1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,800 --> 00:00:14,880 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along 3 00:00:14,880 --> 00:00:17,240 Speaker 2: with Tom Keene. Join us each day for insight from 4 00:00:17,239 --> 00:00:20,760 Speaker 2: the best in economics, geopolitics, finance, and investment. You can 5 00:00:20,800 --> 00:00:24,439 Speaker 2: also watch the show live on YouTube. Visit the Bloomberg 6 00:00:24,480 --> 00:00:27,760 Speaker 2: Podcast channel on YouTube to see the show weekday mornings 7 00:00:27,760 --> 00:00:30,400 Speaker 2: from seven to ten Eastern Remark Global Headquarters in New 8 00:00:30,480 --> 00:00:33,720 Speaker 2: York City. Subscribe to the podcast on Apple, Spotify, or 9 00:00:33,760 --> 00:00:36,800 Speaker 2: anywhere else you listen, and as always on Bloomberg Radio, 10 00:00:36,840 --> 00:00:39,519 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. All right, 11 00:00:39,600 --> 00:00:42,080 Speaker 2: I have my all time list of over educated guests, 12 00:00:42,120 --> 00:00:44,560 Speaker 2: and our next one is certainly on this list. Okay, 13 00:00:44,960 --> 00:00:49,200 Speaker 2: So Christina Hooper, chief Global Market Strategists for Invesco undergraduate 14 00:00:49,200 --> 00:00:50,000 Speaker 2: degree from Wellesley. 15 00:00:50,360 --> 00:00:51,800 Speaker 3: That's good. I have a lot of respect that. 16 00:00:52,280 --> 00:00:54,960 Speaker 2: Then she gets some Masters and Industrial Relations from Cornell. 17 00:00:55,200 --> 00:00:57,120 Speaker 2: Not sure what that is, but I know it's good. 18 00:00:57,600 --> 00:00:59,960 Speaker 2: MBA from NYU. Okay, I think we're over doing it 19 00:01:00,240 --> 00:01:02,280 Speaker 2: there a little bit. And then not only on that, 20 00:01:02,680 --> 00:01:03,920 Speaker 2: she gets a law. 21 00:01:03,760 --> 00:01:05,440 Speaker 3: Degree from Pace University. 22 00:01:05,640 --> 00:01:06,680 Speaker 4: Oh my god, a law degree. 23 00:01:06,720 --> 00:01:08,440 Speaker 5: I did not know this I did not know that either, 24 00:01:08,520 --> 00:01:10,160 Speaker 5: so I knew she was the smartest person I talked 25 00:01:10,200 --> 00:01:10,360 Speaker 5: to you. 26 00:01:10,400 --> 00:01:11,120 Speaker 3: I know exactly. 27 00:01:11,240 --> 00:01:13,760 Speaker 2: So we appreciate getting a few minutes at Christina Hooper's time. 28 00:01:13,920 --> 00:01:16,679 Speaker 2: Hey Christina, what did you make of yesterday's trading? Was 29 00:01:16,720 --> 00:01:19,680 Speaker 2: it just kind of the market kind of blowing off 30 00:01:19,720 --> 00:01:20,399 Speaker 2: some steam here? 31 00:01:20,400 --> 00:01:21,200 Speaker 3: What did you make of that? 32 00:01:22,760 --> 00:01:25,320 Speaker 6: I think there are a lot of jitters right now, 33 00:01:26,000 --> 00:01:27,520 Speaker 6: and I think a lot of it has to do 34 00:01:27,560 --> 00:01:32,240 Speaker 6: with psychologically the fact that now markets are very confident 35 00:01:32,400 --> 00:01:36,319 Speaker 6: that the Fed is going to cut bad news becomes 36 00:01:36,440 --> 00:01:39,919 Speaker 6: bad news. You've heard it before, but it really is true. 37 00:01:40,040 --> 00:01:44,160 Speaker 6: And so any signs that this economy is weakening more 38 00:01:44,560 --> 00:01:49,560 Speaker 6: than we had initially thought is cause for a selloff, 39 00:01:49,880 --> 00:01:54,800 Speaker 6: especially among stocks that are more closely priced for perfection. 40 00:01:55,320 --> 00:01:57,800 Speaker 6: And that really is the story that we saw yesterday 41 00:01:57,840 --> 00:01:59,800 Speaker 6: and we may very well see it again today. 42 00:02:00,360 --> 00:02:02,800 Speaker 5: So it's a bad news is bad news situation when 43 00:02:02,800 --> 00:02:04,200 Speaker 5: it comes to economic data. 44 00:02:04,240 --> 00:02:05,920 Speaker 4: And then the equity market. 45 00:02:05,960 --> 00:02:09,359 Speaker 5: But it's still a slowing not a downturn, right so 46 00:02:09,520 --> 00:02:11,200 Speaker 5: I'm trying to understand the distinction. 47 00:02:11,360 --> 00:02:13,840 Speaker 4: Then when we do have some sort of big equity move. 48 00:02:15,160 --> 00:02:17,720 Speaker 6: Well, it is a slowing but keep in mind we 49 00:02:17,840 --> 00:02:23,639 Speaker 6: don't exactly know how this monetary policy tightening plays out 50 00:02:23,760 --> 00:02:29,359 Speaker 6: because of the long, variable lagged effects of monetary policy, 51 00:02:30,000 --> 00:02:35,280 Speaker 6: and so that is the underlying fear that gives markets 52 00:02:35,600 --> 00:02:39,760 Speaker 6: pause and jitters when we do get, for example, a 53 00:02:39,840 --> 00:02:46,720 Speaker 6: disappointing manufacturing PMI, or we see earnings warnings from companies, 54 00:02:46,840 --> 00:02:49,840 Speaker 6: or whatever the case may be. So I think that 55 00:02:50,080 --> 00:02:54,359 Speaker 6: right now markets are walking on eggshells, and we could 56 00:02:54,480 --> 00:02:58,640 Speaker 6: very well see this leading up to the FEDS meeting, 57 00:02:59,120 --> 00:03:02,920 Speaker 6: and again we lead up to the election. So this 58 00:03:03,080 --> 00:03:07,880 Speaker 6: should be I think a more volatile fall, one where 59 00:03:07,919 --> 00:03:13,800 Speaker 6: there's more downside potential. But I think ultimately we end 60 00:03:14,400 --> 00:03:17,960 Speaker 6: six months after the start of easing, I think we 61 00:03:18,160 --> 00:03:21,400 Speaker 6: end in a better place because that is an environment 62 00:03:21,400 --> 00:03:23,840 Speaker 6: that's supportive of risk assets. 63 00:03:23,800 --> 00:03:24,560 Speaker 3: In the near term. 64 00:03:24,760 --> 00:03:27,600 Speaker 2: Christina, how are you positioning or how are you suggesting 65 00:03:27,639 --> 00:03:31,320 Speaker 2: to your portfolio managers at Invesco that they position themselves 66 00:03:31,360 --> 00:03:34,079 Speaker 2: for I don't know the next three to six months. 67 00:03:34,080 --> 00:03:36,400 Speaker 2: Whereas you say there may be some volatility. 68 00:03:37,240 --> 00:03:40,040 Speaker 6: Well, I think there has to be. What we've been 69 00:03:40,040 --> 00:03:43,240 Speaker 6: saying to clients is it's really important to have diversification. 70 00:03:43,560 --> 00:03:46,480 Speaker 6: Sometimes you can look at periods of time and decide 71 00:03:47,160 --> 00:03:52,560 Speaker 6: it doesn't make sense anymore to be well diversified among equities, 72 00:03:52,600 --> 00:03:57,000 Speaker 6: fixed income, and alternatives. But this is a reminder that 73 00:03:57,560 --> 00:04:02,720 Speaker 6: diversification helps to smooth out follow utility, and so having 74 00:04:02,720 --> 00:04:07,000 Speaker 6: that exposure outside the US in the equity space, and 75 00:04:07,240 --> 00:04:10,120 Speaker 6: keep in mind that there are many many investors who 76 00:04:10,160 --> 00:04:14,160 Speaker 6: probably are overweight the US simply because they're not rebalancing 77 00:04:14,280 --> 00:04:16,840 Speaker 6: frequently enough and we've had such a strong run up. 78 00:04:17,600 --> 00:04:20,400 Speaker 6: There are many clients that are likely overexposed to large 79 00:04:20,400 --> 00:04:26,400 Speaker 6: caps versus small caps, overexposed to growth versus cyclicals, overexposed 80 00:04:26,839 --> 00:04:30,960 Speaker 6: to equities versus fixed income and alternatives. So this is 81 00:04:31,000 --> 00:04:35,680 Speaker 6: an opportunity, I think, or a reminder at least to 82 00:04:35,760 --> 00:04:40,560 Speaker 6: be well diversified, but