WEBVTT - Surveillance: S&P Targets with Chadha 0:00:05.120 --> 0:00:07.119 This is the Bloomberg Surveillance Podcast. 0:00:07.160 --> 0:00:11.080 I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. 0:00:11.280 --> 0:00:15.760 Join us each day for insight from the best an economics, geopolitics, 0:00:15.760 --> 0:00:20.720 finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, 0:00:20.960 --> 0:00:25.439 Spotify and anywhere you get your podcasts, and always on 0:00:25.520 --> 0:00:29.840 Bloomberg dot Com, the Bloomberg Terminal and the Bloomberg Business app. 0:00:30.040 --> 0:00:33.040 Deutsche Bank for David Folkritz Lando set in the intellectual 0:00:33.120 --> 0:00:37.000 structure on equities and asset allocation. Chief global strategist spin 0:00:37.040 --> 0:00:38.840 from Chauda joins us this morning. 0:00:39.080 --> 0:00:40.519 With dby Binkie. 0:00:40.520 --> 0:00:43.000 You nailed the bullmarket. Took a while to happen, the 0:00:43.120 --> 0:00:45.760 Chada market. The Chada bullmarket took a while to happen, 0:00:46.080 --> 0:00:49.360 and with a vengeance, you nailed this. And when we 0:00:49.360 --> 0:00:51.879 were talking going to go in live here, you may 0:00:52.000 --> 0:00:56.080 clear ten percent of the people have participated in ninety 0:00:56.160 --> 0:00:59.040 percent of the people have been left behind. What's the 0:00:59.120 --> 0:01:02.440 next leg look like for ninety percent of the people 0:01:02.480 --> 0:01:04.399 that have missed this October market? 0:01:04.640 --> 0:01:06.840 Yeah, so, I mean for them, you know, And the 0:01:06.880 --> 0:01:09.560 distinction that I was drawing was, you know, we've had 0:01:09.560 --> 0:01:12.160 to move up inequity positioning. So we have a simple 0:01:12.319 --> 0:01:15.560 sort of Z score plus minus one band and you know, 0:01:15.600 --> 0:01:17.240 we were at the bottom last year. That was the 0:01:17.240 --> 0:01:20.440 reason for the call for a positioning squeeze. Positioning today 0:01:20.560 --> 0:01:23.520 is sitting in the middle of the band. The entire 0:01:23.680 --> 0:01:27.720 move in positioning up has come really from systematic strategies 0:01:27.880 --> 0:01:31.360 as VOLL has come down from extremely elevated levels to 0:01:31.520 --> 0:01:35.520 still very elevated levels outside I would say, you know, 0:01:36.400 --> 0:01:41.880 especially driven by really rates VOLL discretionary investors, which you know, 0:01:42.120 --> 0:01:44.839 in terms of assets under management or I would say 0:01:45.280 --> 0:01:49.640 eight to one in terms of relative size to systematic strategies. 0:01:50.040 --> 0:01:53.080 Their positioning has been what I would describe as firmly 0:01:53.280 --> 0:01:58.000 underweight for the last year in you know, a very narrow. 0:01:57.760 --> 0:02:00.360 Can I translate firmly underweight just. 0:02:03.640 --> 0:02:08.040 So the participation has been you know, minimal to zero 0:02:08.160 --> 0:02:11.680 to non existing night this week, what we are seeing 0:02:11.840 --> 0:02:16.160 is basically some move up in what we put in 0:02:16.200 --> 0:02:19.520 our positioning measures, but it's really a sentiment indicator, and 0:02:19.560 --> 0:02:24.040 that's the aaii bullbear spread and that's moved up for 0:02:24.080 --> 0:02:27.639 the first time. Whether or not that actually translates into 0:02:27.840 --> 0:02:30.440 increased allocations we have to wait and see. 0:02:30.280 --> 0:02:32.240 The call from here. From where we are at about 0:02:32.240 --> 0:02:34.920 forty three hundred at of forty five, just written your 0:02:34.960 --> 0:02:37.920 research last night, from the last week or so, it 0:02:37.960 --> 0:02:39.840 feels like it's all about earnings. Can you pair this 0:02:39.960 --> 0:02:42.639 view about earnings with what's happening on the other side 0:02:42.639 --> 0:02:45.359 of the research team, with Mattlasli and Deutsche Bank ultimately 0:02:45.440 --> 0:02:47.079 looking for a recession. Can you pay the two views 0:02:47.080 --> 0:02:47.880 at the moment of Binki. 