WEBVTT - Bloomberg Surveillance TV: November 4, 2024 0:00:00.120 --> 0:00:06.800 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:38.120 Terminal and the Bloomberg Business app. City's VIIATA mancy Navigating 0:00:38.159 --> 0:00:42.000 election scenarios writing a global equity strategy for Trump is 0:00:42.000 --> 0:00:45.280 premised on a stronger dollar, rising rage, trade policy uncertainty, 0:00:45.320 --> 0:00:48.559 and of value rotation. A Harris strategy is premised on 0:00:48.640 --> 0:00:51.760 a weeker dollar, lower nominal yields, potential tax hikes, and 0:00:51.800 --> 0:00:55.120 a general till towards climate friendly policies. Bana joined us 0:00:55.120 --> 0:00:57.480 now for more Biata, Welcome to the program. Given the 0:00:57.520 --> 0:01:00.160 polling over the weekend, how are you advocating for what 0:01:00.200 --> 0:01:02.520 clients should do? What are you telling them about how 0:01:02.520 --> 0:01:04.720 to navigate the next forty eight hours and beyond? 0:01:04.959 --> 0:01:10.680 In markets, good morning, Thanks for having me. So to us. 0:01:10.800 --> 0:01:13.880 Within the equity market that I cover, the biggest, the 0:01:13.880 --> 0:01:16.920 most important call for a Trump win has been. 0:01:16.840 --> 0:01:19.680 Of course overweight to the US versus the rest of 0:01:19.720 --> 0:01:20.120 the world. 0:01:20.400 --> 0:01:22.720 And just like all this macro trade that you've been 0:01:22.720 --> 0:01:24.400 talking about through the morning. 0:01:24.080 --> 0:01:28.240 Stronger dollar or higher yields, this trade has also played 0:01:28.280 --> 0:01:32.600 out substantially. So at its peak it's been seven percent higher. 0:01:33.640 --> 0:01:36.399 There is a sense of the market taking off a 0:01:36.440 --> 0:01:39.399 bit of this profits, so it's up six percent. I 0:01:39.400 --> 0:01:42.640 would argue a lot of Trump win is still in 0:01:42.680 --> 0:01:46.880 the price and that performance, of course means that positioning 0:01:47.440 --> 0:01:50.800 is very stretch on the US versus Europe. In fact, 0:01:50.840 --> 0:01:54.120 it's one of the most stretched on relative basis positionings 0:01:54.160 --> 0:01:56.640 we've been having since the pandemic. 0:01:56.920 --> 0:01:58.360 So there is a very very. 0:01:58.280 --> 0:02:03.320 Setup of the investors going into the election day. 0:02:03.600 --> 0:02:06.080 And as Paul suggests, anything can happen. 0:02:06.240 --> 0:02:08.960 Well, let's talk about Europe. I'd love a European perspective 0:02:08.960 --> 0:02:11.600 on this. How nervous European based investors are about the 0:02:11.639 --> 0:02:15.960 potential Trump victory and are they rethinking that domestic European 0:02:16.000 --> 0:02:19.600 allocations to equities because of it? How is their approach changing. 0:02:21.600 --> 0:02:25.840 European investors and global investors have been very, very nervous 0:02:25.880 --> 0:02:30.720 about allocation into the European equities, but that has already 0:02:30.800 --> 0:02:34.800 started around June with the political risks of French election 0:02:35.400 --> 0:02:40.240 earnings for Europe coming off substantially, China worries, right, so 0:02:40.520 --> 0:02:44.440 we are entering We've entered this pre election period with 0:02:44.760 --> 0:02:50.000 a lot of bearishness, a lot of underperformance actually underlying 0:02:50.320 --> 0:02:54.880 EPs recessions for many cyclical sectors in Europe, which leaves 0:02:54.960 --> 0:02:59.600 us in a very interesting setup if Trump was not 0:02:59.720 --> 0:03:03.040 to it again, holds are fifty to fifty. We really 0:03:03.040 --> 0:03:07.200 don't know, right, But the way I think about global equities, 0:03:07.240 --> 0:03:09.960 it's the US versus the rest of the world equities 0:03:10.320 --> 0:03:13.760 and what is certain and investors really don't argue with 0:03:13.880 --> 0:03:16.440 us about that. That Within this rest of the world 0:03:17.320 --> 0:03:22.880 equity allocation, Europe looks most interesting right now because it's 0:03:22.919 --> 0:03:28.760 been so beaten up beforehand. So everything in equities is 0:03:29.080 --> 0:03:32.800 about changing balance of risks, and the balance of risks 0:03:33.040 --> 0:03:35.680 has been improving from very low levels. 