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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 3: There are certain sites you just never thought you'd see.

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Speaker 3: Jess again.

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Speaker 1: You kind of the pandemic change the world in so

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Speaker 1: many different ways, and one of the ways has just

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Speaker 1: been this whole work from home phenomena. And so many

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Speaker 1: people have been so successful working from home that productivity

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Speaker 1: is as good or better than it ever was.

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Speaker 4: I know how bullish you are though about in office.

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Speaker 1: No, I think it's I think this whole work from

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Speaker 1: home things a scam, but it is the way of

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Speaker 1: the world that I have to adapt.

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Speaker 3: And Mike's listening. I'm coming back after exactly all right.

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Speaker 1: Vinceignerella joins us here. He is our one of our

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Speaker 1: go to voices on the market. Seed joints us here

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Speaker 1: on O Bloomberg Interactive Studio and Vince, we've got the FED.

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Speaker 3: Coming today here.

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Speaker 1: What are you hearing in the marketplace about you know,

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Speaker 1: what the market expects and kind of where we go

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Speaker 1: from here.

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Speaker 5: The market is looking for a skip, we don't really

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Speaker 5: call it a pause, is a skip because the July

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Speaker 5: meeting is still on the table. I said, July rate

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Speaker 5: hikes still on the table. There's a hawkish bent or

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Speaker 5: a hawkish lean is what we're expecting in the statements.

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Speaker 5: But a few of the guys I talked to, and

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Speaker 5: I think their rights are perhaps looking for a little

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Speaker 5: bit more hawkish than I think the market's going to expect.

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Speaker 5: I think, you know, for their credibility purposes, and that's

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Speaker 5: been a huge thing for Powell to try to regain

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Speaker 5: the credibility they lost with the transient inflation story. That

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Speaker 5: even with the skip, he really needs to lay the

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Speaker 5: hammer down and say, essentially, core inflation is not getting

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Speaker 5: down to the two percent goal anywhere near as quickly

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Speaker 5: as they'd like it to.

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Speaker 4: So we have the statement at two pm, then we

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Speaker 4: get the economic projections and the dot plots before we

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Speaker 4: hear from the man himself, j palettes to thirty what

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Speaker 4: are you looking for in the dot plots?

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Speaker 5: In particular, to be perfectly honest, with you. I hate

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Speaker 5: the dot plots.

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Speaker 6: Dots.

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Speaker 5: They are the biggest joke I have ever seen.

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Speaker 4: Well, they also get altered, so obviously changed.

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Speaker 5: Sotquently I was, I was out of lunch with a

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Speaker 5: bullet and he basically said, why are you guys pricing

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Speaker 5: this in? And I said, it's because of your.

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Speaker 3: Bloody dot plots.

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Speaker 7: They're telling us where it's going. And he goes, oh,

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Speaker 7: don't see, that's just those are just estimates. They change

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Speaker 7: all the time, and so you know, people do look

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Speaker 7: at them. I guess you have to take them seriously personally,

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Speaker 7: I don't.

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Speaker 4: Bullard is a non voting member, but such an influential voice,

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Speaker 4: and he had said in the last couple of weeks

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Speaker 4: how he was expecting there to be at least two

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Speaker 4: more even if they are two more great hikes, even

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Speaker 4: if there was a pause at this point. Do you

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Speaker 4: think that's likely with maybe just giving some of the

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Speaker 4: inflation data obviously yesterday CPI coming cool with an expect.

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Speaker 5: I hope not to more. Actually I hope not even

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Speaker 5: one more. And you're you're absolutely right. He isn't an

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Speaker 5: influential voice, but he is a non member, and I

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Speaker 5: think from what I'm hearing from the voting members so far.

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Speaker 5: Perhaps the most interesting thing I should say about what

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Speaker 5: this decision we should see later is any dissensions. I

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Speaker 5: have a full expectation that this isn't going to be

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Speaker 5: something to oh, that there's going to be some dissenters

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Speaker 5: in there, and those dissenters will be people who basically

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Speaker 5: wanted a rate hike. There are a couple in there.

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Speaker 4: So Oxford Economics actually had some great data that they

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Speaker 4: crunch that a FED governor hasn't dissented since two thousand

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Speaker 4: and five, so most more likely it would be a president.

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Speaker 4: So they were looking at either Neil Kashkari Lori Logan

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Speaker 4: as a couple of them. Members's interesting, Yeah.

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Speaker 1: All right, So what are they when you talk to

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Speaker 1: the traders out there, Vincent? Are they figuring price cuts

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Speaker 1: later this year or this is twenty four event?

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Speaker 5: Do you think I think they're liking him later this year?

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Speaker 5: I don't think they're going to get them again. Going

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Speaker 5: back to the Powell credibility issue, I think he needs

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Speaker 5: to at least totally line keep the markets on their

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Speaker 5: toes that you know, inflation would have to do something

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Speaker 5: drastic moving lower before we would see any cuts this year,

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Speaker 5: or if we would see a recession, It'd be really

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Speaker 5: hard to believe a FED would keep rates higher for longer.

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Speaker 5: If we were in some sort of a recession, it'd

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Speaker 5: have to they'd have to bow to it. But I

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Speaker 5: think it would be a very, very small and gradual

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Speaker 5: move because I think he'd be worried more of anything

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Speaker 5: for a repeat of stagflation, and so he's going to

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Speaker 5: be on the tough side if he comes out in

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Speaker 5: any way saying the word pause today, you're probably gonna

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Speaker 5: see one of the most explosive rallies you've seen in

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Speaker 5: a long time.

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Speaker 4: So even if the dots suggest in twenty twenty four that,

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Speaker 4: like we had seen in the past, that there should

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Speaker 4: be some cuts there, it's still tricky, right, just given

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Speaker 4: what you were saying, with the backdrop of how much

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Speaker 4: these things can flip flow.

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Speaker 5: Yeah, And I think it's more the analysts and strategists

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Speaker 5: who are looking for cuts and traders looking for cuts

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Speaker 5: rather than the FED officials. So I think the dot plot,

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Speaker 5: if anything, is going to go against what's being priced

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Speaker 5: into the swap market right now. But again, it's such

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Speaker 5: it's such a waffly kind of changing environment with the

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Speaker 5: dot plots that you know it could come together at

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Speaker 5: any time.

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Speaker 1: Do you still feel like or does a market still

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Speaker 1: feel like vince that this FED is behind the curve

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Speaker 1: in terms of just dealing with inflation, and it just

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Speaker 1: kind of the where the market is.

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Speaker 5: I mean behind the curve in the sense that they're

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Speaker 5: too aggressive.

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Speaker 1: Yeah, I mean that they were too late coming into

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Speaker 1: it dealing with it they were, or maybe they were

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Speaker 1: too late tapering, they were too late tightening, they were

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Speaker 1: too late.

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Speaker 5: And now kind of I think the way the market's

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Speaker 5: looking at it, the way I would look at it is,

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Speaker 5: you know, realistically, and this isn't a political statement, the

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Speaker 5: reason why we have inflation is because of fiscal policy.

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Speaker 5: Monetary policy is not very good at fixing fixed fiscal policy.

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Speaker 5: I won't say errors, but abundance. We say, So, what's

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Speaker 5: really neat at this time is some pullback on the

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Speaker 5: fiscal front, which most likely not going to see and

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Speaker 5: so the FED has to try to fix it with

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Speaker 5: what tools they have, but they're they're not very effective

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Speaker 5: against fiscal policy.

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Speaker 4: You add a really interesting column that was on the

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Speaker 4: terminal recently about how US consumer appears to be in trouble,

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Speaker 4: but good news for bond bulls. Tell us more about that.

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Speaker 5: You know, you're always hearing this about the consumers doing well,

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Speaker 5: and it's definitely something going on in the real estate

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Speaker 5: market for sure, especially in the Northeast, but in general,

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Speaker 5: all of the savings that were gained from a pandemic

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Speaker 5: fiscal policy are gone. Disposable income is dropping, and you're

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Speaker 5: seeing revolving credits sore, and all of that speaks to

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Speaker 5: a consumer that's now borrowing to spend, and there's an

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Speaker 5: endgame to that. Where it is I wish I knew,

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Speaker 5: but there's always an endgame to that. There's only so

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Speaker 5: much they can borrow. And if you see the FED

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Speaker 5: start to raise requirements on banks for loan portfolios, you're

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Speaker 5: going to see the banks pull back on that credit.

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Speaker 5: And when the banks pull back on credit, clearly you're

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Speaker 5: going to see some impact on spending. And I just

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Speaker 5: think the consumer is getting a little bit more tapped

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Speaker 5: out than perhaps some of the optimistic people think, and

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Speaker 5: that probably falls into where the recession potentially comes from.

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Speaker 4: Where are some of those red flags and some of

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Speaker 4: the loans. When it comes to the credit, you were

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Speaker 4: talking about.

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Speaker 5: One of the things that I would look at is

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Speaker 5: the credit card companies. So we've seen very good earnings,

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Speaker 5: very good profits coming from the likes of MasterCard, Visa

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Speaker 5: an American Express. When that turns, I think then you're

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Speaker 5: really looking at where consumers are getting in trouble, whether

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Speaker 5: it be through default rates or simply just not spending,

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Speaker 5: and therefore the earnings of those companies just don't show up.

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Speaker 3: Unemployment.

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Speaker 1: Where do you think that kind of goes over the

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Speaker 1: next six to twelve months. Are we going to get

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Speaker 1: to like a four percent number.

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Speaker 5: I don't know where we're going to get to an

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Speaker 5: in exact rate, but I'll tell you there's a trick

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Speaker 5: to this employment and jobs number that I think which

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Speaker 5: the FED is missing is the Joel's number.

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Speaker 8: In particular.

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Speaker 5: So during the pandemic, what you've saw where a lot

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Speaker 5: of companies buying ads on Indeed, et cetera, those websites

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Speaker 5: for job postings, and they were posting a lot more

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Speaker 5: jobs that they really needed in anticipation of potentially losing

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Speaker 5: staff because of the pandemic. Those are annual contracts, and

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Speaker 5: those contracts are rolling off, so they're not likely to

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Speaker 5: be buying the same size of ads that they did

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Speaker 5: in the past, and they'll probably be just a little

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Speaker 5: bit easier on posting. So I think the job posting

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Speaker 5: is going to go down, the Joel state is going

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Speaker 5: to go down, and with that will get a little

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Speaker 5: bit more realistic employment number because when you buy these

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Speaker 5: contracts to post jobs, they're not per job, they're just

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Speaker 5: per year, and so you can post as many as

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Speaker 5: you want and over post and that makes it look

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Speaker 5: like there's a lot more I think it makes it

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Speaker 5: look like there's a lot more job openings that they

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Speaker 5: really are.

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Speaker 3: Okay, Yeah, that's really interesting.

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Speaker 1: Yeah, that's interesting because the Jolts data is something and

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Speaker 1: it usually ran in between four and six million and

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Speaker 1: still up around ten me and it makes you think about, geez,

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Speaker 1: that's a tightly Hey, Vince, don't be a stranger.

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Speaker 8: Vin.

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Speaker 1: Soon you mound his way back to the Bloomberg Interactor

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Speaker 1: Broker studio and.

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Speaker 5: He will find his way out exactly.

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Speaker 3: Little FaceTime doesn't hurt anybody.

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Speaker 9: You're listening to the team Ken's our live program Bloomberg

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Speaker 9: Markets weekdays at ten am Eastern.

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Speaker 9: wherever you get your podcasts.

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Speaker 1: Just met in Paul Sweeney here in our Bloomberg Interactor

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Speaker 1: Broker's studio. We want to get to the story, the update,

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Speaker 1: the latest reporting on former President Donald Trump and his

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Speaker 1: legal challenges, and of course there's no one better to

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Speaker 1: do that with than Tim O'Brien. Tim is a senior

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Speaker 1: executive editor for Bloomberg Opinion, and Tim is the author

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Speaker 1: of the book Trump Nation, The Art of Being the

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Speaker 1: Donald in two thousand and five, the Definitive Biography of

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Speaker 1: Donald Trump. So there's no one that knows this story

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Speaker 1: in this individual better than Tim.

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Speaker 3: Tim, thanks so much for joining us. We know you're

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Speaker 3: traveling here, but I'd.

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Speaker 1: Love to just get your perspective on We've had so

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Speaker 1: many legal issues with this president before and during and

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Speaker 1: after now his presidency. How important? How significant is this?

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Speaker 1: Are these federal charges here?

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Speaker 10: Well, Paul, I think they're extremely significant because it's a

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Speaker 10: clarifying moment. I think that there's been this myth around

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Speaker 10: former President Trump that he can't really be touched by

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Speaker 10: the law, that it's target holds him accountable. But the

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Speaker 10: reality is throughout his entire career before going into the

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Speaker 10: White entering the White House, he's never had major federal

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Speaker 10: investigations surrounding him, and now he does. And there's some

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Speaker 10: very robust state investigations that are also targeting him. But

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Speaker 10: as it pertains to this specific case, it is one

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Speaker 10: of the I think things that are very very difficult

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Speaker 10: for him to hint and with is the fact pattern.

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Speaker 10: This is not a complex narrative to explain to a journey.

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Speaker 10: He took documents allegedly that he was not entitled to take,

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Speaker 10: and he obstructed justice when the federal government came looking

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Speaker 10: for them, and his own video cameras that mar A

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Speaker 10: Lago recorded this. The testimony that the federal government put

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Speaker 10: in the indictment comes from Trump's own staff and from

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Speaker 10: his own lawyers. So it's a very tough case and

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Speaker 10: I think it's consequential, and I think that he I

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Speaker 10: don't think he's prepared for it. I don't think he

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Speaker 10: has the legal talent surrounding him to adequately defend him

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Speaker 10: right now against the case like this, So there could

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Speaker 10: be a rough ride to have for him.

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Speaker 4: Tim set the scene for us after yesterday when Trump

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Speaker 4: lefts a courtroom what do we need to know from

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Speaker 4: this moving forward?

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Speaker 10: Well, yesterday was pretty undramatic. I think, you know, from

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Speaker 10: all accounts, it was pretty in and out. He sat silently,

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Speaker 10: the federal government and Jack Smith didn't make much of

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Speaker 10: a show of anything, and they process things and he

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Speaker 10: left the courtroom. I think going forward, there's one more

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Speaker 10: process hearing with a second magistrate judge, and then the

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Speaker 10: trial begins with Judge Cannon, and I think there's you know,

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Speaker 10: she's a Trump appoint There's been questions about whether or

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Speaker 10: not she is going to run up their process in

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Speaker 10: her courtroom, given the fact that she owes her job

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Speaker 10: to the president. She also gets to decide even if

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Speaker 10: a jury finds him guilty, she gets to decide how

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Speaker 10: severe his sentence will be. I think his maximum exposure

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Speaker 10: on almost all of the counts is ten years, and

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Speaker 10: there's one count that it has a maximum possible prison

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Speaker 10: sentence for twenty years. I doubt we'll see any sentencing,

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Speaker 10: even if it wasn't a possibly friendly judge go to

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Speaker 10: the full amount here. But that that dynamic, I think

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Speaker 10: how the government presents its evidence, how the jury interprets it,

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Speaker 10: and then how the judge decide to sentence him. Is

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Speaker 10: are the next steps? And all he can do is

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Speaker 10: try to mount an effective defense, which has already done

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Speaker 10: a little bit publicly saying that he was entitled to

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Speaker 10: roose documents and he did nothing wrong.

