Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast
Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Since we have Lisa here,
Speaker 1: we figured we'd booked a whole bunch of super smart
Speaker 1: rates guests, So pream Isra is the first on our
Speaker 1: docket to join us. Pre a great to have you
Speaker 1: on the program. Um, I'm gonna kind of sit back
Speaker 1: while you and Lisa explain to me what's going on.
Speaker 1: I know that what the curve is inverted for like
Speaker 1: the third time, maybe the fourth time, right, Um, and
Speaker 1: Jay help me out. Lisa, Sorry, Lee, Lisa helped me out.
Speaker 1: Jay Powell pays attention to the three month tenure, but
Speaker 1: we're all fixated on the two year, ten year. Well, okay,
Speaker 1: so there are yield curve in versions. People. If it's
Speaker 1: waiting for this, you're seeing people really bid into the
Speaker 1: long end. There is this expectation for some sort of recession.
Speaker 1: But the thing that really has struck me in Matt.
Speaker 1: You know, to me, the fascinating aspect is that people
Speaker 1: are already pricing in rate cuts, and a lot of
Speaker 1: people are pushing back and saying it is too soon
Speaker 1: to predict the FED will curtail their rate hiking cycle.
Speaker 1: Can you weigh in on that, this idea that there
Speaker 1: is going to be some sort of retracement of a
Speaker 1: federal reserve that is dead set uncurtailing inflation. Sure, thanks
Speaker 1: for having me, and I love all the rich talc.
Speaker 1: It's it's really the heart of the issue right now.
Speaker 1: So you know, I think it's fair the market pricing
Speaker 1: in these cuts. What I struggled with not so much
Speaker 1: as the concern. I mean, the FED is likely to
Speaker 1: hike at the fastest space into the highest level really
Speaker 1: since the nineties, so it is a significant amount of frightening.
Speaker 1: We also have balance sheet run off, so there is
Speaker 1: a lot of tightening, and so I think the concern
Speaker 1: about growth and the consumer six months out, one year out,
Speaker 1: I think is legitimate, and which is why we're actually
Speaker 1: long long and real rates. We went long last week.
Speaker 1: What I struggled with is the pricing and of rate cuts.
Speaker 1: I think the FED is telling us, and I'm taking
Speaker 1: them at face value. They've changed their reaction function. They
Speaker 1: care about inflation unconditionally, which means, even though they know
Speaker 1: that they have a dual mandate, if growth slows down,
Speaker 1: I think they'll view it as collateral damage. They really
Speaker 1: have to get price stability and their inflation credibility back
Speaker 1: on track. So if inflation stays higher, we're looking for
Speaker 1: another actually above consensus headline inflation number this week. We're
Speaker 1: concerned that that's going to make the FED continue to hike,
Speaker 1: and I think the market pricing and cuts right after
Speaker 1: the last hike that I struggled with, I think they're
Speaker 1: going to stay on hold for a while, so that
Speaker 1: inversion that Matt's talking about. I think that inversion stays
Speaker 1: deepens further because we're all going to wait for the
Speaker 1: FED to respond to slower growth, and they're going to
Speaker 1: be their hands are a bit tied until inflation gets
Speaker 1: closer to percent. I don't think they'll have that. It's
Speaker 1: two percent the number that we're looking for pre I
Speaker 1: was reading a note from Ben Emmons over at Medley
Speaker 1: Advisors this weekend, and he says, um an unemployment rate
Speaker 1: of sorry, uh uh, an inflation rate of three point
Speaker 1: six percent would be three and a half percent would
Speaker 1: be headed in the right direction. I think it's headed
Speaker 1: in the right direction. It can help them slow down
Speaker 1: the place of hikes like we're looking for after this
Speaker 1: fifties twenty five. But I think to ease you have
Speaker 1: to have two percent very clearly in front of you.
Speaker 1: I think three and a half is still too high.
Speaker 1: I mean, if we're a two and a half, that's
Speaker 1: a big decline and growth is slowing significantly. I think
Speaker 1: that might be mode level where they can cut. But
Speaker 1: absolutely I think getting to three three and a half,
Speaker 1: they'll say, look, their success, our tightening is having an impact.
