1 00:00:13,520 --> 00:00:16,520 Speaker 1: Hello, and welcome to What Goes Up, a Bloomberg weekly 2 00:00:16,600 --> 00:00:20,120 Speaker 1: Markets podcast. I'm Sarah Pantzak, a reporter on the Cross 3 00:00:20,160 --> 00:00:22,919 Speaker 1: Asset team, and I'm Mike Reagan, a senior editor on 4 00:00:22,960 --> 00:00:25,560 Speaker 1: the Markets team. This week on the show, we're still 5 00:00:25,600 --> 00:00:28,320 Speaker 1: catching our breath after what has felt like the busiest 6 00:00:28,480 --> 00:00:31,760 Speaker 1: week of the year. Seriously, First, the Fed cut rates 7 00:00:31,840 --> 00:00:34,680 Speaker 1: for the first time in a decade. Then Wednesday and 8 00:00:34,720 --> 00:00:38,520 Speaker 1: Thursday saw more trading volume midday than at any other 9 00:00:38,640 --> 00:00:43,160 Speaker 1: point in President Trump announced fresh tariffs, and on top 10 00:00:43,200 --> 00:00:45,839 Speaker 1: of all of that, it's been the most hectic period 11 00:00:45,880 --> 00:00:48,639 Speaker 1: of the second quarter earning season. Right. And if all 12 00:00:48,680 --> 00:00:51,960 Speaker 1: of that is not crazy enough, uh, don't worry. We 13 00:00:52,040 --> 00:00:55,120 Speaker 1: still will have our traditional the craziest thing I ever 14 00:00:55,160 --> 00:00:58,000 Speaker 1: saw in markets this week? And Sarah, as you know, 15 00:00:58,040 --> 00:01:01,160 Speaker 1: I get excited on podcast today, I'm especially excited today. 16 00:01:01,280 --> 00:01:03,800 Speaker 1: And you know why why we have a new hotline, 17 00:01:04,080 --> 00:01:06,679 Speaker 1: What goes Up Hotline. So if you saw something in 18 00:01:06,760 --> 00:01:10,600 Speaker 1: crazy in markets, please give us a ring and leave 19 00:01:10,640 --> 00:01:13,040 Speaker 1: a voicemail with what you saw. Sarah, I of course 20 00:01:13,080 --> 00:01:15,040 Speaker 1: forgot the number. Hopefully you have the number handing, Oh 21 00:01:15,120 --> 00:01:17,240 Speaker 1: have it on hand. I memorized it already it's six 22 00:01:17,400 --> 00:01:21,479 Speaker 1: or six three two four three four nine zero, So 23 00:01:21,720 --> 00:01:23,760 Speaker 1: feel free to give us a call, leave us a 24 00:01:23,840 --> 00:01:26,720 Speaker 1: voicemail of the craziest things that you guys have seen 25 00:01:26,760 --> 00:01:29,400 Speaker 1: in markets, and if it's good enough, maybe we will 26 00:01:29,480 --> 00:01:31,759 Speaker 1: even play it on the show. That's right, Well, two 27 00:01:31,800 --> 00:01:34,440 Speaker 1: things that are not crazy are two guests this week. 28 00:01:37,120 --> 00:01:40,080 Speaker 1: First guest is joining us from Footstee Russell. He's the 29 00:01:40,160 --> 00:01:44,000 Speaker 1: managing director of Global market Research, Alec Young. Welcome to 30 00:01:44,040 --> 00:01:46,520 Speaker 1: the show. A great to be here, guys, And also 31 00:01:46,640 --> 00:01:50,280 Speaker 1: joining us from Bloomberg Television. He's an achorman and a reporter. 32 00:01:50,840 --> 00:01:53,240 Speaker 1: Romaine Bostic and Sarah. I just want to paint a 33 00:01:53,240 --> 00:01:55,480 Speaker 1: picture for the listeners who don't watch TV. I think 34 00:01:55,640 --> 00:01:58,760 Speaker 1: Romaine is widely considered the best stress man on on Bloomberg, 35 00:01:59,280 --> 00:02:02,600 Speaker 1: no doubt. Actually like I try, I try. We don't 36 00:02:02,640 --> 00:02:05,080 Speaker 1: have a hotline on our show, though, I'm already to 37 00:02:05,440 --> 00:02:07,560 Speaker 1: you know, two minutes into this podcast and I'm already jealous. 38 00:02:07,560 --> 00:02:14,120 Speaker 1: You're gonna have a bigger budget, not a bigger clothing budget. 39 00:02:14,160 --> 00:02:16,520 Speaker 1: I'll tell you that a Romaine dresses like he belongs 40 00:02:16,520 --> 00:02:18,640 Speaker 1: on TV. I dressed like I should be selling TVs 41 00:02:18,680 --> 00:02:21,239 Speaker 1: down at the mall, you know, like, hey, how about 42 00:02:21,240 --> 00:02:25,440 Speaker 1: a six an zenith for you? Anyway, we got notes 43 00:02:25,480 --> 00:02:28,680 Speaker 1: from Alec and his people about, you know, some of 44 00:02:28,720 --> 00:02:32,560 Speaker 1: the research and stuff he's been up to recently. I 45 00:02:32,600 --> 00:02:34,359 Speaker 1: gotta say he really nailed it. I gotta give you 46 00:02:34,360 --> 00:02:36,079 Speaker 1: a round of appause, Alec. I just want to read 47 00:02:36,120 --> 00:02:38,560 Speaker 1: a couple of the talking points from from your notes here. Now, 48 00:02:38,680 --> 00:02:41,799 Speaker 1: remember this is a week where the Fed cut rates, 49 00:02:42,080 --> 00:02:47,400 Speaker 1: but uh, did not really signal a full on easing campaign. Uh. 50 00:02:47,440 --> 00:02:50,320 Speaker 1: You know, Powell referred to it as a mid cycle 51 00:02:50,360 --> 00:02:52,960 Speaker 1: adjustment kind of signaling maybe one or two cuts, not 52 00:02:53,040 --> 00:02:56,880 Speaker 1: a full blown easing campaign. That disappointed a lot of people. 53 00:02:57,080 --> 00:03:01,200 Speaker 1: The next day we got President up announcing new TIFFs. 54 00:03:01,480 --> 00:03:03,600 Speaker 1: Let me just read you some of the notes Alec 55 00:03:03,680 --> 00:03:08,000 Speaker 1: wrote before all this happened. Uh. One, don't confuse the 56 00:03:08,040 --> 00:03:12,040 Speaker 1: recent US China trade truths within all clear and clearly 57 00:03:12,040 --> 00:03:17,400 Speaker 1: it's not check. And also, markets maybe over extrapulating both 58 00:03:17,400 --> 00:03:19,320 Speaker 1: how much the Fed will ease and how much it 59 00:03:19,360 --> 00:03:23,800 Speaker 1: will help. Now they definitely over extrapolated how much power 60 00:03:23,880 --> 00:03:26,359 Speaker 1: is planning to ease. Now, the question is how much 61 00:03:26,360 --> 00:03:27,959 Speaker 1: will it really help? Is that sort of a top 62 00:03:28,000 --> 00:03:30,600 Speaker 1: of mind thing for you, Alec is you know, will 63 00:03:30,639 --> 00:03:35,000 Speaker 1: these race cuts really be what the market needs to see? 64 00:03:35,040 --> 00:03:37,640 Speaker 1: This data economic data firm up? Yeah. I mean I 65 00:03:37,680 --> 00:03:40,080 Speaker 1: think the markets have been such a one way bet 66 00:03:40,280 --> 00:03:43,960 Speaker 1: for for months, um really buoyed by this idea that 67 00:03:44,120 --> 00:03:47,280 Speaker 1: of the power put and fundamentals are a little bit shaky, 68 00:03:47,320 --> 00:03:49,520 Speaker 1: but it's okay. You know, the Fed's got our back 69 00:03:49,840 --> 00:03:52,200 Speaker 1: that you really have to scrutinize, you know, kid, the 70 00:03:52,200 --> 00:03:54,440 Speaker 1: market be over extrapolating things. And I think on a 71 00:03:54,480 --> 00:03:58,000 Speaker 1: couple of fronts, One, will the Fed just numerically cut 72 00:03:58,040 --> 00:04:00,720 Speaker 1: as much as expected? If we look at Fed fund futures, 73 00:04:00,760 --> 00:04:03,200 Speaker 1: they're still pricing in about one eight on the two 74 00:04:03,240 --> 00:04:06,320 Speaker 1: year note in a year versus there are the two 75 00:04:06,400 --> 00:04:08,280 Speaker 1: year notes at one a d excuse me, and the 76 00:04:08,280 --> 00:04:10,280 Speaker 1: Fed funds is two and a quarter. So the markets 77 00:04:10,320 --> 00:04:13,400 Speaker 1: pricing in about forty five basis points of additional easing 78 00:04:13,680 --> 00:04:16,040 Speaker 1: over the next year. So that's that's two more cuts. 79 00:04:16,080 --> 00:04:19,280 Speaker 1: And and I think Gairman Powell's statements were more like 80 00:04:19,600 --> 00:04:22,240 Speaker 1: we did an insurance cut, we're gonna watch. We're not 81 00:04:22,320 --> 00:04:25,200 Speaker 1: ruling out further cuts, but don't confuse this with you know, 82 00:04:25,600 --> 00:04:29,279 Speaker 1: a month after month rate cutting cycle, So the market 83 00:04:29,320 --> 00:04:31,039 Speaker 1: may have gotten a little ahead of not only the 84 00:04:31,080 --> 00:04:33,640 Speaker 1: amount of the cuts, but then, as you said, what's 85 00:04:33,680 --> 00:04:37,960 Speaker 1: the impact, because things like housing will respond very favorably 86 00:04:38,000 --> 00:04:41,240 Speaker 1: to lower rates, a lot of the traditional economic metrics will, 87 00:04:41,640 --> 00:04:45,400 Speaker 1: but a lack of capex due to trade related anxiety. 