Many Fed Officials See Need for Half-Point Rate Hikes

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show at two pm Eastern Time on the Bloomberg Radio or watch us on YouTube search Bloomberg glovel News. FED officials weighing shrieking the balance sheet by billion a month, UH, signaling it will reduce those massive bond holdings and further tightening credit across the economy. Also has Charlie mentioned many FED officials saying what or more fifty basis point hikes may be warranted.

You know, it feels like the bond market knew this was coming, but it feels like the equity market did not not at all. If you look at the SMP five right now, sharply pairing losses still negative on the day, but direction travel definitely higher. Alright, so let's get to it with our team. We've got Kathleen Hayes, Global Economic and Policy Editor, Bloomberg News. She's in our Interactive Brokers studio, so too is Creedy Gupta, Markets Correspondent APT Bloomberg. Kathleen,

let's get to you what jumps out? Well, first of all, let's start with the not so obvious but important line that FEDE officials say one or more fifty basis point hikes may be warranted. Are Bloomberg ride Up suggests that at the last meeting there were many, now many, I don't know if that's half, but that's a lot of mean Well, look, a few, you would mean honestly, a few would mean just a couple, maybe three, that's my guess. I think many and several several maybe more than half,

but many is a substantial number. So there are people saying, no, I'm ready for fifty basis points. That really shouldn't excide to me a little because I know subsequently everyone's kind of freaking out about inflation. But that's important. So that means, okay, the May fifty basis point high, Beau's gotta be a done deal. Besides that, though the rolloff cap phase is going to take, is gonna phase in three months or

modestly lower, modestly fewer. They want to get to nine five billion dollars a month pretty quickly at the past. Was that more aggressive than when everybody was expecting, Well, it's more aggresive than I expected. People were figuring they'd ultimately get to a hundred a month or a hundred and twenty a month. But to get there in three

months or less, I think it's pretty aggressive. One more thing that Layo brainer the feddvice chair touched on yesterday in her prepared re marks not just an off the cuff answer to something Esther George's exclusive interview on bloe Brick Television touched on, once you start reducing the balance sheet and you're you're reducing stimulus, right, it's the opposite of buying bonds. And when you're raising rates and even you to fifty basis point us, you're moving fairly aggressively

on rates. So how are you going to calibrate that? How much is a month's worth or three months worth of about three hundred that was about three hundred billion of that how how does that equate to rate hikes. That's the question they're going to have to work on, and that's what markets, Katie, have to figure out absolutely. And I mean, creaty come in here. How do you explain the market reaction that we're seeing, because it is you can see the SMP five hundred jumping right now.

The Nastact too, that had been the big underperformer on the day, pairing losses quite significantly. Yeah. Well back up for just a second, and I want to follow what Kathleen said here on the billion, because we talked about what the expectation was. You said one twenty on the higher end. The lower end of that was eighty billion per month. So it's interesting that it came out at ninety five. From what I'm seeing here, the range was

eight two hundred billion. People were thinking a hundred billion a month, as much as a hundred and twenty, like you said. So on the surface, it kind of seems like because it's less than perhaps that a hundred billion, not by much, but still um that perhaps could be a reason the stocks are moving higher. But still look, we're down um over one pent on the SMP five hundred, still still almost two percent on the nastack. So this

does seem like a knee jerk reaction. Even as we're did we dip down for a second then bounce back. Even as we're speaking, we are now back to exactly where we were before the minutes came out, So you're once again see knee jerk reactions. It doesn't look like a ton has changed when it comes to exactly what

people are thinking. One of the headlines that struck out to me though, was the fact that they said, head and I'm just gonna find this really quickly that if if it weren't for the war, more officials would talk about a fifty basis point march hike, And they made it very clear if not for the war. What's interesting here is that the conversation has very often been that perhaps the war would accelerate the rate hikes or make

them bigger. So to see them say, well, actually, maybe this is kind of something that we should be a little bit cautious and maybe a little bit more dubs on instead of because of the war, that's that's new. Well, we know that it's going to hit everyone says it will hit Europe. Artist those economies they are a big, a big purchaser of certainly exports from China. China is droppling with these lockdowns that are spreading so quickly in Shanghai. The global forces that the FED has to watch are