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Speaker 1: So, tim based upon kind of your knowledge and your reporting,

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Speaker 1: is this trial h is it going to happen or

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Speaker 1: is there going to be a plea agreement? And if

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Speaker 1: it does happen, how quickly? There's a lot of moving

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Speaker 1: parts here.

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Speaker 10: Well, you know, if there's gonna be a pre agreement,

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Speaker 10: it's you're going to have to agree to a settlement

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Speaker 10: that satisfies the federal government. And previous cases the government takes,

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Speaker 10: you know, these kinds of cases seriously. He is alleged

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Speaker 10: taken documents, exposed the vulnerabilities the US military had nuclear

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Speaker 10: she puts in some of them, and, by the government's account,

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Speaker 10: compromise national security. We have a voteload of previous cases

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Speaker 10: in which the charges events of here, and the defendants

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Speaker 10: have gone to jail for the equivement for doing that.

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Speaker 10: So if they try to do a plea agreement, it

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Speaker 10: will be very interesting to see what the components of

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Speaker 10: that are. And Trump at this point might be wise

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Speaker 10: to try to do that, but I just don't know.

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Speaker 10: I think the second piece what you'll see here is

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Speaker 10: that he will take his argument to the streets, and

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Speaker 10: I'm concerned about the possibility of violence because he is

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Speaker 10: not someone who goes gently into that good night. He

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Speaker 10: is not going to if he has found guilty. I

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Speaker 10: think he was going to be going to encourage his

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Speaker 10: supporters to be heard. And that's another dynamic that I

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Speaker 10: think we'll have to watch very carefully.

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Speaker 4: How long could the trial.

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Speaker 6: Last for.

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Speaker 10: Well, Jack Smith thinks that he wants a speedy trial,

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Speaker 10: and I think they're going to try to move this

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Speaker 10: along as quickly as they can. I don't think they're

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Speaker 10: going to try to spend months and months presenting evidence.

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Speaker 10: The federal government, particularly the Justice Department, did not by

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Speaker 10: clinging cases during presidential election primary season goes in the

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Speaker 10: full force in January. That's new territory too. I don't

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Speaker 10: think they're going to want to trying him come next spring,

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Speaker 10: so I think you're going to see this move along

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Speaker 10: pretty quickly. The other thing to remember is there's another

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Speaker 10: investigation of the Justice Department involved January sixth, and the

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Speaker 10: possibility that Trump incided and insurrection and tried to intrigue

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Speaker 10: with the electoral count procedures. And that's a trickier case,

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Speaker 10: I think for them to bring the course. I think

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Speaker 10: from a strategic standpoint, they were smart to go first

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Speaker 10: with them are allowed o case, but they still have

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Speaker 10: that one left to unfurrow, and you have to see

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Speaker 10: what happens with that one too.

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Speaker 1: Hey, Tim, let's fast forward a little bit to the election.

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Speaker 1: Any sense of how this might play during the election.

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Speaker 10: Well, I mean, this just throws such a wild card up.

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Speaker 10: So here we know that after Alvin Bragg in Manhattan

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Speaker 10: BA and guided Trump for financial for financial fraud in

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Speaker 10: an electoral fraud in New York. It helped Trump with

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Speaker 10: his base, and I think more generally with Republican voters

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Speaker 10: who aren't part of his base, which are the ones

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Speaker 10: he needs to amount of successful national election. I think

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Speaker 10: he will probably be any other Republican in the primary

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Speaker 10: season right now. I don't think he can win a

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Speaker 10: general election unless he gets moderate and moderate Republicans in

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Speaker 10: an independent And that first case, you know, people felt

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Speaker 10: that drag was being unfair to the former president, and

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Speaker 10: the polls indicated that that gave him an electoral base.

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Speaker 10: It will be interesting to see how Republican voters respond

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Speaker 10: to this case. I think this is a much more muscular,

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Speaker 10: clear cut base. I think what you know, the risure

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Speaker 10: occurred is much more damning yep. And there's not a

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Speaker 10: lot of nebulous nips around it. So we'll have to

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Speaker 10: see how that plays outs too.

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Speaker 3: All right, Tim, thank you so much for joining us.

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Speaker 1: Tim O'Brien, he's a senior executive editor for Bloomberg Opinion.

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Speaker 1: He's also the author of Trump Nation, The Art of

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Speaker 1: Being the Donald. He published that in two thousand and five,

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Speaker 1: held as a definitive biography of Donald Trump.

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Speaker 3: So Tim has a.

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Speaker 1: Real good insight into Donald Trump the person as well

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Speaker 1: as the politician as well.

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Speaker 9: You're listening to the tape. Can's our live program Bloomberg

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Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 9: tune in app, Bloomberg dot Com, and.

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Speaker 8: The Bloomberg Business App.

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Speaker 9: You can also listen live on Amazon Alexa from our

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Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: All right, let's get right to our next guest in studio,

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Speaker 1: which she gets an extra start joining Gegos joins Is.

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Speaker 1: She's a co founder of Bond Blocks. She co found

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Speaker 1: a bond blog in twenty twenty one, and as the

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Speaker 1: name would imply, it's an ETF firm that focuses on bonds. Jinna,

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Speaker 1: thanks so much for joining us. So, I mean the

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Speaker 1: reality join is I can go with a two year treasure,

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Speaker 1: we can get four point sixty two percent. I mean

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Speaker 1: there's actually income and fixed income these days, right, Yeah.

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Speaker 11: We like to say the income's back in fixed income,

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Speaker 11: and we really are encouraging investors to take a look

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Speaker 11: and think about repositioning in their portfolios now because of everything.

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Speaker 6: That's happened over the last year.

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Speaker 11: Of most areas in fixed income, yields have doubled since

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Speaker 11: twenty twenty two.

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Speaker 4: It's interesting because you see so much money plowing into

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Speaker 4: money market funds and other corners of the market when

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Speaker 4: obviously you can yield five percent or more at this point.

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Speaker 4: What do you think is the dynamic changing there between say,

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Speaker 4: post the housing crisis, where you couldn't yield that amount

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Speaker 4: whereas now. Is it not just a defensive posturing. Is

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Speaker 4: it also just because of what investors can yield at

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Speaker 4: this point?

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Speaker 6: Yeah?

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Speaker 11: So we have to remember the fundamentals of fixed income,

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Speaker 11: and that the total return of fixed income includes the

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Speaker 11: yield on the income side of your coupon pay plus

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Speaker 11: the return of the asset itself. And with these yields,

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Speaker 11: like they're really providing a lot of cushion for volatility

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Speaker 11: that's still in the market is still we view is

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Speaker 11: going to persist through the rest of the year, and

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Speaker 11: so you don't want to forget that. You know, it's

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Speaker 11: not just about being defensive. It's about taking action in

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Speaker 11: your portfolio to get great total return relative to other

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Speaker 11: asset classes right now, and fixing them can provide that

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Speaker 11: to you with a lot a lot less volatility relative

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Speaker 11: to other asset.

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Speaker 6: Types, even equity. Well, this bid for cash is.

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Speaker 12: So interesting because you look at money market funds right now.

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Speaker 12: Mutual funds so not quite as cool as ETFs, but

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Speaker 12: still there's five point five trillion in them.

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Speaker 6: Money is still growing. At the same time, you.

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Speaker 12: Also have sort of the spiritual opposite going on, where

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Speaker 12: people are chasing tech, they're chasing AI and those growth

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Speaker 12: of your names.

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Speaker 6: So it's been.

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Speaker 12: Interesting to see those two opposite approaches build up at

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Speaker 12: the same time.

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Speaker 6: And when you think about money market funds, When you think.

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Speaker 12: About cash like instruments on the ETF side, when does

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Speaker 12: that money come out? What would be the catalyst to say, Okay,

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Speaker 12: you know, I can sit in here and clip coupons,

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Speaker 12: but maybe it's time to venture out.

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Speaker 4: Yeah.

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Speaker 11: I think last year's flows were just exactly that there's

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Speaker 11: people sort of hiding out or on the sidelines, trying

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Speaker 11: to figure out when they're going to come back into

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Speaker 11: risk askets or when they're going to come back into

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Speaker 11: the market. And in terms of when, I think what

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Speaker 11: we've been telling folks is you probably shouldn't be waiting

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Speaker 11: for everything.

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Speaker 6: To settle through the end of the year.

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Speaker 11: Yes, there's more volatility, Yes we have still the potential

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Speaker 11: for recession coming up. But it's interesting you say that

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Speaker 11: because I think there's some data that when you look

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Speaker 11: at ETF flows still you're not seeing people rush back

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Speaker 11: into equities, even though there's really attractive yields in I'm sorry,

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Speaker 11: really attractive returns in places like technology. Actually, I think

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Speaker 11: the flows are a little a little opposite of what

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Speaker 11: you would intuitively think that people are running into them

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Speaker 11: through through the et apps. The same is true in

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Speaker 11: categories in fixed income where you have these really big

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Speaker 11: yields with sort of you would think relative risk, but

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Speaker 11: you know something like a triple C which is yielding

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Speaker 11: over thirteen percent, or even WC even double B is

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Speaker 11: that you know, almost eight percent, and people just aren't

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Speaker 11: grabbing those opportunities.

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Speaker 6: For their portfolios.

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Speaker 11: Now, we think by bomb blocks, we try to show

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Speaker 11: people the relative value amongst all this different places in

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Speaker 11: the fixed income offering so that they can take action.

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Speaker 11: So we really think there's a call to action to

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Speaker 11: reposition your portfolios now. But you're right, I think the

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Speaker 11: flows into money markets are still saying people are waiting

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Speaker 11: for more information, and we just think fixing income provides

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Speaker 11: more opportunity.

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Speaker 4: Now, something I've been watching pretty closely is the CFTC

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Speaker 4: data that we get on Fridays and looking at how

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Speaker 4: much investors are shorting the treasury market, whether we're talking

443
00:21:45,080 --> 00:21:47,240
Speaker 4: about the two year, the ten year. The speculative futures

444
00:21:47,320 --> 00:21:49,560
Speaker 4: net positioning has been at a record when we're looking

445
00:21:49,600 --> 00:21:52,960
Speaker 4: at these bonds when it's so extreme, because typically investors

446
00:21:53,000 --> 00:21:55,879
Speaker 4: would do that in anticipation that bonds would or if

447
00:21:55,920 --> 00:21:58,080
Speaker 4: you're looking at yields, those would move higher. Do you

448
00:21:58,119 --> 00:22:00,360
Speaker 4: think there would be any sort of opposite effect there

449
00:22:00,440 --> 00:22:03,800
Speaker 4: when you see positioning so extreme to where yields could

450
00:22:03,800 --> 00:22:06,479
Speaker 4: potentially fall when you have those kind of bets placed

451
00:22:06,520 --> 00:22:07,359
Speaker 4: on that, our.

452
00:22:07,280 --> 00:22:09,520
Speaker 11: View is that yields are going to be higher for longer,

453
00:22:09,640 --> 00:22:12,200
Speaker 11: like we are at. We had some good numbers last

454
00:22:12,240 --> 00:22:14,920
Speaker 11: year yesterday in terms of you know, inflation and four

455
00:22:14,960 --> 00:22:18,880
Speaker 11: percent number, but at the same time, like the Fed

456
00:22:18,960 --> 00:22:21,160
Speaker 11: still has a two percent goal and going from four

457
00:22:21,200 --> 00:22:23,840
Speaker 11: to two is going to be pretty difficult. So I

458
00:22:23,880 --> 00:22:26,480
Speaker 11: don't we just don't see that pivot, even though there's

459
00:22:26,520 --> 00:22:30,480
Speaker 11: a lot of interesting volume activity around all the markets.

460
00:22:31,320 --> 00:22:33,679
Speaker 11: On the short side, I would say that our view is,

461
00:22:33,720 --> 00:22:35,440
Speaker 11: you know, there's a there's still more to process.

462
00:22:36,160 --> 00:22:37,880
Speaker 6: Can we get into the weeds here? Do you guys

463
00:22:37,920 --> 00:22:40,520
Speaker 6: mind take it away straight into the weeds?

464
00:22:40,520 --> 00:22:44,760
Speaker 12: Okay, let's talk specifically about ETFs, because obviously bond Blocks's

465
00:22:44,840 --> 00:22:48,000
Speaker 12: business is sort of carving up the bond ETF market

466
00:22:48,119 --> 00:22:52,639
Speaker 12: into you know, sectors, into duration specific funds.

467
00:22:52,640 --> 00:22:54,280
Speaker 6: And if we look at, you know, what your most

468
00:22:54,280 --> 00:22:55,400
Speaker 6: successful products are.

469
00:22:55,400 --> 00:22:58,480
Speaker 12: We have x h l F, which is six month

470
00:22:58,840 --> 00:23:03,280
Speaker 12: target duration leave that launched in September, right, and you know,

471
00:23:03,320 --> 00:23:06,600
Speaker 12: you're closing in on eight hundred million dollars in a U,

472
00:23:06,760 --> 00:23:09,199
Speaker 12: which is impressive. And then at the same time, I

473
00:23:09,200 --> 00:23:12,280
Speaker 12: mean there's products such as t bill, which recently launched

474
00:23:12,280 --> 00:23:16,240
Speaker 12: that is specifically three month treasury bills. And then Blackrock

475
00:23:16,320 --> 00:23:19,480
Speaker 12: also has a suite of products they're ebond suite, which

476
00:23:19,480 --> 00:23:23,400
Speaker 12: is also really narrowly focused on different duration and it's

477
00:23:23,800 --> 00:23:26,680
Speaker 12: interesting to see all of this money coming into these

478
00:23:27,080 --> 00:23:30,240
Speaker 12: duration specific funds. So I'm just hoping you can talk

479
00:23:30,280 --> 00:23:33,399
Speaker 12: me through where that demand is coming from, who is

480
00:23:33,640 --> 00:23:37,640
Speaker 12: using these ETFs, and how should these ETFs be used

481
00:23:38,000 --> 00:23:39,560
Speaker 12: for the bomb blocks products.

