Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanovik. We're here every day bringing
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Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. Well, why do people buy
Speaker 1: one product over another? Why do they buy a BMW
Speaker 1: versus a Tesla versus a car maybe from Ford? Or
Speaker 1: why do they spend thousands of dollars on a trip
Speaker 1: to Disney. Perhaps it's about a connection that they feel
Speaker 1: to a brand of a company. Emblem is an agency
Speaker 1: focused on what's referred to as brand intimacy, that connection
Speaker 1: that people have between themselves and brands. Mario Natarelli is
Speaker 1: managing partner at Emblem. Mario this Afternoon joins us on
Speaker 1: the phone from New York City. Mario how are you
Speaker 1: good afternoon? Doing great? Thank you? Yeah, thanks for joining us.
Speaker 1: We wanted to get you on the program because you've
Speaker 1: got this brand intimacy study for the year two and
Speaker 1: there are a lot of really familiar names on the list.
Speaker 1: But I want to hear how you define brandontimacy and
Speaker 1: why it's so important for companies to consider. Well, I
Speaker 1: thought you did a phenomenal job that, thank you. I
Speaker 1: would add, yeah, I would add that I think of
Speaker 1: it as the emotional science behind the brands that we
Speaker 1: use and love. We know that behavioral scientists have proven
Speaker 1: that emotion drives our decisions, but in marketing and in
Speaker 1: many other fields, emotion is often under considered. So we've
Speaker 1: been on a twelve of year journey trying to define
Speaker 1: a science and method around measuring that emotion that we
Speaker 1: have with the products that we use and love. Well,
Speaker 1: how do you measure that emotion? I would love to know. Yeah. Well, um,
Speaker 1: we started by actually looking at how people bond with
Speaker 1: each other and we found some interesting patterns. And ironically,
Speaker 1: we bond with brands much like we do bond with
Speaker 1: each other. It's reciprocal, it's fluid, it's always evolving, and
Speaker 1: the way we measure it is um. Not to get
Speaker 1: overly technical, but we basically use quant and call and
Speaker 1: now we're using social listening as our data sources. And
Speaker 1: we observed to mass at two basic elements. One is
Speaker 1: what is the characteristic of the bonds that you're forming,
Speaker 1: and there's six unique patterns to those characteristics. And then
Speaker 1: what's the degree of intensity? Uh, and there's three stages
Speaker 1: of intensity to the way you bond with brand. That
Speaker 1: formula has been evolved and tested and like I said,
Speaker 1: over twelve years we've refined it where we feel like
Speaker 1: it's stabilized now and that we're getting some really rich
Speaker 1: and powerful insights from it. Okay, well, I'm want to
Speaker 1: get to some of these names. They're on the list
Speaker 1: because there there's some everything in here is someone is
Speaker 1: something that someone knows. So we got Disney coming in
Speaker 1: at number one, we got Apple at number three, We've
Speaker 1: got Android at number nine, We've got Netflix at number eight,
Speaker 1: Mercedes at number six. I'm kind of bouncing around here
Speaker 1: because I want to focus on number two, which is Tesla.
Speaker 1: And the reason I want to talk Tesla's because earlier
Speaker 1: this week we had a story out in Bloomberg that
Speaker 1: talked about how Elon Musk's antics are starting to get
Speaker 1: to people who have even been you know, the most
Speaker 1: die hard Tesla fans. So how do you how do
Speaker 1: you get to a score of sixty seven point four
Speaker 1: score for number two of Tesla given all the problems
Speaker 1: that Elon Musk has found himself in and all the
Speaker 1: attention that he has. Yeah, great question, And you know,
Speaker 1: most of the questions we've we've received on the study
Speaker 1: have been around Tesla because of the antics of Musque.
Speaker 1: So this data is um pre dates Tesla's or Musk's
Speaker 1: adventures with Twitter. So we would imagine if we ran
Speaker 1: the data right now that there would probably be some
Speaker 1: performance loss. So the Tesla ranking, I will say, that's
Speaker 1: the first time that Tesla has ranked in the top
Speaker 1: ten in the twelve years that we've been doing this,
Speaker 1: and it essentially rocketed of the fan of the findings.
Speaker 1: This is a brand that's really hitting on all cylinders
Speaker 1: from a brand performance perspective. You know, people that drive Testa's,
Speaker 1: if you know any really love their Testlas. You see
Speaker 1: it in the language that they're using, and you see
Speaker 1: it in the performance um today. Now, like I said, Uh,
Speaker 1: how much damage has been created in the last let's
Speaker 1: say three to four months. It would be interesting to see.
