>> WHAT WE REALLY NEED TO SEE
IS WHETHER OR NOT THE SLOWDOWN IS INTACT. >> WE ARE STILL SEEING
LINGERING EFFECTS OF THE PANDEMIC. >> LOWER INFLATION BY THE END
OF THE YEAR. >> THE HAWKS ARE GOING TO FOCUS
ON WAGE GROWTH. >> IT IS GOING TO BE DIFFICULT
SEEING RATES GOING DOWN IN THE WAY THEY DID 15 YEARS AGO. >> THIS IS "BLOOMBERG
SURVEILLANCE." JONATHAN: BIGGEST ONE-WEEK DROP SINCE
MARCH ON THE S&P 500. GOOD MORNING.
FOR OUR AUDIENCE WORLDWIDE, THIS IS BLOOMBERG SURVEILLANCE
ON TV AND RADIO. YOUR EQUITY MARKET ON THE S&P
500 SLIGHTLY POSITIVE .3%. CPI THURSDAY, PPI FRIDAY. TOM:
INFLATION IS THE KEY DYNAMIC. IT WAS AN ODD WEEKEND.
IT IS IN THE ZEITGEIST, BLOOMBERG REPORTS BOND PRICES
UP IN CHINA AND YIELDS DOWN. IN THE INFLATION REPORTS, IS
THIS TINGE OF DEFLATION TO COME IN ASSET PRICES WORLDWIDE? THE THEME OF THE WEEKEND WAS
DEFLATION, BEGINNING OF DEFLATIONARY WORRIES INTO THAT
KEY INFLATION REPORT. JONATHAN: QUITE A RIDE IN THE BOND MARKET
LAST WEEK. TAKING BACK A MOVE FROM FRIDAY
SESSION. LOTS OF FED SPEAK OUT THERE IN
THE MIX. OVER THE WEEKEND, MAYBE ANOTHER
INTEREST RATE HIKE IN THE FEDERAL RESERVE. TOM:
IT IS GOING TO GO BY THE DATA. JOB SUPPORT, WHAT DO YOU THINK?
CUT THAT WAY, CUT THAT WAY JOB REPORT? JONATHAN:
STILL WAGES ARE HOT. I THINK THE NARRATIVE STICKS,
JEFF ROSENBERG AT BLACKROCK TALKED ABOUT IT THAT ULTIMATELY
WHERE PAYROLLS GROWTH GOES, WE WILL EVENTUALLY FOLLOW.
THE FED SAYS, WE HOPE. LISA: WHEN YOU TALK ABOUT MICHELLE
BOWMAN, AND JOHN WILLIAMS SAYING POTENTIALLY THEY COULD
CUT RATES AS SOON EARLY OF NEXT YEAR.
YOU HAVE THE POLLS COMING UP WITH CONFLICTING DATA LIVING --
LEAVING A LOT OF PEOPLE ON WALL STREET SAYING, WE WILL DO WHAT
WE WANT TO DO AND TRADE THE WAY WE WANT TO DO.
THAT MEANS YIELDS INCREMENTALLY HIGHER. TOM:
IT HAS THAT SUMMER GOOFINESS. WE WILL SEE IT IN BONDS AND
EQUITIES. GOING TO THIS INFLATION REPORT,
INTERNATIONALLY THERE ARE DEFLATION TINGES.
THERE ARE THE FTE WITH PRIVATE EQUITIES STORY, GIVING HAIRCUTS
ON PRIVATE EQUITY. I'M SORRY, THAT IS A FORM OF
NONFAT, NON-BANK OF ENGLAND INFLATION. JONATHAN:
KASHKARI DID A GOOD JOB TO SET UP THE YEAR AHEAD.
HE SAID, THE FACE OF INTEREST -- THE PHASE OF INTEREST POLICY.
WE'VE GOT SOME OFFICIALS DISCUSSING GOING HIGHER.
SOME OFFICIALS INCLUDING GOOLSBY DISCUSSING MAY BE THE
SECOND PHASE, LET'S HAVE THAT CONVERSATION NOW AND TALK ABOUT
HOW LONG IS IT. WE ARE IN BETWEEN THOSE TWO
FACES ON THE COMMITTEE. TOM: AT JACKSON HOLE, CASH KERRY IS
ON THE X AXIS AND UNDERSTANDS THE IMPORTANCE OF TIME.
IF YOU EXTEND OUT TIME, KEEP INTEREST RATES WHERE THEY ARE,
DIFFERENT THINGS CAN HAPPEN. JONATHAN:
LET'S GET TO PRICE ACTION. YOUR EQUITY MARKETS SLIGHTLY
POSITIVE ON THE S&P 500, LIFTED BY 0.4%.
TREASURIES DOWN, YIELDS UP BY SEVEN OR EIGHT BASIS POINTS ON
A 10 YEAR. BIT OF EURO WEAKNESS, 1.09 ON
THE EURO AGAINST THE DOLLAR. LISA:
MAYBE EUROPE WILL NOT DO WELL RELATIVE TO THE U.S.
AS PEOPLE HAD PREVIOUSLY THOUGHT THIS YEAR.
8:30 A.M., SETS UP FED SPEAK YOU TO FLEE BECAUSE IT HAS BOTH
POLES OF THE FEDERAL RESERVE COMING TOGETHER.
RAPHAEL BOSTIC OF THE ATLANTA FED AND MICHELLE BOWMAN
SPEAKING. RAFAEL BOSTIC HAS BEEN MORE
DOVISH, MICHELLE BOWMAN HAS BEEN MORE HAWKISH.
I WOULD LOVE TO HAVE THEM OUT. TODAY, A QUITE EARNINGS WEEK.
ONLY 33 COMPANIES REPORTING OF THE S&P.
TODAY'S REPORTS INCLUDE TYSON AROUND 7:00 A.M..
YOU HAVE PLIANT TIER TECHNOLOGIES, PARAMOUNT AND
BEYOND MEAT. UP 180 3% YEAR TODAY.
TYSON FOODS DOWN 9.3%. BEYOND MEAT UP 28%.
THIS IS A MARKET OF STOCKS. YOU TRY TO COME UP WITH
HEADLINE IDEAS, BUT THIS IS A MARKET OF DIVERGENT STORIES
THAT HAVE DIFFERENT FATES. TOM: BEYOND MEAT, IS IT THE OLD AI?
REMEMBER WHEN BEYOND MEAT WAS EVERYTHING? WE HAVE GONE FROM 2.20 TO 1.15
ON BEYOND MEAT. JONATHAN: BEYOND VEGANS, IS THERE A
CHANCE OF THAT? LISA: [LAUGHTER] TOM:
WHEN BEYOND MEAT WAS THE RAGE, I WAS LIKE, ARE YOU KIDDING ME?
HAVE YOU EATEN IT? LISA: I HAVE NOT. TOM: GROSS.
JONATHAN: VERY SALTY. THERE IS A LOT OF SODIUM AND
THAT STUFF. I HAVE HAD SOME. LISA:
WE CAN MOVE ON TO TALK ABOUT THAT LATER.
I WANT TO MENTION, 3:00 P.M., CONSUMER CREDIT FOR JUNE.
WE HAVE SEEN THIS BIFURCATION, AUTO LOANS COMING DOWN,
MORTGAGES COMING DOWN, CREDIT CARD OUTSTANDING DEBT
INCREASING. INCREASING AT A SLOWER PACE,
BUT DO WE SEE IT WE ACCELERATE AND HOW LONG CAN CONSUMERS
CONTINUE TO KEEP SPENDING UNLESS THEY KEEP BORROWING?
JONATHAN: LET'S START THE CONVERSATION
WITH THE HEAD OF U.S. EQUITIES STRATEGY RBC CAPITAL
MARKETS. THE HEADLINE IN YOUR MOST
RECENT PIECE, DUE FOR REPORTS. WHAT DOES THAT MEAN? >> I DO NOT WANT ANYONE TO COME
AWAY FROM THIS ACHING LORI IS TURNING BEARISH.
-- THINKING LORI IS TURNING BEARISH.
WE ARE SEEING A COUPLE THINGS. EVERY FEW MONTHS, WE MAKE SURE
WE PUBLISH AN UPDATE ON OUR PRICE TARGET FOR THE S&P. A COUPLE ACROSS ASSET MODELS
ARE DETERIORATING. THE APPEAL OF STOCKS RELATIVES
TO BONDS IS WORSENING. ONE STANDARD DEVIATION ABOVE
ITS LONG-TERM AVERAGE. TYPICALLY, YOU SEE MID TO LOW
SINGLE-DIGIT GAINS ON THE S&P OVER THE NEXT 12 MONTHS.
THIS FEELS TO ME LIKE A MARKET, WHILE I THINK EVERY THING HAS
BEEN DESERVED IN TERMS OF EVERYTHING WE HAVE DONE SO FAR,
IT FEELS LIKE THIS MARKET NEEDS TO PAUSE, AND CATCH ITS BREATH.
TOM: I LIKE THE ANALYSIS. THE IDEA IS TO PULL BACK.
YOU HAVE THE FEAR CLICKING. CAN YOU STATE FLAT OUT WE ARE
THROUGH WITH THE BEAR MARKET? LORI: I NEVER SUBSCRIBED TO THAT
THESIS TO BEGIN WITH. I NEVER LIKED THIS WHOLE
CONCEPT OF, WE ARE IN A BEAR MARKET, THEREFORE WE ARE HAVING
TO DO X. I WAS NEVER IN THAT CAMP.
I THINK WE PRICED IN A RECESSION LAST OCTOBER AND HAVE
BEEN HAVING A RECOVERY TRADE. NOW, WE ARE SEEING SOME THINGS
WITH -- THAT ARE TELLING US TO HOLD YOUR NOSE AND GO BACK TO
BUYING. THIS MODEL IS TELLING US TO
CALM DOWN A LITTLE WHILE. TOM: TALKS ABOUT VALUE, TALKS ABOUT
WHAT IS THERE A WAY FROM SEVEN CHOSEN STOCKS.
COLOR OR SHAPE THE VALUE OF MID-CAPS RIGHT NOW. LORI:
IT IS INTERESTING. WE DO A LOT OF WORK ON SMALL
CAPS, BUT HAVE BEEN GETTING INCREASING QUESTIONS ON
MID-CAPS. OUR CHART TELLS US THIS
MORNING, WE ADDED A MID-CAPS SECTION FOR THE FIRST TIME IN
QUITE SOME TIME. A SIMILAR STORY TO SMALL CAPS.
THEY TEND TO BENEFIT WHEN IN RECOVERY MODE. THE VALUATION STORY IS
REASONABLE. IF YOU LOOK AT THE MULTIPLES
VERSUS HISTORY, THE MID-CAPS LOOK CHEAP VERSUS THE MEGA CAPS
RIGHT NOW. IF WE GET A RECOVERY IN 2024,
THERE SHOULD BE MORE UPSIDE THERE.
WE FEEL SIMILAR TO HOW WE FEEL AND SMALL CAPS, WE FEEL THAT
MID-CAP PART OF THE MARKET IS RIGHT FOR CATCH UP TRADE. LISA:
WE ARE GOING TO BE SPEAKING WITH MICHAEL OF MORGAN STANLEY
LATER. HE HAS A NOTE OUT TALKING ABOUT
THE FISCAL BACKDROP AND HOW MUCH OF A VARIABLE THAT IS WITH
RESPECT TO STOCK PERFORMANCE. HOW DOES THAT FACTOR INTO WHAT
YOU ARE EXPECTING GOING INTO AN ELECTION YEAR WITH -- WHICH
TENDS TO BE TUMULTUOUS? LORI: WHEN WE WERE GOING THROUGH THIS
TARGETING REFRESH LAST WEEK, WE LOOKED AT ONE OF OUR POLITICAL
TESTS, A SIMPLE ELECTION CYCLE TEST. WE NOTICE THE CURRENT
YEAR WE ARE IN TENDS TO BE THE STRONGEST FOR THE MARKETS.
IT HAS BEEN ONE OF THE MORE POSITIVE SIGNALS.
NEXT YEAR, THE ELECTION YEAR OR PRESIDENTIAL YEAR TENDS TO BE
ONE OF THE WEAKER YEARS IN THE ELECTION CYCLE.
I JUXTAPOSE THAT WITH WHAT I HAVE BEEN HEARING FROM
INVESTORS. KEEP ASKING, WIN ARE PEOPLE
GOING TO START PAYING ATTENTION TO THE ELECTION?
MY RESPONSE IS, I THINK IT IS STARTING NOW.
YOU ARE ALL ASKING ME ABOUT IT. IT SEEMS TO ME THIS IS EMERGING
AS A BIG SOURCE OF UNCERTAINTY AS TO WHAT IS GOING TO HAPPEN
WITH THE ELECTION NEXT YEAR, BOTH IN TERMS OF THE
PRESIDENTIAL RACE AND CONGRESS. LISA: WHAT IS THE ELECTION CYCLE
PLAYBOOK? HOW DO YOU PLAY THIS CERTAINTY
OPPOSED TO THE UNCERTAINTY IN THE INFLATION CYCLE AND THE
FEDERAL RESERVE? LORI: THERE IS A LOT OF QUESTION
STARTING TO EMERGE ABOUT THE OUTCOME.
ONE OF THE THINGS I'M HEARING FROM INVESTORS ARE, THEY ARE
TRYING TO PROBE WHETHER OR NOT THERE ARE ALTERNATIVES TO BIDEN.
I THINK THERE IS A LOT OF HEAD SCRATCHING OVER WHAT IS GOING
ON ON THE REPUBLICAN SPOT, ESPECIALLY WITH DESANTIS.
THERE WAS EXCITEMENT EARLY ON. NOW, THAT SEEMS TO HAVE FADED.
THIS IS AN AIR POCKET OF UNCERTAINTY STARTING TO EMERGE.
WE ARE NOT HAVING DETAILED CONVERSATIONS WITH CLIENTS YET
ABOUT WHAT SIDE WOULD WANT TO DO POLICY MEASURES.
IT IS FRANKLY THIS OVERHANG OF NOT KNOWING WHAT THE OUTCOME IS
GOING TO BE THAT COULD PUSH INVESTORS TO THE SIDELINES.
THAT IS GOING TO WEIGH HEAVILY ONCE WE GET TO THE FOURTH
QUARTER WHEN EVERYONE STARTS PUTTING THEIR OUTLOOK
DISCUSSIONS OUT. THEY ARE GOING TO BE TALKING
ABOUT THAT CUTS BUT ALSO THE ELECTION.
WE SEE THOSE THINGS STARTING TO COME INTO THE CONVERSATION. TOM:
WE HAVE MORE OUTLOOKS TO COME? OH, JOY. JONATHAN:
THE RECESSION CALLS ON WALL STREET TRUCKING -- DROPPING
LIKE FLIES. TOM: CAN YOU SEE CALVIN SENA ON THE
DECK WITH THE FAMILY WORKING ON HER OUTLOOK, GIN AND TONIC ON
THE TABLE? JONATHAN: THE SUMMERTIME.
A SUMMERTIME OUTLOOK. CAN I FINISH ON A SINGLE NAME?
WHAT DOES IT SAY ABOUT THE MARKET WHEN THE BIGGEST WAITING
ON THE S&P 500 HAS HAD THREE QUARTERS OF DECLINING SALES,
TRADES AT 30 TIMES EARNINGS AND IS UP 40% YEAR TO DATE?
WHAT CAN YOU TAKE AWAY FROM THAT? LORI:
ONE OF THE REASONS WHY I THINK PEOPLE HAVE BEEN GRAVITATING
TOWARDS THESE MEGA CAP GROWTH STOCKS IS, WE ARE IN RECOVERY
MODE. SHAPE OF THAT RECOVERY DOES NOT
LOOK SO FANTASTIC. I THINK THE PRICE WE ARE GOING
TO PAY FOR A SHORT SELL RECESSION IS SHORT ECONOMIC
GROWTH FOR A FEW YEARS. THE ECONOMIC TRACK FOR NEXT
YEAR AND 2025, GDP IS EXPECTED TO BE IN THAT 0% TO 2% RANGE.
GROWTH STOCKS TYPICALLY DO WELL WHEN ECONOMIC GROWTH IS SCARCE.
I THINK THAT IS WHY PEOPLE HAVE BEEN PLOWING MONEY INTO THESE
MEGA CAP NAMES. HIS FIGHT NEAR-TERM CHALLENGES,
THEY HAVE FAITH THE LONGER-TERM GROWTH OPPORTUNITIES ARE STILL
THERE. JONATHAN: THANK YOU. TK, CAN YOU STILL CALL APPLE A
GROWTH STOCK WHEN THERE IS NO GROWTH? TOM:
WE DO NOT HAVE THE LENGTH OF THE SHOW TO ANSWER THAT.
JONATHAN: IT COULD BE A THEME FOR THE
WEEK AHEAD. TOM: THEIR EARNINGS WERE TERRIBLE.
JONATHAN: BIGGEST ONE-DAY LOSS OF THE
YEAR ON FRIDAY. TOM: THEY DID LIKE 20 60 BILLION AND
SPENT 23 BILLION SPENDING IT -- SENDING IT BACK TO SHAREHOLDERS.
JONATHAN: ARE YOU DESCRIBING VALUE STOCK
OR GROWTH STOCK? TOM: IT IS BOTH.
THAT IS THE ATTRACTION TO SOME OF THESE COMPANIES.
WHAT I WOULD SAY IS, IT IS GROWTH. THIS IS THE WRONG KEENNESS,
WHERE DO YOU SET YOUR TERMINAL VALUE?
THE STOCKS LORI IS LOOKING AT HAVE A THREE YEAR, FIVE YEAR
STUDY. HOW CAN YOU DO A THREE YEAR
STUDY IN APPLE? IT HAS GOT TO BE EIGHT YEARS.
OTHER NAMES, AS WELL. I'M NOT SAYING, BY APPLE. LISA:
MY FAVORITE PART OF THE ANALYSIS WITH APPLE HAD TO DO
WITH THEIR CASH PILE GENERATING CASH.
WE ACTUALLY HAVE INTEREST RATES NOW. IT IS NET POSITIVE TO THEIR
BOTTOM LINE AND TOP LINE BECAUSE THERE EARNING 5% ON THE
SIZE OF CASH, WHAT IS IT, THE SIZE OF THIS WAS ECONOMY?
IT IS MASSIVE. TOM: ON TWITTER THIS MORNING, THERE
IS A BAR CHART ON X THIS MORNING THAT SHOWS APPLE
SERVICES AND REVENUES OF SPOTIFY, MASTERCARD AND THE
REST. JUST SERVICES PART. WE EQUATE SPOTIFY WITH APPLE,
WHICH IS GARBAGE. JONATHAN: I AM JUST ASKING A QUESTION.
I CAN OWN 5% CASH. DO I WANT TO GIVE THAT CASH TO
A COMPANY TRYING TO GET ALREADY TIMES EARNINGS?
THAT IS THE QUESTION I THINK A LOT OF PEOPLE ARE ASKING.
YOU MENTIONED THE PLATFORM FORMERLY KNOWN AS TWITTER.
MUSK FIGHT WILL BE LIVE-STREAMED ON XP.
CHARITIES WILL GO TO -- DID YOU SEE WHAT MARK ZUCKERBERG WROTE
BACK ON THREADS? LET'S USE A MORE RELIABLE MONEY
TO RAISE MONEY FOR TRAILING -- RAISE MONEY FOR CHARITY. LISA:
YOU HEARD ELON MUSK SAYING HE MIGHT NEED SURGERY. JONATHAN:
THE WHOLE THING IS WERE TO KILIS.
MIKE WILSON, NOT RIDICULOUS. THAT CONVERSATION.
THE CAGE FIGHT. WHO WINS? >> THE AMERICAN PEOPLE DESERVE
TO KNOW THAT PRESIDENT TRUMP ASKED ME TO PUT HIM OVER MY
OATH TO THE CONSTITUTION. I KEPT MY OATH AND I ALWAYS
WILL. I AM RUNNING IN PRESIDENT IN
PART BECAUSE I THINK ANYONE WHO PUTS HIMSELF OVER THE
CONSTITUTION SHOULD NEVER BE PRESIDENT OF THE UNITED STATES. I HAVE NO PLANS TO TESTIFY, BUT
WE WILL ALWAYS COMPLY WITH THE LAW. LOOK, I WANT TO TELL YOU. I DO NOT KNOW WHAT THE PATH OF
THIS INDICTMENT WILL BE. JONATHAN:
THAT WAS MIKE PENCE, THE FORMER VICE PRESIDENT AND 2024
PRESIDENTIAL CANDIDATE SPEAKING TO CNN OVER THE WEEKEND.
GOOD MORNING. AS WE KICK OFF A BRAND-NEW
TRADING WEEK, YOUR EQUITY MARKET ON THE S&P 500 SHAPING
UP AS FOLLOWS. POSITIVE BY 0.3% ON A FOUR DAY
LOSING STREAK. RESPONSIBLE FOR SOME
VOLATILITY, THAT RISK AVERSION, HAVE YOU SEEN THE BOND MARKET?
YIELDS UP AND AWAY, THEY CAME BACK DOWN FRIDAY AND ARE
SPIKING HIGHER AGAIN THIS MORNING BY EIGHT BASIS POINTS.
ON A 10 YEAR, 4.11. AS EVERYONE STARTS DROPPING THEIR RECESSION CALLS, TAKE A
LISTEN TO THIS. IF THE RECESSION WE PREDICT
THIS YEAR IS DELAYED, RATHER THAN ADVERTED AND THE FED
ULTIMATELY HAS TO HIKE MORE THAN WE CURRENTLY ANTICIPATE --
THE MOST LIKELY CULPRIT WILL BE BIDENOMICS.
THAT IS THE TAKE FROM BLOOMBERG ECONOMICS THIS MORNING. TOM:
SHE HAS BEEN DEAD ON. WHEN SHE WRITES, YOU HAVE TO
READ IT. THE ANSWER IS, I NEEDED TO HELP
ME WITH WHAT BIDENOMICS IS, OTHER THAN VARIOUS FORMS OF
STIMULUS. AS I MENTIONED, THE DEFLATIONARY TONE I AM LOOKING
AT IS "FISCAL TIGHTENING." JONATHAN:
IS THAT FISCAL TIGHTENING ON THE ZEITGEIST RIGHT NOW OR ON
THE HORIZON INTO NEXT YEAR? TOM: ON THE HORIZON. LISA:
I WOULD ARGUE SOME ARE SAYING IT IS NOT ON THE HORIZON, WHICH
IS WHY THEY ARE SAYING THE FED IS GOING TO HAVE TO COME IN AND
DO MORE. JONATHAN: IT WOULD SPEAK TO THE TREASURY
SUPPLY WE HAVE HAD THE LAST WEEK.