482
00:23:39,560 --> 00:23:43,119
Speaker 11: Our clients are really using them for duration management to

483
00:23:43,240 --> 00:23:46,080
Speaker 11: control the interestate risk they have in their portfolios, and

484
00:23:46,359 --> 00:23:49,800
Speaker 11: we have seen some really compelling use cases in this

485
00:23:50,000 --> 00:23:53,000
Speaker 11: last two or three months. In this last quarter, as

486
00:23:53,000 --> 00:23:56,280
Speaker 11: we entered into the debt crisis, we saw clients move

487
00:23:56,800 --> 00:23:59,320
Speaker 11: out of the short short ultra short side and a

488
00:23:59,320 --> 00:24:01,520
Speaker 11: little bit out of the curve one, two, three year

489
00:24:02,359 --> 00:24:05,439
Speaker 11: because they were trying to avoid any of the you know,

490
00:24:05,600 --> 00:24:10,560
Speaker 11: very short term settling maturities in very very short treasury products.

491
00:24:11,200 --> 00:24:14,639
Speaker 11: Once the dust cleared some set we saw the clients

492
00:24:14,720 --> 00:24:16,240
Speaker 11: kind of move back in so I think what's really

493
00:24:16,320 --> 00:24:21,160
Speaker 11: interesting is that these are tools for interest rate risk

494
00:24:21,240 --> 00:24:24,120
Speaker 11: management and duration management, and we're seeing that it's not

495
00:24:24,200 --> 00:24:25,879
Speaker 11: just that I'm going to hide out in cash for

496
00:24:25,920 --> 00:24:27,399
Speaker 11: a while because I'm not sure what I want to do.

497
00:24:27,400 --> 00:24:29,800
Speaker 11: People are using them to add to their portfolios, to

498
00:24:29,840 --> 00:24:33,320
Speaker 11: manage their viewpoint over what kind of duration they want

499
00:24:33,320 --> 00:24:33,960
Speaker 11: to add.

500
00:24:34,080 --> 00:24:35,760
Speaker 6: Or subtract from their portfolio.

501
00:24:35,800 --> 00:24:38,600
Speaker 11: And it's great to see also some hits on the

502
00:24:38,680 --> 00:24:41,600
Speaker 11: longer side too, So there's just people have the opportunity

503
00:24:41,640 --> 00:24:44,199
Speaker 11: to say, like, you know what, I'm going to seven

504
00:24:44,280 --> 00:24:45,359
Speaker 11: the belly of the curve.

505
00:24:45,440 --> 00:24:46,679
Speaker 6: You know, there's a little bit of a.

506
00:24:48,760 --> 00:24:51,119
Speaker 11: I'll get myself out a bit, not all the way

507
00:24:51,160 --> 00:24:52,880
Speaker 11: out to ten and twenty, but yeah, I think they're

508
00:24:52,920 --> 00:24:56,920
Speaker 11: really being precise with their viewpoints week to week.

509
00:24:57,280 --> 00:24:57,560
Speaker 4: Yeah.

510
00:24:57,600 --> 00:25:00,280
Speaker 12: And if I you know, if I'm worried about I'm

511
00:25:00,280 --> 00:25:02,640
Speaker 12: trying to manage my duration risk, my interest rate risk,

512
00:25:02,680 --> 00:25:05,040
Speaker 12: I mean, why do that through one of these products,

513
00:25:05,080 --> 00:25:08,840
Speaker 12: through an ETF versus just going into the actual.

514
00:25:08,480 --> 00:25:13,320
Speaker 11: Securities, you know, buying a portfolio of securities actually, for

515
00:25:13,400 --> 00:25:17,960
Speaker 11: any investor or any investment management firm is a lot

516
00:25:18,000 --> 00:25:20,919
Speaker 11: of work. You have to have the teams that you

517
00:25:20,960 --> 00:25:23,280
Speaker 11: know either on the credit side, you have analysts, you

518
00:25:23,280 --> 00:25:26,920
Speaker 11: have research even back office in middle office operations to

519
00:25:27,000 --> 00:25:30,240
Speaker 11: make sure things are settling into your accounts correctly. And

520
00:25:30,320 --> 00:25:33,000
Speaker 11: we were just talking about this in a different form

521
00:25:33,000 --> 00:25:34,240
Speaker 11: actually here at Bloomberg.

522
00:25:34,560 --> 00:25:35,400
Speaker 6: It's hard to do.

523
00:25:35,960 --> 00:25:40,639
Speaker 11: ETFs give you that exact exposure with one trade, one click,

524
00:25:41,080 --> 00:25:44,240
Speaker 11: settles in your account. It's very simple for asset managers

525
00:25:44,280 --> 00:25:47,399
Speaker 11: and investment managers to use them for these precise exposures.

526
00:25:47,800 --> 00:25:51,000
Speaker 11: Our premise is there isn't enough of them in fixed income.

527
00:25:51,080 --> 00:25:53,000
Speaker 11: You could do a lot in equities. You can get

528
00:25:53,000 --> 00:25:54,840
Speaker 11: any kind of brick factor you want in a ETF

529
00:25:54,840 --> 00:25:57,640
Speaker 11: in equities, and there just isn't enough in fixed income.

530
00:25:57,640 --> 00:25:59,320
Speaker 6: So you buy an ETF for it.

531
00:25:59,320 --> 00:26:04,520
Speaker 11: It's convenience, it's simplicity, they're low costs. They're great management

532
00:26:04,560 --> 00:26:05,600
Speaker 11: tools for investors.

533
00:26:06,800 --> 00:26:08,760
Speaker 4: We only have about a minute left, but I was

534
00:26:08,760 --> 00:26:12,000
Speaker 4: curious about in the ETF space, where would you shy

535
00:26:12,040 --> 00:26:15,000
Speaker 4: away from. We talked about the opportunities there were whatevers.

536
00:26:15,000 --> 00:26:15,640
Speaker 4: Do you not like.

537
00:26:17,520 --> 00:26:19,640
Speaker 11: That's a I guess that's a very personal question.

538
00:26:19,720 --> 00:26:24,240
Speaker 4: Forever I use more client specific.

539
00:26:24,280 --> 00:26:27,960
Speaker 11: It's very client specific because with the way you should view.

540
00:26:28,000 --> 00:26:31,960
Speaker 11: ETFs are tools, tools to build portfolios, tools.

541
00:26:31,600 --> 00:26:32,560
Speaker 6: To express your view.

542
00:26:32,920 --> 00:26:34,919
Speaker 11: And the important thing about the ETF offering is that

543
00:26:34,960 --> 00:26:36,400
Speaker 11: there is enough tools for you.

544
00:26:36,359 --> 00:26:37,200
Speaker 6: To do that with.

545
00:26:38,040 --> 00:26:40,600
Speaker 11: There's new types of products you can get access to

546
00:26:40,680 --> 00:26:44,560
Speaker 11: managers inactive and so I wouldn't shy away from anything

547
00:26:44,600 --> 00:26:47,600
Speaker 11: in ETFs because it's it's the premise of the ETF

548
00:26:47,680 --> 00:26:51,560
Speaker 11: offering is to help investors action their ideas and take

549
00:26:51,600 --> 00:26:54,800
Speaker 11: action in these markets. So there probably isn't an area

550
00:26:54,880 --> 00:26:58,200
Speaker 11: to to to avoid. I mean, we do see obviously

551
00:26:58,240 --> 00:27:01,640
Speaker 11: the dangers of increased altility, and we don't we don't

552
00:27:01,640 --> 00:27:04,200
Speaker 11: know exactly what kind of liquidity is coming out of

553
00:27:04,240 --> 00:27:07,159
Speaker 11: the system, but you know, again, to be able to

554
00:27:07,160 --> 00:27:09,719
Speaker 11: make those trades week over week with ETFs, that's what

555
00:27:09,760 --> 00:27:11,040
Speaker 11: investors are coming.

556
00:27:10,800 --> 00:27:11,199
Speaker 13: To them for.

557
00:27:12,040 --> 00:27:13,560
Speaker 3: Hey, Joanna, thank you so much for joining us.

558
00:27:13,640 --> 00:27:16,159
Speaker 1: Really appreciate it as always having you here in a

559
00:27:16,160 --> 00:27:17,560
Speaker 1: Bloomberg Interactive Broker studio.

560
00:27:17,640 --> 00:27:20,600
Speaker 3: Joining Diego's co founder of bond Blocks.

561
00:27:20,640 --> 00:27:23,240
Speaker 4: I think that was a good business decision, great round table.

562
00:27:23,400 --> 00:27:25,600
Speaker 1: Well I just stepped back toront of him. I can

563
00:27:25,640 --> 00:27:27,800
Speaker 1: step back and let the smart people have the floor.

564
00:27:27,880 --> 00:27:30,760
Speaker 1: So that was great appreciate Katie Greifeld sitting in with us.

565
00:27:31,720 --> 00:27:32,920
Speaker 8: You're listening to the team.

566
00:27:33,280 --> 00:27:36,359
Speaker 9: Ken's a our live program, Bloomberg Markets weekdays at ten

567
00:27:36,400 --> 00:27:37,480
Speaker 9: am Eastern.

568
00:27:37,240 --> 00:27:40,320
Speaker 8: On Bloomberg dot Com, the iHeartRadio.

569
00:27:39,560 --> 00:27:42,359
Speaker 9: App and the Bloomberg Business App, or listen on demand

570
00:27:42,400 --> 00:27:43,960
Speaker 9: wherever you get your podcasts.

571
00:27:47,440 --> 00:27:49,400
Speaker 1: Just meant in and Paul Sweene here in the Bloomberg

572
00:27:49,440 --> 00:27:50,520
Speaker 1: Interactive Broker Studio.

573
00:27:50,560 --> 00:27:51,840
Speaker 3: We've had some smart guests here.

574
00:27:51,760 --> 00:27:53,960
Speaker 4: Today, we have and they're going to continue coming with

575
00:27:54,040 --> 00:27:55,200
Speaker 4: especially with our next guests.

576
00:27:55,400 --> 00:27:57,920
Speaker 1: Exactly all right. He's a pretty smart dude. That's why

577
00:27:57,920 --> 00:27:59,879
Speaker 1: we kind of have him back. I usually can follow

578
00:28:00,080 --> 00:28:02,280
Speaker 1: what he's saying. Sometimes I have to google some things.

579
00:28:02,280 --> 00:28:04,800
Speaker 1: But Jay Haffield joins us. He's a CEO, founder and

580
00:28:04,840 --> 00:28:08,520
Speaker 1: portfolio manager for Infrastructure Capital Advisors. Jay, I know you

581
00:28:08,560 --> 00:28:11,680
Speaker 1: guys at Infrastructure Capital Advisors.

582
00:28:11,800 --> 00:28:14,639
Speaker 3: You fall inflation. You track this thing, right, and so

583
00:28:14,720 --> 00:28:15,320
Speaker 3: does the FED.

584
00:28:16,000 --> 00:28:18,240
Speaker 1: What do you tell us about how you track inflation

585
00:28:18,520 --> 00:28:20,400
Speaker 1: and kind of what your work is telling you guys?

586
00:28:21,600 --> 00:28:25,879
Speaker 14: Thanks Paul. So, the key element is to think of

587
00:28:26,080 --> 00:28:30,160
Speaker 14: three separate buckets of inflation, so you have leading indicators.

588
00:28:30,760 --> 00:28:33,440
Speaker 14: The key one there is oil prices, which we know well,

589
00:28:33,560 --> 00:28:36,240
Speaker 14: and housing prices, okay, and that if you just looked

590
00:28:36,240 --> 00:28:38,280
Speaker 14: at those two and tried to explain the seventies, that

591
00:28:38,320 --> 00:28:41,760
Speaker 14: would explain over one hundred percent of the inflation during

592
00:28:41,760 --> 00:28:42,280
Speaker 14: the seventies.

593
00:28:42,280 --> 00:28:44,080
Speaker 3: So that was the real problem, which was a good decade.

594
00:28:44,480 --> 00:28:47,880
Speaker 14: Right, this is a real problem. The FED has learned

595
00:28:47,880 --> 00:28:49,800
Speaker 14: a lot of lessons that we don't think are accurate

596
00:28:49,960 --> 00:28:53,400
Speaker 14: about why that occurred, like stopping and starting entrenched. We

597
00:28:53,400 --> 00:28:55,600
Speaker 14: don't believe in any of that. In fact, we believe

598
00:28:55,640 --> 00:28:58,400
Speaker 14: Volker made a big mistake raising rates too high. So

599
00:28:58,520 --> 00:29:01,840
Speaker 14: those are leading indicators. Current indicators are today's a good

600
00:29:01,880 --> 00:29:05,120
Speaker 14: day to talk about it. PPI Real Time and CPI

601
00:29:05,200 --> 00:29:08,479
Speaker 14: desh r is are index. Other people have either arguably

602
00:29:08,520 --> 00:29:10,840
Speaker 14: copied it or we copy them. There's no We're not

603
00:29:10,880 --> 00:29:14,280
Speaker 14: an index company center tracked that. But so all that

604
00:29:14,400 --> 00:29:17,160
Speaker 14: is is just looking at that leading indicator housing and

605
00:29:17,200 --> 00:29:20,640
Speaker 14: then stickating into the index and then the deeply unfortunately,

606
00:29:20,720 --> 00:29:24,320
Speaker 14: the deeply lagging indicators are what the FED follows. So

607
00:29:24,920 --> 00:29:30,960
Speaker 14: in fact, the worst is core PCE because Core, what

608
00:29:31,440 --> 00:29:35,240
Speaker 14: the FED doesn't really focus on is that high headline

609
00:29:36,360 --> 00:29:38,640
Speaker 14: bleeds into core. In fact, you can see this during

610
00:29:38,640 --> 00:29:42,959
Speaker 14: the seventies, so they are going to probably be very

611
00:29:43,040 --> 00:29:46,320
Speaker 14: hawkish today, or at least somewhat hawkish. They're going to

612
00:29:46,440 --> 00:29:48,719
Speaker 14: keep talking about raising rates because they're focused on that

613
00:29:48,760 --> 00:29:51,840
Speaker 14: core measure, even though it's highly lagged and it's going

614
00:29:51,880 --> 00:29:53,520
Speaker 14: to drop. It's just going to take a little while.

615
00:29:53,680 --> 00:29:57,200
Speaker 14: So we've and we've had this view almost since July

616
00:29:57,400 --> 00:30:00,520
Speaker 14: last year when inflation peaked, and we've been looking forward

617
00:30:00,560 --> 00:30:03,160
Speaker 14: to this time of the year because this is the

618
00:30:03,160 --> 00:30:05,920
Speaker 14: Fed's almost always a year behind. So they're starting to

619
00:30:05,960 --> 00:30:08,320
Speaker 14: figure out by pausing, and we think they'll pause next

620
00:30:09,160 --> 00:30:11,640
Speaker 14: in July as well. But so those are the those

621
00:30:11,680 --> 00:30:13,600
Speaker 14: three buckets are critical, and that's why we think the

622
00:30:13,640 --> 00:30:16,360
Speaker 14: FED is fundamentally flawed, because they're looking at the wrong bucket.

