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Speaker 1: Surveillance on demand on Apple, Spotify and anywhere you get

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Speaker 1: your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal,

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Speaker 1: and the Bloomberg Business Opup. Will we get back to

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Speaker 1: two percent yield? That'll be a great story. I believe

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Speaker 1: that's price up and yield down if I get it right.

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Speaker 1: Kathy Jones now gives perspective. She fixed income strategists in

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Speaker 1: your kitchen this weekend of what to Do, she's with

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Speaker 1: Charles Schwab. I am absolutely fascinated with an always open

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Speaker 1: question to you and les Anne Saunders. What are people

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Speaker 1: at Schwab doing with their fixed income money?

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Speaker 2: Yeah, so, what we see amongst sort of the majority

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Speaker 2: of the clients is they've been staying very short in duration.

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Speaker 2: They're starting to move out. They're starting to get some

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Speaker 2: confidence that they can move a little bit further out

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Speaker 2: the curve. They're staying at high quality treasuries, very very

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Speaker 2: popular along the CDs, not really dipping their toes into

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Speaker 2: low quality. But you know, at these yields, Uni bonds,

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Speaker 2: investment great corporates, treasuries are looking attractive and they're getting

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Speaker 2: a little bit more confident about stretching out duration.

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Speaker 1: The pros are worried about liquidity, whatever that means in

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Speaker 1: the bond market. Should our viewers and listeners be worried

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Speaker 1: about liquidity and full faith and credit simple to buy

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Speaker 1: duration bonds.

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Speaker 3: Yeah.

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Speaker 2: I don't think for the average investor the liquidity issue

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Speaker 2: is going to be a big one. I think for traders,

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Speaker 2: I think for people like us navigating the markets for

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Speaker 2: our clients. It's an issue, but I also don't think

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Speaker 2: it's a critical issue right.

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Speaker 3: Now in the market.

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Speaker 4: You are the one person who I was most looking

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Speaker 4: forward to speaking to today. I really want to get

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Speaker 4: your understanding of what happened with the failed auction yesterday

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Speaker 4: and whether you give any credence whatsoever to this idea

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Speaker 4: that the hack of ICBC, of the US unit of

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Speaker 4: ICBC had something to do with how poor it went off.

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Speaker 2: You know, I don't really know for sure. It is

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Speaker 2: an open question because we haven't had something like this

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Speaker 2: happen before. It seemed like the win issued market was

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Speaker 2: okay going into it. There were a lot of questions

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Speaker 2: because we've had such a big rally at the long end.

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Speaker 2: You know, who would show up after rates dropped so much?

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Speaker 2: So are there some questions about that? And then you

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Speaker 2: start to get the Powell comments, and then you get

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Speaker 2: the hack whatever that may have had to do with it.

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Speaker 2: So I think it's kind of a constellation of things.

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Speaker 2: But we've had such a big rally going into it,

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Speaker 2: after the ten year went well and the three year

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Speaker 2: went well. I think that had something to do with

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Speaker 2: people stepping back.

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Speaker 4: What sort of signifies to you that we're actually getting

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Speaker 4: stability in longer term bond yields enough to get some

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Speaker 4: conviction to have some sort of trade that can last

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Speaker 4: more than a couple of days.

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Speaker 2: Yeah, we don't have it yet, especially the further out

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Speaker 2: the curve you go, you go beyond ten years, you

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Speaker 2: really don't have it. Even the ten year I mean,

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Speaker 2: look at the volatility we've had recently, up fifty basis points,

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Speaker 2: down fifty basis points. I don't think we're there yet.

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Speaker 2: I think the market needs conviction that the FED is

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Speaker 2: really done and that you know, the hold has some

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Speaker 2: sort of timeframe that you can anticipate, and then we

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Speaker 2: start to get that stability. We thought we had it,

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Speaker 2: and then Paul spoken, we don't have it.

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Speaker 4: How much does this really have to do, though, with

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Speaker 4: the FED and it's policy at a time when people

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Speaker 4: are citing fiscal policy, where people are citing potential inflation,

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Speaker 4: where people are citing just simply, where are the buyers

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Speaker 4: going to come from at a time of changing policy overseas.

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Speaker 2: Yeah, we haven't. So I tend to think it really

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Speaker 2: has to do with three things that always influence the

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Speaker 2: trend and rates. What the FED is doing, because you

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Speaker 2: have to discount that. There's no way you can get

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Speaker 2: around the FED, no matter how hard you try. What

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Speaker 2: inflation is doing, which is tending to recede, and then

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Speaker 2: how the economy is performing, and then you get into

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Speaker 2: these other things like supply and who's buying, you know,

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Speaker 2: in China and Japan. But actually the foreign flows have

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Speaker 2: been pretty steady despite all this chatter. We've had the

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Speaker 2: four and flows hold pretty steady. The reserves are pretty steady,

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Speaker 2: So I'm less worried about that. Fiscal policy. Obviously it's

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Speaker 2: a concern, But is it a concern today versus yesterday

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Speaker 2: versus a week ago. That's a hard argument to me.

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Speaker 1: One year out, am I clipping coupons? Or can I

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Speaker 1: actually invest for total return after a three year nightmare?

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Speaker 2: I think you can get some total return. It's not

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Speaker 2: that hard when you've got a coupon this large to

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Speaker 2: get a positive total return.

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Speaker 1: I'm going to clip the coupon and I'm going to

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Speaker 1: get some capital gain out.

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Speaker 2: Twelve months I think twelve months from now. Yeah, we

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Speaker 2: have fair value, say in tens, right around four to

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Speaker 2: four and a quarter, and so if we get there,

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Speaker 2: if we get even close to there, I'm going to

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Speaker 2: have a positive return.

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Speaker 4: Going into next week when we get CPI. How volatile

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Speaker 4: is the market and how potentially massive could some of

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Speaker 4: the moves be on the heels of either an upside

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Speaker 4: or downside surprise.

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Speaker 2: Yeah, we're I don't think we're done with the volatility, Lisa.

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Speaker 2: I think it's here to stay for a while until

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Speaker 2: we got either that you confidence about where the Fed

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Speaker 2: is and where it's going, which I don't think the

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Speaker 2: Fed really wants to give us too much confidence, right.

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Speaker 2: I think they want to keep the market a little

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Speaker 2: bit off off center, or we start to get those

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Speaker 2: labor market numbers that are just so soft that the

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Speaker 2: market says, oh okay, now the Fed really has to start.

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Speaker 5: Easing Kathy John Cholsh swap Washingsta Marie at the Baumann

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Speaker 5: famous iph we'll.

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Speaker 1: Ask it right now. Let's do this. Let's say we're

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Speaker 1: going to conflate two stories together here this morning, we

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Speaker 1: have a wonderful Bloomberg poll, some real acuity about where

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Speaker 1: we are twelve months out from an election, and also,

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Speaker 1: of course mister Manchin's comments from West Virginia joining us

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Speaker 1: now Emory Horn and Bloomberg luxury correspondent in Washington. Let's

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Speaker 1: get that out of the way. Emory right now is

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Speaker 1: luxury so yesterday is it over in Washington.

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Speaker 6: I don't know if it was ever alive in Washington him,

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Speaker 6: but there is a sale at the moment, private sale

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Speaker 6: if you know who to know at bal Maa.

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Speaker 3: So you can go check that out.

