WEBVTT - Rotation Trade & Fed Expectations 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.880 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.080 us live on YouTube. 0:00:27.160 --> 0:00:27.840 This is a joy. 0:00:28.040 --> 0:00:29.920 What we did today is we're going on and getting 0:00:30.000 --> 0:00:32.839 all of our guests who when they were undergraduates it 0:00:32.880 --> 0:00:36.159 was twenty three below zero, like at Niagara University and 0:00:36.200 --> 0:00:38.560 they had to fight their way from the dorms over 0:00:38.600 --> 0:00:42.000 to class at eight oh two am for an exam. 0:00:42.280 --> 0:00:42.680 Very true. 0:00:43.080 --> 0:00:45.760 I was at rit I mean it was just this 0:00:45.800 --> 0:00:47.520 is Rochester, folks, Western New York. 0:00:47.720 --> 0:00:49.960 It's right now. It's like it's like the second. 0:00:49.640 --> 0:00:52.879 Week of March for me and Joe equivalent Joe, I 0:00:52.920 --> 0:00:54.400 saw I read as zero had you had a great 0:00:54.400 --> 0:00:56.320 summary one of the banks Bank of America, I don't 0:00:56.320 --> 0:01:00.160 know who, and basically they said, retail stepped in in 0:01:00.160 --> 0:01:02.040 the Trumpeton in Davos. 0:01:02.520 --> 0:01:06.320 What does it mean to investors or to our confidence 0:01:06.400 --> 0:01:09.560 to invest in our four oh one k If it's 0:01:09.760 --> 0:01:13.039 just retail stepping in fear and missing out. 0:01:12.880 --> 0:01:15.560 I mean they are stepping into and they're buying the dips. 0:01:15.640 --> 0:01:18.520 But you know, remember there's seven point seven trillion dollars 0:01:18.560 --> 0:01:21.160 sitting on the sidelin. It's not all retail institutions. But 0:01:21.640 --> 0:01:25.200 our clients are looking for those dips. Honestly, they're they're 0:01:25.200 --> 0:01:27.240 waiting for them, and they're stepping in and they're they're 0:01:27.319 --> 0:01:29.000 they're hitting the thing. 0:01:29.200 --> 0:01:31.120 Or was it like this in the sixties or in 0:01:31.160 --> 0:01:32.120 the ears before? 0:01:32.400 --> 0:01:33.840 I say, I don't know if it's a new thing. 0:01:34.160 --> 0:01:36.880 I think there's some confidence out there that longer term, 0:01:36.920 --> 0:01:39.840 despite all the headlines, the dramas, what's happening in Washington, 0:01:40.200 --> 0:01:43.160 they like the companies, they believe in technology. They're spreading 0:01:43.200 --> 0:01:45.600 their risk around small caps. So I think it's a 0:01:45.640 --> 0:01:49.240 belief that despite Washington, the real economy is in good shape. 0:01:49.760 --> 0:01:52.040 Paul, you told me to go into small lips. I 0:01:52.080 --> 0:01:52.720 didn't listen. 0:01:52.880 --> 0:01:55.480 Now, So Joe, what we saw a little bit in 0:01:56.000 --> 0:01:59.480 twenty twenty five was as well as the US equity 0:01:59.680 --> 0:02:02.240 in that just did a lot of markets outside of 0:02:02.240 --> 0:02:03.520 the US did a lot better. 0:02:03.840 --> 0:02:04.760 How do you think about the. 0:02:04.760 --> 0:02:06.840 US versus non US these days? What are your clients 0:02:06.840 --> 0:02:07.160 telling you? 0:02:07.240 --> 0:02:09.080 I mean, we still like the US. I think the 0:02:09.160 --> 0:02:11.440 US had an off year. It's it's kind of like, 0:02:11.480 --> 0:02:14.000 you know, the Boston Celtics, one of the greatest dynasties 0:02:14.040 --> 0:02:14.400 out there. 0:02:14.520 --> 0:02:16.639 They don't win every year, but the UC economy. 0:02:16.680 --> 0:02:20.680 It's part of our core portfolio holdings, the equities, but 0:02:20.720 --> 0:02:23.720 we do like overseas where there it's China, tech banks 0:02:23.760 --> 0:02:28.320 in Europe, defense plays in Europe, and South Korea, Japan. 0:02:28.400 --> 0:02:32.720 So the breadth of opportunities for retail institution investors has broughtened. 