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Speaker 3: Let's talk a little economically. Let's set the plate. Let's
Speaker 3: set the scene for the week ahead. Kathy Bost John
Speaker 3: Chick joins a She's a chief economist at Nationwide. Kathy,
Speaker 3: thanks so much for joining us here, layout for us.
Speaker 3: Kind of your view of this US economy here, I've
Speaker 3: got a Federal Reserve that's cutting rates. I'm not sure
Speaker 3: how aggressive they're going to be. I got some pretty
Speaker 3: decent retail sales last week, so I think the consumer
Speaker 3: is a good place. I think the consumers got a
Speaker 3: job if he or she wants one. What's your view
Speaker 3: of this US economy right here?
Speaker 4: Good morning, Paul. Well, the economy is quite resilient. That's
Speaker 4: what you're seeing in the consumer spending data and and
Speaker 4: and the labor market data and and it's I think
Speaker 4: it's surprising, surprising to the Fed Reserve, surprising to many investors. Uh,
Speaker 4: the strength, you know, continued strength. It's it's obviously welcomed.
Speaker 4: You know, the economic expansion can continue. And I guess
Speaker 4: gives a fit a good problem, uh to try to
Speaker 4: think about, you know, how quickly they need to continue
Speaker 4: to recalibrate interest rates as they say, inflation was a
Speaker 4: little bit sticky though, uh, and that that there's a
Speaker 4: little bit of a wrinkle in the plans. What they
Speaker 4: want to make sure is that, you know, as they're
Speaker 4: recalibrating interest rates lower, they don't stop the disinflationary trend. Uh,
Speaker 4: in inflation that has been in place. Right, that's the
Speaker 4: reason they can cut rates. We've you know, always arguing
Speaker 4: it's really the pace of employment gains that will dictate,
Speaker 4: you know, how how fast they can cut rates.
Speaker 5: Kathy, what about the uncertainty around the so called neutral rate,
Speaker 5: the long run equilibrium interest rate are star? What's your
Speaker 5: sense of sort of what the Fed's thinking on that is,
Speaker 5: is they as they undertake this recalibration as you call it.
Speaker 4: Great question, because that you know is the guiding star,
Speaker 4: that's the north star. And the problem is, you know,
Speaker 4: as you know, the New York Fed President John Williams
Speaker 4: has said many times and he's the foremost expert in
Speaker 4: the area. As you get closer than the star gets
Speaker 4: a bit fuzzier, so you don't really know is it
Speaker 4: two seventy five two point eight, is it three and
Speaker 4: a quarter on the FED funds rate or is it
Speaker 4: three and abcent. It's unsure at this point, so they're
Speaker 4: going to use the data as guidance to tell them,
Speaker 4: you know, how close you're getting to neutral. But I
Speaker 4: think there's another there's a long run neutral, and then
Speaker 4: there's a current neutral and based on current economic data,
Speaker 4: you know, that's where the debate I think is ensuring.
Speaker 4: You know, there's some signs really that monetary policy is
Speaker 4: very restrictive with the housing market. Look at the auto sector,
Speaker 4: they're really being weighed down by high interest rates. Middle
Speaker 4: income households, low income households are struggling under the weight
Speaker 4: of high utriss rates. But on the other hand, retail
Speaker 4: sales continue to show a consumer that is going to
Speaker 4: carry economic growth, not just you know, capping off a
Speaker 4: strong third quarter, but momentum into the fourth quarter. So
Speaker 4: that really is the debate for the Fed. We think
Speaker 4: they'll continue to cut interest rates. We still have in
Speaker 4: our baseline and a twenty five base point rate cut
Speaker 4: in November. We have another one in December, but both
Speaker 4: of those odds, you know, have diminished. There is more doubt,
Speaker 4: I think among FED officials do do we really need
Speaker 4: to keep cutting rates, especially since they cut rates fifty
Speaker 4: basis points in September?
Speaker 3: Kathy, how about the labor market here? We got a
Speaker 3: you know, top line unemployment rate four point one percent
Speaker 3: or so. That seems pretty darn solid to me, but
Speaker 3: some folks tell us some of the recent trends has
Speaker 3: been a little troubling. How should we think about this
Speaker 3: US labor economy?
Speaker 4: It is an interesting picture. So on one hand, there's
Speaker 4: still pretty good demand overall for workers, and the unemployment
Speaker 4: rate reflects that very low four point one percent. On
Speaker 4: the other hand, where you look at the jobs that
Speaker 4: are created from the Establishment survey, they're very concentrated in
Speaker 4: health and education and also leisure and hospitality. Now that's
Speaker 4: not unusual for economic cycles. You could continue to see
Speaker 4: the economy do well with this high concentration, but it
Speaker 4: also tells you again it's a sign that high interest
Speaker 4: rates are hurting the cyclical sectors of the economy. So
Speaker 4: you'd much have much rather have a broad based employee games.
Speaker 4: Right now, it's really highly concentrated.
