19 Burst results for "Neil Grossman"
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"We appreciate it pretty solid day out there for the market. We'll take it here on a Wednesday. Let's see what's happening underneath the hood. We do that with Bailey lipschultz he covers all the markets for Bloomberg. He joins us here on our Bloomberg interactive broker studio Billy, what are you looking at today? Yeah, we're seeing strength really across the board with Tesla and Nvidia and Amazon providing the biggest driver to the upside for the S&P 500. Volumes not as light as many would have expected just kind of given a lot of the news flow that we've been seeing one stock to keep an eye on so far this morning has been target pretty ugly outlook pretty choppy results though the stock still is up 2% this morning and is actually leading some strength in peers. Obviously we do have earnings tomorrow from Walmart, so it'll be interesting to keep an eye on that. And then also looking at regional banks, western alliance deposits grew by about $2 billion so that allowing some of those fears around whether there would be another shoe to drop looking at the spider ETF ticker KRE up 5.6%. So trading a pretty high off the pretty sharply off the recent lows, but when you look at it, trading right now around 39 bucks, it was at 44 bucks back in April, and that was obviously well before we had a lot of the uncertainty really around signature and silvergate and kind of first Republican all the others that are no more. Is there enough good news there to say that the regional banks are back and the whole crisis turmoil thing is over? I would never say that. I had to write a story about how they were bottoming out a couple of weeks ago when that obviously was before first republic. I went belly up. So not a lot of optimism, but maybe things maybe the thought is that things can't or shouldn't really get markedly worse again. A lot of kind of dumpster diving or buying off the bottom for investors in a market that still is so fixated on the debt ceiling alongside kind of what the fed will do next month. So we've got Walmart before the first mean I'm sorry, before the open tomorrow, I'm just looking at that stock. It's up 5% year to date up 15% on a trailing 12 month basis. I mean, to me, that's kind of the bellwether for the consumer. You know, I mean, you can get everything from groceries to whatever else you need. It's there underneath the hood. And they are everywhere. So why beaching to see what they say about the consumer and their ability to continue spending? Yeah, and especially because they own Sam's Club, right? So that gives you the comp to kind of Costco and some of that wholesale buying and membership, but also your typical consumer at the stores like Walmart, where, you know, that's where you're kind of normal person shops and it's a stock that on the last 12 months is up 13%. So you have seen it really outperforming the S&P 500 and hanging in there again it is a dividend payer so it has that upside. It does have exposure to consumers, but really fits into that mold of not luxury items, not quite completely discount purchases, but does still have a lot of exposure to apparel houseware, small appliances, electronics, you name it, they sell it. Yeah, no, I always think about Walmart as potentially a counter indicator because if Walmart's doing really well, maybe that means that the consumer is struggling and they're able to kind of pick up market share from the targets. I wonder what else are you looking at today, Bailey? What other stocks do we need to keep our eyes on? BioTech intercept pharmaceutical down right now about 22% ticker ICP tea. This weakness coming after an FDA staff report calling out that their liver drug could cause significant drug induced liver injury. So this is kind of continuing the trend that we've seen from different FDA panels on drug reviews we heard about and talked about over the last few weeks with their gene therapy. Well, this is intercept, this is a company that is looking to sell a drug that can combat some fatty liver diseases and other issues known as Nash. Well, if the FDA is calling out in this panel, documents are calling out that it could cause significant liver induced injury that obviously is not bad for a drug that is bad for a drug that should be helping combat some of those issues so you're seeing intercept down more than 20%. This is a stock that at one point was much bigger right now around a half a $1 billion. So really a shell of itself, but definitely one that a lot of the BioTech investors I talked to are keeping an eye on. Yeah, BioTech space. Wait, it's hit or miss. You're either a rockstar or you're a bum. I mean, the drug either hits, it doesn't. The test either is positive or it's not. I don't know how you do that for a living. Well, it's also tough because you look at it and you look at a company like horizon Therapeutics agreeing to get bought, you look at C gen and green to get bought, so the whole hope for a lot of these VCs and these specialists, these MDs who invest in BioTech is eventually you can get a deal done. Well now we're seeing the FTC striking back and pushing back on some of those deals. All right, good. Thanks so much. We appreciate that. Bailey, liftoff. She covers all the markets for Bloomberg news. Matt, I'm looking at a story here, just bumming me out on my back to work. I don't know. My thing here. Deutsche Bank seeks 40% cut to Frankfurt offices on remote work. So they're going to cut office space by 40% in Frankfurt and by the end of 2024 it said just because more people are working from home and they don't need the space. I mean, I believe that more people are working from home. What surprising to me is that Deutsche Bank isn't saying, well, you guys need to come back. I mean, that's the real question. Interesting stuff. All right, let's bring in our next guest. We love chatting with Neil Grossman. He's a former CIO, a TK and G capital. Neil million ways to go here. I'm just going to start with because we had President Biden speaking a little bit earlier is now shaking hands getting ready to head over to Japan. But he and his friends in Congress, I got to get a debt deal done and my question is, what are we going to get if they do agree? I guess it's just to raise the debt limit and kick this can down the road another period of time. You're very, very intelligent. I think that's most likely because I don't think
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Some slowing in the employment picture, et cetera. And look, I don't know what to do at this point in a general scheme of things. They have raised rates 5% to 5%. And there's a legitimacy to be sent to say 5, 5 and a quarter is not really relevant. I suspect he's going to say that whether they raise today or not, they're now going to start to step back and give it time to see what the effect is. Look, there's always a lag between fed action and results. And you know that they don't want to totally unsettle the economic system right now. So I'm guessing that's where you had. Now, the problem on the other side is if he's going to stimulate a rally in equities and equities are quite interesting right now as well. I mean, if you look leaving aside the banks, in theory, the stocks are actually a lot higher. The banks have been getting killed with the stocks are actually near the highest level in 6 months. But if asset prices continue to go up without the fundamental supporting them, then the system becomes more at risk to unexpected concepts. We had an earlier guest on said just kind of feels a little bit 1999, 2000. I said, oh, don't go there. I lived through that. Herman, are the regional banks expecting the fed and the FDIC and other regulators to kind of increase regulations on them going forward. Is that the expectation for investors? Yeah, the base case is that capital ratios will go up because banks will now need to incorporate the unrealized losses in the available sales securities into the capital calculation, increase the liquidity requirements that went away during the Trump administration for the regionals and potentially higher debt issuance to help protect the capital structure of banks as well. So that's the base case. I think everybody's just expecting that if it gets worse, then that's could be an incremental. Earlier, I pitched to this is me and my pitch to Stevie Cohen. Give me $2 billion. I'm going to buy some regional banks. I'm not sure when, but I'm very close to buying a basket of