Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: Find Bloomberg Surveillance on Apple podcast, SoundCloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg terminal. We need to
Speaker 1: get from the data this week on the Job's report
Speaker 1: on Friday after November two, where a FED will decide
Speaker 1: Risksman joins us sound Chief Economists at JP Morgan Bruce.
Speaker 1: I usually go global, but I gotta go domestic at
Speaker 1: today the FED will decide how close are we to
Speaker 1: a FED that will decide what to do over the
Speaker 1: next number of meetings. Well, I think the basic message
Speaker 1: of the FED is telling us is that they're committed
Speaker 1: to creating a softer labor market, to pushing the unemployment rate,
Speaker 1: of that the picture on inflation has been concerning enough,
Speaker 1: and that they really want to gain control over credibility here.
Speaker 1: So unless we get a really big downward surprise here,
Speaker 1: I think we're not only on track for a seventy
Speaker 1: five basis point move on November two, but further big
Speaker 1: moves in the next couple of meetings after that. So
Speaker 1: what does your rate get out to? I mean the
Speaker 1: game here, the power game is three and three quarters
Speaker 1: for even up to five. How does that What does
Speaker 1: that mean for the Bank of England, What does it
Speaker 1: mean for the Bank of Japan? What does it mean
Speaker 1: for the Bank of Indonesia. Well, I think the FED
Speaker 1: as we would see it goes up to the mid
Speaker 1: fours and stopping at the mid fours in our forecast
Speaker 1: does require to see a material slowing and job growth
Speaker 1: over the next few months, which is in our forecast,
Speaker 1: but obviously we haven't seen yet. Um. I think the
Speaker 1: Bank of England story is really going to be dependent
Speaker 1: on how much the government gains credibility. We think they're
Speaker 1: on track for getting rates up at least a four percent,
Speaker 1: probably more as we go through the next few And
Speaker 1: as you're noting, there's a number of other central banks
Speaker 1: in em that have wanted to slow down, maybe even
Speaker 1: stop here. They've been using FX intervention, they've been using
Speaker 1: their rhetoric. But with the FED moving, with the volatility
Speaker 1: we're seeing in markets, uh, it's harder. And we've obviously
Speaker 1: been backing off of what we thought was some kind
Speaker 1: of moderation going on in the m central banks. Well, Bruce,
Speaker 1: that really raises the question of what point the dollar
Speaker 1: becomes the US is problem, not just the rest of
Speaker 1: the world's problem. What's the trigger point for the U
Speaker 1: s starting to respond for the US's sake, not just
Speaker 1: out of some charity for other nations that are really
Speaker 1: struggling in the face of the green back. So I
Speaker 1: think the big issue here is does the FED get
Speaker 1: the kind of controlled moderation in labor markets and growth
Speaker 1: does it see inflation come down? I think on the
Speaker 1: inflation story, the dollar rises, combining with what we think
Speaker 1: is a fairly significant fading in both commodity and supply
Speaker 1: chain pressures, we think we're set up for a pretty
Speaker 1: decent drop often goods pricing here in the next few months.
