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Bonds, Markets, and Crypto · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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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
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. Let's bring in Noel Abert.
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Speaker 1: He covers all things credit, fixed income. He's a co
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Speaker 1: director of research at Bloomberg Intelligence, one of the smarter
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Speaker 1: dudes out there, um that we talked to. No, let's
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Speaker 1: just start here. I mean, you're all over the credit
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Speaker 1: space here. What do you expect and from the Federal Reserve?
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Speaker 1: I guess tomorrow and then maybe going forward. Yeah, I
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Speaker 1: think well, at the high level, I mean, you're looking
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Speaker 1: for maybe twenty five basis points tomorrow than another twenty
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Speaker 1: five basis points. But I think one of the places
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Speaker 1: where myself and uh, you know, my group kind of
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Speaker 1: disagrees with broader consensus is that after that, I think
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Speaker 1: the the higher for longer sort of FED holding path
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Speaker 1: through the end of the year is sort of the
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Speaker 1: base case for says if you look at where the
1:02
Speaker 1: rates markets are. Obviously they're looking for a little bit
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Speaker 1: of retracement or pivots somewhere around mid year. So why
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Speaker 1: do you think the market what what's the market maybe
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Speaker 1: looking at? And yeah, I mean, you're right, the feder
1:12
Speaker 1: reserve is pretty clear in the messaging that we're going
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Speaker 1: to stay higher for some period of time, but as
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Speaker 1: you mentioned, the markets not necessarily buying that. What do
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Speaker 1: you think is going on there? Well, I think it's
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Speaker 1: probably a decade's worth of the Fed sort of facilitating
1:26
Speaker 1: sort of the market enthusiasm combined with sort of a
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Speaker 1: very mixed macroeconomic picture, right. I mean, I think it's
1:33
Speaker 1: hard to you know, pull out or distinguish sort of
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Speaker 1: the good and the bad. I mean, I think there's
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Speaker 1: a lot of softness that seems to be cropping up
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Speaker 1: in parts of the manufacturing sector and some of the
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Speaker 1: consumer sentiments side, uh bott the flip side. We saw
1:45
Speaker 1: a strong jobs data, so I think from a standpoint
1:47
Speaker 1: you could say, hey, listen, strong jobs, but we still
1:49
Speaker 1: got this sort of elevated inflation, and so you can
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Speaker 1: kind of ignore sort of the weaker consumer thing that
1:54
Speaker 1: seems to be drawing the attention of the market, Well,
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Speaker 1: it looks like the inflation may turn around even more
2:01
Speaker 1: quick Well, certainly on the good side, we're starting to
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Speaker 1: see what feels like deflation in the automotive sector in
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Speaker 1: a lot of non grocery retail. What about the services
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Speaker 1: and um, you know, the I guess rent component. Well
2:15
Speaker 1: I don't know because I just got my E V Hummer,
2:18
Speaker 1: But so, but now I think on the service design,
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Speaker 1: it's a little bit of a mixed picture. I think
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Speaker 1: you're seeing some softness there. Um, But you know, on
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Speaker 1: the rent side, I think is a you know, I
2:29
Speaker 1: think they're changing the methodology a little bit later this year,
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Speaker 1: but we're seeing some moderation, but it's still going to
2:34
Speaker 1: kind of we're still running a little bit hot on
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Speaker 1: that side, because I mean, remember that rents aren't necessarily
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Speaker 1: related to home prices, where we're seeing a little bit
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Speaker 1: more rapid deceleration. Hey, no, I know you've had a
2:46
Speaker 1: long career on Wall Street looking at this credit business
2:49
Speaker 1: and last year you know, it's just one for the
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Speaker 1: books in terms of underperformance. But you guys are bouncing
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Speaker 1: back a little bit here in January. Talk to us
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Speaker 1: about the performance we're seeing in January austocratic space. Yeah.
3:01
Speaker 1: So I mean in investment grade, you're gonna be looking
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Speaker 1: at probably the third best uh year going back forty years.
