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Earnings, Stocks, And Inflation (Podcast) · Bloomberg Intelligence

0:00
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 do a little
0:22
Speaker 1: stocks round table. Let's talk some stocks here. I'm gonna
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Speaker 1: throw a couple of sectors that we really like to
0:27
Speaker 1: talk about. One is technology. Uh so we do that
0:30
Speaker 1: with an a rock Rana. He's a senior anost covering
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Speaker 1: all things technology for Bloomberg Intelligence. He joins us here
0:35
Speaker 1: on a Bloomberg Interactive broker studio and Debi Aikin. She
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Speaker 1: covers luxury, which is right down Matt's ali, but she
0:42
Speaker 1: covers the luxury. She's based in London for Bloomberg Intelligence.
0:46
Speaker 1: Deb let's start with you here. Can you give us
0:48
Speaker 1: just an overview of how luxury spending performed during the
0:54
Speaker 1: pandemic and now today in what looks like is going
0:58
Speaker 1: to be from much of the world a recession. So um.
1:04
Speaker 1: During the pandemic so um. We saw a big shift
1:08
Speaker 1: to online. So initially we saw stores closed, we saw
1:11
Speaker 1: sales overall down around six UM. Beyond that we then
1:16
Speaker 1: saw full recovery UM and into two. If we head
1:23
Speaker 1: into recession, we don't see it yet in luxury and
1:26
Speaker 1: both the mid and the very top end. We are
1:29
Speaker 1: fearful for some of the entry points, but we're not
1:31
Speaker 1: seeing the pressure there yet for fashion items yet, but
1:35
Speaker 1: for luxury bottom men, no, and the comments that we're
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Speaker 1: receiving so far with l um H haven't reported UM
1:44
Speaker 1: and also for we could also say for consumer staples
1:47
Speaker 1: brands overall as well. If you've got number one tier
1:50
Speaker 1: one positions, they're still holding up and prices have been
1:53
Speaker 1: passed through. Yeah. I notice you cover luxury like air
1:57
Speaker 1: Mares or LVMH, but also Practice and Gamble and Unilever.
2:01
Speaker 1: So I didn't know if debbikon was just stepping down.
2:04
Speaker 1: What do you call it when consumers um, you know,
2:06
Speaker 1: normally shop at Waitrose and then they go to Walmart. Yeah, exactly,
2:10
Speaker 1: it's not you know, for one like A P and
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Speaker 1: G who reported this afternoon, UM, what you see there
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Speaker 1: is that they have such a wide range of price
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Speaker 1: points across KEYTI categories and big brands that they're able
2:23
Speaker 1: to capture the consumers they move around, whether it be
2:26
Speaker 1: that they look for ten dollar small pack or a
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Speaker 1: forty dollar multi pack to feel that they're getting value
2:32
Speaker 1: for money. All right, let's spring in round to talk
2:35
Speaker 1: a little technology, another part of the economy that seems
2:38
Speaker 1: in pretty good stead much like you know, luxury, I mean,
2:43
Speaker 1: but I mean, but but the same. The worry is
2:45
Speaker 1: the same, right for investors that a downturn is going
2:47
Speaker 1: to affect um the outlook. Right. They reported the results
2:53
Speaker 1: that were in line with estimates, but we're more worried
2:55
Speaker 1: about the outlook, right one in the case of Adobe, Adobe,
2:59
Speaker 1: and we headed the analyst day last night, so they
3:01
Speaker 1: gave guidance for three and you know, in our view
3:05
Speaker 1: they talked about softness and some of their business. But
3:08
Speaker 1: the stock reaction tells me that the by side probably
3:11
Speaker 1: was expecting a lot worse than what they said. Um
3:14
Speaker 1: And I think, you know, this is a stock that's
3:15
Speaker 1: just got beaten up so badly over the last year.
3:18
Speaker 1: It's down from its peak ever since they announced the
3:21
Speaker 1: Figma deal. It's down over so I think this is
3:25
Speaker 1: a bit of a relief rally for them that you know,
3:27
Speaker 1: next year it is not going to be maybe as
3:29
Speaker 1: bad as what people were thinking. But they don't they
3:31
Speaker 1: haven't had the supply chain issues, they haven't had so
3:36
Speaker 1: much the chip problems. These are software creators, right, um,
3:40
Speaker 1: but they I guess have to pay much more for
3:43
Speaker 1: workers that aren't coming to the office anymore. So the
3:45
Speaker 1: wage inflations is an issue. But at the same time,
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Speaker 1: these are products that have immense pricing power, so you know,
3:51
Speaker 1: margins really don't get hurt in the software world as
3:54
Speaker 1: much as it does in the consumer area. But the
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Speaker 1: big deal for a company like Adobe would be what's
3:59
Speaker 1: the top line growth? Megin, These guys have done a
4:01
Speaker 1: phenomenal job over the last I would say seven eight
4:04
Speaker 1: years growing in plus organically. I think that's the number
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Speaker 1: that's not going to happen over the next couple of years.
4:10
Speaker 1: But I think it seems like the byside is already
4:12
Speaker 1: you know, brought into that. All right. I want to
4:15
Speaker 1: talk China because it affects both onoragamous technology sector and
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Speaker 1: deb and luxury and deb When I think of some
4:24
Speaker 1: of the drivers for luxury spending in Paris, in you know, Milan,
4:30
Speaker 1: in New York City. I think of the Chinese tourist
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Speaker 1: that has to be totally decimated because we have China
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Speaker 1: still effectively shut down. We do, But what's happened is
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Speaker 1: that the if we think about the whole luxury market
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Speaker 1: pre COVID, we would say that Chinese consumer was taken
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Speaker 1: towards a third of the market overall, but that they
4:53
Speaker 1: would do a quote if they're spent in in China,
4:55
Speaker 1: and it's more source were opened in China and the
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Speaker 1: other three quarters when he was spending. That's transition to China.
5:02
Speaker 1: It's you know, the other problem. You do have a
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Speaker 1: supply chain issue. I assume I tried to buy UM
5:08
Speaker 1: and Arrow Leathers a jacket from Arrow Leathers the Highwaymen,
5:11
Speaker 1: which is their iconic horse leather chrome x L jacket.
