WEBVTT - A Deep Dive Into Markets 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney. Alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.079 at Bloomberg dot com slash podcast. Well, we've certainly seen 0:00:22.120 --> 0:00:24.960 a move up in rates here again the ten year 0:00:25.000 --> 0:00:27.479 treasury one point five three, the thirty year two point 0:00:27.560 --> 0:00:30.000 zero nine, we did touch two point one percent, So 0:00:30.080 --> 0:00:32.280 that got people's attention this week and kind of raising 0:00:32.320 --> 0:00:34.519 the issue of an inflation and and how does the 0:00:34.560 --> 0:00:39.240 secuity market behave in the facing some uh inflation, both 0:00:39.240 --> 0:00:41.479 in the near term and longer term. Let's check in 0:00:41.520 --> 0:00:44.680 with Brett Ewing, chief market strategists at First Franklin Financial 0:00:44.720 --> 0:00:47.919 Services during us on the flow from Tallahassee. I think 0:00:47.920 --> 0:00:50.720 there's some university down there in Tallahassee. I'm not sure 0:00:51.240 --> 0:00:54.560 might play against my dukeys in the a sec Brett Ewing, 0:00:54.560 --> 0:00:57.400 thanks so much for joining us here. Um again, we 0:00:57.680 --> 0:01:00.000 inflation kind of rearing its its head here A little 0:01:00.040 --> 0:01:02.480 bit more for investors here, how do you think these 0:01:02.520 --> 0:01:05.840 equity markets perform in what is likely to be a 0:01:06.240 --> 0:01:11.399 you know, a rising inflationary environment. Yeah, a great question. 0:01:11.520 --> 0:01:13.920 I think that you know, the market is pricing in 0:01:14.200 --> 0:01:19.040 uh continuation here of the inflation numbers. Um. We saw 0:01:19.120 --> 0:01:22.720 supply chain reports coming out earlier in the week, and 0:01:22.920 --> 0:01:26.400 as we all know, the supply chain really hasn't been 0:01:26.440 --> 0:01:30.920 so transitory uh going into this fourth quarter. So we 0:01:30.959 --> 0:01:33.920 think that that the pipeline there is going to improve. 0:01:34.319 --> 0:01:36.760 I think it's dependent on COVID and I think that 0:01:36.840 --> 0:01:39.959 will help with the inflationary pressures in the spring. But 0:01:40.000 --> 0:01:43.520 it's gonna take a little longer than we're all thinking. UM. 0:01:43.680 --> 0:01:47.800 I know it's very frustrating for Chairman Powell, but you know, 0:01:47.880 --> 0:01:50.400 I think I think they're probably gonna go ahead and 0:01:50.400 --> 0:01:54.040 start the taper or announce it formally in November at 0:01:54.040 --> 0:01:58.160 the next meeting. And uh, I think it's due though, 0:01:58.560 --> 0:02:00.720 So let's talk more about those supplies and issues, because 0:02:00.760 --> 0:02:04.120 it doesn't just impact, you know, monetary policy. There's also 0:02:04.280 --> 0:02:06.920 the earnings question because when your input costs are higher, 0:02:08.120 --> 0:02:11.399 margins come into question, and especially as you know we're 0:02:11.520 --> 0:02:14.000 entering now, I believe today's two hundred and thirty days 0:02:14.040 --> 0:02:16.359 where we haven't seen a pullback of five percent in 0:02:16.400 --> 0:02:19.240 the SMP five hundred. How vulnerable are equities at these 0:02:19.320 --> 0:02:22.960 levels as we had into earning season. Yeah, I think 0:02:23.080 --> 0:02:25.560 last week we did hit an ter day five percent correction. 0:02:25.639 --> 0:02:29.000 We were hoping that we would get there. Um, these 0:02:29.080 --> 0:02:31.639 markets need to to have that correction. You know, the 0:02:31.840 --> 0:02:35.120 SMP just has gone almost twelve months without it. I 0:02:35.400 --> 0:02:38.359 think they can be vulnerable. I mean, look in two 0:02:38.400 --> 0:02:40.600 we're gonna have a lot of headwinds. We're gonna have 0:02:40.720 --> 0:02:44.239 the FED doing a taper program. We're gonna also potentially 0:02:44.360 --> 0:02:46.880 have rate hikes going into the fourth quarter of next year. 0:02:47.320 --> 0:02:49.520 You know, the dot plot is moving forward. As far 0:02:49.639 --> 0:02:53.880 as ray hikes, We're gonna have continued supply chain issues, 0:02:54.480 --> 0:02:58.320 potential hike in taxes. So I think these markets could 0:02:58.360 --> 0:03:00.799 be vulnerable. But going to the end of the year, 0:03:00.880 --> 0:03:03.400 we're still holding our price target on the SMP AT 0:03:04.720 --> 0:03:06.440 and I think we could rally into the end of 0:03:06.440 --> 0:03:10.040 the year before we get into a more volatile marketplace 0:03:10.120 --> 0:03:13.680 in Yeah, that's a nice move up. You've got their forecast. 