Speaker 1: We've already started to see it on energy um and
Speaker 1: I think the economy actually shows resilience here. It looks
Speaker 1: like it's tracking two to three percent growth in the
Speaker 1: current quarter. So I think you have attention that the
Speaker 1: FED will get a benefit here on inflation, I think
Speaker 1: in the next few months, but it may not get
Speaker 1: the job market, It may not get the growth number
Speaker 1: that gives it the comfort to stop, in which case
Speaker 1: the concern is is not so much that I think
Speaker 1: the dollar is itself a drag in the near term,
Speaker 1: but the Fed keeps going in a way that it
Speaker 1: doesn't pay enough attention to the lags, and therefore the
Speaker 1: economy slows much more sharply next year. Let's realize the
Speaker 1: risk here is looking at six twelve months down the road,
Speaker 1: not where we are right now. And this really speaks
Speaker 1: to the column that Paul Kruman wrote at the end
Speaker 1: of last week in the New York Times, where he
Speaker 1: basically said, is the Fed breaking too hard? The risks
Speaker 1: have moved to possibly yes? Do you agree with that view? Well,
Speaker 1: I think before we ask whether the Fed is breaking
Speaker 1: too hard, we want to ask is the Fed intending
Speaker 1: to break things? Because if you listen to Pal, if
Speaker 1: you listen to some other speakers, they seem to be
Speaker 1: preparing us for a significant slowing and in job growth
Speaker 1: and perhaps a meaningful rise in the unemployment rate. So
Speaker 1: I think, yeah, there is a risk that they moved
Speaker 1: too hard because they're I think, concerned about seeing results
Speaker 1: and not paying um the kind of attention to the
Speaker 1: lags in the monetary transmission mechanism. But there's also a
Speaker 1: concern that the FED is decided that it's it's much
Speaker 1: more appropriate to risk a recession here than keeping inflation
Speaker 1: unusually high. Person. None of this is in the textbooks.
Speaker 1: It's noted the Krugman textbooks, the man Cue textbooks of
Speaker 1: chasm in textbooks with the survey data. On Friday, I
Speaker 1: have a three month moving average of non farm payrolls
Speaker 1: of two D eighties six thousand. That's job formation. Is
Speaker 1: JP Morgan saying that will break that that will slip
Speaker 1: down to some appallingly three months moving average of say
Speaker 1: a hundred and sixty thousand. Well, U, we have a
Speaker 1: three forecast for three hundred thousand job games on Friday,
Speaker 1: so clearly that's a pretty strong number, even if it's
Speaker 1: a moderation. I think to get the FED to pause,
Speaker 1: you need job growth to slow to at least a
Speaker 1: hundred thousand UH a month over the next two or
Speaker 1: three months. UH. That I think is a harder one
Speaker 1: to to get confident. And that's that is what's based
Speaker 1: on our forecast. At the FED by the first quarter
Speaker 1: sees that and is ready to pause, and I think
Speaker 1: that's the key issue here, both in terms of getting
Speaker 1: the FED to pause and also the concern that if
Speaker 1: they don't see that and they keep moving, that they
Speaker 1: go further than they actually need to. Bruce, we gotta
Speaker 1: expand on that. That's a stunning number. I have a
Speaker 1: run rate back decades of a hundred and fifty thousand,
Speaker 1: and maybe you come up to two hundred thousand per
Speaker 1: month for non farm payrolls. Is a healthy and normal America.
Speaker 1: You're saying we've got to get down to one hundred thousand,
Speaker 1: one hundred thousand than another hundred thousand to make this
Speaker 1: FED blink. Well, yeah, I think if you want to
Speaker 1: have an economy in which the unemployment rate is moving
Speaker 1: in a controlled way to uh roughly four and a
Speaker 1: half percent unemployment rate, which is what I think the
Speaker 1: FED is telling us, you need job growth to be
Speaker 1: a soft A hundred thousand may not even do it,
Speaker 1: but I'd say a hundred thousand is probably the kind
Speaker 1: of number the FED needs to see to be comfortable
Speaker 1: to be thinking about pausing. Bruce. This goes to something
Speaker 1: that you flipped at earlier. Do you think that it's
Speaker 1: inappropriate for the FED reserved to be targeting the unemployment
Speaker 1: rate at a time when the jobs market has drop
Speaker 1: dramatically changed post pandemic. I think it's appropriate for the
Speaker 1: FED to be targeting a softening in the labor market.
