1 00:00:02,480 --> 00:00:07,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,640 --> 00:00:12,880 Speaker 2: This is the Bloomberg Daybreak Asia podcast. I'm Doug Krisner. 3 00:00:12,920 --> 00:00:15,400 Speaker 2: You can join Brian Curtis and myself for the stories, 4 00:00:15,440 --> 00:00:18,560 Speaker 2: making news and moving markets in the APAC region. You 5 00:00:18,600 --> 00:00:21,439 Speaker 2: can subscribe to the show anywhere you get your podcast 6 00:00:21,520 --> 00:00:24,919 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 7 00:00:24,920 --> 00:00:26,120 Speaker 2: Bloomberg Business App. 8 00:00:27,240 --> 00:00:31,720 Speaker 3: Nick Twidale, chief market analyst at ATFX, SO, quite a 9 00:00:31,760 --> 00:00:33,920 Speaker 3: lot of turbulence this morning here. The latest number is 10 00:00:33,920 --> 00:00:36,720 Speaker 3: the NIEK dropping some fourteen hundred and seventy five points 11 00:00:36,800 --> 00:00:39,159 Speaker 3: or so, a drop of three point seven percent. That 12 00:00:39,280 --> 00:00:42,640 Speaker 3: is less than the worst levels of the day. Nick, 13 00:00:43,159 --> 00:00:45,080 Speaker 3: We've got strength in the end dolling in at the 14 00:00:45,080 --> 00:00:50,240 Speaker 3: moment two seventy six. We just got some weak economic data. 15 00:00:50,240 --> 00:00:52,960 Speaker 3: It doesn't seem perhaps to be the right time for 16 00:00:53,040 --> 00:00:56,640 Speaker 3: raising interest rates in Japan. Do you think that we 17 00:00:56,720 --> 00:00:59,120 Speaker 3: might get some comments from Japanese leaders in a few 18 00:00:59,160 --> 00:01:01,480 Speaker 3: moments training to help stabilize things. 19 00:01:02,960 --> 00:01:05,280 Speaker 4: Yes, thanks for having me on, by the way, Yeah, 20 00:01:05,400 --> 00:01:07,920 Speaker 4: it's been I suppose some people were hoping for a 21 00:01:07,920 --> 00:01:09,880 Speaker 4: bit of a quiet start to today, but already we've 22 00:01:09,920 --> 00:01:12,880 Speaker 4: seen sort of seventy odd points in dolly Yen. 23 00:01:13,880 --> 00:01:14,480 Speaker 5: I think you're right. 24 00:01:14,560 --> 00:01:16,640 Speaker 4: It's been a dramatic change from the moves that we 25 00:01:16,680 --> 00:01:19,320 Speaker 4: saw on Friday when we heard that Ichubur got in 26 00:01:19,640 --> 00:01:21,319 Speaker 4: and it was a surprise to the market. I think 27 00:01:21,319 --> 00:01:24,479 Speaker 4: we lost nearly three percent on dolly En, but it's 28 00:01:24,520 --> 00:01:26,679 Speaker 4: been kind of a nice little spike up back into 29 00:01:26,760 --> 00:01:29,480 Speaker 4: the mid range this morning. I think we're back training 30 00:01:29,480 --> 00:01:34,000 Speaker 4: around eighty. The data doesn't look great today, and it 31 00:01:34,080 --> 00:01:36,560 Speaker 4: probably backs up that he's come across a lot less 32 00:01:36,560 --> 00:01:39,039 Speaker 4: hawkish over the weekend. Hence we've seen this move. But 33 00:01:39,840 --> 00:01:42,039 Speaker 4: it looks like there's going to be plenty more volatility 34 00:01:42,120 --> 00:01:44,600 Speaker 4: in Japanese markets today, and it wouldn't surprise me if 35 00:01:44,640 --> 00:01:47,080 Speaker 4: we see a lot more headlines coming out from Japanese 36 00:01:47,080 --> 00:01:49,480 Speaker 4: government officials as the day goes through. 37 00:01:49,600 --> 00:01:52,120 Speaker 2: Hey, Nick, to what extent is this a dollar story 38 00:01:52,120 --> 00:01:54,160 Speaker 2: as well? I mean, we had that very cool reading 39 00:01:54,160 --> 00:01:57,720 Speaker 2: of US inflation Friday, not a lot of dollar weakness, 40 00:01:57,720 --> 00:01:59,800 Speaker 2: but the market's beginning to kind of get a sense 41 00:01:59,840 --> 00:02:03,320 Speaker 2: that the Fed may move another fifty basis points to 42 00:02:03,360 --> 00:02:06,400 Speaker 2: cut another fifty basis points in November. Is that at 43 00:02:06,440 --> 00:02:07,760 Speaker 2: all a part of the story. 44 00:02:07,440 --> 00:02:10,160 Speaker 4: Here, I think, so, yeah, it was kind of the 45 00:02:10,160 --> 00:02:14,639 Speaker 4: perfect storm for Dolly and Bears on Friday with the 46 00:02:14,680 --> 00:02:18,399 Speaker 4: Itchuba story and then the week of PCE. I think 47 00:02:18,400 --> 00:02:22,120 Speaker 4: we're now coming round to I suppose the FED, and 48 00:02:22,520 --> 00:02:24,200 Speaker 4: we'll know a lot more at the end of this week, 49 00:02:24,280 --> 00:02:26,400 Speaker 4: that the FED comeing in line with the market, that 50 00:02:26,600 --> 00:02:29,680 Speaker 4: there's a stronger possibility we do get fifty basis points 51 00:02:30,520 --> 00:02:32,960 Speaker 4: from them at the next meeting. If you'd asked me 52 00:02:33,160 --> 00:02:35,040 Speaker 4: even just a week and a bit ago, you know, 53 00:02:35,080 --> 00:02:37,840 Speaker 4: before we got that fifty, I was firmly still in 54 00:02:37,840 --> 00:02:41,120 Speaker 4: the twenty five basis point cap and probably you know 55 00:02:41,200 --> 00:02:43,680 Speaker 4: fifty over the two meetings, and now suddenly I've changed 56 00:02:43,680 --> 00:02:46,440 Speaker 4: to nearly one hundred basis points. So the market is 57 00:02:46,960 --> 00:02:51,560 Speaker 4: very volatile. You can't ignore this week's employment numbers. And 58 00:02:52,160 --> 00:02:55,120 Speaker 4: obviously we've got non farms and the unemployment rate on Friday, 59 00:02:55,160 --> 00:02:58,160 Speaker 4: But before that we've still got another three three quite 60 00:02:58,240 --> 00:03:02,520 Speaker 4: key job numbers with Jolts ADP and the weekly unemployment claim. 61 00:03:02,600 --> 00:03:05,000 Speaker 4: So all of these I think, if they show a 62 00:03:05,160 --> 00:03:09,280 Speaker 4: calling in the US economy, we're going to be looking 63 00:03:09,360 --> 00:03:10,919 Speaker 4: much We could be by the end of the week 64 00:03:10,960 --> 00:03:13,880 Speaker 4: looking much much more certainly at fifty basis point cut 65 00:03:13,919 --> 00:03:15,560 Speaker 4: from the FED, and that's just going to put more 66 00:03:15,600 --> 00:03:16,400 Speaker 4: pressure on the dollar. 67 00:03:17,080 --> 00:03:19,720 Speaker 3: Of course, there's also other ways you're looking at it. 68 00:03:20,280 --> 00:03:23,040 Speaker 3: You know, job conditions may not be as bad as 69 00:03:23,120 --> 00:03:25,640 Speaker 3: feared in the US, who may get a slightly more 70 00:03:25,720 --> 00:03:28,280 Speaker 3: positive report than expected. And then also if you look 71 00:03:28,320 --> 00:03:30,920 Speaker 3: at the Japanese data, we mentioned the weakness in industrial output, 72 00:03:30,960 --> 00:03:34,880 Speaker 3: but retail sales is actually stronger than expected, which kind 73 00:03:34,920 --> 00:03:36,360 Speaker 3: of shows you that, you know, there's a lot of 74 00:03:36,400 --> 00:03:39,240 Speaker 3: ebb and flow in this there's a volatility in the 75 00:03:39,320 --> 00:03:40,920 Speaker 3: numbers as well as in the markets. 