0:03:13.760 --> 0:03:17.040 I hope you are correct. How about you know a 0:03:17.120 --> 0:03:18.880 few weeks ago. We had a big shock to the 0:03:18.960 --> 0:03:24.200 market when China reared its ugly head and ever Grand 0:03:24.440 --> 0:03:27.880 and the concern about a contagion coming out of Asia 0:03:28.560 --> 0:03:30.359 that seems to have ebbed a little bit. Are you 0:03:30.760 --> 0:03:33.519 is that on hear rate our screen. We are still 0:03:33.639 --> 0:03:36.320 monitoring that. And it's not just about ever Grand anymore. 0:03:36.480 --> 0:03:38.720 China has a lot of debt issues and that's just 0:03:38.920 --> 0:03:42.040 the first salvo um We think there could be continued 0:03:42.120 --> 0:03:45.280 problems coming out of China. They've got a housing issues, 0:03:45.360 --> 0:03:47.880 they've got major debt issues with some of their companies, 0:03:47.920 --> 0:03:50.320 and the crackdowns are doing in the technology sector and 0:03:50.480 --> 0:03:54.360 software sector and the gaming industry and recently on bitcoin. 0:03:54.880 --> 0:03:58.400 It's gonna cause even more problems in their in their economy. 0:03:58.600 --> 0:04:02.400 And that's what we're forecasting, going into something else that 0:04:02.600 --> 0:04:06.640 could happen in maybe if you know things get together 0:04:06.760 --> 0:04:09.520 on Capitol Hill. Is higher tax rates to pay for 0:04:09.800 --> 0:04:13.360 longer economic or longer term economic spending. How do you 0:04:13.560 --> 0:04:16.400 factor that in when making investment decisions, the risk of 0:04:16.520 --> 0:04:20.719 that coming down the pike. Well, look hiking corporate tax rates. 0:04:21.440 --> 0:04:27.040 These big corporations, they certainly have the horsepower with their 0:04:27.080 --> 0:04:30.080 tax attorneys on their payroll to maneuver around as much 0:04:30.120 --> 0:04:33.120 as they can. It's the small business owner that's going 0:04:33.160 --> 0:04:36.000 to get clauded, and that is the backbone of the 0:04:36.160 --> 0:04:40.080 US economy and that definitely will give some headwins to this. 0:04:40.360 --> 0:04:44.720 Uh this economic outlook. Earnings growth is already in a 0:04:45.040 --> 0:04:50.200 slower growth mode as we go into adding increasing corporate 0:04:50.240 --> 0:04:55.960 taxes is only gonna exacerbate that. Brett gotta asking the 0:04:56.080 --> 0:04:59.880 time left Florida State Seminal football team, what's going on 0:05:00.040 --> 0:05:05.200 down in Tallahassee. Wow. Uh man, it's tough. It's tough 0:05:05.320 --> 0:05:07.360 right now being a seminal. But we do have faith 0:05:07.400 --> 0:05:11.280 in coach Doorbell. He's a very solid individual, a great leader. 0:05:11.760 --> 0:05:14.920 I think I think they're gonna eventually get their act 0:05:15.000 --> 0:05:19.440 together here, um hopefully this weekend playing Syracuse. All right, 0:05:19.640 --> 0:05:21.560 Brett Youwing, thank you so much for joining us. We 0:05:21.640 --> 0:05:25.480 appreciated Brett youing Chief Market Strategists first Franklin Financial Services 0:05:25.520 --> 0:05:28.040 on the phone from Tallahassee, Florida. And yes he is 0:05:28.200 --> 0:05:31.440 a graduate of the the Florida State University in Tallahassee. 