Fed Officials Saw Slower Pace of Hikes Appropriate

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube and now also on Bloomberg Quick Take. Let's set your business week agenda on this Yeah, it's kind of a fed Wednesday. We call it an f O m C fed Wednesday because, as Charlie mentioned, definitely market reaction yields dipping down a bit, and we are definitely seeing a pop up in the equity trait. So let's get to it with our markets to Molly Smith is Economics

editor Bloomberg News. She's on the phone in New York City. Creed Gupta and Gred markets correspondent at Bloomberg News and Creed. Before we get into a deeper market analysis, just talk about the reaction to those fed minutes, if you would. Yeah, So the stock market here, and remember we're on extremely low volume, down at seventeen from its five day average. The stock market has popped on these headlines, about six tents of one percent on the SMP five hundred, NASDAC

now hired by above one percent. I should say it was kind of meandering for most of the day, So a very strong positive reaction in the equity market, positive reaction for the bond market as well. The tenure yield three seventy one down at four basis points, and even a drop of the vix. We are now at a twenty handle on the VIX. We have not seen that since this past summer. Um also a little bit of

weakness in the dollar as well. I'm gonna let Molly kind of um go through these headlines here, but to me, I think the one that they're most reacting to is that several officials said continued rapid tightening risk destabilizing financial markets. Destabilizing not a great word. And of course they also talked about in light of the termoil in the UK um a really precarious situation we're gonna be obsessing about

this for a while. Molly, come on in on it and just break down what jumps out for you in terms of those f o MC minutes. Yeah, to me, this reads pretty in line with expectations and echoes a lot of what we've heard in the time since the policy meeting earlier this month, a lot of what Powell had said in the press conference of expecting a higher peak rate, which which most majority which most most participants

did agree with in the minutes here. And also, uh, you know, the UM a theme of what most of the Fed speak in the time since has been in the sense of soon being appropriate to slow the pace of tightening. So I think that's also pretty positive for market drivers here in uh, you know, more solidifying those bets around fifty basis points for December. Yeah, Molly, I

think you're right. You know, it sounds very similar to what Rome pal said at the last press conference, UM, and it really seems like the market is keying in on that notion of slowing the pace of rate hikes and sort of ignoring the idea of the terminal rate being a little bit higher than what we had thought

before the last meeting. I mean, is the Feds sort of just kind of buying themselves some time with this type of st ants, you know, saying, look, we could raise rates to ultimately higher than what everyone expected, but we're going to do it more slowly. Is that is that kind of the takeaway? Do you think it seems? Yeah, that seems like a snare assessment. You know, they know that they need to be hiking you know, well into the first quarter of next year, possibly into the second quarter.

And that seems like what several Wall Street banks are predicting as well. Um, and it's uh, you know, a lot of data this morning would also uh support the idea of slowing the pace. We saw a few reports this morning that generally just pointed toward slowing parts of the economy, and most notably with the labor markets starting to cool and continuing job was claimed being the real uh indicator of that, as in people who are more routinely filing for unemployment claims than a sign that people

are being out of work for longer. Uh. That's being that is, you know, obviously not great for the people who are applying for undemployment benefits, but in the Fed's mission right here to try to cool the Abram market and softened demand more broadly, that is a very good indicator. Can we call this a pivot? Pretty I'm gonna first get your take and then go to Molly. I don't think it's a pivote as yet. We're now talking about

Maybe gave me a very big lecture. He said, you can't call it a pivot until they're actively cutting what you can do whatever you want down. It's a step down, Mike. It's a step down. Pivot, a step down. I'm gonna do that before Mike gets gay in trouble. Um, I've got to say that to me. I mean, look, I completely agree with everything Molly is saying. But I think what's really crucial once again is look what they're saying here that the risk of leverage and non bank institutions

could amplify the shocks. That that's kind of some scary stuff. There's some pretty scary language in here. Destabilize by non bank institutions specifically. I think, so this is like anyone that's not your your market makers, your GP mortgage, your Goldman's, your Yeah, I'm just gonna say crypto, anybody that won't be at the Thanksgiving table, although I bet they'll be discussion among family members. Molly, is this a pivot? I'm gonna stick with Creaty's assessment here and my good friend

Mike McKee, Oh, come on, you guys are checking. No one ever wants to argue with McKey. You can't agree. I think you know, if I, if any of us start saying it's a pivot, then STP is really going to go through the roof today. So I'm not going to call it a pivot for risk of the stabilizing the market. But there's definitely a change, significant change. Could we call it a pivot in the tone of what the FETE is saying? Molly, I like downshift, I really do. Um.

