WEBVTT - Analysis of PCE Data and Kamala Harris' Interview 0:00:00.080 --> 0:00:12.879 Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 0:00:12.960 --> 0:00:16.960 Surveillance Podcast. I'm Tom Keene along with Paul Sweeney. Join 0:00:17.079 --> 0:00:21.000 us each day for insight from the best in economics, finance, investment, 0:00:21.200 --> 0:00:24.840 and international relations. You can also watch the show live 0:00:25.079 --> 0:00:29.400 on YouTube. Visit the Bloomberg Podcast channel on YouTube to 0:00:29.520 --> 0:00:32.920 see the show weekday mornings from seven to ten am 0:00:32.960 --> 0:00:37.000 Eastern from our global headquarters in New York City. Subscribe 0:00:37.000 --> 0:00:40.760 to the podcast on Apple, Spotify, or anywhere else you listen. 0:00:41.080 --> 0:00:44.720 And always I'm Bloomberg Radio, the Bloomberg Terminal, and the 0:00:44.760 --> 0:00:48.599 Bloomberg Business App. Ira Jersey with us here a Bloomberg Intelligence. 0:00:48.640 --> 0:00:50.560 We're going to look at the inflation report. We welcome 0:00:50.640 --> 0:00:53.920 all of you across the nation, around the world on YouTube, 0:00:54.040 --> 0:00:58.000 subscribe to Bloomberg Podcasts, and with that we are here 0:00:58.120 --> 0:01:02.480 commercial free through this important, this critical inflation report, and 0:01:02.520 --> 0:01:04.840 we'll move on. Tifity Wilding and Pimco to join us 0:01:04.880 --> 0:01:07.640 here in a bit. But right now, Ira Jersey with us, 0:01:07.680 --> 0:01:12.240 let me frame out equities, bonds, currencies, commodities, futures lifting 0:01:12.319 --> 0:01:15.280 not because of Ira Jersey, lifting because of tech. Some 0:01:15.360 --> 0:01:18.360 better feeling their futures up twenty six NASDAK up now 0:01:18.520 --> 0:01:21.280 solid eight tens of a percent. The VIX comes in 0:01:21.280 --> 0:01:24.200 a bit fifteen point four to six. You'd look for 0:01:24.240 --> 0:01:26.720 that to be better than good. Here in a bit 0:01:26.880 --> 0:01:30.760 in the yield space ten year yield three point eight 0:01:30.959 --> 0:01:34.160 five percent. We'll see where that goes. Jersey looking for 0:01:34.240 --> 0:01:39.559 lower yields forwards. So the inflation report that Chairman Powell 0:01:39.680 --> 0:01:44.160 cares about, we'll get that to you right now. Waiting 0:01:44.200 --> 0:01:47.200 on the screen ere on the Friday before Labor Day 0:01:47.240 --> 0:01:50.800 takes a few seconds longer. Personal income comes in higher 0:01:50.800 --> 0:01:55.120 than survey spending right on survey and elevated zero point 0:01:55.120 --> 0:02:00.240 five percent PCE all on plan, but year over year 0:02:00.440 --> 0:02:05.240 core PCE disinflates a little bit off survey last month 0:02:05.280 --> 0:02:08.760 two point six percent, this month two point six percent. 0:02:08.800 --> 0:02:11.720 We looked for an elevation there, but pretty much PCE 0:02:12.200 --> 0:02:17.720 on plan. Where spending came in from zero point three 0:02:18.040 --> 0:02:22.240 up to zero point five on survey, and personal income 0:02:22.840 --> 0:02:25.400 did a little bit better. I'm waiting for the revised numbers. 0:02:25.440 --> 0:02:28.240 We'll get them out in a moment. In the markets, 0:02:28.240 --> 0:02:32.760 the vis comes in a more bullish fifteen point twenty 0:02:32.840 --> 0:02:36.160 five futures of up to twenty six pretty much. Stage 0:02:36.280 --> 0:02:37.960 is maybe a little bit of a bid to the 0:02:38.040 --> 0:02:41.240 nastac up nine tenths of a percent right now in 0:02:41.280 --> 0:02:44.160 Ira jerseys yield space, I'm giving him time for what 0:02:44.400 --> 0:02:46.280 the racket, ear, folks is. I got to do this 0:02:46.400 --> 0:02:49.640 data check half as good as Karen Moscow while we 0:02:49.720 --> 0:02:53.440 let Ira Jersey and David Gurra sort out the details. 0:02:53.440 --> 0:02:56.840 Two year yield three point nine zero percent, a little 0:02:56.840 --> 0:03:00.200 bit higher yield, but the yield's not really moving all 0:03:00.240 --> 0:03:01.919 that much. I look at the ten year, really old 0:03:01.960 --> 0:03:04.840 one point six nine percent. I do, okay there, David, 0:03:04.919 --> 0:03:06.400 that was great. I mean you walked. 