1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,200 Speaker 2: Terminal and the Bloomberg Business App. Mike Wilson and Morgan 10 00:00:37,240 --> 00:00:39,880 Speaker 2: Stanley joins us ahead of the most important earnings print 11 00:00:39,960 --> 00:00:40,440 Speaker 2: in the years. 12 00:00:40,520 --> 00:00:41,920 Speaker 3: I'm not sure, Mike, if you'd agree with that. 13 00:00:41,960 --> 00:00:44,159 Speaker 2: I will ask you this though, What is more important, 14 00:00:44,159 --> 00:00:46,720 Speaker 2: Mike to you this interest from Chairman Powell a little 15 00:00:46,720 --> 00:00:50,640 Speaker 2: bit later this morning, or that payrolls print on September sixth? 16 00:00:52,159 --> 00:00:55,280 Speaker 1: Yeah, good morning, John. I think in my mind it's 17 00:00:55,280 --> 00:00:58,720 Speaker 1: about the payroll number. It's really about the labor data period. 18 00:00:59,080 --> 00:01:01,560 Speaker 1: That's what's going to take tape, what the Fed does, 19 00:01:01,680 --> 00:01:03,840 Speaker 1: They've said that, and that's what the market's going to 20 00:01:03,840 --> 00:01:04,480 Speaker 1: trade off of. 21 00:01:05,080 --> 00:01:06,360 Speaker 4: I mean, if you go back a month ago. 22 00:01:06,480 --> 00:01:09,640 Speaker 1: That's when we had this correction, and it really did 23 00:01:09,720 --> 00:01:12,600 Speaker 1: kick off with a weaker non farm payroll number. Now 24 00:01:12,600 --> 00:01:18,160 Speaker 1: that has been somewhat refuted by better claims and also 25 00:01:18,600 --> 00:01:22,399 Speaker 1: just you know the deal that the jobs are okay still, 26 00:01:22,400 --> 00:01:24,800 Speaker 1: but then we got the revision. So the data is 27 00:01:24,800 --> 00:01:27,520 Speaker 1: still very mixed in my view, and the market under 28 00:01:27,560 --> 00:01:29,680 Speaker 1: the surface, as we like to look at it is 29 00:01:29,720 --> 00:01:33,960 Speaker 1: still trading very defensively. It doesn't know, So I think 30 00:01:34,000 --> 00:01:37,399 Speaker 1: it comes down to that payroll number, the federal reacts, 31 00:01:37,560 --> 00:01:39,440 Speaker 1: and we'll see and we'll see how the market goes. 32 00:01:39,480 --> 00:01:42,000 Speaker 1: I mean, my general view is if they cut twenty five, 33 00:01:42,040 --> 00:01:45,040 Speaker 1: that's probably fine. If they cut fifty, historically that has 34 00:01:45,080 --> 00:01:47,560 Speaker 1: been a bad signal for the equity markets. 35 00:01:47,840 --> 00:01:50,080 Speaker 2: Mike, you say the markets traded pretty defensively. I want 36 00:01:50,120 --> 00:01:51,400 Speaker 2: to pick up on that and just build on a 37 00:01:51,440 --> 00:01:53,760 Speaker 2: little bit. In some places we start to see that 38 00:01:53,800 --> 00:01:57,000 Speaker 2: breadth improve against small caps of studes perform. We've seen 39 00:01:57,040 --> 00:01:59,440 Speaker 2: the record highst on an equal weight through this week 40 00:01:59,520 --> 00:01:59,920 Speaker 2: so far. 41 00:02:00,520 --> 00:02:01,600 Speaker 3: Mike. Do you think we're just. 42 00:02:01,640 --> 00:02:03,360 Speaker 2: As vulnerable as we were at the start of the 43 00:02:03,400 --> 00:02:06,000 Speaker 2: month to week data or if we reset things differently 44 00:02:06,000 --> 00:02:06,760 Speaker 2: this time around. 45 00:02:08,160 --> 00:02:12,040 Speaker 1: I think we're more vulnerable to another negative data point 46 00:02:12,080 --> 00:02:15,200 Speaker 1: on the labor market. That was sort of a warning sign, 47 00:02:15,960 --> 00:02:18,000 Speaker 1: and once again we don't know the result. But if 48 00:02:18,040 --> 00:02:20,720 Speaker 1: we get a negative payroll number, I think the market 49 00:02:20,720 --> 00:02:23,480 Speaker 1: could react just as bad at the index level. 50 00:02:23,480 --> 00:02:25,160 Speaker 4: So let's talk about that under the surface. 51 00:02:25,200 --> 00:02:27,520 Speaker 1: I mean you mentioned small caps have done better where 52 00:02:27,560 --> 00:02:30,440 Speaker 1: they did better in July when the money rotated away 53 00:02:30,480 --> 00:02:34,200 Speaker 1: from the Magnificent seven and some of the quality growth leaders, 54 00:02:34,280 --> 00:02:37,480 Speaker 1: and it went into defensives quite frankly, so defensives of now. 55 00:02:37,560 --> 00:02:41,400 Speaker 1: And when I say defensives, I mean utilities, healthcare, stables 56 00:02:41,480 --> 00:02:44,080 Speaker 1: in real estate. Those four sectors have led on a 57 00:02:44,120 --> 00:02:46,880 Speaker 1: five day basis, on a one month basis, and a 58 00:02:46,880 --> 00:02:50,240 Speaker 1: three month basis, So it's been very consistent. And that's 59 00:02:50,240 --> 00:02:52,720 Speaker 1: about the time we pivoted back in May to a 60 00:02:52,760 --> 00:02:55,840 Speaker 1: more defensive book and I don't really see any reason 61 00:02:55,880 --> 00:02:56,960 Speaker 1: to kind of deviate from that. 62 00:02:57,000 --> 00:02:57,160 Speaker 5: Now. 63 00:02:57,200 --> 00:02:59,720 Speaker 1: If we get a very strong payroll number, then that 64 00:03:00,000 --> 00:03:02,160 Speaker 1: it's going to reverse sharply back to the more cyclical 65 00:03:02,200 --> 00:03:04,280 Speaker 1: parts of the market. I think it's going to be 66 00:03:04,360 --> 00:03:08,359 Speaker 1: very messy. I don't anticipate the labor data to improve dramatically. 67 00:03:09,040 --> 00:03:11,320 Speaker 1: I don't know if it's going to deteriorate further, but 68 00:03:11,680 --> 00:03:14,239 Speaker 1: given the signal from the stock market and the bond market, 69 00:03:14,320 --> 00:03:17,080 Speaker 1: quite frankly, the markets are definitely paying attention to this. 70 00:03:17,160 --> 00:03:19,840 Speaker 4: And this is a big number, Mike. 71 00:03:19,880 --> 00:03:22,680 Speaker 6: If I can ask what probability of a recession do 72 00:03:22,760 --> 00:03:25,480 Speaker 6: you think the equity market's essentially pricing and you can 73 00:03:25,520 --> 00:03:28,280 Speaker 6: look at breadth there or you can look at aggregate. 