Latest / Bloomberg Intelligence / The Latest On Infrastructure And Oil And Previewing Jobs Day

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The Latest On Infrastructure And Oil And Previewing Jobs Day · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
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  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. All right, let's bring
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  Speaker 1: in Sophia Song Matt. She's global cities leader for Gensler.
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  Speaker 1: Get a sense of kind of what this big infrastructure
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  Speaker 1: plan means for the cities in this country. Sophia, thank
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  Speaker 1: so much for joining us here again A big, big
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  Speaker 1: number on that bipartisan infrastructure plan. What does it mean
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  Speaker 1: for big and small cities across the United States. First
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  Speaker 1: of all, thanks so much for having me. Uh. I
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  Speaker 1: think the bill is a great first step towards being
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  Speaker 1: really being transformational for for cities. I think the impact
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  Speaker 1: will be seen differently depending on the city that we're
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  Speaker 1: talking about. Um but I think we need to keep
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  Speaker 1: in mind that only only half of the infrastructure bid
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  Speaker 1: is actually new spending, while the other half is what
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  Speaker 1: we've already been spending just to keep it keep up
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  Speaker 1: with maintenance and backlog of projects. And so it's still
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  Speaker 1: not enough to close that two and a half trillion
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  Speaker 1: dollar infrastructure investment gap that's been growing since the seventies.
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  Speaker 1: It won't solve all of our infrastructure problems across the nation,
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  Speaker 1: but it's a great first step to closing, uh, that
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  Speaker 1: massive gap beyond what is what is the answer, Sophia.
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  Speaker 1: You know, I talked to a lot of people, um,
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  Speaker 1: you know Wall Street women and men, but from both
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  Speaker 1: sides of the aisle or even a political and they
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  Speaker 1: all say we need to spend a lot more on infrastructure.
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  Speaker 1: But you know it can't all come directly from the
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  Speaker 1: m Jerome Palell's printing presses, right, There's got to be
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  Speaker 1: another way. Yeah, it's not the feed this infrastructure bill alone.
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  Speaker 1: You know, since the nineteen seventies, it's actually been an
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  Speaker 1: under investment in the US. The you know, in infrastructure
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  Speaker 1: investment in the US has been declining since the seventies,
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  Speaker 1: which is very different from other countries, especially wealthier nations.
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  Speaker 1: We invest less in infrastructure as a percentage of our
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  Speaker 1: GDP than many other first world countries. Um. And so
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  Speaker 1: when we're talking about you know, the impact on these cities.
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  Speaker 1: You know, some cities will see greater impact than others.
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  Speaker 1: You know, our most recent Gunsler City Pulse, which we
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  Speaker 1: actually released just yesterday, it shows that cities, these emergency
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  Speaker 1: cities like Austin, Atlanta, Denver, and Charlotte, these cities have
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  Speaker 1: seen explosive growth but don't have the infrastructure to keep up,
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  Speaker 1: and so that growth is coming out of cost. They're
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  Speaker 1: dealing with traffic congestion, bad roads, bad bridges, and airports
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  Speaker 1: that need to be modernized. And so the bill provides
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  Speaker 1: rising cities an opportunity to address these issues. But to
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  Speaker 1: close that gap, I mean, we're we're going to need,
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  Speaker 1: you know, a lot more investment, but this is a
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  Speaker 1: great first step. Sophia talked to us about a something
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  Speaker 1: like a public private partnership. What's the role for private
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  Speaker 1: enterprise in infrastructure? It can't just be the U. S.
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  Speaker 1: Government kind of doing everything. Kennett, Yes. So, so what's
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  Speaker 1: interesting about this particular bill is that it actually creates
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  Speaker 1: space for private investors UM to join government efforts, especially
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  Speaker 1: projects that are over seven hundred fifty million dollars. And
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  Speaker 1: so when you include the private sector, you actually you
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  Speaker 1: actually build in efficiencies UM where you know, greater efficiencies
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  Speaker 1: than than contracts that where the government is stuck with
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  Speaker 1: greater efficiencies than no efficiency at all. Like, right, exactly
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  Speaker 1: what do you think about? You know? To me? And
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  Speaker 1: I don't I'm gonna get flamed probably on Twitter. Um.
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  Speaker 1: People have been calling me a bleeding heart liberal lately.
