Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Speaker 1: Eastern on Apple Coarclay, and Android Auto with the Bloomberg
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: So let's get to the news out of Canada. Prime
Speaker 2: Minister Justin Trudeau resigning as Liberal Party leader and Prime Minister,
Speaker 2: suspending the Canadian Parliament until March twenty fourth. Trudeau said
Speaker 2: in a press conference and speech in Ottawa that parliament
Speaker 2: needs a reset and needs to calm down. Want to
Speaker 2: just get the latest with Laura Kane, Ottawa Bureau Chief,
Speaker 2: joining us. Hey, Laura, what was unexpected? What did you
Speaker 2: learn from this?
Speaker 3: Well, one thing that was unexpected was his reflection on
Speaker 3: Christian Freeland, his Finance minister, who resigned in mid December
Speaker 3: and really kicked off this crisis for his leadership. You know,
Speaker 3: calls had been growing for him to resign leading up
Speaker 3: to that point, but it was really her issuing that
Speaker 3: scathing resignation letter that accused him of costly political gimmicks
Speaker 3: and failing to keep the fiscal powder dry in advance
Speaker 3: of Trump's presidency that really, you know, led to his
Speaker 3: demise as Liberal leader. And so when he was asked
Speaker 3: to reflect on his side of that story, he said
Speaker 3: that when he called her in to offer her a
Speaker 3: different job than finance minister, he hoped that she would
Speaker 3: take it and believed that she would. He expected that
Speaker 3: she would stay on in cabinet in that position that
Speaker 3: he offered her of managing US relations, and he did
Speaker 3: not anticipate that she would, you resign as Finance minister
Speaker 3: very publicly and trigger this crisis. And so it was
Speaker 3: interesting to hear that. And he also said that he
Speaker 3: had hoped she'd stay on as his deputy prime minister
Speaker 3: as well, which was something we didn't necessarily know before.
Speaker 3: So I did find that surprising. But apart from that,
Speaker 3: it did sort of unfold as we expected. And I'll
Speaker 3: just add that he did confirm that a confidence vote
Speaker 3: on his government would be held in March, when the
Speaker 3: parliament resumes March twenty fourth, and so that would mean
Speaker 3: Canada goes to an election pretty soon after that, potentially
Speaker 3: with an election day in late April or early May.
Speaker 3: That is, assuming that the opposition parties keep their word
Speaker 3: and do as they've told Canadians they would and bring
Speaker 3: down this government.
Speaker 4: All right, Laurn, thank you so much for your reporting.
Speaker 4: Really appreciate that. Lara Kaine, she is Ottawa Bureau Chief.
Speaker 4: Justin Trudeau news today that he'll be stepping down as
Speaker 4: leader of the Liberal Party in Canada.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch the program
Speaker 1: live weekdays at ten am Eastern on Apple Corplay and
Speaker 1: Android Auto with the Bloomberg Business app. You can also
Speaker 1: listen live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 2: Michael Barr of the FED stepped down. I called him
Speaker 2: William Barr when I wrote the news, My bad, Michael Barr.
Speaker 2: Michael Barr stepping down on his FED Vice chair for supervision.
Speaker 2: He's going to hold onto his post in the FED.
Speaker 2: Just stepping down his FED Vice chair for supervision. He's
Speaker 2: going to depart on February twenty eighth, unless a successor
Speaker 2: is confirmed earlier. So guess who's here. Michael McKeith, Bloomberg
Speaker 2: International Economics Policy.
Speaker 5: Correspondents, who does the news for it.
Speaker 2: Was like Michael Barr, Wait, no, it's got to be
Speaker 2: William my bad. Okay, So why is he resigning for
Speaker 2: this specific post.
Speaker 5: You know, this post is relatively new.
Speaker 6: It came in after Dodd Frank, and there have really
Speaker 6: been only well, there's been two people.
Speaker 5: Basically who have had the job in the past.
Speaker 3: And.