Speaker 5: You talked just a moment ago, Kathy, just about following
Speaker 5: the data. How much of this is data driven? We
Speaker 5: have a cacophony of fedspeak this week today, four of
Speaker 5: them as I count them, Mary Daily speaking, Lori Logan
Speaker 5: of the Dallas Fed, Neil Kashgari, Jeffrey Schmid of Kansas City.
Speaker 5: What are you listening for in all of those speeches? Again,
Speaker 5: it seems like there's such monumental uncertainty just a couple
Speaker 5: of weeks away, fifteen days away till this election, we
Speaker 5: might not have a result by the time the FED
Speaker 5: meets Once again, how valuable are the insights from these
Speaker 5: FED officials, just bearing in mind that uncertainty that looms
Speaker 5: so large.
Speaker 4: I think it's very valuable because they are that's the
Speaker 4: fuller guidance, right, and that's one of the tools that
Speaker 4: they can offer the markets, is this verbal guidance.
Speaker 6: You know, there's six.
Speaker 4: Weeks in between meetings, so this is our time to
Speaker 4: give you know, their thoughts. On the other hand, they're
Speaker 4: all individuals, so you're not getting a consensus view, but
Speaker 4: you can pick up Where are the doubts increasing, Like,
Speaker 4: are they leaning forwards saying you know what, we know
Speaker 4: economic data have come in stronger, but we're still really
Speaker 4: restrictive and I think we can continue to lower rates
Speaker 4: and we have room.
Speaker 6: To do that.
Speaker 4: Or is there some concern that maybe, hey, maybe we
Speaker 4: need to go a little slower, even slower than the
Speaker 4: markets thing because we don't want to revive inflation.
Speaker 3: Kathy, thanks so much for joining us. Really appreciate getting
Speaker 3: a few minutes of your time. Kathy Bastoncik. She is
Speaker 3: the chief economist at Nationwide.
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Speaker 3: My question simply is do we trust any of the
Speaker 3: polls here? I can't, you know, I don't know. Sometimes
Speaker 3: they tell us the last election they were pretty accurate
Speaker 3: as it relates to the popular vote, but I don't know.
Speaker 3: I just think back to all the other elections. I
Speaker 3: think about Brexit, how bad they were on that one.
Speaker 3: Henrietta Tres she does this kind of stuff for a
Speaker 3: Living Change the manager partner in Vada Partners, Henrietta, Are
Speaker 3: there any polls that you look at that you feel
Speaker 3: like are maybe more representative and than others and kind
Speaker 3: of what are they telling you these days?
Speaker 6: Great question, Thanks.
Speaker 7: I actually really enjoy the fact that we are in
Speaker 7: the early voting process already, so now we can start
Speaker 7: to move or at least add on to our data
Speaker 7: sets by incorporating the early voting data as opposed to
Speaker 7: just the polling. So that's informative and helpful. It's not
Speaker 7: for the faint of heart. It is worse than day trading.
Speaker 7: You get these huge baskets of data that swing the
Speaker 7: vote totals by these massive margins every single night.
Speaker 6: But nonetheless, if you're really digging into.
Speaker 7: The weeds, you can start to watch early polling data,
Speaker 7: which is very exciting and right now. Effectively, what I
Speaker 7: would say is pay attention to the really great poles
Speaker 7: that are done by you know, tried and tested pollsters.
Speaker 7: So the New York Times swing state poles are particularly valuable,
Speaker 7: and then all the Bloomberg Morning Console pole, which is
Speaker 7: more frequent, is very valuable.
Speaker 6: Stick to the big ones.
Speaker 7: There is a flood of poll right now that is
Speaker 7: coming from the campaigns themselves, and those tend to have
Speaker 7: pretty stark biases three or four points in favor of.
Speaker 6: Whichever candidate right now.
Speaker 7: A number of those like Atlas, Rescues and Trafalgar are
Speaker 7: coming from Republican outlets, So you're going to see a
Speaker 7: republic event, which is what the pools are showing you
Speaker 7: right now.
Speaker 5: Well, speaking of bias, the audience knows I bring my
Speaker 5: North Carolina bias to the show when I fill in.
Speaker 5: And here's a number that stood out to me. One million,
Speaker 5: eighty one hundred and twenty three. That's the number of
Speaker 5: early votes we've seen cast in just four days, and
Speaker 5: this is a state of about ten point five million.
Speaker 3: People.
Speaker 5: Talk a bit about early voting and if this seems
Speaker 5: like an outsize level of enthusiasm so far, sort of
Speaker 5: what we know just a few days in for how
Speaker 5: many people are voting early, and what that says perhaps
Speaker 5: about the trajector here going to election day on the fifth.
Speaker 7: It's really exciting, and congratulations on having North Carolina on
Speaker 7: your radar. And I'm sure you have friends and family
Speaker 7: that are in the area that you're getting feedback from
Speaker 7: in real time.
Speaker 6: And anecdotal stuff.
