Dimon Sees ‘Storm Clouds’ Over the US Economy

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. Well this week, man, we get reads on a lot of economic data points new home sales, durable goods, GDP, core PC E f O MC minutes or something coming steady say that five times fast not gonna happen. What really tell us about the economy? Peak inflation? More so? Many questions, So we're gonna put a few of them to our next guest. Peter Atwater

is adjunct professor of economics at william and Mary. Peter joins us on the phone from Pennsylvania. You may recall that Peter is the one who came up with the idea of the K shape recovery, something that we've been talking about for the last two years. Peter, good to have you with us. How are you. I'm doing well. Tim, thanks so much for having me. Well. We love having you on because what you focus on is sentiment, the way that people are feeling, and you connect that to

the market. So so give us an idea, you know, on a day where it seems like we're coming back from touching a bear market in the what sentiment is like out there? So depends on where you look. Um. You know, within the economy, I am very concerned about the sentiment of those at the very low end socio economically. UM. They have been hit by a barrage of really difficult um actions because of the inflation, whether it's food, energy, housing, childcare.

They're really facing um enormous challenge in every direction they face. On the other hand, I look at the sentiment in the market and I laugh with everyone looking for a bottom because at Loews and sentiment, nobody can anticipate there being a possible bottom. I I feel like the investors today are like kids on a long vacation car ride. All going are we there yet, and that doesn't mark

a market low. You know, later on we're gonna play um a clip of an interview are Bloomberg Surveillance and TV team did with Clembia University professor and Nobel Prize winning economist Joe Stiglets, and he talked about Peter saying raising interest rates is not going to solve the problem inflation. It's not going to create more food. It's going to make it more difficult because you aren't able to be able to make the investment. Um. Tim talks about this

all the time. We all talk about this, that this whole idea of the Fed raising interest rates isn't going to fix supply chains, certainly not overdight. Maybe it reduces demand perhaps a little bit, but you know, that's not going to fix all of our supply chain challenges and certainly not help those who are probably being hit the hardest. Like you talk about, Yeah, and I and I worry is that, Um, you know, the FEDS activity, particularly when it ripples through to things like used car loans and

to you know home, you know the cost of a mortgage. Um, that's really setting a barrier for those at the at the low end. So what's the FED to do? And I know, you know you're not advising the FED right now, but you know the FED FED Chief J. Powell has has talked about the blunt instruments that it has to to tame inflation, It needs to tame inflation. Is it

not doing it the right way? So I have some sympathy for the folks and at the FED, because you know, their tools are not designed for this sort of a the supply shock. But at the same time, I think we need to be careful in terms of overreacting to an overreaction in the first place. So if you go back to March, we pushed all of the stimulus onto the economy and and folks were not paying attention to

the likely bullwhip effect that then manifested. And so I feel like the FED is constantly now chasing the last impactful moment in trying to um respond to what is already a very impulsive um consumer. And I think we're in this environment sentiment wise, where we we tend to overreact.

You know, there's there's not a lot of certainty that people feel, there's not a lot of control people feel, and so there's a high level of impulsivity, and I get concerned that the FED is now trying to to play in that same impulsive manner because we the population are being very impulsive at the same time that I

feel like sums up so much of what's going on. Peter, I keep talking about, I don't know what they're really economy is, to be quite honest, because we did have so much stimulus globally pumped into it, and now we're

kind of trying to find our way back. And I feel like data points don't necessarily indicate that one thing that really jumped out along those lines from the research you shared with us and our producer Paul, you noted below, the service of today's record low unemployment rate is a crisis that has the potential disrupt to disrupt the broader economy just got about a minute left. So what do we need to kind of have on our radar along

those lines? So I think we need to be very aware of the stacked inequities that exist the bottom and that you know, you have an environment where sentive negative sentiment upon negative sentiment upon negative sentiment, and I think we need to be careful that we don't reach a tipping point, particularly because we have an economy today that is so dependent on those at the bottom because everything is being delivered to us, and that that chain of individuals at the low end of the of the system

