1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,040 Speaker 2: Terminal and the Bloomberg Business app. We begin with our 10 00:00:37,040 --> 00:00:40,080 Speaker 2: top story, start Sliding going into jobless claims at eight 11 00:00:40,200 --> 00:00:43,159 Speaker 2: thirty Eastern times. Sema shaff Princeval Acid Management thinks it 12 00:00:43,200 --> 00:00:45,440 Speaker 2: will take a lot to end this bout of volatility. 13 00:00:45,880 --> 00:00:49,559 Speaker 2: Unfortunately for markets, the negativity of the current narrative implies 14 00:00:49,600 --> 00:00:53,560 Speaker 2: it may take a combination of solid economic data, earnings, 15 00:00:53,760 --> 00:00:57,840 Speaker 2: and reassuring fedspeak to settle nerves. Seema joins us. Now 16 00:00:57,960 --> 00:00:59,600 Speaker 2: for more, Seema, Let's take it from the top then 17 00:00:59,640 --> 00:01:02,720 Speaker 2: and go for it point by point. The feder Reserve, 18 00:01:02,960 --> 00:01:06,240 Speaker 2: the FED speak, the yearnings, and the data. Just where 19 00:01:06,319 --> 00:01:07,479 Speaker 2: are we at the moment? 20 00:01:09,400 --> 00:01:11,360 Speaker 3: We haven't got that much, I'll wuldie there's not much 21 00:01:11,400 --> 00:01:14,640 Speaker 3: Fed speak between now and Jacksonville. I'd expect a couple 22 00:01:14,680 --> 00:01:16,800 Speaker 3: more speakers to be coming out to calm the market. 23 00:01:17,040 --> 00:01:19,120 Speaker 3: The thing is is that, you know, just as we 24 00:01:19,200 --> 00:01:21,840 Speaker 3: are all reacting to the to the economic data as 25 00:01:21,840 --> 00:01:23,839 Speaker 3: it comes out, that is also the case for the Fed. 26 00:01:24,200 --> 00:01:27,039 Speaker 3: So they can tell us that things don't look so bad. 27 00:01:27,120 --> 00:01:29,520 Speaker 3: They can reassure us that the labor market doesn't. You 28 00:01:29,560 --> 00:01:31,399 Speaker 3: know that the payrolls print of last week is just 29 00:01:31,440 --> 00:01:33,520 Speaker 3: one data point. But of course if you were to 30 00:01:33,520 --> 00:01:36,559 Speaker 3: see a continued deterioration in the data, what the FED 31 00:01:36,600 --> 00:01:38,240 Speaker 3: themselves are going to have to respond in kind? 32 00:01:38,520 --> 00:01:39,720 Speaker 2: What is driving things here? 33 00:01:39,760 --> 00:01:40,080 Speaker 4: Seema? 34 00:01:40,160 --> 00:01:42,400 Speaker 2: What's amazing about this shock of the last week, if 35 00:01:42,400 --> 00:01:44,320 Speaker 2: we can call it? That is for many people that 36 00:01:44,400 --> 00:01:47,120 Speaker 2: are still trying to diagnose the origins of it. Is 37 00:01:47,160 --> 00:01:49,840 Speaker 2: this a growth scare board in America or the vicious 38 00:01:49,880 --> 00:01:52,320 Speaker 2: some wind of the carry trade out of Tokyo, Japan. 39 00:01:52,520 --> 00:01:54,160 Speaker 2: Where'd you place the greater emphasis? 40 00:01:55,520 --> 00:01:57,520 Speaker 3: Well, I would say they look for the last six 41 00:01:57,560 --> 00:02:00,360 Speaker 3: weeks to two months, I have seen the number of 42 00:02:00,360 --> 00:02:05,960 Speaker 3: client queries moving towards worrying about actually recession has been 43 00:02:06,040 --> 00:02:08,880 Speaker 3: quite surprising. So we've moved away from wondering, you know, 44 00:02:08,960 --> 00:02:10,800 Speaker 3: is the economy going to continue to accelerate? Is there 45 00:02:10,800 --> 00:02:14,079 Speaker 3: an overheating to people really questioning how weak the economy is. 46 00:02:14,120 --> 00:02:15,160 Speaker 3: So in a way, I do think this is a 47 00:02:15,200 --> 00:02:16,880 Speaker 3: growth scal I don't actually buy into it, but I 48 00:02:16,919 --> 00:02:18,840 Speaker 3: do think a lot of it is born of a 49 00:02:18,880 --> 00:02:21,760 Speaker 3: growth skit. And then it's been exacerbated by this very 50 00:02:21,840 --> 00:02:23,280 Speaker 3: very low liquidity. I think the three of you are 51 00:02:23,280 --> 00:02:25,320 Speaker 3: the only ones left in New York this week, so 52 00:02:25,520 --> 00:02:28,480 Speaker 3: that hasn't helped. And then of course it's positioning the 53 00:02:28,520 --> 00:02:30,200 Speaker 3: carriage trade. So it's been a bit of a perfect 54 00:02:30,200 --> 00:02:32,800 Speaker 3: storm of events. But I think that the growth skin 55 00:02:32,919 --> 00:02:35,520 Speaker 3: has actually been building up in people's concerns for a while. 56 00:02:35,919 --> 00:02:38,120 Speaker 5: See what does that mean for the data coming in 57 00:02:38,200 --> 00:02:40,480 Speaker 5: not just this week? John went through the calendar PPI, 58 00:02:40,639 --> 00:02:43,520 Speaker 5: CPI and retail sales next week. Are you worried? 59 00:02:45,480 --> 00:02:46,960 Speaker 3: I don't think I'm worried because I think when we 60 00:02:47,000 --> 00:02:50,480 Speaker 3: look at the breadth of the data, we do believe 61 00:02:50,520 --> 00:02:53,720 Speaker 3: that there's still a lot of resilience, particularly in household 62 00:02:53,760 --> 00:02:56,400 Speaker 3: balancees and corporate balancees. And what that should mean is 63 00:02:56,400 --> 00:02:58,800 Speaker 3: that if you were to see a deteriorating labor market, 64 00:02:58,840 --> 00:03:01,520 Speaker 3: it shouldn't then new take into a hard landing. But 65 00:03:01,600 --> 00:03:04,040 Speaker 3: we have to also be aware that job losses can 66 00:03:04,120 --> 00:03:07,240 Speaker 3: be quite self reinforcing. Job losses lead to further job losses. 67 00:03:08,080 --> 00:03:11,200 Speaker 3: At this point that we're not seeing layoffs, and a 68 00:03:11,240 --> 00:03:13,000 Speaker 3: lot of the surveys that we're looking at and just 69 00:03:13,080 --> 00:03:15,440 Speaker 3: kind of watching companies and how they're reporting, you're not 70 00:03:15,480 --> 00:03:17,880 Speaker 3: really hearing news of that. But of course the third 71 00:03:17,960 --> 00:03:20,880 Speaker 3: has to be aware that the labor market deterioration, if 72 00:03:20,919 --> 00:03:24,440 Speaker 3: it continues, well, then that could feed and create it 73 00:03:24,480 --> 00:03:27,080 Speaker 3: down with spiral. I think that the CPI data, for 74 00:03:27,120 --> 00:03:29,720 Speaker 3: the first time in ages, that's not the front and center. 75 00:03:29,800 --> 00:03:32,280 Speaker 3: It's really about the growth data, and in particular about 76 00:03:32,280 --> 00:03:33,000 Speaker 3: the labor market. 77 00:03:33,120 --> 00:03:35,280 Speaker 5: See Michael, let me actually ask that question another way. 78 00:03:35,560 --> 00:03:38,160 Speaker 5: Are you worried about the market reaction? Are you worried 79 00:03:38,200 --> 00:03:40,160 Speaker 5: that this is a market that is putting too much 80 00:03:40,200 --> 00:03:42,200 Speaker 5: weight on the negative data that's been coming in. 81 00:03:44,120 --> 00:03:45,960 Speaker 3: I think I don't know if it's necessarily putting too 82 00:03:46,040 --> 00:03:48,840 Speaker 3: much weight. I think it's a market which is on edge, 83 00:03:49,320 --> 00:03:52,760 Speaker 3: as exacerbated about the fact liquidity is so low. But 84 00:03:52,840 --> 00:03:55,240 Speaker 3: I think that from here the direction is fairly unclear 85 00:03:55,240 --> 00:03:57,120 Speaker 3: of the next through four weeks. It's going to respond 86 00:03:57,480 --> 00:04:00,400 Speaker 3: to how that data comes out. If jobless claims moves 87 00:04:00,480 --> 00:04:02,920 Speaker 3: further up today, then I think, of course you're going 88 00:04:02,920 --> 00:04:04,920 Speaker 3: to see a negative market reaction. If it falls back 89 00:04:04,960 --> 00:04:06,880 Speaker 3: a bit, then the market is going to celebrate, and 90 00:04:06,920 --> 00:04:10,240 Speaker 3: I expect that to be the pattern of market moves 91 00:04:10,280 --> 00:04:12,040 Speaker 3: for the remainder of the month, once until you get 92 00:04:12,080 --> 00:04:15,800 Speaker 3: into September and a certainly post Jackson hule. At that 93 00:04:15,880 --> 00:04:18,040 Speaker 3: point maybe you can see some stabilization in a really 94 00:04:18,080 --> 00:04:19,400 Speaker 3: clear direction for the market. 