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All right, everybody, we begin this hour though, with the most read story on the Bloomberg in the past sixty minutes. President Trump said he would refrain from imposing tariffs on goods from European nations of posting his effort to take possession of Greenland, citing a framework for a future deal. I put quotations because those are his words. He was reached regarding the island. So we're talking about the island,
of course, of Greenland. So it was kind of like a wait, what moment for a bunch of us because the President has been for days leading up to Davos talking about acquiring that island, so maybe he found an off ramp.
So let's see what Nick Watams has to say.
Bloomberg News National Security Team leader Nick Watams is in the Bloomberg DC News Bureau.
It was Nick.
It felt like a little bit like a wait what moment, Although we did have some market observers yesterday saying that, you know, the President's going to figure out a way out of this. How do you read what's you read on this right?
I mean, it's one of those things that's a little bit shocking, but not entirely surprising. We've definitely been through this before where the Trump administration of the President himself ratchet so pressure, says he's going to impose tariffs and
then backs down right at the last minute. The big question is going to be what this framework agreement will be, what it will entail, what will happen to Greenland, because the President was quite explicit in his comments today that he wants Greenland as US territory, so what the back down is going to be there, But also then, of course, what happened in the future, because we've been in this cycle so many times where he escalates tensions, backs down,
and then escalates a tensions again, and it's a sort of rinse and repeat situation. So markets are certainly happy, but I don't think there's any indication at least that I'm seeing that we're anywhere near out of the woods, and you won't see the President just ratchet pressure up once again as a negotiating tool if this framework deal, once the details become more specific, aren't really to his liking.
Well, he did make a comment earlier today in his speech at Davos Nick that he wouldn't use force. And I'm wondering if which is great, as you know, we don't want I just want to say, like, we don't want conflict here. I think I can say that, But is there another way to do this? If somebody who is not selling something says they're not interested in selling that thing to you, like I don't understand the how to thread that needle, right?
I mean to me, the most likely scenario is that you would see the US put more military assets in Greenland. Of course, that's something that the US has been allowed to do for many decades. In fact, over the decades, the US has drastically scaled back its military presence in Greenland, and Greenland and Denmark have absolutely no objection to the US bolstering military assets that bases all up and down the island and putting essentially as much as they want there.
What you heard from the President today as well was this mention of Golden Dome, which his so far unproven essentially missile interceptor system that he wants to put in place at a cost of many, many billions of dollars. So it's possible that what happened here is that Greenland, NATO and Denmark all sort of said, Okay, we're going to be willing for you to station Golden Dome there,
and that was enough to mollify him. But you know, as usual with these things, clear how much the president knows about the history of US basing on Greenland, what he's allowed to do, and what he's not allowed to do. So it's entirely possible, for example, that they presented to him this thing that might be seen as a big concession, but was something he could already do in the first place. So, needless to say, we're trying to sort all that out right now.
Yeah, it's my brain hurts a little bit, Nick, because I do feel like I'm sorry. Are you laughing at me?
He's laughing at me, No, but it just feels like I'm just sad that your brain hurts.
Where did we what did we get? What did we achieve as a nation, And I just think about some serious.
Situations that are still going on around the world.
Some Americans would say, we're still dealing with a war between Russia and Ukraine, Ukraine and Ally, right, or you know, we still have stuff going on in the Middle East, we still have stuff going on in Minneapolis, Minnesota, our home in front. I'm just trying to understand the amount of time and you know, spent on something like this, and I'm not quite sure what we got as a nation out of that, and as an American what we got out.
Of that, right, I mean, well, I think on the one hand, you have the president's view, which is he sees this pressure dialing up, ratcheting up the pressure as a legitimate and successful strategy. Mean, you look at NATO itself, and he has one of the foreign policy achievements he has had, according to the administration, at least, is this idea of getting other NATO countries to commit to spending five percent of GDP on defense.
And that's not.
Something they would have done, certainly not at this pace, unless he had done that. So, you know, he may see this as something where the US gets an increased presence on Greenland has the ability to install Golden Dome, bolster its military presence, and portray this essentially as a win under the knowledge that a lot of people, certainly his base, are not going to look back and say, well, hey, you guys could have done that anyway, and you could have done it without all of this chaos and drama
and brinksmanship with an ally. But you can be sure that he is going to portray this as a win, and the result may likely be that the US will have an increased military presence in Greenland, which is something that folks on both sides of the aisle. There are certainly voices who would advocate that that's an important thing to do.
