WEBVTT - Israel, Markets, and a Possible Recession 0:00:00.120 --> 0:00:04.360 Bloomberg is now on your dashboard with Apple CarPlay and 0:00:04.360 --> 0:00:08.160 Android Auto. It gives you access to every Bloomberg podcast, 0:00:08.280 --> 0:00:11.560 live audio feeds from Bloomberg Radio, print stories from Bloomberg 0:00:11.640 --> 0:00:14.920 News in audio form, and the latest headlines of the 0:00:14.920 --> 0:00:18.640 click of a button with Bloomberg News. Now it's free 0:00:18.680 --> 0:00:21.439 with the latest version of the Bloomberg Business App. That's 0:00:21.680 --> 0:00:24.400 the Bloomberg Business App. Get it on your phone in 0:00:24.440 --> 0:00:27.760 the Apple App Store or on Google Play. Just download 0:00:27.800 --> 0:00:30.560 the app, connect your phone to your car and get started. 0:00:30.960 --> 0:00:34.400 And it's all presented by our sponsor, Interactive Brokers. 0:00:35.400 --> 0:00:38.600 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:38.640 --> 0:00:39.800 my co host Matt Miller. 0:00:40.200 --> 0:00:44.159 Every business day we bring you interviews from CEOs, market pros, 0:00:44.320 --> 0:00:48.160 and Bloomberg experts, along with essential market Moven News. 0:00:48.720 --> 0:00:51.839 I'm the Bloomberg Markets podcast called Apple Podcasts or wherever 0:00:51.960 --> 0:00:55.080 you listen to podcasts, and at Bloomberg dot Com Slash podcast. 0:00:55.520 --> 0:00:57.480 Jess Metton and Paul Sweeney your life here in our 0:00:57.480 --> 0:01:01.440 Bloomberg Interactive Brooker's studio. It is day for I guess 0:01:01.520 --> 0:01:04.520 of the truce or just the cessation or halt? I 0:01:04.520 --> 0:01:08.679 guess in hostilities between Israel and hamas and some hostage 0:01:08.720 --> 0:01:11.160 exchanges are taking place. That's the good news, and question 0:01:11.240 --> 0:01:15.760 happens is what happens now? Wendy Schiller, professor at Brown University, 0:01:16.000 --> 0:01:19.560 joins us. Wendy, I, you know the reporting I'm seeing 0:01:19.560 --> 0:01:21.880 is that President Biden had you know, had been pushing 0:01:21.959 --> 0:01:25.319 for and continues to push for this pause in fighting, 0:01:25.640 --> 0:01:28.880 maybe get some more hostages out. Where do you think 0:01:28.880 --> 0:01:31.320 we are right now? Where's the administration right now on 0:01:31.360 --> 0:01:33.039 its policy with Israel and Hamasen. 0:01:34.080 --> 0:01:38.480 I think the Administration maintains its support for Israel in 0:01:38.480 --> 0:01:42.280 the sense of defending itself, but they also recognize not 0:01:42.319 --> 0:01:45.880 only the loss of life of civilians in Gaza, but 0:01:45.880 --> 0:01:49.800 that the international community is not on this side of 0:01:49.840 --> 0:01:50.640 this issue. 0:01:50.920 --> 0:01:53.440 And as the. 0:01:52.680 --> 0:01:55.760 Casualties mount in Gaza, you know, the United States will 0:01:55.800 --> 0:01:59.320 then have to defend Israel's action without having really a 0:01:59.360 --> 0:02:02.600 lot of control over what Israel does, which is a 0:02:02.600 --> 0:02:05.280 fairly precarious position for President Biden to be in and 0:02:05.280 --> 0:02:07.080 for the United States to be in. You don't want 0:02:07.080 --> 0:02:09.040 to waiver on your support, but you don't want to 0:02:09.040 --> 0:02:11.800 have to be the apologist or the explainer for another 0:02:11.840 --> 0:02:15.720 country's military offensive. So this is the big question mark, 0:02:15.880 --> 0:02:17.000 how do you describe it? 0:02:17.080 --> 0:02:18.240 Do you keep saying that. 0:02:18.200 --> 0:02:20.679 Israel's defending itself or is there a point at which 0:02:20.720 --> 0:02:23.520 you say, well, we believe Israel's gone far enough. I 0:02:23.560 --> 0:02:26.120 don't see Biden never saying that, but that's what he's 0:02:26.160 --> 0:02:28.600 going to have to do in private conversations. 0:02:28.000 --> 0:02:29.320 With a lot of European leaders. 