1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Abramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:33,280 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. We're 7 00:00:33,320 --> 00:00:37,000 Speaker 1: broadcasting from the Bloomberg Intractor Broker's studios. I'm Pim Fox 8 00:00:37,040 --> 00:00:39,800 Speaker 1: along with Lisa Abramowitz. Our guest now is Phil Orlando. 9 00:00:39,920 --> 00:00:43,519 Speaker 1: He is the chief equity market strategist at Federated Investors. 10 00:00:43,960 --> 00:00:46,440 Speaker 1: Thank you very much for being here, Phil, always a pleasure. 11 00:00:46,520 --> 00:00:48,840 Speaker 1: Thanks for having me back. Happy New Year, belated, Happy 12 00:00:48,840 --> 00:00:50,960 Speaker 1: New Year to you. Are we in a trade war? 13 00:00:52,520 --> 00:00:55,640 Speaker 1: We've been in a trade war for a while US 14 00:00:55,760 --> 00:01:00,480 Speaker 1: China situation, yes, yes, but but one you know, I 15 00:01:00,480 --> 00:01:04,800 Speaker 1: don't know if trade war is the right word. Negotiations skirmish. 16 00:01:04,880 --> 00:01:06,800 Speaker 1: I mean, we we think, we think there's a light 17 00:01:06,840 --> 00:01:08,440 Speaker 1: at the end of the tunnel, and we're hoping that 18 00:01:08,560 --> 00:01:11,640 Speaker 1: light is not the headlight of an oncoming train. And 19 00:01:11,640 --> 00:01:13,839 Speaker 1: and we think, over the course of the next two months, 20 00:01:13,840 --> 00:01:16,759 Speaker 1: we're going to get some you know, some visibility on this. 21 00:01:17,959 --> 00:01:21,640 Speaker 1: How would sorry, but how would an investor actually position 22 00:01:21,720 --> 00:01:25,560 Speaker 1: a portfolio until they find out whether we're going to 23 00:01:25,640 --> 00:01:28,240 Speaker 1: get an increase in tariffs, whether it's going to cost 24 00:01:28,319 --> 00:01:31,679 Speaker 1: more to make products anywhere that that that's a great question. 25 00:01:31,920 --> 00:01:35,119 Speaker 1: So what what we've got, in our opinion, has been 26 00:01:35,160 --> 00:01:38,160 Speaker 1: this elaborate kabuki dance that's been going on for a while, 27 00:01:38,640 --> 00:01:41,680 Speaker 1: you know, threatening tariffs and and you know this and 28 00:01:41,720 --> 00:01:44,959 Speaker 1: that in order to achieve the objective. Now, what is 29 00:01:44,959 --> 00:01:48,400 Speaker 1: the objective? So you look at the situation from a 30 00:01:48,400 --> 00:01:51,920 Speaker 1: financial standpoint, the United States is running six hundred billion 31 00:01:51,960 --> 00:01:55,600 Speaker 1: dollar balance of trade deficit against the world and and China, 32 00:01:55,960 --> 00:01:59,720 Speaker 1: uh slightly more than four billion. Is is is the 33 00:02:00,120 --> 00:02:03,640 Speaker 1: just defender. That's the reason why why the administration, i think, 34 00:02:03,680 --> 00:02:07,800 Speaker 1: has focused their attention on China. Now, what these discussions, 35 00:02:07,800 --> 00:02:11,560 Speaker 1: negotiations where we hope they end up by this much 36 00:02:11,560 --> 00:02:15,799 Speaker 1: first deadline is twofold number one. China agrees to narrow 37 00:02:15,840 --> 00:02:18,040 Speaker 1: that deficit, cut it in half, let's say, to something 38 00:02:18,040 --> 00:02:20,680 Speaker 1: in the two billion dollar neighborhood by buying more of 39 00:02:20,680 --> 00:02:24,959 Speaker 1: our stuff that they need, Agricultural products like soybean and corn, 40 00:02:25,400 --> 00:02:30,040 Speaker 1: uh energy, aerospace and defense, electronics, automobiles, things like that. 41 00:02:30,440 --> 00:02:35,280 Speaker 1: The throne of your issue here is the theft of 42 00:02:35,560 --> 00:02:38,880 Speaker 1: intellectual property and and and that's that's where I think 43 00:02:38,880 --> 00:02:42,520 Speaker 1: this thing gets stickier. Now. Our view is that this 44 00:02:42,720 --> 00:02:46,000 Speaker 1: ends well, that the United States is under pressure, the 45 00:02:46,120 --> 00:02:49,600 Speaker 1: Chinese economy and financial markets are under pressure. The leaders 46 00:02:49,680 --> 00:02:52,040 Speaker 1: want to come to a deal, and so that's our 47 00:02:52,040 --> 00:02:56,600 Speaker 1: base case. Now. Part of the correction that we saw 48 00:02:56,639 --> 00:02:58,680 Speaker 1: in stocks over the last four months of the year 49 00:02:59,160 --> 00:03:02,440 Speaker 1: was in part based upon the markets perception that this 50 00:03:02,600 --> 00:03:06,600 Speaker 1: ends badly and that we're looking at a recession in 51 00:03:06,639 --> 00:03:10,160 Speaker 1: the US, maybe a recession in China, maybe a global recession. 52 00:03:11,240 --> 00:03:15,040 Speaker 1: Based upon our analysis that that's not the right conclusion. 53 00:03:15,680 --> 00:03:20,080 Speaker 1: So we're actually pretty excited with the SNP at right 54 00:03:20,120 --> 00:03:23,480 Speaker 1: around Christmas. We we've had this nice ten percent rally 55 00:03:23,520 --> 00:03:25,960 Speaker 1: over the course of the last you know, couple of weeks. 56 00:03:26,200 --> 00:03:29,840 Speaker 1: We think we're running into some resistance here. We can absolutely, 57 00:03:30,400 --> 00:03:33,239 Speaker 1: in our view, see a retest over the course of 58 00:03:33,280 --> 00:03:35,640 Speaker 1: the next couple of months. But there are these three 59 00:03:35,720 --> 00:03:39,880 Speaker 1: critical signposts in March, the trade thing with China being 60 00:03:39,880 --> 00:03:41,840 Speaker 1: the first of them. The f O M c meeting 61 00:03:41,840 --> 00:03:43,560 Speaker 1: in the middle of the month, and then the bregsit 62 00:03:43,600 --> 00:03:45,760 Speaker 1: deadline at the end of the month. We we think 63 00:03:45,800 --> 00:03:48,880 Speaker 1: we get some clarity, some positive clarity, and all three 64 00:03:48,880 --> 00:03:51,920 Speaker 1: of those issues over the course of the month of March. 