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Speaker 1: Welcome to the Bloombergs Surveillance Podcast hometom Keene. Along with

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Speaker 1: the Jonathan Ferrill and Lisa are Brownwitz Jaylie, we bring

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Speaker 1: you insight from the best an economics, finance, investment and

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Speaker 1: international relations. Fine Bloomberg Surveillance and Apple podcast SoundCloud, Bloomberg

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Speaker 1: dot Com and of course on the Bloomberg terminal. The

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Speaker 1: instally of JP Morgan as management alongside us today. Great

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Speaker 1: have you with us in the building. I wanted to

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Speaker 1: start here because I think this is really important in

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Speaker 1: the United States. Ask about the debt ceiling and people

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Speaker 1: shake their heads and they're like, not this again. Is

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Speaker 1: anyone asking about that? When you go around and see

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Speaker 1: clients in London and UK across Europe, are they asking

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Speaker 1: about it? To be completely honest, No, not not really.

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Speaker 1: Maybe there's the the odd person is starting to think

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Speaker 1: about it. But I get the sense there's a case

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Speaker 1: if we've been here, we've seen the movie, there will

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Speaker 1: be a bit of twoing and throwing, but the reality

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Speaker 1: is at the end of the day there will be

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Speaker 1: some resolve around it. Do you think they should care? Um?

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Speaker 1: Not yet. I think ultimately you need to get you

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Speaker 1: need to wait until we get into the stage where

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Speaker 1: actually there is going to be a material impact that's

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Speaker 1: going to be later over the course of this year.

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Speaker 1: I always look at the bill market to see there's

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Speaker 1: any spikes in certain certain maturities. We're not seeing yet

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Speaker 1: that yet, so the market's not really particularly focusing on it.

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Speaker 1: And I feel that we've had over the last few years.

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Speaker 1: This isn't the first time we've had these these conversations.

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Speaker 1: There's a lot about there's a lot of other things

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Speaker 1: going on in the world before we get to probably

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Speaker 1: worrying about the Well the Ottoman test of that is,

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Speaker 1: if the debt ceiling hits the fan, do we buy

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Speaker 1: the ten year treasury? The answer in years gone bias yes.

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Speaker 1: Do you see the answer changing probably even more so

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Speaker 1: now just because actually you've got some yield on the

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Speaker 1: ten uere treasury. We were happy to buy the ten

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Speaker 1: year treasury back in twenty eleven when there wasn't much

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Speaker 1: yield on on the ten year and at this time

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Speaker 1: there is, so I definitely think that will be the case.

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Speaker 1: In the flight to quality, will will favor those those bonds,

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Speaker 1: you know where there hasn't been any yield and hasn't

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Speaker 1: been for several decades is Japan. I know it's a

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Speaker 1: massive focus for a lot of people here in London

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Speaker 1: for you as well, looking at fixed income. There was

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Speaker 1: a meeting back in December. We had the meetings minutes

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Speaker 1: and it suggested that the government official they're actually requested

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Speaker 1: a recess suspended the meeting. What do you think is

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Speaker 1: going on at the b O J and do you

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Speaker 1: think the government is happy with it? I think the

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Speaker 1: reality is when you look at where inflation is in Japan,

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Speaker 1: it's not what we've seen in the US, it's not

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Speaker 1: what we've seen in Europe, but it's it's going up

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Speaker 1: and at the moment, their policy looks at odds with

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Speaker 1: with what's happening. The reality though, is they don't want

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Speaker 1: to cause untowards volatility in the market. I'm not I

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Speaker 1: don't want to liken what's happening in Japan to me

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Speaker 1: what happen in the UK a few months ago, But

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Speaker 1: they don't want to see that level of volatility. So

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Speaker 1: I think what we've learned from the Bank of Japan

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Speaker 1: over the last couple of months or so is that

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Speaker 1: I think we're going to get there, but they're going

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Speaker 1: to do it on their own terms. They obviously widened

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Speaker 1: the band when the market wasn't expecting it. The market

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Speaker 1: was hoping for something last week they didn't, And they're

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Speaker 1: actually doing these facilities at the moment to try to

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Speaker 1: keep financial stability. We're going to get there, it's inevitable,

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Speaker 1: I think, but they also want to do on their

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Speaker 1: own terms. The two words I want to talk about

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Speaker 1: normal and market. Those two words I could with Jeremy

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Speaker 1: Stretch in the last couple of hours of c ib

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Speaker 1: C and he said, Japan's the next one to normalize,

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Speaker 1: And I said, what's normal? I've got no idea what's

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Speaker 1: normal in Japan when they've been doing this now for decades.