0:03:06.880 --> 0:03:08.640 Do we get the revision? We got the revision, there's 0:03:09.320 --> 0:03:09.880 point three. 0:03:10.280 --> 0:03:14.400 Yeah, and again personal spending revision was a tick higher. 0:03:14.480 --> 0:03:18.040 This is this is important. We continue now with Ira 0:03:18.200 --> 0:03:21.880 Jersey of Bloomberg Intelligence. Ira, I guess it's on plan 0:03:22.280 --> 0:03:28.000 on survey, and yet there's a lift involved, isn't there. Yeah? 0:03:28.040 --> 0:03:30.079 So I think you know, when you when you look 0:03:30.120 --> 0:03:32.720 at the headline data overall, and obviously we'll you know, 0:03:32.880 --> 0:03:34.600 have to focus in on the details. Like I mentioned, 0:03:34.639 --> 0:03:36.960 I want to see what services spending was like and 0:03:36.960 --> 0:03:40.160 and uh, services inflation. But but the economists got it 0:03:40.240 --> 0:03:42.120 right this time, I think, more or less in terms 0:03:42.200 --> 0:03:45.640 of the UH. In terms of the pace of inflation. 0:03:46.160 --> 0:03:48.760 You know, interestingly, we haven't really slowed much, right, So 0:03:48.840 --> 0:03:51.640 July didn't see a slow down in inflation, but still 0:03:51.640 --> 0:03:53.480 two and a half percent on headline and more or 0:03:53.560 --> 0:03:57.200 less right there on on core inflation year on year. 0:03:57.880 --> 0:04:00.920 It has to give the the Reserve at least a 0:04:00.920 --> 0:04:03.400 little bit of comfort that they, you know, if they 0:04:03.400 --> 0:04:06.560 cut interest rates and they go slowly, that that inflation 0:04:06.640 --> 0:04:10.280 can continue to come down at least a little bit. 0:04:11.280 --> 0:04:14.240 You know, the the data that that you mentioned, you know, 0:04:14.320 --> 0:04:18.119 personal spending higher month on month, although in line with expectations. 0:04:18.160 --> 0:04:19.640 You know that that's actually a decent sign. 0:04:19.760 --> 0:04:19.839 Right. 0:04:19.880 --> 0:04:22.200 So the the the idea that we're having a soft 0:04:22.279 --> 0:04:25.400 landing is is certainly playing out in this data for 0:04:25.440 --> 0:04:28.240 this one month. Will it persist? I don't think so. 0:04:28.360 --> 0:04:30.479 But at the same time, you have to take the 0:04:30.480 --> 0:04:32.960 incoming data and put that into your your thinking and 0:04:33.080 --> 0:04:35.440 your your entire your entire outlook going forward. 0:04:35.720 --> 0:04:37.280 Tom, I'm gonna lob one at you if I can. 0:04:37.360 --> 0:04:39.880 I mean, you were out in Northwest Wyoming last week 0:04:40.200 --> 0:04:43.000 when the FED chairman spoke and we've said all morning, 0:04:43.000 --> 0:04:44.480 as we say all the time, this is the Fed's 0:04:44.520 --> 0:04:47.960 preferred inflation metric. How important is this reading to the Fed? 0:04:48.040 --> 0:04:49.520 I'd look ahead to next week, of course in the 0:04:49.560 --> 0:04:52.040 job support, which strikes me as being so paramount in 0:04:52.080 --> 0:04:54.960 comparison to this one. What does this one mean to policymakers? 0:04:55.000 --> 0:04:58.719 Christmas Bowie Chadam Financial said she's looking at service sector 0:04:58.720 --> 0:05:03.400 inflation in Europe, France with disinflation, Spain with disinflation. IIRA 0:05:03.560 --> 0:05:05.920 here three minutes in do you have a service sector 0:05:06.360 --> 0:05:09.240 statistic yet? Because I think that's what they're waiting for 0:05:09.279 --> 0:05:10.120 in Jackson a Hole. 0:05:10.440 --> 0:05:12.600 I'm waiting for the some of the details to come 0:05:12.600 --> 0:05:16.120 out on the terminal and it's you know, the inflating 0:05:16.360 --> 0:05:18.760 inflation number bisector is not out yet. But when I 0:05:18.760 --> 0:05:21.640 look at things like the personal income data at zero 0:05:21.720 --> 0:05:25.240 point three percent and disposable income still up zero point 0:05:25.279 --> 0:05:28.200 three percent, you know that that's actually a pretty good sign. 0:05:28.200 --> 0:05:28.560 I agree. 