WEBVTT - Bloomberg Surveillance: Fed Warns, Stocks Retreat

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<v Speaker 1>Presented by our sponsor, Interactive Brokers. This is the Bloomberg

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<v Speaker 1>Surveillance Podcast. I'm Tom Keene, along with Jonathan Farrow and

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<v Speaker 1>Lisa Abramowitz. Join us each day for insight from the

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<v Speaker 1>Surveillance on demand on Apple, Spotify and anywhere you get

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<v Speaker 1>your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal,

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<v Speaker 1>and the Bloomberg Business Opup. Will we get back to

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

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

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<v Speaker 1>Kathy Jones now gives perspective. She fixed income strategists in

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<v Speaker 1>your kitchen this weekend of what to Do, she's with

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<v Speaker 1>Charles Schwab. I am absolutely fascinated with an always open

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<v Speaker 1>question to you and les Anne Saunders. What are people

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<v Speaker 1>at Schwab doing with their fixed income money?

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<v Speaker 2>Yeah, so, what we see amongst sort of the majority

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

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<v Speaker 2>They're starting to move out. They're starting to get some

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<v Speaker 2>confidence that they can move a little bit further out

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<v Speaker 2>the curve. They're staying at high quality treasuries, very very

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<v Speaker 2>popular along the CDs, not really dipping their toes into

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<v Speaker 2>low quality. But you know, at these yields, Uni bonds,

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<v Speaker 2>investment great corporates, treasuries are looking attractive and they're getting

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<v Speaker 2>a little bit more confident about stretching out duration.

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<v Speaker 1>The pros are worried about liquidity, whatever that means in

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<v Speaker 1>the bond market. Should our viewers and listeners be worried

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<v Speaker 1>about liquidity and full faith and credit simple to buy

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<v Speaker 1>duration bonds.

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<v Speaker 3>Yeah.

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<v Speaker 2>I don't think for the average investor the liquidity issue

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<v Speaker 2>is going to be a big one. I think for traders,

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<v Speaker 2>I think for people like us navigating the markets for

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

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<v Speaker 2>it's a critical issue right.

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<v Speaker 3>Now in the market.

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<v Speaker 4>You are the one person who I was most looking

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<v Speaker 4>forward to speaking to today. I really want to get

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<v Speaker 4>your understanding of what happened with the failed auction yesterday

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<v Speaker 4>and whether you give any credence whatsoever to this idea

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<v Speaker 4>that the hack of ICBC, of the US unit of

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<v Speaker 4>ICBC had something to do with how poor it went off.

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<v Speaker 2>You know, I don't really know for sure. It is

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<v Speaker 2>an open question because we haven't had something like this

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<v Speaker 2>happen before. It seemed like the win issued market was

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<v Speaker 2>okay going into it. There were a lot of questions

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

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<v Speaker 2>You know, who would show up after rates dropped so much?

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<v Speaker 2>So are there some questions about that? And then you

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<v Speaker 2>start to get the Powell comments, and then you get

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<v Speaker 2>the hack whatever that may have had to do with it.

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<v Speaker 2>So I think it's kind of a constellation of things.

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<v Speaker 2>But we've had such a big rally going into it,

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<v Speaker 2>after the ten year went well and the three year

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<v Speaker 2>went well. I think that had something to do with

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<v Speaker 2>people stepping back.

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<v Speaker 4>What sort of signifies to you that we're actually getting

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<v Speaker 4>stability in longer term bond yields enough to get some

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<v Speaker 4>conviction to have some sort of trade that can last

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<v Speaker 4>more than a couple of days.

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<v Speaker 2>Yeah, we don't have it yet, especially the further out

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<v Speaker 2>the curve you go, you go beyond ten years, you

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

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

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

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<v Speaker 2>I think the market needs conviction that the FED is

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<v Speaker 2>really done and that you know, the hold has some

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<v Speaker 2>sort of timeframe that you can anticipate, and then we

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<v Speaker 2>start to get that stability. We thought we had it,

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<v Speaker 2>and then Paul spoken, we don't have it.

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<v Speaker 4>How much does this really have to do, though, with

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<v Speaker 4>the FED and it's policy at a time when people

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<v Speaker 4>are citing fiscal policy, where people are citing potential inflation,

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<v Speaker 4>where people are citing just simply, where are the buyers

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<v Speaker 4>going to come from at a time of changing policy overseas.

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

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<v Speaker 2>has to do with three things that always influence the

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<v Speaker 2>trend and rates. What the FED is doing, because you

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<v Speaker 2>have to discount that. There's no way you can get

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<v Speaker 2>around the FED, no matter how hard you try. What

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<v Speaker 2>inflation is doing, which is tending to recede, and then

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<v Speaker 2>how the economy is performing, and then you get into

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<v Speaker 2>these other things like supply and who's buying, you know,

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<v Speaker 2>in China and Japan. But actually the foreign flows have

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<v Speaker 2>been pretty steady despite all this chatter. We've had the

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<v Speaker 2>four and flows hold pretty steady. The reserves are pretty steady,

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

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<v Speaker 2>a concern, But is it a concern today versus yesterday

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<v Speaker 2>versus a week ago. That's a hard argument to me.

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<v Speaker 1>One year out, am I clipping coupons? Or can I

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<v Speaker 1>actually invest for total return after a three year nightmare?

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<v Speaker 2>I think you can get some total return. It's not

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<v Speaker 2>that hard when you've got a coupon this large to

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<v Speaker 2>get a positive total return.

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<v Speaker 1>I'm going to clip the coupon and I'm going to

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<v Speaker 1>get some capital gain out.

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<v Speaker 2>Twelve months I think twelve months from now. Yeah, we

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<v Speaker 2>have fair value, say in tens, right around four to

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<v Speaker 2>four and a quarter, and so if we get there,

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<v Speaker 2>if we get even close to there, I'm going to

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<v Speaker 2>have a positive return.

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<v Speaker 4>Going into next week when we get CPI. How volatile

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<v Speaker 4>is the market and how potentially massive could some of

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<v Speaker 4>the moves be on the heels of either an upside

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<v Speaker 4>or downside surprise.

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

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<v Speaker 2>I think it's here to stay for a while until

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<v Speaker 2>we got either that you confidence about where the Fed

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

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<v Speaker 2>Fed really wants to give us too much confidence, right.

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<v Speaker 2>I think they want to keep the market a little

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<v Speaker 2>bit off off center, or we start to get those

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<v Speaker 2>labor market numbers that are just so soft that the

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<v Speaker 2>market says, oh okay, now the Fed really has to start.

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<v Speaker 5>Easing Kathy John Cholsh swap Washingsta Marie at the Baumann

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<v Speaker 5>famous iph we'll.

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<v Speaker 1>Ask it right now. Let's do this. Let's say we're

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<v Speaker 1>going to conflate two stories together here this morning, we

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<v Speaker 1>have a wonderful Bloomberg poll, some real acuity about where

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<v Speaker 1>we are twelve months out from an election, and also,

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<v Speaker 1>of course mister Manchin's comments from West Virginia joining us

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<v Speaker 1>now Emory Horn and Bloomberg luxury correspondent in Washington. Let's

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<v Speaker 1>get that out of the way. Emory right now is

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<v Speaker 1>luxury so yesterday is it over in Washington.

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

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<v Speaker 6>but there is a sale at the moment, private sale

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<v Speaker 6>if you know who to know at bal Maa.

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<v Speaker 3>So you can go check that out.

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<v Speaker 1>There we go. You're stalking you your weekend shopping with

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<v Speaker 1>Amory hard and Emory I want to conflate these two together.

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<v Speaker 1>I've got Joe Manchin, who has lived fifty percent votes

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<v Speaker 1>in West Virginia from the special election of Robert Byrd

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<v Speaker 1>fifty three percent eight years ago. Just to cut to

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<v Speaker 1>the chase before the poll chat, did he make this

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<v Speaker 1>decision because he really thought he couldn't win.

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<v Speaker 3>I think that's part of it.

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<v Speaker 6>If you look at a recent Emerson poll and you

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<v Speaker 6>have him against Republican Governor Jim Justice, he's trailing by

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<v Speaker 6>about thirteen points. So this was going to be an

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<v Speaker 6>incredibly challenging race for him, and he's already flirted with

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<v Speaker 6>the fact that this was going to be the end

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<v Speaker 6>of his time in the Senate. He talked about the

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<v Speaker 6>fact that he does think there needs to be a

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<v Speaker 6>conversation about the middle, but also you have to look

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<v Speaker 6>at the reality of what he's facing in West Virginia

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<v Speaker 6>and that was likely going to be a defeat.

