1 00:00:05,120 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:09,200 --> 00:00:12,720 Speaker 1: with Jonathan Ferrill and Lisa are Brownwitz Jay Leye. We 3 00:00:12,840 --> 00:00:16,760 Speaker 1: bring you insight from the best and economics, finance, investment 4 00:00:17,079 --> 00:00:22,400 Speaker 1: and international relations. Fine Bloomberg Surveillance, an Apple podcast, Suncloud, 5 00:00:22,800 --> 00:00:26,280 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg terminal. 6 00:00:30,000 --> 00:00:32,240 Speaker 1: Quite in the morning came from Stuart Kaiser. Came actually 7 00:00:32,360 --> 00:00:34,640 Speaker 1: yesterday evening as I was sitting there on the Bloomberg. 8 00:00:35,200 --> 00:00:36,959 Speaker 1: It dropped from City in the inbox and it read 9 00:00:36,960 --> 00:00:39,400 Speaker 1: as follows. Timing is the key word for markets. He 10 00:00:39,440 --> 00:00:42,120 Speaker 1: went on to say, for data, will inflation crest before 11 00:00:42,159 --> 00:00:45,320 Speaker 1: growth deteriorates? And let the FMC deal with those risks 12 00:00:45,360 --> 00:00:48,480 Speaker 1: to its mandates separately? For markets, how long an investible 13 00:00:48,479 --> 00:00:51,919 Speaker 1: window is there between those two waves of economic risk? 14 00:00:52,000 --> 00:00:54,000 Speaker 1: To which joins us? Right now? Just do awesome to 15 00:00:54,080 --> 00:00:56,320 Speaker 1: catch up. Let's start there. I think it's really important. 16 00:00:56,320 --> 00:00:58,160 Speaker 1: I've heard a couple of times after last week. Now 17 00:00:58,440 --> 00:01:01,160 Speaker 1: the sequencing of what happens growth and inflation and what 18 00:01:01,240 --> 00:01:03,920 Speaker 1: rolls over more quickly and what rolls over first? Where 19 00:01:03,960 --> 00:01:06,640 Speaker 1: are we now? It's a great question. Good morning, you 20 00:01:06,640 --> 00:01:08,440 Speaker 1: know I think the challenge here is I think when 21 00:01:08,440 --> 00:01:10,840 Speaker 1: the Fed started hiking, they were hoping inflation would sort 22 00:01:10,840 --> 00:01:13,520 Speaker 1: of already have crusted by now and they would sort of, 23 00:01:13,560 --> 00:01:15,400 Speaker 1: you know, be able to deal with the growth weaknesses. 24 00:01:15,440 --> 00:01:17,720 Speaker 1: It came at Leasta mentioned housing you started to slow down. 25 00:01:17,760 --> 00:01:19,720 Speaker 1: That's kind of one of those early indicators that growth 26 00:01:19,760 --> 00:01:21,760 Speaker 1: is going to slow it down in the future. You know. 27 00:01:21,800 --> 00:01:23,520 Speaker 1: I think what the Fed is hoping and markets are 28 00:01:23,520 --> 00:01:26,080 Speaker 1: hoping is we had a softer print last week. We'll 29 00:01:26,080 --> 00:01:28,160 Speaker 1: get a softer print hopefully in December, and that will 30 00:01:28,200 --> 00:01:30,720 Speaker 1: be evidence that that inflation started to come down at 31 00:01:30,720 --> 00:01:33,200 Speaker 1: the time when unemployment still sub four percent, right, And 32 00:01:33,200 --> 00:01:35,880 Speaker 1: that's kind of a really nice balance for the Fed, 33 00:01:36,080 --> 00:01:39,360 Speaker 1: especially because based on lags of monetary policy, we haven't 34 00:01:39,360 --> 00:01:42,000 Speaker 1: seen their rate hikes really hit the economy yet, right, 35 00:01:42,040 --> 00:01:44,120 Speaker 1: So they really need this inflation problem to get under 36 00:01:44,120 --> 00:01:46,919 Speaker 1: control before that starts to happen. You mentioned that investable window. 37 00:01:47,400 --> 00:01:50,880 Speaker 1: Is that basically the window before growth collapses essentially? Yeah, 38 00:01:50,920 --> 00:01:52,320 Speaker 1: I mean I think it is right. It's it's the 39 00:01:52,360 --> 00:01:55,400 Speaker 1: window between Hey, inflation looks like it's peak, the FED 40 00:01:55,440 --> 00:01:58,160 Speaker 1: can back off on rate hikes and oh, you know, 41 00:01:58,240 --> 00:02:00,600 Speaker 1: the unemployment rate is rising in other other forms of 42 00:02:00,680 --> 00:02:03,880 Speaker 1: economic growth are slowing. Exactly how well can you actually 43 00:02:03,920 --> 00:02:06,120 Speaker 1: time this market though, if you're looking at something that's 44 00:02:06,120 --> 00:02:08,720 Speaker 1: flip flopped by you know, ten percent in a week. 45 00:02:09,280 --> 00:02:10,760 Speaker 1: I mean, I don't think you can. And I think 46 00:02:10,760 --> 00:02:13,120 Speaker 1: that's why the investable windows are really really short. Um, 47 00:02:13,200 --> 00:02:15,640 Speaker 1: that's why you know you're not taking victory laps, are 48 00:02:15,720 --> 00:02:17,720 Speaker 1: kind of riding positions too long. I think clients are 49 00:02:17,720 --> 00:02:20,240 Speaker 1: in and out of position as quickly as possible, you know, 50 00:02:20,360 --> 00:02:22,480 Speaker 1: just for that reason. Um, it does feel like the 51 00:02:22,480 --> 00:02:25,040 Speaker 1: markets moving data point to data point at this at 52 00:02:25,040 --> 00:02:27,040 Speaker 1: this time, And I think that's why right now are 53 00:02:27,080 --> 00:02:29,120 Speaker 1: people are already asking what are non fond payroll is 54 00:02:29,160 --> 00:02:31,120 Speaker 1: going to look like in early December? What is that 55 00:02:31,120 --> 00:02:33,680 Speaker 1: inflation pretty going to look like? In December? The markets 56 00:02:33,680 --> 00:02:36,239 Speaker 1: are pricing almost at two point eight percent SMP move 57 00:02:36,560 --> 00:02:38,960 Speaker 1: on the CPI in the middle of December, So it 58 00:02:39,000 --> 00:02:40,760 Speaker 1: just gives you a sense of how much risk is 59 00:02:40,800 --> 00:02:43,720 Speaker 1: priced for that day already, you know, sitting here and 60 00:02:43,720 --> 00:02:46,959 Speaker 1: we're not even Thanksgiving, is it easier to look longer term, 61 00:02:47,040 --> 00:02:49,760 Speaker 1: especially at the leadership and we're talking to Lori Calvacina 62 00:02:49,800 --> 00:02:52,000 Speaker 1: about the leadership and the rally that we've seen in 63 00:02:52,080 --> 00:02:54,720 Speaker 1: big tech recently over the past couple of sessions, and 64 00:02:54,760 --> 00:02:57,160 Speaker 1: she sees that it could be sustainable to you agree 65 00:02:57,200 --> 00:03:00,120 Speaker 1: that there is some sort of return the rise of 66 00:03:00,160 --> 00:03:03,480 Speaker 1: the big tech behemoth as leaders. You know, I don't 67 00:03:03,480 --> 00:03:05,240 Speaker 1: think we're I don't think I'm behind that fully. Yet 68 00:03:05,400 --> 00:03:07,040 Speaker 1: there could be, it could not be. I think it's 69 00:03:07,040 --> 00:03:10,560 Speaker 1: just it's impossible to tell me. Look, tech should work 70 00:03:10,760 --> 00:03:13,160 Speaker 1: if the pressure from rates eases a bit. I think 71 00:03:13,160 --> 00:03:14,960 Speaker 1: the challenge with tech for me at this point, it's 72 00:03:15,000 --> 00:03:17,520 Speaker 1: the beginning of the year. This was a valuation discussion, right, 73 00:03:17,520 --> 00:03:20,080 Speaker 1: We're gonna push yields higher, that's gonna push PE's down. 74 00:03:20,080 --> 00:03:23,840 Speaker 1: For the NASTAC third quarter earnings were not about valuation, right. 