Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
Speaker 2: with Paul Sweeney. Join us each day for insight from
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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Here's the secret, folks,
Speaker 2: guy asked me. Wonderful guy email me this weekend. He said,
Speaker 2: how in God's name do you do it? And the
Speaker 2: answer is you read, reread. And I learned decades ago
Speaker 2: that if you read anything from Outlage Press, you will
Speaker 2: be happy. It is a esteemed British firm. This little jewel,
Speaker 2: one hundred and sixty five pages came in. This should
Speaker 2: be in the CFA curricula. Immediately he's with federator or
Speaker 2: MESI has to put up with Steve Off. Daniel Parris
Speaker 2: joins US historian PhD. And this is about what Paul
Speaker 2: Sweeney cares about more than anything, the ownership dividend. It
Speaker 2: is a magnificent global Wall Street primer on dividends. Daniel Paris,
Speaker 2: thank you so much for joining us today. You have
Speaker 2: the Paul Sweeney page, which is Cliff Asnes at AQR
Speaker 2: saying we've done the work, don't worry about paying taxes
Speaker 2: on dividends. Dividends are good. What does that mean for
Speaker 2: our listeners, our viewers?
Speaker 3: You know, Tom, thank you for having me on the show.
Speaker 3: The way I phrased it a little bit differently is
Speaker 3: that in my day job, I do run into a
Speaker 3: lot of advisors and clients who really really want to
Speaker 3: subordinate investment policy to tax minimization. It seems to be
Speaker 3: more important to them than the investment policy. And I
Speaker 3: make the simple statement that's a choice, not a necessity.
Speaker 3: Academic finance is really really strong on tax minimization. There's
Speaker 3: nothing wrong with that, but I take a stand as
Speaker 3: a business owner that investment policy should not be subordinated
Speaker 3: to tax minimization policy. And while the tax code is
Speaker 3: often adverse, you know, it's a sign of success or
Speaker 3: victory if you find yourself having to.
Speaker 1: Pay a bit.
Speaker 3: So it's one of the biggest issues I run into
Speaker 3: on a daily basis.
Speaker 2: Page fifty three, Philip Fisher. There was the Old Testament,
Speaker 2: the New Testament, and then there was common stocks in
Speaker 2: uncommon profits a million like a generation ago. Danielle Paris,
Speaker 2: Should Apple raise their dividends?
Speaker 1: Yeah?
Speaker 3: The biggest pushback I get from this book and Apple's
Speaker 3: are perfec example of that is listen, buybacks are fine,
Speaker 3: and I don't dispute the utility of buybacks in certain circumstances,
Speaker 3: not how they're widely used. But I'm challenged and said, well,
Speaker 3: you know where would these dividends come from. We don't
Speaker 3: want to starve companies of growth opportunities, and of course
Speaker 3: we don't companies should invest in positive MPV projects. But
Speaker 3: when there's close to a trillion dollars spent from the
Speaker 3: S and P five hundred companies, notably concentrated in a
Speaker 3: handful of very very large tech companies on buybacks, shifting
Speaker 3: some of that over time, which I believe will happen
Speaker 3: as interest rates have stopped falling, is not going to
Speaker 3: come at the expense of investment and growth. It's going
Speaker 3: to come out out of the buybacks. And Apple and
Speaker 3: many of the other companies that say they can't afford
Speaker 3: to pay a dividend because they've got so many good
Speaker 3: growth projects are also buying their shares backhand over fist.
Speaker 3: Looks good in a rising market. They need to do
Speaker 3: so when they're issuing shares out the back door to employees.
Speaker 3: But yeah, the payout ratio for the large tech companies
Speaker 3: which is currently pretty low, and for well, it's called
Speaker 3: the Nasdaq one hundred, whether they're in the Nasdaq one
Speaker 3: hundred or not. But I'm just talking about the large,
Speaker 3: mature tech companies. I believe over the next couple years,
Speaker 3: over the next five to ten years, you're going to
Speaker 3: see many of them follow in the footsteps of Meta And.
Speaker 4: There we go. So, Daniel, is there an ideal payout ratio?
Speaker 4: What does the academic research say?
