Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along
Speaker 2: with Tom Keene. Join us each day for insight from
Speaker 2: the best in economics, geopolitics, finance, and investment. You can
Speaker 2: also watch the show live on YouTube. Visit the Bloomberg
Speaker 2: Podcast channel on YouTube to see the show weekday mornings
Speaker 2: from seven to ten Eastern Remark Global Headquarters in New
Speaker 2: York City. Subscribe to the podcast on Apple, Spotify, or
Speaker 2: anywhere else you listen, and as always on Bloomberg Radio,
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. All right,
Speaker 2: I have my all time list of over educated guests,
Speaker 2: and our next one is certainly on this list. Okay,
Speaker 2: So Christina Hooper, chief Global Market Strategists for Invesco undergraduate
Speaker 2: degree from Wellesley.
Speaker 3: That's good. I have a lot of respect that.
Speaker 2: Then she gets some Masters and Industrial Relations from Cornell.
Speaker 2: Not sure what that is, but I know it's good.
Speaker 2: MBA from NYU. Okay, I think we're over doing it
Speaker 2: there a little bit. And then not only on that,
Speaker 2: she gets a law.
Speaker 3: Degree from Pace University.
Speaker 4: Oh my god, a law degree.
Speaker 5: I did not know this I did not know that either,
Speaker 5: so I knew she was the smartest person I talked
Speaker 5: to you.
Speaker 3: I know exactly.
Speaker 2: So we appreciate getting a few minutes at Christina Hooper's time.
Speaker 2: Hey Christina, what did you make of yesterday's trading? Was
Speaker 2: it just kind of the market kind of blowing off
Speaker 2: some steam here?
Speaker 3: What did you make of that?
Speaker 6: I think there are a lot of jitters right now,
Speaker 6: and I think a lot of it has to do
Speaker 6: with psychologically the fact that now markets are very confident
Speaker 6: that the Fed is going to cut bad news becomes
Speaker 6: bad news. You've heard it before, but it really is true.
Speaker 6: And so any signs that this economy is weakening more
Speaker 6: than we had initially thought is cause for a selloff,
Speaker 6: especially among stocks that are more closely priced for perfection.
Speaker 6: And that really is the story that we saw yesterday
Speaker 6: and we may very well see it again today.
Speaker 5: So it's a bad news is bad news situation when
Speaker 5: it comes to economic data.
Speaker 4: And then the equity market.
Speaker 5: But it's still a slowing not a downturn, right so
Speaker 5: I'm trying to understand the distinction.
Speaker 4: Then when we do have some sort of big equity move.
Speaker 6: Well, it is a slowing but keep in mind we
Speaker 6: don't exactly know how this monetary policy tightening plays out
Speaker 6: because of the long, variable lagged effects of monetary policy,
Speaker 6: and so that is the underlying fear that gives markets
Speaker 6: pause and jitters when we do get, for example, a
Speaker 6: disappointing manufacturing PMI, or we see earnings warnings from companies,
Speaker 6: or whatever the case may be. So I think that
Speaker 6: right now markets are walking on eggshells, and we could
Speaker 6: very well see this leading up to the FEDS meeting,
Speaker 6: and again we lead up to the election. So this
Speaker 6: should be I think a more volatile fall, one where
Speaker 6: there's more downside potential. But I think ultimately we end
Speaker 6: six months after the start of easing, I think we
Speaker 6: end in a better place because that is an environment
Speaker 6: that's supportive of risk assets.
Speaker 3: In the near term.
Speaker 2: Christina, how are you positioning or how are you suggesting
Speaker 2: to your portfolio managers at Invesco that they position themselves
Speaker 2: for I don't know the next three to six months.
Speaker 2: Whereas you say there may be some volatility.
Speaker 6: Well, I think there has to be. What we've been
Speaker 6: saying to clients is it's really important to have diversification.
Speaker 6: Sometimes you can look at periods of time and decide
Speaker 6: it doesn't make sense anymore to be well diversified among equities,
Speaker 6: fixed income, and alternatives. But this is a reminder that
Speaker 6: diversification helps to smooth out follow utility, and so having
Speaker 6: that exposure outside the US in the equity space, and
Speaker 6: keep in mind that there are many many investors who
Speaker 6: probably are overweight the US simply because they're not rebalancing
Speaker 6: frequently enough and we've had such a strong run up.
Speaker 6: There are many clients that are likely overexposed to large
Speaker 6: caps versus small caps, overexposed to growth versus cyclicals, overexposed
Speaker 6: to equities versus fixed income and alternatives. So this is
Speaker 6: an opportunity, I think, or a reminder at least to
Speaker 6: be well diversified, but also don't be afraid of equities,
Speaker 6: don't be afraid of risk assets. I look to ninety
Speaker 6: five ninety six as a guide. That was the last
Speaker 6: time the FED was actually successful and avoiding a recession
Speaker 6: when it tightened. Now there are some conditions that are
Speaker 6: very different than they are today, but my key takeaway
Speaker 6: is that it easing provides a tailwind for risk assets. Now.