76 00:03:41,880 --> 00:03:43,920 Speaker 4: I think that we're not getting from a lot of 77 00:03:44,040 --> 00:03:47,160 Speaker 4: jurisdictions across the global well, we're not getting that consistency 78 00:03:47,200 --> 00:03:50,360 Speaker 4: of data, which which kind of makes it interesting for 79 00:03:50,440 --> 00:03:52,840 Speaker 4: us in the FX world because we're getting these really 80 00:03:52,920 --> 00:03:57,360 Speaker 4: sharp moves and counter moves. But I'm kind of in 81 00:03:57,400 --> 00:04:00,920 Speaker 4: your with the US as well. I'm thinking that, you know, 82 00:04:01,000 --> 00:04:04,120 Speaker 4: if we don't see poor data in the jobs numbers 83 00:04:04,160 --> 00:04:06,120 Speaker 4: this week, then we could see a real reversal in 84 00:04:06,160 --> 00:04:10,880 Speaker 4: fortunes for the dollar, because it's it's not changed dramatically 85 00:04:11,160 --> 00:04:13,520 Speaker 4: i think from what we've seen, but clearly the FEDS 86 00:04:13,600 --> 00:04:17,400 Speaker 4: now moving away from that inflation focus and we're really 87 00:04:17,400 --> 00:04:20,120 Speaker 4: looking at employment numbers. So, like you said, we look 88 00:04:20,120 --> 00:04:22,880 Speaker 4: at this dollar en positioning at the moment, yet you've 89 00:04:22,880 --> 00:04:25,799 Speaker 4: got a terrible industrial production number but stronger retail sales. 90 00:04:25,839 --> 00:04:30,440 Speaker 4: So we're getting these contradictory pieces of data across the 91 00:04:30,440 --> 00:04:34,080 Speaker 4: globe and it makes for interesting trading conditions, but it 92 00:04:34,080 --> 00:04:35,640 Speaker 4: certainly doesn't help the trend followers. 93 00:04:35,920 --> 00:04:38,080 Speaker 2: What are you seeing right now in carried trades? I mean, 94 00:04:38,120 --> 00:04:40,599 Speaker 2: the yen used to be the dominant force there. We 95 00:04:40,640 --> 00:04:43,800 Speaker 2: saw what happened a couple of months back. What is 96 00:04:43,839 --> 00:04:46,719 Speaker 2: the leading funding currency these days? Is it still yen? 97 00:04:48,240 --> 00:04:51,560 Speaker 4: I think overall yen is still the leading funding country. 98 00:04:51,560 --> 00:04:54,479 Speaker 4: We're seeing a lot more in emerging markets, and certainly 99 00:04:54,520 --> 00:04:57,279 Speaker 4: in our market, we're still seeing the yen and yen 100 00:04:57,320 --> 00:05:00,240 Speaker 4: crosses are still popular because even though we are and 101 00:05:00,320 --> 00:05:03,480 Speaker 4: this massive decrease in US shields, it's still a relevant trade. 102 00:05:04,360 --> 00:05:08,080 Speaker 4: So we did have that horrible crash back in August, 103 00:05:07,920 --> 00:05:11,560 Speaker 4: but I think it's still a relevant a relevant trade 104 00:05:11,600 --> 00:05:15,480 Speaker 4: for a lot of players out there, and once market 105 00:05:15,520 --> 00:05:18,360 Speaker 4: conditions may be normalize, If they normalize over the next 106 00:05:18,400 --> 00:05:22,040 Speaker 4: few months, it can come back into play, but it's 107 00:05:22,080 --> 00:05:25,159 Speaker 4: a harder trade I think. I think it's once we 108 00:05:25,240 --> 00:05:28,200 Speaker 4: see these volatile conditions, it's an easier trade for the 109 00:05:28,320 --> 00:05:31,640 Speaker 4: yen players because you've got liquidity in those markets where 110 00:05:31,640 --> 00:05:34,360 Speaker 4: we've seen some carry trades across the emerging markets. Obviously, 111 00:05:34,480 --> 00:05:36,920 Speaker 4: you can then get really stuck with the spot positions 112 00:05:36,960 --> 00:05:39,880 Speaker 4: and they can come up unstuck very quickly. So I 113 00:05:39,880 --> 00:05:42,359 Speaker 4: think yen is still the most popular popular play for 114 00:05:42,400 --> 00:05:42,800 Speaker 4: the carry. 115 00:05:43,839 --> 00:05:45,719 Speaker 3: I just had a look at the dollar in the 116 00:05:45,760 --> 00:05:49,240 Speaker 3: last twenty minutes or so. It is actually down four 117 00:05:49,320 --> 00:05:52,560 Speaker 3: percent since the lies, and that goes back to before 118 00:05:53,080 --> 00:05:56,360 Speaker 3: we're starting to get giddy about reids coming down, So 119 00:05:56,400 --> 00:05:59,200 Speaker 3: the dollar move again. Like you say, it's volatile. We 120 00:05:59,240 --> 00:06:03,839 Speaker 3: don't know for sure whether this trend continues, but given 121 00:06:03,880 --> 00:06:06,240 Speaker 3: that the FED is probably you know, pretty much on 122 00:06:06,400 --> 00:06:11,080 Speaker 3: a cutting cycle now, the extent of which we don't know, 123 00:06:11,240 --> 00:06:14,120 Speaker 3: but it doesn't look like any hikes anytime soon. We 124 00:06:14,440 --> 00:06:16,440 Speaker 3: is that something we can kind of bank on a 125 00:06:16,480 --> 00:06:19,320 Speaker 3: week of dollar gradually, at least over over the next 126 00:06:19,440 --> 00:06:20,080 Speaker 3: six months. 127 00:06:21,040 --> 00:06:23,640 Speaker 4: I think so. But then you know, once again, we've 128 00:06:23,680 --> 00:06:26,119 Speaker 4: we've got to look at individual currency, so you start 129 00:06:26,160 --> 00:06:28,400 Speaker 4: to look at and we've got key day throughout later 130 00:06:28,440 --> 00:06:32,159 Speaker 4: this week from the Eurozone with CPI numbers, and like, 131 00:06:32,480 --> 00:06:34,440 Speaker 4: Europe does not look good at the moment from a 132 00:06:34,520 --> 00:06:37,360 Speaker 4: from a number of perspectives. So when when you look 133 00:06:37,400 --> 00:06:41,159 Speaker 4: at the dollar, and obviously you've got a heavy reliance 134 00:06:41,200 --> 00:06:43,560 Speaker 4: on the Euro within both the Blueberg Dollar Index and 135 00:06:44,160 --> 00:06:49,799 Speaker 4: the more conventional ones. You know, as an FX trader, 136 00:06:49,800 --> 00:06:51,760 Speaker 4: when we talk the dollar, we have to look at 137 00:06:51,760 --> 00:06:55,600 Speaker 4: the Euro and I can't personally justify too much more 138 00:06:56,000 --> 00:06:57,120 Speaker 4: top side for. 139 00:06:57,040 --> 00:06:57,920 Speaker 1: The euro dollar. 