Speaker 1: We can slow down, we can pause the hiking cycle.
Speaker 1: I think cutting is just a higher hurdle. Right. We're
Speaker 1: speaking with Permsra Ahead of Rates Strategy over at TV Securities.
Speaker 1: Prior earlier this morning, we were speaking with Sonalza Sai,
Speaker 1: a Franklin Templeton who said she expects inflation headline and
Speaker 1: c p I to remain at about seven and a
Speaker 1: half to eight percent at year end. What kind of
Speaker 1: FED funds rate would that imply if the Fed really
Speaker 1: saw that inflation, Yes, was trending down, but only by
Speaker 1: about a percentage point. Oh that's not a good That's
Speaker 1: much higher than our forecast. We've got FED funds closed
Speaker 1: like three seventy five by your en four percent biole
Speaker 1: next year with a five and a half percent cp I.
Speaker 1: So if you're telling me it's seven percent, I mean
Speaker 1: I don't think we go up necessarily a lot more
Speaker 1: than four four and a quarter, but I think it's
Speaker 1: going to make that it makes it very hard for
Speaker 1: the Fed to sound responsive to growth. Let's say, let's
Speaker 1: sort of reframe this in terms of the CPI print
Speaker 1: that we get this week on Wednesday. Is the risk
Speaker 1: of possible upside or a downside surprise? What's the bigger
Speaker 1: risk based on market positioning for rates? I actually think,
Speaker 1: I mean we're looking for upside surprise because I think
Speaker 1: even though oil prices have fallen, they didn't really fall
Speaker 1: in June. But I think the markets more vulnerable to
Speaker 1: a weaker surprise, meaning you know, we were sort of
Speaker 1: we've priced in high inflation, and so if you start
Speaker 1: to see weaker inflation prints, I think these FED hikes
Speaker 1: start to get taken out. The idea maybe the touts
Speaker 1: pricing will go down, but I do think rates will fall.
Speaker 1: I mean we've risen a lot, even in the front end,
Speaker 1: so I think now with growth concerns sort of front
Speaker 1: and center, a weaker inflation, and I should say it's
Speaker 1: not just headline, it's core, and it's details of the core.
Speaker 1: If all the decline is driven by airline fares, I
Speaker 1: think the market should ignore it. If it's driven by
Speaker 1: shelter service inflation, the consumer is pulling back and therefore
Speaker 1: service inflation is slowing down. I think the market is
Speaker 1: going to say, great, now the FED can slow down
Speaker 1: hikes and that doesn't result in a recession. And so
Speaker 1: I think some of the real move this, you know,
Speaker 1: inversion of the curve or over the FED over doing
Speaker 1: it risk. I think that starts to come off. I
Speaker 1: think it's truly for it. I think we only see
Speaker 1: that sign closer to your end, but but that's the risk.
Speaker 1: Pria thanks so much for joining us. Pre A Miser
Speaker 1: their managing director and global head of rate strategy at
Speaker 1: t D Securities. So, Lisa, I saw that interview they
Speaker 1: do with Nale Decide this morning. I thought it was
Speaker 1: fantastic and both Priya and Sinale are have been going
Speaker 1: long on the long end of the curve, right is
Speaker 1: that is that consensus right now? Basically people see a
Speaker 1: more consistent outlook over the next ten to thirty years
Speaker 1: than they do over the next two months. That's my
Speaker 1: takeaway as we look at a market that is highly
Speaker 1: tollowed off, as we look at that market, and as
Speaker 1: we focus on Way. Paul Sweeney is out this week
Speaker 1: on the Big Island. Lisa just came back. Magnum p I.
Speaker 1: The Robin's nest was demolished in two thousand eighteen. This
Speaker 1: is Bloomberg. Let's go to Darway cong right now and
Speaker 1: talk about the commodities portion of that equation. He's a
Speaker 1: portfolio manager and head of Commodities over at d w
Speaker 1: S Group. Darway. Thanks so much for joining us. Um
Speaker 1: are we seeing commodities prices turned down? I've seen charts
Speaker 1: recently the show. You know, not just the aggs, but
Speaker 1: also the metals and the oils start to turn over,
Speaker 1: even though we still have this natural gas story in Europe.