Speaker 6: There wasn't much of a tailwind in ninety five ninety six.
Speaker 6: Because the FED only gave seventy five basis points and
Speaker 6: cuts for hiking rates three hundred basis points. We're looking
Speaker 6: out on expectations around two hundred basis points and cuts
Speaker 6: over the coming year, so we could have a far
Speaker 6: more powerful engine, far more fuel to support risk assets
Speaker 6: this time around.
Speaker 5: I have a question, which degree did you like getting best?
Speaker 6: I actually loved getting my MBA in finance. That was
Speaker 6: my sweet spot, and I love taing. I did it
Speaker 6: at night while I was working during the day, and
Speaker 6: I found it to be a virtuous circle.
Speaker 2: Half of Wall Street has their MBA from the Start
Speaker 2: School in NYO.
Speaker 3: I'm convinced.
Speaker 2: Yeah, I mean it unbelievable program. Now not what to do,
Speaker 2: but David, just a fantastic program. Christina, What do I
Speaker 2: do here with fixed income? Do I sit with my
Speaker 2: two year treasury close to four percent? Or do I
Speaker 2: try to take some credit risk?
Speaker 6: So I think you do both in the spirit of diversification.
Speaker 6: There when I look at the numbers, For example, in
Speaker 6: that six month period after the FED began easing in
Speaker 6: ninety five, high yield did very well. But I believe
Speaker 6: very strongly that history can often rhyme, but it's not
Speaker 6: repeating itself. So in my opinion, I think it's important
Speaker 6: to have some exposure to investment grade, and I also
Speaker 6: think there's a place for treasuries. I would go longer
Speaker 6: duration in this environment, locking in these higher yields, but
Speaker 6: this should be an environment in which we could see
Speaker 6: a variety of different asset classes perform well, as we
Speaker 6: did in that six month following the FED start of
Speaker 6: easing in July of ninety five.
Speaker 2: All right, thank you so much for joining us, Christina.
Speaker 2: We always love getting a few minutes of your time.
Speaker 2: Christina Hooper, she's a chief Global market strategist at Invesco. Politics.
Speaker 2: The election, it's here, I think three days to go
Speaker 2: or something. I think it's important for Global Wall Street.
Speaker 2: So let's try to figure out what it means for
Speaker 2: Global Wall Street. Libby Control she joins it. She's a
Speaker 2: managing director, head of Public Policy for Pimcoach. She joins
Speaker 2: us here in our studio in New York City. Libby,
Speaker 2: you were just mentioning how you've been traveling all over
Speaker 2: the place talking to Pimco clients. They want to know
Speaker 2: what you think about the election. Maybe what it means
Speaker 2: for markets, what's been your message, Yes, so.
Speaker 1: I would say, but there are non US clients are
Speaker 1: really interested in both the election promise and implications, particularly
Speaker 1: implications for debt sustainability.
Speaker 7: For the US dollar, and then taxation.
Speaker 1: I think what we're telling them, what we've been telling them,
Speaker 1: is that they really needed to wait until after September
Speaker 1: because that's actually when the polling starts firming up. It
Speaker 1: becomes a lot more predictive in terms of kind of
Speaker 1: providing some clarity in the race. Now we are in
Speaker 1: September and there is no clarity.
Speaker 4: I will just say I.
Speaker 1: Think our message to clients now is that this really
Speaker 1: is a is a jump ball. It will likely come
Speaker 1: down to those six swing states that everyone has been
Speaker 1: reading quite a bit about, particularly Pennsylvania. Pennsylvania is the
Speaker 1: most important state in our view. There are some themes
Speaker 1: though that sort of regardless of the election outcome, are
Speaker 1: going to be common between the candidates. One is that
Speaker 1: the deficits are going up regardless, and that's because the
Speaker 1: Trump task cuts and the individual side I'll expire at
Speaker 1: the end of next year. Maybe some of them are
Speaker 1: going to be paid for if they are extended will
Speaker 1: be extended, but most of them won't be, and so
Speaker 1: that will add to the deficit. And then also importantly,
Speaker 1: and I think people sort of forget this, but if
Speaker 1: you just look at sort of the base case scenario
Speaker 1: under the CBO's estimate for the nonpartisan Budget Scorekeeper in Washington,
Speaker 1: I mean, deficits are just structurally high because of entitlement spending,
Speaker 1: because of Medicare, of Social Security. These are really important programs,
Speaker 1: but they're also really expensive, and neither candidate is going
Speaker 1: to reform those. So I think the kind of the
Speaker 1: main takeaway here is deficits are going up regardless of
Speaker 1: who's actually going to win. And then we also think
Speaker 1: the direction of travel on tariffs is also clear, and
Speaker 1: export controls and sort of some of this protectionism. Of
Speaker 1: course they're gonna be shades of gray Trump most likely
Speaker 1: sort of more draconian than Harris, but still again.
