WEBVTT - Bloomberg Surveillance: Powel Speaks and Ukraine Aid 0:00:04.880 --> 0:00:07.960 This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along 0:00:07.960 --> 0:00:10.319 with Tom Keene. Join us each day for insight from 0:00:10.320 --> 0:00:13.840 the best in economics, geopolitics, finance, and investment. You can 0:00:13.880 --> 0:00:17.520 also watch the show live on YouTube. Visit the Bloomberg 0:00:17.560 --> 0:00:20.840 Podcast channel on YouTube to see the show weekday mornings 0:00:20.840 --> 0:00:23.480 from seven to ten Eastern Remark Global Headquarters at New 0:00:23.560 --> 0:00:26.799 York City. Subscribe to the podcast on Apple, Spotify, or 0:00:26.840 --> 0:00:29.880 anywhere else you listen, and as always on Bloomberg Radio, 0:00:29.920 --> 0:00:32.599 the Bloomberg Terminal, and the Bloomberg Business App. I don't 0:00:32.640 --> 0:00:35.959 know what's happening here. This economy looks darnstrong. We got 0:00:35.960 --> 0:00:38.239 some data last week, particularly the jobs front, that just 0:00:38.240 --> 0:00:40.560 shows you how strong the economy is, and it just 0:00:40.640 --> 0:00:43.160 kind of getting people increasingly saying, maybe this feeder reserve 0:00:43.280 --> 0:00:44.879 does not have to. 0:00:44.960 --> 0:00:45.839 Rush too much. 0:00:45.960 --> 0:00:48.280 Let's check in with somebody who who knows this stuff 0:00:48.520 --> 0:00:51.040 better than we do. Jennifer Lee, Senior economist and Managing 0:00:51.080 --> 0:00:54.360 director at BIMO Capital Markets. Hey, Jennifer, we got some 0:00:54.400 --> 0:00:56.920 really strong economic data last week. I mean that jobs 0:00:56.960 --> 0:00:59.240 report just kind of blew out expectations, and then we 0:00:59.520 --> 0:01:02.280 have to fit chair. Last night before the Grammy's on 0:01:02.280 --> 0:01:04.920 sixty minutes saying there were no rush to really cut 0:01:05.000 --> 0:01:07.360 rates here? What do you think the Fed is kind 0:01:07.360 --> 0:01:09.120 of doing? Here is a digest a lot of this 0:01:09.200 --> 0:01:10.520 economic data we've been getting. 0:01:12.040 --> 0:01:13.760 Well, good morning, and thanks for having me on. I 0:01:13.760 --> 0:01:15.600 got to tell you, it's like, just a few minutes 0:01:15.640 --> 0:01:19.520 after that number came out on Friday, my first thought was, 0:01:19.640 --> 0:01:21.760 are we even talking about rate cuts anymore? I mean, 0:01:21.800 --> 0:01:24.480 do we even need to? I mean, that's I'm glad 0:01:24.520 --> 0:01:25.679 that I'm not the only one I was thinking that 0:01:25.680 --> 0:01:27.760 way because I thought, what am I missing? But I 0:01:27.800 --> 0:01:30.480 think it's it's the whole you know, those keywords of 0:01:30.520 --> 0:01:32.679 being patient and what was that where that he kept 0:01:32.720 --> 0:01:35.440 using over and over again after during his press conference 0:01:35.520 --> 0:01:38.920 was being confident and being confident that inflation is coming 0:01:38.959 --> 0:01:42.040 down to two percent, etcetera, etcetera. He needs, They need 0:01:42.040 --> 0:01:45.319 a lot more confidence that you know that that inflation 0:01:45.400 --> 0:01:47.680 again is coming back down to target before they actually 0:01:47.720 --> 0:01:49.560 start to raise rates and of course or start to 0:01:49.560 --> 0:01:52.600 cut rates. And of course this kind of number throws 0:01:52.720 --> 0:01:56.800 I think everyone off, you know, off completely, so you 0:01:56.880 --> 0:01:58.320 have to sort of, you know, read it, get this 0:01:58.360 --> 0:02:00.880 a little bit. Reading the communications a little bit, but 0:02:00.960 --> 0:02:03.680 sort of keep the story on path about rate cuts coming, 0:02:03.840 --> 0:02:07.520 but just not sooner rather than not, but later, of course, 0:02:07.560 --> 0:02:08.440 not rather than sooner. 