WEBVTT - Bloomberg Surveillance TV: January 3, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:36.520 Terminal and the Bloomberg Business app at. 0:00:36.760 --> 0:00:37.839 Any of youant any research. 0:00:38.000 --> 0:00:41.400 Staying bullish, three consecutive years of double digit games don't 0:00:41.440 --> 0:00:45.440 happen too often. Nevertheless, that's what we're expecting. We see 0:00:45.440 --> 0:00:48.000 the S and P five hundred increasing nineteen percent this 0:00:48.120 --> 0:00:50.839 year to seven thousand. However, we think it could be 0:00:50.840 --> 0:00:53.840 a bumpiercent than in recent years. ED joined us for 0:00:53.880 --> 0:00:56.240 more in the flesh. Good to see you, sir, Thank you. 0:00:56.440 --> 0:00:59.280 Happy new year. Let's start with that double digit expectation 0:00:59.440 --> 0:01:01.920 for twenty two twenty five with some volatility. 0:01:01.960 --> 0:01:04.120 What's different about this year compared to last? 0:01:04.400 --> 0:01:07.360 Well, I think we're starting off with more uncertainty. On 0:01:07.400 --> 0:01:10.960 both monetary and fiscal policies. We really don't know how 0:01:11.280 --> 0:01:15.320 all these different policies that the Trump administration will introduce 0:01:15.640 --> 0:01:18.040 basically from day one. Sure, there's going to be something 0:01:18.080 --> 0:01:20.959 like twenty twenty five executive orders. 0:01:22.720 --> 0:01:24.840 Coming very shortly after the inauguration. 0:01:25.840 --> 0:01:27.520 The problem is we don't really know how these things 0:01:27.560 --> 0:01:30.679 are all intermix. It's kind of like a doctor prescribing 0:01:30.720 --> 0:01:33.080 a whole bunch of different medications to you and didn't 0:01:33.120 --> 0:01:35.759 check the computer that some of them don't interact to. Well, 0:01:36.040 --> 0:01:41.520 so we'll see how deportation and deregulation and tax cuts 0:01:41.560 --> 0:01:44.800 and terrify increases and what that implies for the deficit, 0:01:45.280 --> 0:01:48.880 all mixed together. And meanwhile, the assumption is that the 0:01:48.920 --> 0:01:52.520 Republicans are in a position to get everything through. Well, 0:01:52.520 --> 0:01:54.640 maybe that's not quite the case. They've screwed it up 0:01:54.640 --> 0:01:57.920 before they could do it again, I suppose. So, Well, 0:01:58.240 --> 0:02:02.000 there's a lot of uncertainty on the administration's policies. And 0:02:02.040 --> 0:02:06.280 then monetary policy is on pause right now, and the 0:02:06.360 --> 0:02:07.680 question is how long? 0:02:07.720 --> 0:02:09.559 And I think for a while. 0:02:09.520 --> 0:02:10.679 Let's stop the administration. 0:02:11.160 --> 0:02:13.120 What are the assumptions that you've might have any they 0:02:13.120 --> 0:02:14.200 come into your forecast. 0:02:14.720 --> 0:02:20.000 Well, I'm basically acknowledging that I don't know how it's 0:02:20.000 --> 0:02:22.160 all going to end up, but my gut feel is 0:02:22.200 --> 0:02:24.520 that when you add it all up together, it'll be 0:02:24.720 --> 0:02:26.520 unbalanced positive for the economy. 0:02:27.120 --> 0:02:27.960 I think the other thing. 0:02:27.880 --> 0:02:31.000 That's important to recognize, especially after the past three years experience, 0:02:31.440 --> 0:02:34.440 is that the economy hasn't been, as you mentioned, as 0:02:34.480 --> 0:02:39.680 Lisa mentioned, remarkably resilient to high interest rates, and so. 0:02:40.080 --> 0:02:42.560 We really need you know, the economy is kind of like. 0:02:42.520 --> 0:02:46.440 The Rodney danger field of all this doesn't get enough respect. 