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  Speaker 1: But to me, it makes sense to support you know,
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  Speaker 1: something like childcare as infrastructure because you know, working parents
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  Speaker 1: need to put their kids somewhere if they want to
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  Speaker 1: be able to get in a car and drive on
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  Speaker 1: a highway to a job at an airport or whatever.
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  Speaker 1: Does does that make sense to everyone? Or no? I
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  Speaker 1: mean it makes sense to me. But that's not in
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  Speaker 1: the bill. That's in that No, it's in the new
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  Speaker 1: Build Back Better Bill. But I mean there are a
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  Speaker 1: lot of things now that we talk about its infrastructure
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  Speaker 1: that are not just roads, bridges, ports, airports. Right. Um
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  Speaker 1: even goes as far as to say, you know, like
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  Speaker 1: nutrition counts as infrastructure. Yeah, I mean that's what's what's
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  Speaker 1: so unique about this Build Back Better because they are
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  Speaker 1: specifically outlining a social equity infrastructure UM infrastructure bill. All right, Sophia,
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  Speaker 1: thank you so much. We appreciate that. As always so
• 5:12
  Speaker 1: if your song Global Cities leader for against again, I
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  Speaker 1: don't know what the heck is going on with oil
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  Speaker 1: here up one point three percent today after being down
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  Speaker 1: as much as four percent earlier this morning says some
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  Speaker 1: big big swings. Let's bring in somebody who does this
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  Speaker 1: commodity stuff. Will Ryan, the chief executive officer for granted
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  Speaker 1: chair as Advisors. Well, what's going on with the oil today? Well, um,
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  Speaker 1: I think it's really just a reaction to what we
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  Speaker 1: saw over the last couple of days, which is a
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  Speaker 1: pretty significant down leg on the back of the the
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  Speaker 1: new COVID variant. Um and I think that you know that,
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  Speaker 1: coupled with probably the news out of OPEC plus that
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  Speaker 1: they continue or will continue with their plan to put
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  Speaker 1: the four hundred thousand barrels on the market per month
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  Speaker 1: start in January, gives a bit more stability to any
• 6:09
  Speaker 1: concern that there might be more barrels put onto the
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  Speaker 1: market than that is there any you know, Critty was
• 6:15
  Speaker 1: talking to us earlier about a market that looks like
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  Speaker 1: investors will use any excuse to sell, and granted COVID
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  Speaker 1: is very serious. We don't want to make light of
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  Speaker 1: any of the new variants, but it does look like
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  Speaker 1: a very strong reaction to something um we don't know
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  Speaker 1: a lot about yet. No, absolutely, I think that that
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  Speaker 1: was You could arguably say that across the market, but
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  Speaker 1: whether you're talking about you know, stocks, or whether you're
• 6:45
  Speaker 1: talking about UM commodities. But it was just abroad, I
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  Speaker 1: think rejection of risk um while the uncertainty was there
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  Speaker 1: around news of this new variant. But I think as
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  Speaker 1: we start to get more data on it, and like
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  Speaker 1: you said, you don't want to make light of it,
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  Speaker 1: but the more that I think people get comfortable that
• 7:07
  Speaker 1: it's not gonna end in a little lockdown. Of course
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  Speaker 1: we don't know that yet, but if the assumptions it's
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  Speaker 1: not gonna we're not going to go back to where
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  Speaker 1: we were, then I think that you know, the oil price,
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  Speaker 1: commodities and the global economy and continue to track on here.
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  Speaker 1: So we'll give us a sense of you know, kind
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  Speaker 1: of opec um again, where is Russia Viasa the Opeque plus?
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  Speaker 1: So there are they still kind of a wild card
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  Speaker 1: out there? Or is Saudi Arabia still kind of really
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  Speaker 1: directing things? Saudi Arabia definitely is the main player. I
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  Speaker 1: think that you know, like I said that the four
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  Speaker 1: hundred thousand barrels that were telegraphed we put onto the market.
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  Speaker 1: This is a gradually increasing production from the record cuts
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  Speaker 1: that we saw last year with they cut ten million
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  Speaker 1: barrels a day from production. And so clearly, you know,
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  Speaker 1: with the prices at these levels, UM not just okay,
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  Speaker 1: but other oil producing countries would like to put more
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  Speaker 1: production on the market, but they've obviously got to balance
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  Speaker 1: that with the demand UM that we're seeing. So right now,
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  Speaker 1: the robust the demand is robust, and you know, we've
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  Speaker 1: gotten to a position where we had eighty dollar oil,
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  Speaker 1: you know, in a world that's still not open. I
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  Speaker 1: mean people forget sometimes that major countries like China other
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  Speaker 1: Asian countries still not open really for all terms and purposes.