Speaker 1: Uh Hi, Matt, thank you for inviting me today. Yes,
Speaker 1: we do see quite a bit of a correction recently
Speaker 1: across the board across all commodities and your rights across
Speaker 1: energy complexes, cross based metal and certainly agriculture as well.
Speaker 1: But we do think the drivers behind each part of
Speaker 1: the sector is different, so plus energy. Clearly energy is
Speaker 1: most directly related to people's concerns about the session and
Speaker 1: the demand correct in there. It could be very severe
Speaker 1: should we have a deep prolonged recession, but we do
Speaker 1: think right now that's a little bit overdone from the
Speaker 1: energy price correction perspective. On the natural gas side versus oil,
Speaker 1: US natural gas price corrected much more than the global
Speaker 1: natural gas price actually going opposite direction. Large part of
Speaker 1: that is driven by the recent vire freeport that caused
Speaker 1: the export to slow down, and we do think once
Speaker 1: to export blockage, what to reverse welcome to see the
Speaker 1: export pick up again, and then probably energy price, especially
Speaker 1: metural gas price wor pick up again as well. Darway's
Speaker 1: taking on the crude story on the oil, not the gas.
Speaker 1: I'm wondering what the floor and what the ceiling is
Speaker 1: for your expectations at this point, given that just a
Speaker 1: few months ago you saw the potential for a hundred
Speaker 1: and fifty five barrel and Brent and now we're seeing
Speaker 1: recession concerns overwhelmed some of the demand issues and really
Speaker 1: caused the clients. Um, that's a very good question of
Speaker 1: our earlier assumption really comes from the unknown from how
Speaker 1: much would the Russian oil be off market? I think
Speaker 1: at the beginning of March there has really been very
Speaker 1: little clarity about how deep the sension could go and
Speaker 1: how much impact there are in terms of just ability
Speaker 1: for for replacement for the oil. But we have found
Speaker 1: since then, and I think the market recognized that is
Speaker 1: the exports from Russia has been disrupted, but not to
Speaker 1: the large degree that could have happened. And then even
Speaker 1: though Europe is about to impose more ascension hasn't started yet,
Speaker 1: so Europe is still buying oil from Russia. UM that
Speaker 1: that replacement of demands from Asia has been very palpable
Speaker 1: and was a increase buying from both India and China.
Speaker 1: They can take up what the Europe doesn't buy. So
Speaker 1: we're seeing less supply disruption than earlier expected. So that's
Speaker 1: why the price has declined. What's your outlook for China
Speaker 1: and how much does that play into the price because
Speaker 1: they've been locked down and I know, Um, that's also
Speaker 1: stopped a lot of driving demand. Uh trying. That's an
Speaker 1: interesting story because in terms of the crew purchase, they
Speaker 1: actually haven't declined very much, so the country is still
Speaker 1: important crewe uh even though the demand part is impacted
Speaker 1: directly because of the traffic constraint. Um we're seeing China
Speaker 1: releasing some of the products of gasoline diesel, allowed that
Speaker 1: to export out of China recently. Still very limited by
Speaker 1: allowing that to occur, so we may see some more
Speaker 1: inventory freeda from China. Chinese stories are very interesting because
Speaker 1: it is a policy issue for China in terms of
Speaker 1: the COVID constraints. So near term we see the same
Speaker 1: concern on COVID, but once that would to to change
Speaker 1: onnticipating very large spending package. We just saw one recently
Speaker 1: with a recent a large MOM program that's worth about
Speaker 1: billion US dollars that that if that would to kick in,
Speaker 1: we'll want to see sharp reversal of demand from China. Darwai,
Speaker 1: thanks so much for joining us. Darway Kung there portfolio
Speaker 1: manager and head of Commodities over at d w S Group.