Speaker 3: You just stepped on an academic land mine. I don't
Speaker 3: know if we want to go there. In nineteen sixty one,
Speaker 3: the issue of whether there's an ideal pay at ratio
Speaker 3: was raised and answered definitively. So the answer is no,
Speaker 3: and I don't dispute that finding from nineteen sixty one, though,
Speaker 3: much of my work is historically critical of academic finance,
Speaker 3: of modern academic finance, some would say very critical. But
Speaker 3: in the book I do argue that listen, I don't
Speaker 3: know what the payout ratio is going to be in
Speaker 3: the yield of the S and P five hundred is
Speaker 3: going to be. I just know it's going to be
Speaker 3: higher than it is now. We've had a thirty year
Speaker 3: anomaly of declining yields, declining payout ratios, rising buybacks, and
Speaker 3: other phenomena which I think, as the book articulates, kind
Speaker 3: of came to an end starting in twenty twenty. And
Speaker 3: is the yield of the S and P five hundred ready?
Speaker 3: Is everyone sitting down you know? Is it going to
Speaker 3: be three percent, four percent, four and a half. I
Speaker 3: don't know. I think it's going to normalize in that direction.
Speaker 2: If Tim if Lucas was here from Apple, he'd say,
Speaker 2: all of our research as shareholders don't want to big
Speaker 2: text on that four percent SPX dividend.
Speaker 4: So what do you say to that, Daniel about that
Speaker 4: the tax implications here? What's the Kundter argument? I guess
Speaker 4: if there is one?
Speaker 3: Yeah, the only difference right now, remember long term capital
Speaker 3: gains and qualified dividends attacked at the same rate. So
Speaker 3: from a purely investment perspective, or there's no penalty. When
Speaker 3: modern academic finance and when that Apple executive was being trained,
Speaker 3: tax rates were higher on dividends than they were on
Speaker 3: capital gains. That's no longer case, and it hasn't been
Speaker 3: since two thousand and three. The only difference is timing
Speaker 3: so that a investor can time a capital gain or
Speaker 3: capital loss. Again, investors can harvest capital losses as easily
Speaker 3: as they can harvest capital gains, but investor can time that.
Speaker 3: Where's a dividend occurs more regularly. My answer, and it's
Speaker 3: really the theme of the book, and it's in the
Speaker 3: title and you caught it, Tom, is a harvested capital
Speaker 3: gain is a market outcome for which many many people,
Speaker 3: when the market moves up into the right, are very
Speaker 3: happy with. A dividend payment is a business outcome. You
Speaker 3: can choose to play the market, or you can choose
Speaker 3: to be a business owner. Now there are a lot
Speaker 3: of young people in particular who don't care about being
Speaker 3: a business owner. They just think of stocks by low,
Speaker 3: sell high repeat frequently. It goes up to the right
Speaker 3: and that's fine. There's nothing wrong with them that kind
Speaker 3: of a client tele effect. There are a lot of
Speaker 3: people very satisfied with that. I'm just pointing out, if
Speaker 3: you bring a business owner sensibility to stocks the same
Speaker 3: way you might turn real estate or a private enterprise,
Speaker 3: you view a harvesting capital gain as something dramatically different
Speaker 3: from a dividend pact.
Speaker 2: I got one minute left. Daniel Paris is Zuckerberg the
Speaker 2: executive of the year because he turned here here and
Speaker 2: just simply said, no, we're going to change this. We're
Speaker 2: going to do this like a conservative, measured company.
Speaker 3: I just think he's a quick reader. So the book
Speaker 3: came out one day and the very next day, and
Speaker 3: that it made its decision. So I applaud him for
Speaker 3: reading getting a copy and reading it quickly.
Speaker 2: Daniel, thank you so much. He's the federator Mez. But
Speaker 2: I just can't say enough about the history of this, folks.
Speaker 2: This goes back to my grandparents. It's that strong. It's
Speaker 2: got eminem in it, Mertin and Medigliani, all sorts of theories.