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Speaker 1: They created it forty years ago and it goes for
5:17
Speaker 1: a real premium. Can you do have any idea? What
5:19
Speaker 1: are you talking about? I have no idea. Well, well,
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Speaker 1: they can't get them. They can't get the horse leather
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Speaker 1: in the door, they can't get those deliveries from Chrome
5:28
Speaker 1: x L or horween. And I'm assuming that UM, you know,
5:33
Speaker 1: LVMH and air Mas had the same problems with a
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Speaker 1: lot of their materials. So the thing is that they
5:39
Speaker 1: work on such long dated because of how exclusive they are,
5:42
Speaker 1: they work on such long dated, long term agreements. They
5:46
Speaker 1: don't have that issue. The issue they have is maintained
5:48
Speaker 1: in volume from demand. So for MS, we know that
5:52
Speaker 1: their model is unlimited supply and their issue, their bottleneck
5:56
Speaker 1: is that they have to open one new store, sorry,
6:00
Speaker 1: a new production plant. UM it would be there twenty
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Speaker 1: three to twenty six over the next three to four
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Speaker 1: years for their leather goods division, and everything has always
6:08
Speaker 1: produced out of Italy, out of UM, out of France,
6:13
Speaker 1: so they've always had a very flexible supply chain, which
6:16
Speaker 1: became even more flexible over the last couple of years.
6:18
Speaker 1: So for them, the China situation recently has been about
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Speaker 1: closed stores and also close supply chain because of zero
6:25
Speaker 1: you know, the lockdown policy that has started to reopen.
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Speaker 1: And even the data we just got this afternoon kind
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Speaker 1: of ties in from B and G that the market
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Speaker 1: is down about mid single digit overall year to date
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Speaker 1: in China, but that you're getting double digit growth from
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Speaker 1: June only Son On the tech side, China, both as
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Speaker 1: a buyer of technology and a supplier of technology. What's
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Speaker 1: kind of the the tech car. The biggest company that's
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Speaker 1: exposed without is Apple. So we're gonna find out next
6:53
Speaker 1: week of how that's going to shape up, because we
6:56
Speaker 1: think that China numbers are going to be weak because
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Speaker 1: of the luck outs. And the second part is China.
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Speaker 1: You know, j generate over the revenue from the Greater
7:05
Speaker 1: China region, but a hundred percent of the iPhones are
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Speaker 1: close to hundred percent of the iPhones are assembled in
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Speaker 1: that region. So if, for example, we do get into
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Speaker 1: an area, we don't envision that happening in the next
7:15
Speaker 1: six months, but let's say over the next twelve months,
7:18
Speaker 1: if there is an increase in demand for the phones,
7:21
Speaker 1: then they could be some supply chain problems. Right now,
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Speaker 1: we don't see that. And is the supply chain for
7:28
Speaker 1: technology where is it? I guess are we back to
7:32
Speaker 1: normal ish or close to it? We are back to
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Speaker 1: normalists because of demand reasons, but if the demand picks up,
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Speaker 1: we could have some problems down the road. And you
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Speaker 1: know the biggest issue is that you can't really diversify
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Speaker 1: from China that easily. It's taken twenty years to build
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Speaker 1: this supply chain. It's gonna take another decade of plus
7:50
Speaker 1: two even entangle it even slightly, or bringing chips back
7:53
Speaker 1: to the state of Ohio. So I mean, that's a
7:55
Speaker 1: good thing. The great exactly that they can thank you
7:58
Speaker 1: so much for joining us that they can follow retail
8:01
Speaker 1: for Bloomberg Intelligence, including a luxury from our not narrow
8:05
Speaker 1: leathers apparently but apparently not but howe or great producer
8:09
Speaker 1: of tanned leather hides sure, who doesn't know that? And
8:12
Speaker 1: on a rock Ronnie he covers all things technology for
8:14
Speaker 1: Bloomberg Intelligence, joining us here in our Bloomberg Interactive Broker
8:18
Speaker 1: studio round taping. A little uh, technology, a little luxury,
8:22
Speaker 1: a couple of areas that we like to talk about.
8:23
Speaker 1: And again both kind of dependent to varying degrees as
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Speaker 1: both a supplier and a source of demand on China,
8:30
Speaker 1: and that's kind of continues to be an issue. Markets
8:36
Speaker 1: kind of mixed here. We had two ripping days on
8:38
Speaker 1: the upside, uh, and now kind of markets kind of digesting.
8:41
Speaker 1: So let's talk market. So let's do this round table
8:44
Speaker 1: thing again. We're sitting literally at a round table here
8:46
Speaker 1: in our Bloomberg for those of you listeners who haven't
8:49
Speaker 1: seen it. You should come in. Yeah, come on in
8:51
Speaker 1: and see the studio. It's awesome. Mike built us a
8:54
Speaker 1: nice studio. We appreciate it. We've got Gina Martin Adams,
8:56
Speaker 1: chief equity market strategist with Bloomberg Intelligence. She joins us
8:59
Speaker 1: in our blue Brick Interactive broker studio. And then we
9:02
Speaker 1: have Vince Signarella, a global macro strategist with Bloomberg Intelligent. No,
9:06
Speaker 1: he's not global macro strategist with Bloomberg News, And I
9:09
Speaker 1: don't know what the heck he does. But he's been
9:10
Speaker 1: trading stocks and bonds and currencies and all that kind
9:13
Speaker 1: of stuff for decades. And he is firmly ensconced in Westchester,
9:18
Speaker 1: and they will get him out of there. Uh. I
9:20
Speaker 1: don't think ever. Vince. Let's start with you here. Um,
9:23
Speaker 1: we had a couple of ripping days here in the market.
9:26
Speaker 1: What did you make of it? Well? I think what
9:30
Speaker 1: we're seeing, Um, a lot of traders are are sort
9:33
Speaker 1: of putting their finger on some of the weaker data
9:34
Speaker 1: that we've been seeing, especially in the housing market. Uh.
9:37
Speaker 1: And they now have fully priced in the November and
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Speaker 1: December hikes and hoping coping that we will continue to
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Speaker 1: see this weaker data, if you will, that shows inflation
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Speaker 1: moderating and perhaps we get a pause from the said
9:50
Speaker 1: in the first quarter. We've also come a very, very
9:52
Speaker 1: long ways, as I'm sure Gina will be able to
9:55
Speaker 1: articulate far better than I in terms of hitting technical levels.
9:59
Speaker 1: But that had some thing to do with it. Um.
10:01
Speaker 1: We hit a fifty retracement I believe it was from
10:04
Speaker 1: the June numbers, and that triggered some machine buying and
10:08
Speaker 1: a lot to stop lost buying as well, and that's
10:11
Speaker 1: put us put a little base under us. We're right
10:13
Speaker 1: now we're following believe it or not, UK ten year
10:16
Speaker 1: guilts as the guilds fall in UH in Europe, US
10:20
Speaker 1: treasury yields dropping a touch from this morning's highs, and
10:23
Speaker 1: that's lifted the equity market initially. And as you mentioned,
10:27
Speaker 1: we're now more of a mixed place. Do you know
10:29
Speaker 1: how much do the algorithms make a difference? Everyone talks
10:32
Speaker 1: about the algorithms as it helgoes. You know, they're the
10:37
Speaker 1: you know, the evil terminators from the future coming back
10:40
Speaker 1: to kill us. Um, Is it true? Did the algories
10:43
Speaker 1: drive that crazy rally that we saw last Thursday. Are
10:46
Speaker 1: they behind what we saw um Monday and Tuesday. Look,
10:50
Speaker 1: I think anybody that pretends like they can answer that
10:53
Speaker 1: question is simply pretending nobody knows, and it's all speculation.
