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This is the Bloomberg 0:00:45.440 --> 0:00:49.320 Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and 0:00:49.360 --> 0:00:52.800 Lisa Abramowitz. Join us each day for insight from the 0:00:52.840 --> 0:00:58.040 best and economics, geopolitics, finance and investment. Subscribe to Bloomberg 0:00:58.120 --> 0:01:02.680 Surveillance on demand on app, Spotify and anywhere you get 0:01:02.720 --> 0:01:07.200 your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, 0:01:07.600 --> 0:01:09.200 and the Bloomberg Business App. 0:01:09.319 --> 0:01:11.880 Jitting a manuel jointed to surround a table Chief Equity 0:01:12.680 --> 0:01:15.400 just over at evercor SI jitting Good mornings here, Good morning. 0:01:15.480 --> 0:01:18.319 Have you been participating in this wonderful, beautiful thing that 0:01:18.400 --> 0:01:19.479 is an eight day winning streak. 0:01:19.760 --> 0:01:25.160 Yeah, we have, you know, several weeks ago we just 0:01:25.280 --> 0:01:28.000 felt that when you backed off of that five percent yield, 0:01:28.000 --> 0:01:30.240 And I know we've been talking about it, but it 0:01:30.360 --> 0:01:33.240 is the fact that in this world now for the 0:01:33.319 --> 0:01:35.760 last year and a half, where stocks and bonds have 0:01:35.800 --> 0:01:40.479 been positive correlated, if bond yields go down, stocks go up, 0:01:40.560 --> 0:01:44.960 and backing off of five percent was huge for the psychology. 0:01:45.360 --> 0:01:49.160 And now we've got this unexpected oil price plunge, which 0:01:49.840 --> 0:01:52.040 is even bigger for Cheryl. 0:01:51.760 --> 0:01:53.760 I'm with you. Those two points yesterday stood out for me. 0:01:53.800 --> 0:01:55.720 Break a four to fifty on a ten year break 0:01:55.760 --> 0:01:58.320 of eighty on Brent crude. At what point do these 0:01:58.320 --> 0:02:00.520 correlations start to break the other way? What brings up 0:02:00.560 --> 0:02:01.200 hot that change? 0:02:01.280 --> 0:02:04.720 Well, we are watching that very closely. And guess what, 0:02:05.120 --> 0:02:08.799 the high frequency data is really important because that chart 0:02:08.840 --> 0:02:11.000 you were talking about a few moments ago, with the 0:02:11.080 --> 0:02:14.320 unemployment rate rising from three to four to three nine 0:02:14.600 --> 0:02:17.280 in the past, when that starts to happen, it tends 0:02:17.320 --> 0:02:19.800 to snowball. But where we're going to get the initial 0:02:19.840 --> 0:02:22.760 read on that is that eight thirty jobless claims number 0:02:23.000 --> 0:02:26.040 starts edging over two hundred and fifty thousand, we get 0:02:26.040 --> 0:02:28.880 a little bit cautious. Three hundred thousand is where we 0:02:28.919 --> 0:02:31.040 know the economy is going to turn down. 0:02:31.280 --> 0:02:33.720 I'm supposed to fold in now A question on Ed 0:02:33.800 --> 0:02:38.200 Hyman's Hicksy and Islm theory and his disinflation theory into 0:02:38.200 --> 0:02:40.959 your stock babble, forget about it. I love the single 0:02:41.040 --> 0:02:44.520 sentence you have which pushes against all that malarkey by 0:02:44.560 --> 0:02:47.959 saying price is paramount. Right now, when you talk to 0:02:48.160 --> 0:02:51.320 Ed Hyman, how does a respond to you telling them 0:02:51.720 --> 0:02:54.640 your economics doesn't matter, price is paramount. 0:02:54.680 --> 0:02:57.800 I'll tell you how five weeks ago Ed Heyman started 0:02:57.840 --> 0:03:01.839 putting out in almost daily the act that gasoline lean 0:03:01.919 --> 0:03:07.000 prices started falling as the conflict was erupting. You already 0:03:07.040 --> 0:03:12.639 had the turn in gasoline prices completely, you know, devoid 0:03:12.800 --> 0:03:14.160 of real sort of. 0:03:14.560 --> 0:03:19.360 Prosperity with Hymen's disinflationary tendency or outright deflation in China. 