75 00:03:24,000 --> 00:03:27,079 Speaker 1: Those are about actual fundamentals and what's going on in growth, 76 00:03:27,160 --> 00:03:30,160 Speaker 1: what's going on with Amazon, Facebook, everybody laying off employees. 77 00:03:30,360 --> 00:03:32,960 Speaker 1: Seeing The question here for tech is if I take 78 00:03:33,000 --> 00:03:36,200 Speaker 1: that pressure off from rates, do I get evaluation rerating 79 00:03:36,360 --> 00:03:37,920 Speaker 1: or do people take a step back and say, I 80 00:03:37,920 --> 00:03:40,760 Speaker 1: need to see how this this cost cutting initiative plays out, 81 00:03:40,920 --> 00:03:42,840 Speaker 1: Which is why it's I think tech is a really 82 00:03:42,840 --> 00:03:45,400 Speaker 1: tricky trade right here, just for that reason. I keep 83 00:03:45,440 --> 00:03:47,920 Speaker 1: going back to this Brian Chesky tweet. John, I mean, 84 00:03:47,920 --> 00:03:50,040 Speaker 1: you brought this up, and I keep thinking about it. Yeah, 85 00:03:50,280 --> 00:03:52,400 Speaker 1: it feels like we were in a nightclub and the 86 00:03:52,480 --> 00:03:55,000 Speaker 1: light's just turned on, And I keep thinking about this 87 00:03:55,040 --> 00:03:58,000 Speaker 1: in terms to tell me what happens when Yeah, because 88 00:03:58,000 --> 00:04:02,600 Speaker 1: you have no idea clearly so obviously very true. I'm curious, though, 89 00:04:02,880 --> 00:04:05,960 Speaker 1: what else is there that's going to get exposed? John? Well? 90 00:04:05,960 --> 00:04:08,760 Speaker 1: How how big is the iceberg? Is basically what I'm 91 00:04:08,760 --> 00:04:10,920 Speaker 1: trying to work out and everybody's trying to work out. 92 00:04:10,960 --> 00:04:13,280 Speaker 1: And I saw all those comments over Twitter over the weekend. 93 00:04:13,480 --> 00:04:16,920 Speaker 1: How big is the iceberg? Let's talk about crypto for instance, 94 00:04:16,920 --> 00:04:18,520 Speaker 1: And I think this is the big question right now, 95 00:04:19,080 --> 00:04:22,719 Speaker 1: to what degree if we had widespread institutional adoption with 96 00:04:22,800 --> 00:04:25,640 Speaker 1: that in mind, how much scope is there for contagion 97 00:04:25,720 --> 00:04:29,599 Speaker 1: from that asset class across to traditional asset classes. And 98 00:04:29,600 --> 00:04:31,320 Speaker 1: the number one question I'm filled in right now is 99 00:04:31,320 --> 00:04:34,240 Speaker 1: for people that never touched crypto, never touch bitcoin, and 100 00:04:34,240 --> 00:04:35,919 Speaker 1: they want to understand what does it mean for me? 101 00:04:36,160 --> 00:04:37,360 Speaker 1: What does it mean for me? And what are the 102 00:04:37,400 --> 00:04:39,640 Speaker 1: risks around these stories right now? What are they? What 103 00:04:39,680 --> 00:04:41,440 Speaker 1: are your telling clients, well, I think I think that 104 00:04:41,520 --> 00:04:45,279 Speaker 1: question rule relates to what is the FED going to break? Essentially, 105 00:04:45,320 --> 00:04:48,040 Speaker 1: you had ten years of easy monetary policy. You've now 106 00:04:48,160 --> 00:04:50,400 Speaker 1: hiked massively over a short period of time, and I 107 00:04:50,480 --> 00:04:52,320 Speaker 1: think a lot of clients are think, well, if they're 108 00:04:52,360 --> 00:04:54,400 Speaker 1: able to hike this motor over a short time, not 109 00:04:54,480 --> 00:04:56,800 Speaker 1: create a hard lending in the economy and not break 110 00:04:57,120 --> 00:05:01,280 Speaker 1: any asset classes, that's gonna be you ouplishment of a lifetime. So, 111 00:05:01,560 --> 00:05:03,279 Speaker 1: you know, Crypto was one of that people have pointed 112 00:05:03,320 --> 00:05:05,839 Speaker 1: to and that was a beneficiary of easy money. Um, 113 00:05:06,160 --> 00:05:07,880 Speaker 1: you know, is that is that the evidence? Is it 114 00:05:08,000 --> 00:05:10,680 Speaker 1: something like again, is it? Is it easy credit? Is 115 00:05:10,720 --> 00:05:13,000 Speaker 1: it housing? And this is why it's it's just very 116 00:05:13,040 --> 00:05:14,640 Speaker 1: hard to sort of step in and say, over a 117 00:05:14,680 --> 00:05:17,880 Speaker 1: medium term horizon, I'm comfortable owning risk here because we 118 00:05:17,920 --> 00:05:20,400 Speaker 1: haven't had sort of that moment, right, that moment where 119 00:05:20,400 --> 00:05:22,440 Speaker 1: an asset class that you didn't expect to kind of 120 00:05:22,440 --> 00:05:25,559 Speaker 1: come under pressure has So it's it's a great question 121 00:05:25,560 --> 00:05:27,040 Speaker 1: how big is it? I mean, you've you've seen the 122 00:05:27,080 --> 00:05:29,719 Speaker 1: size of the balanty. You know, you've seen you know, 123 00:05:29,800 --> 00:05:33,040 Speaker 1: negative rates in Europe, um, you've seen Cryptogo where it went. 124 00:05:33,120 --> 00:05:35,880 Speaker 1: You've seen tech performance where it was. I mean, if 125 00:05:35,920 --> 00:05:38,080 Speaker 1: there's an iceberg, it's fairly big, right, because all of 126 00:05:38,080 --> 00:05:40,680 Speaker 1: these trends have been extremely powerful and for an extended 127 00:05:40,680 --> 00:05:42,920 Speaker 1: period of time. So I think that's why a lot 128 00:05:42,960 --> 00:05:45,279 Speaker 1: of clients haven't fully re risked and why they're not 129 00:05:45,360 --> 00:05:48,239 Speaker 1: fully bought in yet, because there's a sense that there's 130 00:05:48,279 --> 00:05:51,080 Speaker 1: something out there that that hasn't worked itself out yet. 131 00:05:51,240 --> 00:05:53,039 Speaker 1: We hear from economists that we haven't built up that 132 00:05:53,120 --> 00:05:56,080 Speaker 1: much access. We've been asking on this program, what are 133 00:05:56,080 --> 00:05:58,320 Speaker 1: you talking about the excess of the last two years 134 00:05:58,400 --> 00:06:00,760 Speaker 1: or the excess of the last decade? What is the 135 00:06:00,760 --> 00:06:03,280 Speaker 1: excess we need to unwind the last two years or 136 00:06:03,640 --> 00:06:06,520 Speaker 1: the last ten? I mean I has to I would 137 00:06:06,520 --> 00:06:08,520 Speaker 1: say it's the last ten, right, I mean those are 138 00:06:08,520 --> 00:06:10,480 Speaker 1: two two separate times. It ain't the last two years 139 00:06:10,520 --> 00:06:12,720 Speaker 1: to me is much more a fiscal discussion of how 140 00:06:12,800 --> 00:06:15,160 Speaker 1: much money the government spent the last ten years. Is 141 00:06:15,240 --> 00:06:18,080 Speaker 1: much more monetary discussion in terms of in terms of 142 00:06:18,160 --> 00:06:20,960 Speaker 1: you know, easier monetary policy. So I mean you have 143 00:06:21,000 --> 00:06:23,680 Speaker 1: to unwind all of that. Probably not, but you do 144 00:06:23,760 --> 00:06:25,680 Speaker 1: have to unwind I think a portion of it. And 145 00:06:25,720 --> 00:06:27,640 Speaker 1: the question I think they're for equities. That was a 146 00:06:27,680 --> 00:06:31,400 Speaker 1: discussion about valuation, particularly of growth stocks and tech, and 147 00:06:31,440 --> 00:06:33,520 Speaker 1: a lot of that got sort of dealt with earlier 148 00:06:33,520 --> 00:06:35,480 Speaker 1: in the year. I think what a lot of clients 149 00:06:35,520 --> 00:06:38,440 Speaker 1: struggle with is who have been the biggest beneficiaries of 150 00:06:38,560 --> 00:06:42,560 Speaker 1: easy monetary policy? Um, you know, what have they invested in? 151 00:06:43,240 --> 00:06:45,479 Speaker 1: And have we seen what they've invested in? Kind of 152 00:06:45,520 --> 00:06:48,440 Speaker 1: re rate itself, and there's some questions out there. Real 153 00:06:48,560 --> 00:06:50,560 Speaker 1: estate in particular, I think is one people are really 154 00:06:50,600 --> 00:06:53,200 Speaker 1: really focused on UM And ultimately, yeah, we're just gonna 155 00:06:53,200 --> 00:06:54,960 Speaker 1: have to see how this plays out. But again, this 156 00:06:55,000 --> 00:06:56,560 Speaker 1: is why I think it's hard to say, yeah, all 157 00:06:56,600 --> 00:07:00,240 Speaker 1: clear once inflation peaks were good to go, because again, 158 00:07:00,240 --> 00:07:03,520 Speaker 1: if monetary policy acts with somewhere between the six and 159 00:07:03,520 --> 00:07:06,360 Speaker 1: eighteen month leg depending on who you talk to, what 160 00:07:06,440 --> 00:07:08,840 Speaker 1: was the FED doing twelve months ago? Right? The Fed 161 00:07:08,960 --> 00:07:11,760 Speaker 1: was at zero twelve months ago and they were buying bonds. So, 162 00:07:12,160 --> 00:07:15,600 Speaker 1: you know, while we've hiked a bit, the real estate 163 00:07:15,640 --> 00:07:18,320 Speaker 1: market has weakened a bit. You know, there's a case 164 00:07:18,360 --> 00:07:20,720 Speaker 1: to be made that a very small partition of this 165 00:07:20,960 --> 00:07:23,320 Speaker 1: portion of this tightening has hit the markets. Um, other 166 00:07:23,360 --> 00:07:25,160 Speaker 1: than maybe f c I, which is just the market 167 00:07:25,160 --> 00:07:29,320 Speaker 1: itself anyways, thought, um, if it wasn't holiday season, it 168 00:07:29,320 --> 00:07:31,640 Speaker 1: won't you know, I was just gonna say, I think 169 00:07:31,680 --> 00:07:33,280 Speaker 1: that he hasn't written his review and he's not going 170 00:07:33,320 --> 00:07:35,160 Speaker 1: to and he's just basically coming on. He would explain 171 00:07:35,160 --> 00:07:37,040 Speaker 1: why you're ahead of you is not necessary and he 172 00:07:37,080 --> 00:07:39,320 Speaker 1: can go home and enjoy his holidays. Right the year 173 00:07:39,320 --> 00:07:42,640 Speaker 1: I had outlook in March, I say all the time. 174 00:07:42,840 --> 00:07:45,920 Speaker 1: Just at the end of the first quarter, the new 175 00:07:46,000 --> 00:07:49,679 Speaker 1: poecasts Stuart Kister City, Stuart's great to see you again 176 00:07:49,840 --> 00:07:56,520 Speaker 1: in person in the studio. Doan Swamp Chief Economists the 177 00:07:56,600 --> 00:07:59,880 Speaker 1: KPMG and charts with following some of the Fed speak Dank. 178 00:08:00,040 --> 00:08:02,600 Speaker 1: We start with Governor Walla yesterday evening in Australia. What 179 00:08:02,600 --> 00:08:04,760 Speaker 1: did you make of these lightest comments and a pushback 180 00:08:04,800 --> 00:08:07,160 Speaker 1: seemingly against the market action. I think we're going to 181 00:08:07,240 --> 00:08:08,920 Speaker 1: see more of it. I think what you see with 182 00:08:08,960 --> 00:08:11,080 Speaker 1: the Fed is, you know, they've agreed to do more 183 00:08:11,160 --> 00:08:13,880 Speaker 1: measured rate hikes, but there as they close in on 184 00:08:13,960 --> 00:08:16,600 Speaker 1: a terminal rate, but they still think that terminal rate, 185 00:08:16,640 --> 00:08:19,880 Speaker 1: the peak in short term rates is higher than they 186 00:08:19,880 --> 00:08:21,880 Speaker 1: did just a few months ago. And they're going to 187 00:08:22,000 --> 00:08:24,800 Speaker 1: stick to that kind of language for some time. I 188 00:08:24,840 --> 00:08:26,880 Speaker 1: think we're going to also see when we see the 189 00:08:26,920 --> 00:08:31,240 Speaker 1: PC index because of that weird medical cost deceleration in 190 00:08:31,280 --> 00:08:33,559 Speaker 1: the c p I, the PC index, which is a 191 00:08:33,640 --> 00:08:37,720 Speaker 1: day before the FED meets in December, that when that's released, 192 00:08:37,720 --> 00:08:40,400 Speaker 1: it's going to show a little hotter corese c p I, 193 00:08:40,600 --> 00:08:43,360 Speaker 1: and the Fed's going to feel pretty justified about continuing 194 00:08:43,360 --> 00:08:46,040 Speaker 1: to raise rates, although at a fifty basis point pace 195 00:08:46,360 --> 00:08:48,920 Speaker 1: instead of a seventy five basis point pace. And the 196 00:08:48,960 --> 00:08:53,320 Speaker 1: FED also doesn't like to see financial market conditions easy 197 00:08:53,640 --> 00:08:55,960 Speaker 1: right now when they're still trying to tighten I know 198 00:08:56,080 --> 00:08:58,200 Speaker 1: that sounds strange, but the bottom line is this is 199 00:08:58,280 --> 00:09:01,760 Speaker 1: undoing much of the forward guidance that the FED has 200 00:09:01,880 --> 00:09:04,439 Speaker 1: worked so hard to establish. It was like that summer 201 00:09:04,520 --> 00:09:06,720 Speaker 1: rally on repeat, and I think Governor want to alluded 202 00:09:06,760 --> 00:09:08,760 Speaker 1: to the problems that come about from that. We put 203 00:09:08,800 --> 00:09:11,120 