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  Speaker 1: So I think if we're talking about getting back to
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  Speaker 1: a world which is looks more like two thousand and
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  Speaker 1: nine team where we could travel everywhere and we had
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  Speaker 1: the same kind of you know, free flowing commerce and trade,
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  Speaker 1: and I think we're talking about an other price that's
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  Speaker 1: materially higher than where we are today. What about the
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  Speaker 1: other moves that we're seeing in UM energy commodities. I
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  Speaker 1: mean I'm here in the heart of Europe where is
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  Speaker 1: getting colder and gas prices are extraordinarily high. Um. Is
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  Speaker 1: that linked to the oil issue or is it all
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  Speaker 1: about you know, nords dream and a lack of electricity generation?
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  Speaker 1: How do you see that? Yeah, it's not so much. Actually,
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  Speaker 1: funny enough, it's not so much linked to oil at all.
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  Speaker 1: It's much more of a UM, much more of a
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  Speaker 1: phenomenon or European based phenomenon regarding supplies and constraint of
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  Speaker 1: supplies UM that are specific to some of these European countries. UM.
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  Speaker 1: You know. Throw in also the move to renewable power
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  Speaker 1: and perhaps you know, some of that happening maybe too quickly,
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  Speaker 1: resulting in a situation where there's just not enough energy
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  Speaker 1: that's been generated from renewable sources and so governments are
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  Speaker 1: having to rely more on fossil fuels. But that's sort
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  Speaker 1: of colliding with this perfect storm of supply not being
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  Speaker 1: there um as expected as as we sort of recover
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  Speaker 1: from COVID. By the way, well, do you you know
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  Speaker 1: ad grant share advisors, Do you like this kind of
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  Speaker 1: volatility because you're in demand as well right now. People
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  Speaker 1: need your advice. That's right. I mean I think that there,
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  Speaker 1: you know, I would say we probably favor volatility up
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  Speaker 1: until a point. I mean, clearly we don't want or
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  Speaker 1: I think for anybody that manages money, you know, I I
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  Speaker 1: don't want anything to be too volatile. But like you say,
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  Speaker 1: I mean that there's a point where the market is
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  Speaker 1: moving around and people do want exposure to these types
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  Speaker 1: of assets, and certainly they do want to know, you know,
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  Speaker 1: what's going on, because understanding you know, what's happening in
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  Speaker 1: modity market, I think that sort of underpinned everything. It's
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  Speaker 1: underpinning the inflation that we're seeing in the global economy,
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  Speaker 1: and so really kind of understanding the direction of travel
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  Speaker 1: is key for not just commodities, but I think for
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  Speaker 1: for everything people are doing. All right, Well, thanks so
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  Speaker 1: much for joining us again. We always appreciate your thoughts.
• 11:01
  Speaker 1: Will Ryan, Chief investment Officer, Granted Shairs Advisors, Matt, I mean,
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  Speaker 1: for lack of a better scenario analysis, I'm calling it
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  Speaker 1: by the dip. I don't know, yeah, I mean, by
• 11:16
  Speaker 1: the dip is a strategy that seems to work, but
• 11:18
  Speaker 1: it looks like sell the news is something investors really
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  Speaker 1: want to do. I think pretty Gooda made a great
• 11:24
  Speaker 1: point earlier when she uh, when she talked about the
• 11:28
  Speaker 1: drops that we've seen, the drama of the drops that
• 11:31
  Speaker 1: we've seen compared to you know, news that seemed to
• 11:35
  Speaker 1: lack that drama. Again, not to underplay the virus or
• 11:39
  Speaker 1: the new variant, because we don't know enough about it yet.
• 11:41
  Speaker 1: It could be you know, terribly damaging variant, but so
• 11:47
  Speaker 1: far it doesn't look um like something that's going to
• 11:51
  Speaker 1: affect the global economy that much. And yet we had
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  Speaker 1: a nine hundred points sell off on the Dow on Friday.