88 00:04:45,440 --> 00:04:48,600 Speaker 1: I'm not sure that that's the kind of metric you know, 89 00:04:48,880 --> 00:04:52,000 Speaker 1: um CEO CFO competence. I'm not sure that that's the 90 00:04:52,080 --> 00:04:55,960 Speaker 1: kind of metric that is as sensitive to modest reduction 91 00:04:56,040 --> 00:04:58,880 Speaker 1: in the FED funds rates. So, given how much markets 92 00:04:58,880 --> 00:05:01,800 Speaker 1: have run on the back of one positive catalyst, there's 93 00:05:01,920 --> 00:05:04,800 Speaker 1: quite a bit to lose if the markets maybe overshot 94 00:05:04,800 --> 00:05:07,560 Speaker 1: at skis a little bit on the positive impacts there, Alec, 95 00:05:07,600 --> 00:05:10,480 Speaker 1: you've also called this a quote unquote show me market. 96 00:05:11,120 --> 00:05:12,680 Speaker 1: Some of the latest data that we've got and has 97 00:05:12,760 --> 00:05:15,560 Speaker 1: been some of the I s M data which came in, 98 00:05:16,560 --> 00:05:19,600 Speaker 1: it wasn't It wasn't great by any means. Mis expectations 99 00:05:19,640 --> 00:05:23,200 Speaker 1: still not in contractionary territory prices paid or lower as 100 00:05:23,279 --> 00:05:25,520 Speaker 1: well at this point in time for it to be 101 00:05:25,640 --> 00:05:29,479 Speaker 1: a show me market, now that trade is back in 102 00:05:29,560 --> 00:05:31,839 Speaker 1: play and people are waiting for the Fed to ease. 103 00:05:32,400 --> 00:05:35,960 Speaker 1: Is it better if economic data is good but not 104 00:05:36,120 --> 00:05:39,120 Speaker 1: that good or at this point do you need a 105 00:05:39,160 --> 00:05:42,280 Speaker 1: little bit rougher rougher economic dad to come out. Yeah. 106 00:05:42,279 --> 00:05:45,000 Speaker 1: I think in the current macroeconomic environment, it is safe 107 00:05:45,040 --> 00:05:48,719 Speaker 1: to say that bad economic news may be interpreted in 108 00:05:48,760 --> 00:05:52,760 Speaker 1: a positive way by investors, given that, you know, additional 109 00:05:52,839 --> 00:05:56,360 Speaker 1: FED easing is so important to the macro backdrop right now. 110 00:05:56,600 --> 00:05:59,080 Speaker 1: We even saw that with the latest I S M report. 111 00:05:59,120 --> 00:06:01,880 Speaker 1: It was a little soft and stocks actually welcome that news, 112 00:06:02,000 --> 00:06:05,760 Speaker 1: so that we're in a very tricky environment right now. 113 00:06:05,839 --> 00:06:08,400 Speaker 1: I call it a show me market because we've run 114 00:06:08,480 --> 00:06:12,240 Speaker 1: up so much on hope versus actual you know, fundamental facts. 115 00:06:12,480 --> 00:06:16,839 Speaker 1: The global leading economic indicators are soft. Earnings growth. While 116 00:06:16,880 --> 00:06:19,120 Speaker 1: coming in better than expect it is still pretty weak. 117 00:06:19,160 --> 00:06:22,719 Speaker 1: It's only up low single digits year over year. Valuations 118 00:06:22,760 --> 00:06:26,320 Speaker 1: aren't through the roof, but we're about seventeen eighteen times 119 00:06:26,360 --> 00:06:29,760 Speaker 1: forward earnings, So you need to see investors want to 120 00:06:29,960 --> 00:06:33,919 Speaker 1: show me these great profits because on trailing earnings the 121 00:06:33,920 --> 00:06:36,880 Speaker 1: markets much more expensive. So um, I think we're in 122 00:06:36,920 --> 00:06:39,719 Speaker 1: that that show me phase. To really build on this rally, 123 00:06:39,800 --> 00:06:42,799 Speaker 1: we need to see that investors positive hopes are coming 124 00:06:42,839 --> 00:06:46,560 Speaker 1: to fruition that their their hopes are being fulfilled. Now, Romane, 125 00:06:46,600 --> 00:06:48,520 Speaker 1: you spend a good part of your day talking to 126 00:06:48,720 --> 00:06:52,640 Speaker 1: really smart investors, analysts, strategies. What is sort of the 127 00:06:53,880 --> 00:06:56,359 Speaker 1: consensus out there is what Alec is saying? Does that 128 00:06:56,480 --> 00:06:58,440 Speaker 1: ring true to to what a lot of the people 129 00:06:58,480 --> 00:07:00,360 Speaker 1: you're hearing from? You know, what is sort of the 130 00:07:00,839 --> 00:07:04,040 Speaker 1: what's the word on the street from Romans? Well, I 131 00:07:04,040 --> 00:07:06,240 Speaker 1: think a lot of people. I mean, the cut itself 132 00:07:06,440 --> 00:07:09,120 Speaker 1: wasn't really a disappointment. I think most people weren't really 133 00:07:09,160 --> 00:07:11,800 Speaker 1: expecting more than that. But I definitely think the communication 134 00:07:11,800 --> 00:07:15,240 Speaker 1: that we got during the press conference, Uh, you know, 135 00:07:15,280 --> 00:07:17,760 Speaker 1: it created a lot more confusion. Uh, there were a 136 00:07:17,760 --> 00:07:20,040 Speaker 1: lot of folks banking on this idea that we were 137 00:07:20,080 --> 00:07:22,200 Speaker 1: that this was more than an assurance cut that we 138 00:07:22,200 --> 00:07:25,600 Speaker 1: were embarking on, uh a little bit more of a prolonged, 139 00:07:25,720 --> 00:07:29,600 Speaker 1: if even short, but still prolonged easing cycle. Remember the 140 00:07:29,640 --> 00:07:32,320 Speaker 1: communication that we were getting out of FED members even 141 00:07:32,320 --> 00:07:36,640 Speaker 1: in July Bullard clarata or early July was pretty much 142 00:07:36,680 --> 00:07:38,880 Speaker 1: made it clear that we could potentially get, first of all, 143 00:07:38,920 --> 00:07:41,440 Speaker 1: more than twenty five basis points in one fell swoop 144 00:07:41,520 --> 00:07:42,880 Speaker 1: but that we were released going to get more than 145 00:07:42,880 --> 00:07:45,040 Speaker 1: twenty five basis points this year. So a lot of 146 00:07:45,080 --> 00:07:48,320 Speaker 1: people walked away from Wednesday's press conference with this sense 147 00:07:48,400 --> 00:07:50,520 Speaker 1: of or confusion, I should say, of whether we were 148 00:07:50,520 --> 00:07:53,320 Speaker 1: going to get maybe another twenty five basis points later 149 00:07:53,360 --> 00:07:55,760 Speaker 1: in this year. Something in the market is largely priced 150 00:07:55,760 --> 00:07:57,600 Speaker 1: in not only a twenty five, but really they've been 151 00:07:57,640 --> 00:08:00,400 Speaker 1: They were pricing in about thirty basis points uh prior 152 