are keeping those who are working from home of flu. All right, well, a good point, and um, wish we had more time. We will have you back very soon. Peter Atwater, he's adjunct professor of economics. That will Eave and Mary on the phone from Pennsylvania. I have to tell you one thing. One of the panels I did

and Panama was on the global food crisis. And in some of the research I did that it talked about rising food prices often lead to political instability, and so there are repercussions of this type of environment the longer it goes on. Yeah, people allude, you know, people talk about what happened back in the Middle East in the early two thousand tens Arab spring. Exactly. It's exactly right. All right, So much to talk to you, and we've

got lots more to come. You're listening to Bloomberg Business Week. Cow Master Tom Stenovik were Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stenovic on Bloomberg Radio. Yeah, Jimmy Diamond talks. We all listen. And as Charlie mentioned, talking about some storm clouds. As you said, here's a meteorologist now at him. Yeah, strong clouds over the US economy. They may dissipate, may dissipate.

That would be good. Yes, indeed, let's bring in Sally bake Well, finance team leader for Bloomberg News. Sally joins us via zoom from New York City. Sally, good to have you with us. We got our live blog going right now about JP Morgan's investor Day. Just give us the highlights of what's happened thus far. That'st of all. I really like the idea of Jamie dian And as a meteorologic. If it doesn't, if this whole banking thing doesn't work out for you, Jamie, we got something else

you know where to go. Um. Well, Diamond has been a big champion of the U s economy, and he struck that note again today. Um. You know, it's robust because of all the stimulus that has been pumped into it. But of course he nodded to this very unusual cocktail we have at the moment of surging instation quantitative tightening

by the Fed. He also nodded to the volatile market and lots of liquidity out there, but overall he we got no sense that any recession is in an and um, he has previously in recent weeks sort of made the prediction that there is a thirty percent or so chance of recession, much like the Goldman Sax CEO David Solomon, who made a similar forecast. But you know, with Diamond's words today and with projections by the Bank, we've got the kind of this this relatively politic positive picture with yeah,

there's no real imminent recession on the horizon. We we saw new higher guidance for net interest income, accelerating loan growth, strong credit quality. In fact, Diamond said that he had never seen credit looks so good. Um, no particular changes in consumer behavior and at least flat, if not up deposits. So it's not a particularly negative. You know, there's not

too many negatives to take away. I guess the ominous thing is, you know, it's hard and as Diamond said, it's very hard to predict what any recession, if it did happen, would look like, because this cocktail is so unusual and um, sort of precedented. I gotta say, Sally too. He said they may dissipate me in those storm cloud It's like if you said, of course, folks, they're going to dissipate, just might take a little while. But he

said they may dissipate. So I agree with you, right, It is hard to predict, and I think that's the dilemma that so many CEOs and leaders find themselves in. Having said that wasn't part of the update about their growth and movement increasingly into the wealth management side of the business, and I feel like I want to bring that up because it plays to a very specific sector of our economy. Yeah, they want to have ten percent of wealth market share. They're hiring some one thousand, three

hundred advisers as they doubled down in in that area. UM, so it's definitely a big focus for them. I mean, they gave a lot of updates on some of the you know, the company's plans. They're expanding by product, there is expanding by country. They're entering seven new markets. Um. They've announced plans to introduce an interest free paying for option for debit card customers, which is, you know, to compete with the likes of Klana and after pay you know,

the buy now, pay later. UM. They're investing in building out their international commercial bank, so they're they're expanding in a in a lot of places, and what they had to balance maybe today was UM the idea of assuaging investors who had been slightly worried about the bank's higher expenses in forecasts and eight point six increase in expenses versus the need to show where they're expanding and investing UM to capture you know, hopefully something that feeds into

the bottom line. But they seem to do that pretty well today because the shares were UM at one point about seven point five pc and lifted, as you mentioned at the beginning, UM lifted the whole of the sector. Well. These expenses also have to do with the money that Jamie Diamond is paid, specifically because there was recently some pushback right against that in terms of shareholders support UM.

