WEBVTT - UPDATE: A Global Bond Rout Shakes Markets 0:00:02.600 --> 0:00:05.080 Good morning. It's Wednesday, the fourth of October in London. 0:00:05.160 --> 0:00:08.480 This is the Bloomberg Daybreak Here podcast. I'm Stephen Carroll. 0:00:08.280 --> 0:00:09.880 And I'm Credie Gupta. Coming up today. 0:00:09.880 --> 0:00:12.200 The bond sell off continues as a thirty year US 0:00:12.200 --> 0:00:14.840 treasury yield hits two thousand and seven levels. 0:00:15.200 --> 0:00:18.960 US Republican Kevin McCarthy is ousted as House Speaker by 0:00:19.000 --> 0:00:20.240 those in his own party. 0:00:20.400 --> 0:00:22.920 Plus looking for lightning in a bottle, Rishi Sunac seeks 0:00:22.960 --> 0:00:25.680 to put the Tory agenda back on track. As HS 0:00:25.680 --> 0:00:26.920 two dominates headlines. 0:00:27.120 --> 0:00:29.040 Let's start with a round up of our top stories. 0:00:29.840 --> 0:00:33.400 The US treasury thirty year yield touching five percent for 0:00:33.440 --> 0:00:35.720 the first time since two thousand and seven, the relentless 0:00:35.720 --> 0:00:39.360 selloff in US government bonds is sparking turmoil across global 0:00:39.360 --> 0:00:42.600 bond markets. The route accelerated after the latest US data 0:00:42.640 --> 0:00:45.920 showed job openings increasing by more than expected in August 0:00:46.200 --> 0:00:49.560 to nine point six million. Our market supporter Valery Titel 0:00:49.640 --> 0:00:52.440 says the moves are unprecedented in recent times. 0:00:53.080 --> 0:00:58.080 This route in the treasury market is just absolutely phenomenal. Honestly, 0:00:58.120 --> 0:01:00.120 I've never seen anything like it myself been in the 0:01:00.160 --> 0:01:03.760 markets for nearly fifteen years now. This steepening that we're 0:01:03.760 --> 0:01:08.240 seeing since Drome Powell's testimony two weeks ago. That was 0:01:08.319 --> 0:01:13.640 ten sessions ago. The relentless selloff mentioned there by. 0:01:13.720 --> 0:01:17.200 Valerie Titel in US government bonds is also seeing conditions 0:01:17.200 --> 0:01:19.959 deteriorate in corporate credit. At least two corporate borrow We're 0:01:19.959 --> 0:01:23.680 standing down plant issuances on Tuesday thanks to the market volatility. 0:01:23.959 --> 0:01:27.280 The market reaction comes as Atlanta Fed President Rafile Bostic 0:01:27.319 --> 0:01:30.240 shared his thoughts on the hiking cycle. Speaking at an 0:01:30.240 --> 0:01:33.759 event in Atlanta, Bostik said the FED should hold rates 0:01:33.800 --> 0:01:35.240 at elevated levels. 0:01:36.160 --> 0:01:39.319 I'm grateful to say is that we've seen inflation come down. 0:01:39.680 --> 0:01:42.600 I feel like we're in restrictive space now and now 0:01:42.800 --> 0:01:45.399 we just need to let that restriction play out and 0:01:45.880 --> 0:01:49.160 let it bring inflation, continue to bring inflation down to 0:01:49.280 --> 0:01:51.600 get back into the range of our target, and if 0:01:51.600 --> 0:01:53.440 we can do that, that would be a good thing. 0:01:54.120 --> 0:01:57.080 Bostik's comments come as the US Treasury Secretary Joannet Yellen 0:01:57.120 --> 0:01:59.280 also weighed in on the debate. She told a conference 0:01:59.320 --> 0:02:02.560 in Washington. While the strength of the US economy suggests 0:02:02.640 --> 0:02:05.880 rights will remain higher, for longer. Quote it's by no 0:02:06.040 --> 0:02:06.920 means a given. 