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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene Jaylie.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Every

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Speaker 1: single second. Half guestimate that you will hear over the

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Speaker 1: coming days, weeks, and month will hinge on a very

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Speaker 1: uncertain view of how long mitigation efforts will stay in place,

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Speaker 1: and any hopes for a sharp rebound will be shaped

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Speaker 1: by how well a fiscal plant is executed. And at

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Speaker 1: the moment there is no agreement in Washington. That will

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Speaker 1: be the folkus of this program over the next couple

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Speaker 1: of hours. And joining us on the phone, I'm pleased

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Speaker 1: to say is Peter Hooper, Deutsche Bank Global head of

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Speaker 1: Economic Research. Peter. First question to you, sir, just how

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Speaker 1: much damage is being done every day we go without

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Speaker 1: a big package from Washington. Well, good morning on Tom, Lisa,

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Speaker 1: delighted to be on. Certainly, the failure of Congress to

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Speaker 1: agree on a package is problematic. We we've been expecting

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Speaker 1: something from the Senate in the in the in by

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Speaker 1: very early this week, and this has to then make

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Speaker 1: it through the House. But no question that on on

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Speaker 1: a number of fronts, rescue is certainly needed, not just

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Speaker 1: to get us a recovery down the road, but to

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Speaker 1: prevent major damage. Um as as the economy goes into

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Speaker 1: free fall here, which it is doing in the near term,

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Speaker 1: no question, the numbers are gonna be falling off a

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Speaker 1: cliff as we go into this week and next. Um

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Speaker 1: So we we we absolutely need we have to have

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Speaker 1: unemployment insurance back stopped. Uh. Millions are going to be

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Speaker 1: out of jobs. Congress has to get it act together

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Speaker 1: and beef up our unemployment surance insurance system that's in

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Speaker 1: the bill needs to be beefed up even more. Uh.

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Speaker 1: Number two, we absolutely have to back up backstop small

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Speaker 1: business in the US and and UH and corporate debt

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Speaker 1: um uh. And number three the muni market. I mean

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Speaker 1: to get unemployment insurance out. States are going to have

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Speaker 1: to have to borrow more muni markets frozen right now,

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Speaker 1: New York State, New York City cannot bring money on

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Speaker 1: paper to the market. Um UH. In this bill that

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Speaker 1: Commerce is considering, they're they're looking at putting funds into

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Speaker 1: UH direct backstopping business, but also importantly most important, I

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Speaker 1: think getting getting the FED system operating here? Peter, what's

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Speaker 1: so important here? And thank you so much for taking

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Speaker 1: time away if you were to deutsch you bank clients

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Speaker 1: this morning. What's so important here is we've watched John,

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Speaker 1: Lisa and I have watched wills moved from forty billion

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Speaker 1: to two billion, one trillion to trill you in an

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Speaker 1: up if we now know the shock better than we

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Speaker 1: did a week ago, what is the downside of a

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Speaker 1: massive three, four or five trillion dollar phased in program

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Speaker 1: until we figure out the virology of this virus? What's

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Speaker 1: what's the so what of throwing a wall of money

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Speaker 1: at this? Okay, Well, several questions you raised, Number one.

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Speaker 1: I don't think I've seen numbers yet that have accurately

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Speaker 1: gotten the downside. I'll say we're coming out with a

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Speaker 1: report later today that, uh, well would you do? Come on,

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Speaker 1: No one's listening to the program, Peter, give us a

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Speaker 1: heads up on that report later today. Well, well, the

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Speaker 1: heads up is I have not seen numbers the downside

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Speaker 1: yet that are are near accurate. Okay, number one, We

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Speaker 1: have no idea what accuracy is here, but reasonable guesses

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Speaker 1: when you're looking at a major the whole economies being

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Speaker 1: shut down, when you're looking at major states going through this,

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Speaker 1: and and the spread still accelerating in the US UH.