0:02:29.600 --> 0:02:32.960 Where does Congress stand when it comes to foreign aid? 0:02:33.960 --> 0:02:38.119 Where talking about where Congress stands is almost impossible these days, right, 0:02:38.240 --> 0:02:41.280 because we have Democrats and Republicans. Democrats controlling the Senate, 0:02:41.400 --> 0:02:45.520 Republicans pseudo controlling the House, but really internally divided on 0:02:45.600 --> 0:02:48.760 this very question jes of foreign aid. And you have 0:02:48.800 --> 0:02:51.600 a very large contingent of the Republican majority that does 0:02:51.639 --> 0:02:54.799 not want to give money, especially to Ukraine, but now 0:02:54.880 --> 0:02:57.200 sort of thinks, okay, maybe not even Israel. 0:02:57.440 --> 0:02:57.960 Why are we. 0:02:57.960 --> 0:03:01.800 Giving billions of dollars of taxpayer money to foreign nations 0:03:02.000 --> 0:03:05.720 for conflicts we can't control? And as that grows within 0:03:05.760 --> 0:03:08.280 the Republican caucus, it will get more and more difficult 0:03:08.480 --> 0:03:10.800 for Speaker Johnson to get any kind of foreign aid 0:03:10.880 --> 0:03:12.160 bill through the House. 0:03:13.280 --> 0:03:15.400 When do you assert any reason to believe that the 0:03:15.400 --> 0:03:18.120 Biden administration and the State Department are not on the 0:03:18.160 --> 0:03:20.880 same page as it relates to our policy towards Israel 0:03:20.919 --> 0:03:22.600 and what's happening there. 0:03:23.320 --> 0:03:25.320 In the end of the day, Biden is the commander 0:03:25.360 --> 0:03:27.280 in chief and the President of the United States who 0:03:27.320 --> 0:03:31.600 runs the cabinet. So the State Department may have internal disagreements, 0:03:31.760 --> 0:03:33.680 but I don't think there's an anti question that the 0:03:33.720 --> 0:03:36.560 Secretary of State is on the same page as Biden. 0:03:36.880 --> 0:03:39.160 Whether the Secretary of State is trying to move Biden 0:03:39.200 --> 0:03:41.320 in one way or the other, you know, we're not sure. 0:03:41.360 --> 0:03:43.280 But in the end of the day, the State Department 0:03:43.360 --> 0:03:45.360 still reports to the President of the United States. Even 0:03:45.400 --> 0:03:48.400 civil servants still report to the commander in chief and 0:03:48.400 --> 0:03:51.800 the executive So there can't be a lot of public disconnect. 0:03:51.960 --> 0:03:53.760 And if there is, that's going to be a job 0:03:53.800 --> 0:03:56.760 in the Sect State to clean up. For President Biden. 0:03:57.400 --> 0:04:00.000 What would be the next immediate steps when it comes 0:04:00.160 --> 0:04:04.560 to Israel trying to prolong its truce with Tomas. 0:04:04.960 --> 0:04:06.400 Well, this is a big question mark. 0:04:06.680 --> 0:04:09.440 You know, what is the strategic position of Israel in 0:04:09.560 --> 0:04:10.520 terms of security? 0:04:10.840 --> 0:04:13.480 You know, can they afford to prolong the cease fire. 0:04:13.560 --> 0:04:14.120 Yes they can. 0:04:14.360 --> 0:04:18.080 If they are getting ten fifteen hostages released every day 0:04:18.120 --> 0:04:21.560 every other day, they can justify that cease fire to 0:04:21.640 --> 0:04:23.840 their own people. Remember, they still have a lot of 0:04:23.880 --> 0:04:27.760 explaining to do about how security was so lapsed. 0:04:27.440 --> 0:04:29.960 That they allowed this attack to happen. Now, when I 0:04:30.000 --> 0:04:31.520 say allow, I'm not saying. 