0:05:28.600 --> 0:05:31.360 Fact that you have disposable income continuing to rise at 0:05:31.360 --> 0:05:34.480 a reasonable pace means that spending might continue to be robust, 0:05:34.520 --> 0:05:35.440 at least for the near term. 0:05:35.600 --> 0:05:37.360 IRA, Thank you so much, she's got to go dive 0:05:37.400 --> 0:05:40.920 into the data. Ira Jersey will publish for Bloomberg Intelligence 0:05:40.960 --> 0:05:44.000 here within the r He's also out with new forecasts 0:05:44.040 --> 0:05:47.240 three point six six percent, sort of a blended fan 0:05:47.320 --> 0:05:50.279 distribution of the ten year at yield and that yield 0:05:50.400 --> 0:05:55.200 right now, excuse me, pretty much unchanged three point eighty 0:05:55.200 --> 0:05:58.280 six at percent and the economics of the moment. Tifity 0:05:58.279 --> 0:06:02.640 Wilding joins from the Pacific Investment Management Company PIMCO, where 0:06:02.640 --> 0:06:07.159 she is a Managing Director Economist North America at Tiffany. 0:06:07.200 --> 0:06:09.359 I know you have to wait and dive into the data, 0:06:09.440 --> 0:06:11.919 or the media frenzy here at eight thirty four is 0:06:12.000 --> 0:06:17.000 unfair to you. But the feeling I get here is 0:06:17.200 --> 0:06:20.560 trend based disinflation. Am I off the mark? 0:06:23.200 --> 0:06:25.240 Yeah? I mean you know what I would just say, 0:06:25.279 --> 0:06:27.520 taking a step back when you look at a wide 0:06:27.600 --> 0:06:30.440 range of data, it is it is getting back to, 0:06:30.800 --> 0:06:33.880 you know, some semblance of pre pandemic. You know, you 0:06:33.880 --> 0:06:37.200 look at headline inflation levels, there were some stickier pieces 0:06:37.240 --> 0:06:41.559 of underlying inflation. But now that labor market adjustment looks 0:06:41.600 --> 0:06:45.039 like it's happening more fully, you know, those pieces of 0:06:45.040 --> 0:06:48.880 stickier inflation will will be trending back to target. And 0:06:48.960 --> 0:06:51.600 so when you kind of look around the economy, things look, 0:06:51.880 --> 0:06:53.880 you know, like they're getting back to some semblance of 0:06:53.880 --> 0:06:56.200 normal after the unique set of shocks that we had 0:06:56.279 --> 0:06:58.600 post pandemic. And I think the thing that's you know, 0:06:58.640 --> 0:07:01.760 not as normal that really stands out, obviously is the 0:07:01.760 --> 0:07:05.279 policy rate. You know, and obviously Federal Reserve officials understand 0:07:05.279 --> 0:07:08.840 that Powe was very clear at Jackson Hole that they 0:07:08.839 --> 0:07:12.520 are going to start that journey back to normal or 0:07:12.560 --> 0:07:14.520 at least kind of what they think could be normal. 0:07:14.680 --> 0:07:17.360 And you know, and the pace of that is really 0:07:17.440 --> 0:07:20.200 going to depend on on the data from here, and 0:07:20.560 --> 0:07:23.280 you know, if we see economic weakness, then then they'll 0:07:23.280 --> 0:07:23.840 go faster. 0:07:24.360 --> 0:07:26.720 Tiffany, I really appreciate that. I'm kind of situating it 0:07:26.720 --> 0:07:28.720 in this in this moment of the way that we 0:07:28.840 --> 0:07:31.560 had Brian Levitt doing it at Katie Kaminsky earlier in 0:07:31.600 --> 0:07:33.880 the show. This this notion that there has been this 0:07:33.960 --> 0:07:37.120 kind of post pandemic readjustment that might not be as 0:07:37.160 --> 0:07:40.280 notable or as noticeable as the kind of initial adjustment 0:07:40.360 --> 0:07:42.920 that we had. Where are we in this cycle, as 0:07:42.960 --> 0:07:44.240 you see it, when you look at what we're getting 0:07:44.240 --> 0:07:46.720 in terms of inflation data, pulling back more broadly to 0:07:46.720 --> 0:07:49.480 look at labor data as well, give us a sense 0:07:49.480 --> 0:07:51.160 of where this economy is as you see it. 0:07:53.040 --> 0:07:54.720 