0:02:46.480 --> 0:02:49.560 It's kind of its own dynamics. It's not totally dependent 0:02:49.960 --> 0:02:54.000 on what happens in Washington, DC, and so I think 0:02:54.960 --> 0:02:57.800 we are going to see a productivity boom, which I 0:02:57.800 --> 0:03:00.800 think has already started, and that'll keep the economy movement 0:03:00.840 --> 0:03:04.600 at a faster than expected pace, and that'll keep inflation down. 0:03:04.960 --> 0:03:08.240 Do you think that rates and are fairly valued, even 0:03:08.240 --> 0:03:11.480 though some people are saying, actually, maybe they're looking a 0:03:11.480 --> 0:03:13.840 little cheap after the recent rise at the end of 0:03:13.880 --> 0:03:14.679 last year. 0:03:14.960 --> 0:03:16.680 You're talking about interest rates. 0:03:17.080 --> 0:03:21.000 Well, on the interest rate front, I was not in 0:03:21.040 --> 0:03:24.720 the camp expecting several rate cuts last year, and then 0:03:24.760 --> 0:03:28.200 at the end of the last year, especially around September, 0:03:28.240 --> 0:03:33.560 when the FED chair started talking extremely dubbishly. I couldn't 0:03:33.639 --> 0:03:37.119 understand that. I mean, the economy is doing fine, Inflation 0:03:37.240 --> 0:03:40.200 is pretty close to two percent, So what's the need 0:03:40.240 --> 0:03:44.000 for lowering interest rates? I think we're I think we 0:03:44.040 --> 0:03:46.640 are at neutral. I think we are where interest rates 0:03:46.880 --> 0:03:49.680 should be. The economy is doing quite well with it, 0:03:50.160 --> 0:03:54.360 and there's a lot of consumers, individuals, households that really 0:03:54.600 --> 0:03:57.520 enjoy having interest rates at these levels, a lot better 0:03:57.560 --> 0:04:00.400 than getting nothing for your money market funds, which is the. 0:04:00.400 --> 0:04:02.600 Reason why somebody people have been piling into cash. It 0:04:02.680 --> 0:04:05.280 raises a question, if we do see a third year 0:04:05.400 --> 0:04:07.840 of double digit returns of the nineteen percent gains that 0:04:07.960 --> 0:04:11.280 you foresee, is that going to be concentrated again in 0:04:11.320 --> 0:04:13.320 the same leadership, given the fact that a lot of 0:04:13.320 --> 0:04:16.320 the equal way, the broadening out types of beliefs really 0:04:16.320 --> 0:04:18.400 stemmed from the idea of lower interest rates. 0:04:18.600 --> 0:04:23.200 Yeah, well, look, I think that lower interest rates certainly 0:04:23.240 --> 0:04:26.520 help smid caps, small and mid cap stocks, and we 0:04:26.600 --> 0:04:29.680 had a couple of instances last year where all this 0:04:29.760 --> 0:04:34.279 excitement about rates coming down got them to do reasonably well. 0:04:34.560 --> 0:04:36.840 And then it's all kind of fizzled the part in 0:04:37.120 --> 0:04:40.960 December as great expectations changed and suddenly maybe the FED 0:04:41.080 --> 0:04:43.279 is not going to be lowering interest rates as much, 0:04:43.640 --> 0:04:46.760 and so okay, everybody piles back in into the Magnificent seven. 0:04:47.480 --> 0:04:50.240 But I like the S and P four hundred and 0:04:50.320 --> 0:04:50.880 ninety three. 0:04:51.760 --> 0:04:54.800 They've lagged behind. And you know, I think when you 0:04:54.880 --> 0:04:57.680 look at an S and P five hundred portfolio, the 0:04:57.720 --> 0:05:00.680 way I look at it is all stocks, and there 0:05:00.720 --> 0:05:03.440 are technology stocks. They either make it or they use it. 0:05:03.480 --> 0:05:05.000 If you don't use it, you're gonna lose it. You're 0:05:05.040 --> 0:05:08.960 not going to be competitive. So I think we have yet. 0:05:08.920 --> 0:05:09.560 To see. 0:05:10.960 --> 0:05:16.000 Companies announce and demonstrate that all these technologies that are 0:05:16.040 --> 0:05:19.920 out there, not just artificial intelligence, but robotics, automation, and 0:05:20.279 --> 0:05:24.920 just thinking about changing your procedures in a way that 0:05:25.000 --> 0:05:27.720 makes workers more productive. A lot of that's going on, 0:05:28.080 --> 0:05:29.719 and we are actually seeing it in the data. 0:05:29.839 --> 0:05:31.400 My projection that we're. 0:05:31.320 --> 0:05:36.480 In a productivity growth boom is really not so much 0:05:36.480 --> 0:05:39.719 a forecast as it is an extrapolation. We've already seen 0:05:39.720 --> 0:05:41.960 a pretty significant pickup in productivity. 