WEBVTT - Fed Rate Cuts, World Economy, Muted Markets 0:00:00.280 --> 0:00:07.160 Joining us now Julia Pollock, Bloomberg's Audio studios recruits far 0:00:07.200 --> 0:00:14.840 more important. This is the Bloomberg Savannahs Podcast. I'm Tim 0:00:14.920 --> 0:00:17.960 Keene along with Paul Sweeney. Join us each day for 0:00:18.160 --> 0:00:22.760 insight from the best in economics, finance, investment, and international relations. 0:00:23.040 --> 0:00:25.760 You can also watch the show live on YouTube. 0:00:26.160 --> 0:00:30.159 Visit the Bloomberg Podcast channel on YouTube to see the 0:00:30.240 --> 0:00:33.960 show weekday morning from seven to ten and the easter from. 0:00:33.760 --> 0:00:36.080 Our global headquarters in New York City. 0:00:36.440 --> 0:00:40.200 Subscribe to the podcast on Apple, Spotify, or anywhere else 0:00:40.280 --> 0:00:44.320 you listen, and always I'm Bloomberg Radio, the Bloomberg Terminals, 0:00:44.520 --> 0:00:46.360 and the Bloomberg Business. 0:00:45.960 --> 0:00:50.000 App hapecs orders today, we would have expected to see 0:00:50.000 --> 0:00:53.720 a much larger decline in business investment with such high rates. 0:00:53.880 --> 0:00:57.440 So the data that's coming in is pretty good, but 0:00:57.520 --> 0:01:00.880 it's spectacular compared to where people thought we'd be now 0:01:01.680 --> 0:01:04.120 a year ago. Over year ago and red started rising. 0:01:04.520 --> 0:01:08.240 So when you talk to your companies here, what's the 0:01:08.360 --> 0:01:13.920 challenge they have to attracting retaining talent here? Because I 0:01:13.959 --> 0:01:16.760 look at a Jolt's number that's still really high, and 0:01:16.840 --> 0:01:18.720 I'm like, I don't know all the Sweeney off Springs. 0:01:18.720 --> 0:01:21.200 They're all employed here. What are your employers that you 0:01:21.240 --> 0:01:21.520 talk to? 0:01:21.560 --> 0:01:24.480 Tell Paul, you're the only father east of the Mississippi 0:01:24.560 --> 0:01:27.040 River whose children are all employed gainfully. 0:01:27.520 --> 0:01:30.440 It's a domain set of one. 0:01:31.440 --> 0:01:35.440 Well, we have had twenty six months now of unemployment 0:01:35.480 --> 0:01:39.760 atten below four percent. That's the longest period since the sixties. Really, 0:01:39.959 --> 0:01:43.119 so this is still an incredibly tightly market. Employers thought 0:01:43.160 --> 0:01:45.440 things would get easier, They thought leverage would swing all 0:01:45.480 --> 0:01:48.000 the way back to employers. Hasn't really happened. They're still 0:01:48.040 --> 0:01:50.880 struggling out there, and they're still finding that our attention 0:01:51.120 --> 0:01:53.559 is fairly low. People are job hopping and finding better things. 0:01:53.640 --> 0:01:55.960 I get to me, and I could be wrong. 0:01:56.040 --> 0:01:59.360 There's so much hot era out there now about this 0:01:59.560 --> 0:02:01.640 new how you get a job? 0:02:02.280 --> 0:02:04.440 What do you see in the day to day grind 0:02:04.480 --> 0:02:05.320 and Zip recruiter? 0:02:05.480 --> 0:02:08.600 Like does a resume matterner anymore? Do you have to 0:02:08.720 --> 0:02:11.600 master all this digital You got someone here. I needed 0:02:11.639 --> 0:02:13.880 a change to be able to make more money and 0:02:13.960 --> 0:02:14.880 have a life. 0:02:14.639 --> 0:02:15.600 Outside my job. 0:02:15.680 --> 0:02:19.920 Who doesn't Zip recruiter helped me discover something better. I 0:02:19.919 --> 0:02:24.520 think our audience worldwide is fascinated by this new method. 