WEBVTT - US Manufacturing Activity Contracts, S&P 500 Slides 0:00:02.400 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.320 --> 0:00:15.720 Eastern on Apple car Play and then Broid Auto with 0:00:15.720 --> 0:00:18.800 the Bloomberg Business app. Listen on demand wherever you get 0:00:18.840 --> 0:00:22.640 your podcasts, or watch us live on YouTube. 0:00:23.239 --> 0:00:25.919 Alex see you alongside Paul Sweeny and John Tucker. Let's 0:00:25.960 --> 0:00:28.400 go back to that ism manufacturing data because an ism 0:00:28.400 --> 0:00:31.000 manufacturing and read on the employment side was what really 0:00:31.080 --> 0:00:34.559 preceded that weaker jobs report that we saw in August, 0:00:34.600 --> 0:00:37.000 So it might set us up then for this Friday 0:00:37.200 --> 0:00:39.800 and the jobs report. Tim Fury is a chair for 0:00:39.840 --> 0:00:44.520 the Institute of Supply Managements Manufacturing Business Survey Committee. Hey Tim, 0:00:44.520 --> 0:00:47.080 it's great to see you. So is this number good? 0:00:47.200 --> 0:00:48.480 Is it bad? Is it the same? 0:00:49.800 --> 0:00:50.080 Well? 0:00:50.080 --> 0:00:52.080 Good morning, So you know, I think it's a little 0:00:52.120 --> 0:00:54.200 bit of a misnomer. So you know, we came in 0:00:54.240 --> 0:00:56.000 a little bit lighter than people thought. We're a little 0:00:56.040 --> 0:00:58.240 bit better than last month. But if you look at 0:00:58.240 --> 0:01:00.920 the three elements demand, output, in in puts, the biggest 0:01:00.960 --> 0:01:04.680 reason for the lack of slowing down even further is 0:01:04.720 --> 0:01:09.039 the fact that our manufacturing inventory number came up surprisingly. 0:01:08.400 --> 0:01:12.440 So overall demand is still elusive. It's hard to find. 0:01:12.520 --> 0:01:13.399 It's still not there. 0:01:13.920 --> 0:01:16.840 Okay, fine, backlog is still contracting, not quite as bad, 0:01:16.840 --> 0:01:18.080 but it's still pretty bad. 0:01:18.440 --> 0:01:19.640 On the input. 0:01:19.319 --> 0:01:21.640 Side, we had suppliers are living a little bit slower, 0:01:21.959 --> 0:01:24.240 but not a big deal, probably stable month a month. 0:01:24.480 --> 0:01:27.240 The big surprise there was really manufacturing inventory is popping 0:01:27.319 --> 0:01:30.720 up to fifty point five when it's been historically. 0:01:30.240 --> 0:01:31.200 Forty eight or less. 0:01:31.240 --> 0:01:33.920 So, but I think that's really a timing issue between 0:01:34.319 --> 0:01:38.000 reduced output and trying to slow down the inputs, because 0:01:38.040 --> 0:01:41.000 the real story here is on the output side, with 0:01:41.080 --> 0:01:43.800 production coming down again for the third straight month, which 0:01:43.840 --> 0:01:44.880 really means revenue. 0:01:45.240 --> 0:01:47.200 Good surrogate for revenue, And as you. 0:01:47.160 --> 0:01:50.960 Mentioned, Alex, the employment numbers is continuing to sag and 0:01:51.000 --> 0:01:55.680 in fact, in this month's evaluation, almost sixty five percent 0:01:55.720 --> 0:01:58.480 of our force reduction actions were layoffs, which are the 0:01:58.560 --> 0:01:59.920 highest number we've seen so far. 0:02:01.000 --> 0:02:01.280 Tim. 0:02:01.320 --> 0:02:04.840 When I'm looking at the ISM manufacturing data, what am 0:02:04.880 --> 0:02:08.440 I looking at? What industries are most notably represented in 0:02:08.480 --> 0:02:08.920 that data? 0:02:08.960 --> 0:02:09.360 Point? 0:02:09.840 --> 0:02:12.400 Well, the big six are you know, your first one 0:02:12.720 --> 0:02:15.760 is chemical products, and you have transportation equipment, You've got 0:02:15.800 --> 0:02:18.960 computer and electronics, food and beverage, those two are kind 0:02:18.960 --> 0:02:23.639 of intermixed. You got fabricated metal products, machinery, and those 0:02:23.680 --> 0:02:26.000 are the big six. Those make up seventy percent, seventy 0:02:26.000 --> 0:02:29.320 two percent of manufacturing GDP, so you know, they're pretty 0:02:29.320 --> 0:02:30.040 strong drivers. 