WEBVTT - PCE Reaction and Market Outlook 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:26.599 us live on. 0:00:26.520 --> 0:00:30.360 YouTube Right now, David Balin joins chief executive officers CIO 0:00:30.520 --> 0:00:34.280 Capital and of course Decades It's City Group as well. 0:00:34.760 --> 0:00:39.040 What is the emotion that you see out there among investors, David? 0:00:39.479 --> 0:00:42.200 Is it truly the exuberance of a bull market. 0:00:44.000 --> 0:00:46.560 There's no question time that we see the exuberance of 0:00:46.600 --> 0:00:48.680 a bull market. And I think that people are beginning 0:00:48.720 --> 0:00:51.279 to focus on twenty twenty six and take a look 0:00:51.280 --> 0:00:53.480 at what's going to happen for earnings and things like that, 0:00:54.040 --> 0:00:56.760 and they are, you know, they're pretty bullish on it. 0:00:57.000 --> 0:01:00.200 And I think what they're missing right now is that 0:01:00.320 --> 0:01:02.920 if tariffs are cleaned up, if we actually knew what 0:01:03.000 --> 0:01:05.679 the tariff policy was, we can have a very robust 0:01:05.720 --> 0:01:08.440 twenty twenty six. If we continue to have the kind 0:01:08.480 --> 0:01:10.920 of policy now that varies, we're going to see some 0:01:10.959 --> 0:01:14.240 real issues with two different parts of the economy, one 0:01:14.440 --> 0:01:18.360 manufacturing slowing down, and unemployment rising. And the second is 0:01:18.360 --> 0:01:20.240 that there are a lot of tech companies that, if 0:01:20.280 --> 0:01:22.880 they don't get air under their wings, will remain unprofitable 0:01:22.920 --> 0:01:25.960 in twenty six six and that could create an overhanging 0:01:26.000 --> 0:01:26.440 the market. 0:01:26.920 --> 0:01:28.280 I look at my chart. 0:01:28.080 --> 0:01:30.000 Of the day which was on on Twitter, and it's 0:01:30.080 --> 0:01:36.800 a huge investment contribution of AI computer software into our GDP. 0:01:37.400 --> 0:01:41.240 Is this a fictional buoyant economy? Is it a pretend 0:01:41.560 --> 0:01:42.800 buoyant economy? 0:01:44.959 --> 0:01:45.280 It is? 0:01:45.600 --> 0:01:48.440 This is tom This is perhaps the most real investment 0:01:48.520 --> 0:01:51.560 cycle that we've seen since the Internet boom. But the 0:01:51.600 --> 0:01:54.000 difference this time is we're building an extraordinary amount of 0:01:54.040 --> 0:01:58.800 infrastructure order of magnitude. Four hundred billion dollars has been 0:01:58.800 --> 0:02:02.240 committed this year alone. We've seen a forty percent increase 0:02:02.320 --> 0:02:06.520 right in all of the related hardware and commitments for 0:02:06.640 --> 0:02:09.919 chips this year. Next year we expect to see another 0:02:09.960 --> 0:02:12.320 growth rate. The market expects about a ten percent growth 0:02:12.360 --> 0:02:14.160 rate in that area. We think it'll be more like 0:02:14.240 --> 0:02:17.200 fifteen percent on top of that. And that's an enormous 0:02:17.200 --> 0:02:19.160 amount of capital. And then, of course, the impact of 0:02:19.200 --> 0:02:22.840 AI itself on business will take place after that. Not 0:02:22.960 --> 0:02:26.000 all of those investments are going to be successful, but 0:02:26.080 --> 0:02:28.760 they are going to transform the economy here in the 0:02:28.840 --> 0:02:32.240 United States and certainly in China, and that's happening right now. 0:02:32.280 --> 0:02:35.520 And those are both investable, and I think that what 0:02:35.639 --> 0:02:38.320 is county railing that and what's makes you doubted, I think, Tom, 0:02:38.520 --> 0:02:41.880 and there's legitimate, is that you have a boom in 0:02:41.919 --> 0:02:43.920 this area right and you have a bit of a 0:02:43.960 --> 0:02:46.080 bust in two parts of the economy, one being in 0:02:46.120 --> 0:02:49.280 healthcare and specifically you know in the fact that healthcare 0:02:49.280 --> 0:02:51.560 shares are trading perhaps as bad as they have at 0:02:51.560 --> 0:02:54.840 any time in the last twenty years on evaluation basis. 