0:02:32.720 --> 0:02:34.520 So it's just not about the mag seven, it's not 0:02:34.600 --> 0:02:35.760 about the US equities. 0:02:35.840 --> 0:02:37.120 It's broader and that's a good thing. 0:02:37.639 --> 0:02:39.520 What are we doing in the bond market here, because again, 0:02:39.600 --> 0:02:42.000 twenty twenty five was a solid year for folks who 0:02:42.520 --> 0:02:46.000 held bond's high single digit total returns. How about twenty 0:02:46.040 --> 0:02:46.560 twenty six. 0:02:46.600 --> 0:02:50.239 Twenty twenty six. We're shorter durations. We like corporate bunds. 0:02:50.360 --> 0:02:53.079 We think ten year yield. Our interest rate team is 0:02:53.120 --> 0:02:55.760 looking between four twenty five and like four point fifty 0:02:55.840 --> 0:02:57.960 four to seventy five, so a tight. 0:02:57.800 --> 0:02:59.160 Range for the ten year yield. 0:03:00.160 --> 0:03:02.880 You know that could change given with the Fed's next 0:03:02.919 --> 0:03:05.639 path for cutting rates. What's happening in Japan so there's 0:03:05.639 --> 0:03:07.400 a lot at stake there. Joe Quinnlin with. 0:03:07.440 --> 0:03:11.600 This head in CIO market strategy at Merrill and Bank 0:03:11.639 --> 0:03:15.640 of America Private Bank, as Alexis mentioned, your five thousand, 0:03:15.919 --> 0:03:19.360 four thirty four up twenty one dollars. 0:03:19.200 --> 0:03:21.640 On gold pump. Let's go to gold. 0:03:21.720 --> 0:03:26.320 I mean that then gold ripping, silver ripping, all the 0:03:26.360 --> 0:03:27.600 other precious metals ripping. 0:03:27.680 --> 0:03:29.840 I mean who's buying all. 0:03:29.760 --> 0:03:34.840 This stuff retail institutions and in particular central banks. So 0:03:34.920 --> 0:03:40.480 you are seeing some dollar the dollar hedging out for investors. 0:03:40.520 --> 0:03:43.360 So we think that's going to continue. Central banks are diversifying. 0:03:43.960 --> 0:03:45.520 We're seeing a lot of clients. That's one of the 0:03:45.560 --> 0:03:47.880 first questions I asked, how much gold should own? What 0:03:48.280 --> 0:03:49.240 else sho I own? Silver? 0:03:49.280 --> 0:03:49.880 And so forth? 0:03:50.000 --> 0:03:52.040 So that's going to continue. So and if you look 0:03:52.080 --> 0:03:54.040 at the grid, the build out that we need all 0:03:54.040 --> 0:03:56.320 these precious metals and base metals on top of the 0:03:56.320 --> 0:03:59.960 defense outlays, there's a lot of upside yet for commodities. 0:04:01.480 --> 0:04:04.040 I mean, here's one of the issues. We were getting 0:04:04.280 --> 0:04:07.040 right smack into the teeth of earning season right now, 0:04:07.280 --> 0:04:10.800 twenty twenty five, solid solid earnings here a low double 0:04:10.840 --> 0:04:13.520 digit is the earnings out look for twenty six enough 0:04:13.520 --> 0:04:15.080 to support this market here. 0:04:15.520 --> 0:04:17.520 Short answer is yes, longer answers. 0:04:17.640 --> 0:04:20.280 Look what these companies are doing in terms of pivoting, 0:04:20.600 --> 0:04:26.320 using artificial intelligence, robotics, rejiggering their supply chains. You've got 0:04:26.320 --> 0:04:29.000 a good consumer behind them as well. So I think 0:04:29.040 --> 0:04:32.159 the earnings estimates double digits again this year will be 0:04:32.240 --> 0:04:35.080 supported by the US economy. It'll come up behind it. 0:04:35.160 --> 0:04:38.120 So and it's really the management of companies across the 0:04:38.120 --> 0:04:39.880 board that will help driving earnings well. 0:04:39.920 --> 0:04:41.760 I mean, I guess a lot of that earnings growth 0:04:41.839 --> 0:04:45.359 is coming from, not surprisingly the big tech names, the 0:04:45.400 --> 0:04:48.279 MAGS seven if we want to use that nomenclature, or 0:04:48.360 --> 0:04:51.120 just just big tech in general. I guess big tech 0:04:51.160 --> 0:04:52.719 is going to lead us again in twenty six. 0:04:52.760 --> 0:04:53.680 Or next week as well. 0:04:53.960 --> 0:04:55.680 Yeah, or next week or this year, but not as 0:04:55.760 --> 0:04:58.000 much as last year. Big tech earnings your every year 0:04:58.000 --> 0:05:00.600 are coming down. But that's okay because the other parts 0:05:00.600 --> 0:05:01.680 of the market are coming up. 0:05:02.120 --> 0:05:06.000 I mean, I mean Julian Emmanuel this morning, he's modeling 0:05:06.080 --> 0:05:07.640 right now and it's going to change, folks. 