0:02:30.040 --> 0:02:32.399 And if you look at five of those top. 0:02:32.280 --> 0:02:35.919 Six, the inventory number actually broke fifty, which we haven't 0:02:35.960 --> 0:02:39.959 seen in probably a couple of years. So I really 0:02:40.000 --> 0:02:42.000 think it's a timing issue. We weren't able to slow 0:02:42.040 --> 0:02:44.799 down the inputs as fast as we really wanted, and I. 0:02:44.720 --> 0:02:47.480 Think it will self correct itself. So if you take that. 0:02:47.480 --> 0:02:49.560 Number and you do a normalization where it would have 0:02:49.560 --> 0:02:52.639 been based on what's happening last month, you're probably down 0:02:52.720 --> 0:02:54.839 that same range that we were at last month. So 0:02:55.280 --> 0:02:57.560 you know, the summary on this is is that don't 0:02:57.560 --> 0:02:59.840 really see demand coming back before the end of the year. 0:03:00.040 --> 0:03:01.560 It's a combination of interest rates. 0:03:01.560 --> 0:03:04.239 We got good news last week, obviously, but there's a 0:03:04.280 --> 0:03:06.160 lot of other issues here around the election that are 0:03:06.200 --> 0:03:08.919 really coming to play now. People are they're really holding 0:03:09.000 --> 0:03:11.960 back waiting to see which party actually tastes control and 0:03:12.040 --> 0:03:17.160 how significant that control will be. Demand is the problem 0:03:17.240 --> 0:03:20.320 has been the problem inputs are kind of overwhelming the 0:03:20.360 --> 0:03:23.480 output side. The output sides continuing to sag. So not 0:03:23.560 --> 0:03:25.840 a great story here, but you know, no big surprise. 0:03:25.960 --> 0:03:27.320 We saw this coming last month. 0:03:27.680 --> 0:03:30.160 This report pretty much validates where we were last month, 0:03:30.160 --> 0:03:33.040 and that is that manufacturing and slowing down. It's not 0:03:33.120 --> 0:03:36.760 in a super dangerous category yet it's in a yellow area. 0:03:37.880 --> 0:03:41.680 We had fifty three percent of overall manufacturing GDP contracting, 0:03:42.040 --> 0:03:44.520 which was better than last month at eighty four percent. 0:03:44.560 --> 0:03:47.240 I think it was. So, you know, not a great report, 0:03:47.280 --> 0:03:48.960 but not catastrophic either, but. 0:03:49.160 --> 0:03:51.440 Great, great insight and really helps set us up and 0:03:51.520 --> 0:03:54.200 understand how we are headed into Friday Jobs Friday. All right, Tim, 0:03:54.200 --> 0:03:56.360 thanks a lot. Tim Fiory, chair of the Institute for 0:03:56.360 --> 0:04:00.600 Supply Management's Manufacturing Business Survey Committee. So then it's surprise 0:04:00.680 --> 0:04:02.240 that you still the S and P off by one 0:04:02.240 --> 0:04:04.480 point two percent. There may be some other factors obviously 0:04:04.520 --> 0:04:07.680 going on in that, but it also explains the continued dip. 0:04:09.160 --> 0:04:13.040 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:04:13.120 --> 0:04:16.640 weekdays at ten am Eastern on applecar Play and Android 0:04:16.680 --> 0:04:19.440 Auto with the Bloomberg Business app. You can also listen 0:04:19.560 --> 0:04:22.679 live on Amazon Alexa from our flagship New York station. 0:04:23.040 --> 0:04:25.799 Just say Alexa, play Bloomberg eleven thirty. 0:04:27.400 --> 0:04:30.320 This is Bloomberg Intelligence Radio. We are broadcasting to you 0:04:30.440 --> 0:04:33.400 live from Interactive Broker Studio right here in Midtown Manhattan. 0:04:33.520 --> 0:04:37.000 And if you are listening in Boston, our new home 0:04:37.160 --> 0:04:40.760 starting today will be ninety two nine FM Bloomberg Radio 0:04:40.839 --> 0:04:44.160 moving to nine to nine FM in Boston starting today 0:04:44.400 --> 0:04:47.080 at Newton So follow us on that, all right. Going 0:04:47.080 --> 0:04:48.680 to the markets here, we're right around the lows of 0:04:48.720 --> 0:04:51.960 the session. I have read so many notes about how 0:04:52.040 --> 0:04:55.240 bad September is for equities. I'm very much not surprised 0:04:55.279 --> 0:04:57.960 by the downdraft today. Grace Lee joins us now. She's 0:04:57.960 --> 0:05:00.800 a senior portfolio manager at Columbia Thread. It'll joining us 0:05:00.920 --> 0:05:05.599 from Boston, Massachusetts. Grace, do I just you know, glaze 0:05:05.680 --> 0:05:08.600 over today and say yeah, okay, seasonality whatever and move on? 0:05:08.839 --> 0:05:10.520 Or is there something real going on here? 0:05:12.040 --> 0:05:12.200 Well? 0:05:12.200 --> 0:05:13.360 Alex, thanks for having me. 0:05:14.360 --> 0:05:17.279 I think we when when you look at August, August 0:05:17.360 --> 0:05:20.400 was actually pretty strong. So uh, you know, when we 0:05:20.440 --> 0:05:23.159 come back from vacation and people are kind of back 0:05:23.200 --> 0:05:27.200 to reality and looking at what is historically a not 0:05:27.360 --> 0:05:30.240 so great month for stocks. I think, I think it's worthwhile, 0:05:30.320 --> 0:05:34.840 but this is not anything to be alarmed about. It's 0:05:35.040 --> 0:05:37.000 it's a bit of a breather and the market certainly 0:05:37.040 --> 0:05:40.440 need some of that every once in a while, So overall, 0:05:40.640 --> 0:05:45.200 not not particularly concerned. It's I think it's somewhat normal. 0:05:45.320 --> 0:05:48.360 And and again there there is still green on the 0:05:48.400 --> 0:05:52.120 screen as well, So it just depends on where where 0:05:52.160 --> 0:05:54.840 people choose to look. So I think there's there's a 0:05:54.920 --> 0:05:58.400 number of defensive type names that are doing holding up 0:05:58.440 --> 0:06:02.000 just fine, and even in a tough market today, in a. 0:06:01.960 --> 0:06:04.479 Tough market like today, or just in general here as 0:06:04.520 --> 0:06:06.719 we head into the last few months of the year, 0:06:07.240 --> 0:06:10.080 am I still banking on the big tech stocks grace 0:06:10.240 --> 0:06:12.239 or should I be looking for other areas in the market, 0:06:12.240 --> 0:06:15.120 other sectors, maybe for value? 0:06:15.560 --> 0:06:19.960 Yeah, I think as a value manager myself, I always 0:06:19.960 --> 0:06:24.240 think value is an interesting place, but in particular given that, 0:06:25.640 --> 0:06:28.159 you know, I think tech has certainly done very well 0:06:28.200 --> 0:06:32.400 and continues to post very strong numbers. But I think 0:06:32.440 --> 0:06:34.279 if you look at some of the estimates. 0:06:33.880 --> 0:06:38.520 For the non mag seven stocks, those are projected to 0:06:38.560 --> 0:06:41.240 do somewhat better in the second half of the year, 0:06:41.440 --> 0:06:45.479 and I think We've already seen the broadening of the market, 0:06:45.680 --> 0:06:50.239 you know, with sectors like utilities and reads posting double 0:06:50.279 --> 0:06:53.120 digits in the last couple of months. Ever, since that 0:06:53.279 --> 0:06:56.560 big July CPI print came out, I think that really 0:06:56.560 --> 0:06:59.640 shifted the tone of the market to people looking forward 0:06:59.720 --> 0:07:01.680 to the first rate cuts. 0:07:02.279 --> 0:07:04.160 So before you move on to sort of what other 0:07:04.200 --> 0:07:07.600 stocks are good, did you mentioned tech? However, everyone still 0:07:07.600 --> 0:07:09.800 wants to own AI. So on days like today, like 0:07:09.800 --> 0:07:11.800 do you buy the dip in video or do you 0:07:11.880 --> 0:07:13.920 just sort of like hold those tech positions of where 0:07:13.920 --> 0:07:15.840 they're at and then put the new money to work 0:07:15.880 --> 0:07:18.480 somewhere else, like in consumer or staples or something. 0:07:19.680 --> 0:07:21.280 Well, I think a lot of people are spending a 0:07:21.320 --> 0:07:23.760 lot of time wringing their hands over how to be 0:07:23.880 --> 0:07:28.840 positioned in in the big tech stocks like in video. 