WEBVTT - Bloomberg Surveillance TV: October 25, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.240 Terminal and the Bloomberg Business app. What has been happening 0:00:37.280 --> 0:00:39.800 to the gold price is not just unusual in terms 0:00:39.840 --> 0:00:43.720 of traditional economic and financial influences, it also goes beyond 0:00:44.000 --> 0:00:47.640 strict geopolitical influences. The capture a broader phenomenon which is 0:00:47.640 --> 0:00:50.800 building secular momentum. Mohammad joins us now for more. Mohammad, 0:00:50.840 --> 0:00:53.200 Welcome to the program sir, always looking forward to roundom 0:00:53.240 --> 0:00:55.080 out the week with you. This got a lot of 0:00:55.080 --> 0:00:57.880 attention in the Financial Times this week. Just take it 0:00:57.920 --> 0:01:00.280 from the top four US. What are you trying to 0:01:00.280 --> 0:01:03.240 get people to pay attention to not just why the 0:01:03.360 --> 0:01:05.959 move is higher, but what is behind it and how 0:01:06.000 --> 0:01:07.240 long this has been building for. 0:01:09.160 --> 0:01:11.000 And thanks for having me, John Lord. Gold is up 0:01:11.080 --> 0:01:13.840 thirty two percent year to date. That's compared to twenty 0:01:13.880 --> 0:01:17.840 two percent for the SMP. When we try to relate 0:01:18.440 --> 0:01:22.000 the moves in goal this year to the traditional economic 0:01:22.120 --> 0:01:26.840 and financial variables interest rates, inflation, the dollar, you know them, 0:01:27.520 --> 0:01:31.200 the relationships have broken down. It has been a very 0:01:31.440 --> 0:01:34.679 sort of linear move up and it's something that's continuing 0:01:34.720 --> 0:01:37.280 for a while now. Then you ask the question who's 0:01:37.360 --> 0:01:41.760 buying and you start getting the answer that what is 0:01:41.800 --> 0:01:46.000 happening to gold goes well beyond economics and finance, goes 0:01:46.040 --> 0:01:50.760 well beyond the fluctuations dull politics. There's something secular going 0:01:50.800 --> 0:01:55.560 on and that has two elements. One is slow diversification 0:01:55.680 --> 0:01:59.559 away from the dollar in the reserves of central banks 0:01:59.600 --> 0:02:04.080 around the world, and the other one is a slow 0:02:04.240 --> 0:02:08.280 diversification away from the dollar payment system. Now, the good 0:02:08.360 --> 0:02:12.040 news for the US is both are slow because you 0:02:12.080 --> 0:02:15.800 cannot replace something with nothing. People are still building alternatives. 0:02:16.160 --> 0:02:18.560 The bad news is that the momentum is building up. 0:02:18.600 --> 0:02:21.760 So this is something that people have to take seriously 0:02:21.800 --> 0:02:25.040 in the US if they want to maintain the influence 0:02:25.040 --> 0:02:25.800 that the US has. 0:02:25.720 --> 0:02:28.079 Globally, Mohamma, do you think this is a fairly recent 0:02:28.120 --> 0:02:30.760 trend or something that's been building for a number of years, 0:02:30.760 --> 0:02:31.760 maybe even decades. 0:02:33.720 --> 0:02:38.840 It's multi year, but it's been accelerated recently by two events. 0:02:38.880 --> 0:02:41.760 So it's multi year because there has been some questioning 0:02:42.440 --> 0:02:45.400 about the US being a good steward of the global system. 0:02:45.720 --> 0:02:48.880 The global financial crisis was the first shock. The weaponization 0:02:49.120 --> 0:02:52.400 of trade and investment was a second shock. The way 0:02:52.760 --> 0:02:56.160 the US treated inflation was a third shock. So there's 0:02:56.200 --> 0:03:01.320 been questions built, and we've seen little pipes being institutions, 0:03:01.480 --> 0:03:06.080 payments system. But then there's been two more frequent, more 0:03:06.840 --> 0:03:11.359 recent events that have accelerated that. One is Russia being 0:03:11.440 --> 0:03:14.840 able to continue to trade and grow while being kicked 0:03:14.840 --> 0:03:17.520 