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<v Speaker 1>Gregory Courtney and Marlow writing up our poll piece, it'll

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<v Speaker 1>be talked about, I know across all of your world today.

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<v Speaker 1>Is there a middle in our Bloomberg poll or does

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<v Speaker 1>it show this mass polarity. Is the Joe Manchin middle

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<v Speaker 1>out there in the Bloomberg poll?

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<v Speaker 6>Well, there absolutely is because there's one key finding when

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<v Speaker 6>it comes to RFK, and that's that he is taking

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<v Speaker 6>from both When you look at twenty twenty voters, he's

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<v Speaker 6>definitely taking from Biden.

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<v Speaker 3>But when you look at how voters feel.

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<v Speaker 6>Right now, he is attracting Democrats because of his name Cachet,

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<v Speaker 6>right he's a Kennedy, But he is also attracting Trump voters,

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<v Speaker 6>and that has a lot to do with the fact

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<v Speaker 6>that he has a lot of a dialogue over the

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<v Speaker 6>past two years when it comes to when it comes

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<v Speaker 6>to COVID nineteen.

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<v Speaker 3>And this anti vax movement.

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<v Speaker 6>So he has ten percent, he has obviously a ton

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<v Speaker 6>of name, idea and recognition, but there is this idea

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

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

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<v Speaker 6>who don't like the current president Joe Biden, and definitely

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<v Speaker 6>don't like the former president dot or Trump.

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<v Speaker 5>Double haters.

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<v Speaker 3>I love that. I think we're going to have to

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<v Speaker 3>use that.

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<v Speaker 4>There is this question as I look through some of

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<v Speaker 4>the pole results about how President Biden could turn this around.

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<v Speaker 3>We have a year left.

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<v Speaker 4>Is there some material policy projection that you can hear

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<v Speaker 4>about from the Democrats coalescing around the border, some sort

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<v Speaker 4>of bipartisan agreement to try to deal with some of

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<v Speaker 4>the problems that people are highlighting.

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<v Speaker 3>So I think there's two things that stand down here.

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<v Speaker 6>One is that overwhelmingly in this poll of swing state voters,

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<v Speaker 6>they want to see more being done at the southern border.

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<v Speaker 6>It's sixty eight percent to twenty percent in terms of

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<v Speaker 6>twenty percent disapprove of what's being done. When you look

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<v Speaker 6>at the disapproval across things like Israel, Ukraine, that that

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<v Speaker 6>number is more.

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<v Speaker 3>So what you're seeing here is that.

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<v Speaker 6>Not a lot of people, a lot of people really want.

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<v Speaker 3>To see more work being done on the southern border.

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<v Speaker 6>But Biden has put this all together in one big bill,

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<v Speaker 6>and potentially because people are less concerned about, say, what's

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<v Speaker 6>going on in Ukraine or China at the moment, that

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<v Speaker 6>they are fine with having separate bills.

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<v Speaker 3>What we see Republicans are trying to do.

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<v Speaker 6>I'd also note that this is a hard line for

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<v Speaker 6>the president to walk right now because still in our poll,

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<v Speaker 6>like our poll showed.

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<v Speaker 3>Last month, the economy rates number one.

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<v Speaker 6>More than forty percent of respondents say that is their

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<v Speaker 6>top priority.

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<v Speaker 3>When you look at the.

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<v Speaker 6>Foreign policy concerns, one percent care about China, three percent

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

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<v Speaker 6>those are ranking much higher in this poll.

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<v Speaker 4>And can I just ask a stupid question, is it

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<v Speaker 4>when we talk about economy, are we just talking about inflation?

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<v Speaker 6>Well, that's what people are feeling, because the data shows

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

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<v Speaker 3>This administration continues to use.

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<v Speaker 6>The superlative that for twenty one months the unemployment rate

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<v Speaker 6>has been below four percent.

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<v Speaker 3>That is a huge achievement, and that shows that we

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<v Speaker 3>do have a very strong labor market.

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<v Speaker 6>But time and time again, what people are concerned with

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<v Speaker 6>is price of gasoline, price of groceries, their price of

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<v Speaker 6>rental insurance that spiked over the summer. Mark Zandi in

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<v Speaker 6>September came out and talked about the fact that before

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<v Speaker 6>the pandemic, where prices are now, an average family that

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<v Speaker 6>is making medium income is paying seven hundred and thirty

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<v Speaker 6>four dollars more. And that's the problem with what the

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<v Speaker 6>President is saying. The economy is doing better and people

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<v Speaker 6>are just not feeling it.

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<v Speaker 5>Amichat frustrated? Is this White House with these pulls.

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<v Speaker 3>Very frustrated?

0:11:28.040 --> 0:11:30.080
<v Speaker 6>The President was asked about it yesterday and he says,

0:11:30.160 --> 0:11:32.080
<v Speaker 6>you're just looking at CNN, You're just looking at New

0:11:32.160 --> 0:11:36.360
<v Speaker 6>York Times. Well, this is our second Bloomberg News Morning

0:11:36.440 --> 0:11:39.280
<v Speaker 6>Consult poll that focuses on the states that matter. These

0:11:39.320 --> 0:11:42.360
<v Speaker 6>are the states that win elections. I think what the

0:11:42.640 --> 0:11:45.200
<v Speaker 6>White House feels right now, or the campaign feels right now,

0:11:45.440 --> 0:11:47.920
<v Speaker 6>is that Tuesday they had a great night, But Tuesday

0:11:48.000 --> 0:11:49.880
<v Speaker 6>was all about abortion And is that going to be

0:11:49.960 --> 0:11:52.080
<v Speaker 6>top of mine of voters come November of next year?

0:11:52.160 --> 0:11:54.800
<v Speaker 3>These are very interesting races. In Virginia.

0:11:54.880 --> 0:11:57.640
<v Speaker 6>Glennyunkin made it about a fifteen week limit in Kentucky.

0:11:57.720 --> 0:11:58.800
<v Speaker 3>It was kind of a unicorn.

0:11:58.840 --> 0:12:02.280
<v Speaker 6>Governor race in Ohio is specifically about abortion, and when

0:12:02.679 --> 0:12:06.000
<v Speaker 6>you have roe Vivaid being struck down by the Supreme Court,

0:12:06.600 --> 0:12:08.480
<v Speaker 6>it means that the states are looking at abortion.

0:12:08.679 --> 0:12:10.480
<v Speaker 3>So these are very state specific issues.

0:12:11.480 --> 0:12:13.120
<v Speaker 1>I look, Amory, and I thoughd you're dead out on

0:12:13.200 --> 0:12:15.959
<v Speaker 1>the Zandi point. To me, the inflation's not the statistics

0:12:16.040 --> 0:12:19.280
<v Speaker 1>we talk about on Bloomberg surveillance. It's the level from

0:12:19.360 --> 0:12:22.800
<v Speaker 1>twenty nineteen. I think everyone out there, including me, is

0:12:22.920 --> 0:12:28.199
<v Speaker 1>looking at every single item back to late twenty nineteen,

0:12:28.480 --> 0:12:31.360
<v Speaker 1>very early at twenty and that's how you get to

0:12:31.480 --> 0:12:32.960
<v Speaker 1>that seven hundred dollars paychecks.

0:12:33.080 --> 0:12:35.520
<v Speaker 5>It's great, that's the issue. Take and just to me,

0:12:35.640 --> 0:12:37.880
<v Speaker 5>it's that part of the matter. IMH, thank you. I'm

0:12:37.920 --> 0:12:39.560
<v Speaker 5>Marie down in Washington day say.

0:12:49.960 --> 0:12:51.640
<v Speaker 1>Let's do this right now, and this is going to

0:12:51.640 --> 0:12:54.000
<v Speaker 1>be fascinating a first time in Las Vegas. And what

0:12:54.120 --> 0:12:56.520
<v Speaker 1>you need to know is in the vicinity of Tuesday

0:12:57.160 --> 0:13:00.319
<v Speaker 1>it will be seventy three degrees in Las Vegas. It

0:13:00.400 --> 0:13:03.880
<v Speaker 1>doesn't matter if you run a race at ten pm

0:13:03.960 --> 0:13:08.320
<v Speaker 1>at night Pacific time, one am Eastern time, six am

0:13:08.480 --> 0:13:11.199
<v Speaker 1>in the morning in Bambury, England and the rest of it.

0:13:11.800 --> 0:13:16.079
<v Speaker 1>Christian Horner's team principal and CEO of Oracle Red Bull

0:13:16.200 --> 0:13:18.920
<v Speaker 1>Racing and John I'm sorry, it's about tires.

0:13:19.000 --> 0:13:21.679
<v Speaker 5>That's what the experts Christian. It could well be about tires.

0:13:21.679 --> 0:13:23.160
<v Speaker 5>Good morning to you, sir, and thank you for being

0:13:23.200 --> 0:13:24.640
<v Speaker 5>with us. I think we have to start by saying

0:13:24.640 --> 0:13:28.280
<v Speaker 5>congratulations on an absolutely dominant season for you and the team.

0:13:28.320 --> 0:13:30.320
<v Speaker 5>We've spent some time talking about that. In just a moment.

0:13:30.600 --> 0:13:33.400
<v Speaker 5>Let's go where Tom went. Just approaching a new track

0:13:33.760 --> 0:13:36.040
<v Speaker 5>you haven't had time with, you haven't raced on before,

0:13:36.440 --> 0:13:39.480
<v Speaker 5>and we track temperatures that could be very very low. Christian,

0:13:39.480 --> 0:13:40.959
<v Speaker 5>what's the approach for you and the team going into

0:13:40.960 --> 0:13:45.599
<v Speaker 5>an event like that one take a jacket? Is it

0:13:45.679 --> 0:13:46.280
<v Speaker 5>that simple?

0:13:47.280 --> 0:13:51.600
<v Speaker 7>Oh yeah, I was watching Max on the simulator yesterday

0:13:51.679 --> 0:13:52.600
<v Speaker 7>driving around the circuit.

0:13:52.679 --> 0:13:53.600
<v Speaker 8>It looks a great track.

0:13:53.640 --> 0:13:57.280
<v Speaker 7>I mean it's going to be super fast, there's going

0:13:57.360 --> 0:13:59.880
<v Speaker 7>to be a lot of overtaking opportunities and a tire

0:14:00.040 --> 0:14:03.280
<v Speaker 7>as it could be like driving on ice, you know,

0:14:03.320 --> 0:14:06.760
<v Speaker 7>which just adds another dimension. So, particularly on a road course,

0:14:06.800 --> 0:14:09.920
<v Speaker 7>on a street circuit that can test the drivers and

0:14:09.960 --> 0:14:12.400
<v Speaker 7>the team to the absolute maximum, Christian.

0:14:12.400 --> 0:14:14.280
<v Speaker 5>When it comes to stuff like qualifying, then how do

0:14:14.360 --> 0:14:17.280
<v Speaker 5>you prepare to put that fast lap in that you

0:14:17.400 --> 0:14:19.160
<v Speaker 5>try to do to get that quality in? How do

0:14:19.200 --> 0:14:20.640
<v Speaker 5>you do that? What do you do set up with

0:14:20.720 --> 0:14:22.520
<v Speaker 5>three laps before you go for the qualifying lap, what

0:14:22.560 --> 0:14:22.800
<v Speaker 5>do you do?

0:14:23.800 --> 0:14:25.280
<v Speaker 7>Well, that's all going to come out of where we

0:14:25.400 --> 0:14:29.280
<v Speaker 7>run on Friday for the first time, sorry, on Thursday

0:14:29.320 --> 0:14:31.960
<v Speaker 7>for the first time. We're going to be learning, you know,

0:14:32.040 --> 0:14:34.920
<v Speaker 7>what it takes to get these paradi tires up to

0:14:35.040 --> 0:14:37.440
<v Speaker 7>temperature and is it going to be multiple laps in

0:14:37.560 --> 0:14:40.320
<v Speaker 7>qualifying rather than a single lap. So it could be

0:14:40.440 --> 0:14:43.240
<v Speaker 7>really interesting to see how that's how that's going to

0:14:43.280 --> 0:14:44.760
<v Speaker 7>play out. There's going to be a lot of data

0:14:44.880 --> 0:14:48.120
<v Speaker 7>to look at, and yeah, the simulators are going to

0:14:48.160 --> 0:14:50.280
<v Speaker 7>be working flat out on certainly Thursday evening.

0:14:50.520 --> 0:14:52.760
<v Speaker 5>Christian. Any worries that this could just be a bit

0:14:52.800 --> 0:14:55.040
<v Speaker 5>of a disaster, could end up in chaos.

0:14:56.600 --> 0:14:59.480
<v Speaker 7>Well, look, street races are always dramatic, you know, we've

0:14:59.520 --> 0:15:02.520
<v Speaker 7>seen that Singapore with sin in Azerbaijan and of course

0:15:02.600 --> 0:15:06.400
<v Speaker 7>Monte Carlo, and this one promises to be a big one.

0:15:06.440 --> 0:15:07.720
<v Speaker 8>I think it's going to be one of the biggest

0:15:07.760 --> 0:15:09.400
<v Speaker 8>viewed events in the.

0:15:09.440 --> 0:15:14.360
<v Speaker 7>Sporting calendar this year, and so you know, I'm confident

0:15:14.440 --> 0:15:16.560
<v Speaker 7>it's going to be a you know, a great success.

0:15:16.760 --> 0:15:19.560
<v Speaker 1>Christian Owner. I was appalled by the accident very early

0:15:19.640 --> 0:15:22.680
<v Speaker 1>in the Brazil race. Your Perez was very much involved

0:15:22.800 --> 0:15:25.120
<v Speaker 1>in that. How do you make the start of the

0:15:25.240 --> 0:15:26.120
<v Speaker 1>races safer?

0:15:28.360 --> 0:15:29.160
<v Speaker 8>I don't think you can.

0:15:29.280 --> 0:15:31.840
<v Speaker 7>I mean, you've got cars that will accelerate from not

0:15:32.000 --> 0:15:34.760
<v Speaker 7>to one hundred miles an hour in less than two seconds,

0:15:35.240 --> 0:15:38.840
<v Speaker 7>and you've got twenty very competitive drivers all going, you know,

0:15:39.880 --> 0:15:41.720
<v Speaker 7>to try and make position into that first turn.

0:15:41.800 --> 0:15:44.040
<v Speaker 8>So inevitably sometimes there is going to be contact.

0:15:44.080 --> 0:15:46.120
<v Speaker 7>But the safety of the cars, the safety of the

0:15:46.240 --> 0:15:51.240
<v Speaker 7>circuits has increased dramatically, and you know, thankfully we're seeing,

0:15:52.000 --> 0:15:54.240
<v Speaker 7>you know, drivers walking away from what sometimes looked like

0:15:54.440 --> 0:15:55.400
<v Speaker 7>very nasty accidents.

0:15:55.720 --> 0:15:59.600
<v Speaker 5>Christian, you said, twenty competitive drivers, arguably this nineteen and

0:15:59.640 --> 0:16:02.400
<v Speaker 5>then this one guy on his own out in the front.

0:16:02.520 --> 0:16:06.600
<v Speaker 5>I want to talk about that. The domination of Max Versteppan.

0:16:06.720 --> 0:16:09.840
<v Speaker 5>He's still so young, Christian, He's taken over Alan Prost,

0:16:10.320 --> 0:16:12.960
<v Speaker 5>He's basically on course to take over Vettel, maybe even

0:16:13.000 --> 0:16:15.440
<v Speaker 5>in the next couple of races. In terms of race wins.

0:16:15.480 --> 0:16:17.400
<v Speaker 5>When you go back over the legends of this sport

0:16:17.480 --> 0:16:21.480
<v Speaker 5>that you've been so close to over the years, fanjo Senna, Schumacher,

0:16:21.960 --> 0:16:25.000
<v Speaker 5>even more recently Hamilton, Where does Max rank for you?

0:16:25.400 --> 0:16:27.320
<v Speaker 5>What separates him from the rest?

0:16:28.640 --> 0:16:29.360
<v Speaker 9>Well, of course, it's.

0:16:29.200 --> 0:16:34.120
<v Speaker 7>Always incredibly difficult to compare drivers from different generations, but

0:16:34.280 --> 0:16:36.840
<v Speaker 7>what I think is safe to say with what Max

0:16:36.920 --> 0:16:40.520
<v Speaker 7>has achieved in a short period of time, with now

0:16:40.600 --> 0:16:45.040
<v Speaker 7>three World Championships, fifty or fifty two conpret victories.

0:16:45.240 --> 0:16:48.000
<v Speaker 8>Is an incredible, incredible record.

0:16:47.840 --> 0:16:52.120
<v Speaker 7>And I think that he can now be spoken about

0:16:53.000 --> 0:16:55.680
<v Speaker 7>in the same sentence in category as some of the

0:16:55.760 --> 0:16:57.720
<v Speaker 7>greatest drivers that the sports has ever seen.

0:16:57.920 --> 0:17:01.280
<v Speaker 5>How far do you think he can go, Christian, Well,

0:17:01.320 --> 0:17:01.760
<v Speaker 5>I think.

0:17:02.080 --> 0:17:05.640
<v Speaker 7>You know, he's still so young, he's still evolving as

0:17:05.680 --> 0:17:08.840
<v Speaker 7>a driver, and particularly as he gains more experience, so

0:17:09.440 --> 0:17:11.159
<v Speaker 7>and a lot depends on the equipment that we can

0:17:11.200 --> 0:17:13.080
<v Speaker 7>give him, but I think he can achieve a lot more.

0:17:13.480 --> 0:17:17.640
<v Speaker 7>He's motivated, he's hungry, and yeah, he's he just loves

0:17:17.720 --> 0:17:19.879
<v Speaker 7>his racing. You can see that he's not interesting anything

0:17:19.920 --> 0:17:21.760
<v Speaker 7>else other than just going racing.

0:17:22.040 --> 0:17:24.720
<v Speaker 5>He's been dominant. Your whole team has been absolutely dominant.

0:17:24.800 --> 0:17:27.840
<v Speaker 5>I remember Ferrari being accused of making a spot boring

0:17:28.200 --> 0:17:30.200
<v Speaker 5>in the Schumacher years. Do you take it as a

0:17:30.280 --> 0:17:32.520
<v Speaker 5>compliment when you hear those kind of act sections thrown

0:17:32.560 --> 0:17:33.240
<v Speaker 5>at your team.

0:17:34.320 --> 0:17:36.840
<v Speaker 7>Well, it means that we're doing our job and that

0:17:37.320 --> 0:17:39.560
<v Speaker 7>we're winning. But one thing that's guaranteed in this spart

0:17:39.640 --> 0:17:42.760
<v Speaker 7>is that nothing stands still. And I think with stable regulations,

0:17:42.800 --> 0:17:46.240
<v Speaker 7>we can already see teams improving behind us, and I

0:17:46.359 --> 0:17:48.800
<v Speaker 7>think the next year it's going to converge.

0:17:48.440 --> 0:17:52.760
<v Speaker 8>And we're roo for a much more tight championship next year.

0:17:52.880 --> 0:17:56.480
<v Speaker 7>And also, you know twenty five before another reset with

0:17:56.640 --> 0:18:00.480
<v Speaker 7>new regulations for twenty twenty six. So yeah, I'm expecting

0:18:00.880 --> 0:18:03.320
<v Speaker 7>a much much tougher year in twenty twenty four.

0:18:03.600 --> 0:18:05.320
<v Speaker 1>Christian to that point, And you know, I have my

0:18:05.440 --> 0:18:08.000
<v Speaker 1>autosport at home. John Ferrell made me get it. I

0:18:08.119 --> 0:18:10.440
<v Speaker 1>try to read it. I try to understand it. A

0:18:10.520 --> 0:18:13.959
<v Speaker 1>lot of your brethren are really trying to fix their

0:18:14.080 --> 0:18:17.600
<v Speaker 1>cars now for next year. What do you do when

0:18:17.640 --> 0:18:21.360
<v Speaker 1>you're as strong as you've been about tweaking the platform

0:18:21.600 --> 0:18:24.240
<v Speaker 1>into the next season? Do you leave it alone? Do

0:18:24.280 --> 0:18:26.720
<v Speaker 1>you leave the car the same as we're stapping is

0:18:26.840 --> 0:18:29.679
<v Speaker 1>known this year, or do you actually try to make improvements.

0:18:30.840 --> 0:18:33.320
<v Speaker 7>Well, you're always looking to improve because you can guarantee

0:18:33.600 --> 0:18:35.880
<v Speaker 7>our competitors are going to be going to be improving.

0:18:35.920 --> 0:18:39.159
<v Speaker 7>They will be copying some of the philosophy, you know,

0:18:39.240 --> 0:18:41.639
<v Speaker 7>of our Chihove. That's undoubted. We're already seeing that starting

0:18:41.680 --> 0:18:43.399
<v Speaker 7>to happen, and we just got to keep trying to

0:18:43.440 --> 0:18:46.080
<v Speaker 7>move the goalpost. I try, you know, to try and

0:18:46.200 --> 0:18:50.520
<v Speaker 7>keep developing and improving ourselves. And so, of course, you know,

0:18:50.600 --> 0:18:52.359
<v Speaker 7>for the last few months the facts, you've been very,

0:18:52.480 --> 0:18:55.000
<v Speaker 7>very focused on that. But of course you start to

0:18:55.040 --> 0:18:58.760
<v Speaker 7>get into diminishing returns and you know it's going to

0:18:58.800 --> 0:19:02.520
<v Speaker 7>be tough to improve the RB twenty next year significantly

0:19:02.600 --> 0:19:04.480
<v Speaker 7>from where RB nineteen has.

0:19:04.359 --> 0:19:04.840
<v Speaker 9>Been this year.

0:19:05.240 --> 0:19:07.359
<v Speaker 1>Take us into the pit because to some of us,

0:19:07.400 --> 0:19:09.679
<v Speaker 1>you know, I watch Netflix and I think I'm an expert.

0:19:09.840 --> 0:19:12.840
<v Speaker 1>I'm not, Christian Horner. Take us into the pit stop

0:19:12.960 --> 0:19:15.280
<v Speaker 1>or you're you know, your two point three seconds two

0:19:15.320 --> 0:19:19.000
<v Speaker 1>point eight steconds. How do you train for that excellence

0:19:19.640 --> 0:19:20.880
<v Speaker 1>versus the other teams?

0:19:22.320 --> 0:19:24.520
<v Speaker 8>Well, it's the same same as in any discipline.

0:19:24.560 --> 0:19:29.320
<v Speaker 7>It's all about practice, it's about analysis, it's about the

0:19:29.480 --> 0:19:32.480
<v Speaker 7>small incremental things, just where the driver stops. You know,

0:19:32.520 --> 0:19:36.280
<v Speaker 7>if he's two inches too long, then that will affect

0:19:36.359 --> 0:19:39.640
<v Speaker 7>the timing of the stop. So it's rehearsal, is practice,

0:19:39.760 --> 0:19:42.280
<v Speaker 7>is positioning the right people in the right roles, is

0:19:42.359 --> 0:19:48.040
<v Speaker 7>having the right attitude and the determination to continually to

0:19:48.240 --> 0:19:49.840
<v Speaker 7>continually improve and of.

0:19:49.880 --> 0:19:50.840
<v Speaker 8>Course be consistent.

0:19:51.640 --> 0:19:54.120
<v Speaker 5>Christian, let's talk about next year. You've got two drivers,

0:19:54.720 --> 0:19:57.719
<v Speaker 5>both under contract. There is a question mark over one

0:19:57.800 --> 0:20:00.639
<v Speaker 5>of them. Check out the driver you have in the

0:20:00.720 --> 0:20:03.040
<v Speaker 5>cars in the coming weekends. Are they going to be

0:20:03.080 --> 0:20:04.000
<v Speaker 5>the same two next year?

0:20:05.640 --> 0:20:07.159
<v Speaker 7>The only people will keep put in the pre the

0:20:07.240 --> 0:20:09.840
<v Speaker 7>question marker you guys, I mean people pleasing the Checko's

0:20:09.880 --> 0:20:12.960
<v Speaker 7>going to be our driver, you know, next year. And

0:20:13.480 --> 0:20:16.600
<v Speaker 7>you know he's had a tough, a tough six weeks,

0:20:16.680 --> 0:20:18.600
<v Speaker 7>but he started to rEFInd his form. I thought the

0:20:18.680 --> 0:20:21.359
<v Speaker 7>race that he drove in in Sat Paolo was very strong,

0:20:21.480 --> 0:20:24.800
<v Speaker 7>his race in Austin was strong, and you know he's

0:20:24.880 --> 0:20:27.280
<v Speaker 7>finding his form again. He's second in the World Championship.

0:20:27.359 --> 0:20:32.679
<v Speaker 7>He's over thirty points ahead of Lewis Hamilton with two

0:20:32.760 --> 0:20:34.960
<v Speaker 7>races to go, so you know, let's see what he

0:20:35.000 --> 0:20:36.760
<v Speaker 7>can do over these next couple of races, but he

0:20:37.480 --> 0:20:41.560
<v Speaker 7>will be our driver alongside Max in twenty twenty four.

0:20:41.560 --> 0:20:43.879
<v Speaker 5>As a team. Are you expecting Max to help him

0:20:43.920 --> 0:20:46.600
<v Speaker 5>secure that second position or does he have to do

0:20:46.720 --> 0:20:47.320
<v Speaker 5>this on his own?

0:20:48.520 --> 0:20:49.120
<v Speaker 8>No, I don't think.

0:20:49.400 --> 0:20:51.159
<v Speaker 7>I don't think he'll need the help from Max, to

0:20:51.200 --> 0:20:53.159
<v Speaker 7>be honest with you, I think he just needs to

0:20:53.200 --> 0:20:54.280
<v Speaker 7>finish either ahead or just.

0:20:54.320 --> 0:20:57.600
<v Speaker 8>Behind Lewis this weekend to secure that that second position.

0:20:57.760 --> 0:21:00.679
<v Speaker 7>I think you know, we're treating these from any races

0:21:01.119 --> 0:21:04.560
<v Speaker 7>as cup finals, and that's that's how we've operated since

0:21:04.560 --> 0:21:07.320
<v Speaker 7>winning the championship a few races agoing Katar, and each

0:21:07.440 --> 0:21:11.720
<v Speaker 7>race holds huge importance to us and to race in Vegas. Yeah,

0:21:11.760 --> 0:21:14.119
<v Speaker 7>it's going to be a phenomenal thing and we're going

0:21:14.160 --> 0:21:17.600
<v Speaker 7>to be chasing our twentieth victory of the year there

0:21:17.680 --> 0:21:20.200
<v Speaker 7>for sure. And it's just very nice of them to

0:21:20.400 --> 0:21:24.280
<v Speaker 7>put a race on to celebrate my fiftieth birthday, particularly.

0:21:25.280 --> 0:21:28.840
<v Speaker 5>Christian, you asked for it. Happy Birthday. It's fantastic catch

0:21:28.880 --> 0:21:32.159
<v Speaker 5>over these Congratulations on an absolutely dominant season. It's just

0:21:32.200 --> 0:21:34.320
<v Speaker 5>been phenomenal to see play out all year. And thank

0:21:34.359 --> 0:21:35.920
<v Speaker 5>you also, Christian, to you and the team for being

0:21:35.920 --> 0:21:38.400
<v Speaker 5>a fantastic partner with this program over the last few

0:21:38.440 --> 0:21:41.200
<v Speaker 5>months as well. Christian Horner their team Prince Sports, CEO

0:21:41.640 --> 0:21:49.840
<v Speaker 5>of Oracle Red Bull Racing, joined US now Chief market

0:21:49.920 --> 0:21:53.040
<v Speaker 5>strategistic FS Investments, Troy. Wonderful to have you with us

0:21:53.040 --> 0:21:55.520
<v Speaker 5>on a program. Let's start with fixed income. Did we

0:21:55.720 --> 0:21:59.000
<v Speaker 5>confuse a bond market rally for bond market stability?

0:22:00.200 --> 0:22:00.400
<v Speaker 9>Yeah?

0:22:00.520 --> 0:22:03.200
<v Speaker 10>So, I mean, first of all, humility is an order

0:22:03.280 --> 0:22:06.679
<v Speaker 10>for any forecaster right now. But so much of this cycle,

0:22:06.960 --> 0:22:09.960
<v Speaker 10>whether it's rates or equities, is there's market price action,

0:22:10.280 --> 0:22:13.480
<v Speaker 10>and then there's narratives that follow that price action. And

0:22:13.800 --> 0:22:15.480
<v Speaker 10>you know, if you think of the way yields have

0:22:15.560 --> 0:22:17.359
<v Speaker 10>gone higher this cycle, We've got to three and a

0:22:17.480 --> 0:22:20.479
<v Speaker 10>quarter for a pico second rally back, then we got

0:22:20.520 --> 0:22:21.480
<v Speaker 10>to four and a quarter for a.

0:22:21.520 --> 0:22:24.040
<v Speaker 9>Nanosecond, and Tom really like this one.

0:22:24.200 --> 0:22:26.800
<v Speaker 10>We got to five for a femto second and then

0:22:26.880 --> 0:22:30.119
<v Speaker 10>rally back hard because positioning was so arish, and so

0:22:30.240 --> 0:22:33.000
<v Speaker 10>we came back down hard, and then the narrative builds

0:22:33.080 --> 0:22:36.000
<v Speaker 10>that you know, we've reached the peak and yields and

0:22:36.040 --> 0:22:38.440
<v Speaker 10>then of course you either have a bad auction or

0:22:38.560 --> 0:22:40.760
<v Speaker 10>you have Powell pushing back, and you know you have

0:22:40.840 --> 0:22:42.120
<v Speaker 10>a twenty base point gap higher.

0:22:42.280 --> 0:22:44.720
<v Speaker 1>The geek from MIT is ten to the minus nine

0:22:44.800 --> 0:22:47.520
<v Speaker 1>this morning, Troy Geyski, let's go to the reality. Get

0:22:47.560 --> 0:22:50.360
<v Speaker 1>out the calendar. Everybody's got to catch up. I saw.

0:22:50.400 --> 0:22:52.200
<v Speaker 1>I'm going to give credit to gold and Sacks a

0:22:52.320 --> 0:22:54.439
<v Speaker 1>chart out out hedge funds were out of the market

0:22:54.880 --> 0:22:58.480
<v Speaker 1>before eight day rally. You talk about the edge. You

0:22:58.680 --> 0:23:02.480
<v Speaker 1>own the word alpha. How do we create alpha? Not

0:23:02.640 --> 0:23:05.760
<v Speaker 1>the year in? How do I create alpha out to

0:23:05.840 --> 0:23:09.119
<v Speaker 1>the summer of twenty four Well, so I.

0:23:09.160 --> 0:23:12.359
<v Speaker 10>Think in time like this, most of your positioning should

0:23:12.400 --> 0:23:14.960
<v Speaker 10>be and what we refer to as Northwest Prodernce strategies

0:23:15.000 --> 0:23:15.920
<v Speaker 10>of the Fisher Frontier.

0:23:16.000 --> 0:23:16.920
<v Speaker 9>We have lower vall.

0:23:17.359 --> 0:23:20.440
<v Speaker 10>You're maturely accepting consistent returns. So you know there's a

0:23:20.480 --> 0:23:23.239
<v Speaker 10>few areas we've been focused on heavily. You know, one

0:23:23.320 --> 0:23:26.920
<v Speaker 10>would be prepayment sensitive rmbs because given where yields are today,

0:23:27.280 --> 0:23:30.040
<v Speaker 10>there's going to be incredibly low refi activity really as

0:23:30.080 --> 0:23:32.439
<v Speaker 10>far as I can see, So that's one area you're

0:23:32.480 --> 0:23:33.240
<v Speaker 10>getting attractive.

0:23:33.320 --> 0:23:35.080
<v Speaker 9>Carry spreads are relatively wide.

0:23:35.400 --> 0:23:38.080
<v Speaker 10>We're not counting on spreads to tighten anytime soon until

0:23:38.080 --> 0:23:41.320
<v Speaker 10>at least the FED stops QT, which won't happen until recession.

0:23:41.720 --> 0:23:44.040
<v Speaker 10>But if there is a harder landing and they do QE,

0:23:44.160 --> 0:23:46.200
<v Speaker 10>then obviously spreads are going to come in significantly, So

0:23:46.400 --> 0:23:50.560
<v Speaker 10>get income plus price appreciation. Another area Tom, non speculative

0:23:50.640 --> 0:23:53.520
<v Speaker 10>on the direction rates has been yield curve steepeners. You know,

0:23:53.760 --> 0:23:55.920
<v Speaker 10>whether we get a bowl steepener like we had earlier

0:23:55.960 --> 0:23:59.840
<v Speaker 10>this year or a bear steepner more recently, we're fairly agnostic.

0:24:00.200 --> 0:24:03.280
<v Speaker 10>And then for those that can tolerate less liquidity. You know,

0:24:03.320 --> 0:24:05.639
<v Speaker 10>when you think of this environment as a private lender,

0:24:06.240 --> 0:24:08.680
<v Speaker 10>you have the bank stepping back, you have higher for

0:24:08.840 --> 0:24:12.080
<v Speaker 10>longer and these are all floating rate loans. So what

0:24:12.200 --> 0:24:14.280
<v Speaker 10>we refer to as a dare to dream scenario where

0:24:14.320 --> 0:24:17.160
<v Speaker 10>we keep rates high and we can avoid recession, you're

0:24:17.200 --> 0:24:19.679
<v Speaker 10>going to have very attractive income and you're not going

0:24:19.760 --> 0:24:21.480
<v Speaker 10>to have the hangover of a recession. So those are

0:24:21.520 --> 0:24:22.399
<v Speaker 10>three areas Tom.

0:24:22.480 --> 0:24:25.640
<v Speaker 1>To translate the jargon frenzy. You just heard Gayesky's trying

0:24:25.680 --> 0:24:28.560
<v Speaker 1>to capture the coupon right now, Troy, tell me about

0:24:28.560 --> 0:24:32.240
<v Speaker 1>the equity markets and technology stocks. They have been on

0:24:32.560 --> 0:24:34.960
<v Speaker 1>fire recently. Does the fire continue?

0:24:35.920 --> 0:24:38.080
<v Speaker 9>Well, you know, when you look at an asset allocation.

0:24:38.200 --> 0:24:41.199
<v Speaker 10>There's certainly no reason not to own growth, right, I mean,

0:24:41.720 --> 0:24:44.640
<v Speaker 10>I never understand these arguments why you shouldn't own growth.

0:24:44.680 --> 0:24:47.119
<v Speaker 10>You should own International, you should own Japan, you should

0:24:47.119 --> 0:24:49.920
<v Speaker 10>own them. I mean, this is a winner take all economy,

0:24:50.040 --> 0:24:53.680
<v Speaker 10>both in the US and globally, and unfortunately or fortunately

0:24:53.800 --> 0:24:56.400
<v Speaker 10>depending upon how you look at it, that's really concentrated

0:24:56.440 --> 0:24:58.320
<v Speaker 10>in the top five ten names in the SMP.

0:24:59.080 --> 0:24:59.119
<v Speaker 1>So.

0:24:59.640 --> 0:25:02.440
<v Speaker 10>The the issue we've had with big cap tech, particularly

0:25:02.440 --> 0:25:04.960
<v Speaker 10>over the last several weeks or megacap tech, is, you know,

0:25:05.160 --> 0:25:10.000
<v Speaker 10>are the valuations reasonable given realistic earnings going forward? Obviously

0:25:10.160 --> 0:25:12.479
<v Speaker 10>earnings are not going to be nearly as strong as

0:25:12.480 --> 0:25:14.360
<v Speaker 10>you were the past five seven years, and we look

0:25:14.400 --> 0:25:16.960
<v Speaker 10>at those multiples. In the event of another round of

0:25:17.040 --> 0:25:20.760
<v Speaker 10>multiple compression driven by FED QTT and money supply contraction,

0:25:21.200 --> 0:25:23.400
<v Speaker 10>you're more than likely going to have some price declines.

0:25:24.119 --> 0:25:26.639
<v Speaker 10>But as far as a secular holding, we don't know

0:25:26.680 --> 0:25:28.800
<v Speaker 10>why you want to have some of your portfolio and

0:25:28.880 --> 0:25:30.840
<v Speaker 10>then you look for other things to complement that in

0:25:31.200 --> 0:25:32.960
<v Speaker 10>a very vall to mark environment.

0:25:33.200 --> 0:25:35.600
<v Speaker 4>Can you give us a window, Troy into the debates

0:25:35.680 --> 0:25:39.000
<v Speaker 4>that you have at FS Investments about your year ahead outlook?

0:25:39.119 --> 0:25:39.960
<v Speaker 3>For twenty twenty four.

0:25:41.200 --> 0:25:44.560
<v Speaker 9>Oh yeah, So the debates are obviously a lot of fun.

0:25:44.680 --> 0:25:47.040
<v Speaker 10>But you know, when you think of the economy, you know,

0:25:47.119 --> 0:25:50.280
<v Speaker 10>we've always been in the higher for longer camp. That

0:25:50.480 --> 0:25:54.640
<v Speaker 10>being said, even more surprised at how resilient the economy's been.

0:25:56.359 --> 0:25:58.920
<v Speaker 10>What we're trying to find tune and we don't claim

0:25:58.960 --> 0:26:01.600
<v Speaker 10>to have a crystal wall for versus. What's the probability

0:26:01.680 --> 0:26:03.720
<v Speaker 10>recession in the next twelve to eighteen months? Is it

0:26:03.800 --> 0:26:07.760
<v Speaker 10>fifty percent, sixty percent? It's alreably higher than forty probably

0:26:07.840 --> 0:26:10.600
<v Speaker 10>no higher than sixty. And what's the environment where the

0:26:10.640 --> 0:26:12.520
<v Speaker 10>FED can thread the needle? What's the probability of that,

0:26:12.680 --> 0:26:16.080
<v Speaker 10>whether it's forty percent or thirty or even fifty because

0:26:16.119 --> 0:26:19.480
<v Speaker 10>of the increased business fixed investment, construction spending, because state

0:26:19.520 --> 0:26:22.399
<v Speaker 10>and local governments can spend, because the housing market at

0:26:22.440 --> 0:26:25.720
<v Speaker 10>least isn't a dramatic drag on GDP, And then in turn,

0:26:25.840 --> 0:26:28.440
<v Speaker 10>what does that mean for inflation forecast? So you know,

0:26:28.600 --> 0:26:32.280
<v Speaker 10>from a macro standpoint, it's trying, with again humility, to

0:26:32.440 --> 0:26:36.400
<v Speaker 10>understand in which scenarios through certain trade expressions generate attracting

0:26:36.440 --> 0:26:39.560
<v Speaker 10>returns and in which other scenarios, do you get better

0:26:39.680 --> 0:26:42.560
<v Speaker 10>upside or better convexity, A phrase that I know Tom

0:26:42.640 --> 0:26:43.920
<v Speaker 10>loves well, Troy.

0:26:43.920 --> 0:26:48.160
<v Speaker 4>Given the range of potential outcomes, our longer term treasuries

0:26:48.320 --> 0:26:52.080
<v Speaker 4>virtually uninvestable unless yields are so high to compensate for

0:26:52.160 --> 0:26:53.200
<v Speaker 4>all of those scenarios.

0:26:54.560 --> 0:26:56.520
<v Speaker 9>So that gets back to the scenario analysis.

0:26:56.680 --> 0:26:59.960
<v Speaker 10>We have cautioned everyone fixed income that again, every time

0:27:00.400 --> 0:27:04.120
<v Speaker 10>market fields are popped up, just be aware before it's

0:27:04.160 --> 0:27:06.920
<v Speaker 10>said and done, before we have that next recession, you

0:27:07.000 --> 0:27:09.320
<v Speaker 10>could really get hammered with a bear steepener. And that's

0:27:09.320 --> 0:27:12.560
<v Speaker 10>obviously what happened up until recently. You clearly have better

0:27:13.040 --> 0:27:15.080
<v Speaker 10>risk reward and fixed income today than a year ago

0:27:15.160 --> 0:27:20.000
<v Speaker 10>or two years ago. But until we have that recessionary outcome,

0:27:20.080 --> 0:27:22.520
<v Speaker 10>or until at least market's truly priced it in, not

0:27:22.760 --> 0:27:25.840
<v Speaker 10>fictitiously price it in, but truly price it in, you know,

0:27:25.920 --> 0:27:27.560
<v Speaker 10>all you're going to earn it is your yield, and

0:27:27.600 --> 0:27:30.880
<v Speaker 10>you're gonna have tremendous amounts of volatility. So we don't

0:27:30.920 --> 0:27:32.000
<v Speaker 10>think it's time yet.

0:27:32.040 --> 0:27:35.919
<v Speaker 9>To extend duration cavil nearly, but.

0:27:36.000 --> 0:27:38.359
<v Speaker 10>You more than likely want to think about that and

0:27:38.520 --> 0:27:41.320
<v Speaker 10>understand that in a recessionary scenario, you don't have as

0:27:41.400 --> 0:27:43.760
<v Speaker 10>much upside as you've had historically because you know, like

0:27:43.760 --> 0:27:44.840
<v Speaker 10>where's the ten you're going to go?

0:27:45.200 --> 0:27:47.479
<v Speaker 9>Front end goes to three ten, youre goes to three

0:27:47.520 --> 0:27:48.440
<v Speaker 9>and a quarter three and a half.

0:27:48.560 --> 0:27:50.760
<v Speaker 10>So you have upside, but not like the GFC or

0:27:50.800 --> 0:27:53.440
<v Speaker 10>the Eurozone crisis or the pandemic or two thousand and

0:27:53.440 --> 0:27:55.560
<v Speaker 10>oh two. But if we stay in the stair to

0:27:55.680 --> 0:27:58.480
<v Speaker 10>dream scenario and the FED can thread the needle, you're

0:27:58.480 --> 0:28:00.840
<v Speaker 10>gonna get no price upside. You're going to have still

0:28:00.880 --> 0:28:03.600
<v Speaker 10>a relatively blow yield compared to when we had inflation

0:28:03.720 --> 0:28:05.760
<v Speaker 10>this high in the past, and you could get some

0:28:05.920 --> 0:28:09.760
<v Speaker 10>adverse market price action again like we did yesterday.

0:28:09.720 --> 0:28:12.480
<v Speaker 5>A repeat yesterday. Isn't that what many people want right now? Troy?

