Latest / Bloomberg Intelligence / Sanders Announces Presidential Run: Greg Valliere

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Sanders Announces Presidential Run: Greg Valliere · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you
• 0:05
  Speaker 1: along with my co host Lisa Brahma Wicks. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
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  Speaker 1: you and your money. Whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. Here's some words for you. I
• 0:21
  Speaker 1: think President Trump is a pathological liar. Every day he's
• 0:24
  Speaker 1: telling one liar or another, and it gives me no
• 0:26
  Speaker 1: pleasure to say that. I also think he's a racist,
• 0:28
  Speaker 1: a sexist, homophobe, a zenophobe, somebody who's getting cheap political
• 0:32
  Speaker 1: points by trying to pick on minorities. That is what
• 0:36
  Speaker 1: Bernie Sanders said in an interview with Vermont Public Radio
• 0:39
  Speaker 1: as he announced his candidacy for the President of the
• 0:42
  Speaker 1: United States. Greg Bellier, chief US policy strategist for a
• 0:45
  Speaker 1: g F Investments, joins us Now, Greg, no surprise, but
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  Speaker 1: what do you make of how you rolled out this announcement.
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  Speaker 1: Just think we're going to have a year and a
• 0:54
  Speaker 1: half of this kind of rhetoric back and forth in
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  Speaker 1: Trump of Chris hits back even harder. So, uh, welcome
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  Speaker 1: to the next election. That's going to be pretty ugly.
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  Speaker 1: And Paul, what's interesting, at least for me, is for
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  Speaker 1: the last election, like Bernie Sanders was out on a
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  Speaker 1: lima his own. Now he's not. Now he's not, he's
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  Speaker 1: there's lots of company out on the left limb where
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  Speaker 1: he likes to, uh they play. But Greg, thinking about it,
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  Speaker 1: you know, it is a competitive it's it's a very
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  Speaker 1: crowded field. We're up to twenty some odd names on
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  Speaker 1: the Democratic side. Where do you think Bernie Sanders best
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  Speaker 1: positions himself this go around. Well, let's be honest here,
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  Speaker 1: He's not a Democrat. He is a self professed Democratic socialist,
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  Speaker 1: has never really joined the party, so he's out there.
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  Speaker 1: I mean he's well to the left. Obviously Elizabeth Warren
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  Speaker 1: will be as well. But there's a huge lane in
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  Speaker 1: the center. I think Klobuchar last night in the town
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  Speaker 1: hall tried to take some of that lane. I think
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  Speaker 1: Joe Biden well might even be a guy by the
• 1:52
  Speaker 1: name of Bloomberg. So there are a lot of people
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  Speaker 1: who might want the middle lane, and Bernie makes it
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  Speaker 1: easier for them. And of course Mike Bloomberg is the
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  Speaker 1: majority owner uh and founder of Bloomberg LP. UM, So
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  Speaker 1: are we in for this no matter what side? Because
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  Speaker 1: if you take away even this sort of populist socialist rhetoric,
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  Speaker 1: you also have things like buybacks with Marco Rubio, and
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  Speaker 1: you have a Sanders and Schumer on that train to like,
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  Speaker 1: either way, we're sort of headed for this sort of
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  Speaker 1: collapse of Wall Street versus Main Street. Again, that's a
• 2:23
  Speaker 1: good point, Alex, and I think that even Republicans feel
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  Speaker 1: that perhaps the tax cuts went too far for corporations
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  Speaker 1: and the very wealthy, so that's going to be fair
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  Speaker 1: game for just about everyone. But when you look at
• 2:37
  Speaker 1: Bernie Sanders in particular and the candidates who were well
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  Speaker 1: to the left, I'll be damned if I can figure
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  Speaker 1: out how they'll pay for any of this stuff. And
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  Speaker 1: it may be a little too exotic. Trump has not
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  Speaker 1: lost uh that Uh. He made a speech in Miami
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  Speaker 1: yesterday in which like half of it seemed to be
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  Speaker 1: talking how about how horrible socialists are. What they've done
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  Speaker 1: to venis a whale of us. So he's going to
• 3:01
  Speaker 1: try to portray the Democrats is all socialists. I don't
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  Speaker 1: think it's going to work. So Gregg, what do you
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  Speaker 1: think that Bernie Sanders needs to change from the last
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  Speaker 1: go round for him? Well, I think that he probably
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  Speaker 1: has to do a little bit better with African Americans.