Speaker 1: I think it's appropriate for the FED to be paying
Speaker 1: attention to what's happening in the inflation process, wages, salients,
Speaker 1: inflation expectations. But I think it's also appropriate for the
Speaker 1: FED to be forward looking, which is to recognize that
Speaker 1: there's lags in the process, that they're getting a restrictive
Speaker 1: policy in place. And the difficult call is do you
Speaker 1: stop on the tightening before you've gotten everything you want
Speaker 1: to see in the data. That's really the tough call
Speaker 1: that they're going to have to make here. At some point,
Speaker 1: I think somewhere in the range of four or foreign
Speaker 1: a percent seems perfectly reasonable to be pausing, but they
Speaker 1: may not have the labor market outcomes at that time
Speaker 1: that makes them comfortable to do so. Bruce, this is
Speaker 1: the question, isn't it. I think you just framed it perfectly.
Speaker 1: How can you be forward looking if you're chasing the
Speaker 1: lanking and indicator exactly and you're also being uncomfortable by
Speaker 1: the fact that inflation is persistently. I that you're worried
Speaker 1: about salients in terms of the lagged inflation affecting price
Speaker 1: and weight setting. So it's really I think important to
Speaker 1: be forward looking. But it's really hard to be forward
Speaker 1: looking here. Chris Cassman and jakep Mark and Bruce. Wonderful
Speaker 1: to hear from you, sir. Thank you as always. I
Speaker 1: do you think the return assumptions need to shift lower?
Speaker 1: Maybe they're shifting right now. Let's do that right now
Speaker 1: with Kelvisin of RBC Capital Markets. Laurie is it's small
Speaker 1: caps time? Hi? Thanks for having me, Tom, And I
Speaker 1: think it is. If you look at small cap relative
Speaker 1: to large cap. Just pull up the rt Y against
Speaker 1: the SPX on your Bloomberg. We've been in sort of
Speaker 1: a trading range all year on the relative trade, and
Speaker 1: if you look at small caps, we're basically at historic
Speaker 1: valuations on both an absolute and relative valuation. We've already
Speaker 1: priced in a big spike and jobless claims, and typically
Speaker 1: you want to buy small caps when the unemployment rate
Speaker 1: starts to tick up, so you want to keep that
Speaker 1: in mind as we look ahead to Friday. But I
Speaker 1: will just say this, um, small caps have really been
Speaker 1: orphaned for quite some times. They are more domestic, and
Speaker 1: we are hearing a lot of interest UM in small caps,
Speaker 1: even from people who are very barish on the market overall.
Speaker 1: UM So we're overweight and we feel very good about
Speaker 1: that call. In the turmoil we're in, including low g
Speaker 1: d P, will there be transactions and combinations that combines
Speaker 1: small ups into mid caps. It's interesting time. I mean,
Speaker 1: we have been combing the transcripts among the big cap
Speaker 1: companies for commentary about it in and A and we're
Speaker 1: not seeing it pick up yet. So I wouldn't say
Speaker 1: it's necessarily eminent, But I do think that when you're
Speaker 1: in a sluggish growth environment, and I think that's the
Speaker 1: price we have to pay for a short, shallow recession,
Speaker 1: if indeed that's what we end up getting, I do
Speaker 1: think companies will try to go out and buy growth
Speaker 1: UM And you know, we we find that a lot
Speaker 1: of small cap companies are also much better run than
Speaker 1: they were in the past, much cleaner ballot keep, much
Speaker 1: higher quality management teams. UM. So we think the asset
Speaker 1: base is more attractive than it may have been in
Speaker 1: past cycles as well. Floor is overweighting small caps a
Speaker 1: fight to lose less or actually to get returns that
Speaker 1: are bigger than some of the negative returns that we're
Speaker 1: seeing across the board and brought indexes. I think it's
Speaker 1: a great question, Lisa, and I think that depends on
Speaker 1: your time horizon. In the short term, as stock search
Speaker 1: for a bottom. I do think it's unlikely that small
Speaker 1: caps will start going off while everything else is still
Speaker 1: going down. Um, So it may simply just be you
Speaker 1: lose less on the on the way down to kind
Speaker 1: of find that absolute bottom. But at the same time,
Speaker 1: I will tell you, Lisa, when you talk to people
Speaker 1: who have done small cap for a very long time
Speaker 1: and you go back and look at the history, the
Speaker 1: pivots back into small cap tend to be pretty sharp.
