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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 2: with Paul Sweeney. Join us each day for insight from

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Speaker 2: the best in economics, finance, investment, and international relations. You

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Speaker 2: can also watch the show live on YouTube. Visit the

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Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 2: mornings from seven to ten am Eastern from our global

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Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Neil Dota

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Speaker 2: joins us. Now, Neil, what does this signal for Chairman

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Speaker 2: poulll get going.

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Speaker 3: That's what it says, go fifty with the promise to

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Speaker 3: do more as much as necessary to stabilize labor market conditions.

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Speaker 4: So again, Neil, I mean, and you think about these

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Speaker 4: numbers and the revisions. As Tom was just summarizing here,

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Speaker 4: the labor market, I guess it kind of falls into

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Speaker 4: what we were just saying many minutes ago, not nearly

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Speaker 4: as strong as people think it is.

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Speaker 3: No, I mean, the three month trend on non farm

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Speaker 3: private perils is running below one hundred thousand. I mean,

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Speaker 3: that's not a good number. You know, that's barely break even,

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Speaker 3: and I think it's arguably actually worse than that because

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Speaker 3: one of the reasons why the number even looked as

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Speaker 3: good as it did is because we saw an uptake

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Speaker 3: in construction employment among I think civil engineer contractors, and

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Speaker 3: so that's not going to last because everything we know

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Speaker 3: about construction right now is that units under constructure are

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Speaker 3: under constructure collapse, and so why are we hiring all

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Speaker 3: these people to build one exactly? That implies a argent

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Speaker 3: squeeze for builders, which I don't think they can tolerate

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Speaker 3: right now. So I think it's the goods producing side.

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Speaker 3: I mean Tom mentioned manufacturing. I think that's notable because

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Speaker 3: a lot of people were thinking maybe you'd see some

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Speaker 3: uptake and manufacturer because of the unwind of the retooling,

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Speaker 3: it just didn't happen. Right on the good side of

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Speaker 3: the economy's week, cyclically sensitive industries are sluggish, and you know,

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Speaker 3: this is all about the FED trying to create a

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Speaker 3: handoff from income le growth to credit led growth. That's

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Speaker 3: what this is about. So they need to keep cutting

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Speaker 3: until the credit sensitive areas of the economy.

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Speaker 2: Turn joining us worldwide, Neil Dutta, we are commercial free

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Speaker 2: to the nine o'clock hour. Claudia sam Mark Zandi will

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Speaker 2: join in a moment. Ben Ladler will join us on

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Speaker 2: the equity market reaction in the view forward here Later

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Speaker 2: in these twenty innutes, futures at negative seventeen, the vix's

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Speaker 2: A twenty two level comes in nicely twenty point seventy six.

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Speaker 2: Major bond market adjustments make it eight basis points. Two

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Speaker 2: year yield three point sixty six thirty year bond well

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Speaker 2: under four percent, three point nine eight percent, ten year

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Speaker 2: yield three point sixty seven percent. Neil, I want you

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Speaker 2: to frame out for us what inflation will do given

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Speaker 2: a depressed GDP in the job market, moving the second

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Speaker 2: derivative here is moving to a worser space. What does

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Speaker 2: inflation then do further disinflation I mean absolently, I think so.

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Speaker 3: I mean if you look at core goods, non housing services,

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Speaker 3: and housing rents, I mean those are those are the

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Speaker 3: three ways to slice the inflation data. The entire shortfall

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Speaker 3: relative to the FEDS target is in housing rents, which

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Speaker 3: we know will continue to normalize. Given the lagged you know,

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Speaker 3: sort of nature of that indicator relative to market based rents.

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Speaker 3: Everything else is basically normalized. So you know, again, I mean,

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Speaker 3: what's the upside risk our inflation if growth is running

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Speaker 3: below potential and the momentum under the unemployment rate is higher.

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Speaker 3: I mean, that's kind of it's kind of I mean,

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Speaker 3: unit labor costs are running basically flat for the last year,

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Speaker 3: so there's no more of an inflationary impulse coming out

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Speaker 3: of the job market. That story is completely over, and

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Speaker 3: the Fed continues to run a very very restricted policy stance.

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Speaker 4: Well, Paul, get one more in here and Neil, and

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Speaker 4: you know, the unemployment rate, just for those that are

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Speaker 4: going to be watching the headlines, stay steady at four

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Speaker 4: point two percent here, right in line with expectations. What

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Speaker 4: does the FED think about an unemployment rate of four

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Speaker 4: point two percent? Do you think?

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Speaker 3: I don't think they should think about an unemployment rate

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Speaker 3: of four point two percent. I think they should think

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Speaker 3: about what's gone on over the last six months, which

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Speaker 3: is what's gone out.

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Speaker 2: That's absolutely Neildudda, I know you got a publish will

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Speaker 2: feature that out on Twitter. Neil Dudda with Ren Mack

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Speaker 2: will publish and we thank him for careful market economic analysis.

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Speaker 2: So now bring you Claudius. I'm chief Economists, New Century

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Speaker 2: Advisors and doctor Mark Zandi, chief economists at Moody's. We

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Speaker 2: had them on here, oh thirty or sixty days ago,

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Speaker 2: can't remember. It was just lights out, great, great analysis, Claudia.

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Speaker 2: I want to get this out of the way so

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Speaker 2: we can move on to the real Claudia, Sam, I'm

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Speaker 2: sick of the palm recession. Pinata, can you just give

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Speaker 2: us an update without tire and feathering your reputation? Are

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Speaker 2: we close to a recession? Doctor Sam?

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Speaker 5: So the increase that unemployment rate is in a range

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Speaker 5: where we have historically been in recessions, right, But that's

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Speaker 5: a history, that's a past. We're not in a recession

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Speaker 5: right now. But we do have a weakening labor market, right,

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Speaker 5: So that's the important takeaway. But like, not a recession

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Speaker 5: right now, but a risk, always risk.

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Speaker 2: And what I remember from two thousand and eight is

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Speaker 2: a Zandy rule. There's a Psalm rule, but there's also

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Speaker 2: the Zandy rule, which is to be optimistic about America.

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Speaker 2: Mark Zandy. If we get the deck of cards I

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Speaker 2: hear from Neil and others in you frankly at Moody's

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Speaker 2: as well. Can corporations a just and sustain off of

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Speaker 2: a lower nominal GDP decent revenue and decent earnings or

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Speaker 2: do you just suggest everything goes.

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Speaker 6: Down, Tom, I think they're doing just fine. I mean,

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Speaker 6: looking at corporate earnings, they feel pretty good. I mean,

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Speaker 6: through Q two of twenty twenty four, double digit ear

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Speaker 6: ear growth, and you know, expectations of analysts always are

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Speaker 6: on the high side, but they're still pretty good as well.

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Speaker 6: So I think the economy is doing fine and producing

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Speaker 6: enough enough revenue growth to keep profitability going strong. So yeah,

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Speaker 6: I'm not worried about that. And you know, just broadly, yeah,

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Speaker 6: you know, I'm all on board with the view that

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Speaker 6: the BET should be cutting rates and normalizing them very quickly.

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Speaker 6: But today's report I thought pretty much down the strike zone.

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Speaker 6: I mean, you know, the kind of right underlying job

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Speaker 6: growth is one hundred one hundred and fifty K that's

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Speaker 6: kind of where you want it. Four point two percent unemployment,

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Speaker 6: that's kind of where you want it. You saw a

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Speaker 6: tick up an hour's work per week, that's, you know,

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Speaker 6: feels pretty good. Wage growth is almost exactly where you

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Speaker 6: want it. I mean, yeah, you can put airs, but

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Speaker 6: come on, what are we gonna say this? This is

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Speaker 6: a good report, This was a This felt like a

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Speaker 6: really good report to me.

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Speaker 4: Is it to the point there marked where the FED

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Speaker 4: can stay at twenty five basis points or is this

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Speaker 4: something that some are suggesting may push them to a

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Speaker 4: fifty basis point cut in September.

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Speaker 6: Yeah, I think it's twenty five. I mean, I would

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Speaker 6: expect the FED to cut fifty only in emergency if

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Speaker 6: you know, markets are really evaporating or there really was

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Speaker 6: some serious deterioration in the economy, job market, But I

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Speaker 6: don't see any of that, So I think it's a

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Speaker 6: cooler point. And there's you know, I think there's good

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Speaker 6: arguments to cut and cut in a consistent way, but

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Speaker 6: I don't think we need to dramatically cut all at once,

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Speaker 6: because there's a lot of uncertainty as to reasonable uncertainty

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Speaker 6: as to you know, where the FED should be going here.

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Speaker 6: What is the so called equal riom federal funds right?

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Speaker 6: What's the rate where policy is either supporting or restraining growth?

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Speaker 6: That is very uncertain, and I think given that, I'd

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Speaker 6: go cautiously unless push to do otherwise, and in this report,

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Speaker 6: I don't see any reason to feel like they have

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Speaker 6: to move very quickly.

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Speaker 4: Here, Claudia. Over the weekend, you'll be at some fancy

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Speaker 4: cocktail party and somebody's can come up to you and say, hey, Claudia,

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Speaker 4: how's the US labor market. What's your response?