Speaker 2: V body, if you're listening up, it be you this morning,
Speaker 2: your great corporate team. This is a book for you
Speaker 2: The Ownership Dividend. It's a pro book, folks. I'm not
Speaker 2: going to kid you. Lots of footnotes, lots of what
Speaker 2: you'd expect in an academics treaties from the PhD historian
Speaker 2: Daniel Parris. The Ownership Dividend. The coming paradigm shift is
Speaker 2: the stock market catches up with Paul Sweeney. That's a
Speaker 2: good Paul, take that book.
Speaker 5: Take it.
Speaker 4: I'm going to give it to mister Tim Cook that
Speaker 4: I see him this spring on the campus of university.
Speaker 2: This is the conversation of the day, flat out. I'm gonnay.
Speaker 2: We're gonna talk to Sarah a rap report about Queen
Speaker 2: in the next hour. This is, without question, the conversation
Speaker 2: of the day. Patrick Armstrong believes in the frenzy. He says,
Speaker 2: it's not a frenzy, and you gotta own Amazon the
Speaker 2: rest and what date matters. Here's the date that matters,
Speaker 2: market on your surveillance calendar, May twenty fourth in Nvidia
Speaker 2: reports Again, Patrick Armstrong, why do you own in Vidia?
Speaker 1: Well, it's obviously a great company. It's the epicenter of
Speaker 1: everything that's AI, and it's not trading at a ridiculous multiple.
Speaker 1: Stock is up four hundred percent over the last fourteen months.
Speaker 1: Earnings are up over one thousand percent over that time.
Speaker 1: It's a thirty two times twelve month forward earnings twenty
Speaker 1: six times twenty four months forward. So elevated multiple great company,
Speaker 1: incredible margins, and it can produce as much as there
Speaker 1: is demand for his product. So I love companies with
Speaker 1: pricing power that basically set the price and people are
Speaker 1: clamoring to get whatever they can from whatever it produces.
Speaker 2: Over the weekend. And thanks to shout out to zero head,
Speaker 2: he does a great service on this. They have the
Speaker 2: Golden Sax Hedge fund by side long only long short report.
Speaker 2: It's absolutely spectacular. Thank you for that service. And Patrick,
Speaker 2: it's simple. In the last x number of days institutions
Speaker 2: have sold what Patrick Armstrong owns in retail is bought
Speaker 2: what Patrick arms Strong owns. What's that signal to you.
Speaker 1: I don't know if it's a strong signal either way,
Speaker 1: but you always have an instinct to take profits on
Speaker 1: something that's gone up so much. But I just look
Speaker 1: at the valuations versus the price, and valuations aren't rising.
Speaker 1: It's the price that's rising for in video, So I'm
Speaker 1: sticking with it right now. You've got the earnings in
Speaker 1: May that you just reference. But in March, the middle
Speaker 1: of March, they're coming out with their next generation chip.
Speaker 1: What that's capable of as well, And I think that's
Speaker 1: going to be a really important date that you don't
Speaker 1: schedule that ahead after incredible blowout earnings unless you know
Speaker 1: you're going to really shop the market again and just
Speaker 1: basically create that momentum that everyone's clamoring for on the
Speaker 1: retail side of things. But it's not two thousand type bubble, right,
Speaker 1: it's maybe the estimates are too high. That's possibility basically
Speaker 1: if another company comes in with a competing chip and
Speaker 1: then in video all of a sudden has to compete
Speaker 1: on price. They don't have to compete on price right now.
Speaker 1: But it's not a multiple story. It may be overall
Speaker 1: domestic earning macimates, but I actually believe those area.
Speaker 2: Listening to Patrick Armstrong Neil Datta at run Back, thank
Speaker 2: you Neil for getting off the Delta airplane, and Neil
Speaker 2: says it's simple consensus is wrong. He agrees with the
Speaker 2: optimistic tone that we are from mister Armstrong.
Speaker 4: So Patrick, in addition to Nvidia, how do you feel
Speaker 4: about those other big cap magnificent five six names. You know,
Speaker 4: whether it's the Amazon's, the Googles and metas, do you
Speaker 4: have a similar level of conviction to remain long those
Speaker 4: names here?