0:05:31.800 --> 0:05:34.320 You know, when you think about it, when we talked 0:05:34.360 --> 0:05:38.200 to these smart people, these pros Kaylee. There's a lot 0:05:38.600 --> 0:05:41.160 that goes into that wall will worry that is very 0:05:41.240 --> 0:05:44.240 tough to dismiss, and yet you continue to see the 0:05:44.400 --> 0:05:47.200 buying of the dip behavior, and to me that really 0:05:47.240 --> 0:05:51.000 strikes there's a contrast between institutional investors and retail investors 0:05:51.080 --> 0:05:54.240 and how much is it, you know, retail investors that 0:05:54.320 --> 0:05:56.320 just continually come in and buy the dip that is 0:05:56.320 --> 0:05:59.080 actually continuing to drive US higher despite all the concerns 0:05:59.120 --> 0:06:01.720 and risk factors out there. Yeah. Absolutely, And I think 0:06:02.080 --> 0:06:03.640 it's gonna be very interesting as we go into this 0:06:03.720 --> 0:06:06.360 earning season starting in a couple of weeks, the guidance 0:06:06.440 --> 0:06:09.160 we get from these companies, you know, it's gonna be uh. 0:06:09.440 --> 0:06:12.240 I think we're gonna hear about these uh supply chain 0:06:12.440 --> 0:06:14.760 challenges and the impacts that will have on its costs 0:06:14.800 --> 0:06:17.200 and you keep correctly bringing up the margin pressure that 0:06:17.720 --> 0:06:20.320 could eventually come into some of these companies, And so 0:06:20.400 --> 0:06:22.680 that will be really interesting, uh to see kind of 0:06:22.760 --> 0:06:25.040 the guidance they have as it relates to the supply chain, 0:06:25.120 --> 0:06:28.680 as it relates to inflation, UH, and their margins going forward. 0:06:28.760 --> 0:06:31.159 So again, earnings as it seems to be every quarter, 0:06:31.279 --> 0:06:34.559 will be very important for this market. As this market 0:06:34.640 --> 0:06:37.280 is at or near all time highs on a daily basis, 0:06:37.279 --> 0:06:43.279 we're gonna more coming up. This is Bloomberg, all right. 0:06:43.360 --> 0:06:46.680 Looking at the d X Y index's came back, you know, 0:06:47.680 --> 0:06:51.560 late Mayo's around here. We are ninety four and change. 0:06:51.720 --> 0:06:54.080 Nice move in the dollar, dollar strength. Let's get to 0:06:54.120 --> 0:06:56.760 the bottom of that. PREA misra head of global interest 0:06:56.839 --> 0:06:59.880 rate strategy for TV securities joints is is that you 0:07:00.120 --> 0:07:04.440 the flight to perceived safety over the last couple of 0:07:04.480 --> 0:07:06.520 months here, what do you make of the dollar strength? 0:07:07.720 --> 0:07:09.800 I think thanks for having me on. I think the 0:07:09.920 --> 0:07:13.560 initial move may have been, you know, just safe haven, 0:07:14.240 --> 0:07:17.040 but I do think there's an underlying theme here of 0:07:17.240 --> 0:07:20.320 US exceptionalism, of the U s out performing the rest 0:07:20.400 --> 0:07:23.520 of the world U on the growth front, and now 0:07:23.640 --> 0:07:26.920 in the last week of the FED starting the process 0:07:27.000 --> 0:07:29.800 of unwind and they've sort of taken the drama out 0:07:29.800 --> 0:07:32.520 of the taper. We know when taper starts, when it ends. 0:07:32.920 --> 0:07:35.320 And if that means that US rates and US rates 0:07:35.360 --> 0:07:38.360 have been the underperformer in in in terms of global 0:07:38.480 --> 0:07:41.160 rates over the last week or so, I think that's 0:07:41.200 --> 0:07:45.080 what's reflected in in in the in the currency. You know, 0:07:45.160 --> 0:07:48.520 the correlations between reads and currency do tend to rise 0:07:48.560 --> 0:07:50.960 when you're in these inflection points of monetary policy, and 0:07:51.240 --> 0:07:53.760 I think we're kind of there now, So let's talk 0:07:53.760 --> 0:07:56.800 about those higher rates pre Obviously, we're now north of 0:07:56.880 --> 0:07:58.960 one fifty, where it seemed for a while like we 0:07:59.080 --> 0:08:01.120 might never get back to. There is the bias for 0:08:01.240 --> 0:08:05.320 yields now firmly to the upside. I think in the 0:08:05.480 --> 0:08:07.800 long end, I would argue for somewhat time. Yes, I 0:08:07.840 --> 0:08:11.920 think tapering is not entirely priced in. The Fed chap 0:08:12.000 --> 0:08:14.680 out suggested a much sooner end to tapering than what 0:08:14.800 --> 0:08:17.480 the market was priced for. So the market, I think 0:08:17.480 --> 0:08:19.920 