0:02:07.800 --> 0:02:10.600 Kevin McCarthy has been ousted as the House Speaker after 0:02:10.639 --> 0:02:14.880 Republican hardliners rebelled over his compromise with Democrats to avert 0:02:14.919 --> 0:02:18.280 a government shutdown. Goldman Sachs says the raises the risk 0:02:18.320 --> 0:02:21.480 of a shutdown next month, as his eventual successor will 0:02:21.520 --> 0:02:23.960 be under quote even more pressure from those on the 0:02:24.000 --> 0:02:26.480 right of the party. The move ends in tumultuous nine 0:02:26.480 --> 0:02:28.640 months in the job for McCarthy, who says he won't 0:02:28.720 --> 0:02:29.919 run for the position again. 0:02:30.480 --> 0:02:34.560 I don't regret standing up for choosing governan over grievance. 0:02:34.840 --> 0:02:38.079 It is my responsibility, it is my job. I do 0:02:38.120 --> 0:02:41.960 not regret negotiating. Our government is designed to find compromise. 0:02:42.160 --> 0:02:47.000 I don't regret my efforts to build coalitions and find solutions. 0:02:47.280 --> 0:02:49.840 I was raised to solve problems, not create them. 0:02:50.440 --> 0:02:53.640 Despite McCarthy's lack of regret, the latest turmoil has fueled 0:02:53.639 --> 0:02:57.120 concerns about deepening dysfunction in Washington. Last time the House 0:02:57.160 --> 0:03:00.280 even voted on removing a speaker was over nineteen ten. 0:03:00.760 --> 0:03:03.040 In that case, the officeholder survive the test. 0:03:03.600 --> 0:03:06.240 The Prime Minister, Rishi Sunac is today expected to announce 0:03:06.240 --> 0:03:09.600 that part of Europe's biggest infrastructure project, HS two is 0:03:09.680 --> 0:03:12.480 being scrapped. It's understood the Prime Minister will use his 0:03:12.520 --> 0:03:15.600 speech to the Conservative Party conference to soften the blow, 0:03:15.760 --> 0:03:18.120 announcing that some of the savings will be used to 0:03:18.120 --> 0:03:21.840 boost other parts of the UK's transport network, but labor 0:03:21.919 --> 0:03:25.000 is greater. Manchester Mayor Andy Burnham says the plan is 0:03:25.040 --> 0:03:25.840 a disgrace. 0:03:26.560 --> 0:03:29.320 Do not pull the plug on the North of England. 0:03:29.440 --> 0:03:32.799 Do not treat people here as second class citizens when 0:03:32.800 --> 0:03:35.840 it comes to transport, because if you do do those things, 0:03:35.960 --> 0:03:37.800 people here will never forget. 0:03:38.600 --> 0:03:41.600 Burnham's criticism has been echoed by both the former Chancellor 0:03:41.640 --> 0:03:45.240 George Osbourne and Conservative West Midlands mayor and E Street. 0:03:45.320 --> 0:03:46.760 Here's what he told Bloomberg Radio. 0:03:47.280 --> 0:03:48.920 My argument is you do need to have AGES two, 0:03:48.920 --> 0:03:50.640 so that's not really the question, is it. And of 0:03:50.680 --> 0:03:53.080 course what's been put to the Prime Minister is a 0:03:53.120 --> 0:03:57.440 proposal which is supported by private businesses to say let 0:03:57.600 --> 0:04:00.120 us try to rethink the leg to the North, but 0:04:00.200 --> 0:04:02.960 it is still needed to win the investment around the world. 0:04:03.920 --> 0:04:06.320 Those comments from Andy Street and others have helped to 0:04:06.360 --> 0:04:09.680 cast a long shadow over the annual Tory gathering. HS 0:04:09.720 --> 0:04:12.760 two was a core plank of the party's previous pledge 0:04:12.760 --> 0:04:15.920 to level up economic opportunities across the country. 