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Speaker 1: There we go. You're stalking you your weekend shopping with

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Speaker 1: Amory hard and Emory I want to conflate these two together.

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Speaker 1: I've got Joe Manchin, who has lived fifty percent votes

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Speaker 1: in West Virginia from the special election of Robert Byrd

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Speaker 1: fifty three percent eight years ago. Just to cut to

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Speaker 1: the chase before the poll chat, did he make this

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Speaker 1: decision because he really thought he couldn't win.

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Speaker 3: I think that's part of it.

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Speaker 6: If you look at a recent Emerson poll and you

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Speaker 6: have him against Republican Governor Jim Justice, he's trailing by

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Speaker 6: about thirteen points. So this was going to be an

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Speaker 6: incredibly challenging race for him, and he's already flirted with

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Speaker 6: the fact that this was going to be the end

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Speaker 6: of his time in the Senate. He talked about the

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Speaker 6: fact that he does think there needs to be a

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Speaker 6: conversation about the middle, but also you have to look

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Speaker 6: at the reality of what he's facing in West Virginia

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Speaker 6: and that was likely going to be a defeat.

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Speaker 1: Gregory Courtney and Marlow writing up our poll piece, it'll

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Speaker 1: be talked about, I know across all of your world today.

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Speaker 1: Is there a middle in our Bloomberg poll or does

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Speaker 1: it show this mass polarity. Is the Joe Manchin middle

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Speaker 1: out there in the Bloomberg poll?

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Speaker 6: Well, there absolutely is because there's one key finding when

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Speaker 6: it comes to RFK, and that's that he is taking

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Speaker 6: from both When you look at twenty twenty voters, he's

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Speaker 6: definitely taking from Biden.

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Speaker 3: But when you look at how voters feel.

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Speaker 6: Right now, he is attracting Democrats because of his name Cachet,

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Speaker 6: right he's a Kennedy, But he is also attracting Trump voters,

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Speaker 6: and that has a lot to do with the fact

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Speaker 6: that he has a lot of a dialogue over the

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Speaker 6: past two years when it comes to when it comes

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Speaker 6: to COVID nineteen.

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Speaker 3: And this anti vax movement.

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Speaker 6: So he has ten percent, he has obviously a ton

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Speaker 6: of name, idea and recognition, but there is this idea

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Speaker 6: of what we're calling quote double haters, and that's about

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Speaker 6: nineteen percent we're seeing in our poll, and that's people

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Speaker 6: who don't like the current president Joe Biden, and definitely

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Speaker 6: don't like the former president dot or Trump.

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Speaker 5: Double haters.

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Speaker 3: I love that. I think we're going to have to

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Speaker 3: use that.

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Speaker 4: There is this question as I look through some of

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Speaker 4: the pole results about how President Biden could turn this around.

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Speaker 3: We have a year left.

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Speaker 4: Is there some material policy projection that you can hear

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Speaker 4: about from the Democrats coalescing around the border, some sort

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Speaker 4: of bipartisan agreement to try to deal with some of

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Speaker 4: the problems that people are highlighting.

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Speaker 3: So I think there's two things that stand down here.

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Speaker 6: One is that overwhelmingly in this poll of swing state voters,

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Speaker 6: they want to see more being done at the southern border.

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Speaker 6: It's sixty eight percent to twenty percent in terms of

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Speaker 6: twenty percent disapprove of what's being done. When you look

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Speaker 6: at the disapproval across things like Israel, Ukraine, that that

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Speaker 6: number is more.

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Speaker 3: So what you're seeing here is that.

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Speaker 6: Not a lot of people, a lot of people really want.

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Speaker 3: To see more work being done on the southern border.

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Speaker 6: But Biden has put this all together in one big bill,

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Speaker 6: and potentially because people are less concerned about, say, what's

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Speaker 6: going on in Ukraine or China at the moment, that

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Speaker 6: they are fine with having separate bills.

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Speaker 3: What we see Republicans are trying to do.

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Speaker 6: I'd also note that this is a hard line for

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Speaker 6: the president to walk right now because still in our poll,

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Speaker 6: like our poll showed.

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Speaker 3: Last month, the economy rates number one.

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Speaker 6: More than forty percent of respondents say that is their

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Speaker 6: top priority.

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Speaker 3: When you look at the.

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Speaker 6: Foreign policy concerns, one percent care about China, three percent

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Speaker 6: care about what's going on in Israel. So immigration, the economy, abortion,

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Speaker 6: those are ranking much higher in this poll.

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Speaker 4: And can I just ask a stupid question, is it

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Speaker 4: when we talk about economy, are we just talking about inflation?

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Speaker 6: Well, that's what people are feeling, because the data shows

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Speaker 6: that there's a lot of other optimism happening in the economy.

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Speaker 3: This administration continues to use.

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Speaker 6: The superlative that for twenty one months the unemployment rate

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Speaker 6: has been below four percent.

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Speaker 3: That is a huge achievement, and that shows that we

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Speaker 3: do have a very strong labor market.

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Speaker 6: But time and time again, what people are concerned with

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Speaker 6: is price of gasoline, price of groceries, their price of

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Speaker 6: rental insurance that spiked over the summer. Mark Zandi in

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Speaker 6: September came out and talked about the fact that before

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Speaker 6: the pandemic, where prices are now, an average family that

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Speaker 6: is making medium income is paying seven hundred and thirty

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Speaker 6: four dollars more. And that's the problem with what the

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Speaker 6: President is saying. The economy is doing better and people

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Speaker 6: are just not feeling it.

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Speaker 5: Amichat frustrated? Is this White House with these pulls.

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Speaker 3: Very frustrated?

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Speaker 6: The President was asked about it yesterday and he says,

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Speaker 6: you're just looking at CNN, You're just looking at New

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Speaker 6: York Times. Well, this is our second Bloomberg News Morning

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Speaker 6: Consult poll that focuses on the states that matter. These

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Speaker 6: are the states that win elections. I think what the

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Speaker 6: White House feels right now, or the campaign feels right now,

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Speaker 6: is that Tuesday they had a great night, But Tuesday

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Speaker 6: was all about abortion And is that going to be

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Speaker 6: top of mine of voters come November of next year?

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Speaker 3: These are very interesting races. In Virginia.

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Speaker 6: Glennyunkin made it about a fifteen week limit in Kentucky.

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Speaker 3: It was kind of a unicorn.

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Speaker 6: Governor race in Ohio is specifically about abortion, and when

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Speaker 6: you have roe Vivaid being struck down by the Supreme Court,

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Speaker 6: it means that the states are looking at abortion.

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Speaker 3: So these are very state specific issues.

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Speaker 1: I look, Amory, and I thoughd you're dead out on

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Speaker 1: the Zandi point. To me, the inflation's not the statistics

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Speaker 1: we talk about on Bloomberg surveillance. It's the level from

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Speaker 1: twenty nineteen. I think everyone out there, including me, is

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Speaker 1: looking at every single item back to late twenty nineteen,

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Speaker 1: very early at twenty and that's how you get to

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Speaker 1: that seven hundred dollars paychecks.

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Speaker 5: It's great, that's the issue. Take and just to me,

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Speaker 5: it's that part of the matter. IMH, thank you. I'm

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Speaker 5: Marie down in Washington day say.