Speaker 1: some numbers just on the SEP that might come out 204 00:09:11,120 --> 00:09:12,600 Speaker 1: in the middle of December. In fact, it will come 205 00:09:12,640 --> 00:09:14,720 Speaker 1: out in the middle of December. We put some numbers 206 00:09:14,720 --> 00:09:17,280 Speaker 1: on that. Diane. We saw the SEP and the dot 207 00:09:18,160 --> 00:09:20,640 Speaker 1: three moved from three to four sixty I thought that 208 00:09:20,679 --> 00:09:22,680 Speaker 1: was a major jump. It was a big jump. Are 209 00:09:22,679 --> 00:09:26,040 Speaker 1: you expecting something similar, something similar in the December meeting 210 00:09:26,080 --> 00:09:30,120 Speaker 1: four sixty two? What Well, we did have six participants 211 00:09:30,200 --> 00:09:33,480 Speaker 1: at that meeting that had five percent as the high 212 00:09:33,640 --> 00:09:36,800 Speaker 1: end of that um that range, and so I would 213 00:09:36,840 --> 00:09:39,720 Speaker 1: expect to see those six participants to move above five 214 00:09:40,400 --> 00:09:43,280 Speaker 1: And we could see that SEP the high end of 215 00:09:43,320 --> 00:09:46,679 Speaker 1: that rate move slightly above five percent as well. Our 216 00:09:46,720 --> 00:09:49,600 Speaker 1: expectation now is that the high end of the range 217 00:09:49,640 --> 00:09:52,160 Speaker 1: is five and a quarter percent, which is five point 218 00:09:52,200 --> 00:09:54,560 Speaker 1: one to five in the middle of the target range. 219 00:09:54,800 --> 00:09:56,760 Speaker 1: But I think that's important to remember is that we 220 00:09:56,920 --> 00:10:00,160 Speaker 1: already had six participants at the meeting in September are 221 00:10:00,160 --> 00:10:03,640 Speaker 1: looking to go higher than what the SCP was telling us. 222 00:10:04,200 --> 00:10:06,160 Speaker 1: Ian you mentioned the medical costs, and I don't want 223 00:10:06,160 --> 00:10:07,920 Speaker 1: to get too far in the weeds, but there was 224 00:10:08,320 --> 00:10:11,920 Speaker 1: a glitch or a strange confluence of numbers in the 225 00:10:12,000 --> 00:10:14,680 Speaker 1: latest CPI report. If you back out that health care 226 00:10:14,760 --> 00:10:17,800 Speaker 1: and component, what does cp I look like? But the 227 00:10:17,840 --> 00:10:21,680 Speaker 1: cp I, certainly the underlying inflation members numbers look like 228 00:10:21,720 --> 00:10:23,960 Speaker 1: they're beginning to peak, which is the good news. And 229 00:10:24,040 --> 00:10:27,040 Speaker 1: I'm actually much more optimistic that we're going to see 230 00:10:27,280 --> 00:10:31,880 Speaker 1: a disorderly or a welcome sort of deceleration in shelter 231 00:10:32,000 --> 00:10:35,719 Speaker 1: costs as we get into three much more quickly than 232 00:10:35,760 --> 00:10:39,480 Speaker 1: the Federal Reserve expects. That said, this is still a 233 00:10:39,559 --> 00:10:42,200 Speaker 1: number that's too hot for the FED and not low 234 00:10:42,320 --> 00:10:44,920 Speaker 1: enough for the Fed to feel like, you know, the 235 00:10:44,960 --> 00:10:47,640 Speaker 1: war is over. And I think that's very important that 236 00:10:47,720 --> 00:10:49,560 Speaker 1: the Fed still feels like they still have to go 237 00:10:49,760 --> 00:10:53,640 Speaker 1: higher on rates to cool inflation, and it's still too 238 00:10:53,679 --> 00:10:56,400 Speaker 1: hot of an inflation right for them to stop thinking 239 00:10:56,440 --> 00:10:59,360 Speaker 1: about the pain that might accompany it, which is a 240 00:10:59,480 --> 00:11:01,760 Speaker 1: rise in the unemployment rate. We're just talking with drum 241 00:11:01,800 --> 00:11:04,959 Speaker 1: Schneider of PIMCO about how this feels like it could 242 00:11:05,000 --> 00:11:08,200 Speaker 1: be a prolonged downturn, even if it's shallow, it's going 243 00:11:08,240 --> 00:11:10,440 Speaker 1: to last a long time. Do you adhere to that 244 00:11:10,520 --> 00:11:13,160 Speaker 1: kind of view that perhaps the worst case scenario of 245 00:11:13,160 --> 00:11:16,240 Speaker 1: a severe downturn seems taken off the table a little 246 00:11:16,240 --> 00:11:19,199 Speaker 1: bit more, but that it could be a very long 247 00:11:19,240 --> 00:11:22,319 Speaker 1: time before we see meaningful growth at levels that we've 248 00:11:22,320 --> 00:11:24,520 Speaker 1: seen over the past decade. I think it's going to 249 00:11:24,559 --> 00:11:27,920 Speaker 1: be you know, every recession is different. Our own expectations 250 00:11:27,960 --> 00:11:31,720 Speaker 1: are for a moderate recession of a couple of quarters 251 00:11:31,880 --> 00:11:35,880 Speaker 1: without a robust rebound in the second half of three, 252 00:11:36,240 --> 00:11:39,520 Speaker 1: and then really gaining momentum in the end of four. 253 00:11:39,679 --> 00:11:42,920 Speaker 1: So as a prolonged period of weakness, that is what 254 00:11:43,040 --> 00:11:46,680 Speaker 1: we are seeing. That said, we're only talking about high 255 00:11:46,720 --> 00:11:49,680 Speaker 1: in the unemployment rate, nipping close to six percent. That 256 00:11:49,840 --> 00:11:53,960 Speaker 1: is really low for an unemployment rate for recession. There's 257 00:11:54,000 --> 00:11:55,959 Speaker 1: a lot of reasons for that and none the list 258 00:11:56,000 --> 00:11:58,720 Speaker 1: of which is the aging of the population and the 259 00:11:58,800 --> 00:12:02,240 Speaker 1: loss of participation by those over sixty five. Those are 260 00:12:02,240 --> 00:12:05,400 Speaker 1: going to be holding the participation ratedown and the overall 261 00:12:05,480 --> 00:12:08,360 Speaker 1: unemployment rate down. But this is a very different kind 262 00:12:08,360 --> 00:12:13,439 Speaker 1: of recession, disproportionately hitting housing, some spill over into consumer spending, 263 00:12:13,800 --> 00:12:17,040 Speaker 1: business investment will be hit, but unevenly. We've got the 264 00:12:17,160 --> 00:12:21,520 Speaker 1: ramp up of electric via electric battery pants going on. 265 00:12:21,640 --> 00:12:24,679 Speaker 1: We've got subsidies for chip plants going on. Those are 266 00:12:24,760 --> 00:12:28,320 Speaker 1: ramping up much more quickly than the infrastructure spending bill, 267 00:12:28,360 --> 00:12:31,000 Speaker 1: which was passed sooner, and that's not going to hit 268 00:12:31,080 --> 00:12:35,600 Speaker 1: until we get into well into and just out of interest. 