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Speaker 1: I mean, we were still assuming that this is something

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Speaker 1: that's gonna last a matter of one month, two months,

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Speaker 1: three months. UH. And and how much that how much

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Speaker 1: it does UH determines how far things fall in the

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Speaker 1: second quarter, which is going to be tremendous, no question.

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Speaker 1: We're also assuming that we begin to see some bounce,

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Speaker 1: and all this UH fiscal ammunition, this bring being brought

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Speaker 1: to bear will have a major UH impact. The question

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Speaker 1: is how much can we prevent the damage from a

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Speaker 1: free fall in the economy by back stopping business, by

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Speaker 1: back stopping households, and and the earnings losses through through

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Speaker 1: unemployment insurance, and by in the in the in the

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Speaker 1: very near term, in the day's ahead, getting the credit

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Speaker 1: market functioning, getting the muni market functioning. I mean, we

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Speaker 1: have to get the FED. I mean, the Fed is

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Speaker 1: the FED is going all out. But the FED has

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Speaker 1: more that can do if it gets if it gets

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Speaker 1: awhere with awful Congress, A lot of talk right now

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Speaker 1: about this UH package and and four billion plus two

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Speaker 1: UH to put into a facility to allow the Fed

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Speaker 1: to purchase UH CORP longer term corporate bonds and munies

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Speaker 1: and and that's that's critical. We've got to get that going.

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Speaker 1: So right now, there are sort of dual crises here.

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Speaker 1: There's the economic crisis we're talking about, and then there's

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Speaker 1: the financial crisis that a lot of people think is

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Speaker 1: getting to be a much more real possibility, which speaks

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Speaker 1: to the speed people are hoping that this UH stimulus

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Speaker 1: will get past. How important is the speed of the

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Speaker 1: passage versus the details. UH. Both are important, but speed

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Speaker 1: is now of the essence. I think given what's happening

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Speaker 1: in the credit markets UM States, States are gonna this

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Speaker 1: week going to see unemployment claims jump into the millions.

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Speaker 1: States are going to be totally swamped on on their

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Speaker 1: ability to handle this without being able to go to

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Speaker 1: the market to float more debt. The Fed has to

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Speaker 1: has to get the market going, has to back stop

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Speaker 1: this market to allow this allow this to happen. If households, UH,

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Speaker 1: you know, many households are are living paycheck to paycheck.

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Speaker 1: If if if people can't go out and buy their necessities,

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Speaker 1: it's it's going to be a real problem. I mean,

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Speaker 1: and then there's many firms are starting to let people go,

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Speaker 1: uh if they can, if they can be backed off,

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Speaker 1: if they can get the loans that are needed to

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Speaker 1: tide them over. This what we think is going to

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Speaker 1: be a transitory crisis. Then we prevent having many many

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Speaker 1: people lose their jobs, and we have an economic system

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Speaker 1: that can come back. I mean, you've put a lot

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Speaker 1: of people out of work and and it's difficult of

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Speaker 1: getting things back together. The economy needs happen, it needs

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Speaker 1: how quickly paid. We appreciate your time this morning, So

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Speaker 1: my best to the team, won't you Peter Hoop at

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Speaker 1: that to which your bank glob ahead of economic research

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Speaker 1: this Thursday speaking might note down we have camp On

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Speaker 1: as chief economist, the macro strategist might always great to

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Speaker 1: get you on this program. Fantastic to have you with us.

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Speaker 1: Your thoughts from what you've heard so far this morning, Well, John,

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Speaker 1: thanks for having me. You know, I'm encouraged here by

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Speaker 1: the recent actions of the Federal Reserve. Initially it seemed

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Speaker 1: like they were just totally being overwhelmed and toppled over

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Speaker 1: by the huge, unrelenting surge in money and liquidity demand

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Speaker 1: and actually starting Friday, we were we we it was

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Speaker 1: the first day we started to see real yields fallback

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Speaker 1: and the tips inflation break even market, and they've moved

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Speaker 1: lower again today. So remember from about the sixth of March,

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Speaker 1: most of last week there was a huge surgeon real rates,

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Speaker 1: collapse in inflation expectations, and obviously a lot of carnage

