1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:12,000 --> 00:00:15,600 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,640 --> 00:00:19,000 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:19,000 --> 00:00:23,159 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,200 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,320 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,320 --> 00:00:34,360 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,040 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,400 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,120 --> 00:00:47,600 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. We need voices, 11 00:00:48,240 --> 00:00:51,720 Speaker 2: we need people with experience. And they said, well who, 12 00:00:51,760 --> 00:00:54,160 Speaker 2: And I said, can you get that young Miller kid 13 00:00:54,520 --> 00:00:57,040 Speaker 2: who was with George Schultz and James Baker just a 14 00:00:57,040 --> 00:01:01,600 Speaker 2: few years ago, like Aaron David Miller thirty years ago, 15 00:01:02,040 --> 00:01:06,000 Speaker 2: joining us now, a bit wiser, a bit older, Aaron 16 00:01:06,120 --> 00:01:08,679 Speaker 2: David Miller out of Tulane and of course definitive at 17 00:01:08,720 --> 00:01:12,720 Speaker 2: the Carnegie Endowment for International Peace. I want you to 18 00:01:12,760 --> 00:01:16,240 Speaker 2: tell me how the facts change, Aaron David Miller. If 19 00:01:16,280 --> 00:01:20,080 Speaker 2: I go directly west of Jerusalem, almost to the Mediterranean, 20 00:01:20,800 --> 00:01:21,839 Speaker 2: to I think it's genera. 21 00:01:21,880 --> 00:01:22,920 Speaker 3: I don't have it in front of me. 22 00:01:23,000 --> 00:01:26,880 Speaker 2: A little village thirty one thousand people directly south of 23 00:01:26,959 --> 00:01:29,800 Speaker 2: Tel Aviv, where a missile took out a school in 24 00:01:29,840 --> 00:01:30,479 Speaker 2: the dead of night. 25 00:01:30,560 --> 00:01:32,479 Speaker 3: No one was hurt. But how does that. 26 00:01:32,480 --> 00:01:36,080 Speaker 2: Missile, Aaron David Miller landing on that school in a 27 00:01:36,120 --> 00:01:39,200 Speaker 2: small town, how does that change the dialogue? 28 00:01:39,680 --> 00:01:43,280 Speaker 4: Yeah, it has a ton of caderra and whether that 29 00:01:43,400 --> 00:01:47,880 Speaker 4: was a strike or a shrapnel from an interceptor is unclear. 30 00:01:47,880 --> 00:01:49,160 Speaker 3: But look, I think there are two things. 31 00:01:49,560 --> 00:01:51,200 Speaker 4: And by the way, thanks for having me and I 32 00:01:51,200 --> 00:01:57,920 Speaker 4: really appreciate that the kudos. Number one. What happened yesterday 33 00:01:58,000 --> 00:02:03,040 Speaker 4: is virtually unprecedented, certainly in the air of Israeli Iranian 34 00:02:03,120 --> 00:02:07,120 Speaker 4: Israeli conflict. Iran Locke launched one hundred and eighty plus 35 00:02:07,160 --> 00:02:11,840 Speaker 4: ballistic missiles, and unlike cruise missiles, these take only twelve 36 00:02:11,880 --> 00:02:15,520 Speaker 4: minutes roughly to travel from Iran to impact to an 37 00:02:15,560 --> 00:02:20,360 Speaker 4: Israeli airspace. And it was a saturation attack. It covered 38 00:02:20,440 --> 00:02:23,320 Speaker 4: much of the country. Yes, it was directed primarily at 39 00:02:23,360 --> 00:02:26,400 Speaker 4: several military bases and most out headquarters, but I've been 40 00:02:26,400 --> 00:02:29,160 Speaker 4: to most out headquarters. It is not in some isolated 41 00:02:29,240 --> 00:02:34,720 Speaker 4: area so this could have been, to say the least, 42 00:02:35,240 --> 00:02:41,320 Speaker 4: a catastrophe, and yet Israel's an early air defense Iron 43 00:02:41,360 --> 00:02:47,040 Speaker 4: Dome David sling Arrow managed to intercept most the US 44 00:02:47,160 --> 00:02:51,200 Speaker 4: two destroyers shut down a dozen or so. The Jordanians 45 00:02:51,240 --> 00:02:55,360 Speaker 4: contributed as well, and I think that's the good news. 46 00:02:55,400 --> 00:02:59,080 Speaker 4: That Iran may have three thousand ballistic missiles, but it 47 00:02:59,160 --> 00:03:04,400 Speaker 4: took a huge shot yesterday and it essentially failed. At 48 00:03:04,400 --> 00:03:10,079 Speaker 4: the same time, this is the second direct attack Aaron 49 00:03:10,120 --> 00:03:14,240 Speaker 4: on Israelia. One was a thirteen fourteen. Israelis are are 50 00:03:14,280 --> 00:03:17,799 Speaker 4: going to respond. I don't think there's any doubt. They 51 00:03:17,800 --> 00:03:20,960 Speaker 4: cannot allow a quote new normal to be created. And 52 00:03:21,000 --> 00:03:25,280 Speaker 4: even while they're degrading to his balla to a point 53 00:03:25,320 --> 00:03:31,120 Speaker 4: where it is a hollowed out shadow of itself, they 54 00:03:31,120 --> 00:03:35,560 Speaker 4: are They're going to respond. Biden's going to talk to 55 00:03:35,560 --> 00:03:39,320 Speaker 4: to Ntagnell shortly before the beginning at Rossia Shano, which. 56 00:03:39,440 --> 00:03:41,560 Speaker 2: Okay, see Aaron, just because of the time, because I 57 00:03:41,560 --> 00:03:43,240 Speaker 2: know Paul wants to gain her. I got one more question. 58 00:03:43,280 --> 00:03:45,200 Speaker 2: Paul's got a bunch of important questions. 59 00:03:45,440 --> 00:03:45,840 Speaker 3: Robert T. 60 00:03:46,000 --> 00:03:48,520 Speaker 2: Kaplan air and David Miller would say, get out the 61 00:03:48,600 --> 00:03:52,080 Speaker 2: map from Armenia down to the tip of the Persian 62 00:03:52,120 --> 00:03:55,640 Speaker 2: Gulf is five hundred miles and then it's another five 63 00:03:55,720 --> 00:03:59,680 Speaker 2: hundred miles one thousand miles total across from Dubai. That's 64 00:03:59,720 --> 00:04:05,680 Speaker 2: the western border of Iran. Where should Israel attack, Well. 65 00:04:05,560 --> 00:04:08,840 Speaker 4: I think the strikes will be multiple. I think there 66 00:04:08,840 --> 00:04:15,040 Speaker 4: will be economic targets, there will be strategic conventional military facilities. 67 00:04:15,560 --> 00:04:21,240 Speaker 4: They'll be IRGC command and control facilities, the nuclear sites. 68 00:04:21,760 --> 00:04:25,720 Speaker 4: I'm sure there's an argument being made that now is 69 00:04:25,760 --> 00:04:29,039 Speaker 4: the time Isabella is weakened and no longer has the 70 00:04:29,080 --> 00:04:35,080 Speaker 4: deterrent capacity. Amasa's organized military structure has gone. Iran's defenses 71 00:04:35,240 --> 00:04:41,800 Speaker 4: are weak, So do it now. I'm taking a fire here, 72 00:04:41,839 --> 00:04:45,600 Speaker 4: but I think the Israelis this time around will avoid 73 00:04:45,680 --> 00:04:48,280 Speaker 4: Non Taz and the enrichment facilities. 