1 00:00:02,360 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,840 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 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,200 Speaker 2: Terminal and the Bloomberg Business app. We begin this hour 10 00:00:37,240 --> 00:00:40,080 Speaker 2: Stops pulling back following the biggest one day rally since May. 11 00:00:40,360 --> 00:00:43,160 Speaker 2: Cameron Dawson of neweged Wealth, writing, for now, we see 12 00:00:43,200 --> 00:00:48,040 Speaker 2: recent market volatility as a positioning evaluation recalibration, not a 13 00:00:48,080 --> 00:00:50,560 Speaker 2: growth scare. Cameron joins us now for more camera. Good morning. 14 00:00:51,120 --> 00:00:53,880 Speaker 2: It did not feel like a positioning recalibration through much 15 00:00:53,920 --> 00:00:56,120 Speaker 2: of last week. All that volatility, and we were down 16 00:00:56,200 --> 00:00:59,320 Speaker 2: just zero zero point one percent on the SMP. What 17 00:00:59,360 --> 00:01:00,000 Speaker 2: was last week? 18 00:01:00,200 --> 00:01:03,200 Speaker 3: Well, at the beginning of every bout of market volatility, 19 00:01:03,200 --> 00:01:06,080 Speaker 3: we always ask ourselves, did anything happen that would cause 20 00:01:06,120 --> 00:01:09,399 Speaker 3: EPs or GDP estimates to get revised lower. If the 21 00:01:09,480 --> 00:01:12,480 Speaker 3: answer is no, it shortens shallow. If the answer is yes, 22 00:01:12,600 --> 00:01:15,760 Speaker 3: it's typically deeper and more protracted. And so as we 23 00:01:15,800 --> 00:01:18,280 Speaker 3: looked at the outlook over the course of last week, 24 00:01:18,360 --> 00:01:20,560 Speaker 3: we thought that the answer to that growth question was no. 25 00:01:20,720 --> 00:01:22,840 Speaker 3: And the way that we got to that is looking 26 00:01:22,840 --> 00:01:26,000 Speaker 3: at something like highield spreads not blowing out. Highild spreads 27 00:01:26,000 --> 00:01:27,840 Speaker 3: are at three hundred and forty eight basis points. 28 00:01:27,880 --> 00:01:29,040 Speaker 4: This is not a bond. 29 00:01:28,800 --> 00:01:31,479 Speaker 3: Market that is freaking out about growth. You also look 30 00:01:31,520 --> 00:01:37,320 Speaker 3: at market leadership. You've had really strong leadership out of industrials, energy, materials, financials, 31 00:01:37,600 --> 00:01:40,040 Speaker 3: all areas of the market that would not be rallying 32 00:01:40,120 --> 00:01:42,720 Speaker 3: if we were really concerned about growth. So the net 33 00:01:42,760 --> 00:01:45,920 Speaker 3: of everything is that it seems to be more about positioning, valuation, 34 00:01:46,160 --> 00:01:49,360 Speaker 3: and sentiment recalibration, not a deeper growth scare Well's. 35 00:01:49,120 --> 00:01:51,360 Speaker 2: Stay on valuation. Could it have a damping of FANCTOM 36 00:01:51,440 --> 00:01:53,440 Speaker 2: valuations through the year ahead. 37 00:01:53,560 --> 00:01:56,120 Speaker 3: Yeah, I think that that is probably the biggest risk. 38 00:01:56,440 --> 00:01:58,440 Speaker 3: If we all sit back and think about all the 39 00:01:58,560 --> 00:02:01,360 Speaker 3: justifications as to why the US equity market should trade 40 00:02:01,400 --> 00:02:04,040 Speaker 3: it twenty two times forward or thirty eight times on 41 00:02:04,120 --> 00:02:05,040 Speaker 3: the cape ratio. 42 00:02:05,240 --> 00:02:07,600 Speaker 4: The argument went that because. 43 00:02:07,200 --> 00:02:09,359 Speaker 3: The components of the S and P five hundred are 44 00:02:09,400 --> 00:02:12,079 Speaker 3: that much more quality than they used to be, because 45 00:02:12,120 --> 00:02:14,320 Speaker 3: of the higher weighting in tech, you have things like 46 00:02:14,400 --> 00:02:17,360 Speaker 3: higher free cash flow margins, higher return on invested capital. 47 00:02:17,639 --> 00:02:19,399 Speaker 4: But if we're starting to ding. 48 00:02:19,320 --> 00:02:21,760 Speaker 3: The outlook for free cash flow margins for the big 49 00:02:21,840 --> 00:02:25,680 Speaker 3: hyper scalers, lower potentially return on invested capital for the 50 00:02:25,720 --> 00:02:29,440 Speaker 3: software names, given AI uncertainty, it raises the question of 51 00:02:29,680 --> 00:02:33,760 Speaker 3: is that justification forever higher valuations something that we should 52 00:02:33,760 --> 00:02:34,320 Speaker 3: push back on. 53 00:02:34,480 --> 00:02:36,440 Speaker 5: Well, and this is the reason why, and we'll get 54 00:02:36,480 --> 00:02:38,799 Speaker 5: to the fundamentals in just a minute. People are saying 55 00:02:38,880 --> 00:02:41,760 Speaker 5: it feels more than just a violent shift in positioning 56 00:02:41,800 --> 00:02:44,919 Speaker 5: that can really revert back. There has been a change 57 00:02:44,960 --> 00:02:47,680 Speaker 5: in the way people view tech companies, how cash rich 58 00:02:47,760 --> 00:02:49,960 Speaker 5: they are, how much they can keep giving dividends, and 59 00:02:49,960 --> 00:02:52,320 Speaker 5: how much they can keep doing share bad buybacks, which 60 00:02:52,320 --> 00:02:55,200 Speaker 5: have been a huge tailwind to this stock market. At 61 00:02:55,200 --> 00:02:58,040 Speaker 5: what point do you see the technicals really turning against 62 00:02:58,240 --> 00:02:59,400 Speaker 5: the US equity market? 63 00:02:59,520 --> 00:03:01,560 Speaker 3: Yeah, I think think it's first important to note that 64 00:03:01,639 --> 00:03:05,040 Speaker 3: at the peak of the growth trade back in November 65 00:03:05,080 --> 00:03:08,240 Speaker 3: of last year, you had max positioning and megacap growth 66 00:03:08,400 --> 00:03:11,440 Speaker 3: and max underweight positioning and cyclical so there has been 67 00:03:11,480 --> 00:03:15,280 Speaker 3: a big, huge positioning recalibration. I think your questions are 68 00:03:15,360 --> 00:03:18,080 Speaker 3: really important because the whole notion is that these are 69 00:03:18,400 --> 00:03:21,280 Speaker 3: very capital late businesses that don't need a lot of 70 00:03:21,280 --> 00:03:24,040 Speaker 3: incremental investment. And if you look at that over the past, 71 00:03:24,080 --> 00:03:26,160 Speaker 3: what you saw is that all of these companies are 72 00:03:26,160 --> 00:03:29,080 Speaker 3: able to grow earnings by double digits without having to 73 00:03:29,120 --> 00:03:29,919 Speaker 3: spend any money. 74 00:03:30,000 --> 00:03:31,120 Speaker 4: That was incredible. 