in the last week has been pricing in a fast 0:08:20.320 --> 0:08:22.280 end of taper or or a fast end to quee. 0:08:22.600 --> 0:08:24.120 I think there's a little bit more room and that 0:08:24.240 --> 0:08:26.600 we're looking for one seventy five on the tenure. I 0:08:26.680 --> 0:08:28.800 do think the front end is much more a function 0:08:28.880 --> 0:08:32.360 of economic data. We're gonna get payrolls next week, and 0:08:32.480 --> 0:08:34.480 our view is that that's where the economy is a 0:08:34.559 --> 0:08:37.880 bit choppy, or the recovery is not going to be 0:08:37.960 --> 0:08:40.720 a straight line up. So I think the front end, 0:08:40.800 --> 0:08:43.000 the zero to five year part of the curve. It's 0:08:43.040 --> 0:08:45.000 not clear to me that the bias is higher rates 0:08:45.160 --> 0:08:47.720 just yet. We really need to see whether the structural 0:08:47.840 --> 0:08:52.040 labor market issues, is participation rising, what's happening on the 0:08:52.200 --> 0:08:55.240 labor front. I think we need evidence of that recovery 0:08:55.400 --> 0:08:57.720 before those rates can rise a lot, because we're already 0:08:57.760 --> 0:08:59.719 pricing in the first rate hike at the end of 0:08:59.800 --> 0:09:02.559 next year, which I think is a fairly optimistic view. 0:09:02.640 --> 0:09:05.000 So I actually think front and rates and long fives, 0:09:05.400 --> 0:09:08.360 I think front and rates can decline because we're going 0:09:08.440 --> 0:09:10.400 to realize that the economy has a lot of work 0:09:10.440 --> 0:09:12.160 to do on the labor market front, and the FED 0:09:12.280 --> 0:09:15.000 is going to let it run before they hike. But 0:09:15.120 --> 0:09:16.880 the long end is a different story. I think that's 0:09:16.920 --> 0:09:19.839 where Acque actually matters a lot. And you know, you 0:09:19.960 --> 0:09:22.320 raise a good point there, because we had initial jobs 0:09:22.320 --> 0:09:25.160 claims this morning came in a little higher than expected, 0:09:25.360 --> 0:09:27.520 the highest point since early August, the third month in 0:09:27.559 --> 0:09:31.079 a row of of kind of higher initial jobs claims. 0:09:32.360 --> 0:09:34.199 Should we make up too much out of that or 0:09:34.240 --> 0:09:35.800 how do you view that? Are you putting that in 0:09:35.880 --> 0:09:38.400 the context? Is that a trend for you? Yeah, we 0:09:38.559 --> 0:09:40.800 were stretching aheads a little bit about that. You know, 0:09:40.840 --> 0:09:43.280 there's always seasonals this time of the year, just at 0:09:43.280 --> 0:09:45.480 the start of the new school year, We've often noticed 0:09:45.920 --> 0:09:50.160 seasonal quirkiness in the data. The supplementary unemployment insurance also 0:09:50.280 --> 0:09:53.240 ran off. It's also only a couple of states um 0:09:53.559 --> 0:09:56.520 that showed the rise, So we're not thinking this is 0:09:56.600 --> 0:09:58.760 the start of a trend, but it's absolutely something we 0:09:58.800 --> 0:10:01.720 want to watch for. Or I think the claims are 0:10:01.760 --> 0:10:04.600 giving you a sense of you know, firings and layoffs, 0:10:05.040 --> 0:10:07.439 while what we're trying to spend more time on is 0:10:07.800 --> 0:10:11.040 people re entering the labor force. What's the pace of 0:10:11.160 --> 0:10:13.679 hiring is if some of the supply chain disruptions that 0:10:13.760 --> 0:10:17.439 maybe keeping you know, production law are those ebbing away. 0:10:17.559 --> 0:10:20.800 So you know, our thought is that the labor recovery 0:10:20.880 --> 0:10:24.559 is still continuing and that it's not reversing, but it's 0:10:24.559 --> 0:10:26.599 a slower process than I think what the FED or 0:10:26.640 --> 0:10:29.400 the market would like to see. Obviously, the labor market 0:10:29.440 --> 0:10:32.960 recovery and the resulting FED reaction function is one thing 0:10:33.040 --> 0:10:34.960 that the market has to consider on the monetary side, 0:10:35.000 --> 0:10:37.920 on the fiscal side, I'm just wondering how you view 0:10:38.160 --> 0:10:40.640 the drama down in