Speaker 7: North Carolina and Georgia are breaking records for turnout. I
Speaker 7: would say probably the main takeaway for me now is
Speaker 7: that Republican voters are voting early in much greater frequency
Speaker 7: than they have in the past, and about double the
Speaker 7: rate of Democrats. So that's the case in Nevada, for example,
Speaker 7: which I was just spending some time with this morning,
Speaker 7: and effectively what's happening is Republican voters have been very
Speaker 7: exposed to this idea of an.
Speaker 6: Election that may be stolen and what have you.
Speaker 7: The Republican governors in those states and Republican operatives like
Speaker 7: North Carolina and Georgia in Nevada have been spending millions
Speaker 7: of dollars trying to encourage their voters to come to
Speaker 7: the polls early, and that is.
Speaker 6: Really panning out.
Speaker 7: So you're seeing these substantial increases in Republican voters who
Speaker 7: usually vote on election day coming to vote early, and
Speaker 7: that's I think a main driver of that record turnout number.
Speaker 3: Henry Henrietta, what do we know about I guess the
Speaker 3: down ballot situation for some of these key states, key seats.
Speaker 3: What are we hearing and how do you expect that
Speaker 3: to play.
Speaker 7: Out down ballot's really still moving very substantially for the
Speaker 7: entire year. As we've discussed in the past, Democratic candidates
Speaker 7: in the Senate seats like Ohio, Pennsylvania, Nevada, Arizona, Michigan, Wisconsin,
Speaker 7: et cetera, they've all been leading the top of the
Speaker 7: Democratic ticket, whether that's Kamala Harris or Joe Biden. Throughout
Speaker 7: the year, they've been pulling ahead five, six, ten points.
Speaker 7: As the final voters decide which direction they're going to go,
Speaker 7: the delta between Democratic senators and Republican Senate candidates has
Speaker 7: dropped substantially, and now voters are going to the direction
Speaker 7: that they have since twenty sixteen, which is they're going
Speaker 7: to vote party line down the ballot. So what we're
Speaker 7: starting to see is material tightness for the Democratic candidates
Speaker 7: in Pennsylvania. We're starting to see that tighten up in
Speaker 7: a state like Arizona and Nevada where the Democrat is
Speaker 7: still comfortably ahead, but the Republican under or challenger is
Speaker 7: starting to move a little bit further up in the
Speaker 7: polls as voters decide which direction they're going to go.
Speaker 7: At the top of the ticket, Kamala Harris Donald Trump.
Speaker 7: So we're seeing that the races are really tight. My expectation,
Speaker 7: with ninety percent odds is that Republicans are going to
Speaker 7: control the Senate next year, and that's mostly a virtue
Speaker 7: and a factor of Montana. In Montana, Donald Trump is
Speaker 7: on track to win by twenty one points, and that's
Speaker 7: a bridge too far for any Democratic incumbent to supersed
Speaker 7: Usually a down ballot senator can outrun the top of
Speaker 7: the ticket by about four or five points. But for
Speaker 7: John Tester, the Senator from Montana, he's underwater now already
Speaker 7: against his Republican challenger, and then he's underwater by about
Speaker 7: fifteen to seventeen points against Donald Trump at the Republican
Speaker 7: top of the ticket versus the Democratic ticket. So my expectation,
Speaker 7: almost regardless of how the swing states go, is that
Speaker 7: Republicans will control the Senate next year.
Speaker 5: Henria, let's talk a bit about Elon Musk. He spent
Speaker 5: his college days in Pennsylvania. He's back in the state
Speaker 5: spending a lot of money, and the thing that's getting
Speaker 5: a lot of attention this morning is his that's almost
Speaker 5: like a sweepstakes. If you sign his pledge here to
Speaker 5: support the First Amendment and the Second Amendment. You're in
Speaker 5: the running to win a million dollars a day. My
Speaker 5: eyebrow is raised as a result of seeing that, wondering
Speaker 5: if that's legal. I gather there's some interest on the
Speaker 5: Democratic side and getting law enforcement to look into what
Speaker 5: he's pledging to do.
Speaker 3: There.
Speaker 5: Talk a bit about that scheme, if you would, what
Speaker 5: you make of it, but then more broadly, sort of
Speaker 5: how he's changing or trying to change the ground game
Speaker 5: in Pennsylvania.
Speaker 6: Yeah, a couple of really good points here.
Speaker 7: First, it's illegal to buy votes, and so what Elon
Speaker 7: Musk is doing is he's buying signatures. He's trying to
Speaker 7: get you to sign up to support the First and
Speaker 7: second Amendment.
Speaker 6: He's also trying to get you to sign up to
Speaker 6: register to vote.
Speaker 7: That is a technicality that is different than actually buying
Speaker 7: your vote on election day, So he's circumventing that part
Speaker 7: of election law.
Speaker 6: Democrats are of course screaming.