are something potentially that could temper. But it get the feeling. It's like Bill Dudley hit his piece today saying the FED is going to have to actually shock the stock market. They're really going to have to show an aggressive move to start changing expectations so they can get financial conditions to tighten. And that's that's part of the balancing act is well and also likely is that though that the Fed's appetite would be to actually cause that to happen,

because you have seen calls for it. But among current I would say this, Jim Bullard, who is frequently a leader a thought leader the FED, said what two months ago he wanted to see a hundred basis points in rainhikes, but July one, okay, that would mean uh, in the next three meetings you get at least one fifty basis point hike. And then he said, let's pause and see what's happening. I wonder if that kind of thinking is what's going to come out of this maybeing. Okay, let's

hit a target, you guys, we're gonna do fifty. We'll see if we know they're fifty, We'll see how the markets react. We'll see what happens to inflation. We'll see what the war is doing to the rest of you know, how that is all playing out, what it does to

oil prices, et cetera, and then move forward. I'm so glad you mentioned Sorry if I can just jump in here, I'm so glad you mentioned that, the aggression of it, because we're also getting numbers on the bouncy once again, the other part of the equation like you were talking about and the llion, which we already talked about. It is a little more dubish than the market was expecting anyway,

so that could explain the Knegric react. But if you compare this to the last time you have this kind of quantitative tightening, it took a year to ratchet it up to fifty billion dollars, this is completely different, and that seems like the push to get that and kind of shrink the balance sheet is faster, it's more aggressive.

It's kind of this approach that you were mentioned with the rate hikes as well, does this support what Brainard said yesterday about will continue you tightening monetary policy methodically, like we've all been kind of obsessing over that word. Well, methodically, I would say means we're going to watch the data, We're going to respond to the data. Look, the Fed knows it waited too long. J. Powell has admitted that as much as admitted it publicly. We thought one thing.

Look that their board, the staff board economist in Washington, figured it was going to get she was gonna move pretty back down pretty quickly. It didn't. So now they know they have to make up ground. Now they know they have to get worried about inflation expectations getting more embedded. So methodically I would take we're gonna move and we're going to We're made it pretty clear doors open to

more aggressive hikes, faster balance sheet tighten. But one more thing to remember, this is not at all like the financial crisis. We had a huge falling off a cliff because we got hit by a pend. There's chaos and catastroph drawing back huge fiscal stimulus. You've got lots that you can remove. The question is, though I'm sure they're very sensitive, though they don't want to see this stock market.

What's tricky is there's just so many variables out there for the Fed right now to deal with, including, as you pointed out, the war right that is out there, just like everybody kept saying that the pandemic, you know, like these are just factors they have to continue to deal with. Thank you both so much. Kathleen Hayes, Global Economics and Policy at a Bloomberg News and Pretty Group

to Markets correspon Bloomberg. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio, Carol master in Low Katie Gray felt, Tim is off today. So among our most read stories on the Bloomberg on this Wednesday is what about the x Russian oligarch who says President Putin sees the war with the West already underway. So let's get into it. Let's bring in Bloomberg TV Washington correspondent Amory Horton. She's with

us from our Washington d C Bureau. So, Amory, who are we talking about? So we shut down with me Kronkowski And as you say, he's an exiled oligarch he ran Ukos Oil, which a lot of those assets now our present day roy Snaff, which is run by a very close confidant of President Putin, Igor set him and he kind of took Putin on. He crossed the line of um talking about politics, getting involved in politics, and then he was faced with charges on fraud and tax evasion.

He was thrown in jail for a decade and he was able to leave Russia. But he's never been back and he basically lives in exile now. And so what what is his view of Putin's view of the response that the US has staged thus far, Because you talk about how in the story, how there there's a nuance there that, uh, it's probably not one that Putin is paying attention to. So Putin will not pay attention to the nuance of the war spreading into NATO territory members

the way maybe the United States Wilks. You hear the US say and other U your western officials say, not a single inch of NATO territory will defend it. All. The issue is is that the way Putin perceives the war. According to Kodakovski, who has really studied the man and obviously has met and known him in his former life.