95 00:04:19,640 --> 00:04:21,840 Speaker 4: We also have the DNC next month, and I bring 96 00:04:21,880 --> 00:04:24,560 Speaker 4: this up because Lri Calvacino is on with Manis and 97 00:04:24,600 --> 00:04:26,640 Speaker 4: on Mondays you put our notes saying that the S 98 00:04:26,680 --> 00:04:29,120 Speaker 4: and P five hunderd has now been positively correlated with 99 00:04:29,120 --> 00:04:32,680 Speaker 4: Trump's betting market odds, which have been deteriorating. Now, Lag Harris, 100 00:04:32,880 --> 00:04:35,840 Speaker 4: could politics be also one of those pillars, one of 101 00:04:35,880 --> 00:04:39,159 Speaker 4: those reasons why we are seeing the market's whipsa and 102 00:04:39,160 --> 00:04:40,400 Speaker 4: we sat that'd sell off on Monday. 103 00:04:42,040 --> 00:04:44,640 Speaker 3: So I think that the political picture actually played out 104 00:04:44,640 --> 00:04:47,239 Speaker 3: maybe about three weeks ago, when you have that huge rotation. 105 00:04:48,160 --> 00:04:49,720 Speaker 3: I do think that the rotation to a small cup 106 00:04:49,800 --> 00:04:51,920 Speaker 3: is a little bit about the Trump trade. Things are 107 00:04:51,920 --> 00:04:54,160 Speaker 3: settled at the moment. But you're right in saying that 108 00:04:54,160 --> 00:04:57,359 Speaker 3: that election story it's coming back. It's not like it's disappeared. 109 00:04:58,000 --> 00:05:00,600 Speaker 3: So come September, I think that it is probably going 110 00:05:00,640 --> 00:05:03,039 Speaker 3: to be again near the front of the new story, 111 00:05:03,040 --> 00:05:06,039 Speaker 3: along with the FED. So we will see that add 112 00:05:06,080 --> 00:05:08,960 Speaker 3: to the volatility and probably impact the market narrative too. 113 00:05:09,360 --> 00:05:12,400 Speaker 4: So of all this about September, should you know, Danny 114 00:05:12,480 --> 00:05:15,160 Speaker 4: John and I the last three people left in New York? 115 00:05:15,480 --> 00:05:16,760 Speaker 5: Is all of this just noise? 116 00:05:16,800 --> 00:05:20,440 Speaker 3: Then in a way it's noise. So I mean the 117 00:05:20,480 --> 00:05:23,000 Speaker 3: thing that we're inviting clients is I look away from 118 00:05:23,080 --> 00:05:25,760 Speaker 3: the near tim headlines. It's fairly shocking. The moves are 119 00:05:25,839 --> 00:05:28,960 Speaker 3: very very significant, but we have to have I think, 120 00:05:28,960 --> 00:05:30,680 Speaker 3: those important things to have an idea of what your 121 00:05:30,680 --> 00:05:34,520 Speaker 3: fundamental picture is. Now. It is still unfolding because you're 122 00:05:34,520 --> 00:05:37,520 Speaker 3: at that cusp where you could be pointing to a 123 00:05:37,600 --> 00:05:39,920 Speaker 3: stable economy. But then, as I said before, if job 124 00:05:39,920 --> 00:05:42,600 Speaker 3: losses really start to mount, then it feeds further weakness. 125 00:05:42,920 --> 00:05:45,240 Speaker 3: So unfortunately the native isn't as clear as it would 126 00:05:45,240 --> 00:05:47,640 Speaker 3: have been. Maybe six months ago. But the key one 127 00:05:47,760 --> 00:05:50,280 Speaker 3: is focus on the fundamentals, because the technicals can really 128 00:05:50,279 --> 00:05:52,720 Speaker 3: whipsaw you around, but it's the fundamentals which you're really 129 00:05:52,720 --> 00:05:54,960 Speaker 3: going to create that clear longer term. 130 00:05:54,800 --> 00:05:56,600 Speaker 2: Trend the same, and that's the story. We've got to 131 00:05:56,640 --> 00:05:58,400 Speaker 2: talk about the price of the story. And in certain 132 00:05:58,440 --> 00:06:00,400 Speaker 2: parts of the market we've had quite a big set. 133 00:06:00,480 --> 00:06:02,880 Speaker 2: We heard from Barclay's yesterday. They were talking about going 134 00:06:02,920 --> 00:06:07,320 Speaker 2: overweight tech, overweight financials, looking at buying opportunities. Seem where 135 00:06:07,320 --> 00:06:09,080 Speaker 2: do you see the opportunities at the moment? Where do 136 00:06:09,080 --> 00:06:09,479 Speaker 2: you want to be? 137 00:06:11,400 --> 00:06:13,400 Speaker 3: So I think the key area is, look, we still 138 00:06:13,440 --> 00:06:16,760 Speaker 3: see defensive quality. We know we're going into an economic 139 00:06:16,760 --> 00:06:18,279 Speaker 3: slow down. We don't think it's going to be recession, 140 00:06:18,320 --> 00:06:22,400 Speaker 3: but it does suggest that you need to have a 141 00:06:22,480 --> 00:06:25,479 Speaker 3: slightly safer element to the portfolio. We do think that 142 00:06:25,520 --> 00:06:27,719 Speaker 3: fixing commandment has really proved its work in the last 143 00:06:27,760 --> 00:06:31,080 Speaker 3: few days with that active correlation returning between equities and bonds, 144 00:06:31,880 --> 00:06:34,080 Speaker 3: and then within you know, we've maintained an over weight 145 00:06:34,120 --> 00:06:38,119 Speaker 3: to large cap tech. We're keeping it at some point, 146 00:06:38,240 --> 00:06:39,880 Speaker 3: probably not yet, but at some point will be a 147 00:06:39,920 --> 00:06:41,200 Speaker 3: buying opportunity as well. 148 00:06:41,640 --> 00:06:43,920 Speaker 2: You saying we're not in recession, but I have to say, 149 00:06:43,960 --> 00:06:46,000 Speaker 2: in certain parts of this economy, it certainly feels like 150 00:06:46,080 --> 00:06:48,760 Speaker 2: we are. If you're a low income consumer right now, 151 00:06:49,120 --> 00:06:51,880 Speaker 2: it looks and sounds like recession. If you're a manufacturing 152 00:06:51,920 --> 00:06:54,440 Speaker 2: based on the m we had, it looks and sounds 153 00:06:54,560 --> 00:06:57,799 Speaker 2: like recession. Parts of this market firmly in recession. 154 00:06:59,400 --> 00:07:02,480 Speaker 3: So you're there are pockets of the economy which are struggling. 155 00:07:02,520 --> 00:07:04,960 Speaker 3: And that makes sense because remember that the FED did 156 00:07:05,320 --> 00:07:08,240 Speaker 3: hike a significant amount in a really really short space 157 00:07:08,279 --> 00:07:10,480 Speaker 3: of time, So there will be pockets which will be struggling. 158 00:07:10,800 --> 00:07:13,200 Speaker 3: Lower income households, the ones that really don't have the savings, 159 00:07:13,240 --> 00:07:16,600 Speaker 3: that haven't benefited from that passive income the rise and 160 00:07:16,640 --> 00:07:19,520 Speaker 3: emputy prices rise and house prices. They're the ones who 161 00:07:19,600 --> 00:07:22,160 Speaker 3: were most leveraged to the interest roid environment, and that's 162 00:07:22,160 --> 00:07:24,679 Speaker 3: where the weakness is. But remember, for the US economy, 163 00:07:24,720 --> 00:07:27,440 Speaker 3: the medium and higher income households are the ones that 164 00:07:27,480 --> 00:07:31,560 Speaker 3: really carry growth. They account for about sixty percent of 165 00:07:31,680 --> 00:07:34,400 Speaker 3: consumer spending. So as long as they are okay, and 166 00:07:34,440 --> 00:07:37,480 Speaker 3: the lower income households and are not really struggling significantly 167 00:07:37,520 --> 00:07:40,640 Speaker 3: with job layoffs, then I think the US economy, it's slowing, 168 00:07:40,680 --> 00:07:43,040 Speaker 3: but we're not heading towards recession. But you're right, there 169 00:07:43,080 --> 00:07:46,720 Speaker 3: is a very very differentiated environment underneath the surface for 170 00:07:46,760 --> 00:07:47,560 Speaker 3: the US economy. 