0:03:20.919 --> 0:03:24.760 Look, if you look at the last fifteen years, you've 0:03:24.800 --> 0:03:30.040 had episodic times of that from again. Obviously the financial 0:03:30.080 --> 0:03:32.840 crisis is one of those times. But ultimately what it 0:03:32.880 --> 0:03:36.760 comes back to again for equity investors, for bond investors. 0:03:36.760 --> 0:03:39.080 First of all, the whole idea of getting a real 0:03:39.160 --> 0:03:43.400 return on money in this world now is actually a 0:03:43.480 --> 0:03:47.560 positive for financial assets. It's a positive for capital allocation, 0:03:47.920 --> 0:03:51.360 and long term, it's a positive for growth. And that's 0:03:51.640 --> 0:03:54.200 you know, that's part of the equity investing mindset. 0:03:54.320 --> 0:03:56.240 Do you need a long term view right now or 0:03:56.240 --> 0:03:57.480 do you just trade the short term. 0:03:57.640 --> 0:04:00.520 It's really difficult to have a long term view because 0:04:00.760 --> 0:04:04.040 of what we're talking about the inflection in the economy 0:04:04.680 --> 0:04:08.680 potentially happening. But if you take the super long term view, 0:04:09.000 --> 0:04:11.560 is that even if you get the recession that Ed's 0:04:11.600 --> 0:04:13.280 thinking we're going to get, that it's going to be 0:04:13.320 --> 0:04:16.440 mild in twenty twenty four. What you're left with is 0:04:16.440 --> 0:04:20.160 a labor market that has rebalanced. What you're left with 0:04:20.440 --> 0:04:24.080 is again a real cost of money, better capital allocation, 0:04:24.560 --> 0:04:27.919 and frankly, we've talked about this before, you have new 0:04:27.960 --> 0:04:32.280 technological developments like generative AI that is going to improve 0:04:32.320 --> 0:04:35.840 the productivity of corporate America over the long term. 0:04:35.920 --> 0:04:37.800 One of the main frustrations of this year was that 0:04:37.800 --> 0:04:39.520 pretty much everything everyone said at the beginning of the 0:04:39.560 --> 0:04:42.760 year has proven to be wrong, including that this would 0:04:42.760 --> 0:04:45.800 be the year that tech stocks would fade more meaningfully 0:04:45.880 --> 0:04:48.159 and you start to see a broadening out in the rally. 0:04:48.520 --> 0:04:51.480 Energy stocks would start to be the true leaders. You 0:04:51.760 --> 0:04:54.760 just actually moved away from an overweight and energy and 0:04:54.800 --> 0:04:57.520 are talking more about generative AI. It seems like the 0:04:57.520 --> 0:04:59.839 theme just keeps on being that the leaders will keep leading. 0:05:00.080 --> 0:05:01.920 Everything else will just have to figure out where they 0:05:01.920 --> 0:05:02.240 fit in. 0:05:02.400 --> 0:05:07.720 Well, look, again, the recession will probably, you know, to 0:05:07.760 --> 0:05:10.119 the extent that it does arrive in the next twelve 0:05:10.160 --> 0:05:14.039 months or so, rationalize some of this, but ultimately what 0:05:14.160 --> 0:05:16.800 it's going to do, and look, part of the consternation 0:05:16.839 --> 0:05:20.320 on equity investors' minds is the fact that the Russell 0:05:20.360 --> 0:05:24.360 two thousand is making new lows. Ultimately, you're going to 0:05:24.360 --> 0:05:27.080 get to a point where there will be an attractive 0:05:27.120 --> 0:05:30.320 price for the other four hundred and ninety three stocks 0:05:30.480 --> 0:05:33.400 away from the Magnificent seven, and you will get to 0:05:33.480 --> 0:05:36.719 an earnings reset. We think that's part of next year's narrative. 