0:02:55.120 --> 0:02:56.920 And the second is you're not seeing a pick up 0:02:56.960 --> 0:03:00.720 in manufacturing or manufacturing employment yet that, as I mentioned, 0:03:00.800 --> 0:03:01.880 is really TIAP related. 0:03:02.639 --> 0:03:06.760 David, You've done a great study of cash. What's changed, say, 0:03:06.800 --> 0:03:08.040 in the last one hundred. 0:03:07.840 --> 0:03:10.560 Days, nothing, Tom. 0:03:11.000 --> 0:03:14.800 Cash is in my mind, simply the most ignored part 0:03:14.919 --> 0:03:18.400 of the retail balance sheet and the family office balant 0:03:18.440 --> 0:03:21.880 sheet that I've ever seen in my entire career. Just 0:03:21.880 --> 0:03:25.280 to give you some numbers, family offices have somewhere between 0:03:25.280 --> 0:03:27.440 on average nine to nine and a half percent in 0:03:27.480 --> 0:03:29.919 cash the average yields that they earn on that are 0:03:29.919 --> 0:03:32.760 a little bit above two percent, they could be earning 0:03:33.080 --> 0:03:35.760 four to four and a half percent, and it is 0:03:35.800 --> 0:03:39.640 something something where there is just in transigent laziness on 0:03:39.720 --> 0:03:42.600 the part of on the part of investors, and frankly, 0:03:43.160 --> 0:03:44.680 I think part of this is on the part of 0:03:44.720 --> 0:03:47.000 firms that are not bringing this to the attention of 0:03:47.160 --> 0:03:50.160 their of their clients. I think it's very important that 0:03:50.440 --> 0:03:53.040 we treat asked cash like an acid class. That's something 0:03:53.080 --> 0:03:55.560 we're going to do at CIO Group from now on 0:03:55.920 --> 0:03:57.440 and talk about the fact that if you're going to 0:03:57.440 --> 0:04:01.160 retain that large a portion of your balance sheet in cash, 0:04:01.440 --> 0:04:03.280 that there are ways in different parts of the market 0:04:03.280 --> 0:04:05.760 that you should be investing in far more aggressively than 0:04:05.800 --> 0:04:06.360 they have been. 0:04:06.760 --> 0:04:08.680 David, we've got a federal reserve that's been gone a 0:04:08.760 --> 0:04:11.880 rate cutting cycle. Here, what does that mean for the 0:04:11.920 --> 0:04:13.800 fixed income market? How are you guys thinking about that? 0:04:15.080 --> 0:04:15.280 Right? 0:04:15.320 --> 0:04:18.480 You know, we've been encouraging our clients to really think 0:04:18.520 --> 0:04:22.360 about having more of their capital deployed in the intermediate 0:04:22.400 --> 0:04:25.000 space anywhere between three and seven years, and they're going 0:04:25.040 --> 0:04:27.279 to get a higher total return over the course of 0:04:27.320 --> 0:04:28.640 the next two years by doing that. 0:04:29.040 --> 0:04:31.479 We think that the rate cycle itself will be extended. 0:04:31.520 --> 0:04:33.760 In other words, it's not going to come down quickly, 0:04:33.800 --> 0:04:36.560 but it will come down consistently over the course of 0:04:36.600 --> 0:04:39.159 twenty twenty six. And part of that, of course, is 0:04:39.160 --> 0:04:40.800 going to be the fact that the economy itself is 0:04:40.800 --> 0:04:41.200 going to be a. 0:04:41.160 --> 0:04:43.040 Little weaker with the exception. 0:04:42.800 --> 0:04:45.919 Time of AI related activity, and that's going to enable 0:04:45.960 --> 0:04:48.880 them to reduce rates. And also this is part of 0:04:48.920 --> 0:04:51.880 a larger plan which I think the administration really wants 0:04:51.920 --> 0:04:54.719 to see lower rates, which they've made very clear, but 0:04:54.760 --> 0:04:56.240 they're going to then do a lot of the debt 0:04:56.320 --> 0:04:59.440 refinancing in the US looking at the five year or 0:04:59.680 --> 0:05:02.080 less and I think that's all part of a larger 0:05:02.120 --> 0:05:05.000 plan to mitigate I think, what are very large deficits 0:05:05.400 --> 0:05:06.320 for the next several years. 