0:02:48.040 --> 0:02:48.200 Oh? 0:02:48.320 --> 0:02:51.480 Absolutely, So that's really easy because they are the same view. 0:02:51.680 --> 0:02:56.320 The view so my earnings numbers te off of our 0:02:56.360 --> 0:03:01.400 house economics forecast, but with a small twist, I would say, 0:03:01.639 --> 0:03:03.720 remember that the S and P five hundred gets thirty 0:03:03.720 --> 0:03:05.519 to forty percent of its earnings from the rest. 0:03:05.440 --> 0:03:05.919 Of the world. 0:03:06.000 --> 0:03:11.480 So I have you know, a sales weighted global GDP 0:03:11.680 --> 0:03:16.280 measure obviously for US equities, you know, the US economy 0:03:16.360 --> 0:03:19.720 matters a lot. We have a framework. I'm going to 0:03:19.760 --> 0:03:21.880 leave that aside for a second. That's exactly what it is. 0:03:21.880 --> 0:03:25.119 But it teas off of basically our house economics forecast. 0:03:25.120 --> 0:03:28.480 So it's really a translation issue if you want. It 0:03:28.639 --> 0:03:32.440 embodies a recession. In Q four and Q one, the 0:03:32.520 --> 0:03:35.280 things to note about it are that the forecast is 0:03:35.320 --> 0:03:37.200 for a pretty mild recession. 0:03:37.560 --> 0:03:38.080 Number two. 0:03:38.560 --> 0:03:41.400 You know, we do have growth happening until then, and 0:03:41.440 --> 0:03:44.280 that means that the recession kicks in form a higher 0:03:44.480 --> 0:03:48.920 level in terms of earnings. And you know, what I 0:03:49.040 --> 0:03:53.280 would emphasize is that the equity market, when it looks 0:03:53.320 --> 0:03:57.120 at aggregate earnings like the S and P five hundred earnings, 0:03:57.320 --> 0:04:01.080 tends to look year and year and in year, you know, 0:04:01.400 --> 0:04:05.600 we are still negative in terms of growth. It's slightly 0:04:05.880 --> 0:04:10.920 less negative than you know, the prior quarter, but it's 0:04:10.960 --> 0:04:14.160 still negative. But remember that, you know, when we look 0:04:14.200 --> 0:04:17.960 at all macro series, we look quarter on quarter, which 0:04:18.520 --> 0:04:22.000 in you know, equities, we call sequential growth, and our 0:04:22.120 --> 0:04:25.000 estimate of sequential growth in S and P five hundred 0:04:25.040 --> 0:04:29.680 earnings in Q one on a seasonally adjusted basis is 0:04:29.800 --> 0:04:33.920 a solid five percent. And I would emphasize that's not annualized. 0:04:34.160 --> 0:04:36.240 Markets are not the economy, and you have to just 0:04:36.279 --> 0:04:38.599 keep repeating that markets are not the economy. Markets. John 0:04:38.640 --> 0:04:41.120 was mentioning that earlier, and I am wondering whether this 0:04:41.200 --> 0:04:43.440 could be the start of a bull market, even though 0:04:43.480 --> 0:04:45.960 the US has not yet had a full blown recession. 0:04:46.279 --> 0:04:46.520 Yeah. 0:04:46.760 --> 0:04:49.680 So so you know, there's two sort of elements about 0:04:49.920 --> 0:04:51.960 the recession that I would emphasize. 0:04:52.400 --> 0:04:53.839 This is arguably the. 0:04:53.720 --> 0:04:58.880 Most well telegraphed recession. Recessions, in my view, in terms 0:04:58.880 --> 0:05:03.640 of their impact on financial markets, are not really about 0:05:03.760 --> 0:05:06.480 you know, a couple of quarters of negative growth where 0:05:06.600 --> 0:05:10.880 everybody agrees that it's modest and temporary because the market's 0:05:10.920 --> 0:05:13.640 going to look through that. The market's meant to look 0:05:13.720 --> 0:05:18.479 through that. You know, if you listen to corporates on 0:05:18.640 --> 0:05:21.800 earnings calls, we're at the point where we've been talking 0:05:21.839 --> 0:05:26.160 about recessions for at least three the impending recession basically 0:05:26.279 --> 0:05:30.320 for at least three quarters, and so you know, corporates 0:05:30.320 --> 0:05:33.120 are you know, already responding. And the idea I would 0:05:33.120 --> 0:05:35.040 put on the table is that, you know, it's very 0:05:35.080 --> 0:05:39.040 possible that the recession slow down. Part of that has 0:05:39.160 --> 0:05:44.480 already you know, been brought forward if you want. If 0:05:44.480 --> 0:05:48.839 a recession is very well anticipated, it's not very you know, 0:05:48.880 --> 0:05:52.680 the little shock value to make you risk averse. So 0:05:53.200 --> 0:05:56.080 there will be some negative impacts, but you know a 0:05:56.120 --> 0:05:58.840 lot of the multipliers come really from a risk aversion, 0:05:59.080 --> 0:06:04.000 and it's you know the concept of anticipated risk version. 0:06:04.400 --> 0:06:06.520 You know, an anticipated shock is not a shock. 0:06:07.560 --> 0:06:09.720 To tie this all together and to and where we began, 0:06:10.200 --> 0:06:12.000 do you think that we are seeing durable signs of 0:06:12.000 --> 0:06:13.040 a broadening out. 0:06:13.640 --> 0:06:16.360 I think that it gets pretty choppy from here because 0:06:16.400 --> 0:06:18.919 the positioning squeeze that I spoke about at the beginning, 0:06:19.000 --> 0:06:22.039 that's mostly basically been done. I mean, as you you know, 0:06:22.080 --> 0:06:26.320 as Tom mentioned a vix at fourteen and thirteen, you know, 0:06:26.760 --> 0:06:29.920 the biggest driver of systematic strategies is decline involved and 0:06:29.960 --> 0:06:32.560 we are not looking for a you know, vault to 0:06:32.600 --> 0:06:36.000 really go down from here. We're not really looking for 0:06:36.120 --> 0:06:40.159 discretionary investors to raise their positioning because as you said earlier, 0:06:40.200 --> 0:06:43.119 there is this very long list of concerns that they're 0:06:43.120 --> 0:06:46.320 focused on in on and I don't think the resolution 0:06:46.440 --> 0:06:48.400 of those is easy. So we're going to continue to 0:06:48.400 --> 0:06:50.600 have a tugger war. But the demand supply, the positioning 0:06:50.640 --> 0:06:53.039 squeeze is done, but the demand supply balance still looks, 0:06:53.839 --> 0:06:58.560 you know, constructive. So I would say a grind higher 0:06:58.720 --> 0:07:01.880 forty five hundred per year, it should be pretty sharp. 0:07:03.200 --> 0:07:08.880 Soft landing will easily give you five thousand. Yeah, we've 0:07:08.920 --> 0:07:12.280 said that before, we published that before. 0:07:12.280 --> 0:07:14.480 Think he's so measured out to take here. Last year, 0:07:14.720 --> 0:07:15.160 same time? 0:07:15.800 --> 0:07:16.000 Great? 0:07:16.080 --> 0:07:20.200 Yeah, this year, same time you had this year because. 0:07:19.840 --> 0:07:23.120 You make the call, but the exxies you never know. 0:07:23.440 --> 0:07:26.120 The life of a strategist. Think you just quickly Yeah? 0:07:26.160 --> 0:07:28.240 Does it feel a whole lot better when things are 0:07:28.280 --> 0:07:30.240 going right? Or do you get nervous that things are 0:07:30.240 --> 0:07:32.480 a bad to go wrong? Are you constantly paranoid? How 0:07:32.480 --> 0:07:33.120 do you think about it? 0:07:33.200 --> 0:07:34.240 Constantly paranoid? 0:07:35.160 --> 0:07:36.400 You're asking me this on air? 0:07:38.440 --> 0:07:41.200 Approach to that. Last year was tough. I've talked about 0:07:41.240 --> 0:07:43.880 that with you many times. This year is better. You know, 0:07:43.920 --> 0:07:45.560 how do you approach things when you're right. 0:07:46.520 --> 0:07:48.400 The same way as you approach them when you're wrong. 