Fed Sees Rates Near Zero Through 2023

Week on iTunes, SoundCloud, blo Bloomberg dot com. You can also listen to our radio show at two pm Eastern on Bloomberg Radio every weekday, or watch us on YouTube by searching Bloomberg Global News. All right, Kathleen Hayes, now that we've got the bills paid, talk to us about what you're seeing and what jumped out of you. Well, first of all, the fact that they're the vote was a to two uh thirteen and seventeen officials forecast rates on hold through three not surprising, But again, um, I

think it's a little bit surprising to me. On the descent from Rob Kaplan Neil Cush Gary Minneapolis, said, Rob Kaplin from the Dallas said Now, remember there's only there's there's twelve Fed Bank presidents. Four of them vote on a rotating basis. That's how you get a total of ten on this vote out of the seventeen officials on

the Federal Market Committee. But importantly, Rob Kaplan uh preferred to retain quote greater policy rate flexibility, while uh Neil Coscary dissented because he wanted to wait for a rate hike until core inflation has reached two percent on a sustained basis. Um, I think you know, one of the criticisms among Fed watchers of what came out of the Jackson Hole virtual meeting, this switch to an inflation targeting framework, etcetera, is how are they gonna do it? You know, how

much are they going to overshoot? What happens if they overshoot, then do they have to undershoot? There's so little it's really spelled out in terms of details. This is so vague, And many of them say, well, it's probably because there's still not a full agreement within the Federal but Market

Committee about how they're going to carry this out. Um. Rob Kaplan, I think is already said in the past that he would be fine with in the past year or more that he'd be fine with let inflation run hot, let it run above a bit two percent, but at some point he'd want to look at that and you then he might think change his main mind about rates. Neil Coush Gary, on the other hand, has been very worried about the virus. I think this is he's he's the dub because the key inflation gauge is not the

core inflation gauge. Right, so now he's talking about core inflation reaching at two percent on a susteemed basis if it's a little more, a little stricter, right, I think that this. I think it's going to be something that comes out of this well. And I'm just gonna say what's coming out of it in terms of market reaction, not much. When you look along the yield curve, the ten, five and two pretty much where they were right before

the release of those Fed minutes. Equities, however, we've seen some support and we're moving to just a little bit higher on those news. Let's bring in Dave Wilson. Dave give us the equity market reaction here, because we have seen a bit of a turnaround. I mean, we have and it kind of started, you know, before the decision was announced, and you know, we saw the SNP five kind of pop up for a few minutes. It's given back sort of those initial games. Still trying to hang

on though for a fourth straight advance. And when you look at the eleven main industry groups in the SMP five, it's a distinctly sort of economic bent to all this. Uh, energy stocks, industrial stocks, financial stocks, best performers out of those eleven groups, and what they also have in common

is they're all down for the year. So it's almost like, uh, to some extent, what we're seeing out of the FED is giving at least some investors a reason to kind of look at the more beaten down areas of the market. And I say that knowing that there are only two groups that are down out of the eleven, Technology and communication services, which includes Facebook and Google's owner Alphabet and

a bunch more sort of Internet linked companies. So, you know, definitely a shift from what we've seen over time in terms of the relative performance industry wise, but also areas of the market that have run up a lot, you know, right, yeah, absolutely so, Kathleen, Let's take a step back if we

can and just remind people. I mean, the FED always important, of course, but it has been many would argue, and I might agree with them, the critical player in the government's response to this pandemic, especially from the market's perspective. So as you see this, and obviously we're gonna hear more from J. Powell coming up in about twenty four minutes, remind us the place that the FED is really holding

here in terms of kind of keeping it all together. Well, let's remember that the FED very early, I believe it was March third, and that was before there were even lockdowns going on in the United States. UM made its first emergency rate cut, right, and then it quickly got the rates down to near zero as it launched in totally and nine different programs to to lend money to people, to get money to businesses, to make it easier for them to UM not layoff workers. And importantly, though, remember

