1
00:00:05,120 --> 00:00:09,200
Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along

2
00:00:09,200 --> 00:00:13,200
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you

3
00:00:13,280 --> 00:00:18,600
Speaker 1: insight from the best and economics, finance, investment, and international relations.

4
00:00:18,960 --> 00:00:23,799
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,

5
00:00:23,920 --> 00:00:28,960
Speaker 1: and of course on the Bloomberg terminal. We need to

6
00:00:28,960 --> 00:00:30,960
Speaker 1: get from the data this week on the Job's report

7
00:00:31,000 --> 00:00:34,760
Speaker 1: on Friday after November two, where a FED will decide

8
00:00:34,840 --> 00:00:38,240
Speaker 1: Risksman joins us sound Chief Economists at JP Morgan Bruce.

9
00:00:38,240 --> 00:00:40,920
Speaker 1: I usually go global, but I gotta go domestic at

10
00:00:40,960 --> 00:00:44,239
Speaker 1: today the FED will decide how close are we to

11
00:00:44,479 --> 00:00:48,159
Speaker 1: a FED that will decide what to do over the

12
00:00:48,200 --> 00:00:53,200
Speaker 1: next number of meetings. Well, I think the basic message

13
00:00:53,200 --> 00:00:55,560
Speaker 1: of the FED is telling us is that they're committed

14
00:00:55,600 --> 00:00:59,240
Speaker 1: to creating a softer labor market, to pushing the unemployment rate,

15
00:00:59,280 --> 00:01:03,280
Speaker 1: of that the picture on inflation has been concerning enough,

16
00:01:03,880 --> 00:01:06,880
Speaker 1: and that they really want to gain control over credibility here.

17
00:01:07,560 --> 00:01:10,119
Speaker 1: So unless we get a really big downward surprise here,

18
00:01:10,120 --> 00:01:12,360
Speaker 1: I think we're not only on track for a seventy

19
00:01:12,440 --> 00:01:16,319
Speaker 1: five basis point move on November two, but further big

20
00:01:16,360 --> 00:01:18,759
Speaker 1: moves in the next couple of meetings after that. So

21
00:01:18,800 --> 00:01:20,480
Speaker 1: what does your rate get out to? I mean the

22
00:01:20,520 --> 00:01:22,720
Speaker 1: game here, the power game is three and three quarters

23
00:01:22,760 --> 00:01:26,280
Speaker 1: for even up to five. How does that What does

24
00:01:26,319 --> 00:01:28,720
Speaker 1: that mean for the Bank of England, What does it

25
00:01:28,760 --> 00:01:30,479
Speaker 1: mean for the Bank of Japan? What does it mean

26
00:01:30,520 --> 00:01:34,839
Speaker 1: for the Bank of Indonesia. Well, I think the FED

27
00:01:34,920 --> 00:01:37,280
Speaker 1: as we would see it goes up to the mid

28
00:01:37,319 --> 00:01:40,600
Speaker 1: fours and stopping at the mid fours in our forecast

29
00:01:40,680 --> 00:01:43,640
Speaker 1: does require to see a material slowing and job growth

30
00:01:43,680 --> 00:01:46,000
Speaker 1: over the next few months, which is in our forecast,

31
00:01:46,040 --> 00:01:48,960
Speaker 1: but obviously we haven't seen yet. Um. I think the

32
00:01:49,000 --> 00:01:51,400
Speaker 1: Bank of England story is really going to be dependent

33
00:01:51,480 --> 00:01:54,640
Speaker 1: on how much the government gains credibility. We think they're

34
00:01:54,680 --> 00:01:57,400
Speaker 1: on track for getting rates up at least a four percent,

35
00:01:57,760 --> 00:02:00,560
Speaker 1: probably more as we go through the next few And

36
00:02:00,600 --> 00:02:02,960
Speaker 1: as you're noting, there's a number of other central banks

37
00:02:02,960 --> 00:02:05,680
Speaker 1: in em that have wanted to slow down, maybe even

38
00:02:05,720 --> 00:02:09,639
Speaker 1: stop here. They've been using FX intervention, they've been using

39
00:02:09,680 --> 00:02:12,639
Speaker 1: their rhetoric. But with the FED moving, with the volatility

40
00:02:12,639 --> 00:02:15,799
Speaker 1: we're seeing in markets, uh, it's harder. And we've obviously

41
00:02:15,840 --> 00:02:18,639
Speaker 1: been backing off of what we thought was some kind

42
00:02:18,680 --> 00:02:22,200
Speaker 1: of moderation going on in the m central banks. Well, Bruce,

43
00:02:22,240 --> 00:02:24,520
Speaker 1: that really raises the question of what point the dollar

44
00:02:24,639 --> 00:02:26,560
Speaker 1: becomes the US is problem, not just the rest of

45
00:02:26,560 --> 00:02:29,240
Speaker 1: the world's problem. What's the trigger point for the U

46
00:02:29,320 --> 00:02:32,079
Speaker 1: s starting to respond for the US's sake, not just

47
00:02:32,280 --> 00:02:34,760
Speaker 1: out of some charity for other nations that are really

48
00:02:34,760 --> 00:02:37,400
Speaker 1: struggling in the face of the green back. So I

49
00:02:37,440 --> 00:02:39,880
Speaker 1: think the big issue here is does the FED get

50
00:02:39,960 --> 00:02:44,880
Speaker 1: the kind of controlled moderation in labor markets and growth

51
00:02:45,480 --> 00:02:48,240
Speaker 1: does it see inflation come down? I think on the

52
00:02:48,240 --> 00:02:52,280
Speaker 1: inflation story, the dollar rises, combining with what we think

53
00:02:52,360 --> 00:02:56,520
Speaker 1: is a fairly significant fading in both commodity and supply

54
00:02:56,680 --> 00:02:59,200
Speaker 1: chain pressures, we think we're set up for a pretty

55
00:02:59,240 --> 00:03:02,760
Speaker 1: decent drop often goods pricing here in the next few months.

56
00:03:02,760 --> 00:03:05,520
Speaker 1: We've already started to see it on energy um and

57
00:03:05,560 --> 00:03:08,520
Speaker 1: I think the economy actually shows resilience here. It looks

58
00:03:08,560 --> 00:03:11,000
Speaker 1: like it's tracking two to three percent growth in the

59
00:03:11,040 --> 00:03:13,480
Speaker 1: current quarter. So I think you have attention that the

60
00:03:13,480 --> 00:03:16,959
Speaker 1: FED will get a benefit here on inflation, I think

61
00:03:16,960 --> 00:03:19,239
Speaker 1: in the next few months, but it may not get

62
00:03:19,280 --> 00:03:21,400
Speaker 1: the job market, It may not get the growth number

63
00:03:21,440 --> 00:03:24,280
Speaker 1: that gives it the comfort to stop, in which case

64
00:03:24,320 --> 00:03:26,880
Speaker 1: the concern is is not so much that I think

65
00:03:27,760 --> 00:03:30,000
Speaker 1: the dollar is itself a drag in the near term,

66
00:03:30,040 --> 00:03:32,360
Speaker 1: but the Fed keeps going in a way that it

67
00:03:32,440 --> 00:03:35,320
Speaker 1: doesn't pay enough attention to the lags, and therefore the

68
00:03:35,360 --> 00:03:38,640
Speaker 1: economy slows much more sharply next year. Let's realize the

