1 00:00:05,040 --> 00:00:09,160 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Lisa Abramwoyd's along 2 00:00:09,160 --> 00:00:12,119 Speaker 1: with Tom Keane and Jonathan Farrow, join us each day 3 00:00:12,160 --> 00:00:16,400 Speaker 1: for insight from the best in economics, geopolitics, finance and investment. 4 00:00:16,720 --> 00:00:20,200 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:20,320 --> 00:00:23,800 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:23,800 --> 00:00:27,400 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business app. Data Peterson 7 00:00:27,480 --> 00:00:30,760 Speaker 1: joining us now chief economist at the conference Board Data. 8 00:00:31,040 --> 00:00:33,279 Speaker 1: I want to start by just asking how much has 9 00:00:33,320 --> 00:00:35,720 Speaker 1: your outlook for the US economy changed over the past 10 00:00:35,720 --> 00:00:39,080 Speaker 1: two weeks. It really hasn't. We have been calling for 11 00:00:39,120 --> 00:00:42,080 Speaker 1: a recession starting in the second quarter and extending through 12 00:00:42,080 --> 00:00:46,640 Speaker 1: the fourth quarter. If anything, this might accelerate things. Certainly, 13 00:00:46,680 --> 00:00:50,480 Speaker 1: consumers have already dialed back spending on goods, businesses are 14 00:00:50,520 --> 00:00:54,080 Speaker 1: not spending on investments, and also the housing market has 15 00:00:54,120 --> 00:00:57,240 Speaker 1: really folded in on itself. And really the last jew 16 00:00:57,280 --> 00:01:00,800 Speaker 1: to fall is services. Now, a credit crunch really doesn't 17 00:01:00,800 --> 00:01:04,440 Speaker 1: affect services because people don't tend to finance restaurant and 18 00:01:04,520 --> 00:01:08,600 Speaker 1: visits other than using their credit cards. But certainly we 19 00:01:08,680 --> 00:01:11,840 Speaker 1: think that in terms of durable goods and certainly the 20 00:01:12,800 --> 00:01:16,800 Speaker 1: ability for businesses to invest that tighter credit conditions are 21 00:01:16,840 --> 00:01:19,720 Speaker 1: not a good thing for them, and that will potentially 22 00:01:19,760 --> 00:01:22,920 Speaker 1: cause the economy to have maybe a little bit worse 23 00:01:23,000 --> 00:01:25,880 Speaker 1: recession than we're expecting. So that's what a lot of 24 00:01:25,920 --> 00:01:28,360 Speaker 1: people are saying is that this brings forward the recession. 25 00:01:28,800 --> 00:01:32,319 Speaker 1: But you ring another specter to the table here, this 26 00:01:32,360 --> 00:01:36,319 Speaker 1: idea of a potentially deeper recession. At what point do 27 00:01:36,400 --> 00:01:40,319 Speaker 1: liquidity concerns at banks become a credit problem for the 28 00:01:40,360 --> 00:01:43,399 Speaker 1: consumer a credit problem for the economy akin to what 29 00:01:43,440 --> 00:01:47,960 Speaker 1: we have seen in history when there are liquidity issues. Well, 30 00:01:48,000 --> 00:01:50,480 Speaker 1: if you're a bank and you're concerned about your deposit 31 00:01:50,560 --> 00:01:53,960 Speaker 1: levels dropping, you're less likely to lend money. But the 32 00:01:53,960 --> 00:01:57,200 Speaker 1: things that consumers are already pulling back, they're not going 33 00:01:57,200 --> 00:02:00,400 Speaker 1: out and buying cars and homes because interest rates have 34 00:02:00,520 --> 00:02:04,760 Speaker 1: risen significantly, almost five percentage points and roughly a year. 35 00:02:04,920 --> 00:02:08,640 Speaker 1: So there may not be a much effect on the consumer, 36 00:02:09,000 --> 00:02:11,560 Speaker 1: but certainly I think there's a risk for businesses who 37 00:02:11,960 --> 00:02:14,880 Speaker 1: tend to need cash, especially to pay their workers and 38 00:02:15,400 --> 00:02:18,760 Speaker 1: to invest in and in short term and long term venture. 39 00:02:18,880 --> 00:02:21,560 Speaker 1: So I think the pressures will probably be more on 40 00:02:21,680 --> 00:02:24,959 Speaker 1: businesses relative to consumers. Does this also shift your view 41 00:02:25,000 --> 00:02:27,080 Speaker 1: on how much unemployment could go up or do you 42 00:02:27,120 --> 00:02:29,880 Speaker 1: think that we could get this downturn without some sort 43 00:02:29,919 --> 00:02:33,640 Speaker 1: of structural increase in joblessness just simply because of the 44 00:02:33,680 --> 00:02:39,360 Speaker 1: mismatch right now in the labor market, well, the industries 45 00:02:39,360 --> 00:02:42,480 Speaker 1: that are letting people go or the former pandemic darlings. Again, 46 00:02:42,639 --> 00:02:48,400 Speaker 1: it's tech, it's financed, it's real estate, it's construction, it's transportation, warehousing, 47 00:02:48,480 --> 00:02:51,160 Speaker 1: which were linked to the strong demand for good. So 48 00:02:51,200 --> 00:02:54,160 Speaker 1: that's what we're still seeing in terms of layoffs and weakness. 49 00:02:54,639 --> 00:02:57,720 Speaker 1: But you still have these huge labor shortages and areas 50 00:02:57,760 --> 00:03:01,040 Speaker 1: that are less sensitive to interest rates, such as healthcare 51 00:03:01,440 --> 00:03:06,200 Speaker 1: and restaurants and hotels, and so what we really need 52 00:03:06,280 --> 00:03:11,000 Speaker 1: to see is consumers turn that dour sentiment that we're 53 00:03:11,040 --> 00:03:14,359 Speaker 1: seeing in our consumer confidence gage, which we've seen over 54 00:03:14,400 --> 00:03:17,240 Speaker 1: the last year, into Okay, I no longer want to 55 00:03:17,280 --> 00:03:21,280 Speaker 1: purchase services. And certainly higher interest rates may not get 56 00:03:21,320 --> 00:03:25,200 Speaker 1: at that issue. But if consumers think, well, I might 57 00:03:25,240 --> 00:03:27,799 Speaker 1: be next in terms of layoffs, then they'll pull back 58 00:03:27,840 --> 00:03:29,880 Speaker 1: on spending. But all