Is that the US is failing to see that. From Putin's perspective, the war is already happening between the United States and Moscow, and between Western European capitals and Moscow, so they already view what is going on as an outright war just on Ukrainian soil. But Putin has said this, He said, sanctions, the training of Ukrainian military, the shipping of of US weapons and other weapons to Ukraine, he

views all of that as a war. I would say, and Marina that many people would agree with Putin that we're kind of splitting hairs because there is a lot of support going to Ukraine right from the NATO lies um. But but it is important to kind of understand. We've all been trying to work on understanding Vladimir Putin's mindset, why he has done this and what his intentions are. So, if he perceives that he's already at war with the

westmore broadly, what are the implications of that. Well, if he thinks he's already at war with the West, the implications are and what you get a sense of if you're traveling. I was recently in Poland, and Warsaw, and you get a sense of that anxiety and nervousness in these countries. A border Ukraine and the Baltic countries is that it could be them next. And that's really the

concern on Eastern Europe. And you already hear some of the rhetoric of divisions between these countries, between say France and Germanys and the Baltic nations. They want much tougher sanctions on Russia immediately, but it's also because they're incredibly

worried because their backyard. And what's interesting, I mean, obviously the US has unleashed many sanctions against Russia, really on Russian billionaires, but you go into this article that you know he doesn't think that is necessarily going to be effective at all when it comes to Putin. So the way Dakowski sees it, and he was an oligarch from the Yeltsin era, is one if Putin is not afraid

of sanctions, sanctions do not scare him. And that too, While the idea of going after oligarchs is correct, the presumption that it would change Putin's calculus is wrong because when Karakosti talks about the fact that Russia is a full dictatorship, so he would know Oligarch is going to be able to go up to Putin and say you need to end this war. We saw none of them say they call for peace and they're against the war, but no one has criticized Putin directly. If so, they'll

be incredibly scary for them as individuals. You know, it's interesting too, and I do think about a time like this U S official, State Department officials, National Secure officials and even European officials who they lean on to really kind of get inside Vladimir Putin's mind. I mean, it sounds like he has maybe talked to the government before

and is doing it again. Is that fair to say? Yeah, Well, he's in Washington this week and a State Department official told Bloomberg that he met with US Under Secretary of State Victoria Newland last week on Friday, and then he met with officials at the National Security Council on Tuesday. So on top of speaking to you know, sink tankers and foreign policy experts of the Atlantic Council places like that,

he's also briefing officials. And let me just ask you, because you're on the ground, as you said in Poland and surrounded you know by world leaders and just you know, could feel probably the mood, the tone, if you will. And I do wonder if how much conflict there is right now about you know, the fear of this becoming even bigger than it already is. There is a lot

of fear in places like Poland and Eastern Europe. Um. And I think part of that fear is one because you have you know, any given day, UM missiles hitting Levie, which is very close to the Polish border. But then also you just look at Putin's rhetoric of late and his actions of the past, and his actions of the past, is that um, he has changed the map of Soviet the fall of the Soviet Union. He's changed that map

four times. In Georgia, there's incursions in Moldova. He's been fighting Russian back forces have been fighting in eastern Ukraine for eight years, right, So someone even viewed this as an ongoing of that war, the annexed Crimean. So it is a concern for those that are close by. Yeah, unfortunately, we've seen certainly some of Putin's play playbook before. Hey and Marie, thank you so much. Emory Hordon She's part of a team who put out this story about this

ex oligarch. She of course is watching correspondent at Bloomberg Television. This is Bloomberg Business Week with Carol Masser and Bloomberg takes Tim Stinovic on Bloomberg Radio. You know, we often talk about Miami a great place to go for fun in the sun. There's a lot going on, a lot of financial types are going on and moving there. And then there's what Bitcoino. What is that Bitcoino. It is a huge conference. It's sort of the industry one of

the industry's marquee events. Crosshouse and reporter Vildonna hi Rich is there on the ground. She joins us. Now, vill Donna, I want to hear about the conference and what's going to happen, But first I want to hear about the Miami Bowl. Tell me about this statue. Why have I heard so much about it? They have a bullet to Yeah,

that's that was a big reveal this morning. We had the Mayor of Miami, Francis fuire Is, unveiling this bull statue this morning and it drew quite a crowd and a lot of media attention as well, and it really resembles the Wall Streets charging bull statue that we see down in southern Manhattan, but it looks a little bit more like a transformer. It sort of has this like digital feel to it, and of course it has laser eyes, which in the crypto world connotates that somebody's really into