0:04:31.279 --> 0:04:34.520 That they know invited them in, but nonetheless irresponsible for 0:04:34.640 --> 0:04:36.880 national security. And they still have to explain that they 0:04:36.920 --> 0:04:39.200 haven't had any chance to do that because they've been 0:04:39.240 --> 0:04:42.320 on the offensive. But if the ceasefire continues to hold, 0:04:42.760 --> 0:04:44.720 then I think the Israeli people will say, how did 0:04:44.720 --> 0:04:46.560 this happen in the first place, and what are you 0:04:46.720 --> 0:04:50.040 doing to keep us safe now? And that's constant pressure 0:04:50.080 --> 0:04:53.360 on the Israeli government to continue its offensive in Gaza. 0:04:53.839 --> 0:04:56.360 Well, I think probably one of the challenge, or one 0:04:56.360 --> 0:04:57.919 of the questions that I don't have an answer for, 0:04:58.080 --> 0:05:00.919 is that if the is Real government, how do I 0:05:01.000 --> 0:05:06.119 define mission accomplished? You can't get rid of a terrorist 0:05:06.240 --> 0:05:10.000 organization per se, and that's kind of the end goal 0:05:10.040 --> 0:05:11.960 they've set up here. So they're kind of in a 0:05:12.000 --> 0:05:14.440 box here. How do you think they try to play that? 0:05:15.279 --> 0:05:16.800 Well, Paul, I mean I think if you're of a 0:05:16.800 --> 0:05:20.320 certain age, you remember George W. Bush standing on Air 0:05:20.400 --> 0:05:23.279 Force carrier, I believe his carrier saying, you know, we're done, 0:05:23.400 --> 0:05:25.560 and we were a long way, right, at least ten 0:05:25.600 --> 0:05:27.760 to fifteen years away, I from being done in Iraq. 0:05:28.200 --> 0:05:30.200 So I think that is a fundamental question. 0:05:30.279 --> 0:05:33.000 I think the idea of what is a status quo 0:05:33.440 --> 0:05:36.760 that will allow Israel to defend itself consistently? 0:05:37.160 --> 0:05:39.800 What is the security status quo? 0:05:40.240 --> 0:05:43.200 And you know, eradicating I'm assle with something that's who said, 0:05:43.720 --> 0:05:46.799 It's unclear how long that's in yon, who lasts after 0:05:46.960 --> 0:05:50.960 this immediate military engagement is over, he may be replaced. 0:05:51.240 --> 0:05:53.600 And the question is what is justifiable in terms of 0:05:53.680 --> 0:05:55.920 Israeli security? And that's going to be a question that 0:05:56.040 --> 0:05:58.480 Biden will have to continue to answer and the Israeli 0:05:58.520 --> 0:06:00.600 government will have to tell the world, you know, what 0:06:00.839 --> 0:06:01.360 is enough? 0:06:01.839 --> 0:06:04.279 And you're right, it is very difficult to quote unquote 0:06:04.320 --> 0:06:06.320 eradicate an organization. 0:06:05.960 --> 0:06:09.719 That was duly elected in Gaza has been the government 0:06:09.880 --> 0:06:13.159 in Gaza, and it's almost impossible to weed out. 0:06:13.120 --> 0:06:16.200 Without you know, very very large civilian casualties. 0:06:16.760 --> 0:06:18.920 Walk us through what's going on in the House as 0:06:19.000 --> 0:06:22.239 it was voting to limit those funds to Iran. 0:06:23.640 --> 0:06:26.320 Yeah, so the funds for Iran is really a messaging 0:06:26.400 --> 0:06:29.160 failure by the Biden administration and a messaging win for 0:06:29.240 --> 0:06:33.360 the GOP. This is Iranian money that they made by 0:06:33.480 --> 0:06:36.800 selling fuel on the international market, and it was sort 0:06:36.800 --> 0:06:38.920 of kept aside. They couldn't have it's like you know, 0:06:39.000 --> 0:06:41.200 South Korea had it, other people had it. It's and 0:06:41.320 --> 0:06:44.760 we are allowing it to be released back to Iran. However, 0:06:45.080 --> 0:06:47.320 the Biden administration has put a stop on the vast 0:06:47.440 --> 0:06:49.960 majority of that money and will not allow it to 0:06:50.000 --> 0:06:54.800 be released until there's no visible evidence of Iranian encouragement 0:06:55.000 --> 0:06:57.000 of hamas R Hesblah in the Middle East. 0:06:57.080 --> 0:06:59.280 So that could be a long way and a long 0:06:59.360 --> 0:07:00.800 time for Iran to wait for that money. 0:07:01.000 --> 0:07:03.880 But the Biden administration has gotten caught on that messaging 0:07:03.960 --> 0:07:07.320 because of the deal they made theoretically for the release 0:07:07.400 --> 0:07:10.160 of American hostages in Iran. So this is the problem 0:07:10.280 --> 0:07:13.280 governments have when they make deals to negotiate for hostages. 