0:05:36.760 --> 0:05:38.440 This is the difficult question I think people have got 0:05:38.480 --> 0:05:40.880 to confront at the moment. Do I want to buy 0:05:41.440 --> 0:05:43.960 the recovery to the recession I've not had yet, given 0:05:43.960 --> 0:05:45.640 the damage we've seen in the small camps. You can 0:05:45.640 --> 0:05:49.240 pick up various places to back up the consumer discretionary story. Allines, 0:05:49.279 --> 0:05:51.680 for instance, which have come way off the peak back 0:05:51.720 --> 0:05:53.320 of the summer. Do I want to start picking up 0:05:53.320 --> 0:05:55.400 the pieces going into what could be a slow down 0:05:55.400 --> 0:05:55.839 next year. 0:05:56.440 --> 0:05:58.640 We think you need to be balanced. It's one of 0:05:58.680 --> 0:06:02.480 those things where again, given the lack of visibility into 0:06:02.560 --> 0:06:05.440 next year, what we always say, we've had a very 0:06:05.560 --> 0:06:08.479 nice run in recent weeks, and if you go back 0:06:08.520 --> 0:06:10.839 over the last year, it's been a very nice run 0:06:10.880 --> 0:06:13.720 off the October lows. You need to be comfortable with 0:06:13.760 --> 0:06:16.040 the fact that if the market comes in ten or 0:06:16.040 --> 0:06:20.320 fifteen percent, which it does in any typical year, as 0:06:20.360 --> 0:06:23.320 it did several weeks ago, that you're a buyer of 0:06:23.360 --> 0:06:26.279 the dips and whatever that asset allocation is to you. 0:06:26.640 --> 0:06:28.600 That's the kind of discipline you need to employ. 0:06:28.720 --> 0:06:30.800 Goldman speak to this as well. We've gone through their 0:06:30.839 --> 0:06:32.880 note this morning a few times. It's worth doing it again. 0:06:33.000 --> 0:06:36.560 The hard part's over. More disinflation is in store over 0:06:36.600 --> 0:06:39.159 the next year. On growth, they see limited risk of 0:06:39.200 --> 0:06:42.080 a recession, and they say this on central bank policy. 0:06:42.320 --> 0:06:44.960 Then this is a really really interesting point. An increased 0:06:45.000 --> 0:06:49.760 willingness of central banks to deliver insurance cuts it grows slows. 0:06:50.240 --> 0:06:52.760 Earlier this week, Ben later on this program of E Toro, 0:06:53.040 --> 0:06:55.320 was saying the FED put was back. Lisa and I 0:06:55.320 --> 0:06:57.480 looked at each other and almost spat out our water. 0:06:58.160 --> 0:07:01.160 The FED put is back insures cuts of growth slows. 0:07:01.400 --> 0:07:02.799 Is the old fetch story returning? 0:07:03.000 --> 0:07:03.040 No? 0:07:04.160 --> 0:07:04.920 Why are they wrong? 0:07:05.160 --> 0:07:05.240 No? 0:07:07.000 --> 0:07:09.000 Look, because there is an assumption that there is a 0:07:09.040 --> 0:07:14.920 reflex reaction to a minus GDP quarter. Thankfully we didn't 0:07:14.960 --> 0:07:16.880 see it in twenty twenty two when we had that, 0:07:17.000 --> 0:07:20.760 because if you had interrupted the rate hiking program, you 0:07:20.800 --> 0:07:22.760 wouldn't have gotten to where you are. And you can 0:07:23.120 --> 0:07:26.800 argue both sides of this case, but frankly, for US, 0:07:26.960 --> 0:07:30.600 there is a commitment, given the fact that core PCE 0:07:31.120 --> 0:07:34.000 is still solidly with a three handle, that you just 0:07:34.120 --> 0:07:37.280 can't go down that road unless it really looks like 0:07:37.320 --> 0:07:40.200 there's a severe economic downturn. And we still think there's 0:07:40.320 --> 0:07:44.080 enough savings left over so that won't be the case. 0:07:44.200 --> 0:07:47.600 Judy and awesome as a was Emmanuel have et a court. 0:07:51.520 --> 0:07:54.240 Joining us now to brief off the GOP debate. Last night, 0:07:54.760 --> 0:08:00.320 Gregory Vliate, US policy strategist at AGF Investments. Gregory stood 0:08:00.360 --> 0:08:03.640 on the floor of the GOP convention of two thousand 0:08:03.640 --> 0:08:07.720 and four, and it was a different Republican Party. George 0:08:07.720 --> 0:08:12.800 Bush Junior wanted a more hopeful America. What's going to 0:08:12.840 --> 0:08:16.720 be that slogan this summer for the Republicans? 