74 00:04:48,360 --> 00:04:50,560 Speaker 5: Okay, because I mean Aaron. I think a lot of 75 00:04:50,560 --> 00:04:52,880 Speaker 5: folks just were coming up to the one year anniversary 76 00:04:52,880 --> 00:04:56,400 Speaker 5: of the October seventh attack here, and the scope and 77 00:04:56,480 --> 00:05:00,720 Speaker 5: the aims of this response from Israel gone from decapitating 78 00:05:00,800 --> 00:05:03,840 Speaker 5: Hamas and getting the hostages back to something much much 79 00:05:04,000 --> 00:05:07,560 Speaker 5: broader in the region, And as you suggest, perhaps the 80 00:05:07,640 --> 00:05:10,839 Speaker 5: thinking is, if not now, when do we deal a 81 00:05:10,920 --> 00:05:14,640 Speaker 5: really severe blow to Iran. What are the chances of 82 00:05:14,640 --> 00:05:16,720 Speaker 5: that in terms of the nuclear facilities do you think? 83 00:05:17,480 --> 00:05:17,680 Speaker 3: You know? 84 00:05:17,839 --> 00:05:20,880 Speaker 4: I think the argument can be made us elections coming, 85 00:05:21,000 --> 00:05:27,120 Speaker 4: the Israelis have more margin for maneuver and operational capacity now. 86 00:05:27,279 --> 00:05:30,479 Speaker 4: They probably will never have a more provicious moment. Question 87 00:05:30,640 --> 00:05:34,280 Speaker 4: is whether or not this would be coordinated with the 88 00:05:34,400 --> 00:05:39,000 Speaker 4: United States. Again, I'm assuming they'll be. The Iranians are 89 00:05:39,000 --> 00:05:41,720 Speaker 4: going to respond to whatever the Israelis do. Most likely 90 00:05:42,560 --> 00:05:46,880 Speaker 4: there may be ample opportunities. But again I'm thinking opportunity 91 00:05:46,960 --> 00:05:50,480 Speaker 4: or not, Israeli can set the program back. They do 92 00:05:50,560 --> 00:05:55,360 Speaker 4: not have the capacity to fundamentally destroy it and permanently 93 00:05:56,400 --> 00:06:01,680 Speaker 4: prevent its rebuilding. And remember, iran Is nuclear rimes told 94 00:06:01,760 --> 00:06:05,120 Speaker 4: State they don't yet have a clear weapon, and I 95 00:06:05,120 --> 00:06:07,320 Speaker 4: think that has to be taken into the mix. 96 00:06:07,520 --> 00:06:09,520 Speaker 2: Aaron, I've got to get this in with great respect 97 00:06:09,600 --> 00:06:13,479 Speaker 2: to your public service. Back thirty years ago, what would 98 00:06:13,520 --> 00:06:15,880 Speaker 2: it zach Rabin say right now? 99 00:06:17,960 --> 00:06:22,120 Speaker 4: Raben would not have handled October seventh the way this 100 00:06:22,440 --> 00:06:25,560 Speaker 4: current Israeli government would have handled it. Raben would have responded, 101 00:06:25,600 --> 00:06:29,200 Speaker 4: probably as forcefully. But during the course of that conflict, 102 00:06:29,880 --> 00:06:34,120 Speaker 4: this man who had a sense of strategy, understood the 103 00:06:34,160 --> 00:06:41,279 Speaker 4: relationship between the application of military force and achievable political endgames. 104 00:06:41,720 --> 00:06:44,799 Speaker 4: Rabina would have understood that Israel's involved in three wars 105 00:06:44,800 --> 00:06:47,600 Speaker 4: of attrition, one with Hamas, one with his bow, and 106 00:06:47,640 --> 00:06:50,719 Speaker 4: obviously one with thereon, and I think he would have 107 00:06:50,760 --> 00:06:55,520 Speaker 4: begun to understand and to work with or rather rather 108 00:06:55,600 --> 00:06:58,960 Speaker 4: than not against the United States and other regional allies, 109 00:06:59,000 --> 00:07:03,080 Speaker 4: the amidies that by Rainy's Saudi's, I'm trying to figure 110 00:07:03,120 --> 00:07:07,240 Speaker 4: out a way to create an alternative to Hamas in Gaza, 111 00:07:08,640 --> 00:07:13,360 Speaker 4: and an alternative political reality over time in Lebanon. That's 112 00:07:13,400 --> 00:07:16,320 Speaker 4: the difference I think between this is rarely prime minister 113 00:07:16,440 --> 00:07:18,800 Speaker 4: on trial for bribery, fraud and reach of trust, and 114 00:07:18,800 --> 00:07:22,880 Speaker 4: it drew from this court whose entire world is driven 115 00:07:22,960 --> 00:07:27,680 Speaker 4: largely by his political future or the absence of one, 116 00:07:27,800 --> 00:07:30,640 Speaker 4: if he should be convicted and have to cut a 117 00:07:30,680 --> 00:07:33,160 Speaker 4: plea deal by prison time. 118 00:07:33,480 --> 00:07:34,400 Speaker 3: That's the difference. 119 00:07:34,560 --> 00:07:36,920 Speaker 2: This has been wonderful, Aaron David Miller, thank you for 120 00:07:36,960 --> 00:07:40,880 Speaker 2: your contribution. With Carnegie, there's no other way to put it. 121 00:07:40,960 --> 00:07:44,080 Speaker 2: His wonderful book years ago out as well, The much 122 00:07:44,120 --> 00:07:48,280 Speaker 2: too Promised Land, Aaron David Miller. 123 00:07:57,880 --> 00:07:59,680 Speaker 3: With US now is someone who runs some. 124 00:07:59,640 --> 00:08:03,040 Speaker 2: Money in charge of all the dividend complex, a federated 125 00:08:03,040 --> 00:08:07,720 Speaker 2: Pittsburgh and also an author. I've said a lot about 126 00:08:07,800 --> 00:08:14,080 Speaker 2: the immense intellectual challenge of Daniel Parris's The Ownership Dividend. 127 00:08:14,320 --> 00:08:19,360 Speaker 2: It is a dense short read on what's really interesting 128 00:08:19,600 --> 00:08:23,600 Speaker 2: about how equity stocks became in This is a quote 129 00:08:23,600 --> 00:08:27,040 Speaker 2: from the book. US stocks began moving in the direction 130 00:08:27,760 --> 00:08:32,400 Speaker 2: of becoming nearly cashless investments. Wonderful to have you here. 131 00:08:32,440 --> 00:08:36,320 Speaker 2: You mentioned buybacks. Maybe we've reached a peak. Can Apple 132 00:08:36,480 --> 00:08:40,960 Speaker 2: just keep buying backstock? Mathematically? Why can't they just keep 133 00:08:41,000 --> 00:08:43,520 Speaker 2: giving profits buy in backstock? 