WEBVTT - Bloomberg Surveillance: Fed Decision and Jobs Day 0:00:05.040 --> 0:00:08.639 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:08.680 --> 0:00:12.040 with Paul Sweeney. Join us each day for insight from 0:00:12.039 --> 0:00:16.200 the best in economics, finance, investment, and international relations. You 0:00:16.239 --> 0:00:19.599 can also watch the show live on YouTube. Visit the 0:00:19.600 --> 0:00:24.360 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:24.360 --> 0:00:27.400 mornings from seven to ten am Eastern from our global 0:00:27.440 --> 0:00:32.080 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:32.440 --> 0:00:36.000 or anywhere else you listen, and always I'm Bloomberg Radio, 0:00:36.200 --> 0:00:40.199 the Bloomberg Terminal, and the Bloomberg Business app. Joining us now, 0:00:40.760 --> 0:00:43.559 really looking forward to this. Rebecca Patterson here with a 0:00:43.640 --> 0:00:46.280 really wonderful heritage, yes, or to our duty of Bridgewater, 0:00:46.840 --> 0:00:50.680 but far more than that writing heard at Bessemer Trust 0:00:51.520 --> 0:00:54.840 on Quiet Money. Rebecca, there was a point yesterday, as 0:00:54.880 --> 0:00:57.520 early in the press conference where I thought they could 0:00:57.640 --> 0:00:59.800 verbade him in and run it as a Saturday Night 0:00:59.800 --> 0:01:04.720 Live I've skit where the chairman was washing around the 0:01:04.760 --> 0:01:09.440 word data, we become data dependent, whatever the idiocy he 0:01:09.560 --> 0:01:12.680 was saying, the delicacies he was saying, how did we 0:01:12.760 --> 0:01:17.440 get in this spot where we are jaw boning a 0:01:17.520 --> 0:01:23.319 trend waiting for data and just trying to get through 0:01:23.319 --> 0:01:26.119 a press conference with gobbledegook. How did we get here? 0:01:27.800 --> 0:01:31.120 Well, I think the pandemic and the post pandemic period 0:01:32.319 --> 0:01:35.760 created a lot of humility within central banks globally, including 0:01:35.800 --> 0:01:39.040 the FED, and so I think that's probably made them 0:01:39.080 --> 0:01:42.520 a little bit more cautious. I'm pounding any proverbial fists 0:01:42.560 --> 0:01:45.039 on the table in terms of where they're going with policy. 0:01:45.840 --> 0:01:49.559 Stick to the data releases. If inflation stays on track, 0:01:49.920 --> 0:01:54.360 if growth moderates softly, wonderful, we can get some rate 0:01:54.400 --> 0:01:57.800 cuts this spring. And if it doesn't happen, the FED 0:01:57.880 --> 0:01:59.800 is allowed to change its mind. I think that's what 0:02:00.040 --> 0:02:01.760 I was getting at. But I think to the degree 0:02:01.760 --> 0:02:05.360 there was waltzing yesterday, so to speak, it largely is 0:02:05.360 --> 0:02:07.640 a reflection of what happened in the last few years 0:02:07.640 --> 0:02:12.920 and then realizing how complicated this particular economic cyclists. 0:02:13.040 --> 0:02:15.680 And Rebecca, you know, the market seems to have heard 0:02:15.760 --> 0:02:17.800 what the FED said yesterday. If you look at the 0:02:18.240 --> 0:02:23.040 WRP function worp go, you know, in the March meeting 0:02:23.080 --> 0:02:25.239 there was a fifty percent odds of a rate cut. 0:02:25.280 --> 0:02:27.600 Now that's down about thirty five percent or so. It 0:02:27.639 --> 0:02:30.680 seems like the market's getting the message. Is that kind 0:02:30.720 --> 0:02:32.560 of your your take as well? 0:02:32.840 --> 0:02:33.480 Yes and no. 0:02:34.000 --> 0:02:38.560 I mean I obviously that the UH pricing in of March, 0:02:38.680 --> 0:02:41.959 down pricing in of May up now about ninety three 0:02:42.000 --> 0:02:44.400 percent odds of a cut in May. What was striking 0:02:44.440 --> 0:02:46.880 to me, though, is when we look at what's priced 0:02:46.919 --> 0:02:49.760 in for FED funds today versus before the meeting, is 0:02:49.800 --> 0:02:52.560 we still have about one hundred and fifty basis points 0:02:52.560 --> 0:02:55.359 of easing priced in for this year. That