I wonder if that's part of it, Like Jamie coming out and saying, hey, here's what you're getting for the money. I think he probably did feel that pressure. It was a really unusual rebuke for the CEO to have such little support for his executive pay package. He got about support for his compensation which did include some sort of special perk, special bonuses to entice him and other senior

executives to stay on at the bank. UM, And I think going into the investor day that was That's why this one was particularly significant, not only because it was the first one since before COVID, but they had to kind of win back investors who had allowed the stock to tank UM over the past well so far this year it was the worst performing among all all Wall Wall Street banks, so they did have to kind of

win back some some shareholders. But in terms of whether that UM that those expenses were a link directly to his you know conversation package, UM, certainly within the court. At an investment bank, they have about three point eight billion of expenses for this year. I think some three one billion goes technology. UM. So that's the I think the bulk of it is, you know, technology investment. All Right, Sally got a round Sally bake Well, she is finance

team leader here at Bloomberg News. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, with everything going on in the world, I love love when our Bloomberg team draws our attention to innovation going on around the world, and I definitely saw that last week in Panama, Panama, some of the Unicorn startups in Latin America. Now, it's Ashley Vance's turn in a story in this week's new upcoming issue of

Bloomberg Business Week out later on this week. Timmy's introducing us to a company that discussed its business with the news media Bloomberg for the first time. Yeah, I had never heard of it before reading this story. The company is called Meter, It's founded by two brothers, and it's got a new way to get workplaces online, as well as some noteworthy backers as well. Join us now is

Ashley Vance, features writer for Bloomberg Business Week. Actually is also the author of Elon Musk, Tesla, SpaceX and The Quest for a Fantastic Future. Actually joins us on the phone from Palo Alto, California. Joel Webber is the editor of Bloomberg Business Week. He's with us in the Bloomberg Interactive Broker's studio. Joel is actually writes a couple of brothers. Uh, you know, such as these would could go off and they'd graduate college early. They could go off and they

could basically do anything. They could go work at a crypto startup or start their own, you know, crypto company. They choose to solve a problem that many people would say, Wait a second, that's not necessarily the you know, for lack of a better term, sexy thing to be doing right now. That's right, um, although maybe maybe starting another

crypto company wouldn't be the right call right now either. Um. What I what I liked about the story was just you know, when we think about the way the world works, Uh, there are things that just the world seems to maybe have forgotten. And have you tried turning off the router that have bad WiFi is one of them? Um, And I've done that at home many times. I've turned it on, turn it off during the pandemic. It worked sometimes. The

other place that that happens is in offices. And what what makes makes these brothers interesting is this whole startup is about bringing better WiFi to the office, which, hey, in these times of r t O, anything counts, right Ashley. So where did this idea come from? Yeah? Well, these the brothers are fascinating. I mean to your point. There a Neil and Sunil VARNSONI are their names, and and uh,

I mean they're kind of throwbacks to me. They they had this business in college installing networking equipment at offices and they realized it was just too hard, and so they decided to go fix the problem build all this new networking hardware and software themselves. But the big idea here is you're a company, you move into a new office space, you want to set up the Internet. It's still this kind of archaic process where you have to

call about five different companies to make that happen. And so they wanted to be more like I think up your telephone or your water in your office, where you essentially just kind of click a button or a button on a website and and it appears, and so you know, it's one thing just for you and I to have this idea. Um, and I'll tell you were like getting yourself there. Actually, uh, but they actually have have an interesting role index and they were able to get some

interesting backers. Who who did they who did they call and who put money behind them? Yeah, the backers is kind of like a who's who, But you can imagine in Silicon Valley you've got the Collinson brothers who started Stripe, Diane Green who started gm ware, Egan Durbin who runs silver Lake, Sam Altman, and open A. I mean, the funny thing about this story is the list of investors is incredibly impressive. But this company is operated for about six years in almost complete secrecy UM and so all