00:08:00,440 --> 00:08:02,920 Speaker 1: to the meeting, uh, and then once the meeting ended, 153 00:08:02,960 --> 00:08:05,120 Speaker 1: you kind of saw a lot of fluctuations as people 154 00:08:05,160 --> 00:08:07,120 Speaker 1: were trying to figure it out. I don't know if 155 00:08:07,160 --> 00:08:08,640 Speaker 1: and I want to go back to a point that 156 00:08:08,680 --> 00:08:10,680 Speaker 1: Alec made too about just sort of the impact of 157 00:08:10,720 --> 00:08:13,440 Speaker 1: the rate cut, because there was this sense to that, 158 00:08:13,920 --> 00:08:16,400 Speaker 1: what is Powell really trying to do here? If this 159 00:08:16,560 --> 00:08:21,320 Speaker 1: was about a reigniting inflation or reigniting inflation expectations, he 160 00:08:21,360 --> 00:08:23,720 Speaker 1: clearly failed on that level, at least in the short term. 161 00:08:23,920 --> 00:08:27,040 Speaker 1: If this is about sort of reigniting business confidence, which is, 162 00:08:27,280 --> 00:08:29,600 Speaker 1: let's face it, probably the weak spot of the economy 163 00:08:29,720 --> 00:08:33,240 Speaker 1: right now, what does twenty five basis points do for capex? 164 00:08:33,280 --> 00:08:35,360 Speaker 1: I mean, cost a capital hasn't been really an issue 165 00:08:35,520 --> 00:08:38,200 Speaker 1: for companies. This is a confidence game for companies right now, 166 00:08:38,360 --> 00:08:41,080 Speaker 1: and the confidence really has nothing to do with the FED. 167 00:08:41,120 --> 00:08:42,400 Speaker 1: It has to do with what's going on in the 168 00:08:42,440 --> 00:08:45,400 Speaker 1: White House. And I'm not sure that monetary policy can 169 00:08:45,440 --> 00:08:47,920 Speaker 1: fix that, you know, Alec. A lot of people are 170 00:08:48,120 --> 00:08:52,560 Speaker 1: clearly making the connection to the mid nineties, when the 171 00:08:52,640 --> 00:08:55,680 Speaker 1: mid cycle adjustments from the FED a few two or 172 00:08:55,720 --> 00:08:59,800 Speaker 1: three rate cuts to sort of, uh, you know, react 173 00:08:59,840 --> 00:09:02,720 Speaker 1: to the Asian financial crisis, long term capital management, that 174 00:09:02,760 --> 00:09:05,240 Speaker 1: type of thing. Do you see that parallel in this case? 175 00:09:05,280 --> 00:09:08,200 Speaker 1: I mean, is that a valid comparison to make? I think, 176 00:09:08,440 --> 00:09:10,959 Speaker 1: to really to know if if just one or two 177 00:09:10,960 --> 00:09:13,320 Speaker 1: insurance cuts is all we need, you kind of have 178 00:09:13,400 --> 00:09:15,199 Speaker 1: to have the answer to how does the whole trade 179 00:09:15,240 --> 00:09:19,080 Speaker 1: situation play out? How does the deterioration in Europe and China? 180 00:09:19,400 --> 00:09:21,640 Speaker 1: You know, is that about to bottom or is it 181 00:09:21,720 --> 00:09:24,760 Speaker 1: just sort of getting started. There's a lot of unknowns, 182 00:09:24,800 --> 00:09:27,920 Speaker 1: and I think, um, you know, sometimes people do a 183 00:09:27,960 --> 00:09:30,520 Speaker 1: few things when they read the FED tea leaves One 184 00:09:30,600 --> 00:09:33,240 Speaker 1: they I think, over extrapolate how much more the FED 185 00:09:33,320 --> 00:09:35,559 Speaker 1: knows than the rest of us. Not to take anything 186 00:09:35,600 --> 00:09:37,200 Speaker 1: away from them, but at the end of the day. 187 00:09:37,040 --> 00:09:39,680 Speaker 1: They all have their Bloomberg terminals and they're doing what 188 00:09:39,760 --> 00:09:42,560 Speaker 1: a lot of professional investors that scrutinize them so closely 189 00:09:42,559 --> 00:09:47,800 Speaker 1: and reporters are doing so. You know, they're not omniscient scions, right, UM. 190 00:09:47,840 --> 00:09:50,440 Speaker 1: And the second thing is, I think, unfortunately Chairman Powell 191 00:09:50,559 --> 00:09:54,680 Speaker 1: seems to be maybe overly sensitive to the markets when 192 00:09:54,679 --> 00:09:57,360 Speaker 1: the markets were very volatile. The more volatile the markets are, 193 00:09:57,640 --> 00:10:00,840 Speaker 1: the more devishes commentary just in currently seems to be 194 00:10:01,120 --> 00:10:03,520 Speaker 1: markets had recovered. To get him in front of the microphone, 195 00:10:03,679 --> 00:10:05,880 Speaker 1: he doesn't sound as dublished. I think that seems to 196 00:10:05,920 --> 00:10:09,160 Speaker 1: be the pattern. He's he's very he he's not a 197 00:10:09,760 --> 00:10:13,520 Speaker 1: PhD economis. He comes from a market background, very popular 198 00:10:13,640 --> 00:10:16,080 Speaker 1: in the in the financial community. I think, more in 199 00:10:16,160 --> 00:10:19,600 Speaker 1: tune with market dynamics than maybe some of his predecessors, 200 00:10:19,640 --> 00:10:23,360 Speaker 1: less of a formally trained economist. UM. So I'm very 201 00:10:23,400 --> 00:10:27,360 Speaker 1: confident that UM, if we need further insurance cuts, the 202 00:10:27,400 --> 00:10:31,000 Speaker 1: FED will be there to deliver them. The problem I 203 00:10:31,360 --> 00:10:33,880 Speaker 1: don't think. I think the market was getting comfortable today 204 00:10:33,880 --> 00:10:36,960 Speaker 1: with the idea that the UM, the FED is still 205 00:10:37,040 --> 00:10:39,960 Speaker 1: has their back, even though the communication post meeting could 206 00:10:39,960 --> 00:10:42,120 Speaker 1: have been a little bit better. The wild card here 207 00:10:42,240 --> 00:10:45,280 Speaker 1: is trade, which people thought was on the back burner. 208 00:10:45,320 --> 00:10:48,319 Speaker 1: They're continuing to talk no imminent breakthrough, but it's not. 209 00:10:48,760 --> 00:10:52,960 Speaker 1: It's not deteriorating. That's obviously changed. Um So, I think 210 00:10:53,040 --> 00:10:54,800 Speaker 1: I think it's really it's not so much on the 211 00:10:54,800 --> 00:10:57,760 Speaker 1: insurance side. It's on the growth side of the ledger 212 00:10:57,920 --> 00:11:00,440 Speaker 1: that investors are are struggling a little bit now. You know, 213 00:11:00,520 --> 00:11:02,720 Speaker 1: I wonder if you sort of put yourself in the 214 00:11:02,760 --> 00:11:07,760 Speaker 1: shoes of Jeromee pal Uh and even if you're thinking, well, 215 00:11:08,360 --> 00:11:11,360 Speaker 1: we really are going to do a full on easing campaign, 216 00:11:12,080 --> 00:11:15,360 Speaker 1: is there a danger in signaling that right away? I mean, 217 00:11:15,800 --> 00:11:16,920 Speaker 1: is it the type of thing if you have a 218 00:11:17,000 --> 00:11:19,079 Speaker 1: hungry kid in front of you and you're trying to 219 00:11:19,080 --> 00:11:21,040 Speaker 1: get them neath the their broccoli, you don't want to 220 00:11:21,120 --> 00:11:23,080 Speaker 1: let them know that there's ice cream coming up behind it, 221 00:11:23,160 --> 00:11:25,440 Speaker 1: right I mean? Is it is there a danger in 222 00:11:25,800 --> 00:11:28,080 Speaker 1: cutting a quarter point now and signaling more to come 223 00:11:28,080 --> 00:11:30,920 Speaker 1: where it's sort of differs that behavior that you're trying 224 00:11:30,960 --> 00:11:33,400 Speaker 1: to influence down the line. It can be self fulfilling, 225 00:11:33,440 --> 00:11:36,280 Speaker 1: and there's always that risk that the markets will think, well, 226 00:11:36,320 --> 00:11:38,480 Speaker 1: maybe the Fed knows something we don't. Maybe it's worse 227 00:11:38,480 --> 00:11:41,679 Speaker 1: than we thought. It can also you know, give false 228 00:11:41,679 --> 00:11:44,199 Speaker 1: incentives and get people to take you know, undue risk 229 00:11:44,280 --> 00:11:47,079 Speaker 1: in the market. So you know, there's no perfect answer. 