Yeah, and maybe all the cards are being laid out on the table. It may feels kind of messy, but there's certainly a lot that's out there at this point.
Tips Nick, before we let you go, Article five, the collective defense clause for NATO, just remind everybody when it has been invoked and who benefited from.
That, right, Well, I mean, so the President has said repeatedly that the US gets nothing from NATO. Obviously, the time that Article five was in voked was after the September eleventh attack, and a lot of NATO countries came to the US's eight and you saw participation by NATO
forces in Afghanistan was really the big one. Of course, it would have been an extraordinary and chaotic situation if the US had decided to attack Greenland, and you would have essentially had to have had NATO invoking Article five against one of its own members, and then you would have essentially seen the total dissolution of NATO.
So, at least for today.
January late January twenty twenty six, we are not going to see the dissolution of NATO. But who knows what the President is going to say in the next day or two.
Well, investors certainly like that, and probably like even more that we're not going to see more tariffs coming down.
Nick Wadhams, thank you so much.
Nick, of course, Bloomberg News National Security Team leader out there in our DCBREA.
Stay with us. More from Bloomberg Business Week Daily coming up after this.
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Netflix shares tumbled earlier in the session by as much as six percent off their lows. Now as we see some buying across risk assets late into the trading day, Netflix shares down about two point nine percent right now, the stock taking a hit after the company issued a disappointing forecast for earnings in the months ahead as it spends more on programming and works to close it's eighty two point seven billion dollar deal with Warner Brothers Discovery.
For more, let's bring in Alisha Reese, Senior vice president of equity Research. She covers media entertainment at Weblish Securities more than five billion dollars in assets under management. She joins us from Lake Oswego, Oregon. LISHA, welcome back to the program. You know, we were talking yesterday before the call about the idea of content spend sending shares lower.
And it's like a story that we could have told about Netflix a dozen years ago, because this is always you know, apart from members and maybe get that number anymore. That's what in the past has moved the company's stock. Is that what happened this time or is it something different?
There are a few different elements here going on.
So you know, Netflix does give the engagement numbers now, and you know, after not giving subscriber numbers for most of the year, they did give their subscriber numbers. But the subscriber numbers are really where we expected them to be. There was no surprise there. I think, you know, there was some disappointment. And how much advertising revenue that Netflix was able to squeeze out of a quarter is as
big as Q four. When you had you know, all those live events including NFL games on Christmas, some boxing matches, and of course stranger things, and you had a lot of you know, people coming onto the service and a lot more engagement around those events. Netflix should have been able to get some pretty significant advertising revenue.
They did get decent amount.
Advertising revenue did grow two and a half times year of a year, and they do expect another doubling in twenty six to about three billion dollars. And that's satisfactory, but it's not you know, exciting just yet. You know, there's still a significant growth opportunity for Netflix in advertising, and I think the hurdle so far has been just that they haven't had the data stack and the attribution available for advertisers significant enough for them to really, you know, do all of the campaigns.
That they would like to do.
They have great alternatives right now across social media and other connected TV items, but Netflix is really catching up on this and I do think that they'll be able to exploit that opportunity in the coming year, in year.
Or two, So advertising being the big surge Alicia, when it comes to boosting the top line, the revenue line.
Yeah, I think that's their biggest opportunity in the coming years. Twenty six is the first year where that's really meaningful. It's a meaningful contributor to its growth opportunity. And I you know, the three billion dollar market that they set for themselves, they can easily surpass that if they get all of the pieces in place, and that excessive content spen or what might look excessive content spend relative to the engagement will look a lot more reasonable if a
lot of that engagement is on the ad tier. Now, they said that they're planning to do some price increases in the year, and I think that's going to be mainly on the premium tiers, trying to urge more of its users over to the advertising tier, which is significantly cheaper. If they get a lot of that engagement on the ad tier and a lot more advertisers in front of them, that results in profitability.
The eighty two point seven billion dollar deal for Warner Brothers Discovery predict predict this for us. Does Netflix get these assets?
The regulatory process is going to be long drawn out and very difficult.
Why do you think that in this in this world?
Well, yeah, well there's two different sides of it. On the one side, there's the consumer side. It's going to be hard for Netflix to argue that, you know, the likes of YouTube that you know, billions on YouTube are real competitors. You know, you do have some subscribers, but it's a significantly lower portion. Not all media is going
to be, you know, considered a competitor. If you only have real competitors in their Netflix does have significant market share, and we'll have quite a bit when they have HBO.