THE IMPLICATION IS TO COME. TOM: IS THERE A ROAD IN MANHATTAN
NOT BEING RIPPED UP TO BE REPAVED? JONATHAN:
IS THERE A ROAD IN MANHATTAN THAT SHOULD NOT BE RIPPED UP TO
BE REPAVED? [LAUGHTER] TOM: THE STREETS OF NEW YORK ARE
LIKE DRIVING ON A COUNTRY ROAD, NAME YOUR THIRD WORLD COUNTRY.
JONATHAN: THEY ARE DOING THE SAME STREET
THEY HAVE BEEN DOING FOR THREE YEARS. TOM: [LAUGHTER] LISA:
MY FAVORITE IS WHEN YOU GO TO ANY OTHER PLACE IT SAYS, BUMP
AHEAD. I'M LIKE, WHATEVER. THERE IS A BIG SIGN IN NEW YORK
CITY THAT SAYS, BUMP AHEAD. TOM: THERE IS A TURN I DO ON PARK
AVENUE. THEY HAVE BEEN WORKING ON THAT
TURN LITERALLY FOR THREE YEARS. THERE IS YOUR FISCAL REPORT FOR
THIS MORNING FROM ANAHEIM. WE WELCOME YOU ACROSS THE
STATION TO CALIFORNIA AND WORLDWIDE. JOINING US FROM CALIFORNIA,
GREGORY VALIEVA, CHIEF U.S. POLICY STRATEGIST AT AGF
INVESTMENTS. THERE WAS NOT THE WHITE HOUSE
CORRESPONDENTS DINNER, TAMMY ODETTE WAS THROWING HER PARTY
AND OFF TO THE SIDE WAS THE GOVERNOR OF CALIFORNIA, SMOOTH,
ELEGANT, DOING HIS HOLLYWOOD FINESSE.
HE IS SUPPOSED TO HAVE A DEBATE WITH THE GOVERNOR OF FLORIDA,
WHO EVEN HIS SUPPORTERS SAY IS NOT SMOOTH AND NOT FINESSE.
WHAT WOULD A NEW SOME-DESANTIS DEBATE LOOK LIKE AND SHOULD WE
CARE? >> I THINK THERE MIGHT BE
STOPPED AT A TKO FAIRLY EARLY. NESOME -- NEWSOME IS SLICK AND
HAS THE BEST HAIR IN POLITICS. THE DISSENT BY DESANTIS
CONTINUES WITH THINGS HE HAD'S -- HE HAS SAID.
HE HAS UPSET FLORIDIANS BY NOT TAKING ON INSURANCE COMPANIES
IN FLORIDA. I THINK THE ISSUE IS GOING TO
BE, WHO IS SECOND. I AM NOT SURE IT IS GOING TO BE
DESANTIS FOR MUCH LONGER. TOM: I UNDERSTAND AN INCUMBENT
PRESIDENT ALWAYS HAS PRIORITY. BUT, THE PEOPLE LIKE THE
GOVERNOR OF CALIFORNIA, ARE THEY LINED UP IN WAITING,
INCLUDING THE VICE PRESIDENT? GREG:
I THINK GAVIN NEWSOM IS ITCHING TO RUN.
HE HAS GOT SOME BAGGAGE LIKE ALL POLITICIANS.
HE IS MAYBE TOO FAR TO THE LEFT FOR THE AMERICAN PUBLIC TO
EMBRACE. BUT, HE IS GOOD. HE IS VERY ARTICULATE.
HE IS CHARISMATIC. I THINK HE IS GOING TO BE A BIG
PLAYER. IT IS STILL TOO EARLY TO SAY
JOE BIDEN IS NOT GOING TO RUN. I THINK -- I DO NOT SINCE ANY
ENTHUSIASM WHEN I TRAVEL AROUND THE COUNTRY FOR A SECOND JOE
BIDEN TERM. BIDENOMICS IS BECOME -- HAS
BECOME A NEGATIVE. IT IS ALMOST LIKE EDSEL.
THERE ARE CERTAIN WORDS YOU DO NOT WANT TO HAVE ATTACHED TO
YOU. BIDENOMICS IS NOT HELPING JOE
BIDEN. TOM: GREG, THE PERCENTAGE OF PEOPLE
WATCHING AND LISTENING THAT KNOW WHAT EDSEL IS -- THAT WAS
A CAR FROM A FEW YEARS AGO. LISA: THANK YOU. THERE IS A QUESTION ABOUT
BIDENOMICS, HOW WE PIVOT IN A NEW ERA.
IS IT GOING TO BE FISCAL RESTRAINT, FISCAL EXPENDITURES
THAT JUST PROLONG A CYCLE PERHAPS AT THE EXPENSE OF
HIGHER INFLATION? GREG: I THINK THE AMERICAN VOTERS ARE
STILL SPOOKED BY INFLATION AND BIDENOMICS IS NOT HELPING AT
ALL. I WOULD ARGUE THAT THE BIG STORY DOMESTICALLY THIS FALL IS
GOING TO BE INCREASING FISCAL AUSTERITY.
KEVIN MCCARTHY IS GOING TO COME UP WITH A TRICK TO GET THE
HOUSE TO VOTE FOR A TIGHT BUDGET, EVEN ON DEFENSE.
I THINK THE AMERICAN VOTERS ASSOCIATE SPENDING WITH
INFLATION. LISA: MEANWHILE, WE HAVE THIS STORY
ON THE BLOOMBERG THIS MORNING ABOUT THE POTENTIAL FOR ANOTHER
GOVERNMENT SHUTDOWN. WITH THE FITS RATING DOWNGRADE
EMBOLDENING PEOPLE WHO ARE NOT ON THE FISCAL HAWK SIDE TO PUSH
FOR SOME SPENDING CUTS. DO YOU ANTICIPATE THAT DRAMA
HEADING INTO THE END OF THE YEAR? GREG: I DO. FINCH HAS TWO PROBLEMS. ONE, WE
ARE DYSFUNCTIONAL IN WASHINGTON ON SPENDING.
THAT IS NOT GOING TO GET BETTER. THE SECOND PROBLEM IS THAT WE
ARE POLITICALLY UNSTABLE. THAT IS NOT GOING TO GET BETTER.
ON THE TWO KEY ISSUES, THINGS DO NOT LOOK GOOD. LISA:
HOW MUCH DO BOND VIGILANTES SCARE THE JESUS -- SCARE THE BE
JESUS OUT OF PEOPLE IN WASHINGTON RIGHT NOW AND THE
IDEA THEIR INTEREST EXPENSES ARE CLIMBING RAPIDLY, AND
PEOPLE ARE PUSHING BACK IN A WAY THEY HAVE NOT FOUR YEARS?
GREG: YOU WOULD THINK THIS WOULD START TO AFFECT WASHINGTON.
I THINK THE BOND VIGILANTES CONCERN ON RATES IS NOT GOING
TO LEAD TO BIG POLICY CHANGE ANYTIME SOON.
WE HAVE GOT TO WAIT UNTIL MID-SEPTEMBER.
THEN, THINGS ARE GOING TO GET ACTIVE.
I THINK A GOVERNMENT SHUTDOWN EVE ARDEN -- EITHER ON OCTOBER
1 OR DECEMBER IS BETTER THAN A 50% CHANCE. JONATHAN:
I AM ASKING THE SAME QUESTION WITH REGARDS TO THE DEBATE
LATER THIS MONTH. ANY UPDATES? IS THE FORMER PRESIDENT
ATTENDING OR NOT? GREG: I THINK HE HAS TO.
HE LOVES THE LIMELIGHT. I WOULD BE SURPRISED IF HE DID
NOT. THIS IS TO FIGHT FOR NUMBER TWO. MAY BE A FIGHT FOR THE VICE
PRESIDENTIAL NOMINATION. TRUMP HAS GOT A CLOSE TO A 40
POINT LEAD ON ALL OF THE OTHER REPUBLICANS.
IT IS HARD TO SEE THAT LEAD EVAPORATE. JONATHAN:
GOOD TO START THE WEEK WITH YOU. THANK YOU, SIR. IS THAT DEBATE CONFIRMED,
NEWSOM-DESANTIS? TOM: NO. CORRECT ME IF I AM WRONG, BUT
MAYBE THE DESK HERE KNOWS THAT. I BELIEVE IT IS NOT CONFIRMED.
OUR DESK IS NOT INFORMING. I WENT TO THEM THIS MONEY.
JONATHAN: WHAT WITH THE VALUE BE IN THAT
FOR GOVERNOR NEWSOM -- GOVERNOR DESANTO? TOM:
TO HIS CORE AUDIENCE. GAVIN ARE -- GAVIN NEWSOM
REPRESENTS WOKE. ALL OF THE GOVERNOR FLORIDA HAS
IS A PHILOSOPHY ON WOKE. IF HE DEBATES WOKE, TAKE IT
FROM THERE. LISA: IT WAS REPORTED LAST WEEK
GOVERNOR DESANTIS THURSDAY DID AGREE TO A LONG-STANDING OFFER
BY GOVERNOR NEWSOM TO DEBATE. I THINK YOU HIGHLIGHT THE RIGHT
POINT, ESPECIALLY EDUCATION, ESPECIALLY SOME OTHER POLICIES.
RON DESANTIS WANTS TO COME OUT AS FIRMLY OPPOSED TO ALL OF
THAT. IT MIGHT BE A GOOD TALKING POINT FOR HIM. TOM:
MY ONLY THING IS TO AGREE WITH MR. VALIEVA, THE HAIR AT THE
WHITE HOUSE DINNER WHEN I SAW THE GOVERNORS. THE HAIR.
THE HAIR. JONATHAN: DID YOU CATCH THE INTERVIEW
BETWEEN SEAN HANNITY OF FOX NEWS AND GOVERNOR NEWSOM?
NEWSOM DID A DECENT JOB. PRETTY DECENT JOB.
IF I WAS GOVERNOR DESANTIS, I WOULD HAVE A LOOK AT THOSE
TALKING POINTS AND HOW HE RESPONDED.
COMING UP SHORTLY, WHAT IS DEVELOPING IN THIS MARKET AT
THE MOMENT. IT HAS BEEN A BIG MOVE.
BONDS UP, YIELDS UP FOR TREASURIES. FRIDAY, SNAP BACK.
YIELDS AGGRESSIVELY LOWER. FOLLOWING THE JOBS REPORT
FRIDAY. LOOKING AT THE BOND MARKET THIS
MORNING, UP EIGHT BASIS POINTS ON A 10 YEAR TO 4.12.
ON A 10 YEAR, UP EIGHT BASIS POINTS 4.85.
THE EQUITY MARKET TRYING TO BOUNCE BACK FROM A FOUR DAY
LOSING STREAK ON THE S&P 500. APPLE, BIGGEST ONE-DAY DROP ON
FRIDAY OF THE YEAR SO FAR. JONATHAN:
A SLOW START TO THE WEEK AS YOU PICK UP TOWARDS THE BACKEND
WITH INFLATION DATA THURSDAY. CPI AND PPI DATA FRIDAY.
EQUITY MARKET WITH A LIFT ON THE S&P 500, UP BY 0.2%.
THAT DAILY LOSING STREAK, THE LONGEST GOING BACK TO MAY.
NASDAQ, POSITIVE BY .3%. ESAN P.M.
NASDAQ EXPERIENCING THEIR BOTH -- THERE WORST WEEK SINCE MARCH.
4.85 ON A 10 YEAR. ALL OVER THE PLACE LAST WEEK,
YIELDS HIGHER, LOWER ON FRIDAY SUCCESSION AND WE SNAPPED BACK
THIS MORNING. TOM: THE SPREAD MARKET OUTLINE
MOMENTS AGO, THE GERMAN 30 YEAR BOND.
THE ANSWERS WERE MIGRATING BACK THERE.
YOU GO OUT 10 YEARS, 20 YEARS, WE ARE REPRICING.
MY CRITICISM IS, WE LOOK AT A YIELD, YIELD, YIELDS.
WHAT IT MEANS IS PRICE DOWN. JONATHAN:
LET'S MIGRATE TO FOREIGN QUICKLY.
IN FX G10, DOLLARS STRONG AGAINST EVERYTHING INCLUDING
THE EURO. IT IS A BREAK AT 1.10. WE ARE NEGATIVE BY .3%. LISA:
A LOT OF PEOPLE TALK ABOUT THE END OF THE RATE HIKING CYCLE IN
THE U.S. AND EUROPE. IN EUROPE, WHEN EVERY PERSON
YOU TALKED TO IN LONDON THIS YEAR, EVERY PERSON SAID THE ECB
WOULD GO FURTHER THAN THE FED. OK. WHAT NOW?
HOW DO YOU REARRANGE THOSE WAGERS ON THE HEELS OF
SOMETHING THAT LOOKS DIFFERENT? JONATHAN: EUROPEAN GROWTH IS
DISAPPOINTED. THE UPSIDE SURPRISES HAVE COME
FROM THE UNITED STATES. PLENTY OF US -- PLENTY OF SPED
-- OF BED SPEAK THROUGH THE WEEK. HERE IS THE QUOTE.
ADDITIONAL RATE INCREASES WILL LIKELY BE NEEDED TO GET
INFLATION ON A PATH DOWN TO FOMC'S 2% TARGET.
THERE IS A RANGE OF VIEWS ON THE FOMC. THAT IS ONE.
OTHERS BELIEVE MAYBE WE ARE DONE AND SHOULD TALK ABOUT THE
LENGTH OF TIME SPENT THE 5.5% INTEREST RATES IN A FEDERAL
RESERVE. BOSTIC INDICATING ALSO SPEAKING
TO DAVID WESTIN INTO THE WEEKEND, ULTIMATELY, THAT
PERIOD OF TIME ONCE WE GET TO THAT PEAK RATE WILL BE A LONG
TIME. TOM: I'M GOING TO GO BACK TO THE
HERONS AND WHAT WE DID WITH BLOOMBERG SURVEILLANCE.
WHO ARE THESE PEOPLE? WHAT ARE THIS -- WHAT ARE THEIR
PEDIGREES, ETC.? GOOLSBY CAME OUT WITH -- OVER
TO CHICAGO, OUR BEST MICROECONOMIC FOUNDATION.
BOSTIC, THE SAME WAY. BOWMAN WAS AN INTERN FOR BOB
DOLE. SHE IS A GEORGE BUSH ACCOLADE.
SHE IS AN ATTORNEY. THAT STATEMENT SHE DID IS
BOILERPLATE. IT COULD BE WRITTEN BY ANY
NUMBER OF PHD'S THEY ARE. YOU HAVE GOT TO KNOW WHO IS
TALKING TO WHO. BOSTIC, YOU LEAN FORWARD AND
LISTEN TO. JONATHAN: SHE IS WORTH LISTENING TO. TOM:
THE VIEW? YES, THERE IS NO QUESTION ABOUT
THAT. THE VIEW IS THEIR NO QUESTION.
JONATHAN: LISA, YOU GOT THINGS TO SAY?
LISA: I'VE GOT LOTS OF THINGS TO SAY.
A LOT OF PEOPLE WITH PHD'S HAVE GOTTEN IT WRONG.
THAT IS ALL I WILL SAY. JONATHAN:
TELL US WHAT YOU REALLY THINK, TK. IS A REALLY -- ISRAELI PRIME
MINISTER NETANYAHU SAYING HE WILL NOT PURSUE THE JUDICIAL
OVERHAUL PLANNED BY HIS GOVERNMENT. >> I HOPE WE DO NOT GET INTO A
CONSTITUTIONAL CRISIS. I THINK WE WILL NOT.
I THINK IT IS A WAY OF REACHING INEQUITABLE COMPROMISE, WHICH
IS WHAT I AM TRYING TO DO. JONATHAN:
NETANYAHU SAID HIS GOVERNMENT WAS WORKING TO CHANGE THE
MAKEUP OF THE JUDGE SELECTION COMMITTEE.
YOU WONDER HOW MUCH SOME OF THE MARKET TURMOIL IN THE MORE
RECENT WEEKS HAD TO DO WITH -- CAN WE CALL IT BACKTRACKING?
LISA: HE SAID, WE WANT SMART MONEY.
WE WANT YOUR MONEY INVESTED IN ISRAEL.
WHAT IS INTERESTING TO ME, HE IS NOT DOING A MEDIA TOUR IN
ISRAELI MEDIA. HE IS DOING A MEDIA TOUR IN
INTERNATIONAL BEEN THE -- IN INTERNATIONAL MEDIA.
THERE IS A QUESTION, IS HE BACKTRACKING?
YES, IS HE TRYING TO MAKE ISRAEL SOUND MORE AMENABLE TO
MONEY COMING IN AT A TIME OF POLITICAL FRICTION? TOM: I AM -- THE FACT IS, HE IS 73.
THAT IS YOUNGER. AT THE SAME TIME, IS THIS A
GENERATIONAL DIVIDE IN ISRAEL WHERE HE REPRESENTS THE PEOPLE
HE RESPECTED? AND AS A YOUNGER GENERATION OF
ISRAEL, IS WALKING AWAY FROM THE DIALOGUE. JONATHAN:
GREAT EXCHANGE WITH FRANCINE LACQUA OVER THE WEEKEND .
YOU CAN FIND IT ON BLOOMBERG.COM AND THE BLOOMBERG
TERMINAL. TAKE A LOOK AT THE EXTENDED
INTERVIEW. I WANT TO TURN FROM THIS FROM
HSBC'S HEAD OF PUBLIC AFFAIRS SAYING THIS, HE IS SAID TO HAVE
TOLD ATTENDANCE IN A CLOSED-DOOR EVENT IN LONDON IN
JUNE THE U.K. WOULD BOW TO THE DEMAND OF
WASHINGTON. HE ACCUSED THE BRITISH
GOVERNMENT OF BEING WEAK WHEN IT COMES TO CHINA.
COMPARABLE SAID IN A STATEMENT TO BLOOMBERG HIS PERSONAL
COMMENTS DID NOT REFLECT THE VIEWS OF HSBC. LEE SAID, MAYBE IRONIC TO COME
FROM HSBC WHEN CHINA MIGHT BE ACCUSED OF BEING WEAK ITSELF ON
CERTAIN ISSUES. LISA: WHEN I WAS READING THIS STORY
YESTERDAY, I WAS THINKING, THIS IS GOING TO FLY VERY POORLY.
IT EDIFIES THIS FEELING HSBC EXHORTS THE STATUS QUO OF THE
WESTERN WORLD AND TRIES TO GO OFF AND ALERT BUSINESS FROM
CHINA. IT COMES AT THE SAME TIME CHINESE AUTHORITIES ARE
PRESSURING TOP ECONOMISTS TO NOT BE TOO NEGATIVE ON THEIR
ACADEMIC OUTLOOKS FOR CHINA. IT RAISES QUESTIONS ABOUT THE
OUTLOOKS. JONATHAN: A STORY OLD AS TIME. LISA:
IT COMES AT A TIME OF SERIOUS CONCERN.
YOU START TO THINK ABOUT ALLIANCE. IT IS INTERESTING.
TOM: WHEN YOU GREW UP IN ENGLAND,
WAS HSBC A BRITISH BANK OR WERE THERE ASIAN GUYS IN BRITAIN?
JONATHAN: I THINK WE CONSIDERED THAT A
BRITISH BANK. OF COURSE. TOM: TO ME, I ALWAYS FEEL FOREIGN
DEBATING ABOUT IT. IN HONG KONG AND SHANGHAI AND
THE REST. I DO NOT KNOW WHERE THEY FIT IN RIGHT NOW. LISA:
I THINK IT IS INTERESTING BECAUSE IT IS AN INCREASING
DEBATE. DOES THE REST OF THE WORLD GO
WITH THE U.S.? HOW CLEAN ARE THESE FISHERIES
BETWEEN CHINA AND THE U.S. AND WHO HAS TO ALIGN WITH WHO?
YOU SEE THAT WITH EMMANUEL MACRON. JONATHAN: PERFECT WORLD.
CAN THEY SIT ON THE FENCE ANYMORE? TOM:
POLITICALLY, MAYBE THEY CAN, MAYBE THEY NOT.
IT IS INCREDIBLY DYNAMIC RIGHT NOW. MEXICO IS BECOMING FAR MORE
DOMINANT BECAUSE CHINA IS BECOMING LESS SO.
ON FOREIGN-EXCHANGE, MACRO STRATEGIST ON FOREIGN-EXCHANGE
AT UBS JOINS US. WHAT WE SEE IS A STRONG DOLLAR.
I DO NOT SEE ON A BLENDED INDEX A STABLE DOLLAR.
IS IT A STRONGER DOLLAR FORWARD, OR A STABLE DOLLAR
FORWARD? >> WE THINK IT IS A WEAKER
DOLLAR FORWARD. FROM HERE. I THINK THE FX MARKET IS IN A
TOUGH SPOT AT THE MOMENT IN THE SINCE IT IS DIFFICULT TO
NAVIGATE A LOT OF THESE CROSSCURRENTS.
AS YOU WERE SAYING PREVIOUSLY ON THE PROGRAM, IT SEEMS THE
U.S. ECONOMY IS OUTPERFORMING. AT THE SAME TIME, IT SEEMS WE
ARE GETTING TO THE END OF THE FED TIGHTENING CYCLE.
WHICH WAY DO WE GO? IN OUR VIEW, THE END OF THE
TIGHTENING CYCLE DOMINATES. THAT IS WHAT YOU HAVE SEEN IN
THE PAST SIX FED CYCLES. WHEN THE FED STOPS HIKING AND
STARTS TRANSITIONING TO A PAUSE AND RATE CUTS, THE DOLLAR TENDS
TO WEAKEN. THAT IS USUALLY BECAUSE FRONT
END YIELDS THE U.S. FALL. IT HAS BEEN A MESSY TRANSITION.
THAT IS STILL UNCERTAIN AND DATA-DEPENDENT.