0:08:17.400 --> 0:08:20.480 Well, I think they'll emphasize the economy. They'll state that 0:08:20.520 --> 0:08:23.920 Biden has not done a good job. Frankly I would disagree, 0:08:24.080 --> 0:08:26.400 but I think that they'll make it more about the 0:08:26.440 --> 0:08:29.840 economy than anything else. The really intriguing issues are abortion 0:08:30.120 --> 0:08:35.360 number one, number two. How much more involved are we 0:08:35.440 --> 0:08:37.840 going to get in Ukraine and Israel? 0:08:38.400 --> 0:08:42.520 What about the idea that they're losing elections, not doing 0:08:42.600 --> 0:08:45.280 as well in certain elections. It going to be the 0:08:45.320 --> 0:08:47.760 mix of that we just saw it can be from 0:08:47.880 --> 0:08:52.480 a year ago, November, etc. How do they start winning again? 0:08:53.800 --> 0:08:56.560 Well, I don't think you talk like Ramaswami. I think 0:08:56.559 --> 0:08:59.800 he talked himself off the boat last night. I don't 0:08:59.800 --> 0:09:02.360 see much of a future for him. Probably not much 0:09:02.400 --> 0:09:08.080 of a future for Tim Scott. So it's dwindling. You've 0:09:08.080 --> 0:09:11.960 really only got three challengers. DeSantis, who was okay last 0:09:12.040 --> 0:09:15.800 night but made a strategic error he didn't mention the 0:09:15.840 --> 0:09:18.520 governor of Iowa had endorsed him. I can't believe he 0:09:18.520 --> 0:09:21.240 didn't talk about that. And then you've got Nicky Haley. 0:09:21.280 --> 0:09:23.720 He'll stick around for a while, maybe Chris Christy, but 0:09:23.840 --> 0:09:27.640 we'll begin at twenty twenty four. I think with just 0:09:27.720 --> 0:09:31.880 two challengers to Trump, that would be DeSantis and Haley. 0:09:32.080 --> 0:09:33.880 Do you think either of them have a chance of 0:09:33.920 --> 0:09:38.480 taking Trump off the ticket? Who would either of them? 0:09:38.760 --> 0:09:41.600 Oh? No, not at all. I mean Trump would have 0:09:41.640 --> 0:09:46.120 to do something really egregious, and he's pretty much filled 0:09:46.200 --> 0:09:48.720 the role on that for the last couple of years. 0:09:49.000 --> 0:09:52.160 So no, I don't see anything, you know, barring a 0:09:52.160 --> 0:09:55.320 health issue, that will keep Trump from being the nominee. 0:09:55.480 --> 0:09:58.280 Meanwhile, President Biden is going to meet with the UAW 0:09:58.640 --> 0:10:01.240 leader today and the there's a real question of what 0:10:01.400 --> 0:10:04.720 he can do to shore up the image of bignomics, 0:10:04.920 --> 0:10:07.199 of what's happened in the economy, which some people are 0:10:07.200 --> 0:10:11.080 saying on paper doesn't look so bad, yet in practice, 0:10:11.120 --> 0:10:14.240 has a lot of people feeling like they want something different. 0:10:14.960 --> 0:10:17.840 Well, it's a good question, Liza. I'm told that within 0:10:17.880 --> 0:10:21.199 the White House, Trump Biden is angry, he feels he's 0:10:21.200 --> 0:10:23.240 done a pretty good job in the economy and gets 0:10:23.559 --> 0:10:25.920 no credit. So he's going to hit the road and 0:10:26.000 --> 0:10:29.160 try to make his case. The problem is an awful 0:10:29.200 --> 0:10:32.480 lot of Americans fear that we're not out of the woods, 0:10:32.640 --> 0:10:36.960 and there's still more inflation threats, food, gasoline still to come. 0:10:37.480 --> 0:10:40.320 Greg Valier one oh one. Folks, this is a great 0:10:40.400 --> 0:10:42.480 course to take in politics. You get it off the 0:10:42.520 --> 0:10:46.160 back of a matchbook. You can take Valier one oh one. Greg, 0:10:46.320 --> 0:10:49.680 Your value one oh one is fiscal issues at the 0:10:49.760 --> 0:10:52.920 day of the election don't matter. Are you telling me 0:10:52.960 --> 0:10:56.280 the debt and the deficit don't matter the first Tuesday 0:10:56.320 --> 0:10:57.520 of November. 