This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
All right, Jessman and Paul Sweene here in the Bloomberg Interactive Broker studio and so much focus today. Paul has been on this story about how China is seeking to broaden this iPhone band to state firms and looking at what China's really trying to do here.
And this also does.
Come ahead of next week. We do have that September twelfth iPhone fifteen Apple Watch event that is quickly approaching. So investors really want to get a sense here as far as what this really means for Apple as well as companies when they are doing business in a country like China. So who better to bring back with us than Mark German, chief Technology correspondent at Bloomberg News, joining
us on zoom from our Los Angeles. Mark I will look us through the latest developments here and just kind of broadly what this really is going to mean for Apple as well as other companies.
Yeah, thank you both so much for having me. As always, this ban has become broader than just a ban of iPhones at work of government agencies. This is also related to state owned companies. Right in China, there are plenty of conglomerates that are operated or owned by the Chinese government, So certainly this is pretty broad. Now, I've seen some
analyst reports indicating that this is very limited. Right, If Apple loses five hundred thousand or a million iPhone unit sales because of a ban at Chinese entities, it's not necessarily a big deal, But that misses the bigger picture. The bigger picture is Chinese nationalism. I don't think there's going to be an outright ban of iPhone sales in
China for consumers or anything close to that. But you definitely have to consider the idea of consumers in China pushing back on the idea of buying iPhones because they see that their government is pushing back on iPhones in their own entities.
Mark, what do we know about the quality of the Chinese phones in China? I mean it's me Chinese consumers are like any other consumers. I mean, they will go where they deem value and so I'm trying to get a sense of how good are those Chinese phones.
The Chinese phones are getting better. Whalwei is rolling out a new phone. It's called the sixty Pro. It is quite impressive. It has a larger battery, a larger display, and far higher resolution cameras than the new iPhone fifteen Pro Max that's going to be announced next week, so certainly that's something to keep an eye out. It also has a price that undercuts the latest iPhone, so certainly
that is something to keep an eye on. It also, as we've shown in our exclusive tear down in the last week or so for my colleagues in Asia, that it has a fairly advanced seven animeter chip using homegrown Chinese technology. And that's interesting to watch because right now, you know, the US has been banning exports of US
components to component makers in China. So certainly China is showing that despite those bands and those export and import restrictions, that they're able to release some key components that really power these new devices.
What do you think could potentially be some surprises next week that investors might be hoping to look for at the event.
I'm not anticipating any surprises next week, it'll be pretty straightforward. You'll see four new iPhone fifteen models, too low and too high end, both in the same six point one inch and six point seven in screen sizes. You'll see a new titanium design for the iPhone fifteen Promee Promax.
That's the first redesign in three years. You'll see on those higher end phones, a better battery life, a lighter frame in the A seventeen chip built on the new three and animeter production process, so a little leg up on what China's got in their new Wawei devices. The
Apple Watch upgrades will be very minor. Faster processors, new components, new colors, a black version of the Apple Watch Ultra, and then on the air pods you'll see a move to USBC that new charging standard from Lightning, which is also going to be present on all four new iPhone models.
Ay Mark.
Apple also is working on a revamped iPad pro for next year, and actually would be the first major overhaul in about half a decade.
What do we know so far about that?
Yeah, the IPD pro that's going to be announced around the middle of next year. They're going to be moving to oh LED displays on those for the first time. OLED is the screen technology that Apple uses across many of its iPhones at this point. They started rolling it out with the iPhone ten back in twenty seventeen. Quite a bit better contrast, better color reproduction. It just looks
better overall. And so that display technology will be at the heart of that iPad pro revamp, along with the new Magic keyboard with trackpad that has a metal design. It'll make the iPad look more like a MacBook.
So talk to us about I wonder what Tim Cook is saying these days, Mark about China. I know he was over in China, you know, a month or so ago, and how important China is, not just from their supply chain and also as an end market. What are the folks of Koopertinos saying about kind of the I don't know the intermediate term relationship.