140 00:06:59,760 --> 00:07:02,039 Speaker 4: And and I think because of that, we could see 141 00:07:02,040 --> 00:07:05,400 Speaker 4: a change in the prospects of the dollar itself, because 142 00:07:05,800 --> 00:07:08,679 Speaker 4: as you said, we've seen like a four percent decrease already, 143 00:07:08,680 --> 00:07:10,920 Speaker 4: and so FX markets do tend to get ahead of 144 00:07:10,960 --> 00:07:13,920 Speaker 4: themselves and we price things in in ninety seconds that 145 00:07:13,960 --> 00:07:17,400 Speaker 4: the real world takes nine months to come to fruition, right, 146 00:07:18,840 --> 00:07:21,640 Speaker 4: And so may we maybe we have overpriced a little 147 00:07:21,640 --> 00:07:24,400 Speaker 4: bit more of this downside for the dollar because certainly 148 00:07:25,320 --> 00:07:29,720 Speaker 4: we've seen that big decrease, and with increased geopolitical tensions 149 00:07:29,760 --> 00:07:31,760 Speaker 4: across the globe, the dollars a favorite to go to 150 00:07:31,920 --> 00:07:35,040 Speaker 4: for a haven trade. So if we see escalations and 151 00:07:35,440 --> 00:07:37,760 Speaker 4: segue into what we're seeing. You guys were just talking 152 00:07:37,920 --> 00:07:41,440 Speaker 4: from Israel. At the moment. Things don't look smooth across 153 00:07:41,720 --> 00:07:44,720 Speaker 4: the whole globe, So the dollar can I think the 154 00:07:44,760 --> 00:07:47,680 Speaker 4: dollar could turn, and could turn very dramatically. But it 155 00:07:47,720 --> 00:07:49,280 Speaker 4: feels like, and I hate to say it, this week 156 00:07:49,320 --> 00:07:52,480 Speaker 4: could be another pivotal week, right because these these employment 157 00:07:52,600 --> 00:07:56,400 Speaker 4: numbers come through. Plus, if we see how the geopolitical 158 00:07:56,440 --> 00:08:00,600 Speaker 4: situation plays out, and as we've seen from dollar yen 159 00:08:00,680 --> 00:08:04,360 Speaker 4: in the last day or so, massive moves in that 160 00:08:04,360 --> 00:08:08,360 Speaker 4: currency from politics, I think we're in for some interesting 161 00:08:08,440 --> 00:08:11,320 Speaker 4: times and maybe the dollar does come back into favor 162 00:08:11,400 --> 00:08:13,280 Speaker 4: in those conditions very quickly. 163 00:08:13,360 --> 00:08:16,559 Speaker 2: Nick, ten seconds. I mean, have we seen a top 164 00:08:16,600 --> 00:08:19,520 Speaker 2: in the Chinese currency here? We're strengthening quite a bit. 165 00:08:21,560 --> 00:08:24,200 Speaker 4: I think we may have done Yeah, it's it's that's 166 00:08:24,240 --> 00:08:26,600 Speaker 4: going to be a big call for this week. We've 167 00:08:26,640 --> 00:08:28,520 Speaker 4: got golden week as well, so there may be some 168 00:08:28,560 --> 00:08:30,640 Speaker 4: profit taking that comes through both of the currency and 169 00:08:30,640 --> 00:08:33,960 Speaker 4: for stocks in China. But the question for all investors 170 00:08:34,040 --> 00:08:36,480 Speaker 4: is have they done enough. They've done They've done a 171 00:08:36,480 --> 00:08:38,840 Speaker 4: hell of a lot, but they've done that for a 172 00:08:38,920 --> 00:08:39,600 Speaker 4: very good reason. 173 00:08:40,000 --> 00:08:42,320 Speaker 3: Great points, Nick, really really good to have you on 174 00:08:42,360 --> 00:08:44,880 Speaker 3: the program out of time. Unfortunately, Nick Twydale there from 175 00:08:45,160 --> 00:08:56,200 Speaker 3: eighty FX on the markets, Sonya Meskin, senior economists for 176 00:08:56,280 --> 00:09:00,240 Speaker 3: it UBS Investment Bank, Sonya, Let's talk a litle little 177 00:09:00,240 --> 00:09:04,679 Speaker 3: bit about consumer confidence in the United States. Are consumers 178 00:09:04,880 --> 00:09:07,400 Speaker 3: gaining in confidence or surrendering it? 179 00:09:08,559 --> 00:09:10,120 Speaker 5: Well, it's a very interesting question. 180 00:09:10,240 --> 00:09:14,360 Speaker 6: We've seen two different measures come out last week, and 181 00:09:14,400 --> 00:09:17,800 Speaker 6: they've painted some with divergent pictures. The Conference Boards measure 182 00:09:17,920 --> 00:09:21,600 Speaker 6: was more pessimistic than the University of Michigan's measure, and 183 00:09:21,640 --> 00:09:24,120 Speaker 6: I think partly it may have to do with the 184 00:09:24,160 --> 00:09:27,400 Speaker 6: way that the service that collected, but also the timing 185 00:09:27,440 --> 00:09:30,960 Speaker 6: of the service, because of course the Conference Board surveyce timing. 186 00:09:31,360 --> 00:09:33,760 Speaker 5: The question was asked prior to the cut. 187 00:09:34,520 --> 00:09:37,480 Speaker 6: The University of Michigan asked the question post the Fat's cut. 188 00:09:38,640 --> 00:09:41,840 Speaker 2: Okay, so that seems significant. But when you look at 189 00:09:41,840 --> 00:09:45,440 Speaker 2: the expectations for inflation, is that beginning to come down 190 00:09:45,440 --> 00:09:46,800 Speaker 2: as well? 191 00:09:46,800 --> 00:09:49,880 Speaker 6: That's interesting as well because shorter term yes, in the 192 00:09:49,960 --> 00:09:53,920 Speaker 6: University of Michigan's measure, the one year ahead inflation expectations 193 00:09:53,960 --> 00:09:56,360 Speaker 6: do seem to be coming down, whereas the longer term 194 00:09:56,360 --> 00:10:00,120 Speaker 6: inflation expectations appear to be a bit stickier even as. 195 00:10:00,160 --> 00:10:02,040 Speaker 5: The actual inflation is coming down. 196 00:10:02,120 --> 00:10:05,480 Speaker 6: Obviously, we had the PC numbers last week and we 197 00:10:05,600 --> 00:10:08,679 Speaker 6: continue to see the acceleration there, especially in the headline number. 198 00:10:10,720 --> 00:10:14,240 Speaker 3: So when we look at conditions as a result of 199 00:10:14,280 --> 00:10:16,840 Speaker 3: what the Fed is done by cutting by fifty bases points, 200 00:10:17,720 --> 00:10:22,160 Speaker 3: are we expecting to see the yield curve steepen and 201 00:10:22,200 --> 00:10:25,640 Speaker 3: if we do see longer term yields increase a little bit, 202 00:10:25,840 --> 00:10:29,800 Speaker 3: is that because of confidence about growth, you know, in 203 00:10:29,840 --> 00:10:33,480 Speaker 3: the in the broader part of the US economy, or 204 00:10:33,520 --> 00:10:35,000 Speaker 3: is it more about fears of inflation? 205 00:10:36,120 --> 00:10:38,960 Speaker 6: Well that's you know, when the curve, when the FED 206 00:10:39,000 --> 00:10:43,320 Speaker 6: begins to cut rates, the curve naturally steepens, whether just 207 00:10:43,360 --> 00:10:45,600 Speaker 6: because you know, obviously shorter term rates are coming down, 208 00:10:46,440 --> 00:10:49,760 Speaker 6: but in the intermediate to longer term sector we could 209 00:10:49,760 --> 00:10:54,760 Speaker 6: be seeing both some more confidence in growth expectations as 210 00:10:54,800 --> 00:10:58,360 Speaker 6: well as the higher term premium, which really means high uncertainty, 211 00:10:58,400 --> 00:11:01,079 Speaker 6: and that's where fiscal concerns be coming in as well. 212 00:11:02,000 --> 00:11:04,720 Speaker 2: So we've seen the FED kind of pivot away from 213 00:11:04,960 --> 00:11:10,240 Speaker 2: being concerned about the level of inflation to more trying 214 00:11:10,240 --> 00:11:12,280 Speaker 2: to deal with a labor market that seems to be 215 00:11:12,360 --> 00:11:15,640 Speaker 2: weakening pretty steadily. Here, we've got the non farm payrolls 216 00:11:15,720 --> 00:11:18,640 Speaker 2: data do on Friday. I think economists and our survey 217 00:11:18,800 --> 00:11:21,400 Speaker 2: are looking at the creation of about one hundred and 218 00:11:21,440 --> 00:11:26,000 Speaker 2: forty six thousand non farm jobs in the month of September. 