Speaker 7: Direction of travel here is clear.
Speaker 5: Do you think that any of this is yet reflected
Speaker 5: in the market. I keep obsessing about like the low
Speaker 5: tax and high tax companies, to see if there's something
Speaker 5: there within this and just nothing.
Speaker 1: I would say that the only time we really started
Speaker 1: seeing this actually price in the market was that very
Speaker 1: short period of time in early July when it did
Speaker 1: look like, after the debate and after the assassination attempt
Speaker 1: of a former President Trump, that there the odds would
Speaker 1: be a red you know, red Republican sweep. That's when
Speaker 1: you start seeing sort of the term premium reinsert itself,
Speaker 1: and the and the US yield curve. You started seeing
Speaker 1: some of the sort of sector differentiation. But all of
Speaker 1: that basically is kind of you know, collapse has gone
Speaker 1: away effectively as this race has basically tightened and gone
Speaker 1: back to really where.
Speaker 7: It was in the spring, which is again just just
Speaker 7: to jump.
Speaker 2: Off, how about the down ballot? What happens to two
Speaker 2: houses of Congress? What's the thinking?
Speaker 1: Yeah, well so, and I you know, I used to
Speaker 1: work in Washington, used to work on the Hill, so
Speaker 1: I have a bias towards really focusing our clients on
Speaker 1: the importance of Congress. But I really think from a
Speaker 1: from an investor's perspective, what happens down ballot is just
Speaker 1: as important as what happens at the top of the
Speaker 1: ticket in many ways, particularly from a fiscal policy perspective,
Speaker 1: tax and spending.
Speaker 7: Again, I think it's gonna be very close.
Speaker 1: So this is really unsatisfying, I realized, And we're not
Speaker 1: just trying to punt on not making a call.
Speaker 5: I really do think it's going to My grands were
Speaker 5: talking about the Senate, the.
Speaker 7: Senate and the House.
Speaker 1: I think that you know, the Senate right now controlled
Speaker 1: by one vote by Democrats.
Speaker 7: The Senate map for Democrats.
Speaker 1: In terms of the number of seats that they're defending,
Speaker 1: much more difficult than for Republicans, and so very likely,
Speaker 1: you know, possible that the Democrats hold their majority, but
Speaker 1: unlikely at this point, so likely that the Senate flips,
Speaker 1: but again by probably just one vote, so that that
Speaker 1: actually has implications in twenty twenty five, and then the
Speaker 1: House again, maybe the House flips from Republican control the
Speaker 1: Democratic control. But regardless of actually who wins, it's going
Speaker 1: to be a very narrow majority. And what we have
Speaker 1: seen this session of Congress is that when you have
Speaker 1: a narrow majority of especially particularly we have divided chambers,
Speaker 1: but even if you have a Republican or Democratics sweep,
Speaker 1: it is just difficult to get a lot done.
Speaker 5: So exactly that gets exactly so then to that point,
Speaker 5: does it I'm going to get a lot of hate
Speaker 5: mail from this.
Speaker 4: Does it matter who's in the White House.
Speaker 1: I mean, it does matter, and particularly I just can't underscore.
Speaker 1: I'm just you know, everybody just needs to buckle up
Speaker 1: for next year. It is going to be a you know,
Speaker 1: tax palooza, if you will, There will be because of
Speaker 1: all the individual tax cuts on the Trump you know,
Speaker 1: the Trump Task cuts from twenty seventeen expiring at the
Speaker 1: end of twenty twenty five. Everything is going to be
Speaker 1: on the table. The corporate tax rate is going to
Speaker 1: be on the table, the child task credit is going
Speaker 1: to be on the table, Carried interest is going to
Speaker 1: be on I mean everything. So there will be a
Speaker 1: lot of headline risk. So it does it does matter
Speaker 1: because a lot of those things will go the way
Speaker 1: of the White House in terms of ideology. But outside
Speaker 1: of that, alex and this is what we're sort of
Speaker 1: guiding our clients to is outside of the debt ceiling
Speaker 1: you know issue, which it will be an issue sadly
Speaker 1: early next year, always an issue, right, unfortunate, especially as
Speaker 1: if you're a debt investor. And then also then tax
Speaker 1: I don't I just don't think Congress is going to
Speaker 1: be able to get very much, again, regardless of who's.