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  Speaker 1: That was a weak spot for him. I think that
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  Speaker 1: you know, at his age at seventy seven, now he's
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  Speaker 1: going to have to show a lot of vigor. You know,
• 3:25
  Speaker 1: he can't get a cold. He's got to He's got
• 3:28
  Speaker 1: to plow right through. I think, uh, energy levels are
• 3:31
  Speaker 1: going to be important. So also what we're sort of
• 3:35
  Speaker 1: percolating on this is all the rhetoric we heard about
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  Speaker 1: these potential auto tariffs from the US. You had the
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  Speaker 1: auto European leaders speaking out against it. You know, I
• 3:42
  Speaker 1: spoke to Michael Jays as he runs policy over at
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  Speaker 1: Morgan Stanley US Public Policy, and he said, look, it's
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  Speaker 1: an issue, but it would be short term. This is
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  Speaker 1: what he had to sand Bloomberg Television earlier today. There
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  Speaker 1: is a potential political circuit breaker, which is a couple
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  Speaker 1: of different bills that are going through the Senate right now.
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  Speaker 1: Um that could take back some of this tariffing authority
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  Speaker 1: from the President before it's actually put in the place
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  Speaker 1: right now. I don't think that that's going to happen
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  Speaker 1: before this becomes more live than it already is. But
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  Speaker 1: we have to watch that very carefully because that could
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  Speaker 1: stop it before it starts. So kind of to your point, Greg,
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  Speaker 1: is that you know you went too far to one side.
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  Speaker 1: Are we seeing a world where the Senate and Congress
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  Speaker 1: is going to try and pair back any power that
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  Speaker 1: Trump really has to push certain things forward. I think
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  Speaker 1: if he went for auto terroris, and there's a secret
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  Speaker 1: report that came out over the weekend from Commerce to
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  Speaker 1: the President, and if he looks at it and says
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  Speaker 1: I'm going to impose auto terris, he could get a
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  Speaker 1: mighty mighty pushback from Congress, and not just from Democrats. So, Greg,
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  Speaker 1: mentioning tariffs, what do you expect if anything out of
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  Speaker 1: the trade talks with China that contents that are ongoing?
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  Speaker 1: You know, I think that we probably have gone a
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  Speaker 1: little bit too far, Paul. We've gotten a little bit
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  Speaker 1: ahead of ourselves that there's not going to be a deal.
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  Speaker 1: In my opinion on March one way, too much stuff
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  Speaker 1: still to be resolved. I do think late spring, early
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  Speaker 1: summer there's going to be a big, made for TV
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  Speaker 1: splashy theatrical meeting between Presidents Trump and Z and we
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  Speaker 1: will get a deal. But for anyone who's hoping for
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  Speaker 1: a deal by this much March one deadline, I think
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  Speaker 1: that's unrealistic. So you think we'll get an extension then
• 5:18
  Speaker 1: at least, yeah, I do. I don't think there's anything
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  Speaker 1: special about that day. They can push it back, you know,
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  Speaker 1: two or three months. It does look like they're making progress,
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  Speaker 1: but there's not going to be a final deal without
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  Speaker 1: Trump and Z. And it's too soon for them to
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  Speaker 1: get together. I think that comes to three months from now.
• 5:36
  Speaker 1: Greg Valieri, Chief US Policy Strategy at a g F Investments,
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  Speaker 1: thank you very much for joining us on Bloomberg Radio
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  Speaker 1: this morning. Joining us now is the man who can
• 5:56
  Speaker 1: talk about everything retail berk Littinger, he joins. So from
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  Speaker 1: a strategic let me get the name right, I don't
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  Speaker 1: want to miss this one up Strategic Resource Group, show off,
• 6:06
  Speaker 1: Strategic Resource Group. I had your bio up, but of
• 6:08
  Speaker 1: course I didn't have the name of your shop. So
• 6:09
  Speaker 1: we managing director of Strategic Resource Group has a long career.