On the other side, it's content.
As a content buyer, it's going to consolidate power pretty significantly for you know, against producers of content, and so it'll.
Give Netflix almost too much.
You know, collective power against those producers and how much they'll spend on content. So it does diminish some power in Hollywood potentially, and you know the prosecutors will be able to argue that.
Alicia, you've got an outperform. You've had an outperform for a while. I think you've moved around the target price. Right now, you're looking for about one hundred and fifteen a share on Netflix, So that's some room to the upside. I mean, the stock right now trading just under eighty five dollars this year?
Is it?
Though we just talked about you stress that the revenue is certainly going to be a big opportunity for this company. AD revenue growth. Is that what gets it to the target or there other things?
Is that?
Is it also the completion of the deal. And if that deal doesn't happen, then what what does the story the growth story look like for Netflix going forward? Is add revenue enough or do they need that deal to help with that growth in the AD revenue?
So my price target does not include Warner Brothers at this time, and it won't until the deal closes. Right now, I'm you know, my my assumption is that they're going to just continue operating as Netflix at least for the
next you know, year plus during the regulatory process. So my one hundred and fifty dollars price target if one year out includes only Netflix and its own you know internal opportunity with AD revenue growth and so you know, should that deal go through, that will you know, significantly improve Netflix's ability to leverage its AD stack, which by then should be you know, absolutely booming. So I do think there's a lot of upside opportunity with or without Warner Brothers at this point.
Okay, what happens though if a competitor gets it. You said, there's still a lot of upside even if.
Content gets more expensive. Yeah, yeah, that is that is the issue. You know, Netflix has been making a lot of partnerships and content you know, they made their one with Sony recently.
Of course, they have their you know, content deal with.
Warner Brothers, and they've seen how successful that content library is foreign Netflix on Netflix, and so owning the content makes a lot of sense. It'll save them a lot
of money on those content costs. If somebody else gets the content, it could potentially be more expensive, but Netflix buys that content, plenty of content from paramount already, so you know, it's it's just a matter of will Netflix continue to spend this much on you know, procuring content through licensing deals and then producing its own content and a combination of that in a combination of international content
as well. It certainly can, you know, it just would be a little bit more profitable, especially if they're able to leverage that content against a global you know base that that utilize this advertising.
Okay, so years ago Netflix said, all we're doing, you know, is sending DVDs to people, and that's our business. Then they you know, quick Stir and the whole spin off, and that didn't end up happening. But then they're like, Okay, now all we're doing is focusing on on demand streaming. We're never gonna do sports, We're never gonna do anything live. If they throw all that out the window, they're doing everything right now, they're doing advertising these to say we
never do advertising. What is left for Netflix to do, at least from a content perspective. If they're doing games, if they're doing sports, if they're doing these live one off events, if they're doing the live not one off events and getting actually rights to broadcast sports, if they're if they're doing podcasts, what's left.
Yeah, I mean, there's a lot left in terms of gaming cloud gaming. They have a really big opportunity there as cloud gaming becomes more pervasive on connected TVs, they have a good opportunity.
Just given their global base and the number of games out there.
They can do a lot with that. I think they could become a really important platform for gaming. You know, similar to you know, some of the consoles. They can operate as such, you know, licensing in a lot of really quality, you know, high quality gaming content and then leveraging their own IP as they see fit. You know, there are a lot of other opportunities in sports to your point, they don't have to you know, they can
do one off events. They can do you know, WWE, which has been really successful for them.
They're going to do, you know, the baseball in Japan. I think that's a really important step for them.
And it doesn't have to be global, it can be localized. They can also leverage their global base to bring sports that are not big in certain regions to those regions and and you know, create a larger fan base around the world. You know, take Gaelic football to the US, for instance. You know, that could work. There are a
lot of different opportunities within those I think podcasts. You know, the whole idea is to have content that will appeal to everyone of their subscriber households and keep everyone engaged.
And however they need to do, that is what.
They're going to do.
Alichari, Senior Vice president of equity Research covering media Entertainment at web Bush Securities. Stay with us more from Bloomberg Business Week Daily coming up after this.
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Also on the President's radar, has moved to ban institutional investors from buying single family homes, the latest proposal from the administration to address housing affordability ahead of this year's midterm elections. Actually signed an executive order on this yesterday. The President address housing affordability in his speech in Davos earlier today.