in all, we still think that 59 00:03:29,919 --> 00:03:32,600 Speaker 1: the unemployment rate's probably going to rise to about four 60 00:03:32,639 --> 00:03:35,920 Speaker 1: point four percent next year. That's roughly a million jobs loss. 61 00:03:35,960 --> 00:03:37,920 Speaker 1: I would not want to be in that number, but 62 00:03:38,120 --> 00:03:40,680 Speaker 1: certainly not as bad as what it could be. We're 63 00:03:40,680 --> 00:03:43,440 Speaker 1: speaking with Dana Peterson, chief economist at the Conference Board, 64 00:03:43,480 --> 00:03:47,080 Speaker 1: as we look forward to another week, another month, potentially 65 00:03:47,200 --> 00:03:49,520 Speaker 1: a rate cuts in the face of what some people 66 00:03:49,520 --> 00:03:53,880 Speaker 1: are expecting is a decline in economic momentum. Dana here 67 00:03:53,920 --> 00:03:56,520 Speaker 1: comes sort of the rub on the whole issue as 68 00:03:56,520 --> 00:03:59,360 Speaker 1: we talk about perhaps the sooner recession, a deeper recession, 69 00:03:59,640 --> 00:04:02,520 Speaker 1: and FED cutting rates in response to that. Have we 70 00:04:02,640 --> 00:04:05,960 Speaker 1: dealt with the inflation problem, especially given the stickiness that 71 00:04:06,000 --> 00:04:09,960 Speaker 1: we've seen in recent data. I don't think we have. Certainly, 72 00:04:09,960 --> 00:04:12,800 Speaker 1: when we see the stickiness, it's linked to wages through 73 00:04:13,280 --> 00:04:17,320 Speaker 1: well services through wages and very strong demand for services, 74 00:04:17,400 --> 00:04:22,400 Speaker 1: also food prices, which are being influenced by outside effects, 75 00:04:22,400 --> 00:04:27,680 Speaker 1: certainly the declines that we expect in rent inflation. It's 76 00:04:27,680 --> 00:04:29,520 Speaker 1: in the pipeline. We just have to wait for it 77 00:04:29,560 --> 00:04:32,400 Speaker 1: to happen. Maybe it'll start in the springtime or early summer. 78 00:04:32,880 --> 00:04:35,719 Speaker 1: But I don't think we've licked the inflation problem, and 79 00:04:35,800 --> 00:04:38,240 Speaker 1: so that's why we're not anticipated that the Fed's going 80 00:04:38,279 --> 00:04:40,680 Speaker 1: to cut rates this year even if there is a 81 00:04:40,720 --> 00:04:44,560 Speaker 1: mild recession. If you still have prices that are so 82 00:04:44,600 --> 00:04:47,839 Speaker 1: far above the two percent target, why would the FED 83 00:04:47,880 --> 00:04:51,160 Speaker 1: be cutting interest rates, especially if they also think that 84 00:04:51,200 --> 00:04:53,560 Speaker 1: if there is a recession that it's not going to 85 00:04:53,600 --> 00:04:56,120 Speaker 1: be that bad. Well, and this isn't just an interest 86 00:04:56,200 --> 00:04:58,240 Speaker 1: rate story. It's also a balance sheet story. And we 87 00:04:58,240 --> 00:05:00,760 Speaker 1: saw the balance sheet increase traumatic lay over the past 88 00:05:00,800 --> 00:05:03,600 Speaker 1: two weeks in terms of the Federal Reserve and its holdings, 89 00:05:03,600 --> 00:05:06,760 Speaker 1: and part of this is not necessarily stimulative. Some people 90 00:05:06,800 --> 00:05:10,200 Speaker 1: will point out these are emergency loans to certain banks. 91 00:05:10,240 --> 00:05:14,680 Speaker 1: At the same time, Can this central bank kill inflation 92 00:05:14,960 --> 00:05:17,520 Speaker 1: if it keeps going back to the same crisis area 93 00:05:17,640 --> 00:05:21,800 Speaker 1: tools to try to solve financial instability? Well, I think 94 00:05:21,800 --> 00:05:23,400 Speaker 1: the FEED is trying to say that it can do 95 00:05:23,400 --> 00:05:26,360 Speaker 1: two things at once. Right, It can address inflation through 96 00:05:26,400 --> 00:05:29,560 Speaker 1: the credit channel by raising interest rates and also the 97 00:05:29,640 --> 00:05:32,760 Speaker 1: continue dialing down of its balance sheet. But it can 98 00:05:32,760 --> 00:05:35,880 Speaker 1: also provide liquidity, which yes, does hit the balance sheet, 99 00:05:35,880 --> 00:05:38,599 Speaker 1: but you can think about it as two different wallets 100 00:05:38,640 --> 00:05:41,400 Speaker 1: that the FET is working with here, and so the 101 00:05:41,400 --> 00:05:43,839 Speaker 1: FET is saying we can provide liquidity to banks, and 102 00:05:43,920 --> 00:05:47,799 Speaker 1: it's not stimulative because banks are taking this money because 103 00:05:48,040 --> 00:05:50,520 Speaker 1: they needed to make sure that they remain stable. But 104 00:05:50,560 --> 00:05:52,920 Speaker 1: they're also probably not going to lend this money, so 105 00:05:53,000 --> 00:05:57,240 Speaker 1: that doesn't so that prevents it from being stimulative or inflationary. 106 00:05:57,480 --> 00:05:59,320 Speaker 1: So I think that's the key thing we have to 107 00:05:59,400 --> 00:06:02,799 Speaker 1: understand that has many different tools, it's using these different 108 00:06:02,839 --> 00:06:06,359 Speaker 1: tools in different ways, and that it can address inflation 109 00:06:06,480 --> 00:06:09,360 Speaker 1: and providing liquidity at the same time. How much do 110 00:06:09,400 --> 00:06:13,600 Speaker 1: you think that the Fed can cut rates? Well, again, 111 00:06:13,720 --> 00:06:15,800 Speaker 1: we think there's there are no rate cuts for this year, 112 00:06:16,440 --> 00:06:20,320 Speaker 1: but we'll probably start seeing consideration of rate cuts maybe 113 00:06:20,320 --> 00:06:22,560 Speaker 1: in the second quarter of next year. But we think 114 00:06:22,600 --> 00:06:24,600 Speaker 1: that we're not going to go back down to the 115 00:06:24,600 --> 00:06:27,559 Speaker 1: low levels that we saw even before the pandemic, because 116 00:06:27,600 --> 00:06:30,560 Speaker 1: inflation may be structurally higher and it may be more 117 00:06:30,640 --> 00:06:33,479 Speaker 1: difficult for the FED to maintain that two percent target. 