1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,479 Speaker 2: Terminal and the Bloomberg Business App. Stephanie Rath of Wolfe 10 00:00:37,760 --> 00:00:40,200 Speaker 2: has one of the lowest estimates on the Street rising. 11 00:00:40,200 --> 00:00:44,000 Speaker 2: We're looking for ninety thousand non farm payrolls, weather, seasonal factors, 12 00:00:44,040 --> 00:00:48,400 Speaker 2: and the Canada alone suggests a substantial headwind. Stephanie joins 13 00:00:48,479 --> 00:00:49,959 Speaker 2: us now for more. Stephanie, Good morning. 14 00:00:49,840 --> 00:00:50,400 Speaker 3: Good morning. 15 00:00:50,560 --> 00:00:52,400 Speaker 2: Is it too early to expect to see a hit 16 00:00:52,560 --> 00:00:55,720 Speaker 2: from the policy volatility? Dan in Washington, No, I. 17 00:00:55,640 --> 00:00:57,800 Speaker 4: Think we should start to see that companies probably pause 18 00:00:57,800 --> 00:01:00,200 Speaker 4: on their hiring if we don't know what the outlook is. 19 00:01:00,240 --> 00:01:02,200 Speaker 4: A lot of companies are quite uncertain about where things 20 00:01:02,200 --> 00:01:04,119 Speaker 4: are going. It makes sense that they're gonna pause on hiring. 21 00:01:04,440 --> 00:01:07,399 Speaker 4: And then from the comments that you just read, there's 22 00:01:07,480 --> 00:01:10,160 Speaker 4: seasonal factors weighing on the print, calendar factors weighing on 23 00:01:10,200 --> 00:01:11,720 Speaker 4: the print. It makes sense for it to be below 24 00:01:11,720 --> 00:01:12,160 Speaker 4: one hundred. 25 00:01:12,400 --> 00:01:14,759 Speaker 2: Has been described as a random number generator at time 26 00:01:15,520 --> 00:01:17,840 Speaker 2: in the survey week claims are okay. Does that make 27 00:01:17,880 --> 00:01:19,440 Speaker 2: a difference to you, No. 28 00:01:19,360 --> 00:01:24,080 Speaker 4: Because the seasonal stuff is not really an effect of firing. 29 00:01:24,400 --> 00:01:27,399 Speaker 4: It's more just timing around the survey week compared to 30 00:01:27,520 --> 00:01:30,160 Speaker 4: last month there was bad weather. That doesn't mean that 31 00:01:30,200 --> 00:01:32,160 Speaker 4: there was actual firing, so that shouldn't correlate with the 32 00:01:32,200 --> 00:01:35,160 Speaker 4: claims data. This is more function of this particular non 33 00:01:35,160 --> 00:01:35,959 Speaker 4: farm pails print. 34 00:01:36,120 --> 00:01:39,280 Speaker 5: Does it matter which jobs end up getting removed or 35 00:01:39,520 --> 00:01:42,280 Speaker 5: maybe seeing a weak performance in this report given the 36 00:01:42,319 --> 00:01:45,000 Speaker 5: fact that there has been this ballast of healthcare as 37 00:01:45,000 --> 00:01:47,600 Speaker 5: well as a couple of other sectors, including the government, 38 00:01:47,800 --> 00:01:50,000 Speaker 5: that have really driven things over the past couple of years. 39 00:01:50,160 --> 00:01:51,960 Speaker 4: Yeah, And I think that's something that we're going to 40 00:01:52,000 --> 00:01:54,400 Speaker 4: see over the next couple of months, is the parts 41 00:01:54,400 --> 00:01:57,160 Speaker 4: of the labor market that were really strong should start 42 00:01:57,200 --> 00:02:00,720 Speaker 4: to slow down. Government in particular healthcare is well, especially 43 00:02:00,720 --> 00:02:03,880 Speaker 4: since grants are likely to be slowing down healthcare hiring, 44 00:02:04,120 --> 00:02:05,320 Speaker 4: and then on top of that, you should start to 45 00:02:05,320 --> 00:02:07,960 Speaker 4: see the cyclical parts of the economy slow down. That 46 00:02:08,000 --> 00:02:10,680 Speaker 4: one I don't expect for this print necessarily. I think 47 00:02:10,680 --> 00:02:14,119 Speaker 4: we should see a sort of more gradual slowdown from 48 00:02:14,120 --> 00:02:16,600 Speaker 4: that perspective. But we should start see construction, should see 49 00:02:16,600 --> 00:02:19,640 Speaker 4: ahead wind from some of the weather stuff, healthcare, government 50 00:02:19,639 --> 00:02:21,440 Speaker 4: sho should be a little bit softer in this print, 51 00:02:21,560 --> 00:02:24,399 Speaker 4: and then in the next print things like rail employment, 52 00:02:24,480 --> 00:02:26,840 Speaker 4: stuff that's actually tied to the goods economy. That's probably 53 00:02:26,880 --> 00:02:28,640 Speaker 4: less of a story for this print. It's probably more 54 00:02:28,639 --> 00:02:29,679 Speaker 4: about the Maypairels print. 55 00:02:29,760 --> 00:02:31,520 Speaker 6: You know, this has been a really confusing moment. 56 00:02:31,600 --> 00:02:33,840 Speaker 5: On one hand, a lot of people are predicting a 57 00:02:33,840 --> 00:02:36,519 Speaker 5: lot of pain and potentially a real headwind to growth. 58 00:02:36,560 --> 00:02:39,560 Speaker 5: On the other hand, you do have companies with drawing guidance. 59 00:02:39,560 --> 00:02:42,080 Speaker 5: You have others like some of the travel companies cruise 60 00:02:42,120 --> 00:02:46,799 Speaker 5: liners and hotels increasing theirseph fullier forecast because they see 61 00:02:46,840 --> 00:02:49,480 Speaker 5: people still traveling, people still want to go around, The 62 00:02:49,520 --> 00:02:50,960 Speaker 5: consumer is still strong. 63 00:02:51,320 --> 00:02:52,800 Speaker 6: How do you pair these two. 64 00:02:52,639 --> 00:02:55,240 Speaker 5: Ideas and put them together in some sort of outlook. 65 00:02:55,360 --> 00:02:58,000 Speaker 4: I think it makes sense today the economy is fine. 66 00:02:59,160 --> 00:03:01,440 Speaker 4: There will be something unificant headwinds in the next couple 67 00:03:01,480 --> 00:03:04,520 Speaker 4: of months unless Trump pulls back the tariffs. 68 00:03:04,200 --> 00:03:05,840 Speaker 7: On China in particular in a big way. 69 00:03:06,200 --> 00:03:08,200 Speaker 4: So if he doesn't do that in the next couple 70 00:03:08,200 --> 00:03:10,720 Speaker 4: of weeks, we might be on a sort of unsustainable 71 00:03:10,720 --> 00:03:12,840 Speaker 4: path towards recession base cases. 72 00:03:12,880 --> 00:03:14,120 Speaker 7: He probably pulls down. 73 00:03:14,080 --> 00:03:17,000 Speaker 4: The tariffs on China in particular fairly notably in the 74 00:03:17,040 --> 00:03:18,800 Speaker 4: next couple of weeks, otherwise we might be looking at 75 00:03:18,840 --> 00:03:21,919 Speaker 4: bare shelves and COVID like environment. 76 00:03:21,960 --> 00:03:24,360 Speaker 8: But it was a self inflicted one Stephanie, what's fairly 77 00:03:24,400 --> 00:03:27,000 Speaker 8: notable in terms of pulling the tariffs down sixty percent? 78 00:03:27,560 --> 00:03:29,160 Speaker 3: That still feels like to many people. 79 00:03:29,160 --> 00:03:31,800 Speaker 4: In trade of bargo you need tariff rates to be 80 00:03:31,800 --> 00:03:34,720 Speaker 4: below fifty five percent roughly all in. That includes the 81 00:03:34,760 --> 00:03:39,320 Speaker 4: fentanyel tariffs, that includes the reciprocal tariffs. And then, by 82 00:03:39,320 --> 00:03:40,800 Speaker 4: the way, you have to be cognizant that there are 83 00:03:40,800 --> 00:03:43,000 Speaker 4: three oh one tariffs from the last trade war as well, 84 00:03:43,120 --> 00:03:45,320 Speaker 4: some of them up to twenty five percent, right, so. 85 00:03:45,280 --> 00:03:46,680 Speaker 3: It's a massive cumulative rate. 86 00:03:46,960 --> 00:03:50,000 Speaker 8: You said something earlier, you said you don't expect companies 87 00:03:50,040 --> 00:03:52,480 Speaker 8: to be hiring. They're on pause. Do you expect them 88 00:03:52,480 --> 00:03:54,279 Speaker 8: to be firing at this moment. 89 00:03:54,320 --> 00:03:55,560 Speaker 7: At this moment, probably not. 90 00:03:55,640 --> 00:03:57,920 Speaker 4: There's just so much uncertainty, there was so much difficulty 91 00:03:58,000 --> 00:03:59,920 Speaker 4: hiring in the past couple of years. It probably makes 92 00:04:00,040 --> 00:04:02,320 Speaker 4: send for them to just pause for a little while. 