With end or risk which China.
I mean, they're not saying much and there's really nothing they can do. You know, all of their new iPhone fifteen pros are going to be built in China and they have to sell one hundreds of millions of those devices over the next couple of years. Twenty percent of their sales come from China, right, So there's really nothing
that could be said from their standpoint. I'm sure they are worried internally, but from an outside perspective, they'll definitely show excitement about their future in the region.
Something else I'm curious about, as would we do see US China trade tensions rising up again, How does that affect new production sites that are sort of changing the way that Apple's devices are made.
Yeah, I don't think at this point there's any going back. I think Apple is expanding its supply chain outside of China to places like Thailand, Malaysia, Vietnam, and India foremost, so I certainly think that that's already a given. It's already a done deal. So I'm not really sure there's anything more that could be done on the tariff site to accelerate Apples push outside of China. That's already full blown and going full step ahead.
Hey, Mark, when don't we have phone particularly with the phones. Is there any opportunity going forward or expectation that there will be any kind of leap frog type new versions coming on or is it just incremental here, incremental there, and then people are just going to get into some type of renewal cycle every three, four or five years. Is that kind of how they think about it.
I'm not sure how they think about it, but I can tell you the way I think about it is that it's going to be very incremental over the next you know, three to four years or so, it's going to continue to be. The new devices this year are incremental. And while I say they're incremental, they're still going to be the most significant overhaul so the devices we've seen
in three four years. So certainly you know you'll get your opinion from You can ask one hundred people their opinion and you might get a hundred different opinions.
Well, I'm going with yours. I also talk to anairog ronnie.
He knows a lot about the phone and he tells me when I need to upgrade.
When it comes to different countries like India, I know that has definitely a hot place that companies have been going into.
What's kind of the story there when it comes to Apple.
Well, the strategy for Apple in India is to replicate the success that they've had in China over the past fifteen years. That is the creation of the country as both a production hub but also a key sales hub. Apple sees China as a market that it only has one to three percent penetration in, so there's a long way to go. Very few people comparatively have iPhones in India, and so Apple sees it as a completely untapped market,
just like they saw China fifteen years ago. And the success that Apple has had in China over the last decade plus has been unprecedented, and they want to replicate that in India and they've started to lay the groundwork for that with two retale stores. They're working on three more. I've written definitely think they're going to start doing more for India on the product side as well.
But I've also heard, as it relates to India maybe just emerging markets in general, that some people argue they just need a lower price phone. They can't go into some of these merging markets with their current lineup. It's just too expensive. What do you think about that?
I don't necessarily think that Apple is going to do the lower cost phone in China's in those emerging markets, it's very hard for them to put the skews on a geography basis, So I think they're going to just push their lower price devices harder in those regions, like the iPhone se and some of the older models of the iPhone, like the iPhone twelve and thirteen, the base ones. I also think that they can lower prices once they
get some tax relief based on production locally. Obviously, India lowers import taxes and such if you produce locally, which is one of the driving forces behind Apples work there. So I certainly think they're going to push pricing plans and installment packages rather than cut prices in India.
Also, Vietnam has emerged as a popular.
New hub for Apple. What do we need to know about that?
Yeah, India or Vietnam. In addition to India, Malaysia and Thailand, that's one of the other countries where Apple's pushing. They opened up an online store there last year, which is one of the early indicators of when Apples trying to plant the flag in a particular new market. They have some retail presence, they're on the third parties, I'd imagine they would expand with more first party retail stores there eventually.
I also anticipate Malaysia to be similar in that they're going to grow a retail footprint there too, and you're seeing some macro production in Vietnam, but primarily Apple watching AirPods.
Hey, Mark, thanks so much for giving us your time. Appreciate getting the update of Apple certainly in the news today. Plus they're going to have their new product launches coming up, so we'll be in touch with you. Mark Herman, he's the chief technology correspondent for Bloomberg News. He's just the ace on it. He really is.
He knew the news there.
