1 00:00:00,080 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:33,880 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. We 5 00:00:33,960 --> 00:00:36,480 Speaker 1: begin with the n Exam Walk Street. Then an impressive 6 00:00:36,560 --> 00:00:39,040 Speaker 1: quarter for equity trading revenue at Bank of America, a 7 00:00:39,200 --> 00:00:43,040 Speaker 1: disappointing quarter for debt trading Bank America. Let's get the 8 00:00:43,080 --> 00:00:46,360 Speaker 1: highlights and cross over to Sinali Bassak, Bloomberg finance reporter 9 00:00:46,640 --> 00:00:48,680 Speaker 1: here in New York. What are the highlights and good 10 00:00:48,720 --> 00:00:51,599 Speaker 1: morning to you. Good morning. So the highlights are definitely 11 00:00:51,600 --> 00:00:55,000 Speaker 1: e equity trading. That's something everyone's excited about. The question 12 00:00:55,080 --> 00:00:57,880 Speaker 1: is whether those levels are sustainable. We saw a lot 13 00:00:57,920 --> 00:01:01,240 Speaker 1: of volatility in the first quarter, will continue. The other 14 00:01:01,280 --> 00:01:03,720 Speaker 1: thing that is really low that I'm watching here, the 15 00:01:03,760 --> 00:01:06,640 Speaker 1: investment banking revenue came in at one point three five 16 00:01:06,680 --> 00:01:09,679 Speaker 1: billion UM. It was estimated to be one point four 17 00:01:09,840 --> 00:01:13,080 Speaker 1: eight billion. That's something other people will be looking at 18 00:01:13,120 --> 00:01:15,680 Speaker 1: as well. UM. But on top of that, loan growth 19 00:01:15,720 --> 00:01:18,759 Speaker 1: was strong. UM. They also were able to keep expenses 20 00:01:18,760 --> 00:01:20,600 Speaker 1: in line, and that's something a lot of people are 21 00:01:20,640 --> 00:01:23,560 Speaker 1: looking for from Brian Brian Brynhan. Well, see Brian moynahan 22 00:01:23,640 --> 00:01:26,800 Speaker 1: has been cutting costs aggressively and continue to set pretty 23 00:01:26,800 --> 00:01:29,639 Speaker 1: big targets. Where are we in this in this journey 24 00:01:29,720 --> 00:01:32,760 Speaker 1: for cutting Coscinali Sure, so we're looking for it to 25 00:01:32,840 --> 00:01:36,520 Speaker 1: come in below fifty three billion and expense reductive. You know, 26 00:01:36,959 --> 00:01:39,160 Speaker 1: we want expenses to be around there this year. There 27 00:01:39,160 --> 00:01:43,319 Speaker 1: are above fifty four billion. Last year. Uh, the efficiency 28 00:01:43,440 --> 00:01:48,240 Speaker 1: ratio was down below in the first quarter, and it 29 00:01:48,320 --> 00:01:51,680 Speaker 1: was above that all four for all four quarters last year, 30 00:01:51,760 --> 00:01:53,640 Speaker 1: and that's definitely one of the top goals. I think 31 00:01:53,640 --> 00:01:56,200 Speaker 1: two questions for this market is what's the rate across 32 00:01:56,280 --> 00:01:59,360 Speaker 1: for the other banks Morgan, Stanley, Goldman, Sacks. And then 33 00:01:59,400 --> 00:02:01,360 Speaker 1: the other one that you race, whether this complete into 34 00:02:01,360 --> 00:02:04,200 Speaker 1: the second quarter? And when you look at equity trading revenue, 35 00:02:04,240 --> 00:02:06,480 Speaker 1: that's been the really impressive part of these numbers and 36 00:02:06,560 --> 00:02:08,680 Speaker 1: JP Morgan on Friday as well, But if you look 37 00:02:08,680 --> 00:02:11,680 Speaker 1: at the volumes on equities going into the second quarter, 38 00:02:11,800 --> 00:02:14,480 Speaker 1: it doesn't look like this story really is bleeding into 39 00:02:14,560 --> 00:02:16,560 Speaker 1: Q two. What are the signs that you see it's 40 00:02:16,639 --> 00:02:18,679 Speaker 1: also it's that, and it's also the fact that fick 41 00:02:18,720 --> 00:02:21,639 Speaker 1: trading is a much bigger business for these firms. Morgan 42 00:02:21,680 --> 00:02:24,040 Speaker 1: Stanley is supposed to be one of the biggest beneficiaries 43 00:02:24,160 --> 00:02:27,799 Speaker 1: from the higher equity trading revenues, and of course Goldman 44 00:02:27,840 --> 00:02:29,880 Speaker 1: tomorrow will be as well. But people are going to 45 00:02:29,960 --> 00:02:32,480 Speaker 1: want to see the sustainability of that given the volumes. 46 00:02:32,520 --> 00:02:34,639 Speaker 1: And then also they want to see what the plan 47 00:02:34,800 --> 00:02:37,880 Speaker 1: is for fick Son Bola Finance reporter joining us here 48 00:02:37,880 --> 00:02:39,440 Speaker 1: in New York. Great to get up to speed on 49 00:02:39,520 --> 00:02:42,600 Speaker 1: some of the earnings. Of course, Goldman Sachs coming up tomorrow. 50 00:02:42,600 --> 00:02:45,079 Speaker 1: Bank of America aren't buy about a half of one percent. 51 00:02:45,120 --> 00:02:48,120 Speaker 1: Good morning to you, Tom Keane, Good morning. And one 52 00:02:48,200 --> 00:02:51,640 Speaker 1: more question if I could basic, and it's real simple. 53 00:02:52,360 --> 00:02:57,399 Speaker 1: In retail, they want to be like Chase, right, I mean, 54 00:02:57,560 --> 00:03:00,560 Speaker 1: how far behind in metrics is Bank of a Erica 55 00:03:00,919 --> 00:03:05,079 Speaker 1: from a retail juggernaut like Chase. That's I actually don't 56 00:03:05,120 --> 00:03:06,720 Speaker 1: have the numbers right in front of me. That's a 57 00:03:06,720 --> 00:03:09,120 Speaker 1: good question. They are trying, we were talking about trying. 58 00:03:09,120 --> 00:03:11,079 Speaker 1: It's like a big deal, isn't it. I mean they 59 00:03:11,080 --> 00:03:13,920 Speaker 1: want to open more than five branches across America this 60 00:03:14,000 --> 00:03:16,399 Speaker 1: year at a time where they're also trying to cut 61 00:03:16,480 --> 00:03:20,959 Speaker 1: costs exactly, and and isn't everybody else trying to close branches? 