WEBVTT - US Core PCE Rises, Estée Lauder Pulls Guidance 0:00:02.440 --> 0:00:09.160 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.200 --> 0:00:13.360 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.400 --> 0:00:16.360 Eastern on Apple card playing Android Auto with the Bloomberg 0:00:16.440 --> 0:00:19.759 Business App. Listen on demand wherever you get your podcasts, 0:00:19.960 --> 0:00:22.360 or watch us live on YouTube. 0:00:23.160 --> 0:00:25.520 All right, We've got just a whole slew of economic 0:00:25.600 --> 0:00:28.560 data here, and the question for a lot of folks 0:00:28.600 --> 0:00:31.160 is to what extent is that going to impact the 0:00:31.160 --> 0:00:32.480 Federal Reserve going forward? 0:00:32.520 --> 0:00:32.640 Here? 0:00:32.640 --> 0:00:35.159 We've got a FED meeting next week on the seventh, 0:00:35.720 --> 0:00:37.800 and then the meeting in December. What's the FED going 0:00:37.880 --> 0:00:40.720 to do? Fortunately for us, we have somebody who does 0:00:40.760 --> 0:00:42.519 this stuff for a living. We actually pay him to 0:00:42.520 --> 0:00:45.479 do this stuff, Ira Jersey. He's the best on the street. 0:00:45.479 --> 0:00:47.839 He's our US interest rate strategist. We appreciate getting a 0:00:47.840 --> 0:00:51.200 few minutes of this time interpret some of the economic 0:00:51.280 --> 0:00:54.160 data we've seen recently, maybe some of the remarks we've 0:00:54.200 --> 0:00:56.640 heard from some of these FED folks. How do you 0:00:56.680 --> 0:00:59.120 think the Fed's going to act over the next several meetings? 0:01:00.120 --> 0:01:04.240 Yeah, yeah, so I think it's shifted actually over the 0:01:04.360 --> 0:01:06.959 last month or so, given the strength of the data 0:01:06.959 --> 0:01:10.240 and in fact today's this morning's personal income and spending numbers, 0:01:10.560 --> 0:01:15.120 along with the PC deflator, the consumption deflator that we 0:01:15.200 --> 0:01:18.080 received will allow the Fed Reserve to be somewhat less 0:01:18.480 --> 0:01:22.560 dubbish than they were at the September meeting. So our 0:01:22.600 --> 0:01:24.640 expectation now is at the Fed will cut next week. 0:01:24.680 --> 0:01:27.160 The market's fully priced for it. The Fed, you know, 0:01:27.319 --> 0:01:29.039 they don't want to lose face. They just cut fifty 0:01:29.080 --> 0:01:31.640 bases points, so I think that they'll cut again. But 0:01:32.120 --> 0:01:34.759 the big important announcement is probably going to come during 0:01:34.760 --> 0:01:38.960 the press conference, where Jay Powell will kind of very 0:01:39.959 --> 0:01:43.240 maybe not so subtly hint that the Fed Reserve might 0:01:43.240 --> 0:01:46.320 skip the December meeting and then reevaluate if they're going 0:01:46.360 --> 0:01:49.560 to go in December. So the market's not fully priced 0:01:49.560 --> 0:01:52.520 for that yet. The market's still priced for better than 0:01:52.520 --> 0:01:54.400 even odds that they're going to cut in December, but 0:01:54.640 --> 0:01:57.760 I suspect that those odds will come off pretty dramatically. 0:01:58.280 --> 0:02:02.360 Now that would be definitely an interesting things to see. 0:02:02.960 --> 0:02:06.040 The press conference, of which we'll have you know, Michael 0:02:06.080 --> 0:02:08.280 McKee will be there and you know he'll be there 0:02:08.320 --> 0:02:09.440 and we'll gate the full reporting. 0:02:09.600 --> 0:02:11.400 Yeah, but as we're looking at these numbers that came out. 0:02:11.400 --> 0:02:13.240 I mean, there's still a bit of stickiness in terms 0:02:13.240 --> 0:02:16.360 of the core PCE, but overall PCE does seem to 0:02:16.360 --> 0:02:19.920 be trending lower, which of course we do know that consumers, investors, 0:02:20.000 --> 0:02:22.440 and the FED want to see how are you kind 0:02:22.440 --> 0:02:24.840 of viewing this data and the importance of it, especially 0:02:24.880 --> 0:02:27.000 since we do know that this is the Fed's preferred 0:02:27.000 --> 0:02:28.280 measure for inflation here. 0:02:29.360 --> 0:02:32.200 