Speaker 1: So I own Google, I own Meta And those are
Speaker 1: companies that aren't trading at demanding multiples. They're trading at
Speaker 1: discounts to the Nasdaq, trading almost in line with the SMP.
Speaker 1: But they're growing at a faster rate. They're buying back
Speaker 1: shares at a faster rates, still producing a lot of
Speaker 1: free cash flow. You've got a lot of advertising risk
Speaker 1: with that, but you've got an incredibly resilient consumer, and
Speaker 1: I think advertising is going to continue to drive revenue
Speaker 1: growth to those companies. So I owned both of those.
Speaker 1: I own Amazon as well, which is again a play
Speaker 1: on the US consumer that's just very strong.
Speaker 3: All right, So wow, I know who?
Speaker 4: Yeah, yeah, doubt you're exactly right town doubt component today.
Speaker 4: All right, So Patrick, you and Tom you're both long
Speaker 4: the big tech names that have been working. Both of
Speaker 4: you guys are just clipping coupons. The rest of us
Speaker 4: are out there working for our money here. How about energy?
Speaker 4: What do you feel about ENERGYE? Looking at WTI crude
Speaker 4: here at seventy six bucks a barrel. How do you
Speaker 4: think about the energy space.
Speaker 1: I like the oil and gas companies for a number
Speaker 1: of reasons. I think you get an in built geopolitical
Speaker 1: hedge against unfortunate events that might be happening in the
Speaker 1: Middle East or with Russia, or the war expanding in
Speaker 1: the Middle East, where more sanctions come on around things
Speaker 1: like that. But if you look at the future strip,
Speaker 1: bought prices for WTI are the same as they were
Speaker 1: six months ago and twelve months ago, but the longer
Speaker 1: dated contracts are up to thirty percent over that time.
Speaker 1: So oil and gas stocks are flat over the last
Speaker 1: twelve months, but they're implied profitability based on the future
Speaker 1: strip going out the next ten years. That part of
Speaker 1: the curve is really jumped higher, and I think the
Speaker 1: companies aren't really reflecting that higher for longer food prices,
Speaker 1: and I do think they'll start to move that way.
Speaker 4: So it's interesting here because we're looking at the supply
Speaker 4: and demand out there for energy, and again I'm not
Speaker 4: sure what's driving this thing is it's the supply side
Speaker 4: of the equation of the demand side of the equation,
Speaker 4: But I guess if you feel like the economies in
Speaker 4: the US are going to remain strong, that would suggest
Speaker 4: maybe higher oil. Is that how you think about it.
Speaker 1: I'm not sure if it's going to be higher, But
Speaker 1: the bolt case on oil and gas companies don't need
Speaker 1: higher oil. They need oil to maintain these prices because
Speaker 1: right now, the cash flows they're producing are incredible, and
Speaker 1: they've paid off a big chunk of debt over the
Speaker 1: last twelve months. They've bought back shares, paying dividends as well,
Speaker 1: and all of those things are boring compared to the
Speaker 1: technology companies. But the market is going to re rate
Speaker 1: as you see persistently high food prices based on going
Speaker 1: demand and supply not quite keeping up. Basically, there's not
Speaker 1: been enough capex to probably deliver the new supply that's
Speaker 1: going to be needed to meet demand.
Speaker 4: What shorts have been working for you, guys, Patrick, So you.
Speaker 1: Talked about the auto companies, we're short Rivian short forward
Speaker 1: and yeah, I love companies that have pricing power. I
Speaker 1: hate companies that are market takers of price. And unfortunately,
Speaker 1: if you're an EV producer, there's still demand for what
Speaker 1: you're producing, but you've really got to compete on the truck.
Speaker 2: Looks really cool though, product, but I've yet to see
Speaker 2: a positive review. Yeah seriously, Yeah, I mean Lisa took
Speaker 2: one for driving this week. Lisa, what do you think
Speaker 2: of the Tesla? The car? Yeah?
Speaker 5: Would you feel like you're out of a version of
Speaker 5: Mad Max?
