WEBVTT - Bloomberg Surveillance: Macro Investor Trends 0:00:05.160 --> 0:00:08.480 This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:08.520 --> 0:00:12.360 with Jonathan Farrow and Lisa Abramowitz. Join us each day 0:00:12.400 --> 0:00:16.840 for insight from the best and economics, geopolitics, finance and investment. 0:00:17.280 --> 0:00:22.079 Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 0:00:22.320 --> 0:00:26.600 anywhere you get your podcasts, and always on Bloomberg dot Com, 0:00:26.640 --> 0:00:30.840 the Bloomberg Terminal and the Bloomberg Business App. Short introduction 0:00:31.080 --> 0:00:33.360 Because every word matters, Jeffy you joins us, will be 0:00:33.440 --> 0:00:36.560 n Y Melon Yes. Off their twelve page I'll look 0:00:36.640 --> 0:00:40.320 see forward of twenty twenty four, but far more on 0:00:40.400 --> 0:00:43.600 where we are, the interdependencies of everything that we're doing 0:00:43.680 --> 0:00:47.440 right now. How is our stability, Jeff you to get started? 0:00:47.760 --> 0:00:51.879 Are you worried about glide pass being stable forward? Or 0:00:52.159 --> 0:00:55.520 is there instabilities jump conditions out there? 0:00:56.520 --> 0:00:58.920 I'm actually compared to a few months ago, you know, 0:00:58.960 --> 0:01:01.880 probably I am less worried about the instabilities. You look 0:01:01.880 --> 0:01:05.600 at how markets are reacting to geopolitics and other facets, 0:01:05.600 --> 0:01:07.920 and I think things are being handled pretty well. 0:01:07.959 --> 0:01:09.520 I think we should be thankful. 0:01:09.160 --> 0:01:11.240 That there was a nice loosing of financial conditions over 0:01:11.240 --> 0:01:12.160 the last few weeks. 0:01:12.360 --> 0:01:13.840 Now, some correction is needed. 0:01:13.840 --> 0:01:16.080 The question in the short term, the tactical play is 0:01:16.319 --> 0:01:19.319 do you play the correction of the correction that I 0:01:19.360 --> 0:01:21.520 think is going to be something markets need to deal with. 0:01:21.680 --> 0:01:23.960 What's interesting in Damien is what I think doesn't matter 0:01:23.959 --> 0:01:26.480 because Damien says are is going time? Shut up. We 0:01:26.560 --> 0:01:28.520 got to talk to jeff you about higher. 0:01:28.319 --> 0:01:31.520 Yields, about real stuff. I mean, look, Jeffy, you know 0:01:31.560 --> 0:01:34.800 your iflow macro investor themes piece is just it's required 0:01:34.840 --> 0:01:36.560 reading for anybody in the market. But I'm looking at 0:01:37.360 --> 0:01:39.560 two of your views here, the first being a view 0:01:39.600 --> 0:01:42.240 of the US Treasury tenure yield at five percent or higher. 0:01:42.280 --> 0:01:44.440 Obviously that's a steeper curve, but more importantly to me, 0:01:45.200 --> 0:01:48.920 you're a dollar down to parody before stabilizing. I mean, 0:01:48.960 --> 0:01:51.120 talk to us about that. That seems quite out of consensus. 0:01:51.920 --> 0:01:52.920 It is out of consensus. 0:01:52.960 --> 0:01:55.280 But if you look at what the euro curve is 0:01:55.320 --> 0:01:58.120 pricing right now, you're surprisingly so people ask me, okay, 0:01:58.120 --> 0:01:59.800 you see you're a dollar at parity. Do you see 0:01:59.880 --> 0:02:03.080 very aggressive ECB cards? I said, well, yes, but relative 0:02:03.080 --> 0:02:05.360 to what markets have been pricing towards era and no, 0:02:05.400 --> 0:02:07.600 I thought markets were adequately priced we were at one 0:02:07.640 --> 0:02:10.200 hundred and fifty basis points for the UCB. I thought 0:02:10.200 --> 0:02:12.360 that was perfectly fine. But if you believe it one 0:02:12.400 --> 0:02:14.400 hundred and fifty basis points from the UCB, then what 0:02:14.480 --> 0:02:15.679 was zero dollar doing up here? 0:02:15.800 --> 0:02:16.000 Right? 