0:03:36.320 --> 0:03:38.600 Hasn't shown up in the performance right now. 0:03:39.280 --> 0:03:45.600 But should Harris win, that's definitely a very positive trigger. 0:03:45.320 --> 0:03:48.120 For the rest of the world and Europe in particular. 0:03:49.000 --> 0:03:51.280 But on the other hand, if Trump points a lot 0:03:51.320 --> 0:03:54.880 of that trade has been already played out in Europe, 0:03:54.920 --> 0:03:59.200 perhaps of Trump trade, continental Europe looks less attractive. But 0:03:59.360 --> 0:04:04.040 within the the European equities the UK, which tends to 0:04:04.080 --> 0:04:07.080 be more defensive and has a lot of energy weight 0:04:07.360 --> 0:04:09.880 in it, so puts you one hundreds. I'm talking about 0:04:10.480 --> 0:04:13.440 this is the one that looks more interesting to go after. 0:04:13.640 --> 0:04:15.080 If Trump was to win and it. 0:04:15.240 --> 0:04:17.280 Hadn't played out here, there is a lot to unpack there, 0:04:17.320 --> 0:04:19.279 and I want to just go to what you expect 0:04:19.279 --> 0:04:21.320 in the immediate aftermath of US getting some sort of 0:04:21.360 --> 0:04:23.120 result from the election, because a lot of people are 0:04:23.160 --> 0:04:25.400 going to be up all night at their desks trying 0:04:25.440 --> 0:04:27.920 to figure out how much volatility there is and how 0:04:27.920 --> 0:04:30.480 they should play it. Are you saying that if it 0:04:30.520 --> 0:04:33.520 looks like Harris is winning, you could see a massive 0:04:33.560 --> 0:04:36.880 migration away from US equities into European equities. 0:04:36.920 --> 0:04:39.920 Is that your base case, the. 0:04:39.880 --> 0:04:42.159 Basic case, Yes, the rest of the rest of the 0:04:42.200 --> 0:04:47.640 world would outperform the US equities should Harris win. And 0:04:48.120 --> 0:04:51.880 in terms of the volatiinity, of course, as the Trump 0:04:51.920 --> 0:04:54.960 trades have moved so fast, so quickly. 0:04:55.880 --> 0:04:56.840 Investors have been. 0:04:56.720 --> 0:05:00.640 Anticipating higher volatility that has been already playing out, especially 0:05:00.720 --> 0:05:01.320 last week. 0:05:02.240 --> 0:05:06.000 It is volative. It is on truck of historically. 0:05:05.560 --> 0:05:10.560 Historical trends in pre election, so it is playing out. 0:05:10.600 --> 0:05:12.240 But I really think investors are in. 0:05:12.200 --> 0:05:15.960 A siteguate mode to really we are so close to 0:05:16.000 --> 0:05:21.239 the results that they'll take option once we have the results. 0:05:20.960 --> 0:05:22.440 Yeah, well be out of There is a sort of 0:05:23.000 --> 0:05:23.800 flying the ointment. 0:05:23.839 --> 0:05:25.560 And this is something a lot of people have pointed out, 0:05:25.640 --> 0:05:29.760 which is typically momentum tends to continue after an election, 0:05:29.839 --> 0:05:32.520 regardless of who wins. And then there's also the sense 0:05:32.839 --> 0:05:34.760 that if you look at fiscal stimulus, if you look 0:05:34.800 --> 0:05:37.159 at deficits, the trend is the same across the world, 0:05:37.200 --> 0:05:40.760 regardless of whether it's the US or whether it's Europe, 0:05:40.760 --> 0:05:42.960 with the exception of Germany, which dances to its own music. 0:05:43.000 --> 0:05:45.400 I mean, how much are we talking about a world 0:05:45.480 --> 0:05:47.640 that is looking to stimulate cut rates and do the 0:05:47.680 --> 0:05:49.160 same thing. So it kind of leaves everybody in the 0:05:49.200 --> 0:05:49.719 same place. 