62 00:03:21,240 --> 00:03:25,400 Speaker 1: The thing they both really pushed in their earnings releases 63 00:03:25,480 --> 00:03:29,079 Speaker 1: this year is the push to digital, the assumption that 64 00:03:29,160 --> 00:03:31,800 Speaker 1: you know, doing more online can keep costs low while 65 00:03:31,840 --> 00:03:35,160 Speaker 1: also selling people many things at the same time. Yeah, John, 66 00:03:35,200 --> 00:03:37,880 Speaker 1: can we ask a question about Morgan Stanley? Is that 67 00:03:38,000 --> 00:03:40,240 Speaker 1: part of the rules this morning? You can? We can, 68 00:03:40,400 --> 00:03:42,400 Speaker 1: of course you can. Who are they going to buy? 69 00:03:42,440 --> 00:03:44,960 Speaker 1: I mean, James Gorman is like hit the ball out 70 00:03:44,960 --> 00:03:47,040 Speaker 1: of the park on wealth management and all that. We 71 00:03:47,080 --> 00:03:49,800 Speaker 1: all know the story that you cover every day within 72 00:03:49,880 --> 00:03:54,160 Speaker 1: your reporting. What's the strategic to do for Fortress Gorman? 73 00:03:54,520 --> 00:03:57,800 Speaker 1: So a really big idea here, I think, is what 74 00:03:57,840 --> 00:04:00,360 Speaker 1: they're going to do with their asset management unit. You know, 75 00:04:00,400 --> 00:04:03,880 Speaker 1: it's under five hundred billion. Goldman is in the trillion 76 00:04:03,880 --> 00:04:07,280 Speaker 1: dollar club for example, JP Morgan is also up there 77 00:04:07,280 --> 00:04:10,160 Speaker 1: in asset management. It's a real opportunity to drive a 78 00:04:10,320 --> 00:04:13,680 Speaker 1: fee based income UM. I think that they already have 79 00:04:13,800 --> 00:04:17,480 Speaker 1: done some tuck in acquisitions in real estate, but doing 80 00:04:17,520 --> 00:04:20,120 Speaker 1: something big an asset management would be a bit a 81 00:04:20,120 --> 00:04:22,720 Speaker 1: big deal. Should I basket with us this morning? Her 82 00:04:22,720 --> 00:04:25,160 Speaker 1: coverage of Morgan Stanley and helping out today with the 83 00:04:25,200 --> 00:04:29,240 Speaker 1: Bank of America. All of this devolves to the rate 84 00:04:29,360 --> 00:04:35,280 Speaker 1: market price, lower rates up? What's the responsiveness Irah Jersey, 85 00:04:35,279 --> 00:04:39,000 Speaker 1: the elasticity of all these bankers to actually what goes 86 00:04:39,040 --> 00:04:41,480 Speaker 1: on in your world of bonds and bills notes? Yeah, 87 00:04:41,520 --> 00:04:43,479 Speaker 1: well it matters quite a lot. I mean if you 88 00:04:43,560 --> 00:04:45,960 Speaker 1: look at just fixed revenues, for example, you look at 89 00:04:45,960 --> 00:04:48,919 Speaker 1: fixing come revenues, and clearly things like um, you know 90 00:04:49,000 --> 00:04:51,800 Speaker 1: how well uh these banks did in trying to trade 91 00:04:51,800 --> 00:04:54,400 Speaker 1: treasury securities matters. That's how what's going on in the 92 00:04:54,440 --> 00:04:57,160 Speaker 1: corporate bond market, how many corporate bond deals have come, 93 00:04:57,240 --> 00:05:00,320 Speaker 1: and what's trading like in that neck of the woods. 94 00:05:00,360 --> 00:05:02,559 Speaker 1: So all of these things matter. And when you get 95 00:05:02,600 --> 00:05:04,680 Speaker 1: things like more treasury securities, which we're going to have 96 00:05:04,760 --> 00:05:06,799 Speaker 1: a lot more of over the next couple of years 97 00:05:06,800 --> 00:05:10,320 Speaker 1: with trillion dollar deficits coming, will that crowd out things 98 00:05:10,400 --> 00:05:13,440 Speaker 1: like investment grade or high yield corporate dead or will 99 00:05:13,480 --> 00:05:16,520 Speaker 1: mortgage the mortgage market come back As yields have gone up, 100 00:05:17,000 --> 00:05:20,400 Speaker 1: the number of mortgages being issued is significantly lower. And 101 00:05:20,440 --> 00:05:24,159 Speaker 1: because of that, that's that's another drag sometimes on UM 102 00:05:24,240 --> 00:05:27,599 Speaker 1: on earnings for for for you know, financial firms with 103 00:05:27,760 --> 00:05:31,040 Speaker 1: their UM whe their fixed income trading and uh UM 104 00:05:31,200 --> 00:05:34,640 Speaker 1: and issuance. Yeah, what's becoming clearer IRA after Q one 105 00:05:34,640 --> 00:05:37,239 Speaker 1: and the earnings that we've had from both JP Morgan 106 00:05:37,279 --> 00:05:39,240 Speaker 1: and Bank America that the story of Q one was 107 00:05:39,279 --> 00:05:42,120 Speaker 1: equity volatility. In the story of Q one for these 108 00:05:42,120 --> 00:05:45,240 Speaker 1: banks so far is equity trading. What's been clearer for 109 00:05:45,400 --> 00:05:48,480 Speaker 1: many market participants is that that equity voul hasn't spilled 110 00:05:48,560 --> 00:05:50,880 Speaker 1: over into rates vault. And I think a big question 111 00:05:50,920 --> 00:05:53,600 Speaker 1: for so many people was whether it would or whether 112 00:05:53,600 --> 00:05:56,279 Speaker 1: the equity volt would just roll over stay elevated, but 113 00:05:56,279 --> 00:05:59,279 Speaker 1: at historically normalized levels. And it looks like the latter 114 00:05:59,360 --> 00:06:02,120 Speaker 1: is happening and not the former. How do you expect 115 00:06:02,200 --> 00:06:04,719 Speaker 1: that to actually materialize in the coming weeks and months. Yeah, 116 00:06:04,760 --> 00:06:07,080 Speaker 1: it's interesting. So it really depends on where you're looking 117 00:06:07,120 --> 00:06:09,320 Speaker 1: at for volatility and the fixed income market. So if 118 00:06:09,360 --> 00:06:11,680 Speaker 1: you look at UM tenure treasuries, we've been in this 119 00:06:11,800 --> 00:06:14,600 Speaker 1: range for a while, which um you know, it's it's 120 00:06:14,600 --> 00:06:16,240 Speaker 1: not a huge surprise that we're in this range. So 121 00:06:16,279 --> 00:06:18,680 Speaker 1: what tends to happen with treasury yields is you have 122 00:06:18,760 --> 00:06:20,720 Speaker 1: a lot of volatility over a short period of time 123 00:06:20,720 --> 00:06:24,279 Speaker 