0:07:48.840 --> 0:07:51.160 You ask yourself, what have you got right? And I 0:07:51.400 --> 0:07:53.480 know you're right for the right reason, and what have 0:07:53.560 --> 0:07:56.920 you got wrong? And you were just your review accordingly, What. 0:07:56.760 --> 0:07:58.680 Was the lesson from last year that helped you with 0:07:58.760 --> 0:07:59.160 this year? 0:08:00.200 --> 0:08:02.640 The lesson from last year was a confirmation of my 0:08:02.880 --> 0:08:05.280 view earlier in the year that we would get a 0:08:05.680 --> 0:08:09.160 massive amount of anxiety from the FED. But the anxiety 0:08:09.240 --> 0:08:11.840 was of their own creation because they decided, for a 0:08:11.880 --> 0:08:15.160 variety of reasons to wait a long time. So when 0:08:15.320 --> 0:08:19.200 I listened to the fo mc now I hear calm. 0:08:19.240 --> 0:08:22.720 I mean, and that that really reaffirms my view that 0:08:22.800 --> 0:08:27.200 a lot of their nervousness, yes about inflation, still about inflation, 0:08:27.440 --> 0:08:29.440 but you know they were at zero to start the year. 0:08:29.520 --> 0:08:32.360 We are now at five and and and so there's 0:08:32.480 --> 0:08:34.920 a lot less reason to be anxious. 0:08:34.600 --> 0:08:36.640 Excuse to get out of the triple every doll case. 0:08:37.120 --> 0:08:40.680 I mean, first order, I think this was great, tons 0:08:40.679 --> 0:08:42.320 of respect for you, but it always grayst catch out. 0:08:42.360 --> 0:08:47.480 Thank you out of the Deutsche Bank. 0:08:47.200 --> 0:08:49.280 I get the Jones joins us right now their fixed 0:08:49.320 --> 0:08:51.679 income strategy. And I'm going to go to someone we 0:08:51.679 --> 0:08:54.439 were talking about with your exquisite ability to play piano, 0:08:54.480 --> 0:08:57.360 which is Gershwin George, where he said life is a 0:08:57.360 --> 0:09:00.200 lot like jazz boy, you better improvides. How do you 0:09:00.280 --> 0:09:04.240 improvise in the bond market with the oddity of post 0:09:04.360 --> 0:09:09.120 pandemic economics and the oddity of the ambiguity I. 0:09:09.080 --> 0:09:11.600 Should say almost about where we are right now. 0:09:12.200 --> 0:09:14.480 Yeah, I mean, I think that's really the challenge not 0:09:14.600 --> 0:09:17.680 only strategists have, but also the FED is facing right 0:09:17.760 --> 0:09:21.440 that how do they set policy in an environment that's 0:09:21.480 --> 0:09:24.920 really very unfamiliar. The way we've been doing it is 0:09:24.960 --> 0:09:29.520 simply either barbelling or laddering and not trying to play 0:09:29.160 --> 0:09:32.400 every little up and down in the market. So if 0:09:32.679 --> 0:09:35.320 you know you can stay short and try to roll 0:09:35.360 --> 0:09:38.000 out and time it perfectly, but there's a lot of 0:09:38.000 --> 0:09:40.560 reinvestment risk if you miss it because these moves are 0:09:40.840 --> 0:09:41.480 so fast. 0:09:41.600 --> 0:09:45.240 Are you doing this with combining your work with Lizae Saunders. 0:09:45.280 --> 0:09:48.520 Are you doing it with the understanding there will be 0:09:48.600 --> 0:09:52.480 a jump condition in the short end or even a 0:09:52.600 --> 0:09:54.880 dramatic movement in the long end, or do you see 0:09:54.920 --> 0:09:57.880 sort of stability out there as you barbell or. 0:09:57.880 --> 0:10:01.079 Ladder We think in the bond market it'll be more stable. 0:10:01.200 --> 0:10:03.600 We had huge volatility in the first half of the year, 0:10:03.920 --> 0:10:06.200 and I think that was the market readjusting to FED 0:10:06.240 --> 0:10:09.160 policy and all the surprises that we've had, and yet 0:10:09.240 --> 0:10:11.560 we haven't gone anywhere right. We had all this volatility, 0:10:11.559 --> 0:10:13.960 and yields pretty much from two years out are about 0:10:13.960 --> 0:10:15.840 the same as they were at the beginning of the year. 0:10:16.400 --> 0:10:18.959 But we think second half should be somewhat more stable. 