0:05:51.320 --> 0:05:53.479 Absolutely, And that is a very fair point that you 0:05:53.520 --> 0:05:54.040 are making. 0:05:54.120 --> 0:05:58.080 So election is an important event, but it is about 0:05:58.240 --> 0:06:01.960 everything else as well that will push equities higher or 0:06:02.040 --> 0:06:07.120 lower in the months to come, and one thing is 0:06:07.120 --> 0:06:10.800 certain that yields will stay higher. Rates despite the cuts 0:06:10.800 --> 0:06:14.640 that we have on the forecast, will still be high 0:06:15.520 --> 0:06:16.240 for longer. 0:06:16.720 --> 0:06:22.280 And if this trend of the economic economic surprises around 0:06:22.320 --> 0:06:27.480 the world continuous, positive surprises continuous, this would be an 0:06:27.640 --> 0:06:33.320 interesting setup for this improving balance of risks where the 0:06:33.360 --> 0:06:36.360 rest of the world equities versus the US should be 0:06:36.360 --> 0:06:37.200 better positioned. 0:06:37.720 --> 0:06:40.200 So wonderful to hear from you appreciate the perspective on 0:06:40.240 --> 0:06:53.320 the other side of the Atlantic. The automantic city begin 0:06:53.360 --> 0:06:55.440 this hour, but the equity raally stolen, coming into a 0:06:55.480 --> 0:06:58.560 defining way for financial markets worldwide, where some trade is 0:06:58.600 --> 0:07:01.280 beginning to unwind Trump trade as the latest New York 0:07:01.320 --> 0:07:04.560 Times CNPO shows Vice President Kamala Harris ahead in five 0:07:04.600 --> 0:07:07.760 of seven key swing states, and Walpole giving Harris the 0:07:07.880 --> 0:07:10.600 edge in Iowa, a state from one with ease in 0:07:10.640 --> 0:07:13.640 twenty sixteen and in twenty twenty. Mike Wilson and Malkin 0:07:13.680 --> 0:07:15.720 Stanley judge us now for more. Mike, is good to 0:07:15.720 --> 0:07:17.520 see it, great, thanks for having me. Let's get into this. 0:07:17.600 --> 0:07:21.240 The parallels between now and twenty sixteen. How strong are they? 0:07:21.600 --> 0:07:22.400 They're not strong at. 0:07:22.320 --> 0:07:23.680 All, because I mean, like at the end of the day, 0:07:23.760 --> 0:07:26.440 the business cycle and earnings and also interest rates will 0:07:26.440 --> 0:07:28.560 determine kind of worre stocks trade over the next year 0:07:28.600 --> 0:07:30.960 or two. And in twenty sixteen, as you recall, we 0:07:31.000 --> 0:07:33.400 went into that election with a lot of slack in 0:07:33.400 --> 0:07:35.920 the economy, right, things were slow, We had a manufacturing 0:07:35.960 --> 0:07:39.240 recession around the world. In fifteen sixteen, the FED was 0:07:39.280 --> 0:07:42.920 you know, rates were pretty low. Generally there was the economy. 0:07:42.920 --> 0:07:44.840 We had a last slack from a labor standpoint, so 0:07:44.920 --> 0:07:48.720 it was it could receive kind of a pro reflationary 0:07:49.200 --> 0:07:52.640 policy strategy. Today we don't have that slack. So prices 0:07:52.680 --> 0:07:55.760 are extremely high. Consumers and small businesses are much more 0:07:56.360 --> 0:07:58.920 I was say, sensitive to higher interest rates. So rising 0:07:58.960 --> 0:08:00.440 interest rates and kind of a pro it's a coal 0:08:00.520 --> 0:08:03.440 strategy to do not gonna be good for those types 0:08:03.480 --> 0:08:05.880 of stocks. And I think also the bond market now 0:08:06.120 --> 0:08:08.160 is in a much different position. Right, we have way 0:08:08.160 --> 0:08:10.520 more debt, as you mentioned earlier than in twenty sixteen, 0:08:10.520 --> 0:08:13.160 we had plenty of you know, slack in the in 0:08:13.200 --> 0:08:14.360 the borrowing markets. 