10:58
Speaker 1: It's all speculation, it's all assumption. We know that there
11:03
Speaker 1: is a higher degree of algorithmic trading and quantitatively driven
11:06
Speaker 1: trading in the market, so most likely it had some status,
11:11
Speaker 1: some role to play. But was this particular bottom any
11:15
Speaker 1: different than the one in June, any different than the
11:17
Speaker 1: one at the end of eighteen, any different than the
11:19
Speaker 1: one at the beginning of Nobody knows that answer. They've
11:23
Speaker 1: all been bottoms that have formed in sort of a
11:27
Speaker 1: close correlation with a rise in algorithmic trading. As as
11:32
Speaker 1: an influencer on the market, I think what matters is
11:36
Speaker 1: what is the market now valuing? How is the market
11:39
Speaker 1: trading on the outlook? What does sentiment really look like?
11:42
Speaker 1: Because these are things that will drive ultimate a sort
11:46
Speaker 1: of activity and flows in the market longer term. The
11:50
Speaker 1: algois can certainly make turning points look more vicious and
11:54
Speaker 1: surprise the consensus outlook more, but ultimately there still is
11:59
Speaker 1: our long long term underlying fundamental drivers. Two stocks that
12:02
Speaker 1: I think we want to kind of focus, but was
12:04
Speaker 1: that it was that a bottom? I mean, when we
12:06
Speaker 1: look back, are we gonna say, um, you know, uh,
12:11
Speaker 1: October what was it? October twelfth at thirty seventy seven
12:15
Speaker 1: was the bottom in the SMP. I would say that
12:18
Speaker 1: from a fundamental perspective, our model that we updated at
12:21
Speaker 1: the beginning of the year said that we would trade
12:22
Speaker 1: to thirty six hundred to price in some form of
12:25
Speaker 1: very mild recession. That is very close to the level
12:29
Speaker 1: where we bottomed in October. Our model now says there's
12:32
Speaker 1: downside to closer to thirty one to price in a
12:35
Speaker 1: more vicious normal recession. But we're still questioning whether a
12:40
Speaker 1: vicious normal recession is likely to emerge. Um. We have
12:44
Speaker 1: seen a significant loadown in economic growth, so we have
12:47
Speaker 1: very clearly and very adequately now priced the slowdown that
12:51
Speaker 1: we're experiencing in but we're still working through what looks like.
12:57
Speaker 1: I think that the market has adequately priced roughly five
13:00
Speaker 1: percent downside to earnings expectations. If we can get a
13:04
Speaker 1: turn from the FED, the market may have priced up
13:07
Speaker 1: to a fifteen percent down fifteen percent downside an EPs,
13:10
Speaker 1: but there's still a lot of outstanding question marks in
13:13
Speaker 1: the outlook, and I think that is likely to create
13:15
Speaker 1: some persistent volatility. Maybe this was the bottom. Again, from
13:21
Speaker 1: a sentiment perspective, it looks like a bottom. Our market
13:25
Speaker 1: pulse index reached very serious extremes. Most of the sentiment
13:29
Speaker 1: surveys that we're getting out of some of the cell
13:30
Speaker 1: side shops are confirming sentiment is awful, and that is
13:35
Speaker 1: usually first precondition for a bottom. But is it the
13:40
Speaker 1: only condition? Not necessarily, Vince. What's it feel like out
13:43
Speaker 1: in the trenches when you talk to the traders, they
13:45
Speaker 1: are they trading like where we are at or near
13:47
Speaker 1: or forming a bottom? Or are they like Dennis Gartman
13:50
Speaker 1: who had onto the last hour we said we got
13:52
Speaker 1: a lot more pain to go. Well, they're not trading
13:56
Speaker 1: like we have a lot more pain to go. A
13:58
Speaker 1: lot of guys are now like Gina Man, And from
14:00
Speaker 1: the sentiment standpoint, a little bit of a shift from
14:03
Speaker 1: a cellar ally to look to buy the dip. And
14:05
Speaker 1: that's mostly among the day traders. They're looking for opportunities
14:09
Speaker 1: to get in the market today, especially with the following
14:12
Speaker 1: that interest rate move and just recently um I just
14:16
Speaker 1: literally a few moments ago, had a trader tell me
14:18
Speaker 1: that he's turning his lungs into shorts, and he looks
14:21
Speaker 1: very right at the moment because the VIX was holding
14:23
Speaker 1: up and would not uh and would not go down.
14:26
Speaker 1: So uh, they are trading off these technical levels here
14:30
Speaker 1: and there, but the sentiment looks like traders want to
14:35
Speaker 1: believe that we're at least putting in a temporary low
14:38
Speaker 1: and and some of the technical support it. Um And
14:41
Speaker 1: look at the inforce correlation between the dollar and the
14:43
Speaker 1: S and P five. The dollar looks like it's putting
14:46
Speaker 1: in a technical top, but it could easily be a
14:49
Speaker 1: very temporary one and we could step, you know, a
14:53
Speaker 1: couple of months from now, step back into a major
14:55
Speaker 1: sell off if we get some kind of black Swan moment.
14:59
Speaker 1: So just quick on earnings. I know we've only had
15:01
Speaker 1: sixty two SP five companies report, but my question is
15:06
Speaker 1: its earnings is as it relates to how much lower
15:09
Speaker 1: do you think earnings will go? Should go, need to go?
15:12
Speaker 1: That kind of thing. Yeah, So in this very short
15:16
Speaker 1: term earnings expectations are actually too low. The consensus got
15:20
Speaker 1: too bearish on on third quarter, and the content census
15:23
Speaker 1: continues to get more bearish in the very short term,
15:25
Speaker 1: despite the fact that companies are actually beating third quarter
15:28
Speaker 1: expectations for the year two dollars in the most recent
15:31
Speaker 1: survey that I saw from Lou Way. So, but if
15:34
Speaker 1: you look out forward twelve months, analysts are anticipating eight
15:37
Speaker 1: percent growth still, and that number is too high. It
15:40
Speaker 1: seems very unlikely that given the macro economic conditions, we're
15:43
Speaker 1: going to get a percent growth over the next twelve months,
15:45
Speaker 1: and analysts need to bring those numbers in. I think
15:47
Speaker 1: the problem with the earning seasons right now is analysts
15:50
Speaker 1: and companies alike have very limited visibility into the quarter ahead,
15:54
Speaker 1: let alone the year ahead, and so what we're seeing
15:57
Speaker 1: is this really strong concentration of revisions in just the
16:00
Speaker 1: weeks leading into any individual earning season, with very little
16:04
Speaker 1: change to the longer term outlook. Given the degree of uncertainty.
