Surveillance: Tech Downside with Wilson

you at home. I know. It was from Mike Wilson and Morgan Stanley and it read as follows, Equity markets survived the crucial test of support last week. That suggests this band market Ronnie Tom is not ready to end just yet. How much of a change was that from Mike and a team. This is a pretty substantial change. We're going to dive into that right now with Mike Wilson. Mike John wants to dive into this. I'm gonna I'm gonna talk right now. I'm gonna make some news here,

Mike Wilson, so help me out. The Great Ralph and Kompora was on a while back and he said, look, there was an October bottom. We've heard this from a few other select people with this more optimist to call by you can you call an October bottom? Can we call it the encompora? Wilson Bottom? Well, good morning guys, thanks for having me. As usual. What we did call that bottom in October, and we thought it would be

a substantial rally fifteen twenty percent. We got that rally, and then we decided, well, the risk reward is no longer attractive, and so we backed off of that and we said we'd probably go down and we test those loads at a minimum and probably take it out, which is really based on our fundamental view that you know, the earnings recession is now in place. People acknowledge that, but I think there's a very wide range of how deep that earnings recession is going to be, with us

kind of in the deeper end of that range. Now, this past weekend, we looked at the chart, but we have to be out, we have to be objective about what we see. We're technicians in addition to fundamental strategists. We looked at at the price action last week and we actually talked about it in the week the note the week before we said, like we're going to probably test this level. If it holds it, it'll be a constructive marker at least in the short term, and that's

how we're viewing it now. Time it's a short term positive. I don't think it changes our intermediate term view that you know, the risk reward is still pretty blousy at forty one hundred because of that earnings recession view that we have on the fundamental side. So we remained in the trader's market, and part of our job is to help people navigate that. So it might just to be clear, how different is this call compared to the call for

the tacticle running a mate back in October. Oh, it's very different, John, because you know, in October we were trading thirty five hundred. Of the evaluations were fifteen twenty percent lower interest rates you know, we're higher. We felt like they were going to come down, so we had a lot of canalysts trying to reopening. There are a lot of reasons to believe that that was a very tradeable load, not just for trader types however, people who were in a real capital and it turned out to

be the case. So you know, we don't always get that stuff right. It's impossible to get it right every time. So this is much This is much more tactical. This is just Serve saying, look, we acknowledge that the tactical picture held. We didn't know that was going to be the case, and so you have to respect it. And hey, they could turn down this afternoon again for all I know, given what Jay Powell is going to say this testimony. You know, I have no idea. Maybe that triggers people

to get negative. One thing I will say to you all, however, is that we're pretty confident that between now and the next eLearning season, which isn't that far away, that will be when we think the next you know, bear market kind of decline happens, maybe they a more meaningful decline ten percent plus. So Mike, we can get further down the right in just the moment. I just want to sit on the early part of this year. It's difficult

to get everything you right. You put out a note early in the year and you said thirty nine hundred was an easy sell. What's more difficult about it now? Besides the technical point the of night, Well, I think there's a couple of things you have to acknowledge. I mean that the economic data has been better. You know, Chad's reopening is kind of just getting going, and they kind of held back. They could get they could gather some steam, you know. So those are things you have

to say. Look, I mean, I think people came into this year feeling as if the recession was inevitable, and that no longer is the case. It's probably thirty percent chance and be forty percent chance at best, and that can keep animal spirits alive. The other thing that's happened, John, is we've talked about multiple times, is this liquidity picture from outside the US. So the Fed's doing their job

trying to tighten financial conditions. The problem for them is that we have the Bank of Japan and we have the PBOC adding liquidity, and you have a dollar that's kind of softening up, which is kind of neutralizing you know, the Fed's goals of tightening financial conditions, and that's also kind of breede some life into risk assets. That's the only thing that's changed. Ultimately, we think, you know, evaluations and the fundamentals meaning earnings will determine where stock price

is trade. That setup is now particularly great, particularly to move higher and rates this year given some of the changes that you talked about just now, Mike, how much does that change what floor you could see in your scenario for equities? Well, I mean, look, we have to be flexible when we're trying to you know, also service a lot of different types of clients, right, whether we're talking about trader types or we're talking about asset owners.

