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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along

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Speaker 1: with Jonathan Farrow and Lisa Abramowitz. Join us each day

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Speaker 1: for insight from the best an economics, geopolitics, finance and investment.

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Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and

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Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com,

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Speaker 1: the Bloomberg Terminal and the Bloomberg Business app. Man Deep

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Speaker 1: Singh is a smart guy senior technolical analysts and Bloomberg Intelligence.

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Speaker 1: What you learn from mister Nadella yesterday this was the

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Speaker 1: mother of all home run reports.

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Speaker 2: Yeah, I mean the Azure acceleration. I think they sort

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Speaker 2: of sandbag expectations because last quarter it was like one

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Speaker 2: percent contribution from AI related stuff. This quarter was three percent,

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Speaker 2: and the expectation is it's going to keep growing. But

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Speaker 2: everyone knows that they are looking to deploy their large

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Speaker 2: anglage models, trained their l and look, this is a

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Speaker 2: secular trendo.

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Speaker 3: I mean, Tyler Radkey, it's sad.

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Speaker 1: Your published I believe was this morning, maybe late last night,

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Speaker 1: and you just basically said, you know, this is like

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Speaker 1: a complete report to find what co.

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Speaker 3: Pilot is yeah.

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Speaker 2: So right now they have a GitHub co pilot which

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Speaker 2: basically allows developers to be more productive because it's right

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Speaker 2: for a fee for a fee, and they're charging ten

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Speaker 2: dollars and they have about ten million, uh you know

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Speaker 2: people signed up, so it's it's already a pretty sizable revenue.

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Speaker 3: It's like your newsletter about that. Wow, you've got ten

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Speaker 3: million people.

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Speaker 4: It all right, so they can you know, you can

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Speaker 4: hire a chat GPT to fill a seat, which I

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Speaker 4: think will be a beautiful thing one day. But this

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Speaker 4: raises this question and I'm going to steal some of

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Speaker 4: Katie Sunder because she had a really good point earlier.

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Speaker 4: This idea of have we overplayed AI and not emphasized

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Speaker 4: the cloud enough? Was the real surprise for Microsoft really

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Speaker 4: just purely the cloud and the AI discussion not really

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Speaker 4: there and the same story except the verse kind of

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Speaker 4: sentiment for Google.

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Speaker 2: I mean, look at how much these companies are investing

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Speaker 2: in capex to build their infrastructure. So clearly there is

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Speaker 2: a huge upfront investment. And in terms of the monetization,

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Speaker 2: copilot is one form, then renting your cloud infrastructure is

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Speaker 2: the second big form, and they are launching a big

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Speaker 2: three sixty five copilot starting November first, so that could

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Speaker 2: add to the revenue in addition to what we heard

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Speaker 2: about GitHub. And look, at the end of the day,

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Speaker 2: cloud training is where the money is because that's where

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Speaker 2: the GPUs lie. I mean, everyone knows NBDIA had a

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Speaker 2: big lift because of the GPU demand. Well guess what

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Speaker 2: who are buying these GPUs? It's so hyperscalers and then

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Speaker 2: they are renting it out.

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Speaker 4: The big fear right now is that Google's gap, its

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Speaker 4: lag behind the cloud competitors, is only growing.

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Speaker 3: Do you see this as evidence of that?

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Speaker 2: I think Google again is more niche in the sense

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Speaker 2: that they don't have a legacy in enterprise business as

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Speaker 2: Microsoft does. So clearly they have to build it from

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Speaker 2: scratch and they're focusing more on the AI side of things,

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Speaker 2: rightfully so, and in this case, some of the deals

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Speaker 2: are lumpy. So I won't make a lot out of

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Speaker 2: the miss last night. I know everyone focused on their

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Speaker 2: two percentage point miss, but look, they are building this

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Speaker 2: from scratch and it's at a very healthy thirty two

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Speaker 2: billion dollar run rate growing at over twenty twenty five percent,

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Speaker 2: and to my mind, it's going to accelerate because they

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Speaker 2: are one of the biggest buyers of GPUs as well,

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Speaker 2: So where would you rent the GPU capacity? Besides Microsoft

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Speaker 2: and Amazon, it's Google.

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Speaker 5: And deip I also want to talk a little bit

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Speaker 5: about search because this line from Microsoft's earnings caught my

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Speaker 5: eyes that you take a look at being search and

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Speaker 5: news advertising sales increasing ten percent in the quarter. So

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Speaker 5: it seems a little bit like advertising spent has stabilized.

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Speaker 5: But when it comes to being versus Google, does bing

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Speaker 5: have any hope of taking serious market share from Google?

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Speaker 2: I think satan Adella walked back his comments you know,

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Speaker 2: during the testimony that he was aiming for share, but

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Speaker 2: he conceded it's very hard to take share from Google,

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Speaker 2: and Google's results last night showed that at one hundred

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Speaker 2: and eighty billion dollars round rate, if you're growing double digits.

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Speaker 2: That just goes to show how much power you have.

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Speaker 2: Where Snapchat group five percent, it's much smaller, and I

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Speaker 2: think you get to see where the ad pricing power lies.

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Speaker 3: In the ex did Greifeld get the memo that we're

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Speaker 3: being free, we don't talk about we don't talk about

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Speaker 3: being here you big all the time?

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Speaker 5: Well, I lost it almost an hour.

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Speaker 3: If you could do better.

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Speaker 5: Let's see, are we allowed to talk about Snapchat? I

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Speaker 5: don't know, but let's talk about snap.

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Speaker 1: They make great tools, are out of Ohio, and I

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Speaker 1: love their socket wrench.

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Speaker 5: Can you take my AI? Okay, let's talk about Snapchat.

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Speaker 5: Because they came out with earnings. The share spiked fifteen

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Speaker 5: percent after hours. Now you take a look at shares,

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Speaker 5: they're actually, I don't know, down slightly. What were we

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Speaker 5: so psyched about at around four pm yesterday that we're

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Speaker 5: not excited about it? What's six fifty three in the morning.

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Speaker 2: I mean, clearly, the top line print was better than expected.

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Speaker 2: But when it comes to the guidance, that EBITDN number

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Speaker 2: is the key for a company like Snapchat because they

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Speaker 2: keep losing money. So because they had a positive EBITDT quarter,

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Speaker 2: everyone thought it's going to continue. But in their guide

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Speaker 2: they were quite wage about where the leverage is going

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Speaker 2: to come from, and it was just too uncertain to

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Speaker 2: figure out whether this is sustainable or not.

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Speaker 4: But it goes to this question, this larger question of

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Speaker 4: how the market is measuring the performance the response and

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Speaker 4: you talked about how you actually disagree with the response

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Speaker 4: to the Google to the Google earnings that you think

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Speaker 4: people are overplaying the slight miss and they're underplaying the

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Speaker 4: potential for AI. Does that mean that right now, just

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Speaker 4: from a market perspective, any results that show you the

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Speaker 4: money are the ones that are going to be rewarded,

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Speaker 4: not the ones that show you hope, which is what

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Speaker 4: some people were really trading on with the AI promises

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Speaker 4: of your.