Speaker 1: Let's get over right now to Alex Webb Rights for
Speaker 1: Bloomberg Opinion and covers tech for us, and uh, he's
Speaker 1: going to talk about Twitter and exactly what's going on
Speaker 1: there with Elon Musk doing his you turn. I will
Speaker 1: tell you also, the Bloomberg Markets is brought to you
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Speaker 1: Commonwealth go where you grow. Visit Commonwealth dot com to
Speaker 1: learn more with that other way, Uh, let's get over
Speaker 1: to alex web and and find out what happens next.
Speaker 1: I think Alex to be fair, we none of us
Speaker 1: were really expecting Elon Musk to buy Twitter. Is that
Speaker 1: a fair statement. I mean, some people clearly were, because
Speaker 1: the share price got one stage, got very close to
Speaker 1: the offer price, but not for very long weeks and weeks,
Speaker 1: you know, not for a little while. There's been certainly
Speaker 1: a lot of very confusing messaging, and you know, Elon
Speaker 1: Musk says that she wants to buy it and then
Speaker 1: does something even before today, which seems to suggest very
Speaker 1: much the opposite. It clearly was not looking good because
Speaker 1: the the offer price was fifty four dollars twenty The
Speaker 1: share price is now in the low thirties particularly given
Speaker 1: the latest news, some analysts forecasting that it could fall
Speaker 1: as low as the low twenties. So um, just even
Speaker 1: cutting aside any Elon Must related whimsy, from pure financial perspective,
Speaker 1: it was very hard to see why he would want
Speaker 1: to do this deal. But he's already sealed it, so
Speaker 1: there was an you know, he's tied to it in
Speaker 1: a sense. Well that that's really where wanting to go,
Speaker 1: this idea that he's trying to back out of the deal.
Speaker 1: But the deal exists and is currently being debated in
Speaker 1: a Delaware chord, and you have Twitter board members saying
Speaker 1: you gotta buy this, and you've gotta buy it at
Speaker 1: fifty four and twenty cents. Is this all just a
Speaker 1: lot of drama around renegotiating price. That's hard to tell, Like,
Speaker 1: you know, that's essentially I've said this is someone earlier today.
Speaker 1: Actually that so many questions when you're going broadcasts to
Speaker 1: do with Elon Must, they ultimately come down to what
Speaker 1: is Elon thinking? And no one knows what Ellen is thinking.
Speaker 1: He may still wants to do the deal, just in
Speaker 1: a reduced form. He may not want to do the
Speaker 1: deal at all. Ultimately, I think that you know it
Speaker 1: was looking over priced. Now, if he really wanted to,
Speaker 1: could he raise that money? Yeah, of course he could.
Speaker 1: He could just sell down his test or stake. Does
Speaker 1: he want to sell down his test stake? Almost certainly
Speaker 1: not so. Um, it leaves him in a pickle where
Speaker 1: clearly the Dela where court is going to have to
Speaker 1: make some sort of decision. I think this would be
Speaker 1: one of the if not the biggest decision of this
Speaker 1: nature ever carried up ever taken by the court. Previously,
Speaker 1: there is evidence to suggests that they have forced these
Speaker 1: deals through. The case law that most people tend to
Speaker 1: site is in the meat industry twenty years ago, where
Speaker 1: a company had agreed a deal, the market collapsed and
Speaker 1: then they tried to say, oh, well you weren't didn't
Speaker 1: provide us ironically with full data, which it sounds very
Speaker 1: similar to what Ellen has been saying. And they were
Speaker 1: forced to do the deal anyway. And so, but that
Speaker 1: was a third three point two billion dollars deal. This
Speaker 1: is a forty four billion dollar deal. So there's a huge,
Speaker 1: huge difference there. Um, can he not simply pay the
Speaker 1: billion dollar breakup fee and walk away? I mean, he's
Speaker 1: super rich, right, It would be an expensive, um sort
Speaker 1: of mistake. I guess we would see there's a mistake.
Speaker 1: He probably wouldn't. But can he do that? Not if
Speaker 1: Twitter doesn't agree to it? Right? If they they? If
Speaker 1: Twitter saying look, you you've agreed to do this deal,
Speaker 1: you have to do this deal now. If the thing
Speaker 1: is with a breakup fee, is that is when both
Speaker 1: sides of the of the agreements say, oh, for whatever reason,
Speaker 1: we code determined that this is not going to work,
Speaker 1: for whatever the reasons might be, but irrespect to that,
Speaker 1: you've got to pay the breakup fee. For instance, that
Speaker 1: would be if for antitrust reasons they weren't allowed to
Speaker 1: do the deal. You'd still have to pay the breakup
Speaker 1: fee because you know, you've endured some damage over course
Speaker 1: that time. But just the buyer not one to do
Speaker 1: the deal. That is not enough to go actually the
Speaker 1: breakup fee and be done with it. Is there anyone
Speaker 1: standing by waiting in the wings? Any white night here,
Speaker 1: um even maybe a beige night. Well, we've not seen
Speaker 1: any big names reported, but there is over the years,
Speaker 1: there's been any any amount of speculation, you know, big
Speaker 1: names like Google for instance. Hard to see how that
Speaker 1: would be doable from an antitrust perspective, given that fundamentally
Speaker 1: YouTube is a social media channel. Um, but there are
Speaker 1: you hear some of these names like Oracle or sales Force,
Speaker 1: some less sexy names who you know clearly have the capital,
Speaker 1: and you know that far hose of data's valuable, particularly
Speaker 1: for in the advertising business, Alex. It's a bigger question,
Speaker 1: which is at what point does it become more damaging
Speaker 1: for Twitter to pursue and try to hold elon musk
Speaker 1: price tag versus cutting their losses, cutting a deal with him,
Speaker 1: letting him out, and trying to move on. And you
Speaker 1: could say that that pass that point has long since passed.
Speaker 1: They have clearly endured a lot of damage over the
Speaker 1: past few months and have in a certain amount of stasis,
Speaker 1: except I think clarity is something the shareholders almost certainly want.
Speaker 1: But if there's no path to moving the share price
Speaker 1: from the twenties and thirties to the fifties again, then
Speaker 1: this is the best deal for shareholders, right, And so
Speaker 1: that's why potentially that's why they're trying to fight for it.
Speaker 1: From the Tesla side, how concerning is it and how
Speaker 1: much do you start to hear some pushback about a
Speaker 1: CEO who can joke about an acquisition, who can make
Speaker 1: comments and make agreements without thinking them through, perhaps, or
Speaker 1: you know, just on a whim and try to backpedal
Speaker 1: just as quickly. I mean, has it had any material
Speaker 1: effect on the nuts and bolts of his business? Tesla
Speaker 1: shares are down. I think they're down something like, if
Speaker 1: I recall correctly, something like twelve percent since this this
Speaker 1: since the Twitter deal was announced. Now, whether there's a
Speaker 1: correlation between the two or whether that's the cause entirely,
Speaker 1: it is hard to say. It also suggests that all
Speaker 1: investment in Tesla is rational, which you could say isn't
Speaker 1: necessarily the case as well, when you look at some
Speaker 1: of the earnings fundamentals, it is clearly or has clearly
Speaker 1: been a distraction. But Elon runs a whole bunch of
Speaker 1: companies and they seem to distract from each other, and
Speaker 1: yet Tesla share prices where it is, so, you know,
Speaker 1: I think that the bigger risk would have been perhaps
Speaker 1: relationship with China, stuff like that. Is that, but that's
Speaker 1: probably more of a relation of risk for Twitter. I mean,
Speaker 1: there are so many different moving parts here that it's
Speaker 1: hard to kind of pin anyone down and saying that's
Speaker 1: been detrimental to this. Yes, there's so many moving parts
Speaker 1: to everything I'm finding this morning. Um. In terms of
Speaker 1: the deal, though, one thing I was thinking as I
Speaker 1: read through this over the weekend and Alex is that
Speaker 1: his friends he's got on board must be annoyed. His
Speaker 1: bankers must think, God, this guy waste so much of
Speaker 1: our time. His lawyers even must. I'm sure they're happy
Speaker 1: about the billing, but just unbelievable how much business this
Speaker 1: guy generates. Is it not hurtful to his relationships? I mean,
Speaker 1: if you're a lawyer, you're probably pretty happy, as you say, yeah,
Speaker 1: because your generates all billable hours. If your banker is
Speaker 1: a bit more complicated. It also depends where you are
Speaker 1: in the value chain. If you committed equity, then perhaps
Speaker 1: you're a little bit perturbed, although equally, did you want
Speaker 1: to be buying in at that price given the direction
Speaker 1: of travel. If you can get out of that, you
Speaker 1: might be quite happy. From the debt perspective, of course,
Speaker 1: the debt situation now, if there was a bridge, if
Speaker 1: there was bridging financing in there, and then all of
Speaker 1: a sudden you've got to find new financing. In the
Speaker 1: current climate, it would have been a significantly different ask
Speaker 1: because interest rates are so much higher. So again I'm
Speaker 1: sorry to be, you know, a little too equivocate a
Speaker 1: little bit, but it isn't a clear picture that everybody
Speaker 1: will be angry at him. I think clearly if you
Speaker 1: are Twitter, back to Lisa's original question that you know
Speaker 1: good Twitter wanted to get out of this. I'm sure
Speaker 1: Twitter is annoyed because they he's kind of come in
Speaker 1: throwing a metaphorical grenade into the business which has proven
Speaker 1: a distraction for however many months in his life, to
Speaker 1: prove a distraction for another few months. So those are
Speaker 1: the people I think are most put out right. Although
Speaker 1: you wonder how many employees really wanted to work for
Speaker 1: Elon Musk and I'll leave that a question. Alex Web,
Speaker 1: thanks so much for joining us. Alex Web their Bloomberg
Speaker 1: opinion calumnists who covers tech for us. Talking to us
Speaker 1: about the Elon Musk Twitter deal, I noticed everyone cares.
Speaker 1: Even people who are normally covering rates have commented on
Speaker 1: Twitter today shade this is Bloomberg. Let's bring in Burt
Speaker 1: White to talk about this and how it affects his
Speaker 1: market outlook, his chief strategy officer at the Carson Group
Speaker 1: and bert Um, you know, these prices are real. Um.
Speaker 1: The Fed seems pretty determined to break the back of inflation.
Speaker 1: And can we take them at their word that they're
Speaker 1: gonna do whatever it takes and offer clear and effective
Speaker 1: communication along the way. Yeah, I think you can. And
Speaker 1: I think I think what you're beginning to get a
Speaker 1: sense of is that, Um, you know what, what's causing
Speaker 1: this inflation is a bit demand, but it's released the
Speaker 1: supply side. And so I think what the Feds beginning
Speaker 1: to realize is what's just as important as their rate
Speaker 1: rising is their narrative. Right. They've got to talk pretty tough.
Speaker 1: They've got to redefine what hawk is is. I think
Speaker 1: they are doing that as best they can, and that
Speaker 1: certainly was in the minutes, and I think they're going
Speaker 1: to continue to do that because at the end of
Speaker 1: the day, Um, you can raise rates all you want, um,
Speaker 1: but the demand side is not as big an issue.
Speaker 1: It's a supply side. So the Feds just buying time
Speaker 1: here with this tough talk until the supply chains begin
Speaker 1: to loosen up a bit, which we're starting to see happen.
Speaker 1: It sounds like you doubt the commitment to raising rates
Speaker 1: to the degree that a lot of people in the
Speaker 1: market currently are pricing in. Is that right? Yeah? I
Speaker 1: think I think a lot of this is talk. You know.