these high quality regionals, and I'm going to make you 30, 40% in 12 months. Well, you know, you can actually take advantage of the fact that not only are prices dropping, but the volatility is going up in the regional. So you can actually write put options on regional banks or the indices. Let's say 5% of the below the market. And I haven't looked at the prices today, but I'll bet you get paid an awful lot of money for that. So you break evens on this type of strategy. You're probably ten to 20% below market, depending on how far you out you go. Guys, probably we'll be doing that. This is gold. Why don't we start a buffer regional banks buffer ETF? Yes. Exactly, you know? Yeah, we've heard a lot. Those are all the rage right now. They are. All right, Neil, thanks so much for joining us Neil Grossman, former CIO, a TK and G capital joining us here in our studio as is our resident bank expert Herman Chan you might as well just take the seat for the day. Move in Bloomberg interactive broker studio. Herman Chan covers the regional banks for Bloomberg intelligence and has been indispensable for keeping us informed about what's happening in his banking space. We kind of thought it might the worst might be over, but yesterday's actions suggest maybe there's still more to come. We're going to have more coverage all coming up this is Bloomberg. Let's get some company news with Denise Pellegrini. Yeah, thank you Paul and we got this headline just crossing a few minutes ago, big hedge funds facing a 72 hour deadline to report major losses that's according to the SEC. It's that day of course we'll be right here with you live special coverage coming up as things unfold the fed widely expected to hike interest rates that could mean more trouble for regional banks. They got smacked around big time by investors yesterday, and Herman Chan analyst with Bloomberg intelligence says this year's failures, well that has all the short sellers circling right about now. Look, the short sellers have done a great job with what happened with SVB with signature with first republic and the playbook still there. Nothing has changed from an exogenous standpoint from Washington or the regulators to derail the narrative that if you shorted a stock, it could go into receivership. And Shannon with us moments ago here on Bloomberg market shares of Beverly hill based western lines up about 2% today after plunging yesterday. Forward meeting first quarter profit estimates on higher vehicle pricing and increased volumes left its full year outlook unchanged though that's over concern about pricing power and global economic uncertainty, according to CFO John Lawler here on Bloomberg radio. Look, I think all of us can agree that it's unclear how the macroeconomic environment is going to unfold through the year. There's lots of puts and takes that we're seeing. And maybe a lot of puts on Wall Street right now as well, Ford shares they are lower. Hopes of a new Alzheimer's drug, a shot in the arm for Eli Lilly, that stock's higher, new late stage studies shows a lily drug slows Alzheimer's disease and brain disease in this study, it slowed 35%
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"We are waiting some comments from Washington D.C. secretary agenda Yellen scheduled around the bottom of the hour we'll see how that goes when she does speak we'll bring those comments to you. I want to talk about tissue economy. I want to talk about the fed, so I want to talk to somebody who kind of knows what they're talking about here. Neil Grossman, cofounder and former CIO of TK and G capital. Neil, while the rest of us were and adviser to the Norwegian Central Bank. Oh, nice. You actually live in Norway? No. Unfortunately not. You did it from over here. Because Norway's pretty nice. Actually, they usually only invited me to come visit in February. Right. Exactly. Exactly. You can get some, you get some deals there, I guess. Hey, Neil, you know, last Friday, most of us were not here Weird markets were closed. We were celebrating good Friday or however you do that thing. We had another good jobs number. You know, payrolls are still strong, unemployment rate is low. Can you have that and this greatly anticipated recession at the same time? It's going to take time to evolve into what I would guess. The number, by the way, a couple of interesting things about the number, 236,000 jobs, the trailing 12 months was about 342,000. That's the weakest since we've started the real recovery. But if you go back pre COVID, the single strongest 12 month period going back into the 80s was 332,000 jobs over a 12 month period on average. So we're still creating jobs in a sense at a rate that's very, very strong. To get the unemployment rate up that's going to be tremendously difficult. I mean, at a hundred to a 125,000 usually viewed to be at break-even, so you're going to have to go below that to start to push the rate up. Does this fed have the I don't know if courage is the right word. The metal to push through that point because it's going to be painful for Americans and not politically palatable at all. Well, I mean, again, the question is going to be how you balance that with inflation. I think for the most part, Americans would probably tell you that the inflation they've experienced has been horrifically difficult for them. True. But those who, I mean, if you're faced with rising prices are losing your job, I think I know what most Americans would choose. So the question is how far below, first of all, a 125,000 jobs a month is still not losing job, even going down to zero job creation is not fully losing your job. It means, of course, the unemployment rate will be rising. In the background, I think the question is going to be a couple of things. First of all, there is no way to keep adding jobs at this rate unless the workforce starts to expand significantly. You're going to hit a limit where there's just no jobs available. I actually think in the background, this is what could be the fed's biggest problem because if you're not really losing jobs, which are probably likely to find is that the competition for good employees is going to push wages up and that's where the fed, I think, is worried. That's the wage price spiral that they want to avoid. We did just talk with Gina Martin Adams who runs our equities coverage for Bloomberg intelligence. And she said, what we need to see, what investors need to see to justify these valuations is real cost cutting and that maybe we haven't seen enough in the first quarter, corporate America needs to do more in Q two. Yeah, you haven't seen much. And again, the other interesting feature of what's going on is I think people scratch their head why the economy is tended to remain strong, but we've had as a very strong nominal economy for the last several years. And what's been coming down is real growth is real growth because inflation has been going up. We're now starting to see inflation come down, even though nominal growth is coming down that will still support the real number. The real problem is going to come and this is what I've started position for for whatever it's worth. I'm beginning to buy protection into the fall because I think in the fall you're going to see the consequences of falling earnings. What will be weaker growth, not only nominally, but I think you're going to start to see inflation actually rise as we move into the fall. Wait, before we get further into the economics of it, give us the structure of the mechanics of that trade. How do you buy protection? Well, for me, well, first of all, a couple of things that are interesting. And we've talked about this before. What I've been doing for the last, let's say, half a year to year, because volatility is high, I'm very I've been very happy writing optionality and getting paid to take risk. Volatility has come down significantly. So I've started actually by way out of the money puts. And I'll build a structure where I can have a fairly significant size either outright or spread trade designed to benefit if we have a fairly sizable move. I'm not really as worried about a 5 or 6% move. Those are not the type of things that cause problems. You're protecting against a Big