0:07:30.080 --> 0:07:31.200 You know, I think. 0:07:31.000 --> 0:07:35.760 There's still I think most people probably have enough exposure 0:07:35.760 --> 0:07:40.680 at this point. You know, I think it's probably wise 0:07:40.800 --> 0:07:43.600 to look at the other sectors where people have not 0:07:44.520 --> 0:07:46.679 you know, they go to them every once in a while, 0:07:46.760 --> 0:07:49.760 but I think people need to really change their habits 0:07:49.760 --> 0:07:53.920 a little bit. It's been a always return to growth, 0:07:54.640 --> 0:07:57.640 you know, after some of these shakeouts, and you know, 0:07:57.720 --> 0:07:59.840 maybe people need to stick a little bit more to 0:08:00.280 --> 0:08:04.280 the center or more toward value, especially as we are 0:08:04.360 --> 0:08:07.840 seeing rate cuts and some of the sectors that have 0:08:07.920 --> 0:08:11.200 been parked by that are poised to do a lot better. 0:08:11.840 --> 0:08:16.440 And that if people are concerned about recession or so 0:08:16.720 --> 0:08:20.240 then you know, you do have a little bit more 0:08:20.720 --> 0:08:22.640 room in defensive names. 0:08:22.360 --> 0:08:27.640 To hold up so grace. As a dividend focused manager, 0:08:27.760 --> 0:08:31.720 if Tim Cook walked into your office today, what would 0:08:31.760 --> 0:08:33.720 you tell him about or what would you what would 0:08:33.720 --> 0:08:35.959 you suggest to him about a dividend policy For a 0:08:36.000 --> 0:08:38.080 company that's got you know, one hundred and fifty billion 0:08:38.120 --> 0:08:40.080 in cash on the balance sheet, one hundred million dollars 0:08:40.120 --> 0:08:42.360 for free cash flow every year, what kind of advice 0:08:42.360 --> 0:08:44.640 would you give him vis via a dividend policy. 0:08:46.240 --> 0:08:50.520 Well, I think it's up to every management with that 0:08:50.720 --> 0:08:55.040 type of cash flows. It's always welcome to have, and 0:08:55.080 --> 0:08:57.720 I think it does broaden the investor base quite a 0:08:57.720 --> 0:09:01.240 bit when you have a reasonably meet full dividend and 0:09:01.320 --> 0:09:04.439 you're still able to invest plenty in your in your 0:09:04.480 --> 0:09:08.240 business in order to grow, you know, but it's it's 0:09:08.240 --> 0:09:11.240 it's a different balance for all all types of companies. So, 0:09:12.400 --> 0:09:15.280 you know, but I think certainly dividend investors would welcome, 0:09:16.000 --> 0:09:19.000 you know, an increase in any of the big tech 0:09:19.080 --> 0:09:23.119 names if they wanted to to increase their dividends. 0:09:23.280 --> 0:09:24.800 I don't know, Paul, what would you say. 0:09:25.000 --> 0:09:26.280 I would say, give me a two and a half 0:09:26.320 --> 0:09:29.680 three percent dividend yield. And I've said this one already 0:09:29.720 --> 0:09:33.520 said university and campus. I've told him. Then he just 0:09:33.600 --> 0:09:33.800 kind of. 0:09:33.840 --> 0:09:34.320 Brushed me on. 0:09:34.400 --> 0:09:37.360 He says, okay, thanks, Paul, Bye bye, I see you later. Okay, 0:09:37.400 --> 0:09:40.080 So great's final word? If I want to get defensive here, 0:09:40.200 --> 0:09:41.080 what's my best bet? 0:09:42.679 --> 0:09:45.959 Well, we still think that that some of the real 0:09:46.080 --> 0:09:49.480 estate stocks actually look pretty interesting were we've been involved. 0:09:49.559 --> 0:09:52.280 But uh, you know, the other day I looked at 0:09:52.280 --> 0:09:55.320 a couple of them, and they still look very attractive 0:09:55.360 --> 0:10:02.839 in terms of absolute historical valuations and and getting the 0:10:03.320 --> 0:10:06.320 tailwind from rake cuts. They've been probably some of the 0:10:06.320 --> 0:10:09.080 most pressured names of the last couple of years. So 0:10:09.120 --> 0:10:13.000 I think, you know, you've got names like Simon Property, 0:10:13.440 --> 0:10:16.040 which is the big mall owner. 0:10:15.800 --> 0:10:19.480 That is trading at fifty two week highs but is still. 0:10:19.280 --> 0:10:24.959 Not extremely expensive and really is very well positioned overall. 0:10:25.080 --> 0:10:27.439 And still has I think close to a five percent 0:10:27.520 --> 0:10:30.880 dividend yield, so we think names like that still have 0:10:31.120 --> 0:10:31.640 room to go. 0:10:32.720 --> 0:10:34.920 Grace, thanks so much for joining us. Really appreciate getting 0:10:34.920 --> 0:10:35.480 some of your time. 0:10:35.520 --> 0:10:35.920 Grace Lee. 0:10:35.960 --> 0:10:41.520 She's a senior portfolio manager at Columbia thread Needle in Boston. 0:10:41.679 --> 0:10:45.559 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:10:45.640 --> 0:10:48.320 weekdays at ten am Eastern on Apple car Play and 0:10:48.320 --> 0:10:51.360 Android Otto with the Bloomberg Business App. Listen on demand 0:10:51.400 --> 0:10:56.199 wherever you get your podcasts, or watch us live on YouTube. 0:10:57.000 --> 0:10:59.960 Happy Tuesday, Everybody. Alex steal Here alongside Paul Sweeney is 0:11:00.000 --> 0:11:02.640 Boomberg Intelligence Radio. We bring you all the top news 0:11:02.640 --> 0:11:05.360 and business, economics, finance, and politics. There are lens of 0:11:05.360 --> 0:11:08.320 our Bloomberg Intelligence folks. They cover two thousand companies and 0:11:08.320 --> 0:11:10.920 one hundred and thirty industries all around the world. We 0:11:11.000 --> 0:11:14.480 also tap our deep resources coming from Bloomberg News and 0:11:14.559 --> 0:11:17.360 print to cover all the top stories. Now this caught 0:11:17.400 --> 0:11:19.400 my eye over the weekend. I try to check out 0:11:19.400 --> 0:11:22.160 when I'm on VAK, but this one I really had 0:11:22.200 --> 0:11:27.160 to read in because Volkswagen is turning on Germany that 0:11:27.200 --> 0:11:31.160 the company is considering factory closures in Germany for the 0:11:31.160 --> 0:11:34.720 first time and it's eighty seven year history. Not only 0:11:34.800 --> 0:11:37.360 does it part with this tradition, but risks of feud 0:11:37.440 --> 0:11:41.400 with unions in a step that truly reflects the heartache 0:11:41.480 --> 0:11:44.760 that is happening within the European automakers. So we want 0:11:44.840 --> 0:11:48.280 to get more on that with Stefan Nikola, European Automotive editor, 0:11:48.360 --> 0:11:51.439 joining us from Berlin, Germany. So many layers to this 0:11:51.480 --> 0:11:54.439 stuff on. But are they going to are they going 0:11:54.480 --> 0:11:56.599 to cut factories or is this like a threat to 0:11:56.640 --> 0:11:57.559 the government or something. 0:11:59.000 --> 0:12:01.240 Well, we don't know for all, but what we know 0:12:01.400 --> 0:12:03.880 for sure is that a lot of car makers in 0:12:03.920 --> 0:12:07.560 Europe are having issues, and Volkswagen is right at the 0:12:07.559 --> 0:12:11.439 front of that. There is over capacity in Europe. Car 0:12:11.520 --> 0:12:17.560 sales never really returned to levels before the pandemic. EV 0:12:17.800 --> 0:12:21.920 sales growth is slowing, and we have new competitors like Tesla, 0:12:22.040 --> 0:12:25.479 like some of the Chinese entrants that make their life difficult. 0:12:25.559 --> 0:12:29.000 So you know, it could very well be that one 0:12:29.160 --> 0:12:31.640 or even more factories we'll have to close. 0:12:32.080 --> 0:12:35.560 Stefan talk to us about that Chinese competition, because there's 0:12:35.600 --> 0:12:37.600 no Chinese cars to speak of here in the US. 0:12:38.040 --> 0:12:39.679 Talk to us about how it is in Europe. 0:12:41.160 --> 0:12:44.480 Yeah, of course, in the US, the Chinese can't really 0:12:44.480 --> 0:12:46.719 make an entry because of the tariffs there and the 0:12:47.280 --> 0:12:51.800 trade tensions. The EU has answered, as you know, with 0:12:51.920 --> 0:12:55.960 its own set of terraffs. But you know, the Chinese 0:12:55.960 --> 0:12:59.880 car makers have started to expand here in Europe since 0:13:00.040 --> 0:13:05.360 early last year, and the big brands by d MG, 0:13:05.559 --> 0:13:08.959 which is now owned by a Chinese company, Jily, but 0:13:09.360 --> 0:13:13.720 also some of the smaller ones are offering electric but 0:13:13.840 --> 0:13:18.520 also combustion engine cars at a discount prices. So they're 0:13:18.600 --> 0:13:23.040 really you know, producing very cheaply in China and selling 0:13:23.679 --> 0:13:28.520 at a quite affordable and competitive competitive price here in Europe. 0:13:29.040 --> 0:13:32.520 So you know, they're making in roads. They represent about 0:13:32.559 --> 0:13:37.040 ten percent of new sales, so a significant you know, 0:13:37.160 --> 0:13:41.920 competitive competition already, and they have plans to expand more 0:13:42.160 --> 0:13:45.079 produced locally even so, yeah, it's only going to get 0:13:45.360 --> 0:13:47.280 more intense competition here in Europe. 0:13:47.679 --> 0:13:51.080 What I don't understand is my impression of just working 0:13:51.080 --> 0:13:53.960 in Europe is that unions really rule the roost. I mean, 0:13:54.480 --> 0:13:57.920 where unions allow this, Like, what what's that dynamic? 0:13:59.280 --> 0:14:03.320 Yeah, it's a it's a difficult dynamic to say the least. 0:14:04.240 --> 0:14:08.800 Unions will fight this, that's obvious. They will try to 0:14:09.280 --> 0:14:13.440 sweeten any deal. You know, no company in Europe that 0:14:13.600 --> 0:14:17.959 has a major union presence will be able to do 0:14:18.000 --> 0:14:21.520 this on the cheap, So folk Sagen will have to 0:14:21.600 --> 0:14:26.480 pay sort of considerable uh you know, payoffs to any any. 0:14:26.320 --> 0:14:27.480 Workers it will let go. 0:14:28.120 --> 0:14:32.400 But of course unions also understand that the European automotive 0:14:32.480 --> 0:14:37.800 landscape is changing, that label costs are relatively high in 0:14:37.880 --> 0:14:42.400 countries such as Germany, but also Belgium, where an Audi 0:14:42.520 --> 0:14:47.400 plant might go. So it's a fine fine line that 0:14:47.480 --> 0:14:51.120 they have to to walk. But for sure they will 0:14:51.200 --> 0:14:55.600 not go down easily on this front. And and there's 0:14:55.720 --> 0:14:58.720 there's gonna be hard negotiations to come in the coming months. 0:14:59.000 --> 0:15:00.960 All right, Stefan, thanks so much for joining us. Stuff 0:15:00.960 --> 0:15:04.560 on Nicola joining us. He's European automotive editor for Bloomberg News. 0:15:04.640 --> 0:15:07.920 Joining us from Berlin, Germany via zoom Again. That looks 0:15:08.000 --> 0:15:11.160 like tough times in the European One of the questions 0:15:11.200 --> 0:15:13.640 I have just thinking about the longer termanys why are 0:15:13.680 --> 0:15:15.920 they not buying as many cars as it did pre pandemic? 0:15:16.200 --> 0:15:18.040 Are we not the same here in the US. I mean, 0:15:18.040 --> 0:15:18.480 I don't know. 0:15:18.560 --> 0:15:19.960 Oh, I don't know. Let's see you. I feel like 0:15:19.960 --> 0:15:21.160 I should know this off the top of my head. 0:15:21.160 --> 0:15:22.520 But I just I mean, I know they're not. 0:15:23.320 --> 0:15:24.680 Yeah, I'm looking, so I'm like. 0:15:24.640 --> 0:15:26.040 I mean, what are you doing if you're not buying 0:15:26.040 --> 0:15:29.080 a car? How are you getting around? I mean, like me, 0:15:29.200 --> 0:15:30.360 I go my Vespa scooter. 0:15:30.760 --> 0:15:34.800 Maybe in Jersey, maybe talkers don't. Maybe you just don't 0:15:34.800 --> 0:15:37.080 have as many. So I'm looking at where we're are 0:15:37.120 --> 0:15:40.160 in cars. We're not where we were pre pandemic. Yet 0:15:40.480 --> 0:15:42.200 we're definitely not where we were during a spike during 0:15:42.200 --> 0:15:44.480 twenty twenty one, but also not during the pandemic, but 0:15:44.520 --> 0:15:47.560 not by a terrible amount. I just think it's it's 0:15:47.560 --> 0:15:49.440 also more about the cars that they are selling in 0:15:49.520 --> 0:15:51.760 terms of say, evs are just not profitable, so they 0:15:51.800 --> 0:15:53.040 have to spend all this money and then they don't 0:15:53.040 --> 0:15:55.120 get the money back. Like that seems to be sort 0:15:55.160 --> 0:15:57.800 of the issue and how Germany then deals with it. 0:15:57.840 --> 0:16:00.720 But that was a story that really caught my eye. 0:16:01.160 --> 0:16:05.080 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:16:05.120 --> 0:16:08.640 weekdays at ten am Eastern on applecar Play and Android 0:16:08.680 --> 0:16:11.480 Auto with the Bloomberg Business App. You can also listen 0:16:11.600 --> 0:16:14.680 live on Amazon Alexa from our flagship New York station, 0:16:15.040 --> 0:16:20.000 Just Say Alexa playing Bloomberg eleven thirty. 0:16:19.280 --> 0:16:21.600 Ale Steel, Paul Sweeney live here in our Bloomberg Interactive 0:16:21.600 --> 0:16:25.520 Brookers Studio, streaming live on YouTube as well YouTube dot 0:16:25.560 --> 0:16:27.800 Com search Bloomberg Podcast. That's where you'll find us. And 0:16:28.320 --> 0:16:31.640 if you're listening to us in Boston and in New England, 0:16:31.680 --> 0:16:34.520 our new home starting today will be ninety two nine 0:16:34.680 --> 0:16:37.360 FM Bloomberg Radio moving to ninety two nine FM in 0:16:37.400 --> 0:16:40.920 Boston starting at noon today. How cool is that? That's 0:16:40.920 --> 0:16:43.000 a big stick up there, So that'd be good for 0:16:43.040 --> 0:16:45.680 our friends up there in New England. Marvin Lowe, he 0:16:45.760 --> 0:16:48.880 joins US senior Global market strategist State Street. He's up 0:16:48.920 --> 0:16:50.680 in Boston. He's all fired up for that move to 0:16:50.760 --> 0:16:53.680 ninety two nine. Hey, Marvin, I got what is it? 0:16:54.840 --> 0:16:58.680 You're in the marketplace here? I mean, twenty nine companies 0:16:58.720 --> 0:17:04.280 hitting the bond market today. What does that tell you? You 0:17:03.040 --> 0:17:03.240 know what? 0:17:03.280 --> 0:17:06.600 I didn't realize that the calendar was that heavy. And 0:17:06.840 --> 0:17:09.040 it's interesting, right, especially if you think that the FED 0:17:09.119 --> 0:17:11.480 is going to start cutting that, you know, corporate America. 0:17:12.080 --> 0:17:16.320 Corporate treasurers are just marvelous at really understanding the markets 0:17:16.960 --> 0:17:19.000 in a lot of ways better than we do because 0:17:19.000 --> 0:17:20.600 they're they're trying to figure out how to how to 0:17:20.640 --> 0:17:23.960 deal with their funding costs. There must and and and 0:17:24.000 --> 0:17:26.560 I think we're seeing that in some of the price actions. 0:17:26.640 --> 0:17:31.879 There's got to be an increased amount of recessionary concerns 0:17:32.359 --> 0:17:34.879 making their way into the market, because for them to 0:17:35.000 --> 0:17:37.520 want to come in when they know rates are are 0:17:37.840 --> 0:17:41.440 likely going lower must mean that they're worried about access. 0:17:42.000 --> 0:17:45.479 And that's, you know, that's the telling market narrative, if 0:17:45.520 --> 0:17:45.840 you will. 0:17:47.040 --> 0:17:50.600 So what do you think that the potential for upside 0:17:50.640 --> 0:17:52.520 or downside is for them? I mean, we have some 0:17:52.640 --> 0:17:55.840 key risk events, right, so where is the where's the 0:17:55.960 --> 0:17:57.520 risk profile at this point? 0:17:58.200 --> 0:17:58.880 Yeah? For sure. 0:17:58.960 --> 0:18:03.680 I mean the data this week is is top tier. 0:18:03.840 --> 0:18:06.560 We're going to get a real perspective on this twenty 0:18:07.160 --> 0:18:10.160 twenty five versus fifty. You know, we'll get a sense 0:18:10.200 --> 0:18:10.919 of if. 0:18:10.840 --> 0:18:13.720 Bad is good or bad is bad, if. 0:18:13.600 --> 0:18:17.560 You will, you know, I think the real data point 0:18:17.640 --> 0:18:20.720 that's going to define what this quarter looks like is 0:18:20.760 --> 0:18:23.080 that job's number and whether or not kind of the 0:18:23.200 --> 0:18:26.560 slowing that we saw at the end of the summer, 0:18:27.080 --> 0:18:29.800 at least with the July job support which kind of 0:18:29.840 --> 0:18:33.359 set off kind of the recessionary concerns. Is actually the trend? 0:18:33.440 --> 0:18:37.000 You know, are are we really slowing the jobs market 0:18:37.240 --> 0:18:39.280 to the degree that you know that one hundred and 0:18:39.320 --> 0:18:43.080 fourteen thousand print last month indicates? And if we are, 0:18:43.680 --> 0:18:46.960 then the som rule and everything about recession is a 0:18:47.320 --> 0:18:49.679 legitimate market concern kind of going into the end of the. 0:18:49.720 --> 0:18:53.400 Year, Marvin, for better or worse, it's is an election year. 0:18:53.720 --> 0:18:56.239 How does that typically factor into your calculus or do 0:18:56.240 --> 0:18:58.280 you kind of try to put that to the side. 0:18:59.240 --> 0:19:00.480 You know, I try to put it to the side. 0:19:00.520 --> 0:19:03.480 I mean, it's close. We know how heated this election is. 0:19:04.240 --> 0:19:07.560 The FED itself kind of changed their November meeting to 0:19:07.600 --> 0:19:10.960 Thursday rather than Wednesday in the event that the election 0:19:11.040 --> 0:19:13.159 has created a lot of market volatility, So you know, 0:19:13.359 --> 0:19:17.000 you have to take it seriously. The data leads us, however, 0:19:17.160 --> 0:19:21.360 in terms of what the reaction function from a financial 0:19:21.359 --> 0:19:24.600 conditions perspective is. So we're more focused on non farm 0:19:24.640 --> 0:19:27.200 We're more focused on what the data is telling us 0:19:27.200 --> 0:19:31.120 and whether or not what seems like a fairly aggressive 0:19:31.280 --> 0:19:34.680 rate cutting path that's expected for the FED this year. 0:19:34.800 --> 0:19:39.159 You know, four cuts this year potentially might be underestimating 0:19:39.200 --> 0:19:41.960 the economic weakness, but the data is going to guide 0:19:42.040 --> 0:19:43.359 us to the answer around that. 0:19:43.560 --> 0:19:45.680 So already with one hundred basis points, we're looking at 0:19:45.720 --> 0:19:48.520 one fifty basis point cut. It sounds like you're of 0:19:48.560 --> 0:19:50.679 the mind that we should and maybe have more than 0:19:50.680 --> 0:19:52.560 that if there's more economic weakness. 0:19:53.720 --> 0:19:56.720 You know what, I'm still in the camp that's a 0:19:56.920 --> 0:19:59.760 very methodical one per meeting through the end of the 0:19:59.840 --> 0:20:02.920 year makes sense. I'm still in the soft landing camp. 0:20:03.280 --> 0:20:05.680 But in terms of market pricing, if you're not worried 0:20:05.680 --> 0:20:08.800 about reacceleration of debt, the only other part of the 0:20:08.840 --> 0:20:13.080 discussion is that the economy performs worse than expected. And 0:20:13.119 --> 0:20:15.399 from that perspective, you know, I think that the market 0:20:15.440 --> 0:20:17.639 is going to price in a little bit more and 0:20:17.720 --> 0:20:21.280 could probably get more aggressive if the data really starts 0:20:21.320 --> 0:20:23.240 to move in that in that direction. We're not in 0:20:23.280 --> 0:20:25.679 the camp of that. We haven't really seen it. The 0:20:25.760 --> 0:20:30.000 jobs market still looks like it's creating a decent amount 0:20:30.080 --> 0:20:32.399 of jobs to kind of keep the consumer engaged. But 0:20:33.160 --> 0:20:34.240 every data point is live. 0:20:35.359 --> 0:20:38.520 Marvin, You're a senior global macro strategist, Where do you 0:20:38.520 --> 0:20:42.080 see the macro opportunities on a global basis these days? 0:20:43.119 --> 0:20:45.480