171 00:07:47,760 --> 00:07:50,000 Speaker 5: Well, Siman, just given the noise that's been around this 172 00:07:50,080 --> 00:07:52,280 Speaker 5: earning season, you would assume that it looks pretty bad 173 00:07:52,320 --> 00:07:54,800 Speaker 5: that you've had all these companies from airlines to autos 174 00:07:54,840 --> 00:07:57,120 Speaker 5: talking about how bad things are for the consumer. But 175 00:07:57,320 --> 00:07:59,840 Speaker 5: Deutsche Bank speaking Charger points out that earnings are on 176 00:07:59,840 --> 00:08:03,000 Speaker 5: track to rise the most in eight quarters, at ten 177 00:08:03,080 --> 00:08:05,840 Speaker 5: percent quarter over quarter for this one. 178 00:08:06,080 --> 00:08:07,520 Speaker 6: Do you take comfort in that? 179 00:08:07,600 --> 00:08:09,920 Speaker 5: I mean, are we overlooking what is otherwise a strong 180 00:08:09,960 --> 00:08:10,680 Speaker 5: earning season? 181 00:08:11,720 --> 00:08:11,880 Speaker 1: Yeah? 182 00:08:11,920 --> 00:08:14,120 Speaker 3: I was thinking exactly the same thing today, when when 183 00:08:14,120 --> 00:08:16,960 Speaker 3: you think about the narrative, you'd suggest that maybe earning's 184 00:08:16,960 --> 00:08:19,880 Speaker 3: picture has been horrendous this season. It really hasn't. But 185 00:08:19,920 --> 00:08:21,280 Speaker 3: I think the thing is that we came into the 186 00:08:21,400 --> 00:08:23,960 Speaker 3: earning season with people, as I said, really worried about 187 00:08:24,000 --> 00:08:27,360 Speaker 3: what is happening with growth backdrop, but also looking at 188 00:08:27,360 --> 00:08:30,080 Speaker 3: evaluations some of those big tech firms and starting to 189 00:08:30,080 --> 00:08:32,280 Speaker 3: wonder if they would deliver. So I think that that 190 00:08:32,320 --> 00:08:35,480 Speaker 3: has almost encompassed the entire narrative and hidden the fact 191 00:08:35,520 --> 00:08:37,880 Speaker 3: that actually under the bonnet it doesn't look that bad. 192 00:08:38,000 --> 00:08:41,559 Speaker 3: There has been a broadening out of the stronger earnings 193 00:08:41,559 --> 00:08:44,920 Speaker 3: performance and some other sectors, not just big tech and 194 00:08:44,960 --> 00:08:46,959 Speaker 3: actually the opposite of big tech are really the ones 195 00:08:46,960 --> 00:08:49,679 Speaker 3: who are performing well. And that is a really I 196 00:08:49,679 --> 00:08:51,679 Speaker 3: think encouraging sign. For the remainder of the. 197 00:08:51,640 --> 00:08:54,160 Speaker 2: Year, it's going to catch up. As always, semis Shout, 198 00:08:54,360 --> 00:09:07,080 Speaker 2: Principal Asset Management, talking about what's under the bonnet. The 199 00:09:07,120 --> 00:09:09,599 Speaker 2: Harris Watz ticket is heading to Phoenix, Arizona for the 200 00:09:09,600 --> 00:09:12,520 Speaker 2: next stump of their swing state tour. Jendie Vance shadowing 201 00:09:12,559 --> 00:09:15,679 Speaker 2: the campaign with his own rallies to undercut recent momentum 202 00:09:15,720 --> 00:09:18,960 Speaker 2: behind the Harris campaign. Tobin Marcus of Wolf Research rights this, 203 00:09:19,080 --> 00:09:22,920 Speaker 2: we still think it's premature to consider Harris an outright favorite, 204 00:09:23,120 --> 00:09:26,120 Speaker 2: which still give a slight edge to Trump. Tober Marcus 205 00:09:26,200 --> 00:09:28,120 Speaker 2: joins us now for more, tyb. Been great to catch 206 00:09:28,160 --> 00:09:31,200 Speaker 2: up with you, sir, as always seen just a full 207 00:09:31,600 --> 00:09:34,960 Speaker 2: full aircraft hanker and it just reminded me of like 208 00:09:35,000 --> 00:09:37,880 Speaker 2: twenty sixteen and Donald Trump. They seem to be taking 209 00:09:37,920 --> 00:09:41,280 Speaker 2: a leaf out of his playbook from eight years ago. Tobin, 210 00:09:41,320 --> 00:09:43,360 Speaker 2: and it looks to be highly effective. They look like 211 00:09:43,400 --> 00:09:46,400 Speaker 2: they have some real momentum in the Harris campaign. Yet 212 00:09:46,480 --> 00:09:50,200 Speaker 2: jd Vance is right, we haven't heard Harris answer any 213 00:09:50,280 --> 00:09:52,680 Speaker 2: questions at all, with the exception of standing on the 214 00:09:52,720 --> 00:09:55,719 Speaker 2: tarmac following a prisoner exchange and Tobin. I wonder if 215 00:09:55,720 --> 00:09:58,760 Speaker 2: that's going to change at all anytime soon, whether actually 216 00:09:59,000 --> 00:09:59,600 Speaker 2: it needs to. 217 00:10:01,160 --> 00:10:03,960 Speaker 1: So right now, I think they are trying not to 218 00:10:04,000 --> 00:10:06,120 Speaker 1: mess with the good thing. It's been a very very 219 00:10:06,240 --> 00:10:08,400 Speaker 1: very good two and a half week run for Harris, 220 00:10:08,480 --> 00:10:10,080 Speaker 1: and she took over the top of the ticket, and 221 00:10:10,120 --> 00:10:11,880 Speaker 1: I think that they are reveling in the momentum that 222 00:10:11,880 --> 00:10:14,600 Speaker 1: they're seeing out there and sort of not feeling the 223 00:10:14,679 --> 00:10:19,160 Speaker 1: need to take you any unprompted questions if they're getting 224 00:10:19,160 --> 00:10:21,319 Speaker 1: their menswers to right, the point of the campaign is 225 00:10:21,360 --> 00:10:23,480 Speaker 1: to deliver their message. They feel like they're doing that. 226 00:10:24,080 --> 00:10:26,840 Speaker 1: They're getting tons of earned media, most of it positive, 227 00:10:26,840 --> 00:10:29,160 Speaker 1: but certainly there's no lack of attention, so I think 228 00:10:29,160 --> 00:10:31,839 Speaker 1: they are not going to feel immediately compelled to change 229 00:10:31,880 --> 00:10:35,720 Speaker 1: their media strategy, although you know, as the campaign goes on, 230 00:10:36,360 --> 00:10:39,080 Speaker 1: I do think that we're going to have to see 231 00:10:39,080 --> 00:10:42,360 Speaker 1: a little more kind of unprompted answering of questions. But 232 00:10:42,400 --> 00:10:45,720 Speaker 1: I mean, frankly, both Harris and Trump are not taking 233 00:10:45,720 --> 00:10:48,679 Speaker 1: a sort of press conference forward approach. We're seeing a 234 00:10:48,720 --> 00:10:52,480 Speaker 1: lot of appearances on alternative media, Trump going on I 235 00:10:52,480 --> 00:10:55,080 Speaker 1: guess Kick was the streaming platform he was on the 236 00:10:55,120 --> 00:10:57,400 Speaker 1: other week, which is sort of similarly as an unorthodox 237 00:10:57,440 --> 00:10:58,640 Speaker 1: media strategy. 238 00:10:58,760 --> 00:11:02,120 Speaker 4: Right, But he also did just down with our colleagues 239 00:11:02,160 --> 00:11:05,000 Speaker 4: at BusinessWeek to talk about a slew a number of 240 00:11:05,080 --> 00:11:08,360 Speaker 4: policy something we haven't seen from Kamala Harris. At what 241 00:11:08,440 --> 00:11:10,800 Speaker 4: point do you think they'll actually come up with an 242 00:11:10,800 --> 00:11:14,240 Speaker 4: agenda for what their policy plans would be if they 243 00:11:14,280 --> 00:11:15,079 Speaker 4: win the White House. 