He joining us on Zoom from the Los Angeles bureau speaking in nice office that lost LA is awesome.
Oh yeah.
Like when I first went to LA, I was like boy for Bloomberg, which every office is overwhelmingly nice.
I was like, eh, this is I was.
Coming in And as soon as and I went back, like a year later, they changed offices. Spectacular, top of everything, and you know that's all I did was sayah, and they make the up grade.
I have to know what it's like compete to this office.
Awesome. They just and they've got a great view.
They're right in Century City.
Great office space there, so great job. That's where mister German is. So are you gonna upgrade your phone?
You know what the battery is not quite good, So I feel like I might have to And.
A lot of folks say, you know, maybe that's what Apple does. They kind of give you a battery life and then when the battery starts coming out right.
In time for an upgrade, and there you go. So we'll see how that plays.
Like S and P five hundred off three tents and one percent, the Dow up just fractionally, nastak off nine tenths of one percent, yields they are kind of pulling in a little bit tenure Treasury three zero point two six percent, So we keep an eye on that.
We're gonna work coming up this.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
Let's talk companies now look software company.
Brian Robbins. He's a chief financial officer for get Lab. He joined us on Zoom from Sunset South, Carolina. Are you kidding me?
Sunset? I mean, how good is that?
I've been to Sunset South?
Now it is nice.
I need to get in the low country to scam. I have to figure out what's behind this. Hey, Brian, thanks so much for joining us here. Talk to us about get lab. Just give us kind of the thirty second elevator pitch what you guys do, kind of you where you fit into the tech space.
Absolutely thanks for having me on the show today. The best way to describe get lab for a non technical person is comparing it to the iPhone. And so about ten years ago, I used to travel about every week and I would pack a duffel bag of electronics. I would take my walk hands, I could go jogging in the park. I would take a camera so I could
take pictures of all the cool sites. I'd have my Garmin GPS because you know, the ride share and companies weren't around to basically get somewhere if Matt Quest wasn't right, have my BlackBerry and have all the charges, and I have to take a duffel bag of basically all the electronics to go on a business trip. And then comes to iPhone and all the applications got integrated into a single platform and the user experience just went off the charts.
And so get lab is an iPhone for software developers. We allow software developers, operations, and security professionals to create software faster, better, cheaper, and more secure. It doesn't matter what industry you're in or what geography, everybody uses the same platform.
You just had earnings released in recent days and the stock if you look at this Paul Tickersingle GTLB up almost ten percent this month after the company did report second quarter results that did beat expectations and raise their.
Full year forecast.
What are you seeing when it comes to customer buying patterns and what do you think that really tells us about the economy.
Yeah, you know, great question. Every company has to become a software company. Consumers are demanding data. We're understanding where their package is at. You know, like Amazon, they'll send you a text now if the drivers you know, eight stops away, and where your package is at. So everybody's creating software, they're putting them in the cloud. They're doing
it for revenue generation and also to save money. And so get lab basically eliminates point solutions and allows people to do everything on one platform with a single application. And so even with the tougher economy, we're seeing a lot of companies come to get lad to save money.
If you use our ultimate product, which is our high end product, it's ninety nine dollars per month per user, and it has a six month payback and over three years it's over a four hundred percent return on your investment.
That sense pretty compelling for a lot of buyers. I would think.
Talk to us about Google Cloud, how you guys partner with them?
Yeah, absolutely, we have a partnership with Google Cloud. We're currently using their large language models to train some of our AI products that we're working on. You know, get Lab's core feature is to make the developers, operations and security professionals faster and better at creating software. And one of the ways that we're doing that is at an AI to our product. And so we currently have ten
products under development. We have one that's generally available today called Suggested Reviewers, and we're working on one called code Suggestions. Well that will actually help populate code based on what you ask, you know, ask the software to do, and so we're using Google's large language models to actually train
the software to do that. We have a different approach than other people where we're doing it with a privacy first, and so we want to protect the IP of customers that use it, and we don't want to allow that IP to be training other companies software.
