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It is one of the most coveted research notes on Wall Street. We protect the copyright of all our guests. Go to Data Trek Research to get the wisdom of Nick Kolis, where thrilled he could join us this morning.
Nick, I like what you.
Say in paragraph four. You've got a gross polarity between Nasdaq one hundred melt up right now, up one point four percent this morning and gold on GCA printing twenty seven zero five. How can gold be so different from Nasdaq one hundred.
Yeah, fat, It's a fascinating topic. We kind of think of gold as a static valuable asset, and the NASDAK
is the value of human ingenuity. And what's interesting is they're both kind of working right now, and usually it's one or the other, and we're getting both at the same time for different reasons than Nasdaq because human ingenuity is working, you know, the AI thing works and chip stocks are the center of it right now, and gold is working because central banks around the world viewed as a viable alternative to buying sovereign debt in terms of
holding incremental reserve value. So you got both working. But it is very strange.
You are going to write this morning on China going from monetary to fiscal stimulus and what's three days?
Seventy two hours?
I flunked it in seventy two hours, Nicolis, How do you fold China into the American equity market?
Ooh, that is a great questions, So I'm going on. I was just looking at the five year chart of MCCHI, the MSCI China ATF and I'd say anybody who's in front of a terminal should do that right now because MCCHI is trading below where it was five years ago by a considerable margin. So people keep looking for this China trade to finally catch up. Maybe this is a stimulus that against to get us there. We're pretty skeptical at data trek, but I understand why people would want to believe.
So where are we in the announcement of these monetary and fiscal policies. I think Tom and I both kind of godsmacked by how quickly this has been unrolled by the Chinese government. Are we a point at which this seems like something that is remotely investibule or is there still a moment here to kind of pause and wait to see what else might be coming from Beijing.
You know, the central issue with these, with any of these attempts over the last couple of years by the Chinese government is you have a series of monetary and fiscal policy actions, but then you have this very different perspective from government regulators, where yes, they want the economy to improve, but they don't want to give too much power back to the very wealthy or to the corporations.
And that tension has been really damaging for Chinese equity market investors sentiments and until you see the other side of the coin also begin to maybe pick its finger off the scale a little bit. It's going to be tough to bet too much on this term, but certainly you're right that thesepts have been very dramatically, very impressive.
Michael Mobison was with us yesterday and we talked about this moment for small cap stocks. We talked a lot about through the Magnificent Seven and the run that they've had, the level of concentration that we've been experiencing over these last many months. I'd love your perspective on that as well as sort of how much opportunity there is, how much emphasis we should place on small cap company.
Yeah, Mike, Mike. Mike's a great guy. Worked with him all through the nineteen nineties at the old First Boston, so have a lot of respect for him. My view on small caps is you need the stars to align pretty precisely to get the russell to work really well. And we've seen that twice now, just in the last
three or four months. You had that big rip in July and then they fell apart again, and you're beginning to get that rip again now, but it's much more tentative, and what you need to see is a combination of lower interest rates, lower high yield spreads, and a lot of investor confidence in the US economy, and as great as it is to see the chip stops working again, it kind of tells me that the small caps are going to be on the back bench until we kind
of hit maximum investor enthusiasm towards the end of the fourth quarter.
Nick, we're on a street care. We had Michael Mobison yesterday, as David Gerra mentions in iconic credits like Mason on Morgan Stanley. We have Nick Cholis today. I mean, you can't do better than that. And tomorrow folks scheduled Nicholas not seeing teleeb who changed the world with full by randomness, Nick, I want to go to Tulleb's wonderful effort anti fragile. Anti fragility a property of systems in which they increase in capability to the result of stressors, shocks, volatility, noise,
and un see football. Are we is America prospering, Nick Cholis, because we have Telebian anti fragility where we're not afraid of stressors and shocks and mistakes.
I think that America by nature is psychologically anti fragile. Americans are very optimistic people. They don't worry about making mistakes. And they don't criticize people that fail, at least in business. You know, there are always second and third acts in the American society, and I think by nature we are anti fragile. The systems we create might not be, but I think our psychology is deeply in that direction.
And I don't see that in China.
Discuss do you see any of that within in Foreign Affairs magazine A brilliant essay here Rushier Sharma writing it up in others about a Marxist Leninist regime. I mean, that's that's Friedberg at Georgetown, I believe writing on that is Does China have any anti fragility?
Surelie not to degree the US doesn't. I think the US is unique literally around the world. We talk about American exceptionalism as a concept. This is where America is exceptional. Our ability to keep bouncing back from mistakes, try again, try again, try again, until we get something right, whether it be in business or politics or anything else. And I think it's unique to our culture.