244 00:11:16,200 --> 00:11:18,960 Speaker 1: Well, they have to put out a platform for the 245 00:11:19,000 --> 00:11:23,360 Speaker 1: Democratic National Convention, which is in two weeks, so we'll 246 00:11:23,360 --> 00:11:26,640 Speaker 1: see something before too long that sort of purports to 247 00:11:26,640 --> 00:11:29,000 Speaker 1: be the official agenda of the Democratic Party, and those 248 00:11:29,040 --> 00:11:33,040 Speaker 1: platforms generally are not that informative about what anyone is 249 00:11:33,080 --> 00:11:35,160 Speaker 1: planning to do. They're a little bit of an interest 250 00:11:35,559 --> 00:11:38,960 Speaker 1: group management exercise, particularly on the Democratic side. Trump took 251 00:11:39,000 --> 00:11:42,240 Speaker 1: a more active role in setting the RNC agenda this year, 252 00:11:42,280 --> 00:11:44,200 Speaker 1: and frankly, I think it would be wise for Harris 253 00:11:44,240 --> 00:11:46,760 Speaker 1: to sort of similarly lay out something that's kind of 254 00:11:46,760 --> 00:11:51,079 Speaker 1: streamlined and reflects what she personally wants to prioritize, rather 255 00:11:51,160 --> 00:11:56,480 Speaker 1: than some incredibly detailed fourteen point plan on every single 256 00:11:56,480 --> 00:11:59,760 Speaker 1: policy issue under the sun. So you know, before too 257 00:11:59,800 --> 00:12:02,360 Speaker 1: long we should see her put out something. But you know, 258 00:12:02,360 --> 00:12:04,360 Speaker 1: it's a short campaign. But short of the campaign is 259 00:12:05,160 --> 00:12:07,800 Speaker 1: the less I think she's going to have to answer 260 00:12:07,840 --> 00:12:10,079 Speaker 1: all these tough questions about exactly what's your agenda on 261 00:12:11,120 --> 00:12:14,120 Speaker 1: Peede family leaves you talk about that. I think probably 262 00:12:14,160 --> 00:12:16,720 Speaker 1: she can just sort of state a priority for the 263 00:12:16,760 --> 00:12:18,800 Speaker 1: issue that she wants to focus on and leave some 264 00:12:18,800 --> 00:12:20,160 Speaker 1: of these details for after the election. 265 00:12:20,520 --> 00:12:22,960 Speaker 4: The short campaign works for her, and Washington Post had 266 00:12:22,960 --> 00:12:26,720 Speaker 4: a story where the former president Don Trump apparently said 267 00:12:26,720 --> 00:12:29,520 Speaker 4: to someone, I already beat Biden. Now I have to 268 00:12:29,600 --> 00:12:32,840 Speaker 4: go out and prove myself against her. How should the 269 00:12:32,880 --> 00:12:35,559 Speaker 4: Trump campaign be dealing with this? Because we just showed 270 00:12:35,559 --> 00:12:38,200 Speaker 4: pictures of her rallies. She's getting a lot of people, 271 00:12:38,480 --> 00:12:40,920 Speaker 4: and there's a lot of excitement around her and her 272 00:12:40,960 --> 00:12:42,719 Speaker 4: new VP pick, Governor wald. 273 00:12:44,000 --> 00:12:44,320 Speaker 7: Well. 274 00:12:44,640 --> 00:12:47,520 Speaker 1: Their strategy, I think has always been to portray her 275 00:12:47,559 --> 00:12:49,800 Speaker 1: as kind of dangerously liberal and out of stept The 276 00:12:49,800 --> 00:12:52,800 Speaker 1: American people based on her as positions that she took 277 00:12:52,840 --> 00:12:55,360 Speaker 1: in the twenty nineteen twenty primary. She committed to various 278 00:12:55,400 --> 00:12:57,920 Speaker 1: different things that I think are problematic. One of the 279 00:12:57,920 --> 00:13:00,720 Speaker 1: reasons why I don't yet consider her her favorite, even 280 00:13:00,720 --> 00:13:03,440 Speaker 1: though the polling has looked very strong for her, along 281 00:13:03,440 --> 00:13:06,080 Speaker 1: with that enthusiasm on the ground, is that we haven't 282 00:13:06,200 --> 00:13:07,839 Speaker 1: really had a chance to see whether or not those 283 00:13:07,840 --> 00:13:10,560 Speaker 1: attacks are sticking yet. They have not been delivered in 284 00:13:10,600 --> 00:13:12,800 Speaker 1: the most disciplined way, I would say from the Trump side. 285 00:13:13,440 --> 00:13:16,000 Speaker 1: And I think the way that they're intending to tap 286 00:13:16,200 --> 00:13:19,880 Speaker 1: walls onto that sort of attacking Nice Minnesota as a 287 00:13:19,920 --> 00:13:23,079 Speaker 1: socialist healthscape seems a little bit challenging. But there is 288 00:13:23,160 --> 00:13:25,520 Speaker 1: plenty of ammunition they have to go after Harris, and 289 00:13:25,559 --> 00:13:28,600 Speaker 1: we've only started to see that that effort come together. 290 00:13:28,760 --> 00:13:30,680 Speaker 5: So and that's the content of what they're saying. I 291 00:13:30,679 --> 00:13:32,520 Speaker 5: want to ask you about how they're saying it. We 292 00:13:32,640 --> 00:13:35,240 Speaker 5: haven't seen Trump at a rally since Saturday when he 293 00:13:35,320 --> 00:13:37,760 Speaker 5: was in Georgia. Instead, it's been Jade Vance who's been 294 00:13:37,800 --> 00:13:39,760 Speaker 5: out throughout the Midwest. What do you make of that 295 00:13:40,000 --> 00:13:42,520 Speaker 5: tactic that they're basically sending him out to appeal to 296 00:13:42,559 --> 00:13:43,120 Speaker 5: these voters. 297 00:13:44,880 --> 00:13:48,439 Speaker 1: Well, look, I mean, Jade Vance is from the Midwest. 298 00:13:48,600 --> 00:13:51,959 Speaker 1: His electoral track record is not particularly impressive in the Midwest, 299 00:13:52,000 --> 00:13:53,880 Speaker 1: so I don't know how he's going to do as 300 00:13:53,920 --> 00:13:56,760 Speaker 1: a voter. You know, in Ohio he ran behind Trump, 301 00:13:56,800 --> 00:14:00,640 Speaker 1: and he ran way, way way behind the governor governor 302 00:14:00,679 --> 00:14:04,440 Speaker 1: who is sort of potentially more popular figure. So he 303 00:14:04,520 --> 00:14:06,520 Speaker 1: has some affinity I think, for that part of the 304 00:14:06,559 --> 00:14:09,240 Speaker 1: electoral map, but it remains to be seen how effective 305 00:14:09,280 --> 00:14:14,200 Speaker 1: he is as a as a messenger. You know, Trump's 306 00:14:14,200 --> 00:14:17,839 Speaker 1: not been running the most sort of vigorous campaign, more 307 00:14:18,920 --> 00:14:21,000 Speaker 1: so than in Biden back when he was on the ticket. 308 00:14:21,000 --> 00:14:23,520 Speaker 1: But I think on both sides we do have guys 309 00:14:23,560 --> 00:14:27,040 Speaker 1: who are a little bit kind of probably past the 310 00:14:27,240 --> 00:14:29,520 Speaker 1: peak of their powers in terms of their ability to 311 00:14:29,560 --> 00:14:32,480 Speaker 1: just sort of run a really, really, really aggressive campaign 312 00:14:32,600 --> 00:14:35,960 Speaker 1: five days a week. So you know, if they want 313 00:14:35,960 --> 00:14:37,720 Speaker 1: those to tax to stick, I think they are ultimately 314 00:14:37,720 --> 00:14:40,400 Speaker 1: going to have to get Trump more out there rather 315 00:14:40,440 --> 00:14:42,480 Speaker 1: than just posting about her untrue social so but. 316 00:14:42,480 --> 00:14:43,760 Speaker 2: It just feels like he's trying to be a man 317 00:14:43,800 --> 00:14:46,240 Speaker 2: who's already beaten. He's still trying to beat Joe Biden, 318 00:14:46,880 --> 00:14:48,960 Speaker 2: and so I wonder why he's finding it so difficult 319 00:14:49,040 --> 00:14:51,600 Speaker 2: to pivot. We talked about these pivots in the campaign, 320 00:14:51,880 --> 00:14:54,160 Speaker 2: cuding the Democratic ticket had to pivot. It's done a 321 00:14:54,160 --> 00:14:56,200 Speaker 2: great job of doing so. You can see the enthusiasm 322 00:14:56,200 --> 00:14:58,480 Speaker 2: in the Partsy can see that reflected in the polls. 