I THINK IT IS WHERE WE ARE GOING. TOM: A STRONGER EURO 1.15, OR A
STRONG YEN. OVER THE WEEKEND, THE
ECONOMISTS REDID THE MAX INDEX TO SHOW HOW WEAK THE JAPANESE
YEN IS. ARE THOSE MOVES LEADING TO
INSTABILITY OR LESS SO? VASSILI: I DO NOT THINK THIS IS LEADING
TO ANY PARTICULAR INSTABILITY, BUT IT IS LARGELY A FUNCTION OF
I THINK WHAT HAPPENS TO U.S. MONETARY POLICY RATHER THAN THE
REST OF THE WORLD. I THINK THE ARGUMENT HERE IS
NOT THAT EUROPE OR CHINA ARE GOING TO RE-ACCELERATE.
I THINK THE ARGUMENT IS, U.S. MONETARY POLICY IS GOING MORE
RESTRICTIVE AS I THINK CHAIR POWELL POINTED OUT IN THE LAST
PRESS CONFERENCE WITH INFLATION COMING DOWN.
I THINK THEY'RE GOING TO SEE MORE EVIDENCE OF THAT THIS WEEK.
REAL RATES ARE GETTING MORE RESTRICTIVE.
ULTIMATELY, THAT MEANS THE GROWTH NUMBERS ARE GOING TO
FOLLOW. THAT IS WHEN THE FED TO PIVOT.
THE DIFFICULTY IN WHERE THAT UPSIDE RISK FOR THE DOLLAR IS
IS WERE SENTIMENT WE HAVE SEEN THAT THIS PAST WEEK WHEN THE
S&P DID NOT HAVE A GREAT WEEK ON THE LONG END.
ULTIMATELY, IF THE FED HAS THE ABILITY TO START PIVOTING
TOWARDS THE END OF THE YEAR, THAT IS THE DOMINANT DRIVER FOR
THE FX MARKET THAT PROBABLY OUTWEIGHS ANY SORT OF LEVELS IN
EQUITIES THAT WE MIGHT SEE. LISA:
YOU SAID TYPICALLY THE DOLLAR WEAKENS WHEN THE FED PAUSES OR
REACHES THE END OF THEIR TIGHTENING CYCLE.
WHAT HAPPENS IF EVERYBODY ELSE IS REACHING THE END OF THEIR
RATE HIKING CYCLE AT THE SAME TIME?
WHO DOES THE DOLLAR WEAKENED AGAINST IF EUROPE MIGHT BE
REACHING THE END OF THE RATE HIKING CYCLE? VASSILI:
THAT IS A GREAT QUESTION. THAT IS PROBABLY WHERE A LOT OF
DIVIDED OPINIONS IS IN THE FX MARKET AT THE MOMENT.
GENERALLY, WHAT WE HAVE SEEN IS THE FED HAS TO DOMINATE A LOT
OF CENTRAL BANK'S IN TERMS OF THE DRIVER BECAUSE OF THE
IMPORTANCE OF U.S. RATES. IT IS TRUE COMPARED TO THE ECB,
THE FED HAS A DUAL MANDATE AND I THINK EVERYONE HEARS IF
INFLATION IS UNDER CONTROL -- WHICH IS STILL A BIG IF -- IF
INFLATION IS UNDER CONTROL, THE FED HAS MORE ROOM TO REACT TO
ANY GROWTH WEAKNESS. THERE IS GOING TO BE FASTER IN
DOING THAT THEN THE ECB, WHICH IS MORE FOCUSED ON INFLATION,
WAGES AND INFLATION PROJECTIONS. IN THAT SENSE, AT SOME POINT,
THE DUAL MANDATES MEAN SOME OF THOSE OTHER CENTRAL BANKS ARE
MORE SQUARELY FOCUSED ON INFLATION. LISA:
HOW MUCH WOULD POTENTIAL DOLLAR WEAKENING STEM FROM WHAT WE SAW
LAST WEEK AND THIS FEAR AROUND ONGOING INCURRENCE OF DEBT,
EVEN AT A TIME WHERE THE UNEMPLOYMENT RATE IS STILL LOW
IN THE U.S.? VASSILI: THAT HAS BEEN A TOUGH WAY TO
TRADE THE DOLLAR IF GOING BACK TO 2011 WITH THE S&P DOWNGRADED.
WE SAW SOME STRENGTH IN THE JAPANESE YEN, BUT THE DOLLAR
DID WELL. AT THE TIME. THAT IS A HARDER READ MAINLY
BECAUSE THE LONG END OF THE CURVE IS LESS IMPORTANT FOR
CURRENCIES ANYWAY. AS WE HAVE SAID, EQUITIES MIGHT
REACT NEGATIVELY AND HAS TO GIVE THE DOLLAR A SAFE HAVEN
BED. IT WORKS IN THE BACKGROUND. I THINK IF YOU GET INTO A
WEAKER DOLLAR ENVIRONMENT AND THOSE ADDITIONAL DRIVERS OR
FORCES TEND TO ADD TO THE DOLLAR WEAKNESS, BUT WE ARE NOT
THERE AT THIS POINT. CERTAINLY, IF YOU ARE LOOKING
AT THE FINCH MODEL LAST WEEK, I WOULD NOT USE THAT AS A REASON
TO SELL THE DOLLAR. JONATHAN: I AM NOT SURE A LOT OF PEOPLE
ARE. SO MANY PEOPLE PUSHING BACK AGAINST THAT.
TO LISA'S POINT, YOU'VE GOT THE ECB TALKING ABOUT MAYBE BEING
DONE. THOUGHTS THE BANK OF ENGLAND IS
CLOSE TO THAT POINT. THE FEDERAL RESERVE MADE THIS
25, 50, THEY ARE ALMOST DONE. THE REST OF THE WORLD, EMERGING
MARKETS HAVE STARTED CUTTING. CHILE, BRAZIL, OTHERS WILL
FOLLOW IN 2023. LISA: BRAZIL IS CUTTING TO 13.75%,
COMING DOWN SIGNIFICANTLY TO SOMETHING THAT IS STILL
SIGNIFICANT. YOU RAISE A GREAT POINT.
AT WHAT POINT DOES THE CARRY TRADE NOT WORK ANYMORE?
DO THESE HIGHER-YIELDING CURRENCIES HOLD LESS LUSTER AND
DRIVE A SHIFT BACK TO THE DEVELOPING MARKET?
YOU ARE NOT SEEING PEOPLE GO INTO THOSE CURRENCIES AS A
RESULT OF THIS. TOM: WHERE WE ARE NOW VERSUS THE
THIRD WEEK OF DECEMBER LAST YEAR, DID WE HAVE ANY GREATER
CLARITY THEN WE DID THEN? I DO NOT THINK WE DO.
WE ARE FARTHER ON FROM THE PANDEMIC.
WE ARE FARTHER ON FROM A MEDICAL DISASTER.
I GUESS THERE ARE THINGS WE CAN BELIEVE IN, LIKE BARBIE.
THE BOTTOM LINE IS, WHY DO WE HAVE CERTITUDE NOW ABOUT THE
VIEW THAT Q4, Q1 OF NEXT YEAR? I DO NOT KNOW WHERE THAT COMES
FROM. JONATHAN: ME TOO. THE TEAM AT CITI ARE
ANTICIPATING INFLATION STARTS TO PICK UP AGAIN GOING INTO
EARLY 2024. THAT CONVERSATION WITH A LOOK,
COMING UP SHORTLY. FAROUK :00 OVER AT CITIGROUP, LOOKING
FORWARD TO THAT CONVERSATION. TOM: GOT TO KEEP SCORE ABOUT WHO
ACTUALLY GOT THIS RIGHT. THAT GIVES US FAITH IN THEIR
BELIEF. WHAT THE TEAM DID AT CITIGROUP.
I THINK A LARGE DOSE OF HUMILITY IS IN ORDER NOW.
AS WE TRY TO GET CHILDREN TO BEGIN THEIR SUMMER READING.
JONATHAN: I THOUGHT YOU WERE ABOUT TO
CALL ECONOMISTS ON WALL STREET CHILDREN. LISA: [LAUGHTER] TOM:
IT IS THE TIME OF YEAR. >> THE JOB REPORT THAT HAS
SOMETHING FOR EVERYBODY. IF YOU ARE IN THE SOFTER LANDING CAMP, YOU WILL TAKE
COMFORT FROM A PAYROLL GAIN OF 187,000 BELOW THE 200,000
FORECAST AND LOWER HOURLY WORK. IF YOU ARE IN THE HARDER
LANDING, YOU WILL WORRY ABOUT THE 4.4% WAGE INCREASE DRIVEN
BY MONTH ON MONTH AND WORRY ABOUT THE LOW UNEMPLOYMENT RATE.
THE MARKETPLACE FAVORS A SOFTER LANDING INTERPRETATION AS OF
NOW. JONATHAN: THE BRILLIANT MOHAMED EL-ERIAN
ON FRIDAY. BOTTOM LINE, THERE IS ALWAYS
SOMETHING TO WORRY ABOUT. ON ALL THE ECONOMIC DATA, ON A
FRIDAY. THAT IS HOW BRAMO FEELS ABOUT
MOST INCOMING INFORMATION. CPI THURSDAY, PPI FRIDAY.
YOUR EQUITY MARKET ON THE S&P 500 POSITIVE BY ZERO POINT 2%.
TRYING TO BOUNCE BACK FROM A FOUR DAY LOSING STREAK ON THE
S&P 500. TOM: DO YOU THINK EARNINGS MATTER
THIS WEEK? IT IS LIKE YOU MENTIONED
EARLIER , THERE ARE EARNINGS REPORTS OUT THERE BUT WE ARE
BEYOND THAT. LISA: THE SECOND YOU SAY THAT, THERE
IS GOING TO BE THAT ONE EARNINGS REPORT THAT
CRYSTALLIZES THE FEAR IN MARKET AND UNRAVELS EVERYTHING.
KEEP SAYING THAT. THAT IS EXACTLY IT. JONATHAN:
DID YOU SEE WHAT THEY SAID? WHAT DID THEY DO? LISA:
NEVER GOING TO BE TALKING ABOUT THAT -- NOW WE ARE TALKING
ABOUT THAT THE NEXT THREE WEEKS. TOM: THAT IS A BIG DEAL.
JONATHAN: 30,000 PEOPLE HAVE LOST THEIR
JOBS. DOES THAT GIVE YOU A MACRO SIGNAL ON THE BROADER ECONOMY?
TOM: ABSOLUTELY. YELLOW IS LIKE THE PORT OF
L.A., PORT OF LONG BEACH. IT HAS TO DEAL WITH LOGISTICS
OF A NATION. TO ME, IT IS MORE LIKE 30,000
PEOPLE. IT IS MOVING STUFF AROUND. I AM LOOKING TO THROW THIS UP ON TV, THE ANSWER IS WE ARE
TRYING -- WE HAVE GONE FROM PLUS TWO STANDARD DEVIATION.
I CAN GIVE YOU THE DATA. JULY 27, IN OVER A WEEKEND A
HALF WE HAVE COME DOWN ON MY LONG TERM MOVING AVERAGE.
THIS DAMAGE, THIS PULLBACK IS COMPLETELY NORMAL.
WE ARE TRYING TO MAKE SOME THEATER OUT OF IT.
I DO NOT SEE ANY THEATER ON THE SCREEN. JONATHAN:
TRYING TO MAKE THEATER OUT OF ANYTHING.
I BROUGHT UP APPLE FOR A GOOD REASON.
IT IS THE BIGGEST WAITING ON THE S&P 500 INDEX.
AT -- IT HAS HAD THREE QUARTERS OF NEGATIVE SALES GROWTH.
IF YOU ARE EXPERIENCING THREE QUARTERS OF SOFTER SALES
GROWTH, YOUR STOCK IS STILL UP BY 40% YEAR TO DATE AND YOU ARE
TRADING AT A MULTIPLE OF 30 TIMES EARNINGS, WE'VE GOT
QUESTIONS. LISA: IF YOU'VE GOT A EARNINGS THAT ARE THE MOST OWING BACK TO 2020,
I HAVE TO SAY -- YOU THINK WE ARE GLOOMY AND DO ME.
I COULD GO FULL LOOM. THIS IS NOT FULL LOOM IN ANY
WAY, SHAPE OR FORM. THIS IS NOT EXTRA DRAMA. TOM:
FULL GLOOM. JONATHAN: GIVE IT TO OUR GUESTS.
TOM: VERONICA IS SAYING, WHAT HAVE I
WALKED INTO? THE IDEA THAT AMERICA WILL
PROSPER THROUGHOUT IT. LET'S GO THERE.
YOU GUYS, TAKING A VICTORY LAP THE LAST SIX MONTHS.
YOU HAVE BEEN RIGHT ABOUT THE RESILIENCY OF THE AMERICAN
ECONOMY WITH HIGH RATES. DO YOU ASSUME WITHIN THE
CITIGROUP VIEW THAT IF WE HAVE A NEW RATE REGIME, A HIGHER
RESET BACK BEFORE 2007, 2006, THAT WE WILL BE FINE? VERONICA:
I THINK WE MIGHT BE RELATIVELY GLOOMY COMPARED TO OTHER PEOPLE.
WE ARE NOT FULL GLOOM. WE ARE NOT TERRIBLY OPTIMISTIC
WE WILL GET THIS TRUE, SOFT LANDING.
IT MIGHT LOOK THAT WAY FOR A COUPLE OF MONTHS.
WE WILL GET CPI THIS WEEK AND IT WILL LOOK SOFTER. WE HAD A STRONGER JOBS REPORT
RYAN DAY. I THINK WE ARE LESS OPTIMISTIC
THAT THIS WILL END WELL AND INFLATION WILL COME BACK
SUSTAINABLY TO 2% WITHOUT SOME BIGGER DOWNTURN.
IT DEPENDS ON WHEN WE GET THAT. WE THINK MAYBE FIRST HALF OF
NEXT YEAR. NEXT SIX MONTHS COULD LOOK GOOD.
TOM: TO BE CLEAR, YOU ARE CALLING
FOR A RECESSION STILL? VERONICA: YEAH.
BASICALLY, THE ASSUMPTION IF WE ARE GETTING INFLATION
SUSTAINABLY BACK TO 2%, THAT HAS TO HAPPEN WITH SOME KIND OF
CONTRACTION, SOMETHING WE WOULD CALL A RECESSION. LISA:
HOW MUCH DOES YOUR CALL FINCH -- HINGE ON THE FISCAL IMPULSE?
HOW MUCH BIDENOMICS CONTINUES TO PUMP CASH INTO THE ECONOMY
VERSUS SOME BOGEYMAN PEOPLE ARE TALKING ABOUT? VERONICA:
IT IS ON THE DATA WE HAVE SEEN THIS YEAR.
WE HAVE HAD CONSTRUCTION INVESTMENT, BUILDING NEW
FACILITIES. THAT MIGHT BE RELATED TO
POLICIES. IT IS THE GENERAL ON SHORING,
RE-SHORING AFTER PANDEMIC DISRUPTIONS.
WE WILL BE SKEPTICAL THIS COULD LAST TOO MUCH LONGER.
ONE THING WE HAVE LEARNED FROM THE DEBT CEILING DEBACLE IS
THERE IS NOT A TON OF APPETITE FOR ADDITIONAL FISCAL SPENDING.
IT COULD BE HARD ESPECIALLY GETTING INTO AN ELECTION YEAR
NEXT YEAR. I DO NOT KNOW IF THAT IS A
LONG-LASTING TREND. LISA: IT DOES NOT SEEM THERE IS A LOT
OF APPETITE TO MAKE MATERIAL CUTS.
GOING FORWARD, HOW MUCH DOES THAT UNDERPIN A CALL FOR HIGHER
YIELDS ON THE LONGER END OF THE YIELD CURVE OVER A LONGER
PERIOD OF TIME GIVEN THE POTENTIAL FOR INCREASED
DEFICITS AND INFLATION IS NOT GOING TO COME DOWN AS MUCH?
VERONICA: THAT IS A HUGE PART OF THE MOVE
WE SAW IN LONGER YIELDS LAST WEEK.
I AGREE THAT TRADITIONALLY, MORE FISCAL CONSERVATIVES ARE
LESS INCLINED TOWARDS CUTS. THAT IS A FACTOR KEEPING YIELDS
HIGHER LONGER. JONATHAN: CAN YOU EXPLAIN WHERE YOU ARE
SEEING THAT FISCAL STIMULUS LIFT IN THE ECONOMY?
WHAT WAS IT, WAS IT WORKING? VERONICA:
IT IS HARD TO KNOW WHAT WE ARE SEEING IN GDP DATA, WHERE IT IS
COMING FROM. WE HAVE SEEN INVESTMENT IN
MANUFACTURING STRUCTURES PICKING UP OVER THE LAST COUPLE
OF QUARTERS. MAYBE THAT IS RELATED TO
INFRASTRUCTURE CHIPS ACT. YOU ARE SEEING IT IN PUBLIC
INVESTMENT, INFRASTRUCTURE SPENDING NOW COMING UP.
THAT IS LEGISLATED AND NOW, WE ARE STARTING TO SEE THAT IN THE
DATA. IT IS HARD TO KNOW EXACTLY HOW
MUCH WE CAN INTRODUCE. JONATHAN: IS THAT BASED ON SPENDING OR A
SHIFT IN POLICY? THE CROWDING IN AND GETTING
PEOPLE TO SPEND AT HOME? VERONICA:
SOME OF IT IS DIRECT AND SOME IS INCENTIVES FOR PEOPLE FOR
RE-SHORING, ON SHORING. SOME OF THAT PROBABLY WOULD
HAVE HAPPENED WITHOUT GOVERNMENT. LISA:
HOW MUCH FROM WHAT WE GOT FRIDAY THE IDEA OF A JOBS
NUMBER THAT COULD GIVE YOU ANY STORY YOU WANTED?
AS WE LOOK AHEAD TO CPI, HOW MUCH ARE PEOPLE LOOKING AT IT
OR SHRUGGING IT OFF AS A POTENTIAL HEAD FAKE THAT
INFLATION SMILE AS MOHAMED EL-ERIAN CALLS IT? VERONICA:
THE MOST INTERESTING PART OF THE JOBS DATA THE LAST COUPLE
OF MONTHS, WE ARE GETTING THIS INTERESTING PICKUP IN WAGES.
WE HAD A COUPLE OF MONTHS WHERE TOP EARNINGS ARE PRINTING 5%
ANNUALIZED. THAT IS STRONGER THAN THEY HAD
BEEN PRINTING EARLIER THIS YEAR. OTHER MEASURES LIKE THE ATLANTA
FED WAGE TRACKER WILL COME OUT LATER THIS WEEK, RUNNING 5% TO
6%. YOU ARE STILL HAVING A TIGHT LABOR MARKET.
YOU CAN SEE JOB GROWTH, HEADLINE JOB NUMBERS SLOWING AS
YOU ARE RUNNING OUT OF PEOPLE TO HIRE. A COMBINATION OF LOWER
UNEMPLOYMENT RATES, JOB WEIGHT -- JOB WAGE GROWTH.
LOOKS LIKE THAT SUPPLY ISSUE AGAIN. TOM: THE NEXT SIX WEEKS, EIGHT
WEEKS, MY NUMBER ONE DATA POINT IS THE 10 YEAR REAL YIELDS.
THE ANSWERS HAVE GONE FROM 1.5 TO 1.8. THE HISTORY CRISIS PRE-2006 IS
--WHERE DO YOU FEEL THE 10 YEAR REAL YIELD SHOULD SET? VERONICA:
WE DO NOT HAVE A SPECIFIC FORECAST. I THINK YOU CAN SEE,
YOU ARE NOT GOING TO GET -- POTENTIALLY WE WILL GET SOFTER
INFLATION DATA. YOU HAVE SUPPLY ISSUANCE,
RESETTING OF GROWTH EXPECTATIONS.
YOU CAN SEE REAL YIELDS HIGHER. JONATHAN:
THAT WAS THE RIGHT ANSWER. THANK YOU. TOM:
THAT WAS NOT GLOOMY. JONATHAN: LEAVE IT TO THE RATE
STRATEGIST. THAT IS THE RIGHT ANSWER IF YOU WANT TO MAKE SURE
YOU GET ON WHEN YOU GET BACK TO WORK.
BOTTOM LINE FOR CITI, LOOKING LIKE A SOFT LANDING UNTIL IT
DOES NOT. IT MIGHT LOOK LIKE ONE THROUGH
THE REST OF THE SUMMER AND THE YEAR. TOM:
WHAT DOES THE REAL YIELD DO ABOUT THAT? JONATHAN:
THAT IS THE DEBATE. WHAT DOES THE DATA LOOK LIKE AT
THE TURN OF THE YEAR INTO 2024? LISA:
AND WAGES PICKING A TOUCH UP AT THE SOMETIME -- SAME TIME OIL
ARE. THAT IS CAUSING HEARTBREAK OUT
OF WASHINGTON, D.C. THIS IS CAUSING HEARTBURN IN
WASHINGTON. JONATHAN: X OVER THE WEEKEND, FORMERLY
KNOWN AS TWITTER. LISA: [LAUGHTER]
IT IS REPOST, NOT RETWEET. TOM: DOES THAT MEAN A TWEET IS A
POST? JONATHAN: IT DOES. TOM: WE ARE REPOSTING. JONATHAN:
IF YOU HAVE TO EXPLAIN IT, IT IS A PROBLEM. TOM:
YOU ARE RIGHT. JONATHAN: A LOT OF EXPLAINING. LISA: IT WAS NOT THE PLATFORM
FORMALLY KNOWN AS TWITTER. A REBELLION AGAINST THE LABOR. >> WHAT WE NEED TO SEE IS
WHETHER OR NOT THE SLOW DOWN IS INTACT. >> WE ARE SEEING LINGERING
EFFECTS OF THE PANDEMIC. >> WE THINK WE ARE ON THE PATH
TO GET TO LOWER INFLATION. >> THE HAWKS IN THE FED WILL
FOCUS ON WAGE GROWTH. >> THIS IS "BLOOMBERG
SURVEILLANCE" WITH TOM KEENE, JONATHAN FERRO,
AND LISA ABRAMOWICZ. JONATHAN: RECESSION CALLS ON WALL STREET
DROPPING LIKE FLIES. FOR OUR AUDIENCE WORLDWIDE THIS
IS "BLOOMBERG SURVEILLANCE" ALONGSIDE TOM KEENE AND LISA
ABRAMOWICZ. WE ARE LIGHT ON EARNINGS THIS
WEEK. HEAVY ON DATA. CPI THURSDAY AND PPI FRIDAY.
