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  • all, I was dying for a big week of negotiation.

  • Signs like the Chinese might have the Americans on the ropes or slightly on the run.

  • You take on the latest salvos this morning.

  • Welcome.

  • Thanks for having me here this morning.

  • Look, there's been a bit of a cat mouse game going on for a while here, Dale.

  • So you'll have ah bit of Olive Branch and then you'll have a little bit of a parry.

  • So I don't think that this is anything more than the radical rhetoric that we've seen over the last several months.

  • As that rhetoric continues and people started saying that we should hunker.

  • Dying for something slightly longer, more enduring and less stable without a mind is the bastion for you.

  • I want to be long American equities.

  • I want to belong the dollar relative to the rest of the world.

  • If we're hunkering down for a longer term, Franka, look, the main reason to be long us right now is that the U.

  • S.

  • Economy is still doing pretty well relative to the rest the world.

  • And so that's reflective in capital flows being interested in US assets.

  • So that continues to propel us markets.

  • But as you say anything that continues to weigh on that that suggests that this is going to deteriorate into a broader global recessionary impact, which ultimately would pull the US down with it.

  • Any of those things are things are going to investors very nervous in this environment.

  • My last gas Laurie.

  • I have a look at this is in the GTV lively opposites attract.

  • I'm talking about equities versus bonds.

  • Undoubtedly, the bond traders really had the narrative, didn't they?

  • I think the phrase that my last gas used the bonds were winning control off the narrative.

  • In other words, the yields really were beginning to turn quite aggressively lower.

  • The shorting has reduced what happens next in this story.

  • In regards the bond market, Laurie, do we see lower yields in the near term?

  • Well, we think the bond market, at least in the U.

  • S.

  • Has it a bit wrong, in the sense that yields on the 10 year at one and 1/2 are not consistent with an economy that's still growing north of 2% are forecast is that 2000 and 19 will be about 2.3% in the US and even 2000 and 20 looks pretty good in about 1.9.

  • So it seems as though rates at one and 1/2 are lower than they should be.

  • On the other hand, when you have zero interest rate policies and other geography is around the world, the US it's pretty much a safe haven.

  • It's a place to put some capital and get at least a little bit of return.

  • So we think that that's a lot of what's driving the lower yields, at least on the long end.

  • We just caught up with Jeffrey, you there and I said to him, You know, was Thursday pivotal moment If you look at the slate car slate off data card last week, manufacturing service is on a less than effusive jobs report, even though the rate of unemployment at a 50 year no wages were a bit dubious.

  • I asked him was at a pivotal moment on Thursday, and he said to me, finding have been a pivotal moment in terms of the markets.

  • But it might have been a pivotal moment in terms off the Fed Chevy and chipping them along to do a little bit more.

  • You say the case for pause is building.

  • Have a look at the rates market.

  • Tell me why you think the case for pause is building.

  • Well, look, we still think that the Fed may move one more time this year.

  • We don't think that it's going to be October.

  • We think it's going to be more like the end of the year, December.

  • But really, the Fed has said repeatedly that they're gonna be data dependent.

  • And when you look at the data, at least in the U.

  • S.

  • Economy, the consumer health is quite strong and about 70% of the U.

  • S.

  • Economy rests on the shoulders of the consumer.

  • So you've got an employment number that came in not, you know, knock your shot socks off.

  • But it was also a number that had, you know, reasonable backing.

  • We had some improvement in the past.

  • You know, a job's growth.

  • We still see you hours worked being pretty good.

  • So there doesn't seem to be anything on the horizon that suggest that the consumer is gonna crack.

  • So as long as that doesn't happen, there's no reason for the Fed to get into a bit of an emergency mode here, okay?

  • And you've got some tactical calls in terms of credit versus duration.

  • One of two people have sort of said to me.

  • Look, man, what maybe I'm missing is that the scale off taking those duration trades off has been quite substantial.

  • So when you say you prefer credit to duration, just talk me through that.

  • Yeah.

  • So, again, a zay mentioned our views Are that, you know, 10 years at one and 1/2 just doesn't seem consistent with the kind of broad growth backdrop that we have in the U.

  • S.

  • On the other hand, even though they were late, we're late cycle.

  • We do believe that low interest rates enable companies to continue to finance and continue to have their own operations do well here.

  • So, you know, at the margin we think investment grade looks better than Treasuries because you're picking up a little bit of income there at the margin.

  • We like the certain sectors of the high yield market here again, a nice sort of a balance between ah, large overweight to equities versus having a little bit of our equity exposure through high yield credit.

  • So We're trying to be very selective in here.

  • We're trying to stay focused on quality, but we are looking for those places to get incremental return above just the risk free rate.

all, I was dying for a big week of negotiation.


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