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  Speaker 1: Whether you take a look at say PNG, throughout the
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  Speaker 1: history and sort of helping boost consumer sales, their marketing
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  Speaker 1: and retailing. You're the guy. So clearly Walmart did well
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  Speaker 1: in part because of the push to e commerce, and
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  Speaker 1: they're discounting and Alex and Paul. What's really impressive about
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  Speaker 1: this quarter that hasn't been reported by other networks is
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  Speaker 1: that Walmart's paying higher wages and at the same time
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  Speaker 1: they're lowering their prices and generating more revenue and producing
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  Speaker 1: higher levels of profits. So they're hitting all four cornerstones
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  Speaker 1: that other competitors are not. And even even Amazon's not
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  Speaker 1: doing all that because Amazon's racing prices, and that's one
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  Speaker 1: of the reasons Walmart's doing so well well. This quarter's
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  Speaker 1: numbers were very interesting. I think investors always focused on
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  Speaker 1: Walmart just given its size. By think after the retail
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  Speaker 1: sales report from last week that was such a curveball
• 7:03
  Speaker 1: for everybody with retail sales. I guess and you sent
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  Speaker 1: me down reported one point two per cent. What do
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  Speaker 1: you make of those that number plus the Walmart numbers today?
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  Speaker 1: It's an important question in the issue is that all
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  Speaker 1: consumers across the country are facing all ten monthly budget
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  Speaker 1: expenditures have gone up over the last twelve months. UH
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  Speaker 1: rich people love a bargain, and working people and people
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  Speaker 1: on fixed and limited income need and have to have
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  Speaker 1: a bargain. And the best place to get a bargain
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  Speaker 1: on everything UH she or he buys as the consumers
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  Speaker 1: is Walmart. It's the easiest place to return and UH
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  Speaker 1: Amazon is good if a product doesn't weigh a lot,
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  Speaker 1: or if it's not big in size, but if it's
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  Speaker 1: something that's bulky, like a fifty pound bag of pet
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  Speaker 1: food or uh any anything else that's large in size
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  Speaker 1: or heavy and weight like a UH gall on a
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  Speaker 1: milk which weighs nine pounds and is expensive on Amazon.
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  Speaker 1: Walmart saves people more money. And Walmart's investing in advertising, marketing,
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  Speaker 1: and consumer communication, whether it's Bloomberg, Radio, TV, the Super Bowl.
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  Speaker 1: Sam Walden and his son Rob thought marketing and advertising
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  Speaker 1: was an expense. Amazon views advertising as an expense, Doug McMillan,
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  Speaker 1: the CEO of Walmart, looks at as an investment, and
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  Speaker 1: Jerry del Famina, the legendary advertising agency head I, said
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  Speaker 1: Walmart's advertising as some of the best anywhere in the world,
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  Speaker 1: and that's in taking consumers away from competitors when Walmart
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  Speaker 1: loss for competitors, but at what expense? Right, Like, so
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  Speaker 1: gross margin expansion is going to still be a lusive
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  Speaker 1: for them because they have to do all the stuff
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  Speaker 1: that you just said. They have to keep prices low.
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  Speaker 1: They also have to deal with delivery and shipping and
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  Speaker 1: all that. So why is it okay now? First a
• 8:58
  Speaker 1: couple of years ago and that wasn't okay. We we
• 9:01
  Speaker 1: look at it, Alex on your key question is Walmart's
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  Speaker 1: investing in the future to profitably drive sales growth. So
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  Speaker 1: if you look at depreciation for Walmart versus depreciation for Amazon,
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  Speaker 1: Walmart's spending more than its level of depreciation to win online.