623
00:30:17,280 --> 00:30:21,640
Speaker 4: What is your expectations this afternoon from FED chair Jerom Powell.

624
00:30:23,240 --> 00:30:27,320
Speaker 14: Thanks, Jess, Well, you know he has a stellar track

625
00:30:27,400 --> 00:30:30,960
Speaker 14: record of tanking the market during press conferences, so i'd

626
00:30:31,000 --> 00:30:34,000
Speaker 14: hate to bet against that. The only mitigating factor you

627
00:30:34,400 --> 00:30:38,760
Speaker 14: mentioned Mike Wilson, who just reiterated his target. We just

628
00:30:39,600 --> 00:30:42,840
Speaker 14: we raised our target. It's kind of a little bit

629
00:30:42,880 --> 00:30:45,240
Speaker 14: of a bogus target. It's forty five hundred to five thousand.

630
00:30:45,320 --> 00:30:47,239
Speaker 14: But the reason for that is we have data that

631
00:30:47,280 --> 00:30:51,800
Speaker 14: supports forty five hundred. The five thousand is just we've observed,

632
00:30:51,840 --> 00:30:54,760
Speaker 14: you know, partly or I've observed being an investment banker,

633
00:30:55,040 --> 00:30:59,440
Speaker 14: there's a tendency for hot markets to get overvalued. Like

634
00:30:59,520 --> 00:31:03,400
Speaker 14: right now, we think that AI companies are probably undervalued,

635
00:31:03,440 --> 00:31:05,440
Speaker 14: but they're going to get overvalued, so we don't know

636
00:31:05,480 --> 00:31:08,200
Speaker 14: how much. It seems like five thousands of a pretty good

637
00:31:08,200 --> 00:31:12,160
Speaker 14: target or limit to that. But so we're quite bullish

638
00:31:12,200 --> 00:31:15,120
Speaker 14: about the market, whether we pull back today, maybe even

639
00:31:15,240 --> 00:31:17,479
Speaker 14: pull back through mid July, but we're bullish in mid

640
00:31:17,560 --> 00:31:20,400
Speaker 14: July because you have earnings. Most companies are doing well,

641
00:31:20,440 --> 00:31:24,280
Speaker 14: not just tech companies. We think the market will broaden

642
00:31:24,280 --> 00:31:26,600
Speaker 14: out some of the things that we traffic in more heavily,

643
00:31:26,720 --> 00:31:31,960
Speaker 14: like preferred stocks and dividend stocks will do better. So

644
00:31:32,440 --> 00:31:35,760
Speaker 14: we're bullish for the year. Whether I would say, if

645
00:31:35,800 --> 00:31:38,480
Speaker 14: I had to bet, it's for sixty forty that you know,

646
00:31:38,520 --> 00:31:41,360
Speaker 14: the market will be lower today just because of the

647
00:31:41,440 --> 00:31:44,200
Speaker 14: Powell having to placate the hawks.

648
00:31:44,440 --> 00:31:46,840
Speaker 4: To Jay's point, the S and P five hundred has

649
00:31:46,880 --> 00:31:49,920
Speaker 4: dropped on FED Day five of the last six meetings.

650
00:31:50,040 --> 00:31:50,480
Speaker 3: Is that right?

651
00:31:50,560 --> 00:31:50,920
Speaker 8: Here we go?

652
00:31:51,000 --> 00:31:53,280
Speaker 3: All right, we got it. That's a track record.

653
00:31:53,600 --> 00:31:54,360
Speaker 8: Jay, if you ever.

654
00:31:54,240 --> 00:31:57,640
Speaker 1: Had this discussion about inflation and policy with anybody from

655
00:31:57,680 --> 00:32:00,640
Speaker 1: the FED, because we're going.

656
00:32:00,640 --> 00:32:03,200
Speaker 14: To set it up, Okay, No, I'd be happy to

657
00:32:03,200 --> 00:32:05,520
Speaker 14: debate them, but I will say that we're I think

658
00:32:05,560 --> 00:32:07,880
Speaker 14: we have a leading market share of criticizing the FED

659
00:32:07,920 --> 00:32:08,920
Speaker 14: over the last two years.

660
00:32:09,040 --> 00:32:10,320
Speaker 8: We have a pretty good pr firmt.

661
00:32:10,160 --> 00:32:12,760
Speaker 14: So you can go check that good because we literally

662
00:32:12,760 --> 00:32:15,040
Speaker 14: we were talking about it coming in. We were trying

663
00:32:15,080 --> 00:32:19,320
Speaker 14: to contact reporters in March of twenty one because again

664
00:32:19,360 --> 00:32:22,080
Speaker 14: we follow oil prices they were skyrocketing. We follow housing

665
00:32:22,120 --> 00:32:26,080
Speaker 14: prices skyrocketing. We didn't have CPI dash are, but PPI

666
00:32:26,240 --> 00:32:30,880
Speaker 14: printed at ten percent in January of twenty one, and

667
00:32:30,920 --> 00:32:33,280
Speaker 14: the FED a year over a year later was saying

668
00:32:33,440 --> 00:32:36,560
Speaker 14: is transitory. PPI is again a real time indicator, Like

669
00:32:36,640 --> 00:32:41,280
Speaker 14: if PPI is going up, you're almost certain that CPI

670
00:32:41,400 --> 00:32:44,680
Speaker 14: will follow, So I think that it would. It's just

671
00:32:44,840 --> 00:32:47,200
Speaker 14: useful this conversation is going on. There was a Wall

672
00:32:47,200 --> 00:32:51,640
Speaker 14: Street Journal editorial this morning that the Fed's methodology is

673
00:32:51,640 --> 00:32:55,000
Speaker 14: just fundamentally flawed, including the two percent target. Two percent

674
00:32:55,040 --> 00:32:57,920
Speaker 14: targets way too low, huge enemy of the middle class.

675
00:32:58,480 --> 00:33:02,200
Speaker 14: There's strong evidence that it made the financial crisis way worse.

676
00:33:02,720 --> 00:33:04,640
Speaker 14: And so these issues need to be drawn out because

677
00:33:04,640 --> 00:33:07,360
Speaker 14: everybody treats the FED like they're sort of, you know,

678
00:33:07,480 --> 00:33:10,080
Speaker 14: some sort of god, and you can't. I mean, politicians

679
00:33:10,080 --> 00:33:12,719
Speaker 14: aren't allegedly not supposed to talk about it, and they

680
00:33:12,760 --> 00:33:16,600
Speaker 14: have like four hundred PhDs, but they can make bad mistakes.

681
00:33:17,080 --> 00:33:20,719
Speaker 14: Having a PhD means you're an expert in writing, you know,

682
00:33:20,800 --> 00:33:22,520
Speaker 14: research papers, not running the FED.

683
00:33:22,920 --> 00:33:26,400
Speaker 1: All right, So give all that you mentioned preferred stocks.

684
00:33:26,720 --> 00:33:29,560
Speaker 1: I don't hear that nearly enough in this duty studio.

685
00:33:29,680 --> 00:33:32,520
Speaker 1: Why do you guys are why are you favoring some

686
00:33:32,560 --> 00:33:36,320
Speaker 1: preferred stocks right these days? And why should investors consider preferreds?

687
00:33:36,440 --> 00:33:41,080
Speaker 14: Well, we are kind of evangelical about preferreds because what's

688
00:33:41,120 --> 00:33:43,160
Speaker 14: great about them they are good credits. They have load

689
00:33:43,160 --> 00:33:45,520
Speaker 14: default rates abou zero point three percent on average for

690
00:33:45,680 --> 00:33:49,200
Speaker 14: listed we do the twenty five dollars listed preferreds. They're

691
00:33:49,200 --> 00:33:52,160
Speaker 14: issued by good public companies who care about their credit,

692
00:33:52,720 --> 00:33:55,480
Speaker 14: but they're owned by retail and they tend to get

693
00:33:55,520 --> 00:33:58,440
Speaker 14: sold off way too hard during downturns. So, for instance,

694
00:33:58,520 --> 00:34:02,160
Speaker 14: right now, you look at any credit quality of preferreds,

695
00:34:02,160 --> 00:34:04,280
Speaker 14: they're cheap to high yield by about twenty five to

696
00:34:04,320 --> 00:34:07,560
Speaker 14: thirty basis points. And right now, like the answer to

697
00:34:07,600 --> 00:34:10,160
Speaker 14: your prior conversation about why, because you might ask, well,

698
00:34:10,160 --> 00:34:14,279
Speaker 14: why when just buy the short term ETFs that the

699
00:34:14,360 --> 00:34:17,040
Speaker 14: other the firm before me was here, Well, the reason

700
00:34:17,120 --> 00:34:19,439
Speaker 14: is you can right now with preferred you can get

701
00:34:20,160 --> 00:34:24,040
Speaker 14: equity type upside with fixed income risk. So they're trading

702
00:34:24,160 --> 00:34:27,360
Speaker 14: roughly our funds at nineteen, which is roughly par value

703
00:34:27,400 --> 00:34:30,759
Speaker 14: par values twenty five, so you get potential for appreciation

704
00:34:30,840 --> 00:34:34,120
Speaker 14: at twenty five. But meanwhile, and our fund yields a

705
00:34:34,160 --> 00:34:37,800
Speaker 14: lot because we look for more like double B crossover credits,

706
00:34:37,800 --> 00:34:40,080
Speaker 14: so yields about ten, so you get ten to weight.

707
00:34:40,120 --> 00:34:42,880
Speaker 14: It's not super volatile right now. It can become volatile

708
00:34:43,400 --> 00:34:46,280
Speaker 14: and then you get upside, and it's a good hedge

709
00:34:46,280 --> 00:34:49,400
Speaker 14: because we're pretty bullish on tech stocks, but most retail

710
00:34:49,440 --> 00:34:51,840
Speaker 14: investors have way too many tech stocks and no income

711
00:34:52,600 --> 00:34:55,240
Speaker 14: and fix this is going to be less volatile, certainly

712
00:34:55,320 --> 00:34:58,799
Speaker 14: less volatile than Nvidia and high beta stocks, so we

713
00:34:58,840 --> 00:35:01,400
Speaker 14: think it's a good alternative. The answer why, maybe you

714
00:35:01,400 --> 00:35:03,359
Speaker 14: don't want to go in and get five right now

715
00:35:03,440 --> 00:35:06,280
Speaker 14: for sure, because you can get ten and then maybe

716
00:35:06,680 --> 00:35:10,320
Speaker 14: you know twenty or thirty of upside potential, So preferreds

717
00:35:10,320 --> 00:35:12,160
Speaker 14: you should also sell them at par by the way,

718
00:35:13,280 --> 00:35:15,400
Speaker 14: which hopefully you don't have me on, you know, in

719
00:35:15,400 --> 00:35:16,799
Speaker 14: the year and they're all part and I have to say,

720
00:35:16,800 --> 00:35:19,239
Speaker 14: oh yeah, I said you should sell them all but

721
00:35:19,400 --> 00:35:21,520
Speaker 14: you know, to get ready for like the next crisis,

722
00:35:21,600 --> 00:35:24,640
Speaker 14: next freak out. And during seven oh eight they went

723
00:35:24,680 --> 00:35:27,120
Speaker 14: to like ridiculously low levels and we made a ton

724
00:35:27,120 --> 00:35:28,879
Speaker 14: of money buying cheap referreds back then.

725
00:35:29,360 --> 00:35:31,799
Speaker 4: And to your point when you're talking about PPI, we

726
00:35:31,880 --> 00:35:36,120
Speaker 4: watched the CPI PPI spread very closely, so you would

727
00:35:36,160 --> 00:35:39,080
Speaker 4: have seen that obviously improving dramatically when it comes to

728
00:35:39,120 --> 00:35:42,480
Speaker 4: the input prices before obviously consumer prices. I mean, how

729
00:35:42,480 --> 00:35:44,319
Speaker 4: does that do you think bode well when it comes

730
00:35:44,400 --> 00:35:47,760
Speaker 4: to corporate margins when that obviously is a key component

731
00:35:47,800 --> 00:35:49,640
Speaker 4: of that and obviously in turn stock prices.

732
00:35:50,560 --> 00:35:50,799
Speaker 8: Yeah.

733
00:35:50,840 --> 00:35:53,080
Speaker 14: So I mean we tend to and I think this

734
00:35:53,239 --> 00:35:56,000
Speaker 14: is why we differ a fair amount from Morgan Stanley,

735
00:35:56,600 --> 00:36:01,959
Speaker 14: is that we don't focus as much on margins because really,

736
00:36:02,040 --> 00:36:04,880
Speaker 14: if you analyze and I learned this doing utilities. Almost

737
00:36:04,880 --> 00:36:09,120
Speaker 14: all earnings growth comes from reinvestment and utilities. It's just

738
00:36:09,160 --> 00:36:12,759
Speaker 14: a tautology because it's regulated. But so a utility with

739
00:36:12,800 --> 00:36:15,720
Speaker 14: a fifty percent payout ratio always grows at five because

740
00:36:15,760 --> 00:36:20,000
Speaker 14: they only grow from retaining earnings. So most companies, like McDonald's,

741
00:36:20,000 --> 00:36:24,280
Speaker 14: wherever they grow because they return earnings and actually open

742
00:36:24,400 --> 00:36:28,480
Speaker 14: new McDonald's, like an existing McDonald's, margins is going to

743
00:36:28,480 --> 00:36:31,080
Speaker 14: be relatively flat. So I do think that that's a

744
00:36:31,080 --> 00:36:33,200
Speaker 14: bit of a challenge, but I think that Morgan Stilling's

745
00:36:33,280 --> 00:36:36,879
Speaker 14: overstated it and we're more open. This year's has been

746
00:36:36,920 --> 00:36:38,719
Speaker 14: pressured and we're about two twenty on the S ANDP.

747
00:36:39,320 --> 00:36:42,080
Speaker 14: But actually next year's earnings, which is what our targets

748
00:36:42,120 --> 00:36:44,680
Speaker 14: based on, has been holding up well, in fact even

749
00:36:44,719 --> 00:36:47,640
Speaker 14: going up, so now it's two forty two. So we

750
00:36:48,080 --> 00:36:49,799
Speaker 14: to your point to be this year, we think is

751
00:36:49,840 --> 00:36:52,280
Speaker 14: going to be challenging and next year will be more normal.

752
00:36:52,360 --> 00:36:54,280
Speaker 14: And then also you just get the growth from AI

753
00:36:54,440 --> 00:36:57,239
Speaker 14: and from retained earnings. So I think it's easy to

754
00:36:57,239 --> 00:36:59,680
Speaker 14: be too bearishit about the stock market because people don't

755
00:36:59,719 --> 00:37:04,960
Speaker 14: realize that arithmetic of the reinvestment producing kind of automatic growth.

756
00:37:06,000 --> 00:37:08,640
Speaker 4: Wow, great stuff.