75 00:03:31,280 --> 00:03:33,839 Speaker 3: But now they're growing earnings by double digits, but they're 76 00:03:33,840 --> 00:03:36,640 Speaker 3: having to spend hundreds of billions of dollars to. 77 00:03:36,640 --> 00:03:37,720 Speaker 4: Do so well. 78 00:03:37,760 --> 00:03:40,080 Speaker 5: This raises the issue of the fundamentals, right, And we've 79 00:03:40,120 --> 00:03:41,840 Speaker 5: seen this broadening out trade and you think that it 80 00:03:41,920 --> 00:03:42,720 Speaker 5: might might have legs. 81 00:03:42,720 --> 00:03:44,560 Speaker 4: We see the equal Weight reaching all time. 82 00:03:44,360 --> 00:03:46,960 Speaker 5: Highs even amid the carnage that we're seeing in the 83 00:03:47,160 --> 00:03:48,120 Speaker 5: SaaS coppolps. 84 00:03:48,200 --> 00:03:49,480 Speaker 4: I think I said that correctly. 85 00:03:49,840 --> 00:03:52,720 Speaker 5: Going forward, how much is that broadening out and frankly, 86 00:03:52,760 --> 00:03:55,760 Speaker 5: the entire index going high or crimped by the story 87 00:03:55,760 --> 00:03:58,200 Speaker 5: that's taking place with a fundamental shift in the way 88 00:03:58,200 --> 00:04:02,200 Speaker 5: that tech companies are being valued in front are performing 89 00:04:02,320 --> 00:04:03,720 Speaker 5: and existing in this world. 90 00:04:03,840 --> 00:04:04,760 Speaker 4: Yeah, I think It's. 91 00:04:04,600 --> 00:04:07,360 Speaker 3: Such a fascinating point because if you think about the 92 00:04:07,520 --> 00:04:11,080 Speaker 3: driver of all of this growth within tech spending, which 93 00:04:11,120 --> 00:04:15,160 Speaker 3: is also leading into growth within value sectors, how much 94 00:04:15,200 --> 00:04:17,799 Speaker 3: of this is dependent on some of these software names 95 00:04:17,839 --> 00:04:21,120 Speaker 3: continuing to make investments that would be demand of AI. 96 00:04:21,279 --> 00:04:23,120 Speaker 4: So I think some of this is all just a 97 00:04:23,160 --> 00:04:23,960 Speaker 4: circular reference. 98 00:04:24,000 --> 00:04:27,599 Speaker 3: If we start questioning the KAPEX growth going forward, does 99 00:04:27,640 --> 00:04:30,039 Speaker 3: that also question some of these value rallies that we 100 00:04:30,120 --> 00:04:32,160 Speaker 3: have seen lead the market since November? 101 00:04:32,360 --> 00:04:34,520 Speaker 6: You also talk about how these software companies are the 102 00:04:34,560 --> 00:04:36,119 Speaker 6: ones that are going to be the ones to lead 103 00:04:36,240 --> 00:04:39,000 Speaker 6: when it comes to AI and are the ones that 104 00:04:39,040 --> 00:04:40,919 Speaker 6: have the most to gain. So would this be a 105 00:04:40,960 --> 00:04:42,560 Speaker 6: moment to step in and get. 106 00:04:42,400 --> 00:04:45,400 Speaker 4: Some of those stocks after the accompli. 107 00:04:44,920 --> 00:04:47,160 Speaker 3: Of potentially the most to gain, they have the most 108 00:04:47,200 --> 00:04:49,880 Speaker 3: to lose. But I think if applied properly, they actually 109 00:04:49,880 --> 00:04:51,440 Speaker 3: have a lot to gain given the fact that they 110 00:04:51,480 --> 00:04:55,800 Speaker 3: typically have high headcount, they typically have very strong customer relationships. 111 00:04:55,839 --> 00:04:58,080 Speaker 3: But if they don't move quickly on AI, then they 112 00:04:58,080 --> 00:05:00,320 Speaker 3: have a lot to lose. I think it's important with 113 00:05:00,360 --> 00:05:02,360 Speaker 3: the software names to take a step back and think 114 00:05:02,360 --> 00:05:05,800 Speaker 3: about the technicals because they are very, very oversold. If 115 00:05:05,800 --> 00:05:07,640 Speaker 3: you look at them on a daily, they're oversold. On 116 00:05:07,720 --> 00:05:10,280 Speaker 3: a weekly they're oversold. If you look at them, they're 117 00:05:10,320 --> 00:05:13,080 Speaker 3: now trading at the two hundred week moving average that 118 00:05:13,080 --> 00:05:15,640 Speaker 3: would support back in twenty twenty five, back in twenty 119 00:05:15,680 --> 00:05:18,000 Speaker 3: twenty two, So that would suggest that you have some 120 00:05:18,160 --> 00:05:20,880 Speaker 3: kind of bounce. I think the big question is can 121 00:05:21,400 --> 00:05:24,760 Speaker 3: software regain its leadership coming out of this bounce. I 122 00:05:24,760 --> 00:05:27,279 Speaker 3: think that's a lot more in question, just simply because 123 00:05:27,279 --> 00:05:30,039 Speaker 3: there's all these doubts of things that effectively software companies 124 00:05:30,080 --> 00:05:33,400 Speaker 3: can't disprove at this point, because it's ai risks that 125 00:05:33,480 --> 00:05:36,080 Speaker 3: could be out one, two, three, four years in the future. 126 00:05:36,160 --> 00:05:38,080 Speaker 2: Look at where the leadership's coming from right now. Regional 127 00:05:38,080 --> 00:05:40,800 Speaker 2: bank stocks up every single day through last week on 128 00:05:40,839 --> 00:05:42,880 Speaker 2: the week, up by seven percent, and it wasn't just 129 00:05:42,880 --> 00:05:45,559 Speaker 2: the small names bank for America City JP Morgano somewhere 130 00:05:45,560 --> 00:05:47,640 Speaker 2: between five to six percent through last week. 131 00:05:47,760 --> 00:05:50,159 Speaker 4: What do you think that speaks to deregulation. 132 00:05:50,760 --> 00:05:53,440 Speaker 3: I think it speaks to this question if banks would 133 00:05:53,480 --> 00:05:55,920 Speaker 3: be allowed to grow their balance sheets further, if they're 134 00:05:55,960 --> 00:05:58,919 Speaker 3: allowed to take on more leverage. I think it's fascinating 135 00:05:58,920 --> 00:06:01,240 Speaker 3: that for the banks they have been growing earnings over 136 00:06:01,240 --> 00:06:03,240 Speaker 3: the course of the last two years at a faster 137 00:06:03,360 --> 00:06:06,960 Speaker 3: pace than even prior to the Great Financial Crisis, which 138 00:06:07,040 --> 00:06:10,479 Speaker 3: just suggests that banks have been in an extraordinary period 139 00:06:10,560 --> 00:06:13,240 Speaker 3: of operating leverage as they cut costs and still see 140 00:06:13,279 --> 00:06:15,760 Speaker 3: really strong top line growth. But it also, i think 141 00:06:15,839 --> 00:06:18,760 Speaker 3: is a reflection of this cyclical optimism, because just as 142 00:06:18,760 --> 00:06:21,760 Speaker 3: you saw the regional banks rallying hard, you also saw 143 00:06:21,800 --> 00:06:24,680 Speaker 3: things like transportation stocks rallying hard. And if you look 144 00:06:24,680 --> 00:06:27,799 Speaker 3: at everything within the transportation side of things, you're seeing 145 00:06:27,839 --> 00:06:30,800 Speaker 3: better shipping rates, you're seeing better rejection rates coming out 146 00:06:30,839 --> 00:06:34,000 Speaker 3: of the truckers, You're seeing a demand start to really 147 00:06:34,120 --> 00:06:38,120 Speaker 3: cause a capacity tightening, which all suggests that there's cyclical 148 00:06:38,240 --> 00:06:41,000 Speaker 3: underpinning of a little bit of a fire being lit 149 00:06:41,040 --> 00:06:42,000 Speaker 3: in that part of the market. 