0:05:41.960 --> 0:05:42.840 I think it keeps going. 0:05:43.000 --> 0:05:45.080 We'd love your thought on us Stale as well, so 0:05:45.400 --> 0:05:46.920 that thought will comes to you in just a moment. 0:05:47.040 --> 0:05:49.800 US Stale right now negative in the pre market has 0:05:49.880 --> 0:05:52.200 been all morning off the bank and reporting the President 0:05:52.240 --> 0:05:56.279 minding would block this Stale getting confirmation find it blocking 0:05:56.360 --> 0:06:00.839 nip on Stale's proposed takeover of us Stale. The President's 0:06:00.880 --> 0:06:04.039 saying the following, we need major US companies representing the 0:06:04.120 --> 0:06:07.440 major share of US steel making capacity. That is why 0:06:07.480 --> 0:06:10.480 I'm taking action to block this deal. He goes on 0:06:10.520 --> 0:06:13.120 to say, US Steel will remain a proud American company 0:06:13.320 --> 0:06:17.120 when this American owned, American operated by American union steel 0:06:17.120 --> 0:06:18.960 workers the best in the world. 0:06:19.200 --> 0:06:21.920 This raises the question of how this will be interpreted 0:06:22.160 --> 0:06:23.919 next year. This seems to be in line with what 0:06:24.000 --> 0:06:26.640 President elect Donald Trump was talking about that he also 0:06:26.640 --> 0:06:29.040 would block this deal. But it comes at a time 0:06:29.200 --> 0:06:31.839 where everyone is expecting a whole host of mergers and 0:06:31.880 --> 0:06:34.960 acquisitions as a result of a loosening in some of 0:06:34.960 --> 0:06:38.240 those parameters, and it raises a question what's national security, 0:06:38.600 --> 0:06:41.640 what becomes political and what we'll get through at a 0:06:41.680 --> 0:06:44.320 time when ostensibly this is going to be an administration 0:06:44.520 --> 0:06:45.880 more amenable to mergers. 0:06:45.880 --> 0:06:47.719 Stock is down in the free market by a round 0:06:47.720 --> 0:06:50.280 about eight percent. And to bring you back into the conversation, 0:06:50.320 --> 0:06:52.440 to build on what Lisa was saying, what's the signal 0:06:52.600 --> 0:06:54.320 you take away from this. 0:06:55.520 --> 0:06:58.080 From the steel announcement. 0:06:57.640 --> 0:07:01.600 Blocking the deal? Tell what handket down, what countcat down? 0:07:02.160 --> 0:07:03.919 I mean, I guess we have to conclude that the 0:07:03.960 --> 0:07:09.000 Biden administration is still still in business. They haven't closed 0:07:09.000 --> 0:07:12.960 the shop yet, but it is consistent with what Trump's 0:07:13.000 --> 0:07:17.640 been pushing for, as you said, and it's also consistent 0:07:17.800 --> 0:07:23.720 with a regime change in the Biden years and Obama years. 0:07:23.720 --> 0:07:26.840 I think you could kind of combine those years together. 0:07:26.960 --> 0:07:30.560 We had a lot of globalization, the idea that America's 0:07:30.560 --> 0:07:34.320 interests were identical to global interests and we all had 0:07:34.400 --> 0:07:38.000 to work together, kind of a Kumbayah kind of approach. 