134 00:08:44,320 --> 00:08:46,800 Speaker 6: Thank you having me on the show, Tom and Paul. 135 00:08:47,520 --> 00:08:50,480 Speaker 6: You know, I would dispute the notion that they're buying back, 136 00:08:50,559 --> 00:08:53,679 Speaker 6: that they're giving profits back to shareholders. I can take 137 00:08:53,679 --> 00:08:56,200 Speaker 6: a different view of buybacks. But right now buybacks are very, 138 00:08:56,280 --> 00:08:57,719 Speaker 6: very popular. They're going to continue to do it. I 139 00:08:57,760 --> 00:09:02,920 Speaker 6: think their last authorization was one hundred billion dollars. It's 140 00:09:02,960 --> 00:09:05,000 Speaker 6: a stunning amount of money. We're heading towards a trillion 141 00:09:05,040 --> 00:09:09,679 Speaker 6: dollars in buybacks this year in fiscal or calendar twenty 142 00:09:09,720 --> 00:09:12,240 Speaker 6: twenty four, dividends from the s and P five hundred 143 00:09:12,280 --> 00:09:14,520 Speaker 6: will be about six hundred and six twenty or so 144 00:09:14,640 --> 00:09:20,600 Speaker 6: six twenty five. So buybacks are just wildly acceptable from 145 00:09:20,640 --> 00:09:26,000 Speaker 6: a shareholder perspective, though a business owner perspective, investing through 146 00:09:26,040 --> 00:09:30,040 Speaker 6: the stock market, buybacks don't really work for with fewer 147 00:09:30,120 --> 00:09:34,880 Speaker 6: shares if you do now, most companies announce share backs 148 00:09:35,000 --> 00:09:38,760 Speaker 6: very loudly, but the amount of the share capital that 149 00:09:38,760 --> 00:09:40,760 Speaker 6: they take out of circulation is always lower because they're 150 00:09:40,760 --> 00:09:44,160 Speaker 6: issuing shares out the back door, and they're timing of buybacks. 151 00:09:44,240 --> 00:09:47,000 Speaker 6: You know, the market center all time high. The timing 152 00:09:47,000 --> 00:09:51,080 Speaker 6: of buybacks is generally fairly poor. Companies initiate buybacks when 153 00:09:51,120 --> 00:09:54,080 Speaker 6: they are flushed with cash. It would be better if 154 00:09:54,080 --> 00:09:56,080 Speaker 6: they did it when they were in the swale of 155 00:09:56,120 --> 00:09:58,559 Speaker 6: their cycle, not at the peak. So there are lots 156 00:09:58,600 --> 00:10:03,120 Speaker 6: of reasons why the backboard math of buybacks, which in 157 00:10:03,160 --> 00:10:06,880 Speaker 6: the academy is neutral to a dividend. I write books 158 00:10:06,880 --> 00:10:08,280 Speaker 6: and books and books, and why that's not the case, 159 00:10:08,280 --> 00:10:11,080 Speaker 6: but why that's just not the case in the market. 160 00:10:11,160 --> 00:10:12,920 Speaker 2: I got to bring in our guest here because we 161 00:10:12,960 --> 00:10:16,960 Speaker 2: go into a three am meeting. Bloomberg Surveillance and Sweeney's 162 00:10:17,000 --> 00:10:21,400 Speaker 2: like a robot get parason, Get parason, Get parason, Paul, 163 00:10:21,559 --> 00:10:23,000 Speaker 2: this is your guest exactly. 164 00:10:23,280 --> 00:10:24,880 Speaker 5: Hey, Dan, I mean you know when I was a 165 00:10:24,920 --> 00:10:26,520 Speaker 5: research channels to Wall Street that you know, had my 166 00:10:26,640 --> 00:10:29,679 Speaker 5: income model, I had my balance sheet model, but by 167 00:10:29,760 --> 00:10:31,880 Speaker 5: far the most important model for me was my cash 168 00:10:31,880 --> 00:10:33,920 Speaker 5: flow model. I wanted to know where the cash was 169 00:10:33,960 --> 00:10:36,400 Speaker 5: coming from and where it's going. So, when you sit 170 00:10:36,440 --> 00:10:39,480 Speaker 5: down with a management team, do you have a preferred 171 00:10:40,160 --> 00:10:43,280 Speaker 5: strategy of Hey, you've got x dollars of free cash 172 00:10:43,280 --> 00:10:46,079 Speaker 5: fl overy year, we think this much to go to buyback, 173 00:10:46,200 --> 00:10:48,800 Speaker 5: this much to go to dividends. Do you have a 174 00:10:48,840 --> 00:10:50,839 Speaker 5: policy you like to talk to management teams about it. 175 00:10:51,080 --> 00:10:53,560 Speaker 6: We are not in the interest of starving companies of capital. 176 00:10:53,840 --> 00:10:57,400 Speaker 6: That is the number one acquisition made against business owners 177 00:10:57,440 --> 00:10:59,680 Speaker 6: in the stock market, Minority business owners in the stock 178 00:10:59,720 --> 00:11:02,320 Speaker 6: market seeking a cash payment for the capital. It is 179 00:11:02,320 --> 00:11:04,679 Speaker 6: not that we're trying to bankrupt these companies. But there 180 00:11:04,760 --> 00:11:08,400 Speaker 6: is a reasonable allocation for the US stock market for decades. 181 00:11:08,679 --> 00:11:11,600 Speaker 6: US economy for decades, indeed, better part of two centuries 182 00:11:11,679 --> 00:11:14,120 Speaker 6: was able to grow very, very rapidly and have a 183 00:11:14,160 --> 00:11:17,920 Speaker 6: dividend payout ratio of approximately fifty percent. So we're able 184 00:11:17,960 --> 00:11:23,000 Speaker 6: to build an industrial juggernaut and still pay out cash dividends. 185 00:11:23,280 --> 00:11:26,320 Speaker 6: Now you have tech companies and others saying, oh, if 186 00:11:26,360 --> 00:11:27,959 Speaker 6: I pay a dividend, I won't be able to grow. 187 00:11:28,280 --> 00:11:30,439 Speaker 6: The fact is they're using the money for other purposes. 188 00:11:31,080 --> 00:11:33,240 Speaker 6: But I would say that we've been around a third 189 00:11:33,360 --> 00:11:35,760 Speaker 6: for a while, for the last decade or two. I 190 00:11:35,800 --> 00:11:40,920 Speaker 6: think the more appropriate level for a business owner approaching 191 00:11:41,120 --> 00:11:43,839 Speaker 6: the stock market as an opportunity to own businesses over 192 00:11:43,880 --> 00:11:46,240 Speaker 6: the long term is something closer to about half. And 193 00:11:46,240 --> 00:11:49,640 Speaker 6: that's free cash though, as you know, that earnings payout 194 00:11:50,080 --> 00:11:53,320 Speaker 6: of nominal book earnings at this point is so polluted 195 00:11:53,360 --> 00:11:58,360 Speaker 6: with the accounting challenges and the Shenanigans of adjusted EPs 196 00:11:58,400 --> 00:12:02,280 Speaker 6: and so forth, that we really at free cash flow. 197 00:12:02,679 --> 00:12:06,079 Speaker 5: So for you know, our stock market has been for 198 00:12:06,320 --> 00:12:08,719 Speaker 5: a couple of decades at least driven almost entirely by 199 00:12:08,760 --> 00:12:12,040 Speaker 5: big technology companies. Even more so over the less few years. 