DC, not only the question around 0:10:40.679 --> 0:10:43.680 the dead ceiling, but also the question of what economic 0:10:43.720 --> 0:10:45.640 spending in the longer term is actually going to look 0:10:45.720 --> 0:10:48.319 like in terms of a dollar figure. Right, that's a 0:10:48.400 --> 0:10:51.000 huge deal, particularly because we know there's going to be 0:10:51.040 --> 0:10:54.319 a physical drag for next year. So the extent of 0:10:54.400 --> 0:10:57.079 the drag I think is very important for every market 0:10:57.160 --> 0:11:01.160 to consider. And that's where this artisan there. It's one 0:11:01.400 --> 0:11:03.520 or three and a half or nothing. I think it's 0:11:03.520 --> 0:11:05.760 going to have an implication for how much of a 0:11:05.800 --> 0:11:08.000 fiscal drag does the economy have to live through next 0:11:08.120 --> 0:11:10.079 year because growth is going to slow down. Are we 0:11:10.200 --> 0:11:12.439 going from four percent to two or are we going 0:11:12.520 --> 0:11:15.480 below that? I think the fiscal package actually has a 0:11:15.520 --> 0:11:18.720 lot of bearing. Um. Hard to tell our base cases 0:11:18.800 --> 0:11:21.640 that one and a half to two trillion partisans plus 0:11:21.760 --> 0:11:24.640 the one point too and bipartisan will go through. Clearly 0:11:24.679 --> 0:11:27.439 not easy, and then we've got this messy dead ceiling. 0:11:27.440 --> 0:11:29.240 At least it seems like the shutdown is going to 0:11:29.320 --> 0:11:32.000 get resolved. That's good, But the dead ceiling is a 0:11:32.080 --> 0:11:34.800 tough one, um, And I think the market is absolutely 0:11:34.920 --> 0:11:37.840 ignoring it. Other than a small part in the builders, 0:11:38.480 --> 0:11:40.439 I don't think any market is really pricing that in 0:11:40.559 --> 0:11:42.599 and it's one of those things where you hope and 0:11:42.679 --> 0:11:44.400 pray that you don't have to get to it, but 0:11:44.520 --> 0:11:48.360 if you do, these market implications economic implications are so 0:11:48.520 --> 0:11:51.680 high that I think being aware of that and hopefully 0:11:51.720 --> 0:11:54.640 we don't have to wait until October seventeenth to see 0:11:54.720 --> 0:11:58.480 what happens. But I'm not seeing a very clear consensus 0:11:58.600 --> 0:12:01.720 past of how the death ceiling you seized. Pre MIZERA, 0:12:01.840 --> 0:12:03.880 thank you so much for joining us. I really appreciate 0:12:03.920 --> 0:12:06.880 always getting your thoughts here on global interest rate. She 0:12:07.000 --> 0:12:09.319 is ahead of global interest rate strategy at TV Securities, 0:12:09.320 --> 0:12:14.480 based in New York City. We've got green on the 0:12:14.559 --> 0:12:17.679 screen here. A lot of uncertainty down in Washington, d C. Today, 0:12:17.679 --> 0:12:19.800 and a lot of things have to happen right to 0:12:19.920 --> 0:12:22.600 get some of this legislation moving. But the markets are 0:12:22.640 --> 0:12:25.160 kind of taking away and see action. Uh so will we. 0:12:25.320 --> 0:12:27.720 But let's check in with a professional on the markets, 0:12:27.760 --> 0:12:33.559 Alan Rukshoff, and financial advisor and senior portfolio manager for UBS. Alan, 0:12:33.559 --> 0:12:35.760 thanks so much for joining us here. I'm a little 0:12:35.880 --> 0:12:39.360 surprised that the markets are kind of hanging in there, 0:12:39.440 --> 0:12:42.559 given that we've got a lot of things building. This 0:12:42.679 --> 0:12:46.240 wall of worry, whether it's rising interest rates, tapering uh, 0:12:46.720 --> 0:12:49.079 legislative uncertainty down in Washington. How do you put it 0:12:49.200 --> 0:12:52.440 all together when you talk to your clients. Yeah, Paul, 0:12:52.520 --> 0:12:56.280 that's that That is the the billion dollar question. We 0:12:56.400 --> 0:13:00.760 have a lot of investor challenges, potential to higher taxation, inflation, 0:13:01.360 --> 0:13:04.840 all these ideas that are out there, and government shutdowns looming. 