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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day, we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. We had news yesterday

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Speaker 1: President Biden reappointed FED Chair j Pale, but also elevated

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Speaker 1: Layo Bringer to the vice chair of the FED. But

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Speaker 1: there's still some other openings there at the FED. Let's

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Speaker 1: get a lay of the land there on all things FED.

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Speaker 1: We can do that with the Caleb Nyeguard, Senior Research

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Speaker 1: associated at the Yale Program on Financial Stability, previously worked

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Speaker 1: in Statistics division at the Federal Reserve Bank of Chicago,

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Speaker 1: Sonosa thing or two about the FED. Caleb, thanks so

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Speaker 1: much for joining us here. Um, President Biden did not

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Speaker 1: announce a full slate of FED nominees yesterday. Why do

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Speaker 1: you think we don't have everything filled here? Yeah, it's

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Speaker 1: it's great to be with you. Um, it's President Biden

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Speaker 1: kind of operates on this definition of FED independence. That uh,

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Speaker 1: that's basically that he doesn't comment on specific actions that

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Speaker 1: the Central Bank takes. So he really has one big

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Speaker 1: shot to send a message to the FED, to Congress,

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Speaker 1: to financial markets, and to the broader publican general about

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Speaker 1: what he thinks about the FED. And you know, I

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Speaker 1: think he missed his opportunity yesterday by only filling two

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Speaker 1: of the seats um two of the positions. He could

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Speaker 1: have billed three others. Uh, there's the open seat from

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Speaker 1: that Trump tried to fill with Judy Shelton Quarrels has

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Speaker 1: gone and that seat's gonna need to be filled, and

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Speaker 1: Clara does is leaving, so that seat needs to be filled.

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Speaker 1: I mean, just imagine how powerful it would have been

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Speaker 1: for Biden to account walk up to that Mike yesterday

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Speaker 1: flanks not just by the feds number one and number two,

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Speaker 1: but the fed's top five, and kind of the message

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Speaker 1: that would have sense about what Biden thinks. Who the

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Speaker 1: sen is, what their job is, what their priorities are,

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Speaker 1: and you know who they represent and not just skin

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Speaker 1: color and gender, but also economic background. I think he

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Speaker 1: missed that opportunity because there are three those three seats

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Speaker 1: he says he's going to fill them in early December,

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Speaker 1: but between the debt feeling and the holidays, I just

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Speaker 1: don't think that message is going to get through this

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Speaker 1: same degree that it would have. And why not, I mean,

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Speaker 1: why not come out and make these decisions sooner rather

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Speaker 1: than later. We've had plenty of time to debate, to

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Speaker 1: have an open conversation about especially with the vice here

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Speaker 1: of supervision that all important seed, why leave it open

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Speaker 1: for so long? Yeah, that's right, And I don't think that,

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Speaker 1: you know, I think this is a messaging issue. I'm

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Speaker 1: not one of those that believe that a month or

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Speaker 1: two of one of these seats for the job itself

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Speaker 1: is going to make a huge difference in the medium

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Speaker 1: and especially not in the long term. Of what it doesn't.

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Speaker 1: It shows what it has kind of showed for the

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Speaker 1: FED chair race, which is the President Biden is just

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Speaker 1: not considers just doesn't consider the said to be a priority.

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Speaker 1: And maybe it's political concerns about distracting the different wings

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Speaker 1: of the of the Democrats Democratic senators, but I but

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Speaker 1: I think the concern is real that this is just

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Speaker 1: showing that Biden just doesn't U as a priority. So Caleb,

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Speaker 1: a lot of the progressives, particularly UH Elizabeth Warren where

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Speaker 1: came out against reappointing FED Chairman J Pale. What do

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Speaker 1: you think that the political calculus was for the president

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Speaker 1: in the announcement he did make. Yeah, So, you know,

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Speaker 1: I think this was a big loss by the progressive movement.

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Speaker 1: You know, over the last couple of years, they've proven

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Speaker 1: themselves quite a dept at picking battles that they think

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Speaker 1: they're probably gonna lose, but in the process they can

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Speaker 1: shift the window, expand the potential, you know, kind of

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Speaker 1: win this war of ideas. Uh, And this time the

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Speaker 1: progressive just didn't really bring their their A game to this.