150 00:06:42,040 --> 00:06:43,839 Speaker 4: The question, of course, is can it continue. 151 00:06:43,960 --> 00:06:46,039 Speaker 2: Well, let's talk more about that at the index level. 152 00:06:46,080 --> 00:06:48,080 Speaker 2: This is something Jim Reid of Deutsche Bank has raised 153 00:06:48,120 --> 00:06:50,279 Speaker 2: many other people upon during the same question. At the moment, 154 00:06:50,480 --> 00:06:52,640 Speaker 2: can you have the kind of vicious rotation we're having 155 00:06:52,960 --> 00:06:55,720 Speaker 2: over a prolonged period without index level stress. 156 00:06:56,520 --> 00:06:59,000 Speaker 3: If you think of times like twenty twenty two or 157 00:06:59,040 --> 00:07:01,440 Speaker 3: going back to two th thousand to two thousand and two, 158 00:07:01,480 --> 00:07:04,080 Speaker 3: the answer would be no. If the largest weights in 159 00:07:04,120 --> 00:07:07,480 Speaker 3: the market are continuing to come under significant pressure and 160 00:07:07,640 --> 00:07:11,240 Speaker 3: really leading the market lower, then it's really hard for 161 00:07:11,400 --> 00:07:13,720 Speaker 3: names that are a much smaller portion of the market 162 00:07:13,800 --> 00:07:16,640 Speaker 3: to drag the overall index higher. So you could be 163 00:07:16,680 --> 00:07:20,160 Speaker 3: in an environment where index level returns are kind of 164 00:07:20,200 --> 00:07:23,080 Speaker 3: shoulder shrugging and ho hum, but you have very strong 165 00:07:23,120 --> 00:07:25,560 Speaker 3: returns and pockets of the market that are much smaller. 166 00:07:25,720 --> 00:07:27,560 Speaker 3: I think it's an important point as well that you're 167 00:07:27,560 --> 00:07:31,000 Speaker 3: effectively moving liquidity out of very deep liquid parts of 168 00:07:31,000 --> 00:07:33,880 Speaker 3: the market in tech and into much shallower, smaller parts 169 00:07:33,880 --> 00:07:36,480 Speaker 3: of the market in these cyclicals, which can help explain 170 00:07:36,600 --> 00:07:38,360 Speaker 3: some of the magnitude of these upside moves. 171 00:07:38,520 --> 00:07:40,920 Speaker 2: Cameron Dawson of New h Weeth joins us. Now for more, Cameron, 172 00:07:41,080 --> 00:07:44,320 Speaker 2: let's continue this conversation. The sull America trade, you actually 173 00:07:44,360 --> 00:07:46,720 Speaker 2: sing in the data because we're seeing it in the headlines. 174 00:07:46,800 --> 00:07:47,760 Speaker 4: Yeah, definitely not. 175 00:07:47,880 --> 00:07:50,680 Speaker 3: If you look at last year, we saw record numbers 176 00:07:50,720 --> 00:07:53,640 Speaker 3: of influence into treasuries as well as equities, So we 177 00:07:53,840 --> 00:07:57,280 Speaker 3: ended twenty twenty five with record foreign holdings in both. 178 00:07:57,080 --> 00:07:58,360 Speaker 4: Treasuries and equities. 179 00:07:58,480 --> 00:08:01,360 Speaker 3: You saw five hundred billion dollars worth of treasury increase 180 00:08:01,480 --> 00:08:04,360 Speaker 3: in the overall holding. So sell America was definitely the 181 00:08:04,440 --> 00:08:07,160 Speaker 3: narrative last year. It did not play out in practice. 182 00:08:07,360 --> 00:08:09,680 Speaker 3: But it is good to remember that prices are set 183 00:08:09,680 --> 00:08:12,080 Speaker 3: at the margin and there's a great Bloomberg screen that's 184 00:08:12,200 --> 00:08:14,360 Speaker 3: debt go and what you can see is the treasury 185 00:08:14,360 --> 00:08:15,840 Speaker 3: holdings of different countries. 186 00:08:16,200 --> 00:08:17,880 Speaker 4: And for the last thirteen. 187 00:08:17,520 --> 00:08:20,800 Speaker 3: Years, China has effectively cut its treasury holdings in half. 188 00:08:20,880 --> 00:08:22,640 Speaker 4: So this is not a news story. 189 00:08:22,920 --> 00:08:26,280 Speaker 3: The question is do you see less treasury buying from China? 190 00:08:26,360 --> 00:08:28,920 Speaker 3: Do you also see less treasury buying potentially from Japan 191 00:08:29,040 --> 00:08:32,440 Speaker 3: because home yields are higher, and potentially less treasury buying 192 00:08:32,559 --> 00:08:35,959 Speaker 3: from Europe. You've seen a huge increase, a threefold increase 193 00:08:36,000 --> 00:08:39,400 Speaker 3: in treasury holdings from the UK, for example. So could 194 00:08:39,480 --> 00:08:41,319 Speaker 3: you see that at the margin start to come down 195 00:08:41,360 --> 00:08:42,960 Speaker 3: and put pressure up on long term yields? 196 00:08:43,080 --> 00:08:44,880 Speaker 5: Have we already seen that priced in? I mean, I'm 197 00:08:44,880 --> 00:08:46,880 Speaker 5: asking this with respect to how much the Bank of 198 00:08:46,920 --> 00:08:51,199 Speaker 5: Japan and frankly Takaichi is putting pressure on us tenure yields. 199 00:08:51,280 --> 00:08:54,000 Speaker 3: Yeah, I think you have potentially seen some of the 200 00:08:54,000 --> 00:08:57,520 Speaker 3: fiscal worries get priced in early on within Japan, because 201 00:08:57,520 --> 00:09:00,600 Speaker 3: you're seeing the response this morning is not nearly as violent. 202 00:09:00,920 --> 00:09:03,080 Speaker 3: The selloff in bonds is not nearly as violent as 203 00:09:03,120 --> 00:09:05,640 Speaker 3: what we're seeing as the rise in equities. I do 204 00:09:05,679 --> 00:09:08,480 Speaker 3: still think that there's a very little direction within the 205 00:09:08,520 --> 00:09:11,240 Speaker 3: tenure Treasury. It's at four point two percent. All of 206 00:09:11,280 --> 00:09:13,920 Speaker 3: its moving averages are just kind of coalesced in one 207 00:09:13,960 --> 00:09:17,000 Speaker 3: tight area, which says that there's really no conviction within 208 00:09:17,040 --> 00:09:18,280 Speaker 3: the tenure treasury yield. 209 00:09:18,640 --> 00:09:19,679 Speaker 4: If the tenure. 