0:10:18.920 --> 0:10:22.360 I mean, barring some sort of crazy financial market event 0:10:22.800 --> 0:10:25.760 that seems to happen every six weeks. But barring that, 0:10:26.760 --> 0:10:30.040 I think that we should have a fairly stable move here. 0:10:30.280 --> 0:10:33.000 There's this sort of renegade theory out there right now 0:10:33.160 --> 0:10:35.040 trying to justify perhaps some of the moves and some 0:10:35.080 --> 0:10:37.960 of the resilience in the economy or else it's just true, 0:10:38.080 --> 0:10:40.760 which is we've been talking about the lure of five 0:10:40.720 --> 0:10:44.200 to five and a half percent on cash as a negative, 0:10:44.240 --> 0:10:46.440 a sucking liquidity out of the market. But some people 0:10:46.480 --> 0:10:48.880 say it's actually stimulative because all of a sudden you 0:10:48.880 --> 0:10:51.679 can get returns on your cash, which gives you more 0:10:51.720 --> 0:10:54.200 money to go out and spend that much more. Which 0:10:54.280 --> 0:10:54.520 is it? 0:10:56.000 --> 0:10:59.360 I guess that's a tough question to answer. I think 0:10:59.440 --> 0:11:04.040 the five percent, the higher yields are more punishment than reward, 0:11:04.240 --> 0:11:07.360 right because the number of savers that are actually benefiting 0:11:07.400 --> 0:11:10.800 from that are doing fine. But you have a whole 0:11:10.840 --> 0:11:13.520 bunch of people who are companies and individuals trying to 0:11:13.520 --> 0:11:16.680 borrow either get a mortgage a car loan, companies trying 0:11:16.679 --> 0:11:19.280 to refinance at higher rates. I would say it's more 0:11:19.320 --> 0:11:20.199 negative than positive. 0:11:20.240 --> 0:11:22.200 It's negative in theory. But this is what I keep 0:11:22.200 --> 0:11:24.960 hearing from people that nobody who's buying a home is 0:11:25.000 --> 0:11:28.880 paying seven percent mortgage rate, everybody's getting some other mortgage rate. 0:11:29.520 --> 0:11:32.840 Companies can get pretty low rates if they're a good company. 0:11:32.880 --> 0:11:35.000 On average, they're high, but those companies that have to 0:11:35.040 --> 0:11:37.600 pay through the nose aren't borrowing at those rates. So 0:11:37.679 --> 0:11:41.240 this interest rate effect, the punishment isn't actually bleeding to 0:11:41.280 --> 0:11:45.240 the economy, and the reward is actually driving even more investment. 0:11:45.559 --> 0:11:48.200 Is that an accurate way to understand the dynamic that's 0:11:48.200 --> 0:11:50.120 been so confounding so far this year? 0:11:50.679 --> 0:11:52.800 Well, I would say, and the credit conditions have been 0:11:53.640 --> 0:11:56.559 easier if you go to the capital markets, then you 0:11:56.640 --> 0:11:59.640 know it would normally be under these circumstances. But if 0:11:59.640 --> 0:12:02.280 you're a like I say, are you a low credit borrower, 0:12:02.840 --> 0:12:04.920 those costs really are going up, and we're seeing a 0:12:04.920 --> 0:12:07.440 lot of weakness at the low end of the credit spectrum. 0:12:07.840 --> 0:12:10.079 And I think it's just a matter of time. It's 0:12:10.120 --> 0:12:12.040 hard to believe that we can have all this tightening 0:12:12.080 --> 0:12:15.360 five hundred basis points and a very short period of time, 0:12:16.040 --> 0:12:18.800 qt also at the same time and not have an 0:12:18.800 --> 0:12:21.360 economic effect one year forward. 0:12:21.880 --> 0:12:24.959 Letdered or bar belled, whatever the blend is. Full faith 0:12:24.960 --> 0:12:27.959 and credit corporate, are you clipping a coupon or can 0:12:28.000 --> 0:12:30.800 you actually manage and position for total return. 0:12:31.280 --> 0:12:33.360 I think that the bulk of what you'll get will 0:12:33.400 --> 0:12:36.080 come from the coupon, but you can position to get 0:12:36.080 --> 0:12:36.760 some total return. 0:12:36.800 --> 0:12:38.520 Youre going to give me a double digit total return? 0:12:38.840 --> 0:12:44.120 Not double dita? I think that I can't. I'm sorry 0:12:44.200 --> 0:12:45.360 now I think eleven percent. 0:12:45.679 --> 0:12:48.520 Well, that was just folks, I'm busting chops with Kathy Jones. 0:12:48.679 --> 0:12:51.600 That was a discussion from about ten, twelve, twenty years ago. 0:12:52.120 --> 0:12:53.320 That was fun, wasn't it. 0:12:53.320 --> 0:12:55.960 It was It was gott to give you a stamp. 