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  Speaker 1: When with their store eleven in Avon, Colorado, with click
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  Speaker 1: and collect, with a FedEx station inside, with Western Union
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  Speaker 1: to wire money and of America will be able to
• 9:32
  Speaker 1: get deliveries from Walmart dot Com including consumables within the
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  Speaker 1: next two years. That's all through the investment. Meanwhile, Jeff
• 9:40
  Speaker 1: Bezos aid Amazon typically does not reinvest all his and
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  Speaker 1: Amazon's depreciation in winning for the future. So Walmart with
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  Speaker 1: a better balance sheet. To your point, the margin margins
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  Speaker 1: are more modest, but that's investing in the Roman Empire
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  Speaker 1: of retail UH to win in cyberspace and when the
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  Speaker 1: wars and the stores well, because Amazon's just getting crushed
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  Speaker 1: in the new whole foods formats by Walmart and others.
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  Speaker 1: So Bert Flickinger, Managing director for Strategic Resource Group, joining
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  Speaker 1: us in studio. One of the numbers that jumped out
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  Speaker 1: at me Bert was that growth in e commerce UH
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  Speaker 1: for Walmart. So they continue to compete extraordinarily well against Amazon.
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  Speaker 1: What is the secret sauce for them? Secret sauce is
• 10:25
  Speaker 1: the investment that Alex referenced, plus the reverse recruiting, so UH,
• 10:32
  Speaker 1: Walmart and Doug McMillan of recruited Mark Lorie, who was
• 10:35
  Speaker 1: a genius who helped develop wag Diapers dot com a
• 10:39
  Speaker 1: lot of Amazon dot com away from Amazon. Dave Criscione,
• 10:44
  Speaker 1: my star student at Cornell Summer Executive Program, was running
• 10:48
  Speaker 1: Amazon Go. Walmart recruited Dave away, so they've taken a
• 10:51
  Speaker 1: dream team out of Amazon and Bazos, in our view,
• 10:55
  Speaker 1: is the most brilliant guy in all of the history
• 10:57
  Speaker 1: of retail. But one general can't win the war, and
• 11:01
  Speaker 1: Walmart's taking as best officers and bringing them into Walmart
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  Speaker 1: for Walmart to win where Walmart has been losing in
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  Speaker 1: cyberspace before they did a complete reset with great leadership
• 11:13
  Speaker 1: as opposed to family management. So who do you think
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  Speaker 1: Walmart is taking market share from? Or is the pie
• 11:20
  Speaker 1: bigger than we thought? And we've talked about Amazon, but
• 11:22
  Speaker 1: I'm more interested also in like the targets are the Macy's,
• 11:25
  Speaker 1: Like who are they eat? Who's lunch a they're eating?
• 11:27
  Speaker 1: They're doing a combination. They're taking the business from Target
• 11:30
  Speaker 1: because Walmart on your investment point, Walmart has the biggest
• 11:36
  Speaker 1: UH data base in terms of terror bytes, second only
• 11:40
  Speaker 1: to the US Pentagon. So in terms of dedicated direct
• 11:44
  Speaker 1: distribution h e commerce communications down to the nanosecond, they're great.
• 11:50
  Speaker 1: Target's been working with McKenzie and company and a lot
• 11:53
  Speaker 1: of consulting firms that have done a lot of good work,
• 11:56
  Speaker 1: but they've outsourced distribution. They've outsowed, they outsourced Target dot
• 12:01
  Speaker 1: Com for a number of years, the outsourced part of
• 12:03
  Speaker 1: credit cards. So Target doesn't have that institutional efficiencies that
• 12:09
  Speaker 1: Walmart's gotten. The other thing that you and Paul reported
• 12:12
  Speaker 1: very well is the Payless bankruptcy, the Jimboree bankruptcies, the
• 12:17
  Speaker 1: earlier retail bankruptcies. So two toys r US, which you
• 12:21
  Speaker 1: and Paul spoke of earlier. So Walmart's aggregating the sales
• 12:25
  Speaker 1: from the bankrupt retailers, plus taking retailers from food, drug
• 12:30
  Speaker 1: discount department store category dominant, especially sporting goods and toys
• 12:36
  Speaker 1: twenty spart. How's the consumer doing? Broadly defined? Consumers doing
• 12:40
  Speaker 1: well in off price and the word working consumer, consumers
• 12:45
  Speaker 1: doing okay. Uh. Luxury consumers are really struggling worldwide. As
• 12:50
  Speaker 1: my husband said, can you just please stop spending alex
• 12:53
  Speaker 1: thanks just one week, don't buy Maybe I think a
• 12:56
  Speaker 1: lot of people that In December Profit Burt Flicking, your
• 13:00
  Speaker 1: managing director for Strategic Resource Group, joining us in study
• 13:03
  Speaker 1: on Walmart and all things retail. As we were talking about,
• 13:18
  Speaker 1: you have the FED minutes coming out on Wednesday at
• 13:20
  Speaker 1: two pm, and you know what I'm hearing, kill the dots,
• 13:24
  Speaker 1: more revolution of more revolt against the dot plot because
• 13:27
  Speaker 1: it doesn't help provide clarity, but more confusion for the markets.
• 13:30
  Speaker 1: Joining us now is Craig Taurus with the latest. So Craig, realistically,
• 13:35
  Speaker 1: are we really going to see the end of the
• 13:37
  Speaker 1: dot plot? And why no? And you're so sad about that.
• 13:44
  Speaker 1: It took a long time to get agreement on this.
• 13:47
  Speaker 1: I do think it really isn't expressing what they would
• 13:51
  Speaker 1: like to express, and maybe that's the departure point of
• 13:55
  Speaker 1: their conversation these days. So Craig, maybe you know, it's
• 14:01
  Speaker 1: debatable whether the dot plot itself and that forecast and
• 14:04
  Speaker 1: what it represents is the problem, or maybe just the
• 14:06
  Speaker 1: messaging of what the FED officials are seeing what happened
• 14:10
  Speaker 1: in December that really riled the markets. I think so they,
• 14:15
  Speaker 1: as everybody now knows, they stuck with this outlook of
• 14:19
  Speaker 1: two rate hikes at a time when we later saw
• 14:23
  Speaker 1: in the minutes there were as many as five downside
• 14:26
  Speaker 1: risks that they cited, and so whatever they said in
• 14:30
  Speaker 1: the press release and the FED statement in their forecasts
• 14:35
  Speaker 1: didn't really reflect the conditionality or their conviction about those
• 14:42
  Speaker 1: two hikes in penciled in for so, so again I
• 14:47
  Speaker 1: come back to, is more of a messaging issue. How
• 14:51
  Speaker 1: can they fix that if there is in fact a
• 14:52
  Speaker 1: systemic problem. It's complicated. As we say in our story today,
• 14:59
  Speaker 1: During a number of ideas floating around, one is well,
• 15:03
  Speaker 1: j Pal's having press conferences eight times a year now, right,
• 15:06
  Speaker 1: so they could give more frequent updates on their forecasts
• 15:10
  Speaker 1: eight times a year instead of four. Now, that would
• 15:13
  Speaker 1: show more agility in response to current information. And I
• 15:17
  Speaker 1: would expect, you know, that dot plot and the outlook
• 15:21
  Speaker 1: for growth, you might see some changes. UM would not
• 15:26
  Speaker 1: express conditionality though, uh no, it would not. So here's
• 15:32
  Speaker 1: what this reminds me of. And if you are a parent,
• 15:33
  Speaker 1: maybe you'll get this analogy. It reminds me of my
• 15:36
  Speaker 1: toddler wanting chocolate for breakfast and I said, you can't
• 15:38
  Speaker 1: have chocolate for breakfast, like but I want to and
• 15:40
  Speaker 1: hear all the reasons why, and I say, no, you
• 15:42
  Speaker 1: can't have any anything except giving her chocolate for breakfast.
• 15:45
  Speaker 1: Won't let her relax and calm down. It's kind of
• 15:47
  Speaker 1: the same thing. The markets basically want Powell to come
• 15:49
  Speaker 1: out and say we're raising rates this date and if
• 15:52
  Speaker 1: we don't, here's the number one reason why. But that
• 15:55
  Speaker 1: Paul is like totally unrealistic. That's not how the system works.