Speaker 7: The White House.
Speaker 1: But the White House does matter as obviously as it
Speaker 1: relates to many other things outside of fiscal policy.
Speaker 7: But from a tax perspective, it does matter.
Speaker 3: Are our election is going to be this close like forever?
Speaker 2: I mean, it seems like the last couple elections have
Speaker 2: been you're counting votes like starting.
Speaker 3: In two thousand. Is that kind of where the new
Speaker 3: world is today?
Speaker 7: I mean, it's possible.
Speaker 1: I think it's really difficult to prognosticate this sort of
Speaker 1: a super secular but you know, because of the geographic
Speaker 1: sort of self sorting that we've seen in the United States,
Speaker 1: you know, it has become and because of our sort
Speaker 1: of highly polarized nature, it has become you know, very close,
Speaker 1: particularly at the top of the ticket, and I do
Speaker 1: think that will likely, you know, that will likely continue.
Speaker 1: I mean, if you just look, you know, since the
Speaker 1: nineteen eighties, just the number of elections where one candidate
Speaker 1: has won the popular vote and the other candidate has
Speaker 1: won the electoral college. But I mean, it's really quite
Speaker 1: sort of staggering, and that is just because of sort
Speaker 1: of the kind of polarized nation of our country. The
Speaker 1: Senate and the House, I think are quite a little
Speaker 1: bit different the Senate in particular, just because that is
Speaker 1: more predicated on which seats are up and sort of
Speaker 1: the Senate map. But in terms of the top of
Speaker 1: the ticket, yeah, I think this is probably likely.
Speaker 4: To But even when the stake the Senate, it's still
Speaker 4: going to not Senate.
Speaker 5: But the House is me zoning like it's all redistricting, right,
Speaker 5: Like it's still all it.
Speaker 1: Redistricting happens once every ten years, and we just went
Speaker 1: through a registrating taking period, so that won't happen for
Speaker 1: another ten years. But yeah, that people are, you know,
Speaker 1: the way that state legislatures are right, are drawing these
Speaker 1: districts more blue and more red. But I think the
Speaker 1: upshot here for investors, maybe the silver lining is actually
Speaker 1: that this isn't such a bad thing, right, And I
Speaker 1: think that usually if you just look at how the
Speaker 1: SMP market at SMP has fared since nineteen thirty three,
Speaker 1: the market is actually does better under divided government under
Speaker 1: very narrowly controlled government. And that's, of course that's intuitively
Speaker 1: makes sense.
Speaker 8: Right.
Speaker 7: We like checks, checks and balances, and so does the market.
Speaker 2: All Right, we had sixty three days ago more or
Speaker 2: less Lebby Kentrell, thank you.
Speaker 3: So much for jacky Kin as a managing.
Speaker 2: Director, head of Public Policy at Pimcoke. All right, my
Speaker 2: finance professor Cam Harvey at Duke, he penned this paper
Speaker 2: about the inverted yield curve, leaving recessions and all that
Speaker 2: kind of stuff. I don't know, we've had an inverted
Speaker 2: yield curve for like a couple of years now. It
Speaker 2: seems like although today the two's tens the two three
Speaker 2: point eight five percent, the tenure three point eight three percent,
Speaker 2: So it's kind of uninverted or kind of flattened what
Speaker 2: the bond geeks called all astley almost disinverted, disinverted. Yeah,
Speaker 2: I like that very good. Andrew Sizarowski, he does his
Speaker 2: stuff for a living. He is a senior portfolio manager
Speaker 2: Morgan Stanley Investment Management. Hey, Andrew, what does it mean
Speaker 2: to you if anything that this yield curve is Alex
Speaker 2: just told me is kind of disinverted right here?
Speaker 3: Does that mean anything to you?
Speaker 4: Yeah?
Speaker 8: Look, I think it's the market kind of sending a
Speaker 8: signal that the Fed's about to kind of embark on
Speaker 8: this easing policy. You know, I myself have never kind
Speaker 8: of been a believer in the inverted yield curve being
Speaker 8: a kind of predictor of recessions. I think there's been
Speaker 8: a lot of distortions over the last couple year years
Speaker 8: between monetary policy. We had kind of QI and then
Speaker 8: QT and just to kind of a ton of supply
Speaker 8: it at the front end. So I think that the
Speaker 8: inverted yeal curve this time doesn't send the same signal
Speaker 8: that it's sent in past past cycles. But I think
Speaker 8: the one thing that's been happening, as you mentioned, the
Speaker 8: curve has been uninverting, and that's been sending investors a
Speaker 8: signal that, hey, you can actually go out the yeal
Speaker 8: curve now without giving up that same yield that you
Speaker 8: would have just a year ago or so. So I
Speaker 8: think that as you extend out the curve, it's getting
Speaker 8: more and more attractive, and I think that's something that
Speaker 8: investors should be looking to do. With the FED about
Speaker 8: to embark on this cutting.