93 00:04:02,600 --> 00:04:04,200 Speaker 4: Of course, there's going to be still some hiring to 94 00:04:04,240 --> 00:04:06,880 Speaker 4: some extent, there's just a business eased, the economy still growing, 95 00:04:07,120 --> 00:04:09,240 Speaker 4: but to the extent that at the margin, if you're 96 00:04:09,280 --> 00:04:11,120 Speaker 4: not sure you need the position, you might just kind 97 00:04:11,120 --> 00:04:12,920 Speaker 4: of wait for the next couple of months, see how 98 00:04:12,920 --> 00:04:15,320 Speaker 4: things play out, and then make a decision about whether 99 00:04:15,320 --> 00:04:16,520 Speaker 4: you actually want to hire in that position. 100 00:04:16,640 --> 00:04:18,960 Speaker 2: Later on this morning, we get consumer confidence numbers, and 101 00:04:19,040 --> 00:04:21,600 Speaker 2: within that you offer to read on attitudes to the 102 00:04:21,680 --> 00:04:24,640 Speaker 2: labor market, how difficult or hard it might be to 103 00:04:24,960 --> 00:04:27,000 Speaker 2: get a job. And I think this is really important 104 00:04:27,000 --> 00:04:29,400 Speaker 2: on taking the temperature not only for that, but also 105 00:04:29,560 --> 00:04:31,760 Speaker 2: the potential for second round effects when it comes to 106 00:04:32,160 --> 00:04:36,000 Speaker 2: inflation and price hikes. Now, if I'm worried about getting 107 00:04:36,040 --> 00:04:38,440 Speaker 2: a job, how likely is it that I'm going to 108 00:04:38,440 --> 00:04:40,839 Speaker 2: get a pay rise anytime soon, or at least ask 109 00:04:40,920 --> 00:04:41,480 Speaker 2: for one. 110 00:04:42,000 --> 00:04:43,880 Speaker 4: Probably less so, so you're probably going to start to 111 00:04:43,920 --> 00:04:46,400 Speaker 4: see a little bit of deceleration from our wage perspective. 112 00:04:46,880 --> 00:04:50,200 Speaker 4: The one thing is the immigration stuff actually has a 113 00:04:50,200 --> 00:04:52,880 Speaker 4: different implication for the for the blue collar work or 114 00:04:52,920 --> 00:04:53,400 Speaker 4: the lower end. 115 00:04:53,480 --> 00:04:55,560 Speaker 3: So there is a bit of stuff. 116 00:04:55,279 --> 00:04:57,400 Speaker 4: Happening kind of under the surface that is quite nuanced. 117 00:04:57,560 --> 00:04:59,800 Speaker 4: So we might start to see an unusual tightening for 118 00:05:00,080 --> 00:05:02,960 Speaker 4: blue collar worker, even though the white collar worker might 119 00:05:03,000 --> 00:05:05,760 Speaker 4: actually be having a little bit more difficulty finding it. 120 00:05:06,000 --> 00:05:07,640 Speaker 2: So, just for the record, ask for a pay rise, right, 121 00:05:09,400 --> 00:05:10,720 Speaker 2: really please? Always? 122 00:05:11,480 --> 00:05:15,080 Speaker 5: Okay, So that's you basically, So in some please. 123 00:05:15,520 --> 00:05:19,000 Speaker 2: Rachel, this can become self fulfilling, don't you think People 124 00:05:19,040 --> 00:05:20,800 Speaker 2: start to worry about these things, so they back off, 125 00:05:20,800 --> 00:05:23,040 Speaker 2: they stop spending, and it takes on a life of its. 126 00:05:22,960 --> 00:05:24,760 Speaker 5: Own, which is the reason why I think it's really 127 00:05:24,800 --> 00:05:27,480 Speaker 5: salient that you mentioned these surveys and how people feel 128 00:05:27,480 --> 00:05:30,599 Speaker 5: about their jobs, people staying longer, the quits rate. Later 129 00:05:30,640 --> 00:05:32,440 Speaker 5: this morning, when we get that joelt Stata is going 130 00:05:32,480 --> 00:05:34,800 Speaker 5: to be key in terms of people's confidence not just 131 00:05:34,839 --> 00:05:36,760 Speaker 5: to ask for a raise, but to leave their jobs. 132 00:05:37,000 --> 00:05:39,719 Speaker 5: And as we're talking about this ups and how's his plans? 133 00:05:39,720 --> 00:05:42,960 Speaker 5: You got twenty thousand jobs this year as a result of. 134 00:05:42,880 --> 00:05:43,800 Speaker 6: The Amazon tie up. 135 00:05:44,000 --> 00:05:46,560 Speaker 5: You're seeing this on the margins, cost cutting coming more 136 00:05:46,600 --> 00:05:47,080 Speaker 5: into the floor. 137 00:05:47,400 --> 00:05:50,760 Speaker 2: Where is the consumer price tolerance right now going into 138 00:05:50,839 --> 00:05:53,720 Speaker 2: potentially higher prices, not very high. 139 00:05:53,800 --> 00:05:58,679 Speaker 4: So the biggest driver of consumer inflation expectations is past inflation. 140 00:05:59,320 --> 00:06:01,920 Speaker 4: So today, the extent that consumers are worried about the 141 00:06:01,960 --> 00:06:04,680 Speaker 4: inflation that we saw this time, they're quite worried about 142 00:06:04,680 --> 00:06:06,039 Speaker 4: inflation that we're going to see in the future, in 143 00:06:06,040 --> 00:06:07,919 Speaker 4: which case they're probably going to be pulling back on spending. 144 00:06:07,920 --> 00:06:10,040 Speaker 4: They're gonna be very attuned to the prices that they're 145 00:06:10,040 --> 00:06:11,800 Speaker 4: seeing on the shelves. So this is very different than 146 00:06:11,839 --> 00:06:14,279 Speaker 4: the last trade war for a number of reasons. The magnitude, 147 00:06:14,279 --> 00:06:16,360 Speaker 4: of course, but also where we are coming from, and 148 00:06:16,600 --> 00:06:18,920 Speaker 4: in twenty eighteen we didn't have a period of inflation. 149 00:06:18,920 --> 00:06:21,039 Speaker 3: People weren't really expecting inflation, they didn't really know what 150 00:06:21,040 --> 00:06:21,560 Speaker 3: it felt like. 151 00:06:21,760 --> 00:06:24,560 Speaker 4: This time, consumers field are very very different versus where 152 00:06:24,560 --> 00:06:24,840 Speaker 4: we were. 153 00:06:25,040 --> 00:06:27,160 Speaker 2: Amazon has a different idea of how this might play out. 154 00:06:27,240 --> 00:06:29,160 Speaker 8: Right, Amazon, I think is gonna get very political and 155 00:06:29,160 --> 00:06:31,360 Speaker 8: tru administration is not gonna like this. Punch Bowl says 156 00:06:31,360 --> 00:06:33,600 Speaker 8: that they're going to add what the tariff rate is 157 00:06:33,640 --> 00:06:36,080 Speaker 8: on top of the cumulative price. So if you're a 158 00:06:36,080 --> 00:06:38,440 Speaker 8: consumer and you see something's five dollars and now it's 159 00:06:38,600 --> 00:06:42,360 Speaker 8: ten to seven, whatever, you see the additional tariff input 160 00:06:43,000 --> 00:06:46,159 Speaker 8: that is going to I think really irk the administration. 161 00:06:46,279 --> 00:06:47,880 Speaker 2: Yeah, the politics of that is going to be interesting 162 00:06:48,000 --> 00:06:49,680 Speaker 2: for the next few months or so if that's how 163 00:06:49,680 --> 00:06:51,839 Speaker 2: it plays out. Stephanie's good to see you as always. 164 00:06:51,839 --> 00:06:59,760 Speaker 2: Thanks for dropping by, Stephanie roth Lair of Wolf Research. 165 00:07:04,120 --> 00:07:06,159 Speaker 2: Let's turn to a busy week of data ahead and 166 00:07:06,240 --> 00:07:08,600 Speaker 2: a busy week for Washington as well. The Fed's next 167 00:07:08,640 --> 00:07:11,320 Speaker 2: rate decision just a week away. Colin Martin of Chiles 168 00:07:11,440 --> 00:07:14,520 Speaker 2: Swelb writing, while self data has been concerning, the hard 169 00:07:14,600 --> 00:07:17,480 Speaker 2: data has held up well. If this week's data disappoints, 170 00:07:17,480 --> 00:07:21,000 Speaker 2: the Fed won't necessarily react. Colin joint us now for more. Colin, 171 00:07:21,040 --> 00:07:23,520 Speaker 2: good Mornick, Good morning, Tilson Slock Apollo. I don't know 172 00:07:23,520 --> 00:07:24,680 Speaker 2: if you saw this. I'm going to share it with 173 00:07:24,720 --> 00:07:28,120 Speaker 2: you now. The survey week for employment this week was 174 00:07:28,160 --> 00:07:31,240 Speaker 2: the week after Liberation Day tariffs were announced. It goes 175 00:07:31,240 --> 00:07:33,680 Speaker 2: on to say the consensus expects one hundred and thirty k. 176 00:07:34,080 --> 00:07:36,400 Speaker 2: There are significant risk the number is going to be lower, 177 00:07:36,440 --> 00:07:39,080 Speaker 2: perhaps even negative. What's your reaction to that. 178 00:07:39,560 --> 00:07:40,640 Speaker 9: It'd be pretty disappointing. 