also don't be afraid of equities, 83 00:04:40,640 --> 00:04:43,760 Speaker 6: don't be afraid of risk assets. I look to ninety 84 00:04:43,800 --> 00:04:46,680 Speaker 6: five ninety six as a guide. That was the last 85 00:04:46,880 --> 00:04:50,800 Speaker 6: time the FED was actually successful and avoiding a recession 86 00:04:51,480 --> 00:04:54,720 Speaker 6: when it tightened. Now there are some conditions that are 87 00:04:54,839 --> 00:04:58,640 Speaker 6: very different than they are today, but my key takeaway 88 00:04:59,040 --> 00:05:04,360 Speaker 6: is that it easing provides a tailwind for risk assets. Now. 89 00:05:04,360 --> 00:05:07,240 Speaker 6: There wasn't much of a tailwind in ninety five ninety six. 90 00:05:07,320 --> 00:05:10,839 Speaker 6: Because the FED only gave seventy five basis points and 91 00:05:10,920 --> 00:05:14,800 Speaker 6: cuts for hiking rates three hundred basis points. We're looking 92 00:05:14,839 --> 00:05:20,320 Speaker 6: out on expectations around two hundred basis points and cuts 93 00:05:20,560 --> 00:05:23,600 Speaker 6: over the coming year, so we could have a far 94 00:05:23,680 --> 00:05:29,160 Speaker 6: more powerful engine, far more fuel to support risk assets 95 00:05:29,520 --> 00:05:30,320 Speaker 6: this time around. 96 00:05:30,640 --> 00:05:34,719 Speaker 5: I have a question, which degree did you like getting best? 97 00:05:35,920 --> 00:05:39,240 Speaker 6: I actually loved getting my MBA in finance. That was 98 00:05:39,279 --> 00:05:42,840 Speaker 6: my sweet spot, and I love taing. I did it 99 00:05:42,880 --> 00:05:45,040 Speaker 6: at night while I was working during the day, and 100 00:05:45,920 --> 00:05:47,720 Speaker 6: I found it to be a virtuous circle. 101 00:05:48,400 --> 00:05:51,320 Speaker 2: Half of Wall Street has their MBA from the Start 102 00:05:51,400 --> 00:05:52,640 Speaker 2: School in NYO. 103 00:05:52,680 --> 00:05:53,360 Speaker 3: I'm convinced. 104 00:05:53,560 --> 00:05:56,880 Speaker 2: Yeah, I mean it unbelievable program. Now not what to do, 105 00:05:56,920 --> 00:05:59,800 Speaker 2: but David, just a fantastic program. Christina, What do I 106 00:05:59,800 --> 00:06:03,160 Speaker 2: do here with fixed income? Do I sit with my 107 00:06:03,200 --> 00:06:05,640 Speaker 2: two year treasury close to four percent? Or do I 108 00:06:05,640 --> 00:06:07,400 Speaker 2: try to take some credit risk? 109 00:06:09,520 --> 00:06:12,600 Speaker 6: So I think you do both in the spirit of diversification. 110 00:06:13,760 --> 00:06:17,520 Speaker 6: There when I look at the numbers, For example, in 111 00:06:17,560 --> 00:06:20,279 Speaker 6: that six month period after the FED began easing in 112 00:06:20,400 --> 00:06:25,279 Speaker 6: ninety five, high yield did very well. But I believe 113 00:06:25,360 --> 00:06:30,000 Speaker 6: very strongly that history can often rhyme, but it's not 114 00:06:30,040 --> 00:06:33,920 Speaker 6: repeating itself. So in my opinion, I think it's important 115 00:06:33,920 --> 00:06:38,560 Speaker 6: to have some exposure to investment grade, and I also 116 00:06:38,760 --> 00:06:42,599 Speaker 6: think there's a place for treasuries. I would go longer 117 00:06:42,680 --> 00:06:47,000 Speaker 6: duration in this environment, locking in these higher yields, but 118 00:06:47,480 --> 00:06:50,440 Speaker 6: this should be an environment in which we could see 119 00:06:50,440 --> 00:06:53,480 Speaker 6: a variety of different asset classes perform well, as we 120 00:06:53,520 --> 00:06:56,640 Speaker 6: did in that six month following the FED start of 121 00:06:56,640 --> 00:06:58,200 Speaker 6: easing in July of ninety five. 122 00:06:59,360 --> 00:07:01,680 Speaker 2: All right, thank you so much for joining us, Christina. 123 00:07:01,680 --> 00:07:03,200 Speaker 2: We always love getting a few minutes of your time. 124 00:07:03,279 --> 00:07:18,440 Speaker 2: Christina Hooper, she's a chief Global market strategist at Invesco. Politics. 125 00:07:18,480 --> 00:07:22,680 Speaker 2: The election, it's here, I think three days to go 126 00:07:22,800 --> 00:07:25,480 Speaker 2: or something. I think it's important for Global Wall Street. 127 00:07:25,480 --> 00:07:27,560 Speaker 2: So let's try to figure out what it means for 128 00:07:27,600 --> 00:07:30,120 Speaker 2: Global Wall Street. Libby Control she joins it. She's a 129 00:07:30,120 --> 00:07:33,200 Speaker 2: managing director, head of Public Policy for Pimcoach. She joins 130 00:07:33,240 --> 00:07:35,960 Speaker 2: us here in our studio in New York City. Libby, 131 00:07:36,400 --> 00:07:38,400 Speaker 2: you were just mentioning how you've been traveling all over 132 00:07:38,440 --> 00:07:41,120 Speaker 2: the place talking to Pimco clients. They want to know 133 00:07:41,160 --> 00:07:44,240 Speaker 2: what you think about the election. Maybe what it means 134 00:07:44,240 --> 00:07:46,880 Speaker 2: for markets, what's been your message, Yes, so. 135 00:07:46,840 --> 00:07:49,720 Speaker 1: I would say, but there are non US clients are 136 00:07:49,760 --> 00:07:55,040 Speaker 1: really interested in both the election promise and implications, particularly 137 00:07:55,040 --> 00:07:58,320 Speaker 1: implications for debt sustainability. 138 00:07:57,720 --> 00:08:00,640 Speaker 7: For the US dollar, and then taxation. 139 00:08:01,040 --> 00:08:03,160 Speaker 1: I think what we're telling them, what we've been telling them, 140 00:08:03,480 --> 00:08:06,240 Speaker 1: is that they really needed to wait until after September 141 00:08:06,280 --> 00:08:09,120 Speaker 1: because that's actually when the polling starts firming up. It 142 00:08:09,120 --> 00:08:12,720 Speaker 1: becomes a lot more predictive in terms of kind of 143 00:08:12,760 --> 00:08:14,960 Speaker 1: providing some clarity in the race. Now we are in 144 00:08:15,000 --> 00:08:16,400 Speaker 1: September and there is no clarity. 145 00:08:16,400 --> 00:08:17,200 Speaker 4: I will just say I. 146 00:08:17,120 --> 00:08:19,800 Speaker 1: Think our message to clients now is that this really 147 00:08:19,920 --> 00:08:22,480 Speaker 1: is a is a jump ball. It will likely come 148 00:08:22,520 --> 00:08:24,640 Speaker 1: down to those six swing states that everyone has been 149 00:08:24,680 --> 00:08:27,840 Speaker 1: reading quite a bit about, particularly Pennsylvania. Pennsylvania is the 150 00:08:27,880 --> 00:08:32,360 Speaker 1: most important state in our view. There are some themes 151 00:08:32,400 --> 00:08:35,040 Speaker 1: though that sort of regardless of the election outcome, are 152 00:08:35,080 --> 00:08:37,840 Speaker 1: going to be common between the candidates. One is that 153 00:08:37,920 --> 00:08:41,560 Speaker 1: the deficits are going up regardless, and that's because the 154 00:08:41,640 --> 00:08:44,040 Speaker 1: Trump task cuts and the individual side I'll expire at 155 00:08:44,040 --> 00:08:46,959 Speaker 1: the end of next year. Maybe some of them are 156 00:08:47,000 --> 00:08:50,720 Speaker 1: going to be paid for if they are extended will 157 00:08:50,720 --> 00:08:53,080 Speaker 1: be extended, but most of them won't be, and so 158 00:08:53,160 --> 00:08:55,360 Speaker 1: that will add to the deficit. And then also importantly, 159 00:08:55,400 --> 00:08:57,760 Speaker 1: and I think people sort of forget this, but if 160 00:08:57,760 --> 00:09:00,000 Speaker 1: you just look at sort of the base case scenario 161 00:09:00,280 --> 00:09:04,960 Speaker 1: under the CBO's estimate for the nonpartisan Budget Scorekeeper in Washington, 162 00:09:05,080 --> 00:09:08,920 Speaker 1: I mean, deficits are just structurally high because of entitlement spending, 163 00:09:08,960 --> 00:09:11,960 Speaker 1: because of Medicare, of Social Security. These are really important programs, 164 00:09:11,960 --> 00:09:14,880 Speaker 1: but they're also really expensive, and neither candidate is going 165 00:09:14,880 --> 00:09:16,600 Speaker 1: to reform those. So I think the kind of the 166 00:09:16,640 --> 00:09:19,160 Speaker 1: main takeaway here is deficits are going up regardless of 167 00:09:19,160 --> 00:09:21,640 Speaker 1: who's actually going to win. And then we also think 168 00:09:21,679 --> 00:09:23,800 Speaker 1: the direction of travel on tariffs is also clear, and 169 00:09:23,880 --> 00:09:26,520 Speaker 1: export controls and sort of some of this protectionism. Of 170 00:09:26,520 --> 00:09:29,040 Speaker 1: course they're gonna be shades of gray Trump most likely 171 00:09:29,360 --> 00:09:31,840 Speaker 1: sort of more draconian than Harris, but still again. 