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Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business, finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio, Chess Manton and.

David Gera Here in the Bloomberg Interactive Broker Studio. We were just speaking about how fetcher Jerome pal did say more good inflation data would still need to boost the Fed's confidence. But of course we will get another update on CPI David here on Thursday. So traders looking at that, and I wrote a story earlier today looking at sort of the options market what they were pricing in at the JP Morgan Trading dest sing a potential move here of about nine tenths of a percent. So that actually would be the biggest in about a month, because just a month ago we had CPI and the FED decision on the same day. But that is in line with the last three CPI prints. But we have two really great guests coming up to speak with us on this, so we'll also have Moly Smith, who's on our Economics Desk, but also Ira Jersey, who's Bloomberg Intelligence Headquarters in New Jersey. Get's going to speak with us, but first we're going to get a clip here hearing a little bit more of what Fed Chair Jerome pal had to say. So listen more of what he had to say about inflation as well as the path of interest rates.

David Gera Here in the Bloomberg Interactive Broker Studio. We were just speaking about how fetcher Jerome pal did say more good inflation data would still need to boost the Fed's confidence. But of course we will get another update on CPI David here on Thursday. So traders looking at that, and I wrote a story earlier today looking at sort of the options market what they were pricing in at the JP Morgan Trading dest sing a potential move here of about nine tenths of a percent. So that actually would be the biggest in about a month, because just a month ago we had CPI and the FED decision on the same day. But that is in line with the last three CPI prints. But we have two really great guests coming up to speak with us on this, so we'll also have Moly Smith, who's on our Economics Desk, but also Ira Jersey, who's Bloomberg Intelligence Headquarters in New Jersey. Get's going to speak with us, but first we're going to get a clip here hearing a little bit more of what Fed Chair Jerome pal had to say. So listen more of what he had to say about inflation as well as the path of interest rates.

The most recent inflation readings, however, have shown some modest further progress and more good data would strengthen our confidence that inflation is moving sustainably toward two percent. We continue to make decisions meeting by meeting. We know that reducing policy restraint too soon or too much could stall or even reverse the progress that we've seen on inflation.

The most recent inflation readings, however, have shown some modest further progress and more good data would strengthen our confidence that inflation is moving sustainably toward two percent. We continue to make decisions meeting by meeting. We know that reducing policy restraint too soon or too much could stall or even reverse the progress that we've seen on inflation.

All right, So that was obviously FED Chair Jerome Pale on Capitol Hill, who will be speaking tomorrow as well in front of the House. So I want to bring in Ira Jersey, who here works at Bloomberg News, who's our US interest rates strategiest and he's based actually at the Blue Intelligence headquarters in New Jersey, as well as Wally Smith, who is one of our top editors here for the economics desk. I'll start with you, Molly to kind of get a recap here of what people were expecting fed share pal to say versus what we ended up getting here.

All right, So that was obviously FED Chair Jerome Pale on Capitol Hill, who will be speaking tomorrow as well in front of the House. So I want to bring in Ira Jersey, who here works at Bloomberg News, who's our US interest rates strategiest and he's based actually at the Blue Intelligence headquarters in New Jersey, as well as Wally Smith, who is one of our top editors here for the economics desk. I'll start with you, Molly to kind of get a recap here of what people were expecting fed share pal to say versus what we ended up getting here.

Yeah, very two, very different things. I think people were obviously hoping to get a bit more about the timing of when we might be seeing some interest rate cuts, and Powell on two occasions said he will not be offering any signals on the timing of interest rate cuts, which I said to the chat, I guess we can all go home, because it seems like that's really what we were all here for. And he then said again when another lawmaker had pressed him on the topic, had also said, yeah, I'm not really going to get into that today. So a bit of a bummer. So we're all still here sitting Okay, maybe one maybe two?

Yeah, very two, very different things. I think people were obviously hoping to get a bit more about the timing of when we might be seeing some interest rate cuts, and Powell on two occasions said he will not be offering any signals on the timing of interest rate cuts, which I said to the chat, I guess we can all go home, because it seems like that's really what we were all here for. And he then said again when another lawmaker had pressed him on the topic, had also said, yeah, I'm not really going to get into that today. So a bit of a bummer. So we're all still here sitting Okay, maybe one maybe two?

Right TVD TVD Jersey. Let me turn to you. That's the editor's perspective. Let me get the market market strategy perspective on this is. But what were you listening for and what did you hear from the fed share today?

Right TVD TVD Jersey. Let me turn to you. That's the editor's perspective. Let me get the market market strategy perspective on this is. But what were you listening for and what did you hear from the fed share today?

Well, first, let me say that Laurie does a great job with the tea live chat. So if you're you know, if you can't listen to radio or watch TV and you have a.

Well, first, let me say that Laurie does a great job with the tea live chat. So if you're you know, if you can't listen to radio or watch TV and you have a.

More live Yeah, for sure.

More live Yeah, for sure.

I participate for example, and try to give my insights onto the rates market on those blogs as well. So the I think from j Powell, like like Laurie said, he said even in his prepared remarks that they were going meeting to meeting, he tried to say, where's data dependent as we can possibly be, and he reiterated that. So he didn't say anything broadly new in terms of the monetary policy perspective, but the fact that he reiterated basically what was said at in the June meeting minutes which were released last Wednesday when the market, when the bond market was closed, at least, I think was just telling in and of itself, because you know, it's pretty clear that they're trying to say, like, look, it might be September, it might be November, it might be December, but we're going to cut. The one thing that he did say that I think was important was he did reiterate that he didn't think that the next move as a hike was likely. And that's something that remember, just two months go, we were pricing for almost a twenty percent probability of a hike. That's almost being completely priced out of the market.

I participate for example, and try to give my insights onto the rates market on those blogs as well. So the I think from j Powell, like like Laurie said, he said even in his prepared remarks that they were going meeting to meeting, he tried to say, where's data dependent as we can possibly be, and he reiterated that. So he didn't say anything broadly new in terms of the monetary policy perspective, but the fact that he reiterated basically what was said at in the June meeting minutes which were released last Wednesday when the market, when the bond market was closed, at least, I think was just telling in and of itself, because you know, it's pretty clear that they're trying to say, like, look, it might be September, it might be November, it might be December, but we're going to cut. The one thing that he did say that I think was important was he did reiterate that he didn't think that the next move as a hike was likely. And that's something that remember, just two months go, we were pricing for almost a twenty percent probability of a hike. That's almost being completely priced out of the market.

Now, well, Molly, I want to bring you back into the conversation because David and I had mentioned we will get another update on CPI on Thursday. What are the expectations here from economists?

Now, well, Molly, I want to bring you back into the conversation because David and I had mentioned we will get another update on CPI on Thursday. What are the expectations here from economists?

Yeah, so probably going to get something that's a bit more of a maybe inflation still gradually coming down, if anything, maybe moving still a little bit sideways in this range that it's been in. You know we've seen which you know, Power alluded to today, the big moves in inflation have really are past us, which you know is to be expected at this point, there's less progress to be made and it's going to be coming in you know, smaller chunks with each report that we get. So there was definitely a lot of questions on housing inflation today and that there's you know, the best thing that Howell said that the Fed can do for the housing market is to get inflation back to two percent, so that that will hopefully then bring you know, treasury yields and interest rates back down and then make you know, mortgage rates also more affordable. So that's really yeah, to be expected from him. You know that they can't really control of course, that the US has a persistent structural shortage of housing, and that's what when he was saying, well, this is you on lawmakers to try to you know, that's more your job and that's not something that.