Speaker 1: I would suspect that it has fallen. Yeah, yeah, I
Speaker 1: mean Tesla and Musk. I mean such a polarizing sort
Speaker 1: of figure there. But let's talk about number one Disney,
Speaker 1: and I mean when I think about the emotions attached
Speaker 1: to Disney films, to the Disney parks, that seems to
Speaker 1: make a lot of sense to me. Mario, Yeah, this
Speaker 1: is um. What's great about brands that do very well
Speaker 1: year over years that they generally do well across their
Speaker 1: entire portfolio, So whether it's about retail or in their case,
Speaker 1: content or their theme parks, um, etcetera. Brandon Apple is
Speaker 1: another one that does very well across all demographics and
Speaker 1: across all channels. What's interesting about the ask me is
Speaker 1: it also is benefiting from the effects of the pandemic.
Speaker 1: So the more we were looking for powerful stories to
Speaker 1: uplift us or uh, to drive us to a more
Speaker 1: positive outlook, Disney sort of I think gained in terms
Speaker 1: of that appreciation. As the world also opened and the
Speaker 1: theme parks open, people were eager to take their families places,
Speaker 1: and I think Disney also again um benefited from that
Speaker 1: positive trend. Mario, we only have thirty seconds left. But
Speaker 1: what advice would you give the companies that are not
Speaker 1: high on the list that want to get there? Well,
Speaker 1: this is the reason we do the study. We think
Speaker 1: there's uh boodles of findings and interesting things that you
Speaker 1: can take from the study. Ultimately, if you think about
Speaker 1: your stakeholders, all of them internal and external, and the
Speaker 1: bonds that you're forming with them, you know, really try
Speaker 1: to nurture them and invest in them and maintain them
Speaker 1: over time. It sounds easy, it's not. It takes dedication
Speaker 1: and perseverance. All right, we gotta leave it there, Mario.
Speaker 1: Not a rally managing partner at Emblem, it's an agent
Speaker 1: see that focuses on brand intimacy. They've got this brand
Speaker 1: new brand intimacy study out. Mario, really appreciate you've taken
Speaker 1: the time. He joins us on the phone from New
Speaker 1: York City. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Well,
Speaker 1: as I mentioned, we've got Mr Laney Agafa Poulu in
Speaker 1: the Bloomberg Interactive Broker Studio. She's personal finance reporter for
Speaker 1: Bloomberg News. The reason we've got her in here is
Speaker 1: because she's got a Bloomberg exclusive out today. It's about
Speaker 1: a sneaker head who allegedly operated a massive air Jordan's
Speaker 1: Ponzi scheme. Missy, it's great to have you back with
Speaker 1: us on Bloomberg Business Week. How does a Ponzi scheme
Speaker 1: work when we're talking about shoes and not stocks and bonds.
Speaker 1: That is a great question. And I know you mentioned
Speaker 1: stocks and bonds, So I feel like we should try
Speaker 1: to explain to anyone listening why we're talking about sneakers
Speaker 1: right now. And I think the reason is this became
Speaker 1: a massive asset class that all the people started trading
Speaker 1: during the pandemic. A lot of people were at home,
Speaker 1: they had nothing to do. If they could get their
Speaker 1: hands on sneakers whose price would go up uh later on,
Speaker 1: you know in the year, they could buy them, sell
Speaker 1: them for higher make money off of it. So a
Speaker 1: lot of people sitting at home with you know, those
Speaker 1: um COVID checks, Stimmy's ready to spend money. We're really
Speaker 1: trying to find ways to get access to these really
Speaker 1: highly coveted sneakers, and this company in Oregon, Zade Kicks,
Speaker 1: promised them what their dream scenario could be access to
Speaker 1: these sneakers that were extremely hard to get, like you
Speaker 1: would have to wait in line to get them in
Speaker 1: normal stores or pay for them in the resale market
Speaker 1: for like hundreds of hundreds of dollars for what they
Speaker 1: go for. So they'd offer these sneakers at a discounted price, um,
Speaker 1: a few weeks after they were dropping. And so what
Speaker 1: this man did is essentially sell shoes that he didn't have,
Speaker 1: and so these customers started buying up these shoes. There's
Speaker 1: a great example in the indictment from the federal government
Speaker 1: about how he sold six hundred thousand pairs of Nike
Speaker 1: Air door in but he only had six thousand pairs
Speaker 1: in stock. This is what prosecutors are alleging, right, this
Speaker 1: is what prosecutors are alleging. He's actually showing up an
Speaker 1: Oregan court as we speak, Um, he is going to
Speaker 1: plead not guilty to sort of running this scam of
Speaker 1: an operation. Who you know a lot of it sort
Speaker 1: of comes back to the pandemic again, because what federal
Speaker 1: authorities are saying is this guy has been around since
Speaker 1: he has been running this business where he's selling shoes.