You know, for the asset owner or crowd, we've been pretty adamant. You know. We felt like the fall was a really good entry point where people had a longer time horizon and if you added risk there, you probably just stay with it. You know. I do think people that are getting a bit carried away on what they've been buying, Okay, So I think they're you know, given the rally that we saw on the fall versus the rally we've seen this year, they have very different sort

of complexions, right. The rally and the fall was based on we think fundamentals meaning rates coming down, economic data getting better because of China and globally at least that would help the kind of typical type areas of the market. Then we had this more speculative rally that started in January, kind of buying last year's losers, which was all the growth stocks and the meme stocks for everyone to call them, and those are just gotten out of control again, particularly

in the count of types of higher rates. I think there's there's a lot going on right And I think there's two ways to think about. If you have kind of you know, names that you want to own through, you know, we want to underwrite through what we think is going to be a difficult time for earnings, and you say, look, I think there's value in this security for the next three years, Great, you should just own those through that period. However, there's a lot of stuff

that's gotten dragged along here that is wildly speculative. Now in my viewing, it's it's it's actually somewhat reckulous. And that's the stuff that you got to be really careful it's in your portfolio, got to get out of because you know that stuff has gotten revalued in a way that doesn't make much sense to us. What kind of downside could you be talking about? And I assume you're talking big tech names as well as some of the

other meme stocks. Well for some of this stuff, I mean, I mean, I think there's plenty of stocks that are probably gonna go bankrupt, you know, I mean, I don't think that's a crazy statement. But that's not the bulk of the stock market. Okay, So this is a is a pocket of the stock market. And then I would say, but overall, the growthier stuff and the thing that even the cychnicals names that have gone too far now could have as much as twenty percent downs had no problem.

I mean that that. I mean that our valuation work would suggest that even without the earnings recession, right, the valuations are kind of out of bounds. Again. So it's a stock pickers market a lot that we're saying that. You know, that's usually what people say, by the way, when they're having a hard time calling the direction of the market. We do it too. And so you know,

I pays a stock picking market. Well that's hard, okay, So you know that's not an easy game to play, But it is a stock picking market in the stock the stocks that are likely to go up versus down is probably less than fifty percent. It's a stock picking market with not a great you know, macro backdrop. So that's that's a challenge, Mike. I want to go to what I think is the great divide as Tullub says,

the gravity is return of the system. You remember this when you were studying this in an armor years ago. The bottom line is when you get a normal interest rate structure, all of a sudden down the income statement matters divide for us. Now, how you look at those that profit from those that do not profit. That seems to be a new metric. Yeah, I mean I don't

think this is a new metric. I think it's a forgotten metric, which is that you know, your costs sit on your balance sheet until they have to hit the income statement. And you know, this whole idea of a cruel versus cash accounting which we did learn, you know, seems like forty years probably was forty years ago. And you know, I have a history of studying accounting and it's a it's a great tool to kind of see

through the noise. And this is why we know our note this past week we highlighted a great report done by our Goal Tax Valuation team and basically highlighting this you know, spread between cash flow and NETT income that's being reported that's all based on the rules and so it's you know, it ties into everything we've been talking about for the last year a year and a half,

which is the pandemic. The lockdowns basically brought on this incredible period of over earning by corporations because their costs

were slower to increase than the revenues came back. But now we have the exact opposite, which is the companies that you know basically accrued these costs on the balance sheet at a bad time when you know, inflation was running hot and they thought business is going to continue to be that strong, so they it does not actually happen now, and that has to flow through the income statement,

and that will hurt margins. And that's the story. The question is will the markets look through that and suggest, well, we know this as temporary. Ultimately companies get the head around at which we agree with. But our experience is that markets will not look through it if the earnings degradation is as severe as we think it's going to be. Mike, I mentioned that that you see a difference between what could develop in the real economy and what could happen

with earnings. How well received is that with clients at the moment? Mike, well, what investors understand that concept that I didn't invent that so I mean, I think they very much appreciate that kindcept. The problem is that is noisy, and there is this you know, we live in this world now where there's sort of almost like hand a mouth guidance, you know, the Fed, you know, doing it for the bond market and companies doing it for the stock market, and so it's a process that takes longer

than it probably should. And that's what's frustrating, I think for some investors who are in the weeds on this where we are, it's like, well, my goodness, it's pretty obvious what's about to happen? You know. Why is a marketing solong to kind of prices? That's just the way it is, and that's that's not a new phenomena. That's kind of way it always is at this stage. When you get a significant earnings recession, it just takes longer

