1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Lee. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,640 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. What 5 00:00:27,760 --> 00:00:30,120 Speaker 1: a couple of weeks we've had in global equity markets. 6 00:00:30,160 --> 00:00:33,720 Speaker 1: Stocks are doing better than good. What's changed the data 7 00:00:34,200 --> 00:00:36,680 Speaker 1: or the way investors respond to it? Joining us now 8 00:00:36,760 --> 00:00:39,840 Speaker 1: Michael Purvis, a tool Back and Capital Advisors. Good morning 9 00:00:39,880 --> 00:00:43,360 Speaker 1: to you, Mike, Good morning John. Your thoughts on that question? 10 00:00:43,440 --> 00:00:45,879 Speaker 1: What has changed? Is the data getting better? Has the 11 00:00:45,960 --> 00:00:48,320 Speaker 1: data changed or is it the way investors are reacting 12 00:00:48,400 --> 00:00:51,960 Speaker 1: to it? I think it's the latter, John. You know, 13 00:00:52,000 --> 00:00:56,560 Speaker 1: the earning season has thus far been been an important 14 00:00:56,560 --> 00:01:00,400 Speaker 1: affirmation of what the bulls would like to see to 15 00:01:00,480 --> 00:01:03,040 Speaker 1: keep the markets moving higher. But again, I don't think 16 00:01:03,040 --> 00:01:05,840 Speaker 1: there's any real big surprise there. Right. The economic data 17 00:01:06,200 --> 00:01:09,360 Speaker 1: for most of the economy has been really pretty constructive 18 00:01:09,400 --> 00:01:12,240 Speaker 1: and affirming that, you know, the earnings are gonna the 19 00:01:12,240 --> 00:01:14,679 Speaker 1: earnings story will be pretty good. I mean, that's the 20 00:01:14,680 --> 00:01:16,920 Speaker 1: new data that we've been having over the last few 21 00:01:16,920 --> 00:01:19,240 Speaker 1: weeks that sort of set up this this melt up 22 00:01:19,280 --> 00:01:23,000 Speaker 1: into fresh highs here. UM. So I think the question 23 00:01:23,120 --> 00:01:26,160 Speaker 1: is um, you know, are the bulls right or is 24 00:01:26,160 --> 00:01:29,720 Speaker 1: their complacency? And as you know, as a strategist, guessing 25 00:01:29,760 --> 00:01:31,840 Speaker 1: where the SMP is going to be between now and 26 00:01:31,920 --> 00:01:34,680 Speaker 1: the year end, it's a very it's always a tough question, 27 00:01:35,040 --> 00:01:37,800 Speaker 1: but it's it's always um but this one seems particularly 28 00:01:37,880 --> 00:01:40,560 Speaker 1: tough because if you look at greed across the ethnic 29 00:01:40,640 --> 00:01:43,880 Speaker 1: classes you you will see there is uh, you know, 30 00:01:43,959 --> 00:01:48,840 Speaker 1: the whole trade tensions have been completely almost completely thrown 31 00:01:48,840 --> 00:01:52,040 Speaker 1: out but largely pushed to the side for right now right, 32 00:01:52,520 --> 00:01:56,440 Speaker 1: and the VIX curve, the level of vix, the put 33 00:01:56,480 --> 00:02:00,600 Speaker 1: call skew, all those types of metrics are suggesting that, hey, 34 00:02:00,640 --> 00:02:03,520 Speaker 1: everything is gonna be pretty good. We're about up a 35 00:02:03,520 --> 00:02:05,200 Speaker 1: two year's end. But we've seen a lot of these 36 00:02:05,240 --> 00:02:08,400 Speaker 1: metrics be very ranged out of police hold right now 37 00:02:09,040 --> 00:02:11,280 Speaker 1: one side of the race, Michael, I'm sorry this with 38 00:02:11,320 --> 00:02:13,560 Speaker 1: the clothes we saw on Friday, SMP out to new 39 00:02:13,600 --> 00:02:17,920 Speaker 1: record hide down behind on that on the close. The 40 00:02:18,000 --> 00:02:20,679 Speaker 1: fact is we've got three elephants in the room this week. 41 00:02:20,680 --> 00:02:23,080 Speaker 1: We've got j D. P First, look, one point six 42 00:02:23,120 --> 00:02:27,000 Speaker 1: percent is a stunning Bloomberg Survey statistic. Then we've got 43 00:02:27,000 --> 00:02:29,920 Speaker 1: a small FED meeting where you know, John Jim Reid 44 00:02:29,919 --> 00:02:32,239 Speaker 1: of Deutsche Bank was with us and they're guiding towards 45 00:02:32,240 --> 00:02:35,160 Speaker 1: maybe three rate cuts. Fine, and then we've got jobs 46 00:02:35,240 --> 00:02:38,400 Speaker 1: Day on Friday. What are we gonna be like on Monday? 47 00:02:38,680 --> 00:02:41,799 Speaker 1: I mean, with three ginormous events, how do we shape 48 00:02:41,840 --> 00:02:44,160 Speaker 1: up week from Monday? Besides the jets and giants? Will 49 00:02:44,200 --> 00:02:46,440 Speaker 1: you want some tomorrow's prices as well? You just want 50 00:02:46,440 --> 00:02:49,000 Speaker 1: to get to next week. Me and the tots, we 51 00:02:49,040 --> 00:02:50,840 Speaker 1: want to get the next week. Michael, where are we 52 00:02:50,840 --> 00:02:54,720 Speaker 1: going to be next week? Well, you know, my guess 53 00:02:54,760 --> 00:02:58,120 Speaker 1: is that UM a lot of that. You know, let's 54 00:02:58,240 --> 00:03:02,160 Speaker 1: let'stack that one at the time. UM. On the GDP print, 55 00:03:02,200 --> 00:03:06,040 Speaker 1: i'd be I'd be. Look at those prints are are 56 00:03:06,600 --> 00:03:08,639 Speaker 1: very informative from a very long term point of view. 57 00:03:08,680 --> 00:03:10,120 Speaker 1: But in terms of whether the market is going to 58 00:03:10,200 --> 00:03:13,000 Speaker 1: melt up or or push down, and you know, between 59 00:03:13,000 --> 00:03:15,239 Speaker 1: now and the end of the year, I would say 60 00:03:15,240 --> 00:03:17,200 Speaker 1: that it will be sort of an interesting thing to 61 00:03:17,240 --> 00:03:19,840 Speaker 1: look at. But against so much of that GDP D 62 00:03:19,960 --> 00:03:24,320 Speaker 1: acceleration has been already with us for so long. UM 63 00:03:24,440 --> 00:03:27,280 Speaker 1: on the Fed, I think the Fed is going to 64 00:03:27,360 --> 00:03:30,720 Speaker 1: be you know, that'll be interesting here. But I think 65 00:03:30,760 --> 00:03:34,200 Speaker 1: the Powell, um, John, You're going to disagree with this notion. 66 00:03:34,240 --> 00:03:37,200 Speaker 1: But I think Powell has been learning how to master 67 00:03:37,280 --> 00:03:40,320 Speaker 1: a little bit of this, you know, how to you know, 68 00:03:40,400 --> 00:03:44,640 Speaker 1: sort of give us a slightly hawkish cut and and 69 00:03:45,320 --> 00:03:47,600 Speaker 1: let the market said that he's stole there, even if 70 00:03:47,640 --> 00:03:51,720 Speaker 1: it's not exactly what the money markets UH are screaming 71 00:03:51,760 --> 00:03:55,200 Speaker 1: for UM or what some of the other great strategies 72 00:03:55,280 --> 00:03:57,560 Speaker 1: might be going forward. I'm not here to disagree with you, 73 00:03:57,640 --> 00:03:59,160 Speaker 1: Mike coming and it was the last twelve months. I 74 00:03:59,160 --> 00:04:00,840 Speaker 1: think it's fair to sign a relative to worry he 75 00:04:00,920 --> 00:04:03,080 Speaker 1: was twelve months ago. He's a much better communicator. The 76 00:04:03,120 --> 00:04:05,480 Speaker 1: real challenge for him this week is that we won't 77 00:04:05,520 --> 00:04:08,400 Speaker 1: have a summary of economic projection. There will be no forecast. 