0:12:56.160 --> 0:12:58.400 It's a bolt off. What Lisa say is one set 0:12:58.400 --> 0:13:00.280 of times in this country bulb of cash. 0:13:00.600 --> 0:13:02.120 I noticed that, Glad you bring that. 0:13:02.200 --> 0:13:04.880 Up high sharing like a decade. That was also the stamp, 0:13:04.920 --> 0:13:06.520 by the way, for the whole of last year. Two 0:13:06.600 --> 0:13:09.000 from redfins. So one third lease it to your point. 0:13:09.559 --> 0:13:12.080 Yeah, they're bought in cash, and then the others are 0:13:12.080 --> 0:13:14.839 bought from developers straight up that are offering them much 0:13:14.880 --> 0:13:18.840 lower rates, or they're refinancing existing or they're sort of 0:13:18.880 --> 0:13:21.760 taking on other loans for lower Again, the point being, 0:13:22.080 --> 0:13:24.920 the impulse isn't making its way into slowing the economy 0:13:24.920 --> 0:13:27.000 in a material way, and this is the reason why 0:13:27.000 --> 0:13:29.040 people are wondering, why hasn't it been more painful? 0:13:29.080 --> 0:13:31.280 Oh, they band new homes because they old ones out 0:13:31.280 --> 0:13:33.640 for sale exactly, They've got people in them with mortgages 0:13:33.640 --> 0:13:37.560 at three percent. This housing market is totally distorted completely. 0:13:37.559 --> 0:13:39.640 It's totally totally distorted it. 0:13:39.800 --> 0:13:43.400 I would suggest it's always been distorted in the pandemic 0:13:43.880 --> 0:13:46.720 made it shockingly. I mean, the rent now is foury 0:13:46.800 --> 0:13:49.720 three hundred something. Jonathan Miller Miller, it's nuts. 0:13:49.760 --> 0:13:51.840 But said this, Tom, this is a big question to ask, 0:13:51.880 --> 0:13:53.679 and it's connected to monetary policy and built on what 0:13:53.760 --> 0:13:56.360 Least is talking about because it's so important. Are the 0:13:56.400 --> 0:13:59.400 long and vailable lags longer, like thirty years long? Because 0:13:59.440 --> 0:14:02.560 mortgages three percent like thirty years long? And everyone did that? 0:14:02.679 --> 0:14:04.280 I hope you did that. I didn't do that. I 0:14:04.320 --> 0:14:06.880 wish I had done that. Using the term everyone loosely? 0:14:07.080 --> 0:14:08.679 Or are we just finding out this economy is way 0:14:08.720 --> 0:14:11.720 more resilient, Kathy in that five percent doesn't get it done. 0:14:12.080 --> 0:14:14.840 Yeah, I think it's the long and variable legs are longer. 0:14:15.040 --> 0:14:17.320 And you know, let's put housing aside and let's look 0:14:17.360 --> 0:14:19.400 at all the other costs. That are going up, and 0:14:19.440 --> 0:14:22.000 also the fact that we've had sub two percent growth 0:14:22.040 --> 0:14:25.880 now for several quarters. Manufacturing sector is really very weak, 0:14:26.440 --> 0:14:29.560 and we're starting to see the ism numbers on the 0:14:29.560 --> 0:14:32.640 service side come down as well new orders. So I 0:14:32.680 --> 0:14:35.320 think it's been longer because we had such a fiscal 0:14:35.400 --> 0:14:39.720 and monetary policy response to the pandemic that it's taking 0:14:39.800 --> 0:14:43.040 longer for it to work its way out. But it's 0:14:43.040 --> 0:14:44.960 hard for me to believe again that that's not going 0:14:45.000 --> 0:14:47.840 to happen over time. And I think that's that the 0:14:47.880 --> 0:14:52.680 Feds whole hold on to high rates because if inflation 0:14:52.760 --> 0:14:56.960 continues to come down, holding is tightening, and particularly with 0:14:57.080 --> 0:14:57.920 QT going out of this. 0:14:58.040 --> 0:15:00.440 That's such a good point that's missed by so many people, 0:15:00.680 --> 0:15:03.200 and I totally agree with you. You can keep the nominal 0:15:03.240 --> 0:15:06.000 right study, but the real right shifts. That's the point, 0:15:06.080 --> 0:15:06.840 right right, And. 0:15:07.160 --> 0:15:09.720 Real rates are up, and if they stay up for 0:15:09.760 --> 0:15:12.920 another year or so, that's going to have an impact 0:15:12.960 --> 0:15:13.520 on the. 0:15:13.800 --> 0:15:16.160 A ten year real rate one point five four percent, 0:15:16.280 --> 0:15:18.760 I modeled out two point zero five percent, and sort 0:15:18.800 --> 0:15:21.760 of before all this idiocy, do you people suggest we'll 0:15:21.760 --> 0:15:23.920 see a ten year real rate that will migrate back 0:15:24.280 --> 0:15:26.480 to the sort of the moving averages of another time 0:15:26.520 --> 0:15:26.960 and place. 