230 00:11:47,360 --> 00:11:49,880 Speaker 1: But I think the bottom line is that for most 231 00:11:49,880 --> 00:11:52,200 Speaker 1: of this year, the trend and risk assets has been 232 00:11:52,320 --> 00:11:55,160 Speaker 1: up because the feeling has been that the Fed is 233 00:11:55,160 --> 00:11:58,040 Speaker 1: going to be very supportive. I think now the narrative 234 00:11:58,040 --> 00:12:01,520 Speaker 1: is shifting to growth risks. The focus is squarely on 235 00:12:01,679 --> 00:12:06,840 Speaker 1: US China trade. Both sides wanna save faced domestically. I 236 00:12:06,840 --> 00:12:09,480 Speaker 1: don't see China backing down from this latest news from 237 00:12:09,480 --> 00:12:11,960 Speaker 1: the President. So if we don't see that, if they 238 00:12:12,000 --> 00:12:15,200 Speaker 1: don't try to diffuse this, the next conclusion is, well, 239 00:12:15,240 --> 00:12:19,640 Speaker 1: maybe they do something confrontational. How would the markets take that. 240 00:12:19,720 --> 00:12:23,040 Speaker 1: I think, given the markets have really priced in global 241 00:12:23,080 --> 00:12:26,600 Speaker 1: growth is bottoming, trade will be favorably resolved largely because 242 00:12:26,640 --> 00:12:29,640 Speaker 1: of policy accommodation. I think that has to unwind a 243 00:12:29,640 --> 00:12:34,280 Speaker 1: little bit at the margin. Policy accommodation underwhelmed the little 244 00:12:34,320 --> 00:12:37,800 Speaker 1: The Feds a little less deverish than expected, admittedly from 245 00:12:37,800 --> 00:12:40,800 Speaker 1: a that's relative to very devish expectations, and on the 246 00:12:40,840 --> 00:12:43,560 Speaker 1: trade front, clearly things are a little worse than expected. 247 00:12:43,640 --> 00:12:46,840 Speaker 1: So it's sort of a double whammy for for risk assets, 248 00:12:46,880 --> 00:12:50,800 Speaker 1: whether it's equities, US are globally, probably more so globally, 249 00:12:50,840 --> 00:12:53,160 Speaker 1: a bigger negative globally where they have less of a 250 00:12:53,200 --> 00:12:56,680 Speaker 1: strong consumer to playoff. And for credit um, for high 251 00:12:56,720 --> 00:13:00,480 Speaker 1: things like high yield, it's really um. It's really an 252 00:13:00,559 --> 00:13:03,560 Speaker 1: incremental negative. Your insurance isn't as strong as you thought 253 00:13:03,559 --> 00:13:05,679 Speaker 1: it was going to be, and the risks the reason 254 00:13:05,720 --> 00:13:07,960 Speaker 1: you need that insurance is a little greater than you 255 00:13:07,960 --> 00:13:09,839 Speaker 1: thought it was gonna be. When we came into the 256 00:13:09,880 --> 00:13:12,480 Speaker 1: office Thursday morning, the probability of a rate cut for 257 00:13:12,520 --> 00:13:17,360 Speaker 1: September was around Then President Trump dropped the tweets saying 258 00:13:17,400 --> 00:13:21,160 Speaker 1: that tariffs on three billion dollars of extra imports from 259 00:13:21,240 --> 00:13:24,240 Speaker 1: China we're going to go up to as September one, 260 00:13:24,320 --> 00:13:29,280 Speaker 1: and that probability shot up to more than romaine. How 261 00:13:29,280 --> 00:13:33,280 Speaker 1: do you see the relationship between trade and the Fed 262 00:13:33,480 --> 00:13:35,920 Speaker 1: playing out here? Well, I mean, the market was largely 263 00:13:36,000 --> 00:13:39,560 Speaker 1: pricing in this idea that the best case scenario, and 264 00:13:39,600 --> 00:13:42,880 Speaker 1: part of that best case scenario was predicated on two things. 265 00:13:43,000 --> 00:13:45,400 Speaker 1: Is that the FED would be there as a backstop 266 00:13:45,600 --> 00:13:49,000 Speaker 1: quickly if things really went south, and that the trade 267 00:13:49,040 --> 00:13:52,040 Speaker 1: dispute is still largely in the hands of one man 268 00:13:52,280 --> 00:13:54,520 Speaker 1: who could turn on a dime tomorrow if you really 269 00:13:54,520 --> 00:13:57,000 Speaker 1: wanted to and resolve this. And so there was always 270 00:13:57,040 --> 00:13:59,959 Speaker 1: this this sort of faith that the President would only 271 00:14:00,040 --> 00:14:02,520 Speaker 1: go so far that if the markets, uh, you know, 272 00:14:02,600 --> 00:14:04,760 Speaker 1: got two out of whack, where the economy was getting 273 00:14:04,760 --> 00:14:06,760 Speaker 1: too out of whack from the trade war, that somehow 274 00:14:06,800 --> 00:14:09,840 Speaker 1: Trump would pivot. Now, I think that might have been 275 00:14:09,880 --> 00:14:11,920 Speaker 1: a little bit wishful thinking, and I think somewhat of 276 00:14:11,920 --> 00:14:14,720 Speaker 1: the reaction that you're seeing in the market right now 277 00:14:14,920 --> 00:14:16,440 Speaker 1: is this idea that they are going to try to 278 00:14:16,480 --> 00:14:18,800 Speaker 1: test the FED. They are going to try to test uh, 279 00:14:18,880 --> 00:14:21,760 Speaker 1: the White House and and and the legislators as well, 280 00:14:22,120 --> 00:14:24,760 Speaker 1: uh to sort of, you know, create some sort of 281 00:14:24,800 --> 00:14:27,400 Speaker 1: resolution to all of this. And I think this tantrum 282 00:14:27,440 --> 00:14:29,800 Speaker 1: that you could potentially see in this market has the 283 00:14:29,840 --> 00:14:33,360 Speaker 1: potential to sort of create a really bizarre feedback loop 284 00:14:33,600 --> 00:14:36,080 Speaker 1: where Powell and companies sort of still have to sort 285 00:14:36,080 --> 00:14:38,120 Speaker 1: of look at the data and not really sort of 286 00:14:38,160 --> 00:14:39,960 Speaker 1: just give in and you know, give the market their 287 00:14:40,000 --> 00:14:42,720 Speaker 1: pacifier every time they start whining. But at the same 288 00:14:42,760 --> 00:14:45,240 Speaker 1: time you have to understand that right now, this economy 289 00:14:45,560 --> 00:14:48,280 Speaker 1: is and the markets are intertwined in a way that 290 00:14:48,360 --> 00:14:50,520 Speaker 1: I don't think we've really seen, at least in sort 291 00:14:50,520 --> 00:14:52,880 Speaker 1: of you know, this current generation. Now it's a great 292 00:14:52,880 --> 00:14:54,960 Speaker 1: point because when you think of how we started the week, 293 00:14:55,360 --> 00:14:57,960 Speaker 1: it was with some Trump tweets about oh, maybe this 294 00:14:58,000 --> 00:15:00,480 Speaker 1: won't be resolved until after the election, and they'll they'll 295 00:15:00,520 --> 00:15:03,240 Speaker 1: deal with sleepy Joe Biden. What do you think that's 296 00:15:03,240 --> 00:15:05,920 Speaker 1: just posturing or yeah, you know, I don't know what 297 00:15:06,040 --> 00:15:08,040 Speaker 1: China's position is, but but I can tell you, I mean, 298 00:15:08,040 --> 00:15:10,800 Speaker 1: I think Trump has made it clear what he wants. 