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Speaker 1: So uh, you know, in a lot of that's going
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Speaker 1: to be rates driven, right, because an investment grade you're
3:13
Speaker 1: sensitive to duration, i e. You know, the more interest
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Speaker 1: rates moved, the more pricing moves. So with treasury yields
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Speaker 1: coming down, that's driven a lot of you know, our
3:22
Speaker 1: performance on the investment grade side, but even high yields
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Speaker 1: uh seem a pretty healthy starting pretty much anything kinidi
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Speaker 1: fixed income. Uh, you know, whether you're talking municipals or
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Speaker 1: mortgage bats, etcetera. You know, all sort of keying in
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Speaker 1: on what are the better starts to the year that
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Speaker 1: we've seen, you know, in the last couple of decades
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Speaker 1: at the very least. Um not surprising, I mean, given
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Speaker 1: the prepentous year that you have for mentioned. But you know, nonetheless,
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Speaker 1: I think you know, it takes the edge off for
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Speaker 1: people that are still looking their wounds. What are the
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Speaker 1: biggest headwinds you think? No, I mean, if we uh,
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Speaker 1: if we see a repeat of you know, everyone talks
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Speaker 1: about our their burns, you know, the FED kind of
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Speaker 1: calms down a little bit and then inflation starts, um
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Speaker 1: poking up a bit. Is that is that very bad
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Speaker 1: for for the credit world? Well, I think it will
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Speaker 1: learn a little bit tomorrow, right, I mean I think, uh,
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Speaker 1: you know, if POWE comes out and sort of tries
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Speaker 1: to really re established that sort of hackish under the
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Speaker 1: spectrum and we start to reprice the curve, I think
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Speaker 1: that's where I don't know that you'd necessarily get a
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Speaker 1: big sell off, but you'd certainly get a little bit
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Speaker 1: of a pause and sort of the enthusiasm that's out there,
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Speaker 1: because one of the things that we've seen, you know,
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Speaker 1: early on is it's not only rates that are driving
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Speaker 1: the returns, but people have been very aggressive in the
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Speaker 1: risk bit, i e. Spreads have compressed quite a bit
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Speaker 1: as well, despite the macro economic headwinds. So if you
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Speaker 1: get a FED that says no, no, no, no, you
4:46
Speaker 1: gotta believe us, right, you could start to see some
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Speaker 1: reprice them settling in the right side, and then some
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Speaker 1: repricing in the spread side that maybe you know, tempers
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Speaker 1: the excitement out there and maybe you know it leaves
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Speaker 1: you a little bit more with the coupon and as
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Speaker 1: opposed to a bigger you know return picture. Well, because
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Speaker 1: the market doesn't believe the Fed's gonna get to five percent,
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Speaker 1: not an effective FED funds rate of five percent? Is
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Speaker 1: there any reason that? I mean, of course he's gonna
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Speaker 1: job ow. He he has to, that's his job. But
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Speaker 1: does anybody besides day traders like care? Uh you know, well, well,
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Speaker 1: I mean I think everybody on the rate side cares, right,
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Speaker 1: because I just mean, no, you know, if he's he
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Speaker 1: can talk, uh the talk, but can he walk the walk?
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Speaker 1: Twenty five basis points is just to me it feels
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Speaker 1: so weak and luke warm. I mean, if you're gonna
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Speaker 1: already do that, then I'm not going to listen to
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Speaker 1: the rest of the speech unless you come out with
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Speaker 1: fifty I don't buy it. No, I'm not. I'm not
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Speaker 1: unsympathetic to your view, but I'm also not the rate strategist,
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Speaker 1: so it's not really for me to opine. Al Right.
5:49
Speaker 1: I was not here, Yeah, we can step. I was
5:51
Speaker 1: like watching a soccer soccer match somewhere, alright, So no,
5:54
Speaker 1: you know, if I'm an issuer here, like as a
5:57
Speaker 1: former bang and put my banker had on again there.
5:59
Speaker 1: I mean, just a few months ago, I was I
6:01
Speaker 1: was issuing paper like close to zero percent. Now rates
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Speaker 1: are a lot higher. This isn't as much fun anymore.
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Speaker 1: Talk to us about kind of the new issuance market
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Speaker 1: year to date and kind of what you expect this year. Yeah,
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Speaker 1: So on the investment grade sign, I mean, I mean
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Speaker 1: both markets have gotten off to a reasonably healthy start.
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Speaker 1: I think last year for investment grade, we saw about
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Speaker 1: one point two trillion, which is sort of in keeping
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Speaker 1: if you look at years outside of the media post
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Speaker 1: pandemic when things went crazy, that's sort of like an
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Speaker 1: average year. I think we're gonna come down a little
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Speaker 1: bit from that, maybe closer to one point one trillion,
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Speaker 1: which is one owing to the higher rates that you mentioned,
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Speaker 1: but also you just have a kind of a weaker
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Speaker 1: maturity calendar this year. High yields a little bit different
6:44
Speaker 1: story because last year was basically shut down. Uh, you know,
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Speaker 1: when we got a hundred twenty billion out of there
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Speaker 1: versus you know, mid twos to low threes, which is
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Speaker 1: more common. Uh. This year, I still think we're gonna
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Speaker 1: not quite make it to two billion, but we're gonna
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Speaker 1: start pulling forward some of that talents because high yield,
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Speaker 1: you know, anytime you get a market opening any majority
7:05
Speaker 1: that's sort of within that eighteen month window, you got
7:07
Speaker 1: to start looking at uh and so we'll see some
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Speaker 1: of that this year. We've actually already seen some of
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Speaker 1: that in January. You know, we're a little over twenty
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Speaker 1: billion for January this year, which is down from last January,
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Speaker 1: but still other than last January would be the strongest
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Speaker 1: month in the last year and change. Alright, the bankers
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Speaker 1: are gonna get paid. That makes that warms my heart.