0:08:14.520 --> 0:08:15.400 Today we don't have that. 0:08:15.880 --> 0:08:18.080 Here's what does it make sense to me then about 0:08:18.080 --> 0:08:20.800 the Trump Trade. If you get bond yields that climb, 0:08:21.240 --> 0:08:22.920 how can risk assets keep rallying. 0:08:23.360 --> 0:08:25.480 Well, I think it depends on why they're rallying. Okay, 0:08:25.520 --> 0:08:27.880 So I do think that equity markets are still nervous 0:08:27.920 --> 0:08:30.720 about growth concerns. I mean, the labor market's all over 0:08:30.760 --> 0:08:33.000 the place. I mean, you can people can make excuses 0:08:33.000 --> 0:08:34.520 for why it's better or worse month a month, but 0:08:34.520 --> 0:08:36.559 the general trend in labor is down. We're in a 0:08:36.640 --> 0:08:39.640 late cycle economy. So the equity market is worried about 0:08:39.640 --> 0:08:41.880 growth slowing, and you know that's why the Fed's cutting 0:08:41.880 --> 0:08:44.480 interest rates. Okay, so the bomb marker can't I mean 0:08:44.480 --> 0:08:46.720 the bomb marker the market worker goes up because growth 0:08:46.760 --> 0:08:48.600 is better and people believe. 0:08:48.320 --> 0:08:49.880 That, then it could be okay for equities. 0:08:49.960 --> 0:08:52.079 If bond market yields gow up because term premium is 0:08:52.120 --> 0:08:55.240 widening because of fiscal sustainability issues, then it's a problem. 0:08:55.240 --> 0:08:55.360 Well. 0:08:55.360 --> 0:08:56.760 I guess the reason why I ask this is because 0:08:56.760 --> 0:08:59.000 the Trump trade is the new jerk reaction supposedly is 0:08:59.040 --> 0:09:02.400 bond yields go up and equities, particularly in the more 0:09:02.400 --> 0:09:05.680 cyclical sectors. I'm thinking of financials. Based on the idea 0:09:05.840 --> 0:09:08.240 that you're not necessarily getting some sort of economic impulse. 0:09:08.240 --> 0:09:12.800 It's immediately overlaid onto this scenario. Why should risk acids 0:09:12.840 --> 0:09:16.720 continue to rally if yields continue to surge simply on 0:09:16.800 --> 0:09:19.120 this idea that the deficits increasing and that bond vigilantes 0:09:19.120 --> 0:09:20.000 suddenly could be back. 0:09:20.160 --> 0:09:21.439 Well, I mean, first of all, the financials is a 0:09:21.440 --> 0:09:23.720 little bit different, because that's a drag sort of call, 0:09:23.760 --> 0:09:26.040 and I do think that one's fairly visible. I think 0:09:26.080 --> 0:09:29.320 if you have a Trump presidency and maybe even a 0:09:29.320 --> 0:09:33.200 red sweep, you could get more lenient regulatory environment, maybe 0:09:33.280 --> 0:09:35.520 m and A picks up. That's kind of the financials trade. 0:09:35.559 --> 0:09:37.920 But that's unique, and we don't think the financials have 0:09:37.960 --> 0:09:39.840 really rallied that much on that trade yet. I spend 0:09:39.840 --> 0:09:41.760 more about the third quarter earning season and the fact 0:09:41.800 --> 0:09:43.559 that we went into that arning season with not a 0:09:43.600 --> 0:09:44.760 lot of high expectations. 0:09:45.080 --> 0:09:45.640 So I think. 0:09:45.480 --> 0:09:49.080 There's scope for further follow through in certain quote unquote 0:09:49.080 --> 0:09:51.679 Trump trades. At the same time, there's probably, you know, 0:09:51.800 --> 0:09:53.240 the other side, which is I think a lot of 0:09:53.240 --> 0:09:54.160 the negative. 0:09:53.760 --> 0:09:55.280 Trades have played out for the Trump trades. 