299 00:15:11,000 --> 00:15:12,880 Speaker 1: I also think you can read from the t leaves 300 00:15:12,960 --> 00:15:16,360 Speaker 1: with regards to the Trump administration that they are in 301 00:15:16,400 --> 00:15:18,160 Speaker 1: tune to what's going on in the markets. They are 302 00:15:18,200 --> 00:15:20,360 Speaker 1: in tune to what's going on with the economy, and 303 00:15:20,400 --> 00:15:23,600 Speaker 1: that potentially they would make some sort of concessions if 304 00:15:23,640 --> 00:15:26,000 Speaker 1: they thought that the damage was going to be severe 305 00:15:26,120 --> 00:15:29,960 Speaker 1: enough to damage the economy and obviously damage Trump's re 306 00:15:30,080 --> 00:15:48,440 Speaker 1: election champers to switch gears a little bit. Uh Roman. 307 00:15:48,520 --> 00:15:50,520 Speaker 1: One of the things I don't envy you is when 308 00:15:50,640 --> 00:15:53,640 Speaker 1: an earnings report comes out and you're reading it live 309 00:15:53,680 --> 00:15:55,840 Speaker 1: on TV. They're trying to trying to make the sense 310 00:15:55,840 --> 00:15:58,720 Speaker 1: out of headlines on an earnings release right as they hit. 311 00:15:59,000 --> 00:16:00,640 Speaker 1: But I'm curious if you if you step back a 312 00:16:00,680 --> 00:16:02,760 Speaker 1: little bit. I mean, we have almost three quarters of 313 00:16:02,800 --> 00:16:05,920 Speaker 1: the markets reported for the second quarter. Any big takeaways 314 00:16:05,960 --> 00:16:08,760 Speaker 1: for you that maybe we've missed well, I mean, the 315 00:16:08,760 --> 00:16:12,360 Speaker 1: big takeaway here is that we are seeing declining earnings, 316 00:16:12,520 --> 00:16:18,080 Speaker 1: uh period declining earnings. We're seeing declining revenue growth. Uh. 317 00:16:18,120 --> 00:16:20,400 Speaker 1: These companies are still growing, and I think you're seeing 318 00:16:20,400 --> 00:16:22,720 Speaker 1: sort of almost sort of a you know, this sort 319 00:16:22,720 --> 00:16:25,480 Speaker 1: of corner being sort of uh notched out into the 320 00:16:25,520 --> 00:16:28,000 Speaker 1: market where you have companies that are still able to grow, 321 00:16:28,040 --> 00:16:30,600 Speaker 1: they still have a healthy demand from their customer base. 322 00:16:30,840 --> 00:16:33,160 Speaker 1: That's where investors are flocking to. But I don't think 323 00:16:33,160 --> 00:16:35,640 Speaker 1: you see a lot of confidence amongst investors in a 324 00:16:35,640 --> 00:16:38,240 Speaker 1: lot of these earnings releases that this is something that 325 00:16:38,360 --> 00:16:40,760 Speaker 1: is sustainable. And I'm just talking about an aggregate. There 326 00:16:40,760 --> 00:16:43,600 Speaker 1: are there are some clear exceptions to this, but an aggregate. 327 00:16:43,760 --> 00:16:45,520 Speaker 1: And I think that's why you're seeing this sort of 328 00:16:45,600 --> 00:16:48,680 Speaker 1: rotation into defensive and then back into cilic and then 329 00:16:48,680 --> 00:16:51,040 Speaker 1: back in defensive, because people are really trying to figure 330 00:16:51,080 --> 00:16:53,640 Speaker 1: it out, you know, so we're half almost halfway through 331 00:16:53,680 --> 00:16:55,560 Speaker 1: the earning season, and I think you have a clearer 332 00:16:55,600 --> 00:16:57,800 Speaker 1: picture that this sort of rebound that a lot of 333 00:16:57,800 --> 00:17:00,240 Speaker 1: people are expecting in the second half of the year, 334 00:17:00,840 --> 00:17:03,320 Speaker 1: if it does materialize, it's certainly not going to be 335 00:17:03,360 --> 00:17:05,840 Speaker 1: as strong as some thought in the first half. You 336 00:17:05,880 --> 00:17:07,639 Speaker 1: look at the performance that we've seen this week, and 337 00:17:07,680 --> 00:17:09,840 Speaker 1: it's clear that defensives are back at the driving seat. 338 00:17:09,880 --> 00:17:11,440 Speaker 1: You look at those at the top of the leaderboard. 339 00:17:11,440 --> 00:17:15,520 Speaker 1: It's real estate, it's utility, is consumers, stables, communication services, 340 00:17:15,840 --> 00:17:19,159 Speaker 1: alec coming back to you. A lot of strategists year 341 00:17:19,160 --> 00:17:22,320 Speaker 1: and forecast. We saw Goldman Sachs raise their forecast earlier 342 00:17:22,359 --> 00:17:27,119 Speaker 1: this week. Much of that is predicated on multiple expansion 343 00:17:27,320 --> 00:17:33,359 Speaker 1: valuation growth because we're not seeing it in actual corporate profits. 344 00:17:33,400 --> 00:17:36,560 Speaker 1: Seeing where everything with the trade situation is going, and 345 00:17:36,640 --> 00:17:39,640 Speaker 1: seeing the situation that we have with the FED as 346 00:17:39,680 --> 00:17:45,399 Speaker 1: it stands, do you see multiple expansion growing even further 347 00:17:45,480 --> 00:17:48,600 Speaker 1: from where we're at now, not based on the current 348 00:17:48,640 --> 00:17:52,040 Speaker 1: macro environment. So something would have to give, most specifically 349 00:17:52,160 --> 00:17:55,840 Speaker 1: on trade. I think the one thing we should focus 350 00:17:55,880 --> 00:17:58,080 Speaker 1: on and maybe tying into what romains are saying about 351 00:17:58,080 --> 00:18:01,280 Speaker 1: the earning season is that the increase on September one, 352 00:18:01,760 --> 00:18:04,240 Speaker 1: a new ten percent tariff on three hundred billion and 353 00:18:04,280 --> 00:18:09,920 Speaker 1: currently untariffed Chinese imports will be immediately um diluted to earnings. 354 00:18:09,960 --> 00:18:13,399 Speaker 1: So we have a situation where companies manage the earnings process. 355 00:18:13,400 --> 00:18:16,200 Speaker 1: They're beating expectations by about two or three hundred basis points, 356 00:18:16,240 --> 00:18:19,479 Speaker 1: which they do on average every quarter. The problem is 357 00:18:19,560 --> 00:18:23,879 Speaker 1: that the consensus numbers out the fourth quarter, first quarter. 358 00:18:23,920 --> 00:18:26,160 Speaker 1: They're kind of like icebergs. They tend to melt. As 359 00:18:26,200 --> 00:18:27,600 Speaker 1: you get within a couple of months, you have a 360 00:18:27,600 --> 00:18:29,880 Speaker 1: better sense of a realistic number. You know it will 361 00:18:29,920 --> 00:18:32,920 Speaker 1: be beaten if you apply that type of analysis. We're 362 00:18:32,960 --> 00:18:36,880 Speaker 1: in a five six percent at best earnings growth environment 363 00:18:36,920 --> 00:18:39,760 Speaker 1: here and we're trading at seventeen and a half times 364 00:18:40,200 --> 00:18:43,480 Speaker 1: with with the the earnings numbers naturally tend to go 365 00:18:43,560 --> 00:18:46,240 Speaker 1: down for numbers as analysts get more realistic and advise them. 366 00:18:46,359 --> 00:18:50,400 Speaker 1: You put the tariff um macro dilution on top of that. 367 00:18:50,720 --> 00:18:53,560 Speaker 1: No way you're gonna get multiple expansion. You're getting multiple 368 00:18:53,560 --> 00:18:56,800 Speaker 1: expansion when people are thinking, oh, the Fed's gonna cut, 369 00:18:56,800 --> 00:18:59,879 Speaker 1: the macro is going to improve, that's over FED is 370 00:19:00,119 --> 00:19:03,960 Speaker 1: disappointing or at least a poor communicator, and the macro 371 00:19:04,240 --> 00:19:08,719 Speaker 1: is visibly deteriorating now via Twitter. Right, no, no, no, 372 00:19:08,760 --> 00:19:11,159 Speaker 1: you're not. We We took three cracks at thirty and 373 00:19:11,160 --> 00:19:14,120 Speaker 1: a quarter on the SMP and couldn't break it before 374 00:19:14,240 --> 00:19:16,840 Speaker 1: this latest that we're we're done. I mean, whether we 375 00:19:16,880 --> 00:19:20,800 Speaker 1: can drop back, consolidate, recharge and take another shot. You know, 376 00:19:20,840 --> 00:19:22,639 Speaker 1: we all know in this business things could look very 377 00:19:22,640 --> 00:19:25,160 Speaker 1: different in October November. So I think you're in targets 378 00:19:25,160 --> 00:19:27,440 Speaker 1: are a little bit of of a fool's earned and 379 00:19:27,480 --> 00:19:29,240 Speaker 1: but but I think Goldman would probably want to have 380 00:19:29,280 --> 00:19:32,000 Speaker 1: that one back. Yeah, maybe a little bit of bad timing. 