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Speaker 1: All right, No, thanks so much for joining us. Noel Hibert,
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Speaker 1: Bloomberg Intelligence chiefs Credit Strategists. He's co director of research
7:31
Speaker 1: for that. All that credit research coming out of Bloomberg Intelligence,
7:34
Speaker 1: and Bloomberg Intelligence was one of the few shops on
7:36
Speaker 1: Wall Street that still provides credit research, and they do
7:40
Speaker 1: it across the board. More than two thousand companies, hundred
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Speaker 1: twenty industries. Lots of earnings this week, lots of eco data,
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Speaker 1: We got the Fed tomorrow, Lots for investors to chew on.
7:53
Speaker 1: You can call for your financial bias and say what
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Speaker 1: am I doing now? After the brutal let's check out
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Speaker 1: with somebody who does this stuff for living Gene Bolvin.
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Speaker 1: She's a president of Bovin Wealth Management. Gina, thanks so
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Speaker 1: much for taking the time here. Um, boy, after what
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Speaker 1: was just a brutally and the old sixty portfolio, I'd
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Speaker 1: love to know kind of what your initial communication was
8:15
Speaker 1: to your clients about what to do in twenty three. Yeah,
8:19
Speaker 1: thanks for having me. It's great to see you. Um.
8:22
Speaker 1: You know, we are having a great year so far.
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Speaker 1: We have the S and P up about five point
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Speaker 1: four percent, the nastacks up about ten two. We've been
8:31
Speaker 1: telling our clients to sit tight because if you miss
8:34
Speaker 1: those great days in the market, you're really not going
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Speaker 1: to participate in the upside. And um, we're expecting more
8:42
Speaker 1: of the same for this year. Outlook. Our base case
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Speaker 1: is to be up by by the year end, but
8:51
Speaker 1: expect by year end, but we think it's going to
8:58
Speaker 1: take all year to get there. Well good, I mean,
9:01
Speaker 1: if you're gonna find that high, you don't want to
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Speaker 1: do it in a month, right, Um, you want to build. Yeah,
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Speaker 1: So we do think that it's going to be another
9:09
Speaker 1: choppy year. Um. This is as you know, as you've
9:11
Speaker 1: been talking about. It's a pivotal week with the FED meeting.
9:15
Speaker 1: Tomorrow's the first f o MC meeting of this year.
9:19
Speaker 1: The markets are expecting UM to base point hike and
9:24
Speaker 1: another and you know, well, we know that we've reached
9:29
Speaker 1: peak inflation, but I think the main question is have
9:33
Speaker 1: we have we reached peak hawkishness? Interesting, Well, we'll part
9:39
Speaker 1: that a little bitmorrow. We'll see a little bit tomorrow,
9:41
Speaker 1: we'll see what kind of tone, uh, this takes. I've
9:44
Speaker 1: certainly been talking tough, So, Gina, it give us a
9:47
Speaker 1: sense of kind of who your average client is and
9:50
Speaker 1: maybe what an average portfolio looks for your client these
9:53
Speaker 1: days a two year in terms of your talk in return,
9:57
Speaker 1: what a portfolio should look like? Yeah, yeah, just kind
10:00
Speaker 1: of you know, when you sit down with somebody for
10:02
Speaker 1: the first time, how do you think about, you know,
10:03
Speaker 1: constructing your portfolio, given given the year we just had
10:06
Speaker 1: in given that we've got so much you know, across
10:10
Speaker 1: winds out there. Well, I think it's really important to
10:13
Speaker 1: take a look at what your income needs are right
10:16
Speaker 1: before you build a portfolio. You have to get a
10:19
Speaker 1: sense of somebody's risk tolerance, time horizon, and what income
10:24
Speaker 1: needs that they have. So we would start by doing
10:27
Speaker 1: a financial plan and doing an intake of UM, what
10:31
Speaker 1: they're looking for, and aggressive or conservative mean different things
10:36
Speaker 1: to different people. I think that's what was so difficult
10:39
Speaker 1: about last year is it was one of the worst
10:42
Speaker 1: bond markets ever in the history, and conservative investors really
10:48
Speaker 1: didn't see any diversification that helped their portfolio. But we
10:53
Speaker 1: do think that's going to change this year, and we
10:55
Speaker 1: do think it will be a better year for stocks
10:57
Speaker 1: and for bonds. So, Gina, you were named one of
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Speaker 1: the top advisors, top female advisor and Forbes. Um, what
11:05
Speaker 1: do you think got you those accolades? Great clients, hard work,
11:10
Speaker 1: being honest with my clients, trying to do the best
11:13
Speaker 1: things for them. I've a great research team, and really
11:18
Speaker 1: not making um the wrong decision at the long time.
