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Let's go ahead and get to the economic data of the morning. The notes that I'm getting seemed to then reaffirm that Goldilock scenario, right, because we have subdued inflation, everything else seems to be hanging in.
The FED can continue to cut.
Maybe they can even cut fifty if inflations come down enough. Ira Jersey is Bloomberg Intelligence Chief US interests rate strategist, and he joins us. Now, Ira, is that theory like, Hey, it's Goldilocks. Hey, inflation comes down, they can cut fifty.
Is that vibe with you?
It depends. It depends if the trend continues or if we stabilize here right on. One of the things, Alex, that I've been looking at is this trend in and
slowing momentum in just the number of transactions. So one of the things that you get with the PC report is not only these okay, personal spending is is you know, up a little bit and inflation is a little bit lower, And yes, that seems like goldilocks, But when you look at the momentum of the economy and the momentum of personal spending, it's it's come down quite dramatically, and it even slowed again this h in the latest month, which is it's still August, right, so it's still like pretty
old data in terms of you know, all before the cut and everything else, but by the Fed. So it I still it does not point to an upbeat economy right now. And there is this this issue and I'm gonna you know, talking about like the h the potential long short and strike if inflation goes up, because you know,
good sector prices continue to go up. I think one of the questions is it will consumers then, you know, buy more goods or buy the same goods at a higher price, and not buy as many services because services is really what's been propping up the economy, and that was confirmed again in this report, with services continuing to be the one bright part of the economy whereas everything else is actually kind of met.
Now, one thing I've been trying to get a read on, does inflation data matter to the same extent that it did before, or is now the focus really shifting toward employment.
Yeah, So when you go back eighteen months, the Fed basically had a single mandate and that was to get inflation lower, and it didn't really care what was going on in the jobs market. All the jobs market was fine. So now we're more in balance, right, So, yes, the inflation data still matters, but the employment data matters at least as much. And the employment data, you know, is
certainly weakening. But in a historical context, you go back a long time ago, and we used to say that like one hundred and fifty thousand jobs being created a month was fine. The I think the issue is now is will that continue to decelerate further? And then what does that does that of a knock on effect on wages because the other piece of the why spending continues to be reasonably robust in the services sector is that
wage growth has been okay. So even though there's still a lot of people who are having a problem finding jobs. You know, we talk about new entrances to the workforce. You know, college students who can't find a job after
school is trending a little bit higher. But the issue is that even though they have a problem, the people who have jobs have been continuing to get reasonable wage increases and that's allowed for personal spending to be maintained, you know, two ish percent per year, and that's not a terrible outcome. The thing is will that be maintained, And actually I question whether or not it can be maintained just given all of the trends that are currently in place.
What's also quite interesting too is the amount of money that people still have. And I hear you on the wage increases, but there was the revision in data yesterday that saw the income was actually revised up by eight hundred billion dollars between twenty twenty two and twenty twenty three.
I was also taking a look at money market funds and how much money has gone back into money market funds ever since the Fed did cut and that if you take a look at say, income generated from money market surged to more than twenty seven billion in August alone, it's like, we don't know how to discount that yet.
Well, there certainly is income from interest again, right when where we haven't been used to that the last fifteen years. But you know, you go back to the early two thousands, you go back to the nineteen nineties, and in and interest income was a non trivial share of overall income. You can't just look at money market funds. And the reason is is that there's still this disconnect between the rates of money market funds, which are still well over four percent right on four and a half four four
and three quarters percent, versus deposits at banks. Right the posits at banks are still paying you know, relatively low interest compared to money market funds. So people are still you know, incrementally when incremental savings goes into money markets, as is still some depositive flight out of some banks and into money market funds. So don't think about that as cash on the sideline. I think that's a mistake.
People are doing that. That is savings, right, That is people who are saving their money, and also people who are worried that like with stocks at their relatively lofty valuations in some people's opinion, then you know, the return to cash makes some sense because if you can lock in you know, four percent for the next say, three
to six months and then redeploy that money. People are considering doing that because you know, you might say, oh, well, that's a little short sighted too, because if money funds are paying four and three quarters percent, and then the Federal Reserve were to cut interest rates another hundred basis points this year, then you're looking at what the ten year yield is right now. So I do think that there are some people who are, you know, trying to reallocate,
going into safe assets. But that rotation, that's not money that's going to rotate back in the stocks just because interest rates are a little bit lower, and it's going to find other fixed income assets or find its way back into bank deposits more than likely.