0:02:08.680 --> 0:02:12.040 Yeah, Jennifer, recalibrating those rate cut expectations. When do you 0:02:12.160 --> 0:02:15.080 think the Fed start to pull the trigger. I'm just 0:02:15.080 --> 0:02:18.400 looking at the warp function WRP on the terminal pricing 0:02:18.440 --> 0:02:20.560 in right now, in June than July and September. What 0:02:20.840 --> 0:02:21.639 are you making of that? 0:02:22.760 --> 0:02:25.040 Yes, that sounds good to me. So we haven't you know, 0:02:25.080 --> 0:02:27.960 we were again, we were debating this on Friday as well, 0:02:28.000 --> 0:02:31.200 but we're going to stick to our July rate cut 0:02:31.240 --> 0:02:34.160 for the for the first move. You know, we had always, 0:02:34.280 --> 0:02:36.760 you know, wondered what we were missing, why the market 0:02:36.800 --> 0:02:40.079 was thinking about March. But you know, I'm glad, I'm 0:02:40.080 --> 0:02:42.720 actually quite glad that fencechair pell sort of put all 0:02:42.760 --> 0:02:46.720 those concerns to rest went by dismissing March last week. 0:02:46.760 --> 0:02:49.320 But we're going to stick with our July rate cut 0:02:49.560 --> 0:02:52.080 to be the first move, and then four moves in 0:02:52.080 --> 0:02:54.080 total during the years, so one hundred basis points in 0:02:54.080 --> 0:02:55.399 total for twenty twenty four. 0:02:55.600 --> 0:02:58.080 Hey, Jennifer, you're looking around the world and it seems 0:02:58.160 --> 0:03:01.760 like the US economy is kind of the exception. 0:03:01.360 --> 0:03:02.399 Here rather than a rule. 0:03:02.440 --> 0:03:05.959 We've got continued weakness in Europe, even including the you know, 0:03:05.960 --> 0:03:09.760 obviously the most important economy over there being Germany. China 0:03:10.400 --> 0:03:14.760 just well below expectations. Does this surprise you that maybe 0:03:14.760 --> 0:03:17.600 the US is doing as well as it is, giving 0:03:17.600 --> 0:03:19.840 that its main trading partners aren't. 0:03:21.639 --> 0:03:23.280 A little bit I'm gonna say, I'm gonna make that 0:03:23.639 --> 0:03:25.720 a little bit makes me a little bit concerned. At 0:03:25.720 --> 0:03:28.840 the same time, you know, again, I'm just always wondering, 0:03:28.840 --> 0:03:31.000 you know, what's what's going to come down next? Is 0:03:31.040 --> 0:03:34.040 going to throw everybody off. But you know, it gives 0:03:34.560 --> 0:03:37.680 support to the IMF last week and the OCD this morning, 0:03:37.680 --> 0:03:40.720 you know, raising their global growth prodcasts for this year 0:03:40.760 --> 0:03:44.640 and sort of study for twenty twenty five on the 0:03:44.680 --> 0:03:48.440 back of a strong resilient US economy. Remarkably resilient, I 0:03:48.480 --> 0:03:51.240 think was what the IMF called it. And meanwtime, you know, 0:03:51.280 --> 0:03:53.520 it's and it stands and start contrast with what we're 0:03:53.520 --> 0:03:55.640 seeing in China. But you know, roughly four and a 0:03:55.680 --> 0:03:58.400 half percent growth this year in Europe, which I think 0:03:58.440 --> 0:04:01.480 is just barely just struggling to even grow. You know, 0:04:01.480 --> 0:04:03.839 we're looking for about a half percentage point increase this year. 0:04:04.200 --> 0:04:06.160 And that also shows up when you're looking at the 0:04:06.160 --> 0:04:08.920 different central banks. You've got the FED who's still again 0:04:08.960 --> 0:04:11.720 talking about great cuts but being but sort of pushing 0:04:11.760 --> 0:04:14.960 it off the start date further off into the distance. 0:04:15.360 --> 0:04:17.200 You've got the ECB debating, you know, whether or not 0:04:17.279 --> 0:04:18.719 they're probably going to go in June, by the way, 0:04:19.680 --> 0:04:21.240 and then of course the Big of England who just 0:04:21.480 --> 0:04:25.200 ditched their tightening bias and Governor Bailey said that point blank, 0:04:25.520 --> 0:04:27.400 and now they're talking about when rates are going to 0:04:27.480 --> 0:04:31.120 come down. So it's a very much different discussion is 0:04:31.160 --> 0:04:33.240 taking place around the world among central banks. 0:04:33.760 --> 0:04:36.920 Jennifer ben Emmons just told us basically kind of reiterating 0:04:37.120 --> 0:04:40.520 j Powell's point that the bigger concern, biggest concern, if 0:04:40.520 --> 0:04:43.719 you will, is geopolitical risk. How are you taking that 0:04:43.800 --> 0:04:48.040 into account? Just given the continuing wars going on across 0:04:48.080 --> 0:04:50.120 the pond, that. 0:04:50.120 --> 0:04:52.440 Is probably one of those, you know, those big sources 0:04:52.440 --> 0:04:54.680 of uncertainty that you know that all the data in 0:04:54.680 --> 0:04:56.279 the world are not going to be able to predict. 0:04:56.640 --> 0:04:59.360 You know, you've got not only just like the actual 0:04:59.400 --> 0:05:02.560 war itself, but of course the economic impact in terms 0:05:02.600 --> 0:05:05.200 of inflationary impact. You know, it may not be what 0:05:05.240 --> 0:05:07.320 we saw back you know, in terms of supply chain issues, 0:05:07.360 --> 0:05:09.200 not what we saw back in the during the pandemic, 0:05:09.440 --> 0:05:11.880 but it's still having an impact, especially with you know, 0:05:12.720 --> 0:05:16.400 very few ships going through the Red Sea nowadays and 0:05:16.839 --> 0:05:20.040 going around Africa instead to get from Europe to China 0:05:20.160 --> 0:05:22.640 or around the other way around. So that's adding another 0:05:22.720 --> 0:05:25.480 ten days last time I checked. You know, all the 0:05:25.520 --> 0:05:27.480 ships are all using oil as well, so it's all 0:05:27.720 --> 0:05:29.280 it's not an ev it's not you know, they're not 0:05:29.400 --> 0:05:33.000 using battery batteries to runder ships. So this is all 0:05:33.080 --> 0:05:36.000 potentially inflationary, not as much as what we saw back 0:05:36.040 --> 0:05:38.200 in twenty twenty, of course, but this adds a lot 0:05:38.200 --> 0:05:41.640 of pressure I think on what center banks are watching again, 0:05:41.800 --> 0:05:44.039 not only just the word themselves, but the economic impact. 0:05:44.720 --> 0:05:46.680 Jennifer, I've seen the US dollars kind of rallying here 0:05:46.720 --> 0:05:48.239 a little bit in the last several weeks, I guess, 0:05:48.279 --> 0:05:51.840 expectations that maybe the FED won't be as aggressive as 0:05:51.839 --> 0:05:54.880 maybe we originally thought and cutting rates here. How do 0:05:54.880 --> 0:05:57.359 you think about the currency markets and the dollar here? 0:05:58.320 --> 0:06:00.160 So the current America has been like the one of 0:06:00.240 --> 0:06:03.040 the most toughest things to call over the past few years. 0:06:03.080 --> 0:06:05.440 It's it's been always, at least last few years, it 0:06:05.440 --> 0:06:07.600 has been very much of a strong US dollar story. 0:06:07.920 --> 0:06:10.040 Now this year, we're still looking for the US dollars 0:06:10.040 --> 0:06:12.160 to weekend some much just you know, in theory, when 0:06:12.279 --> 0:06:14.000 you know the Fed starting to cut rates, that should 0:06:14.000 --> 0:06:16.039 take some of the wind out of the US dollars sales. 0:06:16.080 --> 0:06:18.479 But you know, I think I said this before. I 0:06:18.480 --> 0:06:20.960 think it's all about perception. If all the economies around 0:06:20.960 --> 0:06:23.680 the world are slowing, but the US is slowing the 0:06:23.760 --> 0:06:25.600 leads or at the slowest pace, if you know what 0:06:25.600 --> 0:06:27.599 I mean. You know, I think that would actually give 0:06:27.640 --> 0:06:30.200 support to the US dollars. So even though it's going 0:06:30.240 --> 0:06:31.520 to you know, we look for the green back to 0:06:31.520 --> 0:06:33.680 weaken somewhat, I don't think it's gonna be weakening as 0:06:33.760 --> 0:06:36.120 much as we had originally anticipated, say a half a 0:06:36.200 --> 0:06:36.640 year ago. 0:06:37.320 --> 0:06:40.360 With payrolls out of the way, with as Paul pointed out, 0:06:40.720 --> 0:06:45.520 uh J. Powell kind of kicking off Grammy's Night, what's next? 0:06:45.560 --> 0:06:47.479 What is on? What are you looking forward to? 0:06:47.560 --> 0:06:50.680 What do you have in the days weeks ahead that 0:06:50.920 --> 0:06:52.240 can really drive this market. 