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Speaker 1: You know, not panic buying, but not panic selling. So
11:26
Speaker 1: here's this kind of a it sounds like, if I
11:29
Speaker 1: hear correctly, it's kind of a you're kind of a
11:30
Speaker 1: buy on the weakness here for this market. You think
11:33
Speaker 1: we're gonna move higher this year, but you know, are
11:36
Speaker 1: you adding capital to the market today? Are you waiting
11:40
Speaker 1: for pullbacks? How are you tactically getting that done? Well? Um,
11:44
Speaker 1: so right now, we and in the past year, we've
11:47
Speaker 1: had a value kilt. So what that means we've been
11:50
Speaker 1: investing in like quality blue chip stocks that paid dividends. UM.
11:55
Speaker 1: That would be oil stocks. In We like industrials, erro space, defense.
12:01
Speaker 1: You know, we see an uptrend in defense spending. Capital
12:04
Speaker 1: spending has been resilient. They are strong technicals. We like healthcare, farmer, biotech,
12:11
Speaker 1: medical equipment. Because of COVID, there's been a lot of
12:14
Speaker 1: pent up demand for procedures. UM, there's a good demographic
12:19
Speaker 1: kale wind. We also like UM banks, big banks, and
12:23
Speaker 1: pokerage farms. There are some cheap evaluations. UM. We think
12:27
Speaker 1: their recession resistant and UM, you know, think about what
12:32
Speaker 1: happened in two thousand and eight when they had to
12:35
Speaker 1: go through Since two thousand and ate a lot of
12:38
Speaker 1: stress tests, so they're in really good shape. And UM
12:42
Speaker 1: we think earnings growth for the banks were likely to
12:44
Speaker 1: continue this year. And we also like oil oil UM stocks.
12:49
Speaker 1: They've volatile, but there's good valuations. UM. However, you know,
12:55
Speaker 1: so those are the more conservative stocks that we have
12:58
Speaker 1: been tilted in. However, as we get closer to interest
13:03
Speaker 1: rate hike hikes ending, UM, we are going to be
13:10
Speaker 1: a buy you more on some of the technology stocks.
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Speaker 1: You know they've had a fabulous year. We wouldn't chase
13:17
Speaker 1: that just yet. They've up about the nastacks up about
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Speaker 1: over ten this year, so it's one of the best
13:23
Speaker 1: years since nine. But we might see a little bit
13:27
Speaker 1: of weakness as we get closer to the FED easing
13:31
Speaker 1: or pausing even that that would be benefit tech stocks,
13:36
Speaker 1: but we do expect them to be volatile. Well. They've
13:38
Speaker 1: definitely done well in the first month, that is for sure,
13:41
Speaker 1: up almost ten percent on the last trading day of January.
13:45
Speaker 1: S and P s up uh five. Gina, thanks so
13:48
Speaker 1: much for joining us. Pleasure having you on the program.
13:51
Speaker 1: Gina Bolden there from Bolden Wealth Management talking to us
13:54
Speaker 1: about her view on the markets. A fifteen percent gain
13:58
Speaker 1: by year end would be that would be good. I
14:01
Speaker 1: think everybody would take that. Think back to October coming
14:07
Speaker 1: off of those lows. It's been a nice move up
14:10
Speaker 1: in these markets. Here A lot of folks are saying
14:12
Speaker 1: is that it is this the beginning of another bullmark
14:15
Speaker 1: and another leg up in the market. Katrina Simonettie, she's
14:18
Speaker 1: a senior vice president private wealth advisor at Morgan Stanley,
14:21
Speaker 1: joins us. How do you for you this equity market here.