• 15:58
  Speaker 1: It is. And it's also a question of getting too
• 16:00
  Speaker 1: much information. With Chairman Pal, you know, speaking eight times
• 16:03
  Speaker 1: a year versus four times UM, is that too much information?
• 16:07
  Speaker 1: I don't think so. So I think the problem. You know,
• 16:12
  Speaker 1: there's something about communication when you make a decision, you know,
• 16:16
  Speaker 1: as a parent, as an individual, whoever, you want to
• 16:19
  Speaker 1: come out and kind of sell the decision, right, this
• 16:22
  Speaker 1: is why we did what we did. It's kind of
• 16:25
  Speaker 1: hard then to shift and say this is why we
• 16:28
  Speaker 1: might not do what we did. But they have to
• 16:32
  Speaker 1: do that because you know why fed funds markets, money
• 16:36
  Speaker 1: markets are always of reflecting the conditionality and probability of
• 16:42
  Speaker 1: that they're going to do or may not do that,
• 16:45
  Speaker 1: So somehow they have to address that. So basically that
• 16:48
  Speaker 1: means that instead of the market focusing on the dot plot,
• 16:51
  Speaker 1: it come out and say, I'm making this up. Here's
• 16:53
  Speaker 1: the criteria of six things that we look at boom boom, boom,
• 16:57
  Speaker 1: and this is what makes us doat a dependent or
• 16:59
  Speaker 1: not correct. So some central banks run scenarios and they
• 17:03
  Speaker 1: say this isn't gonna we don't this isn't our baseline.
• 17:08
  Speaker 1: This could happen or it may not. But what would
• 17:11
  Speaker 1: happen if after the fiscal stimulus, growth ratcheted down to
• 17:15
  Speaker 1: two percent or below, and then you just ran an
• 17:18
  Speaker 1: economic model and plotted out a funds rate that's called
• 17:22
  Speaker 1: a fan chart. Those are just as confusing. Now that's
• 17:25
  Speaker 1: not a fan chart. This is a scenario with a
• 17:28
  Speaker 1: funds rate and not a fan around it. Fan charts
• 17:30
  Speaker 1: are meaningless in my view and in many people's view,
• 17:34
  Speaker 1: because it tells you the number could be zero where
• 17:37
  Speaker 1: it could before. That's really not specific guidance, or it
• 17:41
  Speaker 1: doesn't say anything about I hate this word, but I'm
• 17:44
  Speaker 1: going to use it your reaction function, how you'll respond. So, Craig,
• 17:49
  Speaker 1: is there any chance that the FED would consider a
• 17:51
  Speaker 1: consensus forecast? That's a great question. So if the three
• 17:58
  Speaker 1: of us were in a room and we had to
• 18:01
  Speaker 1: walk out and say something to Bloomberg at large, right,
• 18:06
  Speaker 1: I think we could agree on what we're going to say.
• 18:09
  Speaker 1: For some reason, the f o MC has a very
• 18:12
  Speaker 1: hard time coming up with us or getting to the
• 18:15
  Speaker 1: point where they say, well, this is we're going to
• 18:17
  Speaker 1: agree on this forecast. Part of it is our system
• 18:21
  Speaker 1: were diversity of views is also important, But it doesn't
• 18:26
  Speaker 1: seem to me like a big goal to aim for. Um.
• 18:30
  Speaker 1: I'm optimistic, I guess all right, Craig, tourists tired of
• 18:33
  Speaker 1: the dot plot, but I resigned and trying to get
• 18:35
  Speaker 1: optimistic joining us up from Bloomberg. Well, interest rates are falling,
• 18:48
  Speaker 1: and a growing course is forecasting slower growth and tepid inflation.