16:07
Speaker 1: It's interesting if you look at you know, Lou Wang
16:09
Speaker 1: puts together this table of strategists. They're not completely comprehensive,
16:13
Speaker 1: but you know, we've got twenty two twenty three replies
16:16
Speaker 1: and we're looking at two or twenty two uh an
16:19
Speaker 1: estimate for EPs at the end of two and the
16:21
Speaker 1: same for an estimate at an EPs at the end
16:23
Speaker 1: of three. All right, good stuff. Gena Martin Adams, Chief
16:26
Speaker 1: equity strategist Bloomberg Intelligence. Vince Signarella, global macro strategist with
16:30
Speaker 1: Bloomberg News. You know Gene is a Florida Gator. I
16:33
Speaker 1: didn't just remember that good stuff. We had a couple
16:39
Speaker 1: of days just ripping it. Uh, kind of some indecision
16:42
Speaker 1: out there, a lot of folks, So we were just talking.
16:44
Speaker 1: Gena Martin Adams has been Signarella talking about bottoms. I
16:47
Speaker 1: don't know, um long for a long period of time.
16:51
Speaker 1: I think that's the only way to play the same.
16:53
Speaker 1: But let's talk to somebody actually does this for a living.
16:55
Speaker 1: Robert Teter. He's the head of investment policy and the
16:57
Speaker 1: strategy group at Silver Crest Asset Management, based here in
17:00
Speaker 1: New York City. Robert's in our studio because he comes
17:03
Speaker 1: into the office everyday match just like us. So, uh,
17:05
Speaker 1: it definitely gets the gold star. Robert, what are you
17:07
Speaker 1: dealing with this market here? I mean, we've got a
17:09
Speaker 1: FED raising rates. I probably have some earnings risk out there,
17:13
Speaker 1: but man, the markets off. What do I do from here? Yeah,
17:17
Speaker 1: that's a great question. It is a very confusing and
17:20
Speaker 1: complex market right here. Interesting to sort of look beyond
17:23
Speaker 1: the headlines, if you ask me so. One of the
17:24
Speaker 1: things that I've been doing is spending a lot of
17:26
Speaker 1: time looking at the message we're getting from earnings. Unless far,
17:28
Speaker 1: the message from earnings has been consumer is pretty strong,
17:31
Speaker 1: not too many problems on the consumer side. Earnings have
17:33
Speaker 1: been a little bit better than feared, and I think
17:35
Speaker 1: that sets a fairly constructive tone. Now we're still in
17:37
Speaker 1: the danger zone for inflation, but thus far the message
17:41
Speaker 1: on the economy has been reasonably sound from earnings. I mean,
17:43
Speaker 1: the problem though, is that inflation. If inflation continues, the
17:46
Speaker 1: consumer strength isn't going to hang on because wages haven't
17:49
Speaker 1: kept up with inflation, and we're starting to see more
17:52
Speaker 1: credit card usage UM still elevated accounts, according to Brian
17:58
Speaker 1: moynihan at Bank America UM, which is good news, but
18:02
Speaker 1: you have to expect, you know, as long as I
18:04
Speaker 1: pay five ten a gallon for gas, but I'm not
18:06
Speaker 1: gonna last much longer. Yeah, that's right. That's really the
18:09
Speaker 1: timeline question that I think is in focus here, and
18:12
Speaker 1: it's a matter of do we get inflation under control,
18:14
Speaker 1: do we get the Fed pausing before you start to
18:16
Speaker 1: see some of that pass through, whether it's lagged effects
18:18
Speaker 1: or otherwise, onto the consumer and onto earnings. And so
18:21
Speaker 1: that's really the race that's in place right now, is
18:23
Speaker 1: you know which which happens first, to break in inflation
18:26
Speaker 1: or a break in the economy. I think if we
18:27
Speaker 1: hold off the break in the economy and breaking earnings
18:30
Speaker 1: for another quarter or two, will be in a much
18:32
Speaker 1: better spot inflation wise and give the Fed a little
18:34
Speaker 1: more flexibility. So I mean, looking at it again, we've
18:36
Speaker 1: been talking about the two year yield here four point five.
18:40
Speaker 1: This is not a bad place to be. I mean,
18:42
Speaker 1: how do you think about that visa v equities here?
18:44
Speaker 1: That's right, it is a pretty compelling option, a lot
18:46
Speaker 1: better than it used to be. I think that's one
18:48
Speaker 1: of the big reasons that we've seen some of the
18:50
Speaker 1: outflows from equities. It's not been too painful to hide
18:52
Speaker 1: out in cash or near cash, at least in the
18:55
Speaker 1: immediate future. And I think if you take a little
18:56
Speaker 1: longer term view, with an expectation that towards the end
18:59
Speaker 1: of next year we won't have as much inflation problem,
19:01
Speaker 1: you might see rates coming down a bit. The reverse
19:04
Speaker 1: relationship reverses back to where it's been a little more
19:06
Speaker 1: upside and equities a little less upside, and fixed income
19:09
Speaker 1: everybody wants uh income, it seems right, um, And I
19:14
Speaker 1: wonder what your thought is about dividend stocks Are they safe?
19:20
Speaker 1: And also about private investments it seems like it's a
19:22
Speaker 1: bigger option even for retail. Yeah, so on both those things.