0:07:13.560 --> 0:07:16.120 This is what Israel is doing right now, what America 0:07:16.200 --> 0:07:19.240 is doing, and the problem is Iran is actively funding, 0:07:19.320 --> 0:07:22.080 as far as we know, a lot of terrorist organizations 0:07:22.320 --> 0:07:24.920 which could pose a security threat to the United States. 0:07:25.120 --> 0:07:27.600 So it puts the Bide administration in a very difficult position. 0:07:28.400 --> 0:07:32.560 When you mentioned the speaker, Johnson's in a familiarly a 0:07:32.600 --> 0:07:37.160 familiarly difficult situation and trying to get everybody together to move, 0:07:37.320 --> 0:07:40.600 particularly in a Republican Party here to move in one 0:07:40.640 --> 0:07:43.400 direction as it relates to some of these foreign policy issues. 0:07:44.880 --> 0:07:48.800 Any reason to believe that he can in fact succeed 0:07:48.880 --> 0:07:52.360 where maybe his prep predecessors did not, and that includes 0:07:52.440 --> 0:07:55.520 aid for Israel and Ukraine. 0:07:56.560 --> 0:08:00.960 I think, Paul there's a very short window for him 0:08:01.000 --> 0:08:03.360 to succeed, literally till the end of the year, or 0:08:03.480 --> 0:08:06.280 as we might say, till the Iowa primary. You know, 0:08:06.360 --> 0:08:10.560 when Trump if Trump, When if Trump wins his first primary, 0:08:11.000 --> 0:08:14.160 he becomes the spokesperson for the Republican Party, and there 0:08:14.360 --> 0:08:18.040 is no voice louder than Donald Trump's, particularly when he'll 0:08:18.080 --> 0:08:20.920 start to win the primary, and then Johnson has almost. 0:08:20.760 --> 0:08:21.720 No maneuvering room. 0:08:21.760 --> 0:08:24.800 And you can imagine that Trump will be adamant against 0:08:24.800 --> 0:08:28.760 spending money except perhaps to help Israel, depends on their calculations. 0:08:29.120 --> 0:08:31.200 But that's going to make things so much more difficult. 0:08:31.360 --> 0:08:34.199 It'll be twenty twenty four, it'll be technically an election year. 0:08:34.520 --> 0:08:37.040 Primary season gears up. Even though most people have to 0:08:37.080 --> 0:08:38.880 register to run in a primary by the end of 0:08:38.960 --> 0:08:41.480 this year, there are some loopholes in a lot of states. 0:08:41.679 --> 0:08:44.439 So members of Congress, particularly Republicans, will be watching what 0:08:44.640 --> 0:08:47.640 Trump says, not as much what Johnson says, and I 0:08:47.800 --> 0:08:49.960 just think his maneuvering room almost goes to zero. 0:08:50.640 --> 0:08:54.479 So, Wendy, do you think that the GOP the Republican 0:08:55.480 --> 0:09:00.120 Party is ready to support and back another run by 0:09:00.200 --> 0:09:02.240 President Bush? I mean President Trump. 0:09:04.160 --> 0:09:06.280 I think talking about the Republican Party as a model 0:09:06.280 --> 0:09:07.920 with the group is a difficult thing to do right 0:09:07.960 --> 0:09:09.880 now as we are seeing cracks in. 0:09:09.880 --> 0:09:11.959 The Democratic Party, so very difficult to know. 0:09:12.080 --> 0:09:15.040 I think there is excitement brewing among the wing of 0:09:15.120 --> 0:09:17.520 the party that doesn't want to see Trump, either because 0:09:17.520 --> 0:09:19.839 they don't like Trump's or they think Trump will lose 0:09:20.280 --> 0:09:24.120 for Nikki Haley, and the jockeying right now is DeSantis Haley. 0:09:24.360 --> 0:09:27.319 DeSantis is really getting his endorsements in line in Iowa. 0:09:27.720 --> 0:09:30.080 And if he can make a strong enough showing against 0:09:30.480 --> 0:09:33.439 Trump and better than Haley, then I think he's back 0:09:33.520 --> 0:09:36.559 in the conversation and I think if you have viability 0:09:36.880 --> 0:09:39.520 with either of those two candidates, then I think it's 0:09:39.640 --> 0:09:42.240 not quite as certain that Trump ends up being the nominee. 