how crazy the bomb market was in February. That's one of the reasons why I started buying securities pumping liquidity right, and they did it. They've done an excellent job with all that. Congress of course did get on board and pass a big stimulus program, but now it looks like nothing until after the election. So they have played a very important role. And I think the other thing that the FED is trying to do with all of the stuff that's done lately in terms of this framework, they're

just making it so crystal clear. I mean, you wouldn't expect with all the speeches safe given everything. J Pole and others have said that they were even thinking about thinking about hiking rates for a long time, but more and more there are so many people, Hey, we're not going to start hiking rates. We're not going to be is this is not the past where we let inflation up rise so much and then say, man, we better cut it up. And I think you have to bring

in all the other aspects of this as well. In Jackson holl the FED also added something that caught a lot of people's eyes. It's not just maximum employment. The FED supporting massive maxim massive inclusive employment, because more and more there's been voices saying, look, you gotta let they call me run hot to allow low income workers. Uh, many of them happened to be black, happened to be Latino,

allowed them to get caught up too. So there's a lot of pieces here, and I think the FED is clearly on the side of some of the big trends going on in our in our country and in the world even I think the question for markets, for investors, and for economists, though, is how this is really going to work as we go down the road. Yeah, exactly. I just I'm blown away about Um, you know, we keep kind of kidding about c e O s and

we don't know what's going to happen in visibility. And I respect that because it's still a lot of questions. But here's the FED saying, you know, we're gonna likely keep rates, uh you know, you know forecasts, you know, and and rates at zero through Don't you suppose that's why Rob Kaplan said, Hey, I'm dissenting in Rob's a centrist, wrong right middle of the road, downright right down the road guy. And remember he worked on Wall Street for

a long time. So, Kathleen, how often is it that they can they put out this kind of long term forecast but then they come back in a year, I mean, I don't know, a long time always. I mean, how likely is it that they're going to revise that? Carol, Let's I'm talk to you like I'm set official. Well, Carol, you know today I put in my forecast to the content. Carol, I'm looking at the economy looks right now and how

I think the virus is going to play out. And we really expect it's going to take a long time to get unemployment uh down to a level that we would consider something like maximum and make sure it's inclusive unemployment. And I'm gonna say, say, fedeficial, get real pertem We're at a bar and you're really talkative, beneficial, Kathleen Hayes,

tell me what you really think. Well, they're gonna change this right, you know, you would say, Carol, You might say, well, but Kathleen, you guys already missed the fact on unemployment that um you you thought it was gonna be nine point three percent at the end of twenty It's already down to eight point four percent as of August. What

if the economy gets stronger faster? Can you really stick with no rate hike until three And then if you push me hard enough for one of them, they probably say, well, sure, yeah, but we're not you know, in going about two percent isn't the thing that pushes us. It's going to be unemployment falling and getting people back to work, and we're willing to tolerate some overshoot. But that's the question too, how much overshoot? Yeah exactly, I love this role playing.

I could just sit here all day and listen to you guys sort of pretend to be FED officials, and I feel like we've got this is the show. Is role playing that fat. I just want to play j Powell and sort of sort of monitor monitone every and not really answer any questions. All right, Kathleen Hayes, thank you so much. Dave Wilson, give us a little tease for your chart of the day coming up. Oh, it's

been quite a year. You know. There's a word called dispersion that analysts used to talk about the extent to which stocks or industry groups either track each other or don't. This year is all about don't there you go role playing for Dave too. Yeah exactly. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Got another blockbuster team here on deck to help us

understand what's going on at the FED. Dr Stephen Skanky, of course, chief economic advisor at keel Point, former U. S. Treasury and White House National Security Council staff member. He's in Washington, d C. Speaking the nation's capital, and Jeffrey Cleveland, chief economist for Paydon and Regal, he joins us on the phone from Los Angeles. Jeffrey, I want to start with you as you sort of distill this down. Nothing seems to be shocking the market about this, but steady

as she goes? Or what what do you see here? Well, I said, this is more explicit for guidance than I think I expected in the statement to the Fed. Here pledging to keep rate slow until inflation is back above two percent for some time and we get the full employment. So I would say that is effectively pledging to keep interest rates at zero for forever, Jason, for the foreseeable future, unless you really expect inflation above two p m. The feed is the Fed is at zero. That was already

