1 00:00:02,520 --> 00:00:18,320 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:12,880 --> 00:00:17,439 Speaker 2: Data and earnings are painting a mixed picture of the economy, ism, services, 3 00:00:17,560 --> 00:00:21,640 Speaker 2: ADP employment. They come in solid challenger job cuts, those 4 00:00:21,760 --> 00:00:25,120 Speaker 2: jump to one of the worst octobers on record, ruining 5 00:00:25,160 --> 00:00:28,120 Speaker 2: these markets. Or the rally yesterday, let's try to get 6 00:00:28,120 --> 00:00:31,840 Speaker 2: a sense of direction. Bringing us that now is Rick Reader, 7 00:00:31,920 --> 00:00:34,320 Speaker 2: chief investment Officer of Global fixed Income. 8 00:00:34,280 --> 00:00:35,279 Speaker 3: At black Rock and Rick. 9 00:00:35,360 --> 00:00:37,200 Speaker 2: We always have you on a jobs day, and today 10 00:00:37,280 --> 00:00:40,240 Speaker 2: is decidedly a jobs day that should have been. 11 00:00:40,840 --> 00:00:43,600 Speaker 3: Are you just flying blind? I mean, this data depends 12 00:00:43,640 --> 00:00:44,319 Speaker 3: what you look at. 13 00:00:44,360 --> 00:00:47,080 Speaker 2: You can say the economy is great or things are 14 00:00:47,080 --> 00:00:47,680 Speaker 2: falling apart. 15 00:00:48,880 --> 00:00:50,839 Speaker 1: Yeah, yeah, it's fine, Thanks for having me on. By 16 00:00:50,880 --> 00:00:53,519 Speaker 1: the way, you know, it's a funny thing, you know. 17 00:00:53,560 --> 00:00:57,440 Speaker 1: I found that the industry's obsession with these individual days 18 00:00:57,440 --> 00:00:59,200 Speaker 1: the pay and by the way, pay reports a great, 19 00:00:59,320 --> 00:01:03,720 Speaker 1: great economic indicator, the CPI report. There is so much 20 00:01:04,000 --> 00:01:07,000 Speaker 1: information that comes through the system. By the way, my favorite, 21 00:01:07,160 --> 00:01:10,360 Speaker 1: I read tons, maybe too many corporate earnings reports, and 22 00:01:10,400 --> 00:01:14,520 Speaker 1: I look at what's happening with hiring, inventory management, receivables, 23 00:01:14,520 --> 00:01:17,119 Speaker 1: et cetera. So there's still I mean, you know, would 24 00:01:17,160 --> 00:01:19,399 Speaker 1: i'd rather have the data for sure. By the way, 25 00:01:19,440 --> 00:01:21,920 Speaker 1: I think the markets become hem strong, and I think 26 00:01:21,920 --> 00:01:23,680 Speaker 1: part of why the markets are acting in this sort 27 00:01:23,680 --> 00:01:25,920 Speaker 1: of paranoid you know, what, do people know? What's the 28 00:01:25,959 --> 00:01:28,119 Speaker 1: information out there manner? 29 00:01:28,160 --> 00:01:28,520 Speaker 4: Today? 30 00:01:28,720 --> 00:01:31,080 Speaker 1: I think the But you know, I feel pretty good 31 00:01:31,120 --> 00:01:34,679 Speaker 1: about knowing that the structural direction of travel. I think 32 00:01:34,720 --> 00:01:37,440 Speaker 1: the economy is in good shape. They're parts of it. 33 00:01:37,440 --> 00:01:40,960 Speaker 1: It's not operating on all its cylinders, which we're talking about. 34 00:01:41,000 --> 00:01:43,600 Speaker 1: Capex is great, how income is doing well, low income 35 00:01:43,640 --> 00:01:45,920 Speaker 1: in the in the consumer side not so much. But 36 00:01:45,959 --> 00:01:48,720 Speaker 1: I feel pretty good about understanding. And listen, I think 37 00:01:48,920 --> 00:01:50,880 Speaker 1: I think, I think we have a softening of the 38 00:01:50,960 --> 00:01:54,280 Speaker 1: labor market that is quite significant. And you see that 39 00:01:54,440 --> 00:01:57,600 Speaker 1: as you mentioned the Challenger jobs report, you see that 40 00:01:57,640 --> 00:01:59,560 Speaker 1: playing out. You certainly see that when I look at 41 00:01:59,560 --> 00:02:01,600 Speaker 1: all the corporate earnings in terms of that, we have 42 00:02:01,640 --> 00:02:04,480 Speaker 1: a softening labor market. And if we had the number today, 43 00:02:04,520 --> 00:02:06,560 Speaker 1: I think it would have been reflective thereof. 44 00:02:06,440 --> 00:02:08,920 Speaker 5: Yeah, I mean, I'm flying blind. I couldn't agree with 45 00:02:08,960 --> 00:02:10,680 Speaker 5: you more and no one cares what I think. But 46 00:02:10,720 --> 00:02:13,480 Speaker 5: Bob Michael of JP Morgan has made this point. Rich Clarita, 47 00:02:14,520 --> 00:02:16,880 Speaker 5: former vice chair of the FED confirmed they have like 48 00:02:16,960 --> 00:02:20,280 Speaker 5: five hundred economists, they have twelve regional banks. They're talking 49 00:02:20,320 --> 00:02:23,640 Speaker 5: to participants, to companies, to institutions every single day, so 50 00:02:23,680 --> 00:02:26,280 Speaker 5: they have a pretty good handle on the economy even 51 00:02:26,320 --> 00:02:29,160 Speaker 5: without it. I wonder about what you guys have at Blackrock. 52 00:02:29,160 --> 00:02:32,440 Speaker 5: I mean, you have ten trillion dollars of assets under management, right, 53 00:02:32,480 --> 00:02:36,360 Speaker 5: what kind of signals are you looking at? What kind 54 00:02:36,360 --> 00:02:38,760 Speaker 5: of proprietary information are you getting that helps you in 55 00:02:38,840 --> 00:02:39,239 Speaker 5: your job? 56 00:02:39,320 --> 00:02:42,280 Speaker 4: Rick? You know, Matt, it's a great question. 57 00:02:42,320 --> 00:02:45,239 Speaker 1: By the way, this morning we went through credit card data, 58 00:02:45,760 --> 00:02:49,000 Speaker 1: so you you know, it's all available information. So we 59 00:02:49,120 --> 00:02:51,800 Speaker 1: end up we had a gentleman named Randy Burker with 60 00:02:51,840 --> 00:02:54,840 Speaker 1: who drives every day. We look at what's happening in 61 00:02:54,919 --> 00:02:57,200 Speaker 1: terms of you know, you go through the internet, you 62 00:02:57,280 --> 00:02:59,400 Speaker 1: splice some of the credit card data that comes out, 63 00:02:59,440 --> 00:03:02,640 Speaker 1: you get amazing amount of high frequency data. 64 00:03:02,919 --> 00:03:03,680 Speaker 4: So we'll use that. 65 00:03:04,120 --> 00:03:07,000 Speaker 1: We use a series of data assimilation tools, by the way, 66 00:03:07,040 --> 00:03:08,160 Speaker 1: text mining. 67 00:03:08,000 --> 00:03:11,200 Speaker 4: Understand what companies are saying. So anyway, we're trying. 68 00:03:11,040 --> 00:03:12,560 Speaker 1: And by the way, we don't have figured it out yet, 69 00:03:12,840 --> 00:03:14,880 Speaker 1: but you know, we're trying to be pretty cutting edge 70 00:03:14,919 --> 00:03:17,160 Speaker 1: around the amount of tools we use and how AI 71 00:03:17,280 --> 00:03:19,360 Speaker 1: is helping us, you know, by the way, also in 72 00:03:19,440 --> 00:03:21,680 Speaker 1: things like how do you think about scenario analysis? How 73 00:03:21,680 --> 00:03:24,119 Speaker 1: do you think about you know, the first derivative rate 74 00:03:24,160 --> 00:03:25,880 Speaker 1: of change on inflation and growth? 75 00:03:25,919 --> 00:03:26,959 Speaker 4: So listen. 76 00:03:27,000 --> 00:03:29,160 Speaker 1: I think part of the why is most exciting times 77 00:03:29,160 --> 00:03:31,200 Speaker 1: for investing ever is the amount of tools you can 78 00:03:31,320 --> 00:03:34,480 Speaker 1: utilize that allow you to get more verse around what 79 00:03:34,520 --> 00:03:38,280 Speaker 1: the direction to travel in is is pretty intense today. 80 00:03:38,400 --> 00:03:40,720 Speaker 1: So you know, we're still working and trying to figure 81 00:03:40,720 --> 00:03:43,360 Speaker 1: out more tools we could use, but there it's so 82 00:03:43,480 --> 00:03:46,640 Speaker 1: much different than quite frankly five years ago, ten years ago. 83 00:03:46,920 --> 00:03:49,760 Speaker 2: I would be very interested to know if any of 84 00:03:49,840 --> 00:03:52,120 Speaker 2: that data, any of the tools that you've been using 85 00:03:52,120 --> 00:03:54,880 Speaker 2: and look and looked at, have changed some of your 86 00:03:54,880 --> 00:03:57,600 Speaker 2: allocations or how you're thinking about BINK right now. 87 00:03:59,400 --> 00:04:01,120 Speaker 4: So it's great us, thanks for asking that man. 88 00:04:01,280 --> 00:04:03,880 Speaker 1: So Bink, you know, there is something that is I 89 00:04:03,880 --> 00:04:05,960 Speaker 1: think pretty intense around so Bank you know. 90 00:04:06,000 --> 00:04:07,600 Speaker 4: Has had has had a good run. 91 00:04:07,680 --> 00:04:09,640 Speaker 1: We feel good about where it's going and more and 92 00:04:09,640 --> 00:04:12,520 Speaker 1: more people coming into it. The thing that it's allowed 93 00:04:12,600 --> 00:04:15,480 Speaker 1: us to think through is today you've got you've obviously 94 00:04:15,560 --> 00:04:17,640 Speaker 1: got the way the Fed's going to interpret the data, 95 00:04:18,560 --> 00:04:21,000 Speaker 1: which is not always what I agree with, but the 96 00:04:21,000 --> 00:04:23,520 Speaker 1: Fed's going to interpret the data is you've got inflation 97 00:04:23,640 --> 00:04:26,880 Speaker 1: that's a little sticky high, and then the employment that's moderating. 98 00:04:27,279 --> 00:04:29,080 Speaker 1: So we thank you you're in this and by the way, 99 00:04:29,080 --> 00:04:30,960 Speaker 1: not just the FAT, the ECB, the Bank of England, 100 00:04:31,000 --> 00:04:33,159 Speaker 1: the RBA, they're in this point of let's sit back 101 00:04:33,200 --> 00:04:35,640 Speaker 1: and watch the data. So the way we move our 102 00:04:35,680 --> 00:04:38,440 Speaker 1: positions around is we've reduced a little bit of our 103 00:04:38,480 --> 00:04:40,920 Speaker 1: interest rate sensitivity. We've pulled some of our interest rate 104 00:04:41,000 --> 00:04:43,279 Speaker 1: sensitivity out of the front end of the yield curve 105 00:04:43,640 --> 00:04:46,640 Speaker 1: and say, gosh, let's just get carry. We can reduce 106 00:04:46,640 --> 00:04:48,800 Speaker 1: a little bit of our duration. We've reduced a little 107 00:04:48,800 --> 00:04:50,760 Speaker 1: bit of our investment great more than a little bit 108 00:04:50,800 --> 00:04:53,960 Speaker 1: of our investment great credit because quite frankly, today, where 109 00:04:54,000 --> 00:04:56,400 Speaker 1: spreads are, it doesn't do a lot for us. And 110 00:04:56,440 --> 00:05:00,440 Speaker 1: if rates are pretty stable, mortgages become agency. Org has 111 00:05:00,440 --> 00:05:04,160 Speaker 1: become much more interesting in the low coupon agency mortgage 112 00:05:04,160 --> 00:05:06,760 Speaker 1: has become much more interesting in the portfolio. So we've 113 00:05:06,760 --> 00:05:08,919 Speaker 1: been doing that. By the way we look at the data, 114 00:05:08,960 --> 00:05:12,200 Speaker 1: including last night, you're seeing with the mortgage rate coming 115 00:05:12,279 --> 00:05:15,760 Speaker 1: down a bit of prepayment faster PREVAIM, so we do 116 00:05:15,880 --> 00:05:19,080 Speaker 1: some high coupon mortgages. We've had a lot of technical there, 117 00:05:19,080 --> 00:05:21,000 Speaker 1: but some stuff moving on. 118 00:05:21,440 --> 00:05:23,600 Speaker 5: We should point out for viewers who don't know, BINK 119 00:05:23,680 --> 00:05:26,159 Speaker 5: is the I Shares Flexible Income ETF that Rick runs 120 00:05:26,279 --> 00:05:28,680 Speaker 5: at Blackrock. Rick is going to stay with us through 121 00:05:28,720 --> 00:05:31,520 Speaker 5: the opening bell into the equities trade next. 122 00:05:31,320 --> 00:05:32,600 Speaker 3: This is Bloomberg. 123 00:05:35,800 --> 00:05:39,279 Speaker 5: Let's bring back Blackrock Chief Investment Officer of Global Fixed 124 00:05:39,279 --> 00:05:40,920 Speaker 5: Income Rick Reader and Rick. 125 00:05:40,920 --> 00:05:42,080 Speaker 3: Can I ask you about that? 126 00:05:42,240 --> 00:05:47,000 Speaker 5: I mean, is this market to frothy our valuations? Are 127 00:05:47,000 --> 00:05:49,080 Speaker 5: we getting too far ahead of ourselves here? Because I 128 00:05:49,120 --> 00:05:53,240 Speaker 5: was looking at the other day the Warren Buffett you know, 129 00:05:53,400 --> 00:05:57,800 Speaker 5: valuation awe stocks, market capital versus GDP. It's at the 130 00:05:57,880 --> 00:06:00,279 Speaker 5: highest level at least since two thousand and The same 131 00:06:00,360 --> 00:06:05,400 Speaker 5: is true of the case the Shielder case cape ratio. Sorry, 132 00:06:05,839 --> 00:06:08,359 Speaker 5: you can see this great chart here that shows you 133 00:06:08,440 --> 00:06:10,960 Speaker 5: we're pretty highly valued on these two measures. Are you 134 00:06:11,000 --> 00:06:12,480 Speaker 5: worried about the AI froth? 135 00:06:13,800 --> 00:06:15,120 Speaker 4: So you know there's something. 136 00:06:15,120 --> 00:06:16,560 Speaker 1: By the way, this is a time of year you 137 00:06:16,640 --> 00:06:19,720 Speaker 1: tend to get momentum gets chased out of the markets, 138 00:06:20,480 --> 00:06:23,480 Speaker 1: particularly today, we have ambiguity around some trends that are 139 00:06:23,480 --> 00:06:25,800 Speaker 1: taking place. So, by the way, I know, I don't 140 00:06:25,800 --> 00:06:27,520 Speaker 1: think it's an AI bubble, and I don't think there's 141 00:06:27,520 --> 00:06:28,240 Speaker 1: too much froth. 142 00:06:28,480 --> 00:06:29,280 Speaker 4: And depending on. 143 00:06:29,200 --> 00:06:31,120 Speaker 1: Where you go, if you look at some of the 144 00:06:31,120 --> 00:06:34,919 Speaker 1: big hyperscalers that trade a twenty to twenty five twenty 145 00:06:34,960 --> 00:06:37,560 Speaker 1: six times earnings and they throw off roe return on 146 00:06:37,560 --> 00:06:41,080 Speaker 1: equity of thirty thirty five forty percent, and you look 147 00:06:41,120 --> 00:06:43,279 Speaker 1: at their free cash flow, I've never seen in my 148 00:06:43,440 --> 00:06:46,640 Speaker 1: career free cash flow generation. We can talk about top 149 00:06:46,680 --> 00:06:49,440 Speaker 1: line revenue growth. When you can have that much free 150 00:06:49,440 --> 00:06:51,599 Speaker 1: cash flow generation allows you to do your cap ax, 151 00:06:51,640 --> 00:06:56,080 Speaker 1: which is extraordinary today, build R and D, which is 152 00:06:56,120 --> 00:06:58,800 Speaker 1: your future cash flow, and then you can buy back 153 00:06:58,839 --> 00:06:59,239 Speaker 1: your stock. 154 00:06:59,320 --> 00:07:02,279 Speaker 4: So it's happened. I you have an unbelievable dynamic. And 155 00:07:02,320 --> 00:07:03,200 Speaker 4: by the way, we're now. 156 00:07:03,120 --> 00:07:06,479 Speaker 1: About to open the buyback window that you have this 157 00:07:06,600 --> 00:07:09,200 Speaker 1: dynamic that you throw off immense amounts of free cash flow, 158 00:07:09,720 --> 00:07:11,679 Speaker 1: and so there's multiples are not scary. 159 00:07:11,960 --> 00:07:12,720 Speaker 4: There are parts. 160 00:07:12,720 --> 00:07:14,400 Speaker 1: I see it in the private market, and I see 161 00:07:14,400 --> 00:07:16,680 Speaker 1: it in some places where you're seeing businesses that have 162 00:07:16,680 --> 00:07:18,400 Speaker 1: no cash flow for a number of years. How much 163 00:07:18,400 --> 00:07:21,240 Speaker 1: would you finance those? So I do see froth in 164 00:07:21,280 --> 00:07:25,480 Speaker 1: some areas, but in the traditional big market cap stuff. 