0:07:38.840 --> 0:07:42.480 Now we have no Everybody pursues their own national interests 0:07:42.480 --> 0:07:45.320 and we can talk about it and negotiate and work 0:07:45.360 --> 0:07:47.640 things out, but you know, we're going to push for 0:07:47.680 --> 0:07:51.360 our national interests. You push for your national interests. We'll 0:07:51.480 --> 0:07:54.200 use our economic power to get what we want and 0:07:54.400 --> 0:07:56.800 to try to cut back what we have to give 0:07:56.800 --> 0:07:59.280 in return. And that's kind of the environment we're in 0:07:59.360 --> 0:07:59.680 right now. 0:08:00.120 --> 0:08:02.680 Real tension developing, especially at a time where people are 0:08:02.680 --> 0:08:06.760 talking about potential external foreign investment in the United States 0:08:06.800 --> 0:08:08.520 in order to gain a presence here at a time 0:08:08.520 --> 0:08:11.440 where people are talking about mergers and acquisitions, the boom 0:08:11.480 --> 0:08:15.640 that possibly could really lift banks in other financial firms, 0:08:16.320 --> 0:08:19.120 how do you put that together with a real existential 0:08:19.200 --> 0:08:21.040 question about what is national security? 0:08:21.280 --> 0:08:22.920 What is going to be politically viable? 0:08:23.240 --> 0:08:27.000 Will this administration, the Trump administration, be excited about the 0:08:27.040 --> 0:08:30.120 idea of tie ups even in the tech space, Well, I. 0:08:30.040 --> 0:08:32.920 Think that it'll be more leslie fair than we had 0:08:32.960 --> 0:08:37.720 under the Biden administrations, as certainly we'll have more M 0:08:37.760 --> 0:08:41.400 and A activity. I think it's been going on kind 0:08:41.400 --> 0:08:45.240 of quietly in the tech field. It's just not public 0:08:45.280 --> 0:08:49.280 because a lot of the deals are Microsoft buying. 0:08:50.520 --> 0:08:51.439 A private company. 0:08:51.480 --> 0:08:54.400 That's one of the frustrations that small cap managers have 0:08:54.600 --> 0:08:57.199 is they spend all this time putting together a portfolio 0:08:57.280 --> 0:09:00.320 of twenty great little companies and they expect that, you know, 0:09:00.600 --> 0:09:03.080 only a few of them will become the next Microsoft, 0:09:03.080 --> 0:09:06.480 and it never happens because Microsoft buys them. So I 0:09:06.480 --> 0:09:08.120 think there's still a lot There is a lot of 0:09:08.320 --> 0:09:11.400 M and A going on even now, But I don't 0:09:11.440 --> 0:09:15.200 think the government's going to be as interventionists as we've 0:09:15.240 --> 0:09:16.360 seen under Biden. 0:09:16.720 --> 0:09:19.320 So you're unabashedly bullish. You do expect this to be 0:09:19.440 --> 0:09:22.960 continue to be the roaring twenties. What is the potential 0:09:23.320 --> 0:09:25.160 risks that you see out there at a time when 0:09:25.160 --> 0:09:27.560 we're talking to some people about gold, some people about 0:09:27.600 --> 0:09:30.000 the possible dissolution of some of the m and I. 0:09:29.960 --> 0:09:33.560 Furvor, Well, you did mention that I'm looking for a 0:09:33.880 --> 0:09:36.319 bumpy year, and I would say that a lot of 0:09:36.360 --> 0:09:38.720 those bumps are going to be occurring over the next 0:09:39.000 --> 0:09:42.559 few months. We certainly have the uncertainty about monetary and 0:09:42.600 --> 0:09:46.720 fiscal policies, the bond vigilanties, my friends, the bond vigilantes 0:09:46.720 --> 0:09:49.520 are acting up again, and the bond deals around four 0:09:49.559 --> 0:09:52.000 and a half percent and getting a lot of questions, 0:09:52.360 --> 0:09:54.280 not just only can we go back to five percent, 0:09:54.360 --> 0:09:56.559 but could we breach that and go to six percent. 0:09:56.880 --> 0:09:58.880 I wouldn't be surprised if we saw five percent, and 0:09:58.880 --> 0:10:01.319 I would spook the market a short term basis, but 0:10:01.360 --> 0:10:03.800 I think we'll find plenty of buyers at five percent, 0:10:03.960 --> 0:10:07.640 just the way we did last time. And then of 0:10:07.679 --> 0:10:13.240 course there's geopolitical concerns. The Middle East is still a mess. 0:10:13.800 --> 0:10:15.880 You know, we have yet to see what Israel is 0:10:15.920 --> 0:10:18.440 going to do next with regards to Iran and what 0:10:18.480 --> 0:10:21.000 Iran will do next with regards to Israel, so that 0:10:21.000 --> 0:10:25.079 that confrontation is still ongoing, as is Ukraine in Russia. 