Yeah, so probably going to get something that's a bit more of a maybe inflation still gradually coming down, if anything, maybe moving still a little bit sideways in this range that it's been in. You know we've seen which you know, Power alluded to today, the big moves in inflation have really are past us, which you know is to be expected at this point, there's less progress to be made and it's going to be coming in you know, smaller chunks with each report that we get. So there was definitely a lot of questions on housing inflation today and that there's you know, the best thing that Howell said that the Fed can do for the housing market is to get inflation back to two percent, so that that will hopefully then bring you know, treasury yields and interest rates back down and then make you know, mortgage rates also more affordable. So that's really yeah, to be expected from him. You know that they can't really control of course, that the US has a persistent structural shortage of housing, and that's what when he was saying, well, this is you on lawmakers to try to you know, that's more your job and that's not something that.

We can do.

We can do.

And we're going to get into that a little bit later in the show. But Molly, let me ask you about the crucible in which this is happening. So this is before the Senate Banking Committee. You had a pretty forceful statement from the chair of that committee from Shared Brown, basically saying to the FED chair, stop raising rate stops bring rates down, that this is having a really deleterious effect on the American consumer, on those who want to buy houses. And there's also this kind of moment of emphasis on the chair's part about the independence of the Federal Reserve. As we see this kind of swirl of politics surrounding what might happen if Donald Trump were to be elected again, How did he deal with that sort of how did the setting of this kind of color your sense of what the FED chair had to say.

And we're going to get into that a little bit later in the show. But Molly, let me ask you about the crucible in which this is happening. So this is before the Senate Banking Committee. You had a pretty forceful statement from the chair of that committee from Shared Brown, basically saying to the FED chair, stop raising rate stops bring rates down, that this is having a really deleterious effect on the American consumer, on those who want to buy houses. And there's also this kind of moment of emphasis on the chair's part about the independence of the Federal Reserve. As we see this kind of swirl of politics surrounding what might happen if Donald Trump were to be elected again, How did he deal with that sort of how did the setting of this kind of color your sense of what the FED chair had to say.

Well, it seems like at least Powell and pretty much everyone on the Senate Banking Committee agrees that the FED is and should remain an independent institution, and that there was pretty unanimous support on that front, and you know, without of course addressing the elephant in the room that if Donald Trump were an elected president, that that's something that he's kind of looking to attack, right that he you know, wants to be a bit more involved somehow in how the FED sets monetary policy, and perhaps ousting Powell this was someone who he appointed. So yeah, clearly that there's a bit of you know, there's certainly a backdrop to all that, and I think he handled it pretty delicately and just stressing you know, the Fed's credibility really relies on its independence.

Well, it seems like at least Powell and pretty much everyone on the Senate Banking Committee agrees that the FED is and should remain an independent institution, and that there was pretty unanimous support on that front, and you know, without of course addressing the elephant in the room that if Donald Trump were an elected president, that that's something that he's kind of looking to attack, right that he you know, wants to be a bit more involved somehow in how the FED sets monetary policy, and perhaps ousting Powell this was someone who he appointed. So yeah, clearly that there's a bit of you know, there's certainly a backdrop to all that, and I think he handled it pretty delicately and just stressing you know, the Fed's credibility really relies on its independence.

Hey, I want to bring you back into the conversation. What are you seeing when we're talking about, say, speculative net positioning, when you're looking at the bond market, and what that tells us about where traders are betting, where rates could be headed in the second half of this year.

Hey, I want to bring you back into the conversation. What are you seeing when we're talking about, say, speculative net positioning, when you're looking at the bond market, and what that tells us about where traders are betting, where rates could be headed in the second half of this year.

Well, a lot of the spec positioning right now is really basis trade. So it's people trading futures versus cash. There's a little tiny bit of money to be made, So in order to be to make that money, though, you have to lever yourself a lot. So that's one reason why you have such large shorts and some of the some of the contracts. I want I go back to something that Molly said just a second ago, and you know that's about what J Powell and the FED independence argument, because you know, from a market perspective, I think that if the FED were will lose a significant amount of its independence, then you'd wind up in a situation where the bond market would probably sell off quite a bit and certainly get a much much steeper yield curve because it'd be worries that the FED would keep interest rates too low for too long in a future environment where you get more inflation. So I think that there is a risk there that something like that happens. And of course, you know, way back when when J. Powell was first appointed, I was actually surprised that Donald Trump appointed him because he appointed a mainstream kind of thinker from the from from the FED border governors instead of someone more duvish. So you know, Donald Trump will still have the opportunity to appoint Aduvish FED chair. He'll just have to wait, you know, eleven months to do that. And because that person won't take office till the beginning of twenty twenty six.

Well, a lot of the spec positioning right now is really basis trade. So it's people trading futures versus cash. There's a little tiny bit of money to be made, So in order to be to make that money, though, you have to lever yourself a lot. So that's one reason why you have such large shorts and some of the some of the contracts. I want I go back to something that Molly said just a second ago, and you know that's about what J Powell and the FED independence argument, because you know, from a market perspective, I think that if the FED were will lose a significant amount of its independence, then you'd wind up in a situation where the bond market would probably sell off quite a bit and certainly get a much much steeper yield curve because it'd be worries that the FED would keep interest rates too low for too long in a future environment where you get more inflation. So I think that there is a risk there that something like that happens. And of course, you know, way back when when J. Powell was first appointed, I was actually surprised that Donald Trump appointed him because he appointed a mainstream kind of thinker from the from from the FED border governors instead of someone more duvish. So you know, Donald Trump will still have the opportunity to appoint Aduvish FED chair. He'll just have to wait, you know, eleven months to do that. And because that person won't take office till the beginning of twenty twenty six.

Molly, we've talked a lot about inflation, is of course what we're all supposed to be talking about this part in the time, but we did get a little color from the FED chair on the labor market as well, And I wonder what stood out to you from from his comments. Of course, we have the rate now at four point one percent, but what did he say just sort of about his perspective, I guess the Fed's perspective on how healthy the jobs market is now?

Molly, we've talked a lot about inflation, is of course what we're all supposed to be talking about this part in the time, but we did get a little color from the FED chair on the labor market as well, And I wonder what stood out to you from from his comments. Of course, we have the rate now at four point one percent, but what did he say just sort of about his perspective, I guess the Fed's perspective on how healthy the jobs market is now?

Yeah, I think you know, this is now starting to look a lot more like the jobs market that we had before the pandemic, which was a very healthy jobs market. And that Powell said something today that he hasn't really said yet but has probably been true for a while, that the labor market is no longer inflationary, and that that's something that you know, one economist I noticed that he had sent around to his distribution list that this has been the case for a while. But it's nice to see Powell finally acknowledging this because there has been so much concern about, you know, all these job openings and perhaps if that's propelling wages higher, or you know, what kind of inflationary environment that might get us into but he seemed to be, you know, a bit more comfortable with where the labor market is in relation to inflation, but certainly that you know, any like he's been saying, any unexpected weakening in the labor market could force the Fed to act a bit more aggressively.