323 00:14:58,680 --> 00:15:01,160 Speaker 2: Why do you think this campaign is struggling so hard 324 00:15:01,560 --> 00:15:02,120 Speaker 2: to pivot? 325 00:15:03,640 --> 00:15:07,840 Speaker 1: Yeah, so the campaign organization, I think is pivoting reasonably well. 326 00:15:07,880 --> 00:15:10,080 Speaker 1: I think if you look at Trump's kind of campaign leadership, 327 00:15:10,080 --> 00:15:14,760 Speaker 1: they're not feeling too wrong footed by the need to 328 00:15:14,760 --> 00:15:16,400 Speaker 1: go after Harris. They feel like they have plenty to 329 00:15:16,400 --> 00:15:19,640 Speaker 1: say about her, even though again that message has not 330 00:15:19,720 --> 00:15:21,920 Speaker 1: yet come across, and time will tell whether or not 331 00:15:21,920 --> 00:15:24,600 Speaker 1: they succeed in getting this sort of negative attempt to 332 00:15:24,600 --> 00:15:27,440 Speaker 1: define her across. But Trump himself, Yeah, really does seem 333 00:15:27,520 --> 00:15:29,360 Speaker 1: to be struggling. I guess there's been a lot of 334 00:15:29,640 --> 00:15:32,360 Speaker 1: intrigue in DC about what exactly is meant by this 335 00:15:32,960 --> 00:15:34,720 Speaker 1: coma blah nickname that he. 336 00:15:34,720 --> 00:15:35,200 Speaker 7: Tries to be. 337 00:15:36,160 --> 00:15:39,800 Speaker 1: He seems to be trying to roll out. So it 338 00:15:39,800 --> 00:15:42,080 Speaker 1: does feel like he personally is sort of throwing some 339 00:15:42,120 --> 00:15:45,000 Speaker 1: things at the wall and seeing what will stick. Again, 340 00:15:45,320 --> 00:15:47,280 Speaker 1: you have ninety days left in the campaign, so we 341 00:15:47,280 --> 00:15:50,560 Speaker 1: have some time to see if he can make it happen, 342 00:15:50,600 --> 00:15:54,840 Speaker 1: but for now not the most effective effort from him. 343 00:15:54,840 --> 00:15:56,280 Speaker 2: Time and this was great. It's going to hear from you, 344 00:15:56,320 --> 00:16:09,000 Speaker 2: sir as always Tybermarcus therefore fresearch to look at the 345 00:16:09,000 --> 00:16:11,400 Speaker 2: totality of the data. Joining us now is David Rosenberg 346 00:16:11,640 --> 00:16:14,400 Speaker 2: of Rosenberg Research. David, we've been looking forward to catching 347 00:16:14,480 --> 00:16:16,520 Speaker 2: up with you, sir. Let's just take a step back. 348 00:16:16,720 --> 00:16:18,760 Speaker 2: Totality the data is a fed would like to say, 349 00:16:18,760 --> 00:16:23,680 Speaker 2: what's your assessment of where we are, David at the moment, Well, I. 350 00:16:23,600 --> 00:16:30,920 Speaker 7: Still think that we're either intercession or about to confront one. 351 00:16:31,200 --> 00:16:34,440 Speaker 7: And you know, I know everybody's on tenor books because 352 00:16:34,480 --> 00:16:38,920 Speaker 7: of weekly jobas claims numbers which can quite often contain 353 00:16:39,040 --> 00:16:41,720 Speaker 7: quite a bit of noise in coming off or could 354 00:16:41,720 --> 00:16:46,720 Speaker 7: have been a hurricane distortion from the previous week. However, 355 00:16:47,720 --> 00:16:51,760 Speaker 7: I would say that what's tried, tested and true is 356 00:16:51,800 --> 00:16:56,240 Speaker 7: the unemployment rate, and the unemployment rate is up nine 357 00:16:56,280 --> 00:16:59,240 Speaker 7: tenths of a percentage point over the past fifteen months, 358 00:17:00,120 --> 00:17:03,240 Speaker 7: and the data going back to nineteen forty eight show 359 00:17:03,360 --> 00:17:06,920 Speaker 7: that we had twelve recessions. And when you're up ninety 360 00:17:06,960 --> 00:17:10,199 Speaker 7: bases points or more in the unemployment rate from the 361 00:17:10,240 --> 00:17:12,919 Speaker 7: cyclow You go on a recession one hundred percent of 362 00:17:12,960 --> 00:17:16,440 Speaker 7: the time, So I am definitely not one of those 363 00:17:16,440 --> 00:17:18,840 Speaker 7: people that would say to you it's different this time. 364 00:17:18,920 --> 00:17:20,760 Speaker 7: I don't think that it is. In today's job is 365 00:17:20,800 --> 00:17:24,040 Speaker 7: Glam's numbers. We'll get a fresh patch a week today. 366 00:17:25,160 --> 00:17:26,080 Speaker 7: Doesn't change my view. 367 00:17:26,200 --> 00:17:26,440 Speaker 2: David. 368 00:17:26,440 --> 00:17:28,360 Speaker 5: I'm going to push you on this, and I'm sure 369 00:17:28,359 --> 00:17:30,760 Speaker 5: it's something that you have heard multiple times, So give 370 00:17:30,760 --> 00:17:32,480 Speaker 5: you the opportunity to tell me why I am wrong. 371 00:17:32,800 --> 00:17:35,159 Speaker 5: The argument of you being wrong goes something like this, 372 00:17:35,359 --> 00:17:38,800 Speaker 5: that the uptrend is about immigration. Torson's lack of Apollo 373 00:17:38,840 --> 00:17:41,000 Speaker 5: out with a note just moments ago saying that more 374 00:17:41,080 --> 00:17:43,760 Speaker 5: visas are getting accepted, that there's been a COVID backlog, 375 00:17:43,800 --> 00:17:46,320 Speaker 5: and that just adds again to the evidence that there's 376 00:17:46,359 --> 00:17:49,640 Speaker 5: growth in the labor supply, hence the uptrend in unemployment. 377 00:17:49,720 --> 00:17:51,000 Speaker 5: Why is that argument not right? 378 00:17:52,720 --> 00:17:58,399 Speaker 7: Well, the argument is partially right, but the reality is 379 00:17:58,480 --> 00:18:01,560 Speaker 7: just to go back, the unemployment comes from the household survey, 380 00:18:01,640 --> 00:18:05,800 Speaker 7: not the payroll survey. But the reality is that there's 381 00:18:05,840 --> 00:18:09,840 Speaker 7: been no growth in job creation in the household survey 382 00:18:09,840 --> 00:18:13,879 Speaker 7: over the past twelve months. What the data show is 383 00:18:13,880 --> 00:18:19,200 Speaker 7: that ninety six percent of those people, and I'm sure 384 00:18:19,240 --> 00:18:22,280 Speaker 7: a lot of them are immigrants, ninety six percent of 385 00:18:22,280 --> 00:18:24,919 Speaker 7: the people that entered the labor force in the past 386 00:18:25,080 --> 00:18:29,040 Speaker 7: year have not found a job. Now, I would pose 387 00:18:29,080 --> 00:18:31,240 Speaker 7: the question back to you, does that sound like a 388 00:18:31,240 --> 00:18:35,760 Speaker 7: buoyant labor market as far as you're concerned. This time 389 00:18:35,840 --> 00:18:39,879 Speaker 7: last year, ninety six percent of labor force entrants we're 390 00:18:39,920 --> 00:18:43,440 Speaker 7: finding a job. Only four percent now are finding a job. 391 00:18:44,720 --> 00:18:48,199 Speaker 7: So it's not just about labor supply, and it's not 392 00:18:48,320 --> 00:18:52,320 Speaker 7: just about firing your layoffs which remain very low. Companies 393 00:18:52,359 --> 00:18:55,240 Speaker 7: are still hoarding labor. But what are they doing. They're 394 00:18:55,240 --> 00:19:00,000 Speaker 7: cutting the workweek and they're furloing workers from full time 395 00:19:00,160 --> 00:19:02,640 Speaker 7: part time. Well, you get from full time to part time, 396 00:19:02,680 --> 00:19:04,880 Speaker 7: it's not a job loss, so you don't you don't 397 00:19:04,880 --> 00:19:10,080 Speaker 7: collect an unemployment insurance check. But there are decisive shifts 398 00:19:10,080 --> 00:19:14,080 Speaker 7: taking place in the labor market right now. So there's 399 00:19:14,080 --> 00:19:16,960 Speaker 7: been no growth in household employment. And in fact, if 400 00:19:17,000 --> 00:19:18,680 Speaker 7: you look at household if you look at the full 401 00:19:18,720 --> 00:19:22,000 Speaker 7: time picture, full time jobs are down on a year 402 00:19:22,000 --> 00:19:24,159 Speaker 7: of a year basis. The number of full time jobs 403 00:19:24,160 --> 00:19:27,600 Speaker 7: are negative year on year, and that does not happen 404 00:19:27,640 --> 00:19:31,680 Speaker 7: typically in an economy that's still expanding. That's my point. 