Speaker 2: You know we're not, Patrick, We're just going to Lisa
Speaker 2: to talk, you know, cyber truck and all that. Patrick,
Speaker 2: I want to ask your pro question. You got your
Speaker 2: own PLAAMI Capital. Now, what would you do as a
Speaker 2: portfolio manager if they said, Patrick, you own thirteen percent
Speaker 2: in Meta, you own ten percent in Amazon, you got
Speaker 2: to lighten up based on prospectus. How would you respond
Speaker 2: to that?
Speaker 1: Well, in our useage funds, we do have those restrictions.
Speaker 1: In Europe, there's a five to ten forty rule, meaning
Speaker 1: you can only have ten percent in one position. But
Speaker 1: with global mandates that's more than enough for me. Anyway,
Speaker 1: in a US centric mandate, you might start to feel
Speaker 1: constrained by those kind of things. I'm happy to run
Speaker 1: in a global mandate less than ten percent of those
Speaker 1: kind of stocks. So I don't want my portfolios to
Speaker 1: be one stop. That's a client can do that themselves,
Speaker 1: but we manage a thirty stock portfolio, so that's not
Speaker 1: a constraint for me really that I worry about.
Speaker 4: So Patrick, what's your aside from the big tech here?
Speaker 4: What are there any themes that you're playing here in
Speaker 4: twenty twenty four and beyond.
Speaker 1: So we like the big cap tech, We like Energy, Novo,
Speaker 1: nordist Eli, Lilly. Those are the other market darlings that
Speaker 1: I still think.
Speaker 4: Maybe Okay, So yeah, you're right, there are all the
Speaker 4: good spots there, tech and weight loss.
Speaker 2: I can't say enough the value of talking to Patrick Arnstein.
Speaker 2: Look for his work been quoted in essays in the
Speaker 2: Financial Times as well. Patrick Armstrong, thank you so much.
Speaker 2: Form Plurimi Wealth their chief investment.
Speaker 4: Officers Society General great offices in Paris. Man I was there.
Speaker 4: I love those offices there. Subajo Rajapa joints that she's
Speaker 4: head of US rate strategy for Society General or is
Speaker 4: the old school we call it sac gen Sbajo. What
Speaker 4: is our Federal Reserve going to do next? Because we've
Speaker 4: had some guests come in here the past couple of weeks,
Speaker 4: I would say that, say you have in your scenario analysis,
Speaker 4: you have to have a rate hike in your scenario analysis,
Speaker 4: I'm like, what a rate hike? I'm just like, when
Speaker 4: are they cutting and how fast can they cut? Is
Speaker 4: there a scenario where maybe they think about pushing rates
Speaker 4: up a little bit?
Speaker 6: I don't see that scenario at least as of now.
Speaker 6: Perhaps the off chance and we see a sharp prize
Speaker 6: in geopolitical risks leading to supply chain destruct options and
Speaker 6: the economy remaining resilient under the circumstances could argue for
Speaker 6: a policy adjustment. But really, everything we've heard from our
Speaker 6: FED speakers so far has been that yields have peaked,
Speaker 6: so we're looking towards perhaps, you know, if anything, if
Speaker 6: the economy remains strong and resilient, that they might that
Speaker 6: they might cut rates later than the market expects, okay,
Speaker 6: and less than the market expects, but not necessarily hike
Speaker 6: from here on for.
Speaker 4: Better or worse. It's a presidential year. How does that
Speaker 4: factor into kind of the Fed's behavior. Do you think
Speaker 4: a lot of folks are saying they probably got to
Speaker 4: do something no later than June because you don't want
Speaker 4: it to feel like you're starting a rate cutting cycle
Speaker 4: in an election period.
Speaker 5: I guess so.
Speaker 6: Paul has told us that they're not, you know, partisan
Speaker 6: in any way. They're not focused on the political scenario,
Speaker 6: and they tend to do what's what's right for the economy,
Speaker 6: and I do believe them in that. But that said,
Speaker 6: there is no precedence for the FED cutting rates or
Speaker 6: adjusting policy just before an election. So in some respects
Speaker 6: that argues for perhaps a May or June rate cut
Speaker 6: kind of get that process started, even though if they
Speaker 6: don't deliver on subsequent meetings, I think that they might
Speaker 6: space outcuts, but I don't think they take it all
Speaker 6: the way to November to cut rates.
