US Inflation Finally Offers Relief

Bloomberg Business Weekend iTunes, SoundCloud, or Bloomberg dot com. You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg glovel News. Let's get your business week agenda on this Thursday afternoon. We've got Michael McKee, international Economics and Policy correspondent at Bloomberg News here in our interactive broker studio, So too is Creaty Group to anchor and

Markets correspondent at Bloomberg. Got to start with the trade here because I agree, you know, like we just haven't seen a rally like this in a long time. We absolutely haven't, and you know this is going to be a a fun combination of or confluence of a bunch of different factors. Now the immediate one. The biggest one I would argue is that CPI report we saw this morning eight thirty am. Future shot up like uh like like a kind of way. I said, yeah, absolutely, so

to see this is pretty interesting. I want to put some context though, because Dan Curtis, our markets producer DJOR, did actually crunch the numbers a little bit and he said, if you invest in the SMP five hundred year to date, you lost about on your portfolio if you invested only on the days that you had a CPI report. So basically, the ten days it was had reports you've had, you've

only lost seven percent. So basically a third of the markets losses this year so far have been a direct uh relationship to those CPI numbers, which speaks to just how sensitive the market is. Also, keep in mind that a lot of these shorts that were into that were kind of positioned in the market in the last couple of weeks. A lot of them were kind of liquidated before the election. The midterm election. The idea here being that gridlock was going to be a good thing for

the markets. A Republican red wave would then once again be a positive, So a lot of shorts were taken out of the market. So the confluence of that, the CPI report work, and then of course the idea I would say a little bit of a short covering because they were already taken out. It's not a short cover um from what I from what I hear just from

my sources. But then also keep in mind a little bit of a side relief what's going on in the cryptosphere, because yesterday there was the big question of is there contagion this? Uh, today perhaps not so much? Right, right, exactly, all right, So let's come in with Mike. I was listening to him this morning break it on Bloomberg surveillance that cp I print. It's it's down. We still have a ways to go, but it's a trend line that continues to go down. Right if you look at the

reaction in the equity market, certainly you're welcome. Rooster gets credit for the sunrise, I get credit breaking Um, it's down, and it was down more than anybody could have anticipated. Now that's a relative judgment because seven point seven percent out the head like six point three on the core is still quite a bit. But uh, guests that we're

going in the right direction. We don't know because it's only one month, but the overall number, especially in the core, there were a lot of things that went down in price which we had not seen. For the most part, what you're looking for is the rate of inflation slows, but in this case there were actual declines. Milk went down, orange juice went down, um bacon went down, which is

always the most important item used. Cars went down. So yeah, basically you're you're looking at what could be a turning point, and I think that's what the markets were reacting to is because it was more than expected, more than anybody had thought possible. It's okay, this is this is a change, this is the turning point. It will lead the FED to put some sort of uh stopping point in place

soon enough and maybe we get that soft landing. But is the headline number coming to Like I thought I had seen something on the TV side that they were talking about. This was like the fourth month in a row. Is there is there a trendline yet or no, there's not a trend line yet. The problem being with the headline is that food and gasoline are still going up. Food increased less than it did the month before, Gasoline was down five in September and up in September, so

in October, brothers. So you know, the headline is subject to the vagaries of things that the FED has nothing to do with, so safe to say crety when you look at the markets and certainly what happened on the fixed income side of things. I mean, investors are expecting that the FED is kind of done with not that

they're done raising rates, but done with those big rates. Well, I'm not going to use the word pivot, as I was told not to by someone in this room, but what I will say is that there is there is. I mean, look, the commentary has already changed in literally the last six hours or so since we've gotten this data. The idea that the conversation of soft landing is back into the narrative, The idea of that perhaps another seventy

five basis point hike is thrown out the window. Um so far that the quote unquote pivot that everyone was expecting going into I want to say, even last month is actually coming the slow down that you will of rate hikes, and that is actually a good sign. There's also this commentary on the jobs market, specifically because look at the layoff numbers that you are starting to see in corporate America, people all of a sudden are saying, and I want to say on Wall Street and off