Yeah, well, I mean I think I think the labor 0:07:54.720 --> 0:07:57.560 market data has has been you know, sort of confusing, 0:07:57.840 --> 0:08:01.400 if you will, the usual sign in the labor market 0:08:01.960 --> 0:08:04.640 of an underlying economy that's not doing well. I The 0:08:04.720 --> 0:08:08.360 unemployment rate rising, I think is a bit of you 0:08:08.440 --> 0:08:11.160 have to, you know, kind of dig into the drivers 0:08:11.160 --> 0:08:13.160 of that indicator, because if you just looked at the 0:08:13.200 --> 0:08:15.640 labor market and you looked at nothing else, you would 0:08:15.680 --> 0:08:18.640 be incredibly worried about a recession. But if you look 0:08:18.640 --> 0:08:21.320 at a broader range of indicators of the economy, it 0:08:21.320 --> 0:08:24.200 looks like it's doing okay. Right, It's a soft landing 0:08:24.360 --> 0:08:27.960 if anything. You know, the activity data, the growth data, 0:08:28.040 --> 0:08:30.880 the GDP data have been coming in better than expected. 0:08:31.280 --> 0:08:32.600 So I think you have to, you know, kind of 0:08:32.600 --> 0:08:34.600 take a step back and you know, just again understand 0:08:34.600 --> 0:08:36.960 that there's been a unique set of shocks since the pandemic. 0:08:37.040 --> 0:08:41.000 It's made indicators, usual economic indicators, more difficult to read. 0:08:41.679 --> 0:08:44.439 And I think the unemployment rate right now is one 0:08:44.480 --> 0:08:45.160 of those things. 0:08:45.520 --> 0:08:48.160 I mean, difficult to read. I'm sorry at a three 0:08:48.240 --> 0:08:52.000 percent real GDP ending June thirty, I got a five 0:08:52.040 --> 0:08:55.600 and a half percent amateurs look at nominal GDP led 0:08:55.640 --> 0:09:01.320 by Newport Beach, California. I mean, Tiffany, we've been wrong, wrong, wrong, 0:09:01.640 --> 0:09:05.480 on the resilience and spirit of America. When you sit 0:09:05.600 --> 0:09:08.880 with cynics like Jerome Schneider and the other animals at 0:09:08.880 --> 0:09:11.559 pimcoh are you trying to tell them it's not as 0:09:11.559 --> 0:09:12.720 bad out there as your thing? 0:09:12.880 --> 0:09:13.920 His words, not yours? 0:09:16.240 --> 0:09:18.439 Yeah, I mean, I think the you know, I guess 0:09:18.520 --> 0:09:20.920 the point that I would just really emphasize is that, 0:09:21.040 --> 0:09:23.320 you know, when you look at the labor market, the 0:09:23.320 --> 0:09:26.160 things that have driven the unemployment rate higher this time 0:09:27.040 --> 0:09:30.400 is more about labor supply. Obviously, over the last few years, 0:09:30.440 --> 0:09:34.000 we've gotten a surge of immigration, and that has resulted 0:09:34.120 --> 0:09:36.960 in a higher unemployment rate. Because you just have more 0:09:37.000 --> 0:09:41.040 people in the labor force, you're not actually seeing layoffs now. 0:09:41.040 --> 0:09:44.160 I certainly we could start to see more material layoffs 0:09:44.200 --> 0:09:47.440 across the economy, but you know, I would just say, overall, 0:09:47.800 --> 0:09:51.720 you know, the things still appear relatively strong, and usually 0:09:51.760 --> 0:09:54.240 when you have labor supply gains you know that's actually 0:09:54.280 --> 0:09:56.960 good for the economy. More people are consuming, where people 0:09:57.000 --> 0:10:00.439 are working. It's not usually the time and where you're 0:10:00.440 --> 0:10:01.559 going into recession. 0:10:01.920 --> 0:10:04.679 Tiffany Wedding, thank you so much, greatly appreciate it. This 0:10:04.720 --> 0:10:17.680 morning here our team is just done a wonderful job. 0:10:17.720 --> 0:10:21.079 I can't really can't say enough about the intelligence of 0:10:21.120 --> 0:10:24.000 the conversation throughout all of this week, as we had 0:10:24.080 --> 0:10:29.680 Katherin Kaminsky in earlier with Elpha simplex, wicked, quantitative Massachusetts 0:10:29.679 --> 0:10:34.120 Institute of Technology think Andrew Lowe. She knows where epsilon is. 0:10:34.720 --> 0:10:38.360 Someone with the same prodigious chops is Cam Dawson new 0:10:38.440 --> 0:10:41.640 edge that joins us right now, I think also with 0:10:41.800 --> 0:10:45.720 a much more almost barrens like focus on. Hey, here's 0:10:45.760 --> 0:10:48.560 the confidence to be in the market. Thrilled to have 0:10:48.640 --> 0:10:50.960 you here. Thank you for coming out on Friday, I 0:10:50.960 --> 0:10:54.080 mean before Labor Day. I mean Tucker's working Monday. 