Speaker 1: When things went really south was during the pandemic again,
Speaker 1: because he saw this surge of demand from people wanting
Speaker 1: access to these sneakers um and I think he started
Speaker 1: taking orders without necessarily realizing that he would never actually
Speaker 1: be able to get these orders to people. And so
Speaker 1: we have a lot of victims on the record saying
Speaker 1: that they've lost thousands of dollars by sneakers that they
Speaker 1: put money in for but never arrived. And how did
Speaker 1: this unravel? What led authorities to this sneaker ponzi scheme
Speaker 1: as it appears to be so, I think that authorities
Speaker 1: had seen this happened, they were monitoring the situation. What
Speaker 1: the lawyers for the man behind the company told us
Speaker 1: is that he actually turned himself into authorities back in
Speaker 1: May because he realized that everything had gotten out of
Speaker 1: control and he owed so much money to people that
Speaker 1: he couldn't really pull back, and so the you know,
Speaker 1: he essentially turned himself in and surrendered and dissolved his company.
Speaker 1: And now he's going through the bankruptcy process where he's
Speaker 1: trying to essentially get people's money back to them. But
Speaker 1: of course we all know that, you know, there's people
Speaker 1: here who might never really get their money back. Okay,
Speaker 1: so what's this guy like. We're talking about someone you
Speaker 1: describe as a Lamborghini loving sneaker head. What's he like? Yeah,
Speaker 1: so again, sold a ton of sneakers that he didn't have.
Speaker 1: Back to that example of the six hundred thousand Nike
Speaker 1: Air Jordan's that he sold. Um, he made seventy millions
Speaker 1: off of that, and according to the indictment, federal authorities
Speaker 1: state that he was spending it on really expensive cars Lamborghini's, Porchet's,
Speaker 1: Mercedes Ferraris, but also all of the luxury goods that's
Speaker 1: one can imagine, like Louis Betton purses fors jewelry and
Speaker 1: watches that caused up to six thousand dollars UM. And
Speaker 1: what's also very interesting is he did not keep that quiet.
Speaker 1: I mean, if you look at his social media, his
Speaker 1: Instagram was, you know, full of evidence that this guy
Speaker 1: was living a very lavish lifestyle, assuming you know, from
Speaker 1: the sort of profits he can make out of this
Speaker 1: out of this company. And of course, like you said,
Speaker 1: he's an appearing in court as we speak. But what
Speaker 1: is he exactly being charged with and what could a
Speaker 1: possible sentence look like? So he's UM being charged with
Speaker 1: wire fraud, conspiracy to commit bank fraud because he also
Speaker 1: UM provided a lot of false statements to banks to
Speaker 1: get funding that UM we're based on falsified information and
Speaker 1: also money laundering. And so he's facing as much as
Speaker 1: thirty years if convicted UM on the most serious count,
Speaker 1: which again is conspiracy to commit bank fraud. All right,
Speaker 1: we got thirty seconds left, Missy. What are customers you
Speaker 1: spoke you're saying? I mean, I think this is what's
Speaker 1: really interesting about this story is like they made a
Speaker 1: lot of money from this company because they were still
Speaker 1: able to get some sneakers flip them and really just
Speaker 1: double and triple their investments. But I do think a
Speaker 1: lot of them are facing like hundreds of thousands of
Speaker 1: credit card debt because that is where they would charge
Speaker 1: these sneakers is across level of credit cards. And what
Speaker 1: they're doing is they're trying to go to credit card
Speaker 1: companies and essentially file chargeback claims to get some of
Speaker 1: their money back. Some of them are succeeding, some of
Speaker 1: them are not UM, but all in all just all
Speaker 1: of them sort of looking at this trial and hoping
Speaker 1: to see something positive come out of it. Mr Lanny Gaffapulu,
Speaker 1: personal finance reporter for Bloomberg News. This is an exclusive story.