0:10:57.920 --> 0:11:00.760 Well, when you look at net inter cost, you look 0:11:00.800 --> 0:11:04.360 at borrowing costs, this is becoming a major crisis for 0:11:04.400 --> 0:11:07.880 the bond market, and there's no mood in Congress whatsoever 0:11:08.240 --> 0:11:12.240 to dramatically cut the deficit. However, I think that once 0:11:12.280 --> 0:11:15.360 we get through Labor Day of this coming year, this 0:11:15.400 --> 0:11:19.280 stuff will be irrelevant. I think attitudes harden during the summer. 0:11:20.480 --> 0:11:23.600 If Trump is well ahead, he could pull us out. 0:11:23.880 --> 0:11:28.040 But I have a feeling that Biden will come back. 0:11:28.160 --> 0:11:30.320 I have a feeling that the Democrats all of a 0:11:30.320 --> 0:11:33.720 sudden are motivated because of what happened in Kentucky. 0:11:34.040 --> 0:11:36.920 Is a path of least resistance for the former president. 0:11:37.120 --> 0:11:38.600 Another tax cut. 0:11:39.640 --> 0:11:42.200 That's going to be on the agenda. You're absolutely right, Tom, 0:11:42.559 --> 0:11:46.280 and I think with the Senate probably flipping, in the 0:11:46.280 --> 0:11:50.040 House probably flipping, you're going to have a climate that 0:11:50.160 --> 0:11:53.080 will be ripe for a huge argument on whether we 0:11:53.200 --> 0:11:56.600 extend the Trump tax cuts. I think we will. I 0:11:56.600 --> 0:11:59.280 think Trump will talk about tax cutting even though the 0:11:59.320 --> 0:12:00.920 deficit is enormous. 0:12:01.400 --> 0:12:03.800 Greg, I have to wonder whether this time is different. 0:12:03.920 --> 0:12:06.040 A lot of people come on the show. We'll say 0:12:06.200 --> 0:12:09.040 dysfunction in Washington, DC is the reason why yields have 0:12:09.040 --> 0:12:11.160 been flipping and flopping and going all over the place, 0:12:11.480 --> 0:12:13.679 and then they talk about a potential government shutdown and. 0:12:13.600 --> 0:12:14.720 Say markets won't care. 0:12:15.280 --> 0:12:18.640 Have we reached the point where market dysfunction is going 0:12:18.679 --> 0:12:21.560 to result from political dysfunction in DC in a more 0:12:21.600 --> 0:12:22.280 material way. 0:12:23.000 --> 0:12:26.800 Well, we're going to see probably another alleged crisis on 0:12:26.880 --> 0:12:29.760 November seventeenth if there's no budget. I don't think the 0:12:29.800 --> 0:12:32.480 markets will be all that concerned about it. I do 0:12:32.559 --> 0:12:36.000 worry about the credit agencies, you know, fitch S and 0:12:36.080 --> 0:12:40.040 p downgrading US debt, not just because of the size 0:12:40.040 --> 0:12:43.440 of our debt, but because things are so dysfunctional in 0:12:43.480 --> 0:12:44.280 getting a budget. 0:12:44.800 --> 0:12:47.160 Great to catch up, Greg, appreciate your input. Greg Vally. 0:12:47.160 --> 0:13:00.640 THEFJEFF investment's gone into next year, as Ed. 0:13:00.679 --> 0:13:03.920 Marangi and Emmanuel. So are you a confirmed bull? 0:13:04.000 --> 0:13:04.360 Cameron? 0:13:04.920 --> 0:13:07.640 I think that given the setup into your end, we 0:13:07.760 --> 0:13:11.319 can expect some kind of Santa claus rally just because 0:13:11.520 --> 0:13:14.080 of tax loss dynamics into the end of the year. 0:13:14.559 --> 0:13:17.480 The largest weights in the index are up the most 0:13:17.559 --> 0:13:20.240 this year, which means that you don't have eager sellers 0:13:20.280 --> 0:13:23.920 to recognize tax games. This is very different than last year, 0:13:23.960 --> 0:13:25.720 where the largest weights in the index were down a 0:13:25.720 --> 0:13:28.760 lot people sold them and you effectively puked into the 0:13:28.840 --> 0:13:32.319 end of the year. What it's the proverbial puke into 0:13:32.320 --> 0:13:32.920 the end of the year? 0:13:33.040 --> 0:13:36.160 Okay, thank you? Can we say that on radio? We 0:13:36.320 --> 0:13:41.840 just did, Cameron seriously our Warner Brothers discovery yesterday. Puke 0:13:41.960 --> 0:13:45.000 as you call it. Okay, how does that handle by 0:13:45.040 --> 0:13:45.880 tax saw selling? 