• 18:52
  Speaker 1: Consensus has shifted to a point where virtually all forecasters
• 18:55
  Speaker 1: expect interest rates to follow inflation towards this seller. To
• 18:58
  Speaker 1: get a sense of how this scenario may play out,
• 19:01
  Speaker 1: we welcome Jack Ablin. Jack is founding partner and chief
• 19:04
  Speaker 1: investment officer at Crescent Wealth Advisors. Jack, thanks so much
• 19:08
  Speaker 1: for joining us. So the inflation outlook is currently I
• 19:12
  Speaker 1: think quite benign in the marketplace. What do you think
• 19:14
  Speaker 1: could change that? Well, I think probably if anything is
• 19:18
  Speaker 1: the labor market. You know clearly um our economy is
• 19:22
  Speaker 1: is pivots off of households, and household income pivots off
• 19:27
  Speaker 1: of wages. And you know, we'll keep in mind that
• 19:30
  Speaker 1: wages your over year have are up three point two percent,
• 19:34
  Speaker 1: so certainly you know, well above our trend trend growth
• 19:40
  Speaker 1: UH for real GDP, and based on our forecast, we
• 19:44
  Speaker 1: think wages could rise another three percent over the coming
• 19:48
  Speaker 1: four quarters. So does that wind up feeding into inflation
• 19:51
  Speaker 1: expectations because a lot of investors now argue that inflation
• 19:55
  Speaker 1: expectations will be now, really what the fees reacting to Yeah,
• 20:00
  Speaker 1: I think that's exactly at Uh. The fact is that,
• 20:03
  Speaker 1: you know, um that we've we've we've printed four point
• 20:07
  Speaker 1: three four point five trillion dollars of money to buy bonds.
• 20:12
  Speaker 1: That hasn't led too much inflation. We've had now a
• 20:17
  Speaker 1: ten year recovery. Uh, that so far has not led
• 20:21
  Speaker 1: too much inflation. But I think consumer demand, which drives
• 20:26
  Speaker 1: obviously most of economic activity, once we start running out
• 20:30
  Speaker 1: of capacity, we will, uh, we will eventually start to
• 20:35
  Speaker 1: see some price rises. Not to mention, of course, uh
• 20:38
  Speaker 1: some of these tariffs that um, that that companies are
• 20:41
  Speaker 1: going to have to pass along. So Jack, I guess
• 20:44
  Speaker 1: the consensus for the Fed for the remainder of the
• 20:46
  Speaker 1: year is maybe one, maybe two hikes and then I
• 20:49
  Speaker 1: guess a systematic, steady wind down of the balance sheet.
• 20:53
  Speaker 1: Are you in that consensus? Yeah, I mean I think
• 20:58
  Speaker 1: that In fact, I would say consensus what the Fed
• 21:02
  Speaker 1: believes and what consensus believes maybe a little bit different here.
• 21:06
  Speaker 1: I think consensus is closer to you know, zero hikes
• 21:10
  Speaker 1: this year and in fact rate cuts next year. I
• 21:12
  Speaker 1: think that probably a little overly aggressive. I do think, um,
• 21:19
  Speaker 1: you know, we are starting to run of certain capacity. UM.
• 21:24
  Speaker 1: You know, I I did note that, for example, UM,
• 21:27
  Speaker 1: a lot of the staples companies said that they're going
• 21:30
  Speaker 1: to be passing along higher prices to their consumers. UM.
• 21:35
  Speaker 1: And so you know that's obviously staples in elastic demand.
• 21:39
  Speaker 1: But eventually if that starts to move into other areas, UM,
• 21:43
  Speaker 1: you know, that could that could put the price indecks higher.
• 21:46
  Speaker 1: Here's a question. Can we just keep going up but
• 21:50
  Speaker 1: the economy slows? You know, it's a it's a great question. UM, yeah,
• 21:57
  Speaker 1: I guess it could if we have a higher productivity.