I think you know. And the thing for me is what pivot implies is that like it's that, you know, a start, like a start turn away from what they've been communicating. And to me, this has been what they've been communicating. This is like very much in line with what we heard at the meeting earlier this month and what several feed speakers have been communicating to us. All Right, we gotta go, all right, we can continue to beat this um. In the meantime, do my Twitter Paul on

your favorite pipe for Thanksgiving. Molly Smith, economics ceterer, a Bloomberg created give to anchor and markets correspondent at Bloomberg. This is Bloomberg Business Week with Carol Masser and Bloomberg

Quick Takes. Tim Stinovic on Bloomberg Radio. The minutes from the last FED meeting as you just turned there out just about eighteen minutes ago, and I feel like the big takeaway for me was that the FED did see officials talking about a slower pace of hikes appropriate soon, but they also talked about a somewhat higher than uh FED than they had previously discussed federal funds rate, the ultimate level of the FED funds. So I feel like

there's something for everyone in this report. Let's bring in Steve Skanky's chief economic advisor ever at keel Point. He is a former U. S Treasury and White House National Security Council staff member. He is based in Washington, d C. And that's where we find him via zoom Steve Skanky, So nice to have you here with Mike Reagan and myself. Um, is it true that there's maybe a little bit of everything or something in in this report for everyone? A

little bit. I think that's a good assessment, Carol. Uh, there's there there's nothing that's really surprised scene here. Uh. We had a dovish statement at the end of the November meetings, and then we had a somewhat hawkish UH commentary from cherre Poul and his press conference which was delivering the the the notion that they may have to raise above the four and a half to four and three quarters percentage points UH as the top rate of FED funds that was indicated in their September Summary of

Economic um outlook. So yes, a little bit devish, a little bit hawkish, no big surprises for what we've been hearing already, you know, Steve, when I look at the stock market react the way it did to this UH these minutes, you know, smps up about half a percentage point, and we have the end of the year coming. A lot of investors sort of assumed there'll be some sort of seasonality that leads to a year end rallying in stocks.

Does that do you think influence the Fed? Uh the next time they go out on the speaking circuit to the point where they might walk some of this debbishness back a little bit. If they're afraid that financial conditions are are loosening up to two aggressively. Oh no, they never talk it back, They never Mike, Mike, that's a that's that's a great point. Um. What's what's interesting is that there was enough devilishness in it, UH in their

policy statement and even in share Paul's press conference. And then we got this great inflation news UH the October cp I, the p p I last week, and UH markets just started to u basically rejoice in what was good news that that the fat actions were working. They could lighten up the things that they said about what was it a slower pace in these circumstances would allow the committee to assess progress towards its goals of maximum

employment and price stability. It seemed like that UH, that was being achieved, and of course the the f MC members got unnerved about that, and so last week and even earlier this week you heard a lot of pushback on that. They certainly don't want irrational exuberance to set in, But at the same time, a good number of them recognize that they've done a lot pretty quickly and they really need to take time to reflect to see how

that's working out so that they don't overdo it. So do you feel like when you look at the subsequent data points that we're getting, as you mentioned the inflation print, but even like the weekly jobless claims today right um week are than expected, showing some slowing down of the labor markets, still very high historically in terms of the strength that we're seeing. But that's a good sign at least from the FEDS perspect ative. That is a good

sign from the FET's perspective. And the job's number that we expect for November at the end of next week also looks like it's going to be below two hundred thousand, more in the range of a hundred and seventy five thousand.

Wage growth also seems to be slowing. All good things because one of the recurring themes in their minutes as we just look through them, is thanks to concern about tightness in the labor market, and and so some of the labor information out today, out earlier this week indicates that it's it's becoming less tight. Uh, it is slowing. That's helpful as an early indicator of avoiding what the fet IS is afraid about, and that is that inflation just gets built into the labor market and very hard

to root out. Steve. The other big takeaway from these minutes is as the Fed is sort of laying the groundwork for less aggressive rate hikes going forward, their simultaneously sort of you know, prepping the market for a higher terminal rate, you know, the higher peak rate in the Fed funds rate. I'm I'm looking at the uh what the Fed fund futures are implying, and they're pricing in basically about a five percent peak in the Fed funds rate towards the middle of the next year. Does that