Speaker 1: So I do think it's an area where if you
Speaker 1: really kind of wait around and try to pick the
Speaker 1: bottom in the market, you're gonna miss the Turney. You
Speaker 1: do tend to make a lot of that outperformance in
Speaker 1: those early days in the trade. Right now, we're looking
Speaker 1: at eight five and clothes on Friday for the SMP
Speaker 1: five hundred. Your target for your end is forty two hundred.
Speaker 1: What's the trigger? What's the pivot point that gets us
Speaker 1: up there is it just the bear market rally that
Speaker 1: we heard about from a number of analysts. I think
Speaker 1: that's one thing you can look at. I mean, we
Speaker 1: actually found if you look at the SMP five hundred
Speaker 1: this year in two, it's got about a seventy two
Speaker 1: percent correlation with house stocks for trading back in two
Speaker 1: thousand two, which was another period of kind of painful
Speaker 1: normalization after a big market shock, an initial rally. And
Speaker 1: so if you sort of go through that playbook and
Speaker 1: there was a fierce four Q rally and then you
Speaker 1: gave most of it back in the or s quarter,
Speaker 1: that seems like a plausible way for things to turn
Speaker 1: out this time around as well. I think also, Lisa,
Speaker 1: we're about a month out from the midterm elections, and
Speaker 1: go back to the summer, I started really getting an
Speaker 1: earful from a lot of investors about how that would
Speaker 1: be a potentially positive catalyst for markets. So we do
Speaker 1: think that's something on investors radar. And if you look
Speaker 1: at the generic congressional ballot, after you know, several weeks
Speaker 1: of seeing the pulling data kind of shift back in
Speaker 1: democrats favor, we actually saw the Republicans pull ahead of
Speaker 1: Democrats in the congressional generic congressional ballot data last week,
Speaker 1: So things are starting to shift a little bit the
Speaker 1: more market friendly way. In the latest date of their all,
Speaker 1: I just wanted to squeeze this in Nike, FedEx, Apple,
Speaker 1: Tesla missing this morning. What are you learning from corporations
Speaker 1: about how quickly this downtown is coming around? Well, look,
Speaker 1: I think what we are learning, John, is that we
Speaker 1: are starting to see some companies rip off the our
Speaker 1: needs band aid. And if you go back to the summer,
Speaker 1: that is something investors were telling me they really needed
Speaker 1: to see half and to get comfortable with buying markets.
Speaker 1: People said, you know, we want to buy stocks around
Speaker 1: fifteen times PE the market around fifteen sixteen times P.
Speaker 1: But we just need a little bit of certainty on
Speaker 1: that e. We need to see the numbers come down.
Speaker 1: You know, we'll see if the early reporters turn out
Speaker 1: to be a harbinger of what's to come in the
Speaker 1: actual reporting season. Um, but I do think, you know,
Speaker 1: kind of getting those learnings expectations down is something that
Speaker 1: we really need to see. Hi, Luri, thank you all
Speaker 1: some mental whites. Let me kind of saying to that
Speaker 1: of MBC Capital markets. What an interesting day and it
Speaker 1: is about the greater economies of the world. One of
Speaker 1: the great facts is Madrid as the best museum in
Speaker 1: the world. It is called the Prado and it is
Speaker 1: a must visit and that speaks to the healing of
Speaker 1: tourism in Spain. Spain is booming, like Paris, like London.
Speaker 1: It's been a very strong story, but with it too
Speaker 1: and up to ten inflation. Maria today on now with
Speaker 1: the Deputy Prime Minister of Spain, Tom, thank you so much,
Speaker 1: and we are joined of course by Spain's fine as
Speaker 1: Minister and Deputy Prime Minister and Aia Colvino Wan. They
Speaker 1: ask God morning, I have a lot of questions about Europe,
Speaker 1: but first of all I have to get your thoughts
Speaker 1: on what's going on in the UK, because today we've
Speaker 1: seen a huge you term from the UK government. Markets
Speaker 1: really flipping on this country. I don't want to create trouble,
Speaker 1: but when you look at that country, isn't a message
Speaker 1: in terms of what not to do going into the winter.