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Speaker 1: The other world I want to talk about with you

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Speaker 1: as well is the word market. Is there a market,

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Speaker 1: a sufficient market with private demand both domestically and internationally

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Speaker 1: for Japanese debt for when this bo j backs away?

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Speaker 1: Does it exist? Is there any sign of the one

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Speaker 1: actually being there right now? Um, that's going to be

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Speaker 1: a challenge because obviously the Bank of Japan own a huge,

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Speaker 1: huge piece of the market, particularly in the in the

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Speaker 1: shorter dated ten years and in where they've obviously been

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Speaker 1: looking to control control yields. So I think that's an open,

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Speaker 1: open debate. Obviously we're going to see the market repriced

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Speaker 1: to where to where it should should do. But the

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Speaker 1: reality is there is a huge amount of securities owned

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Speaker 1: by by the bank repriced too. If we don't know

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Speaker 1: if there's a market that actually what you get. What

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Speaker 1: you can do is if you track the tenure j

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Speaker 1: GB yield and put it on top of the ten

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Speaker 1: year treasury year and you see treasury yields move higher

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Speaker 1: over the course last year, the tenure j GB suddenly

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Speaker 1: hit hit the upper bound. If you before then there

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Speaker 1: was a pretty good relationship. So if you reach continue

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Speaker 1: to track that, you're talking somewhere seventy seventy five basis points.

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Speaker 1: Given where the tenure treasury is, that probably seems as

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Speaker 1: a as a good started point. As I said, inflation

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Speaker 1: in Japan isn't what it was in the U S

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Speaker 1: and Europe, but it's going up. We've got, you know,

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Speaker 1: wage negotiations coming up in April. I think they're going

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Speaker 1: to have to let that go. So don't find the

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Speaker 1: fair used to be the phrase I know they've been

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Speaker 1: reflected on that. Should I fight the b J I

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Speaker 1: think the interesting thing is, as I said, they want

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Speaker 1: to do on their own terms. So there at the

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Speaker 1: moment they're trying to push some of the shorts out

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Speaker 1: of out of the market. If you've got a long

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Speaker 1: term view, I think you can hold that and actually

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Speaker 1: yields will be higher over the medium medium term. What

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Speaker 1: kind of number are you thinking about on the yields,

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Speaker 1: I think only five base points on the tenure. I

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Speaker 1: think then they go beyond that kind of number. Though.

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Speaker 1: In Japan, I'm looking at the things right now that

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Speaker 1: are taking place across fixed income and with central banks.

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Speaker 1: You're talking about the b O J backing away from

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Speaker 1: the YELD curve control. These eb is doing QT. They've

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Speaker 1: got officials running out all over the place. Sound fifty

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Speaker 1: basis points? Fifty basis points? I think the bank agrees

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Speaker 1: pushed back a little bit in that world. Is that

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Speaker 1: bullish your bearest for fixed income at a time where

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Speaker 1: I've got pretty much everyone is fixed incomes saying buy bonds,

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Speaker 1: all these things taking place Japan, the e C b

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Speaker 1: QT all over the place, is that bearish your bullish

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Speaker 1: fixed income? It depends what part of the fixed income

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Speaker 1: market you're talking about. Because the US, where people are

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Speaker 1: looking to buy bonds, has seen the bigger repricing. We've

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Speaker 1: got more evidence over the last week or so that

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Speaker 1: we are having a slow down retail sales. We're gonna

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Speaker 1: have the FED who want to slow down from their pace,

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Speaker 1: the European Central Bank, the Bank of Japan, they're behind

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Speaker 1: the FED. We've only just got too neutral in Europe.