172 00:09:31,720 --> 00:09:33,080 Speaker 7: Direction of travel here is clear. 173 00:09:33,480 --> 00:09:35,480 Speaker 5: Do you think that any of this is yet reflected 174 00:09:35,520 --> 00:09:38,080 Speaker 5: in the market. I keep obsessing about like the low 175 00:09:38,200 --> 00:09:41,800 Speaker 5: tax and high tax companies, to see if there's something 176 00:09:41,840 --> 00:09:43,760 Speaker 5: there within this and just nothing. 177 00:09:44,120 --> 00:09:46,720 Speaker 1: I would say that the only time we really started 178 00:09:46,720 --> 00:09:49,440 Speaker 1: seeing this actually price in the market was that very 179 00:09:49,480 --> 00:09:52,320 Speaker 1: short period of time in early July when it did 180 00:09:52,400 --> 00:09:57,160 Speaker 1: look like, after the debate and after the assassination attempt 181 00:09:57,160 --> 00:10:00,720 Speaker 1: of a former President Trump, that there the odds would 182 00:10:00,720 --> 00:10:03,319 Speaker 1: be a red you know, red Republican sweep. That's when 183 00:10:03,360 --> 00:10:06,480 Speaker 1: you start seeing sort of the term premium reinsert itself, 184 00:10:06,480 --> 00:10:10,199 Speaker 1: and the and the US yield curve. You started seeing 185 00:10:10,240 --> 00:10:13,200 Speaker 1: some of the sort of sector differentiation. But all of 186 00:10:13,240 --> 00:10:16,280 Speaker 1: that basically is kind of you know, collapse has gone 187 00:10:16,280 --> 00:10:20,080 Speaker 1: away effectively as this race has basically tightened and gone 188 00:10:20,080 --> 00:10:20,920 Speaker 1: back to really where. 189 00:10:20,720 --> 00:10:22,679 Speaker 7: It was in the spring, which is again just just 190 00:10:22,720 --> 00:10:23,280 Speaker 7: to jump. 191 00:10:23,160 --> 00:10:27,839 Speaker 2: Off, how about the down ballot? What happens to two 192 00:10:27,920 --> 00:10:29,360 Speaker 2: houses of Congress? What's the thinking? 193 00:10:29,559 --> 00:10:31,880 Speaker 1: Yeah, well so, and I you know, I used to 194 00:10:31,880 --> 00:10:33,400 Speaker 1: work in Washington, used to work on the Hill, so 195 00:10:33,440 --> 00:10:36,600 Speaker 1: I have a bias towards really focusing our clients on 196 00:10:36,679 --> 00:10:38,640 Speaker 1: the importance of Congress. But I really think from a 197 00:10:39,160 --> 00:10:42,080 Speaker 1: from an investor's perspective, what happens down ballot is just 198 00:10:42,160 --> 00:10:44,720 Speaker 1: as important as what happens at the top of the 199 00:10:44,320 --> 00:10:47,640 Speaker 1: ticket in many ways, particularly from a fiscal policy perspective, 200 00:10:47,679 --> 00:10:48,520 Speaker 1: tax and spending. 201 00:10:49,559 --> 00:10:50,959 Speaker 7: Again, I think it's gonna be very close. 202 00:10:51,640 --> 00:10:54,520 Speaker 1: So this is really unsatisfying, I realized, And we're not 203 00:10:54,600 --> 00:10:56,240 Speaker 1: just trying to punt on not making a call. 204 00:10:56,280 --> 00:10:58,920 Speaker 5: I really do think it's going to My grands were 205 00:10:58,920 --> 00:11:00,240 Speaker 5: talking about the Senate, the. 206 00:11:00,200 --> 00:11:01,120 Speaker 7: Senate and the House. 207 00:11:01,800 --> 00:11:03,560 Speaker 1: I think that you know, the Senate right now controlled 208 00:11:03,559 --> 00:11:05,040 Speaker 1: by one vote by Democrats. 209 00:11:05,320 --> 00:11:07,559 Speaker 7: The Senate map for Democrats. 210 00:11:07,120 --> 00:11:09,000 Speaker 1: In terms of the number of seats that they're defending, 211 00:11:09,679 --> 00:11:14,000 Speaker 1: much more difficult than for Republicans, and so very likely, 212 00:11:14,760 --> 00:11:17,240 Speaker 1: you know, possible that the Democrats hold their majority, but 213 00:11:17,760 --> 00:11:20,760 Speaker 1: unlikely at this point, so likely that the Senate flips, 214 00:11:20,800 --> 00:11:23,000 Speaker 1: but again by probably just one vote, so that that 215 00:11:23,040 --> 00:11:25,440 Speaker 1: actually has implications in twenty twenty five, and then the 216 00:11:25,480 --> 00:11:29,120 Speaker 1: House again, maybe the House flips from Republican control the 217 00:11:29,120 --> 00:11:32,240 Speaker 1: Democratic control. But regardless of actually who wins, it's going 218 00:11:32,320 --> 00:11:34,280 Speaker 1: to be a very narrow majority. And what we have 219 00:11:34,400 --> 00:11:36,880 Speaker 1: seen this session of Congress is that when you have 220 00:11:36,880 --> 00:11:39,960 Speaker 1: a narrow majority of especially particularly we have divided chambers, 221 00:11:40,000 --> 00:11:42,800 Speaker 1: but even if you have a Republican or Democratics sweep, 222 00:11:42,840 --> 00:11:44,640 Speaker 1: it is just difficult to get a lot done. 223 00:11:45,520 --> 00:11:49,559 Speaker 5: So exactly that gets exactly so then to that point, 224 00:11:49,880 --> 00:11:52,000 Speaker 5: does it I'm going to get a lot of hate 225 00:11:52,000 --> 00:11:52,440 Speaker 5: mail from this. 226 00:11:52,520 --> 00:11:54,119 Speaker 4: Does it matter who's in the White House. 227 00:11:54,840 --> 00:11:57,960 Speaker 1: I mean, it does matter, and particularly I just can't underscore. 228 00:11:58,920 --> 00:12:00,840 Speaker 1: I'm just you know, everybody just needs to buckle up 229 00:12:00,840 --> 00:12:03,000 Speaker 1: for next year. It is going to be a you know, 230 00:12:03,320 --> 00:12:06,840 Speaker 1: tax palooza, if you will, There will be because of 231 00:12:06,880 --> 00:12:09,000 Speaker 1: all the individual tax cuts on the Trump you know, 232 00:12:09,040 --> 00:12:11,520 Speaker 1: the Trump Task cuts from twenty seventeen expiring at the 233 00:12:11,600 --> 00:12:13,800 Speaker 1: end of twenty twenty five. Everything is going to be 234 00:12:13,840 --> 00:12:15,880 Speaker 1: on the table. The corporate tax rate is going to 235 00:12:15,920 --> 00:12:17,600 Speaker 1: be on the table, the child task credit is going 236 00:12:17,640 --> 00:12:19,280 Speaker 1: to be on the table, Carried interest is going to 237 00:12:19,280 --> 00:12:21,080 Speaker 1: be on I mean everything. So there will be a 238 00:12:21,080 --> 00:12:23,880 Speaker 1: lot of headline risk. So it does it does matter 239 00:12:24,360 --> 00:12:26,320 Speaker 1: because a lot of those things will go the way 240 00:12:26,360 --> 00:12:29,800 Speaker 1: of the White House in terms of ideology. But outside 241 00:12:29,840 --> 00:12:31,079 Speaker 1: of that, alex and this is what we're sort of 242 00:12:31,120 --> 00:12:33,720 Speaker 1: guiding our clients to is outside of the debt ceiling 243 00:12:34,600 --> 00:12:37,920 Speaker 1: you know issue, which it will be an issue sadly 244 00:12:38,200 --> 00:12:42,360 Speaker 1: early next year, always an issue, right, unfortunate, especially as 245 00:12:42,400 --> 00:12:46,000 Speaker 1: if you're a debt investor. And then also then tax 246 00:12:46,080 --> 00:12:47,679 Speaker 1: I don't I just don't think Congress is going to 247 00:12:47,720 --> 00:12:49,960 Speaker 1: be able to get very much, again, regardless of who's. 248 00:12:49,720 --> 00:12:50,160 Speaker 7: The White House. 