0:05:06.480 --> 0:05:09.760 David Bamon, thank you so much for CIO capital. Tiffany 0:05:09.839 --> 0:05:12.560 Wilding has never gone to three decimal points. 0:05:12.760 --> 0:05:14.760 If she did, they throw her out of that acclaim 0:05:14.800 --> 0:05:18.640 meeting at PIMCO where she talks to the fixed income managers. 0:05:18.880 --> 0:05:21.599 I mean, I'm seeing a buoyancy, Tiffany. How do you 0:05:21.680 --> 0:05:25.640 do fixed income in a boom economy? 0:05:26.600 --> 0:05:29.440 Well, I think that there's I think there's winners and 0:05:29.520 --> 0:05:33.400 losers right now in the economy, and that's the result 0:05:33.560 --> 0:05:36.279 of you know, what I would call clashing of three 0:05:37.160 --> 0:05:40.080 three policy pivot slash cycles that are happening. So you 0:05:40.160 --> 0:05:42.680 have the tariffs that have come up quite a bit 0:05:43.320 --> 0:05:45.560 more than any time in a century. You also have 0:05:45.600 --> 0:05:48.320 immigration policy that's done a U term, and underlying all 0:05:48.360 --> 0:05:51.040 of that, we have this tech boom that's also happening. 0:05:51.760 --> 0:05:53.919 So what does that mean, Well, it means the economy 0:05:53.960 --> 0:05:57.440 is adjusting, and certain parts of the economy are do 0:05:57.560 --> 0:05:59.920 look like they're doing worse than other parts. I think 0:06:00.520 --> 0:06:02.880 the most interesting thing right now is the labor markets. 0:06:02.920 --> 0:06:05.159 If you look at the details of it, you know, 0:06:05.200 --> 0:06:09.520 they do look quite recessionary. If you adjust the the 0:06:09.839 --> 0:06:12.800 Establishment Survey for some of the overestimation issues that it's 0:06:12.800 --> 0:06:15.520 had over the past year or of several years, you know, 0:06:15.720 --> 0:06:20.479 it does look contractionary. But however, despite that, you have consumers. 0:06:20.520 --> 0:06:23.719 You have real consumption you know that is still chugging along. 0:06:23.839 --> 0:06:27.719 You have real wage growth that is you know, still 0:06:27.760 --> 0:06:31.120 resilient around one percent that's supporting consumption. And you have 0:06:31.240 --> 0:06:34.240 this AI capital boom that's happening under the surface as well. 0:06:34.320 --> 0:06:36.560 So there's you know, there's a lot of on the 0:06:36.600 --> 0:06:38.200 one hand, on the other hand, not to be a 0:06:38.240 --> 0:06:41.880 two handed economist, but it's an interesting it's an interesting 0:06:41.920 --> 0:06:42.880 economy right now. 0:06:43.279 --> 0:06:45.560 And Tiffany, the inflation data that we just received at 0:06:45.560 --> 0:06:49.880 eight thirty this morning suggests that inflations kind of check here. 0:06:50.360 --> 0:06:53.240 There's nothing really to spook anybody. I don't think what 0:06:53.320 --> 0:06:54.719 did you make of the inflation data? 0:06:56.080 --> 0:06:58.400 Yeah, I mean, I think just taking a step back, 0:06:58.960 --> 0:07:01.960 you know, we haven't seen this type of tariff adjustment 0:07:01.960 --> 0:07:04.280 in a century, so there is a lot of uncertainty 0:07:04.320 --> 0:07:06.000 around just how it would play out. You know, we 0:07:06.080 --> 0:07:09.159 try to have some sort of historical benchmark which suggests that, 0:07:09.440 --> 0:07:11.800 you know, tariffs are passed through to prices. But the 0:07:11.840 --> 0:07:14.240 reality is is when we look at the data right now, 0:07:14.720 --> 0:07:17.560 what's happening is that companies are passing some of it 0:07:17.640 --> 0:07:20.560 through but much less and I think most people expect it. 0:07:20.920 --> 0:07:23.720 And where you're getting more of an adjustment is lower 0:07:23.840 --> 0:07:26.880 cost Companies are trying to manage costs in other places, 0:07:27.160 --> 0:07:30.200 and one of those places is managing labor costs, and 0:07:30.240 --> 0:07:32.720 we think the clash of the AI cycle, you know, 0:07:32.840 --> 0:07:36.040 is also allowing them to manage labor costs. You're already 0:07:36.040 --> 0:07:40.040 seeing tech entry level job hiring a tech firm start 0:07:40.040 --> 0:07:43.239 to slump, So the labor market is taking on more 0:07:43.280 --> 0:07:45.840 of this adjustment than I think most people expected. 