0:02:25.200 --> 0:02:27.440 How's a method work within our economy, and. 0:02:27.360 --> 0:02:31.560 So for years, job search was centered around search right 0:02:31.600 --> 0:02:34.920 people typing in a job title and finding the few 0:02:35.000 --> 0:02:40.320 jobs that were in their area. Now, with AI matching technology, 0:02:40.320 --> 0:02:43.200 people create a profile, they answer a couple of questions 0:02:43.240 --> 0:02:45.000 and say what they want and what they're interested in, 0:02:45.400 --> 0:02:48.640 and then a technology instantly alerts them to jobs that 0:02:48.680 --> 0:02:50.760 match their skills and experience and shows them jobs they 0:02:50.760 --> 0:02:54.639 wouldn't even have considered. And that is where the sort 0:02:54.680 --> 0:02:57.080 of exciting new discovery is taking place. 0:02:57.160 --> 0:02:58.680 I just wanted to be the bad boy for the 0:02:58.760 --> 0:03:04.040 Rochester Reds aim back then, ya back then? So what 0:03:04.080 --> 0:03:04.799 are the sectors? 0:03:04.880 --> 0:03:08.520 I mean, what are the sectors that are just really 0:03:09.160 --> 0:03:12.200 in dire need of just workers. 0:03:12.840 --> 0:03:17.600 So there are many sectors where the workforce is aging, 0:03:17.760 --> 0:03:22.000 where people are retiring in huge numbers, and where the 0:03:22.000 --> 0:03:25.400 talent pipeline is drinking. People are not enrolling in accounting anymore, 0:03:25.400 --> 0:03:28.560 They're not enrolling in the skilled trades in the kinds 0:03:28.560 --> 0:03:31.200 of numbers. I have a whole theory on this, and 0:03:31.280 --> 0:03:32.800 so a lot of jobs are just seen as kind 0:03:32.800 --> 0:03:33.079 of old. 0:03:33.120 --> 0:03:36.560 Why Paul and I are asking, because we've survived this 0:03:36.720 --> 0:03:40.960 in school, what does the accounting industry do it's a 0:03:41.000 --> 0:03:43.480 broad statement, not the big four, but what do they 0:03:43.480 --> 0:03:44.040 do well? 0:03:44.080 --> 0:03:46.680 So, so companies like KPMG, you're saying, wow, we've got 0:03:46.880 --> 0:03:49.360 an image problem. Young smart people want to go into tech, 0:03:49.440 --> 0:03:52.000 they want to go into AI and do all these 0:03:52.040 --> 0:03:52.480 fun jobs. 0:03:52.520 --> 0:03:54.320 They don't want to pay accounts. 0:03:54.320 --> 0:03:58.240 They aft, So what is to pay? 0:03:58.360 --> 0:04:01.560 Is the paul. It's a tough job, but. 0:04:01.800 --> 0:04:05.400 The bigger issue is the perception that it's really hard 0:04:05.400 --> 0:04:08.000 and stressful. So the number one reason people give us 0:04:07.800 --> 0:04:11.280 for having quit a job is stress. People are increasingly 0:04:11.320 --> 0:04:14.840 young people especially are prioritizing work life balance, and so 0:04:15.000 --> 0:04:18.160 what KPMG and other companies that are strongly. 0:04:18.400 --> 0:04:22.680 Account are prioritizing work, like are you kidding me? An 0:04:22.680 --> 0:04:27.400 account what's an accountant make nowadays? Six fres dificult six 0:04:27.400 --> 0:04:30.119 figures and twenty you pop them one hundred and eighty. 0:04:30.400 --> 0:04:31.720 Nobody's worried about stress. 0:04:32.160 --> 0:04:37.480 That's what companies that What industries that are very seasonal 0:04:37.560 --> 0:04:42.159 like accounting, are doing now is increasing staffing generally across 0:04:42.200 --> 0:04:44.760 the year, right, so that you don't have people who 0:04:44.800 --> 0:04:47.120 are mostly kind of idle for several months and then 0:04:47.160 --> 0:04:49.240 who have these massive rushes when they're working twenty four 0:04:49.279 --> 0:04:53.679 to seven. They're the companies are absorbing that seasonal risk 0:04:54.240 --> 0:04:57.880 and kind of overstaffing during during parts of the year 0:04:57.920 --> 0:04:59.960 and then giving people an easier time. 0:05:00.040 --> 0:05:02.640 I'm jerk, taxis, how does this back to home thing? 0:05:02.680 --> 0:05:04.480 How is it playing out here? We're four or five 0:05:04.600 --> 0:05:08.080 years into it here? How do you think it's How 0:05:08.200 --> 0:05:10.599 is it shaking out? And we still have more room 0:05:10.680 --> 0:05:12.279 to go in terms of that shacking. 