69
00:03:38,720 --> 00:03:41,640
Speaker 1: risk here is looking at six twelve months down the road,

70
00:03:41,680 --> 00:03:43,880
Speaker 1: not where we are right now. And this really speaks

71
00:03:43,920 --> 00:03:45,920
Speaker 1: to the column that Paul Kruman wrote at the end

72
00:03:45,920 --> 00:03:47,600
Speaker 1: of last week in the New York Times, where he

73
00:03:47,600 --> 00:03:51,400
Speaker 1: basically said, is the Fed breaking too hard? The risks

74
00:03:51,440 --> 00:03:55,840
Speaker 1: have moved to possibly yes? Do you agree with that view? Well,

75
00:03:55,880 --> 00:03:58,040
Speaker 1: I think before we ask whether the Fed is breaking

76
00:03:58,040 --> 00:04:00,600
Speaker 1: too hard, we want to ask is the Fed intending

77
00:04:00,640 --> 00:04:03,440
Speaker 1: to break things? Because if you listen to Pal, if

78
00:04:03,440 --> 00:04:06,080
Speaker 1: you listen to some other speakers, they seem to be

79
00:04:06,080 --> 00:04:09,600
Speaker 1: preparing us for a significant slowing and in job growth

80
00:04:09,640 --> 00:04:12,840
Speaker 1: and perhaps a meaningful rise in the unemployment rate. So

81
00:04:12,880 --> 00:04:14,839
Speaker 1: I think, yeah, there is a risk that they moved

82
00:04:14,880 --> 00:04:18,120
Speaker 1: too hard because they're I think, concerned about seeing results

83
00:04:18,120 --> 00:04:20,520
Speaker 1: and not paying um the kind of attention to the

84
00:04:20,600 --> 00:04:23,760
Speaker 1: lags in the monetary transmission mechanism. But there's also a

85
00:04:23,760 --> 00:04:27,040
Speaker 1: concern that the FED is decided that it's it's much

86
00:04:27,080 --> 00:04:31,080
Speaker 1: more appropriate to risk a recession here than keeping inflation

87
00:04:31,440 --> 00:04:34,600
Speaker 1: unusually high. Person. None of this is in the textbooks.

88
00:04:34,640 --> 00:04:37,320
Speaker 1: It's noted the Krugman textbooks, the man Cue textbooks of

89
00:04:37,440 --> 00:04:41,440
Speaker 1: chasm in textbooks with the survey data. On Friday, I

90
00:04:41,480 --> 00:04:44,479
Speaker 1: have a three month moving average of non farm payrolls

91
00:04:44,520 --> 00:04:49,520
Speaker 1: of two D eighties six thousand. That's job formation. Is

92
00:04:49,600 --> 00:04:52,440
Speaker 1: JP Morgan saying that will break that that will slip

93
00:04:52,480 --> 00:04:56,040
Speaker 1: down to some appallingly three months moving average of say

94
00:04:56,080 --> 00:05:00,520
Speaker 1: a hundred and sixty thousand. Well, U, we have a

95
00:05:00,520 --> 00:05:03,400
Speaker 1: three forecast for three hundred thousand job games on Friday,

96
00:05:03,480 --> 00:05:07,840
Speaker 1: so clearly that's a pretty strong number, even if it's

97
00:05:07,839 --> 00:05:11,560
Speaker 1: a moderation. I think to get the FED to pause,

98
00:05:12,000 --> 00:05:13,680
Speaker 1: you need job growth to slow to at least a

99
00:05:13,760 --> 00:05:17,320
Speaker 1: hundred thousand UH a month over the next two or

100
00:05:17,360 --> 00:05:20,400
Speaker 1: three months. UH. That I think is a harder one

101
00:05:20,440 --> 00:05:23,680
Speaker 1: to to get confident. And that's that is what's based

102
00:05:23,800 --> 00:05:26,120
Speaker 1: on our forecast. At the FED by the first quarter

103
00:05:26,520 --> 00:05:28,640
Speaker 1: sees that and is ready to pause, and I think

104
00:05:28,680 --> 00:05:31,360
Speaker 1: that's the key issue here, both in terms of getting

105
00:05:31,400 --> 00:05:34,120
Speaker 1: the FED to pause and also the concern that if

106
00:05:34,120 --> 00:05:36,960
Speaker 1: they don't see that and they keep moving, that they

107
00:05:37,120 --> 00:05:40,360
Speaker 1: go further than they actually need to. Bruce, we gotta

108
00:05:40,400 --> 00:05:42,440
Speaker 1: expand on that. That's a stunning number. I have a

109
00:05:42,520 --> 00:05:45,160
Speaker 1: run rate back decades of a hundred and fifty thousand,

110
00:05:45,160 --> 00:05:47,560
Speaker 1: and maybe you come up to two hundred thousand per

111
00:05:47,640 --> 00:05:51,320
Speaker 1: month for non farm payrolls. Is a healthy and normal America.

112
00:05:51,760 --> 00:05:54,320
Speaker 1: You're saying we've got to get down to one hundred thousand,

113
00:05:54,640 --> 00:05:57,839
Speaker 1: one hundred thousand than another hundred thousand to make this

114
00:05:57,960 --> 00:06:01,440
Speaker 1: FED blink. Well, yeah, I think if you want to

115
00:06:01,480 --> 00:06:04,080
Speaker 1: have an economy in which the unemployment rate is moving

116
00:06:04,120 --> 00:06:07,240
Speaker 1: in a controlled way to uh roughly four and a

117
00:06:07,279 --> 00:06:09,400
Speaker 1: half percent unemployment rate, which is what I think the

118
00:06:09,440 --> 00:06:12,120
Speaker 1: FED is telling us, you need job growth to be

119
00:06:12,440 --> 00:06:14,760
Speaker 1: a soft A hundred thousand may not even do it,

120
00:06:14,960 --> 00:06:17,360
Speaker 1: but I'd say a hundred thousand is probably the kind

121
00:06:17,360 --> 00:06:19,960
Speaker 1: of number the FED needs to see to be comfortable

122
00:06:20,160 --> 00:06:23,000
Speaker 1: to be thinking about pausing. Bruce. This goes to something

123
00:06:23,000 --> 00:06:24,920
Speaker 1: that you flipped at earlier. Do you think that it's

124
00:06:24,960 --> 00:06:28,320
Speaker 1: inappropriate for the FED reserved to be targeting the unemployment

125
00:06:28,400 --> 00:06:30,880
Speaker 1: rate at a time when the jobs market has drop

126
00:06:31,120 --> 00:06:35,520
Speaker 1: dramatically changed post pandemic. I think it's appropriate for the

127
00:06:35,520 --> 00:06:38,120
Speaker 1: FED to be targeting a softening in the labor market.