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Speaker 5: It's not headed in the right direction. This is the

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Speaker 5: thing I am most concerned about. Again, just you know,

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Speaker 5: the numbers, like the numbers themselves. Okay, fine, it's just

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Speaker 5: things have been slowing and we can and not because

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Speaker 5: I am you know, hair on fire, that are recessions

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Speaker 5: around the corner. I'm really concerned that we're losing a

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Speaker 5: slipping away of a really good labor market. And we

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Speaker 5: need this as good as it gets and there should

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Speaker 5: be nothing weaker than what it takes the get inflation down.

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Speaker 5: And we are like the train is still moving and

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Speaker 5: is not in the right direction.

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Speaker 2: I mean to both of you, and then folks, we've

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Speaker 2: got huge academic caliber here. Mark, I'm gonna go to

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Speaker 2: you first, and then Claudia the same question the ECB

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Speaker 2: is trying to teach us about being non measured. Are

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Speaker 2: we slaves? Mark Sandy to a green spanny and measured approach. Careful, careful, careful.

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Speaker 2: Why can't we go X beeps or why beeps or

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Speaker 2: Z beeps and see what happens? Why can't we do that?

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Speaker 2: Mark Sandy, Well, I.

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Speaker 6: Don't know Tom that you need to. I mean, if

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Speaker 6: the you know, the labor market was falling apart, yeah, absolutely,

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Speaker 6: If you know financial system was in turmoil, yeah, i'd

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Speaker 6: move quit more quickly. But you know the economies, it's

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Speaker 6: throttling back. But that's exactly what you'd want to see,

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Speaker 6: to throttle back it for, to throttle back here it's

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Speaker 6: been growing too strongly and it's kind of coming right

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Speaker 6: into where you want it, and no reason to to

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Speaker 6: move quickly otherwise. And again I keep going back to

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Speaker 6: I don't think anyone knows reasonably so where we're headed here.

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Speaker 6: You know, it feels like it feels like the equilbrium

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Speaker 6: rate is higher than it has been typically and it's moving,

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Speaker 6: so you know, why not go cautiously? And you know,

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Speaker 6: if things start to really deteriorate, if you know, we do,

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Speaker 6: you start to see really significant job loss or or

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Speaker 6: even very weak job growth. Hey, one other quick point

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Speaker 6: I wanted to make you know, the August data is

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Speaker 6: always weak. You know, we get very low response rates,

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Speaker 6: initial response rates in the month of August. I think

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Speaker 6: for obvious reasons, people are on vacation, and we always

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Speaker 6: get an initial print that's on the sauce side. And

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Speaker 6: almost invariably, if you cast me back a year from now,

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Speaker 6: we're going to be talking about upward revisions to the data.

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Speaker 6: So you know, you just have to take that into consideration.

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Speaker 2: Claudia, I got a screen month moving average of one

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Speaker 2: hundred and sixteen thousand, three hundred and thirty three one

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Speaker 2: one three three three. I'm sorry, but that's way below

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Speaker 2: anything I've seen as a normal rate of unemployment if

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Speaker 2: you take this free mouth moving average. Jason Furman will

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Speaker 2: help out on this at Harvard. I'm sorry, Claudia, is

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Speaker 2: measured in place or is this a fed that's got

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Speaker 2: to go ad hoc forward?

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Speaker 5: Well, I think again, is like looking at how the

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Speaker 5: variables are changing. The unemployment rate has been rising, Yes,

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Speaker 5: it is still relatively low historically. We also have an

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Speaker 5: older workforce. Four point three percent is not that far

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Speaker 5: from and experienced and esteemed right, and so there's no

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Speaker 5: magic number with the unemployment rate it's watching the dynamics,

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Speaker 5: it's watching the change and knowing that once that changes

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Speaker 5: in place. The FED has been trying for two years

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Speaker 5: to cool off the labor market. That's why the funds

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Speaker 5: rate is at five percent and other types of demand. Right, so, yes,

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Speaker 5: things are cooling off, and now it's like, okay, now

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Speaker 5: we need to we need to turn that around. We

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Speaker 5: don't need that. I think that changes everything.

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Speaker 2: Wonder will Zamon Sandy with us right now? They move

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Speaker 2: the market higher? Futures negative thirty now negative twelve deterioration

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Speaker 2: and the Sweeney yield two year yield from negative seven

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Speaker 2: basis points down to negative nine. Those levels three sixty five,

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Speaker 2: two year, three sixty eight, ten year, thirty year bond

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Speaker 2: hunt or four percent? Paul you home shopping this weekend?

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Speaker 4: I might be absolutely red headline crossing the Bloomberg terminal.

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Speaker 4: Traders pricing fifty percent chance of half point FED cut

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Speaker 4: this month, crossing the Bloomberg terminal, Mark Sandy. Given the

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Speaker 4: labor outlook here in some of the data we got today,

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Speaker 4: as it relates to total payrolls and wages, what's your

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Speaker 4: view of the US consumer here? How healthy or how

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Speaker 4: at risk is the US consumer.

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Speaker 6: I think in aggregate, you know, looking across all Americans,

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Speaker 6: they're continue to do their part. They're hanging tough. I mean,

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Speaker 6: the train is being driven by folks in the top

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Speaker 6: part of the income distribution. And you know, I don't know,

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Speaker 6: I don't think it's hyperperctly, but their financial situation is

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Speaker 6: probably is it as it's ever been. You know, got

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Speaker 6: a job, the strong, real wage gains, they own stocks,

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Speaker 6: stocks or near record high zone home home vows or

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Speaker 6: near record highs. If they've got any debt at all,

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Speaker 6: it's a thirty or fifteen year or fixed rate mortgage

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Speaker 6: locked in And seems like everyone I talked to us

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Speaker 6: mortgae is it two and a half or three percent

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Speaker 6: kind of locked in? So I and they get and

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Speaker 6: in my by my calculation, they still have some excess

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Speaker 6: cash that they build up during the pandemic when they

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Speaker 6: couldn't spend that they're spending down now. So I think

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Speaker 6: they're fine. I do think the soft spot, obviously is

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Speaker 6: lower income households. They clearly are struggling. You know, they

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Speaker 6: got nailed by the high inflation. They took on a

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Speaker 6: lot of debt to supplement their income, to maintain their

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Speaker 6: purchasing power. And it's one thing when rates are low,

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Speaker 6: but when rates are really high. They mean, the credit

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Speaker 6: card RATEED is twenty two percent, a record high. That's

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Speaker 6: very painful. They don't own stocks, they don't own a home.

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Speaker 6: They rent, so you know, very different kind of perspectives.

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Speaker 6: But you know, at the end of the day, it's

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Speaker 6: the folks in the top middle parts of the distribution

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Speaker 6: that critical here.

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Speaker 2: I mean, I can't keep up. Did I tried to

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Speaker 2: get John Williams on the show, Claudias, Mark Sandy, John Williams.

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Speaker 2: That would have been good. New York Fed President John

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Speaker 2: Williams says, now appropriate to lower FED funds rate, Claudia,

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Speaker 2: when you were studying this at Michigan, this this this

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Speaker 2: ex post lag Is this unusual the way our FED

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Speaker 2: is acting.

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Speaker 5: Yes, particularly in the way monetary policy is quote unquote

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Speaker 5: supposed to be done like in the theories, right, but

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Speaker 5: that's a very clean, not realistic state. I understand why

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Speaker 5: the FED when tools start breaking down and data don't

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Speaker 5: make as much sense, then you kind of you, you know,

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Speaker 5: crawl your way along and you want evidence. I think

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Speaker 5: this FED did lean into a very FED like tendency

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Speaker 5: of being super super cautious, and they have been kind

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Speaker 5: of greedy in terms of how much data they wanted

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Speaker 5: on inflation. And if I had to hear so many times,

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Speaker 5: we have the luxury time because the labor market is

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Speaker 5: so strong, it's like, well, well guess what, it actually wasn't

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Speaker 5: as strong, and so there's a cost. They took time

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Speaker 5: to get comfortable with inflation, but that probably means they

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Speaker 5: do not have time.

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Speaker 7: To get right.

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Speaker 5: Is the labor market really weak and like they may

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Speaker 5: need to recalibrate some and get going I think would

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Speaker 5: be the appropriate But this is really outside of their playbook.

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Speaker 5: So I understand why this is a hard case to make.

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Speaker 2: Doctor Xandy, your opiniata for the Gloom Crew, I mean

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Speaker 2: seven eight oh nine, you said, everybody shut up, We're

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Speaker 2: going to fix this Zandy pandemic. Everybody shut up, We're

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Speaker 2: going to fix this. Give us an optimistic touch here

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Speaker 2: on how America will clear these traumas post pandemic. China

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Speaker 2: is slowing down, Claudius Sam's cats are miserable. Mark Zandy,

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Speaker 2: just as directly as you can give us. I need

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Speaker 2: some Zandy optimism now, or I can't get through the weekend.

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Speaker 6: Early I've got that reputation. I didn't know that that optimistic.

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Speaker 6: Well look, uh, just look at the numbers. I mean,

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Speaker 6: top four point two percent unemployment. I mean, okay, maybe

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Speaker 6: be nicer if it were four I'm I'm on board

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Speaker 6: with that. I mean, it's maybe on the soft side

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Speaker 6: of one point four point two percent unemployment. We're creating

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Speaker 6: a lot of jobs across lots of different industries and

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Speaker 6: have been for you know, quite some time. Inflation that's

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Speaker 6: back in the bottle almost no matter how you measure it.