out of Swift. That has gotten a lot of people 0:03:17.560 --> 0:03:20.760 paying attention. How did Russia do this? And of course 0:03:20.760 --> 0:03:24.040 the answer is they built a very clunky system that 0:03:24.200 --> 0:03:28.160 involves four other countries, but it works and they avoid 0:03:28.160 --> 0:03:31.480 the dollar completely. That's first of all. Second development is 0:03:31.520 --> 0:03:34.320 what's been happening in the least where the majority of 0:03:34.360 --> 0:03:36.960 countries around the world have viewed the US as an 0:03:37.000 --> 0:03:41.840 inconsistent backer of human rights and an inconsistent back of 0:03:41.880 --> 0:03:45.320 international law. So you've had those two recent developments that 0:03:45.400 --> 0:03:48.040 have accelerated something that's been in play for a while. 0:03:48.200 --> 0:03:50.400 Mom, and I'm glad you mentioned what's going on with Russia. 0:03:50.480 --> 0:03:54.000 John and I spoke to Deleep Singing yesterday, Biden's Deputy 0:03:54.040 --> 0:03:57.120 National Security Advisor for International Economics, and we asked him this, 0:03:57.640 --> 0:04:00.400 what do you say to those that say sanctions don't work, 0:04:00.520 --> 0:04:03.480 they just create new markets? And his response is, well, 0:04:03.480 --> 0:04:06.480 what's your alternative? You have to do something. I guess 0:04:06.480 --> 0:04:08.040 the question is what is the alternative? 0:04:09.480 --> 0:04:13.640 So that's a really hard question, and Marie, there is 0:04:13.680 --> 0:04:16.560 no easy alternative. I think if you look back, those 0:04:16.640 --> 0:04:20.320 who impose those sanctions now wish they had gone far 0:04:20.480 --> 0:04:25.680 further straight away, that this slowgmentation of sanction has given 0:04:25.720 --> 0:04:29.720 Russia enormous time to build alternative systems. That if you're 0:04:29.720 --> 0:04:33.560 serious about sanctions, then you should be willing to absorb 0:04:33.600 --> 0:04:36.040 the cost of sanctions to you, and that's something that 0:04:36.120 --> 0:04:38.360 neither Europe nor the US was willing to do. Initially, 0:04:38.560 --> 0:04:41.120 that were very worried about the blowback in terms of 0:04:41.160 --> 0:04:44.880 oil prices in particular, But looking back now, I suspect 0:04:45.040 --> 0:04:47.240 that they wish that they had gone further initially. 0:04:47.640 --> 0:04:49.640 Well, that's part of the problem when a lot of 0:04:49.640 --> 0:04:51.720 critics of this White House is why have a price cap, 0:04:51.839 --> 0:04:54.680 just sanction the actual oil and gas and cut off 0:04:54.720 --> 0:04:57.480 the funds that Putin is using to continue to wage 0:04:57.480 --> 0:05:00.720 this war. Putin is hosting the Brick Summit. He says, 0:05:00.720 --> 0:05:04.400 it's now a multi multipolar world is emerging. Do you agree? 0:05:05.880 --> 0:05:09.039 So? Certainly the Bridge submit is involving more countries and 0:05:09.120 --> 0:05:11.880 more heads of state. But to jump from there to 0:05:11.880 --> 0:05:15.880 say a multi multipolar world, that's way too far. It 0:05:16.000 --> 0:05:19.120 is still at a very very early stage. It's going 0:05:19.160 --> 0:05:23.000 to be very hard to get them to unite around 0:05:23.320 --> 0:05:29.200 certain issues. So we should pay attention. I think if 0:05:29.240 --> 0:05:31.360 you want to worry about a multipolar world, you worry 0:05:31.400 --> 0:05:36.039 about China. China is creating institutions. The US is not 0:05:36.120 --> 0:05:39.760 part of the Asian Infrastructure Investment Bank, and that institution 0:05:39.920 --> 0:05:44.000 is growing and it's collaborating with the World Bank. China 0:05:44.080 --> 0:05:48.920 is building little pipes around the system fifty by later 0:05:48.920 --> 0:05:52.640 of payments agreement with other countries that completely exclude the dollar. 