Wall Street, because that matters. The markets are always going to talk about sentiment off Wall Street, They're gonna not necessarily have that same timeline. They're talking about the fact that the economy is actually turning. Yeah, exactly, all right, Mike twenty seconds. I say for you in terms of FED talk, because we are FED speakers, anything that's a

note for you, No, they basically followed a script. We've had a lot of FED speakers today and almost all of them said the same thing that, um, it is time to consider slowing down the pace of rating races. But we've got a long way to go, and the inflation battle is not one. Inflation still way too high. So if heeds the narrative, not gonna be but probably going to be fifty and then there'll be another one

after that. All right, Michael McKee and Crety Groupta, thank you so much for our markets set up here on this Thursday. This is Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio Paul and I were just talking. He got his COVID vaccine, the number five COVID vaccine. Me too this morning. It's

the one against the O macron variants. Uh. This as we see COVID nine hospitalizations rising among babies under six months old, and the US CDC is urging mothers to get vaccinated to reduce the risk of infection that was not yet eligible for shots. That was coming from the CDC director Rochelle Wallinski. Well back with us is Dr Ian LUs Beder, clinical Professor of Medicine at n y U Land God he is once again on the phone in New York City. Hey Ian, Dr LUs Beder, good

to have you here with Paul and myself. So I got my COVID chat. I'm feeling kind of good. I'm running out of space on my card. Um tell us about the what's going on? First of all, how are you? Everything is great, Nice to be with you, Carol and Paul and uh, yep, COVID is still with us. So we've talked about us for several years and not going away yet. And some of the data which we can talk about this time or next time. In Nature Journal,

the prestigious journal we're seeing more variants out there. Dr Lensky raises a point about seeing more COVID in really the very young and the very old. They're the most susceptible, and the CDC does not recommend vaccines for babies under six months, so that group is somewhat more susceptible. According to my sources, they're seeing a number of infections r SC, power influenza, add no rhinoviruses, well, this sort of virus

soup that kids are coming in with. So I don't think we can say kids are getting sicker from or dying from, but they're certainly being hospitalized with COVID. And so the thought is, since antibodies crossed the placenta, that mothers or pregnant women probably would benefit from getting vaccines and being boosted because that should gives passive immunity for the first few months after delivery to the babies. UH

complicating that, and certainly that's true for older people. To definitely be up to date, we've talked for a long time diabetes, heart disease, lung disease. Those people are much more at risk. So we're not seeing a big increase in COVID deaths the opposite. We're seeing fewer cases nationally and the death rate is dropping as well. But for vulnerable populations, they need to be aware of this not less fare for folks. To characterize where we are in

this process, is covid Is is endemic not pandemic. Yes, I think that's a very good and I think you know that's what we will see. In other words, endemic. We're going to be living with it for a long time. We're seeing more and more variance. This Nature Journal talked about variant soup XBB. Different countries are having different offshoots of O macron u, you know, which is why in part we need to find out the origin of the virus,

you know, because this is new. We are not really living with viruses in the past that have had the ability to mutate this much and really um be in every area, and vaccines are not able to keep up with the mutations. We're seeing um more mutations in what's called the receptor binding domain, right, so that's where the virus attaches and when you have more rb D changes, and we're seeing really an exponential increase in those mutations

and variants. You can have as many vaccines as you want the virus outruns you, So there's a lot more work to do. The good news is um over time, whether it'svaccines, are just getting COVID a few times, people seem to be more resistant. But how this will end we don't really know yet. Certainly we're going to live with it for a while, but how it will end, we don't know. So are you anticipating I'm curious, you know, you guys at n y U Land going or what's

the talk of the medical community. Are we anticipating some other kind of spike among the general population come to fall in winter months or is it just like we'd see a spike in flu cases, which we know can also be deadly right, Unfortunately, vaccines are not perfect. Right, the flu vaccine is about fifty effect of UM. You know, we have to take it. Certainly, you don't want the flu. It's not fun and it does kill certainly people. So I think vaccines are helping. But all of these viruses

are piercing a lot of those vaccines. I do think we are going to see a bit of a rise, and I'm concerned about other countries where these other variants are going on that are resistant to our by valence vaccine, So we don't really know will that be another way? It doesn't look that way at this point. The number of cases are dropping, hospitalizations from COVID or dropping. What will happen in the winter. Uh, hopefully it will stay in those other countries and not come to the US,