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Speaker 1: Is as you said, what is neutral in Japan? Maybe

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Speaker 1: we'll find out got no idea, So they need to

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Speaker 1: do a little bit more. And I actually think Europe

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Speaker 1: is particularly interesting at the moment because we were in

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Speaker 1: a world where they were hiking rates to deal with inflation.

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Speaker 1: Now inflation is coming or likely to come off because

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Speaker 1: what's happening in energy prices that should be good for

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Speaker 1: the economy. Growth is supposed We're supposed to be be in

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Speaker 1: recession in Europe at the moment, and we're not. So

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Speaker 1: are The e C began and maybe have to go

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Speaker 1: slower but further as they tried to battle this. So

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Speaker 1: I definitely thin there's a dynamic between wanting to own

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Speaker 1: US fixed income and then being a little bit more

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Speaker 1: cautious and some of the other markets around the world.

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Speaker 1: I wanted to squeeze this in because I asked this

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Speaker 1: question earlier, I'm going to ask it a week. Does

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Speaker 1: the ECP hype more than the FEDE Yes, it seems

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Speaker 1: to be the takeaway at the moment and stably this

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Speaker 1: was fantastic. It's good to see it from JP Morgan

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Speaker 1: Asset Management. Right now, Alfia dor Walla joins us with

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Speaker 1: Rock Creek Group. They are an exceptionally thoughtful group with

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Speaker 1: real hydrocarbon focus and also with an E. M. Bent.

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Speaker 1: We're thrilled she could join us this morning. If what

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Speaker 1: is cash right now? Is cash an asset? You know?

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Speaker 1: Last year cash was definitely an asset. We were overweight

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Speaker 1: cash and it helped our portfolios. This year we are

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Speaker 1: starting to put a little bit of money to work

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Speaker 1: incrementally within fixed income more than anything else. UM a

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Speaker 1: little bit too early to be really chasing fixed in cup.

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Speaker 1: We think that at some point we're gonna want to

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Speaker 1: start extending duration, so fixed income is a big focus today.

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Speaker 1: What do you do with the energy is the only

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Speaker 1: survivor of an ugly two thousand twenty two You people

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Speaker 1: have got terrific natural gas history. How do you how

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Speaker 1: do you frame that or how do you bet on

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Speaker 1: that out three years? Yeah? And you know, Lisa, you

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Speaker 1: mentioned two of our main themes, will the energy shock

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Speaker 1: from the war in Europe continue to be contained or

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Speaker 1: do we see part two this year? You know, we

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Speaker 1: saw winter warmth, We've started seeing European subsidies, We've seen

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Speaker 1: the US tapping into the Strategic Patrol reserve support containment.

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Speaker 1: And then we see China on the other hand. You know,

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Speaker 1: demand for oil is going to increase as China reopens,

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Speaker 1: and so we're kind of looking at all of these

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Speaker 1: factors and saying, is the second half of the year

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Speaker 1: going to be a little bit like we were seeing

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Speaker 1: some of the tensions in the last year. So let's

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Speaker 1: put those two ideas together. You were saying it's not

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Speaker 1: time to lean into duration, but you're waiting too, and

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Speaker 1: the cuential for the energy crisis to rear its head.

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Speaker 1: What are you waiting for? We've seen a rally already,

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Speaker 1: so yields are already almost a percentage point off the

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Speaker 1: recent highs for the tenure. What are you waiting for

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Speaker 1: to say it is time? Yeah, and it's a continuous

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Speaker 1: conversation as markets are moving, But we've seen a disconnect

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Speaker 1: right between market expectations and the fed's hawk is announcements.

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Speaker 1: The tenure seems to be stuck a little bit around

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Speaker 1: three and a half percent because markets think that the

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Speaker 1: FED is going to have to pit it and reduce rates.

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Speaker 1: We think that the tenure could retrace it around four

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Speaker 1: percent at some point early this year, and then that's

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Speaker 1: going to signal a good opportunity to slowly start buying

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Speaker 1: duration again. We're looking for good entry points to start

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Speaker 1: extending duration in our fixtingcome portfolios, but we don't want

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Speaker 1: to chase anything because we do think that we're still

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Speaker 1: a long way off from the FED really signaling any

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Speaker 1: sort of even pause. What's interesting to me is the

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Speaker 1: idea of a four percent ten year yield and the

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Speaker 1: implication for equities that previously sold off when yields went up.