0:05:53.080 --> 0:05:57.120 So if you're looking at the alternative architecture, pay attention 0:05:57.200 --> 0:05:59.240 to China. Now, I want to stress there is no 0:05:59.400 --> 0:06:02.359 other current to replace the dollar at the core of 0:06:02.400 --> 0:06:05.760 the system, and there's no other payment system to replace 0:06:05.800 --> 0:06:08.680 the dollar payment system. But you can build pipes around it, 0:06:08.880 --> 0:06:10.719 and that's what starts fragmenting the system. 0:06:10.800 --> 0:06:12.800 And as we know, China has been buying a lot 0:06:12.800 --> 0:06:14.960 of gold. So Mohammed, let's bring it home a little bit. 0:06:15.040 --> 0:06:17.400 We've talked a lot about international forces, let's talk about 0:06:17.440 --> 0:06:18.200 domestic once. 0:06:18.680 --> 0:06:19.680 The US deficit. 0:06:20.120 --> 0:06:22.960 Now, if you look at traditional financial indicators like the 0:06:23.000 --> 0:06:26.679 treasury market and foreign exchange treasuries, we are seeing higher yields. 0:06:26.839 --> 0:06:29.080 But what we're not seeing in the FX market is 0:06:29.120 --> 0:06:31.160 a week of dollar. We're not seeing a week of dollar. 0:06:31.160 --> 0:06:33.040 And some people might suggest that that's not a real 0:06:33.080 --> 0:06:35.120 worry about the deficit. Then no real side of a 0:06:35.120 --> 0:06:37.960 bias strike away from dollar denominated assets. You're not seeing 0:06:38.000 --> 0:06:40.640 the Euro, the yen, or the Chinese. You runt much 0:06:40.680 --> 0:06:43.120 stronger off the back of this. Now, some people might 0:06:43.160 --> 0:06:45.680 push back and go back to your story, Mohammed and say, actually, 0:06:45.680 --> 0:06:50.320 you are seeing the dollar depreciate, You're seeing depreciate against gold. Mohammad, 0:06:50.680 --> 0:06:52.800 can you share your thoughts with us about whether we 0:06:52.839 --> 0:06:55.880 are starting to see some concerns creep in about the 0:06:55.960 --> 0:06:58.360 US deficit into financial markets. 0:07:00.000 --> 0:07:04.400 First, let's start with currencies. Currencies are relative prices, so 0:07:05.640 --> 0:07:09.240 you would not pick up concern about the US deficit 0:07:09.360 --> 0:07:12.760 because other countries have their own debt and deficit problems. 0:07:13.160 --> 0:07:15.160 You know. I go back to this notion the US 0:07:15.200 --> 0:07:17.840 is the cleanest dirty shirt, So you will not pick 0:07:17.920 --> 0:07:20.720 up in the currency in the relative price. So you 0:07:20.760 --> 0:07:22.760 have to look at an absolute price. And that's why 0:07:22.800 --> 0:07:26.680 people competit dollar to gold. Gold is a store of value. 0:07:26.720 --> 0:07:29.560 Gold is not really a currency or unit of account. 0:07:29.560 --> 0:07:31.760 It is a store of value. And people look at 0:07:31.760 --> 0:07:36.720 that and say, well, relative to gold, the dollar is depreciating. Now, 0:07:36.760 --> 0:07:41.000 why is it doing this. I talk a little bit 0:07:41.040 --> 0:07:44.120 about that, but it's not just the impact of the debt. 0:07:44.120 --> 0:07:46.400 I mean the impact of the debt is making people 0:07:46.680 --> 0:07:51.040 wonder about how over the very long term. I want 0:07:51.040 --> 0:07:57.160 to stress the credit worthiness of the US bond yield 0:07:57.240 --> 0:07:59.680 levels are now being impacted on by four things, and 0:07:59.720 --> 0:08:01.560 you pay. No one has been able to tell what 0:08:01.640 --> 0:08:04.760 it is. One is US economic exceptionalism. We are simply 0:08:04.800 --> 0:08:09.600 growing better. Look at the recent IMF revisions, US up 0:08:10.000 --> 0:08:13.720 in terms of growth rate. Second thing is the WE calibration, 0:08:13.760 --> 0:08:16.840 although I hate that word, the WE calibration of expectations 0:08:16.840 --> 0:08:19.560 for the FED and the question mark as to what's 0:08:19.600 --> 0:08:24.520 fifty basis points in September in October a mistake. The 0:08:24.640 --> 0:08:30.040 third issue is the debt, and the fourth issue has 0:08:30.080 --> 0:08:33.800 to do with the overall sort of confidence in there. 