WEBVTT - The Fed, Interest Rates, And Pandemic Darlings (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.760 at Bloomberg dot com slash podcast. Let's bring in daniel 0:00:22.840 --> 0:00:25.920 d Martino Booth, CEO and chief strategist for Quill Intelligence, 0:00:26.120 --> 0:00:28.479 one of the leading voices of my opinion on the FED, 0:00:28.520 --> 0:00:31.120 on and on this economy. She's a former advisor to 0:00:31.160 --> 0:00:33.520 Fedo Reserve Bank of Dallas, so she knows FED speak 0:00:33.600 --> 0:00:35.680 when she hears it. Danielle, thank you for being in 0:00:35.720 --> 0:00:37.520 our studio. I think it's been more than two years 0:00:37.560 --> 0:00:40.239 on my show at least than you've been in the studio. Um. 0:00:40.280 --> 0:00:43.360 Now to me, we're back. When Danielle D Martino Booth 0:00:43.560 --> 0:00:46.240 flies up from Dallas comes in studio, we're back. Well, 0:00:46.440 --> 0:00:49.199 I'm not the only one this place is buzzing. Let's 0:00:49.200 --> 0:00:52.080 see if humanity it's getting getting better, getting better every time? 0:00:52.080 --> 0:00:55.680 All right, what would surprise you from the FED this afternoon? 0:00:55.680 --> 0:00:59.040 What would spook the markets from the Fed serve, you know, 0:00:59.280 --> 0:01:01.720 as confident as we're seeing market pricing. I think that 0:01:01.760 --> 0:01:04.120 if if Powell was to allude to kind of the 0:01:04.360 --> 0:01:07.679 Bullard bomb of seventy basis points, I don't think markets 0:01:07.680 --> 0:01:10.720 would take that very easily. I think they want for 0:01:10.800 --> 0:01:12.559 him to stick to If it's going to be fifty 0:01:12.560 --> 0:01:14.959 basis points, let's be consistent going forward and plan on 0:01:15.000 --> 0:01:17.200 that in June and July. And by the way, caveat 0:01:17.240 --> 0:01:19.920 that chair pal by saying we're going to remain dated dependent. 0:01:20.480 --> 0:01:23.480 And the market is expected, the market was expecting in 0:01:23.560 --> 0:01:26.200 March a little bit more detail on the launch of 0:01:26.240 --> 0:01:28.120 quantitative easing and how they're going to ramp up to 0:01:28.120 --> 0:01:30.840 this dollars a month. I think the market is going 0:01:30.880 --> 0:01:35.000 to demand details today on that also starting off this month. 0:01:36.920 --> 0:01:39.640 I think it's the balance sheet that's caught most of 0:01:39.640 --> 0:01:42.080 my attention, right, I think as as as I would 0:01:42.120 --> 0:01:45.280 say the entire investor community has, because we've never really 0:01:46.120 --> 0:01:49.840 been able to successfully execute q T. Right, We've only 0:01:49.840 --> 0:01:51.800 ever done this once before, and we had to kind 0:01:51.840 --> 0:01:53.120 of backtrack. And when I say we, I mean the 0:01:53.160 --> 0:01:55.400 Federal Reserve. I had no hand in it, but I 0:01:55.480 --> 0:01:58.960 used to use. We we we the people um but 0:01:59.200 --> 0:02:01.760 talked to us about what is the likelihood of not 0:02:01.840 --> 0:02:04.360 necessarily the rate high side of it, but the balance 0:02:04.360 --> 0:02:07.280 sheet being executed correctly. Well, I think we have to 0:02:07.320 --> 0:02:08.800 bear in mind that there was this there was this 0:02:08.880 --> 0:02:11.760 quirky third quarter corporate tax payment that was due that 0:02:11.919 --> 0:02:15.440 kind of launched the not QE illiquidity era in two 0:02:15.520 --> 0:02:18.200 thousand nineteen that so spooked the markets. Right now we're 0:02:18.240 --> 0:02:20.880 seeing reserves already declined because tax receipts are up so 0:02:20.960 --> 0:02:23.320 much and Americans are about to pay their property taxes. 