WEBVTT - Single Best Idea with Tom Keene: Mike Green & Frances Donald

0:00:02.520 --> 0:00:16.280
<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news.

0:00:14.640 --> 0:00:16.960
<v Speaker 2>A single best idea on a FED day, I think

0:00:17.000 --> 0:00:19.159
<v Speaker 2>more than any other FED day that we've done. In

0:00:19.160 --> 0:00:23.360
<v Speaker 2>the morning. We had less conversation on the FED. It's

0:00:23.440 --> 0:00:26.760
<v Speaker 2>just the confusion that's out there. And this keyword uncertainty.

0:00:27.360 --> 0:00:30.160
<v Speaker 2>We covered it yesterday. I will be honest, I can't

0:00:30.160 --> 0:00:33.120
<v Speaker 2>remember the guest, but we had a brilliant discussion of

0:00:33.600 --> 0:00:41.800
<v Speaker 2>Nightian uncertainty. Nightian k and Ight Nightian Uncertainty is Frank Knight,

0:00:42.000 --> 0:00:44.640
<v Speaker 2>nineteen twenty one. It was his thesis I believe at

0:00:44.680 --> 0:00:48.360
<v Speaker 2>Chicago a million years ago, and it's a rite of passage.

0:00:48.400 --> 0:00:50.879
<v Speaker 2>You have to read the thing. It's my recollection. It's

0:00:50.920 --> 0:00:54.600
<v Speaker 2>forty fifty sixty pages, but you have to read his

0:00:54.720 --> 0:00:57.760
<v Speaker 2>thesis on Nightian uncertainty, which is sort of a reachable,

0:00:58.320 --> 0:01:02.520
<v Speaker 2>touchable uncertainty even though you can't see or touch the

0:01:02.640 --> 0:01:05.480
<v Speaker 2>uncertainty is a simple way to put it. That's where

0:01:05.520 --> 0:01:08.560
<v Speaker 2>we are right now, particularly given the trade war. A

0:01:08.600 --> 0:01:12.320
<v Speaker 2>lot of good conversations today. We started strong, huge response,

0:01:12.400 --> 0:01:16.200
<v Speaker 2>Thank you so much out on YouTube to Mike Green,

0:01:16.600 --> 0:01:20.959
<v Speaker 2>five Star, Morning Star, High Yield Fun Mike Green with

0:01:21.000 --> 0:01:24.800
<v Speaker 2>a lot of really good discussions about active versus passive.

0:01:25.000 --> 0:01:27.880
<v Speaker 2>Here's Mike Green on your retirement choice.

0:01:28.040 --> 0:01:30.520
<v Speaker 3>The quick answer is there is no right percentage, right,

0:01:30.560 --> 0:01:33.679
<v Speaker 3>It's going to depend on everyone's individual component. The key

0:01:33.720 --> 0:01:36.080
<v Speaker 3>thing that I would highlight is that when you think

0:01:36.120 --> 0:01:39.280
<v Speaker 3>about investing for retirement, when you think about those, focus

0:01:39.319 --> 0:01:42.640
<v Speaker 3>on what you need, not what your neighbor wants. Right,

0:01:42.680 --> 0:01:44.720
<v Speaker 3>And this is a really key component. We tend to

0:01:44.760 --> 0:01:47.400
<v Speaker 3>get ourselves caught up in the fomo type framework. We're

0:01:47.400 --> 0:01:49.760
<v Speaker 3>in an environment in which you can if you're worried

0:01:49.760 --> 0:01:52.280
<v Speaker 3>about inflation, you can buy real yielding tips with a

0:01:52.320 --> 0:01:55.800
<v Speaker 3>positive yield for the first time in over a decade. Right.

0:01:55.960 --> 0:01:57.880
<v Speaker 3>That is something that I would argue people are ignoring.

0:01:57.960 --> 0:02:00.920
<v Speaker 3>I would broadly suggest that income in a lot of

0:02:00.920 --> 0:02:03.800
<v Speaker 3>ways because it has what I refer to as indogenous liquidity,

0:02:04.000 --> 0:02:07.640
<v Speaker 3>significant coupon payments and an ultimate payment of at maturity.

0:02:08.280 --> 0:02:12.480
<v Speaker 3>Has very different characteristics than the Ponzi like characteristics associated

0:02:12.480 --> 0:02:15.000
<v Speaker 3>with equities, where you are always getting your value from

0:02:15.040 --> 0:02:17.840
<v Speaker 3>what somebody else pays, and so those are ways that

0:02:17.880 --> 0:02:20.120
<v Speaker 3>you can separate yourselves. They're not immune, I have to

0:02:20.120 --> 0:02:22.760
<v Speaker 3>be clear, this is a systemic issue, but they are

0:02:22.800 --> 0:02:25.679
<v Speaker 3>a better way to think about the opportunity.