THE LIGHT GETTING LONGER. YOU HAVE THE LIKES OF MICHAEL
GAPEN AT BANK OF AMERICA DROPPING THE RECESSION CALL.
THIS COMES AFTER CHAIRMAN POWELL TOLD US A COUPLE OF
WEEKS BACK THE FED STAFF HAVE ALSO DROPPED THEIR RECESSION
CALL. WHO IS LEFT? TOM: WE WILL GO TO JACKSON HOLE AND
PEOPLE SAY WHAT ARE YOU DOING WITH RECESSION CALL COME UP
CLASSICALLY TWO QUARTERS OF NEGATIVE GDP.
THESE PEOPLE REACTING TO THE DATA.
THE ATLANTA GDP NOW STATISTIC. IT MOVES.
WE COULD GET FULL BLOOM. -- FULL GLOOM.
THE FACT IS 3% IS NOT A RECESSION. JONATHAN:
UNEMPLOYMENT AT 3.5%, WHICH IS ALSO NOT A RECESSION. LISA:
WHICH IS RAISING THE QUESTION WHY THERE IS THE AMOUNT OF DEBT
OVERHANGING AND WHY THERE IS THE FISCAL SPENDING.
THERE IS A QUAGMIRE WITH PEOPLE SAYING HAVE FAITH, THE
EMPLOYMENT RATE IS A LAGGING INDICATOR.
OTHER PEOPLE SAYING YOU HAVE TO LOOK AT THE DATA AS IT IS.
IT SHOWS STRENGTH AND HIGHER INFLATION. JONATHAN:
ONE MORE PAYROLLS PRINT AFTER THIS ONE. TWO MORE CPI PRINTS. ARE WE AT THE POINT WHERE THIS
DATA HAS TO TELL THE FED TO HIKE AS OPPOSED TO NOT TO? LISA:
IF YOU BELIEVE YOU HAVE TO LISTEN TO EACH FED OFFICIAL
DIFFERENTLY THAT I WOULD SAY THAT IS THE CASE BECAUSE WE HAD
THE NEW YORK FED PRESIDENT JOHN WILLIAMS SPEAKING WITH THE NEW
YORK TIMES SAYING HE SEES THE CASE TO PAUSE AND LEADING INTO
THAT TALKING ABOUT POTENTIAL CUTS EARLY NEXT YEAR.
AT WHAT POINT ARE THEY LOOKING FOR EXCUSES NOT TO AT A TIME
WHEN PEOPLE SAY THE DATA IS NOT REAL-TIME ENOUGH TO GIVE US A
SENSE? HOW MANY PEOPLE ARE LOOKING
PAST THE DATA? TOM: HOW CAN YOU LOOK PAST THE DATA.
EVERY CENTRAL BANK HAS BEEN EX POST. WE ARE ALL EX POST.
JONATHAN: THAT IS NOT TRUE. I HATE TO BE SNAPPY.
THAT IS NOT TRUE. WHAT WAS THE MISTAKE COMING OUT
OF THE CRISIS? TOM: THE MISTAKE COMING OUT OF THE
CRISIS IS THEY HAD TO DEAL WITH THE MEDICAL EVENT AND THEY OVER
ACCOMMODATED FOR THE MEDICAL EVENT, EVERYONE DID. JONATHAN: THERE WAS A FORECAST. TOM:
THERE WAS A FORECAST BASED ON A SET OF MEDICAL CARDS.
THINGS GOT BETTER. I REMEMBER THE DAY ELLEN
ZENTNER CHANGED HER CALL. SHE SWITCHED ON A DIME WHEN THE
MEDICAL DATA IT BEGAN TO SHOW A RECOVERY. JONATHAN:
WE WILL SWITCH ON A DIME TO THE MARKETS.
EQUITY FUTURES ON THE S&P 500 POSITIVE .25%.
YIELDS HIGHER SEVEN BASIS POINTS. LISA:
THIS IS GOING TO BE A FUN COMMERCIAL BREAK.
8:30 TODAY WE GET THE FED SPEAK, RAPHAEL BOSTIC AND
MICHELLE BOWMAN ARE ON OPPOSITE SIDES OF THE IDEOLOGICAL
SPECTRUM. IT SEEMS LIKE RAPHAEL BOSTIC IS
PUSHING TOWARDS A MORE DOVISH PAUSE.
MICHELLE BOWMAN PUSHING MORE ON THE HIKING NARRATIVE.
TODAY A BIT OF A QUIETNESS IN THE EARNINGS FRONT. WE ARE LOOKING AT TYSON FOODS,
WHICH IS COMING ANY MINUTE. AS WELL AS PAL AND TIER
TECHNOLOGIES -- HE PALANTIR TECHNOLOGIES. TOM:
IS THAT A MEME STOCK? LISA:
I DON'T KNOW THAT IS THE CASE BECAUSE THEY DID COME OUT WITH
ARTIFICIAL INTELLIGENCE PER GUST OCCASIONS.
YOU CAN CALL ANYTHING A MEME STOCK.
WE ARE LOOKING AT CREDIT FOR THE MONTH OF JUNE.
THIS WILL BE INTERESTING BECAUSE OF THE SHIFT AWAY FROM
TERM LOANS, STUDENT LOANS, PEOPLE NOT TAKING THOSE OUT.
CREDIT CARD DEBT, LET'S GO. THAT SEEMS TO BE WHAT EVERYBODY
IS DOING BECAUSE THEY ARE SPENDING MORE THAN THEY ARE
EARNING AND THAT IS WHAT WE ARE SEEING CONSISTENTLY. JONATHAN:
I LOVE IT WHEN YOU HAVE A RAMPED. -- WHEN YOU HAVE A RANT.
CAMERON DAWSON JOINS US NOW. THE DATA IS COMING BETTER THAN
EXPECTED. I'M TRYING TO WORK OUT WHETHER
THINGS ARE GETTING BETTER. ARE THINGS IMPROVING OR
BETTER-THAN-EXPECTED? CAMERON: YES IT IS BETTER-THAN-EXPECTED.
THERE ARE SIGNS THAT CERTAIN PARTS OF THE ECONOMY ARE
RE-ACCELERATING. LOOK AT HOUSING INVESTMENT.
IT WAS DOWN 15%, UP 5% SINCE APRIL. LOOK AT MANUFACTURING.
YOU ARE STARTING TO SEE SIGNS OF THAT IMPROVING.
THERE ARE POCKETS THAT ARE BETTER-THAN-EXPECTED BUT
CERTAINLY SIGNS OF RE-ACCELERATION DESPITE THE
FACT WE HAVE HIGHER INTEREST RATES. JONATHAN:
CAN YOU SAY THE SAME THING ABOUT EARNINGS IN AMERICA?
CAMERON: NO. DESPITE THE FACT WE HAVE HAD
ECONOMIC SURPRISES BEING POSITIVE YOU SEE EARNINGS
ESTIMATES CONTINUE TO GET CUT FOR 2023 AND YOU'RE NOT SEEING
ESTIMATES MOVE HIGHER FOR 2024 WHICH POINTS TO THE FACT THAT
THOUGH THE BOND MARKET AND ECONOMISTS MIGHT HAVE
FORECASTED A RECESSION THE EQUITY MARKET NEVER PRICED IN A
RECESSION. TOM: YOU MENTIONED THE SCALE AND
PRICING POWER. IS THAT THE GREAT UNDERESTIMATED FEATURE OF THE
BULL MARKET? CAMERON: ALMOST CERTAINLY.
LOOK AT PRICES THIS QUARTER OF 8% OR 9%.
LOOK AT CATERPILLAR RAISING PRICES.
LARGE COMPANIES HAVE PRICING POWER THAT MEANS THEY ARE ABLE
TO PASS ON HIGH PRICES TO CUSTOMERS.
IT IS A QUESTION OF IF THAT CONTINUES IN THAT DOES REMAIN A
KEY QUESTION. PRICING POWER IS WHAT DEFINED
WHY LARGE CAPS HAVE OUTPERFORMED SMALL CAPS. TOM:
IF YOU LOOK AT THE MARGINS DOWN THE INCOME STATEMENT OF THESE
GIANT STOCKS, DO THEY DESERVE A 28 OR 830 MULTIPLE? CAMERON:
NOT REALLY. IF YOU LOOK AT APPLE, APPLE HAS
ALL OF ITS EXPANSION THIS YEAR DRIVEN BY MULTIPLE EXPANSION.
IT'S EARNINGS HAVE BEEN FLAT TO DOWN.
ALL OF THE EARNINGS HAVE COME FROM FINANCIAL ENGINEERING.
THERE IS AN ASPECT OF THE TRADE TO APPLE TRADING AT 30 TIMES
EARNINGS. OVERALL IT IS NOT JUST THE
EARNINGS OUTLOOK BUT IT IS THE INTEREST RATE OUTLOOK AS WELL.
WE KNOW THERE'S BEEN A HISTORY OF INTEREST RATES BEING TIED AT
THE HIP OF GROWTH VALUATIONS. THAT RELATIONSHIP HAS
COMPLETELY BROKEN DOWN THIS YEAR. LISA:
WHEN YOU WALKED IN IT SOUNDED LIKE YOU WOULD BEEN IN THE RAIN
AND A FISHING BOAT FOR FOUR DAYS TRYING TO FIGURE OUT
WHETHER YOU LIKE BEING IN THE OUTDOORS.
THAT IS BECAUSE -- I AM WONDERING WITH ALL OF THE
LUMINARIES, ARE WE FEELING MORE OPTIMISTIC OR LAST AFTER ALL OF
THE REVISIONS AND THE CHANGES TO FORECAST WE HAVE BEEN SEEING?
CAMERON: THERE WAS A LOOKING AROUND AND
SAYING IS THIS TIME DIFFERENT. WE HAVE THE DEBT DOWNGRADE AT
THE SAME TIME YIELD STARTED TO CLIMB.
THAT IS VERY DIFFERENT THAN 2011.
WE ALL LOOKED AROUND AND SAID WE HAVE 8.5% OF DEFICIT TO GDP
RIGHT NOW IN A WORLD WHERE GDP IS REALLY STRONG.
WHAT HAPPENS WHEN GDP FALLS? WHERE DOES THAT DEFICIT GO?
HOW MUCH ROOM IS THERE FOR THE BOND MARKET TO ABSORB THE
HIGHER ISSUANCE. WE ALL LOOKED IN THE MIRROR AND
SAID YIELDS COULD MOVE HIGHER GIVEN THE FACT THE BOND MARKET
IS CONFIDENT THEY COULD MOVE LOWER. LISA:
ARE YOU SAYING THAT IN SOME WAYS THIS WAS A SEA CHANGE IN
TERMS OF PROJECTING HIGHER LONG-TERM YIELDS THAN MOST
PEOPLE HAD PREVIOUSLY THOUGHT? CAMERON:
IT IS VERY MUCH A POSSIBILITY GIVEN THE FACT THAT THE BOND
MARKET HAS BEEN SO CONFIDENT THE FED WOULD GET INFLATION
DOWN TO ITS 2% TARGET. LOOK AT INFLATION BREAKEVENS.
THEY NEVER BLEW OUT DURING THIS ENTIRE EPISODE, WHICH REFLECTS
THE CONFIDENCE OF THE BOND MARKET.
IF THE BOND MARKET STARTED TO LOOK AROUND TO SAY YOU ARE
SPENDING A LOT OF MONEY, THAT COULD RESULT IN HIGHER
INFORMATION STOP THAT MEANS ALL OF THESE CALLS FOR YIELDS TO GO
BACK TO THEIR PRIOR LOWS OR REVERT BACK TO THE 3% LEVELS
ARE BUBBLY A LITTLE TOO PREMATURE.
-- ARE PROBABLY A LITTLE TOO PREMATURE. TOM: -- JONATHAN: I SAW JIM BIANCO FISHING OVER
THE WEEKEND. HE THINK INFLATION HAS BOTTOMED
FOR THE YEAR. DO YOU SHARE THAT VIEW? CAMERON:
I THINK THAT IS POSSIBLE. DURABLE GOODS HAVE GONE FROM A
PEAK INFLATION RATE OF 18% AND ALLEY ARE RUNNING IN DEFLATION.
THEY ARE VERY MUCH CORRELATED TO SHIPPING PRICES.
LOOK AT THE PRICE TO MOVE A CONTAINER FROM SHANGHAI TO LOS
ANGELES. IT FELL 87% FROM 2021. IN JULY, UP 41%.
YOU ARE STARTING TO SEE SIGNS OF A POTENTIAL FOR HIGHER GOODS
INFLATION, NOT JUST ON DURABLE GOODS BUT ALSO NONDURABLE GOODS.
I THINK THAT IS A KEY WATCH ON WHERE WE COULD SEE A
REACCELERATION. JONATHAN: IS THAT GOOD OR BAD FOR THE S&P
500? CAMERON: I THINK IT IS BAD FROM A
VALUATION STANDPOINT. HIGHER INFLATION IS GOOD FOR
EARNINGS. IF WE ARE TO MEET EARNINGS
ESTIMATES FOR 2024, YOU NEED INFLATION TO STAY HIGH. TOM:
THAT IS THE KEY POINT. THERE IS A BELIEF THAT WITH THE
INTEREST RATE STRUCTURE OF 16 YEARS AGO AND BEYOND HIGHER
INFLATION IS BAD. IT IS NOT TRUE WHEN YOU LOOK AT
HISTORY. SHE NAILED THAT. JONATHAN:
IT RAISES THE QUESTION OF THE SOFT LANDING HOPES AND DREAMS.
WHY IS THAT GOOD FOR EARNINGS? CAMERON:
IT MEANS WE DO NOT HAVE AN EARNINGS RECESSION BUT THAT IS
WHAT IS ALREADY BEING PRICED IN. THE CHALLENGE IS HOW MUCH OF
TODAY'S VALUATION TRADING AT 19.8 TIMES EARNINGS IS PRICING
IN THAT PIVOT BY THE FED THAT IS SO CONFIDENTLY PRICED INTO
2024. THE RISK GOING FORWARD MAY NOT
BE ON THE EARNINGS FRONT. IT MAY BE ON THE VALUATIONS
FRONT WHICH IS SIMILAR TO 2022. JONATHAN:
CAMERON DAWSON GOING THROUGH THIS MARKET.
WE KEEP GOING BACK TO THE NUMBER ONE WEIGHTING OF THE S&P.
THERE IS A STORY THERE. LISA: IF YOU TAKE WHAT CAMERON SAID
AND YOU TAKE IT ONE STEP FURTHER AND BONDS DO NOT LOOK
GOOD. WHERE WILL PEOPLE PUT THEIR
MONEY? IF YOU'RE GETTING HIGHER REVENUES AT THAT, THAT MIGHT
ENCOURAGE PEOPLE TO GO INTO STOCKS, EVEN THOUGH THERE IS A
HIGH MULTIPLE IN PLACE. JONATHAN:
WELCOME TO THE PROGRAM. WE ARE POSITIVE .3%.
COMING UP IN ABOUT 45 MINUTES WE WILL CATCH UP WITH MIKE
WILSON AT MORGAN STANLEY WITH A NOTE OVER THE WEEKEND ABOUT
SUPPORTING EQUITY SO FAR AND WE WILL GET HIS VIEW ON WHETHER HE
THINKS THAT WILL LAST THROUGH YEAR END AND BEYOND.
WE DO HAVE A PICTURE OF JIM BIANCO WITH A FISH. WONDERFUL. EXPLAIN WHAT IS CAMCO TALK? LISA: YOU TOOK THE PICTURE? TOM:
IF WE GO TO JACKSON HOLE WE CAN GET YOU AND BRAMO IN A CANOE ON
THE LAKE. CAMERON: IF THIS IS AN OPEN INVITE I AM
THERE. TOM: THIS IS NOT THE END OF THE
CHICAGO RIVER LIKE LAKE MICHIGAN. BRING THAT UP.
CAMERON: I'M JUST SAYING THAT WAS NOT
THE LARGEST FISH CAUGHT THAT DAY. LISA:
WHO WOULD YOU BE SUGGESTING CAUGHT THE LARGEST FISH?
CAMERON: THEY SOMEONE AT THIS TABLE.
JONATHAN: IS THERE ANY PHOTO EVIDENCE OF
THAT AT ALL? STORIES AND FISHING. [LAUGHTER] LISA:
I AM SUGGESTING THERE MIGHT BE A GENDER DIVIDE NOT TO NEED TO
HOLD IT UP. TOM: DIVERSITY IS IN FULL SWING.
THEY DO SWITCH FROM GIN TO VODKA. THIS IS SMART PEOPLE.
WAY UP AND MADE. IT IS IT -- WAY UP IN MAINE.
A BEAUTIFUL LAKE. FRESHWATER WITH STURGEON AND
FISH. CAN YOU SEE CAMERON DAWSON AND
THE L.L. BEAN? >> IS A CHALLENGING CASE BUT I
DO NOT THINK IT RUNS AFOUL OF THE FIRST AMENDMENT.
I THINK THERE OTHER CONSIDERATION.
I WOULD HAVE TAKEN THOSE INTO ACCOUNT. JONATHAN:
THAT WAS WILLIAM BARR OVER THE WEEKEND ON CBS.
AT THE MOMENT YOU NEED A LAW DEGREE IN AMERICA TO UNDERSTAND
WHAT IS GOING ON WITH AMERICAN POLITICS.
YOUR AMERICAN EQUITY MARKET IS POSITIVE BY ONE THIRD OF 1% ON
THE S&P. A LIFT AFTER A FOUR DAY LOSING
STREAK. IN THE BOND MARKET, YIELDS
HIGHER SEVEN BASIS POINTS. IF YOU LIKE A QUICK SNAPSHOT OF
FOREIGN-EXCHANGE, FOR G10, THE DOLLAR IS STRONGER.
WE ARE NEGATIVE .25% ON THAT CURRENCY PAIR. TOM:
THE CURRENCY THIS MORNING -- THE DATA IS THERE.
IF I LOOK AT EQUITIES, USUALLY I CAN JUST AD LIB.
OUT AND SAY HERE IS A DATA POINT THAT MATTERS.
I CANNOT SAY THAT THIS MORNING. I DO NOT HAVE THE STATISTIC ON
THE SCREEN. JONATHAN: IS A QUIET START TO THE WEEK.
A BIT OF FED SPEAK IN BETWEEN. NOT HEAVY ON THE FED SPEAK. TOM:
I WENT AFTER GOVERNOR BOWMAN AS A CERTAIN KIND OF GOVERNOR AND
OFFICIAL. WE WERE SITTING AT SATURDAY
DINNER TALKING ABOUT HOW THE FED CAME OUT. JONATHAN:
YOU DESCRIBED GOVERNOR BOWMAN AS BOB DOLE'S INTERN. TOM:
SHE WAS. SHE IS A POLITICAL BEAST.
THAT'S OK. WHEN THE FED WAS INVENTED IN
1912 AND THE INDEPENDENT FITTED 1915, THIS IS WHAT WE WANTED
WAS AN ECLECTIC SET OF VOICES. SOME COULD ONLY SAY IT COULD BE
MONETARY. IT IS ECLECTIC. I WISH THEY VOTED LIKE THE BANK
OF ENGLAND. I WISH THERE WAS MORE DISSENT.
DOES BOWMAN AGREE WITH BOSTICK? NO. JONATHAN:
WE BOTH SAID ON THURSDAY WE MISSED YOU.
THERE WAS A THREE WAY SPLIT ON THURSDAY.
TWO OF THE EIGHT WANTED 50 AND NOT 25.
YOU DO NOT SEE THAT AT THE FED. TOM: I WISH WE WOULD. WITH GREAT VENERATION WE HAVE
SOMEONE VERY POLITICAL LIKE GOVERNOR BOWMAN.
BOSTICK HAS HIS OWN KINDS OF ECONOMICS.
VERY DIFFERENT FROM BRAINARD OR CLARA TO.
THAT IS THE ECLECTIC POWER OF OUR CENTRAL BANK. JONATHAN:
-- LISA: WE TALKED ABOUT THE KANSAS CITY
FED. THEY GOT A NEW PRESIDENT. THEY HAVE JEFFREY SCHMIDT, WHO
IS OF THAT COMMUNITY BANKING COMING TO THE FORE.
WE CAN MEET HIM IN JACKSON HOLE. JONATHAN: HE KNOWS THE RULES.
ESTHER GEORGE USED TO PAY FOR DINNER AT THE DINER. LISA:
IS THERE ANYTHING ELSE YOU WOULD LIKE TO? JONATHAN: DRINKS.
BREAKFAST, TOO. AND A CAR TO PICK ME UP. LISA:
A CANOE RIDE TOGETHER. JONATHAN: THIS END OF GOLF CART -- THEY
SEND A GOLF CART. JONATHAN: -- TOM:
MRS. KEENE WANTS TO GO OUT AND HIKE WYOMING.
THE IDEA IS THE KANSAS CITY FED WILL PIVOT TO THE PUPPY.
JONATHAN: DOES MANAGEMENT KNOW YOU ARE
MAKING THIS A FAMILY TRIP? LISA: NOW THEY DO. [LAUGHTER] TOM:
THE SOUND OF MUSIC. JONATHAN:
BUT IN WYOMING BUT NOT AUSTRIA. TOM: WENDY BENJAMIN TO SAVE THE
MOMENT. SHE IS WITH BLOOMBERG NEWS AND
THE POLITICS OF THE MOMENT. THERE WAS A PHOTO IN THE
ZEITGEIST OVER THE WEEKEND. ONE OF OUR MOST POPULAR MOMENT
SUNDAY AFTERNOON WE REPLAY THE STUFF WENDY BENJAMIN WATCHES
ALL SUNDAY MORNING. IT WAS THE GREEN ROOM AT FACE
THE NATION WITH FOUR DIFFERENT TYPES OF REPUBLICANS WITNESSING
THIS MOMENT WE ARE IN. GIVE US SOME COLOR OF THE
DIVIDE AND THE NUANCES OF THE REPUBLICAN PARTY SHATTERED
VERSUS 1860 OR 1858. IT IS AMAZING THE SPLITS. WENDY:
I WAS NOT THERE FOR THE 1860 CONVENTION, BUT CLOSE. THE REPUBLICAN PARTY IS NOT
EVEN THE REPUBLICAN PARTY I GREW UP WITH, LET ALONE MY
DAD'S REPUBLICAN PARTY. THIS IS A PARTY THAT IS DEEPLY
POPULIST, THAT WANTS LESS TRADE, LESS IMMIGRATION,
PROTECTING BENEFITS. IT IS GOING AFTER THE
BLUE-COLLAR WORKING CLASS AMERICAN AS OPPOSED TO THE
REAGAN REVOLUTION REPUBLICAN IT WAS FOR LAISSEZ-FAIRE
REGULATION AND LET THE MARKET TO WHAT IT WANTS AND IMMIGRANTS
ARE WELCOME BECAUSE THEY KEEP PRODUCTION UP.