Speaker 6: The tradition sort of started in the last administration with
Speaker 6: the vice chair resigning at the time, and now you've
Speaker 6: got Michael Barr following through because basically, you get a
Speaker 6: new administration like this with a big philosophical change, and
Speaker 6: it's going to be a big philosophical change in regulation.
Speaker 6: And so Barr in his in his statement said the
Speaker 6: risk over a dispute over the position would distract the
Speaker 6: FED from its mission. So he's decided to resign as
Speaker 6: Vice chair for Supervision, which has big implications for banks.
Speaker 6: Keep an eye on bank stocks because basically what this
Speaker 6: tells you the FED says it won't make any new
Speaker 6: major bank regulations until a successor is in place, and
Speaker 6: with bar leaving, that probably means that Basil three, the
Speaker 6: Bosle three endgame proposal, is on life support at this point,
Speaker 6: if it even has a breath left. And so that's
Speaker 6: major news for financial firms because the Trump administration would
Speaker 6: be expected to sort of junk that. But the interesting
Speaker 6: thing is he's not resigning as governor, and there are
Speaker 6: no openings on the FED at least not until January
Speaker 6: of twenty twenty six, and so the incoming administration cannot
Speaker 6: name a new person to the job. They could elevate
Speaker 6: one of the current governors to the job.
Speaker 4: Interesting. So again, I'm just looking at the banks, you know,
Speaker 4: over the past year. You know, they're all up kind
Speaker 4: of thirty forty percent, kind of the big banks, JPMorgan,
Speaker 4: Bank of America. So it feels like, you know, I
Speaker 4: guess since the election, people said banks are one of
Speaker 4: the places you have to be, and I guess this
Speaker 4: is just another example of how things are changing.
Speaker 6: Yeah, there's been a feeling that the incoming administration would
Speaker 6: pull back on the Basil three requirements, the additional capital
Speaker 6: that the big banks would have to hold, and so
Speaker 6: this is going to be seen as good news for them,
Speaker 6: and this is just sort of confirmed the idea that
Speaker 6: that's probably what's going to happen.
Speaker 2: So endgame BOSL three endgame is the endgame.
Speaker 6: Yeah, unless this is like the Marvel movie series where
Speaker 6: the the you know, the The Avengers Endgame was followed
Speaker 6: by another dozen sequels.
Speaker 2: Okay, but to be fair, let's get into it. They
Speaker 2: wound up killing off the main characters, right like Captain America,
Speaker 2: iron Man and Black Widow, the new generation that took
Speaker 2: one after.
Speaker 5: It, and now Michael barr it goes with iron Man.
Speaker 2: But the position could still exist. He just won't do it.
Speaker 2: The position a position.
Speaker 6: Theory would have to be filled. The only one I
Speaker 6: can think of on the board right now who might
Speaker 6: take that job would be Mickey Bowman. She's the essentially
Speaker 6: the small bank representative on the community bank representative on
Speaker 6: the FED Board of Governors.
Speaker 5: She's been heavily involved.
Speaker 6: In the regulatory efforts of the FED and has been
Speaker 6: a big opponent of a lot of what we've seen
Speaker 6: in the basle proposals, and so she might be the choice.
Speaker 6: She is a Republican, and people had thought she might
Speaker 6: be a candidate for that job or one of the
Speaker 6: other bank regulation jobs. But at this point, you know,
Speaker 6: she'd be about the only one I could think of
Speaker 6: that would take the job because it's less of monetary
Speaker 6: policy and much more regulation.
Speaker 5: So there's also so that's the Bossle three.
Speaker 4: Now there's also a broader narrative in the marketplace, Michael,
Speaker 4: that Trump administration would be depositive for M and A
Speaker 4: activity just in general, and me from a regulatory perspective
Speaker 4: that nothing else, an easier, lighter touch from the Federal
Speaker 4: Trade Commission in the Department of Justice. What are you
Speaker 4: hearing about that type of narratives? That's something because I'm
Speaker 4: hearing bankers lawyers putting that out there.
Speaker 6: Well, it makes logical sense put it that way, and
Speaker 6: there is some pent up M and A demand out there.
Speaker 6: How much there is in the banking sector, I don't know.