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Conversation with Neil Grossman, former CIO, a TK and G capital. What's your takeaway from the fed's balancing act of where I got to fight inflation, but I've also got a shaky, maybe banking system out there. How do you think he did yesterday? I think he tried to flip thread the line as best as he could. I think the approach to saying, look, we still have an inflation problem, and we're not going to give up on it. It's an important I think that's going to transmit confidence to the market over time. But he also is willing to say a few things. Obviously, he's aware of the banking issues. I think he sort of threw SVB under the bus a little bit. But he was willing to say that some of the consequences not only of what they're doing directly with rates, but the consequences of the impact of credit tightening and other things that are now beginning to flow through the economy are going to have an impact as well. And I think ultimately what they're trying to do is slow the economy sufficiently. To cut demand and that will take pressure off prices. And I think that's what he's hoping is going to happen. I'm going to actually guess that if you watched what's happened to commodity prices in the last few weeks, I mean, oils drop significantly. Some of the others that you're likely on top of the positive year on your comparisons that we're going to occur anywhere anyway that between now and the summertime, you're going to see some of the edge come off of prices and the risk is that they take that as success too quickly. But I think they're going to find that there
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Balance of power on Bloomberg TV, I'll see you then. And we're going to spend some time with Bloomberg's Kaley Lyons coming up along with economist Marcus Andy on the fastest show in politics. I'm Joe Matthew this is Bloomberg. Bloomberg radio on demand and in your podcast feed. On the latest edition of the Tay podcast, a conversation with Neil Grossman, former CIO, a TK and G capital. What's your takeaway from the fed's balancing act of where I got to fight inflation, but I've also got a shaky, maybe banking system out there. How do you think he did yesterday? I think he tried to flip thread the line as best as he could. I think the approach to saying, look, we still have an inflation problem, and we're not going to give up on it. It's an important I think that's going to transmit confidence to the market over time. But he also is willing to say a few things. Obviously, he's aware of the banking issues. I think he sort of threw SVB under the bus a little bit. But he was willing to say that some of the consequences not only of what they're doing directly with rates, but the consequences of the impact of credit tightening and other things that are now beginning to flow through the economy are going to have an impact as well. And I think ultimately what they're trying to do is slow the economy sufficiently to cut demand and that will take pressure off prices. And I think that's what he's hoping is going to happen. I'm going to actually guess that if you watched what's happened to commodity prices in the last few weeks, I mean, oils drop significantly. Some of the others that you're likely on top of the positive year on your comparisons that we're going to occur anywhere anyway that between now and the summertime, you're going to see some of the edge come off of prices and the risk is that they take that as success too quickly. But I think they're going to find that there is
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Council. On the latest edition of the tape podcast, a fed roundtable with Neil Grossman, Priya mizra and Danielle dimartino booth. Some of the frustration with the fed, I think, remains next year because we're going to look for the fed to eat and I think they're going to struggle to be with inflation still high next year. Speaking of frustration with the fed let me bring in Neil Grossman here. And first, let me say, you got to differentiate between how you feel about the fed what the fed should be doing in your take and what you expect if that actually to do. Very fed up by the way. And in a couple of things. First of all, as you know, I don't think they've been hawkish. They barely done anything in the way they should have, because I call it, as you know, infinitesimal incrementalism. They haven't even done one Volcker yet as far as I'm concerned. Paul Volcker raised rates 4% intermediate on a weekend. That would have been something. And I'm sorry for you, but they don't haven't done quantitative tightening either. Letting something slowly drip drip away. After they bought a 130 billion a month for ten years, is not tightening. So I mean, yes, there are effects, but to be honest with you, I would stop tightening now and announce this afternoon that I'm going to start selling bonds at a clip of 50 to a 100 billion a month. That would be effective per se. Now, what are they going to do or not? I'm not going to disagree too much. Other than I think the thing you need to watch or consider is the liquidity. I'm going to push back as hard as I possibly can about quantitative tightening not taking place. Now, there's something called the employee retention credit in the 9 months through November. It injected a 120 plus $1 billion into the economy, so there is still stimulus money running
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Council. On the latest edition of the tape podcast, a fed roundtable with Neil Grossman, Priya mizra and Danielle dimartino booth. Some of the frustration of the bed I think remains next year because we're going to look for the pet to eat and I think they're going to struggle to ease with inflation still high next year. Speaking of frustration with the fed, let me bring in Neil Grossman here. And first, let me say, you got to differentiate between how you feel about the fed what the fed should be doing in your take and what you expect if that actually to do. Yeah, you're right. Very fed up by the way. And then a couple of things. First of all, as you know, I don't think they've been hawkish. They barely done anything in the way they should have, because I call it, as you know, infinitesimal incrementalism. They haven't even done one Volker yet as far as I'm concerned. Paul Volcker raised rates 4% intermediate on a weekend. That would have been something. And I'm sorry for you, but they don't haven't done quantitative tightening either. Letting something slowly drip drip away after they bought a 130 billion a month for ten years is not tightening. So I mean, yes, there are effects, but to be honest with you, I would stop tightening now and announce this afternoon that I'm going to start selling bonds at a clip of 50 to a 100 billion a month. That would be effective per se. Now, what are they going to do or not? I'm not going to disagree too much. Other than I think the thing you need to watch or consider is a liquidity. I'm going to push back as hard as I possibly can about quantitative tightening not taking place. Now, there's something called the employee retention credit in the 9 months through November. It injected a 120 plus $1 billion into the economy, so there is still stimulus money running around out there. Catch more of this and other conversations on today's edition of the tape. Subscribe on Apple, Spotify, and anywhere else you get your podcasts. Plus, listen anytime
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"NHTSA dot gov slash the right seat, brought to you by the national highway traffic safety administration of the act council. On the latest edition of the tape podcast, a fed roundtable with Neil Grossman, Priya mizra and Danielle dimartino booth. Some of the frustration of the fed, I think, remains next year because we're going to look for the fed to eat and I think they're going to struggle to ease with inflation still high next year. Speaking of frustration with the fed, let me bring in Neil Grossman here. And first, let me say, you got to differentiate between how you feel about the fed what the fed should be doing in your take and what you expect the fed actually to do. Very fed up by the way. And in a couple of things. First of all, as I don't think they've been hawkish, they barely done anything in the way they should have, because I call it, as you know, infinitesimal incrementalism. They haven't even done one Volker yet as far as I'm concerned. Paul Volcker raised rates 4% intermediate on a weekend. That would have been something. And I'm sorry for you, but they don't haven't done quantitative tightening either. Letting something slowly drip drip away after they bought a 130 billion a month for ten years is not tightening. So I mean, yes, there are effects, but to be honest with you, I would stop tightening now and announce this afternoon that I'm going to start selling bonds at a clip of 50 to a 100 billion a month. That would be effective per se. Now, what are they going to do or not? I'm not going to disagree too much. Other than I think the thing you need to watch or consider is a liquidity. I'm going to push back as hard as I possibly can about quantitative tightening not taking place. Now, there's something called the employee retention credit in the 9 months through November. It injected a 120 plus $1 billion into the economy, so there is still stimulus money