0:05:12.000 --> 0:05:16.240 Out, Very very resilient. Remote work is just about stabilized 0:05:16.279 --> 0:05:18.719 in job hostings now at around eleven percent. There's still 0:05:18.720 --> 0:05:21.880 a huge mismatch though, between demand for remote work and 0:05:22.640 --> 0:05:27.400 remoters at hybrid remote and hybrid okay hybrid, sixty five 0:05:27.480 --> 0:05:29.680 percent of job seekers say they would prefer to find 0:05:29.680 --> 0:05:32.760 a remote or hybrid job. So there's huge. 0:05:32.520 --> 0:05:33.640 Demand for remote work. 0:05:34.000 --> 0:05:36.400 We know eleven percent of the people who just quit 0:05:36.480 --> 0:05:39.960 jobs are looking for remote work, and that's why they quit. 0:05:40.160 --> 0:05:43.480 One final question is just so so important. You got 0:05:43.520 --> 0:05:44.040 to come back. 0:05:44.640 --> 0:05:47.799 Where's she She's like West Coast, right, She's like working 0:05:47.839 --> 0:05:49.839 like a twenty hour day going down to Santa. 0:05:49.560 --> 0:05:52.520 Monica surfing, surfing and all that. 0:05:52.800 --> 0:05:56.120 The absolute thing I hear from everybody older, is that 0:05:56.240 --> 0:05:57.400 young kids won't work. 0:05:57.760 --> 0:05:58.280 Is that true? 0:05:58.279 --> 0:06:01.200 What do you see at ZIP recruiter, Well, prime age 0:06:01.279 --> 0:06:04.120 labor force precipation is the highest it's been since two 0:06:04.120 --> 0:06:07.200 thousand and one, right, so it's it's it's not exactly true, 0:06:07.920 --> 0:06:10.240 but yes, there is a bit more priority placed on 0:06:10.680 --> 0:06:14.279 work life balance and companies are having to improve and 0:06:14.839 --> 0:06:15.680 that pandemic. 0:06:15.720 --> 0:06:17.000 I think part of that's a pandemic. A lot of 0:06:17.040 --> 0:06:20.000 people just said, man, life is short. 0:06:20.080 --> 0:06:23.359 I need to read. I strongly agree. 0:06:23.560 --> 0:06:24.159 I think that is. 0:06:24.240 --> 0:06:24.760 And I don't know. 0:06:25.520 --> 0:06:27.000 I think that's here for a while. 0:06:27.279 --> 0:06:28.200 Don't be a strange. 0:06:28.240 --> 0:06:28.560 I think. 0:06:28.800 --> 0:06:30.760 And we would love to come out to La to 0:06:30.800 --> 0:06:34.240 have you and you. We could do it. 0:06:34.680 --> 0:06:36.599 We could, we could do it right by the pool 0:06:36.640 --> 0:06:40.320 of the Sunset Tower Hotel. Nobody's there at seven, it's 0:06:40.320 --> 0:06:43.559 three or four. We got Julie over there for early 0:06:43.560 --> 0:06:46.560 morning cockcaills. Julia Pollock, thank you so much for Zipper. 0:06:46.680 --> 0:07:00.039 This was fascinating joining us. Now. This is the interview. 0:06:59.760 --> 0:07:03.640 Of the day with good perspective on the frenzy of 0:07:03.680 --> 0:07:05.960 the moment. Paul, I'm embarrassed to say this, but I 0:07:06.040 --> 0:07:08.680 got to rip up the script short with bitdog at 0:07:08.720 --> 0:07:12.360 fifty six thousand with liz Anne Saunders at Charles Schwabs. 0:07:12.360 --> 0:07:15.560 She and I are on the same page on this. Lizanne, 0:07:15.640 --> 0:07:19.120 you know you've done fiscal advice to our government. You've 0:07:19.160 --> 0:07:23.640 been involved in new administrations and giving them counsel on. 0:07:24.040 --> 0:07:27.680 How to be responsible. As a five you were like seventeen, 0:07:27.720 --> 0:07:28.920 I remember twenty years ago. 0:07:29.080 --> 0:07:33.840 But liz Anne, did Gary Gensler screw this up? How 0:07:33.840 --> 0:07:39.280 do you feel about the SEC green lighting bitcoin within 0:07:39.360 --> 0:07:40.800 our retirement plans? 