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Speaker 6: So you know, we're growing at a potential. And by

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Speaker 6: the way, here's here's the thing that's really you know,

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Speaker 6: makes me encouraged. The economy's potential is very strong. I mean,

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Speaker 6: we're seeing a lot of labor force growth. That's one

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Speaker 6: of the that's the key reason why unemployment is not

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Speaker 6: tired here over the past year. That goes to immigration,

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Speaker 6: and you know, there's a lot of costs there, but

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Speaker 6: the benefit, obviously is the strong labor force grows. And

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Speaker 6: look at those productivity growth numbers, and you know, I

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Speaker 6: mean it's hard to argue that whether it's sustainable or not,

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Speaker 6: but it feels like there's a lot of good things

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Speaker 6: happening onunderneath all the business formation we're beginning. Since the

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Speaker 6: pandemic hit, it's probably reaping benefit. And this is all

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Speaker 6: before AI kind of kicks in. So you add of

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Speaker 6: all the productivity gains, you add in the labor force growth,

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Speaker 6: and that's a strong growing economy. And the FEDS trick

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Speaker 6: for the FED here is, you know, let the economy

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Speaker 6: take the foot off the brakes sufficiently to allow the

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Speaker 6: economy to grow it at its higher potential. That's a

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Speaker 6: very different issue or a problem. If demand we're evaporating,

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Speaker 6: that's not what's going on here. So you know, objectively,

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Speaker 6: take a step back and take a look around. This

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Speaker 6: economy is good.

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Speaker 2: Paul, one quick question to Claudia. Sign because futures just

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Speaker 2: went green, which is a signal. Go Ben Laidler, so

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Speaker 2: quickly here go to Claudia. And then we got to

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Speaker 2: drag Ben Laidler in here.

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Speaker 4: Claudia, Sam, I mean again, how do you just when

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Speaker 4: you sit back, you've had a few minutes of the Digestie,

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Speaker 4: how's the Fed? How do you think they're going to

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Speaker 4: digest these numbers today?

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Speaker 5: I think the payroll numbers are going to be the concern.

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Speaker 5: And frankly, the piece of it that I found most

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Speaker 5: is concerning you are the revision the earlier revisions. Right,

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Speaker 5: that's the hiring rate has gotten too low of a place,

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Speaker 5: and we're seeing it in the job gains. And then

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Speaker 5: to see it, you know, July was actually even a

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Speaker 5: little worse than we thought on the job's number, and

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Speaker 5: so that I think that takes some pause.

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Speaker 2: She said, So I'm supposed to have dinner with Claudia

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Speaker 2: and Jackson Hole. You know what they served elk and

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Speaker 2: the health's food was venison. I mean there's no fish

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Speaker 2: or nothing. Claudia Sam, we got to go. Thank you

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Speaker 2: so much, Claudia Sam, just nailing these revisions. I want

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Speaker 2: to want to mention Anna Wong as well at Bloomberg

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Speaker 2: and Mark Zandi, thank you so much for being where

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Speaker 2: this really appreciate from Moody's his optimism on the American

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Speaker 2: economic experiment. He is the bull strategist who has nailed

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Speaker 2: the trip from twenty eighteen. From Christmas Eve of twenty eighteen,

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Speaker 2: Ben Ladler joins us right now in this market, Ben Laidler,

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Speaker 2: are you going to cash? No?

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Speaker 8: I just killed my keyboard.

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Speaker 2: Here.

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Speaker 8: No, I think this is a I think we're at

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Speaker 8: the early innings of a bull market. I think the

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Speaker 8: FED cut, which is just around the corner and which

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Speaker 8: we're all sort of naval gazing over, I think is

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Speaker 8: the trigger for this bull market to broaden, both by

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Speaker 8: sector and bi geography. I think the data today probably

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Speaker 8: a little bit weaker than you know, bulls like I

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Speaker 8: would have liked, and it's probably a recipe for a

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Speaker 8: little bit more uncertainty. But bottom line, I don't think

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Speaker 8: it really changes the trajectory. I mean, this is an

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Speaker 8: economy that is slowing. We want it to slow to

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Speaker 8: pull forward those rate cuts. FED has a lot of

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Speaker 8: room to cut here. I think that will stabilize the

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Speaker 8: US economy, and I think that would be very, very

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Speaker 8: bullish for the rest of the world.

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Speaker 2: He's from the United Kingdom. We should properly introduce some

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Speaker 2: Ben Ladler britesco PBI with us right now.

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Speaker 4: Paul, the same question I asked that Claudia some Ben is,

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Speaker 4: how do you think the Federal Reserve will digest this

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Speaker 4: labor data today?

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Speaker 8: Yeah, so it's probably a little bit weaker than you know,

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Speaker 8: I would have liked, and probably that they would have liked. Mean,

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Speaker 8: I guess we'd all be looking for that sort of

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Speaker 8: goldilocks number that last month was was an aberration. Last

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Speaker 8: month probably wasn't an aberration, even though you know the

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Speaker 8: numbers were revised down a little bit today, I think

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Speaker 8: they're probably leaning a little bit more towards fifty. But

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Speaker 8: I think, bottom line, you know, they're going to get started.

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Speaker 8: Inflation break evens are at two percent. They've a lot

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Speaker 8: of room to cut here if they feel that they need.

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Speaker 8: I would like to see them get started, and I

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Speaker 8: think the chances a fifty basis point cut probably increased

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Speaker 8: a little bit. But you know, I'm not sweating the

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Speaker 8: pace I think too much. I think, you know, there's

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Speaker 8: a lot of moving parts here. I think overall, this

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Speaker 8: is an economy which is which is slowing. But you know,

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Speaker 8: let's not lose some perspective here. I mean, this is

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Speaker 8: an economy that we just had a three percent inflation

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Speaker 8: GDP print last you know, last quarter, that's nearly double

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Speaker 8: potential GDP unemployment just over four percent. I mean, we're

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Speaker 8: coming from the start point is a very good.

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Speaker 4: Place, giving that backdrop, ben given ef fact that we've

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Speaker 4: got ks likely coming down got through a pretty solid

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Speaker 4: earnings period in Q two. What are the sectors at

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Speaker 4: screenwall for you guys?

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Speaker 8: So, I think the biggest call right now is not

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Speaker 8: necessarily the direction of the market, which I think is

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Speaker 8: pretty well set and you know, up and to the right.

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Speaker 8: I think it's more about the sectors you own and

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Speaker 8: which parts of the world you own. I think this

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Speaker 8: is a broadening ball market. I think Tech's being a

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Speaker 8: great place to be. It's nothing wrong with Tech, but

404
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Speaker 8: I think you know the bits of the world and

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Speaker 8: the sectors that are much more sensitive to these interest

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Speaker 8: rate cuts which are coming. It's not the US and

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Speaker 8: it's not Tech, it's basically everybody else. All theres are

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Speaker 8: the bits of the market that we've forgotten about for

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Speaker 8: the last ten years. That's I think where you know

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Speaker 8: you should be kicking the ties on right now.

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Speaker 2: Ben, I don't have Apple in front of me, but

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Speaker 2: you were way out front twenty eighteen, twenty two, twenty three.

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Speaker 2: In all I'm here in Paul, you earn a lot

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Speaker 2: of death of big tech. I am Tayler, the Mag seven,

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Speaker 2: the Mag eight, including Berkshire. You still got to own them, right, Yeah?

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Speaker 8: I think so, you know the earning numbers are decelerating,

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Speaker 8: but that's still you know, no one else comes even close.

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Speaker 8: You've got these FORRTRESS balance sheets, You've got these huge

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Speaker 8: profit margins. You know, with all that, I can more

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Speaker 8: than justify you know, the valuations. You know, but we

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Speaker 8: all know that they're posting strong growth. You know, the

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Speaker 8: valuations are you know, already a premium numbers. That's not

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Speaker 8: I don't think where the surprise is going to come.

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Speaker 8: That's not where the sensitivity to low interest rates is

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Speaker 8: coming from. It's everybody else that has those shrivel profit margins,

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Speaker 8: that has those you know, depressed earnings expectations, who've just

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Speaker 8: come out of an earnings recession where valuations are forty

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Speaker 8: to fifty percent lower. That's where I think you're going

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Speaker 8: to get the bank for your buck in this sort

430
00:22:48,960 --> 00:22:52,440
Speaker 8: of broadening ball market and potential changing leadership.

431
00:22:52,680 --> 00:22:54,639
Speaker 2: Too short of visit. We got to get Ben Laylor

432
00:22:54,720 --> 00:22:57,800
Speaker 2: on again. Next time Tottenham wins, we'll get Ben labor on.

433
00:22:58,119 --> 00:23:12,400
Speaker 2: Ben Laylor, thank you so much. With Fordesco joining us now,

434
00:23:12,760 --> 00:23:15,760
Speaker 2: Denise Chism with really one of the most interesting jobs

435
00:23:16,280 --> 00:23:21,000
Speaker 2: at Fidelity Boston, Director of Quantitative Market Strategy and with

436
00:23:21,080 --> 00:23:27,119
Speaker 2: a legacy of quant and technical fidelity that the heritage

437
00:23:27,160 --> 00:23:30,600
Speaker 2: of what Denise Chism does is a big deal. Denise,

438
00:23:30,600 --> 00:23:31,920
Speaker 2: are we in a bull market?