0:13:04.960 --> 0:13:08.640 Perhaps so all these things really are in the midst 0:13:08.960 --> 0:13:12.280 of a period of recovery after the pandemic. You know, 0:13:12.559 --> 0:13:15.160 we have a situation where we have a health crisis 0:13:15.240 --> 0:13:18.920 that's going to leave a world that's more indebted, less global, 0:13:19.120 --> 0:13:21.880 more digital. But at the end of the day, they're 0:13:21.920 --> 0:13:24.760 going to be structural changes that happen as a result 0:13:25.000 --> 0:13:27.559 of the last eighteen months that we've all lived through 0:13:27.640 --> 0:13:33.600 together that really could lead to extreme positivity, spectacular positivity. 0:13:33.880 --> 0:13:37.000 And I think that the market is aware and has 0:13:37.080 --> 0:13:39.839 to balance both of those things, the realities of the 0:13:39.960 --> 0:13:43.319 uncertainty with the fact that we have a potential for 0:13:43.679 --> 0:13:47.400 unbelievable new things to happen over the next couple of years. Well, 0:13:47.480 --> 0:13:49.679 you talk about how things have changed during the pandemic, 0:13:50.360 --> 0:13:53.559 and it's to such a degree that the word normalization 0:13:54.160 --> 0:13:56.679 is relative. You know what is normal now. But when 0:13:56.720 --> 0:13:59.840 we talk about not just monetary policy normalization but fiscal 0:14:00.000 --> 0:14:03.320 policy normalization and that being less supportive going forward, how 0:14:03.360 --> 0:14:06.920 do you think about that with the long term lens. Yeah, 0:14:08.240 --> 0:14:10.679 we have a situation on the monetary policy side, and 0:14:10.720 --> 0:14:12.360 we'll get the fiscal policy in a second. Of the 0:14:12.400 --> 0:14:17.360 monetary policy side, where we have a balance sheet that 0:14:17.440 --> 0:14:20.520 has doubled over the course of the of the of 0:14:20.600 --> 0:14:24.400 the COVID crisis. We had a quadruple over the course 0:14:24.440 --> 0:14:27.400 of the financial crisis. So there's a lot of new 0:14:27.480 --> 0:14:29.800 money out there. We have a Congress that is considering 0:14:29.880 --> 0:14:32.160 two bills right now that's going to spend more and 0:14:32.240 --> 0:14:34.960 more money, and so there is a real structural question 0:14:35.080 --> 0:14:38.560 about whether or not this can have long term impacts 0:14:38.640 --> 0:14:44.000 on inflation, and the inflation question, the transitory language, notwithstanding, 0:14:44.480 --> 0:14:47.120 has to be a question that goes beyond the academic 0:14:47.280 --> 0:14:50.280 because we have a lot more money out there and 0:14:50.480 --> 0:14:54.400 balance that with the supply chain issues and everything else 0:14:54.440 --> 0:14:56.440 that's going on, and we really have to try to 0:14:56.560 --> 0:15:00.640 understand where things are heading in the ticks of these 0:15:00.720 --> 0:15:03.800 great changes. So the fiscal policy and the monetary policy 0:15:03.880 --> 0:15:06.840 of all this new money, Really we don't know where 0:15:06.920 --> 0:15:08.400 that's going to be, and that is the wall of 0:15:08.480 --> 0:15:12.240 worry that that Paul referred to. So Alan, you know, 0:15:12.640 --> 0:15:14.760 Katie and I were just chatting off air about, you know, 0:15:14.840 --> 0:15:18.320 how consumer behaviors may change post pandemic. You know, we've 0:15:18.320 --> 0:15:20.800 been through eighteen months of this, whether it's getting back 0:15:20.800 --> 0:15:23.360 into the workforce, buying a house. When you talk to 0:15:23.520 --> 0:15:28.160 your clients, have you sense that their outlook for their investments, 0:15:28.560 --> 0:15:34.360 their goals has has anything changed? What I've seen changes 0:15:34.440 --> 0:15:37.360 this acceptance that we are in an inflationary period. I 0:15:37.440 --> 0:15:41.480 think the people feel that, notwithstanding this idea of transitory inflation, 0:15:41.920 --> 0:15:44.920 once prices go up, uh, we don't see it go 0:15:45.080 --> 0:15:47.640 down so fast. And I think that the clients have 0:15:48.480 --> 0:15:51.000 are respectful of that and trying to figure out how 0:15:51.120 --> 0:15:53.840 to keep up with inflation. Historically, the stock market has 0:15:53.880 --> 0:15:56.600 been an excellent place to do that, and that's, you know, 0:15:56.720 --> 0:15:58.800 one of the ways to stay ahead of inflation. But 0:15:58.960 --> 0:16:01.440 really doing that in the context of managing the risk 0:16:01.480 --> 0:16:04.080 of what's going on out there, it is a necessity, 0:16:04.120 --> 0:16:07.160 and it goes beyond you know, having bonds and stocks. 