This is the Bloomberg Surveillance Podcast.
I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best an economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. Right now, we're going to go to Henry Hoaternet in Japan and with her is Admiral John Kirby's National Security
Council Coordinator for Strategic Communications. This for America at the G seven meetings.
Thanks Tom, And that's right.
He's on the ground less than four hours and Admiral Kirby is joining Bloomberg first here as he lands with the President for this really important G seven summit. But of course the President is scrapping the remainder of this forum trip. You was supposed to have Papa New Guinea and Australia. How much I think that domestic policy concerns are undermining the foreign policy goals of this administration.
It's not about undermining our foreign policy goals. I mean the President has really revitalized. He's really put a lot of energy, particularly into this part of the world. I mean, here we are in Japan for the G seven. You know, just a few weeks ago in San Diego, we were standing next to Prime Minister Arabanas and Prime Minister Sunak to unveil the next phase of the Akas Agreement. And of course he's already had a chance to meet with all the Pacific Island leaders at the White House last year.
We'll do another one here in the near future. So we have invested a lot of time and energy into this particular part of the world. And today's today's visit, this G seven, I think is just further proof of that.
But at the same time, the President loves to use these moments like a G seven.
He reminds the world America is back.
He tries to draw parallels for democracy visa the autocracies, what's going on in terms of Beijing, what happens in Russia.
How hard is it for him to.
Deliver that message to other leaders.
When he was supposed to be the first.
US president to go to Papua New Guinea, he was supposed to go meet the Quad in Australia, and this is where he wants to spend his time, like you said, in the Asia Pacific.
But the president knows and so do these leaders leaders of democratic democratic nations, that if you don't, if you don't take care of the nation's dead, if you allow the United States to default, virtually nothing else matters in terms of what you're trying to do around the world.
You know, I heard comments to know BI analysts that our credibility in the region is suffering because you know, we're not going on two other stops, but the credibility really suffers if we end up, you know, being a debtor nation if we default.
That was the message I got in Nagata from the foreign ministers.
Well, a president, I'm a deadbeat nation that our international credibility standing suffers. So the President is doing the right thing here. He's obviously the G seven is important. A lot of things to discuss while we're here in Japan. We can reschedule a trip to Australia, we can reschedule a trip to Papula, Nigina, which you can't reschedule. You can't reschedule the looming debt ceiling deadline. That is a hard fixed thing, and we've got to make sure we get these negotiations through.
Critics will say, then the President didn't manage this correctly. He should have been speaking to Speaker McCarthy earlier so he didn't have to cancel his foreign trip. But do you think the president here in the g set will be able to say to leaders, well, West will not default on its debt.
Well, the president's optimistic. He said that before we left. He said that he's optimistic that we'll get there. And so that's one of the reasons why we're going home a little bit early, so that he can be there to make sure the Congress does its job. But let's go back a little second on the talking to Speaker McCarthy. Not defaulting is a congressional duty. It's in the constitution.
There didn't need to be negotiations over the debt. Now the President is willing to sit down and talk to Speaker McCarthy about the budget and appropriations, and we'll do that. But when it comes to raising the debt ceiling, that is something that has been done seventy eight times under democratic and Republican administrations, without negotiations, without having to have
an argument about it. So there's no reason for I mean, the argument that we should have talked to X number of days ago, this should be this is a congressional duty there. They should just simply do their job.
This is something we're going to be closely watching here from the sidelines of the G seven when it comes to of course, one of the biggest elephants in the room is going to be China. We know the US wants to go after economic coersion that's coming out of China. Also, the Papua New Guinea trip was about deterring Beijing. Is there a concern from the White House that potentially when it comes to say, Papa New Guinea, that Beijing is trying to do a security agreement like they did with
the Solomon Islands. How concerned is it about making sure that countries like that are on board what the US is doing well.
The trip in Papua New Guinea was not about deterring China. It was about again revitalizing, reinvigorating our vast network of alliances and partnerships in this region, a network by the way, that China can't even close to match, just can't get there. Five of our seven Treaty alliances are in this part of the world, and a lot of people don't realize that. So I mean there's a lot of a lot of network of partnerships and alliances here that we're trying to
try to bolster. And we will still have discussions and some deliverables with Papua New Guinea. You'll see that even though we're not making that stop, we'll see.
Those move forward.