165 00:07:25,520 --> 00:07:28,840 Speaker 1: And I would say related to that in semis in 166 00:07:28,960 --> 00:07:33,440 Speaker 1: healthcare technology, where you're seeing rapid change but real cash 167 00:07:33,520 --> 00:07:36,840 Speaker 1: flow alongside of it. It is the exact dichotomy I 168 00:07:36,920 --> 00:07:37,720 Speaker 1: think you saw in two. 169 00:07:38,680 --> 00:07:42,320 Speaker 2: Why then do you have these large cap giants tapping 170 00:07:42,360 --> 00:07:44,800 Speaker 2: the bond market to the degree they are, and not 171 00:07:44,920 --> 00:07:48,920 Speaker 2: just the broadly syndicate market, but also raising capital off 172 00:07:49,000 --> 00:07:51,360 Speaker 2: balance sheet too. If they were so confident and have 173 00:07:51,440 --> 00:07:54,560 Speaker 2: such robust cash flows, is that not a concerning turn 174 00:07:54,600 --> 00:07:57,960 Speaker 2: of events that they're instead building up on debt piles. 175 00:07:59,160 --> 00:08:01,160 Speaker 1: So so, first of all, when you look at the 176 00:08:01,480 --> 00:08:04,360 Speaker 1: when you look at any measure debty, but you look 177 00:08:04,400 --> 00:08:06,400 Speaker 1: at their debt to book cap, debt to market cap, 178 00:08:06,480 --> 00:08:09,640 Speaker 1: these companies are under geared or under levered. Their cap 179 00:08:09,680 --> 00:08:14,120 Speaker 1: structure is so low in terms of leverage relative certainly 180 00:08:14,160 --> 00:08:16,880 Speaker 1: relevant their market cap, but relevan their book cap. If 181 00:08:16,880 --> 00:08:19,640 Speaker 1: you were running a big mature company and you think 182 00:08:19,680 --> 00:08:22,680 Speaker 1: about what does your normal cap structure look like, and 183 00:08:22,760 --> 00:08:24,920 Speaker 1: if you're going to fund near term cap X over 184 00:08:25,000 --> 00:08:27,440 Speaker 1: the next couple of years, if you can do it 185 00:08:27,520 --> 00:08:29,360 Speaker 1: out the yields curve, which is where you see a 186 00:08:29,360 --> 00:08:32,280 Speaker 1: lot of that financing take place to say, gosh, I am. 187 00:08:32,200 --> 00:08:33,560 Speaker 4: Throwing off a lot of cash flow. 188 00:08:33,880 --> 00:08:35,800 Speaker 1: But if I can lock in these rates, and if 189 00:08:35,800 --> 00:08:38,080 Speaker 1: I'm as a shareholder of any of these companies, I say, 190 00:08:38,280 --> 00:08:40,840 Speaker 1: why in a world would you fund everything with equity 191 00:08:41,320 --> 00:08:43,480 Speaker 1: or why wouldn't we put a little bit of debt, 192 00:08:43,520 --> 00:08:46,120 Speaker 1: get a little bit of gear, and get your ROE higher. 193 00:08:46,440 --> 00:08:49,720 Speaker 1: So I just think it's a natural evolution of Gosh, 194 00:08:49,800 --> 00:08:51,600 Speaker 1: this is how you run a big company, and this 195 00:08:51,640 --> 00:08:53,400 Speaker 1: is what a normal cap structure looks like. 196 00:08:53,520 --> 00:08:55,720 Speaker 5: I mean, we were just talking about global bond sales 197 00:08:55,800 --> 00:08:59,959 Speaker 5: hitting six trillion dollars, an all time record. 198 00:09:01,000 --> 00:09:02,160 Speaker 3: That's pretty incredible. 199 00:09:02,240 --> 00:09:04,440 Speaker 5: And the and the and the return on fixed income 200 00:09:04,520 --> 00:09:06,680 Speaker 5: has been great this year as well. 201 00:09:06,720 --> 00:09:10,480 Speaker 3: Finally, how how. 202 00:09:10,880 --> 00:09:15,079 Speaker 5: Could we be in a world with tight financial conditions 203 00:09:15,120 --> 00:09:17,640 Speaker 5: when this is happening. It just doesn't make any sense 204 00:09:17,679 --> 00:09:19,400 Speaker 5: to me why the FED would want to be cutting 205 00:09:19,400 --> 00:09:19,839 Speaker 5: into this. 206 00:09:21,400 --> 00:09:24,280 Speaker 1: So, uh so you got good, You've got I would argue, 207 00:09:24,360 --> 00:09:28,120 Speaker 1: there's an immense amount of cash that came from certainly 208 00:09:28,200 --> 00:09:31,360 Speaker 1: years ago at fiscal monetary