78 00:04:08,720 --> 00:04:11,040 Speaker 1: The guidance will be in the words of the statement 79 00:04:11,400 --> 00:04:13,160 Speaker 1: and in the words of the Federal Reserve channel. What 80 00:04:13,240 --> 00:04:16,400 Speaker 1: kind of guidance are you looking for? You know, I 81 00:04:16,920 --> 00:04:20,919 Speaker 1: I am m. There's been this massive disagreement between the 82 00:04:20,920 --> 00:04:26,760 Speaker 1: money markets and and Powell sort of narrative forwards UM 83 00:04:27,000 --> 00:04:29,440 Speaker 1: that's been a defining feature of this year. I think 84 00:04:29,480 --> 00:04:34,960 Speaker 1: Powell is going to be, um, you know, pretty conditional 85 00:04:35,080 --> 00:04:39,960 Speaker 1: about the need to do anything substantially further to give 86 00:04:40,040 --> 00:04:43,440 Speaker 1: us like you know, you know, another three or four 87 00:04:44,440 --> 00:04:46,320 Speaker 1: even cut. I think he's gonna be like sort of 88 00:04:46,360 --> 00:04:49,600 Speaker 1: we're gonna go this one one, one day at a time, um. 89 00:04:50,000 --> 00:04:53,039 Speaker 1: And I think it's important to recognize that this one. 90 00:04:53,279 --> 00:04:55,880 Speaker 1: This is one of my overarching themes about about rates, 91 00:04:55,880 --> 00:04:58,520 Speaker 1: which is that so much of the narratives for cutting 92 00:04:58,560 --> 00:05:00,440 Speaker 1: over the last six months has been a rest of 93 00:05:00,480 --> 00:05:03,320 Speaker 1: world weakness. Well, rest of world weakness has already reflected 94 00:05:03,320 --> 00:05:05,520 Speaker 1: in that bund deal being at minus fifty or sixty 95 00:05:05,560 --> 00:05:09,040 Speaker 1: basis points, which ricochets right back into our treasure of 96 00:05:09,160 --> 00:05:11,839 Speaker 1: our rates anyway. Right, So if the rest of world 97 00:05:11,880 --> 00:05:16,480 Speaker 1: weakness and European weakness, China and so forth, that stabilizes 98 00:05:16,560 --> 00:05:19,640 Speaker 1: or even in except a little bit um, those interest 99 00:05:19,720 --> 00:05:21,880 Speaker 1: rates are gonna go for a while like the spill 100 00:05:21,960 --> 00:05:25,920 Speaker 1: over fast here and and it quickly erode Hels narrative. Mike. 101 00:05:26,080 --> 00:05:29,159 Speaker 1: One final question. We're up twenty one year to date 102 00:05:29,279 --> 00:05:32,799 Speaker 1: in SPX. I've never seen a more miserable market forget 103 00:05:32,839 --> 00:05:37,040 Speaker 1: about buy or sell here? How does Michael Purvis hold 104 00:05:37,160 --> 00:05:42,039 Speaker 1: here equities this morning? Well, you know, look, I think 105 00:05:42,040 --> 00:05:45,880 Speaker 1: this this rally has been hated us for yeah, but 106 00:05:46,040 --> 00:05:49,680 Speaker 1: now it's like yeah, no, I know. I mean, look, 107 00:05:49,680 --> 00:05:52,560 Speaker 1: you have to triangulate back and forth between the the 108 00:05:53,400 --> 00:05:55,960 Speaker 1: you know, the valuation, the quality of the earnings, the 109 00:05:56,040 --> 00:05:58,920 Speaker 1: quantity of the earnings, um, you know, where rates are 110 00:05:58,960 --> 00:06:02,360 Speaker 1: and so forth. You know, that's what's strategists do. Um. 111 00:06:02,400 --> 00:06:06,560 Speaker 1: But but right now, putting aside larger questions like election, 112 00:06:06,680 --> 00:06:09,200 Speaker 1: which are and all that right now, I think you 113 00:06:09,200 --> 00:06:12,719 Speaker 1: can you can make the case. But um equities right 114 00:06:12,760 --> 00:06:18,800 Speaker 1: now are um. Uh. The case for massive bullet price 115 00:06:18,839 --> 00:06:21,039 Speaker 1: action is very remote. But the case for them to 116 00:06:21,080 --> 00:06:25,040 Speaker 1: hold together, to put together you know, uh, five percent 117 00:06:25,120 --> 00:06:27,320 Speaker 1: gains with a two percent dividend yield, that's sort of 118 00:06:27,360 --> 00:06:31,200 Speaker 1: a reasonable and conservative base case. I think you can 119 00:06:31,240 --> 00:06:33,800 Speaker 1: make that case right now. Michael Burvis, thank you so much. 120 00:06:33,839 --> 00:06:50,800 Speaker 1: With's all back and this morning. This is a joy. 121 00:06:51,080 --> 00:06:54,000 Speaker 1: It's on Argentina and the distance to Argentina, but it's 122 00:06:54,040 --> 00:06:58,440 Speaker 1: also on the protest worldwide. Actual Christensen is with black Rock, 123 00:06:58,520 --> 00:07:01,200 Speaker 1: chief investment strategist for lack in America, but far more 124 00:07:01,360 --> 00:07:05,680 Speaker 1: a student of his Chile. We want to get to Argentina, Axel, 125 00:07:05,880 --> 00:07:08,200 Speaker 1: but first I've got to ask you about your Chili. 126 00:07:08,279 --> 00:07:11,120 Speaker 1: What is the level of protests in Chile? What does 127 00:07:11,160 --> 00:07:16,880 Speaker 1: that signal to the nation into Greater South America? Hi, Tom, Well, 128 00:07:16,960 --> 00:07:20,040 Speaker 1: definitely more than a million people showed up this weekend 129 00:07:20,080 --> 00:07:23,840 Speaker 1: to manifest that they're not happy that there are discontents 130 00:07:23,880 --> 00:07:28,120 Speaker 1: around how the paradox of one of the highest growing 131 00:07:28,200 --> 00:07:32,520 Speaker 1: countries in Latin America has not been able to spread 132 00:07:32,560 --> 00:07:36,080 Speaker 1: the wealth of that growth, and the government is taking note. 133 00:07:36,360 --> 00:07:42,200 Speaker 1: It came out with some measures to address this concern, Tom, 134 00:07:42,240 --> 00:07:44,600 Speaker 1: I mean the Minister John I think it was on Saturday, 135 00:07:44,720 --> 00:07:47,840 Speaker 1: just said the cabinet everybody resigned. We're going to start 136 00:07:47,840 --> 00:07:49,360 Speaker 1: all over. You know, you used to live in Chile, 137 00:07:50,160 --> 00:07:52,840 Speaker 1: bloom Bags, Lisa Rabbit, she used to live in Chile. 138 00:07:53,040 --> 00:07:55,640 Speaker 1: It's true. How many years ago? A long time ago? 139 00:07:56,280 --> 00:07:58,600 Speaker 1: Is this when you became a journalist for the first time? Yeah? 140 00:07:58,680 --> 00:08:01,880 Speaker 1: Actually I worked at on Recruitio. You learned Spanish before 141 00:08:01,920 --> 00:08:04,720 Speaker 1: you write in English, Before I could even write or 142 00:08:04,800 --> 00:08:06,800 Speaker 1: read in Spanish. I wrote in Spanish. You know. It's 143 00:08:06,800 --> 00:08:09,680 Speaker 1: an interesting question though, because Chile always was sort of 144 00:08:09,720 --> 00:08:13,640 Speaker 1: the humble, uh stepchild of Latin America, although it was 145 00:08:13,680 --> 00:08:16,040 Speaker 1: also the economic stalwart, and Argentina was sort of the 146 00:08:16,080 --> 00:08:19,600 Speaker 1: bad boy, but they had a certain sort of verve 147 00:08:19,680 --> 00:08:22,080 Speaker 1: to them that everyone was jealous of. And I'm wondering, Axel, 148 00:08:22,160 --> 00:08:24,840 Speaker 1: from your perspective, Uh, since I'm sitting here and I'm 149 00:08:24,840 --> 00:08:27,600 Speaker 1: gonna just crash your party to learn more about soccer 150 00:08:27,760 --> 00:08:31,120 Speaker 1: and and and generally all things surveillance, But actually I 151 00:08:30,920 --> 00:08:33,960 Speaker 1: I just have to to wonder from your perspective, Uh, 152 00:08:34,000 --> 00:08:36,520 Speaker 1: you know, whether this sort of unrest that we're seeing 153 00:08:36,520 --> 00:08:40,400 Speaker 1: in Chile is sort of a tipping point for all 154 00:08:40,440 --> 00:08:45,320 Speaker 1: of Latin America that people aren't really recognizing well at LISTA. 