0:08:34.240 --> 0:08:36.600 No one's been able to tell me John, with any 0:08:36.600 --> 0:08:40.600 degree of confidence the relative weight of the four. So yes, 0:08:40.760 --> 0:08:42.439 that may be an issue, but I'm not sure how 0:08:42.440 --> 0:08:42.880 big it is. 0:08:43.200 --> 0:08:47.600 Muhammad, you forgot one provision. One topic the US presidential election. 0:08:47.800 --> 0:08:50.320 Is that impacting gold right now? Is that impacting bond 0:08:50.360 --> 0:08:51.040 yield right now? 0:08:51.880 --> 0:08:56.120 So certain people feel it's impacting bond yields and they 0:08:56.160 --> 0:08:58.839 throw it in there, and then you ask, how is 0:08:58.880 --> 0:09:01.880 it impacting bond yield exactly? Is it the tariffs? Is 0:09:01.920 --> 0:09:06.040 it industrial policy? What exactly is playing out in there? 0:09:07.120 --> 0:09:09.840 And then it's hard to answer. So I'll add it 0:09:09.920 --> 0:09:13.040 if you want to the list. But I suspect that 0:09:13.040 --> 0:09:15.000 that the coefficient on that is not as high as 0:09:15.080 --> 0:09:19.560 coefficient on some other things, particularly US economic exceptionalism and 0:09:19.600 --> 0:09:20.240 FED policy. 0:09:20.360 --> 0:09:23.040 Mohammed. Just a final word, Yankees or Dudgers. That's so 0:09:23.120 --> 0:09:23.600 we want to know. 0:09:24.320 --> 0:09:26.160 And movie sitting right next to you, and she has 0:09:26.200 --> 0:09:29.079 a she has a wonderful New York Yankees cup on there. 0:09:29.080 --> 0:09:31.200 I told I told her in an earlier thing that 0:09:31.320 --> 0:09:34.120 for the first time ever, I may be thinking of 0:09:34.200 --> 0:09:35.760 abandoning the National League. 0:09:36.280 --> 0:09:48.439 Mohammed Dalarian, Big cold there, Mohammed of Queen's College, Cambridge. 0:09:49.679 --> 0:09:52.480 Tamala Harris and Donald Trump heading deeper into their oppositions 0:09:52.520 --> 0:09:55.400 backyard and the penultimate week of the election race, Trump 0:09:55.440 --> 0:09:57.560 gearing out for a rally over the weekend of Madison 0:09:57.600 --> 0:10:00.640 Square Garden, with Harris heading to Houston, Texas, as both 0:10:00.679 --> 0:10:03.199 candidates look to grab attention in the last few days 0:10:03.280 --> 0:10:05.760 of the campaign. At mos of Raymond James writing, the 0:10:05.760 --> 0:10:08.839 recent shift in sentiment and polling appears to favor former 0:10:08.880 --> 0:10:12.360 President Donald Trump, but given the surprise results of recent elections, 0:10:12.400 --> 0:10:15.120 we continue to view the presidential election as a US 0:10:15.320 --> 0:10:17.559 up at John des now for more and welcome back 0:10:17.559 --> 0:10:19.720 to the program sir. Let's talk about this trend of 0:10:19.720 --> 0:10:22.480 going against your all positions backyard. How powerful do you 0:10:22.480 --> 0:10:23.280 think that effort is? 0:10:24.360 --> 0:10:26.800 So, John, I think it's an important way of trying 0:10:26.800 --> 0:10:30.440 to nationalize the race in the final days here. Going 0:10:30.480 --> 0:10:33.840 to Texas gives an opportunity to give the Senate candidate 0:10:34.440 --> 0:10:38.479 that is challenging Ted Cruz Allrad a boost of support, 0:10:38.880 --> 0:10:41.400 but it also gives an opportunity for Kamala Harris to 0:10:41.440 --> 0:10:44.240 talk about abortion. We're going to see her next week 0:10:44.280 --> 0:10:47.199 on the National Mall. She is in the early stage 0:10:47.280 --> 0:10:51.120 of making that closing argument. For former President Donald Trump. 