Speaker 1: It's on the Bloomberg Terminal and at Bloomberg dot Com.
Speaker 1: It's about a sneaker head allegedly operating a massive air
Speaker 1: Jordan Ponzi scheme. Be sure to check it out. This
Speaker 1: is Bloomberg Business Week with Carol Messer and Bloomberg Quick
Speaker 1: Takes Tim Stinovic on Bloomberg Radio. Katie Greifeld and I
Speaker 1: have been in here chatting about what it's like to
Speaker 1: be a manager. And you know what, spoiler alert, neither
Speaker 1: of us are managers. Know somehow, I'm not in charge
Speaker 1: of a single person other than myself. It's probably a
Speaker 1: good thing for both of us. I know, it's a
Speaker 1: lot of work. It's really interesting because it's something that
Speaker 1: Julie Jaal writes about. She's the co founder of In
Speaker 1: Spirit and also the author of the new book The
Speaker 1: Making of a Manager, What to Do When Everyone looks
Speaker 1: to You. Julie joins us this afternoon from the Bay
Speaker 1: Area out west. Julie, how are you I'm doing great.
Speaker 1: How are you all doing. We're doing well. Thanks. Um.
Speaker 1: Take us back to your mid twenties and when you
Speaker 1: got this promotion and you became a manager. That is
Speaker 1: sort of the genesis of this book. So I was
Speaker 1: years old. I had just joined a scrappy startup three
Speaker 1: years prior. It was a little college social networking at
Speaker 1: the time. Facebook heard of it multily for me, you know,
Speaker 1: to start ups grew and grew, and so within a
Speaker 1: couple of years we had added a lot more people,
Speaker 1: and so I was one of the early people there.
Speaker 1: One day, my manager turned to me and said, you know,
Speaker 1: we have four new designers joining next week, and I
Speaker 1: don't have time to meet with them. Why don't you
Speaker 1: be their manager? And at this point, you know, I
Speaker 1: had no training at this about how to lead, how
Speaker 1: to manage. But yet I found myself in this situation
Speaker 1: needing to ramp up new people and help our team grow.
Speaker 1: And this is a very common story in Silicon Valley
Speaker 1: or in any context where a small team starts to
Speaker 1: take on bigger and bigger goals. Uh. And that is
Speaker 1: how I found myself in that role. Um, without that preparation,
Speaker 1: I made every single mistake in the book about learning
Speaker 1: how it is to manage and lead people, And ultimately,
Speaker 1: some years later I decided to write all that down
Speaker 1: and um hopefully make it seem like I'm having a
Speaker 1: coffee chat with somebody else finding themselves in that situation.
Speaker 1: And so, I mean, if you could go back in
Speaker 1: time and talk to younger Julie Newly in that situation,
Speaker 1: what would you say? What would be the main bullet
Speaker 1: point there? The most important thing I would tell somebody
Speaker 1: in that situation here is what the job of a
Speaker 1: manager is. Because here's the thing. We grow up, we
Speaker 1: watch movies. We have a sense of like, what does
Speaker 1: the boss do right? And we think about the boss
Speaker 1: as the person who makes decisions, the person who hires
Speaker 1: and fires people, the person who gets to tell everyone
Speaker 1: else you know, what's right and how things go. And
Speaker 1: the reality is, in my experience, like, that's not really
Speaker 1: what great managers do. So the first thing I wanted
Speaker 1: from to understand is what exactly is the job of management?
Speaker 1: And very simply I define it as the manager's job
Speaker 1: is to help a group of people be able to
Speaker 1: achieve more together. So how do they do that right?
Speaker 1: How do they actually get a group of talented people
Speaker 1: to achieve more together. There are three main levels that
Speaker 1: a manager has. The first is people. You know, you
Speaker 1: need to bring in talented people who have the skills
Speaker 1: to be able to do what the group wants to
Speaker 1: do together. The second is process us. So do you
Speaker 1: have all of these great people okay? How should they
Speaker 1: work together? You know? How do they come up with
Speaker 1: new ideas? How do they resolve disagreement? Who should do what?
Speaker 1: You know? How does their work get divided? And finally, purpose,
Speaker 1: which is defining what does success look like for this
Speaker 1: group of people? How do we know what a good
Speaker 1: job is? How do we know what a great job is?