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Speaker 1: But if we have an environment where pausitive, where it's

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Speaker 1: a positive look at the economy at could potentially happen

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Speaker 1: with growth, is it also couldn't be positive for equities

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Speaker 1: in the short run. You know, I think equities are

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Speaker 1: gonna be maybe potentially a tale of two halves this year.

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Speaker 1: You know, we think kind of middling for the next

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Speaker 1: six months, but I think you're gonna have to pick

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Speaker 1: your spots. You have to remember the SNP is still

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Speaker 1: trading around eighteen times, whereas Europe's trading around twelve and

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Speaker 1: a half and e M in certain countries even lower.

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Speaker 1: So it could be a valuation story of the half

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Speaker 1: of the Here Lifia with you and our Sanny, let's

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Speaker 1: just talk about the Vogue again. I believe it was

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Speaker 1: a vogue twelve months ago, twenty four months ago, thirty

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Speaker 1: six months ago. You get the theme e M in

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Speaker 1: international are back. Is this time different? You know, it

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Speaker 1: feels like a little bit of a consensus trade because

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Speaker 1: you're starting to hear people really talk about it more

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Speaker 1: and again. You can't generalize yet. I mean China to

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Speaker 1: Brazil to India. These are completely different factors, completely different

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Speaker 1: time horizons you have to have. But as an institutional investor,

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Speaker 1: you have to be in emerging markets a to some extent.

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Speaker 1: You have to get China right because that is the

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Speaker 1: still the biggest determinant in a NIM portfolio. Alifa, thank

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Speaker 1: you so much. Olivia Dorwalla with Rock Creek Group there

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Speaker 1: on the allocation mystery, what we're gonna do right now?

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Speaker 1: You speak to someone who invented it. I really can't

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Speaker 1: say this enough. I'm gonna go back to the shot

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Speaker 1: gun aw of point figure charts of eighteen eighty and

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Speaker 1: through the early part of last century, and then in

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Speaker 1: the nineteen forties there was dropped upon us someone who said,

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Speaker 1: you can plot a stock and you can draw lines

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Speaker 1: of support in resistance. His name was John Maggie. One

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Speaker 1: of his great disciples was Relf and compora to say

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Speaker 1: he's a chartered market technician. Co Farnder barely describes his

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Speaker 1: contribution to looking back at what Price tells us about forward? Ralph,

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Speaker 1: honored to have you with us today. I want you

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Speaker 1: to discuss the modern idiocy over catharsis. We need Catharsis

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Speaker 1: to make a bottom in the equity market. Have you

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Speaker 1: observed catharsis that drags us out of this bear market? Absolutely? Tom,

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Speaker 1: Thank you for that kind introduction. I have to have

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Speaker 1: I have to stress Octobert. Tom, the Dow had an

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Speaker 1: intra day price wing of fifteen hundred and two points.

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Speaker 1: No one's talking about it. In technical parlance, that's called

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Speaker 1: a key reversal day when the low of the day

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Speaker 1: and the high of the day precede the previous days

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Speaker 1: high low, and that to me was a major turning point.

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Speaker 1: And since that October low to the December thirteenth high,

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Speaker 1: that DALLA is up about the S and P s

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Speaker 1: up about eighteen. So there's been a nice recovery and

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Speaker 1: since then the market has been consolidating. I think we're

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Speaker 1: making a bottom long term in this bowl market. Well,

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Speaker 1: if the study of technical analysis, with great respect for

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Speaker 1: Dow theory and the rest of it, was done of

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Speaker 1: a time of non derivative instruments, we now live in

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Speaker 1: a world of E t f s, of massive indexation,

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Speaker 1: and all to the formulas of support and resistance that

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Speaker 1: you helped invent, do they work in this time where

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Speaker 1: the New York Stock Exchange really isn't the New York

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Speaker 1: Stock Exchange we knew. Yes, I appreciate that question, Tom,

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Speaker 1: But remember what technical analysis is all about. It is

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Speaker 1: following the laws of supply and demand bias versus sellers,

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Speaker 1: and that has never changed. The emotion of investors has

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Speaker 1: never changed, fear and greed. It is all manifest and

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Speaker 1: what we follow. So if you believe in price, which

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Speaker 1: I do, that's I don't own and indicator an own price,

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Speaker 1: and I follow the trend of price. Buyers push him up,

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Speaker 1: sell us push them down. It's that simple ralph on

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Speaker 1: the spectrum of risk versus fear of a risk, appetite

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Speaker 1: versus taking all your tips off the table, where are we? Um?