128
00:06:38,320 --> 00:06:41,080
Speaker 1: I think it's appropriate for the FED to be paying

129
00:06:41,120 --> 00:06:45,160
Speaker 1: attention to what's happening in the inflation process, wages, salients,

130
00:06:45,200 --> 00:06:48,359
Speaker 1: inflation expectations. But I think it's also appropriate for the

131
00:06:48,360 --> 00:06:51,159
Speaker 1: FED to be forward looking, which is to recognize that

132
00:06:51,240 --> 00:06:53,800
Speaker 1: there's lags in the process, that they're getting a restrictive

133
00:06:53,800 --> 00:06:57,240
Speaker 1: policy in place. And the difficult call is do you

134
00:06:57,800 --> 00:07:00,800
Speaker 1: stop on the tightening before you've gotten everything you want

135
00:07:00,800 --> 00:07:03,839
Speaker 1: to see in the data. That's really the tough call

136
00:07:03,920 --> 00:07:06,119
Speaker 1: that they're going to have to make here. At some point,

137
00:07:06,680 --> 00:07:09,280
Speaker 1: I think somewhere in the range of four or foreign

138
00:07:09,320 --> 00:07:14,080
Speaker 1: a percent seems perfectly reasonable to be pausing, but they

139
00:07:14,120 --> 00:07:16,400
Speaker 1: may not have the labor market outcomes at that time

140
00:07:16,520 --> 00:07:18,800
Speaker 1: that makes them comfortable to do so. Bruce, this is

141
00:07:18,800 --> 00:07:20,720
Speaker 1: the question, isn't it. I think you just framed it perfectly.

142
00:07:20,760 --> 00:07:22,640
Speaker 1: How can you be forward looking if you're chasing the

143
00:07:22,720 --> 00:07:29,080
Speaker 1: lanking and indicator exactly and you're also being uncomfortable by

144
00:07:29,080 --> 00:07:33,320
Speaker 1: the fact that inflation is persistently. I that you're worried

145
00:07:33,320 --> 00:07:37,200
Speaker 1: about salients in terms of the lagged inflation affecting price

146
00:07:37,240 --> 00:07:40,080
Speaker 1: and weight setting. So it's really I think important to

147
00:07:40,120 --> 00:07:42,239
Speaker 1: be forward looking. But it's really hard to be forward

148
00:07:42,280 --> 00:07:45,000
Speaker 1: looking here. Chris Cassman and jakep Mark and Bruce. Wonderful

149
00:07:45,160 --> 00:07:58,440
Speaker 1: to hear from you, sir. Thank you as always. I

150
00:07:58,520 --> 00:08:00,520
Speaker 1: do you think the return assumptions need to shift lower?

151
00:08:01,600 --> 00:08:03,880
Speaker 1: Maybe they're shifting right now. Let's do that right now

152
00:08:03,920 --> 00:08:07,360
Speaker 1: with Kelvisin of RBC Capital Markets. Laurie is it's small

153
00:08:07,400 --> 00:08:11,840
Speaker 1: caps time? Hi? Thanks for having me, Tom, And I

154
00:08:11,880 --> 00:08:14,120
Speaker 1: think it is. If you look at small cap relative

155
00:08:14,160 --> 00:08:17,160
Speaker 1: to large cap. Just pull up the rt Y against

156
00:08:17,160 --> 00:08:19,600
Speaker 1: the SPX on your Bloomberg. We've been in sort of

157
00:08:19,640 --> 00:08:22,200
Speaker 1: a trading range all year on the relative trade, and

158
00:08:22,240 --> 00:08:24,680
Speaker 1: if you look at small caps, we're basically at historic

159
00:08:24,800 --> 00:08:29,000
Speaker 1: valuations on both an absolute and relative valuation. We've already

160
00:08:29,000 --> 00:08:31,360
Speaker 1: priced in a big spike and jobless claims, and typically

161
00:08:31,440 --> 00:08:34,280
Speaker 1: you want to buy small caps when the unemployment rate

162
00:08:34,320 --> 00:08:36,600
Speaker 1: starts to tick up, so you want to keep that

163
00:08:36,640 --> 00:08:38,560
Speaker 1: in mind as we look ahead to Friday. But I

164
00:08:38,600 --> 00:08:41,240
Speaker 1: will just say this, um, small caps have really been

165
00:08:41,360 --> 00:08:44,320
Speaker 1: orphaned for quite some times. They are more domestic, and

166
00:08:44,360 --> 00:08:47,600
Speaker 1: we are hearing a lot of interest UM in small caps,

167
00:08:47,679 --> 00:08:50,240
Speaker 1: even from people who are very barish on the market overall.

168
00:08:50,600 --> 00:08:53,280
Speaker 1: UM So we're overweight and we feel very good about

169
00:08:53,280 --> 00:08:55,760
Speaker 1: that call. In the turmoil we're in, including low g

170
00:08:55,840 --> 00:08:59,320
Speaker 1: d P, will there be transactions and combinations that combines

171
00:08:59,440 --> 00:09:04,160
Speaker 1: small ups into mid caps. It's interesting time. I mean,

172
00:09:04,200 --> 00:09:07,080
Speaker 1: we have been combing the transcripts among the big cap

173
00:09:07,120 --> 00:09:09,199
Speaker 1: companies for commentary about it in and A and we're

174
00:09:09,200 --> 00:09:11,160
Speaker 1: not seeing it pick up yet. So I wouldn't say

175
00:09:11,160 --> 00:09:13,640
Speaker 1: it's necessarily eminent, But I do think that when you're

176
00:09:13,640 --> 00:09:15,920
Speaker 1: in a sluggish growth environment, and I think that's the

177
00:09:15,960 --> 00:09:18,320
Speaker 1: price we have to pay for a short, shallow recession,

178
00:09:18,320 --> 00:09:20,400
Speaker 1: if indeed that's what we end up getting, I do

179
00:09:20,440 --> 00:09:22,600
Speaker 1: think companies will try to go out and buy growth

180
00:09:22,720 --> 00:09:24,720
Speaker 1: UM And you know, we we find that a lot

181
00:09:24,760 --> 00:09:27,040
Speaker 1: of small cap companies are also much better run than

182
00:09:27,080 --> 00:09:29,679
Speaker 1: they were in the past, much cleaner ballot keep, much

183
00:09:29,720 --> 00:09:32,680
Speaker 1: higher quality management teams. UM. So we think the asset

184
00:09:32,720 --> 00:09:34,319
Speaker 1: base is more attractive than it may have been in

185
00:09:34,400 --> 00:09:38,040
Speaker 1: past cycles as well. Floor is overweighting small caps a

186
00:09:38,120 --> 00:09:42,160
Speaker 1: fight to lose less or actually to get returns that

187
00:09:42,200 --> 00:09:44,320
Speaker 1: are bigger than some of the negative returns that we're

188
00:09:44,360 --> 00:09:48,079
Speaker 1: seeing across the board and brought indexes. I think it's

189
00:09:48,080 --> 00:09:50,200
Speaker 1: a great question, Lisa, and I think that depends on

190
00:09:50,240 --> 00:09:52,760
Speaker 1: your time horizon. In the short term, as stock search

191
00:09:52,840 --> 00:09:54,960
Speaker 1: for a bottom. I do think it's unlikely that small

192
00:09:55,000 --> 00:09:57,360
Speaker 1: caps will start going off while everything else is still

193
00:09:57,360 --> 00:10:00,200
Speaker 1: going down. Um, So it may simply just be you

194
00:10:00,240 --> 00:10:02,439
Speaker 1: lose less on the on the way down to kind

195
00:10:02,440 --> 00:10:05,200
Speaker 1: of find that absolute bottom. But at the same time,

196
00:10:05,240 --> 00:10:06,920
Speaker 1: I will tell you, Lisa, when you talk to people

197
00:10:06,920 --> 00:10:09,199
Speaker 1: who have done small cap for a very long time

198
00:10:09,440 --> 00:10:11,000
Speaker 1: and you go back and look at the history, the

199
00:10:11,040 --> 00:10:13,640
Speaker 1: pivots back into small cap tend to be pretty sharp.