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Speaker 1: Let's do this right now, and this is going to

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Speaker 1: be fascinating a first time in Las Vegas. And what

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Speaker 1: you need to know is in the vicinity of Tuesday

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Speaker 1: it will be seventy three degrees in Las Vegas. It

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Speaker 1: doesn't matter if you run a race at ten pm

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Speaker 1: at night Pacific time, one am Eastern time, six am

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Speaker 1: in the morning in Bambury, England and the rest of it.

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Speaker 1: Christian Horner's team principal and CEO of Oracle Red Bull

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Speaker 1: Racing and John I'm sorry, it's about tires.

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Speaker 5: That's what the experts Christian. It could well be about tires.

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Speaker 5: Good morning to you, sir, and thank you for being

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Speaker 5: with us. I think we have to start by saying

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Speaker 5: congratulations on an absolutely dominant season for you and the team.

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Speaker 5: We've spent some time talking about that. In just a moment.

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Speaker 5: Let's go where Tom went. Just approaching a new track

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Speaker 5: you haven't had time with, you haven't raced on before,

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Speaker 5: and we track temperatures that could be very very low. Christian,

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Speaker 5: what's the approach for you and the team going into

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Speaker 5: an event like that one take a jacket? Is it

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Speaker 5: that simple?

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Speaker 7: Oh yeah, I was watching Max on the simulator yesterday

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Speaker 7: driving around the circuit.

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Speaker 8: It looks a great track.

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Speaker 7: I mean it's going to be super fast, there's going

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Speaker 7: to be a lot of overtaking opportunities and a tire

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Speaker 7: as it could be like driving on ice, you know,

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Speaker 7: which just adds another dimension. So, particularly on a road course,

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Speaker 7: on a street circuit that can test the drivers and

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Speaker 7: the team to the absolute maximum, Christian.

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Speaker 5: When it comes to stuff like qualifying, then how do

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Speaker 5: you prepare to put that fast lap in that you

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Speaker 5: try to do to get that quality in? How do

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Speaker 5: you do that? What do you do set up with

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Speaker 5: three laps before you go for the qualifying lap, what

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Speaker 5: do you do?

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Speaker 7: Well, that's all going to come out of where we

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Speaker 7: run on Friday for the first time, sorry, on Thursday

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Speaker 7: for the first time. We're going to be learning, you know,

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Speaker 7: what it takes to get these paradi tires up to

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Speaker 7: temperature and is it going to be multiple laps in

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Speaker 7: qualifying rather than a single lap. So it could be

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Speaker 7: really interesting to see how that's how that's going to

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Speaker 7: play out. There's going to be a lot of data

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Speaker 7: to look at, and yeah, the simulators are going to

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Speaker 7: be working flat out on certainly Thursday evening.

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Speaker 5: Christian. Any worries that this could just be a bit

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Speaker 5: of a disaster, could end up in chaos.

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Speaker 7: Well, look, street races are always dramatic, you know, we've

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Speaker 7: seen that Singapore with sin in Azerbaijan and of course

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Speaker 7: Monte Carlo, and this one promises to be a big one.

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Speaker 8: I think it's going to be one of the biggest

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Speaker 8: viewed events in the.

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Speaker 7: Sporting calendar this year, and so you know, I'm confident

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Speaker 7: it's going to be a you know, a great success.

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Speaker 1: Christian Owner. I was appalled by the accident very early

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Speaker 1: in the Brazil race. Your Perez was very much involved

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Speaker 1: in that. How do you make the start of the

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Speaker 1: races safer?

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Speaker 8: I don't think you can.

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Speaker 7: I mean, you've got cars that will accelerate from not

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Speaker 7: to one hundred miles an hour in less than two seconds,

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Speaker 7: and you've got twenty very competitive drivers all going, you know,

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Speaker 7: to try and make position into that first turn.

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Speaker 8: So inevitably sometimes there is going to be contact.

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Speaker 7: But the safety of the cars, the safety of the

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Speaker 7: circuits has increased dramatically, and you know, thankfully we're seeing,

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Speaker 7: you know, drivers walking away from what sometimes looked like

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Speaker 7: very nasty accidents.

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Speaker 5: Christian, you said, twenty competitive drivers, arguably this nineteen and

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Speaker 5: then this one guy on his own out in the front.

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Speaker 5: I want to talk about that. The domination of Max Versteppan.

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Speaker 5: He's still so young, Christian, He's taken over Alan Prost,

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Speaker 5: He's basically on course to take over Vettel, maybe even

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Speaker 5: in the next couple of races. In terms of race wins.

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Speaker 5: When you go back over the legends of this sport

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Speaker 5: that you've been so close to over the years, fanjo Senna, Schumacher,

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Speaker 5: even more recently Hamilton, Where does Max rank for you?

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Speaker 5: What separates him from the rest?

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Speaker 9: Well, of course, it's.

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Speaker 7: Always incredibly difficult to compare drivers from different generations, but

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Speaker 7: what I think is safe to say with what Max

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Speaker 7: has achieved in a short period of time, with now

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Speaker 7: three World Championships, fifty or fifty two conpret victories.

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Speaker 8: Is an incredible, incredible record.

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Speaker 7: And I think that he can now be spoken about

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Speaker 7: in the same sentence in category as some of the

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Speaker 7: greatest drivers that the sports has ever seen.

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Speaker 5: How far do you think he can go, Christian, Well,

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Speaker 5: I think.

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Speaker 7: You know, he's still so young, he's still evolving as

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Speaker 7: a driver, and particularly as he gains more experience, so

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Speaker 7: and a lot depends on the equipment that we can

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Speaker 7: give him, but I think he can achieve a lot more.

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Speaker 7: He's motivated, he's hungry, and yeah, he's he just loves

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Speaker 7: his racing. You can see that he's not interesting anything

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Speaker 7: else other than just going racing.

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Speaker 5: He's been dominant. Your whole team has been absolutely dominant.

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Speaker 5: I remember Ferrari being accused of making a spot boring

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Speaker 5: in the Schumacher years. Do you take it as a

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Speaker 5: compliment when you hear those kind of act sections thrown

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Speaker 5: at your team.

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Speaker 7: Well, it means that we're doing our job and that

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Speaker 7: we're winning. But one thing that's guaranteed in this spart

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Speaker 7: is that nothing stands still. And I think with stable regulations,

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Speaker 7: we can already see teams improving behind us, and I

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Speaker 7: think the next year it's going to converge.

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Speaker 8: And we're roo for a much more tight championship next year.

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Speaker 7: And also, you know twenty five before another reset with

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Speaker 7: new regulations for twenty twenty six. So yeah, I'm expecting

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Speaker 7: a much much tougher year in twenty twenty four.

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Speaker 1: Christian to that point, And you know, I have my

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Speaker 1: autosport at home. John Ferrell made me get it. I

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Speaker 1: try to read it. I try to understand it. A

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Speaker 1: lot of your brethren are really trying to fix their

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Speaker 1: cars now for next year. What do you do when

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Speaker 1: you're as strong as you've been about tweaking the platform

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Speaker 1: into the next season? Do you leave it alone? Do

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Speaker 1: you leave the car the same as we're stapping is

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Speaker 1: known this year, or do you actually try to make improvements.

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Speaker 7: Well, you're always looking to improve because you can guarantee

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Speaker 7: our competitors are going to be going to be improving.