Speaker 5: Cycle, with the set about to embark on a cutting cycle,
Speaker 5: what do I do with my money?
Speaker 4: Send it's yielding still that fu Yeah.
Speaker 8: Look, look there's over six trillion dollars that's sitting in
Speaker 8: money markets and that's money that again, not all of
Speaker 8: it's going to move out the curve. But if you
Speaker 8: stayed in that money market fund over the next sixteen
Speaker 8: months and the FED cutting cycle played out as the
Speaker 8: market's expecting, by the end of twenty twenty five, you're
Speaker 8: looking at a three percent T bill rate and by
Speaker 8: March of twenty by March of twenty five, you're looking
Speaker 8: at four percent people rate. So while you collect that
Speaker 8: five and a quarter percent today, if you just go
Speaker 8: out six months or so, it's going to be dramatically lower.
Speaker 8: So I think you do want to be moving out
Speaker 8: the curve. I think there's a lot of places that
Speaker 8: you can still lock in if you like that five
Speaker 8: and a quarter percent yield today, you can actually lock
Speaker 8: in over five percent yields without taking any credit risk
Speaker 8: by going out into the agency mortgage backed security market.
Speaker 8: So again, triple a government agency yielding north of five percent.
Speaker 8: That's a place that investors should be kind of moving to,
Speaker 8: even if they're worried about a recession. This is a
Speaker 8: this is a kind of a natural place to go.
Speaker 8: The other nice thing about extending out the curve is
Speaker 8: that bonds once again as inflation declines acts as a
Speaker 8: hedge on your risk portfolio again, and we're starting to
Speaker 8: see that. You saw it yesterday as equity sold off,
Speaker 8: bonds rallied. I think that's something that when inflation is moderating,
Speaker 8: bonds kind of fit in that balanced portfolio much better.
Speaker 3: Again.
Speaker 2: So I'm just looking at the Bloomberg US MBS index
Speaker 2: total return about three point eight percent year to date,
Speaker 2: but I can do a lot better than in the
Speaker 2: US corporate high yield market. How do you think about
Speaker 2: high yield versus maybe again some of the mortgages that
Speaker 2: you were talking about.
Speaker 8: Yeah, look, I think that there's kind of when you
Speaker 8: look at spreads and high yield, the aggregate spreads are
Speaker 8: a bit tighter when you look on a kind of
Speaker 8: historical average. But you got to be as I mentioned,
Speaker 8: I think that we're heading for a kind of a
Speaker 8: shallow kind of slow down in the economy here. So
Speaker 8: I think this is a bond pickers market. In the
Speaker 8: high yield market, I think you've got to be selective,
Speaker 8: you know. We think that at the end of the day,
Speaker 8: you want to be kind of up in quality in
Speaker 8: that market and wait for spreads to widen out. We
Speaker 8: just had a kind of dramatic tightening over the last
Speaker 8: couple of weeks, and then we just saw spreads wide
Speaker 8: out about seventeen basis points yesterday. So I think there's
Speaker 8: going to be opportunities to kind of move more into
Speaker 8: the high yield market. You know, I run a multisector
Speaker 8: fund right now. We're a little underweight high yield, but
Speaker 8: it's a space that we're looking to kind of add
Speaker 8: on dips, and it's a space that we think will
Speaker 8: remain attractive as yields come down. That's going to be
Speaker 8: great for kind of companies that are borrowing and have
Speaker 8: to kind of roll over this debt. But it's something
Speaker 8: that again you got to kind of pick and choose
Speaker 8: over time kind of where to add, and we think
Speaker 8: that's a space that will get more attractive as the
Speaker 8: year goes on.
Speaker 5: What's so interesting in August is when we saw the
Speaker 5: melt on and equities that spike and vicks.
Speaker 4: We saw a little to widening out in.
Speaker 5: Credit spreads, but not a lot, not that we'd normally
Speaker 5: see with a jump in the VIX like that. Are
Speaker 5: we still seeing it this time with the rollover in
Speaker 5: equities and then jump on the vix.