0:06:53.720 --> 0:06:56.080 I think it's going to I mean, it's not like 0:06:56.120 --> 0:06:57.400 a work a record, but it's all going to be 0:06:57.480 --> 0:06:59.800 coming back down to data, all the keys, all the 0:06:59.880 --> 0:07:01.839 key numbers. We can't only just look at, just like 0:07:01.880 --> 0:07:03.359 with payrolls, you know, you can't just look at this 0:07:03.440 --> 0:07:06.560 one report on its own. But it's for the inflation 0:07:06.640 --> 0:07:09.640 data for sure. We're looking at CPI and even producer 0:07:09.680 --> 0:07:13.600 prices just as an indicator of prices coming through the pipeline, 0:07:13.760 --> 0:07:17.040 and certainly the PC de flavors, and of course consumer spending, 0:07:17.200 --> 0:07:20.520 the all important consumer spending numbers again not just retail sales, 0:07:20.520 --> 0:07:23.280 but the all inclusive PC report, just to see how 0:07:23.320 --> 0:07:26.240 broader spending patterns are. You know, I think overall, you 0:07:26.520 --> 0:07:28.400 as long as you have strong jobs, you're still going 0:07:28.440 --> 0:07:32.840 to see solid fundamentals below. The US consumer, you know, 0:07:32.840 --> 0:07:34.720 they don't have to spend spend all their all their 0:07:34.760 --> 0:07:37.080 hard ar and serving the savings right away. But at 0:07:37.120 --> 0:07:39.280 the same time, it gives them support that it puts 0:07:39.320 --> 0:07:41.640 them away for a rainy day, and that will help them, 0:07:41.800 --> 0:07:45.120 you know, that will actually help support the US economy 0:07:45.200 --> 0:07:47.680 going forward, as opposed to you know, just having everything 0:07:47.720 --> 0:07:48.760 spent all in one quarter. 0:07:49.160 --> 0:07:51.920 All right, Jennifer, thank you very much, As always, Jennifer Lee. 0:07:52.000 --> 0:07:55.400 She's a senior economist managing director of PEMO Capital Markets, 0:07:55.400 --> 0:08:08.680 located up there in Toronto. Nobody better to talk to 0:08:08.680 --> 0:08:10.880 geopolitics than Mick Molroy. He's a co founder of the 0:08:10.960 --> 0:08:14.880 Lobo Institute. The Lobo Institute consults, advisors and teachers on 0:08:14.960 --> 0:08:16.840 current and future conflicts. 0:08:17.000 --> 0:08:18.920 His resume is just extraordinary. 0:08:19.120 --> 0:08:21.960 Former Deputy Assistant Secretary of Defense for the Middle East 0:08:21.960 --> 0:08:25.920 at the US Department of Defense, former Paramilitary Operations officer 0:08:25.960 --> 0:08:28.520 at CIA, I've heard of them, and a former US 0:08:28.560 --> 0:08:31.160 Marine Infantry officer for like I know, twenty six years. 0:08:31.240 --> 0:08:34.200 We thank him very much for his military service. McK 0:08:34.280 --> 0:08:37.640 moulroy joins us. Hey, Mick, it's heating up. Perhaps. I 0:08:37.679 --> 0:08:39.360 think the risk for a lot of folks shares we 0:08:39.360 --> 0:08:41.760 think about the Middle East is seems like the scope 0:08:41.760 --> 0:08:44.720 heare might be expanding. Where are we right now and 0:08:44.760 --> 0:08:46.400 what are the risks do you think in that part 0:08:46.440 --> 0:08:46.920 of the world. 0:08:48.760 --> 0:08:50.880 Great to be with you, guys, and I just returned 0:08:50.880 --> 0:08:54.679 from Israel, where I was in a lot of discussions 0:08:54.760 --> 0:08:57.360 on these things, these topics, and of course Secretary Blanken 0:08:57.960 --> 0:08:59.559 is in the region right now and he's going to 0:08:59.600 --> 0:09:03.320 be pushed on several things. Of course, specifically to the 0:09:03.360 --> 0:09:06.760 war in Gaza. He's going to be talking about the 0:09:06.840 --> 0:09:12.600 needs of transition to a lower intensity combative situation, and 0:09:12.640 --> 0:09:16.080 of course Israel still has their strategic aim to military 0:09:16.200 --> 0:09:19.280 league defeat Hamas, but that is not going to be 0:09:19.720 --> 0:09:21.720 done anytime soon. He's going to be talking about the 0:09:21.760 --> 0:09:24.040 