219 00:11:26,120 --> 00:11:28,760 Speaker 2: How are you viewing the American labor market right now? 220 00:11:29,520 --> 00:11:33,600 Speaker 6: We do expect ongoing acceleration in the labor market really 221 00:11:33,600 --> 00:11:36,960 Speaker 6: as a reflection of a broader growth slow down. GDP 222 00:11:37,080 --> 00:11:40,160 Speaker 6: growth is expected to slow as well, so these two 223 00:11:40,200 --> 00:11:44,280 Speaker 6: trends would be naturally consistent. Our own forecast is a 224 00:11:44,280 --> 00:11:48,600 Speaker 6: bit higher than yours at one eighty one thousand gains 225 00:11:48,640 --> 00:11:52,160 Speaker 6: for September, and also operate revisions to August, which are 226 00:11:52,400 --> 00:11:56,040 Speaker 6: very historically common, in part because the response rate in 227 00:11:56,080 --> 00:11:59,280 Speaker 6: August proper is not particularly high. 228 00:11:59,520 --> 00:12:02,079 Speaker 3: I'm curious what is your thoughts on the housing sector, 229 00:12:02,320 --> 00:12:04,040 Speaker 3: because you've got a couple of ways of looking at it. 230 00:12:04,080 --> 00:12:08,880 Speaker 3: Mortgage applications are up, but there's a possibility I would 231 00:12:08,920 --> 00:12:11,520 Speaker 3: suppose that if jobs don't do very well, that the 232 00:12:11,600 --> 00:12:14,319 Speaker 3: housing market doesn't do very well. So what's going to 233 00:12:14,360 --> 00:12:18,040 Speaker 3: affect housing more? The FED cutting interest rates, which would 234 00:12:18,200 --> 00:12:22,920 Speaker 3: be seemingly a very good thing for that market or jobs. 235 00:12:24,040 --> 00:12:25,679 Speaker 5: Well, both of course are important. 236 00:12:26,320 --> 00:12:29,920 Speaker 6: We've seen in recent years some pent up demand in 237 00:12:30,160 --> 00:12:35,200 Speaker 6: housing on short supply but few transactions really, so lower 238 00:12:35,280 --> 00:12:38,280 Speaker 6: rates are supposed to of course help with that, but 239 00:12:38,400 --> 00:12:41,200 Speaker 6: at the same time, we also do expect some expansion 240 00:12:41,240 --> 00:12:44,400 Speaker 6: and supply, which would be meaningful away. 241 00:12:44,160 --> 00:12:47,360 Speaker 2: From the market though. Per se, if you get a 242 00:12:47,400 --> 00:12:51,000 Speaker 2: lot of refinancing as a result of a lower rate, 243 00:12:52,000 --> 00:12:55,160 Speaker 2: is that money likely the money that is saved there, 244 00:12:55,480 --> 00:12:58,120 Speaker 2: is that likely to enter the economy in a meaningful 245 00:12:58,160 --> 00:12:59,440 Speaker 2: way or will it be saved? 246 00:12:59,440 --> 00:13:02,160 Speaker 5: Do you think it could be both? 247 00:13:02,760 --> 00:13:05,960 Speaker 6: And it really depends on which income bracket we're talking about, 248 00:13:06,000 --> 00:13:11,480 Speaker 6: because lower, lower income consumers do tend to spend proportionally more, 249 00:13:12,440 --> 00:13:15,160 Speaker 6: and we've seen savings there get depleted. 250 00:13:14,760 --> 00:13:17,000 Speaker 5: A lot faster than the upper income strata. 251 00:13:18,360 --> 00:13:21,040 Speaker 3: So everything, you know, it's kind of like checks and balances. 252 00:13:21,120 --> 00:13:23,720 Speaker 3: Everything has well if you look at it from this standpoint, 253 00:13:23,800 --> 00:13:25,800 Speaker 3: and then you have to look at it from this standpoint, right, 254 00:13:25,880 --> 00:13:28,880 Speaker 3: So you've got kind of a healthy consumer, but not 255 00:13:28,920 --> 00:13:32,080 Speaker 3: at the lower end. You've got housing that could do 256 00:13:32,160 --> 00:13:34,160 Speaker 3: well because of rates coming down, But then you got 257 00:13:34,200 --> 00:13:37,079 Speaker 3: to watch jobs on balance as you look at the 258 00:13:37,160 --> 00:13:41,160 Speaker 3: US economy. Are you positive six months out or slightly negative? 259 00:13:42,720 --> 00:13:46,120 Speaker 6: I think we would be. You know, we're not expecting 260 00:13:46,120 --> 00:13:49,120 Speaker 6: anything drastic. We're not expecting your recession. We're expecting you 261 00:13:49,160 --> 00:13:51,760 Speaker 6: to slow down, which, in fact, the fact had been 262 00:13:52,160 --> 00:13:56,560 Speaker 6: looking to achieve precisely because that would help bring inflation down, 263 00:13:56,640 --> 00:14:01,320 Speaker 6: and that connection between strong wage growth and higher inflation 264 00:14:01,960 --> 00:14:05,200 Speaker 6: is something that could be in fact quite dangerous and 265 00:14:05,440 --> 00:14:09,040 Speaker 6: entrenching inflation expectations to be higher longer term. So some 266 00:14:09,160 --> 00:14:12,640 Speaker 6: slow down in the labor market would not be inconsistent 267 00:14:12,640 --> 00:14:15,680 Speaker 6: with the FED subjective and also our expectation. But we're 268 00:14:15,720 --> 00:14:17,920 Speaker 6: not expecting anything drastic on the downside. 269 00:14:18,000 --> 00:14:20,480 Speaker 2: I'm curious as to what you're expecting Sonya to hear 270 00:14:20,480 --> 00:14:23,040 Speaker 2: from FED Shair J. Powell tomorrow when he speaks to 271 00:14:23,080 --> 00:14:27,080 Speaker 2: the National Association for Business Economics. What are the themes 272 00:14:27,240 --> 00:14:29,760 Speaker 2: do you think that he needs to address if the 273 00:14:29,800 --> 00:14:34,840 Speaker 2: FED is going to offer the appropriate messaging going forward. 274 00:14:35,240 --> 00:14:37,920 Speaker 6: Yes, it would be very good if he addresses a 275 00:14:37,960 --> 00:14:41,360 Speaker 6: little bit more how the FED is thinking about progress 276 00:14:41,360 --> 00:14:45,120 Speaker 6: in the labor market going forward, and whether, of course 277 00:14:45,160 --> 00:14:47,920 Speaker 6: they can't commit to any specific piece of cuts we've 278 00:14:47,920 --> 00:14:53,320 Speaker 6: heard of from some speakers last week, including Kashkari who 279 00:14:53,760 --> 00:14:56,480 Speaker 6: indicated that he would be I think more interested in 280 00:14:56,480 --> 00:15:01,440 Speaker 6: a twenty five business point piece rather than fifty. But really, 281 00:15:01,840 --> 00:15:04,280 Speaker 6: how the FED is thinking about the terminal rate and 282 00:15:04,320 --> 00:15:07,320 Speaker 6: how the FED is thinking about the interplay between the 283 00:15:07,440 --> 00:15:10,760 Speaker 6: data and the piece at which they expect to be 284 00:15:10,800 --> 00:15:13,080 Speaker 6: easying rates. With any more color on that would be 285 00:15:13,200 --> 00:15:13,760 Speaker 6: very welcome. 286 00:15:14,720 --> 00:15:17,560 Speaker 3: Sonia. Maybe my last question, if we look at the 287 00:15:17,600 --> 00:15:20,800 Speaker 3: FED going forward, are we going to get a new 288 00:15:20,920 --> 00:15:24,400 Speaker 3: sort of policy framework, some sort of next big move 289 00:15:24,440 --> 00:15:25,560 Speaker 3: that the FED wants to make. 290 00:15:26,600 --> 00:15:30,960 Speaker 6: Well, the FED did indeed have a policy framework revision 291 00:15:32,040 --> 00:15:36,520 Speaker 6: in kind of around the pandemic, and it may be 292 00:15:36,680 --> 00:15:39,440 Speaker 6: in fact one of the reasons why there was somewhat 293 00:15:39,480 --> 00:15:43,360 Speaker 6: more reactive than proactive when it came to the acceleration 294 00:15:43,440 --> 00:15:46,720 Speaker 6: and inflation, and that is something that they may, in fact, 295 00:15:46,720 --> 00:15:50,760 Speaker 6: to some extent reconsider going forward. It appears that they 296 00:15:51,440 --> 00:15:53,760 Speaker 6: really did not want to be reactive this time around. 