Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal and I'm Tracy Alloway. Tracy, it's been
Speaker 1: a long time since we've done like a sort of
Speaker 1: like I don't know if it's been too long, it's been.
Speaker 1: It feels like it's been a while since we've done
Speaker 1: like a pure sort of macro episode. We've obviously, we
Speaker 1: obviously do a lot of micro that's been one of
Speaker 1: the fun things about but I think it's a it's
Speaker 1: time to switch back to the macro. I was gonna
Speaker 1: say we've been distracted by the micro in attempting to
Speaker 1: put together a better picture of the macro in all fairness,
Speaker 1: but yes, you're right, it's been a while since we
Speaker 1: talked about the general outlook for the economy and for markets,
Speaker 1: and of course we are looking ahead to two and
Speaker 1: there are a lot of things going on and a
Speaker 1: lot of things that people are concerned about. So obviously
Speaker 1: we have inflation worries, and then we have a slowdown
Speaker 1: in China as well, and then we have of course
Speaker 1: the fed's reaction function, and there's still a lot of
Speaker 1: questions over what exactly it's going to prioritize going into
Speaker 1: next year. Yeah, exactly right. And you know, I think
Speaker 1: the other thing about this environment and this court kind
Speaker 1: of applied, it's like nobody has any familiarity with this
Speaker 1: type of economic environment. I mean, it's pretty new. So, yes,
Speaker 1: we've seen periods of elevated inflation before, for sure, but
Speaker 1: by and large, this is not like the nine sixties
Speaker 1: or sies. It's different conditions. Employment is growing extremely fast,
Speaker 1: we had a pandemic, were still in a pandemic, and
Speaker 1: so that is totally new. The policy responses that we've
Speaker 1: seen are new. So I think kind of what makes
Speaker 1: this interesting is just like, yeah, everyone could like sort
Speaker 1: of reach for analogies, but there's no real experts who
Speaker 1: could say, you know, this is the playbook or anything.
Speaker 1: It's everyone is on some level doing a non charted territory. Yeah,
Speaker 1: it's a very unusual business cycle. And we've talked about
Speaker 1: this before, but we basically squeezed in like an accelerated
Speaker 1: business cycle right after the pandemic. We have a very short,
Speaker 1: sharp recession, and then the recovery started almost immediately, largely
Speaker 1: thanks to the stimulus efforts from various governments. But of
Speaker 1: course the question is what does the cycle look like?
Speaker 1: Does it behave like other cycles. I've already seen lots
Speaker 1: of people talking about how we're late cycle. All the
Speaker 1: signs point to a late cycle, and it's like, well,
Speaker 1: it's been what two years since this started, Like that
Speaker 1: would be a pretty fast cycle. Yeah. And then I
Speaker 1: guess the other sort of like medium ish to long
Speaker 1: term question is does something change meaning flee And I'm
Speaker 1: thinking about, say an inflation And you know, obviously prior
Speaker 1: to this we had you know, great moderation or disinflation
Speaker 1: or FED could never hit two percent. Now we have, uh,
Speaker 1: you know, over six percent inflation. But is this mean revert?
Speaker 1: Does it just go back to the old way or
Speaker 1: do we enter into some sort of new regime where
Speaker 1: inflation is persistently above and there's much more inflation volatility.
Speaker 1: Sort of These are all like kind of difficult questions
Speaker 1: to know right now, but the big ones that people
Speaker 1: will be asking over the next year and beyond. Yes, indeed,
Speaker 1: so I'm very excited to have is our guest today,
Speaker 1: perfect guest for a macro conversation. He's been on odd
Speaker 1: lots before, at least a couple of times, and in
Speaker 1: terms of sort of macro thinkers. I think one of
Speaker 1: the clearest and most useful guests that we speak to,
Speaker 1: UH please to welcome back on the show. John Turk.
Speaker 1: He's the author of the Chief Convexity blog and the
Speaker 1: founder of j ST Advisors. I think maybe this is
Speaker 1: his third time on the show, but someone who always
Speaker 1: get a lot of insight reading his stuff and having
Speaker 1: him on the show. John, thank you for coming back
Speaker 1: on Other loves. Hey, guys, thank you so much for
Speaker 1: having me. We're going to talk about two. But what
Speaker 1: for you was the sort of big surprise of one? Like,
Speaker 1: what was your what was your lesson? What was your
Speaker 1: takeaway from what we saw this? You know, I think
Speaker 1: that one of the things that you know, really kind
Speaker 1: of changed. And this is pretty obvious, you know, ex
Speaker 1: post is kind of the stickiness we've seen in inflation
Speaker 1: this year. You know, going back to before the year,
Speaker 1: there was kind of this obvious forward looking effect that
Speaker 1: inflation would be higher given the supply bottle next and
Speaker 1: also given the base effects from the pandemic, negative oil prices, etcetera.
Speaker 1: The kind of seeing the stickiness and broadening out of inflation,
Speaker 1: and we really haven't seen that in you know, almost
Speaker 1: twenty years. I mean, there's this famous joke for the
Speaker 1: US that really the only thing that goes up in
Speaker 1: price is education and healthcare, and that's that's not been
Speaker 1: the case this year. And I think especially as this
Speaker 1: relates to FED policy, is we kind of entered this
Speaker 1: year with this thinking of like, okay, was the FED
Speaker 1: reaction function, especially that had it changed post Jackson hole
Speaker 1: and they introduced this idea of flexible average inflation targeting,
Speaker 1: is would it be would that be the best position
Speaker 1: to look through and for the FED to basically avoid
Speaker 1: ECB moment where they were you know, kind of hawkishly
Speaker 1: reacting to spot inflation that was not telling a demand story.
Speaker 1: But now I think, you know, what's becoming clearer is
Speaker 1: that while there are supply bott elects and there are
Speaker 1: kind of supply fragilities that have weighed on spot inflation,
Speaker 1: there's clear that there's also excess to mend and that
Speaker 1: the FED has kind of had to had you know,
Speaker 1: this broader shift that's really started, you know, since June
Speaker 1: poem C, but it's kind of really been enhanced post
Speaker 1: Powell reappointment that you know, fate may still be the
Speaker 1: policy playbook, but it kind of has to adjust to
Speaker 1: the force that fiscal policy was at the lower bound
Speaker 1: and you know, kind of change the nature of where
Speaker 1: nominal GDP is now and probably for the next twelve months.
Speaker 1: So how much of a role do you think demand
Speaker 1: actually played in the price pressures that we're seeing now?