Yeah, I think you know, this is now starting to look a lot more like the jobs market that we had before the pandemic, which was a very healthy jobs market. And that Powell said something today that he hasn't really said yet but has probably been true for a while, that the labor market is no longer inflationary, and that that's something that you know, one economist I noticed that he had sent around to his distribution list that this has been the case for a while. But it's nice to see Powell finally acknowledging this because there has been so much concern about, you know, all these job openings and perhaps if that's propelling wages higher, or you know, what kind of inflationary environment that might get us into but he seemed to be, you know, a bit more comfortable with where the labor market is in relation to inflation, but certainly that you know, any like he's been saying, any unexpected weakening in the labor market could force the Fed to act a bit more aggressively.

Molly, great to speak with you. Thank you very much. That's Molly Smith from our ECON team. Our thanks to Ira Jersey as well, chief US interest rate strategist to Bloomberg Intelligence, joining us from Bloomberg Intelligence headquarters just a bit south of here in New Jersey. And I know we want to get into some of what you're talking about, right, a knock on effect of this kind of very strange economic environment.

Molly, great to speak with you. Thank you very much. That's Molly Smith from our ECON team. Our thanks to Ira Jersey as well, chief US interest rate strategist to Bloomberg Intelligence, joining us from Bloomberg Intelligence headquarters just a bit south of here in New Jersey. And I know we want to get into some of what you're talking about, right, a knock on effect of this kind of very strange economic environment.

That's right, and especially because why high rates have failed to dent record stock prices right now as well as home price is too. So who better to bring in than Bloomberg's own personal finance reporter, Suzanne Wooley, who's here in the Bloomberg Interactive Brokers studio. Thanks so much for joining us this afternoon. And it's interesting because you wrote about how more people in the market right now, especially when you're thinking about stocks and what's happening with housing prices staying relatively high here, but it's still a confusing world of finance. And this is also you wrote for her latest Bloomberg Business Week story here, So walk us through this sort of dynamic, especially coming out of the pandemic, and how unique this is compared to history.

That's right, and especially because why high rates have failed to dent record stock prices right now as well as home price is too. So who better to bring in than Bloomberg's own personal finance reporter, Suzanne Wooley, who's here in the Bloomberg Interactive Brokers studio. Thanks so much for joining us this afternoon. And it's interesting because you wrote about how more people in the market right now, especially when you're thinking about stocks and what's happening with housing prices staying relatively high here, but it's still a confusing world of finance. And this is also you wrote for her latest Bloomberg Business Week story here, So walk us through this sort of dynamic, especially coming out of the pandemic, and how unique this is compared to history.

Well, for most of us, we went through such a long period of really reads near zero, you know, back in twenty twenty it's early as twenty twenty two though, they were at zero point zero eight percent. Now this is the federal funds, right that I'm talking about. Now it's around five point three percent, so very abrupt ramp up. You know, they're like eleven fed hikes and something like a sixteen month period, right.

Well, for most of us, we went through such a long period of really reads near zero, you know, back in twenty twenty it's early as twenty twenty two though, they were at zero point zero eight percent. Now this is the federal funds, right that I'm talking about. Now it's around five point three percent, so very abrupt ramp up. You know, they're like eleven fed hikes and something like a sixteen month period, right.

So came on big.

So came on big.

And normally the script would be that we would expect the stock market to take a hit, and you know, housing with mortgage rates now at seven percent, in twenty twenty one they were like around three percent, you expect that to take a hit. Hasn't happened, obviously, you know. And a big reason with the stock market is of course, AI, right is just like powered over everything, and you know when you look at the SMP and Vidia, it contributed by thirty percent of the index is gained to date. You know, Microsoft contributed another ten percent. So AI is just sending it, you know, a market cap index flying.

And normally the script would be that we would expect the stock market to take a hit, and you know, housing with mortgage rates now at seven percent, in twenty twenty one they were like around three percent, you expect that to take a hit. Hasn't happened, obviously, you know. And a big reason with the stock market is of course, AI, right is just like powered over everything, and you know when you look at the SMP and Vidia, it contributed by thirty percent of the index is gained to date. You know, Microsoft contributed another ten percent. So AI is just sending it, you know, a market cap index flying.

And even things beyond traditional tech and gross stocks. If you look at utilities with people think it's more kind of steady diven in low volatility. But if you have the particular sub industry groups within it that are related to data center businesses, those have taken off at certain points this year two exactly.

And even things beyond traditional tech and gross stocks. If you look at utilities with people think it's more kind of steady diven in low volatility. But if you have the particular sub industry groups within it that are related to data center businesses, those have taken off at certain points this year two exactly.

It's like an AI is, you know, an energy play. It's such a huge energy guzzler, you know, so those things have propped it up and underneath when you look under the hood at the SMP. I was just listening to Goldman Sachs's mid year investment outlook and one of their experts was talking about, how, you know, the average gain and the stock for the SMP for the year is like three percent, you know, so beneath the breadth as we know is just so narrow. In the mag seven or mag whatever they are now six ' five.

It's like an AI is, you know, an energy play. It's such a huge energy guzzler, you know, so those things have propped it up and underneath when you look under the hood at the SMP. I was just listening to Goldman Sachs's mid year investment outlook and one of their experts was talking about, how, you know, the average gain and the stock for the SMP for the year is like three percent, you know, so beneath the breadth as we know is just so narrow. In the mag seven or mag whatever they are now six ' five.

Right, we've gone from a lot of.

Right, we've gone from a lot of.

I want to ask you about the kind of consumer psychology aspect of this. There's such a great line in your piece about how for most people into the age of thirty five, they never had to live in a world where rates are what they are. You talk about what we've become a custom them to. How have you found as you talk to people reporting out this piece, what council have they given people who might long for those lower rates not even not even know that they used to be as high as they are in higher see right.

I want to ask you about the kind of consumer psychology aspect of this. There's such a great line in your piece about how for most people into the age of thirty five, they never had to live in a world where rates are what they are. You talk about what we've become a custom them to. How have you found as you talk to people reporting out this piece, what council have they given people who might long for those lower rates not even not even know that they used to be as high as they are in higher see right.

Well, I mean some people are saying, listen, you know these rates are really not that unusual when you look over the long scheme of things, so you know they people are thinking that rates I mean a lot of people think rates will go down now with people are saying that the Fed maybe we'll get one cut in September and such. But you really have to sort of rethink some of your basics. There are a lot of people who have gotten into buy now, pay later loans.

Well, I mean some people are saying, listen, you know these rates are really not that unusual when you look over the long scheme of things, so you know they people are thinking that rates I mean a lot of people think rates will go down now with people are saying that the Fed maybe we'll get one cut in September and such. But you really have to sort of rethink some of your basics. There are a lot of people who have gotten into buy now, pay later loans.

Which we know so little about still exactly.

Which we know so little about still exactly.

It's sort of a black box in a way.

It's sort of a black box in a way.

And we had a poll on a Harris poll don back in April that showed that forty three percent of people in those loans were behind in their payments. And you know, that's an area where they're going to feel a lot of interest rate pressure, but also just in buying a home you have to sort of think through it a bit differently because if you want to get a seven percent mortgage rate, you know, and rates don't go down that much, you really can't. I mean, it's not why is to take a flyer and.

And we had a poll on a Harris poll don back in April that showed that forty three percent of people in those loans were behind in their payments. And you know, that's an area where they're going to feel a lot of interest rate pressure, but also just in buying a home you have to sort of think through it a bit differently because if you want to get a seven percent mortgage rate, you know, and rates don't go down that much, you really can't. I mean, it's not why is to take a flyer and.

Just think, oh, yeah, you're down the road, I'll be down to whatever.

Just think, oh, yeah, you're down the road, I'll be down to whatever.

You know.

You know.

Do we see people taking more flexible rates or are trying different? Are they just wedded to the notion that it's going to be high or where it is?

Do we see people taking more flexible rates or are trying different? Are they just wedded to the notion that it's going to be high or where it is?

For there are little pockets that are starting to pop up, Like there's something called it's a little complicated, but it's an assumable mortgage, and it's when you can actually assume the seller's mortgage at their rate. Interesting, you know, at their you know, it's it's complicated to do. But more startups are popping up to create a sort of a more organized market for these assumable mortgages because it's so appealing. If you could just inherit someone's three percent mortgage, that would be great. It's very expensive because you have to sort of pay the premium on their home and you have to pay off the equity that's in their mortgage, so.

For there are little pockets that are starting to pop up, Like there's something called it's a little complicated, but it's an assumable mortgage, and it's when you can actually assume the seller's mortgage at their rate. Interesting, you know, at their you know, it's it's complicated to do. But more startups are popping up to create a sort of a more organized market for these assumable mortgages because it's so appealing. If you could just inherit someone's three percent mortgage, that would be great. It's very expensive because you have to sort of pay the premium on their home and you have to pay off the equity that's in their mortgage, so.

You need a lot of fun money for that.

You need a lot of fun money for that.

Yeah, it's not an appealing option for most people.

Yeah, it's not an appealing option for most people.

Well, we only have about forty five seconds left. But what do you think are the biggest takeaways for people to take from your story? As well as how long this dynamic can continue, which obviously a million dollar questions.

Well, we only have about forty five seconds left. But what do you think are the biggest takeaways for people to take from your story? As well as how long this dynamic can continue, which obviously a million dollar questions.

I think a lot of people that I spoke with, more of the financial planner types, were just giving some good solid advice about diversification and if you're sitting on some really big equity gains, and now, particularly in tech, they've been telling some of their clients, you know, maybe do a little profit taking, just make sure you're diversified because there's just so much talk right now about it expecting greater volatility, how long this lasts, which we've been hearing forever, But they're just kind of telling people to remember if they need to rebalance now, they can get five percent on a bot.

I think a lot of people that I spoke with, more of the financial planner types, were just giving some good solid advice about diversification and if you're sitting on some really big equity gains, and now, particularly in tech, they've been telling some of their clients, you know, maybe do a little profit taking, just make sure you're diversified because there's just so much talk right now about it expecting greater volatility, how long this lasts, which we've been hearing forever, But they're just kind of telling people to remember if they need to rebalance now, they can get five percent on a bot.

Right. Well, that was Sulisane really personal finance reporter at Bloomberg News on why hireing have failed to dent record stock prices and housing prices here, thanks so much for joining us. Well more coming up, this is Bloomberg.

Right. Well, that was Sulisane really personal finance reporter at Bloomberg News on why hireing have failed to dent record stock prices and housing prices here, thanks so much for joining us. Well more coming up, this is Bloomberg.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter listen on Apple car Play and then brought auto with a Bloomberg Business app or watch us live on YouTube.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five pm. Easter listen on Apple car Play and then brought auto with a Bloomberg Business app or watch us live on YouTube.

And another really interesting story, David, that is in the terminal that we've been reading here is about looking at Bobby Jane's complex hedge fund debut and how it's spawning fans as well as doubters to Who better to come in than the author of the story, Ahemma Palmer, who's here at one of our hedge fund reporters at Bloomberg News in New York in studio with us. So walk us through your story here about Bobby Jane's fund. What makes it so complex such that it is unprecedented?

And another really interesting story, David, that is in the terminal that we've been reading here is about looking at Bobby Jane's complex hedge fund debut and how it's spawning fans as well as doubters to Who better to come in than the author of the story, Ahemma Palmer, who's here at one of our hedge fund reporters at Bloomberg News in New York in studio with us. So walk us through your story here about Bobby Jane's fund. What makes it so complex such that it is unprecedented?

Yes, So what he's trying to do here is launch a fully formed multi strategy hedge fund. Means is going to trade six strategies on day one when it launched July first trade all of those strategies, have the teams built out, have everyone hired in the right seats, all the operational back and operational infrastructure and back office teams. It's a pretty big undertaking. It's never been done before. Typically, hedge funds start out small with one or two strategies, and then they add on more over time. What he's doing here is birthing a fully formed multi shrat heedge fund.

Yes, So what he's trying to do here is launch a fully formed multi strategy hedge fund. Means is going to trade six strategies on day one when it launched July first trade all of those strategies, have the teams built out, have everyone hired in the right seats, all the operational back and operational infrastructure and back office teams. It's a pretty big undertaking. It's never been done before. Typically, hedge funds start out small with one or two strategies, and then they add on more over time. What he's doing here is birthing a fully formed multi shrat heedge fund.

Why is he going this route? So you describe the complications of doing that. He has been ambitious about what he hoped to raise, raised a little less than I think what he wanted to the very beginning here. But I think of a hedge fund starting in this environment in particular, how complicated that must be, how difficult it must be the line of the talent, of the technology infrastructure to do all of this.

Why is he going this route? So you describe the complications of doing that. He has been ambitious about what he hoped to raise, raised a little less than I think what he wanted to the very beginning here. But I think of a hedge fund starting in this environment in particular, how complicated that must be, how difficult it must be the line of the talent, of the technology infrastructure to do all of this.

Absolutely, it's very challenging in this fundraising environment too. His thinking is that it's more efficient when you start a firm of the size doing these many different types of things. If you build the infrastructure from the ground up ready for all the different parts, then you're less likely to have duplicate costs, duplicate talent. It's going to be more efficient. Every system will have everything it needs in order to get going, and you don't need to add on things later and then double over on expenses and everything. He also was trying to build a system where even if in the future, he adds more talent and has more money to invest that the cost of operating the business don't scale proportionally to that.

Absolutely, it's very challenging in this fundraising environment too. His thinking is that it's more efficient when you start a firm of the size doing these many different types of things. If you build the infrastructure from the ground up ready for all the different parts, then you're less likely to have duplicate costs, duplicate talent. It's going to be more efficient. Every system will have everything it needs in order to get going, and you don't need to add on things later and then double over on expenses and everything. He also was trying to build a system where even if in the future, he adds more talent and has more money to invest that the cost of operating the business don't scale proportionally to that.

Talk to us more.

Talk to us more.

About the asset raising environment right now. In some of the top challenges, it's really tough out there to be raising money.

About the asset raising environment right now. In some of the top challenges, it's really tough out there to be raising money.

So five point three is a good amount of change to be starting a hedge fund with it. It's the second biggest launch that we've seen in years, is the biggest launch we've seen this year. But the environment is tricky for a few reasons. Firstly, investors are not getting as much money back from private equity from distributions as they have been in the past, and so that limits how much money they have to put to work, though also a lot more cautious about every dollar they want to put to work. You have an option, You have optionality between the hot private credit markets or a multishat fund, and they've been so somewhat underperforming recently. You're seeing a lot of questions over should we even invest in hedge funds or do we put it someplace else? With each dollar? Do we want to take the day one risk in investing in a brand new manager and a new fund versus a tried and true option. So LP's a weighing all of these things, and every dollar is harder to get these days than it has been in some time.

So five point three is a good amount of change to be starting a hedge fund with it. It's the second biggest launch that we've seen in years, is the biggest launch we've seen this year. But the environment is tricky for a few reasons. Firstly, investors are not getting as much money back from private equity from distributions as they have been in the past, and so that limits how much money they have to put to work, though also a lot more cautious about every dollar they want to put to work. You have an option, You have optionality between the hot private credit markets or a multishat fund, and they've been so somewhat underperforming recently. You're seeing a lot of questions over should we even invest in hedge funds or do we put it someplace else? With each dollar? Do we want to take the day one risk in investing in a brand new manager and a new fund versus a tried and true option. So LP's a weighing all of these things, and every dollar is harder to get these days than it has been in some time.

The piece opens with a meal a pitch at the seafood restaurant at the Breakers in South Florida. Bobby Jaen making this overture to a Middle East sovereign wealth fund I believe ultimately ponies up. I think about close to a billion dollars to the fund. How has he made that pitch? How is he trying to convince investors, yes, that this model that you've described as being kind of un orthodox is likely to work, and be that this is the moment to do it. That you know, don't bide your time, don't watch all of this unfold, get in now, and this is likely to reapers here in the next I guess twelve months to eighteen months exactly.

The piece opens with a meal a pitch at the seafood restaurant at the Breakers in South Florida. Bobby Jaen making this overture to a Middle East sovereign wealth fund I believe ultimately ponies up. I think about close to a billion dollars to the fund. How has he made that pitch? How is he trying to convince investors, yes, that this model that you've described as being kind of un orthodox is likely to work, and be that this is the moment to do it. That you know, don't bide your time, don't watch all of this unfold, get in now, and this is likely to reapers here in the next I guess twelve months to eighteen months exactly.

So he has gotten Adia, which is the Abi Dhabi Investment Authority, with a billion dollar ticket, other big name investors, to a number of bank platforms. So you know, his pitch is, yes, you get the ground. You know, day one opportunity to invest in this fund. He's offered a lot of concessions and.

So he has gotten Adia, which is the Abi Dhabi Investment Authority, with a billion dollar ticket, other big name investors, to a number of bank platforms. So you know, his pitch is, yes, you get the ground. You know, day one opportunity to invest in this fund. He's offered a lot of concessions and.

He's fees are cheaper. He's lowered fees.

He's fees are cheaper. He's lowered fees.

The bigger the tickets, the more the better fees you get for investing. He offered promise them future capacity. So if you want an investor any future optionality, if you like what you see, you can get in later on and that will be guaranteed. Some investors got co invest opportunities. The liquidity of this fund means that you can get your cash back in three years versus other other competitive firms the more like five and there's a number of other investor family terms. So you do see in this environment needing to have more concessions make it worthwhile. And I think even Bobby Jane understands that there's a day one risk to doing this kind of thing and made those these these perks advantageous for them.

The bigger the tickets, the more the better fees you get for investing. He offered promise them future capacity. So if you want an investor any future optionality, if you like what you see, you can get in later on and that will be guaranteed. Some investors got co invest opportunities. The liquidity of this fund means that you can get your cash back in three years versus other other competitive firms the more like five and there's a number of other investor family terms. So you do see in this environment needing to have more concessions make it worthwhile. And I think even Bobby Jane understands that there's a day one risk to doing this kind of thing and made those these these perks advantageous for them.

And you talked about obviously the concerns and the caution that investors have. Clearly there's different issues when it comes to lofty targets, But what are some of the underlying problems in the root of where those concerns.

And you talked about obviously the concerns and the caution that investors have. Clearly there's different issues when it comes to lofty targets, But what are some of the underlying problems in the root of where those concerns.

Lie with investing in hedge funds? Right, Yes, so you know people use hedge funds in their portfolios in a few different ways. It could be to hedge against you know, if the markets take a downturn, then maybe invest in some of the multi strategy funds. Multi shrat funds aren't typically aiming to always beat the market. They want to be a steady return roughly a percent a month, tried and reliable and true, and so that's sort of how they would think about it. But if you want, you know, really huge returns, so hedge funds are incredibly volatile where you can see double digit gains one year and then double digit losses the following year. So it really is like strategy strategy dependent, fund dependent, liquidity dependent. As this strategy has shifted to become a lot more illiquid. The assets themselves are pretty liquid, but the structure of these vehicles means it's harder to get your money back, and it's become a lot more expensive to run these multi strategy funds. There's been more caution when it comes to this specific strategy fum investors because they're thinking, well, do I want to be locked up for this long? And what am I paying for? Because they're paying for the talents and the compensation of these traders.

Lie with investing in hedge funds? Right, Yes, so you know people use hedge funds in their portfolios in a few different ways. It could be to hedge against you know, if the markets take a downturn, then maybe invest in some of the multi strategy funds. Multi shrat funds aren't typically aiming to always beat the market. They want to be a steady return roughly a percent a month, tried and reliable and true, and so that's sort of how they would think about it. But if you want, you know, really huge returns, so hedge funds are incredibly volatile where you can see double digit gains one year and then double digit losses the following year. So it really is like strategy strategy dependent, fund dependent, liquidity dependent. As this strategy has shifted to become a lot more illiquid. The assets themselves are pretty liquid, but the structure of these vehicles means it's harder to get your money back, and it's become a lot more expensive to run these multi strategy funds. There's been more caution when it comes to this specific strategy fum investors because they're thinking, well, do I want to be locked up for this long? And what am I paying for? Because they're paying for the talents and the compensation of these traders.

Your world is one in which I think personality matters, and you know, the head of these funds, you know, can really shape the way that the business works. I think Bobby Janis is close to a household name as you can get. But what can you tell us about him? And is he in the mold of his England or is he somebody who has taken a lot of inspiration from the time that he's spent at millennium Sor how does he operate? How is he as a manager's or what's his personality like as somebody who's ever seeing these billions of dollars?

Your world is one in which I think personality matters, and you know, the head of these funds, you know, can really shape the way that the business works. I think Bobby Janis is close to a household name as you can get. But what can you tell us about him? And is he in the mold of his England or is he somebody who has taken a lot of inspiration from the time that he's spent at millennium Sor how does he operate? How is he as a manager's or what's his personality like as somebody who's ever seeing these billions of dollars?

Yes, so if you look at his tenure, he spent more than twenty years at Credit Sweez. He spent about six at Millennium, so really you know, experience that big name repids. At Millennium, he was co cio, worked very closely with Izzy Englander at Credit Sweets. He helped to build out various businesses, So he's sort of known for building businesses, working with teams, being sort of on that higher up level versus being in the weeds unnecessarily a trade. But he is has been described to us as being more cerebral, more like a philosopher, thinks in matrices and can jump between sort of the big picture idea and in the weeds details. But we have also heard from investors that he struggles to communicate some of his ideas clearly and sucstence disinctly. What that's meant is some investors have walked away from meetings feeling either frustrated that they didn't really understand things, or walked away with ideas of the firm that were not really what the firm is, or unclear as to what Bobby's trying to build here.

Yes, so if you look at his tenure, he spent more than twenty years at Credit Sweez. He spent about six at Millennium, so really you know, experience that big name repids. At Millennium, he was co cio, worked very closely with Izzy Englander at Credit Sweets. He helped to build out various businesses, So he's sort of known for building businesses, working with teams, being sort of on that higher up level versus being in the weeds unnecessarily a trade. But he is has been described to us as being more cerebral, more like a philosopher, thinks in matrices and can jump between sort of the big picture idea and in the weeds details. But we have also heard from investors that he struggles to communicate some of his ideas clearly and sucstence disinctly. What that's meant is some investors have walked away from meetings feeling either frustrated that they didn't really understand things, or walked away with ideas of the firm that were not really what the firm is, or unclear as to what Bobby's trying to build here.

And Bobby trying to use that sort of seeing things as a matrix to oversee what I think he describes a smories board of options here at this fun just a fascinating piece by Emma Parmer on the Bloomberg terminal, Bobby Jane's complex hedge fund debut, sponds, fans and daughters. I was just fascinated by, I guess the ambitions prisonly of doing this and trying to do it on such short short order.

And Bobby trying to use that sort of seeing things as a matrix to oversee what I think he describes a smories board of options here at this fun just a fascinating piece by Emma Parmer on the Bloomberg terminal, Bobby Jane's complex hedge fund debut, sponds, fans and daughters. I was just fascinated by, I guess the ambitions prisonly of doing this and trying to do it on such short short order.

No, it's true, and then obviously the challenges that come with it and the money they've been able to pull off, but still the other issues they have to deal with.

No, it's true, and then obviously the challenges that come with it and the money they've been able to pull off, but still the other issues they have to deal with.

You're listening to the Bloomberg Business Week Podcast. Listen live each weekday starting a two pm Eastern on applecar Play and ANDROYD Auto with the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just Say Alexa, Play Bloomberg eleven thirty.

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David, let's switch gears here and talk more about the latest jobs report data as well as women leaving the US workforce. We're going to bring in Laura Gasner, adding a serial entrepreneur, a HR veteran who's joining us on Zoom in New York City. Thanks so much, Laura for making time for us now. We wanted to dig deeper here when it comes to this libor market report. Obviously we get them monthly, but dig deeper to us and when it comes to the issues when it comes to women leaving the workforce, especially coming out of the pandemic, and how that's been exacerbated by that issue.

David, let's switch gears here and talk more about the latest jobs report data as well as women leaving the US workforce. We're going to bring in Laura Gasner, adding a serial entrepreneur, a HR veteran who's joining us on Zoom in New York City. Thanks so much, Laura for making time for us now. We wanted to dig deeper here when it comes to this libor market report. Obviously we get them monthly, but dig deeper to us and when it comes to the issues when it comes to women leaving the workforce, especially coming out of the pandemic, and how that's been exacerbated by that issue.

I mean, I think that we saw during the pandemic women were leaving the workforce in droves because obviously during the pandemic, our kids were all home from school. Suddenly we were dealing with our parents who were getting older, some of them getting sick and women were the ones who had to pick up all of the slack. We saw women just absolutely leading the workforce in historic numbers, but we're saying that that's still happening, and that's due in large part because the gender pakeapp of course continues as a lack of flexibility and control for women, especially as they've become more senior, there's inadequate opportunities for advancement. It's hard to integrate work in life, and of course we're all looking for more purpose in our life right now as well. So it's across so many different variables that we're seeing it. And because women are getting paid less than men at the same job, that gender pay gapp does still exist. It just means that when it comes time to choose who's going to lead the workforce, it often ends up being the woman.

I mean, I think that we saw during the pandemic women were leaving the workforce in droves because obviously during the pandemic, our kids were all home from school. Suddenly we were dealing with our parents who were getting older, some of them getting sick and women were the ones who had to pick up all of the slack. We saw women just absolutely leading the workforce in historic numbers, but we're saying that that's still happening, and that's due in large part because the gender pakeapp of course continues as a lack of flexibility and control for women, especially as they've become more senior, there's inadequate opportunities for advancement. It's hard to integrate work in life, and of course we're all looking for more purpose in our life right now as well. So it's across so many different variables that we're seeing it. And because women are getting paid less than men at the same job, that gender pay gapp does still exist. It just means that when it comes time to choose who's going to lead the workforce, it often ends up being the woman.

I look just kind of the nature of the pandemic, which was without precedent, and how little time relatively has passed since then, and we do have this atmosphere now and a lot of workplaces where there is more flexibility baked in, able to work from home more. Do we know sort of how that's affecting workplace dynamics or again, given how little time has passed, are we still trying to figure out what the sort of longer term effects of that new, more novel flexibility is going to be on workers in the workforce.

I look just kind of the nature of the pandemic, which was without precedent, and how little time relatively has passed since then, and we do have this atmosphere now and a lot of workplaces where there is more flexibility baked in, able to work from home more. Do we know sort of how that's affecting workplace dynamics or again, given how little time has passed, are we still trying to figure out what the sort of longer term effects of that new, more novel flexibility is going to be on workers in the workforce.

Yeah, I think we're still trying to figure it out, and I think a lot of it comes down to the fact that, you know, the workers are using the same tools that they used in the office. They're using ZOM, they're using Sleck, they're using all of the same tools that they're using when they're actually an office to work from home. But the bosses, which tend to be predominantly morales, still the maganity of people and meta physicians are still Then those bosses have to be different tools, but they can't just manage by walking around anymore. Becomes very different for them to figure out how they're going to see how people work now. I ran an executive search from for fifteen year seventy two thousand and two to twenty seventeen, fifteen years, and we were always virtual, like before it was COVID cool. We were all virtual, and people used to say to me like, Laura, do you how do you judge the quality of being team's work? And I'll just like are you waiting, are you sitting, or are you listening? By the quality of my team's work. But the problem is a lot of bosses, if you can't see are people working, we wonder whether or not they're actually working. And so you know, if you've got kids at home again, you know how old is the story of the man takes time off for work to go to the kid's soccer game. Everyone goes, Oh, what a good daddy is, And the woman takes time off to go to the soccer game, and everyone's like, well, she prioritizes her kids over the work. So if there's a woman and she's in a flexible work arrangement and she's got kids at home, of course we always fall to that age old trope that it must be that she's being a mom and not working. So I think that bosses have to really change the way that they're thinking about how they manage their people and really think about what the metrics are but which they're managing the people. So it's not just do I see them working, Okay, they must be working.

Yeah, I think we're still trying to figure it out, and I think a lot of it comes down to the fact that, you know, the workers are using the same tools that they used in the office. They're using ZOM, they're using Sleck, they're using all of the same tools that they're using when they're actually an office to work from home. But the bosses, which tend to be predominantly morales, still the maganity of people and meta physicians are still Then those bosses have to be different tools, but they can't just manage by walking around anymore. Becomes very different for them to figure out how they're going to see how people work now. I ran an executive search from for fifteen year seventy two thousand and two to twenty seventeen, fifteen years, and we were always virtual, like before it was COVID cool. We were all virtual, and people used to say to me like, Laura, do you how do you judge the quality of being team's work? And I'll just like are you waiting, are you sitting, or are you listening? By the quality of my team's work. But the problem is a lot of bosses, if you can't see are people working, we wonder whether or not they're actually working. And so you know, if you've got kids at home again, you know how old is the story of the man takes time off for work to go to the kid's soccer game. Everyone goes, Oh, what a good daddy is, And the woman takes time off to go to the soccer game, and everyone's like, well, she prioritizes her kids over the work. So if there's a woman and she's in a flexible work arrangement and she's got kids at home, of course we always fall to that age old trope that it must be that she's being a mom and not working. So I think that bosses have to really change the way that they're thinking about how they manage their people and really think about what the metrics are but which they're managing the people. So it's not just do I see them working, Okay, they must be working.