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Speaker 1: For me, I've taken I've become a little I've become

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Speaker 1: very aggressive coming out of that October thirteenth low, and

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Speaker 1: I think since then, if you look at foreign markets

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Speaker 1: like Europe, and you look at emerging markets, they have

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Speaker 1: been leading the US market. So UM, I think it's

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Speaker 1: broadening out. So I'd say, put chips on the table,

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Speaker 1: play the game. What makes you feel like this has

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Speaker 1: staying power? Like this is the early stages of something

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Speaker 1: more sustained versus a head fake ahead of something that

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Speaker 1: a lot of people say as an a very byproduct

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Speaker 1: of monetary policy. Good question. Um, Remember I was talking

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Speaker 1: about October thirteen low and rallied in two much to

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Speaker 1: December thirteenth high, and that since December thirteenth we've had

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Speaker 1: a pullback. The doll was dropped about uh six percent

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Speaker 1: the so I think the SMP had an eight percent

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Speaker 1: decline and those levels right there, we are looking at

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Speaker 1: that would be a thirty two thousand, five eighty one

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Speaker 1: on the Dow and three thousand, seven sixty four on

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Speaker 1: the SMP. Those are very short term support levels. That's

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Speaker 1: where the buy and she could be in. I I

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Speaker 1: keep my eye closely on that on a short term basis,

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Speaker 1: and I think we're holding up well. Well. I want

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Speaker 1: to get back to the arch issue of the day,

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Speaker 1: which is the failure of the American retirement system because

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Speaker 1: people are in and out and in and out of

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Speaker 1: the market. We're at one of those moments right now.

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Speaker 1: We're millions of people are literally saying, how do I

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Speaker 1: summon the cur to get back into the market. And

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Speaker 1: I'm gonna go to the to the crew that you

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Speaker 1: and I are weaned on in Large Mountain, New York,

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Speaker 1: Mike Burke, Chartcraft, Mr. Cohen's work, and of course Earl Blumenthal.

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Speaker 1: They knew when to have the courage to get into

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Speaker 1: the market. How do you get into the market like

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Speaker 1: you did in nine Uh, when you say get into

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Speaker 1: the market, you mean participating and trading. I'm in cash

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Speaker 1: and I need to go long. How do I get

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Speaker 1: back into the market if I'm scared stiff? Well again,

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Speaker 1: I I again being a technician, I think you gotta

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Speaker 1: look at levels, and I think in the days ahead,

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Speaker 1: literally excuse me, in the in the very short term,

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Speaker 1: the next couple of weeks, just watch because we're in

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Speaker 1: the early seasons right now, and we've still got a

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Speaker 1: lot of dialogue about whether it's a recession and not

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Speaker 1: a recession um and you've got the war in Ukraine.

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Speaker 1: If we can hold above that October low, which I

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Speaker 1: think we will, that to me would be the final test.

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Speaker 1: So the next couple of weeks volatility we hold above

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Speaker 1: those loans, I think, looking out towards the second half

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Speaker 1: of this year, I think we're going to be in

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Speaker 1: pretty good cheap never enough time Ralph and Compourer, they're

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Speaker 1: on technical analysis. Just honored to have him on with us.

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Speaker 1: I'm happy to say here in London I can catch

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Speaker 1: up with Jeremy Stretch, the head of Detail FEC Strategy

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Speaker 1: at C I B C. Jeremy great to catch up

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Speaker 1: with anybody. Good to see it from page to the

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Speaker 1: ft this morning for all to see. Europe can avoid recession?

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Speaker 1: The Eurozone can avoid recession? Can the Eurozone avoid recession? Well?

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Speaker 1: Suddenly the movie music has materially changed because of the

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Speaker 1: retreat that we've seen in European gas prices, and of

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Speaker 1: course we've also seen that Chinese reopening narrative which is

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Speaker 1: providing a slightly more constructive backdrop for the German exports sector.