269 00:12:35,720 --> 00:12:37,960 Speaker 1: If the Democrats hold onto the House, and they may 270 00:12:37,960 --> 00:12:39,559 Speaker 1: well to do. I've got no idea what happens here. 271 00:12:39,600 --> 00:12:42,600 Speaker 1: Everyone's still talking about gridlock, but ultimately things have shifted 272 00:12:42,600 --> 00:12:45,160 Speaker 1: the other way more recently. But that changed your round 273 00:12:45,160 --> 00:12:47,440 Speaker 1: look at all. I think the biggest change in the 274 00:12:47,480 --> 00:12:50,680 Speaker 1: outlook is the risks of battle over the debt ceiling 275 00:12:50,720 --> 00:12:53,080 Speaker 1: and what that would mean at a time when the 276 00:12:53,120 --> 00:12:55,760 Speaker 1: Fed still raising rates. You know, we already had the 277 00:12:55,800 --> 00:12:58,600 Speaker 1: debacle of two thousand eleven and the debt ceiling debate 278 00:12:58,640 --> 00:13:01,080 Speaker 1: back then. To take that off the table, I think 279 00:13:01,280 --> 00:13:03,840 Speaker 1: is good news now. Whether or not it means more 280 00:13:03,920 --> 00:13:07,040 Speaker 1: stimulus or more stimulus if we hit a downturn. I 281 00:13:07,080 --> 00:13:10,040 Speaker 1: still think that we're limited in fiscal space, so I'm 282 00:13:10,040 --> 00:13:12,960 Speaker 1: not sure that it actually means more steamless out there. 283 00:13:13,360 --> 00:13:15,520 Speaker 1: It's certainly I don't think they're going to have an 284 00:13:15,520 --> 00:13:19,960 Speaker 1: easy path to any kind of changes in policy, which 285 00:13:20,040 --> 00:13:22,400 Speaker 1: is a bit unfortunate because we need to make some 286 00:13:22,559 --> 00:13:25,719 Speaker 1: major decisions on policy that I believe need to be 287 00:13:25,800 --> 00:13:29,199 Speaker 1: bipartisan in scope, and I don't see that no matter 288 00:13:29,240 --> 00:13:32,280 Speaker 1: what the outcome is either way, Dian, fantastic as a 289 00:13:32,280 --> 00:13:34,319 Speaker 1: white to catch up with you. Dian Swunk, the of 290 00:13:34,400 --> 00:13:46,360 Speaker 1: KPMG Prams rejoins us now they had a level of 291 00:13:46,400 --> 00:13:49,640 Speaker 1: right strategy of TV securities prayer. It's the question that 292 00:13:49,720 --> 00:13:53,280 Speaker 1: every strategist face right now. Has the twenty three outlook 293 00:13:53,400 --> 00:13:57,600 Speaker 1: coming along? Oh gosh, you know every year it's tough, 294 00:13:57,640 --> 00:14:00,960 Speaker 1: but I would say this year we're debating economic outload, 295 00:14:01,000 --> 00:14:04,040 Speaker 1: inflation growth. I actually think that the growth outlook will 296 00:14:04,040 --> 00:14:06,800 Speaker 1: become more interesting as we go into twenty three, and 297 00:14:06,840 --> 00:14:09,840 Speaker 1: the FED reaction function. We normally don't have uncertainty on 298 00:14:09,960 --> 00:14:13,920 Speaker 1: all these aspects, plus a fairly liquid market positioning. I mean, 299 00:14:14,160 --> 00:14:17,040 Speaker 1: just look at the reaction on Thursday. I think it 300 00:14:17,080 --> 00:14:19,160 Speaker 1: tells you it's It's never easy, but I think this 301 00:14:19,240 --> 00:14:21,880 Speaker 1: year is particularly hard. You're supposed to take these outlooks 302 00:14:21,920 --> 00:14:24,400 Speaker 1: with a pinch of salt or a fistful of salt 303 00:14:24,560 --> 00:14:27,480 Speaker 1: and be nimble. So but but we're all going to 304 00:14:27,560 --> 00:14:30,200 Speaker 1: be writing it over the next you know, a couple 305 00:14:30,200 --> 00:14:33,320 Speaker 1: of weeks. Do you have any convictions whatsoever prere you know? 306 00:14:33,440 --> 00:14:36,640 Speaker 1: I do think I think liquidity is important, um, you know, 307 00:14:36,680 --> 00:14:39,520 Speaker 1: so I think making sure that you've got enough liquid 308 00:14:39,520 --> 00:14:41,560 Speaker 1: assets so that you're not forced to sell what you 309 00:14:41,600 --> 00:14:44,160 Speaker 1: don't want to sell. I think that is I would 310 00:14:44,160 --> 00:14:46,240 Speaker 1: say a theme that we've had this year. I think 311 00:14:46,240 --> 00:14:49,400 Speaker 1: that continues. The other big conviction I have is I 312 00:14:49,440 --> 00:14:52,760 Speaker 1: know that the data right now is still strong. Um, 313 00:14:52,800 --> 00:14:54,760 Speaker 1: you know, we think inflation is going to be it's 314 00:14:55,000 --> 00:14:57,160 Speaker 1: it's less about the peak, it's how quickly it's going 315 00:14:57,200 --> 00:14:58,920 Speaker 1: to decline. So I think we're going to move from 316 00:14:59,120 --> 00:15:02,000 Speaker 1: whether we speak to that pace of decline. If the 317 00:15:02,040 --> 00:15:05,080 Speaker 1: pace of decline is shallow, which is actually our our 318 00:15:05,120 --> 00:15:07,800 Speaker 1: call here, the fat's going to stay restrictive for longer, 319 00:15:07,840 --> 00:15:10,000 Speaker 1: and and so a recession is almost a done deal. 320 00:15:10,120 --> 00:15:14,840 Speaker 1: So we've got these views around sticky inflation, recession. It's 321 00:15:14,920 --> 00:15:17,280 Speaker 1: timing that, treating that that's going to be hard. I 322 00:15:17,400 --> 00:15:19,480 Speaker 1: still like ten your treasuries. I mean, I don't know 323 00:15:19,520 --> 00:15:22,040 Speaker 1: why we move thirty basis points on Thursday. So that 324 00:15:22,040 --> 00:15:24,440 Speaker 1: can absolutely be undone a little bit. But I think 325 00:15:24,520 --> 00:15:27,880 Speaker 1: owning some duration risks, which has been shunned by investors 326 00:15:28,200 --> 00:15:30,760 Speaker 1: all through this year, I think it's actually it actually 327 00:15:30,800 --> 00:15:34,440 Speaker 1: makes sense to start to position for duration coming back. Um, 328 00:15:34,480 --> 00:15:36,920 Speaker 1: you know, the tenure should not be around four percent 329 00:15:36,960 --> 00:15:39,400 Speaker 1: if you're heading into a recession. I'm not going to 330 00:15:39,520 --> 00:15:41,840 Speaker 1: let that go. I have no idea why it rallied 331 00:15:41,840 --> 00:15:45,240 Speaker 1: thirty basis points on Friday or on Thursday rather Friday 332 00:15:45,280 --> 00:15:47,440 Speaker 1: the bottom market was closed. So what do you do 333 00:15:47,480 --> 00:15:49,400 Speaker 1: with these types of moves? How do you understand them 334 00:15:49,400 --> 00:15:52,600 Speaker 1: in terms of positioning a liquidity standpoint and what that 335 00:15:52,640 --> 00:15:55,760 Speaker 1: means in terms of coming up with some sort of trade. So, 336 00:15:55,800 --> 00:15:59,080 Speaker 1: as Governor Wallace said, you know, to become to to 337 00:15:59,200 --> 00:16:01,920 Speaker 1: breathe that. I think that's actually good advice. The market 338 00:16:02,000 --> 00:16:04,520 Speaker 1: has been extremely volatile. You know, when we track standard 339 00:16:04,560 --> 00:16:07,640 Speaker 1: deviation of tenure changes, this is the highest we've seen 340 00:16:07,720 --> 00:16:10,640 Speaker 1: including the seventies in terms of how much the tenure. 