0:10:54.160 --> 0:10:59.199 You'd like to come in to wear my white last chest? 0:10:59.280 --> 0:11:00.520 Who are we were today? 0:11:00.600 --> 0:11:03.560 Well, it is this artorial hook slide of white into 0:11:03.640 --> 0:11:04.640 the Labor day holiday. 0:11:04.840 --> 0:11:08.360 Very good, good girl, serving lobster roles in the telecligt right, Yes, 0:11:08.600 --> 0:11:11.200 our Kim Dawson, How do I have confidence to be 0:11:11.240 --> 0:11:14.840 in the market. You're wonderful at this frame. The belief 0:11:15.040 --> 0:11:17.880 construct to own equities now. 0:11:18.280 --> 0:11:22.520 The belief construct is that the twelve month forward EPs 0:11:22.679 --> 0:11:26.439 estimate continues to move higher in this market. And if 0:11:26.480 --> 0:11:29.480 we look at over the last five years, that has 0:11:29.520 --> 0:11:32.400 been the north star guiding light of what you do 0:11:32.520 --> 0:11:35.760 with equities exactly, which is that as long as that 0:11:35.960 --> 0:11:39.440 is lifting, then all of this volatility and oscillation that 0:11:39.480 --> 0:11:41.880 we see in the short term should be something that 0:11:41.880 --> 0:11:45.520 we can look through. Now, if that starts to level off, 0:11:45.640 --> 0:11:48.959 meaning the growth rate and earnings starts to slow, that's 0:11:49.000 --> 0:11:52.160 when you get a choppier, sideways market. We do think 0:11:52.200 --> 0:11:55.080 that that's a risk for twenty twenty five, but not 0:11:55.240 --> 0:11:58.480 something that necessarily says run for the hills, get out 0:11:58.520 --> 0:12:00.640 of your equities, take big capital gains. 0:12:00.760 --> 0:12:04.240 My theory on this is corporations adapt I think we're 0:12:04.240 --> 0:12:07.800 seeing in spades, whether it's a resurrection, a Dell computer, 0:12:08.240 --> 0:12:11.000 you know, name whatever you want. I mean, you know, 0:12:11.160 --> 0:12:13.920 Intel with this huge news today from Bloomberg News that 0:12:13.960 --> 0:12:17.920 they may do some form of grossery structuring as well. 0:12:18.600 --> 0:12:23.080 Day to day and new as are you seeing corporations adapt. 0:12:23.440 --> 0:12:23.800 I am. 0:12:24.280 --> 0:12:27.320 They say that necessity is the mother of invention, and 0:12:27.679 --> 0:12:30.080 that is exactly what we think that we are seeing 0:12:30.200 --> 0:12:33.240 given the fact that look at the backdrop of pricing power. 0:12:33.720 --> 0:12:35.640 If we go back to twenty and twenty one, you 0:12:35.760 --> 0:12:39.360 had massive pricing power that allowed companies to raise prices 0:12:39.400 --> 0:12:43.280 and that drove margin expansion. That's gone. Companies are no 0:12:43.400 --> 0:12:46.160 longer able to push price to customers, which means that 0:12:46.240 --> 0:12:49.680 they have to get margin expansion out of invention, out 0:12:49.679 --> 0:12:53.680 of innovation, out of applying new technologies. Now, the challenge 0:12:53.679 --> 0:12:55.480 we see in twenty five to get it back to 0:12:55.559 --> 0:12:57.880 earnings is that you already have a big amount of 0:12:57.920 --> 0:13:01.560 margin expansion priced in. So it just means that companies 0:13:01.720 --> 0:13:05.200 have to deliver on those high expectations in order to 0:13:05.240 --> 0:13:07.840 get to the fourteen percent growth that is projected. 0:13:08.400 --> 0:13:09.880 One of the things I've learned on the show is 0:13:09.920 --> 0:13:11.880 it's good to crib a question that Tom has asked 0:13:11.920 --> 0:13:13.800 reword it's lately and put it to another guest, so 0:13:13.800 --> 0:13:15.800 I'll do that. We had Katie Kaminsky on. He asked 0:13:15.800 --> 0:13:18.000 about if you can extrapolate any kind. 0:13:17.840 --> 0:13:19.760 Of bad about it. I used to do that with 0:13:20.840 --> 0:13:24.680 Ken would ask a question, and I would just reframe. 