439
00:23:33,080 --> 00:23:35,359
Speaker 9: Well, you just said it's grein So I think that

440
00:23:35,359 --> 00:23:37,320
Speaker 9: that's a good start. I mean, I think that that's

441
00:23:37,520 --> 00:23:40,040
Speaker 9: the question in terms of what the labor market actually

442
00:23:40,119 --> 00:23:43,800
Speaker 9: means to the overall stock market. And people are struggling

443
00:23:43,840 --> 00:23:46,720
Speaker 9: with the Fed's cutting interest rates? Is that necessarily a

444
00:23:46,720 --> 00:23:49,000
Speaker 9: bad thing? Half the time in history it has been

445
00:23:49,000 --> 00:23:52,240
Speaker 9: the Fed's cutting because they have to. But half the

446
00:23:52,280 --> 00:23:55,480
Speaker 9: time in history, the FED is cutting because they can.

447
00:23:56,160 --> 00:23:58,320
Speaker 9: And that's the part that I look at in terms

448
00:23:58,359 --> 00:24:00,879
Speaker 9: of the data is what is you ni about this

449
00:24:01,040 --> 00:24:04,240
Speaker 9: cycle and what is predictive about this cycle? And when

450
00:24:04,280 --> 00:24:06,960
Speaker 9: you look at bull markets and when you look at

451
00:24:07,000 --> 00:24:09,639
Speaker 9: the weakening of the labor market, in some ways, the

452
00:24:09,640 --> 00:24:12,960
Speaker 9: FED cutting doesn't really add much to market returns when

453
00:24:12,960 --> 00:24:15,240
Speaker 9: you roll all the data past nineteen sixty two, which

454
00:24:15,440 --> 00:24:18,159
Speaker 9: we might be focusing on the wrong metrick, But what

455
00:24:18,280 --> 00:24:21,600
Speaker 9: actually has mattered historically is earnings growth.

456
00:24:22,119 --> 00:24:25,280
Speaker 2: But Denise, what Peter Lynch didn't have to worry about

457
00:24:25,320 --> 00:24:28,040
Speaker 2: a pandemic? Do you have to adjust your work with

458
00:24:28,200 --> 00:24:30,720
Speaker 2: urine Timber, do you have to adjust your work because

459
00:24:30,720 --> 00:24:31,680
Speaker 2: you're coming out of a.

460
00:24:31,600 --> 00:24:35,520
Speaker 9: Pandemic always in the sense that there are no analogs

461
00:24:35,560 --> 00:24:37,639
Speaker 9: that can help you. So to your point, it is

462
00:24:37,760 --> 00:24:40,959
Speaker 9: always different this time, and there are a lot of

463
00:24:40,960 --> 00:24:43,560
Speaker 9: differences in the data. So the what you can do

464
00:24:43,720 --> 00:24:46,800
Speaker 9: is to study those differences to see if those differences

465
00:24:46,840 --> 00:24:49,840
Speaker 9: are predictive and to find out what those differences mean

466
00:24:50,000 --> 00:24:53,240
Speaker 9: to the overall stock market. Unemployment rate is actually a

467
00:24:53,280 --> 00:24:56,000
Speaker 9: great indicator to study because as much as we're all

468
00:24:56,080 --> 00:24:58,879
Speaker 9: laser focused on it, what you'll find is when you

469
00:24:58,920 --> 00:25:01,479
Speaker 9: look back in history, a rise in the unemployment rate

470
00:25:01,720 --> 00:25:05,679
Speaker 9: such that we've seen isn't necessarily bearish for the overall market.

471
00:25:06,200 --> 00:25:08,160
Speaker 9: In fact, some of the time, even when the stock

472
00:25:08,200 --> 00:25:10,760
Speaker 9: market's gone up, so some of that is recessionary fears.

473
00:25:10,760 --> 00:25:12,760
Speaker 9: But even when the stock market's gone up before it,

474
00:25:12,800 --> 00:25:15,360
Speaker 9: a rise in the unemployment rate hadn't been a problem

475
00:25:15,560 --> 00:25:18,640
Speaker 9: because some of that historically speaking, like the mid sixties

476
00:25:18,640 --> 00:25:21,280
Speaker 9: and the mid nineties, is driven by an increase in

477
00:25:21,359 --> 00:25:26,080
Speaker 9: labor supply. So the nuances in the data, the study

478
00:25:26,119 --> 00:25:29,879
Speaker 9: of history can actually help you identify the differences and

479
00:25:29,960 --> 00:25:32,920
Speaker 9: help you understand what is predictive on a go forward basis.

480
00:25:33,160 --> 00:25:35,560
Speaker 4: All right, we're speaking to Denise Chisolm, director of Quantitative

481
00:25:35,600 --> 00:25:38,479
Speaker 4: market Strategy Fidelity. Remember up in Boston time. We're now

482
00:25:38,520 --> 00:25:41,560
Speaker 4: in ninety six nine FM. Big signal up there so

483
00:25:41,640 --> 00:25:43,840
Speaker 4: far friends in New England. Denise, if I talk to

484
00:25:43,880 --> 00:25:46,280
Speaker 4: equity bulls here, they're telling me, I've got a pretty

485
00:25:46,280 --> 00:25:49,119
Speaker 4: solid earnings backdrop. I've got a FED that's about the

486
00:25:49,119 --> 00:25:52,200
Speaker 4: cut rates. That sounds pretty constructive. What are the black

487
00:25:52,240 --> 00:25:55,560
Speaker 4: boxes of the Fidelity quantitative group? What are they saying

488
00:25:55,600 --> 00:25:56,040
Speaker 4: these days?

489
00:25:56,640 --> 00:25:58,879
Speaker 9: Yeah, I will say I'm not a black box quant

490
00:25:59,200 --> 00:26:02,119
Speaker 9: so I'm notmatic by nature. As we just talked about,

491
00:26:02,160 --> 00:26:05,560
Speaker 9: it is always different, so I like to evaluate those differences.

492
00:26:05,800 --> 00:26:08,200
Speaker 9: And that's the part that's interesting about the FED cut.

493
00:26:08,240 --> 00:26:10,800
Speaker 9: I think that you hear a lot of strategists say, well,

494
00:26:10,840 --> 00:26:13,480
Speaker 9: this is a bullish thing because it's adding to accommodation,

495
00:26:13,920 --> 00:26:15,960
Speaker 9: or this is a bearerss thing because the last two

496
00:26:16,000 --> 00:26:18,000
Speaker 9: times the fed's been cutting, it's been because we've been

497
00:26:18,080 --> 00:26:20,680
Speaker 9: in a recession. So I think that the struggle around

498
00:26:20,760 --> 00:26:23,800
Speaker 9: that data is what is unique. And to me, what

499
00:26:23,920 --> 00:26:26,680
Speaker 9: is very unique this cycle is the elevated level of

500
00:26:26,720 --> 00:26:29,480
Speaker 9: the FED funds rate itself now above five with the

501
00:26:29,560 --> 00:26:34,560
Speaker 9: juxtaposition of inflation actually being below average or below three,

502
00:26:34,880 --> 00:26:37,440
Speaker 9: and that, as much as it sounds very restrictive in

503
00:26:37,520 --> 00:26:40,720
Speaker 9: terms of monetary policy, when you look at that, historically,

504
00:26:41,080 --> 00:26:43,119
Speaker 9: that's actually been a really good setup for the equity

505
00:26:43,119 --> 00:26:45,000
Speaker 9: market because the FED has the ability to.

506
00:26:45,000 --> 00:26:48,040
Speaker 2: Cut Okay, but what's the linkage here of the FED

507
00:26:48,240 --> 00:26:51,119
Speaker 2: to an equity account. I mean, let's say somebody owns

508
00:26:51,119 --> 00:26:53,760
Speaker 2: a few shares it will dan Off up at Fidelity.

509
00:26:54,240 --> 00:26:57,280
Speaker 2: What is the linkage here for a FED action now

510
00:26:57,800 --> 00:27:01,040
Speaker 2: to Danoff's contrafund. I don't get the linkage.

511
00:27:01,840 --> 00:27:04,200
Speaker 9: Well, there's not a big linkage. What I just said

512
00:27:04,359 --> 00:27:06,760
Speaker 9: was in some ways, when the FED is cutting interest rates,

513
00:27:06,760 --> 00:27:09,199
Speaker 9: your equity market returns will down off a side. Your

514
00:27:09,240 --> 00:27:12,400
Speaker 9: equity market returns run around the same average as when

515
00:27:12,400 --> 00:27:14,840
Speaker 9: the FED is hiking interest rates. So there's not a

516
00:27:14,840 --> 00:27:18,280
Speaker 9: big differentiation in terms of what's the value proposition to

517
00:27:18,359 --> 00:27:21,439
Speaker 9: own any given fund because of the FED. And I

518
00:27:21,480 --> 00:27:23,600
Speaker 9: think that that's the key factor that I want to

519
00:27:23,680 --> 00:27:26,640
Speaker 9: change the investor focus to all about the FED, all

520
00:27:26,680 --> 00:27:30,080
Speaker 9: about an indicator that really has provided very little signal

521
00:27:30,119 --> 00:27:32,879
Speaker 9: when you look historically because it's the why behind the

522
00:27:32,920 --> 00:27:35,840
Speaker 9: FED that matters. The parts of the data that can

523
00:27:35,880 --> 00:27:39,119
Speaker 9: help us understand that. Why are things like bank willingness

524
00:27:39,119 --> 00:27:43,040
Speaker 9: to lend, earnings growth, the acceleration and leading indicators, and

525
00:27:43,200 --> 00:27:46,040
Speaker 9: right now data can always change. They're actually pointing in

526
00:27:46,080 --> 00:27:47,439
Speaker 9: a fairly constructive direction.