0:13:46.400 --> 0:13:48.840 Well? I think that it will magnify as we go 0:13:48.920 --> 0:13:50.400 into the end of the year. You look at the 0:13:50.440 --> 0:13:53.280 areas that are down the most. This is small caps, 0:13:53.320 --> 0:13:56.600 This is cyclicals, This is healthcare some of your defensives. 0:13:56.760 --> 0:13:59.200 These are the areas where people are looking for tax 0:13:59.240 --> 0:14:02.400 sace harvesting opportunities. The key point though, is that they're 0:14:02.440 --> 0:14:04.880 smaller weights in the index or they're not part of 0:14:04.920 --> 0:14:05.600 the index. 0:14:05.800 --> 0:14:07.120 So when we just look. 0:14:07.000 --> 0:14:09.080 At the S and P five hundred, that could be 0:14:09.120 --> 0:14:10.800 something that supports it into end year. 0:14:11.040 --> 0:14:12.720 So help me here. Am I buying the index the 0:14:12.800 --> 0:14:14.400 S and P five hundred? And am I looking for 0:14:14.440 --> 0:14:17.320 buying opportunities in small camps? The financials, things that have struggled? 0:14:17.320 --> 0:14:17.880 What am I doing? 0:14:18.120 --> 0:14:20.280 I think that you have to look for opportunities and 0:14:20.320 --> 0:14:22.680 things that have struggled as you go into twenty twenty four, 0:14:23.040 --> 0:14:26.360 because we know that pain trades usually are reversal trades 0:14:26.360 --> 0:14:29.600 in leadership and just at the point where everybody throws 0:14:29.600 --> 0:14:31.840 in the towel and says, well, you can't own anything 0:14:31.840 --> 0:14:34.360 but the magnificent seven. These are the names that give 0:14:34.400 --> 0:14:36.240 you optionality on AI and they have. 0:14:36.240 --> 0:14:37.360 The best earnings growth. 0:14:37.440 --> 0:14:41.320 Everybody crowds into them, that's typically the moment that that's 0:14:41.360 --> 0:14:43.200 when they start to lag. And so I think we 0:14:43.320 --> 0:14:46.720 have to have the imagination that other things could do 0:14:46.840 --> 0:14:49.360 well in twenty twenty four. Other than just the narrow 0:14:49.440 --> 0:14:51.040 leadership that we've had this year. 0:14:50.880 --> 0:14:53.560 The Tilson Slock of Apollo's writing questions for us this morning. 0:14:53.600 --> 0:14:56.280 This is the question he's asking in its most recent note. 0:14:56.560 --> 0:14:59.520 Everyone who's bullish on equities and lower rated credit should 0:14:59.520 --> 0:15:01.920 ask them sound where they think the labor market will 0:15:01.960 --> 0:15:04.200 be in three months. With the Fed on hold and 0:15:04.200 --> 0:15:07.200 not showing any signs of cutting anytime soon, what's your 0:15:07.240 --> 0:15:08.920 labor market bed With that in mind. 0:15:09.240 --> 0:15:11.840 We are having the ultimate debate is if we're seeing 0:15:11.880 --> 0:15:15.520 normalization or we're seeing weakening. And the challenge is that 0:15:15.560 --> 0:15:18.760 normalization is usually the gateway drug two weakening, meaning that 0:15:18.800 --> 0:15:20.920 you see a little easing that turns into a lot 0:15:20.920 --> 0:15:24.840 of easing. But we're not yet seeing definitive data yet 0:15:24.920 --> 0:15:27.760 to say that the uplift we've had in unemployment is 0:15:27.800 --> 0:15:30.720 going to barrel higher. The key thing to remember, though, 0:15:30.760 --> 0:15:34.120 the Fed itself in its SEP the Summary Economic Projections 0:15:34.200 --> 0:15:37.320 has unemployment going to four point one percent next year 0:15:37.800 --> 0:15:41.200 and they're not forecasting a recession. So that's going to 0:15:41.240 --> 0:15:43.000 be a key question of if we get that four 0:15:43.040 --> 0:15:46.160 point one percent, does that justify them easing policy? 