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Always, let's get back to it. It is fed day and we've put together an all star panel in studio Neil Grossman former CIO of TK and G capital and Danielle dimartino booth CEO and chief strategist at quill intelligence and joining us on the phone. Priya misra global head of rates strategy, managing director of TD securities. We've got the fed coming out with our statement of 2 p.m. Wall Street time, a little press conference two 30. Michael McKee's down in D.C., he flies. I tell him to take the acela, but he flies down to D.C.. He likes. He likes getting the points, I think, is kind of what we're all about. Wait, you know what? Did Daniel Mark, did you work with Priya? Did you guys wear you freshman together at yeah, I was saying this year in the break Priya that when we were both starting out in the industry when we were teenagers and you were at Bank of America and I was at the fed that you were one of my closest contacts. So it's good to be on with you. I've enjoyed lots of Ed conversations with Danielle. So let me ask you about something that Danielle mentioned during the break, which I wasn't really thinking about. But all of the big hawks on this fed are rotating out and they're gonna be replaced with either doves or cash carri and like who knows which way he's gonna go depending on the politics. But what do you think that means for February 1st? Are we gonna see another 50 basis point hike after this or are they gonna step down to 25? Yeah, and the market I think was about 50% priced for it. I think it's actually fair because we've had two CPI misses. So we get another week CP and other point to a .3. I think they can step down. I do think then they can keep going at 25 for a few more meetings. But it's interesting. I think the divisions at the fed will sound less unified. And whether it's because of the rotating members to your point or the fact that I think inflation and growth will point in different directions next year, much more than this year. This year it was one trade at high inflation. So they were all very unified. But next year is inflation goes down, but not all the way to 2% and growth starts to slow down in the labor market more importantly starts to weaken. I think you'll see the fed sounding a lot more divided. And the voting members won't help either. So yeah, I think it's going to become a lot harder to call the fed next year. When do they stop? When do they ease? What happens to QUT? And the fed will sound, I think, more divided on this. Danielle, we've got a function on a Bloomberg terminal DOTS the whole dot plot thingamajig. I don't know what the heck it means, but it looks like it's going down starting in 23. Does that make sense to you? And again, as you raise the issue of the makeup of the fed, does that make sense to you? Hang on, the dots, median rises in 23. Settings on your oh yeah, after 23, then it goes down to 24 and 25. Right. Yeah, and I think what you could actually see today in the dot plot is that some of those dots might move down in 23. So you might see a shift onto the Devi spectrum in fact, well, I'll be looking for today is maybe the widest disparity that we've ever seen to Prius point. It's going to be much more contentious. I think that Powell is going to be facing multiple descents. One of the things that has been on his side, which has been surprising to me, given John Williams came from the San Francisco fed and has traditionally been a dove, is that John Williams has been so loyal to Powell throughout this, and I think that's going to be critical next year because between bar at bar being one of them, Williams, Powell, and Waller, he's not going to have that many more voters. In his camp, we forget that Powell suffered full blown mutiny in the very end with not a single person until Wayne angel changed his vote back years and years ago, but I think it's going to be a much more contentious fed and I think the dot pots are going to widen out a lot. What do you think, Neil? I'm looking at four 62 right now in the dot plot. So basically four 75 is the upper range. And I'm going to take the other side of that that Danielle. I think they're going to four 8 or 5. Well, I think that's possible, but I think the other interesting question is going to become, again, it lower the ultimate peak rate, the longer I think they're going to end up having to maintain that level because I think again, it's going to become a question of sort of tug of war between the stimulative effects of not doing enough and the potential impact on prices. And their ability to ultimately push prices down low enough. Again, one of the things you might ask yourself is we just went through two years. Well, as of next month, we'll have gone through two years over 7% inflation. So we've already started a process of wave process of pushing the consequences out. And so if it's going to take you, for example, you're hearing people talking, we'll get to 2% at the end of next year. I find that hard to believe. But if it takes 5 years or 8 years to get you to 2%, it's very different than if you can get to 2% say in two and a half years. And keep in mind, mister Volcker, even with 20 some odd percent rates, it functionally took a generation to get to an ambient level. A lot of them. I mean, I put together a Ford F one 50 and I'm looking at $90,000 for an American pickup truck. That's just not, that's the most repossessed vehicle in America, and it's the 21 and 22 models that they're repossessing the most quickly mats. Yeah, because everything has big payments and they are a friend who goes to auction if you're ever interested. Yeah, I'm definitely interested. So I'll tag along. What do you think? I mean, the terminal rate, I guess, is important. And I think Neil brings up a great point. If they don't get higher, quick enough, they're going to have to be stuck at their relatively low late rate for longer. Right. And I do think that next year, despite the market really begging for the fed to ease, I think they're going to sound very resolute and not ease or even push back against some of the market pricing of cuts. And I wonder, I hope Chappelle's asked about that if you can lobby in a question to mister McKee to ask about the rate cuts is a market in the last month has priced in a lot more rate cuts in late 23, 24. And while I think they're going to have to cut in 24 because the unemployment rate will rise a lot, I struggled with the cuts in 23. Now on the dots, I think the media is going to move up for 23. It's a fair point that I wish we had a mid 23 dot because that would be a clear median or to clear estimate of terminal, but we don't have a mid 23. I
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"We appreciate it. Thank you as always. Neil Grossman former CIO of TK and G capital management. He's here. Danielle dimartino booth quill intelligence. She shared in our Bloomberg interactive broker studio. Second segment with these folks because when we get them in a room, we gotta get as much out of them as we can. So Danielle, are we going to do a recession here? I just had a bunch of transportation companies saying, they don't see it. But boy, everybody else seems to see it. Well, it's ironic that you say transportation companies because truckers are going out of business at the fastest pace since 2018 right now. And transportations in a pickle. But no, I don't think that there should be a debate anymore about whether or not we're going into recession when the conference board queries CEOs and 98% of them say that we are almost in a recession and thereby, you know, therefore they are in cost cutting mode, I would point out that the ISM services survey that just came out a few minutes ago showed that employment actually contraction last month. So if the employment caboose is finally going to come into the station, I mean that's the final nail in the coffin of the recession debate. I'm confused, Neil, when it comes to what you're actually supposed to do in this environment in terms of the trade itself because it kind of felt like the bull case for the equity market and arguably for yields as well was the idea that the terminal rate would stall out at 5% and that was going to be the peak policy rate. But it keeps kind of shifting higher and higher every couple of months. So it kind of feels like there's this consistent upside risk that just doesn't go away. What do you trade in that environment? Well, a couple of things right now. I think number one from a dollar perspective is probably still raises the strength of the dollar at least in the short term. You're seeing, for example, commodities come off today, I think, probably commodity prices have some pressure, which of course is what they what they want. I've been having a rougher time trying to figure out what I would do with the yield curve. I'm looking for a point where I can actually put on a yield curve steep in her. I think the long end of the yield curve is still too low. But you're still fighting with the adjustment at the front of the curve. And from a broader perspective, what I like in this environment, I use, I use optionality because I think with higher volatility prices, even though we have had the haven't had the explosion in volatility that you might like to see, volatility is still high enough that you can put on trades with very, very favorable break-even. So that's sort of what I've been doing. Hey, Daniel, you know, I'm a simple equity guy, and I get the inflation talk. I get the recession talk. I think I've got that. What else am I missing? What's the thing out there that you think maybe investors or people in general are just not talking about enough or thinking about enough? So I think what is getting left behind is any talk or discussion of what's happening in the credit market. You've seen rates volatility. The vix is subdued. Yes. It's buried under a rock. But rates volatility viewed through the move index has just gone ballistic. It's at the highest level since 2007. And it's basically saying there's a credit event lurking out lurking out there and we forget that in 2018, the last time we were trying quantitative tightening that it was a credit event that actually bled through into the equity market at around this time of the year heading into Thanksgiving in the holidays that caused that Christmas Eve sell off in 2018, which by the way prompted the first Powell pivot. Yes, that's right. That's right. So Neil, I mean, again, I'll put it to you. What am I missing? I'm a simple guy. Well, it looks like. Let's go two things for going back. Let's go back to the fed for one moment. There are two things they're watching, employment. And inflation and the employment one is beginning to rise in priority because the unemployment rate is so low. You have to understand, if you went back in history up until COVID and what happened afterwards, the single highest 12 month average job creation was about 330,000 a month. Even after last month's number, we're still at 451,000 a month. So, and historical basis, the general view has been that a hundred to a 150,000 is a static employment market. Now, we have a very low participation rate and so if you can get a large jump that would help bring push up the unemployment rate. But if we're not going to get that to get a four and a half percent unemployment rate, which is talking about is going to take a lot of work. And even that, well, you just have to look at the numbers. It may happen next year this time, but it's not going to happen easily for 6 months. You're going to have to lay off. You're going to have to have losing jobs 200,000 a month for 6 months. Net, to get there. So I'm going to push back a little bit. If you look into the weekly jobless claims data, which appears to be benign on the surface. You'll see that in early September that jobless claims nationwide were down 49%. In the subsequent weeks, up until this morning's data, now they're down 23%, continuing claims bottomed out in early May. They have continued to quietly march upwards, continuing claims this is the one that you should follow more closely because that's people actually week after week collecting unemployment insurance. So that's an early May, low point. I think there's an unemployment rate shock building in this system right now. Just what the economy needs. All right guys, thank you so much for spending this extended period of time with us. We really appreciate it smart discussion. That's what we try to do here. Neil Grossman former CEO of TK and G capital and Danielle di martino booth of quill intelligence both in the Bloomberg interactive broker studio. They are not mailing it in so you guys, you get gold stars here. All right, let's head down to Washington, D.C.
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"The Bloomberg interactive broker studio in New York City to our worldwide audience. We're going to have a big opening half hour for you. We're going all Federal Reserve all Bank of England. We're going to do it on a round table with Neil Grossman former CIO, a TK NG capital. He's going to join us also Danielle dimartino booth of quill intelligence. They're going to be both of them in studio and we're going to be talking the fed, we're going to be talking inflation. We're going to be talking about a recession and what it means for these markets. So all star roundtable coming up. But first, let's go to John Tucker and get a Bloomberg business. All right, Paul, thanks to the S&P 500 dropping for a fourth consecutive session. Ten of the 11 industry groups and the broader index they are lower right now, being led by tech, information technology, communication services, there is some green energy is actually the best performing group right now. Well, of course, a day after the fed decision to deliver another jumbo sized industry rate increase traders of betting rates will now be held at a higher level for a longer period to not down inflation. You look at the swaps markup rates for swaps that reference future fed meetings rising further with the May and June 2023 contracts indicating that expected peak rate of around 5.2%. Economists Caleb Pickering at barenberg says short term gain from the fed, the pain for the pitch short term will lead to longer term gains. Fed is seems to be determined to bring down inflation. This is actually a short run problem for markets, but probably I think over the next few weeks it becomes something that helps us a little bit. The two year yield right now up 7 basis points four 69. The ten year yield, that is a 5 basis points four 15 right now, the spread between the two, a negative
The Trish Regan Show
"neil grossman" Discussed on The Trish Regan Show
"Interestingly enough, speaking of economists that tend to have political views, you've got Larry summers out there, and now I'm going to play for you some sound he's at it, Aspen, just a few days ago at the festival there. Basically saying, what the heck happened? We had it going well. And then this. Here he is. We basically had inflation under control for 40 years, despite the fact that the price of oil fluctuated despite the fact that there were all kinds of supply shocks. We lost the thread along with many other countries about a year and a half ago with massively expansionary policies. Okay, so there you go. It's what you're saying, right? They just spent too much money. They lost the friend in my view a lot longer ago than 18 months. This is interesting, explain, explain. Look, the Central Bank of the United States is not a Central Bank, or it wasn't, and it's coming back to maybe to home. But it became a central asset manager. The basic premise became making sure asset markets were supported and bailed out more than anything else. This fed and will even misses Yellen. If you went through a normal risk return analysis, you cut off half of the probability distribution that's wrong. You're always going to be right. You think. They didn't want to consider the consequences. And when you overlay reality in the probability distribution and have to acknowledge that there's a risk, you take policy action earlier to address those potential risks. You've got, you know what? I call it ostrich economics. They stuck their head in the ground. Prayed it would go away. And all it did was get worse and they kept, you know, they came up with acronym or added J after our transitory was just a bad answer. I know, but it was a big word, though. It sounded good.