74 00:03:28,400 --> 00:03:30,160 Speaker 6: And the other question was on margins, how do you 75 00:03:30,200 --> 00:03:33,040 Speaker 6: see that evolving? Because I felt margins had a nice 76 00:03:33,120 --> 00:03:37,000 Speaker 6: tale wind with the fact that that essential cost of 77 00:03:37,080 --> 00:03:40,960 Speaker 6: input prices were coming down. Does that change if prices 78 00:03:40,960 --> 00:03:42,720 Speaker 6: are going to be more stable, it's all going to 79 00:03:42,760 --> 00:03:45,840 Speaker 6: come down to those sales numbers. So I guess two questions. 80 00:03:46,440 --> 00:03:47,680 Speaker 4: Yeah, we'll start with the second one. 81 00:03:47,680 --> 00:03:49,840 Speaker 1: I mean, I think you're dead right on I mean, 82 00:03:49,840 --> 00:03:52,680 Speaker 1: what the micro data has been definitely weaker than the 83 00:03:52,720 --> 00:03:53,360 Speaker 1: macro data. 84 00:03:53,360 --> 00:03:55,119 Speaker 4: And let me just take a minute on this. 85 00:03:55,120 --> 00:03:57,200 Speaker 1: This kind of goes to my core thesis that we 86 00:03:57,320 --> 00:04:00,920 Speaker 1: basically have a policy mix, call it fiscal dominance, where 87 00:04:01,240 --> 00:04:04,720 Speaker 1: fiscal policy has been really the dominant lever for the 88 00:04:04,760 --> 00:04:07,680 Speaker 1: last couple of years. That's what led to the inflation breakout. 89 00:04:07,680 --> 00:04:10,280 Speaker 1: In my view, there was some supply constraints, sure, but 90 00:04:10,320 --> 00:04:14,120 Speaker 1: basically had too much aggregate demand from fiscal stimulus. And 91 00:04:14,160 --> 00:04:18,039 Speaker 1: now that's somewhat that is somewhat prevented the Fed from 92 00:04:18,080 --> 00:04:21,960 Speaker 1: being more proactive with rate policy, and in effect, it's 93 00:04:21,960 --> 00:04:24,440 Speaker 1: crowded out, as you were mentioning earlier, it's crowded out 94 00:04:24,560 --> 00:04:27,440 Speaker 1: the middle class. It's crowded out the lower class, lower 95 00:04:27,520 --> 00:04:30,839 Speaker 1: income class for sure, and even some of the wealthier 96 00:04:30,880 --> 00:04:32,200 Speaker 1: investors now are being crowded out. 97 00:04:32,240 --> 00:04:34,720 Speaker 4: And that's why small caps have underperformed so much. So 98 00:04:34,800 --> 00:04:36,560 Speaker 4: that that's very much intact. 99 00:04:37,200 --> 00:04:39,720 Speaker 1: And I think that you know that that policy mix 100 00:04:39,760 --> 00:04:41,160 Speaker 1: has been unusual. 101 00:04:41,480 --> 00:04:42,800 Speaker 4: It is also extended. 102 00:04:42,920 --> 00:04:45,839 Speaker 1: I think the cycle longer than what it probably would 103 00:04:45,839 --> 00:04:47,760 Speaker 1: have been, which has kept the Fed doing their job 104 00:04:47,800 --> 00:04:48,760 Speaker 1: of keeping rates. 105 00:04:48,560 --> 00:04:51,880 Speaker 4: Higher for longer. And they're and they're now it's working. 106 00:04:51,920 --> 00:04:54,599 Speaker 1: Now it's really starting to bite any interest rates sensitive 107 00:04:54,600 --> 00:04:57,479 Speaker 1: parts of the market, like housing, autos in some of 108 00:04:57,520 --> 00:04:58,120 Speaker 1: those areas. 109 00:04:58,120 --> 00:04:59,000 Speaker 4: So overall, I. 110 00:04:58,960 --> 00:05:01,640 Speaker 1: Would say that the S and P level, it's not 111 00:05:01,720 --> 00:05:04,840 Speaker 1: really pricing in a recession at all. I would say 112 00:05:04,920 --> 00:05:07,279 Speaker 1: at the stock level, it's probably similar to where the 113 00:05:07,279 --> 00:05:09,960 Speaker 1: bond market is. That's why we have defensive leadership. That's 114 00:05:09,960 --> 00:05:13,320 Speaker 1: why small caps have and persistently underperforming. And it's probably 115 00:05:13,320 --> 00:05:16,120 Speaker 1: in the twenty percent range or so, and that's what 116 00:05:16,160 --> 00:05:19,479 Speaker 1: always happens, right until it's definitive. The stock market doesn't 117 00:05:19,480 --> 00:05:20,960 Speaker 1: really want to go there, and it won't go there 118 00:05:21,000 --> 00:05:23,159 Speaker 1: because it needs the hard data. 119 00:05:23,839 --> 00:05:25,680 Speaker 6: Thank you, which actually makes a lot of sense to me. 120 00:05:25,720 --> 00:05:27,680 Speaker 6: We all see the same data. So this idea that 121 00:05:27,720 --> 00:05:30,200 Speaker 6: the bond market might be pricing is something very different 122 00:05:30,200 --> 00:05:32,480 Speaker 6: from the equity market. When we're all looking at the data, 123 00:05:32,520 --> 00:05:35,480 Speaker 6: we're all listening to the Fed. One point you made 124 00:05:35,560 --> 00:05:38,599 Speaker 6: earlier that fifty basis points might be viewed negatively, and 125 00:05:38,640 --> 00:05:39,320 Speaker 6: I see the point. 