priced in. So I think that's why markets are not reacting much, at least so far. You didn't have a rate hike priced into the bond market until so that's that's nothing new. But I think it's interesting to to think about UH made more explicit that forward guidance. Then I think most people expected in this particular meeting. I'm like blown away. Um, Steve Skanky, come on in on this. Um, I'm curious. Do you think that this is a political decision one at least made a little bit with the

election in November in mind. Yeah, the fet is obvious. You just pointed that there hasn't been any action on the fiscal stimulus tide of things yet. They've they've said about all that they can and being specific about that, and they they no in their announcement, and then the comments of individual f l M team was leading up to the meeting that they remained concerned about the economy

and the tremendous human and economic hardship. They once again reiterate their their statement from six weeks ago the path of the economy will depend significantly on the course of

the virus, and we had daily infections yesterday thousand. It's it's very frustrating for the FT and UH and rather say something more about the fiscal stimulus, UH, they were just very explicit they're going to keep rates of zero, They're going to continue their their pond buying program at least at the current rate, and may implied that they may increase it above a hundred and twenty billion a month until there's just a honstormable evidence that they're reaching

the employment targets and inflation that is average Jane above two percent a year for some period of time. Um, it would be hard for them to just say more that would be encouraging and positive for the market. Well, and in the market seemed to be reacting pretty positively. I mean, now taking a look Carroll, the SMP in the Dow, uh definitely hitting their highs of the day,

the NASDAC creeping very close to there as well. So Jeffrey Cleveland, I mean, this is a market that not to be too silly about it, but like loves the Fed. They have counted on the Fed throughout this entire crisis. Well, there is no alternative right at this point. I mean, they're pushing people into equities. Yeah, what's the old adage,

don't fight the Fed. I think that that applies. If real rates are going to be maintained at a negative level, so negative T bill returns, then investors, you know, many of our clients looking elsewhere. So the investment grade corporate space, the high yield corporate space, emerging market debt and equities. Uh, there's your alternative if you're looking for income and return.

So I think that's still in play. I should also say that, you know, the there are risks, of course, the one of them that were worried about is the fiscal relief, the lack thereof the extension of that. But the data, the economic data is better than last time. The Fed put out their projections that much more pessimistic projections from the f MC in June, and they've marked up their GDP forecast. They've marked down at least in terms of the unemployment rate, lowering the unemployment rate to

seven point six, you know, by the year end. So that's much better than they were anticipating in June they had it closer to ten. So things have improved relative to you know, ninety days ago. And I think that's important for the for the financial markets because financial markets are always looking ahead. So what do you guys want to hear from j Powell at the bottom of the hour, So just in about ten minutes time, Steve, let me

start with you. What was it What would it be that you would us the FED chief on to be more explicit if you can about what really is the inflation target and and probably even more importantly, Carol, is what it is they're going to do to try to drive it to that. What's left in their arsenal of monetary policy tools which they say they're going to use their fullest to to help bring further economic activity that

will cause wages to rise and and further health increase employment. Uh. And you know, following up a little bit of what about what you asked earlier, this is really I mean, their next meeting is at the eve of the election, and so it's very hard for them to do or

say much at their next meeting without sounding political. So so Chairman Powell has got to get in all the points you'd like to make in this press conference and exactly what they're gonna do in terms of increasing the balance sheet, uh, putting more energy into their their emergency long facilities to get things quite in a better way. And especially if we end up with no more fiscal

genulus before the end of the year. And so, Jeffrey, if you're on Capitol Hill and you're looking at this and you're watching the negotiations or lack thereof go on around fiscal rescue or stimulus, does this change your thinking at all. I mean, it's hard to say what they're thinking candidly at this point because they can't get it. They can't seem to get get a deal done. But how does the fiscal picture match up with what we're

hearing on the monetary side. Well, unfortunately, I think the story was that the consumer was going to completely fall apart in August and September when these benefits ended as at the end of July, and that really hasn't happened. You're you know today this morning's data for retail sales, the August data, it was a little bit lower than expect did it slowed down from July, but you know,

the consumer has not fallen apart. We're remarkably Jason back, I think we're fifteen six below where we were in February on restaurant sales. So that's much better than I would anticipated given the expiration of the fiscal benefits and the fact that, um, you know, the the virus is ongoing.