0:04:16.480 --> 0:04:19.719 Pallentteer, the data analysis firm co founded by tech billionaire 0:04:19.800 --> 0:04:22.960 Peter Thiel, has emerged as the topic for a major 0:04:23.120 --> 0:04:26.160 NHS data contract. The five year deal could be worth 0:04:26.200 --> 0:04:29.599 close to half a billion pounds and focuses on analyzing 0:04:29.680 --> 0:04:34.320 medical information. Palenteer's relationship with the NHS has been criticized 0:04:34.360 --> 0:04:37.880 by civil rights and patient advocacy groups who worry about 0:04:37.960 --> 0:04:42.080 data privacy and the firm's work with intelligence and defense agencies. 0:04:42.440 --> 0:04:46.000 Billionaire investor Ray Dalio says US China relations are close 0:04:46.040 --> 0:04:48.720 to breaking down. Speaking to Bloomberg's David Weston at the 0:04:49.240 --> 0:04:53.239 Bridgewater Associates, founder warned of the risk of conflict between 0:04:53.279 --> 0:04:54.760 the world's two largest economies. 0:04:55.440 --> 0:04:59.599 The US China relationship are in a number of areas 0:05:00.080 --> 0:05:03.320 on the brink of red lines, so, in other words, 0:05:03.440 --> 0:05:05.760 these irreconcilable differences, they're right on the. 0:05:05.720 --> 0:05:09.240 Brig Dahalio went on to say that the breaking point 0:05:09.279 --> 0:05:11.640 would be if the United States comes out in favor 0:05:11.920 --> 0:05:15.080 of an independent Taiwan, that he said would be quote 0:05:15.120 --> 0:05:19.040 the equivalent of a declaration of war. Dahlio's long nurtured 0:05:19.040 --> 0:05:23.039 relations with Chinese officials and has previously expressed admiration for 0:05:23.120 --> 0:05:27.480 some of Beijing's economic policies. So let's talk more than 0:05:27.560 --> 0:05:31.599 about the route in global bond markets. We've been talking 0:05:31.600 --> 0:05:34.960 this morning about the thirty year treasury yield hitting that 0:05:35.160 --> 0:05:37.920 five percent level for the first time since two thousand 0:05:37.960 --> 0:05:40.800 and seven, just slightly below that at the moment, back 0:05:40.800 --> 0:05:43.240 down around four point nine to nine percent. This is 0:05:43.400 --> 0:05:46.400 a milestone moment for markets at the time that we've 0:05:46.440 --> 0:05:50.520 seen treasuries essentially bulldoze their way through global markets to 0:05:50.560 --> 0:05:52.600 the greatest extens that we saw at the start of 0:05:52.640 --> 0:05:55.479 the pandemic. A market support of Valerie title is with 0:05:55.520 --> 0:05:56.920 us as well, and Critie this is I know you've 0:05:56.920 --> 0:06:00.240 been following closely too. I mean where to start in this. 0:06:00.520 --> 0:06:03.280 First of all, Valari, can we talk about yesterday first? 0:06:03.520 --> 0:06:05.039 And what happened yesterday. 0:06:04.800 --> 0:06:07.120 Was a phenomenal session, one of the worst sessions for 0:06:07.160 --> 0:06:09.440 the treasury market on the year. And not only did 0:06:09.440 --> 0:06:14.040 we have the thirty year yield rise fifteen basis points 0:06:14.080 --> 0:06:16.599 on the session, but all across the curve five year 0:06:16.640 --> 0:06:20.120 tenure and thirty year breached new cycle highs, and it 0:06:20.200 --> 0:06:23.800 is phenomenal to see this move extending in the Asia session, 0:06:23.839 --> 0:06:25.920 in the European session as well as we As you 0:06:25.960 --> 0:06:29.120 just mentioned that thirty year yield breaching five percent. The 0:06:29.160 --> 0:06:32.120 weakness in the equity market is continuing. SMP was down 0:06:32.120 --> 0:06:35.880 some one point four percent today. Futures are falling nearly 0:06:35.880 --> 0:06:38.400 another six tenths so far this morning, so that's a 0:06:38.400 --> 0:06:41.039 two percent move in the next in the last