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Speaker 1: UH in a broader array of credit markets. So we

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Speaker 1: might be seeing the very first signs that the Fed

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Speaker 1: is starting to get some traction again. It's preliminary, but

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Speaker 1: every journey starts with one step. Michael Dard, If we

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Speaker 1: throw billions, hundreds of billions, trillions of dollars at this

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Speaker 1: natural disaster, this verological disaster, is there any harm to

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Speaker 1: the economy? I mean, don't we just pull that back

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Speaker 1: over the quarters in the years once we get through

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Speaker 1: this natural event. Tom, listen, if this were isolated to

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Speaker 1: simply a supply side shock, it should be contractionary and inflationary.

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Speaker 1: That's what a supply side shock is. If it's adverse

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Speaker 1: and an aggregate supply aggregate demand model. What these money

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Speaker 1: markets are telling us is that we have an incredible

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Speaker 1: adverse demand shock unfold, and that's going to require a

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Speaker 1: tremendous amount of monetary and fiscal action that is sustained.

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Speaker 1: That's the key here, sustained. If it's just viewed as

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Speaker 1: temporary and likely to be yanked back as soon as

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Speaker 1: conditions um start to to normalize, then we have the

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Speaker 1: prospect of of you know, limping out of this without

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Speaker 1: a full throated V shaped recovery. That has to be

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Speaker 1: the key. So the risk here is that we do

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Speaker 1: too little and back off too soon. That was the

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Speaker 1: mistake made after two thousand eight, and we cannot afford

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Speaker 1: another lost decade for the labor market. That would be

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Speaker 1: an utter human tragedy. Mike Darta, As I was reading

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Speaker 1: all the headlines and the news over the weekend, it

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Speaker 1: seemed like there was a competition for the most dire

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Speaker 1: prediction for the economy in the second quarter and beyond,

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Speaker 1: and depression started to become a word that was used

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Speaker 1: more and more frequently. A sustained UH downturn over the

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Speaker 1: course of years. Do you see that as an increasing

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Speaker 1: possibility or is that a little bit too far in

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Speaker 1: the gloom school, I'd say only if policymakers complete at

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Speaker 1: least fail so that will be a choice. You know

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Speaker 1: that that is not a destination. Um. You know that

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Speaker 1: is etched into stone. We know there's a huge contraction

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Speaker 1: coming that you know is unavoidable. But how quickly and

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Speaker 1: forcefully recover we recover is a choice. And so that means,

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Speaker 1: you know, policymakers doing whatever it takes in keeping it

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Speaker 1: up until we're there. So we're going to take a

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Speaker 1: huge hit in the short term. But the key now

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Speaker 1: is how do we come out of this if and

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Speaker 1: when the pandemic either ends or starts to let up. Uh,

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Speaker 1: And that's that's really a policy choice. So let's not

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Speaker 1: make the mistakes we made in two thousand and eight,

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Speaker 1: where the fear was we're doing too much. We're going

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Speaker 1: to debase the dollar. There's going to be inflation utterly

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Speaker 1: wrong across the board. And guess what the labor market

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Speaker 1: paid the price with a ten year period before we

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Speaker 1: got back to full employment. If that happens again, capitalism

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Speaker 1: could be on the chopping block. So let's not go

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Speaker 1: down that path. Mike, you you raise a good point.

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Speaker 1: It goes to John's point earlier about speed, about how

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Speaker 1: there already has been a lot of missed opportunity here

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Speaker 1: with how slow, even though they're moving really quickly, how

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Speaker 1: slow Congress has been trying to pass this bill. Have

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Speaker 1: they already been too late at this point? You know,

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Speaker 1: I think I think they have, but you know they

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Speaker 1: but they can still do good by trying to to

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Speaker 1: catch up and to get the policy mix right. So

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Speaker 1: no doubt about it, I think, you know, too late

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Speaker 1: across the board. Listen, just a few short weeks ago,

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Speaker 1: all of us together that are on the that around

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Speaker 1: the air waves. Now we're talking about the yield curve reinverting. Right,

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Speaker 1: The federal Reserve came into the year with short term

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Speaker 1: interest rates above long rates. That's a sign right there

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Speaker 1: that policies out of whack and you are vulnerable to shocks.