0:02:25.280 --> 0:02:29.280
<v Speaker 2>The forever debate about the certain cash flows of fixed

0:02:29.280 --> 0:02:34.120
<v Speaker 2>income versus a less certain equity world. Mike Green. There

0:02:34.560 --> 0:02:37.760
<v Speaker 2>Francis Donald is with RBC Capital Markets. She gave us

0:02:37.760 --> 0:02:41.680
<v Speaker 2>a traditional FED coverage is best she could. Here's Francis

0:02:41.720 --> 0:02:44.880
<v Speaker 2>Donald of RBC on our labor economy.

0:02:45.000 --> 0:02:47.760
<v Speaker 1>The nature of this job market is changing. We have

0:02:47.800 --> 0:02:49.960
<v Speaker 1>the most amount of those over the age of sixty

0:02:50.000 --> 0:02:52.440
<v Speaker 1>five the US has ever seen. Over one in five

0:02:52.480 --> 0:02:55.280
<v Speaker 1>Americans is over the age of sixty five, most amount

0:02:55.320 --> 0:02:58.160
<v Speaker 1>of retirees ever and so economists are scratching their head.

0:02:58.240 --> 0:03:01.760
<v Speaker 1>Why are higher rates down but also fire rates down

0:03:01.840 --> 0:03:04.400
<v Speaker 1>and quick rates down. This is a job market that

0:03:04.480 --> 0:03:08.600
<v Speaker 1>is acclimating to a demographic bus that's occurring in real time.

0:03:09.000 --> 0:03:11.960
<v Speaker 1>Demographics are traditionally something that you look at when you're

0:03:12.040 --> 0:03:14.160
<v Speaker 1>five or ten year forecast when you're forced to do

0:03:14.200 --> 0:03:17.280
<v Speaker 1>something that difficult. They're not something we take to hear now.

0:03:17.560 --> 0:03:19.880
<v Speaker 1>And this is why when I talk about uncertainty, a

0:03:19.880 --> 0:03:21.960
<v Speaker 1>lot of folks are saying we're going to get more

0:03:21.960 --> 0:03:24.520
<v Speaker 1>certainty on trade in the coming week. But a lot

0:03:24.520 --> 0:03:26.240
<v Speaker 1>of the customers, a lot of the folks that we

0:03:26.280 --> 0:03:28.079
<v Speaker 1>talk to in the United States are also paying very

0:03:28.080 --> 0:03:31.399
<v Speaker 1>close attention to immigration policies that come through and how

0:03:31.440 --> 0:03:34.560
<v Speaker 1>this government is going to support or not support what

0:03:34.720 --> 0:03:37.680
<v Speaker 1>is a very shifting labor dynamic. Now Federal Reserve is

0:03:37.720 --> 0:03:39.680
<v Speaker 1>going to have to talk about this at some point,

0:03:39.800 --> 0:03:42.240
<v Speaker 1>probably not today, when they're looking at something like a

0:03:42.360 --> 0:03:44.960
<v Speaker 1>high fours unemployment rate and that's going to be enough

0:03:44.960 --> 0:03:45.920
<v Speaker 1>for them to start cutting.

0:03:46.320 --> 0:03:49.800
<v Speaker 2>Just brilliant Francis Donald there on what the media doesn't

0:03:49.800 --> 0:03:56.120
<v Speaker 2>talk about enough, which is demographic economics. Angus Madison owned

0:03:56.160 --> 0:03:59.520
<v Speaker 2>the high ground one this I really can't and Robert Fogel,

0:03:59.560 --> 0:04:03.800
<v Speaker 2>I believe it. Penn at University of Pennsylvania, the laureate.

0:04:04.360 --> 0:04:07.360
<v Speaker 2>I really can't say enough how we ignored our peril

0:04:08.080 --> 0:04:11.520
<v Speaker 2>the demographics the makeup of any society, whether it's China

0:04:11.560 --> 0:04:15.000
<v Speaker 2>or the US, whatever. But that was just brilliant. Francis

0:04:15.040 --> 0:04:19.520
<v Speaker 2>Donald there on an Aging America. We're on YouTube, some

0:04:19.600 --> 0:04:22.600
<v Speaker 2>real benchmarks today for us. Thank you so much for

0:04:22.680 --> 0:04:26.960
<v Speaker 2>subscribing to Bloomberg podcasts out on YouTube. It is the

0:04:27.000 --> 0:04:30.599
<v Speaker 2>foundation of our future. Really appreciate that. And out on

0:04:30.680 --> 0:04:41.600
<v Speaker 2>YouTube podcasts. This is a single best idea