two 0:06:41.080 --> 0:06:43.360 sessions just so far for the S and P five hundred, 0:06:43.760 --> 0:06:46.960 and the route is notable. Globally, Not only did we 0:06:47.000 --> 0:06:50.279 see Japan five year yields breaching a new decade highs, 0:06:50.279 --> 0:06:53.440 we also had Germany ten year yields breaching three percent 0:06:53.480 --> 0:06:56.159 for the first time since twenty eleven. Honestly, there are 0:06:56.200 --> 0:06:59.400 too many superlatives out there for how high these yields 0:06:59.400 --> 0:07:03.160 have gotten in this phenomenal steepening of the treasury curve 0:07:03.160 --> 0:07:06.480 that we have seen over the summer and continuing into 0:07:06.520 --> 0:07:06.840 the fall. 0:07:07.240 --> 0:07:09.160 Well, I think the scariest superlative is these are the 0:07:09.279 --> 0:07:11.520 highest levels in yields going back to two thousand and seven, 0:07:11.560 --> 0:07:14.400 which doesn't exactly instill a lot of confidence in terms 0:07:14.400 --> 0:07:18.080 of what comes next, Valerie, what is the ripple effect here. 0:07:19.160 --> 0:07:20.360 Yet to be seen? That Critty. 0:07:20.920 --> 0:07:23.680 We know that what happened last year here in the UK, 0:07:23.800 --> 0:07:26.200 when we had that such volatility and long end guilt, 0:07:26.280 --> 0:07:29.200 it caused pension funds and insurers to really fall out 0:07:29.200 --> 0:07:31.480 of bed. That one really came out of nowhere. Is 0:07:31.480 --> 0:07:34.200 there some risk lurking in the US at the moment 0:07:34.640 --> 0:07:37.280 for those holders of this long end debt. I mean, 0:07:37.680 --> 0:07:40.640 some of these thirty year treasuries are trading below fifty 0:07:40.680 --> 0:07:43.520 cents on the dollar. Now, that is just an imprecedent 0:07:43.760 --> 0:07:46.480 amount of losses that we are seeing in the treasury market, 0:07:46.520 --> 0:07:50.000 which around the world is known as a safe asset, 0:07:50.080 --> 0:07:52.960 as a safe haven, as something you. 0:07:52.800 --> 0:07:54.720 Hold because it holds its value. 0:07:54.760 --> 0:07:57.440 That's clearly not been the case in the last two 0:07:57.520 --> 0:08:01.200 years in the treasury market. But we're seeings happen elsewhere 0:08:01.240 --> 0:08:05.120 across emerging markets bit jitterly when it comes to this 0:08:05.240 --> 0:08:09.400 dollar strength causing those emerging market currencies to weaken. We 0:08:09.440 --> 0:08:12.560 saw it in the credit markets yesterday. We're seeing credit 0:08:12.640 --> 0:08:17.000 spreads start to creep wider, and some issuers in the 0:08:17.120 --> 0:08:20.520 US yesterday pulling their deals just due to this treasury volatility, 0:08:21.480 --> 0:08:25.239 we're also seeing it in financial conditions. This is something 0:08:25.360 --> 0:08:28.800 that could possibly be in the Fed's favor in some 0:08:28.840 --> 0:08:32.400 way financial conditions and now flipped into tightening territory due 0:08:32.440 --> 0:08:34.840 to the strengthening dollar due to this rise in yields 0:08:35.200 --> 0:08:37.680 and due to these credit spreads beginning to widen crazy. 