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Speaker 1: So no one could have predicted the pandemic. But clearly,

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Speaker 1: I think we've made some policy mistakes and you know,

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Speaker 1: in the past and in the recent past, that have

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Speaker 1: made us more vulnerable. But that doesn't mean we shouldn't

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Speaker 1: try everything, uh in our power to make sure that

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Speaker 1: we vault this economy out of what's certain to be

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Speaker 1: you know, a sharp contraction, uh, back to full health

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Speaker 1: within a year year and a half. That needs to

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Speaker 1: be the goal, and if you can find the right

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Speaker 1: policy mix, I think we can do it. Let's hope

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Speaker 1: we can achieve it. You know, better early than late,

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Speaker 1: but better late than never. But for me, at the moment, Mike,

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Speaker 1: the sequencing of this is already so so messy. We

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Speaker 1: needed a huge ESIME support before the shutdowns. We needed

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Speaker 1: ESTIME is convinced that they would get the house. They

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Speaker 1: didn't lay off people. We're in the shutdown. We don't

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Speaker 1: have the support that already laying off people we need

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Speaker 1: to checks in a post yesterday. Those checks water a

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Speaker 1: couple of weeks away. Even if we get that past

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Speaker 1: to day, hopefully we can get that quicker than that.

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Speaker 1: But Mike, this is already really tough, and I'm wondering

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Speaker 1: whether an economic shock has already become a credit crunch.

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Speaker 1: We're there already, aren't we, Mike, Oh yeah, no doubt

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Speaker 1: about it. If you look at the commercial paper and

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Speaker 1: high yield markets, we're seeing spreads there as of Friday

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Speaker 1: of last week that we hadn't seen since the you know,

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Speaker 1: the essentially the worst of the two thousand to two

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Speaker 1: thousand seven, two thousand nine global financial crisis, and so

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Speaker 1: what's happening now is expectations of collapsing nominal GDP and

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Speaker 1: nominal incomes are feeding into the credit markets. So consider

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Speaker 1: the Scott Sumner Market monitor is quote that nominal income

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Speaker 1: is the resources with which behave back debt. And so

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Speaker 1: if you have an economic shock, demand shock, that can

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Speaker 1: actually cause what looks like a credit crisis. So you know,

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Speaker 1: so it's not you know, the credit markets are reflecting

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Speaker 1: that in real time, but it's tied that huge collapse

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Speaker 1: and inflation expectations. That's why it's important when you hear

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Speaker 1: people say, oh, printing money. Yes, that's what you do here,

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Speaker 1: right if you have a deflationary shock, you print money

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Speaker 1: and the risk is print enough. That was the O

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Speaker 1: eight lesson. Let's not fail again, joining us worldwide and

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Speaker 1: across this nation. Michael Dart of MKM Partners, Uh Michael

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Speaker 1: as celebrity emails in from Coventry, England. Mrs Faraoh emails

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Speaker 1: and it says more Euclidean geometry. We need it right now,

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Speaker 1: Let's go I s l M right now. Michael Darted.

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Speaker 1: The supply curve in this supply shock is shifted and

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Speaker 1: many would suggest has become any elastic. How does the

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Speaker 1: supply shock shift back to normal supply? Well, Tom, I'll

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Speaker 1: give you some So with the I s l M,

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Speaker 1: I think we can think about this big shock to

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Speaker 1: liquidity demand. Right, So, we were seeing real interest rates

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Speaker 1: shoot up from the sixth of March until last Thursday, huge,

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Speaker 1: over a hundred basis point move, you know, in in

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Speaker 1: less than two weeks. That was even more forceful than

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Speaker 1: what we were seeing in the dark days of oh eight.

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Speaker 1: So that's like the l M curve shifting to the right.