249 00:12:50,160 --> 00:12:52,439 Speaker 1: But the White House does matter as obviously as it 250 00:12:52,480 --> 00:12:54,720 Speaker 1: relates to many other things outside of fiscal policy. 251 00:12:54,800 --> 00:12:56,480 Speaker 7: But from a tax perspective, it does matter. 252 00:12:57,160 --> 00:13:00,440 Speaker 3: Are our election is going to be this close like forever? 253 00:13:00,760 --> 00:13:03,040 Speaker 2: I mean, it seems like the last couple elections have 254 00:13:03,080 --> 00:13:05,960 Speaker 2: been you're counting votes like starting. 255 00:13:05,640 --> 00:13:08,280 Speaker 3: In two thousand. Is that kind of where the new 256 00:13:08,280 --> 00:13:09,320 Speaker 3: world is today? 257 00:13:09,600 --> 00:13:10,320 Speaker 7: I mean, it's possible. 258 00:13:10,320 --> 00:13:12,520 Speaker 1: I think it's really difficult to prognosticate this sort of 259 00:13:12,559 --> 00:13:15,640 Speaker 1: a super secular but you know, because of the geographic 260 00:13:15,720 --> 00:13:18,640 Speaker 1: sort of self sorting that we've seen in the United States, 261 00:13:19,760 --> 00:13:22,079 Speaker 1: you know, it has become and because of our sort 262 00:13:22,080 --> 00:13:26,680 Speaker 1: of highly polarized nature, it has become you know, very close, 263 00:13:26,880 --> 00:13:28,560 Speaker 1: particularly at the top of the ticket, and I do 264 00:13:28,640 --> 00:13:31,000 Speaker 1: think that will likely, you know, that will likely continue. 265 00:13:31,800 --> 00:13:33,199 Speaker 1: I mean, if you just look, you know, since the 266 00:13:33,280 --> 00:13:37,200 Speaker 1: nineteen eighties, just the number of elections where one candidate 267 00:13:37,240 --> 00:13:38,840 Speaker 1: has won the popular vote and the other candidate has 268 00:13:38,840 --> 00:13:40,600 Speaker 1: won the electoral college. But I mean, it's really quite 269 00:13:40,880 --> 00:13:43,559 Speaker 1: sort of staggering, and that is just because of sort 270 00:13:43,600 --> 00:13:46,800 Speaker 1: of the kind of polarized nation of our country. The 271 00:13:47,280 --> 00:13:48,840 Speaker 1: Senate and the House, I think are quite a little 272 00:13:48,880 --> 00:13:52,000 Speaker 1: bit different the Senate in particular, just because that is 273 00:13:52,040 --> 00:13:55,040 Speaker 1: more predicated on which seats are up and sort of 274 00:13:55,200 --> 00:13:56,640 Speaker 1: the Senate map. But in terms of the top of 275 00:13:56,640 --> 00:13:59,080 Speaker 1: the ticket, yeah, I think this is probably likely. 276 00:13:58,880 --> 00:14:00,760 Speaker 4: To But even when the stake the Senate, it's still 277 00:14:00,760 --> 00:14:01,920 Speaker 4: going to not Senate. 278 00:14:01,960 --> 00:14:05,079 Speaker 5: But the House is me zoning like it's all redistricting, right, 279 00:14:05,160 --> 00:14:06,680 Speaker 5: Like it's still all it. 280 00:14:06,760 --> 00:14:09,199 Speaker 1: Redistricting happens once every ten years, and we just went 281 00:14:09,200 --> 00:14:11,920 Speaker 1: through a registrating taking period, so that won't happen for 282 00:14:11,960 --> 00:14:14,040 Speaker 1: another ten years. But yeah, that people are, you know, 283 00:14:14,160 --> 00:14:17,000 Speaker 1: the way that state legislatures are right, are drawing these 284 00:14:17,000 --> 00:14:19,880 Speaker 1: districts more blue and more red. But I think the 285 00:14:20,000 --> 00:14:23,560 Speaker 1: upshot here for investors, maybe the silver lining is actually 286 00:14:23,560 --> 00:14:25,360 Speaker 1: that this isn't such a bad thing, right, And I 287 00:14:25,360 --> 00:14:27,600 Speaker 1: think that usually if you just look at how the 288 00:14:27,640 --> 00:14:31,080 Speaker 1: SMP market at SMP has fared since nineteen thirty three, 289 00:14:31,760 --> 00:14:35,640 Speaker 1: the market is actually does better under divided government under 290 00:14:35,760 --> 00:14:39,120 Speaker 1: very narrowly controlled government. And that's, of course that's intuitively 291 00:14:39,120 --> 00:14:39,520 Speaker 1: makes sense. 292 00:14:39,600 --> 00:14:39,680 Speaker 8: Right. 293 00:14:39,760 --> 00:14:42,160 Speaker 7: We like checks, checks and balances, and so does the market. 294 00:14:42,240 --> 00:14:44,560 Speaker 2: All Right, we had sixty three days ago more or 295 00:14:44,640 --> 00:14:46,320 Speaker 2: less Lebby Kentrell, thank you. 296 00:14:46,280 --> 00:14:49,800 Speaker 3: So much for jacky Kin as a managing. 297 00:14:49,400 --> 00:15:03,360 Speaker 2: Director, head of Public Policy at Pimcoke. All right, my 298 00:15:03,400 --> 00:15:06,800 Speaker 2: finance professor Cam Harvey at Duke, he penned this paper 299 00:15:06,800 --> 00:15:10,000 Speaker 2: about the inverted yield curve, leaving recessions and all that 300 00:15:10,040 --> 00:15:11,680 Speaker 2: kind of stuff. I don't know, we've had an inverted 301 00:15:11,720 --> 00:15:13,280 Speaker 2: yield curve for like a couple of years now. It 302 00:15:13,320 --> 00:15:17,040 Speaker 2: seems like although today the two's tens the two three 303 00:15:17,080 --> 00:15:19,680 Speaker 2: point eight five percent, the tenure three point eight three percent, 304 00:15:19,760 --> 00:15:22,760 Speaker 2: So it's kind of uninverted or kind of flattened what 305 00:15:22,760 --> 00:15:26,800 Speaker 2: the bond geeks called all astley almost disinverted, disinverted. Yeah, 306 00:15:26,840 --> 00:15:29,160 Speaker 2: I like that very good. Andrew Sizarowski, he does his 307 00:15:29,160 --> 00:15:32,280 Speaker 2: stuff for a living. He is a senior portfolio manager 308 00:15:32,320 --> 00:15:35,760 Speaker 2: Morgan Stanley Investment Management. Hey, Andrew, what does it mean 309 00:15:35,840 --> 00:15:39,040 Speaker 2: to you if anything that this yield curve is Alex 310 00:15:39,240 --> 00:15:42,000 Speaker 2: just told me is kind of disinverted right here? 311 00:15:42,040 --> 00:15:42,880 Speaker 3: Does that mean anything to you? 312 00:15:44,160 --> 00:15:44,360 Speaker 4: Yeah? 313 00:15:44,400 --> 00:15:46,600 Speaker 8: Look, I think it's the market kind of sending a 314 00:15:46,600 --> 00:15:49,320 Speaker 8: signal that the Fed's about to kind of embark on 315 00:15:49,320 --> 00:15:52,680 Speaker 8: this easing policy. You know, I myself have never kind 316 00:15:52,680 --> 00:15:55,400 Speaker 8: of been a believer in the inverted yield curve being 317 00:15:55,440 --> 00:15:58,160 Speaker 8: a kind of predictor of recessions. I think there's been 318 00:15:58,160 --> 00:16:00,360 Speaker 8: a lot of distortions over the last couple year years 319 00:16:00,960 --> 00:16:03,400 Speaker 8: between monetary policy. We had kind of QI and then 320 00:16:03,520 --> 00:16:06,320 Speaker 8: QT and just to kind of a ton of supply 321 00:16:06,440 --> 00:16:07,840 Speaker 8: it at the front end. So I think that the 322 00:16:07,920 --> 00:16:10,480 Speaker 8: inverted yeal curve this time doesn't send the same signal 323 00:16:10,520 --> 00:16:12,760 Speaker 8: that it's sent in past past cycles. But I think 324 00:16:12,840 --> 00:16:14,560 Speaker 8: the one thing that's been happening, as you mentioned, the 325 00:16:14,560 --> 00:16:17,480 Speaker 8: curve has been uninverting, and that's been sending investors a 326 00:16:17,520 --> 00:16:19,280 Speaker 8: signal that, hey, you can actually go out the yeal 327 00:16:19,360 --> 00:16:22,040 Speaker 8: curve now without giving up that same yield that you 328 00:16:22,040 --> 00:16:23,760 Speaker 8: would have just a year ago or so. So I 329 00:16:23,760 --> 00:16:25,920 Speaker 8: think that as you extend out the curve, it's getting 330 00:16:25,960 --> 00:16:27,960 Speaker 8: more and more attractive, and I think that's something that 331 00:16:28,000 --> 00:16:30,320 Speaker 8: investors should be looking to do. With the FED about 332 00:16:30,360 --> 00:16:31,640 Speaker 8: to embark on this cutting. 