0:07:46.160 --> 0:07:48.600 What's your model number? I'm some fan, you know. 0:07:48.640 --> 0:07:50.880 I think Jerome Schneider, I mean, is only working like 0:07:50.920 --> 0:07:53.640 a three day work I mean his idea long term 0:07:53.640 --> 0:07:54.800 it is ninety day paper. 0:07:55.320 --> 0:07:58.160 So you're talking to Jerome Schneider, a Pimco legend and 0:07:58.280 --> 0:08:02.040 short term paper, and Tiffany, you have to talk about 0:08:02.040 --> 0:08:04.160 the buoyancy of the economy. 0:08:04.960 --> 0:08:12.840 Is AI discrete or is the American economy doing better? Yeah? 0:08:12.920 --> 0:08:16.160 I mean again, I think if you just look at 0:08:16.200 --> 0:08:20.360 growth rates last year versus this year, we have seen 0:08:20.520 --> 0:08:23.200 a clear step down in the pace of growth in 0:08:23.240 --> 0:08:25.680 the US economy. You know, we were growing you go, 0:08:25.880 --> 0:08:28.000 call it two and a half to three percent over 0:08:28.040 --> 0:08:30.000 the last you know, not only last year, but of 0:08:30.040 --> 0:08:32.200 the last several years. And now we've stepped that pace 0:08:32.280 --> 0:08:33.959 down to what looks like a one and a half 0:08:34.440 --> 0:08:37.679 to one percent pace. So clearly the economy stepping down, 0:08:38.080 --> 0:08:40.240 you know. But I think what's becoming more clear is 0:08:40.240 --> 0:08:42.640 that any economist, when you have that big of a 0:08:42.760 --> 0:08:46.080 move in growth. You have a deceleration in growth, you know, 0:08:46.120 --> 0:08:48.320 you worry about that momentum, so you worry about the 0:08:48.360 --> 0:08:51.280 economy stalling. But it looks like, you know, when you 0:08:51.280 --> 0:08:53.680 look across indicators, we are not seeing a stalling in 0:08:53.720 --> 0:08:55.880 the economy. We're seeing growth that step down. 0:08:56.280 --> 0:09:00.440 Where is the slowing economy? To me, Paul mentioned it earlier, 0:09:00.480 --> 0:09:03.280 it's just case shape. There's a part of America flat 0:09:03.360 --> 0:09:07.040 on their back. There's a part of America booming wealth 0:09:07.040 --> 0:09:10.560 effect whatever. You know that drill tiffany better than I do. 0:09:11.200 --> 0:09:14.359 What does a FED do? How does a FED manage 0:09:14.840 --> 0:09:17.800 the polarity of the American economic experiment? 0:09:19.440 --> 0:09:19.760 Yeah? 0:09:19.840 --> 0:09:22.800 I mean I think that it's a really tough environment 0:09:22.920 --> 0:09:25.320 to be a central banker, you know, for a lot 0:09:25.360 --> 0:09:30.440 of reasons. And I think how you balance this all 0:09:30.520 --> 0:09:35.240 of these factors is that you remind yourself, as most 0:09:35.280 --> 0:09:37.240 of them do all the time, that you're still above 0:09:37.480 --> 0:09:41.080 neutral policy. You still think you're restrictive, and you do 0:09:41.200 --> 0:09:43.960 have an economy that has slowed. You have a labor 0:09:44.040 --> 0:09:47.160 market that has slowed quite dramatically, and you have inflation 0:09:47.480 --> 0:09:51.640 risks that look less than they did before. And so 0:09:51.720 --> 0:09:53.800 What that means in our mind is that you can 0:09:53.880 --> 0:09:56.560 start cutting interest rates, you know now, because the economy 0:09:56.559 --> 0:09:58.959 doesn't look like it's stalling, and we wouldn't go as 0:09:58.960 --> 0:10:01.040 far as to say recession and aary cuts are needed, 0:10:01.320 --> 0:10:04.400 you know, but starting that cutting cycle back to neutral 0:10:04.559 --> 0:10:06.480 makes sense to us. You get more information, you see 0:10:06.480 --> 0:10:07.480 how the economy is reacting. 