200
00:10:14,040 --> 00:10:15,600
Speaker 1: So I do think it's an area where if you

201
00:10:15,640 --> 00:10:17,320
Speaker 1: really kind of wait around and try to pick the

202
00:10:17,320 --> 00:10:19,280
Speaker 1: bottom in the market, you're gonna miss the Turney. You

203
00:10:19,320 --> 00:10:21,760
Speaker 1: do tend to make a lot of that outperformance in

204
00:10:21,800 --> 00:10:24,320
Speaker 1: those early days in the trade. Right now, we're looking

205
00:10:24,360 --> 00:10:27,320
Speaker 1: at eight five and clothes on Friday for the SMP

206
00:10:27,400 --> 00:10:30,199
Speaker 1: five hundred. Your target for your end is forty two hundred.

207
00:10:30,559 --> 00:10:32,920
Speaker 1: What's the trigger? What's the pivot point that gets us

208
00:10:33,000 --> 00:10:35,240
Speaker 1: up there is it just the bear market rally that

209
00:10:35,320 --> 00:10:38,680
Speaker 1: we heard about from a number of analysts. I think

210
00:10:38,720 --> 00:10:40,360
Speaker 1: that's one thing you can look at. I mean, we

211
00:10:40,400 --> 00:10:42,760
Speaker 1: actually found if you look at the SMP five hundred

212
00:10:42,840 --> 00:10:45,320
Speaker 1: this year in two, it's got about a seventy two

213
00:10:45,320 --> 00:10:47,960
Speaker 1: percent correlation with house stocks for trading back in two

214
00:10:47,960 --> 00:10:50,760
Speaker 1: thousand two, which was another period of kind of painful

215
00:10:50,800 --> 00:10:54,400
Speaker 1: normalization after a big market shock, an initial rally. And

216
00:10:54,480 --> 00:10:57,000
Speaker 1: so if you sort of go through that playbook and

217
00:10:57,080 --> 00:10:58,840
Speaker 1: there was a fierce four Q rally and then you

218
00:10:58,880 --> 00:11:00,440
Speaker 1: gave most of it back in the or s quarter,

219
00:11:00,600 --> 00:11:03,120
Speaker 1: that seems like a plausible way for things to turn

220
00:11:03,160 --> 00:11:05,800
Speaker 1: out this time around as well. I think also, Lisa,

221
00:11:05,840 --> 00:11:08,560
Speaker 1: we're about a month out from the midterm elections, and

222
00:11:08,600 --> 00:11:10,880
Speaker 1: go back to the summer, I started really getting an

223
00:11:10,880 --> 00:11:12,920
Speaker 1: earful from a lot of investors about how that would

224
00:11:12,920 --> 00:11:16,000
Speaker 1: be a potentially positive catalyst for markets. So we do

225
00:11:16,040 --> 00:11:18,199
Speaker 1: think that's something on investors radar. And if you look

226
00:11:18,240 --> 00:11:21,520
Speaker 1: at the generic congressional ballot, after you know, several weeks

227
00:11:21,559 --> 00:11:23,640
Speaker 1: of seeing the pulling data kind of shift back in

228
00:11:23,720 --> 00:11:26,640
Speaker 1: democrats favor, we actually saw the Republicans pull ahead of

229
00:11:26,679 --> 00:11:30,440
Speaker 1: Democrats in the congressional generic congressional ballot data last week,

230
00:11:30,520 --> 00:11:32,280
Speaker 1: So things are starting to shift a little bit the

231
00:11:32,360 --> 00:11:34,640
Speaker 1: more market friendly way. In the latest date of their all,

232
00:11:34,760 --> 00:11:37,959
Speaker 1: I just wanted to squeeze this in Nike, FedEx, Apple,

233
00:11:38,120 --> 00:11:42,320
Speaker 1: Tesla missing this morning. What are you learning from corporations

234
00:11:42,320 --> 00:11:46,320
Speaker 1: about how quickly this downtown is coming around? Well, look,

235
00:11:46,360 --> 00:11:48,200
Speaker 1: I think what we are learning, John, is that we

236
00:11:48,240 --> 00:11:50,440
Speaker 1: are starting to see some companies rip off the our

237
00:11:50,520 --> 00:11:52,440
Speaker 1: needs band aid. And if you go back to the summer,

238
00:11:52,480 --> 00:11:54,839
Speaker 1: that is something investors were telling me they really needed

239
00:11:54,880 --> 00:11:57,880
Speaker 1: to see half and to get comfortable with buying markets.

240
00:11:57,920 --> 00:11:59,880
Speaker 1: People said, you know, we want to buy stocks around

241
00:12:00,000 --> 00:12:03,040
Speaker 1: fifteen times PE the market around fifteen sixteen times P.

242
00:12:03,600 --> 00:12:05,200
Speaker 1: But we just need a little bit of certainty on

243
00:12:05,240 --> 00:12:07,240
Speaker 1: that e. We need to see the numbers come down.

244
00:12:07,600 --> 00:12:10,120
Speaker 1: You know, we'll see if the early reporters turn out

245
00:12:10,120 --> 00:12:11,560
Speaker 1: to be a harbinger of what's to come in the

246
00:12:11,600 --> 00:12:14,040
Speaker 1: actual reporting season. Um, but I do think, you know,

247
00:12:14,080 --> 00:12:17,120
Speaker 1: kind of getting those learnings expectations down is something that

248
00:12:17,200 --> 00:12:19,720
Speaker 1: we really need to see. Hi, Luri, thank you all

249
00:12:19,800 --> 00:12:21,360
Speaker 1: some mental whites. Let me kind of saying to that

250
00:12:21,559 --> 00:12:29,240
Speaker 1: of MBC Capital markets. What an interesting day and it

251
00:12:29,360 --> 00:12:32,360
Speaker 1: is about the greater economies of the world. One of

252
00:12:32,400 --> 00:12:34,520
Speaker 1: the great facts is Madrid as the best museum in

253
00:12:34,559 --> 00:12:37,000
Speaker 1: the world. It is called the Prado and it is

254
00:12:37,040 --> 00:12:39,560
Speaker 1: a must visit and that speaks to the healing of

255
00:12:39,600 --> 00:12:44,000
Speaker 1: tourism in Spain. Spain is booming, like Paris, like London.

256
00:12:44,360 --> 00:12:47,080
Speaker 1: It's been a very strong story, but with it too

257
00:12:47,440 --> 00:12:51,520
Speaker 1: and up to ten inflation. Maria today on now with

258
00:12:51,559 --> 00:12:57,760
Speaker 1: the Deputy Prime Minister of Spain, Tom, thank you so much,

259
00:12:57,760 --> 00:12:59,560
Speaker 1: and we are joined of course by Spain's fine as

260
00:12:59,600 --> 00:13:02,680
Speaker 1: Minister and Deputy Prime Minister and Aia Colvino Wan. They

261
00:13:02,760 --> 00:13:06,199
Speaker 1: ask God morning, I have a lot of questions about Europe,

262
00:13:06,200 --> 00:13:07,880
Speaker 1: but first of all I have to get your thoughts

263
00:13:07,880 --> 00:13:10,040
Speaker 1: on what's going on in the UK, because today we've

264
00:13:10,080 --> 00:13:13,199
Speaker 1: seen a huge you term from the UK government. Markets

265
00:13:13,200 --> 00:13:16,160
Speaker 1: really flipping on this country. I don't want to create trouble,

266
00:13:16,240 --> 00:13:18,840
Speaker 1: but when you look at that country, isn't a message

267
00:13:18,880 --> 00:13:21,360
Speaker 1: in terms of what not to do going into the winter.