need for increasing umanitarian aid. And then to the point 0:09:24.080 --> 0:09:27.000 of her question, this is a conflict that has already 0:09:27.080 --> 0:09:30.960 expanded across the region with the Huthis attacks in the 0:09:31.000 --> 0:09:34.000 Red Sea, in the Gulf of Aden and the near 0:09:34.040 --> 0:09:37.120 continuous attacks on our forces in Syria and Iraq. That 0:09:37.400 --> 0:09:40.120 might continue and might have to be even more of 0:09:40.160 --> 0:09:42.560 a substantial response that we've seen in so far. So 0:09:42.600 --> 0:09:45.560 there is and then lastly, i'd say when it comes 0:09:45.559 --> 0:09:49.000 to expansion, there's always a concern of Hezbollah in Lebanon 0:09:49.080 --> 0:09:52.200 and expanding that to include two front war in Israel. 0:09:52.480 --> 0:09:55.320 So this is something that is it's a tinderbox. I 0:09:55.360 --> 0:09:59.040 would argue that it's already happening. The question is whether 0:09:59.080 --> 0:10:02.200 we can invent this from becoming a war that's directly 0:10:02.240 --> 0:10:06.200 between the United States in Iran, and that's to be determined. 0:10:06.200 --> 0:10:08.880 I would say, yeah, what canon should be done in 0:10:08.920 --> 0:10:10.680 your view to prevent that from happening. 0:10:12.360 --> 0:10:15.000 So there's a fine balance when it comes to our 0:10:15.120 --> 0:10:20.280 responses to these attacks, for example, both against commercial shipping 0:10:21.360 --> 0:10:25.400 and our very naval forces that are there, and then 0:10:25.679 --> 0:10:29.080 these continuous attacks against our positions in Iraq and Syria. 0:10:29.240 --> 0:10:32.240 I think the administration has now decided that they have 0:10:32.280 --> 0:10:35.079 to be more forceable because they're obviously not reaching the 0:10:35.160 --> 0:10:39.280 level deterrence that they wanted, and those attacks are now 0:10:39.320 --> 0:10:44.080 going after I think IRGC positions, that's the Iranian Special 0:10:44.080 --> 0:10:47.880 Operation Forces that works with the APPROXY forces in Syria 0:10:47.880 --> 0:10:51.280 and Iraq, but it might eventually include targets in Iran. 0:10:51.320 --> 0:10:55.280 And I think the non answer from National Security Advisor 0:10:55.320 --> 0:10:58.480 Sullivan recently on the television when he was asked that 0:10:58.600 --> 0:11:01.719 question is means to me that they are looking at 0:11:01.720 --> 0:11:04.960 that in the future if they cannot do deterrence any 0:11:04.960 --> 0:11:05.400 other way. 0:11:05.800 --> 0:11:08.480 In terms of deterrence, Mick, you know better than anybody 0:11:08.559 --> 0:11:10.440 kind of the assets the US has in that part 0:11:10.440 --> 0:11:12.720 of the world. Do we have the assets and capabilities 0:11:12.720 --> 0:11:18.160 to really deal a serious blow to the Huthis and 0:11:18.400 --> 0:11:20.360 try to get some control back in that part of 0:11:20.360 --> 0:11:22.400 the world, whether it's the Red Sea in other parts. 0:11:24.240 --> 0:11:27.200 Yes, we do. We have not only the assets that 0:11:27.240 --> 0:11:31.680 we've pushed to the region, but we have considerable assets 0:11:31.720 --> 0:11:36.120 for example in Ledade, in Qatar, in Baharain with our 0:11:36.400 --> 0:11:40.440 fifth Fleet of Central Command. And we of course have 0:11:40.559 --> 0:11:44.680 the ability to project power better than any country in 0:11:44.720 --> 0:11:48.080 the world, perhaps in history, so we can we have 0:11:48.200 --> 0:11:51.160 the assets that we can certainly surge to get more 0:11:51.200 --> 0:11:54.400 assets there. The question is what is the balance between 0:11:54.760 --> 0:11:58.640 responding forcefully enough to get Ran to change its calculation 0:11:58.720 --> 0:12:02.160 when it comes to their support for proxies. And yes, 0:12:02.240 --> 0:12:04.720 they have different levels of controls of each of these 0:12:04.720 --> 0:12:08.520 proxy forces, but ultimately they keep providing the very weapons 0:12:09.080 --> 0:12:11.400 that are being launched at our troops. So I think 0:12:11.440 --> 0:12:15.240 the indicator of whether we have reached deterrence is if 0:12:15.280 --> 0:12:18.600 that stops. And I also would say that if it continues, 0:12:18.840 --> 0:12:21.760 that means they intend these weapons to be used against 0:12:21.760 --> 0:12:25.000 our forces, which to me means they're complicit in these attacks. 