00:20:11 · Kristina Campmany, Paul Sweeney, Tom Keene, Kristina Campmany, S6
[00:20:11] S0: I'm heading to Atlanta next week. Don't get me in trouble. [00:20:14] S1: Kristina, in your portfolio, how do you guard against... AI concentration here, because it's not just owning an Invesco bond or something, but boy, if you own a utility bond in Virginia, that might be. [00:20:26] S3: Yeah. Yeah. [00:20:27] S9: It really, again, I think it goes back to that has been the driving story and the driving force of the U S economy this year. So it has been, it's been utilities. It's been the chips. It's been the hyperscalers. It, It feeds into all of these things. We have been, and you guys know this from our conversations, a bit more cautious of our three levers, FX credit, foreign exchange credit, or rates. We've been the most cautious on credit just because of how historically. Tight we are. I think that still kind of remains our bias. I think- There's still not really a case that you need to extend out the curve to duration yet. [00:21:03] S6: One question from Stephanie Roth. People are like, let's get to Stephanie. I'm like, okay, I got one more to Kristina here this morning. I can't emphasize enough the hysteria around hedge funds, bonds. [00:21:16] S3: What is it? [00:21:16] S6: Coreweave? Yeah. [00:21:19] S3: It's like a 16%, 15% yield or whatever. [00:21:22] S6: How should our listeners and viewers separate the noise of AI garbage paper from the real world of capturing a coupon? Look, I think.
00:21:22 · S6, Kristina Campmany, Tom Keene
[00:21:22] S6: How should our listeners and viewers separate the noise of AI garbage paper from the real world of capturing a coupon? Look, I think. [00:21:34] S9: like anything else, like with stocks, with bonds, especially as an individual investor, to go be chasing the one name, the highest yields, like there's obviously all inherent risk in that. I think broad portfolios, diversification, you want exposure to the theme. And I think when we take a step back, the theme of AI is because of the election or because of a wobble in the equity markets is not going. Away, right? The pace may slow down. The. Way it's implemented may change, but I don't know. Even we look at our own world and how your job has changed in the last six months and what we're trying to incorporate. That's not stopping on the switch of a dime, right? [00:22:14] S3: Kristina, thank you. Kristina Campmany with Invesco here this morning. Greatly appreciate it. [00:22:19] S6: As we go to Stephanie Roth here, we say good morning across America. I guess it's a fully employed America. Changing nonfarm payrolls, two-month revision. Even I could do the math. $ 249, 000, a big 165 number, plus $ 84, 000. A nice revision upwards. A lot of other data which bent price down, yield up. The 10-year yield now three basis points. Two-year yield explodes. Higher yield by six basis points. Stephanie Roth to look at the economics of the moment. Stephanie, can you program out with this jobs report, with the inflation reports, with the data, can you program out a continued buoyant nominal GDP rate?
00:22:19 · S6, Stephanie Roth
[00:22:19] S6: As we go to Stephanie Roth here, we say good morning across America. I guess it's a fully employed America. Changing nonfarm payrolls, two-month revision. Even I could do the math. $ 249, 000, a big 165 number, plus $ 84, 000. A nice revision upwards. A lot of other data which bent price down, yield up. The 10-year yield now three basis points. Two-year yield explodes. Higher yield by six basis points. Stephanie Roth to look at the economics of the moment. Stephanie, can you program out with this jobs report, with the inflation reports, with the data, can you program out a continued buoyant nominal GDP rate? [00:23:06] S10: Yeah, I think that's the environment that we're in. I think it will be slightly less than where we've been running. You're probably talking more like a 4.5% nominal GDP for 27 as opposed to something that's notably higher. As where we've been. But it's still a robust economy and one that's incrementally going to be driven by real growth as opposed to inflation. This year. you know, the mix was a bit different because inflation was just running so hot for a variety of reasons. But like overall, the economy's buoyant and it's not just AI. The economy's running on firm footing outside of just the sort of the AI CapEx space.
00:23:06 · Stephanie Roth, Paul Sweeney
[00:23:06] S10: Yeah, I think that's the environment that we're in. I think it will be slightly less than where we've been running. You're probably talking more like a 4.5% nominal GDP for 27 as opposed to something that's notably higher. As where we've been. But it's still a robust economy and one that's incrementally going to be driven by real growth as opposed to inflation. This year. you know, the mix was a bit different because inflation was just running so hot for a variety of reasons. But like overall, the economy's buoyant and it's not just AI. The economy's running on firm footing outside of just the sort of the AI CapEx space. [00:23:39] S1: So again, the change in non-farm payroll data we got today says, you know, the U.S. labor economy is in pretty good shape. All right. If that's the case, let's turn to inflation here. What's your inflation call for 2027? Because I've got, you know, energy prices whipping all around here based upon whatever the latest tweet is.
00:23:39 · Paul Sweeney, Stephanie Roth, Tom Keene, S6
[00:23:39] S1: So again, the change in non-farm payroll data we got today says, you know, the U.S. labor economy is in pretty good shape. All right. If that's the case, let's turn to inflation here. What's your inflation call for 2027? Because I've got, you know, energy prices whipping all around here based upon whatever the latest tweet is. [00:23:55] S10: Yeah, well, when you think about sort of forecasting into the future, energy prices are. Not going to repeat. I certainly hope they don't. Repeat what happened in this year in terms of sort of year-over-year growth rate. So you're naturally going to get disinflationary pressures from oil prices, even if. They stay where they are. And there's good reason to believe that. Oil prices may sustainably come down a little bit. Therefore, you're going to get disinflation on a year-over-year basis from the things that were elevated this year. So anything related to sort of energy prices, anything from airfares, you're going to have the. Tariffs roll off the data. All of these factors that kept inflation elevated this year because they were largely one-off will fade into next year, and we're looking for about 2.5% inflation, which is certainly higher than what the Fed would like, but something that's a lot more tolerable. [00:24:43] S3: Stephanie Roth goes right to where I want to go. [00:24:46] S6: It's like the budget lab at Yale, Natasha and Martha and all that. Stephanie, do you frame out an amendment to our tariff policy given the political bombshell two days ago? [00:25:00] S10: Tariff policy is largely unchanged.
00:25:00 · Stephanie Roth, Tom Keene, S6, Paul Sweeney
[00:25:00] S10: Tariff policy is largely unchanged. [00:25:02] S3: Really? [00:25:03] S10: The revenues are kind of too high to really make any adjustments from that perspective. So tariffs are going to remain. [00:25:08] S3: Come on. Come on. Stop. [00:25:09] S6: We're addicted to tariffs at a fiscal basis. [00:25:13] S10: Kind of at this point. And I don't even think even if we have a Democrat in, you know, when in 2028, I'm not even sure they're going to bring down tariffs all that much, maybe on a targeted basis. But My expectation is the tariffs. Will remain elevated for quite some time because from a deficit perspective, it's not really attractive to trim them so much. [00:25:34] S6: I believe my recollection is the president of the United States touched on this with our John Micklethwaite in conversation. OK. [00:25:41] S3: Once the tariffs are in. They're like an addiction to politicians. [00:25:46] S1: Yeah, I guess so. [00:25:46] S3: You and I are paying them. [00:25:48] S6: Yeah. [00:25:48] S3: Look at the tariff on your Vespa. [00:25:50] S1: I know. [00:25:50] S3: That was unthinkable. [00:25:51] S1: That was unthinkable. So, Stephanie, given this backdrop here of a pretty firm labor market, a market where in 2070 you should see inflation come down somewhat, what does that mean for our Federal Reserve then?