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Speaker 1: Higher real rates and a reduction and output not what

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Speaker 1: you want to see. So it looks like that might

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Speaker 1: be starting to reverse it the margin. But back to

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Speaker 1: what I where we started. If you tie the I

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Speaker 1: s l M into the aggregate supply aggregate demand model,

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Speaker 1: just a simple supply side shock should give you a

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Speaker 1: contract you know, contrac action. But with inflation, that's what happens.

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Speaker 1: What we're dealing with here looks like a demand side shock,

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Speaker 1: and that's why policymakers are are really going to be

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Speaker 1: required to do things that are more permanent this time.

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Speaker 1: If all of these actions are viewed as temporary, sure

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Speaker 1: you'll put out the liquidity panic. But the risk is

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Speaker 1: that the economy won't come back to full health. And

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Speaker 1: you know, and that's really something that that we can

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Speaker 1: avoid and that we should avoid. Michael Donna always great

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Speaker 1: to get your thoughts. Shout out to the docks and

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Speaker 1: to the missus as well. Mike Data that m campotent

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Speaker 1: as chief economist and Macros strategists. I would suggest the

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Speaker 1: senator from Massachusetts would like to hear from the economists

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Speaker 1: from Chicago. She's with Grant Thornton Diane Swack listening to

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Speaker 1: Senator Warren uh this morning. Diane, the urgency is profound,

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Speaker 1: and I want to go to the idea of the

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Speaker 1: economic impact not in the big companies, but on the

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Speaker 1: thousands of suppliers they have of you are in the

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Speaker 1: absolute crucible of that in Chicago. How beleaguered will the

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Speaker 1: suppliers be in four weeks time. Well, it's important to

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Speaker 1: remember they are already feeling pain in mid February as

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Speaker 1: the supply disruptions coming out of China. We're compounding and

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Speaker 1: so this is something kind of graph much like the

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Speaker 1: infections that goes up on an exponential curve. And that's

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Speaker 1: what's critical to remember is that the losses we're seeing UM.

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Speaker 1: It's not just individuals. We need cash and money hands

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Speaker 1: of individuals, we need small business. But you have to

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Speaker 1: deal with the whole economy, because that is where we're at.

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Speaker 1: If you can only pass it for part of the

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Speaker 1: economy now, then in two days pass up for the

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Speaker 1: rest of the economy. But we need it hit on

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Speaker 1: all sides. To blow to state and local government budgets

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Speaker 1: is also extraordinary, and there on the precipice of having

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Speaker 1: to deal with deep cuts at the state and local

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Speaker 1: level as they're at the front lines of this crisis.

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Speaker 1: That's just not acceptable. And I sort of agree with

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Speaker 1: Jonathan here is that you know, everyone's standing on their

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Speaker 1: ideal ideological UM platforms is not helping us. We've got

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Speaker 1: to shelve all of the ideology and help everyone. And

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Speaker 1: we can't discriminate because the virus doesn't discriminate. We have

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Speaker 1: to help on all sides, which is what the FET

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Speaker 1: acknowledged today that you need to hit everyone. But the

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Speaker 1: set is only on one aspect of the economy. Credit

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Speaker 1: markets and people don't want it. Small businesses don't want

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Speaker 1: to take out loans they can't pay back, they don't

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Speaker 1: want to take out loans to pay workers that they

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Speaker 1: don't have anymore, and then have to pay it back

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Speaker 1: if they don't have those workers anymore. Congress needs to

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Speaker 1: get their arms around this and just act, even if

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Speaker 1: it's just to get the first trunch out, get it out,

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Speaker 1: get the second trunch out. We're talking days here, and

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Speaker 1: they need to learn to vote remote because they're all

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Speaker 1: infecting each other too. Diane ats entering point there at

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Speaker 1: the end, Diane, So we've over the weekend we've had

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Speaker 1: a lot of the Wall Street banks come out with

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Speaker 1: their GDP Outlook, where do you stand? How bad is

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Speaker 1: Q two going to be? And will it be? How

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Speaker 1: will there be recoveries in queues three and four? Um?