333 00:16:31,320 --> 00:16:34,120 Speaker 5: Cycle, with the set about to embark on a cutting cycle, 334 00:16:34,280 --> 00:16:35,600 Speaker 5: what do I do with my money? 335 00:16:35,600 --> 00:16:37,200 Speaker 4: Send it's yielding still that fu Yeah. 336 00:16:37,200 --> 00:16:39,960 Speaker 8: Look, look there's over six trillion dollars that's sitting in 337 00:16:40,120 --> 00:16:42,880 Speaker 8: money markets and that's money that again, not all of 338 00:16:42,920 --> 00:16:44,920 Speaker 8: it's going to move out the curve. But if you 339 00:16:45,040 --> 00:16:48,200 Speaker 8: stayed in that money market fund over the next sixteen 340 00:16:48,280 --> 00:16:51,880 Speaker 8: months and the FED cutting cycle played out as the 341 00:16:51,920 --> 00:16:54,800 Speaker 8: market's expecting, by the end of twenty twenty five, you're 342 00:16:54,840 --> 00:16:57,480 Speaker 8: looking at a three percent T bill rate and by 343 00:16:57,560 --> 00:16:59,920 Speaker 8: March of twenty by March of twenty five, you're looking 344 00:17:00,000 --> 00:17:02,600 Speaker 8: at four percent people rate. So while you collect that 345 00:17:02,640 --> 00:17:04,679 Speaker 8: five and a quarter percent today, if you just go 346 00:17:04,720 --> 00:17:06,960 Speaker 8: out six months or so, it's going to be dramatically lower. 347 00:17:07,000 --> 00:17:08,440 Speaker 8: So I think you do want to be moving out 348 00:17:08,440 --> 00:17:10,159 Speaker 8: the curve. I think there's a lot of places that 349 00:17:10,200 --> 00:17:11,719 Speaker 8: you can still lock in if you like that five 350 00:17:11,760 --> 00:17:13,760 Speaker 8: and a quarter percent yield today, you can actually lock 351 00:17:13,800 --> 00:17:16,640 Speaker 8: in over five percent yields without taking any credit risk 352 00:17:16,680 --> 00:17:19,119 Speaker 8: by going out into the agency mortgage backed security market. 353 00:17:19,160 --> 00:17:22,879 Speaker 8: So again, triple a government agency yielding north of five percent. 354 00:17:22,920 --> 00:17:25,119 Speaker 8: That's a place that investors should be kind of moving to, 355 00:17:25,560 --> 00:17:27,320 Speaker 8: even if they're worried about a recession. This is a 356 00:17:27,480 --> 00:17:29,159 Speaker 8: this is a kind of a natural place to go. 357 00:17:29,480 --> 00:17:31,480 Speaker 8: The other nice thing about extending out the curve is 358 00:17:31,480 --> 00:17:35,800 Speaker 8: that bonds once again as inflation declines acts as a 359 00:17:35,840 --> 00:17:38,119 Speaker 8: hedge on your risk portfolio again, and we're starting to 360 00:17:38,160 --> 00:17:40,199 Speaker 8: see that. You saw it yesterday as equity sold off, 361 00:17:40,240 --> 00:17:44,119 Speaker 8: bonds rallied. I think that's something that when inflation is moderating, 362 00:17:44,359 --> 00:17:47,040 Speaker 8: bonds kind of fit in that balanced portfolio much better. 363 00:17:47,080 --> 00:17:47,320 Speaker 3: Again. 364 00:17:48,040 --> 00:17:51,320 Speaker 2: So I'm just looking at the Bloomberg US MBS index 365 00:17:51,359 --> 00:17:54,639 Speaker 2: total return about three point eight percent year to date, 366 00:17:55,040 --> 00:17:56,240 Speaker 2: but I can do a lot better than in the 367 00:17:56,320 --> 00:17:58,240 Speaker 2: US corporate high yield market. How do you think about 368 00:17:58,320 --> 00:18:01,399 Speaker 2: high yield versus maybe again some of the mortgages that 369 00:18:01,440 --> 00:18:02,560 Speaker 2: you were talking about. 370 00:18:02,960 --> 00:18:05,199 Speaker 8: Yeah, look, I think that there's kind of when you 371 00:18:05,240 --> 00:18:07,760 Speaker 8: look at spreads and high yield, the aggregate spreads are 372 00:18:07,760 --> 00:18:09,199 Speaker 8: a bit tighter when you look on a kind of 373 00:18:09,240 --> 00:18:11,840 Speaker 8: historical average. But you got to be as I mentioned, 374 00:18:11,840 --> 00:18:13,399 Speaker 8: I think that we're heading for a kind of a 375 00:18:13,480 --> 00:18:15,720 Speaker 8: shallow kind of slow down in the economy here. So 376 00:18:15,760 --> 00:18:17,840 Speaker 8: I think this is a bond pickers market. In the 377 00:18:17,920 --> 00:18:19,840 Speaker 8: high yield market, I think you've got to be selective, 378 00:18:20,200 --> 00:18:21,679 Speaker 8: you know. We think that at the end of the day, 379 00:18:21,720 --> 00:18:23,119 Speaker 8: you want to be kind of up in quality in 380 00:18:23,160 --> 00:18:25,119 Speaker 8: that market and wait for spreads to widen out. We 381 00:18:25,240 --> 00:18:26,920 Speaker 8: just had a kind of dramatic tightening over the last 382 00:18:26,960 --> 00:18:28,880 Speaker 8: couple of weeks, and then we just saw spreads wide 383 00:18:28,920 --> 00:18:31,520 Speaker 8: out about seventeen basis points yesterday. So I think there's 384 00:18:31,520 --> 00:18:34,240 Speaker 8: going to be opportunities to kind of move more into 385 00:18:34,280 --> 00:18:36,600 Speaker 8: the high yield market. You know, I run a multisector 386 00:18:36,640 --> 00:18:38,879 Speaker 8: fund right now. We're a little underweight high yield, but 387 00:18:38,880 --> 00:18:40,560 Speaker 8: it's a space that we're looking to kind of add 388 00:18:40,560 --> 00:18:42,240 Speaker 8: on dips, and it's a space that we think will 389 00:18:42,240 --> 00:18:44,320 Speaker 8: remain attractive as yields come down. That's going to be 390 00:18:44,320 --> 00:18:47,080 Speaker 8: great for kind of companies that are borrowing and have 391 00:18:47,119 --> 00:18:49,080 Speaker 8: to kind of roll over this debt. But it's something 392 00:18:49,080 --> 00:18:50,960 Speaker 8: that again you got to kind of pick and choose 393 00:18:51,040 --> 00:18:53,040 Speaker 8: over time kind of where to add, and we think 394 00:18:53,040 --> 00:18:54,720 Speaker 8: that's a space that will get more attractive as the 395 00:18:54,760 --> 00:18:55,280 Speaker 8: year goes on. 396 00:18:55,480 --> 00:18:57,560 Speaker 5: What's so interesting in August is when we saw the 397 00:18:57,600 --> 00:18:59,399 Speaker 5: melt on and equities that spike and vicks. 