There was an interesting story in Forbes where they were citing a survey about how sixty percent of you as business executives said that their company will likely have to have layoffs over the next few months in the second half of this year, and that was based on resume template survey. So if you are unexpectedly laid off, what high income skills do you think people really need and that will be crucial to move forward?

There was an interesting story in Forbes where they were citing a survey about how sixty percent of you as business executives said that their company will likely have to have layoffs over the next few months in the second half of this year, and that was based on resume template survey. So if you are unexpectedly laid off, what high income skills do you think people really need and that will be crucial to move forward?

Oh, I think that we all have to. I think relationships. I think it all comes down to human caspital all the time, all ways. So I could say AI, I could talk about, you know, all the different types of technology skills that we need. But at the end of the day, I think, especially now that we're all working remote and being able to figure out how to create relationships, how'd be steward relationship to you decide what to ask for, when to ask for how do you move that relationship forward? Business moves at the speed of relationships all the time. So making sure in this period of time where we're working in this remote in this hybrid fashion, especially if you're a young person, making sure that you are making time to go into the office, getting to see people, going out to talk through with people, making sure that you are investing in that one on one relationship building time because those are the skills that we're losing right now. They're sort of leaching out of our civil discourse or reaching out of the way that we work with each other. And so to think somebody who's able to create those high level, deep sticky relationships will be skills that will help people absolutely forever and ever.

Oh, I think that we all have to. I think relationships. I think it all comes down to human caspital all the time, all ways. So I could say AI, I could talk about, you know, all the different types of technology skills that we need. But at the end of the day, I think, especially now that we're all working remote and being able to figure out how to create relationships, how'd be steward relationship to you decide what to ask for, when to ask for how do you move that relationship forward? Business moves at the speed of relationships all the time. So making sure in this period of time where we're working in this remote in this hybrid fashion, especially if you're a young person, making sure that you are making time to go into the office, getting to see people, going out to talk through with people, making sure that you are investing in that one on one relationship building time because those are the skills that we're losing right now. They're sort of leaching out of our civil discourse or reaching out of the way that we work with each other. And so to think somebody who's able to create those high level, deep sticky relationships will be skills that will help people absolutely forever and ever.

All Right, Laura, thanks for sticking with us. That's Laura Gasner adding so your entrepreneur and each R veteran who is joining us on Zoom here in New York City. And it's really fascinating, especially when you think of this dynamic of the labor market still. You know, just at the end of last year's unemployment was still there a half century load, David, and not far off from that still even though it's around four percent.

All Right, Laura, thanks for sticking with us. That's Laura Gasner adding so your entrepreneur and each R veteran who is joining us on Zoom here in New York City. And it's really fascinating, especially when you think of this dynamic of the labor market still. You know, just at the end of last year's unemployment was still there a half century load, David, and not far off from that still even though it's around four percent.

And an interesting study I saw recently in the Harvard Business Review just indicating that this really kind of plays out differently among how senior you are within the workforce. So as I was kind of getting too there, I think there's a lot we still don't know yet just about how this is all going to shake out. This is Blimber Business Week on BLOEM Radio David Gerra with Jess Manton and for Carol Mass and Tim Stanbek.

And an interesting study I saw recently in the Harvard Business Review just indicating that this really kind of plays out differently among how senior you are within the workforce. So as I was kind of getting too there, I think there's a lot we still don't know yet just about how this is all going to shake out. This is Blimber Business Week on BLOEM Radio David Gerra with Jess Manton and for Carol Mass and Tim Stanbek.

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M brother mack.

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A journal.

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How about you let me drive?

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Oh no, no, no, no's honey, please, I'll do the driving.

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Gravels eleas mate, I want to try it.

It's good question time.

It's good question time.

This please the drive to the Globe dot Com thing well round.

This please the drive to the Globe dot Com thing well round.

On Bloomberg Radio Jessman and David Gera here in the Bloomberg Interactive Brokers studio in of course for Carol and Tim, who both have the day off. If you look at where the S and P five hundred is trading right now, David that we have a little under twenty minutes left to go on track four, it's thirty thirty six records of the year.

On Bloomberg Radio Jessman and David Gera here in the Bloomberg Interactive Brokers studio in of course for Carol and Tim, who both have the day off. If you look at where the S and P five hundred is trading right now, David that we have a little under twenty minutes left to go on track four, it's thirty thirty six records of the year.

Pretty astonishing, it is.

Pretty astonishing, it is.

I must say I did a charticle after the first half and at that point it had been thirty one records. That was the best pace of records in the first half of your year, second best this century behind twenty twenty one. Obviously that was when you saw a big rebound in the stock market from the depths of COVID. But we have so many different things coming up. Obviously we have a fed Shared's Room palas we've mentioned back on Capitol Hill tomorrow in front of the house. We also have that CPI report of course coming on Thursday, and then earning season getting into full swing at the end of the week. Of course the big banks like JP Morgan reporting. But who better to talk to us about his outlook on the stock market, the economy, all things in Louis Navalier, founder in CIO at Navalier Associates, who's joining us once again. So it's always great having you back here with us talk to us about kind of your outlook moving forward, especially when we've continued to see a big rise here and you looking at the S and P F five hundred, the spread between the SNP it's two hundred day movie average hovering around thirteen percent. But as you know, that can kind of go on for a while here. As we have seen the S and P five hundred rise, Louis.

I must say I did a charticle after the first half and at that point it had been thirty one records. That was the best pace of records in the first half of your year, second best this century behind twenty twenty one. Obviously that was when you saw a big rebound in the stock market from the depths of COVID. But we have so many different things coming up. Obviously we have a fed Shared's Room palas we've mentioned back on Capitol Hill tomorrow in front of the house. We also have that CPI report of course coming on Thursday, and then earning season getting into full swing at the end of the week. Of course the big banks like JP Morgan reporting. But who better to talk to us about his outlook on the stock market, the economy, all things in Louis Navalier, founder in CIO at Navalier Associates, who's joining us once again. So it's always great having you back here with us talk to us about kind of your outlook moving forward, especially when we've continued to see a big rise here and you looking at the S and P F five hundred, the spread between the SNP it's two hundred day movie average hovering around thirteen percent. But as you know, that can kind of go on for a while here. As we have seen the S and P five hundred rise, Louis.

Well means are supposed to be up eight point eight percent for the second quarter. That's the best estimate from the Allison over two years. We have very easy year of year comparisons, but it should be you know, it's every stock for itself come earning season. Now. The other thing is we're expecting a very good CPI and PPI later in the week, and so we might get a little turbo boost on the anticipation that the FED will be cutting on September eighteenth.

Well means are supposed to be up eight point eight percent for the second quarter. That's the best estimate from the Allison over two years. We have very easy year of year comparisons, but it should be you know, it's every stock for itself come earning season. Now. The other thing is we're expecting a very good CPI and PPI later in the week, and so we might get a little turbo boost on the anticipation that the FED will be cutting on September eighteenth.