IT IS A VERY DIFFERENT REPUBLICAN PARTY DRIVEN BY ONE
MAN, DONALD TRUMP. TOM: IS THAT GOING TO CHANGE AFTER
THE REPUBLICAN DEBATE OR DOES THAT CHANGE AFTER LEGAL AFFAIRS?
FOR OUR INTERNATIONAL AUDIENCE, IS THERE A NEXT STEP FOR THE
FORMER PRESIDENT WHEN YOU LOOK AT THIS ON A DAY-TO-DAY BASIS?
WENDY: HE IS CERTAINLY TAKING THE NEXT
STEP, WHICH IS TO FIGHT AS IF IT WERE A POLITICAL OPPONENT
THE JUSTICE DEPARTMENT AND THE JUDICIAL SYSTEM.
THIS WEEK WE MAY SEE THE FOURTH INDICTMENT IN GEORGIA FOR HIS
ATTEMPTS TO OVERTURN THE ELECTION THERE.
OVER THE WEEKEND HE WENT FULL THROTTLE, GOING AFTER
PROSECUTORS, JUDGES, POTENTIAL WITNESSES BY PUTTING ON TRUTH
SOCIAL "IF YOU COME AFTER ME I WILL GO AFTER YOU."
THAT MAY PUT A PROTECTIVE ORDER ON WITNESSES.
HE SEEMS TO BE TAKING HIS LEGAL TROUBLES THROUGH A CAMPAIGN
LENS AND THAT MAY BE HOW HE RUNS HIS CAMPAIGN.
WHETHER THE REPUBLICAN PARTY STICKS WITH HIM THROUGH THICK
AND THIN, THERE IS NO EVIDENCE THEY WILL NOT.
IF CONVICTION START TO PILE UP MAYBE THAT WILL CHANGE. LISA:
A LOT OF PEOPLE ARE TRYING TO DRAW PARALLELS BETWEEN THE
HUNTER BIDEN SITUATION IN THE LEGAL WOES OF FORMER PRESIDENT
TRUMP. SOME PEOPLE SAY THAT IS NOT
ANALOGOUS. REGARDLESS, THERE IS LEGAL
CONCERN AROUND THE CURRENT SITTING PRESIDENT THAT
OVERHANGS THAT CAMPAIGN. MANY PEOPLE IN THE DEMOCRATIC
PARTY ARE TALKING ABOUT POTENTIAL OTHER RUNNERS.
, HARRIS IS TRYING TO TAKE A MUCH MORE SIGNIFICANT ROLE IN
THE CAMPAIGN. WENDY: I THINK THERE IS A SIMMERING
WHISPER CAMPAIGN, NOT SO MUCH ABOUT HUNTER BIDEN BUT MORE
ABOUT THE PRESIDENTS AGE AND HIS ABILITY TO DO HIS JOB FOR
ANOTHER FOUR YEARS. THAT IS EXACTLY WHY HARRIS IS
TAKING SUCH A PROMINENT ROLE. SHE IS OUT AS THE ATTACK DOG.
SHE IS CAMPAIGNING HARD WHILE THE PRESIDENT TOOK A VACATION
ON THE BEACH LAST WEEK. HE IS BACK IN WASHINGTON THIS
WEEK AND IS BEGINNING TO TOUR THE COUNTRY ON CAMPAIGN SWINGS
TO PUSHES ECONOMIC IDEAS. HARRIS WILL BE A VERY ACTIVE VP
IN THIS CAMPAIGN AND I THINK IT IS BECAUSE THE POTENTIAL FOR
HER TO BE PRESIDENT IS GREATER THAN IT IS FOR OTHER VICE
PRESIDENTS. JONATHAN: IS THAT BASED ON AGE?
IS THAT THE WORRY? WENDY: MAYBE I'M JUST USING THE
INSURANCE ACTUARIAL TABLES. JOE BIDEN SEEMS IN PERFECT
HEALTH BUT HE WILL BE 81 OR 82 IF HE IS REELECTED.
WITH FOUR YEARS TO GO, PEOPLE ARE KEEPING AN EYE ON, LIE
HARRIS BECAUSE SHE WOULD BE COULD -- ON KAMALA HARRIS
BECAUSE SHE WOULD BECOME THE PRESIDENT. JONATHAN:
YOU THINK THAT IS AN ASSET FOR HIM ON THE CAMPAIGN TRAIL?
WENDY: IN SOME QUARTERS. YOUNGER VOTERS, MINORITY
VOTERS, THE MORE LIBERAL WINGS OF THE PARTY LIKE HARRIS.
THE MORE ESTABLISHED PEOPLE FIND HER LESS APPEALING.
SHE WAS NOT A GREAT CANDIDATE IN 2019 WHEN SHE RAN AGAINST
BIDEN. SHE SOMETIMES STUMBLES RHETORICALLY.
SHE HAS SOME ISSUES BUT SHE IS DEFINITELY AN ASSET WITH A
CERTAIN GROUP OF VOTERS WHO ARE NOT ENTHUSIASTIC ABOUT BIDEN.
JONATHAN: THE PHRASE I HEAR A LOT IS WORD
SALAD ASSOCIATED WITH THE VICE PRESIDENT. THANK YOU. WENDY BENJAMIN AND WASHINGTON,
D.C.. LISA: THERE WAS A NEW YORK TIMES
ARTICLE THAT TALKED ABOUT HOW PERSONALLY SHE TAKES IT AND SHE
HAS BEEN VERY DEFENSIVE AND A LOT OF HER SPEECHES BECAUSE OF
THE CRITICISM SHE HAS HAD. SHE IS TRYING TO CHANGE THAT.
A LOT OF PEOPLE SAY SHE DOES NOT BRING POPULARITY TO THE
CAMPAIGN. TOM: THAT WAS JUST -- LISA:
AM I WRONG? JONATHAN: THAT WAS PRETTY GOOD. LISA:
UH OH. JONATHAN: WE ARE OUT OF TIME. JONATHAN:
EQUITIES TRYING TO BOUNCE ON THE S&P 500.
BIGGEST WEEKLY LOSS GOING BACK TO MARCH ON THE S&P 500.
EQUITY MARKET UP .2%. THE NASDAQ POSITIVE .4%.
DOES THE YEAR, 10 YEAR, 30 YEAR. HIGHER ON THE YIELD SIDE OF
THINGS. COMING BACK ON FRIDAY FOLLOWING
PAYROLLS, A BIT OF A BOUNCE THIS MORNING. ON A TWO YEAR, 4.8331.
I WANT TO GET TO SOME BREAKING NEWS.
PLENTY OF FITS SPEAK GOING INTO CPI.
WE TALKED ABOUT GOVERNOR BOWMAN AND HER COMMENTS INDICATING
ADDITIONAL RATE INCREASES WILL LIKELY BE NEEDED TO GET
INFLATION DOWN TO THE FOMC 2% TARGET.
MORE DATA LATER THIS WEEK. CPI DUE ON THURSDAY.
PPI ON FRIDAY. I THOUGHT THIS WAS NOTABLE.
UKRAINE'S WAR WITH RUSSIA ENTERING A NEW PHASE. DRONES CRIPPLE A RUSSIAN NAVAL
VESSEL AND AN OIL TANKER. THE ATTACKS PUTTING AT RISK
RUSSIA'S COMMODITY EXPORTS VIA THE BLACK SEA.
A ROUTE THAT ACCOUNTS FOR MOST OF THE GRAIN.
10 TO 20% OF THE SALES ON MARKET. TOM:
I NAILED THIS WITH THE BLACK SEA FOCUS.
THERE IS NOTHING TO NAIL AT ALL. THE FOCUS HAS BEEN TO THE NORTH
NEAR BELARUS AND THE POLISH BORDER BUT SO MUCH OF THIS
TENSION IS WITH CRIMEA AND AROUND THE BLACK SEA WITH THE
GRAIN SHIPMENTS. IT IS MORE THAN JUST ABOUT
GRAIN. THIS IS ABOUT THE CULTURAL
NEXUS OVER WHERE ANCIENT RUSSIA MEETS WITH MODERN PUTIN.
JONATHAN: YOU'VE TALKED ABOUT THIS FROM
THE BEGINNING OF THIS CONFLICT. WHY IS THIS AT THE HEART OF HOW
THE WAR PROGRESSES? TOM: IS INTERNATIONAL SEE.
YOU GO TO ISTANBUL, YOU GO THROUGH THE STRAIGHT, YOU INTO
THE BLACK SEA. IS THAT INTERNATIONAL WATER OR
IS IT THE PLAYGROUND OF RUSSIA? THAT IS THE ANCIENT DEBATE.
JONATHAN: HERE IS THE BREAKING NEWS.
JEFF CURRIE LEAVING GOLDMAN SACHS. THE FACE OF THE FIRMS'S
COMMODITY RESEARCH TEAM FOR THREE DECADES.
PRETTY BOLD CALLS. ON HIS WAY OUT OF GOLDMAN.
AS I UNDERSTAND NO SIGN AS TO THE ULTIMATE DESTINATION.
HEADING TO THE EXIT. TOM: IT IS LIKE A DAILY TRIP OF
PEOPLE LEAVING GOLDMAN. WE CAN PAY HOMAGE TO JEFF
CURRIE , THE PARETO ECONOMIST FROM CHICAGO. HIS STYLE OF CALL.
OR IS THIS MORE ABOUT GOLDMAN SACHS WITH THE ANNOUNCEMENT
THEIR FAMILY OFFICE HAD LEFT FIVE DAYS AGO?
I THINK THE FAMILY OFFICE LEFT. I IMMEDIATELY SAY OMG IS JEFF
CURRIE GOING TO SIX STRAIGHT -- TO 6TH STREET?
WITH HIM EXITING THIS IS A HUGELY FLUID TIME FOR THIS
VENERABLE INSTITUTION. LISA: I DO NOT HAVE A SENSE OF WHAT
IS TRANSPIRING AND WHERE HE IS GOING OR WHAT THE CATALYST WAS.
TAKING A STEP BACK, THIS IS BEEN A HUGELY DIFFICULT TIME
FOR COMMODITIES ANALYST. I'M NOT TALKING ABOUT JEFF CURRIE.
A LOT OF PEOPLE CALLING FOR A SUPER CYCLE WITH A LACK OF
INVESTMENT IN FOSSIL FUELS. GRADUATES ARE SHIFTING AWAY
FROM THAT AS A CAREER. WE ARE LOOKING AT THE POTENTIAL
FOR NEW ENERGY THAT HAS NOT HAPPENED YET. JONATHAN: FOR THOSE REASONS I IMAGINE
JEFF CURRIE IS NOT DONE. THERE ARE CERTAIN PEOPLE AT
CERTAIN PLACES WHO ARE JUST THE FACE OF THE RESEARCH DIVISION.
JAN HATZIUS ON THE ECONOMIC SIDE IS THE FACE OF ECONOMICS
AT GOLDMAN SACHS. JEFF CURRIE IS THE FACE OF THE
COMMODITIES DESK AT GOLDMAN. HE REALLY IS IT. TOM:
THE COMMON THEME OF JAN HATZIUS, BILL DUDLEY.
STEVE ROACH AT MORGAN STANLEY. ALL OF THESE PEOPLE HAVE
BULLETPROOF ACADEMICS. THEY HAVE BEEN RIGHT, THEY HAVE
BEEN WRONG. THE ANSWER IS THEY HAVE
BULLETPROOF ACADEMICS. THE NUANCES HERE.
ED MORRIS AT CITIGROUP. FRANCISCO BLANCHE AT BANK OF
AMERICA, AND JEFF KERRY -- AND JEFF CURRIE.
THE THEME IS HUGE ACADEMICS. LISA:
HERE IS A QUOTE FROM A FORMER COLLEAGUE OF HIS.
"HE IS A LITTLE BIT OF A MAD SCIENTIST. THERE WAS NEVER A
TIME I COULD NOT GET A MEETING WITH THE CEO IF JEFF CURRIE WAS
WITH ME." JONATHAN: I REMEMBER BUMPING INTO EACH
OTHER AT HEATHROW. I'M LOOKING FORWARD TO SEEING
WHERE HE ENDS UP. HE WILL WANT TO TALK ABOUT THE
ISSUES LISA DESCRIBES. TOM: HE HELPED FINANCE A MOVIE ON
THE KINKS. MAYBE HE WAS TIRED OF WAITING.
TIRED OF WAITING FOR YOU. THAT'S WHAT HE SAID TO MR.
SULLIVAN. JONATHAN: YOU MADE THE POINT OF WHAT IS
HAPPENING AT GOLDMAN. A LOT OF PEOPLE LEAVING. TOM:
WE ARE TRYING TO BE DIPLOMATIC. FRANKLY, MAKING WAY LESS
HEADLINES THAN THE WOMAN THAT RAN FAMILY OFFICE LEAVING FIVE
OR SIX DAYS AGO IS PROBABLY A BIGGER DEAL.
WE WILL HAVE MUCH MORE FROM BLOOMBERG NEWS ON THIS THROUGH
THE DAY AS WERE REPORT ON JEFF CURRIE'S EXIT FROM GOLDMAN
SACHS. SUBADRA RAJAPPA JOINS US RIGHT
NOW, HEAD OF U.S. RATES STRATEGY.
WITH GREAT RESPECT FOR YOUR RESEARCH, WHAT HAS CHANGED,
WHAT IS NEW AS YOU GALLIVANTING INTO AUGUST? SUBADRA: WHAT HAS CHANGED IS THE
TRAJECTORY FOR THE DATA. THE EXPECTATION WAS THE SECOND
HALF YOU SHOULD START SEEING A SLOWDOWN IN THE DATA.
EMPLOYMENT SHOULD START TO MODERATE.
INFLATION IS MODERATING. THE ECONOMY HAS BEEN
EXTRAORDINARILY RESILIENT WITH VERY HIGH INTEREST RATES.
THAT IS WHAT IS THROWING EVERYBODY THROUGH A LOOP.
I WOULD SAY IT HAS BEEN A VERY FRUSTRATING YEAR FOR THE BOND
POOLS AS WELL AS THE BOND BEARS BECAUSE AT CERTAIN TIMES OF THE
WEEK WITH THE BULLS AND THE BEARS ARE RIGHT AND IT HAS BEEN
A TOUGH CALL IN THE MARKETS GIVEN THE FACT THE ECONOMY
SEEMS TO BE DOING WELL DESPITE HIGHER INTEREST RATES. TOM: WE HAVE A NEW RATE REGIME AND
THE THEME FOR THE MORNING'S MAYBE THERE IS A DEFLATIONARY
TINGE ON ASSET REPRICING. ARE YOU PRICING IN THE DYNAMICS
OF ASSETS DROPPING IN PRICE WITH A RATE STRATEGY OR ARE
THEY DISCRETE RIGHT NOW? SUBADRA:
ASSET PRICES ARE GOING TO HAVE TO DROP EVENTUALLY WITH HIGHER
INTEREST RATES, BUT YOU ARE SEEING A BOTTOMING OUT OF THE
HOUSING MARKET. YOU ARE SEEING SOME
IMPROVEMENTS IN THE RECENT DATA. IT FEELS LIKE THERE IS LITTLE
BIT OF AN ADJUSTMENT PROCESS GOING ON AS WE SPEAK TO HIGHER
INTEREST RATES. ASSET PRICES SEEM TO BE
ADJUSTING QUITE WELL. HOW LONG THAT LASTS IS LED TO
BE'S -- IS YET TO BE SEEN. AT THIS POINT IT FEELS LIKE A
PERSISTENCE OF HIGHER YIELDS IS WHAT THE MARKET NEEDS FOR THE
READJUSTMENT OF ASSET PRICES. LISA:
WE WERE SPEAKING WITH CAMERON DAWSON EARLY THIS MORNING AND
SHE SAID THERE SEEMS TO BE A FEELING WE ARE FACING A SEA
CHANGE WHERE SUDDENLY THE FISCAL BACKDROP DOES PUSH
LONGER-TERM YIELDS HIGHER IN A MORE MATERIAL WAY AND IT SEEMS
STICKIER. SUBADRA: THE FISCAL BACKDROP HAS TO BE
WITHIN THE BROADER CONTEXT OF THE ECONOMIC BACKDROP.
THE ECONOMIC BACKDROP IS NOT AS STRONG AS IT IS RIGHT NOW.
THEN YOU SEE PEOPLE DISCOUNT THE FISCAL BACKDROP AND START
BUYING BONDS REGARDLESS OF HOW MUCH IS BEING ISSUED.
THIS TIME IT IS DIFFERENT RELATIVE TO WHAT WE SAW IN 2011
WITH THE S&P DOWNGRADED, THE U.S. SOVEREIGN.
IN THE BIG SCHEME OF THINGS WE ARE RESERVE CURRENCY AND WE ARE
GOING TO SEE DEMAND FOR TREASURIES.
TO ME THE BROADER ECONOMIC BACKDROP IS KEY.
WHAT HIGHER DEBT AND DEFICITS MEAN IS IT IS MORE OF AN
ACCELERANT TO HIGHER YIELDS. IF YIELDS ARE HEADING HIGHER
YOU WILL SEE A PUSH HIGHER IN YIELDS AS WELL AS VOLATILITY IN
BONDS AS WE PROGRESS HIGHER IN YIELDS. LISA:
GIVEN WHERE YOUR EAR CAN ON THE OUTLOOK IS, HOW MUCH -- WHERE
YOUR ECONOMIC OUTLOOK IS, HOW MUCH YOU PUSH BACK IN THE RISE
IN YIELDS AND BY HIGHER TERM BONDS? SUBADRA:
THAT HAS BEEN A FRUSTRATING TRADE FOR US. EARLIER IN THE YEAR WE SAID GO
ALONG BONDS. NOW WE ARE WAITING FOR
SOMETHING ELSE TO BREAK SO THAT BONDS WOULD BE ATTRACTIVE FOR
INVESTORS. THAT IS NOT HAPPENING YET.
THE THINGS I AM WATCHING WHERE I AM AT HIS INFLATION
EXPECTATIONS. YOU'VE SEEN THE FIVE-YEAR
FORWARD BREAK EVEN RISE MEANINGFULLY OVER THE LAST
COUPLE OF WEEKS OR EVEN BEFORE THAT. THEN YOU HAVE HIGHER REAL
YIELDS OVER THE PAST WEEK. HIGHER REAL YIELDS AND HIGHER
INFLATION EXPECTATIONS GENERALLY PROCEED THE MARKET
PRICING MORE HIKES. I AM LOOKING TO SEAT WHAT THE
MARKET IS PRICING GOING FORWARD GIVEN THE SHARP RISE IN
INFLATION EXPECTATIONS. JONATHAN:
WONDERFUL TO GET AN UPDATE FROM YOU.
SUBADRA RAJAPPA WITH AN UPDATE ON THIS BOND MARKET.
THE 10 YEAR YIELD ENDED THE WEEK HIGHER BY JUST EIGHT BASIS
POINTS. AFTER THOSE MOVES ACROSS MONDAY
THROUGH THURSDAY WE HAVE A MASSIVE RALLY ON FRIDAY TO
CLOSE OUT THE WEEK ON THE BACK OF THE PAYROLLS REPORT. LISA:
THE PAYROLLS REPORT WAS THERE WHENEVER YOU WANTED TO MAKE OF
IT. IT HAD A STORY TO EXPLAIN ANYTHING.
TODAY WE ARE RESTARTING THAT WHICH TO ME IS IMPORTANT TO
NOTE THAT WE ARE RESTARTING THE SELLOFF AND MOST PEOPLE ARE
SAYING WE ARE ALL PAINT LITTLE BIT CLOSER ATTENTION TO THIS.
JONATHAN: THE CAPITULATION CONTINUES ON
WALL STREET. RECESSION CALLS ARE DROPPING
LIKE FLIES. THE WEEK BEFORE, CHAIRMAN
POWELL TELLING US ALL THE FED STAFF HAVE DROPPED THEIR
RECESSION CALL. A SERIES OF UPGRADES ON THE
EQUITY MARKET. CITIGROUP HAD A BIG UPGRADE.
THIS FROM MICHAEL PURVES. 4300 IS THE NEW PRICE TARGET.
THAT IS FROM 3650 ON THE S&P. TOM:
HE SYNTHESIZES THE GLOBAL DATA INTO A DOMESTIC CALL.
IT IS NOT JUST ABOUT EARNINGS WITH MICHAEL PURVES.
WHAT IS IMPORTANT IS NOT THE SINGLE NUMBER BUT THE VECTOR. LISA:
IF YOU LOOK AT THE REVISION, 3650, THAT IS PRETTY LOW.
THIS IS PEOPLE REASSESSING TO A RECESSION THAT NEVER HAPPENED.
JONATHAN: I CANNOT -- TOM: I CANNOT EMPHASIZE ENOUGH HOW
THE CALENDAR IS CHANGING IT IN AUGUST WE ARE HAVING OCTOBER
FEELINGS. THERE IS A BODY OF WALL STREET
THAT IS MASSIVELY BEHIND THIS. IT IS NOT LIKE THEY ARE IN A
MEETING SAINT LET'S BY THE EQUITY FUND.
THEY ARE NOT DOING THAT. AT THE MARGIN THEY HAVE TO BE
BUYERS OF SHARES. JONATHAN: MIKE WILSON OF MORGAN STANLEY
COMING UP SHORTLY. EQUITY FUTURES POSITIVE .26%.
