,760 Speaker 5: My expectations of what the Fed is on track to 395 00:18:04,800 --> 00:18:07,360 Speaker 5: do did not change. Last week. We did we had 396 00:18:07,400 --> 00:18:11,080 Speaker 5: the second disappointing read on inflation. We also had this 397 00:18:11,200 --> 00:18:16,040 Speaker 5: second disappointing read on retail sales. And Pale has talked 398 00:18:16,040 --> 00:18:18,359 Speaker 5: about multiple times that the risk to the two sides 399 00:18:18,359 --> 00:18:21,040 Speaker 5: of the mandate, the stable prices and the maximum employment, 400 00:18:21,119 --> 00:18:24,320 Speaker 5: those risks are coming into balance, and we saw that 401 00:18:24,440 --> 00:18:28,000 Speaker 5: last week, right, that nailed the balance of Yeah, inflation 402 00:18:28,160 --> 00:18:31,080 Speaker 5: has been not so good, and really January clearly from 403 00:18:31,119 --> 00:18:34,800 Speaker 5: the February looks pretty fluky with owner's equivalent rent coming 404 00:18:34,840 --> 00:18:38,680 Speaker 5: back down and those retail sales those are not good numbers. 405 00:18:38,760 --> 00:18:40,879 Speaker 5: I mean, I did consumer spending at the FED. Those 406 00:18:40,920 --> 00:18:43,840 Speaker 5: are not good numbers. So that should maintain the quote 407 00:18:43,880 --> 00:18:45,280 Speaker 5: unquote coming into balance. 408 00:18:45,760 --> 00:18:47,639 Speaker 4: Well, can you elaborate a little bit on why those 409 00:18:47,680 --> 00:18:49,719 Speaker 4: are not good numbers and why that's important Because we 410 00:18:49,720 --> 00:18:53,040 Speaker 4: were hearing earlier this morning from Lindsay Piagsa that they 411 00:18:53,080 --> 00:18:55,480 Speaker 4: weren't that bad and that you're seeing a deceleration, but 412 00:18:55,560 --> 00:18:58,000 Speaker 4: overall there still is quite a bit of spending and 413 00:18:58,040 --> 00:19:00,000 Speaker 4: you can tell that balance seats aren't terrible. 414 00:19:00,520 --> 00:19:01,640 Speaker 1: Why are they terrible? 415 00:19:03,840 --> 00:19:06,040 Speaker 5: So in terms of the retail sales, I mean these 416 00:19:06,040 --> 00:19:09,480 Speaker 5: were the clients, right, like, these aren't good numbers. And yes, 417 00:19:09,560 --> 00:19:12,320 Speaker 5: a acceleration was what we were looking for, but we 418 00:19:12,480 --> 00:19:16,600 Speaker 5: know and the flip side is the acceleration worries on inflation. 419 00:19:17,240 --> 00:19:19,159 Speaker 5: We know, once things get going, it's kind of like 420 00:19:19,200 --> 00:19:21,800 Speaker 5: the snowball. Right, this is a big economy. It takes 421 00:19:21,880 --> 00:19:23,920 Speaker 5: some work to get it going, and then you can 422 00:19:24,040 --> 00:19:26,919 Speaker 5: end up with like a really big snowball that's like 423 00:19:26,960 --> 00:19:29,639 Speaker 5: crushing us and bringing down the economy. So once you 424 00:19:29,680 --> 00:19:32,119 Speaker 5: start going in a direction, there is a danger that 425 00:19:32,160 --> 00:19:35,159 Speaker 5: you build up speed in that direction for the economy. 426 00:19:35,280 --> 00:19:39,400 Speaker 5: For the spending side, that would be a contraction in spending. 427 00:19:39,440 --> 00:19:41,399 Speaker 5: That's a recession if we get there. And on the 428 00:19:41,400 --> 00:19:44,760 Speaker 5: inflation side, if that not just sticks but kind of 429 00:19:44,800 --> 00:19:48,480 Speaker 5: gets you know, going, that's that's a big problem too. Right, 430 00:19:48,520 --> 00:19:51,359 Speaker 5: So they have the potential for two big problems, which 431 00:19:51,400 --> 00:19:55,600 Speaker 5: speaks to don't do anything. Just let us. 432 00:19:55,720 --> 00:19:58,640 Speaker 2: See Claudia, I'd love you though, is just to wrap 433 00:19:58,680 --> 00:20:00,800 Speaker 2: things up on inflation as well. We had a hot 434 00:20:00,840 --> 00:20:04,720 Speaker 2: CPI print relative to expectations likewise on PPI, where the 435 00:20:04,800 --> 00:20:08,160 Speaker 2: components of that that gave you encouragement, maybe even made 436 00:20:08,200 --> 00:20:10,840 Speaker 2: you uncomfortable about the path I've head had. What were 437 00:20:10,840 --> 00:20:11,560 Speaker 2: you focused on? 438 00:20:12,359 --> 00:20:15,560 Speaker 5: Well, first the encouragement. We did see the owner's equivalent rent, 439 00:20:15,560 --> 00:20:19,920 Speaker 5: which had come in really hot and inexplicable in January, 440 00:20:20,119 --> 00:20:22,679 Speaker 5: that did cool back off. So that tells us a 441 00:20:22,680 --> 00:20:25,000 Speaker 5: lot that that piece, which was very important in CPI 442 00:20:25,080 --> 00:20:29,480 Speaker 5: and important in PCE, that was something Pluchy in all likelihood. 