Speaker 1: And I realized it's sort of tough to disaggregate supply
Speaker 1: versus demand in all of this. But maybe give us
Speaker 1: a little bit more color on on how you're thinking
Speaker 1: of it. Yeah, you know, I think that what's looking
Speaker 1: at specially retail sales on things like two years stacks
Speaker 1: and seeing that, like how above trend nominal consumption is.
Speaker 1: I think it's I think it's amplified the supply fragility.
Speaker 1: So it's kind of created a perfect storm for prices.
Speaker 1: And you know, I don't think that it's only a
Speaker 1: demand issue, but you know, it's clear that you know,
Speaker 1: we had a recession where household income in aggregate went up,
Speaker 1: which is obviously most peculiar. You know, the thing that's
Speaker 1: worth thinking about going into next year, especially as inflation
Speaker 1: will peak in Q one, it will come down in
Speaker 1: Q two. The question is, you know, what is the
Speaker 1: run rate. You know, what is the handoff that the
Speaker 1: economy is dealing with. Well, you know, looking back at
Speaker 1: the beginning of one, you know, you can argue the
Speaker 1: transfer payments and things of that nature made a big
Speaker 1: difference in wage replacement or even for some you know,
Speaker 1: income quartels, you know, wage enhancement effectively. But you know,
Speaker 1: now looking into the economy into especially at the lower
Speaker 1: end of the income distribution, you know, wage growth is
Speaker 1: pretty robust, so you know, there is kind of this
Speaker 1: there's not this just big drop off because we're a
Speaker 1: year out from when there was a lot of retail sales.
Speaker 1: You know, wage growth is broadening out in the economy
Speaker 1: and as really strong as we kind of had this
Speaker 1: reset of wages through the Amazon Walmart effect at the
Speaker 1: lower end, that it's hard to have this you know,
Speaker 1: big deceleration in demand that will you know, broaden outer
Speaker 1: help inflation come back to the said supercent target in
Speaker 1: an environment where wage growth is really strong. And I
Speaker 1: think that's also kind of the point miss about this year, right,
Speaker 1: is there are the supply side fragilities, especially in that
Speaker 1: you know we're enhanced through in Southeast Asia through Delta
Speaker 1: when we had Malaysian shutdowns and that affective semiconductor fobs
Speaker 1: and etcetera. But you know, income growth pretty much at
Speaker 1: least especially on the wage side across the Western world,
Speaker 1: has been really strong this year, and there's no real
Speaker 1: signs that, you know, this labor tightness is going to
Speaker 1: give away. We may get more labor surprised, participation rates
Speaker 1: may go higher, but labor is pretty tight right now,
Speaker 1: so wage growth should continue. And I think that kind
Speaker 1: of you know, makes that handoff in terms of like,
Speaker 1: you know, things coming back from mean reverting to normal
Speaker 1: next year kind of tricky. I think this is a
Speaker 1: really interesting point. I'm glad you brought this up. Like
Speaker 1: this idea, it's like, okay, sure, the transfer payments are
Speaker 1: gonna come down, there's going to be at least some
Speaker 1: relative fiscal tightening or the fiscal impulse won't be what
Speaker 1: it is. But there is also this thing you know
Speaker 1: called like endogenous way uh indogenous demand growth or they're
Speaker 1: not everything is just about transfers, and in an environment
Speaker 1: at which there's a lot of momentum, particularly at the
Speaker 1: low end, that has to be a plus. One question
Speaker 1: though on this idea of like demand, because in addition
Speaker 1: to a high level of income growth and a high
Speaker 1: level of aggregate demand, we've also seen this shift that
Speaker 1: a lot of people are talking about, including many of
Speaker 1: our past guests, of goods consumption for services consumption that
Speaker 1: hasn't normalized. Some of us said that more than the
Speaker 1: actual demand itself, is what's contributing to sort of persistent
Speaker 1: bottlenecks or maybe persistent inflation. If that normalizes, if like, okay,
Speaker 1: we get you know, it seems like, you know, I
Speaker 1: don't know what's gonna happen with the virus. But if
Speaker 1: that normalizes, can we get some further downward pressure on
Speaker 1: inflation even with demand remaining quite robust? You know? I
Speaker 1: think you probably will, you know. And I think that
Speaker 1: the broader point that I want to make is that,
Speaker 1: you know, inflation will come down. The question now is
Speaker 1: what is the run rate and getting that run rate
Speaker 1: back to two you know, it's seemingly getting a little harder,
Speaker 1: especially for next year. And I think within this good
Speaker 1: services you know, composition, is that there is goods pressure
Speaker 1: that is going to come down as you know, the
Speaker 1: economy does hand off back to more service oriented, Especially
Speaker 1: the US economy has always been but there's also this
Speaker 1: element that goods are not going to go back to
Speaker 1: where they were in the tents, where you saw many
Speaker 1: years of goods prices actually printing deflation and goods prices
Speaker 1: were falling year year to year. And you know, given
Speaker 1: this level of nominal demand being a little more sticky,
Speaker 1: I think it's hard to kind of see that even
Speaker 1: as you know, we get into next year and it's like, well,
Speaker 1: everyone bought a washing machine or everybody bought a car.
Speaker 1: I think, you know, that argument does hold weight. The
Speaker 1: question is doesn't get you all the way down and
Speaker 1: doesn't get you all the way down in some senses
Speaker 1: to print start printing negative prints and durable goods, and
Speaker 1: that I think is just it's just a harder back
Speaker 1: to have given the level of demand that we're continuing
Speaker 1: to see. And I think, you know, that's that's kind
Speaker 1: of like the broader macro point of this to me is,
Speaker 1: you know, and especially I think this is especially relevant
Speaker 1: with the tenure at one forty and the market like
Speaker 1: very skeptical of forward looking growth. Is we're in the
Speaker 1: midst of this public sector to private sector handoff and
Speaker 1: everyone kind of doubting it. So you know, I think
Speaker 1: that that that story is actually more alive than the
Speaker 1: market is given credit for it. Just real quickly though,
Speaker 1: do what does it need to come all the way down?
Speaker 1: Like what are the stakes of getting back down to
Speaker 1: versus maybe still being over the fence target? Yeah? Yeah,
Speaker 1: so you know, I think like the question for me
Speaker 1: next year on inflation run rate is it below three
Speaker 1: or much above three? Because I think that you know,
Speaker 1: if we if we start getting to you know, if
Speaker 1: you do like simple math and you start going through, okay,
Speaker 1: what is Q two inflation going to start looking like?
