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Speaker 2: Michael Green joins you strategists, simplify asset manager. Mike, let's
Speaker 2: start with you first principles. Why is the vixit twenty
Speaker 2: one in a bull market?
Speaker 3: Well, I mean, the simple answer is that we've been
Speaker 3: realizing relatively high volatility, particularly amongst the megacap names, and
Speaker 3: that is affecting the composition of the index. The other
Speaker 3: thing is the vixit highs or VIC moving higher in
Speaker 3: the face of the equity markets moving higher. Part of
Speaker 3: that is simply a mechanical process, the reflection news strikes
Speaker 3: being brought in, and so the width of the variant
Speaker 3: swap actually in increases that mechanically can push it up.
Speaker 3: About a third of the time when you're making new
Speaker 3: all time highs, you're pushing higher on the vix So.
Speaker 2: Do you assume that it will dampen it down and
Speaker 2: come in under nineteen under seventeen at some point.
Speaker 3: Yeah, that would be my core expectation. Unless exogenous events occur.
Speaker 3: The VIX has spiked significantly, It was very primed for
Speaker 3: that sensitivity. What we call the implied correlation, which is
Speaker 3: the relationship of the index to those individual stocks, had
Speaker 3: pressed it down to very very low levels. Most of
Speaker 3: what we've seen in this pop has actually been that phenomenon.
Speaker 3: The increased concern about some of the stocks is now
Speaker 3: manifesting itself into is.
Speaker 2: This a bigger broader issue?
Speaker 3: That implied correlation rose in the past couple of weeks,
Speaker 3: but we're not realizing those levels of volatility, and the
Speaker 3: pressure is always there to sell all If the implied
Speaker 3: are well above the realized, i'd expect to see that
Speaker 3: pressure coming down.
Speaker 4: What about in the credit space? That's what I was
Speaker 4: reading all of the whole weekend because I was wondering
Speaker 4: whether this is isolated or not.
Speaker 5: You get conflicting answers.
Speaker 4: Some are saying maybe this will be signs of more
Speaker 4: further stress to come, but others are saying it's isolated.
Speaker 5: What is your take on that?
Speaker 3: My take on it is is that this is actually
Speaker 3: indicative of a much broader problem we've been seeing bankruptcies
Speaker 3: themselves have actually been elevated in the corporate space those
Speaker 3: with assets above fifty million dollars. Bankruptcies for assets above
Speaker 3: fifty million dollars have actually been surging in our levels
Speaker 3: that are consistent with a much higher level of credit spreads.
Speaker 3: The biggest story in credit spreads continues to be exactly
Speaker 3: what you guys were referring earlier to from the sock
Speaker 3: Gen observation.
Speaker 2: People are piling money in.
Speaker 3: There's not a lot of issues, particularly in high yield,
Speaker 3: because they resist the higher yields. That means they're chasing
Speaker 3: the secondary of securities and pressuring credit spreads.
Speaker 2: Do you noticed Isabelle that he dresses up for Charles
Speaker 2: Pain over at Fox Business, but he doesn't dress up
Speaker 2: for us.
Speaker 5: He did?
Speaker 1: You know?
Speaker 5: I saw that.
Speaker 2: Slides in seven am in the morning. You were talking
Speaker 2: to the wonderful Charlie Pain and you're going to talk
Speaker 2: to us now about translate the private credit banks that's
Speaker 2: out there. It's it's not a frenzy, but it's fermenting,
Speaker 2: is how i'd put it. Discuss the fermenting of our fears. Well,
Speaker 2: the biggest.
Speaker 3: Thing to remember about private credit and private equity is
Speaker 3: at the end of the day, these are just really
Speaker 3: allocators in another form. Right, you are taking a private
Speaker 3: credit firm, they are receiving an equity investment from their
Speaker 3: end investors. They are then levering that with bank loans.
Speaker 3: This comes through the banking system of what we call
Speaker 3: the non depository financial institution lending, which is absolutely exploded.
Speaker 3: So what you're really seeing is banks lending to non
Speaker 3: banks where then lending to operating companies that are running
Speaker 3: on a lege.
Speaker 2: I got to interrupt. This is really important. What do
Speaker 2: you perceive as a leverage ratio of private credit as
Speaker 2: a lever up versus two thousand and sixty seven relative
Speaker 2: to where the banks were in two thousand and six.
Speaker 2: Two thousand and seven is well below that.
Speaker 3: NDFI also captures hedge fund lending that in some situations,
Speaker 3: particularly in the treasury basis, trade is running quite high.
Speaker 3: So the overall leverage ratio in that sector is probably
Speaker 3: in the ten to filaus.
Speaker 2: It's pretty high. I say, Isabel, save me.
Speaker 4: And so you said that this is a sign of
Speaker 4: broader stress, So then will that mean we should be
Speaker 4: on the lookout for further blowout?
Speaker 5: And how cautious.
Speaker 4: Will that make lenders because that will have ramifications for
Speaker 4: the economy.
Speaker 3: That's really the critical observation is about is the fact
Speaker 3: that when you start to start asking questions, you become
Speaker 3: less willing to extend credit. When you are less willing
Speaker 3: to extend credit, you suddenly discover that people that desperately
Speaker 3: needed that credit no longer have it.
Speaker 2: The stresses begin to emerge. It's Warren Beffett's.
Speaker 3: Expression, you find out who's naked when the tide is
Speaker 3: going out right. It's the same underlying phenomenon where less
Speaker 3: money available means it's easier to miss that payment.
Speaker 4: Tom, can I ask about Vanguard? You wrote a paper
Speaker 4: about Vanguard. It's called setting the record straight retraious questions
Speaker 4: about passive investing, which is you know, an interest out
Speaker 4: for everyone. I mean, yes, a big question always asking
Speaker 4: the team is the S and P actually passive? Because
Speaker 4: when they rebalance there's a committee in charge of it
Speaker 4: which asked this question. Anyway, what do you make of that?
Speaker 4: Why did you write the paper? What do you see
Speaker 4: as Vanguard's central blind spot?
Speaker 3: Well, I think the core issue is is that passive
Speaker 3: investing is, first of all, not passive So the definition
Speaker 3: of passive in the academic literature is somebody who never transacts.
Speaker 2: That means you can't get in. It means you can't get.
Speaker 3: Out, right, So they are not passive strategies, But it
Speaker 3: turns out they are as systematic algorithmic strategies that simply say,
Speaker 3: did you give me cash? If so, then by did
Speaker 3: you ask for cash? If so, then sell. Any systematic
Speaker 3: strategy can get crowded. And what we're experiencing now is
Speaker 3: the impact of crowding into a strategy that most people
Speaker 3: had presumed had nearly unlimited capacity.
Speaker 4: You can see crowding about a lot of things like
Speaker 4: AI or gold.
Speaker 2: Now, well, what.
Speaker 3: You actually are seeing is a little bit even more perverse,
Speaker 3: so things like the rising concentration. This is actually the
Speaker 3: subject of my first academic paper, which I will send
Speaker 3: a copy over to you.
Speaker 2: Yes, as soon as it's ready.
Speaker 3: But what you actually have with passive investing because you
Speaker 3: are allocating on the basis of market capitalization. That means
Speaker 3: when a stock goes up, the next dollar in gets
Speaker 3: a larger allocation. And the perverse thing that we are
Speaker 3: now finding out is that markets are not nearly elastic
Speaker 3: enough to take in the scale of the flows that
Speaker 3: we're sending them from passive vehicles, It has a really
Speaker 3: perverse impact. The largest stocks in many situations are the
Speaker 3: least elastic stocks and are therefore actually being inflated more
Speaker 3: than the rest of the market. That creates a feedback
Speaker 3: loop that really plays through in the types of concentration
Speaker 3: that we're seeing and unfortunately lowers the threshold.
Speaker 2: This is what the paper is about.
Speaker 3: It lowers the threshold at which we discover that passive
Speaker 3: becomes a negative feature in the market.
Speaker 2: Can you quantify a set of PE points where it's
Speaker 2: overvalued because of passive internal dynamics. Walmart's at forty should
Speaker 2: it be at thirty eight or thirty six or fifteen?
Speaker 3: So this is one of the real challenges tom, because
Speaker 3: if you think about what should be happening when companies
Speaker 3: are experiencing extraordinary levels of profitability, we should expect those
Speaker 3: profit margins to mean revert at some point in the future.
Speaker 3: That would actually tell you the valuation should be even
Speaker 3: lower than you would otherwise expect. I know this sounds
Speaker 3: absolutely crazy, but my estimate for Walmart is probably somewhere
Speaker 3: in the teens.
Speaker 2: Oh that's I can't say I agree with that because
Speaker 2: I'm not allowed to have an opinion, But there it is.
Speaker 2: I got to squeeze a sentence to important. We have
Speaker 2: a planum in Beijing. It's off the radar for the
Speaker 2: American people, the American business community. I don't buy it
Speaker 2: for a minute. And you watched China in this development
Speaker 2: of a five year plan forward. What are you watching for?
Speaker 3: Well, the single most important thing that's happening at this
Speaker 3: planet is the relative lack of news about gi going
Speaker 3: into it and the wholesale replacement of many of his
Speaker 3: loyalists that we've seen in the million terry in the
Speaker 3: past couple of weeks.
Speaker 2: There's nine nine and well that's just in the last week.
Speaker 3: I believe about seventeen that have been replaced over the
Speaker 3: past couple of months. It's unclear whether this is driven
Speaker 3: by g or whether this is a loss of power
Speaker 3: for G.
Speaker 2: Right.
Speaker 3: We look at American politics, We're very familiar with the
Speaker 3: travails between the Trump administration and the Democratic Party, et cetera.
Speaker 3: Every other country has those as well, the simple reality
Speaker 3: as they are largely concealed from us, but there very
Speaker 3: much appears to be a significant power struggle underway in
Speaker 3: China right now. What the implications of it, Whether these
Speaker 3: generals are being replaced because they're saying we're not ready
Speaker 3: to go for Taiwan and G is pushing for it
Speaker 3: when he's trying to find somebody who says, yes, I'll
Speaker 3: ah putin with the invasion of Ukraine, or whether this
Speaker 3: is more a verdict.
Speaker 2: On G himself. We just don't know yet. Brilliant synopsis.
Speaker 2: Michael Green, thank us so much. Is simplify asset management
Speaker 2: something we'll be watching through the week. Here are these
Speaker 2: important meetings in China. Stay with us. More from Bloomberg's
Speaker 2: Surveillance coming up after this.
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Speaker 2: We now turn, incredibly importantly, turn to Henrietta Trees joining
Speaker 2: us from Veda Partners here on the shutdown. Henriette, I
Speaker 2: look at the Washington Post this morning and there is
Speaker 2: not a single article on the shutdown. I'm sort of
Speaker 2: shocked by that. Give us an update X number of
Speaker 2: days in to the agony of our federal workers.
Speaker 6: Yeah, that tells me pretty much everything you need to know.
Speaker 6: There's not going to be any resolution this week. I
Speaker 6: wouldn't even expect one next week. The White House is
Speaker 6: not engaged. It's clear to me for my conversations with
Speaker 6: Republicans on the House and set outside, that they're waiting
Speaker 6: for the White House to decide what they want to
Speaker 6: do here, whether there's anything that they want to offer
Speaker 6: to Democrats to make anything shake loose.
Speaker 5: They'll have their eleventh vote.
Speaker 6: It will fail again, and we'll just keep repeating the
Speaker 6: same thing, knocking our heads against the wall for a while.
Speaker 2: What part of our federal government will we observe failing?
Speaker 2: Don't tell me like national parks. Okay, there's twelve people
Speaker 2: out there, I get it. But within the real day
Speaker 2: to day of our listeners and viewers, what will fail
Speaker 2: because of the shutdown?
Speaker 6: Well, I think we already have seen the data releases fail,
Speaker 6: so we're already in the thirds of that. The market's
Speaker 6: already had to adapt to that. But the next big one,
Speaker 6: as everybody always knows, is going through the airport and
Speaker 6: trying to travel. It's very scary to be concerned about
Speaker 6: whether or not you're going to be able to get through,
Speaker 6: whether or not the flights are going to get shut down.
Speaker 6: That's generally the main branch of AACK.
Speaker 2: Okay, but Isabelle at the golf stream. So I had
Speaker 2: to take thank you Delta for a great trip down
Speaker 2: to Houston. And the answer is it was seamless andry.
Speaker 2: There was no problem. Are there really problems with TSA
Speaker 2: and air controllers?
Speaker 6: Now they're starting to register upticks in folks calling in
Speaker 6: sick from work, And the longer it goes, and as
Speaker 6: you miss those pay cycles, you'll start to see more
Speaker 6: of that. And I think that's really the story of
Speaker 6: the shutdown. It's not one being silver bullet. It's a
Speaker 6: compounding of a bunch of little things. No military pay,
Speaker 6: no federal employee pay, that starts to weigh on members
Speaker 6: and districts and starts to get painful. And we're going
Speaker 6: to need to be shut down for probably another two
Speaker 6: weeks before we get there.
Speaker 4: You said that in your note that polling shows that
Speaker 4: Republicans are bearing the blunt of the blame, but most
Speaker 4: of their ads are actually targeted towards the Democrats. And
Speaker 4: I've seen some of them. Where do you see the
Speaker 4: breakdown and messaging is why isn't one party more effective
Speaker 4: than the other when it comes to the blame game?
Speaker 6: Yeah, I asked staff across the aisle both sides about
Speaker 6: this last week on Capitol Hill, and Republicans are a
Speaker 6: little bit split. There's some who think that none of
Speaker 6: this matters. Voters are totally disengaged and therefore it's not
Speaker 6: a big deal. The President can keep tweeting, you know,
Speaker 6: AI images if he wants to and it doesn't move
Speaker 6: the needle. Then there are others who are saying, look,
Speaker 6: when I go back to my district in Alabama or wherever,
Speaker 6: they see that the president controls the White House, Republicans
Speaker 6: control the House. In the Senate, it's difficult to then
Speaker 6: have to layer on yet, but we need sixty votes
Speaker 6: in the Senate, you know. And then on the Democratic side,
Speaker 6: they're just waiting it out. They think that they're winning
Speaker 6: as well.
Speaker 2: And had one final question here to get the week started.
Speaker 2: It's October. How many people what's the level of Henrietta
Speaker 2: Tre's radar on retirement of representatives and senators? Are we
Speaker 2: going to see a wave of people retire.
Speaker 6: We already have seen the announcements come there from all
Speaker 6: over as well, so from farming states. I think that
Speaker 6: the next round of elections, this midterm cycle is going
Speaker 6: to be really telling. Everybody's sort of already in twenty
Speaker 6: twenty eight, even on Capitol Hill, which is really fascinating.
Speaker 2: You know.
Speaker 6: The main story is Jadie Vance will be, you know,
Speaker 6: deemed to be the onner op and the follower to
Speaker 6: President Trump. Who are the Democrats going to pick?
Speaker 5: We're focused on that.
Speaker 6: A lot more in conversation than even the midterms. It's
Speaker 6: kind of interesting to see that we just move ahead
Speaker 6: to that.
Speaker 2: Henrietta, Thank you so much. A Monday Brief with Henrietta
Speaker 2: Tray's Beta partners stay with us. More from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Stephen Angler joins us. He's with a standard charter bank
Speaker 2: and it can't be a normal day. When you see
Speaker 2: the headlines coming out of Argentina. Oh, I guess we
Speaker 2: booked Yeller. Darius Dale was just in all ivy football
Speaker 2: at Yale. Were you on the football team? Ill, Stephen Englander?
Speaker 7: I had to turn them down because they would be
Speaker 7: unfair if I joined the team.
Speaker 2: It's great to go from darius Dale to Stephen Englander
Speaker 2: of Yale. At University Argentina, we have the stereo Troy
Speaker 2: uh stereotype Avia Pirona and that maybe we have a
Speaker 2: Germanic history, and then coming out the prosperity of Argentina
Speaker 2: fading away within standard charter. Where is Argentina right now?
Speaker 2: How chaotic is it? Well?
Speaker 7: You know I should preface anything I say by saying
Speaker 7: I'm not an expert, as you know, I do G
Speaker 7: ten mostly.
Speaker 2: Well, it's G eleven. Okay, Well, you know, maybe let
Speaker 2: me rephrase this. When you look at Argentina dealing with
Speaker 2: the Secretary of Treasury and the President of the United States,
Speaker 2: his swap agreement this morning is unusual, right.
Speaker 7: You know, all of these types of agreements are unusual,
Speaker 7: and you know ultimately they get decided, you know, in
Speaker 7: the course of years by whether or not they're consistent
Speaker 7: with the fundamentals, and what they're trying to achieve is,
Speaker 7: you know, sort of makes sense. You know, does the
Speaker 7: exchange rate make sense? Do the policies make sense? And
Speaker 7: you know, aid like that can be a bridge. It's never,
Speaker 7: it's never the entire edifice itself.
Speaker 5: What about let's talk about the quality of the US data.
Speaker 4: You've said that it's now a risk to the market
Speaker 4: and the policy itself. How much is it actually distorting
Speaker 4: the FED decision.
Speaker 7: If it is, well, I think it distorted it pretty much.
Speaker 7: I mean, if you compare the comments that the FED
Speaker 7: was making about the labor market may June July into
Speaker 7: August and what we now know about the labor market
Speaker 7: and the fact that the data are still wrong in
Speaker 7: the sense that they overstate the contribution of new firms consistently.
Speaker 7: You know, I think it probably the more hawkish than
Speaker 7: they ought to have been.
Speaker 4: So the FED aal always sys their data dependent. If
Speaker 4: the data is flawed, it was it that What does
Speaker 4: that say about policy reliability then, especially around employment inflation readings.
Speaker 2: I think there's risk there.
Speaker 7: I think what ultimately the data are probably correct over
Speaker 7: a period of say four quarters two years. But I
Speaker 7: think in terms of making real term, real time policy
Speaker 7: and in terms of market participants, you know, pricing assets,
Speaker 7: the fact that there's so much volatility and error and
Speaker 7: the short term numbers is a big deal.
Speaker 2: Steve Dangler wrote is the standard Charter Bank and extended
Speaker 2: conversation for Global Wall Street. This morning, we said good
Speaker 2: Morning around the world on YouTube, in your office, at home,
Speaker 2: even in your car. Don't look at the screen while
Speaker 2: you're driving. Subscribe to Bloomberg podcasts Good Morning across the
Speaker 2: nation ticularly ninety nine one FM in Washington, ninety two
Speaker 2: nine FM in Boston, and Bloomberg eleventh three to zero.
Speaker 2: Here in a perfect New York this morning, Steven, I
Speaker 2: look at the great call of dollar weakness and flat
Speaker 2: out it just hasn't happened. Then I look at cross rates,
Speaker 2: which you are expert at, Euro Yen, euro swissy and
Speaker 2: the rest. Which cross rate do you look at away
Speaker 2: from a G ten analysis.
Speaker 7: Well, lately we've been looking at things like euro Brazil
Speaker 7: or sterling Brazil as a gauge of you know, Brazil
Speaker 7: being a very risk on type of currency and sort
Speaker 7: of a gauge of how kind of willing the market
Speaker 7: is to take on risk and buy Carrie.
Speaker 2: Europe a kind of a very mixed.
Speaker 7: Bag and getting sort of slightly more negative mixed than
Speaker 7: positive mixed.
Speaker 2: So Zabelle to translate this into the real world, I
Speaker 2: punch up EU BRL euro Brazil on the Bloomberg. I
Speaker 2: take it back twenty years and there's just been a
Speaker 2: massive Brazilian weakness and euro strength until now. And that's, folks,
Speaker 2: just as a window into the Steve Englander world. Are
Speaker 2: you suggesting go long Brazil versus more dominant economies?
Speaker 7: You know, we we have some sympathy to that view.
Speaker 7: I mean we you know, you look at some of
Speaker 7: the risk negative events of the last week.
Speaker 2: They are a couple of weeks.
Speaker 7: They look as if they're likely to fade, and we
Speaker 7: do think that the markets could well go back to
Speaker 7: looking at Carrie and a, you know, as the risk
Speaker 7: environment becomes more favorable.
Speaker 4: I do see that this is a stunning chart. Actually,
Speaker 4: it's almost like, I don't know, how do you draw it?
Speaker 4: A day, I'm gonna liigne the EU RBRL go.
Speaker 2: That's Steven Englander's world across right as well. Tell me
Speaker 2: about Swiss Frank, I mean, for America. We perceive Swiss
Speaker 2: Frank is strong, strong, strong, and they've got their own
Speaker 2: unique issues. I mean, Nestley makes headlines with sixteen thousand
Speaker 2: people out the door. But the flow of money into
Speaker 2: Switzerland with dollars Swiss or EuroSwiss, how does that ultimately
Speaker 2: play out?
Speaker 7: You know, over time, I've changed my view on Swiss
Speaker 7: because you know, I was always focused on overvaluation.
Speaker 2: But you take a look at it.
Speaker 7: They continue to have a trade surplus, so you know,
Speaker 7: they and they tend to be in product segments where
Speaker 7: it's not you know, there's some product differentiation, so the
Speaker 7: you know, there's interlastic sleeve demand there, so prices go up,
Speaker 7: man doesn't collapse. And at the same time, you know,
Speaker 7: they have a surplus in their income account and at
Speaker 7: the same time money wants to come into Switzerland. That's
Speaker 7: a very powerful driver. What's your trade this morning? What
Speaker 7: is the intelligent trade out three months?
Speaker 2: Six months? For steven Ing?
Speaker 7: Well, you know, we we like our euroview your weakness,
Speaker 7: and we think and dollars think, we think it will
Speaker 7: play out over that time horizon, and we think that
Speaker 7: it's you know, we think that the market consensus is
Speaker 7: still very dollar bearish.
Speaker 4: You mentioned dollar strength, So if the US is overstating
Speaker 4: it's labor growth, labor growth and market growth strength, then
Speaker 4: is the US dollar miss price?
Speaker 7: The dollar is mispriced, but not for that reason, I think,
Speaker 7: I think what you know, what we're seeing. I mean,
Speaker 7: if you think of it, the GDP now before the
Speaker 7: shutdown was running three eight three nine, it looks like
Speaker 7: labor input and correctly measured was probably down one percent.
Speaker 7: So productivity is booming. Historically that's been a very dollar
Speaker 7: positive development.
Speaker 2: I mean, I look at the charter folks a bbd
Speaker 2: x Y. This is the Bloomberg Dollar Index. Michael Rosenberg
Speaker 2: and his team invent of this. It was immediately taken
Speaker 2: up by the IMF. It's more than the d x
Speaker 2: Y includes China, includes the world of standard charter bank
Speaker 2: as well. I see one about two bouts three bouts
Speaker 2: of catharsis move strong dollar? Yes? Yes, yes, yes, yes, reversal.
Speaker 2: I mean, does that indicate is there a catharsis out there?
Speaker 2: When the dollar strengthens, that does indicate out there somewhere
Speaker 2: is dollar weakness.
Speaker 7: You know, you can look at it both ways. I
Speaker 7: look at it the other way. I think that exporders
Speaker 7: to the US. They have less competitive currencies because of appreciation,
Speaker 7: and then they're facing the tariffs. I think it's hard
Speaker 7: for the you know, for them to swallow for their appreciation.
Speaker 7: And you know, i'd say that the you know potential,
Speaker 7: you know what we're seeing in terms of productivity, productivity
Speaker 7: potential in the US that's emerging very late in the cycle.
Speaker 7: We're just not seeing anywhere else. So and that typically
Speaker 7: generates it's a capital inflow, which ends up being you know,
Speaker 7: dollar positive or positive for any currency, you're going to
Speaker 7: get that inflow.
Speaker 2: Steven Angler are an extensive conversation this morning, Isabelle in time,
Speaker 2: can we welcome all of you around the world and
Speaker 2: particularly the standard charter world.
Speaker 4: Isabelle, you've highlighted that employment population ratio is a more
Speaker 4: reliable labor metric than headline unemployment.
Speaker 5: Can you talk to us about why.
Speaker 7: Well, because the unemployment trade is affected by labor force participation.
Speaker 7: So if you're losing jobs but you know people are
Speaker 7: dropping out of the labor force, it doesn't show up,
Speaker 7: or if you're it doesn't show up as much. But
Speaker 7: normally you'd say that, well, you know, say people want
Speaker 7: to work and so if the employment of population goes down,
Speaker 7: that tells you that there are fewer people working.
Speaker 4: So if all these data are inaccurate, what could Affed
Speaker 4: or the BLS do realistically and urgently to shore up
Speaker 4: data credibility without, of course, massive new funding, given that
Speaker 4: the government is on day twenty of the shutdown.
Speaker 7: Well, I'm not sure they need that much funding. I
Speaker 7: think that the issues are more conceptual. I mean things
Speaker 7: that would be easy, like counting gig workers. Because there's
Speaker 7: so few big gig firms you can they're now not
Speaker 7: picked up at all or virtually not at all. In NFP,
Speaker 7: you know so much RELI there's so much reliance on
Speaker 7: the unemployment rate. But it's a tiny sample compared to
Speaker 7: you know how much policy and markets rely on it.
Speaker 7: The Jewelt's number, again, very imperfect sample. I wouldn't rely
Speaker 7: on that at all.
Speaker 4: But doesn't that require staff though, and that's their main complaint.
Speaker 7: Well, look, I'm not an expert on the inner workings
Speaker 7: of BLS, but I'd say that what it requires. And
Speaker 7: just as an example, the data show that the native
Speaker 7: born population of the US increased two and a half
Speaker 7: million between March and August. Well, that didn't happen because
Speaker 7: there there wasn't a surge of birth sixteen years ago
Speaker 7: to you know that would be reflected now. But there's
Speaker 7: no comment on that, sort of saying, look, you got
Speaker 7: to be careful about this that it may reflect well
Speaker 7: some imperfections in the sample.
Speaker 2: O come on and it's a great work of anaalong
Speaker 2: to help us out. I want to get back in
Speaker 2: the time we've got left, Steve Angler. I want to
Speaker 2: get back to your arch call of euro weakness, and
Speaker 2: it's Robert Schiller at Yale, Marty Feldstein, years and years,
Speaker 2: just a challenged euro experiment. We've got We're looking at
Speaker 2: the six Republic of France, depending on how that works out,
Speaker 2: London and complete chaos in the United Kingdom is well,
Speaker 2: how does that push euro weaker? If there's geopolitical upset
Speaker 2: in euro give us a target there? Are you framing
Speaker 2: one fifteen or do you go back to parody?
Speaker 7: So we have one twelve by the middle of next
Speaker 7: year and we basically keep it there. I think what
Speaker 7: the market is under estimating is the ECB's willingness to
Speaker 7: cut raids. The market basically has things flat. We have
Speaker 7: another cut in in Q four coming or the end
Speaker 7: of Q four. But I think the ECB is likely
Speaker 7: to be much more reactive to weak data than the
Speaker 7: market is now.
Speaker 2: Is that because they enjoy a lower nominal GDP set,
Speaker 2: they just simply have room to move without upsetting the system.
Speaker 7: You know, inflation isn't the problem, but the right wing
Speaker 7: politics are a problem, and I think that they in
Speaker 7: so far as they could push back against it with
Speaker 7: stronger growth, they're going to do it.
Speaker 2: But we have right wing politics in America, and I
Speaker 2: believe we have a financial boom going on.
Speaker 7: I think right now the ECB seeds that, well, a,
Speaker 7: there's not a financial boom in Europe, but I think
Speaker 7: the ECB seeds itself is part of the you know,
Speaker 7: European political framework, and you know they, you know, the
Speaker 7: sort of center of gravity in Europe is for more unification,
Speaker 7: not the sort of right wing agenda, and I think
Speaker 7: that they're trying to make it easier to stay at
Speaker 7: the center.
Speaker 4: So the Eurozone economy continues to underperform. Is the FX
Speaker 4: market then reacting to current data or more forward looking
Speaker 4: expectations in your view?
Speaker 7: You know, I think the the FX market has been
Speaker 7: very focused on what Donald Trump does, and you know
Speaker 7: too much in the sense that even Trump laughs that
Speaker 7: kind of you know, the seriousness, the literal and the
Speaker 7: degree of literal interpretation they take of every policy move
Speaker 7: that he makes, which he knows he's prepared to pull back.
Speaker 2: I got to get this in your frame out right now,
Speaker 2: your euro dollar call, just to give global Wall Street
Speaker 2: scope and skill. Yeah, well, I.
Speaker 7: Think we expect one fifteen at the end of this year,
Speaker 7: when twelve at the middle of next year.
Speaker 2: One twelve?
Speaker 7: Really?
Speaker 2: Okay? Wow? Is that upset that up? This has been wonderful.
Speaker 2: Can you do this tomorrow at your Beckon call? Steven Agler,
Speaker 2: thank you so much for the standard Charter Bank. I
Speaker 2: just can't say enough, folks, his ability to synthesize in
Speaker 2: all of our global system. Stay with us. More from
Speaker 2: Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
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Speaker 1: say Alexa play Bloomberg eleven thirty folks.
Speaker 2: I don't do enough of this. I'm not going to
Speaker 2: mince words. It's the cottage industry up in Boston, the
Speaker 2: leadership up in Boston within the financial business of trying
Speaker 2: to figure out retirement. This goes back well to World
Speaker 2: War Two, back to Arisa of nineteen seventy four as well.
Speaker 2: It's work at Boston College and their retirement work, and
Speaker 2: also at the Massachusetts Institute of Technology. They have the
Speaker 2: mit Age Lab. They're the ones that send me a
Speaker 2: note every year and say you're one year older, joining
Speaker 2: us now driving our study of retirement, Wayne Park. He
Speaker 2: is with Manual Life, John Hancock Retirement. We're thrilled he
Speaker 2: could join us. This morning, Wayne, you got out a
Speaker 2: new report and it's the fact John Tucker and I
Speaker 2: are going to be working here till we're ninety two.
Speaker 2: How bad is our longevity? Longevity? How much do we
Speaker 2: not understand how long we're going to live?
Speaker 8: Good morning, Tom, and thank you for having me and
Speaker 8: I think you'd be working till ninety regardless of this report.
Speaker 8: Having listening to you for a while. So the study
Speaker 8: is a new one. As you mentioned, with mit Age Lab,
Speaker 8: we wanted to take a more holistic look at retirement
Speaker 8: beyond just finance and health. So it's the LPI stands
Speaker 8: for Longevity Preparedness Index, and are we really prepared not
Speaker 8: just to retire as a singular act, but prepared to
Speaker 8: live very long life, which is really good news, But
Speaker 8: some of us are less prepared.
Speaker 2: I've always said there's a kink at age forty two.