The Trish Regan Show
Investor Neil Grossman Reacts to Larry Summers' Latest Comments
"Interestingly enough, speaking of economists that tend to have political views, you've got Larry summers out there, and now I'm going to play for you some sound he's at it, Aspen, just a few days ago at the festival there. Basically saying, what the heck happened? We had it going well. And then this. Here he is. We basically had inflation under control for 40 years, despite the fact that the price of oil fluctuated despite the fact that there were all kinds of supply shocks. We lost the thread along with many other countries about a year and a half ago with massively expansionary policies. Okay, so there you go. It's what you're saying, right? They just spent too much money. They lost the friend in my view a lot longer ago than 18 months. This is interesting, explain, explain. Look, the Central Bank of the United States is not a Central Bank, or it wasn't, and it's coming back to maybe to home. But it became a central asset manager. The basic premise became making sure asset markets were supported and bailed out more than anything else. This fed and will even misses Yellen. If you went through a normal risk return analysis, you cut off half of the probability distribution that's wrong. You're always going to be right. You think. They didn't want to consider the consequences. And when you overlay reality in the probability distribution and have to acknowledge that there's a risk, you take policy action earlier to address those potential risks. You've got, you know what? I call it ostrich economics. They stuck their head in the ground. Prayed it would go away. And all it did was get worse and they kept, you know, they came up with acronym or added J after our transitory was just a bad answer. I know, but it was a big word, though. It sounded good.
The Trish Regan Show
"neil grossman" Discussed on The Trish Regan Show
"It's amac, the association for mature American citizens. You can go to a Mac U.S. slash Regan if you're watching this as opposed to listening, which I also hope you are listening on Apple iTunes or on Spotify sign up for both if you would. It's really important. If you subscribe. But if you're watching this on YouTube or on rumble, aim act U.S. slash Reagan. It's on the screen. I'm also going to include it in the show notes. It's just $16 a year, and you get access to all kinds of opportunities. And importantly, all that money, you're $16, it's joining forces with roughly 2.4 million other Americans who care passionately about our future as well. And so amac is working to make sure we have leaders that are following responsible economic policy, something you know, I so much believe in. And I'm so committed to because I want to make sure that we have a country that's economically secure, as well as physically secure in the future. So go to a Mac, also make sure you get a locals because we're going to do this live event. I don't think inflation can be tamed and I think it's going to result in scary times ahead. I wanted to introduce you all some of you may already know him if you've listened to my podcast in the past. I wanted to introduce you to a dear friend Neil Grossman, whom I've known for many, many years and as I like to say a real renaissance man probably the only person I know that has this combination of mathematician trained mathematician trained physicist, former corporate lawyer, former hedge fund founder. Oh, and by the way, let me add in current vineyard owner, Neil is basically done it all and is truly one of the smartest people. I know. So I wanted to have him share a little bit of his expertise with you when it comes to these markets Neil. Always good to see you. Thanks, drew. I wanted to get your feel for where we are right now, where this market is right now. And where we're heading, what do you think? Well, let's go. We've talked about this. I think there's a short, probably medium and long term. Short term, I'm still quite negative. The extraordinary appreciation of the dollar combined with weaknesses and many of the economies around the world are telling you that the major American multinationals have some real significant risks and still left on their earnings, which you can put significant downward pressure. So what does that mean for this month? And we're going into October here. Early October, what is me? Well, I think in the next month, because earnings are just about to start. I think it's very important to understand before we get to some of the technical issues. I don't think the mindset of investors has changed enough. With the change in what the basic structure of policy is, and I think part of the problem is that there's going to be an awful lot of pain that's going to force people out over the shore room and they begin to realize that earnings projections are way too high, combined with higher yields, no matter what. So it's going to be an ugly October. That's my guess. And so where we go, I've been looking probably to test 3000 to 32 50. It depends on the S&P if you think about it, if earnings come down from where they are by about 15%, which would put them, I think, about $200 a share. I think current earnings projections are 15 times. That gets you to 3000 type of target. Our equity markets are still tremendously concentrated, right? The big companies represent so much of the market cap. And they're the ones who have been much more resistant. The significant price deterioration you've seen elsewhere. So if they're forced to normalize lower, that that presents a significant amount of risk. Think about what's happened over the last however many years, fed has just always been there ready willing and able to help in any way that they think they can. And it got so excessive. They told us for so long and I want to play some sound for you of Janet Yellen to her credit. She admitted she was wrong, but they sat there with a straight face and they told us that inflation was transitory, you and I knew better. But here's Janet Yellen admitting she was wrong, listen. Well, look, I think I was wrong then about the path that inflation would take as I mentioned there have been unanticipated and large shocks to the economy that have boosted energy and food prices. Administration didn't love that, but at least I credit her with being willing to be honest on that. Because she hasn't always been. Right, but she missed what's at least 50%, if not more of the problem. Yes, look, I'm not going to say COVID didn't have an impact on inflation a day. And I'm not going to say Russia didn't have an effect, although Russia did not actually occur until inflation was 7.9%. By the way, we're still above 7 9, but only a smidge, but glaringly absent was the concept that the Central Bank of the United States poured liquidity in unprecedented amounts. Followed by a fiscal stimulus package after package that actually added more liquidity to the system probably to the fellow reserve and the combination was toxic and inflammatory. And so there was a enormously contributory contribution coming from the government itself. From the interestingly enough, speaking of economists that tend to have political views, you've got Larry summers out there, and now I'm going to play for you some sound he's at it, Aspen, just a few days ago at the festival there. Basically saying, what the heck happened? We had it going well. And then this. Here he is. We basically had inflation under control for 40 years, despite the fact that the price of oil fluctuated despite the fact that there were all kinds of supply shocks. We lost the thread along with many other countries about a year and a half ago with massively expansionary policies. Okay, so there you go. It's what you're saying, right? They just spent too much money. They lost the friend in my view a lot longer ago than 18 months. This is interesting, explain, explain. Look, the Central Bank of the United States is not a Central Bank, or it wasn't, and it's coming back to maybe to home. But it became a central asset manager. The basic premise became making sure asset markets were supported and bailed out more than anything else. This fed and will even misses Yellen. If you went through a normal risk return analysis, you cut off half of the probability distribution that's wrong. You're always going to be right. You think. They didn't want to consider the consequences. And when you overlay reality in the probability distribution and have to acknowledge that there's a risk, you take policy action earlier to address those potential risks. You've got, you know what? I call it ostrich economics. They stuck their head in the ground. Prayed it would go away. And all it did was get worse and they kept, you know, they came up with acronym or added J after our transitory was just a bad.