155 00:08:45,679 --> 00:08:47,720 Speaker 1: I'm happy to know that you know, you know Chile. 156 00:08:47,880 --> 00:08:50,679 Speaker 1: I'm curious to see if if you're Colo Cola fan 157 00:08:50,840 --> 00:08:52,960 Speaker 1: or you actually Chile. But we can talk about that 158 00:08:53,040 --> 00:08:58,200 Speaker 1: later on soccer. Uh, definitely. I think there's two lessons 159 00:08:58,240 --> 00:09:01,440 Speaker 1: to be learned, not only from other countries in Latin 160 00:09:01,480 --> 00:09:05,240 Speaker 1: America but overall. One I would point out to what 161 00:09:05,280 --> 00:09:08,439 Speaker 1: I call the tyranny of of statistics. If we look 162 00:09:08,480 --> 00:09:11,400 Speaker 1: at the numbers that Julie has and they've been quite impressive. 163 00:09:11,960 --> 00:09:14,760 Speaker 1: We usually just focus on the averages. So if we 164 00:09:14,800 --> 00:09:17,839 Speaker 1: look at GDP per capita, uh, pretty good at a 165 00:09:17,920 --> 00:09:21,160 Speaker 1: p PP level, Chili's uh, you know, coming in with 166 00:09:21,360 --> 00:09:24,040 Speaker 1: around twenty five dollars per year, but there's a lot 167 00:09:24,040 --> 00:09:28,960 Speaker 1: of dispersion around uh that number, so definitely, uh, you know, 168 00:09:29,040 --> 00:09:33,040 Speaker 1: inequality is a very very high challenge for Chili. And 169 00:09:33,080 --> 00:09:36,000 Speaker 1: the second UM I think if um, you know, if 170 00:09:36,040 --> 00:09:40,120 Speaker 1: if you think that winning the war against poverty is hard, 171 00:09:40,160 --> 00:09:42,320 Speaker 1: and that's what you know, a lot of institutions like 172 00:09:42,360 --> 00:09:44,640 Speaker 1: the I M from the World Bank or are built 173 00:09:44,720 --> 00:09:49,200 Speaker 1: upon UM. Getting a very very strong middle class is 174 00:09:49,360 --> 00:09:52,160 Speaker 1: as large as a task, and I think that's where 175 00:09:52,240 --> 00:09:56,080 Speaker 1: Chili has come in short, to assure people that you know, 176 00:09:56,120 --> 00:09:57,760 Speaker 1: once that they are in the middle class, that they 177 00:09:57,760 --> 00:10:01,000 Speaker 1: can stay stay there. UM. Middle class citizens sitially face 178 00:10:01,080 --> 00:10:04,640 Speaker 1: a very fragile situation. They're not getting um much more 179 00:10:04,679 --> 00:10:09,160 Speaker 1: support from the government subsidies or social welfare programs as 180 00:10:09,160 --> 00:10:11,839 Speaker 1: they were the families that are in the poor situation. 181 00:10:12,320 --> 00:10:15,000 Speaker 1: They have to face a lot of um, you know, costs, 182 00:10:15,400 --> 00:10:18,920 Speaker 1: increasing costs of living by their own education cost, the 183 00:10:18,960 --> 00:10:22,560 Speaker 1: transportation cost, what have you, and and that's I think 184 00:10:22,640 --> 00:10:26,480 Speaker 1: a strong element of the discontent. It was middle class 185 00:10:26,480 --> 00:10:30,880 Speaker 1: people protesting this weekend rather than low income segments. Act. 186 00:10:30,920 --> 00:10:32,800 Speaker 1: So what happens when you see these kind of pictures 187 00:10:32,800 --> 00:10:35,280 Speaker 1: on the screen. Though, For the tourist investor in e 188 00:10:35,440 --> 00:10:37,960 Speaker 1: M right now, they see protests in Chile, they see 189 00:10:37,960 --> 00:10:40,840 Speaker 1: the election in Argentina over the weekend, and it scares 190 00:10:40,880 --> 00:10:43,240 Speaker 1: them off. Do you throw the hole and lad atom 191 00:10:43,280 --> 00:10:45,440 Speaker 1: into the one bucket right now? Does it all start 192 00:10:45,440 --> 00:10:48,440 Speaker 1: to look a whole lot worse? Well, well, definitely not, 193 00:10:48,600 --> 00:10:51,760 Speaker 1: Johnathan Um. If we look at a Latin American might 194 00:10:51,840 --> 00:10:55,880 Speaker 1: seem like a very kind of uniform area, but everything 195 00:10:55,920 --> 00:10:58,079 Speaker 1: but that. If we look at Brazil right now, it's 196 00:10:58,120 --> 00:11:01,000 Speaker 1: just last week uh con is AP proved a very 197 00:11:01,120 --> 00:11:06,040 Speaker 1: very necessary social security reform that is an important step 198 00:11:06,080 --> 00:11:11,960 Speaker 1: into uh improving it's very difficult fiscal situation and death situations. 199 00:11:12,000 --> 00:11:15,760 Speaker 1: So so they've definitely other countries in the region have 200 00:11:15,920 --> 00:11:19,040 Speaker 1: been showing a more positive note in BRAZILA is very 201 00:11:19,040 --> 00:11:21,760 Speaker 1: important given the way it has in Latin ariage. So 202 00:11:21,880 --> 00:11:25,760 Speaker 1: cut to the chase complex, So cut to the chase. 203 00:11:25,880 --> 00:11:27,959 Speaker 1: Chile I have the will to get out of their 204 00:11:28,040 --> 00:11:31,720 Speaker 1: mess at some point what's the will meter this morning? 205 00:11:31,720 --> 00:11:34,400 Speaker 1: In point as areas? I mean, do they have does 206 00:11:34,400 --> 00:11:36,679 Speaker 1: the left or frankly the right do they does the 207 00:11:36,800 --> 00:11:40,680 Speaker 1: society have a will to finally play by the rule 208 00:11:40,760 --> 00:11:45,280 Speaker 1: book of all other developed nations. Well, I think they 209 00:11:45,280 --> 00:11:48,079 Speaker 1: will have to, uh, Tom, they don't have a lot 210 00:11:48,120 --> 00:11:50,600 Speaker 1: of options right now. If you look at the numbers 211 00:11:50,600 --> 00:11:52,920 Speaker 1: of the Argentine economy, if you look at what markets 212 00:11:52,920 --> 00:11:57,000 Speaker 1: have been pricing in since the preliminary UM elections back 213 00:11:57,000 --> 00:11:59,880 Speaker 1: in August, they'll have to find an agreement. And if 214 00:11:59,880 --> 00:12:03,080 Speaker 1: you look at the results of the yesterday UM although 215 00:12:03,400 --> 00:12:07,280 Speaker 1: uh President Marcari will not be reelected, his coalition did 216 00:12:07,320 --> 00:12:10,160 Speaker 1: a lot better than expected. And if you look at 217 00:12:10,160 --> 00:12:14,040 Speaker 1: the Congress results, there have to find a common ground 218 00:12:14,160 --> 00:12:17,880 Speaker 1: of the new government, the more moderate government leaving office. 