Speaker 7: About it because it's designed with a monetary value behind
Speaker 7: it and it's about voting, so they're trying to get
Speaker 7: the Elections Commission involved. But that is the way that
Speaker 7: he asides stepping that issue. I think you're seeing as
Speaker 7: a general strategy from the Republican camp from Donald Trump
Speaker 7: is to farm out a lot of the campaign to
Speaker 7: third parties. So whether that's trying to have a third
Speaker 7: party boots on the ground program that will get you
Speaker 7: volunteers and door knockers in an individual state, or in
Speaker 7: the case of Elon Musk here with trying to buy
Speaker 7: signatures to get registered to vote, or in the case
Speaker 7: of even the predictive markets you've seen that on poly Market,
Speaker 7: for example, with this sharp uptick from an estimated four
Speaker 7: accounts driving the odds up to sixty one percent as
Speaker 7: of this morning that Trump will win. This is all
Speaker 7: sort of third party designed to influence voter perception in
Speaker 7: the final days of the campaign, and you still have
Speaker 7: about twenty four percent of the individual voter base who's
Speaker 7: undecided about which direction they want to go. What they're
Speaker 7: trying to do is influence the idea of where momentum
Speaker 7: is because voters like to vote for the winner. Trying
Speaker 7: to give this projection in this image of winning, and
Speaker 7: I think that's a big part of what the Elon
Speaker 7: Musk campaign is all about.
Speaker 3: So Elon Musk for former President Trump, maybe a mark
Speaker 3: Cuban for Vice President Harris to these types of celebrity
Speaker 3: supporters that they mean anything at the end of the day.
Speaker 7: I think what Republicans are trying to do specifically is
Speaker 7: turn out very keyed in media, attentive audiences and the
Speaker 7: young male demographics. So for this cohort, it very much
Speaker 7: could take hold that unfortunately has yet to be proven.
Speaker 7: I mentioned earlier that a lot of the voters who
Speaker 7: are coming out for the Republican Party right now used
Speaker 7: to vote on election day, and now they're voting early.
Speaker 7: What's happening is you're actually not seeing new voter turnout.
Speaker 7: You're cannibalizing your election day vote. So there's a big
Speaker 7: to do about a blue wall going into election day
Speaker 7: that's overwhelmed by a red wave on election Day.
Speaker 6: That was the trajectory we saw in twenty twenty.
Speaker 7: Donald Trump has talked a lot about that in the past,
Speaker 7: sort of thisocratic blue firewall. What Republicans are trying to
Speaker 7: do with this media strategy and this outreach to young,
Speaker 7: very online mail voters is get them to come out
Speaker 7: and vote for Donald Trump. What we're seeing so far
Speaker 7: is that very enthusiastic repeat Republican voters.
Speaker 6: Trump supporters are very galvanized this year.
Speaker 7: They're extraordinarily enthusiastic about voting for Trump, and they're.
Speaker 6: Turning out early.
Speaker 7: So it's not that we're seeing a new influx of
Speaker 7: voters thus far. There has been strong voter registration from
Speaker 7: Republicans in the last four years, but that's not what
Speaker 7: we're seeing in the early returns thus far. Again, as
Speaker 7: I said in the beginning, this data swings a lot,
Speaker 7: but right now it's all election day voters that are
Speaker 7: pulling forward, not new voters coming into the Republican poult.
Speaker 3: All right, Henrietta Trez nobody better.
Speaker 5: Always great to speak with you.
Speaker 3: Always good on that one, Henrietta Trice, Thank you so
Speaker 3: much again for your time. Henrietta is a managing partner
Speaker 3: at Veda Partners. Given us the latest breakdown of a
Speaker 3: fluid situation, again fifteen days away from election day.
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Speaker 3: I'm sandwich between two Carolina people. David Gerr, who grew
Speaker 3: up at North Carolina Chapel Hill and at Chapel Hill,
Speaker 3: she's also the chief market strategist at Ridolt's Wealth Management. So, Kelly,
Speaker 3: I mean, I've got a stock market. I'm not jumping
Speaker 3: off yet. I mean should I be jumping off here?
Speaker 3: I'm sticking with it.
Speaker 8: Well, the economy looks okay, so I don't think you
Speaker 8: should be jumping off and better yet, expectations are so
Speaker 8: low that I think it could lead to more of
Speaker 8: a rally in the future. Of course, everybody's nervous about election,
Speaker 8: the election coming up, and you know we're seeing some
Speaker 8: premium in the Vics and in the ten year because
Speaker 8: of that. But at the same time, I mean, what
Speaker 8: post election rallies are quite typical. We're heading into an
Speaker 8: earning season where you know, estimates have been cut way
Speaker 8: too much, and up until a few weeks ago, everybody
Speaker 8: thought we were heading for a recession, and it turns
Speaker 8: out maybe we're not. So it's all about.
Speaker 3: Expectations early days.
Speaker 5: Yet in this earning season, I GUS one hundred and
Speaker 5: thirteen companies reporting this week what have you been able
Speaker 5: to divine from what we've gotten thus far from the
Speaker 5: financials and others, and sort of what are you looking
Speaker 5: for as we get kind of more fully underway in
Speaker 5: the reporting period.
