WEBVTT - Biden's Disastrous Debate and Fresh Inflation Data 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.160 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.480 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen, and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.000 the Bloomberg Terminal, and the Bloomberg Business app. Scarlet for 0:00:47.240 --> 0:00:50.000 I mean the New York Post. No fan of President Biden, 0:00:50.040 --> 0:00:52.440 let's be sure now, but this is all over the media. 0:00:52.479 --> 0:00:53.199 I didn't know this. 0:00:53.960 --> 0:00:58.760 The President speaks at a Georgia waffle house following the 0:00:58.880 --> 0:01:02.240 date debate before it's quote, I think we did well. 0:01:02.640 --> 0:01:05.560 Can you Could you see Libby Cantrell in a waffle house? 0:01:06.360 --> 0:01:07.920 I just can't. I can't you. 0:01:08.000 --> 0:01:09.720 In the music business, we used to call it shay 0:01:09.800 --> 0:01:12.640 waff because you know, you're driving down on Nashville and 0:01:12.680 --> 0:01:13.800 it's the only thing open. 0:01:13.600 --> 0:01:15.559 At three am doing a road trip. 0:01:15.600 --> 0:01:16.640 Maybe have you ever. 0:01:16.480 --> 0:01:19.680 Been to a waffle house? I had cracker barrel looked 0:01:19.760 --> 0:01:23.160 like you know, Danielle, I'm sixty. You've never been to 0:01:23.200 --> 0:01:25.040 a waff louse? Joining us? 0:01:25.080 --> 0:01:28.120 Now? The queen of the waffless Lebby Cantrell joined us. 0:01:28.120 --> 0:01:29.760 Some pink quote, Libby, have you ever darked at the 0:01:29.840 --> 0:01:30.840 door of a waffle house? 0:01:31.120 --> 0:01:34.319 A waffle I love twelve you know, a midnight waffle. 0:01:36.640 --> 0:01:36.920 Cheese? 0:01:37.240 --> 0:01:41.320 I mean, come on, you know, and that's in that 0:01:41.480 --> 0:01:42.440 synthetic butter. 0:01:43.040 --> 0:01:45.040 It's just too much. Libby. 0:01:45.120 --> 0:01:47.520 Thank you so much for joining us after the history 0:01:47.520 --> 0:01:50.120 made last night, I. 0:01:50.080 --> 0:01:51.680 Got eight ways to go here. 0:01:51.720 --> 0:01:55.560 But let's stay with your public policy, which means the 0:01:55.680 --> 0:02:01.480 legislative branch. How does Capitol Hillary act we witnessed last night? 0:02:01.560 --> 0:02:04.240 Yeah, I mean there is definitely the reports of a 0:02:04.280 --> 0:02:07.800 collective freak out to use a more technical term, the 0:02:07.840 --> 0:02:12.120 collective bed wedding are are correct. I think folks who 0:02:12.280 --> 0:02:15.920 are on the ballot, particularly those who are in vulnerable 0:02:16.160 --> 0:02:19.320 Senate races, who are in House races that you know, 0:02:19.360 --> 0:02:22.919 of course, Democrats control the Senate by one vote. How 0:02:23.000 --> 0:02:26.440 the Democrats are hoping to flip the House Republicans controlled 0:02:26.440 --> 0:02:28.600 by a very small margin, and I think those folks 0:02:28.680 --> 0:02:30.200 are very concerned this morning. 0:02:30.639 --> 0:02:30.799 Now. 0:02:31.000 --> 0:02:34.560 Interestingly, as you know, they've been actually outperforming on polls, 0:02:35.000 --> 0:02:37.360 so there has been a big gap between those candidates 0:02:37.360 --> 0:02:40.120 in Biden. But I think they are very concerned that 0:02:40.160 --> 0:02:42.919 Biden will be a headwind to both re election into 0:02:43.040 --> 0:02:44.560 into their aspirations of flipping. 0:02:44.760 --> 0:02:48.200 In your world, you're surrounded by people that won't shut up. 0:02:48.320 --> 0:02:49.920 I mean, I don't know if you know this, but 0:02:49.960 --> 0:02:53.240 they have this surveillance cork where it's Tucker, you know, 0:02:53.320 --> 0:02:55.440 Scarlet can put in my mouth time shut up. 0:02:55.760 --> 0:02:57.680 In your world, nobody stops talking. 