I can't speak for what China's doing with each individual Pacific Island nation. They have used a mix of intimidation and coersion economic and security wise to try to have their way in this part of the world. We are not asking countries to choose between the United States and China. They get to decide what their bilateral relationships look like and who they associate with and what that association looks like.
What we are doing is trying to show in demonstrable way in ways that the United States is a reliable, stable, credible partner in this part of the world and around the world, and to give people alternatives to the coercion and the intimidation that the Chinese tend to demonstrate.
How close are g seven leaders aligned on this point on making sure they are deemed risking from China, most notably, I'm thinking of Europe and Emmanuel Malcaran after his visit where he said that Europe actually has strategic autonomy when it comes to China.
China is going to be key on the agenda here in Japan, and I think you're going to see the G seven leaders all speak with one voice about the challenges that China poses here in the Endo Pacific and around the world, but also what some of the opportunities are as the G seven nations are to compete, to compete fairly, but to compete well with China.
Broad strokes of.
Words, though, will there be any action visa E China and the G seven.
Well, I'm not going to get ahead of the of the discussions, and the G seven leaders will absolutely spend quite a bit of time here as you would expect they would certainly here in Japan talking about the challenges
that the PRC represents. They will think, I'm convinced of it that you'll see at the end of those discussions that they'll all speak with one voice about about how we need to treat that particular competition from not just from a security perspective, from an economic perspective, from a diplomatic perspective.
Adamal John Kirby, thank you so much for joining Bloomberg TV. That was, of course, the National Security counselor Strategic Communications Director John Kirby, his first interview on the ground. He's been here for under four hours here and here as Shima, Japan.
Spend most of that traffling from the airport. So to an interview with an Marie mh great work. Has always looking forward to converridge to the G seven.
Ellen Ze joins us now quarters on from a transitory economics and Ellen, in your note today, you are framing out a.
New job economy.
We are at a two hundred and fifty thousand run rate on non farm payrolls, and you have a stunning observation of a path to forty thousand non farm payrolls. How close are we do that?
Yeah?
So I think we can hit that late summer tom And you know, look, you want to assume that things are linear, which they're never linear. Then if you look at the slowdown that we've had and just project that forward and say, knowing nothing else, let's just assume that continues, you would be down below one hundred thousand within a couple of prints. So, look, we see a slowing path for job gains here, but we don't see a cliff,
And I think that's very important. Claims are still low, companies are still doing more labor hoarding than they are laying off. We see an employment gap that still needs to get filled, and so I think there's a lot of support here that, Yeah, let's be realistic. Things are slowing, but this is not a cliff that we're headed toward for job gains.
This is, Lisa, to me, the conundrum for you, me and John into May into June into July is we don't have a clue what the is. Ellen mentions the linear flows here on labor no.
Clue given the fact that it is slow. How does a feder respond to a slow burn, Given the fact that they are continuing to say inflations are pre eminent concern and inflation has been sticky, Ellen, can they afford to not hike rates again if we continue to see just a slow grind lower but not that quickly and inflation is still higher.
Yeah, So, Lisa, I think it's a good question. Inflation is moving in the right direction, but very stubbornly so, and it's not moved down clearly and convincingly as Chair pal has wanted. But that was not a prerequisite to them stopping hiking, right that is a prerequisite to when they make adjustments, say normalizing policies. Inflation has down a lot, So right now we think they're at the point where, yes, it's arguable on the FED whether they are in restrictive territory.
How far are they in restrictive territory? Are they close enough? We think that they're close enough. But the arguments that you are, the points that you make, would suggest that you need to keep that peak rate.
There for quite some time.
And I think that's the argument that the FED will lean on that as inflation slowly comes down.
But they're holding rates high.
Policy actually maintains its restrictive territory, and in fact it's even more restrictive throughout the year, and I think that's what policymakers ultimately will lean on.
Ell And we were talking about this earlier and Tom asked the question, do we have a sense of what the new neutral really is? Do we have a sense of what it takes to really take some of the momentum out of an economy? That has defied all expectations that were incredibly gloomy heading into the year. What's your view, Do we have a better sense of what that neutral rate is?
So I would say that, you know, very cynical of me to say that neutral does not exist.
We're never at neutral.
We pass it up and you know in hindsight whether you're at neutral, below neutral, above neutral. But we're always reaching for these sort of fictitious metrics or goals. What the Fed does know or can see is that things are slowing. We think they're going to be very slow in the middle of this the middle two quarters of
this year. And that's an economy with a backdrop of banking pressures, of ball financial conditions that you might not want to push it further, but you want to maintain the option to hike.