341 00:16:10,920 --> 00:16:12,880 Speaker 1: When the risk free rate moves that much, you can 342 00:16:12,920 --> 00:16:17,080 Speaker 1: just imagine positioning the importance of flows. I think understanding 343 00:16:17,080 --> 00:16:20,240 Speaker 1: that the market is not as liquid, dealers have constrained capacity. 344 00:16:20,440 --> 00:16:22,640 Speaker 1: I think that's important, which is why you're supposed to 345 00:16:22,760 --> 00:16:25,880 Speaker 1: keep some cash. I think bills are actually attractive. You 346 00:16:26,040 --> 00:16:28,760 Speaker 1: keep money in the front end, UH to make sure 347 00:16:28,800 --> 00:16:31,200 Speaker 1: that if the moves are excessive, you don't have to sell. 348 00:16:31,240 --> 00:16:34,200 Speaker 1: There's no fire sale. You can potentially put money to work. 349 00:16:34,520 --> 00:16:37,240 Speaker 1: I think being nimble, I think all of this is 350 00:16:37,720 --> 00:16:40,000 Speaker 1: you know, we shouldn't see this as a one off 351 00:16:40,200 --> 00:16:44,120 Speaker 1: maybe positioning was was particularly exaggerated. I see it as 352 00:16:44,160 --> 00:16:46,320 Speaker 1: a structural issue and something I think we have to 353 00:16:46,360 --> 00:16:49,560 Speaker 1: get used to, particularly because we have a data dependent FED. 354 00:16:49,640 --> 00:16:52,280 Speaker 1: It's very different from when forward guidance was there. You 355 00:16:52,280 --> 00:16:55,880 Speaker 1: could actually expect volatility to stay low. I think volatility 356 00:16:55,920 --> 00:16:58,200 Speaker 1: stays high all through next day. It's just the market 357 00:16:58,200 --> 00:17:01,240 Speaker 1: focus will shift from in lation to growth. With that 358 00:17:01,320 --> 00:17:03,200 Speaker 1: in mind, prayer how much influence that this FED have 359 00:17:03,800 --> 00:17:06,760 Speaker 1: on the long end, on the ten year? You know, 360 00:17:06,880 --> 00:17:08,719 Speaker 1: I actually think they do. I don't know why they 361 00:17:08,720 --> 00:17:11,879 Speaker 1: don't talk as much about QT. They're letting about a 362 00:17:11,920 --> 00:17:15,040 Speaker 1: hundred billion of treasuries and mortgages run off the balance 363 00:17:15,080 --> 00:17:18,040 Speaker 1: sheet every single month. I think that's the reason why 364 00:17:18,080 --> 00:17:20,560 Speaker 1: the long end of the treasury CLUVE has underperformed. There's 365 00:17:20,600 --> 00:17:23,480 Speaker 1: a lot more supply, there's mortgages, which also long duration, 366 00:17:24,000 --> 00:17:26,240 Speaker 1: and the market is looking for that marginal buyer. So 367 00:17:26,320 --> 00:17:29,159 Speaker 1: I do think that they have control. Um. You know, 368 00:17:29,240 --> 00:17:31,040 Speaker 1: at some point, I do think QUT is going to 369 00:17:31,200 --> 00:17:33,400 Speaker 1: end once they start to ease. We actually have them 370 00:17:33,440 --> 00:17:36,080 Speaker 1: starting to ease. I know, I just talked about sticky inflation, 371 00:17:36,400 --> 00:17:38,720 Speaker 1: but if the unemployment rate is at five percent or 372 00:17:38,800 --> 00:17:41,760 Speaker 1: higher and inflation is getting down to three percent. We 373 00:17:41,800 --> 00:17:44,679 Speaker 1: actually think then the tradeoff will look will start to 374 00:17:44,680 --> 00:17:47,600 Speaker 1: skew the FED towards rate cuts. And I think if 375 00:17:47,600 --> 00:17:49,880 Speaker 1: the Fed starts to put trade, they're going to stop QUT. 376 00:17:50,520 --> 00:17:53,520 Speaker 1: And so while people think that's really a front end trade. Now, 377 00:17:53,600 --> 00:17:56,320 Speaker 1: if quantitative tightening stops, I think the tenure has a 378 00:17:56,320 --> 00:17:58,840 Speaker 1: lot more room to go. So I do think that 379 00:17:58,920 --> 00:18:01,640 Speaker 1: they have control over along end. They just don't talk 380 00:18:01,640 --> 00:18:04,280 Speaker 1: about that control a whole lot. When you press send 381 00:18:04,359 --> 00:18:07,000 Speaker 1: on the outlook, come and see us right, premisra of 382 00:18:07,040 --> 00:18:14,399 Speaker 1: TV Securities, Thank you. Lori Canvassino had a US acurity 383 00:18:14,400 --> 00:18:17,280 Speaker 1: strategy at NBC Capital Markets. Laurie, Mike Wilson, and Morgan 384 00:18:17,320 --> 00:18:20,640 Speaker 1: Stanley talking about the volatile path back to thirty after 385 00:18:20,680 --> 00:18:24,160 Speaker 1: maybe testing something like three K in the first quarter. Laurie, 386 00:18:24,240 --> 00:18:26,240 Speaker 1: earnings risk. Can you walk us through where you see 387 00:18:26,240 --> 00:18:28,959 Speaker 1: the earnings risk in the economy right now for corporate 388 00:18:29,000 --> 00:18:32,360 Speaker 1: America and why you expect that to land? Sure, it's 389 00:18:32,359 --> 00:18:34,520 Speaker 1: a great question, John, and let me let me say, Look, 390 00:18:34,560 --> 00:18:36,440 Speaker 1: I don't think we're out of the woods on earning yet. 391 00:18:36,520 --> 00:18:38,719 Speaker 1: That being said, I do think it's possible that markets 392 00:18:38,720 --> 00:18:40,800 Speaker 1: put in the ultimate low in October because three to 393 00:18:40,920 --> 00:18:44,119 Speaker 1: six months before you get the final earnings downgrades is 394 00:18:44,119 --> 00:18:46,440 Speaker 1: typically when the stock market bottoms and big sort of 395 00:18:46,520 --> 00:18:49,080 Speaker 1: challenge periods. But just kind of backing up from that, 396 00:18:49,240 --> 00:18:51,120 Speaker 1: I think we're at too oh wait for next year 397 00:18:51,160 --> 00:18:53,560 Speaker 1: on earnings. I think the consensus is still tracking around, 398 00:18:53,560 --> 00:18:56,879 Speaker 1: say to thirty three. Um, you know, what we really 399 00:18:56,880 --> 00:18:59,760 Speaker 1: have baked in is moderating inflation, which is really taking 400 00:18:59,800 --> 00:19:02,040 Speaker 1: our of a new number. It doesn't really end up 401 00:19:02,040 --> 00:19:04,199 Speaker 1: helping margins. We find that margins are really more of 402 00:19:04,200 --> 00:19:06,520 Speaker 1: a function of wages, where we've still got some wage 403 00:19:06,520 --> 00:19:09,400 Speaker 1: growth baked in on things like productivity pricing. I