405 00:19:32,160 --> 00:19:34,520 Speaker 4: We heard from Mary Daily recently and she said, firms 406 00:19:34,520 --> 00:19:37,080 Speaker 4: are not laying off people to your point there, So 407 00:19:37,119 --> 00:19:39,840 Speaker 4: why isn't this just normalization? How can we be a 408 00:19:39,880 --> 00:19:42,680 Speaker 4: recession if firms are not laying off individuals? 409 00:19:44,480 --> 00:19:49,240 Speaker 7: Well, because employment is not just one number. It's the 410 00:19:49,280 --> 00:19:54,200 Speaker 7: product of the two numbers firings and hirings. And what's happening 411 00:19:54,440 --> 00:19:57,639 Speaker 7: and it's not contained in today's job is claim number. 412 00:19:59,280 --> 00:20:04,159 Speaker 7: But you do see in the Jolt Stata agency in 413 00:20:04,240 --> 00:20:10,040 Speaker 7: the Challenger data, which is that hiring activity is collapsing. 414 00:20:11,000 --> 00:20:12,760 Speaker 7: Like I don't know what I'm missing. We just got 415 00:20:12,800 --> 00:20:16,080 Speaker 7: a few weeks ago the Joel Stata. The Joel Stata 416 00:20:16,119 --> 00:20:19,639 Speaker 7: showed that the number of new hires in the economy, 417 00:20:20,560 --> 00:20:24,720 Speaker 7: the number of new hires is running negative nine percent 418 00:20:24,960 --> 00:20:30,359 Speaker 7: year of a year, and the level of hirings is 419 00:20:30,600 --> 00:20:34,000 Speaker 7: back to where it was in April twenty twenty. So 420 00:20:34,040 --> 00:20:38,000 Speaker 7: what's happening is that, yes, the firing rate is remaining 421 00:20:38,359 --> 00:20:40,800 Speaker 7: very low for the reasons. As I said before, a 422 00:20:40,880 --> 00:20:44,480 Speaker 7: lot of it is because companies have this horrible memory 423 00:20:44,520 --> 00:20:47,520 Speaker 7: that is lingering about letting people go in twenty twenty 424 00:20:47,560 --> 00:20:50,719 Speaker 7: and then not finding them again. So they're holding on 425 00:20:50,880 --> 00:20:55,960 Speaker 7: to their staff, they're cutting hours, repositioning staff to part 426 00:20:56,080 --> 00:20:59,600 Speaker 7: time from full time, and that's giving this illusion that yes, 427 00:20:59,720 --> 00:21:03,080 Speaker 7: fires are very low, but what's happening is that the 428 00:21:03,160 --> 00:21:07,800 Speaker 7: hiring rate is collapsing. We've got the Challenger numbers just 429 00:21:07,840 --> 00:21:12,639 Speaker 7: ahead of non farm last week, So in July the 430 00:21:12,760 --> 00:21:18,239 Speaker 7: number of hiring announcements in the Challenger data was the 431 00:21:18,280 --> 00:21:21,240 Speaker 7: weakest for any July back when the data started in 432 00:21:21,240 --> 00:21:24,480 Speaker 7: two thousand and four. The number of hires in the 433 00:21:24,560 --> 00:21:28,280 Speaker 7: Challenger survey is negative seventy one percent year of a year. 434 00:21:28,400 --> 00:21:30,840 Speaker 7: So you're just looking at one side of the ledger, 435 00:21:30,880 --> 00:21:34,920 Speaker 7: which is firings. But the reason why employment growth is 436 00:21:35,080 --> 00:21:39,480 Speaker 7: decilerating sharply even in the payroll survey is because hiring 437 00:21:39,560 --> 00:21:44,800 Speaker 7: activity is collapsing even as the firing rate remains very low. 438 00:21:44,920 --> 00:21:47,760 Speaker 7: That's the story beneath the story, David. 439 00:21:47,800 --> 00:21:50,399 Speaker 2: As you know, whether it's consensus right now, a lot 440 00:21:50,440 --> 00:21:52,600 Speaker 2: of people believe the FED needs to get less restrictive. 441 00:21:52,920 --> 00:21:55,119 Speaker 2: There's another element to this as well. I just wonder 442 00:21:55,119 --> 00:21:57,520 Speaker 2: whether you think they need to get accommodative. And when 443 00:21:57,520 --> 00:21:59,320 Speaker 2: we talk less about the path and whether they go 444 00:21:59,359 --> 00:22:01,880 Speaker 2: twenty five or fifty in September, and talk more about 445 00:22:01,880 --> 00:22:04,199 Speaker 2: the destination, where do you think they're going to end 446 00:22:04,280 --> 00:22:05,679 Speaker 2: up here at the Federal Reserve? 447 00:22:07,200 --> 00:22:09,919 Speaker 7: Well, you know, I think that J. Powell gave us 448 00:22:09,960 --> 00:22:13,320 Speaker 7: a ton of information at the podium last week at 449 00:22:13,359 --> 00:22:18,959 Speaker 7: the press conference when he uttered the word normalization. Describe 450 00:22:19,000 --> 00:22:21,840 Speaker 7: the labor market in the economy no fewer than eleven 451 00:22:21,880 --> 00:22:27,119 Speaker 7: times normalization. So things have normalized. You strip out the 452 00:22:27,200 --> 00:22:30,639 Speaker 7: nonsense around owner's equivalent rent and the lag nature of 453 00:22:30,680 --> 00:22:33,439 Speaker 7: the actual rents, and inflation is basically back to target, 454 00:22:34,119 --> 00:22:36,600 Speaker 7: and the unemployment rate is actually higher now than it 455 00:22:36,760 --> 00:22:41,280 Speaker 7: was before COVID, when the funds rate was one point 456 00:22:41,359 --> 00:22:45,720 Speaker 7: seventy five. So he uttered the word normalization. The only 457 00:22:45,760 --> 00:22:50,840 Speaker 7: thing that's not normalized is the fit funds rate. And 458 00:22:50,880 --> 00:22:54,840 Speaker 7: so what's normalized, Well, according to their own estimates, the 459 00:22:54,880 --> 00:22:59,240 Speaker 7: neutral rate, the equilibrium rate, the rate that we should 460 00:22:59,280 --> 00:23:02,120 Speaker 7: have in a balance to economy, which he said we're 461 00:23:02,160 --> 00:23:06,920 Speaker 7: in is two point seventy five. And every tailor rule 462 00:23:07,080 --> 00:23:10,840 Speaker 7: estimate shows that today the funds rate maximum should be 463 00:23:10,880 --> 00:23:13,359 Speaker 7: four percent, we're still five and a quarter, five and 464 00:23:13,400 --> 00:23:17,160 Speaker 7: a half, So they are ridiculously behind the curve no 465 00:23:17,200 --> 00:23:19,880 Speaker 7: matter what's happening with the equity market. And it wasn't 466 00:23:19,920 --> 00:23:22,680 Speaker 7: about data that caused the markets to start thinking they're 467 00:23:22,720 --> 00:23:24,320 Speaker 7: going to go inter meeting. It was are we going 468 00:23:24,359 --> 00:23:26,800 Speaker 7: to continue to get thousand point down days in the Dow? 469 00:23:27,160 --> 00:23:30,240 Speaker 7: That was just all about the stock market. But they 470 00:23:30,280 --> 00:23:35,359 Speaker 7: are ridiculously behind the curve irrespective of what the capital 471 00:23:35,400 --> 00:23:39,520 Speaker 7: margarets are doing. So he basically said things are normalized, 472 00:23:39,920 --> 00:23:41,879 Speaker 7: and we do not have a funds rate that is 473 00:23:41,880 --> 00:23:44,760 Speaker 7: consistent with a normalized economy. So they have a long 474 00:23:44,840 --> 00:23:45,320 Speaker 7: road to hoe. 475 00:23:46,160 --> 00:23:48,760 Speaker 2: David ros Rosenbuck Research, Dave, we quit to catch up 476 00:23:48,840 --> 00:24:00,000 Speaker 2: set mat To Danny's point, we've both been talking about it. 477 00:24:00,240 --> 00:24:02,600 Speaker 2: Are we're going to treat every single jobless climbs print 478 00:24:02,760 --> 00:24:04,720 Speaker 2: every single week for the rest of the summer, the 479 00:24:04,720 --> 00:24:05,440 Speaker 2: rest of this year. 480 00:24:05,680 --> 00:24:08,000 Speaker 6: This way, it's gonna be exciting. We're going to be 481 00:24:08,040 --> 00:24:10,720 Speaker 6: watching for it. It's gonna be It's gonna because. 