Whenever I hear AI, obviously we know, Paul how much it is all the rage this year from so many different industries, but I'm curious as far as when it comes to developer demand what that really means right now, when it comes to some of those AI tools.
Yeah, you know, AI is important. It's another tool to allow developers become more efficient. But you know, this is a first time in my career where the media has actually talked about something way before the technology really being
generally available. And so in the software development process, we just released a devop support that basically talks about in the process of making software, only about twenty five percent of it is actually done on coding, and so some of the AI tools will make coding more more efficient and more quicker, but you know, some of the other tools out in the market, this quickness and suggestion of code has actually created more vulnerabilities. And so our product's
not currently generally available. It's in private beta. We hope to have it generally available later this year, and we're working on making sure that the code quality that's being recommended is of high quality and has very limited vulnerabilities.
Hey, Brian, just about thirty seconds. How do you guys view cybersecurity? How is that engendered into your software?
Yeah? Absolutely. Security is top of mind for every company, right and the security market continues to grow because you have the builders, the buyers, and the hackers, and the hackers are always getting better at trying to create different mouse traps to breach into the companies. And so one of the advantages of our platform is you actually have security integrated into the software development process. So the old way of actually creating software is the developers would actually
code and develop the software. They then throw it over the wall to the ops and the security teams and they would come back and say, hey, you have the security vulnerabilities, please go rewrite these lines of codes. Our security function is actually built into the software, so as you're right in the code, the security is actually telling you you have a vulnerability, you need to fix us, and we'll fix it in all your code where that vulnerability is at.
Fascinating stuff, coders, That's what we should have done back in the day coding.
Brian Roberts, chief financial officer at get Lab.
You're listening to the Bloomberg Business Week Podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
All right, let's switch to a big, big topic that's going to be even more news as we head towards the twenty twenty four elections.
It's always a.
Big political issue, and that is gun violence. Cassandra Crafossi joins us. He's a deputy director of the Center for Gun Violence Solutions, located at the Johns Hopkins Bloomberg School of Public Health. She joins us on zoom from Charms City, Baltimore, Maryland. The Bloomberg School of Public Health is supported by Michael R. Bloomberg,
founder of Bloomberg LP, and Bloomberg philanthropiece Cassandra. I guess the way I think about the gun violence issue in the United States is a tweet that I just took a screenshot of and I keep and it reads something like this. In retrospect Sandy Hook marked the end of the gun control debate in the US once America decided killing children was bearable.
It was over.
That's kind of how I feel about it. That's sad. Hopefully there are a lot of people who are still passionate about trying to change things out there. Can you tell us where are we with the gun violence situation in this country right now?
It just seems as bad as it's ever been.
Unfortunately, we have seen increases in gun violence, particularly since the start of the pandemic.
There is some promise though.
Our data for twenty twenty two indicates that overall gun death rates have declined slightly since twenty twenty one, but we're still substantially higher than we were in twenty nineteen. In twenty twenty two, we saw over forty eight thousand people die from gun related deaths. That includes homicide and suicide, which is the leading cause of gun death in the US.
Cassandra, is there any reason to have any confidence in common sense gun legislation being passed?
Certainly, we have to be optimistic. At our center. There's a large group of us.
Doing this really important work, which would be even harder if we weren't optimistic that we could see change.
We have an amazing team.
Of researchers and policy advocates who work at the state and federal level. In June of last year, following the Buffalo and Uvaldi shootings, we did see the bipartisan Safer Communities Act pass at the federal level provided funding for some important policies like extreme risk protection orders, but we also see a lot of progress at the state level. Just this year, we saw Michigan and Minnesota both pass
extreme Risk Protection Order laws. These temporarily separate someone from their firearms during a time of crisis, So there is opportunity we have evidence based solutions that experience broad public support. We just really need to be pushing for these policies at the state and federal level.
In Cassandra Japaul's point, Sandy Hook, that tragedy happened over a decade ago. What has prevented more major policy from actually happening in Washington.