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  Speaker 1: We had um a huge turnaround yesterday. So the question
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  Speaker 1: I think is why are investors taking advantage of any headline,
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  Speaker 1: especially you know, yesterday we sold off after the headline
• 12:10
  Speaker 1: across the Bloomberg terminal at I think it was one
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  Speaker 1: forty two pm New York time, we had a headline
• 12:17
  Speaker 1: that said, we've discovered one case of omicron in California.
• 12:23
  Speaker 1: We knew that there would be a case or dozens,
• 12:26
  Speaker 1: or hundreds or maybe even thousands of cases of oh
• 12:29
  Speaker 1: macron in the US, and yet mr Market took advantage
• 12:33
  Speaker 1: of that and sold hard right and then here we
• 12:37
  Speaker 1: are today and you you mentioned uh, Bloomberg Markets, corresponding, Cretty,
• 12:41
  Speaker 1: guess what meant? She's back in the Bloomberg Interactive Brooker studio. So, Cretty,
• 12:45
  Speaker 1: what are you seeing at there? I mean again a
• 12:48
  Speaker 1: couple I went to business squad, spent a lot of
• 12:50
  Speaker 1: time on Wall Street, and I got nothing better than
• 12:53
  Speaker 1: by the dip um Well sometimes, Paul, So I've learned.
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  Speaker 1: This was one of the first lessons I learned when
• 12:58
  Speaker 1: I was on the Markets Live team e former traders.
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  Speaker 1: They said, sometimes the answer isn't fundamental. Sometimes it's literally
• 13:04
  Speaker 1: people are trading because they trade, and they want to
• 13:06
  Speaker 1: trade like and and not to simplify too much, but
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  Speaker 1: it quite literally is by the dip because and here's
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  Speaker 1: why we're not just saying that to get out of
• 13:14
  Speaker 1: a reason. But your your tell here is going to
• 13:17
  Speaker 1: be the VIX because you haven't had a spike in
• 13:19
  Speaker 1: the VIX like this too. I think a thirty two
• 13:21
  Speaker 1: handle going all the way back to January when they
• 13:23
  Speaker 1: were starting to see some of those hedge funds getting
• 13:26
  Speaker 1: really burned by those shorts against the retail trader and
• 13:28
  Speaker 1: the entire kind of me mania that was happening. And
• 13:31
  Speaker 1: if you remember going back then or even going back
• 13:33
  Speaker 1: to March on a bigger scale, is that when you
• 13:35
  Speaker 1: see volatility, one day it's green, the next day it's read.
• 13:39
  Speaker 1: This is a very normal reaction on that front, and
• 13:42
  Speaker 1: especially as we go into the holly season where a
• 13:45
  Speaker 1: lot of people are essentially closing out their books, they're rebalancing.
• 13:48
  Speaker 1: You're also waiting for I think about two weeks for
• 13:50
  Speaker 1: the next FMC meeting, and on top of that, you're
• 13:53
  Speaker 1: waiting once again for two weeks for more data and
• 13:57
  Speaker 1: more information on this variant in particular, which we are
• 14:00
  Speaker 1: still getting contradicting information on. So right now and I
• 14:04
  Speaker 1: think for the foreseeable future, and I mean for the
• 14:05
  Speaker 1: next couple of days, you're going to continue to see
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  Speaker 1: this volatility where you see moves in the market that
• 14:10
  Speaker 1: just don't make sense. But then eventually, when we do
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  Speaker 1: have more information, those correlations are going to come back
• 14:14
  Speaker 1: together and there will be a very clear risk on
• 14:17
  Speaker 1: or risk off narrative. Right now, we're just not there.
• 14:19
  Speaker 1: It was also interesting that the FED didn't react as
• 14:23
  Speaker 1: devish lee at least in the Q and a portion
• 14:26
  Speaker 1: of um Jerome pal senate testimony, as maybe the market
• 14:30
  Speaker 1: had anticipated, right because we got that hawkish pivot at
• 14:33
  Speaker 1: the same time as the market seemed to be a
• 14:37
  Speaker 1: little bit on edge about coronavirus. Again. Yeah, and you know,
• 14:41
  Speaker 1: I actually went back and read the exact wording of j.