0:02:58.320 --> 0:03:02.399 Was President Trump advantaged last night because he didn't. 0:03:02.200 --> 0:03:04.120 Have a mic on a lot so he had to stop? 0:03:04.160 --> 0:03:04.480 I think that. 0:03:04.560 --> 0:03:08.600 I think the format absolutely favored President Trump. I think 0:03:08.760 --> 0:03:11.720 so ironically they were the Biden world thought that not 0:03:11.800 --> 0:03:16.160 having an audience being able to mute the mics would 0:03:16.160 --> 0:03:19.240 be a detriment to President Trump, but if anything, he 0:03:19.320 --> 0:03:23.840 seemed more controlled, more moderated. Now, how both how both 0:03:23.919 --> 0:03:27.880 candidates characterize each other's presidencies were just not correct. There 0:03:27.880 --> 0:03:30.240 were a lot of falsehoods I think on Zay honestly, 0:03:30.360 --> 0:03:33.800 on both sides. But but you know, the reality is 0:03:33.840 --> 0:03:36.440 that President Biden did not fact check President Trump. 0:03:36.720 --> 0:03:37.320 Uh. 0:03:37.360 --> 0:03:39.800 And of course the broader issue here is that he 0:03:39.880 --> 0:03:43.680 just underscored all of the concerns about about his age 0:03:43.720 --> 0:03:47.680 and and President Trump, on the other hand, looked energetic, 0:03:48.040 --> 0:03:49.720 he was confident, and he was very much on his 0:03:49.760 --> 0:03:52.040 talking points. He talked a lot about immigration, he talked 0:03:52.080 --> 0:03:55.280 a lot about inflation. I think from a market's perspective, 0:03:55.280 --> 0:03:58.120 we didn't hear anything about deficit restraint. 0:03:58.440 --> 0:03:58.920 Uh. 0:03:59.120 --> 0:04:01.680 You know, I think if any thing, both gentlemen really 0:04:01.720 --> 0:04:05.160 reinforced the importance of Medicare and social Security. There was 0:04:05.200 --> 0:04:08.080 no really whiff of reform. President Biden talked a little 0:04:08.120 --> 0:04:11.400 bit about it, and we they talked about tariffs, and 0:04:11.400 --> 0:04:14.080 so I think the big themes for the markets, you know, 0:04:14.240 --> 0:04:19.080 higher deficits and more tariffs, more hawkishness on China. Those 0:04:19.120 --> 0:04:20.760 are I think, if if you're trading in front of 0:04:20.760 --> 0:04:23.000 your screen this morning, those are kind of the big takeaway. 0:04:23.240 --> 0:04:27.240 John does that here a talkers doing? You know, mean. 0:04:27.200 --> 0:04:29.960 Stocks here these trading, But those are those I think 0:04:29.960 --> 0:04:32.479 are the big takeaways. Obviously, the chances of President Trump 0:04:32.520 --> 0:04:35.440 being re elected are higher this morning than they were yesterday. 0:04:35.560 --> 0:04:38.440 I think after yesterday's debate, it's clear that style over 0:04:38.520 --> 0:04:42.920 substance was the big takeaway from the proceedings of ninety minutes. 0:04:43.640 --> 0:04:45.400 I guess the question now is how does the White 0:04:45.440 --> 0:04:48.279 House regain control of the narrative versus how do Democrats 0:04:48.279 --> 0:04:50.120 as a party regain control of the narrative. 0:04:51.320 --> 0:04:54.120 Yeah, I think there is no really indication from Biden 0:04:54.160 --> 0:04:56.880 will released the campaign world that there is a problem. 0:04:57.279 --> 0:04:59.120 I do think that, you know, it sounds like from 0:04:59.160 --> 0:05:01.440 from you know what, folks are saying that internally in 0:05:01.440 --> 0:05:04.080 the White House there are concerns. I think it's called 0:05:04.120 --> 0:05:07.120 the broader question is even though folks are talking about 0:05:07.160 --> 0:05:11.960 an open convention or replacing President Biden, the only person 0:05:12.000 --> 0:05:15.080 who can make that decision is Biden himself. We are 0:05:15.120 --> 0:05:17.040 not in the nineteen sixties, right, This is not in 0:05:17.120 --> 0:05:19.880 nineteen sixty This is not nineteen sixty eight where you 0:05:19.960 --> 0:05:24.000 had party elders in the back room smoking cigars after 0:05:24.080 --> 0:05:27.440 the testing. And I we keep reinforcing that to clients. 