Louis, as Jess mentioned a moment ago, the FED chair was up on Capitol Hill, largely sticking to script as I saw it, as I heard it today. Anything stand out to you and sort of how are you processing or thinking about what the Fed's next steps are here and how that's affecting your your investment strategy at this point.

Louis, as Jess mentioned a moment ago, the FED chair was up on Capitol Hill, largely sticking to script as I saw it, as I heard it today. Anything stand out to you and sort of how are you processing or thinking about what the Fed's next steps are here and how that's affecting your your investment strategy at this point.

Well, the Fed's clearly worried about the labor market because we've gone from three point four percent unemployment to four point one percent in a little over a year, and so it's there's a problem. And you know, if we throw out government jobs and healthcare jobs, there's not a lot of job creation. And we you know, we have those negative sm numbers. You know, manufacturing has been down for the last twenty months. There was one month but one up, and now the service sector has been down to the last three months. So anytime you get those ISM surveys under fifty, it's a bad sign. So he clearly sees that they've engineered a soft landing, but they don't want to be too cute.

Well, the Fed's clearly worried about the labor market because we've gone from three point four percent unemployment to four point one percent in a little over a year, and so it's there's a problem. And you know, if we throw out government jobs and healthcare jobs, there's not a lot of job creation. And we you know, we have those negative sm numbers. You know, manufacturing has been down for the last twenty months. There was one month but one up, and now the service sector has been down to the last three months. So anytime you get those ISM surveys under fifty, it's a bad sign. So he clearly sees that they've engineered a soft landing, but they don't want to be too cute.

I've been taking a close look at systematic positioning as well as discretionary positioning, so obviously people listening if usually fund managers have more of the discretion to make their changes, whereas with systematic positioning it's more kind of tied to algos. But louis what I've been looking at that, especially from Deutsche Bank. It's interesting because they've seen a bit of when you're thinking about sort of stretched positioning here for tech is what they're seeing, but they've been seeing that for a while. But they're also seeing more rotation into areas like financials and other areas that obviously have at times benefited from rate cut cycles. There, how are you putting money to work right now in the stock market and where are you putting that?

I've been taking a close look at systematic positioning as well as discretionary positioning, so obviously people listening if usually fund managers have more of the discretion to make their changes, whereas with systematic positioning it's more kind of tied to algos. But louis what I've been looking at that, especially from Deutsche Bank. It's interesting because they've seen a bit of when you're thinking about sort of stretched positioning here for tech is what they're seeing, but they've been seeing that for a while. But they're also seeing more rotation into areas like financials and other areas that obviously have at times benefited from rate cut cycles. There, how are you putting money to work right now in the stock market and where are you putting that?

Well, I'm super concentrated. You know, most of our clients are taxable and they don't like to pay a lot of taxes. So we are grossly overweighted in the video super Micro on another stock called a Lar, which is a cybersecurity stock. Also we have CrowdStrike, another cybersecurity firm, but we're loaded with Lily, you know, menor Disk and those stocks right now are probably thirty five percent of our portfolios. We have invested a lot in the utility grid and beefing up the demands for cloud computing. Essentially, I'm here in Reno and we have the Apple Google servers here in Reno, but I live high in the hills and suburbia, and they have these netch They have diesel generators every mile to make sure you can meet our air conditioning demand. So the server farms have priority around here. They can't they can't go down, and so expanding the grid has become very problematic and it's not easy. I mean, you know, the power is just coming on now in Houston. I mean people that have been kind of miserable for the last couple of days.

Well, I'm super concentrated. You know, most of our clients are taxable and they don't like to pay a lot of taxes. So we are grossly overweighted in the video super Micro on another stock called a Lar, which is a cybersecurity stock. Also we have CrowdStrike, another cybersecurity firm, but we're loaded with Lily, you know, menor Disk and those stocks right now are probably thirty five percent of our portfolios. We have invested a lot in the utility grid and beefing up the demands for cloud computing. Essentially, I'm here in Reno and we have the Apple Google servers here in Reno, but I live high in the hills and suburbia, and they have these netch They have diesel generators every mile to make sure you can meet our air conditioning demand. So the server farms have priority around here. They can't they can't go down, and so expanding the grid has become very problematic and it's not easy. I mean, you know, the power is just coming on now in Houston. I mean people that have been kind of miserable for the last couple of days.

This is so fascinating to me. We had a big piece at Bloomberg last week kind of looking at this and the heightened demand that that AI and cloud computing is having for energy and the consequences of building all of these data centers. Can you walk us through to more granular levels, what companies or what stocks for appealing to you as you look at Yes and Video, which you said is in your portfolio with these others that are kind of secondary plays when it comes to AI.

This is so fascinating to me. We had a big piece at Bloomberg last week kind of looking at this and the heightened demand that that AI and cloud computing is having for energy and the consequences of building all of these data centers. Can you walk us through to more granular levels, what companies or what stocks for appealing to you as you look at Yes and Video, which you said is in your portfolio with these others that are kind of secondary plays when it comes to AI.

I would be Eten which is etn mcre Eme, Quanta Services PWR, and then Vistra which is v our Tea. Those all help make the grid more efficient expand. The one thing holding the grid back is the Biden administration did pass a law that if you add a new not a law, but an executive order that if you do a new natural gas power plant, they would like you to sequester the carbon and that's an eight year permit. So normally you would just hook up a natural gas power plant and that's how you expand the grid. Okay, but when you put all these new rules on it, it really messes things up. Now Here in Nevada, you know, we're next to California. We're extra green. Everything here is solar and batteries. We do have a lot of geothermal, but that can only.

I would be Eten which is etn mcre Eme, Quanta Services PWR, and then Vistra which is v our Tea. Those all help make the grid more efficient expand. The one thing holding the grid back is the Biden administration did pass a law that if you add a new not a law, but an executive order that if you do a new natural gas power plant, they would like you to sequester the carbon and that's an eight year permit. So normally you would just hook up a natural gas power plant and that's how you expand the grid. Okay, but when you put all these new rules on it, it really messes things up. Now Here in Nevada, you know, we're next to California. We're extra green. Everything here is solar and batteries. We do have a lot of geothermal, but that can only.

Do so much.

Do so much.

Since you are in Reno, talk to us about what it's like for the economy. What you're seeing consumers spending their money on, whether you're going to the grocery store or other things. Telltale signs about the economy right now.

Since you are in Reno, talk to us about what it's like for the economy. What you're seeing consumers spending their money on, whether you're going to the grocery store or other things. Telltale signs about the economy right now.

Yeah, Well, you know, Reno is a is a boomtown because we're next to California and people move here, and you know that we got a lot of The Schwab office in Reno is the largest in the world, so there's a lot of money hiding here. Plus we have a lot of corporate money. Microsoft is one of the largest employers in Reno because there's a two percent tax on gross revenue in Washington State. Amazon is here too, big time, so they're avoiding the state corporate taxes. But we have Apple, Google, Intel, the into It founders, my neighbor, you know, Cisco's here that they're all a lot. We have a lot of Treasury departments here. But yeah, we got a lot of wealthy retirees. You know, the Californians come in and buy our real estate and what used to be you know, you know, two hundred foot for a home is now in the hills pushing four to five hundred a foot. It's funny the last twelve hundred. But then we have to remind them where they built. But you know, it's it's a boomtown. But you know, we do have extreme weather here and they should have a four wheel drive and they better put snow tires on the right.