The Trish Regan Show
Investor Neil Grossman Predicts a MASSIVE PLUNGE
"Always good to see you. Thanks, drew. I wanted to get your feel for where we are right now, where this market is right now. And where we're heading, what do you think? Well, let's go. We've talked about this. I think there's a short, probably medium and long term. Short term, I'm still quite negative. The extraordinary appreciation of the dollar combined with weaknesses and many of the economies around the world are telling you that the major American multinationals have some real significant risks and still left on their earnings, which you can put significant downward pressure. So what does that mean for this month? And we're going into October here. Early October, what is me? Well, I think in the next month, because earnings are just about to start. I think it's very important to understand before we get to some of the technical issues. I don't think the mindset of investors has changed enough. With the change in what the basic structure of policy is, and I think part of the problem is that there's going to be an awful lot of pain that's going to force people out over the shore room and they begin to realize that earnings projections are way too high, combined with higher yields, no matter what. So it's going to be an ugly October. That's my guess. And so where we go, I've been looking probably to test 3000 to 32 50. It depends on the S&P if you think about it, if earnings come down from where they are by about 15%, which would put them, I think, about $200 a share. I think current earnings projections are 15 times. That gets you to 3000 type of target. Our equity markets are still tremendously concentrated, right? The big companies represent so much of the market cap. And they're the ones who have been much more resistant. The significant price deterioration you've seen elsewhere. So
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"In Hawaii Miller's here. Yeah, yeah, I'm all you got left. I'm your only choice. Greg Jarrett, thank you very much for that. Now, what? And amazing, what an insane, what a painful print. On CPI year over year, 9.1%, who better to bring in than Anna Wong. Chief U.S. economist from Bloomberg economics joins us now to talk about this. And first I want to get your take on how the fed is going to react. I mean, I thought a 75 basis point hike was a lock already, but is it possible they go a hundred? Yeah, so from that, it really depends on what the market is going to do in the next couple of days, right? If the market is going to price in 100 bps and the fed does a 75 tips, it would be almost like financial condition even when they do do it. So and also we just saw the bank Canada out rates by 100%. And our inflation problem is worse than their inflation problem. So I do think that today's ugly print does make a case for the fed to have to go back. And I think both bank of Canada and fed policymakers have internalized the lessons from the 1970s and 80s, which is that when you perceive that inflation expectations are a boring or kind of shaky or getting there, you want to bring down the hammer and the hammer means 100 basis points. And I'm just talking to Matt here on our very personal IB Jack here talking about what you just said, but it depends on the markets. It's interesting because we're talking about how much of the work when it comes to easing inflation, easing pressure has really been done through market expectations, but to hear it say that it's actually almost entirely doing the fed's job. That the markets are leading the fed that the markets tell the fed what to do in a sense. That's the shocking part. That is wild. I mean, look, the market is doing all sorts of things. If you look at market based inflation compensation measures, they have been sharply down since a month ago. But on the other hand, the market is pricing in more aggressive fed fund rate hikes after today's print. So I think that does pay attention to market market based measures of inflation, but they also, you know, pay attention, I mean, power said themselves that so far the market has interpreted and interpreted action very well. But I'm just saying that, yeah, financial conditions is the key transmission channel of monetary policy. And if they want to affect that, it is the surprise of where the market is relative to what the vet actually deliver. So you mentioned financial conditions. Let's talk about what makes that up because if you're looking at credit spreads, if you're looking at even the stock market, although I would argue, the stock market pain isn't as aggressive as it was maybe even a month ago. So we're still dropping, but you had seen a little bit of a recovery. You have credit spreads that haven't really widened to those warning signs yet, which really brings it feels like all the action and all the tightness and financial conditions, perhaps coming from the dollar a trade that I feel like consensus is that it's not going to stop anytime soon when it comes to greenback strength. Walk us through just how much stronger the dollar can get and how that feeds back in to this tightness that you're speaking of. Yeah, so yes, exactly. Financial conditions is made up by a range of indicators. The most important ones are credit spreads ten year treasury yields. And stock market and dollar do play a role too, but smaller role. So I think historical precedent for thinking about how the dollar affects this effect fed funds rate plans is back in 2015, 2016. So back then, the dollar over a year's period period appreciated by over time percent credit spreads also widened by over 200 bits. And the fed models then said that the combination of 200 bps of credit spreads and over 10% of dollar appreciation substituted for about a hundred bps of interest rate hikes. So we are not there yet. So if you look at where financial conditions, both the dollar appreciation and the credit spreads have not reached the level that the tightening that we saw back in 2016. So I just think for a couple of weeks ago, frankly. I just want to point out to anyone using a Bloomberg terminal, FCO and go. F con goes, how you look at financial conditions, you can do it for a range of different countries. But it's so awesome right now because it's live. These markets are moving it back and forth between negative 50 basis points and negative 67, like every two seconds, some trading is really going to decide this as much as the fed. Right. And you know the fcon go function on Bloomberg, the great thing is it has many different financial conditions index. And the Bloomberg financial condition index actually has no weight on the dollar. But other index do. So I think one can take a look at all of them and see being careful. Are you suggesting that we change our Bloomberg financial conditions? Do you want me to put you in touch with the people in charge of F con go? If they add some weight on the dollar. I will put forth your suggestion Ana Wong and I really appreciate you joining us and along there she is chief U.S. economist for Bloomberg economics and wow, just to repeat if you are waking up now. First of all, kudos to you for getting up at ten 30. A.m.. But we had a 9.1% print on year over year CPI. That's the highest that we've seen since at least 1981. And there have been arguments Neil Grossman was arguing. If you measured it the same way if you did in the 70s, we'd see the 15% that they saw then. So big inflation, leading to a drop in market. This is a Bloomberg money minute. The latest snapshot of our collective cost of living is even hotter than forecast. 9.1% in June from June last year, according to the Labor Department's consumer price index, and that's immediately convincing Wall Street that the fed reserve has just been given the green light to remove all hesitation and keep going big with interest rate hikes. Market traders like neither the inflation news nor the likely response from the fed, and the Dow is down more than a percent, NASDAQ and S&P 500 each losing almost a percent. Perhaps giving the fed reserve further incentive to keep pressing with rate hikes. Today's action north of the border. The bank of Canada has hiked its policy interest rates, Canada's equivalent of our funds rate, one full percent opting to front load its own inflation fighting effort and warning of more hikes to come. Yesterday we told you that electric vehicle maker canoe has scored major deal to supply Walmart with as many as 10,000 battery powered vans. Turns out there's some fine print in the deal. Canoe can't supply any vehicles to Amazon. Bloomberg radio. Neil Armstrong waited 6 hours and 39 minutes to
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"Got to have you back on very soon Really appreciate you coming into the Bloomberg interactive broker studio Neil Grossman there Cofounder and former CIO at TK NG capital also an adviser to the norges bank We're going to have more from New York and Dallas Texas this Is Bloomberg Hey sis are you video calling me from the new home sense Reporting from Rockville there are some serious deals here Where are we supposed to go together Oh so competitive Speaking of competitive look at the price on this sleeper sofa That alabaster lamp for less I want I bet you do Wait go back show me that hand woven rug from turkey A total upgrade Oh are you seeing this standing mirror I see a sister who's gonna buy that for me Hello Now open in Rockville HomeSense standout pieces outstanding prices This is a Bloomberg money minute The labor market may be tight but many of the nation's workers are struggling financially a survey by Willis towers Watson found that more than 40% of workers have difficulty meeting basic needs their living paycheck to paycheck The advisory firm says financial well-being among employees has been deteriorating since the start of the pandemic furthermore a lot of people have deferred medical care because of time constraints COVID-19 concerns or the cost Amazon.com's prime day is less than a month away It's actually two days Amazon announced that the event will be held July 12th and 13th early discounts on some of Amazon's own products will begin later this month Anyone looking to buy a Tesla vehicle will have to dig deeper elect track reports Tesla has hiked the prices on its entire lineup the cost of some models was raised by as much as $6000 Stock market is starting out sharply lower Jeff Bellinger Bloomberg radio It's time for today's stem tip Okay you know recycling is important No one wants plastic in the ocean Here's a cool way to repurpose a plastic bottle Build an awesome terrarium Cut a large plastic bottle in half and fill the base with sand pebbles potting soil and your favorite plant I chose an African violet At the top of the bottle.