Speaker 1: The good news is that that the markets come down
Speaker 1: a little bit, a feed has come up a little bit,
Speaker 1: which is really what has got the market a little
Speaker 1: bit more comfortable. They were in completely different camps set
Speaker 1: in left field in La La Land, the market much
Speaker 1: more on Hawkish Land, and those two things have come
Speaker 1: together a bit um. But I do believe that the
Speaker 1: Fed wants to take a couple of really big swings
Speaker 1: at the ball um and and raise seventy five. They
Speaker 1: did that. They'll raise seventy five again. But then I
Speaker 1: think that they're gonna be a lot more moderate than
Speaker 1: what I think that people think they will be. Um,
Speaker 1: at least the market is thinking they will be, because
Speaker 1: I think they recognize that all they can really do
Speaker 1: is reduced demand, which sends us to a recession. That's
Speaker 1: all they can do, and so they're willing to do
Speaker 1: that a bit, but they don't want to take that
Speaker 1: too far. They recognize what really is going to get
Speaker 1: us on the other end of this is the supply
Speaker 1: side beginning to open up. So how much pain do
Speaker 1: you think they're willing to let us take? I mean,
Speaker 1: so far, we really haven't seen much in terms of,
Speaker 1: you know, equity indexes, we still haven't come down to
Speaker 1: pre COVID levels, and um in terms of unemployment, we're
Speaker 1: still an incredibly low number. Right, What do you think
Speaker 1: is gonna set them off to go together direction? Yeah, well,
Speaker 1: you know, you're exactly right. They have a lot of
Speaker 1: room to operate. And and remember the FED doesn't have
Speaker 1: a scalpel. The set has baseball bats, and so they
Speaker 1: recognize that. So they have a blunt instrument. And so
Speaker 1: if they were trying to lower inflation from let's just
Speaker 1: pretend five to two, that'd be pretty tough because you
Speaker 1: need a scalpel to do that. But but moving from
Speaker 1: eight percent to two percent, have a lot of room.
Speaker 1: And so that's why I think that this soft landing
Speaker 1: is possible. So I think they're willing, just like they
Speaker 1: showed in some of the dot plots, They're willing to
Speaker 1: see employment begin to slow down and moderate. They're willing
Speaker 1: to see the unemployment rate take back up a bit UM,
Speaker 1: call that a few a few, you know, maybe a
Speaker 1: half a percentage point or so. I think they're willing
Speaker 1: to see demand come down just a little bit because
Speaker 1: that's going to take some of the pressure off of
Speaker 1: what really is going to impact this, and that is
Speaker 1: a supply chain and so UM. I do think they're
Speaker 1: they're mindful of that, but their narrative has to be tough.
Speaker 1: And that's really what's really cut out of this is. UH,
Speaker 1: they've come out with a really tough sort of stance,
Speaker 1: and I think that they're trying to just buy time
Speaker 1: that they'll do whatever it takes, UM, but they don't
Speaker 1: have the tools to fix it. They're just buying time
Speaker 1: until those uh, those real fixes on the supply side
Speaker 1: come through. Bert, my spidy sense gets the feeling that
Speaker 1: maybe your long stocks is that right? You know, UM,
Speaker 1: we're neutral rate right now, UM, but we want to
Speaker 1: start buying UM and and and listen, midterm election years
Speaker 1: are always tough. You know, this is historically go back
Speaker 1: the nineteen fifty mid term election years have been the
Speaker 1: hardest of the three year presidential cycle, and the quarters
Speaker 1: win right now are almost always tough. UM. What we
Speaker 1: usually see historically is around right before the midterm elections.
Speaker 1: That is typically the time UM to begin to see
Speaker 1: the market rally. We think that's going to happen again
Speaker 1: this time. So I think we're in for some you know,
Speaker 1: foltle up and down. Think about a decision box that
Speaker 1: this plus or minus you know, five or six percent.
Speaker 1: But at the end of the day, we think that
Speaker 1: that stocks move higher before the you know, by the
Speaker 1: end of the year, substantially higher by the end of
Speaker 1: the year, and a lot of that's going to happen
Speaker 1: in the latter parts of this year. Bert, thanks so
Speaker 1: much for joining us. Burt White, they're um talking to
Speaker 1: us from the Carson Group, where he is chief strategy Officer.
Speaker 1: Thanks for listening to the Bloomberg Mark Kids podcasts. You
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