0:13:24.800 --> 0:13:26.880 Ken's questions made me look brilliant. 0:13:26.600 --> 0:13:29.160 Rephrasing it, reframing when you look at Nvidia, is there 0:13:29.200 --> 0:13:30.960 any kind of trend that you can apply to that 0:13:31.080 --> 0:13:33.760 or that you see? It's it's something of such focus. 0:13:33.960 --> 0:13:35.120 What more can we make of that? 0:13:35.160 --> 0:13:35.640 If anything? 0:13:35.840 --> 0:13:39.079 Well, I think Katie was so intelligent in talking about 0:13:39.120 --> 0:13:42.679 the parabolic move that you have seen in the stock, 0:13:42.760 --> 0:13:45.600 which makes it really hard to sustain. The thing with 0:13:45.679 --> 0:13:49.080 parabolic moves is that they can last longer than expected. 0:13:49.160 --> 0:13:52.240 But as Walter Deemer says, when they go up in 0:13:52.280 --> 0:13:55.439 a straight line, they typically go down in a straight line. 0:13:55.480 --> 0:13:58.000 So it's something that is hard from a trend basis. 0:13:58.160 --> 0:14:01.080 You don't remember two thousand, No wait, no one in 0:14:01.120 --> 0:14:04.840 the studio, no one in the controllero remembers two thousand. 0:14:04.840 --> 0:14:07.880 That's why we're playing classic rock today. Don't play Journey today. 0:14:08.720 --> 0:14:12.000 Guy spit out his coffee yesterday when I played Journey. Cam. 0:14:12.120 --> 0:14:17.680 Journey's a band from California. Cam. I'm looking here in Wallydemer, 0:14:17.679 --> 0:14:20.720 of course, is a legend on this. But the answer 0:14:20.760 --> 0:14:24.120 is Trees to the Sky nineteen ninety nine, two thousand 0:14:24.280 --> 0:14:28.080 without profit. This time around, I got free cash flow. 0:14:28.400 --> 0:14:30.080 That's a distinction you do. 0:14:30.200 --> 0:14:33.000 But you always have to be aware of when stocks 0:14:33.000 --> 0:14:36.360 are running ahead of what the earnings estimates have been 0:14:36.480 --> 0:14:38.720 being revised higher themselves. So if you look at a 0:14:38.800 --> 0:14:42.080 name like Nvidia in prior reports, each time that they 0:14:42.080 --> 0:14:44.640 would report, the forward guidance would go up by thirty 0:14:44.680 --> 0:14:47.920 cents or forty cents. This time is about five cents. 0:14:48.320 --> 0:14:50.360 Is that the end of the world. No, But it 0:14:50.400 --> 0:14:53.760 does mean that we should probably lower expectations for the 0:14:53.800 --> 0:14:57.720 pace of returns simply because the pace of earnings revisions 0:14:57.800 --> 0:15:00.880 higher are starting to slow. The issue would be if 0:15:00.880 --> 0:15:04.160 the stock keeps going up even as earnings slow down 0:15:04.200 --> 0:15:07.200 and the revision's higher, that's when you get the trees 0:15:07.240 --> 0:15:11.120 growing to the sky. The issues with valuations being part. 0:15:10.960 --> 0:15:14.440 Too stretched at this point in the earning season. Are 0:15:14.480 --> 0:15:17.560 we talking too much or focusing too much on tech? 0:15:18.960 --> 0:15:20.720 What else is sort of drawing your attention or what 0:15:21.040 --> 0:15:21.800 is tech to strategy? 0:15:22.320 --> 0:15:25.960 If I apologize, it's such a Brooklyn question, curious only people. 0:15:26.080 --> 0:15:29.240 Let's go lade, let's go old school what sector? 0:15:29.600 --> 0:15:32.440 But see I speak that language, So I think that 0:15:32.560 --> 0:15:35.640 the interesting thing about this earning season is the reaction 0:15:35.720 --> 0:15:37.720 of the stocks, and the backdrop is that we've seen 0:15:37.760 --> 0:15:40.640 some of this weakness and tech start to build. Tech 0:15:40.680 --> 0:15:43.960 treated below its fifty day moving average yesterday. It's been 0:15:44.000 --> 0:15:47.640 deteriorating on a relative basis. What's been winning the four 0:15:47.800 --> 0:15:50.600 ninety three the equal weight index. So if we look 0:15:50.640 --> 0:15:53.480 at earning sestiments going into twenty twenty five, what you 0:15:53.480 --> 0:15:56.600 can see is the mag seven is expected to decelerate 0:15:56.800 --> 0:16:01.000 a lot, but the overall market is expected to accelerate, 0:16:01.080 --> 0:16:04.280 which effectively says the four ninety three is about to 0:16:04.360 --> 0:16:07.400 have to carry all of that weight in the earnings growth. 