482 00:24:10,440 --> 00:24:12,280 Speaker 2: I think we should put this much weight on this print. 483 00:24:12,480 --> 00:24:14,320 Speaker 6: Yes, because that people want to talk to us about it, 484 00:24:14,359 --> 00:24:17,080 Speaker 6: so I think we should. We absolutely shouldn't to your point, 485 00:24:16,720 --> 00:24:19,359 Speaker 6: it's it's a very noisy number week to week. You 486 00:24:19,440 --> 00:24:21,600 Speaker 6: gotta look at the trend. But more importantly, at the 487 00:24:21,600 --> 00:24:24,880 Speaker 6: start of a recession, generally speaking, weekly in appointment claims 488 00:24:24,920 --> 00:24:26,800 Speaker 6: are sort of three hundred and fifty to four hundred 489 00:24:26,800 --> 00:24:29,679 Speaker 6: and fifty thousand, so we're still well off the number 490 00:24:30,040 --> 00:24:32,400 Speaker 6: where we see companies firing and people are getting really 491 00:24:32,400 --> 00:24:35,440 Speaker 6: concerned about their financial condition. So we're not overly concerned 492 00:24:35,440 --> 00:24:38,520 Speaker 6: about a recession right now. We're not calling for a recession. Certainly, 493 00:24:39,000 --> 00:24:42,119 Speaker 6: the market implied recession as we're way too low a 494 00:24:42,119 --> 00:24:43,760 Speaker 6: couple of weeks ago, and they're more getting to a 495 00:24:43,760 --> 00:24:45,800 Speaker 6: place that's more normal. There's a higher risk of recession 496 00:24:45,800 --> 00:24:47,840 Speaker 6: than zero. But it's still not a base case for 497 00:24:47,920 --> 00:24:48,240 Speaker 6: us yet. 498 00:24:48,280 --> 00:24:50,040 Speaker 2: So what you make of the levels around right now 499 00:24:50,119 --> 00:24:51,040 Speaker 2: in the bond market. 500 00:24:51,840 --> 00:24:54,359 Speaker 6: So for the bond market, as you know, bond guys 501 00:24:54,400 --> 00:24:57,800 Speaker 6: like undertakers, we're only when everyone else is said, we've 502 00:24:57,840 --> 00:25:01,120 Speaker 6: been listening for a year now, all these reasons why 503 00:25:01,160 --> 00:25:03,600 Speaker 6: bonds don't work, why diverse vacation isn't going to work, 504 00:25:04,000 --> 00:25:07,480 Speaker 6: why you should have commodities something else. Your portfolio last 505 00:25:07,480 --> 00:25:10,040 Speaker 6: week was close the Blue Book. Put your pencils down 506 00:25:10,080 --> 00:25:13,479 Speaker 6: and the exams over bonds did their job. We've been 507 00:25:13,480 --> 00:25:15,360 Speaker 6: saying this for a year. We've been counseling getting long 508 00:25:15,440 --> 00:25:18,640 Speaker 6: duration four over a year now with real rates around 509 00:25:18,680 --> 00:25:21,359 Speaker 6: that two percent level below that, now they can do 510 00:25:21,400 --> 00:25:23,360 Speaker 6: a job of diverse sewing. Back in twenty twenty one 511 00:25:23,359 --> 00:25:26,040 Speaker 6: when they were negative two percent real right when there 512 00:25:26,040 --> 00:25:28,040 Speaker 6: were fifty base points two percent and ten years, yes, 513 00:25:28,080 --> 00:25:30,040 Speaker 6: they weren't doing their job. Now they can do their job. 514 00:25:30,119 --> 00:25:31,840 Speaker 6: That was the most important thing we learned from the 515 00:25:31,840 --> 00:25:34,600 Speaker 6: market that when there is an economic downturn, when there 516 00:25:34,720 --> 00:25:38,160 Speaker 6: is real market volatility, treasuries, high quality, fix and click 517 00:25:38,160 --> 00:25:39,760 Speaker 6: collateral will protect your portfolio. 518 00:25:40,119 --> 00:25:41,800 Speaker 5: I look at the past week, though, and I say, yeah, 519 00:25:41,840 --> 00:25:43,480 Speaker 5: I did a job. They did their job, but in 520 00:25:43,560 --> 00:25:46,520 Speaker 5: an extremely volatile way that you saw some big swings 521 00:25:46,520 --> 00:25:49,919 Speaker 5: in this bond market does not dampen their ability to 522 00:25:49,960 --> 00:25:51,800 Speaker 5: give you protection that if I have bonds in my 523 00:25:51,840 --> 00:25:53,600 Speaker 5: portfolio that it could actually add to some of the 524 00:25:53,640 --> 00:25:54,479 Speaker 5: volatility in it. 525 00:25:54,640 --> 00:25:56,960 Speaker 6: That's a very good question. So Mark Cabaner are head 526 00:25:57,000 --> 00:25:59,600 Speaker 6: of race research at Bank for America Meryl. He does 527 00:25:59,640 --> 00:26:02,680 Speaker 6: have learned about liquidity in the treasury market. You can 528 00:26:02,680 --> 00:26:05,120 Speaker 6: flip that a little bit on its head, though there's 529 00:26:05,119 --> 00:26:07,200 Speaker 6: no constitutionally guaranteed to right to be able to trade 530 00:26:07,200 --> 00:26:09,640 Speaker 6: a yard to ten years in a millisecond. So when 531 00:26:09,640 --> 00:26:12,960 Speaker 6: people realize that maybe the liquidity's not quite there right, 532 00:26:13,119 --> 00:26:15,480 Speaker 6: maybe they can't take as large positions. Maybe there will 533 00:26:15,480 --> 00:26:17,840 Speaker 6: be an increase in risk premiums in the market for 534 00:26:17,920 --> 00:26:20,760 Speaker 6: our clients who are liquity providers looking for money to work. 535 00:26:21,000 --> 00:26:23,639 Speaker 6: Higher risk premiums potentially because of the bidass factors and 536 00:26:23,640 --> 00:26:26,520 Speaker 6: the liquity you're talking about, is probably better for overall 537 00:26:26,560 --> 00:26:28,960 Speaker 6: for investors on the whole, because that should lead to 538 00:26:28,960 --> 00:26:31,879 Speaker 6: a higher term premium, should lead to higher credit spreads 539 00:26:31,960 --> 00:26:34,159 Speaker 6: on average. They should get a little more compensation for 540 00:26:34,160 --> 00:26:36,239 Speaker 6: that lack of liquidity. So we are a little bit 541 00:26:36,240 --> 00:26:39,240 Speaker 6: concerned about it, but from an investor who's providing liquity 542 00:26:39,280 --> 00:26:40,800 Speaker 6: to the market, can actually be a benefit. 543 00:26:41,480 --> 00:26:43,480 Speaker 5: Just to that point, do you think this week would 544 00:26:43,520 --> 00:26:45,840 Speaker 5: have played out differently if it wasn't the debta summer, 545 00:26:46,080 --> 00:26:48,280 Speaker 5: if it wasn't August, if this was a couple months ago. 546 00:26:48,080 --> 00:26:50,159 Speaker 6: And all of this was happening, I definitely think that 547 00:26:50,280 --> 00:26:52,159 Speaker 6: was a factor. A lot of traders on their two 548 00:26:52,160 --> 00:26:54,879 Speaker 6: week vacations. Now August is a new September. It feels like, 549 00:26:55,640 --> 00:26:58,400 Speaker 6: definitely there was more violatile than we would have expected. 