cryptocurrencies and that you're a crypto fan. And the bull does have these blue laser eyes. I just walked by it a couple of minutes ago again and it's it's quite striking. And that was the big reveal this morning at the conference. For those watching on YouTube right now, sorry radio folks, you're just gonna to use your imagination. But if you're watching on YouTube, yeah, that's exactly. It does look like a very high tech you know Avenger's type with blue eyes, right, yes, yeah, So it has

a sort of digital feel. It's almost like it's made up of tiny little like a black little chips or something. It has a shiny feel to it. Do people like the bull, I mean looking at it like, I don't know, I'm fighting the temptation to roll my eyes. But what is the reaction on the ground of this big reveal? Well, that was the interesting thing. Because it did draw a crowd, and we had the Mayor of Miami there, and we had a couple of other mayors from surrounding cities from

Miami Dade over here also attending. And we had Trade Station, the CEO of Trade Station, which is the trading platform, also attending because they're doing the bull reveal in partnership with the City of Miami. And so the crowd was really excited. And that's the mood that's been prevalent sort of all day here where everybody's been really really excited to be here, been really happy to be together, and too, it sort of feels like it's the first big event

post you know, the past couple of years. I mean, we had the conference here last year, but it wasn't as big, it wasn't as sort of open in the post COVID world as it is this year. And just to give you a sense of how a bulliant the mood has been, I did overhear somebody say that she was so excited about the bull that she was ready to cry. So that's my little tidbit. It's just to give you a send what the mood is like on

the ground. Just got a couple of minutes here, so we know Florida long uh, you know, looking to be the Wall Street of the South, right, and that's why the bull is sign it again right like the bull that we have in downtown uh Manhattan. Here. What's interesting is what are you going to be looking for? Because we've talked a lot about Miami the financial aspect of it, but looking to really you know, put a flag down, if you will, when it comes to crypto. What's gonna

be key? What are you gonna be looking at for at this event? I mean we've already heard from what Mike Novograds, Yeah, we did. We heard we heard from Mike Novograts. He was sort of giving his take on where he sees bitcoin and cryptocurrencies going right now. You know, you guys were just talking about the Federal Reserve and their tightening plants, and he was saying that as soon as the as soon as the economy slows done in the set actually stops hiking race, that he can see

bitcoin taking off after that. So that was one of the bigger comments that we heard this morning, just in terms of projections for crypto prices, but then in terms of you know, Southern Florida. In the city of Miami, the mayor really has been very gung ho about creating a sort of crypto haven here and he was talking

this morning. He gave a speech after the reveal of the bull statue where he was saying that he he called this plan Bitcoin America four and he was saying the country really needs to elect more pro bitcoin politicians and people to lead different cities across America where you know there he is hoping that more of them will be more pro crypto. So, uh, that's sort of the mood in in Miami, and especially from this mayor who has been so so into crypto and he takes his

paychecks in crypto as well in bitcoin. Still, hey, Bil, Donna just got about twenty seconds. Is there any big voice that you're looking forward to hearing from very quickly? Oh my gosh, there's so many really big voices. Although the one big big news is that the President of Solvador is no longer coming. We heard that, uh just a little bit ago. I think he was announced via Twitter. And Salvator has been out there in front right yea

for their bitcoin bond, their Volcano bonds. That's really fascinating. That he won't be there. All right, we'll listen. We'll definitely be leaning on you and getting updates on the Bloomberg in and on air. Um vill Donna, thank you so much. Vildnna Hi Reck, she's Bloomberg News cross asset reporter on the phone Miami. That's significant, right, yeah, definitely. I mean people are expecting a big reveal, so I

guess we're not going to get it. You're listening to Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stenovich on Bloomberg Radio. I will say this was the first thing I read in its entirety this morning. Sometimes you read in and your skimming this. I was

just glued to the story from the get go. It is among the most read it's the Bloomberg Big Take, and it is the domestic cover story of the new issue of Bloomberg, which is out Bloomberg Business Week Magazine, I should say, out tomorrow, already online and on the Bloomberg. It's about the former financial elite and champion of diversity and inclusion who is now running for a seat a Senate seat in Pennsylvania. UM, I gotta say, Joel Love