Speaker 1: Perhaps for you, I think it's very good news that
Speaker 1: they back tracked, in particular when it comes to the
Speaker 1: reduction of the taxes on the wealthiest parts of society,
Speaker 1: because it really shows that it's not only a matter
Speaker 1: of financial stability, it's also a matter of fairness. We're
Speaker 1: all confronted with the challenge how to contain prices, how
Speaker 1: to support our economies, how to fund our public services,
Speaker 1: and we need to ensure that we have fiscal sustainability,
Speaker 1: financial stability, but also a fair distribution of the impact
Speaker 1: of the world, so that means essentially tax the rich
Speaker 1: more to some extent. That's what all international institutions are recommending,
Speaker 1: and this is what the Spanish government has been defend
Speaker 1: think when it comes to the international framework, not not
Speaker 1: specifically or not only this dimensions, but generally we need
Speaker 1: a fair tax system. We need to avoid a race
Speaker 1: to the bottom, which at the end of the day
Speaker 1: is making all of us poorer when we need stronger
Speaker 1: states to also face the blackmail coming from Russia. And
Speaker 1: that's a message perhaps for listra Us. But I don't
Speaker 1: want to create trouble intentionally, perhaps between the e N
Speaker 1: and the UK. So let's talk about Europe. It seems
Speaker 1: to me there's forces that are pulling from different ways.
Speaker 1: You have demand instruction which seems to be working at
Speaker 1: least the message is resonated with Europeans. The storage is up.
Speaker 1: You have an escalation in the war and an escalation
Speaker 1: in the energy war in your view, with the outlook
Speaker 1: for Europe going into the winter, we're challenging at a
Speaker 1: very challenging moment. No, because the war is entering a
Speaker 1: new phase. So it seems we also see that not
Speaker 1: stream supply was cut first of September. The positive element
Speaker 1: here is that prices are not continuing to escalate as
Speaker 1: they did in past months when Putting was using the
Speaker 1: energy blackmail. Also, I think that actually what we see
Speaker 1: now is that the storage level is appropriate, that Europe
Speaker 1: is having a stronger voice when it comes to international
Speaker 1: energy markets, and we should continue in that direction with
Speaker 1: a response which is united determined and also based on
Speaker 1: solidarity between the different member states. When you see solidarity,
Speaker 1: last week Germany came up with the two hundred billion
Speaker 1: your package to save their households and companies. Is that
Speaker 1: solidarity for you? Well, I understand that each country is
Speaker 1: subject to a different kind of challenge now, I mean
Speaker 1: the increase of energy prices hit Spain maybe before other
Speaker 1: countries because of the flexibility of our electricity markets, but
Speaker 1: now we see that inflation is already going down in Spain,
Speaker 1: whereas we see in Germany that the situation is very different.
Speaker 1: They have a higher dependence on Russian gas and oil,
Speaker 1: and so we have to be respectful of the different
Speaker 1: specific the cities of the different countries and ensure that
Speaker 1: our framework and our rules are fit for purpose in
Speaker 1: the sense of allowing for this flexibility in terms of
Speaker 1: the response at the national level, but reinforcing the European
Speaker 1: level instruments so that we ensure fair treatment of all
Speaker 1: citizens and companies throughout the UN were from that messages
Speaker 1: a final question. On Wednesday, the Spanish Prime Minister pro
Speaker 1: Sanchez will meet with the German chancellor. Is he going
Speaker 1: to convince the Germans to drop their opposition to this
Speaker 1: price cap on gas? I hope so we'll definitely Spain well.