14:24
Speaker 1: I mean, you know, as such a brutal last year,
14:27
Speaker 1: but if you kind of, you know, just kind of
14:29
Speaker 1: got into the game in October, it's been a good
14:31
Speaker 1: market here. What are you telling your clients? Well, it
14:35
Speaker 1: has been a good market. And you know, you can't
14:37
Speaker 1: blame the investors for wanting to be optimistic. You know,
14:41
Speaker 1: we're just so desperately, you know, kind of just clinging
14:44
Speaker 1: for that little bit of a release. And you know,
14:46
Speaker 1: the fact of it is is that for the entire
14:48
Speaker 1: twenty two we have been focused on the FED on inflation,
14:52
Speaker 1: and we can't really ignore the fact that, you know,
14:55
Speaker 1: following inflution shows the effectiveness of the FED quality. In
14:58
Speaker 1: our view, though this optimism is highly premature. We think
15:03
Speaker 1: that there is a lot more volatility ahead. And in
15:06
Speaker 1: our review, the story for twenty three is not the
15:10
Speaker 1: story of the fat or installation, or even the fact
15:12
Speaker 1: the CPI is getting under control, which is good news.
15:16
Speaker 1: This is the story about the earning since, specifically earnings revisions,
15:20
Speaker 1: because the earnings has to be properly revised and be
15:23
Speaker 1: set at the realistic level in order for us to
15:26
Speaker 1: pivot into the next is exactly what I was thinking.
15:31
Speaker 1: You know, I get in trouble a lot here at work.
15:33
Speaker 1: He does with my wife legally, um, but I never
15:37
Speaker 1: feel any better than when I've told everyone what I've done.
15:41
Speaker 1: I've been completely open about it, and I can start
15:44
Speaker 1: making amends. Then it's off to the races, right. That's
15:47
Speaker 1: kind of why I was hoping for a kitchen Sinc.
15:48
Speaker 1: What people call a kitchen Sinc. Quarter this earning season,
15:51
Speaker 1: but we haven't really seen that. Nonetheless, with the horrible, terrible,
15:56
Speaker 1: no good year we had last year and equities and bonds,
16:00
Speaker 1: maybe all the bad news is priced in, you know,
16:04
Speaker 1: and it's it's a really good point, and I think
16:06
Speaker 1: that that we have to separate the actual fourth quarter
16:09
Speaker 1: earnings from the earnings estimates. You know. It is really
16:13
Speaker 1: the forward looking projections that we need to be looking
16:15
Speaker 1: at because the fact is that the cost of running
16:18
Speaker 1: the businesses are high. And the high inflation on some
16:22
Speaker 1: level was really positive for many businesses because it allowed
16:26
Speaker 1: those broader profit margins. It was easier to be profitable
16:31
Speaker 1: in the environment of higher inflation. But what it is
16:34
Speaker 1: going to be going forward, and while the earnings are
16:37
Speaker 1: actually coming in mixed and positive in many ways, when
16:40
Speaker 1: we're looking at the revisions when we're looking at the
16:43
Speaker 1: new levels and the profit margins that are getting tight,
16:46
Speaker 1: you know in labor market is you know, is quite complex.
16:50
Speaker 1: You know. The issue is that what is the new normal?
16:52
Speaker 1: What are the levels that are going to be realistic?
16:55
Speaker 1: Because in order for our companies here in the US
16:57
Speaker 1: to be able to meet and exceed the earnings, you know,
17:00
Speaker 1: we have to be um, you know, adequately pricing them.
17:04
Speaker 1: And therefore we think that they're going to be this
17:06
Speaker 1: you know, revisions that are going to be mostly to
17:08
Speaker 1: the negative and it will catch a lot of investors
17:11
Speaker 1: by surprise. And we're expecting for this market to be
17:15
Speaker 1: worth before it gets better, you know. And I think
17:17
Speaker 1: that if we go into this market with that level
17:19
Speaker 1: of an expectation and stay defensive and stay high quality
17:23
Speaker 1: and focus on dividend being stocks, you know, will be
17:26
Speaker 1: good to go for the next bull market when it's
17:29
Speaker 1: when it gets here. Katarina, it talked us about fixed
17:33
Speaker 1: income here. I like income as much as the next person,
17:36
Speaker 1: and you know, I look at some of these I
17:37
Speaker 1: can actually get a yield now in the fixed income market. Um,
17:41
Speaker 1: how do you think about bonds? What are you telling
17:43
Speaker 1: your clients about bonds. You got the year treasury at four. Well,
17:47
Speaker 1: that's actually good news. You know, the environment last year
17:50
Speaker 1: was challenging because for the first time in many years,
17:53
Speaker 1: both stocks and bonds were down at the same time
17:56
Speaker 1: Dad was raising race. That was pressure on bonds. It
17:59
Speaker 1: was really difficult to invest in fixed income. It's a
18:01