0:09:42.520 --> 0:09:44.120 All Right, Wendy, thank you so much for joining us. 0:09:44.160 --> 0:09:48.480 Really appreciate it. Wendy Schiller, she's a professor at Brown University, 0:09:48.559 --> 0:09:51.199 and we can talk to Professor Schiller about a wide 0:09:51.280 --> 0:09:54.839 range of political and geopolitical issues as well. So a 0:09:54.920 --> 0:09:57.199 lot going on in the market light and a lot 0:09:57.679 --> 0:09:59.079 just it's going to take place early over the next 0:09:59.080 --> 0:09:59.600 several weeks. 0:10:01.120 --> 0:10:04.480 You're listening to the Team Ken's are Live program Bloomberg 0:10:04.559 --> 0:10:07.760 Markets weekdays at ten am Eastern on Bloomberg dot com, 0:10:08.000 --> 0:10:11.120 the iHeartRadio app and the Bloomberg Business app, or listen 0:10:11.240 --> 0:10:13.360 on demand wherever you get your podcasts. 0:10:14.880 --> 0:10:16.600 All right, s and P five hundred. It's up almost 0:10:16.640 --> 0:10:17.800 nineteen percent year to date. 0:10:17.840 --> 0:10:20.880 It's up about ten one alone is it's up over 0:10:20.960 --> 0:10:21.840 eight percent. 0:10:21.760 --> 0:10:24.120 Exactly, It's and so but a lot of people I 0:10:24.160 --> 0:10:26.240 just don't feel like there's that conviction behind it. And 0:10:26.280 --> 0:10:28.319 I think maybe it's just because it's not you know, 0:10:28.400 --> 0:10:30.520 you back out the magnificent seven and then it's like, 0:10:30.840 --> 0:10:32.559 all right, we're five to six percent. So I'm just 0:10:32.640 --> 0:10:34.800 not sure we go here, particularly as we think about 0:10:34.800 --> 0:10:36.719 twenty twenty four. But our next guest, I know she 0:10:36.880 --> 0:10:40.559 has an opinion. Katie Kaminski. She's a chief research strategist 0:10:40.679 --> 0:10:44.079 at Alpha Simplex. Katie, thanks so much for joining us here. 0:10:44.200 --> 0:10:47.360 I mean, what do you make of what we've seen 0:10:47.360 --> 0:10:49.640 in the equity markets this year and how does that 0:10:49.760 --> 0:10:51.600 set you up for your twenty twenty four outlook. 0:10:53.160 --> 0:10:54.719 Oh that's a good question. I mean, I think the 0:10:54.800 --> 0:10:57.600 biggest shock we've seen is just that divergence. I mean, 0:10:58.080 --> 0:11:01.079 you look at the numbers and they look good, but 0:11:01.200 --> 0:11:03.960 the truth is the average company hasn't done as well, 0:11:04.400 --> 0:11:07.920 and so I think people are nervous about this excitement 0:11:08.000 --> 0:11:10.040 that we're having this relief rally. But at the same 0:11:10.120 --> 0:11:13.920 time they're saying, why is cooler data or weakness actually 0:11:14.000 --> 0:11:16.079 a good sign? I think we have a lot of 0:11:16.160 --> 0:11:17.480 things we have to digest right now. 0:11:17.840 --> 0:11:20.319 Well, Katie, you're not only a strategist, you're also a 0:11:20.480 --> 0:11:23.320 co portfolio manager, So I want to hear how are 0:11:23.400 --> 0:11:27.120 you advising clients to position going into yurine and what 0:11:27.320 --> 0:11:29.480 do they buy, what do they sell going into next year? 0:11:30.520 --> 0:11:32.959 Well, I think the biggest thing we've focused on is 0:11:33.040 --> 0:11:35.960 fixed income, and that's where we've come to this inflection point, 0:11:36.480 --> 0:11:38.240 and I think we have to figure out are we 0:11:38.320 --> 0:11:40.120 going to get those cuts or are we going to 0:11:40.200 --> 0:11:43.119 have to wait longer for them. So I think investors 0:11:43.240 --> 0:11:46.679 have to really think about what the potential impact of 0:11:46.840 --> 0:11:49.760 opportunities for fixed income is the next year, and then 0:11:50.000 --> 0:11:54.000 also consider how does this tighter policy continue to percolate 0:11:54.440 --> 0:11:57.680 through the equity markets and where does that create opportunities 0:11:57.960 --> 0:12:00.960 and where does that create problems for in places based 0:12:01.000 --> 0:12:03.439 on just sort of that duration exposure that might be 0:12:03.600 --> 0:12:04.839 more prolonged than we like. 0:12:07.200 --> 0:12:09.880 So, Katie, do you think we've seen peak rates back 0:12:09.920 --> 0:12:10.679 in late October? 