Speaker 8: Yeah, I mean, look, we saw it yesterday and as
Speaker 8: you mentioned, there was this We had the high yield
Speaker 8: spreads widen out to almost four hundred basis points and
Speaker 8: then they tightened into around three hundred twenty five, and
Speaker 8: then they widen out around seventeen basis points yesterday. So
Speaker 8: I do think that credit markets will will move with
Speaker 8: risk assets at the end of the day, with the
Speaker 8: equity market. But I also think that at the same time,
Speaker 8: it's if you're a corporation and you had turned out
Speaker 8: your debt, let's say in twenty twenty, and you issued
Speaker 8: a five year bond, you have to roll that over
Speaker 8: in twenty twenty five. So I think that lower yields
Speaker 8: are not or lower yields are not actually a bad
Speaker 8: thing this time for corporations. It's going to be something
Speaker 8: that they're going to use to take advantage and kind
Speaker 8: of turn out that debt once again.
Speaker 2: So Andrew, what do you guys that we're going to
Speaker 2: stand the investment manageer? What do you think or how
Speaker 2: do you think the Fed's going to proceed here?
Speaker 3: Are they going to front load some of the rate
Speaker 3: cuts here?
Speaker 2: Where are they going to be I guess more systematic
Speaker 2: twenty five basis points every meeting or every other meeting.
Speaker 3: How do you think they're going to do this?
Speaker 8: Look, I think that the Jolts number today is going
Speaker 8: to be very telling, and even more important is the
Speaker 8: payroll numbers on Friday. I think the payroll number is
Speaker 8: going to tell you one hundred percent whether the Fed's
Speaker 8: going to go twenty five or fifty basis points if
Speaker 8: we get a weak number all of a sudden. You know,
Speaker 8: right now there's about a forty percent chance priced for
Speaker 8: a fifty basis point cut. But the FED is shifting
Speaker 8: from an inflation like a single mandate on inflation. Over
Speaker 8: the last two years, while they have this duel mandate,
Speaker 8: they've been solely focused on inflation to all of a sudden,
Speaker 8: solely focused on the labor market because inflation's coming back
Speaker 8: in order, and the one thing that the FED wants
Speaker 8: to do is have this soft landing. And so the
Speaker 8: FED knows that they're well above neutral. So the Fed's
Speaker 8: that kind of five and a quarter to five and
Speaker 8: a half percent. At the same time, core PCE has
Speaker 8: come down from five point six to two point six percent,
Speaker 8: so there's been about three hundred basis points of net
Speaker 8: tightening from as far as the Fed's concerned. So the
Speaker 8: FED needs to kind of get going, and at the
Speaker 8: end of the day, the market, you know, the Fed,
Speaker 8: the FED policy operates with these long and variable lags,
Speaker 8: So anything the FED does today won't have an immediate
Speaker 8: transmission through the economy. It's going to take some time.
Speaker 8: And so the Fed's turning this giant ship. It's going
Speaker 8: to take a while to turn it. I think that
Speaker 8: when you look at what's priced in for the market,
Speaker 8: so around nine cuts total for the cycle, that still
Speaker 8: puts the FED funds right north of three percent, which
Speaker 8: keep in mind the last hiking cycle we only hiked
Speaker 8: to two and a half percent. So even if we
Speaker 8: are in a higher neutral rate environment, which I'm not
Speaker 8: convinced that it's substantially higher than where we used to be,
Speaker 8: I think at the end of the day, we're talking
Speaker 8: about where neutral is, and if we have a slow down,
Speaker 8: the Fed's going to go through neutral and below neutral,
Speaker 8: and that's where the value proposition is in bonds.
Speaker 4: All right, Andrew, appreciate it. Thanks a lot.
Speaker 5: Andrew Cisarowski, a senior portfolio manager at Morgan Stanley Investment Management, all.
Speaker 2: Right, your daily look at the front pages around the world.
Speaker 2: All right, what are the guys there in the newspaper
Speaker 2: segment Lisa mutt Teyo, I know you've got some good
Speaker 2: stuff for us.
Speaker 4: What do you get we do?
Speaker 9: Okay, So remember you're talking to us about Vice president
Speaker 9: Kamala Harris said US Steel s she remained domestically owned
Speaker 9: and operated. Well, if Financial Times had this report out,
Speaker 9: it's reporting that Japan's Nippon Steele has made this pledge
Speaker 9: to promise the company would be run by Americans. So
Speaker 9: a few things. At a promise, it pledged to appoint
Speaker 9: a board for US Steal with a majority US citizens.
Speaker 9: It said the board's going to include three independent directors
Speaker 9: who are US citizens, and that that core senior management
Speaker 9: members would be American. But here's another thing. It also
Speaker 9: said US Steel would be owned by Nippon Steel North America,
Speaker 9: So that's a New York based subsidiary of the company.
Speaker 9: But then you have the Wall Street Journal now coming
Speaker 9: out saying US Steel CEO saying the company could close
Speaker 9: steel mills, likely move its headquarters out of Pittsburgh if
Speaker 9: that sale to Nippon Steel collapses. So all these things
Speaker 9: kind of coming together after what President Kamala had said.