sound about right to you? That sounds about right. And right after the meeting, Mike, uh Uh, Fed funds futures were up at five ten and change, which was which was where the Fed I think was was pointing them. And then of course, with a good inflation numbers, uh, that dropped back to you know, four point eight Uh. And now it's as you say, it's back up about five percent um. It's also a bit of a race as to which gets to five percent first, the FED

funch rate or inflation um Shure. Powell implied that we didn't say it explicitly it as press conference a couple of weeks ago that that they sort of see five ten as, which was of course their sep uh inflation rate by their their there person consumption expenditures inflation metric that they were going to get there, got it and accordingly. But but you know, inflation coming down more quickly than than they had fought. Steve, we gotta run. Have a

good Thanksgiving, Steve, stinky over at kill point. This is Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, this story definitely jumped out at me reading in this morning. It's a Bloomberg opinion piece. It's about the real reasons your family is sick right now, and basically it's about

how we're masks. For more than two years, drove down the incidents of colds and flus, the viruses that causes that, and as a result, we lost immunity, something that the popular press Mike has dubbed immunity debt. Immunity debt. I guess it's into our world. What if there's credit the fault swaps on the immunity. It feels like a new asset class. All right, so let's get to our next guest. See what he has to say. He's a friend of the program, Dr Ian LUs Bade, our clinical professor of

Medicine at n y U Land Going. He's on the phone in New York City. Ian, good to have you here with Mike and myself. I gotta say this is why I continued to wear a mask on subways in public places while flying. Um tell us about all the stuff that's coming at us right now. Absolutely. First of all, Happy Thanksgiving, Carol and Mike and uh, I hope it's a good holiday. So yeah. So though many people enjoy the holidays and feel very positive, there are both emotional

and health risks to it. A lot of people feel somewhat isolated, depressed, anxious, but in addition to that, they're worried about potential risks. From what we're seeing now are multiply infected people, both kids and adults with a combination of influenza. And for that, we do have a vaccine, so it makes sense to get your flu shot, even though it's not a hundred percent effective because of mutations

that usually provide some protection. So influenza rsp RS v as you said, respiratory sinsicial virus, which we tend to see more in kids, but you can also see in adults, and of course based on age, can have more complications. COVID, which hasn't gone away, although it does seem to be a little less serious. So we're seeing patients often with a combination of all of these and even other viruses like rhinovirus and ad no virus. So we are in this kind of soup of viruses and even kids going

into the hospital. Friends of mine who are in the ICU UM out in Long Island say when they test kids with these pathogens this nasal swab, often they come up positive on a multitude of these viruses. So you know, what do you do? Do you invite everyone over? Do you wear you know, how can you wear a mask

when you're all sitting down? So a mass certainly can help a debt, but obviously not practical and you really have to evaluate your risk, you know, if you're older, if you have diabetes, if you have lung disease, you know, maybe sit it out this year, Maybe make your guests take a COVID swab before they come in. You know, there be smart about it and emotionally prepare. In other words, try not to take things too seriously, be relaxed, but

make sure your guests are healthy before they show up. Doctor. Is there anything we can do about this quote unquote immunity debt? You know, if if our immune systems are are sort of weaker now than they were before, COVID is the old you know, taking vitamin C or drinking our institutes? Is there anything to that? Is that worthwhile precaution at this definitely? Definitely Vitamin D plays a big role. And most people are vitamin D deficient, so definitely most people.

And you can check your levels and see where you are, although there is a big range. I think vitamin D supplementation makes sense to some degree. Zinc prevents attachment of viruses, so being in good health in general, losing weight, exercising, um, so all of that makes sense. It is less clear that the fact that we haven't had as bad a flu outbreak makes you more vulnerable to the flu next time.