Speaker 8: Well, obviously, earning estimates are way too low on the
Speaker 8: revenue side, on the earning side as well. That's why
Speaker 8: you're seeing about an eighty percent beat rate and why
Speaker 8: you're seeing stocks react really well when you know companies
Speaker 8: come out with these, you know, not impressive results, but
Speaker 8: at least they kind of hurdle the low bar. I
Speaker 8: really like the management commentary that we've heard so far.
Speaker 8: I feel encouraged by the bank commentary around the economy,
Speaker 8: around the consumer that we've heard. You know, I'm more macro,
Speaker 8: so I don't look as much at individual companies, But
Speaker 8: so far, so good. I mean, that beat rate is strong.
Speaker 3: Valuation. What are the concerns, if any here for you
Speaker 3: for valuation for this market?
Speaker 8: Yeah, well, I think valuation is a distraction for people.
Speaker 8: So obviously the S and P valuation is quite high,
Speaker 8: but when you take out tech, the smp sits around
Speaker 8: like a nineteen forward pe and that's actually quite low.
Speaker 8: I mean, if you think about the average for that
Speaker 8: is around seventeen historically. So what I'm trying to say
Speaker 8: is that there are a lot of opportunities in this
Speaker 8: market if you're willing to look for them. Valuation isn't
Speaker 8: a concern for most stocks. You just have that influence
Speaker 8: from big tech just kind of clouding the valuation picture
Speaker 8: that you're seeing for the overall SMP.
Speaker 5: So if I'm looking for them, where would you guide
Speaker 5: me or where would you recommend that I go? Maybe
Speaker 5: kind of unloved places that might be overlooked.
Speaker 8: Well, we've been talking about the S and P. I'm
Speaker 8: going to look outside the SMP now, I think you
Speaker 8: have to look at small and mid caps, especially if
Speaker 8: we think the economy can survive these high interest rates.
Speaker 8: I mean, small caps were a rate story, but they
Speaker 8: need a strong or even an okay economy to really
Speaker 8: thrive in this environment. I mean, normally we see small
Speaker 8: caps outperform in the first legs of able market. We
Speaker 8: haven't seen it this time around. It's because the FED
Speaker 8: has been restricting the bowl, you know, kind of depriving
Speaker 8: it of oxygen through higher interest rates. So small apps, midcaps,
Speaker 8: I think great sensitive sectors are dealing with the same
Speaker 8: fate right now. You know, I think cyclicals look interesting,
Speaker 8: but I'm not as excited to jump into them because
Speaker 8: we've only seen one month of relatively okay jobs data sectors.
Speaker 3: Are there sectors that screen well for you guys these days?
Speaker 8: Well, we like looking at value over at rid hoolets.
Speaker 8: I mean you have to remember long term clients, trying
Speaker 8: to get them from point A to point B. I
Speaker 8: think value in general is really interesting right now. I
Speaker 8: think we see some value in real estate and consumer
Speaker 8: staples again in those rate sensitive sectors. See a lot
Speaker 8: of value in small caps. Like I mentioned to David,
Speaker 8: I mean overall, just look at the unloved sectors in
Speaker 8: this bowl market. What hasn't performed well? Rotate there.
Speaker 5: I'm very cleo asking everybody about this, just sort of
Speaker 5: how the role of the FED is sort of dovetailing
Speaker 5: with what you're doing. And so it just strikes me
Speaker 5: as you kind of look ahead to the election and
Speaker 5: beyond this kind of monumental uncertainty, how do you see
Speaker 5: around that? How does the FED see around that?
Speaker 2: Again?
Speaker 5: I bring this up over and over again today. It's
Speaker 5: like how many FED speakers or speaking I remember we
Speaker 5: heard from Austin Golesby a couple of weeks ago, saying
Speaker 5: he loves, he loves getting all those perspectives. He thinks
Speaker 5: it's valuable. How are you able to sort of divine
Speaker 5: any sort of sense of direction from from what all
Speaker 5: these folks are saying and what is it telling you
Speaker 5: if you are able to.
Speaker 8: Well, our clients are lucky they have me. I'm the
Speaker 8: one that's stressed.
Speaker 3: About over the lie.
Speaker 5: You have to figure it out.
Speaker 8: Trying to put all the tea leaves together, but ultimately
Speaker 8: reminding people that these headlines these FED speakers don't probably
Speaker 8: won't push you off of your financial goals. Of course,
Speaker 8: the FED and what the FED does is important, but
Speaker 8: what you're hearing from Goalsby and no offense to Golesby,
Speaker 8: I love Goalsby, but what you're hearing from these FED
Speaker 8: speakers ultimately is noise.
Speaker 2: You know.
Speaker 8: Of course FED policy is important, but right now it
Speaker 8: looks like the Fed is cutting grapes gradually. I think
Speaker 8: they have an argument to cut to neutral at the moment,
Speaker 8: especially if we see job market data, you know, kind
Speaker 8: of addling along like we've seen for the past few
Speaker 8: months outside of September, and you know, a gradual cutting
Speaker 8: is a really good background for the stock market, but
Speaker 8: it also means that you probably need to lock in
Speaker 8: rates and prepare for a potential crisis, you know, take
Speaker 8: advantage of where we are now.