hasn't changed 0:02:55.800 --> 0:02:59.000 really since before the press conference, So it's just getting 0:02:59.080 --> 0:03:03.560 compressed into a shorter timeframe. And I still am skeptical 0:03:03.600 --> 0:03:05.880 about that. I think you would have to see a 0:03:05.919 --> 0:03:08.720 lot of things go really perfectly right to get that 0:03:08.800 --> 0:03:12.760 amount of easing and get the double digit earnings growth 0:03:12.760 --> 0:03:14.760 that's still priced in for the SMP this year. 0:03:15.160 --> 0:03:18.359 Rebecca Patterson with US our Tech Analysts this morning. Rebecca, 0:03:18.480 --> 0:03:22.080 I looked at the operating cash flow of Microsoft yesterday 0:03:22.600 --> 0:03:24.919 and this is with your tour duty at JP Morgan 0:03:25.000 --> 0:03:28.600 years ago. I think we really don't understand the size 0:03:28.639 --> 0:03:32.359 the scope to scale a fortress Diamond or frankly fortress 0:03:32.400 --> 0:03:37.560 such an Adela as well. Apple computer today pre pandemic 0:03:37.560 --> 0:03:41.400 they had fifty nine billion in free cash sule Paul. 0:03:42.000 --> 0:03:45.240 Basically they've done a double sure in like four or 0:03:45.240 --> 0:03:50.120 five years. Do we understand the size of these companies, Rebecca, 0:03:50.160 --> 0:03:54.160 and how can we not own them? If they're that dominant? 0:03:55.840 --> 0:03:58.000 I think you have to own them. The question is 0:03:58.040 --> 0:04:03.080 are you underweight benchmark weight overweight? And with the valuations today, 0:04:03.160 --> 0:04:07.000 with the expectations for growth as we've seen in the 0:04:07.040 --> 0:04:10.600 last few days, any disappointment versus what's priced in in 0:04:10.640 --> 0:04:13.760 their earning season get some profit taking. But if you 0:04:13.800 --> 0:04:16.520 take a longer term view and I try to on 0:04:16.600 --> 0:04:20.760 these things, I'm not day trading, you know, with that 0:04:20.839 --> 0:04:25.000 free cash flow, with the comparative advantages they have the motes, 0:04:25.080 --> 0:04:30.720 they have, the technology, the personnel comparative advantage. Whether we're 0:04:30.720 --> 0:04:33.599 talking tech or you mentioned JP Morgan, I would argue 0:04:33.640 --> 0:04:36.599 they're in that camp too. It's very hard to see 0:04:36.600 --> 0:04:38.320 them taken down now this year, as you know, we're 0:04:38.320 --> 0:04:41.200 going to have some regulatory kurdles for some of the 0:04:41.279 --> 0:04:44.279 tech stocks, which probably don't end with the decision. 0:04:44.320 --> 0:04:44.880 They'll go to the. 0:04:44.920 --> 0:04:46.960 Court, so it'll drag out for a while. But that 0:04:46.960 --> 0:04:50.200 could be another impetus for some profit taking. I'd say 0:04:50.200 --> 0:04:52.040 if you get that kind of profit taking on the 0:04:52.040 --> 0:04:55.160 tech stocks, it's an opportunity to buy for a longer 0:04:55.279 --> 0:04:55.880 term position. 0:04:56.760 --> 0:04:57.600 How do you feel about that? 0:04:58.200 --> 0:05:00.440 You know, we're right smack in the middle earnings, Rebecca, 0:05:00.480 --> 0:05:02.360 how do you feel about what you're seeing here in 0:05:02.400 --> 0:05:05.280 earnings and what we're hearing from companies. It seems like 0:05:05.320 --> 0:05:08.000 the technology sector is still in pretty solid shape it. 0:05:08.800 --> 0:05:10.520 You know, some of the others are still very cautious. 0:05:11.880 --> 0:05:14.719 Well, we've seen that divergent in the divergence in the 0:05:14.760 --> 0:05:16.960 economy over the last few years. If you look at 0:05:17.000 --> 0:05:21.560 the business sentiment surveys, the PMIS, we've seen a manufacturing 0:05:21.600 --> 0:05:24.600 sector that you know, reflected in those surveys, has been 0:05:24.600 --> 0:05:29.160 modestly contracting for fourteen fifteen months now, and the service sector, 0:05:29.200 --> 0:05:33.040 while strong, has been moderating. And so it's not surprising 0:05:33.080 --> 0:05:35.479 to me if you look across companies and sectors, you 0:05:35.520 --> 0:05:38.640 are seeing a difference between services, manufacturing, and then even 0:05:38.680 --> 0:05:39.839 within sub sectors. 