So things have have you falled better than some of the worst fears until I guess that just makes policymakers, if they already had their heels dug in on the on the fiscal relief front, they might stay with that position. I mean, Jeffy, how does the economy feel right now? I mean it's really kind of shocking. I feel like if you think about, you know, how much we went down, how much you know we have come off of that low, and yet there are still statistics, some that are promising,

some that are troubling. How do you see the economy, especially when we don't have a lot of CEOs who come out and say here's what we're seeing. Um, even those CEOs who are in a better place and God forbid,

you know, have kind of benefited from the pandemic. So how do you see the economy for the rest of the year and going into well, the third quarter is looking great, carol Us and global we're we're going to see a GDP, you know, annualized rate in excess of which is good coming off the decline, and we saw on Q two, so big bouncing Q three And by the end of the year we're still below levels that

we that we started the year. So GDP is probably three to four percent below levels and we'll take another year or two to get back to the pre virus levels. So strong bounce back, but then we are going to face a little bit of a longer road to get to get back there with you know, some some uncertainty in the fall, of course. And Steve, do you agree

with that or what's your assessment here? I do agree that we should see a g d F bounce back at an annualized rate oft in UH in the third quarter and then just continue to continue to move forward. I think one of the challenging things though, is the difficulty that we've had with some of the employment numbers and unemployment numbers. You know, this began back in March where the the COVID impact on surveys had a created a big problem for the way the survey results were

coming in. And even when we looked at the August numbers, which were great all things considered, after tremendous shot browth in UH May in June, UH, there are there are fifteen million people roughly who left the labor force, a third of those because they didn't have shild care opportunities UH and the other two thirds unsure as to what

opportunities there there might be. So while I I'm really excited about the unemployment rate falling to where it has compared to word the tent thought it was going to be even to the end of the year or in the percent range. I think we need to be careful, uh, to make sure we understand really what's going on in those numbers, so that the people, especially policymakers, aren't are aren't letting the foot off the gas. Two to right.

Can I just say, Jason, do I still have to get my head around a bounce back, you know after drop of like I just can't even yeah, and and and to that, to that point, and and to the point Um Stevenskey was was just making you know, this question of who's affected and how I mean, Jeffrey, I think about that a lot. I was having a conversation earlier today for a private equity event with David Rubinstein, and we were talking about this K shaped recovery um and maybe that is or isn't the right way to

look at it. But what we do know is that this pandemic has not been indiscriminate economically. We know it has been actually very um discriminatory economically. What are the long term impacts of that, especially given that we even have maybe I shouldn't say even, but we do have the feed essentially saying we may let the economy run a little hotter in order to ensure that employment is

not just fuller, but fairer. Well, that was the key part of the Ford guidance in the statement Jason, full employment, so there's a whittle room around. That does not mean in my view, the unemployment rate getting back to four or five. What they probably refer are referring to is something you know, more inclusive, so an employment to population ratio.

So one that we like to look at is the fifty four year old the core working age population employment to population ratio that as of August was seventy five, right around there pre COVID, before before the pandemic, we were around eighty, a little bit above eighty. So we have a ways to go until we get back to a more in full, inclusive employment. But that that would be the metric that I would watch, and the fetes

pledging to keep rates low until that time. Alright, So what keeps you up at night Steve when you think about the economy. I mean you talked about, you know, your concerns about policymakers making sure that they are watching and being smart as we read the data. I feel like, we've to be really good about digging deeper into statistics right now so that we really understand what's going on. But what is it that keeps you up at night when it comes to the economy, Well, Carl, it's it's