0:09:55.280 --> 0:09:57.880 I mean, bonds have sold off probably too much, and 0:09:58.280 --> 0:10:02.000 the renewables and things like consumer goods companies will be 0:10:02.080 --> 0:10:05.080 hurt by tariffs have really been hammered. So if Harris wins, 0:10:05.080 --> 0:10:06.920 you could see a really a pretty big rebound in 0:10:07.000 --> 0:10:09.679 some markets, you know. So there's a lot of permutations here. 0:10:09.760 --> 0:10:11.400 This is is not as clear cut. I think you 0:10:11.400 --> 0:10:15.120 said exactly right. It's all about the setup. Okay, Stocks 0:10:15.120 --> 0:10:18.280 and asset prices move based on positioning as much as 0:10:18.280 --> 0:10:20.960 they do about the actual news. I'm looking for a 0:10:20.960 --> 0:10:23.600 clearing event, Okay. I'm hoping this is a clearing event, 0:10:23.880 --> 0:10:25.320 and then we can kind of get back to doing 0:10:25.360 --> 0:10:27.240 what we, you know, get paid to do, which is 0:10:27.240 --> 0:10:30.320 analyze interest rates, earnings growth, and kind of multiples trying 0:10:30.320 --> 0:10:32.679 to figure out, Okay, what's the fundamental case here? And 0:10:33.280 --> 0:10:35.280 my guess is that could take maybe a month to 0:10:35.360 --> 0:10:35.600 kind of. 0:10:35.600 --> 0:10:37.160 Clear when it comes to a clearing event. 0:10:37.200 --> 0:10:39.560 Would you agree with Kit Jukes that it's either likely 0:10:39.600 --> 0:10:42.679 going to be a Republican sweep or Harris with Gridlock 0:10:42.760 --> 0:10:44.240 aka Republican Senate. 0:10:44.520 --> 0:10:45.400 Yeah, I think that's probably. 0:10:45.400 --> 0:10:47.520 I mean, that's what the prediction markets Stayman, Who am 0:10:47.559 --> 0:10:49.720 I to argue with that? And but there are but 0:10:49.880 --> 0:10:52.400 it's not like it's a slam dunk Okay, I think 0:10:52.400 --> 0:10:54.400 the mark I think, but I do not agree with 0:10:54.440 --> 0:10:56.840 the view that a Republican sweep is the best outcome 0:10:56.880 --> 0:11:01.200 for equities. I think it's probably Trump with a divided Congress. 0:11:01.040 --> 0:11:04.720 A publicans means a fifteen percent corporate tax rate, potentially. 0:11:04.240 --> 0:11:07.280 Potentially potentially, I mean, let's see if they can actually 0:11:07.320 --> 0:11:09.040 get that through. I mean, I mean the bomb vigilanis 0:11:09.080 --> 0:11:11.080 may come for them if they try to cut taxes 0:11:11.120 --> 0:11:12.599 in that sort of form or fashion. And they're not 0:11:12.640 --> 0:11:15.640 even talking about they're talking about at the margin, trying 0:11:15.640 --> 0:11:17.880 to reduce some taxes, maybe extending some certain things. 0:11:18.280 --> 0:11:19.440 I think the bomb margins. 0:11:19.440 --> 0:11:21.680 The whole election has been a tax cut election. 0:11:22.000 --> 0:11:23.920 Yeah, but I mean I don't think that's price. Just 0:11:23.960 --> 0:11:26.960 like in twenty sixteen. Remember in twenty sixteen, nobody priced 0:11:27.040 --> 0:11:30.200 that bond cut until December of seventeen when the Senate 0:11:30.240 --> 0:11:31.960 actually passed it. I mean, the whole year is like, 0:11:31.960 --> 0:11:34.400 there's never gonna happen. It's never gonna happen. I think 0:11:34.400 --> 0:11:37.000 the markets are they always wait for the actual evidence 0:11:37.040 --> 0:11:39.560 to actually trade those types of events, particularly when it 0:11:39.559 --> 0:11:40.360 comes to Congress. 0:11:40.520 --> 0:11:43.319 You said the most beneficial Trump with divanded government. Yeah, 0:11:43.360 --> 0:11:44.800 can you explain that just a little bit more. 0:11:44.960 --> 0:11:47.120 Well, I mean, the market's like uncertain, they don't want 0:11:47.160 --> 0:11:50.600 one party in power. I do think that a Trump 0:11:50.840 --> 0:11:52.920 we said this all along, Trump presidency is probably more 0:11:52.920 --> 0:11:56.080 pro growth. Okay, maybe that's good for bonds. Harris would 0:11:56.080 --> 0:11:58.600 be probably a little less growth, but probably better for bonds. 0:11:58.600 --> 0:12:00.920 And that's been our general view even prior to the 0:12:00.960 --> 0:12:02.920 last couple of weeks of things have kind of traded through. 0:12:03.160 --> 0:12:05.559 Now at the margin is going to be dramatically better. 