THAT CONVERSATION WITH MIKE WILSON JUST ABOUT 18 MINUTES
AWAY. THE JEEP EQUITY STRATEGIST AT
MORGAN STANLEY PUT OUT A NOTE BASICALLY A TRIPPING MUCH OF
THE MOVE THIS YEAR AND MAYBE THE PUSHING OUT OF RECESSION
CALLS ON FISCAL POLICY. LISA: THIS WAS THE MOST INTERESTING
THING TO READ. PEOPLE WILL SAY MIKE WILSON,
HOW CAN HE SAY ANYTHING? THE REASONING IS THE MOST
INTERESTING. THE IDEA THAT NEVER IN THE
HISTORY OF THIS COUNTRY HAVE THE INCREASED FISCAL SPENDING
AT A TIME THE UNEMPLOYMENT RATE WAS THE SLOPE AND SING THE DEBT
INCREASE. THIS IS A GAME CHANGER.
HOW DOES HE PARLAY THAT INTO THE VALUATION CALL.
THE MULTIPLE CALL. TOM: I GO FURTHER AND SAY THIS IS
NOT PANDEMIC STIMULUS, THIS IS INFRASTRUCTURE STIMULUS.
REPUBLICANS WOULD SAY IT A STEALTH STIMULUS OF FUNDING.
I DO NOT BELITTLE THE CALL. I THINK MIKE WILSON IS ONTO
SOMETHING AND SOME PORTION OF OUR BUOYANCY THAT SOME FEEL IS
BASED ON WASHINGTON. JONATHAN: HE HAS A GREAT CHART IN THAT
RESEARCH. IT IS THE DEFICIT TO GDP.
ON THE LEFT SIDE IS UNEMPLOYMENT DOWN AT THE
BOTTOM, AND WE ARE OFF THE BOTTOM TO THE LEFT.
YOU DON'T SEE A DEFICIT THIS LARGE WITH UNEMPLOYMENT THE
SLOPE. TOM: I AM GETTING MASSIVE EMAILS ON
THE KINKS. IT REALLY GOT ME. I WENT THROUGH TWO COPIES OF >> YOU'RE NOT SEEING THAT TRADE
BETWEEN TECH AND RATES THE WAY YOU DID LAST YEAR.
TECH HAS COME THROUGH WITH GOOD EARNINGS EVEN AT HIGHER RATES.
THEY HAVE SO MUCH CASH THEY ARE EARNING MONEY ON SOME OF THAT
CASH. THE IDEA TECH WILL BE IN TROUBLE BECAUSE RATES ARE GOING
HIGHER IS DIFFICULT ON THE TECH SIDE TO SEE. JONATHAN:
SARAH HUNT, CHIEF MARKET STRATEGIST ON TECH EARNINGS.
TECH EARNINGS DISAPPOINTING FOR APPLE LAST WEEK.
THE BIGGEST ONE-DAY DROP OF THE YEAR FOR APPLE.
THE STOCK IS -4.8%. IT WAS DOWN THURSDAY,
WEDNESDAY, TUESDAY. I KNOW YOU HAVE SOMETHING TO
SAY. APPLE POSITIVE IN THE PREMARKET. TOM:
THIS IS NOT GOSPEL BUT ADULTS LOOK AT STANDARD DEVIATION
MOVES INTO YOU ARE CORRECT POINT APPLE HAD A SOLID TWO
STANDARD DEVIATION MOVE TO A LOWER PRICE UNLIKE SOME OF THE
SUCCESS STORIES LAST WEEK. IT IS NOT LIKE IT IS A
TECHNICAL BREAKDOWN. I THOUGHT SARAH HUNT WAS ON
FIRE. JONATHAN: DAN IVES OF WEDBUSH STILL
BULLISH ON THE STOCK. RAISING THE PRICE TARGET TO
$230. "IPHONES AND SERVICES WILL ACCELERATE IN THE JUNE QUARTER.
WHEN EXCLUDING FX AND FOCUSING ON IPHONES AND SERVICES THIS
WAS A STRONG PERFORMANCE AND GUIDES US IN OUR VIEW.
WE WOULD BE STRONG BUYERS ON ANY WEAKNESS." TOM: JOINING US IS DAN IVES IN AMSTERDAM WHO
JOINS US BY PHONE. DOES APPLE SELL IN AMSTERDAM
LIKE IT SALES IN NEW YORK AND CHICAGO AND L.A.? DAN: THEY DO. APPLE HAS ALWAYS HAD A PRESENCE
NOT JUST IN AMSTERDAM BUT ACROSS EUROPE. I FOCUS ON IPHONES, SERVICES,
CHINA, GROSS MARGIN. THAT WAS ALL
BETTER-THAN-EXPECTED. TOM:
THEY WANT TO GO AFTER EUROPE, THEY WANT TO GO AFTER MICROSOFT.
LET'S SAY THERE ANTI-TECHNOLOGY. THAT IS THE POLITICAL ELITES. ARE THE PEOPLE OF AMSTERDAM,
BERLIN, ARE THEY ANTI-APPLE OR ANTI-GOOGLE OR ANTI-TECHNOLOGY?
DAN: THEY ARE NOT ANTI-APPLE. THEY ARE PRO-APPLE.
I THINK INVESTORS ARE PRO-APPLE. WHEN IT COMES TO THE EU, THAT
IS ANOTHER SITUATION. IT COMES DOWN TO FINES FOR BIG
TECH COMPANIES LIKE APPLE AND GOOGLE.
AT THIS POINT THAT IS LIKE DRINKING A CUP OF COFFEE.
JONATHAN: OVER THE WEEKEND SOMEONE AT
BARRON'S SAID SOMETHING LIKE IPHONE ZERO GROWTH.
WE HAVE HAD THREE QUARTERS OF THAT.
THE STOCKS TRADING AT 30 TIMES EARNINGS AND UP 40% YEAR TO
DATE. WHAT IS THE ARGUMENT THAT THIS
IS A GROWTH STOCK? DAN: FIRST YOU HAVE FX HEADWIND.
FROM A CURRENCY PERSPECTIVE WHERE THEY ARE GROWING, THEN YOU LOOK AT WHAT GOES INTO THE
IPHONE -- YOU HAVE 25% OF THE INSTALL BASE HAS NOT UPGRADED
IN FOUR YEARS. EVEN THOUGH THEY'VE GONE
THROUGH CONSERVATIVE GROWTH, THAT WILL START TO BE HIGH
SINGLE DIGIT OR DOUBLE DIGITS AND AT THE SAME TIME SERVICES,
THAT IS THE KEY. NOW THEY ARE STARTING TO WATCH
DOUBLE-DIGIT SERVICES. THAT IS THE PERFECT STORM OF
I.T. GOING 2024. JONATHAN:
PART OF YOUR BULLISH THESIS HAS BEEN THIS BASE THAT IS NOT
UPGRADED THEIR PHONE. AT SOME POINT AS THE BASE GET
BIG ENOUGH THAT THAT IS NOT A BULLISH THESIS THAT THEY ARE
JUST SITTING THERE AND THEY'RE NOT UPGRADING.
YOU START TO CHANGE THEIR MIND -- YOUR MIND ABOUT WHY THEY ARE
NOT UPGRADING? DAN: IT IS A GREAT QUESTION.
THEY ARE ADDING IPHONES. THEY HAVE ADDED 150 MILLION
IPHONE USERS THE LAST 18 MONTHS. WHAT IS STARTED HAPPENING IS
THAT IS 1.2 MILLION WHICH AT ONE POINT WAS BELOW ONE BILLION.
WHAT STARTED HAPPENING IS THEY ARE GETTING MORE SHARE IN CHINA.
THEY GAINED 300 BIBS MARKET SHARE IN CHINA DESPITE THE
GEOPOLITICAL. YOU WILL SEE THE BEARS COME OUT
ON APPLE, ESPECIALLY THE LAST WEEK.
I BELIEVE THIS IS JUST A PAUSE. SELLING APPLE INTO THE IPHONE
15 CYCLE IS LIKE LEAVING THE SUPER BOWL HALFTIME. LISA:
I LOVE IPHONE ZERO. I AM STILL THINKING ABOUT THAT.
ARE YOU THINKING ABOUT GETTING AN IPHONE 15?
NO, ZERO, ZERO GROWTH. THAT IS WHAT BARRON'S WAS GOING
AFTER THEM FOR. THERE IS A QUESTION WHAT YOU DO
WITH THE STOCK AT A TIME PEOPLE ARE SPECULATING THERE IS NOT A
LOT OF GROWTH IN THE SMARTPHONE INDUSTRY. NOTHING AGAINST APPLE.
IN GENERAL THERE HAS BEEN A SLOW DOWN.
AT WHAT POINT CAN YOU BE BULLISH ON APPLE SHARES IF YOU
CONTINUE TO SEE LONGER-TERM RATES CREEP HIGHER OR YOU SEE
THE VALUATION PROPOSITION CHALLENGED ON A MORE MACRO
FRONT? DAN: EXCELLENT POINT. THE GROSS MARGIN STORY.
HIGHEST GROSS MARGINS EVER. WHAT WE HAVE SEEN ON THE CHIP
AND THE INNOVATION AND MARGINS, THAT WILL GO HIGHER.
THAT IS JUST HIGHER FROM A MARKET PERSPECTIVE. SERVICES IS WORTH 1.3 TO 1.4
TRILLION. EVEN THOUGH WE HAVE THIS FROM A
MULTIPLE HEADWIND PERSPECTIVE IT STARTS TO ABATE IT I THINK
SERVICE IS THE KEY TO HOW THIS RERATE'S HIGHER ALONG WITH THE
IPHONE 15 CYCLE I THINK IT WILL BE MASSIVE. LISA:
THIS SPEAKS TO THE QUESTION AROUND WHAT THE CONTENT WILL BE
THAT FEEDS SOME OF THEIR SERVICES.
THIS IDEA THAT LIONEL MESSI WAS NAMED CHECKED ON THE CALL IS
ONE OF THE REASONS THEY HAVE SEEN AN INCREASE IN SUBSCRIBERS.
WHAT WILL THEY USE WITH THAT CASH PILE TO ACQUIRE MORE
CONTENT? ARE THEY GOING TO BUY A LONDON
FOOTBALL TEAM? DAN: I THINK YOU HAVE SEEN IT A BIT
IN TERMS OF SOME OF THE THINGS THEY HAVE TALKED ABOUT.
THEY WILL CONTINUE TO EXPAND APPLE TV.
THEY WILL GO AFTER MORE RIGHTS. THE BIG THING WILL BE AI.
ULTIMATELY THEY WILL FURTHER BUILD OUT AI. THAT WILL BE THE NEXT WAVE OF
GROWTH AND BE FURTHER MONETIZED WITH AN UNPARALLELED INSTALL
BASE IN CUPERTINO. JONATHAN:
MESSI MAKING IT LOOK LIKE CHILD'S PLAY OVER THE WEEKEND.
I SAW SOMEONE TWEET IT IS LIKE EASY MODE FOR MESSI IN THE MLS.
A DIFFERENT STANDARD. THANK YOU DAN IVES FROM WEDBUSH.
WE HAVE PLAYED THIS GAME SO MANY TIMES.
HE IS DEAD, NEW PHONE COMES OUT, AND BOOM.
THE TREND HAS NOT BEEN FAVORABLE FOR THIS STOCK.
ULTIMATELY THE STOCK HAS PERFORMED TREMENDOUSLY WELL.
THE ARGUMENT PEOPLE MADE IS MAYBE IT DOES GET THE HIGHER
MULTIPLE BECAUSE YOU MAKE THE SWITCH FROM HARDWARE TO
SERVICES. ON THAT FRONT WE ARE SEEING
THAT DEVELOPMENT TAKE PLACE BASED ON THE NUMBERS WE SAW
OVERNIGHT THURSDAY INTO FRIDAY. TOM:
GET OUT THE CALENDAR AS WELL. THE ANSWER IS OFF OF THE
EARNINGS ANNOUNCEMENT HOW CLOSE ARE WE TO ANOTHER SIX PHONE
CALL BOND OFFERING? WHY NOT? JONATHAN: AT THESE RATES? TOM:
I THINK THEY ARE OBLIVIOUS TO THE RATES. LISA:
HAVE YOU GOTTEN A NEW PHONE RECENTLY AND YOU HAVE TO
TRANSLATE ALL OF THE DATA AND ALL OF THE CONTACTS YOU HAVE TO
RESET ALL OF YOUR PASSWORDS AND YOU HAVE TO DO ALL THAT.
I THINK THERE IS A FRICTION, NATURAL FRICTION. JONATHAN:
THEY MAKE IT PRETTY EASY, DON'T THEY? YOU HAVE AN IPHONE? LISA: I HAVE AN IPHONE.
IT IS PRETTY OLD. JONATHAN: THEY MAKE IT PRETTY EASY.
IVAN IPHONE. I KNOW WHAT YOU ARE SAYING.
IT USED TO BE. NOT ANYMORE. IT IS PRETTY STRAIGHTFORWARD TO
UPGRADE THE PHONE. TOM: -- LISA:
WHY WOULD SOMEONE GET A NEW PHONE? THE CAMERA? JONATHAN: YOU WANT A BETTER BATTERY,
FASTER. LISA: WHAT ABOUT A PERSON LIKE YOU?
JONATHAN: IT WOULD BE A PRETTY REVOLUTIONARY CHANGE TO GET ME
TO CHANGE. IT WAS ON THE WAY HOME FROM
WORK AND I SAID THEY MADE IT SO WELL AND IT LASTS SO LONG.
MEMBER WHAT YOU HAD A CHOICE OF PHONES AND WAS NOT JUST SAMSUNG
AND IPHONE AND YOU HAD TO MAKE A DECISION.
SONY USED HAVE A PHONE. SHARP. THEY USED TO BREAK ALL THE TIME.
TOM: AND THEY DON'T NOW. I WOULD LOOK AT MY ONE VARIABLE
IS THE TRADE-IN VALUE OF ALL THE STUFF WE HAVE. >> THIS DEEPENING TREND OF THE
YIELD CURVE IS ANTICIPATING FED RATE CUTS. >> IT IS HARD FOR ME TO BELIEVE
THE FED WILL CUT. >> WE ARE STARTING TO SEE SOME
OF THE FISCAL SUPPORT OVER THE PAST FEW YEARS. >> BREAKING DOES THE FED
TOLERATE? >>
THIS IS BLOOMBERG SURVEILLANCE WITH TOM KEENE, JONATHAN FERRO
AND LISA , ABRAMOWITZ. TOM: GOOD MORNING, EVERYONE. DEEP INTO THE SUMMER DAYS OF
AUGUST. LOTS TO TALK ABOUT. WE ARE NOT WAITING FOR GOOD A --
GADOT. JONATHAN: AUGUST 10 IS CPI.
THEN SEPTEMBER 13 AND THEN THE FED DECISION ON SEPTEMBER 20TH.
YOU MAY NOT HEAR FROM CHAIRMAN POWELL AT JACKSON HOLE UNTIL
THE 20TH. YOU HAVE SEEN PAYROLLS DECENT,
JOB OPENINGS COME DOWN. YOU ARE MAKING PROGRESS AT THE
MOMENT THE INFLATIONARY DATA AND UNEMPLOYMENT REPORT, YOU
LOOK AT LABOR MARKET THAT STILL LOOKS HOT TO ME AND UNLIMITED
AT 3.5%. THERE ARE TWO PHASES TO THIS,
PHASE ONE IS HIKE AND PHASE TWO IS OLD.
EVEN THOSE ON THE COMMITTEE ARE NOT TALKING ABOUT CUTS THEY
WANT TO JUST BE DONE WITH HIKES AND SIT AND WAIT FOR INFLATION
TO COME BACK DOWN. TOM: THE MOST IMPORTANT THING FOR ME
BESIDES THE JEFF CURRY NEWS LEAVING, THE REAL NEWS IS THE
GERMAN 30 YEAR YIELD BACK TO 2014 HIM INTERNATIONALLY IN
FINANCE, WE ARE GETTING USED TO A NEW HIRE RATE REGIME.
THAT IS WHAT IS NEW. JONATHAN: LET'S TAKE A 10 YEAR YOU. -- 10 YEAR VIEW.
THE ECB ANCHORS AWAY. THE BOJ STARTING TO SEE THE
SAME THING DEVELOP. IS THIS A NEW FLOOR FOR THE
GLOBAL BOND MARKET AND YIELDS? CAN YIELDS GO UP HIGHER FROM
HERE OR ULTIMATELY CAN FALL SO FAR. TOM:
I WOULD SUGGEST THAT THE LARGER COMPANIES WE HAVE TALKED ABOUT,
IN PARTICULARLY DAN IVES, LIFE GOES ON AT THESE RATES.
I DON'T UNDERSTAND IF WE SEE A BREAK OUT IN THE 30 YEAR
MORTGAGE IN AMERICA 7.38%. CAN WE START TO FRAME AN 8%
MORTGAGE? WHY DOES THAT CHANGE THE
DIALOGUE. LISA: THERE IS A BIGGER QUESTION AS
PEOPLE SHIFT FROM THE IDEA THAT WE ARE GOING TO GO BACK TO
LOWER LONG-TERM RATES AND WHERE IS THE DEBT RECKONING WE WERE
SUPPOSED TO EXPERIENCE WHEN THE FED AND ECB RAISED RATES?
WAS THAT JUST TAKEN OFF THE TABLE REALLY DEFERRED UNTIL
NOW, UNTIL THE TIME WHEN PEOPLE START TO THINK ABOUT WE DO HAVE
DEBT, FISCAL SPENDING AND SUDDENLY MONEY COSTS SOMETHING
IN A MATERIAL WAY? THE INFLATION PICTURE IS NOT
GOING BACK TO WHAT IT USED TO BE.
THAT RAISES QUESTIONS LONG-TERM FOR A LOT OF MARKETS. TOM:
LET'S BEGIN THE DATA. I AM LOOKING AT THE
INFLATION-ADJUSTED 10 YEAR YIELD, ONE POINT 71%, LOWER
THAN 1.80, BUT MORE RESTRICTIVE AND HIGHER THAN IT WAS TWO OR
THREE WEEKS AGO AT 1.50. JONATHAN:
NOMINAL YIELD COME UP BY SIX BASIS POINTS.
WE ARE ON A FOUR DATE LOSING STREAK WITH THE S&P 500. THE BIGGEST WEEKLY LOSS GOING
BACK TO MARCH FOR THE S&P 500. TOM: IT IS AS SIMPLE AS THAT. THE VIX 17.12 OUT ABOVE THE
COMB ON THE 12 STATISTIC SEEN. -- OUT ABOVE ON THE 12
STATISTIC SCENE. YOU GO OVER A NEW STUDY
YELLEN'S NOTES, DESCRIBE FISCAL TIGHTENING AND WHAT IT MEANS
FOR THE STANDARD & POOR'S 500. MIKE:
I DON'T THINK WE HAVE HIT A WALL COMPLETELY BUT I THINK IT
IS FAIR TO SAY WHAT WE HAVE EXPERIENCED OVER THE LAST FEW
MONTHS CAUGHT PEOPLE OFF GUARD, INCLUDING OURSELVES AND HAS
REALLY KEPT THE ECONOMY GOING AND WAIT MOST PEOPLE WERE NOT
PROJECTING. THAT HAS LED PEOPLE TO BELIEVE
THIS WILL CONTINUE. THERE HAS BEEN A CONFLUENCE OF
EVENTS AS TO WHY RATES HAVE RISEN. I WOULDN'T BLAME IT ON
THE DOWNGRADE BUT THE BIGGEST IS SUPPLY AND DEMAND. WE HAVE AN ENORMOUS AMOUNT OF
SUPPLY WHEN PERHAPS SOME OF THE NATURAL BUYERS ARE NOT THERE
ANYMORE, PERHAPS THE BAKING SYSTEM, TREASURIES AND THE BAKE
OF JAPAN CHANGE -- BANK OF JAPAN'S CHANGE.
STOCKS WERE ALREADY EXPENSIVE. THE RECOVERY WE HAVE HAD SINCE
COVID HAS BEEN FUNDED BY THE GOVERNMENT, FOR THE MOST PART.
ANOTHER COST OF CAPITAL IS GOING UP.
THAT HAS TO HAVE SOME SORT OF A KNOCKDOWN EFFECT IN VALUATION.
IF WE WERE TRADING AT A LOWER EVALUATION -- VALUATION, I
WOULDN'T BE SO CONCERNED ABOUT THE GROWTH OUTLOOK.
THAT IS WHAT YOU HAVE A REAL ISSUE. IT IS A HARDER GAME. THAT IS WHAT MOST CLIENTS ARE
HAVING TROUBLE WITH. TOM: IF WE GET A FISCAL TIGHTENING
AND WHATEVER YOUR MATRICES -- MATRIX IS AND FOLDED IN
ECONOMICS, DOES IT LEAD TO A MORE AGGREGATE SUMMED INDEX OR
IS IT WORKS SECTORS AND SELECTIVE STOCKS INCLUDING THE
GLORIOUS EIGHT STOCKS, THEY DO GREAT WHILE EVERYBODY ELSE
STRUGGLES? MIKE: THAT HAS BEEN THE BET THAT HAS
WORKED SO FAR AND NO THOSE SEEM TO BE TIRING. THIS EARNINGS SEASON, EVEN WITH
PUTTING UP GOOD NUMBERS IT HAS FADED BECAUSE THE MARKET
ANTICIPATED THIS STRONGER ECONOMIC BOUNCE THIS YEAR AND
EARNINGS NOT BEING AS BAD AS PEOPLE WERE THINKING. I THINK FOR THIS RALLY TO
CONTINUE AT HAS TO HAPPEN INTERNALLY.
WE NEED TO SEE A ROTATION INTO SOME OF THE OUTLYING AREAS.
WE ARE NOT CONVINCED YET. WE ARE OPEN-MINDED.
THAT WOULD BE THE NEXT PHASE OF THE BULL MARKET, YOU HAVE TO
BUY LAGGARDS AND CAN'T KEEP CHASING THE MAGNIFICENT SEVEN
AND FORGET ABOUT EVERYTHING ELSE. LISA: WHAT ABOUT KAREN DOS WAS --
CAMERON DOSS WAS TALKING ABOUT. IT TURNS OUT THAT THERE IS
ANOTHER ALTERNATIVE. MULTIPLES LOOK HIGH.