Speaker 5: I mean yeah, I mean they lost money for like
Speaker 5: a decade US steel, right, higher cost prices for steel,
Speaker 5: Like it's it's a commodity cyclical business and it is
Speaker 5: really hard.
Speaker 2: I mean, other than the name United States Steel, like
Speaker 2: it's only eight billion dollar market cap company. I get
Speaker 2: the name, I get the affinity, I get all that
Speaker 2: stuff Pittsburgh Steel. But you know, I mean economics or
Speaker 2: economic side.
Speaker 5: Seems like the difference is that Cleveland Cliffs has also
Speaker 5: offered a deal for US steel, but it wasn't as good.
Speaker 4: Isn't it fun Steel?
Speaker 5: So you just wonder if like Harris campaign and Biden
Speaker 5: is going to talk more about.
Speaker 3: That now it just seems political. You know, we'll just
Speaker 3: let it.
Speaker 2: I mean, the day after the election, neither side will
Speaker 2: care just let.
Speaker 3: The deal happen.
Speaker 4: That's probably true.
Speaker 9: All right, what do you got do you guys carry
Speaker 9: around like.
Speaker 4: The I don't like the story and I don't want
Speaker 4: to talk about it. Yes, we have to talk about it.
Speaker 9: Yes, Okay, it's bossing one of those So you carry
Speaker 9: around these reusable water bottles, right, but they're like infested
Speaker 9: with bacteria because you have to think about how I
Speaker 9: think I wash it once a week.
Speaker 4: That's so bad, like pop it in the starts? How
Speaker 4: do you wash it?
Speaker 9: You need like a little tiny baby hand, yes, or
Speaker 9: you need the little brushes. So the bus and Globe
Speaker 9: like laid out a plan for you, like what to do?
Speaker 7: They say.
Speaker 9: One of the things this Stanley Summer dishwashers safe and
Speaker 9: some aren't. And that's like the most popular one. So
Speaker 9: some people are popping it in the dishwasher.
Speaker 4: You really shouldn't.
Speaker 9: So you need, like, yes, the little tiny brush to
Speaker 9: wash it every day.
Speaker 10: They say, you have way deeper than how you clean it. Yes,
Speaker 10: why do you even have it? When I was growing up,
Speaker 10: if you were thirsty, you gotta drink of water. You
Speaker 10: didn't have to hydrate, hydrate.
Speaker 7: But at all, do not see how much water I drink?
Speaker 2: I know, but I mean it's like the kids today,
Speaker 2: they've got these huge things sitting at their desk and
Speaker 2: they're hydrating. I mean the water fountains literally three feet away.
Speaker 2: Why do you have this jug of water because you
Speaker 2: have to.
Speaker 9: Keep track of how much you're drinking.
Speaker 3: No, you don't. If you're thirsty, then you drink some water.
Speaker 3: That's how it was.
Speaker 5: If you are also taking a mountain of pills and
Speaker 5: have Asafa guy is like, I do you need a
Speaker 5: whole glass of water with every pill you take? So
Speaker 5: I down like those like two and a half liter
Speaker 5: bottles when my pills.
Speaker 3: This is a good Yeah, don't get me started on these.
Speaker 9: You have to half your what is it half your
Speaker 9: body weight and ounces.
Speaker 2: That's how much you're It's always been that way. So
Speaker 2: what have we done since the beginning of time? When
Speaker 2: you're thirsty, you drink water.
Speaker 3: Water. There you go.
Speaker 5: You can't overhydrate though I read that that's the thing
Speaker 5: and it can actually cause a physical reaction that's not good.
Speaker 4: But you can o d on water.
Speaker 3: This is just the right em very good.
Speaker 7: Okayst Taylor Swift.
Speaker 4: I don't know if your daughter is a fan.
Speaker 9: Okay, there we go. Okay, so this is the thing
Speaker 9: the Dodgers show. Hey, Otani could be have like that
Speaker 9: Taylor Swift effect, because you know he joined the Dodgers
Speaker 9: this season seven hundred million dollar deal. Right, But tourism
Speaker 9: officials telling the Wall Street Journal he's bringing visitors to
Speaker 9: Los Angeles as far away from his native Japan Omni
Speaker 9: Los Angeles, California Plaza. They've been seeing bookings for Japanese
Speaker 9: visitors jump thirty percent this summer from Expedia alone. He's
Speaker 9: made the Dodgers this hotter ticket on the road too.