Speaker 3: Cally, I know you mentioned rid Holts Wealth Management. You
Speaker 3: guys think longer term. We've certainly heard that from red
Speaker 3: Holts himself. How do you guys think about stocks versus bonds,
Speaker 3: maybe even alternatives for a typical Redolts Wealth Management client?
Speaker 8: Well, I mean we offer I think six or seven
Speaker 8: different portfolios, different stock and bond allocations. That ultimately matters
Speaker 8: most for the client in their personal situation. Again, right now,
Speaker 8: with bonds, we're telling clients to think about locking in rates.
Speaker 8: We don't think they'll stay here for very long on
Speaker 8: the stock market. I mean we obviously we think you
Speaker 8: need to be invested in risk of your assets to
Speaker 8: reach certain financial goals. And you know, depending on where
Speaker 8: you are, if you're an accumulator, if you're you know,
Speaker 8: pulling more income from your portfolio, that's going to change
Speaker 8: the allocation you're looking at. But right now, we still
Speaker 8: think the stock market is quite attractive. We always remind
Speaker 8: people it's expensive to miss a bowl more so, you know,
Speaker 8: the risk of sitting out most of the time is
Speaker 8: bigger than the risk of potentially buying at a top.
Speaker 8: You know, just make sure that you have that cushion
Speaker 8: in your portfolio, because we all have emotions, we're all human,
Speaker 8: you know, we need a little bit of that protection
Speaker 8: if we do see a bigger sell off.
Speaker 5: Could you give us some insight into those conversations, because,
Speaker 5: as you say, it's costly to miss out, but you
Speaker 5: look at how much money is sitting on the sidelines.
Speaker 5: You're trillions of dollars on the sidelines, and so much
Speaker 5: in money market funds, so much in bonds. How do
Speaker 5: you compel people or what are the conversations like as
Speaker 5: you're trying to convince people that there is still opportunity
Speaker 5: in a moment to get into equities.
Speaker 8: Well, there's a lot of talk around big tech. I mean,
Speaker 8: that was more of the talk in the first half
Speaker 8: of the year. You know, why are so few stocks
Speaker 8: driving those market higher? You know, obviously we have an
Speaker 8: e toward value. So that was a harder conversation to
Speaker 8: have with clients, but ultimately we reminded them that, you know,
Speaker 8: over time, there's this area of stasis, and the market
Speaker 8: tends to go there. You just have to, you know,
Speaker 8: kind of wait it out and be prepared for a
Speaker 8: bunch of different scenarios, and that actually worked out really well.
Speaker 8: Over the past few months. We're seeing, you know, as
Speaker 8: the Fed's cut rates, we're seeing more money of course
Speaker 8: go to those value oriented stocks. But on the whole,
Speaker 8: I agree with you, there's still a lot of cash
Speaker 8: on the sidelines. I don't think it's a positive catalyst
Speaker 8: in the next three to six months. I think there's
Speaker 8: a lot of inertia there. But that's something something to consider.
Speaker 8: I mean, this bull market has grown on doubt and skepticism,
Speaker 8: and believe it or not, that's a healthy environment for
Speaker 8: higher prices.
Speaker 3: I'm sure your clients are calling up all the time
Speaker 3: asking about the election and what they should do. I mean,
Speaker 3: what do you try to tell.
Speaker 8: Them, Well, politics don't matter if your portfolio okay, bar none.
Speaker 8: There are a few caveats there. I think they matter
Speaker 8: for your financial situation, especially with the tax cuts and
Speaker 8: Jobs Act, certain provisions they're expiring at the end of
Speaker 8: twenty twenty five. So that's mostly what we've been talking
Speaker 8: to clients about. I mean, you need to plan now
Speaker 8: for any changes that could happen in the next you know,
Speaker 8: several months. But on the whole, we we remind our
Speaker 8: clients who are more long term that, you know, it's
Speaker 8: one person can't control the fifty seven trillion dollar stock market,
Speaker 8: maybe j Powell, but you know, I'm not even gonna
Speaker 8: go there for him. You know, trying to buy or
Speaker 8: sell stocks depending on who's taking office is usually a fool's.
Speaker 5: Errand can we get a little anecdotal sense from you,
Speaker 5: You a North Carolinian like myself for like what this election,
Speaker 5: what this part of the campaign cycle has been, Like,
Speaker 5: how inundated are you just as a citizen of that state?
Speaker 5: And what's the what is the electoral atmosphere?
Speaker 7: Like?
Speaker 8: Even better, I'm a resident of Mecklenburg County, which is
Speaker 8: one of the most important counties in North Carolina. I
Speaker 8: mean there's a lot of noise, a lot of signs.
Speaker 8: I mean obviously a lot of conversation I can't really
Speaker 8: get into. You know, I'm not a polster right now,
Speaker 8: I'm watching the polls nervously like everybody else, But just
Speaker 8: know that people are paying attention, and I think that
Speaker 8: there's a lot of energy around both sides.