443 00:20:29,800 --> 00:20:33,920 Speaker 5: Now the discouraging part is what we've gotten into in 444 00:20:33,960 --> 00:20:38,639 Speaker 5: the core services outside of shelter, the supercore. The stickiest 445 00:20:38,640 --> 00:20:42,720 Speaker 5: part in there is motor vehicle insurance and the homeowners 446 00:20:42,800 --> 00:20:45,280 Speaker 5: insurance is in there too. That is not about the 447 00:20:45,320 --> 00:20:48,000 Speaker 5: FED the motor vehicle that is a knock on effect 448 00:20:48,000 --> 00:20:50,160 Speaker 5: of the used car prices. The car prices were high, 449 00:20:50,240 --> 00:20:53,639 Speaker 5: they're making up for repair costs. There's really hot relief 450 00:20:53,680 --> 00:20:56,400 Speaker 5: on the horizon for that piece until later in the year. 451 00:20:57,000 --> 00:21:00,359 Speaker 5: That's an unfortunate part of inflation for us US to 452 00:21:01,920 --> 00:21:05,080 Speaker 5: latch onto the FED to wait on, and yet it's 453 00:21:05,080 --> 00:21:07,480 Speaker 5: in there. I mean, it is making a contribution, and 454 00:21:07,520 --> 00:21:10,040 Speaker 5: it is outsized from before the pandemic, and it ain't 455 00:21:10,080 --> 00:21:11,560 Speaker 5: going away, probably for a little while. 456 00:21:11,840 --> 00:21:13,520 Speaker 2: You know, the enner workings of the feder reserve better 457 00:21:13,520 --> 00:21:15,200 Speaker 2: than mouse quadia. How do you think they would deal 458 00:21:15,240 --> 00:21:17,840 Speaker 2: with that around the table this week? And how do 459 00:21:17,880 --> 00:21:20,080 Speaker 2: you think cham and Powell will address the topic in 460 00:21:20,119 --> 00:21:21,000 Speaker 2: the news conference. 461 00:21:22,440 --> 00:21:25,159 Speaker 5: I go on the news conference to get Marcus to 462 00:21:25,240 --> 00:21:26,880 Speaker 5: kind of stay where they are, and we're this rare 463 00:21:26,920 --> 00:21:29,120 Speaker 5: moment that the FED is kind of lined up with markets, 464 00:21:29,119 --> 00:21:31,919 Speaker 5: you know, this June cut and probably where Jay Powell is. 465 00:21:32,200 --> 00:21:34,800 Speaker 5: So I think it's reinforcing you have a balance of risk. 466 00:21:35,000 --> 00:21:39,680 Speaker 5: If we don't see retail sales mentioned in the statement, 467 00:21:40,119 --> 00:21:43,760 Speaker 5: then that's a sign they have gotten more hawkish. You know, 468 00:21:43,920 --> 00:21:45,680 Speaker 5: there are all these details under the hood, like motor 469 00:21:45,760 --> 00:21:49,560 Speaker 5: vehicle insurance. Yeah, that's wonky, and yet it gives hawks. 470 00:21:49,600 --> 00:21:51,159 Speaker 5: I mean, if you look at the top line, it 471 00:21:51,200 --> 00:21:53,879 Speaker 5: gives them cover to push out to July. Frankly, I 472 00:21:53,880 --> 00:21:56,760 Speaker 5: think they're going to win. July is my baseline. And 473 00:21:57,440 --> 00:22:01,400 Speaker 5: so it's the messaging, you know. So, but the FED 474 00:22:01,480 --> 00:22:04,680 Speaker 5: knows better, like they know what's under the hood. It's 475 00:22:04,720 --> 00:22:08,480 Speaker 5: just a question of can they look past it or 476 00:22:08,480 --> 00:22:11,600 Speaker 5: are they gonna get antci like sometimes they do. 477 00:22:12,040 --> 00:22:13,879 Speaker 2: Interesting Claudia, you're one of the very best, and we 478 00:22:13,920 --> 00:22:16,320 Speaker 2: always appreciate your time. Thanks for being with us. Cludia, Sam, 479 00:22:16,320 --> 00:22:19,760 Speaker 2: there of sum consulting on the Federal Reserve. This is 480 00:22:19,800 --> 00:22:24,119 Speaker 2: the Bloomberg Surveillance Podcast, bringing you the best in markets, economics, 481 00:22:24,160 --> 00:22:27,120 Speaker 2: antient politics. You can watch the show live on Bloomberg 482 00:22:27,160 --> 00:22:30,320 Speaker 2: TV weekday mornings from six am to nine am Eastern. 483 00:22:30,600 --> 00:22:33,960 Speaker 2: Subscribe to the podcast on Apple, Spotify, or anywhere else 484 00:22:34,000 --> 00:22:36,639 Speaker 2: you listen, and as always, on the Bloomberg Terminal and 485 00:22:36,680 --> 00:22:37,920 Speaker 2: the Bloomberg Business app.