19:26
Speaker 1: On on dividends, I think generally speaking they are reasonably
19:29
Speaker 1: safe unless we go into a major recession, which I'm
19:31
Speaker 1: not looking for, and so most company balance sheets are
19:34
Speaker 1: pretty sound. It looks like dividends are pretty stable. We
19:36
Speaker 1: haven't heard the term the stretch for yield in a
19:38
Speaker 1: long time, because there is some yield. But I do
19:39
Speaker 1: think dividends are valuable here. It's a known quantity and
19:42
Speaker 1: you know what you're getting and is valuable. UM. On
19:44
Speaker 1: the private side, I think it's interesting. You know a
19:46
Speaker 1: lot of investors have been newly into privates. Is probably
19:49
Speaker 1: an awakening for them here as to how things transpire
19:52
Speaker 1: in that marketplace. I think if you have the ability
19:55
Speaker 1: to handle the time horizon, handle illiquidity, there are some
19:58
Speaker 1: great opportunities there, but important to be very, very selective
20:01
Speaker 1: it's not a not a one size fits all type
20:03
Speaker 1: of thing. A lot of noise beneath the surface in
20:05
Speaker 1: terms of how those investments play out, and so important
20:07
Speaker 1: to be selective. But good opportunities if you're careful. All right,
20:10
Speaker 1: If if we are approaching peak inflation, if we are
20:14
Speaker 1: approaching you know, maybe some type of pivot late this
20:18
Speaker 1: year early next year in rates. Are there some sectors
20:21
Speaker 1: that you're willing to kind of put some get some
20:25
Speaker 1: approaching a pivot? Maybe maybe that's been telling us for
20:31
Speaker 1: months there's no pivot coming. I'm reading between the tea leaves.
20:35
Speaker 1: I'm paid to think ahead. So early in twenty three,
20:37
Speaker 1: is there any place you want to start dipping your toe. Well,
20:40
Speaker 1: one of the things that I think looks pretty attractive
20:42
Speaker 1: here is small cap on a couple of bases. One
20:44
Speaker 1: is on evaluation basis, which has been the case for
20:46
Speaker 1: a long time. We haven't broken that trend of small
20:48
Speaker 1: cap being cheaper and and for arguably good reasons. There
20:51
Speaker 1: are benefits to scale in this massive global economy. But
20:54
Speaker 1: I do think that the trends that we talked about
20:56
Speaker 1: at the beginning and the middle of the pandemic of
20:58
Speaker 1: re on shoring and the Erican manufacturing renaissance. Um, we're
21:02
Speaker 1: still in place, they're just not playing out as fast
21:04
Speaker 1: as many had hoped for. And so I do think
21:05
Speaker 1: that sets a tail wind behind the small cap space.
21:08
Speaker 1: So I do think that looks pretty compelling. And then
21:10
Speaker 1: the consumer areas held up reasonably well also, And so
21:12
Speaker 1: until we start to see any kind of cracks on
21:14
Speaker 1: the consumer, I think consumer stocks are being sort of
21:17
Speaker 1: underappreciated here in terms of their ability to pass through
21:20
Speaker 1: price increases and generate strong earnings. So that's one trend
21:23
Speaker 1: that you think is still ongoing. What about the reopening trade?
21:27
Speaker 1: Does that continue? What about a shift from goods to services?
21:31
Speaker 1: Is that an important trend? I mean, what are the
21:32
Speaker 1: other key threads that you're pulling out of this? Uh tip,
21:36
Speaker 1: what's the site guist right now? Yeah, that's super important.
21:39
Speaker 1: I think that is a trend that's come through from
21:41
Speaker 1: what we've seen in earning. So you've seen you know,
21:43
Speaker 1: commentary around the consumer, particularly out of travel and leisure,
21:46
Speaker 1: restaurant space, airlines, all pointing to consumer being very strong.
21:50
Speaker 1: And I think that that continues until you get to
21:52
Speaker 1: a point where you see a slowdown in jobs or
21:55
Speaker 1: you see a real slowdown in terms of wage gains.
21:57
Speaker 1: Um So, I think that's a durable and trend here
21:59
Speaker 1: that that can continue for some time. On the good side,
22:02
Speaker 1: you're absolutely right that has slowed down. You know, people
22:04
Speaker 1: are back in offices and back here in the studio
22:06
Speaker 1: and not not at home and buying things in ordering things,
22:09
Speaker 1: and so some of these trends have been fairly predictable
22:11
Speaker 1: and they seem to be playing out this quarter from
22:13
Speaker 1: what we're hearing on earnings valuation, do you feel like
22:16
Speaker 1: the market is fairly valued, is offered some opportunities here
22:20
Speaker 1: or with the earnings risk maybe still not there for you.
22:23
Speaker 1: I think it's pretty fairly valued. Um. I do think
22:25
Speaker 1: that that the key to it all really is going
22:27
Speaker 1: to be when we get that pause from the FED.
22:29
Speaker 1: And I think you could see valuation improved quite a
22:31
Speaker 1: bit whenever that moment happens. As to exactly the day
22:34
Speaker 1: when it happens, hard to tell. But I think stocks
22:36
Speaker 1: are fairly valued here. They're certainly at or below long
22:39
Speaker 1: term averages. And I think if you get some improvement
22:40
Speaker 1: on the rates side, we'll see some recovery invaluation. But
22:43
Speaker 1: that's not buying it. Well, I pause. I could see happening,
22:47
Speaker 1: you know, after they get to find a pivot. But
22:49
Speaker 1: I don't think a pivot. So I mean, it's not
22:51
Speaker 1: about what I think. This messages pounded into me, pounded
22:55
Speaker 1: into me by the Federal Reserve, right, and I think
22:57
Speaker 1: pounded into investors. We have seen the SMP fall down
23:01
Speaker 1: to and um, that's because the Fed keeps telling people
23:06
Speaker 1: there is no pivot coming. Yeah, and the Russell. You're
23:09
Speaker 1: just mentioning the Russell, I mean the small caps that's down.
23:12
Speaker 1: So maybe some some opportunity there. Robert Teter, thanks so
23:15
Speaker 1: much for joining us. Robert Teter, his head of Investment
23:18
Speaker 1: Policy and Strategy Group at Silver Crest Asset Management UH
23:22
Speaker 1: in New York City, comes to us live in our
23:24
Speaker 1: Bloomberg interactor, not phoning it in like so many people
23:28
Speaker 1: we know even within this building, uphone and we're just
23:32
Speaker 1: putting our foot down on that going forward. Robert Teter,
23:35
Speaker 1: thanks so much for joining us. We've got the more
23:42
Speaker 1: round table because we want to talk a little macroeconomics.
23:45
Speaker 1: You want to do that, I would like to, And
23:48
Speaker 1: we brought in one of our favorite guests and we
23:50
Speaker 1: have a former UH economists apparently, But yeah, he's got
23:55
Speaker 1: a little problem with being on time. But we've got
23:58
Speaker 1: Ben Emmon's managing director of Global acro Strategy UH from
24:01
Speaker 1: Medley Global Advisors. He has this in studio studio and
24:05
Speaker 1: Carl Ricka Donna BNP Parrybot used to be a Bloomberg
24:08
Speaker 1: intelligence but he's back saying hi to all his old friends,
24:11
Speaker 1: probably rating the pantry upstairs, and we'll see him at
24:14
Speaker 1: some point taking hands, taking selfies, exactly, handing on business cards. Now,
24:18
Speaker 1: so Ben, talk to us about kind of your recession call.