398 00:18:59,400 --> 00:19:01,400 Speaker 4: We saw a little to widening out in. 399 00:19:01,400 --> 00:19:04,040 Speaker 5: Credit spreads, but not a lot, not that we'd normally 400 00:19:04,080 --> 00:19:06,600 Speaker 5: see with a jump in the VIX like that. Are 401 00:19:06,600 --> 00:19:08,639 Speaker 5: we still seeing it this time with the rollover in 402 00:19:08,640 --> 00:19:09,920 Speaker 5: equities and then jump on the vix. 403 00:19:10,880 --> 00:19:13,240 Speaker 8: Yeah, I mean, look, we saw it yesterday and as 404 00:19:13,280 --> 00:19:15,200 Speaker 8: you mentioned, there was this We had the high yield 405 00:19:15,240 --> 00:19:17,480 Speaker 8: spreads widen out to almost four hundred basis points and 406 00:19:17,480 --> 00:19:19,480 Speaker 8: then they tightened into around three hundred twenty five, and 407 00:19:19,480 --> 00:19:21,800 Speaker 8: then they widen out around seventeen basis points yesterday. So 408 00:19:22,240 --> 00:19:25,840 Speaker 8: I do think that credit markets will will move with 409 00:19:26,080 --> 00:19:27,800 Speaker 8: risk assets at the end of the day, with the 410 00:19:27,840 --> 00:19:30,560 Speaker 8: equity market. But I also think that at the same time, 411 00:19:30,960 --> 00:19:33,720 Speaker 8: it's if you're a corporation and you had turned out 412 00:19:33,720 --> 00:19:36,520 Speaker 8: your debt, let's say in twenty twenty, and you issued 413 00:19:36,520 --> 00:19:38,640 Speaker 8: a five year bond, you have to roll that over 414 00:19:38,720 --> 00:19:41,160 Speaker 8: in twenty twenty five. So I think that lower yields 415 00:19:41,200 --> 00:19:44,440 Speaker 8: are not or lower yields are not actually a bad 416 00:19:44,480 --> 00:19:47,280 Speaker 8: thing this time for corporations. It's going to be something 417 00:19:47,280 --> 00:19:49,000 Speaker 8: that they're going to use to take advantage and kind 418 00:19:49,000 --> 00:19:50,320 Speaker 8: of turn out that debt once again. 419 00:19:51,160 --> 00:19:52,639 Speaker 2: So Andrew, what do you guys that we're going to 420 00:19:52,640 --> 00:19:54,520 Speaker 2: stand the investment manageer? What do you think or how 421 00:19:54,520 --> 00:19:56,480 Speaker 2: do you think the Fed's going to proceed here? 422 00:19:56,600 --> 00:19:58,320 Speaker 3: Are they going to front load some of the rate 423 00:19:58,359 --> 00:19:58,960 Speaker 3: cuts here? 424 00:19:59,359 --> 00:20:01,840 Speaker 2: Where are they going to be I guess more systematic 425 00:20:01,880 --> 00:20:04,520 Speaker 2: twenty five basis points every meeting or every other meeting. 426 00:20:04,520 --> 00:20:05,880 Speaker 3: How do you think they're going to do this? 427 00:20:06,880 --> 00:20:09,000 Speaker 8: Look, I think that the Jolts number today is going 428 00:20:09,080 --> 00:20:11,399 Speaker 8: to be very telling, and even more important is the 429 00:20:11,440 --> 00:20:13,439 Speaker 8: payroll numbers on Friday. I think the payroll number is 430 00:20:13,440 --> 00:20:15,800 Speaker 8: going to tell you one hundred percent whether the Fed's 431 00:20:15,840 --> 00:20:18,040 Speaker 8: going to go twenty five or fifty basis points if 432 00:20:18,040 --> 00:20:20,159 Speaker 8: we get a weak number all of a sudden. You know, 433 00:20:20,240 --> 00:20:22,359 Speaker 8: right now there's about a forty percent chance priced for 434 00:20:22,480 --> 00:20:25,080 Speaker 8: a fifty basis point cut. But the FED is shifting 435 00:20:25,119 --> 00:20:28,080 Speaker 8: from an inflation like a single mandate on inflation. Over 436 00:20:28,080 --> 00:20:29,840 Speaker 8: the last two years, while they have this duel mandate, 437 00:20:29,880 --> 00:20:32,560 Speaker 8: they've been solely focused on inflation to all of a sudden, 438 00:20:32,800 --> 00:20:35,600 Speaker 8: solely focused on the labor market because inflation's coming back 439 00:20:35,600 --> 00:20:37,560 Speaker 8: in order, and the one thing that the FED wants 440 00:20:37,600 --> 00:20:39,879 Speaker 8: to do is have this soft landing. And so the 441 00:20:39,920 --> 00:20:42,680 Speaker 8: FED knows that they're well above neutral. So the Fed's 442 00:20:43,080 --> 00:20:44,520 Speaker 8: that kind of five and a quarter to five and 443 00:20:44,560 --> 00:20:47,199 Speaker 8: a half percent. At the same time, core PCE has 444 00:20:47,240 --> 00:20:49,679 Speaker 8: come down from five point six to two point six percent, 445 00:20:49,760 --> 00:20:52,960 Speaker 8: so there's been about three hundred basis points of net 446 00:20:53,000 --> 00:20:55,560 Speaker 8: tightening from as far as the Fed's concerned. So the 447 00:20:55,600 --> 00:20:57,320 Speaker 8: FED needs to kind of get going, and at the 448 00:20:57,400 --> 00:20:59,399 Speaker 8: end of the day, the market, you know, the Fed, 449 00:20:59,640 --> 00:21:02,399 Speaker 8: the FED policy operates with these long and variable lags, 450 00:21:02,400 --> 00:21:04,600 Speaker 8: So anything the FED does today won't have an immediate 451 00:21:04,640 --> 00:21:07,120 Speaker 8: transmission through the economy. It's going to take some time. 452 00:21:07,160 --> 00:21:09,480 Speaker 8: And so the Fed's turning this giant ship. It's going 453 00:21:09,560 --> 00:21:11,240 Speaker 8: to take a while to turn it. I think that 454 00:21:11,280 --> 00:21:13,040 Speaker 8: when you look at what's priced in for the market, 455 00:21:13,119 --> 00:21:15,960 Speaker 8: so around nine cuts total for the cycle, that still 456 00:21:16,000 --> 00:21:18,360 Speaker 8: puts the FED funds right north of three percent, which 457 00:21:18,440 --> 00:21:20,480 Speaker 8: keep in mind the last hiking cycle we only hiked 458 00:21:20,480 --> 00:21:22,320 Speaker 8: to two and a half percent. So even if we 459 00:21:22,359 --> 00:21:25,359 Speaker 8: are in a higher neutral rate environment, which I'm not 460 00:21:25,600 --> 00:21:28,359 Speaker 8: convinced that it's substantially higher than where we used to be, 461 00:21:28,760 --> 00:21:30,640 Speaker 8: I think at the end of the day, we're talking 462 00:21:30,640 --> 00:21:32,960 Speaker 8: about where neutral is, and if we have a slow down, 463 00:21:33,000 --> 00:21:34,920 Speaker 8: the Fed's going to go through neutral and below neutral, 464 00:21:34,920 --> 00:21:36,919 Speaker 8: and that's where the value proposition is in bonds. 465 00:21:37,040 --> 00:21:38,600 Speaker 4: All right, Andrew, appreciate it. Thanks a lot. 466 00:21:38,640 --> 00:21:53,400 Speaker 5: Andrew Cisarowski, a senior portfolio manager at Morgan Stanley Investment Management, all. 467 00:21:53,400 --> 00:21:55,879 Speaker 2: Right, your daily look at the front pages around the world. 468 00:21:55,960 --> 00:21:58,000 Speaker 2: All right, what are the guys there in the newspaper 469 00:21:58,080 --> 00:22:00,960 Speaker 2: segment Lisa mutt Teyo, I know you've got some good 470 00:22:00,960 --> 00:22:01,439 Speaker 2: stuff for us. 471 00:22:01,440 --> 00:22:02,080 Speaker 4: What do you get we do? 472 00:22:02,160 --> 00:22:05,040 Speaker 9: Okay, So remember you're talking to us about Vice president 473 00:22:05,119 --> 00:22:07,639 Speaker 9: Kamala Harris said US Steel s she remained domestically owned 474 00:22:07,680 --> 00:22:10,400 Speaker 9: and operated. Well, if Financial Times had this report out, 475 00:22:10,680 --> 00:22:14,200 Speaker 9: it's reporting that Japan's Nippon Steele has made this pledge 476 00:22:14,240 --> 00:22:17,040 Speaker 9: to promise the company would be run by Americans. So 477 00:22:17,119 --> 00:22:19,360 Speaker 9: a few things. At a promise, it pledged to appoint 478 00:22:19,480 --> 00:22:22,359 Speaker 9: a board for US Steal with a majority US citizens. 479 00:22:22,640 --> 00:22:25,280 Speaker 9: It said the board's going to include three independent directors 480 00:22:25,320 --> 00:22:28,160 Speaker 9: who are US citizens, and that that core senior management 481 00:22:28,720 --> 00:22:31,600 Speaker 9: members would be American. But here's another thing. It also 482 00:22:31,600 --> 00:22:35,000 Speaker 9: said US Steel would be owned by Nippon Steel North America, 483 00:22:35,040 --> 00:22:37,480 Speaker 9: So that's a New York based subsidiary of the company. 