Speaker 6: That's a question for some of the bank analysts that
Speaker 6: you have on because we saw a lot of consolidation
Speaker 6: in the past following the financial crisis. But there are
Speaker 6: always mid sized banks that are looking to get a
Speaker 6: little bit bigger, and so I would imagine in that
Speaker 6: space there is going to be some business for those
Speaker 6: lawyers and lenders. I'm not sure that we'll see a
Speaker 6: big well, we won't see a big impact in the megabanks,
Speaker 6: except as lenders perhaps because they're already at their limit
Speaker 6: for how many deposit customers they can have.
Speaker 5: But it is going to be a new era.
Speaker 2: A new era in terms of the Fed speak. We've
Speaker 2: heard of them last day, three days. Have you taken
Speaker 2: anything away from it? The notes that I read tend
Speaker 2: to think like, oh, maybe we want to just roll
Speaker 2: back on these cuts, maybe we don't want to go
Speaker 2: to aggressively, we're still really worried about inflation, etc. Is
Speaker 2: that your take.
Speaker 6: Yeah, they're basically reaffirming what Jay Pole said in his
Speaker 6: news conference that the FED is close enough to pausing
Speaker 6: that they would consider pausing because the risks are sort
Speaker 6: of even at this point, and they want to move
Speaker 6: slowly and make sure that inflation doesn't come back while
Speaker 6: making sure that unemployment doesn't rise too much. So they're
Speaker 6: all kind of setting the stage at this point for
Speaker 6: a pause in January, and we'll see what the conditions
Speaker 6: are when we get there, because obviously, if you've slapped
Speaker 6: tariffs on right away, there might be an immediate market
Speaker 6: reaction or something like that.
Speaker 5: But right now it looks like a.
Speaker 6: Pause in January, and then we'll see what happens by
Speaker 6: the time they get to March.
Speaker 4: Pretty busy week here with you look at the economic
Speaker 4: data calendar, what are you going to be focusing on it.
Speaker 4: I guess it's kind of Friday with the change in
Speaker 4: non farm payrolls is a big one.
Speaker 5: How are you prioritizing that's going to be the big one.
Speaker 6: It's an interesting situation because on Thursday in Washington you
Speaker 6: have the Jimmy Carter Memorial and that's pushed a lot
Speaker 6: of stuff into Wednesday, like jobless claims will be out Wednesday,
Speaker 6: and also it's moved up the calendar for treasury auctions
Speaker 6: to Tuesday and Wednesday. So at this point it looks
Speaker 6: like by the time you get to Thursday, there will
Speaker 6: have been a sort of data and information void for
Speaker 6: the markets. So it may have a bigger impact than
Speaker 6: it usually does, just because traders always have to trade
Speaker 6: on something, and this will be news in more of
Speaker 6: a vacuum.
Speaker 2: When we take a look at the jobs number real quick,
Speaker 2: does that mean that if we get a strong jobs number,
Speaker 2: does that really wipe out the case for cuts? Like
Speaker 2: is that really going to be the barometer here?
Speaker 6: Well, it will have that impact immediately in the markets.
Speaker 6: Then I think people will take a look at where
Speaker 6: we are. As I say, when we get past I
Speaker 6: mean the next big meeting is January twenty ninth, So
Speaker 6: when we get to that period, we'll have a little
Speaker 6: bit better feel for the economy than we do immediately,
Speaker 6: which is because it's December numbers, but a strong jobs
Speaker 6: report and Bloomberg Economics thinks we're going to get two
Speaker 6: hundred and sixty eight thousand jobs and sixty so they're
Speaker 6: out right on a very long limit and we'll see
Speaker 6: how they do with that. But if we got something
Speaker 6: like that, it would certainly cement a pause for January,
Speaker 6: and then we'll see what Trump policies do to you know,
Speaker 6: the march outlook.
Speaker 2: Hence the thirty year yield at the highest in November
Speaker 2: twenty twenty three.
Speaker 5: Yep.