but we're not sure. Yeah, right, Uh, stay tuned for all of this. Um Ian, Thank you so much. Dr Ian los bad Our, Clinical Professor Medicine at n y U Landgoing Medical Center. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The new issue of Bloomberg Business Week is out. Is on newsstands, it's online of Bloomberg dot com slash business weekend of course, on the Bloomberg terminal. The cover story,

appropriately so, is about this week's midterm elections. It's a story you'll find in the issue's remarks. It's about Republican Congressman Kevin McCarthy's dream and nightmare coming true. Here to explain, Bloomberg Business Week National correspondent Josh Green. He's with us on the phone in Washington, d C. Josh, good to have you here with Paul and myself, So tell us about Kevin McCarthy his dream come true, And yeah, it's

probably not exactly maybe like he envisioned. Well. McCarthy is a longtime Republican House leader who has wanted to be Speaker of the House for years and years and years. UM was expected to be in UM and was sort of uh forced out, forced to remove himself from the race uh in favor of Paul Ryan before he could get in there, because he just didn't have the trust

to the right wing of this caucus. Over the last seven years, he's plotted, he's raised money, he's campaigned, uh, and it seemed like on election night he was on the cost of taking over the speakership, maybe by a pretty wide margin. And then of course the red wave uh turned out not to be much of a wave after all. So we're I write in the New Business Week, is that it still looks like Republicans and win the House,

but it's gonna be a very very narrow majority. And so it's it's the dream for McCarthy in the sense that he'll finally realize the speakership, but it's a nightmare because it means that the right wing of his caucus. You know, rat icals like Marjorie Taylor Green are really going to have a lot of leverage over him, and I think that's a recipe for chaos. This is a great quote in here, uh that from Senator Green quote.

She made this to the New York Times. I think that to be the best Speaker of the House and to please the base, he's going to give me a lot of power and a lot of leeway. So that's some pressure on the next Speak of the House, whoever that is, to really do cater to some of the right wing elements of the Republican Party. Is McCarthy willing able to do that? Well, I think he's in a position where he's not going to have much of a choice. Um, you know, he he needs in order to elected speaker,

he needs two hundred eighteen votes. And if you've got you know, had there been a big wave and they were you know, let's say, you know, two hundred fifty two and sixty Republicans, I think he might have been able to marginalize people like Representative Green. And just to be clear for for listeners, um, you know, this isn't somebody who wants aggressive tact cuts. She is someone who suggested a while back, um that forest fires in California

were caused by lasers from space. Um, She's retweeted a lot of q and on conspiracy theories. And she was stripped in this current Congress of her committee assignments for having endorsed social media posts calling on Democratic officials to be assassinated. So we're talking way way off the deep

end um extreme right. And yet you hear from the quote you just read that she expects and is getting a lot of catering to by McCarthy simply because he needs her vote in order to assemble those two eighteen votes. The smaller the Republican margin is, uh, the more leverage people like Green and the House Freedom Caucus are going

to have. You know, Josh, it feels like the Republicans over the last few years, five years, ten years, I guess, you know, have been smart when they're all kind of on a singular mission and whether it's Supreme Court justices and you know, different initiatives that are out there, abortion and so on and so forth. Um, what is the the Republican mission at this point? What is the agenda? Because you kind of you right, that that's a problem

for McCarthy because they don't really have an agenda. Yeah, you know, it is, I mean one of the one of the difficulties when you have a kind of chaotic Republican party like like McCarthy does, it's hard to get people to degree of an establishment wing that wants you to government responsibly. You have a radical ring that wants to impeach Joe Biden, and so Republicans this election really didn't agree on a clear set of legislative goals the way that let's say New Gingrich did in the Contract

with America UM. That was in order to focus attention on on Biden and the problems with inflation and crime. Uh. And it you know, it looks like that's worked to a very narrow extent of Republicans do wind up winning the House. But the problem is it leaves a vacuum for anybody to rush in uh and push their issue. And so one of the things that we're gonna be contending when the Republicans are gonna be contending with is there's an element that wants to engineer another debt ceiling

showdown in order to cut Medicare and Social Security. I'm sure. You guys, remember eleven years ago, after Republicans won the House tried to do that same thing. We came to the brink of default and US government uh dead wound up or credit wound up being written down. So a lot of concern among both Republicans and Democrats are at least the more responsible ones about what exactly h McCarthy led the House would look like, what they'd be able to engineer, and what kind of problems that might cost

with the global economy. So, I mean, you point out in your piece here that boy, it's tough to be a Republican Speaker of the House. The last two John Baynard and Paul Ryan, they were effectively hounded out of the position and out of politics in general by the right wing of their caucus. I mean, McCarthy, representative McCarthy has to be sensitive to that, cognizant of that, you know, absolutely.

I mean, the lifespan of a Republican House speaker, it's sort of like being the drummer for spinal tap, Like you're not gonna be around for very long. Um, And you know, arguing McCarthy actually has a tougher job than John Bayner or Paul Ryan, the last two Republican speakers who were both hounded out of the job by their wings. Um A, because the right wing is just more radical today, there's gonna be a narrow majority. But the other reason is that, you know, the big influential voice on the

outside who's dictating a lot of behavior. Donald Trump wasn't on the scene for for John Banner. Mean, John Bender couldn't hold on to his job, and it was you know, Donald Trump wasn't even weighing in. Well he's going to be now. Uh. You know, everybody's expecting a presidential announcement from Trump in the next couple of days or in the next week. Uh, you know, and he's somebody who

likes to weigh in and criticize people Kevin McCarthy in particular. Uh. And you know, that's one more headache that McCarthy is going to have to grapple with as he tries to cobble together this narrow majority, uh and keep his Republican caucus from revolting. So does that mean you're expecting that he doesn't really get anything done? Or maybe I think that's right. Uh, you know, I think it would be considered a win for from McCarthy and Democrats. You know,

if we're just able to avoid a death ceiling to fall. Um. But as far as passing legis flation, if McCarthy takes over and Republicans win the House, that effectively ends the period of the bride and presidency where we're getting big pieces of legislation through the House. Um, nothing's really going

to kind of get through. The thing that I think a lot of people are worried about is will mccorthy be able to do basic things like pass an appropriation bill, have the the U. S Government payoff its debts by raising the debt limit. The basic kind of blocking and tackling that didn't used to be contentious ten years ago. Uh, but now has become very much so. And it's really not clear is there going to be an adult in the room who can make these things happen or is

McCarthy in trouble. Josh really quickly twenty seconds here an impeachment of President Biden. Is that likely to happen with him as speaker? It's certainly possibility. A lot of Republicans telling Bloomberg News that that's something they want to push in the new Congress. It will be made more difficulty by the narrow majority, but I think it's something that's certain to come up interesting times. They just continue, Josh Green,

great cover story of Bloomberg Business Week. It is the remarks of the new issue of Bloomberg Business Week on newstands, on the Bloomberg terminal and at Bloomberg dot com slash business Week. Josh by the way, national correspondent Bloomberg Business Week, joining us on the phone in d C. And we appreciate that, like job, be careful what you wished exactly. This is Bloomberg Business Week with Carol Messer and Bloomberg

Quick Takes Tim Stinovic on Bloomberg Radio. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. The crypto story that was the recent cover, really entire issue of Bloomberg Business Week

was written by Bloomberg opinion columnist Matt Levin. So I knew we wanted Matt to weigh in on this week's flurry of activity and calamity surrounding the meltdown of the crypto Exchange f t X. Matt is a Bloomberg opinion calumnist covering finance, former editor of deal Breaker from her investment banker colgmnacts so much more. He is back in our Bloomberg Interactive Broker studio. Thank you, thank you, thank you.

I know you're busy. Um, you went through all the nix and crannies of how the crypto world came to be. Really taught us kind of the understanding of all of the terminology of the significance of the development since crypto has come to be, how do you then take this

week and kind of cross it with what you wrote about? Well, I mean, one thing that I wrote towards the end of that piece was that Crypto this summer had its own two thousand eight where it had a financial crisis caused by like over leverage and opaque interconnections between firms. And you know, in the summer, the person bailing out the you know, providing the bailouts to these firms that we're wearing bust was f t X. And this week

ft X is having its two thousand eight crisis. So what does that mean when the White Night, as everybody keeps calling him, has his own crisis. Well, it's bad, I mean, I mean it's it's bad because like the place where you thought your money was safe in crypto is not safe. It's bad also because like if your money, if you had your money somewhere else, you're like, well, if something goes wrong, ft X will ballot out. Right.

There was a sort of like ft X Laura under the market, and now that that seems to be gone as well. All right, So there are a lot of people out there in the financial services industry, and most notably Jamie Diamond, who have not been supportive of this space, of the crypto space broadly defined. Are they right? I mean, they certainly seem vindicated this week. Look. I mean, like like you can have views about like the technology and

the usefulness of tokens. But you know, when Jamie Diamond is like, this is all decentralized Ponzi schemes, Like everything that comes out looking like a Ponzi scheme makes him look more right. I don't think he's entirely right, but like he's not wrong to say this is a sector with a lot of troubles, right, I mean, what do you think Sam Bankman freed, what how do you think it plays out for him? I mean, you were a lawyer.

I don't know. I don't know. I mean, I still don't know what went wrong, and I think that there's certainly a possibility of like something along the lines of innocent mistake crossed with like one thing that did happen is that FTTS seems to have been kind of knifed by its biggest competitor. And so you know, like how bad this ends up looking at don't know, but it doesn't look good. Yeah. Well, hey, Matt, I mean, do you had a long conversation with SPF Right, Yeah, I've

done a couple of few conversations. I mean, you know, and we've been running sought strings about kind of all the things that he has said. I mean, is it a case of I mean, this is I guess what we forget to the bottom of what he said. Was it true back then? Or is it a case of that the market got so volatile or sold off and there were so many losses that this is why we are having this discussion right now. Is it part of the market environment or is it something specifically he did

and how he ran or didn't run his businesses. I mean, I never asked him like do you keep customer money safe? Because one sort of hopes that just assume you know, like I think that you know, like one thing that definitely happened here, it was just the failure of risk management, right, and a failure of of like you know, concentrating too much money and about that went bad. But like whether that is an innocent failure or something more in nefarious is I think it's a little too early to tell.

But there's no doubt that some very smart people made very bad decisions and lost a lot of money here. I think about that just the latest round of fundraising, which I think value the company dollars. I mean, there were real people in Silicon Valley, like Sequoia, right exactly, I mean down that putting it off? How do you how do you think happen there? Was it just blind faith?

Those guys don't invest on blind faith. Well, I mean, so one thing is they didn't put that much money in and the scheme of things, right, I mean, is value at thirty billion, but they're putting you're writing you know, nine figure checks, which is real money, but it's not like they're fund um. The other thing is that I don't know, like like if you're if you're an adventure investor investing in crypto and people come to with like some wild dream and they say, in twenty years, you'll

pay for tweets on the blockchain. You kick in some money, but then same banquetry comes to you. It's like, look I make know I have real revenue, Like we make a lot of money, Like we're very profitable, we have lots of cash. Like that was all true, Like they were making money. Like like one thing that is happening here is that venture capitalists are good at and evaluating tech business models and maybe not so good at evaluating

highly levered financial services business models. Um, but like they were making money, you know, So Matt, we take a step back. Like one thing I feel like Bloomberg is good about is like putting things in perspective. So what is the smart perspective on this? I mean, we've got an incredible rally in the equity markets today right like

they are focusing on something else. They're not focusing at least equity investors are focusing on the inflation print today so that the system financial system hasn't come down, Like, is there some smart perspective in terms of how we look at crypto at this point. Oh look, I mean I think for a while now, certainly since like the baillouts of the summer, it's been fairly clear that crypto could go to zero without bringing down like the financial system.