Let's talk soft and hard landings. What has been the general consensus as we've seen this latest data. What are you looking forward to.
Let's pretend that you can't use the word goldilocks.
Yes, off limits.
So well, so the way that we have so the way we have it couched and we put out a piece earlier this week where we looked at five different scenarios for how the economy might react and where treasure
yields and how the Fed might react. Each of those five scenarios, so one is a hard landing, and that's actually our base case scenario is we do think we're going to see a recession in the next twelve to eighteen months, and because of that, you have treasure yields much lower, the Fed reserve cutting interest rates quite aggressively, even more aggressively than what's currently priced, which is already pretty aggressive, quite frankly. But then there is a chance for a reacceleration.
Right, So.
Even though you know, I think that there's going to be a recession next year, if I'm wrong, I might be wrong. The other direction, which is we see a reacceleration in spending, We see you know, firms not wanting to give up their employees because they're worried about retraining
or finding people with the same skills easily. If there is a rebound, and if we do have a reacceleration in the economy and somewhat and inflation starts to tick up a little higher, then the Fed is going to have to stop very early, right, and that means that the whole entire treasury market is going to have to sell off probably twenty five to fifty basis points across the curve. And if that scenario plays out, so when you take like the weighted average of all of these
scenarios is equals of soft landing. But that and that seems like the one of the least likely outcomes is that soft landing scenario. More likely we'll have either a hard landing or a reacceleration. But each of those seems more plausible to us.
Totally fair, real quick for you.
Go, But then we get all this inflow of stimulus from China, and does this kind of offset that impact?
Is it blunt that.
Well, that's one of my concerns and one of the reasons why you could potentially get a reacceleration with with central banks globally easing rates like not only China, right, but you have ECB and the BOE as well as the FED to reserve all easing interest rates. At the same time, you do have a global stimulus stimulus going that's going to be hitting the market.
Now.
It might take three to six months before we see any of that in the data, but it is coming at some point. And you know, the Fed's going to cut in November and they're probably going to cut in December, so that's going to feed into some next year's next year's outlook for the economy for sure.
All Right, Ira, thanks a lot, really appreciate It's like the thing we've all been waiting for. We get it, and then it may not be so awesome on a broad level, Ira, thanks a lot. Ira Jersey having good weekend. Bloomberg Intelligence US Interest Rates Strategist.
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Alex Steel here alongside Nora Melinda. This is Bloomberg Intelligence Radio.
We bring you all the top news and business, economics and finance through our lens of our Bloomberg Intelligence folks. They cover two thousand companies and one hundred and thirty industries all around the world. We also tap the best of Bloomberg. And one of those things is this great Bloomberg News Morning Console poll. It's a great poll and
it measures all the different aspects of the election. Now, in the latest poll of swing states, it shows that Vice President Harris Now is leading among likely voters by seven percentage points. In Nevada, five points in Pennsylvania, three points in Arizona, Michigan, and Wisconsin, and three points in North Carolina. Both Trump and Harris are tied in Georgia,
US as. Laura Davison, Bloomberg Politics Editor, can you walk us through I know I gave the broad strokes, but can you walk us through some of your takeaways from this pole.
Yeah, So Harris is leading in all of these swing states. So I'll note that those leads are within the margin of air. So what that tells us is if this race is really really close. This is something that we have seen, you know, across pulling other polls for several weeks now, and this is really going to be a nail bider of a race. And you know that either candidate really has the potential to win any of these states, and the electoral College could down come down to just
one state. You know, one of the ones that being most close closely watched right now is Pennsylvania. That's really a must win for Harris and the biggest electoral college prize of all of these. When you kind of dig down into the data a little bit further, what is sort of one of the key takeaways this month is that Harris is really cutting into Trump's lead on trust in the economy. We've pulled every month about how much people, you know, whether they prefer Trump or Harris or Trump
and Biden on a bunch of different topic issues. You know, Trump throughout the entire pool has had a lead on the economy, though Harris has really narrowed that gap. And that's really come as she started to lay out her policies on housing, on taxes, on prices, and inflation. So this is sort of an indication that some of those messages are getting through to voters. The other main issue that voters say is their top their top issue this cycle is immigration. On that Trump still holds a pretty
big lead. So that's where we're You're going to see Harris focusing a lot of her attention, you know, including today she's headed to Arizona to go to the border. She'll you know, have a rally in Nevada later on the weekend. So you started to see her focus, you know, the kind of she's tackled the economy. That's something that will still see is key to messaging. But now turning attention to immigration.