• 22:00
  Speaker 1: Mean right now, you know, businesses can only pay wage
• 22:04
  Speaker 1: increases out of really two things. One is higher inflation, right,
• 22:09
  Speaker 1: if they can price their products higher and then share
• 22:12
  Speaker 1: some of those higher prices with labor. Uh. The other,
• 22:16
  Speaker 1: of course, is productivity if they if their employees can earn,
• 22:21
  Speaker 1: you know, can can pump out five more product for
• 22:24
  Speaker 1: the same amount of effort that I argue you could
• 22:26
  Speaker 1: argue that, UM, business owners can pass some of those
• 22:31
  Speaker 1: productivity benefits along to their workforce. Without those two, UM,
• 22:37
  Speaker 1: the business owners have to start cutting into profits to
• 22:40
  Speaker 1: pay those wage increases. And that's pretty much what we're
• 22:44
  Speaker 1: starting to see over the last couple of quarters. So Jack,
• 22:49
  Speaker 1: we had some pretty good numbers coming out of Walmart
• 22:51
  Speaker 1: this morning. UM, kind of kind of I think, offsetting
• 22:55
  Speaker 1: kind of the weak retail sales number we had for
• 22:57
  Speaker 1: December last week. What is what is sense of where
• 23:00
  Speaker 1: the consumer is right now? I think that, you know,
• 23:04
  Speaker 1: it's funny, I'm actually very surprised with that weak retail
• 23:08
  Speaker 1: number in December. Um. You know, I don't know. UM
• 23:12
  Speaker 1: you know obviously one month um, and we want to
• 23:15
  Speaker 1: you know, one once we get um, you know, more data,
• 23:18
  Speaker 1: we can get a better sense of it. But I
• 23:21
  Speaker 1: tend to be believe Walmart, which I think last time
• 23:24
  Speaker 1: I checked was ten percent of all retail UM. Over
• 23:28
  Speaker 1: you know, some of the one one time government stat
• 23:32
  Speaker 1: I think the consumer is very strong. Um. You know
• 23:35
  Speaker 1: again hearkening back to this notion, uh that uh that
• 23:40
  Speaker 1: wages have outpaced economic activity, so real wages are on
• 23:44
  Speaker 1: the rise, and of course pump prices UM are remarkably low.
• 23:49
  Speaker 1: One of the things we look at is how far
• 23:51
  Speaker 1: can you drive on an hour's worth of work? Um.
• 23:55
  Speaker 1: So it looks at pump prices, it looks at wages,
• 23:58
  Speaker 1: It also looks at fuel efficient and see and we
• 24:00
  Speaker 1: find if you can get over three and twenty miles
• 24:04
  Speaker 1: on an hour's worth of work. UM, that's a pretty
• 24:08
  Speaker 1: good economy for American workforce. And that's where we are
• 24:11
  Speaker 1: right now. So does that mean you want to be
• 24:13
  Speaker 1: taking on more risk right now or less? Well? UM,
• 24:18
  Speaker 1: you know it's interesting. I'm looking at other metrics. UM.
• 24:21
  Speaker 1: I think that equities in general are fairly priced. I
• 24:25
  Speaker 1: will say, anyone who's forecasting recession, uh, must have a
• 24:31
  Speaker 1: better um crystal ball than I do. I don't see
• 24:34
  Speaker 1: one on the horizon. Uh. You know, notwithstanding the weakness abroad.
• 24:39
  Speaker 1: I I just don't see one here at home. UM.
• 24:42
  Speaker 1: So I would say, you know, I'm I'm pretty much
• 24:45
  Speaker 1: neutrally weighted to equities. I think they're fairly priced based
• 24:49
  Speaker 1: on conditions. One of the things I do look at, though,
• 24:52
  Speaker 1: for the next at least six months, is the relative
• 24:55
  Speaker 1: return of financials. What we find is historically that equities
• 25:00
  Speaker 1: do well when financials do well, and equities don't do
• 25:03
  Speaker 1: as well when financials are underperforming. And you know, over
• 25:07
  Speaker 1: the last six months, financials have underperformed. Uh, the S
• 25:11
  Speaker 1: and p F I've founded, and that spells some headwinds
• 25:14
  Speaker 1: for equity investing over the next couple of quarters. All right, Jack,
• 25:18
  Speaker 1: good to catch up with you. Thank you very much.
• 25:20
  Speaker 1: Chack Ablin, founding partner and chief investment officer at Crescent
• 25:23
  Speaker 1: Wealth Advisors. Thanks for listening to the Bloomberg P and
• 25:27
  Speaker 1: L podcast. You can subscribe and listen to interviews at
• 25:30
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• 25:34
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• 25:36
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• 25:39
  Speaker 1: you can always catch us worldwide. I'm Bloomberg Radio.