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Speaker 1: I don't think there will be a recovery in three

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Speaker 1: and four. In a curse, it's a moving target ross

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Speaker 1: sing on quicksand with little stability. And the way that

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Speaker 1: the problem is the way that we do this, I

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Speaker 1: mean I have almost to client from the banks of

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Speaker 1: others are talking client. You can get all those numbers, um.

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Speaker 1: And the problem is on unemployment you have a huge,

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Speaker 1: certain precipitous drop in payrolls immediately, which we'll see in

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Speaker 1: the unemployment claim so not everyone is is eligible for

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Speaker 1: unemployment insurance. You also have you know, when we start

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Speaker 1: measuring unemployment, what does it mean when are you participating

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Speaker 1: in the labor force if the whole economy is shut

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Speaker 1: down and you can't look for a job, that could

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Speaker 1: influence our unemployment rates. So you know, this is um

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Speaker 1: I think that what we have is something you have

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Speaker 1: to think of. In stages. There was the denial, the contagion,

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Speaker 1: and now we're you know, into the part of dealing

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Speaker 1: with the pandemic, which is global in scope. And when

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Speaker 1: we start to do with efforts of testing, tracking and

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Speaker 1: trying to manage the focus our efforts more aggressively, I'm

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Speaker 1: bringing up the economy that will be a slow process

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Speaker 1: of ramp up and we don't get to The new

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Speaker 1: economy we will emerge into will be different than the

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Speaker 1: one we had before, because now pandemics are no longer

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Speaker 1: just something you see in a horror movie. They are

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Speaker 1: a reality. We have to manage every day and ensure

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Speaker 1: the health of our employees, our workers, and our customers. Dan,

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Speaker 1: thank you so much, too short of visit will do

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Speaker 1: something longer next time. Dane Swunk with Grant Thorn this morning.

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Speaker 1: This is the Conversation of the day. Ben Layler is

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Speaker 1: with Tara Hudson in London. He writes very short, very

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Speaker 1: dense notes, and he usually has written them with a

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Speaker 1: sense of optimism, a glass half full feel feel. Then

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Speaker 1: I loved, loved, loved your note in the last twelve hours.

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Speaker 1: I believe it was where you really make a distinction

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Speaker 1: between two thousand and eight and two thousand twenty, and

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Speaker 1: you say, what's fascinating this time is you really don't

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Speaker 1: want to be near the financials. You've got other places

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Speaker 1: to go. Let's begin with that idea. Why are you

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Speaker 1: avoiding financials? I think for a lot of reasons, you know,

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Speaker 1: I think that there's a sort of the view out there.

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Speaker 1: There's all about main Street, not about Wall Street. Certainly

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Speaker 1: main Street leading it down, but um, there is a

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Speaker 1: transmission straight back into the financials. Yes, they've got you know,

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Speaker 1: big capital buffers you know this time around, but they're

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Speaker 1: still going to take quite a lot of pain here,

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Speaker 1: I think, um fundamentally. Um, we've also written quite a

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Speaker 1: lot about share buy backs. They've suspended show buy backs,

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Speaker 1: which I don't think it's a huge surprise given the

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Speaker 1: amount of support they're getting from the FED here, but

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Speaker 1: they had a five percent share buy back yield last year.

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Speaker 1: They were some of the biggest buyers back of their

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Speaker 1: own shares. That that's the key support that I think

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Speaker 1: has gone to the whole market. But I think it's

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Speaker 1: going to be especially keenly felt for financials. And and

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Speaker 1: I also think we're in a world of obviously bonyals

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Speaker 1: staying low for forever, and I think that's some you know,

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Speaker 1: pretty difficult for financials. So I think there are, um,

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Speaker 1: I think there are more attractive ways to play this

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Speaker 1: than uhother than financials. For sure. It's interesting ben looking

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Speaker 1: and we've had a lot of economists come out from

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Speaker 1: Wall Street with forecasts and you know, just some huge,

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Speaker 1: huge declines in the second quarter. But thinking about Goldman Sacks,