0:05:27.640 --> 0:05:31.280 Is that just the party mechanics are so different from 0:05:31.320 --> 0:05:34.360 those days. It's a really only President Biden can make 0:05:34.360 --> 0:05:37.039 the decision on whether he is going to continue to 0:05:37.080 --> 0:05:39.800 be on the ticket, and this is his decision alone. 0:05:39.600 --> 0:05:42.680 With PIMCO and particularly with the a leons on the 0:05:42.720 --> 0:05:47.080 continent of Europe. You've always had an international feel foreign Affairs, 0:05:47.080 --> 0:05:50.200 and I give Foreign Affairs great credit. They had two 0:05:51.000 --> 0:05:55.599 Biden Trump foreign analysis within the latest issue, and the 0:05:55.640 --> 0:05:58.160 democratic side, of course was done by Ben Rhoades. Who 0:05:58.240 --> 0:06:02.560 else Ben Rhodes last night on Twitter? Just think about 0:06:02.560 --> 0:06:06.760 what that debate looked like to people and leaders around 0:06:06.760 --> 0:06:10.240 the world. Libya, how you mentioned this earlier? Scarlett? How 0:06:10.240 --> 0:06:13.760 will this be taken particularly by Beijing? Nick Burns has 0:06:13.800 --> 0:06:15.599 to deal with Beijing over there. 0:06:15.960 --> 0:06:17.960 Yeah, I mean, and I actually, by the way, that 0:06:18.080 --> 0:06:21.760 Foreign Affairs article Ben Rhod's article is very interesting. Robert 0:06:21.800 --> 0:06:24.880 O'Brien's article in that in that latest issue, I would say, 0:06:24.880 --> 0:06:27.280 if you're interested in what a Trump two point zero 0:06:27.320 --> 0:06:29.400 foreign policy will look like, that is worth a read 0:06:29.480 --> 0:06:32.159 because he sort of lays out the roadmap for foreign policy. 0:06:32.920 --> 0:06:33.279 You know this. 0:06:33.560 --> 0:06:35.520 Of course President Biden is on the way a candidate. 0:06:35.560 --> 0:06:37.039 He is the president of the United States, and so 0:06:37.080 --> 0:06:40.000 I think it's what what signal did he send both 0:06:40.080 --> 0:06:43.360 our allies but also to China. Well, you know, he 0:06:43.480 --> 0:06:45.680 you know, he did not, of course, restore any confidence 0:06:45.680 --> 0:06:48.000 that he can manage for more years, let alone night 0:06:48.040 --> 0:06:50.400 next ninety minutes. So I think it, you know, it 0:06:50.560 --> 0:06:53.760 really undermined. You know, I think I don't I don't 0:06:53.760 --> 0:06:54.840 want I don't want to. I don't want to be 0:06:54.920 --> 0:06:57.960 hyperbolic here. We don't want to over extrapolate from one debate. 0:06:58.120 --> 0:06:59.160 But again it reinforced. 0:06:59.160 --> 0:07:01.159 Okay, cume to the So what do you tell Jerome 0:07:01.200 --> 0:07:06.000 Schneider today he's in short term paper. What's the market 0:07:06.120 --> 0:07:08.919 effect for Jerome Schneider at PIMCO that. 0:07:09.000 --> 0:07:09.920 You see in Washington. 0:07:09.960 --> 0:07:11.800 Well, again, I think that the big takeaway from last 0:07:11.880 --> 0:07:14.120 night is that deficits are going to continue to go 0:07:14.280 --> 0:07:17.400 up because neither candidate is going to reform the entitlements. 