Sure, so the feder Reserve and j Palace you've mentioned 0:02:32.200 --> 0:02:36.000 this in some recent speeches, that they focus on headline 0:02:36.200 --> 0:02:38.760 PC deflator, right, that's their preferred measure. That's a two 0:02:38.760 --> 0:02:41.400 point one percent, two percent of their target, so you know, 0:02:41.720 --> 0:02:45.720 call it done deal there. But as you noted, the 0:02:46.320 --> 0:02:49.000 core inflation measure is meaningfully higher than that at two 0:02:49.040 --> 0:02:52.960 point seven percent, which is largely driven by housing prices 0:02:52.960 --> 0:02:55.440 and the year and year change in housing prices, which 0:02:55.480 --> 0:02:58.840 still continue to be relatively sticky. But even that started 0:02:58.880 --> 0:03:00.960 to come off a little bit. And the big thing 0:03:01.000 --> 0:03:02.800 that I look at is some of the details and 0:03:02.840 --> 0:03:04.760 components in here. So you know, as soon as this 0:03:05.080 --> 0:03:07.160 data came out at eight thirty at eight by eight 0:03:07.280 --> 0:03:09.600 thirty five, I was updating a bunch of the charts 0:03:09.600 --> 0:03:12.880 and nerdiness that I do in parsing out this data. 0:03:12.919 --> 0:03:15.960 And if you look at services inflation, services inflation has 0:03:16.000 --> 0:03:19.640 been the single biggest driver, and that's been slowing pretty 0:03:19.919 --> 0:03:23.359 significantly over the last couple of months, and compared to 0:03:23.400 --> 0:03:25.880 a year ago, it's it's much much lower in fact, 0:03:26.639 --> 0:03:28.799 or slower, I should say, it's still growing, right, Prices 0:03:28.800 --> 0:03:30.400 are still going up, they're just going up a lot, 0:03:30.560 --> 0:03:32.880 a lot less than they had been before. And I 0:03:32.880 --> 0:03:34.720 think that the Federal Reserve is going to look at 0:03:34.720 --> 0:03:37.520 that and say, okay, look, if services inflation is actually 0:03:37.560 --> 0:03:40.240 rolling over and not going to be as big of 0:03:40.240 --> 0:03:42.760 a driver of inflation going forward, then that means that 0:03:42.800 --> 0:03:45.600 over time, core inflation will continue to come down. And yeah, 0:03:45.600 --> 0:03:47.600 you know, quite frankly, if core inflation is sticky at 0:03:47.600 --> 0:03:49.680 two and a half percent, that's fine for the Fed. 0:03:49.840 --> 0:03:51.600 The Fed just doesn't want that to go up, right, 0:03:51.920 --> 0:03:55.880 like I call it. Over three percent is unacceptable to 0:03:55.920 --> 0:03:58.160 the Fed. But you know, kind of hovering around two 0:03:58.200 --> 0:04:00.839 and a half percent would be absolutely fine as long 0:04:00.880 --> 0:04:03.480 as you have goods prices that aren't going up very 0:04:03.520 --> 0:04:06.200 quickly at all, which is the other aspect of this, right, 0:04:06.240 --> 0:04:08.680 which is why the election next week might actually have 0:04:08.800 --> 0:04:11.320 some impact, but not in the near term. It's much 0:04:11.360 --> 0:04:15.680 longer term impact, like do tariffs increase increased prices of goods? 0:04:15.720 --> 0:04:18.400 Which goods have been one of the bright points of 0:04:18.440 --> 0:04:19.400 the inflation data of. 0:04:19.440 --> 0:04:21.160 Late All Right, our Jersey, thank you so much. 0:04:21.160 --> 0:04:23.240 We appreciate that our Jersey chief you wus interest rate 0:04:23.279 --> 0:04:26.719 strategists for Bloomberg Intelligence appreciate getting a few minutes of 0:04:26.720 --> 0:04:27.239 his time. 0:04:28.520 --> 0:04:32.400 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:04:32.480 --> 0:04:36.040 weekdays at ten am Eastern on applecar Play and Android 0:04:36.040 --> 0:04:38.839 Auto with the Bloomberg Business app. You can also listen 0:04:38.920 --> 0:04:42.040 live on Amazon Alexa from our flagship New York station. 0:04:42.400 --> 0:04:45.159 Just say Alexa play Bloomberg eleven thirty. 