757
00:37:08,680 --> 00:37:10,719
Speaker 1: As always, a body continues to come in here. He

758
00:37:10,760 --> 00:37:13,160
Speaker 1: hasn't figured it out yet. Jay Hatfield. He's the CEO,

759
00:37:13,239 --> 00:37:17,160
Speaker 1: founder and portfolio manager at Infrastructure Capital Management Lots. I

760
00:37:17,239 --> 00:37:19,360
Speaker 1: learn new stuff every time he comes in here, and

761
00:37:19,400 --> 00:37:21,279
Speaker 1: we love having him in here on days when there's

762
00:37:21,280 --> 00:37:22,440
Speaker 1: going to be some big news in.

763
00:37:22,440 --> 00:37:23,080
Speaker 3: Today's one of those.

764
00:37:23,160 --> 00:37:26,279
Speaker 4: Yeah, it's flag day exactly. Price target that he has

765
00:37:26,400 --> 00:37:27,200
Speaker 4: forty five hundred.

766
00:37:27,280 --> 00:37:29,600
Speaker 6: Ye'll take that five hundred.

767
00:37:29,680 --> 00:37:31,960
Speaker 3: Yeah, like the five thousand and one. I'll stick with that.

768
00:37:32,480 --> 00:37:36,359
Speaker 1: Jay Haffield, CEO, founder and portfolio manager for Infrastructure Capital Advisors.

769
00:37:36,600 --> 00:37:40,240
Speaker 9: You're listening to the tape cansur live program Bloomberg Markets

770
00:37:40,280 --> 00:37:43,680
Speaker 9: weekdays at ten am Eastern on Bloomberg Radio, the tune

771
00:37:43,719 --> 00:37:45,600
Speaker 9: in app, Bloomberg dot Com, and the.

772
00:37:45,480 --> 00:37:46,680
Speaker 8: Bloomberg Business App.

773
00:37:46,719 --> 00:37:49,520
Speaker 9: You can also listen live on Amazon Alexa from our

774
00:37:49,560 --> 00:37:54,680
Speaker 9: flagship New York station, just say Alexa playing Bloomberg eleven thirty.

775
00:37:54,960 --> 00:37:58,760
Speaker 1: All right, let's switch giers and talk about the pharma space,

776
00:37:58,880 --> 00:38:02,960
Speaker 1: biotech and really with a focus on anti obesity drugs,

777
00:38:03,000 --> 00:38:05,080
Speaker 1: and you just think about the opportunity there in terms

778
00:38:05,120 --> 00:38:07,320
Speaker 1: of market size, just extraordinate. There are a lot of

779
00:38:07,320 --> 00:38:08,880
Speaker 1: big players in there, so we want to get to

780
00:38:08,880 --> 00:38:10,960
Speaker 1: the latest and see what's happening there. So we go

781
00:38:11,080 --> 00:38:15,280
Speaker 1: to one Mikey Shaw, senior industry analyst at Bloomberg Intelligence.

782
00:38:15,280 --> 00:38:17,440
Speaker 1: He is live at his desk, I can tell you,

783
00:38:17,840 --> 00:38:20,920
Speaker 1: at the Bloomberg headquarters in Queen Victoria Street, in the

784
00:38:20,960 --> 00:38:22,840
Speaker 1: center of the city of London.

785
00:38:22,960 --> 00:38:25,680
Speaker 3: No better place to be in Mikey Shaw. Now he's

786
00:38:25,719 --> 00:38:26,200
Speaker 3: in the office.

787
00:38:26,280 --> 00:38:29,320
Speaker 1: Unlike like Sam Fazeldi, who just mails it in from France,

788
00:38:29,440 --> 00:38:32,719
Speaker 1: Mike's there every day, grinding it. We appreciate it. Mikey,

789
00:38:32,760 --> 00:38:34,360
Speaker 1: thanks so much for joining us here. Talk to us

790
00:38:34,400 --> 00:38:38,040
Speaker 1: about the market for anti obesity drugs. Give us a

791
00:38:38,080 --> 00:38:41,520
Speaker 1: sense of how big this market is and the kind

792
00:38:41,520 --> 00:38:42,400
Speaker 1: of the growth profile.

793
00:38:43,400 --> 00:38:45,600
Speaker 15: Sure, I mean, just a reminder, when we look at

794
00:38:45,600 --> 00:38:48,279
Speaker 15: the market in terms of patient population, it could be

795
00:38:48,320 --> 00:38:51,319
Speaker 15: three times larger than diabetes. So when we look at

796
00:38:51,360 --> 00:38:53,919
Speaker 15: the target population in the US one hundred and forty

797
00:38:53,960 --> 00:38:57,240
Speaker 15: million sufferers in the US six hundred and fifty million globally,

798
00:38:57,600 --> 00:38:59,640
Speaker 15: and if left untreated, we think that could go to

799
00:39:00,040 --> 00:39:02,160
Speaker 15: you know, that could double by twenty thirty to about

800
00:39:02,160 --> 00:39:05,839
Speaker 15: one point two billion. And what's you know, when we

801
00:39:05,880 --> 00:39:08,160
Speaker 15: look at the number of patients that are medically treated,

802
00:39:08,320 --> 00:39:11,440
Speaker 15: the proportion is load, so there's kind of a significant runway,

803
00:39:12,000 --> 00:39:14,160
Speaker 15: you know, for these drug makers which are active in

804
00:39:14,200 --> 00:39:18,320
Speaker 15: the space. And then you know, we published an update

805
00:39:18,360 --> 00:39:21,799
Speaker 15: to our market model a couple of days ago, and

806
00:39:21,840 --> 00:39:24,440
Speaker 15: we think that you know, looking at marketed drugs and

807
00:39:24,480 --> 00:39:26,560
Speaker 15: drugs in phase three at the moment, we think that

808
00:39:26,560 --> 00:39:29,920
Speaker 15: that market could go to forty four billion dollars in

809
00:39:29,960 --> 00:39:34,400
Speaker 15: twenty thirty. That's an eighteen fold increase on the twenty

810
00:39:34,400 --> 00:39:37,280
Speaker 15: twenty two levels. And then we see two dominant players,

811
00:39:37,520 --> 00:39:41,000
Speaker 15: so Novo Nordisk Eli Lilie with the fifty four percent

812
00:39:41,040 --> 00:39:44,600
Speaker 15: share and a forty six percent share respectively in twenty thirty,

813
00:39:45,480 --> 00:39:48,400
Speaker 15: and then pipeline drugs well drugs in the early to

814
00:39:48,440 --> 00:39:52,200
Speaker 15: midsday pipeline could represent upside to that potential view you.

815
00:39:52,160 --> 00:39:54,240
Speaker 4: Talked about the big players in the space with Lily

816
00:39:54,360 --> 00:39:57,360
Speaker 4: Novo break it down on both sides of the spectrum.

817
00:39:57,400 --> 00:39:59,920
Speaker 4: As far as what it comes to whether there are

818
00:40:00,080 --> 00:40:02,840
Speaker 4: free here when it comes to those entire obesity drugs

819
00:40:03,000 --> 00:40:04,319
Speaker 4: that they have in the pipeline.

820
00:40:05,000 --> 00:40:07,520
Speaker 15: I mean, ultimately, what we've seen in terms of you know,

821
00:40:07,800 --> 00:40:11,720
Speaker 15: obese medications is you know, prior to the launch of WEGOV,

822
00:40:12,280 --> 00:40:16,560
Speaker 15: the effectiveness of these treatments was relatively I want to

823
00:40:16,600 --> 00:40:19,800
Speaker 15: say low, but sub ten percent weight loss. WE'REGOV across

824
00:40:19,800 --> 00:40:22,880
Speaker 15: its PASE three trials showed eighteen percent up to eighteen

825
00:40:22,920 --> 00:40:25,800
Speaker 15: percent weight loss, and then Lily's to zeppetide, which should

826
00:40:25,800 --> 00:40:28,759
Speaker 15: get approved by the end of the year, showed more

827
00:40:28,760 --> 00:40:31,120
Speaker 15: than twenty percent weight loss. So what these two drugs

828
00:40:31,160 --> 00:40:34,239
Speaker 15: have done the second generation of medicines, They've really raised

829
00:40:34,280 --> 00:40:38,400
Speaker 15: the facy bar in this in this treatment space. And

830
00:40:38,440 --> 00:40:41,400
Speaker 15: then we see that tussle in terms of innovation continuing

831
00:40:41,880 --> 00:40:45,720
Speaker 15: with Novos. Basically, it's got a drug called Kagari Semma

832
00:40:46,520 --> 00:40:49,439
Speaker 15: in its FACE three pipeline and it's targeting twenty five

833
00:40:49,440 --> 00:40:52,120
Speaker 15: percent weight loss with that particular product.

834
00:40:53,120 --> 00:40:55,000
Speaker 1: Now that I mean, those are I was going to

835
00:40:55,000 --> 00:40:57,360
Speaker 1: ask you kind of what is the efficacy of these drugs,

836
00:40:57,400 --> 00:41:00,000
Speaker 1: I mean, and what are these you know, farmer comings,

837
00:41:00,040 --> 00:41:02,360
Speaker 1: what are they kind of promising their patients?

838
00:41:03,640 --> 00:41:05,319
Speaker 15: I mean in terms of I mean most of the

839
00:41:05,320 --> 00:41:07,480
Speaker 15: patients when we look at the trials, they're going off

840
00:41:07,560 --> 00:41:10,520
Speaker 15: baseline weight of you know, ninety five kilograms to one

841
00:41:10,560 --> 00:41:12,120
Speaker 15: hundred kilograms and.

842
00:41:12,040 --> 00:41:14,400
Speaker 3: What we pounds for the rest of the world.

843
00:41:16,280 --> 00:41:18,839
Speaker 15: The pounds conversion I'm not sure about.

844
00:41:20,120 --> 00:41:21,640
Speaker 3: All right, go ahead, let's google.

845
00:41:24,000 --> 00:41:25,919
Speaker 15: So I mean, you know, as I said earlier, Lily

846
00:41:25,960 --> 00:41:29,040
Speaker 15: showed Lily's basically shown the best efficacy to date with

847
00:41:29,160 --> 00:41:32,120
Speaker 15: the zepptide, and that showed upwards of twenty percent weight loss,

848
00:41:32,120 --> 00:41:36,120
Speaker 15: so it's kind of a significant it's a significant fac

849
00:41:36,480 --> 00:41:40,880
Speaker 15: And when we look at bariatric surgery, which is obviously invasive, costly,

850
00:41:41,360 --> 00:41:44,880
Speaker 15: you know, that's associated with twenty five percent weight loss plus.

851
00:41:45,239 --> 00:41:47,840
Speaker 15: So you know, with this new innovation, you're really narrowing

852
00:41:47,880 --> 00:41:52,719
Speaker 15: that gap between you know, therapeutics and surgery. And what's

853
00:41:52,760 --> 00:41:54,799
Speaker 15: going to be key for this market is going to be,

854
00:41:55,480 --> 00:41:58,960
Speaker 15: you know, getting pairs on site. Traditionally, you know, probably

855
00:41:58,960 --> 00:42:01,920
Speaker 15: because of the ficacy or they of prior treatments, it's

856
00:42:01,960 --> 00:42:04,359
Speaker 15: been an out of pocket market. So we hope that's

857
00:42:04,400 --> 00:42:06,839
Speaker 15: going to change. And what's key to making that change

858
00:42:06,920 --> 00:42:10,239
Speaker 15: is going to be outcomes data. So the effects that

859
00:42:10,280 --> 00:42:12,680
Speaker 15: weight loss have on kind of cardiovasclet en points such

860
00:42:12,719 --> 00:42:15,680
Speaker 15: as cardiovasca death, heart attacks, et cetera. And we should

861
00:42:15,719 --> 00:42:19,320
Speaker 15: see the first outcomes data midyear for Novo and noticeable

862
00:42:19,320 --> 00:42:24,440
Speaker 15: go VI. We think that's gonna read out positive and

863
00:42:24,480 --> 00:42:25,640
Speaker 15: hopefully that should kind of.

864
00:42:25,560 --> 00:42:28,760
Speaker 13: Break down the access hurdles faced by some.

865
00:42:28,640 --> 00:42:31,760
Speaker 4: Patients when it comes to companies like Ela Lilly trying

866
00:42:31,800 --> 00:42:35,200
Speaker 4: to move toward this fast track approval. What kind of

867
00:42:35,280 --> 00:42:36,320
Speaker 4: dangerous could be there?

868
00:42:38,520 --> 00:42:40,600
Speaker 13: I think in terms of, you know, the fast track

869
00:42:40,680 --> 00:42:46,080
Speaker 13: approval In terms of clinically, I think, you.

870
00:42:46,040 --> 00:42:50,160
Speaker 15: Know, they've done they still needed two trials to file.

871
00:42:50,320 --> 00:42:52,560
Speaker 15: What they did was they you know, they've had a

872
00:42:52,640 --> 00:42:57,560
Speaker 15: rolling submission, so the first phase three data set came out,

873
00:42:58,000 --> 00:43:01,560
Speaker 15: they then had their discussions with the sk FDA. The

874
00:43:01,600 --> 00:43:04,440
Speaker 15: second Phase three data set came out, and that enables

875
00:43:04,440 --> 00:43:10,200
Speaker 15: them to kind of complete the filing in sorry, it

876
00:43:10,200 --> 00:43:13,560
Speaker 15: should enable them to complete filing by mid mid year,

877
00:43:13,760 --> 00:43:16,120
Speaker 15: mid year, which would enable them approval by the end

878
00:43:16,120 --> 00:43:18,239
Speaker 15: of the year. So in terms of kind of data sets,

879
00:43:18,239 --> 00:43:23,880
Speaker 15: they're still submitting the same amount of data to support

880
00:43:24,120 --> 00:43:27,000
Speaker 15: to support approval. It's just that they've kind of done

881
00:43:27,040 --> 00:43:32,200
Speaker 15: it in they've just done it in a quicker manner, right.

882
00:43:32,200 --> 00:43:32,879
Speaker 13: They haven't had to.

883
00:43:32,800 --> 00:43:37,719
Speaker 15: Wait for the second trial trial to report before being

884
00:43:37,760 --> 00:43:38,759
Speaker 15: able to file, So.

885
00:43:39,200 --> 00:43:43,000
Speaker 1: You know, obviously they've invested a lot of money in

886
00:43:43,080 --> 00:43:45,919
Speaker 1: but these companies in coming up with these therapeutics, what's

887
00:43:45,960 --> 00:43:48,960
Speaker 1: the I guess the risk of the generics coming in

888
00:43:49,000 --> 00:43:50,839
Speaker 1: and kind of impacting the profitability.

889
00:43:52,239 --> 00:43:56,239
Speaker 15: I mean, we don't see generics coming in until you know,

890
00:43:57,840 --> 00:44:00,960
Speaker 15: you know, twenty thirty post twenty third See, so I

891
00:44:01,000 --> 00:44:03,640
Speaker 15: believe you know that these drugs are.