268
00:13:21,520 --> 00:13:24,120
Speaker 1: Perhaps for you, I think it's very good news that

269
00:13:24,160 --> 00:13:26,800
Speaker 1: they back tracked, in particular when it comes to the

270
00:13:27,000 --> 00:13:30,960
Speaker 1: reduction of the taxes on the wealthiest parts of society,

271
00:13:30,960 --> 00:13:33,360
Speaker 1: because it really shows that it's not only a matter

272
00:13:33,440 --> 00:13:36,040
Speaker 1: of financial stability, it's also a matter of fairness. We're

273
00:13:36,080 --> 00:13:39,800
Speaker 1: all confronted with the challenge how to contain prices, how

274
00:13:39,840 --> 00:13:43,359
Speaker 1: to support our economies, how to fund our public services,

275
00:13:43,520 --> 00:13:46,560
Speaker 1: and we need to ensure that we have fiscal sustainability,

276
00:13:46,640 --> 00:13:49,760
Speaker 1: financial stability, but also a fair distribution of the impact

277
00:13:49,760 --> 00:13:52,160
Speaker 1: of the world, so that means essentially tax the rich

278
00:13:52,360 --> 00:13:56,680
Speaker 1: more to some extent. That's what all international institutions are recommending,

279
00:13:56,800 --> 00:13:59,959
Speaker 1: and this is what the Spanish government has been defend

280
00:14:00,080 --> 00:14:03,200
Speaker 1: think when it comes to the international framework, not not

281
00:14:03,400 --> 00:14:06,559
Speaker 1: specifically or not only this dimensions, but generally we need

282
00:14:06,559 --> 00:14:09,680
Speaker 1: a fair tax system. We need to avoid a race

283
00:14:09,720 --> 00:14:11,520
Speaker 1: to the bottom, which at the end of the day

284
00:14:11,640 --> 00:14:14,800
Speaker 1: is making all of us poorer when we need stronger

285
00:14:14,840 --> 00:14:18,480
Speaker 1: states to also face the blackmail coming from Russia. And

286
00:14:18,520 --> 00:14:20,400
Speaker 1: that's a message perhaps for listra Us. But I don't

287
00:14:20,400 --> 00:14:23,480
Speaker 1: want to create trouble intentionally, perhaps between the e N

288
00:14:23,640 --> 00:14:26,160
Speaker 1: and the UK. So let's talk about Europe. It seems

289
00:14:26,200 --> 00:14:29,080
Speaker 1: to me there's forces that are pulling from different ways.

290
00:14:29,240 --> 00:14:32,360
Speaker 1: You have demand instruction which seems to be working at

291
00:14:32,400 --> 00:14:35,640
Speaker 1: least the message is resonated with Europeans. The storage is up.

292
00:14:35,960 --> 00:14:38,240
Speaker 1: You have an escalation in the war and an escalation

293
00:14:38,280 --> 00:14:40,800
Speaker 1: in the energy war in your view, with the outlook

294
00:14:40,840 --> 00:14:45,280
Speaker 1: for Europe going into the winter, we're challenging at a

295
00:14:45,400 --> 00:14:48,920
Speaker 1: very challenging moment. No, because the war is entering a

296
00:14:48,960 --> 00:14:51,800
Speaker 1: new phase. So it seems we also see that not

297
00:14:51,960 --> 00:14:58,240
Speaker 1: stream supply was cut first of September. The positive element

298
00:14:58,320 --> 00:15:01,680
Speaker 1: here is that prices are not continuing to escalate as

299
00:15:01,720 --> 00:15:05,400
Speaker 1: they did in past months when Putting was using the

300
00:15:05,520 --> 00:15:09,200
Speaker 1: energy blackmail. Also, I think that actually what we see

301
00:15:09,240 --> 00:15:12,400
Speaker 1: now is that the storage level is appropriate, that Europe

302
00:15:12,400 --> 00:15:15,400
Speaker 1: is having a stronger voice when it comes to international

303
00:15:15,520 --> 00:15:18,400
Speaker 1: energy markets, and we should continue in that direction with

304
00:15:18,440 --> 00:15:22,000
Speaker 1: a response which is united determined and also based on

305
00:15:22,080 --> 00:15:25,480
Speaker 1: solidarity between the different member states. When you see solidarity,

306
00:15:25,640 --> 00:15:27,680
Speaker 1: last week Germany came up with the two hundred billion

307
00:15:27,720 --> 00:15:30,560
Speaker 1: your package to save their households and companies. Is that

308
00:15:30,720 --> 00:15:35,000
Speaker 1: solidarity for you? Well, I understand that each country is

309
00:15:35,520 --> 00:15:37,880
Speaker 1: subject to a different kind of challenge now, I mean

310
00:15:37,960 --> 00:15:42,200
Speaker 1: the increase of energy prices hit Spain maybe before other

311
00:15:42,240 --> 00:15:46,120
Speaker 1: countries because of the flexibility of our electricity markets, but

312
00:15:46,240 --> 00:15:49,080
Speaker 1: now we see that inflation is already going down in Spain,

313
00:15:49,120 --> 00:15:53,080
Speaker 1: whereas we see in Germany that the situation is very different.

314
00:15:53,160 --> 00:15:56,120
Speaker 1: They have a higher dependence on Russian gas and oil,

315
00:15:56,440 --> 00:15:59,560
Speaker 1: and so we have to be respectful of the different

316
00:15:59,600 --> 00:16:02,440
Speaker 1: specific the cities of the different countries and ensure that

317
00:16:02,760 --> 00:16:05,840
Speaker 1: our framework and our rules are fit for purpose in

318
00:16:05,840 --> 00:16:08,320
Speaker 1: the sense of allowing for this flexibility in terms of

319
00:16:08,320 --> 00:16:12,160
Speaker 1: the response at the national level, but reinforcing the European

320
00:16:12,280 --> 00:16:15,440
Speaker 1: level instruments so that we ensure fair treatment of all

321
00:16:15,480 --> 00:16:18,480
Speaker 1: citizens and companies throughout the UN were from that messages

322
00:16:18,520 --> 00:16:21,480
Speaker 1: a final question. On Wednesday, the Spanish Prime Minister pro

323
00:16:21,520 --> 00:16:24,360
Speaker 1: Sanchez will meet with the German chancellor. Is he going

324
00:16:24,360 --> 00:16:27,240
Speaker 1: to convince the Germans to drop their opposition to this

325
00:16:27,360 --> 00:16:32,280
Speaker 1: price cap on gas? I hope so we'll definitely Spain well.