Speaker 2: I want you to overlay your world into the equity
Speaker 2: melt up we're seeing right now, largely from Globin Sachs
Speaker 2: was just done, and he made very clear it's an
Speaker 2: economics call, a productivity call, better economy up, everything goes.
Speaker 2: Do you buy that? How do you link fixed income
Speaker 2: into the equity melt up we're living?
Speaker 6: You know, the equity melt up in the strength of
Speaker 6: the economy is definitely caught everybody by surprise. We have
Speaker 6: very strong growth momentum going into the second half of
Speaker 6: last year, and the momentum in the first quarter is
Speaker 6: also very.
Speaker 2: To get ahead of this because the time because Paul
Speaker 2: wants to jump in here, what's it mean in the
Speaker 2: fixed income space? What does CFOs do? Are we going
Speaker 2: to have an issue ince frenzy? Because times are good.
Speaker 6: We've already seen a little bit of an issuance frenzy
Speaker 6: in the first month of the year, and that's carrying
Speaker 6: over into February with tenny yields coming from say five
Speaker 6: percent last year to around four and a quarter percent now.
Speaker 6: But broadly speaking, it is a buyer's market in bonds
Speaker 6: because yields are very attractive, whether it be in investment
Speaker 6: grade or high yield, as well as in treasures. I mean,
Speaker 6: we get two year and five year bonds being issued,
Speaker 6: you know, this week, and you're going to see a
Speaker 6: pretty decent amount of demand from investors because of the
Speaker 6: higher interest rates that you can and yield that you
Speaker 6: can pick up.
Speaker 4: So I'm looking at a ten year like four point
Speaker 4: two four percent here. Are we going meaningfully higher here?
Speaker 4: Or can are Do you expect rates in the back
Speaker 4: half of this year to come down as we look
Speaker 4: at our yield curve, I.
Speaker 6: Do expect rates to come down gradually during the course
Speaker 6: of this year. I think the tenure yields around four
Speaker 6: and a quarter percent is a buy. In my view,
Speaker 6: investors are going to be looking at you know, two
Speaker 6: years around four seventy five and tens around for twenty
Speaker 6: five as a buying opportunity. And every time you know,
Speaker 6: bonds sell off, I see the buye the dip mentality
Speaker 6: come in and put a cab on how high yields
Speaker 6: can rise. So that's our base case, and I think
Speaker 6: we think teny yields will probably decline to around you know,
Speaker 6: three seventy five sometime in the middle of this year,
Speaker 6: and then perhaps start rising towards the end of the year.
Speaker 2: Again, what does the tenure really you'ld do with a
Speaker 2: three seventy five nominal yield? You take the nominal yield, folks,
Speaker 2: you subtract out Sivadra's best guess on inflation, and that
Speaker 2: gives you the residualtion adjusted yield. What's that number? Can
Speaker 2: you get down to two point zero zero? One point
Speaker 2: zero zero?
Speaker 6: So tenre yields around ten real yields I should say
Speaker 6: around two percent or higher is again a buying opportunity
Speaker 6: over the long run, because inflation expectations aren't really moving
Speaker 6: that much ten year break heavens have been anywhere between
Speaker 6: two and two and a half percent.
Speaker 2: So you have a three seventy five nominal. Right, you
Speaker 2: just said that, where does the ten year real yield end?
Speaker 6: It's going to probably be, you know, about two percent
Speaker 6: lower from there, given that low one.
Speaker 2: Yeah, this is really important, Paul, because you say to yourself,
Speaker 2: how do you get a roaring twenties like your Denny's
Speaker 2: talking about. That's precisely how you get there.
Speaker 4: Yep, absolutely, So what is my what is my feeder
Speaker 4: reserve doing here? With its balance sheet? Are they still
Speaker 4: tightening here? I don't hear as much about that these days.
Speaker 5: So I think the.
Speaker 6: Fed is going to want to continue to run off
Speaker 6: its balance sheet.
Speaker 4: Is like sixty what is it, sixty billion a month
Speaker 4: or something?