24:23
Speaker 1: Has it changed or how has it changed, if at
24:25
Speaker 1: all over the last weeks maybe months here, because that's
24:30
Speaker 1: kind of been the center of attention for a lot
24:32
Speaker 1: of folks. If you assume that the PET is the
24:34
Speaker 1: FET is going to continue to raise rates. Yeah, it
24:37
Speaker 1: hasn't changed. But I think that what I found interesting
24:40
Speaker 1: is that in the production data you can now really
24:42
Speaker 1: see that the supply chain problem is being resolved. And
24:45
Speaker 1: that's why we have a bit of an upturn in
24:47
Speaker 1: the data coming through. You're not GDP now data, it's
24:50
Speaker 1: been stronger, and that's really in net trade impact and
24:54
Speaker 1: that's supply chain, right, that's really clearing. So that's that's
24:57
Speaker 1: I think, I guess some sort of a catch up
24:58
Speaker 1: from earlier this year, which means that we're I think
25:01
Speaker 1: not in this recession just yet. Well, if we have
25:04
Speaker 1: stronger GDP data and it looks like the supply chain
25:08
Speaker 1: inflation problems are abating, does that mean we could see
25:13
Speaker 1: lower inflation and higher growth than maybe previously expected. So
25:20
Speaker 1: no recession or even a light recession as compared to
25:24
Speaker 1: something longer and deeper. I think from that Saturday economy, yes,
25:29
Speaker 1: you know, the durable goods deflation is coming through, that's clear,
25:33
Speaker 1: and the supply chain easy. But the real issue that
25:36
Speaker 1: we have in the United States is a food inflation problem,
25:40
Speaker 1: and that's really sticky inflation that's difficult to get on
25:43
Speaker 1: the control for. You know, I think a period of time,
25:46
Speaker 1: will that push the economy and tied into recession. No,
25:49
Speaker 1: But as we all know, a bigger catalysis overhanging the
25:52
Speaker 1: economies how the housing market starts to really adjust and
25:55
Speaker 1: you see how the home sales really collapsing in big
25:58
Speaker 1: cities like l A. So AT think that is a
26:00
Speaker 1: that's a surface impact. So if I take that together,
26:04
Speaker 1: I say we got one side of the economy clearing
26:06
Speaker 1: the supply chain. More downward pressure comes through in prices.
26:10
Speaker 1: But there's the surface side of the economy that's not
26:12
Speaker 1: only hop as food in fleshing's too sticky with housing contracting.
26:16
Speaker 1: So it puts the economy still at risk of this recession.
26:20
Speaker 1: I see Carl here, but I don't think it's a
26:23
Speaker 1: deep recession you have until you get two rates of
26:25
Speaker 1: over five six percent for the fat and that's you know,
26:28
Speaker 1: that may be the case next year, you know, if
26:30
Speaker 1: we can't get in flesh under control. But we're not
26:32
Speaker 1: there at this stage, all right, Carl Ka Donna has
26:35
Speaker 1: darkened the door. Chief's Economists for BNP Parry bab formally
26:39
Speaker 1: of Bloomberg Intelligence Chief Economists here. So BNP Parry Bob,
26:44
Speaker 1: do you speak French? Okay, great, good for you, all right,
26:49
Speaker 1: So what's it? That's it? That's it? What is the
26:52
Speaker 1: house view of BNP PARRYA. What are you telling your
26:55
Speaker 1: clients these days? Because you now have clients. Yes, well,
26:58
Speaker 1: we just updated our house few this morning actually, and
27:02
Speaker 1: and so you know, looking back at the kind of
27:05
Speaker 1: slew of negative inflation numbers we've seen, which which my
27:10
Speaker 1: partner in crime here across the studio that was so
27:14
Speaker 1: eloquently laying out the problem is the supply chain healing,
27:19
Speaker 1: which is happening to some degree, is happening too slowly
27:23
Speaker 1: and too late, and it's being overwhelmed by what we're
27:27
Speaker 1: seeing in the service sector right the surging rent pressures
27:30
Speaker 1: h and also in fact, in the last CPI report,
27:34
Speaker 1: increasing evidence of wage price spiral dynamics. So our view
27:37
Speaker 1: is while at the September meeting maybe nine out of
27:42
Speaker 1: ten FETE officials favored a more aggressive tapering UH, in fact,
27:46
Speaker 1: eighteen out of nineteen we're favoring some sort of downshift
27:50
Speaker 1: UH in terms of tightening later this year, presumably at
27:53
Speaker 1: the December meeting, down meeting from fifty exact exactly. We
27:58
Speaker 1: no longer think that's going to be viable. That less
28:01
Speaker 1: bad report was pretty ugly. The wage price spiral dynamics
28:05
Speaker 1: look pretty nasty, UH. And so the icing on the
28:09
Speaker 1: cake is the fact that inflation expectations are low at
28:13
Speaker 1: the moment, but the question is are they stable? And
28:16
Speaker 1: as we looked at last week's data, the New York
28:18
Speaker 1: Fed survey showed three and five year inflation expectations starting
28:22
Speaker 1: to notch higher. Uh. The University of Michigan survey showed
28:26
Speaker 1: the same thing for longer run inflation expectations. Even Matt
28:29
Speaker 1: Miller's complaining about the price he's paying at the gas
28:31
Speaker 1: pump now that the prices have started moving higher again.
28:34
Speaker 1: And so the concern is that, Uh, just as we
28:37
Speaker 1: saw back in May and June when the FED panicked
28:40
Speaker 1: on the news that inflation expectations were starting to drift higher,
28:43
Speaker 1: we think this is closing the window on them being
28:47
Speaker 1: able to kind of execute a whether it's soft landing
28:50
Speaker 1: or non recessionary outcome. It's seventy in December more in
28:54
Speaker 1: Q one, and that puts puts US in recession seventy
28:56
Speaker 1: five November seventy five December more in Q one. Why
28:59
Speaker 1: are are expectations so important? I mean, in terms of
29:03
Speaker 1: um predicting inflation. I've recently looked back and found that
29:08
Speaker 1: the bond market is horrible at that There's there's no
29:11
Speaker 1: no one who's good at estimating what inflation is um,
29:15
Speaker 1: you know, further out than a couple of quarters. But
29:18
Speaker 1: expectations are really key to the Fed, right, They are
29:21
Speaker 1: really critical to inflation dynamics in the economy. If households
29:25
Speaker 1: and businesses have the assumption that inflation is low and stable, uh,
29:31
Speaker 1: then they act accordingly. And if they have the perception
29:34
Speaker 1: that inflation is higher on a longer run basis, then
29:38
Speaker 1: they act differently. And so this is very critical to
29:41
Speaker 1: all of the price dynamics in the economy. So households
29:43
Speaker 1: may not accurately be able to assess for inflation is
29:46
Speaker 1: heading into your head, but just their sentiment matters to
29:49
Speaker 1: how inflation dynamics pan out. And so the kind of
29:52
Speaker 1: worst nightmare for the FED or or one are the
29:54
Speaker 1: worst nightmares for the FED is that the expectations genie
29:57
Speaker 1: gets out of the bottle. And that's the difference between
30:00
Speaker 1: where we are right now compared to the nineteen seventies. Right,
30:02
Speaker 1: Everyone says, well, it's you know, it's the nineteen seventies
30:04
Speaker 1: all over again. Not true, because inflation expectations were becoming
30:09
Speaker 1: disanchored for a fifteen year period in the nineteen seventies.