0:10:51.320 --> 0:10:54.440 What we're going to see is the stadium tour trying 0:10:54.480 --> 0:10:58.160 to show that his movement is truly national. So we 0:10:58.200 --> 0:11:01.600 have had a range on the swing states, but in 0:11:01.640 --> 0:11:03.680 the closing days here, I do think you try to 0:11:03.800 --> 0:11:07.520 nationalize the race, make that closing arguments, and try to 0:11:07.520 --> 0:11:10.160 have that attention in all states and try to see 0:11:10.160 --> 0:11:11.960 if you can go on the offensive. See if there's 0:11:12.000 --> 0:11:15.720 some state that doesn't seem to be on anyone's map right. 0:11:15.520 --> 0:11:16.960 Now that could flip. 0:11:17.240 --> 0:11:19.320 We saw that in twenty sixteen, we saw that in 0:11:19.360 --> 0:11:20.000 twenty twenty. 0:11:20.200 --> 0:11:21.560 Will we see that again here. 0:11:21.400 --> 0:11:24.080 In twenty four For Kamala Harris, Houston makes sense because 0:11:24.080 --> 0:11:26.600 she's going to be joined by Beyonce, and as you say, 0:11:26.679 --> 0:11:29.000 she wants to talk with this issue of reproductive rights. 0:11:29.120 --> 0:11:31.959 Is one of the states that has one of the 0:11:32.000 --> 0:11:36.080 most stringent abortion roles in the country. But why is 0:11:36.120 --> 0:11:38.600 Donald Trump once again in New York. He was in 0:11:38.640 --> 0:11:41.400 the Bronx earlier this year. He was just in Nasau County. 0:11:41.679 --> 0:11:42.480 Why the Garden. 0:11:44.040 --> 0:11:46.040 Well, you know, there are a number of things about 0:11:46.040 --> 0:11:49.960 the Trump campaign that I would not always say this 0:11:50.000 --> 0:11:53.440 is a traditional campaign. I do think he does want 0:11:53.480 --> 0:11:57.040 to have this rally at some of these major kind 0:11:57.040 --> 0:12:00.680 of venues, showing that there's enthusiasm. And I think part 0:12:00.720 --> 0:12:03.200 of what they tried to have from the Trump campaign 0:12:03.200 --> 0:12:06.679 is saying that this is a movement that's national and 0:12:06.760 --> 0:12:09.760 even though there are some states that they are exceptionally 0:12:09.840 --> 0:12:14.280 unlikely to win, there is a strong basis support. New 0:12:14.360 --> 0:12:16.800 York is also critical for the race for the House 0:12:16.840 --> 0:12:20.079 of Representatives. We look at New York, we look at California. 0:12:20.200 --> 0:12:25.680 There are eight Republicans in toss ups districts. If Harris 0:12:25.760 --> 0:12:29.680 is able to mobilize her base, she's probably going to 0:12:29.679 --> 0:12:32.560 see the Democrats win control of the House of Representatives. 0:12:32.760 --> 0:12:36.040 If Donald Trump is able to stabilize and kind of 0:12:36.080 --> 0:12:38.880 get his base out on Long Island in some of 0:12:38.880 --> 0:12:41.600 the close in suburb districts. 0:12:41.200 --> 0:12:41.720 In New York. 0:12:42.080 --> 0:12:45.439 Maybe a couple of those Republicans hang on. Maybe Republicans 0:12:45.480 --> 0:12:46.920 hang on to their House majority. 0:12:47.400 --> 0:12:51.040 And you mentioned the Texas Senate race. This is Ted Cruz, 0:12:51.040 --> 0:12:54.199 a seat that he is defending. This morning. I was 0:12:54.240 --> 0:12:57.200 looking at polling. It's Republican backed, but they do some 0:12:57.280 --> 0:13:01.640 good polling the Senate Opportunity Fund. They now have Nevada 0:13:02.080 --> 0:13:05.720 Rosen and Brown tied. What are you seeing in some 0:13:05.880 --> 0:13:08.400 of the down ballot ticket races. 0:13:09.600 --> 0:13:11.960 They're really really close, And I think what we have 0:13:12.040 --> 0:13:15.000 seen in Nevada is a consistent lead for Senator Rosen 0:13:15.080 --> 0:13:19.240 throughout this cycle, but with the early voting coming in Nevada, 0:13:19.920 --> 0:13:23.160 there's been a tilt to Republicans at least that's what 0:13:23.320 --> 0:13:26.360 the non priorcs and prognosticators out there and some of 0:13:26.440 --> 0:13:30.760 the press that do a great job in Nevada kind 0:13:30.760 --> 0:13:34.240 of following that. So they're seeing a tight, maybe slight 0:13:34.320 --> 0:13:37.040 lead for Donald Trump in Nevada. 