Speaker 6: Sixty billion? It's the runoffs are capped at sixty billion
Speaker 6: for treasuries, and I think that they're probably going to
Speaker 6: lower that cap sometime in the second half from sixty
Speaker 6: billion to thirty billion. But I think that they're going
Speaker 6: to want to continue to run off the balance sheet
Speaker 6: for the remainder of the year, perhaps into the early
Speaker 6: part of twenty twenty five and That's really where we
Speaker 6: have a little bit of an outer consensus call because
Speaker 6: the FED, I believe, is going to try to reduce
Speaker 6: its balance sheet as it's cutting rates, which hasn't done
Speaker 6: in the past, because they want to right size the
Speaker 6: balance sheet and get that liquidity or the access liquidity
Speaker 6: in the system out of the system as they're unwinding
Speaker 6: their balance sheet.
Speaker 4: So, I mean, a lot of folks feel like the
Speaker 4: Federal Reserve is already late to the game here. They
Speaker 4: should have been cutting rates like now, because if you
Speaker 4: look at the real time data, inflation has in fact
Speaker 4: been beaten and they should be cutting rates now. Think
Speaker 4: what do you say to those folks.
Speaker 6: The way I think the FED looks at the markets
Speaker 6: is holistically. Inflation is one piece of the puzzle. Yes,
Speaker 6: if you look at the three month and six month
Speaker 6: annualized rates and core PC it's around two percent. But
Speaker 6: growth has been extraordinarily resilient. They want to avoid what
Speaker 6: happened in the seventies and eighties where they cut rates
Speaker 6: prematurely and they saw a resurgence in inflation. So the
Speaker 6: FED is very much focused on both the inflation dynamics
Speaker 6: as well as the growth dynamics, and as long as
Speaker 6: growth remains relatively strong, I think that they're going to
Speaker 6: hold out on cutting rights.
Speaker 4: Yes, all right, Sabaja, thank you so much for joining
Speaker 4: Sabaja Djappa from Society General giving us our thoughts on
Speaker 4: the rate outlooking.
Speaker 2: You take a look at the front pages around the world,
Speaker 2: a zillion stories. She was in here early. She got
Speaker 2: unked six fifty or something that at the newspaper's lease.
Speaker 2: So what do you got?
Speaker 5: All right? The New York Times, this one really stood
Speaker 5: out to me.
Speaker 7: So they are reporting that unused money in college saving
Speaker 7: accounts can now go toward your child's retirement. So this
Speaker 7: really stood out to me because there are parents out
Speaker 7: there who don't open the five twenty nine because they're
Speaker 7: worried that what if my child changes his mind, you know,
Speaker 7: he decides not to go to college. What if they
Speaker 7: choose a more affordable school and you're left with this
Speaker 7: chunk of money. What if they get a scholarship and
Speaker 7: you're you're left with this chunk of money, what do
Speaker 7: you do without without getting the taxes taken out of it?
Speaker 7: Because you get that, you know, the taxes have to
Speaker 7: get taken out of it. So that's what they're saying.
Speaker 7: Sometimes you can pass it on to a sibling. For example,
Speaker 7: I'm doing that with my son. He decided to stop
Speaker 7: a little bit early, so that money is going.
Speaker 5: To a sister. But some people don't hook up the siblings.
Speaker 7: So this new rule, under a federal law, it allows
Speaker 7: up to thirty five thousand dollars in a five twenty
Speaker 7: nine account to be rolled over to a wroth retirement
Speaker 7: account for the beneficiary if certain conditions are met.
Speaker 5: One of them.
Speaker 7: Conditions it has to be have have been open for
Speaker 7: at least fifteen years that five twenty nine account. No
Speaker 7: contributions or earnings from the past five years can be transferred.
Speaker 7: I mean, there's a few other rules in there, but
Speaker 7: it's opening a new conversation.
Speaker 2: You know what, the conversation. We don't have time for
Speaker 2: me to get up in a soapbox and go mental
Speaker 2: about this. This is the problem with Arisa beec in
Speaker 2: nineteen seventy four is the solution for legislators is complexity.