0:07:18.200 --> 0:07:20.400 They may not be able to spend a lot more, 0:07:20.400 --> 0:07:22.520 but they're not going to do anything about our structural 0:07:22.760 --> 0:07:26.000 deficit issue. And again, tariffs are likely to go up. 0:07:26.040 --> 0:07:29.720 I thought the interesting conversation around tariffs was that President 0:07:29.760 --> 0:07:33.600 Trump was not defensive of his tariff plan. He was 0:07:34.000 --> 0:07:36.400 leaning into it. He was talking about how it wasn't 0:07:36.440 --> 0:07:39.600 going to increase inflation, how it was a good thing 0:07:39.720 --> 0:07:42.200 for the United States, both from national security person and 0:07:42.240 --> 0:07:45.240 an economic perspective. He talked about deficit reduction in terms 0:07:45.280 --> 0:07:48.440 of tariffs. So I think the big takeaway Tom is 0:07:48.560 --> 0:07:51.600 and this is true. If Biden's elected too, deficits are 0:07:51.640 --> 0:07:54.800 going up and likely we're having more hawkish relationship with 0:07:54.840 --> 0:07:55.560 China and tariffs are. 0:07:55.520 --> 0:07:58.040 Going to Let me thank you, Libby ConTroll with Public 0:07:58.080 --> 0:08:02.440 Policy and PIMCO here after this historic debate. 0:08:12.840 --> 0:08:14.800 The first smart. 0:08:14.600 --> 0:08:19.360 Note last evening was from Terrence Haynes. He's with Pangaea policy. 0:08:19.840 --> 0:08:23.080 He's been doing this forever. You know, he was prepared. 0:08:23.600 --> 0:08:27.480 But the bottom line is Terry Haynes absolutely nailed it 0:08:27.880 --> 0:08:31.920 last night with perspective over what we saw Skyletfu and 0:08:31.960 --> 0:08:35.560 Tom Key Now with Terry Haines. Terry, I'm not going 0:08:35.640 --> 0:08:37.520 to mince words off your note. I'm going to pick 0:08:37.840 --> 0:08:40.520 a couple ideas here as I can. 0:08:42.040 --> 0:08:42.439 Others. 0:08:42.679 --> 0:08:46.680 The Democrats, particularly alike, nervous for next week until the 0:08:46.760 --> 0:08:52.200 polling consequences fully shake out. How low will the polling be, 0:08:52.480 --> 0:08:56.360 how will they adjust after President Biden's performance. 0:08:57.280 --> 0:08:59.679 Well, you know, I don't think the polling is gonna 0:08:59.760 --> 0:09:01.960 change a great deal over the next ten days. That 0:09:02.040 --> 0:09:06.240 is instinct on my part. But compare this Biden to 0:09:06.320 --> 0:09:09.000 three points. Biden is at you know, roughly forty two 0:09:09.000 --> 0:09:12.440 percent right now, he and Trump are tied. Thirty three 0:09:12.480 --> 0:09:16.240 percent of those surveyed in the CNN Flash post debate 0:09:16.320 --> 0:09:19.840 poll thought Biden won the debate. And you know, there's 0:09:19.880 --> 0:09:23.480 a bunch of different snark we could respond to it, 0:09:23.800 --> 0:09:26.600 but they you know, but there's third of those not 0:09:26.640 --> 0:09:29.760 too far off the two percent thought that he won. 0:09:30.320 --> 0:09:32.280 So I think what you're probably going to get is 0:09:32.320 --> 0:09:34.920 some sort of a dip. But you know, short attention 0:09:35.000 --> 0:09:38.040 span theater here is going to move on to Trump, immunity, 0:09:38.120 --> 0:09:41.440 Trump and you know, Trump sentencing conventions, all kinds of 0:09:41.480 --> 0:09:43.840 other things. Meanwhile, Biden's got a lot of time to 0:09:43.880 --> 0:09:46.599 try to correct the ship, and Democrats have nowhere to 0:09:46.640 --> 0:09:48.640 go on this. Frankly, Okay, well that's. 0:09:48.520 --> 0:09:50.240 A really important distinction. Now. 0:09:50.400 --> 0:09:53.360 The zeitgeist this morning is they do have a place 0:09:53.400 --> 0:09:57.760 to go. Why can't they go to a president who 0:09:57.800 --> 0:10:02.080 decides with his family to in some form not run 0:10:02.160 --> 0:10:04.880 for a second term. And there's seven or eight other 0:10:04.920 --> 0:10:07.720 people that can make this look like Grover Cleveland Alexander 0:10:08.040 --> 0:10:09.959 in eighteen eighty, Why can't they do that? 0:10:11.840 --> 0:10:13.520 That was Grover Cleveland, not Grover Cleveland. 0:10:13.679 --> 0:10:15.080 Excuse me, sorry. 