0:13:37.080 --> 0:13:39.560 So investing a little bit. 0:13:39.360 --> 0:13:43.240 More seeing if Sam Brown, the Republican contender, can maybe 0:13:43.640 --> 0:13:46.679 catch that seat, even though he's been down the whole cycle. 0:13:47.200 --> 0:13:49.000 At this part of the game, it is also a 0:13:49.000 --> 0:13:53.400 bit of a chess match between these campaign committees. Making 0:13:53.440 --> 0:13:56.440 a couple million dollar investment in one seat is trying 0:13:56.480 --> 0:13:59.000 to get that last push from donors to say, oh, 0:13:59.040 --> 0:14:01.960 we're on the offense. People like to be with the 0:14:02.000 --> 0:14:04.320 link winning team, and so the more you're on the 0:14:04.360 --> 0:14:07.679 offensive going into the final stretch, the more you can 0:14:07.679 --> 0:14:08.200 get your. 0:14:08.080 --> 0:14:09.160 Donors to pony up. 0:14:09.760 --> 0:14:11.840 Donors don't like to give money if they think the 0:14:11.880 --> 0:14:15.240 campaign's losing. And so again, it's probably part of a 0:14:15.360 --> 0:14:19.840 national strategy by both the senatorial campaign arms the Republican 0:14:19.880 --> 0:14:23.240 and Democrats to say that there is an offensive opportunity. 0:14:23.400 --> 0:14:26.560 Is it for Texas for Democrats? Is it for Nevada 0:14:26.600 --> 0:14:29.520 for Republicans? Some of this is a little bit of 0:14:29.600 --> 0:14:32.920 bluffing at this point, But we have to wait to 0:14:32.960 --> 0:14:35.840 election day to see whose bets were actually the correct 0:14:35.880 --> 0:14:36.400 bet to make. 0:14:36.600 --> 0:14:38.560 And let's talk about that. How long it's going to 0:14:38.560 --> 0:14:40.280 take to actually find out the answer to some of 0:14:40.280 --> 0:14:43.080 the questions we have. One thing we know is that 0:14:43.120 --> 0:14:44.680 it will take a long time to count some of 0:14:44.720 --> 0:14:47.160 these votes. Ed, what are you telling clients about when 0:14:47.200 --> 0:14:49.800 you expect to actually see a result to this election? 0:14:51.200 --> 0:14:52.520 So, John, my hope. 0:14:52.680 --> 0:14:55.760 For this election and my hope for the markets is 0:14:55.800 --> 0:14:58.160 that what we've gone back and we've looked at many 0:14:58.240 --> 0:15:00.640 past elections and what we're at fifth fifty in the 0:15:00.680 --> 0:15:03.280 presidential race, and we look at a number of these. 0:15:03.480 --> 0:15:06.240 Cases in the Senate where those are kind. 0:15:06.080 --> 0:15:08.840 Of toss up, which implies fifty to fifty, they tend 0:15:08.880 --> 0:15:12.040 to all break in one direction. And so if we 0:15:12.080 --> 0:15:15.440 do have seven swing states, we could see it break 0:15:15.560 --> 0:15:18.840 five to two six ' one in the end. And 0:15:18.960 --> 0:15:21.600 if we are seeing that break in that direction, we 0:15:21.680 --> 0:15:27.040 will know probably early on kind of Wednesday morning after 0:15:27.080 --> 0:15:30.240 the election, kind of largely who's won. If it comes 0:15:30.280 --> 0:15:32.520 down to one state, that could be a week, that 0:15:32.560 --> 0:15:35.960 could be a couple a month or more before we 0:15:36.040 --> 0:15:38.200 know who that is. I don't want to have that happen. 0:15:38.720 --> 0:15:42.200 Pennsylvania was called Saturday after the election. 0:15:42.440 --> 0:15:44.600 Nevadom was called Saturday after the election. 0:15:44.960 --> 0:15:48.320 It was sixteen days before North Carolina was called in 0:15:48.400 --> 0:15:50.600 the twenty twenty election. I don't want to be waiting 0:15:50.640 --> 0:15:53.120 sixteen days. So my hope is that we do have 0:15:53.160 --> 0:15:56.160 a decisive break on election day. It will be pretty 0:15:56.200 --> 0:15:59.040 clear election night, if not early Wednesday morning. 0:15:58.920 --> 0:16:02.080 And the most important county in Arizona Maricopa County. Their 0:16:02.120 --> 0:16:04.760 officials are saying it could take ten to thirteen days. 0:16:04.800 --> 0:16:06.640 What if this comes down to Arizona. 