0:10:07.520 --> 0:10:09.320 When was the last time I did this, Paul? I 0:10:09.400 --> 0:10:12.440 just did a fibonacci retrace mail boy from the peak 0:10:12.440 --> 0:10:13.440 of the market. 0:10:13.160 --> 0:10:16.440 On September twenty two. We had three down days in 0:10:16.480 --> 0:10:19.560 a row. Ice. Ice stayed solid because I was all 0:10:19.600 --> 0:10:20.439 in cash. 0:10:20.800 --> 0:10:24.840 We just hit the fifty percent retracement yep in like 0:10:25.040 --> 0:10:28.480 a cup of senka. We just hit the fifty percent 0:10:28.520 --> 0:10:32.079 retracement going up of our three day debacle home. 0:10:32.360 --> 0:10:33.079 It was a correction. 0:10:33.200 --> 0:10:36.360 It was a correction for the ages. So, tiffany one 0:10:36.400 --> 0:10:38.880 of the areas that's a little bit concerning for I 0:10:38.880 --> 0:10:41.560 think consermers out there is the housing market here. It's 0:10:41.640 --> 0:10:44.920 just a affordability of housing is such a problem for 0:10:45.000 --> 0:10:48.280 so much of this economy. How do you think about that? 0:10:50.200 --> 0:10:54.160 Yeah, I mean, clearly, the housing affordability issue is a 0:10:54.720 --> 0:10:57.160 very big issue, you know, we would argue it's a 0:10:57.200 --> 0:11:00.280 political issue when we look under the surface of the 0:11:00.320 --> 0:11:04.200 housing market. However, you know what we see as a 0:11:04.240 --> 0:11:07.640 housing market actually that has pretty decent fundamentals, you know, 0:11:07.800 --> 0:11:11.800 just in terms of leverage, equity and homes, you know, 0:11:11.840 --> 0:11:14.600 and the fact that after the Great Financial Crisis you 0:11:14.679 --> 0:11:18.719 had about a decade of underbuilding relative to relative to 0:11:18.800 --> 0:11:22.080 population growth and demographics. You know. So the housing market, 0:11:22.240 --> 0:11:25.079 you know, from a supplied demand perspective, you know, it's 0:11:25.160 --> 0:11:28.160 it's in a tight spot. So that's you know, not 0:11:28.360 --> 0:11:30.520 where it was at all before the you know, the 0:11:30.520 --> 0:11:33.720 two thousand and eight financial crisis. But nevertheless, with COVID 0:11:34.160 --> 0:11:37.280 you saw this very big run up in prices along 0:11:37.360 --> 0:11:41.240 with higher interest rates that's made housing much much less affordable. 0:11:41.280 --> 0:11:43.599 So we need the economy, we need real incomes to 0:11:43.679 --> 0:11:47.080 basically grow into these housing prices, you know, And our 0:11:47.160 --> 0:11:49.080 view is that you're probably going to have housing prices 0:11:49.120 --> 0:11:51.960 that are a bit more sluggish in terms of their 0:11:52.040 --> 0:11:54.200 appreciation over the next several years as you get that 0:11:54.240 --> 0:11:55.439 economy growing into them. 0:11:55.520 --> 0:11:57.880 I mean, Tiffany, I know you lived down the street 0:11:57.880 --> 0:11:59.960 from Antigua a Way in Newport. 0:11:59.559 --> 0:12:01.400 Beach into six six zero. 0:12:01.840 --> 0:12:05.600 I got four bedrooms, four bass twenty seven hundred square 0:12:05.640 --> 0:12:09.240 feet for Paul. That's a small abode, clocking in at 0:12:09.360 --> 0:12:11.280 four point two million dollars. 0:12:11.920 --> 0:12:15.040 I mean, the housing market is nuts. What is the 0:12:15.040 --> 0:12:20.959 most efficacious ten year yield for you? For American society? 0:12:21.320 --> 0:12:25.400 What yield would not the bond guys at PIMCO a 0:12:25.480 --> 0:12:30.640 legitimate economist, what's the best ten year yield for America? 