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Speaker 2: Yeah, I mean results matter. And in Google's case, there

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Speaker 2: was an operating income as well, but they are investing

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Speaker 2: and is with Google I see, you know, YouTube being

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Speaker 2: a very big business. In fact, YouTube subscription growth has

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Speaker 2: accelerated past all the streaming players, so that live NFL

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Speaker 2: content is working. Cloud is another driver's search remains robot.

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Speaker 2: So the durability of earnings is there with a.

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Speaker 3: Name like Google.

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Speaker 2: Yes, they may have a bad you know, a slight

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Speaker 2: miss when it comes to operating margin, but it doesn't

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Speaker 2: change the fact that they've got all these large businesses

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Speaker 2: with a long runway, and I think that's the thing

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Speaker 2: to focus.

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Speaker 1: Can you extrapolate out to Apple here? I believe it's

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Speaker 1: November two, whatever day. That is, if we saw a

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Speaker 1: Microsoft do what they do, are we going to give

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Speaker 1: the same joy, the same completeness, as Tyler Redken talks about,

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Speaker 1: Are we going to get that from Apple?

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Speaker 2: Very unlikely given the what's going on with China and

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Speaker 2: their focus on moving the supply chain. And look, they're

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Speaker 2: a hardware company, so we know PC and smartphone markets

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Speaker 2: are still bottoming out, so they will not have big quarter.

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Speaker 2: And the one risk factor for Alphabet going back to

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Speaker 2: that is if Apple decides to do their own large

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Speaker 2: anglid model on the phone and take out the distribution

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Speaker 2: they have for Google, which has come under scrutiny. That's

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Speaker 2: a big risk for Google Search. I mean, other than that,

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Speaker 2: I don't see any risks for the business. But if

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Speaker 2: Apple decides to do their search and maps and everything

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Speaker 2: large anglid model, that's a big risk.

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Speaker 1: Mande, thank you so much, I got I gave more questions.

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Speaker 1: Mandy's singing with us. We'll have them on here. Over

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Speaker 1: this arc of these tech earnings, we start strong with

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Speaker 1: Marvin Lowe, senior global macro strategists at Stage Street. Here

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Speaker 1: in this time of confusion and cacophony, I guess I

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Speaker 1: have to rebalance, I have to reallocate. Is the rebalanced

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Speaker 1: formula changed because of this yield move.

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Speaker 6: I mean, for sure, everyone's thinking about, you know, whether

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Speaker 6: sixty forty is appropriate. What we're seeing in terms of

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Speaker 6: the institual investor is that they're so underweight fixed income

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Speaker 6: at this point because the losses have been so great

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Speaker 6: that they're still trying to catch up. If you're a

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Speaker 6: bond bull, it's encouraging because they're still engaged with the

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Speaker 6: asset class. But do they settle below that forty percent

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Speaker 6: once we get there?

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Speaker 1: I thought of you, they said, marvinlow is going to

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Speaker 1: open the show, and I thought of you. In a

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Speaker 1: cold of winter, Peter Lynch used to walk around the

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Speaker 1: streets of Boston without a coda. He looked like Jim Geordan,

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Speaker 1: except it was ten below zero and he'd have his

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Speaker 1: value lines and he's walking to meetings with Will and

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Speaker 1: the rest of Betina and the rest of them. Okay, great,

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Speaker 1: that's all fine and well. But to me, the securities

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Speaker 1: analysis now is just out the window. It's about survival.

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Speaker 1: How do you survive in an allocated portfolio?

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Speaker 6: I mean, for sure, you are reevaluating duration in terms

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Speaker 6: of a story, and you have to remember that duration

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Speaker 6: is much more than just your fixed income holdings. The

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Speaker 6: US equity market is very heavy, So you've got to

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Speaker 6: be really conscious of where those long yields are affecting

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Speaker 6: your portfolio. Keeping powder dry right now is not a crime,

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Speaker 6: absolutely not, particularly given the shape of the curve, particularly

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Speaker 6: given that the fed's going to be you know, higher

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Speaker 6: for longer, probably for a lot longer than people think.

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Speaker 6: In my mind, you know, keep that powder dry because

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Speaker 6: things are still going to be rough going into next year.

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Speaker 4: What does that mean powder dry? Because it doesn't just

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Speaker 4: mean that you take cash and you put it in

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Speaker 4: a mattress. Do you put it into t bills? Do

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Speaker 4: you just keep it into your treasuries?

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Speaker 6: I love bills. Two years feel pretty good to me

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Speaker 6: at this point. Also, you know, if you wanted to

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Speaker 6: extend from your bill uh structure in your portfolio, I

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Speaker 6: think you know, you could add that kind of duration.

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Speaker 6: You can nibble on the tenure for sure, you know,

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Speaker 6: if you like that income. But yeah, you know, I'm

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Speaker 6: looking at the short end out to two years.

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Speaker 4: Does this mean that you're concerned about risk equity valuations

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Speaker 4: and other parts of the market that maybe haven't fully

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Speaker 4: comprehended the level and have ignored it because volatility that's

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Speaker 4: gotten so much more significant than what we're seeing in

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Speaker 4: equity volatility.

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Speaker 6: You know, for sure, if we look at you know,

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Speaker 6: even since the since the Milies conflict, it's been rates

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Speaker 6: that have moved. Everyone else has been kind of frozen,

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Speaker 6: if you will. The dollar hasn't really moved, effects hasn't moved,

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Speaker 6: and equities are trading, you know, fairly well in a

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Speaker 6: wider range. They're not reflecting the volatility that rates are showing.

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Speaker 6: And you know, ultimately, I say to a lot of folks,

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Speaker 6: the most important number out there is that ten year yield.

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Speaker 6: And that ten year yield is unanchored right now.

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Speaker 5: And that's what I want to talk about, saying in

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Speaker 5: the fixed income market for rate now, I mean, the

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Speaker 5: most important question, it feels like, is why are rates rising?

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Speaker 5: And I'm looking through your notes and you right that

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Speaker 5: you would push back against the buyer strike thesis. Why

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Speaker 5: is that?

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Speaker 6: First off? You know, like I said, the institutional investor

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Speaker 6: is still buying. They're still trying to get back to

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Speaker 6: their benchmarks. We actually are able to also look across

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Speaker 6: border flows at that institutional level and they're still buying.

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Speaker 6: So they're buying it on hedge. There's various stories around

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Speaker 6: the dollar that you could infer from that. But mof

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Speaker 6: data around Japanese buyers, they're still engaged. China kind of

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Speaker 6: looking at tics data, tick data. They're not buying as much,

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Speaker 6: but they're buying based on what their reserves let them buy.

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Speaker 6: So we really haven't seen that kind of buyer strike.