love this story. Joe Webber, editor Bloomberg business Week, is here in our interactive broker studio. Who wrote it? Josh Green, who is Bloomberg Business Week national correspondent. Uh, this story is about Give McCormick, who's uh not that long ago, is the CEO of Bridgewater. Obviously Bridgewater, the world's biggest hedge fund. Uh. Now, David McCormick is running for a Senate seat in Pennsylvania. It's a hot race because he's going up against Dr Oz. So we've got a TV

personality versus a former hedge fund ceo. Josh, how's that going so far? Uh? It is, without a doubt, the most bizarre, surreal Republican Senate primary of this cycle, for for precisely the reasons you laid out, uh and more. You know is I write in this problem it's really profile McCormick. But there are kind of dispatches from the Oz campaign and the McCormick campaign. What both candidates are really trying to do here is shed their old personas

and reinvent themselves as Trump loving Maga acolytes. Because both have concluded, um possibly not incorrectly, that that that is the surest way to power. So there's some jockeying for Trump's endorsement in trying to shed all the biographical baggage um that might interfere with that. In McCormick's case, the fact that he, until just a few months ago was the CEO of the world's largest hedge fund and sort of the embodiment of establishment republicans um that of course, uh,

you know, Trump despises and doesn't want to support. So writing about his his reinvention was was a lot of fun. And that's that's sort of the focus of this long profile. Well, let's talk about that reinvention more. How is it actually going? Because I mean, like you alluded to being the CEO of one of the biggest hedge funds, the largest hedge fund out there, it's not exactly relatable experience, that is right.

So I described the transformation as being sort of like Clark Kent in a phone booth with McCormick went overnight from uh, you know, being a regular at Davos to being somebody who's out on a campaign trail um, campaigning against woke liberalism and that sort of thing. Um. But the upshot is it's working for him. So far. There have been a lot of polls of this race, but the most recent one that I've seen has him up

about five or six points over Dr Oz. So the primary isn't until May seventeenth, but he seems to be doing a serviceable job of convincing Pennsylvania Republicans uh that he is aligned with Trump and that he will govern in a Trump friendly way, which has come as a shock to a lot of his former colleagues of Bridgewater who don't recognize the guy they see out their campaigning Uh, and kind of wonder who the authentic David McCormick is. Uh, you had a very memorable interaction with Dr Oz in

a bathroom. Um what did you? What did Oz have to say about McCormick. Well, Uh, you know, the interesting thing with Oz is he doesn't like to talk to national reporters. But I sort of felt it was my duty to go to an Oz campaign event and see if I could get him. So I showed up a couple of hours early and went into the men's room to clean up, and lo and behold, Uh there is

Dr Oz. And so I politely used myself said that I was doing a profile of David McCormick and Oz was dying to talk right there as he was washing his hands fulminating against Bridgewater and McCormick. And so it's one of the otter scenes that I've encountered in my journalism. But it goes to show you there's some interview somebody anywhere. Yeah. Uh and when you know what one of the things that he basically says in that moment though, is, you

know McCormick is is soft on on China. And so there's this tension that you can see where you know the Maga element uh that you know, essentral to this story that Oz is you know, using that as leverage against McCormick. Right, that's exactly right. I mean, Ray Dalio and Bridgewater are you know, famously great fans of and investors in China. And that's something that is politically problematic

if you're trying to win over Trump and the Mago audience. Uh. So part of McCormick's transformation has been from China dub to China hawk uh. And that's a real vulnerability. I mean, speaking to political consultants Republicans around Pennsylvania, that is still

something that people care about. China and they have some suspicion some McCormick's work in convincing people that he's authentically MAGA on China probably isn't yet isn't yet complete, And it is one of the area's vulnerability that that ODDS is trying to exploit. Hey, Josh, speaking of going back and forth in conversations, your conversation with McCormick on near the end of your story where you really try to get him to commit to an answer about whether or

not he agrees with Donald Trump that his election was stolen. Um, it feels like he dodged it, wouldn't answer it. Yeah, I mean, to me, the most shocking thing about McCormick and in this profile is that in order to demonstrate your MAGA allegiance, I think he and many other candidates have concluded that they have to indulge Trump's uh falsehood