Speaker 3: Kelly, thanks so much for joining us. Always great to
Speaker 3: see you. Calli Cox's chief market strategist for Ritholtz Wealth Management.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: All right, folks, you dentely look at the front pages
Speaker 3: around the world. Lisa mitteo newspapers. What do you got
Speaker 3: for us today?
Speaker 1: All right, we're just talking about elections. So I want
Speaker 1: to get to this reality for the election workers.
Speaker 3: What they're living in.
Speaker 1: This is Arizona, Macopa County. It's one of the most
Speaker 1: populous counties in Arizona. They're reporting that some of the
Speaker 1: workers you have buildings that are been added, metal detectors,
Speaker 1: arm guards, but there's also police, snipers, drone patrols will
Speaker 1: be on hand. This is for election day. Election workers
Speaker 1: going through active shooter drills. So this is like a
Speaker 1: whole new reality. A lot of these workers are living
Speaker 1: through a lot of them volunteers too. On top of it,
Speaker 1: so a lot of them are saying, some are scared
Speaker 1: to come in. But why this area of Arizona, Well,
Speaker 1: you know, it's sparked by years Donald Trump's false claims
Speaker 1: twenty twenty election was stolen, so he has told his
Speaker 1: supporters it could happen again. So now you have this
Speaker 1: whole entire security going on now in order to protect
Speaker 1: a lot of these workers.
Speaker 3: It's it's it's a new reality. In Colorado. Death threats
Speaker 3: from election deniers have led some county clerks and election
Speaker 3: officials to bulletproof bulletproof vests on hand, so you get that.
Speaker 1: Yeah, so it's not just Arizona, it's like it's nationwide.
Speaker 1: I mean, they're stockpiling narcan because if you remember, they
Speaker 1: received ballad En bulps last year that has the white
Speaker 1: powder with the traces of fental in it. So just
Speaker 1: a big like overall look at the security, think.
Speaker 5: About like will will this continue? Obviously we saw what
Speaker 5: happened last time and that's what it's informed this time.
Speaker 5: But as you mentioned, so many people doing this on
Speaker 5: a voluntary basis or taking these jobs apart time. One
Speaker 5: wonders if the hassle of doing this and the fears
Speaker 5: associated with doing it are going to keep people from
Speaker 5: signing up in the field.
Speaker 3: The hanging chad seems so quaint. Now no, yes, well
Speaker 3: you got it, okay.
Speaker 1: So Business I spoke at labor experts. They're looking to see,
Speaker 1: because it's this whole battle back and forth, is the
Speaker 1: college degree still a top priority for employers. So Business
Speaker 1: Insider they spoke with a couple and they say the
Speaker 1: employers they might no longer require a degree for certain roles,
Speaker 1: but those doing the hiring still care whether an applicant
Speaker 1: has one. So there's been different types of research that
Speaker 1: has been done. Some consulting firms say that it shows
Speaker 1: hiring for skills is five times more predictive of how
Speaker 1: someone performs on a job than hiring based on just education.
Speaker 1: But they also say that those hired based on their
Speaker 1: skills rather than education, tend to stay with an employer longer.
Speaker 1: I don't know if it's that whole thing of just
Speaker 1: you know, being happy that you've kind of been brought
Speaker 1: onto this company because you don't have the degree. But
Speaker 1: those are just some of the things that they're saying.
Speaker 1: Whether this degree is still told just before I drive
Speaker 1: them up and down the Jersey Shore.
Speaker 3: Forget about the big monster houses on the beach. That's
Speaker 3: all the Wall Street folks that tech whoever those people are.
Speaker 3: How about everybody on the Bay side there are two
Speaker 3: million dollar homes. There's tens of thousands of them just
Speaker 3: on the Jersey Shore. Forget about the rest of the world.
Speaker 3: And the each have a like five hundred thousand dollars
Speaker 3: boat moored in the back. Who are those people? Where
Speaker 3: did they come from? And what I think they are
Speaker 3: is as I drive around, I think you're just small
Speaker 3: business owners and they just created this wealth and that's it.
Speaker 3: I mean. And there's jillions of them out there, and
Speaker 3: that's I think a lot of them are going to be,
Speaker 3: you know, coming generations from from the trades. Yeah, and
Speaker 3: they don't have any college debt or any of that
Speaker 3: kind of stuff. You just wonder where all that wealth
Speaker 3: comes from. And it's just small business, I think in
Speaker 3: this country.
Speaker 1: And then we just had that story not too long
Speaker 1: ago that a lot of private equity pouring money into
Speaker 1: the trades, like buying out a lot of these hvac
Speaker 1: and plumbers and all that who are now becoming millionaire.
Speaker 3: So there you go, all right, this is this next
Speaker 3: article is not what I was expecting. Yeah, okay, sandwich generation.
Speaker 1: Sandwich generation.
Speaker 3: I hadn't heard that term before, so maybe I'm out
Speaker 3: of low. I don't know. But those are stuff.