0:16:07.240 --> 0:16:11.000 It goes looking at alternative investments and and other potential 0:16:11.080 --> 0:16:13.560 and uh, you know, and this is by certainly not 0:16:13.680 --> 0:16:16.880 a recommendation and uh certainly not an area of that 0:16:17.160 --> 0:16:19.440 that we look at from an investment perspective, but certainly 0:16:19.480 --> 0:16:22.560 gives you some indications of people's thinking out there is 0:16:22.840 --> 0:16:25.880 the focus on the cryptocurrency market and the fact that 0:16:25.960 --> 0:16:29.600 it gets quoted, you know, by by people on TV 0:16:29.800 --> 0:16:33.240 and looked at very seriously because people are trying to 0:16:33.280 --> 0:16:35.840 figure out how do you manage the risk For us, 0:16:35.960 --> 0:16:40.320 we really try to diversify throughout um the listed security 0:16:40.400 --> 0:16:43.640 world and through alternative investments to try to do that 0:16:43.920 --> 0:16:46.360 because of this uncertainty that's out there. And I think 0:16:46.400 --> 0:16:49.000 that in answer to your question, that's what clients are 0:16:49.040 --> 0:16:53.960 focused on. How do you balance the COVID realities, the 0:16:54.480 --> 0:16:57.600 fiscal man terry policy realities, with the fact that we 0:16:57.680 --> 0:17:00.160 have to stay ahead of inflation. What do you tell 0:17:00.200 --> 0:17:02.120 a client who comes to you and says, I think 0:17:02.160 --> 0:17:03.840 it may be time for me to you know, telt 0:17:03.880 --> 0:17:09.000 more into cash. You know, having cash as part of 0:17:09.040 --> 0:17:12.080 me portfolio, especially in a period of such dynamic change, 0:17:12.200 --> 0:17:14.720 is a must. At the same time, I think that 0:17:14.800 --> 0:17:17.280 the inflation picture is something that we have to be 0:17:17.359 --> 0:17:19.720 aware of so we don't want to. It's not a 0:17:19.840 --> 0:17:22.399 matter of fear of missing out. It's beyond that. It's 0:17:22.440 --> 0:17:25.320 a matter of keeping up with the global pricing structure 0:17:25.600 --> 0:17:27.480 to being able to be able to buy the Coca 0:17:27.560 --> 0:17:30.479 Cola for the same price you know, two years from 0:17:30.520 --> 0:17:33.840 now that it is today, based on your assets that 0:17:34.000 --> 0:17:38.120 you have. So I think that people are it's they're 0:17:38.200 --> 0:17:42.520 they're they're numerous risks by by taking an action, but 0:17:42.720 --> 0:17:45.720 there it could be significantly greater risk by taking in action. 0:17:46.640 --> 0:17:48.399 All right, Alan, thank you so much for joining us. 0:17:48.480 --> 0:17:51.520 I really appreciate your perspective and your thoughts. Alan Rekschaffen, 0:17:51.920 --> 0:17:55.639 financial advisor and senior portfolio manager at UBS based in 0:17:55.960 --> 0:17:58.560 New York City. Um, and again, you know, it's it's 0:17:58.680 --> 0:18:01.040 tough to be in cash because it's not you're not 0:18:01.119 --> 0:18:03.760 getting paid here and on a you know, a real basis, 0:18:04.520 --> 0:18:06.840 you're losing money in cash. And so it's for a 0:18:06.920 --> 0:18:10.200 lot of folks it's that Tina situation kind of there's 0:18:10.240 --> 0:18:12.159 no alternative. I need to be in the market, and 0:18:12.280 --> 0:18:14.160 so that becomes a question of what do I own. 0:18:14.480 --> 0:18:16.920 You know, if we're in fact heading into rising and 0:18:17.160 --> 0:18:20.880 rate environment, inflation picking up, and it may not be transitory. 0:18:21.119 --> 0:18:23.359 What do I want to own in this market? So 0:18:23.520 --> 0:18:25.680 that tends to be the discussion for lots of folks. 