65 00:03:52,200 --> 00:03:54,880 Speaker 1: So there's volatility that we're seeing in the first quarter. 66 00:03:55,680 --> 00:03:59,880 Speaker 1: We think leads to a much better environment in the 67 00:04:00,120 --> 00:04:02,200 Speaker 1: back nine months of the year. So we think the 68 00:04:02,240 --> 00:04:04,400 Speaker 1: market's gonna end up, you know, in pretty good shape. 69 00:04:04,600 --> 00:04:08,480 Speaker 1: People look at our forecasts and say, you guys are lunatics, 70 00:04:09,480 --> 00:04:12,000 Speaker 1: but you know, look, if if those three things fall 71 00:04:12,040 --> 00:04:14,160 Speaker 1: into place, and we think they will, we think stocks 72 00:04:14,160 --> 00:04:15,839 Speaker 1: are gonna be a lot higher twelve months rom Now, 73 00:04:16,080 --> 00:04:19,320 Speaker 1: so let's talk specifics here, because we did just report 74 00:04:19,360 --> 00:04:21,280 Speaker 1: that black Rock is playing to cut three of its 75 00:04:21,279 --> 00:04:23,760 Speaker 1: global workforce. It comes a day after State Streets said 76 00:04:23,800 --> 00:04:26,240 Speaker 1: that they were going to be cutting a significant portion 77 00:04:26,360 --> 00:04:30,520 Speaker 1: of their workforce. We've seen financials on the asset management 78 00:04:30,520 --> 00:04:33,479 Speaker 1: side as well as on the banking side really beaten up. 79 00:04:33,520 --> 00:04:37,680 Speaker 1: Are you seeing value there? You know, Lisa, I've been 80 00:04:37,720 --> 00:04:41,320 Speaker 1: doing this now for thirty nine years, and I've noticed 81 00:04:41,360 --> 00:04:45,360 Speaker 1: the trend that that when the asset managers do these things, 82 00:04:46,000 --> 00:04:49,640 Speaker 1: hires or fires, They usually do them at exactly the 83 00:04:49,680 --> 00:04:52,520 Speaker 1: wrong time, at the inflection point in the cycle when 84 00:04:52,520 --> 00:04:55,360 Speaker 1: when they're hiring people, it's usually we're about to get 85 00:04:55,360 --> 00:04:57,720 Speaker 1: a big blow off on a bull rally, And when 86 00:04:57,760 --> 00:04:59,960 Speaker 1: they're firing people is usually at the bottom of the psyche, 87 00:05:00,000 --> 00:05:02,679 Speaker 1: when we're about to take off our best gas. Based 88 00:05:02,720 --> 00:05:04,840 Speaker 1: upon what we just talked about with the China question, 89 00:05:05,320 --> 00:05:06,760 Speaker 1: is that stocks are going to be in a lot 90 00:05:06,760 --> 00:05:09,359 Speaker 1: better shape twelve months from now than they are today. 91 00:05:09,480 --> 00:05:11,680 Speaker 1: Uh and and if if if a couple of the 92 00:05:11,720 --> 00:05:14,719 Speaker 1: big bell weathers are laying off a couple of percent 93 00:05:14,760 --> 00:05:17,560 Speaker 1: of their workforce, that gives me greater confidence that we're 94 00:05:17,560 --> 00:05:19,559 Speaker 1: at a we're an inflection point ready to go higher. 95 00:05:19,560 --> 00:05:22,760 Speaker 1: Although in fairness, the asset management industry is facing a 96 00:05:22,800 --> 00:05:27,040 Speaker 1: pretty fundamental shift toward passive management and towards reduced costs 97 00:05:27,080 --> 00:05:29,440 Speaker 1: and a lot of other things that are causing them 98 00:05:29,480 --> 00:05:32,520 Speaker 1: to want to reduce headwinds over well. But and that's 99 00:05:32,520 --> 00:05:34,760 Speaker 1: an interesting point that and and if we were to 100 00:05:34,800 --> 00:05:37,840 Speaker 1: have this conversation two years ago, I would agree with 101 00:05:37,880 --> 00:05:40,400 Speaker 1: you wholeheartedly. But if you look at the trends over 102 00:05:40,440 --> 00:05:43,960 Speaker 1: the last couple of years, um the active has actually 103 00:05:44,000 --> 00:05:47,120 Speaker 1: been beating passive from performance standpoint over the last couple 104 00:05:47,160 --> 00:05:49,760 Speaker 1: of years, let's be honest. And and we're starting to 105 00:05:49,800 --> 00:05:53,840 Speaker 1: see that shift back over to active management in terms 106 00:05:53,839 --> 00:05:56,760 Speaker 1: of asset flows versus passive because investors are looking at 107 00:05:56,800 --> 00:05:58,640 Speaker 1: their statements the last couple of years and saying, wait 108 00:05:58,640 --> 00:06:01,360 Speaker 1: a second, all right, I'm paying fifty basis points less 109 00:06:01,360 --> 00:06:03,680 Speaker 1: on fees, but I just gave up five hundred basis 110 00:06:03,720 --> 00:06:07,840 Speaker 1: points in relative performance. Maybe maybe there's a place where 111 00:06:07,920 --> 00:06:11,880 Speaker 1: where both of these strategies can coexist. Phill Orlando, you 112 00:06:11,920 --> 00:06:14,359 Speaker 1: still have a thirty one hundred price target for the 113 00:06:14,480 --> 00:06:17,800 Speaker 1: SMP five hundred twelve months out. Yes, we twelve months out. Okay, 114 00:06:17,800 --> 00:06:21,920 Speaker 1: so we're twenty three let's say right now, Well you're 115 00:06:21,960 --> 00:06:27,640 Speaker 1: you're just under all right, we bottom to right around Christmas. 116 00:06:28,040 --> 00:06:30,560 Speaker 1: What I'm telling you is we just rallied ten percent 117 00:06:30,800 --> 00:06:33,920 Speaker 1: up to what we think as a resistance level of hundred. 