1: and then you kind of um just uh just trade 124 00:06:24,320 --> 00:06:26,800 Speaker 1: in a range for a while. So therefore things like 125 00:06:27,320 --> 00:06:30,320 Speaker 1: volatility looks very low. But you look at you look 126 00:06:30,360 --> 00:06:33,000 Speaker 1: at what's gone on with implied volatility, so with what's 127 00:06:33,040 --> 00:06:35,800 Speaker 1: gone on the options market, and that also went way up. 128 00:06:35,800 --> 00:06:37,840 Speaker 1: So when the VIC spiked a couple of months ago, 129 00:06:38,200 --> 00:06:41,200 Speaker 1: you wound up having UM having rate valve spike quite 130 00:06:41,240 --> 00:06:43,080 Speaker 1: a lot as well. And we haven't retraced the whole 131 00:06:43,080 --> 00:06:46,320 Speaker 1: way yet, uh compared to uh UM compared to where 132 00:06:46,360 --> 00:06:48,440 Speaker 1: we were, and the volatility ends up being in the 133 00:06:48,440 --> 00:06:50,799 Speaker 1: front end of the market, right, So it's where, um, 134 00:06:50,800 --> 00:06:53,120 Speaker 1: what's the Fed doing, what's going on with short term 135 00:06:53,120 --> 00:06:56,080 Speaker 1: interest rates? Based on UM on the likelihood that the 136 00:06:56,120 --> 00:06:59,080 Speaker 1: Fed's gonna hike or not, just to run three things, 137 00:06:59,160 --> 00:07:02,520 Speaker 1: what we're expecting at a bit like to UMRA. Retail 138 00:07:02,560 --> 00:07:05,159 Speaker 1: sells in the United States in just on the ninety 139 00:07:05,200 --> 00:07:08,239 Speaker 1: minutes time UM it's been disappointing over the last few months. 140 00:07:08,320 --> 00:07:10,440 Speaker 1: A lot of people expected retail sales in the United 141 00:07:10,480 --> 00:07:13,280 Speaker 1: States to pick up after that tax bill was signed 142 00:07:13,280 --> 00:07:16,240 Speaker 1: into law. Are you expecting that to happen anytime soon? 143 00:07:16,400 --> 00:07:19,600 Speaker 1: Was this the trend? Yeah? So you know, obviously the 144 00:07:19,600 --> 00:07:22,120 Speaker 1: market's expectation is that we're going to see a better 145 00:07:22,200 --> 00:07:25,440 Speaker 1: number this month, um for for March than we did 146 00:07:25,520 --> 00:07:29,160 Speaker 1: for um uh for for for the first couple of 147 00:07:29,160 --> 00:07:31,960 Speaker 1: months of the year. Um. You know, the tax cuts 148 00:07:31,960 --> 00:07:34,760 Speaker 1: are very incremental. So the and I think a lot 149 00:07:34,800 --> 00:07:37,320 Speaker 1: of people are really worried is will they keep it? So? 150 00:07:37,440 --> 00:07:40,760 Speaker 1: Will we will uh these tax cuts to be permanent? 151 00:07:40,760 --> 00:07:42,520 Speaker 1: And if they are, then you wind up seeing somewhat 152 00:07:42,560 --> 00:07:45,120 Speaker 1: better spending in retail sales numbers. But this is a 153 00:07:45,200 --> 00:07:47,120 Speaker 1: huge part of the economy and this is why we 154 00:07:47,160 --> 00:07:48,760 Speaker 1: wind up having the focus on this. And when you 155 00:07:48,760 --> 00:07:50,480 Speaker 1: look at a lot of leading indicators. So if you 156 00:07:50,480 --> 00:07:53,280 Speaker 1: look at the leading economic indicators for not only for 157 00:07:53,320 --> 00:07:56,560 Speaker 1: the US, but for for Europe for example, and you 158 00:07:56,640 --> 00:07:58,800 Speaker 1: see a slowdown in those indicators, so it's not a 159 00:07:58,840 --> 00:08:01,200 Speaker 1: huge surprise that you wind up not having you know, 160 00:08:01,280 --> 00:08:03,720 Speaker 1: massive retail sales games here at least at the moment. 161 00:08:03,880 --> 00:08:06,160 Speaker 1: Thank you so much for it's really really good to 162 00:08:06,200 --> 00:08:08,840 Speaker 1: hear you, and particularly the dovetail with Banking as well 163 00:08:08,880 --> 00:08:12,679 Speaker 1: Ira Jersey Bloomberg Intelligence more than patient today with terrific 164 00:08:13,080 --> 00:08:31,200 Speaker 1: that new slope. The sequence of excellence for Stephen Cook 165 00:08:31,240 --> 00:08:34,760 Speaker 1: of the Consul and Foreign Relations has gone from ruling 166 00:08:35,000 --> 00:08:39,040 Speaker 1: but not govering two is widely acclaimed the struggle for 167 00:08:39,160 --> 00:08:43,520 Speaker 1: Egypt to the new book False Dawn protest democracy and 168 00:08:43,640 --> 00:08:46,280 Speaker 1: violence in the new Middle East. Stephen, I want you 169 00:08:46,400 --> 00:08:49,240 Speaker 1: to speak to our audience coast to coast this morning 170 00:08:49,800 --> 00:08:52,600 Speaker 1: about the fact that Damascus is five hundred miles from 171 00:08:52,600 --> 00:08:57,640 Speaker 1: Bagdag and twenty miles from Kabul. Is Damascus our next 172 00:08:57,720 --> 00:09:02,440 Speaker 1: front for the troops in America, where we have two 173 00:09:02,440 --> 00:09:06,480 Speaker 1: thousand troops already in Syria, albeit not anywhere close to Damascus. 174 00:09:07,040 --> 00:09:12,480 Speaker 1: It seems highly unlikely that anybody would contemplate marching an 175 00:09:12,559 --> 00:09:16,000 Speaker 1: army into Damascus to gates and regime change after our 176 00:09:16,040 --> 00:09:18,240 Speaker 1: experience in the Rock beginning in two thousand and three. 177 00:09:18,320 --> 00:09:23,360 Speaker 1: So no, but Syria has become an important pivot for 178 00:09:23,400 --> 00:09:27,640 Speaker 1: American interest in the Middle East and even Europe. I 179 00:09:27,679 --> 00:09:30,720 Speaker 1: look at the images, forget about the horrific images of 180 00:09:30,800 --> 00:09:34,719 Speaker 1: chemical warfare, of the destruction of city A, city B, 181 00:09:34,960 --> 00:09:38,199 Speaker 1: city C, city D. Do you just assume that one 182 00:09:38,280 --> 00:09:42,440 Speaker 1: day Damascus will look like those other cities. I think 183 00:09:42,520 --> 00:09:46,600 Speaker 1: that's unlikely. Um. It's true that the Syrian regime, along 184 00:09:46,640 --> 00:09:50,720 Speaker 1: with the Russians and the Iranians, have devastated major Syrian 185 00:09:50,920 --> 00:09:55,520 Speaker 1: cities in this fight. UM video of the eastern sections 186 00:09:55,559 --> 00:10:01,200 Speaker 1: of Aleppo, for example, look like Hiroshima after the atomic bombing. 187 00:10:01,840 --> 00:10:06,200 Speaker 1: But Damascus is the center of the offside regime and 188 00:10:06,280 --> 00:10:08,880 Speaker 1: it will be protected at all costs, which is precisely 189 00:10:09,040 --> 00:10:14,439 Speaker 1: why the regime has used chemical weapons and huge amounts 190 00:10:14,480 --> 00:10:19,640 Speaker 1: of conventional force against these rebellious outskirts and suburbs of 191 00:10:19,679 --> 00:10:22,760 Speaker 1: the city. Stephen, there was some concern about a risk 192 00:10:22,760 --> 00:10:25,120 Speaker 1: of escalation. Of course, a risk of escalation being if 193 00:10:25,160 --> 00:10:27,120 Speaker 1: you have strikes on Syria, there may be an accident. 194 00:10:27,120 --> 00:10:30,160 Speaker 1: Youm end up hitting the Russians by accident. How much 195 00:10:30,200 --> 00:10:34,040 Speaker 1: conversations were there between that team response of the US, 196 00:10:34,120 --> 00:10:38,319 Speaker 1: the UK, and France, that multilateral response to the situation 197 00:10:38,360 --> 00:10:40,200 Speaker 1: in Syria. How much of a conversation was there with 198 00:10:40,280 --> 00:10:45,240 Speaker 1: Russia ahead of that? Well, we certainly Uh indicated that 199 00:10:45,280 --> 00:10:48,160 Speaker 1: these strikes were coming, and he gave the Russians as 200 00:10:48,200 --> 00:10:51,480 Speaker 1: an opportunity to clear out of places, We certainly made 201 00:10:51,480 --> 00:10:54,160 Speaker 1: it clear what we were going to hit. Now you 202 00:10:54,200 --> 00:10:56,120 Speaker 1: have to go by what the Pentagon said, saying that 203 00:10:56,160 --> 00:11:00,000 Speaker 1: they used the usual deconfliction procedures that have been set 204 00:11:00,080 --> 00:11:03,120 Speaker 1: up given how many militaries are operating in the airspace 205 00:11:03,200 --> 00:11:09,480 Speaker 1: over over Syria. So whether the President or atmispheres of 206 00:11:09,520 --> 00:11:13,720 Speaker 1: his administration gave the Russian specific warning remains unclear, but 207 00:11:14,520 --> 00:11:18,360 Speaker 1: the Russians were obviously clued into what would be coming 208 00:11:18,640 --> 00:11:20,679 Speaker 1: and step when I think investors this morning a lot 209 00:11:20,720 --> 00:11:23,760 Speaker 1: calmer about the situation in Syria in terms of the 210 00:11:23,880 --> 00:11:27,000 Speaker 1: risk of military escalation, would you say it's a positive 211 00:11:27,040 --> 00:11:29,679 Speaker 1: that the signs of cooperation between the United States, the UK, 212 00:11:29,760 --> 00:11:32,080 Speaker 1: and France, when just a week ago we were talking 213 00:11:32,080 --> 00:11:35,400 Speaker 1: about the United States with drawing from Syria altogether. Well, 214 00:11:35,440 --> 00:11:37,600 Speaker 1: it's always a positive when the United States is working 215 00:11:37,600 --> 00:11:40,600 Speaker 1: with its closest allies on an issue of international importance 216 00:11:40,640 --> 00:11:44,319 Speaker 1: like this. I think, though, that the calming as a 217 00:11:44,360 --> 00:11:46,400 Speaker 1: result of the fact that the U s strikes were 218 00:11:46,520 --> 00:11:51,160 Speaker 1: quite limited. There was no accident or miscalculation that drew 219 00:11:51,200 --> 00:11:56,000 Speaker 1: in or or harmed Russian forces and thus far, and 220 00:11:56,080 --> 00:11:59,480 Speaker 1: let me emphasize that thus far, the Iranians haven't taken 221 00:11:59,640 --> 00:12:01,880 Speaker 1: any calle tory measures, but that of course may be 222 00:12:02,000 --> 00:12:04,880 Speaker 1: coming sometimes down the road. Well, this is the point, Stephen, 223 00:12:04,920 --> 00:12:07,679 Speaker 1: and this is part of your great expertise. Is it's 224 00:12:07,720 --> 00:12:11,680 Speaker 1: all clinical, it's all perfect, and any politician of any 225 00:12:11,679 --> 00:12:16,120 Speaker 1: persuasion loves to say mission accomplished. How did you respond 226 00:12:16,720 --> 00:12:19,600 Speaker 1: when the President went for a phrase that we already 227 00:12:19,760 --> 00:12:24,400 Speaker 1: understand is cheap to say and hard to keep. Well, 228 00:12:24,559 --> 00:12:27,400 Speaker 1: I was, I was. I think I had the reaction 229 00:12:27,440 --> 00:12:30,240 Speaker 1: that almost everybody said, did he really use the term 230 00:12:30,280 --> 00:12:35,720 Speaker 1: mission accomplished? And and it's clearly it's not really a mission. 231 00:12:36,120 --> 00:12:38,640 Speaker 1: Is not a mission that either the Obama administration nor 232 00:12:38,720 --> 00:12:43,400 Speaker 1: the Trump administration has taken on. There are broader issues involved. 233 00:12:44,240 --> 00:12:48,000 Speaker 1: Even given the importance of countering the Syrian regime's use 234 00:12:48,000 --> 00:12:51,720 Speaker 1: of chemical weapons, they're broader issues associated with Syria that 235 00:12:51,800 --> 00:12:54,440 Speaker 1: this administration and administration before it had determined that they 236 00:12:54,480 --> 00:12:56,760 Speaker 1: did not want to take on. And in fact, at 237 00:12:56,800 --> 00:12:59,200 Speaker 1: the moment that the President was announcing these air strikes, 238 00:12:59,360 --> 00:13:01,280 Speaker 1: he was also saim that the United States was going 239 00:13:01,360 --> 00:13:03,920 Speaker 1: to leave Syria and that it would be up to 240 00:13:04,000 --> 00:13:08,079 Speaker 1: the to the neighbors. Neighbors sorted out. Stephen Cook. We 241 00:13:08,320 --> 00:13:11,559 Speaker 1: greatly appreciate your time and energy with Bloomberg