219 00:12:18,160 --> 00:12:21,439 Speaker 1: They will have to find a common ground to pull 220 00:12:21,600 --> 00:12:25,040 Speaker 1: Argentina out of the very difficult situation they're currently at. 221 00:12:25,240 --> 00:12:27,640 Speaker 1: So accell. Essentially, what you're saying is that President elect 222 00:12:27,640 --> 00:12:30,160 Speaker 1: Albetta Fernandez won't be as a left wing of some 223 00:12:30,200 --> 00:12:33,920 Speaker 1: people where he might be well, definitely, he will have 224 00:12:34,040 --> 00:12:38,160 Speaker 1: to negotiate the more deep structural changes, say if he 225 00:12:38,200 --> 00:12:41,840 Speaker 1: wants to change the constitution in Argentina or uh, you know, 226 00:12:42,000 --> 00:12:45,439 Speaker 1: unwinds of the macro reforms. He will have to sit down, 227 00:12:46,000 --> 00:12:48,319 Speaker 1: uh and negotiate a lot of revolting especially in the 228 00:12:48,320 --> 00:12:51,640 Speaker 1: Lower House. Jonathan, what does currency disruption do here? I mean, 229 00:12:51,679 --> 00:12:53,280 Speaker 1: we talked to a number of people this morning with 230 00:12:53,360 --> 00:12:57,079 Speaker 1: a close rounded up to sixty Argentinean pacos per dollar. 231 00:12:57,440 --> 00:13:02,320 Speaker 1: The black market is one estimate six above. That is, 232 00:13:02,400 --> 00:13:04,640 Speaker 1: can you measure a black rock at tip point on 233 00:13:04,720 --> 00:13:09,719 Speaker 1: that currency where it becomes zimbabwe like? Well, tom um 234 00:13:10,520 --> 00:13:13,640 Speaker 1: if it's it's already quite quite difficult. Last night it 235 00:13:13,760 --> 00:13:17,160 Speaker 1: got buried a little bit after the election retails coming out. 236 00:13:17,400 --> 00:13:19,800 Speaker 1: But the Central Bank in Argentina just announced that they 237 00:13:20,320 --> 00:13:24,400 Speaker 1: are um, you know, uh, putting a very very strict 238 00:13:24,559 --> 00:13:27,520 Speaker 1: limit on terms of how much dollars Argentine's can purchase. 239 00:13:27,960 --> 00:13:32,360 Speaker 1: It was um not too long ago, um, you know, uh, 240 00:13:32,840 --> 00:13:35,719 Speaker 1: four thousand dollars a month. Now it's going all the 241 00:13:35,760 --> 00:13:39,840 Speaker 1: way down to two dollars. That's very very low. A 242 00:13:39,840 --> 00:13:43,840 Speaker 1: lot of restrictions in exporters have to sell their dollars 243 00:13:43,880 --> 00:13:46,640 Speaker 1: in the local market in a very short What will 244 00:13:46,679 --> 00:13:51,720 Speaker 1: that mean? Beautifully explain? But Alex uh alex Axtel Christiansen, 245 00:13:51,840 --> 00:13:57,840 Speaker 1: what does that mean for society? That means Tom that 246 00:13:58,080 --> 00:14:01,360 Speaker 1: economic authorities are really strong link to put a containment 247 00:14:01,400 --> 00:14:04,120 Speaker 1: on the bleeding, which is pretty much on the currency side. 248 00:14:04,520 --> 00:14:07,360 Speaker 1: So that is the first step. Once you get the 249 00:14:07,440 --> 00:14:10,880 Speaker 1: currency more or less stabilized, then you can start tackling 250 00:14:11,000 --> 00:14:15,200 Speaker 1: inflation and eventually economic growth. But there is that that's 251 00:14:15,200 --> 00:14:18,520 Speaker 1: a critical path. It's it's very hard to shortcut that 252 00:14:19,000 --> 00:14:22,360 Speaker 1: um and get growth if you haven't stabilized the currency first. 253 00:14:22,440 --> 00:14:24,480 Speaker 1: And so just to found a couple of questions, a 254 00:14:24,520 --> 00:14:26,600 Speaker 1: guidebook if you will, for the rest of the trading day. 255 00:14:26,640 --> 00:14:28,960 Speaker 1: The first print on dollar pace, So when do we 256 00:14:29,000 --> 00:14:30,840 Speaker 1: get that nine eastern and what kind of gap are 257 00:14:30,840 --> 00:14:35,880 Speaker 1: you expecting in either direction? Well, Um, since the elections 258 00:14:36,160 --> 00:14:40,520 Speaker 1: were a little bit less um you know of avalanche. 259 00:14:40,640 --> 00:14:44,560 Speaker 1: As the preliminary results were back in August, um we 260 00:14:44,640 --> 00:14:47,680 Speaker 1: could see a little bit of of a bounce back 261 00:14:47,920 --> 00:14:51,440 Speaker 1: from some of the Argentine assets, may mainly more on 262 00:14:51,480 --> 00:14:54,240 Speaker 1: the bond side, perhaps equities. The currency is going to 263 00:14:54,320 --> 00:14:58,320 Speaker 1: be much more influenced by the measures um announced by 264 00:14:58,360 --> 00:15:01,680 Speaker 1: the central Bank, so we should see uh somewhat of 265 00:15:01,720 --> 00:15:06,400 Speaker 1: a spike of the dollar against the currency of Starting 266 00:15:06,480 --> 00:15:09,680 Speaker 1: this morning from Miami, Axel Christiansen of Black Crop, we 267 00:15:09,800 --> 00:15:12,120 Speaker 1: really appreciate actual your effort to be with us today. 268 00:15:12,120 --> 00:15:28,680 Speaker 1: He is chief investment strategist for Latin America. What I 269 00:15:28,760 --> 00:15:31,920 Speaker 1: love about Stephanie Kelly is that she's with us Everydeen 270 00:15:32,000 --> 00:15:36,040 Speaker 1: Standard um and they've always got on TV that backdrop 271 00:15:36,120 --> 00:15:39,520 Speaker 1: of Edinburgh Castle. They've never been there. I've been to 272 00:15:39,640 --> 00:15:41,520 Speaker 1: Edinburgh a bunch of times. I've never made it to 273 00:15:41,600 --> 00:15:43,640 Speaker 1: the castle. How if you've been there without going to 274 00:15:43,680 --> 00:15:46,680 Speaker 1: the council, it's because there's eight pubs on the way 275 00:15:46,760 --> 00:15:51,720 Speaker 1: up though together. Yeah, you know, it's like it's up 276 00:15:51,720 --> 00:15:53,880 Speaker 1: on It's like Gibraltar, like it's up on a rock, 277 00:15:54,000 --> 00:15:57,800 Speaker 1: and you know it's it's very it's gloomy in Game 278 00:15:57,800 --> 00:16:00,480 Speaker 1: of Thrones and all that. You're gonna bring Stephanie. Stephanie 279 00:16:00,560 --> 00:16:04,840 Speaker 1: Kelley with us with Aberdeen Standard Investment. Stephanie, you and 280 00:16:04,880 --> 00:16:06,520 Speaker 1: I talked about this too this morning, but I think 281 00:16:06,520 --> 00:16:10,360 Speaker 1: it's really important to review how remain is Scotland Like 282 00:16:10,760 --> 00:16:13,680 Speaker 1: at the margin, does the Prime Minister pick up any 283 00:16:13,760 --> 00:16:17,840 Speaker 1: of Scotland? I gotta say, I mean there are a 284 00:16:17,880 --> 00:16:21,120 Speaker 1: couple of leave voting constituencies. But I mean you've got 285 00:16:21,120 --> 00:16:24,520 Speaker 1: they've got double trouble in Scotland. The first these that 286 00:16:24,600 --> 00:16:27,880 Speaker 1: most constituencies at least a majority of voters and which 287 00:16:27,880 --> 00:16:31,600 Speaker 1: obviously is a little bit different and don't support, don't 288 00:16:31,600 --> 00:16:34,080 Speaker 1: support leave, the support remain and quite strongly, which is 289 00:16:34,120 --> 00:16:37,040 Speaker 1: reflected in the SMP's strength here. But also the second 290 00:16:37,440 --> 00:16:40,240 Speaker 1: issue that's the kind of to add insult to injury 291 00:16:40,280 --> 00:16:43,120 Speaker 1: for bar Johnson, is that the very very popular consert 292 00:16:43,160 --> 00:16:45,840 Speaker 1: of leaders stepped down a couple of months ago, m 293 00:16:46,480 --> 00:16:49,080 Speaker 1: Rick Davidson. And because of that, I think they've got 294 00:16:49,120 --> 00:16:51,040 Speaker 1: double the issues in Scotland. I don't think Scotland is 295 00:16:51,040 --> 00:16:52,640 Speaker 1: where they're looking to pick up seats and I don't 296 00:16:52,680 --> 00:16:54,800 Speaker 1: think where they will pick up any seats. We'll definitely 297 00:16:54,840 --> 00:16:56,800 Speaker 1: let's get to whether they can have an election first, 298 00:16:56,800 --> 00:17:00,000 Speaker 1: the several roads to getting an election for the Prime minister. 