stimulus. So you know, I 209 00:09:31,360 --> 00:09:34,440 Speaker 1: don't think financial conditions drive financial business are great for 210 00:09:34,520 --> 00:09:38,000 Speaker 1: older savers in the economy. The interest rate tool today 211 00:09:38,679 --> 00:09:41,640 Speaker 1: is incredibly powerful on parts of the economy that are 212 00:09:41,640 --> 00:09:45,880 Speaker 1: really struggling, low income, small business, the housing market. By 213 00:09:45,880 --> 00:09:47,880 Speaker 1: the way, the government debt since eighty nine percent of 214 00:09:47,960 --> 00:09:49,839 Speaker 1: what the government funds is and zero a two year 215 00:09:49,880 --> 00:09:51,400 Speaker 1: part of the yield curve, so it has a huge 216 00:09:51,440 --> 00:09:55,880 Speaker 1: influence on what tax payers are paying for for debt today. 217 00:09:56,320 --> 00:09:59,200 Speaker 1: So my view today, what the interest rate tool does. 218 00:09:59,280 --> 00:10:01,120 Speaker 1: You know the idea it affects in place. I've been 219 00:10:01,160 --> 00:10:03,720 Speaker 1: saying this for months. It's very hard for the Fed 220 00:10:03,760 --> 00:10:08,800 Speaker 1: to bring down sticky inflation. Healthcare, education, insurance not terribly robust, 221 00:10:09,520 --> 00:10:11,560 Speaker 1: but you do Actually, if you bring the rate down, 222 00:10:11,840 --> 00:10:14,559 Speaker 1: we'll bring down the mortgage rate, which you're seeing play out. 223 00:10:14,520 --> 00:10:16,240 Speaker 3: Well, but for more Americans. 224 00:10:16,320 --> 00:10:19,520 Speaker 5: Rick Diane Swank has said, you know, bringing down these 225 00:10:19,600 --> 00:10:23,360 Speaker 5: rates is not going to affect subprime rates, and twenty 226 00:10:23,360 --> 00:10:27,320 Speaker 5: five percent of the country is below six ninety with 227 00:10:27,400 --> 00:10:29,960 Speaker 5: a credit score. Also, I don't see how a lower 228 00:10:30,040 --> 00:10:35,160 Speaker 5: rate adds jobs in an environment where companies are cutting 229 00:10:35,240 --> 00:10:38,960 Speaker 5: headcount to try and offset higher tariffs to their margins. 230 00:10:39,960 --> 00:10:42,480 Speaker 1: So you know, I've said this for months now. I 231 00:10:42,480 --> 00:10:45,120 Speaker 1: would say one thing The FED doesn't create jobs directly, 232 00:10:45,679 --> 00:10:48,560 Speaker 1: but you think about what happens small business does forty 233 00:10:48,600 --> 00:10:49,480 Speaker 1: four percent of the hiring in. 234 00:10:49,440 --> 00:10:51,360 Speaker 4: The US a small business. The rate's too high for 235 00:10:51,400 --> 00:10:52,080 Speaker 4: small business. 236 00:10:52,559 --> 00:10:55,960 Speaker 1: Second, you think about what happens in the housing market. 237 00:10:56,400 --> 00:10:58,760 Speaker 1: We put three point one people to work for every 238 00:10:58,760 --> 00:11:01,160 Speaker 1: home built in this country. If you get the mortgage rate, 239 00:11:01,160 --> 00:11:02,280 Speaker 1: by the way, you don't have to get it down 240 00:11:02,280 --> 00:11:04,000 Speaker 1: that much. But if you've got it down twenty five 241 00:11:04,040 --> 00:11:07,720 Speaker 1: to fifty basis points, you increase labor mobility. Your point 242 00:11:07,760 --> 00:11:11,200 Speaker 1: is right, companies, we are in a productivity revolution. Companies 243 00:11:11,240 --> 00:11:14,600 Speaker 1: are going to cut jobs. But if you increase labor 244 00:11:14,640 --> 00:11:16,920 Speaker 1: mobility because people can sell our house, move to another 245 00:11:16,920 --> 00:11:17,520 Speaker 1: state where. 