Speaker 1: For the last year, Spain has been pushing for a
Speaker 1: European response. We've been pushing for price cups. We've been
Speaker 1: pushing for a joint purchases h an overhaul of the
Speaker 1: European legislation. We managed to have a very exception which
Speaker 1: is allowing us to have a gas price cup between
Speaker 1: Spain and in Spain and Portugal, and this is already
Speaker 1: saving European Spanish citizens and companies more than two point
Speaker 1: five billion euros, you know, and it's proving too allow
Speaker 1: us to have lower prices in other countries. It has
Speaker 1: even the coupled the wholesale gas price from the mediterrane
Speaker 1: of the bery and gas from the t TF reference,
Speaker 1: which shows that we can act and we can change
Speaker 1: things if we act together. So I am sure this
Speaker 1: will be discussed in the summit between Spain and Germany
Speaker 1: on Wednesday, and I hope we took convince Germany to
Speaker 1: move in this direction. And it's interesting how the diplomatic
Speaker 1: ties are changing between Madrid and Berlin, perhaps growing close
Speaker 1: over the past three weeks, in particular when it comes
Speaker 1: to potential gas suppliers coming in from Spain. But you
Speaker 1: also make it clear that has to go both ways.
Speaker 1: Nada Calvinia, thank you so much for joining us on
Speaker 1: bloomber TV this morning, and we hope to see very soon,
Speaker 1: of course, in a few in a few hours time. Yes, yes, indeed,
Speaker 1: thank you, radiant, thank you so much, and guys back
Speaker 1: to you, Maria, thank you one of the best marit
Speaker 1: today there alongside Nadia Calvin or Spain's Deputy Deputy Prime Minister.
Speaker 1: John Gets from Birmingham. Is Bloomberg's Lizzie Burden out of
Speaker 1: the UK morning, Lizzie, Good morning John. While I'm out
Speaker 1: Conservative Party conference and I'm sat here with Chloe Smith,
Speaker 1: the Secretary of State for Work and Pensions. Chloe, thank
Speaker 1: you so much for making time for me. It's a
Speaker 1: wild morning here in Birmingham. This budget that the Chancellor
Speaker 1: had announced was described as reverse robin Hood. At the
Speaker 1: one end, you were cutting the top rate of income
Speaker 1: tax that has now been reversed. But at the other end,
Speaker 1: the Chancellor said he'd cut the benefits of people who
Speaker 1: are not trying hard enough to get a job. Are
Speaker 1: you not going to you turn on that as well
Speaker 1: when it's equally politically toxic. I think the key point
Speaker 1: about the growth package that the Chancellor set out is
Speaker 1: that it is all about getting more people into jobs
Speaker 1: and getting higher wages. And in fact you can see
Speaker 1: that around us as a slogan here at the conference
Speaker 1: is painted on the stairs just over there that we
Speaker 1: want to be able to deliver more jobs and higher wages. Now,
Speaker 1: the majority of the growth package set out was to
Speaker 1: be able to do that, for example, including putting money
Speaker 1: straight back into people's pockets through the adjustment to the
Speaker 1: lower rate of income tax and of course that builds
Speaker 1: on the cost of living package and the energy price guarantee.
Speaker 1: Now my role is then to be able to help
Speaker 1: people into those jobs that growth package will create, and
Speaker 1: that to me is a real priority. So to pay
Speaker 1: for all your tax cuts, to have any credibility and markets,
Speaker 1: you're going to have to cut spending. The one thing
Speaker 1: that the Prime Minister promised yesterday was that she was
Speaker 1: going to raise pensions in line with inflation. We're on
Speaker 1: a cost of living crisis. Has the Chancellor asked you
Speaker 1: to your cut cutting benefits? The Prime Minister was right
Speaker 1: to talk about the triple or on pensions. That's been
Speaker 1: a commitment of ours for a while, and that's been
Speaker 1: a clear public commitment already. Now, naturally there is then
Speaker 1: also the decision to be taken about benefits operating. This
Speaker 1: is one for me to take in my role. I
Speaker 1: can't tell you here and now what that will be
Speaker 1: and what the data that goes inside it will be,
Speaker 1: because I have to wait for that data to come
Speaker 1: to me. Now, the key principle though, that I want
Speaker 1: to take in approaching that decision is how we can
Speaker 1: best protect the most vulnerable in our society. And for me,
Speaker 1: this builds on those elements of the cost of living
Speaker 1: support that we have already been doing and delivering. My
Speaker 1: department has been making payments to people and they'll be
Speaker 1: more coming out very shortly that are supporting people at
Speaker 1: that time with real needs. Why is it fair to
Speaker 1: guarantee pensions not benefits in a cost of living crisis?