0:05:07.800 --> 0:05:08.120 Ready. 0:05:08.480 --> 0:05:12.160 Fourteen point four percent Marines growth is his model guest 0:05:12.240 --> 0:05:12.760 this morning. 0:05:12.880 --> 0:05:14.039 Yep, unbelievable. 0:05:14.120 --> 0:05:15.800 So what do we do here, to the extent we 0:05:15.880 --> 0:05:19.279 want to, I don't know, rotate out broaden trying to 0:05:19.279 --> 0:05:20.840 find some breath in this market. 0:05:21.360 --> 0:05:23.280 What do you say, so you're suggesting to rotate from 0:05:23.400 --> 0:05:25.360 Nvidio and Microsoft exactly. 0:05:25.440 --> 0:05:29.839 Maybe we've been looking at small cap for quite a while. 0:05:29.920 --> 0:05:34.960 We like to cycicles, whether it's financials, materials, metals, industrials, 0:05:35.000 --> 0:05:38.279 some of the old economy stocks that we were accustomed to. 0:05:38.600 --> 0:05:39.760 They're becoming more. 0:05:39.640 --> 0:05:43.839 Technology enablers and adopters and they're going to surprise folks 0:05:43.839 --> 0:05:44.359 to the opsite. 0:05:44.400 --> 0:05:47.240 Kay Nixon was president when you walked into Mary Lynch 0:05:47.279 --> 0:05:50.400 Pierce Center and Smith Joe, let's cut to the chase here. 0:05:50.880 --> 0:05:53.400 How long does this sagin dance keep going? I keep 0:05:53.480 --> 0:05:56.520 I'm talking anamong was it yesterday? She's definitive And the 0:05:56.600 --> 0:06:00.279 answer is we got poping real GDP and massive pop 0:06:00.240 --> 0:06:04.120 penmenal GDP. Like the fourth of July, Does Joe Quinlan 0:06:04.200 --> 0:06:06.200 go into twenty twenty seven? 0:06:06.720 --> 0:06:09.159 Yes, Tom, Because you know, the average bull market is 0:06:09.160 --> 0:06:11.480 typically five and a half years, so we're like not 0:06:11.600 --> 0:06:13.400 even three and a half years into this bull market. 0:06:13.480 --> 0:06:16.000 I see this in the twenty seven and twenty eight, right, 0:06:16.160 --> 0:06:18.880 because we have a lot of just because just see 0:06:19.320 --> 0:06:22.080 Tom Davis is our economy right now is expanding faster 0:06:22.200 --> 0:06:24.440 than China's. 0:06:24.480 --> 0:06:26.320 And so in the earnings we go back to the ball. 0:06:26.440 --> 0:06:27.479 It's supportive that. 0:06:27.520 --> 0:06:31.599 So we've got a lot of energy economy, the stock market, 0:06:31.680 --> 0:06:34.360 the animal spirits that takes us into twenty security. 0:06:34.440 --> 0:06:36.760 So I studied this at Fordham University, which focus is 0:06:36.800 --> 0:06:40.240 expert on this in international economics. Okay, so we have 0:06:40.279 --> 0:06:42.640 a nominal g I did this with Darter Paul the 0:06:42.680 --> 0:06:46.000 other day. We have a nominal GDP popping like China. Yes, 0:06:46.080 --> 0:06:49.000 but we don't have the same economics structure as well. 0:06:49.240 --> 0:06:54.120 Do we embed a permanent inflation because we don't have 0:06:54.160 --> 0:06:58.239 the supplied demand dynamics of a seven percent nominal GDP. 0:06:58.520 --> 0:07:01.080 I think the inflation number of times closer to three percent 0:07:01.360 --> 0:07:03.279 as opposed to two percent. But I don't think it 0:07:03.320 --> 0:07:06.039 has to bust through four or five percent in that sense. 