246 00:11:17,320 --> 00:11:17,920 Speaker 4: They get a job. 247 00:11:17,960 --> 00:11:20,160 Speaker 1: If we actually put people to work in building houses, 248 00:11:20,200 --> 00:11:23,720 Speaker 1: you bring down shelter inflation. The FED can't create jobs, 249 00:11:24,040 --> 00:11:26,960 Speaker 1: but you can ameliorate some of the stress that's happening 250 00:11:27,000 --> 00:11:30,240 Speaker 1: because of productivity. And people talk about productivity is like AI. 251 00:11:30,800 --> 00:11:34,240 Speaker 1: It is happening everywhere. We talk about freight, how we 252 00:11:34,320 --> 00:11:37,319 Speaker 1: do logistics, how we do inventory management, how we do 253 00:11:37,840 --> 00:11:41,960 Speaker 1: customer procurement. Productivity is exploding. We don't need as much 254 00:11:42,080 --> 00:11:45,600 Speaker 1: labor collectively in the country, you know, bringing that rate 255 00:11:45,640 --> 00:11:48,840 Speaker 1: down in the places that can actually help will actually 256 00:11:48,880 --> 00:11:52,120 Speaker 1: at the margin help help a labor dynamic. I think 257 00:11:52,160 --> 00:11:54,360 Speaker 1: today you'll see not just where you're seeing in the 258 00:11:54,400 --> 00:11:56,040 Speaker 1: last four months, what you're going to see for the 259 00:11:56,120 --> 00:11:56,959 Speaker 1: next couple of years. 260 00:11:57,040 --> 00:12:00,520 Speaker 2: And with these conversations and especially your viewpoint is made 261 00:12:00,559 --> 00:12:04,199 Speaker 2: all the more important. We have to ask because last week, 262 00:12:04,200 --> 00:12:06,920 Speaker 2: the beginning of last week, Secretary of Scott Besson confirmed 263 00:12:06,920 --> 00:12:09,880 Speaker 2: his list for FED picks, your name among them. How 264 00:12:09,920 --> 00:12:11,080 Speaker 2: have those conversations gone? 265 00:12:13,280 --> 00:12:16,559 Speaker 1: No, I can't, you know, I can't really comment. I 266 00:12:16,600 --> 00:12:18,320 Speaker 1: wake up in the morning and I try to figure 267 00:12:18,320 --> 00:12:20,800 Speaker 1: out the supline of the yield curve and what your 268 00:12:20,800 --> 00:12:23,120 Speaker 1: comments about fast food versus FED like, should we be 269 00:12:23,160 --> 00:12:24,640 Speaker 1: buying this stock or that stock? 270 00:12:24,960 --> 00:12:26,480 Speaker 4: That's what I got to focus on. 271 00:12:26,400 --> 00:12:31,000 Speaker 1: That and so anyway, that's uh, that's what I'm doing today, 272 00:12:30,800 --> 00:12:31,640 Speaker 1: the most. 273 00:12:31,440 --> 00:12:32,560 Speaker 4: Exciting time to do it. 274 00:12:33,000 --> 00:12:33,840 Speaker 3: Rick, Even if. 275 00:12:33,760 --> 00:12:36,400 Speaker 5: You're not confirmed his FED chair, everybody has a view 276 00:12:36,440 --> 00:12:38,800 Speaker 5: about what they would do differently at the FED. 277 00:12:38,880 --> 00:12:40,640 Speaker 3: What what what are some of the changes that you 278 00:12:40,679 --> 00:12:41,079 Speaker 3: would make? 279 00:12:43,160 --> 00:12:44,439 Speaker 4: You know, I'm a listen. 280 00:12:44,480 --> 00:12:46,440 Speaker 1: I mean, I'll all point to is what I've said 281 00:12:46,440 --> 00:12:48,760 Speaker 1: for many months now is I think there are some 282 00:12:48,880 --> 00:12:51,760 Speaker 1: things too that you can do that to create velocity 283 00:12:51,800 --> 00:12:54,160 Speaker 1: in the system. You know, nobody borrows off the overnight 284 00:12:54,160 --> 00:12:57,800 Speaker 1: funds right anymore. Velocity happens where financing happens out the 285 00:12:57,880 --> 00:13:01,239 Speaker 1: yield curve. Things you could do to keep that stability 286 00:13:01,280 --> 00:13:03,480 Speaker 1: of the back end of the yield curve, to keep 287 00:13:03,520 --> 00:13:05,959 Speaker 1: the mortgage rate in a place where we get real 288 00:13:06,040 --> 00:13:09,120 Speaker 1: velocity existing home sales moving. So I think there's some 289 00:13:09,160 --> 00:13:11,240 Speaker 1: things that are that are that can be done, that 290 00:13:11,280 --> 00:13:14,200 Speaker 1: are that are