Speaker 1: very different environment right now. Yields are actually high. You know,
18:05
Speaker 1: how how many years have it been when we can
18:07
Speaker 1: get excited about what even the money markets are paying
18:11
Speaker 1: right not to mention the treasuries and you know, high
18:14
Speaker 1: quality corporates, you know, just well diversed about fixed income
18:18
Speaker 1: portfolio right now is saying field in a significantly higher
18:21
Speaker 1: that we had seen for years to investors that are
18:24
Speaker 1: looking for yield, investors that are looking for safety, you know,
18:28
Speaker 1: for this cushion in their portfolio. You know, this is
18:30
Speaker 1: the time where they're actually getting the value out of
18:33
Speaker 1: their fixed income portion of their portfolio. You know. But
18:36
Speaker 1: the diversification is the key on the fixed income site
18:39
Speaker 1: as much as it is it's on the equities. I mean,
18:41
Speaker 1: Paul is excited. He's in a genuinely good mood. He's
18:46
Speaker 1: driving home every day in the BMW he switches serious
18:48
Speaker 1: X time the yacht rock. You know. Uh, he's listening
18:52
Speaker 1: to as much Michael McDonald as he can because he's
18:54
Speaker 1: got those munis. And now he gets a chance to
18:57
Speaker 1: put all of his dry powder into fixed income, dividend
19:00
Speaker 1: growing stocks, value stocks. This is a Paul Sweeney market
19:03
Speaker 1: right now. Um, is this the do you think this
19:07
Speaker 1: is a chance to pounce? Like do we do? We
19:10
Speaker 1: look at this period of higher rates as you know, uh,
19:15
Speaker 1: once in a decade opportunity to get in or or
19:18
Speaker 1: is this the new normal? Well? Absolutely, you know, investors
19:22
Speaker 1: for years we're saying, you know, if only rates where
19:25
Speaker 1: where they were years ago, you know, I would love
19:27
Speaker 1: to have you know, like this, this in comportion of
19:30
Speaker 1: the portfolio, you know, and for in the zero rate
19:33
Speaker 1: environment which we were in just recently, you know, that
19:37
Speaker 1: wasn't even a possibility. You know. So when you think
19:39
Speaker 1: about the higher rates that we can enjoy in the
19:41
Speaker 1: fixed income site, higher quality that we can enjoy, you know,
19:45
Speaker 1: and and that risk management that comes with us coupled
19:49
Speaker 1: with this amazing stock picking environment, So we do believe
19:52
Speaker 1: that the volatility is ahead, but it's not necessarily negative
19:55
Speaker 1: because in this time of volatility. This is the time
19:58
Speaker 1: to pick great individual positions, defensive place, improve the quality
20:04
Speaker 1: of the portfolio, stay within the sectors you know that
20:07
Speaker 1: will be the in our view, the leading sectors going forward,
20:11
Speaker 1: like healthcare, like consumer stables and you know, utilities energy.
20:15
Speaker 1: You know, it might not be the same exact things
20:18
Speaker 1: that we've experienced in the possible market, you know, So
20:21
Speaker 1: that rotation to quality to dividend ping stuff you know,
20:25
Speaker 1: we think will serve the investors for many years to come.
20:29
Speaker 1: What do you in your practice and Morgan Stanley in
20:32
Speaker 1: the private wealth business, what do you guys do to
20:34
Speaker 1: attract younger investors? Um to Morgan Stanley, Well, I think
20:39
Speaker 1: that the question with younger investors is, you know, where
20:43
Speaker 1: is why are we investing? You know, where is this
20:46
Speaker 1: leading to? You know? And the the the young investors
20:50
Speaker 1: have been dealing with so much risk and so much volatility,
20:53
Speaker 1: you know, and they've been growing up in this market
20:56
Speaker 1: being so volatile. You know. So the question here is
20:58
Speaker 1: to really than the time frame, you know, and developed
21:03
Speaker 1: this habit of putting together the portfolio of high quality
21:08
Speaker 1: place the individual positions that they can own for many
21:11
Speaker 1: many years to come. You know that come with a
21:14
Speaker 1: story that diversify, that that really gives them access to
21:18
Speaker 1: every sector of the market, you know, but also that
21:20
Speaker 1: that represents their personal values. I think that what differentiates
21:25
Speaker 1: the young investor versus you know, some of the more
21:27
Speaker 1: seasons investors is e s G in a place a
21:30
Speaker 1: significantly higher role for our younger investors than for their
21:34
Speaker 1: parents in many cases. All right, Katerina, great stuff, as always,
21:37
Speaker 1: Katerina Seminetti. She's a senior vice president of the private
21:41
Speaker 1: wealth advisor over at Morgan Stanley. Appreciate getting her perspective here.
21:47
Speaker 1: I'm talking a little commodities, maybe talk a little bit coin.