0:12:25.679 --> 0:12:27.600 And Nick, we were talking to one of our DC 0:12:27.880 --> 0:12:30.600 editors a minute ago about some of the aids and 0:12:30.679 --> 0:12:34.520 hurdles that are going on on Capitol Hill. How does 0:12:34.559 --> 0:12:39.360 that impact what's going on with Israel, Ukraine, Taiwan and China. 0:12:41.120 --> 0:12:43.960 So they are tying of course, as you know, a 0:12:44.000 --> 0:12:50.800 lot of these security assistant packages together. So Ukraine absolutely 0:12:50.840 --> 0:12:55.160 need to continue to support Ukraine. They are decimating one 0:12:55.200 --> 0:12:58.760 of our most significant adversaries in Russia, right, So that 0:12:58.920 --> 0:13:01.280 is something that I think is clearly at the United 0:13:01.320 --> 0:13:05.760 States interest. It isn't charity. Obviously we should also support 0:13:05.800 --> 0:13:08.520 partners because that's what good partners do. But this is 0:13:08.520 --> 0:13:13.400 also on our interest and that shows, like Taiwan and China, 0:13:13.480 --> 0:13:16.199 that we are a good partner and we stick with 0:13:16.800 --> 0:13:20.079 our partners. So I think how we act with Ukraine 0:13:20.120 --> 0:13:23.040 will have an effect on China and a Taiwan situation. 0:13:23.360 --> 0:13:26.079 And of course the aid specifically for the Middle East, 0:13:26.240 --> 0:13:28.680 it's both for Israel and at last I've read is 0:13:28.960 --> 0:13:31.719 like a ten billion dollar ear mark for Gaza when 0:13:31.720 --> 0:13:33.839 it comes to humanitarian aid, and I would assume that 0:13:33.840 --> 0:13:36.480 it would also be for reconstruction after the end of 0:13:36.520 --> 0:13:41.360 combat operations. All of those things are incredibly important both 0:13:41.400 --> 0:13:44.040 to support a partner in Israel, but also to really 0:13:44.080 --> 0:13:47.160 recognize the level of a human crisis. That's going on 0:13:47.200 --> 0:13:49.520 in Gaza right now. There needs to be much more 0:13:49.920 --> 0:13:52.600 humanitarian aid going in there, and it's going to be 0:13:52.679 --> 0:13:55.720 needed for the foreseeable future. But there also needs to 0:13:55.720 --> 0:14:01.079 be a reconstruction effort, as Gaza itself has been essentially decimated. 0:14:01.640 --> 0:14:03.840 Heynck, I'm probably like a lot of people in that 0:14:04.360 --> 0:14:06.160 the news flow coming out of the Middle East has 0:14:06.200 --> 0:14:07.800 kind of pushed Ukraine on the. 0:14:07.720 --> 0:14:09.000 Back burner a little bit. 0:14:09.280 --> 0:14:11.640 Can you give us an updated assessment from you know, 0:14:11.679 --> 0:14:15.720 your sources about how this thing can play out here? 0:14:15.840 --> 0:14:18.280 I mean, are we gearing up for another spring offensive? 0:14:18.320 --> 0:14:21.360 I'll be back into that narrative. Is there any sense 0:14:21.360 --> 0:14:23.160 that there can be some movement? It's been such a 0:14:23.160 --> 0:14:24.120 long time now. 0:14:25.480 --> 0:14:28.360 Right so we are at somewhat of an impass, somewhat 0:14:28.360 --> 0:14:30.840 of a stalemate, if you will. But it's important to 0:14:30.840 --> 0:14:34.880 point out a stalemate doesn't mean that the fighting hasn't subsided. 0:14:34.920 --> 0:14:38.640 There's considerable fighting going on in Russia is losing a 0:14:38.680 --> 0:14:42.440 lot of soldiers and equipment every day. I think what 0:14:42.920 --> 0:14:45.440 Putin is looking at right now. President Putin's looking at 0:14:45.440 --> 0:14:48.920 our level of support and what if anything would change 0:14:48.960 --> 0:14:52.160 if they're in the presidential election. That is what he's 0:14:52.200 --> 0:14:56.320 hoping on that we cut our aid. Obviously, the European Union, 0:14:56.440 --> 0:15:00.440 our European allies have stepped up and need to continue 0:15:00.480 --> 0:15:02.960 to step up, but the United States also needs to 0:15:03.000 --> 0:15:07.280 match that. It's very imperative that I think the Ukrainians 0:15:07.360 --> 0:15:11.760 get these significant weapons systems like the F sixteen fighter jet, 0:15:12.080 --> 0:15:16.080 like long range artillery the attackers. That is really what's 0:15:16.120 --> 0:15:18.880 needed for them to have an effect, be able to 0:15:18.920 --> 0:15:21.840 go and continue on this counter offensive and take back 0:15:21.880 --> 0:15:24.800 to Rain. If they don't have that, it's essentially going 0:15:24.880 --> 0:15:26.560 to continue in this stalemate. It's going to be a 0:15:26.600 --> 0:15:29.000 tick to tack for a long time, which of course 0:15:29.240 --> 0:15:31.720 we don't want. We want them to start making gains. 0:15:32.280 --> 0:15:34.360 We want to help them start making gains so they 0:15:34.400 --> 0:15:37.040 push putin into a corner where he is looking for 0:15:37.080 --> 0:15:39.960 an exit ramp right now, he's waiting to see what 0:15:40.000 --> 0:15:40.360 we do. 0:15:40.960 --> 0:15:42.640 Yeah, all right, very good, Nick, Thanks so much for 0:15:42.720 --> 0:15:45.880 joining us. Always appreciate getting the benefit of your wisdom 0:15:45.880 --> 0:15:47.800 and experience. Mick Molroy, he's a co founder of the 0:15:47.800 --> 0:15:55.200 Lobo Institute, a career full of international experience here on geopolitics, 0:15:55.200 --> 0:15:57.040 and boy, there's a lot to talk about. 0:16:00.760 --> 0:16:03.120 Right now, Let's go to Laurie Cavacina or Cavasina. 0:16:03.160 --> 0:16:06.680 She's head of US equity strategy at OURBC Capital Markets 0:16:06.760 --> 0:16:07.680 Royal Bank at Canada. 0:16:07.680 --> 0:16:09.840 But we've got the Canadian banks covered today. 0:16:10.560 --> 0:16:13.000 Hey, Laurie, thanks so much for joining us here. You know, 0:16:13.480 --> 0:16:16.440 I'd love to get your perspective on the market snapshot 0:16:16.520 --> 0:16:19.880 right here. We had a really strong November December for 0:16:20.040 --> 0:16:23.720 risk guss at stocks, bonds ripping, a decent January. I mean, 0:16:23.760 --> 0:16:26.400 let's let's let's be honest. Do I just keep riding 0:16:26.440 --> 0:16:28.320 this thing? Do I just keep writing the big names 0:16:28.320 --> 0:16:29.000 that have worked for me? 0:16:29.200 --> 0:16:29.880 What do I do here? 0:16:32.000 --> 0:16:32.120 Right? 0:16:32.160 --> 0:16:34.680 So thanks for having me look. I think to some 0:16:34.760 --> 0:16:37.680 extent depends on your time horizon and your risk profile. 0:16:37.800 --> 0:16:41.120 I think the big move in November December was absolutely deserved. 0:16:41.160 --> 0:16:42.800 We baked in a lot of good news on twenty 0:16:42.880 --> 0:16:44.960 twenty four, including the idea that the FED is going 0:16:45.000 --> 0:16:48.680 to start cutting I think that January we saw, you know, 0:16:48.720 --> 0:16:51.480 sort of the markets do well for interesting reasons. We 0:16:51.520 --> 0:16:53.240 saw the bond yi old move back up if you 0:16:53.240 --> 0:16:54.960 look at the ten year and that really supported the 0:16:54.960 --> 0:16:57.360 growth side of the trade, which is the bigger you know, 0:16:57.440 --> 0:16:59.560 market cap weight in the index. So it kind of 0:16:59.600 --> 0:17:02.600 brought an end to the broadening out that had gotten 0:17:02.640 --> 0:17:04.919 people excited in November and December. But we went up 0:17:04.960 --> 0:17:08.199 for slightly different reasons, and I don't actually think that 0:17:08.320 --> 0:17:10.480 earnings has given us too much of a reason to 0:17:10.520 --> 0:17:13.000 go up. Nevertheless, the market has kind of muddled through. 