210 00:09:19,440 --> 00:09:22,640 Speaker 3: Treasury believed the equity market and the cyclical rebound, I 211 00:09:22,679 --> 00:09:24,400 Speaker 3: don't think that we would be seeing ten years at 212 00:09:24,400 --> 00:09:27,200 Speaker 3: four point two percent. They'd likely be closer to four 213 00:09:27,200 --> 00:09:28,000 Speaker 3: point six percent. 214 00:09:28,160 --> 00:09:30,320 Speaker 5: Which is the reason why people are looking at Kevin 215 00:09:30,360 --> 00:09:34,080 Speaker 5: worsh the potentially a new incoming Fed SHAIRT should he 216 00:09:34,120 --> 00:09:37,920 Speaker 5: get confirmed or even heard. Secretary Bust had some really 217 00:09:37,920 --> 00:09:40,520 Speaker 5: interesting things to say over the weekend about how it 218 00:09:40,600 --> 00:09:42,480 Speaker 5: was probably going to take about a year or more 219 00:09:42,720 --> 00:09:46,000 Speaker 5: in order to really start to wind down the balance 220 00:09:46,000 --> 00:09:49,120 Speaker 5: sheet in any significant way, and he made some other comments. 221 00:09:49,240 --> 00:09:50,960 Speaker 5: At a time when we're looking at something of a 222 00:09:51,000 --> 00:09:53,800 Speaker 5: Fed Treasury accord or something like that. Do you have 223 00:09:53,840 --> 00:09:55,320 Speaker 5: a sense of what that could look like. 224 00:09:55,559 --> 00:09:59,280 Speaker 3: Yeah, well, we've been joking that they should rebrand quantitative 225 00:09:59,320 --> 00:10:02,480 Speaker 3: easing on a dative freedom in order to be able 226 00:10:02,480 --> 00:10:06,240 Speaker 3: to navigate this balance sheet runoff. I think it's a 227 00:10:06,240 --> 00:10:09,520 Speaker 3: really big question because we know that Treasury wants yields 228 00:10:09,559 --> 00:10:11,640 Speaker 3: to move lower, not just on the front end, in 229 00:10:11,760 --> 00:10:15,000 Speaker 3: order to reduce treasury borrowing costs, which interest expense is 230 00:10:15,120 --> 00:10:16,480 Speaker 3: over one trillion dollars. 231 00:10:16,520 --> 00:10:18,080 Speaker 4: It's larger than defence spending. 232 00:10:18,120 --> 00:10:19,840 Speaker 3: So this is something that they want the front end 233 00:10:19,880 --> 00:10:22,000 Speaker 3: to come down, but they also want the back end 234 00:10:22,000 --> 00:10:24,200 Speaker 3: to come down. They want to have relief within the 235 00:10:24,240 --> 00:10:27,120 Speaker 3: housing market with mortgage rates coming lower, cyclical areas of 236 00:10:27,160 --> 00:10:30,280 Speaker 3: the market getting stimulated by lower long term yields. It's 237 00:10:30,400 --> 00:10:33,000 Speaker 3: really hard to do that in a very pro growth, 238 00:10:33,120 --> 00:10:37,079 Speaker 3: pro stimulus kind of backdrop, which means that it suggests 239 00:10:37,080 --> 00:10:40,360 Speaker 3: in order to accomplish three percent growth and three percent 240 00:10:40,400 --> 00:10:43,600 Speaker 3: treasury yields, you need some kind of treasury market intervention. 241 00:10:43,760 --> 00:10:46,000 Speaker 4: It can't do it alone. So what would that look like? 242 00:10:46,040 --> 00:10:47,400 Speaker 6: And I'm glad you bring this up because just a 243 00:10:47,440 --> 00:10:49,600 Speaker 6: few hours ago, the President actually put on truth Social 244 00:10:49,640 --> 00:10:52,640 Speaker 6: a Bloomberg story talking about a Barclay's note about how 245 00:10:52,679 --> 00:10:55,640 Speaker 6: this president wants to see mortgage rates drop to five 246 00:10:55,679 --> 00:10:56,560 Speaker 6: percent this year. 247 00:10:56,640 --> 00:10:57,679 Speaker 4: Can they actually get to that? 248 00:10:58,080 --> 00:11:00,640 Speaker 3: Well, some of the things are within their control. We 249 00:11:00,800 --> 00:11:03,720 Speaker 3: saw the mortgage buying that was that was pushed through 250 00:11:03,800 --> 00:11:05,560 Speaker 3: back a couple of months ago, and then there's of 251 00:11:05,559 --> 00:11:08,000 Speaker 3: course things that are out of their control. And the 252 00:11:08,040 --> 00:11:09,840 Speaker 3: best way to think about the yield curve is that 253 00:11:09,920 --> 00:11:11,959 Speaker 3: the surer you are in the yield curve, the ward's 254 00:11:12,000 --> 00:11:15,040 Speaker 3: controlled by the FED. As you move longer and longer out, 255 00:11:15,080 --> 00:11:17,719 Speaker 3: it's controlled by supply and demand. The supply side of 256 00:11:17,760 --> 00:11:19,920 Speaker 3: the course is what's going on within the fiscal side 257 00:11:19,960 --> 00:11:22,960 Speaker 3: of things, and the demand side is demand from not 258 00:11:23,120 --> 00:11:25,520 Speaker 3: just domestic owners, but foreign orders. And I think that 259 00:11:25,520 --> 00:11:27,920 Speaker 3: that's one of the big questions that everybody's wrestling with. 260 00:11:27,960 --> 00:11:28,400 Speaker 4: This morning. 261 00:11:28,520 --> 00:11:31,040 Speaker 2: Found a word on Torston slock of Apollo. You saw 262 00:11:31,040 --> 00:11:32,760 Speaker 2: the quote, I'm sure you read it over the weekend, 263 00:11:32,920 --> 00:11:35,000 Speaker 2: right hikes at the end of the athink. That's the conversation. 264 00:11:35,280 --> 00:11:37,600 Speaker 3: Well, if you look at the warp screen, they actually 265 00:11:37,600 --> 00:11:40,400 Speaker 3: have a slight probability of rate heights starting in twenty 266 00:11:40,480 --> 00:11:43,520 Speaker 3: twenty seven. I don't think that This is something that 267 00:11:43,600 --> 00:11:46,520 Speaker 3: worsh will necessarily want to push through, but it is 268 00:11:46,559 --> 00:11:47,440 Speaker 3: a committee vote. 269 00:11:47,440 --> 00:11:49,760 Speaker 4: And think of us going forward in just June. 270 00:11:50,240 --> 00:11:53,080 Speaker 3: If we have this kind of of strong economy where 271 00:11:53,080 --> 00:11:56,240 Speaker 3: we see some reacceleration, are we in an environment where 272 00:11:56,280 --> 00:11:57,480 Speaker 3: the chairs were the. 273 00:11:57,559 --> 00:11:59,559 Speaker 2: Only one blas coming up? 274 00:12:00,040 --> 00:12:00,760 Speaker 4: What about. 275 00:12:09,400 --> 00:12:11,480 Speaker 2: That's turn to the metals market. Some major moves in 276 00:12:11,520 --> 00:12:13,640 Speaker 2: the last week in both gold and in silver the 277 00:12:13,679 --> 00:12:16,800 Speaker 2: Treasury Secretary scale best and also pointing the finger over 278 00:12:16,840 --> 00:12:18,680 Speaker 2: the wild swings in precious metals. 