0:12:32.000 --> 0:12:34.400 Well, I mean I think this gets into this concept 0:12:34.880 --> 0:12:37.120 you know that many people criticize but is helpful for 0:12:37.160 --> 0:12:40.800 central banks, of what is the neutral interest rate? And 0:12:40.840 --> 0:12:43.440 that's like the rate that the economy can handle. It's 0:12:43.480 --> 0:12:46.079 never you know, accelerating or decelerating. And I think there's 0:12:46.120 --> 0:12:48.800 a lot of debate around that right now, but many 0:12:48.800 --> 0:12:52.200 people think that a nominal kind of neutral interest rate 0:12:52.240 --> 0:12:55.679 of three percent is you know, something that is more 0:12:55.720 --> 0:12:57.760 neutral for the economy. I mean, if you look at 0:12:57.920 --> 0:13:02.920 broader investment, not just how residential investment, which has been 0:13:03.679 --> 0:13:07.520 you know, very low, flat slash contractionary, a broader set 0:13:07.559 --> 0:13:11.280 of investment in the United States is actually also flat 0:13:11.320 --> 0:13:14.600 to slightly contractionary outside of AI. So if you look 0:13:14.640 --> 0:13:17.240 at everything x AI, you know, it does look like 0:13:17.280 --> 0:13:20.560 monetary policy is restrictive, and so I think as a 0:13:20.600 --> 0:13:22.800 result of that, they have room to bring down interest rates. 0:13:22.840 --> 0:13:24.400 You know, we think kind of a three percent level 0:13:24.440 --> 0:13:26.520 still makes a lot of sense to us, you know, 0:13:27.280 --> 0:13:30.720 you know, Stephen Myron made a made a case for 0:13:30.800 --> 0:13:32.720 something lower than that. I think we just have to see, 0:13:33.240 --> 0:13:35.920 you know, again, taking small steps, seeing how the economy 0:13:35.960 --> 0:13:38.560 reacts to that is what makes sense to us. 0:13:38.559 --> 0:13:41.120 Now, it's gift Tiffany in Trouble Friday. Okay, that's what 0:13:41.160 --> 0:13:42.160 it is called, Tiffany. 0:13:42.200 --> 0:13:45.720 Do you agree with the certitude Governor Myron has of 0:13:45.760 --> 0:13:48.640 a need for a shock rate cut down to a 0:13:48.679 --> 0:13:49.319 new regime. 0:13:51.440 --> 0:13:53.760 Yeah, I mean, I think this is the key issue 0:13:53.960 --> 0:13:58.160 with monetary policy and central banking. You know, the thing 0:13:58.280 --> 0:14:01.160 is is if you're if you're uncertain, the level of 0:14:01.200 --> 0:14:04.360 our star is uncertain. Anybody who's worked on the models 0:14:04.720 --> 0:14:07.960 that try to estimate these things understand how big of 0:14:08.120 --> 0:14:11.839 bands are around the point estimates and uncertainty. And if 0:14:11.840 --> 0:14:14.200 you're uncertain about anything as a central banker, what you 0:14:14.240 --> 0:14:17.280 want to do is move more slowly, and you want 0:14:17.280 --> 0:14:19.880 to take steps, and you want to see how the 0:14:19.920 --> 0:14:23.400 economy reacts. Now, the reasons why you move fast as 0:14:23.400 --> 0:14:27.280 a central banker is that you're worried that inflation expectations 0:14:27.320 --> 0:14:30.560 are going to become unanchored. Inflation expectations look very stable, 0:14:30.800 --> 0:14:32.440 you know, or you worry that the economy is going 0:14:32.480 --> 0:14:34.800 into recession, and then you want to move quickly, you know. 0:14:34.800 --> 0:14:36.640 And again, as I mentioned before, you know, there's a 0:14:36.640 --> 0:14:38.760 lot of data that suggests that, you know, the economy, 0:14:38.760 --> 0:14:41.520 the growth rate has moved down, but we're not necessarily 0:14:42.000 --> 0:14:44.480 nearing it, you know, a stall. So you know, again, 0:14:44.560 --> 0:14:47.720 I think all of that suggests that moving in a 0:14:47.720 --> 0:14:50.880 methodical way makes a lot of sense here for the. 0:14:50.800 --> 0:14:53.720 FED, brilliant, really complete, Thank you so much. Tifhity wild 0:14:54.280 --> 0:14:56.360 there as well. We've pried for what three days to 0:14:56.360 --> 0:14:57.400 get Ethan Deevin. 0:14:57.200 --> 0:14:59.240 On with the schedules and schedule. 