• 14:44
  Speaker 1: Powell this morning, and he used a lot of maybes
• 14:48
  Speaker 1: and cood's and really a hedged response. He didn't say
• 14:51
  Speaker 1: we are tapering at a faster pace. He said we
• 14:54
  Speaker 1: could and we might. And that isn't something that we
• 14:57
  Speaker 1: didn't know from the last FMC meeting. In fact, we
• 15:00
  Speaker 1: haven't actually gotten the actual number or the actual asset
• 15:03
  Speaker 1: purchases for January, so we knew there was always going
• 15:06
  Speaker 1: to be this question mark that the pace from for
• 15:08
  Speaker 1: January would completely change, and he's just reiterated that in
• 15:11
  Speaker 1: his testimony, So once again, it's not new. I think
• 15:14
  Speaker 1: what is new, though, is the way the bond market
• 15:16
  Speaker 1: in particular is pricing it. And the biggest part of
• 15:18
  Speaker 1: that is the curve flattening you've seen really accelerated in
• 15:22
  Speaker 1: the past couple of days because you saw essentially the
• 15:24
  Speaker 1: five thirties curve uh kind of come down, kind of
• 15:26
  Speaker 1: flatten a little bit for the last really I think
• 15:29
  Speaker 1: two wish months. If you look at the chart. But
• 15:31
  Speaker 1: if you compare that to what you're seeing and say,
• 15:33
  Speaker 1: the equity market, this is a really important comparison because essentially,
• 15:37
  Speaker 1: when for those folks who aren't tuned into the bond market,
• 15:40
  Speaker 1: the curve flattening just means that you are not paid
• 15:43
  Speaker 1: as much of a premium for taking on that extra
• 15:46
  Speaker 1: time risk. If you apply that logic to big tech,
• 15:48
  Speaker 1: which is also a very long duration asset essentially or
• 15:51
  Speaker 1: has been trading as such, that's not exactly a good sign.
• 15:54
  Speaker 1: And right now you do have that disconnect between stocks
• 15:58
  Speaker 1: in that regard and tech stocks in particular, as well
• 16:00
  Speaker 1: as the bond market. The question is when those two connect,
• 16:03
  Speaker 1: is it the bond market that kind of becomes more
• 16:06
  Speaker 1: risk on more and steepens a little bit, or is
• 16:08
  Speaker 1: it the equity market that gets dragged down by big tech? Yeah,
• 16:11
  Speaker 1: and it's interesting to see how the markets are reacting
• 16:14
  Speaker 1: to that big, big pivot um by FED chairman Powell
• 16:18
  Speaker 1: earlier this week. Again we had that sell off um.
• 16:22
  Speaker 1: But again, if you're the market was looking for just
• 16:26
  Speaker 1: reasonable signaling to get you to a spot of okay,
• 16:29
  Speaker 1: I kind of have a feeling of how this thing
• 16:31
  Speaker 1: is going to go. He certainly gave it to you. Yeah,
• 16:34
  Speaker 1: it really did. And and what's tricky about right now though,
• 16:37
  Speaker 1: is that And I think this is why there's so
• 16:39
  Speaker 1: much emphasis on tomorrow's payrolls report in particulars because anything
• 16:43
  Speaker 1: could happen. And if you start to see the payer's
• 16:44
  Speaker 1: report come in, the market is planning on interpreting this
• 16:47
  Speaker 1: as well. This is permission for for J. Powell and
• 16:50
  Speaker 1: the Fed to just say all eyes are on inflation
• 16:52
  Speaker 1: and that means tapering, and that means right, Hicks. And
• 16:54
  Speaker 1: that's a narrative that can spiral very very quickly on
• 16:57
  Speaker 1: one data point. So that's going to be a spot
• 16:59
  Speaker 1: where where you might see some pretty drastic moves. All right. Interesting.
• 17:03
  Speaker 1: We will certainly have wall to wall coverage of the
• 17:05
  Speaker 1: job report, as we do every month here on Bloomberg
• 17:08
  Speaker 1: Radio and Bloomberg TV. We live for that kind of stuff.