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Speaker 6: That seems to be one of the themes.

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Speaker 3: That are out there.

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Speaker 6: Certainly, all of the issuance is an overhang, and so

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Speaker 6: I agree with you, Lisa, it's like these auctions become

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Speaker 6: more and more important, particularly as we go into November

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Speaker 6: and understand how the next phase of all this deficit

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Speaker 6: funding is going to look like. But the buyers are engaged.

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Speaker 6: There's just a lot of paper right now, and the

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Speaker 6: knife is pretty big and falling.

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Speaker 5: Still well to that point, Okay, maybe there's not a

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Speaker 5: buyer strike, but there is a lot of supply here,

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Speaker 5: and with that in mind, you look forward to next week,

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Speaker 5: which is going to be very fun because we have

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Speaker 5: the refunding announcement in addition to the actual FED decision

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Speaker 5: for the direction of this market from here, Which do

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Speaker 5: you think is more important?

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Speaker 6: You know what, I think the supply is more important.

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Speaker 6: The FEDS message is pretty well crafted at this point.

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Speaker 6: It shows that they don't really have a handle on

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Speaker 6: how this is going to evolve, and I think that's

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Speaker 6: part of the volatility out there. But given that they've

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Speaker 6: pulled back and turned more you know, less hawkish, if

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Speaker 6: you will, with the volatility in the market, they're not

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Speaker 6: looking to introduce much more into it at this point.

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Speaker 6: We have nothing christ in for November. That's correct. I

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Speaker 6: think they're ultimately done. The question really winds up being

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Speaker 6: how much longer we stay at these what they believe

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Speaker 6: is restricted levels.

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Speaker 4: It sounds really gloomy, sounds pretty rough, sounds concerning a

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Speaker 4: zure of Microsoft posted a twenty nine percent sales gain

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Speaker 4: in their cloud services business. At a certain point, you

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Speaker 4: take a look at the gloom of the doom, and

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Speaker 4: you take a look at some of the cash producers,

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Speaker 4: and they're minting money. So at a certain point, why

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Speaker 4: are they not the havens?

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Speaker 6: You know, I believe I believe they still are. You know,

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Speaker 6: we do like those big motes that are ultimately quite defendable.

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Speaker 6: And if you're looking at the return that you get

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Speaker 6: from cash, and you got these companies that can generate

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Speaker 6: the cash and actually return it back however they decide

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Speaker 6: it's an advantage.

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Speaker 3: So evaluation key thing.

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Speaker 1: I get what you're saying, but in this earning season

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Speaker 1: we're proving it once again.

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Speaker 3: Then do you less.

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Speaker 1: Diversify and do you shift from index to more active management?

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Speaker 6: You know, I think that active managers are going to

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Speaker 6: have their day in the sun. It's been a while.

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Speaker 3: I want to quote you on that.

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Speaker 1: Robert Armstrong was brilliant in the ft yesterday. Looking at

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Speaker 1: the recent track record of active management, and you're saying

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Speaker 1: this is the time for active managers.

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Speaker 6: Correctly, it matters, and these duration discussions that we're talking about,

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Speaker 6: rather than just nearly willy going into it based on

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Speaker 6: kind of what an overall market capitalization is allowing you

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Speaker 6: to do, becomes important.

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Speaker 3: To my mind.

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Speaker 1: It's going to be interesting. Marvin Low, thank you so much, greatly, greatly.

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Speaker 1: I appreciate it. I love the phrase keeping your powder dry.

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Speaker 1: Assistance here. Editor in chief cbe emails in from London

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Speaker 1: and he says, keep your powder dry, Tom, come on

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Speaker 1: know your Cromwell English Civil War sixteen forty two, Oliver Cromwell,

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Speaker 1: keep your powder dry, your English history for this morning

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Speaker 1: to do. The other in chief said I have to

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Speaker 1: do that. You know, when British history comes into what we're.

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Speaker 4: Talking about, you have to talk Oliver Cromwell, gunpowder, Well's

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Speaker 4: the other Civil War. All I can say is your

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Speaker 4: nailing the keeping your powder dry. How's the triple evertail cash,

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Speaker 4: triple levers dot cash is.

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Speaker 1: Doing fine here, But this is really important and Lisa,

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Speaker 1: this goes to the technical construction of the market. Now

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Speaker 1: we've got to pull back a price up yield down,

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Speaker 1: but on a technical basis, there's like zero veracity to it.

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Speaker 1: We need a lot of constructive work here to begin

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Speaker 1: to demonstrate lower yields.

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Speaker 4: On a technical basis, it's still a ping pong. I mean, basically,

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Speaker 4: what you're seeing the redow every day is another ping

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Speaker 4: pong and you're not sure where it's going to bounce

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Speaker 4: and if it's going to hit a weird corner on

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Speaker 4: the ping pong table. And that's sort of where we are,

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Speaker 4: which goes to Marvin's point. We are sort of getting

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Speaker 4: unanchored in terms of where that yield is, whether it

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Speaker 4: is fundamental or whether to your point, Katie, it's something

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Speaker 4: about the refinancing.

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Speaker 3: People disagree with the ECB media coming up.

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Speaker 1: I guess quickly to Marvin Lowe, here is the ECB unanchored.

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Speaker 6: No, and it's because their transmission mechanism is clearer than

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Speaker 6: what we're dealing with here. We're seeing these higher yields

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Speaker 6: make their way into their economy right now. In terms

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Speaker 6: of Powell said it last week, based on the evidence,

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Speaker 6: we might not be restrictive, even though they've been saying

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Speaker 6: that they're restricted for the well they're gettings are restricted

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Speaker 6: for the last three to six months.

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Speaker 3: Marvin, thank you so much.

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Speaker 1: Gregory Vllier of AGF Investments Rights every morning, he says

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Speaker 1: geopolitics could be quote the trickiest issue in next year

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Speaker 1: twenty twenty fours. Public opinion, especially among young voters, seems

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Speaker 1: to be shifting towards isolationism. The idea of spending another

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Speaker 1: one hundred billion in Ukraine and Israel, it's increasingly unpopular. Nevertheless,

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Speaker 1: Biden has a police pical opportunity to become an effective

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Speaker 1: wartime president. This with decent support in Congress, that from

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Speaker 1: Greg Valier and Lisa. This is something I've brought up.

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Speaker 1: You've heard me like a broken record talk about America's

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Speaker 1: history of isolationism and is now a demographic isolationism.

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Speaker 4: And how much is that going to really play out,

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Speaker 4: especially into the next contours of two front conflict. Right

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Speaker 4: it's both in Israel and Ukraine, and Greg Valier are

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Speaker 4: joining us right now. I want to start there is

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Speaker 4: there the political support to support Israel in addition to

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Speaker 4: Ukraine going forward through not just the next month, not

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Speaker 4: just the next two months, but six months to a year.

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Speaker 7: Well that's the key question, isn't it. And I do

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Speaker 7: since over the last few weeks a waning of support.

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Speaker 7: I think that Biden has enough backing in the Senate.

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Speaker 7: I think he's got Mitch McConnell and Lindsey Graham and

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Speaker 7: many others who are very hawkish. But I say young

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Speaker 7: people are not in enthusiastic. A lot of Americans don't

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Speaker 7: want to spend one hundred billion dollars more so it's soft.

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Speaker 7: But I still think that Biden has enough support to

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Speaker 7: get an aid package, probably not until the middle of

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Speaker 7: the winter.

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Speaker 4: Craig, what do you make of the fact that you're

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Speaker 4: essentially getting a Democratic party that doesn't seem to back

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Speaker 4: Israel and is actually moving away from it, and a

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Speaker 4: president that's trying to lead the charge in that effect.

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Speaker 7: Well, it's quite a dichotomy. It's really almost shocking to

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Speaker 7: see the Democrats, the party that supported Israel so aggressively

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Speaker 7: for decades and decades, now looking a little bit softer.

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Speaker 7: I do think though, that we will get a deal done.

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Speaker 7: My issue is the timing. I think we're still many

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Speaker 7: weeks away from anything new for Ukraine, Israel, Taiwan, US

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Speaker 7: border with Mexico. That's still a ways off in terms

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Speaker 7: of getting it enacted.

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Speaker 5: Well, Greg, walk us through the ramifications of that. If

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Speaker 5: we don't get an aid package approved until mid December,

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Speaker 5: as you outlined, what would that mean for this war.

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Speaker 7: I think it sends a very bad signal to our allies,

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Speaker 7: at the least ambiguous, but I would argue it sends

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Speaker 7: a signal that the US is losing a bit of

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Speaker 7: its resolved. You know, we all recall in the last

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Speaker 7: year a year and a half that was the big

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Speaker 7: issue that we would lose our resolve on Ukraine. If

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Speaker 7: we lose our resolve on Ukraine and Israel, that to

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Speaker 7: me sends a really negative signal.

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Speaker 5: And let's tie this into what we're seeing play out

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Speaker 5: in the House right now and the efforts to elect

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Speaker 5: a speaker there because a week two weeks ago, I

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Speaker 5: would have asked if the Israel Hamas war would have

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Speaker 5: put more urgency behind this process. But that doesn't seem

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Speaker 5: to necessarily have materialized, Greg.

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Speaker 7: No, it doesn't. I think this deadline of November seventeenth

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Speaker 7: is going to come and go. I can't see them

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Speaker 7: getting a budget done by the seventeenth. So the new

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Speaker 7: speaker if we get one. Because nobody's ever heard of

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Speaker 7: this guy, but he has a pretty good reputation. He

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Speaker 7: also is a denier that Biden was elected president. That

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Speaker 7: is not my cup of tea, but he has denied

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Speaker 7: frequently that this is a fake election result. He's going

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Speaker 7: to have to answer for that. But I think we're

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Speaker 7: going to go well past the seventeenth of November to

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Speaker 7: get a deal done.

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Speaker 4: How much? Greg? Is former President Trump driving the bus here?

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Speaker 4: We heard from him this morning congratulating all of the

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Speaker 4: congressman and saying that Mike Johnson is the strong suggestion

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Speaker 4: from him.

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Speaker 7: Well, it looks like Trump has veto power, doesn't it.

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Speaker 7: The guy from Minnesota lasted for like eight hours before Trump,

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Speaker 7: and then Trump boasted that I killed the nomination. So

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Speaker 7: Trump is taking a very overt role in the House,

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Speaker 7: and I've got to think there are a lot of

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Speaker 7: House members who resent it.

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Speaker 4: How much is there still discussion about some sort of

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Speaker 4: bipartisan answer. We heard that for a hot second, and

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Speaker 4: then it was dropped because it was politically not viable

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Speaker 4: on either side.

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Speaker 7: I wouldn't put the chances at much more than twenty percent.

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Speaker 7: If that, I think it's unlikely that we could get it.

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Speaker 7: If this thing totally breaks down and we get into

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Speaker 7: the winter without anything, well then all bets are off,

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Speaker 7: and I think Hakeem Jeffries might have to intervene, but

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Speaker 7: it's not coming yet.

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Speaker 5: And Greg, this drama, this disarray that we're seeing in

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Speaker 5: the House among the Republicans. Have we seen the Democrats

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Speaker 5: try to capitalize off of that?

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Speaker 7: Not as much as I would have expected. I think

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Speaker 7: they're sitting back. What's the old saying, if your opponent

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Speaker 7: is self destructing, don't get in the way. So I

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Speaker 7: think the Democrats will stay pretty muted, but at some

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Speaker 7: point they may have to be called to enter this fight.

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Speaker 1: Riik Viliah, I want to go back to a comment

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Speaker 1: you said, because I really think we need to paint

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Speaker 1: this picture the New York Times reporting Mark Santorio of

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Speaker 1: the war east of Kerson. This is done by the

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Speaker 1: Black Sea folks. This is east of Odessa, east of Romania,

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Speaker 1: and the Ukrainian forces are surprising by moving east along

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Speaker 1: the shores of the Black Sea again east of Kirsan.

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Speaker 1: What do they need from us that's going to wait

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Speaker 1: for the winter financing by America? Do they literally run

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Speaker 1: out of artillery, run out of ammunition?

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Speaker 7: Well, timing is everything, Tom, and I think that they've

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Speaker 7: only got another few weeks before it's the mud season,

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Speaker 7: and we have four months of mud and ice, and

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Speaker 7: you know, basically a stalemate. They will get more arms,

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Speaker 7: I think from Western Europe, but I again looking at Washington,

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Speaker 7: I think it's going to come later rather than sooner.

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Speaker 4: All wars have always been marked by propaganda efforts. We've

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Speaker 4: always seen that through history. It's something very notable. This

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Speaker 4: time feels different, though, whether it's Ukraine or whether it's Israel.

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Speaker 4: And some of the images that are coming out in

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Speaker 4: social media, some of the battles that are coming out

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Speaker 4: in social media, how do you view this information war

436
00:21:56,119 --> 00:21:59,840
Speaker 4: as having a materially different nature than previous ones.

437
00:22:00,840 --> 00:22:02,840
Speaker 7: Well, the first casualty of war is we all know

438
00:22:03,000 --> 00:22:05,480
Speaker 7: is the truth. And I think it's going to continue

439
00:22:05,480 --> 00:22:10,240
Speaker 7: to be very difficult to ascertain who's winning who's losing.

440
00:22:11,080 --> 00:22:12,920
Speaker 7: I don't think that's going to change.

441
00:22:13,600 --> 00:22:15,480
Speaker 3: Greg Villiers, thank you so much.

442
00:22:15,520 --> 00:22:19,879
Speaker 1: With AGF investments, always an important morning note.

443
00:22:19,880 --> 00:22:31,320
Speaker 3: Pier, we get rebrief here. He's been on the show

444
00:22:31,359 --> 00:22:31,960
Speaker 3: way too much.

445
00:22:32,040 --> 00:22:34,439
Speaker 1: It's a it's a folks part of our team, but

446
00:22:34,560 --> 00:22:37,400
Speaker 1: actually huge value at Stephen Rashuda joins us down chief

447
00:22:37,520 --> 00:22:42,320
Speaker 1: US economist in Missoo's securities. We all get the consumer boom.

448
00:22:42,520 --> 00:22:45,040
Speaker 1: We all get that we were wrong. We're in the

449
00:22:45,119 --> 00:22:45,840
Speaker 1: vicinity of.

450
00:22:45,800 --> 00:22:48,960
Speaker 3: Five percent Q three GDP okay.

451
00:22:48,640 --> 00:22:51,199
Speaker 1: Great, but I got an I, I got a G

452
00:22:51,880 --> 00:22:52,960
Speaker 1: and I got an NX.

453
00:22:53,000 --> 00:22:55,040
Speaker 3: On the back end. Are they going to help out

454
00:22:55,040 --> 00:22:56,040
Speaker 3: the booming consumer?

455
00:22:56,600 --> 00:22:59,200
Speaker 8: That's the real question, you know. I think you could

456
00:22:59,200 --> 00:23:01,760
Speaker 8: look maybe for a little bit from trade. The real

457
00:23:01,880 --> 00:23:04,600
Speaker 8: key question is the government component, because to be honest

458
00:23:04,600 --> 00:23:07,640
Speaker 8: with you, we don't have any good priori data when

459
00:23:07,680 --> 00:23:10,000
Speaker 8: it comes to government spending. We do have the monthly

460
00:23:10,000 --> 00:23:12,399
Speaker 8: Treasury statement of receipts in outlays and we can look

461
00:23:12,440 --> 00:23:15,480
Speaker 8: at that, but those don't translate well into the GDP accounts,

462
00:23:15,600 --> 00:23:18,840
Speaker 8: they don't translate as clearly as other components do. So

463
00:23:19,000 --> 00:23:20,840
Speaker 8: we're looking at most of the other components and saying

464
00:23:20,840 --> 00:23:22,879
Speaker 8: nothing else is contributing. So you down to maybe a

465
00:23:22,920 --> 00:23:25,040
Speaker 8: little from trade and how much we get from government.

466
00:23:25,119 --> 00:23:25,600
Speaker 3: Is there a.

467
00:23:25,520 --> 00:23:31,480
Speaker 1: Separation in the eye of big business, ginormous business, successful, profitable,

468
00:23:31,600 --> 00:23:35,960
Speaker 1: Microsoft like business investment and everybody else flat on their back.

469
00:23:36,320 --> 00:23:38,840
Speaker 8: Well, there clearly is. And when you look at the

470
00:23:39,080 --> 00:23:42,680
Speaker 8: shipments of non defense, non aircraft capital goods, which is

471
00:23:42,720 --> 00:23:46,040
Speaker 8: the key driver of the equipment investment components that you're

472
00:23:46,080 --> 00:23:49,360
Speaker 8: looking at, they're really showing you that on a real basis,

473
00:23:49,440 --> 00:23:52,399
Speaker 8: we're doing nothing in terms on average in terms of

474
00:23:52,400 --> 00:23:54,840
Speaker 8: investing in this economy. But in an environment where you

475
00:23:54,920 --> 00:23:58,520
Speaker 8: still have sort of an excess supply globally of tradable goods,

476
00:23:58,520 --> 00:24:00,280
Speaker 8: it's not surprising that we're seeing that.

477
00:24:00,680 --> 00:24:02,000
Speaker 5: And I want to talk a little bit about a

478
00:24:02,040 --> 00:24:04,240
Speaker 5: story that ran on the terminal yesterday that if you

479
00:24:04,280 --> 00:24:07,000
Speaker 5: take a look at the deficit. The US government ran

480
00:24:07,080 --> 00:24:11,760
Speaker 5: a two trillion dollar deficit in the fiscal year through September,

481
00:24:11,800 --> 00:24:14,160
Speaker 5: and then you think about what's happening in the bond market,

482
00:24:14,160 --> 00:24:17,320
Speaker 5: you think about a ten year at five percent. Does

483
00:24:17,320 --> 00:24:19,399
Speaker 5: that level make more sense when you think about the

484
00:24:19,440 --> 00:24:20,560
Speaker 5: deficits that we're running.

485
00:24:20,640 --> 00:24:22,480
Speaker 8: Well, it certainly makes more sense when you think about

486
00:24:22,480 --> 00:24:24,479
Speaker 8: the deficits worrying, but it also makes more sense when

487
00:24:24,520 --> 00:24:27,640
Speaker 8: you ask yourself the question what level of inflation does this.

488
00:24:27,520 --> 00:24:28,520
Speaker 3: Federal Reserve want?

489
00:24:29,000 --> 00:24:31,560
Speaker 8: You know, they seem to give lip service to the

490
00:24:31,560 --> 00:24:34,080
Speaker 8: two percent numbers, but they seem to also be paying

491
00:24:34,080 --> 00:24:36,840
Speaker 8: a lot of attention to the employment aspects. So they've

492
00:24:36,920 --> 00:24:39,679
Speaker 8: kind of shifted the dual mandate. What used to be

493
00:24:39,720 --> 00:24:43,240
Speaker 8: inflation first, then employment comes along as a result. Now

494
00:24:43,240 --> 00:24:45,480
Speaker 8: it's almost like, well, we want to get employment first

495
00:24:45,520 --> 00:24:47,919
Speaker 8: and see what happens with inflation later, and you know,

496
00:24:48,000 --> 00:24:50,520
Speaker 8: maybe we'll tolerate three. So the upward movement in the

497
00:24:50,560 --> 00:24:53,199
Speaker 8: tenure note is reflecting a new fair value, which I

498
00:24:53,200 --> 00:24:55,240
Speaker 8: don't think markets have fully discounted yet.

499
00:24:55,400 --> 00:24:57,440
Speaker 5: So does that tell you that they still see that

500
00:24:58,200 --> 00:25:01,600
Speaker 5: link between the unemployment rate and what's happening in inflation

501
00:25:01,720 --> 00:25:04,280
Speaker 5: that to get inflation back to two percent you do

502
00:25:04,359 --> 00:25:06,280
Speaker 5: need to get unemployment of I.

503
00:25:06,200 --> 00:25:09,359
Speaker 8: Think most investors see that. Unfortunately, I don't think this

504
00:25:09,400 --> 00:25:11,399
Speaker 8: Federal Reserve does. And if you were at the New

505
00:25:11,480 --> 00:25:14,719
Speaker 8: York Economics Club lunch the other day with Jerome Powell.

506
00:25:14,960 --> 00:25:17,320
Speaker 8: You really got a sense. You really got a sense

507
00:25:17,320 --> 00:25:19,880
Speaker 8: that these people are he in particular as well, are

508
00:25:19,920 --> 00:25:22,960
Speaker 8: looking at the things like the jilt S data, which,

509
00:25:23,000 --> 00:25:24,920
Speaker 8: to be honest with you, there isn't that much history

510
00:25:25,000 --> 00:25:27,399
Speaker 8: behind the jailt stata number one and number two. The

511
00:25:27,480 --> 00:25:30,400
Speaker 8: history we have is only available for what we call

512
00:25:30,480 --> 00:25:33,679
Speaker 8: credit recessions, recessions that were driven by a credit crunch.

513
00:25:34,160 --> 00:25:36,199
Speaker 8: This is not a recession that would be driven by

514
00:25:36,200 --> 00:25:40,119
Speaker 8: a credit crunch. This is an inflation monetary policy, and

515
00:25:40,160 --> 00:25:43,240
Speaker 8: that's a different story, and therefore the reaction it function

516
00:25:43,359 --> 00:25:43,959
Speaker 8: is very different.

517
00:25:44,000 --> 00:25:47,080
Speaker 3: Did you feed David Weston's questions? They were so vicious

518
00:25:47,119 --> 00:25:49,199
Speaker 3: and so mean spirit. I'm like, we shootos given him

519
00:25:49,200 --> 00:25:49,960
Speaker 3: those questions.

520
00:25:50,680 --> 00:25:52,560
Speaker 8: I thought he could have gotten even harder if he did.

521
00:25:52,760 --> 00:25:55,200
Speaker 1: Yeah, well, you know, there'd be like a pharaoh was there.

522
00:25:55,240 --> 00:25:57,639
Speaker 1: Can you imagine John Farrow doing the Economic Club in

523
00:25:57,640 --> 00:25:58,000
Speaker 1: New York.

524
00:25:58,119 --> 00:26:00,080
Speaker 5: It would have been good television.

525
00:26:00,440 --> 00:26:05,080
Speaker 1: That would be good entertainment, it'd be sport. Powell, I

526
00:26:05,080 --> 00:26:07,359
Speaker 1: don't think it was game changing. I think he's just

527
00:26:07,480 --> 00:26:10,080
Speaker 1: trying to get from event to event. Waiting for the

528
00:26:10,160 --> 00:26:10,720
Speaker 1: data Kating.

529
00:26:10,960 --> 00:26:13,560
Speaker 5: I will say that the thing that stuck with me

530
00:26:13,720 --> 00:26:17,360
Speaker 5: from that appearance was the focus on financial conditions. I mean,

531
00:26:17,359 --> 00:26:20,639
Speaker 5: I think he said financial conditions at least fifteen times.

532
00:26:20,720 --> 00:26:23,119
Speaker 5: When you look at financial conditions, you think about the

533
00:26:23,200 --> 00:26:26,879
Speaker 5: lag of monetary policy. Have we finally started to see that?

534
00:26:27,280 --> 00:26:29,919
Speaker 8: Well, see, I don't follow the financial conditions in disease

535
00:26:30,000 --> 00:26:32,680
Speaker 8: that are on the street, particularly because they're reflecting long

536
00:26:32,760 --> 00:26:34,680
Speaker 8: term interest rates, which, to be honestly, should be driven

537
00:26:34,720 --> 00:26:38,720
Speaker 8: by inflation, not by real rates. That's number one. Number two,

538
00:26:38,880 --> 00:26:41,440
Speaker 8: I don't look at it because they're looking at currency,

539
00:26:41,760 --> 00:26:44,320
Speaker 8: and the currency is really not part of the financial conditions.

540
00:26:44,320 --> 00:26:45,119
Speaker 3: In the marketplace.

541
00:26:45,480 --> 00:26:48,040
Speaker 8: I look at the availability of companies to bring paper

542
00:26:48,040 --> 00:26:50,480
Speaker 8: to market and get that paper sold, and I look

543
00:26:50,480 --> 00:26:53,119
Speaker 8: at the Treasury's ability to bring a ridiculous amount of

544
00:26:53,119 --> 00:26:55,920
Speaker 8: paper to market and get it sold, and all these

545
00:26:55,960 --> 00:26:58,840
Speaker 8: markets are functioning beautifully. So I sit there and say,

546
00:26:58,840 --> 00:27:01,600
Speaker 8: you know what there really is and illiquidity in the system.

547
00:27:01,760 --> 00:27:05,040
Speaker 8: Financial conditions aren't tightening in the sense that really matters

548
00:27:05,080 --> 00:27:07,400
Speaker 8: to the economy. It's tightening in the sense that we're

549
00:27:07,440 --> 00:27:10,679
Speaker 8: trying to measure what would cause a credit crunch, But

550
00:27:10,720 --> 00:27:13,679
Speaker 8: there is no preconditions for a credit crunch. There's no

551
00:27:13,720 --> 00:27:17,760
Speaker 8: asset liability mismatch, and there's no valuation problem to be triggered,

552
00:27:17,880 --> 00:27:21,160
Speaker 8: and therefore these things are looking for the wrong indicator.

553
00:27:21,320 --> 00:27:23,960
Speaker 3: Halloween, I'm going as Gamma this year. That's my Greek

554
00:27:24,040 --> 00:27:27,359
Speaker 3: letter this year. But after Halloween, we've got a FED

555
00:27:27,400 --> 00:27:28,120
Speaker 3: meeting and.

556
00:27:28,040 --> 00:27:31,080
Speaker 1: We have a jobs report, the first jobs report questioned

557
00:27:31,080 --> 00:27:34,320
Speaker 1: for October folks with mister Rashudo of Bazoo.

558
00:27:35,040 --> 00:27:38,359
Speaker 3: Is it finally going to slow down? I don't think so.

559
00:27:38,720 --> 00:27:41,320
Speaker 8: No, because you're in an environment still where the initial

560
00:27:41,359 --> 00:27:43,520
Speaker 8: n employment claims are telling you that we still have

561
00:27:43,560 --> 00:27:45,920
Speaker 8: a very very tight labor market to continuing claims numbers

562
00:27:45,920 --> 00:27:47,520
Speaker 8: are telling you we still have a very very tight

563
00:27:47,600 --> 00:27:49,960
Speaker 8: labor market. So the people that are getting laid off

564
00:27:49,960 --> 00:27:52,560
Speaker 8: are getting hired fairly quickly. So I don't think it

565
00:27:52,560 --> 00:27:54,399
Speaker 8: will show up. And will there be some potential for

566
00:27:54,400 --> 00:27:56,240
Speaker 8: a little bit of weakness in the payroll employment number

567
00:27:56,240 --> 00:27:58,200
Speaker 8: in the headline number month over a month, a little

568
00:27:58,200 --> 00:28:00,560
Speaker 8: bit of a change, sure, but we're not saying substance

569
00:28:00,600 --> 00:28:03,119
Speaker 8: of change in the underlying dynamics of the labor mark.