0:10:26.559 --> 0:10:28.679 So I think, you know, you put it all together, 0:10:28.800 --> 0:10:31.960 and at least for the first few weeks of the year, 0:10:32.520 --> 0:10:34.640 I think there's a potential for the market two weekend 0:10:34.679 --> 0:10:37.920 and maybe perhaps even a correction, but I would I 0:10:37.920 --> 0:10:40.120 would view that as a buying opportunity. 0:10:40.360 --> 0:10:41.720 Certainly weave for the last week. 0:10:41.920 --> 0:10:41.959 ED. 0:10:42.120 --> 0:10:43.800 It's good to say, sir, thank you. I did this 0:10:43.840 --> 0:10:46.200 more often in person, absolutely thanks for being here at 0:10:46.480 --> 0:10:58.959 any day of any research advestors looking at hats of 0:10:59.000 --> 0:11:02.440 keydanks this month with next Friday's payrolls report followed by 0:11:02.520 --> 0:11:05.280 CPI and a Federate decision at the end of the month. 0:11:05.480 --> 0:11:08.400 Claudia Salm of New Century Advisors noting the FED summary 0:11:08.440 --> 0:11:12.160 of Economic projections isn't living up to promises, writing tension 0:11:12.160 --> 0:11:14.760 has been building around the SEP at the Power Feed. 0:11:15.080 --> 0:11:17.400 The FED has long been data driven in its decisions, 0:11:17.440 --> 0:11:20.240 but the complexities of the post pandemic economy have led 0:11:20.240 --> 0:11:23.240 it seemingly to rely on data over forecast. Powell even 0:11:23.280 --> 0:11:26.079 admitted as much at the press conference. Claudia jointed just 0:11:26.160 --> 0:11:28.440 now for more, Laudia, welcome to the program and a 0:11:28.559 --> 0:11:30.040 very happy new year to year. It's good to see 0:11:30.040 --> 0:11:33.200 you once again. How is this complicating decision making on 0:11:33.240 --> 0:11:34.240 the f WEBC. 0:11:35.640 --> 0:11:37.520 Well, I think, you know, a real theme of the 0:11:37.600 --> 0:11:40.679 last FMC meeting was how much uncertainty there is about 0:11:40.720 --> 0:11:43.440 the outlook for twenty twenty five, and a lot of 0:11:43.440 --> 0:11:46.120 that comes from policy uncertainty out of fiscal policy. 0:11:46.440 --> 0:11:48.920 But you know, the FED has. 0:11:48.520 --> 0:11:54.440 Increasingly underpower become very data driven, and it's hard to 0:11:54.440 --> 0:11:56.040 believe it, but I think we're actually going to see 0:11:56.040 --> 0:11:58.240 a year where the data plays an even bigger role, 0:11:58.600 --> 0:12:01.040 and we already know that that can create a lot 0:12:01.080 --> 0:12:04.960 of unnecessary volatility because it's hard to measure a thirty 0:12:04.960 --> 0:12:08.040 trillion dollar economy in real time with a lot of accuracy. 0:12:08.400 --> 0:12:10.080 So they were going to continue to see this. 0:12:10.080 --> 0:12:13.240 Real overreaction, and we saw this yesterday with the initial 0:12:13.240 --> 0:12:16.880 claims for unemployment data to just you know, these little 0:12:16.880 --> 0:12:19.839 scraps of data we get on how how strong labor 0:12:19.840 --> 0:12:23.240 market is how hot inflation is, you know, So buckle up. 0:12:23.320 --> 0:12:23.880 Well, Claudie. 0:12:23.880 --> 0:12:26.319 This is a reason why people can't liken the moment 0:12:26.320 --> 0:12:28.880 that we're into a dark room with a blindfold on, 0:12:29.120 --> 0:12:31.719 with lots of furniture, going around and trying not to 0:12:31.760 --> 0:12:34.520 bump into anything because the data is messy. We keep 0:12:34.559 --> 0:12:37.719 talking about distortions, but forecasts have been wrong and the 0:12:37.760 --> 0:12:40.800 whole concept of transitory is a huge scar over this fed. 0:12:40.920 --> 0:12:44.160 So is there a forecast or an economic model that 0:12:44.200 --> 0:12:46.839 they should be following. And I'm asking you of this 0:12:46.960 --> 0:12:49.000 some rule who has come out and talked about how 0:12:49.080 --> 0:12:52.640 every rule has its exceptions and it's difficult to really 0:12:52.679 --> 0:12:53.760 come up with these. 