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Speaker 7: They will be copying some of the philosophy, you know,

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Speaker 7: of our Chihove. That's undoubted. We're already seeing that starting

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Speaker 7: to happen, and we just got to keep trying to

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Speaker 7: move the goalpost. I try, you know, to try and

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Speaker 7: keep developing and improving ourselves. And so, of course, you know,

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Speaker 7: for the last few months the facts, you've been very,

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Speaker 7: very focused on that. But of course you start to

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Speaker 7: get into diminishing returns and you know it's going to

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Speaker 7: be tough to improve the RB twenty next year significantly

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Speaker 7: from where RB nineteen has.

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Speaker 9: Been this year.

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Speaker 1: Take us into the pit because to some of us,

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Speaker 1: you know, I watch Netflix and I think I'm an expert.

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Speaker 1: I'm not, Christian Horner. Take us into the pit stop

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Speaker 1: or you're you know, your two point three seconds two

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Speaker 1: point eight steconds. How do you train for that excellence

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Speaker 1: versus the other teams?

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Speaker 8: Well, it's the same same as in any discipline.

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Speaker 7: It's all about practice, it's about analysis, it's about the

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Speaker 7: small incremental things, just where the driver stops. You know,

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Speaker 7: if he's two inches too long, then that will affect

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Speaker 7: the timing of the stop. So it's rehearsal, is practice,

401
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Speaker 7: is positioning the right people in the right roles, is

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Speaker 7: having the right attitude and the determination to continually to

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Speaker 7: continually improve and of.

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Speaker 8: Course be consistent.

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Speaker 5: Christian, let's talk about next year. You've got two drivers,

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Speaker 5: both under contract. There is a question mark over one

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Speaker 5: of them. Check out the driver you have in the

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Speaker 5: cars in the coming weekends. Are they going to be

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Speaker 5: the same two next year?

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Speaker 7: The only people will keep put in the pre the

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Speaker 7: question marker you guys, I mean people pleasing the Checko's

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Speaker 7: going to be our driver, you know, next year. And

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Speaker 7: you know he's had a tough, a tough six weeks,

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Speaker 7: but he started to rEFInd his form. I thought the

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Speaker 7: race that he drove in in Sat Paolo was very strong,

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Speaker 7: his race in Austin was strong, and you know he's

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Speaker 7: finding his form again. He's second in the World Championship.

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Speaker 7: He's over thirty points ahead of Lewis Hamilton with two

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Speaker 7: races to go, so you know, let's see what he

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Speaker 7: can do over these next couple of races, but he

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Speaker 7: will be our driver alongside Max in twenty twenty four.

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Speaker 5: As a team. Are you expecting Max to help him

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Speaker 5: secure that second position or does he have to do

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Speaker 5: this on his own?

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Speaker 8: No, I don't think.

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Speaker 7: I don't think he'll need the help from Max, to

427
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Speaker 7: be honest with you, I think he just needs to

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Speaker 7: finish either ahead or just.

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Speaker 8: Behind Lewis this weekend to secure that that second position.

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Speaker 7: I think you know, we're treating these from any races

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Speaker 7: as cup finals, and that's that's how we've operated since

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Speaker 7: winning the championship a few races agoing Katar, and each

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Speaker 7: race holds huge importance to us and to race in Vegas. Yeah,

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Speaker 7: it's going to be a phenomenal thing and we're going

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Speaker 7: to be chasing our twentieth victory of the year there

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Speaker 7: for sure. And it's just very nice of them to

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Speaker 7: put a race on to celebrate my fiftieth birthday, particularly.

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Speaker 5: Christian, you asked for it. Happy Birthday. It's fantastic catch

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Speaker 5: over these Congratulations on an absolutely dominant season. It's just

440
00:21:32,200 --> 00:21:34,320
Speaker 5: been phenomenal to see play out all year. And thank

441
00:21:34,359 --> 00:21:35,920
Speaker 5: you also, Christian, to you and the team for being

442
00:21:35,920 --> 00:21:38,400
Speaker 5: a fantastic partner with this program over the last few

443
00:21:38,440 --> 00:21:41,200
Speaker 5: months as well. Christian Horner their team Prince Sports, CEO

444
00:21:41,640 --> 00:21:49,840
Speaker 5: of Oracle Red Bull Racing, joined US now Chief market

445
00:21:49,920 --> 00:21:53,040
Speaker 5: strategistic FS Investments, Troy. Wonderful to have you with us

446
00:21:53,040 --> 00:21:55,520
Speaker 5: on a program. Let's start with fixed income. Did we

447
00:21:55,720 --> 00:21:59,000
Speaker 5: confuse a bond market rally for bond market stability?

448
00:22:00,200 --> 00:22:00,400
Speaker 9: Yeah?

449
00:22:00,520 --> 00:22:03,200
Speaker 10: So, I mean, first of all, humility is an order

450
00:22:03,280 --> 00:22:06,679
Speaker 10: for any forecaster right now. But so much of this cycle,

451
00:22:06,960 --> 00:22:09,960
Speaker 10: whether it's rates or equities, is there's market price action,

452
00:22:10,280 --> 00:22:13,480
Speaker 10: and then there's narratives that follow that price action. And

453
00:22:13,800 --> 00:22:15,480
Speaker 10: you know, if you think of the way yields have

454
00:22:15,560 --> 00:22:17,359
Speaker 10: gone higher this cycle, We've got to three and a

455
00:22:17,480 --> 00:22:20,479
Speaker 10: quarter for a pico second rally back, then we got

456
00:22:20,520 --> 00:22:21,480
Speaker 10: to four and a quarter for a.

457
00:22:21,520 --> 00:22:24,040
Speaker 9: Nanosecond, and Tom really like this one.

458
00:22:24,200 --> 00:22:26,800
Speaker 10: We got to five for a femto second and then

459
00:22:26,880 --> 00:22:30,119
Speaker 10: rally back hard because positioning was so arish, and so

460
00:22:30,240 --> 00:22:33,000
Speaker 10: we came back down hard, and then the narrative builds

461
00:22:33,080 --> 00:22:36,000
Speaker 10: that you know, we've reached the peak and yields and

462
00:22:36,040 --> 00:22:38,440
Speaker 10: then of course you either have a bad auction or

463
00:22:38,560 --> 00:22:40,760
Speaker 10: you have Powell pushing back, and you know you have

464
00:22:40,840 --> 00:22:42,120
Speaker 10: a twenty base point gap higher.

465
00:22:42,280 --> 00:22:44,720
Speaker 1: The geek from MIT is ten to the minus nine

466
00:22:44,800 --> 00:22:47,520
Speaker 1: this morning, Troy Geyski, let's go to the reality. Get

467
00:22:47,560 --> 00:22:50,360
Speaker 1: out the calendar. Everybody's got to catch up. I saw.

468
00:22:50,400 --> 00:22:52,200
Speaker 1: I'm going to give credit to gold and Sacks a

469
00:22:52,320 --> 00:22:54,439
Speaker 1: chart out out hedge funds were out of the market

470
00:22:54,880 --> 00:22:58,480
Speaker 1: before eight day rally. You talk about the edge. You

471
00:22:58,680 --> 00:23:02,480
Speaker 1: own the word alpha. How do we create alpha? Not

472
00:23:02,640 --> 00:23:05,760
Speaker 1: the year in? How do I create alpha out to

473
00:23:05,840 --> 00:23:09,119
Speaker 1: the summer of twenty four Well, so I.