0:07:41.720 --> 0:07:46.080 Well, there's there's always caution around this, and as you know, 0:07:46.200 --> 0:07:50.600 Tom don't we don't offer it. We do provide the 0:07:50.640 --> 0:07:54.920 opportunity for some of the you know, ETF vehicles to 0:07:54.960 --> 0:07:58.160 be purchase a soul, but it's always with a wrapper 0:07:58.320 --> 0:08:01.800 around about under standing the risk associated with this. It's 0:08:01.800 --> 0:08:05.880 not a currency. It doesn't really provide and has it 0:08:06.000 --> 0:08:09.800 provided an inflation hedge per se, and that you have 0:08:09.880 --> 0:08:13.400 to treat it like a very speculative trade or investment 0:08:13.480 --> 0:08:17.240 in your portfolio. But you know, beyond that, we we 0:08:17.360 --> 0:08:19.880 can't control what all of our investors want to do. 0:08:19.960 --> 0:08:22.960 But I'm a skeptic and I am just on crypto 0:08:23.040 --> 0:08:23.480 in general. 0:08:23.560 --> 0:08:25.720 Paul, I'm going to get in trouble here. But I'm 0:08:25.800 --> 0:08:28.600 upset every time I go to the Bloomberg and do 0:08:28.720 --> 0:08:31.520 the symbol for bitcoin that we have, which is xbt 0:08:31.960 --> 0:08:34.360 x ray void Tom, and I have to hit the 0:08:34.360 --> 0:08:36.160 famous yellow currency button. 0:08:36.280 --> 0:08:40.840 Yes, you do next, it's not I don't care where 0:08:40.880 --> 0:08:42.719 they put it. Yeah, but it's not. 0:08:43.040 --> 0:08:45.280 I think it's more like an equity almost. But continue, 0:08:45.320 --> 0:08:46.000 I just will talk. 0:08:46.440 --> 0:08:47.080 Lizanne's right. 0:08:47.200 --> 0:08:48.559 I know a guy of six floor we can talk 0:08:48.559 --> 0:08:50.439 to about that work on the Hey, listen. 0:08:50.240 --> 0:08:53.559 It's become very correlated to indexes like the Nasdaq one hundred, 0:08:53.640 --> 0:08:55.000 So I think you're absolutely right. 0:08:55.520 --> 0:08:58.240 Hey, Lizene, we're just kind of through the earning season here, 0:08:58.640 --> 0:09:00.960 a couple more of the retailers left to come here. 0:09:01.240 --> 0:09:02.080 What's your takeaway? 0:09:03.960 --> 0:09:06.760 Maybe yet again, but to a more significant degree. You 0:09:06.960 --> 0:09:09.959 saw analysts forced to lower the bar to a more 0:09:10.000 --> 0:09:13.280 significant degree than was actually necessary, and as a result, 0:09:13.320 --> 0:09:15.560 you've had almost a perfect round trip. If you go 0:09:15.600 --> 0:09:18.720 back to October of last year, the expectation was about 0:09:18.720 --> 0:09:21.040 eleven percent earn its growth for the fourth quarter. You 0:09:21.160 --> 0:09:25.160 started the reporting season down sub two percent, but then 0:09:25.200 --> 0:09:27.760 you've seen analysts have to ratchet things back up and 0:09:27.840 --> 0:09:31.640 last I looked yesterday or Friday, it was back up 0:09:31.679 --> 0:09:35.679 in the ten percent and change now. In fairness, though, 0:09:35.880 --> 0:09:39.640 because of the way base effects work, that increase that 0:09:39.640 --> 0:09:43.199 we're now seeing in Q four twenty twenty three, because 0:09:43.200 --> 0:09:45.640 the bar gets set too low, You've seen analysts have 0:09:45.720 --> 0:09:48.960 to ratchet down estimates for Q four twenty twenty four 0:09:49.400 --> 0:09:51.280 because the year over years is not going to be 0:09:51.400 --> 0:09:54.360 robust because you got that bigger pop in Q three. 0:09:54.440 --> 0:09:58.360 But I think analysts have been admittedly flying a little 0:09:58.400 --> 0:10:01.679 more blind in this environment called the pandemic era, where 0:10:01.800 --> 0:10:04.840 even though there's fewer companies that are not providing guidance 0:10:04.920 --> 0:10:08.640 at all, the guidance is just not quite as maybe 0:10:08.679 --> 0:10:11.679 it was never precise, but it's a little the guidance 0:10:11.720 --> 0:10:14.359 is a little more loosey goosey right now, leaving analysts 0:10:14.360 --> 0:10:16.880 to have to kind of finagle things on their