0:10:16.400 --> 0:10:22.160 Anyway, But the point is really twofold. One is that 0:10:22.200 --> 0:10:25.800 Biden's got a tight grip on the party. Secondly, you know, 0:10:25.840 --> 0:10:28.760 a lot of the party's been enabling and pockets of 0:10:28.800 --> 0:10:31.440 the media as well. Not this not this network, but 0:10:31.480 --> 0:10:35.720 pockets in the media have been enabling Democrats, particularly corporate 0:10:35.760 --> 0:10:39.080 Democrats in Washington, trying to ignore this as best they can. 0:10:39.480 --> 0:10:42.360 You know, now the reckoning is here. You know, the 0:10:42.720 --> 0:10:44.480 last thing I think they will do is make a 0:10:44.520 --> 0:10:47.880 snap decision to jett us and the sitting president off 0:10:47.920 --> 0:10:50.320 the ticket. And the sitting president will resist that with 0:10:50.400 --> 0:10:52.360 every fiber, and he's being He's been after this for 0:10:52.400 --> 0:10:56.920 fifty years. So you know, reality will set in and 0:10:57.080 --> 0:10:59.040 the plan B will be you know, how do we 0:10:59.320 --> 0:11:01.240 how do we prop this up and move forward? 0:11:02.040 --> 0:11:04.120 Let me bring in Scarlet foo in for plus wing 0:11:04.240 --> 0:11:04.720 this one. 0:11:04.720 --> 0:11:08.440 Scarlett Terry. We know a lot of Americans don't like 0:11:08.600 --> 0:11:12.440 the candidates running for president in November and they want 0:11:12.520 --> 0:11:17.040 someone else. Does the debate boost any third party candidates? 0:11:18.240 --> 0:11:21.840 You know, I don't think it does, Scarlett, And you know, 0:11:22.080 --> 0:11:25.520 there's a huge disparity and a lot of things related 0:11:25.559 --> 0:11:27.680 to this election. One is the appetite for a third 0:11:27.679 --> 0:11:32.320 party candidate compared with the actual third party candidates. You know, 0:11:32.640 --> 0:11:35.079 I thought at one point, probably back in January or 0:11:35.120 --> 0:11:38.480 so February, that Bob Kennedy had a pretty decent shot 0:11:38.600 --> 0:11:42.199 at becoming a serious candidate. He's decided to turn himself 0:11:42.240 --> 0:11:45.920 into a niche candidate, and his numbers reflect that the 0:11:46.000 --> 0:11:48.280 air is slowly being let out of the balloon and 0:11:48.320 --> 0:11:51.520 will continue to I think, continue in that direction. The 0:11:51.559 --> 0:11:54.199 other thing I want to point out to you, it's 0:11:54.200 --> 0:11:57.400 implied in your question, is you know, where do people go? 0:11:58.000 --> 0:12:02.080 If this was any other Republican other than Trump, you'd 0:12:02.120 --> 0:12:06.680 see wholesale flight from Biden to that Republican candidate. I 0:12:06.679 --> 0:12:11.600 think polling shows continues to show though that even though 0:12:11.640 --> 0:12:14.960 people are kind of marginal on Biden, they don't want 0:12:14.960 --> 0:12:17.560 to go to Trump. There's no such thing as a 0:12:17.640 --> 0:12:21.840 somewhat disapproves of Trump. It's all strong disapproval. So you know, 0:12:21.920 --> 0:12:23.720 these people are in a bit of a quandary, which 0:12:23.800 --> 0:12:27.240 you know, in a backhanded way, works in Biden's favor. 0:12:27.280 --> 0:12:27.640 I think. 0:12:27.880 --> 0:12:30.360 Okay, so that's how it stands with voters. What about 0:12:30.720 --> 0:12:34.840 our allies, our rivals in the global theater as Democrats 0:12:34.840 --> 0:12:36.960 wait for polls to come out, and you said it'll 0:12:36.960 --> 0:12:39.960 be a couple of days. How does Europe, how does 0:12:40.120 --> 0:12:44.319 China prepare to think about what might happen in November? 0:12:45.000 --> 0:12:47.120 Well, you know, I've been banging the drama on this 0:12:47.280 --> 0:12:50.720 for nine months to a year. I think, you know, 0:12:50.720 --> 0:12:55.479 we've got the highest geopolitical risk in over fifty years already. 