179 00:07:40,680 --> 00:07:42,480 Speaker 10: I mean, when we look at the labor market outlook, 180 00:07:42,520 --> 00:07:45,320 Speaker 10: there's all these thoughts and concerns about what can happen 181 00:07:45,680 --> 00:07:48,080 Speaker 10: as the tariffs are put in place over the next 182 00:07:48,080 --> 00:07:50,400 Speaker 10: few months, and there isn't too much concern in the 183 00:07:50,440 --> 00:07:53,360 Speaker 10: here and now opposite, you know, aside from what Wordslock 184 00:07:53,800 --> 00:07:55,600 Speaker 10: just put out. I mean, I think the consensus estimate 185 00:07:55,680 --> 00:07:58,000 Speaker 10: is one hundred and sixty five thousand something like that. 186 00:07:58,680 --> 00:08:02,000 Speaker 10: If we were to see slow down here in April, 187 00:08:02,640 --> 00:08:04,880 Speaker 10: I don't think that would change the FEDS calculus for 188 00:08:04,960 --> 00:08:05,520 Speaker 10: next week. 189 00:08:05,640 --> 00:08:06,880 Speaker 9: We kind of heard that from a lot of FED 190 00:08:06,880 --> 00:08:08,040 Speaker 9: officials in terms. 191 00:08:07,760 --> 00:08:10,880 Speaker 10: Of no move in May. Maybe it gets pulled up 192 00:08:10,920 --> 00:08:13,200 Speaker 10: to June. I think it'd be bad for the markets, though, 193 00:08:13,440 --> 00:08:16,920 Speaker 10: if we got that negative reading this early, this quickly, 194 00:08:17,000 --> 00:08:18,760 Speaker 10: I think that'd be a pretty bad outcome. 195 00:08:18,840 --> 00:08:21,840 Speaker 5: When you see the markets, you're talking risk assets in particular, 196 00:08:21,880 --> 00:08:23,480 Speaker 5: and what we have seen so far is a real 197 00:08:23,560 --> 00:08:26,040 Speaker 5: divergence between the front end of the yield curve, which 198 00:08:26,040 --> 00:08:29,720 Speaker 5: has really signals a great more pain than certainly risk assets, 199 00:08:29,720 --> 00:08:32,880 Speaker 5: whether it's credit instruments or whether it's equity ones. Do 200 00:08:32,920 --> 00:08:35,720 Speaker 5: you think that that divergence needs to close to more 201 00:08:35,720 --> 00:08:38,160 Speaker 5: weakness on the risk side of things, or do you 202 00:08:38,200 --> 00:08:41,720 Speaker 5: think that people are pricing in an overly large response 203 00:08:41,760 --> 00:08:42,680 Speaker 5: by the Federal Reserve. 204 00:08:43,440 --> 00:08:45,160 Speaker 9: I don't think they are. 205 00:08:45,320 --> 00:08:48,679 Speaker 10: If you look at the ten year treasury, for example, 206 00:08:48,679 --> 00:08:50,760 Speaker 10: I mean, that's been hovering in that four to two 207 00:08:50,880 --> 00:08:52,679 Speaker 10: to four five range. I think a lot of that 208 00:08:52,720 --> 00:08:56,080 Speaker 10: comes down to potential confidence dollar concerns, things like that. 209 00:08:56,280 --> 00:08:58,559 Speaker 10: If you look at the Fed funds futures market, they 210 00:08:58,600 --> 00:09:01,280 Speaker 10: have been pricing in relatively aggressive cuts. 211 00:09:01,360 --> 00:09:03,320 Speaker 9: We somewhat disagree with that. 212 00:09:03,760 --> 00:09:05,680 Speaker 10: We don't think we're going to see that slow down 213 00:09:05,720 --> 00:09:08,800 Speaker 10: as quickly as a three or four rate cut outcome suggests. 214 00:09:09,240 --> 00:09:10,959 Speaker 10: But it does come down to the labor market. If 215 00:09:10,960 --> 00:09:14,240 Speaker 10: we see that weakening, we think the Fed over time 216 00:09:14,320 --> 00:09:17,079 Speaker 10: will react. We're seeing Powell kind of pivotal away a 217 00:09:17,120 --> 00:09:18,520 Speaker 10: little bit. I think a week and a half ago 218 00:09:18,760 --> 00:09:21,840 Speaker 10: he mentioned maybe we'll focus on the inflation mandate more 219 00:09:21,880 --> 00:09:24,679 Speaker 10: than the labor market mandate. That seems to be the 220 00:09:24,679 --> 00:09:27,840 Speaker 10: minority right now, based on concerns and comments we've heard 221 00:09:27,880 --> 00:09:28,760 Speaker 10: from other Fed officials. 222 00:09:28,920 --> 00:09:30,040 Speaker 6: This is a fascinating moment. 223 00:09:30,080 --> 00:09:31,760 Speaker 5: Where a lot of Fi Crui of gold mis Sax 224 00:09:31,840 --> 00:09:33,920 Speaker 5: yesterday came on the show, and so that he actually 225 00:09:34,160 --> 00:09:37,000 Speaker 5: prefers credit risk to sovereign risk right. 226 00:09:36,840 --> 00:09:39,040 Speaker 6: Now and talking about removing. 227 00:09:38,640 --> 00:09:41,080 Speaker 5: From some of the volatility that you're seeing in treasury 228 00:09:41,120 --> 00:09:44,400 Speaker 5: markets to really go with corporations that are telling you 229 00:09:44,480 --> 00:09:47,320 Speaker 5: we have no clue, that are one after another saying 230 00:09:47,320 --> 00:09:49,040 Speaker 5: we can't give you any forward guidance. 231 00:09:49,440 --> 00:09:51,320 Speaker 6: Can you reconcile that? Do you agree with that? 232 00:09:51,880 --> 00:09:53,600 Speaker 10: You know somewhat, But I guess it depends how much 233 00:09:53,640 --> 00:09:55,880 Speaker 10: credit risk we're talking about. We're still a little bit 234 00:09:55,920 --> 00:09:58,840 Speaker 10: cautious on the very low rated parts of the market, 235 00:09:58,880 --> 00:10:01,400 Speaker 10: I mean junk in general. We're worried that spreads can 236 00:10:01,440 --> 00:10:05,439 Speaker 10: blow out if we get this prolonged trade war investment creed. 237 00:10:06,040 --> 00:10:08,880 Speaker 10: We're still pretty comfortable taking that risk. So, whether it's 238 00:10:09,080 --> 00:10:11,720 Speaker 10: credit on the corporate side, whether it's municipal credit risk, 239 00:10:11,960 --> 00:10:14,840 Speaker 10: we're okay there because the hard data leading up to 240 00:10:14,920 --> 00:10:19,040 Speaker 10: now was generally okay. Corporations are in pretty solid footing, 241 00:10:19,120 --> 00:10:22,040 Speaker 10: especially ig rated. We're looking at really strong balance sheets, 242 00:10:22,160 --> 00:10:25,360 Speaker 10: plenty of liquid assets. If profits slow down, I think 243 00:10:25,400 --> 00:10:27,760 Speaker 10: that might need more of a stock market issue that's 244 00:10:27,760 --> 00:10:29,439 Speaker 10: an earnings issue, not a balance sheet issue, and we 245 00:10:29,480 --> 00:10:32,080 Speaker 10: think they have really strong balance sheets right now. Again, 246 00:10:32,160 --> 00:10:34,640 Speaker 10: IG issues. They've pushed back that maturity wall a little bit, 247 00:10:34,880 --> 00:10:36,360 Speaker 10: so IG we're okay with. 248 00:10:36,600 --> 00:10:40,040 Speaker 9: But we're not really taking low credit risk right now. 249 00:10:40,040 --> 00:10:41,960 Speaker 6: This is a really tough time to be an investor. 250 00:10:42,000 --> 00:10:44,920 Speaker 5: I have to say, I can just begin to imagine 251 00:10:45,080 --> 00:10:47,680 Speaker 5: there's so many different themes that are kind of overlaid. 252 00:10:47,679 --> 00:10:49,679 Speaker 5: You've got this question of credit versus software risk, and 253 00:10:49,679 --> 00:10:51,840 Speaker 5: then you've got a question of just international appetite for 254 00:10:51,920 --> 00:10:54,439 Speaker 5: US dollars nominated assets, and that has been one of 255 00:10:54,480 --> 00:10:56,880 Speaker 5: the biggest shifts over the past few weeks, is that 256 00:10:56,880 --> 00:10:59,560 Speaker 5: that's really been called into question. How much have you 257 00:10:59,679 --> 00:11:03,040 Speaker 5: changed your allocation to shift away from US dollars to 258 00:11:03,120 --> 00:11:05,920 Speaker 5: nominated assets, just to touch on the margins, to immunize 259 00:11:05,960 --> 00:11:08,719 Speaker 5: yourself from that type of narrative that does seem to 260 00:11:08,760 --> 00:11:10,440 Speaker 5: becoming entrenched in certain pockets. 