381 00:19:32,080 --> 00:19:34,680 Speaker 1: But looking even deeper to this next chaunch of terras, 382 00:19:34,760 --> 00:19:37,439 Speaker 1: sure it's ten percent, which is a lesser rate than 383 00:19:37,480 --> 00:19:40,280 Speaker 1: the percent that we've seen on the two fifty billions 384 00:19:40,320 --> 00:19:45,200 Speaker 1: so far. But considering that this next list, the three billion, 385 00:19:45,320 --> 00:19:47,760 Speaker 1: is going to be more so on consumer good, does 386 00:19:47,800 --> 00:19:50,840 Speaker 1: a ten percent rate on that larger amount worry you 387 00:19:50,960 --> 00:19:54,000 Speaker 1: more than we've seen so far. As you said, it's 388 00:19:54,000 --> 00:19:57,000 Speaker 1: going to be more consumer centric. Apple doesn't have an 389 00:19:57,040 --> 00:19:59,240 Speaker 1: exemption as of yet, and we know air pods and 390 00:19:59,280 --> 00:20:02,719 Speaker 1: wearables were big part of um, you know, their their growth, 391 00:20:02,920 --> 00:20:05,600 Speaker 1: and that's the kind of thing that gets that gets hit. 392 00:20:05,840 --> 00:20:07,840 Speaker 1: So on the other thing is the president is the 393 00:20:07,880 --> 00:20:11,400 Speaker 1: ultimate poker players. So it's ten percent now there's currently 394 00:20:12,359 --> 00:20:16,080 Speaker 1: in place on the old money imports that were being tariffed. 395 00:20:16,280 --> 00:20:18,600 Speaker 1: He's leaving himself room to go to twenty five on 396 00:20:18,680 --> 00:20:21,760 Speaker 1: the new batch, you know, in the next round of 397 00:20:21,760 --> 00:20:24,719 Speaker 1: of of poker, of betting as it were. So just 398 00:20:24,800 --> 00:20:27,280 Speaker 1: because we're only going to ten now doesn't mean that 399 00:20:27,320 --> 00:20:30,920 Speaker 1: the final resting stop isn't um isn't twenty five. I mean, 400 00:20:30,920 --> 00:20:33,520 Speaker 1: it's pretty clear that his people came back from the 401 00:20:33,640 --> 00:20:36,040 Speaker 1: Chinese negotiations this week and briefed him, and he didn't 402 00:20:36,040 --> 00:20:38,639 Speaker 1: like what he heard, and so he's trying to and 403 00:20:38,840 --> 00:20:40,680 Speaker 1: I don't know if you read his tweet word for word, 404 00:20:40,720 --> 00:20:43,080 Speaker 1: but he's trying to be very He's saying, we look 405 00:20:43,160 --> 00:20:46,640 Speaker 1: forward to engaging with you and get yeah, we're gonna 406 00:20:46,680 --> 00:20:49,280 Speaker 1: he said, we're gonna put a small additional tariff on you. 407 00:20:49,560 --> 00:20:53,320 Speaker 1: So this is clearly um, you know, gamesmanship and deal making. 408 00:20:53,359 --> 00:20:57,160 Speaker 1: So I think the market is going to be worried that, um, 409 00:20:57,200 --> 00:20:59,920 Speaker 1: you know, we're not stopping at ten Luckily, there's a 410 00:21:00,040 --> 00:21:02,720 Speaker 1: finite amount of imports coming from China, so there's a 411 00:21:02,720 --> 00:21:06,119 Speaker 1: finite universe of the dollar amount of Chinese imports that 412 00:21:06,160 --> 00:21:08,840 Speaker 1: can be tariffed. But the President's made clear he's willing 413 00:21:08,880 --> 00:21:11,080 Speaker 1: to look at other places. The last point I would 414 00:21:11,080 --> 00:21:13,200 Speaker 1: make on this, as you mentioned that FED fund futures 415 00:21:13,240 --> 00:21:16,359 Speaker 1: once this news broke, um started a much more aggressively 416 00:21:16,400 --> 00:21:19,560 Speaker 1: priced into September quarter point ease, and yet the markets 417 00:21:19,560 --> 00:21:23,440 Speaker 1: still soft. So I think the smart money takeaway here 418 00:21:23,640 --> 00:21:27,320 Speaker 1: is that don't get long around the FED that's priced in. 419 00:21:27,440 --> 00:21:30,399 Speaker 1: That can't help you anymore. When something's been this talked 420 00:21:30,400 --> 00:21:33,680 Speaker 1: about and beaten to death, that can no longer move markets. 421 00:21:33,720 --> 00:21:37,200 Speaker 1: So a dovish FED can't help you. And and at 422 00:21:37,200 --> 00:21:40,199 Speaker 1: the margin the growth outlook, which is the reason you 423 00:21:40,240 --> 00:21:41,880 Speaker 1: need a dovish FED in the first place. You need 424 00:21:41,920 --> 00:21:44,640 Speaker 1: growth to be short. That's that's melting away a little bit. 425 00:21:44,800 --> 00:21:47,360 Speaker 1: And President Trump has the potential to do a lot 426 00:21:47,400 --> 00:21:49,919 Speaker 1: of damage very quickly, or at least get people to 427 00:21:49,960 --> 00:21:52,879 Speaker 1: extrapolate that in their minds, because he's very vocal and 428 00:21:52,920 --> 00:21:55,280 Speaker 1: he's very bold. So when you add it all up, 429 00:21:55,320 --> 00:21:58,840 Speaker 1: I think the momentum has shifted very quickly and violently 430 00:21:58,960 --> 00:22:02,359 Speaker 1: from the bulls to the bears this week, and I 431 00:22:02,359 --> 00:22:05,240 Speaker 1: think I think it's um it would behoove investors to 432 00:22:05,280 --> 00:22:07,960 Speaker 1: sort of step back and not do the thing that's 433 00:22:07,960 --> 00:22:11,240 Speaker 1: been working recently. The Pavlovian instinct is to just buy 434 00:22:11,240 --> 00:22:14,359 Speaker 1: the dip. So Alec, you sound very cautious to me. 435 00:22:14,520 --> 00:22:16,879 Speaker 1: I think that's a common, you know, feeling right now 436 00:22:16,920 --> 00:22:19,359 Speaker 1: among investors. But you know, if you're someone who needs 437 00:22:19,359 --> 00:22:22,960 Speaker 1: to remain invested in equities or you know, we all 438 00:22:22,960 --> 00:22:25,160 Speaker 1: know the dangers of trying to time the market get 439 00:22:25,200 --> 00:22:28,800 Speaker 1: in and out. It's very confusing now, as Romaine pointed out, 440 00:22:29,400 --> 00:22:32,159 Speaker 1: what is a good defense to play right now? Like 441 00:22:32,240 --> 00:22:34,240 Speaker 1: you you mentioned, you know, in a low rate environment, 442 00:22:34,400 --> 00:22:38,560 Speaker 1: reads the bond proxies, utilities do well. But there's almost 443 00:22:38,640 --> 00:22:42,040 Speaker 1: feel like a crowded trade now with utilities high pees. 444 00:22:42,760 --> 00:22:46,159 Speaker 1: Another place people had always sort of assumed would be 445 00:22:46,160 --> 00:22:49,080 Speaker 1: a safe haven from the trade wars small caps, just 446 00:22:49,119 --> 00:22:51,919 Speaker 1: because they're more domestically focused, but as you point out 447 00:22:52,000 --> 00:22:56,320 Speaker 1: your your note, they're heavily uh weighted towards financials. Large 448 00:22:56,320 --> 00:22:59,400 Speaker 1: caps are more tech weighted with the larger earnings growth, 449 00:22:59,480 --> 00:23:02,359 Speaker 1: So you know, boil it all down. Where is a 450 00:23:02,440 --> 00:23:04,760 Speaker 1: good place to play defense if you want to stay 451 00:23:04,760 --> 00:23:07,240 Speaker 1: fully engaged in the stock market right now? Sure, and 452 00:23:07,320 --> 00:23:09,320 Speaker 1: just the point out, I mean, we try to give 453 00:23:09,359 --> 00:23:12,600 Speaker 1: some tactical insights. So just because there's a cautious tone, 454 00:23:12,880 --> 00:23:17,040 Speaker 1: certainly not suggesting major allocation changes. Most of our institutional 455 00:23:17,080 --> 00:23:20,160 Speaker 1: clients do have, you know, all equity mandates or um 456 00:23:20,200 --> 00:23:23,159 Speaker 1: asset allocations that they have to maintain on an evergreen basis. 