0:05:40.160 --> 0:05:42.040 And I think that's likely to continue. 0:05:42.279 --> 0:05:44.359 Rebecca. We got to go to your wheelhouse, which is 0:05:44.400 --> 0:05:47.200 dollar currency, and Allison that what does the strong dollar 0:05:47.279 --> 0:05:49.080 the resilient dollar, what does that. 0:05:49.200 --> 0:05:53.400 Signal well in the last twenty four hours. 0:05:53.400 --> 0:05:55.920 It's simply a reflection of the March rate cut being 0:05:55.960 --> 0:05:57.720 pushed back some higher short term. 0:05:57.640 --> 0:06:00.200 In the last six months, the last year, it's an 0:06:00.200 --> 0:06:04.760 extraordinary how we've seen resilient dollar and underperformance of international equities. 0:06:04.760 --> 0:06:07.800 It's just yeah, running I agree with you, Tom. 0:06:07.880 --> 0:06:10.920 You know, you have to remember that compared to when 0:06:10.960 --> 0:06:14.320 we started our careers and trade flows, where the dominant 0:06:14.360 --> 0:06:17.520 cross border flow. Today it's capital flows and where does 0:06:17.560 --> 0:06:21.960 capital go. Capital go goes where growth is stronger, and 0:06:22.080 --> 0:06:25.600 ideally where valuations are attractive. Now, US valuations, we can 0:06:25.680 --> 0:06:28.679 argue are not so attractive, but growth is so much 0:06:28.720 --> 0:06:31.600 more attractive in the United States versus the rest of 0:06:31.600 --> 0:06:34.680 the world today, By and large, money keeps coming here 0:06:34.760 --> 0:06:37.760 and that keeps supporting the dollar and US stock market. 0:06:37.880 --> 0:06:40.440 Sounds like Bob Sinch from years ago at bear Stearns. Okay, 0:06:40.480 --> 0:06:44.600 Bob Sinch or Rebecca Patterson. Great, except the great destabilizer 0:06:44.760 --> 0:06:50.160 is Japan. If we finally get Japanese instability, what does 0:06:50.160 --> 0:06:52.919 that mean for our YouTube viewers in America? 0:06:55.480 --> 0:06:58.360 You know, Japan has been one of the few overseas 0:06:58.440 --> 0:07:03.800 developed markets out performing the US of late based on reflation, 0:07:04.040 --> 0:07:07.800 better growth, stronger inflation, but not too strong. And now 0:07:07.839 --> 0:07:10.680 the question is if the Bank of Japan pulls back 0:07:10.720 --> 0:07:14.640 from that aggressively easing monetary posture and you get a 0:07:14.680 --> 0:07:19.120 stronger yen, does that undermine exports in Japan? That's been 0:07:19.160 --> 0:07:21.320 a big engine of growth and a big engine of 0:07:21.360 --> 0:07:24.280 the reflation for that economy. So the stronger yen on 0:07:24.320 --> 0:07:28.800 the back of less easy monetary policy higher yields. To 0:07:28.880 --> 0:07:31.600 your point, we don't know how big a destabilizer that 0:07:31.640 --> 0:07:34.880 could be. It certainly could pause the equity rally there 0:07:34.880 --> 0:07:39.200 for some time, again underscoring the attractiveness of being in 0:07:39.320 --> 0:07:43.440 US large caps, But I think it's going to Japan 0:07:43.480 --> 0:07:45.640 has shown that they're going to be very incremental, very 0:07:45.640 --> 0:07:48.160 slow about this. The last thing they want is a disruption. 0:07:48.880 --> 0:07:52.120 Rebecca, just real quickly here geopolitics front and center of 0:07:52.240 --> 0:07:54.000 course for global Wall Street. 0:07:55.200 --> 0:07:57.240 How does that factor into your outlook? 0:07:57.280 --> 0:07:57.480 Here? 0:07:57.520 --> 0:08:00.280 Do you buy some gold you try to head? 0:08:00.480 --> 0:08:01.040 How do you do that? 0:08:02.360 --> 0:08:04.680 I do think a small allocation of gold, and I'm 0:08:04.680 --> 0:08:08.720 talking about in a portfolio, probably something between two and 0:08:08.840 --> 0:08:12.240 five percent of the total is a good hedge not 0:08:12.280 --> 0:08:15.679 only against geopolitical risk, but also the possibility. 