0:15:27.600 --> 0:15:29.440 I think two percent might be a little bit on 0:15:29.480 --> 0:15:31.640 the high side for a ten year, but we'd be 0:15:31.800 --> 0:15:34.440 actually looking at tips right here and locking in some 0:15:34.480 --> 0:15:35.240 of those really yields. 0:15:35.680 --> 0:15:39.160 Interesting, Kathy, he's going to see Kathy John child swabble. 0:15:48.920 --> 0:15:50.440 What we're going to do is talk to somebody who 0:15:50.440 --> 0:15:54.280 has an immense respect for legal pros on this. Terry 0:15:54.280 --> 0:15:57.880 Haynes is founder of penjea policy with decades of duty 0:15:57.920 --> 0:15:58.840 on Capitol Hill. 0:15:59.160 --> 0:16:00.920 Terry, you know, I go to Law Fair like. 0:16:00.920 --> 0:16:03.280 Everybody else, because these guys are the adults in the room, 0:16:03.760 --> 0:16:05.600 and they say, wait for the document. 0:16:05.760 --> 0:16:06.800 What are we waiting for? 0:16:07.720 --> 0:16:10.240 Well, we're waiting to see what the actual indictment says 0:16:10.400 --> 0:16:13.320 and what the chargers actually are. You know, you and 0:16:13.440 --> 0:16:15.480 John are absolutely right. You know, there's a lot of 0:16:15.560 --> 0:16:19.160 dinner three sources to say, and you know, the former 0:16:19.200 --> 0:16:22.840 president wasted no time not only in getting out there 0:16:22.840 --> 0:16:26.080 and talking about it, but one thing I found significant 0:16:26.200 --> 0:16:29.680 was the first fundraising email showed up at about a 0:16:29.760 --> 0:16:33.560 half an hour after made that announcement, So you know, 0:16:33.640 --> 0:16:37.400 there's clearly an attempt by him not only to frame 0:16:37.480 --> 0:16:41.440 this thing, before the indictment whatever it is comes out 0:16:41.680 --> 0:16:45.520 as well as raised money, and you know it'd been 0:16:45.560 --> 0:16:47.080 gin up as followers. 0:16:47.200 --> 0:16:50.000 Terry, My experience here goes as far as Perry Mason, 0:16:50.320 --> 0:16:51.320 maybe law and order. 0:16:51.640 --> 0:16:53.120 So you're going to help us right now. 0:16:53.160 --> 0:16:57.680 To me, there's a massive distinguishing feature between state courts 0:16:57.840 --> 0:16:58.640 in New York or. 0:16:58.560 --> 0:17:02.440 Any other state for that matter, in a federal court anywhere. 0:17:02.440 --> 0:17:05.520 In this case in Miami, what is the state court 0:17:05.640 --> 0:17:08.960 versus federal court distinction for the former president. 0:17:09.680 --> 0:17:12.399 Well, it's a couple of things. One is the is 0:17:12.440 --> 0:17:14.480 the sorts of offenses. I mean, there are things that 0:17:14.560 --> 0:17:19.800 are that are exclusively federal offenses, and you have in 0:17:19.880 --> 0:17:24.639 the in the Trump case, you have not only documents 0:17:24.640 --> 0:17:30.320 but kind of also investigations about January sixth matters. A 0:17:30.400 --> 0:17:32.399 lot of the state court matters have to do with 0:17:33.840 --> 0:17:38.880 things like his business and whether whether his business records 0:17:38.880 --> 0:17:43.480 were on the up and up, the tax evasion matter 0:17:43.600 --> 0:17:47.920 that they went through in Manhattan, those sorts of things. 