0:02:23.600 --> 0:02:26.079 So as this is with with this as a backdrop, 0:02:26.200 --> 0:02:29.079 the FEDS about to launch QT, so there's already liquidity 0:02:29.120 --> 0:02:32.160 coming out of the market, reserves coming down as the 0:02:32.160 --> 0:02:34.000 FEDS getting ready to launch. So not everything is in 0:02:34.000 --> 0:02:36.160 their control with Quante Dave tightening, and certainly out of 0:02:36.200 --> 0:02:39.320 the magnitude and scale that they're contemplating, and most of 0:02:39.320 --> 0:02:42.359 their mortgage backed securities are at such low cubans that 0:02:42.400 --> 0:02:44.880 the Fed would effectively had to book a loss. It 0:02:44.880 --> 0:02:46.960 wouldn't look like that, but there would be certainly some 0:02:46.960 --> 0:02:48.799 progressives on the Hill who would view it as a 0:02:48.840 --> 0:02:50.880 loss if they actually had to go as far as 0:02:50.880 --> 0:02:52.960 the nuclear option. I call it the nuclear option. That's 0:02:53.080 --> 0:02:56.120 selling mortgage backed securities off that balance sheet to hit 0:02:56.120 --> 0:02:59.400 that bogie that they've got. The FED, you know, in 0:02:59.440 --> 0:03:02.960 the past, has reacted to market volatility um and maybe 0:03:02.960 --> 0:03:04.720 being a little bit more cautious, and we have I 0:03:04.720 --> 0:03:06.760 would argue, we have a volable marketplace so far here 0:03:06.760 --> 0:03:10.680 in two get the SMP down or so. Do you 0:03:10.680 --> 0:03:13.200 think that might impact their actions here? They might be 0:03:13.240 --> 0:03:15.440 even maybe a little bit more cautious and what markets 0:03:15.480 --> 0:03:17.600 pricing in No. I think that that. I think that 0:03:17.639 --> 0:03:20.400 the strike price of the foot of the FED puts 0:03:20.480 --> 0:03:23.359 has changed dramatically. I think that he realizes. I think 0:03:23.360 --> 0:03:26.120 that Powell and others realized that speculations become rife in 0:03:26.160 --> 0:03:28.839 the stock market. I think they want to cool housing down, 0:03:28.880 --> 0:03:31.040 and I'm I'm being polite and diplomatic on that. I 0:03:31.040 --> 0:03:33.520 don't think they'll go so far, however, as to break credit. 0:03:33.880 --> 0:03:36.080 So I think that what they're paying attention to is 0:03:36.120 --> 0:03:37.800 the fact that we've seen a doubling and triple see 0:03:37.840 --> 0:03:40.200 high yields. You know it's north of ten percent. How 0:03:40.280 --> 0:03:43.520 yield is actually high, and so you don't want, you know, 0:03:43.720 --> 0:03:47.400 Bloomberg's bankruptcy tracker bc y go. It's a great thing 0:03:47.440 --> 0:03:50.200 to follow and even know about it. It's ticked up. 0:03:50.520 --> 0:03:53.040 It's ticked up after hitting an all time low in February, 0:03:53.160 --> 0:03:55.920 so you're starting to see some insolvency issues creep in. 0:03:56.160 --> 0:03:58.560 There's a trillion dollars of non financial debt to be 0:03:58.600 --> 0:04:02.880 refinanced in two thousand twenty two alone globally, Danielle, So 0:04:03.000 --> 0:04:05.640 we have the FED today. Are you in the camp 0:04:05.680 --> 0:04:09.600 that says the FED is behind the curve, ears behind 0:04:09.760 --> 0:04:12.960 the market? Um? And if you are in that camp, 0:04:13.040 --> 0:04:15.400 can they do anything about it? I don't think there's 0:04:15.400 --> 0:04:17.080 any way to make up for lost time. And I 0:04:17.680 --> 0:04:20.360 clearly I'm in Randy Coral's camp as well, because he 0:04:20.440 --> 0:04:22.160 came out and said flat out, we would have been 0:04:22.160 --> 0:04:24.720 acting sooner had there not been a crisis of leadership 0:04:24.839 --> 0:04:27.160 inside the FED, and so I think that it has 0:04:27.160 --> 0:04:29.160 been widely acknowledged. I think that the FED is in 0:04:29.240 --> 0:04:31.920 a pickle when it comes to continuing to ease credit 0:04:32.000 --> 0:04:34.040 by virtue of having such a massive footprint in the 0:04:34.040 --> 0:04:37.880 mortgage back securities market. And I don't think there's an easy, 0:04:38.320 --> 0:04:41.080 elegant way out. I don't think that there's a reasonable 0:04:41.080 --> 0:04:44.080 path that anybody can paint of a soft landing. Really wow. Alright, 0:04:44.080 --> 0:04:48.040 So let we're also talking off air about China Germany 0:04:48.320 --> 0:04:52.279 recession risks there and how that may drag the US 0:04:52.640 --> 0:04:54.720 into a recession. How do you think about those dynamics. 