own 0:10:17.040 --> 0:10:19.600 and also not adjust earnings too far out. 0:10:19.840 --> 0:10:22.800 So one of the things Luzan as people try to 0:10:22.800 --> 0:10:25.800 get a handle on those earnings is we need to 0:10:25.800 --> 0:10:27.679 see a broadening out of this market. We saw a 0:10:27.720 --> 0:10:30.160 little bit of a November December last year, but it 0:10:30.360 --> 0:10:33.439 still feels like this market may be a little too 0:10:33.480 --> 0:10:35.800 thin in terms of maybe the magnificent seven or five 0:10:35.920 --> 0:10:37.839 or however many are left are kind of really driving 0:10:37.880 --> 0:10:39.760 the performance here, and a lot of folks say that 0:10:39.840 --> 0:10:41.360 makes them nervous. How do you think about it? 0:10:42.400 --> 0:10:45.360 So I do think there's still is risk associated with 0:10:45.400 --> 0:10:47.480 the concentration, but it's nowhere near as cute as it 0:10:47.559 --> 0:10:49.320 was last year. To your point that we've had to 0:10:49.320 --> 0:10:53.439 start whittling down from the magnificent seven to the sensational 0:10:53.559 --> 0:10:57.600 six to the fabulous five, because we've seen that move 0:10:57.640 --> 0:11:00.200 from in the case of Tesla, just out of the 0:11:00.280 --> 0:11:03.319 seven in terms of the largest seven stocks recently dropped 0:11:03.320 --> 0:11:06.400 down to number ten. And you've had stocks outside of 0:11:06.440 --> 0:11:10.160 the sort of techy world like Brickshire Hathaway, like Eli, 0:11:10.240 --> 0:11:14.440 Lilly leapfrog Tesla. But I think what's happening and you 0:11:14.440 --> 0:11:18.280 don't pick it up necessarily by traditional breath statistics or 0:11:18.360 --> 0:11:21.120 just looking at the MAGS seven is there's more churn 0:11:21.200 --> 0:11:25.040 under the surface. So the Nasdaq Index overall, at the 0:11:25.080 --> 0:11:28.079 index level, the maximum draw down this year from a 0:11:28.160 --> 0:11:30.400 year to date high is only three percent, But the 0:11:30.520 --> 0:11:34.439 average member maximum draw down again year to date from 0:11:34.440 --> 0:11:36.720 a year to date high within the Nasdaq is negative 0:11:36.720 --> 0:11:40.520 twenty two percent, so there's a lot more churn going 0:11:40.520 --> 0:11:42.360 on under the surface. And I think in this kind 0:11:42.400 --> 0:11:45.680 of market environment, to get the true story, the narrative 0:11:45.720 --> 0:11:48.920 that the market is telling, you have got to leave 0:11:49.000 --> 0:11:51.439 aside just index level analysis. 0:11:51.600 --> 0:11:53.920 Lizanne four equity types in a room, you're going to 0:11:53.960 --> 0:11:55.679 get seventeen answers. 0:11:55.240 --> 0:11:56.200 On a rebalance. 0:11:56.600 --> 0:11:59.319 What is the liz Ane Saunders formula. 0:11:59.320 --> 0:12:03.400 For REBOUNDCE So I think to the extent investors can 0:12:03.480 --> 0:12:07.520 do it based on the implications of turnover, tax bracket, 0:12:07.600 --> 0:12:13.559 et cetera. I think portfolio based rebalancing versus calendar based rebalancing. 0:12:13.640 --> 0:12:16.320 Letting actual moves in your portfolio, whether it's at the 0:12:16.360 --> 0:12:20.240 individual stock level or some group like the Magnificent seven, 0:12:20.320 --> 0:12:24.040 or at the sector asset class level. Let the moves 0:12:24.120 --> 0:12:26.520 up and down as a share of your portfolio, dictate 0:12:26.559 --> 0:12:29.840 the timing associated with rebalancing, versus say, what the mutual 0:12:30.400 --> 0:12:34.079 fund complex does, which is last quarter, I mean last 0:12:34.120 --> 0:12:36.880 week of every quarter. It's very calendar based, and I 0:12:36.880 --> 0:12:40.600 think that's just a beneficial way for individual investors to 0:12:40.720 --> 0:12:43.480 stay in gear not have to make all or nothing decisions. 