surveillance over 242 00:13:11,559 --> 00:13:26,280 Speaker 1: the last number of days. It is a joy to 243 00:13:26,320 --> 00:13:29,520 Speaker 1: have with us too brief a time this morning. David Kelly, 244 00:13:29,640 --> 00:13:32,560 Speaker 1: he is a JP Morgan asset management where he combines 245 00:13:33,240 --> 00:13:37,719 Speaker 1: UH strategy into market analysis and far more than that 246 00:13:38,400 --> 00:13:41,959 Speaker 1: UH first rate economics from Dublin and also the green 247 00:13:42,040 --> 00:13:45,240 Speaker 1: part of Michigan, and that would be Michigan State as well. David, 248 00:13:45,280 --> 00:13:48,200 Speaker 1: wonderful to have you with us. You and I were 249 00:13:48,240 --> 00:13:52,120 Speaker 1: talking before we opened here in the hour the idea 250 00:13:52,679 --> 00:13:56,720 Speaker 1: that the CBO buried in the news last week really 251 00:13:56,760 --> 00:14:00,560 Speaker 1: has a subdued nominal g d P in subdued real 252 00:14:00,640 --> 00:14:04,040 Speaker 1: g d P. How subdued is subdued? For you, well, 253 00:14:04,240 --> 00:14:07,760 Speaker 1: I think I think it's just realism. We were. This 254 00:14:07,840 --> 00:14:11,320 Speaker 1: economy is, as I've said many times before, a healthy tortoise. 255 00:14:11,360 --> 00:14:13,880 Speaker 1: It is capable of growing at about two percent per 256 00:14:13,960 --> 00:14:16,760 Speaker 1: year in the long run. Um the tortoisees on a 257 00:14:16,800 --> 00:14:19,200 Speaker 1: sugar hide. This year, because of all this fiscal stimulus, 258 00:14:19,240 --> 00:14:21,440 Speaker 1: we're gonna get about three percent growth. But it's one 259 00:14:21,600 --> 00:14:24,040 Speaker 1: three followed by a string of twos. For as long 260 00:14:24,080 --> 00:14:26,240 Speaker 1: as this expansion goes where we just don't have the 261 00:14:26,280 --> 00:14:29,400 Speaker 1: labor force growth of the productivity growth to sustain GDP 262 00:14:29,520 --> 00:14:31,440 Speaker 1: growth of over two percent of the long run. I 263 00:14:31,480 --> 00:14:33,640 Speaker 1: think that's in the CBOs numbers. It's also the Federal 264 00:14:33,680 --> 00:14:36,400 Speaker 1: reserves numbers. Can the earnings deliver in long with the 265 00:14:36,440 --> 00:14:41,040 Speaker 1: expectations consider how elevates it they are? Well, the whole 266 00:14:41,120 --> 00:14:44,440 Speaker 1: key is can we please appreciate how good the earnings are? 267 00:14:44,480 --> 00:14:46,840 Speaker 1: I think that's I think that's I think the problem 268 00:14:46,880 --> 00:14:48,440 Speaker 1: is that, you know, it's it's kind of like you 269 00:14:48,560 --> 00:14:50,800 Speaker 1: order a five course of dinner and all the courses 270 00:14:50,880 --> 00:14:53,200 Speaker 1: arrive at the start, and he said, but what are 271 00:14:53,240 --> 00:14:54,960 Speaker 1: we gonna have for dinner? I mean, You've got it 272 00:14:54,960 --> 00:14:57,280 Speaker 1: all in front of you. We've got twenty five percent 273 00:14:57,800 --> 00:15:00,360 Speaker 1: year over year earnings growth pegged for this year, following 274 00:15:00,440 --> 00:15:04,320 Speaker 1: seventeen percent last year. Now that's I would think a 275 00:15:04,400 --> 00:15:06,760 Speaker 1: normal year in a normal slow growing economies have talked 276 00:15:06,800 --> 00:15:09,360 Speaker 1: about will be about five percent earnings growth per year. 277 00:15:09,360 --> 00:15:11,760 Speaker 1: So if you get it's like getting five years worth 278 00:15:11,800 --> 00:15:14,520 Speaker 1: of growth at the same time. So I think I 279 00:15:14,560 --> 00:15:17,560 Speaker 1: think the market is always about future earnings growth. That's 280 00:15:17,560 --> 00:15:20,000 Speaker 1: what the stock market is really about. But for the moment, 281 00:15:20,000 --> 00:15:22,520 Speaker 1: I think investors really need to adjust their their thought 282 00:15:22,520 --> 00:15:25,000 Speaker 1: processes here and say, well, wait, if I can just 283 00:15:25,280 --> 00:15:28,080 Speaker 1: treat stocks as a bond, I'm clipping an earning zield 284 00:15:28,280 --> 00:15:31,280 Speaker 1: more of about six percent, why don't I just live 285 00:15:31,360 --> 00:15:34,480 Speaker 1: off that for a little bit here before constantly waiting 286 00:15:34,480 --> 00:15:36,320 Speaker 1: for the next big thing, Because we've got a lot 287 00:15:36,360 --> 00:15:38,840 Speaker 1: to appreciate right now. Well, investors and what they should 288 00:15:38,880 --> 00:15:41,080 Speaker 1: and shouldn't do, them not like children all the time. 289 00:15:41,080 --> 00:15:42,600 Speaker 1: It's what they will and won't do. And I just 290 00:15:42,640 --> 00:15:45,120 Speaker 1: wonder whether what you think they should do will actually happen. 291 00:15:45,200 --> 00:15:49,080 Speaker 1: JP more than a great example Friday record profit, record revenue, 292 00:15:49,200 --> 00:15:52,080 Speaker 1: really solid numbers in isolation, then the stocks down two 293 00:15:52,080 --> 00:15:55,280 Speaker 1: point Well yeah, and obviously I can't. I can't agree 294 00:15:55,320 --> 00:16:00,160 Speaker 1: talk about the stock too much direct spection. And it 295 00:16:00,200 --> 00:16:02,480 Speaker 1: speaks to the point that I'm making that, Um, you know, 296 00:16:02,520 --> 00:16:04,680 Speaker 1: we've had big gains in the market at this point, 297 00:16:04,720 --> 00:16:07,000 Speaker 1: of great gains and earnings. But I think that if 298 00:16:07,000 --> 00:16:08,840 Speaker 1: you what you should do as a long term investors 299 00:16:08,880 --> 00:16:11,120 Speaker 1: say well, one of my choices out there, bond deals 300 00:16:11,120 --> 00:16:12,840 Speaker 1: are still very low and they're going to go up. 301 00:16:12,880 --> 00:16:14,480 Speaker 1: I'm not gonna make much money there. I'm not gonna 302 00:16:14,520 --> 00:16:17,160 Speaker 