118 00:06:34,279 --> 00:06:37,320 Speaker 1: I think over the next two months we could absolutely 119 00:06:37,360 --> 00:06:40,840 Speaker 1: retrace that level. Let's call it back in that. I 120 00:06:40,839 --> 00:06:44,520 Speaker 1: think we're gonna retestred because of concern about BREGSIT and 121 00:06:44,600 --> 00:06:47,560 Speaker 1: the FED and China and the government shut down and 122 00:06:47,560 --> 00:06:49,960 Speaker 1: and and the stuff that Lesa just talked about with 123 00:06:50,040 --> 00:06:52,360 Speaker 1: the layoffs and whatever, is the labor market at at 124 00:06:52,440 --> 00:06:55,120 Speaker 1: risk um And then I think is as we get 125 00:06:55,160 --> 00:06:58,200 Speaker 1: through this first quarter and in my opinion, get some 126 00:06:58,240 --> 00:07:00,680 Speaker 1: positive clarity on some of these issues that I think 127 00:07:00,720 --> 00:07:05,040 Speaker 1: investors say, well, wait a second, we just contracted multiples 128 00:07:05,040 --> 00:07:08,120 Speaker 1: from eighteen times earnings to fourteen times earnings because we 129 00:07:08,160 --> 00:07:10,320 Speaker 1: thought the economy was about to roll in a recession. 130 00:07:10,600 --> 00:07:14,120 Speaker 1: That's not happening. Inflations two percent, Treasury yields are at 131 00:07:14,160 --> 00:07:17,600 Speaker 1: two point seven percent. We need to get multiples back 132 00:07:17,640 --> 00:07:21,080 Speaker 1: to eighteen times earnings, and that multiple expansion with a 133 00:07:21,160 --> 00:07:23,520 Speaker 1: little bit of earnings gain maybe five or six percent 134 00:07:23,640 --> 00:07:25,920 Speaker 1: this year, is going to give us a nice rally 135 00:07:25,920 --> 00:07:27,440 Speaker 1: in the last nine months of the year. So just 136 00:07:27,480 --> 00:07:29,800 Speaker 1: in thirty seconds here, what were you buying with most 137 00:07:29,800 --> 00:07:32,960 Speaker 1: conviction in the December sell off? I think energy and 138 00:07:33,000 --> 00:07:36,080 Speaker 1: emerging markets are the things that look most interesting to 139 00:07:36,240 --> 00:07:38,400 Speaker 1: us here over the last couple of weeks. Energy stocks 140 00:07:38,400 --> 00:07:42,920 Speaker 1: and emerging market stocks in any particular nations. Uh No, 141 00:07:43,080 --> 00:07:47,240 Speaker 1: I'm not that smart. Come on, you don't give yourself 142 00:07:47,320 --> 00:07:50,240 Speaker 1: enough credit. Fil I love your insights. It's always a 143 00:07:50,320 --> 00:07:53,400 Speaker 1: wonderful speaking with you, and I like the polishness, and 144 00:07:53,440 --> 00:07:57,120 Speaker 1: honestly there is a question, especially if President Trump really 145 00:07:57,280 --> 00:07:59,920 Speaker 1: is using the stock market is a gauge of his 146 00:08:00,040 --> 00:08:02,560 Speaker 1: success that he will do everything that he wants to 147 00:08:02,560 --> 00:08:05,160 Speaker 1: do and can do to keep it up. So there 148 00:08:05,280 --> 00:08:09,520 Speaker 1: is that also tail tailwind that is potentially boosting markets 149 00:08:09,520 --> 00:08:11,720 Speaker 1: as well. Philip phil Orlando, thank you so much for 150 00:08:11,720 --> 00:08:16,120 Speaker 1: being with us, Phil Orlando's chief equity market strategistic Federated Investors. 151 00:08:31,400 --> 00:08:35,320 Speaker 1: The minutes from the December Federal Reserve meeting indicated a 152 00:08:35,360 --> 00:08:39,120 Speaker 1: willingness to wait, a sort of devilish tilt that has 153 00:08:39,160 --> 00:08:42,400 Speaker 1: given some markets some confidence. Joining us now as Steve Blitz, 154 00:08:42,600 --> 00:08:46,320 Speaker 1: chief US economist for Ts Lombard uh and he joins 155 00:08:46,400 --> 00:08:48,200 Speaker 1: us now my phone, thank you so much for being 156 00:08:48,240 --> 00:08:52,400 Speaker 1: with us. I'm just wondering, from your perspective, do you 157 00:08:52,480 --> 00:08:56,560 Speaker 1: think that the Federal Reserve will hike rates again this year? No? 158 00:08:57,480 --> 00:09:01,839 Speaker 1: I don't, and first of all, happy to do you everybody. Um, No, 159 00:09:02,000 --> 00:09:04,240 Speaker 1: I don't. I don't. I don't think they're gonna hike 160 00:09:04,440 --> 00:09:06,840 Speaker 1: because I think you know, you always get this very 161 00:09:06,880 --> 00:09:11,920 Speaker 1: interesting uh fedspeak which which has at the moments this 162 00:09:12,080 --> 00:09:15,199 Speaker 1: notion that the asset markets of pricing one world and 163 00:09:15,280 --> 00:09:18,800 Speaker 1: the economy is a different world. When we all know 164 00:09:18,840 --> 00:09:25,000 Speaker 1: that asset prices determine economic activity, it's how monetary policy works. 165 00:09:25,040 --> 00:09:29,560 Speaker 1: What has occurred to date, especially in terms of the 166 00:09:29,640 --> 00:09:32,560 Speaker 1: curve and the fixed income markets in the treasury markets 167 00:09:33,200 --> 00:09:37,959 Speaker 1: will knock the average growth rates for the year below trends, 168 00:09:38,000 --> 00:09:40,240 Speaker 1: So let's call it one and a half two percent. 