0:12:05.679 --> 0:12:07.360 I mean, I don't know. The markets are very priced 0:12:07.360 --> 0:12:08.640 a lot, right, you know what I'm saying, Like, that's 0:12:08.679 --> 0:12:10.520 the problem. We've already priced a lot of good news. 0:12:10.760 --> 0:12:13.439 And let's let's take a step back too. We're training 0:12:13.480 --> 0:12:17.200 twenty almost twenty two times earnings. Okay, in twenty sixteen, 0:12:17.320 --> 0:12:19.400 we were trading sixteen and a half times earning, So 0:12:19.400 --> 0:12:21.640 you got five and a half multiple points of you 0:12:21.679 --> 0:12:24.240 know how, we got to justify that no matter who 0:12:24.280 --> 0:12:26.680 wins this selection. So we're just in a totally different 0:12:26.679 --> 0:12:28.160 setup going into this election. 0:12:28.240 --> 0:12:30.840 So at Giantenny VIANTNY Research was on the program early 0:12:30.920 --> 0:12:33.400 this morning and essentially said to us Choppy wrote to 0:12:33.440 --> 0:12:36.000 nowhere flat market into year end. You share that. 0:12:36.000 --> 0:12:39.160 View, well, chopping meaning here could still be some big swings. 0:12:39.240 --> 0:12:41.240 I mean, maybe we end up flat from here to there, 0:12:41.280 --> 0:12:43.439 but there's going to be some big trading opportunities between 0:12:43.480 --> 0:12:46.439 here and there. I think we could see six thousand potentially, 0:12:46.760 --> 0:12:48.560 you know, in some sort of a clearing event that 0:12:48.720 --> 0:12:49.920 isn't you know, there's. 0:12:49.679 --> 0:12:51.800 Not a lot of consternation. People feel good about things. 0:12:52.440 --> 0:12:54.760 But then I think it's really hard for us to 0:12:54.800 --> 0:12:57.520 get past six six thousand, sixty one hundred in any 0:12:57.559 --> 0:13:00.000 scenario because then you're, I mean, you're so stretched on value, 0:13:00.640 --> 0:13:03.079 and I don't see growth accelerating in a kind of 0:13:03.120 --> 0:13:06.559 way which would justify even higher multiples for twenty twenty five. 0:13:06.679 --> 0:13:09.600 Can you explain what this clearing event for a month 0:13:09.960 --> 0:13:10.400 looks like? 0:13:11.480 --> 0:13:12.080 No? I can't. 0:13:12.280 --> 0:13:14.960 Okay, all right, but the sense of what that could mean, 0:13:15.000 --> 0:13:17.120 I mean, is it basically just whip sawing every single 0:13:17.200 --> 0:13:19.680 day or is it basically that you see one trade 0:13:19.720 --> 0:13:22.400 in particular that you could see really getting blown up 0:13:22.600 --> 0:13:23.720 during that period of time. 0:13:23.840 --> 0:13:26.080 Well, I could see many trades getting blown up, not 0:13:26.200 --> 0:13:28.360 just because of the election, but because once again, we're 0:13:28.440 --> 0:13:31.520 very stressed we're into the FOMO season, right people need 0:13:31.559 --> 0:13:33.320 to perform the next two months. 0:13:33.520 --> 0:13:35.240 There's a lot of things going on here. 0:13:35.080 --> 0:13:37.840 And so what could I could see a blowoff move 0:13:37.960 --> 0:13:40.319 of some kind post election, a clearing event, but then 0:13:40.400 --> 0:13:42.400 reality sets in that we're gonna have to have some 0:13:42.480 --> 0:13:44.920 kind of fiscal consolidation next year no matter who wins, 0:13:44.960 --> 0:13:47.200 and my view, I think that has to happen, and 0:13:47.200 --> 0:13:49.040 that you know, that's going to create uncertainty akein and 0:13:49.040 --> 0:13:50.800 then positioning gets kind of whipped around. The other thing 0:13:50.840 --> 0:13:53.600 that's going on is a mag seven which reported last 0:13:53.640 --> 0:13:55.320 week was a very was a mixed bag. 0:13:55.640 --> 0:13:57.439 What I was, we've been more procifical. 0:13:57.520 --> 0:13:59.040 What I was worried about last week was that they 0:13:59.040 --> 0:14:01.720 would come in with such great results they would suck 0:14:01.760 --> 0:14:03.079 all the oxygen. 