0:04:46.080 --> 0:04:48.960 Keith wrong enough and getha is the media analyst at 0:04:49.000 --> 0:04:52.320 Bloomberg Intelligency Space down in Princeton, New Jersey. Keith, A 0:04:52.360 --> 0:04:55.560 lot to talk to you about today. Let's start with Comcast. 0:04:56.080 --> 0:04:58.599 Was this announcement by the company that they're considering spelling 0:04:58.640 --> 0:05:01.279 off their cable networks? Was it expected by the street 0:05:01.480 --> 0:05:03.000 and do you think it could be a good move. 0:05:03.520 --> 0:05:05.760 I'm not so sure. If it was expected by the street, 0:05:05.839 --> 0:05:09.680 I mean, we've always known, especially from a timing perspective, Paul, 0:05:09.720 --> 0:05:12.000 I mean, we've always known Comcast is itching to do 0:05:12.080 --> 0:05:15.480 something when it comes to M and A, and especially 0:05:15.640 --> 0:05:19.080 as far as their NBC media business is concerned. You're 0:05:19.080 --> 0:05:21.560 absolutely right in pointing out that this is a segment 0:05:21.600 --> 0:05:24.360 that has been affected very adversely by court cutting. They're 0:05:24.400 --> 0:05:27.400 losing about eight to ten percent of their subscriber base 0:05:27.440 --> 0:05:30.160 every year and that has kind of really weighed on 0:05:30.320 --> 0:05:33.440 you know, both advertising revenue as well as distribution revenue, 0:05:33.440 --> 0:05:36.080 which is affiliate fees for the cable networks. Remember, they 0:05:36.120 --> 0:05:39.800 have some very good cable networks, whether it's USA, whether 0:05:39.839 --> 0:05:43.720 it's the Golf Channel, whether it's MSNBC. But again, across 0:05:43.760 --> 0:05:46.960 the board, you know, we've seen ratings pressure, we've seen 0:05:47.040 --> 0:05:50.160 advertising pressure, we've seen affiliate fee pressure. And so this 0:05:50.200 --> 0:05:52.280 is them basically saying, yeah, we need to do something 0:05:52.360 --> 0:05:53.960 about this, and we need to kind of spin this 0:05:54.040 --> 0:05:56.599 because this is really weighing on the valuation of the 0:05:56.760 --> 0:05:57.520 entire company. 0:05:58.120 --> 0:06:00.479 Keep it. Talk to me about Peacock. What's going on there? 0:06:00.560 --> 0:06:02.159 Is that a good business for the company. 0:06:02.640 --> 0:06:07.040 The Peacock is you know, Comcasts and NBC solution streaming solution, 0:06:07.760 --> 0:06:10.560 and they've had some pretty good success. But again, if 0:06:10.600 --> 0:06:13.279 you're kind of looking at streaming as a as a 0:06:13.320 --> 0:06:17.599 subscriber scale game, Nora, well they're they're really far behind. 0:06:17.640 --> 0:06:20.320 So they have about thirty six thirty seven million subscribers. 0:06:20.360 --> 0:06:23.680 I mean every time they have a sports programming boost, 0:06:23.680 --> 0:06:25.599 either with the Olympics or you know, with a with 0:06:25.640 --> 0:06:29.279 an NFL playoff game, so they do kind of get 0:06:29.400 --> 0:06:33.440 those little bumps. But again, when you're comparing Peacock at 0:06:33.480 --> 0:06:36.040 you know, thirty seven million subscribers to Netflix at two 0:06:36.120 --> 0:06:39.839 hundred and eighty two million, I mean, there's just no comparison. 0:06:39.960 --> 0:06:42.839 So it's not a scalable solution, but it is a 0:06:42.839 --> 0:06:45.599 good solution nevertheless, for Comcasts at the time at the 0:06:45.600 --> 0:06:46.239 time being. 0:06:46.120 --> 0:06:47.840 You know, I've been a big fan of Comcasts as 0:06:47.880 --> 0:06:51.240 a stock for thirty plus years. The management family, the 0:06:51.720 --> 0:06:55.800 Roberts family there at Comcasts, Mister Roberts back in the day. 0:06:57.200 --> 0:06:59.320 What's the future of this company, Githa, how do people 0:06:59.360 --> 0:07:02.400 look at this commpany because you know, the cable their 0:07:02.600 --> 0:07:05.360 cable TV business, they're entertainment businesses. Is you talked about 0:07:05.360 --> 0:07:08.599 the cord cutting. Everybody who's got you know, what's the 0:07:08.600 --> 0:07:09.480 future of this company? 