297 00:15:53,800 --> 00:15:56,560 Speaker 6: This the economy is slowing, which may be one reason 298 00:15:56,600 --> 00:15:59,680 Speaker 6: why they caught. They started off with a fifty basis 299 00:15:59,680 --> 00:16:03,680 Speaker 6: point this time around, So that is perhaps something that 300 00:16:03,720 --> 00:16:05,840 Speaker 6: will come out in our future iterations. 301 00:16:06,080 --> 00:16:08,120 Speaker 3: Yeah, let me just sneak this one in quickly before 302 00:16:08,160 --> 00:16:11,120 Speaker 3: we go. Was it a mistake years ago when the 303 00:16:11,120 --> 00:16:14,440 Speaker 3: FED said, well, we think, really inflation was so low 304 00:16:14,520 --> 00:16:16,320 Speaker 3: for so long that we want to let it run 305 00:16:16,360 --> 00:16:19,280 Speaker 3: hot for a while to kind of balance things out. 306 00:16:19,360 --> 00:16:22,720 Speaker 7: Was that a mistake then, well, they certainly did not 307 00:16:22,840 --> 00:16:25,520 Speaker 7: expect the supply side shock that we got post COVID, 308 00:16:25,920 --> 00:16:29,840 Speaker 7: I believe when they were saying that so in a sense, 309 00:16:29,960 --> 00:16:32,080 Speaker 7: in the context in which they were operating then and 310 00:16:32,120 --> 00:16:36,040 Speaker 7: the expectations they had further out, perhaps not, but you 311 00:16:36,080 --> 00:16:39,800 Speaker 7: do get those these exhaugous shocks, which you know, obviously 312 00:16:39,800 --> 00:16:44,080 Speaker 7: no one expected that I think more necessarily as in 313 00:16:44,120 --> 00:16:46,120 Speaker 7: line with the framework that they had laid out. 314 00:16:47,200 --> 00:16:49,560 Speaker 3: All right, Sonya, thank you so much for joining us 315 00:16:49,560 --> 00:16:53,840 Speaker 3: here on the program. Sonya Michigan, Senior economists for UBS 316 00:16:53,840 --> 00:16:54,720 Speaker 3: Investment Bank. 317 00:17:02,280 --> 00:17:04,600 Speaker 2: Let's take a closer look now at what is happening 318 00:17:04,640 --> 00:17:06,440 Speaker 2: in the Middle East. It may be fair to say 319 00:17:06,520 --> 00:17:10,960 Speaker 2: the escalation of violence between Israel and those Iran bach 320 00:17:11,160 --> 00:17:15,399 Speaker 2: backed proxies really threatening to bring these combatants closer to 321 00:17:15,440 --> 00:17:18,720 Speaker 2: a regional war. Joining us now at the Bloomberg Interactive, 322 00:17:18,760 --> 00:17:21,199 Speaker 2: a broker studio here in New York. John Jay Edwards, 323 00:17:21,200 --> 00:17:25,560 Speaker 2: he is Bloomberg Weekend America's managing editor. Thanks for making time. 324 00:17:25,600 --> 00:17:28,000 Speaker 2: I'm sure it's been a busy day for you. So 325 00:17:28,440 --> 00:17:31,359 Speaker 2: ed just referred to the killing of the leader of 326 00:17:31,400 --> 00:17:35,919 Speaker 2: Hezbalah Nissan Nosrala in Beirut last week. How is this 327 00:17:36,040 --> 00:17:39,600 Speaker 2: being received right now in Israel? What's the mood there? 328 00:17:39,920 --> 00:17:42,679 Speaker 8: Yeah, Actually, the mood in Israel at the moment is, 329 00:17:43,359 --> 00:17:46,639 Speaker 8: according to our reporting, somewhat jubilant. In fact, you know, 330 00:17:47,119 --> 00:17:53,040 Speaker 8: israelis after the long and you know, you know, really 331 00:17:53,240 --> 00:17:59,639 Speaker 8: in many ways disturbing slog in Gaza are celebrating what 332 00:17:59,680 --> 00:18:03,440 Speaker 8: they say, he is a clearer success in the actions 333 00:18:03,440 --> 00:18:06,200 Speaker 8: against Hesbela over the last several weeks, you know, going 334 00:18:06,240 --> 00:18:10,919 Speaker 8: back to of course the attacks on heswell uh and 335 00:18:10,960 --> 00:18:16,119 Speaker 8: their use of pagers that were sabotaged by the Israelis 336 00:18:16,680 --> 00:18:20,399 Speaker 8: UH and uh and then you know, of course, the 337 00:18:20,400 --> 00:18:26,680 Speaker 8: the strikes on Friday that that killed Nosrala. So, in fact, 338 00:18:26,800 --> 00:18:31,240 Speaker 8: the recent Israeli actions have killed a great many of 339 00:18:32,240 --> 00:18:36,160 Speaker 8: Heswela's top leadership. Looks like, you know, something like ten 340 00:18:36,200 --> 00:18:40,520 Speaker 8: of their top eleven leaders and uh, So there is 341 00:18:40,560 --> 00:18:44,600 Speaker 8: a feeling in Israel at the moment that this is 342 00:18:45,320 --> 00:18:48,639 Speaker 8: a an operation that has gone pretty much to plan 343 00:18:48,960 --> 00:18:53,360 Speaker 8: and has has actually perhaps led to, you know, some 344 00:18:53,600 --> 00:18:56,480 Speaker 8: greater safety for for those in Israel's North. 345 00:18:57,760 --> 00:19:02,719 Speaker 3: John, with Nostralla's death, is Hesblah beaten or does this 346 00:19:02,920 --> 00:19:06,679 Speaker 3: just continue? This is always a cycle. But he was 347 00:19:06,880 --> 00:19:09,760 Speaker 3: a kind of significant leader for Hesbela. 348 00:19:10,320 --> 00:19:14,400 Speaker 8: He was absolutely significant, and you know, it's obviously too 349 00:19:14,440 --> 00:19:17,639 Speaker 8: soon to say that he was beaten, but he was 350 00:19:17,840 --> 00:19:21,639 Speaker 8: is clearly diminished both by the loss of Mazrala and 351 00:19:21,680 --> 00:19:26,120 Speaker 8: other leaders, as well as by you know, the the 352 00:19:26,160 --> 00:19:29,399 Speaker 8: decimation of its communications capability. You know, they had turned 353 00:19:29,440 --> 00:19:34,560 Speaker 8: to those pagers because they had well founded fears that 354 00:19:34,680 --> 00:19:38,080 Speaker 8: the cell phones that were using before were being monitored 355 00:19:38,080 --> 00:19:40,679 Speaker 8: by the Israelis, So they got rid of the cell phones, 356 00:19:40,720 --> 00:19:43,960 Speaker 8: went to the pagers. The pagers exploded, They turned to 357 00:19:43,960 --> 00:19:47,439 Speaker 8: walkie talkies, many of which also exploded. So you know, 358 00:19:47,480 --> 00:19:52,360 Speaker 8: they they are rattled, they are diminished, and I imagine 359 00:19:52,359 --> 00:19:56,480 Speaker 8: that they as well as as well as Iran are 360 00:19:56,520 --> 00:20:00,000 Speaker 8: trying to figure out exactly what their remaining capabilities are 361 00:20:00,080 --> 00:20:02,400 Speaker 8: are even as Israel makes further plans. 362 00:20:02,920 --> 00:20:06,080 Speaker 2: So among those plans, might we see a ground invasion. 363 00:20:06,119 --> 00:20:08,679 Speaker 2: I mean, we're actually the idea for to cross the 364 00:20:08,680 --> 00:20:09,600 Speaker 2: border with Lebanon. 