Bloomberg Audio Studios, Podcasts, Radio News, Sweeney with makeup.
I have no makeup, No, as Yard Denny said, I'm not wearing makeup in this hour, mister Yardanny and Studio. A gift for you from Team Surveillance. Dana Telsey on Retail America, Julia Coronado.
I think to be the key thing with the FED is now are they going to raise cut raids? But are they going to do it two? Three, four times? A major mystery.
I'm looking at the WORP function here. Got an eighty percent chance of a rate cut here in December. That's good enough for I think the market. You'll see what they do in the new year.
Futures Futures up eleven now after the CNE squire that we've had this morning, the vix I still have a good print. Yeah, we'll have to see you see if we get under doing a sixteen and Oliver Chen on Madison Avenue Luxury here coming up as well with TD at Cowen right to it for the Interactive Broker Studios for you worldwide.
Lisa Mittego, you said a futures Yeah, advancing on this day after Thanksgiving, but it's an early close don't forget. The stock market closes one pm Wall Street time, the bond market open until two pm Wall Street time. SMB Future is rising a tenth of a percent. Same for Dow futures. Nazak Future is up to ten percent. Over to the yield space a two year three point four to seven percent, that's little change, and the yield on the tenure three point nine to nine percent, and that
is little change. The Bloomberg Dollar Spot Index not much movement there. Bitcoin up about one percent at just above ninety two thousand.
Few stocks to.
Check in with, Alphabet at more than one percent, Amazona up, Amazon up nearly one percent. Black Friday Shopping moving into full swing. That is your Bloomberg business flash. Paul and Tom.
Listen, Materia, thanks so much. This is our Thanksgiving gift to you. And it is not only the question of nailing this bull market ed yard.
Denny lonely, I'm going to give real fan compora.
Joy as well a few octobers ago saying get on board. But it is someone who's taken yell economics and folded it into his strategy for participating in the American experience. No one has done this in the last three four years post COVID, like Edward Jardenny, where ANRETI joins US Center studio today. Are you here just as an excuse before shopping?
Shopping?
Are we shopping?
No?
No, no, no, I came just for you. And not only that, I figured it wouldn't be much of a traffic jam on the Islands ways.
True.
So it's a combination of your requests and as a perfect data commute.
How do you extrapolate? The first question for Global Wall Street is to say your Denny as an audacious call that everyone's catching up to SPX is.
Now fifty three thousand whatever.
What is the ther Denny process to extrapolate out?
Well, I think that what we've gotten right over the past few years is the resilience of the economy, which is then of course related to the resilience of the consumer. And I think I sort of had insight information. I'm a baby boomer and I'm seeing all my friends retiring, and then I'm looking at the data from the FED and it shows that the baby boomers have eighty trillion dollars of net worth. It's the wealthiest generation ever to retire.
Thank you, And you know, I guess some of them intend to spend it all because the kids didn't listen, you know, they didn't clean up the room, whatever. But it's a lot of money. And I also see a lot of my friends helping out their adult kids with mortgage down payments, with mortgage payments and with the kids, you know, after school activities. So there's a lot of trickling down going on, and I think the consumer has been residient. I've also been talking about the digital revolution
with the technology boom. I mean, it was back in twenty twenty that I started to posit that this could very well be the Roaring twenty twenties, and so far, so good.
So far, so good. And on that front, I've told my kids the last check I write is going to bounce, so you get to work. So given that backdrop here, what is your view of this economy here? I mean the labor market. People are little concerned about the labor market. How do you think about that?
Well, one of.
The reasons we talked about the Roaring twenty twenties is we anticipated that there would be a slowdown in the availability of labor. Baby boomers will be retiring, and we also would find that as a result of that, companies would be under a lot of pressure to increase their productivity. And perceived that there are a lot of technologies that existed in not too long ago, in twenty twenty and that we did spotlight that AI could be an important technology.
Never expected it would just come out of the blue in twenty twenty two, but it did. And so we think that technologies are there to increase the productivity of workers. And we're seeing that just even now, I mean, second and third quarters looks like real GDPs up almost four percent each of those quarters. At the same time, the BLS has been reducing the forecasts and anticipation of what
the labor force will be. That adds up to tremendous productivity, which is great for real purchasing power of consumers.
By the way, Edvard Denning with us folks, the celebration is Friday after Thanksgiving.
We welcome all of you. Paul help me.
One PM is equities, yes, two PM bonds.
It's nuts. Why do they do two separates?
I don't know who's in charge of this stuff.
We welcome all of you across the surveillance Nation on all the ways you listen to us on YouTube, subscribe to Bloomberg Podcast, and of course we welcome Bloomberg Television worldwide. A special good morning Jamana PRESETSI in Dubai, killing it on the horizons.
Good morning in the Middle.
East on this special day for America. Futures up eleven down, Futures of forty eight ed Yard Denny with us as well. I want to describe as said, because I think it's important. James Tobin came out of Harvard studying under Chumpaer basically the Nobel Prize is your folks, was a Nobel Prize Chumpaider never got went down to his school in New Haven, Connecticut, and under him was Villain Bouder, Edmund Phelps, a young lady Janet Yellen as well.
Philim and I were there at the same time getting our graduate degrees.