Speaker 1: And let's say we assume that month over month prints
Speaker 1: go back to point ones and point two and point
Speaker 1: twos are actually pretty high relative to the last ten years.
Speaker 1: We've become kind of immune to that as we've seen
Speaker 1: point sevens and point nine. But if you start getting
Speaker 1: point to month over month, Prince, you're still going to
Speaker 1: get back to an inflation number around two and a
Speaker 1: half by the end of the summer next year. And
Speaker 1: I think that number, while it's still high relative to
Speaker 1: the FENS target and in terms of their moderate overshooting,
Speaker 1: I think that would be a nudge high. I do
Speaker 1: think that that gives the Fed enough room to say
Speaker 1: that listen, inflation is high, we're hiking, but there's marginal
Speaker 1: risk of us hiking too much that we're going to
Speaker 1: crush this thing, which I think really is the risk now, right.
Speaker 1: The risk now is that inflation comes down in Q two,
Speaker 1: but it comes down to four percent, it comes down
Speaker 1: to three and a half four percent, and in that world,
Speaker 1: does the FEDS say that is not tolerable to us?
Speaker 1: That could meaning belief meaningfully affect inflation expectations and we
Speaker 1: have to act more aggressively than we have, you know,
Speaker 1: in the last few cycles. And I think that's kind
Speaker 1: of what the market is weighing now, right, is there's
Speaker 1: this residual risk premium that the FED is going to
Speaker 1: have to almost hit the kabbash or kind of smash
Speaker 1: this thing, because you know, spot inflation is going to
Speaker 1: start leading to a d anchoring of inflation expectations or
Speaker 1: at a level that they don't see as tolerable. So
Speaker 1: I think that's really the big question of next year,
Speaker 1: and we'll probably find out, you know, late Q two,
Speaker 1: which is why for me, June f O m C
Speaker 1: is the one that is circled. So I wanted to
Speaker 1: go back to what you said about the tenure yield
Speaker 1: so currently sitting at one point four or five percent
Speaker 1: or they're about And one of the big mysteries of
Speaker 1: this entire year has been why bond yields are so low,
Speaker 1: even in the face of the FED ostensibly beginning to
Speaker 1: taper it's balance sheet and maybe getting more worried about inflation.
Speaker 1: And I've seen all sorts of explanations for it. One
Speaker 1: of our guests, Joseph Wayne, was talking about the idea
Speaker 1: that banks are just buying lots more treasuries than they
Speaker 1: used to and that kind of puts a floor or
Speaker 1: maybe I should say a ceiling on yields because you
Speaker 1: always have that huge chunk of demand they're waiting in
Speaker 1: the wings. And I've also seen other people talk about it.
Speaker 1: It's sort of what you were saying, this idea of
Speaker 1: investors not really buying the public to private hand off,
Speaker 1: thinking that the FED is inducing some sort of policy
Speaker 1: error and it's going to have to backtrack at some point.
Speaker 1: So how are you thinking about the bond market at
Speaker 1: the moment and what the tenure is actually telling us? Yeah,
Speaker 1: you know, I think it's especially one of the more
Speaker 1: prevalent questions right now, as we're gonna end the year
Speaker 1: probably with you know, between the eleven and twelve present
Speaker 1: nominal GDP growth, and you know that all the tenure
Speaker 1: does is rally, and we're entering pro FED hiking cycle
Speaker 1: and it's still rallies. And I actually think it does
Speaker 1: make more sense than it would appear on the face,
Speaker 1: you know. I think looking at things like five year
Speaker 1: five year o I s, which the FED and you know,
Speaker 1: market participants kind of look at as as an estimate
Speaker 1: of you know, where the FED will get to in
Speaker 1: terms of the hiking cycle or destination, which equates to
Speaker 1: around the tenure was treasury yield. I think there is
Speaker 1: this element, and we're just talking about this of this
Speaker 1: residual risk premium that inflation got too high and the
Speaker 1: FED is going to have to react asymmetrically to it
Speaker 1: next year. And that is why I think we've kind
Speaker 1: of had not only this this front loading of the
Speaker 1: hiking cycle, but also this relentless flattening as the market
Speaker 1: has had to weigh the probability that if the FED
Speaker 1: has to go let's say faster than quarterly next year,
Speaker 1: or has to go at a pace that's more than
Speaker 1: basis points of meeting, then the chances of the FED
Speaker 1: overdoing it go up. And we also know that we're
Speaker 1: still in a very low our star world. So if
Speaker 1: the chances to FED overdo it, the chances that the
Speaker 1: forward looking bond market is like okay, that raises the
Speaker 1: odds that we're actually going to end up back at zero.
Speaker 1: So you're in this interesting paradox where the bond market
Speaker 1: is weighing hikes but also weighing what kind of hikes
Speaker 1: we get, and the fatter that residual risk premium is
Speaker 1: that the hikes we get are destructive or too much
Speaker 1: given the level spot inflation or the worry about inflation expectations,
Speaker 1: that actually paradoxically raises the chances that the FED will
Speaker 1: be back at zero. Because we're in this low R
Speaker 1: star world and the assumption is that the Fed over
Speaker 1: does it, that means the next move is to cut,
Speaker 1: and if they cut, that means they go to zero.
Speaker 1: I think that's kind of the calculation that the bond
Speaker 1: market is making right now, and which is why I think,
Speaker 1: you know, we're in this interesting time where you know,
Speaker 1: people like me have this you know, pretty positive view
Speaker 1: about nominal GDP growth next year, and then we look
Speaker 1: at the tenures like, well, that's not confirming it. And
Speaker 1: I think the reason that's not the trade yet is
Speaker 1: the market kind of has to get through this this
Speaker 1: period of what is the peak of inflation and what
Speaker 1: is the inflation run rate? And those are both questions
Speaker 1: we don't have the answer to yet, and I think
Speaker 1: until we do, the market is not going to feel
Speaker 1: comfortable taking these quote unquote destination trades higher, especially neal.
Speaker 1: Is the possibility of a highly aggressive hiking cycle. Something
Speaker 1: which we haven't seen in a long time. Is death
Speaker 1: showing up in risky assets anywhere? Is the showing up
Speaker 1: at the stock market? You know? I think that you know,
Speaker 1: we have had a little bit of multiple compression this year,
Speaker 1: I mean, especially looking at you know what forward earnings
Speaker 1: are projected to do. I think there has been some.