126 00:05:39,360 --> 00:05:40,960 Speaker 3: What does the FED know that we don't know why 127 00:05:40,960 --> 00:05:41,240 Speaker 3: are they. 128 00:05:41,240 --> 00:05:43,880 Speaker 6: Cutting fifty but if we hear from chep Out and 129 00:05:43,920 --> 00:05:46,040 Speaker 6: I don't know if we'll hear it today, but providing 130 00:05:46,080 --> 00:05:50,279 Speaker 6: a context around potentially going faster initially that if Montree 131 00:05:50,320 --> 00:05:52,640 Speaker 6: policy is restrictive, they're just trying to reduce the level 132 00:05:52,640 --> 00:05:55,560 Speaker 6: of restrictiveness. You think the equity market might like it, 133 00:05:55,640 --> 00:05:58,040 Speaker 6: that they can be a little more aggressive initially, so 134 00:05:58,640 --> 00:06:00,680 Speaker 6: they're not behind the curve. I guess that was a 135 00:06:00,800 --> 00:06:03,040 Speaker 6: learning from the hiking cycle. It would be to start 136 00:06:03,080 --> 00:06:05,000 Speaker 6: earlier so you don't have to do as much. I 137 00:06:05,000 --> 00:06:07,039 Speaker 6: think you can finess that message and keep it in 138 00:06:07,080 --> 00:06:09,440 Speaker 6: the normalization of fifty basis point cut. 139 00:06:10,839 --> 00:06:12,280 Speaker 4: Well, anything's possible, for sure. 140 00:06:12,320 --> 00:06:14,880 Speaker 1: I'm just saying Historically speaking, when the FED is kicked 141 00:06:14,920 --> 00:06:18,400 Speaker 1: off with a fifty basis point cut, it usually has 142 00:06:18,600 --> 00:06:21,880 Speaker 1: led to, you know, not a great outcome that that 143 00:06:21,880 --> 00:06:23,919 Speaker 1: that you know, basically were on the down swinging on 144 00:06:24,000 --> 00:06:26,440 Speaker 1: the cycle. Now this cycle has been unique. They got 145 00:06:26,480 --> 00:06:29,680 Speaker 1: they probably got higher than they initially planned. So maybe 146 00:06:29,720 --> 00:06:32,760 Speaker 1: that that sort of situation doesn't apply this time. So 147 00:06:32,800 --> 00:06:35,080 Speaker 1: I'm open minded to anything. All I'm saying is that 148 00:06:35,080 --> 00:06:37,240 Speaker 1: if the FED were to do fifty, that means that 149 00:06:37,320 --> 00:06:41,120 Speaker 1: data probably deteriorated more. Okay, that's really kind of where 150 00:06:41,160 --> 00:06:43,640 Speaker 1: that comes from. And that would suggest that probably the 151 00:06:43,720 --> 00:06:47,159 Speaker 1: labor market in particular deteriorated more. And that's how the 152 00:06:47,200 --> 00:06:49,000 Speaker 1: bomb market's pricing it right now, right, I mean, they're 153 00:06:49,000 --> 00:06:52,560 Speaker 1: basically saying it twenty five percent chance of a fifty 154 00:06:52,600 --> 00:06:55,159 Speaker 1: basis point cut. That's not you know, that's much less 155 00:06:55,160 --> 00:06:56,360 Speaker 1: than it was two weeks ago. 156 00:06:56,720 --> 00:06:59,120 Speaker 2: My less squeeze and subsective preferences as well. I know 157 00:06:59,160 --> 00:07:00,560 Speaker 2: you're not a big fan of can sum it's Christion. 158 00:07:00,720 --> 00:07:03,839 Speaker 2: Based on the conversation we've just had, industrials, how do 159 00:07:03,880 --> 00:07:05,839 Speaker 2: they fit in? Why do you like that's part of 160 00:07:05,839 --> 00:07:07,159 Speaker 2: the market so much right now? 161 00:07:08,279 --> 00:07:11,360 Speaker 1: Well, I would say, you know, we don't love industrials here, 162 00:07:11,400 --> 00:07:13,160 Speaker 1: we're just sing in the consumer. 163 00:07:13,520 --> 00:07:13,880 Speaker 4: I'm sorry. 164 00:07:13,920 --> 00:07:16,480 Speaker 1: In the cyclical bucket, you've got to own something, right. 165 00:07:16,480 --> 00:07:20,560 Speaker 1: You can't just be totally naked on cyclical exposure. And 166 00:07:20,960 --> 00:07:23,680 Speaker 1: if there is one group that we would gravitate towards, 167 00:07:23,680 --> 00:07:26,760 Speaker 1: it would be the industrial sector that that's cyclical preference. 168 00:07:26,840 --> 00:07:30,760 Speaker 1: Is there within technology, which is a cyclical group, I 169 00:07:30,800 --> 00:07:33,800 Speaker 1: would say we would skew more towards software rather than 170 00:07:33,880 --> 00:07:37,960 Speaker 1: semiconductors or hardware, simply because they're more defensive, but it. 171 00:07:37,920 --> 00:07:38,840 Speaker 4: Is cyclical still. 172 00:07:39,120 --> 00:07:40,560 Speaker 1: So those would be the two cyclical groups that we 173 00:07:40,600 --> 00:07:46,120 Speaker 1: would like in conjunction with our defensive bias, which is utilities, 174 00:07:46,400 --> 00:07:48,360 Speaker 1: you know, healthcare, staples in real estate. 175 00:07:49,040 --> 00:07:51,160 Speaker 2: My Wilson of Augustanding Mincha always cry to catch have 176 00:07:51,240 --> 00:08:03,160 Speaker 2: with the set. So here's the latest this morning. Kamala Harris, 177 00:08:03,320 --> 00:08:07,000 Speaker 2: formerly accepting the Democratic nomination, prioritizing a fight for America's 178 00:08:07,000 --> 00:08:10,480 Speaker 2: middle class, Donald Trump zero again on immigration as his 179 00:08:10,560 --> 00:08:13,440 Speaker 2: counter programming campaign made a stop at the UST Mexico border, 180 00:08:13,480 --> 00:08:17,720 Speaker 2: threatening large tarris on countries that don't accept deported migrants 181 00:08:17,920 --> 00:08:19,480 Speaker 2: joining us from the DNCA Chicago. 182 00:08:19,760 --> 00:08:22,360 Speaker 3: It's Blimberg's and Marie. Let's get straight to it. 183 00:08:22,520 --> 00:08:24,559 Speaker 2: The question that came from the former president, why didn't 184 00:08:24,560 --> 00:08:27,040 Speaker 2: she do these things that she's complaining about. What's the 185 00:08:27,080 --> 00:08:28,840 Speaker 2: response from the Democratic Party to that? 186 00:08:31,840 --> 00:08:34,280 Speaker 7: Well, Jonathan, she gave this speech last night, which I 187 00:08:34,280 --> 00:08:37,240 Speaker 7: think you nailed it. It was heavy on vibes and 188 00:08:37,320 --> 00:08:41,439 Speaker 7: rhetoric and short on policy. That is normal for acceptance speeches. 189 00:08:41,480 --> 00:08:44,000 Speaker 7: What Donald Trump is going to do now and when 190 00:08:44,040 --> 00:08:46,520 Speaker 7: we're on a race seventy four days to this election, 191 00:08:47,080 --> 00:08:49,480 Speaker 7: he is going to want to define her and tether 192 00:08:49,600 --> 00:08:53,439 Speaker 7: her to Biden. Biden obviously was not polling well, not 193 00:08:53,559 --> 00:08:56,840 Speaker 7: only because of things like inflation and his age, but 194 00:08:56,920 --> 00:09:00,360 Speaker 7: also just you know, other things not happen under the 195 00:09:00,400 --> 00:09:03,600 Speaker 7: surface brought her in the economy as well as immigration. 