than than you would think to get it priced. Do you get more questions about single names now, Mike, and what single stock contents do you offer them? We do? But you know, I think most of our clients are pretty good at that job. I mean, they do a good job. That's that's their job. Essentially, We absolutely help them. We We do run amud of portfolio as you know, we've had great success with that. But it's you know,

it's it's a it's a helpful tool. And then we run a lot of screens for people based on our view of the work from a macro standpoint, say, okay, these factor variables should be uh in effect and this is what you want to you know, kind of put in your portfolio. We run those screens, and that's kind of how we go at it. We don't we don't you know, talk specifics necessarily with clients around uh, you know, individual companies as much as you know, say, our analysts

team does, which is really their job. But let's talk about sectors in particular with margin compression. If the service sector, if sector is possibly seeing more perhaps wage pressure, need to pay more to people to bring them in the door than say tech stocks. How do you look at where margin compression is going to be the greatest and what could potentially get hit as people trickle through and realize this new kind of reality. Well that's exactly right. Now.

One of the other features we've just touch on for a second is that the recovery and selfless sort of two stage, right, It was goods first, then services. Normally, in a normal recovery, everything comes back at the same time, so you have the sort of rolling recovery, and now

rolling recession. Tech is intercession right now, I think that's obvious right there, losing uh you know there there, there's there're seeing negative growth, They're they're laying people off, more aggresive in other sectors, and I think the big question for the economy is does that spill over into the services sector, which is where the employment really lives, right, I mean, that's that's you know, small medium businesses and

services come to employ a lot more people as you suggested. Look, we think ultimately this will roll through kind of the entire economy. Services will probably get hit later in the year when other businesses are showing weakness and then we're seeing layoffs there, which and people spend less money. So it's sort of a circular argument. But clearly this idea of operational efficiency is what the market is paying for.

So companies that are showing good inventory controls labor costs as a percentage of costcuts so are smaller, and then capex appreciation is lower. And this word efficiency has been popping up. I find it very interesting. You know, we're hearing it from all different companies. We've been talking about that for twelve months, so you know, people are catching on,

and but we think that it's not over. We think the market will continue to pay for companies that are very efficient with their expenses and can get the revenue to the bottom line. This is fascinating, Mike. Are you saying that in the months to come, the good sectors that perhaps have already seen the downturn will outperform as margin pressures and some of the downturns start to hit the later recovering sectors, namely services, leisure, hospitality. We think

that could be the case. I wouldn't say that it's like a high conviction view, but we do think that a lot of the good sector stocks in particular, and even the earnings forecasts have come down because it's obvious, right they you know, we had to pull forward of demand and so those numbers are written reset the questions when does the demand profile look like for some of those businesses that we're basically COVID winners? Are they are they winners in the long term that's to be determined.

And then services, we do think it's kind a bit for our thing. It's kind of you there's there'll be demand destruction as prices are a bit out of control there, so it's just messy, you know, And that's why I think this our view. We do a lot of work on top down earnings, which we have high conviction, and that way, you know, we don't have to focus so much on trying to call the economy moves everything, which I think is a much trickier, uh you know thing

to do. Calling recession is is very hard because you never know when that light switch is going to go off unemployment, but when it does, it's you know, it's immediate, and it's just there's no lead time. It's just all sud to hit you with the earnings picture, we can see out twelve months pretty good, and that's why we've had conviction there. Well said, is always fantastic to catch up with you, said Mike Wilson, that of Mokan Stanley, Thank you. Dana Peterson doesn't call it Humphrey Hawk, and

she calls it muscle Listen. She listens to every single word two days at running. She's chief economist at the Conference Board. Dana, what I love about your work is its consumer foundation at the conference board, maybe a little business investment as well. You are heated that measured is not fifty basis points, and that we've got a measured FED that will stay measured and stay at twenty five beeps, whatever that path is. Discuss a nuance of a measured

FED versus the jump condition that some are calling for. Sure, I think that a fifty basis point hike is actually inflammatory or would raise a lot of concerns among markets and also consumers and businesses that the FED is losing control over inflation, at least the fight over inflation. So I think the Fed's probably going to opt for more twenty five bases point hikes, probably three more, maybe even more greater than that. Maybe we'll get to something close

to six percent. It's not really clear, but it's really going to depend upon inflation and also the labor market and whether wages are starting to cool at all. And so I think that you know, certainly the FED does not want to cause alarm and will probably go with twenty five basis points in terms of interest rate hikes going forward. Dana, you've got unique visibility into consumer confidence and frankly, consumer spending which is the engine of this economy.