0:02:16.080 --> 0:02:18.240 So I think that needs to be reconciled. Even if 0:02:18.240 --> 0:02:21.240 we meet halfway. I don't think parity actually is is 0:02:21.280 --> 0:02:22.280 quite a bold call at all. 0:02:22.440 --> 0:02:23.919 Well, what's a bit of this way in fax? I 0:02:23.960 --> 0:02:27.400 mean the big heavy lifting models, those you know, relative value, 0:02:27.440 --> 0:02:31.080 those great differential relative rate differential models are doing a 0:02:31.080 --> 0:02:33.280 lot of the explaining in terms of, you know, how 0:02:33.440 --> 0:02:35.200 currencies are performed over the better part of not just 0:02:35.240 --> 0:02:36.760 the last year, but the last two years. Talked to 0:02:36.840 --> 0:02:40.800 us about carry in foreign exchange markets, Jeff, is it 0:02:40.800 --> 0:02:43.639 still going to be the driver performance in. 0:02:43.600 --> 0:02:46.080 The short term? Not really, I think because things are 0:02:46.120 --> 0:02:48.240 starting to come off. You know, I look at our 0:02:48.280 --> 0:02:51.120 carry indecks. Are people buying Latin not as much as 0:02:51.240 --> 0:02:54.320 last year? If are they buying Central and Eastern Europe? Yes, 0:02:54.360 --> 0:02:56.079 over the last month, but that's coming off as well. 0:02:56.080 --> 0:02:57.800 We saw the news out of Hungary this morning. How 0:02:58.080 --> 0:03:01.160 but the dollar's role is very interesting. Last year it 0:03:01.280 --> 0:03:04.120 was a carry currency. So you own dollar yield against 0:03:04.440 --> 0:03:07.880 CNY against the en, but you funded out of dollars 0:03:08.040 --> 0:03:10.640 against Brazilian real and Mexican pay so it was a 0:03:10.639 --> 0:03:13.320 funder and it was a carry name. This year, however, 0:03:13.400 --> 0:03:16.800 we think on balance dollar strength, you know, again it 0:03:16.840 --> 0:03:20.000 will depend on what you play against. Maybe Asia can 0:03:20.040 --> 0:03:22.440 come back a bit, but against the rest like Latin 0:03:22.520 --> 0:03:24.399 for example, I think the dollar can actually hold well. 0:03:24.600 --> 0:03:27.840 Jeff you on a strong dollar in a parody hero, 0:03:28.400 --> 0:03:31.800 What does that do to the stock market and particularly 0:03:32.280 --> 0:03:36.440 what does that do to the Magnificent seven? Is long 0:03:36.520 --> 0:03:37.680 duration assets? 0:03:38.680 --> 0:03:41.560 Well, I'll always say for the US, thankfully, especially for 0:03:41.680 --> 0:03:44.600 US equity markets, you know, the lowest proportion of foreign 0:03:44.760 --> 0:03:47.800 earnings exposure compared to the rest of the major economies, 0:03:48.240 --> 0:03:51.520 so it shouldn't worry them too much if there is 0:03:51.520 --> 0:03:52.400 a global. 0:03:52.000 --> 0:03:54.000 Demand story or an earning story. 0:03:54.200 --> 0:03:56.720 And on the external side, what if China starts to 0:03:56.760 --> 0:04:00.640 export deflation disinflation again, that's where the things for US 0:04:00.760 --> 0:04:01.960 tech we'll have to worry about. 0:04:02.000 --> 0:04:04.640 And that's a wheelhouse of Jeffrey, you Damien to talk 0:04:04.720 --> 0:04:07.320 about this, this exporting of price change. 0:04:07.360 --> 0:04:09.760 That's exactly right China, and it's the Asian currencies. I mean, 0:04:09.760 --> 0:04:11.640 all the talk this morning, Jeffrey is about you know, 0:04:11.680 --> 0:04:14.600 the dollar dominance and how it's triggering intervention fears across 0:04:14.600 --> 0:04:16.719 some of those more developed Asian markets. You know, I'm 0:04:16.760 --> 0:04:20.320 talking China, South Korea, Taiwan and perhaps even Japan. I mean, 0:04:20.360 --> 0:04:21.680 talk to us about that. What do you what are 0:04:21.720 --> 0:04:25.480 your thoughts about official buying of of currencies and equities 0:04:25.480 --> 0:04:25.920 in Asia? 0:04:27.040 --> 0:04:29.680 I think most Asian central banks are you know, much 0:04:30.040 --> 0:04:33.599 more neutral these days. Know, they're happy to let the 0:04:33.640 --> 0:04:36.080 markets do its job. You know, they don't want misalignments. 