0:07:09.480 --> 0:07:12.080 Do you think I think the future of the company 0:07:12.080 --> 0:07:13.520 still remains very strong, Paul. 0:07:13.680 --> 0:07:13.760 So. 0:07:13.840 --> 0:07:16.600 Yes, they are a vertically integrated media company. They have 0:07:16.800 --> 0:07:20.840 both distribution as well as content. Majority of their IBADA, 0:07:20.880 --> 0:07:24.640 as you pointed out, comes from their cable connectivity business 0:07:24.640 --> 0:07:27.000 eighty percent of their IBADA and that part of the 0:07:27.040 --> 0:07:29.640 business has been you know, on you know, suffering from 0:07:29.680 --> 0:07:32.640 a little bit of a slowdown because broadband subscriber growth 0:07:33.000 --> 0:07:35.400 has really been hurt because of a lot of competition 0:07:35.480 --> 0:07:37.920 from both fiber as well as fixed wireless access. But 0:07:38.000 --> 0:07:40.160 it looks like there might be a slight turnaround, So 0:07:40.200 --> 0:07:42.920 there are some green shoots there and at the end 0:07:42.960 --> 0:07:44.760 of the day, while even if it might not be 0:07:44.880 --> 0:07:46.840 a big growth business, I think it will be a 0:07:46.840 --> 0:07:50.560 stable business and Comcast will be able to drive pretty healthy, 0:07:51.440 --> 0:07:53.920 you know, both revenue gains as well as you know, 0:07:54.240 --> 0:07:56.960 a load of mid single digit EBADA gains. Now, where 0:07:57.160 --> 0:07:59.240 you know kind of investors really struggle is what are 0:07:59.240 --> 0:08:01.480 they going to do with the end see asset And 0:08:01.640 --> 0:08:04.240 yes again now there it looks like they're evaluating some 0:08:04.280 --> 0:08:07.160 strategic options with the cable network business. But the studio 0:08:07.240 --> 0:08:10.560 is doing really well, and the theme parts, while suffering 0:08:10.600 --> 0:08:15.000 from some softness recently, will kind of see a reversal 0:08:15.080 --> 0:08:17.880 next year because they're opening one of their most ambitious 0:08:17.960 --> 0:08:22.120 projects ever in Orlando, Epic Universe, which will basically double 0:08:22.160 --> 0:08:23.840 their footprint in Orlando. 0:08:24.240 --> 0:08:24.440 Yeah. 0:08:24.440 --> 0:08:26.280 I saw a big gone through the airport recently down 0:08:26.280 --> 0:08:29.840 in Orlando, tons of advertising for this new Universal park. 0:08:29.920 --> 0:08:32.679 And we saw some people where did I say? We 0:08:32.679 --> 0:08:35.520 were at the hotel Alex Steele and I for something 0:08:35.640 --> 0:08:38.160 and the people came down. No, they came from England 0:08:39.000 --> 0:08:41.120 just for the Universal Parks to Orlando. They didn't go 0:08:41.160 --> 0:08:43.240 to the Disney properties, which you're fascinating. 0:08:43.800 --> 0:08:46.200 This is back up. They were in separate rooms and 0:08:46.240 --> 0:08:47.840 it was a business trip, business. 0:08:47.520 --> 0:08:50.319 Trip, Thank you, thank you. 0:08:51.160 --> 0:08:53.000 Well, I wanted to move over to Peloton. I mean, 0:08:53.000 --> 0:08:55.080 of course, we did hear that news today that Ford's 0:08:55.160 --> 0:08:59.560 executive Peter Stern will be the next CEO of Peloton. 0:08:59.600 --> 0:09:02.680 They're really hoping that he will lead a turnaround. Of course, 0:09:02.679 --> 0:09:04.760 we know that this has really been a struggling company here. 0:09:05.200 --> 0:09:06.920 What has been the general sentiment? I mean, I'm seeing 0:09:06.960 --> 0:09:10.080 shares up substantially more than twenty percent in trading today. 0:09:11.520 --> 0:09:13.680 Yeah, so I mean, you know, the sentiment obviously has 0:09:13.720 --> 0:09:16.240 has turned and it has shifted to a more positive sentiment. 0:09:16.360 --> 0:09:19.320 Of course, with this new announcement of a CEO, I 0:09:19.320 --> 0:09:22.320 think the street kind of now really expects an articulation 0:09:22.600 --> 0:09:26.120 off kind of this future of the future strategic direction 0:09:26.280 --> 0:09:29.240 for the company, the vision for the brand, and how 0:09:29.360 --> 0:09:32.160 this new CEO is going to go about accomplishing that. 0:09:32.480 --> 0:09:34.920 But in the interim, even as they've kind of waited, 0:09:35.360 --> 0:09:37.920 you know, for this new person to come on board, 0:09:38.160 --> 0:09:39.720 they've done a lot of things to kind of rite 0:09:39.720 --> 0:09:41.880 the ships. So one of the biggest problems for Peloton, 0:09:42.000 --> 0:09:45.200 along with you know, the softness in demand, has been 0:09:45.480 --> 0:09:49.040 you know, a very kind of bulky cost base, which 0:09:49.120 --> 0:09:52.240 led to a lot of losses, a lot of cash burn, 0:09:52.559 --> 0:09:55.480 and they've really kind of righted the ship there, if 0:09:55.480 --> 0:09:59.360 you will. So we saw them posting profitability that came 0:09:59.360 --> 0:10:02.720 in well about what consensus was expecting. They've raised their 0:10:02.760 --> 0:10:05.120 guidance for a justiny bit du for you know, fiscal 0:10:05.160 --> 0:10:08.600 twenty twenty five. Again, free cash flow as positive, So 0:10:08.679 --> 0:10:11.960 a lot of things to to cheer. But again, I 0:10:11.960 --> 0:10:14.640 think the ultimate question for this company is what is 0:10:14.679 --> 0:10:18.280 really the endgame for Peloton? Will they have sustainable demand, 0:10:18.280 --> 0:10:21.000 will they have sustainable free cash flow? Or is this 0:10:21.120 --> 0:10:22.720 just going to be kind of an m and A play. 0:10:23.559 --> 0:10:24.520 So where do we go from here? 0:10:24.559 --> 0:10:26.199 Because you mentioned the free cash loan, and I'm looking 0:10:26.240 --> 0:10:28.440 at the FA function on the Bloomberg terminal and the 0:10:28.520 --> 0:10:32.040 company forecasted for the first time in many, many years. 0:10:32.040 --> 0:10:35.079 Maybe it's history free cashual positive in our fiscal twenty 0:10:35.120 --> 0:10:38.840 five and even more free casual positive fiscal twenty six. 0:10:38.960 --> 0:10:41.200 So it sounds like maybe, as you mentioned, they've righted 0:10:41.240 --> 0:10:44.360 the ship. But is this a standalone company gether or 0:10:44.400 --> 0:10:47.200 to investors feel like it could be part of something bigger, 0:10:47.240 --> 0:10:49.480 bigger experiential company. 0:10:49.880 --> 0:10:52.000 I mean, Paul, there have been so many rumors about 0:10:52.040 --> 0:10:55.360 Peloton kind of ultimately being you know this this attractive 0:10:55.440 --> 0:10:58.800 MNA candidate, whether you know it's it could make sense 0:10:58.800 --> 0:11:00.960 for an Apple, whether it could make sense for Amazon. 0:11:01.280 --> 0:11:03.360 Over the past few months, there have actually been some 0:11:03.440 --> 0:11:06.440 rumblings about whether it makes sense for private equity, especially 0:11:06.480 --> 0:11:09.320 with all this focus on cost cuts. So that's still 0:11:09.400 --> 0:11:11.439 kind of a little bit of a wait and watch. 0:11:11.520 --> 0:11:14.200 I'm not so sure it really makes sense as a 0:11:14.200 --> 0:11:18.560 standalone company unless this new CEO has some really grand 0:11:18.679 --> 0:11:21.560 vision in terms of introducing new modalities, in terms of 0:11:21.600 --> 0:11:25.600 really resuscitating the demand, because you know, we're seeing subscribers 0:11:25.640 --> 0:11:28.600 kind of fall off quarter after quarter, and that really 0:11:28.679 --> 0:11:31.240 is the question. Yes, they are going to be you know, 0:11:31.280 --> 0:11:33.600 free cash flow positive in twenty twenty five and twenty 0:11:33.600 --> 0:11:37.480 twenty six, but that's really more by right sizing costs. 0:11:37.640 --> 0:11:38.800 At the end of the day, they have to grow 0:11:38.840 --> 0:11:41.680 their top line and you know that is where we're 0:11:41.720 --> 0:11:42.640 kind of still struggling. 0:11:42.960 --> 0:11:44.439 All right, Githa, thanks so much for that. 0:11:44.520 --> 0:11:46.920 Keith Ranganath, and she covers all of the media space 0:11:47.640 --> 0:11:50.880 for Bloomberg Intelligency space on our Princeton, New Jersey offices PEM. 0:11:55.480 --> 0:11:59.360 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:11:59.440 --> 0:12:02.760 weekdays ten am Eastern on Apple Car, playing Android Otto 0:12:02.880 --> 0:12:05.840 with the Bloomberg Business app. Listen on demand wherever you 0:12:05.880 --> 0:12:09.559 get your podcasts, or watch us live on YouTube. 