326
00:16:32,320 --> 00:16:34,600
Speaker 1: For the last year, Spain has been pushing for a

327
00:16:34,640 --> 00:16:38,160
Speaker 1: European response. We've been pushing for price cups. We've been

328
00:16:38,200 --> 00:16:42,640
Speaker 1: pushing for a joint purchases h an overhaul of the

329
00:16:42,680 --> 00:16:47,800
Speaker 1: European legislation. We managed to have a very exception which

330
00:16:47,840 --> 00:16:50,440
Speaker 1: is allowing us to have a gas price cup between

331
00:16:50,720 --> 00:16:53,640
Speaker 1: Spain and in Spain and Portugal, and this is already

332
00:16:53,840 --> 00:16:57,960
Speaker 1: saving European Spanish citizens and companies more than two point

333
00:16:58,000 --> 00:17:00,240
Speaker 1: five billion euros, you know, and it's proving too allow

334
00:17:00,320 --> 00:17:02,760
Speaker 1: us to have lower prices in other countries. It has

335
00:17:02,800 --> 00:17:06,480
Speaker 1: even the coupled the wholesale gas price from the mediterrane

336
00:17:06,560 --> 00:17:09,760
Speaker 1: of the bery and gas from the t TF reference,

337
00:17:10,000 --> 00:17:13,800
Speaker 1: which shows that we can act and we can change

338
00:17:13,800 --> 00:17:15,960
Speaker 1: things if we act together. So I am sure this

339
00:17:16,040 --> 00:17:19,800
Speaker 1: will be discussed in the summit between Spain and Germany

340
00:17:19,840 --> 00:17:22,119
Speaker 1: on Wednesday, and I hope we took convince Germany to

341
00:17:22,160 --> 00:17:24,760
Speaker 1: move in this direction. And it's interesting how the diplomatic

342
00:17:24,760 --> 00:17:27,840
Speaker 1: ties are changing between Madrid and Berlin, perhaps growing close

343
00:17:27,880 --> 00:17:31,240
Speaker 1: over the past three weeks, in particular when it comes

344
00:17:31,240 --> 00:17:33,480
Speaker 1: to potential gas suppliers coming in from Spain. But you

345
00:17:33,480 --> 00:17:35,960
Speaker 1: also make it clear that has to go both ways.

346
00:17:36,560 --> 00:17:38,919
Speaker 1: Nada Calvinia, thank you so much for joining us on

347
00:17:39,000 --> 00:17:41,320
Speaker 1: bloomber TV this morning, and we hope to see very soon,

348
00:17:41,359 --> 00:17:44,600
Speaker 1: of course, in a few in a few hours time. Yes, yes, indeed,

349
00:17:44,600 --> 00:17:47,360
Speaker 1: thank you, radiant, thank you so much, and guys back

350
00:17:47,359 --> 00:17:49,359
Speaker 1: to you, Maria, thank you one of the best marit

351
00:17:49,359 --> 00:17:53,560
Speaker 1: today there alongside Nadia Calvin or Spain's Deputy Deputy Prime Minister.

352
00:18:03,880 --> 00:18:07,119
Speaker 1: John Gets from Birmingham. Is Bloomberg's Lizzie Burden out of

353
00:18:07,160 --> 00:18:12,320
Speaker 1: the UK morning, Lizzie, Good morning John. While I'm out

354
00:18:12,320 --> 00:18:16,119
Speaker 1: Conservative Party conference and I'm sat here with Chloe Smith,

355
00:18:16,119 --> 00:18:18,760
Speaker 1: the Secretary of State for Work and Pensions. Chloe, thank

356
00:18:18,800 --> 00:18:20,760
Speaker 1: you so much for making time for me. It's a

357
00:18:20,760 --> 00:18:24,480
Speaker 1: wild morning here in Birmingham. This budget that the Chancellor

358
00:18:24,520 --> 00:18:27,639
Speaker 1: had announced was described as reverse robin Hood. At the

359
00:18:27,680 --> 00:18:29,800
Speaker 1: one end, you were cutting the top rate of income

360
00:18:29,880 --> 00:18:33,040
Speaker 1: tax that has now been reversed. But at the other end,

361
00:18:33,040 --> 00:18:35,800
Speaker 1: the Chancellor said he'd cut the benefits of people who

362
00:18:35,800 --> 00:18:38,560
Speaker 1: are not trying hard enough to get a job. Are

363
00:18:38,600 --> 00:18:40,440
Speaker 1: you not going to you turn on that as well

364
00:18:40,480 --> 00:18:44,840
Speaker 1: when it's equally politically toxic. I think the key point

365
00:18:45,160 --> 00:18:48,040
Speaker 1: about the growth package that the Chancellor set out is

366
00:18:48,040 --> 00:18:50,480
Speaker 1: that it is all about getting more people into jobs

367
00:18:50,600 --> 00:18:52,640
Speaker 1: and getting higher wages. And in fact you can see

368
00:18:52,680 --> 00:18:55,000
Speaker 1: that around us as a slogan here at the conference

369
00:18:55,080 --> 00:18:56,879
Speaker 1: is painted on the stairs just over there that we

370
00:18:56,920 --> 00:19:00,440
Speaker 1: want to be able to deliver more jobs and higher wages. Now,

371
00:19:00,440 --> 00:19:03,359
Speaker 1: the majority of the growth package set out was to

372
00:19:03,440 --> 00:19:06,440
Speaker 1: be able to do that, for example, including putting money

373
00:19:06,520 --> 00:19:09,719
Speaker 1: straight back into people's pockets through the adjustment to the

374
00:19:09,760 --> 00:19:12,399
Speaker 1: lower rate of income tax and of course that builds

375
00:19:12,400 --> 00:19:15,320
Speaker 1: on the cost of living package and the energy price guarantee.

376
00:19:15,520 --> 00:19:17,800
Speaker 1: Now my role is then to be able to help

377
00:19:17,840 --> 00:19:21,280
Speaker 1: people into those jobs that growth package will create, and

378
00:19:21,359 --> 00:19:23,280
Speaker 1: that to me is a real priority. So to pay

379
00:19:23,320 --> 00:19:26,360
Speaker 1: for all your tax cuts, to have any credibility and markets,

380
00:19:26,440 --> 00:19:28,680
Speaker 1: you're going to have to cut spending. The one thing

381
00:19:28,680 --> 00:19:31,840
Speaker 1: that the Prime Minister promised yesterday was that she was

382
00:19:31,880 --> 00:19:34,680
Speaker 1: going to raise pensions in line with inflation. We're on

383
00:19:34,720 --> 00:19:37,320
Speaker 1: a cost of living crisis. Has the Chancellor asked you

384
00:19:37,359 --> 00:19:41,120
Speaker 1: to your cut cutting benefits? The Prime Minister was right

385
00:19:41,160 --> 00:19:43,399
Speaker 1: to talk about the triple or on pensions. That's been

386
00:19:43,440 --> 00:19:45,199
Speaker 1: a commitment of ours for a while, and that's been

387
00:19:45,240 --> 00:19:48,440
Speaker 1: a clear public commitment already. Now, naturally there is then

388
00:19:48,480 --> 00:19:50,919
Speaker 1: also the decision to be taken about benefits operating. This

389
00:19:50,960 --> 00:19:53,080
Speaker 1: is one for me to take in my role. I

390
00:19:53,119 --> 00:19:55,080
Speaker 1: can't tell you here and now what that will be

391
00:19:55,119 --> 00:19:56,560
Speaker 1: and what the data that goes inside it will be,

392
00:19:56,520 --> 00:19:58,720
Speaker 1: because I have to wait for that data to come

393
00:19:58,760 --> 00:20:01,080
Speaker 1: to me. Now, the key principle though, that I want

394
00:20:01,119 --> 00:20:03,560
Speaker 1: to take in approaching that decision is how we can

395
00:20:03,600 --> 00:20:07,000
Speaker 1: best protect the most vulnerable in our society. And for me,

396
00:20:07,359 --> 00:20:10,119
Speaker 1: this builds on those elements of the cost of living

397
00:20:10,160 --> 00:20:12,840
Speaker 1: support that we have already been doing and delivering. My

398
00:20:12,920 --> 00:20:15,000
Speaker 1: department has been making payments to people and they'll be

399
00:20:15,040 --> 00:20:18,400
Speaker 1: more coming out very shortly that are supporting people at

400
00:20:18,400 --> 00:20:20,280
Speaker 1: that time with real needs. Why is it fair to

401
00:20:20,359 --> 00:20:24,000
Speaker 1: guarantee pensions not benefits in a cost of living crisis?