169 00:09:41,520 --> 00:09:45,719 Speaker 1: And in that environment, Uh, there's no reason why the 170 00:09:45,800 --> 00:09:49,679 Speaker 1: Fed would increase rates. Steve Blitz, do you believe that 171 00:09:49,720 --> 00:09:54,280 Speaker 1: the Federal Reserve fully understands and concurs with the notion 172 00:09:54,640 --> 00:09:58,360 Speaker 1: that economic growth is dependent as well as the direction 173 00:09:58,400 --> 00:10:03,160 Speaker 1: of asset prices, is the on their monetary actions? Well, 174 00:10:03,160 --> 00:10:06,839 Speaker 1: it's it's it's it's it's a great question. Um. The 175 00:10:06,960 --> 00:10:09,520 Speaker 1: short answer that question is obviously yes, Otherwise what are 176 00:10:09,520 --> 00:10:14,480 Speaker 1: they doing? Um? But when you look at the minutes 177 00:10:15,160 --> 00:10:18,360 Speaker 1: and they talk about what are the risks to growth? Uh, 178 00:10:18,400 --> 00:10:22,079 Speaker 1: they put monetary policy about fourth and first is what's 179 00:10:22,120 --> 00:10:26,640 Speaker 1: happening in the global economy, and second is the shift 180 00:10:26,679 --> 00:10:29,439 Speaker 1: from stimulus to a lack of stimulus, to drop off 181 00:10:29,440 --> 00:10:32,840 Speaker 1: of the stimulus from the from the from the federal deficit. 182 00:10:33,400 --> 00:10:37,520 Speaker 1: So those two factors in and of itself, UH is 183 00:10:37,720 --> 00:10:39,880 Speaker 1: number one and number two, and then they get into 184 00:10:39,880 --> 00:10:44,080 Speaker 1: other things. So UM, at the moment they're seeing their 185 00:10:44,160 --> 00:10:48,480 Speaker 1: policies somewhat benign, I disagree with them, and I think 186 00:10:48,559 --> 00:10:50,959 Speaker 1: the reason they first of all, they see that is 187 00:10:51,000 --> 00:10:54,400 Speaker 1: because they're looking at the level of nominal rates against 188 00:10:54,480 --> 00:10:56,720 Speaker 1: growth in the economy and they're saying, you know, money 189 00:10:56,840 --> 00:10:59,040 Speaker 1: is still cheap, you know, to an a percent funds 190 00:10:59,120 --> 00:11:04,160 Speaker 1: rate against or odd percent nominal growth in GDP, but 191 00:11:04,440 --> 00:11:06,880 Speaker 1: you have to look at it as an adjustment. You've 192 00:11:06,960 --> 00:11:11,040 Speaker 1: gone from ten years of zero rates to the money 193 00:11:11,080 --> 00:11:15,320 Speaker 1: markets being a viable asset, and ten years is a 194 00:11:15,360 --> 00:11:17,960 Speaker 1: long time. There's a lot of habits, both on the 195 00:11:18,000 --> 00:11:22,760 Speaker 1: borrowing and the investing side. UM that reflects zero rates. 196 00:11:22,880 --> 00:11:25,400 Speaker 1: And last September when the funds rate went over too, 197 00:11:25,520 --> 00:11:29,840 Speaker 1: and we know from behavioral finance, people don't react continuously. 198 00:11:29,880 --> 00:11:33,680 Speaker 1: They act react and discrete steps, and that discreet step 199 00:11:33,880 --> 00:11:36,560 Speaker 1: was when we got a two handle on funds and 200 00:11:36,600 --> 00:11:39,679 Speaker 1: all of a sudden, UH as the old expression is 201 00:11:39,720 --> 00:11:42,920 Speaker 1: the dime dropped UM, and that would have to be 202 00:11:42,960 --> 00:11:45,439 Speaker 1: an expression that people haven't been in the market more 203 00:11:45,440 --> 00:11:47,440 Speaker 1: than ten years wouldn't know. Well, let's let's talk about 204 00:11:47,440 --> 00:11:49,720 Speaker 1: the balance sheet, because this is where the focus is turning. 205 00:11:49,760 --> 00:11:52,960 Speaker 1: The four trillion dollars of assets on the reserves balance sheet. 206 00:11:53,120 --> 00:11:54,560 Speaker 1: What do you expect them to do with that? How 207 00:11:54,640 --> 00:11:57,000 Speaker 1: much is that really affecting? Uh? That the sort of 208 00:11:57,000 --> 00:11:59,560 Speaker 1: shrinking of it, How much is it actually affecting markets 209 00:11:59,640 --> 00:12:02,200 Speaker 1: right now? Well, I think there's two parts of that 210 00:12:02,320 --> 00:12:05,760 Speaker 1: balance sheet that are that are up for discussion. Okay, 211 00:12:05,800 --> 00:12:08,000 Speaker 1: so one which was in the minutes, and I'm gonna 212 00:12:08,040 --> 00:12:10,599 Speaker 1: do not dismisses, but just put that aside. And I 213 00:12:10,640 --> 00:12:13,920 Speaker 1: don't think it's relevant to this discussion, which is the 214 00:12:13,960 --> 00:12:18,400 Speaker 1: impact of shrinking the balance sheet and the internal plumbing 215 00:12:18,440 --> 00:12:21,679 Speaker 1: of bank funding. Uh, it's an issue, and does the 216 00:12:21,760 --> 00:12:25,200 Speaker 1: fundering mean anything anymore? And all these things, But that's 217 00:12:25,200 --> 00:12:29,280 Speaker 1: that's It's an issue the contingency planning. It's important, but 218 00:12:29,360 --> 00:12:32,000 Speaker 1: it's not important at the moment. And what's important at 219 00:12:32,000 --> 00:12:35,440 Speaker 1: the moment is that the SET is stepping away from 220 00:12:35,480 --> 00:12:40,200 Speaker 1: buying billions of treasuries this year plus whatever. The banks 221 00:12:40,240 --> 00:12:44,200 Speaker 1: are pulling themselves out of the out of reserves and 222 00:12:44,200 --> 00:12:47,000 Speaker 1: transferring it elsewhere, which means that the SET has to 223 00:12:47,040 --> 00:12:51,680 Speaker 1: adjust their assets by selling an effect more treasuries, although 224 00:12:51,679 --> 00:12:54,240 Speaker 1: they not really selling. But in any eventlet's to say, 225 00:12:54,280 --> 00:12:58,439 Speaker 1: selling doesn't make it easier um at a time when 226 00:12:58,480 --> 00:13:02,360 Speaker 1: you have a doubling of the deficit, and that means 227 00:13:02,400 --> 00:13:06,120 Speaker 1: that the private markets have to not only accommodate and 228 00:13:06,960 --> 00:13:10,120 Speaker 1: for what the treasury is selling, but for what the 229 00:13:10,920 --> 00:13:14,800 Speaker 1: is not buying. And that's what has the markets have 230 00:13:14,800 --> 00:13:18,160 Speaker 1: been spooked. And if you'll notice with the drop in 231 00:13:18,280 --> 00:13:22,480 Speaker 1: yields UH at the determent level that terms to them 232 00:13:22,480 --> 00:13:25,040 Speaker 1: into ten years, even five to ten, your yields, the 233 00:13:25,120 --> 00:13:28,160 Speaker 1: real yields haven't gone down that much. The inflation premiums 234 00:13:28,240 --> 00:13:30,920 Speaker 1: dropped a lot, and the real yield has stayed up 235 00:13:30,960 --> 00:13:34,960 Speaker 1: because you need to attract that capital to buy treasuries. 