0:04:54.839 --> 0:04:57.240 In fact, there was some great math that Bloomberg Economics 0:04:57.240 --> 0:04:59.400 did that they published yesterday that shows that if there's 0:04:59.440 --> 0:05:01.919 one thing that's going turn US inflation around, it's if 0:05:01.960 --> 0:05:04.880 China stays in a funk. And we fully anticipate that 0:05:04.920 --> 0:05:06.839 to be the case. And so if this carries out 0:05:06.880 --> 0:05:10.000 in Beijing, and I'm watching Bloomberg Asia every night when 0:05:10.000 --> 0:05:11.760 it comes on the air, If this carries out from 0:05:11.760 --> 0:05:14.760 Shanghai into Beijing and we carry this through may that 0:05:14.800 --> 0:05:17.640 means that China is effectively in recession, that Germany, that 0:05:17.800 --> 0:05:20.880 the world's third largest exporter is in recession. So you 0:05:20.920 --> 0:05:22.719 tell me how the United States, stuck in the middle, 0:05:22.720 --> 0:05:25.320 is the world's second largest exporter, How how do they 0:05:25.360 --> 0:05:28.520 resist that gravitational pull of the two other largest exporting 0:05:28.600 --> 0:05:31.440 nations being in recession. If we were to enter into recession, 0:05:31.680 --> 0:05:34.080 do you have any sense of how deep, how long 0:05:34.120 --> 0:05:37.680 it may be. You know, that's also a secondary question. 0:05:38.200 --> 0:05:40.800 So it was interesting. UM an interview from Milkin yesterday 0:05:40.800 --> 0:05:43.000 and Bloomberg talked about, you know, the hopes this was 0:05:43.040 --> 0:05:45.880 the President Coke from Goldman Sachs, the hope it would 0:05:45.880 --> 0:05:49.240 be a shallow recession. I just can't say, there's so 0:05:49.240 --> 0:05:51.360 many If you look at trend, we should have six 0:05:51.400 --> 0:05:53.800 million more Americans in the workforce right now. They want 0:05:53.800 --> 0:05:55.520 to do where are they had we stayed on pre 0:05:55.560 --> 0:05:59.000 pentemic trend, So there's already that initial drag. And again 0:05:59.040 --> 0:06:02.560 then I I'll reiterate what Amazon said was really important. 0:06:02.760 --> 0:06:04.800 They said we're not going to stop at attrition with 0:06:04.839 --> 0:06:07.320 our warehouses. We built too many warehouses, we hired too 0:06:07.320 --> 0:06:09.760 many people. They effectively said, we're gonna we're gonna fire 0:06:09.760 --> 0:06:11.880 a hundred thousand people, and that's going to reduce our headcount. 0:06:12.279 --> 0:06:13.839 This is kind of the first this is kind of 0:06:13.839 --> 0:06:15.480 the first volley, if you will. And if you look 0:06:15.520 --> 0:06:18.760 at indeed dot com job postings, they decisively turned in 0:06:18.839 --> 0:06:21.960 very early February because I thought that labor market was 0:06:22.040 --> 0:06:25.360 just rock solid, and I guess we'll get some more data. Well, 0:06:25.360 --> 0:06:27.320 this is something that was a point of pride for 0:06:27.360 --> 0:06:30.800 a while. I remember in early twenty you had ground 0:06:30.800 --> 0:06:32.880 Powell coming out and saying we have a great labor market. 0:06:32.920 --> 0:06:35.120 It's really tight, and now that's kind of become a 0:06:35.279 --> 0:06:37.880 negative almost he says that we have an extremely tight 0:06:37.960 --> 0:06:40.520 labor market. This is something we have to address. Do 0:06:40.600 --> 0:06:42.600 we have to address it? I think the market is 0:06:42.640 --> 0:06:44.360 going to take care of addressing it on its own. 0:06:44.680 --> 0:06:47.400 I mean, you don't have goods consumption step back to 0:06:47.480 --> 0:06:50.039 the extent that Amazon told us that goods consumption was 0:06:50.040 --> 0:06:53.159 stepping back. You don't have good consumption stepping back and 0:06:53.200 --> 0:06:56.240 inflation running where it is for essentials uh and and 0:06:56.400 --> 0:06:58.400 landlords trying to make up on what they lost during 0:06:58.440 --> 0:07:01.520 the rental ediction moratorium. So you've got your three essential energy, gas, 0:07:01.839 --> 0:07:05.719 and housing. You don't have inflation