279 00:12:20,360 --> 00:12:24,160 Speaker 7: The gold move things have gotten a little unruly in China. 280 00:12:24,320 --> 00:12:28,080 Speaker 7: They're having to tighten margin requirements. So the gold looks 281 00:12:28,120 --> 00:12:31,559 Speaker 7: to me kind of like a classical specut in below. 282 00:12:31,240 --> 00:12:34,200 Speaker 2: All gold hovering around five k after a stretch of 283 00:12:34,280 --> 00:12:37,720 Speaker 2: historic volatility. Amy, Gareth, Mork and Stanley seeing more upside 284 00:12:37,720 --> 00:12:40,440 Speaker 2: ahead with a bullcase of fifty seven hundred for the 285 00:12:40,440 --> 00:12:42,559 Speaker 2: second half of the year. Amy joins us now for more, 286 00:12:42,600 --> 00:12:44,880 Speaker 2: Amy going to see you. Welcome to New York. Great here, 287 00:12:45,080 --> 00:12:47,839 Speaker 2: wild wild swings not just in gold, but silver too, 288 00:12:47,880 --> 00:12:50,160 Speaker 2: And if we can bring up the silver chart here today. 289 00:12:50,400 --> 00:12:52,439 Speaker 2: The silver chart is one of the most ridiculous things 290 00:12:52,480 --> 00:12:55,920 Speaker 2: I've ever seen. Covering financial markets, a runny of sixty percent, 291 00:12:55,960 --> 00:12:59,720 Speaker 2: and then a complete round trip on what Yeah, Look. 292 00:12:59,600 --> 00:13:02,640 Speaker 1: I think silver you do always expect more volatility. It 293 00:13:02,679 --> 00:13:06,040 Speaker 1: has generally lower liquidity, there's smaller trading volumes going through. 294 00:13:06,520 --> 00:13:07,520 Speaker 4: I think we could say. 295 00:13:07,559 --> 00:13:10,800 Speaker 1: Look, the setup was reasonably supportive in terms of we'd 296 00:13:10,840 --> 00:13:13,320 Speaker 1: eroded a lot of the inventory, and so when somebody 297 00:13:13,400 --> 00:13:16,120 Speaker 1: needs metal immediately and that metal is not available, it 298 00:13:16,160 --> 00:13:17,960 Speaker 1: sort of goes to the highest bidder and the price 299 00:13:17,960 --> 00:13:20,760 Speaker 1: can accelerate very rapidly. And clearly there was an element 300 00:13:20,800 --> 00:13:23,120 Speaker 1: of momentum here as well. And then of course when 301 00:13:23,160 --> 00:13:26,080 Speaker 1: we had that turnaround in both gold and silver, with 302 00:13:26,160 --> 00:13:30,120 Speaker 1: potentially the nomination of wash coming through and some of 303 00:13:30,120 --> 00:13:32,439 Speaker 1: that momentum coming off, you know, it's not surprising we've 304 00:13:32,440 --> 00:13:34,280 Speaker 1: pulled back a long way. I think what we've been 305 00:13:34,320 --> 00:13:37,360 Speaker 1: struggling with is what is the right valuation for silver here? 306 00:13:37,600 --> 00:13:39,960 Speaker 1: And especially when you see, you know, a fifty dollars 307 00:13:40,000 --> 00:13:42,360 Speaker 1: trading range for something that only started the year at 308 00:13:42,360 --> 00:13:44,640 Speaker 1: seventy five dollars. That's quite difficult to do. 309 00:13:44,800 --> 00:13:46,680 Speaker 2: And the Treasury Secretary was porn in the finger at 310 00:13:46,760 --> 00:13:48,760 Speaker 2: China with regards to gold. He said things were getting 311 00:13:48,760 --> 00:13:52,240 Speaker 2: a little unruly in China. Can you translate what does 312 00:13:52,280 --> 00:13:52,960 Speaker 2: it mean by that? 313 00:13:53,400 --> 00:13:54,000 Speaker 4: So I think. 314 00:13:53,880 --> 00:13:57,560 Speaker 1: Definitely there's been an element of momentum and high volumes 315 00:13:57,559 --> 00:13:59,640 Speaker 1: going through and we've seen this across the metals, very 316 00:13:59,679 --> 00:14:02,400 Speaker 1: very high trading volumes in China, and so we've seen 317 00:14:02,400 --> 00:14:05,280 Speaker 1: some sort of controls from the exchanges and position limits 318 00:14:05,280 --> 00:14:08,360 Speaker 1: trying to cab things back into place. We might also 319 00:14:08,400 --> 00:14:10,880 Speaker 1: be seeing a bit of positioning taken off ahead of 320 00:14:10,960 --> 00:14:13,920 Speaker 1: Luna New Year, because things will generally be slowing down there. 321 00:14:14,240 --> 00:14:17,120 Speaker 1: So I think partly that's probably been having a hand here. 322 00:14:17,120 --> 00:14:19,360 Speaker 1: But I think also unsurprising when you get sort of 323 00:14:19,400 --> 00:14:21,440 Speaker 1: a straight line up in metals to have a bit 324 00:14:21,440 --> 00:14:24,400 Speaker 1: of consolidation take a pause, that's not unusual. 325 00:14:24,720 --> 00:14:26,760 Speaker 5: So it seemed like Scott Bessett was talking about the 326 00:14:26,840 --> 00:14:30,120 Speaker 5: hat he's currently blaming this one trader who had an 327 00:14:30,120 --> 00:14:33,040 Speaker 5: incredible slew of losses in China and then fled the country. 328 00:14:33,200 --> 00:14:35,359 Speaker 5: I mean, it just raises the question of how financialized 329 00:14:35,520 --> 00:14:37,920 Speaker 5: some of these metals markets have gotten. The idea that 330 00:14:37,960 --> 00:14:41,320 Speaker 5: suddenly people are turning to precious metals as an alternative 331 00:14:41,320 --> 00:14:44,360 Speaker 5: to things like treasuries, which are a very deep liquid market. 332 00:14:44,880 --> 00:14:48,400 Speaker 5: How comfortable is the gold market? Is this silver market 333 00:14:48,440 --> 00:14:51,360 Speaker 5: with this moniker of an alternative as an attorney to 334 00:14:51,400 --> 00:14:53,960 Speaker 5: be treated as an alternative to full faith and credit 335 00:14:53,960 --> 00:14:55,440 Speaker 5: in the Unitedity's government. 336 00:14:56,160 --> 00:14:58,320 Speaker 1: So I think gold has kind of always had this 337 00:14:58,440 --> 00:15:00,560 Speaker 1: role as a safe hay and traditional so you have 338 00:15:00,680 --> 00:15:03,960 Speaker 1: had yes, financial flows, but also real physical buying from 339 00:15:03,960 --> 00:15:06,640 Speaker 1: central banks, from ETFs, and kind of we're used to 340 00:15:06,640 --> 00:15:08,880 Speaker 1: this sort of flowing gold. I think for silver, because 341 00:15:08,920 --> 00:15:11,440 Speaker 1: it's also got that industrial metal hat, probably this is 342 00:15:11,440 --> 00:15:14,000 Speaker 1: where it's a little more difficult because there are real 343 00:15:14,120 --> 00:15:16,600 Speaker 1: end users who also need silver. So when people are 344 00:15:16,640 --> 00:15:20,960 Speaker 1: suddenly trying to buy quite large volumes for financial reasons 345 00:15:21,160 --> 00:15:23,400 Speaker 1: and then you still have the physical buyers, that's where 346 00:15:23,400 --> 00:15:26,160 Speaker 1: things get a little tense. So gold, I would say, 347 00:15:26,360 --> 00:15:29,040 Speaker 1: should be okay with this silver obviously a lot of 348 00:15:29,080 --> 00:15:30,200 Speaker 1: volatility as we're seeing. 