that election was stolen from him. And so the piece concludes with McCormick and I sitting in a in a diner booth and I sort of asked him, I'm like, you know you you you claim to be authentically pro Trump, but do you agree that the election was stolen from And I put the question to him four or five different times. He simply refused to answer and eventually ended the interview. Um So, I think I think what that means it shows how enduring Trump's grip over the GOP

still is. If somebody is credentialed and established and impressive in their own way, as McCormick is, fields the need to kind of subordinate to Trump to that degree. I think what that says is that, you know, our politics is a long way from being finished with Donald Trump, even if he's not in the headlines every day. So, Josh, what all of this this odds and McCormick rays. All of this is just to you know, basically win a primary,

right how much money? And then who might they face off on the Democrat side, since you know this would just be the Republican Uh well, that is wild. I mean, yeah, as you said, this is already shaping up to be the world's most expensive Senate primary because you know, McCormick is worth somewhere around nine nine figures and Oz has tons of money himself. There are other wealthy candidates in the race, and they're all wailing on each other with negative ads. So we're up in the mid forty million

dollars already in the primary isn't until May. Whoever does is going to have a very expensive general election race. Right now on the Democratic side is between John Fetterman, very blue collar guy, and Connor Lamb, a moderate who is trailing um. But no matter what it is, I think this is gonna be probably the central Senate race that people are looking at in November. So is McCormick survives the primary, he's gonna have another big race right

after that. In general, it is amazing though about that kind of feeling of kissing the ring right for Donald Trump still, and that is all about the Republican Party and the and the variable is also like what Trump has has been quiet, so relatively quiet on this one. Right at some point if he opens his boorn, what does he say? Yeah, we'll see if Twitter welcomes him back. Hey, guys,

we gotta run. Josh Green, thank you so much now, so national correspondent Bloomberg Business Week on the phone from Washington, d C. And of course I think so always to Jilt Weber, editor of Bloomberg Business Week, you are listening to Bloomberg Business Week, Carol Master, Katy Greifeld, and this is Bloomberg Radio. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.

There's a lot of things going on when it comes to Tesla and Elon Musk and Katie and I just talked about more things coming this week. More things coming this week, including a big party. I wasn't invited. That's weird Rodeo Rodio. Where's our invitation? Hey, listen, um, let's get to our next guest. He's a Tesla owner and investor of Voice that we count on to talk all things Tesla. A. Russ Gerber's back with us. He's president n CEO Gerber Kawasaki Wealth and Investment Management. He's on

the phone from Santa Monica, California. Are you out driving around in your Tesla now? Oh? Actually, I'm actually at the airport going to Austin right now, and I didn't want to miss talking to you guys. Ah, So okay, what are you expecting? Oh my god. I just set off the phone with people from Austin and this is incredible. People from all over the country are Pesto fans that

aren't even going to the event. Are just coming into Austin to celebrate the most consequential factory being opened in probably modern American history, at the most perfect time to be opening, and it's an exciting time. And so will

you be at the rodeo itself? Oh, for sure, I'm gonna be at the rodeo, and I'm hopefully going to be able to get access to, you know, the people I like to talk to you where I can get a great idea of this amazing combination of hardware, software, and the complete manufacturing process from you know, you're talking from basically rocks all the way through until I finished

e V all going through. And remember they're using new battery cells as well as new hardware in the computers that drive full self driving, and now that full self driving is getting closer and closer, this entire thing is coming together all here and often, and it's hugely consequential technology. And so, Ross, I know you're a big Tesla fan, and I feel like I might know your answer to

this question. But something I've been wondering about this week is, you know, with Elon Musk clearly going to be taking uh not a passive interest in Twitter joining the board, I mean, do you have any concerns that you know, he could be spreading himself a little too thin, that you know, maybe with this focus on Twitter, you know, he won't be focusing as much on Tesla. Okay, well, let's let's be real if he's got a human being. Okay, I'm spread thin and I'm exhausted. So how Elon functions

in this world that just, frank you don't understand. So I don't see with the time he spends on Twitter and I do too, and how important Twitter is as a vehicle, I don't see this as negative in any way. I think this is very common among the extremely wealthy to control media platforms as basically that conclose every media platform is just smarter than everybody because they're still buying newspapers.