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Speaker 1: So the combination of these two factors does suggest that

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Speaker 1: Europe might and Germany and the leadership of that might

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Speaker 1: just avoid that negative GDP print. And that's obviously one

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Speaker 1: of the one of the catholics which has really been

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Speaker 1: driving this euro recovery narrative, alongside the presumption that the

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Speaker 1: ECB is seemingly much more hawkers than the defeat. And

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Speaker 1: it's a relative story, isn't it stagnation versus recession? Now

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Speaker 1: we need to talk about stagnation versus expansion and recovery.

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Speaker 1: It's a big difference between the form and the latter. No, indeed,

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Speaker 1: indeed there is so in a sense, I think what

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Speaker 1: we had is that obviously, going through the third quarter

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Speaker 1: last year, we had an enormous degree of negativity pricing

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Speaker 1: or baked into the sort of the Eurozone recovery narrative,

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Speaker 1: because of course we were talking about the potential of

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Speaker 1: gas rationing. Now here we are at this stage in

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Speaker 1: the in the in the winter period. Now it is

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Speaker 1: remarkably cold here in London as we know at the moment,

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Speaker 1: but the actual winter itself has been relatively mild thus far.

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Speaker 1: And if you look at European gas short storage levels,

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Speaker 1: it's they're running around twenty above the sort of levels

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Speaker 1: you would have expected normally at this time of the winter.

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Speaker 1: So that eases the burden in terms of the re

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Speaker 1: refilling of those gas storage tanks through the course of

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Speaker 1: this summer, and US we've seen Germany opening its liquefied

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Speaker 1: natural gas UH ports in terms of William's Harving for example.

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Speaker 1: So the ability for Germany to get those en ergy

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Speaker 1: capabilities or or flows from the US in particular has

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Speaker 1: helped to alleviate some of those recession risks far enough,

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Speaker 1: coal as well over in Germany well, which is which

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Speaker 1: is which is an interesting one. So in the sense

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Speaker 1: that's one of the legacy issues. So that's why it

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Speaker 1: was as fascinating to see, you know, the great of

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Speaker 1: Thumberg narrative being put alongside at the World Economic Forum

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Speaker 1: in Davos. You mentioned the CP is a question for

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Speaker 1: you three, does the e c V hype more than

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Speaker 1: the Fed this year. Yes, I think it does. I

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Speaker 1: think we're very much in this steady and significant policy

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Speaker 1: narrative the you know, the sort of paraphrase Madame Legarde

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Speaker 1: and throw Margaret Thatcher into it's the ladies not for

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Speaker 1: turning in terms of the interest rate story from the

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Speaker 1: narrative that we saw from last week. So it seems

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Speaker 1: likely to go along with the comments and class not

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Speaker 1: over the weekend that we're going to see at least

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Speaker 1: two fifty bases where most in the from the CD

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Speaker 1: the next two meetings. Do they go beyond that in

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Speaker 1: terms of into the spring? Possibly? Yes. So that I

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Speaker 1: think does suggest that the c B is gonna be

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Speaker 1: a little more hawkers than the Fed, because if we're

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Speaker 1: if the market is right, and obviously markets attending to be,

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Speaker 1: you know, very aggressive in terms of calling for a

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Speaker 1: moderation in terms of policy timing for the Fed, then

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Speaker 1: that does suggest that the c is gonna be more

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Speaker 1: hawk kid Joseph salk Jen this morning, writing in London

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Speaker 1: for sock Jen, saying, a spoonful of optimism house the

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Speaker 1: dollar go down. You want to play that against the yen,

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Speaker 1: against the euro? How do you want to play that story? Well, well,

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Speaker 1: I think that I think the yen is is an

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Speaker 1: obvious and in an interesting one because again we've we've

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Speaker 1: seen a degree of policy uncertainty really written large after

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Speaker 1: that adjustment in term of your curve control back in December.

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Speaker 1: Now those minutes from the meeting there have been really

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Speaker 1: so overnight suggests that a lot of the b o

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Speaker 1: J members were worried about the communication aspects of that change.