261 00:11:10,600 --> 00:11:12,400 Speaker 10: I could say we're talking about it a lot more 262 00:11:12,840 --> 00:11:14,640 Speaker 10: with our clients than we were a few months ago 263 00:11:14,720 --> 00:11:16,000 Speaker 10: and over the past few years. When we look at 264 00:11:16,000 --> 00:11:19,440 Speaker 10: international markets a Schwab, it's not really a big aspect 265 00:11:19,480 --> 00:11:21,680 Speaker 10: of what we look at I think most US investors 266 00:11:21,679 --> 00:11:25,560 Speaker 10: from a bond standpoint, are probably under allocated to international debt. 267 00:11:25,840 --> 00:11:27,800 Speaker 10: With the dollar being as strong as it's been over 268 00:11:27,800 --> 00:11:29,560 Speaker 10: the past few years, there hasn't been as much of 269 00:11:29,559 --> 00:11:32,319 Speaker 10: a case because you have that yield disadvantage when you 270 00:11:32,360 --> 00:11:35,840 Speaker 10: consider other global developed markets. If the outlook is for 271 00:11:35,880 --> 00:11:39,040 Speaker 10: the dollar to weaken a little bit from here, then 272 00:11:39,080 --> 00:11:40,840 Speaker 10: the case can be made to shift a little bit 273 00:11:40,880 --> 00:11:42,960 Speaker 10: to international assets. We're not saying go nuts, We're not 274 00:11:43,000 --> 00:11:46,600 Speaker 10: saying go overweight, but it probably makes sense, especially when. 275 00:11:46,440 --> 00:11:48,520 Speaker 9: You talk about the idea of a. 276 00:11:48,040 --> 00:11:51,480 Speaker 10: Loss of confidence or sovereign risk. You don't hear about 277 00:11:51,480 --> 00:11:54,040 Speaker 10: those concerns with some of the higher rated issuers and 278 00:11:54,120 --> 00:11:57,440 Speaker 10: say Europe for example. So I think it's a decent option, 279 00:11:57,559 --> 00:12:00,160 Speaker 10: but really just for investors who are probably un are 280 00:12:00,200 --> 00:12:02,800 Speaker 10: allocated right now versus Hey take all your money out 281 00:12:02,800 --> 00:12:04,760 Speaker 10: of the US and go into Europe for example. 282 00:12:04,880 --> 00:12:06,360 Speaker 3: You said you're talking to your clients about this. 283 00:12:06,559 --> 00:12:11,120 Speaker 8: Are they nervous about us losing something like reserve status? 284 00:12:11,200 --> 00:12:14,079 Speaker 9: Yes, full stop. I mean that's over the past few 285 00:12:14,080 --> 00:12:14,880 Speaker 9: weeks we've done. 286 00:12:14,679 --> 00:12:15,760 Speaker 3: You've never heard this before. 287 00:12:16,360 --> 00:12:17,240 Speaker 9: We get it a lot. 288 00:12:17,720 --> 00:12:21,120 Speaker 10: It's a question that it always lingers, especially when you 289 00:12:21,160 --> 00:12:23,680 Speaker 10: have the idea of rising debts, rising deficits. There's no 290 00:12:23,760 --> 00:12:26,559 Speaker 10: shortage of concerns about the outlook for the dollar and 291 00:12:26,840 --> 00:12:29,360 Speaker 10: how investors should be positioned. But over the past few weeks, 292 00:12:29,440 --> 00:12:33,280 Speaker 10: especially since so called Liberation Day, the client events and 293 00:12:33,320 --> 00:12:36,760 Speaker 10: requests for communications have been through the roof no supply, 294 00:12:36,920 --> 00:12:40,200 Speaker 10: no surprise, and that's a major concern. The question is 295 00:12:40,240 --> 00:12:44,120 Speaker 10: what's going on with treasury, with foreigners potentially selling our debt, 296 00:12:44,440 --> 00:12:46,880 Speaker 10: what's the outlook for the dollar. We try not to 297 00:12:46,880 --> 00:12:49,040 Speaker 10: be too alarmist about it. We don't think the dollar 298 00:12:49,120 --> 00:12:53,120 Speaker 10: is going to lose its reserve currency status overnight. I 299 00:12:53,160 --> 00:12:54,760 Speaker 10: think there could be a risk over the long run. 300 00:12:54,840 --> 00:12:58,840 Speaker 10: If the goal here by the Trump administration is to 301 00:12:58,880 --> 00:13:02,120 Speaker 10: reduce those trade deficits, then maybe that means we have 302 00:13:02,240 --> 00:13:04,760 Speaker 10: less of a capital account surplus, and it means foreigners 303 00:13:04,760 --> 00:13:07,959 Speaker 10: over time don't need to hold as many dollars. It's 304 00:13:08,000 --> 00:13:10,320 Speaker 10: a very long term view, though, so we're trying not 305 00:13:10,360 --> 00:13:13,560 Speaker 10: to be alarmist. Obviously there's concerns out there, but we're 306 00:13:13,559 --> 00:13:15,400 Speaker 10: not saying you need to get out of the dollar 307 00:13:15,520 --> 00:13:17,240 Speaker 10: or dollar denominated assets right now. 308 00:13:17,280 --> 00:13:18,839 Speaker 2: It's not something that happens. I have an eye something 309 00:13:18,880 --> 00:13:20,720 Speaker 2: that happens gradually, and we have start to say this 310 00:13:20,760 --> 00:13:24,160 Speaker 2: type place the dollar stats awaken goldsteins to appreciate that's 311 00:13:24,160 --> 00:13:25,960 Speaker 2: been a story for the last couple of years now. 312 00:13:26,320 --> 00:13:27,920 Speaker 2: And some of the people would also point to the 313 00:13:27,920 --> 00:13:29,960 Speaker 2: state of cufs. We've seen this well, less of a 314 00:13:29,960 --> 00:13:32,840 Speaker 2: willingness to hold the long bonped particularly moments of strengths 315 00:13:32,840 --> 00:13:35,240 Speaker 2: and equity markets. You're not even seeing sensual signs of 316 00:13:35,240 --> 00:13:36,359 Speaker 2: this stime to accumulate. 317 00:13:37,080 --> 00:13:37,719 Speaker 9: What do you mean by. 318 00:13:37,679 --> 00:13:41,079 Speaker 10: Starting to accumulate with foreign investors and nervousness about long term. 319 00:13:40,880 --> 00:13:44,520 Speaker 2: Debt, nervousness about holding US assets, particularly a time of stress. 320 00:13:44,600 --> 00:13:46,280 Speaker 10: You know, I don't know if it's so much a nervousness. 321 00:13:46,440 --> 00:13:48,840 Speaker 10: I think it's just a gradual shift away. Hey, there's a. 322 00:13:48,840 --> 00:13:51,120 Speaker 9: Lot going on right now. And if you're a foreign. 323 00:13:50,800 --> 00:13:53,280 Speaker 10: Investor, and it seems like it might be private investors 324 00:13:53,320 --> 00:13:56,000 Speaker 10: as opposed to turn for banks, obviously these are negative 325 00:13:56,040 --> 00:13:58,040 Speaker 10: headlines if you're a foreigner, just the idea of maybe 326 00:13:58,080 --> 00:14:00,320 Speaker 10: I don't want to hold that asset right now. But John, 327 00:14:00,360 --> 00:14:02,040 Speaker 10: you hit the nail on the head. It's a long 328 00:14:02,200 --> 00:14:06,840 Speaker 10: term potential shift This takes years for something like this 329 00:14:06,920 --> 00:14:09,120 Speaker 10: to happen, and it's not our outlook great now, mainly 330 00:14:09,120 --> 00:14:10,880 Speaker 10: because where else can you go? I mean, the dollar 331 00:14:11,000 --> 00:14:14,600 Speaker 10: is still the most held asset, the most traded asset, 332 00:14:14,720 --> 00:14:16,400 Speaker 10: so it's not something that we're worried about right now. 333 00:14:16,400 --> 00:14:17,679 Speaker 2: And if you've been away for a while and came 334 00:14:17,720 --> 00:14:19,280 Speaker 2: back and saw de x y A ninety nine, you 335 00:14:19,280 --> 00:14:20,240 Speaker 2: probably wouldn't freak out. 336 00:14:20,440 --> 00:14:20,960 Speaker 9: That's for sure. 337 00:14:21,160 --> 00:14:22,960 Speaker 2: Going to see a Colin appreciate it as always, Colin 338 00:14:23,000 --> 00:14:35,000 Speaker 2: mouse in there of Charles Swam on the latest Savita 339 00:14:35,000 --> 00:14:37,600 Speaker 2: SUPERMANI but Bank for America writing, the only thing to 340 00:14:37,680 --> 00:14:40,640 Speaker 2: fear is fear itself. Folks are worried about a recession, 341 00:14:40,720 --> 00:14:43,840 Speaker 2: so they are acting recession rate speed and achieving policy 342 00:14:43,840 --> 00:14:47,040 Speaker 2: clarity is healthy essence. Savita joined us now for more Sevita, 343 00:14:47,160 --> 00:14:47,560 Speaker 2: good morning. 344 00:14:47,600 --> 00:14:48,120 Speaker 3: It's good to see it. 345 00:14:48,160 --> 00:14:49,480 Speaker 7: I'm morning great to see. 346 00:14:49,480 --> 00:14:52,120 Speaker 2: A lot of cuts to outlooks. We're seeing suspensions of 347 00:14:52,240 --> 00:14:55,320 Speaker 2: guidance repeatedly across the board from Corporate America this morning. 348 00:14:55,320 --> 00:14:56,520 Speaker 2: What does that mean for you and the team. 349 00:14:56,640 --> 00:15:00,480 Speaker 11: Yeah, well, I mean it's not great, It's definitely not good. 350 00:15:01,000 --> 00:15:03,720 Speaker 11: We're seeing the revision ratio, just a number of cuts 351 00:15:03,760 --> 00:15:07,760 Speaker 11: to number of raises to earnings approaching all time lows. 352 00:15:08,560 --> 00:15:10,440 Speaker 11: Guidance is being suspended. 353 00:15:10,920 --> 00:15:11,880 Speaker 7: That's a hit. 354 00:15:11,960 --> 00:15:14,760 Speaker 11: I mean, we saw the same thing during COVID, probably 355 00:15:14,800 --> 00:15:17,680 Speaker 11: more so during COVID because there was a much higher 356 00:15:17,800 --> 00:15:18,920 Speaker 11: level of uncertainty. 