these people somehow kept kept as a secret. And this is the first time, you know, the founders ever talked that anyone's written a single story about this company called Meter. It's so interesting actually because these guys, you know, you could try to solve a problem from Silicon Valley or you know, from Virginia or from New York City, but these guys actually moved to Shenzen because the hardware in

this they really wanted to understand the hardware. Here talk about what they did in order to to really make it so they understood the ins and out of the business. Yeah, I thought this was this is when I started to

think they were the real deal. Uh. They had this previous networking business that they started in college, and they took all that money and they just flew on a whim almost to Shenzen and and decided they were going to manufacture their online of routers and switchers and access points. But they had to talk their way into it. And so they lived in a hospital for eighteen months, and and and did manage to talk their way into a factory. They would sleep on the factory floor, and they had

their beds. They had no beds even in their hospital. It was awful of their networking gear. And so these were two kids that you know, they believe in themselves, and then they wanted to know every little piece of how this works, and so they fund it, you know, before they got all these big name backers. They funded all of that themselves and lived through it. So I get it, and I could see and as you report that a lot of companies, they've already got a lot

of clients out there, some larger ones. But is there success based on really lining up massive companies who already have invested so much in their own networks at this point they want to get there, but it's obviously a harder sell. You know. Traditionally, what you do is you're in a building. You've bought a ton of equipment, probably from Cisco. Um. You probably have people on staff who

manage all that stuff. You've invested millions of dollars to have the internet working at your office and so to to rip all of that out and bet on a startup is a little bit harder. But if you're a company, you could be a large company that's moving into a new office that you don't want to go through all

that pain. Again, the idea as you called meter and they set everything up for you and they bill you per month like UM, and so I think that's the the easier cell right now is started larger companies moving to a new spot and once you're in the cloud, everything goes great, right like what else could go what else could go wrong? Here? Though? Actually I mean they you know, they've got serious challenges ahead of them, which

is like you know, the network. If your WiFi is not working at the office, you're gonna hear about it. If there's some security disaster, you're gonna you're gonna hear about that and possibly get egg on your face publicly. And so so it's a young company. They have to prove that their networking gear is as good as they say it is. So this is gonna be it's gonna be a long march. That said, they reminded me a

lot of kind of like a young vm Ware. Um, just it's it's potentially this huge infrastructure play if they get it right. And so it's a it's a big deal. Does a company like this Ashley and like, I don't want to put the card too much before the horse, but it's got some big name backers and they're looking for an exit here. Is this the type of company that I p O s or gets it gets acquired

by an established player like a Cisco. Yeah, exactly. Yeah, this is a conserved Cisco through the years, as they're one of the most inquisitive companies ever. And what generally happens is as soon as you're doing well in networking, Cisco buys you or Juniper buys you, and and there's a tendency for the technology to languish. Of course, these founders, as they always say, you know, promise me, they're not going to do that. They're in this for the long haul.

They're going to be the ones who stick it out there will see if if history is our guy, Cisco tends to end up with this stuff. But but these brothers seem quite determined to go to make make their name for themselves. Well, definitely an interesting model that makes sense certainly in today's environment. Um, actually, thank you so much. Ashley Vance, features writer of Bloomberg Business Week, also author of Elon must Tesla, SpaceX, and The Quest for a

Fantastic Future. This story, by the way, in the upcoming new issue of Bloomberg Business Week do out later this week, and of course our thanks to Joe Webber. He is the editor of Bloomberg Business Week. You're listening to Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. All right, this is gonna be a tale of where reporting out the story is probably even more interesting in the story itself.