0:08:15.040 --> 0:08:16.240 That we have a harder landing. 0:08:16.640 --> 0:08:18.720 But I think in the case of geopolitical risk, what 0:08:18.760 --> 0:08:22.640 you always have to ask is, if this risk becomes reality, 0:08:23.040 --> 0:08:25.800 does it have a material impact on my view of 0:08:25.840 --> 0:08:29.120 the economy globally or in that region, and doesn't have 0:08:29.160 --> 0:08:32.400 a material impact on markets. Why the market doesn't react 0:08:32.520 --> 0:08:36.559 is because so far it doesn't change your broader economic thesis. 0:08:36.720 --> 0:08:40.360 If we do see that change, then the politics will 0:08:40.360 --> 0:08:42.840 matter a lot. And unfortunately it's the sort of thing 0:08:42.880 --> 0:08:45.160 that happens quickly, so you have to plan ahead. You 0:08:45.160 --> 0:08:48.320 have to do your scenario analysis now because when it happens, 0:08:48.559 --> 0:08:50.680 you don't want to be reacting with the market moving 0:08:50.720 --> 0:08:51.200 against you. 0:08:51.480 --> 0:09:05.040 Rebecca Patterson, thank you so much, greatly appreciate it. We're 0:09:05.040 --> 0:09:07.320 gonna turn serious here and I want to get to 0:09:07.360 --> 0:09:10.240 some mathiness here, so stay with me on this, folks. 0:09:10.240 --> 0:09:12.719 Where with sree Kamar, who we can always do a 0:09:12.800 --> 0:09:16.840 high level economics math shre to be honest and Ethan 0:09:16.880 --> 0:09:20.280 Ayris wrote a brilliant essay on trend out on LinkedIn 0:09:20.320 --> 0:09:22.240 a couple of days ago. I mentioned it yesterday with 0:09:22.280 --> 0:09:25.840 Bill Dudley, the former New York Fed President. Richard Claire 0:09:25.920 --> 0:09:29.080 to the Vice chairman shre Kamar with us and Shre 0:09:29.880 --> 0:09:34.400 If we're on trend and the trends is disinflation, the 0:09:34.520 --> 0:09:37.400 probability is you're not going to stay on trend. And 0:09:37.440 --> 0:09:40.360 so the Fed is waiting to see if we trend 0:09:40.360 --> 0:09:46.600 a surprising employment or we trend to weak employment. When 0:09:46.640 --> 0:09:50.040 we finally get off trend, then what then what do 0:09:50.080 --> 0:09:53.160 they do once they have a data point that cuts 0:09:53.280 --> 0:09:54.440 either way off trend. 0:09:57.440 --> 0:09:59.920 You're absolutely correct, Tom, that is the part of the 0:10:00.120 --> 0:10:03.840 problem in doing what I call seat of the pants 0:10:04.320 --> 0:10:12.280 analysis and policy implementation, because they don't have a fixed path. 0:10:13.000 --> 0:10:16.839 I have long been recommending something like a tailor rule, 0:10:17.400 --> 0:10:20.080 so that you have the formula in place and you 0:10:20.200 --> 0:10:24.800 follow it and you don't have the jerky moves pivoting 0:10:24.920 --> 0:10:27.199 from one to the other, which is exactly what you're 0:10:27.280 --> 0:10:30.360 pointing to. That is the risk taking. Look here in 0:10:30.400 --> 0:10:35.080 the near term, Tom, December thirteenth, there is Jero power 0:10:35.840 --> 0:10:40.480 sending the market upwards like a rocket. Shire yesterday he 0:10:40.600 --> 0:10:45.040 pulls it back. What happened between December thirteenth and yesterday 0:10:45.120 --> 0:10:49.160 to cause a big change to hawkishness, Nothing, if anything 0:10:49.240 --> 0:10:53.880 inflation numbers came out more benign than expected. So this 0:10:54.080 --> 0:10:57.080 is what is the problem with not having a long 0:10:57.200 --> 0:10:58.840 term view on the part of the FED. 0:10:58.960 --> 0:11:01.880 The problem tailor role, and it's beautifully done out in 0:11:01.880 --> 0:11:06.199 the Bloomberg terminal. I got the neutral real ray. Guess 0:11:06.280 --> 0:11:10.079 that CPI, I guess I can grab that. I got 0:11:10.080 --> 0:11:13.679 a Greek letter named alpha, we almost named vetno Alpha. 0:11:13.880 --> 0:11:16.760 Then I got a beta, I got an oken factor, 0:11:17.240 --> 0:11:19.000 and I got a nehbrew suit I've got to wear 0:11:19.080 --> 0:11:21.360 when I look at the tailor roll, come on street. 