Are you seeing signs of softening materially or not really, Because we are seeing that kind of wage increase, then a lot of people have been waiting for It's interesting consumers are divided in terms of the present situation. They're saying, we are fine. Most of us are working, many of us who switch jobs are seeing wage increases. We may still have a little bit of spending, a little bit of saving that we can spend. We have credit cards

and we're continuing to spend. However, looking at the future, they still say, hey, we do expect a recession at some point. We're concerned about job prospects, we're concerned about the business environment, and we're concerned about our own income. So it's really a mixed picture in terms of how consumers are feeling. How divided is it in terms of

the high income and the lower income sectors? And I ask this as you start to see companies increasingly cater to wealthy individuals who still have more than a trillion dollars of discretionary savings in their checking accounts, that's according to some metrics, and then you have the others who are looking at shrinking spending capabilities. How much do you

see that reflected in sentiment? Sure, it's interesting in the last reading, folks making thirty five between thirty five thousand and seventy five thousand, we're the most concerned about the outlook. And indeed, when we look at what consumers are saying they're going to do regarding spending, they're saying they're not going to by cars or homes, and they're even pulling

back on and expect expectations for going on vacation. And that's really important because that's a harborer of what's going to happen in the services sector, Dana, with all of the uncertainties that are out there. To me, the great divide is the domestic economy versus foreign dynamics. And of course we look at that subdivided into this strange thing called domestic final sales. Does domestic final sales indicate we are near recession? Well, it's a mix again. Consumers certainly

did spend a lot of money in January. They were pulling back on consumption late last year, but then there was a big spurt. But certainly when we look at business investment, that's already starting to roll over and certainly investment in capex structures and the residential investment environment are all weakening. And really the last you to fall is going to be the consumer, especially with respect of purchasing.

So well, this is the Conference Board x Bertise. Do you see the tea leaves there of a consumer that could fail. Well, I think that's the tough part. Our leading indicators continue to signal a recession. Indeed, they say that recessions should be happening right about now, but consumers are defying all expectations. So I think we really need to see the data that's going to come out for February. Certainly, January was a pretty good month in terms of weather.

February was horrible, March was worse, and we'll see if that's born out in the data. Dana Peterson, I love that we're going to codify that. It's going to be in all of our ads going forward. Data February was horrible, March's worst. Stata Peterson of the Conference Board. Thank you. It's interesting to see how the doves have become hawks. This idea that people who had aired on the side of not doing as much are now saying this is

a different scenario. Given the inflation. What's important here is to understand that if you do equities, buns, currencies, commodides, all sorts of good things can happen. And what's great is it any given firm, the guy who's the quote unquote fixed strategist, it's always their fault. Well, you know, if it's equities, okay, you can Mike Wilson, just equities partition that. But if you're a fixed strategist every day,

it can be here fault. Yeah. Even worse, you're supposed to know what's going on at a time where it's very difficult to do so. Ian Steely understands the angst of that very clearly. He is an international CIO four fixed income at JP who work and asset management and

joins us here in studio. And I'm so glad that you are in because I'm really struck by what Robert Holtzman said the ECB, a Governing Council member this morning that he potentially backs raising rates in Europe by two hundred basis points more this year, potentially four or fifty basis point rate hikes. How outlandish is this? How much is this starting to actually gain traction? So he's probably the whole, the more whole kish end of ECB members, but I think they're The reality t is the ECB

have still got the inflation problem to deal with. So everyone over here is well aware that core inflation is coming down alb all bit slower than the FED would like it to be. That's not the case in Europe. You know, core inflation continues to move higher in Europe. The way the mix of core inflation is likely to be calculated over the coming months, it's going to continue

to move higher. So the ECB, who were behind the curve, who were slower to the party of rate hiking than other central banks, is playing catch up, and it feels like they're going to have to have to go a little bit harder. Although I think we need to be clear this is the probably the top end of expectations, the top end, perhaps extreme top end. That said, this comes at a time when so many people have been bullish on Europe. They've seen the surprise of a warmer

than expected winter. They've expected to see perhaps more growth in tandem with inflation. Do you push back against that now? I think that's that's right. I think Europe has you mean, there were big big concerns about Europe last summer, the gas problems and the hikes. I mean the Bundesbank. I think at one point we're saying Germany full five percent GDP, and obviously that hasn't transpired. And now you've got an

environment when Europe's coming out the other side. The gas tanks are much fuller than than was expected come the end of the winter, and people are seeing a really good cycle out of Europe. And again that goes into the problem the ECB's got to deal with. They've got the growth, but they've also got the inflation, and they've got they're gonna have to keep going in coming out of the pandemic. And you've got one of the toughest

jobs at your shop. And that is just simply looking across FICK, across all of commodities, currencies, in fixed income and in such, what do the correlations look like for next year? How predictive or how tight are the relationships

a fixed income commodities and currencies right now? I think what you're going to see is you are going to see obviously we saw a big correlation last year, not just I think probably not just in fixed last year, it was across fixed income, across equities, everything was going down in price. And I think we are going to see a bit of a difference this year because of the huge repricing that we saw last year in fixed income. And then you've got, as I say, some central banks

which are much further ahead. You've got to say the Bank of Canada, who are likely to pause this week. You had a bit of more doubage message out of Australia overnight. You know, the FED there's there's a decent amount of price in now, and then there's the ECB and other central banks, whatever the relationship is. And I don't even want to go in we don't have time

here to go into you know, the fancy talk. But do you assume that the dampening going through two twenty three and twenty twenty four is a normal what's caused, say nodal dampening where we're just going like this, he's in our way along or are we going to see more abrupt jump conditions within the relationships of fixed income currencies and commodities. I think we're going to have a slower journey, or a more smoother journey than we saw last year. You know, outside of the European Central Bank.

I think the central banks wants to slow down the pace of hiking, which is going to bring down market volatility, and then it's going to be a case of later in the year, how high do rates yet? And then we do we have to do some sharp decreases if we do start to see a slowdown, And Lisa, this

is just critical. The extension of the xxis out where people in particularly financial media, we're always like what June look like, and the real question is is what its twenty twenty five look like exactly, especially once you've worked through some of this reset. Going back to this idea of the rate hikes that you're talking about, why haven't

we seen more spread risk in Europe? Why haven't we seen more contagion really feeding through to the peripheral spreads, the peripheral bond yields that typically would blow out in this kind of situation. So I think there's a couple of things there. I mean, firstly, we did see that concern around spread risk in Europe last year, last summer, when we had these big concerns around a slowdown, and as we've come through that and slowdown hasn't materialized. And

economic growth and strength looks better in Europe. People are getting a bit more confidence around Europe, and we've seen that not just in peripheries. We've seen that in credit spreads, high yiel spreads. They've basically come back down to pretty much be in line with where where the US is trading. But I think you've also got a much more joined up Europe than I can really remember, with the recovery plan in place and the coordination that we've seen across Europe.

So it feels that we haven't got that sort of spread risk, the periphery risk that we've seen through previous cycles that we've all come to know over the last decade or so, and if that goes away, then actually there's some decent yields on offer owning some of these bonds, which is fascinating at a time when a lot of our guests come on and they say, you know, perhaps people have overplayed the euro and people are perhaps overseeing what's going to happen with the dollar and the potential

strength later on. Do you push back against that and say, not only do you have upsides risk with respect to ECB raids, but also the strength, the resilience can maintain that. I would say both of those, and I would also add just the flow dynamics. So if you think about what's been the case of Europe over the last decade, negatively yielding bonds, who wanted to invest in Europe, who wanted to buy negatively yielding bonds, Well that's not the

case at the moment. To your Germany now at three percent, you're getting north of four percent across the Italian curve. You're getting seven seven and a half percent across the European high yeld mix. And that's before you even move into into the dangerous world of equities. So I think there's just a lot of demand that will come back into fixed income people who haven't wanted to own European fixed income for a long time. We're un duration, are you then? I mean, you know, on a global basis,

is there comfort in the belly? Do you have to go short term? I'm hearing that you're don't or can you actually be brave like the equity people and extend out duration? So I think you still want to. So we're still playing for the curve to actually flatten a bit further from here. We think there is still concerns that the central banks around the world maybe have to do a little bit more. That's priced, although the repricing that we've seen over the last few weeks has been

very helpful. And then really it's the back end of the curve that gives you that ballast in a portfolio. That's the bit of the curve that will do very well if things go things go badly and suddenly fixed income yields move higher and the cap gains could come from from that part of them. Can I ask, okay, well, you know I'm asking for a friend. Then you load the boat on the ninety seven year Austrian piece right now down down seventy one percent from its peak. I mean,