Speaker 6: Yeah, and you talk to some of the bond analysts
Speaker 6: and they say, we're kind of there now. You would
Speaker 6: need something else to push us above the levels we're
Speaker 6: at for the long end, because it's steepened enough at
Speaker 6: this point. So if anybody could do that, though.
Speaker 4: Yep, it's stop one Trump, right. Michael McKee, thank you
Speaker 4: so much for joinings. Michael McKee covers all the economics here,
Speaker 4: force the markets trading kind of at their intra day high, Seria,
Speaker 4: the S and P five hundreds, up one point two percent,
Speaker 4: the nastacs up one point eight percent. Here the vis
Speaker 4: it's below sixteen. I'll call that after Tom Keen. And
Speaker 4: again we were just talking about the treasure market. Ten
Speaker 4: year treasure is up another couple basis points here four
Speaker 4: point sixty one percent. And why is your WTI crude
Speaker 4: oil over seventy four dollars a hourrow?
Speaker 2: I mean, maybe it's a demand thing. You no, Actually
Speaker 2: a big part of it's going to be a storm
Speaker 2: if it's going to disrupt oil and gas production, so
Speaker 2: that's like a weather impact. But in actuality, many are
Speaker 2: thinking that a President Trump is going to be more
Speaker 2: hawkish when it comes to Iran, and does that actually
Speaker 2: remove some barrels and tightened sanctions because there's been a
Speaker 2: lot of oil exported surreptitiously at the end of the day,
Speaker 2: so thank you. So if that changes, then that could
Speaker 2: actually have a material impact. But it's really hard to
Speaker 2: play the geopolitical risks in this world.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts or watch us live on YouTube.
Speaker 2: Alex deal here alongside Paul swe Need. This the Bloomberg
Speaker 2: Intelligence Radio. We bring you all the top news and business,
Speaker 2: economics and finance through a lens of our Bloomberg Intelligence folks.
Speaker 2: They cover two thousand companies and one hundred and thirty
Speaker 2: industries all around the world. We also tap our great
Speaker 2: experts outside of Bloomberg for their take on the market,
Speaker 2: and we go to one now. Shana Sissel is president
Speaker 2: and CEO of Benriyon Capital Management and she joins us.
Speaker 2: So usually January is like one of the best months
Speaker 2: for inflows, right, like, do we buy the January effect here?
Speaker 7: I don't know if I buy the January effect this year.
Speaker 8: We also normally get a Santa claus rally that we
Speaker 8: didn't get through this year either.
Speaker 7: So I think we have a new administration coming in.
Speaker 8: There's some uncertainty there, but overall positives for the markets.
Speaker 7: Inflation, though remains a headwind.
Speaker 8: The FED is more hawkish than they were, so there's
Speaker 8: there's certainly some things to be concerned about.
Speaker 7: But that doesn't mean I wouldn't put money into the market.
Speaker 8: I'd just be really selective on where I do put
Speaker 8: money in the market.
Speaker 4: So Shanna a Bloomberg News m Live is out with
Speaker 4: a survey with we do with a third party. People
Speaker 4: are still buying this Trump trade. I mean, sixty one
Speaker 4: percent of the responds feel like risk assets are going
Speaker 4: to move higher. Is that what you're still hearing from
Speaker 4: your clients? Is there still that type of trade out there?
Speaker 8: Well, I think it's more of a mindset of the
Speaker 8: last you know, fifteen years.
Speaker 7: If you think about it, I think we.
Speaker 8: Are largely more optimistic because there's an entire generation of
Speaker 8: investors that don't know what it's like to have a
Speaker 8: flat to down to volatile market, and there's an expectation
Speaker 8: that what we've been seeing, which is double digit returns
Speaker 8: on average since the financial crisis bottomed, and that I
Speaker 8: think is kind of coloring the expectations of the average investor.
Speaker 8: I do think that overall, the Trump tated is positive
Speaker 8: for equities, but I do think we need to temper
Speaker 8: our expectations and the fact that you know, twenty percent
Speaker 8: plus returns of the S and P five hundred for
Speaker 8: multiple years is not normal, and there is going to
Speaker 8: be a return to normalcy at some point when that
Speaker 8: is I don't know, but there are certainly reasons to
Speaker 8: think that twenty twenty five could be the year we
Speaker 8: returned to normalcy.