0:11:21.400 --> 0:11:24.440 This is mathematical mumbo jumbo. How do you use an 0:11:24.440 --> 0:11:28.360 algebraic stree Kamar rule when I got a pandemic in 0:11:28.400 --> 0:11:30.560 a triple stimulus? It doesn't compute. 0:11:33.240 --> 0:11:36.400 You do it in two ways. One is the tailor 0:11:36.520 --> 0:11:40.240 rule is sufficiently flexible, meaning that it is not a 0:11:40.240 --> 0:11:44.960 fixed formula. And it basically says that when inflation is 0:11:45.000 --> 0:11:47.679 about target or below target, what you should what you 0:11:47.760 --> 0:11:51.400 should be doing, When GDP growth is above or below 0:11:51.520 --> 0:11:53.959 what you wanted to be, what you should be doing. 0:11:54.640 --> 0:11:59.200 And it allows you some amount of flexibility between those stuff. 0:11:59.840 --> 0:12:02.120 You don't have to go to the open rule. You 0:12:02.280 --> 0:12:04.280 do not have to go to the others. If you 0:12:04.440 --> 0:12:08.920 follow any particular rule diligently, you would be a lot 0:12:09.000 --> 0:12:11.560 better off than what we are doing now, where we 0:12:11.600 --> 0:12:15.000 don't have any fixed principles. That's where I come out at. 0:12:15.200 --> 0:12:19.360 It doesn't matter what principle you use. Use something as 0:12:19.360 --> 0:12:23.400 a rule rather than just decide that morning what you're 0:12:23.440 --> 0:12:26.080 going to do with interest rates and quantitative tightening. 0:12:26.720 --> 0:12:26.920 Shre. 0:12:27.040 --> 0:12:28.680 We've had a number of guests on over the last 0:12:28.720 --> 0:12:33.040 several weeks, both academics and market practitioners, who say the 0:12:33.120 --> 0:12:37.880 Fed should be cutting rates now inflation is already whipped. 0:12:39.600 --> 0:12:43.320 How do you view that kind of call? 0:12:43.480 --> 0:12:46.600 That is the call all that we had in the 0:12:46.679 --> 0:12:50.360 nineteen seventies, and we know how it turned out to be, 0:12:50.360 --> 0:12:53.440 because when you cut interest rates significantly, and if you 0:12:53.520 --> 0:12:57.880 did that today, the markets would rally, consumer spending would 0:12:57.920 --> 0:13:03.240 increase the economy then temporarily go on a much faster 0:13:03.400 --> 0:13:07.320 growth seting, inflation will pick up, and then it will 0:13:07.400 --> 0:13:09.920 make it much more difficult for you to bring the 0:13:09.960 --> 0:13:13.240 inflation rate down. That is the risk of cutting down 0:13:13.320 --> 0:13:16.200 interest rates sharply today, Shre. 0:13:16.320 --> 0:13:20.760 Are you surprised about how resilient the consumer is? I mean, 0:13:20.760 --> 0:13:24.560 we just had Royal Caribbean cruise lines take their guidance up. 0:13:24.640 --> 0:13:28.880 People are spending, They're going on cruises, they're going on trips, 0:13:29.040 --> 0:13:33.240 they're buying stuff. I'm actually kind of surprised how resilient 0:13:33.280 --> 0:13:33.960 the consumer is. 0:13:35.840 --> 0:13:37.959 There are two reasons for that part. You raise a 0:13:38.000 --> 0:13:40.760 good point. First of all, I think there was an 0:13:40.840 --> 0:13:45.600 immense amount of fiscal stimulus that was provided to the economy. 0:13:46.200 --> 0:13:48.760 At the end of twenty twenty two, the estimate was 0:13:48.960 --> 0:13:53.400 one point five trillion dollars worth of excess savings were 0:13:53.400 --> 0:13:56.559 in the hands of the consumers. So it is being 0:13:56.640 --> 0:13:59.920 spent the last months of the Trump administration, the initial 0:14:00.200 --> 0:14:04.160 months of the Biden administration, the stimulus that came forth 0:14:04.240 --> 0:14:08.320 is still being spent. That's one reason. Second, look at 0:14:08.480 --> 0:14:12.079 what has happened with the recent numbers on consumer disposable 0:14:12.080 --> 0:14:17.640 income and savings. Savings are rising much slower than consumer 0:14:17.720 --> 0:14:21.160 disposable income. Sorry, I should say the other way. Consumer 0:14:21.280 --> 0:14:25.840 savings are not rising. Consumers are essentially dipping into their 0:14:25.880 --> 0:14:30.080 savings in order to finance their spending, and that is 0:14:30.160 --> 0:14:34.520 going to cause it. Credit card loan defaults are increasing 0:14:34.640 --> 0:14:37.440 in the case of banks, and that is another way 0:14:37.480 --> 0:14:40.600 in which the consumer spending is being done. You saw 0:14:40.680 --> 0:14:43.640 what happened with the banking problems in the last couple 0:14:43.640 --> 0:14:47.840 of days. I've been writing Paul that, especially with the consumers, 0:14:48.440 --> 0:14:51.160 that you're only seeing the tip of the iceberg. You're 0:14:51.160 --> 0:14:53.120 going to see a lot more in the next six 0:14:53.160 --> 0:14:54.160 to nine months. 0:14:54.880 --> 0:14:58.440 So given that backdrop here, do you think the FED 0:14:58.720 --> 0:15:02.080 is the message? Yes, they was pretty clear or don't 0:15:02.120 --> 0:15:04.160 bank on us cutting rates in March. Do you think 0:15:04.200 --> 0:15:07.200 that's the right message? And do you think that message 0:15:07.240 --> 0:15:10.520 is subject to you know, if the data changes, maybe 0:15:10.520 --> 0:15:11.280 they'll change. 0:15:13.680 --> 0:15:17.040 Uh. If I would say that, if they stick to 0:15:17.160 --> 0:15:21.400 March and if they wait for inflation to significantly come 0:15:21.440 --> 0:15:24.480 down before they cut rates, that is the correct policy. 0:15:25.280 --> 0:15:28.480 But if what your own power does is to switch 0:15:28.720 --> 0:15:33.000 messages from meeting to meeting, from December to this meeting 0:15:33.560 --> 0:15:37.920 with no change significantly happening in the economy, that is 0:15:37.960 --> 0:15:40.760 going to be a problem. It's going to cause volatility, 0:15:41.160 --> 0:15:45.480 it's going to cast uncertainty in markets. But unfortunately that's 0:15:45.520 --> 0:15:46.760 the way the FED operates. 0:15:48.480 --> 0:15:51.640 I look sre and you know, we would like to 0:15:51.640 --> 0:15:53.560 talk to him for like an hor Yeah, you have 0:15:53.600 --> 0:15:56.280 no guess, lose Lisa, you know, lose. 0:15:56.080 --> 0:15:59.280 Bar exactly, Senta Monica too straight. 0:15:59.520 --> 0:16:02.520 There's a lot. Yeah, I know he's smarter than we are, yes, Sre. 0:16:02.760 --> 0:16:06.160 Just to wrap this up, is there a theory at 0:16:06.160 --> 0:16:09.480 the FED now or are they literally staggering from meeting 0:16:09.520 --> 0:16:09.960 the meeting. 0:16:12.680 --> 0:16:14.520 I think it's the latter, Tom. I think they are 0:16:14.520 --> 0:16:18.320 staggering from meeting to meeting. Powell tells to you that 0:16:18.400 --> 0:16:22.320 they are data dependent, which means they act based on 0:16:22.400 --> 0:16:25.640 the latest data, and that may not be what is 0:16:25.680 --> 0:16:28.920 good for the long term, but unfortunately that is the 0:16:28.920 --> 0:16:31.960 FED formula right now. And you've heard it from the chairman, 0:16:32.240 --> 0:16:32.960 not just from me. 0:16:34.240 --> 0:16:37.160 Sre. Thank you so much, Sri Kamar, or this here, 0:16:41.440 --> 0:16:44.800 this is some important conversation. It's fallen off the radar, 0:16:44.880 --> 0:16:48.080 but it is gospel from Margie Patel. She has been 0:16:48.120 --> 0:16:51.520 doing this for ages and she has been right, right, right, 0:16:51.960 --> 0:16:54.160 And one of the important things is she shifted from 0:16:54.200 --> 0:16:58.400 coupon to dividend growth in terms of a measured portfolio 0:16:58.480 --> 0:17:02.240 at all Spring Global Investments. Margie, it's really fallen off 0:17:02.240 --> 0:17:04.119 the radar in this great lift we've seen in the 0:17:04.160 --> 0:17:07.680 equity markets, which is used to cash share buyback. We'll 0:17:07.720 --> 0:17:11.439 hear that from the tech companies today, but also dividend growth. 