0:12:56.280 --> 0:12:58.960 So you know, the net of last night's debate is 0:12:59.000 --> 0:13:02.600 that it's negative for for geopolitical risk and it's negative 0:13:02.600 --> 0:13:07.679 for US domestic political risk as well. You know, our 0:13:07.760 --> 0:13:11.679 ally or excuse me, rfos already feel somewhat emboldened. That's 0:13:11.720 --> 0:13:14.440 a whole other conversation as to why. But they do, 0:13:15.080 --> 0:13:20.040 and you know, allies now officially you're probably going to 0:13:20.080 --> 0:13:21.360 be a little bit more disquieted. 0:13:21.600 --> 0:13:24.640 I'm trying to avoid the you know, the twenty four 0:13:24.640 --> 0:13:27.760 hour culture or cable TV talk Terry, But I got 0:13:27.760 --> 0:13:30.520 to go to a single sentence of your brilliant note 0:13:30.559 --> 0:13:32.800 from last night. So the first thing I read, folks 0:13:32.880 --> 0:13:36.680 last night, coming office tobacco. You said of the President 0:13:36.760 --> 0:13:40.680 of the United States, sometimes over prepped and was without 0:13:40.840 --> 0:13:44.800 humor a sin for an Irish American politician. 0:13:45.440 --> 0:13:48.240 This was no JFK last night. I get it. But 0:13:48.800 --> 0:13:51.600 the over prepped I think is brilliant. Terry. 0:13:51.960 --> 0:13:57.560 His first answer, I was thunderstruck by the fectoidness of it. 0:13:59.280 --> 0:14:01.959 Yeah, yeah, I think so. The you know, I heard 0:14:02.000 --> 0:14:04.439 that a bunch in the debate where you know you 0:14:04.720 --> 0:14:07.240 could almost see the you know, you can almost hear 0:14:07.280 --> 0:14:10.800 the click, and you know, like you know, this is 0:14:10.800 --> 0:14:15.280 the spiel that works, and you know with with polsters 0:14:15.360 --> 0:14:18.760 and fact gatherers, and you know this is my answer, 0:14:19.080 --> 0:14:22.360 you know, kaboom. And of course that that you know, 0:14:22.440 --> 0:14:24.880 that's a double sided sword too, because you did that 0:14:24.920 --> 0:14:29.320 whole medicare daff happens when when he forgets the line 0:14:29.360 --> 0:14:34.560 and the transition. So you know, Biden's coin throughout his 0:14:34.600 --> 0:14:39.320 career has been affability and relatability, and neither showed up 0:14:39.400 --> 0:14:41.080 last night, and that's unfortunate for him. 0:14:41.280 --> 0:14:43.120 Terry Haynes, thank you so much, and for all of 0:14:43.200 --> 0:14:46.160 us at Bloomberg, thank you for your perspective across many 0:14:46.240 --> 0:14:48.920 conversations in the past twenty four hours. 0:14:48.960 --> 0:14:56.760 Mister Haynes is with pen Geez. I know he'll be 0:14:56.800 --> 0:14:58.280 here in July fifth. 0:14:58.160 --> 0:15:00.520 And that is Neil Dutta is all of you know, 0:15:00.560 --> 0:15:03.440 I thought you did a phenomenal job in twenty twenty 0:15:03.480 --> 0:15:09.040 three of being optimistic, Neil Data of Renaissance Redmac. I 0:15:09.040 --> 0:15:14.080 should say, are you still optimistic about the American economic experiment? 0:15:16.440 --> 0:15:19.360 I mean, my optimism is getting a little bit shaken 0:15:20.000 --> 0:15:23.360 because I think the Fed is, you know, on the 0:15:23.400 --> 0:15:26.600 wrong side of the eight ball here. You know, their rhetoric, 0:15:27.280 --> 0:15:30.640 I think doesn't really match the tone of the incoming 0:15:30.680 --> 0:15:34.160 economic information that we're seeing. You know, they're going around 0:15:34.200 --> 0:15:38.240 telling people that the economy is strong. Over the first 0:15:38.280 --> 0:15:41.280 five months of this year, real consumption is growing below 0:15:41.400 --> 0:15:45.600 one percent. New home sales we just learned are running 0:15:45.600 --> 0:15:49.400 at their lowest levels since last November. Ending home sales 0:15:49.400 --> 0:15:54.000 are at fresh record lows, and over the last six months, 0:15:54.000 --> 0:15:59.160 core capital goods orders and shipments are basically flat. And 0:15:59.200 --> 0:16:01.800 I think the reason that matters is because one of 0:16:01.800 --> 0:16:06.480 the things the Hawks have been saying is that financial conditions. 