892
00:44:03,280 --> 00:44:04,680
Speaker 13: Protected by patents.

893
00:44:05,160 --> 00:44:07,640
Speaker 15: We've got a litigation analysis that's done a deep dive

894
00:44:08,080 --> 00:44:11,280
Speaker 15: into all these passives called Tish Walker, and I believe

895
00:44:11,320 --> 00:44:14,120
Speaker 15: she's you know, she thinks that WEGOV could remain unpatent

896
00:44:14,200 --> 00:44:15,239
Speaker 15: until twenty thirty eight.

897
00:44:16,120 --> 00:44:19,440
Speaker 13: I believe the Lily.

898
00:44:19,360 --> 00:44:22,719
Speaker 15: To zeppatide pattern is you know, somewhere somewhere around that

899
00:44:23,280 --> 00:44:26,040
Speaker 15: time point as well. So there's significant you know, these

900
00:44:26,120 --> 00:44:31,000
Speaker 15: drugs should remain free of generic competition for a significant time.

901
00:44:32,080 --> 00:44:34,560
Speaker 4: As far as when it comes to the timetable, what's

902
00:44:34,680 --> 00:44:38,440
Speaker 4: next in the immediate future that you're keeping your eye.

903
00:44:38,280 --> 00:44:43,200
Speaker 15: On with this, So in terms of catalysts, use players approvals,

904
00:44:43,800 --> 00:44:46,600
Speaker 15: you know, as I mentioned earlier, Goovy outcomes data that's

905
00:44:46,680 --> 00:44:50,200
Speaker 15: due mid year. To Zeppetite approval should happen by year end,

906
00:44:50,640 --> 00:44:54,600
Speaker 15: and then we should see oral seg side which there's

907
00:44:54,640 --> 00:45:00,320
Speaker 15: an oral GLP one, so an oral product that should

908
00:45:00,320 --> 00:45:03,760
Speaker 15: get approved in twenty twenty four and that could really

909
00:45:03,800 --> 00:45:06,200
Speaker 15: open up the market. So we did a survey of

910
00:45:06,520 --> 00:45:09,880
Speaker 15: one hundred prescribers, and there's a clear need for oral therapies,

911
00:45:10,239 --> 00:45:13,680
Speaker 15: especially in the primary care setting where you know, doctors

912
00:45:13,680 --> 00:45:16,200
Speaker 15: are often short on time they may want to avoid

913
00:45:16,239 --> 00:45:20,520
Speaker 15: the complex titration strategies of some of the injectable.

914
00:45:21,560 --> 00:45:24,120
Speaker 13: Treatments on market at the moment, such as We'll.

915
00:45:24,040 --> 00:45:26,720
Speaker 1: Go be So, Mike, you're just looking at your research

916
00:45:26,800 --> 00:45:31,600
Speaker 1: report here, which is awesome. By the way, Novo Nordesk

917
00:45:31,640 --> 00:45:33,839
Speaker 1: and Eli Lilly vuying for leadership. You say, is this

918
00:45:33,960 --> 00:45:37,319
Speaker 1: kind of a dwopoly here or more farmer companies going

919
00:45:37,360 --> 00:45:38,600
Speaker 1: to come here? More providers are going to come in

920
00:45:38,640 --> 00:45:39,920
Speaker 1: here and try to compete for this space.

921
00:45:40,760 --> 00:45:42,520
Speaker 15: I mean in terms of how the market's going to

922
00:45:42,520 --> 00:45:44,120
Speaker 15: play out, I mean we think it's going to be

923
00:45:44,120 --> 00:45:47,560
Speaker 15: similar to the JLP one class in diabetes. So Novo

924
00:45:47,680 --> 00:45:50,759
Speaker 15: Lily dominating, They're going to drive the innovation in the

925
00:45:50,760 --> 00:45:54,000
Speaker 15: space and continue on that tussle. But you know, given

926
00:45:54,040 --> 00:45:56,560
Speaker 15: the size of the indication, there's room for other entrants

927
00:45:57,320 --> 00:46:01,600
Speaker 15: these might include pfizor Zealand and and I'll say also

928
00:46:01,760 --> 00:46:05,440
Speaker 15: and all of them have got drugs in mid ear

929
00:46:05,520 --> 00:46:07,160
Speaker 15: least amid stage sevelopment.

930
00:46:07,560 --> 00:46:08,080
Speaker 6: It's interesting.

931
00:46:08,120 --> 00:46:11,000
Speaker 4: I'm looking at how Bank of America recently actually boosted

932
00:46:11,000 --> 00:46:13,720
Speaker 4: their price target on Eli li Lad of five hundred

933
00:46:13,719 --> 00:46:15,839
Speaker 4: dollars is actually trading around four hundred and forty four

934
00:46:15,880 --> 00:46:18,200
Speaker 4: dollars right now. But this is based on the obesity

935
00:46:18,320 --> 00:46:19,200
Speaker 4: drug demand.

936
00:46:19,880 --> 00:46:20,120
Speaker 8: Yeah.

937
00:46:20,160 --> 00:46:23,480
Speaker 3: And I mean, and Mikey, this is I mean, the US.

938
00:46:23,320 --> 00:46:26,880
Speaker 1: Is really from you know, unfortunately leading the way in

939
00:46:26,960 --> 00:46:28,560
Speaker 1: terms of cases, aren't aren't we?

940
00:46:30,200 --> 00:46:33,040
Speaker 15: Yeah, I think the presidence in the US is high.

941
00:46:33,320 --> 00:46:36,480
Speaker 15: China is obviously a big market as well, but when

942
00:46:36,480 --> 00:46:38,839
Speaker 15: we look at you know, numbers in general, I think

943
00:46:39,040 --> 00:46:41,440
Speaker 15: the presidence of the disease is on the on the

944
00:46:41,520 --> 00:46:42,320
Speaker 15: rise everywhere.

945
00:46:42,520 --> 00:46:45,080
Speaker 3: Yep, all right, all right, Mikey Shaw, folks.

946
00:46:45,520 --> 00:46:47,560
Speaker 1: He I'm gonna say, Mikey, you were like one of

947
00:46:47,640 --> 00:46:50,799
Speaker 1: our first analysts we ever hired to be I like

948
00:46:50,840 --> 00:46:54,040
Speaker 1: fourteen or fifteen years ago, and I see him on zoom, Folks.

949
00:46:54,080 --> 00:46:55,560
Speaker 3: He's actually got some gray hair.

950
00:46:56,000 --> 00:46:58,560
Speaker 1: I mean, he was a kid when we hired him,

951
00:46:59,120 --> 00:47:02,279
Speaker 1: and now he works along with san Fazelli, and they

952
00:47:02,360 --> 00:47:05,120
Speaker 1: just do outstanding work covering the farmer space in the

953
00:47:05,120 --> 00:47:06,040
Speaker 1: biotech space.

954
00:47:06,280 --> 00:47:08,399
Speaker 3: Mikey is well known in the city of London.

955
00:47:08,120 --> 00:47:11,160
Speaker 1: For with institutional investors and with the companies he owned,

956
00:47:11,200 --> 00:47:12,960
Speaker 1: so we appreciate getting a few minutes of his time.

957
00:47:12,960 --> 00:47:16,200
Speaker 1: Mike Schai is his senior Industry and also at Bloomberg Intelligence,

958
00:47:16,360 --> 00:47:17,480
Speaker 1: based in our London office.

959
00:47:17,480 --> 00:47:20,440
Speaker 3: So good stuff there. It's a great report, very detailed.

960
00:47:20,560 --> 00:47:22,000
Speaker 3: Check it out on the Bloomberg terminal.

961
00:47:22,640 --> 00:47:26,400
Speaker 1: Bigo gets you to all the Bloomberg Intelligence research and

962
00:47:26,440 --> 00:47:28,719
Speaker 1: some top notch stuff there coming from a healthcare team.

963
00:47:29,040 --> 00:47:32,160
Speaker 9: You're listening to the tape Cat's are live program Bloomberg

964
00:47:32,200 --> 00:47:35,799
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

965
00:47:35,880 --> 00:47:37,839
Speaker 9: tune in app, Bloomberg dot Com, and.

966
00:47:37,800 --> 00:47:39,080
Speaker 8: The Bloomberg Business App.

967
00:47:39,160 --> 00:47:41,960
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968
00:47:41,960 --> 00:47:47,000
Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

969
00:47:48,680 --> 00:47:50,680
Speaker 1: Just met and Paul Sweene here in the Bloomberg Interactive

970
00:47:50,680 --> 00:47:51,680
Speaker 1: Brokers studio.

971
00:47:51,920 --> 00:47:53,640
Speaker 6: Really excited for our next guest.

972
00:47:53,680 --> 00:47:55,720
Speaker 3: I'm always excited to chat with Gina Martin Adams.

973
00:47:55,719 --> 00:48:00,000
Speaker 1: He's a chief equity strategist for Bloomberg Intelligence. Gina, thanks much,

974
00:48:00,000 --> 00:48:01,759
Speaker 1: thanks for joining us here. I'm just looking at my

975
00:48:01,920 --> 00:48:05,680
Speaker 1: Russell What is it two thousand chart? Man, it's how

976
00:48:05,680 --> 00:48:08,319
Speaker 1: to move over the last couple of days and this

977
00:48:08,480 --> 00:48:09,480
Speaker 1: month and this month.

978
00:48:09,520 --> 00:48:12,359
Speaker 3: Yeah, exactly what what's going on? Well?

979
00:48:12,400 --> 00:48:16,320
Speaker 16: I think part of it is the FED. Part of

980
00:48:16,360 --> 00:48:18,640
Speaker 16: it is finally regting to the point where the FED

981
00:48:18,760 --> 00:48:21,160
Speaker 16: is looking likely to pause. Maybe it's just a skip,

982
00:48:21,239 --> 00:48:24,080
Speaker 16: but it is pretty close to a pause, and FED

983
00:48:24,120 --> 00:48:27,840
Speaker 16: tightening packages of the past have certainly dampened the outlook

984
00:48:27,920 --> 00:48:30,920
Speaker 16: for small cap stocks. Part of it is also the

985
00:48:30,960 --> 00:48:34,640
Speaker 16: earning cycle. You know, we do appear to be in

986
00:48:34,680 --> 00:48:36,799
Speaker 16: the worst of the worst of the earning cycle right now.

987
00:48:36,840 --> 00:48:40,080
Speaker 16: With an improvement going forward into twenty twenty four, small

988
00:48:40,080 --> 00:48:43,839
Speaker 16: caps revenues are finally expected to recover into twenty twenty four.

989
00:48:43,960 --> 00:48:47,319
Speaker 16: So to the degree that investors are getting some visibility

990
00:48:47,360 --> 00:48:51,719
Speaker 16: into a recovery process emerging for small caps, that may

991
00:48:51,719 --> 00:48:53,719
Speaker 16: be driving some of it, and certainly we see that

992
00:48:53,800 --> 00:48:56,240
Speaker 16: with some of the more suppressed areas of small caps.

993
00:48:56,840 --> 00:48:59,680
Speaker 16: Part of it is in the banking crisis, which really

994
00:48:59,719 --> 00:49:03,720
Speaker 16: weighs on small cap stocks, does appear to be increasingly

995
00:49:03,760 --> 00:49:06,319
Speaker 16: in the past. So certainly there's a lot of hesitancy

996
00:49:06,400 --> 00:49:09,640
Speaker 16: with respect to that call. It's not as profound a

997
00:49:09,719 --> 00:49:13,160
Speaker 16: drag on sentiment for small caps as it was in March.

998
00:49:13,200 --> 00:49:15,480
Speaker 16: And then generally, I think it's just large caps have

999
00:49:15,520 --> 00:49:18,480
Speaker 16: performed so well they're dragging the overall market a bit higher.

1000
00:49:18,520 --> 00:49:22,040
Speaker 16: Sort of investors are starting to capitulate to the idea

1001
00:49:22,120 --> 00:49:26,640
Speaker 16: that maybe the worst for equity performance is in the past.

1002
00:49:26,920 --> 00:49:30,319
Speaker 4: And as you know, Gina, investors watch small caps very

1003
00:49:30,320 --> 00:49:34,080
Speaker 4: closely because typically they'll bottom before larger caps, do you.

1004
00:49:34,120 --> 00:49:36,520
Speaker 4: I know, various points last year they were holding up

1005
00:49:36,560 --> 00:49:38,920
Speaker 4: better than their larger counterparts. But to your point, we

1006
00:49:39,000 --> 00:49:41,600
Speaker 4: saw some of that, especially in the smaller cap spiece

1007
00:49:41,640 --> 00:49:44,480
Speaker 4: pressured which was going on with the banking stresses. What

1008
00:49:44,520 --> 00:49:47,680
Speaker 4: do you think small caps are telling us moving forward

1009
00:49:47,719 --> 00:49:49,800
Speaker 4: as far as the direction of the stock market.

1010
00:49:50,560 --> 00:49:53,839
Speaker 16: Yeah, and they're confirming large cap gains. Finally, I mean,

1011
00:49:53,920 --> 00:49:56,279
Speaker 16: it's very intriguing when you look at the small caps charts.

1012
00:49:56,320 --> 00:49:58,319
Speaker 16: Small caps actually bottomed all the way back in June

1013
00:49:58,320 --> 00:50:01,200
Speaker 16: of last year. They never made low lows, but they've

1014
00:50:01,719 --> 00:50:05,560
Speaker 16: sort of failed to spring higher even though they did

1015
00:50:05,760 --> 00:50:08,920
Speaker 16: create a bottom and sort of traded sideways at large

1016
00:50:09,000 --> 00:50:12,279
Speaker 16: they really weren't springing higher until more recently when they

1017
00:50:12,400 --> 00:50:14,680
Speaker 16: finally appear to be breaking out. I mean they sprung

1018
00:50:14,719 --> 00:50:17,560
Speaker 16: a little bit from October to January, then got overbought.

1019
00:50:18,920 --> 00:50:23,000
Speaker 16: You know, some big sentiment swing happened in small caps.

1020
00:50:23,520 --> 00:50:25,960
Speaker 16: Now we're starting to see a little bit of recovery again.

1021
00:50:26,120 --> 00:50:29,320
Speaker 16: I think those January peaks are pretty consequential to watch

1022
00:50:29,360 --> 00:50:32,399
Speaker 16: for the small cap index. But you know, I look

1023
00:50:32,400 --> 00:50:35,120
Speaker 16: at small caps as a confirming signal. Usually when all

1024
00:50:35,160 --> 00:50:38,120
Speaker 16: stocks are rising, small caps are confirming large caps, you've

1025
00:50:38,160 --> 00:50:42,000
Speaker 16: got a much healthier market than when, you know, just

1026
00:50:42,120 --> 00:50:45,160
Speaker 16: large caps are a rising alone. So what we're seeing

1027
00:50:45,280 --> 00:50:48,640
Speaker 16: is a confirmation of the breakout in large caps that

1028
00:50:48,680 --> 00:50:51,239
Speaker 16: occurred in the latter part of May now occurring in

1029
00:50:51,280 --> 00:50:52,279
Speaker 16: small caps as well.