Now since Kamala Harris announced her run for presidency back in July. Has there been a specific shift at all in terms of her lead in the polls.
Yeah, we have seen her generally cut into Trump's lead, both the national polls as well as swing state poles like the Bloomberg News Morning Consult poll. And on the issues too, she has you know, inched up, you know, specifically on the economy, She's grown her lead when it comes to abortion, housing, democracy, but she she the immigration is kind of that one key issue where she has not really made any dent in Trump's lead.
There.
Uh, this is you know, sort of notable. As you know, Trump has made a lot of inflammatory statements, including us the most recent debate about you know, this unfounded claim I should note about immigrants in Ohio eating household pets.
In terms of the issues, though, I'm wondering in terms of the why do we think that she's gained more in the economy, How has she been able to close a little bit of that gap.
What we have seen from her campaign really over the past four or five weeks is they've been putting out different specific policies. So she put out a policy calling for an increase of building of housing units, as well as it down payment assistance for first time homepires. You've seen her call for an expanded Chile tax credit.
She's also called for.
Other tax cuts, including one that dot Trump has also embraced, no taxes on tips. She's called for an end to corporate price gouging and has sort of a fuzzy proposal there. We've pulled specifically on some of these policies, and they are broadly popular, you know, talking you know, more upwards of sixty to seventy and in some cases even eighty percent. So that means that she's winning over not just Democrats, but also a decent chunk of Republicans as well, and
of course independent voters. Those are the people that she needs to win over in order to win this election.
So for the average listener, how important are polls in an election year?
So polls are an important tool, but they you know, aren't necessarily you know, one hundred percent predictive. They can give you a snapshot of where the race is right now, and obviously, as we know this year that you know, a lot can happen in a couple of weeks and really change the contours of this race. So you know, it's important that this is sort of where the race
is now. There is a margin of air, So it's important to not just look at you know, the headline numbers, but also you know how much those have fluctuation within them.
Where where does President Trump, a former president Trump still pull quite well, like what issues and how does that play out in the specific states.
Yeah, so he you know, really immigration is one where he still has a strong lead. He also, you know, he still has a lead on the economy, albeit much smaller than he used to. Some of his proposals are also broadly popular. The most popular issue we pulled this month was no taxes on Social Security benefits. This is one that he has you know, trot it out on the campaign trail. It's very appealing of course to older voters, but this is one that you know has broad broad
bipartners and support. He also has a proposal to end taxes on overtime pay, really very appealing to blue collar workers. Some of his other proposals, however, things you know, like increased tariff He's also talked about increasing the state and local assualt deduction cap and that's something that he talked about in New York this past week. You know those are less popular, you know, more around fifty percent.
Of people like those.
You mentioned Pennsylvania being the grand prize this year. How are the two candidates strategizing and trying to tackle that area.
So the airways there are blanketed in ads. When you look at ads spending from both campaigns, that is where they are putting you know, if not the majority, at least the plurality of their money. So they're spending heavily in that state. You also see a lots of visits there. Harris, you know, very strategically chose Pittsburgh as where she was going to give her economic address this earlier this week to talk about, you know, bolstering the industrial economy and
you know, looking at steel and iron manufacturing. Trump will see him go there next week. He's planning a rally in Butler, Pennsylvania, at the same site where the first assassinating as fascination attempt was in July. So you've seen the candidate spend a lot of time there and spend a lot of their money, and that's really kind of where you see the bulk of the campaigning happening.
There has been a lot of criticism around Harris's campaign that she's a light on details, and I appreciate that she did give that speech as you reference in Pittsburgh, but nonetheless in your poll finding, is that still a problem.
So it shows that she is. We actually asked the specific question of you know, which Canada described as having the best detailed policy positions. In August, she was trailing Trump and then in September she's leading him. You know, it was the sort of a they were pretty close and relatively close, but she has pulled ahead. And part of that is she has given more economic speeches and she also put up a document this week. This is, however, after the poll was but she put out a big,
eighty page document that had some more policy details. It was still largely a political document, but she puts some stuff on paper. So these are the kinds of things her campaign sees it as helping. You know, Trumps has done less in terms of like writing out his ideas, but he's been sort of trotting out idea this week by week.