0:16:06.040 --> 0:16:06.760 Are too easy. 0:16:07.200 --> 0:16:11.120 They're too easy, so the FED can't cut if financial 0:16:11.160 --> 0:16:14.320 conditions are so so loose, Why is it that you 0:16:14.360 --> 0:16:16.520 know things that you'd expect to respond to the sort 0:16:16.560 --> 0:16:21.400 of standard financial accelerator model, like housing, like business investment. 0:16:22.720 --> 0:16:23.800 They're flat on their back. 0:16:23.920 --> 0:16:27.920 So either you're looking at the wrong financial stress variable. 0:16:29.040 --> 0:16:30.720 You know. Maybe it's things like loan. 0:16:30.600 --> 0:16:35.000 Rates for for private households more so than corporate credit spreads. 0:16:35.400 --> 0:16:38.080 Maybe it's the strong dollar. Maybe it's just high interest 0:16:38.120 --> 0:16:38.840 rates generally. 0:16:39.120 --> 0:16:40.760 I look more so the equity. 0:16:40.400 --> 0:16:43.320 Prices that that really is what we should be focused on. 0:16:43.400 --> 0:16:45.760 Scar is Scarlet, by the way, Tom, I haven't talked 0:16:45.760 --> 0:16:48.640 to Scarlett, I feel like in so long, so it's 0:16:48.680 --> 0:16:49.360 good to hear her. 0:16:50.120 --> 0:16:50.680 To hear you know. 0:16:50.760 --> 0:16:52.720 I mean, she's she's like doing the twenty four hour 0:16:52.800 --> 0:16:53.440 shift today. 0:16:53.440 --> 0:16:56.360 But the don is with his kids in the afternoon. 0:16:56.360 --> 0:17:00.600 He's like, forget about Scarlet. Neil dota with scar Good 0:17:00.640 --> 0:17:01.880 morning all Neil. 0:17:01.960 --> 0:17:04.159 Let me ask you about the core PC and just 0:17:04.200 --> 0:17:07.040 dig into it a little bit more because it's slowing down. 0:17:07.080 --> 0:17:09.840 The games are slowing down in large part because oil 0:17:09.880 --> 0:17:12.080 prices have come down, and I know we're talking about 0:17:12.280 --> 0:17:14.920 core versus non core, but in any case, and declining 0:17:15.000 --> 0:17:18.840 goods prices, but services which does include things like home 0:17:18.880 --> 0:17:21.359 insurance or auto insurance that remains sticky. I got the 0:17:21.400 --> 0:17:25.440 bill for my home insurance. It was stunning, and when 0:17:25.440 --> 0:17:29.120 I asked the broker to look into other policy premiums, 0:17:29.359 --> 0:17:31.600 couldn't find anything better. So I was stuck with it. 0:17:32.320 --> 0:17:36.080 And we're not talking about two point six percent increase. 0:17:36.119 --> 0:17:37.720 We're talking about twenty percent. 0:17:37.400 --> 0:17:41.280 Of your house price has gone up, So it's a wash. 0:17:40.080 --> 0:17:43.480 Oh, John, I don't think I had to cut. 0:17:43.240 --> 0:17:46.880 The dogs back from Fancy Hills dog food to some 0:17:47.000 --> 0:17:48.600 you know, cheap costco. 0:17:48.280 --> 0:17:51.440 Thing you guys are because of the insurance continue scarlet. 0:17:51.600 --> 0:17:53.439 So me, you'll talk a little bit more about the 0:17:53.520 --> 0:17:57.000 services inflation that we're seeing and the stickiness there and 0:17:57.119 --> 0:18:00.040 whether we're not paying enough attention to. 0:18:02.240 --> 0:18:05.159 Well, I think we're paying too much attention to it, 0:18:05.240 --> 0:18:08.120 quite frankly, because this is being used as a rationale 0:18:08.480 --> 0:18:12.280 for sort of holding off on rate cuts, and frankly, 0:18:12.520 --> 0:18:16.879 I think what's interesting is that we can say why 0:18:16.960 --> 0:18:20.800 core services inflation has been strong, but I think it's 0:18:20.840 --> 0:18:24.080 more challenging to lay out a coherent rationale for why 0:18:24.080 --> 0:18:26.719 it will stay strong. One of the reasons why we 0:18:26.760 --> 0:18:29.840 look at core services is because of the labor market sensitivity. 