• 17:12
  Speaker 1: Pretty Gupta, Bloomberg Markets correspondent joining us here in our
• 17:15
  Speaker 1: Bloomberg Interactive Broker studio. UH and again full coverage tomorrow
• 17:20
  Speaker 1: of that job's data, which is pretty mentioned, will be
• 17:22
  Speaker 1: a key data point for this federal Reserve. Let's check
• 17:31
  Speaker 1: in with a longtime contributor to Bloomberg Markets, Hugh Johnson Chairman,
• 17:35
  Speaker 1: Chief Economists A Great Point LLC. First of all, you
• 17:38
  Speaker 1: what is the Great Point LLC? What happened to Hugh
• 17:41
  Speaker 1: Johnson Advisors for like a gazillion years? Well, well that's
• 17:45
  Speaker 1: a good question. We merged our company with a company
• 17:49
  Speaker 1: called Bender Lane, which was a family office business, and
• 17:51
  Speaker 1: then we decided to have a give it one name
• 17:53
  Speaker 1: for the two. But we've kept Hugh Johnson Advisors as
• 17:56
  Speaker 1: a as a division of and I'm sort of the
• 18:00
  Speaker 1: chairman emeritus of Great Point and the Chief Economists A
• 18:04
  Speaker 1: Great Point, and I'm also the is the best I
• 18:06
  Speaker 1: understand it, the chairman of Hugh Johnson Advisors and the
• 18:10
  Speaker 1: chief economists the Hugh Johnson Advisors, and the chief chief
• 18:14
  Speaker 1: investment officer a huge Johnsen. Well, all right, we're just
• 18:16
  Speaker 1: gonna go, chairman. Yeah, we're just gonna go the chairman, um,
• 18:20
  Speaker 1: and everybody knows you're buying your chairman, Yeah, Mr Chairman, Yeah,
• 18:24
  Speaker 1: that's good. Mr. So who what do you make of
• 18:27
  Speaker 1: this world we're living in now? I mean, it's been
• 18:30
  Speaker 1: such a crazy twenty months here with the pandemic and
• 18:34
  Speaker 1: the economic disruption and now they reopening. But it just
• 18:37
  Speaker 1: seems like, you know, there's one monkey wrench thrown in
• 18:41
  Speaker 1: after another, and it's got to be tough to kind
• 18:43
  Speaker 1: of forecast where this economy is going. What are your
• 18:46
  Speaker 1: best thoughts at the moment, Well, the best thoughts are
• 18:50
  Speaker 1: really number one. As you get some surprises thrown at us,
• 18:53
  Speaker 1: and that's a part of financial market history. And of
• 18:55
  Speaker 1: course with the the COVID nineteen is kind of surprised
• 18:58
  Speaker 1: we've been sent with a macron right now. That's a surprise.
• 19:02
  Speaker 1: Very causes a great deal of volatility. That's one surprise.
• 19:05
  Speaker 1: And the second surprise, of course, is some of the
• 19:07
  Speaker 1: comments made by Gairman Paul which seemed to move up
• 19:10
  Speaker 1: the time in which is gonna be gin the taper,
• 19:12
  Speaker 1: and then of course the time they're gonna begin to
• 19:14
  Speaker 1: start to raise interest rates. These are surprises, create great,
• 19:18
  Speaker 1: great level of volatility, and I would just urge all
• 19:21
  Speaker 1: investors to just try to look through all of that
• 19:24
  Speaker 1: volatility and we'll start to get some real answers on COVID,
• 19:27
  Speaker 1: we'll get some real answers on monetary policy over the
• 19:30
  Speaker 1: course of a little bit of time now. But let's
• 19:33
  Speaker 1: let those things settle out and recognize, and the more
• 19:35
  Speaker 1: important thing is to recognize, Look, we are in a cycle,
• 19:39
  Speaker 1: a stock market, economic, interest rate cycle. It's very normal
• 19:43
  Speaker 1: by past cycles. We're at the twenty month mark. We're
• 19:46
  Speaker 1: really not far into it, and really all of the
• 19:49
  Speaker 1: kind of the levers. When you look at leading indicators
• 19:51
  Speaker 1: for the economy, you look at the yield curve and
• 19:53
  Speaker 1: what it tells you about what the economy has in
• 19:55
  Speaker 1: store for the next twelve months. Um, it's still very positive.
• 19:59
  Speaker 1: The cycle has further to go, and it's gonna have
• 20:01
  Speaker 1: a little bit of volatility created by these issues, these
• 20:04
  Speaker 1: exogenous unexpected issues along the way. You just gotta just
• 20:08
  Speaker 1: gotta put those on the back burner and make sure
• 20:11
  Speaker 1: you pay attention to the fact the underlying cycle and
• 20:14
  Speaker 1: where we are in that cycle, and then make your
• 20:16
  Speaker 1: investment decisions asset allocation on the basis of that. Yeah,
• 20:19
  Speaker 1: we had a great story by Matthew Bosler a couple
• 20:22
  Speaker 1: of days ago about how fat corporate profit margins are.