Nicholas, thank you so much, greatly appreciated that. With data Track this morning, I got ghostb I got ducky bumps. I mean we got momas and Colas Taleb and Michael Barr All.
For Michael Barr it's the smart one or no particular order.
It's just too much. Nicolas, thank you so much. We need to get right to our guests. David and I can talk all day and monopolize you, forget about it. More important is Rob sank and tying all things together.
It's City group. I want to go to China, and I thought I'd.
Have to wait for at least two cups of tang and senka to get to fiscal support.
It happened in twenty four hours, forty eight hours.
The polit Bureau comes out today and says they will provide fiscal stimulus to China.
What is that signal?
Yeah, and I was like you as well.
I thought this would be drip drip stimulus throughout the year and maybe we get some more in twenty twenty five. This shows that China can move on a dime. We saw that earlier in the cycle when they opened the floodgates a game rid of their zero COVID policy. Now what does it mean? You know, it's good news. It's more than I would have expected. But we'll have to see how the boots hit the ground and how the stimulus impacts the economy. Right now, we have a consumer
there who's very unwilling to spend. Confidence is very low, and the economy has been mostly supported by the external sector. So we'll see if the stimulus is able to lift animal spirits. I think it's good news, but we'll have to wait see how effective it is.
I go back to the conversation that we had in the lead up to the FED meeting last week, and there was the speculation that if the FED were to go big, that would showcase panic on the part of the Central Bank. Let's step back and look at these actions by the Chinese government, by the PBOC, explain to us sort of why they're moving on a dime, why they feel the need to do this, How urgent the situation is in the Chinese economy more broadly.
Yeah, it's a great question, and I think probably they were looking at an economy, as we were, that was at real risk of falling short of their growth target. We recently marked down growth a bit more this year prior to these announcements and growth next year. I know others have been marking down growth as well, and we had seen risk still skewed to the downside and had
not been expecting any type of large simmis. So I think they're seeing the data that's been coming over the last few months, which has been broadly softer than expected, and the soft data signaling even more softness. So I think they got spooked by the data.
Andrew hollin Horst this morning is looking at Euroswissy, along with everybody else on Global Wall Street, the Swiss National Bank, as they did in twenty fifteen X they' say enough with Swiss Frank's strength, we're going to cut interest rates to protect our economy. How does that tie in for our American listeners and viewers to see smb C.
Yeah, I think really what that signals is a that the exchange rate does play a role in a lot of how these central banks think, and as the FED is easing policy more broadly, we think that opens the door for other central banks to ease as well.
They don't have to.
Work's one big global rate cut.
It's one big global rate cut.
J Powell is Good Morning, Bill Rhodes, the Wonderful Bill Roads. J Powell is Central Banker to the World.
Japallis Central Banker to the world, and I think this is going to open the door, especially of the FED, as Andrew's been writing, continues to go more aggressively. That's going to open up the door for these other central banks.
Today they nailed the vector. I mean they nailed it going up. I'm this Hollimar's kid.
First of all, he went to UCLA.
David, what is Colline in Los Angeles?
Well?
Are you kissing a lucky man?
I mean, he nailed it going up, and now he's nailing it going down with a lot of raid cuts to come.
Ron, what are you listening for today? When we get this pre tape recording from the FED share This has been a week a cacophony of FED speakers. Now the big one comes out and gives what I guess we'll each the ten minutes remarks pre recorded as I say, what are you listening for? What it's going to give you? Any indication of sort of where we're headed from those remarks today?
That's great question. I think for this one, I'm not looking for too much because I don't think we've gotten a lot of data that can really move the needle. So I think it's going to sound pretty similar to how the last decision sound and how he sounded during his press conference, But more broadly from the Fed, I'm really looking for, you know, how can earned are they about the dynamics in the labor market. I don't think it's about inflation that much for them anymore. They're not
worried about the upside risk. They said, they're not going to deteriorate much more weakness in the labor market. They tell us the think we think that the labor you know, Andrew's team thinks that the labor market's going to continue to weakend they're gonna have to go fifty again. And they've very told us where that bar is. They sell it in their summary of economic projections.
A little bit.
Five point zero percent is like bigger than down ten thousand.
Well, if you get that high, as as as our team expects, you're going to get a rapid rate cutting cycle. But you know, if the unemployment rate kind of stays near where it is and conditions stabilize, then you're gonna get a more gradual rate cutting cycle. So it really comes down to labor market conditions.
Twenty seconds.
You want to comment on why the yank the Yankees can't get it done.
I've m a long term Mets fan. I don't know if that cancels me on the podcast and why.
I saw walking into the stadium. Lennard's back is really bad.
Yeah, yeah, absolutely, you know, I so on the Yankees and.