1: make much money in cash. But if you look at 303 00:16:17,400 --> 00:16:19,640 Speaker 1: the ability of companies to both buy back stock and 304 00:16:19,720 --> 00:16:22,240 Speaker 1: pay our dividends based on the windfall they've seen from 305 00:16:22,240 --> 00:16:24,640 Speaker 1: this corporate tax cut, I think people should live off 306 00:16:24,640 --> 00:16:27,280 Speaker 1: that for a while. And eventually, of course, you know, 307 00:16:27,520 --> 00:16:29,800 Speaker 1: nominal GDP growth will catch up with these profits, and 308 00:16:29,840 --> 00:16:32,680 Speaker 1: then the economy and then profits will grow, you know, 309 00:16:32,760 --> 00:16:35,960 Speaker 1: in line with with with the economic growth. But for 310 00:16:36,000 --> 00:16:38,480 Speaker 1: the moment, just appreciate how good it is, how lean 311 00:16:39,360 --> 00:16:42,160 Speaker 1: is corporate America. I mean, Mr mourning Hand this morning 312 00:16:42,160 --> 00:16:43,960 Speaker 1: at another bank, I don't want to mention that to 313 00:16:44,040 --> 00:16:48,760 Speaker 1: David Kelly. Another bank reported to the one and what 314 00:16:48,840 --> 00:16:51,560 Speaker 1: a shock they lead with expense control. Well, and I 315 00:16:51,600 --> 00:16:53,880 Speaker 1: think this this is really symptomatic of what's going on 316 00:16:53,920 --> 00:16:56,760 Speaker 1: around America. We've because it's been a tortoise like economy 317 00:16:56,800 --> 00:16:59,640 Speaker 1: for so long, corporations are really focused on how do 318 00:16:59,680 --> 00:17:02,840 Speaker 1: I down costs? And that that is why we're not 319 00:17:03,040 --> 00:17:05,080 Speaker 1: one of the reasons why we're not seeing wage growth. 320 00:17:05,080 --> 00:17:08,080 Speaker 1: I mean, we're still seeing very slow wage growth, um, 321 00:17:08,480 --> 00:17:10,960 Speaker 1: but because companies are so focused on that, they hold 322 00:17:10,960 --> 00:17:13,280 Speaker 1: down wage growth. But that that is actually allowing us 323 00:17:13,320 --> 00:17:15,880 Speaker 1: to extend this expansion. Good Morning, Bloomberg one or six 324 00:17:15,880 --> 00:17:18,159 Speaker 1: one FM Boston. We're gonna take Mr Kelly back a 325 00:17:18,200 --> 00:17:20,879 Speaker 1: million years to your great work. Really some of the 326 00:17:20,960 --> 00:17:24,159 Speaker 1: work at Putnam years ago with Bob Goodman. There was 327 00:17:24,200 --> 00:17:28,879 Speaker 1: an inherent optimism to Goodman Kelly economics, like there is 328 00:17:28,960 --> 00:17:33,840 Speaker 1: too Chasman Kelly economics now JP Morgan, our audience doesn't 329 00:17:33,880 --> 00:17:36,480 Speaker 1: feel the optimism. I'm sure the fat cats do with 330 00:17:36,640 --> 00:17:40,080 Speaker 1: the tax cut. But the wage growth thing, I mean, David, 331 00:17:40,640 --> 00:17:43,760 Speaker 1: this wage growth debate you and I did not have 332 00:17:43,960 --> 00:17:47,000 Speaker 1: thirty years ago. Yes, and it's I mean it's not 333 00:17:47,320 --> 00:17:50,560 Speaker 1: It's not easy for the average American worker. The problem 334 00:17:50,600 --> 00:17:53,320 Speaker 1: is it's getting more and more competitive for sellers around 335 00:17:53,320 --> 00:17:55,960 Speaker 1: the economy, whether the sellers of goods or services or labor. 336 00:17:56,359 --> 00:17:59,480 Speaker 1: We've got an information revolution which is empowering buyers. That's 337 00:17:59,520 --> 00:18:01,960 Speaker 1: holding down inflation all over the place, including wage inflation. 338 00:18:02,240 --> 00:18:04,280 Speaker 1: You know, it's not good from a social perspective. I 339 00:18:04,320 --> 00:18:05,919 Speaker 1: think there are a lot of evolute things in the 340 00:18:05,920 --> 00:18:09,440 Speaker 1: way the economy is evolving that are really generating fractures 341 00:18:09,560 --> 00:18:12,919 Speaker 1: in the American society and leaving people behind. But As 342 00:18:12,960 --> 00:18:14,600 Speaker 1: an investor, you've got to take you know, this is 343 00:18:14,600 --> 00:18:16,560 Speaker 1: the way it is. So you need to figure out 344 00:18:16,560 --> 00:18:18,359 Speaker 1: what with the money that I am saving, how am 345 00:18:18,359 --> 00:18:19,920 Speaker 1: I going to invest it? And I think you should 346 00:18:19,960 --> 00:18:22,760 Speaker 1: invest it based on optimism about long term corporate profits. 347 00:18:22,840 --> 00:18:26,600 Speaker 1: The optimism year of the nominal GDP partition then is 348 00:18:26,640 --> 00:18:30,920 Speaker 1: a lesser inflation differential, but you actually get a piece 349 00:18:30,960 --> 00:18:34,359 Speaker 1: of it is real GDP actually does better. Well, No, 350 00:18:34,520 --> 00:18:37,399 Speaker 1: I think we're talking about a few tents one way 351 00:18:37,480 --> 00:18:39,600 Speaker 1: or the other. I do think we're we're talking about 352 00:18:39,640 --> 00:18:42,040 Speaker 1: about two percent real growth. But again we you know, 353 00:18:42,320 --> 00:18:43,600 Speaker 1: in some ways we need to learn to live with 354 00:18:43,640 --> 00:18:45,879 Speaker 1: that too. There's a nof lot of waste in terms, 355 00:18:46,040 --> 00:18:48,840 Speaker 1: two percent growth could mean a really healthy you're talking 356 00:18:48,880 --> 00:18:51,400 Speaker 1: two point zero or two point eight. No, I'm talking 357 00:18:51,400 --> 00:18:53,359 Speaker 1: about two point zero in the long run at at 358 00:18:53,359 --> 00:18:55,159 Speaker 1: a high I don't think that we're going to I 359 00:18:55,160 --> 00:18:57,280 Speaker 1: think we'll get one year of about three. So you 360 00:18:57,359 --> 00:19:00,960 Speaker 1: didn't help with Jamie Diamond's letter. Well, actually we did 361 00:19:00,960 --> 00:19:03,520 Speaker 1: help us, but we don't always necessarily agree with Jamie 362 00:19:03,520 --> 00:19:07,119 Speaker 1: and everything like, let's trying to cause trouble. We're not. 363 00:19:09,800 --> 00:19:13,920 Speaker 1: I'm kiding the effective tax rate Bank of America. Um, 364 00:19:13,920 --> 00:19:16,440 Speaker 1: that's coming from the CFO this morning. And if that's 365 00:19:16,440 --> 00:19:18,919 Speaker 1: the bottom line for these banks, and yet the bottom 366 00:19:18,960 --> 00:19:20,919 Speaker 1: line is also the growth is not going to accelerate. 