474
00:23:09,160 --> 00:23:12,359
Speaker 10: Think in time like this, most of your positioning should

475
00:23:12,400 --> 00:23:14,960
Speaker 10: be and what we refer to as Northwest Prodernce strategies

476
00:23:15,000 --> 00:23:15,920
Speaker 10: of the Fisher Frontier.

477
00:23:16,000 --> 00:23:16,920
Speaker 9: We have lower vall.

478
00:23:17,359 --> 00:23:20,440
Speaker 10: You're maturely accepting consistent returns. So you know there's a

479
00:23:20,480 --> 00:23:23,239
Speaker 10: few areas we've been focused on heavily. You know, one

480
00:23:23,320 --> 00:23:26,920
Speaker 10: would be prepayment sensitive rmbs because given where yields are today,

481
00:23:27,280 --> 00:23:30,040
Speaker 10: there's going to be incredibly low refi activity really as

482
00:23:30,080 --> 00:23:32,439
Speaker 10: far as I can see, So that's one area you're

483
00:23:32,480 --> 00:23:33,240
Speaker 10: getting attractive.

484
00:23:33,320 --> 00:23:35,080
Speaker 9: Carry spreads are relatively wide.

485
00:23:35,400 --> 00:23:38,080
Speaker 10: We're not counting on spreads to tighten anytime soon until

486
00:23:38,080 --> 00:23:41,320
Speaker 10: at least the FED stops QT, which won't happen until recession.

487
00:23:41,720 --> 00:23:44,040
Speaker 10: But if there is a harder landing and they do QE,

488
00:23:44,160 --> 00:23:46,200
Speaker 10: then obviously spreads are going to come in significantly, So

489
00:23:46,400 --> 00:23:50,560
Speaker 10: get income plus price appreciation. Another area Tom, non speculative

490
00:23:50,640 --> 00:23:53,520
Speaker 10: on the direction rates has been yield curve steepeners. You know,

491
00:23:53,760 --> 00:23:55,920
Speaker 10: whether we get a bowl steepener like we had earlier

492
00:23:55,960 --> 00:23:59,840
Speaker 10: this year or a bear steepner more recently, we're fairly agnostic.

493
00:24:00,200 --> 00:24:03,280
Speaker 10: And then for those that can tolerate less liquidity. You know,

494
00:24:03,320 --> 00:24:05,639
Speaker 10: when you think of this environment as a private lender,

495
00:24:06,240 --> 00:24:08,680
Speaker 10: you have the bank stepping back, you have higher for

496
00:24:08,840 --> 00:24:12,080
Speaker 10: longer and these are all floating rate loans. So what

497
00:24:12,200 --> 00:24:14,280
Speaker 10: we refer to as a dare to dream scenario where

498
00:24:14,320 --> 00:24:17,160
Speaker 10: we keep rates high and we can avoid recession, you're

499
00:24:17,200 --> 00:24:19,679
Speaker 10: going to have very attractive income and you're not going

500
00:24:19,760 --> 00:24:21,480
Speaker 10: to have the hangover of a recession. So those are

501
00:24:21,520 --> 00:24:22,399
Speaker 10: three areas Tom.

502
00:24:22,480 --> 00:24:25,640
Speaker 1: To translate the jargon frenzy. You just heard Gayesky's trying

503
00:24:25,680 --> 00:24:28,560
Speaker 1: to capture the coupon right now, Troy, tell me about

504
00:24:28,560 --> 00:24:32,240
Speaker 1: the equity markets and technology stocks. They have been on

505
00:24:32,560 --> 00:24:34,960
Speaker 1: fire recently. Does the fire continue?

506
00:24:35,920 --> 00:24:38,080
Speaker 9: Well, you know, when you look at an asset allocation.

507
00:24:38,200 --> 00:24:41,199
Speaker 10: There's certainly no reason not to own growth, right, I mean,

508
00:24:41,720 --> 00:24:44,640
Speaker 10: I never understand these arguments why you shouldn't own growth.

509
00:24:44,680 --> 00:24:47,119
Speaker 10: You should own International, you should own Japan, you should

510
00:24:47,119 --> 00:24:49,920
Speaker 10: own them. I mean, this is a winner take all economy,

511
00:24:50,040 --> 00:24:53,680
Speaker 10: both in the US and globally, and unfortunately or fortunately

512
00:24:53,800 --> 00:24:56,400
Speaker 10: depending upon how you look at it, that's really concentrated

513
00:24:56,440 --> 00:24:58,320
Speaker 10: in the top five ten names in the SMP.

514
00:24:59,080 --> 00:24:59,119
Speaker 1: So.

515
00:24:59,640 --> 00:25:02,440
Speaker 10: The the issue we've had with big cap tech, particularly

516
00:25:02,440 --> 00:25:04,960
Speaker 10: over the last several weeks or megacap tech, is, you know,

517
00:25:05,160 --> 00:25:10,000
Speaker 10: are the valuations reasonable given realistic earnings going forward? Obviously

518
00:25:10,160 --> 00:25:12,479
Speaker 10: earnings are not going to be nearly as strong as

519
00:25:12,480 --> 00:25:14,360
Speaker 10: you were the past five seven years, and we look

520
00:25:14,400 --> 00:25:16,960
Speaker 10: at those multiples. In the event of another round of

521
00:25:17,040 --> 00:25:20,760
Speaker 10: multiple compression driven by FED QTT and money supply contraction,

522
00:25:21,200 --> 00:25:23,400
Speaker 10: you're more than likely going to have some price declines.

523
00:25:24,119 --> 00:25:26,639
Speaker 10: But as far as a secular holding, we don't know

524
00:25:26,680 --> 00:25:28,800
Speaker 10: why you want to have some of your portfolio and

525
00:25:28,880 --> 00:25:30,840
Speaker 10: then you look for other things to complement that in

526
00:25:31,200 --> 00:25:32,960
Speaker 10: a very vall to mark environment.

527
00:25:33,200 --> 00:25:35,600
Speaker 4: Can you give us a window, Troy into the debates

528
00:25:35,680 --> 00:25:39,000
Speaker 4: that you have at FS Investments about your year ahead outlook?

529
00:25:39,119 --> 00:25:39,960
Speaker 3: For twenty twenty four.

530
00:25:41,200 --> 00:25:44,560
Speaker 9: Oh yeah, So the debates are obviously a lot of fun.

531
00:25:44,680 --> 00:25:47,040
Speaker 10: But you know, when you think of the economy, you know,

532
00:25:47,119 --> 00:25:50,280
Speaker 10: we've always been in the higher for longer camp. That

533
00:25:50,480 --> 00:25:54,640
Speaker 10: being said, even more surprised at how resilient the economy's been.