0:12:43.559 --> 0:12:46.439 And as I always say, do a version of BI 0:12:46.480 --> 0:12:49.040 low cell high, which is you know, at low trim high. 0:12:49.520 --> 0:12:51.360 I suppose boring to talk about. I love when you 0:12:51.360 --> 0:12:54.040 guys ask me about that, but for the most part, 0:12:54.040 --> 0:12:56.640 it's not maybe what it's not the bomb bass that 0:12:56.800 --> 0:12:59.480 is more intriguing to people, but it's actually what matters. 0:13:00.080 --> 0:13:04.440 Hey, Liz, and thinking about this market here, a lot 0:13:04.520 --> 0:13:07.200 of folks are saying, yeah, earnings are fine, but we've 0:13:07.200 --> 0:13:08.760 got to focus on what the Fed's going to do. 0:13:08.800 --> 0:13:11.160 And I'm an old self side I don'tlyt so earnings 0:13:11.160 --> 0:13:13.600 still matter to me, but we can't escape that this 0:13:13.679 --> 0:13:15.800 FED is really a key driver of this marketplace. What 0:13:15.840 --> 0:13:18.800 do you expect our freeder reserve to do this year? 0:13:19.800 --> 0:13:22.920 Well, as you guys know, we've talked about this a 0:13:22.920 --> 0:13:26.800 lot on this program and on TV in advance of 0:13:26.920 --> 0:13:29.839 the better than expected job most recent job support, the 0:13:29.960 --> 0:13:33.000 hotter than expected CPI report. We were not in the 0:13:33.040 --> 0:13:36.680 March camp, felt that that was just too aggressive an assumption, 0:13:36.840 --> 0:13:40.120 not to mention the six to seven cuts priced in 0:13:40.240 --> 0:13:43.920 at that point, and that's now shifted to an outlook 0:13:43.960 --> 0:13:47.480 that's a little more in line with the fed's dots, 0:13:47.520 --> 0:13:50.840 but I think it's still too soon to tell the 0:13:50.840 --> 0:13:53.720 FED is data dependent. I think this is a FED 0:13:54.200 --> 0:13:56.760 that took the elevator up, the opposite of what they 0:13:56.760 --> 0:13:58.960 normally do, which is take the escalator up. And I 0:13:58.960 --> 0:14:01.280 think they're going to take the sc later down in 0:14:01.320 --> 0:14:05.680 the interest of making sure that inflation has come down 0:14:05.679 --> 0:14:07.680 as staying there. The other really important thing, and this 0:14:07.720 --> 0:14:09.520 is what you need to watch for in all the 0:14:09.600 --> 0:14:13.600 upcoming inflation data reports is Powell's emphasis, not at the 0:14:13.800 --> 0:14:16.920 FOMC meeting or the presser, but in the sixty minutes 0:14:16.960 --> 0:14:21.240 interview when he somewhat suddenly mentioned the twelve month rate 0:14:21.280 --> 0:14:23.680 of change as being a key as opposed to the 0:14:23.680 --> 0:14:25.480 thick six month rate of change or the three month 0:14:25.520 --> 0:14:27.960 rate of change. That's another way of saying, we want 0:14:28.000 --> 0:14:32.520 to sort of elongate the analysis period to feel confident 0:14:32.640 --> 0:14:35.240 that inflation has come down and it's likely to stay down. 0:14:35.440 --> 0:14:37.000 Li'sand a little weight to the tape here of the 0:14:37.080 --> 0:14:40.600 magnificent whatever they are, a little saggy. Microsoft goes from 0:14:40.600 --> 0:14:43.080 a four to twelve over the last couple of days 0:14:43.120 --> 0:14:45.360 down to four oh seven right now, even in vidio 0:14:45.440 --> 0:14:49.520 breaking down a little bit, do you still model out 0:14:49.720 --> 0:14:53.200 it is completely normative to have a ten percent correction? 0:14:53.920 --> 0:14:56.080 Is that still part of the Saunders playbook? 