I think that's a little unclear, right, because if you're taking a vaccine or you're wearing a mask, are you doing yourself a favor or not? If the next round of flu you're more susceptible to. I would say that it does make sense to take precautions. There's some evidence that the shot helps UM. I don't think that it makes sense that that if you haven't had some illnesses that you're necessarily more at risk. Most of us have had RSV growing up. Most of us see a lot

of viruses, but they mutate from year to year. It's I think vitamin D carroll is best achieved through the sun, right, Dr. So I'm going to take this prescription that we should be in the Caribbean for the holidays. Here here, it's good, but you can't. You can't live there and in New York because you're in a northern climate, the sun is at a very shallow angle. So somewhat sun exposure is good also for the mood, because we know that increases

mood people there. There's seasonal effective disorder. When it gets dark early, people get depressed. In addition, probably one of the reason the holidays you're stressful. Dr les Prick, right exactly. We're all getting ready for that stress that comes with the holidays. Maybe we'll talk about that next time. Ian B. Well Over at Dr leon Ian LUs Over at n y u landgoing Medical Center. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Steno on

Bloomberg Radio. Right now, we want to talk a little bit more about the crypto crash, something we talked about a lot. Uh yesterday we did that with ars Kathy would Which. If you miss that conversation, check out our podcast feed. It's also on the Bloomberg Terminal. I have to say, though, when it comes Mike to the crypto crash continues to evolve and play out every day. One angle I'm not sure if you caught it is about how cryptos crash is actually helping couples rekindle their relationships.

Who knew? Yeah, and not true of the journalists and editors covering this FTX collapse. I will say, I think my wife's tired of hearing about all this. It's kind of been nonst the late nights. But at least someone is happy ending for something. No more SBF, no more SPI. Alright, so let's get to this story, which you can find online at Bloomberg dot com Slash business Week. It's also on the Bloomberg Terminal. Let's bring in Bloomberg Business Week

contributor Joel Stein. He is on the phone in Los Angeles, and Pat Ragnew York Markets and Finance out a Bloomberg Business Week via zoom from New York City. Pat, I gotta say, in all of our crypto coverage, I kind of missed this one. I'm so glad you guys are on it. How did it come to your tension? Pat? Well, you know, I think I'll what Joel talk a little bit about the people he knows, but I think all of us who spent any time reporting on crypto got to know people for whom crypto became kind of a

defining part of their lives. I mean, you know, a lot of people listening to this are just ordinary finance workaholics who have a hard enough time sort of paying attention to this stuff. Um. You know, when the markets are open to crypto has this quality of never being closed, even on the weekends, and bringing a lot of things outside of people's peripheral vision. And UM, I think a lot of people have had a hard time kind of emotionally managing that. And um, the side effect of that

is that it's hard on people's relationships. But um, Joel tell me how you kind of came came onto this. Uh, these were some people you knew. Yeah, my friend Igor Hiller, who's in the piece, And he was a guy I always called when I ever got assigned a crypto story to ask him like the basics of like what the hell this is all about? And he was over for

dinner with his longtime girlfriend. They've been together for like four years, and they told us that kind of like what started as a really funny story and turned really kind of sad and serious where they almost broke up because he wasn't paying any attention to the relationship because he was so obsessed with his cryptope and hanging out with them and just checking his phone constantly and waiting for n f T drops and just like you know, degenerate gambler maybe if you'd call it d Jenning when

he went into these kind of phases and uh, and she kind of gave him an ultimatum that was either crypto or her. But you know, Joey, you mentioned those n f T drops And I get the impression reading this that, uh, n f T is almost really worse in this situation because you're stuck there waiting for these things to drop and they can be delayed. Did you

get that sense to that? You know, the the addiction was almost worse when it came to n f t s, both because of the time consumption and also sort of the potential upside and those as an investments, at least for a hot minute. There, for a hot minute, n f t s were. But throughout the entire you know, crypto cycle, there was always a different thing that could occupy you twenty four hours a day because crypto markets

don't close. So during the D five farming phase, there was always some new farm that was opening up that you had to get involved and get their coin real quick, or there'd be a coin drop, right like, people were creating new coins all the time, and Elon Musk or someone else would tell you that this was a hot coin you had to get and you had to get it,

you know, when it was minted. So I don't think it was just n f t s. There were there was always some new craze that you had to get involved in, and you know, maybe you had to simp some star in order to get involved in that, you know, um in that discord channel and by I guess those are often n f T s. But yeah, there was always a new craze and even if you kept up with one of them, there'd be a new one that popped up. Pat, come on back in on the conversation. Yeah.

You know, one of the things I'm thinking about a lot with all of the really serious stuff having happening now, is that, um. You know, Um, we've learned that markets can grow up faster than you can teach yourself how to think about them, and I think also faster than you can teach yourself how to emotionally handle them. Um. You know, in the last two years in crypto, even for people who aren't investing in it, um, it's been uh, something that has moved so fast that it just keeps

you kind of like mentally and emotionally agitated. Um. But you know, I mean I also kind of want to talk a little bit about sort of, you know, the people who are the partners in these situations, and Joel's sort of like what they felt like they had to do to kind of get ahold of their relationships and really like bring their partners back from the brink. Yeah, and almost every case there was a guy, and it

was almost always a young it was always fat. We were looking all around all we could find with young men, uh and and the and the numbers, IM polls and and kind of play this out. There's a bunch of young men and they get so wrapped up in this and they think it's going to be a life changing moment that they can't miss out on. It's all fomo, and that there's going to be generational wealth created for their grandchildren if they just stick to this one thing.

And they all kind of we're able to get their spouse or more like with their girlfriend involved to an extent, but um, not as much as they would have liked. And then there their relationships started to wither because they were so devoted to this one thing. Yeah, Juel, I wonder if you know, if these guys really are creating wealth through this, if that sort of changes the equation

with the wise and girlfriends a little bit too. Were any of these guys actually you know, doing well with their trading enough to you know, sort of uh, get the get the day passed from their wives and girlfriends. Sure, I mean some of these guys, you know, on a exciting day could make ten dollars. The guys I was talking to at least and that that goes, you know, a long way and convincing your girlfriend that it's okay

you didn't go out with her this weekend. But you know, those days were few and far between, especially as the markets started to dry up at the beginning of this year. I have to say I loved I didn't love that. It was a Candice who's dating her boyfriend and their face timing and she becomes the really small box so

that he can continue crypto trading. Yeah, they're a long distance right now, they're they're getting married soon, but yeah, he they face time a lot, and you make her really small so that he can check all his his crypto stuff, and that would annoy her. But in a lot of these cases, eventually, either because of the crash or because of ultimatums, the boyfriends somewhat came around and

people were able to resolve their relationships. And in a lot of the cases where I talk to people, So, Joel, what do you think happens if the crypto market takes off again? Are these guys incorrigible or they they learned their lesson with how do you see a planet? I mean, do you know any gamblers should be encourageable. Um, you know, I think there's there's hope that the lessons were learned, but I think it's it's a very powerful draw packet Ready for like part two of this story, because I

have a feeling. Hi, my name is Igor and it's coming. It's coming, uh, fund to check in with you, guys. Both have a great Thanksgiving, a safe one. Joel Stein, contributor to Bloomberg Business Week, joining us on the phone from Los Angeles and pat right near these markets and finance editor at Bloomberg business Week. This story, by the way, online at Bloomberg dot com, Slash business Week, and of

course always on the Bloomberg terminal. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. We talked about a lot of theories when it comes to economics. There's supply side economics, there's Kenzie and there's Marxism. There's new growth theory. I mean, Mike, there's a lot out there. There's roconomics. Carol, did you know about roconomics? How come I did go back to

school Adrian economics. That wasn't a course option for me. All right, So there's lots of theories out there. I'm curious if any of you have heard about swift anomics. This is, as we said, among the most read on the Bloomberg So let's get into it with Bloomberg News US economy reporter, um Augusta Surviva. She is US economy reporter. As we said here at Bloomberg News, she's joined us, joining us in our interactive broker's studio. Augusta, thank you

so much for having us. Tell us about first of all, how this came to be or came to your attention. Thank you so much for having me and the reason why we decided to do those stories because last week I was one of the fourteen million people who hit the ticket master. No I did not get tickets, So now I'm left to deal with the secondary market and maybe try to get tickets forty dollars. So how is this like an economic theory, Like, how do you think about that and put it into kind of you know,

economic language. Of course, Well, when you think about economic theory, I feel like two of the most basic concepts are supply and demand, right, But in swift ponomics, that's completely upside down. That's an environment where you have skyrocketing demand, you have limited supply. At the same time you have monopoly accusations, you have accusations of price gouging. So it's a place where economic laws just don't apply, or maybe they do apply, but they're just completely um out of

this role. Yeah, and Carol, for our generation, I think we experienced this with bruceonomics earlier in the year when when no one could get a Springsteen ticket. But talk to me about Augusta. That notion of elasticity of demand. You know, the classic economic theory is that is prices go higher, uh an elastic good, the demand goes down. That doesn't seem to be the case with swift adomics here that people are seem to be willing to spend

any amount of money on a ticket. I mean, is is that what's going on in is there sort of any amount of their parents money right right? An elastic parent old demand. It's a whole different category of economics. But but is it's also part of sort of just this this bottleneck of people wanting to catch up with what they missed over over the pandemic when they're locked inside. Yeah, I definitely talked to some Taylor Swift fans who weren't able to get tickets last week and now they're willing

to pay anything. I spoke to to a fan who had been saving for ten months. He had a two thousand dollar budget and he was telling me if I had to spend three thousand, I would I've never seen this woman play life. Uh, in my life, I've been saving throughout the pandemic. And I feel like that's just one example of something, as you mentioned, Bruce Springsteen, Um, this is something that we're seeing in the spost pandemic world, right.