570
00:28:03,040 --> 00:28:03,960
Speaker 3: Stee thank you so much.

571
00:28:04,040 --> 00:28:06,280
Speaker 1: We've took it for the frequent visits as well, really

572
00:28:06,320 --> 00:28:13,000
Speaker 1: really valuable. Stephen Rashudo with this with Missoo's securities today.

573
00:28:14,400 --> 00:28:15,360
Speaker 3: This is right.

574
00:28:15,160 --> 00:28:17,680
Speaker 1: Now for Global Wall Street, the Interview of the day.

575
00:28:17,760 --> 00:28:22,200
Speaker 1: Everybody's fundamental based. Katie Kaminski is weaned on the technician

576
00:28:22,400 --> 00:28:26,720
Speaker 1: technical analysis of trend, going back to the giant Wells

577
00:28:26,760 --> 00:28:28,440
Speaker 1: Wilder of nineteen seventy eight.

578
00:28:28,480 --> 00:28:29,879
Speaker 3: She's with alpha simplex.

579
00:28:30,160 --> 00:28:34,200
Speaker 1: Katie an opening question, what's a trend right now in equities?

580
00:28:35,359 --> 00:28:37,879
Speaker 9: So equities right now, we finally see some of our

581
00:28:38,000 --> 00:28:41,960
Speaker 9: signals tick short net, which kind of is surprising to me.

582
00:28:42,440 --> 00:28:44,920
Speaker 9: And second of all, the biggest trade and biggest thing

583
00:28:44,960 --> 00:28:48,160
Speaker 9: to fall in. This goes with what Lisa's saying divergence.

584
00:28:48,600 --> 00:28:52,360
Speaker 9: We've seen long signals in big tech megacap and we're

585
00:28:52,360 --> 00:28:55,640
Speaker 9: seeing short signals in the small cap. That tells the

586
00:28:55,680 --> 00:29:00,720
Speaker 9: consumer the average stock is in trouble. Your big high

587
00:29:00,800 --> 00:29:04,280
Speaker 9: names they are doing well, but your average stock is

588
00:29:04,320 --> 00:29:05,719
Speaker 9: worried about higher rates.

589
00:29:06,080 --> 00:29:09,840
Speaker 1: Katie Kimisky and I studied Tishushande on beta. I'm not

590
00:29:09,880 --> 00:29:11,719
Speaker 1: a big believer in beta. For those of you from

591
00:29:11,760 --> 00:29:15,400
Speaker 1: Global Wall Street, Katie in this world, do you have

592
00:29:15,480 --> 00:29:19,040
Speaker 1: to do beta as a sector study or index study

593
00:29:19,480 --> 00:29:22,360
Speaker 1: or can you actually have the conceit and confidence to

594
00:29:22,440 --> 00:29:25,040
Speaker 1: do beta on individual securities.

595
00:29:26,280 --> 00:29:29,160
Speaker 9: So we tend to think about looking at sectors because

596
00:29:29,160 --> 00:29:31,239
Speaker 9: we're trading more in the futures markets, but we do

597
00:29:31,440 --> 00:29:34,360
Speaker 9: also look at some of cash equity strategies as well,

598
00:29:34,640 --> 00:29:37,680
Speaker 9: and we're definitely seeing tilts right now. You're seeing people

599
00:29:37,760 --> 00:29:41,160
Speaker 9: talking a lot more about tilts to defensive tilts towards

600
00:29:41,240 --> 00:29:45,560
Speaker 9: oil companies. So right now, I think this divergence trade

601
00:29:45,640 --> 00:29:48,880
Speaker 9: is about finding certain areas of the market that are

602
00:29:48,880 --> 00:29:52,280
Speaker 9: going to do better or worse in a higher rate environment.

603
00:29:52,880 --> 00:29:56,240
Speaker 9: But it is tricky because it's uncharted water. We haven't

604
00:29:56,320 --> 00:29:59,040
Speaker 9: really figured out what's going to happen next. That's pretty

605
00:29:59,080 --> 00:30:01,800
Speaker 9: much the theme worse thinking and seeing is that we

606
00:30:01,920 --> 00:30:03,160
Speaker 9: got to the higher rates.

607
00:30:03,600 --> 00:30:04,320
Speaker 3: What's next?

608
00:30:04,640 --> 00:30:07,320
Speaker 9: Which stocks are going to succeed, which are going to

609
00:30:07,360 --> 00:30:10,240
Speaker 9: be able to refinance, which are going to waivers through

610
00:30:10,480 --> 00:30:11,480
Speaker 9: this new environment?

611
00:30:11,640 --> 00:30:13,320
Speaker 4: Katie, I was so excited to speak with you today

612
00:30:13,360 --> 00:30:15,800
Speaker 4: because you follow trends and I'm looking for a trend

613
00:30:15,920 --> 00:30:17,600
Speaker 4: in the ten year yield and yet it's up. But

614
00:30:17,640 --> 00:30:19,560
Speaker 4: it's also you know, we've we're talking about a ping

615
00:30:19,600 --> 00:30:23,880
Speaker 4: pong ball. Pick your metaphor. How can you find a

616
00:30:23,960 --> 00:30:25,640
Speaker 4: trend in a market that's unanchored?

617
00:30:26,960 --> 00:30:30,560
Speaker 9: Good question. I've been asking this myself as well. Because

618
00:30:30,920 --> 00:30:35,280
Speaker 9: we have seen consistent short trends for months, I have

619
00:30:35,440 --> 00:30:39,840
Speaker 9: still yet to see a steepener in the relative positioning

620
00:30:39,960 --> 00:30:42,840
Speaker 9: and trend signals. That's something that I've been kind of

621
00:30:42,880 --> 00:30:46,040
Speaker 9: looking for to understand when we might have an inflection point.

622
00:30:46,400 --> 00:30:48,680
Speaker 9: There was a little bit more pressure on the long

623
00:30:48,800 --> 00:30:51,600
Speaker 9: end this month, which is something that kind of brought

624
00:30:51,600 --> 00:30:54,440
Speaker 9: my attention to the fact that we might be eventually

625
00:30:54,480 --> 00:30:57,720
Speaker 9: at a buying point. It does feel right now in

626
00:30:57,800 --> 00:31:00,520
Speaker 9: terms of how we're seeing the market's trade, that we're

627
00:31:00,560 --> 00:31:04,560
Speaker 9: at a point where there's some interest to buy because

628
00:31:04,640 --> 00:31:07,760
Speaker 9: we've come so far in this disinversion in the yield curve,

629
00:31:08,520 --> 00:31:10,400
Speaker 9: and so I think the next step is going to

630
00:31:10,440 --> 00:31:13,600
Speaker 9: be what's the next phase of this bond trade. Is

631
00:31:13,640 --> 00:31:16,000
Speaker 9: it wait and see and see if we see something

632
00:31:16,000 --> 00:31:17,680
Speaker 9: that could push us to a new shape of the

633
00:31:17,760 --> 00:31:20,440
Speaker 9: yield curve, or do we go to a state where

634
00:31:20,440 --> 00:31:23,880
Speaker 9: we have worse financial conditions and we have to actually

635
00:31:23,960 --> 00:31:27,840
Speaker 9: tighten stop tightening and thus see you know, the shorter

636
00:31:27,960 --> 00:31:29,840
Speaker 9: end has to release some of the pressure.