• 20:25
  Speaker 1: We haven't seen margins this fat since the fifties, and
• 20:28
  Speaker 1: yet it looks like investors, uh current. So you've got
• 20:33
  Speaker 1: the pajama investors, the pajama traders who buy the dip
• 20:37
  Speaker 1: for us every night, but it does look like um
• 20:40
  Speaker 1: sell first ask questions later is the afternoon mantra. You know,
• 20:45
  Speaker 1: you get you have a group of investors, there's very volatile,
• 20:48
  Speaker 1: price sensitive investors, and that's not all of them. That's
• 20:51
  Speaker 1: really a small group of them. I mean, they were
• 20:53
  Speaker 1: talking about ten percent of all the investors that are
• 20:56
  Speaker 1: involved in these markets that are just extremely edgy and
• 21:00
  Speaker 1: they create a lot of the volatility that you're seeing
• 21:02
  Speaker 1: because they respond to all of the news that comes out.
• 21:05
  Speaker 1: And I'm just saying, you know, okay, that's fine. They're
• 21:08
  Speaker 1: going to be investors like that. There always have been,
• 21:10
  Speaker 1: there always will be. But I think the majority of investors,
• 21:13
  Speaker 1: quite frankly of are a little bit more sensible, are
• 21:16
  Speaker 1: not caught up in that kind of alatili And that's
• 21:18
  Speaker 1: exactly what they should do. They should, you know, basically
• 21:21
  Speaker 1: set their portfolios on the basis of what is really
• 21:24
  Speaker 1: going on or what the underlying fundamentals, the underlying cycle
• 21:28
  Speaker 1: is doing, and that's really the most important thing. So
• 21:31
  Speaker 1: don't get caught up in that day to day volatility,
• 21:33
  Speaker 1: even though I'm sure all of us kind of emotionally
• 21:36
  Speaker 1: do get caught up in it all right. Here, you've
• 21:38
  Speaker 1: got more than forty years of experience in this game. Here,
• 21:41
  Speaker 1: what's your outlook for Uh, it's positive, But you've got
• 21:47
  Speaker 1: to keep in mind. I think one thing that's sort
• 21:49
  Speaker 1: of a basic fact, and that is since the bottom
• 21:52
  Speaker 1: in two thousand and nine, the average annualized rate of
• 21:54
  Speaker 1: return has been over eight. Look, that's just's that's just
• 21:59
  Speaker 1: a big number, and that's not going to continue. So
• 22:02
  Speaker 1: my outlook is positive. In other words, I think the
• 22:04
  Speaker 1: economy is going to continue to expand, although it's gonna slow.
• 22:08
  Speaker 1: I think the same thing is true of earnings, and
• 22:10
  Speaker 1: so you should maintain you should maintain a positive view
• 22:14
  Speaker 1: of the equity markets, in other words, a meaningful allocation
• 22:17
  Speaker 1: to equities. But recognize one important fact, and that is
• 22:21
  Speaker 1: we're going from a high return environment that's two thousand
• 22:24
  Speaker 1: twenty for sure, um, and we're going to a low
• 22:28
  Speaker 1: return environment. My outlook or prospects for two thousand and
• 22:31
  Speaker 1: twenty two are quite frankly, a low three to five
• 22:36
  Speaker 1: percent single digit return. Don't worry about that, because I
• 22:39
  Speaker 1: think you're gonna be I'm gonna be wrong on earnings.
• 22:41
  Speaker 1: Earnings are gonna come in higher than I'm expecting, in
• 22:44
  Speaker 1: which case the market will do a little bit better
• 22:46
  Speaker 1: than I'm expecting, but don't look for anything more than
• 22:49
  Speaker 1: single digit returns, and equities will outperform fixed income, so
• 22:53
  Speaker 1: you should overallocate the equities, all right. You thank you
• 22:56
  Speaker 1: so much for joining us once again. You Johnson, Chairman,
• 22:59
  Speaker 1: Chief Economy US, and a bunch of other stuff at
• 23:02
  Speaker 1: Great Point LLC over forty years in the business. Thanks
• 23:09
  Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe
• 23:12
  Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast
• 23:16
  Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at
• 23:19
  Speaker 1: Matt Miller, three pt on Fall Sweeney I'm on Twitter
• 23:23
  Speaker 1: at pt Sweeney Before the podcast. You can always catch
• 23:26
  Speaker 1: us worldwide at Bloomberg Radio.