WEBVTT - Bracing for a Recession 0:00:13.960 --> 0:00:17.560 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.640 --> 0:00:20.160 My name is Mike Reagan. I'm a senior editor at 0:00:20.160 --> 0:00:23.079 Bloomberg and humble Down a higher across asset reporter with 0:00:23.120 --> 0:00:27.040 Bloomberg at This week on the show, well, Wall Street 0:00:27.040 --> 0:00:30.200 has become obsessed with trying to figure out whether the 0:00:30.280 --> 0:00:33.800 US economy will fall into a recession or whether it's 0:00:33.800 --> 0:00:38.120 already in one. Certain economic data points have weakened, Inflation 0:00:38.240 --> 0:00:42.559 remains sky high, so is a recession inevitable? And how 0:00:42.640 --> 0:00:46.400 much have the markets already discounted a potential recession. We'll 0:00:46.400 --> 0:00:49.800 get into it with a senior markets analyst in London, 0:00:50.479 --> 0:00:52.800 but first, Viltani, you need to catch me up. I've 0:00:52.840 --> 0:00:55.400 been off all week until Thursday. What did I miss? 0:00:55.480 --> 0:00:59.400 As they say, well, all of the new Bloomberg interns started, 0:00:59.640 --> 0:01:01.920 and uh I added a bunch of them on LinkedIn 0:01:02.200 --> 0:01:05.560 or they added me and I accepted. You did you 0:01:05.959 --> 0:01:09.399 disrubbing in there? We already have the interns all in 0:01:09.440 --> 0:01:12.479 your professional network. Yeah, they're not even professionals yet, they're 0:01:12.520 --> 0:01:14.880 just interns and they're and you allow them in your 0:01:14.880 --> 0:01:17.759 professional network. I did. Yeah, I'm getting along with them 0:01:17.840 --> 0:01:21.480 really really well. So we're LinkedIn friends. Welcome to all 0:01:21.520 --> 0:01:26.000 the Bloomberg interns and uh, I'm happy to have you 0:01:26.040 --> 0:01:30.480 in my network. Wow, that's amazing for listeners who haven't 0:01:30.480 --> 0:01:32.680 been paying attention to a kind of refuses to allow 0:01:32.720 --> 0:01:35.840 me into her professional network on LinkedIn. Yet all the 0:01:35.840 --> 0:01:39.640 interns are admitted right away. Yeah, they just started I 0:01:39.680 --> 0:01:42.319 think like three or four days ago. So if I 0:01:42.360 --> 0:01:45.920 were to go back and restart as an intern, would 0:01:45.920 --> 0:01:48.560 you would you let me in? I think so? Yeah, 0:01:48.800 --> 0:01:51.760 it depends. It depends like would we be working together? 0:01:52.360 --> 0:01:55.240 What kind of work would you be producing? But yeah, 0:01:55.520 --> 0:01:57.320 I think so. Now it's it's too late for you 0:01:57.360 --> 0:02:02.880 to that's I'm too old to be an intern. That 0:02:03.080 --> 0:02:04.800 that's the bottom line. I guess do you know who 0:02:04.880 --> 0:02:08.120 else is in my on my LinkedIn network? I bet 0:02:08.280 --> 0:02:11.080 our this week's guest. Yeah, this week with this week's 0:02:11.120 --> 0:02:13.880 guest is also part of my LinkedIn network. I want 0:02:13.880 --> 0:02:17.520 to welcome Fiona Sencoda. She's the senior financial markets analyst 0:02:17.600 --> 0:02:22.200 at City Index. Welcome Fiona, Hey, how're they going? Welcome 0:02:22.240 --> 0:02:25.360 to the show, Fyota, and welcome to vil Donna's professional network. 0:02:25.360 --> 0:02:32.120 It's a very exclusive club, clearly. Uh oh yes, only 0:02:32.720 --> 0:02:35.960 some people being excluded. But I wanted to start UM 0:02:36.680 --> 0:02:39.919 by asking you a little bit about Cindy City Index itself. 0:02:39.960 --> 0:02:41.480 I mean, we definitely want to get your take on 0:02:41.520 --> 0:02:44.240 the on the market outlook and everything. But for US 0:02:44.360 --> 0:02:48.000 listeners who aren't uh familiar with City Index, UM, I'm 0:02:48.040 --> 0:02:50.840 kind of fascinating because you you offer some types of 0:02:50.880 --> 0:02:53.520 trading that UM, I think many of our U S 0:02:53.560 --> 0:02:56.959 listeners are not familiar with, such as spread betting and 0:02:57.320 --> 0:03:01.120 CFD trading. Could you just explain to people who aren't 0:03:01.120 --> 0:03:03.320 familiar with that type of trading what it is and 0:03:03.919 --> 0:03:07.120 how City Index is involved. Yeah, of course, So I 0:03:07.120 --> 0:03:12.000 mean DFD trading and spread trading. They are trading derivatives, 0:03:12.040 --> 0:03:15.960 and the idea is that they're traded on margins. So basically, 0:03:16.000 --> 0:03:19.120 what that means is that when you're taking out a position, 0:03:19.639 --> 0:03:25.480 you don't actually own the position. You're actually making or 0:03:25.520 --> 0:03:29.880 taking an opinion on where you think the price movement 0:03:29.960 --> 0:03:32.480 is going. So you're not owning it like you would 0:03:32.520 --> 0:03:34.840 a stopper a share. If you're going to actually buy 0:03:34.920 --> 0:03:38.240 stocks and shares, you're actually making or losing money on 0:03:38.280 --> 0:03:41.880 the price movement. And so what that means is that 0:03:41.960 --> 0:03:45.120 you can actually short the market just as easily as 0:03:45.160 --> 0:03:48.160 you can go along the market, which is brilliant in 0:03:48.360 --> 0:03:51.480 times of high volatility when you need to get some 0:03:51.600 --> 0:03:55.760 heading strategies going. And also for example, in bear market 0:03:56.680 --> 0:04:03.880 whatever being an industry can become really I mean, there 0:04:03.880 --> 0:04:05.240 are a couple of things to watch out for it. 0:04:05.320 --> 0:04:07.920 I said, it's traded on margins. So what that means 0:04:07.960 --> 0:04:11.080 there is you're actually just putting forward a deposit. You 0:04:11.120 --> 0:04:13.720 don't need to put forward the whole value of the 0:04:13.760 --> 0:04:17.080 trade that you're taking out. Now, that could be very 0:04:17.120 --> 0:04:19.520 advantageous in the sense that you only need to put 0:04:19.560 --> 0:04:22.920 forward like a percentage of the value of your trade, 0:04:23.120 --> 0:04:26.320 but you make losses or gains as if it was 0:04:26.360 --> 0:04:31.000 the full position tide. Brilliant when it goes in your favor, 0:04:32.120 --> 0:04:34.560 not so good when it goes against you. You've got 0:04:34.560 --> 0:04:37.280 to be really hot on your risk management. You've got 0:04:37.320 --> 0:04:40.240 to keep these ideas, you know, stop losses and and 0:04:40.040 --> 0:04:42.320 and sort of really have a good strategy when you're 0:04:42.320 --> 0:04:44.920 trading the market. You can't just sort of leave it 0:04:44.960 --> 0:04:47.919 with the hope that things might turn around, because that 0:04:47.960 --> 0:04:51.839 could get a little bit hairy, right right. I bet 0:04:52.279 --> 0:04:55.200 some of our more active US traders are very jealous 0:04:55.240 --> 0:04:58.000 that that of this type of trading that they can't 0:04:58.000 --> 0:04:59.960 do in the US, But who knows, maybe someday they'll 0:05:00.160 --> 0:05:04.880 all our Um. But are you are the clients a 0:05:05.120 --> 0:05:07.680 sort of a mix of retail and hedge funds and 0:05:07.720 --> 0:05:11.000 whatnot or or what who exactly is uh you know 0:05:11.040 --> 0:05:14.360 the client piece? Yea completely, We have an absolute mix, 0:05:14.480 --> 0:05:17.640 so you know we can go from We do have newbies, 0:05:17.760 --> 0:05:20.560 complete newbies who have never traded before and they're just 0:05:20.600 --> 0:05:23.120 sort of looking to get involved because obviously you can't 0:05:23.120 --> 0:05:26.120 take very small position sizes as well, which is good 0:05:26.160 --> 0:05:28.159 if you're just you know, testing it out and wants 0:05:28.160 --> 0:05:30.719 to see how it all works. Um. And then we 0:05:30.800 --> 0:05:32.680 go all the way out. We scouted all the way through, 0:05:32.760 --> 0:05:35.240 so we've got some big clients in there as well. UM. 0:05:35.720 --> 0:05:38.240 So I mean, you know, different news is people using 0:05:38.279 --> 0:05:41.400 for different and different institutions have different uses for what 0:05:41.440 --> 0:05:44.280 we offer. Um. But yeah, we we we cover the 0:05:44.360 --> 0:05:47.400 complete range professional clients as well as as we tell 0:05:47.480 --> 0:05:50.320 it just so our listeners are aware and is aware. 0:05:50.920 --> 0:05:53.440 And I actually hung out in London when when I 0:05:53.480 --> 0:05:55.080 was there a couple of weeks ago, and we arranged 0:05:55.160 --> 0:05:58.279 the podcast appearance, but I wanted to ask you to 0:05:58.320 --> 0:06:01.080 gauge the mood over there and what it's what it's 0:06:01.080 --> 0:06:04.280 actually like. We have the war in Ukraine, we have 0:06:04.520 --> 0:06:08.760 high inflation in the UK and across the Eurozone. Plus 0:06:08.800 --> 0:06:12.520 we had Germany this week warning of this contagion from 0:06:12.600 --> 0:06:15.159 Russian gas cuts. So I wanted to ask you to 0:06:15.200 --> 0:06:17.040 sort of tell us what it's like, what the mood 0:06:17.080 --> 0:06:20.279 has been like. Yes, I mean it was great catching 0:06:20.320 --> 0:06:22.440 up with you. That was so lovely and putting a 0:06:22.440 --> 0:06:24.719 pace through a name and a chap so that was 0:06:24.760 --> 0:06:28.799 really good fun. But yeah, you know, we're really noticing 0:06:29.240 --> 0:06:32.320 these price rises and I'm sure this is something that 0:06:32.320 --> 0:06:37.440 that's really being noticed across the across the social social 0:06:37.440 --> 0:06:40.120 sectors in the UK at the moment. Are those price 0:06:40.279 --> 0:06:43.800 rises that we've been coming through. Um, you know, inflation 0:06:44.200 --> 0:06:46.960 is really quite high here. It's coming at nine percent, 0:06:47.080 --> 0:06:49.760 it's expected to spring to double digits, were expecting eleven 0:06:50.640 --> 0:06:53.599 in the coming months. Um, And so it's really being 0:06:53.640 --> 0:06:56.200 felt because it's broad based as well food. We have 0:06:56.240 --> 0:06:58.960 a lot of important energies that energy bills are just 0:06:59.080 --> 0:07:02.400 going through the real um that's really proving to be 0:07:02.480 --> 0:07:05.760 quite a struggle, um for a lot of people, and 0:07:05.760 --> 0:07:08.680 it's putting in this we've got this cost of living crisis, 0:07:09.200 --> 0:07:12.520 UM and we're seeing that there's a lot of strikes 0:07:12.560 --> 0:07:15.560 now where where we've got unions wanting their payers to 0:07:15.640 --> 0:07:17.400 have more money. We're just in the middle of this 0:07:17.800 --> 0:07:21.160 huge train strike in in the UK at the moment, 0:07:21.680 --> 0:07:23.360 and so yeah, you know, most of us are working 0:07:23.400 --> 0:07:26.600 from home this week just because it's gonna be impossible 0:07:26.680 --> 0:07:29.400 to get into the office. But this is just one union. 0:07:29.480 --> 0:07:31.520 You know, We've got other unions and workers that are 0:07:31.560 --> 0:07:35.240 planning on more strikes because they want higher wages to 0:07:35.360 --> 0:07:38.040 be able to afford and to be able to copen 0:07:38.040 --> 0:07:41.920 this cost of living crisis. But obviously that's just spiraling 0:07:42.160 --> 0:07:48.720 into this this inflation spiral and helping everything go up more. So, 0:07:48.920 --> 0:07:51.920 you know, it's a very very difficult place we are 0:07:51.960 --> 0:07:54.679 at the moment. We're expecting it a really tough summer 0:07:54.960 --> 0:07:58.120 as far as walkouts, the concerned, as far as rising 0:07:58.160 --> 0:08:01.760 prices they concerned, and for inflation just keep on going home. 0:08:03.520 --> 0:08:05.200 You know, fid I wanted to ask you about that 0:08:05.280 --> 0:08:09.160 because you know, obviously in the US, um UH President 0:08:09.200 --> 0:08:12.720 Biden has gotten a lot of political heat over the 0:08:13.040 --> 0:08:15.840 inflation issue in the US. It doesn't seem correct me 0:08:15.880 --> 0:08:17.840 if I'm wrong. It doesn't seem that maybe Boris john 0:08:18.080 --> 0:08:21.840 Johnson is getting as much criticism and blame for inflation. 0:08:21.920 --> 0:08:24.120 Maybe I'm wrong about that. I feel like people are 0:08:24.120 --> 0:08:28.360 still fixated on the parties he had during COVID. I 0:08:28.440 --> 0:08:33.080 was gonna say, but they're not done with that scandal yet. 0:08:33.120 --> 0:08:36.360 They'll maybe they'll get get to inflation, but it's is 0:08:36.400 --> 0:08:40.200 inflation sort of you know, a political risk across the spectrum. 0:08:40.200 --> 0:08:42.280 Do you think in Europe to to the leaders and 0:08:42.440 --> 0:08:47.080 the leadership parties um because of you know, people expecting 0:08:47.120 --> 0:08:48.880 the government to be able to do something about it. 0:08:49.400 --> 0:08:52.800 How are politics sort of factoring into your your thoughts 0:08:52.800 --> 0:08:56.920 on the markets and what inflation is doing to uh 0:08:57.280 --> 0:09:00.120 things like the labor issue you've discussed. You know that 0:09:00.320 --> 0:09:04.480 there isn't as much yet, I say, of a blame 0:09:04.520 --> 0:09:07.760 game going on as part as Boris Johnson's concerned. As 0:09:07.760 --> 0:09:09.520 he said, you know, we're just all getting over the 0:09:09.559 --> 0:09:12.480 fact that he was over the partying during lockdown. So 0:09:12.600 --> 0:09:14.360 we're just just trying to get a head around that. 0:09:14.400 --> 0:09:16.079 We've had the Queen's do believe there's been quite a 0:09:16.120 --> 0:09:18.679 lot of other things to folks do, but I think 0:09:18.800 --> 0:09:22.000 that's starting to change. We've had some by elections where 0:09:22.000 --> 0:09:24.400 he has not been doing so well. We've seen in 0:09:24.480 --> 0:09:29.840 France as well, Macron's having problems getting a majority in parliament. 0:09:29.960 --> 0:09:32.200 So you know, I think there is this sort of 0:09:32.559 --> 0:09:35.680 it's deeping in there, that there is this sort of 0:09:35.760 --> 0:09:40.000 blame towards the politicians coming in. We just seem at 0:09:40.000 --> 0:09:41.920 the moment, I feel there have been a lot more 0:09:41.960 --> 0:09:45.360 blame thrown towards Andrew Bailey, who has been sort of 0:09:45.400 --> 0:09:50.479 out defending himself quite vigorously recently, you know, over inflation 0:09:50.840 --> 0:09:54.000 and why it suddenly got so out of control and 0:09:54.080 --> 0:09:57.440 why the Bank of England hadn't done anything before. And 0:09:57.480 --> 0:10:01.000 then we've also got Richie snack O Finance, uh, Chance 0:10:01.040 --> 0:10:03.720 of the Exchequer, who has also been sort of drawn 0:10:03.800 --> 0:10:06.840 into this as to what what he's doing where, how 0:10:06.920 --> 0:10:09.000 they're going to help out, how they're going to help 0:10:09.000 --> 0:10:12.079 this for a family, um, so that there is sort 0:10:12.120 --> 0:10:14.240 of a bit of a blame game going on. It's 0:10:14.320 --> 0:10:17.680 not really I think heated up properly yet, but I 0:10:17.720 --> 0:10:20.440 think it will over the summer, as we have more 0:10:20.520 --> 0:10:22.760 strikes and more people struggle to get to work because 0:10:22.760 --> 0:10:24.600 more people can't afford what they want to be able 0:10:24.600 --> 0:10:26.640 to board. That's when we're really going to start to 0:10:26.679 --> 0:10:29.840 see sort of the politicians come under a lot of heat. 0:10:31.840 --> 0:10:34.720 And I know, Fiona, you also focus on the U 0:10:34.840 --> 0:10:38.000 S economy and US markets. We heard from Powell this 0:10:38.040 --> 0:10:40.520 week where he sort of came really close to admitting 0:10:40.559 --> 0:10:43.400 that the FED might not be able to engineer the 0:10:43.440 --> 0:10:46.480 soft dish lenning that everybody's been hoping for it, and 0:10:46.559 --> 0:10:47.960 wanted to ask you what you make of that and 0:10:48.000 --> 0:10:50.920 what you're outlook is in in terms of a recession 0:10:50.960 --> 0:10:54.160 in the US. Yes, so, I mean it was almost 0:10:54.160 --> 0:10:58.760 the first sort of like official acknowledgement that there could 0:10:58.800 --> 0:11:00.880 be a recession in the U earth bright and I 0:11:00.920 --> 0:11:06.040 think that was also the market actually behaved quite interestingly 0:11:06.040 --> 0:11:08.440 in response to that, because we saw the equities actually 0:11:08.440 --> 0:11:12.440 pick up off the session lowse They didn't close higher, 0:11:12.440 --> 0:11:14.400 but they did try to. But we've seen them pushed 0:11:14.440 --> 0:11:18.760 higher today. But this question on is there going to 0:11:18.800 --> 0:11:20.800 be a recession in the US is one that sort 0:11:20.840 --> 0:11:24.079 of really dominating the market this week. When you knows 0:11:24.200 --> 0:11:27.240 as investors to sort of tussle with that idea of 0:11:27.679 --> 0:11:32.280 more huge great heights from the Fed basis points potentially 0:11:32.840 --> 0:11:36.520 in July and another fifty basis points in September. So yeah, 0:11:36.600 --> 0:11:39.040 that that focus of is there going to be a 0:11:39.080 --> 0:11:41.520 recession in the US, and I think the answer is 0:11:41.520 --> 0:11:46.280 still unclear. I think the chances of a recession happening 0:11:46.320 --> 0:11:48.880 in the US are much more likely now than they 0:11:48.920 --> 0:11:53.040 have been for for a very long time. It's not 0:11:53.120 --> 0:11:56.040 as clear cut in the US. That is in Europe. 0:11:56.240 --> 0:11:59.200 I think in Europe it's almost going to be impossible 0:11:59.280 --> 0:12:02.800 for US to have your recession over this side. Um, 0:12:02.840 --> 0:12:06.360 But I think in the US there is still I think, 0:12:07.840 --> 0:12:11.240 and a soft landing is optimistic, we'll put it that way. 0:12:11.280 --> 0:12:15.520 So that puts my expectations of a recession probably morving 0:12:15.679 --> 0:12:19.280 moving over sort of over fifty chance at the moment. 0:12:20.160 --> 0:12:22.160 But there are a couple of things that the US 0:12:22.160 --> 0:12:25.480 economy really does have in its favor, and I think 0:12:25.760 --> 0:12:28.320 that's the leeway in the jobs market. You know, you've 0:12:28.360 --> 0:12:31.679 got such a strong jobs market right now, which is 0:12:31.720 --> 0:12:33.840 obviously does have its down for and the sense that 0:12:33.880 --> 0:12:37.360 it's sort of keeping wages elevated but that does mean 0:12:37.400 --> 0:12:40.200 that there's a lot of leeway, um, you know, gives 0:12:40.240 --> 0:12:43.120 the FED real wiggle room to be able to get 0:12:43.120 --> 0:12:46.200 those big hypes in early and I think that's what 0:12:46.280 --> 0:12:48.360 they're going to be looking at doing. So, you know, 0:12:48.520 --> 0:12:50.560 it could be that the jobs market is actually the 0:12:50.559 --> 0:12:55.000 saving grace for the US economy, even though right now 0:12:55.120 --> 0:12:58.360 that might not necessarily see the point seemed to be 0:12:58.400 --> 0:13:03.160 the case, given that it's keeping wages so high. Well, 0:13:03.320 --> 0:13:06.040 how much do you think has already priced into the market. 0:13:06.080 --> 0:13:08.320 I mean, we're looking at a US stock market that's 0:13:08.360 --> 0:13:12.480 down more on the year. Is the worst already priced in? 0:13:12.559 --> 0:13:14.440 Do you think? Or is there a lot more room 0:13:14.480 --> 0:13:18.200 to fall should the outlook deteriorate and we actually get 0:13:18.840 --> 0:13:23.000 a contraction in growth. You know, I think the focus, 0:13:23.240 --> 0:13:25.439 as I said, was going to be on on the 0:13:25.520 --> 0:13:28.120 job side of things. I think for now. We had 0:13:28.160 --> 0:13:30.680 that big sell off last week when there was that 0:13:30.760 --> 0:13:33.040 sort of realization that the FED is going to raise 0:13:33.640 --> 0:13:36.400 raise height rates like them to buy basic point and 0:13:36.480 --> 0:13:39.240 they did, um and that sort of you know, when 0:13:39.280 --> 0:13:42.040 we saw some some some big sort of moves down 0:13:42.120 --> 0:13:44.400 and we saw the F ANDP bear market move into 0:13:44.400 --> 0:13:48.599 that bear market I do think there is more downside 0:13:48.640 --> 0:13:52.760 to come, and I think that will be coming when 0:13:52.840 --> 0:13:56.440 we start to see the cooling off in the jobs market. 0:13:56.640 --> 0:14:00.080 That's going to start to get people nervous, that's going 0:14:00.160 --> 0:14:03.920 to get invested a little bit more nervous. Um For now, 0:14:04.000 --> 0:14:08.160 we've seen that inflation is high. We know that, we 0:14:08.240 --> 0:14:11.439 know that we've seen that one point five contraction already. 0:14:12.360 --> 0:14:14.960 So I think as far as those maccorrect mimic figures 0:14:14.960 --> 0:14:18.560 are concerned, it's priced in where we are. It's when 0:14:18.600 --> 0:14:22.120 we start to see that that easing in the jobs market. 0:14:22.120 --> 0:14:25.800 And today I mean jobless claims, they hag that they've 0:14:25.920 --> 0:14:28.440 just initial claims of just they're still creeping up for 0:14:28.680 --> 0:14:31.800 that five month high. We're not seeing big moves there, 0:14:31.920 --> 0:14:35.960 but there might just be some sense that there could 0:14:36.040 --> 0:14:39.280 be a little bit of sort of easing coming in. 0:14:39.360 --> 0:14:41.240 So I think that for me is going to be 0:14:41.280 --> 0:14:44.680 like one of the key data points to be really 0:14:44.680 --> 0:14:49.600 watching closely. Are you watching any other indicators besides that? 0:14:49.720 --> 0:14:51.360 I know I talked to a lot of people who 0:14:51.360 --> 0:14:54.800 are looking at technical indicators and so on, and I 0:14:54.840 --> 0:14:58.080 also wanted to ask you to look ahead considering that 0:14:58.160 --> 0:15:00.640 we're talking about you know how much further we could go. 0:15:00.920 --> 0:15:03.280 But what does the second half of the year look 0:15:03.360 --> 0:15:06.920 like now that we now the tune is almost over, okay, 0:15:06.920 --> 0:15:09.200 so you know, as far as the chance they can stand, 0:15:09.520 --> 0:15:12.320 I think the one place that we tend to be 0:15:12.400 --> 0:15:15.440 looking for is movement on the vict right. I think 0:15:15.520 --> 0:15:19.400 historically the Victor has seen a little bit more movement 0:15:19.640 --> 0:15:23.400 when we're sort of getting towards that last part of 0:15:23.400 --> 0:15:26.880 of the bear market and sort of concerns of processions. 0:15:26.880 --> 0:15:30.120 So we haven't really seen that in the Victor yet. 0:15:30.120 --> 0:15:32.760 It's elevated, but it's not up at those levels at 0:15:32.760 --> 0:15:35.400 forty five level, which I think is pretty key to 0:15:35.400 --> 0:15:39.200 be watching out for. And as far as looking out 0:15:39.320 --> 0:15:42.360 towards the second half of the year, I mean, I 0:15:42.400 --> 0:15:46.920 think we will start to see inflation cooling. I mean 0:15:46.960 --> 0:15:50.240 if we look ahead and even just next week, not 0:15:50.280 --> 0:15:51.760 as far as we're going, I want to look ahead, 0:15:51.760 --> 0:15:55.360 well said further, We'll start with next week. You know, 0:15:55.400 --> 0:16:01.320 you've got the PC inflation gage and that's fallen now. 0:16:01.680 --> 0:16:03.800 So it was up at six point six and then 0:16:03.800 --> 0:16:07.840 and then came down to three. If that falls again, 0:16:08.320 --> 0:16:11.480 I think that we could start to say that is 0:16:11.560 --> 0:16:15.200 looking like a friend. And if that's the case, then 0:16:15.320 --> 0:16:19.440 that could potentially continue and that is going to be 0:16:19.640 --> 0:16:22.480 a really good place for the market to be watching, Bob. 0:16:23.280 --> 0:16:25.720 So as far as as what to sort of watch 0:16:25.720 --> 0:16:27.520 out in the second half of the year, I think 0:16:27.680 --> 0:16:33.680 falling inflation is something that we could potentially be seeing. Also, though, 0:16:33.800 --> 0:16:36.040 I think we're also going to be seeing sort of 0:16:36.120 --> 0:16:38.520 a calling as I said in the in the jobs market. 0:16:38.600 --> 0:16:40.280 I think we could expect to see sort of you know, 0:16:40.520 --> 0:16:43.200 those non farm payrolls come right down. We could see 0:16:43.240 --> 0:16:47.040 sort of jobless claims start to inch. Hire um. As 0:16:47.080 --> 0:16:49.280 far as that's been said, they're going to be sort 0:16:49.320 --> 0:16:51.720 of the two key areas that I'm going to be 0:16:51.720 --> 0:16:54.400 watching would be inflation and job for the second half 0:16:54.440 --> 0:16:58.160 of the year. But I think until we've got that 0:16:58.280 --> 0:17:01.200 sense of peeking for ation, which has been you know 0:17:01.240 --> 0:17:03.640 this this real sort of bugged for the market. Have 0:17:03.760 --> 0:17:06.960 we passed it? When's it going to come? Until we 0:17:07.040 --> 0:17:09.359 get to there, and I think the markets are going 0:17:09.400 --> 0:17:18.520 to struggle for me higher, you know, Funeral. I think 0:17:18.680 --> 0:17:21.000 one of the most difficult things for sort of your 0:17:21.080 --> 0:17:26.840 conservative buy and hold investor this year was the the 0:17:26.920 --> 0:17:30.399 correlation between stocks and bonds being so close, you know, 0:17:30.480 --> 0:17:34.720 both falling in tandem. Um. You know, now as we're 0:17:34.760 --> 0:17:38.679 you know, people crossing their fingers and hoping possibly there 0:17:38.760 --> 0:17:41.240 might be a bottom in for for both and and 0:17:41.280 --> 0:17:43.199 they'll both for them up a little bit, you know, 0:17:43.280 --> 0:17:46.600 yields will come down and treasury prices will rise and 0:17:46.640 --> 0:17:50.359 stocks rise. I'm curious how you're thinking about that. How 0:17:50.400 --> 0:17:53.280 long can we uh sort of expect the two to 0:17:53.359 --> 0:17:57.480 be correlated? Uh, you know positively we're you know, what 0:17:57.720 --> 0:18:00.720 would it take do you think to sort of get 0:18:00.720 --> 0:18:03.680 them the dcouple again and sort of start moving in 0:18:03.760 --> 0:18:06.840 uppposite directions again. Yeah. I mean it's been a challenge, 0:18:06.840 --> 0:18:10.920 hasn't it. This year has been like really tough. Cash 0:18:11.080 --> 0:18:13.640 is king, That's what it's been. You know. It's been 0:18:14.080 --> 0:18:16.120 that idea of where are you going to look for 0:18:16.200 --> 0:18:19.920 in order to to to be able to to make 0:18:19.960 --> 0:18:25.679 something something from your investment. I think the idea that 0:18:25.720 --> 0:18:29.439 there has or there is now so much in cash 0:18:30.200 --> 0:18:33.520 is something that would be favorable for the markets and 0:18:33.640 --> 0:18:37.399 seeing that point of change around UM. And I also 0:18:37.440 --> 0:18:40.520 think I generally would expect to see I think a 0:18:40.640 --> 0:18:43.959 movement in bonds before we see the movement in stock. 0:18:44.119 --> 0:18:47.159 So that again is something that I've been looking out for. 0:18:47.240 --> 0:18:50.199 But I don't think with the Yeah, I don't know 0:18:50.320 --> 0:18:53.920 what that event is going to be. Sometimes you see 0:18:53.920 --> 0:18:56.639 that capitulation only where everyone just throws in the towel. 0:18:56.680 --> 0:18:59.159 Then enough enough, you know, take me out before you 0:18:59.280 --> 0:19:02.320 see that botty something out. Whether we'll see that this 0:19:02.400 --> 0:19:05.480 time now, I don't know that's historically the case, um, 0:19:06.040 --> 0:19:09.400 and so but I do think that there is going 0:19:09.440 --> 0:19:12.440 to be a rough ride still to come. I don't 0:19:12.520 --> 0:19:15.680 think it's, as I said, being completely priced and yet 0:19:16.280 --> 0:19:19.600 so I do think volatility is going to remain. And 0:19:19.640 --> 0:19:22.080 also that sort of does mean that having that sort 0:19:22.080 --> 0:19:26.400 of that hedging strategy UM could be really useful for 0:19:26.600 --> 0:19:29.080 these challenging days in the markets, because if you think, well, 0:19:29.119 --> 0:19:31.760 you know, we do a comparison to two years ago, 0:19:32.240 --> 0:19:34.639 by anything, and you're going to make money the market 0:19:34.680 --> 0:19:38.360 just went up, you know, we're in that sort of position, 0:19:38.560 --> 0:19:42.680 whereas it's a much more challenging environment at the moment. Yeah, 0:19:42.760 --> 0:19:45.879 that that whole notion of capitulation is kind of fascinating. 0:19:45.880 --> 0:19:49.080 I mean, we've seen we've had these you know, down 0:19:49.200 --> 0:19:53.320 to three plus percent days and no one is convinced 0:19:53.359 --> 0:19:56.560 we've seen capitulation. And I guess when you see so many, 0:19:56.720 --> 0:19:59.280 so much vilatility, you really need to see something that's 0:19:59.280 --> 0:20:02.480 even above and beyond what we've seen to really feel 0:20:02.480 --> 0:20:04.639 like capitulation is in. Is that is that kind of 0:20:04.640 --> 0:20:07.760 what everyone's waiting for anything? I think so, I think 0:20:07.800 --> 0:20:09.760 that I think that's why. But as you said, you know, 0:20:09.840 --> 0:20:12.680 we have seen the sort of these big swings, and 0:20:12.800 --> 0:20:14.880 to a degree, we've always got a little bit used 0:20:14.880 --> 0:20:18.680 to it, haven't we. So its yeah, so it's something 0:20:18.760 --> 0:20:21.239 even bigger needs to be happening. And is that going 0:20:21.240 --> 0:20:23.840 to be the moment? I mean, and as we know, 0:20:23.920 --> 0:20:27.680 what historically happens doesn't necessarily mean that it's going to 0:20:27.760 --> 0:20:30.560 happen this time. But you know, if we're trying to 0:20:30.680 --> 0:20:34.000 draw comparisons, and that is what would be expecting, but 0:20:34.119 --> 0:20:35.960 it expects to see that rise in the vix, the 0:20:36.160 --> 0:20:40.520 drop off and then a floor in place. Um when 0:20:40.560 --> 0:20:43.520 that will happen at the moment is quite a difficult 0:20:43.600 --> 0:20:47.879 question to answer. But I think we're getting closer, definitely, 0:20:47.920 --> 0:20:50.359 and I think by the by the time that we're moving, 0:20:50.359 --> 0:20:52.280 you know, well into the second quarter of the year, 0:20:53.119 --> 0:20:56.480 then we should have been past that. Does that also 0:20:56.560 --> 0:20:59.440 mean it's too early to say that we've seen a 0:20:59.520 --> 0:21:04.200 pea cans? Yeah, I think it's difficult. That's a really 0:21:04.240 --> 0:21:06.679 good question because I think bonds do me before stock, 0:21:06.760 --> 0:21:09.840 so in the sense that we will see that first, 0:21:09.880 --> 0:21:12.800 and we have seen that, You'll have come off in 0:21:12.840 --> 0:21:16.280 the last couple of days pretty in a pretty impressive 0:21:16.320 --> 0:21:22.040 manner um. But yeah, I just for me, there's still 0:21:22.080 --> 0:21:24.400 there's still more to come out. And I think the 0:21:24.440 --> 0:21:26.760 other thing that we need to be aware of it 0:21:26.960 --> 0:21:31.639 is the situation in Russia and Ukraine is I know 0:21:31.800 --> 0:21:34.640 you are in the US are not as closely tired 0:21:34.640 --> 0:21:37.840 as we are in written by any sense of the picture. 0:21:38.359 --> 0:21:40.679 But I think that that is a big anomaly. And 0:21:40.720 --> 0:21:43.800 also the COVID cases in in China. Again, you know, 0:21:43.880 --> 0:21:46.399 we feel that we might have passed that, but we 0:21:46.520 --> 0:21:49.880 just don't know when these sort of anonymally are going 0:21:49.920 --> 0:21:52.320 to pop up. So I think that's something that is 0:21:52.359 --> 0:21:56.560 worth just being aware of as well. But yeah, I 0:21:56.640 --> 0:21:59.360 just my feeling is there's a little bit longer to go. 0:21:59.560 --> 0:22:02.080 So we've seen this, but yes, that's what we're watching 0:22:02.080 --> 0:22:04.520 out for, is that that that falling in the yield 0:22:04.600 --> 0:22:08.880 and the peak path thing. Yeah, so so how would 0:22:08.880 --> 0:22:11.640