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Speaker 1: But I think it was it was always going to

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Speaker 1: be the case, you know, to expect a degree of

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Speaker 1: policy normalization from the bo J this year, but more

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Speaker 1: so after Corona leaves office, because of course he's only

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Speaker 1: got one more meeting to go. So I think, you know,

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Speaker 1: I think there is some substantive scope for yet appreciation.

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Speaker 1: So we you know, we'd be looking for runs up

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Speaker 1: to maybe one one, one thirty two in the nearer

403
00:20:06,440 --> 00:20:08,960
Speaker 1: term to provide better levels to start short looking from

404
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Speaker 1: a return back to one twenty. The words we use matter.

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Speaker 1: You said normalization and Japan in the first same sentence.

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Speaker 1: So we've had several decades now see a rates in Japan.

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Speaker 1: What's normal? Well, that's true. I mean I've been in

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Speaker 1: the market for some considerable time and you know Japan

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Speaker 1: and Japanese minetary policy has been generally the same. They

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Speaker 1: but always attaining for this aiming for this two percent

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Speaker 1: inflation target, which invariably they've missed other than and sporadic

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Speaker 1: and exceptional circumstances. We're seeing now normalization that I think

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Speaker 1: is a process of moving away from that negative interest

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Speaker 1: rate policy. So I think that's going to be the

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Speaker 1: dynamic that we're going to see. So if we start

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Speaker 1: to seeing Japan moving away from those negative rates, that

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Speaker 1: has enormous implications for fund flows because of course Japan

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Speaker 1: being that major exporter of capital, exporter of credit in

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Speaker 1: terms of looking for those higher yields. If there is

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Speaker 1: a degree of dislocation in terms of those fun flows

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Speaker 1: and that exiting from Japan, that I think that has

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Speaker 1: in more normous implications. So as we look for treasury

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Speaker 1: j UB spreads to continue to compress, that provides that

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Speaker 1: to a momentum for Dolly and to move. Love talked

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Speaker 1: to me about their limits, about how far they B

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Speaker 1: I J can go, how far they can pull back

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Speaker 1: from their your curve control. I was thinking about the

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Speaker 1: ECB in Europe in the last year, and if you

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Speaker 1: told me they were going to deliver what they have delivered.

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Speaker 1: On top of throwing in QUTEI as well. I would

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Speaker 1: have had real doubts about what could or couldn't happen

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Speaker 1: to the bond market. I would have expected the periphery

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Speaker 1: to face a real, real difficulty. I know spreads are wider,

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Speaker 1: I know yields are out over the last twelve months

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Speaker 1: or so, but not to the extent that I would

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00:21:29,560 --> 00:21:31,199
Speaker 1: have said, have you been surprised by that? What does

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00:21:31,200 --> 00:21:33,639
Speaker 1: that inform you about how far the BOJ might go?

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Speaker 1: You're absolutely right, because if you think about what we've

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00:21:36,359 --> 00:21:37,800
Speaker 1: seen from the c B, you would have thought that

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00:21:37,920 --> 00:21:39,520
Speaker 1: B two B bund spreads would have been pushing to

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00:21:39,600 --> 00:21:42,000
Speaker 1: fifty basis points or higher and starting to really create

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00:21:42,520 --> 00:21:45,119
Speaker 1: some degree of fragmentation risk. So, in a sense, I

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00:21:45,119 --> 00:21:46,720
Speaker 1: think you know that we have seen a degree of

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Speaker 1: relative calm, if you like, in terms of the movements

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00:21:50,240 --> 00:21:52,359
Speaker 1: that we've seen in terms of monitory policy. And I

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00:21:52,400 --> 00:21:54,040
Speaker 1: think that's going to be interesting in terms of Japan.