Time you make it more and more and more affordable for somebody to buy house cheaply, you are actually hurting the value of those houses.
Now, if I want to really crush the housing market.
I could do that so fast to be good by houses, but you would destroy a lot of people that already have houses.
Thus, President Trump earlier today, Jonathan Reckford knows what it takes to build affordable housing. You CEO of Habitat for Humanity. He joins us from the World Economic Forum in Davos, Switzerland. Jonathan, good to have you on the program. Is you know, we spoke a lot last week about institutional investors owning single family homes in the US, and the data are out there. It's actually a small percentage of the homes
in the US are owned by institutional investors. In your view, would banning these folks from owning single family homes ease the housing crisis in the US?
Well, first, we're just pleased the administration is talking about housing, and I think the housing crisis is such a huge issue in the US and globally. I'm glad it's on the agenda here at Davos as well. And we would say that now that middle class families children cannot afford housing, the more invisible housing crisis has become visible. We need We haven't taken a stance on the issue that you've just raised. We still want to look at the details.
There are certain markets nationally it's a very small percent There's small certain markets like Atlanta, Charlotte, a few others where it's a meaningful percentage. But that's only one small piece of the broader housing issue. And what we really
have is a supply problem. We have a massive shortage, particularly at the low end of the market, starter homes, and so our view is creating a lot more supply on the starter home side would not actually damage home values in the middle and upper ends because we have such a shortage right now. In fact, if we work more on the demand side without increasing supply, we'll drive house costs up further and it won't really solve the housing crisis. So we need really a little bit of everything.
We do need demand side solutions, but the most important thing is to increase the supply of houses at the low end of the market.
You know, I have to I don't always understand.
I mean, I understand giving developers breaks and tax breaks to build in certain areas that maybe need some juice and some help, right to get a kind of back and bring back a community, bring back a city, bring back a town. But I'm amazing, like tax abatements that still get given in areas where things are good without any maybe provisions to make sure that there is housing for everybody in the community, not just the wealthier folks.
So how do we really fix this?
I mean, I just don't understand what's the incentive to developers or builders to really help out here, and is that what.
It needs to be.
I do think it requires incentives, but also requirements, and the best model anywhere in the world is mixed income, mixed use, where families can be close to where they need to go to work and where they have economic opportunity. But we haven't planned that way, and I think there's no magic bullet. But there are a whole series of things that can help. And I agree with you if they're incentives that should come with expectations of mixed income,
or that they're because the math is tough. COVID was kind of a perfect storm on affordability. So the gap between what a cost to build a unit of housing for habitat or for a private developer and what a family can afford is the widest in history. So we do have a real math problem, and I think there are different ways to solve it. We've seen at the local and state level. First, you can make it faster
and easier to build. That doesn't cost cities a lot of money, but can make a big difference for builders and developers. You can address zoning at the local level, get rid of parking minimums, increased density, get a minimum lot size. There's a lot of nineteen eighty strategies that aren't relevant today that would increase supply. You can do accessory dwelling units at the federal level. I think incentives, but incentives tied to building at the starter home level
and increasing the supply, so discounted financing. As the Senate has a good bill we supported on the Road to housing. The House has a strong bill as well. I think there is bipartisan support for doing something on housing, so we're enthusiastic administration wants to support it. We know it's one of the biggest drivers right now. One in three families in the world lives inadequate or substandard housing. One in six families in America is spending over half their
income on housing right now. So the level of cost burden families is the highest it's ever been, and a lot of historically affordable markets have more than doubled over the last six years.
I think one of the challenges that you raised is the local level, and if this stuff is left in the control of voters, you oftentimes see pushback against zoning. This so called nimbi's not in my backyard. We only have thirty seconds left. But how do you get local officials to push through this stuff that doesn't end up being very popular with people already?
I think you have to make the moral and the economic argument where we're seeing as employers can't hire work because they can't afford housing. That starts to turn the pressure. If you ask almost any mare in America now, for the last three years, housing has been at the top of the list of their issues. Governors now would say
housing is the top of the list. You see conservative governors trying to reduce local zoning because they can't get enough workers for their new factories or newly recruited jobs. So I think it does take getting hearts and minds and think about it doesn't have to be housing everywhere, but we need density, more density around transit and thoughtful density, and I think we have good models for that.
Jonathan, safe travels and please come back soon. We'd love to continue this with us. Jonathan Reckford, CEO Habitat for Humanity.
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Yeah, eighteen minutes to go, just under eighteen minutes.