Speaker 1: But you know, a question I get a lot is well,
Speaker 1: the bond market is flattening a lot, so shouldn't stocks care?
Speaker 1: And you can make an argument that five thirties may
Speaker 1: actually be inverted that you know, this time next year.
Speaker 1: And while that's always at least in two tens, that's
Speaker 1: always traditionally a harbingeer of recession. And you know, I
Speaker 1: think that actually that there should be this this d
Speaker 1: link between kind of the slope of the yield curve
Speaker 1: and kind of equity market risk premium. When I think that,
Speaker 1: you know, from a distribution perspective, the bond market has
Speaker 1: to weigh the risk, especially in things like five or
Speaker 1: five year or ten year US treasury yields, is the
Speaker 1: bond market has to weigh the risk of you know,
Speaker 1: kind of the whole trajectory of a policy where it's like, okay, well,
Speaker 1: what's the percent chance they go too much with the
Speaker 1: percent chance that in three or four years they have
Speaker 1: to take it back, and thinking about that kind of
Speaker 1: the whole scope visa VI the equity market, which is like, well,
Speaker 1: next year, earnings growth is still going to be really good.
Speaker 1: Even if the FED goes four times three earnings they
Speaker 1: may have to come down a little. And I think
Speaker 1: that's what we've seen in forward pees coming down actually
Speaker 1: or at least not really moving all year, even though
Speaker 1: earnings growth and earnings estimates they need to be picked up,
Speaker 1: because I think there is that element, but the equity
Speaker 1: market is not going to be like, oh, in four
Speaker 1: or five years, the FED, you know, may have to
Speaker 1: go back to zero. You know, I think in terms
Speaker 1: of time prisons, they're really operating on different ones. And
Speaker 1: the bond market is you know, leaning into its symmetry,
Speaker 1: and the equity market is leaning into its own. And
Speaker 1: I don't think necessarily, you know, they have to be
Speaker 1: saying the same thing. In fact, I think it would
Speaker 1: be odd of the work just on the idea of
Speaker 1: whether or not a great hiking so I goal would
Speaker 1: be bad for risk assets or what impact it would have.
Speaker 1: Can you talk a little bit about emerging markets, because
Speaker 1: of course, you know, if the FED is raising rates,
Speaker 1: then theoretically the dollars should go up. That's bad for
Speaker 1: people that have a lot of dollar denominated debt or
Speaker 1: you know, historically it has been bad for many developing economies.
Speaker 1: So how do you see that unfolding? And I gotta say,
Speaker 1: like the dollar index already has been pretty strong going
Speaker 1: into the end of this year. Yeah, you know, I
Speaker 1: think it's a it's a really interesting one. And I
Speaker 1: think that for e M. The question for the FED
Speaker 1: next year is not if they're hiking, but what they're
Speaker 1: hiking at relative to market pricing, and I think, you know,
Speaker 1: e M has had this tricky few months and you
Speaker 1: could really argue since the summer, partly because we've had
Speaker 1: to continuously add hikes, especially into the implied and it's
Speaker 1: kind of always still those added hikes have come with
Speaker 1: the the asymmetry that the next pricing is towards a
Speaker 1: hike and not towards less. Right, we've kind of entered
Speaker 1: since June fom C market pricing for next year went
Speaker 1: from zero to one with the asymmetry of a B too.
Speaker 1: It went from two to three with almost the asymmetry
Speaker 1: of being four. And I think that's kind of what
Speaker 1: the dollar has leaned into, right, The dollar has leaned
Speaker 1: into Okay, they're hiking, and it's more likely that they
Speaker 1: hike more than less. And now I think we're entering
Speaker 1: this like kind of interesting period. I think is especially
Speaker 1: relevant for emerging markets where I'm not convinced the next
Speaker 1: hype is actually dollar positive, where the the ray change
Speaker 1: from zero to one, one to two, two to three
Speaker 1: have all been dollar positive, and we've seen this pretty
Speaker 1: significant dollar rally, especially since Q three. But I think
Speaker 1: what's interesting now is if you get to if the
Speaker 1: market goes from three to four. There are a few
Speaker 1: interesting externalities. One I think that lessens the odds that
Speaker 1: the FED is operating by themselves, and this I think
Speaker 1: especially matters for emerging markets because it kind of goes
Speaker 1: through the dollar channel. Is if the fourth hike in
Speaker 1: the market price for the FED happens, I think that
Speaker 1: raises the chances that the e c B, the r
Speaker 1: b A, the ricks Bank, central banks that have been,
Speaker 1: you know, kind of more into this not necessarily transitory message,
Speaker 1: but next year is too soon, even if they've given
Speaker 1: up on transitory, I think that hike makes it much
Speaker 1: more likely that central banks like the ECB go hold
Speaker 1: on a second. Maybe two should be live in terms
Speaker 1: of rate hikes. The other thing that I think is
Speaker 1: really interesting is if we went to four, that means
Speaker 1: to go to quarterly paces, the FED would have to
Speaker 1: go in March, but also that they would be hiking
Speaker 1: in the same meeting that they're basically ending HUEY. And
Speaker 1: now there's no necessary preconditioned to the FED having to
Speaker 1: have a gap between the end of KUEI and rate hikes.
Speaker 1: We only know that the FED can heke while they're
Speaker 1: buying bonds, but I think in terms of a message
Speaker 1: or signal of intent, that would be a pretty big
Speaker 1: one where the FED would say there's no gap in
Speaker 1: between the end of keewee and raid hikes, and that
Speaker 1: would also, I think make it much more likely that
Speaker 1: central banks like BCB, like the r B A kind
Speaker 1: of have their moment of yet we're also live this year.
Speaker 1: And then that kind of speaks to something that I
Speaker 1: think is very different this cycle than last, which is
Speaker 1: in this period was very FED dominant, very US growth dominant,
Speaker 1: but kind of looking into next year, you could be
Speaker 1: in this much more coordinated policy growth dynamic, which I
Speaker 1: don't think will have the same dollar spill over. Now.