Speaker 1: Between caring for the old, their older parents, and they
Speaker 1: have younger kids. And I'm talking younger because a lot
Speaker 1: of these who this is these are millennials who are
Speaker 1: now reached that midlife who had kids later in life,
Speaker 1: you know, so now they have newborns, but yet they
Speaker 1: have parents who are eighty plus.
Speaker 3: They need care, need care.
Speaker 1: So now it's this whole struggle of can they afford
Speaker 1: one daycare and then two, you know, to pay for
Speaker 1: these aging parents who may not have prepared for staying
Speaker 1: alive this much longer, and elder care is.
Speaker 3: So so expensive.
Speaker 5: Yeah, eleven million people in this boat in this country,
Speaker 5: which is you know, a sizeable chunk, right, that's crazy.
Speaker 3: Yeah, it is.
Speaker 1: And then it's taking away from their retirement because they're
Speaker 1: putting all their money into you know, the daycare and
Speaker 1: the elder.
Speaker 3: Care, right. And then and some of them have to
Speaker 3: leave the workforce because they have to take care of
Speaker 3: both parts of this sandwich, if you will.
Speaker 1: And they're saying that's it. That's a problem because most
Speaker 1: of those people are women. They're saying, that's a massive,
Speaker 1: massive risk for the economy if a lot of women
Speaker 1: start to And.
Speaker 5: Staffing is still a huge issue too, just because you
Speaker 5: can't get people to do this kind of work. So
Speaker 5: I think a lot of people are doing it by default.
Speaker 5: You know, they want to get care for their aging
Speaker 5: parents and they can't do just thrown a people doing
Speaker 5: those doing those jobs.
Speaker 1: That's true, that's true. Now, I know you're happy about
Speaker 1: the New York Clery right basking in their title. Yeah,
Speaker 1: the sweatshirt on Friday, Okay, but the league actually said
Speaker 1: to lose millions this season. Investors are growing and patient.
Speaker 1: This was in the New York Post, it was exclusive
Speaker 1: with them. They're saying the NBA, I didn't realize this,
Speaker 1: owns nearly sixty percent of the WNBA. So sources are
Speaker 1: telling the Post that NBA team owners they've invested hundreds
Speaker 1: of millions of dollars in the WNBA since they formed.
Speaker 1: But NBA executives are saying that the WNBA will lose
Speaker 1: forty million dollars. But they're saying that, you know, starting
Speaker 1: in twenty twenty six, they'll get that two point two
Speaker 1: billion over eleven years to part of this new basketball
Speaker 1: media contract.
Speaker 3: Right, so they have the new.
Speaker 1: Media deals, but still then they have the contracts are up.
Speaker 1: So now players are going to be starting to get
Speaker 1: paid more as should. But that's another side of it
Speaker 1: to think of. But I didn't realize it was. There
Speaker 1: was so much behind it. It's kind of confusing to me, just.
Speaker 5: The way that it's structured. Yeah, and there very few
Speaker 5: teams I think where they're kind of single owned, but
Speaker 5: the liberty are I think that it's owned by one
Speaker 5: family now. But it is kind of jarring to kind
Speaker 5: of look at the crowds that they were able to
Speaker 5: pull for the semifinals in the finals, especially, you know,
Speaker 5: filling up not completely but most of the Barkley Center
Speaker 5: last night, and the same out the Target Center in Minneapolis.
Speaker 5: It looks like there's momentum here, but it's still a
Speaker 5: financial challenge for a lot of.
Speaker 3: All comes down to the broadcasting right now. So if
Speaker 3: I were revising, if I were advising the teams, I
Speaker 3: would not sign a long term deal. I would sign
Speaker 3: a short term deal.
Speaker 2: And why is that?
Speaker 3: Because their rights are going up in value so dramatically
Speaker 3: that why lock yourself into a value today for eleven
Speaker 3: years when I think I can come back in three
Speaker 3: years of five years and negotiate a much higher rate.
Speaker 3: So I would go short term. I think they're making
Speaker 3: a mistake to lock in these higher rates, but I
Speaker 3: can see the incentive because that's a big jump from
Speaker 3: where they are now. But again, as you mentioned, the
Speaker 3: players are going to want to get theirs and they're expanding.
Speaker 5: I think they're gonna have three new teams in the
Speaker 5: next season as well, and they're going to go prolong.
Speaker 5: The finals are gonna do a seven game series next year,
Speaker 5: So they're playing this optimistically.
Speaker 3: Yeah, well, they're in a great spot. I think again,
Speaker 3: the value for most of professional sports is in the
Speaker 3: media rights. That's it counts for the vast majority of
Speaker 3: the value of these teams. I don't care if you're
Speaker 3: English Premier Soccer at the NFL, it's the media rights,
Speaker 3: and so you really have to focus on them.
Speaker 6: Now.
Speaker 3: They're getting a nice big jump here, but I would
Speaker 3: I think you've got the leverage to maybe do a
Speaker 3: little bit more. So all right, Lisa Mitello, thank you
Speaker 3: so much. That is our newspaper segment back by popular demand.
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