1030
00:50:53,239 --> 00:50:57,120
Speaker 1: You know, it's Fed day When the likes the surveillance

1031
00:50:57,160 --> 00:51:01,240
Speaker 1: stars like Tom Yes, you know, and and Lisa Brommins

1032
00:51:01,320 --> 00:51:03,520
Speaker 1: sticking around in the afternoon. You know it's Fed day

1033
00:51:03,560 --> 00:51:04,960
Speaker 1: because they have got to come up on one thirty

1034
00:51:05,000 --> 00:51:05,560
Speaker 1: with a big show.

1035
00:51:05,719 --> 00:51:08,520
Speaker 3: And guess who darkens the door here? We're excited about it.

1036
00:51:08,480 --> 00:51:10,120
Speaker 17: I mean, Gina Martin Adams knows.

1037
00:51:09,920 --> 00:51:11,560
Speaker 3: It'll move the mark I know, and it's.

1038
00:51:11,400 --> 00:51:14,480
Speaker 17: All there is to it, and it's going to be interesting.

1039
00:51:14,520 --> 00:51:17,000
Speaker 17: We've got a great set of guests today. Randall Krasner

1040
00:51:17,040 --> 00:51:19,320
Speaker 17: will lead us off to the former governor, without question,

1041
00:51:19,440 --> 00:51:23,680
Speaker 17: the nation's lead financial analyst. But but there'll be more

1042
00:51:24,000 --> 00:51:26,839
Speaker 17: And is you and I talked about earlier, Paul, there's

1043
00:51:26,880 --> 00:51:30,080
Speaker 17: a huge mystery here, and particularly first, I mean Gina.

1044
00:51:30,120 --> 00:51:32,799
Speaker 17: Martin Adams told me Apple's trading at a pe of

1045
00:51:32,920 --> 00:51:35,680
Speaker 17: thirty and it's like a pink sheet stock.

1046
00:51:37,160 --> 00:51:40,120
Speaker 1: So I mean, Gina, I mean, you know Tom's here,

1047
00:51:40,200 --> 00:51:42,720
Speaker 1: he's working hard, he's working late, same with Lisa Bromins.

1048
00:51:42,719 --> 00:51:45,480
Speaker 3: We don't no idea where John Pharaoh is. But what

1049
00:51:45,560 --> 00:51:48,439
Speaker 3: are you looking for, Gina? On on this FED day?

1050
00:51:49,920 --> 00:51:52,480
Speaker 16: I think everyone's kind of looking for the same. Is

1051
00:51:52,520 --> 00:51:55,000
Speaker 16: it a pause or is going to confirm a pause?

1052
00:51:55,080 --> 00:51:56,840
Speaker 16: Or are they going to talk about a skip? I

1053
00:51:56,840 --> 00:51:58,920
Speaker 16: think is the first thing that everyone's looking for. If

1054
00:51:58,960 --> 00:52:01,320
Speaker 16: they confirm a pause, do they then start to address

1055
00:52:01,320 --> 00:52:05,200
Speaker 16: the balance sheet? Is the second thing to look for.

1056
00:52:05,400 --> 00:52:07,240
Speaker 16: I do think we want to watch for their language

1057
00:52:07,280 --> 00:52:10,520
Speaker 16: around inflation and their comfort level with respect to the

1058
00:52:10,520 --> 00:52:14,759
Speaker 16: inflation trajectory. You know, the difference between a pause and

1059
00:52:14,800 --> 00:52:18,640
Speaker 16: the skip. We could be underestimating how meaningful that is.

1060
00:52:18,640 --> 00:52:20,920
Speaker 16: The skip this late in a rate high cycle. It

1061
00:52:20,960 --> 00:52:24,040
Speaker 16: is very rare. There have only been two times in

1062
00:52:24,080 --> 00:52:27,960
Speaker 16: which the FED since nineteen seventy has embarked upon a

1063
00:52:28,040 --> 00:52:30,560
Speaker 16: rate hike cycle, then skipped at the very end of

1064
00:52:30,600 --> 00:52:33,279
Speaker 16: it for just one month, then hiked again, and then

1065
00:52:33,440 --> 00:52:37,560
Speaker 16: was done. And the market performance following those two instances

1066
00:52:37,600 --> 00:52:40,480
Speaker 16: has been very different. So in nineteen eighty nine the

1067
00:52:40,480 --> 00:52:45,480
Speaker 16: market greeted that sort of FED hike trajectory pretty kindly.

1068
00:52:46,320 --> 00:52:48,880
Speaker 16: In two thousand they tried it again, and the stock

1069
00:52:48,920 --> 00:52:53,239
Speaker 16: market obviously did very poorly following that. But typically pauses

1070
00:52:53,320 --> 00:52:55,719
Speaker 16: are very good for stocks. I mean, the average gain

1071
00:52:55,800 --> 00:52:58,880
Speaker 16: following a pause as long as that pause lasts at

1072
00:52:58,960 --> 00:53:01,279
Speaker 16: least three months after or a rate hike cycle is

1073
00:53:01,320 --> 00:53:03,719
Speaker 16: about eight percent over three months. So if we get

1074
00:53:03,719 --> 00:53:06,239
Speaker 16: the confirmation of a pause, we could have a continuation

1075
00:53:07,000 --> 00:53:09,520
Speaker 16: of the momentum that has emerged in stocks. But I'm

1076
00:53:09,560 --> 00:53:11,920
Speaker 16: a little worried about this idea of a skip.

1077
00:53:12,320 --> 00:53:13,000
Speaker 10: A skip is.

1078
00:53:13,120 --> 00:53:17,400
Speaker 16: Unusual, as I said, and also creates pretty variable results

1079
00:53:17,440 --> 00:53:20,759
Speaker 16: for the equity market. So That's what I'm watching most carefully, Gina.

1080
00:53:20,560 --> 00:53:23,480
Speaker 4: This argument about breadth in the market. Obviously we had

1081
00:53:23,600 --> 00:53:25,959
Speaker 4: just talked about the strength and small caps. We're seeing

1082
00:53:26,000 --> 00:53:27,680
Speaker 4: it broaden out this month. When you're looking in the

1083
00:53:27,719 --> 00:53:30,399
Speaker 4: S and P five hundred with materials, industrials, other more

1084
00:53:30,440 --> 00:53:32,480
Speaker 4: sickle corners of the market. What do you need to

1085
00:53:32,480 --> 00:53:34,920
Speaker 4: see to give you more conviction that this breath is

1086
00:53:35,000 --> 00:53:38,120
Speaker 4: growing and not narrowing to these obviously more coherent when

1087
00:53:38,120 --> 00:53:41,080
Speaker 4: you're talking about these kind of big growth and technology.

1088
00:53:40,560 --> 00:53:44,000
Speaker 16: Stocks, yeah, we have seen them in the market broaden.

1089
00:53:44,160 --> 00:53:46,719
Speaker 16: I mean, frankly, I think that much of the commentary

1090
00:53:46,800 --> 00:53:49,640
Speaker 16: around the narrow breath of the market is just way

1091
00:53:49,840 --> 00:53:52,960
Speaker 16: over emphasizing narrow breath as a factor. What we find

1092
00:53:53,080 --> 00:53:57,480
Speaker 16: is narrow breaths more than often actually is a signal

1093
00:53:57,520 --> 00:53:59,560
Speaker 16: that will broaden to the rest of the market. It's

1094
00:53:59,560 --> 00:54:03,640
Speaker 16: not a word some sign that stocks are overdone or

1095
00:54:03,719 --> 00:54:06,840
Speaker 16: we're going to get some sort of crash following narrow breath.

1096
00:54:06,840 --> 00:54:11,040
Speaker 16: It's not a particular profound signal that said, I do

1097
00:54:11,320 --> 00:54:14,319
Speaker 16: like a market that has broad participation. You now got

1098
00:54:14,320 --> 00:54:16,440
Speaker 16: about sixty percent of S and P five hundred stocks

1099
00:54:16,440 --> 00:54:18,880
Speaker 16: trading above their two internay moving average. We love to

1100
00:54:18,920 --> 00:54:21,479
Speaker 16: see that above fifty percent to confirm that the market

1101
00:54:21,520 --> 00:54:24,399
Speaker 16: has entered a new bull phase. I think the more

1102
00:54:24,480 --> 00:54:27,839
Speaker 16: participation you have from sectors and the leadership of cyclicals

1103
00:54:27,880 --> 00:54:32,360
Speaker 16: relative to defensives is very consistently a strong signal for

1104
00:54:32,400 --> 00:54:36,280
Speaker 16: the durability of a rally. The fact that consumer discretionary stocks,

1105
00:54:36,320 --> 00:54:39,319
Speaker 16: for instance, are outperforming staples and have been all year.

1106
00:54:39,520 --> 00:54:42,120
Speaker 16: The fact that utilities are underperforming the rest of the

1107
00:54:42,120 --> 00:54:45,560
Speaker 16: market and have been all year. Those are consistent signals

1108
00:54:45,600 --> 00:54:50,160
Speaker 16: of longer term performance or a longer term, more durableble

1109
00:54:50,320 --> 00:54:53,600
Speaker 16: trend emerging in the equity market. And so the broader

1110
00:54:53,640 --> 00:54:56,920
Speaker 16: the market games are, the more comfortable I think the

1111
00:54:56,920 --> 00:55:01,000
Speaker 16: investor base gets with sort of dipping in the water.

1112
00:55:01,200 --> 00:55:02,960
Speaker 16: I think we do need to get passed a lot

1113
00:55:02,960 --> 00:55:05,520
Speaker 16: of this recession chatter before we can get too excited

1114
00:55:05,560 --> 00:55:08,280
Speaker 16: about it. But nonetheless it's a positive sign.

1115
00:55:09,520 --> 00:55:12,799
Speaker 3: Yes, that sound you hear, Gina, is Tom Keane dipping

1116
00:55:12,840 --> 00:55:13,239
Speaker 3: his toe in.

1117
00:55:15,280 --> 00:55:17,080
Speaker 17: I got the paper ticket out. I think I'm going

1118
00:55:17,120 --> 00:55:18,680
Speaker 17: to do an odd lot. I don't think I could

1119
00:55:19,040 --> 00:55:21,600
Speaker 17: stretch you up a hundred shares, you know, I'm thinking

1120
00:55:22,200 --> 00:55:24,600
Speaker 17: something safe, like you know Bank of New York or

1121
00:55:24,600 --> 00:55:27,560
Speaker 17: remember the safe dominion Mityell. I'll go on, give me

1122
00:55:27,600 --> 00:55:29,920
Speaker 17: the d e as at first purchase.

1123
00:55:30,480 --> 00:55:33,800
Speaker 3: So Gina tell us about earning's risk in this market.

1124
00:55:33,840 --> 00:55:36,800
Speaker 1: We talked to some guests earlier who you know, called

1125
00:55:36,800 --> 00:55:38,560
Speaker 1: that out is still a potential risk out there.

1126
00:55:39,280 --> 00:55:41,879
Speaker 16: Look, I think that we've been talking about earnings risk

1127
00:55:42,000 --> 00:55:45,400
Speaker 16: for so long that eve analysts haven't embedded an expectation

1128
00:55:45,640 --> 00:55:48,080
Speaker 16: for recession into their estimates, and we should really be

1129
00:55:48,080 --> 00:55:50,680
Speaker 16: ashamed of ourselves. I mean, I think that's really been

1130
00:55:50,719 --> 00:55:54,080
Speaker 16: the story all year. Is we got to a point

1131
00:55:54,120 --> 00:55:57,400
Speaker 16: in twenty twenty two where we were pricing in the

1132
00:55:57,440 --> 00:56:01,640
Speaker 16: equity market just really terrible conditions emerging on the earning stream.

1133
00:56:01,880 --> 00:56:04,960
Speaker 16: And what companies have proven so far this year is

1134
00:56:05,719 --> 00:56:08,879
Speaker 16: those things are not as bad as the analysts had anticipated.

1135
00:56:09,000 --> 00:56:12,319
Speaker 16: Analysts are still marking down their expectations, believe it or not,

1136
00:56:12,360 --> 00:56:14,080
Speaker 16: but they're not marking them down as fast as they

1137
00:56:14,080 --> 00:56:16,560
Speaker 16: were six months ago, eight months ago, nine months ago,

1138
00:56:16,600 --> 00:56:19,759
Speaker 16: and so the result is net positive for equities. I

1139
00:56:19,800 --> 00:56:22,520
Speaker 16: think that we're just in this space right now where

1140
00:56:22,600 --> 00:56:26,280
Speaker 16: our expectations were so grim by the end of twenty

1141
00:56:26,320 --> 00:56:29,120
Speaker 16: twenty two that it was almost impossible for companies not

1142
00:56:29,200 --> 00:56:31,719
Speaker 16: to beat those expectations, and I think that that's going

1143
00:56:31,760 --> 00:56:33,800
Speaker 16: to be the case for at least the next quarter

1144
00:56:33,960 --> 00:56:39,440
Speaker 16: or two, where expectations are already very grim. We're already

1145
00:56:39,440 --> 00:56:43,759
Speaker 16: seeing companies start to show some margin stability. So last week,

1146
00:56:43,880 --> 00:56:50,000
Speaker 16: last year's really weak players that had too many employees

1147
00:56:50,280 --> 00:56:53,520
Speaker 16: and we're overlaiden with cost pressures. They're starting to show

1148
00:56:53,600 --> 00:56:56,719
Speaker 16: some improvement. And on the other hand, you've got some

1149
00:56:56,960 --> 00:56:59,600
Speaker 16: deteriorating companies in the S and P five hundred, but

1150
00:56:59,760 --> 00:57:02,360
Speaker 16: are earnings and P five hundred, but they're being overwhelmed

1151
00:57:02,400 --> 00:57:03,720
Speaker 16: by the improvements at large.

1152
00:57:03,960 --> 00:57:06,200
Speaker 1: All right, Gina, thanks as always, aways appreciate getting a

1153
00:57:06,200 --> 00:57:08,040
Speaker 1: fe minutes of your time. Jean Martin Adams, chief Acorty

1154
00:57:08,080 --> 00:57:11,359
Speaker 1: strategist at Bloomberg Intelligence, and Tom, you guys, you and

1155
00:57:11,400 --> 00:57:13,680
Speaker 1: Lisa are going on at one thirty Bloomberg Radio and

1156
00:57:13,760 --> 00:57:15,799
Speaker 1: TV going to walk us through kind of what we're

1157
00:57:15,840 --> 00:57:16,520
Speaker 1: gonna get from this.