402
00:20:24,040 --> 00:20:26,880
Speaker 1: People need to plan now. And one of the other

403
00:20:26,880 --> 00:20:28,720
Speaker 1: principles that I really want to look at here is

404
00:20:28,760 --> 00:20:32,200
Speaker 1: how we protect those who can't perhaps work to raise

405
00:20:32,240 --> 00:20:35,000
Speaker 1: their own earnings. So for example, that would usually include pensioners,

406
00:20:35,240 --> 00:20:37,119
Speaker 1: and it may well include others as well. These are

407
00:20:37,160 --> 00:20:40,040
Speaker 1: the principles that I'm thinking about very carefully as part

408
00:20:40,040 --> 00:20:42,640
Speaker 1: of that decision. But let me also say this, as

409
00:20:42,640 --> 00:20:45,800
Speaker 1: a party, we are about helping more people into work.

410
00:20:46,080 --> 00:20:48,720
Speaker 1: We shouldn't be writing people often saying that they can't work.

411
00:20:48,720 --> 00:20:50,680
Speaker 1: We should have been instead be looking at what people

412
00:20:51,000 --> 00:20:53,320
Speaker 1: can do rather than what they cannot do. So that's

413
00:20:53,359 --> 00:20:55,600
Speaker 1: what the Growth Package is all about, and that's the

414
00:20:55,600 --> 00:20:57,520
Speaker 1: golden thread that you see going through the other rest

415
00:20:57,560 --> 00:21:00,240
Speaker 1: of the work of my department, helping people into work

416
00:21:00,400 --> 00:21:02,720
Speaker 1: and ensuring that there is an incentive to work. Okay,

417
00:21:02,720 --> 00:21:05,000
Speaker 1: so you mentioned pensions. Last week, the Bank of England

418
00:21:05,040 --> 00:21:07,600
Speaker 1: had to step in to bail out the pensions industry

419
00:21:07,880 --> 00:21:10,600
Speaker 1: from a systemic crash that was triggered by your government.

420
00:21:10,840 --> 00:21:13,840
Speaker 1: Are you having emergency meetings with the pensions regulator and

421
00:21:13,920 --> 00:21:17,960
Speaker 1: asset managers and if so, what proposals are being discussed. Well,

422
00:21:18,080 --> 00:21:20,920
Speaker 1: colleagues are having the right meetings of course, with the

423
00:21:20,960 --> 00:21:24,480
Speaker 1: Pensions Regulated, with the Treasury and across my department as well.

424
00:21:24,600 --> 00:21:26,560
Speaker 1: I can't give you further details them that, but I'm

425
00:21:26,560 --> 00:21:28,480
Speaker 1: glad that the Bank of England was able to take

426
00:21:28,480 --> 00:21:31,040
Speaker 1: the action that they did last week, and naturally we

427
00:21:31,080 --> 00:21:33,560
Speaker 1: are keeping a very close eye on this situation because

428
00:21:33,560 --> 00:21:35,800
Speaker 1: we want there to be a thriving pension industry in

429
00:21:35,840 --> 00:21:38,440
Speaker 1: this country. That is an essential part of supporting people

430
00:21:38,480 --> 00:21:40,840
Speaker 1: in their retirement. Clarie Smith, Secretary of State for the

431
00:21:41,160 --> 00:21:43,080
Speaker 1: Department of Work and Pensions, thank you very much for

432
00:21:43,200 --> 00:21:46,560
Speaker 1: joining me. John. The question remains, then, what happens when

433
00:21:46,600 --> 00:21:50,359
Speaker 1: the Bank of England's rescue package ends on October the fourteenth,

434
00:21:50,640 --> 00:21:53,240
Speaker 1: unclear if we're going to have the same issues for

435
00:21:53,480 --> 00:21:55,720
Speaker 1: l d Eyes. Hey, Lizzie, thank you. Looking forward to

436
00:21:55,720 --> 00:21:57,160
Speaker 1: catching up with you through the next camp of days,

437
00:21:57,200 --> 00:22:04,480
Speaker 1: Lizzie Burton there at the United Kingdom. Let's learn something

438
00:22:04,480 --> 00:22:08,439
Speaker 1: from dance setting, Dan, fantastic year, notorious, the Barrish through

439
00:22:08,520 --> 00:22:11,840
Speaker 1: much of two it's worked out almost perfectly. We're all

440
00:22:11,840 --> 00:22:14,840
Speaker 1: wandering now for you. What are the preconditions that you

441
00:22:14,880 --> 00:22:18,880
Speaker 1: want to see the checkbox check check check check check

442
00:22:19,040 --> 00:22:22,440
Speaker 1: to add equity exposure. Sure, and good morning. By the way,

443
00:22:22,440 --> 00:22:25,480
Speaker 1: it's great to be in studio altogether, having the band

444
00:22:25,560 --> 00:22:29,000
Speaker 1: here back together. It's been two years, Dan, it's been

445
00:22:29,040 --> 00:22:37,160
Speaker 1: too long. I'll inch my chairs to your question. You know, look,

446
00:22:37,200 --> 00:22:39,200
Speaker 1: we've done a lot of damage obviously in the third

447
00:22:39,280 --> 00:22:43,160
Speaker 1: quarter in last month, but notably we're still trading around

448
00:22:43,200 --> 00:22:45,920
Speaker 1: the June lows. But notably all of that work has

449
00:22:45,960 --> 00:22:49,400
Speaker 1: been rates. Right, we haven't seen the earnings reflected yet,

450
00:22:49,400 --> 00:22:52,320
Speaker 1: and so talking about FED speak, I think investors want

451
00:22:52,359 --> 00:22:54,840
Speaker 1: to hear management speak really at this point and really

452
00:22:54,920 --> 00:22:57,240
Speaker 1: kind of throw in more of a towel. So number

453
00:22:57,240 --> 00:22:59,440
Speaker 1: one is earnings. Number two is p M I s.

454
00:22:59,480 --> 00:23:02,040
Speaker 1: We haven't seen in that contraction yet UH. And number

455
00:23:02,080 --> 00:23:04,040
Speaker 1: three is jobs, and we have a big update coming

456
00:23:04,359 --> 00:23:06,920
Speaker 1: this week, but we just haven't seen that rise in

457
00:23:06,920 --> 00:23:09,920
Speaker 1: the unemployment just yet. I've been waiting, waiting, waiting for

458
00:23:09,960 --> 00:23:12,639
Speaker 1: a research note like you've got, which is real simple.