196 00:09:04,040 --> 00:09:07,120 Speaker 7: So Donald Trump and his campaign has been trying to 197 00:09:07,360 --> 00:09:12,400 Speaker 7: nail Kamala Harris on those specific policies yesterday was really 198 00:09:12,440 --> 00:09:16,080 Speaker 7: her introducing herself to the American people at the top 199 00:09:16,120 --> 00:09:20,600 Speaker 7: of the ticket, not just as the VP ticket VP slot. 200 00:09:21,160 --> 00:09:23,959 Speaker 7: And when you look at some of the broad parts 201 00:09:24,000 --> 00:09:28,200 Speaker 7: of policy, whether it's the economy, foreign policy, immigration, and 202 00:09:28,280 --> 00:09:32,160 Speaker 7: reproductive rights, it really felt like a continuation, or at 203 00:09:32,240 --> 00:09:35,080 Speaker 7: least she was cherry picking parts of the Biden menu 204 00:09:35,440 --> 00:09:38,400 Speaker 7: that she would carry through to her administration. Not a 205 00:09:38,400 --> 00:09:41,040 Speaker 7: lot of details, but broadly in line with what we've 206 00:09:41,080 --> 00:09:43,280 Speaker 7: been seeing from President Joe Biden. 207 00:09:43,320 --> 00:09:44,040 Speaker 3: Maybe she spent a. 208 00:09:44,000 --> 00:09:47,480 Speaker 7: Little bit more time on reproductive rights, something that she 209 00:09:47,679 --> 00:09:50,840 Speaker 7: really talked about when she was vice president already and 210 00:09:51,040 --> 00:09:53,480 Speaker 7: Joe Biden stayed away from. But most of this felt 211 00:09:53,520 --> 00:09:55,760 Speaker 7: like a continuation. And Donald Trump is going to try 212 00:09:55,800 --> 00:09:59,280 Speaker 7: to really tether her to Joe Biden because he pulls 213 00:09:59,280 --> 00:10:01,840 Speaker 7: well when it comes to things like the economy and immigration, 214 00:10:01,960 --> 00:10:04,320 Speaker 7: and Joe Biden and Kamal Harris did not when it comes. 215 00:10:04,240 --> 00:10:04,760 Speaker 3: To Donald Trump. 216 00:10:04,800 --> 00:10:07,040 Speaker 2: Can we talk about one specific policy that's been mentioned 217 00:10:07,040 --> 00:10:09,200 Speaker 2: in the last twenty four hours threatening launch Tarris some 218 00:10:09,240 --> 00:10:11,480 Speaker 2: countries that don't accept deported migrants. 219 00:10:11,760 --> 00:10:13,000 Speaker 3: What's been the reaction to that. 220 00:10:15,840 --> 00:10:18,520 Speaker 7: Well, Jonathan, when it comes to the Democratic reaction to 221 00:10:19,080 --> 00:10:23,080 Speaker 7: migration immigration Kamala Harris said yesterday this would be her 222 00:10:23,160 --> 00:10:28,040 Speaker 7: policy position, which is to bring back the bipartisan immigration 223 00:10:28,200 --> 00:10:32,040 Speaker 7: agreement that we're struck between a number of senators Knows, 224 00:10:32,120 --> 00:10:36,880 Speaker 7: notably Senator James Langford of Oklahoma and Connecticut Senator Chris Murphy, 225 00:10:37,280 --> 00:10:40,000 Speaker 7: and that Democrats have been hammering that. The reason why 226 00:10:40,040 --> 00:10:42,960 Speaker 7: that deal did not go through because presidents said, I 227 00:10:43,000 --> 00:10:45,800 Speaker 7: want that deal killed because I want the issue. So 228 00:10:45,960 --> 00:10:49,160 Speaker 7: that is their current plan, which is more support for 229 00:10:49,200 --> 00:10:51,800 Speaker 7: border security, the ability for the president to have his 230 00:10:51,880 --> 00:10:54,520 Speaker 7: executive power to shut it down. When it comes to 231 00:10:54,600 --> 00:10:59,040 Speaker 7: tariffs broadly, at the entire DNC, they have been talking 232 00:10:59,040 --> 00:11:01,800 Speaker 7: about the fact that this is a sales tax. They 233 00:11:01,840 --> 00:11:04,360 Speaker 7: don't want to say the word tariffs because remember Jonathan, 234 00:11:04,600 --> 00:11:08,520 Speaker 7: this administration also kept terrors from the Trump era under 235 00:11:08,640 --> 00:11:12,400 Speaker 7: Joe Biden's watch, some of those Chinese tariffs. But they 236 00:11:12,400 --> 00:11:14,000 Speaker 7: are calling it a sales tax. 237 00:11:14,440 --> 00:11:14,640 Speaker 3: MH. 238 00:11:14,679 --> 00:11:16,679 Speaker 2: I appreciate the imper will catch over in about an 239 00:11:16,679 --> 00:11:19,800 Speaker 2: hour's time from the DNC in Chicago. Speaking of the menu, 240 00:11:20,200 --> 00:11:23,400 Speaker 2: vtig'sis at Botanski with this to say, the Harris campaign 241 00:11:23,480 --> 00:11:26,640 Speaker 2: has treated Bidenomics like a buffet whereby they can embrace 242 00:11:26,679 --> 00:11:28,920 Speaker 2: the issues the play well at the kitchen table well, 243 00:11:28,960 --> 00:11:33,000 Speaker 2: hopefully leaving the less politically palatable provisions behind. Isaac joins us. 244 00:11:33,000 --> 00:11:35,600 Speaker 2: Now for more so, Isaac, let's build on that. What's 245 00:11:35,640 --> 00:11:36,160 Speaker 2: on the menu? 246 00:11:38,679 --> 00:11:42,440 Speaker 8: Well, sure, thus far, it's whatever plays well with the vibes. 247 00:11:42,440 --> 00:11:44,440 Speaker 8: As you said, right, like, all that we've learned over 248 00:11:44,520 --> 00:11:48,280 Speaker 8: the past few days is that is that they have 249 00:11:48,400 --> 00:11:52,640 Speaker 8: a triangulation play called here to do their best to 250 00:11:53,440 --> 00:11:58,040 Speaker 8: a blunt the attacks that Vice President Harris is too 251 00:11:58,120 --> 00:12:03,920 Speaker 8: liberal and b to to meaningfully separate Vice President Harris 252 00:12:03,920 --> 00:12:06,800 Speaker 8: from some of the more contentious Biden issues, and to 253 00:12:06,840 --> 00:12:10,200 Speaker 8: portray her as a change agent. And that's why you 254 00:12:10,240 --> 00:12:14,280 Speaker 8: saw President Trump just last night trying to tag her 255 00:12:14,320 --> 00:12:16,800 Speaker 8: as the incumbent. And that's what the next seventy. 