Speaker 9: So on the road people are going to travel to
Speaker 9: go see tour operators are selling packages featuring Dodgers games,
Speaker 9: and then you know, if they're in first place in
Speaker 9: their division, they now get ready for these playoff package
Speaker 9: to get away. So all this different money kind of
Speaker 9: going into all the talk about shoe Hey o'tani.
Speaker 4: I bet that's cheaper than tailor sub tickets.
Speaker 3: Right, yeah? Could he?
Speaker 2: Here's the East coast bias.
Speaker 3: I haven't seen him play. I'm a baseball fan. I'm
Speaker 3: going to the Yankees next week. I haven't seen him play.
Speaker 2: I mean, if you're on the West Coast, you might
Speaker 2: as well be, you know, you just nobody cares, it
Speaker 2: seems like.
Speaker 3: But again, sho he Atani here.
Speaker 2: I know he's huge and he's a once in a
Speaker 2: lifetime kind of Babe ruth Ten kind of player here.
Speaker 3: But it was on the West Coast. I just I
Speaker 3: need to pay more attention, I think, I mean, right,
Speaker 3: move over, Taylor swift.
Speaker 9: I know, I don't know if they're going to be
Speaker 9: doing will say thousand dollars tickets.
Speaker 2: As per Ari and from the Bleachers show, he is
Speaker 2: closing in on the first fifty home run and fifty
Speaker 2: stolen based season ever.
Speaker 3: Oh see, how amazing for.
Speaker 9: A reason exactly all right, I don't know if he's
Speaker 9: getting the friendships though, that's true and you can trade him.
Speaker 4: I don't know, guys, I don't know what else you're
Speaker 4: looking at.
Speaker 9: Okay, are you drinking less wine these days? I don't
Speaker 9: know if you guys were like wine drinkers, but you're switching.
Speaker 4: It up, you are.
Speaker 3: I'm into the barber Eska now we've been pouring that recently. Grape.
Speaker 5: I mean, I drink a lot less than I used to.
Speaker 5: Let's just put a lot. You are a lot less
Speaker 5: and I used to.
Speaker 3: Yeah, another we need to discussion.
Speaker 4: Rack them up. We're them up. They're all probably.
Speaker 9: Well, there's the thing, because people are doing Constellation brands.
Speaker 7: They're said they weren't.
Speaker 9: They're warning that they're going to write down the value
Speaker 9: of its assets by as much as two and a
Speaker 9: half billion dollars this year. So, I mean, they make
Speaker 9: Robert Mundavi on wine, but they also do the beer
Speaker 9: Corona MODELO.
Speaker 7: You know, they do those two.
Speaker 9: They say, or not as well too. But they're saying inflation,
Speaker 9: consumers are pulling back. They're saying wine is not a
Speaker 9: not an essential item, so people are pulling back.
Speaker 2: I wonder if it's also like the post pandemic. People
Speaker 2: drink more during the pandemic because they were locked up.
Speaker 3: I remember.
Speaker 2: What else was there to do exactly, And now people
Speaker 2: are out and about doing stuff maybe I don't know.
Speaker 9: Yeah, and then people are getting like a little bit
Speaker 9: more health conscious, like wine has more sugar and more like.
Speaker 2: Well what everybody's drinking at least down at the Jersey
Speaker 2: shore bars or the you.
Speaker 5: Know, the like the vodka, the Seltzer's Spike Selzer, yes, everywhere.
Speaker 4: Yeah.
Speaker 5: It sort of reminds me of sort of the I
Speaker 5: p A trend and like craft beer, what like ten
Speaker 5: years ago.
Speaker 3: That was what do we have growing up? The Winders
Speaker 3: girls were drinking. I was like in high school.
Speaker 9: Now it's the hard Seltzer's because some of them have
Speaker 9: you sugar, it's right, but.
Speaker 5: They have like really high alcohol content. They're like five
Speaker 5: six percent alcohol content. Yeah, yeah, some are even more.
Speaker 4: I don't remember wine coolers having on that much short
Speaker 4: for Zeemas. No, do they still exist? No, but yes
Speaker 4: I did so.
Speaker 3: All right.
Speaker 2: That is the newspaper segment with Lisa Mitello. Thank you
Speaker 2: so much. This is the Bloomberg Surveillance Podcast, bringing you
Speaker 2: the best in economics, geopolitics, finance, and investment. You can
Speaker 2: also watch the show live on YouTube. Visit the Bloomberg
Speaker 2: Podcast channel on YouTube to see the show weekday mornings
Speaker 2: from seven to ten Eastern from our global headquarters in
Speaker 2: New York City. Subscribe to the podcast on Apple, Spotify,
Speaker 2: or anywhere else you listen, and as always on Bloomberg Radio,
Speaker 2: the Bloomberg Terminal, and the Bloomberg Business app.