0:12:55.280 --> 0:12:59.120 Right, Yeah, this is the past for a half year. 0:12:59.200 --> 0:13:01.640 Have not been kind to rules or rules of thumb 0:13:01.720 --> 0:13:03.959 or how it's usually in the past. But we also 0:13:04.200 --> 0:13:08.960 can't become hamstrung by a mistake or a misjudgment that 0:13:09.160 --> 0:13:11.680 was made in twenty twenty one about inflation. 0:13:11.880 --> 0:13:12.040 Right. 0:13:12.080 --> 0:13:14.680 We have moved forward and there are we've seen the 0:13:14.720 --> 0:13:17.839 economy slowly overtime heal. We're seeing patterns that make a 0:13:17.880 --> 0:13:19.760 lot more sense than they did in the early days 0:13:20.160 --> 0:13:24.000 of the post pandemic recovery. So the FED, Yes, and 0:13:24.040 --> 0:13:26.319 that's exactly how it feels in a dark room moving 0:13:26.360 --> 0:13:28.679 We know there's furniture, but part of the Fed's job 0:13:28.760 --> 0:13:30.840 is to help turn the lights on and at least 0:13:30.880 --> 0:13:31.520 chart a path. 0:13:31.559 --> 0:13:33.960 And yes, that could mean redirecting. 0:13:33.880 --> 0:13:37.600 But to just well, you know what we do This 0:13:37.679 --> 0:13:39.320 next year is going to be all about the data 0:13:39.360 --> 0:13:41.400 points we get. That really sets up I think a 0:13:41.440 --> 0:13:45.120 lot of unnecessary volatility, Like the FED is injecting volatility 0:13:45.160 --> 0:13:48.480 because it's saying, just follow those data points, and we 0:13:48.600 --> 0:13:51.240 know we get bounced around by them, so you kind 0:13:51.240 --> 0:13:54.400 of you need to have a grand plan in terms 0:13:54.480 --> 0:13:57.320 of how you're working your way through the years. It's tricky, 0:13:57.360 --> 0:14:00.640 like the policy uncertainty is real for this for the FED. 0:14:00.679 --> 0:14:02.640 So I'm not saying like I have an easy solution 0:14:02.760 --> 0:14:04.960 for them, But now is not the time to back 0:14:05.000 --> 0:14:11.200 away from some of the forward looking the heuristics that 0:14:11.280 --> 0:14:11.679 we have. 0:14:12.160 --> 0:14:13.880 Mom and Elerian I would agree with you, and he's 0:14:13.920 --> 0:14:17.439 talked about this as much the whole over data point dependence. 0:14:17.679 --> 0:14:20.720 What patterns are you observing that you think are going 0:14:20.760 --> 0:14:24.400 to be important and prescriptive for what's to come in 0:14:24.400 --> 0:14:25.360 the US economy? 0:14:27.080 --> 0:14:29.760 Right, So I tend to I keep all eyes on 0:14:29.800 --> 0:14:32.200 the labor market, and that's such a linchpin to the 0:14:32.480 --> 0:14:35.560 resilient economy we've had and the ongoing recovery. In addition 0:14:35.600 --> 0:14:38.240 to you know, millions of Americans lives really depend on 0:14:38.280 --> 0:14:41.480 their paychecks. And this is one where I worry that 0:14:41.520 --> 0:14:43.800 the FED is somewhat come placent. I think they're being 0:14:43.840 --> 0:14:46.720 hyper visional mot inflation, as we know the FED often 0:14:46.760 --> 0:14:51.000 is and should be. But their outlook that most of 0:14:51.000 --> 0:14:53.880 the officials laid out in the last summer of economic projections, 0:14:53.880 --> 0:14:57.880 there's a pretty optimistic one on the labor market and 0:14:57.960 --> 0:15:00.520 basically saying, hey, we're back, We're back to normal, We're 0:15:00.560 --> 0:15:03.040 back in think Mary Daily even use the words kind 0:15:03.040 --> 0:15:06.640 of an equilibrium. Got one vacancy for one unemployed worker, 0:15:06.680 --> 0:15:08.440 and it's close to what the FED things the long 0:15:08.520 --> 0:15:11.960 run unemployment rate is, and they project that to stay 0:15:12.000 --> 0:15:14.000 with us, like, hey, we've got back to equilibrium, We've 0:15:14.000 --> 0:15:14.840 got back to a good place. 