really that there's overconfidence and how quickly to rebound is coming. Um. The the the annualized numbers are are are are sort of hard to get our head around, especially when you're talking about a second quarter decline of thirty two UH minus a little bit on an annualized rate from January. At the end of the end of June that GDP went down about eleven and we went from a twenty one frellon dollar economy to a nine and change trade and pour economy and lost a lot of jobs in

the meantime. And I just don't think that our our data, particularly on jobs, gives us a good picture as to what is happening, and that if if we give up too soon, we will contribute to what I think will be permanent and irreparable damage to a big piece in our labor force. And that just takes a long time to to come back from. And I understand all the arguments against UH putting more gas into the economy through

to a fiscal stimulus. But we have something that's just extraordinary, and I believe that if it falls for outside and outsized response, and I hate to see us give up too soon and missed the opportunity that that that is. Uh, here's something that we can't fully retover from except over a long period time. Right, all right, Well, our thanks to you both. Really interesting to get both your perspectives, especially as we look ahead to hear from Mr Powell.

Chir Powell himself. Dr Stephen Skanky, chief economic advisor for keel point from your U. S. Treasury and White House National Security Council staff member from d C. And Jeffrey Cleveland are pale out in Los Angeles, chief economists for Peydon and Regal. This is Bloomberg Business Week with Carol Masser and Jason Kelly on Bloomberg Radio. Let's understand what he said and what impact it may have on how people think about economics and interest rates. Ira Jersey is

chief US Interest rate Strategists for Bloomberg Intelligence. He done this on the phone f b I headquarters in Princeton. Yelena schletevis in US economist for Bloomberg Economics. She's in our Bloomberg Interactive broker's studio. So Elena, let me start with you. You were listening very closely you and your team. What's the most important thing? J Powell said, Well, the most important thing that they did follow through on the framework change and they were decisive in changing the language

in the statement. So there was some discussion around whether they will do it now or they will wait till later in the year, and they did do it this time around, and it was a strong forward guidance, and I think that is very important. That's probably the key point here. Uh. That comes at the expense of two descents though, So there was simply not enough time between the Jackson Hole meeting and this current Effoency meeting for

everybody to get into consensus. So, uh, there was some like changes in the statement that the President's kaplan and cash Carry did not like. But overall, I think that's very important that the Fed went ahead and they were nimble to change forward guidance to make it pretty clear what they are going to do boy and forward guidance. They did give us our jersey come on and out what stood out for you not just in the decision and the statement, but what we heard from J. Howell

in that lengthy press conference. Yeah, so a couple of things. I mean, the press conference really didn't have anything that new. I think that he wanted to go along just because there were a lot of changes in the statement, and uh, obviously if there were more questions about the new forward guidance, he wanted to get to those. Um. You know, interesting that he continues to be asked about what does you know longer term mean, what does you know modest mean?

And things like that. You know that everyone expecting the Fed to be that specific is always going to be disappointed in asking those questions. I I think going back to the sense a little bit, you know, I think I think uh, um, Robert Taplin's descent was kind of interesting and that it seemed to be a little bit hawkish, where whereas everyone else on the committee is relatively dubbish.

So um, in talking to some investors on on Bloomber terminal after as J. Powell was speaking, you know, to talk about, um, you know, who's this person who thinks that they're going to hike in two a couple of times and then three more times in three that doesn't seem realistic, and it's like, well, look, it's one of seventeen people saying that they're going to hike, so, um, you know, I wouldn't take much away from that. But for the treasury market, I think this is, you know,

pretty much what was expected. They were, you know, committing to keeping interest rates low for very long time and and for that, um, you know, maybe at some point the curve, the treasury yield curve, ll steepen a little bit, but that's probably more of a two event than than in the near term. So, Elena, what did we learn from j Powell about the their view of the economy.