I kind of have lost track today.
It's been a weird hour and a half or so, if you will, in terms of we've obviously been focusing a lot, lot of Davos, the President speaking, and then we did see some comments when it comes to Greenland, and we did see equities certainly moving higher, so some enthusiasm coming back into the markets. But it's been a lot again in a twenty four hour news cycle.
I want to bring in Gregory Peters, Co, Chief investment Officer of PGIM Fixed Income. The firm has about a one and a half trillion dollars in AUM, more than a trillion at pGEM Fixed Income. He joins us here in the Bloomberg Interactive broker's studio. I had to kind of rip up the intro that we were going to do for you because a lot has happened just in the last half hour. I want to start with the Greenland comments because it moved treasuries long end took another
leg higher. In late trading, President Trump said he reached the framework deal on Greenland after speaking with NATO Secretary General Mark Ruda at Davos. The view of US treasuries right now, did it change for you at all this week? With the pushback from some Europeans who say the US is not worth investing in right now, it's not credit worthy. The President's changing dialogue about Greenland? Is it nois or is it meaningful?
I think it's both.
So just because there hasn't been a sustained reaction today doesn't mean there's not medium to longer term implications. You know, I do believe that over time you'll see less enthusiasm to invest in US treasuries.
Will that happen right now? No?
You know, you see it in the TICK data, you see it in other data. The flows are still pretty sizable into you know, treasuries.
But now what we're seeing, what we're hearing.
Particularly outside of the US, is just less enthusiasm and this quote unquote passive allocation away from treasury, So you're just less likely.
Why less enthusiasm? What are the reasons given?
Well, it manifests itself through this notion of risk slash term premium, right, you know the back end, and if you kind of look at the US versus you know, other jurisdictions, it's still pretty flat. You know, Japan's a classic example which there's been a massive repricing oh SQL that that takes money out of treasuries into jgbs as well.
And so what we're seeing and hearing from Japanese investors is that the finance for a very very long time, it's more advantageous for them to remain in their local market instead of going outside.
So that's one factor.
But you know, these things just take time, and everyone wants this immediacy, this snap reaction, and I don't think the market works that way. It's too large of a market and it's too well entrenched. But it's over time will get a better sense.
So what does that mean then for the USL curve over time?
Well, I think the curve is poised to steep end. If you look at the US curve as.
An example, it's stole, not even at like the average steep levels, and it seems to me the risk out there is above average. You look at other places globally curves are steeper. You look at the fiscal trajectory that points to a steeper curve. You look at you know, inflation dynamics, you know, being just more robust, and what we saw, you know, the previous ten years. So I think all these things point to a steeper curve. And you know, that's kind of my view and the bias there.
What gets us there and how quickly do we get there in terms?
Well, you know I knew exactly that, but these things do take time, right, So it's not going to be immediate impact. So my thought, my view, our view is that over the course of this year, you'll just see it continued steepening. So even though the markets responded a lot this week, there's a lot of informational content in
the price section. So you mentioned the markets have rallied in the face of kind of the latest news, but it's still hasn't completely retraced, right, So now what you're seeing is these more negative moves more pronounced than the positive and it's not being offset one for one. I think there's value in seeing that, and I think that tells you a lot about the trend.
Is this.
If it was a different administration, different policies, would we see this trade? Would we see this conversation? And I guess I'm going back to Greg thinking about how much of this has to do with the fiscal situation of the United States government. It's not other countries have similar problems or some problems, but I keep thinking about the US situation.
Yeah, So is it something.
Again specific to policies that we are seeing in this White House or is it No, it's something that's been building in the US government fiscal house.
It's both.
I mean, you look at you you look at the US fiscal situation. It is just you know, continuing to worsen, all right, And so there was a step function higher during the pandemic. That's a global phenomena, as you mentioned. So fiscal is a problem everywhere, which somewhat perversely helps out the US in a way. But you know, I do think, you know, the latest fiscal stimulus coming through
comes out of cost. And then I do think just how policy is being conducted has an impact on foreign investors, and you put it all together, and I think that's what matters. So it's not a single event, it's a bunch of things put together.
Well, we're here, we're sort of hearing this rhetoric come out of folks at Davos. We've got a great story that does a round up of this on the Bloomberg terminal. One of those p get Gopinath, formerly of the IMF, said it's clear that investors no longer consider the US the secure borrower that it once was.
Is she right?
I think that's a little melodramatic and I don't think that's right. But at the end of the day, the more debt to GDP you have, the worser fiscal finances are, the closer you are to that tipping point. One of the scary aspects about this type of environment is that there is no magical number things. Just markets move, investors lose faith, and you can't pinpoint exactly the precise.
Time around it.
But if we learned anything what happened in France, UK, even you know now in Japan, is the tie of having kind of heightened debt to GDP with just called administrative political instability has a tendency of you know, wreaking havoc on the bond market.
I do just think about, especially in the US situation, we talk about the birth rate going down and aging population tapping into more you know, safety nets if you will.
It just we've seen this picture before, right you think.
About Japan and some other nations. It just feels like a lot of nations are moving towards this are pushback against immigration, and I just I'm curious at a time where certainly more Americans are relying on the financial markets for retirement and things like, it just feels a little messy and a little ugly here of how this all kind of ultimately plays out.
Yeah, I mean it's always you know, filling darkest or worse when you're going through it. But you know, there's a lot of positives going on as well. You know, there's lots of focus on you know, AI as an example, and what does that mean for productivity? And if you just think about productivity, productivity through the lens of death sustainability, if you get fifty basis points of uplift and productivity,
that actually changes the whole fiscal trajectory. You go from kind of a baseline of one hundred and seventy percent of GDP down to about one hundred and seventeen percent. So there are some real positives here as well. But you know, on the immigration side, you're quite right. We've seen this story elsewhere. We saw it in Japan, We're definitely going to see it in China.
We see it across Europe.
And what has been a saving grace for the US from an economic standpoint, this is not a political statement. From an economic standpoint, has been actually immigration.
Oh yeah, you just have to look at the numbers. I mean, it's not a political statement at all. We talked about this this all the time, so absent that what happens.
Well, then we're very similar to these European countries.
I got to ask you about the FED.
It seems like the President did make some comments and saying I'm down to three, I'm down to two, I'm down to one, but he hasn't mentioned it's been I know, we've heard this for the last month or so. What's your comfort in feeling that whoever whomever gets this job, it will be still an independent FED and we keep report reminding everybody it's one vote, but it's a FED chair vote and their ability to maybe sway other members
of the Federal Reserve. Do you have confidence it still remained an independent FED.
I think what we saw last week was crucial.
The pushback from Powell, the pushback from policymakers across the aisle, business leaders and alike, I think had this perversely positive effect.
On keeping the independence.
But I think it's also important to remind yourselves that independence isn't a binary function, right, It's a continuum. Yeah, so one person chair in and of itself will not dramatically shift the FED. But you know, credibility is key there and if you have a more credible FED chair
to pull individuals along, then that's you know, helpful. And the mirror example is a good one where you know, he has been kind of an outlier at each meeting and his ability to kind of coalesce and pull people with him just just hasn't been there, right, And so I think that is quite telling.
The short list does that include people who are independent? In your view er, could be or will be independent?
I don't know.
I you know, I do have faith in institution, but you know, the way this whole poler game has been conducted. I mean, it has to be called in a question, but ultimately I think it does hold. And you know, you're a FED chair, you know, you worry about your legacy, you know, and I think just being a puppet for the administration is something that I don't think anyone wants.
As part of their legacy. So hope springs with Turner on this one.
The one thing I would say, though, important that we do because we think about the mandate and inflation, because it does feel like we're going to see inflationary pressures persist, and that is something that we have to ensure that We've got a FED that you know, wants to deal with that and keep it in check.
And that's absolutely essential. So one of the risk factors that we have for this year is this overheating scenario. There's a lot of stimulus coming through the system. You know, as we mentioned, if you have easier financial conditions that pushes it through. You have rates lower that pushes it through, and the tendency will be for inflation to move higher. It's already above the two percent target. And if there's a perception by the market that the FED is ignoring inflation.
Then they're basically waging war against their own credibility and that'll manifest itself in the marketplace through steeper curves, higher term premium and five year five year break even is a really important measure, and it hasn't moved to be fair because to me, that's the ultimate FED credibility measure. And if you look at that measure, it's.
Unmoved right Without it, though, you would see a lot of nervousness and volatility, no doubt about it.
Because credibility is tried to inflation, right, so exactly one big guess or the other, and so to ignore it is.
Ignoring at your own peril.
Super appreciate it. Thank you so much.
Thank you for having Gregory.
Peters Co, Chief Investment Officer pageon fixed income joining us right here in studio.
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