459
00:23:13,080 --> 00:23:16,680
Speaker 1: Look at dividend growers. How did dividend growth change? How

460
00:23:16,680 --> 00:23:21,679
Speaker 1: does dividend growth change given dampened economy, dampened revenue growth

461
00:23:21,760 --> 00:23:23,960
Speaker 1: and then down the income statement, How does that filter

462
00:23:24,280 --> 00:23:27,280
Speaker 1: into the dividend growth decision? Well, when you look at

463
00:23:27,280 --> 00:23:30,600
Speaker 1: companies M and A and and deals have been really

464
00:23:30,720 --> 00:23:33,399
Speaker 1: dried up this year, So I think you look at

465
00:23:33,440 --> 00:23:37,360
Speaker 1: companies being more defensive. BIBAS has obviously been a huge

466
00:23:37,440 --> 00:23:40,159
Speaker 1: use of capital this year, and dividends continues to be

467
00:23:40,200 --> 00:23:42,840
Speaker 1: a huge use of capital. And and UH investors are

468
00:23:42,920 --> 00:23:46,200
Speaker 1: rewarding dividend growth wildly this year. How many basis points

469
00:23:46,200 --> 00:23:48,439
Speaker 1: pick up do you have there with dividend growth versus

470
00:23:48,840 --> 00:23:50,800
Speaker 1: the riff raff that's out there. I mean, when you

471
00:23:50,840 --> 00:23:53,480
Speaker 1: look at kind of income styles, dividend growth styles, they're

472
00:23:53,480 --> 00:23:56,240
Speaker 1: down kind of mid single digit, high single digit this

473
00:23:56,320 --> 00:24:00,520
Speaker 1: year versus the SMP down plus. So Dan said something

474
00:24:00,560 --> 00:24:03,119
Speaker 1: earlier at the start of the show that our bonds

475
00:24:03,160 --> 00:24:04,760
Speaker 1: going to and John asked him, our bond is going

476
00:24:04,800 --> 00:24:06,840
Speaker 1: to react the way that they normally do in a

477
00:24:06,880 --> 00:24:10,080
Speaker 1: downturn where they gain value. People pile in. Tom was

478
00:24:10,119 --> 00:24:12,440
Speaker 1: saying he doesn't think so. A lot of people agree

479
00:24:12,480 --> 00:24:16,040
Speaker 1: with him, do you. Inflation is still stubbornly high, and

480
00:24:16,160 --> 00:24:18,840
Speaker 1: so if we have kind of a plateau ng or

481
00:24:18,840 --> 00:24:21,760
Speaker 1: a moderation inflation, I think bonds could certainly act better.

482
00:24:22,119 --> 00:24:24,280
Speaker 1: But at least it's your point. That was the case

483
00:24:24,359 --> 00:24:26,600
Speaker 1: earlier this year. The first four and a half months

484
00:24:26,600 --> 00:24:28,959
Speaker 1: of this year was all about stag inflation, and so

485
00:24:29,000 --> 00:24:32,160
Speaker 1: you saw both stocks and bonds down together. It got

486
00:24:32,200 --> 00:24:34,520
Speaker 1: a little bit better over the summer. Then, as you've

487
00:24:34,520 --> 00:24:37,199
Speaker 1: seen again, bonds have sold off quite rapidly. So I

488
00:24:37,200 --> 00:24:39,880
Speaker 1: think around the four percent level on the tenure, there

489
00:24:39,960 --> 00:24:42,040
Speaker 1: is more value in bonds here to do their job

490
00:24:42,400 --> 00:24:46,280
Speaker 1: in an in evolvable environment. Wilson, your colleague a good friend.

491
00:24:46,280 --> 00:24:48,919
Speaker 1: In the last couple of weeks, I'm austin whether you

492
00:24:48,920 --> 00:24:51,760
Speaker 1: guys start to get uncomfortable when everyone starts to share

493
00:24:51,840 --> 00:24:53,800
Speaker 1: your few, when you start to see some of the

494
00:24:53,800 --> 00:24:56,959
Speaker 1: big bulls on Wolf Street capitulate and Marko Kanovich came

495
00:24:57,000 --> 00:25:01,280
Speaker 1: about that close on Friday. Do you feel uncomfortable when

496
00:25:01,280 --> 00:25:04,400
Speaker 1: everyone starts getting comfortable with your way of thinking? You do,

497
00:25:04,480 --> 00:25:06,760
Speaker 1: but your thesis is still in check. Right, So when

498
00:25:06,800 --> 00:25:09,200
Speaker 1: you think about the call Mike made, and we joked

499
00:25:09,240 --> 00:25:12,239
Speaker 1: a few months ago about that lonely Island in every

500
00:25:12,280 --> 00:25:13,840
Speaker 1: one's on board, it's a flow, you know what. To

501
00:25:13,840 --> 00:25:15,920
Speaker 1: your point, Jonathan, you look at the cell side, you

502
00:25:15,960 --> 00:25:18,840
Speaker 1: look at the byside, mutual fun cash levels, hedge, fun

503
00:25:18,920 --> 00:25:22,080
Speaker 1: net exposures, and we have a particular vantage because Morgan

504
00:25:22,119 --> 00:25:25,280
Speaker 1: Stanley is the biggest prime broker out there. So everyone

505
00:25:25,440 --> 00:25:31,800
Speaker 1: is inching. We're here in studio, you can power play.

506
00:25:32,440 --> 00:25:34,960
Speaker 1: But to Jonathan's point, we are growing a little bit

507
00:25:34,960 --> 00:25:38,280
Speaker 1: more nervous about that consensus trade. But that doesn't think

508
00:25:38,400 --> 00:25:41,120
Speaker 1: that doesn't mean things can't go lower. Still, swats cut

509
00:25:41,160 --> 00:25:43,160
Speaker 1: this morning. I think city did as well, Jonathan Gollip

510
00:25:43,200 --> 00:25:46,920
Speaker 1: Thoma has gone to fifty for year end. Down from

511
00:25:48,640 --> 00:25:52,000
Speaker 1: the facts. Change I change once had gone on board

512
00:25:52,000 --> 00:25:54,919
Speaker 1: that that island is very crowded right now. You were

513
00:25:54,960 --> 00:25:56,679
Speaker 1: the first one there, though, Dan, it's gonna see it.

514
00:25:56,680 --> 00:26:02,000
Speaker 1: That's kind of snailed it. In the supportly Allen Zentner

515
00:26:02,080 --> 00:26:06,119
Speaker 1: was transitory and on a dime she switched shifted to

516
00:26:07,320 --> 00:26:11,080
Speaker 1: This is the Bloomberg Surveillance Podcast. Thanks for listening. Join

517
00:26:11,200 --> 00:26:14,520
Speaker 1: us live weekdays from seven to ten am Eastern on

518
00:26:14,640 --> 00:26:18,879
Speaker 1: Bloomberg Radio and on Bloomberg Television each day from six

519
00:26:19,000 --> 00:26:23,840
Speaker 1: to nine am for insight from the best in economics, finance, investment,

520
00:26:24,000 --> 00:26:29,000
Speaker 1: and international relations. And subscribe to the Surveillance podcast on

521
00:26:29,119 --> 00:26:32,920
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on

522
00:26:33,040 --> 00:26:37,159
Speaker 1: the terminal. I'm Tom Keene, and this is Bloomberg