357 00:15:19,760 --> 00:15:22,760 Speaker 7: And what we found was the companies that continued. 358 00:15:22,200 --> 00:15:26,240 Speaker 11: To guide actually traded at the widest premium to the 359 00:15:26,360 --> 00:15:29,360 Speaker 11: non guiders or the suspenders that we've seen. So I 360 00:15:29,360 --> 00:15:32,960 Speaker 11: think right now people want transparency, investors want to know, 361 00:15:34,040 --> 00:15:36,440 Speaker 11: So that's that's one thing we're watching. I think what's 362 00:15:36,480 --> 00:15:38,800 Speaker 11: interesting is that in the last week we've heard more 363 00:15:38,840 --> 00:15:44,840 Speaker 11: companies talk about mitigation tactics for tariffs. 364 00:15:44,320 --> 00:15:46,480 Speaker 7: Than we did in prior weeks. 365 00:15:47,320 --> 00:15:49,200 Speaker 11: So I think that what we're in right now is 366 00:15:49,240 --> 00:15:51,520 Speaker 11: the environment where corporates are doing what they always do, 367 00:15:51,560 --> 00:15:54,400 Speaker 11: which is adapt, you know, figure out where they can, 368 00:15:54,520 --> 00:15:57,440 Speaker 11: you know, kind of change things around the edges. And 369 00:15:57,680 --> 00:15:59,880 Speaker 11: on top of that, we're seeing kind of a defer 370 00:16:00,400 --> 00:16:03,600 Speaker 11: of big decisions. So it almost feels like we're in 371 00:16:03,640 --> 00:16:05,280 Speaker 11: this phase where there's. 372 00:16:05,080 --> 00:16:07,000 Speaker 7: No hiring, but no firing. 373 00:16:07,120 --> 00:16:10,400 Speaker 11: There's you know, no new capital committed to projects, but 374 00:16:10,800 --> 00:16:14,520 Speaker 11: projects aren't necessarily being canceled, and I think that's both 375 00:16:14,520 --> 00:16:15,040 Speaker 11: good and bad. 376 00:16:15,080 --> 00:16:16,000 Speaker 7: I mean, this pause. 377 00:16:16,080 --> 00:16:18,960 Speaker 11: The longer it lasts, you know, the worse it gets 378 00:16:18,960 --> 00:16:22,640 Speaker 11: for the economy. But at least we're not seeing just 379 00:16:22,640 --> 00:16:26,440 Speaker 11: this sort of reactive firing canceling, you know, kind of 380 00:16:26,680 --> 00:16:27,880 Speaker 11: a downdraft and activity. 381 00:16:28,000 --> 00:16:30,320 Speaker 2: This is important for the data that comes on Friday Pace. 382 00:16:30,680 --> 00:16:33,280 Speaker 2: When you say adapt, then if they're not firing, how 383 00:16:33,320 --> 00:16:34,080 Speaker 2: are they adapting? 384 00:16:34,080 --> 00:16:34,720 Speaker 3: What are they doing? 385 00:16:35,280 --> 00:16:38,640 Speaker 11: So what they're doing is they're sort of shifting supply chain. 386 00:16:38,840 --> 00:16:41,800 Speaker 11: They're thinking about more manufacturing in the US. 387 00:16:42,720 --> 00:16:45,680 Speaker 7: I think that the idea that we've seen this. 388 00:16:45,760 --> 00:16:49,760 Speaker 11: Movie before, back in twenty eighteen, especially with respect to China, 389 00:16:50,280 --> 00:16:53,360 Speaker 11: gives companies a little bit more confidence that they know 390 00:16:53,480 --> 00:16:54,880 Speaker 11: how to negotiate this. 391 00:16:55,120 --> 00:16:56,760 Speaker 7: So I think that's a positive. 392 00:16:57,040 --> 00:17:00,400 Speaker 11: What's interesting, though, is that you're hearing more weakness around 393 00:17:00,440 --> 00:17:05,800 Speaker 11: consumer and even in consumer staples. So if you think 394 00:17:05,840 --> 00:17:08,639 Speaker 11: you can hide in the food stocks and the you know, 395 00:17:08,680 --> 00:17:12,360 Speaker 11: the defense not necessarily working this time, and I think 396 00:17:12,400 --> 00:17:16,640 Speaker 11: that's also noteworthy. I will tell you, I mean everything 397 00:17:16,680 --> 00:17:20,480 Speaker 11: we're looking at really points us in one direction, which 398 00:17:20,520 --> 00:17:24,400 Speaker 11: is large cap value. And I feel like it's almost 399 00:17:24,440 --> 00:17:28,320 Speaker 11: this kind of unassailable theme in an environment where the 400 00:17:28,440 --> 00:17:31,359 Speaker 11: risks are you know, potentially higher yields, and we can 401 00:17:31,800 --> 00:17:36,040 Speaker 11: talk about that potentially higher inflation, because what we're seeing 402 00:17:36,119 --> 00:17:38,399 Speaker 11: right now on the table from a policy standpoint, is 403 00:17:38,440 --> 00:17:41,600 Speaker 11: mostly inflationary, and in that environment, you really don't want 404 00:17:41,640 --> 00:17:42,240 Speaker 11: to be in bonds. 405 00:17:42,240 --> 00:17:44,280 Speaker 7: You want to be in dividends. Rustle one thousand. 406 00:17:44,400 --> 00:17:49,199 Speaker 11: Value companies have a much higher tether to non discretionary spend, 407 00:17:49,280 --> 00:17:51,280 Speaker 11: either services or goods. 408 00:17:51,520 --> 00:17:52,040 Speaker 7: Think about it. 409 00:17:52,080 --> 00:17:55,200 Speaker 11: I mean, if we're in an environment where we're cutting back, 410 00:17:55,240 --> 00:17:57,200 Speaker 11: we're still going to pay insurance, We're still going to 411 00:17:57,240 --> 00:18:00,680 Speaker 11: be utilities, heating, et cetera. So I think those types 412 00:18:00,720 --> 00:18:03,280 Speaker 11: of areas of the market should hold up quite well. 413 00:18:03,840 --> 00:18:05,360 Speaker 7: And the value. 414 00:18:05,040 --> 00:18:08,120 Speaker 11: Index, the large pat value index has kind of consistently 415 00:18:08,160 --> 00:18:11,040 Speaker 11: outperformed the growth indexes here, So I think I think 416 00:18:11,040 --> 00:18:13,080 Speaker 11: that's where you really want to be to sort of 417 00:18:13,520 --> 00:18:16,560 Speaker 11: cover yourself as opposed to just going pure defense of 418 00:18:17,080 --> 00:18:19,440 Speaker 11: you know, kind of the old school defense playbook. 419 00:18:19,600 --> 00:18:22,080 Speaker 5: Yeah, to your point, some of the consumer staples craft 420 00:18:22,119 --> 00:18:24,800 Speaker 5: hignds came out in cited worse than consumer sentiment and 421 00:18:24,880 --> 00:18:28,280 Speaker 5: cut their forecast. Evidently, Oscar Myer Sausages as well as 422 00:18:28,640 --> 00:18:30,879 Speaker 5: your hines catch up, but not necessarily moving off the 423 00:18:30,920 --> 00:18:32,240 Speaker 5: shelves as quickly as in the past. 424 00:18:32,280 --> 00:18:34,119 Speaker 7: You said you've latched talk about hot sogs. 425 00:18:34,160 --> 00:18:36,440 Speaker 5: Yeah, well, I mean maybe that's something else. Maybe that's 426 00:18:36,520 --> 00:18:40,120 Speaker 5: John in terms of healthcare exactly. 427 00:18:40,240 --> 00:18:40,560 Speaker 3: Baby. 428 00:18:40,640 --> 00:18:42,359 Speaker 5: You know, if you check your blood and then you 429 00:18:42,440 --> 00:18:44,080 Speaker 5: check that oscar wedding, that's my boot. 430 00:18:44,480 --> 00:18:46,040 Speaker 6: You talk about yields, let's go there. 431 00:18:46,080 --> 00:18:49,520 Speaker 5: You have a very non consensus call on what US 432 00:18:49,600 --> 00:18:52,760 Speaker 5: equity markets are implying about where treasure yields could go. 433 00:18:53,040 --> 00:18:54,080 Speaker 6: Yeah, seven percent? 434 00:18:54,200 --> 00:18:55,560 Speaker 7: Really seven percent? 435 00:18:55,680 --> 00:18:58,080 Speaker 11: So this is this is the analysis we said, Okay, 436 00:18:58,760 --> 00:19:02,800 Speaker 11: equities and the core sector is actually quite unlevered and 437 00:19:03,200 --> 00:19:07,080 Speaker 11: unusually healthy when it comes to leverage because all that 438 00:19:07,240 --> 00:19:08,480 Speaker 11: leverage sits on. 439 00:19:08,440 --> 00:19:09,600 Speaker 7: Government balance sheets. 440 00:19:09,600 --> 00:19:12,159 Speaker 11: So if you look at the leverage ratio between corporates 441 00:19:12,200 --> 00:19:14,560 Speaker 11: and the government, complete opposites. 442 00:19:14,920 --> 00:19:16,960 Speaker 7: And if you apply the math, so what we. 443 00:19:16,960 --> 00:19:21,480 Speaker 11: Found is that investors will pay a higher multiple if 444 00:19:21,800 --> 00:19:25,240 Speaker 11: leverage risk is lower. If you apply that math to 445 00:19:25,400 --> 00:19:28,720 Speaker 11: where bond yields are where the US government is it 446 00:19:28,840 --> 00:19:32,359 Speaker 11: spits out yields around seven percent, it's a much higher 447 00:19:32,440 --> 00:19:36,280 Speaker 11: level of return that investors need to see in an 448 00:19:36,359 --> 00:19:38,160 Speaker 11: environment where leverage. 