Speaker 1: If we went to four next year, then the chances
Speaker 1: of five I think actually become this maybe the same
Speaker 1: or even less than the chances of three, because five
Speaker 1: would be the FED saying, okay, we're off, We're not
Speaker 1: on a quarterly pace. Something really bad happened and we
Speaker 1: have to we have to address it right away. So
Speaker 1: I think in terms of the dollar, I don't know
Speaker 1: that it's obvious cell but I do think there are
Speaker 1: elements that are actually you know, topping, and I think
Speaker 1: from an e M perspective, you know, going into next year,
Speaker 1: I think the setup is fairly binary, as it usually
Speaker 1: is in the m UM, where you know, you could
Speaker 1: have a bed that's kind of priced for what it's
Speaker 1: going to do. Right, it's for the first time we're
Speaker 1: not kind of incrementally adding hikes into the implies for
Speaker 1: next year at the same time that terms of trade
Speaker 1: and e M are off the charts. On the other hand,
Speaker 1: you could have an EM where the Fed says, oh,
Speaker 1: by the way, we really have to stop this thing
Speaker 1: because inflation is too high, and that's at the same
Speaker 1: time that you have political development such as Brazilian elections
Speaker 1: in October, etcetera, and you have a further mess. But
Speaker 1: I do think EM is going into next year actually
Speaker 1: with some bet are buffers. Then people I think give
Speaker 1: it credit for given that because US demand is so strong,
Speaker 1: because the Chinese currency has been so strong this year,
Speaker 1: terms of trade are really strong, and current accounts have
Speaker 1: kind of sayed sticky to the surplus side. I mean,
Speaker 1: we've had this year, We've had South Africa have a
Speaker 1: current account circus, which is kind of unheard of. And
Speaker 1: it's not to say that that will last. It won't
Speaker 1: but the question is, you know, the same thing with
Speaker 1: US inflation is kind of what does it come back
Speaker 1: to for e M. The interesting thing for next year is,
Speaker 1: you know, all these guys have pretty much have hyped
Speaker 1: a lot in terms of trade, are really strong. If
Speaker 1: the FED is not doesn't have to say, oh, you know,
Speaker 1: inflation got to how we have to do something drastic,
Speaker 1: then this setup is actually pretty strong, especially as you
Speaker 1: know Chinese growth starts to you know, bottom around here.
Speaker 1: That was that was very interesting and useful framework. I
Speaker 1: want to can you just say a little bit more
Speaker 1: about China? I mean, Tracy has been obviously covering it
Speaker 1: a lot, the slowdown in China, and yet we have
Speaker 1: seen the Chinese u N even during a period of
Speaker 1: dollar strength. I think the un has been even stronger.
Speaker 1: What is the dynamic there you expect a re acceleration,
Speaker 1: what explains that und strength? And how are you thinking
Speaker 1: about China and its contribution to growth and uh sort
Speaker 1: of demand in Yeah, you know, I think China has
Speaker 1: been probably outside of the FED and inflation, I think
Speaker 1: one of the more interesting drivers this year where you know,
Speaker 1: we've clearly had this policy goal or crackdown on both
Speaker 1: the tech and property sectors that you know, obviously made
Speaker 1: Chinese assets underperform. But at the same time we've had
Speaker 1: this massive out performance of the Chinese currency. And this
Speaker 1: is also this performance has happened in the context of
Speaker 1: Chinese growth, you know, kind of decelerating faster than it
Speaker 1: has pretty much anywhere in the West. And I think,
Speaker 1: you know something that I I've definitely you know, talked
Speaker 1: about with Tracy is this China has had this interesting
Speaker 1: policy posture this year where they came into this year
Speaker 1: with two things. One, they wanted to get the credit
Speaker 1: impulse lowered because they thought, okay, you know, we did
Speaker 1: a lot in we got demand back, global economy strong.
Speaker 1: They have politically become more sensitive to no kind of
Speaker 1: new credit in the economy, especially as it relates to
Speaker 1: the property sector, etcetera. So I think that there's been
Speaker 1: this this impetus to bring being credit lowered and then
Speaker 1: that traditionally ways on domestic growth, which it did this time.
Speaker 1: I think the difference that happened this time and why
Speaker 1: China wasn't this you know, kind of disaster for the
Speaker 1: global economy, as it really did have a pretty big
Speaker 1: deceleration and it's credit impulse is that China was able
Speaker 1: to not fully but replace a lot of domestic demand
Speaker 1: that they usually got through marginal credit increased via the
Speaker 1: current account. And this is something that didn't happen the
Speaker 1: last two times that China has had these pretty stark
Speaker 1: credit decelerations that we saw post eleven which ended up
Speaker 1: in you know, kind of a commodity bus, and we
Speaker 1: didn't see you know, which followed China. Stimulus is China
Speaker 1: because of how strong US and European demand was, specially US.
Speaker 1: China was running a current account surplus three percent this year,
Speaker 1: and this is in contrast to it basically drawing its
Speaker 1: current account to zero in and I think that China
Speaker 1: was basically made the calculation that they could import the
Speaker 1: demand that they were off setting by being tied on credit.
Speaker 1: It seemingly was a bet that worked. I mean, it's
Speaker 1: hard to say that, you know, China has had this
Speaker 1: robust growth theory it didn't, especially in a relative sense.
Speaker 1: But China was not this massive drag on global growth
Speaker 1: this year, even though have you know, much weaker credit impulse.
Speaker 1: I think partly because it was able to import that
Speaker 1: you know, lost demand, and I think that's what kind
Speaker 1: of you know, they kind of set this up as
Speaker 1: China wanted two things from this year. One is, they
Speaker 1: wanted to offset some of the inflationary pressure that the
Speaker 1: rest of the world was feeling. One way to do
Speaker 1: that is to have a stronger currency. And then the
Speaker 1: other thing is that they wanted to have this tightening
Speaker 1: either on the credit side, and won't really speak to
Speaker 1: the tech side as not an expert on it, is
Speaker 1: they wanted to really tighten credit post big credit acceleration
Speaker 1: they had then, especially as the property sector is extremely
Speaker 1: vulnerable right now, they wanted to replace that demand through
Speaker 1: the West, which is not too dissimilar to what the
Speaker 1: West effectively did post GFC. Right the post GFC, the
Speaker 1: West basically lad not purposefully and probably not as purposefully
Speaker 1: as China did this time. Is the s went into
Speaker 1: austerity and China stimulated, and kind of the way out
Speaker 1: was that, you know, Chinese demand carried the way, and
Speaker 1: this time it's China made the i think calculation that
Speaker 1: they were going to let the West leave, they were
Speaker 1: going to import that excess demand and that would let them,
Speaker 1: you know, achieve some policy tightening that they wanted to
Speaker 1: do anyway without a big marginal cost of growth. This
Speaker 1: leads very well into the next question I wanted to
Speaker 1: ask you, which is about the policy response going into two,
Speaker 1: because I think there is I mean, there is this
Speaker 1: history that when things go awry in the global economy,
Speaker 1: China will start easing and effectively save everyone. And that
Speaker 1: might not be the case this time around, given what
Speaker 1: you just laid out. But on the other hand, we
Speaker 1: are seeing China start to push back a little bit
Speaker 1: against the u N and also show some signs of easing.
Speaker 1: So it just cut the reserve vironment ratio, it's talked
Speaker 1: a little bit about rolling back some of the property curves.
Speaker 1: How should we be thinking about that policy response going
Speaker 1: into I think this is really one of the more
Speaker 1: important questions. I think I kind of come at it
Speaker 1: with a China is not going to go full easing.
Speaker 1: I either is not going to be well, there's a
Speaker 1: National Party Congress, so we go pedal to the metal,
Speaker 1: you know. I don't really think that will be China's
Speaker 1: policy posture. I think what we are seeing though, is
Speaker 1: and this became extremely evident when we had three separate
Speaker 1: macro economic stabilizer events in China that I think China
Speaker 1: is putting a floor in terms of where they're going
Speaker 1: to let growth go. And I think this became really
Speaker 1: not worthy over the past two weeks when three things happened. One,
Speaker 1: as you noted, China basically said, okay, you want it's
Speaker 1: gone a lot and we're comfortable with a strong huan policy,
Speaker 1: especially as we're in this broader context of dual circulation
Speaker 1: and wanting to increase message demand, but it's gone too strong,
Speaker 1: and they hyped forex reserve ratio from seven to nine percent.
Speaker 1: Then we also saw from the Stitate Council in the
Speaker 1: Peelborough that there is more of a fiscal backstop that
Speaker 1: will probably kick in next year. And then on the
Speaker 1: monetary side, we saw that they're going to cut the
Speaker 1: triple R rate again. And have you know, at least
Speaker 1: in the market been a little more aggressive on the
Speaker 1: liquidity side. So I think we've had these three theory
Speaker 1: independent macro stabilizers that have all kind of happened at
Speaker 1: once that I kind of think give you the message
Speaker 1: that listen, China is not going to go into next
Speaker 1: year and start doing massive fiscal or massive infrastructure or
Speaker 1: massive monetary stimulus through rate cuts. You know, I wouldn't
Speaker 1: even be surprised if you know, the loan prime rate
Speaker 1: or you know, kind of China's now default policy rate
Speaker 1: doesn't actually move down at all. But I think China
Speaker 1: is going through the process of kind of narrowing the
Speaker 1: confidence into both their growth range. And I think we've
Speaker 1: reached the point now where growth has gotten too low
Speaker 1: that they wanted to pretty much pick up. And I
Speaker 1: think what you will see in you know, the next
Speaker 1: two quarters is the credit impulse will pick up, and
Speaker 1: China wants that, but they don't want it, you know,
Speaker 1: necessarily going bananas. So I think that's kind of what's
Speaker 1: different this time is that China is not going to
Speaker 1: be this big marginal impulse to global growth. But I
Speaker 1: think China, especially as we've seen over the last two quarters,
Speaker 1: is the fear of China being this big drag on
Speaker 1: global growth I think we'll receive going into the first
Speaker 1: half next year. Oh no, bring it back a little
Speaker 1: bit to the United States, and you know, one of
Speaker 1: the you know, thinking about this possibility of multiple hikes
Speaker 1: and maybe four and you know, maybe at some point
Speaker 1: of things where to go get a little too wild,
Speaker 1: maybe five. And obviously that's nobody. That doesn't seem like
Speaker 1: that's anyone space case. But I'm thinking about you know,
Speaker 1: of course, at the end, near the end of twenty
Speaker 1: and the FED unveiled its new framework flexible average inflation targeting,
Speaker 1: And in addition to this sort of new framework change,
Speaker 1: we heard share Powell talk about things like inclusive growth
Speaker 1: and a true commitment to sort of maximum employment in
Speaker 1: a way that seemed different. Do you think, you know,
Speaker 1: if you think about how the market and investors are
Speaker 1: anticipating Fed action next year and beyond, would you say
Speaker 1: that it's a reflection of essentially the FED having met
Speaker 1: its goals and the FED having delivered on its commitments.
Speaker 1: Or is there a belief that actually, in the end
Speaker 1: it will be the same old Fed and that for
Speaker 1: all of the talk of a new rainwork and uh
Speaker 1: perhaps a slightly greater weight on the employment side of
Speaker 1: the mandate, that in the end the FED is going
Speaker 1: to sort of be the Fed it's always been. No,
Speaker 1: It's it's a good question, and I think, you know,
Speaker 1: on the surface, I think a lot of people would
Speaker 1: say that it's you know, kind of same old Fed,
Speaker 1: But I I don't think so. And the reason I
Speaker 1: don't think so is you know, I think that part
Speaker 1: of what's made this recalibration FED pricing very uncomfortable is
Speaker 1: we were thinking about in the first half of that
Speaker 1: the first FED rate hike was going to come in,
Speaker 1: and we've basically gone from no hikes until two three
Speaker 1: hikes in two in a very short period of time, right,
Speaker 1: And I think that that has kind of come with
Speaker 1: the broader perception that this is a FED that flinches,
Speaker 1: this is it's you know, the fate is kind of dead,
Speaker 1: and you know, I think going into next year, there
Speaker 1: is a possibility that fate does die, but it's it's
Speaker 1: a possibility the fate dies with in kind of what
Speaker 1: the FED told you in their monetary policy statement, which
Speaker 1: is that the goal of fate is to be reactive, right,
Speaker 1: It's not to be pre emptive. However, there was one
Speaker 1: thing that the FED said they would be pre emptive on,
Speaker 1: even in within the context of faith, and that was
Speaker 1: inflation expectations. And inflation expectations as we've known this year
Speaker 1: is kind of this messy concept. But I think what's
Speaker 1: easier to say, and you could read the Jeremy Read
Speaker 1: paper and different papers have come out on this year.
Speaker 1: That's kind of show how messy it is to kind
Speaker 1: of manage. And we know that CLARAA looks at things
Speaker 1: like c I E. The Fed's common inflation expectations indicator.
Speaker 1: Is that the FED could decide that spot inflation so
Speaker 1: above target for so long has a risk of the
Speaker 1: anchoring that it could require a faster pace, and that
Speaker 1: would actually be consistent with their monetary policy strategy. And
Speaker 1: I think, you know, going into next year, more of
Speaker 1: a base case world, right where the FED kind of
Speaker 1: hikes three times. It ends quie in March at least.
Speaker 1: Looking if you assume the first hike is going to
Speaker 1: be in June, well, what's going to be the case.
Speaker 1: In June? You're probably gonna have a sub four percent unemployment, right,
Speaker 1: You're going to have prime age EPOP that's probably going
Speaker 1: to be back at pre COVID levels. And I think
Speaker 1: there is this implicit bias from the FED, and it
Speaker 1: may not come across in a higher you start or
Speaker 1: higher natural rate of unemployment. Is that the natural rate
Speaker 1: of unemployment probably did rise post COVID, and it may
Speaker 1: have not risen drastically, but I think the FED is
Speaker 1: going to be less comfortable with the idea that you
Speaker 1: can get back to three and a half percent unemployment
Speaker 1: and then have no marginal inflationary cost, especially at this
Speaker 1: point in time when inflation is in the sixtes. So
Speaker 1: you know, I think going into next year, there is
Speaker 1: this idea that it's like kind of all over the
Speaker 1: same old FED. Whatever the data comes in is that is.
Speaker 1: And I do agree that the FED is now less
Speaker 1: preemptive in terms of policy being the dominant variable, not
Speaker 1: the data. The data now is definitely the valiant and variable,
Speaker 1: and that was kind of the FED shift post June.
Speaker 1: But I think you know, looking into June and you
Speaker 1: look at the Fate checklist, you know something that claritists
Speaker 1: gave a speech on in August UM that really called
Speaker 1: people by surprise is well, I'm he said, I'm looking
Speaker 1: at the Faith checklist and I could see it being
Speaker 1: hit by the end of And I think it's reasonable
Speaker 1: to say, since you know, the labor market progress we've
Speaker 1: had since August and the continued price pressure we've had,
Speaker 1: that that has just been moved forward six months, and
Speaker 1: it's I think it's pretty consistent to say that Fate
Speaker 1: will actually be hit in June of next year, and
Speaker 1: the FED won't be you know, kind of same old
Speaker 1: fetting it in terms of, Okay, how do we come
Speaker 1: up with reasons to hype when we're really only scared
Speaker 1: about inflation. I do think inflation is the dominant variable
Speaker 1: and kind of this recalibration policy. But I think it's
Speaker 1: this recalibration of policy also happened in the context of
Speaker 1: a labor market that is healing much faster than it
Speaker 1: has in past cycles. So before we go, John, you know,
Speaker 1: I wanted to get your take obviously, just sort of
Speaker 1: risky assets, and we talked about them a little bit
Speaker 1: before about whether there's any evidence of them pricing in
Speaker 1: an aggressive hiking cycle like maybe the bond market is.
Speaker 1: But by and large, it's been an incredible year. I mean,
Speaker 1: and I think there's sort of two things that stand
Speaker 1: out for me. Is like, one is, you know, at
Speaker 1: least in the US, but also I think elsewhere headline
Speaker 1: stock induscries have just an insanely well smp up something
Speaker 1: it'll you know, something like just like an incredible year.
Speaker 1: On the other hand, we have seen this pretty intense
Speaker 1: sell off in what was really hot earlier in the
Speaker 1: year a lot of the growth the stuff textu meme stuff, etcetera.
Speaker 1: I'm just sort of like curious, like, you know, how
Speaker 1: you're thinking about this. I don't know if you wann't
Speaker 1: like have a call on sort of like the SMP
Speaker 1: or think about that. But within the macro context, how
Speaker 1: does all of this play into the part of the
Speaker 1: market that sort of most people observe most directly, which
Speaker 1: is the stock market. Yeah, you know, I think it's
Speaker 1: it's interesting going into next year. I think that there's
Speaker 1: kind of this like broader narrative that we've been alluding
Speaker 1: to that you know, the economy is not really going
Speaker 1: to be able to deal with this public deprivate sector handoff.
Speaker 1: The FED is going to be a big, you know,
Speaker 1: impediment to the market. And you know, something I do
Speaker 1: think is true is that you know, the quote unquote
Speaker 1: FED foot has been restruck lower. Yeah, you know, and
Speaker 1: and in terms of like distribution of where like multiples
Speaker 1: can go. Given that, I do think it is significant.
Speaker 1: But you know, I think more broadly is I think
Speaker 1: the market is actually readjusting now to the possibility that
Speaker 1: the FED may have to be more drastic next year
Speaker 1: than especially originally intended to, but also in terms of like,
Speaker 1: you know, the last ten to twenty years of what
Speaker 1: it has done, and I think like that's become like
Speaker 1: really obvious, and things like you know that really you know,
Speaker 1: techie stuff and arc and those type of things where
Speaker 1: you know they just cannot handle a hawk is shed.
Speaker 1: But I think, you know, in terms of the market
Speaker 1: at large and in terms of the SMP, I think
Speaker 1: we're getting to actually closer to an equilibrium point. And
Speaker 1: I think a lot of people I think I I mean,
Speaker 1: I think going into next year, we're getting to the
Speaker 1: point now where a lot more hikes next year versus
Speaker 1: you know, too fewer hikes next year. It's actually getting
Speaker 1: pretty close in the odds. I mean, I think given
Speaker 1: where spot inflation is, there is this bias too kind
Speaker 1: of assumed that you know, the asymmetry is into more
Speaker 1: and the asymmetry was into more hikes for a long time.
Speaker 1: But I think the interesting thing now is we're getting
Speaker 1: close to a pretty nice de Delibrium point where you know,
Speaker 1: inflation maybe four, but it also maybe two and a half.
Speaker 1: And I think like the odds are kind of close,
Speaker 1: and I really think you should be on the side
Speaker 1: of two and a half given what base effects will
Speaker 1: do starting Q two next year. And when you get
Speaker 1: into that two and a half world, that's still a
Speaker 1: world where the feed is hiking because inflation is above target,
Speaker 1: and in terms of the fake checklist, it's all hit.