0:08:37.679 --> 0:08:39.960 Can we talk a bit about the kind of political 0:08:40.240 --> 0:08:44.160 implications here as well, because of course, higher yields immediately 0:08:44.200 --> 0:08:46.280 means the cost of borrowing for the US government gets 0:08:46.320 --> 0:08:49.520 even higher. And part of this story is the supply 0:08:49.679 --> 0:08:52.160 issue around the fact that the US government is borrowing 0:08:52.240 --> 0:08:52.920 that much more. 0:08:53.280 --> 0:08:54.040 Yeah, it really is. 0:08:54.080 --> 0:08:55.680 And I think part of this is as well, and 0:08:55.760 --> 0:08:57.560 this is something that Valerie could probably weigh in on 0:08:57.640 --> 0:08:59.800 as well. As you look at the thirty year yield, 0:09:00.160 --> 0:09:01.520 is the yield that a lot of people are. 0:09:01.440 --> 0:09:03.520 Taking out mortgages on as well. Just on the surface 0:09:03.559 --> 0:09:03.920 as well. 0:09:04.160 --> 0:09:06.720 So when you were talking about a crack in the markets, 0:09:06.760 --> 0:09:09.080 the fact that the long end affects the housing market, 0:09:09.440 --> 0:09:11.720 well that's going to affect the broader economy. Can you 0:09:11.760 --> 0:09:14.240 imagine going into twenty twenty four when people are kind 0:09:14.280 --> 0:09:17.200 of hitting all of their or say, submitting their ballots 0:09:17.440 --> 0:09:22.160 and suddenly their household wealth has completely been eliminated or 0:09:22.280 --> 0:09:25.040 is even more expensive than initially thought, those mortgage payments 0:09:25.080 --> 0:09:25.760 getting higher. 0:09:25.920 --> 0:09:26.800 I think James. 0:09:26.520 --> 0:09:30.480 Carville, the political famous political strategists, had said, it's the economy, stupid, 0:09:30.559 --> 0:09:33.160 that's how you decide who's president. This isn't I mean, 0:09:33.440 --> 0:09:36.240 how you punctuate that is quite important. Well, it really is, 0:09:36.280 --> 0:09:39.040 but I mean that happens to be the sense. And 0:09:39.080 --> 0:09:41.440 I think that's been the concern around why gasoline prices, 0:09:41.480 --> 0:09:44.520 for example, are such a political mover, but housing is 0:09:44.559 --> 0:09:45.160 not far behind. 0:09:45.280 --> 0:09:47.440 But this is happening at a time when you know, 0:09:47.720 --> 0:09:51.439 even within the US bascal scene, there's more upheaval because 0:09:51.480 --> 0:09:54.640 Kevin McCarthy has now gone a speaker, putting essentially Congress 0:09:54.640 --> 0:09:56.200 into staces until I figure that out. 0:09:56.200 --> 0:09:58.720 Yeah, I mean, look, it's not the best time in 0:09:58.920 --> 0:10:01.560 Washington right now. We aren't exactly setting a great precedent, 0:10:02.000 --> 0:10:03.480 I want to say, in terms of leadership. But I 0:10:03.520 --> 0:10:05.640 think what you have to keep in mind here is that, look, 0:10:05.679 --> 0:10:07.680 this shutdown just got a whole lot harder. And I 0:10:07.679 --> 0:10:10.600 think those are the calls that matter from a political standpoint. 0:10:10.280 --> 0:10:12.280 Because we brought six weeks away. 0:10:12.800 --> 0:10:15.680 November seventeenth, Yeah, is when the US government shuts down. 0:10:15.720 --> 0:10:17.560 And look, I think just for some kind of inside 0:10:17.559 --> 0:10:20.000 baseball here or inside cricket as I believe it's called 0:10:20.040 --> 0:10:24.400 on this side of the ocean, is basically that one 0:10:24.440 --> 0:10:27.280 of the major issues of this spending bill has been 0:10:27.320 --> 0:10:28.200 you can't touch the fence. 0:10:28.240 --> 0:10:28.640 Spending. 0:10:29.120 --> 0:10:32.360 Ukrainian aid has kind of gone out the window essentially, 0:10:32.640 --> 0:10:34.160 and then a lot of it is coming down as 0:10:34.200 --> 0:10:36.400 well as how you tackle eventually what will be the 0:10:36.400 --> 0:10:37.240 debt load as well. 0:10:37.280 --> 0:10:39.479 And there are calls coming out of Goldman that are saying. 