0:16:07.600 --> 0:16:11.000 In conservative three year short term money, what we call 0:16:11.120 --> 0:16:17.160 retirement plans, are I more index or more active? Right now? 0:16:17.960 --> 0:16:20.440 I think you have to be both. It's not a 0:16:20.600 --> 0:16:24.000 black or white. It's a sliding scale. In indices that 0:16:24.040 --> 0:16:27.240 are highly concentrated, it does not pay you to pay 0:16:27.240 --> 0:16:30.640 for active management. In indices that have a great deal 0:16:30.680 --> 0:16:33.359 of dispersion, you can pay for active. 0:16:33.160 --> 0:16:34.800 NASA industries give me an example. 0:16:34.960 --> 0:16:38.240 So the difference between the growth sector and things like 0:16:38.320 --> 0:16:41.280 small cap and international in value, we think that there's 0:16:41.320 --> 0:16:45.040 a lot more opportunity to outperform and get alpha in 0:16:45.160 --> 0:16:48.400 those industries small cap international value where you have a 0:16:48.400 --> 0:16:50.360 lot more dispersion between winners and losers. 0:16:50.360 --> 0:16:53.440 When you're great at this will internationally get a jumpstart 0:16:53.520 --> 0:16:55.160 off legitimate week dollar. 0:16:56.360 --> 0:16:59.040 It has been in a relative down trend for the 0:16:59.080 --> 0:17:03.680 past fifty years. The week dollar is an absolute necessity 0:17:03.800 --> 0:17:07.400 for international to be able to outperform. The only time 0:17:07.480 --> 0:17:11.159 you've had big international bull markets is in big dollar 0:17:11.280 --> 0:17:14.439 bear markets. The only problem is that it has to 0:17:14.520 --> 0:17:17.720 translate to earnings. The most fascinating stat is that if 0:17:17.720 --> 0:17:20.440 you look from two thousand and seven to today, US 0:17:20.520 --> 0:17:22.159 earnings and the S and P five hundred are up 0:17:22.200 --> 0:17:26.600 one hundred and fifty percent. International EFA Index they're flat. 0:17:27.160 --> 0:17:30.919 The Emerging Market Index they're still down versus two thousand 0:17:30.920 --> 0:17:33.840 and seven. It's an earning story, not evaluation story. 0:17:34.000 --> 0:17:38.199 Questioned, let me go back to today's data. We go 0:17:38.200 --> 0:17:40.920 to today's data, to what you heard at Jackson Hole. 0:17:41.240 --> 0:17:43.240 This is a FED that has been for these last 0:17:43.240 --> 0:17:47.159 few years so united. There has been such unanimity. Do 0:17:47.200 --> 0:17:49.480 you sense that the remarks that we heard from FED 0:17:49.560 --> 0:17:52.600 chair Jerom Powell are widely shared? What are you listening 0:17:52.600 --> 0:17:54.840 for in the commentary that we're going to get before 0:17:54.840 --> 0:17:56.119 this meeting on the sixteenth and seventies. 0:17:56.119 --> 0:18:00.200 Did you see what she wrote? Did you see your research? Phiao. 0:18:00.400 --> 0:18:03.440 John Farrell introduced me to Love Island and the British 0:18:03.480 --> 0:18:07.080 Love Island is different. Love Island. No pharaoh taught me 0:18:08.640 --> 0:18:13.359 in ninety day five fiance or something farah all this 0:18:13.480 --> 0:18:16.760 garbage from London. Pharaoh introduced me to. And so cam 0:18:16.800 --> 0:18:20.640 doesn't have Love Island, She's got doug Island, Dove Island. Yeah, 0:18:20.680 --> 0:18:21.159 and that j. 0:18:21.400 --> 0:18:25.400 Powell may be the only bombshell on Dove Island. It's 0:18:25.520 --> 0:18:29.280 really interesting. The one word missing from that Jackson Hole 0:18:29.320 --> 0:18:32.560 speech was patience. And that's the one word you've heard 0:18:32.560 --> 0:18:36.080 