00:00Talk me through your view of the price action. The last 24 hours has been worth the history books.
00:06Yeah, I mean, certainly. I think it all comes from a place of unease. It comes from the fact that you've got very high valuations.
00:13Yesterday, obviously, we got the labor market report for September. Now, that I don't think was particularly concerning.
00:20Yes, unemployment rate ticked up, but it was because of a rising participation rate, and that seems like it's unlikely to repeat.
00:25It's now very much a stale data print, so I don't think you can get a lot of signal from it.
00:30But the more worrying aspect of the labor market reports generally is that the November employment report, along with October payrolls, we won't get until after the December Fed.
00:41So that Fed meeting won't have that important information.
00:43And I think there was a bias within the market that those prints would come in on the dovish side.
00:48That made sense because you had the weakening that maybe looked more artificial than what was actually happening because of the shutdown in labor market data we did expect.
00:57And so that dovishness isn't going to come through.
00:59And it means that you have some eight basis points price for December from the Fed that can come out still, especially because you've had more hawkish Fed minutes.
01:07The skew of speeches certainly is leaning that direction.
01:10And so it means that the bias is for more of a sell-off and fixed income as that comes out, and certainly for equity markets to stay on shakier grounds, especially as we head into next week when we get more data.
01:20And you also have Thanksgiving, which I don't know about you, but as an investor, I wouldn't want to put on risk heading into that.
01:25I'd rather just enjoy it.
01:27Yeah.
01:28Enjoy your investments.
01:29Enjoy the turkey.
01:29Totally.
01:31Does it matter, though?
01:32Does it matter what the Federal Reserve is thinking or doing or what the effect is on the bond market?
01:36If the bond market feels still fairly range bound and the correlation between the bond market and everywhere else seems to be broken?
01:43Yeah.
01:44I mean, I think it depends on what kind of investor you are, right?
01:46If you're looking at day-to-day moves and you're worried about kind of short-term gyrations, then certainly it matters in terms of that December pricing.
01:53But further out, yeah, we're still looking at a terminal rate around 3%.
01:56That's been very firm.
01:58And I don't see anything in the next little while that really changed as that if you're not having the data come in because it's a question around neutral.
02:04There's nothing to tell you about neutral from kind of like retail sales on a monthly basis.
02:10So I think certainly if you're a longer-term investor, you can be reassured in the equity market by the fact that you've got monetary and fiscal easing into next year that may get more positive.
02:20And from a rates perspective, that that terminal at 3% looks pretty firm.
02:24Well, given the market is so shaky, it feels shaky this morning, we have PMI data out across the globe, Europe and the U.S.
02:31Could that be something that maybe shifts the bar headed into this Friday?
02:35Yeah.
02:35I mean, European PMI data is expected to come in on the positive side in terms of composite being in expansionary territory.
02:41I wouldn't take a lot of signal from that, though, because it's relative, right?
02:45So when you had tariffs at very high levels post-liberation day, that's much more negative than now that we have a trade deal.
02:53I would also say from the PMI perspective that it doesn't help if you're not spending.
02:58So I think certainly there's still too much of a growth positive price into the euro.
03:03And I think that needs to come out to its detriment.
03:05Are we paying attention to crypto too much?
03:08The price action this morning is extraordinary.
03:11But does it matter?
03:13Yeah, I mean, I think it's because you're already in an environment where people are worried about things, where valuations are high.
03:19Because of that, you're taking kind of any signal that you can, especially because the data is all over the place.
03:24You're trying to look for places.
03:25And I think it is a relevant point that retail investors are very much invested in crypto.
03:30And so if you have sell-offs there, maybe then you need some deleveraging elsewhere.
03:34Maybe that means you get flows out of equities.
03:36But I think, generally, I don't think there's a huge amount of value in what you see in crypto movements.
03:44The movements tend to be quite a lot larger.
03:46Yeah, the signal from it.
03:47Because, you know, how do you value crypto, right?
03:50Like, what's the reasoning behind it?
03:53I can't really tell you, like, why we'd be down 10% one day and up 10% the other day beyond headline noise.
03:59And so the feed-through to equities, for example, which are very much a growth-driven asset, doesn't seem clear-cut to me.
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