0:10:39.400 --> 0:10:42.920 Because of the political politicization of this, you are now 0:10:42.960 --> 0:10:45.000 going to see it become even harder to actually hit 0:10:45.040 --> 0:10:46.160 a bipartisan deal. 0:10:46.600 --> 0:10:48.120 It come November seventeenth. 0:10:48.240 --> 0:10:50.880 The first people that get hit in a shutdown are 0:10:50.920 --> 0:10:54.040 your servicemen, are your troops. And again coming from the South, 0:10:54.440 --> 0:10:56.920 that is a real sticking point for a lot of 0:10:56.960 --> 0:10:59.640 the folks who are very passionate about our army battery. 0:11:00.000 --> 0:11:01.920 Sorry, go aheadah, And you have to wonder whether the 0:11:01.960 --> 0:11:05.760 markets are really going to force some political change when 0:11:05.800 --> 0:11:08.520 it comes to Washington, and just how much money they're 0:11:08.559 --> 0:11:12.360 spending because I'll give you some shocking stats. Thirty percent 0:11:12.400 --> 0:11:16.280 of treasuries have to be refinanced in the next sixteen months, 0:11:16.320 --> 0:11:18.600 and a lot of questions are now being raised as 0:11:18.640 --> 0:11:21.080 to whether those debt financing costs are going to become 0:11:21.720 --> 0:11:24.640 too much of a burden to the US government and 0:11:24.720 --> 0:11:29.120 possibly push the path towards fiscal unsustainability. We had a 0:11:29.120 --> 0:11:32.720 call out from Goldman yesterday noting that they see interest 0:11:32.840 --> 0:11:37.000 expense rising to four percent of GDP by twenty thirty. 0:11:37.040 --> 0:11:40.120 That is a shocking statistic. It has not gone much 0:11:40.200 --> 0:11:42.959 above two percent. I think the highest it was was 0:11:43.000 --> 0:11:45.360 back in the nineteen nineties where we reached two percent. 0:11:45.720 --> 0:11:48.240 But if we're really headed for this higher for longer 0:11:48.480 --> 0:11:51.360 situation in the bond market, the US government could be 0:11:51.400 --> 0:11:52.679 the first casualty of them. 0:11:52.800 --> 0:11:54.960 Yeah, Votari, Can we talk a bit about the international 0:11:54.960 --> 0:11:56.760 impact of this as well, because I mean, we've seen 0:11:56.760 --> 0:11:59.120 the German YO curve has uninversed in the past few minutes, 0:11:59.160 --> 0:12:02.280 because we've seen the thirty year yields move above where 0:12:02.280 --> 0:12:04.760 the two year yield is the ten year German bundshield 0:12:04.840 --> 0:12:08.200 and over three percent for the first time since twenty eleven. 0:12:08.440 --> 0:12:11.760 This is a story that is rippling through markets across 0:12:11.760 --> 0:12:12.080 the world. 0:12:12.120 --> 0:12:15.120 It's rippling through and let's be clear, the Central Bank 0:12:15.280 --> 0:12:17.360 in Europe and the Central Bank here in the UK 0:12:17.559 --> 0:12:19.520 have really no control over what's going on. 0:12:19.679 --> 0:12:22.720 This will tighten financial conditions. 0:12:22.200 --> 0:12:25.080 Globally as we see yields rise, and that is not 0:12:25.240 --> 0:12:28.440 something the ECB or the Bank of England can necessarily fight. 0:12:28.520 --> 0:12:31.880 This is being led by the US, and let's be honest, 0:12:31.880 --> 0:12:33.920 even in the US, the FED really does have no 0:12:34.000 --> 0:12:38.240 control over long end yields unless they intend on embarking 0:12:38.320 --> 0:12:41.480 again on quantitative easing, which is something I don't think 0:12:41.520 --> 0:12:43.640 they have necessarily on their radar. So this is going 0:12:43.679 --> 0:12:46.200 to be a very very hard thing for not just 0:12:46.240 --> 0:12:48.600 politicians but for central banks to fight. 