0:17:47.960 --> 0:17:52.240 But also the also one of the cases, which is 0:17:52.280 --> 0:17:56.399 a Georgia case, possibly has to do with whether or 0:17:56.440 --> 0:17:59.040 not he interfered with Georgia state election law as a 0:17:59.080 --> 0:18:02.639 result of the January sixth matter, asking Georgia officials to 0:18:03.000 --> 0:18:08.840 find him votes that sort of thing. So the matter 0:18:09.000 --> 0:18:11.960 really is kind of civil versus criminal, and it also 0:18:12.119 --> 0:18:16.920 has to do with the degree to which the former 0:18:16.960 --> 0:18:20.280 president can be punished, either by incarceration or fines or 0:18:20.320 --> 0:18:20.679 the like. 0:18:21.000 --> 0:18:23.199 Terry John picked up on the right point here, which is, 0:18:23.280 --> 0:18:26.199 how do the other Republican potential candidates really step up 0:18:26.240 --> 0:18:28.119 and respond to this. Do they embrace the sort of 0:18:28.200 --> 0:18:32.200 deep state conspiracy or do they say this just shows 0:18:32.200 --> 0:18:33.080 he's not fit to run? 0:18:34.680 --> 0:18:38.080 You know, the answer is, Lisa, is both. You know, 0:18:38.280 --> 0:18:41.360 they have to attack Trump head on. I think you'll 0:18:41.359 --> 0:18:45.360 see an intensification of what I call the pack swarm mentality, 0:18:45.400 --> 0:18:50.959 where the pack of these candidates all talk about Trump's 0:18:51.000 --> 0:18:53.399 unfitness to run and how he's not the best person 0:18:53.480 --> 0:18:57.719 and why. And at the same time they hedge their 0:18:57.760 --> 0:19:00.960 bets a little bit by raising concerns about out about 0:19:01.000 --> 0:19:05.400 the justice system, and there are questions unresolved questions about 0:19:05.800 --> 0:19:09.600 not only whether or not you know, the potential indictment 0:19:09.640 --> 0:19:12.800 here is different treatment. I mean, remember, Trump's not the 0:19:12.840 --> 0:19:17.240 only person that's had took records home with him, that 0:19:17.359 --> 0:19:22.119 includes his vice president that includes the sitting president potentially others. 0:19:22.640 --> 0:19:26.200 But also there's kind of a broader historical question about 0:19:26.200 --> 0:19:30.440 how these laws were enforced, and you know, the president, 0:19:31.119 --> 0:19:34.080 the President Trump is trying to make a case that 0:19:34.280 --> 0:19:38.040 both there's different treatment here for him, as well as 0:19:38.200 --> 0:19:41.080 a situation where these laws were never enforced in the 0:19:41.119 --> 0:19:44.200 way that the Justice Department is proposing to enforce those laws. 0:19:44.960 --> 0:19:48.320 You know, those are both questions that the Justice Department 0:19:48.359 --> 0:19:50.520 is going to have to answer as this case moves forward. 0:19:50.800 --> 0:19:53.719 Terry, you mentioned that the fundraising emails went out right 0:19:53.760 --> 0:19:57.720 after the announcement by the former president. Does this type 0:19:57.720 --> 0:20:00.240 of issue have the same resonance with voter that it 0:20:00.359 --> 0:20:00.600 used to? 0:20:02.240 --> 0:20:02.400 Oh? 0:20:02.440 --> 0:20:05.080 I think it has a residence. You noticed in the 0:20:05.080 --> 0:20:08.800 Trump's statement, he's pushing the buttons about you know, you know, 0:20:08.840 --> 0:20:11.200 they talked about the Russia hopes and that was wrong. 0:20:11.240 --> 0:20:13.600 They talked about this that was wrong, that this that 0:20:13.720 --> 0:20:15.760 was wrong. Now this is the He refers to this 0:20:15.800 --> 0:20:18.840 as the Box's hoax, so he's trying to gin that up. 0:20:19.359 --> 0:20:23.520 What I will say on the primary battle is that 0:20:23.760 --> 0:20:26.840 you know, forget about the national beauty contests. If you 0:20:26.840 --> 0:20:29.440 look at the early states, you've got Trump about forty 0:20:29.480 --> 0:20:32.280 percent in the field about sixty percent. And I think 0:20:32.320 --> 0:20:36.040 that what happens is that a lot of these candidates 0:20:36.359 --> 0:20:38.440 really kind of combined to take Trump down and at 0:20:38.440 --> 0:20:41.440