It's just really, really, really austere. In the heart of Tobin and his wonderful eclectic economics of the twentieth century was pay attention to nominal GDP. To me, the great missed call here to bring it over to corporate is animal spirit. Does your bullmarket extrapolation hinge just simply a nominal GDP?
Well, it does certainly a nominal GDP runs profits, and profits run nominal GDP and runs revenues runnues at the top of the income statement, right, And you know profits typically lead to companies expanding their operations in both the labor and in capital. In the current situation, as we just discussed as a shortage of labor, so we're seeing a lot more spending on capital to increase the productivity of labor. And it's all good. Productivity is like ferry dust.
It makes everything better, It makes real GDP better, it makes inflation lower, and so you still get an increased nominal GDP, but it's the right mix.
Let me get one morning here, because Paul's got like eight questions.
With that said, when you look at MAG seven, which you have dealed, they're not under the same microeconomics of traditional corporations.
Are they discuss that? Well, they have.
Some of them have motes around them and it's kind of like game of thrones where you know, whe is rising and another one's falling, and it's a very dynamic situation. But they do account for thirty percent of the market cap of the S and P five hundred, but they also account for something like five percent of the earnings.
Paul, can you see Zuckerberg going cue the dragons exactly?
So, Yes, as we think about what a lot of people have called concentration risk in this marketplace, is that a risk to you? How concerned are you about it?
Well, that's not a concern to me, because these companies are earning a lot of money, and they have a tremendous amount of cash flow, and they also basically have internal investment banking departments where they are able to find small companies that they can leverage up and their businesses. I think it's one of the reasons that smidcap, small and MidCap managers have been frustrated because anytime that they put in the next Microsoft in their portfolio, it gets bought out.
Exactly.
Well, how about for the small and MidCap investors out there? Presumably lower interest rates should help those companies. Is that enough?
I think we can see it in the way things trade. Whenever there's expectations that the federal lower rates, the Russell two thousand that does better. The problem is the Russell two thousand and has what something like forty percent of companies that don't have any earnings. That's a little bit of a problem. But when people are excited and you risk on, they're willing to buy those kind of companies. But my preference is I call them the impress of
four ninety three. Everybody's focusing on the Magnificent seven. There's four hundred and ninety three companies in the S and P five hundred that are going to benefit are benefiting from what the Magnificent seven are creating. These companies the Magnificent seven aren't going to continue to do well unless the products really do improve productivity for the four ninety three. I think that's happening, and I do expect that the market will broaden out.
What is our Federal Reserve going to do here? I think the market's saying December, we're going to get a rate cut. After that?
Not sure, Well, the Fed really frustrates me. For the past few years. Every now and then, I've written that I be more than happy to do what the Fed does for half the price, and my condition is a continue if they allow me to work from home. I would regulation or supervision, just macroeconomic policy. But a year ago when they started cutting rates, you know, they're down one hundred and fifty basis points since September of last year.
I said, I don't think that's a good idea because the economy is doing pretty well and inflation is still above three percent. But they just wouldn't listen to me. They did it anyways, and you know what, the bondial went up last year. Remember they cut the FED funds rate by one hundred basis points. My friends, the bond Vigelanis took it up one hundred basis points.
So Taylor rule with plugins, I can go eight ways here, folks, on the plugins of Taylor rule. I'm going to say this, doctor you Denny, as clearly as I can. With the pandemic and with this original productivity experiment we're working, they're flying blind if I'm blind, they're making I mean, you know with me, Pharaoh Bramo sitting on the set, the fedicides were making it up as we go.
Well, they basically admit admit as much in their fair and their dot plot. In the dot plot, you know, when he asked what is the neutral rates? Oh, on average, we think it's three percent, But then when you look at the dot plot, it's be told between four percent is the kind of range, you guess, So they have no idea what the neutral rate is. I think you have to look at the neutral rate at right post after the fact.
I got one final question.
Kurt Soup is out in Indianapolis for Creative Financial Group and he's writing up these brilliant mistakes you make in retirement tweets Real value ed. Kurt Soup Supe can't say enough about how he gets you thinking.
How is ed? You're Denny saying we.
Should invest if we're all going to live forever?
Well, I think the baby Boomers especially were raised by Spock, and I know doctor Spock has some influence on our mother's but Spock from Star Trek basically told us live long and prosper and that's what we've been doing. So I think, you know, all investors should assume they're going to live long and along the way should let the magic of compounding really make the retirement very, very prosperous.
Michael Barr emails in he's already on the way back to pick up the pieces after the lion's lost.
Ed your Denny ask him about his dog? Did you bring your dog today?
No?
I you know we have four King Charles Cavaliers and Max always likes to take a snooze on my couch in my office. So Max is very, very famous.
I watched the Dog Show yesterday, did you great?
Yeah?
That was great.
Yeah yep, so some beautiful dog shined show.
I forget I forget that.
But it really is true. If you want a friend, get a dog.
I put puppy sweaters from Canines Styles Manhattan yesterday. I had to re mortgage the Middle Child.
Yep, they're expensive.
They are expensive.
It's outrageous.
If you get if you get a dog, make sure you get health insurance.
And short well with Kemelfy. It's hopeless.
Edgar Denny, thank you for joining us today.
Just a real treat Thanksgiving