449 00:19:37,840 --> 00:19:38,840 Speaker 7: Is so high. 450 00:19:39,160 --> 00:19:42,439 Speaker 5: This is following the logic that the math is the 451 00:19:42,480 --> 00:19:46,480 Speaker 5: same for US sovereign risks. I mean, it's it's the 452 00:19:46,480 --> 00:19:49,040 Speaker 5: back of the envelope. But this raises this real question, 453 00:19:49,200 --> 00:19:52,399 Speaker 5: which is, if there is a credit risk component to 454 00:19:52,600 --> 00:19:56,200 Speaker 5: US sovereign debt, how much does that impede the equity 455 00:19:56,240 --> 00:19:58,320 Speaker 5: story in the United States? Given that a lot of 456 00:19:58,320 --> 00:20:00,760 Speaker 5: guests who come on this show say once ten year 457 00:20:00,800 --> 00:20:03,439 Speaker 5: treasure yields hit five percent, forget about it, you're going 458 00:20:03,480 --> 00:20:04,760 Speaker 5: to see some losses in equities. 459 00:20:04,840 --> 00:20:06,439 Speaker 7: Yeah, I don't necessarily think so. 460 00:20:06,640 --> 00:20:08,760 Speaker 11: I mean, let's say we're kind of becoming more like 461 00:20:08,800 --> 00:20:13,320 Speaker 11: an emerging market. Sometimes emerging market equities do really well, 462 00:20:13,400 --> 00:20:16,800 Speaker 11: especially when they're unlevered and there's potential for growth. 463 00:20:17,080 --> 00:20:18,919 Speaker 7: And I think that's where we are today. So if 464 00:20:18,960 --> 00:20:20,040 Speaker 7: you look past. 465 00:20:19,920 --> 00:20:22,960 Speaker 11: Tariffs and you think about what the administration is trying 466 00:20:22,960 --> 00:20:25,800 Speaker 11: to do, we're trying to get America manufacturing again. We're 467 00:20:25,800 --> 00:20:29,399 Speaker 11: already seeing the seeds sewn for that story over the 468 00:20:29,480 --> 00:20:31,960 Speaker 11: last four to eight years. So I think that the 469 00:20:32,040 --> 00:20:35,320 Speaker 11: idea that stocks have to implode if yields hit five 470 00:20:35,359 --> 00:20:38,560 Speaker 11: percent is completely false. In fact, we've looked at a 471 00:20:38,560 --> 00:20:40,560 Speaker 11: lot of We've looked at this a lot of different ways. 472 00:20:40,640 --> 00:20:41,480 Speaker 7: I mean, think about it. 473 00:20:41,600 --> 00:20:46,320 Speaker 11: Yields right now are not unusually high. Seven percent sounds 474 00:20:46,400 --> 00:20:49,240 Speaker 11: really high, but it's you know, we've been there, We've 475 00:20:49,240 --> 00:20:51,679 Speaker 11: been higher in the past, and stocks have done okay, 476 00:20:51,760 --> 00:20:54,679 Speaker 11: especially dividend yielding stocks. So I think this is an 477 00:20:54,760 --> 00:20:57,640 Speaker 11: environment where we have to kind of recalibrate to what's 478 00:20:57,680 --> 00:20:58,479 Speaker 11: actually going on. 479 00:20:59,119 --> 00:21:00,399 Speaker 7: The US government. 480 00:21:00,560 --> 00:21:04,400 Speaker 11: Debt levels are at you know, off the grid. We've 481 00:21:04,480 --> 00:21:08,760 Speaker 11: never seen this before. We're seeing a closed economy. We're 482 00:21:08,800 --> 00:21:11,280 Speaker 11: seeing signs of a closed economy. We're seeing signs of inflation. 483 00:21:11,840 --> 00:21:13,800 Speaker 11: We want to see growth in the US. That's what 484 00:21:13,840 --> 00:21:16,440 Speaker 11: the policymakers are trying to get. And all of that 485 00:21:16,600 --> 00:21:19,440 Speaker 11: is likely to push up bond yields on the long end. 486 00:21:20,280 --> 00:21:20,560 Speaker 3: Yeah. 487 00:21:21,080 --> 00:21:21,240 Speaker 10: Right. 488 00:21:21,359 --> 00:21:23,840 Speaker 8: The administration, though, is targeting lower yields. If it hit 489 00:21:23,960 --> 00:21:25,959 Speaker 8: seven percent, does that mean they failed? 490 00:21:26,560 --> 00:21:28,200 Speaker 7: I don't know if it's failing. 491 00:21:28,280 --> 00:21:30,240 Speaker 11: I mean, I think it's just sort of we're all 492 00:21:30,280 --> 00:21:35,280 Speaker 11: anchoring to super low rates over the last twenty thirty years, 493 00:21:35,280 --> 00:21:38,160 Speaker 11: and they've been falling the entire time. But think about 494 00:21:38,160 --> 00:21:42,080 Speaker 11: where we are now. I mean, rate cycles last for decades. 495 00:21:42,359 --> 00:21:45,160 Speaker 11: We were in a multi decade period where interest rates 496 00:21:45,160 --> 00:21:47,200 Speaker 11: were falling, So I just think we should we just 497 00:21:47,240 --> 00:21:49,879 Speaker 11: sort of gear ourselves for the idea that interest rates 498 00:21:49,960 --> 00:21:53,800 Speaker 11: rising even from here is not necessarily anathema for stocks 499 00:21:54,119 --> 00:21:55,480 Speaker 11: from a policy perspective. 500 00:21:55,520 --> 00:21:58,120 Speaker 7: I mean, nobody's calling me about, you know, if rates 501 00:21:58,200 --> 00:21:59,320 Speaker 7: we hire or have we failed? 502 00:21:59,320 --> 00:22:01,760 Speaker 11: But I think that the idea is if rates move higher, 503 00:22:01,760 --> 00:22:06,120 Speaker 11: but growth is accompanying that rate move, that's not a failure. 504 00:22:06,200 --> 00:22:09,800 Speaker 11: It's actually kind of a more normal boom time economy. 505 00:22:10,080 --> 00:22:12,960 Speaker 11: And I just think we're so not used to that 506 00:22:13,040 --> 00:22:16,600 Speaker 11: because we haven't seen that in such a long time. 507 00:22:16,840 --> 00:22:18,760 Speaker 2: Why they're high that was important. Is it going to 508 00:22:18,760 --> 00:22:20,959 Speaker 2: be the boom time economy that takes rates higher or 509 00:22:20,960 --> 00:22:21,880 Speaker 2: is it going to be something else. 510 00:22:21,960 --> 00:22:24,240 Speaker 11: I think it's a whole bunch of things. The good 511 00:22:24,520 --> 00:22:29,080 Speaker 11: case is positive growth. The bad case is sovereign risk. 512 00:22:29,600 --> 00:22:32,800 Speaker 11: It's also a lack of demand for US treasuries because 513 00:22:32,840 --> 00:22:35,879 Speaker 11: the buyers, you know, foreign buyers have left the building 514 00:22:35,960 --> 00:22:37,520 Speaker 11: the FED used to buy treasuries. 515 00:22:37,680 --> 00:22:38,800 Speaker 7: I mean, one could argue. 516 00:22:38,560 --> 00:22:40,359 Speaker 11: That if we get to five percent on rates, the 517 00:22:40,359 --> 00:22:42,240 Speaker 11: FED will step back in and start buying. 518 00:22:42,840 --> 00:22:44,120 Speaker 7: But I think even there. 519 00:22:44,200 --> 00:22:47,159 Speaker 11: You know, we've got an environment where, you know, again 520 00:22:47,359 --> 00:22:50,560 Speaker 11: going back over time, we're just all looking at the 521 00:22:50,640 --> 00:22:53,359 Speaker 11: last ten to twenty years, and we're thinking that five 522 00:22:53,400 --> 00:22:55,119 Speaker 11: percent seems unsustainable. 523 00:22:55,200 --> 00:22:58,720 Speaker 7: Companies aren't geared for it. Companies are actually very geared 524 00:22:58,800 --> 00:23:00,480 Speaker 7: for a higher rate in vironment. 525 00:23:00,520 --> 00:23:03,680 Speaker 11: They've paid down debt, they've locked in very low fixed 526 00:23:03,800 --> 00:23:08,240 Speaker 11: rate obligations. Consumer balance sheets are pristine. I mean, for 527 00:23:08,280 --> 00:23:10,960 Speaker 11: the most part, you're seeing you know, you're seeing some 528 00:23:11,080 --> 00:23:13,879 Speaker 11: frame around the edges. But when you think about what 529 00:23:14,040 --> 00:23:17,080 Speaker 11: just happened, the government gave the private sector a whole 530 00:23:17,119 --> 00:23:19,880 Speaker 11: bunch of money. True, right, so what do you want 531 00:23:19,920 --> 00:23:22,080 Speaker 11: to buy the government or the private sector. 532 00:23:22,119 --> 00:23:23,720 Speaker 2: But when I hear you, Suviat, I hear you talking 533 00:23:23,720 --> 00:23:26,120 Speaker 2: about the potential for earnings, I don't hear you talking 534 00:23:26,119 --> 00:23:29,200 Speaker 2: about the potential for what people will pay for those earnings. 