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Speaker 1: They have never named an alternative. You know, Warren's dangerous

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Speaker 1: man kind of comment was appeared to be off the

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Speaker 1: cuff and didn't have a big follow up. The squads

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Speaker 1: and how their letter to that was released over the summer.

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Speaker 1: You know, they had some shallow issue things concerns that

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Speaker 1: they were bringing up, but they didn't name any names.

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Speaker 1: They didn't even have a short list, and they didn't

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Speaker 1: really collect around what it exactly is that they wanted,

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Speaker 1: uh from the FED. What do you want to see then,

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Speaker 1: particularly when it comes to the vice chair for supervision,

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Speaker 1: as you mentioned before. Biden has talked a lot about

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Speaker 1: gender and race diversity and inclusion as well. What are

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Speaker 1: some of the qualifications of the people that you've seen

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Speaker 1: floated around. Yeah, so that that diversity in in both

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Speaker 1: both gender, race, and then and then background is really important.

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Speaker 1: And I'll throw up at the top that in the law,

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Speaker 1: the Federal Reserve Act itself says that that these the

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Speaker 1: leadership should include various sectors of the economy, and it

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Speaker 1: explicitly includes labor. And then you know, we've never had

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Speaker 1: a member of the Federal Open Market Committee, so either

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Speaker 1: from a Reserve Bank president or one of the governors

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Speaker 1: that came from a background of of organized labor. We've

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Speaker 1: had labor economists, we've not had someone from the actual movement.

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Speaker 1: And so that would be something for one of the

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Speaker 1: three seats UH that I would I would be interested

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Speaker 1: in seeing. And then there are others on the on

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Speaker 1: the actual supervision stuff. We want to see somebody that

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Speaker 1: has experience in that matter, that has a track record

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Speaker 1: of of of having having views um and there are

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Speaker 1: there are a few people on the list that just

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Speaker 1: don't really have much supervisory experience or public messages about that.

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Speaker 1: And so that's what That's one of the things I

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Speaker 1: want to see. All right, Caleb, thank you so much

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Speaker 1: for joining us. We really appreciate you taking the time.

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Speaker 1: Caleb Nyeguard, Senior Research Associate for the Yale Program on

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Speaker 1: Financial Stability, part of the Yale School of Management. I

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Speaker 1: want to bring on Jim Shariko. He's a president CEO

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Speaker 1: of a Via Holdings uh symbol a v y A.

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Speaker 1: But we're gonna get to that in just a moment.

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Speaker 1: But first let's check in with Kritty Gupta. Get some

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Speaker 1: small cap stocks that's coming up right now. Paul the

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Speaker 1: Russell two thousand down one percent, underperforming the broader market.

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Speaker 1: The move that looks a lot like tech, but under

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Speaker 1: the hood you're seeing a little bit of a mixed picture.

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Speaker 1: Jack in the Box shares down six percent tigger J

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Speaker 1: A c K after the fast food chain reported same

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Speaker 1: store sales that missed expectations and restaurant margin declines driven

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Speaker 1: by higher costs and higher wages, kind of thing we've

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Speaker 1: been hearing lately. Abercrombie and Fish is another one. Tigger

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Speaker 1: A n F. Those shares down sixteen percent, the most

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Speaker 1: intra day since March of once again hitting those supply

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Speaker 1: chain issues. You also have Urban Outfitters down fourteen percent.

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Speaker 1: Those third quarter results mixed. Uh, they did beat those expectations.

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Speaker 1: The outlook was encouraging, but once again supply chain disruptions

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Speaker 1: and pressure from higher costs weighing on that stock. To

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Speaker 1: the upside though, because we've gotta have some good is

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Speaker 1: in their American Eagle shares up five percent, took your

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Speaker 1: a EO, also reporting better than expected earnings, this time

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Speaker 1: on strong in store sales ahead of the holidays. And lastly,

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Speaker 1: die Coum Industries took her d Y shares that fifteen

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Speaker 1: percent after the infrastructure company whose sales turned positive for

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Speaker 1: the first time in a year and even in margins

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Speaker 1: also stabilized thanks to a client or some improvement when