0:18:25.840 --> 0:18:31.800 We're got more coming up. This is Bloomberg. Let's bring 0:18:31.840 --> 0:18:34.480 it right now. Louis Navalier, Chairman, founder and CEO of 0:18:34.600 --> 0:18:37.200 Navalier and Associates. Louie, thanks so much for joining us here. 0:18:37.640 --> 0:18:40.119 I think as we think about these markets, Kaylee and 0:18:40.160 --> 0:18:43.280 I were just discussing, this wall of worry is a 0:18:43.400 --> 0:18:46.800 real thing. There's a lot of stuff out there. How 0:18:46.880 --> 0:18:51.280 are you thinking about these markets when people might throw back, Boy, 0:18:51.320 --> 0:18:54.960 We've got inflation, we've got earnings risk, we've got uncertain 0:18:55.040 --> 0:18:57.520 Washington d C. We've got rising rates. How do you 0:18:57.640 --> 0:19:01.960 frame it all well? I think the big picture that's 0:19:02.240 --> 0:19:07.080 happening now is obviously China's intercession, and we had that 0:19:07.160 --> 0:19:12.840 with their purchasing energy index this morning, and Britain could 0:19:12.880 --> 0:19:15.000 be in a recession pretty click too if they don't 0:19:15.000 --> 0:19:19.440 get their act together, and then we have a green 0:19:19.560 --> 0:19:24.439 energy problem because anyone who's trying to comply is um 0:19:24.800 --> 0:19:28.760 it's not working out in China. It's the higher electrics 0:19:29.040 --> 0:19:32.640 drawing down. So then they're trying to. They have rolling 0:19:32.720 --> 0:19:36.720 blackouts and many provinces and obviously in Britain, I guess 0:19:36.800 --> 0:19:40.320 pycess up sixfold because the wind will stop blowing. That's 0:19:40.320 --> 0:19:46.959 also hurt Germany. And it's it's a problem, and it's just, uh, 0:19:47.359 --> 0:19:51.000 we're gonna have very high energy inflation and uh it's um. 0:19:51.680 --> 0:19:54.160 I think it's against told. But the central banks can't 0:19:54.240 --> 0:19:58.720 raise rates because the interest burden is too big. So okay, 0:19:58.800 --> 0:20:00.760 so you just desc I had a lot of things 0:20:00.840 --> 0:20:02.520 that I would think would be you know, kind of 0:20:02.760 --> 0:20:06.080 negative for a risk sentiment. But to Paul's point, we 0:20:06.160 --> 0:20:08.160 continue to climb the wall of worry by the dip 0:20:08.320 --> 0:20:11.359 works every time. Is there a point where it's going 0:20:11.400 --> 0:20:15.760 to stop working. I think it's gonna work welter in 0:20:15.800 --> 0:20:19.400 the next year, because um, when you have inflation, it's 0:20:19.400 --> 0:20:23.560 either real estate or stocks, and growth stocks are place 0:20:23.640 --> 0:20:26.479 to be. Clearly, some energy stocks are gonna wint fall earnings. 0:20:27.200 --> 0:20:31.800 But I don't have the analysis estimate cuts UM that 0:20:31.960 --> 0:20:34.680 some people are starting to complain about. But I am 0:20:34.800 --> 0:20:38.720 finding fewer stocks to buy UM, and I am profiting 0:20:38.880 --> 0:20:41.480 from all the problems out there. I mean, I'm loaded 0:20:41.560 --> 0:20:44.879 with all this shipping and container stocks, so they're going 0:20:44.920 --> 0:20:49.200 to be profiting from the glut men the ship, the 0:20:49.240 --> 0:20:53.439 shipping glut, and um It's just it's a very interesting 0:20:53.520 --> 0:20:57.399 environment we're in. But earnings do work. Um. We are 0:20:57.400 --> 0:21:00.280 going to have positively quota results and notest on so 0:21:00.359 --> 0:21:04.040 it's previous quarter and then we have season seasonal strength 0:21:04.119 --> 0:21:06.760 in a lot three months the year. October is the 0:21:06.800 --> 0:21:10.600 season strong month despite October eighty seven and Novembers even better. 0:21:11.359 --> 0:21:13.680 So I expect the strong finish to the year. UM. 0:21:14.040 --> 0:21:17.720 I was very happy. Every time the market corrects, the 0:21:17.800 --> 0:21:19.879 money seems to go to different stocks, so money is 0:21:19.920 --> 0:21:22.840 not leaving the market's just washing around. All right, Louis, 0:21:22.840 --> 0:21:25.120 you've been in this game a long time. You began 0:21:25.280 --> 0:21:31.560