Speaker 2: We finally get serious about retirement. At forty two. Are
Speaker 2: the younger kids learning from our lousy retirement history to
Speaker 2: start saving earlier? Is Isabelle leading the way by saving earlier?
Speaker 8: I would like to say yes, but I think they
Speaker 8: trends continue. So the younger generations, just with the immediate needs,
Speaker 8: whether that's student loan or just attention span, is not
Speaker 8: where we see the most prepared. That still continues to
Speaker 8: be just before retirement age pre retirees and retirees having
Speaker 8: been gone through some of the thought process.
Speaker 2: But there's some bright spots.
Speaker 8: There are places where the American score highest is around
Speaker 8: social connections. So great to stay connected, whether that's directly
Speaker 8: in person, phone, social media, what have you, and community.
Speaker 8: Are you at a place where you have access to facilities,
Speaker 8: whether that's healthcare, great food sources, fresh produce and things
Speaker 8: like that, and transportation, which is really important as you
Speaker 8: get older as well.
Speaker 5: Those are lifestyle things as it well, yeah, and how.
Speaker 2: Can you afford it if you can't afford the groceries
Speaker 2: is the heart of them.
Speaker 5: I feel like they're all interconnected.
Speaker 4: And Wayne has made the point that working with a
Speaker 4: financial advisor who discusses longevity planning makes a meaningful difference.
Speaker 4: But what exactly does good longevity planning look like? Because
Speaker 4: as we've pointed out, it's not just I thought it
Speaker 4: was just money to be friend, but it seems like
Speaker 4: it's not.
Speaker 8: Yeah, So our study shows that someone that actually has
Speaker 8: a financial advisor, that's not surprising, is probably better prepared.
Speaker 8: But if that financial advisor talks about longevity planning, they
Speaker 8: score solid seven points higher than the US average. So
Speaker 8: what are those things? And yeah, we typically talk about
Speaker 8: do you have enough money saved? And sometimes health, but
Speaker 8: there's actually six other domains like are you planning to
Speaker 8: have daily activities so that you can get used to networking?
Speaker 8: Is your home prepared so things like you have too
Speaker 8: much stairs or even little things that you can do.
Speaker 2: And you're not going to tell us to get rid
Speaker 2: of the dogs, right, dogs? Yeah, because you trip over
Speaker 2: the dogs. That's how everybody breaks her. Like the first
Speaker 2: time you're saying we can keep the dogs right.
Speaker 8: I think yeah, depends on the size of the house. Actually,
Speaker 8: I was visiting a friend this weekend and I miss
Speaker 8: stepped on the tiny little dog that was constantly on
Speaker 8: my feet. But maybe larger dogs will be better. But
Speaker 8: other things like like I mentioned the community, but place
Speaker 8: where we scored the lowest as Americans was talking about
Speaker 8: care because at one point, one way or the other,
Speaker 8: we will either need care or provide care to somebody else.
Speaker 8: So that's one area I think. As Thanksgiving is coming up,
Speaker 8: maybe if you want to have an awkward, equally awkward
Speaker 8: but more productive conversation with your family who is going
Speaker 8: to take care of you depending on whatever the health
Speaker 8: ailements may be later in life.
Speaker 4: What's one thing every listener should do this week? I
Speaker 4: guess to improve their longevity preparedness so that you know,
Speaker 4: the people in the circular table could take note as
Speaker 4: well as me.
Speaker 8: Yeah, to end on a really hopefully positive note. The
Speaker 8: good news is we're living longer, right, so we want
Speaker 8: to make sure we prepare for that longer life. And
Speaker 8: it's not just longer, but a better life. So simple
Speaker 8: things like making sure you have your annual checkup, planning
Speaker 8: to talk about care, finding some other things to do,
Speaker 8: whether it's a hobby, to make sure that you have
Speaker 8: daily activities, and then just thinking about preparing for a
Speaker 8: life that's not going to just change into retirement as
Speaker 8: a binary event at sixty five, but you'll have a longer,
Speaker 8: hopefully better life, and you want to thrive in those
Speaker 8: later years. So trying to end on a positive note,
Speaker 8: what are those things that you could be thinking about
Speaker 8: and then maybe have a conversation with your life ones.
Speaker 8: I think that's a really good way to end it.
Speaker 2: You gotta run Wing Park. Thank you so much. Please
Speaker 2: come to our studios in New York when you're in
Speaker 2: town with many in your life. Johnny Ncock and the
Speaker 2: mit Age Lab an important study on We're living Forever.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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