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Speaker 1: the client that Bloomberg Intelligence expects is Verizon. Interesting. Interesting,

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Speaker 1: all right, Gretty goop that thank you so much. We

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Speaker 1: appreciate getting that small cap report. Look at one of

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Speaker 1: these small caps via holdings of the stock was up

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Speaker 1: had a nice movie actually from eighteen to twenty two,

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Speaker 1: pulling back at six point six percent today. Jim Shariko,

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Speaker 1: president and CEO of A Villa, joins us here. Jim,

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Speaker 1: thanks so much for joining us here via Again, a

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Speaker 1: technology communications company that offers collaboration and kee communication tools

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Speaker 1: for businesses. Talk to us about your business, Jim. We're

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Speaker 1: seeing Zoom Technologies trade off a lot today and a

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Speaker 1: lot of the companies that had benefited from some of

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Speaker 1: the work from home issues getting a little bit under

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Speaker 1: pressure here. Talked to us about your company, what you're

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Speaker 1: seeing in your business. Yeah, Hi, good morning, Thanks for

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Speaker 1: having me on UM. Yeah, for a viot look. We

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Speaker 1: had our fourth quarter of fifthical year results yesterday. Was

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Speaker 1: a strong year on many fronts. We exceeded the street

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Speaker 1: expectations across the board UM, and we've really been focusing

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Speaker 1: on delivering a three pillar value creation strategy. FIRSTUS growth.

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Speaker 1: We've had six consecutive quarters a year on year growth.

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Speaker 1: We reversed more than a decade of revenue declines by

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Speaker 1: being up roughly a hundred million dollars to very close

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Speaker 1: to three billion of revenue for the year UM. We

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Speaker 1: have moved to a cloud uh cloud first company. Our

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Speaker 1: annually recurring revenues finished up roughly a hundred and seventy

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Speaker 1: seven percent year on year, so we're seeing strength across

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Speaker 1: the board. We operate in a hundred and ninety countries.

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Speaker 1: We have more than a hundred thousand UH customers, and

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Speaker 1: we've been investing significantly and really focusing on reshaping a

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Speaker 1: bye to a cloud company and a real leader in

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Speaker 1: large enterprise communication and collaboration. You know, it's interesting we

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Speaker 1: heard from Zoom as well yesterday and they really in

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Speaker 1: their press release we're highlighting how they have to be

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Speaker 1: wherever some of these large enterprise companies are. So if

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Speaker 1: it's a hybrid work environment, if it's fully work from home,

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Speaker 1: if it's all returned to office, they're having to you know,

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Speaker 1: sort of sort of tackle all of that. How are

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Speaker 1: you thinking about finding a customer where they are, even

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Speaker 1: if it's at work from home, even if it's a

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Speaker 1: percent in office. Yeah, if you take a look at

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Speaker 1: our overall solutions, in fact, we're purpose built for exactly that.

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Speaker 1: We are a portfolio company, in fact for the only

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Speaker 1: portfolio company that offers solutions that cover both the unified

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Speaker 1: communications space as well as the contact center space. And

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Speaker 1: we provide solution whether it's hybrid, whether it's private and

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Speaker 1: or public. Um. Many of our competitors really offer basically

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Speaker 1: one or maybe two of those solutions, but we're a

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Speaker 1: complete portfolio company and in fact really focusing on from

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Speaker 1: our point of view, how people communicate and collaborate, whether

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Speaker 1: it's uh, you know, work at home or from from

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Speaker 1: the office, because we view that work has been significantly disrupted,

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Speaker 1: it won't go back to where it once was, and

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Speaker 1: these disruptions provide us an opportunity to grow really predicated

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Speaker 1: on the fact that our line platform enables enables business

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Speaker 1: to really have that customer as well as employee experience,

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Speaker 1: and that's a real differentiator in today's market. So, Jimmy,

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Speaker 1: you know, you guys have just a fantastic advantage point

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Speaker 1: talking you know, working with your clients. How do you

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Speaker 1: think the future of work will be? Will it be hybrid?

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Speaker 1: Is that kind of the new norm now for corporations?

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Speaker 1: You know it really is. You know we did I said,

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Speaker 1: we deal with you know, the largest of large enterprises

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Speaker 1: down to the SMB marketplace, and no matter what vertical

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Speaker 1: you look across, be at healthcare or banking or government, um,

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Speaker 1: we're seeing that the workforce will be um really more

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Speaker 1: of a hybrid environment as as we see it out

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Speaker 1: through you know, the foreseeable future and what that means

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Speaker 1: is that businesses today need more flexibility and how they

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Speaker 1: use technology, how they can create this purposeful and consistent experience.

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Speaker 1: And that's UM. You know, that's a huge opportunity for

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Speaker 1: us because we UM. We provide that platform, We provide

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Speaker 1: the end to end solutions. You know, we've been running

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Speaker 1: mission critical applications for our number of customers for for

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Speaker 1: for many many years. And the challenge is pretty clear,

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Speaker 1: and that's to eliminate these departmental silos, UH and really

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Speaker 1: eliminate friction on how businesses conduct commerce and and we're

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Speaker 1: excited about the opportunity for the company. Hey, Jim, thanks

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Speaker 1: so much, sure for taking some time here. We really

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Speaker 1: appreciate getting your thoughts here. It's really the future of

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Speaker 1: business and working and as Jim was just mentioning, it

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Speaker 1: kind of feels like a hybrid is here to stay.

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Speaker 1: Jim Shariko, president and CEO of a Vaya symbol A

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Speaker 1: the y A. They stalk us up about eight percent

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Speaker 1: year to day, had a big big move up yesterday

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Speaker 1: on the earnings eighteen to twenty two, pulling back about

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Speaker 1: six percent today, but a big move there, and we

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Speaker 1: appreciate Jim taking the time Taylor, you're looking at the

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Speaker 1: NASTAC here today it's off one percent. We've kind of

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Speaker 1: got the SMP flatish, but the nasdak off, you know,

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Speaker 1: a little more than one percent. We've got the you know,

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Speaker 1: looking at the rates rising a little bit here, it

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Speaker 1: could be a little bit of a challenge. Well, and

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Speaker 1: I think we're gonna pull in pretty coopta back in

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Speaker 1: here because you had a big sort of you know,

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Speaker 1: it was so interesting, Paul. Yesterday we stood here and

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Speaker 1: early in the morning we got the Fed announcement. Sort

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Speaker 1: of it seemed to be this clarity rally, big relief

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Speaker 1: for then you had a decline of one point three

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Speaker 1: percent on the NASTACK by the end of the session,

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Speaker 1: and then you wake up today and you're off again

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Speaker 1: another one percent. And one key metric I'm looking at

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Speaker 1: is the number of stocks in the NASTAC that are

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Speaker 1: making fifty two week lows. It's go up to five

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Speaker 1: hundred and news stocks it was four three days ago.

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Speaker 1: So that's sort of giving you an indication when you

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Speaker 1: think about breadth and the magnitude. And again, a one

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Speaker 1: percent sell off is nothing in the scheme of things,

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Speaker 1: but underneath the surface there seems to be something going on,

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Speaker 1: and that is the highest now since March of when

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Speaker 1: you think about the number of stocks that are making

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Speaker 1: fresh fifty two week lows. So just some really interesting dynamics.

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Speaker 1: And you know, again with yields rising, you do, as

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Speaker 1: you know better than anyone, talk about that discount rate

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Speaker 1: and cash flows. And then you've had a lot of

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Speaker 1: push pool with this COVID narrative though as you and

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Speaker 1: I've been talking about hard to talk about cases. It's

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Speaker 1: better to be talking about death and hospitalizations when you

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Speaker 1: think about, uh, sort of the stay at home home

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Speaker 1: trades all over again, Yeah, exactly, And you think about

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Speaker 1: the nastac and some of these tech names that kind

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Speaker 1: of goes to that you know, push and pull we've

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Speaker 1: had in this market really since the beginning of the pandemic.

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Speaker 1: Where do you want to be in some of those

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Speaker 1: traditional growth stories that have worked so well for really

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Speaker 1: since a financial crisis back in two thousand eight, or

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Speaker 1: do you really make that cyclical play, that reopening play

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Speaker 1: on you know, whether it's you know, some of the

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Speaker 1: energy names, or the financials or even some of the

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Speaker 1: small cap names. It's that push and pull there that

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Speaker 1: we see in this market, um, and we see kind

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Speaker 1: of waves where tech does well and then again some

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Speaker 1: of the more cyclical names do well. Yeah, let's do

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Speaker 1: all of this and more with Critty Gupta who we've

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Speaker 1: swooped in here and pretty you know. Again, we don't

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Speaker 1: want to make too much of a one percent here,

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Speaker 1: one percent there, But it was the price action at

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Speaker 1: the end of the day yesterday and sort of this continued, uh,

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Speaker 1: small slight cell off today that catches our attention. Is

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Speaker 1: this a rewriting or is this a yield reaction story? Well,

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Speaker 1: you know this is going to see I would say

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Speaker 1: neither actually, because I think this is where and you're

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Speaker 1: guys are gonna hate me for saying this, but it's

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Speaker 1: a little technical brace yourselves. Let me explain why. Because

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Speaker 1: you do start to see these tiny pullbacks. One of

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Speaker 1: the main themes of has been that there's been this

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Speaker 1: major rally and no major corrections. Instead, you see these

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Speaker 1: very shallow pullback to three percent drops, usually lead by

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Speaker 1: big tech, And I think that's what you're seeing right

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Speaker 1: now because in the past I'm looking at to chart

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Speaker 1: here two months, you do start to see that tech

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Speaker 1: without performing with this ev boom, with this a semis boom,

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Speaker 1: so tech was kind of a big part of that

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Speaker 1: trade in the last two months, and now it's taking

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Speaker 1: a breather because for two reasons. One, it's found that

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Speaker 1: big kind of jumping yields that we talked about about

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Speaker 1: yesterday at ten basis point move in today, which so

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Speaker 1: we do see that yield tensitivity coming back. But you

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Speaker 1: also have us going into the holiday period where you

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Speaker 1: are going to see a little less volume, a little

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Speaker 1: less cash on the table. And I think that's really

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Speaker 1: what markets are preparing for here, and they're just doing

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Speaker 1: that through tech in a very normal reaction that you've

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Speaker 1: seen this year, which is those shallow pullback. And it's interesting.

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Speaker 1: We've seen earnings come through, you know, generally very very

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Speaker 1: well across the SMP five hundred, but particularly in tech.

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Speaker 1: But again it just seems I think, as you mentioned,

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Speaker 1: pretty investors are trying to get a sense of boy,

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Speaker 1: the next six to twelve months. You know, how positive

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Speaker 1: can I be about earnings about top line growth? Yeah, Well,

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Speaker 1: this is a conversation that we had in right this

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Speaker 1: idea that it's going to see all about the recovery

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Speaker 1: trade and how you really compare yourself year over year

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Speaker 1: to the depths of every all the numbers were going

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Speaker 1: to be good because your comparisons or two in the

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Speaker 1: next essentially year, the next six to twelve months is

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Speaker 1: going to be a completely different story because now those

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Speaker 1: comparisons aren't going to be you don't have that kind

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Speaker 1: of extra leeway, that extra slack there. In stead, they're

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Speaker 1: going to be compared to how much progress have these

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Speaker 1: companies made relative we're talking about oil prices for example.

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Speaker 1: Today we're talking about energy stocks, so we're talking about

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Speaker 1: their capacity, and still when you look at the production

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Speaker 1: levels or you look at their revenue stream, they're not

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Speaker 1: anywhere near what they were in twenty nineteen. They're also

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Speaker 1: in terms of what values they're trading at, they're still

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Speaker 1: note and there's all those kind of questions that you're

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Speaker 1: going to start to see, whether it's tech, whether it's semis,

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Speaker 1: whether it's your industrial companies, whether or not they're actually

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Speaker 1: making that progress that we really wan them sing. Hey, Crety,

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Speaker 1: thanks so much for joining us to really appreciate as

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Speaker 1: always getting your thoughts on these markets. You know, tell,

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Speaker 1: I'm looking at a chart of the two year treasury

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Speaker 1: back in June the two years trading about fifteen basis points. Here,

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Speaker 1: we are today at sixty one basis points. It seems

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Speaker 1: like the market, because the markets are already doing its job,

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Speaker 1: let's see kind of how the FED should react. Managing

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Speaker 1: director and global head of rate strategy at TV Securities

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Speaker 1: pre is the Fed kind of falling behind the market

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Speaker 1: at all here. So we think that the FED threshold

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Speaker 1: to either accelerate, taper or hike as soon as priced

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Speaker 1: in that I think the threshold is much higher than

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Speaker 1: what the markets pricing in. But to your question, I

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Speaker 1: think the market is pricing in an economic outlook and

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Speaker 1: a Fed response to that outlook. And I think the

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Speaker 1: economic outlook that the market is pricing in is that

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Speaker 1: inflation remains a problem and that the labor market shows

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Speaker 1: signs of being tight, much more tight than we think

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Speaker 1: it is, which will sort of force the Fed's hand.

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Speaker 1: And that's why we've moved the timing of the first

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Speaker 1: hike now, which just a month ago you were talking

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Speaker 1: about where the two year was. We're pricing in end

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Speaker 1: of twenty two to now June two first hike, and

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Speaker 1: more than three hikes in the first year of the

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Speaker 1: hiking cycle. So it's a normal start to the hiking cycle.

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Speaker 1: It's the timing that I struggled with. And I also

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Speaker 1: struggled with the endpoint because the market saying, well, they'll

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Speaker 1: start really early, but after the first few hikes, the

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Speaker 1: hiking cycle will sort of abort because it's impact in

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Speaker 1: a long term growth is lower. And so I struggled

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Speaker 1: with the start in the end. But the market I

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Speaker 1: think is pricing in that the FED will be forced

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Speaker 1: in sooner than what they're indicating right now. And is

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Speaker 1: that um perhaps maybe confusion or uncertainty about the start

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Speaker 1: the pace in the end. Is that what a yield

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Speaker 1: curve on the two stands it just around a hundred

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Speaker 1: basis points is telling you right, yes, I think so

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Speaker 1: it's not as steep as you normally would expect that

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Speaker 1: two stands curve because the endpoint is much lower than

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Speaker 1: historically heading into a hiking cycle. In fact, what we

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Speaker 1: noticed in the last two cycles was as we were

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Speaker 1: getting closer to the endpoint the market, or to the

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Speaker 1: start of the hiking cycle, the market was moving the

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Speaker 1: endpoint higher. And that's just not happening this time. Because

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Speaker 1: there are pretty big questions I think among investors minders

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Speaker 1: to the structural impact of COVID, as COVID slowed down

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Speaker 1: productivity or is it impacting long term growth? And so

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Speaker 1: the FED. The assumption is that the FED might be

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Speaker 1: forced to start hiking because of inflation, but they won't

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Speaker 1: be able to hike too much. So the we're estimating

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Speaker 1: the endpoint of the hiking cycle that the market is

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Speaker 1: pricing in it less than one in three quarters. So

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Speaker 1: that's a very short hiking cycle if the market is right.

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Speaker 1: But ultimately, yes, that's what's impacting that curve where those

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Speaker 1: long end rates are not able to rise, because if

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Speaker 1: the endpoint of the hiking cycle is only one and

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Speaker 1: a half, then there's a limit to how high that

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Speaker 1: two year can go. But I disagree with that. I

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Speaker 1: think the FED is going to try and let the

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Speaker 1: economy run hot to get all the people back into

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Speaker 1: a large number of people who have left the labor

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Speaker 1: force back in and so if they start a little

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Speaker 1: bit late, I think they can go much more. And

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Speaker 1: so we think that the endpoint Priceton should be closer

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Speaker 1: to two and a half, which is where it was

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Speaker 1: in the last If the labor force and labor participation

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Speaker 1: is one of the variables that the FED is looking at.

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Speaker 1: What do you make of the argument that people a

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Speaker 1: sizeable portion of the people that have left they're not

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Speaker 1: coming back. How do you think about the labor market?

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Speaker 1: So I think that's the big question, right, are they

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Speaker 1: not coming back forever or are they being picky about

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Speaker 1: the type of job or what we call the reservation wage?

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Speaker 1: At what wage level do they come back? I think

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Speaker 1: the savings high level of savings, partly because we had

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Speaker 1: the fiscal transfer, partly because spending on services was just

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Speaker 1: even if you wanted to spend, you couldn't spend it

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Speaker 1: last year, and that's provided. I think a lot of

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Speaker 1: people in the labor market a cushion to wait for

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Speaker 1: a better job or or higher wages. But how long

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Speaker 1: does that qushion last? We know the fiscal transfers are

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Speaker 1: running out or they've already run out, So in the

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Speaker 1: next six months we think a lot of people might

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Speaker 1: be forced back in into the labor force, and that

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Speaker 1: will indicate to the FED that there is hidden slack

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Speaker 1: in the labor market. Now if they're actually not coming

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Speaker 1: back because COVID was such a big change that you

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Speaker 1: know they will sort of not come back or they'll retire.

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Speaker 1: I think then that has implications for how tight the

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Speaker 1: labor market is, and that has implications for wage inflation.

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Speaker 1: And I think inflation is not a big problem price inflation.

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Speaker 1: If you have wage inflation, what we think is likely

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Speaker 1: to happen as the price inflation remains high. But wage

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Speaker 1: inflation starts to decline, that's when it starts to impact growth,

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Speaker 1: and the FED will want to be very careful not

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Speaker 1: to add to the problem by raising rates. So yeah,

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Speaker 1: I think that you've hit the key question, which is

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Speaker 1: how quickly do these people come back? And do they

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Speaker 1: come back? And our views that over time, as savings

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Speaker 1: come off, that they will come back to the labor market.

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Speaker 1: How are you thinking about very negative real yields? You're

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Speaker 1: still at negative on the tenure, negative one sixty seven

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Speaker 1: on the thirty years. That speaking into some of these

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Speaker 1: loose financial condition ends, And and why aren't we seeing

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Speaker 1: bigger movement in real yells? Absolutely, I think in the

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Speaker 1: long end that is what is puzzling. When I look

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Speaker 1: at our forecasts, we are projecting a decent rise in

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Speaker 1: those ten year real rates um you know, by the

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Speaker 1: end of next year. And absolutely I think The fact

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Speaker 1: that real rates are that negative is why the repricing

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Speaker 1: in the rates market has not had an impact really

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Speaker 1: even to the dollar to the dollar or broader financial conditions.

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Speaker 1: Is because real rates ultimately impact financial conditions and the economy. Now,

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Speaker 1: why are they here? You are? I would think a

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Speaker 1: lot of that has to do with the FED que program.

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Speaker 1: They're still by mean, they've started to taper, but it's

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Speaker 1: a slow taper um. The FED has been taking out

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Speaker 1: a lot of duration from the market, and we know

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Speaker 1: that savings is high, so there's just a lot of

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Speaker 1: demand for duration. But that is set to change next

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Speaker 1: year where the FED stops buying by the middle of

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Speaker 1: next year, the FED is not buying any treasuries and

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Speaker 1: globally rates arising, and so I think some of that

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Speaker 1: demand for treasuries, for long data treasuries that have kept

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Speaker 1: these real rates at low, that starts to ebb away

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Speaker 1: and that's going to take I don't think positive. But

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Speaker 1: we do have a fifty basis point rise in tenia

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Speaker 1: real rates by the end of next year, and that's

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Speaker 1: what then starts to impact financial conditions and actually become

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Speaker 1: self limiting for how high Tenia nominal rates can go

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Speaker 1: as well, because those real rates then really start to bite. Premisra,

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Speaker 1: thank you so much for joining us. We always always

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Speaker 1: always appreciate getting your thoughts and opinion and opinions on rates.

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Speaker 1: Premisrab Managing Director, Global head of Rates Strategy at t

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Speaker 1: D Securities. Thanks for listening to the Bloomberg Markets podcast.

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Speaker 1: You can subscribe and listen to interviews of Apple podcasts

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00:24:49,280 --> 00:24:53,200
Speaker 1: or whatever podcast platform you prefer. I'm Matt Miller. I'm

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00:24:53,240 --> 00:24:57,440
Speaker 1: on Twitter at Matt Miller V three on Boswheney, I'm

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Speaker 1: on Twitter at pt Sweeney before the podcast you and

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Speaker 1: always catch us worldwide at Bloomberg Radio. M