The challenge at the federal level is, I think there's a bit of complacency, that people feel like gun owners are single issue voters on guns, and that people who don't vote to advance these policies are going to continue to get re elected. But at the state level, we have seen that's actually not the case. Recently in Virginia there was a high profile shooting. They called a special
session and nothing happen, and their legislature turned. They have many more Democrats and are putting some of these policies in place. We're watching closely to see what will happen
in Tennessee following this very recent failed special session. I think the biggest challenge has been we see broad support for policies, but people haven't always been activated to make change, contacting their legislators, showing up to testify, and hopefully as people learn more about many of the evidence based solutions that are available, people will be contacting their elected officials and we will see change.
What are some of the changes that you would like to see be implemented, whether it's at the federal or state level, that you think are reasonable to work towards In terms.
Of LIKELI had to get it done.
So we really advance five policy solutions. There are lots of important areas that need to be attended to, but we focus on these areas that have we think the strongest evidence base. The first is requiring people to get a license before buying a gun. This is associated with fewer guns diverted for use in crime, lower rates of mass shootings and homicide, lower rates of suicide, and also lower rates of shootings by police. The second policy is
about regulating how people carry guns in public spaces. What kinds of objective criteria can we set out to minimize the harms when people are having guns in public spaces. The third policy is we generally refer to as firearm removal. This includes domestic violence and extreme risk protection order laws those that separate from someone who is at risk of harming themselves or others they're firearms and keep them from buying more for the duration of the order.
The fourth policy is.
About funding and effectively evaluating community based violence prevention programs, identifying those who are at elevated risk of violence involvement, and getting them supportive services. The final policy is about safe and secure gun storage, so having effective policies in place that hold people liable when they behave negligently with their firearms. But it's also about promoting responsible gun ownership.
What are the kinds of behaviors we think come along with the rights of having a gun in the home, and that includes safely storing your guns to ensure that kids and teens can't gain.
Access to them.
And to your point, we only have about thirty seconds left. But gun doests among children are declining, but your data do show that guns are still the leading cause of death among children and teens. And is it due to what you were just talking about responsponsible gun ownership?
Certainly, Unsecured firearms are an important source of injury for children and teens, including kids getting access to guns and taking them into schools. Guns are the leading cause of death for kids and teens. And while they have been on the decline, it's up almost over the last decade, So we really need to be promoting safe and secure gun storage.
All right, Cassandra, thank you very much for your time. Really appreciate getting your thoughts. Casenter Crafossi, Deputy director of the Center for Gun Violence Solutions to JOHNS. Compkins Bloomberg School of Public Health, and of course the Bloomberg School of Public Health is supported by Michael R. Bloomberg, the founder of Bloomberg LP, Bloomberg Philanthropies and this little radio UH and TV operation here, So you appreciate getting time from Ms.
Grafossi. Umbromcome a journal.
How about you let me drive.
Oh no, no, no, no, he's gone drive honey, please, I'll do the gravest I want to drive.
It's a good question.
This is the drive to the Globe.
Dot com for me effect well ber jot it on.
On Bloomberg Radio Jessamin and Paul Sweeney here in the Bloomberg Interactive Broker Studio in for Tim Senovic and Carol Masser today who have the day off and taking a
look more broadly stocks coming off session loads. We have a little under forty minutes before the closing bell, the S and P five hundred, trimming some of those losses amid some gains here in defensive groups like utilities and healthcare, and traders also keeping a close eye on some of this latest economic data, Paul, when it comes to some of these solid jobbless claims, basically.
Reinforcing the case that maybe the Fed to keep.
Rates elevated at that September twentieth decision. But who better to walk us through some of this latest when it comes to the markets than Jake Jolly, head of investment analysis at B and Y Mellon Investment Management, here in the Bloomberg Interactive Broker Studio. Thanks so much for joining Paul and myself this afternoon, walk us through, starting off just with your take on today's market action and what you think is happening underneath the surface here.