0:04:36.080 --> 0:04:38.840 And if there's there are moves. And it's always about pace. 0:04:38.880 --> 0:04:41.240 It's never really about levels, right, It's about pace if 0:04:41.240 --> 0:04:43.479 it goes too much too soon. You've heard the Swiss 0:04:43.560 --> 0:04:46.160 National Bank come president here talk about this as well, so. 0:04:46.520 --> 0:04:47.920 They could start to push back a bit. 0:04:48.279 --> 0:04:50.599 But the fact is, you know, China's numbers are the 0:04:50.600 --> 0:04:52.800 inflation numbers. They need a bit of a lift, and 0:04:52.880 --> 0:04:55.159 so the central banking and may say, come on, stronger 0:04:55.240 --> 0:04:56.600 dollar right now may not be a bad thing. 0:04:57.200 --> 0:05:00.440 Your report, folks, we've protected the copyright of being mel 0:05:00.640 --> 0:05:02.920 go to by Melon to get the Jeffrey you report 0:05:03.000 --> 0:05:07.360 with mister Savage. But there, Damien, it's just simple three 0:05:07.480 --> 0:05:10.520 or five percent GDP growth in China. Right, that's the way, 0:05:10.600 --> 0:05:11.760 Jeff Well. 0:05:11.800 --> 0:05:13.320 I mean, Jeff, you know the other thing I'm really 0:05:13.360 --> 0:05:15.520 curious to hear your thoughts about is geopolitical risk. Right, 0:05:15.560 --> 0:05:17.799 I mean, if you just think about performance since Israel 0:05:17.839 --> 0:05:20.760 Hamas began in early October. I mean, we have equities up, 0:05:20.800 --> 0:05:23.040 we have oil down, spreads, you're tighter. I mean we've 0:05:23.040 --> 0:05:25.760 been saying this over and over again. Does geopolitical risk 0:05:25.839 --> 0:05:28.280 even matter? And in an election year, I mean, forget 0:05:28.320 --> 0:05:30.440 about the US. We have a lot of other countries 0:05:30.440 --> 0:05:32.200 in an election year. I mean, I think two out 0:05:32.240 --> 0:05:34.480 of three individuals in the democratic world are going to 0:05:34.520 --> 0:05:36.520 be voting for a new leader in twenty twenty four. 0:05:37.000 --> 0:05:38.760 How does that kind of resonate with you? 0:05:39.920 --> 0:05:42.400 I think it will always matter. But people want to 0:05:42.440 --> 0:05:45.200 wait these days rather than preempt and policy outcomes. 0:05:45.279 --> 0:05:46.480 Right, it doesn't matter where you are. 0:05:46.640 --> 0:05:49.440 You want to just look at policy proposals with a 0:05:49.480 --> 0:05:51.920 fine toothcomb and then identify what could be a risk. 0:05:52.160 --> 0:05:55.760 If now there's a sudden geopolitical event that comes through, 0:05:55.760 --> 0:05:57.839 we can deal with accordingly. But the fact that we 0:05:57.880 --> 0:06:00.080 have been able to respond on markets being able to 0:06:00.120 --> 0:06:03.120 one in a much more obviously calm manner. I think 0:06:03.120 --> 0:06:05.440 you can read this two ways. One we have the 0:06:05.480 --> 0:06:08.360 tools available to deal with risks. Or is there still 0:06:08.400 --> 0:06:10.520 too much liquidity? And that's an argument, you know, for 0:06:10.640 --> 0:06:12.400 more financial conditions tightening. 0:06:12.240 --> 0:06:14.080 Is needed as well, maybe that they need to do more. 0:06:14.320 --> 0:06:17.560 Jeffro quickly, here are you worried about the United States 0:06:17.800 --> 0:06:19.039 ginormous debt? 0:06:20.920 --> 0:06:24.039 So two things there there is no replacement or the 0:06:24.120 --> 0:06:26.680 dollars dominance, you know as the world's funding assets. 0:06:26.720 --> 0:06:28.440 You know, this has been talked about for twenty years. 0:06:28.600 --> 0:06:31.760 Is it going to be them? Be the euro crypto dollars? 0:06:31.800 --> 0:06:35.720 Press prominence is not going to be challenged. Alternatives always 0:06:36.120 --> 0:06:38.880 come through, So it's about a decline in share, but 0:06:38.920 --> 0:06:41.960 from a very high level. So yes, people will worry 0:06:41.960 --> 0:06:44.680 about that. We always ask the counter question, Okay, we 0:06:44.760 --> 0:06:47.240 agree there is a risk, what is the alternative? And 0:06:47.279 --> 0:06:49.520 if there's still a lack of alternatives at this pace, 0:06:49.680 --> 0:06:50.960 I don't see that challenging the status. 