200 00:12:12,840 --> 00:12:15,800 Speaker 5: They'll give you a token dividend Apple Meta, you know, 201 00:12:15,880 --> 00:12:18,120 Speaker 5: less than one percent. What do you say to those 202 00:12:18,160 --> 00:12:22,120 Speaker 5: management teams who have literally almost countless free cash flow 203 00:12:22,240 --> 00:12:23,080 Speaker 5: every single year? 204 00:12:23,240 --> 00:12:25,079 Speaker 6: Yeah, And so this year we saw a couple of 205 00:12:25,120 --> 00:12:28,320 Speaker 6: companies move in that direction symbolically token, no more than that, 206 00:12:28,440 --> 00:12:32,920 Speaker 6: so I don't want to discourage that behavior. But they're 207 00:12:32,960 --> 00:12:35,240 Speaker 6: not part of the dividend universe yet because the cash 208 00:12:35,240 --> 00:12:39,520 Speaker 6: flows simply aren't there to the minority shareholder. So we 209 00:12:40,200 --> 00:12:42,959 Speaker 6: like the movement in that direction, but it's not material yet, 210 00:12:43,200 --> 00:12:45,960 Speaker 6: and so it's a journey, not a moment. It would 211 00:12:45,960 --> 00:12:47,959 Speaker 6: be stunning if one of those large companies were to 212 00:12:48,000 --> 00:12:50,959 Speaker 6: announce a dividend payment that amounted to three or four 213 00:12:51,000 --> 00:12:55,200 Speaker 6: percent of their share price of their market capitalization, and 214 00:12:55,280 --> 00:12:57,600 Speaker 6: announced that they were backing off of the buybacks, but 215 00:12:57,760 --> 00:12:58,960 Speaker 6: that would get our attention. 216 00:13:00,040 --> 00:13:03,080 Speaker 3: Discuss Duke Energy. Good morning, Tim Cook. 217 00:13:03,160 --> 00:13:06,600 Speaker 2: I know you're listening in your commute today out in Coopertino. 218 00:13:07,080 --> 00:13:11,240 Speaker 2: Duke Energy with a three point six percent yield. Their 219 00:13:11,600 --> 00:13:16,680 Speaker 2: persistency of excellence over twenty years is jaw dropping, coming 220 00:13:16,720 --> 00:13:19,760 Speaker 2: out to about a ten percent return, but their five 221 00:13:19,880 --> 00:13:23,679 Speaker 2: year dividend growth is two point zero two percent, which 222 00:13:23,720 --> 00:13:26,480 Speaker 2: matters more the yield or the dividend growth. 223 00:13:27,040 --> 00:13:29,080 Speaker 6: I'm not going to discuss individual securities, but I will 224 00:13:29,080 --> 00:13:32,680 Speaker 6: answer the question. When you operate with a high yield, 225 00:13:32,679 --> 00:13:35,440 Speaker 6: the hard part is dividend growth. So the US stock 226 00:13:35,440 --> 00:13:38,040 Speaker 6: market has a yolda around one point three percent. We 227 00:13:38,120 --> 00:13:40,960 Speaker 6: target in our portfolios a gross yield between four and 228 00:13:41,000 --> 00:13:45,040 Speaker 6: five percent. Duke meets that standard. Other companies do as. 229 00:13:44,920 --> 00:13:46,319 Speaker 7: Well at that level. 230 00:13:46,480 --> 00:13:49,160 Speaker 6: The hard part's dividend growth, where we spend almost all 231 00:13:49,200 --> 00:13:51,319 Speaker 6: of our time is trying to figure out those companies 232 00:13:51,320 --> 00:13:53,480 Speaker 6: that do have a reasonable cash flow pad are they 233 00:13:53,480 --> 00:13:57,600 Speaker 6: in a position to grow better? You ask about utilities 234 00:13:57,600 --> 00:14:01,120 Speaker 6: in general, they have been among the less rapidly growing 235 00:14:01,160 --> 00:14:04,640 Speaker 6: dividend companies are the last couple decades. However, watch out 236 00:14:04,720 --> 00:14:07,440 Speaker 6: over the next couple decades. The demand for electricity is 237 00:14:07,520 --> 00:14:12,160 Speaker 6: finally stopped being flatlined, its kicked up, and these companies 238 00:14:12,160 --> 00:14:14,480 Speaker 6: are well positioned to benefit from them. 239 00:14:14,520 --> 00:14:16,920 Speaker 2: Okay, so Totel of Paris, I mean, I don't want 240 00:14:16,920 --> 00:14:19,120 Speaker 2: you to go into the individual stack, Paul, but I 241 00:14:19,200 --> 00:14:22,320 Speaker 2: got a five point one percent yield in a dividend 242 00:14:22,320 --> 00:14:26,120 Speaker 2: growth like Duke energy of three point five percent. When 243 00:14:26,160 --> 00:14:28,520 Speaker 2: do you know you're a yield hog or a dividend 244 00:14:28,600 --> 00:14:32,400 Speaker 2: hog versus doing something intelligent like Paul does. 245 00:14:32,280 --> 00:14:33,280 Speaker 3: In his five oh one k. 246 00:14:34,080 --> 00:14:38,000 Speaker 6: So Total has its enter its analyst day today in 247 00:14:38,040 --> 00:14:40,920 Speaker 6: New York. I'm heading to that right after we sign off, 248 00:14:41,360 --> 00:14:44,040 Speaker 6: and so we will find out what they're announcing, but 249 00:14:44,120 --> 00:14:47,440 Speaker 6: they do that company can't discuss individual securities, but I 250 00:14:47,440 --> 00:14:49,720 Speaker 6: can say the numbers that you presented have a reasonably 251 00:14:49,760 --> 00:14:54,160 Speaker 6: good balance of dividing yield and dividend growth. But your 252 00:14:54,240 --> 00:14:57,480 Speaker 6: question again, where the risk of being a dividend investor 253 00:14:57,520 --> 00:15:00,920 Speaker 6: in a stock market is exactly what you identify, Tom, 254 00:15:00,960 --> 00:15:03,560 Speaker 6: and that is the risk of being too yielding and 255 00:15:03,560 --> 00:15:05,400 Speaker 6: not enough dividend growth. And that's what we work on 256 00:15:05,520 --> 00:15:07,120 Speaker 6: sort of every day in the portfolio. 257 00:15:07,160 --> 00:15:08,520 Speaker 5: So what is that balance for you? 258 00:15:08,680 --> 00:15:11,400 Speaker 6: I mean for us, it's roughly fifty to fifty, meaning 259 00:15:11,480 --> 00:15:14,560 Speaker 6: we are looking for an even four to five percent 260 00:15:15,880 --> 00:15:19,840 Speaker 6: yield at the portfolio level, not individual securities, and roughly 261 00:15:19,880 --> 00:15:22,240 Speaker 6: the same and dividend growth and the harder part, I 262 00:15:22,280 --> 00:15:24,120 Speaker 6: will tell you, in a one and a half percent 263 00:15:24,200 --> 00:15:28,120 Speaker 6: yielding market which is all oriented towards buybacks and flashy, 264 00:15:28,400 --> 00:15:30,880 Speaker 6: shiny new objects, the hard parts of the dividend growth 265 00:15:30,880 --> 00:15:33,120 Speaker 6: and that's where we spend most of our times. 266 00:15:33,200 --> 00:15:33,920 Speaker 3: Thank you so much. 267 00:15:33,960 --> 00:15:36,800 Speaker 2: Great to have you in our studios here from Pittsburgh 268 00:15:37,160 --> 00:15:38,480 Speaker 2: Baseball Park in America. 269 00:15:38,600 --> 00:15:40,840 Speaker 3: A question about that with the Pirates, the. 270 00:15:40,800 --> 00:15:44,840 Speaker 2: Book is the ownership dividend is he manages the dividend portfolio. 271 00:15:45,400 --> 00:15:46,120 Speaker 3: It federated. 272 00:15:46,200 --> 00:15:50,520 Speaker 2: Daniel Paris, thanks so much for being with us this morning. 273 00:15:53,640 --> 00:15:56,000 Speaker 2: With the tensions of the world, maybe a little bit 274 00:15:56,000 --> 00:15:59,600 Speaker 2: of Erning's as well. Nike and Humanna very difficult this morning. 275 00:16:00,080 --> 00:16:02,640 Speaker 2: Future is negative ten to futures negative one forty one. 276 00:16:02,680 --> 00:16:07,320 Speaker 3: The VIX out over twenty nineteen point four five. Right 277 00:16:07,320 --> 00:16:07,760 Speaker 3: now on. 278 00:16:07,760 --> 00:16:10,920 Speaker 2: The VIX Paul Sweeney's yield the two year yield three 279 00:16:10,960 --> 00:16:14,520 Speaker 2: point six y one percent. Higher yields three point seven 280 00:16:14,640 --> 00:16:17,560 Speaker 2: six percent. You had a three ninety nine to thirty 281 00:16:17,640 --> 00:16:21,880 Speaker 2: year now four point one one, so a higher set 282 00:16:21,880 --> 00:16:24,720 Speaker 2: of yields across a full faith and credit curve. 283 00:16:25,200 --> 00:16:27,600 Speaker 3: On oil, Brent crued up two point eight. 284 00:16:27,480 --> 00:16:30,760 Speaker 2: Percent, up of full two dollars. It's gone negative two 285 00:16:30,760 --> 00:16:35,920 Speaker 2: standard deviations out the plus two standard deviations eloquently, It's 286 00:16:35,960 --> 00:16:38,960 Speaker 2: seventy five point six zero. 287 00:16:39,760 --> 00:16:42,120 Speaker 3: There was a debate last night. 288 00:16:42,000 --> 00:16:44,480 Speaker 5: Different I did not, but I got the highlights this morning. 289 00:16:44,560 --> 00:16:46,440 Speaker 5: Much like you would go to ESPN for sports highlights, 290 00:16:46,520 --> 00:16:50,760 Speaker 5: I went to guess some most highlights. It seemed pretty reasonable. 291 00:16:50,800 --> 00:16:53,360 Speaker 5: They'd act like reasonable adults. There's some politic. 292 00:16:53,320 --> 00:16:57,960 Speaker 2: Aed Mills they were polite, cordial, deferential, joining us now 293 00:16:58,000 --> 00:17:02,479 Speaker 2: the polite, cordial, deferential Ed Mills, policy analyst. 294 00:17:02,200 --> 00:17:03,760 Speaker 3: At Raymond James. 295 00:17:03,840 --> 00:17:08,919 Speaker 2: I was thunderstruck Ed Mills by the decorum almost to 296 00:17:08,960 --> 00:17:12,320 Speaker 2: the edge of Kennedy Nixon just a few years ago, 297 00:17:13,119 --> 00:17:16,479 Speaker 2: ed before your time. Is that where we're going in 298 00:17:16,640 --> 00:17:19,480 Speaker 2: five years when all of this anger recedes? 299 00:17:21,040 --> 00:17:21,320 Speaker 3: Tom? 300 00:17:21,359 --> 00:17:21,720 Speaker 7: I hope. 301 00:17:21,760 --> 00:17:25,520 Speaker 8: So you know, I was struck, and I have folks 302 00:17:25,560 --> 00:17:28,360 Speaker 8: on my team who are kind of somewhat newer, kind 303 00:17:28,359 --> 00:17:30,119 Speaker 8: of I don't go back to Kennedy Nixon, but I've 304 00:17:30,160 --> 00:17:33,920 Speaker 8: been watching for my adult life the all of the debates, 305 00:17:34,440 --> 00:17:36,840 Speaker 8: and it's been remarkable. You go back to twenty sixteen, 306 00:17:36,880 --> 00:17:38,520 Speaker 8: you go back to twenty twenty, and it seems like 307 00:17:38,600 --> 00:17:41,359 Speaker 8: this is the conversation we had. The more substant to 308 00:17:41,400 --> 00:17:45,320 Speaker 8: debate was at the vice presidential level, and when you 309 00:17:45,480 --> 00:17:48,960 Speaker 8: turn on the commentary afterwards, there is a lot of 310 00:17:48,960 --> 00:17:54,639 Speaker 8: conversation of would the American people prefer these as their candidates. 311 00:17:55,000 --> 00:17:57,720 Speaker 8: I do think it's nice to actually have a debate 312 00:17:57,760 --> 00:18:00,399 Speaker 8: where you have candidates turned to each other and say, 313 00:18:00,440 --> 00:18:02,919 Speaker 8: I actually agree with what you said, but here's my vision. 314 00:18:03,880 --> 00:18:06,159 Speaker 8: And we had that multiple times last night. 315 00:18:07,080 --> 00:18:11,000 Speaker 5: So Ed, I mean, the reality is vice president debates 316 00:18:11,040 --> 00:18:15,200 Speaker 5: have little impact generally on the broader general election. As 317 00:18:15,200 --> 00:18:19,080 Speaker 5: we make this sprint here towards No. Fifth, what is 318 00:18:19,119 --> 00:18:21,000 Speaker 5: the goal of each campaign do you think? 319 00:18:22,000 --> 00:18:25,760 Speaker 8: Yeah, Paul, I think that that's absolutely correct. What we 320 00:18:25,800 --> 00:18:28,359 Speaker 8: wrote in our note at Raymond James was the goal 321 00:18:28,480 --> 00:18:31,760 Speaker 8: of a vice presidential candidate is to get the American 322 00:18:31,800 --> 00:18:35,280 Speaker 8: people to have comfort with him or her on whether 323 00:18:35,440 --> 00:18:38,120 Speaker 8: or not they could be president. And I think both 324 00:18:38,119 --> 00:18:42,160 Speaker 8: of those candidates clearly cleared that bar last night. 325 00:18:42,880 --> 00:18:44,760 Speaker 7: As we look to your question and. 326 00:18:44,880 --> 00:18:48,600 Speaker 8: What the sprint is to the end of the month 327 00:18:48,680 --> 00:18:52,840 Speaker 8: here into November fifth is trying to get momentum back 328 00:18:52,920 --> 00:18:55,800 Speaker 8: for the Trump vance team and trying to maintain the 329 00:18:55,880 --> 00:18:59,960 Speaker 8: momentum for the Harris Walls team. And I continue to 330 00:19:00,119 --> 00:19:03,439 Speaker 8: believe we have seven swing states, but as I do 331 00:19:03,520 --> 00:19:07,399 Speaker 8: my maps, it's very hard to see one side winning 332 00:19:07,640 --> 00:19:11,560 Speaker 8: unless they capture Pennsylvania. So it's going to be essentially 333 00:19:12,040 --> 00:19:15,560 Speaker 8: all four of those candidates should take up residency, either 334 00:19:15,600 --> 00:19:18,640 Speaker 8: in Philadelphia or in Pittsburgh and see what they can 335 00:19:18,640 --> 00:19:20,960 Speaker 8: get out of that state to see who can win 336 00:19:21,000 --> 00:19:21,439 Speaker 8: this election. 337 00:19:21,840 --> 00:19:24,040 Speaker 5: So Ed, I mean, you know, Tom and I by it, 338 00:19:24,080 --> 00:19:26,480 Speaker 5: by our math, we think there's forty two people maybe 339 00:19:26,480 --> 00:19:29,280 Speaker 5: in state of Pennsylvania that are going to decide this selection. 340 00:19:29,640 --> 00:19:34,399 Speaker 5: I just don't recall it ever being so tight. It 341 00:19:34,440 --> 00:19:36,480 Speaker 5: seems like a new world of campaigning, a new world 342 00:19:36,520 --> 00:19:39,840 Speaker 5: of politics seemingly gets tighter and tighter. What in fact 343 00:19:39,960 --> 00:19:43,439 Speaker 5: can be done between now November fifth by either side? 344 00:19:44,040 --> 00:19:47,000 Speaker 8: Well, I think it's an important question because we do 345 00:19:47,160 --> 00:19:50,480 Speaker 8: have the fact that we are just started the month 346 00:19:50,480 --> 00:19:54,159 Speaker 8: of October, and we have a list of potential October surprises. 347 00:19:54,200 --> 00:19:56,800 Speaker 8: So for Harris, I think it is about trying to 348 00:19:56,840 --> 00:20:01,000 Speaker 8: contain those surprises, trying to contain some of the momentum 349 00:20:01,040 --> 00:20:03,040 Speaker 8: that she's had since she's announced. 350 00:20:02,640 --> 00:20:03,560 Speaker 7: As a candidate. 351 00:20:04,040 --> 00:20:06,200 Speaker 8: And for Trump, what we're watching is back in twenty 352 00:20:06,240 --> 00:20:08,840 Speaker 8: sixteen and twenty twenty he had a surge at the end. 353 00:20:09,320 --> 00:20:13,000 Speaker 8: Is he able to capitalize on this and get that 354 00:20:13,080 --> 00:20:13,840 Speaker 8: surge once again? 355 00:20:13,920 --> 00:20:14,120 Speaker 3: Yeah? 356 00:20:14,119 --> 00:20:16,840 Speaker 2: I mean Walter's note out at Cook Political Report at 357 00:20:16,880 --> 00:20:20,040 Speaker 2: this morning is jaw dropping on the closeness of this 358 00:20:20,160 --> 00:20:23,920 Speaker 2: and the dynamics here. She takes undecided in swing states 359 00:20:24,119 --> 00:20:27,840 Speaker 2: from ten percent down to five percent at Mills twenty 360 00:20:27,960 --> 00:20:34,520 Speaker 2: twenty NPR quote just forty four thousand votes in Georgia, Arizona, 361 00:20:34,520 --> 00:20:39,240 Speaker 2: and Wisconsin separated Biden and Trump from a tie in 362 00:20:39,320 --> 00:20:42,240 Speaker 2: the electoral College? Are we closer now? 363 00:20:43,400 --> 00:20:43,960 Speaker 7: Potentially? 364 00:20:44,080 --> 00:20:45,959 Speaker 8: And I look at that and I say, if it 365 00:20:46,000 --> 00:20:48,960 Speaker 8: does come down to Pennsylvania, Tom, there's a law in 366 00:20:49,000 --> 00:20:52,400 Speaker 8: Pennsylvania that does not allow you to open up ballots 367 00:20:52,440 --> 00:20:55,320 Speaker 8: that have been mailed in until seven pm on election night. 368 00:20:56,160 --> 00:20:58,760 Speaker 8: And so it's very possible that we would have the 369 00:20:59,119 --> 00:21:02,280 Speaker 8: repeat of twenty two twenty in Pennsylvania where same day 370 00:21:02,400 --> 00:21:05,560 Speaker 8: votes favor Trump. You have an election if and it 371 00:21:05,640 --> 00:21:08,520 Speaker 8: hinges on Pennsylvania. What I am concerned for from a 372 00:21:08,560 --> 00:21:12,720 Speaker 8: market perspective, from a voters in the American people accepting 373 00:21:12,760 --> 00:21:15,040 Speaker 8: the outcome of this election is I don't want to 374 00:21:15,080 --> 00:21:17,960 Speaker 8: come down to one state and have that lead windle 375 00:21:18,119 --> 00:21:22,280 Speaker 8: as kind of votes get counted and then a doubt 376 00:21:22,320 --> 00:21:22,760 Speaker 8: set in. 377 00:21:23,520 --> 00:21:25,320 Speaker 3: And a civis question. 378 00:21:25,680 --> 00:21:28,880 Speaker 2: With your expertise here and folks at Mills for decades, 379 00:21:29,320 --> 00:21:33,760 Speaker 2: legislative experience and of courses work at Raymond James, when 380 00:21:33,800 --> 00:21:39,880 Speaker 2: someone says to you mail order votes are shady, uncountable, whatever. 381 00:21:39,600 --> 00:21:41,840 Speaker 3: Other language you want to do, how do you respond 382 00:21:41,880 --> 00:21:42,080 Speaker 3: to that? 383 00:21:44,040 --> 00:21:46,800 Speaker 8: I point to the literature that shows that they are 384 00:21:47,080 --> 00:21:51,479 Speaker 8: incredibly kind of safe and easy way of doing it. 385 00:21:51,880 --> 00:21:56,160 Speaker 8: We have a couple of states Utah, Washington State that 386 00:21:56,359 --> 00:21:57,920 Speaker 8: kind of almost. 387 00:21:57,520 --> 00:21:59,800 Speaker 7: Exclusively vote by mail. 388 00:22:00,040 --> 00:22:04,280 Speaker 8: When I started in campaigns, it was the exact opposite. 389 00:22:04,320 --> 00:22:08,520 Speaker 8: It was disproportionately Democrats that showed up on the same day, 390 00:22:08,560 --> 00:22:11,800 Speaker 8: and a lot of conversations was how do we shift 391 00:22:11,880 --> 00:22:15,480 Speaker 8: that kind of politically one way or another, depending upon 392 00:22:15,520 --> 00:22:16,680 Speaker 8: which side you're working on. 393 00:22:17,240 --> 00:22:18,560 Speaker 7: So it's pretty remarkable. 394 00:22:18,560 --> 00:22:21,399 Speaker 8: It's only in recent years where you've had those concerns 395 00:22:21,840 --> 00:22:23,840 Speaker 8: pop up into our conversation. 396 00:22:24,000 --> 00:22:26,760 Speaker 5: Ed, what should we be looking for down ballot for 397 00:22:26,840 --> 00:22:29,320 Speaker 5: each of these parties? Here are there certain states, certain 398 00:22:29,359 --> 00:22:31,360 Speaker 5: seats that you're focusing on. 399 00:22:32,280 --> 00:22:34,399 Speaker 8: Yeah, So in the House of Representatives, I think the 400 00:22:35,000 --> 00:22:37,920 Speaker 8: switch from Biden to Harris has probably had the biggest impact. 401 00:22:38,600 --> 00:22:41,359 Speaker 8: Something I'm looking at there is that Democrats need to 402 00:22:41,400 --> 00:22:44,360 Speaker 8: pick up about three or four seats in the House 403 00:22:44,400 --> 00:22:48,960 Speaker 8: of Representatives to win the majority. There are eight Republicans 404 00:22:49,000 --> 00:22:52,640 Speaker 8: in New York in California who are labeled as toss ups, 405 00:22:53,000 --> 00:22:55,080 Speaker 8: and so to the extent that the Democratic base has 406 00:22:55,080 --> 00:22:58,480 Speaker 8: been energized since Harris has gotten into this election, those 407 00:22:58,520 --> 00:23:02,320 Speaker 8: Republicans have a tougher kind of road ahead for them. 408 00:23:02,600 --> 00:23:04,800 Speaker 8: On the Senate side, you look at the fact that 409 00:23:05,520 --> 00:23:09,320 Speaker 8: Tester and Montana probably could decide who has a majority 410 00:23:09,800 --> 00:23:13,760 Speaker 8: in the Senate in testers underwater. So Democrats have moved 411 00:23:13,840 --> 00:23:17,439 Speaker 8: into Texas, moved into Florida. The question there is is 412 00:23:17,480 --> 00:23:21,159 Speaker 8: that a recognition of they are very much underwater in 413 00:23:21,200 --> 00:23:22,960 Speaker 8: their attempt to keep the majority. 414 00:23:23,040 --> 00:23:26,359 Speaker 2: I think at thirty seconds, John from just east of Newark, 415 00:23:26,440 --> 00:23:30,040 Speaker 2: New Jersey, asks, is assault tax going to get fixed. 416 00:23:31,800 --> 00:23:33,360 Speaker 7: If Democrats win? 417 00:23:33,520 --> 00:23:37,320 Speaker 8: I think the salt tax expires in resets to being unlimited. 418 00:23:37,600 --> 00:23:40,159 Speaker 8: I think that there is a Republican sweep. It stays 419 00:23:40,160 --> 00:23:43,119 Speaker 8: as if is if Republicans win, but there is a 420 00:23:43,160 --> 00:23:46,560 Speaker 8: Democratic House, look for a compromise at twenty thousand dollars 421 00:23:46,600 --> 00:23:48,960 Speaker 8: versus ten thousand dollars and an income threshold of five 422 00:23:49,040 --> 00:23:52,240 Speaker 8: hundred thousand dollars to qualify for that higher twenty thousand 423 00:23:52,240 --> 00:23:53,520 Speaker 8: dollars tax deduction. 424 00:23:53,760 --> 00:23:57,480 Speaker 3: John, thank you for that response. Ad Mills brilliant with 425 00:23:57,600 --> 00:23:58,359 Speaker 3: Raymond jameson. 426 00:24:08,600 --> 00:24:11,800 Speaker 2: You know how much I hate the fed parlor game, 427 00:24:12,520 --> 00:24:14,360 Speaker 2: except Paul, this time is different. 428 00:24:14,680 --> 00:24:16,600 Speaker 3: You gotta look at the parlor game. 429 00:24:16,680 --> 00:24:20,640 Speaker 2: Stephanie Roth with a brilliant note at Wolf Research really 430 00:24:20,680 --> 00:24:24,840 Speaker 2: frames it out the many different opinions. Stephanie, critically, you 431 00:24:24,880 --> 00:24:28,520 Speaker 2: say the three months trend is not one hundred and 432 00:24:28,560 --> 00:24:33,639 Speaker 2: sixty sixteen. One hundred and sixteen thousand is published. But 433 00:24:33,760 --> 00:24:37,359 Speaker 2: as a higher statistic, why is that many disagree with you? 434 00:24:39,000 --> 00:24:39,760 Speaker 1: Totally fair? 435 00:24:40,160 --> 00:24:42,080 Speaker 9: So when you look at the three month averages, it's 436 00:24:42,080 --> 00:24:44,520 Speaker 9: been reported, sure that it's one hundred and sixteen thousand, 437 00:24:44,600 --> 00:24:47,600 Speaker 9: but what you've seen historically is that August tends to 438 00:24:47,600 --> 00:24:51,680 Speaker 9: get revised up so by actually the forty nine thousand 439 00:24:51,680 --> 00:24:54,400 Speaker 9: by the third print. So if you incorporate those types 440 00:24:54,400 --> 00:24:57,239 Speaker 9: of revisions, which we expect to see on Friday, and 441 00:24:57,240 --> 00:24:58,960 Speaker 9: of course we'll see whether that's right or not. But 442 00:24:59,040 --> 00:25:01,760 Speaker 9: if we got a forty nine thousand upward revision to 443 00:25:01,760 --> 00:25:03,520 Speaker 9: the month of August, in your three months ten is 444 00:25:03,600 --> 00:25:04,880 Speaker 9: closer to one hundred and thirty five. 445 00:25:05,440 --> 00:25:08,040 Speaker 2: And what's amazing about this, folks one over the square 446 00:25:08,119 --> 00:25:12,560 Speaker 2: root of n is she got Bucknell mathematics here along 447 00:25:12,640 --> 00:25:16,439 Speaker 2: with masters and statistics from really Glumbia University. Like the 448 00:25:16,480 --> 00:25:19,720 Speaker 2: other day we're talking to Sebastian Page about Gaussian and 449 00:25:19,800 --> 00:25:20,960 Speaker 2: bluss on distribution. 450 00:25:21,400 --> 00:25:24,800 Speaker 5: Stephanie's all over this, She's all a master's and statistics. 451 00:25:24,800 --> 00:25:27,119 Speaker 5: Oh my goodness. So Stephanie, people are telling me I 452 00:25:27,160 --> 00:25:30,680 Speaker 5: really have to pay attention to this labor report this 453 00:25:31,119 --> 00:25:34,040 Speaker 5: coming Friday. Is that because the Fed's really focused on that. 454 00:25:35,400 --> 00:25:38,600 Speaker 9: Yeah, this is the most important payrolls report of the year. Wow, 455 00:25:38,640 --> 00:25:41,840 Speaker 9: for a couple of reasons. One this is we're now 456 00:25:41,920 --> 00:25:43,760 Speaker 9: starting to get concerned about the labor market. We have 457 00:25:43,840 --> 00:25:47,480 Speaker 9: seen a deceleration in momentum in terms of jobs, and 458 00:25:47,600 --> 00:25:49,720 Speaker 9: Powell said this, it's not about the level of the 459 00:25:49,760 --> 00:25:52,520 Speaker 9: labor market, but it is about the speed. And the 460 00:25:52,560 --> 00:25:54,560 Speaker 9: next couple of prints are going to be really noisy 461 00:25:54,560 --> 00:25:57,000 Speaker 9: outside of this one. So once we get the October 462 00:25:57,040 --> 00:25:59,000 Speaker 9: print printed in November, we're going to have the impact 463 00:25:59,000 --> 00:26:01,520 Speaker 9: of Boeing Strikesotentially, we're gonna have the potential impact of 464 00:26:01,600 --> 00:26:03,800 Speaker 9: port strikes. We're gonna have the hurricane, and that could 465 00:26:03,880 --> 00:26:05,600 Speaker 9: last for a couple of months. So this is one 466 00:26:05,600 --> 00:26:08,320 Speaker 9: of the cleanest reads. We're going to get in a 467 00:26:08,359 --> 00:26:11,120 Speaker 9: point where the labor market is the most important thing here. 468 00:26:12,080 --> 00:26:14,600 Speaker 5: So stepping back from that, I mean, how how do 469 00:26:14,720 --> 00:26:18,480 Speaker 5: you kind of view this labor market. Again, some people 470 00:26:18,480 --> 00:26:20,320 Speaker 5: are saying, hey, if you look at the absolute levels, 471 00:26:20,720 --> 00:26:23,080 Speaker 5: it's in good shape. Four point two percent whatever the 472 00:26:23,119 --> 00:26:26,439 Speaker 5: unemployment rate, that's kind of full employment. But there are 473 00:26:26,440 --> 00:26:29,679 Speaker 5: others saying, boy, the most recent trends are troubling. How 474 00:26:29,720 --> 00:26:30,520 Speaker 5: do you kind of view it? 475 00:26:31,680 --> 00:26:34,240 Speaker 9: Yeah, and the recent trends certainly point to a deceleration. 476 00:26:34,320 --> 00:26:36,000 Speaker 9: And this is kind of what a soft landing looks like. 477 00:26:36,080 --> 00:26:38,560 Speaker 9: Right at some point, soft landing and recession look kind 478 00:26:38,560 --> 00:26:40,920 Speaker 9: of similar because you get that deceleration, and the question 479 00:26:40,960 --> 00:26:42,080 Speaker 9: is where you stabilize. 480 00:26:42,400 --> 00:26:44,400 Speaker 1: So what we're seeing right now is the labor market 481 00:26:44,480 --> 00:26:47,280 Speaker 1: is fairly healthy. Claims are not picking up. 482 00:26:47,720 --> 00:26:52,040 Speaker 9: We're seeing job openings even yesterday that kind of stabilize. 483 00:26:52,080 --> 00:26:53,680 Speaker 9: So our base case is that the labor market is 484 00:26:53,680 --> 00:26:56,199 Speaker 9: going to stabilize at a level that's similar to what 485 00:26:56,200 --> 00:26:58,800 Speaker 9: we saw in twenty nineteen, which is a healthy labor market. 