Yeah, I mean the way well, first off, thanks for having me. You know, the way I would sort of characterize what we've been seeing right is, let's know, where did we come from? Right through the summer, it was a pretty strong market, We had positive economics prizes, growth has been very resilient, disinflationary story has remained intact. Things probably got a little bit stretched towards the end of July.
We've had, you know, the pullback in August. Sentiment I think has normalized a bit at the same time that we've obviously had much higher yields today rolling into Steptember.
You know, we know that seasonality is going to be working against us, right, but I think you know, from our perspective, why we're maybe a little more cautious kind of through the end of the year is really around the fact that you know, what's priced in, and our view is that, you know, consensus has moved pretty aggressively towards a soft landing narrative, right, So what.
Does that mean?
It means that data incoming needs to basically reinforce that soft landing, and if it misses, you know, you could definitely see a repricing lower. So I think that, you know, obviously not today, there's some idiosyncratics things going on. But to me, the price action that we saw yesterday on the backside of the services prices paid in IM really suggests that this is a market that wants to kind of question that disinflation narrative out there.
Absolutely. I mean, I don't know.
I've been in the I took recession off the table, I would say three or four months ago, so I kind of feel like I was a little only released sight. But maybe I'm rongd Matt doesn't buy it. Matt Melow does not buy my call there, since I took all of I think two economics classes in my NBA career. So so Jake, So, how are you guys positioned at B and Y Melon, I mean, do we do you take risk on here, whether it's in the equity markets or fixed income or have you pulled back a little bit?
Yeah, I mean it's a very difficult tactical call. You know, you were right to make that call to take the recession off the table for this year.
Unfortunately.
Our take on it is that when we look at the leading economic indicators, when we assess kind of where we think inflation is going to head, we think that there's still a material.
Risk of a recession next year.
So that's why kind of we don't think it's really the right time to be aggressively re risking right now. We really continue to see much better opportunities in terms of a risk reward trade off within high quality fixed income, so that that hasn't changed. We have been emphasizing to folks that you know, we are nearing the end of this this hiking cycle, and historically that's really when you
want to start extending duration. And then on the equity side, equityside of the story, it's really about kind of where
can you build you know, resilience into your portfolio. Right It's not about you know, sitting out the rally, because certainly there's enough uncertainty that you could, you know, definitely have another leg higher, but I think it's going to you know, really rely on that disinflationary story being reinforced by the incoming data, and we see that as being you know, the risk in this fall.
One thing I'm curious about is when we look at the ten year treasury yield that's trading around four twenty six right now.
A peaked out around a four.
Thirty three last month. But when you think about where it its high last autumn versus where the S and P five hundred was trading at at that point that was thirty five hundred. You look now the S and P five hundreds up almost a thousand points since then. What's the difference in the bond market and why haven't we seen some same pressure and longer duration stocks like we would have seen a year ago.
That's a great question, and there's no simple answer for that. That's why you have this job because and I think you know it deserves scrutiny. You know, that's the real answer, because last year was all about, you know, this aggressive hiking cycle, the de rating off of you know, elevated multiples. At the start of twenty twenty two, right I think the SMP was trading at about twenty three times at the start at twenty and twenty two. We had a
trough last year at about sixteen times. Now we're back at nineteen twenty times. You know, is that a fair valuation. It's not extreme, I would say, but I would also say that it is elevated relative to you know, what we expect going forward, right, and that is that the
recession risk is is still quite high. And by the way, if you kind of look, you know, underneath the hood, the you know, tech multiples are pretty much back to that twenty twenty two right, So it's actually the other sectors that have gotten a bit cheaper relative to the start twenty twenty two, but tech is looking kind of just where it started. So and that decoupling is kind of what you're referring to, the fact that we've had rates move higher, but long duration is kind of held in there.
You know.
Part of that, of course is the AI story, right, I mean, you're you're factoring in much better earnings growth expectations, So that's I think offsetting it a bit. But at the same time, I think it does speak to you know, there's still a lot of risk out there because we are in the middle of this tightening cycle. We think that there's still our risk to the cumulative tightening, and that means that there's risk to those multiples still well.