484 00:22:37,960 --> 00:22:40,280 Speaker 9: But then you have the Wall Street Journal now coming 485 00:22:40,320 --> 00:22:43,760 Speaker 9: out saying US Steel CEO saying the company could close 486 00:22:43,960 --> 00:22:47,200 Speaker 9: steel mills, likely move its headquarters out of Pittsburgh if 487 00:22:47,240 --> 00:22:50,879 Speaker 9: that sale to Nippon Steel collapses. So all these things 488 00:22:50,960 --> 00:22:54,680 Speaker 9: kind of coming together after what President Kamala had said. 489 00:22:54,920 --> 00:22:56,800 Speaker 5: I mean yeah, I mean they lost money for like 490 00:22:56,840 --> 00:23:01,119 Speaker 5: a decade US steel, right, higher cost prices for steel, 491 00:23:01,280 --> 00:23:04,000 Speaker 5: Like it's it's a commodity cyclical business and it is 492 00:23:04,119 --> 00:23:04,760 Speaker 5: really hard. 493 00:23:05,240 --> 00:23:08,960 Speaker 2: I mean, other than the name United States Steel, like 494 00:23:09,320 --> 00:23:11,640 Speaker 2: it's only eight billion dollar market cap company. I get 495 00:23:11,680 --> 00:23:13,480 Speaker 2: the name, I get the affinity, I get all that 496 00:23:13,480 --> 00:23:17,600 Speaker 2: stuff Pittsburgh Steel. But you know, I mean economics or 497 00:23:17,640 --> 00:23:18,320 Speaker 2: economic side. 498 00:23:18,359 --> 00:23:20,680 Speaker 5: Seems like the difference is that Cleveland Cliffs has also 499 00:23:21,119 --> 00:23:23,200 Speaker 5: offered a deal for US steel, but it wasn't as good. 500 00:23:23,240 --> 00:23:24,000 Speaker 4: Isn't it fun Steel? 501 00:23:24,040 --> 00:23:27,159 Speaker 5: So you just wonder if like Harris campaign and Biden 502 00:23:27,280 --> 00:23:28,360 Speaker 5: is going to talk more about. 503 00:23:28,119 --> 00:23:30,399 Speaker 3: That now it just seems political. You know, we'll just 504 00:23:30,480 --> 00:23:30,720 Speaker 3: let it. 505 00:23:30,760 --> 00:23:33,640 Speaker 2: I mean, the day after the election, neither side will 506 00:23:33,640 --> 00:23:34,800 Speaker 2: care just let. 507 00:23:34,640 --> 00:23:35,120 Speaker 3: The deal happen. 508 00:23:35,240 --> 00:23:35,920 Speaker 4: That's probably true. 509 00:23:37,160 --> 00:23:39,320 Speaker 9: All right, what do you got do you guys carry 510 00:23:39,320 --> 00:23:39,760 Speaker 9: around like. 511 00:23:39,720 --> 00:23:41,880 Speaker 4: The I don't like the story and I don't want 512 00:23:41,920 --> 00:23:44,600 Speaker 4: to talk about it. Yes, we have to talk about it. 513 00:23:45,400 --> 00:23:48,560 Speaker 9: Yes, Okay, it's bossing one of those So you carry 514 00:23:48,560 --> 00:23:51,560 Speaker 9: around these reusable water bottles, right, but they're like infested 515 00:23:51,600 --> 00:23:54,760 Speaker 9: with bacteria because you have to think about how I 516 00:23:55,119 --> 00:23:56,480 Speaker 9: think I wash it once a week. 517 00:23:56,560 --> 00:24:00,199 Speaker 4: That's so bad, like pop it in the starts? How 518 00:24:00,240 --> 00:24:01,119 Speaker 4: do you wash it? 519 00:24:01,480 --> 00:24:04,119 Speaker 9: You need like a little tiny baby hand, yes, or 520 00:24:04,240 --> 00:24:06,320 Speaker 9: you need the little brushes. So the bus and Globe 521 00:24:06,400 --> 00:24:08,680 Speaker 9: like laid out a plan for you, like what to do? 522 00:24:09,760 --> 00:24:10,120 Speaker 7: They say. 523 00:24:10,119 --> 00:24:13,199 Speaker 9: One of the things this Stanley Summer dishwashers safe and 524 00:24:13,240 --> 00:24:15,880 Speaker 9: some aren't. And that's like the most popular one. So 525 00:24:15,880 --> 00:24:17,480 Speaker 9: some people are popping it in the dishwasher. 526 00:24:17,520 --> 00:24:18,240 Speaker 4: You really shouldn't. 527 00:24:18,240 --> 00:24:20,480 Speaker 9: So you need, like, yes, the little tiny brush to 528 00:24:20,640 --> 00:24:22,040 Speaker 9: wash it every day. 529 00:24:22,080 --> 00:24:26,840 Speaker 10: They say, you have way deeper than how you clean it. Yes, 530 00:24:27,080 --> 00:24:29,679 Speaker 10: why do you even have it? When I was growing up, 531 00:24:29,760 --> 00:24:32,679 Speaker 10: if you were thirsty, you gotta drink of water. You 532 00:24:32,680 --> 00:24:34,960 Speaker 10: didn't have to hydrate, hydrate. 533 00:24:35,359 --> 00:24:37,760 Speaker 7: But at all, do not see how much water I drink? 534 00:24:37,920 --> 00:24:39,919 Speaker 2: I know, but I mean it's like the kids today, 535 00:24:39,920 --> 00:24:42,479 Speaker 2: they've got these huge things sitting at their desk and 536 00:24:42,520 --> 00:24:45,919 Speaker 2: they're hydrating. I mean the water fountains literally three feet away. 537 00:24:46,280 --> 00:24:49,159 Speaker 2: Why do you have this jug of water because you 538 00:24:49,200 --> 00:24:49,439 Speaker 2: have to. 539 00:24:49,480 --> 00:24:51,359 Speaker 9: Keep track of how much you're drinking. 540 00:24:51,440 --> 00:24:54,560 Speaker 3: No, you don't. If you're thirsty, then you drink some water. 541 00:24:55,000 --> 00:24:55,520 Speaker 3: That's how it was. 542 00:24:55,720 --> 00:24:58,879 Speaker 5: If you are also taking a mountain of pills and 543 00:24:59,000 --> 00:25:01,560 Speaker 5: have Asafa guy is like, I do you need a 544 00:25:01,680 --> 00:25:05,080 Speaker 5: whole glass of water with every pill you take? So 545 00:25:05,240 --> 00:25:07,440 Speaker 5: I down like those like two and a half liter 546 00:25:07,560 --> 00:25:08,960 Speaker 5: bottles when my pills. 547 00:25:09,119 --> 00:25:11,960 Speaker 3: This is a good Yeah, don't get me started on these. 548 00:25:12,080 --> 00:25:15,800 Speaker 9: You have to half your what is it half your 549 00:25:16,240 --> 00:25:17,440 Speaker 9: body weight and ounces. 550 00:25:17,600 --> 00:25:19,439 Speaker 2: That's how much you're It's always been that way. So 551 00:25:19,480 --> 00:25:21,040 Speaker 2: what have we done since the beginning of time? When 552 00:25:21,080 --> 00:25:23,240 Speaker 2: you're thirsty, you drink water. 553 00:25:23,359 --> 00:25:24,080 Speaker 3: Water. There you go. 554 00:25:24,280 --> 00:25:26,239 Speaker 5: You can't overhydrate though I read that that's the thing 555 00:25:26,240 --> 00:25:28,840 Speaker 5: and it can actually cause a physical reaction that's not good. 556 00:25:28,880 --> 00:25:30,120 Speaker 4: But you can o d on water. 557 00:25:30,440 --> 00:25:32,160 Speaker 3: This is just the right em very good. 558 00:25:32,800 --> 00:25:35,639 Speaker 7: Okayst Taylor Swift. 