349 00:15:30,280 --> 00:15:33,000 Speaker 5: Then you overlay the fundamentals, which is that every country 350 00:15:33,000 --> 00:15:35,320 Speaker 5: in the world is trying to build up as strategic 351 00:15:35,360 --> 00:15:37,920 Speaker 5: reserves of some metals as well as try to build 352 00:15:37,920 --> 00:15:40,320 Speaker 5: out their infrastructure. We still heard about the vault from 353 00:15:40,320 --> 00:15:42,880 Speaker 5: President Trunk that he wants to stackpile certain metals. Do 354 00:15:42,880 --> 00:15:44,520 Speaker 5: you have a sense of how much there could really 355 00:15:44,560 --> 00:15:45,520 Speaker 5: skew valuations. 356 00:15:45,600 --> 00:15:46,680 Speaker 4: Is that already prosed in. 357 00:15:47,400 --> 00:15:50,560 Speaker 1: Yeah, So I think the stockpiling theme is super interesting. 358 00:15:50,600 --> 00:15:53,320 Speaker 1: So we have as you say, Project Vault launched in 359 00:15:53,320 --> 00:15:55,720 Speaker 1: the US, which is looking for any critical minerals. Now, 360 00:15:55,760 --> 00:15:58,440 Speaker 1: the US critical minerals list is about sixty different metals. 361 00:15:58,560 --> 00:16:00,560 Speaker 1: Some of these are very very small market, some of 362 00:16:00,560 --> 00:16:03,000 Speaker 1: these are much bigger, and so I think we need 363 00:16:03,040 --> 00:16:05,200 Speaker 1: to see what ultimately is going to be top priority 364 00:16:05,200 --> 00:16:07,840 Speaker 1: in terms of stockpiling. I can think, you know, it's 365 00:16:07,840 --> 00:16:10,240 Speaker 1: probably you know, it could be any of those metals, 366 00:16:10,240 --> 00:16:13,280 Speaker 1: but it's the larger ones could be more easily able 367 00:16:13,320 --> 00:16:16,000 Speaker 1: to absorb that stockpiling. You could say for copper, actually, 368 00:16:16,040 --> 00:16:18,600 Speaker 1: already the US has already built quite a large stockpile. 369 00:16:18,840 --> 00:16:21,840 Speaker 1: Last year, the US imported probably two thirds again what 370 00:16:21,880 --> 00:16:23,840 Speaker 1: it would normally need, and most of that is just 371 00:16:23,920 --> 00:16:26,440 Speaker 1: sat in the warehouse system. So actually you could say 372 00:16:26,440 --> 00:16:28,400 Speaker 1: the US may have an incentive to try and keep 373 00:16:28,400 --> 00:16:30,880 Speaker 1: that in the country rather than letting that be exported. 374 00:16:30,920 --> 00:16:32,600 Speaker 6: I was going to ask you about copper too, because 375 00:16:32,680 --> 00:16:35,920 Speaker 6: really this matters with demand in China. How weak is 376 00:16:35,960 --> 00:16:37,720 Speaker 6: the demand is so off the demand right now for 377 00:16:37,760 --> 00:16:38,840 Speaker 6: copper and China. 378 00:16:39,000 --> 00:16:41,960 Speaker 1: Yeah, I think it's remarkable how strong copper has been 379 00:16:42,040 --> 00:16:44,440 Speaker 1: considering what we're seeing in the Chinese demand. And this 380 00:16:44,520 --> 00:16:46,520 Speaker 1: is not a new story. This is something that started 381 00:16:46,600 --> 00:16:49,640 Speaker 1: back in September October time Q four. We saw Chinese 382 00:16:49,640 --> 00:16:52,920 Speaker 1: apparent consumption down around twelve percent year on year. Is 383 00:16:52,960 --> 00:16:55,600 Speaker 1: that really weighing on the sort of total full year 384 00:16:55,680 --> 00:16:58,760 Speaker 1: twenty twenty five demand number. We're going into lunar New year, 385 00:16:58,800 --> 00:17:02,480 Speaker 1: which is where activity typically slows down. So often you 386 00:17:02,560 --> 00:17:06,400 Speaker 1: see the semi fabricators slowing down their activity, but yet 387 00:17:06,480 --> 00:17:09,240 Speaker 1: copper has proved remarkably resilient, which I think tells you 388 00:17:09,280 --> 00:17:12,160 Speaker 1: there's broader macro factors at play. There's this theme around 389 00:17:12,200 --> 00:17:16,840 Speaker 1: the AI trade, stockpiling, scarcity, supply chains, and then also 390 00:17:16,960 --> 00:17:21,000 Speaker 1: these macro overlays of rake cuts still coming through demand 391 00:17:21,000 --> 00:17:22,520 Speaker 1: for real assets from investors. 392 00:17:22,720 --> 00:17:24,480 Speaker 4: WESA mentioned Project Vault. 393 00:17:24,520 --> 00:17:27,719 Speaker 6: What about the fact this administration also has tariffs on 394 00:17:27,760 --> 00:17:28,680 Speaker 6: some of these metals. 395 00:17:29,359 --> 00:17:31,560 Speaker 1: Yeah, so at the moment, you've got your steel and 396 00:17:31,600 --> 00:17:34,439 Speaker 1: aluminium tariffs in place, and what it looks like, if anything, 397 00:17:34,520 --> 00:17:37,679 Speaker 1: is actually the US has been importing less aliminum than 398 00:17:37,720 --> 00:17:40,240 Speaker 1: it needs at the moment, so that would imply actually 399 00:17:40,320 --> 00:17:43,879 Speaker 1: the stocking rather than stocking and copper. We only have 400 00:17:43,960 --> 00:17:46,919 Speaker 1: tariffs on things like copper wire, not on copper itself. 401 00:17:46,960 --> 00:17:47,880 Speaker 1: But we are due to here. 402 00:17:47,960 --> 00:17:50,800 Speaker 4: Whether those MICROWA twenty twenty seven they're going to. 403 00:17:50,760 --> 00:17:54,280 Speaker 1: Do it, it's a tricky one to call. I'd say 404 00:17:54,600 --> 00:17:57,639 Speaker 1: the US is probably more reliant on imports of aluminium 405 00:17:57,680 --> 00:17:59,920 Speaker 1: than copper, so arguably if they can do it on aluminium, 406 00:18:00,160 --> 00:18:02,640 Speaker 1: could do it on copper. The market is not really 407 00:18:02,680 --> 00:18:04,400 Speaker 1: pricing that that is going to happen at the moment. 408 00:18:04,480 --> 00:18:07,280 Speaker 1: There's very little premium for US metal at this point. 