So that's on the multiple side how about on the earnings. I you know, the second quarter earnings were a little bit better than expected. But if you've got a recession still kind of fifty to fifty out there, do you think there's still earnings risk out there that the market needs to deal with?
And I think it's actually pretty similar to kind of what I was referring to in terms of the you know, the growth, economic growth, and this dissiflation story is being pretty optimistic. The same is actually kind of true on the earning side as well. Right, I would describe earnings results so far this year is basically being better than feared. Right, We mark down expectations quite a bit from kind of mid last year, and so far this year earnings have
again been better than feared. So it hasn't derailed the rally. It hasn't sort of caused this knee jerk reaction to say, oh, you know, we're the earnings growth needs it to really come down. But now if you look at where consensus is, you're basically seeing that, Okay, two Q was the trough, and now we're going to have sequentially better and better earnings growth going forward and then into twenty twenty four for the s and P five hundred in aggregate ten
percent earnings growth. Now that's you know, not kind of extreme, but it means you have a year where you don't have a recession, you have a solid recovery. And I think think that for this rally to continue, you know, the follow through has to be there. And our view is that companies are going to continue to face margin pressure, the labor costs.
Side of the story.
I don't think that's completely in the past now, so we are, you know, looking hard at that and think that that's where you could see a bit of risk.
What's the top question that you hear from your clients.
Probably when are you going to stop talking about recessions? I mean, you know, the thing is when you look at the leading indicators, right, I think the conference boards leading economic interacy has made I feel.
Like investors also like to scrutinize that and say it's a lagging indicator.
Right, Well, it is all known information right when it comes out, we already know everything that's in there. But the bottom line is that there's still information there. And I don't think we should dismiss it. Dismiss it just because we're facing fatigue, just because we've been talking about it so long. The reality is that you know, we have a bear market last year. We've now exited that
bear market, and all of that happened without a recession. Historically, bear markets are associated with recessions, meaning that we are recovering out of recession. That is not the case. Now we're still facing down a risk of recession and to us that that really deserves caution, right and it should influence how you are trying to position your portfolio.
Also, that ECFC function that we like to look at in the terminals, so that's where you can go. You can look at how economists are projecting kind of an aggregate in the terminal. You can look at yearly estimates as well as quarterly. But when you look at a quarterly basis, I mean, it's continued to be pushed out to where there's not a contraction anymore. It just looks like there's going to be flat growth in the fourth quarter,
that it picks up again going into next year. But whenever people are talking about the consumer and the issues there, I mean, what really has to change things? Because it seems like whenever we're talking to different strategies, especially airlines and things like that a lot of people are still traveling in Europe, not as much domestically. But what really needs to change here to where we see see things actually shift since that is such a huge.
Component when we talk about GDP growth, I mean.
It's the labor market, right.
The big conundrum through this cycle has been how consumer surveys have remained very pessimistic. They have not recovered since COVID, at the same time that the consumer buy and large has been much more resilient than people expected, right. And people point to the excess savings, they point to the moratoria among on student loans, you can talk about you know, yolo, all of these things that that sort of could be
underpinning this, the underpinning the consumer. But the reality is that I think the simplest answer is probably the right one, which is to say that most people still have jobs. People are confident that they've you know, if they aren't getting a increase in their wages this year, they probably got one recently, so they're probably still, you know, feeling relatively optimistic about that. And ultimately, you know, the recessions.
If you want to know how recession starts, you look at the jump and jobless claims and you just haven't seen that. He's seen a bit of weakness at the edges, but buy and.
Large still holding together.
But unfortunately that doesn't tell us too much about where we're all right.
Yeah, the job markets has.
Been an amazing that the market has been just amazing.
Jake, thanks for work for joining us, Jake Jolly.
He's head of investment analysis at b and Y Mellon Investment Management.
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