Speaker 1: How do we know what a mediocre job is? All
Speaker 1: that has to be shared in terms of all of
Speaker 1: the members on the team in order for this to
Speaker 1: two team to go on and do great things. I'm
Speaker 1: wondering about people who may not be managers yet and
Speaker 1: may not even aspire to be managers. And how you know,
Speaker 1: we talked about this idea of managing up and the
Speaker 1: idea of working with your bosses in a way that
Speaker 1: is productive. What advice do you have for people in
Speaker 1: those situations? The most important advice I have for somebody
Speaker 1: when they think about managing up is make sure you
Speaker 1: know these two things. Make sure that your manager knows
Speaker 1: what you aspire for, what your goals. Goals are in
Speaker 1: your career. Do you want to get a promotion, do
Speaker 1: you want to manage when did? Do you want to
Speaker 1: take on big projects? Or or you know, are you
Speaker 1: very happy doing what you're doing? You know what kind
Speaker 1: of projects are you excited to take on? What kind
Speaker 1: of challenges are meaningful, and what kind of things you
Speaker 1: hate doing? Make sure your manager understands that, right, So
Speaker 1: ask yourselves, does my manager understand what my aspirations are,
Speaker 1: what my strengths are, what my weaknesses are, and if not,
Speaker 1: go ahead and tell them right, tell them in a
Speaker 1: one on what make sure they know. And the second
Speaker 1: question is do you want to understand what success for
Speaker 1: my manager looks like in regards to what I can
Speaker 1: do to help them? Because if you don't feel like
Speaker 1: you know what your manager is aspiring for in regards
Speaker 1: to the team that you're a part of, or what
Speaker 1: success for you looks like, you know you're gona be
Speaker 1: basically talking past each other. So both of these things
Speaker 1: need to be true. And if they're not clear. That's
Speaker 1: what you know. Time with the manager in one on
Speaker 1: one setting is for right. Make sure they understand your goal,
Speaker 1: make sure you understand their goals. And Julie, what would
Speaker 1: you say, not necessarily to a new manager entering a situation,
Speaker 1: but a manager that maybe has already had some struggles
Speaker 1: with their team, with their reports, who has you know,
Speaker 1: maybe lost faith. How do you rebuild that sort of
Speaker 1: trust there? It's super critical that managers have the trust
Speaker 1: with their team. And you know, everyone makes mistakes. I've
Speaker 1: certainly made many as a manager, and in those cases,
Speaker 1: what helped me the most was being able to admit
Speaker 1: my own vulnerability and uh and and come clean with people. Right.
Speaker 1: The thing is a lot of times managers have immense
Speaker 1: pressure on them. You know, they might think I'm the
Speaker 1: manager of the boss, I'm the person who should have
Speaker 1: all the answers. But that's just too high of an
Speaker 1: expectation to have on anyone. There's no single person to
Speaker 1: company who should feel like they have the answers to
Speaker 1: every single problem. That's why we have a team, That's
Speaker 1: why people come together to work on big problems. And
Speaker 1: so in the cases in which you know, as a manager,
Speaker 1: you made the wrong call, something happened. Just to own it.
Speaker 1: Just admit that there was a mistake, you know that
Speaker 1: you made You thought certain things. It didn't happen the
Speaker 1: way they expected and complete and ask for help. Ask
Speaker 1: the team, Hey, you know, this is one of the
Speaker 1: things that we need to do together as a team.
Speaker 1: I don't have all the answers. I would like ideas
Speaker 1: from all of you. What do you think we should do.
Speaker 1: The best thing I've found for myself as a manager,
Speaker 1: the thing that gave me both a lot more impact
Speaker 1: but also a lot more power, is to be able
Speaker 1: to leverage the expertise and the wonderful talent among the
Speaker 1: people on my team. Julie Joe, we got to leave it.
Speaker 1: Their co founder at the advisory Firm in Spirit. It's
Speaker 1: an organization that partners with tech companies to help scale
Speaker 1: and build products. Julie also spent years at Facebook, where
Speaker 1: she helped build the app into one that's used by
Speaker 1: more than a billion people. She's the author of the
Speaker 1: new book The Making of a Manager, What to Do
Speaker 1: When Everyone looks to You. Joining us this afternoon from
Speaker 1: the Bay Area in California. Julie, thanks so much for
Speaker 1: taking the time a journal. Yeah, but you let me drive?