running amok and and 0:07:05.720 --> 0:07:07.479 and try and say services are going to make up 0:07:07.520 --> 0:07:10.080 for it. But is there. Sorry I was gonna say, 0:07:10.160 --> 0:07:13.240 I gotta, I gotta get in here, but there not 0:07:13.320 --> 0:07:15.440 to make it too simplistic of an approach, but if 0:07:15.480 --> 0:07:19.400 we're looking at declining demand, a slowing demand from the 0:07:19.440 --> 0:07:23.640 American consumer specifically, and you're also seeing slower supply chains 0:07:23.800 --> 0:07:26.720 MSS or slower exports. You mentioned China, you mentioned Germany 0:07:26.920 --> 0:07:29.720 in terms of net exports. Does that in some way 0:07:29.880 --> 0:07:32.680 cancel out a little bit. Well, the one thing that 0:07:32.720 --> 0:07:34.679 we don't have to worry about as much, and bless 0:07:34.720 --> 0:07:37.120 j Pal's heart, is the supply change in structure, because 0:07:37.160 --> 0:07:39.280 what we're seeing is this magnificent build. If you look 0:07:39.280 --> 0:07:41.840 at if you look at the company earnings conference calls, 0:07:42.320 --> 0:07:44.400 there are so many companies that are saying, we've got 0:07:44.520 --> 0:07:47.400 enough inventory on hand, it's no longer a crisis. But 0:07:47.480 --> 0:07:49.600 now we have to consider the fact that warehouse expenses 0:07:49.600 --> 0:07:51.440 are higher than they've ever been, and they have an 0:07:51.440 --> 0:07:54.760 expense to carry this inventory that not a single operations 0:07:54.760 --> 0:07:57.400 manager in the current generations accustomed to because their entire 0:07:57.440 --> 0:07:59.200 career has been just in time as opposed to just 0:07:59.280 --> 0:08:01.960 in case. I learned just in time back in business 0:08:02.000 --> 0:08:04.800 school in the late eighties early nineties. Is that a 0:08:04.920 --> 0:08:06.720 thing of the past. Do you think is that taken 0:08:06.720 --> 0:08:09.840 a big blow? The stockpiling that we've seen suggests as much. 0:08:09.880 --> 0:08:11.840 I mean, they were so burned by not being able 0:08:11.880 --> 0:08:14.040 to get the product on hand to keep the production 0:08:14.040 --> 0:08:16.600 lines up and running that they do have inventory on 0:08:16.640 --> 0:08:19.160 hand now. So it's there's not the same crisis because 0:08:19.160 --> 0:08:20.960 of what's happening in China, because there's not the same 0:08:21.000 --> 0:08:25.080 demand pull from our ports, because because supplies have been replenished. 0:08:25.600 --> 0:08:27.880 So as it relates to what we're here from the 0:08:27.920 --> 0:08:32.040 FED today, um like I kind of felt like the 0:08:32.080 --> 0:08:34.520 inflation we're experiencing today isn't so much a result of 0:08:34.559 --> 0:08:36.280 the FED, because the FED has been easy for a 0:08:36.320 --> 0:08:39.240 long time. It was a pandemic, it was a supply chain, 0:08:39.320 --> 0:08:41.480 and once that stuff plays out, inflation will play out. 0:08:41.720 --> 0:08:44.280 So I'm surprised that people are depending so much on 0:08:44.320 --> 0:08:48.280 this Federal Reserve detain inflation. It's it's it's wrong headed, 0:08:48.400 --> 0:08:50.040 and a lot of it was all that. You know, 0:08:50.040 --> 0:08:53.760 when you pump forty of US GDP via fiscal stimulus 0:08:53.800 --> 0:08:55.760 into the economy, you're gonna generate a heck of a 0:08:55.800 --> 0:08:57.880 lot of inflation. And that, in my opinion, is why 0:08:58.160 --> 0:09:00.640 President might have initially scheduled his press conference for two 0:09:00.640 --> 0:09:03.840 o'clock thinking he could compete with the FED statement being released, 0:09:03.880 --> 0:09:06.360 which obviously he moved that back to eleven am, figuring 0:09:06.360 --> 0:09:08.360 out that he couldn't. But it was I mean, I 0:09:08.440 --> 0:09:11.120 think initially it was literally an attempt to distract from 0:09:11.160 --> 0:09:14.160 a fifty basis point right hip, And I don't know 0:09:14.160 --> 0:09:16.760 if you've already hit this, but we also are expecting 0:09:16.800 --> 0:09:20.360 comments from