457 00:23:23,160 --> 00:23:25,720 Speaker 1: It's more just about expectations setting, you know. And we 458 00:23:25,760 --> 00:23:27,760 Speaker 1: are still up I think nineteen and a half percent 459 00:23:28,000 --> 00:23:30,760 Speaker 1: for the year. You know this is but we we 460 00:23:30,840 --> 00:23:33,160 Speaker 1: do want to set expectations because a lot of people 461 00:23:33,200 --> 00:23:36,160 Speaker 1: think past this prologue. There's a lot of the recency 462 00:23:36,160 --> 00:23:39,280 Speaker 1: bias from the behavioral work, and we think, um that 463 00:23:39,520 --> 00:23:41,560 Speaker 1: I call it a gear shifter or day. But there 464 00:23:41,560 --> 00:23:44,920 Speaker 1: are times when the tone changes and the direction shifts, 465 00:23:45,280 --> 00:23:47,680 Speaker 1: all those things have an inflection point, and I think 466 00:23:47,680 --> 00:23:50,560 Speaker 1: we've just hit one, UM And I think if you 467 00:23:50,560 --> 00:23:53,479 Speaker 1: look at the July performance, everything was clustered around up 468 00:23:53,480 --> 00:23:56,080 Speaker 1: about two percent. There were a few outliers on either side, 469 00:23:56,119 --> 00:23:58,360 Speaker 1: but everything is participated on the way up. I don't 470 00:23:58,359 --> 00:24:00,800 Speaker 1: think there's gonna be any great place to hide on 471 00:24:00,840 --> 00:24:03,680 Speaker 1: the way down, UM, other than maybe cash. And that's 472 00:24:03,720 --> 00:24:06,240 Speaker 1: why people do have cash allocations is so that they 473 00:24:06,240 --> 00:24:08,840 Speaker 1: can put dry powder to work in these kinds of 474 00:24:09,080 --> 00:24:12,479 Speaker 1: UM situations. But again just cautioned that the biggest thing 475 00:24:12,520 --> 00:24:15,560 Speaker 1: that's helped risk appetite has been the Dovish fed and 476 00:24:15,600 --> 00:24:17,760 Speaker 1: I think we've stretched that rubber band as far as 477 00:24:17,840 --> 00:24:21,400 Speaker 1: we can and if the margin it underwhelmed a little yesterday, 478 00:24:21,440 --> 00:24:23,399 Speaker 1: I don't think that helps you. And then on the 479 00:24:23,400 --> 00:24:26,640 Speaker 1: growth side, which has been the big source of anxiety, UM, 480 00:24:26,720 --> 00:24:30,720 Speaker 1: the president's UM trade news flow has meant that that 481 00:24:30,720 --> 00:24:33,480 Speaker 1: that's deteriorated. So when you add it all up, I 482 00:24:33,520 --> 00:24:36,840 Speaker 1: think the path of least resistance tactically is is lower 483 00:24:37,520 --> 00:24:40,560 Speaker 1: for for stocks. Alright, Well, on that downbeat, I think 484 00:24:40,720 --> 00:24:42,159 Speaker 1: we have to end living it up a little bit, 485 00:24:42,240 --> 00:24:44,720 Speaker 1: living it up a little bit with the the craziest 486 00:24:44,720 --> 00:24:47,280 Speaker 1: thing we're not we're not all going triple leverage cast 487 00:24:47,760 --> 00:24:50,679 Speaker 1: a right now. If I can triple casts, I think 488 00:24:51,480 --> 00:24:53,119 Speaker 1: what kind of what kind of rates you get on 489 00:24:53,200 --> 00:24:57,359 Speaker 1: your leverage? But Romaine, let's start with you. Have you 490 00:24:57,400 --> 00:25:00,000 Speaker 1: witnessed anything? I mean, Okay, look, we witnessed, all witness 491 00:25:00,040 --> 00:25:02,760 Speaker 1: a lot of crazy things, right, what's the craziest thing? Okay, 492 00:25:02,840 --> 00:25:06,520 Speaker 1: aside from j Pale's press conference? Uh, you know, actually 493 00:25:06,520 --> 00:25:08,280 Speaker 1: the thing I it wasn't sort of witnessed, but it 494 00:25:08,320 --> 00:25:10,800 Speaker 1: was a great story actually, Uh in Bloomberg Business Week 495 00:25:11,000 --> 00:25:14,440 Speaker 1: about oat milk. Are you into this this night? And 496 00:25:14,480 --> 00:25:16,239 Speaker 1: I've been meaning the reading and I haven't read it. Well, 497 00:25:17,000 --> 00:25:20,080 Speaker 1: it's pretty good. It's a it's a well, okay, that's all. 498 00:25:20,200 --> 00:25:22,639 Speaker 1: That's a that's a matter of but but but it's 499 00:25:22,680 --> 00:25:25,359 Speaker 1: a fascinating read about how this something that was pretty 500 00:25:25,400 --> 00:25:28,520 Speaker 1: much obscure just a few years ago. Swedish company, uh 501 00:25:28,600 --> 00:25:30,840 Speaker 1: totally makes this thing and they came to the US 502 00:25:31,040 --> 00:25:33,000 Speaker 1: a couple of years ago. They just built this gigantic 503 00:25:33,080 --> 00:25:36,119 Speaker 1: facility in New Jersey. They're building another facility in Utah. 504 00:25:36,240 --> 00:25:38,520 Speaker 1: They can't keep this stuff in stories. And Bloomberg has 505 00:25:38,560 --> 00:25:41,600 Speaker 1: this great sort of breakdown of a how it's made 506 00:25:41,720 --> 00:25:45,600 Speaker 1: the milk um, which you know isn't the most appetizing process, 507 00:25:45,640 --> 00:25:47,680 Speaker 1: but you know, apparently it has you know, the same 508 00:25:47,720 --> 00:25:52,000 Speaker 1: mouth feel of milk apparently and uh yeah, the texture 509 00:25:52,000 --> 00:25:53,919 Speaker 1: of mouth feel of milk, but you don't have, you know, 510 00:25:53,960 --> 00:25:56,080 Speaker 1: if you have issues with you know, eating animal products 511 00:25:56,160 --> 00:25:58,720 Speaker 1: or something, or you just or again, or you just 512 00:25:58,760 --> 00:26:03,080 Speaker 1: can't tolerate arey, this gives you that alternative. And I 513 00:26:03,200 --> 00:26:05,040 Speaker 1: just see this popping up everywhere. And we talk a 514 00:26:05,080 --> 00:26:07,520 Speaker 1: lot about you know, plant based meats. They'll obviously the 515 00:26:08,119 --> 00:26:11,240 Speaker 1: surge of you know, beyond meat and and impossible foods. 516 00:26:11,119 --> 00:26:14,080 Speaker 1: It's just kind of an interesting phenomenon. And for somebody 517 00:26:14,080 --> 00:26:17,200 Speaker 1: who's still you know, just drinks regular milk and eats 518 00:26:17,240 --> 00:26:20,280 Speaker 1: you know, regular beef, I find it very fast. There's 519 00:26:20,280 --> 00:26:22,440 Speaker 1: no oat milk in the Bloomberg pantries. If you haven't 520 00:26:22,440 --> 00:26:25,320 Speaker 1: seen it yet, have seen it. I've tried it. I 521 00:26:25,359 --> 00:26:27,639 Speaker 1: know I'm still a regular Burger. Read are we caveman? 