0:17:13.240 --> 0:17:15.959 I think where we sit today is sentiments at a 0:17:16.040 --> 0:17:19.840 particularly sort of stretched point. That being said, my work 0:17:19.880 --> 0:17:22.679 does suggest that valuation should be supportive at the end 0:17:22.720 --> 0:17:25.239 of the year, that as inflation continues to moderate, if 0:17:25.280 --> 0:17:27.320 we get better economic data in the back half of 0:17:27.359 --> 0:17:29.879 the year and interest rates come down just a little bit, 0:17:29.880 --> 0:17:32.440 we can support a pretty robust pe multiple in the market. 0:17:32.440 --> 0:17:34.480 So I think we may have to ride out some volatility. 0:17:34.520 --> 0:17:35.959 I think we're going to pay the price for all 0:17:36.000 --> 0:17:38.600 that you know, big move that we had in November 0:17:38.600 --> 0:17:40.720 through January. But I think you wouldn't want to buy 0:17:40.760 --> 0:17:42.639 that dip. So again, are you going to try to 0:17:42.640 --> 0:17:44.720 play for every little tactical turn or you're just going 0:17:44.800 --> 0:17:47.200 to kind of, you know, ignore the noise. Most people 0:17:47.240 --> 0:17:49.280 I talked to you are probably in the latter camp, and. 0:17:49.240 --> 0:17:51.679 Laurier when you're looking at buying the dip is that 0:17:51.720 --> 0:17:54.080 on individual stocks, are we looking at buying? You know, 0:17:54.160 --> 0:17:57.000 the cues if we see the NASDAC come under some pressure. 0:17:58.680 --> 0:18:00.920 So you know, I've given edge to small caps and 0:18:01.040 --> 0:18:03.159 value on the year, and I do think that the 0:18:03.520 --> 0:18:06.520 Magnificent seven, I guess now we're talking about the top five. 0:18:06.600 --> 0:18:08.920 You know, I think they've outperformed for very good reasons. 0:18:09.280 --> 0:18:12.240 That being said, I think valuations are highly stretched. If 0:18:12.240 --> 0:18:13.639 you look at the top ten names in the S 0:18:13.680 --> 0:18:16.440 and P five hundred, we're sitting at peak valuation. If 0:18:16.440 --> 0:18:19.800 you look at positioning, crowding on the CFTC data, if 0:18:19.840 --> 0:18:21.679 you basically just look at what is owned in the 0:18:21.760 --> 0:18:25.280 Nasdaq futures in terms of byside positioning, we've actually broken 0:18:25.320 --> 0:18:28.000 above twenty thirteen twenty fifteen highs. So I think we 0:18:28.040 --> 0:18:31.000 look quite stretched. And I think you look at things 0:18:31.040 --> 0:18:34.160 like small caps where the valuations are about average, You've 0:18:34.200 --> 0:18:36.520 got positioned at three year highs but nowhere close to 0:18:36.560 --> 0:18:38.240 all time highs. I think you've got a lot more 0:18:38.320 --> 0:18:40.880 room there to run. I do think for that part 0:18:40.920 --> 0:18:42.880 of the market and this broadening out to really work, 0:18:42.920 --> 0:18:46.120 you've got to see economic expectations improved. So far, we're 0:18:46.119 --> 0:18:49.080 only seeing people really inch up one que numbers. We're 0:18:49.080 --> 0:18:52.080 not really seeing a broader improvement in twenty twenty four 0:18:52.160 --> 0:18:53.840 numbers as a whole, and you really need the ladder 0:18:53.840 --> 0:18:56.159 to get that broadening trade to work. I'm in the 0:18:56.160 --> 0:19:00.600 camp it probably can simply because I think economics xations 0:19:00.640 --> 0:19:02.760 have been consistently too low and I think we're in 0:19:02.880 --> 0:19:05.960 kind of a post crisis PTSD in the economics community. 0:19:06.680 --> 0:19:10.320 So, Laurier, when you screen this market here, are there 0:19:10.320 --> 0:19:12.080 any sectors that kind of jump out of you as 0:19:12.119 --> 0:19:15.280 either really attract them on a momentum basis of value 0:19:15.400 --> 0:19:17.600 basis kind of what are you talking to your clients 0:19:17.600 --> 0:19:18.280 about these days? 0:19:19.400 --> 0:19:21.960 So I think sectors are really tough. I think that 0:19:22.040 --> 0:19:25.399 you're more looking at opportunities in individual names and industries 0:19:25.400 --> 0:19:27.880 within sectors. That being said, I'm a strategist, so it's 0:19:27.920 --> 0:19:31.360