Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovick. We're here every day bringing
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Speaker 1: YouTube search Bloomberg Global News. Well you might have heard,
Speaker 1: you know, big headlines like Bitcoin's energy usage or cryptos
Speaker 1: energy usage uses more energy in a single year than
Speaker 1: the entire country of Argentina. One of the reasons is
Speaker 1: because the Ethereum blockchain uses something called proof of work,
Speaker 1: and now it is going to merge into something called
Speaker 1: a proof of steak. If it's a little bit of
Speaker 1: jargon or perhaps a different language, really likely to be
Speaker 1: joined by a people who speak that language. Joe Weber
Speaker 1: is the editor of Bloomberg Business Week. He's with us
Speaker 1: in the Bloomberg interactive at Broker Studio. Follow him on
Speaker 1: Twitter at Joel Weber Show. We also got Olga Career
Speaker 1: with us. She's a crypto reporter for Bloomberg News. She
Speaker 1: has been covering the space for years and can explain
Speaker 1: exactly what is going on. She's joining us on the
Speaker 1: phone from Portland, Oregon. Olga story is featured in the
Speaker 1: upcoming issue of Business Week magazine. You can read it
Speaker 1: now on the Bloomberg and at Bloomberg dot com slash
Speaker 1: business Week. Joeld emerge has been a long time coming.
Speaker 1: Why do we need to care about it? Will it come?
Speaker 1: It should come? It comes to be comes right, like
Speaker 1: we don't know. But the countdown clock there there, there
Speaker 1: is a countdown clock. Everybody's been very excited about this
Speaker 1: for a really long time. UM. And one of the
Speaker 1: things that Olga points out here is really this foundational
Speaker 1: way that things are happen on on the Ethereum blockchain.
Speaker 1: And we're gonna talk about that because, um, I think
Speaker 1: it has some pretty big implications for for especially that
Speaker 1: energy consumption you mentioned. So this proof of stake ORGA,
Speaker 1: I want to talk to you about what what that
Speaker 1: really means, what it means for for miners um and
Speaker 1: why should uh, you know the norm is out there?
Speaker 1: Care sure so, Uh, It's it's a huge change. It's
Speaker 1: this kind of a change has never been attempted in
Speaker 1: the blockchain world before. And what it does is essentially
Speaker 1: until now and for the next day or so, uh,
Speaker 1: miners basically very powerful computers are the ones ordering transactions
Speaker 1: on the ethere And blockchain. And then after that there
Speaker 1: will be a switch to proof of stake essentially stakes
Speaker 1: of coins will be used to do the same to
Speaker 1: order transactions. And of course what this means for miners
Speaker 1: is that they will be out of the job. And
Speaker 1: miners have been looking around to see which other changes
Speaker 1: they could potentially move their equipment to or what other
Speaker 1: options they have. And for Ethereum, what this will mean
Speaker 1: is that um power consumption of the blockchain will drop
Speaker 1: by about which is really good news for investors and
Speaker 1: and developers who have been deterred from participating in the
Speaker 1: Theoryum ecosystem because of its high energy consumption. You know,
Speaker 1: companies and investors who have s G requirements can now
Speaker 1: perhaps give Ethereum a second look. So good time to
Speaker 1: buy a mining rig on the cheap I guess the second.
Speaker 1: But what I'm fascinated with is the other innovation that
Speaker 1: this sort of unlocks, which is staking coins in return
Speaker 1: for your yield. You know, you lock up your ether
Speaker 1: uh in a staking protocol and you get, say, I
Speaker 1: don't know, three or four or five percent whatever the
Speaker 1: yield is. Obviously, that makes ether look a lot more
Speaker 1: like a security than just a cryptocurrency like bitcoin. And
Speaker 1: I wonder, how are you thinking about the regulators. Is
Speaker 1: there the potential for a backlash from the Gary Gensler's,
Speaker 1: the SEC chairman, and other regulators of the world. Absolutely,
Speaker 1: this is an issue that a lot of people are
Speaker 1: thinking about and worrying about because so about um, high up,
Speaker 1: high up executive at the SEC essentially said, you know,
Speaker 1: ethereum does not look like a security to us, and
Speaker 1: so that was the assumption to everybody ever since. But
Speaker 1: now etherium is undergoing some very dramatic changes. You know,
Speaker 1: right now people are going to be essentially staking, putting
Speaker 1: in money to earn yield, and that brings ethereum just
Speaker 1: a little bit closer to um appearing to at least
Speaker 1: one point off about four that regulators look at to
Speaker 1: determine if something is the security or not. There are
Speaker 1: also questions about does the theory and become more or
Speaker 1: less decentralized after this change, which is which also impacts
Speaker 1: whether it will be defined as a security or not.
Speaker 1: So there could be some uh, there could be some
Speaker 1: moves from regulators on this front. And in fact, in August,
Speaker 1: coin Base UH, the US's biggest scripto exchange, UH, did
Speaker 1: disclose that the SEC has asked for some um information
Speaker 1: from it on it's taking services someone the other things.
Speaker 1: So uh, you know, this is definitely something that people
Speaker 1: are watching. Okay, so this has never happened before. It's
Speaker 1: going to happen. If it doesn't go well, can you
Speaker 1: just put it in reverse and back up and like
Speaker 1: go back to the way it was before. Well, so, uh,
Speaker 1: there are some people who are sort of creating alternatives
Speaker 1: and then an alternative chain UH in hopes that the
Speaker 1: merge the SUFT software upgrade does not go well and
Speaker 1: then people will be like, wait a minute, we want
Speaker 1: to go back to the previous block chain. So um,
Speaker 1: there are people who are creating a copy of UH
Speaker 1: ethereum that will still use minors, but I think UM,
Speaker 1: the majority of the Ethereum community is going ahead with
Speaker 1: this uh new block proof of state blockchain. It's been
Speaker 1: tested and retested for years. I mean, it's it's been
Speaker 1: expected to happen for years. The developers have been delaying
Speaker 1: in delaying because of this very extensive testing that they've performed.
Speaker 1: So they're hoping that the issues that do come up
Speaker 1: um after this upgrade will be relatively minor. And what
Speaker 1: does this all mean for for bitcoin? And there's this
Speaker 1: thing called the flippening right, so some people believe that
Speaker 1: this puts Etherium more head to head in competition with bitcoin,
Speaker 1: which of course, um, you know, crypto fans have long
Speaker 1: called digital gold. With Etherium undergoing this transition, perhaps it's
Speaker 1: going to become more more attractive um for corporate treasuries
Speaker 1: and for hedge funds and for other investors that have
Speaker 1: until now only I have only invested in bitcoins. So
Speaker 1: there is a potential for something that crypto fans called
Speaker 1: the flippenine, which is basically the Etherium market cap exceeding bitcoins.
Speaker 1: And this is you know, probably some time away from
Speaker 1: from it not happening anytime soon, auga, right, I A.
Speaker 1: And you know, not much buying happening when it comes
Speaker 1: to crypto today, Bitcoin down more than nine point two percent,
Speaker 1: of theory Um down close to eight percent. Check out
Speaker 1: Olga's article in the new issue of Bloomberg Business Week
Speaker 1: magazine out later this week. Thanks to Joel Webber and
Speaker 1: Ogel Career from Bloomberg Business Week. You're listening to Bloomberg Radio.
Speaker 1: You're listening to Bloomberg Business Week with Carol Messer and
Speaker 1: Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, I
Speaker 1: might have spoke too soon, because Twitter shows now we're
Speaker 1: only up seven tenths of one percent. But on a
Speaker 1: day where everything is down, it is notable that something
Speaker 1: is in the grain. The reason why Well shareholders approving
Speaker 1: a billionaire Elon Musk's proposed forty four billion dollar buyout.
Speaker 1: It paves the way for a trial next month to
Speaker 1: determine the disputed deal's fate. We've got Man deep Seeing
Speaker 1: right now. He's in the Bloomberg Interactive Broker studios. He's
Speaker 1: senior tech industry analyst. Hey Man deep Um, you were
Speaker 1: joking that maybe this will mean that you know, this
Speaker 1: will all come to an end pretty soon, and I
Speaker 1: kind of like said, you know, not so fast, because
Speaker 1: they're still quite a bit left to have happened before
Speaker 1: there is some sort of resolution to this. What is it? Well,
Speaker 1: I mean, there could be another whistle blower. It could be,
Speaker 1: you know, anything from Twitter not handling their data properly,
Speaker 1: or they may have gotten breached which they may not
Speaker 1: have reported. Look, I mean, we can come up with
Speaker 1: a lot of different scenarios, but at the end of
Speaker 1: the day, when when it comes to how the court
Speaker 1: is going to view it, it's very clear that you know,
Speaker 1: there will be a specific performance performance clause in the
Speaker 1: sense that if it goes to trial and must lose this,
Speaker 1: he has to buy the company. He just can't get
Speaker 1: away with paying the termination fee. And I think that's critical.
Speaker 1: That is what will determine the odds of this closing,
Speaker 1: and that seemed to be increasing, uh, you know, with
Speaker 1: the shareholders finally approving the deal. Bendy, what's kind of
Speaker 1: the vibe check on this case? I mean it from
Speaker 1: what I read, it doesn't strike me as the judge
Speaker 1: just being very friendly to Musque's case. I mean, is
Speaker 1: there any sort of settlement possibility? Do you think some
Speaker 1: you know, between a complete forcing of him to take
Speaker 1: it over and and just throwing the case out. I mean,
Speaker 1: what what where do you see this going? Yeah, it's
Speaker 1: very unlikely given how the company's uh, you know, has
Speaker 1: behaved in terms of dealing with Musk and uh, what
Speaker 1: they have said so far, it's very clear they want
Speaker 1: to force the deal to close, and the way the
Speaker 1: contract is structured, I think it really goes in their favor.
Speaker 1: And uh, the whole I think whistle blower thing has
Speaker 1: created more noise. The judge hasn't really given it a
Speaker 1: lot of credence in terms of it influencing how this
Speaker 1: deal may fall apart, and uh, I I think that's
Speaker 1: still remains. So I I think the odds of the
Speaker 1: deal closing are fairly high, given we've seen an approval
Speaker 1: closing at what price. Maybe there is a concession here
Speaker 1: on the company's part. They may, uh if if they find,
Speaker 1: you know, their systems weren't perfect, you know, based on
Speaker 1: the whistle lower complaints, they may have to give a concession.
Speaker 1: But we're talking about maybe a dollar or two of concession,
Speaker 1: not material really. Yeah, I mean the company right now
Speaker 1: is valued at thirty two billion dollars by the public markets,
Speaker 1: so you're actually saying that we could see Elon Musk
Speaker 1: being forced to pay more than forty billion dollars for
Speaker 1: this company. Absolutely, and uh bad deal for him. Just
Speaker 1: the only reason I say that is because I mean,
Speaker 1: look what's happened to the to these types of stocks
Speaker 1: in the last few months. It has, But you know,
Speaker 1: I think when he signed the deal, he kind of
Speaker 1: knew that Twitter would take a while to you know,
Speaker 1: really turn around in terms of you know, coming up
Speaker 1: with a subscription model and all that. Why he changed
Speaker 1: his mind and why he doesn't want to, you know,
Speaker 1: buy the company anymore is beyond my wild We had
Speaker 1: buyers remorse, right, Yeah, Like when I was a kid,
Speaker 1: I saved up for that new pair of shoes, you know,
Speaker 1: go buy it, and then I you know like, oh,
Speaker 1: I shouldn't have bought this. But the fundamentals are impaired
Speaker 1: now from where you know, he signed a contract and
Speaker 1: the employee morale is low. So a lot has changed
Speaker 1: for the worst, which is the reason why the company
Speaker 1: is so keen to close this deal because they know
Speaker 1: they can't find an alternative buyer. Well, I wanted to
Speaker 1: ask you about that. What is the outlook for Twitter's
Speaker 1: business itself. You know, I'm looking at their financials here.
Speaker 1: They had a drop in revenue in the second quarter,
Speaker 1: looks like another drop is expecting the third quarter drop
Speaker 1: in gross profit. Last quarter they're kind of in decline.
Speaker 1: I mean, is is this all part and parcel of
Speaker 1: just a sort of rudderless ship or what's coming on?
Speaker 1: You're right about the management and the board not doing
Speaker 1: a great job of, you know, the fundamental performance. But
Speaker 1: at the same time, Twitter as a platform that still
Speaker 1: has the engagement when you look at their daily active
Speaker 1: user base, it's still intact. They always had a monetization
Speaker 1: problem and probably will take somebody more creative to really
Speaker 1: come up with a better model to monetize the time
Speaker 1: spent on Twitter. But look, I think the fundamentals are
Speaker 1: much poorer than they were back if they could monetize
Speaker 1: all the anger that that site it creates. I mean,
Speaker 1: the time, the time I spent on Twitter, like I
Speaker 1: should be And you know what, the ads I see
Speaker 1: are so irrelevant shocking to me that they haven't figured
Speaker 1: it out. I mean, they should know what I do.
Speaker 1: And it's like, you know, I spend way too much
Speaker 1: time on that platform, and deep we love it when
Speaker 1: you join us, you know, for the sake of us,
Speaker 1: we hope you get to continue to keep covering this
Speaker 1: story because we love having you join us. Senior tech
Speaker 1: industry analyst for Bloomberg Intelligence, Man Deep saying, this is
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovich on Bloomberg Radio. Yeah, a lot of red
Speaker 1: there on the screen. Of course, today's equity market reaction
Speaker 1: a response to what we saw when it came into
Speaker 1: those hotter than expect did inflation numbers that happening at
Speaker 1: eight thirty AM. Well, a few hours before that, about
Speaker 1: eight hours before that, John Authors from Bloomberg Opinion, a
Speaker 1: senior editor for Bloomberg Markets as well, I wrote a
Speaker 1: column that said markets need a less rosy view of
Speaker 1: inflation news. He wrote that there's no sign of a
Speaker 1: FED pivot or reason for Powell to make one until
Speaker 1: it's clear how to get back to two percent. John
Speaker 1: Authors joins us right now from the Bloomberg Interactive Broker Studio,
Speaker 1: following him on Twitter at John Authors. John Um, like
Speaker 1: I said at the start of our show today, this
Speaker 1: was a really prescient column. You kind of called it uh,
Speaker 1: also kind of gutsy to do this on CPI Tuesday.
Speaker 1: What did you see that perhaps a lot of people
Speaker 1: missed here? Okay, um, I think first well, first of all,
Speaker 1: I did see quite a little of it's it's actually
Speaker 1: worse than I was expecting. Because was I did buy
Speaker 1: into is the notion that we at least the peak
Speaker 1: was in even if we weren't going to decrease inflation
Speaker 1: and anything like the rate that people were hoping. If
Speaker 1: you if you looked at all the numbers other than oil,
Speaker 1: there were still reasons for concern that inflation was still growing.
Speaker 1: And the other critical point is that, particularly in this country,
Speaker 1: gas prices work almost contrary to the rest of the index.
Speaker 1: So gas prices, because there's so little tax on gas
Speaker 1: in the this country, um in percentage terms, they vary
Speaker 1: far more than they do in other places. And obviously
Speaker 1: Americans love their cars, and it turns out that if
Speaker 1: gas price goes up, they just spend more on gas
Speaker 1: and drive the same amount and spend less on everything
Speaker 1: else and vice versa. So basically what we had had
Speaker 1: in the last two months, which at least did help
Speaker 1: the headline number come down because gases in the headline
Speaker 1: was the effect the E couldn't of a tax cut.
Speaker 1: It's as though we've had Vladimir Putin more or less
Speaker 1: gave us the eculdment of a up tax hike followed
Speaker 1: by a tax cut, and that meant there was always
Speaker 1: a great risk, which is what happened, that the underlying
Speaker 1: project products, that the things that were separate from oil
Speaker 1: would actually take off in a bigger way than we
Speaker 1: were thinking. And boy did they ever. I mean, it
Speaker 1: was a very very bad number compared to not only
Speaker 1: what the market was expecting, but to be honest, I
Speaker 1: was barish about it, and it was worse than I
Speaker 1: was expecting. John, I'm gonna throw a bit of a
Speaker 1: curveball here, something that's not in your comment Calm today,
Speaker 1: but I have a feeling you'll you'll hit this curveball
Speaker 1: like crickets and making the Google or one of you
Speaker 1: was a David Ortiz type here, I have an Ortis
Speaker 1: Jersey car. But I was talking earlier about the whole
Speaker 1: notion of value versus growth, and you know how lo
Speaker 1: and behold, we finally had this value out performance earlier
Speaker 1: in the year. Uh, many people tying it to this,
Speaker 1: you know, high inflation regime. Good for energy company, is
Speaker 1: good for banks, Harry Yields on and on and on
Speaker 1: it does. It looked like growth kind of made a
Speaker 1: comeback and it was back to the old normal where
Speaker 1: where growth was outperforming again. You know your touch stocks,
Speaker 1: your your high growth companies like that? Does today put
Speaker 1: value back in front for a while? Do you think
Speaker 1: of growth yet? Not a momentum? The last time I checked,
Speaker 1: I did look at the ft W. Those listings at
Speaker 1: home Factors that work ft W go on the terminal
Speaker 1: was a really good way of seeing how the different
Speaker 1: factors are moving. The one that was the strongest for
Speaker 1: today was momentum, which is simply because the momentum has
Speaker 1: generally been against the fangs, and the fangs have really
Speaker 1: sold off very bloodily, very impressively today. Um yes, I
Speaker 1: do think it probably helps value at the margin. What
Speaker 1: people really didn't want to be holding value forward be stagflation.
Speaker 1: I think the chances of stagflation as supposed to a
Speaker 1: recession that comes after the FED has really had to
Speaker 1: bludgeon bloodgend us all into into the out of our
Speaker 1: resistance in a matter of you know, many more months.
Speaker 1: I think stagflation looks less likely simply because the stag
Speaker 1: isn't happening, and that is why the flation is worse.
Speaker 1: That adds up to value continues to be a better
Speaker 1: deal than we thought, and growth continues to be a
Speaker 1: worse deal than we thought. John, we only have ten
Speaker 1: seconds left here. What does this all mean for the Fed?
Speaker 1: And you know seventy five verses one at the next
Speaker 1: meeting and beyond I would still better on. The critical
Speaker 1: thing is how much they're going to cut by the
Speaker 1: end of next year. Okay, that's what we'll keep an
Speaker 1: eye on. We have a little ways to go before
Speaker 1: we get there. Big thank you to John Authur, Senior
Speaker 1: editor for Bloomberg Markets, also a Bloomberg opinion columnist with
Speaker 1: us in the Bloomberg Interactive Broker Studio. Check out his
Speaker 1: story on Bloomberg dot com and on the terminal. You're
Speaker 1: listening to Bloomberg Business Week with Roll Messer and Bloomberg
Speaker 1: Quick Takes. Tim Stinovic on Bloomberg Radio. Mike, you were
Speaker 1: looking at the sins function on the Bloomberg terminal, Uh,
Speaker 1: getting us some data about when the last time we
Speaker 1: saw drops like this in the market. What are you saying, yeah,
Speaker 1: it's it's pretty brutal. That is actually on a closing basis,
Speaker 1: you know, going from closing level to closing level. Uh,
Speaker 1: that's the worst drop since June of remember when the
Speaker 1: pandemic was still locking us all down. Even worse for
Speaker 1: the NASTAC one d though closing basis, biggest drop since March.
Speaker 1: And I had forgotten how bad that day was, to
Speaker 1: be honest, twelve percent drop NASTAC one hundred that day.
Speaker 1: What a crazy time it was. But uh, here we
Speaker 1: are having, you know, five and a half percent dropping
Speaker 1: the deck one hundred, worst day since Hey, let's bring
Speaker 1: in carrol'sch life. She's deputy chief investment officer at a
Speaker 1: bemo family office. Really pleased to have her this afternoon,
Speaker 1: joining us on the phone from Minneapolis. Carol, how are you?
Speaker 1: Oh great? Really? But are you? Are you really great? Uh? Well,
Speaker 1: it's a beautiful fault day here and we're getting lots
Speaker 1: of pretty sunset things to all the smoke in the sky. Right.
Speaker 1: Other than that, yeah, the market day is not such
Speaker 1: a nice day. Okay, we'll help us make sense of this.
Speaker 1: I mean, obviously the equity traders got a little ahead
Speaker 1: of themselves when it came to thinking that the inflation
Speaker 1: numbers would come in softer that didn't end up happening.
Speaker 1: What are you looking at today? Yeah, I think it's
Speaker 1: interesting because we've been saying all along, you know, we're
Speaker 1: range bound data dependent through the summer, there's little to
Speaker 1: really do a compelling uh push to the top side
Speaker 1: or the downside necessarily, And keep in mind we had
Speaker 1: migrated back towards the top of the channel and so
Speaker 1: coming back like this, And honestly this comes from the perspective.
Speaker 1: I know that the down days are scary, but I
Speaker 1: watched seven happened that was in a day, and the
Speaker 1: year still closed up, so pertive. Well, I think a
Speaker 1: piece of this is too, is that the market desperately
Speaker 1: to figure out a bullish tone and they've been fighting
Speaker 1: the FED all year, and the FED has been unequivocal
Speaker 1: saying we're gonna you know, they communicated pretty clearly that
Speaker 1: it's the three quarters of basis point rise. And I
Speaker 1: think this number took everybody by surprise. But the data
Speaker 1: has been really sloppy month to month, and there are
Speaker 1: signs of slowing in some pockets. There's it's going to
Speaker 1: be tough to slow things like wages and rents because
Speaker 1: that takes time to work through the system. So the
Speaker 1: data sloppy, and markets and investors hate sloppy and hate unknown. Carol,
Speaker 1: I keep thinking about, well, what could sort of break
Speaker 1: us out of this range that you describe um, which
Speaker 1: I think is a great point to make. It's a
Speaker 1: very wide range, but certainly arranged range battle market. And
Speaker 1: I keep thinking, well, earning the season is coming up
Speaker 1: in a few weeks, and it seems like so many
Speaker 1: people we talked to our skeptical of the earnings estimates
Speaker 1: out there. They believe that they need to come down
Speaker 1: to account for sort of the data image being done,
Speaker 1: the profit margins from inflation. So I'm wonder how you're
Speaker 1: thinking about that. Is that the third quarter the earning
Speaker 1: season where companies really sort of hit us over the
Speaker 1: head with some bad news. Yeah, I think you could
Speaker 1: see a lot. You know, people will be listening very
Speaker 1: very carefully to the earnings announcements. They won't be watching
Speaker 1: the numbers as much because numbers are are a picture,
Speaker 1: a snapshot of what's already happened. So they're going to
Speaker 1: be listening really carefully for what are the inventories, like,
Speaker 1: they'll be watching all the consumer goods companies for that,
Speaker 1: what's their pricing power alike? You know, are their supply
Speaker 1: chain issues, are their labor issues? What are they doing
Speaker 1: with their labor. They're going to be listening to all
Speaker 1: those indications. And you know, it's too bad markets when
Speaker 1: they get volatile like this. People tend to look only
Speaker 1: at the short term because the intermediate to longer term.
Speaker 1: When you look at the US economy relative to the
Speaker 1: global economy, there's a lot of potential strength underneath to
Speaker 1: prevent us from really tailing off deeply, because it's been
Speaker 1: a long time since we've had a FED tightening cycle
Speaker 1: where you actually had the quantity of fiscal stimulus coming
Speaker 1: in behind it that we do by all of the
Speaker 1: spending packages, and we're spending on interesting industries in terms
Speaker 1: of green energy and infrastructure, and who knows, maybe a
Speaker 1: lot of those European manufacturing companies will decide that it's
Speaker 1: cheaper to put a manufacturing plant up here in the
Speaker 1: US because they're closer to reliable energy sources right right,
Speaker 1: And we saw that Intel announcement in Ohio, maybe a
Speaker 1: sign of things to come. Carol I know that you,
Speaker 1: and and really a lot of investors who look at
Speaker 1: the market both bottoms up and tops down. UH like
Speaker 1: to keep at least one eye on credit markets, especially
Speaker 1: in a in a rising rate environment like this. What
Speaker 1: are you seeing there in the credit markets? There are
Speaker 1: there any alarm bells going off? I don't think there's
Speaker 1: alarm bells yet, But it's interesting watching that companies recently,
Speaker 1: you know, you've had not necessarily record corporate debt issue.
Speaker 1: It's but a lot of corporate debt issuance, and a
Speaker 1: lot of people would have figured g rates are up.
Speaker 1: Companies aren't going to want to issue debt, but they
Speaker 1: are because I think some of these companies think rates
Speaker 1: are going higher. And it's interesting because business. If the
Speaker 1: pandemic taught business anything, it's that you need to maximize
Speaker 1: your cash utilization, the cash on the balance sheet. You
Speaker 1: need to be really careful about what you're doing. So
Speaker 1: we're watching them closely. You know, they've been volatile. The
Speaker 1: yield curve has been kinky, if you will, and lumpy
Speaker 1: because it's not necessarily inverted on the whole curve, but
Speaker 1: it's inverted in spots. So the yield curve doesn't even
Speaker 1: know what to make out of the data that we're getting.
Speaker 1: Not that's kind of kinky him. Hey watch it, hey,
Speaker 1: Carol nice I like that. Hey, Carol, talk to us
Speaker 1: a little bit about you know what you're doing with
Speaker 1: asset allocation right now? I mean, really, the question I
Speaker 1: have is, is today buying opportunity? If you're long this market,
Speaker 1: if you're if you're in it for the long haul.
Speaker 1: I think you know, it's interesting because we've been pretty
Speaker 1: cautious all year. We've been balanced, but we've been we've
Speaker 1: had a somewhat underweight to more recently neutral weight in
Speaker 1: fixed income, and we've migrated towards core fixed income because
Speaker 1: you can get paid to sit in some pretty interesting
Speaker 1: short to intermediate term fixed income opportunities. But we're also
Speaker 1: we've been slightly neutral to overweight US equities. Mid caps
Speaker 1: have done pretty well in here, and we do think
Speaker 1: intermediate longer term. If you've got that viewpoint, it's an
Speaker 1: interesting standpoint. You don't want to be out of the markets,
Speaker 1: but I don't think i'd necessarily jump in with both
Speaker 1: feet because you still have some valuations. You've got earning
Speaker 1: seasons right around the corner, so there could be you're
Speaker 1: essentially saying there could be further to fall potentially. We
Speaker 1: just think you're range bound and you're not necessarily at
Speaker 1: the bottom end of that of that range that we
Speaker 1: don't think things are going to fall dramatically and not necessarily,
Speaker 1: you know, go into a big, serious bear market or recession,
Speaker 1: and the Fed has a good shot at sticking as
Speaker 1: soft right, it's um sticking a soft landing, if you will,
Speaker 1: although you know, the inflation numbers would argue otherwise, but
Speaker 1: inflation numbers too are trailing for a lot of cases.
Speaker 1: Let's talk a little bit about um, you know, other
Speaker 1: data that we could get this week. I like the
Speaker 1: idea that you've described. The data is kind of a
Speaker 1: lumpy and not really clear. Is the data that we're
Speaker 1: going to get later this week PPI tomorrow, retail sales Thursday,
Speaker 1: University of Michigan sentiment on Friday? Is that going to
Speaker 1: tell us a different story? Could have potentially changed the
Speaker 1: narrative here. It could a little bit, especially the sentiment survey,
Speaker 1: because consumer sentiment tends to be tied pretty closely to
Speaker 1: what what we're all paying for gas and so, and
Speaker 1: gas prices are down that's helping a lot of individuals. Now,
Speaker 1: food is up, rent is up. They may say, you
Speaker 1: know the rate of increase in rent is falling, but
Speaker 1: still you know lots of individuals where they're being slammed
Speaker 1: with really high rent increases and they're trying to figure
Speaker 1: out changing up their house and situation. But you're seeing
Speaker 1: cooling there. You're seeing cooling at the fringes. In other places.
Speaker 1: You're also seeing some straightening out of supply chains, which
Speaker 1: is helping all along the path there. You know, rails
Speaker 1: are moving, the courts are moving, and so you could
Speaker 1: change the narrative. I mean this today is really a
Speaker 1: disappointment about um, the narrative that people were hopeful that
Speaker 1: the Fed wouldn't They keep saying the Fed is not
Speaker 1: going to have to raise as much as the Fed things. Well, yeah,
Speaker 1: the narrative certainly shifted today. Hey, Carol, we gotta run
Speaker 1: Klsch Life Deputy chief investment officer at a Bemo Family
Speaker 1: office on the phone from Minneapolis. Really appreciate you taking
Speaker 1: the time this afternoon. Thanks for listening to Bloomberg Business Week.
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