from every other FED voting member, which just means that 0:18:36.440 --> 0:18:39.720 Powell is thinking I could do fifty other voting members 0:18:39.800 --> 0:18:43.119 are saying no, slow and steady twenty five basis points 0:18:43.160 --> 0:18:44.600 more evidence, we can take our time. 0:18:44.840 --> 0:18:51.760 Kim Dawson, thank you so much. Now as here justin 0:18:51.800 --> 0:18:54.479 sink is going? Why am I here? Futures up twenty 0:18:54.520 --> 0:18:58.080 six off of the news PCE ebbed a little way, 0:18:58.200 --> 0:19:02.000 still up seventeen. Nasdak was up eight tenths of a percent. 0:19:02.119 --> 0:19:06.160 Now up seven tenths of a percent. He is our 0:19:06.280 --> 0:19:09.800 White House correspondent, and it is things have changed. Justin 0:19:09.880 --> 0:19:13.560 sink joins us right now. Justin what has changed? It's 0:19:13.600 --> 0:19:15.520 sixteen hundred Pennsylvania Avenue. 0:19:16.520 --> 0:19:19.480 Well, I think there's a lot of changes, both, you know, 0:19:19.600 --> 0:19:22.200 at the White House itself and in the race overall. 0:19:22.280 --> 0:19:24.200 So you know, at the White House it's a completely 0:19:24.200 --> 0:19:27.320 different posture from just five weeks ago when Joe Biden 0:19:28.520 --> 0:19:32.679 dropped out. There's been significant staff turnover as people exit 0:19:32.720 --> 0:19:37.280 to either find outside opportunities or go join sort of 0:19:37.359 --> 0:19:39.879 super packs and affiliates. The President himself has been on 0:19:39.920 --> 0:19:42.440 vacation now, this is his second straight week. I don't 0:19:42.440 --> 0:19:46.440 know if he's seen any whale so unfortunately, but he 0:19:46.560 --> 0:19:50.280 is just kind of scaled back as cadence overall, and 0:19:50.359 --> 0:19:52.560 I think it's it's mostly because they're trying to stay 0:19:52.560 --> 0:19:55.399 out of the way of Kamala Harris. And as you know, 0:19:55.440 --> 0:19:59.919 Bloomberg Swing State pole that came out today showed it's working. 0:20:00.200 --> 0:20:02.640 You know, it was a sort of undeniably great poll 0:20:02.680 --> 0:20:05.919 for Kamala Harris shows her sustaining and building on that 0:20:05.960 --> 0:20:08.200 momentum that she got from taking over the ticket from 0:20:08.200 --> 0:20:11.159 Biden and now has either a tire or lead in 0:20:11.160 --> 0:20:13.760 all the major swing states. So at the White House, 0:20:13.800 --> 0:20:15.439 I think a lot of what they're trying to do 0:20:15.560 --> 0:20:18.600 is just bolster her where they can, but otherwise stan out. 0:20:18.480 --> 0:20:18.800 Of the way. 0:20:19.200 --> 0:20:21.160 Justin you mentioned that, Cadence, and I wanted to ask 0:20:21.200 --> 0:20:24.600 you about President Biden's ambitions and watching that conversation last 0:20:24.640 --> 0:20:26.520 night between the vice president and her running mate and 0:20:26.560 --> 0:20:29.520 Dana Bash of CNN, there was a lot of due 0:20:29.520 --> 0:20:33.280 deference too in mentioning of the current president. What are 0:20:33.359 --> 0:20:35.320 his aspirations going for? Is once he gets back from 0:20:35.320 --> 0:20:38.120 this vacation, gets back from California, comes to the East 0:20:38.119 --> 0:20:40.960 coast again, what does he hope to accomplish? How clearly 0:20:41.040 --> 0:20:44.480 articulated is that mission or that vision by the White House? 0:20:45.720 --> 0:20:48.240 Yeah, I think there's a couple elements to it. One 0:20:48.359 --> 0:20:51.399 is sort of legacy protection. I think the president is 0:20:51.440 --> 0:20:53.920 going to go out and make the case for why 0:20:53.960 --> 0:20:56.280 his first term was success, even though it's something that 0:20:56.359 --> 0:20:59.320 voters don't necessarily agree with. And there's two reasons for that. 0:20:59.440 --> 0:21:02.640 One is obviously self interested, with the other is because 0:21:02.640 --> 0:21:04.879 it helps Kamala Harris and you heard her in that 0:21:04.960 --> 0:21:05.880 interview last night. 0:21:06.920 --> 0:21:07.320