0:06:51.000 --> 0:06:54.880 Quote a briefing from Jeffrey You terrific kickoff report from 0:06:54.960 --> 0:07:09.200 bny Mel and Jeffrey You there their lead strategists. This 0:07:09.279 --> 0:07:13.360 is a really important conversation and at Dovetail's perfectly office 0:07:13.400 --> 0:07:17.320 work is incredible carefulness about measuring the American economy. Shree 0:07:17.360 --> 0:07:20.360 Kamar out on the left coast just iconic it doing 0:07:21.360 --> 0:07:25.760 this so well in Shre Bob Burgess, who's legendary at Bloomberg, 0:07:25.880 --> 0:07:29.160 Robert Burgess driving all of our bond coverage for year 0:07:29.760 --> 0:07:32.440 had arguably could be the chart of the year in 0:07:32.560 --> 0:07:36.840 January and basically it shows the linear growth, the straight 0:07:36.880 --> 0:07:41.240 line growth of American retail and then we enjoyed one 0:07:41.880 --> 0:07:47.120 two and the final Damien Sassar stimulus and retail has 0:07:47.360 --> 0:07:52.400 boomed off the projection the trajectory that it was supposed 0:07:52.400 --> 0:07:55.800 to be on. Shree Kamar is our GDP of fiction 0:07:56.680 --> 0:07:59.720 because we've got a consumer pop as we saw yesterday 0:08:00.040 --> 0:08:04.320 retail simply because of the COVID stimulus. 0:08:06.120 --> 0:08:09.440 I think Bob is correct in this analysis. It's a 0:08:09.480 --> 0:08:13.640 good one, Tom, and I would mention, yes, GDP growth 0:08:13.800 --> 0:08:17.040 as well as the retail sales increase being so substantial 0:08:17.960 --> 0:08:21.080 is a large measure due to both the fiscal and 0:08:21.160 --> 0:08:25.600 monetary stimulus that we have had nine hundred billion dollars 0:08:25.640 --> 0:08:29.120 in the final months of the Biden about the Trump administration, 0:08:29.760 --> 0:08:33.160 and another one point nine trillion in the initial months 0:08:33.200 --> 0:08:37.200 of the Biden administration. That is along with the Federal 0:08:37.240 --> 0:08:42.319 Reserve keeping zero interest rates much longer than the economic 0:08:42.400 --> 0:08:47.040 recovery required, and also the fact that the interest rates 0:08:47.320 --> 0:08:50.520 not only were kept zero, but the balance sheet was 0:08:50.600 --> 0:08:54.640 doubled from the beginning of twenty twenty to twenty twenty two. 0:08:54.880 --> 0:08:59.000 That was That's what you're seeing in consumer hands. More 0:08:59.040 --> 0:09:02.880 than one trillion dollars of stimulus is estimated to be 0:09:03.000 --> 0:09:05.679 with them, and that is what is giving rise to 0:09:05.720 --> 0:09:09.959 what you see the postponement of the recession tom rather 0:09:10.040 --> 0:09:13.080 than an abandonment of it. And that's how it put it. 0:09:13.240 --> 0:09:15.360 Forget about the parlor game of like what the Fed 0:09:15.440 --> 0:09:17.559 is going to do January March whenever the next meeting 0:09:17.720 --> 0:09:20.960 is our twenty four month tree thirty six months where 0:09:20.960 --> 0:09:25.040 you really work. Are you optimistic our federal reserve can 0:09:25.120 --> 0:09:27.080 get us there with stability? 0:09:29.400 --> 0:09:33.160 I think despite the Federal Reserve, we are going to 0:09:33.200 --> 0:09:35.800 get there to economic growth and we are going to 0:09:35.800 --> 0:09:39.679 get to recovery. That because the Federal Reserve is present, 0:09:39.920 --> 0:09:41.720 we are going to get there with a lot of 0:09:41.800 --> 0:09:46.000 volatility a lot more than it's needed. Example, you have 0:09:46.320 --> 0:09:50.080 Jerome Power telling us in his December thirteenth press conference 0:09:50.679 --> 0:09:55.960 essentially indicating the next move is downward and suggesting several 0:09:56.080 --> 0:10:00.320 rate cuts. The markets took off after his speech. Then 0:10:00.480 --> 0:10:02.960 we hit people like John Williams of the New York 0:10:03.040 --> 0:10:05.480 FED who had to do the clean up pat and 0:10:05.480 --> 0:10:11.200 they essentially contradict the chairman. That provides volatility. But I 0:10:11.240 --> 0:10:14.560 think the US economy is strong enough, as Bob mentioned 0:10:14.559 --> 0:10:17.800 in this article, that you really will have a good 0:10:17.840 --> 0:10:19.920 result two to three years from now, which is the 0:10:19.960 --> 0:10:21.120 timeframe you suggested. 