President Biden today at two o'clock as well. No, no, 0:09:20.480 --> 0:09:22.800 he moved it to eleven. Oh to eleven. I'm so sorry, 0:09:23.080 --> 0:09:26.360 but what did at one point? And the topic of 0:09:26.440 --> 0:09:30.079 this conversation even at eleven is going to be about 0:09:30.120 --> 0:09:34.040 economic growth? How much of a concern is this fifty 0:09:34.040 --> 0:09:38.040 basis point hike? Is this going to scare the consumer 0:09:38.200 --> 0:09:41.120 or scare the American public when they see Chairman Powell 0:09:41.160 --> 0:09:43.400 today if he does indeed deliver what the market's expecting 0:09:44.000 --> 0:09:46.199 very well? Could I mean sixteenth two thousand, that's the 0:09:46.320 --> 0:09:49.080 last time that they launched a fifty basis point hike. 0:09:49.559 --> 0:09:51.880 That was one month almost to the day from from 0:09:51.880 --> 0:09:54.640 the day the dynastic peaked before it completely imploded. And 0:09:54.679 --> 0:09:57.040 people are beginning to draw parallels, maybe because they follow 0:09:57.120 --> 0:10:00.760 me on Twitter. Daniel d Martino Booth follow you on Twitter. 0:10:00.840 --> 0:10:04.800 Daniel DeMartino Booth, CEO and chief strategist for Quill Intelligence, 0:10:05.120 --> 0:10:07.400 former advisor at the Federal Reserve Bank of Dallas. When 0:10:07.400 --> 0:10:09.760 we talked to FED, we'd like to talk to smart 0:10:09.760 --> 0:10:11.760 people who have experience with this stuff, and Daniel is 0:10:11.760 --> 0:10:18.040 certainly not camp here. Let's get back to these markets here, 0:10:18.080 --> 0:10:21.080 because it's going to be a busy day, a busy afternoon, 0:10:21.480 --> 0:10:24.440 and probably into tomorrow. Market's gonna be digesting a lot 0:10:24.520 --> 0:10:27.440 of commentary coming from the US Federal Reserve. Let's bring 0:10:27.440 --> 0:10:30.880 an Anders person, chief investment Officer of Global fixed Income 0:10:30.960 --> 0:10:33.120 for Nuvine Anders thanks so much for joining us here. 0:10:33.520 --> 0:10:35.800 You know, we kind of we pay a lot of 0:10:35.800 --> 0:10:37.920 attention here at Bloomberg News and Bloomberg Radio on TV 0:10:38.080 --> 0:10:39.920 on the Federal Reserve, and when we do have these 0:10:40.280 --> 0:10:44.120 press conferences with the chairman, this one today seems to 0:10:44.240 --> 0:10:46.959 be even more so because we're gonna have a FED 0:10:47.000 --> 0:10:49.720 that's gonna go really into hawkish mode here. What are 0:10:49.760 --> 0:10:54.640 you looking for this afternoon from your Federal Reserve chairman? Sure, yeah, 0:10:54.760 --> 0:10:57.400 we we we do believe that that they're going to 0:10:57.440 --> 0:10:59.959 be announcing it's if two basis point tied today we're 0:11:00.760 --> 0:11:03.559 in our mind it's been well telegraphed a Powell and 0:11:04.000 --> 0:11:06.960 very much in line with that market expectation. So so, certainly, 0:11:07.559 --> 0:11:08.959 as you said, it's gonna be a lot of focus 0:11:09.080 --> 0:11:12.839 on this today, um certainly more so on the press conference, um, 0:11:13.640 --> 0:11:15.640 you know, trying to read between the lines, what kind 0:11:15.679 --> 0:11:19.280 of signals and inside the power of passing along. That 0:11:19.400 --> 0:11:21.679 being said, I'm not so sure that we're going to 0:11:21.760 --> 0:11:25.040 get a whole lot of tangible new news here. It's 0:11:25.080 --> 0:11:28.360 probably not going to be much of fireworks where frankly, 0:11:28.440 --> 0:11:30.439 we're not going to get an updated dot plot or 0:11:30.440 --> 0:11:33.280 any new forecast at this meeting. So it's going to 0:11:33.360 --> 0:11:36.000 be again more kind of reading between the lines, kind 0:11:36.040 --> 0:11:39.320 of figuring out if we can read anything into any 0:11:39.400 --> 0:11:42.079 kind of signals one way or another. So while we're 0:11:42.120 --> 0:11:44.040 hoping for a little more clarity, I have I have 0:11:44.200 --> 0:11:46.960 a strong suspicion it's going to be a little bit 0:11:47.000 --> 0:11:51.200 more of a vague message from