0:17:12.080 --> 0:17:17.120 One of our guests, Paul Sweeney, is apoplectic about this 0:17:17.520 --> 0:17:26.560 that Apple that Microsoft should install a responsible adult dividend policy. Margie, 0:17:26.600 --> 0:17:29.000 should they? 0:17:29.840 --> 0:17:32.760 I really wouldn't be in a position to judge that. 0:17:32.880 --> 0:17:37.680 I think that, for example, Microsoft has been exceptionally strong 0:17:37.920 --> 0:17:41.159 in their capital expenditures, so I would really look for 0:17:41.160 --> 0:17:43.200 the long term and see that they're using their cash 0:17:43.200 --> 0:17:46.560 wives and to invest for future growth, not necessarily doing that. 0:17:46.800 --> 0:17:48.520 Paul, I think you're onto something here. I'm going to 0:17:48.600 --> 0:17:51.040 jump in and say, I get all the rationalization of 0:17:51.160 --> 0:17:55.000 not doing a dividend, but there's something American about it 0:17:55.160 --> 0:17:56.480 that's as simple as I can put it. 0:17:56.600 --> 0:17:58.400 Yeah, And it just goes to the issue of these 0:17:58.400 --> 0:17:59.920 tech companies. Mark, We're going to hear from some of 0:17:59.920 --> 0:18:02.400 the big tech companies after the close tonight, and we're 0:18:02.440 --> 0:18:06.120 just marvel at the free cash flow that these companies generate. 0:18:06.200 --> 0:18:06.400 Here. 0:18:06.920 --> 0:18:09.439 What are you looking for after the close here today? 0:18:09.480 --> 0:18:12.400 From you know, some of the real leaders in this marketplace, 0:18:12.640 --> 0:18:13.680 some of these big tech names. 0:18:15.680 --> 0:18:17.760 Well, we saw some yesterday and I think we'll see 0:18:17.800 --> 0:18:20.479 more of the same today, which is they still have 0:18:20.680 --> 0:18:24.040 a strong, sustainable growth well into the future, and it's 0:18:24.119 --> 0:18:26.560 more a question of the markets nervous. The market wants 0:18:26.560 --> 0:18:28.880 to have a little correction. So we saw a negative 0:18:28.880 --> 0:18:32.480 reaction yesterday when the Big three reported. Maybe we'll see 0:18:32.520 --> 0:18:34.840 that tonight. I think the market will chop around here 0:18:35.000 --> 0:18:37.600 because it just wants to have a little bit of correction. 0:18:37.720 --> 0:18:40.480 But still the fundamentals look great, so there's no reason 0:18:40.480 --> 0:18:42.280 why stock shouldn't go up all year. 0:18:42.320 --> 0:18:45.600 In the discent holdings, well, you know, part of that 0:18:45.640 --> 0:18:47.840 I assume is going to be earnings. 0:18:47.960 --> 0:18:49.240 They are going to have to come through here. 0:18:49.359 --> 0:18:51.760 And I see kind of you know, high single little 0:18:51.760 --> 0:18:54.240 double digit earnings as I look forward on the Bloomberg 0:18:54.320 --> 0:18:57.080 terminal here for the next twelve eighteen months. Do you 0:18:57.080 --> 0:18:59.720 feel like there's earnings risk in some of. 0:18:59.640 --> 0:19:05.359 Those I No, I think most of them, most of 0:19:05.400 --> 0:19:08.919 the big tech companies have a path for sustainable growth 0:19:09.359 --> 0:19:11.280 for as far as we can see. In other words, 0:19:11.320 --> 0:19:14.119 several years. And the surprises we've had a few of 0:19:14.119 --> 0:19:17.160 the negative some surprises have really come from other sectors 0:19:17.160 --> 0:19:21.040 with a healthcare, transportation things, industrials, things like that. 0:19:21.359 --> 0:19:23.280 I mean, Paul, we got to frame this out, you know, 0:19:23.280 --> 0:19:26.119 I get hysterical about this. Paul absolutely nails at folks. 0:19:26.160 --> 0:19:29.720 In the brutal correction we've had, we're down one point 0:19:29.840 --> 0:19:32.919 nine percent in the standard ports in the peak. In 0:19:32.960 --> 0:19:38.399 my long term log exponential moving average is down a 0:19:38.480 --> 0:19:42.720 plunging two point nine percent in this bullmarket. That's a 0:19:42.800 --> 0:19:46.520 daily chart, Paul. We are addicted to going up every day. 0:19:46.520 --> 0:19:47.240 It seems like it. 0:19:47.480 --> 0:19:51.399 MARKI we heard from some Federal Reserve yesterday. It looks like, 0:19:51.440 --> 0:19:53.119 you know, get a hold steady here the Bank of 0:19:53.160 --> 0:19:58.480 England today holding steady. What's your interest rate outlook here 0:19:58.520 --> 0:20:00.919 for constructive equity market? 