0:12:12.280 --> 0:12:14.280 That is the billion dollars? 0:12:15.120 --> 0:12:16.560 Do be honest when you're the one to. 0:12:18.600 --> 0:12:20.760 Tell us, well, you know what's interesting? 0:12:20.840 --> 0:12:21.040 Yeah? 0:12:21.400 --> 0:12:24.400 So sorry, yeah, No, what's interesting is we're really at 0:12:24.440 --> 0:12:27.080 that inflection point because I've been looking at the trends 0:12:27.160 --> 0:12:30.559 and fixed income and we started off with the inverted curve. 0:12:30.920 --> 0:12:34.319 We moved to a disinversion this year. The next phase 0:12:34.760 --> 0:12:38.400 is naturally a steeper yield curve. The question is do 0:12:38.520 --> 0:12:41.600 we have a steeper yield curve because of some difficult 0:12:41.640 --> 0:12:44.839 situation where we actually have higher rates for longer or 0:12:44.960 --> 0:12:47.120 do we get cuts. And I think that's where I'm 0:12:48.000 --> 0:12:49.920 I'm not sure yet to be honest, but I do 0:12:50.080 --> 0:12:51.839 think we need to have a steep yield curve at 0:12:51.920 --> 0:12:52.400 some point. 0:12:52.760 --> 0:12:56.000 How do you view the direction of the economy and 0:12:56.040 --> 0:12:59.040 also consumer spending because there's so much still kind of 0:12:59.120 --> 0:13:01.400 gloom out there, well, the consumer pulling back. I mean, 0:13:01.440 --> 0:13:03.400 if you look at those third quarter GDP numbers, we'll 0:13:03.400 --> 0:13:06.000 get another revision on that later this week. I mean 0:13:06.080 --> 0:13:08.680 that was close to five percent growth. You look at 0:13:08.679 --> 0:13:11.280 the Atlanta FED numbers, obviously those are coming down around 0:13:11.360 --> 0:13:13.280 two percent for the fourth quarter. But just on the 0:13:13.360 --> 0:13:16.760 back of this record online sales for Black Friday, I mean, 0:13:16.800 --> 0:13:19.000 should we really be concerned about consumer spending? 0:13:20.200 --> 0:13:22.880 Well, this has been a continual question as well, is 0:13:22.960 --> 0:13:27.600 that consumers are just being much more resilient than people 0:13:27.760 --> 0:13:30.920 have it expected. And I think that's why this narrative 0:13:30.960 --> 0:13:33.160 of when do we cut rates? When are we done 0:13:33.640 --> 0:13:37.080 has been so hard because there hasn't been a clear 0:13:37.280 --> 0:13:42.000 sign that we're ready to cut anytime soon. Because consumers 0:13:42.080 --> 0:13:45.520 continue to be resilient, and you know, the recent data 0:13:45.600 --> 0:13:47.880 this week has really already showed that that you know, 0:13:48.640 --> 0:13:50.840 it's not clear, Katie. 0:13:50.920 --> 0:13:52.880 I guess the one on one of the trades that 0:13:53.000 --> 0:13:54.800 we read about a lot to shear was you know, 0:13:54.880 --> 0:13:58.040 the hedge funds short treasuries. Do you think that's still 0:13:58.080 --> 0:14:00.319 the case or they kind of covered that here? 0:14:01.720 --> 0:14:03.600 I think, I mean, okay, this is a great question. 0:14:03.679 --> 0:14:06.280 I love this question because I'm a quant and when 0:14:06.320 --> 0:14:08.560 I look at the signals right now, what is alarming 0:14:08.640 --> 0:14:11.000 to me is long term signals are still short in 0:14:11.120 --> 0:14:14.720 fixed income given the moves that we've seen until recently, 0:14:15.880 --> 0:14:18.880 shorter term signals are moving more on the long side. 0:14:18.920 --> 0:14:21.840 So we're seeing this sort of mixed view on fixed income. 0:14:22.320 --> 0:14:25.600 So that inflection point that so I do think because 0:14:25.640 --> 0:14:28.000 of that, there are going to be some investors who 0:14:28.040 --> 0:14:30.880 still think this may not be over yet, and so 0:14:30.960 --> 0:14:33.160 I think that's mixed, but there's definitely less of them 0:14:33.280 --> 0:14:34.120 than there were before. 