that are interesting and listen, mat I mean, 291 00:13:14,320 --> 00:13:16,240 Speaker 1: you know, I've said it publicly for many months now. 292 00:13:16,960 --> 00:13:19,600 Speaker 1: I think if we're running break even, you can buy 293 00:13:19,640 --> 00:13:21,640 Speaker 1: in the market that a five year inflation break evens 294 00:13:21,640 --> 00:13:24,280 Speaker 1: a two point three five percent. I think the funds 295 00:13:24,320 --> 00:13:26,480 Speaker 1: rate should be a three and I just think you 296 00:13:26,520 --> 00:13:28,240 Speaker 1: could move it there and then you don't have to 297 00:13:28,280 --> 00:13:30,680 Speaker 1: go much further. I just think the price. You know, 298 00:13:30,720 --> 00:13:32,840 Speaker 1: in markets, if something's price wrong, you get it there. 299 00:13:33,160 --> 00:13:34,920 Speaker 1: I just think we can get it there and then 300 00:13:35,080 --> 00:13:37,120 Speaker 1: and then look at when then take another view on 301 00:13:37,200 --> 00:13:39,640 Speaker 1: where are we today and do you have to move 302 00:13:39,720 --> 00:13:42,600 Speaker 1: higher or lower? But anyway I would I think we 303 00:13:42,640 --> 00:13:43,800 Speaker 1: could move right a bit lower. 304 00:13:43,920 --> 00:13:47,240 Speaker 2: Well, you know, it does have this feeling that whoever 305 00:13:47,559 --> 00:13:49,560 Speaker 2: is next and whoever's next leading the FED, that there 306 00:13:49,600 --> 00:13:52,040 Speaker 2: will be this difference in tone when we have the 307 00:13:52,120 --> 00:13:55,480 Speaker 2: scenario where Chair Powell's term is up and we have 308 00:13:55,840 --> 00:13:58,400 Speaker 2: our next chair and waiting, whoever that might be. How 309 00:13:58,440 --> 00:14:02,559 Speaker 2: should that person hand that kind of lame duck gray period. 310 00:14:04,240 --> 00:14:07,640 Speaker 4: From an investor point of view or just communication. 311 00:14:07,160 --> 00:14:10,480 Speaker 2: To the markets, how should that look when Shairpala's term 312 00:14:10,600 --> 00:14:13,800 Speaker 2: is over and we're waiting for the newly confirmed FED chair. 313 00:14:15,280 --> 00:14:16,960 Speaker 1: Listen, I think it's trick, Jim, And you know, I 314 00:14:17,000 --> 00:14:21,200 Speaker 1: have incredible sympathy for and frankly, you know the sanctity 315 00:14:21,240 --> 00:14:23,720 Speaker 1: of what that institution is. I think what they will 316 00:14:23,720 --> 00:14:25,720 Speaker 1: continue to do and I think what they do today 317 00:14:25,800 --> 00:14:28,760 Speaker 1: is they make judgment based on here's the data that 318 00:14:28,800 --> 00:14:31,840 Speaker 1: we have to interpret, what is the right thing for 319 00:14:31,960 --> 00:14:34,920 Speaker 1: the population at large in terms of managing that policy. 320 00:14:34,960 --> 00:14:37,120 Speaker 1: And you know, I really believe in this, and I 321 00:14:37,160 --> 00:14:39,560 Speaker 1: certainly believe in this Fed, Shair and this FED committee 322 00:14:39,720 --> 00:14:41,600 Speaker 1: that I think they're going to make the decision based 323 00:14:41,640 --> 00:14:44,760 Speaker 1: on let's evaluate the data, interpret the data and make 324 00:14:44,800 --> 00:14:46,720 Speaker 1: a decision based on that. And I don't think there's 325 00:14:46,720 --> 00:14:49,480 Speaker 1: any reasonab believe that happens any other way than that. 326 00:14:49,760 --> 00:14:51,600 Speaker 2: Well, Rick, you certainly do that for us, and we 327 00:14:51,640 --> 00:14:54,520 Speaker 2: are very appreciated, appreciative of it to get all of 328 00:14:54,520 --> 00:14:56,920 Speaker 2: your thoughts from what's going on with Bink to the 329 00:14:57,000 --> 00:14:59,480 Speaker 2: labor market and beyond, Rick Reader, thank you so much 330 00:14:59,800 --> 00:15:00,760 Speaker 2: for joining us.