299 00:17:00,120 --> 00:17:02,160 Speaker 1: Talk to me about the several options that the Prime 300 00:17:02,160 --> 00:17:06,040 Speaker 1: Minister could basically have before him through the next couple 301 00:17:06,040 --> 00:17:08,720 Speaker 1: of weeks. So we've got, yeah, as you say, a 302 00:17:08,720 --> 00:17:11,640 Speaker 1: couple of options. Obviously tonight we'll see them more. Maybe 303 00:17:11,680 --> 00:17:14,400 Speaker 1: traditional option, which ordinarily he would say should be enough 304 00:17:14,640 --> 00:17:16,919 Speaker 1: for a government to trigger an election, and which is 305 00:17:16,960 --> 00:17:19,439 Speaker 1: that they are going to have a vote in the 306 00:17:19,440 --> 00:17:21,800 Speaker 1: Fixed from Parliament Act. As it stands today, you needed 307 00:17:21,800 --> 00:17:23,919 Speaker 1: to through the majority in order to get a general 308 00:17:23,920 --> 00:17:27,439 Speaker 1: election through a kind of election vote, which is what 309 00:17:27,520 --> 00:17:29,879 Speaker 1: we have tonight. It is unlikely that Labor will go 310 00:17:29,960 --> 00:17:31,840 Speaker 1: for that for all the reasons we've talked about before. 311 00:17:31,920 --> 00:17:34,680 Speaker 1: That party is deeply, deeply divided on the issue of 312 00:17:34,720 --> 00:17:36,840 Speaker 1: Brexit and is struggling to kind of gain traction with 313 00:17:36,840 --> 00:17:39,360 Speaker 1: its voters, is actually losing a lot of voters, more 314 00:17:39,400 --> 00:17:41,760 Speaker 1: sols that live them to than the Conservatives, but actually 315 00:17:41,800 --> 00:17:44,439 Speaker 1: really to both. So against that f actor, what else 316 00:17:44,480 --> 00:17:45,879 Speaker 1: could they do if we think that they can't get 317 00:17:45,880 --> 00:17:48,439 Speaker 1: to the third majority? And then the other option they 318 00:17:48,440 --> 00:17:51,000 Speaker 1: have is the smple Gem Bill that there is being 319 00:17:51,040 --> 00:17:54,359 Speaker 1: put forward, which essentially amends Fixed from Parliament Act so 320 00:17:54,520 --> 00:17:57,080 Speaker 1: that the election is on a specific date in December, 321 00:17:57,400 --> 00:18:00,920 Speaker 1: and that only needs a simple majority, so they could 322 00:18:00,960 --> 00:18:02,840 Speaker 1: do that. And then the third kind of nuclear option 323 00:18:03,280 --> 00:18:05,520 Speaker 1: is that they could call the vote of confidence in 324 00:18:05,560 --> 00:18:09,560 Speaker 1: themselves and hope that the government the whole and basically 325 00:18:09,560 --> 00:18:12,200 Speaker 1: support themselves in a vote of no confidence. But we 326 00:18:12,240 --> 00:18:14,760 Speaker 1: have no votes we have no confidence in our own government. 327 00:18:15,640 --> 00:18:20,480 Speaker 1: Imagine selling that once electorate one volume and worse of 328 00:18:20,520 --> 00:18:23,280 Speaker 1: the roses, and nothing has changed since Robert the Bruce 329 00:18:23,359 --> 00:18:27,040 Speaker 1: and William Wallace and all that back. Even farther, Stephanie, 330 00:18:27,240 --> 00:18:29,840 Speaker 1: one of your charms is you're not in London. How's 331 00:18:29,880 --> 00:18:34,439 Speaker 1: the British economy? How's the United Kingdom economy outside of London? 332 00:18:36,720 --> 00:18:40,160 Speaker 1: How's it doing? Yeah, how's the United Kingdom economy doing 333 00:18:40,600 --> 00:18:45,320 Speaker 1: outside of London? I mean it's a pretty good question. 334 00:18:45,359 --> 00:18:47,320 Speaker 1: I mean it's it's always a dangerous thing to say 335 00:18:47,320 --> 00:18:49,040 Speaker 1: when you live in Edinburgh, which is kind of like 336 00:18:49,080 --> 00:18:53,320 Speaker 1: the London of the North, very financial services based, I 337 00:18:53,800 --> 00:18:56,359 Speaker 1: think broadly speaking, Look, we've already seen the kind of 338 00:18:56,400 --> 00:18:58,520 Speaker 1: the impact that breaks that has had. There's been a 339 00:18:58,560 --> 00:19:00,320 Speaker 1: lot of focus on oh, you know, thanks got me 340 00:19:00,400 --> 00:19:02,360 Speaker 1: wrong and Bank of England was wrong saying that would 341 00:19:02,359 --> 00:19:04,520 Speaker 1: be a recession with Brexit, and there wasn't. It's really 342 00:19:04,560 --> 00:19:06,400 Speaker 1: important to bear in mind that, you know, the kind 343 00:19:06,400 --> 00:19:08,240 Speaker 1: of growth we've seen in the UK has been really 344 00:19:08,280 --> 00:19:11,480 Speaker 1: weak relative to their relative to its potential, and if 345 00:19:11,480 --> 00:19:14,520 Speaker 1: you think about the industries that are unfortunately most likely 346 00:19:14,560 --> 00:19:17,520 Speaker 1: to be affected, you think with agriculture. If you think 347 00:19:17,520 --> 00:19:20,840 Speaker 1: about manufacturing, those are things that are outside of London. 348 00:19:20,960 --> 00:19:22,600 Speaker 1: Those are things that you know are happening up and 349 00:19:22,640 --> 00:19:25,280 Speaker 1: down the country, particularly in kind of the north of England, 350 00:19:25,280 --> 00:19:28,399 Speaker 1: and so there is this kind of um. I suppose 351 00:19:28,440 --> 00:19:31,520 Speaker 1: that a tragic irony to the Brexit debate, which is 352 00:19:31,600 --> 00:19:34,080 Speaker 1: all the conversations about, you know, the things that you 353 00:19:34,119 --> 00:19:36,760 Speaker 1: can get from Brexit. From an economist perspective, we look 354 00:19:36,760 --> 00:19:39,000 Speaker 1: at it and say, well, manufacturing agriculture, at least in 355 00:19:39,040 --> 00:19:42,280 Speaker 1: the short term will be you know, highly uncertain. I 356 00:19:42,320 --> 00:19:44,680 Speaker 1: think that's such respected he definitely we've got to leave 357 00:19:44,680 --> 00:19:46,159 Speaker 1: it there. Thank you very much for jo wanting us. 358 00:19:46,119 --> 00:20:02,560 Speaker 1: Stephanie Kelly there of Aberdeen Stanford senior political economists, John, 359 00:20:02,560 --> 00:20:08,040 Speaker 1: I'm still not used to it. Tapestry, tapestry, tapestry. It's 360 00:20:08,080 --> 00:20:11,480 Speaker 1: the old coach. Okay, it's tapestry. You're going to elaborate 361 00:20:11,880 --> 00:20:14,960 Speaker 1: on some of this. We should talk to somebody's encyclopedic 362 00:20:15,040 --> 00:20:18,960 Speaker 1: on equity name changes. Okay, she's just you know, she's 363 00:20:19,080 --> 00:20:21,120 Speaker 1: what are you going with this? She's with us every 364 00:20:21,119 --> 00:20:23,760 Speaker 1: seven out of eight days. We're talking to her because 365 00:20:23,760 --> 00:20:28,560 Speaker 1: it's up SPXA Gino Martin Adams with US head of 366 00:20:28,560 --> 00:20:33,600 Speaker 1: Equities Bloomberg Intelligence. Give me, give me an angle this morning. 