All right, Laura, I really appreciate it. Thank you so much.
Laura Davison, Bloomberg Politics reporter on the latest Bloomberg Morning Console poll you're listening to.
The Bloomberg Intelligence podcast. Catch us Live weekdays at ten am Eastern on Apple car Play and broyd Otto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
All right, taking a look at these markets here, Yes, it feels like we continue to kind of melt up slash move higher. And I say that because clearly we've not seen a ton of volume, doesn't feel like there's a ton of conviction, but yet we keep making record highs after record highs. The wildcard, though, is what's happening with China, And sort of what I'm interested in is where the catch up potential is. Quants were caught really offside by the move right flows are going to be
caught really offside. CTA's will be caught off side. So how do you manage all of that? NADIA level is senior US equity strategistic global wealth management over at UBS. How are you looking at the stream of money that's going to be pumped into the Chinese economy?
You know, it remains to be seen how that actually translated into real demand and the real economy. It's not like the code coming out of COVID. When the COVID zero policy was turned off, we sort of flip the switch and that helped to reopen the economy. It's going to take some time for this to filter through to the economy, just given the issues in the property market
over the last couple of years. Yes, you're seeing those trying to expose stocks catch a bit this week, but I think that some of this remains to be seen and how that actually translates into profits and.
On a domestic landscape. That data that we got this morning, the inflation data that everyone's looking at. Some people are saying that we hit a sweet spot. Others are saying that this, you know, is just a small thing in the pipeline. What do you think the impact of this data that we saw this morning will have moving forward.
I think the focus right now is more on the growth data and then necessarily in inflation data. The inflation data recently has been well. It behaved, came in in lot of our expectation colle PC at two point seven percent. I don't think that was only real surplies to anyone. I mean, monetary policy have started to ease. It took inflation to get this, so that and it will take the labor market to determine how large the rate cuts
are going forward. So even though the FAT has said it's data dependent, the data is more focused on the labor market and less inflation at this point.
So what kind of sector do you like right now?
Yeah, we continue to light tech just given the AI tailwinds that are behind tech. We've gotten a number of incrementally positive news this week when you look at the likes of a centure that goings to continued demand for general AI and investments around there, and also even micron Earns this week that suggests that high bandwid memory chips are sold out for twenty twenty four into twenty twenty five,
So we like that story. We also would lean into financials as cyclical value that should benefit from lower interest rates and a potential pickup in long growth. And then I think you balance that out with some utilities that this is no longer like your grandparents' utilities. Yes, it's defensive, but it also has those cycle of tail winds behind it, given the increase in demand for power associated with AI.
Nadia. What about small and MidCap stocks, what's your view there?
Yeah, MidCap is actually at a record today. Yeah, yeah, you know.
So we are neutral on small cap, and so that means you should have a market weighted exposure to small cap. I think that small cap will benefit as interest rates come down from a balance sheet standpoint, some alleviation of pressure. But what we're really waiting for to become more constructive on the space is a pickup in Ernest Group, which just hasn't been followed through yet. I mean that could come through if we start to see a pickup in PMIS.
I mean pmi's manufacturing has been struggling for quite some time. So if we get that, then maybe we could be more incrementally positive on small cap and we see that acceleration and Earnest Group potentially in twenty twenty five, Well what about.
Me madcaps, because it feels like that some say that could be the sweet spot, right, like, you're not ready to get into small caps, but midcaps could provide that for.
You, absolutely. I mean MidCap then tends to be a bit higher quality, so we would also look at that area as well to be able to add to. But our preference overall is really more towards the larger names that we think that do have those secular growth stories, but I think metcalvs also you can find some value there as well, because it's you are right, it is and that's somewhat of us sweet spots.
All right, thanks so much, Nadia. I really appreciate it.
Natia Level, senior US equity strategist at Global Wealth Management over at UBS, we really appreciate it.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Otto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven.
Thirty Going to the markets here.
Some of the headlines is that Intel rebuffed an offer from ARM after ARM inquired about buying a unit from Intel. Man Deep Singh, senior tech industry analyst, joined us now for Bloomberg Intelligence.
Man, Deep, is this just going to be like a string of.
Random suitors for random parts of the business here, Like, what was your take on this?