527
00:27:47,600 --> 00:27:50,239
Speaker 2: Okay, Denise, thank you so much. Denise Schism joining us

528
00:27:50,240 --> 00:27:57,800
Speaker 2: in bost We continue strong. Stuart Kaiser joins US now

529
00:27:58,440 --> 00:28:02,040
Speaker 2: head of US Equity Trainings Strategy. It's City Group here

530
00:28:02,440 --> 00:28:05,199
Speaker 2: and the word to use coming into the studio is

531
00:28:05,240 --> 00:28:10,200
Speaker 2: it's not like early August. This time is confusing. Describe

532
00:28:10,200 --> 00:28:13,240
Speaker 2: our confusion, mister Kaiser, Yeah, good morning.

533
00:28:13,440 --> 00:28:15,480
Speaker 7: Look, I think you got the payroll print right in

534
00:28:15,520 --> 00:28:18,240
Speaker 7: the in the middle of the range, and that's probably

535
00:28:18,280 --> 00:28:20,480
Speaker 7: the most confusing outcome for equity markets. Is it low

536
00:28:20,560 --> 00:28:22,800
Speaker 7: enough for the FED to cut? Is it high enough

537
00:28:22,800 --> 00:28:25,120
Speaker 7: to believe the economy is still resilient? And if I'm

538
00:28:25,119 --> 00:28:27,080
Speaker 7: an equity investor, how do I kind of respond to

539
00:28:27,119 --> 00:28:29,560
Speaker 7: that unemployment rate? About flats? You didn't get a signal

540
00:28:29,560 --> 00:28:32,000
Speaker 7: there either, So I think equities are probably gonna take

541
00:28:32,040 --> 00:28:33,960
Speaker 7: their cue from the rag market at this point. And

542
00:28:34,040 --> 00:28:36,199
Speaker 7: you know, you guys were look at the warp before,

543
00:28:36,480 --> 00:28:38,800
Speaker 7: and you know, you know how much cut is priced

544
00:28:38,800 --> 00:28:40,680
Speaker 7: into there. The equities are probably gonna take pretty big

545
00:28:40,680 --> 00:28:43,440
Speaker 7: signal from because I think the data today was just

546
00:28:43,520 --> 00:28:45,120
Speaker 7: not as informative as it could have been.

547
00:28:45,480 --> 00:28:47,480
Speaker 4: So on your desk at the City Trading desk at

548
00:28:47,480 --> 00:28:51,720
Speaker 4: four ninety Greenwitch Avenue, Downtown Manhattan, what are they saying?

549
00:28:51,720 --> 00:28:54,440
Speaker 4: Are they are you guys taking positions, You're taking risk

550
00:28:54,840 --> 00:28:58,280
Speaker 4: for your clients, or maybe just waiting to get more

551
00:28:58,400 --> 00:29:00,480
Speaker 4: data to get more conviction one one way the other.

552
00:29:00,720 --> 00:29:02,800
Speaker 7: I think this week has largely been a sit on

553
00:29:02,840 --> 00:29:05,080
Speaker 7: your hands type of week and wait for the data

554
00:29:05,080 --> 00:29:06,880
Speaker 7: to come out. And I think that applies to the banks,

555
00:29:06,880 --> 00:29:08,520
Speaker 7: and I think that applies to clients as well.

556
00:29:08,640 --> 00:29:10,440
Speaker 2: You know, you had to sell off on Monday.

557
00:29:10,560 --> 00:29:12,560
Speaker 7: Maybe in a typical week you might have had a

558
00:29:12,560 --> 00:29:14,360
Speaker 7: little bit of a by the mentality. But I think

559
00:29:14,400 --> 00:29:16,080
Speaker 7: a lot of folks that how can I add risk

560
00:29:16,160 --> 00:29:16,880
Speaker 7: ahead of this event?

561
00:29:17,160 --> 00:29:20,600
Speaker 2: In your experience, If you get an Andrew Hollandhurst Market

562
00:29:21,120 --> 00:29:23,640
Speaker 2: where City Group's been outfront saying there's going to be

563
00:29:23,680 --> 00:29:28,160
Speaker 2: a rapidity to the rate cuts, the corporate world's assuaged

564
00:29:28,200 --> 00:29:31,600
Speaker 2: by that, I mean corporations are just given a new

565
00:29:31,640 --> 00:29:33,400
Speaker 2: lower rate regime, right, Yeah.

566
00:29:33,440 --> 00:29:36,000
Speaker 7: I think corporates would like it in terms of you know,

567
00:29:36,240 --> 00:29:39,480
Speaker 7: bounanceet management, refinancing, things of that nature. Equity markets will

568
00:29:39,480 --> 00:29:41,240
Speaker 7: not like it. I think if you have to cut

569
00:29:41,280 --> 00:29:45,080
Speaker 7: fifty because growth is slowing that rapidly, equity markets are

570
00:29:45,160 --> 00:29:48,160
Speaker 7: not going to get enough support from rates initially. Obviously,

571
00:29:48,200 --> 00:29:51,080
Speaker 7: eventually market will stabilize, but the initial reaction I think

572
00:29:51,080 --> 00:29:53,720
Speaker 7: to a fifty basis point cut would be Wow.

573
00:29:53,960 --> 00:29:57,160
Speaker 2: You know, they clearly believe that they're cut to the chase. Here.

574
00:29:57,160 --> 00:29:59,040
Speaker 2: It's the end of the year. Everybody's in a panic

575
00:29:59,320 --> 00:30:01,520
Speaker 2: to stay in place. Lloyd somewhere in the vicinity of

576
00:30:01,920 --> 00:30:05,640
Speaker 2: March thirty one, are we going to see strategists cutting

577
00:30:05,680 --> 00:30:07,960
Speaker 2: their s and p Outlook, I.

578
00:30:07,920 --> 00:30:09,720
Speaker 7: Don't think they're going to cut for this year. I think,

579
00:30:09,760 --> 00:30:11,640
Speaker 7: you know, what they do for twenty twenty five will

580
00:30:11,640 --> 00:30:13,360
Speaker 7: be pretty interesting. I mean, you know, twenty twenty four

581
00:30:13,440 --> 00:30:15,160
Speaker 7: is almost baked in the cake at this point. Earnings

582
00:30:15,200 --> 00:30:17,560
Speaker 7: been pretty solid, Equity markets are up mid double digits.

583
00:30:17,720 --> 00:30:19,560
Speaker 7: I think the question is going to be, if we

584
00:30:19,640 --> 00:30:22,320
Speaker 7: are decelerating from a growth perspective, what does that twenty

585
00:30:22,360 --> 00:30:26,040
Speaker 7: twenty five EPs number look like, and you could have

586
00:30:26,160 --> 00:30:27,840
Speaker 7: a little bit of a balancing act here right where

587
00:30:27,920 --> 00:30:29,800
Speaker 7: Ernie's brought this slowing a bit, but you're getting some

588
00:30:29,880 --> 00:30:32,680
Speaker 7: rate cuts, which their supporter for valuation, so it'll be

589
00:30:32,880 --> 00:30:34,920
Speaker 7: something for everything type out look. But to me, it's

590
00:30:34,920 --> 00:30:37,200
Speaker 7: the twenty twenty five EPs number. What does that look

591
00:30:37,240 --> 00:30:38,160
Speaker 7: like for next year will.

592
00:30:38,000 --> 00:30:38,400
Speaker 2: Be the key.

593
00:30:38,840 --> 00:30:41,840
Speaker 4: Tom Morgan Stanley's US economics research team is out with

594
00:30:41,840 --> 00:30:46,320
Speaker 4: the note here saying modest rebounding jaws easingcoming probably twenty

595
00:30:46,320 --> 00:30:48,160
Speaker 4: five bases points, So they're sticking with their twenty five

596
00:30:48,160 --> 00:30:51,920
Speaker 4: basis point four cast there at Morgan Stanley Stewart. Given that,

597
00:30:52,440 --> 00:30:55,000
Speaker 4: is this now going to be an earnings driven market?

598
00:30:55,120 --> 00:30:56,680
Speaker 4: Do you think is that kind of what's going to

599
00:30:56,680 --> 00:30:58,440
Speaker 4: be the primary determined going into next year?

600
00:30:58,880 --> 00:31:01,320
Speaker 7: I think early next year, I think the next couple

601
00:31:01,280 --> 00:31:03,880
Speaker 7: of weeks months are just gonna be very much macro driven. Okay,

602
00:31:03,880 --> 00:31:05,520
Speaker 7: we need to see what the Fed is gonna do.