118 00:06:33,839 --> 00:06:36,360 Speaker 1: So we think that maybe the federal funds rate next 119 00:06:36,440 --> 00:06:40,320 Speaker 1: year goes down to around three quarter four percent, but 120 00:06:40,440 --> 00:06:43,279 Speaker 1: certainly not back to two or one or even zero 121 00:06:43,360 --> 00:06:46,800 Speaker 1: unless we have some major crisis or very deep procession. 122 00:06:47,200 --> 00:06:49,280 Speaker 1: Dana Peterson, thank you so much for being with us 123 00:06:49,279 --> 00:06:56,240 Speaker 1: of the conference board, joining us now as Patrick Compstrong, 124 00:06:56,360 --> 00:06:59,680 Speaker 1: CEO of Plurimi Wealth. Patrick, You've usually got a ridly 125 00:06:59,720 --> 00:07:02,800 Speaker 1: intestinct trade. I know you were sure Credit sways and 126 00:07:02,960 --> 00:07:05,360 Speaker 1: you how some of the jet let's start there. Want 127 00:07:05,360 --> 00:07:09,080 Speaker 1: me through how that worked out? Um, so our story 128 00:07:09,160 --> 00:07:11,200 Speaker 1: Credit swayed all of last year. I actually closed my 129 00:07:11,280 --> 00:07:14,400 Speaker 1: sort unfortunately at the beginning of March, so I thought 130 00:07:14,440 --> 00:07:17,760 Speaker 1: it covered in a two nineties two point nine Swiss 131 00:07:17,760 --> 00:07:20,520 Speaker 1: pranks are there, so made about a seventy percent return 132 00:07:20,560 --> 00:07:23,720 Speaker 1: on the tourt thesis. Was not much upside in the equity, 133 00:07:23,720 --> 00:07:26,600 Speaker 1: even though it's incredibly cheap. But bonds are going to 134 00:07:26,640 --> 00:07:31,760 Speaker 1: be safe. It's a systemically important company. Bonds couldn't fail. 135 00:07:31,880 --> 00:07:34,240 Speaker 1: So I had a bit of a scary ride over 136 00:07:34,280 --> 00:07:37,080 Speaker 1: the weekend. Sure you did some of the bonds. I 137 00:07:37,120 --> 00:07:40,520 Speaker 1: own our senior bonds, all senior bonds, but at the 138 00:07:40,560 --> 00:07:43,080 Speaker 1: group level, and there are were scenarios where if it 139 00:07:43,160 --> 00:07:45,800 Speaker 1: was a forced acid sale and UBS didn't buy the group, 140 00:07:46,080 --> 00:07:48,600 Speaker 1: those bonds would have come under pressure and potentially even 141 00:07:48,640 --> 00:07:51,240 Speaker 1: been worthless. But it turned out to be a good 142 00:07:51,240 --> 00:07:54,200 Speaker 1: trade on both sides of those. Since we've pulled closed 143 00:07:54,200 --> 00:07:57,080 Speaker 1: Credit Swiss, so we're actually short Bank of Nova Scotia 144 00:07:57,120 --> 00:08:01,320 Speaker 1: in Canada now and the Adian banks became the biggest 145 00:08:01,360 --> 00:08:04,160 Speaker 1: banks in the world in the financial crisis. They weren't 146 00:08:04,200 --> 00:08:08,240 Speaker 1: impaired basically by the same issues that all the other 147 00:08:08,280 --> 00:08:10,680 Speaker 1: banks plummet and value, and I think they're viewed as 148 00:08:10,680 --> 00:08:14,160 Speaker 1: a beacon of safety. But Canadian banks have a property 149 00:08:14,160 --> 00:08:16,160 Speaker 1: bubble to deal with, and they've got rising rates to 150 00:08:16,200 --> 00:08:19,360 Speaker 1: deal with, and they're very expensive. You look at every 151 00:08:19,360 --> 00:08:21,880 Speaker 1: other bank in the world and they're trading at frank 152 00:08:22,080 --> 00:08:25,520 Speaker 1: practions of tangible book value. In Canada they're still trading 153 00:08:25,520 --> 00:08:28,960 Speaker 1: at multiples of tangible book values. So very expensive banks, 154 00:08:29,320 --> 00:08:32,120 Speaker 1: very well run banks, but with a property bubble that 155 00:08:32,200 --> 00:08:34,120 Speaker 1: creates some risks. Well, let's put some numbers on that 156 00:08:34,160 --> 00:08:38,439 Speaker 1: property bubble, Patrick, how about is that situation? Well, property 157 00:08:38,440 --> 00:08:43,880 Speaker 1: it's always very hard to exactly quantify, but affordability index 158 00:08:44,000 --> 00:08:46,559 Speaker 1: Canada is right near the bottom of the world. Property 159 00:08:46,559 --> 00:08:49,760 Speaker 1: prices have gone up four hundred percent incomes a rising 160 00:08:49,840 --> 00:08:52,720 Speaker 1: in line with the rest of the world. So zero 161 00:08:52,760 --> 00:08:56,160 Speaker 1: interest rate policy that led to property price jumps everywhere. 162 00:08:56,280 --> 00:09:00,000 Speaker 1: Just we're really magnified in Canada. Canada has been commodity 163 00:09:00,040 --> 00:09:02,240 Speaker 1: the exporter as well. So in high old prices, the 164 00:09:02,240 --> 00:09:06,160 Speaker 1: economy was relatively resilient, and zero interest rate policies have 165 00:09:06,360 --> 00:09:10,400 Speaker 1: led to incredibly strong property market, especially in the big cities. Patrick, 166 00:09:10,440 --> 00:09:12,880 Speaker 1: I'm going to help you out disclosure. You're from Canada, right, 167 00:09:12,920 --> 00:09:15,280 Speaker 1: so this is something coming from a place where you 168 00:09:15,320 --> 00:09:17,920 Speaker 1: can you can criticize your own home more easily. I 169 00:09:17,960 --> 00:09:20,880 Speaker 1: am curious of whether this is just a symptom of 170 00:09:21,000 --> 00:09:23,360 Speaker 1: liquidity being drawn out of the system that is exposing 171 00:09:23,360 --> 00:09:26,680 Speaker 1: other areas is overly inflated that have not gotten repriced down, 172 00:09:26,960 --> 00:09:31,200 Speaker 1: or you see a potential trade. What's a combination with 173 00:09:31,280 --> 00:09:35,920 Speaker 1: bank lover expensive versus other banks very high on book value, 174 00:09:36,080 --> 00:09:39,479 Speaker 1: higher on earnings, and you are going to see impairments 175 00:09:39,480 --> 00:09:42,559 Speaker 1: on its loan book because