Speaker 7: And god forbid, get eight to ten percent returns on.
Speaker 2: The S and P five hundred, right, it's like normalcy.
Speaker 2: But it's not like you're getting negative return or anything.
Speaker 2: What's interesting is that FED official Lisa Cook said that
Speaker 2: AI and private credit are among financial stability risks. That
Speaker 2: was in a speech earlier this morning. That kind of
Speaker 2: touches your area of expertise, right, the alternative landscape. What
Speaker 2: do you think about that kind of sentence.
Speaker 7: Well, you know AI.
Speaker 8: I think is interesting that that was thrown in there
Speaker 8: because that doesn't necessarily impact the capital markets per se.
Speaker 7: I think it's more the whole you.
Speaker 8: Know, trends around it and all of the FOMO that
Speaker 8: goes into wanting to be involved with the AI trade.
Speaker 8: But it's not necessarily specific to how the structure of
Speaker 8: capital markets work. But private credit is. And I think
Speaker 8: that's an interesting comment. You know, if you think about
Speaker 8: the explosion of private credit, it happened during and after
Speaker 8: the Financial crisis as traditional banks became less able and
Speaker 8: less willing to provide capital to small businesses to lower credit,
Speaker 8: that kind of thing, and there was this need for
Speaker 8: this secondary non bank financial lending market, which is where
Speaker 8: private credit kind of exploded. It's always existed, but that's
Speaker 8: where it really became a much bigger part of overall
Speaker 8: capital market structure. And you know, the same risks that
Speaker 8: existed prior to that, in terms of lower quality lending,
Speaker 8: lending to non traditional types of businesses, things of that nature.
Speaker 8: Those risks still exist, right and AI is part of that.
Speaker 8: Crypto is part of that. And when and when I
Speaker 8: mean AI and crypto, I don't necessarily mean actual crypto
Speaker 8: and AI as an investment, but companies related to that
Speaker 8: ancillary that need capital. And so I do think that
Speaker 8: private credit, because so much money has rushed into it,
Speaker 8: that tends to push folks to make loans and to
Speaker 8: provide capital at a higher risk.
Speaker 7: And so I can see why she would have mentioned
Speaker 7: private credit.
Speaker 4: So CES kicks off in earnest tomorrow out Las Vegas,
Speaker 4: and we heard from Dan E's Woodbush Securities this morning
Speaker 4: that once again AI is going to be front and center.
Speaker 4: From your perspective on Gal Turner's front, do you feel
Speaker 4: like there's a lot more to go with this AI story,
Speaker 4: it feels like it's a long term trend, not a
Speaker 4: short term issue at all.
Speaker 8: I agree it is a long term trend. But what
Speaker 8: happens when we have these long term trends? And let's
Speaker 8: think about Like, I know, it feels like AI has
Speaker 8: been all we've talked about for a really long time,
Speaker 8: but let's think about what the last hottest trend was.
Speaker 8: Where all the money, especially in the private markets like
Speaker 8: venture capital and private equity, was just throwing money at
Speaker 8: anything that had the word blockchain or crypto in it.
Speaker 7: And what happens is.
Speaker 8: All the money runs and there's people who probably shouldn't
Speaker 8: have gotten capital, did not have great business models or
Speaker 8: business plans, but because they had those two really really
Speaker 8: important buzzwords in their pitch decks, they were able to
Speaker 8: capture assets and capital as a result. And then what
Speaker 8: happens is you find out who the winners and losers
Speaker 8: are going to be, and there's always things that blow
Speaker 8: up on you. And I think AI is kind of
Speaker 8: in that trend right now, and as we get a
Speaker 8: little bit further into the AI.
Speaker 7: Development, you will see.