559 00:25:35,640 --> 00:25:36,880 Speaker 4: I don't know if your daughter is a fan. 560 00:25:37,680 --> 00:25:40,120 Speaker 9: Okay, there we go. Okay, so this is the thing 561 00:25:40,320 --> 00:25:43,600 Speaker 9: the Dodgers show. Hey, Otani could be have like that 562 00:25:43,760 --> 00:25:47,440 Speaker 9: Taylor Swift effect, because you know he joined the Dodgers 563 00:25:47,440 --> 00:25:50,560 Speaker 9: this season seven hundred million dollar deal. Right, But tourism 564 00:25:50,560 --> 00:25:53,000 Speaker 9: officials telling the Wall Street Journal he's bringing visitors to 565 00:25:53,080 --> 00:25:56,520 Speaker 9: Los Angeles as far away from his native Japan Omni 566 00:25:56,560 --> 00:26:00,600 Speaker 9: Los Angeles, California Plaza. They've been seeing bookings for Japanese 567 00:26:00,680 --> 00:26:05,440 Speaker 9: visitors jump thirty percent this summer from Expedia alone. He's 568 00:26:05,440 --> 00:26:07,760 Speaker 9: made the Dodgers this hotter ticket on the road too. 569 00:26:07,840 --> 00:26:09,560 Speaker 9: So on the road people are going to travel to 570 00:26:09,560 --> 00:26:15,080 Speaker 9: go see tour operators are selling packages featuring Dodgers games, 571 00:26:15,080 --> 00:26:16,919 Speaker 9: and then you know, if they're in first place in 572 00:26:16,960 --> 00:26:19,600 Speaker 9: their division, they now get ready for these playoff package 573 00:26:19,600 --> 00:26:21,879 Speaker 9: to get away. So all this different money kind of 574 00:26:21,880 --> 00:26:24,960 Speaker 9: going into all the talk about shoe Hey o'tani. 575 00:26:25,200 --> 00:26:27,800 Speaker 4: I bet that's cheaper than tailor sub tickets. 576 00:26:28,440 --> 00:26:29,560 Speaker 3: Right, yeah? Could he? 577 00:26:29,800 --> 00:26:32,560 Speaker 2: Here's the East coast bias. 578 00:26:33,119 --> 00:26:35,919 Speaker 3: I haven't seen him play. I'm a baseball fan. I'm 579 00:26:35,960 --> 00:26:38,360 Speaker 3: going to the Yankees next week. I haven't seen him play. 580 00:26:38,400 --> 00:26:39,840 Speaker 2: I mean, if you're on the West Coast, you might 581 00:26:39,840 --> 00:26:44,199 Speaker 2: as well be, you know, you just nobody cares, it 582 00:26:44,240 --> 00:26:44,639 Speaker 2: seems like. 583 00:26:44,640 --> 00:26:46,000 Speaker 3: But again, sho he Atani here. 584 00:26:46,040 --> 00:26:48,040 Speaker 2: I know he's huge and he's a once in a 585 00:26:48,080 --> 00:26:50,640 Speaker 2: lifetime kind of Babe ruth Ten kind of player here. 586 00:26:50,680 --> 00:26:52,800 Speaker 3: But it was on the West Coast. I just I 587 00:26:52,840 --> 00:26:55,719 Speaker 3: need to pay more attention, I think, I mean, right, 588 00:26:56,320 --> 00:26:57,399 Speaker 3: move over, Taylor swift. 589 00:26:57,680 --> 00:26:59,600 Speaker 9: I know, I don't know if they're going to be 590 00:26:59,640 --> 00:27:01,760 Speaker 9: doing will say thousand dollars tickets. 591 00:27:02,080 --> 00:27:06,159 Speaker 2: As per Ari and from the Bleachers show, he is 592 00:27:06,200 --> 00:27:09,199 Speaker 2: closing in on the first fifty home run and fifty 593 00:27:09,200 --> 00:27:11,000 Speaker 2: stolen based season ever. 594 00:27:11,240 --> 00:27:13,080 Speaker 3: Oh see, how amazing for. 595 00:27:13,040 --> 00:27:15,479 Speaker 9: A reason exactly all right, I don't know if he's 596 00:27:15,480 --> 00:27:18,760 Speaker 9: getting the friendships though, that's true and you can trade him. 597 00:27:18,840 --> 00:27:20,679 Speaker 4: I don't know, guys, I don't know what else you're 598 00:27:20,720 --> 00:27:21,080 Speaker 4: looking at. 599 00:27:21,119 --> 00:27:24,600 Speaker 9: Okay, are you drinking less wine these days? I don't 600 00:27:24,600 --> 00:27:27,080 Speaker 9: know if you guys were like wine drinkers, but you're switching. 601 00:27:26,760 --> 00:27:27,400 Speaker 4: It up, you are. 602 00:27:28,200 --> 00:27:32,040 Speaker 3: I'm into the barber Eska now we've been pouring that recently. Grape. 603 00:27:32,720 --> 00:27:34,480 Speaker 5: I mean, I drink a lot less than I used to. 604 00:27:34,600 --> 00:27:36,720 Speaker 5: Let's just put a lot. You are a lot less 605 00:27:37,080 --> 00:27:37,639 Speaker 5: and I used to. 606 00:27:38,040 --> 00:27:39,680 Speaker 3: Yeah, another we need to discussion. 607 00:27:40,520 --> 00:27:42,600 Speaker 4: Rack them up. We're them up. They're all probably. 608 00:27:44,119 --> 00:27:47,200 Speaker 9: Well, there's the thing, because people are doing Constellation brands. 609 00:27:47,800 --> 00:27:48,680 Speaker 7: They're said they weren't. 610 00:27:48,680 --> 00:27:50,280 Speaker 9: They're warning that they're going to write down the value 611 00:27:50,280 --> 00:27:51,800 Speaker 9: of its assets by as much as two and a 612 00:27:51,840 --> 00:27:54,760 Speaker 9: half billion dollars this year. So, I mean, they make 613 00:27:54,880 --> 00:27:57,359 Speaker 9: Robert Mundavi on wine, but they also do the beer 614 00:27:57,400 --> 00:27:58,280 Speaker 9: Corona MODELO. 615 00:27:58,359 --> 00:27:59,200 Speaker 7: You know, they do those two. 616 00:27:59,440 --> 00:28:01,960 Speaker 9: They say, or not as well too. But they're saying inflation, 617 00:28:02,080 --> 00:28:04,639 Speaker 9: consumers are pulling back. They're saying wine is not a 618 00:28:05,000 --> 00:28:07,840 Speaker 9: not an essential item, so people are pulling back. 619 00:28:07,840 --> 00:28:10,359 Speaker 2: I wonder if it's also like the post pandemic. People 620 00:28:10,480 --> 00:28:12,560 Speaker 2: drink more during the pandemic because they were locked up. 621 00:28:13,040 --> 00:28:13,639 Speaker 3: I remember. 622 00:28:16,680 --> 00:28:19,320 Speaker 2: What else was there to do exactly, And now people 623 00:28:19,359 --> 00:28:21,120 Speaker 2: are out and about doing stuff maybe I don't know. 624 00:28:21,200 --> 00:28:23,119 Speaker 9: Yeah, and then people are getting like a little bit 625 00:28:23,160 --> 00:28:26,080 Speaker 9: more health conscious, like wine has more sugar and more like. 626 00:28:26,000 --> 00:28:28,879 Speaker 2: Well what everybody's drinking at least down at the Jersey 627 00:28:28,880 --> 00:28:30,520 Speaker 2: shore bars or the you. 628 00:28:30,480 --> 00:28:37,240 Speaker 5: Know, the like the vodka, the Seltzer's Spike Selzer, yes, everywhere. 629 00:28:37,320 --> 00:28:37,679 Speaker 4: Yeah. 630 00:28:38,080 --> 00:28:40,080 Speaker 5: It sort of reminds me of sort of the I 631 00:28:40,200 --> 00:28:42,480 Speaker 5: p A trend and like craft beer, what like ten 632 00:28:42,560 --> 00:28:43,120 Speaker 5: years ago. 633 00:28:43,240 --> 00:28:51,600 Speaker 3: That was what do we have growing up? The Winders 634 00:28:54,800 --> 00:28:58,000 Speaker 3: girls were drinking. I was like in high school. 635 00:28:58,240 --> 00:28:59,760 Speaker 9: Now it's the hard Seltzer's because some of them have 636 00:28:59,840 --> 00:29:01,400 Speaker 9: you sugar, it's right, but. 637 00:29:01,320 --> 00:29:03,840 Speaker 5: They have like really high alcohol content. They're like five 638 00:29:03,960 --> 00:29:06,440 Speaker 5: six percent alcohol content. Yeah, yeah, some are even more. 639 00:29:06,480 --> 00:29:08,520 Speaker 4: I don't remember wine coolers having on that much short 640 00:29:08,640 --> 00:29:13,600 Speaker 4: for Zeemas. No, do they still exist? No, but yes 641 00:29:13,680 --> 00:29:14,240 Speaker 4: I did so. 642 00:29:14,440 --> 00:29:14,760 Speaker 3: All right. 643 00:29:14,840 --> 00:29:17,840 Speaker 2: That is the newspaper segment with Lisa Mitello. Thank you 644 00:29:18,040 --> 00:29:20,760 Speaker 2: so much. This is the Bloomberg Surveillance Podcast, bringing you 645 00:29:20,800 --> 00:29:23,959 Speaker 2: the best in economics, geopolitics, finance, and investment. You can 646 00:29:24,000 --> 00:29:27,520 Speaker 2: also watch the show live on YouTube. Visit the Bloomberg 647 00:29:27,520 --> 00:29:30,840 Speaker 2: Podcast channel on YouTube to see the show weekday mornings 648 00:29:30,840 --> 00:29:33,280 Speaker 2: from seven to ten Eastern from our global headquarters in 649 00:29:33,360 --> 00:29:36,520 Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify, 650 00:29:36,680 --> 00:29:39,880 Speaker 2: or anywhere else you listen, and as always on Bloomberg Radio, 651 00:29:39,960 --> 00:29:42,080 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.