30:13
Speaker 1: That meant Pulp Bulker needed a nine pound sledge hammer.
30:16
Speaker 1: I'll explain to you what that is after the show. Paul, Yes,
30:19
Speaker 1: in the never held a nine hammer. I have people
30:23
Speaker 1: that do expects have not disanchored, right, So they haven't
30:29
Speaker 1: been disanchored for a decade, which means that, you know,
30:31
Speaker 1: Jerome Powell doesn't need the same sledge hammer that Paul
30:34
Speaker 1: Bolker used. But if they start to creep higher the
30:37
Speaker 1: fed nose, it's very expensive to get those pressures back
30:40
Speaker 1: in the bottle, and so that's why they will act
30:42
Speaker 1: very aggressively if that starts. Student to quickly add to
30:45
Speaker 1: Carl's points, is really good. You know the market is
30:48
Speaker 1: so bad, Matt, because you're really talking about nominal rates.
30:52
Speaker 1: How these break evens are determined nominal rates, real rates
30:55
Speaker 1: are dynamic. It's really dead so too as being people
30:59
Speaker 1: out as shaying, look at these break evens, they've fallen
31:01
Speaker 1: so much that predicts a collapse in CPI. No, sorry,
31:04
Speaker 1: this isn't it's just nominal rate moves. And that's just
31:07
Speaker 1: the dynamic of the tips or the treasury market specific
31:10
Speaker 1: which the FAT by the way, has put out papers
31:12
Speaker 1: on They found that out like yeah, we do do
31:14
Speaker 1: with liquidly respremum in tips. That makes them just not
31:17
Speaker 1: as accurate as maybe some of the surveys that Karl's mentioning.
31:22
Speaker 1: So back to the FAT, those expectation markets matter. But
31:26
Speaker 1: I think what we're seeing in those household service is
31:28
Speaker 1: the ultimately determinant, and that was their reaction back in
31:31
Speaker 1: I believe it was July that that Michigan, particularly miche
31:34
Speaker 1: and Economic came out as the preliminary estimate that's booked
31:37
Speaker 1: them and immediately shifted them to the seventy five base
31:40
Speaker 1: point hike. I think that really was the start of
31:42
Speaker 1: the Okay, we're no longer in one seventy five base
31:45
Speaker 1: point hike pace. This is becoming deep base right until
31:49
Speaker 1: these expectations are moderating. I think this is we cannot
31:53
Speaker 1: really go away from seventy five. If you look at
31:56
Speaker 1: Cascario overnight with what he was talking, he's just admitting that, saying, yeah,
32:00
Speaker 1: we have to reach higher credit card usage has gone up, right, So, um,
32:04
Speaker 1: and if inflation continues at a higher pace than wage increases,
32:09
Speaker 1: how much longer can we count on this consumer to
32:13
Speaker 1: support the U. S economy? Ben not that long, I think,
32:17
Speaker 1: you know, because the inflation is eroting. If real incomes
32:20
Speaker 1: continue to be this negative, Um, it's just spending power
32:24
Speaker 1: continues to be eroded. So I do think that what
32:26
Speaker 1: we're seeing is maybe the last gasp of credit card
32:30
Speaker 1: spending before you do hit a break. Now, again to
32:34
Speaker 1: the earlier discussion, the economy is still not at that
32:38
Speaker 1: procession or in recession. I think, so this is why
32:41
Speaker 1: it was maintain this consumer spending. So it's it's it's
32:45
Speaker 1: I think at this tipping point, you have too many,
32:47
Speaker 1: you have too negative real income plus get the tip
32:50
Speaker 1: of potentially in the recession. So I think they will
32:53
Speaker 1: change consumer spending. Matt back in the summer when there
32:57
Speaker 1: was recession concerned, um, you know, might team was banking
33:01
Speaker 1: on the fact pun intended banking on the fact that
33:04
Speaker 1: the households had accumulated about two point five trillion dollars
33:08
Speaker 1: of excess savings during the pandemic that insulate we're a
33:12
Speaker 1: twenty trillion dollar economy. So two and a half trillion
33:15
Speaker 1: is a lot of extra money, a lot of dry
33:17
Speaker 1: powder for consumers to confront inflation. That's you know, outpacing
33:21
Speaker 1: a lot of their wage gains for instance, that's more
33:23
Speaker 1: money than private equity has. Yeah, well, we burned through
33:26
Speaker 1: a trillion last quarter, right, so now we're down to
33:29
Speaker 1: about one point four trillion of excess savings. So for
33:33
Speaker 1: burning through savings at the pace we did last quarter,
33:35
Speaker 1: Then that tells you kind of Q one of next
33:38
Speaker 1: year will be the moment of reckoning, where a lot
33:41
Speaker 1: of the dry powder has been spent. And this means
33:43
Speaker 1: a few things. That means number one, consumers will pull
33:46
Speaker 1: back right or or spend more in line with what
33:50
Speaker 1: they're earning in the labor market. So so non farm
33:53
Speaker 1: payrolls in wage games become a lot more relevant to
33:56
Speaker 1: kind of consumer dynamics. That's number one. But issue number
33:59
Speaker 1: two is consumer has become more price sensitive when they
34:03
Speaker 1: don't have those success savings telling you know that that
34:06
Speaker 1: enable them to kind of ignore price increases. And so
34:08
Speaker 1: the elasticity in a lot of discretionary spending categories could
34:13
Speaker 1: start to change. But that means that until that happens,
34:16
Speaker 1: there's not a lot of elasticity, and so it's kind
34:18
Speaker 1: of premature to expect much improvement on the inflation front. Ben,
34:22
Speaker 1: what do you think about the labor market here? A
34:24
Speaker 1: lot of folks are saying and we're not going to
34:26
Speaker 1: go into a recession because we're everybody's got a job,
34:28
Speaker 1: wages are going up. Um, how concernary that this labor
34:33
Speaker 1: market may start to show some cracks. So I think
34:37
Speaker 1: the last not this report, but the report before, and
34:39
Speaker 1: I think this is on a one hand, this is
34:41
Speaker 1: labor force movements. But I found it notable that previous
34:46
Speaker 1: reports showed a major uptake in Hispanic employments African American employments,
34:51
Speaker 1: and as we studies out, that showed like if we
34:54
Speaker 1: are moving towards this recessionary environment, given the access hiring,
34:58
Speaker 1: this happens that those groups have been particularly vulnerable, and
35:01
Speaker 1: that's would change a lot of the labor dynamic. Now
35:05
Speaker 1: I don't have the old statis exact in mind, but
35:07
Speaker 1: we know there's access hiring. I think to the earlier
35:10
Speaker 1: discussion before Paul, if you have companies really start to
35:14
Speaker 1: set that group of people, then it will it will
35:17
Speaker 1: change and you could see labor force expansion. But really
35:21
Speaker 1: it's unemployment right that starts to right for real, so
35:24
Speaker 1: which is not exactly there yet. You know, we had
35:26
Speaker 1: we had a surprising strong payover report with people coming
35:29
Speaker 1: back in the labor force, so there must be got
35:31
Speaker 1: like two job openings for every job or something like that.