Excuse me, everyone, it's a market moving store. It's totally market moving story. Intrigue behind the scenes is pretty good too, So should we get to it. Yeah. Lenna Baker is Deal's team leader for Bloomberg News. She's with us in the Bloomberg Interactive Broker studio. Leona and her colleague for Busy Yesterday breaking the news that Broadcom is said to be in talks to buy vm Ware. Uh, we do see Broadcom lower vm Ware surging on this story. Uh

good to have you with us. Can you take us through your weekend and just what happened when this news broke because you broke this story yesterday. Sure, so on our team, we usually have someone on the weekend shift, but I took off this weekend because it was my bridal shower. I'm getting graduation, thank you. Um So, I thought the coast was clear, but I had my phone in my hand to take some photos, you know, it's with my future mother in law. And the call came

in that this deal was in the work. So luckily I cleaned up quickly, you know, send people on their way. Luckily things were dying down by then and we started working the phones, and luckily, around seven o'clock we did break the story of the broad commas and talks about vm Ware. Alright, to remember, all right above and beyond Bloombergers, you like a couple of wedding presents right there, and that I'm just or maybe like paying for the honeymoon

or something unbelievable. Alright, so just kidding, just kidding, Well, maybe not Let's get to this story, because this is massive and what I like about these stories at the middle of this market volatility, companies are talking about are possibly doing mega deals. So one thing that it does seem counterintuitive, why is big strategic m and A happening right now, especially in the text sell off. But if you look at Broadcom and vm Ware stocks, they've fallen

in tandem. So as long as you are trading UM in the same direction as the partner in your deal, you could still do a deal. If they're trading in different directions, that would then be problematic. But where we are going to see deals like this UM as as things slow down, is it It's not a distressed deal though. It's not like the type of deal that we'd see in a bear market or a downturn where we see some high flying stocks having fallen se like private equity

coming in and swooping up some of those companies. It's totally different than that. Totally broad Colm under its CEO Hawk Tan, they've been on the lookout for big acquisitions. They wanted to do something to really move the needle in software. They've done deals before, you know, ten billion, twenty billion, but now at over forty billion, This would be its largest to date in software. So they're just

very deal hungry. Vm Ware has been UH doing deals also for years since bought e m C back in tw e MC hit high controlled vm Ware and Michael Dell, the billionaire UH is the top shareholder in vm Ware, so he's had his hands in this deal for a long time and he's he's made a lot of money out of vm Ware already. But this will be sort of the final chapter should they end up selling Lee. And I know you're the deals person on here, so looking at it from that perspective, but I mean a transaction.

I mean this broadcast Com has been a pretty inquisitive company. UM strategically. Are people saying this makes sense? Sure? So Broadcom does a lot of financial engineering and they're almost like a publicly traded like tech private equity firm for all the deals they've done. But we are hearing that there are synergies here, and you know, some of Broadcom's customers could benefit from being up sold you know, infrastructure

software from vm Ware. So it's very complicated and kind of the guts of what runs the Internet is what these cloud companies are doing. But yeah, we're hearing that there there are some some cost cuts and synergies. It could happen here, Aleana. Just the latest from from you and at Hammond Crossing just about a half hour ago. The deal is said to come as soon as this week.

What's the latest there? Sure, So when we reported yesterday we didn't know, you know, what stage they were in, But now we could safely report that the deal could come as early as this week. There are some earnings that are planned, so we're keeping an eye on it. Although no deal is ever done until it's announced. Even then, as you can see with Elon Musk and Twitter, even if you announce a deal, it's not a done deal until it closes. So we'll be keeping an eye on

it um to see what happens. Is there a chance that somebody else comes in? So vm Ware has been publicly traded for a while, and um, you know, different companies could definitely swoop in. I wouldn't be surprised if they're looking at it right now. Always on the cusp of a sale to someone else, you get that final look. So we'll be chasing it as of now. Nothing to report. What does the landscape look like right now we've been talking a lot about well, uncertainty and unease with the

public markets and the economy and typic leak. During that time, you'd probably see a decline in deal activity. What are you hearing from your sources? So we are seeing that general M and A activity is down thirty compared to last year, but last year was a blockbuster year, so that doesn't mean M and A is dead. If for downt tech deal making has been a bright spot, like you see what this deal today, and also private equity

firms are licking their chops. They're looking at every software company under like ten billion and thinking I'm going to buy that. So we're gonna be very busy trying to break the next deals and tech. And they've got a lot of dry powder too, they're sitting on mountains of it. It might be harder for them to exit some of their investments because the I p O market is totally dead.