0:28:12.560 --> 0:28:14.239
<v Speaker 5>Thank you sir. It's going to catch on, buddy, as

0:28:14.240 --> 0:28:17.920
<v Speaker 5>O whis troguscae of FS investments following a state day

0:28:17.920 --> 0:28:29.879
<v Speaker 5>of losses on the S and P five hundred, I.

0:28:29.960 --> 0:28:33.119
<v Speaker 1>Have not spoken about Byron Weed, what a joy it

0:28:33.320 --> 0:28:36.399
<v Speaker 1>was for me sliding in here at Bloomberg and the

0:28:36.480 --> 0:28:40.320
<v Speaker 1>privileged Steve Roach at Morgan Stanley, Barton Biggs. I have

0:28:40.440 --> 0:28:44.760
<v Speaker 1>the clearest memories of talking to Barton he died tragically

0:28:44.880 --> 0:28:49.760
<v Speaker 1>too young, and Byron Ween with a full life dying recently,

0:28:50.320 --> 0:28:52.560
<v Speaker 1>Byron Ween with a wisdom and what he did, and

0:28:52.680 --> 0:28:57.440
<v Speaker 1>his annual guestimates of the future, and Doug cast joining

0:28:57.480 --> 0:28:59.160
<v Speaker 1>now who knew Byron better than me? And I think

0:28:59.200 --> 0:29:02.120
<v Speaker 1>what Doug cast to me the ultimate thing I could

0:29:02.120 --> 0:29:05.960
<v Speaker 1>say about Byron Ween. He was so good that when

0:29:06.000 --> 0:29:10.240
<v Speaker 1>he got something wrong, you studied why he got it wrong.

0:29:10.960 --> 0:29:12.440
<v Speaker 5>It was just that good.

0:29:15.040 --> 0:29:17.640
<v Speaker 11>It's like what Yogi Berra said about my cousin Sandy

0:29:17.760 --> 0:29:20.120
<v Speaker 11>when he went twenty five and five. I know why

0:29:20.240 --> 0:29:22.360
<v Speaker 11>he won twenty five games, but I don't know how

0:29:22.400 --> 0:29:23.960
<v Speaker 11>he lost five ell.

0:29:23.960 --> 0:29:26.880
<v Speaker 1>It's like that. I mean, Byron came out with X

0:29:27.040 --> 0:29:30.320
<v Speaker 1>number of calls and he was right, and everybody was that,

0:29:30.760 --> 0:29:32.440
<v Speaker 1>but the humility met him.

0:29:33.200 --> 0:29:36.320
<v Speaker 11>I met him back in nineteen eighty we formed something

0:29:36.400 --> 0:29:40.040
<v Speaker 11>called the First Tuesday of the Month Club with Julian Robertson,

0:29:40.400 --> 0:29:42.880
<v Speaker 11>with Lee Cooperman, who was at Goldman Sachs at the time,

0:29:43.000 --> 0:29:46.200
<v Speaker 11>Susan Byrne, who was a JP Morgan and not yet

0:29:46.440 --> 0:29:51.240
<v Speaker 11>form Westwood Management, Lou Margoliz, who ran Solomon's institutional business,

0:29:51.360 --> 0:29:55.479
<v Speaker 11>David Rocker from Rocker Partners, and of course someone who

0:29:55.560 --> 0:29:58.840
<v Speaker 11>Barton Biggs called in his Hedgehoging book the bearded prophet

0:29:59.040 --> 0:30:02.400
<v Speaker 11>of the Apocalypse, Tony Salupo, who was the head trader

0:30:02.560 --> 0:30:07.160
<v Speaker 11>of Michael Steinhardt and we dueled. Look he we quickly

0:30:07.240 --> 0:30:10.440
<v Speaker 11>became friends. He became an important mentor to me. We

0:30:10.640 --> 0:30:14.880
<v Speaker 11>dueled in our annual surprise lists. Since two thousand and two,

0:30:16.080 --> 0:30:20.160
<v Speaker 11>I so anxiously awaited his constructive criticism and his responses

0:30:20.240 --> 0:30:22.400
<v Speaker 11>to my list on TheStreet dot com. I still write it.

0:30:23.920 --> 0:30:27.200
<v Speaker 11>But the most important thing to me is someone with

0:30:27.280 --> 0:30:31.720
<v Speaker 11>a short selling bias concerning the multiple economic tragedies and

0:30:31.800 --> 0:30:34.400
<v Speaker 11>the market swoons over the last several decades. It was

0:30:34.520 --> 0:30:37.640
<v Speaker 11>also easy to get barished at the bottoms when things

0:30:38.360 --> 0:30:42.560
<v Speaker 11>were obvious, but Byron taught me something in an immortal phrase,

0:30:42.680 --> 0:30:46.840
<v Speaker 11>he said, disasters have a way of not happening, and

0:30:46.960 --> 0:30:50.800
<v Speaker 11>that dictum embolded me in March of two thousand and nine,

0:30:51.000 --> 0:30:53.640
<v Speaker 11>in May of twenty twenty and over at twenty twenty

0:30:53.720 --> 0:30:57.120
<v Speaker 11>two to buy stocks. And the second favorite quote I

0:30:57.200 --> 0:31:00.160
<v Speaker 11>have from Byron is something that he wrote about in

0:31:00.280 --> 0:31:02.560
<v Speaker 11>the Jewish Journal when he hit eighty years of age.

0:31:02.600 --> 0:31:06.240
<v Speaker 11>He said quote, I still ski, I play tennis, I sail,

0:31:06.320 --> 0:31:09.520
<v Speaker 11>and make love, although my skills at all of these

0:31:09.680 --> 0:31:11.440
<v Speaker 11>have slightly deteriorated.

0:31:11.480 --> 0:31:12.760
<v Speaker 1>Well, that's a perfect security and.

0:31:15.800 --> 0:31:16.880
<v Speaker 11>First time long.

0:31:16.800 --> 0:31:22.400
<v Speaker 4>Time Tom, really, I will say, Doug trying to shift

0:31:22.480 --> 0:31:26.840
<v Speaker 4>gears a little bit. When you're talking about catastrophes don't happen,

0:31:27.480 --> 0:31:30.440
<v Speaker 4>How then do you get bearish at a time where

0:31:30.480 --> 0:31:33.280
<v Speaker 4>the catastrophe is what hasn't happened, and everyone has been

0:31:33.360 --> 0:31:34.080
<v Speaker 4>surprised by that.

0:31:35.360 --> 0:31:37.959
<v Speaker 11>Well, as we discussed in my last bloomber Of interview

0:31:37.960 --> 0:31:41.000
<v Speaker 11>about two or three weeks ago, we've had fourteen years

0:31:41.040 --> 0:31:45.840
<v Speaker 11>of absurdly loose monetary policy, when coupled with aggressive fiscal

0:31:45.960 --> 0:31:49.920
<v Speaker 11>largess in large measure of reaction from the COVID epidemic.

0:31:50.280 --> 0:31:54.360
<v Speaker 11>It's distorted our economy, Bramo and our markets. It's resulted

0:31:54.600 --> 0:31:57.680
<v Speaker 11>in an economy that for up till now, has been

0:31:57.800 --> 0:32:02.760
<v Speaker 11>immunized and has contributed to a much longer lag for

0:32:02.840 --> 0:32:05.760
<v Speaker 11>the tightening and monetary policy to take home any other

0:32:05.840 --> 0:32:09.760
<v Speaker 11>cycle in history. But this is going to change, and

0:32:09.840 --> 0:32:12.520
<v Speaker 11>the best distortion is in the housing market. The existing

0:32:12.560 --> 0:32:17.080
<v Speaker 11>home turnover is frozen for obvious reasons. That said, affordability

0:32:17.120 --> 0:32:20.200
<v Speaker 11>has been so extended that the price will shortly be paid.

0:32:21.160 --> 0:32:24.560
<v Speaker 11>Alan Abelson at Baron's used to say, as night follows day,

0:32:24.920 --> 0:32:27.480
<v Speaker 11>and as a night follows day, the legged impact and

0:32:27.680 --> 0:32:30.760
<v Speaker 11>the economicdownturn is going to soon be upon us through

0:32:30.880 --> 0:32:31.320
<v Speaker 11>a by gloom.

0:32:31.360 --> 0:32:34.120
<v Speaker 1>Here I got Bramo and Cass digging a hole. But

0:32:34.320 --> 0:32:36.520
<v Speaker 1>the fact is, and this goes to Byron Wien and

0:32:36.600 --> 0:32:40.280
<v Speaker 1>Barton Biggs, Doug Cass, we came out of seventy four

0:32:40.880 --> 0:32:44.720
<v Speaker 1>with that shock bullmarket. Then we paused, and then I'm

0:32:44.760 --> 0:32:47.920
<v Speaker 1>going to guess in seventy seven somewhere we got a

0:32:48.040 --> 0:32:51.160
<v Speaker 1>second leg of a bullmarket. Is this a second leg

0:32:51.960 --> 0:32:55.440
<v Speaker 1>off the October low that we saw in twenty two.