35:34
Speaker 1: We also have sidelined people to write it's like over
35:37
Speaker 1: two million people from the COVID or out of reasons sidelines,
35:41
Speaker 1: so to speak. So this is why it keeps the
35:43
Speaker 1: market sur tight. I'm not on the sideline. Did we
35:45
Speaker 1: just heard We just heard Nathan Hagar report that half
35:49
Speaker 1: more than half of Americans are either looking for a
35:52
Speaker 1: second job or already have one. Really, that seems a
35:56
Speaker 1: little well, I guess the priory that inflation has gone on.
35:58
Speaker 1: If you're not keeping up, you need that had hustle
36:00
Speaker 1: Paul exactly, as I look at the labor market. Right,
36:05
Speaker 1: We've seen some very dramatic swings during the pandemic. Right,
36:07
Speaker 1: the economy covered very quickly when the worst of the
36:10
Speaker 1: COVID crisis had passed, but the labor market only returned
36:15
Speaker 1: to February levels in the middle of this summer, right,
36:18
Speaker 1: So we had a big expansion in g d P.
36:21
Speaker 1: Payrolls didn't keep up. So that tells you there was
36:23
Speaker 1: a productivity surge, and productivity was about four times as
36:27
Speaker 1: pre pandemic level growth rate during that period. But productivity
36:31
Speaker 1: is mean reverting. It has mean reverted because we know
36:34
Speaker 1: in the first half of the year the economy didn't grow,
36:36
Speaker 1: in fact, it contracted mildly, but we created about three
36:39
Speaker 1: point five million jobs. So productivity collapsed, right, it is
36:43
Speaker 1: now mean reverted, and what that means is, uh, no
36:46
Speaker 1: longer can we live in a suspended animation world? And
36:50
Speaker 1: now development in the labor market are going to be
36:53
Speaker 1: much more tightly tied to economic growth, which means that
36:57
Speaker 1: if we're heading towards a growth rate of zero point
37:00
Speaker 1: three percent at your end, the tone in the labor
37:03
Speaker 1: data is going to deteriorate. Appreciate. We've seen a you know,
37:07
Speaker 1: a slow down from where we were at midyear four
37:09
Speaker 1: hundred or five hundred thousand per month to two d
37:12
Speaker 1: and fifty thousand per month ish in the last report,
37:15
Speaker 1: and I think we're going to see that erosion continue
37:17
Speaker 1: over the next several months, mediumto longer term. If we
37:20
Speaker 1: get through this um the global economy put on hold
37:27
Speaker 1: and then refueled with trillions and trillions of dollars of
37:31
Speaker 1: fiscal stimulus, you know, if we get through that without
37:35
Speaker 1: a major recession, somebody deserves a gold star, right, I mean,
37:38
Speaker 1: what an insane experiment more than gold start. But yeah,
37:42
Speaker 1: you know, looking the IMF meetings last week, China the
37:47
Speaker 1: worst Christina Alina georgie Eva. That was the lead quote
37:52
Speaker 1: coming out of the meetings. And from my colleague Marcello Carvallo,
37:55
Speaker 1: who was at those meetings, uh, you know, he said
37:57
Speaker 1: that the tone of the meetings was just so some
38:00
Speaker 1: or and downbeat. No silver lining. That is a dismal
38:02
Speaker 1: science after all. But if we look at Europe, which
38:05
Speaker 1: is most likely in recession, UK definitely struggling, China growth
38:09
Speaker 1: prospects dimming, and now the US probably moving into recession
38:12
Speaker 1: in the first part the next year, it's hard to
38:14
Speaker 1: earn the gold star mats. This trust is not going
38:17
Speaker 1: to get a gold star. No, she lost all the confidence, right,
38:20
Speaker 1: So it's about like, I mean, this is the story
38:22
Speaker 1: that that makes Now we're going into this discussion. Yes she,
38:25
Speaker 1: I mean, is she out? What a legacy? That's that's rough. Yeah,
38:29
Speaker 1: and look that policy just announcing it. It's just put
38:32
Speaker 1: the economy right in the recession. And I think it's
38:34
Speaker 1: literally what happened to the turmoil the collapse. That's called
38:37
Speaker 1: an own goal. Yes, so so the Bank of England
38:41
Speaker 1: brief fild nats. You know that no choice but to
38:44
Speaker 1: do super size hikes or you spiral out of completely
38:48
Speaker 1: out of control. All right, good stuff. I don't know
38:50
Speaker 1: whose bright idea was to get too economists in the
38:53
Speaker 1: studio at the same time. But I enjoyed it, you did, okay,
38:56
Speaker 1: But on the fourth hand, yes, exactly, alright, alright and
39:00
Speaker 1: Emmons Managing director and global macro strategist at Medley Global Advisors,
39:03
Speaker 1: and Carver Kadna, Chief US economist at BNP Parry Bah which,
39:08
Speaker 1: by the way, on your bio page, list say Paris address.
39:11
Speaker 1: I know you don't You're not working at the Paris address.
39:13
Speaker 1: How do you know address that? So we'll have more
39:15
Speaker 1: company takes the company jet. Yeah. Maybe. Thanks for listening
39:19
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
39:22
Speaker 1: to interviews of Apple Podcasts or whatever podcast platform you prefer.
39:27
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
39:31
Speaker 1: On Fall Sweeney, I'm on Twitter at pt Sweeney. Before
39:34
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.