409 00:18:07,760 --> 00:18:09,480 Speaker 1: But the other thing they could do is, of course, 410 00:18:09,600 --> 00:18:11,480 Speaker 1: just kick the can down the road and say, look, 411 00:18:11,560 --> 00:18:13,959 Speaker 1: let's see again in six months from now, and that 412 00:18:14,080 --> 00:18:16,080 Speaker 1: is more likely to keep the metal on shore, but 413 00:18:16,160 --> 00:18:19,400 Speaker 1: without really having too much impact on domestic US copper price. 414 00:18:19,520 --> 00:18:22,119 Speaker 2: Well, just how tight is the copper market at the moment, 415 00:18:22,520 --> 00:18:22,879 Speaker 2: So we. 416 00:18:23,280 --> 00:18:24,520 Speaker 4: Do have a lot of inventory. 417 00:18:24,520 --> 00:18:26,480 Speaker 1: We've had this big infantry build in the US, but 418 00:18:26,520 --> 00:18:29,080 Speaker 1: I would almost disregard that for now because it's sort 419 00:18:29,080 --> 00:18:30,639 Speaker 1: of locked in the US. If you think of that 420 00:18:30,680 --> 00:18:33,240 Speaker 1: as a strategic reserve, then you'd say the copper market's 421 00:18:33,280 --> 00:18:37,560 Speaker 1: pretty tight, London inventtry is low. Chinese infantry, yes, is building, 422 00:18:37,600 --> 00:18:40,440 Speaker 1: which we think is this demand weakness, but we always 423 00:18:40,440 --> 00:18:42,560 Speaker 1: get built around this time of year. To me, the 424 00:18:42,600 --> 00:18:44,359 Speaker 1: big signal for us is going to be as we 425 00:18:44,440 --> 00:18:47,200 Speaker 1: come out of Lunar New Year, what happens in China. 426 00:18:47,240 --> 00:18:50,000 Speaker 1: Does activity pick up or not? And that's going to 427 00:18:50,040 --> 00:18:52,280 Speaker 1: really tell us, you know, is China just pausing because 428 00:18:52,320 --> 00:18:55,159 Speaker 1: prices have moved a lot, or is this China actually 429 00:18:55,200 --> 00:18:58,280 Speaker 1: stepping away from the market. Normally they pause, they kind 430 00:18:58,320 --> 00:19:00,159 Speaker 1: of get used to the new price levels and they 431 00:19:00,200 --> 00:19:00,639 Speaker 1: come back in. 432 00:19:00,800 --> 00:19:02,920 Speaker 2: Can we finish on supply Back in the day, give 433 00:19:03,000 --> 00:19:05,080 Speaker 2: a minor a dollar. They've dig a hole. Are they 434 00:19:05,119 --> 00:19:06,120 Speaker 2: still digging holes? 435 00:19:06,840 --> 00:19:07,480 Speaker 4: Not so much. 436 00:19:07,520 --> 00:19:07,639 Speaker 7: So. 437 00:19:07,840 --> 00:19:10,480 Speaker 1: We are now ten years on from the twenty fifteen 438 00:19:10,520 --> 00:19:14,440 Speaker 1: to sixteen metals price downturn, which is where mining companies 439 00:19:14,720 --> 00:19:17,120 Speaker 1: largely cut their budgets, and we're really starting to fill 440 00:19:17,119 --> 00:19:19,280 Speaker 1: the effects of that. And the challenge is this long 441 00:19:19,359 --> 00:19:21,680 Speaker 1: lead time, so we can't give you a big list 442 00:19:21,720 --> 00:19:23,240 Speaker 1: of new minds that are coming on in the next 443 00:19:23,240 --> 00:19:23,760 Speaker 1: few years. 444 00:19:23,920 --> 00:19:24,960 Speaker 4: And even now where. 445 00:19:24,800 --> 00:19:27,399 Speaker 1: Copper prices are really high, you'd argue probably most copper 446 00:19:27,440 --> 00:19:29,680 Speaker 1: projects in the world would make sense. Here, we're still 447 00:19:29,680 --> 00:19:32,840 Speaker 1: seeing companies trying to buy each other or buy assets 448 00:19:33,160 --> 00:19:36,240 Speaker 1: rather than building from scratch. So really what we're then 449 00:19:36,280 --> 00:19:38,080 Speaker 1: hoping for is a bit of scrap, a bit of 450 00:19:38,160 --> 00:19:41,119 Speaker 1: brown field expansion, but nothing major stay with us. 451 00:19:41,480 --> 00:19:53,720 Speaker 2: More Bloomberg surveillance coming up after this. So here's the 452 00:19:53,760 --> 00:19:56,720 Speaker 2: list this morning, the Federal Reserve of waiting delayed reports 453 00:19:56,720 --> 00:19:59,760 Speaker 2: on both employment and inflation, US payrolls. Do you want 454 00:19:59,760 --> 00:20:03,280 Speaker 2: to Whennesday? Followed by CPI on Friday. Dania Peterson of 455 00:20:03,320 --> 00:20:05,440 Speaker 2: the Conference Board Right in the next five days will 456 00:20:05,480 --> 00:20:08,040 Speaker 2: be a blockbuster week to look ahead to that. Dana 457 00:20:08,119 --> 00:20:09,959 Speaker 2: joins us now for more, Danna, good morning. Let's talk 458 00:20:10,000 --> 00:20:13,240 Speaker 2: about confidence first. The CEOs that we speak to sound confident, 459 00:20:13,560 --> 00:20:16,080 Speaker 2: and the CEOs you hear from bullish about hiring, because 460 00:20:16,119 --> 00:20:18,439 Speaker 2: that seems to be the story in the data at 461 00:20:18,440 --> 00:20:18,840 Speaker 2: the moment. 462 00:20:20,080 --> 00:20:22,560 Speaker 8: Not really, they're still waiting on the sidelines, and we're 463 00:20:22,560 --> 00:20:25,640 Speaker 8: seeing that in the actual data. Payrolls have been pretty small, 464 00:20:26,320 --> 00:20:29,640 Speaker 8: but that's also consistent with on labor market that's still healthy, 465 00:20:30,280 --> 00:20:31,920 Speaker 8: very close to maximum employment. 466 00:20:32,480 --> 00:20:34,480 Speaker 2: Is it a supply side factor? Then if it's a 467 00:20:34,560 --> 00:20:37,400 Speaker 2: labor market that's still healthy because at the moment we're 468 00:20:37,400 --> 00:20:39,280 Speaker 2: looking back to olf months and we could see jobs 469 00:20:39,280 --> 00:20:42,560 Speaker 2: growth at zero nothing. Data that doesn't sound healthy. 470 00:20:43,680 --> 00:20:47,000 Speaker 8: Well, it's about levels, not the deltas right. So right, 471 00:20:47,080 --> 00:20:51,480 Speaker 8: if you look at the data, either the establishment payrolls 472 00:20:51,640 --> 00:20:57,080 Speaker 8: or the household survey in levels, most people are still 473 00:20:57,119 --> 00:21:01,480 Speaker 8: working and those levels have returned to the path that 474 00:21:01,560 --> 00:21:04,439 Speaker 8: we had before the pandemic with a delta, and that 475 00:21:04,520 --> 00:21:09,159 Speaker 8: delta is really the advancement of people retiring. Other than that, 476 00:21:09,359 --> 00:21:12,760 Speaker 8: most people are still working if they want to data in. 477 00:21:12,880 --> 00:21:15,960 Speaker 5: The Conference Board's own survey, a number of respondents, the 478 00:21:15,960 --> 00:21:19,240 Speaker 5: greatest number of respondents going back to twenty twenty one, 479 00:21:19,400 --> 00:21:21,520 Speaker 5: say that jobs are hard to get. You see an 480 00:21:21,560 --> 00:21:25,840 Speaker 5: increasing amount of concern about the availability of work. And 481 00:21:25,920 --> 00:21:29,160 Speaker 5: I'm just wondering how much of a forward leading indicator 482 00:21:29,160 --> 00:21:31,200 Speaker 5: this tends to be in prior readings. 