He talked a lot about employment, how they're looking at UH employment a little more holistic than just saying, hey, a bunch of people got jobs, but what jobs they got and who got those jobs. It sounded like, well, I think I agree with Ira that we did not

learn that much from the press conference. I mean, the kid messages were already in the statement and in the Summari economic projections, but j PA will confirm that they are not going to move until they actually see the whites of the eyes of the inflation and until they return to full employment. So, uh, they need to see the actual changes in those two goals of the FATS. So I would say that what JPA will set in the press conference with respect to where the unemployment is

is obviously very davish. Uh. They saw a lot of progress in terms of unemployment, but the level of unemployment remains extremely elevated. And he mentioned also all these people who remained out of the labor force, So if you add those to the pool of unemployed, you will see the unemployment rate is probably three percentage points higher. That's what he said. So they are looking at a whole bunch of different labor market indicators to assess the state

of the labor market. Hey just quickly, guys, because we're ben a time. But Ira, are you freaked out a little bit by his statement? Are you a little bit worried a little bit more about the economic outlook as a result. So I'm not. I mean, he didn't say anything that we don't know. I mean, there is still a lot of uncertainty and it's going to take a long time for us to get back to the levels

of economic activity we enjoyed in how about you, Yelena. Uh, Well, the Fed updated the forecast for We did that a few like last week, I think so. Uh. Yes, we do expect better growth based on the recent data this year, but that comes at the expense of slower growth in twenty one and two, and that is probably a result of a lot of complacency among fiscal policy makers because of this better than expected data. Right now, all right,

all right, thank you both so much. We really appreciate it. Yelliness, She'll let you have a senior US economists for Bloomberg Economics and Ira Jersey, chief US interest rate strategists for Bloomberg Intelligence, Broom the journal. But you let me drive. Oh no, no, no no, no, honey, please, I'll do the right rivel. Let me. I want to drive, all just drive, baby, good questions trying. This is the drive to the globe future. Thanks, we'll try us on Bloomberg Radio. All right, it is

time for the drive to the clothes. Let's turn to our pall. David Deats, President and chief investment strategists four Point View Wealth Management, joining us on the phone from summit, New Jersey. All right, David, let's do a beat on the FED. What do you what did you not hear from J Powell from an investment perspective, Well, well, certainly you have to say that the market hurts something that

they weren't totally happy with. If I were to put my finger on it is they talked about keeping interest rates low as low as possible for much longer, up to potentially two thousand four. But when you looked at their economic forecast, they talked about keeping the interest rates slow. So ultimately we get not only to the two percent inflation target, but above it. In their economic forecast for this long period, they don't show inflation ever coming up

to two percent. So there's some question as to whether they feel that the tools they have, even though they say they're nearly omnipotent, is gonna be enough to get us out of a very slow growth economic environment. Do

you agree? You know, if there's one thing that we've learned through the pandemic and going back to the subprime crisis, is awfully difficult to make forecasts, particularly long term forecast so um, you know, as much as we love to know what's going to happen over the next three or four years, I think it's awfully difficult to tell. Why would that be, Carroll, I mean We're just part of a global economy. A lot of things going on in China, Europe and so forth affects up to half the revenues

of the SMPI. You may have a change in administration, maybe not just the White House, but potentially the Senate to what changes will that bring and how will that affect the economy. And then finally, the big eight hundred pound guerilla Jason Carroll is COVID. When will people feel safe to get back on an airplane they have full capacity in a restaurant. I don't think anyone has a

crystal ball on exactly how that's going to play out. Well, and based on a call I had with someone who works with all of the big publicly health companies this morning, you know she's finding I'm not going to have to get on meetings with with a lot of folks going forward. You just it's it's kind of a waste of time, and you realize you don't have to have face to face for everything, and you lose time in the process. Well, in speaking of which is a headline crossings Boomberg right

now courtesy of Dow Jones. Deutsche Bank to let its US staff stay home until mid That is cutting against what we've been hearing from a lot of Wall Street over the past couple of days here. But I I, you know, these are the big banks, but I don't know necessarily, I feel like Deutsche Banks kind of in its own little world. They've been in their own little world of hurt for the past few years. But that's

a whole other story. So, David diets, as we look across the landscape here and we think about names that you like, one that you shared with us that I want to hear more about a lot is Intel, because it has been an unloved chip maker, especially Visa, VI, Nvidia and others. Sure, absolutely, so we love tech in terms of it's the way of a few. You're the secular tail in behind it. But what we are cautious

about some of the valuations. I mean, we're studying here where Apple is bigger than the Russell two thousand is bigger than the UK dot market, and yet you know, I don't know whether we're gonna be using an iPhone in the next five to ten years. So but we still believe that tech will make a difference. I'm just not sure how what I like about Intel is is a chip maker involved in artificial intelligence, autonomous driving UM, the Internet of Things, anything you can think of with tech.