0:15:46.360 --> 0:15:48.600 Is it okay to sort of say we don't care 0:15:48.680 --> 0:15:52.320 for now. Down the line, whatever happens will happen. In 0:15:52.360 --> 0:15:53.800 the meantime, we can dance in the head of a 0:15:53.840 --> 0:15:57.440 pin with oil prices coming off, yield coming lower, and 0:15:57.680 --> 0:15:59.280 risk appetite still available. 0:15:59.560 --> 0:16:01.960 Yeah, because if we think going into CPI next week, 0:16:02.040 --> 0:16:05.000 remember that gasoline prices are down ten percent over the 0:16:05.040 --> 0:16:07.800 month of October. That's very different over the summer months 0:16:07.840 --> 0:16:10.360 where gas prices were up a lot. It pinched consumer 0:16:10.400 --> 0:16:13.200 spending maybe a little bit at the margin. So that 0:16:13.320 --> 0:16:17.200 does create this beneficial environment. But I think it's important 0:16:17.240 --> 0:16:20.960 to remember twenty twenty two, we priced in the earnings recession. 0:16:21.000 --> 0:16:23.520 In twenty twenty three, twenty three, we priced in the 0:16:23.560 --> 0:16:26.360 earnings recovery in twenty four. What are we going to 0:16:26.360 --> 0:16:28.480 price in twenty twenty four as we looked at twenty 0:16:28.520 --> 0:16:31.760 twenty five, are we still confident that this entire economic 0:16:32.480 --> 0:16:36.080 setup can remain very strong, that unemployment won't be an issue, 0:16:36.080 --> 0:16:37.600 consumer spending can remain. 0:16:37.440 --> 0:16:40.600 Robust Given the lack of certainty around some of the outcomes, 0:16:40.640 --> 0:16:44.200 the potential outcomes with the economy, How nimble are you 0:16:44.240 --> 0:16:46.840 remaining How are you remaining nimble? To be able to 0:16:46.840 --> 0:16:47.600 adjust quickly. 0:16:47.800 --> 0:16:50.600 I think we have to remain completely nimble. We saw 0:16:50.600 --> 0:16:52.800 that over thet last couple of weeks where we went 0:16:52.840 --> 0:16:56.560 from deeply oversold to deeply over to getting close to 0:16:56.600 --> 0:17:00.760 being overbought. It means that technicals become really important. We 0:17:00.840 --> 0:17:03.880 can't get too lodged into narratives because narratives would have 0:17:03.920 --> 0:17:06.280 told you everything's ending back a couple of weeks ago. 0:17:06.359 --> 0:17:06.920 Be scared. 0:17:07.280 --> 0:17:10.200 Now the narratives are saying everything is fantastic. The thing 0:17:10.320 --> 0:17:12.600 is that we are at resistance when we look at 0:17:12.600 --> 0:17:15.600 technical levels forty four hundred very important for the s 0:17:15.640 --> 0:17:18.080 and P five hundred four and a half percent very 0:17:18.080 --> 0:17:22.120 important support for the tenure. How we interact with those 0:17:22.200 --> 0:17:24.919 resistance and support levels will be very indicative of the 0:17:24.960 --> 0:17:25.919 next couple of months. 0:17:26.040 --> 0:17:29.080 Speak to the people who listened to you and said, Okay, 0:17:29.119 --> 0:17:31.240 I'm really nervous, but I'm going to participate in this 0:17:31.400 --> 0:17:35.800 market and they own tech which literally on an hourly basis, 0:17:36.160 --> 0:17:39.159 has a bid right now. What's the character of that 0:17:39.359 --> 0:17:41.560 bid on the Magnificent seven. 0:17:41.960 --> 0:17:45.280 Well, it's extraordinarily strong. But then think about the difference 0:17:45.320 --> 0:17:48.640 in the setup going into twenty twenty two Magnificent seven 0:17:48.720 --> 0:17:51.480 earnings had been cut by about twenty percent over the 0:17:51.480 --> 0:17:54.240 course of the year. Now going into twenty twenty three, 0:17:54.280 --> 0:17:57.239 over the course of twenty three, Magnificent seven earnings had 0:17:57.280 --> 0:18:01.120 been revised higher by sixty seventy percent sent on average 0:18:01.440 --> 0:18:04.120 because of the better growth that they've had. So it's 0:18:04.160 --> 0:18:06.800 a much higher bar and I think that's where the 0:18:06.840 --> 0:18:09.800 discipline is is not trying to extrapolate too much of 0:18:09.800 --> 0:18:13.040 the experience of twenty three, get too crowded, and instead 0:18:13.040 --> 0:18:15.919 look for opportunities and areas that might be more left behind. 