Powell, more noncommittal, certainly 0:11:51.360 --> 0:11:53.679 probably not going to be commenting all that much and 0:11:53.760 --> 0:11:57.000 what kind of size hikes we can expect here going forward, 0:11:57.600 --> 0:12:00.640 probably reiterating that he's going to be it a dependent 0:12:01.040 --> 0:12:04.400 um uh here going forward as well. So certainly key 0:12:04.440 --> 0:12:07.240 focus here, but I think today probably not a lot 0:12:07.320 --> 0:12:09.920 of details and maybe more interesting to hear where some 0:12:10.040 --> 0:12:12.839 of the committee members kind of speak about here in 0:12:12.880 --> 0:12:15.319 the coming days and weeks, well at least there'll be 0:12:15.400 --> 0:12:18.320 an in person press conference there, so perhaps we can 0:12:18.320 --> 0:12:21.040 get a little fireworks going there about the balance sheet 0:12:21.160 --> 0:12:22.679 run off here, This is something that I think the 0:12:22.760 --> 0:12:24.679 market's trying to, you know, just you know, learn a 0:12:24.760 --> 0:12:26.400 little bit more about what do you think we'll here 0:12:26.880 --> 0:12:29.439 fed Sherman j pal about how this Federal Reserve will 0:12:29.480 --> 0:12:34.520 actually you know, affect a balance sheet run off? Yeah, 0:12:34.600 --> 0:12:37.679 that is that is the area that will hopefully get 0:12:37.800 --> 0:12:40.160 a little bit more clarity around and let's go a 0:12:40.240 --> 0:12:43.559 little bit more new news. Um, you know, expectations is 0:12:43.720 --> 0:12:45.920 on our end, and I think the market is that. Um, 0:12:46.240 --> 0:12:48.480 they'll they'll talk about a June kind of kick off. 0:12:49.080 --> 0:12:52.600 They talked about these cap sizes around sixty billion for treasuries, 0:12:52.640 --> 0:12:55.920 thirty five billion for mbs, most likely a three month 0:12:56.040 --> 0:12:58.600 ramp up, So you know, all in all, I would 0:12:58.640 --> 0:13:01.720 call it probably going to be in line with market expectations. 0:13:01.880 --> 0:13:05.160 Maybe a little bit more clarity around that, but I 0:13:05.240 --> 0:13:08.120 think Powell and team have done a pretty good job 0:13:08.360 --> 0:13:12.360 communicating sort of where they're heading, and I'm guessing it's 0:13:12.520 --> 0:13:15.920 mostly going to be radiating what they've been signaling here 0:13:15.960 --> 0:13:19.800 for a bit I have to ask about negative yielding 0:13:19.920 --> 0:13:22.839 debt because we are looking at a tenure yield that 0:13:22.920 --> 0:13:26.959 has bounced off three twice now, once today and once 0:13:27.000 --> 0:13:29.280 I believe a couple of days ago as well. You're 0:13:29.280 --> 0:13:32.160 also looking at a German boond that has crossed one 0:13:32.200 --> 0:13:35.760 percent several times as well. But negative yielding debt is 0:13:35.800 --> 0:13:42.240 kind of almost going into extinction. What would reverse that trend? Yeah, No, 0:13:42.760 --> 0:13:45.439 I think it's it's certainly it's I would call it, 0:13:45.520 --> 0:13:48.320 first of all healthy to see these changes and things 0:13:48.360 --> 0:13:51.240 from moving into a more normal kind of state all 0:13:51.320 --> 0:13:54.079 in all, because I think we can all agree that 0:13:54.160 --> 0:13:56.800 negative yielding debt is not you know, sort of what 0:13:56.960 --> 0:13:59.280 we would like to see in a in a fully 0:13:59.320 --> 0:14:01.920 functioning econ mean what have you. So I would say, 0:14:02.040 --> 0:14:05.400 we're you know, setting a new range here, and we 0:14:05.520 --> 0:14:08.480 would expect more of a range bound both from the 0:14:08.559 --> 0:14:11.480 treasury side and from the boons and more broadly in Europe. 0:14:11.559 --> 0:14:14.679 So I think, um, you know, if if if we 0:14:14.840 --> 0:14:18.880 were to turn over, um, perhaps if if there is 0:14:18.920 --> 0:14:23.120 a central bank policy era or FED era going forward 0:14:23.320 --> 0:14:26.680 where you know they go to aggressively and in fighting 0:14:26.720 --> 0:14:30.000 the inflation, uh, and we end up you know, kind 0:14:30.000 --> 0:14:34.000 of dipping into a recession most likely next year either 0:14:34.080 --> 0:14:36.280 here in the US, so maybe more likely in Europe. 