0:12:10.200 --> 0:12:11.520 Alalu Aganga joins us. 0:12:11.520 --> 0:12:14.840 She's the US Chief Investment Officer at Mercer, joining us 0:12:14.840 --> 0:12:15.520 here in our studio. 0:12:15.520 --> 0:12:16.640 We appreciate you coming in. 0:12:18.240 --> 0:12:19.719 What do you make of this market when you talk 0:12:19.760 --> 0:12:21.840 to your clients because we've got people are telling me 0:12:21.840 --> 0:12:23.840 we've got an election next week, so I think that's 0:12:23.920 --> 0:12:27.760 kind of important. We've got earnings coming out like crazy 0:12:28.200 --> 0:12:30.760 this week. What's kind of the message you go out 0:12:30.760 --> 0:12:32.040 to your clients with these. 0:12:31.920 --> 0:12:33.880 Days right now? 0:12:34.640 --> 0:12:39.080 Hang tight, so you know, when you think of the elections, 0:12:39.280 --> 0:12:42.120 at least for us our clients as we say they're 0:12:42.160 --> 0:12:45.240 long term investors. There are a couple of things though 0:12:45.240 --> 0:12:47.439 with regards to elections that are top of mind. And 0:12:47.520 --> 0:12:50.840 the first is just uncertainty, and it's uncertainty around where 0:12:50.880 --> 0:12:54.719 you allocate capital, because for us, if you're tying up 0:12:55.679 --> 0:12:58.400 money for years and years and years and a policy 0:12:58.520 --> 0:13:03.840 change happens, that could affect your investments. So things like infrastructure, 0:13:04.040 --> 0:13:07.920 clean tech spending, you know, those areas that were attractive 0:13:08.000 --> 0:13:10.880 during the Inflation Reduction Act. Of any aspect of that changes, 0:13:10.920 --> 0:13:14.680 that's one issue. And then another thing that is top 0:13:14.720 --> 0:13:18.440 of mind for clients is the potential for tariffs like 0:13:18.480 --> 0:13:21.480 that is a big topic right now, depending on where 0:13:21.520 --> 0:13:26.560 that goes, and it's either that'll increase you're spending if 0:13:26.559 --> 0:13:28.840 you're an operating entity, those types of things, and the 0:13:28.920 --> 0:13:31.880 impact on the portfolio is is my portfolio generating enough, 0:13:32.000 --> 0:13:34.000 so top of mind in those two categories. 0:13:34.080 --> 0:13:36.439 So when we think about next week and the potential outcome, 0:13:36.559 --> 0:13:39.040 are there any particular sectors that you're keeping an eye 0:13:39.120 --> 0:13:41.800 on depending on either presidential win. 0:13:42.679 --> 0:13:46.240 Well, we've actually most recently taken risk off the table. 0:13:46.280 --> 0:13:49.960 We were overweight equities just broadly going into these types 0:13:50.000 --> 0:13:52.760 of events because of the volatility and uncertainty. It's a 0:13:52.760 --> 0:13:56.120 close race as we know it. So we've moved back 0:13:56.160 --> 0:13:59.720 to tactically neutral across the board. So where at market weights, 0:14:00.200 --> 0:14:03.880 no real sector, no real geographic overweight going into this 0:14:04.480 --> 0:14:05.120 fixed income. 0:14:05.200 --> 0:14:06.720 I mean, I don't know what's going on out there. 0:14:06.760 --> 0:14:08.480 I mean I got a feathers cutting rates that I've 0:14:08.520 --> 0:14:11.760 got yields going up. So I don't know what are 0:14:11.800 --> 0:14:13.480 you doing in fixed InCom space or you're sticking with 0:14:13.480 --> 0:14:15.680 the treasure market. It takes some credit risk. How do 0:14:15.679 --> 0:14:16.280 you think about it? 0:14:16.480 --> 0:14:20.000 You know, when people throughout fixed income broadly, it plays 0:14:20.040 --> 0:14:25.400 like five roles in the portfolio, right, So diversification, income, inflation, protection, 0:14:25.600 --> 0:14:28.840 you name it for us. When folks are thinking about 0:14:28.880 --> 0:14:31.600 fixed income, they're really thinking in terms of diversification, and 0:14:31.680 --> 0:14:34.760 then we are we're encouraging