0:14:34.560 --> 0:14:38.160 What about in the commodities market? What is energy telling 0:14:38.240 --> 0:14:40.120 us about the direction of the economy. 0:14:41.440 --> 0:14:44.480 This is really one of my favorite questions because we 0:14:44.680 --> 0:14:47.600 have really been pointing to the energy moves earlier in 0:14:47.680 --> 0:14:51.520 the fall, when we started to see energy prices surging again. 0:14:51.960 --> 0:14:55.320 But look what happened recently. Energy is now a short signal, 0:14:55.400 --> 0:14:58.040 and that's been one of the more recent developments, and 0:14:58.160 --> 0:15:01.440 that tells us that we didn't really have enough legs 0:15:01.760 --> 0:15:04.880 and that energy move to cause some serious issues for inflation, 0:15:05.320 --> 0:15:08.840 which is a positive sign, i'd say for this inflation 0:15:09.280 --> 0:15:12.200 narrative of raising rates is a little bit more likely 0:15:12.240 --> 0:15:14.680 to be over soon, which I think is good for 0:15:14.960 --> 0:15:18.320 the consumer. It's good for this getting to target, and 0:15:18.920 --> 0:15:21.320 you know, it's something to continue watching. But definitely it 0:15:21.440 --> 0:15:24.360 had moved to a point where we were watching it, 0:15:24.800 --> 0:15:27.000 but now it's come back and now it's short. Are 0:15:27.080 --> 0:15:28.160 the signals for energy? 0:15:28.480 --> 0:15:29.040 You're interesting? 0:15:29.320 --> 0:15:29.680 All right? 0:15:29.760 --> 0:15:32.560 So in a treasury remark, well, why can't I just 0:15:32.640 --> 0:15:34.840 go buy a two year treasury and get my close 0:15:34.920 --> 0:15:36.960 to five percent and just kind of call it a 0:15:37.040 --> 0:15:37.800 couple of years. 0:15:37.640 --> 0:15:40.240 Here, Well, the problem is you're going to have to 0:15:40.280 --> 0:15:41.600 roll that over, right, So. 0:15:41.800 --> 0:15:44.000 Two years A lot can happen in two years. 0:15:44.880 --> 0:15:47.560 Yeah, that's true. And so I think where the challenge 0:15:47.680 --> 0:15:49.680 is is that if you look at where the curve 0:15:49.840 --> 0:15:53.600 is today, we still don't have that duration premium there. 0:15:54.040 --> 0:15:56.360 So if you buy longer term debt and we do 0:15:56.680 --> 0:16:00.120 have an environment where yields continue to be higher, that 0:16:00.240 --> 0:16:02.800 might be negative MPV in relative terms, and I think 0:16:02.960 --> 0:16:06.600 that's where I think you have to think about what 0:16:06.880 --> 0:16:09.360 is going to happen for cuts is going to dictate 0:16:09.760 --> 0:16:12.160 when we get to that and that steeper curve or 0:16:12.160 --> 0:16:15.120 a more normal yield curve. So yeah, the two year 0:16:15.200 --> 0:16:16.800 looks still very good, and I think that's why people 0:16:16.840 --> 0:16:18.600 are buying it right now, and that's why yields have 0:16:18.640 --> 0:16:22.640 been going down because people think this opportunity might not last. 0:16:22.920 --> 0:16:25.600 So maybe it's time to buy treasuries because you want 0:16:25.640 --> 0:16:26.480 to lock in those rates. 0:16:26.680 --> 0:16:28.880 I only have about forty five seconds left. But what's 0:16:28.960 --> 0:16:31.240 the top question that you hear from your clients? 0:16:32.480 --> 0:16:35.080 Oh, I think the biggest question is are we done? 0:16:35.720 --> 0:16:37.280 Our interest rate's going to go down? 0:16:37.440 --> 0:16:37.840 And when? 0:16:38.040 --> 0:16:40.760 And tell me now, because I think everybody really wants 0:16:40.840 --> 0:16:44.000 that for many reasons, because we're used to lower rates. 