do you extenduration out seven years? So that that is I think that now is we're looking at it last week. I think that is now at the lowest the lowest price one hundred year bond there. Yes, we did notice that continue, So I think obviously then you've got to take ano account. That's obviously the European curve where they're

most possibly more still going through. From an ECB standpoint, I think in the US, if you want to go out and you look at the ten year part of the curve, and your your four percent, maybe it goes to four and a quarter. I can't see it going a huge amount higher than that. And that means that over the next few years that looks like a decent investment. And I think, you know, but buying bombs definitely more attractive than they were at any point point last year.

And thankfully the rally that happened in January has reversed a bit to give us another opportunity to go back into the market. Don't be a stranger and love to see here in our New York studios, Luke and Ramen joins us up We are thrilled to have her back. Really to begin our coverage of what the International Monetary Fund will be doing here one month out. We're making a lot of good plans out at John Farrell, leading our planning meetings on IMF Spring meetings. Lupa Ramen is

with PIMCO and as well versed on the emerging markets. Look, but let's start with the beginning. To me, there's two ems at the minimum, the frontier economies greatly belieguered and another EM of great prosperity or dare I say could there be three worlds of EM. Which is it. I think EM is extremely diversified right now, and you hit the nail on the head in terms of vibificating the frontier economies, especially the low single B high yield economies that are facing a lot of stress. Some of them

have very large external financing needs. They're having to have IMF programs or other bilateral lines from creditors like the Gulf States and China. And then there is the rest of EM. There is the investment grade portion and the double B portion of the EM asset class. Even there there is a lot of diversification and differentiation, both in terms of the balance sheets as well as how these economies are coming out of this COVID and growth cycle.

Do you look at this as country by country or by asset class or even subsets of asset class, You have to look at all. Unfortunately, I don't think EM is a one size fits all in terms of the framework or model that you need to use, and so you really thinking about asset classes and regions makes a lot of sense right now, as well as countries that perhaps are going to benefit more secularly from the near shoring and structural structural shift that are occurring both in

the global and macro playing field for EM. Luban I was reading this morning all of the rhetorics, the fiery rhetoric coming from the Chinese Communist Party, coming from leaders talking about the increasingly fractious relationship between the US and China. Hear the same coming from a lot of US officials. What's the investment consequence of this, because right now I'm

still seeing a lot of people say Chinese debt, Chinese equities. Thereby, I think the main investment implication from this is to really think about EM in terms of the various centers of global growth and drivers of global growth. For EM as a whole, This fractionalization that we're seeing much moral from the US and China trade relations and geopolitics is really going to be a headwind for many countries within

the asset class. Slow globalization, as the IMF has coined the term, is not a positive for the EM asset

class as a whole. Having said that, there are areas that are going to be growing and perhaps benefiting from this, countries like Mexico, countries like India, many other smaller emerging markets that perhaps have a niche in particular parts of the supply chain, and so for the em asset class, I think the investment implication really is to start from the bottom up and really focus on country by country selection in terms of really thinking about the investment opportunities

that are out there. Specifically with China. I think about Mark Mobius, the emerging markets investor who complained that he had some money in China that he couldn't get out because of all of the red tapes that he had to go through to bring the money out of the country. In your view, is China not uninvestable but increasingly a

fraud investing proposition that perhaps isn't recognized in pricing currently. Well, I think that, you know, looking at the fixed income opportunities in China with the cyclical horizon, you know, we are a bit more cautious given the opportunities elsewhere within the fixed income world as well as within emerging markets. So if you're looking at the level of real rates, really you're getting better opportunities elsewhere, whether it's Brazil or

even Mexico. If you're looking at currency plays, perhaps the CNY is not the best play right now. Given without bound tourism, you may see capital outflows resuming. So I think that from an investment perspectives, there are more interesting opportunities from a risk adjusted perspective elsewhere within em Lipin Ramed of Pimco Lapin, Thank you on em China and

whether It's investable or not. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern. I'm Bloomberg dot Com, the iHeartRadio app tune In, and the Bloomberg Business app. You can watch us live. I'm Bloomberg Television and Always, and the Bloomberg Terminal. Thanks for listening. I'm Tom Keane and this is Plumber