21:50
Speaker 1: Met you there, I do, all right, I want to
21:52
Speaker 1: just talk Let's start with gold here. I mean, you know,
21:54
Speaker 1: it's up almost six percent year today. Let's talk about that.
21:57
Speaker 1: So let's talk about commodities, cryptos, all that kind of stuff.
21:59
Speaker 1: We can do that with Everett Milman, chief markets analysts
22:01
Speaker 1: like Gainesville Coin. Give you one guest to where he's from.
22:06
Speaker 1: All right, Everett, Let's start with gold here. He's in Gainesville,
22:09
Speaker 1: right somewhere in Florida. I think Truman says he's calling
22:11
Speaker 1: in from Pennsylvania. All right, Everett, where are you Oh sorry, no,
22:15
Speaker 1: he said, Ricket Knights, sorry, Everett, where are you right now?
22:21
Speaker 1: Just outside of Tampa, Florida? Actually so not Ga proper,
22:24
Speaker 1: but that part of the that part of the state alright.
22:26
Speaker 1: Talked to us about commodities. What's going on here? What's
22:28
Speaker 1: your call here? Per this year? Yeah, I think the
22:33
Speaker 1: recent rally and gold has been spurred by the fact
22:36
Speaker 1: that the dollar has softened up a little bit um
22:39
Speaker 1: and we have some positive seasonality with the Chinese lunar
22:42
Speaker 1: New Year. I would expect some volatility surrounding the f
22:46
Speaker 1: MC decision this week, as interest rates are definitely one
22:50
Speaker 1: of the big drivers for gold, but the fundamentals, the
22:53
Speaker 1: macro fundamentals for gold have not been this strong really
22:56
Speaker 1: since the nineteen seventies UM, and far as I can tell,
23:00
Speaker 1: it really doesn't matter what scenario we get from the
23:03
Speaker 1: Fed UM if there is a pivot towards either pausing
23:07
Speaker 1: rate hikes or lowering rates, as seems to be the
23:10
Speaker 1: market consensus sometime out in the next six twelve months.
23:14
Speaker 1: It's so weird every because you know, Paul was just saying, hey,
23:18
Speaker 1: I can get you know, four and a quarter percent
23:21
Speaker 1: on the two year yesterday we're talking Ted Oakley, right,
23:23
Speaker 1: and he said, I have no problem being heavily in
23:26
Speaker 1: cash because I get so much from three three month bills.
23:29
Speaker 1: Like you know, UM, when rates are this high, why
23:33
Speaker 1: on earth would anybody want a pet rock that yields
23:37
Speaker 1: nothing rather than you know, making generating income with with
23:42
Speaker 1: fixed income. It is a fair question, obviously, UM, that
23:47
Speaker 1: is a gold main competitor in terms of what what
23:51
Speaker 1: class in misters does it appeal to? What goals are
23:54
Speaker 1: you trying to reach in terms of wealth preservation rather
23:56
Speaker 1: than UM looking to hit a home run. But I
23:59
Speaker 1: will say that even if the Fed remains hawkish and
24:02
Speaker 1: perhaps keeps monetary policy too restrictive, and we do see
24:07
Speaker 1: rates remain higher for longer, that's probably going to cause
24:11
Speaker 1: some pain and other you know, parts of the riskier
24:14
Speaker 1: parts of markets. And that's where gold safe haven characteristics
24:18
Speaker 1: kick in UM. And we have seen that treasuries have
24:20
Speaker 1: experienced quite a bit of volatility UM really since the pandemic.
24:25
Speaker 1: So I think that that lends gold some added credibility
24:28
Speaker 1: as as a non correlated alternative asset UM, even though obviously,
24:33
Speaker 1: as you say, a fixed income is going to essentially
24:36
Speaker 1: be doing the same things that investors look for from
24:38
Speaker 1: goal is that why bitcoin is has rallied as well.
24:43
Speaker 1: I mean, we're back up at twenty three dollars and
24:46
Speaker 1: as rates rise. UM. Well, first of all, after the
24:50
Speaker 1: collapse of f t X and it's pretty embarrassing bankruptcies
24:54
Speaker 1: across the crypto universe, and then with rising rates. Why
24:58
Speaker 1: why I don't get it? Uh, you know, it's kind
25:02
Speaker 1: of tough to explain really a reasonable explanation for anything
25:06
Speaker 1: that goes on in the cryptocurrency market at this point,
25:09
Speaker 1: given how speculative they remain. UM. But I think kind
25:13
Speaker 1: of strangely we've seen that as a flight to safety
25:17
Speaker 1: of sorts that Bitcoin and ethereum have really rebounded and
25:20
Speaker 1: led the way as retail investors have largely shunned much
25:25
Speaker 1: of the alts coin market. UM. So you could look
25:27
Speaker 1: at that of a flight to safety. UM. Overall, UH
25:31
Speaker 1: transaction on chain transaction volumes have been relatively stable in crypto.