0:10:21.440 --> 0:10:25.040 I can't say enough Damian about how Shriek Kamars he 0:10:25.120 --> 0:10:28.640 always does explains this and this is Stiglitz one O 0:10:28.840 --> 0:10:31.760 one and that all the worries out there, and shre 0:10:31.880 --> 0:10:35.640 frames it beautifully. But if you have this miracle, which 0:10:35.679 --> 0:10:39.200 is American economic growth, it can solve the debt, the 0:10:39.240 --> 0:10:40.199 deficit problem. 0:10:40.400 --> 0:10:43.320 Things of the Past by Shriek Kumar three. I have 0:10:43.400 --> 0:10:46.839 to ask you this. I read your work religiously. You're 0:10:46.880 --> 0:10:49.800 talking about the mention of a slowing of QT and 0:10:49.840 --> 0:10:52.280 the read through into how that might mean that the 0:10:52.280 --> 0:10:55.560 FED is thinking about perhaps something breaking in the market. 0:10:55.559 --> 0:10:58.240 It's a credit event as opposed to you know, PC 0:10:58.360 --> 0:10:59.960 below two percent is clearing the way for the FED 0:11:00.160 --> 0:11:02.240 the cut I mean, talk to us about that. What 0:11:02.280 --> 0:11:04.080 does that mean for financial markets? 0:11:04.080 --> 0:11:08.559 And as the prices very timely questioned Damien. Look back 0:11:08.600 --> 0:11:14.600 to September twenty nineteen, QT, or quantitative tightening, had been 0:11:14.640 --> 0:11:17.760 in effect for two years. At that time. The FED 0:11:17.840 --> 0:11:21.720 had been reducing its balance sheet from twenty seventeen until 0:11:21.760 --> 0:11:26.440 September twenty nineteen and was fined one fine day the 0:11:26.520 --> 0:11:30.880 week of September sixteenth. The short term interest rate shot 0:11:30.960 --> 0:11:34.600 up as the FED had not anticipated, so they had 0:11:34.640 --> 0:11:38.200 to give up on the quantitative tightening switch over to 0:11:38.280 --> 0:11:41.679 provide liquidity in order to bring the interest rate down. 0:11:42.400 --> 0:11:46.160 We are, I think, in an exactly same situation today. 0:11:46.720 --> 0:11:51.640 We have quantitative tightening, which resumed in mid March after 0:11:51.720 --> 0:11:55.760 the regional banking crisis, and having done that and reached 0:11:55.800 --> 0:12:00.240 where we are, Damiene, we are finding out that the 0:12:00.280 --> 0:12:03.400 amount of reserves in the hands of the banks the 0:12:04.280 --> 0:12:08.400 reverse repurchase agreements have fallen off a cliff in the 0:12:08.480 --> 0:12:11.200 last few days. That is what I think the FED 0:12:11.320 --> 0:12:14.640 is reacting to. That's where the Wall Street Journal article 0:12:14.800 --> 0:12:18.360 in the last two days about the resumption of a 0:12:18.440 --> 0:12:21.520 slowdown of the QT is coming from so stree. 0:12:21.559 --> 0:12:23.160 I just have to cut in here. I mean, so 0:12:23.679 --> 0:12:26.640 let me ask you this. Do we want something to break? 0:12:26.760 --> 0:12:28.880 Is that the way we get that egg your Denny 0:12:29.120 --> 0:12:32.400 six thousand in the S and P only after something breaks? 0:12:32.480 --> 0:12:35.000 Or are we trying to avoid that with a soft landing? 0:12:35.040 --> 0:12:36.480 I mean, what's better for the US economy? 0:12:38.160 --> 0:12:40.920 Off landing would be better for the US economy. But 0:12:41.000 --> 0:12:43.280 I don't think you reach a six thousand on the 0:12:43.440 --> 0:12:44.720 SNP without a break. 0:12:45.440 --> 0:12:47.640 And there it is. I agree completely straight. 