Again if you need to.
And I think that's that's something that we have to consider. There are two sided risks. After the pause here, I got to rip.
Up the script. You've done it with me before.
Don't panic here, And the answer is that we're going to talk to Ellen Zenner foreign exchange strategist. Moments ago, Euro dollar solid one ten forever just breached through a one oh eight to a weaker euro one oh seven point ninety nine right now on YU dollar. To me, the great unspoken, along with your idea of NFP down well under one hundred thousand, is resilient to stronger dollar.
Dovetail that into your call, do we get a resilient dollar again with the certitude out there the consensus of dollar weakness.
Look, I think that you know, currency movements are very important, and of course where strategists are, you know, shorter term tactical tactically on the dollar matter a good deal. But I think there's going to be a realization here that the economy is not collapsing, and in fact a realization that, yes, we think the FED is paused here, but there are
meread options for policy after that. Right, It's very easy to get inflation down from seven percent to four percent, is very difficult to get inflation down from four percent to two percent, and that might take more work from the FED after they pause. So I think it's more of that realization creeping in that five point one percent is the peak now, but they may have to move higher at some point.
At least to me, this is so important. Dovetailing in what Ian Lincoln said, with what Ellen Zender said and the idea of the asymmetric call, and this is frankly Hollendhorst as well. Do you get a symmetric call where you get rates up or the Zenner pause and we don't understand the duration of that pause, and that's where you get the dollar.
Dynamic to come in well, and we also have the sense that Europe perhaps has seen the bulk of the gains and perhaps their signs that the other side of the trade isn't doing as well as the resilience of the US economy. Ellen to that point. We were talking with Jim Bianco of Bianco Research earlier and one of the big fears about the US was the banking crisis that wasn't or the banking crisis that hasn't yet materialized, and he said it's too soon to say all clear,
which a lot of people have been saying. Do you agree with this idea of a bank walk of sort of assets just kind of tiptoeing out the door over a longer period of time, more akin to the nineteen eighties SNL crisis that still hasn't fully transpired.
Yeah, So I think, look, we've had a shock to the system that takes time to flow through. I don't believe this is a credit crunch where we've just choked off the flow of credit to the economy, but it's clearly a credit cycle, and it's coming also from a drop in loan demand. So I agree we can't assume that we're past sort of these evils lurking around the corner. But I think one of the difficult things here, which is very different from the eighties, is that banks are
now having to contend with sentiment. So think of a bank that's had an equity event, right, and equity investor does not want to own that stock, so the stock goes down, and then like clockwork, within days outflows of deposits because you're suspicious of is that bank where I'm holding my money safe.
So it's a sentiment.
And then you've got bank runs that move at the speed of light, that are electronic now. And so this is all something that the banking system has to contend with and I think will continue to weigh on credit availability and lending for some time.
Ellen when you talk about the bank walk and later this year, does it become that much more sort of pronounced as a result of the FED remaining on hold if the economy is also slowing in a commensurate level. So basically the relative yield that you're getting on those T bills is that much better.
Yeah, So look, I think for banks it comes down to liquidity. And you know, you can look at it one way and say, well, banks are accessing the facility that the FED is put in place, or they might be accessing the discount window. But ultimately the other side is the way I would look at That's a good thing. Banks need liquidity and they're accessing it, and so that alone will help banks work through this.
Ellen. I wanted one fine question.
There's a guy named Gorman, I think it's the first name is James Gorman, and he said a number of months ago something like and he said it with that accent. He's got that, you know, that Australian thing going. He said, with some fury. If they can eat in a restaurant and so they can come to work. I'm fascinated what you see nationwide on back to work. It's a big debate in Manhattan, but are we going to go back to work?
In America?
So we are going back to work?
I think when I've traveled around the country, I find a good deal of regional differences in terms of people that are back to work full time almost full time.
Look, why does this need to be a worry?
I mean, yes, office space for commercial real estate is working through problems resizing. It's more of a Tier B and Tier C market than a Tier A problem. But still, we don't have to be in five days a week. That's not what new work arrangements need to look like.
We do need to connect.
See in a restaurant in Soho. We'll try to ignore mister Gorman if we can. Ellen Zatner with Morgan Stanley working for the James.
Gorman, we've found a bill. She joins us around a tangle. Bamba rhin Hop, the head of USA allocation at Voye Investment Management, Barbara, good morning, Good morning, your bullish Why.