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00:21:54,119 --> 00:21:56,960
Speaker 1: So can they tolerate you know, long air yields, you

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00:21:57,000 --> 00:21:59,000
Speaker 1: know ten year olds moving up on one percent? I

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00:21:59,000 --> 00:22:01,800
Speaker 1: think they probably can if we get a more normalized

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00:22:02,119 --> 00:22:04,600
Speaker 1: yield curve in Japan. So I think you know there

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Speaker 1: is this scope for an adjustment. I'm not suggesting that

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Speaker 1: you know the bo J is going to be suddenly

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00:22:08,840 --> 00:22:13,040
Speaker 1: adopting a very aggressive place of balance sheet constriction. I

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00:22:13,040 --> 00:22:16,400
Speaker 1: think it's more about removing or easing those consideration terms

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00:22:16,440 --> 00:22:20,240
Speaker 1: of your curve control, removing that negative rate dynamic, and

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00:22:20,280 --> 00:22:22,879
Speaker 1: then encouraging some of those fun flows to remain on shore.

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00:22:23,160 --> 00:22:25,760
Speaker 1: I think that's the sort of the dynamic, rather necessarily

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Speaker 1: going for a complete sea change, even with the confines

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00:22:28,600 --> 00:22:30,960
Speaker 1: of a new administration. Let's finish on the FED. The

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00:22:31,000 --> 00:22:33,480
Speaker 1: dove's got the last word, Governor Waller. I would have

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00:22:33,480 --> 00:22:35,800
Speaker 1: called him a dove last year, but certainly endorsed the

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00:22:35,800 --> 00:22:38,240
Speaker 1: twenty five basis quite moved this year. Are we done

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00:22:38,240 --> 00:22:41,480
Speaker 1: after that? I think we're then getting to a situation

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00:22:41,520 --> 00:22:43,720
Speaker 1: where we are literally right at the end game, and

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Speaker 1: I think the data will then determine that. So I

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Speaker 1: think we are still very much focusing on employment and earnings.

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00:22:49,040 --> 00:22:50,639
Speaker 1: I think those are the t that you know, the

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00:22:50,720 --> 00:22:54,000
Speaker 1: obvious benchmarks, and then of course looking within the CPI

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Speaker 1: print to see how things like those rent dynamics play out.

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Speaker 1: So I think we are very very close to the

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00:22:58,640 --> 00:23:00,879
Speaker 1: end game here. But I think the the other issue

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00:23:00,880 --> 00:23:03,679
Speaker 1: that we were still take take issue with from the

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00:23:03,720 --> 00:23:06,600
Speaker 1: market perspective is that degree of cuts, you know, that

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00:23:06,680 --> 00:23:09,040
Speaker 1: rate cutting, that's price into the market. Were very close

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00:23:09,040 --> 00:23:10,520
Speaker 1: to the end of the hiking cycle where we don't

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00:23:10,560 --> 00:23:13,680
Speaker 1: necessariything we should be pricing in cuts from the second

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00:23:13,680 --> 00:23:16,119
Speaker 1: half of the final question, Marcus have to grapple with

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00:23:16,200 --> 00:23:20,119
Speaker 1: ever changing probabilities and price them accordingly. Who's got more

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00:23:20,200 --> 00:23:23,040
Speaker 1: chance here the Federal's Earth get into five or Tottenham

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00:23:23,080 --> 00:23:25,240
Speaker 1: getting the top four finish this year in the league.

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Speaker 1: We'll considering my son as a massive Arsenal fan. Then

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Speaker 1: I really really cannot, I really cannot answer anything in

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00:23:31,640 --> 00:23:34,560
Speaker 1: the affirmative in relation to Tottenham. There we go, Jemmy Stretcher,

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Speaker 1: CRV Sanks very much. Let's see you may Thanks for

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00:23:36,680 --> 00:23:40,760
Speaker 1: having us. This is the Bloomberg Surveillance Podcast. Thanks for listening.

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00:23:41,119 --> 00:23:44,480
Speaker 1: Join us live weekdays from seven to ten AMI Eastern.

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00:23:44,680 --> 00:23:49,080
Speaker 1: I'm Bloomberg Radio and Bloomberg Television each day from six

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00:23:49,200 --> 00:23:54,080
Speaker 1: to nine am for insight from the best in economics, finance, investment,

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00:23:54,240 --> 00:24:00,920
Speaker 1: and international relations. And subscribe to the Surveillance Podcast on Apple, podty, SoundCloud,

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00:24:01,080 --> 00:24:04,680
Speaker 1: Bloomberg dot com, and of course on the terminal. I'm

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Speaker 1: Tom keene In. This is Bloomberg m