think 404 00:19:09,400 --> 00:19:12,760 Speaker 1: as inflation moderates, that hurts pricing power as well. So 405 00:19:12,880 --> 00:19:15,560 Speaker 1: we've really got a ratcheting down of earnings and kind 406 00:19:15,560 --> 00:19:17,919 Speaker 1: of you know, flatish the slightly down levels with what 407 00:19:17,960 --> 00:19:20,159 Speaker 1: we saw last year in the SMP five hundred. This 408 00:19:20,200 --> 00:19:24,120 Speaker 1: is very similar in our minds to the backdrop where 409 00:19:24,160 --> 00:19:26,600 Speaker 1: we just kind of don't really go anywhere on earnings 410 00:19:26,600 --> 00:19:29,440 Speaker 1: for a few years. Um. But I think honnestly, John, 411 00:19:29,440 --> 00:19:31,960 Speaker 1: I don't think the street really has a good understanding 412 00:19:32,040 --> 00:19:35,159 Speaker 1: of how much moderating inflation is going to hurt earnings 413 00:19:35,200 --> 00:19:37,280 Speaker 1: because of that link to revenues. How much are we 414 00:19:37,320 --> 00:19:39,560 Speaker 1: going to see the leadership change, Laurie in a sustainable 415 00:19:39,600 --> 00:19:42,159 Speaker 1: way over the next year. So I think this is 416 00:19:42,160 --> 00:19:44,359 Speaker 1: a great question, Lisa, and I think that's probably, you know, 417 00:19:44,400 --> 00:19:47,560 Speaker 1: one of the bigger challenges to figure out for next year. Frankly, 418 00:19:47,800 --> 00:19:50,920 Speaker 1: typically when you are in a sluggish economic growth backdrop 419 00:19:51,280 --> 00:19:53,800 Speaker 1: growth stocks outperformed, so that would point you to things 420 00:19:53,880 --> 00:19:57,639 Speaker 1: like technology, communication services, consumer discretionary. And one of the 421 00:19:57,640 --> 00:20:00,320 Speaker 1: things our economists have been talking about is that if 422 00:20:00,320 --> 00:20:01,960 Speaker 1: you when you kind of get out of the short 423 00:20:02,000 --> 00:20:05,080 Speaker 1: shallow recession, we're going to see pretty sluggish GDP for 424 00:20:05,119 --> 00:20:07,480 Speaker 1: a while. I do think though, that there's a big 425 00:20:07,560 --> 00:20:09,960 Speaker 1: leadership change of foot here, so I'd be very very 426 00:20:09,960 --> 00:20:12,000 Speaker 1: selected in looking at some of those growthy parts of 427 00:20:12,000 --> 00:20:14,040 Speaker 1: the market. We like tech, but we don't like the others. 428 00:20:14,600 --> 00:20:17,320 Speaker 1: If you think though about kind of the value oriented sectors, 429 00:20:17,600 --> 00:20:19,920 Speaker 1: we're starting to hear some people make a growth case 430 00:20:19,960 --> 00:20:23,040 Speaker 1: for them, things like energy, things like industrials, and you're 431 00:20:23,080 --> 00:20:25,360 Speaker 1: starting to see some pretty good out performance in sectors 432 00:20:25,400 --> 00:20:27,960 Speaker 1: like that over the past month or so. Freely energy 433 00:20:28,000 --> 00:20:29,720 Speaker 1: has been doing great all year, but now we're starting 434 00:20:29,720 --> 00:20:31,360 Speaker 1: to see that broaden out to some of the other 435 00:20:31,440 --> 00:20:34,480 Speaker 1: value oriented sectors. So I would say, stay pretty balanced, 436 00:20:34,520 --> 00:20:37,080 Speaker 1: have a little bit of growth, have some value exposure. 437 00:20:37,080 --> 00:20:39,320 Speaker 1: I think that's gonna work better in the near term anyway, 438 00:20:39,680 --> 00:20:42,320 Speaker 1: Be balanced and try to be more selected within those 439 00:20:42,359 --> 00:20:45,159 Speaker 1: buckets as opposed to just leaning into one big bucket 440 00:20:45,200 --> 00:20:47,440 Speaker 1: for the longer term. Lore you, it brought up something 441 00:20:47,480 --> 00:20:50,639 Speaker 1: about how you are leaning into big tech potentially, and 442 00:20:50,640 --> 00:20:52,360 Speaker 1: this is one of the big questions over the past week. 443 00:20:52,359 --> 00:20:55,119 Speaker 1: With the tremendous rally. Does it have legs? Can it 444 00:20:55,240 --> 00:20:57,760 Speaker 1: reassert itself? Are you really in the camp that it 445 00:20:57,800 --> 00:21:00,480 Speaker 1: can in terms of the rally? You know, look, I 446 00:21:00,520 --> 00:21:02,439 Speaker 1: would say i'd probably share Wilson's view that we're going 447 00:21:02,480 --> 00:21:04,439 Speaker 1: to be volatile for a bit longer on One of 448 00:21:04,440 --> 00:21:07,080 Speaker 1: the things we've pointed out is that markets in two 449 00:21:07,160 --> 00:21:10,240 Speaker 1: are really trading on the two thousand two paths um 450 00:21:10,280 --> 00:21:12,159 Speaker 1: and if you look at you know sort of what 451 00:21:12,320 --> 00:21:15,680 Speaker 1: happened back then. We had a January peak, a summer low, 452 00:21:15,800 --> 00:21:19,040 Speaker 1: a big October low. We rallied back pretty fiercely into Thanksgiving, 453 00:21:19,240 --> 00:21:21,160 Speaker 1: and then we turned around and gave most of it 454 00:21:21,200 --> 00:21:23,680 Speaker 1: back going into a new low in March, and so. 455 00:21:23,800 --> 00:21:25,520 Speaker 1: On the one hand, I do see the potential for 456 00:21:25,560 --> 00:21:27,720 Speaker 1: the rally to continue a little bit in the longer term. 457 00:21:27,760 --> 00:21:30,080 Speaker 1: I think, frankly on things like the election that's already 458 00:21:30,119 --> 00:21:32,679 Speaker 1: baked in. Um. You know, I think there's a lot 459 00:21:32,680 --> 00:21:35,399 Speaker 1: of people who think the FED moves have been exaggerated. 460 00:21:36,040 --> 00:21:38,399 Speaker 1: We can save that for another segment. Um. But I 461 00:21:38,440 --> 00:21:40,320 Speaker 1: do think that we're going to chop around, and I 462 00:21:40,320 --> 00:21:41,760 Speaker 1: think you know, whether or not you think the rally 463 00:21:41,760 --> 00:21:44,160 Speaker 1: can continue, Sure, I think I can continue a bit 464 00:21:44,200 --> 00:21:45,560 Speaker 1: in the short term, but I do think there's a 465 00:21:45,560 --> 00:21:47,399 Speaker 1: tremendous risk that we do give a lot of it 466 00:21:47,440 --> 00:21:49,240 Speaker 1: back in the first quarter. We won't save it for 467 00:21:49,280 --> 00:21:50,879 Speaker 1: another segment. You can't bring up the FED and not 468 00:21:50,960 --> 00:21:53,560 Speaker 1: talk about already. Let's talk about it now. Jennis Monic 469 00:21:53,600 --> 00:21:55,720 Speaker 1: of The New York Times yesterday was life blocking Governor 470 00:21:55,760 --> 00:21:58,440 Speaker 1: Water speech down in Australia, and this is what Governor 471 00:21:58,480 --> 00:22:00,720 Speaker 1: Water had to say. The markets seems to have gotten 472 00:22:00,880 --> 00:22:03,120 Speaker 1: way out in front. We're going to need to see 473 00:22:03,119 --> 00:22:05,199 Speaker 1: a continued run of this kind of behavior before we 474 00:22:05,240 --> 00:22:08,960 Speaker 1: really start to think about taking off foot off the break, Laurie, 475 00:22:09,040 --> 00:22:10,959 Speaker 1: is the FED still in charge of where this market 476 00:22:10,960 --> 00:22:14,200 Speaker 1: goes and how far this rally can go to the upside? Well, look, 477 00:22:14,240 --> 00:22:15,800 Speaker 1: I think I think it was really interesting. You know, 478 00:22:15,840 --> 00:22:17,639 Speaker 1: we said in our weekly, John that you know, we 479 00:22:17,800 --> 00:22:19,639 Speaker 1: liked what we saw in the CPI print, but the 480 00:22:19,640 --> 00:22:21,119 Speaker 1: thing we didn't like is we knew the FED was 481 00:22:21,160 --> 00:22:23,320 Speaker 1: going to come out and quite a quation with harsh rhetoric, 482 00:22:23,520 --> 00:22:26,320 Speaker 1: and that's exactly what we ended up getting with waller Um. 483 00:22:26,359 --> 00:22:28,760 Speaker 1: And look, I think that, you know, to some extent, 484 00:22:28,800 --> 00:22:31,040 Speaker 1: maybe they are losing a little bit of control. Um. 485 00:22:31,080 --> 00:22:33,000 Speaker 1: I think that they are trying their best to clamp 486 00:22:33,000 --> 00:22:35,359 Speaker 1: down on the enthusiasm. But I'll tell you, John, I 487 00:22:35,359 --> 00:22:38,120 Speaker 1: don't think the peak inflation, peak FED narrative ever really 488 00:22:38,160 --> 00:22:40,520 Speaker 1: went away. I think that those people just got really 489 00:22:40,560 --> 00:22:43,000 Speaker 1: really quiet over the last month or so because they 490 00:22:43,000 --> 00:22:45,480 Speaker 1: were tired of having their heads ripped off. So I 491 00:22:45,480 --> 00:22:48,200 Speaker 1: think when we yeah, where they're allowed now. Because when 492 00:22:48,200 --> 00:22:50,560 Speaker 1: we saw that CPI print came out, there was a 493 00:22:50,600 --> 00:22:53,080 Speaker 1: massive sigh of relief. There was a massive sort of 494 00:22:53,200 --> 00:22:56,560 Speaker 1: uncoiling of enthusiasm. And I sympathize with those who say 495 00:22:56,600 --> 00:22:58,600 Speaker 1: the market went too far but at the same time, 496 00:22:58,800 --> 00:23:00,720 Speaker 1: having talked to a lot of usters that you know, 497 00:23:00,800 --> 00:23:02,959 Speaker 1: have been doing work on used car prices, another all 498 00:23:02,960 --> 00:23:05,720 Speaker 1: the all these other components of inflation coming down. You know, 499 00:23:05,800 --> 00:23:09,479 Speaker 1: I understand the release that happened. I understand that relief 500 00:23:09,520 --> 00:23:12,400 Speaker 1: valve that occurred. Lorie. Final question, what are you telling 501 00:23:12,400 --> 00:23:14,480 Speaker 1: clients about what's happening in crypto and what it means 502 00:23:14,520 --> 00:23:18,160 Speaker 1: for them, even if they're not in the asset class. Yeah, 503 00:23:18,160 --> 00:23:20,240 Speaker 1: so it's a great question, John. You know, I don't 504 00:23:20,320 --> 00:23:22,000 Speaker 1: cover it. Um We we sort of leave that to 505 00:23:22,040 --> 00:23:23,760 Speaker 1: other people at the firm. But one of the things 506 00:23:23,800 --> 00:23:26,199 Speaker 1: we have talked about is the extent to which the 507 00:23:26,240 --> 00:23:29,080 Speaker 1: average retail investor, you know, is involved. And I know 508 00:23:29,119 --> 00:23:31,360 Speaker 1: I saw a Good Morning consult pole recently that said 509 00:23:31,400 --> 00:23:35,720 Speaker 1: about nineteen percent of those that they surveyed owned crypto, um, 510 00:23:35,760 --> 00:23:39,040 Speaker 1: you know, which tells me that perhaps it's not as 511 00:23:39,080 --> 00:23:41,920 Speaker 1: pervasive as some fear in terms of the impact to 512 00:23:42,000 --> 00:23:43,760 Speaker 1: the average investor. We're going to have to see. We're 513 00:23:43,800 --> 00:23:46,040 Speaker 1: getting a lot of information right now. But as I've 514 00:23:46,080 --> 00:23:47,520 Speaker 1: talked to some of my friends sort of in the 515 00:23:47,560 --> 00:23:50,520 Speaker 1: wealth management community. Remember I speak mostly with institutions, but 516 00:23:50,560 --> 00:23:51,800 Speaker 1: as I've talked to some of my friends in the 517 00:23:51,800 --> 00:23:54,600 Speaker 1: wealth management community over the past year or so. You know, 518 00:23:54,600 --> 00:23:56,720 Speaker 1: I've heard things like, well, my clients aren't really involved 519 00:23:56,720 --> 00:23:58,720 Speaker 1: in crypto. Their kids and grandkids have tried to get 520 00:23:58,720 --> 00:24:01,439 Speaker 1: them involved, um, but they said no. So, you know, 521 00:24:01,520 --> 00:24:03,920 Speaker 1: for the moment, I still view this as a contained implosion, 522 00:24:03,960 --> 00:24:05,960 Speaker 1: but we do have to watch it. There's a tremendous 523 00:24:06,000 --> 00:24:09,640 Speaker 1: correlation between the SNP and bitcoin, and we do view 524 00:24:09,640 --> 00:24:12,840 Speaker 1: bitcoin as a risk barometer for stock stocks have been 525 00:24:12,880 --> 00:24:15,040 Speaker 1: sort of defined the carnage that we've seen in that 526 00:24:15,119 --> 00:24:17,000 Speaker 1: space recently, but we'll have to keep an eye and 527 00:24:17,320 --> 00:24:19,320 Speaker 1: you know, frankly, just just see how bad this is. 528 00:24:19,320 --> 00:24:21,600 Speaker 1: It's something we've got to watch. Laurie Bridians catch up 529 00:24:21,600 --> 00:24:23,880 Speaker 1: as always that's told before year end Laurie campass into 530 00:24:23,960 --> 00:24:27,960 Speaker 1: that of MBC Capital Markets. This is the Bloomberg Surveillance Podcast. 531 00:24:28,240 --> 00:24:31,600 Speaker 1: Thanks for listening. Join us live weekdays from seven to 532 00:24:31,680 --> 00:24:35,760 Speaker 1: ten am Eastern on Bloomberg Radio and on Bloomberg Television 533 00:24:36,119 --> 00:24:40,080 Speaker 1: each day from six to nine am for insight from 534 00:24:40,119 --> 00:24:44,719 Speaker 1: the best in economics, finance, investment, and international relations. And 535 00:24:44,800 --> 00:24:49,960 Speaker 1: subscribe to the Surveillance Podcast on Apple Podcast SoundCloud, Bloomberg 536 00:24:50,000 --> 00:24:53,320 Speaker 1: dot com, and of course, on the terminal. I'm Tom 537 00:24:53,400 --> 00:25:00,240 Speaker 1: Keene and this is Bloomberg one.