236 00:13:35,240 --> 00:13:38,560 Speaker 1: So I think it means a lot. And I think 237 00:13:38,600 --> 00:13:42,400 Speaker 1: that it was telling that when Powell was at the 238 00:13:42,440 --> 00:13:45,040 Speaker 1: A e A last Friday, and we'll hear what he 239 00:13:45,080 --> 00:13:47,480 Speaker 1: has to say today if he if he reiterates the 240 00:13:47,559 --> 00:13:50,880 Speaker 1: comments or expands upon them. When he was for the 241 00:13:50,960 --> 00:13:54,640 Speaker 1: first time, he said, look if and he said it 242 00:13:54,679 --> 00:13:59,240 Speaker 1: in the context of treasury issuance, that in the context 243 00:13:59,320 --> 00:14:02,680 Speaker 1: of treasury is uns if they think that the Fed matters, 244 00:14:03,400 --> 00:14:07,400 Speaker 1: that the balance sheet policies matter, they will adjust their policies. 245 00:14:07,800 --> 00:14:10,600 Speaker 1: And I think that, and I know we have limited time, 246 00:14:11,000 --> 00:14:12,960 Speaker 1: but I think that the first step that said it's 247 00:14:13,000 --> 00:14:16,120 Speaker 1: gonna make is they're gonna paper, not end, but they're 248 00:14:16,120 --> 00:14:20,280 Speaker 1: gonna taper the pace of QT and they'll get a nice, 249 00:14:20,760 --> 00:14:23,640 Speaker 1: you know, pr benefits from that, and maybe they go 250 00:14:23,720 --> 00:14:26,400 Speaker 1: in and instead of buying seven to ten your paper, 251 00:14:26,480 --> 00:14:28,760 Speaker 1: maybe they buy some bills to try and get a 252 00:14:28,760 --> 00:14:32,000 Speaker 1: little steepness back into the curve. Thanks very much for 253 00:14:32,080 --> 00:14:35,920 Speaker 1: being with us. Steve Blitz is chief economist at T S. 254 00:14:36,120 --> 00:14:40,400 Speaker 1: Lombard speaking about the Federal Reserve and US interest rates. 255 00:14:55,920 --> 00:15:00,200 Speaker 1: The retail picture not very nice today for investors. AC 256 00:15:00,400 --> 00:15:04,440 Speaker 1: shares down about eight. Matt Townsend joins us here in 257 00:15:04,440 --> 00:15:07,800 Speaker 1: our Bloomberg Interactor Broker Studios. Matt is our global business 258 00:15:07,840 --> 00:15:11,040 Speaker 1: reporter for Bloomberg News, and you can follow Matt on 259 00:15:11,080 --> 00:15:16,800 Speaker 1: Twitter at Matt underscore Townsend. Okay, Matt underscore Townsend. I 260 00:15:16,840 --> 00:15:19,720 Speaker 1: thought that the holiday shopping season was supposed to be 261 00:15:19,840 --> 00:15:24,000 Speaker 1: gangbusters and everything's gonna be right for the retail industry. 262 00:15:24,240 --> 00:15:27,480 Speaker 1: That that's why this reaction is so you know, Steep, 263 00:15:27,520 --> 00:15:30,320 Speaker 1: I mean, the story going into this was, yes, this, 264 00:15:30,320 --> 00:15:33,160 Speaker 1: this is gonna be a robust holiday season, maybe the 265 00:15:33,200 --> 00:15:35,760 Speaker 1: best of the recovery. You know last year was was 266 00:15:35,960 --> 00:15:38,480 Speaker 1: basically the best of their coming to that point. So, 267 00:15:39,000 --> 00:15:41,400 Speaker 1: you know, investors had this idea baked in that this 268 00:15:41,480 --> 00:15:43,920 Speaker 1: is gonna be a good holiday. Retailers opposed to good results, 269 00:15:44,200 --> 00:15:47,160 Speaker 1: results have been good throughout the year. Macy's comes out 270 00:15:47,200 --> 00:15:51,760 Speaker 1: and says, our sales were weak. We're cutting our earnings 271 00:15:51,800 --> 00:15:55,320 Speaker 1: forecast or earnings guidance, and the whole market sells off. 272 00:15:55,520 --> 00:15:57,880 Speaker 1: So the investors are just pouring out of retail stocks. 273 00:15:57,920 --> 00:16:02,680 Speaker 1: So what I'm wondering is our investors overreacting to an 274 00:16:02,680 --> 00:16:06,920 Speaker 1: idiosyncratic issue with Macy's. Considering the fact that the guidance 275 00:16:07,080 --> 00:16:10,320 Speaker 1: wasn't that bad for Target and bed Bath and beyond 276 00:16:10,360 --> 00:16:14,520 Speaker 1: even guided upwards, Investors basically are saying, we don't believe you. Yeah, 277 00:16:14,720 --> 00:16:18,560 Speaker 1: that's the question. Is this a department store issue? Coals 278 00:16:18,640 --> 00:16:24,280 Speaker 1: Another department store had an underwhelming report on their holiday sales. 279 00:16:24,920 --> 00:16:27,280 Speaker 1: Um you know, the thing about Target, which some of 280 00:16:27,280 --> 00:16:29,280 Speaker 1: the analysts were calling out was yes, they had this 281 00:16:29,360 --> 00:16:33,320 Speaker 1: five percent growth, but they didn't raise their their guidance 282 00:16:33,320 --> 00:16:35,480 Speaker 1: for the fourth quarter. They didn't say anything about profits. 