clients to look more at 0:14:34.840 --> 0:14:39.440 non traditional strategies. Right, So where rates are today, hedge 0:14:39.520 --> 0:14:42.600 fund strategies, if you build a well diversified one, can 0:14:42.640 --> 0:14:45.440 actually really be more impactful in your portfolio than your 0:14:45.440 --> 0:14:48.360 traditional fixed income. Treasury correlation is negative point three too 0:14:48.360 --> 0:14:50.920 point five, but the rest is actually zero to positive 0:14:51.640 --> 0:14:55.480 positive correlation s equities. Where rates are today, it has 0:14:55.520 --> 0:14:58.880 a direct impact on companies bottom lines and funding and 0:14:58.920 --> 0:15:02.600 those types of things. Long short strategies for hedge funds 0:15:02.640 --> 0:15:04.880 do well in this type of rate environment, even though 0:15:04.880 --> 0:15:09.800 it's decreasing the trend. Following strategies are doing well as well. 0:15:09.880 --> 0:15:11.400 So those are some of the things that we're talking 0:15:11.400 --> 0:15:15.000 to clients about if they're looking for diversification that they 0:15:15.040 --> 0:15:16.400 traditionally go to fixed income for. 0:15:17.560 --> 0:15:19.160 I mean, how are you thinking about data right now? 0:15:19.240 --> 0:15:21.760 Of course, we had PCE coming out this morning, and 0:15:21.840 --> 0:15:24.200 when we think about it, this year, we've really seen 0:15:24.200 --> 0:15:26.200 a brab browley. Of course we're seeing a breather today, 0:15:26.560 --> 0:15:28.320 but we do have the S and P five hundred 0:15:28.440 --> 0:15:31.240 up twenty percent year today. So how are you really 0:15:31.360 --> 0:15:35.120 viewing this data? Inflation? What is the consensus right now? 0:15:35.320 --> 0:15:37.880 So for all the data points that are going in. 0:15:38.000 --> 0:15:42.720 We're piecing everything together to make the case. And we've 0:15:42.760 --> 0:15:45.200 been seeing this for some time around a soft landing, right. So, 0:15:45.280 --> 0:15:49.320 if you start with GDP data consensus was three point one, 0:15:49.360 --> 0:15:51.800 it came in what two point eight for the quarter, 0:15:52.080 --> 0:15:54.960 but that's still you know, that's still pretty decent. That's strong. 0:15:55.920 --> 0:15:59.480 Then if you go into the inflation numbers, CPI I 0:15:59.520 --> 0:16:02.680 think was like call it two point four for September 0:16:03.840 --> 0:16:07.000 non farm payroll at the start of the month. So 0:16:07.040 --> 0:16:10.440 the September numbers was like twenty five hundred or something 0:16:10.480 --> 0:16:12.800 like that. We've got numbers out tomorrow, so we'll see. 0:16:13.080 --> 0:16:16.200 But those three, coupled with the fifty basis point rate 0:16:16.280 --> 0:16:19.120 cut that happened, right like, all of the data points 0:16:19.160 --> 0:16:22.280 are still consistent with the fact that we are gently landing. 0:16:22.800 --> 0:16:25.920 So when you're thinking about data more broadly, where is 0:16:25.960 --> 0:16:29.760 your focus? Are we looking at job data or inflation data? 0:16:29.800 --> 0:16:31.680 Seems as though there's been a shift more recently. 0:16:31.920 --> 0:16:35.160 It's a mosaic because what we found is there's just 0:16:35.200 --> 0:16:37.840 no one data point that has predictive power for you 0:16:37.920 --> 0:16:40.640 from an investment standpoint. We've tested a number of different things, 0:16:40.640 --> 0:16:44.000 so it's both piecing the data together and then what 0:16:44.080 --> 0:16:47.000 is the interpretation for that point. We also look at 0:16:47.040 --> 0:16:51.120 commodity data right like, right now, geopolitics is somewhat front 0:16:51.120 --> 0:16:54.240 and center across the board, and that affects commodity, so 0:16:54.280 --> 0:16:57.080 we're watching that as well. So what we do gradually 0:16:57.120 --> 0:16:59.360 is as each piece of data comes in, we start 0:16:59.360 --> 0:17:02.920 getting a sense for where the trends are going and 0:17:03.040 --> 0:17:05.440 using that in addition to the earnings