3 Burst results for "Fx Tom"
Bloomberg Radio New York
"fx tom" Discussed on Bloomberg Radio New York
"The fetish trying to run a more aggressive policy relative to its Central Bank peers, and yet the dollar's going down because there's enthusiasm that people in Europe won't freeze to death and that China is maybe reopening. And so that's providing some optimism around the global economy. The dollars coming down, and guess what, the trade deficit has been narrowing. Neil dutter was absolutely brilliant yesterday from ren Mack, got a ton of feedback. Thank you for everyone that listened to that. It's available online on Bloomberg dot com. Terminal on YouTube as well. You're very fired up about that. Fired up about YouTube about YouTube. It's building. Okay. We got to kill our audience out there. We want to get to FX briefly. The turnaround we've seen in foreign exchange over the last couple of months. So let's take the pound against the U.S. dollar. Known in FX markets as cable. The lower the year, one O three 50 intraday. Got to go back to the 26th of September before that. This morning, Tom, hired a session, one 22. We've gone from one O three 50 intraday to one 22 in just a couple of months. Two cups of coffee brutal. You're a Dolly. You can pick up another currency pair. You're a dollar. Lower the year. September 28th, 95 36. This morning, the higher the session, one O four, 64. These are big, big moves. What we're going to do is dive into this with Jordan Rochester G ten FX strategist, no more. I'm going to ask one question here on how do you not lose money and then John's going to pick it up on the currency dynamics he just mentioned. Jordan Rochester, you, like every adult out there, uses a thing like stop losses. You've been enjoying being stopped out of trades right now. Explain to our audience why it's amateur hour if you don't have stops. Well, I don't enjoy being stocked out, Tom, but is it absolutely essential to your risk management? I think with the FTX scandal, I think the Alameda bragged that they didn't have stop losses. So that's quite clear. What can happen if you don't? But look, what's happening in the markets, Tom, how to avoid losing money here, is the market's looking at U.S. energy prices. They cooled off year on year. That leads PPI, producer price is lower. That leads headline inflation with a lag lower. So it's quite hard to see reasons why the fed would get suddenly more hawkish, especially after chair pals, speech last night, signaling that slow down to 50 basis points. So you had a green light from the fed chair last night to sell the dollar and buy risk appetite. And that's why you've seen the NASDAQ cup over 4% yesterday. In FX Tom, the correlations between foreign exchange and interest rates have really dropped off a cliff. The most predominant fact that's driving everything right now is where global equities are going. So I'm currently long Euro dollar. We do have a stop on that around one O one, one O one 70, but I think that's going to go towards one O 8. I think that's going to be something that could go towards one ten in the new year, because what's happening in China because the low energy prices we've seen over recent weeks in Europe as well, helping boost European production. So that risk on sentiment that you see in equities feeds directly to the dollar. Now, does that famous spider meme Spider-Man meme on Twitter where everyone points at each other blaming each other? FX guys. That's surveillance. We call that Jordan's surveillance. FX guys says equities drying everything empty guys say it's FX. Well, I just, the main point I would say is if you think that this risk can carry on in the S&P 500, it means the dollar is going to continue to weaken into year end. And you'd play that through the Euro. Where does Sterling fit in? Well, we had short Sterling Swiss on because we thought we needed some RV to hedge our sort of risk on position. Startings had been less correlated to the equity market than of a crosses, but you can't ignore that Swiss E is a risk off hedge. So what's happened is we got stopped out of that short Sterling Swiss, not because we had some amazing news out of the UK, but for two reasons, one, everybody agreed with the trade and that always tells you that everyone's positioned the same way as you and two risk on Sterling always does well when the equity markets rally. It's very rare that it doesn't only during Brexit really did we see that change in 2016. So for the likes of Sterling, we think that you could climb towards one 25 by the end of next year and in these markets guys it was seeing big moves in Dolly and for example, for four big figures in just 24 hours, one 25 is not that big of a push to see earlier if we have more good news, but based on what we know right now, it's going to be about slow grind higher. It's hard for me to see any of this other than a big dollar story and everyone else is coming along in rationalizing it in some way or another. I mean, it was pretty much all of the major currency pairs. We're really big gainers in the past month versus the dollar. And are people getting ahead of themselves with this idea of fading inflation and a fed that's going to somehow respond to that. I mean, could this really whip saw in the other direction based on positioning? I think it really could Lisa, but not now. That's a problem in markets. We could have a view about what could happen in Q two or Q three next year. But the markets don't trade that just yet sometimes. And I think the risks are all my leading indicators for inflation in the U.S.. They all point down. There's none of them pointing up. I can't really say, oh my God, watch out for this inflation risk. Look at this chart. They're all pointing to lower energy prices lower inflation. Therefore, you can say it is CPI has peaked and it's quite clearly peaked. We're looking for .3% on the core again, month on month. Nomura was the only team, the economics team in the U.S. to get that number right last month. So if they get that right again and we have another .3 or even lower, it's kind of hard for the dollar to rally. But let's look to next year. We could have in Q two, China's reopened Q three. We start to feel the impact of that in energy markets. And the fed doesn't cut rates. It perhaps. That's the risk. We think they will, but the risks are we have a wave of energy inflation again next year in Q three as energy markets tighten up and demand comes back. And that could change the narrative quite a lot. So right here right now, I don't think we're getting ahead of ourselves. I think the dollar can continue to weaken against the Euro at least. And that should feed through to risk on another G ten crosses. Jordan one reason why I love reading a report is because you've got this confidence metric and you have three out of 5, 5 out of 5. I remember back when you were 5 out of 5. Now you're three out of 5. How much are you seeing a lack of conviction or pulling back or humility in some of the positioning that you're seeing across FX as you sort of sort out all of these uncertainties that are lying ahead? Well, I think there's a lot of uncertainty. What we tend to have in this market is prices moving, make narratives, narratives then drive research pieces. But fundamentals ultimately derive where prices will be right now the fundamentals are that we could perhaps see software inflation therefore we could dollar, but we're getting to yearend and a lot of accounts were sat long dollar for most of this year, including ourselves since February pretty much of the year when Russia invented Ukraine, why wouldn't you be long the dollar? So that trade is still being unwound in certain sectors. And that means perhaps everything we're seeing right now is just position reduction and no one really changing their optimism for next year. For us, we think there's going to be recession risks. Usually when there's a recession, the dollar as well. The problem is we are starting to see signs of early rebounds in European PMIs, for example, China's credit impulse is going up. So there are fundamental reasons why you could see this risk on be sustained. You just need hope to prevail. And we do have risks coming up. We've got OPEC next week. We've got the EU oil sanctions on Monday as well. That's 21% of the EU's oil imports from Russia being sanctioned from Monday onwards. I'm not sure where they're going to get that 21% of their total oil imports from in the next month. So there are certainly risks to this outlook. Johnny, you've got 20 seconds. What are you more confident about your Euro dollar call or England getting past Senegal later this weekend? I'm pretty confident about the young team. I mean, the U.S. gay game was a bit boring. It's like watching paint dry. But what a fantastic Wales game and I thought hopefully they bring that back to the pitch. Jack Grealish be playing more. You ask in a Birmingham boy with a Jack creator should be playing more. I already know what Jordan's going to say. The answer is I'm happy with him playing every game at least in the second half he gets the showing. You know, you got one of the goals as well in the first game of a World Cup. So this is fantastic for Birmingham. And we've got it's not just Grealish now. We've got two Bellingham two. He's a great English is on the edge of Gareth. I mean, he gets in the field and things happen. He's
Bloomberg Radio New York
"fx tom" Discussed on Bloomberg Radio New York
"Noise is exceptionally high right now. And it's really disturbing for a lot of investors. This type of volatility is something that we think you'll see still for the next couple of quarters. I think there's more work to do here before the fed really believes that short rates are offering a positive real yield. I think the thing people really need to focus on the most is how long does the fed keep that funds rate really high. I think the time has come for them to take a slower pace of rate hikes and wait and see what kind of shape the economy is in. This is Bloomberg surveillance with Tom Keene, Jonathan farrow, and Lisa Abraham always. Good morning, everyone. This is Bloomberg surveillance. Jonathan farrow, Lisa oberon once and Tom Kean, we welcome all of you on Bloomberg radio and Bloomberg television, the common theme of the earnings season from industrial America this morning, John, right over to where we are with tech this afternoon is dollar ramifications. Alphabet and Microsoft coming up a little bit later in FX is the brand new excuse available to see. It is worldwide and 3M is taking that opportunity to blame FX Tom. It's a real deal. The dollar is a whole lot stronger. And if you're an international company this year, Tom, it makes a difference if you base here in the United States. It's Lizzie and Saunders with a great chart from Schwab's showing that domestic company outperformance versus multinational and international as well. The conversation Jordan Rochester and George cerebellum that we had earlier, it's just simply not about yen. It's about a holistic thing, the developing economies, the EM economies, and there's real dynamics out there. The rest of the world wants this fed to slow down. The step down. No question a step. The blink now. No more is not looking for that. They reckon 75 for the next meeting, and then another 75%. Do we all agree that you said that we all agree 75, I get it. ECB and that. To me, it's the then what? Well, and then at what point, if they do pause, right, let's say they do a step down, and they get to four and a half percent. Hold on a second. Then what happens then? I didn't say anything. But if they don't say anything, if they don't do anything further, is the further path going to be another rate hike as we heard from Robert tip because of the inflationary pressure. Any call on the fed is at the mercy of the CPI data and we get another CPI print, time and a couple of weeks time. In nature the nation is a huge variance as well and as jumbo vents at earlier and John to stagger to the data here with inflation tied to the yield right now ten year yield 4.16%, the real yield comes back from that one 82 down to one 58. Everything linked together off that key inflation report. And not just in Europe and the United States as well. Some of the time for this market worldwide this year and maybe beyond it to 2023. Let's whip through the price section for you just briefly on the S&P 500 slightly negative through much of this morning. No drama though. We've done about 13 on the S&P with softer by a third of 1%. Yields on a ten year lower negative down 8 basis points on a ten year to four 16 and in the FX market TK. Softer Euro here, just a little bit weaker, 98 63 on Euro dollar. If you were a student of the Midwest and you had parents that were industrial on your college list was the West Point of manufacturing and engineering. It was called General Motors institute now Kettering and never did they know that one of their students would come out to provide leadership for General Motors. She is Mary Barra and Matt Miller brings us to her today. The engineer from the General Motors institute. I'm looking forward to it. Mary, thanks so much for joining us really appreciate it on such a busy day for you. Let me pick up where these guys left off and ask you about the stronger dollar, obviously the lion share of your revenue comes here in the U.S., but you still buy purchase a lot of parts in your supply chain from outside of the country is the stronger dollar, a tailwind for you. Well, I think there's a lot of pressures right now when you look at commodity costs, transportation. It's just one of the elements in that we're facing is not a significant for as it is for other companies just based on our strong position in North America. But we continue to monitor and be impacted by each of these factors. Rates obviously a huge factor as well. We've seen it impacting other lenders. And I'm wondering how it's impacting GM financial. Well, we are seeing GM financial get back to, I would say, historically strong performance. I think we had especially strong performance last year in the year prior due to the strength of use cares pricing that's coming down with interest rates. We are seeing a little softening on leasing. But overall, GMF is performing very well. You know, the CEOs of JPMorgan and Goldman Sachs both this morning have said they see a recession as likely for the U.S.. I'm wondering your view you have a unique position, what's the economy look like to you? How is it unfolding and car sales specifically? Well, I'm going to let calling a recession to The Economist, not my expertise, but what I'll tell you what we are seeing. And we're seeing still very strong demand for our products. We're seeing strong average transaction pricing that we continue to be able to build on. And so we are starting to see inventory build just a little bit, but well below levels that were in the past. So overall, we're still seeing a very strong consumer for our products. And we're watching carefully all the different signs, but right now it's still very strong. But what about inflation and the pressure on margins? I mean, does the stronger dollar balance that out? Are you seeing a big inflation in rise in the costs that you need to pay out for parts and is that sort of squeezing your margins here? Well, we have, yes, we have seen commodities logistics, we work with our suppliers to make sure that we have a very healthy supplier base. So all of those factors, we tend to work to offset. And we predicted this year and be about a 5000 or excuse me, $5 billion impact. And we are seeing that, but we have worked effectively to find offsets and that's part of our overall equation for this year, which is allowing us to still maintain guidance. One big boost is going to be the inflation reduction act, at least UBS says they see the IRA as very generous. They say it has the potential to make the U.S. a global EV battery hub. How do you see the inflation reduction act for GM? Well, General Motors was already investing in North America or in the United States, for instance, we have a battery plant in Ohio that's ramping right now. We have two others, one in Michigan, one in Tennessee that are also ramping. So we were making the investments because we wanted to make sure we had a resilient supply chain after we've lived through so much disruption over the last few years. So as the IRA came into was passed and we're looking now for treasury to set the rules, we think we're very, very well positioned. And we do believe that the benefits of IRA will drive stronger EV adoption with the American consumer. So we think it's going to do exactly what was intended to do. And we're well positioned to benefit and work with our consumers to make sure they have an EV that's affordable, that they can really enjoy the benefits of an EV. Are you still on track to sell a million EVs in 2025 and beyond? We absolutely are, you know, when you look at the lineup that we have starting with the Hummer to the lyric to now the Chevy Silverado EV, we just last week launched the GMC Sierra EV along with the Chevrolet blazer EV and the equinox EV. I think we're going to be well positioned covering the important segments in the portfolio to reach that million unit level by 2025. You do get a huge boost also from big truck margins. And I imagine that helps you to fund the EV business and get towards that target. If we ever recession and you see sales of those big trucks, those big ICE trucks drop, can you continue to fund the EV boost? We very much believe we have a strong enough balance sheet and the strength of the business. When you look at the truck, we have truck leadership. We've had it since 2020 and we just did a major refresh to our light duty full size trucks. We have strong SUVs as well. And now the heavy duties, we just revealed there'll be next year. So we think our product portfolio is going to position us well in the truck market. I would also say midsize crossovers are very strong as well. And the truck consumer, especially the full size truck consumer. They generally are not, they don't shop as many segments as maybe other customers of other segments do. So we think we're well positioned. And obviously we'll moderate based on what happens from an economy in a consumer buying perspective. You know, earlier this
Bloomberg Radio New York
"fx tom" Discussed on Bloomberg Radio New York
"Wages? And right now, we're not seeing the economy going over a cliff. And this is exactly the time that the fed needs to be moving quickly. The economy hasn't sputtered yet, so they need to move, but also they haven't gotten the political pressure on them yet because they don't put a rate is at near record lows. So this is the time to be raising rates to try to stamp the inflation expectations and inflation out of the system. Randy, you're going to throw me out of the classroom, but I'm going to ask the question. I'm going to raise my snarky arm and say, professor krasner, where's the neutral rate? And I say that with great respect because within all the back and forth of all our guests and that, it's when does this become painful, which means through the neutral rate, where's the neutral rate professor? I always knew you were the troublemaker in the back of the class. And you continue to be. That's exactly that's a very important question. And one where the consensus of the fed, what they say is around two and a half, so roughly where they are. But that's two and a half when they think of inflation being down at 2% in the long run. In the short run, when inflation is still very, very high, you still have a very dramatically negative inflation adjusted rate. So two and a half is not neutral right now. In the long run, it might be neutral, but it's still quite expansionary when inflation is depending on are you giving up the Chicago school and joining Adam posen with a 3% inflation level is that really what we're talking about here is we need to adjust the neutral rate higher no, no, no, I'm not saying that the goal should change from 2% and I'm not saying that in the long run they're not, I think they're right about the or it seems reasonable that they are in a reasonable range for the long run. But in the short run, you can't say that two and a half percent is neutral when inflation is 8% and so you have very significantly negative real rate. So there's sort of a long run versus short run kind of thing. Awesome to catch up. Randy krysten is there with the latest reaction to this payrolls report and it really is a wow payrolls report. The headline number 528 K the meat and estimate 250, the previous number revised higher from three 72 to three 98 and everywhere you look, unemployment lower to 3.5% down from 3.6 average hourly earnings year over year, 5.2% month on month 0.5%, both of those, better than expected. And this is how the market responds to it. Lisa said it, good news, bad news for stocks. We're down 7 tenths. I thought we'd be dumb. On the NASDAQ, we're down 9 cents of 1%. And so way much more. Given what we're seeing in the bond market, I can imagine why you think that. Up 17 basis points on a two year on a ten year up ten or 11, that means twos tens, the difference between the two, negative one basis points. Let me just get to FX, Tom. You're a dollar down 6 tenths of 1% of dollar strength out there now. One O one 82. And I think the take from connoisseur over at Bloomberg opinion out on Twitter right now is something we all need to think about. You don't go from 300 to 500 K monthly prints to negative prints in 6 months. If you're worried about a job loss recession, you've got to kick that view to 2023. Now Tom if Connor's right, then I wonder what that means for how far fed funds goes. And I'd throw in Larry summers, which essentially is what Randy was talking about there. Larry summers said on Wall Street week with David Westin last week. The idea that we're at neutral with inflation where it is right now and Tom I'd add in where the labor market is right now. What did he say Lisa to be diplomatic to be blunt? It was absurd. Yeah, it was indefensible. That was the word he is. It's somewhat have to say this morning at least. It sounds absurd. And I would suggest that governor Rosner there was being delicate with his former his former public effort of being delicate about 2% moving on to posing 3% or where maybe where summers is, which is even a higher statistic. John, before we get to Jeff Rosenberg, we have to make the call of the summer, which is pretty a miserable TD securities, is the curve inversion plunges beneath the negative 40 to a negative 43 basis points as well. I'm sorry, John. It's my call of the summer. The 6 basis points deeper can run it down another 6 or 7. So I'm going to run. I'm going to catch up with Rick Reed with black rock in the next hour. Muhammad Ali. My colleague of P Jim and a state amoroso of our capital and we're here from The White House to secretary Welsh coming up Tom. We said earlier on this morning, the story they've got to tell is getting just a little bit better. I imagine they'll lean a little bit more heavily towards the labor market report. Today and maybe away from the GDP. It's so fascinating. And futures negative 32 here now a little bit of deterioration there in the last number of minutes to make sense of this stunning report. Jeffrey Rosenberg joins us portfolio manager of the systematic multi strategy fund at BlackRock. Jeff Rosenberg, let me cut to the chase. How do you do multi strategy with such a shock? It is a bit of a surprise, clearly, you guys have hit it on the head with good news being bad news. And it's surprising, at least strong. And it's a reminder of just how strong the economy is. We're expecting an eventual slowdown. But it's not here yet. And Lisa and I were talking about this, but ahead of time, you know, what is the market do on a big upside surprise? And so the narrative going in here from the FOMC was the Powell pivot. And this is the payroll pushback. And the pushback is they're not going to be able to pivot as aggressively as the market was expecting, post that FOMC. And that's what you're seeing with that yield curve flattening and the big increase in the front end of the race. And then on risky assets and equities, they don't like that because they like the end of the fed tightening. And as Randy crosser was talking about, if inflation doesn't come down, we are nowhere near neutral. And so you've got a lot more fed hikes if you don't have that inflation coming down. Jeff, I've got a bunch of dweeby Bond questions for you, but I think it's important that a large population of our radio and TV audience worldwide don't have fancy financial degrees and they're asking what's wrong with generating 556,000 jobs with the revision. Why is so much good jobs reformation, a bad thing? I just don't get that. Yeah, well, it's about overheating and it's about inflation. And one of the challenges that you have is in this report, you see a lot of signs of that wage inflation. And the wage price spiral that is really the bigger risk here, that you transition from COVID, supply side, disruptions, transitory, to something that's much more persistent. And the risk is that inflation hurts everyone. And if you don't snub it out early, the pain that has to happen later is much, much greater. And so that's why good news is bad news because for financial markets, it means the fed is going