0:14:36.920 --> 0:14:40.840 Then you know, we we have to assume that those 0:14:40.960 --> 0:14:43.360 deals will come down again. It could be slipping down 0:14:43.440 --> 0:14:46.880 into the negative territory again. We're hoping that's not to 0:14:46.960 --> 0:14:50.600 get base case certainly. Um, it seems like we're making 0:14:50.640 --> 0:14:53.560 the right steps here going forward, but at the end 0:14:53.560 --> 0:14:55.440 of the day, we have to, you know, take a 0:14:55.480 --> 0:14:58.520 step back and acknowledge that there's still a lot of 0:14:58.640 --> 0:15:02.640 uncertainties out there in terms of deal, political kind of 0:15:02.680 --> 0:15:07.240 top situation, the Chinese lockdowns, some of these cross currents 0:15:07.320 --> 0:15:11.600 around economic economic growth and inflation, and and the soft 0:15:11.720 --> 0:15:15.400 lending kind of type approach to all central banks are 0:15:15.600 --> 0:15:17.920 are trying to achieve. It's not going to be easy, 0:15:18.040 --> 0:15:20.920 so I wouldn't rule it out. Um, we're hoping for 0:15:21.000 --> 0:15:23.120 the best here, but but that's not a base case 0:15:23.160 --> 0:15:25.200 at this point, and there's a lot of folks are 0:15:25.280 --> 0:15:28.760 really looking to this for the reserve too bring down inflation. 0:15:29.920 --> 0:15:31.560 I don't even think they caused inflation. I kind of 0:15:31.560 --> 0:15:34.320 feel like it was a byproduct of a reopening global economy, 0:15:34.400 --> 0:15:38.240 supply chain issues. Uh, that those types of things that 0:15:38.360 --> 0:15:41.160 and that's just gonna take time to play out. How 0:15:41.200 --> 0:15:43.480 do you envision or how do you think about this 0:15:43.600 --> 0:15:49.240 Federal Reserve in its ability to fight inflation? Yeah, I mean, 0:15:49.320 --> 0:15:52.800 certainly it is unprecedented times, and I think we have 0:15:52.920 --> 0:15:57.280 to again remind ourselves that we're dealing with with something 0:15:57.360 --> 0:16:00.040 that we really don't have a playbook around, given of 0:16:00.120 --> 0:16:04.120 the COVID shutdown and supply chain related issues as you mentioned. 0:16:04.640 --> 0:16:07.360 That being said, I think our view is that inflation 0:16:07.600 --> 0:16:11.000 likely did peak, most likely in the last month or so. 0:16:12.080 --> 0:16:15.360 When we look at some of the core durable goods numbers, 0:16:15.520 --> 0:16:17.680 for instance, you know, new cars have been kind of 0:16:17.760 --> 0:16:21.520 rolling over. We're seeing energy prices moderating at this point. 0:16:21.640 --> 0:16:25.680 We are seeing the signs that inflation at least is moving, 0:16:26.000 --> 0:16:28.080 you know, lower and in the right direction. We're we're 0:16:28.120 --> 0:16:30.800 expecting core inflation kind of at four and a half 0:16:30.840 --> 0:16:33.760 percent at here and uh and and continue to go 0:16:33.920 --> 0:16:37.240 lower next year. But um, to your point, I mean, 0:16:37.560 --> 0:16:40.640 the FEDS job now is to to really kind of 0:16:40.720 --> 0:16:46.240 tighten financial conditions. So we see that psychology shifting from 0:16:46.280 --> 0:16:49.280 consumers from companies and what have you, so we can 0:16:49.320 --> 0:16:51.960 see that trend continuing here in the coming months. So 0:16:52.680 --> 0:16:54.640 I think they're on the right path. My you know, 0:16:54.760 --> 0:16:56.880 the concern I guess we'll have is that they're going 0:16:56.920 --> 0:16:58.720 to be a little bit too slow in their actions. 0:16:58.960 --> 0:17:00.720 All right, And this person, thank you so much for 0:17:00.800 --> 0:17:03.880 joining us. Really appreciate it. Ander's person, chief Investment Officer 0:17:04.320 --> 0:17:07.840 of Global Fixing, come for Nouvene giving us his thoughts 0:17:07.840 --> 0:17:09.399 on kind of how he thinks his Phoederal Reserve is 0:17:09.440 --> 0:17:13.280 gonna navigate this high level of inflation that we're all 0:17:13.280 --> 0:17:19.560 experiencing right now. All right, it has been a rocky 0:17:19.720 --> 0:17:21.960 tech earning season, I would say here for the first quarter. 