That's people on here. That's what I was asking you. I was scared to say. Thursday, Rob Sock, and thank you so much.
Another economic brief, and why are we doing this? We're doing this because all of this market hinges on the economy. She's lucky, she's a Bemo Capital market. So Jennifer Lee gets to throw things in Ian Lingen, who's just wonderful in the fixed income market. She's not on speaking terms with Brian Belski inequities.
Jennifer Lee synthesize for me. You guys at Bemo Capital are just killing it. Lingoln looked for lower yields. Belski has been a confirmed bull. What are you telling them that makes this market move?
So good morning, and thanks for having me on. By the way, I love Ian and I love Brian, who's chippy across. So I mean, obviously things have been not as bad as many econos had expected. You know, we are continuing to stay in that whole soft landing camp, you know, which is helping, which you know Brian is obviously online with as well, and hence he's been a lot more optimistic or still optimistic as well. But again
things are just tapping on the brakes. As I say, month after month, you know, we're seeing slower economic data in general, but totally to be expected, but we're not certainly we're not slamming on the brakes. We've got some decent numbers this morning from on GDP on the UI claims, front durables were okay as well. So again, tapping on the brakes and that's what I guess that's the boat, the best that we can hope for at this point, Jennifer.
For something that we talked about yesterday was how abnormal this moment is, how far we are from what we would consider to be normally when it comes to the economy and monetary policy. And I'd love your perspective on that as well, as you kind of chart out what the Fed may or may not do, how you acknowledge the kind of strangeness of where.
We are, great question. So the strangeness is that after five and twenty five basis points of hikes. You know, the music on me still has to have to take a significant step back again, slowing, tapping on the brakes and all that. But you know, and I'll be quite honest here, I was not in the fifty basis point rate cut camp. I was actually excuming it was gonna
be twenty five. So I won't tell you what words came out of my mouth when I saw the announcement, but I mean I understand, you know, he was saying to Fridcherpowloll, saying, the economy is still, you know, in decent shape. The US labor market is still also in decent shape, so let's just basically give them some It's almost like, I guess, you know, you're kind of on the way to being sick, but you're not really full
on sick yet. So let's give you some medicine now to avoid that being full on sick, if you know what I mean.
Jennifer, give us a clinic. I'm tomorrow at eight thirty. PCE is the Fed's favorite inflation indicator. I get it.
But are we, like I'm thinking Laurence Summers, are we going to hear from PC tomorrow stagflation or some other grand theme.
So that's another great question. So we're looking for roughly like steady ish reading on the deflator, just about a point two percent increased month to month, about two six two seven.
Year of a year.
You know, it's all going to be about focusing on normally I would say, spending, but also the wages and salaries component of consumers, workers that continue to see a steady rise in wages and salar which is I think the most important part of all this, because consumers need, you know, a job, they need steady wages, steady income, just that security to give them confidence for the future. I think that is what is critical. So looking at what people are making on a month to month basis,
and of course what they're spending on. And the last report on retail sales, if I can remember, you know, it wasn't exactly broad based strength. You know, there was actually quite a few sectors that we're seeing that said decline in sales. But even the discussionary edements were a little bit. You know, we saw some up and some down.
Dining out was a flat. So I still think we are still seeing some you know, consumers are still spending, they are still making a decent wage, but there were definitely definitely more cautious on what they are spending on.
Jennifer, let me ask you about the effects of the decision from last week as we look at Switzerland today, perhaps we cast our right a Beijing as well, and what that bank is doing. You may not have gotten the fifty basis points right, I think your nine PhDs did from many hundreds of We'll forgive that, but is this playing out the way that you thought it would. Now that we're in this rate cutting cycle, we are seeing movement and change among other central banks around the world.
So a lot of the central banks, I think, you know, because I think credibility is a huge factor for all central bankers. You may without it, you know, they got nothing right. So I think everyone has been very cautious on moving, especially the Federal Reserve. But now we're starting to see a little bit more I'm certain to thinking maybe a bit more anxiety, only because all of a
sudden we're seeing these fifty basis point moves. I think it was yesterday, it was the Ricks Bank yesterday that said you know that you know they're going to you know, they cut twenty five, but then they said, then they gave lots of bord guidance. You know, we're going to be cutting for the next the other two meetings that remain for the rest of this year, and one of the could be a fifty basis pointer. So it seems
like we're seeing more of that lately. So a bit more a tinge, more anxiety of perhaps just again to cut off the slow down, you know, before it gets off to too much. And then of course with China, the whole series of you know, they're acting almost every day this week, and of course this you know, I don't know how much it's going to help the Chinese economy overall, because it's all about households and consumer confidence
and all that. But I think this morning's news gives us a little bit more hope that you know, that they are going to do whatever it takes, you know, to borrow from Mariod Reggi, you know, to be that to get to that about five percent growth target.