0:15:14.840 --> 0:15:15.760 We're going to stay there. 0:15:16.080 --> 0:15:17.600 And I think there's a lot of other dimensions you 0:15:17.600 --> 0:15:21.200 can look at the labor market, particularly the differences between 0:15:21.200 --> 0:15:23.200 the hiring and the firing. 0:15:23.840 --> 0:15:26.000 When the hiring doesn't look so good. 0:15:26.040 --> 0:15:29.080 The firing looks really pretty great, Like that's not typical 0:15:29.200 --> 0:15:32.520 for a labor market, you know, that's in balance, that's 0:15:32.560 --> 0:15:35.840 in equilibrium. And so I think there are some signs 0:15:36.080 --> 0:15:37.160 and that's why we have to keep an eye on 0:15:37.160 --> 0:15:39.320 out or the places where it doesn't make sense. 0:15:39.680 --> 0:15:40.600 And in other big. 0:15:40.440 --> 0:15:43.120 Pieces, we've had a big push from the increase in 0:15:43.200 --> 0:15:45.760 labor supply from the immigration into this country, which has 0:15:45.800 --> 0:15:48.840 been extraordinarily high in recent years. 0:15:48.880 --> 0:15:50.560 And that that's turning. 0:15:50.880 --> 0:15:52.720 Or even if we don't have mass deportations, we're not 0:15:52.760 --> 0:15:55.680 going to have a big push from the outside immigration. 0:15:55.800 --> 0:15:58.240 And that's an important that's been an important dynamic at 0:15:58.240 --> 0:15:59.920 the labor market. We're going to watch it on Why 0:16:00.200 --> 0:16:01.720 so I don't think things are as calm in the 0:16:01.800 --> 0:16:04.960 labor market as the FED kind of in their latest. 0:16:04.560 --> 0:16:06.840 Projection seems to view. 0:16:06.880 --> 0:16:08.120 And I mean, you know, we're going to get our 0:16:08.120 --> 0:16:11.680 first taste of the data next week for the with 0:16:11.800 --> 0:16:12.840 the report. 0:16:12.800 --> 0:16:15.760 Irol's coming on January tenth. Just quickly, Claudia, how unusual 0:16:15.760 --> 0:16:18.920 would it be for unemployment to stabilize at these levels 0:16:19.000 --> 0:16:20.760 after coming off the lows to the extent that they have. 0:16:23.400 --> 0:16:26.640 It would be very unusual to stabilize and hold in 0:16:26.680 --> 0:16:29.000 this place for like the next three years, which is 0:16:29.120 --> 0:16:32.880 essentially what the FED is projecting. But that's saying that 0:16:32.920 --> 0:16:35.000 we're in a good place and we're going to stay there. 0:16:35.320 --> 0:16:38.600 But we have there is a sense that, you know, 0:16:38.680 --> 0:16:41.280 barring a lot of this policy uncertainty, this year twenty 0:16:41.320 --> 0:16:42.280 twenty five really. 0:16:42.080 --> 0:16:44.880 Could could be. It still could be, but it was 0:16:44.920 --> 0:16:45.800 don't have to be. 0:16:46.320 --> 0:16:48.560 Like we get to the sustainable place, we work out 0:16:48.600 --> 0:16:49.960 some of the last disruptions. 0:16:50.600 --> 0:16:52.280 So we'll see. 0:16:52.560 --> 0:16:53.280 I hope you're right. 0:16:53.360 --> 0:16:56.040 Clodia Samp of New Century Advice is Cludia, appreciate your time. 0:16:56.240 --> 0:16:56.520 Thank you. 0:16:56.560 --> 0:17:08.920 I think we all hope Clodius right. Stephanie Roth the 0:17:08.960 --> 0:17:10.960 full free search market banner of Banks of America joining 0:17:11.040 --> 0:17:12.240 us run a table to the turf you. 0:17:12.400 --> 0:17:13.600 Good morning and a happy new year. 0:17:13.760 --> 0:17:14.240 Good morning. 0:17:14.280 --> 0:17:16.800 Let's see you both. Let's start with you, Stephanie. Expectations 0:17:16.840 --> 0:17:19.160 for a week today in a payrolls report. 