365 00:20:10,160 --> 00:20:14,080 Speaker 8: Yes, that's considered very possible. You know, it's not clear 366 00:20:14,119 --> 00:20:17,600 Speaker 8: exactly when that would happen, but the thought is, you know, 367 00:20:17,640 --> 00:20:23,640 Speaker 8: possibly in coming days. And you know, you know, interestingly 368 00:20:23,680 --> 00:20:27,439 Speaker 8: on nomenclature, we are thinking that it's likelier to be 369 00:20:27,480 --> 00:20:32,360 Speaker 8: an incursion rather than an invasion, meaning that Israel would 370 00:20:32,400 --> 00:20:36,480 Speaker 8: send ground troops in to accomplish certain objectives and then 371 00:20:36,600 --> 00:20:40,000 Speaker 8: come out as opposed to an invasion and sort of occupation, 372 00:20:40,160 --> 00:20:44,680 Speaker 8: a longer term operation as we saw on Gaza. 373 00:20:44,920 --> 00:20:49,400 Speaker 3: You mentioned that even even liberal Israelis have welcomed these strikes, 374 00:20:49,760 --> 00:20:52,920 Speaker 3: but we note that they also are saying now is 375 00:20:52,960 --> 00:20:55,879 Speaker 3: the time to push for peace. Yeah, push for a 376 00:20:55,920 --> 00:20:59,080 Speaker 3: negotiated peace. The question is who do you negotiate with? 377 00:20:59,440 --> 00:21:02,760 Speaker 3: And you know, and and you know, what form does 378 00:21:02,800 --> 00:21:06,080 Speaker 3: it take if if if the timing is right to 379 00:21:06,119 --> 00:21:08,800 Speaker 3: push for it, now, what form does it take? 380 00:21:09,600 --> 00:21:13,520 Speaker 8: Yeah, that's exactly right. I think that you know, Uh, 381 00:21:13,640 --> 00:21:18,440 Speaker 8: Natan Yahu's government is seeing it more as a time 382 00:21:18,640 --> 00:21:25,639 Speaker 8: to continue pressing Uh its clear advantage against Hesbelah and uh, 383 00:21:25,840 --> 00:21:27,720 Speaker 8: you know, as you say, there is some question as 384 00:21:27,760 --> 00:21:32,000 Speaker 8: to you know, with whom Israel would negotiate at this point. 385 00:21:32,680 --> 00:21:36,960 Speaker 8: But I believe that Israel sees, you know, still further 386 00:21:37,119 --> 00:21:43,080 Speaker 8: opportunity to UH degrade Hesbela's capabilities, and UH, you know, 387 00:21:43,240 --> 00:21:46,800 Speaker 8: is more hopeful of achieving peace through that means than 388 00:21:47,200 --> 00:21:49,240 Speaker 8: than at the negotiating table at the moment. 389 00:21:49,320 --> 00:21:52,879 Speaker 2: It's been nearly a year since Warren Gaza. We're talking 390 00:21:52,920 --> 00:21:55,920 Speaker 2: here about the situation with Hesbelah. What about with the 391 00:21:56,000 --> 00:21:57,760 Speaker 2: moss and the Gaza strip. 392 00:21:58,280 --> 00:22:02,399 Speaker 8: Yeah, that you know, also UH remains somewhat up in 393 00:22:02,440 --> 00:22:06,320 Speaker 8: the air. And the the pressure that the United States 394 00:22:06,320 --> 00:22:10,240 Speaker 8: and others have been applying for a negotiated ceasefire there, 395 00:22:11,200 --> 00:22:14,080 Speaker 8: that also seems to be you know, a somewhat distant 396 00:22:14,080 --> 00:22:17,520 Speaker 8: prospect at this point. Again, as as Israel and and 397 00:22:17,640 --> 00:22:21,639 Speaker 8: UH and Natan Yaho see their military strategy you know, 398 00:22:21,680 --> 00:22:26,439 Speaker 8: bearing significant fruit in UH in Lebanon, UH, you know 399 00:22:26,520 --> 00:22:29,960 Speaker 8: that that makes them, I believe, still less inclined to 400 00:22:30,560 --> 00:22:35,760 Speaker 8: seek a negotiated peace or even a ceasefire with hamas 401 00:22:35,800 --> 00:22:36,600 Speaker 8: in Gaza. 402 00:22:37,240 --> 00:22:38,840 Speaker 2: John, we'll leave it there. Thank you so much for 403 00:22:38,880 --> 00:22:41,800 Speaker 2: making time to chat with us. John Jay Edwards, Bloomberg 404 00:22:41,840 --> 00:22:45,159 Speaker 2: Weekend America's managing editor joining us from here in New 405 00:22:45,240 --> 00:22:46,240 Speaker 2: York on daybreakation. 406 00:22:53,840 --> 00:22:58,719 Speaker 3: Fance Howard, CEO and portfolio manager at Howard Capital Management Events, 407 00:22:58,800 --> 00:23:01,840 Speaker 3: Thanks very much for joining us. I'm wondering whether or 408 00:23:01,840 --> 00:23:04,760 Speaker 3: not we're going to get volatility on steroids this week 409 00:23:05,359 --> 00:23:09,400 Speaker 3: in China and Japan, given what we heard from Doug earlier. 410 00:23:09,960 --> 00:23:13,560 Speaker 3: Uh and and and there's just been such a rush 411 00:23:13,600 --> 00:23:16,760 Speaker 3: of funds into Chinese assets, and you know, you have 412 00:23:16,840 --> 00:23:20,399 Speaker 3: this yen strength that could be hurting Japanese assets. I 413 00:23:20,400 --> 00:23:22,320 Speaker 3: know you're a little more geared up to talk about 414 00:23:22,320 --> 00:23:25,359 Speaker 3: the US, but is it is it possible that you know, 415 00:23:25,480 --> 00:23:27,800 Speaker 3: China and Japan really take the lion's share of attention 416 00:23:27,920 --> 00:23:28,359 Speaker 3: this morning? 417 00:23:29,280 --> 00:23:29,440 Speaker 6: Oh? 418 00:23:29,640 --> 00:23:30,520 Speaker 1: I think that they will. 419 00:23:30,560 --> 00:23:32,320 Speaker 9: You know, last year, let's face it, China, you know, 420 00:23:32,400 --> 00:23:34,800 Speaker 9: with what they did with the PBOC and the number 421 00:23:34,840 --> 00:23:36,800 Speaker 9: and dropping the rates over there is a game changer. 422 00:23:37,200 --> 00:23:39,800 Speaker 9: And you look at FXI, which is the ETF of China, 423 00:23:39,800 --> 00:23:43,760 Speaker 9: it had a very nice breakout, looks incredibly strong. I 424 00:23:43,760 --> 00:23:45,560 Speaker 9: don't think you can help with be bullish on China 425 00:23:45,600 --> 00:23:46,840 Speaker 9: right now. I mean, they're gonna throw a lot of 426 00:23:46,840 --> 00:23:48,679 Speaker 9: money at this. I think they've got one point one 427 00:23:48,800 --> 00:23:52,840 Speaker 9: one billion, one point one billion, one hundred four hundred trillion. 428 00:23:52,880 --> 00:23:53,119 Speaker 1: I don't know. 429 00:23:53,359 --> 00:23:55,359 Speaker 9: The liquidity that they're going to throw with this on 430 00:23:55,440 --> 00:23:59,520 Speaker 9: stock buybacks that came from the PBOC is just amazing. 431 00:23:59,560 --> 00:24:01,720 Speaker 9: So there's just a lot of legs for the China 432 00:24:01,760 --> 00:24:04,000 Speaker 9: market to move higher. Now that may affect Japan. I'm 433 00:24:04,000 --> 00:24:05,879 Speaker 9: not really sure how it's going to affect Japan in 434 00:24:05,880 --> 00:24:07,840 Speaker 9: the end, but will It'll be interesting to watch. 435 00:24:07,960 --> 00:24:11,440 Speaker 2: Fed policy drives so much of market psychology. We had 436 00:24:11,440 --> 00:24:15,120 Speaker 2: this very cool reading on the core PC last Friday. 437 00:24:15,640 --> 00:24:17,520 Speaker 2: Is it too much to think that the Fed will 438 00:24:17,520 --> 00:24:20,399 Speaker 2: do another fifty basis point rate cut in November? 