And he bought Twitter. Uh well, I mean, I mean, with with that, lat how do you feel about Twitter? You know, is this news enough to you know, make you bullish on the stock if you weren't already are

you buying it? Well? Yeah, you know it's funny because I of course immediately wanted to buy the stock, and I followed Twitter, and you know, the company internals probably better than Elon in some ways, Um, because I know a lot of people who work there, and Twitter is going through a big transition right now with Hug and I think the jury is still out on the math

and reorganization that's going on actually at Twitter. So I I I hear people's perspectives of a good and bad So, you know, I just I like the direction that Twitter is going in, and with Elon on board, I think that's a huge posits that said, I'm not investment in social media at this time. I think it's a really hard way to make money. I don't think Twitter's value is as much as a profit driver as much as a utility to society in a way globally. So it's worth a lot of money, but I also think I

don't know how much more it works. So you didn't buy any of the stock, and I'm not per se against it either, and we're still considering it. What about Tesla, which is up almost since mid March? You've gotten sold? Right? Have you been selling and pocketing some game here? Well? Um, for a couple of a couple of our older clients, were you know, barking at me, So I have to

you know, But now that said, for my fun. You know, g K we bought down at eight hundred and we haven't sold even though we've actually have over our mandates and Tesla right now at a well person allocation, but for how uh well educated now with the caveat China is a big, big problem right now, and it is an issue for Tesla short terms, not long term, and I want to discount that. But they're also just opened

two factories in completely different markets right now. So you know, when you think about twelve months from now, I think Tesla execution and I think the stuck stot that you stuck by any means here. But but I tell me a company more consequences than Tesla. Well listen, um, Ross. We appreciate you. You're a busy man. You're headed to Austin, UH, and we'll be looking for your research after the event

there with Tesla. And we appreciate our audience who's been listening, because we know the sound and audio is a little rough, but we like to be able to get to some of these investors on these specific names and somebody like Ross Gerber, who has owns the car, has been in and out of Tesla and has really followed it, really closely so our thanks to Ross Gerber, UH President CEO Gerber Kawasaki Wealth and Investment Management. On the way to

the airport UH there in California, headed to Austin. I mean, stocks down four point two percent, but as I set up about since mid March, oh big time, and I mean it's still over a thousand dollars a share. That is quite a price tag, even with you know, in eight point seven per center off of the last two days, right, pretty significant. Yeah, but you let me drive, no, no, no, all right, please, I want to drive. It's a good question,

good drive ride to the globe on radio. Alright, we're all getting a little driven crazy by the NonStop FED talk, inflation talk, what happens next, balance sheet interest rates? And it definitely is playing out after those latest FED minutes today, f OMC minutes that we got it two pm. Wall Street time, because equity markets bouncing back and forth here Katie really trying to make sense. Bond market though, seems

to have taken it like okay, got this. Yeah, and usually I mean you've been seeing bond volatility March higher, stock vulatility maybe calmed down a little bit, not so much today all right, So let's get to it with our market guest. Our Drive to the Close guest with Michael Sheldon. He's executive director, chief investment Officer over at High Tower r d M Financial Group. He is with us on the phone from Westport, Connecticut. Michael, good to have you here with Katie and myself. Um, how did

you Yeah, great to have you here. How did you read the minutes today? Well, I think we did get some additional information from the FED today and they said a couple of things that caught my attention. One is, I think the March minutes make it clear that that rates will be increased by fifty basis points at the May meeting, borrowing some kind of significant shock. Generally, the participants at the FED were fairly positive on the outlook for the economy right now, and I think, why do

you say you feel like you've got that clarity. I'm just reading. Well, I just read through the individual comments of all the different FED districts which contribute to the FED for the FED minutes and again, just for all the viewers out there, Fed minutes or comments from the last FED meeting. The more important FED comments will actually be the Beige Book, which comes out in a few weeks, and for reference, the Beige Book is what the FED will be talking about at their next meeting coming up,

so just to put things in perspective. But the other thing, just to mention is they talked about the balance sheet runoff, which is something which was just sort of floating out there, and they identified that they planned to roll off about billion dollars that will be sort of target amount for treasuries and agencies and then only once that's up and running will they eventually start actually selling securities. So I think we have at least we have a better idea

of what's ahead. And the market kind of moved around and actually was off its lows following the minutes, possibly because some investors were expecting even more hawkish comments and more negative comments in terms of the balance sheet rolloff. And this Fed has come under a lot of criticism, you know, for maybe waiting too long, maybe letting themselves fall behind the curve. What is your view on the matter,