256 00:12:16,400 --> 00:12:17,800 Speaker 9: Four days is going to be about. 257 00:12:18,000 --> 00:12:21,880 Speaker 8: Is Vice President Harris seen as a representation of the 258 00:12:21,920 --> 00:12:25,600 Speaker 8: current administration and the incumbency, or is she seen as 259 00:12:25,640 --> 00:12:26,600 Speaker 8: an agent of change? 260 00:12:26,679 --> 00:12:28,920 Speaker 2: Isaac, When you sit down with clients, when you catch 261 00:12:28,960 --> 00:12:30,600 Speaker 2: up with them in person over the phone, and they 262 00:12:30,640 --> 00:12:33,840 Speaker 2: ask you, Isaac, which candidate is the pro market candidate? 263 00:12:33,960 --> 00:12:37,880 Speaker 2: If you form strong ideas about that, yet you know. 264 00:12:37,960 --> 00:12:40,040 Speaker 8: Look, I think what we tried to focus on is 265 00:12:40,280 --> 00:12:44,680 Speaker 8: acute market themes, right, Like, we feel pretty strongly that 266 00:12:45,040 --> 00:12:47,040 Speaker 8: Trump is good for M and A because he's going 267 00:12:47,080 --> 00:12:49,840 Speaker 8: to change leadership at the FTC. Right, That's something that 268 00:12:49,880 --> 00:12:52,079 Speaker 8: we can really sink our teeth into when clients ask 269 00:12:52,160 --> 00:12:55,120 Speaker 8: who's good for the market broadly, I think that one's 270 00:12:55,120 --> 00:12:57,800 Speaker 8: a lot tougher because when you look at Trump's policies, 271 00:12:57,840 --> 00:13:01,760 Speaker 8: we're talking about tariffs, right, talking about uncertainty in the 272 00:13:01,800 --> 00:13:05,600 Speaker 8: global economic regime that I don't think folks are really 273 00:13:05,640 --> 00:13:08,240 Speaker 8: getting their arms around, especially since we're not going to 274 00:13:08,320 --> 00:13:11,160 Speaker 8: have the sugar high of tax cuts that come along 275 00:13:11,280 --> 00:13:14,080 Speaker 8: with that. And so I think that that's really the 276 00:13:14,160 --> 00:13:16,000 Speaker 8: stinction that we've made and the point I've tried to 277 00:13:16,040 --> 00:13:17,600 Speaker 8: make the clients, and the one that I think we 278 00:13:17,679 --> 00:13:20,240 Speaker 8: really need to start understanding and sink Garan teeth into 279 00:13:20,360 --> 00:13:22,880 Speaker 8: is no matter who is in the White House, we're 280 00:13:22,920 --> 00:13:26,360 Speaker 8: going to have buckets and buckets of deficit spending coming 281 00:13:26,800 --> 00:13:29,680 Speaker 8: through the tax reform effort that comes next year. 282 00:13:31,720 --> 00:13:34,840 Speaker 5: I think, in terms of more detail on Harris's policies, 283 00:13:34,920 --> 00:13:36,959 Speaker 5: do you think that's a when or if? Do you 284 00:13:37,000 --> 00:13:38,679 Speaker 5: think she's going to try to go as long as 285 00:13:38,720 --> 00:13:41,319 Speaker 5: possible without providing detail on that, or is she being 286 00:13:41,320 --> 00:13:42,439 Speaker 5: sort of strategic about it. 287 00:13:43,360 --> 00:13:47,000 Speaker 8: I've been surprised at how open Democrats at the convention 288 00:13:47,120 --> 00:13:52,400 Speaker 8: have been in their belief and their hope that she 289 00:13:52,480 --> 00:13:55,920 Speaker 8: will not offer much policy detail. I found it interesting 290 00:13:55,960 --> 00:13:57,960 Speaker 8: that a number of top Democrats have said, do you 291 00:13:58,000 --> 00:14:01,480 Speaker 8: remember that Elizabeth Warren when she in twenty twenty had 292 00:14:01,480 --> 00:14:04,520 Speaker 8: a white paper for every policy? There were twenty pages, 293 00:14:04,600 --> 00:14:09,240 Speaker 8: well vetted by academics and market experts for each policy, 294 00:14:09,280 --> 00:14:11,680 Speaker 8: and she sure as heck didn't win, So why would 295 00:14:11,760 --> 00:14:14,040 Speaker 8: Harris and so? Look, I think that this is again 296 00:14:14,160 --> 00:14:17,520 Speaker 8: going to be something that they ride the vibes, which 297 00:14:17,679 --> 00:14:20,960 Speaker 8: which John has outlined, for as long as they possibly can. 298 00:14:21,320 --> 00:14:23,480 Speaker 8: The date that I have circled on my calendar is 299 00:14:23,560 --> 00:14:27,040 Speaker 8: September tenth. That's the first and only debate between these two. 300 00:14:27,080 --> 00:14:29,920 Speaker 8: And to me, that's the moment where perhaps the rubber 301 00:14:30,000 --> 00:14:31,560 Speaker 8: can heat meet the road in terms of some of 302 00:14:31,600 --> 00:14:35,160 Speaker 8: these policy specifics that I think we're all yearning for Isaac. 303 00:14:35,200 --> 00:14:36,000 Speaker 3: We couldn't agree more. 304 00:14:36,080 --> 00:14:37,800 Speaker 2: What is particularly striking to me, as well as how 305 00:14:37,880 --> 00:14:41,880 Speaker 2: much room, how much space progressive like Warren Alexandro Acasso 306 00:14:42,000 --> 00:14:45,600 Speaker 2: Cordez have given the Vice President Kamala Harris. They're not 307 00:14:45,760 --> 00:14:48,480 Speaker 2: trying get to unpopular themes. If you think about where 308 00:14:48,480 --> 00:14:51,720 Speaker 2: Harris was back in twenty nineteen gone into twenty twenty, 309 00:14:52,120 --> 00:14:54,560 Speaker 2: if you were running in that primary, you had to 310 00:14:54,600 --> 00:14:57,000 Speaker 2: make commitments to things that weren't going to be popular 311 00:14:57,280 --> 00:14:59,120 Speaker 2: with the rest of the country. Do they continue to 312 00:14:59,120 --> 00:15:00,560 Speaker 2: give her that kind of space, Isaac? 313 00:15:02,480 --> 00:15:04,320 Speaker 8: I think they do until election day? 314 00:15:04,360 --> 00:15:06,320 Speaker 9: And so those there are two points to make here. 315 00:15:06,440 --> 00:15:10,960 Speaker 8: Number one is the one unifying issue for Democrats is 316 00:15:10,960 --> 00:15:13,520 Speaker 8: that they are against Trump. So as long as they 317 00:15:13,520 --> 00:15:16,360 Speaker 8: can keep this race about Trump, they will remain together. 318 00:15:16,840 --> 00:15:18,440 Speaker 8: But the second point, and the one that I think 319 00:15:18,440 --> 00:15:23,560 Speaker 8: that we should examine over time, is I truly think 320 00:15:23,600 --> 00:15:27,000 Speaker 8: that if Democrats are in power, you're going to start 321 00:15:27,040 --> 00:15:29,920 Speaker 8: to see those fissures re emerge. And Amh mentioned the 322 00:15:29,920 --> 00:15:33,360 Speaker 8: immigration bill that failed. That immigration bill had a chance 323 00:15:33,360 --> 00:15:36,320 Speaker 8: to become law this year in large part because of 324 00:15:36,360 --> 00:15:38,760 Speaker 8: the election. Now, if Democrats win the White House and 325 00:15:38,760 --> 00:15:41,560 Speaker 8: they're in power in Congress in some way, shape or form, 326 00:15:41,920 --> 00:15:44,560 Speaker 8: I'm not sure that same immigration bill passes because at 327 00:15:44,560 --> 00:15:48,400 Speaker 8: that point you see the progressive voices rise and become 328 00:15:48,440 --> 00:15:50,640 Speaker 8: even louder. And so that's something we think about, that 329 00:15:50,800 --> 00:15:54,560 Speaker 8: chasm between rhetoric and reality that warrants consideration. 330 00:15:54,800 --> 00:15:56,480 Speaker 2: Is it when it comes to blue sweet red sweep? 331 00:15:57,120 --> 00:15:59,280 Speaker 2: Formed any firm ideas on that one? Also, what's your 332 00:15:59,280 --> 00:15:59,760 Speaker 2: base case? 333 00:15:59,800 --> 00:15:59,960 Speaker 9: Now? 334 00:16:01,680 --> 00:16:04,600 Speaker 8: Look at the moment I think that we're going through 335 00:16:04,720 --> 00:16:07,440 Speaker 8: the presidential election. There seven on the presidential side, there 336 00:16:07,440 --> 00:16:10,160 Speaker 8: the seven states that matter. I still think that you 337 00:16:10,240 --> 00:16:12,840 Speaker 8: have to look at the issues that animate those voters. 338 00:16:13,160 --> 00:16:16,840 Speaker 8: The top ones are the economy and immigration. Trump does 339 00:16:16,960 --> 00:16:19,400 Speaker 8: better on average by eight and fifteen points in the 340 00:16:19,400 --> 00:16:22,960 Speaker 8: swing states. As long as that maintains, I view Trump 341 00:16:22,960 --> 00:16:25,680 Speaker 8: as a slight favorite. On the Senate side, I remain 342 00:16:25,720 --> 00:16:28,560 Speaker 8: committed to our view eighty plus percent likelihood that the 343 00:16:28,560 --> 00:16:31,680 Speaker 8: Senate is going to flip to Republican control. And I 344 00:16:31,720 --> 00:16:34,480 Speaker 8: think that's something that investors in markets should really more 345 00:16:34,560 --> 00:16:38,520 Speaker 8: themselves to, is that we will have a small Republican 346 00:16:40,800 --> 00:16:43,280 Speaker 8: margin in the Senate that can then give us some 347 00:16:43,360 --> 00:16:45,680 Speaker 8: sort of framework for thinking about what next year will 348 00:16:45,680 --> 00:16:46,000 Speaker 8: look like. 349 00:16:46,160 --> 00:16:49,000 Speaker 2: Interesting, Isaac, thank you, sir, appreciate the update. I suppotanski 350 00:16:49,080 --> 00:17:01,280 Speaker 2: that a great Actually when begin with that top story, 351 00:17:01,480 --> 00:17:03,800 Speaker 2: stocks arising as trade is a wait. FED Chair Jaypounce 352 00:17:03,880 --> 00:17:07,040 Speaker 2: remarks at ten am Eastern Time. Bob Dollar crossmark right 353 00:17:07,080 --> 00:17:10,760 Speaker 2: in the following. The global economic expansion remains intact and 354 00:17:10,840 --> 00:17:15,119 Speaker 2: will benefit from rate cunning expectations. Equity valuation remains at risk, 355 00:17:15,680 --> 00:17:19,440 Speaker 2: especially if growth continues to decelerate and the FED does 356 00:17:19,520 --> 00:17:23,040 Speaker 2: not show urgency. Bob joined us now for more. But 357 00:17:23,119 --> 00:17:25,280 Speaker 2: we want to talk about a gap, a spread, if 358 00:17:25,320 --> 00:17:27,840 Speaker 2: you will, the difference between FED funds in the two 359 00:17:27,920 --> 00:17:30,560 Speaker 2: year you've noted. That's the why this going all the 360 00:17:30,560 --> 00:17:32,480 Speaker 2: way back to two thousand and eight. And when people 361 00:17:32,520 --> 00:17:35,760 Speaker 2: say two thousand and eight, Bob, they get worried concerned. 362 00:17:35,920 --> 00:17:37,359 Speaker 2: How worried and concern should they be? 363 00:17:38,320 --> 00:17:42,880 Speaker 10: Well, look, the journey is out. The economy is slowing. 364 00:17:43,000 --> 00:17:45,320 Speaker 10: I don't think people can dispute that anymore. But we 365 00:17:45,359 --> 00:17:47,240 Speaker 10: don't know is it going to be a soft landing 366 00:17:47,320 --> 00:17:51,000 Speaker 10: or a harder landing. And look, that's a mind view 367 00:17:51,119 --> 00:17:53,840 Speaker 10: out of the Fed's control. The FED what he does 368 00:17:54,240 --> 00:17:57,040 Speaker 10: in the next few meetings will impact the economy later. 369 00:17:57,160 --> 00:17:59,119 Speaker 9: So it's already cooked and we just don't know. 370 00:17:59,880 --> 00:18:02,480 Speaker 10: You want to be fearful, pretend there's going to be 371 00:18:02,480 --> 00:18:05,240 Speaker 10: our hard landing not out of the question. The consumers 372 00:18:05,240 --> 00:18:07,879 Speaker 10: slow and you're seeing it all over the place, but 373 00:18:07,920 --> 00:18:09,760 Speaker 10: we just don't know how slow they're going to get. 374 00:18:09,880 --> 00:18:10,840 Speaker 9: That's the problem. 375 00:18:11,080 --> 00:18:13,480 Speaker 2: Well, play best guest with me. Now, let's take that spread. 376 00:18:13,880 --> 00:18:15,640 Speaker 2: You've got FED funds up here and the two year 377 00:18:15,720 --> 00:18:17,760 Speaker 2: down here. How do you expect that to close? Is 378 00:18:17,760 --> 00:18:19,600 Speaker 2: it the two year yield coming up to FED funds, 379 00:18:19,800 --> 00:18:21,840 Speaker 2: fed funds coming down, the two meeting each other. 380 00:18:21,880 --> 00:18:22,800 Speaker 3: What's that going to look like? 381 00:18:23,480 --> 00:18:26,320 Speaker 10: Look, the Fed's going to lower rates. The Chairman will 382 00:18:26,320 --> 00:18:29,400 Speaker 10: make that clear today. But as you and Stewart talked 383 00:18:29,400 --> 00:18:30,800 Speaker 10: about earlier, we just don't know the. 384 00:18:30,880 --> 00:18:32,399 Speaker 9: Pace of that decline. 385 00:18:32,960 --> 00:18:36,560 Speaker 10: You recollected appropriately January First, we're gonna get six cuts 386 00:18:36,560 --> 00:18:36,960 Speaker 10: this year. 387 00:18:37,119 --> 00:18:40,360 Speaker 9: Oh no, no, it's going to be seven. Well here 388 00:18:40,400 --> 00:18:40,600 Speaker 9: we are. 389 00:18:40,760 --> 00:18:44,160 Speaker 10: We haven't seen one yet, and so I think it'll 390 00:18:44,200 --> 00:18:48,560 Speaker 10: be slow but deliberate, and the language will be will 391 00:18:48,600 --> 00:18:52,080 Speaker 10: watch very carefully. Look, inflation, remember, is still two point eight, 392 00:18:52,119 --> 00:18:56,040 Speaker 10: it's not two. So they have to have their one 393 00:18:56,080 --> 00:18:58,920 Speaker 10: eye on that corner of the world too, as they 394 00:18:59,240 --> 00:19:02,360 Speaker 10: on the other hand in the fight this emerging economic slowdown. 395 00:19:02,440 --> 00:19:04,080 Speaker 3: But we've ran it into this story. 396 00:19:04,280 --> 00:19:07,040 Speaker 2: We've noted that the equal Way s and P five 397 00:19:07,160 --> 00:19:09,080 Speaker 2: hundred has printed a couple of all time high so 398 00:19:09,200 --> 00:19:11,520 Speaker 2: far this week, we've seen the leadership come from the 399 00:19:11,520 --> 00:19:14,440 Speaker 2: small caps at times. Once again, with that in mind, 400 00:19:14,560 --> 00:19:16,159 Speaker 2: are we more at risk of this day to come 401 00:19:16,200 --> 00:19:18,680 Speaker 2: again weaker all over again on September six? 402 00:19:20,240 --> 00:19:23,520 Speaker 10: I absolutely agree that that's the question mark, and that 403 00:19:23,640 --> 00:19:27,479 Speaker 10: is the risk that things slow down faster than the 404 00:19:27,520 --> 00:19:30,840 Speaker 10: market is expecting. And there's a little bit of well, 405 00:19:30,880 --> 00:19:34,080 Speaker 10: whatever ails us, the FED will have the cutting power 406 00:19:34,359 --> 00:19:36,240 Speaker 10: to fight that. Well, you know, what the FED does 407 00:19:36,280 --> 00:19:39,920 Speaker 10: today doesn't affect the economy for some time. Little psychology maybe, 408 00:19:39,920 --> 00:19:42,840 Speaker 10: but that's about it. So it is how fast does 409 00:19:42,880 --> 00:19:43,639 Speaker 10: this thing slow? 410 00:19:44,960 --> 00:19:47,159 Speaker 5: Bob on those lines, man, how sensitive do you think 411 00:19:47,160 --> 00:19:49,720 Speaker 5: the Fed is the financial conditions here? I how reactive 412 00:19:49,720 --> 00:19:51,240 Speaker 5: would they be if we got, you know, a sharp 413 00:19:51,240 --> 00:19:53,719 Speaker 5: pullback in equities on some week labor market data in 414 00:19:53,720 --> 00:19:55,720 Speaker 5: your view, I think. 415 00:19:55,600 --> 00:19:57,640 Speaker 10: You bring up a good point, and that is things 416 00:19:57,640 --> 00:19:59,000 Speaker 10: that might be out of our control. 417 00:19:59,080 --> 00:20:00,800 Speaker 9: Look, we had that a month ago. 418 00:20:01,160 --> 00:20:03,280 Speaker 10: It turned out to be, you know, the Japanese yen 419 00:20:03,359 --> 00:20:07,480 Speaker 10: carry trade. And you know, as the market was following 420 00:20:07,560 --> 00:20:11,399 Speaker 10: those three days, we just had some clues it was No, 421 00:20:11,600 --> 00:20:15,199 Speaker 10: it's a fear about the economy falling apart. It's causing 422 00:20:15,240 --> 00:20:17,840 Speaker 10: this decline. Well maybe that's what started, but we know 423 00:20:17,880 --> 00:20:22,120 Speaker 10: what aggravated it. So to your point, the financial system 424 00:20:23,080 --> 00:20:27,520 Speaker 10: doesn't necessarily operate smoothly every day, and we could get 425 00:20:27,560 --> 00:20:31,520 Speaker 10: a bump there as well. Not predicting that, but there 426 00:20:31,640 --> 00:20:34,280 Speaker 10: is always discontinuity in the system. 427 00:20:34,680 --> 00:20:37,680 Speaker 5: And you mentioned high valuation. Mean, would you have the 428 00:20:37,760 --> 00:20:40,040 Speaker 5: view that the market kind of needs some rate cuts 429 00:20:40,400 --> 00:20:42,600 Speaker 5: given the level of valuation here or do you think 430 00:20:42,640 --> 00:20:44,440 Speaker 5: you know we can kind of skirt through things of 431 00:20:44,480 --> 00:20:45,040 Speaker 5: growth stays? 432 00:20:45,040 --> 00:20:47,280 Speaker 9: Okay, I love the way you put it. 433 00:20:48,040 --> 00:20:53,400 Speaker 10: Valuation is demanding a good environment, maybe a perfect environment, 434 00:20:54,000 --> 00:20:56,640 Speaker 10: and therefore the Fed better do exactly what they need 435 00:20:56,680 --> 00:20:59,359 Speaker 10: to do, and earnings better come along, and we better 436 00:20:59,400 --> 00:21:03,480 Speaker 10: not have any more consumer weakness. A lot of good 437 00:21:03,560 --> 00:21:07,840 Speaker 10: news in this market with a PET into the twenties. 438 00:21:08,560 --> 00:21:13,760 Speaker 10: So yes, we do need to justify these valuations reasonably 439 00:21:13,760 --> 00:21:16,200 Speaker 10: good economic news and or FED assistance. 