Um stack market has also died. But if they want to do deals, there's a lot of stocks that have sold off as you guys you know, report every day, So the flow hasn't slowed down from the market instability that we saw. The volatility. I mean pretty extreme last week. We certainly saw in the first quarter. But I'm curious people that you're talking to your saying no, no, we

we still see a pipeline. People are busy, and private equity deals is on track to be like the second biggest year I think for private equity deal making, only surpassed by last year. So things are looking good, especially in that space. Yeah, fascinating. Um, well, I hope you've warned, like your team when you're getting married, when you're going on your honeymoon, so that like if there is a

follow up, if this isn't closed, you're off limits. No phone in the hand right, Well, you know if this, if I break this from the bridle shower, the wedding, you know, maybe I'll break a hundred billion dollars. Don't say that. Leanna Baker, thank you so much. She's Deal's team leader at Bloomberg News, joining us here in our interactive broker studio. I do find it interesting even the deal flow is down. She's right, like, we've had a record year last year, so it doesn't mean it's still

not a busy year. Sure's a broadcast, by the way, down about three point five percent, all right, you're listening to Bloomberg Business Week. This is Bloomberg Radio broad Journal. Yeah, but you let me drive? Oh no, no, no, should be home please, I'll do. I want to drive. Good question. This is the Drive to the Clothes music on Bloomberg Radio. All right, here we go, everyone, Just about ten minutes

left to today's trading session. Definitely risk on trade, but again, if you look at the year to date averages, we are still way way off our highs, certainly of the trade. Let's get into it with Michael Sheldon, an executive director and chief investment officer at High Tower r d M Financial Group. Michael joining us this afternoon on the phone from New York City. Michael, how are you good? Thanks? Thanks for having me. Yeah, it's good to have you

with us. Certainly a changing sentiment from what we saw at the end of last week with you know, we entered the bear market for the S and P five hundred that we didn't close in it. What are you what are you hearing right now? What are you seeing

right now when you look across the investment landscape. Well, it's definitely a challenging and vironment right now, I think, um, I mean, it's been well documented that fed policy, inflation, the events in China, the events in Russia, all of those are sort of conspiring to to make it a very difficult market environment, one that's very different than than last year and much different than the past three years.

So it's it's gonna be choppy, I think over the next several months until we get more clarity on on many of those issues. Um. You know, there's a lot of talk about do we go into a recession, do we not go into recession, And obviously that may have the outcome or the answer to that question may may ultimately determine how much more downside there is. If you look back at all the all the recessions into World War two, for example, there have been twelve of them.

On average. In a recession, equity markets decline a median of two and average of so Um. Many parts of the market have already experienced a lot of pain, unfortunately, but depending on you know, the direction of the economy, there unfortunately maybe more downs before we ultimately get out of this and and there will be another bull market at some point um. But we're keeping our sort of

we're keeping an eye on that. In terms of inflation, do you think, realistically, we need to think about it being a much higher number until we work through some of these supply chain problems. And also you know the economy, the global economy shifting away from fossil fuels, moving towards alternative energy. I mean, these are things that take time. Yeah, you're absolutely right. Um. I think in terms of inflation, I think we're sort of at the peak pain sort

of threshold right now. Um. You know, Jeremy Siegel from from the Warden School has has famously talked about how the money supply has been a big factor in influencing inflation. So you know, for example, the money supply, the M two money supply, which is basically broadly money and circulation, grew it about really about five point four in the

decade or so leading up to two thousand twenty. But but then due to COVID, the Federal Reserve basically pulled out all the stops and the money supply grow to over on a year of a year basis. And now as it's been pulling back liquidity, the money supplies back under ten percent. So there are some potential reasons to be more optimistic looking forward. And if you look at for example of freight rates around the world are here