Do you have a lot of pent up demand people who, in the case of Taylor Swift fans, they've been waiting to see her life for four years now five years by the time she goes on tour next year. So you just have a lot of pent up demand people who haven't been able to go to concerts for a long time and now are just eager to go back to that life. And we're just Um, Mike and I were talking with our TV colleagues on radio and TV about consumer debt, and you know, you keep hearing that

consumer balance sheets are strong. There's lots of money. I pulled up something from the New York Fed because remain Remaine was kind of pushing back a little bit. He's like, I don't understand. You know, we're hearing about rising credit card balances year over year, increasing credit card balances is the largest and more than twenty years. This is coming from the New York Fed. They put out some data and release on November fifteen. And you do wonder whether

the roost will come. You know, Okay, great, I got the tickets, but now it's on my credit card, and um, you do wonder whether, even though they want to do this pent up demand from pandemic, whether you know, later on we're going to see it. And rising credit card balances continued, rising credit card balances, of course, And I did talk to someone who, unfortunately we weren't able to

include on the story. But this person was able to get tickets and the primary market last week, so those weren't crazy prices, but still it was outside of this person's budget. And they were telling me for the next month, I'm only going to be able to buy groceries. Oh my god, crazy hashtag crazy. And you know what's fascinating is it's not a short tour. It's fifty two dates. That's a very long tour. So she seems to be, you know, putting herself out there as much as possible.

Big arenas a lot of dates. Um, any chance do you think she'll add some more dates? Well, hopefully that would be good for me. But uh, And we sort of allude to that in the story that says that

she's the sort of supply mastermind. At the end of the day, everyone's blaming ticket master because of some of the issues, but at the end of the day, it's the artist who decides how many concerts they're adding, um, how many places they're going to, And in this case, she's added seventeen um new concerts since the tour was first announced at the beginning of the month. So she's trying to work on the supply side, but the demand is just as I said, at this point, for some

people it's nearly in the last dax. She's get it wiping up a frenzy there. I'm just gonna put that out because to survive, I thank you so much. US economy reporter at Bloomberg News. Check out her story at Bloomberg dot com. Moel Journal. Now, but you let me drive, No, no, no no, who's home? I'll do Bridey gravels. I want to drive. It's good question. Good drive, this good drive

to the clube. Well down on Bluebird Radio. All right, we've got just about ten minutes, just under ten minutes left in today's trading session, getting ready to wrap up the trade ahead of the Thanksgiving Day holiday markets. Remember equity markets open on Friday again, but UH should say a shortened holiday, uh session. Let's get to it though, with Jennifer to sister. She's chief investment officer at the registered financial advisory firm, Anchor Capital Advisors. They've been managing

money for nearly forty years. They've got seven point six billion in assets under management. Jennifer joining us via zoom from Boston. Jennifer, good to have you here with Mike and myself. Let's talk about the tone, if you will, not the tone of your computer. It happens. It's zoom um, but kind of a tone in the trade right now. It seems you know that there's an ability for investors, even though it's a light trading volume, to continue to take on risk. The f O m C minutes does

that support that trade in your view? No, I think, I mean, there's opportunities out there. I think, you know, we've seen a pretty steady decline in the markets this year, and I think what we're seeing is that, you know, the FED is getting closer to the end um, which for us is a good sign of an opportunity to kind of step in and buy some stocks at this point. Um, we think that there's a number of areas in the market that are down pretty significantly this year that present

great opportunities for us to buy. Yeah, Jennifer, I'm wondering, you know, the debate all year has been this sort of resurgence in the value stocks or the cyclical you know, companies really tied to the economy, know, at the expense of growth high tech, you know, less profitable sort of hopes and dreams type of growth stocks. How are you thinking about the leadership for the rest of the year and next year's Is it as simple as you know, the growth factor versus value factory or are you thinking