483 00:21:32,359 --> 00:21:35,280 Speaker 8: Well, I think this time it's a little bit different. Yes, 484 00:21:35,440 --> 00:21:38,360 Speaker 8: it is pointing to the fact that the unemployment rate 485 00:21:38,400 --> 00:21:42,600 Speaker 8: could rise because people, some people especially in industries like finance 486 00:21:42,680 --> 00:21:45,520 Speaker 8: and tech, are being let go and it's very difficult 487 00:21:45,560 --> 00:21:49,720 Speaker 8: for them to find new jobs. And so that's accurate. 488 00:21:49,800 --> 00:21:51,760 Speaker 8: The survey is saying, yeah, it's tough to get a 489 00:21:51,840 --> 00:21:54,359 Speaker 8: job out there if you don't already have one. But 490 00:21:54,840 --> 00:21:57,359 Speaker 8: when you look at the JULS data and even the 491 00:21:57,440 --> 00:22:01,480 Speaker 8: unemployment rate, most people, most companies are not letting anyone go. 492 00:22:01,960 --> 00:22:04,480 Speaker 8: So we're kind of still in this low, higher low 493 00:22:04,520 --> 00:22:08,600 Speaker 8: fire place. And again it's about the level the number 494 00:22:08,640 --> 00:22:11,600 Speaker 8: of people who are actually working is very high. 495 00:22:12,359 --> 00:22:14,840 Speaker 5: That said data, we have seen jobless claims start to 496 00:22:14,880 --> 00:22:17,520 Speaker 5: tick up, and there is some concern that this particular 497 00:22:17,520 --> 00:22:19,720 Speaker 5: reading that we get on Wednesday of non farm payrolls 498 00:22:20,080 --> 00:22:22,600 Speaker 5: is going to be really skewed to the downside from 499 00:22:22,640 --> 00:22:25,240 Speaker 5: the revisions, the benchmark revisions that are going to come out. 500 00:22:25,280 --> 00:22:28,200 Speaker 5: I'm just wondering what you're looking for to determine whether 501 00:22:28,200 --> 00:22:30,119 Speaker 5: you're starting to see a shift from low high or 502 00:22:30,200 --> 00:22:33,880 Speaker 5: low fire dynamic to something slightly different, a little bit 503 00:22:33,880 --> 00:22:37,600 Speaker 5: more pernicious, a little bit more protracted to the downside. 504 00:22:37,840 --> 00:22:40,320 Speaker 8: Sure, so I'll be looking at two things. Yes, you 505 00:22:40,320 --> 00:22:43,840 Speaker 8: can look at payrolls in terms of the change, but again, 506 00:22:43,960 --> 00:22:47,520 Speaker 8: when you're close to full employment, you don't need much 507 00:22:48,080 --> 00:22:52,040 Speaker 8: change at all because most people are working. So I 508 00:22:52,040 --> 00:22:54,399 Speaker 8: would look at the level of that and certainly with 509 00:22:54,440 --> 00:22:56,840 Speaker 8: the unemployment rate, I would deep beneath the surface and 510 00:22:56,880 --> 00:22:59,800 Speaker 8: take a look at who's driving it. Is it people 511 00:22:59,840 --> 00:23:03,359 Speaker 8: who who are newly let go or is it people 512 00:23:03,440 --> 00:23:08,320 Speaker 8: who are still looking for jobs. You have to look 513 00:23:08,320 --> 00:23:10,720 Speaker 8: at those details to understand what's going on in the 514 00:23:10,760 --> 00:23:11,480 Speaker 8: labor market. 515 00:23:11,760 --> 00:23:13,760 Speaker 6: And then, of course Friday we're going to get CPI. 516 00:23:13,920 --> 00:23:16,439 Speaker 6: So as you say, blockbuster week for economic data, what 517 00:23:16,520 --> 00:23:18,639 Speaker 6: are you focused on when it comes to inflation report? 518 00:23:19,800 --> 00:23:24,720 Speaker 8: Absolutely, I'm looking at again underneath the surface, first, looking 519 00:23:24,760 --> 00:23:28,920 Speaker 8: at goods, especially those that are most likely to be imported. 520 00:23:29,000 --> 00:23:33,479 Speaker 8: Are we still seeing prices increase for those items? And 521 00:23:33,520 --> 00:23:36,040 Speaker 8: we've seen that in the data over the last few months. 522 00:23:36,080 --> 00:23:40,440 Speaker 8: So the tariff effect is coming in. However, it's being 523 00:23:40,520 --> 00:23:45,399 Speaker 8: offset mightily by slowing shelter costs, and that's that's a 524 00:23:45,440 --> 00:23:48,639 Speaker 8: good thing. So I'll be looking at the shelter costs 525 00:23:48,640 --> 00:23:52,359 Speaker 8: to make sure that's still putting downward pressure on overall inflation. 526 00:23:52,720 --> 00:23:56,680 Speaker 8: But I'll also be looking at any services that are 527 00:23:56,840 --> 00:24:00,760 Speaker 8: indirectly affected by tariffs, and also things like hell insurance 528 00:24:00,800 --> 00:24:03,680 Speaker 8: and car insurance, which we know have been rising. 529 00:24:04,320 --> 00:24:08,480 Speaker 6: When it comes to when you said earlier about CEOs, 530 00:24:08,480 --> 00:24:11,760 Speaker 6: they're waiting on the sidelines. What exactly do CEOs want 531 00:24:11,760 --> 00:24:13,520 Speaker 6: to hear in order for them to get back in 532 00:24:13,560 --> 00:24:14,480 Speaker 6: and start hiring again. 533 00:24:15,720 --> 00:24:17,560 Speaker 8: Well, I think for a lot of them, any of 534 00:24:17,560 --> 00:24:19,879 Speaker 8: them that are exposed in some form or fashion to 535 00:24:19,960 --> 00:24:24,800 Speaker 8: supply chains, are waiting for the trade deals to be completed. 536 00:24:24,840 --> 00:24:28,919 Speaker 8: There's still some major trade deals that have not been affected. 537 00:24:29,359 --> 00:24:34,480 Speaker 8: And also usmcaight renegotiations start this summer, and if you 538 00:24:34,560 --> 00:24:38,199 Speaker 8: are an auto company or a lumber company, you're curious 539 00:24:38,240 --> 00:24:40,119 Speaker 8: to know whether or not you're going to have to 540 00:24:40,160 --> 00:24:44,919 Speaker 8: pay different rates of tariffs, whether a product is moving 541 00:24:45,000 --> 00:24:48,719 Speaker 8: from Canada to the US, from Mexico to the US, 542 00:24:49,080 --> 00:24:51,520 Speaker 8: and so I think they really want to know what 543 00:24:51,600 --> 00:24:53,560 Speaker 8: that looks like for them. 544 00:24:53,880 --> 00:24:57,400 Speaker 2: This is the bloombergs Evanents podcast, bringing you the best 545 00:24:57,480 --> 00:25:00,800 Speaker 2: in markets, economics, antient politics. 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