0:15:00.160 --> 0:15:03.200 It joins us right now. Senior investment strategists Manetta Group 0:15:03.280 --> 0:15:09.680 love having her on. Even Prime Minister Mitsotakis was collegial 0:15:10.360 --> 0:15:15.600 about the challenge of Europe. Can the fiscal tobaccle, which 0:15:15.640 --> 0:15:18.440 is Europe, can it affect America? 0:15:20.200 --> 0:15:22.880 Very interesting question and yes, better late than never. Great 0:15:22.920 --> 0:15:25.640 to be here again. In terms of Europe, Greece is 0:15:25.640 --> 0:15:28.880 actually a great example of a comeback kid when it 0:15:28.880 --> 0:15:31.440 comes to Europe. They have come from being one of 0:15:31.480 --> 0:15:35.080 the so called pigs back in the day when austerity 0:15:35.160 --> 0:15:40.320 have to dominate, and they've really read engineered their economy. 0:15:40.320 --> 0:15:42.560 They've focused a lot on tourism and they really have 0:15:43.040 --> 0:15:45.920 moved it into that more positive phase. So I'd say 0:15:45.920 --> 0:15:48.120 that is certainly in Europe in Tagant along with Spain, 0:15:48.160 --> 0:15:50.360 as one of the comeback kids. So as to what 0:15:50.400 --> 0:15:53.160 whether Europe is is in adulgence, certainly it is not 0:15:53.240 --> 0:15:56.720 experiencing the same resilient growth as we see in the US, 0:15:57.000 --> 0:16:00.800 and is lower inflation even stagflation areas if you look 0:16:00.800 --> 0:16:03.240 at the UK on the periphery of Europe there. 0:16:03.480 --> 0:16:05.160 So as to whether it will drive the. 0:16:05.160 --> 0:16:08.840 US down, I don't see that the US is firing 0:16:08.880 --> 0:16:12.080 on all cylinders on its own. I think as a 0:16:12.120 --> 0:16:14.400 trading partner it's already gaining independence. 0:16:14.760 --> 0:16:18.400 So if one of the concerns here of the marketplace is, boy, 0:16:18.480 --> 0:16:20.240 this has been such a big run off of that 0:16:20.360 --> 0:16:23.160 April low and if we've gone too far too fast, 0:16:23.520 --> 0:16:26.280 our earnings there to support it? Are is fed policy 0:16:26.320 --> 0:16:29.440 there to support it? How what are the conversations you're 0:16:29.440 --> 0:16:31.120 having with your clients these days about that. 0:16:32.120 --> 0:16:34.640 We're starting, we're having the conversations around some of this 0:16:34.800 --> 0:16:38.240 uncertainty that is circulating on the policy side, on the 0:16:38.240 --> 0:16:41.880 political side, geopolitical side, and then we're contrasting that with 0:16:41.920 --> 0:16:45.200 the resilient market performance which has seemed like that teflon 0:16:45.280 --> 0:16:48.360 market that is marched ahead regardless. So our clients are 0:16:48.360 --> 0:16:51.880 clearly pleased that their worries which they are experiencing are 0:16:51.880 --> 0:16:54.720 not being reflected in their investment portfolio as far as 0:16:54.760 --> 0:16:57.440 whether we see there's a frothiness emerging. How we and 0:16:57.480 --> 0:17:00.120 Manetta are insulating against that is by going back to 0:17:00.160 --> 0:17:03.840 our diversification playbook that we've never really strayed from or 0:17:04.000 --> 0:17:06.720 going back to kind of validate our strategy there, and 0:17:06.840 --> 0:17:10.720 that's diversification into small caps, mid caps, less exciting sectors 0:17:10.720 --> 0:17:11.440 of the economy. 0:17:11.680 --> 0:17:13.600 We've always had a linchpin. 0:17:13.359 --> 0:17:17.159 Of inflation resilient assets such as such as infrastructure and 0:17:17.200 --> 0:17:20.360 real estate. They haven't been stars shining stars at all 0:17:20.440 --> 0:17:23.720 in the portfolio. And we've had that international exposure, which 0:17:23.720 --> 0:17:26.640 has finally started to earn its keep after about ten 0:17:26.720 --> 0:17:29.840 years of languagehaing under performance, as well as the dollar 0:17:29.920 --> 0:17:33.080 was weaker. So the dollar being now and weaker is 0:17:33.119 --> 0:17:36.120 it is making those performance even more compelling. So I'd 0:17:36.160 --> 0:17:38.320 say we are a little concerned about froth. But how 0:17:38.400 --> 0:17:42.320 that will manifest is in more volatility in the tech names. 