0:07:06.240 --> 0:07:09.320 And that's the sweet spot. Nominal growth seven eight percent, 0:07:09.600 --> 0:07:12.200 that's perfect for earnings. A lot of companies can do 0:07:12.240 --> 0:07:15.240 a lot. It's not American move to Beijing. 0:07:15.920 --> 0:07:17.080 I'll get one more in here. 0:07:17.160 --> 0:07:19.920 Joe what's the discussion you have with the Maryland ba 0:07:19.960 --> 0:07:24.560 A private bank clients about alternative investments, private equity, private credit, 0:07:24.640 --> 0:07:27.480 hedge funds, and what's what's an allocation that you think 0:07:27.560 --> 0:07:30.320 is reasonable for I mean, more of. 0:07:30.280 --> 0:07:33.679 Our clients are looking at that, particularly private credit, private equity. 0:07:33.720 --> 0:07:35.880 They like what they see the opportunities. There's a lot 0:07:35.880 --> 0:07:37.840 of good companies that are not public good tradit, so 0:07:37.840 --> 0:07:40.640 they want to have access. But they're moving slowly. They're 0:07:40.680 --> 0:07:43.920 moving slowly. They still looking at bond stocks, cash, private equity. 0:07:44.000 --> 0:07:46.559 So the conversation has started. They're putting money to work. 0:07:47.320 --> 0:07:50.160 This is wicked and important. Paul's brilliant question here, folks, 0:07:50.520 --> 0:07:54.080 to me, in the zeitgeist, the blooms off the roads. Everybody, 0:07:54.240 --> 0:07:58.040 every marketing type on the fourteenth floor ninety days ago 0:07:58.240 --> 0:08:00.640 was private credit, Give me a piece, give me an our, 0:08:01.000 --> 0:08:03.880 you know, cheerlead none. Paul, do you suggest this a 0:08:03.920 --> 0:08:07.720 little bit like the demand for private credit? And my 0:08:07.880 --> 0:08:09.520 IRA is maybe not there. 0:08:09.680 --> 0:08:11.880 I don't know, Tom. When we go visit some of 0:08:11.880 --> 0:08:15.720 these rias out there, I'm shocked at the allocation they 0:08:15.720 --> 0:08:18.560 out that they do have for alternatives. I would have 0:08:18.560 --> 0:08:20.559 thought it was three percent five percent now they're talking 0:08:20.640 --> 0:08:22.120 ten twenty five percent. 0:08:22.400 --> 0:08:25.040 Really, it's moving higher, for sure, there's no doubt about it. 0:08:25.040 --> 0:08:26.960 But I think it's going to stall out at say 0:08:27.000 --> 0:08:28.720 ten to fifteen percent. It's going to just show me 0:08:29.120 --> 0:08:32.920 it has tax ramifications, the paperwork that comes with the 0:08:33.000 --> 0:08:34.880 tranches to tie ups and so forth. 0:08:35.000 --> 0:08:37.320 So there's clients that really embrace it. 0:08:37.320 --> 0:08:40.480 But in general it's moving higher, but not not close 0:08:40.520 --> 0:08:41.439 to fifteen twenty percent. 0:08:41.440 --> 0:08:42.520 When you talk to Brian. 0:08:42.320 --> 0:08:44.839 Moynan when he's back fancy from Davos, what do you 0:08:45.480 --> 0:08:49.320 say to him about the state of buying the stock market? 0:08:49.760 --> 0:08:53.320 Well, you saw our bank earnings pretty robust last year 0:08:53.320 --> 0:08:55.680 of the year before. We're looking at another good outlook 0:08:55.760 --> 0:08:58.360 this year. Our Bank of American Institute is a da 0:08:58.600 --> 0:09:01.880 data gatherer. Weren't eighty million households here in the US 0:09:02.000 --> 0:09:05.319 Bank of America, so our data is suggesting good. Consumer 0:09:05.600 --> 0:09:08.920 capital investment is strong. Our commercial book is strong as well, 0:09:09.000 --> 0:09:13.280 so Brian eighty contem the CIO where I work all 0:09:13.280 --> 0:09:16.480 pretty positive heading into twenty twenty six. It's a good 0:09:16.480 --> 0:09:18.480 story and people don't believe it, but it's a good 0:09:18.480 --> 0:09:19.079 story because. 