637
00:31:30,120 --> 00:31:31,280
Speaker 4: Are you still short bonds?

638
00:31:32,280 --> 00:31:32,800
Speaker 5: Yes?

639
00:31:33,000 --> 00:31:35,680
Speaker 4: Okay, So are you basically seeing this as a sign

640
00:31:35,920 --> 00:31:39,280
Speaker 4: that there could still be more yield increases to come,

641
00:31:39,560 --> 00:31:42,840
Speaker 4: even though you are seeing a bid to buy come

642
00:31:42,840 --> 00:31:44,440
Speaker 4: in around the margins.

643
00:31:44,920 --> 00:31:47,960
Speaker 9: Yes, Lisa. And what's amazing to me is that signals

644
00:31:48,000 --> 00:31:50,480
Speaker 9: in the technical space have been short and fixed income

645
00:31:50,560 --> 00:31:55,760
Speaker 9: for two years almost consistently. That hasn't happened in many decades,

646
00:31:56,280 --> 00:31:58,280
Speaker 9: And I think what we need to start to see

647
00:31:58,520 --> 00:32:02,040
Speaker 9: is to see some consolidate and see some actual view

648
00:32:02,120 --> 00:32:04,920
Speaker 9: that that trade might turn around. But so far I

649
00:32:05,000 --> 00:32:07,560
Speaker 9: keep looking for it, and I haven't seen the end

650
00:32:07,560 --> 00:32:10,840
Speaker 9: of this trade yet. So that suggests that we haven't

651
00:32:10,880 --> 00:32:13,200
Speaker 9: seen the bottom of perhaps the long end of the

652
00:32:13,440 --> 00:32:16,280
Speaker 9: bond market as of yet. I think we might see

653
00:32:16,280 --> 00:32:18,400
Speaker 9: it in the next three to six months.

654
00:32:18,120 --> 00:32:20,560
Speaker 5: So maybe yields have more room to climb here. But

655
00:32:20,600 --> 00:32:23,080
Speaker 5: can we talk about the importance of five percent, because

656
00:32:23,080 --> 00:32:25,080
Speaker 5: I think it was very telling that you had the

657
00:32:25,120 --> 00:32:28,640
Speaker 5: ten year treasure yield just kiss five percent earlier this

658
00:32:28,680 --> 00:32:32,560
Speaker 5: week and then immediately drop in the path to higher yields.

659
00:32:32,840 --> 00:32:34,880
Speaker 5: How much of a hurdle will five percent be.

660
00:32:36,400 --> 00:32:40,080
Speaker 9: Well, five percent was a pretty important philosophical boundary for

661
00:32:40,200 --> 00:32:43,840
Speaker 9: many investors, and maybe it also represents a buying point

662
00:32:43,880 --> 00:32:47,360
Speaker 9: if you think about it from the investor perspective. As

663
00:32:47,440 --> 00:32:49,560
Speaker 9: yields go up, there starts to be more and more

664
00:32:49,560 --> 00:32:52,960
Speaker 9: of a trade off between at what point do you

665
00:32:53,040 --> 00:32:56,040
Speaker 9: not worry about the entry point of that particular investment,

666
00:32:56,080 --> 00:32:58,440
Speaker 9: and you start saying, it's actually pretty good to lock

667
00:32:58,520 --> 00:33:01,720
Speaker 9: in five percent over these horizons, and there is some

668
00:33:01,840 --> 00:33:05,560
Speaker 9: risk that we might have deteriorating financial conditions, so purchasing

669
00:33:05,600 --> 00:33:08,880
Speaker 9: those bonds might actually seem like a good idea. And

670
00:33:08,920 --> 00:33:11,560
Speaker 9: that's what I'm hearing from investors as well. We're starting

671
00:33:11,560 --> 00:33:14,760
Speaker 9: to see more discussions about the trade off for the

672
00:33:14,920 --> 00:33:18,880
Speaker 9: risk of investing in risky assets versus the return of

673
00:33:18,960 --> 00:33:23,000
Speaker 9: fixed income. That has become so much more more interesting

674
00:33:23,040 --> 00:33:24,640
Speaker 9: than it was a few years ago.

675
00:33:25,120 --> 00:33:26,880
Speaker 5: Well, we're talking about the level here. Let's talk about

676
00:33:26,960 --> 00:33:28,600
Speaker 5: rate of change a little bit, because the rate of

677
00:33:28,680 --> 00:33:31,560
Speaker 5: change has been shocking over the past few months. You

678
00:33:31,600 --> 00:33:34,520
Speaker 5: look over through the next few months, are things going

679
00:33:34,560 --> 00:33:35,200
Speaker 5: to calm down?

680
00:33:36,560 --> 00:33:39,800
Speaker 9: Well, I think these things come in spurts and in runs,

681
00:33:39,920 --> 00:33:42,400
Speaker 9: and I think we've gone through a pretty strong run

682
00:33:42,440 --> 00:33:44,520
Speaker 9: in terms of trends. And one thing that we note

683
00:33:44,560 --> 00:33:47,440
Speaker 9: in the trend falling space is that fixed income is

684
00:33:47,520 --> 00:33:51,239
Speaker 9: not linear. It tends to accelerate very quickly when it

685
00:33:51,280 --> 00:33:53,720
Speaker 9: wants to, and then it can be very smooth for

686
00:33:53,800 --> 00:33:56,520
Speaker 9: some period of time. It feels like we've gone through

687
00:33:56,560 --> 00:33:59,120
Speaker 9: one of those phases and now there's going to be

688
00:33:59,360 --> 00:34:03,360
Speaker 9: some consolid until we see something that has the ability

689
00:34:03,440 --> 00:34:07,880
Speaker 9: to move that curve again. So far, we need to

690
00:34:07,920 --> 00:34:10,799
Speaker 9: have something a little bit more extreme, perhaps some deteriorating

691
00:34:10,840 --> 00:34:15,200
Speaker 9: financial conditions or just an excess supply of treasuries that

692
00:34:15,320 --> 00:34:18,600
Speaker 9: just has difficulty, you know, kind of consolidating.

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00:34:19,000 --> 00:34:22,840
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694
00:34:23,000 --> 00:34:27,200
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695
00:34:27,440 --> 00:34:30,960
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696
00:34:31,080 --> 00:34:33,400
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00:34:33,120 --> 00:34:35,080
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00:34:35,520 --> 00:34:39,160
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00:34:41,160 --> 00:34:45,400
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