Speaker 1: People need to plan now. And one of the other
Speaker 1: principles that I really want to look at here is
Speaker 1: how we protect those who can't perhaps work to raise
Speaker 1: their own earnings. So for example, that would usually include pensioners,
Speaker 1: and it may well include others as well. These are
Speaker 1: the principles that I'm thinking about very carefully as part
Speaker 1: of that decision. But let me also say this, as
Speaker 1: a party, we are about helping more people into work.
Speaker 1: We shouldn't be writing people often saying that they can't work.
Speaker 1: We should have been instead be looking at what people
Speaker 1: can do rather than what they cannot do. So that's
Speaker 1: what the Growth Package is all about, and that's the
Speaker 1: golden thread that you see going through the other rest
Speaker 1: of the work of my department, helping people into work
Speaker 1: and ensuring that there is an incentive to work. Okay,
Speaker 1: so you mentioned pensions. Last week, the Bank of England
Speaker 1: had to step in to bail out the pensions industry
Speaker 1: from a systemic crash that was triggered by your government.
Speaker 1: Are you having emergency meetings with the pensions regulator and
Speaker 1: asset managers and if so, what proposals are being discussed. Well,
Speaker 1: colleagues are having the right meetings of course, with the
Speaker 1: Pensions Regulated, with the Treasury and across my department as well.
Speaker 1: I can't give you further details them that, but I'm
Speaker 1: glad that the Bank of England was able to take
Speaker 1: the action that they did last week, and naturally we
Speaker 1: are keeping a very close eye on this situation because
Speaker 1: we want there to be a thriving pension industry in
Speaker 1: this country. That is an essential part of supporting people
Speaker 1: in their retirement. Clarie Smith, Secretary of State for the
Speaker 1: Department of Work and Pensions, thank you very much for
Speaker 1: joining me. John. The question remains, then, what happens when
Speaker 1: the Bank of England's rescue package ends on October the fourteenth,
Speaker 1: unclear if we're going to have the same issues for
Speaker 1: l d Eyes. Hey, Lizzie, thank you. Looking forward to
Speaker 1: catching up with you through the next camp of days,
Speaker 1: Lizzie Burton there at the United Kingdom. Let's learn something
Speaker 1: from dance setting, Dan, fantastic year, notorious, the Barrish through
Speaker 1: much of two it's worked out almost perfectly. We're all
Speaker 1: wandering now for you. What are the preconditions that you
Speaker 1: want to see the checkbox check check check check check
Speaker 1: to add equity exposure. Sure, and good morning. By the way,
Speaker 1: it's great to be in studio altogether, having the band
Speaker 1: here back together. It's been two years, Dan, it's been
Speaker 1: too long. I'll inch my chairs to your question. You know, look,
Speaker 1: we've done a lot of damage obviously in the third
Speaker 1: quarter in last month, but notably we're still trading around
Speaker 1: the June lows. But notably all of that work has
Speaker 1: been rates. Right, we haven't seen the earnings reflected yet,
Speaker 1: and so talking about FED speak, I think investors want
Speaker 1: to hear management speak really at this point and really
Speaker 1: kind of throw in more of a towel. So number
Speaker 1: one is earnings. Number two is p M I s.