0:09:19.440 --> 0:09:22.880 On Friday night at Niagar University. What do you do 0:09:23.000 --> 0:09:25.480 go over to the American Falls. Well, now you go 0:09:25.559 --> 0:09:26.480 to the Freshman you. 0:09:26.400 --> 0:09:28.760 Go to the you go to the Rathskeller, lock the 0:09:28.840 --> 0:09:30.360 door and make sure the kegs are full. 0:09:30.480 --> 0:09:34.880 Okay, Joe Quitman, thank you for that important strategy advice. He, 0:09:34.960 --> 0:09:39.679 of course legendary at Merrill and Bank of America Private Bank. 0:09:39.920 --> 0:09:40.680 Stay with us. 0:09:40.880 --> 0:09:44.120 More from Bloomberg Surveillance coming up after this. 0:09:51.360 --> 0:09:54.959 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:09:55.000 --> 0:09:58.520 weekday afternoons from seven to ten am Eastern Listen on Apple, 0:09:58.600 --> 0:10:01.920 Karplay and Android Otto with the Bloomberg Business Up, or 0:10:02.080 --> 0:10:03.520 watch us live on YouTube. 0:10:03.720 --> 0:10:07.439 Say She's a JP Morgan Asset management barely describes an 0:10:07.440 --> 0:10:11.240 eclectic track record. I love the idea, folks, that you 0:10:11.400 --> 0:10:16.960 prepare for fixed income, currency and commodities by spending seventeen 0:10:17.040 --> 0:10:20.200 years in equities. You are a strange beast, k ere. 0:10:20.640 --> 0:10:23.880 What is it like moving from equities over to fix 0:10:24.040 --> 0:10:25.640 I mean, that's a rare thing. 0:10:25.960 --> 0:10:27.640 So I'm going to take that as a compliment from you, 0:10:27.720 --> 0:10:29.440 because a strange beest. 0:10:29.720 --> 0:10:32.400 I mean, it's really really a different path, isn't it? 0:10:32.440 --> 0:10:33.640 And I would have thought you would have been in 0:10:33.720 --> 0:10:35.920 Davos this week while I was toiling away at two 0:10:36.000 --> 0:10:36.720 seventy Park. 0:10:36.840 --> 0:10:39.400 You're not out there wearing a fancy sun blisses. 0:10:39.440 --> 0:10:42.160 I did it for twenty years, and you know John Wynn, 0:10:42.240 --> 0:10:43.920 and you know we sent a whole bunch of people 0:10:43.960 --> 0:10:46.640 to Bloomberg House in that. But you know, frankly, I 0:10:46.679 --> 0:10:50.040 get as much done on Davos sitting here as I 0:10:50.080 --> 0:10:51.359 do sitting at the Belvidere. 0:10:51.520 --> 0:10:55.240 What are you nod in your head about? 0:10:57.000 --> 0:11:00.760 So look to answer your question. I love investing. 0:11:00.920 --> 0:11:05.280 I love thinking about what's priced into markets, and investing 0:11:05.360 --> 0:11:09.520 is fundamentally about projecting future cash flows. So the major 0:11:09.559 --> 0:11:12.439 difference between you know, I started as a credit research channelist, 0:11:12.440 --> 0:11:14.680 spent three years as a credit research channelist, then spent 0:11:14.760 --> 0:11:17.600 seventeen years and equities as an analyst and a portfolio 0:11:17.760 --> 0:11:20.560 manager before moving back to fixed income, I guess six 0:11:20.600 --> 0:11:24.440 seven years ago. And the real fundamental difference tom is 0:11:24.720 --> 0:11:28.160 upside or downside, and so inequities, you get to dream 0:11:28.360 --> 0:11:32.600 about things going up ten times, you know, sunglass makers 0:11:32.600 --> 0:11:35.040 going up sixty percent in the week. Bonds were a 0:11:35.080 --> 0:11:37.760 little bit more boring. We're in basis point to basis 0:11:37.800 --> 0:11:39.160 point not losing money. 0:11:39.200 --> 0:11:39.960 So I guess I'm a. 0:11:39.920 --> 0:11:42.400 Little bit better about thinking about downside risk than I 0:11:42.440 --> 0:11:46.000 am about blue sky blue sunglass scenarios. 