banks their business model is 176 00:09:42,600 --> 00:09:45,080 Speaker 1: you lend money to people to buy houses. If those 177 00:09:45,120 --> 00:09:48,600 Speaker 1: house prices come back to normal on any measure versus history, 178 00:09:49,400 --> 00:09:51,920 Speaker 1: you're going to have bad dents in Canada. But it's 179 00:09:51,960 --> 00:09:53,960 Speaker 1: not just a Canadian story. I mean aside from just 180 00:09:54,040 --> 00:09:56,720 Speaker 1: real estate, and there are issues or pockets of issues 181 00:09:57,000 --> 00:09:59,760 Speaker 1: in the Scandinavian countries and other areas where there also 182 00:09:59,880 --> 00:10:02,920 Speaker 1: is an affordability problem. It's also in private equity. It's 183 00:10:02,920 --> 00:10:04,880 Speaker 1: also in private debt. We have seen this. We've heard 184 00:10:04,920 --> 00:10:07,320 Speaker 1: this from a number of different people, and then others 185 00:10:07,360 --> 00:10:09,640 Speaker 1: push back and say, well, it's either repriced or won't 186 00:10:09,640 --> 00:10:12,400 Speaker 1: have to reprice because the assets will return to their 187 00:10:12,480 --> 00:10:15,040 Speaker 1: value later on. Do you think that that's fair or 188 00:10:15,040 --> 00:10:17,800 Speaker 1: do you think that there are pockets nodes of potential contagents. 189 00:10:17,800 --> 00:10:21,440 Speaker 1: Should there be some forced sale, some price discovery in 190 00:10:21,520 --> 00:10:25,960 Speaker 1: some of these assets. Yeah, private equity investors are generally 191 00:10:25,960 --> 00:10:28,360 Speaker 1: not forced in to sell. But if you mark to 192 00:10:28,440 --> 00:10:32,560 Speaker 1: market properly, there's no way private equity dodge to sell 193 00:10:32,600 --> 00:10:34,760 Speaker 1: off in treasuries, to sell off in equities, to sell 194 00:10:34,800 --> 00:10:37,600 Speaker 1: off in every asset. In twenty twenty two, but private 195 00:10:37,640 --> 00:10:40,600 Speaker 1: equity funds mark their assets down six percent some of 196 00:10:40,600 --> 00:10:43,599 Speaker 1: them things like that, But those aren't realizable levels. So 197 00:10:44,240 --> 00:10:46,960 Speaker 1: actually I don't want to talk about but I'm sort equt, 198 00:10:47,240 --> 00:10:49,880 Speaker 1: which is a private equity a lot of private equity assets. 199 00:10:49,920 --> 00:10:53,079 Speaker 1: I'm sort soft bank, which was a play on higher 200 00:10:53,080 --> 00:10:56,440 Speaker 1: interest rates and companies that have no path to profitability. 201 00:10:56,520 --> 00:10:59,160 Speaker 1: But it is also tying into what you just said 202 00:10:59,160 --> 00:11:01,760 Speaker 1: about marking to market versus marking to what you wanted 203 00:11:01,760 --> 00:11:04,120 Speaker 1: to market out So Patrick, tell me about the lungs. 204 00:11:04,120 --> 00:11:05,679 Speaker 1: Since you don't want to talk about the shorts too 205 00:11:05,720 --> 00:11:09,560 Speaker 1: much anymore. What's your favorite long run? Now? My favorite 206 00:11:09,679 --> 00:11:16,240 Speaker 1: long I like BBVA. If we're talking about banks, especially, 207 00:11:16,360 --> 00:11:19,040 Speaker 1: that's a company that's going to grow its revenue probably 208 00:11:19,080 --> 00:11:22,720 Speaker 1: at fifteen percent minimum this year. They've told the regulator 209 00:11:22,800 --> 00:11:25,960 Speaker 1: they expect to grow revenue at twenty five percent. Interest 210 00:11:26,040 --> 00:11:28,559 Speaker 1: rates on zero anymore, that was a big headwind to 211 00:11:28,600 --> 00:11:32,920 Speaker 1: their profitability. So I'm not anti bank. I think some 212 00:11:32,960 --> 00:11:35,560 Speaker 1: of the banks makes sense. I like to pair longs 213 00:11:35,559 --> 00:11:38,959 Speaker 1: with shorts. BBVA I think is very attractive value. Right now, 214 00:11:39,000 --> 00:11:41,920 Speaker 1: the ECPs coming out swinging talking about more hikes. You 215 00:11:42,000 --> 00:11:44,600 Speaker 1: heard the German Central Bank governor saying the same thing, 216 00:11:44,679 --> 00:11:48,400 Speaker 1: maybe even speeding up QT in three Q. You think 217 00:11:48,440 --> 00:11:52,480 Speaker 1: that's achievable, Well, you've got to measure price stability, which 218 00:11:52,520 --> 00:11:55,760 Speaker 1: they're worried about. But financial stability I think is first 219 00:11:55,800 --> 00:11:59,120 Speaker 1: and foremost in all the central banks as to be 220 00:11:59,360 --> 00:12:02,400 Speaker 1: right now, and I actually think we probably aren't going 221 00:12:02,440 --> 00:12:05,360 Speaker 1: to get as hawks responses we probably would have otherwise, 222 00:12:05,800 --> 00:12:07,840 Speaker 1: and it's going to soil the seeds for future inflation 223 00:12:07,880 --> 00:12:10,520 Speaker 1: down the line because central banks playbook when there is 224 00:12:10,559 --> 00:12:15,880 Speaker 1: financial press still liquidity at it, and you've got conditions 225 00:12:15,960 --> 00:12:18,520 Speaker 1: tightening that are offset by the liquidity is they're throwing 226 00:12:18,600 --> 00:12:20,800 Speaker 1: right now. So it's not in placemary right now, but 227 00:12:20,920 --> 00:12:22,960 Speaker 1: they have a tendency to leave those policies in place 228 00:12:23,000 --> 00:12:25,120 Speaker 1: a little bit longer than they could. So I think 229 00:12:25,120 --> 00:12:28,320 Speaker 1: inflation is really dying out quick right now, but I 230 00:12:28,360 --> 00:12:31,000 Speaker 1: think it's probably got another leg up in response to 231 00:12:31,040 --> 00:12:32,880 Speaker 1: what's going to be happening from central banks in the 232 00:12:32,880 --> 00:12:39,120 Speaker 1: coming month. What's the growth profile associated with that inflation? Kilpatrick? Well, so, 233 00:12:39,200 --> 00:12:42,280 Speaker 1: I think the US is probably going to fall into 234 00:12:42,600 --> 00:12:46,359 Speaker 1: a technical recession, probably just based on the tighter financial conditions, 235 00:12:46,440 --> 00:12:49,920 Speaker 1: less access to credit. My view was a month ago 236 00:12:49,920 --> 00:12:52,840 Speaker 1: it wouldn't and my view is now that it probably will, 237 00:12:52,880 --> 00:12:54,920 Speaker 1: but I think it's going to be relatively minor. The 238 00:12:54,920 --> 00:12:58,920 Speaker 1: employment situation is still robust. Employments always a lagging indicator, 239 00:12:59,040 --> 00:13:02,679 Speaker 1: but one point six job openings for every unemployed person. 240 00:13:03,040 --> 00:13:05,200 Speaker 1: That's got to change a lot before you see a 241 00:13:05,240 --> 00:13:08,600 Speaker 1: meaningful disdropt into the US consumer Patra fascinating to catch 242 00:13:08,679 --> 00:13:11,320 Speaker 1: up great cold on credit Swaice as well, Patrick Armstrong. 243 00:13:11,360 --> 00:13:13,640 Speaker 1: There of plurimi wealth. I'm sure he hoped he'd held 244 00:13:13,679 --> 00:13:17,559 Speaker 1: on for another two weeks onto that short but seventy 245 00:13:17,600 --> 00:13:19,959 Speaker 1: percent move. Yeah, that's a pretty big move. Yeah, he 246 00:13:20,200 --> 00:13:27,160 Speaker 1: did pretty well for himself. Henrita Trace joins us now 247 00:13:27,200 --> 00:13:30,480 Speaker 1: the managing partner and director of Economic Research at FADA Partners. 248 00:13:30,720 --> 00:13:34,160 Speaker 1: What a moment, Henrietta. I wouldn't subscribe it that way. 249 00:13:34,240 --> 00:13:37,040 Speaker 1: I don't think spying is the right way to describe it. 250 00:13:37,160 --> 00:13:40,760 Speaker 1: What were your thoughts when you heard that? Look, please stop. 251 00:13:40,800 --> 00:13:43,280 Speaker 1: I mean that was so terrible to watch. That was 252 00:13:43,360 --> 00:13:45,640 Speaker 1: really tough, and it was definitely one of the most 253 00:13:45,679 --> 00:13:48,679 Speaker 1: aggressive hearings that I can remember watching, and I've seen 254 00:13:48,760 --> 00:13:50,960 Speaker 1: quite a few of them. But I agree with your point. 255 00:13:51,000 --> 00:13:53,240 Speaker 1: I think he did as great of a job as 256 00:13:53,280 --> 00:13:55,800 Speaker 1: you could have done. The members knew what they wanted 257 00:13:55,840 --> 00:13:57,920 Speaker 1: to get out of that moment, out of that five 258 00:13:58,000 --> 00:14:00,960 Speaker 1: hour hearing, and it was some of the members were saying, 259 00:14:01,080 --> 00:14:03,760 Speaker 1: the most bipartisan committee and the most bipartisan hearing that 260 00:14:03,800 --> 00:14:05,600 Speaker 1: we've seen in a very long time. And I think 261 00:14:05,600 --> 00:14:08,880 Speaker 1: that is really what drove the attention yesterday, and they 262 00:14:08,920 --> 00:14:11,200 Speaker 1: got the SoundBite they wanted. As he pointed out, Lisa well, 263 00:14:11,200 --> 00:14:13,600 Speaker 1: but Henrietta, how quickly can they actually get something done? 264 00:14:13,679 --> 00:14:16,840 Speaker 1: Where is the actual political will to do something that 265 00:14:17,040 --> 00:14:20,800 Speaker 1: could make some serious ripple effects, particularly among younger Americans. 266 00:14:21,840 --> 00:14:23,800 Speaker 1: I'm really glad you asked. I don't think that there 267 00:14:23,840 --> 00:14:27,760 Speaker 1: will be material legislation targeting TikTok specifically, and I do 268 00:14:27,800 --> 00:14:29,320 Speaker 1: not think that there will be a national ban. I 269 00:14:29,400 --> 00:14:32,240 Speaker 1: understand that yesterday's hearing was very explosive, got a lot 270 00:14:32,240 --> 00:14:35,280 Speaker 1: of attention. It was the banner headline across all media 271 00:14:35,320 --> 00:14:38,600 Speaker 1: platforms yesterday. But the Congress is not in a position 272 00:14:38,680 --> 00:14:41,800 Speaker 1: to pass legislation to ban TikTok right now, even constitutionally 273 00:14:41,800 --> 00:14:44,080 Speaker 1: if they could. What I think is happening, and I 274 00:14:44,080 --> 00:14:46,760 Speaker 1: would encourage investors to do, is watch Katherine Tie, the 275 00:14:46,880 --> 00:14:49,600 Speaker 1: US Trade Representative, today when she's up on the help 276 00:14:49,600 --> 00:14:51,600 Speaker 1: for the second hearing in front of the House Ways 277 00:14:51,640 --> 00:14:55,120 Speaker 1: and Means Committee. That's where you're writing a big, comprehensive 278 00:14:55,240 --> 00:14:57,400 Speaker 1: China Bille, and we saw her give a preview of 279 00:14:57,400 --> 00:15:00,400 Speaker 1: that yesterday. It state finance. They were dueling here at 280 00:15:00,440 --> 00:15:03,000 Speaker 1: the exact same time. But if you didn't want as 281 00:15:03,120 --> 00:15:05,600 Speaker 1: much fireworks, and you were more interested in policy, you 282 00:15:05,600 --> 00:15:07,680 Speaker 1: would have watched the Setate Finance Committee hearing and that's 283 00:15:07,720 --> 00:15:10,320 Speaker 1: what I was doing. So I would encourage people to 284 00:15:10,360 --> 00:15:13,960 Speaker 1: watch Katherine Tye today Master Tie at nine am because 285 00:15:14,040 --> 00:15:18,640 Speaker 1: they have issues about China's expansion into Latin America, Brazil, Russia, 286 00:15:19,560 --> 00:15:24,800 Speaker 1: ip theft, human rights, climate issues. This is the TikTok issue, 287 00:15:24,880 --> 00:15:28,760 Speaker 1: is one that effectively brings everybody to the yard, gets 288 00:15:28,760 --> 00:15:31,560 Speaker 1: the bipartisan support we're looking for that allows them to 289 00:15:31,560 --> 00:15:34,360 Speaker 1: craft a comprehensive China bill, which the Biden administration is 290 00:15:34,360 --> 00:15:37,360 Speaker 1: hoping to do after the debt ceiling standoff is resolved 291 00:15:37,680 --> 00:15:40,120 Speaker 1: or worst case scenario, in his next term if he 292 00:15:40,160 --> 00:15:42,440 Speaker 1: gets reelected. When it comes to the consequences of this, 293 00:15:42,520 --> 00:15:44,320 Speaker 1: how much are you watching TikTok and how much are 294 00:15:44,360 --> 00:15:47,560 Speaker 1: you watching Apple and other big tech companies that have 295 00:15:47,600 --> 00:15:51,680 Speaker 1: substantial businesses over in China. This is exactly what's in 296 00:15:51,720 --> 00:15:54,360 Speaker 1: the restrict Act. That is the one bill that I 297 00:15:54,360 --> 00:15:57,600 Speaker 1: do think could pass on TikTok. It's really about all 298 00:15:57,640 --> 00:16:01,440 Speaker 1: emerging technologies, all social media, and it doesn't just target China. 299 00:16:01,440 --> 00:16:06,160 Speaker 1: It also targets around Russia, Venezuela, Cuba. It's most it's 300 00:16:06,160 --> 00:16:10,360 Speaker 1: the most comprehensive and it could theoretically put every social 301 00:16:10,360 --> 00:16:13,440 Speaker 1: media company on the front of the table and allow 302 00:16:13,480 --> 00:16:17,000 Speaker 1: the Department of Commerce, obviously run by an extraordinarily competent 303 00:16:17,080 --> 00:16:20,080 Speaker 1: Secretary Raymondo, to see what they want to do, study 304 00:16:20,120 --> 00:16:22,240 Speaker 1: the issue, and then restrict and ban if they see 305 00:16:22,280 --> 00:16:25,400 Speaker 1: fit they takes CEO had a tough day. Secretary has 306 00:16:25,440 --> 00:16:28,600 Speaker 1: had a tough two weeks, Henrietta. Let's talk about policy. 307 00:16:28,920 --> 00:16:31,960 Speaker 1: Where is this policy effort going on the bank in front? 308 00:16:33,720 --> 00:16:38,480 Speaker 1: Nowhere fast. I have spoken with Democrats and Republicans House 309 00:16:38,520 --> 00:16:41,480 Speaker 1: Senate for the last two weeks or two years, however 310 00:16:41,520 --> 00:16:46,560 Speaker 1: it's been since SAB collapsed. The reality on Capitol Hill 311 00:16:46,680 --> 00:16:49,400 Speaker 1: is that the House Republican Conference is not prepared to 312 00:16:49,480 --> 00:16:54,240 Speaker 1: move legislation on banking at this time. There are many 313 00:16:54,280 --> 00:16:57,640 Speaker 1: ideas floating around, but there is no path to two 314 00:16:57,760 --> 00:16:59,800 Speaker 1: hundred and eighteen votes from a majority of the Republican 315 00:16:59,800 --> 00:17:02,280 Speaker 1: call friends in the House on any legislation. And what 316 00:17:02,360 --> 00:17:04,639 Speaker 1: I hear time and time again is that you need 317 00:17:04,680 --> 00:17:09,280 Speaker 1: to see the impact of this banking crisis and the 318 00:17:09,280 --> 00:17:13,200 Speaker 1: collapse of a couple sort of bespoke boutique firms, which 319 00:17:13,240 --> 00:17:15,280 Speaker 1: is how a lot of House Republicans think about this 320 00:17:15,680 --> 00:17:17,720 Speaker 1: really start to hit the heartland. You need to see 321 00:17:17,920 --> 00:17:21,639 Speaker 1: farming banks, farming state impacts. You know, it can't just 322 00:17:21,680 --> 00:17:25,440 Speaker 1: be commercial real estate that is reeling from this collapse 323 00:17:25,480 --> 00:17:29,040 Speaker 1: and potentially seeing their lending ability squeezed. You need to 324 00:17:29,080 --> 00:17:33,320 Speaker 1: see real heartland impact that's not just in a certain 325 00:17:33,760 --> 00:17:36,920 Speaker 1: couple of places. Most of the Republican conference, I would 326 00:17:36,960 --> 00:17:40,320 Speaker 1: say about eighty percent was not in office during the 327 00:17:40,359 --> 00:17:42,919 Speaker 1: Great Recession, and they were not here during the banking collapse, 328 00:17:42,960 --> 00:17:45,199 Speaker 1: and many of them ran on the campaign of we 329 00:17:45,280 --> 00:17:48,840 Speaker 1: are against bailouts, were against heart and when they look at, 330 00:17:48,880 --> 00:17:51,600 Speaker 1: you know, ensuring all deposits and passing legislation to hike 331 00:17:51,640 --> 00:17:54,080 Speaker 1: the two hundred fifty thousand dollars cap, all they see 332 00:17:54,119 --> 00:17:56,320 Speaker 1: is bailout and that's not going to pass in this conference. 333 00:17:56,560 --> 00:17:59,560 Speaker 1: Do you see and can you identify a mechanism for 334 00:17:59,600 --> 00:18:02,639 Speaker 1: the trade ye to move forward and temporarily suspend the 335 00:18:02,680 --> 00:18:05,639 Speaker 1: limit on deposits. It's to a mechanism that exists in 336 00:18:05,680 --> 00:18:09,240 Speaker 1: your mind. Yes, absolutely. And one thing that I recall, 337 00:18:09,280 --> 00:18:11,080 Speaker 1: you know, I was in the Senate during the banking crisis. 338 00:18:11,160 --> 00:18:14,840 Speaker 1: The ability regulators to act is unparalleled, and the things 339 00:18:14,840 --> 00:18:17,679 Speaker 1: that they can pull out of a hat are really impressive. 340 00:18:17,720 --> 00:18:20,120 Speaker 1: So I think the most focused right now. What I've 341 00:18:20,160 --> 00:18:22,720 Speaker 1: spoken with Senate Banking Committee staff on, and I know 342 00:18:22,800 --> 00:18:25,720 Speaker 1: Treasury is working on, is shoring up all the things 343 00:18:25,760 --> 00:18:27,760 Speaker 1: that we would think of for extraordinary measures on the 344 00:18:27,800 --> 00:18:30,760 Speaker 1: debt ceiling. I would encourage folks to look at Secretary 345 00:18:30,800 --> 00:18:33,600 Speaker 1: Geitner's letters sent back in twenty twelve, where he lays 346 00:18:33,640 --> 00:18:36,640 Speaker 1: out like five different baskets of funding that the Treasury 347 00:18:36,640 --> 00:18:39,879 Speaker 1: has exclusive authority over that they can tap into in 348 00:18:39,920 --> 00:18:43,000 Speaker 1: the event of a crisis. This circumstance I'm referencing was 349 00:18:43,040 --> 00:18:45,480 Speaker 1: the debt ceiling, but they can use that here as well. 350 00:18:45,920 --> 00:18:48,520 Speaker 1: The ESG Fund in particular, is getting a lot of attention. 351 00:18:48,720 --> 00:18:52,520 Speaker 1: Treasury Secretary Yellen, once President Biden gives her the sign off, 352 00:18:52,640 --> 00:18:55,960 Speaker 1: is authorized to use the funds there, which were two 353 00:18:56,040 --> 00:18:59,200 Speaker 1: hundred and sixteen billion dollars as of January thirty first 354 00:18:59,240 --> 00:19:02,239 Speaker 1: of this year, to deploy as she sees it. So 355 00:19:02,280 --> 00:19:04,760 Speaker 1: I think that's where a lot of the focus should be. 356 00:19:04,840 --> 00:19:07,879 Speaker 1: It's on the regulators importantly. I think the regulators know 357 00:19:07,960 --> 00:19:10,440 Speaker 1: that Congress is incapable of action, and so they are 358 00:19:10,520 --> 00:19:14,360 Speaker 1: already prepared to move and they have experienced if the 359 00:19:15,119 --> 00:19:17,879 Speaker 1: members of the House do not just to finish on 360 00:19:17,920 --> 00:19:21,639 Speaker 1: Secretary Yellen, she was asked whether she discussed some of 361 00:19:21,640 --> 00:19:24,639 Speaker 1: these issues, and she said she hadn't discussed them. And 362 00:19:24,680 --> 00:19:27,879 Speaker 1: I struggled to believe that Henrietta just struggled to believe 363 00:19:27,880 --> 00:19:31,040 Speaker 1: that the Treasury hadn't had a discussion about doing away 364 00:19:31,600 --> 00:19:34,480 Speaker 1: with the cap on deposity deposit insurance through the mechanisms 365 00:19:34,520 --> 00:19:37,919 Speaker 1: which you've identified. Were surprised that she used that language. 366 00:19:39,160 --> 00:19:41,679 Speaker 1: I do think that there's been some maybe back and 367 00:19:41,760 --> 00:19:46,240 Speaker 1: forth in terms of what they're telegraphing. But I also 368 00:19:46,920 --> 00:19:49,560 Speaker 1: get the sense the Treasury is trying to you know, 369 00:19:49,880 --> 00:19:53,359 Speaker 1: exude calm and stress as the followers are to help 370 00:19:53,440 --> 00:19:56,120 Speaker 1: them do earlier this week that there's not a systemic 371 00:19:56,160 --> 00:20:00,359 Speaker 1: banking crisis. So I do think that acting unila early 372 00:20:00,440 --> 00:20:03,000 Speaker 1: to you know, provide unlimited backstop would have gotten a 373 00:20:03,040 --> 00:20:06,600 Speaker 1: lot of blowback. Yeah, she'd committed that. Just think about 374 00:20:06,600 --> 00:20:08,760 Speaker 1: how quickly that sounds like a bailout, especially when you've 375 00:20:08,800 --> 00:20:11,159 Speaker 1: got guys like Gary Cohn throwing out ten million dollars numbers. 376 00:20:12,000 --> 00:20:14,120 Speaker 1: It's just too high. So I do think that there 377 00:20:14,240 --> 00:20:18,360 Speaker 1: was some strategy involved there, which was the worst scenario 378 00:20:18,520 --> 00:20:21,240 Speaker 1: saying that you are considering it an unlimited basis, or 379 00:20:21,240 --> 00:20:23,119 Speaker 1: maybe just say, hey, we haven't had that conversation. I 380 00:20:23,119 --> 00:20:26,280 Speaker 1: think she picked the least bad option. What a tough 381 00:20:26,320 --> 00:20:29,520 Speaker 1: spot hemerer trace their faded partners. Who would you prefer 382 00:20:29,520 --> 00:20:32,960 Speaker 1: to be this week? Framo TikTok ceo? Second, Psach, you 383 00:20:33,040 --> 00:20:36,240 Speaker 1: pick TikTok ceo because you had nothing to lose. Who 384 00:20:36,240 --> 00:20:42,080 Speaker 1: are already working to be exactly lose it lost already exactly? 385 00:20:42,320 --> 00:20:46,440 Speaker 1: Patrick calm Strong flimy Wealth coming up. Chris Marangue joins 386 00:20:46,520 --> 00:20:49,720 Speaker 1: US now coc iok Belly Funds. Chris, your words, the 387 00:20:49,760 --> 00:20:53,200 Speaker 1: bank crisis a feature, not a bug of FED policy, Chris, 388 00:20:53,200 --> 00:20:56,000 Speaker 1: what do you mean by that? Well, listen, I think 389 00:20:56,200 --> 00:20:59,920 Speaker 1: we've talked for a long time about Cherry Powell pushing rates. 390 00:21:00,160 --> 00:21:04,359 Speaker 1: Something breaks, and clearly something's broken. He's made no he 391 00:21:04,400 --> 00:21:07,920 Speaker 1: hasn't been shy about about talking about the fact that 392 00:21:08,000 --> 00:21:12,280 Speaker 1: this credit crisis is going to be disinflationary. It helps 393 00:21:12,280 --> 00:21:15,720 Speaker 1: them attack inflation. So as long as we can manage 394 00:21:15,720 --> 00:21:17,800 Speaker 1: through this, it probably helps that part of the equation. 395 00:21:18,320 --> 00:21:20,240 Speaker 1: If we can manage through it, if we can avoid 396 00:21:20,240 --> 00:21:23,200 Speaker 1: a deeper crisis, one that spreads even more. Chris, is 397 00:21:23,240 --> 00:21:28,200 Speaker 1: this sector attractive to you in any way, shape or form. Well, thankfully, 398 00:21:28,200 --> 00:21:33,160 Speaker 1: we have generally avoided cyclical and sorry, we've generally avoided 399 00:21:33,960 --> 00:21:37,440 Speaker 1: commoditized businesses, and the borrow short lived long business is 400 00:21:37,480 --> 00:21:43,680 Speaker 1: somewhat commoditized. And it's become less attractive recently, in part 401 00:21:43,720 --> 00:21:46,159 Speaker 1: because funding costs are going to go up, Banks are 402 00:21:46,160 --> 00:21:49,679 Speaker 1: gonna have to pay more for deposits. Credit quality is 403 00:21:49,680 --> 00:21:53,240 Speaker 1: likely deteriorating. There could be fewer loans, a fewer revenue opportunities, 404 00:21:53,520 --> 00:21:59,120 Speaker 1: and almost certainly more regulation, including higher credit standards, higher 405 00:21:59,200 --> 00:22:02,200 Speaker 1: ratios acquired. And that's going to impact both the P 406 00:22:02,400 --> 00:22:05,359 Speaker 1: and the E for these stocks, and so they're less attractive. 