0:17:42.200 --> 0:17:44.280 Real Quick, thirty seconds. Gold what a star? 0:17:44.800 --> 0:17:46.080 Yeah, gold has been a star. 0:17:46.240 --> 0:17:48.280 We tend to see that more through some of the 0:17:48.280 --> 0:17:51.080 picks and shovels around gold, some of the broader holdings 0:17:51.119 --> 0:17:54.320 within our portfolio. We don't have dedicated exposure to gold. 0:17:54.600 --> 0:17:57.040 I think gold though, can be seen as an alarm bell, 0:17:57.080 --> 0:17:59.919 as a signal as to what investors are really thinking 0:18:00.160 --> 0:18:03.040 about the fiscal state and the concern about dollar debasement. 0:18:03.280 --> 0:18:05.560 So yes, it's positive story, but what can we read 0:18:05.560 --> 0:18:05.879 into that? 0:18:06.160 --> 0:18:08.000 If you can't wait to get you into our studios 0:18:08.040 --> 0:18:08.600 here in New York. 0:18:08.640 --> 0:18:12.720 As devit is, senior investment strategist at Monetta Group. 0:18:12.920 --> 0:18:13.680 Stay with us. 0:18:13.880 --> 0:18:17.120 More from Bloomberg Surveillance coming up after this. 0:18:24.359 --> 0:18:27.960 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:18:28.040 --> 0:18:31.159 weekday afternoons from seven to ten am Eastern Listen on 0:18:31.280 --> 0:18:34.919 Applecarplay and Android Auto with the Bloomberg Business app, or 0:18:35.080 --> 0:18:37.080 watch us live on YouTube. 0:18:36.720 --> 0:18:41.359 From trend following, joining us as Katie's Kaminski really one 0:18:41.400 --> 0:18:44.000 of the leaders in the nation at Alpha Simplex on 0:18:44.040 --> 0:18:47.479 trend following. Let's go back to Soybetia futures and what 0:18:47.560 --> 0:18:51.400 John Henry Monroe, Trout and a whole bunch of others did. 0:18:51.880 --> 0:18:55.280 What did they invent with Sparks stations years ago? 0:18:55.960 --> 0:18:58.479 So trend following is a strategy where you're looking at 0:18:58.560 --> 0:19:02.159 rules and you're looking over different horizons to determine the 0:19:02.200 --> 0:19:05.520 footprint of the market using math. And so what was 0:19:05.560 --> 0:19:08.760 exciting about their approach was they were following market trends 0:19:08.880 --> 0:19:11.800 using math, and today we do the same thing, perhaps. 0:19:11.560 --> 0:19:15.359 A little more math, but this is beautifully explaining, folks. 0:19:15.440 --> 0:19:19.000 What's so important here is they did this on spark stations, 0:19:19.040 --> 0:19:23.080 which were unreachable, and then one day Michael Bloomberg and 0:19:23.160 --> 0:19:27.160 Tom Secundi showed up with a mini Sparks station called 0:19:27.160 --> 0:19:30.320 the Bloomberg Terminal, and all of a sudden, I had 0:19:30.480 --> 0:19:35.560 unit choice. In looking at five, six, seven trend following ideas, 0:19:35.920 --> 0:19:39.399 which unit right now, Katie Kaminski. 0:19:39.240 --> 0:19:41.919 Is most efficacious for staying on trend? 0:19:42.400 --> 0:19:44.680 Well, I think if you think about units, we tend 0:19:44.680 --> 0:19:48.080 to think more about windows and frequencies as the most interesting. 0:19:48.160 --> 0:19:53.680 So longer term horizons have been more more profitable recently, 0:19:53.840 --> 0:19:56.960 thank you, but shorter term horizons have really struggled. So 0:19:57.000 --> 0:19:57.879 we'll see what happened. 0:19:57.920 --> 0:20:00.520 So what are some of the areas now that have 0:20:00.600 --> 0:20:03.159 your attention right now, whether it's stocks, bonds, commodities. 0:20:03.640 --> 0:20:06.879 I think you know who can't ignore what's going on 0:20:06.920 --> 0:20:09.960 in precious metals. I mean that's been very interesting to me. 0:20:10.000 --> 0:20:11.920 I mean we're talking about gold, but take a look 0:20:11.920 --> 0:20:13.159 at slatinum. 0:20:13.240 --> 0:20:16.560