25:36
Speaker 1: So as you say, with all of these bankruptcy and scandals,
25:39
Speaker 1: that hasn't completely tanked UH confidence in the broader market.
25:44
Speaker 1: But clearly, UH, some type of regulation and oversight isn't
25:47
Speaker 1: necessary evil here, particularly if crypto exchanges and crypto based
25:52
Speaker 1: lenders are going to continue to engage in what amounts
25:55
Speaker 1: to banking behaviors. UM. They really can't do that unless
25:58
Speaker 1: they are registered and regular aided, and obviously that is
26:01
Speaker 1: something that they have greatly resisted up to this point. Hey,
26:04
Speaker 1: every what's the relationship between gold and so as? Again,
26:07
Speaker 1: golds up about five or six percent this year and
26:10
Speaker 1: all silvers down about one So historically, how do investors
26:14
Speaker 1: look at those two things together? So the divergence there
26:18
Speaker 1: is mainly because silver has more industrial properties that kind
26:23
Speaker 1: of decouple it from the performance of gold. As you
26:26
Speaker 1: pointed out, we've seen silver lagging behind UM. Right now,
26:29
Speaker 1: the gold is silver ratio is about eighty to one,
26:32
Speaker 1: which has remained elevated for several years. That maybe perhaps
26:37
Speaker 1: the new normal, but I wouldn't be surprised by some
26:39
Speaker 1: mean regression where that ratio of gold gold price and
26:43
Speaker 1: silver price comes back closer to its longer run average
26:46
Speaker 1: of about six one. We do, yes, and we do
26:50
Speaker 1: see that not only UM is silver demand rising in
26:54
Speaker 1: the East, particularly UM in Asia with China and India,
26:58
Speaker 1: but there are still a major tale wins for just
27:01
Speaker 1: general silver demand from an industrial standpoint, um, like continued,
27:05
Speaker 1: from my standpoint, it looks like one of the most
27:07
Speaker 1: undervalued assets on the market. I there's nothing I love
27:11
Speaker 1: more than a post apocalyptic movie with like Kevin Costner,
27:14
Speaker 1: you know, or Will Smith. There's one right now I
27:17
Speaker 1: can't remember the name of on Apple TV, only the
27:21
Speaker 1: first two episodes in. But all of these uh scenarios
27:26
Speaker 1: involved using gold or gas or maybe bitcoin. Does any
27:30
Speaker 1: of that actually drive investment or is that just a
27:33
Speaker 1: fun way to look at things? Ever? Because I can't
27:35
Speaker 1: imagine that, um you know, if uh, if this hugely
27:40
Speaker 1: leveraged giant debt construct collapses, that will be like um,
27:46
Speaker 1: you know, melting down gold bars and spending it at
27:49
Speaker 1: the next cave over right, right, And certainly in a
27:53
Speaker 1: in a scenario where the financial system is in dire streets,
27:58
Speaker 1: the infrastructure to can duct to normal commerce would would
28:02
Speaker 1: be impaired in that situation, it seems unreasonable or unlikely
28:06
Speaker 1: that we would actually hit that scenario. But to the
28:08
Speaker 1: first point in your question, Um, in my experience, it's
28:11
Speaker 1: undeniable that that sentiment or narrative surrounding UM, the perceived
28:18
Speaker 1: riskiness of the leveraging markets that does drive quite a
28:22
Speaker 1: bit of interest in gold, precious metals and then alternatives
28:26
Speaker 1: like cryptocurrency. But I have to admit that UM in
28:29
Speaker 1: terms of utility or use cases, uh, in a in
28:33
Speaker 1: a sort of financial collapse scenario, I think you would
28:36
Speaker 1: be just as well off with canned foods, ammunition, those
28:40
Speaker 1: types of essentials UM, just like commodity of like gold.
28:44
Speaker 1: All right, good stuff. Everett Millman. He's a chief market
28:46
Speaker 1: analyst at Gainesville Coins. Thanks for listening to the Bloomberg
28:51
Speaker 1: Markets podcast. You can subscribe and listen to interviews with
28:54
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.
28:59
Speaker 1: I'm Twitter at Matt Miller seventy three. I'm fall Sweeney.
29:03
Speaker 1: I'm on Twitter at pt Sweeney. Before the podcast, you
29:06
Speaker 1: can always catch us worldwide at Bloomberg Radio