535 00:23:29,240 --> 00:23:31,879 Speaker 2: And when you talk about higher solvereign risk. When I 536 00:23:31,920 --> 00:23:33,880 Speaker 2: start to think about that, when I start to think 537 00:23:33,920 --> 00:23:36,320 Speaker 2: about what could happen to the self reign, that makes 538 00:23:36,320 --> 00:23:38,000 Speaker 2: me think that people won't be willing to pay for 539 00:23:38,040 --> 00:23:40,480 Speaker 2: earnings in the same way they were, particularly foreign investors. 540 00:23:40,520 --> 00:23:43,040 Speaker 2: We have built up an incredible long on dollar assets yeah, 541 00:23:43,119 --> 00:23:45,120 Speaker 2: over the last decade, what kind of multiply you put 542 00:23:45,160 --> 00:23:47,080 Speaker 2: in on that very optimistic count. 543 00:23:47,080 --> 00:23:50,199 Speaker 11: Look, it's yeah, it's it's tricky because I think the 544 00:23:50,320 --> 00:23:52,879 Speaker 11: S and P today is a very different animal than 545 00:23:52,920 --> 00:23:56,919 Speaker 11: it's been historically. So saying a fifteen multiple, which is 546 00:23:56,960 --> 00:23:59,440 Speaker 11: the long term average, you just slap that on and 547 00:23:59,480 --> 00:24:00,800 Speaker 11: that's what you get. 548 00:24:00,800 --> 00:24:02,440 Speaker 7: What you get. I don't think that's fair. 549 00:24:02,480 --> 00:24:05,000 Speaker 11: I think that's overly punitive because when you look at 550 00:24:05,000 --> 00:24:09,160 Speaker 11: the market today, it's you know, higher margin industries with 551 00:24:09,400 --> 00:24:12,920 Speaker 11: a lot of potential to become even even higher. When 552 00:24:12,920 --> 00:24:15,240 Speaker 11: you think about old economy sectors that can use a 553 00:24:15,280 --> 00:24:17,800 Speaker 11: lot of this automation and tools, and you know, little 554 00:24:17,840 --> 00:24:21,720 Speaker 11: AI sprinkled in to get more asset light and you 555 00:24:21,760 --> 00:24:25,520 Speaker 11: know kind of improve margins and improve earnings variability. So 556 00:24:25,640 --> 00:24:29,600 Speaker 11: I think a multiple of twenty seems completely reasonable. In fact, 557 00:24:29,640 --> 00:24:32,320 Speaker 11: we ran this analysis where we looked at the S 558 00:24:32,359 --> 00:24:36,680 Speaker 11: and P five hundred versus other global benchmarks. Granted the 559 00:24:36,720 --> 00:24:40,920 Speaker 11: SMP is trading in the stratosphere, everything else is super cheap. Now, 560 00:24:40,960 --> 00:24:46,240 Speaker 11: if you adjust for sector mix, if you adjust for earnings, volatility, leverage, 561 00:24:46,560 --> 00:24:51,080 Speaker 11: consumer aspects, you actually come to a conclusion that the 562 00:24:51,359 --> 00:24:55,760 Speaker 11: SMP isn't that expensive relative to these other benchmarks. 563 00:24:55,760 --> 00:24:58,520 Speaker 7: So I think by just sort of painting this. 564 00:24:59,080 --> 00:25:02,439 Speaker 11: Historical app everything has to trade at the same level. 565 00:25:02,480 --> 00:25:06,800 Speaker 11: I think we're sort of oversimplifying really important details about. 566 00:25:06,680 --> 00:25:10,320 Speaker 2: US corporate bigdose of optimism this morning from Savita Subramani, 567 00:25:10,359 --> 00:25:23,040 Speaker 2: but Bank for Americas VETA, thank you. Kathy Postchansik of Nationwide, writing, 568 00:25:23,160 --> 00:25:25,000 Speaker 2: we think the economy out of just one hundred and 569 00:25:25,040 --> 00:25:28,840 Speaker 2: twenty thousand jobs in April, Kathy joins us now to 570 00:25:28,840 --> 00:25:32,080 Speaker 2: discuss Kathy, welcome to the program. One twenty we at 571 00:25:32,160 --> 00:25:33,959 Speaker 2: risk of something much much lower. 572 00:25:34,800 --> 00:25:35,800 Speaker 12: Well, good morning, John. 573 00:25:36,600 --> 00:25:38,439 Speaker 1: Well, yeah, I do do think the risks are on 574 00:25:38,480 --> 00:25:42,560 Speaker 1: the downside, but it's a bit early to look for 575 00:25:42,640 --> 00:25:47,280 Speaker 1: the real negative numbers in payroll or they hit from 576 00:25:47,480 --> 00:25:50,760 Speaker 1: the government layoffs and the hit to healthcare and even 577 00:25:50,800 --> 00:25:51,880 Speaker 1: the cyclical sectors. 578 00:25:51,960 --> 00:25:54,280 Speaker 12: I think that's going to be a few months from now. 579 00:25:54,359 --> 00:25:58,080 Speaker 1: But we certainly have seen businesses just pull in their 580 00:25:58,200 --> 00:26:01,919 Speaker 1: hiring range. And given that we do see churn in 581 00:26:01,960 --> 00:26:04,080 Speaker 1: the labor market every month, the fact that you're just 582 00:26:04,160 --> 00:26:09,280 Speaker 1: seeing companies paralyzed right and not hiring, that does impart 583 00:26:09,320 --> 00:26:11,480 Speaker 1: a downward bias to the number. 584 00:26:11,680 --> 00:26:14,159 Speaker 5: Kathy, are there specifics that you're looking for with in 585 00:26:14,680 --> 00:26:17,600 Speaker 5: like under the hood of the headline number that's going 586 00:26:17,640 --> 00:26:20,080 Speaker 5: to be important to see. 587 00:26:20,920 --> 00:26:22,120 Speaker 12: Yeah, No, absolutely. 588 00:26:22,840 --> 00:26:26,440 Speaker 1: You know, one of the main engines of growth in 589 00:26:26,520 --> 00:26:30,800 Speaker 1: payrolls has really been the healthcare and a social assistance sector. 590 00:26:31,520 --> 00:26:33,280 Speaker 12: Those sectors are. 591 00:26:33,240 --> 00:26:40,200 Speaker 1: Very much related and dependent on federal government activity and support. 592 00:26:40,359 --> 00:26:43,639 Speaker 1: So we think those are areas that we'll start to see, 593 00:26:43,760 --> 00:26:46,720 Speaker 1: you know, some softening, and then that means overall non 594 00:26:46,760 --> 00:26:49,639 Speaker 1: farm payrolls you know, start the week, and really if 595 00:26:50,000 --> 00:26:51,600 Speaker 1: you looked at like kind of what we would call 596 00:26:51,680 --> 00:26:54,760 Speaker 1: the core cyplical sector, we had already seen the labor 597 00:26:54,800 --> 00:27:00,240 Speaker 1: market losing some steam, but overall healthcare, education, any even 598 00:27:00,400 --> 00:27:04,119 Speaker 1: the government sector was boosting the overall headline number. 599 00:27:04,280 --> 00:27:06,000 Speaker 5: Katy. We're going to get a host of other data 600 00:27:06,000 --> 00:27:10,400 Speaker 5: before that, including the Jolts information, which includes the quits rate. 601 00:27:10,480 --> 00:27:11,920 Speaker 6: We'll get some more consumer confidence. 602 00:27:11,960 --> 00:27:14,040 Speaker 5: As John was just mentioning, I'm just wondering from your 603 00:27:14,119 --> 00:27:17,399 Speaker 5: vantage point, as you look forward, how you reconcile the 604 00:27:17,440 --> 00:27:19,320 Speaker 5: gap that we have seen between the soft data and 605 00:27:19,359 --> 00:27:20,800 Speaker 5: the hard data. Do you agree with some of the 606 00:27:20,840 --> 00:27:23,679 Speaker 5: earlier people earlier guests on the show said it's probably 607 00:27:23,680 --> 00:27:25,679 Speaker 5: a four to six month lag before you see a 608 00:27:25,720 --> 00:27:30,320 Speaker 5: similar type of deterioration in the hard data. 609 00:27:30,440 --> 00:27:31,399 Speaker 12: Yeah, I would agree with that. 610 00:27:31,440 --> 00:27:33,159 Speaker 1: I mean, maybe i'd say a little shorter, you know, 611 00:27:33,200 --> 00:27:36,399 Speaker 1: three to six months, but by and large, you know, 612 00:27:37,080 --> 00:27:40,040 Speaker 1: the movement in the soft data has been so pronounced 613 00:27:40,440 --> 00:27:45,080 Speaker 1: you really have be careful of shrugging that off. Sometimes 614 00:27:45,119 --> 00:27:48,159 Speaker 1: it can be a little bit misleading, especially the confidence numbers. 615 00:27:48,200 --> 00:27:52,120 Speaker 1: But when you spoke about the conference board consumer confidence data, 616 00:27:52,160 --> 00:27:54,200 Speaker 1: when I'm going to zero in on is all the 617 00:27:54,280 --> 00:27:57,399 Speaker 1: labor market readings, and particularly I want to see the 618 00:27:57,520 --> 00:28:02,280 Speaker 1: expectations for more jobs or you know, jobs are fewer 619 00:28:02,640 --> 00:28:05,359 Speaker 1: out there, and looking at the labor differential that I 620 00:28:05,359 --> 00:28:10,320 Speaker 1: think is meaningful, and also consumers' expectations about income going forward. 