0:16:07.120 --> 0:16:10.960 Well, that's the deciding factor. Where it's like we did 0:16:11.000 --> 0:16:13.240 look back into twenty twenty. We put out a note. 0:16:13.400 --> 0:16:15.480 A number of clients at Raymond James have been asking 0:16:15.560 --> 0:16:16.560 us when will we know? 0:16:16.720 --> 0:16:19.320 So we'd get a chart of every single. 0:16:19.080 --> 0:16:22.200 State that we got the calls, and it was interesting 0:16:22.240 --> 0:16:25.200 that most of the kind of swing states that are 0:16:26.040 --> 0:16:31.680 being discussed this year were called Saturday or after the election. 0:16:32.760 --> 0:16:35.640 My gut tells me that we probably will have a 0:16:35.720 --> 0:16:39.480 clear kind of direction on election night, if not early 0:16:39.520 --> 0:16:43.320 on Wednesday, it probably will take until a week or 0:16:43.360 --> 0:16:46.120 more for the final certification of these results. 0:16:46.360 --> 0:16:48.640 We just don't want to be back in the two thousand. 0:16:48.480 --> 0:16:51.280 Land where it gets litigated or we have election denial 0:16:51.320 --> 0:16:55.040 two point zero because we have different vote counting methods 0:16:55.960 --> 0:16:59.000 which kind of will favor one candidate early versus the other. 0:16:59.240 --> 0:17:01.840 There are bloom states, there are rad mirage states. 0:17:02.000 --> 0:17:04.080 Is there any concern that it might take days for 0:17:04.200 --> 0:17:05.600 some of the down ballot seats. 0:17:06.680 --> 0:17:08.240 Yeah, I mean, I think we could be in a 0:17:08.280 --> 0:17:11.399 scenario if it's a very close House or representative race. 0:17:12.040 --> 0:17:15.439 New York and California, as I mentioned, are two states 0:17:15.440 --> 0:17:19.240 that could determine the outcome of this majority in the 0:17:19.240 --> 0:17:23.560 House of Representatives. New York and California are really slow 0:17:23.840 --> 0:17:28.720 to count votes, especially on absentee ballots, and so they're 0:17:28.720 --> 0:17:31.240 not normally swing states. They're not going to be swing 0:17:31.240 --> 0:17:34.000 states at the presidential level, so they don't get the attention. 0:17:34.640 --> 0:17:38.880 But on some primaries where they have gone into kind 0:17:38.880 --> 0:17:43.000 of a very close final count, it's been weeks at 0:17:43.040 --> 0:17:45.040 times before we know the final result of some of 0:17:45.040 --> 0:17:49.840 those House races. It's arguably unacceptable, but that's just the 0:17:49.880 --> 0:17:52.280 reality of the way their systems are set up. So 0:17:53.440 --> 0:17:57.080 we probably know kind of the result of the presidential 0:17:57.080 --> 0:17:59.520 election before we know the results of the final House 0:17:59.520 --> 0:18:02.600 and Senate races for twenty twenty four. 0:18:02.640 --> 0:18:04.399 Here and we all agree with you. The fact that 0:18:04.440 --> 0:18:06.040 this has been such an issue for such a long 0:18:06.080 --> 0:18:09.560 time and still hasn't been addressed is unacceptable, and thank you, sir. 0:18:09.680 --> 0:18:21.760 At most of Raymond James there don't get around of table. 0:18:21.840 --> 0:18:24.639 Sonny meskit A ups, Sonny, good morning. It's got to 0:18:24.680 --> 0:18:27.160 see you just had a conversation with definitely about payrolls 0:18:27.200 --> 0:18:29.640 next week, base case for her seventy k if you've 0:18:29.640 --> 0:18:31.520 got a base case, and how difficult is it to 0:18:31.560 --> 0:18:33.720 just pick a number at the sky and roll with 0:18:33.760 --> 0:18:34.520 it for next week? 0:18:34.760 --> 0:18:37.159 So tough. And we've talked about this before actually on 0:18:37.200 --> 0:18:41.440 this program specifically, the report that we got last time 0:18:41.560 --> 0:18:44.440 was probably the last clean report for the year given 0:18:44.480 --> 0:18:47.880 all these hurricane effects and such. And Waller came out 0:18:47.920 --> 0:18:51.520 recently and said, look, this next report can be down 0:18:51.560 --> 0:18:54.159 by one hundred cage as from the weather effects. So 0:18:54.320 --> 0:18:56.040 we just think that the Fed is going to have 0:18:56.080 --> 0:18:59.080 to look through this one off weather impact, as horrible 0:18:59.119 --> 0:19:01.160 as it is for the unity is that are impacted. 