WHAT ARE YOU GOING TO DO GO INTO BONDS THAT ARE LOSING
VALUE AT THIS POINT? HOW MUCH DO YOU BUY THAT TYPE
OF ARGUMENT? MIKE: WE DON'T BUY IT BECAUSE OUR
VIEW IS THAT INFLATION IS COMING DOWN MUCH MORE RAPIDLY
FROM A COMPANY LEVEL THAN IN THE GOVERNMENT STATISTICS. WE HAVE GOVERNMENT STATISTICS
REPORTING INFLATION STILL AT 3% TO 4% SO THE FED WILL HOLD OR
MAYBE EVEN RAISE MORE YET WHAT COMPANIES ARE SEEING IN THEIR
BUSINESSES IS DETERIORATION. WE HAVE NEGATIVE IN THE GOODS
SECTOR. EXPORT PRICING, IMPORT PRICING,
THE OPPOSITE OF 2021. IN THE BACK HALF OF 2021,
COMPANIES WERE GETTING 50% TO 20% PRICE AND THE FED WAS ON
HOLD BECAUSE THEY ARE SAYING WE ARE NOT SURE IT WILL BE
PERMANENT. NOW YOU HAVE THE OPPOSITE.
INTEREST RATES ARE BEING HELD HIGH AT A TIME WHEN COMPANY
EARNINGS FOR THE MAJORITY OF COMPANIES IS INTERROGATING AND
SALES GROWTH NOT GROWING. IF WE ARE RIGHT ON THE PRICING
DYNAMIC, THAT WILL BE SOMETHING THAT CATCHES FOLKS OFF GUARD.
MAKE SURE YOU GO TO LAGGARDS WITH A GOOD BALANCE SHEET AND
MARGIN STRUCTURES. JUST DIFFERENT QUALITY NAMES.
LISA: IF INFLATION IS GOING TO COME
DOWN AND COME DOWN RAPIDLY, WHITE WOODEN THAT FAVOR A FED
RATE CUT THAT COULD TURBOCHARGE SOME OF THE TRADE INTO BIG TECH?
MIKE: THE FED KNOWS THEY MADE A
MISTAKE AND THEY SAID IT. THEY SAID NO THEY WERE LATE ON
THE TRANSITORY CALL. WHY WOULD THEY CUT RATES IF WE
HAVE FULL EMPLOYMENT? THERE IS NO REASON TO DO THAT.
UNEMPLOYMENT IS 3.5%. INFLATION NORTH OF 3%, NOT NEAR
THE GOAL. JUST HOLD. I'M NOT MAKING THE CASE TO
RAISE RATES I THINK THEY WILL WANT TO SEE THE WHITES OF THE
EYES. I DON'T KNOW WHAT THEY ARE GOING TO DO BUT MY PRUDENCE
WOULD SAY THAT IS WHAT THEY SHOULD DO.
THEY SHOULD PAUSE AND SEE WHAT HAPPENS AND NOT TRY TO
ANTICIPATE TOO MUCH. JONATHAN: CAN WE FINISH WITH YOUR
POST-PANDEMIC FRAMEWORK? IT WAS HOT AND SHORT.
IT WOULD BE HOT THAN ULTIMATELY SHORT FROM WHAT WE HAVE SEEN
PREVIOUSLY. YOU HAVE THE EQUITY MARKET CALL
FROM THE PANDEMIC DEBT ON. DOES THAT LEAD YOU TO QUESTION
THE SHORT PART? THINK THAT IS WHERE THE
CONVERSATION IS SHIFTING OVER THE PAST COUPLE OF WEEKS. MIKE: AS YOU REMEMBER BACK IN
JANUARY, I WAS CONCERNED THAT EVERYBODY WAS TO BEARISH,
INCLUDING OURSELVES, AND THAT APPEARED TO BE I SHOULD HAVE
FOLLOWED MY INSTINCTS. NOW I THINK THE FACT THAT
EVERYBODY IS SAYING THE RECESSION RISK IS ELIMINATED
FOR THE MOST PART, INCLUDING THE FED. THEY BACKED OFF.
I DON'T THINK WE NEED A FULL-BLOWN RECESSION BUT I AM
CONVINCED GROWTH IS SLOWING. THE ARE IN A DOWN CYCLE.
WHETHER IT NEEDS TO A FLOW -- FULL-BLOWN LABOR CYCLE, MANY
HAVE PUSHED DOWN FOR 2024. IT IS A FOUR-YEAR CYCLE AS
OPPOSED TO A THREE-YEAR CYCLE. THAT IS POSSIBLE.
I LIKE OUR BOOM BUST SHORT CYCLE BECAUSE I SEE THE DATA
SUPPORTING THAT. PART OF OUR NOTE OVER THE
WEEKEND AND YOU CAN APPRECIATE THIS, WE MISSED THIS FISCAL
IMPULSE. WE THOUGHT THE FISCAL IMPULSE
WOULD COME AT A TIME WHEN THEY NEEDED IT.
THEY ARE DOING 8% BUDGET DEFICIT SPENDING WHEN YOU HAVE
3.5% UNEMPLOYMENT. THAT IS UNPRECEDENTED.
WHAT IS GOING TO HAPPEN IF WE GET SLOWDOWN NEXT YEAR, I THINK
THIS BOOM BUST PIECES IS CORRECT AND MAY BEAT THE MARKET
IS LOOKING THROUGH TO THE OTHER SIDE.
THAT IS A RISKY PROPOSITION GIVEN WHERE VALUATIONS ARE.
WE DIDN'T STICK WITH IT LONG ENOUGH THAT I THINK IN THIS
STAGE YOU NEED TO BE VERY SELECTIVE FOR SOME SORT OF
RETRACEMENT. JONATHAN: WONDERFUL TO GET YOUR THOUGHTS
AND UPDATE FROM THE TEAM OVER AT MORGAN STANLEY.
MIKE LISTEN THERE OF MORGAN STANLEY. JUST TUNING IN, WELCOME TO THE
PROGRAM. EQUITY MARKETS POSITIVE BY
POINT 25%. WE WILL TALK ABOUT THE ECONOMY
AND LOOKING AHEAD TO CPI AND PPI DATA.
THAT WAS IN THE RESEARCH FROM MORGAN STANLEY OVER THE WEEKEND
AND MIKE OLSON POINTING OUT -- WILSON POINTING OUT THE FACT
THAT THE BUDGET DEFICIT IS AS LARGE AS IT IS AT A TIME WHEN
UNEMPLOYMENT IS STILL AT 3.5% IS PRETTY REMARKABLE STUFF.
LISA: WHAT HE IS SAYING IS IF WE GET
WEAKNESS, WHERE WILL THE APPETITE BE TO INCREASE
SPENDING TO COUNTERACT THAT POTENTIAL WEAKNESS? IF WE DO GO INTO RECESSION,
WHAT WILL THE COUNTERBALANCE IN THE FISCAL TERMS BE?
YOU WILL HAVE MONETARY POLICY AND RATES COMING IN BUT NOT
SINCERELY SOME SPENDING PACKAGE. IT IS A SALIENT POINT BUT
HIGHLIGHTS THE DEGREE OF UNCERTAINTY IN TERMS OF SOME
PEOPLE SAY IT IS A BACKWARD LOOKING INSTRUMENT. JONATHAN: A TROOP SOFT LANDING WITH
INFLATION SLOWER AND SOME ECONOMISTS AND FED POLICIES --
ANALYSTS SEE THIS AS A LIKELY SCENARIO. OR ON THAT LATER.
FROM NEW YORK, GOOD MORNING. >> REVIEW MONTHS WE MAKE SURE
WE PUBLISH AN UPDATE ON OUR TARGET.
MODELS ARE DETERIORATING. THEY WERE IMPROVING IN MAY.
THE APPEAL OF STOCKS RELATIVE TO BONDS IS SITTING.
THIS FEELS LIKE THE EVERYTHING HAS BEEN DESERVED IN WHAT WE
HAVE DONE SO FAR BUT IT FEELS LIKE THE MARKET SEEMS TO PAUSE
AND HAVE A MOMENT OF DIGESTION AND CATCH IT BREATH. JONATHAN:
THE MESSAGE FROM THE HEAD OF U.S. EQUITY STRESS SHOULD --
STRATEGY. EQUITY IS POSITIVE BY 0.3% ON
THE S&P 500. THERE WAS A LIFT ON THE NASDAQ
AS WELL, YIELDS A BIT HIGHER ON A 10 YEAR BY SIX OR SEVEN BASIS
POINTS. CRUDE LOWER, INTERESTING GIVEN
WHAT IS HAPPENING IN UKRAINE AND RUSSIA. BRENT IS AT $85.60. I THINK WE CAN CALL THIS A NEW
PHASE IN THE CONFLICT BETWEEN UKRAINE AND RUSSIA.
THE SCENE OVER THE WEEKEND, DRONES CRIPPLING THE RUSSIAN
NAVAL VESSEL. THIS IS A KEY PASSAGE FOR
COMMODITIES COMING OUT OF RUSSIA. TOM:
I STRONGLY AGREE WITH THE IDEA THAT IT IS NEW PHASE. IT IS NOT IN THE ZEITGEIST.
WAIT UNTIL THURSDAY OR FRIDAY. YOU MAY GET A LOT OF SMART
REPORTING ON THAT. THE QUESTION IS, DOES IT FULL
TO COMMODITIES AND OIL? WE SAW WE MOVE. I WENT TO ERIC MARTIN AND I
SAID , IF I WANT TO FOLLOW WHEAT IN THE MEDITERRANEAN,
WHAT DO I FOLLOW? HE SAID CHICAGO, WHICH
SURPRISED ME. THE ANSWER IS, YOU HAVE TO
WATCH THE COMMODITY PRICES TO SEE WHAT THEY DO. IN OIL, WE WERE COMFORTABLE
SOME 80 AND NOW WE ARE 85 OR 86. IS ANYONE MODELING UP A JUMP TO
90 OR 91? JONATHAN: TRIPLE DIGITS? TOM: RITIKA: TOM:
-- WE ARE NOT THERE. JONATHAN: CURRY IS LEAVING -- JEFF CURRIE
IS LEAVING GOLDMAN SACHS. TOM:
WE ARE GOING TO JOIN ON OIL AND WE DO SO WITH A TRICK --
TERRIFIC ACADEMIC PEER JULIAN LEE.
-- TERRIFIC ACADEMIC, JULIAN LEE.
THANK YOU FOR JOINING US THIS MORNING.
I WANT TO GO TO THE MISTREAT WHICH IS OIL DEMAND.
WE HAVE GREAT REPORTING YOUR TEAM SAYING WHAT A SHOCK, PRICE
UP, DEMAND DOWN. THERE WILL DEMAND BE IF WE GET
PRICES TO STAY AT JEFF CURRIES '$85 A BARREL? JULIAN:
THE THEME HAS BEEN THE SLOWER PACE OF DEMAND RECOVERY IN
CHINA THAN MANY PEOPLE WERE EXPECTING AFTER THE EASING OF
LOCKDOWNS EARLIER IN THE YEAR AND THE OPENING UP OF TRAVEL.
ONE OF THE THINGS PEOPLE DIDN'T QUITE GET EARLIER IN THE YEAR WAS THAT OIL ISN'T QUITE SUCH A
TRANSPORT DOMINATED FUEL IN CHINA AS IT IS IN THE UNITED
STATES OR EVEN EUROPE, WHERE THE BULK IS IN TRANSPORTATION.
THEREFORE THE OPENING UP OF TRANSPORTATION HAS A BIG IMPACT.
IN CHINA IS ONLY ABOUT OF HALF OF OIL INVOLVED IN THE
TRANSPORT SECTOR. YOU OPEN UP THAT AREA, THE
IMPACT ON DEMAND ISN'T ANYWHERE NEAR AS GREAT AS IT WOULD BE IN
THE U.S. I THINK PEOPLE TENDED TO
OVERESTIMATE WHAT THE DEMAND REBOUND WOULD BE IN CHINA. TOM:
IT IS SUCH A HARD GAME TO GUESSTIMATE WHAT OIL WILL DO, SO WE FALL BACK ON WHAT ARE
CALLED FAN DISTRIBUTIONS, PROBABILITY DISTRIBUTIONS OF
WHAT JULIAN LEE THINKS IS OUT THERE SOMEWHERE.
HOW IS YOUR FAN DISTRIBUTION OF OIL PRICE CHANGING LOOKING OUT
ONE YEAR OR DARE I SAY TWO YEARS? JULIAN: I AM NO LONGER IN THE GAME OF
PRICE FORECASTING. THAT IS SOMETHING I USED TO DO.
TOM: JULIAN, IT IS AUGUST. NO ONE IS
WATCHING. GIVE ME YOUR POINT ON FAN
DISTRIBUTION. JULIAN: I THINK WE HAVE TO LOOK AT WHAT
PEOPLE WHO ARE MUCH MORE CLEVER THAN ME AND MUCH MORE INVOLVED
IN MONITORING THE MARKETS AND THE MOVEMENTS OF PRICES AND
SUPPLY AND DEMAND ON A DAY TO DAY BASIS.
WHAT WE ARE SEEING FROM THEM IS THE FORECASTS OF TRIPLE DIGIT
PRICES BY THE END OF THIS YEAR AS YOU SAID EARLIER HAVE
LARGELY THIS APPEARED. MOST -- MOSTLY DISAPPEARED.
MOST PEOPLE ARE SAYING 80 295 PERHAPS BY THE END -- 80 TO 95
PERHAPS BY THE END OF THE YEAR. SO MUCH IS DEPENDENT UPON THE
POLITICAL DECISIONS TAKEN IN RE-ADD ASH IN -- IN RYAD.
SHOWING A WILLINGNESS TO GO IT ALONE.
THEY HAVE CUT PRODUCTION TARGET TO THE LOWEST IT HAS BEEN SINCE
THE DEPTHS OF THE COVID PANDEMIC AND IF YOU TAKE OUT
THE PANDEMIC MONTHS AND THE ATTACK ON SAUDI OIL FACILITIES
BEFORE THAT, THIS IS THE LOWEST SAUDI PRODUCTION WE HAVE SEEN
FOR MANY YEARS AT AROUND 9 MILLION BARRELS A DAY.
I WOULD QUESTION WHETHER THEY WOULD BE ABLE TO GO MUCH BELOW
THAT FOR ANY LENGTH OF TIME, BUT THEY CAN CERTAINLY PROLONG
THESE CUTS. IN THE SECOND HALF OF THE YEAR
BUT WE WERE ALREADY EXPECTING DEFICIT, OIL SUPPLY DEFICIT,
PROLONG THE CUTS WILL DEEPEN THAT. LISA:
WHAT PRICE TARGET IS SAUDI ARABIA TARGETING? JULIAN:
I HAVE SAID REPEATEDLY -- THEY HAVE SAID REPEATEDLY THEY DON'T
TARGET A PRICE. THEY ARE SEEKING BALANCE IN THE
MARKET AND THE PRICE WILL BE WHAT IT IS.
IF YOU LOOK AT THE ACTIONS THEY HAVE TAKEN, THEY WERE CLEARLY
VERY UNHAPPY WITH PRICES BELOW 80. I THINK THEY PROBABLY WANT A
PRICE CLOSER TO 90 AT LEAST FOUR BRENT.
-- AT LEAST FOR BRENT. BUT THEY WILL DENY THEY HAVE A
PRICE TARGET. JONATHAN: OF COURSE THEY DON'T.
JULIAN, THANK YOU. I WOULD LOVE TO KNOW WHEN THEY
JUST WHAT IT IS. WHAT IS THE PRICE TARGET? TOM:
I THINK IT IS A MOVABLE FEAST BASED ON THEIR FISCAL NEED AND
THE ANSWER IS ON A 10 OR 30 YEAR BASIS IT IS A HIGHER
NUMBER. JONATHAN: COMING UP, KEITH LERNER FROM JP
MORGAN AND TONS OF STUFF ON BY NYMEX
-- BIDENOPICS. HAVE YOU EVER SEEN A BUDGET
DEFICIT THIS LARGE WITH UNEMPLOYMENT THIS LOW? LISA:
YOU COULD SAY HE GOT THE EQUITY CALL WRONG BUT HE RAISES A VERY
IMPORTANT POINT THAT A LOT OF PEOPLE ARE TALKING ABOUT RIGHT
NOW, THE FISCAL BACKDROP HAS CHANGED MATERIALLY FROM WHERE
IT HAS BEEN AND THAT SHIFTING THE UNDER STANDING.
THAT IS UNCERTAINTY AND A DRIVING FORCE A LOT OF PEOPLE
ARE THING AT. JONATHAN:
KEITH LERNER AND OKSANA ARE ENOUGH -- OKSANA AR ANOV.
SHE WAS TALKING ABOUT THESE SPREADS AND THEN WE HAD THE
COLLAPSE OF SVB. 100 BASIS POINTS AND HERE WE
ARE ALL THE WAY BACK DOWN TO ABOUT 390.
AMAZING TRIP WE HAVE BEEN IN THE CREDIT MARKET. LISA: IT HAS DEFIED ALL MARKETS.
THE WHY IS WHERE PEOPLE ARE FOCUSING ON. JONATHAN:
THAT CONVERSATION STILL TO COME. THE EQUITY MARKET ON THE S&P
500 POSITIVE BY 0.2%. A QUIET-ISH START TO THE WEEK.
CPI A FEW DAYS AWAY. FROM NEW YORK, THIS IS
BLOOMBERG. ♪ TOM: BERG SURVEILLANCE.
GOOD -- BLOOMBERG SURVEILLANCE. LISA ABRAMOWICZ LOOKING AT HER
L.L. BEAN CATALOG ON THE BREAK. MICHAEL MCKEE, INTERNATIONAL
ECONOMICS AND POLICY. CAMERON DAWSON, WITH JIM
BEYONCA IN THE BACKGROUND. TRUE AMERICAN HERITAGE.
WHAT ARE THE SIZE OF THE DEER FLIES? MICHAEL: THEY ARE NOT TOO BAD I DID NOT
GO THIS YEAR IN ALL TRUTH BUT I IMAGINE I WAS WELL REPRESENTED.
THE BUGS ARE NOT TOO BAD UP THERE. TOM:
THE DEBATE THAT HAS BEEN MADE AND WE MAKE JOKES AND THERE IS
A PICTURE OF THE STURGEON THAT CAMERON DAWSON CAUGHT BUT THERE
ARE HE DID DEBATES. GIVE ME AN EXAMPLE OF ALL OF
THE DEBATE AFTER THE THIRD WHISKEY AT 9:00 P.M. MICHAEL: THE DEBATES ARE QUITE SERIOUS
BUT AFTER THE THIRD WHISKEY, LESS SO.
THERE IS A LOT OF TALK ABOUT JUST RATES AND WHERE THEY ARE
GOING TO GO AND THE VIEWS ON THAT AND WHAT THE POLICY SHOULD
BE. IT IS EVERY YEAR. LISA: WE ARE SPEAKING TO YOU AHEAD OF ONE OF THE BIGGEST DATA POINTS
IN THE FED MEETING AHEAD OF JACKSON HOLE.
WE HAVE CPI ON THURSDAY AND PPI FRIDAY AND THE UNIVERSITY OF
MICHIGAN SENTIMENT SURVEY HERE AND WHAT ARE YOU WATCHING THE
MOST COZY THAT COULD BE THE MOST FORWARD-LOOKING OF
INDICATORS? MICHAEL: IT WILL BE THE CPI AND THE
MONTH OVER MONTH NUMBERS. THAT WILL GET THE FOCUS FOR
MANY OF THE HEADLINES BUT I IMAGINE THE FED IS MORE FOCUSED
ON THE MONTH OVER MONTH. IF IT COMES IN AT 2/10 AS
FORECASTED BY BLOOMBERG, INFLATION WOULD BE INDICATED TO
BE SLOWING DOWN. BUT THEY HAVE ANOTHER CPI
REPORT FOR THE NEXT MONETARY POLICY DECISION. LISA: IS IT FAIR TO SAY WE FELT A
SHIFT WHERE THERE IS AN EMPHASIS ON HOLDING AND NOT
RAISING FURTHER THAT SUDDENLY SEES THAT IS THE PUSH? MICHAEL: JOHN WILLIAMS OF THE NEW YORK
FED SAYS IT IS A QUESTION NOW OF WHETHER THEY ACTUALLY DO
NEED TO RAISE RATES AGAIN. HE SAID WE ARE GOING TO LEAVE
RATES THEY ARE FOR QUITE SOME TIME, PROBABLY WELL INTO 2024,
BUT DO WE NEED TO RAISE RATES AGAIN?
HE SAID BASED ON THE DATA HE HAS SEEN, IT IS AN OPEN
QUESTION. GIVEN THAT HE IS ONE OF THE BIG
THREE ON THE OPEN MARKET, PEOPLE ARE PAYING ATTENTION TO
THAT. TOM: AS WE GET TO JACKSON HOLE, YOU
CAN I WERE WEANED ON MUTUAL OF OMAHA, WILD KINGDOM. MICHAEL:
MARLON PERKINS. TOM:
JEFFREY SMIT WILL NOW RUN THE KANSAS CITY FED.
WHAT DOES HE BRING IN THE HERITAGE OF JACKSON HOLE
INSTITUTION? MICHAEL: IT WAS NO SURPRISE TO SEE THAT
WAS HIS BACKGROUND. HE STARTED IN KANSAS CITY BUT
WITH THE FBI C. HE HAS A FEEL FOR WHAT NEEDS TO
BE DONE FOR BANKING. IT WILL BE INTERESTED --
INTERESTING TO SEE WHERE HE COMES DOWN.
THIS IS ANOTHER PERSON WHO WILL HAVE A BANK BACKGROUND WITH THE
IDEA ON WHAT THEY SHOULD BE DOING WITH REGULATIONS WITH THE
SET OF PROPOSALS AND WILL JOIN MICKEY BOWMAN AND MICHAEL BARR
AS THE BANK EXPERTS ON THE FED. TOM:
JACKSON HOLE WILD KINGDOM WITH OCCULT MCKEE.
FOR THAT IN THE FUTURE. LISA, ON THE AMERICAN ECONOMY,
SIMPLE TO SAY THE BIGGEST PART OF THE ALGEBRAIC FUNCTION IS
THE CONSUMER AND OUR GUEST IS DEFINITIVE ON CONSUMER DYNAMICS.