Speaker 8: Similar things happen there because so much money run into
Speaker 8: it all the vcs wanted to have anything and anything
Speaker 8: that had AI associated with it, and there are going
Speaker 8: to be things that just don't work but blow up
Speaker 8: in spectacular fashion as a result. So I think AI
Speaker 8: as a trend is a big deal. Just like when
Speaker 8: we had the tech bubble, the same thing.
Speaker 7: It was a game.
Speaker 8: Changing type of technology, type of trend, but as a result,
Speaker 8: a lot of money runs after it and goes into
Speaker 8: bad things.
Speaker 2: Channa, always going to get your perspective. Thank you so
Speaker 2: so much. Happy New Year. Shanna Sisoul, President and CEO
Speaker 2: of benry On Capital Management, Joining us.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
Speaker 1: you get your podcasts, or watch us live on YouTube.
Speaker 4: All right, s and P five hundred, up mid twenty percent,
Speaker 4: twenty twenty three, up mid twenty percent and twenty twenty four.
Speaker 4: Can you top it in twenty twenty five? That's what
Speaker 4: the pros have to figure out here. Brian Vendick joins
Speaker 4: us here. He is a Chief investment Officer at MJP
Speaker 4: Wealth Advisors. Brian I'm sure you're out there with your
Speaker 4: look ahead letter recently telling your clients kind of what
Speaker 4: you're looking for for twenty twenty five. What'd you tell them?
Speaker 9: Yeah, thanks, Paul, and great to be with you.
Speaker 8: Well.
Speaker 9: I think we're still constructive on the markets over the
Speaker 9: balance of the year, but I think it's going to
Speaker 9: be the tale of two cities, as we've seen in
Speaker 9: some other years in the past, where we have the
Speaker 9: policy uncertainties. These policy pieces I think that need to
Speaker 9: come together, as we've seen in recent headlines this morning
Speaker 9: with the new administration coming to town and what's going
Speaker 9: to happen with tariffs, spending, taxes, immigration, paired with are
Speaker 9: we still going to have earnings growth for the SMP
Speaker 9: and other.
Speaker 5: Parts of the cyclical parts.
Speaker 9: Of the economy over the balance of the year, And
Speaker 9: I think a two we get through this policy uncertainty
Speaker 9: and also uncertainty that the FED gave us back on
Speaker 9: December eighteenth regarding monetary policy. In twenty twenty five, it's
Speaker 9: going to be chopping in the markets. I think it's
Speaker 9: easy for me to forecast Paul on alex but I
Speaker 9: think if earnings is there, and we've heard from some
Speaker 9: FED officials some FED speak this morning. As you mentioned,
Speaker 9: the economy is unstable footing inflation probably will be sticky
Speaker 9: over the course of the year due to housing pricing
Speaker 9: and some seasonal adjustments there. But at the end of
Speaker 9: the day, if consumers have a job, consumers will spend.
Speaker 9: We expect lower spending, but we still expect earnings to
Speaker 9: grow double digits for the SMP and also maybe some
Speaker 9: participation coming in the markets from some areas outside of
Speaker 9: megacap tech, even though this morning we know megacap tech
Speaker 9: is in front of investors optimism for a good year.
Speaker 2: I guess the question then becomes weirder earnings actually grow,
Speaker 2: So do earnings for say the megacap mag seven come
Speaker 2: down and then the rest of the S and P
Speaker 2: earnings go up and that spread narrows.
Speaker 9: Yeah, so that's a great point. I mean, that's our view.
Speaker 9: You know, we are still expecting growth, you know, greater
Speaker 9: than twenty percent year over year on the megacap tech side,
Speaker 9: So when we think about portfolio positionings, we're definitely leaning
Speaker 9: still in that direction. Also because tech has been a
Speaker 9: great place to hide out obviously when trouble waters happen
Speaker 9: in the economy. We've seen that historically, and I think
Speaker 9: that muscle memory is still going to occur for investors.
Speaker 9: But those are other areas of the market that I
Speaker 9: still say look attractive, in mid and small cap and
Speaker 9: some of those cyclical areas where the economy does slow.
