Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
Speaker 2: from our global headquarters in New York City. We are
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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or
Speaker 2: anywhere else you listen, and as always on the Bloomberg
Speaker 2: Terminal and the Bloomberg Business App. I'm very pleased to
Speaker 2: say that joining us on this program, Howard Mark joins
Speaker 2: us some more. Howard, Welcome to the program, Sir.
Speaker 3: I want to start.
Speaker 2: We want to start with a central question that you
Speaker 2: pose yourself. Why asset price is so strong in the
Speaker 2: face of what you view as net negative developments. Howard,
Speaker 2: can you share your thoughts with us?
Speaker 4: I'm glad to be with you this morning. Of course,
Speaker 4: as the quote you just put on the screen indicates,
Speaker 4: you know, this is all just feeling and an opinion.
Speaker 4: None of this is factual, but it does seem that
Speaker 4: stocks are expensive relative to what I call fundamentals. Or
Speaker 4: you might call reality. And you know, the outstanding reason
Speaker 4: I think is that, you know, there hasn't been a
Speaker 4: serious market correction in sixteen years, so people get out
Speaker 4: of the habit of thinking about market corrections. The biggest
Speaker 4: single mistake. I've been thinking a lot what is the
Speaker 4: biggest single mistake investors make? And I've concluded that it
Speaker 4: is that they conclude that the way things are today
Speaker 4: is the way it will always be, and the things
Speaker 4: that have been happening will always continue to happen, whereas
Speaker 4: reversion to the mean is much more likely. So I
Speaker 4: just think that it's worked very well. Being in equity
Speaker 4: investor has worked very well. Doing it on leverage has
Speaker 4: worked even better. Concentrating in a few stocks has gone
Speaker 4: very well. Investors are by nature optimistic, and that optimism
Speaker 4: dies hard. And you know, I just think that the
Speaker 4: fluctuations of the market are mostly related to psychological fluctuations,
Speaker 4: and people go from neutrality to liking stocks, to liking
Speaker 4: them a lot, to liking them a ton, to liking
Speaker 4: them too much, and that's the continuation that creates bubbles.
Speaker 4: And you know, we're we probably in the early days
Speaker 4: of that.
Speaker 5: When you talk about liking Howard, maybe liking these assets
Speaker 5: a little bit too much. Can you put into perspective
Speaker 5: the last time you saw this type of environment that
Speaker 5: left you thinking, maybe some of the opportunities aren't as
Speaker 5: great when it comes to buying some of these assets
Speaker 5: at the current valuations. Is there another time that this
Speaker 5: sort of reminds you of in any capacity?
Speaker 4: Well, I guess, Lisa, the last time was probably around
Speaker 4: a ninety ninety seven when the market was kind of
Speaker 4: falling in love with tech stocks, and you know, the
Speaker 4: market was rocketing along. People were not worried about the
Speaker 4: level of valuations. People were extremely optimistic about the opportunities
Speaker 4: for the Internet, and you know, Alan Greenspan famously cautioned
Speaker 4: that there might be irrational exuberance. Now I picked ninety
Speaker 4: seven because even though green Span was concerned about exuberance,
Speaker 4: the market went on to rise for another two and
Speaker 4: a half to three years. So remember I said, we're
Speaker 4: in the early days. We're not at a critical at
Speaker 4: a nutty valuation. I'm certainly not ringing the alarm bells
Speaker 4: as the quote that you had on the screen said,
Speaker 4: no reason to think there'll be a correction soon. But
Speaker 4: the point is that things are expensive. They may go on,
Speaker 4: they may go on to become more expensive, but the
Speaker 4: fact that they're expensive it should not be lost.
Speaker 5: And Howard, I think a lot of people point to,
Speaker 5: in terms of the echoes of the late nineties, the
Speaker 5: tech sector of the market as being the most overvalued.
Speaker 5: What I thought was so interesting about your memo is
Speaker 5: that that wasn't your take, That that wasn't your bigger
Speaker 5: concern in the market at a time when people are
Speaker 5: counting on a certain robustness of growth and a certain
Speaker 5: kind of inflationary backdrop. Why is it that tech Is
Speaker 5: it the focus of your concern this time around?
Speaker 4: A tech contributes to the aura it surrounds the markets,
Speaker 4: and a lot of people have been citing the fact
Speaker 4: that the so called Magnificent seven stocks like Amazon and
Speaker 4: Alphabet have been contributing disproportionally to the rise, and they
Speaker 4: are responsible for more than seven stocks. Their dollar gains
Speaker 4: have been responsible for more than half of all the
Speaker 4: gains in the five hundred stocks in the S and
Speaker 4: P seven out of five hundred. But they're great companies,
Speaker 4: they're at high valuations. I think that I can't say
Speaker 4: those valuations are excessive, but the other four hundred and
Speaker 4: ninety three stocks are quite highly valued, not as highly
Speaker 4: as the magnizins of seven, but nobody says they're the
Speaker 4: same quality companies, quite highly valued relative to history. And
Speaker 4: it is the the fact that high valuations are being
Speaker 4: applied to more average companies that I think is more
Speaker 4: alarming then the fact that exceptional evaluations are being applied
Speaker 4: to exceptional companies.
Speaker 2: How there's a quote you use in this memo. I
Speaker 2: enjoyed this quote. You said, he who knows only his side,
Speaker 2: his own side of the case, knows little of that.
Speaker 2: And then I worked through the rest of the memo
Speaker 2: and there was a conclusion there about credit. And I
Speaker 2: just wonder whether you focus on equities in this note
Speaker 2: offers you a greadit perspective on how much value is
Speaker 2: offered in credit right now?
Speaker 4: Well, you know, it's as John Stewart Mill said, and
Speaker 4: I believe it was eighteen fifty nine, you have to
Speaker 4: know all the sides of the story to understand whether
Speaker 4: your side holds water. And I cite the book case
Speaker 4: there for why the market isn't overvalued. I think that's
Speaker 4: part of the job. But as you say, you know
Speaker 4: my conclusion is that it's as I said before, I'm
Speaker 4: not really seeing an alarm belt, but I do think
Speaker 4: it's time for some caution. And you know, this is
Speaker 4: a little bit of what we call on Wall Street
Speaker 4: talking your own book. But you know what I do,
Speaker 4: what Oakrey does is mostly something called credit buying the
Speaker 4: debts of companies, and debt is inherently more defensive than equities.
Speaker 4: And you have a promise of payment, you know what
Speaker 4: your return will be. They if they pay interest in
Speaker 4: principle has promised and most of the time they do.
Speaker 6: So.
Speaker 4: I just think that this is a time to put
Speaker 4: a little more defense into your portfolio, and investing in
Speaker 4: credit as opposed to equities is one way to do it.
Speaker 1: Is it still defensive, Howard?
Speaker 5: If you're looking at credit spreads that are the tightest
Speaker 5: since nineteen ninety, I'm looking at investment grade credit spreads
Speaker 5: are thought to be a more defensive part of the
Speaker 5: credit market. I mean, is that sort of question what
Speaker 5: it means for it to be defensive where the evaluations
Speaker 5: are high there as well?
Speaker 4: Well? First of all, it's what you see debt or
Speaker 4: fixed income or bonds or what I call credit, all
Speaker 4: different words for the same thing is different in nature
Speaker 4: from equities because you do have a promised contractual rate
Speaker 4: of return, and you can say that the promised contractual
Speaker 4: return isn't as high as it has been historically, or
Speaker 4: the increment that it provides over treasuries to compensate for
Speaker 4: the credit risk isn't as higher as high as it
Speaker 4: has been historically. But you can't say that they don't
Speaker 4: promise seven and a half percent, and a promise of
Speaker 4: seven and a half percent you're going to pay for
Speaker 4: some fees. You're once in a while going to encourage
Speaker 4: encounter a credit loss. I think it's highly likely to
Speaker 4: provide let's say, a return in the sixties over the
Speaker 4: next ten years. A contractual guarantee approaching something in the
Speaker 4: sixes over the next ten years is I think more
Speaker 4: defensive than being in the stock market at these elevated valuations.
Speaker 4: That's the point. And you know you just said tighter
Speaker 4: than they have been since ninety eight. And if you
Speaker 4: looked at where they were in ninety eight, and you
Speaker 4: hypothesize that put an investment in a portfolio HYO bonds
Speaker 4: in ninety eight, how did you do over the last
Speaker 4: seventeen years? Of twenty seven years, and I think you
Speaker 4: did fine. That's my point. It has a high probability
Speaker 4: of doing fine, whereas stocks, if the valuations are elevated,
Speaker 4: have some reasonable probability of doing less than fine.
Speaker 5: Is the United States still the focal point for defensive investments?
Speaker 4: You know? I think? I said in the memo that
Speaker 4: I think the US is still the best place in
Speaker 4: the world to invest. The things that make the US exceptional,
Speaker 4: the spirit of innovation, the free markets, the rule of law,
Speaker 4: the capital markets, the growth and dynamism, the great companies.
Speaker 4: These things are still all true. But as I said
Speaker 4: in the memo, we're the best place. We may be
Speaker 4: a little less best than we used to be. The
Speaker 4: world is thinking that maybe the US is a little
Speaker 4: best less best than it used to be. I can't
Speaker 4: argue against that. I mean, fundamentally, as an investment environment,
Speaker 4: I think things are a little bit deteriorated.
Speaker 5: Is there a place that you see has more opportunities
Speaker 5: right now, just based on valuations and based on maybe
Speaker 5: affirming up of contract law and other aspects that really
Speaker 5: lead to a robust investment backdrop.
Speaker 4: Well, as I say, I still think we're the best
Speaker 4: place in the world to invest. And you know, we're
Speaker 4: a great car at a high price. You can get
Speaker 4: some cars around the world that are not as great
Speaker 4: as ours cheaper. Which do you prefer less good at
Speaker 4: a cheaper price or better at a more expensive price.
Speaker 4: So you know, other parts of the world do not
Speaker 4: have our dynamism, and lots of places in the world
Speaker 4: are overregulated compared to the United States, But if they're
Speaker 4: on sale relative to the US, it's not unreasonable to
Speaker 4: want to have some representation there.
Speaker 2: Stay with us More Bloomberg Surveillance coming up after this.
Speaker 2: Eugenio Alamann for Remond James, writing the following inflationary effects
Speaker 2: from taris should start making inroads into those nominal retail numbers,
Speaker 2: and we should expect to see weakness and consumer demound
Speaker 2: during the rest of the year. Eugenia joins US Now
Speaker 2: for more. Welcome to the program sir, what's your read
Speaker 2: on the US consumer. Let's just build on what you
Speaker 2: said there and how broad based will that weakness be.
Speaker 6: Yeah, we have been seen weakness in the US consumer
Speaker 6: for a while. The first two quarters of the year
Speaker 6: were relatively low, I mean weak, and as we expect
Speaker 6: the full impact of times continued to make in roads.
Speaker 6: We are expecting the consumer to continue to slow down.
Speaker 6: So our second, third quarter and fourth quarter expectation is very,
Speaker 6: very weak, very very close to recession. We are still
Speaker 6: not calling a recession. We have fifty percent recession, but
Speaker 6: it is a very smooth slowing down of the consumer.
Speaker 6: There is no falling of of consumer demand, but it
Speaker 6: is weakening. I mean we have employment numbers weekend considered,
Speaker 6: aurienda is going to continue to keep the consumer contained.
Speaker 2: Can we focus on the potential for further bifurcation within
Speaker 2: the consumer?
Speaker 3: Eugenia.
Speaker 2: This came from the Bank of America Institute, and they
Speaker 2: said total credit and debit card spending per household increase
Speaker 2: one point eight percent year over year in July, the
Speaker 2: highest growth rate since January. So bounce back and spend
Speaker 2: in July coming through the summer. But they also said
Speaker 2: this the difference in wage growth between higher and lower
Speaker 2: income households the largest since February twenty twenty one. Is
Speaker 2: there something more regressive about the policy effort of the
Speaker 2: past few months that you see playing out in a
Speaker 2: much more negative way in the months to come.
Speaker 6: Yeah, it is clear that tires effect are very regressive
Speaker 6: effect the lower income individuals households compared to the higher
Speaker 6: income and we have seen this wave of a splitting consumer,
Speaker 6: let's say, in terms of income for a while. I mean,
Speaker 6: we also have student loans that are going to have
Speaker 6: to be repaid again, so those spendings are going to
Speaker 6: come down on discretionary side of the economy. So yes,
Speaker 6: I mean, we are concerned that this bifurcation of the
Speaker 6: consumer through income levels will will put I mean, will
Speaker 6: help to weaken the consumer even further.