Well, Look, we think there are a couple of things that are likely to go right. Inflation is still going in the right direction. Yields are very supportive but have come off of their highs. That gives the pe multiple for the S and P five hundred a little bit
of wind at its back. But mostly we think that it's going to be the economic data is slowing enough that the FED is able to take their foot off of the brakes and maybe take a break or a pause in their hiking cycle, and that is a very good tailwind for the equity market.
At this point, you've.
Been perhaps painfully along the US over the rest of the world, and this is been sort of a contrarian trade. Is everyone piled into Europe and the rest of the world that's harding to shift around the margins at least this week. What gives you confidence that has staying power and that you'll basically be able to say.
I was right all along, It just took a little bit.
We never say that, Lisa, But nonetheless, look, we think that the US has some really good qualities to it right, So the Federal Reserve was one of the first central banks to start raising interest rates. Inflation in the US peaked a number of months ago. It's on the right trajectory and going in the right direction, if not fast enough for all market participants. But in Europe, think about this, A lot of bad news had been in the price in the.
Fourth quarter of last year.
A lot of things didn't happen, so not necessarily incrementally good news, but the disaster scenario didn't happen. You need things to go in the right direction for Europe to continue to work. A lot of fund managers are indeed putting assets out there. We're seeing asset allocators start to put money overseas. That's generally when the data to really
start breaking your way. If you think the US has an information problem, Europe has a much bigger one and a much stickier one, and their central bank is much further behind the curve than the US is. So at the margin, we think that the US is likely to outpace the rest of the world.
The US to talk place.
Let's be blunt more than anyone we talk to. Voya is America first? Which five does a dollar fold into that? I mean to me the big surprise here. No one is looking for resilient.
Or strong dollar. John dxy A one.
Oh three level BBDXY twelve thirty.
Six, All of a sudden resilient dollar.
Is that part of the America first story?
Well, look, you don't necessarily need the currency going in your direction in order for the US to do well. I think part of it also is the visibility that you have on the US is actually quite good. The US consumer is holding in there quite well, even in the face of job openings coming down in some rebalance in the labor market. So the US just has more strength to it, and we think that's what the margin a relatively good thing.
So you inter meeting with retailer high net worth individuals with Voya and they go, we own eighty five five percent of our portfolios Apple.
What else do we do?
Come on, we all own Apple, and as an outrage, what do we do after Apple?
Well, the good news is when you saw some like relatively good news on the debt ceiling yesterday, you saw some of those other parts of the market that haven't done relatively well start to pick up. So midcaps, small caps, even real estate investment trust yesterday did a bit better.
Exxon is a mid cap in case you're.
Taking announce John, But I would say the thing is if you can see some broadening of the leadership, that is a relatively good thing. But you've had now a leadership across the entire globe, right, So what's been doing well over the past five months has been US tech and European luxury goods, right, So seeing a broadening out of the strength of the market is a good sign.
Just to be glad. Do you expect that to continue that boarding out?
We would certainly hope.
So the inflation data in the US we think is likely to go our way, and we also see that potentially getting through this debt sealing problem is good. I would note if the US economy tends to be too strong, or if the inflation data starts to break higher, that goes right in the face of how we're positioned in our portfolios. But we think at least for the next couple of months, things are going to go our way.
Just to be super super clear and specific here, we know the most crowded triads at least indicated by the Bank of American Film Manager Survey, long tech short banks. Right, are you leaning in the other direction?
Then?
Look, I think you've got to be a real, real brave person to buy the banks at this point. But remember we're top down global, so I'm not making sector decisions, compositioning more in terms of countries and in terms of style tilts. So, but we think that the US is
probably the strongest place to be. I mean, you know, at this point, thinking about the rest of the world, the only other place that I would probably really think about allocating to might be parts of Japan because it looks like it's so cheap and it has a big benefit to it from the currency at this point.
But for US, the US is probably the place to be.
Just to tie this conversation back to what we were speaking about with Max Kettner of HSBC earlier, he was saying, it's not really a sector kind of market, it's and everything on or everything off kind of market. This is why acid allocators are their hair out right now. Are you finding that it's the same thing, but it's country specific everything on in one country or one region everything off in that region.
Yeah, I think it's more regional probably than specific countries. Right these markets can be very thin. When you have narrow leadership, you have to be on the right side of pretty much everything. It's very difficult to go into risk on and risk off positions. You have to really pick where you see the best visibility, and the best visibility for our part is.
In the US right now.
Is big tech sort of a necessary play within that that basically you have to kind of ride the big tech wave, and that's basically what's going to distinguish the US from the rest of the world.
Well, we think that big tech actually did a couple of things right. Also, remember last year all of the layoff headlines were in big tech firms, right, So big tech took a very big view in terms of trying to right size some of their cost measurements for the difficult investment environment that specifically that segment of the market was feeling last year.
So they took some of their medicine early.
And then of course they have the benefit of this whole AI big.
Boom that's going on right now.
So look, could tech take a breather, Absolutely, But I would say that probably the best part of it is the dynamics for them are probably a bit stronger than the rest of because they took their medicine last year.
I'm looking to a small cap United Health Group and everybody keeps talking medicine, medicine, medical health, whatever the sector categories are. Is that part of an American play.
Look, small caps have really been beaten down post sv base.
Small caps have really taken it on the chin.
You probably need to get some of these recession fears off of the table in order to go very long small.
What about medical across small mid and large cap as well.
Again, I can't talk to sectors that we don't invest that way in our funds.
You can't talk sectors.
I can't. I really we invest more so in terms of top down global macro. Look, I do think that there are I can't talk United, I can talk health care, I can talk utilities.
I can talk technology.
I don't want yousar United, but talk to me about medicine, healthcare.
We're all getting older, we are going to work.
Well.
Look at the place.
Look at the cover of the Financial Times. It was all of this morning about you know that you have to right size pensions, public pensions because you have an aging population. If it's not healthcare, I don't know where it is.
That we got the answer to your question.
It took like four questions to get it over.
Sorry, I don't know, Bob.
We'll get tough crowd this morning.
Give us perspective here working with Dana Telsea always as Joseph Feldman, just really quite good Terse Terse reports.
What did you do?
I mean, let's get out front of your research. I need to front run you and Dana this morning. Do you change your view on Walmart with this optimism we're getting in the last hour.
I don't think so.
I think you want to stick with Walmart here, especially in the environment where we're in at the moment, and you know, we're hearing from so many of the retailers that there's a lot more concern about the second quarter, concern about the economy, what it's going to look like in the second half, and for times, Walmart tens to shine.
Data was legendary Bergdorf Goodman as a kid, she was like twelve years old, and if somebody who's caught shoplifting, they had the babysit Danta, you know, for years. Joe Feldman on shrink, on the theft we saw with Target yesterday.
Is there a shrink at Walmart?
Yeah, there's absolutely shrink happening at Walmart. They haven't called it out quite the same way Target has, but you know, all the retailers are dealing with the shrink issue, the theft, organized crime. It's a big deal, and I think it's a big part of the equation for a lot of the retailers. It's a big number, maybe less as a percentage of the overall total sales for Walmart, but the dollar amount might be as high or if not higher, I would think at a Walmart relative to Target. And
it's not just these two. Again, this is a cross retail and the retailers really need to work work with local authorities to find ways to try to stop this because the current way to do it is you have to lock down a lot of products in the stores and it makes it for not the great shopping experience for the consumer. It really feels uncomfortable for those that are not there for theft, they just want to buy stuff.
Putting that aside and giving the fact that this is going to be a policy consideration going forward, there is a question about what period we're in. You said these times that we're in, what times are we in? Are they at one of strength with the consumer having spending power or not.
So it's been very confusing. We're getting lots of mixed signals. We believe the consumer is a bit stronger than most belit may otherwise believe. The reason I say that is you're seeing spending on consumables, household essentials, basic items. People are keeping their food on the table and keeping the
house running. At the same time, you're continuing to see increases in sales dining out entertainment, going to sporting events, travel, all of those service oriented economy is still actually doing fairly well. I do think we're going to see spending slow a bit, broadly speaking, but those pockets of the economy right now would sort of indicate that the consumer still has some money to spend.
Now.
I agree, they're not spending on discretionary goods, and we don't expect that to pick up much this year. I think you're going to see more of the same where and then you could start to parse it out by income level, where the higher income people are the ones that are really spending on the services the load to middle income they're the ones just focus on getting food on the table, keeping the household afloat.
In Walmart's earnings, it's kind of a microcosm of the broader story. At a lot of fronts, you've got people who are downshifting perhaps to grocery, and grocery certainly does account for a significant amount of volume, but the profit really comes from the other areas, and you can see that the margin is expanding there like it is at
other companies as well. In other words, the imput prices that they experience they can pass that all along and then some and consumers will keep buying and buying more than expected. How long can this last that they actually just can increase their profit margins and just expect the consumer will eat the price increase.
I think what we're seeing a lot of the profit margin increase from Walmart and some of the others, it actually relates to greater efficiencies and getting better leverage. And if you look at comparisons from a year ago, supply chain costs through the roof, those have come down pretty significantly, so that is providing some cushion. I think, you know, as far as food and consumables and basics go, Walmart
especially passes things through pretty quickly. So as prices have been moderating, which we're hearing inflation is starting to moderate on that side, they're passing that through.
Joe c Ifa one oh one, you got a single digit nomenal GDP grower. They're bringing pennies down to the bottom line. And I'm joining enjoying a forward view on Walmart of a twenty four multiple. You got to be kidding me, how do you, really, with great respect, how do you and Dana adapt to a twenty four multiple on the biggest aircraft carry in the water going through the water at four knots.
Well, it's a big aircraft carrier that's becoming sleeker. They're doing more with higher margin businesses advertising online. They're transforming there. They're kind of meeting in the middle with Amazon. If you think about it, think about the valuation that Amazon trades at. You know, Walmart has gotten a lot more efficient with their online business. They've grown that they have a marketplace very much like Amazon, which is highly profitable.
They've got more third party sellers coming on. So there's a lot that Walmart's doing to kind of borrow from the Amazon playbook that would argue that they are becoming a more dominant and more important retailer, building their ecosystem in more profitable ways and therefore require or what Warren maybe not require, but Warren's a higher valuation.
Interesting. JII, We've got to leave it that, Thank you, sir. I've found that that's how seafans recruit.
Who does give me information as James bionco president and founder of Bianco Research, who does a really allegic effort here on economics and dovetailing it into the state we're in and then, as John mentioned, there's the debt and the deficit. I read Hail Bronner Bernstein years ago, just the Bible on all the sum of our fears here. How a fear are you of the debt debate?
I'm probably more aligned with Wall Street. I mean, there's two types of people when you talk about the debt debate. There's those put it in Bloomberg terms that Anne Marie Harton would interview, that would tell you there's a forty or fifty percent chance that we're going to default. And then there's the Wall Street types that will tell you that there's a three or four percent chance that we're
going to default. I'm probably in the three or four percent chance that we're actually going to see a default. We're going to see a lot of political theater. And I think what the markets heard from Speaker McCarthy the other day was that the President has appointed somebody to negotiate with him. So that means we're going to get a deal. And I think that a deal is largely expected in the market, and if there was not a deal, that would be the surprise.
So there's a market call to make as well. In that what is your market call around the story.
You mean around the debt ceiling.
Well, if you believe it's not price, then you also believe you acknowledge to some degree there is some risk here.
There is risk.
Do you think that risk is I think, well, I think that risk is really in the short term bill market, and I think that that risk is potentially in the banking system. Remember that treasury bills treasury securities are used as reserves. That's a fancy way saying there are another
form of money, is what they are. And if we were to default on those, we would throw the banking system into complete chaos because their reserves that they use would no longer be worth anything, at least for the day or two or three or however long we didn't pay them. That's the risk that you would face if we were to have a default. And there is a risk out there right now that if this negotiation falls apart. I don't think it will, but that is your risk.
So you've got to use a fancy word, any symmetric risk. If there's a deal, there's gonna be very little movement in the market. If there isn't a deal, we're going to have to reprice the markets.
Then whether it's a problem the FED has a solution. Typically, do they have a solution for that?
I don't think they do, nor do I think they should. This is a political issue, is what this is. We elected congressmen and senators to represent us, and if they're in their infamite wisdom decide to represent us by defaulting on its debt, we'd have to figure that out.
If that becomes a market functioning issue, doesn't the FEED have a role to play?
It does to some extent, but you also have to be careful that you're not undoing the will of Congress. Where where does one and the other? That's why I think that this will get resolved because it is all on Congress. If this happens, if we have a debt default, it is not on the FED for mitigating it.
What's the next crisis? Then? If this gets off the crisis off the table, then what do people focus on next?