0:18:16.080 --> 0:18:18.480 You've been talking, Cameron about how difficult it is to 0:18:18.480 --> 0:18:19.600 follow the mood because it. 0:18:19.600 --> 0:18:22.520 Swings so massively from week to week. 0:18:22.600 --> 0:18:25.360 How much has the move that we've seen in yields 0:18:25.560 --> 0:18:29.040 underpinned your conviction that you can lean into the rally 0:18:29.080 --> 0:18:30.000 heading into your end. 0:18:30.720 --> 0:18:32.119 It certainly has helped. 0:18:32.240 --> 0:18:34.840 We've seen it play out in the valuation and now 0:18:34.920 --> 0:18:38.480 valuations are back to about eighteen and a half time's earnings. 0:18:38.720 --> 0:18:42.280 The question is is that the right valuation even given 0:18:42.280 --> 0:18:44.600 where yields are at four and a half percent, where 0:18:44.600 --> 0:18:48.000 that equity risk premium is The challenge with valuations though, 0:18:48.040 --> 0:18:50.960 is they are terrible timing tools and that they have 0:18:51.160 --> 0:18:52.600 no predictive power. 0:18:52.320 --> 0:18:53.800 On a one year forward basis. 0:18:54.040 --> 0:18:55.760 So we can look at the market and say, hey, 0:18:55.760 --> 0:18:58.960 it's expensive here, expensive there, but that may not actually 0:18:59.040 --> 0:19:02.560 show up in price action for two, three, four years. 0:19:02.800 --> 0:19:05.600 And that's where that discipline of not chasing very high 0:19:05.680 --> 0:19:08.679 valuations comes in. When you have a longer holding period, you. 0:19:08.720 --> 0:19:12.040 Go breaking news TK on donuts? Is that where you 0:19:12.040 --> 0:19:14.000 want to go? DONI plural don't I? 0:19:14.280 --> 0:19:18.280 Yeah? Yeah, longer going far away the way a prime 0:19:18.320 --> 0:19:21.920 broker attracted a hedge fund. We can get you shares 0:19:21.960 --> 0:19:26.000 of krispy Kreme short. There's a in the East Coast, 0:19:26.040 --> 0:19:29.000 particularly in the krispy Kreme's more southern thing, and they're 0:19:29.040 --> 0:19:32.080 a different don I than what you get from Dunkin Donuts, 0:19:32.720 --> 0:19:35.359 which is, you know, there's cultures here. John, It's like 0:19:35.440 --> 0:19:39.200 it's like Greg's, but it's like American. Okay, all of 0:19:39.280 --> 0:19:42.600 a sudden, krispy Kreme nice video on radio. You are 0:19:42.680 --> 0:19:46.000 missing the making of the Magnificent. And the answer here 0:19:46.160 --> 0:19:49.640 is krispy Kreme is looking for a partnership with McDonald's. 0:19:49.680 --> 0:19:51.760 John Tower out with this and it's a mixed story 0:19:51.800 --> 0:19:54.480 of Ibada out there. But John Tower, a city group 0:19:54.520 --> 0:19:58.040 says first bite on d n ut. It's a McDonald's 0:19:58.040 --> 0:19:59.160 partnership that we may see. 0:19:59.200 --> 0:20:01.040 Do you know what you don't know? And I know 0:20:01.119 --> 0:20:03.159 this story already because Bramo shared it with me before 0:20:03.560 --> 0:20:07.639 Bramo breaking into the news industry and Fargo years and 0:20:07.720 --> 0:20:14.480 years ago for the first Crispy Kreme shop tre Tree story, 0:20:14.600 --> 0:20:16.120 true story. 0:20:16.200 --> 0:20:18.080 I covered it and people lined up. 0:20:18.320 --> 0:20:21.439 They camped out overnight to get the first Krispy krama. 0:20:21.480 --> 0:20:23.280 I went to interview that. You can't imagine that Bramo 0:20:23.400 --> 0:20:29.920 was what Bradma was like in local news, right, just 0:20:29.960 --> 0:20:30.720 get into a fluff. 0:20:31.440 --> 0:20:32.880 It was like, it's an investive piece. 0:20:32.920 --> 0:20:33.600