Speaker 5: How much do you see some of the retail sales
Speaker 5: data that we've been getting is somewhat clouded, Eugenio, given
Speaker 5: the fact that inflation has been present. You have seen
Speaker 5: a couple of key goods really see pretty significant inflationary pops,
Speaker 5: and that's included in the absolute number that people then say, look,
Speaker 5: it shows.
Speaker 1: The consumer is strong, the consumer is robust.
Speaker 6: Yeah, I mean, the biggest issue with nom with retail
Speaker 6: sales is that they are nominal. Right. The DA used
Speaker 6: to calculate some real retail sales, but they don't have
Speaker 6: enough resources, so they no longer calculate them. So every
Speaker 6: time that we see nominal retail sales, we say wait
Speaker 6: a second. Yes, it was relatively strong in July, but
Speaker 6: you have to take into account that most of it
Speaker 6: is probably price increases. So that is one of the
Speaker 6: reasons that we say that the consumer consumer demand has
Speaker 6: been slowing down, so you have to take away and
Speaker 6: increases in prices. We are seeing some increases in prices.
Speaker 6: A third of consumption is good, so those are the
Speaker 6: ones that are most impacted by by tires, and there
Speaker 6: are goods that affect the lower end consumer more than
Speaker 6: the upper end consumer. So it is concerning. We don't
Speaker 6: see a crisis, so we don't see something funny enough
Speaker 6: right now, but you know, the shock from times is
Speaker 6: going to continue to making roads.
Speaker 2: Into Stay with us. More Bloomberg Surveillance coming up after this.
Speaker 2: Eric Friedman of US Bank writing, as long as CAPEX
Speaker 2: continues and technology diffusion occurs at a measured pace, we
Speaker 2: see further upside, but would not mind the pause. The refreshes.
Speaker 2: Eric joins us now for more. Eric, welcome to the program.
Speaker 2: So last time we spoke a little more than a
Speaker 2: month ago. Around a month ago, I remember you were
Speaker 2: maintaining that overweight risk on posture. Eric, are you maintain
Speaker 2: in that posture going through summer.
Speaker 7: Yeah, Jonathan, we are great to see you as always.
Speaker 7: I think that our viewpoint is certainly trees don't grow
Speaker 7: to the sky, and I think a level of skepticism
Speaker 7: around you know, leads. That's a great point made about
Speaker 7: the return on capital with an AI that for us
Speaker 7: is really the big factor. We think that with respect
Speaker 7: to technology, we are seeing that diffusion pick up.
Speaker 3: In other words, we're.
Speaker 7: Seeing more access to AI technologies across a broader plethora
Speaker 7: of companies, which is a good thing. At the same time,
Speaker 7: though companies have to make money. This is about return
Speaker 7: of shareholder capital and so you can't just have a
Speaker 7: plan where you want to spend a bunch of money
Speaker 7: on AI. There needs to be some evidence if you
Speaker 7: will have returned. So we think that CAPEX is a
Speaker 7: good guide. It's not the only guide, but we're starting
Speaker 7: to see more companies talk about those returns on their
Speaker 7: capital deployed, which for us is still a positive.
Speaker 3: So again we're still risk on. We think consumers hang
Speaker 3: in there.
Speaker 7: We think CAPEX continues, but again we would not be
Speaker 7: surprised to see a bit of a pullback, which we'd
Speaker 7: like to be buyers of especially as we get deeper
Speaker 7: into the doldrums, if you will, pre labor Day.
Speaker 2: So you've got a pro rispose quite clearly, and you've
Speaker 2: had that every time we've spoken over the last several times.
Speaker 2: What would begin to construc in that pro respose for you?
Speaker 4: Eric?
Speaker 2: What could you point too specifically?
Speaker 3: I think two things.
Speaker 7: Number one would be, Jonathan, the consumer rolls over, which
Speaker 7: we can't discount. We'd like to say that we have
Speaker 7: a working thesis mentality about consumers. A lot of concern
Speaker 7: about did we see a huge pull forward in demand
Speaker 7: around the Liberation Day announcement in the week shortly thereafter,
Speaker 7: and will that return? In other words, will that demand
Speaker 7: actually resurface. We have a couple of data points we
Speaker 7: can look at. Number one is back to school sales,
Speaker 7: and then number two is what we're hearing about the
Speaker 7: holiday shopping season. So we'll have some good evidence right now.