534
00:25:56,359 --> 00:25:58,920
Speaker 10: What we're trying to find tune and we don't claim

535
00:25:58,960 --> 00:26:01,600
Speaker 10: to have a crystal wall for versus. What's the probability

536
00:26:01,680 --> 00:26:03,720
Speaker 10: recession in the next twelve to eighteen months? Is it

537
00:26:03,800 --> 00:26:07,760
Speaker 10: fifty percent, sixty percent? It's alreably higher than forty probably

538
00:26:07,840 --> 00:26:10,600
Speaker 10: no higher than sixty. And what's the environment where the

539
00:26:10,640 --> 00:26:12,520
Speaker 10: FED can thread the needle? What's the probability of that,

540
00:26:12,680 --> 00:26:16,080
Speaker 10: whether it's forty percent or thirty or even fifty because

541
00:26:16,119 --> 00:26:19,480
Speaker 10: of the increased business fixed investment, construction spending, because state

542
00:26:19,520 --> 00:26:22,399
Speaker 10: and local governments can spend, because the housing market at

543
00:26:22,440 --> 00:26:25,720
Speaker 10: least isn't a dramatic drag on GDP, And then in turn,

544
00:26:25,840 --> 00:26:28,440
Speaker 10: what does that mean for inflation forecast? So you know,

545
00:26:28,600 --> 00:26:32,280
Speaker 10: from a macro standpoint, it's trying, with again humility, to

546
00:26:32,440 --> 00:26:36,400
Speaker 10: understand in which scenarios through certain trade expressions generate attracting

547
00:26:36,440 --> 00:26:39,560
Speaker 10: returns and in which other scenarios, do you get better

548
00:26:39,680 --> 00:26:42,560
Speaker 10: upside or better convexity, A phrase that I know Tom

549
00:26:42,640 --> 00:26:43,920
Speaker 10: loves well, Troy.

550
00:26:43,920 --> 00:26:48,160
Speaker 4: Given the range of potential outcomes, our longer term treasuries

551
00:26:48,320 --> 00:26:52,080
Speaker 4: virtually uninvestable unless yields are so high to compensate for

552
00:26:52,160 --> 00:26:53,200
Speaker 4: all of those scenarios.

553
00:26:54,560 --> 00:26:56,520
Speaker 9: So that gets back to the scenario analysis.

554
00:26:56,680 --> 00:26:59,960
Speaker 10: We have cautioned everyone fixed income that again, every time

555
00:27:00,400 --> 00:27:04,120
Speaker 10: market fields are popped up, just be aware before it's

556
00:27:04,160 --> 00:27:06,920
Speaker 10: said and done, before we have that next recession, you

557
00:27:07,000 --> 00:27:09,320
Speaker 10: could really get hammered with a bear steepener. And that's

558
00:27:09,320 --> 00:27:12,560
Speaker 10: obviously what happened up until recently. You clearly have better

559
00:27:13,040 --> 00:27:15,080
Speaker 10: risk reward and fixed income today than a year ago

560
00:27:15,160 --> 00:27:20,000
Speaker 10: or two years ago. But until we have that recessionary outcome,

561
00:27:20,080 --> 00:27:22,520
Speaker 10: or until at least market's truly priced it in, not

562
00:27:22,760 --> 00:27:25,840
Speaker 10: fictitiously price it in, but truly price it in, you know,

563
00:27:25,920 --> 00:27:27,560
Speaker 10: all you're going to earn it is your yield, and

564
00:27:27,600 --> 00:27:30,880
Speaker 10: you're gonna have tremendous amounts of volatility. So we don't

565
00:27:30,920 --> 00:27:32,000
Speaker 10: think it's time yet.

566
00:27:32,040 --> 00:27:35,919
Speaker 9: To extend duration cavil nearly, but.

567
00:27:36,000 --> 00:27:38,359
Speaker 10: You more than likely want to think about that and

568
00:27:38,520 --> 00:27:41,320
Speaker 10: understand that in a recessionary scenario, you don't have as

569
00:27:41,400 --> 00:27:43,760
Speaker 10: much upside as you've had historically because you know, like

570
00:27:43,760 --> 00:27:44,840
Speaker 10: where's the ten you're going to go?

571
00:27:45,200 --> 00:27:47,479
Speaker 9: Front end goes to three ten, youre goes to three

572
00:27:47,520 --> 00:27:48,440
Speaker 9: and a quarter three and a half.

573
00:27:48,560 --> 00:27:50,760
Speaker 10: So you have upside, but not like the GFC or

574
00:27:50,800 --> 00:27:53,440
Speaker 10: the Eurozone crisis or the pandemic or two thousand and

575
00:27:53,440 --> 00:27:55,560
Speaker 10: oh two. But if we stay in the stair to

576
00:27:55,680 --> 00:27:58,480
Speaker 10: dream scenario and the FED can thread the needle, you're

577
00:27:58,480 --> 00:28:00,840
Speaker 10: gonna get no price upside. You're going to have still

578
00:28:00,880 --> 00:28:03,600
Speaker 10: a relatively blow yield compared to when we had inflation

579
00:28:03,720 --> 00:28:05,760
Speaker 10: this high in the past, and you could get some

580
00:28:05,920 --> 00:28:09,760
Speaker 10: adverse market price action again like we did yesterday.

581
00:28:09,720 --> 00:28:12,480
Speaker 5: A repeat yesterday. Isn't that what many people want right now? Troy?

582
00:28:12,560 --> 00:28:14,239
Speaker 5: Thank you sir. It's going to catch on, buddy, as

583
00:28:14,240 --> 00:28:17,920
Speaker 5: O whis troguscae of FS investments following a state day

584
00:28:17,920 --> 00:28:29,879
Speaker 5: of losses on the S and P five hundred, I.

585
00:28:29,960 --> 00:28:33,119
Speaker 1: Have not spoken about Byron Weed, what a joy it

586
00:28:33,320 --> 00:28:36,399
Speaker 1: was for me sliding in here at Bloomberg and the

587
00:28:36,480 --> 00:28:40,320
Speaker 1: privileged Steve Roach at Morgan Stanley, Barton Biggs. I have

588
00:28:40,440 --> 00:28:44,760
Speaker 1: the clearest memories of talking to Barton he died tragically

589
00:28:44,880 --> 00:28:49,760
Speaker 1: too young, and Byron Ween with a full life dying recently,

590
00:28:50,320 --> 00:28:52,560
Speaker 1: Byron Ween with a wisdom and what he did, and

591
00:28:52,680 --> 00:28:57,440
Speaker 1: his annual guestimates of the future, and Doug cast joining

592
00:28:57,480 --> 00:28:59,160
Speaker 1: now who knew Byron better than me? And I think

593
00:28:59,200 --> 00:29:02,120
Speaker 1: what Doug cast to me the ultimate thing I could

594
00:29:02,120 --> 00:29:05,960
Speaker 1: say about Byron Ween. He was so good that when

595
00:29:06,000 --> 00:29:10,240
Speaker 1: he got something wrong, you studied why he got it wrong.

596
00:29:10,960 --> 00:29:12,440
Speaker 5: It was just that good.

597
00:29:15,040 --> 00:29:17,640
Speaker 11: It's like what Yogi Berra said about my cousin Sandy

598
00:29:17,760 --> 00:29:20,120
Speaker 11: when he went twenty five and five. I know why

599
00:29:20,240 --> 00:29:22,360
Speaker 11: he won twenty five games, but I don't know how

600
00:29:22,400 --> 00:29:23,960
Speaker 11: he lost five ell.

601
00:29:23,960 --> 00:29:26,880
Speaker 1: It's like that. I mean, Byron came out with X

602
00:29:27,040 --> 00:29:30,320
Speaker 1: number of calls and he was right, and everybody was that,

603
00:29:30,760 --> 00:29:32,440
Speaker 1: but the humility met him.