that are coming out. 0:17:05.800 --> 0:17:08.200 You know, for example, like we're looking at where earnings 0:17:08.200 --> 0:17:11.480 forecasts are and if you think of the US other 0:17:11.600 --> 0:17:15.400 than a small handful, like the earnings growth numbers aren't fantastic, 0:17:15.600 --> 0:17:17.880 you know, the magnificent seven maybe, but for the rest 0:17:17.960 --> 0:17:18.520 not so much. 0:17:18.920 --> 0:17:20.880 So what do you think this market needs to see 0:17:20.880 --> 0:17:22.080 out of earnings? We're kind of kind of in the 0:17:22.119 --> 0:17:23.639 middle of the earning season here do we need to 0:17:23.680 --> 0:17:26.720 see big It feels like we need to see big 0:17:26.720 --> 0:17:29.159 beats because we've got the market selling off. Nastak off 0:17:29.160 --> 0:17:32.360 two percent today on Microsoft and meta numbers I thought 0:17:32.359 --> 0:17:34.880 were pretty good but maybe just a little weak, and 0:17:35.080 --> 0:17:36.360 that's enough for the market to sell off. 0:17:36.440 --> 0:17:38.520 It's still tech though. If you were to think of 0:17:38.560 --> 0:17:41.920 the broader. You know, we need to see it expand 0:17:42.000 --> 0:17:46.120 beyond a specific category to be you know, more excited 0:17:46.119 --> 0:17:48.600 than we are now. Granted we're sitting here with the 0:17:48.680 --> 0:17:53.240 SMP where it is right, So the question is how 0:17:53.280 --> 0:17:55.159 consistent is it? And can it last? 0:17:55.720 --> 0:17:57.639 Do you see this rally lasting? Do you see it 0:17:57.720 --> 0:17:58.680 having further to run? 0:17:59.280 --> 0:18:01.359 The thing about heck is that it continues to push 0:18:01.400 --> 0:18:04.240 the frontier right, so as you have more capex, more data, 0:18:04.240 --> 0:18:07.160 more innovation like never say never like those the bet 0:18:07.160 --> 0:18:10.960 against that has surely been wrong. But we will say, 0:18:11.000 --> 0:18:14.080 looking at valuations relative to history, we are at extremely 0:18:14.119 --> 0:18:17.840 stretched levels. So back to how we allocate capital for 0:18:17.880 --> 0:18:20.520 the longer term. If we're looking at our forward looking 0:18:21.000 --> 0:18:25.000 capital markets assumptions, for example, where we see longer term equities, 0:18:25.160 --> 0:18:28.960 especially US and more and more firms are coming out 0:18:28.960 --> 0:18:33.000 with numbers that are not as high as they have been. Right, 0:18:33.040 --> 0:18:35.399 So it's like what we've seen the last decade. Do 0:18:35.440 --> 0:18:39.240 we expect this type this magnitude going forward? We haven't 0:18:39.280 --> 0:18:41.680 seen it, and we're not convinced. 0:18:42.480 --> 0:18:45.119 How about alternative investments? How do they figure into your 0:18:45.119 --> 0:18:47.600 outlook these days? I'm surprised when I go to see 0:18:48.040 --> 0:18:51.920 and visit with registered investment advisors representing their institutional clients 0:18:52.400 --> 0:18:54.920 that their clients are asking for it and they want 0:18:55.280 --> 0:18:58.400 something more than just two to five percent allocation. Kind 0:18:58.400 --> 0:19:00.399 of surprises me. It gets me a little nerve respect. 0:19:00.520 --> 0:19:03.320 How do you guys at an institution level think about alternatives? 0:19:03.440 --> 0:19:07.400 So the first part about it is assessing your liquidity profile. 0:19:07.480 --> 0:19:09.919 Even you know you're talking about individuals, but if you 0:19:09.960 --> 0:19:12.560 start thinking how much cash. 0:19:12.240 --> 0:19:12.920 Do I need? 0:19:13.760 --> 0:19:16.960 As we talk about cash planning with a number of organizations, 0:19:17.040 --> 0:19:19.919 especially operational ones, do you have enough cash for the 0:19:19.920 --> 0:19:23.119 first one year, eighteen months, maybe two years of operations? 0:19:23.160 --> 0:19:27.159 Then beyond that, let's start thinking of a waterfall. So 0:19:27.560 --> 0:19:30.960 where primaries in private equity has the longest tail, maybe 0:19:30.960 --> 0:19:34.760