440 00:21:16,400 --> 00:21:18,240 Speaker 2: What would you adv K four going deeper into the 441 00:21:18,280 --> 00:21:20,359 Speaker 2: second half then, Bob, I'm just sitting here guessing that 442 00:21:20,400 --> 00:21:22,200 Speaker 2: you're not telling everyone to sit in cash and take 443 00:21:22,240 --> 00:21:23,440 Speaker 2: five percent and wait it out. 444 00:21:23,680 --> 00:21:26,280 Speaker 3: What are you telling them to do exactly? 445 00:21:26,320 --> 00:21:29,040 Speaker 10: On the other hand, we've got this momentum driven bull market, 446 00:21:29,080 --> 00:21:31,920 Speaker 10: and you know, fighting that kind of market is a 447 00:21:31,920 --> 00:21:32,640 Speaker 10: fool's game. 448 00:21:32,720 --> 00:21:35,320 Speaker 9: So you've got to be invested. Just be careful what 449 00:21:35,400 --> 00:21:38,400 Speaker 9: you own. You've heard me say it before, earnings. 450 00:21:38,000 --> 00:21:43,160 Speaker 10: Predictability, earnings persistence, and cash flow. So should we get 451 00:21:43,200 --> 00:21:46,560 Speaker 10: into sort of a bumpy environment, those kinds of stocks 452 00:21:46,600 --> 00:21:49,600 Speaker 10: will sell off less, but they'll do just fine on 453 00:21:49,600 --> 00:21:50,359 Speaker 10: the upside. 454 00:21:51,160 --> 00:21:52,960 Speaker 5: And Bob, A lot of those stocks you've described, I 455 00:21:53,000 --> 00:21:54,960 Speaker 5: think are what people have kind of owned, you know, 456 00:21:55,160 --> 00:21:58,960 Speaker 5: for a period of time here, is that a steady 457 00:21:58,960 --> 00:22:02,080 Speaker 5: issue goes or would you worry about positioning, you know, 458 00:22:02,200 --> 00:22:04,320 Speaker 5: being so long of those kind of stocks if we 459 00:22:04,359 --> 00:22:05,400 Speaker 5: did come under suppressure. 460 00:22:05,440 --> 00:22:05,880 Speaker 9: This is debate. 461 00:22:05,920 --> 00:22:07,560 Speaker 5: We feel like we're having out tech all the time. 462 00:22:07,720 --> 00:22:11,080 Speaker 5: Is it Are they safe or not? Basically, yeah, so 463 00:22:11,240 --> 00:22:12,919 Speaker 5: I would broaden the list. 464 00:22:13,960 --> 00:22:17,159 Speaker 10: Valuation has got to come into the question relative to 465 00:22:17,200 --> 00:22:21,600 Speaker 10: the earnings persistence, et cetera list that I put together. There, 466 00:22:21,880 --> 00:22:24,760 Speaker 10: I wouldn't just own high pe stocks. They have some 467 00:22:24,880 --> 00:22:28,600 Speaker 10: vulnerability should things not go all that well. And back 468 00:22:28,640 --> 00:22:30,760 Speaker 10: to what Jonathan said, a few minutes ago. The market 469 00:22:30,920 --> 00:22:34,320 Speaker 10: is broadening, and to those of us are a little cautious, 470 00:22:34,640 --> 00:22:38,080 Speaker 10: that's a good sign that we're getting some broadening. I 471 00:22:38,080 --> 00:22:39,720 Speaker 10: guess it couldn't get much narrower. 472 00:22:40,400 --> 00:22:42,000 Speaker 5: Yeah, I mean, I think that's the question we get 473 00:22:42,040 --> 00:22:44,320 Speaker 5: on the broadening theme is do I broaden? Am I 474 00:22:44,359 --> 00:22:46,720 Speaker 5: willing to broaden out into a weakening economy? And I 475 00:22:46,760 --> 00:22:48,879 Speaker 5: feel like that's like a big trade off that people 476 00:22:48,880 --> 00:22:49,600 Speaker 5: are struggling with. 477 00:22:50,000 --> 00:22:50,800 Speaker 3: Do you have a view there? 478 00:22:51,520 --> 00:22:53,880 Speaker 10: Yes, I do, and that is be careful how much 479 00:22:53,920 --> 00:22:54,800 Speaker 10: broadening you do. 480 00:22:55,040 --> 00:22:57,000 Speaker 9: We all know the downcasts. 481 00:22:57,000 --> 00:23:00,720 Speaker 10: Small in particular tends not to do well economic slow 482 00:23:00,760 --> 00:23:02,800 Speaker 10: down environment. They do best when we come out of 483 00:23:02,800 --> 00:23:07,280 Speaker 10: a recession, and so I think it's don't be zero 484 00:23:07,560 --> 00:23:11,240 Speaker 10: in those areas, as many people are, but don't overdo it. 485 00:23:11,960 --> 00:23:16,320 Speaker 10: We've lost two thirds of the small cap rally we 486 00:23:16,359 --> 00:23:19,320 Speaker 10: saw in July relative to bigcap. That's a lot of 487 00:23:19,359 --> 00:23:23,200 Speaker 10: deterioration despite the broadening that we're speaking about here together. 488 00:23:23,280 --> 00:23:25,160 Speaker 2: Another way of asking the same question, do I want 489 00:23:25,160 --> 00:23:27,879 Speaker 2: to we own financials going into the back end of 490 00:23:27,880 --> 00:23:28,879 Speaker 2: the year, Bob, Yes or no? 491 00:23:29,640 --> 00:23:29,960 Speaker 9: Yes? 492 00:23:30,000 --> 00:23:33,640 Speaker 10: Absolutely, I think that's look a lot of lending took 493 00:23:33,680 --> 00:23:37,359 Speaker 10: place outside the banking system. That's why bank balance sheets 494 00:23:37,760 --> 00:23:41,679 Speaker 10: are on average better shape today than they are typically 495 00:23:41,880 --> 00:23:44,320 Speaker 10: at this point in the economic cycle, and they're pretty cheap. 496 00:23:44,359 --> 00:23:45,840 Speaker 9: So yes, I would own financials. 497 00:23:45,920 --> 00:23:48,040 Speaker 2: Big mass off the life from earlier this month. Pupto 498 00:23:48,320 --> 00:23:49,280 Speaker 2: across Mark Pupto. 499 00:23:49,359 --> 00:23:49,679 Speaker 3: Thank you. 500 00:23:50,480 --> 00:23:54,040 Speaker 2: This is the Bloomberg Sevenans podcast, bringing you the best 501 00:23:54,040 --> 00:23:57,359 Speaker 2: in markets, economics, anchient politics. You can watch the show 502 00:23:57,400 --> 00:24:00,359 Speaker 2: live on Bloomberg TV weekday mornings from six am to 503 00:24:00,480 --> 00:24:04,240 Speaker 2: nine am Eastern. 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