1158
00:57:16,960 --> 00:57:19,040
Speaker 17: It's going to be interesting to see the statement, obviously

1159
00:57:19,080 --> 00:57:21,120
Speaker 17: in Michael McKee's interpretation of it, but I think the

1160
00:57:21,120 --> 00:57:24,960
Speaker 17: press conference will be really extraordinary. I had the surveillance

1161
00:57:25,040 --> 00:57:25,760
Speaker 17: NAP I gotta go.

1162
00:57:25,720 --> 00:57:26,280
Speaker 8: Back to makeup.

1163
00:57:26,360 --> 00:57:28,840
Speaker 3: Yeah, exam, we need to work. A little work needs me.

1164
00:57:29,160 --> 00:57:30,320
Speaker 9: I look a little peak it.

1165
00:57:31,720 --> 00:57:34,320
Speaker 3: All right, Tom Ky, thanks so much for stopping by.

1166
00:57:34,440 --> 00:57:37,480
Speaker 9: You're listening to the tape cans are live program Bloomberg

1167
00:57:37,600 --> 00:57:41,200
Speaker 9: Markets weekdays at ten am Eastern on Bloomberg Radio, the

1168
00:57:41,240 --> 00:57:43,280
Speaker 9: tune in app, Bloomberg dot Com.

1169
00:57:43,040 --> 00:57:44,479
Speaker 8: And the Bloomberg Business App.

1170
00:57:44,520 --> 00:57:47,320
Speaker 9: You can also listen live on Amazon Alexa from our

1171
00:57:47,360 --> 00:57:52,360
Speaker 9: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

1172
00:57:53,520 --> 00:57:55,040
Speaker 3: Let's check in with Jeff Phipps.

1173
00:57:55,040 --> 00:57:58,800
Speaker 1: He's a portfolio manager in trading strategists at Picton Mahoney

1174
00:57:58,920 --> 00:58:03,480
Speaker 1: Asset Management. Jeff, again, it's a frust down here in

1175
00:58:03,520 --> 00:58:06,040
Speaker 1: the United States. It's Flag Day, but for folks that

1176
00:58:06,520 --> 00:58:09,080
Speaker 1: also follow the markets, it's it's FED Day as well.

1177
00:58:09,080 --> 00:58:12,120
Speaker 3: What do you expect from the US Federal Reserve today?

1178
00:58:12,120 --> 00:58:14,720
Speaker 1: And how's that kind of influencing kind of how you

1179
00:58:14,720 --> 00:58:16,840
Speaker 1: guys are allocating capital these days.

1180
00:58:18,520 --> 00:58:21,720
Speaker 18: Thanks for the question and happy to be on. So

1181
00:58:21,800 --> 00:58:24,360
Speaker 18: I mean, short term, I think, yes, there are solid

1182
00:58:24,400 --> 00:58:27,480
Speaker 18: reasons here for a FED pause today. That is a

1183
00:58:27,480 --> 00:58:31,600
Speaker 18: fairly consensus view. I do think that you know, there

1184
00:58:31,720 --> 00:58:35,600
Speaker 18: was there was enough in yesterday's CPI to think that

1185
00:58:35,720 --> 00:58:40,520
Speaker 18: the particularly on core services, if we do think about

1186
00:58:41,200 --> 00:58:45,160
Speaker 18: rents and as having a leg I do think that

1187
00:58:45,200 --> 00:58:48,160
Speaker 18: it's you know, likely that the median dots are most

1188
00:58:48,200 --> 00:58:50,720
Speaker 18: likely to move up, say twenty five basis points for

1189
00:58:50,800 --> 00:58:52,680
Speaker 18: the end of the year from the last update back

1190
00:58:52,720 --> 00:58:55,760
Speaker 18: in March, probably not fifty at this point, that's a possibility.

1191
00:58:57,240 --> 00:59:00,000
Speaker 18: I think though that the big picture, though, is probably

1192
00:59:00,000 --> 00:59:03,560
Speaker 18: probably more important here, particularly as we move into the

1193
00:59:03,600 --> 00:59:06,800
Speaker 18: second half. So this FED meeting is probably going to

1194
00:59:06,800 --> 00:59:09,800
Speaker 18: be a pause, which is consensus, but I think the

1195
00:59:09,840 --> 00:59:13,680
Speaker 18: bigger picture is really becoming more front and center.

1196
00:59:13,680 --> 00:59:15,400
Speaker 4: As we head into the second half of the year.

1197
00:59:15,440 --> 00:59:17,080
Speaker 4: How are you positioning.

1198
00:59:18,200 --> 00:59:21,160
Speaker 18: Well, I think when we think about the second half,

1199
00:59:21,520 --> 00:59:24,280
Speaker 18: and you know, I think we have to think about

1200
00:59:24,600 --> 00:59:28,560
Speaker 18: how we got here as well. We have a lot

1201
00:59:28,600 --> 00:59:32,200
Speaker 18: of moving parts right now for the FED to try

1202
00:59:32,240 --> 00:59:37,600
Speaker 18: to manage. We have this economic resilience across DM economies

1203
00:59:37,880 --> 00:59:38,360
Speaker 18: coming from a.

1204
00:59:38,400 --> 00:59:39,200
Speaker 8: Number of sources.

1205
00:59:39,520 --> 00:59:43,320
Speaker 18: We have a pretty substantial fiscal expansion that's been going

1206
00:59:43,360 --> 00:59:46,040
Speaker 18: on this year and we'll continue next year in the

1207
00:59:46,120 --> 00:59:50,000
Speaker 18: year after, and we also do have we are entering

1208
00:59:50,040 --> 00:59:52,720
Speaker 18: we are about fifteen months from the beginning of the

1209
00:59:52,760 --> 00:59:56,040
Speaker 18: hike cycle, So we're going to be in a window

1210
00:59:56,600 --> 01:00:00,000
Speaker 18: in the second half where historically more of those impacts

1211
01:00:00,040 --> 01:00:02,440
Speaker 18: start to play out. And second, and we also have

1212
01:00:02,560 --> 01:00:07,080
Speaker 18: a large treasury issue in schedule to refinance the the

1213
01:00:07,160 --> 01:00:09,760
Speaker 18: t g A, and then that is a few analogs

1214
01:00:09,760 --> 01:00:13,120
Speaker 18: for what's about to happen. So you know, I I

1215
01:00:13,440 --> 01:00:16,720
Speaker 18: do think that as we move into that second half

1216
01:00:18,080 --> 01:00:20,680
Speaker 18: where where the FED is probably going to be in

1217
01:00:20,720 --> 01:00:22,440
Speaker 18: a in a bit of a weight and see mode.

1218
01:00:22,440 --> 01:00:25,320
Speaker 18: And and we can make the case that if you

1219
01:00:25,480 --> 01:00:27,200
Speaker 18: if you you know that one of the measures of

1220
01:00:27,240 --> 01:00:30,880
Speaker 18: FED likes to look at is is a real rate

1221
01:00:31,000 --> 01:00:34,320
Speaker 18: version of of the FED rate. So if you look

1222
01:00:34,320 --> 01:00:37,200
Speaker 18: at FED fund rate and you and you back out

1223
01:00:37,240 --> 01:00:41,440
Speaker 18: some FORWD inflation expectation, it's approaching three percent, it's two

1224
01:00:41,480 --> 01:00:44,000
Speaker 18: point eight two point nine percent, and that is a

1225
01:00:44,000 --> 01:00:48,960
Speaker 18: pretty high number historically. So I think what the FED

1226
01:00:49,000 --> 01:00:51,280
Speaker 18: needs to do today and they probably will try, is

1227
01:00:51,320 --> 01:00:56,600
Speaker 18: to maintain a a forward set of expectations towards tightness

1228
01:00:57,520 --> 01:01:02,120
Speaker 18: that will in theory, in their maybe be able to

1229
01:01:02,120 --> 01:01:07,440
Speaker 18: to mitigate how how forward expectations for inflation react.

1230
01:01:08,280 --> 01:01:11,400
Speaker 1: So you know, the FED has stated Jeff that obviously

1231
01:01:11,400 --> 01:01:13,080
Speaker 1: that they are their number one goal here is to

1232
01:01:13,320 --> 01:01:16,840
Speaker 1: fight inflation. It looks like they're kind of doing it.

1233
01:01:16,880 --> 01:01:19,040
Speaker 1: Looking at the CPI print and the PPI print seems

1234
01:01:19,080 --> 01:01:19,880
Speaker 1: like it's kind of working.

1235
01:01:20,040 --> 01:01:20,640
Speaker 3: What do you think.

1236
01:01:22,360 --> 01:01:25,520
Speaker 8: I don't disagree. I think there's more work to do

1237
01:01:25,560 --> 01:01:25,919
Speaker 8: on CORE.

1238
01:01:26,000 --> 01:01:28,720
Speaker 18: I mean, if CORE is annuallyzing uh, you know four

1239
01:01:28,760 --> 01:01:30,800
Speaker 18: and a half five percent, that that number is still

1240
01:01:30,840 --> 01:01:35,080
Speaker 18: too high. I think there is still the understanding that

1241
01:01:35,080 --> 01:01:40,000
Speaker 18: that the variable the variable legs are are indeed variable,

1242
01:01:40,360 --> 01:01:43,560
Speaker 18: and that will take some time to play out. The

1243
01:01:43,880 --> 01:01:47,440
Speaker 18: one thing I'd say though, is that the uh, the

1244
01:01:47,520 --> 01:01:50,320
Speaker 18: ability for them to have a high level of confidence

1245
01:01:50,800 --> 01:01:55,560
Speaker 18: in terms of forward expectations for inflation not becoming embedded,

1246
01:01:55,680 --> 01:02:00,600
Speaker 18: because historically that can create a more entrenched expectation for inflation.

1247
01:02:00,640 --> 01:02:06,480
Speaker 18: It can make policy makers jobs much more difficult. So overall,

1248
01:02:06,880 --> 01:02:10,720
Speaker 18: I think that they they are getting some work done

1249
01:02:10,760 --> 01:02:12,640
Speaker 18: on headline and energy has a lot to do with

1250
01:02:12,680 --> 01:02:16,240
Speaker 18: that and that and that has been positive from the

1251
01:02:16,240 --> 01:02:20,320
Speaker 18: perspective of their policy interacting with with the economy. But

1252
01:02:20,440 --> 01:02:22,360
Speaker 18: I I do think they are they are, you know,

1253
01:02:22,440 --> 01:02:24,920
Speaker 18: wary of the fact that you know what happens. If

1254
01:02:25,160 --> 01:02:28,480
Speaker 18: if there is some exogynoist shock in the next six

1255
01:02:28,520 --> 01:02:31,280
Speaker 18: to nine months that does move energy prices higher, that

1256
01:02:31,320 --> 01:02:34,000
Speaker 18: would that would reduce that that real rate of of

1257
01:02:34,000 --> 01:02:37,200
Speaker 18: of on FED funds and would be a would be

1258
01:02:37,200 --> 01:02:38,120
Speaker 18: a potential concern.

1259
01:02:38,680 --> 01:02:41,800
Speaker 4: What range of inflation do you need to see get

1260
01:02:41,880 --> 01:02:43,840
Speaker 4: to where you're more comfortable. Obviously we have the c

1261
01:02:43,920 --> 01:02:46,120
Speaker 4: p I, but then there's the Fed Preferred Measure of

1262
01:02:46,120 --> 01:02:47,200
Speaker 4: Inflation with PCE.

1263
01:02:48,560 --> 01:02:49,560
Speaker 8: Right right.

1264
01:02:49,640 --> 01:02:52,880
Speaker 18: I think that there's a couple of measures that that

1265
01:02:52,880 --> 01:02:55,280
Speaker 18: that that matters, as PC is one of them. As

1266
01:02:55,280 --> 01:03:00,640
Speaker 18: you mentioned, I think a real a real rate sort

1267
01:03:00,640 --> 01:03:03,080
Speaker 18: of sort of in the on a one year basis,

1268
01:03:03,120 --> 01:03:07,240
Speaker 18: if we're using the inflation swaps as a as as

1269
01:03:07,240 --> 01:03:10,280
Speaker 18: a tool to back out to relate, it's something something

1270
01:03:10,280 --> 01:03:13,240
Speaker 18: above two and a half percent is important. And then

1271
01:03:13,280 --> 01:03:16,680
Speaker 18: on on core, I do think we need to see,

1272
01:03:16,840 --> 01:03:19,040
Speaker 18: you know, if if we're at if we're annualizing at

1273
01:03:19,040 --> 01:03:21,800
Speaker 18: a at a four and a half percent core or

1274
01:03:21,920 --> 01:03:25,520
Speaker 18: somewhere thereabouts in two or three months, I don't think

1275
01:03:25,560 --> 01:03:27,640
Speaker 18: that's going to be acceptable for the FAT. I think

1276
01:03:27,640 --> 01:03:31,440
Speaker 18: we need to start UH to see core UH annualizing

1277
01:03:31,520 --> 01:03:33,520
Speaker 18: it at a rate that that has that has a

1278
01:03:33,560 --> 01:03:38,040
Speaker 18: three handle over the next few months, and that and

1279
01:03:38,080 --> 01:03:40,840
Speaker 18: that is something that that that you know, is also

1280
01:03:40,880 --> 01:03:42,920
Speaker 18: going to be highly watched by this market as well.

1281
01:03:43,200 --> 01:03:44,840
Speaker 3: All Right, Jeff, thanks so much for joining us there.

1282
01:03:44,880 --> 01:03:49,120
Speaker 1: Jeff Phipps, portfolio manager and trading strategist at Picton Mahoney

1283
01:03:49,200 --> 01:03:53,000
Speaker 1: Asset Management. That up there in Ontario, Yeah, yeah, in Toronto,

1284
01:03:53,080 --> 01:03:55,040
Speaker 1: So good stuff up there. So I mean again, we're

1285
01:03:55,040 --> 01:03:57,920
Speaker 1: gonna hear you know, in uh a little bit of

1286
01:03:57,920 --> 01:03:59,480
Speaker 1: time here, We're going to get that statement from the

1287
01:03:59,480 --> 01:04:01,360
Speaker 1: FED at two m Wall Street time, and then the

1288
01:04:02,040 --> 01:04:03,640
Speaker 1: press conference at two thirty.

1289
01:04:03,560 --> 01:04:04,680
Speaker 4: Dots at two o'clock.

1290
01:04:06,160 --> 01:04:09,280
Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can

1291
01:04:09,320 --> 01:04:13,080
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever

1292
01:04:13,160 --> 01:04:16,880
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1293
01:04:17,080 --> 01:04:19,000
Speaker 2: at Matt Miller nineteen seventy three.

1294
01:04:19,480 --> 01:04:21,840
Speaker 3: And I'm fall Sweeney. I'm on Twitter at pt Sweeney.

1295
01:04:21,960 --> 01:04:24,640
Speaker 1: Before the podcast, you can always catch us worldwide at

1296
01:04:24,640 --> 01:04:26,400
Speaker 1: Bloomberg Radio