603
00:31:05,560 --> 00:31:07,400
Speaker 7: We need to see if this slow down in the

604
00:31:07,480 --> 00:31:09,640
Speaker 7: job of data is real. We need to see, you know,

605
00:31:09,680 --> 00:31:11,320
Speaker 7: what kind of momentum we have to the upside of

606
00:31:11,360 --> 00:31:15,040
Speaker 7: the unemployment rate. So earnings will matter, but you know,

607
00:31:15,080 --> 00:31:17,440
Speaker 7: it's very hard for earnings to matter if the FED

608
00:31:17,520 --> 00:31:20,040
Speaker 7: is cutting fifty or if the labor market is printing,

609
00:31:20,120 --> 00:31:21,600
Speaker 7: let's say, sell one hundred k jobs.

610
00:31:21,720 --> 00:31:24,960
Speaker 2: Good Morning across the Nation ninety ninety one FM Boston,

611
00:31:25,120 --> 00:31:28,800
Speaker 2: Bloomberg eleven three or Flagshit Network here in New York.

612
00:31:28,840 --> 00:31:32,160
Speaker 2: Good Morning ninety two nine FM Boston. Thrilled that you're

613
00:31:32,200 --> 00:31:34,720
Speaker 2: with us. Thanks for the feedback. I'm gonna go to

614
00:31:34,760 --> 00:31:39,280
Speaker 2: three thirteen this morning. SPX futures cratered. We're up over

615
00:31:39,480 --> 00:31:44,000
Speaker 2: one point one percent now, Dow up to twenty, SPX

616
00:31:44,040 --> 00:31:47,920
Speaker 2: green up eighteen. Nastic lags a little bit. The Vics

617
00:31:47,960 --> 00:31:51,640
Speaker 2: from a twenty two handle. It's the stored Keiser derivative.

618
00:31:52,400 --> 00:31:55,400
Speaker 2: Paul Sweeney, We're into an eighteen point eighty six in

619
00:31:55,480 --> 00:31:58,480
Speaker 2: a stick three big figure. Move on the Vicks.

620
00:31:58,560 --> 00:32:02,440
Speaker 4: That's all you gotta know, absolutely, Tom Stewart, what sectors

621
00:32:02,440 --> 00:32:04,840
Speaker 4: look good to you guys at city these days? Given

622
00:32:05,120 --> 00:32:07,480
Speaker 4: we're in a pretty decent earnings environment, it looks like

623
00:32:07,520 --> 00:32:11,200
Speaker 4: we've got rates coming down. What sector screenwall for you guys.

624
00:32:11,960 --> 00:32:13,840
Speaker 7: Yeah, Look, a lot of that's going to have to

625
00:32:13,840 --> 00:32:15,680
Speaker 7: do with how the economic growth you know, kind of

626
00:32:15,680 --> 00:32:17,840
Speaker 7: evolves itself. I would say that, you know, if you

627
00:32:17,880 --> 00:32:19,640
Speaker 7: want to stay in the growth trade, the stuff that's

628
00:32:19,680 --> 00:32:22,320
Speaker 7: underperformed has kind of been more in healthcare on the

629
00:32:22,320 --> 00:32:22,960
Speaker 7: cyclical side.

630
00:32:22,960 --> 00:32:25,320
Speaker 4: I think with healthcare is underperformed, right, it has.

631
00:32:25,360 --> 00:32:27,080
Speaker 7: But I mean if you if you want to be

632
00:32:27,120 --> 00:32:28,760
Speaker 7: in growth but you're a little bit worried about Tech

633
00:32:28,840 --> 00:32:30,920
Speaker 7: risk award for instance, I think you know, healthcare will

634
00:32:30,920 --> 00:32:33,280
Speaker 7: be a second option there. I think there's a lot

635
00:32:33,280 --> 00:32:35,560
Speaker 7: of folks that are very positive of financials and banks

636
00:32:35,640 --> 00:32:38,000
Speaker 7: ahead of the election. The other sector, and I'm not

637
00:32:38,000 --> 00:32:39,560
Speaker 7: sure that we necessarily have a strong view on it,

638
00:32:39,600 --> 00:32:42,920
Speaker 7: is energy, which is lags so much but is very

639
00:32:43,000 --> 00:32:45,960
Speaker 7: much in that cyclical camp. So to me as a

640
00:32:46,000 --> 00:32:48,600
Speaker 7: house you know, as Tom mentioned, Andrew Holandhorst has a

641
00:32:48,600 --> 00:32:50,160
Speaker 7: recession back half of the year. So I think that

642
00:32:50,200 --> 00:32:52,240
Speaker 7: means you need to be relatively conservative in terms of

643
00:32:52,280 --> 00:32:54,760
Speaker 7: how you're allocating stuff. You know that puts you in

644
00:32:54,880 --> 00:32:57,000
Speaker 7: things I think like healthcare and staples and the like.

645
00:32:57,640 --> 00:33:00,440
Speaker 7: To me, the wildcard there is tech. If you look

646
00:33:00,480 --> 00:33:03,280
Speaker 7: at it fundamentally, you'd say this thing is defensive. If

647
00:33:03,280 --> 00:33:05,600
Speaker 7: you look at it from a positioning perspective, you'd say

648
00:33:05,600 --> 00:33:07,640
Speaker 7: there's a lot of embedded risks there and if you

649
00:33:07,680 --> 00:33:10,960
Speaker 7: saw what happened Monday, Monday positioning took over that trade.

650
00:33:11,000 --> 00:33:12,320
Speaker 7: So I think tech to me is the one that

651
00:33:12,360 --> 00:33:13,560
Speaker 7: has the most debate right now.

652
00:33:13,640 --> 00:33:14,240
Speaker 4: How about AI?

653
00:33:14,360 --> 00:33:15,040
Speaker 2: Is it AI?

654
00:33:15,560 --> 00:33:15,680
Speaker 6: Oh?

655
00:33:15,760 --> 00:33:18,640
Speaker 2: Yeah? Over? Is that? We haven't mentioned it all week?

656
00:33:18,720 --> 00:33:20,800
Speaker 4: I know That's what I'm thinking of. Is it now?

657
00:33:21,200 --> 00:33:23,959
Speaker 4: Is that peaked a little bit? We kind of hit

658
00:33:24,000 --> 00:33:25,840
Speaker 4: post or peak and AI.

659
00:33:26,440 --> 00:33:27,960
Speaker 7: It does feel like that a bit, you know, just

660
00:33:28,000 --> 00:33:30,040
Speaker 7: in the sense of you saw broad come overnight traded

661
00:33:30,080 --> 00:33:32,160
Speaker 7: off and video traded off on earnings, You're kind of

662
00:33:32,200 --> 00:33:34,160
Speaker 7: waiting until early next year to see what the new

663
00:33:34,200 --> 00:33:36,400
Speaker 7: chip set out of a video does come on.

664
00:33:36,640 --> 00:33:39,600
Speaker 2: It's September thirty. We're going to go on four weeks.

665
00:33:39,600 --> 00:33:42,440
Speaker 2: October one to October ten is going to be freaking

666
00:33:42,600 --> 00:33:45,720
Speaker 2: frenzy of AI Nirvana, right.

667
00:33:46,360 --> 00:33:48,560
Speaker 7: You know, we'll see tom. Because I do think sentiment

668
00:33:48,640 --> 00:33:50,960
Speaker 7: is shifted a bit. People are very hesitant to buy

669
00:33:51,000 --> 00:33:53,520
Speaker 7: the cappec spending right now, the people that are spending

670
00:33:53,560 --> 00:33:55,720
Speaker 7: capex on II. I think people are a little cautious

671
00:33:55,760 --> 00:33:58,120
Speaker 7: about and I think on the recipients which would be

672
00:33:58,120 --> 00:34:01,200
Speaker 7: broad comming to video. Primarily people are a little concerned about,

673
00:34:01,240 --> 00:34:03,960
Speaker 7: you know, the continued upside to revenue outlooks and where

674
00:34:04,000 --> 00:34:06,800
Speaker 7: the valuation is. So yes, in earning's going to be

675
00:34:06,800 --> 00:34:09,400
Speaker 7: a huge talking point. Whether those stocks respond will be interesting.

676
00:34:09,480 --> 00:34:12,319
Speaker 2: Is your trading desk like the show industry? I mean,

677
00:34:12,400 --> 00:34:15,640
Speaker 2: is that that nuts over its city group? Where? I mean,

678
00:34:15,760 --> 00:34:17,200
Speaker 2: are they throwing things at you?

679
00:34:17,719 --> 00:34:20,080
Speaker 7: I've never seen the show industry. I haven't had anything

680
00:34:20,120 --> 00:34:23,279
Speaker 7: thrown in me into a least twenty years, though I'm

681
00:34:23,320 --> 00:34:23,919
Speaker 7: a friendly guy.

682
00:34:24,120 --> 00:34:26,680
Speaker 2: I mean, I mean, how has a trading desk changed

683
00:34:26,680 --> 00:34:29,600
Speaker 2: when Paul Sweeney was taking them out to three hundred

684
00:34:29,640 --> 00:34:31,799
Speaker 2: dollars lunches? Yeah, thirty years ago.

685
00:34:32,360 --> 00:34:34,320
Speaker 7: It's a lot quieter than it used to be. Honestly,

686
00:34:34,440 --> 00:34:36,600
Speaker 7: like big news comes out, you don't hear people yelling.