Jennifer, Thank you.
Jennifer le Vemo Capital Markets with us here looking at the economy and the clear message there for me folks, solid economy and you see it with domestic final sales in er.
Vemo report.
With all of his expertise on the Eastern Hemis fear is years in Moscow, and with Ethan Bronner Bloomberg, Israeli Bureau Chief with us as well, with his legacy of coverage an award for The New York Times. Mister Browner joins us this morning from a fractured Israel in Lebanon. Jamana Basacci in her interview with I'man Salaam of Lebanon, their economy minister. Here's the quote from your story Lebanon.
We feel there is a lot of flexibility in the past twenty four hours from Hezbollah's side, discuss that Ethan, is there a Hesbollah that mister Natyaho can speak to.
Hi Tom, I'm not sure, and I'm not sure in fact, I mean this is this bizarre relationship between the government in Lebanon and his Belah right, which is that in the country of Lebanon, the government is less powerful than the militia of his Belah.
So while he says that we have also heard.
Nothing official from his Beelah about desiring to move forward with this ceasefire. And there's another fact, of course, which is that for eight or nine days Israel has been pummeling Hasbollah first with those booby trapped pagers and walkie talkies, and then killing off a bunch of its top people, and then bombing the hell out of a lot of
its launchers a couple of thousand spots. So it may be that his Belah is in the mood to talk, and conversely looks like Israel, feeling on the horse, is not in the mood to talk.
Ethan, the Prime Minister of Israel is making his way to New York to address the UN tomorrow, and we can talk a bit about that and the postponement of that trip. But let me ask you first, if he meets with another world leader while he's here, and that
person says to him, what is the overall strategy? You talk about the explosive devices baked into these walkie talkies and pagers, the bombardments we've seen since then, what is the answer from the net and Yahoo administration about where this leads to, where what the broader military strategy is.
So their view is that these militias like Hamas and his Bela only respond to force. In the case of his Belah a year, don't forget in two thousand and six, they fought a war, and after the war was over, UN Resolution seventeen oh one asserted that Habalah would disarm and move twenty five to thirty kilometers away from the border, with Israel's unanimously accepted.
They didn't disarm, they didn't move back.
In fact, they now have one hundred and fifty two hundred thousand missiles underground and they are right up against the border. So Israel would say, Natagna, who would say, And on October eighth, we had no quarrel with what was happening in Lebanon because of what we was happening with Hamas in Gaza, his Balla joined in the fight and continued to pummel us. And now our goal is to get them back and to make it so painful for them that they cry uncle and move back voluntarily.
That's what he would say.
There's plenty of reasons to think that won't work, but that's what he would say.
Ethan, this is a prime minister who knows how to give a speech. He can command an audience. Yes, and we're going to get one tomorrow in the General Assembly Building on the east side of Manhattan. He'll be fulminating do you expect a defensive speech. Do you expect something different? What are we anticipating. We'll hear from the Prime Minister here anymore.
We'll hear from him once again that Iran the head of the octopus, as Israel views, it has ruined the region, It has undermined the states of Lebanon, Syria, Iraq and Yemen and replace the governments in those countries with militias that are its aspect. And call whether that's exactly true we can discuss, but that's what he'll say, and that this is a dress rehearsal for the rest of the world, that Iran is in cahoots of the Russia, China and North Korea and Israel is holding them back.
Ethan living where he lives, knows that.
You know.
Sometimes interviews are interrupted by reports of corruption involving public officials. He'll forgive us. Forgive us for that as we move forward here, give us just the update on what's been happening in the West Bank. I think you know, as Tom has said, there is so much going on in the region and our focus has been drawn to Lebanon in recent days, But just give us an update on that other campaign. The initial campaign that we saw in the aftermath of October seventh, and we were thinking talking
about just moments before speaking with you. We are approaching here the anniversary of those grievous attacks.
Yes, which you're asking specifically about the West Bank right now. Yes, So the West Bank on October sixth was a place where a couple of one hundred thousand Palestinians were coming into Israel working, bringing back large salaries.
Compared to what they could earn it home.
And there was of course, it is an occupied area, militarily occupied.
It is no fun to be a Palestinian in the West Bank.
But there was not the sense of dread that there has developed since then, which is that their movements are much more restricted. Nobody is coming into work, at least legally, and there is a sense also that there is no future for the Palestinian movement unless there is some lab betwey at Gaza in the West Bank.
That's how they feel there.
Terrific brief.
Ethan Browner, thank you so much as really Israel Bureau chief today.
From Tel Aviva.
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