486 00:26:59,440 --> 00:27:02,440 Speaker 9: One reason to believe that is forgetting about the labor 487 00:27:02,440 --> 00:27:04,639 Speaker 9: market data. But if you look at consumer spending, that 488 00:27:04,720 --> 00:27:06,600 Speaker 9: rain is really healthy. It's running at about a three 489 00:27:06,640 --> 00:27:10,280 Speaker 9: percent real realized pace, which is which is better than 490 00:27:10,320 --> 00:27:13,040 Speaker 9: most folks would have expected, especially if you're concerned about 491 00:27:13,040 --> 00:27:16,280 Speaker 9: the labor market. This is just another economic data point 492 00:27:16,280 --> 00:27:18,600 Speaker 9: that tells you that economy is really doing just fine. 493 00:27:18,760 --> 00:27:19,160 Speaker 3: Stephanie. 494 00:27:19,160 --> 00:27:21,520 Speaker 2: Gobensax came out where I believe a three point two 495 00:27:21,520 --> 00:27:25,239 Speaker 2: percent run rate statistic and real GDP, which dovetails with 496 00:27:25,280 --> 00:27:28,919 Speaker 2: your optimism on a labor economy. Do we still have 497 00:27:29,320 --> 00:27:30,880 Speaker 2: a legitimate real wage? 498 00:27:32,400 --> 00:27:32,680 Speaker 3: Yeah? 499 00:27:32,720 --> 00:27:34,560 Speaker 1: Well, yeah we do. 500 00:27:35,480 --> 00:27:38,320 Speaker 9: We certainly do, and that's one reason why the consumer 501 00:27:38,400 --> 00:27:40,320 Speaker 9: is still able to be spending. And now that you 502 00:27:40,400 --> 00:27:44,000 Speaker 9: have inflation slowing back down, you know pretty considerably. Now 503 00:27:44,040 --> 00:27:47,359 Speaker 9: you your wages are on your real wages are at 504 00:27:47,400 --> 00:27:50,040 Speaker 9: least in positive territory, which is which is a good thing. 505 00:27:50,080 --> 00:27:51,840 Speaker 9: For a period of time, that wasn't the case because 506 00:27:51,840 --> 00:27:54,560 Speaker 9: inflation was running so high. But now your inflation rate 507 00:27:54,640 --> 00:27:56,760 Speaker 9: is running at or even below two percent if you 508 00:27:56,800 --> 00:27:59,960 Speaker 9: look on a six month basis, so consumers are actually 509 00:28:00,040 --> 00:28:01,920 Speaker 9: able to be in a better position. And then we 510 00:28:01,960 --> 00:28:05,080 Speaker 9: didn't even talk about interest rates which are now starting. 511 00:28:04,960 --> 00:28:05,480 Speaker 1: To come down. 512 00:28:05,520 --> 00:28:07,639 Speaker 9: So you're having an easy and financial conditions at a 513 00:28:07,680 --> 00:28:10,800 Speaker 9: point where inflation is not running back down towards two percent. 514 00:28:11,119 --> 00:28:13,920 Speaker 1: So that's good impetus for the consumer. 515 00:28:14,320 --> 00:28:16,680 Speaker 5: So let's step back and what is your view of 516 00:28:16,720 --> 00:28:18,720 Speaker 5: the consumer. We've had a lot of companies kind of 517 00:28:18,960 --> 00:28:22,240 Speaker 5: calling out the lower end of the consumers really struggling here. 518 00:28:22,280 --> 00:28:24,040 Speaker 5: Whether you look at the numbers out of a Walmart 519 00:28:24,119 --> 00:28:26,440 Speaker 5: or Targe or the dollar stores, how do you view 520 00:28:26,480 --> 00:28:27,160 Speaker 5: the consumer here? 521 00:28:28,400 --> 00:28:30,560 Speaker 1: The consumer's okay, And that's been the case for a while. 522 00:28:30,600 --> 00:28:32,680 Speaker 9: We've had for the past year and a half, we've 523 00:28:32,720 --> 00:28:35,480 Speaker 9: heard heard companies come out and talk about the decelerating 524 00:28:35,800 --> 00:28:38,520 Speaker 9: lower end consumer, and that's absolutely been the case. There 525 00:28:38,560 --> 00:28:43,120 Speaker 9: has been a divergence between the middle and higher end consumer. 526 00:28:42,800 --> 00:28:43,720 Speaker 1: Versus the lower end. 527 00:28:44,200 --> 00:28:46,360 Speaker 9: But now there's a good reason to believe that actually 528 00:28:46,360 --> 00:28:48,040 Speaker 9: that lower end consumer could start to do a little 529 00:28:48,040 --> 00:28:49,800 Speaker 9: bit better. Their credit card interest rates are going to 530 00:28:49,840 --> 00:28:52,800 Speaker 9: be coming down, and you know, it turns out the 531 00:28:53,120 --> 00:28:55,600 Speaker 9: savings for the broad based economy is actually a bit 532 00:28:55,600 --> 00:28:58,480 Speaker 9: better than what was previously reported. We just got GDP 533 00:28:58,600 --> 00:29:00,640 Speaker 9: revisions last week that told us the savings rate is 534 00:29:00,640 --> 00:29:02,560 Speaker 9: culture to five percent rather than three percent. 535 00:29:02,920 --> 00:29:05,280 Speaker 1: So the consumer actually has a bit more buffer than 536 00:29:05,320 --> 00:29:06,280 Speaker 1: we previously thought. 537 00:29:06,320 --> 00:29:10,400 Speaker 9: And Powell talked about this the other day, highlighting exactly 538 00:29:10,480 --> 00:29:13,440 Speaker 9: the same concept that you know, now maybe the consumer's 539 00:29:13,440 --> 00:29:16,040 Speaker 9: a bit healthier than we thought, so, Yeah, you know, 540 00:29:16,040 --> 00:29:18,000 Speaker 9: you might still hear a little bit of softness on 541 00:29:18,040 --> 00:29:20,640 Speaker 9: the lower end, but we should actually start to see 542 00:29:20,640 --> 00:29:22,480 Speaker 9: an inflection point where things get a bit better. 543 00:29:22,280 --> 00:29:24,680 Speaker 3: For the consumer, usually valuable folks. This is what it's 544 00:29:24,680 --> 00:29:25,120 Speaker 3: all about. 545 00:29:25,120 --> 00:29:28,920 Speaker 2: The distinction of our conversations on Bloomberg Surveillance. Stephanie Rore 546 00:29:28,920 --> 00:29:33,320 Speaker 2: out there pushing against the caution on the American labor economy. 547 00:29:33,360 --> 00:29:34,960 Speaker 3: Stephanie Roth is with Wolf. 548 00:29:35,320 --> 00:29:38,560 Speaker 2: This is a Bloomberg Surveillance podcast, bringing you the best 549 00:29:38,560 --> 00:29:43,360 Speaker 2: in economics, finance, investment, and international relations. You can also 550 00:29:43,400 --> 00:29:47,440 Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast 551 00:29:47,560 --> 00:29:51,600 Speaker 2: channel on YouTube to see the show weekday mornings from 552 00:29:51,640 --> 00:29:54,880 Speaker 2: seven to ten am Eastern from our global headquarters in 553 00:29:55,000 --> 00:29:58,680 Speaker 2: New York City. 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