0:14:02.600 --> 0:14:04.760 Out of the markets. Again. So that didn't happen. 0:14:05.000 --> 0:14:07.120 But if we were to get a new theme, for example, 0:14:07.160 --> 0:14:09.520 let's see a new theme pops up, I can guarantee 0:14:09.520 --> 0:14:10.880 you this some money is going to flock to that 0:14:10.920 --> 0:14:14.000 theme very quickly, because that's that's what that's what we 0:14:14.040 --> 0:14:16.040 need right now. We need something to get excited about, 0:14:16.120 --> 0:14:17.320 and we're kind of lacking in that. 0:14:17.320 --> 0:14:19.240 We're kind of lacking that. But some people will happen. 0:14:19.560 --> 0:14:21.520 In other words, the market will find something, a new 0:14:21.560 --> 0:14:24.000 shiny toy, and we'll move to that shiny toy. 0:14:24.240 --> 0:14:25.880 Right now, the FED is not the shiny toy. We 0:14:25.920 --> 0:14:28.640 have barely mentioned the Fed's meeting on Thursday. How much 0:14:28.680 --> 0:14:30.480 does that matter to this entire equation? 0:14:30.760 --> 0:14:34.160 Isn't it Wednesday? Moved it back? 0:14:34.240 --> 0:14:34.480 Yeah? 0:14:34.560 --> 0:14:37.720 I know it's yeah, but I mean, but Wednesday. I mean, 0:14:37.720 --> 0:14:39.160 they're meeting their meeting on Wednesday. 0:14:39.160 --> 0:14:41.360 They're meeting on Wednesday, but we're still meeting. 0:14:41.360 --> 0:14:44.400 They're gonna know what happened or think anyways, Yes, what 0:14:44.520 --> 0:14:44.960 do I think? 0:14:45.720 --> 0:14:47.400 I mean, they don't have any they don't have any 0:14:47.400 --> 0:14:48.160 crystal ball. They don't. 0:14:48.320 --> 0:14:50.080 I don't think the election is going to change their 0:14:50.120 --> 0:14:52.280 decision making. So right now it's twenty five basis points. 0:14:52.320 --> 0:14:53.240 Did they change years? 0:14:53.720 --> 0:14:54.000 We look? 0:14:54.040 --> 0:14:55.240 I mean, at the end of the day, the Fed's 0:14:55.240 --> 0:14:58.400 on someone on an autopilot. Assuming we don't the economy does 0:14:58.560 --> 0:14:59.880 take a really bad turn and they got to cut 0:15:00.080 --> 0:15:02.040 bit more rapidly. I think that the trick for the 0:15:02.040 --> 0:15:04.200 equity market is going to be what's their tone? The 0:15:04.280 --> 0:15:07.040 dubbish tone or hawkish tone is it a hawkish cut 0:15:07.160 --> 0:15:09.360 or is it a dubbish cut? And that, but that's 0:15:09.400 --> 0:15:11.760 one or two percent, that's not a ten percent move 0:15:12.240 --> 0:15:14.200 on the Fed. The Fed is kind of over here 0:15:14.280 --> 0:15:16.720 now they're doing their thing. They made their decision. That 0:15:16.800 --> 0:15:18.880 was that was September. That was a shining twenty September. 0:15:19.160 --> 0:15:21.320 And now we've kind of got off of that and 0:15:21.360 --> 0:15:23.120 now it's about earnings and then as we go in 0:15:23.160 --> 0:15:24.600 a year, and it's going to be how the twenty 0:15:24.680 --> 0:15:28.240 twenty five settle in for the economy for earnings growth 0:15:28.360 --> 0:15:30.800 and where should multiples be based on how the equity 0:15:30.800 --> 0:15:33.120 how the equity marks are interpreting the move in bond yields. 0:15:33.240 --> 0:15:35.200 Looking forward to having that conversation with you, Mike. It's 0:15:35.200 --> 0:15:48.640 going to say thank you, Mike Wilson of Molting Standard Cetermatic. 0:15:48.680 --> 0:15:50.920 If newthe joins us now so more to talk about 0:15:50.960 --> 0:15:53.280 the election and what it means a financial market cera. 0:15:53.720 --> 0:15:55.480 What are you doing going against tomorrow? And I know 0:15:55.520 --> 0:15:58.960 it's super short term, it's super tactical, but given why 0:15:59.000 --> 0:16:00.800 this market has been how are you thinking about the 0:16:00.840 --> 0:16:04.520 price sanction bey on Tuesday into Wednesday and through next week. 0:16:05.320 --> 0:16:05.840 It's good to. 0:16:05.760 --> 0:16:07.840 See you, Jonathan, Well, the stakes are high this week 0:16:07.880 --> 0:16:11.040 for three reasons, and that's the FED earnings and the elections. 