0:12:50.080 --> 0:12:52.559 The other aspect of this, of course, to think about, 0:12:52.320 --> 0:12:56.240 is where we see the other asset classes. Essentially, as 0:12:56.280 --> 0:12:58.280 I look across the sea of Red on my Bloomberg 0:12:58.360 --> 0:13:01.880 terminal this morning, well, I mean, when we're thinking about 0:13:01.880 --> 0:13:04.920 what happens next in this story, Valerie, where do we 0:13:04.960 --> 0:13:08.600 need to watch for what might either accelerate this further 0:13:09.080 --> 0:13:11.160 or potentially bring some calm to market. 0:13:11.320 --> 0:13:13.560 Well, my mind goes straight to the big data. 0:13:13.600 --> 0:13:13.840 We have. 0:13:13.920 --> 0:13:16.520 On Friday, we get the monthly payroll report out of 0:13:16.559 --> 0:13:20.040 the US, which if it does reflect a hotter than 0:13:20.080 --> 0:13:24.880 expected labor market. Yet again, we could see a bit 0:13:24.880 --> 0:13:27.000 more panic when it comes to the treasury market and 0:13:27.000 --> 0:13:30.560 that hit equities and strengthen the dollar as well. That 0:13:30.600 --> 0:13:33.080 could be the next kicker. But I mean it could 0:13:33.080 --> 0:13:35.280 also be the kicker that could end the selloff. Right 0:13:35.320 --> 0:13:38.480 if we get a week payroll print, let's say, way 0:13:38.520 --> 0:13:41.600 weaker than expected, we could all calm down now thinking 0:13:41.600 --> 0:13:43.600 that the US economy is going to slow down. Maybe 0:13:43.600 --> 0:13:46.079 this higher for longer mantra is a bit of a lie, 0:13:46.200 --> 0:13:49.640 kind of like transitory, and that's on the horizon. So 0:13:49.679 --> 0:13:52.120 I think Friday's data is going to be pivotal for 0:13:52.200 --> 0:13:52.920 what happens forward. 0:13:53.160 --> 0:13:55.959 Spoken like a true macro thinker, I'll do the micro 0:13:56.080 --> 0:13:58.400 here because I'll take the other side of it, which 0:13:58.480 --> 0:14:00.559 is when you look at the ripple effects in terms 0:14:00.559 --> 0:14:02.360 of this in terms of this market, take a look 0:14:02.400 --> 0:14:04.319 at what the stock market has not priced in the 0:14:04.360 --> 0:14:07.520 stock market around the world, I might add, has not 0:14:07.600 --> 0:14:10.079 priced in this higher bar wing cost. We know that 0:14:10.080 --> 0:14:11.640 the FED has been hiking, We know that a lot 0:14:11.640 --> 0:14:13.880 of these has been priced in for twenty twenty two. 0:14:13.960 --> 0:14:16.600 It has not been priced in for the varshocks, which 0:14:16.640 --> 0:14:19.680 essentially means that all the selling momentum that you're seeing 0:14:19.680 --> 0:14:21.680 at a lot of these trading desks that hasn't been 0:14:21.680 --> 0:14:23.720 priced into the stock market. Another place we're going to 0:14:23.720 --> 0:14:26.400 see a disconnect is when oil starts trading in line 0:14:26.440 --> 0:14:28.400 with the global sentiment at a time, by the way, 0:14:28.640 --> 0:14:32.200 when over and over again we see these physical supply shortages, 0:14:32.560 --> 0:14:34.840 and yet the market is trading in line with the 0:14:34.880 --> 0:14:37.120 stock market, or the bond market, or even the stronger 0:14:37.160 --> 0:14:40.680 dollar is responding to that as opposed to the fundamental 0:14:41.000 --> 0:14:43.120 kind of tailwinds for that price. And I think that's 0:14:43.120 --> 0:14:44.920 where you're going to start to see the dislocations really 0:14:44.960 --> 0:14:45.400 show up.