0:12:47.720 --> 0:12:52.120 Please, thank you and thank you, and then again once 0:12:52.160 --> 0:12:56.280 something breaks. I would say, you are in the September 0:12:56.400 --> 0:13:01.040 two thousand and eight situation. Lehman Brothers has just gone bankrupt, 0:13:01.920 --> 0:13:04.560 but the stock market continues to decline for the next 0:13:04.559 --> 0:13:07.559 three or four months. An end of two thousand and eight, 0:13:07.840 --> 0:13:10.960 the Fed says they are going to increase the balance sheet, 0:13:11.360 --> 0:13:14.079 keep the interest rate at zero. We reach the S 0:13:14.160 --> 0:13:16.800 and P five hundred bottom in March of two thousand 0:13:16.800 --> 0:13:20.120 and nine, so wait for three months after a breakage, 0:13:20.360 --> 0:13:22.439 and then you will have the rally starting. 0:13:22.240 --> 0:13:24.200 In stre Thank you so much, so you comar with 0:13:24.280 --> 0:13:25.240 us from Santa Monica. 0:13:25.360 --> 0:13:26.520 Thank you very much this one. 0:13:26.559 --> 0:13:34.439 I really really appreciate joining us now with PNC Bank 0:13:34.559 --> 0:13:37.920 with a look to your portfolio. Amanda A. Gotti joins 0:13:37.960 --> 0:13:42.079 his PNC's the chief investment Officer asset Management. Amanda, thank 0:13:42.120 --> 0:13:43.520 you so much for joining today. 0:13:43.880 --> 0:13:44.400 I get the. 0:13:44.360 --> 0:13:49.160 Memo that sixty forty worked last year. Can the theory 0:13:49.200 --> 0:13:52.120 of sixty forty work in twenty twenty four. 0:13:53.400 --> 0:13:55.920 Well, I'm delighted to be with both of you. By 0:13:55.920 --> 0:13:58.400 the way, I can't compete with those pirates tickets, but 0:13:58.440 --> 0:14:02.760 I have knit Neilon for tickets. Maybe we can go 0:14:02.840 --> 0:14:06.360 to a game sometime. Look, but to get yeah, to 0:14:06.400 --> 0:14:09.240 get there, you go, there you go. We're going to 0:14:09.320 --> 0:14:11.000 have a big year next year. I have no doubt. 0:14:11.920 --> 0:14:16.080 To get to your question, absolutely, sixty forty will be 0:14:16.240 --> 0:14:19.360 alive and well in twenty twenty four. A lot of 0:14:19.400 --> 0:14:22.400 calls for the death of sixty forty previously, and that 0:14:22.480 --> 0:14:25.400 was effectively the case when we were in a different 0:14:25.440 --> 0:14:28.840 interest rate, you know, regime and environment. But given all 0:14:28.920 --> 0:14:32.840 of the FED policy action, given where yields are sitting today, 0:14:33.120 --> 0:14:36.800 it's breathing a lot of new life into fixed income markets, 0:14:36.800 --> 0:14:39.840 and so we do think that that sixty forty portfolio 0:14:39.960 --> 0:14:42.400 does make a lot of sense, not for everybody, but 0:14:42.480 --> 0:14:45.320 certainly does make sense, make good sense in this environment. 0:14:45.480 --> 0:14:47.320 How do you at P and C take a measured 0:14:47.360 --> 0:14:51.520 approach when you see the growth the revenue growth modeling 0:14:52.000 --> 0:14:56.120 of say Magnificent seven or Luxury Goods Reachmunk today out 0:14:56.160 --> 0:14:58.800 with a nine percent pop in revenue surprising with some 0:14:58.840 --> 0:15:01.800 good China growth. What do you do with the super 0:15:01.840 --> 0:15:03.680 growers after a bang up year. 0:15:04.800 --> 0:15:07.840 Well, we're certainly not backing up the truck and adding 0:15:07.880 --> 0:15:10.560 to positions, but we're very grateful that we have had 0:15:10.920 --> 0:15:14.040 a pretty broad based exposure to them in addition to 0:15:14.080 --> 0:15:16.160 the rest of the market over the course of the 0:15:16.280 --> 0:15:20.760 rally last year. I do think, though, given where valuations are, 0:15:20.800 --> 0:15:24.320 and even though the fundamental story continues to be pretty strong, 0:15:24.680 --> 0:15:27.560 we can't hang our hat on seven stocks to carry 0:15:27.560 --> 0:15:30.160 the day in twenty twenty four, and so we really 0:15:30.240 --> 0:15:34.560 need to see broader based reacceleration from