Speaker 1: We haven't seen in that contraction yet UH. And number
Speaker 1: three is jobs, and we have a big update coming
Speaker 1: this week, but we just haven't seen that rise in
Speaker 1: the unemployment just yet. I've been waiting, waiting, waiting for
Speaker 1: a research note like you've got, which is real simple.
Speaker 1: Look at dividend growers. How did dividend growth change? How
Speaker 1: does dividend growth change given dampened economy, dampened revenue growth
Speaker 1: and then down the income statement, How does that filter
Speaker 1: into the dividend growth decision? Well, when you look at
Speaker 1: companies M and A and and deals have been really
Speaker 1: dried up this year, So I think you look at
Speaker 1: companies being more defensive. BIBAS has obviously been a huge
Speaker 1: use of capital this year, and dividends continues to be
Speaker 1: a huge use of capital. And and UH investors are
Speaker 1: rewarding dividend growth wildly this year. How many basis points
Speaker 1: pick up do you have there with dividend growth versus
Speaker 1: the riff raff that's out there. I mean, when you
Speaker 1: look at kind of income styles, dividend growth styles, they're
Speaker 1: down kind of mid single digit, high single digit this
Speaker 1: year versus the SMP down plus. So Dan said something
Speaker 1: earlier at the start of the show that our bonds
Speaker 1: going to and John asked him, our bond is going
Speaker 1: to react the way that they normally do in a
Speaker 1: downturn where they gain value. People pile in. Tom was
Speaker 1: saying he doesn't think so. A lot of people agree
Speaker 1: with him, do you. Inflation is still stubbornly high, and
Speaker 1: so if we have kind of a plateau ng or
Speaker 1: a moderation inflation, I think bonds could certainly act better.
Speaker 1: But at least it's your point. That was the case
Speaker 1: earlier this year. The first four and a half months
Speaker 1: of this year was all about stag inflation, and so
Speaker 1: you saw both stocks and bonds down together. It got
Speaker 1: a little bit better over the summer. Then, as you've
Speaker 1: seen again, bonds have sold off quite rapidly. So I
Speaker 1: think around the four percent level on the tenure, there
Speaker 1: is more value in bonds here to do their job
Speaker 1: in an in evolvable environment. Wilson, your colleague a good friend.
Speaker 1: In the last couple of weeks, I'm austin whether you
Speaker 1: guys start to get uncomfortable when everyone starts to share
Speaker 1: your few, when you start to see some of the
Speaker 1: big bulls on Wolf Street capitulate and Marko Kanovich came
Speaker 1: about that close on Friday. Do you feel uncomfortable when
Speaker 1: everyone starts getting comfortable with your way of thinking? You do,
Speaker 1: but your thesis is still in check. Right, So when
Speaker 1: you think about the call Mike made, and we joked
Speaker 1: a few months ago about that lonely Island in every
Speaker 1: one's on board, it's a flow, you know what. To
Speaker 1: your point, Jonathan, you look at the cell side, you
Speaker 1: look at the byside, mutual fun cash levels, hedge, fun
Speaker 1: net exposures, and we have a particular vantage because Morgan
Speaker 1: Stanley is the biggest prime broker out there. So everyone
Speaker 1: is inching. We're here in studio, you can power play.
Speaker 1: But to Jonathan's point, we are growing a little bit
Speaker 1: more nervous about that consensus trade. But that doesn't think
Speaker 1: that doesn't mean things can't go lower. Still, swats cut
Speaker 1: this morning. I think city did as well, Jonathan Gollip
Speaker 1: Thoma has gone to fifty for year end. Down from
Speaker 1: the facts. Change I change once had gone on board
Speaker 1: that that island is very crowded right now. You were
Speaker 1: the first one there, though, Dan, it's gonna see it.
Speaker 1: That's kind of snailed it. In the supportly Allen Zentner
Speaker 1: was transitory and on a dime she switched shifted to
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