0:11:46.200 --> 0:11:48.600 Geopolitical risk kind of came back to the four again 0:11:48.640 --> 0:11:52.280 this week. Okay, how do you guys think about that? 0:11:52.480 --> 0:11:54.800 We had to deal with it in April of last year. 0:11:54.880 --> 0:11:57.120 Came back a little bit this week. Do you guys 0:11:57.200 --> 0:11:58.120 just try to see through that? 0:11:58.920 --> 0:12:01.960 You know that it's a great question, and we got 0:12:02.000 --> 0:12:05.520 to separated into two pieces. So when we're managing portfolios, 0:12:05.600 --> 0:12:07.720 you've got to see through it and look to see 0:12:07.840 --> 0:12:11.199 are there any opportunities we can capitalize on. You take 0:12:11.240 --> 0:12:13.360 a step back, though, and you think about the backdrop 0:12:13.400 --> 0:12:17.360 heading into Davos. We've got relatively low volatility of the 0:12:17.480 --> 0:12:21.840 equity and bond markets and relatively high valuations, and so 0:12:22.040 --> 0:12:26.280 you introduce a little bit of geopolitical intrigue and there 0:12:26.320 --> 0:12:29.840 you've got some volatility in markets, and that tends to 0:12:29.880 --> 0:12:31.920 pass along, you know. You think about the bond market 0:12:31.960 --> 0:12:35.559 this week. The tenure Treasury had been kind of range 0:12:35.600 --> 0:12:37.920 bound between three seventy five and four and a quarter 0:12:38.000 --> 0:12:40.480 for a while, edging towards the lower end. When we 0:12:40.520 --> 0:12:43.600 get weak employment number moving back towards the higher end, 0:12:43.640 --> 0:12:47.200 when we get concerns about inflation, and we broke through 0:12:47.200 --> 0:12:49.839 that this week. When the geopolitical tensions, when you look 0:12:49.840 --> 0:12:52.080 at it breaking through the two hundred day moving average, 0:12:52.080 --> 0:12:54.760 which was for twenty three, there's not a lot of 0:12:55.679 --> 0:12:59.079 technical support. And when you start to worry about I 0:12:59.120 --> 0:13:02.959 don't think that you know, invading Denmark was on I'm sorry, 0:13:02.960 --> 0:13:08.640 invading sorry, invading ice cream Land, not Iceland or Denmark 0:13:09.120 --> 0:13:11.360 was on anybody's binko card. So that kind of comes 0:13:11.400 --> 0:13:14.360 in and makes people very volatile. And we've got an 0:13:14.400 --> 0:13:18.439 absence of fundamental data until the next employment data until 0:13:18.440 --> 0:13:21.760 February sixth, so people start to move into conspiracy theories 0:13:21.800 --> 0:13:24.280 and concerns about geopolitical But the answer to your question 0:13:24.360 --> 0:13:26.960 is yes, the fundamentals are what's more important. 0:13:27.240 --> 0:13:29.040 And on the fundamental side. 0:13:28.800 --> 0:13:31.600 What we see is a no hire, no fire market, 0:13:32.000 --> 0:13:36.400 moderating inflation and you know, pretty pretty solid economic growth. 0:13:36.400 --> 0:13:38.320 You saw GDP yesterday at four point four. 0:13:38.760 --> 0:13:41.160 How much credit risk were we taking in twenty twenty six, 0:13:41.280 --> 0:13:44.000 I mean, considered to your treasure and get three zero 0:13:44.000 --> 0:13:45.400 point six percent. That's not bad. 0:13:45.800 --> 0:13:49.160 Yeah, so we like high quality credit, both high quality 0:13:49.200 --> 0:13:52.440 investment grade and high quality high yield. And you know, 0:13:52.480 --> 0:13:55.040 as I was sitting here listening to the meteorologists, which 0:13:55.040 --> 0:13:56.760 I think this is the first time I've ever been 0:13:56.800 --> 0:13:59.640 preceded by a meteorologist on Bloomberg, I was trying to 0:13:59.640 --> 0:14:02.520 pull this together and what are the themes? And Tom's 0:14:02.600 --> 0:14:06.200 this one's for you. Really, the last major snowstorm the 0:14:06.200 --> 0:14:09.040 New York metro area had to my recollection was nineteen 0:14:09.120 --> 0:14:09.760 ninety six. 0:14:10.440 --> 0:14:11.079 That was a big one. 0:14:11.200 --> 0:14:14.880 Credit spreads in ig are back to their nineteen ninety 0:14:14.920 --> 0:14:18.960 eight tights, so we're going back to the nineties this week. 0:14:19.240 --> 0:14:22.080 There's a heritage at JP Morgan on gold. You made 0:14:22.080 --> 0:14:24.840 a splash or a middle last year on a five 0:14:24.880 --> 0:14:28.280 thousand statistic, which is happening way faster than you thought 0:14:28.400 --> 0:14:32.160 or anybody else thought. But bring over how you think 0:14:32.560 --> 0:14:39.000 gold should be an adult, responsible retail even institutional family 0:14:39.080 --> 0:14:43.000 office portfolio. Do you buy broken ill properties of Australia? 