283 00:16:35,560 --> 00:16:40,080 Speaker 1: So you know, every holiday there's this big battle between 284 00:16:40,160 --> 00:16:42,000 Speaker 1: you go after sales or do you protect profits. So 285 00:16:42,000 --> 00:16:44,480 Speaker 1: if you after sales but hurt your profit, investors are 286 00:16:44,480 --> 00:16:45,880 Speaker 1: gonna hit you there. If you don't hit on sales, 287 00:16:45,880 --> 00:16:48,400 Speaker 1: they're gonna hit you there. So, yes, this is raiding, 288 00:16:48,480 --> 00:16:51,560 Speaker 1: raising red flags in the investment community that maybe the 289 00:16:51,560 --> 00:16:54,280 Speaker 1: holiday isn't as good as expected, and consumers that maybe 290 00:16:54,320 --> 00:16:57,040 Speaker 1: are ready to pull back on their spending. Potentially. Well, 291 00:16:57,040 --> 00:16:59,040 Speaker 1: if you look at all of the websites of these 292 00:16:59,080 --> 00:17:03,880 Speaker 1: major retailers, they are all offering discounts and sales of 293 00:17:03,960 --> 00:17:07,840 Speaker 1: up to twenty That kind of matches the decline in 294 00:17:07,840 --> 00:17:10,439 Speaker 1: the stock of Macy's today. I mean Macy's is offering 295 00:17:10,440 --> 00:17:14,359 Speaker 1: an extra off, an extra fift off. I mean, if 296 00:17:14,359 --> 00:17:17,000 Speaker 1: they've trained the customer to wait for sales and to 297 00:17:17,119 --> 00:17:20,639 Speaker 1: wait until prices are cut, what hope do they have 298 00:17:20,720 --> 00:17:23,480 Speaker 1: of maintaining those margins? Right, That's one of the things 299 00:17:23,520 --> 00:17:26,000 Speaker 1: we were talking about this morning is shoppers are so 300 00:17:26,040 --> 00:17:28,600 Speaker 1: savvy now. They know all the prices, they know all 301 00:17:28,640 --> 00:17:31,840 Speaker 1: the promotions, and they do know how to use mobile phones. 302 00:17:32,200 --> 00:17:35,400 Speaker 1: Do not. They know how to compare and contrast. So 303 00:17:36,280 --> 00:17:39,720 Speaker 1: you're a lot of a lot of shoppers do wait 304 00:17:40,160 --> 00:17:44,879 Speaker 1: till the end for for discounts or sales. They're very savvy. Um, 305 00:17:44,920 --> 00:17:47,320 Speaker 1: you know, but just back to department stores. You know, 306 00:17:47,359 --> 00:17:49,840 Speaker 1: one of the things if if people are shifting for 307 00:17:49,920 --> 00:17:53,240 Speaker 1: their purchases from department stores to say a Target. You know, 308 00:17:53,320 --> 00:17:55,320 Speaker 1: we don't know Walmart what Walmart yet did yet, so 309 00:17:55,359 --> 00:17:58,520 Speaker 1: maybe Walmart did well. You know, that's also a potential 310 00:17:58,640 --> 00:18:00,360 Speaker 1: sort of negative sign for the con to me if 311 00:18:00,400 --> 00:18:03,680 Speaker 1: the trading down effective shoppers are going from a department 312 00:18:03,720 --> 00:18:06,480 Speaker 1: store shopper to a discount shopper. So can you just 313 00:18:06,480 --> 00:18:10,080 Speaker 1: give us some perspective here? Have we heard enough to 314 00:18:10,280 --> 00:18:13,800 Speaker 1: know that, yes, Macy's will be a bell weather for 315 00:18:13,920 --> 00:18:17,840 Speaker 1: retailers in the first quarter, We have not um when 316 00:18:17,880 --> 00:18:20,240 Speaker 1: the dust settles, when they all all these companies report 317 00:18:20,280 --> 00:18:23,600 Speaker 1: the fourth quarter earnings, which won't be until February because 318 00:18:23,600 --> 00:18:27,720 Speaker 1: their quarters weren't through January. That's when we'll really know, um. 319 00:18:27,920 --> 00:18:31,560 Speaker 1: And so this could just be you know, Macy's and 320 00:18:31,680 --> 00:18:35,240 Speaker 1: Cole's did not have good court good holidays, but best 321 00:18:35,280 --> 00:18:38,359 Speaker 1: Buy Walmart did really well. Some of these other chains. 322 00:18:38,359 --> 00:18:41,159 Speaker 1: Obviously there's Amazon, we know that obviously do our a 323 00:18:41,160 --> 00:18:44,280 Speaker 1: big holiday player. So you know, we'll see the story 324 00:18:44,320 --> 00:18:46,479 Speaker 1: is not written at this point. Taking a look at 325 00:18:46,480 --> 00:18:50,879 Speaker 1: Costco for example, Costco host sale same store sales in 326 00:18:50,960 --> 00:18:56,440 Speaker 1: December up seven and a half percent. That was the 327 00:18:56,480 --> 00:18:58,359 Speaker 1: same store sales for the total company that was U 328 00:18:58,480 --> 00:19:02,240 Speaker 1: S stores. So the total company up six. Stock is 329 00:19:02,280 --> 00:19:05,120 Speaker 1: basically unchanged. So maybe they got it right and Macy's 330 00:19:05,119 --> 00:19:08,880 Speaker 1: got it wrong right again. Costco a discount play. Um, 331 00:19:08,960 --> 00:19:10,560 Speaker 1: you know, that's that's what we saw in the in 332 00:19:10,560 --> 00:19:14,120 Speaker 1: the last recession. Um was you know, there was this 333 00:19:14,400 --> 00:19:20,080 Speaker 1: sort of deterioration among the sort of middle income retailers. Uh, 334 00:19:20,160 --> 00:19:22,400 Speaker 1: and then you know, consumers a little more worried about 335 00:19:22,440 --> 00:19:26,760 Speaker 1: their finances, shifting down to the discounters, dollar stores, things 336 00:19:26,800 --> 00:19:29,120 Speaker 1: like that. I think what it does do is it 337 00:19:29,240 --> 00:19:32,280 Speaker 1: casts some high skepticism on all the claims about how 338 00:19:32,280 --> 00:19:34,760 Speaker 1: the holiday season was fantastic. And I think that that 339 00:19:35,160 --> 00:19:38,239 Speaker 1: perhaps is the big takeaway. So a little bit more 340 00:19:38,280 --> 00:19:43,960 Speaker 1: caution heading into the earning season. All off all coats 341 00:19:44,000 --> 00:19:46,879 Speaker 1: at Macy's and I believe if you're you know, going 342 00:19:46,920 --> 00:19:52,000 Speaker 1: to rush out Matt Townsend fifty eight five off four 343 00:19:52,000 --> 00:19:54,840 Speaker 1: men swear well, good to know we'll let you go 344 00:19:54,880 --> 00:19:56,879 Speaker 1: off and shop because that's what you do at your 345 00:19:56,880 --> 00:19:58,960 Speaker 1: desk all day. I'm sure not at all. He is 346 00:19:59,000 --> 00:20:02,359 Speaker 1: a very hard working quarter. Matt Town's end for Bloomberg News. 347 00:20:02,400 --> 00:20:22,280 Speaker 1: Joining us here in our Bloomberg Interactive Broker's studios. Crude 348 00:20:22,320 --> 00:20:26,760 Speaker 1: oil today falling after a string of increases. The value 349 00:20:26,760 --> 00:20:29,520 Speaker 1: of crude on the n Imax fifty two dollars thirteen 350 00:20:29,640 --> 00:20:31,840 Speaker 1: cents for a barrel of crude. That's a decline of 351 00:20:31,880 --> 00:20:34,120 Speaker 1: about a half of percent. Here to help us understand 352 00:20:34,160 --> 00:20:37,159 Speaker 1: what's going on in the world of fossil fuel, Stephen Short. 