407 00:22:05,720 --> 00:22:07,639 Speaker 1: Not something I'd want to get involved with today. I 408 00:22:07,640 --> 00:22:10,280 Speaker 1: feel like this market has been exerting the maximal pain 409 00:22:10,720 --> 00:22:13,280 Speaker 1: on the maximal number of traders at all times. Heading 410 00:22:13,280 --> 00:22:15,439 Speaker 1: into this year, people were talking about value stocks and 411 00:22:15,480 --> 00:22:18,080 Speaker 1: how banks fit into that, and how big tech was 412 00:22:18,119 --> 00:22:20,040 Speaker 1: going to be left for dead. Big tech has ripped, 413 00:22:20,240 --> 00:22:22,840 Speaker 1: banks are having trouble at this point. Do you still 414 00:22:22,880 --> 00:22:26,399 Speaker 1: think that big tech can lead given the concerns around growth, 415 00:22:26,560 --> 00:22:29,639 Speaker 1: given the concerns that perhaps the cost cutting and the 416 00:22:29,640 --> 00:22:33,440 Speaker 1: potential right sizing of the businesses is not over. Yeah, 417 00:22:33,480 --> 00:22:35,760 Speaker 1: I would make a distinction about Obviously there's been this 418 00:22:36,440 --> 00:22:39,320 Speaker 1: rotation back to tech, back to growth. I think much 419 00:22:39,320 --> 00:22:43,440 Speaker 1: of that is related to safe haven trade investors looking 420 00:22:43,480 --> 00:22:48,280 Speaker 1: for these big nation state type companies with big credit balances, 421 00:22:48,400 --> 00:22:51,760 Speaker 1: cash flowing businesses as a as a safe place to 422 00:22:51,800 --> 00:22:57,560 Speaker 1: be Small tech, profitless tech has not shared in as 423 00:22:57,640 --> 00:23:01,280 Speaker 1: much in this rotation and the higher interest rate environment, 424 00:23:01,520 --> 00:23:03,679 Speaker 1: A recessionary environment is not going to be good for 425 00:23:03,720 --> 00:23:06,080 Speaker 1: those companies. So you know, we're still looking for the 426 00:23:06,400 --> 00:23:12,119 Speaker 1: cash flow generators, companies with pricing power, and that's been 427 00:23:12,280 --> 00:23:15,800 Speaker 1: the formula for recessionary environment, for an invitationary environment. We 428 00:23:15,800 --> 00:23:18,640 Speaker 1: started this conversation Chris talking about the FED hiking rates 429 00:23:18,680 --> 00:23:21,680 Speaker 1: until something breaks, and something clearly has broken. As you said, 430 00:23:22,040 --> 00:23:25,360 Speaker 1: I'm curious what that means about the way you invest 431 00:23:25,480 --> 00:23:28,480 Speaker 1: in terms of do you go for diversification or do 432 00:23:28,520 --> 00:23:31,040 Speaker 1: you go for further concentration and the companies that you 433 00:23:31,119 --> 00:23:34,960 Speaker 1: know best. Yeah, I mean, we're obviously looking for diversification 434 00:23:35,000 --> 00:23:39,199 Speaker 1: across both industries and companies, but you know, it's to 435 00:23:39,240 --> 00:23:42,280 Speaker 1: a certain extent. We want to focus on our core competencies. 436 00:23:42,320 --> 00:23:44,720 Speaker 1: We want to put our eggs in a basket and 437 00:23:44,720 --> 00:23:47,800 Speaker 1: watch that basket. And that's basically what we've been doing, 438 00:23:47,880 --> 00:23:50,760 Speaker 1: unchanged for forty years. Chris. So we sleep walking into 439 00:23:50,800 --> 00:23:55,320 Speaker 1: a crisis, a much bigger one. I don't think. I'm 440 00:23:55,359 --> 00:23:57,240 Speaker 1: certainly not sleepwalking, and I don't think the market is 441 00:23:57,240 --> 00:23:59,439 Speaker 1: as well. The market is well aware of what's going on, 442 00:23:59,480 --> 00:24:03,600 Speaker 1: and maybe a little bit too nervous given the recency 443 00:24:04,000 --> 00:24:08,800 Speaker 1: for many of us of the seven crisis. Obviously, lots 444 00:24:08,800 --> 00:24:11,720 Speaker 1: of lots of risks out there, and that's where we 445 00:24:11,720 --> 00:24:14,960 Speaker 1: get paid to manage. She's in our breed's complacency. Though, 446 00:24:15,240 --> 00:24:17,879 Speaker 1: those that experienced O seven who always sit there and 447 00:24:17,920 --> 00:24:21,960 Speaker 1: say it's not oh seven way, Chris, it's always a 448 00:24:22,000 --> 00:24:24,399 Speaker 1: little bit different, and clearly this time is different. I 449 00:24:24,440 --> 00:24:26,720 Speaker 1: don't think we have quite the systemic issues in the 450 00:24:26,760 --> 00:24:30,800 Speaker 1: banking system that we did back then. Obviously, you know, 451 00:24:30,800 --> 00:24:34,520 Speaker 1: the BE now having raised rates so aggressively, does have 452 00:24:34,600 --> 00:24:41,320 Speaker 1: some ammunition, some dry powder u to uh copcy cut 453 00:24:41,400 --> 00:24:46,119 Speaker 1: rates and improve the situation. But you know, it's what 454 00:24:46,240 --> 00:24:48,840 Speaker 1: you don't know that you're worried about totally and as 455 00:24:48,840 --> 00:24:50,359 Speaker 1: so much we don't know, Chris, We've got to leave 456 00:24:50,359 --> 00:24:52,840 Speaker 1: it there. Thank you, sir, Chris Marangi there a cabelly Funds. 457 00:24:53,000 --> 00:24:56,280 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on the Apple, Spotify, 458 00:24:56,320 --> 00:24:59,480 Speaker 1: and anywhere else you get your podcasts. Listen live every 459 00:24:59,520 --> 00:25:02,439 Speaker 1: weekday starting at seven am Eastern on Bloomberg dot com, 460 00:25:02,440 --> 00:25:05,920 Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app. 461 00:25:06,240 --> 00:25:09,520 Speaker 1: You can watch us live on Bloomberg Television and always 462 00:25:09,600 --> 00:25:13,040 Speaker 1: on the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, 463 00:25:13,080 --> 00:25:14,160 Speaker 1: and this is Bloomberg.