0:14:43.280 --> 0:14:45.880 Do you put krueger Rans in the bedroom of the 0:14:45.920 --> 0:14:48.960 third house, you know, the dresser drawer. What does k 0:14:49.160 --> 0:14:51.640 hers say you do? If you say, I guess I 0:14:51.720 --> 0:14:53.040 need to own gold. 0:14:54.040 --> 0:14:56.480 Look I think if you guess you need to own gold, 0:14:56.720 --> 0:14:58.600 I think the biggest change in the market in the 0:14:58.680 --> 0:15:02.400 last few years is that tfs have made that more accessible. 0:15:02.560 --> 0:15:05.560 So I guess I'm an old fashioned by gold jewelry, 0:15:05.640 --> 0:15:08.280 by gold coins, but I think for the average person 0:15:08.440 --> 0:15:11.040 maybe it's more accessible and an ETF type structure or 0:15:11.080 --> 0:15:13.520 something like that. But I think one of the things 0:15:13.560 --> 0:15:18.800 that's driven the increase in prices in gold is the 0:15:18.880 --> 0:15:21.440 creation of the new ETFs in that market and the 0:15:21.520 --> 0:15:25.720 accessibility for gold. And as I'm sure you know, there 0:15:25.720 --> 0:15:27.640 hasn't been the supply of gold hasn't really changed in 0:15:27.680 --> 0:15:29.600 the demand for gold has risen, so I think that's 0:15:29.640 --> 0:15:30.520 what's really driving it. 0:15:30.960 --> 0:15:33.480 Twenty twenty five, we started hearing out a lot more, 0:15:33.480 --> 0:15:36.520 at least I did, about emerging markets and the performance 0:15:36.560 --> 0:15:39.400 there gives your view on emerging markets seas is, how 0:15:39.440 --> 0:15:40.640 are you playing it if at all? 0:15:40.880 --> 0:15:42.280 Yeah, A couple of things on that. 0:15:42.400 --> 0:15:46.000 Yeah, emerging markets really rebounded in a material way last year. 0:15:46.800 --> 0:15:48.360 I think a couple of things when you think about 0:15:48.400 --> 0:15:52.120 the emerging markets. First off, I mean, as we've learned 0:15:52.120 --> 0:15:55.160 over the last couple of years, develop market central banks 0:15:55.200 --> 0:15:58.440 forgot about inflation emerging markets never had the luxury to 0:15:58.480 --> 0:16:01.840 throw out the inflation fighting, so emerging markets were much 0:16:01.960 --> 0:16:07.080 quicker to start hiking rates before inflation got carried away. 0:16:07.600 --> 0:16:11.280 And increasingly they've shown more fiscal discipline as well. So 0:16:11.440 --> 0:16:14.800 when you look at EM versus DM, you're seeing, you know, 0:16:14.960 --> 0:16:17.960 a growth pickup in emerging markets on the order of 0:16:18.240 --> 0:16:21.960 two and a half pike percent above develop markets, and 0:16:22.000 --> 0:16:24.760 that's a pretty attractive opportunity. 0:16:25.800 --> 0:16:28.640 New issuance has been crazy in the fixed income space 0:16:28.640 --> 0:16:31.960 on municipals, investment grade, high yield, and I don't know 0:16:32.000 --> 0:16:33.720 if I listened to the Jamie Diamonds in the one 0:16:33.800 --> 0:16:35.200 hands of the world, it's going to be even more 0:16:35.240 --> 0:16:37.960 so in twenty twenty six. How do you guys as 0:16:38.000 --> 0:16:39.760 investors deal with that, because I would think that would 0:16:39.760 --> 0:16:42.280 be a challenge or a headwind floor performance. 