621 00:28:10,720 --> 00:28:13,720 Speaker 1: Usually that survey shows is very like an American attitude 622 00:28:14,040 --> 00:28:16,720 Speaker 1: the future incomes will be up. What we've seen is 623 00:28:16,840 --> 00:28:19,919 Speaker 1: some breakdown on that and people becoming a little more 624 00:28:19,960 --> 00:28:26,400 Speaker 1: pessimistic about future income. That can obviously influence current consumer spending. 625 00:28:26,760 --> 00:28:29,639 Speaker 8: But at the moment we do see consumers also front loading, 626 00:28:29,680 --> 00:28:31,280 Speaker 8: wanting to get ahead of the tariffs. What does this 627 00:28:31,359 --> 00:28:37,920 Speaker 8: mean for spending at the second half of the year, Kathy. 628 00:28:36,600 --> 00:28:39,160 Speaker 12: So the data very skewed by the terriffs. 629 00:28:39,160 --> 00:28:41,120 Speaker 1: You know, you were talking about Mike was talking about 630 00:28:41,120 --> 00:28:41,840 Speaker 1: the import data. 631 00:28:42,320 --> 00:28:43,720 Speaker 12: You know, yes, imporart is going. 632 00:28:43,720 --> 00:28:48,920 Speaker 1: To drag on GDP, but consumption is going to keep 633 00:28:48,960 --> 00:28:51,120 Speaker 1: it elevated more than it otherwise would be. 634 00:28:51,160 --> 00:28:52,000 Speaker 12: So it's very skewed. 635 00:28:52,360 --> 00:28:55,200 Speaker 1: But that's pulling forward means it's just a lot less 636 00:28:55,240 --> 00:28:57,720 Speaker 1: consumption in the second half of the year, regardless of 637 00:28:57,800 --> 00:28:59,720 Speaker 1: what happens on the teriff Fright, Like, even if there 638 00:28:59,800 --> 00:29:02,760 Speaker 1: was if you bought an auto or a big ticket item, 639 00:29:03,000 --> 00:29:04,320 Speaker 1: you're not going to be buying one. 640 00:29:04,200 --> 00:29:05,160 Speaker 12: In the second half of the year. 641 00:29:05,160 --> 00:29:08,160 Speaker 1: So that's certainly going to be a negative for consumer 642 00:29:08,200 --> 00:29:10,400 Speaker 1: spending in GDP growth in the second half of the year. 643 00:29:10,640 --> 00:29:12,360 Speaker 8: John has broughtup this point a lot. If you're going 644 00:29:12,400 --> 00:29:14,520 Speaker 8: out and you're spending on big ticket items, say a 645 00:29:14,560 --> 00:29:18,240 Speaker 8: car or some sort of suv, are you actually nervous 646 00:29:18,320 --> 00:29:19,720 Speaker 8: about losing your job? 647 00:29:21,720 --> 00:29:24,160 Speaker 12: Well, it's a great question. I would say no. 648 00:29:25,200 --> 00:29:27,640 Speaker 1: I think that you know, buying lads to those are 649 00:29:27,680 --> 00:29:29,240 Speaker 1: people who are just trying to get ahead of the 650 00:29:29,240 --> 00:29:32,240 Speaker 1: price increase. I think if you're worried about losing your job, 651 00:29:32,280 --> 00:29:34,400 Speaker 1: you probably hold on to your current car and just 652 00:29:34,480 --> 00:29:37,240 Speaker 1: run it as long as you can, or looked to 653 00:29:37,280 --> 00:29:39,520 Speaker 1: the used car market, which that's also going to feel 654 00:29:39,560 --> 00:29:42,080 Speaker 1: upward pressure right in prices. We saw that during COVID, 655 00:29:42,400 --> 00:29:44,600 Speaker 1: So I think that's a really good point. And even 656 00:29:44,640 --> 00:29:47,000 Speaker 1: in you know, our outlook, and I would say the 657 00:29:47,080 --> 00:29:51,479 Speaker 1: vast majority of others I've seen, you know it's going 658 00:29:51,520 --> 00:29:53,680 Speaker 1: to either be a borderline recession or if you get 659 00:29:53,680 --> 00:29:55,080 Speaker 1: a recession, at this point, most of. 660 00:29:55,080 --> 00:29:55,959 Speaker 12: Us thinking mild. 661 00:29:56,280 --> 00:29:58,520 Speaker 1: That means the unemploym rate goes up to five percent, 662 00:29:58,600 --> 00:30:02,600 Speaker 1: that's still overall all historically pretty good labor market. But 663 00:30:02,600 --> 00:30:05,600 Speaker 1: it's this uncertainty that is really I think killing the 664 00:30:05,640 --> 00:30:06,640 Speaker 1: economy right now. 665 00:30:06,960 --> 00:30:07,280 Speaker 3: Kathy. 666 00:30:07,320 --> 00:30:09,960 Speaker 2: As we've seen, the Chairman of the Federal Reserve has 667 00:30:10,040 --> 00:30:13,760 Speaker 2: chosen to prioritize anchoring inflation expectations. I just wonder from 668 00:30:13,800 --> 00:30:16,640 Speaker 2: your perspective, how you imagine that might shape his approach 669 00:30:16,680 --> 00:30:20,720 Speaker 2: the next Week's may think, yeah. 670 00:30:20,560 --> 00:30:23,040 Speaker 1: He's going to have to walk a tightrope as many 671 00:30:23,080 --> 00:30:25,680 Speaker 1: times he does, especially during the press conference, but. 672 00:30:26,000 --> 00:30:27,720 Speaker 12: I don't think he'll back away from that. 673 00:30:27,800 --> 00:30:30,440 Speaker 1: I know some others have suggest been a little more 674 00:30:30,480 --> 00:30:34,000 Speaker 1: devish right, some FED officials, but I think he'll maintain 675 00:30:34,080 --> 00:30:36,920 Speaker 1: this idea the inflation expectations. How the worst outcome for 676 00:30:37,000 --> 00:30:40,360 Speaker 1: them is it becomes embedded and becomes more persistent. One 677 00:30:40,360 --> 00:30:42,800 Speaker 1: of the things I worry about is the roll out 678 00:30:42,840 --> 00:30:44,600 Speaker 1: of the terriffs, Like we're still waiting to see if 679 00:30:44,640 --> 00:30:48,000 Speaker 1: there's going to be additional sectoral tariffs. The longer that 680 00:30:48,040 --> 00:30:52,200 Speaker 1: process gets elongated, the more inflation shock can be persistent. 681 00:30:52,400 --> 00:30:52,600 Speaker 10: Right. 682 00:30:53,000 --> 00:30:54,840 Speaker 12: I'd almost rather have all the terriffs at once. 683 00:30:54,920 --> 00:30:56,680 Speaker 1: I mean, it's not good for the economy, but in 684 00:30:56,760 --> 00:30:59,240 Speaker 1: terms of inflation, it is really hard to gauge. 685 00:30:59,280 --> 00:31:02,440 Speaker 12: Then what's you know, transitory verse persistent. 686 00:31:03,080 --> 00:31:05,000 Speaker 2: Kathy, what's your take on some of the pressure that's 687 00:31:05,040 --> 00:31:07,160 Speaker 2: come from the President on the chairman of the Federal Serve? 688 00:31:07,200 --> 00:31:09,239 Speaker 2: How does that reshape the optics of them trying to 689 00:31:09,240 --> 00:31:10,720 Speaker 2: ease sometime soon? 690 00:31:13,720 --> 00:31:16,920 Speaker 1: You know, I think Chairman Pow would say he ignores that, 691 00:31:17,040 --> 00:31:19,360 Speaker 1: and they're a political and they're only looking the data, 692 00:31:19,440 --> 00:31:21,640 Speaker 1: and I think by and large data is the case. 693 00:31:22,120 --> 00:31:24,480 Speaker 1: I just worry a little bit about the optics for 694 00:31:24,800 --> 00:31:27,520 Speaker 1: market and investors how they interpret that. 695 00:31:28,080 --> 00:31:31,480 Speaker 12: And it could be that you know, they. 696 00:31:31,240 --> 00:31:35,080 Speaker 1: Ease for the right reasons, but the market second guesses 697 00:31:35,120 --> 00:31:36,800 Speaker 1: at and that would be bad, right, And then you 698 00:31:36,840 --> 00:31:39,560 Speaker 1: get of long term interest rates rising by short term 699 00:31:39,560 --> 00:31:43,680 Speaker 1: interest rates are lower because of inflation expectations rising, or 700 00:31:43,840 --> 00:31:46,640 Speaker 1: an extra term premia embedded on the long end. 701 00:31:47,160 --> 00:31:49,040 Speaker 2: Kathy got to leave it there, Kathy pill chance it 702 00:31:49,120 --> 00:31:54,000 Speaker 2: that of nationwide. This is the Bloomberg Seventans podcast, bringing 703 00:31:54,080 --> 00:31:57,680 Speaker 2: you the best in markets, economics, an giopolitics. You can 704 00:31:57,720 --> 00:32:00,479 Speaker 2: watch the show live on Bloomberg TV we tendings from 705 00:32:00,520 --> 00:32:03,800 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 706 00:32:03,840 --> 00:32:07,000 Speaker 2: on Apple, Spotify or anywhere else you listen, and as 707 00:32:07,040 --> 00:32:09,920 Speaker 2: always on the Bloomberg Terminal and the Bloomberg Business app 708 00:32:13,880 --> 00:32:14,280 Speaker 10: M HM