353 00:20:37,280 --> 00:20:40,800 Speaker 1: He is the president of the Short Group. Stephen. It's 354 00:20:40,800 --> 00:20:43,560 Speaker 1: always a pleasure to have you with us. What do 355 00:20:43,600 --> 00:20:45,480 Speaker 1: you think the price of oil is going to be 356 00:20:46,000 --> 00:20:48,520 Speaker 1: at the end of the month that we're staying around 357 00:20:48,560 --> 00:20:53,720 Speaker 1: fifty a barrel? Yes, I don't see him us going 358 00:20:53,760 --> 00:20:56,680 Speaker 1: significantly higher. Perhaps we can make a four ray into 359 00:20:56,680 --> 00:20:59,439 Speaker 1: the midst fifties. Keep in mind that we had a 360 00:20:59,480 --> 00:21:02,640 Speaker 1: significant sell off at the end of where spot prices 361 00:21:02,680 --> 00:21:05,560 Speaker 1: got down to about forty two, so we're a solid 362 00:21:05,600 --> 00:21:09,320 Speaker 1: ten dollars of barrel higher we're pretty much now at 363 00:21:09,320 --> 00:21:11,439 Speaker 1: the bottom of the market. That is to say, I 364 00:21:11,480 --> 00:21:15,280 Speaker 1: think that forty two dollar number was overdone. You had 365 00:21:15,520 --> 00:21:20,720 Speaker 1: a significant amount of psychological factors pushing all markets lower, 366 00:21:20,760 --> 00:21:23,600 Speaker 1: and I think crewdal just fell in sympathy with everything else. 367 00:21:23,920 --> 00:21:27,120 Speaker 1: So the market obviously got way too low at forty two. 368 00:21:27,359 --> 00:21:29,399 Speaker 1: At fifty two fifty five, when we look at the 369 00:21:29,440 --> 00:21:32,360 Speaker 1: economics of pulling a barrel out of the oil generally 370 00:21:32,600 --> 00:21:35,640 Speaker 1: in here in North America, you're essentially at the bottom. 371 00:21:36,040 --> 00:21:39,199 Speaker 1: The concern now going forward why we'll probably see a 372 00:21:39,200 --> 00:21:41,480 Speaker 1: cap on prices for at least the next two months 373 00:21:41,520 --> 00:21:45,000 Speaker 1: PIM is that demand for crudal and now is strong, 374 00:21:45,160 --> 00:21:47,239 Speaker 1: but in the months ahead and certainly by the end 375 00:21:47,240 --> 00:21:51,080 Speaker 1: of the first quarter, demand will be significantly lower because 376 00:21:51,160 --> 00:21:54,840 Speaker 1: refineries here in North America and Northern Europe will go 377 00:21:54,880 --> 00:21:58,480 Speaker 1: into their maintenance season, so they'll begin buying fewer barrels 378 00:21:58,600 --> 00:22:01,760 Speaker 1: on the spot market of crew all, which should lead 379 00:22:01,760 --> 00:22:05,760 Speaker 1: to some overhang going into the second quarter. I'm just wondering, 380 00:22:06,119 --> 00:22:09,399 Speaker 1: why have analysts gotten oil so wrong? What is the 381 00:22:09,560 --> 00:22:14,320 Speaker 1: big variable that people keep underestimating with oil? Uh with 382 00:22:14,359 --> 00:22:17,800 Speaker 1: boiled right, That's an excellent question. A Lisa, and I 383 00:22:17,840 --> 00:22:22,479 Speaker 1: think us certainly with regard to UH oil. It's similar 384 00:22:22,520 --> 00:22:25,520 Speaker 1: to what in natural gas, where we tend to look 385 00:22:25,920 --> 00:22:29,400 Speaker 1: solely on the supply side. So we I think at 386 00:22:29,440 --> 00:22:32,760 Speaker 1: this point we put too much weight on the impact 387 00:22:32,840 --> 00:22:36,400 Speaker 1: of OPEC part of the run up that we saw 388 00:22:36,720 --> 00:22:38,679 Speaker 1: back in September. We keep in mind that we had 389 00:22:38,680 --> 00:22:41,920 Speaker 1: about a ten dollar rally in September, which is at 390 00:22:41,920 --> 00:22:45,440 Speaker 1: the weakest demand part of the month, on speculation of 391 00:22:45,480 --> 00:22:49,159 Speaker 1: what depending Iran UH sanctions which went into effect on 392 00:22:49,200 --> 00:22:52,000 Speaker 1: the November one, we're going to impact the market. So 393 00:22:52,040 --> 00:22:54,959 Speaker 1: we're always looking at the supply side UH, and we 394 00:22:55,000 --> 00:22:58,280 Speaker 1: tend to ignore the demand side, and I think e 395 00:22:58,280 --> 00:23:01,280 Speaker 1: gauging demand, whether it's an oil and natural gas, that 396 00:23:01,760 --> 00:23:05,320 Speaker 1: is really the art UH to forecasting right now, and 397 00:23:05,400 --> 00:23:08,240 Speaker 1: similar to a natural gas where I think too many 398 00:23:08,280 --> 00:23:13,080 Speaker 1: forecasts took into consideration record production and completely ignored the 399 00:23:13,080 --> 00:23:16,560 Speaker 1: fact that demand was keeping pace with that production. Do 400 00:23:16,600 --> 00:23:20,200 Speaker 1: you believe that Saudi production will remain at its current level? 