0:17:19.359 --> 0:17:21.399 Yeah, so we're looking for one seventy five on payrolls, 0:17:21.440 --> 0:17:23.520 which sounds a little higher relative to expectations. 0:17:24.040 --> 0:17:26.400 But I think the surprise from the report. 0:17:26.280 --> 0:17:28.040 Just given where markets are, is that it could come 0:17:28.080 --> 0:17:30.760 into the soft side forgetting about the headline number. There 0:17:30.800 --> 0:17:33.840 could be download revisions to the prior two months, And importantly, 0:17:33.880 --> 0:17:35.719 we're looking for an unemployment rate that could take up 0:17:35.720 --> 0:17:38.280 a little bit higher than what expectations are looking for. 0:17:38.520 --> 0:17:40.480 So there might just be some soft pieces of the 0:17:40.560 --> 0:17:43.639 report that at the margin could put some downward pressure 0:17:43.640 --> 0:17:44.000 on yields. 0:17:44.000 --> 0:17:45.040 Where's the weakness come from? 0:17:45.040 --> 0:17:46.680 Because I think the book was right now would say 0:17:46.760 --> 0:17:48.960 claims to low lay off the low things look pretty good. 0:17:49.240 --> 0:17:49.880 What looks bad? 0:17:50.280 --> 0:17:52.119 The breath hasn't been very good in terms of hiring. 0:17:52.160 --> 0:17:55.280 That's been quite disappointing. A lot of the gains have 0:17:55.320 --> 0:17:58.239 been driven by healthcare and government, and that's not a 0:17:58.280 --> 0:18:00.800 sign of a really really strong labor So we think 0:18:00.800 --> 0:18:02.760 the lead market is fine. We think the underlying trend 0:18:02.760 --> 0:18:05.280 is one hundred and forty thousand, but at the margin 0:18:05.320 --> 0:18:07.560 that's probably a little bit softer than where consensus is 0:18:07.560 --> 0:18:08.480 at the moment mark. 0:18:08.480 --> 0:18:10.800 We were talking earlier with Claudia sam and she was 0:18:10.840 --> 0:18:13.159 talking about how the FED has really injected a lot 0:18:13.200 --> 0:18:15.480 of volatility into the market and the rates of market 0:18:15.520 --> 0:18:18.960 in particular, as a result of its data point dependence. 0:18:19.240 --> 0:18:21.280 Do you expect there to be quite a bit of 0:18:21.320 --> 0:18:24.760 volatility either way, if there is any kind of surprise 0:18:24.800 --> 0:18:26.760 whatsoever on Friday's payrolls. 0:18:26.440 --> 0:18:28.280 We do we also think that volatility is going to 0:18:28.280 --> 0:18:30.640 be a little bit higher in the rates market this year, 0:18:30.880 --> 0:18:33.200 simply because the FED is so data dependent and there's 0:18:33.200 --> 0:18:35.840 still so much we don't know about next year, how 0:18:35.880 --> 0:18:38.080 will all these economic policies take shape, what will the 0:18:38.119 --> 0:18:40.919 impacts be, and so we do think that a very 0:18:40.960 --> 0:18:43.960 data dependent FED in that context, we'll just keep ratevall 0:18:44.000 --> 0:18:46.440 a little bit higher than it otherwise would have. Now, 0:18:46.440 --> 0:18:48.040 if we get the kind of number that Stephanie was 0:18:48.080 --> 0:18:51.879 talking about, if we see some softness in the underlying data, 0:18:52.000 --> 0:18:53.880 we do think that there's pretty good potential for rates 0:18:53.920 --> 0:18:56.800 to move quite a bit lower, largely because we think 0:18:56.800 --> 0:18:59.280 that there's so much good news that's priced into the 0:18:59.320 --> 0:19:03.040 market right now, there's so much optimism about US growth 0:19:03.040 --> 0:19:07.159 remaining strong, about around elevated risk asset valuations, that if 0:19:07.160 --> 0:19:09.360 you start to see any wobbles in the economy, then 0:19:09.440 --> 0:19:11.840 we do think that there's a fair amount of reassessment 0:19:11.920 --> 0:19:13.320 that's going to have to happen, and that should mean 0:19:13.359 --> 0:19:13.960