Speaker 1: Oh no, no, no, no, who's honey? Please gravels let me.
Speaker 1: I want to drive. It's good question. This is the
Speaker 1: drive to the Globe on Bluebird Radio. All right, we
Speaker 1: got lesson ten minutes to go, and as Charlie mentioned,
Speaker 1: we've got a rally underway. Taking a look at the
Speaker 1: S and P five hundred up one point eight percent,
Speaker 1: the nasdack up two point eight percent. Let's get into
Speaker 1: it with Katie Nixon, chief investment officer at Northern at
Speaker 1: Trust Wealth Management. Katie joins us on the phone from
Speaker 1: right just outside of New York City. Katie, how are you? Um? Great?
Speaker 1: How are you? We're doing pretty well. What we're trying
Speaker 1: to figure out is whether or not this equity market
Speaker 1: has gotten ahead of itself, given what we're hearing from
Speaker 1: FED officials, because it sounds like they're saying it has well,
Speaker 1: it's been I mean, as you have started off the segment,
Speaker 1: that's been a crazy day in the market today, a
Speaker 1: huge risk on rally here in particular with the riskiest
Speaker 1: areas of the market. The nastack up so strongly, and
Speaker 1: you know, I think we came into this really with
Speaker 1: with such low sentiment, with such a negative positioning that
Speaker 1: we were due for a nice bounce like we've seen
Speaker 1: last week and sort of into this week. But I
Speaker 1: think you asked the right question, which is is it
Speaker 1: sustainable in the phase of a bed that appears to
Speaker 1: be hell bent on not stopping not stopping um? And
Speaker 1: that's certainly where what we're looking at right now as well.
Speaker 1: You know, how far will the said go um, and
Speaker 1: how will markets be able to digest how the final destination?
Speaker 1: And Katie, I mean, I'm sure you've heard this one before.
Speaker 1: Don't fight the Fed, And just you know, thinking about
Speaker 1: what we've heard in the past forty eight hours or
Speaker 1: so from Feed officials looking at a one point eight
Speaker 1: percent rally on the sp Now, is that not kind
Speaker 1: of the definition of fighting the Fed? It really is,
Speaker 1: you know, the if you think about it, the stock
Speaker 1: market and the bond market are both fighting the Fed
Speaker 1: right now. Um. And it's really I think a function
Speaker 1: of the fact that we're all data dependent and the
Speaker 1: market is interpreting some of the data as suggesting that
Speaker 1: growth is slowing down here, but so is inflation. So
Speaker 1: the market is basically saying to the Fed, you're not
Speaker 1: going to have to go as far as you think
Speaker 1: you do. Um and also you might have to start
Speaker 1: reversing course much sooner than you think you have to. Now,
Speaker 1: Be that as it may, the Fed, the Feed officials
Speaker 1: that are coming out with all of this sort of
Speaker 1: hawkish sentiment are doing exactly what they should be doing.
Speaker 1: They cannot afford to show any signs of capitulation or
Speaker 1: weakness right here. They have to keep consistently telling the
Speaker 1: market that they going to focus on inflation so that
Speaker 1: they can maintain that all important credibility. And it's I mean,
Speaker 1: it's kind of interesting to me that if you look
Speaker 1: at break even inflation expectations, for example, they have come
Speaker 1: down quite a lot. I mean, it feels like that
Speaker 1: in and of itself is a vote of confidence in
Speaker 1: the Fed. But again, you just try to marry that
Speaker 1: with what's happening in the equity markets. I mean, what
Speaker 1: what is driving sort of this big rally that has
Speaker 1: been going on for well over a month now. Well,
Speaker 1: I think you hit the nail on the head about
Speaker 1: inflation expectations. And that's kind of to my point earlier
Speaker 1: that you know, investors are telling you said they won't
Speaker 1: have to go as far as they think they need
Speaker 1: to go because inflation is coming off the boil. We
Speaker 1: have seen that through some of the p m I
Speaker 1: data with the prices paid. We've seen that clearly in
Speaker 1: the commodity complex, not just the energy market, but across
Speaker 1: other areas of the commodity complex. So I think you're
Speaker 1: sort of seeing this broadly based plateau going, if not falling,
Speaker 1: in the inflation data, and I think it's giving market
Speaker 1: the confidence to fight the Fed. Okay, so, Katie, I
Speaker 1: want to talk more about the overall economy. Obviously, the
Speaker 1: market not the economy, but the two are certainly interconnected.