in the US UM. You can look at some of the comments from the retailers that we heard from earlier this week, where individuals are shopping for different items, and you can also look at five year forward UM inflation indicators. So there are some signs that maybe on the margin inflation maybe in the process of peaking, but it's hard

to tell how quickly it will come down. Having said that, Peter Atwater was on with us Tim and myself, Magic professor of economics Evert William and Mary, and he said, the Feed has to be careful about overreacting to an overreaction in the first place, meaning that you know, we had so much stimulus during the pandemic and now the FET has to be careful about, you know, the impulsiveness of today's market and mistake of the FED policy overreacting

to what was an overreaction in terms of stimulus in the first place. Well, that's a good point. So there are five rate meetings left in this year, and then the FED funds rate right now is at one percent, So the expectation is that the FED will raise rates by a half point at each of the next two meetings, which would bring the FED funds rate to two percent, I believe, and then maybe do quarter point rate hikes

into early next year. There are some FED members who think we should be doing more than that, raising rates three quarters of a point or one percent. I think Powell was on the camp that, you know, you want to see what the effect of current rate increases is over time and not overdo it, and then may re reassess things as we go into the end of this year. So I there are there's a wide range of opinions, but I'm in that same camp where you don't want to overdo it and maybe give time a little bit

of a give things a little bit of time. Michael, I want to go back to something that you said a couple of minutes ago. You said that we're starting to see signs of optimism, and you mentioned retail earnings last week, which were really brutal when it came to Walmart into Target. Why why do those results make you optimistic? Because I do. I do agree that to a certain extent, the slowdown that we're seeing in the stock market, and it's from some firms during earning season, is kind of

what the FED is going for. Well, maybe I misspoke when I said optimism, optimism in sense that maybe inflation is starting to show that it may be in the

early signs of peaking. And if you look at some of the earnings from the retailers last week, unfortunately a couple of the earning a couple of the retailers really so their stocks decline significantly, But that's because consumers are shifting their buying patterns, so they're not buying the same things which they loaded up on during the during the shutdown of the economy, and retail sales are way above trends if you look at them on an historical basis.

So as consumers start to pull back, that will mean left demand and that would be unfortunately, some of the retails will be left with extra goods on their shelves, which will lead to lower prices and ultimately what the FED wants in terms of reducing inflation over time. So what do we do as investors right now? Michael Well, I think one of the most important things is you have to have a financial plan, and a financial plan

will help you meet your long term investment goals. So I think you want to be balanced in your approach. We've been adding to growth versus Sorry, we've been adding to value versus growth. We're still overweight growth and we are trying to take into consideration taxes. Uh. You want to have a little bit of waiting overseas, but it's too early to really get too excited about foreign markets.

And you do want to have be balanced. And unfortunately markets may be volatile over the over the next several months, but but having the right asset allocation will allow you to sleep at night to ride out the inevitable ups and downs that come with investing in these times of environments. When do you see an opportunity to buy the SMP five, Well, if not necessarily the the SMP five itself, you want

to look at different sectors of the market. Uh, we like healthcare for example, and all there's parts of the market. You want to continue to have some exposure too to technology because that's the growth party your portfolio. You do generally want to be um. You want to have a variation and you want to be barbelled in your portfolio and not just load up on one particular sector going forward. Hey,

thirty seconds, Michael, Energy up forty percent last week. If I'm looking at the major industry groups in the SMP five hundred, it's a top performing group this year. Get up another I think fifty here would you be committing more money to energy? This is one sector that's that's hard to love. And right now it's about four percent of the SMP five hundred and and some are talking about the fact it could go to ten of the SMP five hundred unless something changes. It looks like energy

should continue to to outperform. It is hard to jump in after the massive run it's had. It's amazing. Michael Sheldon over a Hi Tower, RDM Financial, Thank you so much. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube search Bloomberg Global see al