0:19:01.280 --> 0:19:03.240 And actually know this treasury market has been doing much 0:19:03.240 --> 0:19:06.479 of the same thing, lening on retail sales, upside surprise, 0:19:06.560 --> 0:19:08.879 jobless claims back to pre hurricane levels. We've set that 0:19:08.960 --> 0:19:11.480 repeatedly through this morning, and we've had a move on 0:19:11.520 --> 0:19:13.720 a ten uere of something like fifty to sixty banks 0:19:13.800 --> 0:19:16.359 Is points since the Fed cut interest rates by fifty 0:19:16.400 --> 0:19:19.560 Banks's points. What's driving treasuries now right now for you? 0:19:19.560 --> 0:19:22.440 Because the debate we've had on this program, data or politics, 0:19:22.440 --> 0:19:24.199 politics or data, a mix of the two or one 0:19:24.280 --> 0:19:24.600 or the other. 0:19:25.200 --> 0:19:27.560 We think, look, it's three things driving rates right now. 0:19:27.640 --> 0:19:31.600 Uncertainty around inflation, uncertainty around years from growth, with the 0:19:31.640 --> 0:19:35.720 fiscal trajectory is from both candidates, and the broader fiscal 0:19:35.800 --> 0:19:38.800 trajectory of the United States that may potentially come more 0:19:38.880 --> 0:19:42.199 into a focus as we near the election. All speed to. 0:19:42.160 --> 0:19:46.080 Political strategists who say the proposals don on Trump has 0:19:46.200 --> 0:19:48.399 right now and he's putting out there is worse for 0:19:48.440 --> 0:19:51.200 the deficit. You don't think that's true. You think both 0:19:51.280 --> 0:19:53.320 camps are pretty bad for the deficit. 0:19:53.800 --> 0:19:56.520 Well, so we actually differ a bit from consensus here. 0:19:56.680 --> 0:19:59.000 We've done some modeling around this, and we think that 0:19:59.440 --> 0:20:02.959 Kamala here would probably extend the deficit by about two trillion, 0:20:03.119 --> 0:20:05.879 whereas Trump would extend the deficit by just over four trillion. 0:20:06.200 --> 0:20:08.119 In the grand scheme of things in the wall of 0:20:08.160 --> 0:20:12.000 the entitlements that are coming more and more into focus 0:20:12.000 --> 0:20:15.520 for the markets, and also the TCGA extension and then 0:20:15.640 --> 0:20:19.040 the immigration policies that would impact the labor market and 0:20:19.080 --> 0:20:22.560 therefore inflation and growth, we think that those differences are 0:20:22.560 --> 0:20:23.800 actually not the biggest. 0:20:24.080 --> 0:20:26.680 So do you find it odd that the bond market 0:20:26.720 --> 0:20:30.880 is pricing in Trump, Well, we think that. 0:20:30.960 --> 0:20:33.720 You know, over the weekend, for example, we saw him 0:20:33.760 --> 0:20:37.080 improving the polls, and historically Trump has done a bit 0:20:37.119 --> 0:20:40.239 better in elections than polls have shown, so it's not 0:20:40.440 --> 0:20:43.639 exactly unusual that the market is giving him more credence 0:20:43.720 --> 0:20:44.120 right now. 0:20:44.520 --> 0:20:46.080 Do you think we're WoT priced for it in the 0:20:46.119 --> 0:20:48.199 treasury market? Because we've gone back and forth on this 0:20:48.280 --> 0:20:50.480 a lot. There is a massive difference between a Trump 0:20:50.480 --> 0:20:53.480 presidency and a full GOP sweep. And I've heard from 0:20:53.480 --> 0:20:56.440 the likes of Bemos in Lincoln who suggested that outside 0:20:56.440 --> 0:20:59.159 of a GOP sweep, it's difficult to see ten year 0:20:59.240 --> 0:21:02.520 treasury yields anywhere between twenty thirty forty fifty basis points 0:21:02.600 --> 0:21:04.720