Speaker 1: Are we in a recession right now? Oh? No, that's
Speaker 1: the six or four thousand dollar question. You're right, market
Speaker 1: is not the economy, but certainly they do. Rhyme um.
Speaker 1: I'll jump in the camp with with the most that
Speaker 1: say we might be in a technical recession, but I
Speaker 1: think for it to be a true recession, you need
Speaker 1: to see much more broad weakness, and we just haven't
Speaker 1: seen it. Friday is going to be a super important
Speaker 1: day to see what the job's data shows us, and
Speaker 1: we do expect some weakening, but we still anticipate that
Speaker 1: we're going to be in this healthy labor market for
Speaker 1: the foreseeable future. So it's really hard to argue that
Speaker 1: we're in a recession when you have such low unemployment.
Speaker 1: And Katie, I mean, I've got to get your thoughts
Speaker 1: on the bond market because I look at the bench
Speaker 1: mark ten year treasury yield and the moves have just
Speaker 1: been amazing. I mean, seventeen eighteen basis points yesterday, another
Speaker 1: sort of reach Eastman today, but a lot of choppiness.
Speaker 1: And that's just this huge rally that we saw over
Speaker 1: the past month. I mean, you compare that to the
Speaker 1: equity market. Sure we've seen big moves, but it feels
Speaker 1: like the bond market though, it's just hanging on every
Speaker 1: single word, every single data point. What do you make
Speaker 1: of some of the whips all that we've seen there.
Speaker 1: I think, unfortunately, we're gonna have to get used to it.
Speaker 1: We're going to continue to see volatility within range um
Speaker 1: in the bond market. And you know, our view is
Speaker 1: that we've probably seen at or close to the highs
Speaker 1: and the tenure. We have sort of a central tendency
Speaker 1: for the ten year around three percent um. But as
Speaker 1: you can see as it creeps up toward that toward
Speaker 1: that level, it quickly comes comes back down as as
Speaker 1: investors longer term investors longer at the duration curve are
Speaker 1: anticipating much slower economy and also much less aggressive fed.
Speaker 1: That's what you're seeing priced into bonds right now. But
Speaker 1: it's not. It's interesting because it's not a recessionary forecast
Speaker 1: because you look at some of the credit indicators and
Speaker 1: they are certainly not flashing red in terms of being
Speaker 1: concerned about there being an kind of a deep recession
Speaker 1: or any kind of a credit event. So it's very
Speaker 1: interesting time. It is interesting, and it's hard to untangle
Speaker 1: sort of the different relationships that are at play right now.
Speaker 1: But Katie, I am curious what you read on it
Speaker 1: as to which market is leading which right now? Is
Speaker 1: it bonds leading stocks, is it stocks leading bonds, or
Speaker 1: are both as a classes sort of marching to their
Speaker 1: own drums. Right now you're a bit marched into their
Speaker 1: own drums because um kind of contrary to what we
Speaker 1: said before where the economy it rhymes with the market,
Speaker 1: what we've seen is this dissidence where we have had
Speaker 1: actually pretty strong earnings growth in the face of a
Speaker 1: technical recession, which is kind of unusual. Um but it
Speaker 1: does show you that at this point in time things
Speaker 1: are a bit discombobulated, where we have had surprising strength
Speaker 1: and earnings despite the fact that we have a macro
Speaker 1: outlook that's that's certainly dimmed. Um. So I think stocks
Speaker 1: are kind of heaving a sigh of relief here that
Speaker 1: the recession story is not playing out in earnings, and
Speaker 1: bonds are telling you the go forward view it is
Speaker 1: just slower, okay. So the bonds bond story is telling
Speaker 1: us that, okay, growth is going to be there, but
Speaker 1: it's slower. Yes, that's exactly what it's saying. And the
Speaker 1: equity markets are kind of catching up to what had
Speaker 1: been almost an uber bearers sentiment coming into July, where
Speaker 1: there were lots and lots of concerns about about the
Speaker 1: second quarter earnings period being much worse than analysts expected.
Speaker 1: As we're seeing it's actually surprising on the upside, quite
Speaker 1: the rally that we're seeing today. I mean, look, the
Speaker 1: NASDAC up two point seven percent as we speak. Katie Nixon,
Speaker 1: chief investment officer at Northern Trust Wealth Management, joining us
Speaker 1: this afternoon from Rye, New York. Thanks for listening to
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