the bottom four 0:15:34.600 --> 0:15:36.240 hundred and ninety three. And so that's one of my 0:15:36.240 --> 0:15:39.960 biggest wish list items for twenty twenty four. We'll see 0:15:39.960 --> 0:15:43.120 whether that wish is delivered by the time we get 0:15:43.160 --> 0:15:43.560 to the end of. 0:15:43.560 --> 0:15:45.600 The year, Amanda. You know, I'm a fixed income guy, 0:15:45.640 --> 0:15:49.080 but we've had a lot of stock jocks on in 0:15:49.120 --> 0:15:52.040 the past few days, and they're talking about beats beats 0:15:52.080 --> 0:15:54.840 over concerning consensus estimates. How that's going to be a 0:15:54.880 --> 0:15:57.200 big driver of equity market performance. But would you write 0:15:57.200 --> 0:15:59.280 in your note here it's not so much the beats, 0:15:59.280 --> 0:16:01.440 it's the missus. And I'd like you to expand on 0:16:01.480 --> 0:16:03.120 that a little bit. I mean, if you miss your 0:16:03.120 --> 0:16:05.360 earnings here in twenty twenty four, given this kind of 0:16:05.640 --> 0:16:08.800 positive undertone, the soft landing scenario that's being painted here, 0:16:09.200 --> 0:16:11.840 what do you think that will do to valuations and 0:16:12.720 --> 0:16:13.520 to total returns? 0:16:14.400 --> 0:16:17.840 Well, I think it's a challenging, if not fragile environment 0:16:17.920 --> 0:16:20.160 that we start twenty twenty four here with such a 0:16:20.160 --> 0:16:24.040 torrid rally and the lion's share of market returns last 0:16:24.080 --> 0:16:27.880 year being driven by valuation multiple expansion. We really need 0:16:27.920 --> 0:16:31.600 to see the earnings deliver to justify those valuations. And 0:16:31.680 --> 0:16:34.680 so I think this is the scenario in particular here 0:16:34.720 --> 0:16:38.840 for Q four earning season, where the misses can be 0:16:38.920 --> 0:16:42.720 pretty punishing, and so the beats or the inlines may 0:16:42.720 --> 0:16:44.920 be more muted in terms of reaction, but I think 0:16:44.920 --> 0:16:47.040 it's going to be a tough slog out there for 0:16:47.120 --> 0:16:50.400 those who miss, particularly given that we've had this really 0:16:50.440 --> 0:16:53.560 negative revisionary period is one of the worst in the 0:16:53.640 --> 0:16:56.080 last ten years, and so the bar has been set 0:16:56.160 --> 0:17:00.640 lower from an earnings perspective. But that valuations, I think 0:17:00.800 --> 0:17:03.520 is going to be a tough one to achieve here 0:17:03.560 --> 0:17:04.600 with Q four results. 0:17:04.720 --> 0:17:06.840 Yeah, and all the while, we see the VIX involved 0:17:06.880 --> 0:17:08.840 just kind of hanging in here at some very low levels. 0:17:08.920 --> 0:17:10.480 I mean, what are your thoughts there? I mean, should 0:17:10.480 --> 0:17:12.720 we be buying protection, should be looking at options markets, 0:17:12.720 --> 0:17:13.680 It's a way to hedge. 0:17:14.400 --> 0:17:18.320 The VIX has been in hibernation mode, certainly in a 0:17:18.400 --> 0:17:21.439 winter slumber here. I do think we're set for a 0:17:21.520 --> 0:17:25.400 bit of a resurgence in terms of volatility. Historically, though 0:17:25.480 --> 0:17:29.040 I've been very focused on a higher volatility regime or 0:17:29.160 --> 0:17:32.080 high volatility regime. I'm not sure we're going to see 0:17:32.119 --> 0:17:35.399 that kind of environment here in twenty twenty four. I 0:17:35.440 --> 0:17:37.800 do think things are going to be choppy. The start 0:17:37.840 --> 0:17:40.120 of the year has been pretty choppy, but it doesn't 0:17:40.160 --> 0:17:43.200 mean that it's going to be an extreme volatility environment 0:17:43.320 --> 0:17:46.320 like what we've seen really since the onset of the pandemic. 0:17:46.080 --> 0:17:50.040 State the dynamic as fields come down of what all 0:17:50.080 --> 0:17:52.720 that cash does. We popped six trillion a couple days 0:17:52.760 --> 0:17:56.200 ago in money market funds. It's a huge Pennsylvania heritage, 0:17:56.200 --> 0:18:00.560 folks of money market development, a federated at PNC is 0:18:00.800 --> 0:18:04.480 as well. If the yield comes down, what happens to 0:18:04.520 --> 0:18:06.000 our listeners portfolio? 