550 00:26:58,800 --> 00:27:00,840 Speaker 6: And again you start to say these things in the market, 551 00:27:00,920 --> 00:27:04,439 Speaker 6: like six or seven federate cuts by January seem to 552 00:27:04,520 --> 00:27:08,840 Speaker 6: overestimate economic weakness. It was more market technical sentiment driven. 553 00:27:09,040 --> 00:27:10,679 Speaker 4: So what do you do in a day like today 554 00:27:10,840 --> 00:27:15,080 Speaker 4: when the markets are basically reacting to this claims like 555 00:27:15,080 --> 00:27:18,080 Speaker 4: it's a non fum payrolls because it's a liquid it's August. 556 00:27:18,960 --> 00:27:21,199 Speaker 6: So one of the best things to do is just 557 00:27:21,320 --> 00:27:24,840 Speaker 6: have your strategic plan in place and take opportunities like 558 00:27:24,880 --> 00:27:27,040 Speaker 6: this as they give it to you. So we've been 559 00:27:27,080 --> 00:27:30,240 Speaker 6: saying for a while that again we didn't expect a recession, 560 00:27:30,600 --> 00:27:32,840 Speaker 6: but as we looked across the credit complex, we thought 561 00:27:32,880 --> 00:27:35,520 Speaker 6: ig high yield, even muni's were a little bit expensive. 562 00:27:35,560 --> 00:27:38,439 Speaker 6: So we're slightly underweight some of the credit sectors, but 563 00:27:38,520 --> 00:27:41,040 Speaker 6: we haven't moved to an underway position on equity. So actually, 564 00:27:41,040 --> 00:27:44,040 Speaker 6: when we see volatility like this, we've been advising clients 565 00:27:44,040 --> 00:27:46,240 Speaker 6: to take advantage of it, get back to their strategic targets, 566 00:27:46,280 --> 00:27:48,320 Speaker 6: put a little bit of money to work, you kind 567 00:27:48,320 --> 00:27:50,679 Speaker 6: of want this volatility. You want these drawdowns every once 568 00:27:50,720 --> 00:27:52,600 Speaker 6: in a while to be able to add back to 569 00:27:52,600 --> 00:27:53,760 Speaker 6: your portfolio. 570 00:27:53,280 --> 00:27:55,240 Speaker 2: When you get backups in Yeo's line, the ones we've 571 00:27:55,240 --> 00:27:56,840 Speaker 2: got right now. Do you think these are going to 572 00:27:56,840 --> 00:27:58,439 Speaker 2: get bored? Do you think the last week was a 573 00:27:58,440 --> 00:28:00,399 Speaker 2: wake up call for the lazy money, if we can 574 00:28:00,440 --> 00:28:03,040 Speaker 2: call it that, sitting in money market funds getting rewarded 575 00:28:03,080 --> 00:28:06,640 Speaker 2: for doing nothing, and they've been sold repeatedly by individual 576 00:28:06,680 --> 00:28:09,040 Speaker 2: after individual on Wall Street to lock in this yield, 577 00:28:09,119 --> 00:28:11,520 Speaker 2: this reinvestment risk, that's been the phrase of this year. 578 00:28:11,920 --> 00:28:13,080 Speaker 2: And then they've sat there and said, I don't know 579 00:28:13,119 --> 00:28:14,320 Speaker 2: what you're talking about it. You've been sending this for 580 00:28:14,359 --> 00:28:16,320 Speaker 2: twelve months and we've had no rate cuts. Do you 581 00:28:16,320 --> 00:28:18,000 Speaker 2: think this was the week where that money woke up 582 00:28:18,000 --> 00:28:18,480 Speaker 2: a little bit? 583 00:28:18,720 --> 00:28:20,600 Speaker 6: I would like to think that's the case, but that's 584 00:28:20,640 --> 00:28:22,159 Speaker 6: not going to be the case in my opinion. As 585 00:28:22,200 --> 00:28:24,360 Speaker 6: you said, we've been counseling for a year or so 586 00:28:24,480 --> 00:28:28,040 Speaker 6: that fixed incomes longer dated bonds. Cash is not fixed income, 587 00:28:28,040 --> 00:28:30,080 Speaker 6: it's veriabile income. You just don't know how long are 588 00:28:30,080 --> 00:28:31,840 Speaker 6: you're going to cash hield for. It's going to come down, 589 00:28:31,840 --> 00:28:35,240 Speaker 6: But unfortunately, what it seems like until the fit actually cuts, 590 00:28:35,280 --> 00:28:37,159 Speaker 6: people don't actually move out of money market funds. So 591 00:28:37,160 --> 00:28:39,400 Speaker 6: we're still going to counsel that. I do think this 592 00:28:39,480 --> 00:28:41,880 Speaker 6: is somewhat of a wake up call again that if 593 00:28:41,880 --> 00:28:44,560 Speaker 6: you were concerned that bonds couldn't diversify, I think that 594 00:28:44,680 --> 00:28:46,120 Speaker 6: is taken off the table and now so that will 595 00:28:46,120 --> 00:28:48,720 Speaker 6: hopefully encourage clients get back their strategic targets are fixing it. 596 00:28:48,880 --> 00:28:50,280 Speaker 2: Did you just give us a little snake peek of 597 00:28:50,280 --> 00:28:52,840 Speaker 2: what client conversations were like this week. Yes, they're still 598 00:28:52,840 --> 00:28:53,680 Speaker 2: reluctant to do this. 599 00:28:53,800 --> 00:28:55,920 Speaker 6: They've been reluctant to do this for some time, which 600 00:28:56,000 --> 00:28:57,560 Speaker 6: is one of the reasons. You know, it's the right 601 00:28:57,640 --> 00:28:59,840 Speaker 6: thing to do. When it's that hard to get people 602 00:28:59,880 --> 00:29:01,239 Speaker 6: to do it, you know that's probably the right. 603 00:29:01,240 --> 00:29:03,040 Speaker 2: Well, why do you think this week wasn't enough for them? 604 00:29:03,080 --> 00:29:04,520 Speaker 2: What did they say back to you? What did those 605 00:29:04,520 --> 00:29:05,600 Speaker 2: conversations sound like? 606 00:29:06,440 --> 00:29:11,440 Speaker 6: So essentially, there's always some new concern why they wouldn't 607 00:29:11,440 --> 00:29:13,760 Speaker 6: want to move it a cash whether it's higher deficits, 608 00:29:14,160 --> 00:29:15,760 Speaker 6: whether it's the fact that they can still get five 609 00:29:15,760 --> 00:29:17,280 Speaker 6: and a quarter percent even if they cut three or 610 00:29:17,280 --> 00:29:19,160 Speaker 6: four times they can still get it. It's just it's 611 00:29:19,240 --> 00:29:22,000 Speaker 6: very difficult to make the conversation. I try to tell folks, 612 00:29:22,240 --> 00:29:24,920 Speaker 6: the yield curve tries to trick you, right when yields 613 00:29:24,960 --> 00:29:26,280 Speaker 6: are that high in the shorten and lower and the 614 00:29:26,280 --> 00:29:28,040 Speaker 6: long and it's trying to trick you. Sort of don't 615 00:29:28,080 --> 00:29:29,560 Speaker 6: fall for And again we don't need to be crazy 616 00:29:29,600 --> 00:29:31,600 Speaker 6: long bonds. But getting clients from a two to three 617 00:29:31,680 --> 00:29:33,960 Speaker 6: year average duration to a five or six year duration, God, 618 00:29:34,080 --> 00:29:35,240 Speaker 6: is going to be better for the long term. 619 00:29:35,240 --> 00:29:37,040 Speaker 2: It's a big challenge still at the moment, Matt's going 620 00:29:37,080 --> 00:29:38,960 Speaker 2: to say thank you, sir. Matt Days offair of Merrow 621 00:29:38,960 --> 00:29:41,360 Speaker 2: and Bank of America Private Bank on the latest jobless 622 00:29:41,360 --> 00:29:45,680 Speaker 2: claims print. This is the Bloomberg Sevenants podcast, bringing you 623 00:29:45,920 --> 00:29:49,080 Speaker 2: the best in markets, economics, an giet politics. You can 624 00:29:49,120 --> 00:29:51,920 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 625 00:29:51,920 --> 00:29:55,200 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 626 00:29:55,240 --> 00:29:58,400 Speaker 2: on Apple, Spotify or anywhere else you listen, and as 627 00:29:58,440 --> 00:30:01,320 Speaker 2: always on the Bloomberg Terminal and the Bloomberg Business Out 628 00:30:05,400 --> 00:30:05,600 Speaker 2: Yeah