0:16:42.800 --> 0:16:45.240 So it's it's really interesting if you look at the 0:16:45.240 --> 0:16:48.240 investment grade market. We've had one hundred and seventy billion 0:16:48.320 --> 0:16:52.720 dollars issued from jan one through this week and as 0:16:52.880 --> 0:16:55.160 well as you probably would expect with that, and I 0:16:55.240 --> 0:16:57.360 think the first two days of the year were records, 0:16:57.360 --> 0:17:00.280 so market really came out in force force with a 0:17:00.320 --> 0:17:03.920 lot of issuance. But I think it's really interesting to 0:17:03.960 --> 0:17:07.480 think about the fact that in the face of record 0:17:07.520 --> 0:17:11.840 or near record issuance, you've also seen a tightening in spreads. 0:17:12.320 --> 0:17:15.480 So you know, we've heard, you know, talk this week 0:17:15.480 --> 0:17:18.040 about the Cell America trade. Instead, what we've seen is 0:17:18.080 --> 0:17:22.000 record demand for these types of and a tightening in spread. 0:17:22.119 --> 0:17:25.040 So in terms of the question, and I think about 0:17:25.119 --> 0:17:28.960 twenty six and generating investment performance for our clients, I 0:17:29.000 --> 0:17:33.560 think there's likely to be more dispersion in performance of 0:17:33.600 --> 0:17:36.320 different credits, and I think security selection is going to 0:17:36.400 --> 0:17:37.480 be very important. 0:17:38.480 --> 0:17:41.239 So I think that's that's what we are really focused on. 0:17:41.320 --> 0:17:45.560 But I think because of the geopolitical situation this week 0:17:45.600 --> 0:17:49.680 and the fact that some issuers are in blackout, it's 0:17:49.680 --> 0:17:52.080 been relatively quiet this week. I think it comes back 0:17:52.119 --> 0:17:54.840 in force over the next couple of weeks we get 0:17:54.840 --> 0:17:55.720 sever one hundred. 0:17:55.480 --> 0:17:59.240 Thousand job formation. You know, there's eight different opinions on 0:17:59.440 --> 0:18:02.800 the job. Could Michael Faroli with path Baking work on 0:18:02.880 --> 0:18:06.960 potential GDP even a decade ago, eight years ago, and 0:18:07.040 --> 0:18:10.480 yet we've got this boom real GDP, this boom nominal GDP. 0:18:11.240 --> 0:18:14.320 Do you say to your clients, look out past the 0:18:14.359 --> 0:18:17.639 twenty twenty six stimulus, or do you say this is 0:18:17.720 --> 0:18:20.440 part of the new America where you're going to have 0:18:20.520 --> 0:18:24.160 a greater animal spirit from a buoyant nominal GDP. 0:18:24.840 --> 0:18:27.359 You know, I worry about saying in the investment in 0:18:27.400 --> 0:18:30.800 the investment landscape, one of the most dangerous expressions ever 0:18:30.960 --> 0:18:33.360 is this time is different. So I worry about that. 0:18:33.760 --> 0:18:36.520 But I do think that we have what we've seen 0:18:36.960 --> 0:18:40.280 is an enhancement in productivity. So on the topic of 0:18:40.320 --> 0:18:42.280 Mike Farole, he's an outstanding economist. 0:18:42.280 --> 0:18:43.960 I've got a lot of respect for him. 0:18:44.200 --> 0:18:48.000 And the topic of the broader economy, I mean, it 0:18:48.040 --> 0:18:50.639 looks pretty solid across It continues to be a CA 0:18:50.800 --> 0:18:52.520 shaped recovery consumers. 0:18:52.560 --> 0:18:55.240 It's not equally spread across people. 0:18:55.960 --> 0:18:59.560 But I do think we've got some fiscal stimulus this 0:18:59.640 --> 0:19:05.200 year at an administration that is looking to enhance animal spirits. 0:19:05.240 --> 0:19:06.119 I think you're absolutely right. 0:19:06.200 --> 0:19:08.400 How far by I got eight ways to go here? 0:19:08.480 --> 0:19:13.919 How far behind retail is institutional? I saw something yesterday 0:19:14.160 --> 0:19:16.520 that once again they under your own tech into earnings. 0:19:16.800 --> 0:19:20.760 Julian Emmanuel publishes at everquare Isi this morning a fourteen 0:19:20.800 --> 0:19:23.960 point four percent earnings growth run rate. Maybe it's there, 0:19:24.240 --> 0:19:26.600 maybe it's not well know in you know, two weeks, 0:19:26.600 --> 0:19:32.440