Speaker 1: But it's not a world where the FED is kind of,
Speaker 1: you know, hitting the brakes on the cycle. And I
Speaker 1: think as long as the feed is not hitting the
Speaker 1: brakes on the cycle, market and the economy can deal
Speaker 1: with with higher interest rates. Now can it deal with
Speaker 1: you know, in two years or three years, when the
Speaker 1: FED gets back to an assemblance of neutral. But I
Speaker 1: have a different view. Yes, but I think you know,
Speaker 1: in terms of next year, and you told me, you
Speaker 1: know that the unemployment rate is three and a half,
Speaker 1: inflation is two and a half to seventy five, and
Speaker 1: the FED is at eighty seven and a half basis
Speaker 1: points on FED funds. My guesses stocks did Okay, I'm
Speaker 1: not saying that you know, it's another twenty percent year,
Speaker 1: But in that kind of backdrop, I think I'd rather
Speaker 1: over twelve months. I'd rather be imbed. John Turk, thank
Speaker 1: you so much for coming out odd lots always a
Speaker 1: pleasure and I always I always learned a ton of
Speaker 1: have a have a happy New Year, and well looking
Speaker 1: forward to revisiting. Maybe we'll get you on a summer
Speaker 1: of to do the halfway mark sounds good. Thank you
Speaker 1: so much for having me. Yeah, I mean I think
Speaker 1: you know, summer is the big one. We kind of
Speaker 1: know what the inflation in game is. Thanks so much, Sean,
Speaker 1: all right, take care of John. Thank you. You know what,
Speaker 1: I love talking to John for many reasons, but one
Speaker 1: thing that really stands out to me is just his clarity. Yeah.
Speaker 1: The thing I really like about John is that he
Speaker 1: kind of looks at everything on a probability distribution basis,
Speaker 1: So he's always trying to weigh tale risks on either side,
Speaker 1: whereas I feel like other people are going, you know,
Speaker 1: they're usually just focusing on one thing, like runaway inflation
Speaker 1: and not necessarily looking at the other side of that
Speaker 1: probability distribution. But I thought, for instance, what John was
Speaker 1: saying about these sort of asymmetric risks to the inflation outlook,
Speaker 1: the idea that like, on the one hand, maybe we
Speaker 1: have four and a half percent inflation, on the other hand,
Speaker 1: maybe we get down to two and a half percent, Like,
Speaker 1: this is something that I've been thinking about with the
Speaker 1: piece I did on Whack inflation, and it seems like, yes,
Speaker 1: everyone's worried about inflation right now, but really what's going
Speaker 1: on is it's not necessarily relentless price increases, its volatility
Speaker 1: in those prices and the difficulty of actually predicting where
Speaker 1: they're going to go given all these different factors around
Speaker 1: supply and what's going on. Well now with the omicron variant. Yeah, absolutely,
Speaker 1: the way he talked about distribution very useful, and specifically
Speaker 1: I thought this idea, it's like, okay, like all years
Speaker 1: so we've had this big dollar rally, and I thought
Speaker 1: that was really helpful hearing him explain that, but all
Speaker 1: year we've had this sort of relentless like maybe they'll
Speaker 1: hype a little bit more, maybe go from zero to one,
Speaker 1: maybe we go from one to two. And this idea
Speaker 1: that once you get to around four possible hikes in two,
Speaker 1: once like that becomes closer to say the market's base
Speaker 1: case or a possibility, then we really start to uh,
Speaker 1: it shifts in both directions. So we've had all this
Speaker 1: sort of like upward biased to the possibility range. We
Speaker 1: might still have that, but not much more, and then
Speaker 1: you start thinking about maybe three, you know, once you're
Speaker 1: once you're at four, maybe three is more likely than five.
Speaker 1: And hearing him explain why and that was really useful.
Speaker 1: And I think also he offers probably the clearest, in
Speaker 1: my opinion, the sort of the clearest explanation for why
Speaker 1: in a year where there's been so much anxiety about inflation,
Speaker 1: we've really just seemed like nothing going on at the
Speaker 1: long end of the yield curve. Yeah. Absolutely, And I
Speaker 1: thought his point about inflation expectations was also very good
Speaker 1: because despite all the handwringing that we're seeing, you know,
Speaker 1: consumer demand has been relatively strong. Most people are saying
Speaker 1: that it's not a good time to buy things at
Speaker 1: the moment, which kind of suggests that they expect prices
Speaker 1: to come down, right. Yes, I don't know about you, though.
Speaker 1: I have like five washing machines in my basement that
Speaker 1: I've been buying on expectations that I'll be able to
Speaker 1: flip them for flip them for more later. So yeah,
Speaker 1: I'm definitely. Uh, I've definitely been hoarding consumer durable goods
Speaker 1: as as investments. You're you're not doing that, Tracy you know.
Speaker 1: The sad thing is I can't even tell if you're
Speaker 1: joking or not. I am joking. You might actually have
Speaker 1: five washing machines. I do not have five washing machines.
Speaker 1: I do have a washing machine, though, which I feel
Speaker 1: extremely privileged to have in New York City. I've never
Speaker 1: had one in my apartment before. Yeah, that is very convenient.
Speaker 1: So we leave it there before we start doing like
Speaker 1: washing machine product reviews. Yeah, although we could do that too,
Speaker 1: but yes, let's leave it. Let's leave it. Wait, actually, wait,
Speaker 1: can I see one thing? Wait? Wait, can I see
Speaker 1: one thing? Yeah, of course, I speaking of washing machines.
Speaker 1: I had the most problem, which is that a I
Speaker 1: have like some smart washing machine, so I couldn't use
Speaker 1: it for a couple of weeks due to like a
Speaker 1: software glitch. So that's a modern problem, but that'd be
Speaker 1: I couldn't get a repair person for the washing machine
Speaker 1: for like over two weeks because, of course, you know,
Speaker 1: labor market tightness and service market types and everything. So
Speaker 1: I do think by the story of my washing machine
Speaker 1: is a sort of like quintessential micro economy story. Maybe
Speaker 1: you need to write that up as an add thoughts post.
Speaker 1: That's a good idea. I will do that this week.
Speaker 1: All right, let's leave it there. All right, we are
Speaker 1: actually leaving it there. This has been another episode of
Speaker 1: the ad Thoughts podcast. I'm Tracy Alloway. You can follow
Speaker 1: me on Twitter at Tracy Alloway and I'm Joe wisn't Thal.
Speaker 1: You can follow me on Twitter at the Stalwart. Follow
Speaker 1: our guest John Turrek. He's the author of the Chief
Speaker 1: Convexity blog. His hand on Twitter is at j Turrek eighteen.
Speaker 1: Follow our producer Laura Carlson at Laura M. Carlson. Follow
Speaker 1: the Bloomberg head of podcast, Francesco Leavi at Francesco Today,
Speaker 1: and check out all of our podcasts at Bloomberg unto
Speaker 1: the handle at podcasts. Thanks for listening.