I mean, in this case, it's very specific in the sense that Qualcomm was more about chip design. ARM is specifically interested in the IP related to the instruction set business that Intel has. Remember, Intel has got a lot of assets within the company which is you know, patented, it's IP that's very desirable. That's been the basis of their mode for the last forty years. And ARM is
a competitor to Intel's eighty six architecture. But at the same time, ARM wants to expand into other adjacencies and that's where you know they are looking probably to buy some of that IP or patents from Intel. I mean, we don't know the details, that's just a speculation, but I can imagine ARM getting into you know, chip design or foundry manufacturing. That's just a way out of what they're doing right now. So the natural extension of their business would be to buy some of the IP from Intel.
I mean, the company's got quite a few suitors. We're seeing shares down as much as fifty two percent year to date. What do you think would really be a positive outcome for the Stockwader analysts saying the route that they should be taking.
I mean, everyone looks at Intel based on the some of the parts spaces, and clearly the current market cap of Intel doesn't justify you know, all the assets and the IP that is within the company. At the same time, they're bleeding money when it comes to the foundry side of the business, losing almost seven to eight billion dollars a year. They're investing a lot in capex subsidized by the US government, but the turnaround clearly hasn't played out.
And that's where you know, the bigger you are, the harder it is to turn around the ship. But at the same time, one could argue, you know that X eighty six business will rebound if this AI super cycle has to play out, because they still have that dominant eighty percent share. When it comes to the PC market, and if everyone is upgrading their PCs, guess what it will be an Intel PC. It's as if they are
losing market share on that PC side. So that's that's the hope when it comes to the Intel turner round.
So do we know when the PC market, the consumer market is going to start turning around? Like it feels like the trough is in, But how long that looks and what that looks like?
We just have to watch for data points. In fact, Micron this week gave us one data point they called out AIPC being you know, rebounding and twenty twenty five being a better year than the past couple of years. So clearly that inventory correction has happened and we have seen a trough and now it's a question of how fast does the units recover. And I think that's where Intel we'll see a nice rebound on that client PC side. On the server side, I mean, clearly there is no
fix right now. They are losing share to Nvidia ANAMD and that's unlikely to change in the near term.
Hey, Mandy, what's about a minute on the clock. I'm curious what will investors really be looking for from earnings? What's the most important thing here?
Well, I think they're looking for a plan. So Amazon you tying up with Intel to use their foundry side for chip manufacturing. That's a positive sign. The question is the scale at which Amazon is going to look to use Intel versus TSMC that they're using right now. So
that foundry business is where Intel is bleeding money. Hyperscalers, partnering with Intel on that side is great news, and I think that's where you want, you know, more positive news in terms of Microsoft and other hyperscalers really ramping up on Intel foundry.
All right, man, Deep thanks a lot.
We really appreciate man Deep Say Bloomberg Intelligence senior tech industry analyst joining us on Intel on the struggles and kind of how you wind up moving forward from their net.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
So let's get more into it. Michelle Martin is president of Prosperity. It is an iSER amper company. To discuss her market outlooks, she joins us now from Minneapolis. Hey, Michelle, I feel like some takeaway from the last two weeks has been are we actually in a global easing cycle now that China's on board? And does that change how you think about things?
It certainly does, and thanks for having me on today. I think with the global easing there's more likelihood that we might be heading for a soft landing. We're seeing it across you know, what's happening with China today or this week, and we're certainly with interest rates coming down, it appears that we're in a really good place. It's been a great week for that, and the trends are showing that there may be more cuts ahead.
And when we're thinking about China, just as a big, big has a big economy, how much do we really think that this will affect other aspects more globally in pointing it back to the US here.
So it's interesting and I think you were just talking about this. We've been on the sidelines as it relates to China, as many have just based upon the performance. I think we would typically have a wait and see attitude again, understanding what comes out of the election and
what tariffs might be in place. I think that we've seen a general trend of companies moving away from China, So I would say that we're we have looked at getting back into emerging markets, particularly with this news with China, and we would ease our way back in.
How do you do that?
Like is it local consumer facing stocks? Is it through ETFs?
It's through generally ets and mutual funds within our portfolios.
Absolutely, And how aggressive you said dipping your toe? So how does that progress work? Like you dip your toe and then what do you wait to see if more stimulus comes, do you wait to see how assets perform?