687
00:34:36,640 --> 00:34:39,200
Speaker 7: You hear the ting ting ting of the computers, right, So,

688
00:34:39,280 --> 00:34:43,080
Speaker 7: because you're watching Bloomberg surveillance, of course, you know they

689
00:34:43,080 --> 00:34:44,280
Speaker 7: can't concentrate on the markets.

690
00:34:44,320 --> 00:34:46,960
Speaker 2: They yeah, well, you know that's the story of life.

691
00:34:47,200 --> 00:34:47,360
Speaker 6: You know.

692
00:34:47,640 --> 00:34:50,120
Speaker 2: I look Stewart here at this bull market, and I

693
00:34:50,120 --> 00:34:52,960
Speaker 2: mean we walked in your slit your wrists at five am.

694
00:34:53,200 --> 00:34:56,960
Speaker 2: Future is negative thirty we've done like a forty point

695
00:34:57,239 --> 00:35:01,439
Speaker 2: swing in SPX futures today. Is that the future? I mean,

696
00:35:02,040 --> 00:35:03,840
Speaker 2: is that what Q four lays out to be.

697
00:35:04,560 --> 00:35:06,000
Speaker 7: I think for the next couple of months of marks,

698
00:35:06,040 --> 00:35:08,680
Speaker 7: you'll be very, very sensitive and jumpy on any growth data.

699
00:35:08,719 --> 00:35:10,560
Speaker 7: I think we saw that on IM earlier this week.

700
00:35:10,600 --> 00:35:12,759
Speaker 7: To your point, you know, this was a very was

701
00:35:12,840 --> 00:35:14,840
Speaker 7: viewed as a very binary event. You know, if we

702
00:35:14,880 --> 00:35:17,879
Speaker 7: print above consensus, the market's going to recover because all

703
00:35:17,880 --> 00:35:20,319
Speaker 7: of this slow down, you know, fear was overdone. If

704
00:35:20,320 --> 00:35:22,239
Speaker 7: we print, you know, sell one hundred and twenty five k,

705
00:35:22,719 --> 00:35:23,959
Speaker 7: it's re session around the corner.

706
00:35:24,040 --> 00:35:24,879
Speaker 2: We need to sell off.

707
00:35:25,400 --> 00:35:28,280
Speaker 7: So I think that what we got was something in between,

708
00:35:28,520 --> 00:35:31,480
Speaker 7: which is sort of stabilized markets, but not resolve the

709
00:35:31,480 --> 00:35:34,640
Speaker 7: confusion or sorted out the uncertainty. So that means the

710
00:35:34,640 --> 00:35:36,879
Speaker 7: next month or two incoming growth data, you know, much

711
00:35:36,920 --> 00:35:38,520
Speaker 7: more important that it's been for at least the last

712
00:35:38,520 --> 00:35:38,959
Speaker 7: two years.

713
00:35:39,680 --> 00:35:42,040
Speaker 4: There you go, I mean, it's we're data dependenton but

714
00:35:42,080 --> 00:35:42,279
Speaker 4: it's not.

715
00:35:42,360 --> 00:35:46,520
Speaker 2: We're data depending I guess so. But the one common

716
00:35:46,600 --> 00:35:49,160
Speaker 2: theme I would suggest, as everyone agrees that fed's way

717
00:35:49,200 --> 00:35:52,920
Speaker 2: behind Yes, whether right or wrong, Stuart Kaiser, Thank you

718
00:35:52,960 --> 00:36:05,839
Speaker 2: so much for joining us today your daily look at

719
00:36:05,840 --> 00:36:06,759
Speaker 2: the front pages.

720
00:36:07,440 --> 00:36:09,880
Speaker 10: Lisa, all right, we're starting with TikTok. You know they

721
00:36:09,920 --> 00:36:14,240
Speaker 10: had that possible ban going out. Apparently it's losing American support,

722
00:36:14,320 --> 00:36:15,920
Speaker 10: So Bloomberg has the story out.

723
00:36:15,960 --> 00:36:17,360
Speaker 1: It's a survey from Pew Research.

724
00:36:17,440 --> 00:36:20,239
Speaker 10: It showed many Americans, well, they shifted their stance in

725
00:36:20,239 --> 00:36:21,960
Speaker 10: the past year and a half. So just thirty two

726
00:36:22,040 --> 00:36:23,520
Speaker 10: percent US adults.

727
00:36:23,480 --> 00:36:24,560
Speaker 1: Back that TikTok band.

728
00:36:24,600 --> 00:36:25,359
Speaker 10: That was compared to.

729
00:36:25,400 --> 00:36:27,760
Speaker 1: Thirty eighty percent last fall.

730
00:36:28,080 --> 00:36:29,840
Speaker 10: And this is not kid, this is adults. This are

731
00:36:29,920 --> 00:36:32,360
Speaker 10: adults that are that are surveyed for this. So it

732
00:36:32,400 --> 00:36:35,319
Speaker 10: didn't ask them why their opinion changed, because I was asking, well,

733
00:36:35,360 --> 00:36:37,360
Speaker 10: what's the difference, why are they why are they thinking different?

734
00:36:37,560 --> 00:36:39,640
Speaker 10: It didn't say why they changed. They did say that

735
00:36:39,680 --> 00:36:43,000
Speaker 10: it's divided along party lines. That's a difference there.

736
00:36:43,080 --> 00:36:44,720
Speaker 2: But uh, you use TikTok.

737
00:36:45,239 --> 00:36:45,799
Speaker 7: I do not.

738
00:36:47,440 --> 00:36:48,120
Speaker 2: Use TikTok.

739
00:36:48,520 --> 00:36:51,920
Speaker 1: Come only to follow my kid.

740
00:36:50,600 --> 00:36:54,239
Speaker 4: So you say, but I mean, who's I mean? Still,

741
00:36:54,239 --> 00:36:56,719
Speaker 4: the issue is it's owned by bike Dance, which is

742
00:36:56,760 --> 00:36:59,879
Speaker 4: a Chinese company, and so the risk of having US

743
00:37:00,000 --> 00:37:02,279
Speaker 4: consumer data owned by a Chinese company that's the risk

744
00:37:02,800 --> 00:37:04,759
Speaker 4: is it still with the government. Does the government thinking

745
00:37:04,760 --> 00:37:06,120
Speaker 4: about what to do? Is that kind of where we

746
00:37:06,120 --> 00:37:06,400
Speaker 4: are now?

747
00:37:06,400 --> 00:37:09,960
Speaker 10: That's what they have until January to basically sell the

748
00:37:10,000 --> 00:37:11,080
Speaker 10: app or face.

749
00:37:10,840 --> 00:37:12,759
Speaker 2: The band because that was signed.

750
00:37:12,800 --> 00:37:14,560
Speaker 4: That's a loss signed by President Biden.

751
00:37:14,640 --> 00:37:15,920
Speaker 1: So something that's going to happen.

752
00:37:15,840 --> 00:37:19,480
Speaker 2: Miamateur take is everybody's trying to be the new TikTok.

753
00:37:19,719 --> 00:37:27,320
Speaker 2: Everybody wants to short attention span see by kids little

754
00:37:27,480 --> 00:37:28,799
Speaker 2: you know, Instagram, all of them.

755
00:37:28,840 --> 00:37:31,040
Speaker 1: You can get lost in that frit you just keep

756
00:37:31,120 --> 00:37:33,040
Speaker 1: scrolling and scrambling.

757
00:37:33,000 --> 00:37:37,960
Speaker 2: Like talk Tom Sekunda about TikTok on the Bloomberg Professional service.

758
00:37:38,160 --> 00:37:39,920
Speaker 2: That would work out next.

759
00:37:40,239 --> 00:37:43,080
Speaker 10: To get them on Okay, this is from the Wall

760
00:37:43,080 --> 00:37:47,040
Speaker 10: Street Journal. There's been this battle of public versus private beaches.

761
00:37:47,080 --> 00:37:51,400
Speaker 10: This is along Florida's coastline. It's actually Walton County, twenty

762
00:37:51,440 --> 00:37:53,239
Speaker 10: six miles beautiful.

763
00:37:52,719 --> 00:37:56,799
Speaker 1: Beaches, right, but half the beach is private, so only

764
00:37:56,840 --> 00:37:57,600
Speaker 1: residents can do it.

765
00:37:57,640 --> 00:37:59,160
Speaker 10: So a lot of beach goers they have to do

766
00:37:59,280 --> 00:38:02,120
Speaker 10: these big ses that are put out. There's even security guards,

767
00:38:02,120 --> 00:38:04,319
Speaker 10: so if you're not part of the private beach, you have.

768
00:38:04,320 --> 00:38:05,000
Speaker 1: To stay out.

769
00:38:05,560 --> 00:38:08,839
Speaker 10: So the public beaches are now packed. This though has

770
00:38:08,920 --> 00:38:11,200
Speaker 10: been a law forever, like it's been around for the

771
00:38:11,239 --> 00:38:13,080
Speaker 10: long time. The reason why it's an issue now is

772
00:38:13,080 --> 00:38:15,120
Speaker 10: because it's become more crowded, more developed.

773
00:38:15,200 --> 00:38:18,480
Speaker 2: Is it state by state because some of the New

774
00:38:18,480 --> 00:38:21,520
Speaker 2: England climbs I've been and it's just understood it's private.