439 00:24:21,000 --> 00:24:22,280 Speaker 1: No, I don't think so at all. 440 00:24:22,320 --> 00:24:24,639 Speaker 9: And I think you look at Fed chair Pale, I 441 00:24:24,640 --> 00:24:28,639 Speaker 9: think that he's looking at the unemployment numbers incredibly. 442 00:24:29,640 --> 00:24:31,440 Speaker 1: Hard. He's very devish right now. But you got the 443 00:24:31,520 --> 00:24:33,080 Speaker 1: Joels number coming out later in the week. 444 00:24:33,119 --> 00:24:34,920 Speaker 9: That's going to cause a little bit of volatility. But 445 00:24:35,000 --> 00:24:37,720 Speaker 9: I know the Fed's really looking at unemployment now. You 446 00:24:37,760 --> 00:24:39,840 Speaker 9: know in plation is coming back down, it's dropping at 447 00:24:39,840 --> 00:24:41,720 Speaker 9: a pretty good pace. So I think that's on track 448 00:24:41,760 --> 00:24:44,600 Speaker 9: and the trend is clearly lower. But unemployment is something 449 00:24:44,600 --> 00:24:46,199 Speaker 9: I think the Fed's really watching. I think if that 450 00:24:46,280 --> 00:24:48,200 Speaker 9: number comes in a week, I think you just almost 451 00:24:48,240 --> 00:24:49,879 Speaker 9: guaranteed a fifty basis point cut. 452 00:24:50,680 --> 00:24:54,240 Speaker 3: Now, people like to have victories, and especially given it's 453 00:24:54,280 --> 00:24:56,840 Speaker 3: been a tough period over the past three or four years. 454 00:24:57,520 --> 00:25:00,400 Speaker 3: Should the FED declare victory here or you know, would 455 00:25:00,400 --> 00:25:01,639 Speaker 3: that be sort of tempting fate? 456 00:25:02,640 --> 00:25:03,280 Speaker 1: I don't think so. 457 00:25:03,359 --> 00:25:04,959 Speaker 9: You know, I don't think the FED or any government 458 00:25:04,960 --> 00:25:07,280 Speaker 9: body needs to declare victory because it's an ongoing fight. 459 00:25:07,320 --> 00:25:09,960 Speaker 9: It's a never ending war, and you know, you never 460 00:25:10,000 --> 00:25:11,720 Speaker 9: know what page is going to be turned next week 461 00:25:11,760 --> 00:25:14,080 Speaker 9: and what challenges we're all going to be faced with. 462 00:25:14,280 --> 00:25:16,400 Speaker 9: But I think today, I think Sunday evening here in 463 00:25:16,440 --> 00:25:18,800 Speaker 9: the US, I think we can be pretty satisfied and happy. 464 00:25:18,840 --> 00:25:21,359 Speaker 9: You've got an uptrending market, there's a lot of money 465 00:25:21,359 --> 00:25:23,399 Speaker 9: to be made. You've got a tremendous amount of cash 466 00:25:23,440 --> 00:25:26,200 Speaker 9: on the sidelines. I was looking at the Better Reserve 467 00:25:26,280 --> 00:25:30,440 Speaker 9: Board Banks money market statistic that they put out on 468 00:25:30,480 --> 00:25:32,800 Speaker 9: the amount of money market money sitting out there, which 469 00:25:32,800 --> 00:25:35,480 Speaker 9: is about six point five trillion. That's an incredible amount 470 00:25:35,480 --> 00:25:37,560 Speaker 9: of money that's just sitting on the sidelines that can 471 00:25:37,600 --> 00:25:40,600 Speaker 9: be deployed into good equities in different sectors of the 472 00:25:40,720 --> 00:25:43,639 Speaker 9: investment economy. That's going to push things higher. So I 473 00:25:43,680 --> 00:25:44,840 Speaker 9: would be very, very bullish. 474 00:25:45,320 --> 00:25:47,680 Speaker 2: So you're speaking to us from the largest city in 475 00:25:47,720 --> 00:25:50,880 Speaker 2: what has become a swing state. You're in Atlanta, Georgia. 476 00:25:51,400 --> 00:25:54,120 Speaker 2: We've got an election about a month from now, and 477 00:25:54,200 --> 00:25:58,720 Speaker 2: I'm wondering whether or not your clients are expressing some concerns, 478 00:25:58,760 --> 00:26:03,119 Speaker 2: some apprehension and maybe talking to about shifting their strategies. 479 00:26:03,160 --> 00:26:05,480 Speaker 2: What's that conversation like right now? 480 00:26:06,280 --> 00:26:08,160 Speaker 9: I think this race is so tight that I think 481 00:26:08,160 --> 00:26:10,760 Speaker 9: that people are really just sitting on their hands. I 482 00:26:10,760 --> 00:26:12,880 Speaker 9: think what they're more concerned about if we can keep 483 00:26:12,880 --> 00:26:14,800 Speaker 9: a gridlock in the Congress, in the Senate. I think 484 00:26:14,920 --> 00:26:16,960 Speaker 9: that's going to be very very healthy no matter who 485 00:26:16,960 --> 00:26:19,280 Speaker 9: wins the presidential election. So I think more people are 486 00:26:19,280 --> 00:26:21,200 Speaker 9: looking at that and a little bit more concerned about 487 00:26:21,200 --> 00:26:22,680 Speaker 9: that than they are who wins the White House. 488 00:26:23,119 --> 00:26:24,480 Speaker 1: But it's going to be a vault you know what, 489 00:26:24,480 --> 00:26:25,720 Speaker 1: do we have thirty six days. 490 00:26:25,600 --> 00:26:27,520 Speaker 9: Until the election, So it's going to be a volatile 491 00:26:27,680 --> 00:26:30,000 Speaker 9: period of time as people sort of decide what they 492 00:26:30,000 --> 00:26:32,320 Speaker 9: want to do. I think election night you may see 493 00:26:32,320 --> 00:26:35,199 Speaker 9: some volatility after election, not the day after, because you're 494 00:26:35,240 --> 00:26:37,600 Speaker 9: going to have a pretty good, pretty good idea of 495 00:26:37,600 --> 00:26:38,840 Speaker 9: what to expect going forward. 496 00:26:40,240 --> 00:26:43,919 Speaker 3: And when we look at deploying money, given the election 497 00:26:44,080 --> 00:26:48,680 Speaker 3: coming up, and given the inflation fight and the jobs concerned. 498 00:26:49,640 --> 00:26:51,120 Speaker 3: I like it that you say that, you know, it's 499 00:26:51,160 --> 00:26:55,520 Speaker 3: really important to think about the math not emotion. Explain 500 00:26:55,600 --> 00:26:57,000 Speaker 3: that a little bit for our listeners. 501 00:26:57,640 --> 00:26:59,359 Speaker 9: Well, when you look at the trend, two things you 502 00:26:59,359 --> 00:27:00,800 Speaker 9: don't want to fight. One, you don't want to fight 503 00:27:00,800 --> 00:27:03,040 Speaker 9: the FED. Clearly the Feds dropping race. That's a that's 504 00:27:03,040 --> 00:27:05,280 Speaker 9: a very positive sign. Number two is you don't want 505 00:27:05,320 --> 00:27:07,400 Speaker 9: to fight the trend. And now we use the ACM byline, 506 00:27:07,400 --> 00:27:10,080 Speaker 9: which that's our proprietary trend indicator and is clearly up 507 00:27:10,119 --> 00:27:12,600 Speaker 9: as clearly strong and all pullbacks should be bought until 508 00:27:12,640 --> 00:27:14,880 Speaker 9: that changes. But you just don't want to fight the trend. 