Speaker 1: Bloomberg Audio Studios, podcasts, radio news, single best idea out
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Speaker 1: I know you're listening to podcasts like The Big Take.
Speaker 1: David Gura recently really strong in our politics as conversation
Speaker 1: with different politicians. Janet Yellen I thought was the Secretary
Speaker 1: of Treasury was just really prescient. But you know The
Speaker 1: Big Take twenty minute podcast. We try to slip it
Speaker 1: in with a five or six minute jewel for you
Speaker 1: of conversation. Steve Eisman darkening the door today. You knew
Speaker 1: him in The Big Short. Actually quoted a thing on
Speaker 1: The Big Short on the banks. Iiceman said, the banks, Well,
Speaker 1: it's better, but that's not where he is. He's focused
Speaker 1: on broad themes of artificial intelligence, technology, an infrastructure. That's
Speaker 1: where Steve Eisman is right now. We were focused on
Speaker 1: the FED yesterday, thanks for the huge response to the
Speaker 1: Fed decides really really extraordinary with no market reaction, and
Speaker 1: then this morning boom up we go with a bid
Speaker 1: to the market. To say the least. Jim Karen joined
Speaker 1: from Morgan Stanley talk to him about all sorts of things,
Speaker 1: including the boade and observatory. Here Jim caern On, Debt,
Speaker 1: and Powell.
Speaker 2: My view is is that if we are in an
Speaker 2: inflationary environment, and I still believe that we are in one,
Speaker 2: is inflation stable for now, then that means that the
Speaker 2: FED does not have a free shot at just cutting
Speaker 2: interest rates as aggressively without inflation picking up. And so
Speaker 2: my suspicion here again, this is a suspicion one of
Speaker 2: the things that triggered the FED to move as aggressively
Speaker 2: as they did is that they may may think that
Speaker 2: the employment situation is worse than what the data is
Speaker 2: actually telling us, and that they do need to move
Speaker 2: quickly today. So this goes back to the thought that
Speaker 2: if they go fifty, what are they telling the markets?
Speaker 2: Should we be nervous. I'm a little concerned here, and
Speaker 2: I want to be very clear about that. I want
Speaker 2: to admit that that I think the unemployment rate is
Speaker 2: probably really higher than what is actually being forecasted in
Speaker 2: the data.
Speaker 1: Boy, do we have fun with this. Jim Caron is
Speaker 1: prodigious in legitimate physics, mathematics, and astronomy out of Boden
Speaker 1: and Caltech and I'm not going to take a lot
Speaker 1: of time here, but we took it over to the
Speaker 1: geometric space. And you remember a Cartesian chart you made
Speaker 1: in school of a y axis and the x axis. Well,
Speaker 1: think about an axis coming out of the page that's
Speaker 1: a z axis, and that gets you into a thing
Speaker 1: called spherical geometry. And if you have three ideas, as
Speaker 1: mister Karen talks about there, the one he's looking at
Speaker 1: is the mystery is the labor economy. And of all
Speaker 1: our conversations today, that's sent it around to the October
Speaker 1: labor report. Week of November, Anna Wong was brilliant on that.
Speaker 1: To continue Jim Caron here again is he looks forward
Speaker 1: in the FED.
Speaker 2: This is positive for risky assets and credit spreads. Just
Speaker 2: broadly speaking, Powell is basically saying that he is going
Speaker 2: to stand behind and support this market. If we look
Speaker 2: at default rates, default rates have been coming down, specifically,
Speaker 2: Tom default rates have been coming down even in the
Speaker 2: triple C space, So even in the part of the
Speaker 2: credit market that people are worried about the most, so
Speaker 2: the lower credit echelons, triple c's, those spreads have actually
Speaker 2: started to come in as as well. Now, if that
Speaker 2: starts to happen. Then what you're going to see is
Speaker 2: a decline in the overall yield for high yield, and
Speaker 2: it makes it a very positive setup for these assets.
Speaker 2: And let's not just talk about high yield. We can
Speaker 2: also talk about private credit, private assets, all of these
Speaker 2: other things all are competing with each other for returns.
Speaker 2: So as these bond yields and these credit spreads start
Speaker 2: to come in, money is going to start to follow it.
Speaker 2: And I think this becomes positive not just for bonds,
Speaker 2: but also frequities.
Speaker 1: Jim Caeren generous half hore with us today. He is
Speaker 1: with Morgan Stanley. One of the things we've done right
Speaker 1: from the beginning. And I don't I can honestly say, folks,
Speaker 1: I don't know where this started. I think it just
Speaker 1: started out of my curiosity. That's a curiosity is an
Speaker 1: important word from Matt Winkler, who is the founder of
Speaker 1: Bloomberg News, founding anitor in chief and now at chief Emeritis.
Speaker 1: But the curiosity of who are these people and what
Speaker 1: were there like. We talked to Anna Wong today about
Speaker 1: her first moment at Berkeley with a giant Barry Keen
Speaker 1: Green of International Economics, well we talked to you know,
Speaker 1: Joe Davis shows up from Vanguard, always interesting looking at
Speaker 1: really twisted things for the giant of index funds. And
Speaker 1: you know what you got to ask Joe Davis is simple,
Speaker 1: how scared were you? Were you sitting in the chair
Speaker 1: with John Bogel The.
Speaker 3: First question he asked me first day on the job,
Speaker 3: because Joe, you need to help me help investors have
Speaker 3: a coj and framework for where we're long term earnings growth, pe,
Speaker 3: dividends and what drives interest rates? Right, and so he
Speaker 3: you know, and Tom as you well know, we are
Speaker 3: very large active fixed income managers. So our cyclical assessment
Speaker 3: of risky economy matter a lot. But I think it's
Speaker 3: really that long term. How do I think about debt,
Speaker 3: how do I think about AI? What if any what
Speaker 3: that means for corporate earnings in the portfolios we have
Speaker 3: to assemble for clients. So that's that's why I've been
Speaker 3: there for twenty years. And you know economists sometimes don't
Speaker 3: always last that long, but that's really been the big reason.
Speaker 3: And our group has grown and we have a seventy
Speaker 3: five person research organization of Anger.
Speaker 1: Joe Davis at Vanguard is sidecar right now, is he's
Speaker 1: really really studying how much of artificial intelligence will be benefit,
Speaker 1: will have impact on society looking at five and ten years.
Speaker 1: Just an extraordinary day here after the FED need to
Speaker 1: say thank you, to tell you and all of our
Speaker 1: the FED decides meeting and also of course what we're
Speaker 1: driving in the conversation each in every morning. I'm Bloomberg
Speaker 1: Surveillance again. Out on YouTube record audience yesterday. Thank you
Speaker 1: for that. Humbled by the numbers. Subscribe to Bloomberg podcast.
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