Where do you fall on that debate? And how does that inform how you're thinking equities and markets will perform from here? Right? Well, I mean, if you think about it, the FED goals sounds simple in theory. Their goal is to raise rates a few times. They want to slow the economy somewhat, they want to reduce inflation, but they

want to keep the economic expansion on track. So the FED has accomplished this before in the I think in the sixties, the eighties, and the nine nineties, but they also unfortunately have a poor track record of of raising rates too aggressively and causing a downturn in the economy. And that's what I think investors are getting kind of

a jittery rabat right now. So unfortunately for investors, until we find out more about how much the FED intends to raise rates, what the speed of the FED sort of trajectory will be, um, we're not going to have a lot of clarity until later this year, so that could create more of a periods of volatility as we go through the summer into the fall. So it feels like, you know, we go, we get we get some more insight, whether it's a FED meeting or FOMC minutes. As you

said Beige Book. You know, this will be also important of course as a next point in terms of figure out what FED policy is. But it's kind of a reminder Michael right, that the FED um is going to look at where we are in the current market condition and what they're getting from their regional banks and what the data points are telling us. Well, that's really important to us. So the said Powell has talked about it

many meetings in the past. The feed data dependent. So one of the issues if you remember back in two thousand eighteen, going into Christmas, last of two thousand eighteen, after the FED had started as last rate cycle, the stock markets sold off sharply heading into Christmas period, and that was because after the Feds started raising rates, they started to reduce the balance sheet, but they sort of kept it on what I think they called it autopilot,

and they really needed to make adjustments. So this time around, I think the FED will be more aware of that. In the minutes, they actually talked about looking at the two thousand seventeen period for reference. They did talk about the fact the economy is on better footing now and they do plan to be more aggressive, but I think they will be data dependent. And you know, it's not it's not all terrible. I mean, there is some good

news out there. The unemployment rate is currently at three point six per weekly jobless claims were recently the lowest since nineteen. Consumer balance sheets are strong, and I think the outlook for manufacturing generally is pretty positive. But the issue is that to consume or sentiment index recently fell to a multi year low, and that's really all about inflation, and consumers are not feeling good about inflation, and that's

what's you know, impacting the markets a bit. And when you wrap that all together, you know, you have a pretty lousy consumers sentiment. You have still very robust job market, you have a federal reserve that is starting to tighten, plenty more to come. I mean, where do you see the most opportunities across asset classes, across markets right now? Well, in the first quarter, it was really all about a very sort of narrow group the steels, the coppers, oil

and oil and gas, the commodities. So it was it was difficult to make money in the first quarter if you weren't in those very small specific parts of the market. I think going forward, for now you want to be in high quality versus low quality stocks. I think you're probably better off in large versus small stocks. Um the US is probably a safer place than overseas, although at some point in the future foreign stocks will start to do better. One thing to watch is the dollar for example,

and sort of obviously the military events between Ukraine and Russia. Um, and between value and growth there is a sort of a tough one. But I think you want to have whereas over the past decade you wanted to be overweight growth, which is what we were, but I think going forward you want to have a little more balanced between growth and value in your portfolios. Is there a longer term thought here in terms of you know, the market, the

stock market. It's higher than it was five years ago, it's higher than it was ten years ago, Like, is there a longer thought Michael that we need to have in what is a very tricky environment And just got about thirty seconds here. Sure, Well, that's that's really a good comment. We're investment planners at heart. We run a financial advisory firm, so we try and encourage clients to have the appropriate asset allocation to basically ride out the

inevitable ups and downs. And we try and basically preach that it's time time in the market, not timing the market over the long term. That helps clients reach their long term investment goals. Yeah, I know it's it's not always easy to do. Things are a little crazy. Um. Michael Sheldon, thank you so much. We really appreciate like all the prep you do and the reading through UH in terms of your commentary that you can bring to

our Bloomberg audience. Michael Sheldon, executive director and chief investment Officer over at High Tower r d M Financial Group, on the phone from Westport, Connecticut. 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 News