604
00:29:33,200 --> 00:29:36,320
Speaker 11: I met him back in nineteen eighty we formed something

605
00:29:36,400 --> 00:29:40,040
Speaker 11: called the First Tuesday of the Month Club with Julian Robertson,

606
00:29:40,400 --> 00:29:42,880
Speaker 11: with Lee Cooperman, who was at Goldman Sachs at the time,

607
00:29:43,000 --> 00:29:46,200
Speaker 11: Susan Byrne, who was a JP Morgan and not yet

608
00:29:46,440 --> 00:29:51,240
Speaker 11: form Westwood Management, Lou Margoliz, who ran Solomon's institutional business,

609
00:29:51,360 --> 00:29:55,479
Speaker 11: David Rocker from Rocker Partners, and of course someone who

610
00:29:55,560 --> 00:29:58,840
Speaker 11: Barton Biggs called in his Hedgehoging book the bearded prophet

611
00:29:59,040 --> 00:30:02,400
Speaker 11: of the Apocalypse, Tony Salupo, who was the head trader

612
00:30:02,560 --> 00:30:07,160
Speaker 11: of Michael Steinhardt and we dueled. Look he we quickly

613
00:30:07,240 --> 00:30:10,440
Speaker 11: became friends. He became an important mentor to me. We

614
00:30:10,640 --> 00:30:14,880
Speaker 11: dueled in our annual surprise lists. Since two thousand and two,

615
00:30:16,080 --> 00:30:20,160
Speaker 11: I so anxiously awaited his constructive criticism and his responses

616
00:30:20,240 --> 00:30:22,400
Speaker 11: to my list on TheStreet dot com. I still write it.

617
00:30:23,920 --> 00:30:27,200
Speaker 11: But the most important thing to me is someone with

618
00:30:27,280 --> 00:30:31,720
Speaker 11: a short selling bias concerning the multiple economic tragedies and

619
00:30:31,800 --> 00:30:34,400
Speaker 11: the market swoons over the last several decades. It was

620
00:30:34,520 --> 00:30:37,640
Speaker 11: also easy to get barished at the bottoms when things

621
00:30:38,360 --> 00:30:42,560
Speaker 11: were obvious, but Byron taught me something in an immortal phrase,

622
00:30:42,680 --> 00:30:46,840
Speaker 11: he said, disasters have a way of not happening, and

623
00:30:46,960 --> 00:30:50,800
Speaker 11: that dictum embolded me in March of two thousand and nine,

624
00:30:51,000 --> 00:30:53,640
Speaker 11: in May of twenty twenty and over at twenty twenty

625
00:30:53,720 --> 00:30:57,120
Speaker 11: two to buy stocks. And the second favorite quote I

626
00:30:57,200 --> 00:31:00,160
Speaker 11: have from Byron is something that he wrote about in

627
00:31:00,280 --> 00:31:02,560
Speaker 11: the Jewish Journal when he hit eighty years of age.

628
00:31:02,600 --> 00:31:06,240
Speaker 11: He said quote, I still ski, I play tennis, I sail,

629
00:31:06,320 --> 00:31:09,520
Speaker 11: and make love, although my skills at all of these

630
00:31:09,680 --> 00:31:11,440
Speaker 11: have slightly deteriorated.

631
00:31:11,480 --> 00:31:12,760
Speaker 1: Well, that's a perfect security and.

632
00:31:15,800 --> 00:31:16,880
Speaker 11: First time long.

633
00:31:16,800 --> 00:31:22,400
Speaker 4: Time Tom, really, I will say, Doug trying to shift

634
00:31:22,480 --> 00:31:26,840
Speaker 4: gears a little bit. When you're talking about catastrophes don't happen,

635
00:31:27,480 --> 00:31:30,440
Speaker 4: How then do you get bearish at a time where

636
00:31:30,480 --> 00:31:33,280
Speaker 4: the catastrophe is what hasn't happened, and everyone has been

637
00:31:33,360 --> 00:31:34,080
Speaker 4: surprised by that.

638
00:31:35,360 --> 00:31:37,959
Speaker 11: Well, as we discussed in my last bloomber Of interview

639
00:31:37,960 --> 00:31:41,000
Speaker 11: about two or three weeks ago, we've had fourteen years

640
00:31:41,040 --> 00:31:45,840
Speaker 11: of absurdly loose monetary policy, when coupled with aggressive fiscal

641
00:31:45,960 --> 00:31:49,920
Speaker 11: largess in large measure of reaction from the COVID epidemic.

642
00:31:50,280 --> 00:31:54,360
Speaker 11: It's distorted our economy, Bramo and our markets. It's resulted

643
00:31:54,600 --> 00:31:57,680
Speaker 11: in an economy that for up till now, has been

644
00:31:57,800 --> 00:32:02,760
Speaker 11: immunized and has contributed to a much longer lag for

645
00:32:02,840 --> 00:32:05,760
Speaker 11: the tightening and monetary policy to take home any other

646
00:32:05,840 --> 00:32:09,760
Speaker 11: cycle in history. But this is going to change, and

647
00:32:09,840 --> 00:32:12,520
Speaker 11: the best distortion is in the housing market. The existing

648
00:32:12,560 --> 00:32:17,080
Speaker 11: home turnover is frozen for obvious reasons. That said, affordability

649
00:32:17,120 --> 00:32:20,200
Speaker 11: has been so extended that the price will shortly be paid.

650
00:32:21,160 --> 00:32:24,560
Speaker 11: Alan Abelson at Baron's used to say, as night follows day,

651
00:32:24,920 --> 00:32:27,480
Speaker 11: and as a night follows day, the legged impact and

652
00:32:27,680 --> 00:32:30,760
Speaker 11: the economicdownturn is going to soon be upon us through

653
00:32:30,880 --> 00:32:31,320
Speaker 11: a by gloom.

654
00:32:31,360 --> 00:32:34,120
Speaker 1: Here I got Bramo and Cass digging a hole. But

655
00:32:34,320 --> 00:32:36,520
Speaker 1: the fact is, and this goes to Byron Wien and

656
00:32:36,600 --> 00:32:40,280
Speaker 1: Barton Biggs, Doug Cass, we came out of seventy four

657
00:32:40,880 --> 00:32:44,720
Speaker 1: with that shock bullmarket. Then we paused, and then I'm

658
00:32:44,760 --> 00:32:47,920
Speaker 1: going to guess in seventy seven somewhere we got a

659
00:32:48,040 --> 00:32:51,160
Speaker 1: second leg of a bullmarket. Is this a second leg

660
00:32:51,960 --> 00:32:55,440
Speaker 1: off the October low that we saw in twenty two.

661
00:32:56,560 --> 00:32:58,440
Speaker 11: I don't think so. I think the question is not

662
00:32:58,560 --> 00:33:00,720
Speaker 11: whether one should be short. I should be short, but

663
00:33:00,800 --> 00:33:03,080
Speaker 11: how should I should be I think the mistake that

664
00:33:03,200 --> 00:33:05,720
Speaker 11: many are making, and you've discussed this in the last

665
00:33:06,000 --> 00:33:10,520
Speaker 11: forty eight hours, is that everyone's looking at the slight

666
00:33:10,600 --> 00:33:13,840
Speaker 11: improvement in the rate of inflation over the last couple

667
00:33:13,880 --> 00:33:16,680
Speaker 11: of months, thanks in large measure obviously to the lower

668
00:33:16,720 --> 00:33:19,320
Speaker 11: price of oil. But the real concern to me, and

669
00:33:19,800 --> 00:33:22,959
Speaker 11: the real reason, there's growing evidence that the consumers starting

670
00:33:23,000 --> 00:33:26,840
Speaker 11: to roll over, and roll over badly. Is that stacked inflation.

671
00:33:27,080 --> 00:33:30,840
Speaker 11: The cumulative rise over the last three years is debilitating

672
00:33:31,280 --> 00:33:33,520
Speaker 11: and you're seeing that in all sorts of industries. You

673
00:33:33,640 --> 00:33:37,400
Speaker 11: see the Agios shares down, it's the largest liquor distributor

674
00:33:37,480 --> 00:33:41,720
Speaker 11: in the world, it's down fifteen percent. There's weakness, the extermination,

675
00:33:41,920 --> 00:33:45,960
Speaker 11: the bug extermination. Companies are suffering because it's a discretionary

676
00:33:47,400 --> 00:33:50,640
Speaker 11: expenditure that is being pulled down. As we mentioned before,

677
00:33:50,720 --> 00:33:56,360
Speaker 11: pet companies are suffering because the discretionary items like play

678
00:33:56,440 --> 00:34:01,440
Speaker 11: toys and Chewy's are reduced. But the real big story

679
00:34:01,520 --> 00:34:04,080
Speaker 11: in this market is that it hasn't been a bull market.

680
00:34:04,560 --> 00:34:09,560
Speaker 11: It's it's been a market that that is so bifurcated.

681
00:34:09,719 --> 00:34:12,960
Speaker 11: Never in history has it been so bifurcated. And I

682
00:34:13,080 --> 00:34:17,120
Speaker 11: look back into stuff that Byron that Bob Farrell used

683
00:34:17,160 --> 00:34:19,759
Speaker 11: to say in his Lessons to invest In, and he

684
00:34:19,880 --> 00:34:21,680
Speaker 11: used to say that markets are the strongest when they

685
00:34:21,760 --> 00:34:24,480
Speaker 11: brought and weakest when they're narrow to a handful of

686
00:34:24,520 --> 00:34:26,800
Speaker 11: blue chip names. And that's exactly what's occurring.

687
00:34:26,920 --> 00:34:28,520
Speaker 4: But it's been apparing for a long time.

688
00:34:28,880 --> 00:34:31,840
Speaker 11: At DOUG and just well, the market has made no

689
00:34:31,960 --> 00:34:35,960
Speaker 11: progress November twenty one. There's been a lot of action.

690
00:34:36,080 --> 00:34:40,600
Speaker 11: There's a lot of opportunity trading opportunities. Remember Bramo, let's

691
00:34:40,640 --> 00:34:42,680
Speaker 11: look at the twenty twenty one top, which was an

692
00:34:42,719 --> 00:34:46,279
Speaker 11: important top, and we're not far off from it. The

693
00:34:46,440 --> 00:34:48,960
Speaker 11: yield today on the one year is five point four

694
00:34:49,080 --> 00:34:52,600
Speaker 11: percent on treasuries. It was thirty pieces points then as

695
00:34:52,680 --> 00:34:55,840
Speaker 11: important two years ago the economy was progressing well. Today

696
00:34:55,880 --> 00:34:58,880
Speaker 11: we're on the customer recession, and that helps to explain

697
00:34:59,360 --> 00:35:02,200
Speaker 11: that we have a paper thin equity risk premiums or

698
00:35:02,280 --> 00:35:03,400
Speaker 11: tens lower returns.

699
00:35:03,640 --> 00:35:05,760
Speaker 4: There's a question around how to be short.

700
00:35:06,120 --> 00:35:09,040
Speaker 3: If you are short, can you go short a.

701
00:35:09,040 --> 00:35:11,480
Speaker 4: Whole index or are you taking a look at the

702
00:35:11,600 --> 00:35:14,759
Speaker 4: losses and say small caps and leaning into that and

703
00:35:14,880 --> 00:35:17,239
Speaker 4: saying that if we're going to get a recession, that's

704
00:35:17,320 --> 00:35:18,120
Speaker 4: the surest bet.

705
00:35:18,320 --> 00:35:21,480
Speaker 11: Sure. I think the best bet today is an odd

706
00:35:21,560 --> 00:35:25,560
Speaker 11: pairs bet, which you are talking about. If you look

707
00:35:25,640 --> 00:35:28,800
Speaker 11: at the ratio of equal weighted SMP relative to the

708
00:35:28,880 --> 00:35:32,799
Speaker 11: capitalization weighted SMP, it's fallen to the lowest level since

709
00:35:32,840 --> 00:35:35,680
Speaker 11: September twenty twenty. If you look at the chart, that

710
00:35:35,840 --> 00:35:39,799
Speaker 11: indicates that the Nasdaq has outperformed the Russell Index. It's

711
00:35:39,880 --> 00:35:44,279
Speaker 11: the largest margin in twenty seven years. And finally, technology

712
00:35:44,360 --> 00:35:46,759
Speaker 11: stocks have hid an all time high relative to the

713
00:35:46,960 --> 00:35:49,560
Speaker 11: SMP index. So my pair trade and by the way,

714
00:35:49,560 --> 00:35:52,239
Speaker 11: oh also short interest in the magnetums and seven is

715
00:35:52,320 --> 00:35:54,080
Speaker 11: that an all time loss? And my pay trade is

716
00:35:54,200 --> 00:35:57,520
Speaker 11: long Russell Index and short cues short the NATAE.

717
00:35:57,600 --> 00:36:01,080
Speaker 1: Quick question here, My trade is long KOFE and long Otani.

718
00:36:01,640 --> 00:36:04,600
Speaker 1: Is Otani the new Sandy kofex boy.

719
00:36:04,719 --> 00:36:07,279
Speaker 11: I guess sort he gave out sixty thousand gloves to

720
00:36:08,680 --> 00:36:13,000
Speaker 11: kids in elementary school in Japan. He's a great guy.

721
00:36:13,600 --> 00:36:15,680
Speaker 1: What it seems he gonna play for Cut to the chase.

722
00:36:15,760 --> 00:36:18,759
Speaker 1: You know everybody down there. He's in Florida. Doug's like

723
00:36:18,880 --> 00:36:21,560
Speaker 1: dining with all the owners. Who's in Orlando.

724
00:36:21,320 --> 00:36:23,840
Speaker 11: TOWNI now he'll end up with the Yankees.

725
00:36:24,040 --> 00:36:26,880
Speaker 1: There we go, Dougcast. Thank you so much for Seabury's

726
00:36:26,880 --> 00:36:30,440
Speaker 1: there for our New York City audience. Subscribe to the

727
00:36:30,440 --> 00:36:34,680
Speaker 1: Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you

728
00:36:34,800 --> 00:36:39,000
Speaker 1: get your podcasts. Listen live every weekday starting at seven

729
00:36:39,040 --> 00:36:43,680
Speaker 1: am Eastern. I'm Bloomberg dot Com. The iHeartRadio app tune

730
00:36:43,760 --> 00:36:47,239
Speaker 1: In and the Bloomberg Business app. You can watch us

731
00:36:47,400 --> 00:36:51,400
Speaker 1: live on Bloomberg Television and always I'm the Bloomberg Terminal.

732
00:36:51,840 --> 00:36:56,000
Speaker 1: Thanks for listening. I'm Tom Keen, and this is Bloomberg.

733
00:37:00,400 --> 00:37:01,800
Speaker 10: I d