0:14:56.720 --> 0:14:59.120 Sure, and a lot of people forget we had one. 0:14:59.360 --> 0:15:02.000 In the latter of last year, there was a ten 0:15:02.040 --> 0:15:04.120 percent correction in the S and P more for the 0:15:04.200 --> 0:15:07.760 NASDAC from the late July to late October ten year 0:15:07.880 --> 0:15:12.160 yield spike from subforida to up five. So it's incredible 0:15:12.160 --> 0:15:15.000 how short memories are, as if the most recent correction 0:15:15.320 --> 0:15:18.680 was way back in the twenty twenty covid era. And 0:15:18.720 --> 0:15:20.840 I think to some degree, not on a day to 0:15:20.960 --> 0:15:23.640 day basis or maybe week to week, but I think 0:15:23.880 --> 0:15:26.200 the bond market is to some degree still in the 0:15:26.240 --> 0:15:28.280 driver's seat for the equity market. And I think if 0:15:28.280 --> 0:15:31.720 we were to get an outsized move, especially tied to 0:15:31.800 --> 0:15:34.720 inflation on the upside and yields, I think that that 0:15:34.760 --> 0:15:36.920 would be to the detriment of the equity market. 0:15:37.120 --> 0:15:39.640 Lizanne Saunders, thank you so much. In honor of Lizanne, 0:15:39.680 --> 0:15:41.720 Tomorrow all of our music. 0:15:41.480 --> 0:15:48.080 Will be led Zeppelin. This is really cool. 0:15:48.280 --> 0:15:50.400 I mean, he was with Steve Cohen over to SEC 0:15:50.440 --> 0:15:51.960 and then Cohen bought the Mets. 0:15:51.680 --> 0:15:53.600 And Nicholes said forget it, see. 0:15:53.440 --> 0:15:55.960 You and you know this is a guy who writes 0:15:56.000 --> 0:16:00.920 a memo and it's read religiously on Wall Street because 0:16:00.960 --> 0:16:03.840 of his work, And like Mario Gibelly, I'm gonna take 0:16:03.840 --> 0:16:08.040 it back to there's something about being an auto securities 0:16:08.440 --> 0:16:12.600 analyst as Nick Colis was at First Boston a few 0:16:13.280 --> 0:16:13.880 years ago. 0:16:14.360 --> 0:16:16.120 Is just hugely read Data Trek. 0:16:16.200 --> 0:16:19.400 Again, we protect the copyright of all of our guests 0:16:19.440 --> 0:16:22.760 looked at Data Trek to get Nick Colis's brilliant work. 0:16:22.840 --> 0:16:24.920 Yeah, Temmy had a pretty good career on Wall Street. 0:16:24.960 --> 0:16:27.720 But here's a guy. It goes to Haverford College, great 0:16:27.760 --> 0:16:32.120 school outside of Philly. He majors in Near Eastern archaeology. 0:16:32.200 --> 0:16:34.720 Are you kidding me? If one of your offspring came 0:16:34.800 --> 0:16:37.520 to you, Thomason, I'm going to major near Yeah, let's 0:16:37.520 --> 0:16:38.000 go there. 0:16:37.880 --> 0:16:41.400 Right now, Nick Colis, how about that Near Eastern archaeology 0:16:41.440 --> 0:16:42.080 to get you through? 0:16:42.280 --> 0:16:43.360 But how did that work? 0:16:44.560 --> 0:16:44.720 Oh? 0:16:44.920 --> 0:16:46.600 Very very slowly, very slightly. 0:16:46.600 --> 0:16:48.680 But he made up for it by getting his MBA 0:16:48.760 --> 0:16:51.240 at the Chicago Hey, Nick, thanks so much for joining 0:16:51.320 --> 0:16:54.960 us here. Warren Buffett out with his annual letter. You 0:16:55.000 --> 0:16:57.840 know what he didn't even talk about once was AI. 0:16:58.520 --> 0:17:00.840 What do we read into that if Buffett doesn't care 0:17:00.840 --> 0:17:04.240 about AI. Is he missing something? Are we overplaying something? 0:17:05.520 --> 0:17:06.600 Yeah, it's fascinating. 0:17:06.680 --> 0:17:09.040 You're right. He didn't mention AI even once in his letter, 0:17:09.080 --> 0:17:13.040 which is one of the most widely read portfolio manager 0:17:13.119 --> 0:17:14.040 letters in the world. 0:17:14.480 --> 0:17:16.840 And I just take it as kind of Warren being Warren. 0:17:17.000 --> 0:17:20.800 He cares about fundamentals, and he cares about company management, 0:17:20.800 --> 0:17:24.320 and he cares about return of capital. AI is probably 0:17:24.320 --> 0:17:25.879 just a footnote for him. 0:17:26.320 --> 0:17:28.439 Are you concerned or to what level are you concerned? 