Yes, exactly what we're really look at, NOURA is for
the trends to take hold. So in other words, it would be dipping the toe in probably a position of a couple percent in a portfolio, and then really really watching what that performance looks like, what the volatility is, and if we're starting to see the trend become solid more than you know, more than an indication it's relatively recent, So we would want to and from an emerging markets perspective in our portfolios, that generally is a relatively low allocation for us to begin with.
Can you just speak a bit more to the opportunity in emerging markets more broadly?
Well, I think the thing that's really interesting about emerging markets.
Being a part of looks like.
We're freezing up a little bit. Let's see if you can re establish that connect with President of Prosperity. We're just going to re establish that connection and see if that winds at making sense. Okay, but what you were asking about was flows, right, and to really diversifying out right.
I mean, I think that's really interesting, especially as we've really been looking at the China stimulus and how it's really been affecting I mean, we just had Abigail Doolittle here talking about how it's even affecting casinos thoughts. So I'm really curious how she and other investors are really thinking about how they're going to be allocating their money and if they want to put some of it into emerging markets as we're looking forward.
I've been talking to a tactical strategist and one of the main banks and just how it's been a really painful week for some of the investors and the flows are now flying into stuff that we haven't seen before, and that's been a really painful week. And take a look at tech and the underperformance that we've seen, right, Like Micron was a one off right this week.
But if Tech continues to kind of underperform.
What does that mean?
What does that mean?
What does that mean?
And then on a headline level, can the headline s and p go up if Tech is underperforming? It may be, but even so, it's a just cheering kind of under the surface.
Right, And it's counted for so much of our gains this year. It's really had the wind in the sales here.
Yeah, exactly, So looking forward to that. All right, I think she's back. Michelle Martin, President Prosperity joining us. Sorry about that glitch, Michelle. So you were saying in terms of flows and where it's all going, walk us through it.
So I think, you know, generally, I think one of the from a flow perspective, I think where we're really watching things is we've had really strong success with high yield credit, but in the equity market, we're really looking
at the trends that are starting to take hold. And what we're seeing, particularly over the last quarter, is that we're seeing dividend pain stocks, value stocks in sectors like utilities and industrials really start to you know, take hold and outperform and perhaps become more of a position within our portfolios. Technology has been such a strong performer, and what we're seeing now is that technology is basically consolidating. It's come so far, so fast, and we're starting to
see those trends start to change. That also gives us an indication that we might want to be looking at Europe a little bit more. We've been waiting for Europe to uh for that trend to solidify. We have underweight in in our international stocks in general, both in developed international as well as emerging markets, and so this is actually starting to look much more attractive in those in those sectors as well.
Now, Michelle, how are you all thinking about small and mid caps? Is there a play there?
Well? There is, and we've we've definitely been had a presence in the mid cap space holding back on small cap. But with interest rate cuts, there's definitely an opportunity because particularly small businesses have much more sensitivity to interest rates. So with the cost of credit going down, there's absolutely an opportunity that we could see a rebound in small cap.
If and I say if, because it's like I've heard the story before, right, I've heard the story about European cyclicals.
I've heard the story about small.
Caps before, and I always seem to manage that story for like a few weeks and then all of a sudden, we're back.
To the basics.
Right, So this is the question, right, why, what conviction do you have at this time might be different?
Well, I think we're seeing it in the results. We're seeing some quarterly numbers that are starting to point towards that we saw small cap rally earlier this summer, and then we had a big pullback in it, So you know, we're as I had mentioned earlier, it really is important to start to see those trends take hold, to start to see the consumer confidence with small business owners. I think that plays into it as well, and we're you know, to have banks be a little bit more agreeable to lending.
We're seeing credit standards being relatively tight right now, so I think that conviction is probably still a little ways out from our perspective on small cap so we're kind of waiting on the sidelines ready to jump in, but the environment is definitely more favorable than it has been.
How are you thinking about opportunity in the equities market especially, We've been hearing people saying that we could be at lofty levels. How are you looking at that as we think about year end and all the rate cuts that people are pricing in.
You know, it's so true, I think, and we actually have been slightly underweight to equities just because of where we're at. Equities are are somewhat priced for perfection, particularly on the growth side of the equation, so we've you know, I think it's stay steady invests for the long term.