LISA: WHICH IS THE KEY MYSTERY POINT
PEOPLE ARE TRYING TO HOOK INTO NO ONE BETTER TO SPEAK TO THAN
MICHELLE MEYER WHO HAS GROWN UP UNDER ETHAN HARRIS AT BANK OF
AMERICA DURING THE HOME MORTGAGE SITUATION LINK --
SITUATION. ALWAYS WONDERFUL TO SEE YOU. OUR PEOPLE OVERESTIMATING OR
UNDERESTIMATING THE STRENGTH OF THE CONSUMER? MICHELLE:
THAT WAS THE STORY FOR THE PAST YEAR AND A HALF,
UNDERESTIMATION OF THE U.S. CONSUMER.
THE CONSUMER HAS BEEN ABLE AND WILLING TO SPEND.
THE CONSUMER HAS BEEN EAGER TO ENGAGE IN THE ECONOMY AND COME
BACK AFTER THE PANDEMIC. THERE HAS BEEN A LOT OF
PURCHASING POWER, WHETHER THE STRENGTH OF THE LABOR MARKET OR
THE HEALTH OF THE BALANCE SHEET, WHICH WAS REALLY
IMPROVED IN THE PANDEMIC PERIOD AS HOUSEHOLDS PAY DOWN THEIR
DEBT. EVEN ON HIGHER RATE ENVIRONMENT, DEBT SERVICE
RATIOS ARE FAIRLY REASONABLE AND BACK TO WHERE WE WERE PRIOR
TO THE PANDEMIC. LISA: THAT SAID YOU HAVE SEEN A
DECREASE IN INCOME RELATIVE TO SPENDING.
PEOPLE ARE SPENDING A LOT MORE THAN THEY ARE BRINGING IN AND A
LOT HAS TO DO WITH CREDIT CARD DEBT.
HOW LONG CAN THAT CONTINUE? MICHELLE:
THROUGHOUT LAST YEAR WE HAD THE HIGH INFLATION AREA.
-- INFLATION PERIOD, THEY WERE TAKING ON MORE DEBT TO SUPPORT
THE INFLATIONARY ENVIRONMENT. NOW INFLATION IS A LOT MORE
SUBDUED. IF YOU LOOK AT REAL WAGES OR
PURCHASING POWER, IT HAS CERTAINLY TURNED POSITIVE,
WHERE CONSUMERS HAVE A LOT OF SUPPORT FROM THE LABOR MARKET
AND DON'T NECESSARILY NEED THE SAME OPERATE THEY NEEDED WHEN
THEY WERE FACING SUCH HEIGHT INFLATION. TOM: IT WAS JUST PUT OUT ON TWITTER,
WE CAUGHT SOMETHING DIFFERENT NOW, HE LIKES TO TAKE
THREE-MONTH DATA AND ANNUALIZE IT. THE REAL GDP STATISTIC, THE AMERICAN CONSUMER STATISTIC IS
EXTRAORDINARY, 5.3% NUMBER, ABSOLUTELY STUNNING AS WELL.
DOES YOUR CONSUMER DATA AT MASTERCARD VALIDATE THE
RESILIENCY TO THAT 5.3% TREND? MICHELLE:
YOU ARE STARING AT ALL OF MY OLD COLLEAGUES, IT IS A PARTY
HERE. [LAUGHTER] TOM: ONLY ABOUT RELATIVE GDP -- TELL
ME ABOUT RELATIVE GDP, DOESN'T HAVE CONSISTENCY? MICHELLE:
EVEN MEASURES OF BUSINESS INVESTMENT, IT HAS BEEN ABOVE
EXPECTATIONS, PARTLY BECAUSE I THINK EXPECTATIONS WERE SET TOO
LOW BUT ALSO SHOWED A CONSUMER THAT DOES HAVE THIS PERSISTENCE.
THE CONSUMER AND ECONOMY ARE SHIFTING.
WE ARE ENTERING A DIFFERENT STAGE IN THIS BUSINESS CYCLE,
MORE MODERNIZATION, NORMALIZATION, TREND WHERE
POTENTIAL GROWTH IS COMING OUT OF THE PANDEMIC. IT IS NOT AN ECONOMY MOVING
TOWARDS DECELERATION, WHICH WAS THE FEAR OF A LOT OF PEOPLE
EARLIER IN THE YEAR. LISA: DO YOU STAND ON THE SIDE OF
SOFT LANDING OR ON THE SIDE WHERE WE ARE UNDERESTIMATING
HOW MUCH STRENGTH THERE IS AND HOW MUCH POTENTIAL FOR
INFLATION TO KEEP GOING AT REALLY ELEVATED LEVELS?
MICHELLE: WE HAVE BEEN IN THE SOFT
LANDING CAMP AND I STILL HOLD THAT YOU.
WHEN YOU THINK ABOUT SOFT, THERE WILL BE BUMPS IN FIRST
QUARTER EARNINGS. THE MANUFACTURING IS STRUGGLING
AND HOUSING WAS AN BIG ADJUSTMENT AND THIS YEAR IS WE
ACCELERATING JUST SOMEWHAT PROBLEMATIC FOR THE FEDERAL
RESERVE. IT SEEMS LIKE THIS IS AN
ECONOMY THAT IS READJUSTING AND DOING SO IN A WAY THAT HAS BEEN
A LOT LESS PROBLEMATIC THAN I THINK PEOPLE FEARED. LISA: WE WERE TALKING EARLIER WITH
MIKE WILSON OF MORGAN STANLEY ABOUT FISCAL IMPULSE THAT HAS
BEEN ONE OF THE DRIVERS OF THE STRENGTH AND RESILIENCE IS
BELIEVING IN THE SOFT LANDING WE CURRENTLY HAVE IN THE MARKET.
HOW MUCH DO YOU LEAN INTO THAT? STRENGTH OF THE ECONOMY HAS
BEEN DRIVEN ENTIRELY BY FISCAL SPENDING THAT HAS BEEN DELAYED
AND COME INTO EFFECT AFTER THE PANDEMIC WAS OVER. MICHELLE: THERE WAS FISCAL AND MONETARY
STIMULUS THAT BOOSTED THE ECONOMY. YOU HAD PANDEMIC THAT CREATED
AN ABRUPT SHUTDOWN OF THE ECONOMY, A REOPENING STAGE THAT
WAS HOT, RED HOT BECAUSE YOU HAD PENT UP DEMAND, FISCAL
STIMULUS AND MONETARY POLICY. NOW WE ARE AT A STAGE WHERE THE
ECONOMY IS CREATING A MORE NORMALIZATION, REBALANCING,
ADJUSTMENT, PICK YOUR PHRASE. WHICHEVER WAY YOU CUT IT, THERE
IS STILL SOME SUPPORT FROM THE STIMULUS THAT WE HAD ENJOYED.
THAT COULD BE FROM THE CONSUMER WITH THE HOUSEHOLD BALANCE
SHEET IMPROVED OR EVEN PART OF THE MANUFACTURING SECTOR WHEN
YOU THINK ABOUT THE INFRASTRUCTURE SPENDING GOING
THROUGH THE ECONOMY NOW WHICH IS PORTED -- IS IMPORTANT. TOM:
UMS CAR HAVE INCREDIBLE CONSUMER DATA.
IS THERE RESISTANCE TO 29% OR 30% CREDIT CARD INTEREST RATES?
DO PEOPLE GO NO, I DON'T WANT TO DO THAT? MICHELLE:
THE ECONOMY IN GENERAL IS FIGURING OUT WHAT THAT LEVEL OF
INTEREST RATE IS. WHEN YOU THINK ABOUT THE FED
BRINGING INTEREST RATES CLOSE TO 6% ON THE POLICY RATE, THE
BEGINNING OF THE CYCLE THAT WAS VIEWED AS BEING IMPOSSIBLE AND
THAT THE ECONOMY WOULD BREAK UNDER THAT ENVIRONMENT AND IT
HASN'T. YOU HAVE TO THINK ABOUT IN
TERMS OF REAL RATES AND NOT THE NOMINAL RATE.
THAT IS WHAT THE FED IS TRYING TO FIGURE OUT, WHAT IS THE
LEVEL OF INTEREST RATE THAT IS APPROPRIATE THAT DOESN'T CAUSE
THE ECONOMY TO ROLLOVER BUT DOES CAUSE THE ECONOMY TO SLOW
DOWN BECAUSE THE MODERATION IS IMPORTANT. TOM: YOU MENTIONED ALL YOU DID AT
BANK OF AMERICA WITH ETHAN HARRIS WHO IS RETIRING.
I WOULD SUGGEST WHAT ETHAN HARRIS GAVE YOU WAS A SENSE OF
A LOOK AT HISTORY AND THE ANSWER IS WHERE WE ARE NOW IS
WHERE WE WERE. WHERE ARE WE, EARLY TO
THOUSANDS , IS THIS A 1990'S -- EARLY 2000'S OR IS THIS EIGHT
1990'S? -- OR IS THIS 1990'S? MICHELLE:
IT WOULD BE GREAT IF IT WAS EIGHT 1990'S CYCLE, IT HAD ON
DURATION THAN ANTICIPATED AND ABLE TO HIKE RATES AND
GRADUALLY NORMALIZE -- IT WAS A 1990'S CYCLE, IT HAD DURATION
THAT ANTICIPATED AND WAS ABLE TO HIKE RATES AND READILY
NORMALIZE. IT IS HARD TO SAY BECAUSE IT
WAS A PANDEMIC WITH EXTRAORDINARY MEATLESS.
SO MUCH HAS CHANGED. THINK ABOUT THE STRUCTURE OF
THE WORKFORCE AND HOW MUCH WE HAVE EMBRACED TECHNOLOGY.
THERE IS A LOT DIFFERENT ABOUT THIS ECONOMY. TOM:
IT WOULD BE GREAT TO GET YOU, NEAL DUNN AND ETHAN HARRIS.
MICHELLE MYERS WITH MASTERCARD. LISA: HOW CAN ANYONE NOT BE ON
SPEAKING TERMS WITH MICHELLE MYERS? TOM:
STANDARD AND POOR 500 OF .3%. LISA: WE ARE SEEING A TRICKLE OF
EARNINGS FROM LAST WEEK AND THE WEEK BEFORE BUT SOME ARE
INTERESTING IN LIGHT OF WHAT WE HAVE BEEN TALKING ABOUT. TYSON, THE CHICKEN PLANT ASSETS
ARE, CAME OUT WITH NEGATIVE EARNINGS.
THEY HAD EIGHT NEGATIVE LOOK FORWARD. THEY ARE SHUTTING FOUR
ADDITIONAL CHICKEN FACILITIES. ON THE MARGINS THERE ARE AREAS
OF WEAKNESS AND IT IS INTERESTING TO SEE HOW THEY A
STAFF SELECTIVE MARKET. TOM: THE GREAT JOHN BARROW SEE -- JOHN BJERGA SI WHO WAS A GREAT
ANALYST. HE ALWAYS HAVE TO LOOK AT TYSON. I SAID I WAS GOING TO GO LARGE
AND SAID I'M GOING TO GET A REAL STAKE. I HAD -- STEAK. I HADN'T BOUGHT ONE LIKE I DID
THIS WEEKEND. I COULD NOT BELIEVE PRICE OF
COW AT THE STORE. I WAS STUNNED. LISA:
THAT IS ONE SIDE OF THINGS. ON THE TYSON SIDE OF THINGS,
THE PRICE OF PORK AND CHICKEN GOING DOWN.
TALK ABOUT HOW INFLATION SUPPORTS REVENUES BUT DEFLATION
IS THE OTHER WAY AROUND. THAT IS UNDERSTATED IN THIS
BIZARRE MIX THAT WE HAVE IN THE POST-PANDEMIC ECONOMY. TOM:
WE WILL STAY WITH LARGER TRENDS OF THE AMERICAN ECONOMY, AND I
THINK DEFLATION IS SOMETHING. WE WILL TALK TO JACKSON HOLE
AND JAN. MICHELLE MEYER, DRIVING THE >> NOT TERRIBLY OPTIMISTIC WE
WILL GET THIS TRUE SOFT LANDING. IT MIGHT LOOK THAT WAY FOR A
FEW MONTHS BUT WE WILL GET THE DATA AND LOOK SOFTER AGAIN.
STRONG JOBS REPORT FRIDAY. WE ARE LESS OPTIMISTIC THIS
WILL END WELL AND INFLATION WILL COME BACK SUSTAINABLY TO
2% WITHOUT SOME BIGGER DOWNTURN. IT JUST DEPENDS ON WHEN WE GET
THAT. TOM: VERONICA CLARK, CITIGROUP WITH
A STATEMENT ON RESILIENCY. THIS, REAL SIMPLE, THEY RETAIN
A HIGHER RATE VIEW. CITIGROUP SIMPLY WILL NOT GIVE
IT UP. LISA: A LOT WON'T GIVE IT UP.
THEY HAD IT RIGHT FOR A LOT OF THE YEAR.
THE QUESTION IS, WHEN THE DISINFLATION WE ARE SEEING NOW
IS TRANSITORY AND WE WILL END UP WITH HIGHER OIL PRICES AND
WAGES THAT FUEL GAINS ELSEWHERE. HOW DO YOU GET DISINFLATION AND
A STRONG CONSUMER AND A ROBUST ECONOMY? TOM:
IT WILL BE INTERESTING TO SEE. I AM BETTER THAN I WAS LAST
WEEK THANK YOU FOR THE MANY NOTES.
DO YOU KNOW WHAT I AM DRINKING? LISA: TANG. TOM:
TART CHERRY JUICE IS WHAT THEY RECOMMENDED. LISA: FOR WHAT? TOM: RESPIRATORY WELL BEING.
LISA: DO YOU LIKE IT? TOM: I AM GETTING USED TO IT.
ON GOLDMAN SACHS, IT IS ABOUT JEFF CURRIE LEAVING.
IT DOES ARE MORE ON THAT. I WANT TO GO TO A STORY FROM
SIX DAYS AGO, GOLDMAN SACHS FAMILY OFFICE PARTNER TO LEAVE
BECAUSE MAYBE THAT IS A BIGGER STORY.
AN EXPERT ON THIS JOINS US AND REPORTS THIS MORNING.
THERE IS SOMETHING GOING ON HERE.
DON'T GIVE ME YOUR WE DON'T KNOW, IT IS SPECULATION.
BALONEY, THEY ARE WALKING OUT THE DOOR. >> JEFF CURRIE WOULD BE THE
SIXTH PARTNER TO LEAVE. IT STILL FEELS LIKE THE
DEPARTURE MIGHT BE SLIGHTLY DIFFERENT FROM THE OTHERS.
THESE WERE SOME OF THE PEOPLE ON THE UP AND UP.
FOR THEM TO LEAVE WAS SURPRISING.
OVER THE YEARS GOLDMAN HAS TOLD US THEY GO THROUGH 70 PARTNERS
LEAVING. A NEW SPOKESMAN SAID 80 PARTNERS EVERY TWO YEARS.
THE FACT OF THE MATTER IS, THERE IS ALWAYS A BUNCH OF, TO
PUT IT POLITELY, UNDESIRABLES. THEY WALK OUT AND RETIRE AND
LEAVE. WHAT HAS BEEN SURPRISING IN THE
LAST COUPLE OF YEARS IS THE TYPE OF PARTNERS LEAVING,
PEOPLE PICKED FOR BETTER ROLES AND MUCH GREATER THINGS
DECIDING TO WALK OUT THE DOOR BECAUSE OF THE ISSUES. TOM: WILL BE REPORTING ON THIS TODAY
AND INTO TOMORROW. WHAT IS THE WHY? WHAT IS THE SET OF WHY'S? >> IT IS FAIR TO SAY THERE IS A LITTLE TO MALT -- T
TUMALT AND THE HIGHER RANKS YOU HAVE COME OFF A HIGH OF 2021
ONLY TO SEE PROFITS AND EARNINGS GET DECIMATED IN 2022.
THAT COULD BE A FACTOR. THERE ARE OTHERS WHO SAY THE
CEO DOES NOT INSPIRE. LISA: IS THERE A CERTAIN AREA OF THE
COMPANY WHERE THE DEPARTURES ARE FOCUSED, A CERTAIN TYPE OF
ASSET CLASS, PRACTICE? SRIDHAR: WE SHOULD ACKNOWLEDGE WE DON'T
HAVE FULL VISIBILITY TO THE DEPARTURES.
WHAT WE DO SEE SOME OF THE PROMINENT NAMES THAT THOSE TALK
OUTSIDE OF THE FIRM BECAUSE THEY ARE NAMES THAT ARE
RECOGNIZABLE. WE DON'T KNOW.
DAVID SOLOMON CAN'T TAKE A LOT OF CREDIT BECAUSE THAT WAS
DOING WELL. THE KINDS OF AREAS HE TRIED TO
DIVE INTO CONSUMER BANKING TURNED OUT TO BE A MAJOR FLOP
AND THAT UNFORTUNATELY SITS ON HIS HEAD. LISA:
IT SEEMS AS THOUGH THERE ARE A NUMBER OF BIG, SEISMIC CHANGES.
CREDIT SUISSE HAS GONE AWAY. YOU HAVE A SHIFTING THE BATON
WITH RESPONSE TO GOLDMAN SACHS AND MORGAN STANLEY AND AT LEAST
PEOPLE ARE THINKING ABOUT THAT. WHERE DOES GOLDMAN SACHS FIT
INTO THIS VERY MUCH TALENT WAR? SRIDHAR: THE CHANGES, STRUCTURAL
CHANGES WE HAVE SEEN IN THE GLOBAL BANKING INDUSTRY, WHAT
HAS HAPPENED WITH THE BIG EUROPEAN BANKS HAS MEANT IF YOU
ARE A LARGE BANK DOING WELL AND HAVE A STRONG PRESENCE IN WHAT
YOU ARE DOING, YOU GAIN MARKET SHARE. AROUND JP MORGAN, MORGAN STANLEY AND GOLDMAN SACHS
CONTINUES TO BECOME DEEPER. HAVE BENEFITED FROM THAT. LISA:
WHERE HAS GOLDMAN SACHS NOT BENEFITED, TO THE EXTENT OR
PEOPLE ARE SEEING AN OPPORTUNITY TO LEAVE PERHAPS TO
GO SOMEWHERE ELSE THAT IS IN A FITTING OR GOING OFF ON THEIR
OWN? SRIDHAR: WHEN YEARS AGO IF THE BANK WAS
PERFORMING AS WELL AS IT WAS, YOU WOULD HAVE MADE A LOT MORE
MONEY. THAT IS NOT THE CASE ANYMORE.
THAT KIND OF MONEY THEY JUST CANNOT GET TO THE EXECUTIVES
AND LOYALTY IS NOT A FACTOR ANYMORE. TOM:
PRIVATE EQUITY IS TAKING OVER. DR. CURRIE IS WITH HIS WEIGHT
IN GOLD TO SOME PRIVATE EQUITY, RIGHT? SRIDHAR: WE DON'T KNOW WHAT JEFF CURRIE
IS DOING. IT WOULD SEEM THAT HE IS TAKING
SOME TIME OUT TO SPEND SOME TIME HIS EMILY.
HE HAS TWO SMALL CHILDREN. TOM: YOU SAID JEFF CURRIE IS TIRED
OF WAITING. SRIDHAR: THAT WAS YOU. AT LEAST WITH JEFF CURRIE YOU
KNOW ABOUT HIS PART-TIME WHICH IS A LITTLE BIT OF COMMODITIES
BUT HE IS PERHAPS MORE FAMOUS FOR HELPING REDUCE A
DOCUMENTARY ON THIS JOURNALIST TRYING TO REUNITE THE KING SOME
40 YEARS AFTER THOSE GUYS BROKE UP. LISA: I LOVE THAT.
I LOVE THAT YOU TRIED TO PUT THE SONG INDUSTRIES SAYING WHEN
YOU LOOK FORWARD, THE PEOPLE YOU TALK TO, ARE THE MORE TO
COME? SRIDHAR: YES, UNFORTUNATELY AS --
UNFORTUNATELY IT DOES NOT LOOK LIKE IS GOING TO STOP. THE NUMBER OF PEOPLE AT GOLDMAN
SACHS, THERE ISN'T ANYTHING IN THAT QUANTITY SUGGESTS A
PROBLEM BUT WE WANT TO SEE THE TYPE OF PEOPLE THINK THE
BUILDING. TOM:'S AUGUST BUT IT DOES NOT FEEL
LIKE AUGUST ON NEW YORK IN WALL STREET BUT IT FEELS LIKE LATE
OCTOBER, BONUS SUSAN, FISCAL LANDING FOR NEXT YEAR -- BONUS
SEASON, FISCAL PLANNING FOR NEXT YEAR.
WHAT YOU THINK FOR THE PLAYERS THIS AUGUST IN MANHATTAN?
SRIDHAR: YOU HAD 6, 7 VERY SLOW MONTHS.
YOU HAD SEVEN SLOW MONTHS TO START THE YEAR.
NOW WHEN WE ARE SEEING PICKUP, WE HEAD INTO THE LATE SUMMER,
HOPING FOR A PICKUP IN LABOR DAY BUT THE GIANT U.S.
GOVERNMENT SHUTDOWN THREATS START COMING IN AT THE START OF
OCTOBER. AND THEN CLOSE TO THE END OF
THE YEAR AND IS THERE ENOUGH TIME? TOM:
WHERE ARE YOU PUBLISHING THIS MORNING? HE WILL BE PUBLISHING LATER
TODAY. LISA: I LOVE THAT. THIS IS A REAL BIG QUESTION,
YOU DO SEE THE GLOBAL CHANGE IN THE BANKING SYSTEM.
WHO IS BENEFITING AND IF YOU DO HAVE THE INCREASE IN PROMINENCE
OF PRIVATE EQUITY FIRMS, HOW MUCH DOES THAT AMP UP THE
TALENT WARS? WE HAVE SEEN THIS OVER THE PAST
DECADE. TOM: THERE IS A WHOLE SET OF
VARIABLE CAUSE ON GLOBAL WALL STREET WHICH ARE -- COSTS ON
GLOBAL WALL STREET WHICH ARE AFFIXED.
AND WHAT DO THEY DO WITH THE COST OF THE FIXED PERSONNEL?
LISA: PRAYED TALKING ABOUT JOB CUTS?
TOM: WE HAVE BEEN THERE, DONE THAT.
CATHIE WOOD, CEO AND CHIEF INVESTMENT OFFICER AT ARK
INVESTMENT MANAGEMENT, A WELL-TIMED ETF DISCUSSION.