0:17:28.520 --> 0:17:28.720 Nick? 0:17:28.760 --> 0:17:32.119 About? This is still a very concentrated market. There's not 0:17:32.200 --> 0:17:34.320 a lot of breadth that there, whether it's the Magnificent 0:17:34.760 --> 0:17:36.960 seven or five, or whether it's just a handful of 0:17:37.040 --> 0:17:40.560 names pushing this market higher. The technicians telling me that's 0:17:40.600 --> 0:17:42.359 not really a healthy market. How do you think about it? 0:17:43.600 --> 0:17:45.600 It's I totally take a point that it's probably not 0:17:45.640 --> 0:17:47.720 a healthy market, but it's the market that we have 0:17:48.320 --> 0:17:50.840 and to some degree at least forgetting some movement out 0:17:50.880 --> 0:17:54.840 of names besides tech. So Lily is helping healthcare, Berkshire 0:17:54.880 --> 0:17:57.120 is helping financials, and those are two groups that are 0:17:57.119 --> 0:18:00.399 performing here to date. So while we're having some amount 0:18:00.400 --> 0:18:03.000 of narrowness at least it's narrowness in some sectors, it's 0:18:03.040 --> 0:18:06.000 besides tech and tech adjacent. So I put that in 0:18:06.000 --> 0:18:08.760 the win column versus say last year, where it was 0:18:08.840 --> 0:18:11.480 really almost all tech for the first half of the year. 0:18:12.720 --> 0:18:15.400 So when you think about this market here, Nick, I mean, 0:18:15.600 --> 0:18:18.240 do we have to be smart on earnings? Do we 0:18:18.280 --> 0:18:20.400 have to be smart on the FED? I mean, I'm 0:18:20.400 --> 0:18:21.920 not even sure what's really driving this mark. 0:18:22.680 --> 0:18:25.399 That's the smartest question I've heard this month, Paul. The 0:18:25.520 --> 0:18:28.879 month's ending, the month's ending. I mean, this is really 0:18:28.920 --> 0:18:29.640 really important. 0:18:29.640 --> 0:18:31.199 Fos. Paul Sweening nails it. 0:18:31.560 --> 0:18:34.880 Nicholas, am I a FED watcher or a street watcher? 0:18:36.040 --> 0:18:37.800 I think you've got to be a street watcher. I 0:18:37.800 --> 0:18:41.960 think it is said to a first degree of magnitude. 0:18:42.040 --> 0:18:45.360 Rates don't really matter anymore. It comes down to what's 0:18:45.400 --> 0:18:47.960 the story, what's the theme. If it's tech, that it's AI, 0:18:48.520 --> 0:18:51.119 if it's outside of tech, that it's organic growth, So 0:18:51.240 --> 0:18:54.080 a lily for example, being for the best example. It 0:18:54.119 --> 0:18:56.480 comes down to stocks, It comes down to sectors. We've 0:18:56.520 --> 0:19:00.240 got three winning sectors year to date, financial, healthcare, and tech, 0:19:00.840 --> 0:19:02.040 and that's the way it's going to be most of 0:19:02.080 --> 0:19:03.800 the year. This is kind of a mid cycle market. 0:19:04.040 --> 0:19:06.840 This is a market where we're caring about growth, not Rachel. 0:19:06.880 --> 0:19:09.159 You a guy that I miss, miss miss each and 0:19:09.200 --> 0:19:11.880 every day. He was so kind to me, Clayton Christiensen 0:19:12.320 --> 0:19:16.480 in disruption. This morning, we're seeing disruption at Macy's, Nick 0:19:16.520 --> 0:19:18.720 coolis are we going to see a lot more disruption 0:19:19.240 --> 0:19:22.520 of the have nots of corporate enterprise in the next 0:19:22.560 --> 0:19:23.159 five years? 0:19:24.080 --> 0:19:24.480 Boy? 0:19:24.840 --> 0:19:26.840 I miss Christensen as well. It's a good point. 0:19:26.920 --> 0:19:30.879 And you know his thesis was that disruption happens in perpetuity. 0:19:30.920 --> 0:19:33.720 It happens every day in every way, and so I 0:19:33.720 --> 0:19:36.240 think it's the single most important theme in investing, frankly, 0:19:36.320 --> 0:19:37.760 not just day to day, in week to week, but 0:19:37.880 --> 0:19:40.360 year and year and decades a decade. 0:19:40.560 --> 0:19:42.879 So, Nick, if that is in fact the case in 0:19:42.960 --> 0:19:46.479 terms of disruption, is there any scenario where I'm not 0:19:46.560 --> 0:19:48.720 overweight tech? Just like forever? 0:19:50.760 --> 0:19:53.080