401 00:23:21,640 --> 00:23:23,960 Speaker 1: I do. I think I will have to. If not, 402 00:23:24,400 --> 00:23:26,960 Speaker 1: they will have to put more barrels on the market. UH. 403 00:23:27,000 --> 00:23:30,520 Speaker 1: The US perhaps now is producing as much as twelve 404 00:23:30,520 --> 00:23:33,600 Speaker 1: million barrels a day, which is by far the largest 405 00:23:33,640 --> 00:23:36,680 Speaker 1: producer in the world. I do not expect to see 406 00:23:36,720 --> 00:23:40,600 Speaker 1: any sort of significant pullback in that production, even down 407 00:23:40,640 --> 00:23:45,439 Speaker 1: at these levels, given that last summer production for you 408 00:23:45,520 --> 00:23:48,359 Speaker 1: had the ability of at least two months to hedge 409 00:23:48,359 --> 00:23:51,800 Speaker 1: at seventy barrel So I do believe we have a 410 00:23:51,840 --> 00:23:55,240 Speaker 1: significant amount of future production that's already been sold at 411 00:23:55,280 --> 00:23:58,000 Speaker 1: these levels. So those producers will have to continue to 412 00:23:58,000 --> 00:24:01,240 Speaker 1: produce to offset those sharpest editions in the future market. 413 00:24:01,520 --> 00:24:04,840 Speaker 1: So Saudi really cannot up production. I think at a 414 00:24:04,920 --> 00:24:07,720 Speaker 1: minimum they will maintain production, if not have to pull 415 00:24:08,000 --> 00:24:10,879 Speaker 1: production out of the market. Given the strong response by 416 00:24:11,000 --> 00:24:14,440 Speaker 1: US up product producers. Yeah, it's sort of interesting. You're 417 00:24:14,440 --> 00:24:18,600 Speaker 1: talking about how people are overestimating opaque. I'm wondering what's 418 00:24:18,640 --> 00:24:23,680 Speaker 1: the perfect price for US producers, US producer right now. 419 00:24:24,280 --> 00:24:28,239 Speaker 1: Keep in mind, when everyone was under the assumption at 420 00:24:28,280 --> 00:24:31,040 Speaker 1: the end of that year that Saudi Arabia was trying 421 00:24:31,080 --> 00:24:34,320 Speaker 1: to derail North American production. I said it then, and 422 00:24:34,359 --> 00:24:36,480 Speaker 1: I've said it ever since, and I'll continue to say it. 423 00:24:36,800 --> 00:24:39,959 Speaker 1: Saudi was not trying to destroy US production, because they 424 00:24:39,960 --> 00:24:43,560 Speaker 1: couldn't destroy US or Canadian production. Uh, So that said, 425 00:24:43,560 --> 00:24:47,440 Speaker 1: what Saudi Arabia actually did in was give the industry 426 00:24:47,600 --> 00:24:50,160 Speaker 1: a shot in the arm and did all the heavy 427 00:24:50,160 --> 00:24:53,879 Speaker 1: lifting that the FEDS cheap capital UH created that bubble. 428 00:24:54,200 --> 00:24:56,400 Speaker 1: So now where I'm getting out here is that US 429 00:24:56,440 --> 00:25:00,040 Speaker 1: producers are much more profitable at level levels given the 430 00:25:00,040 --> 00:25:03,560 Speaker 1: efficiencies they've created over the last three years. So at 431 00:25:03,600 --> 00:25:06,639 Speaker 1: a minimum, depending on the play, you can make money 432 00:25:06,680 --> 00:25:09,000 Speaker 1: with oil as low as twenty five dollars a barrel, 433 00:25:09,520 --> 00:25:11,480 Speaker 1: thirty five dollars a barrel. But if you're going to 434 00:25:11,480 --> 00:25:14,040 Speaker 1: take a blended price, I would think to say that 435 00:25:14,080 --> 00:25:16,880 Speaker 1: we are at these levels. Looking at my Bloomberg at 436 00:25:16,880 --> 00:25:19,359 Speaker 1: oil right around fifty two dollars a barrel, we're pretty 437 00:25:19,400 --> 00:25:22,200 Speaker 1: much at the bottom of the market. You would want 438 00:25:22,200 --> 00:25:24,960 Speaker 1: to see oil back to where we saw it back 439 00:25:24,960 --> 00:25:29,119 Speaker 1: in September, up around that sixty level, and that would 440 00:25:29,119 --> 00:25:32,760 Speaker 1: certainly be a sweet spot for US producers. Stephen short 441 00:25:32,880 --> 00:25:35,480 Speaker 1: in about twenty seconds. Do you believe that the gasoline 442 00:25:35,480 --> 00:25:37,960 Speaker 1: shortage in Mexico is going to have any effect on 443 00:25:38,000 --> 00:25:42,600 Speaker 1: the price of oil? Uh? No, I don't actually pim 444 00:25:43,200 --> 00:25:47,200 Speaker 1: at this point. Uh. I don't think the Mexican uh 445 00:25:47,280 --> 00:25:50,080 Speaker 1: shortage at this point will have much of an impact, 446 00:25:50,160 --> 00:25:53,200 Speaker 1: especially given that gasoline supplies here in the United States 447 00:25:53,280 --> 00:25:56,120 Speaker 1: are at an all time high and that will continue 448 00:25:56,200 --> 00:25:58,560 Speaker 1: through the first quarter. Thank you so much for being 449 00:25:58,560 --> 00:26:01,359 Speaker 1: with us. Oil definitely an important topic right now because 450 00:26:01,359 --> 00:26:05,640 Speaker 1: it's also been a driver in inflation expectations as as 451 00:26:05,640 --> 00:26:09,280 Speaker 1: we've seen oil rebounds, so to have five year inflation 452 00:26:09,320 --> 00:26:12,639 Speaker 1: expectations which have had their best four day rally in 453 00:26:12,720 --> 00:26:14,840 Speaker 1: a very long time. Stephen Short, thank you so much 454 00:26:14,880 --> 00:26:20,800 Speaker 1: for being with us, President of the Short Group. Thanks 455 00:26:20,840 --> 00:26:23,439 Speaker 1: for listening to the Bloomberg p m L podcast. You 456 00:26:23,480 --> 00:26:27,280 Speaker 1: can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 457 00:26:27,400 --> 00:26:30,840 Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm 458 00:26:30,880 --> 00:26:34,880 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 459 00:26:35,040 --> 00:26:37,600 Speaker 1: It's one before the podcast. You can always catch us 460 00:26:37,640 --> 00:26:39,240 Speaker 1: worldwide on Bloomberg Radio.