I think what we're really looking at and what we're seeing with a lot of client accounts or people that we're talking to is that money markets have been so favorable and so they've pulled out of the markets thinking that they're overextended. I think that it's definitely, you know,
methodical a phase in. I think the challenge is that if you wait on the sidelines too long, you know, you kind of miss if we if we look back even to like, you know, the years of after the Great Recession in twenty ten twenty eleven, I had many clients that we're just afraid to get back in and sat on the sidelines and really miss that opportunity. So I think it's a gradual phase back in for those
that are sitting on the sidelines. And then it's really been thoughtful about tactical shifts within the equity exposure to these areas that you know, create are showing some opportunity most people.
Yeah, Michelle, we got to leave it there up against a break. But it's such a good point and also sort of when we're going to wind up seeing that money come out of high yield savings account and money market funds. Michelle Martin, a president of Prosperity Give you're.
Still getting four percent. It's still four percent.
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The news over the last twelve hours was Hurricane Helen. Helene Helene, right, Helene. Helene has just barreled into the western coast of Florida, dangerous winds, knocking out power for more than a million customers and threatening to unleash deadly flooding across several states. Helene made landfall near Perry with top sustained winds of one hundred and forty miles per hour. And that's according to the US National Hurricane Center. It made it a Category four on the five step scale
before weakening now to a tropical storm. And this just, I mean, these headlines just keep on coming fast and furious. We wanted to take a business angle to it and look at the oil and gas industry. Vincent Piazza, Bloomberg Intelligence, senior equity research analysts for oil and gas Vincent to some extent, these companies are very well known.
To these risks.
They know how to shut down the infrastructure, they know how to shut down any sort of offshore rigs, et cetera. What have they done in the path to the storm?
Yeah, you're right, you know the companies the infrastructure benefited from Well probably not the best word to say, but the storm moved eastwards, so it was not a direct hit on the installations, And in fact, some of the operators are looking to restart the platforms. I know Chevron mentioned earlier that they'll be looking to bring production back
on the six platforms that they shut in. It's never really about the supply side, because, as you mentioned, Alex, the companies are well versed in executing these types of
disaster plans. Where the impact really is is on the demand side, And especially for guys like me who cover natural gas, you know, those without power that can be a longer term issue across many states, and the latest stats that we have, we're looking at at least roughly four million people without power at the moment across states like Florida somewhere around a million, Georgia somewhere around a million, and I think if you had the Carolinas together at
somewhere around two million, so there's as much as four million residents without power and that is truly devastating. Although if this had occurred in July and August, where the weather would would have been much warmer, it would have a more devastating impact. We're right in the middle of the shoulder season here, so maybe there's a little bit
of reprieve with the weather. But over the next six to ten days our weather projections, what we see from across the various providers is that it is somewhat still warm in that neck of the woods, but probably not as bad as it would have.
Been if it had hit during July and August.
Yeah, I mean you mentioned the idea of a demand. What just how catastrophic could a backup and demand be for oil and gas companies here.
Well, if we look at the last couple of days, you know, you're roughly looking at two bcf a day of demand coming off. And you know, power gen is a very important end market for many of these producers. It's the supply into the electricity facilities and that is a significant source of consumption for natural gas.
So it is a very important market. It is interrelated.
Because when a storm like this hits, thousands of customers come offline.
And of course these customers not.
Only use these facilities for air conditioning, but also hospitals and also other areas other institutions need these facilities as well, the HVAC facilities, especially in the south where it can get very, very warm, and that's where this storm is hit.
If we're right, you know, four million folks without power.
That takes a long time to bring back on online, especially now.
Yeah.
Absolutely, And at the flip side, just before we let you go, have about a minute left, I'm taking a look at crude here WTI at sixty eight right, It doesn't sound so bad, but I look at that curve. We are still in backgradation. But the rerating we've seen in the whole curve at that front end has been quite extreme.
At what point do producers get worried?
So producers are pretty much still in a little bit of a sweet spot here.
You know, that seventy handle is still okay.
The demand side of the equation for global crude, that tends to be the real concern. What happens overseas, especially in China, that still seems to be somewhat of concern demand overall, especially here in the US as well, as things tend to slow. But for the most part, the producers are holding in discipline very very well. We as analysts and investors are more concerned with that discipline.
And returning excess cash.
To investors, either in the form of dividends or share buybacks. So the operators have been hearing that message and have been sustaining that discipline overall.
All right, Vince really appreciated, Thank you so much. Vincent Piaza joining us Boomberg Intelligence and your equity research analyst Oil and Gas joining us on the impact of the storm Hellen that has tabok there on Florida as well.
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