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Speaker 1: they have a clear V shaped outlook. You know, after

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Speaker 1: a decline in GDP, U S GDP and Q two,

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Speaker 1: they have gains significant double digit gains in Ques three

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Speaker 1: and four. As you think about the market, how are

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Speaker 1: you thinking about how the economy will perform? Yeah, I mean,

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Speaker 1: I think anyone that tells you they really know is

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Speaker 1: is you know, it's been a little bit disingenuous you know,

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Speaker 1: I think the base cases, uh that UM you've got

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Speaker 1: you know, a V or a moderate u UM. But

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Speaker 1: you know, I think the problem is I think there's

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Speaker 1: two issues. I think one of the depth of that

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Speaker 1: V and I think that's what's so important about this week.

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Speaker 1: You know, we're going to get this terrible data on

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Speaker 1: the joblest side. We're gonna get this terrible pm MY data.

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Speaker 1: And I think economists, really for the first time, we're

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Speaker 1: going to start putting hard numbers in those forecasts. We've

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Speaker 1: only just begun to see those Q two trough numbers,

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Speaker 1: whether it's GDP or EPs begin to come down, and

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Speaker 1: I think I'm beginning to put some sort of more

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Speaker 1: realistic numbers on That is really important in terms or

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Speaker 1: it is a pretty requisite for us to sort of

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Speaker 1: build a bottom here um, because I do think everything

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Speaker 1: else is sort of beginning to fall into place a

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Speaker 1: little bit. I mean, the policy response is really beginning

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Speaker 1: to accelerate, both on the monetary side and the fiscal side.

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Speaker 1: And I think the technicals in terms of sentiment, in

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Speaker 1: terms of how far we've fallen here um, is also capitulated.

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Speaker 1: Ben they they're not in a technical basis, but on

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Speaker 1: a fundamental or almost securities analysis basis, how do you

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Speaker 1: dollar cost average into the barton that you can't see coming?

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Speaker 1: How do you approach placing capital across the time continuum

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Speaker 1: of a barton that you can't see? Right? So I

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Speaker 1: mean basically, you want to have that, um. You know,

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Speaker 1: if I by looking back at all the corrections over

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Speaker 1: the last thirty forty years, if you bought that average

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Speaker 1: correction which was only minus, we're obviously down a lot

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Speaker 1: more than that. Your twelve month return has averaged. Obviously

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Speaker 1: we're down you know, an extra ten percent from there.

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Speaker 1: So I think that gives you quite a lot of

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Speaker 1: potential buffer too, um uh to beginning to put capital

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Speaker 1: to work at these levels I look at I can

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Speaker 1: look at the sentiment capitulation as well. We have a

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Speaker 1: sentiment index, which is levels that you've maybe only seen

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Speaker 1: three or four times before over the last sort of

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Speaker 1: twenty years. That tells a similar story. You buy in

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Speaker 1: at these sorts of levels, your twelve month return is

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Speaker 1: is north. I think that gives you, um, you know,

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Speaker 1: a fair amount of protection if markets continue to fall.

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Speaker 1: Here there's somewhat of a buffer. Um And just to

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Speaker 1: be clear, I'm not jumping in with sort of both

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Speaker 1: feet here. All I'm saying is, I do think the

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Speaker 1: risk reward is beginning to shift. I think people should

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Speaker 1: be thinking about what to buy rather than rather than

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Speaker 1: what to sell. You know, all positions are still fairly defensive,

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Speaker 1: but I would be looking at those cyclical recovery traits.

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Speaker 1: Stop producing that sort of that that cyclical by list.

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Speaker 1: At this point, Bed Layler, thank you so much. Not

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Speaker 1: enough times for Tower Hudson. Well, he's just been wonderful

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Speaker 1: with us here in the last number of weeks. Thanks

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Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen

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Speaker 1: to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform

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Speaker 1: you prefer. I'm on Twitter at Tom Keane before the podcast.

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Speaker 1: You can always catch us worldwide. I'm Bloomberg Radio