Speaker 9: And we've gotten some indication that FED cuts are still
Speaker 9: you know, on the table. That's going to help out
Speaker 9: some of those sectors like industrials, some pocket areas and healthcare.
Speaker 9: And also I got to give it to our friends
Speaker 9: in small cap that I know have been trailing for
Speaker 9: about ten years. The economies on stable footing. We're not
Speaker 9: going into a recession, and we have some domestic focus
Speaker 9: and policies. Those should help some of the smaller companies
Speaker 9: as well, assuming a good economy over the.
Speaker 5: Next twelve months.
Speaker 4: How about in the fixed income space, Brian, We've got
Speaker 4: a steepening yield curve. We've now, you know, after being
Speaker 4: inverted for several years, we've got a ten year treasury
Speaker 4: yield to four point six percent, two year four point
Speaker 4: twenty five percent. I mean, that seems like a nice
Speaker 4: way to make a living in a fixed income space.
Speaker 4: Do you stay there or do you maybe take some
Speaker 4: credit risk.
Speaker 9: Yeah, no, that's that's a great point.
Speaker 5: We've actually been adding.
Speaker 9: Duration in our portfolios late last year into even the
Speaker 9: start of this year. And you know, we like fixed income.
Speaker 9: I mean, it's it's we know it's it's been a
Speaker 9: tough investment over the last three years or so with
Speaker 9: anemic total returns. But again, our view as we kind
Speaker 9: of look out, is that the economy will slow due
Speaker 9: to slower consumer spending. And depending on how those puzzle
Speaker 9: pieces come together from our friends in Washington, that might
Speaker 9: we might look at these yields right now and say,
Speaker 9: you know what, this is a great opportunity from a
Speaker 9: risk war point of view.
Speaker 5: So we're not getting too.
Speaker 9: Long in duration, Paul, going back to your question, We're
Speaker 9: not trying to be heroes here with a bond trade,
Speaker 9: but thinking about taking durations up a little bit from
Speaker 9: that two to three year to five to seven year,
Speaker 9: still sticking with quality, not looking to jump in too
Speaker 9: deep on some of the high yield that's already had
Speaker 9: a good run with tight spreads. But I think fixed
Speaker 9: income isn't is an opportunity for investors, and also if
Speaker 9: we have trouble waters ahead with those uncertainties from policy decisions.
Speaker 9: We've seen investors come back to fixed income as a
Speaker 9: means to protect.
Speaker 2: Do you think that we're going to see correlations kind
Speaker 2: of up that the higher yields go, the more equities
Speaker 2: get hit that inverse correlation, or do you think that
Speaker 2: both can live in harmony.
Speaker 9: Well, I think we have seen recently, going back to
Speaker 9: the second half of December and now we've seen that
Speaker 9: when yields have picked up, it's been it's been tough
Speaker 9: for the equity market. Now I'm not I'm not saying
Speaker 9: that you know, yields at you know, four to six
Speaker 9: and they come down a little bit from this morning's
Speaker 9: highs is not tolerable for the markets. But I think
Speaker 9: if you start getting above you know, four seventy five
Speaker 9: on the ten year and getting back to that five handle,
Speaker 9: I mean, I think the economy, based on where we
Speaker 9: are right now, can handle it. But it definitely starts
Speaker 9: to take some of some of the optimism out of
Speaker 9: earnings growth in some of those more cyclical areas that
Speaker 9: are dependent upon lending and the cost of debt and
Speaker 9: that and then again, but you know, this is why
Speaker 9: I say it's a first half versus second half story.
Speaker 9: Not to talk and be too complicated here, because we
Speaker 9: know that FED will use Monto Harry policy to support
Speaker 9: the economy. So if we start seeing that those higher
Speaker 9: rates are being more restrictive and slowing down the economy,
Speaker 9: that's where I think the FED has made it clear
Speaker 9: that they'll take action to kind of support the labor
Speaker 9: market and try to keep things going.
Speaker 2: All right, Brian really appreciate that. Thank you very much.
Speaker 2: Brian Bendig, Chief investment Officer at MJP Wealth Advisors, joining us.
Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: ten am to noon Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal.