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At the feeling Baby.
Great quarter, great quarter, soft landing, soft landing earning season is not over yet, That's all I'm gonna say. And listen. More than eighty percent of S and P five hundred companies eighty two percent of S and P five hundred copies issued results out of toped analyst earnings expectations by an average of stuff. I know, I know they learned.
Okay, let's talk called managing expectations.
Like I said, not everybody's running to downgrade stocks to sell.
Yeah, that's a really good point. Did they used to do that? More?
They never do that until it's like the stock is down to nothing.
You're like, oh, thanks for the breaking news.
All right. Having said that, let's talk a little bit about the soft landing that seems to be happening. Today's CPI report showed US inflation, as we just talked about, broadly slowing last month. And so despite some bumps in recent months, inflation team has settled substantially from that forty year high that was just last year, and it's led several FED policy makers to signal that maybe they're done raising interest rates.
Okay, maybe with us more on the data and the impact on US yields, which today we got Bloomberg News economics enter Molly Smith. She's with us in the Bloomberg and Active Brokers studio along with Bloomberg Intelligence Chief US interest rates strategist Ira Jersey, live from BI headquarters in Princeton, New Jersey. Molly, I want to start with you and just get into the nitty gritty here. As Carol mentioned, everything is awesome at least today.
Yeah.
Great quarter, great quarter, great month. Really October is it though?
I mean, you've been on team soft Landing for a long time.
I have been. Thank you, Tim, I thank you for reminding everybody that I have been. I still am obviously optimistic. I think today gave a lot of reasons to still
be optimistic. This was yeah, I think from the FEDS perspective, one of the more you know goldilocks reports that you could get, you know, it showed the one of the biggest contributors to inflation in the past few months has been that shelter category in rent and some of those rent measures stepped down pretty significantly this month, so that was very welcome to The rents of course, are still rising, but not nearly as fast as they have been in recent.
And that's the point, still going up, but not as much as they.
Were right, which is the same with core inflation. But then you saw overall inflation that's the one that includes that those food and gas court categories. That one was unchanged on the month, and that's because gas prices fell so much, so we were expecting that. But the read on core inflation coming in below expectations. That's what everyone is really cheering about right now.
I want to get to you in terms of that two percent rate that's the FED target in a moment. But let's bring in Ira Jersey because Ira, we saw, you know, certainly an equity rally, but on the bond side, the treasury US treasury side, some significant moves all along the curve talked us about the trade this morning, this morning today specifically.
Yeah, so it's happened all day. There's been pretty decent follow through actually, and if you look at the belly of the curve, right the best performing part of the treasury market right now is the five year kind of area of the curve, and that's that's basically the market saying, Oh, this is going to continue. The Fed's going to have to cut interest rates. So this idea of a goldilocks I'm not quite sure that's what the market's telling you. That's not what the rate market is telling you anyway.
What the rate market is saying is the rate market's actually worried that the growth and inflation story is going to be so bad next year that the Federal Reserve is going to be cutting interest rates. So I have a different read on what the market's telling us. You know, it's extrapolating out I think a little bit too much. So, you know, I would take this with a grain of
salt because it's one day's move. But nonetheless, the market certainly seems to think that you're going to get maybe a string of better inflation data, but maybe significantly worse growth data as well.
You know, Ira, what's the nuance between in the trade between the activity indicating recession versus soft landing? How do you figure that out?
Yeah, well, I think in the market, like what the treasury market has had been pricing for a long time was basically the Federal Reserve to do nothing with a tail risk that they would have to ease interest rates by the end of next year because you'd wind up seeing a recession and slower economic activity. But today they've just leaned into that slower economic activity, slower growth the
federers are easing. You know, we went from from pricing in under two cuts by the end of next year to pricing in almost four cuts, right, So that's a pretty significant move, right, fifty bases point move. I mean, you just look at where short end futures are pricing, and they've moved basically at least one one more cut, if not more, throughout the course of the year. So you know, my base case is the Fed does nothing
next year. But the market seems to be much more worried about, you know, softness in the economy.
So okay, Molly, So that two percent target that Jay powellin companies say that's what they are shooting for, or that the trend line is getting there, that would maybe give them a reason to pause and just be done with this rate hiking cycle. Are we still have a ways to go?
Right?
Yeah? And remember also that two percent target is based on the other inflation metric that we're getting next week. So that's the PCE Inflation Report. That's the one that the Fed uses for the target. This one today was the CPI. It's a bit more public facing. I think some people might say this more is a truer sense of what consumers actually pay and representative of more their
actual basket. But I mean, yeah, I think the real thing that they've been looking for has been a mediation more in the core metrics of inflation, so stripping out the volatile food and energy categories, especially core services x housing, so getting into where we've seen so much strength in especially rents and other services inflation that has been really strong.
That did step down a bit in today's report, but like you still are generally getting so much more relief on the good side, as you guys were just saying with the luxury watches and other big purchases that people are just not buying as much physical stuff. But the services side is still where the strength in spending is.
That it's been like that for quite a while.
Mollie, Yeah, and that I mean that is ultimately reflective of what our economy is. The US economy is a service driven economy that you know, consumers tend to spend more of their UH except.
For during the pandemic when right.
It was long when there were no services to be had, right exactly. So now we're shifting back into that kind of normalization, and I think, yeah, it's a great point. It is sometimes really hard to distinguish from the market moves and also from the economic data. What is the differentiator between recession and soft landing and that's why, you know, to IRI's point, you can't read into one month of this too much.
Well, that's that's the thing. I would say, a sustained level.
And what I just would say, it's it's I think people could push back and say, well, it's one maybe one month of CPI data, but it's CPI data on top of data that we got, you know, starting a couple of weeks ago, with the jobs number that came in kind of lighter than expected, which gave people the idea, Okay, well maybe the labor market's not as hot as people thought and kind of set off this rally that we've seen the last two weeks.
Ken Griffen of Citadel say that labor hoarding, maybe we're starting to see not as much of that which we had seen for a long time. I would come back in here, though. The bond mark at the US treasury market has been very vaultive this year, and so I am always hesitant, even when we've got a steep move on a daylight today, to buy the trend. How about you,
you know and understand this market. I mean, we could get something that's a little hot in terms of the US economy and go in the other direction.
Yeah, I think a lot of people were leaning a little bit short. A lot of people were burned. You know, we had when this past summer, if you recall when a lot of people, including myself, were calling for the Federal Reserve to have been finished with their interest rate hikes. Usually, when you when the Fed finishes hikes, you want to own duration, you want to own the lung and own
market risk. And what happened this time was people got burned, right because you wound up getting better economic data than people thought you had. The September data was pretty strong, right so, and surprisingly strong, and that's one of the big reasons why people reset their expectations for the Fed, and you wound up getting that pretty big sell off
during the months of August and September. And then you know, so subsequently, like you mentioned, the last two weeks has been great for the treasury market, right we hit five percent on the tenure yeld and then we've done nothing but rally for the last forty basis points or so. And I think that that is, you know, shows you how on edge the market is and how confused the market is about the future path of the economy because you know, I have still had a lot of people
telling me. Some investors I've spoken to just today, we're mentioning that they think that inflation next year is going to reaccelerate. Meanwhile, you have, you know, the market pricing for cuts. So so I think if there's any piece of data that suggests that, hey, maybe inflation will be reaccelerating, you can wind up just going right back the other way.
That's interesting. Hey, Molly, come on back in here.
Did you want to frightened the thought of inflation reaccelerating?
You'll keep you busy.
I mean, I guess I could see the thing. And maybe I'm a little partial here. I'm in a somewhat of a home buying journey myself and thinking about, Okay, what's the reason that like housing prices could reaccelerate, and thinking, okay, if you start to get mortgage rates coming down, which it seems like we are at our near the peak
that at least in the New York City market. Because you can't talk about housing really is a national market, it doesn't exist that there does seem to be a lot of demand here, and that when there would be more supply coming on if people start to move when rates come down. It seems like there would be a lot of demand to meet that extra supply, in which case prices could come back up. So I could see that in a housing sense, in the sense that like
inflation could accelerate more in that sector. It's tough for me to see right now where the opportunities are for inflation elsewhere to re accelerate. I'm not saying it's not possible, but that's the most obvious one to meet that comes to mind.
The house and one because it's just kind of so tight. It's interesting. Ken Griffin said he expects a US recession in the second quarter of next year.
Scary. He also thinks, so that work from home is going to make it easier to fire people, So I mean, maybe that'll get the rise in unemployment that the FED is looking for.
We're all just saying, we're all here today.
Remember how was that? Happy Monday? Today? Ready? Great quarter month in the studio? It is. It is really really tricky. What's the next economic report on your radar? Really quick?
Retail sales tomorrow retail See how well that.
Does your consumer? Yeah? Right, well, all right, always love love love Molly Smith Economics cedit at Bloomberg News right here in our studio, Irid Jerseyer thanks to him as well, Chief US Interest Rate Strategy at Bloomberg Intelligence. It's amazing how expectations of what the FED is doing are moving so quickly in reaction to all of this. This is Bloomberg.
If you're listening to the Bloomberg Business Week podcast, catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or watch us live on YouTube.
Cherl, think about some of these skills that you need to be a good poker player. Yeah, are you thinking?
Yeah?
Okay, Patience, discipline, discipline.
Ability to read people, confidence yep, understanding odds yep, or odd people no understanding odds.
Maybe hot people too.
Taking measured risk. And then I think this is a big one. Knowing when to quit.
Yeah, so no question. I think that some of those things, or maybe all of them, what you need to be a good poker player also translates to other areas of life, whether we're talking, you know, in the workplace or out of the workplace.
I love this kind of way of thinking. Aaron Laden is on a mission to use poker to teach life skills to women. She's the president of Poker Power. It's an organization that provides poker workshops to businesses also individuals to in poker Powers words quote, teach women critical leadership skills so they can turn any situation to their next big win. She is joining us, Aaron that is on zoom from Chicago. Erin Welcome. Nice to have you here with Tim and myself.
How are you, I'm great, lovely to be here.
Well, it's lovely to have you here. Tell us a little bit more about what you are doing and how you can take what you've learned in terms of playing poker and to really make it apply to women making some really serious advancements in the workplace.
Yeah. Actually, the skills that you started with are exactly what we teach with Poker Power, and we have figured out a way to gamify leadership skills through the game
of poker. And so it has nothing to do with the wanting to get you into the casino or even into that you know, basement home game where it's all smoky and gross, But it's all about getting women how to think like a winning poker player, and so that's taking risk, it's allocating capital, it's strategizing and problem solving using the skills of Texas.
Hold them, Eric, take a step back your own experience playing poker and how it kind of got you to this point. Yeah.
So I was not a poker player when I agreed to run this company, and that's an important part of the story. I was surrounded by poker when I was on Wall Street. I was at JP Morgan, and there was always a poker game going on, and I never had the confidence or the courage to ask if I could learn, and I certainly was something invited. And so my image of this game was quite negative. And that's just what I was familiar with. Fast forward twenty years, and what I have come to realize about Hooker is
it is the secret. Sauce and I have been talking about equal pay for almost twenty years and trying to inspire women to live life differently through thinking differently and strategizing different really, but I hadn't really had a solution that could be tactical that women could employ on their own to exhance their own careers and certainly go for
equal pay. Poker is that skill. And the reason that I say that is when you are playing this game you want it's communal, it's social, so it's fun and that's a good thing that gets people to come back to it. But two, it's a place to practice. And I think that's what's been missing, is that in order to negotiate well, in order to seek that promotion, you have to practice the courage and the confidence and the confidence and poker game after game gives you that opportunity.
But do you have data that show that it's actually working for the groups and the individuals you work with.
Yeah, we have tens of thousands of women over the last three years who have gone through our programs, which are both virtual and now in person. We love doing in person with our cohorts. And what we know from these different groups, and they're all ages, they're interns. All the way to CEOs is that it's learning to think like a winning poker player translates to asking for that raise,
asking for that promotion. And what we see is through their testimonials is that we're hearing stories around doing just that and people are getting outside of their comfort zone, which may not sound like such a big deal, but it is absolutely critical to have the courage in order to do that. We're actually running a couple studies. So you asked about data, and we're big on data at
Poker Power. We're actually doing a study with Northwestern and also with Harvard, and we're going to put numbers to exactly what I am.
Saying, What is it about poker versus I don't know, you know, car racing or some other sport. What is it about poker specifically that gives you the skill? And I guess, and do you have to get to a certain expertise in terms of playing poker or is it just doing it over and over in order to be able then start applying it in the workplace.
So what I like to say about poker and I used to race cars, So I love that analogy. But the reason it doesn't work is that to be an amazing car racer, it's a physical skill. It's mental, certainly, but it's a physical skill. Poker is different. And while you need to have stamina to stay at a poker table,
what you really need is your mind. And so it's the ultimate meritocracy, and that is incredibly empowering for women to be able to sit down at a table and it doesn't matter how big, tall, strong they are, how fast they are, None of that matters. What matters is how they play their cards. And so I think it's actually, you know, the greatest leveler to help women take what they can from the poker table and start to apply
it to real life and to workplace. And what we like to say is there's some number of hands, and so I think it's about one hundred hands of play for you to really start to understand the rules of the game, the position that you play in the game, and how your stack of chips factors into the game. Those are the key elements that you maneuver hand after hand. After those country hands, I say, you can go play in a charity tournament and you will not be the
first person to bust. And the reason that matters is we need more women sitting at the table at those charity events because right now it's almost all men who are playing the game, and that's where the deals are getting done and that's where the networks are formed.
We have like thirty seconds left, but I want to make sure we understand how the business works. How much does it cost to actually get trained by you guys.
Yeah, so you can enroll in virtual classes today. We have them starting at the beginning of every month, and it's fifty dollars for four classes. So we feel very strongly about not having barriers to entry. If you would like to work with us as a corporate partner, you should reach out directly to me and the team and we will create the spoke experience that is one of a kind for your clients, for your internal employees, and for the different way and cohorts that you'd like to work with.
Really interesting, all right, erin thank you so much, Aaron Leiden. She is the president of Poker Power, joining us on Zoom from Chicago. Interesting. So I guess there is what you can go play poker now?
Not not good, I'll say that. Not good at poker. All it takes is one hundred hens or the roulette kind of guy. No, I don't do any of that stuff. I'll tell you my Vegas story, the point where I lost a lot of money in.
The vegab story. Always are good stories. All right, this is Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six. Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty the.
Phone.
Yes, folks were taking you to the lone Star state and you might be called. Last month, Ken Paxton, he's Texas's and battled Republican attorney general, threatened to bar about eight banks from municipal bond deals in Texas simply because of their commitment to cut greenhouse gas emissions. It's a conflict that dates back a few years to twenty twenty one, when the Texas Legislator legislature enacted a pair of laws because some lawmakers saw big financial institutions as to woke
when it came to oil and guns. That's what it really came down to.
Well, let's go to the most recent threat, which was last month, and it spurred concern on New York trading desks about losing access to the state's fifty billion dollars a year debt market, where business is booming even as high interest rates krimp deal making elsewhere. After all, as Attorney General, Ken Paxton signs off on almost all meauti bonds issued in Texas, so his approval is key to infrastructure financing in the state.
All right. Amanda Albright and Danielle Morin wrote about it for Bloomberg business Speak the story and the upcoming new issue of the magazine. It's on newsstands later on this week on Thursday, but it's already online at Bloomberg dot com, Slash BusinessWeek and of course on the Bloomberg terminal. Amanda, by the way, his municipal bonds report for Bloomberg News. She's with us on zoom from Kansas and also here in our Bloomberg Interactor Broker Studio is the editor of
Bloomberg BusinessWeek. Jill Weber feels like a Texas showdown.
And it's one that's been going for a while. Only it seems like, you know, once you're you know, in in this kind of situation with the Attorney General of Texas, Paxson, you know, first of all, he's been he's had some legal issues of his own. So once he once he got through those, you know, it turns out that he
couldn't quite turn away from this one. Yeah, and this showdown continues, and it's all about municipal bonds which he signs off on, and that has some some tension, created some tension with Wall Street.
Exactly. Yeah.
No, I was just gonna say my coworkers and I the big thing we've been saying the past month is that we just can't believe that we're still writing about this in such an in depth way. These laws were enacted two years ago, so that's over two years of kind of drama in the Texas muni world over these laws. There's a law of targeting firearm policies, and then there's a law targeting energy policy. So the latest kind of drama is more about energy policies. And so Paxton back
in office. A few weeks back into office, some people were hoping maybe he kind of forgot about these laws. He released a list of banks that he's reviewing for their basically their climate change policies and their commitments that they've made around greenhouse gas emissions. So we've seen a pretty dramatic reaction among the people that we talked to regularly for these stories. They seem pretty rattled by this, and I'm happy to talk through some of the specifics of it.
But let's do that.
Because Ultimately, you know, Texas is known for having a business friendly environment. This kind of puts it in a place where it might not get to last that long.
Absolutely, and earlier this month, Jamie Diamond made unprecedented comments in the world of SB thirteen and SB nineteen saying that, you know, he wants Texas to remain a welcoming place for business. Obviously, JP Morgan has invested heavily in Texas, but the fact that he was willing to comment about these laws and the impact that they're having, shows that this is a really big deal to businesses, especially because a lot of them have gone all in on Texas
and within the MUNI space. I mean, Texas is growing, school districts are selling bonds constantly, They're doing you know, billion dollar ballot initiatives so they can add new school buildings and stadiums. So Texas is really where the action is at in UNI. So that just makes all of this all the more painful for the muni bond desk at say a JP Morgan where they can't well it's called JP Morgan, but it makes it harder for them to work on transactions.
Right now, Hey man, I want to talk about Ken Paxton, because this is a guy, an attorney general, who has come under a lot of pressure over the last couple of years, and there was a time not so long ago that perhaps the CEOs at the biggest banks in the US thought they wouldn't have to be dealing with
him anymore. Just give us a rundown of a g. Ken Paxton, who, by the way, I think a lot of people might have heard of for the first time if you live outside of Texas, maybe during the controversy post Trump losing the twenty twenty election.
Absolutely, so he's definitely a rising star in Texas and everyone kind of wants to know what his next move will be, whether it's you know, running for governor running for Senate. And so he's also a man of mystery in the muni bond market, a man of that people have really focused on because he has this role that is very unusual where he can sign off on muni bond contracts and some other types of contracts too, seems like.
And so with he actually did an interview also this week about the laws, and he's sort of downplayed kind of that a lot of people see him having a very heavy hand and enacting these laws and implementing the laws and doing these reviews of policies. A lot of people within Texas see him having a heavy hand. But in this interview he talked about how he's just following the constitution, He's following the law, the legislators, the entity that enacted this law, and so he's just sort of
doing his job, so to speak. But a lot of the people we talked to in Texas see it as a very kind of it fits with him being more conservative, and they see it as kind of being a very intense, for lack of a better word, a very intense way of implementing the laws. Because, for example, this list of banks that he's reviewing more recently, there's a lot of well known American banks that are very involved immuni. He's very involved in state and local finance, whereas the comptroller
has his own list. He's also a Texas Republican. He really a list of banks that aren't so involved in Texas government contract work. So that list was seen as like a little more moderate, a little less splashy. So if that just that's kind of inside baseball. But there's two big Texas Republicans involved in implementing the law basically and carrying out the law, and they've taken two very different approaches.
And as you point out in your story, Packson was suspended from office back in May as he faced impeachment over allegations of bribery and corruption, and his suspension ignited hopes and some quarters that interest in those laws that you've been referring to would quietly fade away. We should note the State Senate acquitted him back in September, and he quickly said he would review whether the lenders that join the net zero Banking Alliance will be allowed to underwrite muni deals in Texas.
Droll.
Good good summary there, Tim th Well, I was reading directly from Amanda's story, but it's like, yeah, it's all Amanda, it is this.
You know thing for Waltreet. I think where I mean this is a there's a significant amount of business at risk here, Bill, Yeah, and you know, basically it comes down to sort of a you know a little bit of a grudge match between how Texas wants to do its business and how Wall Street does it. Okay, Amanda, worst case scenario here, how bad might this get for Wall Street?
I think it could get pretty bad. We have eighteen, or we have eight underwriters who are on the list. I did like some quick math. I think the last I checked, those eight banks have underwritten like fourteen billion of the fifty three ish billion. Might be more now, but one in five deals, if that's easier in Texas,
is essentially underwritten by one of these banks. So if you keep knocking off banks, it makes it harder and harder for municipalities to find a lender to work with at an attractive price.
And what kind of.
Projects could become at risk when we start thinking about that at scale.
I think about school districts because school districts are selling so much in bonds lately because people are moving to Texas, theyre moving their families there, and school districts are really like brand from the ground up, being built through the bond market. They're constantly hitting the market with sales. I really think school districts are the ones that are probably most at risk because they're the most active at the moment.
Our chief curmudgeon correspondent Budge, and I'm.
Just saying this is going to cost taxpayer result.
Well, that's that's where.
This is the idea of voice you here is John Tucker's right.
I'm with you on this because doesn't this lead to amanda higher financing costs for deals.
Yes, there's been studies or there's a really prominent study that shows that in Texas specifically.
So I mean ultimately, you do wonder are they not going to be able to get you know, maybe they're not going to be able to afford as many projects to do because their financing costs are going to be more expensive.
You know what, though, it's Texas like this stuff.
Every stick, you just turn it into, you know, some.
Kind of culture war and hope it kind of blows over along the way, you know. And Ken Paxton is shown again and again and again that he has a way of kind of you know, galvanizing his base around stuff like this. So and you know, taking on Wall Street yet another way of you know, those those guys not in this state.
Totally.
I think the thing that interests me about it, and this definitely to me shows the anti ESG war is not going away. But to me, it's not a kitchen table issue that like your grandma cares about. So I am really curious about the politics of why this is, you know, the issue that he's really been harping on because to me, it doesn't necessarily seem like something every day. Every day people don't tend to care that much about
bond issuances and who's underwriting their city's bond deal. So it's one of those weird things where I'm still trying.
To taxes go up to pay for it, right, Yeah, Like that's when all of a sudden you sit up. I mean I live in an area where all of a sudden, you know, the border of education good and payers everything, and you know, they just add they can just randomly add it to like things like that start to get noticed.
Wall Street makes a good foil too, right, And like the good point the whole ESG DeSantis thing, like he showed that there was a way to weaponize this, and you know, Paxton's saving enough to find new ways to do this too.
You know.
The other thing I do wonder, though, Amanda is like, doesnt Texas though have to have relationship I mean, City's out right, Goldman's out. Don't they want to have relationship that with some of these really big Wall Street banks?
Yes? And I think you know, I think I said this last time on your show, But if people want to talk about this always call me. So I do think mayors and Texas and city finance officials they if you talk to them, maybe more privately, maybe not for a quote in Bloomberg News, I think they would tell you that they think this is really frustrating and they would like to work with whatever bank is the best to work with, the easiest, the cheapest to work with.
And they really kind of also want this to go away. But it's difficult getting folks to talk about this. That kind of comes away from our piece. It's been difficult getting folks to talk about this on the record because it is such a divisive environment and people, because he has this power over contracts, people don't want to upset him.
So that's that's a really good point. Every single UNI deal in the state he signs off on, right, Amanda.
Remarkable exactly.
Yeah. So I mean like this is you know, kind of your nightmare where your your business, your bonds have ended up in this place where uh, they're part of the culture wars. Remember when we talked about the culture wars, Like this is this is it in reality and there's kind of no escaping any of it in the US.
Now, And is there I mean, is there an attorney general with more of a national profile at this point than Ken Paxton. I don't know if there is. And I think that's why Amanda, you know, referred us to like, Okay, a lot of people are looking what's his next movie as well?
And he's proven to be teflon when you have sixteen accounts and acquit it on all of them, right, So, and you know, that was a really interesting case study for Texas. So I think we'll be talking about this again probably well, and I do.
Is it just tech?
So?
I'm told we live in it, right, Amanda? Are there anything I mentioned there's an election next year? Are there other states though facing this? Because I do feel like the ESG pushback we see it. Is there other states or no? Is it really just a Texas thing, especially because of the potential the size.
Well, I actually think Texas might be leading the way on this, Amanda, Right, And it might just be like how does Paxton navigate this? Because if other states are watching this, especially red states, like this could provide a little bit of an example for how to navigate this.
Absolutely. I mean West Virginia and Oklahoma actually enacted similar laws deep the minutia of the laws differs among states, but Texas really led the charge. We already saw other Republican states follow suit. The firearms law hasn't caught on quite as much as the energy one, but energy was an issue, especially with concerns about Russia. It just it got a lot of traction, especially I think last year. So Texas really leads the way on the anti ESG war.
And there's definitely chatter that these fair access laws that's what they're known as, that kind of are all encompassing cultural wars, issues that use government contracts as like the weapon. There's a lot of chatter that we will continue to see traction on these next year as state legislators go back into sessions. So it really seems like this isn't going away anytime anytime soon.
I remember when just like everybody just jumped on the ESG board, like and you know, states, cities all wanted to be a part of it in terms of their investment portfolio.
I think that's when stocks where our record has day after day of Carrol.
Yeah, So you know, and to bring it back to the schools part, because I think that is a really interesting observation and you know, the fact that taxpayers are potentially going to feel this. Like I remember, like the story that we talked about in the Culture Wars package as the homeschooling one. Right, like this is already playing out and people are seeing how it's playing out, and they're kind of taking control of their decisions and doing things that are, you know, in some ways feel radical
compared to where the mainstream has been. But like that's why where we go when we enter a fractured kind of landscape.
But just like with that story, Joel, this feels like another reason why someone would choose to live somewhere and not somewhere else. I mean, these states are becoming their own fief domes.
Well they That's also the point of America, right, Like there are for those dates, yeah, and there are, and the states are entitled to do something that's different than the Yeah, exactly, so that this is America and like we're we're living through.
It's why you end up with red states, just the.
Big dates, you know, American experiments.
This is Texas, Texas man. All right, Amanda, thank you so much. Amita Albright Music Small Bond's reporter for Bloomberg News. They're in Kansas, and of course the editor of Bloomberg Business Retel whatever here in our studio. Check it out. Like we said, this is going to be the upcoming new issue of the magazine on newstands on Thursday. Find it. They're already online at Bloomberg dot com, slash BusinessWeek and of course on the Bloomberg terminal. This is Bloomberg Radiomarco Journal.
Can you let me drive?
Oh no, no, no, no, who's going to drive? All right? Please?
Grave wait, I want to drive.
It's a good question.
This is the drive to the globe well.
On Bloomberg Radio, all right, everybody, just about seventeen minutes away from quite a rally on Wall Street. I haven't seen this in some time. We've also seen, as John just broke down the numbers, quite a drop back in US treasury yields all along the curb. But we are pretty much just off our highs of this session, so just backing off a little bit. But nonetheless, really we've held onto these games really throughout the Dayti're.
Curious what Dan Griffith, Senior vice president and director of Wealth Strategy at Huntington Private Bank, has to say about all this. Dan is here in our Bloomberg Interactive Brokers studio. I want to get to the survey that you did in just a few minutes, Dan, but first of all, give us an idea of where you're thinking about INFLA going if you think the FED is done after today's print, Because this is kind of a monster rally that we're saying, it's.
A great day, and I I'm glad.
To be unless market. It's not such a great day.
That's true, that's true there. I'm sure there's always a few losers out there, right but I think for the most part, this is going to be good news for a lot of people out there, and we're glad to celebrate with the people who are going to are good to be.
There and seeing good news.
We are a lot of good news, as we'll mention a little bit from our clients, but we think that inflationary trends, you know, are starting to moderate. I think we've got some great news earlier this week that demonstrates that that'll be the case, and a lot of the conversations we're having with real business owners and our clients demonstrate the fact that they're starting to feel a little bit better about that. So we're thinking, we think through the end of the show.
Feeling better about what inflationary trends. I mean, we're way down from where we.
Were a year ago, significantly, So yeah, I think one of the other things that we're experiencing is this phenomenon that a lot of people haven't yet experienced some of what's the consequences of the rate hikes. If you haven't bought a new car in the last two years, or a new house in the line two years, if you haven't carried credit card debt in the last two years, and really this inflationary thing is just a headline as opposed to something that hits your pocketbook.
Now we're starting that's say, zero zero zero one percent of the population.
Right, You're exactly right, You're right. So I think we're seeing now many many more people are starting to say, Hey, I'm seeing a change because I've had to move or buy a new car and go from there. And I think that's why we think inflation will start to decrease.
Your business clients, are they talking recession? Ken Ken Griffin of Citadel thinks it's a second quarter twenty twenty four thing.
We're at about fifty five percent risk of recession in twenty twenty four, I will say.
That that high are a lot for you guys.
It's actually been pretty consistent. We think it's about, you know, fifty to fifty broadly. We were there all last year, and I think the market was out ahead of us and kind of came back to where we were. Part of what we're experiencing is when we talk to our clients themselves, we say, how do you feel what does it look like? Sixty percent of our clients that we recently surveyed said, you know, we actually feel like we're
going to have a better year next year. More than sixty percent of them said twenty twenty three was a better year.
Than they say a small business client, that's.
Right, Yeah, small business and middle market clients, so a lot of them are still very optimistic. Only about eight percent of them had a negative outlook on the economy, and I think that's very telling in one of the reasons that we're in the position that we are.
Based on the survey data that you got, do you think there's a more than typical disconnect between what we're seeing in the stock market and what you're seeing in the economy. With the caveat that. We know the stock market is not the economy, but they're certainly related.
Yeah. I do think that's one of those things that we're realizing more and more right, that the markets themselves can be very different than what we see. I think we see that phenomenon in small and mid caps themselves, right as we see there's a disconnect between the large
cap space and small and mid caps. But I think the nimbleness of the middle market client, the ability for small businesses to kind of adjust to supply chain disruption, a lot of them being able to turn around and say, hey, we're going to go ahead and adjust and make and make evolutionary changes. It's panned out, and as a result, I think we're going to end up with an economy that's a lot stronger, especially in that middle market space.
All Right, Having said that, a client comes in and it's got has some money to put to work. One of the names that you like is Exon Mobile. We know they did the mid October deal buying Pioneer Natural Resources shale oil play. We get it. Is that a reason why you want to buy it or is it something else? Is it the dividend? What is it?
Yeah.
I think the dividend is one. It's an interesting phenomenon. A lot of our clients come in and say, Hey, we really want to talk about these higher yields and how we can lean into fixed income a little bit more, and then they realize, well, I'm giving up the opportunity for some upside and I'm giving up some really potentially beneficial dividends. And Exon's a great example of that right
where they can still catch some upside. I think because of their myths earlier, a lot of clients kind of feel like they're on sale a little bit, and so they're happy to get the large dividend and happy to get potentially a little bit of something on sale, and that's one of the things that they're excited about. They're a leader in the premium basin. I think the consolidations that they've done are going to be very beneficial from a growth standpoint as well. Well.
I don't want to say speaking of on sale, because that's absolutely not what's happening with Microsoft today. Another record high for the company, up fifty four percent so far this year. It was last week that it hit an all time high as well. Carol, what are you thinking when it comes to Microsoft, do you think there's still room to run?
We do, and it's kind of funny. I mean, some of these names like Exon and Microsoft their names that people have thrown around a lot, and they've done really well. But we think, you know, again, Microsoft has done a lot and they're still upside. The work that they've done in the cloud computing area is one that we think there's still room to run there too, And obviously their growth in the gaming area is one that we're also following. So I know how much people at my house play
certain games like Minecraft. If they figure out a way to monetize that, and I hope that's after you know, my kids are gone, that could be a definite.
Up I mean.
But actually a serious question though, are your kids Do you think they're going to like go from Minecraft to Xbox games that do cost money and have all the game if I can help it?
But yes, I think for sure, Yeah, And obviously there are ways that they can figure out how to monetize that. If it's not you know, purely fun kind of games, I'm sure that they'll be creative ways to look at that.
You're fine.
Minecraft's educational John you're a Minecraft master, aren't you.
No, of course not.
Don't let your kids do video games.
That is my.
Advice to you was that.
I was always I've.
Always don't go down that pant.
I always think about like all the tech entrepreneurs and doing panels with them like years ago, and they're like, yeah, my kid doesn't like they're not on a phone, they're not on it.
Well, I know a lot of video games. I think phones. A lot of tech executives draw the line with phones, but they're okay with like with gaming. Really, I think gaming is is totally acceptable.
Here's one of the weird things.
It's just like, this is big kids watching other kids play.
That is fifteen years twitch. That's psychotic, I think, and there is you know.
YouTube has figured out how to monetize that for sure. So that's yeah, definitely a factor.
Did you remember watching people play pong?
John, Yeah, I was a huge Pong player.
I'm still okay, No, just pop, you're still the Space Invaders.
Oh my god. I always get some perspective. Dan Griffith, thank you so much. Thank you. Nice to have you in studio. Senior vice president, director of Wealth Strategy at Huntington Private Bank here. As we said in our Bloomberg Interactor Broker Studio, this is.
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