0:16:11.120 --> 0:16:13.680 So let's start with the two perhaps more certain ones 0:16:13.680 --> 0:16:15.680 for the market. For the Fed, we expect twenty five 0:16:15.720 --> 0:16:18.320 basis points, even with that twelve thousand payrolls that we 0:16:18.360 --> 0:16:21.520 saw on Friday. Earnings have been strong. There's optimism there. 0:16:22.360 --> 0:16:24.640 Estimates did come down going into earning seasons, but we 0:16:24.680 --> 0:16:26.640 are growing at about four to five percent year over 0:16:26.760 --> 0:16:29.680 year at about three quarters of companies are beating earnings. Now, 0:16:29.720 --> 0:16:31.400 going to an election, I think we're going to see 0:16:31.440 --> 0:16:33.840 caution with the markets more of a defensive trade. First 0:16:33.840 --> 0:16:36.280 of all, markets don't like uncertainty, and we keep talking 0:16:36.280 --> 0:16:38.600 about which candidate will win, but we also need to 0:16:38.600 --> 0:16:40.920 talk about when will the candidate win. I think there's 0:16:40.960 --> 0:16:43.560 a reasonably high chance that we have a contested election 0:16:43.800 --> 0:16:45.440 and we don't have an answer to who our next 0:16:45.440 --> 0:16:48.200 president is for days and perhaps weeks. In the year 0:16:48.240 --> 0:16:50.800 two thousand, it took twenty four trading days to decide 0:16:50.840 --> 0:16:52.880 who our president was going to be, and the markets 0:16:52.880 --> 0:16:55.160 were down about four to five percent during that period. 0:16:55.240 --> 0:16:57.360 What kind of market volatility could we see if that 0:16:57.480 --> 0:16:58.880 happens this time around. 0:17:00.040 --> 0:17:01.520 But I think first of all, the markets have been 0:17:01.560 --> 0:17:04.000 starting to pre price in Trump winning, so we're seeing 0:17:04.000 --> 0:17:06.000 today a bit of that unwinding because of that poll 0:17:06.080 --> 0:17:07.040 that came out of Iowa. 0:17:07.280 --> 0:17:09.040 So markets have started to prices in. 0:17:09.119 --> 0:17:11.600 This is unlike twenty sixteen where markets were surprised by 0:17:11.640 --> 0:17:13.960 his win. So we're seeing that start to unwind a 0:17:14.000 --> 0:17:15.760 little bit. And then I think the issue of who 0:17:15.760 --> 0:17:17.439 will win is going to cause the markets to just 0:17:17.600 --> 0:17:19.400 go into more of a defensive mode. 0:17:19.520 --> 0:17:21.399 We're also in a different period. Today. 0:17:21.600 --> 0:17:24.760 SMP five hundred valuations are at the third highest level 0:17:24.800 --> 0:17:27.760 since the year nineteen ninety nine. So nineteen ninety nine 0:17:27.800 --> 0:17:30.479 we had a SMP five hundred valuation higher than today, 0:17:30.600 --> 0:17:32.280 and in twenty twenty one we did, and we know 0:17:32.359 --> 0:17:34.720 how both of those periods ended. So this is not 0:17:34.800 --> 0:17:36.800 a cheap market that's going into quite a bit of 0:17:36.840 --> 0:17:38.159 uncertainty over the next few. 0:17:38.040 --> 0:17:38.679 Days and weeks. 0:17:38.840 --> 0:17:41.040 You mentioned the DESMOI Iowa poll. What do you make 0:17:41.080 --> 0:17:43.280 of that and it's impact on financial markets. There's been 0:17:43.320 --> 0:17:46.240 no data, just this one poll coming out of a 0:17:46.320 --> 0:17:49.040 state that many view as solid red. 0:17:50.400 --> 0:17:52.720 Well, markets keep trying to trade off of the polls, 0:17:52.720 --> 0:17:54.800 and as you've seen, they've been very tight, and there's 0:17:54.800 --> 0:17:56.960 a lot of uncertainty around poles, which markets have learned 0:17:56.960 --> 0:18:00.199