0:16:44.440 --> 0:16:47.320 But we have been very strong this year saying higher 0:16:47.400 --> 0:16:49.360 for longer, and to be honest, most of the year 0:16:49.400 --> 0:16:52.880 we've been correct. So I would generally have been telling 0:16:52.960 --> 0:16:55.640 them to be patient and that to expect that higher 0:16:55.720 --> 0:16:57.720 rates could last longer than you'd like. 0:16:58.600 --> 0:17:00.920 Kittie, thank you so much for joining us. Really appreciate 0:17:00.960 --> 0:17:03.720 getting some of your time today, Katie Kaminski. She is 0:17:03.840 --> 0:17:08.040 the chief research strategist at Alpha Simplex. We're up there, 0:17:08.080 --> 0:17:10.440 and I think someone Cambridge, Massachusetts or something in a 0:17:10.440 --> 0:17:13.200 couple of decent schools up there, so I understand, So 0:17:13.280 --> 0:17:14.840 we appreciate getting a few minutes for a time. 0:17:15.119 --> 0:17:18.200 You're listening to the tape. Cat's are live program Bloomberg 0:17:18.320 --> 0:17:21.879 Markets weekdays at ten am Eastern on Bloomberg Radio, the 0:17:21.960 --> 0:17:25.160 tune in app, Bloomberg dot Com, and the Bloomberg Business App. 0:17:25.240 --> 0:17:28.000 You can also listen live on Amazon Alexa from our 0:17:28.080 --> 0:17:32.720 flagship New York station, Just say Alexa, play Bloomberg eleven thirty. 0:17:34.359 --> 0:17:36.280 Chess men, Paul Sweeney here in our Bloomberg and Art 0:17:36.280 --> 0:17:39.920 at Brokers Studio in our HQ here in New York City. 0:17:40.440 --> 0:17:43.240 Good news on the geopolitical front. I think it's good news. 0:17:43.720 --> 0:17:48.320 Cutter says Israel Hamas agree to extend truce for two days. 0:17:48.400 --> 0:17:50.960 Let's get some color on this developing story. Bobby Ghost 0:17:51.040 --> 0:17:54.480 joins us. He's Bloomberg Opinion. He knows this part of 0:17:54.520 --> 0:17:59.240 the world very very well. Lots of experience. Bobby, I 0:17:59.359 --> 0:18:01.000 take this as good news. How do you take this? 0:18:01.320 --> 0:18:04.040 No, Yeah, it's good news. It's good news for the 0:18:04.119 --> 0:18:06.439 families of the hostages that are going to be released. 0:18:06.440 --> 0:18:09.560 We don't know the exact number, but good news for them. 0:18:09.640 --> 0:18:12.119 It gives them hope. It's good news for the Palestinians 0:18:12.119 --> 0:18:13.840 who live in Gaza because it gives them two more 0:18:13.920 --> 0:18:17.160 days without the sky falling on their heads. It's good 0:18:17.200 --> 0:18:21.080 news for President Biden, who has articulated several times that 0:18:21.400 --> 0:18:24.200 he wanted the truth to be extended. It's good news 0:18:24.240 --> 0:18:28.520 for all of those constituencies. For Benjamin Ettnia, who the 0:18:28.560 --> 0:18:32.119 Prime Minister of Israel. The question was always going to 0:18:32.200 --> 0:18:37.720 be the balancing of all this pressure from within and 0:18:37.800 --> 0:18:41.000 without to extend the truth with the military calculation, And 0:18:41.040 --> 0:18:45.040 the military calculation was, you know, if you extend, does 0:18:45.080 --> 0:18:47.760 that give Hamas more time to re arm itself, to 0:18:47.880 --> 0:18:53.480 regroup its fighters and become a danger. Do you lose momentum? 0:18:53.560 --> 0:18:57.119 Do you lose the optics? So he's clearly decided that 0:18:57.240 --> 0:18:59.919 two days is adequate at least for now. 0:19:00.680 --> 0:19:03.200 What are the next immediate steps to see whether or 0:19:03.240 --> 0:19:06.520 not this truth could be extended for even longer beyond 0:19:06.600 --> 0:19:07.280 those two days? 0:19:07.520 --> 0:19:10.760 Well, again those calculations. He's going to be the NETNA 0:19:10.800 --> 0:19:13.000 who's going to be informed by his generals about what 0:19:13.200 --> 0:19:16.320 their best assessment is. And I think we will see 0:19:16.520 --> 0:19:20.359 extensions on one day, two days at a time, not 0:19:20.520 --> 0:19:23.080 for a a week long or even a month long. 0:19:23.480 --> 0:19:25.480 So how do you think the generals, how do you 0:19:25.520 --> 0:19:29.520 think the generals and the military folks are defining success 0:19:29.600 --> 0:19:31.280 on a daily basis. It kind of reminds me a 0:19:31.320 --> 0:19:33.280