about sectors? You know, how are you sort of positioning for what's coming? Yeah, I mean we're you know, we're

thinking about sectors. Um. I think there's you know, we're really kind of seeing this transition UM sort of what we saw in the one to oh two time period UM, where you know, the technology valuations came down significantly and we kind of rotated into this stretch of time for value stocks UM and value sectors like energy, industrials, materials, and I think because there's been such an under investment in that space for the last decade UM, there's a

real opportunity over the next several years where we're gonna see those companies you a lot better. We're also really interested in industrial companies that are supporting the you know, secular drivers in renewable energy and electric vehicles. UM. We're not directly participating in electric vehicles, but UM or you know, the the more hyper growth UM plays and renewable energy.

But there are a number of industrial companies that make components and sensors and connectors and UM and substrates and that go into UM go into these types of renewable energy plays. So we think those are really interesting opportunities UM. And we think in the mining and material sector there's

opportunities as well. UM. We're gonna be needing UM, you know, copper and lithium to be put into electric batteries so UM, we think that companies in that space who have actually done a lot on environmental, UM and and social concerns are really set up well for the next several years. UM. And I don't know how how much deeper we can go in terms of specific names. You are talking sectors, but you did talk about all the economy stuff and

you mentioned industrials. What about something like the agg economy. You know, you've got Deer with some outperformance today and rallying in a big way. Yeah, I think, UM, you know we're going to be set up well in the agricultural space. UM. I think, you know, companies like Deer, UM as well as UM some of the kind of the seed companies we've looked at UM and own in

our in our portfolios that are doing really well. UM. I think the shortage coming out of the Ukraine and Russia really puts pressure on the food supplies globally, and so I think there's an opportunity there for UM companies in the AGG sector to perform well in this environment. Jennifer, how about the bond market. You know, obviously we've seen this huge increase in yields, both in treasuries and corporates

this year. Um, is there enough competition now from the bond market to sort of, uh make you allocate a little bit more heavily to fixed income than you would have otherwise. Yeah, I mean we kind of track where treasury fields are are at versus the SMP five hundred dividend yield, and we're clearly well above that level for the tenure treasury at this point UM at three you know, over three point seven percent, And so we think the ball market is actually a very very attractive levels um

from a yield perspective. And also you rarely see um an instance where you have back to back negative years in the bond market. So we think it's really set up well for the bond market to kind of rally back here and and also get some yield from from both treasuries as well as investment grade corporate bonds. Jennifer,

you mentioned mining and materials. You also you know you mentioned you know, renewable energy space, what about you know, the old integrated oil energy still your top performer this year if you look at the major industry groups in the SMP five hundred, that's after our batter year, you know, the year before, Like it has just been on a tear.

We get the reasons. Why would you be committing new money to you know, basically fossil fuels at this point, I would I think on these pull backs UM that we're seeing in the energy space, I'd be adding money. I think there's UM. You know a lot of these energy companies are have transformed themselves. They become very cash flow conscious and UM and very shareholder friendly, which I

think is a real positive. UM. They aren't drilling as much, but they the drilling that they're doing is very profitable. And so from stock perspective perspective, we think that the energy space, and you know, the integrated oil companies are are attractive stocks at this point. You know, Jennifer, I know, uh,

no one likes to try to time the market. I'm sure you don't either, but I'm just curious how you're thinking about this tremendous rally we've seen off the lows in October, you know, SMP five hundreds up almost from that low in October. Was that the quote unquote low capital thor or could there be another one to come? What do you think? You know, I think we still have a little ways to go. UM. Usually when we have the inversion of the Guild curve, it signals a

recession coming at some point. Uh So we're kind of anticipating, you know, that this that there will be a point early you know, to mid next year that we'll see some recession. Um. You know, I think what what we're kind of looking at in these short term rallies as opportunities to kind of lighten light in areas that have really worked well and and kind of set up well for have cash to redeploy um when the market does

ultimately bottom. We just haven't seen kind of earnings really come down yet, um, and which really kind of marks the bottom of a or marks kind of the recession starting. So we're really just being very patient at this point and and and just think that we probably have a

better opportunity um in next year. All Right, we're gonna run. Hey, listen, have a great Thanksgiving Jennifer to sister, thank you, Chief investment officer at Anchor Capital Advisor, seven point six billion in assets under management, joining us via zoom Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,

or Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio, or watch us live on YouTube and now also on Bloomberg Quick Take