0:17:22.280 --> 0:17:26.480 Some positive surprises, but probably more negative surprises. Cap off 0:17:26.640 --> 0:17:28.919 just recently, most recently with the lift and Uber lifts down, 0:17:30.200 --> 0:17:33.480 Uber off ten percent here, So some real challenges for 0:17:33.520 --> 0:17:36.080 some of these tech investors. So we talked tech. We 0:17:36.200 --> 0:17:38.560 talked to Dan Ives. He is one of our leading 0:17:38.680 --> 0:17:41.879 voices on all things technologies. He's an equity research and 0:17:41.920 --> 0:17:45.520 also would Bush Securities and managing director over there. Um, Dan, 0:17:45.600 --> 0:17:48.040 thanks so much for joining us here. Let's start with boy. 0:17:48.520 --> 0:17:50.840 I go back to last Friday, we had Amazon. What 0:17:51.000 --> 0:17:53.000 happened there in a big sell off in that stock 0:17:53.040 --> 0:17:55.640 and then we had lifted Uber. Today as you step 0:17:55.680 --> 0:17:57.520 back down, I know you have this lens and think 0:17:57.560 --> 0:18:00.879 about tech. What's the market telling us here? Well, I 0:18:00.960 --> 0:18:03.320 think it's to have and have not in tech. I 0:18:03.359 --> 0:18:08.600 mean you look at a m D, Microsoft, cyber Security, Apple, 0:18:08.680 --> 0:18:12.879 outside the supply chain Strong, you look at some of 0:18:12.920 --> 0:18:16.200 the e commerce work from home beneficiaries that's been a disaster. 0:18:16.359 --> 0:18:19.280 And when we look at with I mean they're spending 0:18:19.520 --> 0:18:24.480 money like rock stars, and ultimately that's something in this environment, 0:18:25.119 --> 0:18:28.480 even though for good in terms of a demand rebound 0:18:28.600 --> 0:18:31.840 to get drivers back on street, any sort of issue, 0:18:31.920 --> 0:18:34.760 the stocks will get crushed. So I think what we're seeing, Paul, 0:18:34.880 --> 0:18:40.760 is it's a bifurcation within tech, enterprise, Cloud, cyber semis, Strong, 0:18:41.280 --> 0:18:45.080 everything else. You know, we're seeing weakness, but I think 0:18:45.200 --> 0:18:48.320 the there is kind of an extremity, almost to the 0:18:48.440 --> 0:18:50.840 extent that some of these stocks are getting punished. I mean, 0:18:51.119 --> 0:18:55.520 off Amazon earningclin right off the bat. That isn't a 0:18:55.640 --> 0:18:59.400 normal move, even off of an earnings disappointment. A similar 0:18:59.440 --> 0:19:01.359 story when you're looking Lift, for example, we're looking at 0:19:01.359 --> 0:19:05.359 those shares down thirty almost Uber down eight point eight 0:19:05.400 --> 0:19:08.600 percent as well. These are really extreme moves, and I 0:19:08.680 --> 0:19:11.879 don't necessarily think you can blame the rates picture. So 0:19:12.080 --> 0:19:17.080 why these particular stocks, Why such an outsize move. Look, 0:19:17.160 --> 0:19:20.719 I think it is as nervous of an environment. I mean, 0:19:20.880 --> 0:19:24.600 forget Mark two twenty, but it's just nervous as I've 0:19:24.640 --> 0:19:29.560 seen talking attach investors institutionally, I'd seen eight nine years 0:19:30.040 --> 0:19:34.960 because of the Rubik's cube macro fed raising rates and 0:19:35.080 --> 0:19:39.480 what we're seeing on valuations, and I think any crack 0:19:39.560 --> 0:19:42.480 in the armor, any softness you're seeing what I've use 0:19:42.800 --> 0:19:45.879 overreaction and a lot of these tech prints, and I 0:19:45.960 --> 0:19:48.399 think it just speaks to what I view is an 0:19:48.440 --> 0:19:51.760 over souled tech tape in a complex macro. But I 0:19:51.920 --> 0:19:56.040 believe it sets up for what over the next quote 0:19:56.160 --> 0:19:58.879 three six nine months is going to be a significant 0:19:58.920 --> 0:20:02.640 rebound tech for the high quality tech games and obviously 0:20:02.800 --> 0:20:06.040 just this massive white knucle panics. I feel like it 0:20:06.119 --> 0:20:08.560