775
00:38:21,920 --> 00:38:25,440
Speaker 2: But then the great venture capitalist vinode Coosla had a

776
00:38:25,520 --> 00:38:29,920
Speaker 2: running battle in California for years exactly your kids walking

777
00:38:29,960 --> 00:38:30,840
Speaker 2: across this beach.

778
00:38:30,960 --> 00:38:33,040
Speaker 4: I know in California, having owned a home there for

779
00:38:33,080 --> 00:38:36,160
Speaker 4: a long time. All open, I mean, you know, dogs

780
00:38:36,160 --> 00:38:40,279
Speaker 4: are it's all completely open. New Jersey, right, you have

781
00:38:40,280 --> 00:38:41,360
Speaker 4: to have the badges.

782
00:38:41,120 --> 00:38:44,000
Speaker 1: I pay you to go on the beach in New Jersey.

783
00:38:44,120 --> 00:38:46,960
Speaker 4: Yeah, and they say, oh, it's for the maintenance of

784
00:38:47,000 --> 00:38:48,560
Speaker 4: the beach and replenishment of the beach.

785
00:38:48,640 --> 00:38:49,920
Speaker 1: And I don't know, I don't know.

786
00:38:50,160 --> 00:38:52,240
Speaker 2: So what's happening in Florida, New Jersey?

787
00:38:52,480 --> 00:38:54,239
Speaker 10: So because of that, in Florida, it's it's it's a

788
00:38:54,360 --> 00:38:57,080
Speaker 10: battle between you know, the residents and people who are visiting.

789
00:38:57,160 --> 00:38:59,319
Speaker 1: So now they want the law to change. But the

790
00:38:59,320 --> 00:39:00,719
Speaker 1: people that there's saying, hey, this is good.

791
00:39:01,080 --> 00:39:04,960
Speaker 4: Say the beaches on dustin Florida beautiful. The nicest beaches.

792
00:39:05,000 --> 00:39:07,799
Speaker 4: I think I've ever been on the perfect sand water

793
00:39:08,000 --> 00:39:08,960
Speaker 4: just extraordinary there.

794
00:39:09,080 --> 00:39:10,080
Speaker 2: You wouldn't wouldn't think it.

795
00:39:10,080 --> 00:39:12,560
Speaker 10: But it's also yeah, they say it's not fair all right,

796
00:39:13,600 --> 00:39:16,279
Speaker 10: still for sale. Twelve years later, we've been talking about

797
00:39:16,320 --> 00:39:19,000
Speaker 10: the housing market, right, houses going off like this.

798
00:39:19,160 --> 00:39:21,680
Speaker 1: I mean, I'm being outbit left and right. But you

799
00:39:21,719 --> 00:39:23,960
Speaker 1: know whose house is still up for sale? Michael Jordan.

800
00:39:24,120 --> 00:39:27,879
Speaker 10: Yes, his mansion, his estate north of Chicago, fifty six

801
00:39:27,920 --> 00:39:31,239
Speaker 10: thousand square foot home. It listed first listed for twenty

802
00:39:31,280 --> 00:39:34,480
Speaker 10: nine million back in twenty twelve, later dropped to about

803
00:39:34,520 --> 00:39:35,360
Speaker 10: fifteen million.

804
00:39:35,520 --> 00:39:37,080
Speaker 1: It's still unsold.

805
00:39:37,520 --> 00:39:40,319
Speaker 10: The reason why, I mean, experts are saying it's just

806
00:39:40,360 --> 00:39:43,120
Speaker 10: to Michael Jordan, right, it's highly personalized.

807
00:39:43,960 --> 00:39:45,239
Speaker 1: That's kind of tough to sell.

808
00:39:45,280 --> 00:39:47,680
Speaker 10: It has this big entrance gate with the two three

809
00:39:47,800 --> 00:39:50,279
Speaker 10: you know on the gate, a lot of flags with

810
00:39:50,320 --> 00:39:52,840
Speaker 10: the silhouette across it. The movie theater has his you

811
00:39:52,840 --> 00:39:56,200
Speaker 10: know silhouette. He has these certain things like the doors

812
00:39:56,239 --> 00:39:58,680
Speaker 10: and the Playboy mansion. And here's the biggest part is

813
00:39:58,680 --> 00:40:01,680
Speaker 10: that it's about two miles west of the waterfront houses

814
00:40:01,920 --> 00:40:03,920
Speaker 10: that are lining Lake Michigan where everyone wants to be.

815
00:40:04,320 --> 00:40:06,080
Speaker 1: So Michael Jordan wants to be private, so.

816
00:40:06,400 --> 00:40:10,120
Speaker 2: To way that doesn't he clear the market this weekend

817
00:40:10,120 --> 00:40:14,160
Speaker 2: with an open house and drop the price. That's usually

818
00:40:14,200 --> 00:40:14,839
Speaker 2: what you do.

819
00:40:15,000 --> 00:40:18,839
Speaker 10: He's been paying housekeepers, managers, security staff. He's paid over

820
00:40:18,880 --> 00:40:21,799
Speaker 10: a million dollars in taxes since it was listed back

821
00:40:22,160 --> 00:40:22,960
Speaker 10: twenty twelve.

822
00:40:23,480 --> 00:40:27,880
Speaker 2: Fifty six thousand square feet that's the size of Delaware. Yeah, exactly.

823
00:40:27,920 --> 00:40:29,399
Speaker 4: I mean, it's just unbelievable, he wrote.

824
00:40:29,520 --> 00:40:31,000
Speaker 7: I guess he can afford to wait.

825
00:40:30,840 --> 00:40:33,400
Speaker 4: But I mean I think enough enough. I would just

826
00:40:33,560 --> 00:40:36,280
Speaker 4: say just move it whatever, whatever pricing.

827
00:40:37,960 --> 00:40:41,399
Speaker 10: And finally, now you're up for the iPhone update. Correct, Well, okay,

828
00:40:41,440 --> 00:40:42,560
Speaker 10: you're going for it next week.

829
00:40:42,600 --> 00:40:45,000
Speaker 1: Here's what you might get. Okay, I know you're not

830
00:40:45,040 --> 00:40:46,239
Speaker 1: a big social media.

831
00:40:46,080 --> 00:40:49,799
Speaker 10: Person, but Apple has cleared we Chat ahead of that

832
00:40:49,920 --> 00:40:53,440
Speaker 10: iPhone sixteen debut. We Chat it's like this Instagram like

833
00:40:53,800 --> 00:40:58,120
Speaker 10: we chat moments. It has live streaming in China. Yeah, yes, exactly.

834
00:40:58,239 --> 00:41:00,720
Speaker 10: China's Tencent that's owns it.

835
00:41:00,719 --> 00:41:01,600
Speaker 1: It's a big deal.

836
00:41:01,440 --> 00:41:05,080
Speaker 10: Because Apple approving that update basically eases those concerns that

837
00:41:05,160 --> 00:41:07,640
Speaker 10: a dispute over fees it could block the app.

838
00:41:08,040 --> 00:41:09,120
Speaker 1: So this is a big thing.

839
00:41:09,160 --> 00:41:10,800
Speaker 10: That's happening with a new iPhone sixteen.

840
00:41:10,920 --> 00:41:11,960
Speaker 7: So there you go.

841
00:41:12,040 --> 00:41:14,160
Speaker 1: You'll you'll have that upditionwitch out.

842
00:41:14,320 --> 00:41:16,560
Speaker 4: When one of my kids was in Europe for Eastern

843
00:41:16,640 --> 00:41:18,480
Speaker 4: because it's just you can call and do all that

844
00:41:18,520 --> 00:41:20,960
Speaker 4: stuff and it's free and I don't know, so she

845
00:41:21,080 --> 00:41:22,239
Speaker 4: just said, use we chat that.

846
00:41:22,560 --> 00:41:23,640
Speaker 2: Yeah, that's it on us.

847
00:41:23,680 --> 00:41:26,600
Speaker 1: Any there are Yeah, well it's different from what'sapp. What's

848
00:41:26,600 --> 00:41:27,759
Speaker 1: app is a different thing.

849
00:41:27,880 --> 00:41:31,600
Speaker 2: Well I get them confused. Well, thank you, Lisa Matteo

850
00:41:31,960 --> 00:41:35,120
Speaker 2: with the newspapers, Thank you so much. This is a

851
00:41:35,160 --> 00:41:40,160
Speaker 2: Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment,

852
00:41:40,360 --> 00:41:43,960
Speaker 2: and international relations. You can also watch the show live

853
00:41:44,200 --> 00:41:48,520
Speaker 2: on YouTube. Visit the Bloomberg Podcast channel on YouTube to

854
00:41:48,640 --> 00:41:52,040
Speaker 2: see the show weekday mornings from seven to ten am

855
00:41:52,080 --> 00:41:56,120
Speaker 2: Eastern from our global headquarters in New York City. Subscribe

856
00:41:56,120 --> 00:41:59,880
Speaker 2: to the podcast on Apple, Spotify, or anywhere else you listen,

857
00:42:00,200 --> 00:42:03,880
Speaker 2: and always i Bloomberg Radio, the Bloomberg Terminal, and the

858
00:42:03,880 --> 00:42:05,399
Speaker 2: Bloomberg Business App.