367 00:20:33,640 --> 00:20:37,000 Speaker 1: I mean, I got HSBC redo, telephone redo, I got 368 00:20:37,280 --> 00:20:41,520 Speaker 1: massive mask of risk off. People are loving equities. It's 369 00:20:41,520 --> 00:20:43,640 Speaker 1: got to be the most hated market of all time. 370 00:20:44,240 --> 00:20:46,239 Speaker 1: It definitely is the most hated market at all time. 371 00:20:46,280 --> 00:20:49,040 Speaker 1: If you look at institutional sort of confidence, it hit 372 00:20:49,080 --> 00:20:52,280 Speaker 1: an all time low in December January of last year, 373 00:20:52,320 --> 00:20:56,000 Speaker 1: lower than the two eight two thousand nine lows. So 374 00:20:56,119 --> 00:20:58,720 Speaker 1: it's it's very hated. Let's cut to the chase. What 375 00:20:58,800 --> 00:21:03,080 Speaker 1: does its signal when we see this? I mean, truly, 376 00:21:03,280 --> 00:21:07,200 Speaker 1: I've never seen it like this. Do you say aberration? 377 00:21:07,359 --> 00:21:10,280 Speaker 1: Do you say it's part of our equity theory that 378 00:21:10,400 --> 00:21:13,960 Speaker 1: we have, It's part of our sentiment measures, which I 379 00:21:14,000 --> 00:21:15,800 Speaker 1: do believe that you have to have a pretty strong 380 00:21:15,840 --> 00:21:18,000 Speaker 1: handle on what sentiment is in order to get a 381 00:21:18,000 --> 00:21:20,399 Speaker 1: pretty decent beat on where prices are going to go. 382 00:21:21,000 --> 00:21:23,040 Speaker 1: I mean, frankly, everyone piled on the end of the 383 00:21:23,080 --> 00:21:25,639 Speaker 1: boat that is very, very bearish, and the results is 384 00:21:25,680 --> 00:21:28,600 Speaker 1: your downside is fairly limited. Now your upside is going 385 00:21:28,640 --> 00:21:32,120 Speaker 1: to be framed by a case of beating those low expectations. 386 00:21:32,119 --> 00:21:33,600 Speaker 1: Which I think we're going through. Over the course of 387 00:21:33,640 --> 00:21:36,840 Speaker 1: the last few weeks, more than SPI companies have been 388 00:21:36,880 --> 00:21:42,000 Speaker 1: earnings expectations. I did not know that. Yeah, Um, eight 389 00:21:42,040 --> 00:21:45,240 Speaker 1: of eleven economic sectors are beating expectations. Energy is still 390 00:21:45,240 --> 00:21:48,639 Speaker 1: a huge wink weak link, But in general things are 391 00:21:48,640 --> 00:21:51,160 Speaker 1: coming in better than poor forecast. Can I get out 392 00:21:51,160 --> 00:21:54,119 Speaker 1: of triple leverage? Dog cash? I think you might have 393 00:21:54,119 --> 00:21:56,520 Speaker 1: wanted to do that a few year dollar cost origin 394 00:21:56,720 --> 00:21:58,560 Speaker 1: a few get years ago might be telling Jane if 395 00:21:58,600 --> 00:22:02,400 Speaker 1: something happened this week too high profile misses, Caterpillar, Amazon, 396 00:22:02,720 --> 00:22:05,480 Speaker 1: gap blah, what you expect that? Then as the session progressed, 397 00:22:05,520 --> 00:22:07,879 Speaker 1: we started to fill the gap. Yes, something about the 398 00:22:07,920 --> 00:22:11,840 Speaker 1: way investors responded to data and information and earnings shifted 399 00:22:12,119 --> 00:22:14,240 Speaker 1: in the last couple of weeks. What's your take on it? Well, 400 00:22:14,240 --> 00:22:16,480 Speaker 1: I think I think a lot of it was really 401 00:22:16,480 --> 00:22:19,640 Speaker 1: over the last several months, investors fled any port any 402 00:22:19,680 --> 00:22:21,960 Speaker 1: type of risk. I mean, you had just persistent out 403 00:22:21,960 --> 00:22:26,359 Speaker 1: performance in very defensive strategies, bonds out performing equities within 404 00:22:26,400 --> 00:22:29,640 Speaker 1: the equity market, defensive shares out performing cyclical shares. So 405 00:22:30,119 --> 00:22:32,720 Speaker 1: part of it is just this frame the setup coming 406 00:22:32,720 --> 00:22:36,080 Speaker 1: into earnings was very, very bearish. There was an expectation 407 00:22:36,080 --> 00:22:38,240 Speaker 1: we were going to fall into an earnings recession and 408 00:22:38,280 --> 00:22:41,919 Speaker 1: we were going to see down draft to expectations as well, 409 00:22:42,320 --> 00:22:44,280 Speaker 1: and that just hasn't happened. As a matter of fact, 410 00:22:44,320 --> 00:22:46,760 Speaker 1: forward earnings estimates are holding up much better than you 411 00:22:46,760 --> 00:22:49,480 Speaker 1: would normally see in October. October is a month where 412 00:22:49,520 --> 00:22:52,680 Speaker 1: you almost always record negative estimate revision for the year 413 00:22:52,680 --> 00:22:55,400 Speaker 1: ahead forecast, and we haven't seen that. And I think 414 00:22:55,400 --> 00:22:56,880 Speaker 1: part of it goes back to what Tom was talking 415 00:22:56,880 --> 00:22:58,879 Speaker 1: about with the European banks as an example, with the 416 00:22:58,880 --> 00:23:03,960 Speaker 1: telecoms as an example. A companies are incredibly adapted rationalizing 417 00:23:04,000 --> 00:23:07,000 Speaker 1: cost in this cycle, and the result of that is 418 00:23:07,000 --> 00:23:10,240 Speaker 1: they're not laying off enough or cutting enough expense to 419 00:23:10,880 --> 00:23:13,399 Speaker 1: really create a depression and economic growth, but at the 420 00:23:13,440 --> 00:23:16,199 Speaker 1: same time, they are cutting enough to create a bottom 421 00:23:16,200 --> 00:23:20,560 Speaker 1: and earnings and create some better marginalea going forward. At 422 00:23:20,560 --> 00:23:25,040 Speaker 1: the same time, frankly, just consensus forecasts for revenue growth 423 00:23:25,080 --> 00:23:27,920 Speaker 1: and earnings growth were far too barish headed into this quarter. 424 00:23:27,960 --> 00:23:30,199 Speaker 1: It's just not that bad. And Jenna was seeing this 425 00:23:30,240 --> 00:23:32,359 Speaker 1: sentiment shift in the ball market two leaks. So if 426 00:23:32,400 --> 00:23:35,000 Speaker 1: you think about treasuries at the moment, the bad news 427 00:23:35,280 --> 00:23:38,960 Speaker 1: is moving treasury yields to lower, less so than the 428 00:23:38,960 --> 00:23:41,360 Speaker 1: good news is moving treasury yield high. Yeah, and we're 429 00:23:41,359 --> 00:23:44,240 Speaker 1: gonna probably hear from the Fed to this week about 430 00:23:44,280 --> 00:23:46,800 Speaker 1: whether they think that people have gotten over their skis 431 00:23:46,800 --> 00:23:49,080 Speaker 1: with bearishness. I love some of the quotes in a 432 00:23:49,119 --> 00:23:52,040 Speaker 1: story about how just because people are feeling barish doesn't 433 00:23:52,040 --> 00:23:53,480 Speaker 1: mean that there's going to be a recession. There's some 434 00:23:53,520 --> 00:23:57,399 Speaker 1: pretty awesome quotes from Craig Tours of Bloomberg News writing it. 435 00:23:57,440 --> 00:23:59,600 Speaker 1: But I do have to wonder when this is going 436 00:23:59,640 --> 00:24:01,960 Speaker 1: to even now, if yields go up, whether that will 437 00:24:01,960 --> 00:24:04,639 Speaker 1: actually make stocks look worse, and whether that sort of 438 00:24:04,720 --> 00:24:07,359 Speaker 1: keep things in the range. Yeah. I think it's a 439 00:24:07,440 --> 00:24:11,040 Speaker 1: great point. We are sort of at that um position 440 00:24:11,119 --> 00:24:14,480 Speaker 1: right now where we have priced for much easier monetary policy, 441 00:24:14,480 --> 00:24:17,680 Speaker 1: we have priced for lower yields. As a result, your 442 00:24:17,720 --> 00:24:20,240 Speaker 1: future upside from equities probably needs to come from the 443 00:24:20,240 --> 00:24:22,720 Speaker 1: earning stream, because unless the Fed is going to really 444 00:24:22,720 --> 00:24:25,119 Speaker 1: push the limits even more than the bond market is expecting, 445 00:24:25,160 --> 00:24:28,320 Speaker 1: which seems highly unlikely, your your need to have price 446 00:24:28,400 --> 00:24:31,399 Speaker 1: appreciation come from the earning side. This puts the risk 447 00:24:31,640 --> 00:24:35,639 Speaker 1: really later into November December, because earnings will go on 448 00:24:35,720 --> 00:24:38,040 Speaker 1: for the next several weeks and probably will continue to 449 00:24:38,119 --> 00:24:42,359 Speaker 1: inflate UM stock prices as a result of overly barished positioning. 450 00:24:42,600 --> 00:24:45,520 Speaker 1: But going into November December, January, then you've got to say, okay, 451 00:24:45,560 --> 00:24:47,880 Speaker 1: are we going to actually continue to see this recovery 452 00:24:47,880 --> 00:24:50,040 Speaker 1: and earnings growth to power stocks? How do your advantage 453 00:24:50,080 --> 00:24:52,320 Speaker 1: quickly your gene. You've got an international field with all 454 00:24:52,359 --> 00:24:55,280 Speaker 1: of Bloomberg intelligence. I just looked at the Stockholm Exchange 455 00:24:55,640 --> 00:24:57,800 Speaker 1: set it in US to hours and it's truly a 456 00:24:57,960 --> 00:25:03,400 Speaker 1: range breakout. Are you suggesting within equities we're seeing range breakouts. 457 00:25:03,840 --> 00:25:06,920 Speaker 1: We are on the precipice of breakouts, especially in the US, 458 00:25:07,000 --> 00:25:11,320 Speaker 1: but also in a lot of underappreciated markets overseas. UM 459 00:25:11,359 --> 00:25:13,600 Speaker 1: we noticed in our scorecard, for example, you know you 460 00:25:13,680 --> 00:25:16,199 Speaker 1: usually want to be hugging US stocks in an environment 461 00:25:16,200 --> 00:25:19,159 Speaker 1: where you're a little bit more defensively stratgy sort of positioned. 462 00:25:19,560 --> 00:25:22,200 Speaker 1: In our global scorecard, we started to push into Latin 463 00:25:22,240 --> 00:25:25,919 Speaker 1: America and Canada and some areas outside of of the 464 00:25:26,000 --> 00:25:28,240 Speaker 1: US for the first time in more than six months. 465 00:25:28,280 --> 00:25:31,480 Speaker 1: In our last update. In the US, you're starting to 466 00:25:31,560 --> 00:25:36,880 Speaker 1: see breakouts occur in some cyclicals. Technology, in particular financials 467 00:25:36,960 --> 00:25:39,800 Speaker 1: is on the verge of better performance. Certainly there are 468 00:25:39,840 --> 00:25:42,880 Speaker 1: still some pretty big awful drags, like energy, but there 469 00:25:42,920 --> 00:25:45,080 Speaker 1: are names that I think are showing some signs of 470 00:25:45,080 --> 00:25:47,160 Speaker 1: life five days a week. Gina Martin Adam, she will 471 00:25:47,200 --> 00:25:51,040 Speaker 1: be with us tomorrow. We hope Bloomberg Intelligence and with equities, 472 00:25:51,040 --> 00:26:09,480 Speaker 1: the spirit of our equity coverage. Banks that stepped back 473 00:26:09,840 --> 00:26:12,600 Speaker 1: and try to think a little better. Wells Fargo has 474 00:26:12,600 --> 00:26:15,840 Speaker 1: the Wells Fargo Institute for this away from by hold 475 00:26:15,880 --> 00:26:19,280 Speaker 1: Cell and much more about the bigger picture. Sameersna jess 476 00:26:19,880 --> 00:26:23,600 Speaker 1: uh Now with the Will's Fargo Institute, Sar. I want 477 00:26:23,600 --> 00:26:26,360 Speaker 1: to talk about a single quote you've got from Mr Buffet, 478 00:26:27,119 --> 00:26:31,840 Speaker 1: The investor of today does not profit from yesterday's growth. Obviously, 479 00:26:31,920 --> 00:26:36,760 Speaker 1: we expect out what's the trek record of getting right 480 00:26:36,880 --> 00:26:40,879 Speaker 1: the expectation out into the future. It tends to be 481 00:26:41,000 --> 00:26:44,000 Speaker 1: very difficult, tom and that's really why it's more about 482 00:26:44,040 --> 00:26:47,840 Speaker 1: being prepared as opposed to trying to kind of predict 483 00:26:48,040 --> 00:26:50,520 Speaker 1: when those bearer markets and those recessions might head. And so, 484 00:26:50,920 --> 00:26:53,639 Speaker 1: you know, being almost ten years into this, you know, 485 00:26:53,800 --> 00:26:57,520 Speaker 1: very nice recovery with the markets having almost quadrupled. Um. 486 00:26:57,560 --> 00:27:00,159 Speaker 1: Really it's all about preparedness, right. Well, well, we'll kind 487 00:27:00,160 --> 00:27:01,840 Speaker 1: of crib a little bit from the boy Scouts, right 488 00:27:01,840 --> 00:27:04,960 Speaker 1: that always be prepared motto um is really what makes 489 00:27:05,080 --> 00:27:07,480 Speaker 1: most sense right now? Do you live day to day 490 00:27:07,840 --> 00:27:13,800 Speaker 1: with the textbook that Sweeney Keenan's about, uh learned from, 491 00:27:13,840 --> 00:27:16,320 Speaker 1: which is a correction is ten percent of bear market? 492 00:27:16,400 --> 00:27:19,360 Speaker 1: Is eighteen? Is their new math? You know, I think 493 00:27:19,359 --> 00:27:21,600 Speaker 1: that's kind of the generally accepted principle, is about ten 494 00:27:21,600 --> 00:27:24,400 Speaker 1: percents of correction of bearer market. But you know, we've 495 00:27:24,440 --> 00:27:26,560 Speaker 1: we've for the report that we recently put out, we've 496 00:27:26,600 --> 00:27:29,040 Speaker 1: chosen kind of a closing price basis um and that's 497 00:27:29,080 --> 00:27:32,439 Speaker 1: where we just I think barely skated by last you know, 498 00:27:32,560 --> 00:27:35,119 Speaker 1: fourth quarter. But again we we have had a couple 499 00:27:35,119 --> 00:27:37,440 Speaker 1: of harrowing declines fifteen sixteen and then the one more 500 00:27:37,480 --> 00:27:40,520 Speaker 1: recently last year. Yeah, that's kind of where I want 501 00:27:40,520 --> 00:27:42,200 Speaker 1: to go. I think I'm not sure people know what 502 00:27:42,240 --> 00:27:45,600 Speaker 1: they should be preparing for. Should I be preparing for 503 00:27:46,280 --> 00:27:48,760 Speaker 1: the next three to five years of just lower returns, 504 00:27:48,840 --> 00:27:50,800 Speaker 1: not the double digit returns, or should I be pparing 505 00:27:50,840 --> 00:27:55,960 Speaker 1: for something worth something fourth quarter of like, so at 506 00:27:56,040 --> 00:27:58,359 Speaker 1: least right now, what we say from our checklist is 507 00:27:58,400 --> 00:28:01,600 Speaker 1: probably more lower growth and lower returns. But at some 508 00:28:01,640 --> 00:28:03,880 Speaker 1: point we probably will have one of those fourth quarter 509 00:28:03,920 --> 00:28:06,200 Speaker 1: of last year. You take a round number a hundred 510 00:28:06,200 --> 00:28:08,520 Speaker 1: thousand dollars, you know at some point you're gonna be 511 00:28:08,560 --> 00:28:15,080 Speaker 1: down thirty dollars. That's the game. And I would particularly 512 00:28:15,080 --> 00:28:18,840 Speaker 1: you of America have never experienced that they have no clue. 513 00:28:18,880 --> 00:28:21,960 Speaker 1: A lot of the trading desk have those have no clue. 514 00:28:22,000 --> 00:28:24,359 Speaker 1: So absolutely, which is why again this is serving to 515 00:28:24,400 --> 00:28:26,520 Speaker 1: be kind of a public service announcement of you know, 516 00:28:26,600 --> 00:28:29,080 Speaker 1: nothing in the report should shock anybody from the standpoint, 517 00:28:29,200 --> 00:28:31,840 Speaker 1: I think we all kind of know how theoretically bull 518 00:28:31,920 --> 00:28:35,280 Speaker 1: markets should end um but because it has been so long, 519 00:28:35,280 --> 00:28:36,919 Speaker 1: I think we've lost a lot of that muscle memory. 520 00:28:37,000 --> 00:28:40,440 Speaker 1: All right, So you know, oftentimes bull markets end because 521 00:28:40,720 --> 00:28:43,160 Speaker 1: the Fed ends them, whether they want to or not. 522 00:28:43,280 --> 00:28:45,600 Speaker 1: A dozen't appear that's going to be the case here. 523 00:28:45,720 --> 00:28:48,600 Speaker 1: So again, we're ten plus years into this economic cycle. 524 00:28:48,640 --> 00:28:51,040 Speaker 1: Are there sectors of the market that you feel more 525 00:28:51,040 --> 00:28:54,320 Speaker 1: comfortable with than not? We do, so we you know, 526 00:28:54,360 --> 00:28:55,880 Speaker 1: like a lot of others, you know, have kind of 527 00:28:55,880 --> 00:29:00,000 Speaker 1: gravitated more towards technology, towards consumer discretionary. We also like financials, 528 00:29:00,040 --> 00:29:01,760 Speaker 1: which have been kind of the value play of, you know, 529 00:29:01,840 --> 00:29:05,080 Speaker 1: do jour um. But more recently we've also gotten less cyclical, 530 00:29:05,120 --> 00:29:08,600 Speaker 1: so we've downgraded industrials, we downgraded energy, and we upgraded 531 00:29:08,640 --> 00:29:12,040 Speaker 1: reads and utilities. So again the typical playbook is starting 532 00:29:12,080 --> 00:29:14,680 Speaker 1: to play out. But again it's very early. I'm a 533 00:29:14,920 --> 00:29:19,600 Speaker 1: I'm what a sp X year to date? Yeah, come on, 534 00:29:19,680 --> 00:29:23,520 Speaker 1: it's a most unlovable market. Ever. All these smart guys 535 00:29:23,520 --> 00:29:27,240 Speaker 1: are modeling single digit actual assumption. You'll be lucky if 536 00:29:27,240 --> 00:29:29,920 Speaker 1: you make seven percent. You know, if you're nine percent, 537 00:29:29,960 --> 00:29:32,400 Speaker 1: you're an optimist, and we just keep going. Do you 538 00:29:32,400 --> 00:29:34,760 Speaker 1: would you just suggest a central bank fuel to the 539 00:29:34,800 --> 00:29:37,520 Speaker 1: back end of your report? You talk about asset bubbles? 540 00:29:37,560 --> 00:29:40,080 Speaker 1: Is that what we're living? The only thing we would 541 00:29:40,080 --> 00:29:41,840 Speaker 1: push back a little bit on would be, you know it, 542 00:29:42,320 --> 00:29:45,640 Speaker 1: in January we were seventy three on the SMP. So 543 00:29:45,720 --> 00:29:47,760 Speaker 1: if you look at kind of what the run rate 544 00:29:47,840 --> 00:29:49,720 Speaker 1: right the kager has been since then, I mean, really, 545 00:29:49,760 --> 00:29:51,479 Speaker 1: it would be kind of low single digits even here. 546 00:29:51,520 --> 00:29:53,320 Speaker 1: Every year the SMP is only kind of batting about 547 00:29:53,320 --> 00:29:55,840 Speaker 1: four to five. So what we would say is you've 548 00:29:55,840 --> 00:29:58,040 Speaker 1: already kind of hit that stall speed from an SMP 549 00:29:58,120 --> 00:30:02,800 Speaker 1: appreciation standpoint, But app calendar year has been a great year. 550 00:30:03,640 --> 00:30:06,440 Speaker 1: How much do you think these macro events that Tom 551 00:30:06,440 --> 00:30:08,000 Speaker 1: and I and the rest of folks in the news 552 00:30:08,000 --> 00:30:09,880 Speaker 1: business spent a lot of time talking about, whether it's 553 00:30:09,880 --> 00:30:12,520 Speaker 1: global trade, whether it's Brexit, you know, some of these 554 00:30:12,520 --> 00:30:14,800 Speaker 1: big macro geopolitical issues, how much do you think they 555 00:30:15,040 --> 00:30:18,840 Speaker 1: really have been impacting markets? We would say it impacts 556 00:30:18,840 --> 00:30:21,240 Speaker 1: the level of volatility, and it probably impacts the pe 557 00:30:21,320 --> 00:30:23,440 Speaker 1: to a certain extent as to how comfortable can I 558 00:30:23,520 --> 00:30:25,840 Speaker 1: get with the estimates out a year or two years, 559 00:30:25,880 --> 00:30:28,440 Speaker 1: three years. But really the last year or so has 560 00:30:28,480 --> 00:30:30,680 Speaker 1: been much more driven by the FED, which started with 561 00:30:30,760 --> 00:30:33,320 Speaker 1: probably a rate hike that didn't need to happen in December, 562 00:30:33,600 --> 00:30:36,200 Speaker 1: then pivoted and talked about how all of a sudden, 563 00:30:36,320 --> 00:30:39,160 Speaker 1: you know, we aren't all that close to neutral um 564 00:30:39,320 --> 00:30:41,520 Speaker 1: and now is starting to cut again as part of 565 00:30:41,560 --> 00:30:44,080 Speaker 1: a mid cycle adjustment. That's probably been the biggest theme 566 00:30:44,120 --> 00:30:46,719 Speaker 1: for markets over the last twelve months. So we're a 567 00:30:46,760 --> 00:30:49,200 Speaker 1: third in a third of the way into earnings. Is 568 00:30:49,240 --> 00:30:52,040 Speaker 1: anything causing you to spook you or or making even 569 00:30:52,080 --> 00:30:54,840 Speaker 1: maybe incrementally more positive as we kind of try grind 570 00:30:54,840 --> 00:30:57,040 Speaker 1: through these earnings. No, not really. I mean probably the 571 00:30:57,440 --> 00:30:59,680 Speaker 1: trickiest part is just the fact that earnings continue to 572 00:30:59,720 --> 00:31:03,600 Speaker 1: just decelerate and the you know, effects of tax reform 573 00:31:03,680 --> 00:31:06,120 Speaker 1: Containa Wayne. So the question continues to be for markets 574 00:31:06,200 --> 00:31:09,440 Speaker 1: is what's next, right, What's the next catalyst to drive 575 00:31:09,520 --> 00:31:11,640 Speaker 1: us meaningfully higher? And that's that's the one that we're 576 00:31:11,640 --> 00:31:16,720 Speaker 1: struggling with. Sam Smona, thanks so much for fantastic Samir 577 00:31:16,880 --> 00:31:20,960 Speaker 1: is a Wells Fargo Investment Institute senior Global market strategists. 578 00:31:22,640 --> 00:31:26,840 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 579 00:31:26,880 --> 00:31:32,240 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 580 00:31:32,280 --> 00:31:36,520 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 581 00:31:36,520 --> 00:31:40,760 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg Radio.