Intel is working on solutions in terms of the chips and semiconductors that you would use UM. Yet you still have a reasonable valuation. You've got a dividend. So it seems to me that we could have a situation where people get a little nervous on some of the nose evaluation on some of the text. But say I need to stay in my space. Intel is your ticket at that decent dividend, that decent valuation, good management. Uh in

the TAO seems like a good spot here. All right, Wells Fargo, talk to me about that one, David, Um, it's down. You're along a Wells fargable. I love it when you talk to WFC and I will say, I think Charlie Sharf is shaking things up there. So you put your finger on it, Carol. I mean, he finally brought someone in from the outside. He had a great record of bank in New York. He came in and he doesn't have those established you know, alliances and loyalties.

He he wasn't responsible for any of the bad decisions. So I think he's got a much freer hand to start cutting costs, to make the tough decision. I mean, you've got the franchise coast to coast, you're not involved in risk your trading, you're involved in middle market lending, nuts and bolts, mortgages and so forth. Um, so you've got the economy's of scale. You are now below book value. And I think you've got a man here who has

said point blank we're gonna be chopping costs. And if you can just get the costs down, and then of course a little tail wind behind the banks would be that maybe Mr Paul doesn't have the forecast right, the inflation will perk up a little faster than these forecasts interest rates come up. That would be manner from heaven for the banks so wells Fargo, I think is an interesting situation for cost cutting and ultimately take at some point where the banks take the baton from some of

these nosebleed texts. Another excuse me another name Right in the middle of everything we're talking about is it relates to the pandemic and also a lot of focus on our health as I cough is. CBS talked to us about that one dude, So I love CBS is the duopoly with walled grains in terms of drug stores coast to coast. I do believe that at some point a

vaccine will emerge where we're gonna get it. Not everyone's gonna be able to get into their primary physician, and I think people are going to be going to CBS and drug stores like that. And of course I think they're expanding their operations to have more than just products but also services healthcare practitioners. But it's more than that because they've recently executed a merger with Etna's just kind of a one stop shoping. You get your health insurance,

you can get your prescriptions. Of course they have a great pharmacy benefit managers. Meanwhile, the stock is show us playing cheap at under ten times earnings with its dividend above three. You want to be in healthcare. This seems to be something that's been overlooked recently. And once that vaccine comes out, I think people can be paying more attention to who's going to be providing those vaccines. And just got about a minute or so left here, Tyson Foods,

what's to deal with that one? So we love companies that kind of dominate their space. So they're like number one in port production, number one in chicken production. We know the whole world wants more protein and so forth. Tyson has been knocked down off of its perch because unfortunately some of the working conditions were just fertile hotbeds for COVID exposure. So all the meat producers got knocked down on that. But eventually again we will have a vaccine.

What I also like about Tyson Foods is they're moving into higher value products, so they're not just giving you commodity meat, but they're putting it into you know, branded Jimmy Dean's and things like that, branded products where people will pay a higher margin for a Jimmy Dean's product as opposed to a brand extra product. And so uh, largest in the space, good dividend, low valuation, and of course I don't think that's gonna be made moved by

e commerce. All right, David, Dee, it's really good to catch up with you. Thank you so much, and great feed analysis, and we love talking names. David Deats is president and chief investment strategist for Point View Wealth Management, overseeing about seven point three billion dollars joining us on the phone from Summit, New Jersey. Thanks so much for listening to Bloomberg Business Week. Download the podcast on itune, South Cloud, blooberg dot com, or wherever you get your podcasts.

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