367 00:19:21,160 --> 00:19:23,080 Speaker 1: Do you just assume that this is coming all into 368 00:19:23,119 --> 00:19:25,720 Speaker 1: buy backs and dividends, that extra money that they are 369 00:19:25,760 --> 00:19:27,600 Speaker 1: making from that lower tax, right? Yeah? I think so 370 00:19:27,680 --> 00:19:31,560 Speaker 1: as a capital controls, as a degree of regulation diminishes, 371 00:19:31,640 --> 00:19:34,360 Speaker 1: I think these companies will distribute more money to share 372 00:19:34,400 --> 00:19:36,399 Speaker 1: olds and buy back stock or pay our dividends. I 373 00:19:36,400 --> 00:19:38,600 Speaker 1: think buying back stock will actually be the preferred way 374 00:19:38,640 --> 00:19:41,120 Speaker 1: to do this. That's going to push up EPs because 375 00:19:41,119 --> 00:19:44,080 Speaker 1: I'm gonna reduce the number of shares. I want to Johnny, 376 00:19:44,119 --> 00:19:45,640 Speaker 1: I don't mean to be rude here, but I've got 377 00:19:45,640 --> 00:19:47,879 Speaker 1: to bring us up. We thank David blanche Flower up 378 00:19:47,920 --> 00:19:52,760 Speaker 1: at Dartmouth College for listening intently this morning. John David NF. Bell, 379 00:19:53,160 --> 00:19:56,520 Speaker 1: and David G. Blanche Flower the lack of wage growth 380 00:19:56,720 --> 00:20:01,960 Speaker 1: in the falling NEHRU. David Kelly explain n AI R 381 00:20:02,240 --> 00:20:06,480 Speaker 1: you and why Blanche Flowers as chairman powells for rate 382 00:20:06,600 --> 00:20:11,480 Speaker 1: increases wrong? Okay, well, well, NARU is a non accelerating 383 00:20:11,480 --> 00:20:13,880 Speaker 1: inflation rate of unemployment, and the ideas you can push 384 00:20:14,119 --> 00:20:16,760 Speaker 1: unemployment down so far and then wages will take off. 385 00:20:17,160 --> 00:20:19,040 Speaker 1: And in fact, the Fed in the long run thinks 386 00:20:19,040 --> 00:20:21,119 Speaker 1: maybe that's about four and a half percent. We're down 387 00:20:21,160 --> 00:20:22,800 Speaker 1: at four point one percent, but we still got it 388 00:20:22,880 --> 00:20:25,040 Speaker 1: yet to see wages take off, and I you know, 389 00:20:25,080 --> 00:20:27,439 Speaker 1: you could even push unemployment down a bit more. I 390 00:20:27,440 --> 00:20:29,360 Speaker 1: think it's going to be almost impossible to get wage 391 00:20:29,400 --> 00:20:32,800 Speaker 1: growths to to accelerate. Look look at Japan. Japan has 392 00:20:32,800 --> 00:20:36,119 Speaker 1: got a two point five percent unemployment rate and wages 393 00:20:36,119 --> 00:20:38,000 Speaker 1: are up seven tenths or percent a year over year. 394 00:20:38,720 --> 00:20:41,400 Speaker 1: So so I don't think that's a I don't think 395 00:20:41,400 --> 00:20:44,240 Speaker 1: we want to see accelerating inflation bus I think Chairman 396 00:20:44,280 --> 00:20:47,040 Speaker 1: pal ought to raise rates. The Fed ought to raise 397 00:20:47,160 --> 00:20:49,879 Speaker 1: rates because they need to ward off asset bubbles. We 398 00:20:49,880 --> 00:20:52,440 Speaker 1: haven't had an inflation problem with this economy for generation, 399 00:20:52,640 --> 00:20:54,879 Speaker 1: but we've had problems called in this economy caused by 400 00:20:54,920 --> 00:20:57,560 Speaker 1: asset bubbles, which lead to recessions. And so we've got 401 00:20:57,920 --> 00:21:01,000 Speaker 1: the economy is perfectly healthy. We need to normalized policy. 402 00:21:02,000 --> 00:21:03,840 Speaker 1: You know, if if for nothing no other reason, we've 403 00:21:03,880 --> 00:21:06,320 Speaker 1: got expansionary fiscal policy, we need to lean against that 404 00:21:06,480 --> 00:21:09,760 Speaker 1: with more contractionary monitory fills. David Colley, thank you so much, 405 00:21:10,080 --> 00:21:13,000 Speaker 1: don't be a stranger. Greatly appreciate having us on radio 406 00:21:13,040 --> 00:21:30,919 Speaker 1: and television. I want to bring in George Nomura Securities 407 00:21:30,960 --> 00:21:33,480 Speaker 1: managing director, who is hoping that we don't talk about 408 00:21:33,480 --> 00:21:36,760 Speaker 1: tweets and probably hoping we do talk about those retail suns. 409 00:21:36,800 --> 00:21:41,200 Speaker 1: It's a bounce back for US retail salves. George encouraging. Yeah, 410 00:21:41,240 --> 00:21:42,879 Speaker 1: let's start with the data. I think you guys are right. 411 00:21:42,920 --> 00:21:45,120 Speaker 1: I mean, I think it's after a number of months 412 00:21:45,119 --> 00:21:46,639 Speaker 1: of weakness on the retail sales side, you get to 413 00:21:46,680 --> 00:21:49,879 Speaker 1: see some momentum returning there. Hopefully it follows through for 414 00:21:49,960 --> 00:21:52,080 Speaker 1: the rest of the quarter. We do think, you know, 415 00:21:52,200 --> 00:21:53,840 Speaker 1: Q one was kind of on the weaker side, you know, 416 00:21:53,880 --> 00:21:56,200 Speaker 1: markets really the economy really getting its footing and in 417 00:21:56,240 --> 00:21:58,520 Speaker 1: the beginning of the year, and the outlook looks more 418 00:21:58,600 --> 00:21:59,920 Speaker 1: rosy as we look down the road. We do have 419 00:21:59,920 --> 00:22:02,480 Speaker 1: a lot of fiscal stimulats coming our way and hopefully 420 00:22:02,480 --> 00:22:04,800 Speaker 1: that's going to kind of keep, you know, fueling consumer spending. 