509 00:27:14,920 --> 00:27:17,359 Speaker 9: The trend's too strong. There's too much cash on the 510 00:27:17,400 --> 00:27:19,760 Speaker 9: sidelines to build a base underneath this market, so it 511 00:27:19,840 --> 00:27:21,920 Speaker 9: keeps it from going you know, dropping too lower, being 512 00:27:21,920 --> 00:27:24,560 Speaker 9: too volatile, because any pullback you have we see as 513 00:27:24,560 --> 00:27:27,159 Speaker 9: a buying opportunity. I think others will too. I mean, 514 00:27:27,200 --> 00:27:29,480 Speaker 9: if he drops rates another half a basis point. You 515 00:27:29,560 --> 00:27:31,600 Speaker 9: got six point five trade in money market. Some of 516 00:27:31,640 --> 00:27:34,119 Speaker 9: that's going to come off the sidelines into equity. So 517 00:27:34,560 --> 00:27:36,760 Speaker 9: I would be very bullish and I'd be buying on pullbacks. 518 00:27:36,800 --> 00:27:38,919 Speaker 9: And there's a lot of opportunities now because the market 519 00:27:38,960 --> 00:27:42,040 Speaker 9: has broadened, doubt from just being the magnificent seven. 520 00:27:42,080 --> 00:27:43,360 Speaker 1: So it's getting pretty encouraging. 521 00:27:43,560 --> 00:27:46,160 Speaker 2: That said, I mean, are you negative on the bond 522 00:27:46,240 --> 00:27:49,560 Speaker 2: market right now? Are those opportunities pretty much? Have they evaporated? 523 00:27:50,280 --> 00:27:50,800 Speaker 1: Not at all? 524 00:27:51,000 --> 00:27:52,359 Speaker 9: I think you need to but you need to look 525 00:27:52,400 --> 00:27:55,199 Speaker 9: at other places than twenty year treasury. The twenty year 526 00:27:55,280 --> 00:27:58,080 Speaker 9: treasuries drop back since they dropped race, and the reason 527 00:27:58,119 --> 00:28:00,840 Speaker 9: being is is people are concerned about how big our 528 00:28:00,880 --> 00:28:03,760 Speaker 9: debt loads is becoming. Our debt is becoming, you know, 529 00:28:03,800 --> 00:28:06,240 Speaker 9: astronomically high. But if you look at other sectors of 530 00:28:06,280 --> 00:28:09,320 Speaker 9: the bond market looks, look at convertible bonds like CWB 531 00:28:09,680 --> 00:28:13,040 Speaker 9: it's breaking out to a very nice breakout of you know, 532 00:28:13,400 --> 00:28:16,119 Speaker 9: for the year, it's looking strong. High yields are looking strong, 533 00:28:16,160 --> 00:28:19,480 Speaker 9: Emerging market bonds EMB's looking strong, it's broke out. Also 534 00:28:20,000 --> 00:28:21,879 Speaker 9: other areas the bond market looks strong. 535 00:28:22,119 --> 00:28:22,679 Speaker 1: The twenty year. 536 00:28:22,720 --> 00:28:24,560 Speaker 9: Treasury is looking a little bit weak, but I think 537 00:28:24,600 --> 00:28:26,200 Speaker 9: it'll have its day. 538 00:28:26,760 --> 00:28:29,960 Speaker 3: We just got this flash from NHK, the public broadcaster 539 00:28:30,080 --> 00:28:34,080 Speaker 3: in Japan, saying that the incoming prime Minister Ishiba is 540 00:28:34,280 --> 00:28:37,640 Speaker 3: eyeing a general election for October twenty seventh, so that's 541 00:28:38,040 --> 00:28:43,960 Speaker 3: coming up pretty fast. We understand that Shigeru Ishiba's surprise 542 00:28:44,080 --> 00:28:46,880 Speaker 3: victory has kind of caused people to buy the end 543 00:28:46,920 --> 00:28:49,640 Speaker 3: strength the en is strengthening. Do you think most people 544 00:28:49,680 --> 00:28:53,080 Speaker 3: invested in Japanese equity are hedged or could this be 545 00:28:53,160 --> 00:28:56,160 Speaker 3: a potential problem here with the kind of runaway strength 546 00:28:56,200 --> 00:28:56,600 Speaker 3: in the end. 547 00:28:57,680 --> 00:28:59,560 Speaker 9: I don't think so. I think you got runaway strength 548 00:28:59,560 --> 00:29:01,360 Speaker 9: in the RIM. I don't think they've hedged at all. 549 00:29:01,400 --> 00:29:03,480 Speaker 9: I think this is, you know, an opportunity over there. 550 00:29:04,400 --> 00:29:06,760 Speaker 9: You know, the volatility in their market's been pretty extreme, 551 00:29:06,800 --> 00:29:08,120 Speaker 9: so it's a little bit hard to trade and a 552 00:29:08,120 --> 00:29:09,160 Speaker 9: little bit hard to judge. 553 00:29:09,160 --> 00:29:11,440 Speaker 1: But you know, they've got a lot of activity over there. 554 00:29:11,440 --> 00:29:13,000 Speaker 9: But again, I would go back to China'd be more 555 00:29:13,040 --> 00:29:15,360 Speaker 9: bullish on China, and I'd look at like FXI, which 556 00:29:15,440 --> 00:29:16,360 Speaker 9: is the ETF of China. 557 00:29:16,400 --> 00:29:17,280 Speaker 1: I'd be a buyer that. 558 00:29:18,040 --> 00:29:22,760 Speaker 2: So we were talking about potential volatility. You know, October 559 00:29:22,800 --> 00:29:25,880 Speaker 2: can be in a notorious month for losses in the 560 00:29:25,880 --> 00:29:29,200 Speaker 2: equity market. Would you be surprised if we were to 561 00:29:29,240 --> 00:29:31,800 Speaker 2: see in spite of everything that we're talking about, that 562 00:29:31,840 --> 00:29:35,680 Speaker 2: would equate with you know, a fair amount of positivity. 563 00:29:35,720 --> 00:29:38,000 Speaker 2: Would you be surprised if there was a pullback this 564 00:29:38,080 --> 00:29:42,280 Speaker 2: month of significant magnitude, maybe close to between five and 565 00:29:42,360 --> 00:29:42,920 Speaker 2: ten percent. 566 00:29:43,840 --> 00:29:46,040 Speaker 9: I would be very surprised if we received a five 567 00:29:46,120 --> 00:29:48,160 Speaker 9: or ten percent pullback at this point. The reason being 568 00:29:48,240 --> 00:29:50,200 Speaker 9: is it about, you know, four weeks ago we worked 569 00:29:50,200 --> 00:29:52,800 Speaker 9: off the throw. We had a very overbought market. We 570 00:29:52,800 --> 00:29:55,160 Speaker 9: saw you know, a dramatic sell off. We saw buyers 571 00:29:55,200 --> 00:29:57,760 Speaker 9: come back in, sell off again. Now we're seeing buyers 572 00:29:57,800 --> 00:29:59,640 Speaker 9: come back in. So I think we worked that off. 573 00:30:00,000 --> 00:30:02,000 Speaker 9: I don't think you're going to see anything like that in October, 574 00:30:02,000 --> 00:30:03,880 Speaker 9: and I think we're going to work for ourselves to 575 00:30:03,960 --> 00:30:05,840 Speaker 9: it quite well. 576 00:30:05,880 --> 00:30:07,960 Speaker 3: All right, Vance, thank you very much for joining us. 577 00:30:08,000 --> 00:30:10,600 Speaker 3: You're sounding pretty bullish, and I'm sure you gave a 578 00:30:10,640 --> 00:30:13,960 Speaker 3: little springing a step to many listening this morning. Vance Howard, 579 00:30:14,080 --> 00:30:17,480 Speaker 3: CEO and portfolio manager at Howard Capital Management. 580 00:30:20,680 --> 00:30:23,640 Speaker 2: This has been the Bloomberg daybreak Asia podcast bringing you 581 00:30:23,680 --> 00:30:26,800 Speaker 2: the stories making news and moving markets in the Asia Pacific. 582 00:30:27,320 --> 00:30:30,440 Speaker 2: Visit the Bloomberg Podcast channel on YouTube to get more 583 00:30:30,440 --> 00:30:34,080 Speaker 2: episodes of this and other shows from Bloomberg. Subscribe to 584 00:30:34,080 --> 00:30:37,880 Speaker 2: the podcast on Apple, Spotify, or anywhere else you listen 585 00:30:38,000 --> 00:30:41,080 Speaker 2: and always on Bloomberg Radio, the Bloomberg Terminal, and the 586 00:30:41,080 --> 00:30:42,160 Speaker 2: Bloomberg Business app.