Speaker 2: It's simple. You put money aside for your kid, you're
Speaker 2: not going to use it, put it in the parent's
Speaker 2: retirement account. Because the parents can't afford to retire because
Speaker 2: they're raising the kids. That's a national issue that we
Speaker 2: have right now. Paul can help me here.
Speaker 4: Yeah, that's the first thing I thought. I was like, Hey,
Speaker 4: if the kids aren't gonna use it, I'm taking it back.
Speaker 5: Yeah, but I take it back after Now you got.
Speaker 2: To okay, a rawth or whatever. But this Roger Ferguson
Speaker 2: is expert on this at TIA Craft, the former vice chairman.
Speaker 2: Make it simple, and I refuse to do that because
Speaker 2: you're afraid Paul Sweeny's gonna get away with murder.
Speaker 3: Yes, all there is exactly next.
Speaker 5: Okay, this is about the housing market.
Speaker 7: So a lot of renters, what they're starting to do
Speaker 7: is they're realizing that they might not be able to
Speaker 7: buy a house. So what they're doing is they're saying,
Speaker 7: you know what, I'm gonna give up on my deposit
Speaker 7: and I'm gonna make this apartment for me. I'm gonna
Speaker 7: paint it, I'm gonna wallpaper it, I'm going to decorate it,
Speaker 7: I'm gonna pay pictures and you know, nail things in
Speaker 7: the wall, you know, and and forge over that deposit
Speaker 7: because they just realized that it's.
Speaker 5: It's not going to be a reality for them. They're
Speaker 5: not gonna be able to get that house that they want.
Speaker 4: Yeah, with interest rates where they are, I mean, you know,
Speaker 4: and there's just no housing stock for sale. So even
Speaker 4: if I wanted to go into something, there's there's not
Speaker 4: a lot out there.
Speaker 2: I just looked in Skinny Atlas. We had Eric Friedman
Speaker 2: with us this morning, who lives in arguably the most
Speaker 2: beautiful town in all of New York State, and there's
Speaker 2: nothing for sale.
Speaker 1: Now.
Speaker 2: I mean I looked on really I looked on Zillo
Speaker 2: to talk to Eric about it, and there was no
Speaker 2: property to talk to him about, because literally, Paul, nothing's
Speaker 2: for sale.
Speaker 7: Well, were open houses this week and the town I
Speaker 7: live in there were open houses this weekend and there
Speaker 7: were lines.
Speaker 5: We had to wait because we're renting right now.
Speaker 7: We're waiting, and there were lines on the door of
Speaker 7: these open houses.
Speaker 5: So because there's whole few of them, Ye, it's it's true.
Speaker 1: All right.
Speaker 7: Let's say Apple they want to make more wearable devices
Speaker 7: to attract customers.
Speaker 5: Okay, so here we go. What do we go? This
Speaker 5: is ay Mark German. Okay, he says wearable devices.
Speaker 7: Okay, they want to you know, Apple wants to keep
Speaker 7: their Apple family. They want to keep people locked in there.
Speaker 7: So they're talking about a smart ring that could take
Speaker 7: health tracking features from the Apple Watch and apps, apps
Speaker 7: on the phone and phone calls and things like that.
Speaker 7: So the smart ring why people will like it is
Speaker 7: because sometimes you have the watch and you might not
Speaker 7: want all the additional things. You know, you might just
Speaker 7: want to know the health benefits, so you might not
Speaker 7: want to watch. So maybe this ring could be something that.
Speaker 5: You could use. No, okay, this one about this one
Speaker 5: Art glasses.
Speaker 7: It's something similar to new products from Meta Amazon. They
Speaker 7: could provide audio so you don't have to do the
Speaker 7: air pods.
Speaker 4: Which they don't say which does Yes, that's my biggest
Speaker 4: problem with them.
Speaker 7: And they use AI cameras they can identify things around
Speaker 7: the world. So it's taking Apple that step closer to
Speaker 7: the reality spectacles that you can wear all day.
Speaker 5: So that's another thing.
Speaker 7: The regular glasses, not the Vision pro but the regular glasses.
Speaker 2: Listen Mateo with our newspaper and report today. Thank you
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Speaker 4: Hmm