522 00:26:27,760 --> 00:26:32,400 Speaker 1: I mean, I don't know, We're dinosaurs? Were going, well, 523 00:26:32,560 --> 00:26:34,960 Speaker 1: my crazy thing kind of ties in. But but Alec, 524 00:26:35,040 --> 00:26:37,439 Speaker 1: let's go, let's go with tears first. What's your crazy 525 00:26:37,480 --> 00:26:39,399 Speaker 1: thing for the I'm probably gonna stick to the market. 526 00:26:39,440 --> 00:26:41,439 Speaker 1: I thought that was you guys wanted the craziest thing 527 00:26:41,440 --> 00:26:43,040 Speaker 1: in the market, So that's kind of what I can. 528 00:26:43,080 --> 00:26:44,840 Speaker 1: I think they did, Alec, but I just I don't 529 00:26:44,840 --> 00:26:46,760 Speaker 1: read it. And that was good room and we needed 530 00:26:46,760 --> 00:26:49,880 Speaker 1: to kind of, you know, lighten it up a little bit. 531 00:26:49,920 --> 00:26:52,000 Speaker 1: But I would just sticking with the markets. We've had 532 00:26:52,000 --> 00:26:54,320 Speaker 1: a few choices. You mentioned the press conference, which was 533 00:26:54,359 --> 00:26:57,120 Speaker 1: definitely a little bit you know, offbeat. But I think 534 00:26:57,119 --> 00:26:59,400 Speaker 1: the President and his tweets. I mean, he's been tweeting 535 00:26:59,440 --> 00:27:01,520 Speaker 1: for years, So I think when we look back and 536 00:27:01,560 --> 00:27:05,000 Speaker 1: we rank all of the praise president's wild tweets, especially 537 00:27:05,000 --> 00:27:07,560 Speaker 1: related to financials markets, that's going to be quite a list. 538 00:27:08,240 --> 00:27:11,399 Speaker 1: Thursdays is going to be right up there. Alright, Sarah, 539 00:27:11,600 --> 00:27:14,000 Speaker 1: what do you got? Alright? So mine mine actually also 540 00:27:14,400 --> 00:27:18,160 Speaker 1: in a way goes off of Romaines Oat milk because 541 00:27:18,160 --> 00:27:21,000 Speaker 1: it has to do with Beyond Meat. And that is 542 00:27:21,080 --> 00:27:23,439 Speaker 1: because there is an e t F and it's ticker 543 00:27:23,560 --> 00:27:26,320 Speaker 1: is f n G. It's known as the Thing E 544 00:27:26,520 --> 00:27:29,080 Speaker 1: t F And what its title actually is, it's the 545 00:27:29,119 --> 00:27:31,960 Speaker 1: Advisor Shares New Tech and Media e t F. Now 546 00:27:32,240 --> 00:27:35,399 Speaker 1: you might not expect this. It holds Amazon, but the 547 00:27:35,440 --> 00:27:40,400 Speaker 1: fund no longer holds Facebook, Netflix or Google. However, this 548 00:27:40,440 --> 00:27:44,480 Speaker 1: week about shares of Beyond Meat. So not quite sure 549 00:27:44,520 --> 00:27:49,360 Speaker 1: how Beyond meat stock fits into a media a New 550 00:27:49,400 --> 00:27:53,000 Speaker 1: Technology fund um, but they're going after it all right, 551 00:27:53,000 --> 00:27:57,239 Speaker 1: Well I guess this new technology, Yeah, I guess all right, 552 00:27:57,280 --> 00:28:00,280 Speaker 1: Well I'm gonna go with some old technology. You guys 553 00:28:00,320 --> 00:28:03,920 Speaker 1: are familiar with the Canada Goose company. The nine Jackets. 554 00:28:04,520 --> 00:28:09,160 Speaker 1: Romans probably has three of them with and it's warm 555 00:28:09,280 --> 00:28:13,880 Speaker 1: and it's the best suit is Canada Goose, right right. 556 00:28:14,160 --> 00:28:17,240 Speaker 1: The animal lovers up there are very upset with Canada 557 00:28:17,240 --> 00:28:20,119 Speaker 1: Goose because part of their UH selling point was that 558 00:28:20,160 --> 00:28:24,080 Speaker 1: they were treated the geese very fondly when they took 559 00:28:24,119 --> 00:28:26,160 Speaker 1: took the feathers for the day, and they used kai 560 00:28:26,359 --> 00:28:29,520 Speaker 1: odie fur, and they promised that we only hunt coyotes 561 00:28:29,560 --> 00:28:33,760 Speaker 1: that are pests and and threatening pets. Well, you're gonna 562 00:28:33,800 --> 00:28:37,040 Speaker 1: tell me all this is, it's not exactly so uh. 563 00:28:37,240 --> 00:28:41,560 Speaker 1: Canada Goose Shares took a beating on Thursday when The 564 00:28:41,600 --> 00:28:44,440 Speaker 1: New York Post got its hands on a video that 565 00:28:44,560 --> 00:28:48,920 Speaker 1: the People for Ethical Treatment of Animals had UH filmed 566 00:28:49,000 --> 00:28:53,400 Speaker 1: of Canada Goose suppliers basically grabbing the geese by their 567 00:28:53,480 --> 00:28:56,000 Speaker 1: necks and stepping on them. This is actually probably the 568 00:28:56,000 --> 00:28:59,800 Speaker 1: saddest thing in markets this week. We were livening it 569 00:28:59,880 --> 00:29:01,760 Speaker 1: up and then he just had something really bring it 570 00:29:01,800 --> 00:29:05,680 Speaker 1: back down. If you have a complaint about any of this, 571 00:29:05,760 --> 00:29:08,120 Speaker 1: you can call us on our hotline number and uh 572 00:29:09,040 --> 00:29:10,800 Speaker 1: or Stars direct number. I think it is better. Oh, 573 00:29:10,800 --> 00:29:12,280 Speaker 1: no one has my direct number, so you have to 574 00:29:12,320 --> 00:29:15,600 Speaker 1: stick with the hotline ring. I thought it was gonna ring. 575 00:29:15,640 --> 00:29:18,600 Speaker 1: Now it's like we weren't going to get like, you know, 576 00:29:18,760 --> 00:29:21,840 Speaker 1: Joe from Nassau County ask us how the Knicks are 577 00:29:21,840 --> 00:29:27,720 Speaker 1: gonna do this? This that he's a real good to 578 00:29:27,800 --> 00:29:29,960 Speaker 1: guy for a crazy market series. And if you want 579 00:29:29,960 --> 00:29:32,320 Speaker 1: to share any of your craziest things with us, you 580 00:29:32,320 --> 00:29:36,040 Speaker 1: can also tweet at us at podcasts, or you can 581 00:29:36,080 --> 00:29:39,760 Speaker 1: also leave us a voicemail at our Bloomberg Podcast hotline. Also, 582 00:29:39,760 --> 00:29:41,760 Speaker 1: if you have any questions for us, feel free to 583 00:29:41,760 --> 00:29:43,920 Speaker 1: give us a call and ask away. That number is 584 00:29:44,000 --> 00:29:47,480 Speaker 1: six or six three to four three for nine zero 585 00:29:47,920 --> 00:29:50,200 Speaker 1: and we may even play your question or tip on 586 00:29:50,240 --> 00:29:53,280 Speaker 1: the show. Um Alec Young, Romaine Bostick, thanks so much 587 00:29:53,320 --> 00:30:03,440 Speaker 1: for joining us today, pleasure, Thank you, what goes out. 588 00:30:03,520 --> 00:30:06,360 Speaker 1: We'll be back next week. Until then, you can find 589 00:30:06,440 --> 00:30:09,600 Speaker 1: us on the Bloomberg Terminal, website and app, or wherever 590 00:30:09,680 --> 00:30:12,480 Speaker 1: you get your podcasts. We'd love it if you took 591 00:30:12,480 --> 00:30:15,080 Speaker 1: the time to rate and interview the show on Apple Podcasts, 592 00:30:15,280 --> 00:30:18,000 Speaker 1: so more listeners can find us, and you can find 593 00:30:18,080 --> 00:30:21,520 Speaker 1: us on Twitter, follow me at at Sara Ponzeck, Mike 594 00:30:21,800 --> 00:30:25,880 Speaker 1: is at Reaganonymous, Romaine Bostick is at Romaine Bostic, and 595 00:30:25,960 --> 00:30:28,200 Speaker 1: you can also follow up with flet See Russell at 596 00:30:28,280 --> 00:30:32,400 Speaker 1: Footsie Russell and Bloomberg Podcast, as I mentioned, is at Podcasts. 597 00:30:32,840 --> 00:30:35,200 Speaker 1: What Goes Up is produced by Tofur Foreheads. The head 598 00:30:35,200 --> 00:30:38,640 Speaker 1: of Bloomberg Podcast is Francesca Levie. Thanks for listening, See 599 00:30:38,680 --> 00:30:39,240 Speaker 1: you next time.