Right like there is that crypto is still kind of isolated off on its own. It is is a place where there is you know, hundreds of billions of dollars of notional value and where people are getting rich and where people have money, but it is not deeply tied to the real economy in a way that like you know, FDS goes down, like the people who are FDS customers will lose money, but like the banks won't notice. It won't affect mortgages, There won't be foreclosures, there won't be

like high unemployment numbers. It's just like it is its own isolated system at this point, will bring in anti crypto, I don't think so, but it's it doesn't help, you know, like it doesn't help that you know, there's a lot of a lot of trust in crypto was undermine this summer as all these high profile firms went bust, and the person who was doing the most to restore trust was Sam Bankman Freed, who is bailing out those firms

that their customers got made whole. And when he goes under like I think a lot of people are going to have real doubts about trusting anything in the crypto system. I just want to know where he is. Well. I think it's the Bahamas. Great place. Next, traditional want to do some snorkeling York. It's better than New York. Matt Levin, thank you so much. I know you're so busy, but I knew we want to do away in on this

about these huge columns. He's not bad. I mean I think I think he dreams it and then it just comes out miraculously on paper. Matt Levin is columnist in Bloomberg Opinion, A must read here for all of us at Bloomberg and for you Bloomberg and director Burger Studio. I'm brooom a journal. But you let me drive? Oh no, no, no, no no, who's please? I'll do the ride gravels. I want to drive. It's a good question. Drive. This is

the drive to the Clobell on Bloomberg Radio. All Right, just got about eleven minutes left in today's trading session, and we have stocks we're seeing buying into the clothes, as Charlie mentioned, up more than seven percent on the NASDAC. We've got about a five point three percent gain on the sp Paul, I mean it is broad based, all in it is. I mean that Nashtack is just amazing. But we've been buying him into the clothes here, so

we've seen some strength and trading. Yeah, pretty significant. Alright, let's so let's get to it. Let's see what Doug Ciocca has to say. He is CEO and partner at Kvar Capital Partners. They've got over a billion in assets under management based on Leewood, Kansas. That's where we find him joining us via zoom. All right, Doug Ciocca, how are you? I'm great? How are you? Thank you for having me on? Doing well enough? There's Notre Dame shirt. I mean people you can't, They're just they wear the

Notre Dame stuff everywhere. Like Paul Sween, you cannot object. And that's exactly right. That's cute. So uh interesting day to say the least yields backing off a tremendous rally. I can't remember the last day I saw such a buy in into the equity trade. Doug, is this it. Have we bottomed out when it comes to stocks and topped out when it comes to yields? Uh? You know,

And that's that's obviously the six four th question. It is incredible, actually, Carrol, to see the Bloomberg Barkley's agg Now, I think this is gonna be the best day it's had a single day performance two So it's amazing. Is the bond rally, the stock rally, the incredible decline of the dollar, and yet the Bloomberg Financial Conditions Index of

the United States is actually tightening. And I don't know if the FED would take this is all very positive news, but um, it couldn't be the peak and c P I maybe for the core, yet to be seen yet for the for for the I'm sorry for the headline, but yet to be seen for the core. But certainly I think a nicely motivating factor as far as taking some of the worst case scenarios off the table. So, I mean, I'm not sure if this is just a technical short squeeze or we've got real and long term

investors buying in here. If this is a trade, I'm not really sure, but it's clear that to the extent and anybody wasn't paying attention. This is a market that that's paying close attention to the federal reserve, just as a federal reserve is paying close attention uh to inflation. But it's not so much earnings. It's just what's this fed gonna do? And I guess the market sellers today we think we're maybe if we're not at the peak,

we're close to it. Well, it's interesting, right, So you had kind of the Powe switcheroo last week, Paul, and you had a very dubbish or at least largely dubbish statement and then a very hawkish press conference. And then we had a couple of the fat governors when they hit the media circuit post press conference, um, and they were a little bit mixed me. Mary Daily seems to be reasonably dubbish, and and of course Bullet and Cash

Cary and more hawkish. And then Loretto Mester today, who is set up to maybe told throw some cold water on the rally, came out with there four or five headlines around Aloomberg that probably could be interpreted as her most most dubbish um interpretation of the new data. So if they're actually seeing right this long and variable lag making its way into the data. I don't know why you would need to throw a fuel on the fire, and it's reflected in the production in the turmal rates.