Speaker 7: Our high frequency data checks, things like TSA data, things
Speaker 7: like open table bookings are still very robust, So consumers
Speaker 7: are not rolling over. The second area that where we
Speaker 7: could be wrong would be companies actually don't use this
Speaker 7: opportunity with a bit more tear iff clarity to hire people.
Speaker 7: And again we do think the labor market softness has
Speaker 7: been very well documented.
Speaker 3: That for us is a red flag.
Speaker 7: So those two elements consumer pulling back, but then also
Speaker 7: the notion of will businesses actually come back to higher
Speaker 7: folks now that we have a little more tear if clarity,
Speaker 7: that for us would be a bit of the concerning points.
Speaker 7: It would take that glass half fle thesis to task.
Speaker 5: Relative to where we are right now, it seems like
Speaker 5: the potential for disappointment is in the four hundred and
Speaker 5: ninety three, based on what you just said, not necessarily
Speaker 5: the magnificent seven. You never said in that entire risk paradigm,
Speaker 5: the idea that suddenly we're in a bubble in tech
Speaker 5: valuations and that it would crash as people lost faith
Speaker 5: in just how much artificial intelligence could actually do. Why
Speaker 5: is that not necessarily a concern for you in the
Speaker 5: same way that just sort of the more humdrum aspects
Speaker 5: of just a slowing consumer would be.
Speaker 6: Yeah.
Speaker 3: I think that's a very thoughtful challenge, Lis.
Speaker 7: I mean, if you look at the broader marketplace right now,
Speaker 7: you look what's really developing from a core spend standpoint,
Speaker 7: we need to see a development beyond AI and cyberspect
Speaker 7: that's something that is a very played out thesis. Again,
Speaker 7: we're weary of being involved for too long. I think
Speaker 7: that that's something that gives us again some level of
Speaker 7: skepticism about the rest of the of the markets participation.
Speaker 7: One thing that I want to really emphasize it I
Speaker 7: think is probably undercovered, is is that cash flows are
Speaker 7: actually becoming more valuable. If anything, when we look at
Speaker 7: our discount and cash flow models when we're evaluating the
Speaker 7: other four hundred and ninety three companies out there, you know,
Speaker 7: there's the expectation that FED funds goes down to three
Speaker 7: percent by the end of calendar year twenty twenty six.
Speaker 7: That's a pretty significant development. Again, that's not necessarily new news,
Speaker 7: if you will. I mean, the forward curve has that
Speaker 7: pretty well priced in. But when we're discounting cash flows,
Speaker 7: we're using a much lower interest rate, which makes those
Speaker 7: cash flows more valuable.
Speaker 3: So, if anything, you know, we.
Speaker 7: Think that that should the FED continue with a more
Speaker 7: measured gradual reduction for a prolonged period of time. Again,
Speaker 7: the move from four point three three to three percent
Speaker 7: on a discout rate that has been hero impacts on
Speaker 7: stock valuation. So I think if anything leads so what
Speaker 7: would be another challenge, if you will, would be if
Speaker 7: the FED decides to be more incremental, if the yeld
Speaker 7: curve doesn't have that twist shape, and in fact the
Speaker 7: front of the curve remains more elevated, that would make
Speaker 7: that four to ninety three less valuable. Because we think
Speaker 7: that that will likely be the outcome. The FED will
Speaker 7: be measured but still bring the front rates down. That
Speaker 7: makes the other four ninety three more attractive, even with
Speaker 7: more prosaic sales growth.
Speaker 5: This is the reason why so many people are thinking
Speaker 5: that ten am on Friday Eastern Time is going to
Speaker 5: be so pivotal for equity m bond markets. Given the
Speaker 5: fact that potentially FED chair Jay Powell could come out
Speaker 5: and say in September we're going to cut, or in
Speaker 5: September we're not going to cut.
Speaker 1: He's not going to say either of those things. What
Speaker 1: are you actually going to hear?
Speaker 5: That will give you a sense of whether this market
Speaker 5: has baked in too many rate cuts or has gotten
Speaker 5: a little bit overly excited about the pace of the
Speaker 5: easing cycle that's ahead.