0:32:56.560 --> 0:32:58.440
<v Speaker 11>I don't think so. I think the question is not

0:32:58.560 --> 0:33:00.720
<v Speaker 11>whether one should be short. I should be short, but

0:33:00.800 --> 0:33:03.080
<v Speaker 11>how should I should be I think the mistake that

0:33:03.200 --> 0:33:05.720
<v Speaker 11>many are making, and you've discussed this in the last

0:33:06.000 --> 0:33:10.520
<v Speaker 11>forty eight hours, is that everyone's looking at the slight

0:33:10.600 --> 0:33:13.840
<v Speaker 11>improvement in the rate of inflation over the last couple

0:33:13.880 --> 0:33:16.680
<v Speaker 11>of months, thanks in large measure obviously to the lower

0:33:16.720 --> 0:33:19.320
<v Speaker 11>price of oil. But the real concern to me, and

0:33:19.800 --> 0:33:22.959
<v Speaker 11>the real reason, there's growing evidence that the consumers starting

0:33:23.000 --> 0:33:26.840
<v Speaker 11>to roll over, and roll over badly. Is that stacked inflation.

0:33:27.080 --> 0:33:30.840
<v Speaker 11>The cumulative rise over the last three years is debilitating

0:33:31.280 --> 0:33:33.520
<v Speaker 11>and you're seeing that in all sorts of industries. You

0:33:33.640 --> 0:33:37.400
<v Speaker 11>see the Agios shares down, it's the largest liquor distributor

0:33:37.480 --> 0:33:41.720
<v Speaker 11>in the world, it's down fifteen percent. There's weakness, the extermination,

0:33:41.920 --> 0:33:45.960
<v Speaker 11>the bug extermination. Companies are suffering because it's a discretionary

0:33:47.400 --> 0:33:50.640
<v Speaker 11>expenditure that is being pulled down. As we mentioned before,

0:33:50.720 --> 0:33:56.360
<v Speaker 11>pet companies are suffering because the discretionary items like play

0:33:56.440 --> 0:34:01.440
<v Speaker 11>toys and Chewy's are reduced. But the real big story

0:34:01.520 --> 0:34:04.080
<v Speaker 11>in this market is that it hasn't been a bull market.

0:34:04.560 --> 0:34:09.560
<v Speaker 11>It's it's been a market that that is so bifurcated.

0:34:09.719 --> 0:34:12.960
<v Speaker 11>Never in history has it been so bifurcated. And I

0:34:13.080 --> 0:34:17.120
<v Speaker 11>look back into stuff that Byron that Bob Farrell used

0:34:17.160 --> 0:34:19.759
<v Speaker 11>to say in his Lessons to invest In, and he

0:34:19.880 --> 0:34:21.680
<v Speaker 11>used to say that markets are the strongest when they

0:34:21.760 --> 0:34:24.480
<v Speaker 11>brought and weakest when they're narrow to a handful of

0:34:24.520 --> 0:34:26.800
<v Speaker 11>blue chip names. And that's exactly what's occurring.

0:34:26.920 --> 0:34:28.520
<v Speaker 4>But it's been apparing for a long time.

0:34:28.880 --> 0:34:31.840
<v Speaker 11>At DOUG and just well, the market has made no

0:34:31.960 --> 0:34:35.960
<v Speaker 11>progress November twenty one. There's been a lot of action.

0:34:36.080 --> 0:34:40.600
<v Speaker 11>There's a lot of opportunity trading opportunities. Remember Bramo, let's

0:34:40.640 --> 0:34:42.680
<v Speaker 11>look at the twenty twenty one top, which was an

0:34:42.719 --> 0:34:46.279
<v Speaker 11>important top, and we're not far off from it. The

0:34:46.440 --> 0:34:48.960
<v Speaker 11>yield today on the one year is five point four

0:34:49.080 --> 0:34:52.600
<v Speaker 11>percent on treasuries. It was thirty pieces points then as

0:34:52.680 --> 0:34:55.840
<v Speaker 11>important two years ago the economy was progressing well. Today

0:34:55.880 --> 0:34:58.880
<v Speaker 11>we're on the customer recession, and that helps to explain

0:34:59.360 --> 0:35:02.200
<v Speaker 11>that we have a paper thin equity risk premiums or

0:35:02.280 --> 0:35:03.400
<v Speaker 11>tens lower returns.

0:35:03.640 --> 0:35:05.760
<v Speaker 4>There's a question around how to be short.

0:35:06.120 --> 0:35:09.040
<v Speaker 3>If you are short, can you go short a.

0:35:09.040 --> 0:35:11.480
<v Speaker 4>Whole index or are you taking a look at the

0:35:11.600 --> 0:35:14.759
<v Speaker 4>losses and say small caps and leaning into that and

0:35:14.880 --> 0:35:17.239
<v Speaker 4>saying that if we're going to get a recession, that's

0:35:17.320 --> 0:35:18.120
<v Speaker 4>the surest bet.

0:35:18.320 --> 0:35:21.480
<v Speaker 11>Sure. I think the best bet today is an odd

0:35:21.560 --> 0:35:25.560
<v Speaker 11>pairs bet, which you are talking about. If you look

0:35:25.640 --> 0:35:28.800
<v Speaker 11>at the ratio of equal weighted SMP relative to the

0:35:28.880 --> 0:35:32.799
<v Speaker 11>capitalization weighted SMP, it's fallen to the lowest level since

0:35:32.840 --> 0:35:35.680
<v Speaker 11>September twenty twenty. If you look at the chart, that

0:35:35.840 --> 0:35:39.799
<v Speaker 11>indicates that the Nasdaq has outperformed the Russell Index. It's

0:35:39.880 --> 0:35:44.279
<v Speaker 11>the largest margin in twenty seven years. And finally, technology

0:35:44.360 --> 0:35:46.759
<v Speaker 11>stocks have hid an all time high relative to the

0:35:46.960 --> 0:35:49.560
<v Speaker 11>SMP index. So my pair trade and by the way,

0:35:49.560 --> 0:35:52.239
<v Speaker 11>oh also short interest in the magnetums and seven is

0:35:52.320 --> 0:35:54.080
<v Speaker 11>that an all time loss? And my pay trade is

0:35:54.200 --> 0:35:57.520
<v Speaker 11>long Russell Index and short cues short the NATAE.

0:35:57.600 --> 0:36:01.080
<v Speaker 1>Quick question here, My trade is long KOFE and long Otani.

0:36:01.640 --> 0:36:04.600
<v Speaker 1>Is Otani the new Sandy kofex boy.

0:36:04.719 --> 0:36:07.279
<v Speaker 11>I guess sort he gave out sixty thousand gloves to

0:36:08.680 --> 0:36:13.000
<v Speaker 11>kids in elementary school in Japan. He's a great guy.

0:36:13.600 --> 0:36:15.680
<v Speaker 1>What it seems he gonna play for Cut to the chase.

0:36:15.760 --> 0:36:18.759
<v Speaker 1>You know everybody down there. He's in Florida. Doug's like

0:36:18.880 --> 0:36:21.560
<v Speaker 1>dining with all the owners. Who's in Orlando.

0:36:21.320 --> 0:36:23.840
<v Speaker 11>TOWNI now he'll end up with the Yankees.

0:36:24.040 --> 0:36:26.880
<v Speaker 1>There we go, Dougcast. Thank you so much for Seabury's

0:36:26.880 --> 0:36:30.440
<v Speaker 1>there for our New York City audience. Subscribe to the

0:36:30.440 --> 0:36:34.680
<v Speaker 1>Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you

0:36:34.800 --> 0:36:39.000
<v Speaker 1>get your podcasts. Listen live every weekday starting at seven

0:36:39.040 --> 0:36:43.680
<v Speaker 1>am Eastern. I'm Bloomberg dot Com. The iHeartRadio app tune

0:36:43.760 --> 0:36:47.239
<v Speaker 1>In and the Bloomberg Business app. You can watch us

0:36:47.400 --> 0:36:51.400
<v Speaker 1>live on Bloomberg Television and always I'm the Bloomberg Terminal.

0:36:51.840 --> 0:36:56.000
<v Speaker 1>Thanks for listening. I'm Tom Keen, and this is Bloomberg.

0:37:00.400 --> 0:37:01.800
<v Speaker 10>I d