So the mark kid is trying to price in what it thinks it is going to be the next couple of moves and then by no mean done. And I think there's a major difference between a pivot and a pause. But we when when they say in the press conference, we're nowhere near considering pausing. I don't know mathematically how

that is the case. Have you already raised rates before an invasive points you're not gonna raise them by eight hundred You certainly are past that inflection point where at least would be something you would have to consider in future meeting. All right, So I'm trying to translate that. Does that mean, Doug, you think we're overdone here certainly

on the equity trade, that we're just too amped up here? No, by no means I certainly see that there's whether it's shortcoming relief for ally, I do think, like anything, there was an elevation of a liquidity concern given what's taking place in the crypto complex in the last forty eight hours, I think a little reprieve if if it isn't going to be taking additional equidity out of the system because of the cooling off on some of the inflation data. I think that the market is trying to find some

level ground. But more than anything, you're chasing out shorts pretty quickly today. But the question always becomes like, is this just another bear market rally? And is someone in your program a couple of weeks ago and said maybe it is, maybe it isn't. But they all look the same right at the beginning, And so the question just becomes, are we at a point where the FED is not going to end the rally by talking down um any

optimism by very harsh hawk is language. If you think what ended the bear market bump that took place in July and August, it was poul and Jackson hole. If you think what ended the bear market pop two weeks ago, it's when the FED came out of the press conference. So if the FED now in the in the red semester, being one of the the head hawks, is talking a little less strongly, the market might take that as a higher probability that this may not be a bear market bounce.

But something start of the next legable market, Doug. If it is somewhat along that scenario that maybe you know the fetish starting to taper here, it's it's increases. Where are you suggesting folks go in this market? Yeah, great question, Paul. I mean I think within the equity realm, we still think defensive products sectors makes sense, healthcare, staples, some industrials,

but they need to they need to sell at low multiples. Right, You're not gonna get multiple expansion in a high interest rate, low growth environment. They need to have super clean balance sheets. Into the three they can self sufficiency and sourcing products. Okay, So we still think right, and the equity market is larger than been resilient, even though the average stock has done what genterments peak. There's been a lot of damage that's been done to really good companies that have been

thrown into discriminately and treated like very poor stocks. So there's opportunity particularly those three sectors. But in fixed income is likely we're we're most excited. Right. It's interesting when Paul talks about needing to establish positive real yields. They're there, right, three, five, seven, nine, fifteen years out they are positive real yields based upon the five year fourd on the break evens for these tips.

So if you think about right, everyone talks about built by association um colonal damage when certain class of assets become impaired, but there's also a rising tide component when all aspects of an asset class become more attractive do purely to their spread over the risk free treasury. And this is fixed income. And at times like this, some of these companies actually their balance sheets not being cynical that the federal government that are offering yield previous at three,

four or five basis points above. How much of do you think the move today that we're seeing is because the dollar has backed off. I'm looking at the dollar index. It's down about two point three and that has certainly been troubling, uh for the profit picture. We've heard that from a lot of CEOs. Yeah, I think it's a

large part of it. Carol, there's no question. I mean with everyone that came down to your point of CEO is coming to the quarterly confessional and saying, we've read a couple of the companies we cover this morning, so the same thing, right, we have to be a little bit cautious in our revenue projections just because of the head win of the PAX. Now, if that gets into the multiple and that starts to abate, then you're gonna have upward surprises in the out quarters. But there's no question, Carol,

you hit on one of the primary catalysts for today's move. Hey, Doug, you're in the burbs of Kansas City there. How's the economy out there? Yeah, I mean it's it's pretty strong. It's pretty resilient. One of the great things about I mean, I'm in southern Johnson County, Johnson County in Kansas, but the whole sort of broad case area, we have very diverse revenue base. Right, There are not two or three single community pillars of large public companies that employ a

lot of people. So we have a very big service industry, particularly within professional services, legal accounting, financial services. But we also have a very diverse healthcare business. There was a cast off of a company that had been kind of the king pin of the city back in the eighties and nineties, So the economy is probably very very resilient.

All right, We're gonna leave it there, Hey, Doug. Always fun to check in with you, Doug Cioca is CEO and partner at Capital Partner uh AS we said over a billion dollars in assets under manager basically Wood Kansas and joining us via zoom from their dog take care. Good to talk with you. Thanks for listening to Bloomberg

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