421 00:22:04,960 --> 00:22:06,680 Speaker 1: The last time the consumer got a little bit of 422 00:22:06,720 --> 00:22:08,800 Speaker 1: a lift, which when crude crashed and a lot of 423 00:22:08,800 --> 00:22:11,040 Speaker 1: people thought that the consumer would go out and spend 424 00:22:11,080 --> 00:22:14,280 Speaker 1: that extra cash in its pockets, um, George. That didn't happen, 425 00:22:14,480 --> 00:22:17,320 Speaker 1: and the consumer tended to save that money. Why is 426 00:22:17,359 --> 00:22:21,000 Speaker 1: this time different, well, compared to that period specifically, I 427 00:22:21,040 --> 00:22:22,840 Speaker 1: mean there was a kind of pre election and just 428 00:22:22,920 --> 00:22:25,520 Speaker 1: kind of a point where consumer confidence was not as 429 00:22:25,640 --> 00:22:27,480 Speaker 1: as strong as it is now. Let's come off, it's 430 00:22:27,480 --> 00:22:30,160 Speaker 1: as high as we still have strong kind of small 431 00:22:30,240 --> 00:22:32,040 Speaker 1: business sentiment out there, and I think that, you know, 432 00:22:32,160 --> 00:22:33,920 Speaker 1: the belief is that we're going to see the fall 433 00:22:34,040 --> 00:22:38,240 Speaker 1: through from the government spending into consumer spending. But you know, look, 434 00:22:38,240 --> 00:22:40,280 Speaker 1: you're you're, you're on onto something that you know, there 435 00:22:40,320 --> 00:22:42,520 Speaker 1: is this kind of preponderance for consumers to kind of 436 00:22:42,560 --> 00:22:44,480 Speaker 1: see whatever extra cash they get, and we'll see how 437 00:22:44,560 --> 00:22:46,399 Speaker 1: much they kind of put back into the economy. Just 438 00:22:46,480 --> 00:22:49,960 Speaker 1: then it's sort of its totality over the quarter, George. 439 00:22:50,000 --> 00:22:52,959 Speaker 1: The data for the United States not as impressive as 440 00:22:53,000 --> 00:22:55,399 Speaker 1: some people hoped it would be. Is this going to 441 00:22:55,520 --> 00:22:58,560 Speaker 1: be the normal form what we saw in Q one? 442 00:22:58,600 --> 00:23:01,560 Speaker 1: And if it changes, how will it it should change? 443 00:23:01,560 --> 00:23:04,240 Speaker 1: For the upside? The tricky part, and no one that 444 00:23:04,320 --> 00:23:06,600 Speaker 1: I have ever seen actually calibrate this perfectly. Is that 445 00:23:07,080 --> 00:23:10,400 Speaker 1: trying to time precisely when the fiscal coffers are open 446 00:23:10,520 --> 00:23:13,399 Speaker 1: and the money flows into the economy. It's you know, 447 00:23:13,480 --> 00:23:17,640 Speaker 1: it's like you know, trying to park it a cruise ship, 448 00:23:17,640 --> 00:23:20,400 Speaker 1: you know, in the middle of midtown Manhattan. So we'll 449 00:23:20,400 --> 00:23:22,680 Speaker 1: see how you know, it's it's a lot of data, 450 00:23:22,720 --> 00:23:24,680 Speaker 1: a lot of new information from the government side, a 451 00:23:24,720 --> 00:23:27,120 Speaker 1: lot of money being spent. How quickly it gets into 452 00:23:27,119 --> 00:23:29,280 Speaker 1: the economy is anyone's guests. But we do think it's 453 00:23:29,359 --> 00:23:32,040 Speaker 1: upside for the balance of the year. The upside is 454 00:23:32,080 --> 00:23:34,639 Speaker 1: I looked at the thirty year bond, the trading bund 455 00:23:34,880 --> 00:23:37,240 Speaker 1: George and the price from the peak. I did a 456 00:23:37,280 --> 00:23:40,000 Speaker 1: moving average study and the bottom line is, if you 457 00:23:40,000 --> 00:23:43,120 Speaker 1: had a hundred dollars in the thirty year bond, you're 458 00:23:43,119 --> 00:23:48,320 Speaker 1: now enjoying dollars or even nineties four dollars in your bun. 459 00:23:48,480 --> 00:23:51,240 Speaker 1: How much price erosion are we gonna see? How much 460 00:23:51,240 --> 00:23:54,760 Speaker 1: of a bond bear market are we gonna see? The 461 00:23:54,800 --> 00:23:57,000 Speaker 1: early part of Q one didn't kind of you know, 462 00:23:57,600 --> 00:23:59,240 Speaker 1: give us a shot across the bot in terms of 463 00:23:59,280 --> 00:24:02,080 Speaker 1: how much losses he could you know, expect, And we 464 00:24:02,160 --> 00:24:04,760 Speaker 1: think that this does come in waves and we're gonna see, 465 00:24:04,800 --> 00:24:08,159 Speaker 1: you know, further price erosion and it's gonna be bigger 466 00:24:08,200 --> 00:24:10,320 Speaker 1: than the actual coupon that you can actually clip to 467 00:24:10,400 --> 00:24:13,280 Speaker 1: offset that. And that's what makes this year very unique. 468 00:24:13,359 --> 00:24:15,080 Speaker 1: You know that, you know, on the one hand, the 469 00:24:15,080 --> 00:24:19,480 Speaker 1: physical supply and where the fiscal growth factors are good 470 00:24:19,480 --> 00:24:21,280 Speaker 1: for the economy, but on the negative side, it is 471 00:24:21,320 --> 00:24:23,680 Speaker 1: introducing all this debt. It's someone's gonna have to pay 472 00:24:23,720 --> 00:24:24,840 Speaker 1: for it, and it's going to come at a higher 473 00:24:24,880 --> 00:24:27,560 Speaker 1: expense and law fixing come. Investors for the last three 474 00:24:27,640 --> 00:24:29,399 Speaker 1: years got locked in a very low race and they 475 00:24:29,440 --> 00:24:32,879 Speaker 1: may suffer some big losses going forward. Mr Goon Collvis, 476 00:24:32,920 --> 00:24:35,720 Speaker 1: thank you for that clarity there. And even though we're 477 00:24:35,720 --> 00:24:38,800 Speaker 1: and I would believe John Pharaoh that the key rasier 478 00:24:38,840 --> 00:24:41,440 Speaker 1: from George Gung Colvis was somebody has to pay for it. 479 00:24:48,240 --> 00:24:52,480 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 480 00:24:52,520 --> 00:24:57,840 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 481 00:24:57,880 --> 00:25:02,119 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 482 00:25:02,160 --> 00:25:06,000 Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg 483 00:25:06,080 --> 00:25:06,359 Speaker 1: Radio