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"684 and the NASDAQ down 3.4% down 377 The ten year is down 31 30 seconds the yield is 3.4% West Texas intermediate cruise down 1.9% at one 1315 of barrel comic golds up a half a percent in 1828 60 announced The dollar yen one 32 83 the Euro dollar O four 56 and the British pound the dollar 22 50 As the Bloomberg business flash Bloomberg markets continues now in New York City we have Matt Miller and worried his new silverback cowboy hat in Dallas Texas fall swinging Greg Jarrett thanks very much By the way Bloomberg markets brought to you by Commonwealth supporting more than 2000 independent financial advisers with the solutions they need to grow a thriving business Commonwealth Go where you grow visit Commonwealth dot com to learn more Now I'm very happy to have Neil Grossman here with me in the studio He is the cofounder and former CIO of TK and G capital He spent two decades in the financial industry as a prop trader asset manager market maker advised the Norwegian Central Bank among other things And I want to just start the conversation off on what happens that we're at this point Before we get to what we need to do to fix it because a lot of people have been saying it's the COVID stimulus that drove this inflation that got us here but a new friend of mine from an anarchist from Twitter has suggested And I think she's right That it's really the original quantitative easing that got us in this spot We've never gotten the hangover from that high I would say you have to actually go back a little further man.
Bloomberg Radio New York
"neil grossman" Discussed on Bloomberg Radio New York
"That Greg I really appreciate it Although I'd say 3.1% is still very low And even yesterday I sat down on the mortgage guy And mortgage woman And they said even like big jumbos with small down payments are going to be high threes max Low fours If you have good credit and you go well I haven't been in the country for 5 years My credit is great All right Good to know And there's a house out there for you We're sure I'm looking today I'm going today I'm going to venture into scarsdale Nice And check out a few houses around the edgemont school district because my good friend Neil Grossman went there and David Solomon went there Oh there you go And I figured if it's a school district that produces David Solomon they can deal with my daughter All right let's bring in Janelle Woodward president Mackay shields Thanks so much for joining us here We love to get your thoughts I mean a little bit of a rollover in the market today But I'd love to get your thoughts on this Federal Reserve Are you comfortable with the pace of the tapering and more importantly the communication around potential rate increases or are you in that camp that I think is growing that's saying maybe the feds kind of falling behind here Well thank you so much for having me and I think a really important question as we think about our outlook into 2022 I think we're up to the first part of your question We are comfortable with tapering and what's been communicated I think what is still outstanding is whether or not that pace changes as we get through November and into December But you're right I think what the market's really watching is what happens from a liftoff perspective and tightening which is now projected to be somewhere in mid 2022 To us demand is strong Consumers resilient you are just referencing that as we look at some of the earnings and retail data But it really comes back to the conversation around inflation So what kind of inflation do you expect in 2022 And is it going to be enough to drive the fed fund rate up to 50 basis points between 50 and 75 Because that's what the market is pricing in right now And I feel like it just seems a little aggressive for this dovish group of fed governors I think when we look at inflation I mean I think there's still this question of transitory And I think one of the challenges is that we've seen demand come back and be quite robust and we're still seeing that met with some of the pressures and supply chain And then we also have the commodity story at place That's definitely creating some short term pressure It's interesting to look at 5 year inflation expectations Versus more forward looking inflation expectations there's still some confidence that inflation is somewhat transitory and or the fed is going to get it right So we think it's probably prudent at some point for them to step into the market in 2022 But to your point it's probably a little bit slower if we continue to really just kind of navigate the cycle and some of the unprecedented recovery that we've been seeing I know you were used to be the formal global head of fixed income at BMO global asset management And I have to say I really feel sorry for my friends that are fixed income portfolio managers I look at the ten year at 1.58% and I'm like what do people do all day Where do you find opportunities in the fixed income market I think it's a question that we continue to have a lot of dialog on with our clients especially as we think about what the implications are for real returns Going back to what we're seeing on the earnings picture gives us a lot of confidence You basically have to manage down expectations Well I think there's two pieces of it One yes of course it's about thinking about what the expectations are But the other piece of it is how can you get total return So the yield is one component But how can we capture opportunities to create a better total return picture than the yield would otherwise support So for us it comes back to credit sectors which continue to be resilient But then looking underneath of that and saying where do we see strength Where do we see recovery Real estate that you highlighted the consumer some of the leisure sectors coming back And we think there's still good opportunities to get to positive real returns through using a total return approach All right so if we look at the S&P 500 right now on the equity side of the equation it seems priced to perfection and we're starting to realize that you've got to have earnings to impress You were talking we were talking about the retailers you mentioned them as well If you get margin compression because you can't pass on the higher prices you're in trouble How do you see that going forward Yeah I think it's a great question As we look back on the earnings cycle it's one of the things that was raised To date and through the third quarter we saw corporations effective in their ability to pass on the prices But certainly important especially if we don't have the demand to support it into 2022 It's been interesting even if we look at spread markets and we look at the curve we do see some softening as we get these inflation prints worried about both the ability to pass it on and what does it mean for earnings but also if it forces the fed to act what it does to the overall broader support of the economy Woodward thank you so much for joining us for really appreciate your thoughts and you're taking the time Do you know Woodward president of Makai shields looking at the market It kind of rolled over here this morning kind of a mixed start but kind of rolling over but maybe just a little bit of a pause if you will and what has been an extraordinary market setting new highs And again driven in large part one could argue just by the strong third quarter earnings we've had and started out with the banks and then some of the tech names and now we're getting the retailers coming through with some pretty strong numbers We're going to more coming up This is Bloomberg This is we're all.