Well, I think we go back to focusing on the banking crisis. And I think we go back to focusing on you know, go back to the Senior Loan Officer survey. Do we see lending you know, tighten up and continue to tighten up? And do we see problems then metastasized
because lending is going to continue to tighten. And then I think the other one would probably be, if you know, going with my forecast, do we see a bottom of inflation this summer, and then does the FED come up short of their target and does all the talk of cuts in the funds rate by the end of the year kind of go away?
Do you feel like people are exhausted by the pessimism that they've heard the sky is falling for so long and it hasn't happened, that they're basically tuning it out and basically saying, yeah, yeah, yeah, you've been wrong, which is basically some of the messaging that I keep hearing. How much is that really kind of prevailing?
Oh?
I think it's prevailing quite a bit. I mean, you know, it goes all the way back to the pandemic, when we had the ultimate pessimism we were all going to die, that was what we had for the pandemic, and then we all didn't die, so and then we've kind of recovered it's yell from that. So yeah, I mean, I think there's a lot of frustration. I'll go back to what I said earlier. The markets haven't done anything. So
no one is right, no one is wrong. You know, the optimists are still waiting for the breakout and the pessimists are still waiting for the breakdown, and that this just continues in the frustration continues to build.
If there is no debt ceiling default, right, and we do have that sense by the next FED meeting, and we don't really have a sense of ongoing stress that's really coming to a head in the banking system. How much of a disruptive force would fedbee if they actually did hike rates at the June meeting.
Oh, I think they would be a hugely disruptive force if they If they continued to hike rates, they would exacerbate the bank walk. I mean, this is becoming the national pastime right now, is pullet your phone and brag about your money market fund. It's no longer about a mean stock anymore. And that would just exacerbate that and at higher rates will then definitely filter through in the economy.
I'm county for one that still thinks that rates matter and that if the FED wants to raise I know that's a wild thought, yeah, but if the FED wants to raise rates, it's going to really hurt the economy.
Band was everybody modeling a six percent money market fund I mean, imagine that.
We actually think Lindsay pigs I was talking about a six percent fed funds rate still on the table, even though everyone's taking that off and then triple over cat.
Thank you it's worked out well.
You had a two and twenty payout last year this year, I don't think we're gonna do it. Ralphankaport, you're a CMT. You want to adore Ralphank. I know he was on the show and Ralph said October was the SPX bearmark low. We're up fourteen percent SPX off the Akompoor low.
That to me is stunning.
Nobody's talking about this, and a lot of people missed this lift off this low, didn't they.
Yes, so we've for six months and fourteen percent off the low. But I would also say, if you wanted to back up and look at the January high, we've only retraced half story.
Get me on my story here. Don't give me this technical analysis stuff. Go with the story.
Yeah, you know, the market has lifted off the low, but what I'm saying is it's still well away from the highs and it's been reandering sideways. So you know, I see a market without a conclusion right now in terms of the sideways. It's waiting to see what comes next.
Remember the first time you read John Maggie, this is a textbook, John, written in nineteen forty something. You read Maggie and a support and support and resistance in the bottom line, John is you can make up any story you want.
So I got a story. I'm coming from the October low and the smart guy over here is going no, you got to bring it back further. And it's not that glorious of a story. Technical analysis stock tr by John Maggie.
So my favorite story right now, allow me to share it with you. I can get behind this bill in Washington, d C. There no pay for Congress during default or shut down act. It's doesn't that sound great? Awesome?
Who's a sponsor?
The sponsor Representatives Abigail Spenberger Democrat, Virginia Bran Fitzpatrick Republican Pennsylvania. Love that, Love that. So this is what NBC is saying. A bipartisan bill set to be unveiled today with block members of Congress from getting paid off. The US Center's debt default or if the government shuts down. I think we're all on board, which means one thing. If we're all on board, they certainly aren't down in Congress.
This is revenge of the middle, this is revenge of the sentences. Right, it's revenge of the guys. What are we doing here trying to gain political points in holding the US's future in hand?
Can you get behind that, gym Oh, of course I can get behind that.
I think we should go with when we hit the debt ceiling and retroactively stop paying him.
Since January, I've said all along, just pairm and tee bills, pam T boats.
Pay them in January first, t bulls in January eighth, T bulls.
To do that.
I want leader in the Eurozone debt crisis. They should. They should have been paid in in BTPs and in Greek debt. Pay the German politicians in Greek debt. Thanks quick.
The most important masters Bamberger is x Cia and she won her primary fifty to forty eight percent.
She's in the middle, and that's what the middle of Americas think.
Hey Jim, this is great. Love it you, jimp Boncov Research.
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