0:20:02.760 --> 0:20:05.920 Well, really, to me, a four percent across the curve 0:20:06.240 --> 0:20:11.200 looks pretty constructive for the economy, and I think short 0:20:11.240 --> 0:20:13.560 rates will come down whether it doesn't seem like it's 0:20:13.560 --> 0:20:16.119 going to be marched. But really it's irrelevant to the 0:20:16.160 --> 0:20:20.280 strength we had last year in the economy. Very strong employment, 0:20:20.400 --> 0:20:22.960 consumers in good shape, business is in good shape. There's 0:20:22.960 --> 0:20:26.000 no sector under stress. So in a sense, you might say, 0:20:26.359 --> 0:20:29.520 Federal Reserve next interest rate action is irrelevant to the 0:20:29.520 --> 0:20:31.440 equity market and to the economy overall. 0:20:31.680 --> 0:20:35.400 Market market lifts here, market Pattel driving the market higher. 0:20:35.480 --> 0:20:39.000 Paul Sweeney nastick up half a percent off the courtage, 0:20:39.040 --> 0:20:39.600 I say. 0:20:39.960 --> 0:20:42.639 Yesterday exactly all right, So Margie, we're gonna have some 0:20:42.680 --> 0:20:45.600 big tech numbers at tonight and presumably gonna be pretty solid, 0:20:46.119 --> 0:20:48.879 you know. And Tom King, of course was long magnificent seven, 0:20:48.920 --> 0:20:50.959 so he's just clipping coupons at this point. 0:20:51.240 --> 0:20:52.800 What are the rest of us do who maybe have 0:20:52.920 --> 0:20:54.600 missed that trade here? 0:20:54.640 --> 0:20:57.080 How do we kind of approach twenty twenty four in 0:20:57.160 --> 0:20:58.760 terms of trying to find some opportunities? 0:21:00.200 --> 0:21:01.919 Well, I think you have to look at companies that 0:21:02.000 --> 0:21:05.600 have a path to above average future growth and really 0:21:05.640 --> 0:21:07.720 not be hung up on the fact that, well, this 0:21:07.760 --> 0:21:10.160 has been a great stock, great future, but it's up 0:21:10.320 --> 0:21:12.320 a lot over the last year, so therefore I'm not 0:21:12.359 --> 0:21:13.760 going to buy it. I think that's never a good 0:21:13.800 --> 0:21:16.400 reason to buy a stock because it's already been up. 0:21:17.040 --> 0:21:19.840 Mark you. The yield market is speaking, and I'm going 0:21:19.880 --> 0:21:22.679 to look at the ten year real yield, which framed 0:21:22.720 --> 0:21:25.800 out about a one point eight zero and plunges the 0:21:25.880 --> 0:21:30.719 right word, folks, The inflation adjusted yield is now plunged 0:21:31.480 --> 0:21:35.520 to one point sixty five percent. On a chart. If 0:21:35.520 --> 0:21:37.760 it hits a one point fifty nine one point five 0:21:37.840 --> 0:21:41.679 nine percent. That's a huge deal. What does a stock 0:21:41.760 --> 0:21:45.560 market do, mark you Peatel, if the inflation adjusted yield, 0:21:45.600 --> 0:21:49.240 that restrictive cost of money yield, if it really breaks 0:21:49.280 --> 0:21:50.840 down to a lower level. 0:21:52.200 --> 0:21:54.920 Well, it just says to me, it's another positive factor 0:21:55.000 --> 0:21:58.280 for sustainable growth. And what's different with this cycle is 0:21:58.440 --> 0:22:02.560 companies use the last decad this consumers did to restructure 0:22:02.600 --> 0:22:05.320 take advantage of zero interest rates, so they really aren't 0:22:05.400 --> 0:22:07.840 very hurt by when the Fed raised rates. It really 0:22:07.920 --> 0:22:10.160 is not a big matter to them when the Fed 0:22:10.200 --> 0:22:13.480 cuts rates. It's more of what's their prospective return on investments. 0:22:14.400 --> 0:22:17.000 So we had another little scare yesterday, Margie in the 0:22:17.400 --> 0:22:20.600 banking space with your community bank, and I think most 0:22:20.640 --> 0:22:24.480 analysts research that I've read says it's kind of specific 0:22:24.520 --> 0:22:26.320