Speaker 7: I think it is very much a horse race, Lisa
Speaker 7: about which risk is the FED more focused on. Again,
Speaker 7: the labor market is softening, That's that is something that
Speaker 7: we think has been evidenced for a couple of months,
Speaker 7: a couple of quarters, versus what about this inflation issue?
Speaker 7: Is in fact inflation going to be more ephemeral in nature.
Speaker 7: So I do think that the labor market, you know,
Speaker 7: sort of having the lead if you will, right now,
Speaker 7: versus a little bit of a viewpoint that perhaps the
Speaker 7: FED is rounding down with its inflation expectations. Again, the
Speaker 7: Fed has had many opportunities to come off that two
Speaker 7: percent long term inflation target and they haven't budged. We
Speaker 7: do think that the Fed is actually rounding down if
Speaker 7: you will say, hey, if we see something in the
Speaker 7: mid twes, that's probably okay to start a or at
Speaker 7: least to continue the rate cutting cycle. But again I
Speaker 7: think that the terminal rate leads to probably lasting I'd say,
Speaker 7: is of the utmost important to us. Again, while we
Speaker 7: are very focused on where the front of the curve
Speaker 7: maybe in twenty twenty six.
Speaker 3: We also care a lot about how long it'll actually
Speaker 3: be there.
Speaker 7: The FED has been very stealthily increasing their terminal level
Speaker 7: of FED funds that has material implications for equity investors
Speaker 7: like us. If we're discounting again a higher terminal rate,
Speaker 7: that's not a good thing. So we think that two
Speaker 7: things are really important. Number one, how long will we
Speaker 7: actually be at that terminal rate? At Number two, which
Speaker 7: of those two risks of the Fed more focused on.
Speaker 7: We think that right now the labor market softness is
Speaker 7: getting a little more attention from the Fed versus inflation,
Speaker 7: which has been again well on their sites for some time.
Speaker 2: Let's focus on inflation. Let's just finish there. We spoke
Speaker 2: to Jim Caron and molk and Stanley just yesterday. Now,
Speaker 2: as I asked this question, I do understand the stocks
Speaker 2: are still close to all time highs and we're trading
Speaker 2: at are pretty anovated forward multiple. But Jim at this
Speaker 2: to say inflation is acting like a guard dog keeping
Speaker 2: unrestrained bullish sentiment at bay. But what if the doc
Speaker 2: doesn't bark, then markets might be under risk? Eric from
Speaker 2: man with a pri Risk APPT site pri Risk by
Speaker 2: do you have some sympathy with those lines coming from
Speaker 2: Jim Careen and Molgan Stanley.
Speaker 6: Oh?
Speaker 7: Absolutely, I think one great imagery from mister Karen in
Speaker 7: terms of that visual. But you know, I think that
Speaker 7: the inflation issue is a material risk. And again, we
Speaker 7: don't want to just whistle past this idea that perhaps
Speaker 7: inflation is going to have some normalization effect just because
Speaker 7: that's what markets currently expect. If you look at the
Speaker 7: great reporting that your team has done, you know, companies
Speaker 7: right now are still eating inflationary pressures, not just on
Speaker 7: the good side, but also on the services side as well.
Speaker 3: That may not persist.
Speaker 7: We could see an about face where companies say, hey,
Speaker 7: you know what, I'm going a thin margin business and
Speaker 7: other companies are also passing through inflationary risks. So we'll
Speaker 7: do the same thing if that actually occurs, Jonathan, and
Speaker 7: that that bark may be a lot louder than we
Speaker 7: think it will. Again, we do expect again even just
Speaker 7: looking at differentials, look at forward estimates for in the
Speaker 7: US at like you know, two and a half to
Speaker 7: three percent versus Europe and an em at sub two
Speaker 7: percent out another you know.
Speaker 3: Twelve eighteen months.
Speaker 7: That's a differential that this administration as well as companies
Speaker 7: can't maintain indefinitely.
Speaker 3: Something has to give.
Speaker 7: Again, we do think that inflation will bend, but not break,
Speaker 7: and we're a little more i think optimistic about inflation,
Speaker 7: nestment's coming down, but we certainly have to respect the
Speaker 7: case if that, of course is wrong.
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