0:18:07.560 --> 0:18:11.040 Well, I don't know that I'm particularly worried about yields 0:18:11.080 --> 0:18:14.119 coming down. Materially, there is quite a bit of cash 0:18:14.160 --> 0:18:16.880 sitting on the sidelines. I think a function of that 0:18:17.040 --> 0:18:20.120 is really locking in many of the games that we've 0:18:20.200 --> 0:18:24.000 enjoyed over the last year plus, and so I think 0:18:24.040 --> 0:18:27.119 there is definitely a yearning to put that capital to 0:18:27.280 --> 0:18:30.560 work again. But I think it's really hard to pound 0:18:30.600 --> 0:18:33.200 the table and back up the truck here given where 0:18:33.240 --> 0:18:36.320 equity valuations are, and so I think I would probably 0:18:36.400 --> 0:18:39.439 see more room and fixed income markets for some of 0:18:39.480 --> 0:18:41.680 that cash to be put to work, even if yields 0:18:41.680 --> 0:18:43.560 do start to come down ever so slightly. 0:18:43.800 --> 0:18:47.480 Thank you so much, yeadye whatever it is eighty listening 0:18:47.520 --> 0:18:51.240 in Altuna, Pennsylvania, where the Pennsylvania Railroad makes a tight 0:18:51.320 --> 0:18:57.399 turn with Miszagatti and Penn State football guy emails in 0:18:57.440 --> 0:19:01.280 from Altuna, Amanda, and he says, like Franklin can't get 0:19:01.320 --> 0:19:04.240 it done in the middle of the game. I mean, 0:19:04.280 --> 0:19:07.240 what do you do with your coach, James Franklin with 0:19:07.359 --> 0:19:10.000 always you know, game day coach and all that. I mean, 0:19:10.240 --> 0:19:12.480 where's the improvement got to be next year for the 0:19:12.640 --> 0:19:13.480 Nitney Lions. 0:19:14.640 --> 0:19:17.679 Oh my god, that is such a horrible question to 0:19:17.920 --> 0:19:21.080 end on here. I am not going to bet against Franklin. 0:19:21.440 --> 0:19:25.440 We've had just a tremendous recruiting history here these last 0:19:25.520 --> 0:19:27.680 couple of years, and I think next year is our year, 0:19:27.720 --> 0:19:29.359 and so I'm not going to bet against him. I 0:19:29.359 --> 0:19:30.200 think it's going to be fix. 0:19:30.800 --> 0:19:33.000 We'll take the odds. It's like the Fed. Let's take 0:19:33.040 --> 0:19:35.960 you think Amanda Gotty is going to come back again, Davey. 0:19:35.920 --> 0:19:38.159 You know, well Franklin used to coach the The mandible 0:19:38.200 --> 0:19:40.800 commodore is Maya. He's a andy guy, you know. I mean, 0:19:40.840 --> 0:19:42.240 we we're sorry to see him go. 0:19:42.520 --> 0:19:45.280 Yeah, James Franklin out of Penn State. Amanda Gotty never 0:19:45.359 --> 0:19:48.240 to appear again. Amanda, thank you so much. With P 0:19:48.359 --> 0:20:01.680 and C Banking, this is a Joy for a first 0:20:01.680 --> 0:20:05.720 conversation in twenty twenty four and the bankdrop here to 0:20:05.760 --> 0:20:08.720 talk to Marghi Patel of Allspring is wonderful. Torsen slock 0:20:08.760 --> 0:20:12.159 at Apollo out with a wonderful note which I'm in 0:20:12.280 --> 0:20:16.160 very strong agreement on, and his question is will twenty 0:20:16.280 --> 0:20:20.160 twenty four be a repeat of twenty twenty three. I've 0:20:20.160 --> 0:20:24.520 been suggesting that that's an outside non consensus call of 0:20:24.560 --> 0:20:28.080 the boredom. It will be just the same, Margie, after 0:20:28.480 --> 0:20:32.399 the oddities of twenty twenty three. Will this year be 0:20:32.520 --> 0:20:32.920 the same? 0:20:34.560 --> 0:20:36.560 No, I think it'll be a little different. I think 0:20:36.600 --> 0:20:39.760 the first half of the year will be choppy, probably 0:20:39.800 --> 0:20:43.320 down a bit, and after midyear the album for eurnings 0:20:43.320 --> 0:20:45.679 will look better, and also the run up with the 0:20:45.680 --> 0:20:48.119