0:18:30.240 --> 0:18:32.800 If you look at unit labor costs over the last year, 0:18:32.920 --> 0:18:35.800 they've been growing less than one percent at an annual rate. 0:18:36.680 --> 0:18:41.720 So where's the inflation coming from. You talk about insurance costs, 0:18:41.720 --> 0:18:44.199 and it's true that insurance costs have gone up, but 0:18:44.280 --> 0:18:46.720 it's also true that the underlying value of the asset 0:18:46.760 --> 0:18:49.480 you're ensuring is not rising as rapidly as it once was, 0:18:50.119 --> 0:18:53.800 whether that be housing or more importantly, autos. Right, auto 0:18:53.840 --> 0:18:58.240 adjacent services, things like motor vehicle insurance, maintenance and repair costs, 0:18:58.640 --> 0:19:03.200 those have right, those are for disinflationary pressure because the 0:19:03.280 --> 0:19:04.760 value of the car is declining. 0:19:04.880 --> 0:19:05.879 I mean, if we look. 0:19:05.760 --> 0:19:08.919 At wholesale auction prices for use vehicles, it looks like 0:19:09.640 --> 0:19:11.399 used car prices will continue. 0:19:11.000 --> 0:19:12.280 Deflating over the summer. 0:19:12.359 --> 0:19:14.400 We already know that new car prices are done about 0:19:14.400 --> 0:19:17.479 a percent last year. So I think it's just important 0:19:17.520 --> 0:19:20.359 to kind of think about first principles and what do 0:19:20.440 --> 0:19:22.879 we know? People are talking about how we're done with 0:19:22.920 --> 0:19:25.720 the disinflation and goods with the dollar breaking out to 0:19:25.800 --> 0:19:28.000 your to date highs, So how does that work? I mean, 0:19:28.000 --> 0:19:29.920 most of what we import our consumer goods. 0:19:30.000 --> 0:19:34.359 So anyway, well, Neil dunnah with us, and we're going 0:19:34.400 --> 0:19:36.760 to continue with mister Dota Gino Martin Adams with us 0:19:36.800 --> 0:19:38.760 as well. We are commercial free for you in this 0:19:38.880 --> 0:19:43.120 eight o'clock our lots going on future stabilize up eighteen 0:19:43.160 --> 0:19:46.480 and out to up twenty four now back to up eighteen, 0:19:46.560 --> 0:19:50.399 mark the up nineteen right now, SMB futures, NaSTA c 0:19:50.400 --> 0:19:53.000 cup half a percent is as well. 0:19:53.160 --> 0:19:53.640 Neil Donta. 0:19:53.720 --> 0:19:56.160 We just had an economist on talking about sub two 0:19:56.200 --> 0:20:00.600 percent real GDP for six months Q one Q two. 0:20:00.680 --> 0:20:03.520 Do you buy into that that the American economy is 0:20:03.520 --> 0:20:05.320 that moldy. 0:20:06.880 --> 0:20:09.200 I mean, you could talk me into something like that. 0:20:09.280 --> 0:20:11.159 I mean, we had sub one and a half percent 0:20:11.240 --> 0:20:15.960 growth in the first quarter. I do think that, you know, 0:20:16.000 --> 0:20:18.960 it looks like Q two is running about two and 0:20:18.960 --> 0:20:22.679 a half and you know, so you average that out, 0:20:22.720 --> 0:20:25.399 you're talking about a round two percent for the first 0:20:25.400 --> 0:20:28.040 half of the year. I think what's important is that 0:20:28.240 --> 0:20:31.159 private domestic demand is clearly slowing. I mean, one of 0:20:31.200 --> 0:20:33.919 the reasons why there was a little bit of enthusiasm 0:20:33.960 --> 0:20:37.080 in the first quarter is because we had such a 0:20:37.119 --> 0:20:40.440 strong private domestic demand backdrop in Q one. 0:20:40.520 --> 0:20:42.880 But remember that a lot of that was premised on. 0:20:42.800 --> 0:20:45.840 A sixty basis point increase in residential investment which we 0:20:45.880 --> 0:20:49.119 know is not going to repeat in Q two and 0:20:49.160 --> 0:20:50.440 probably not in Q three. 0:20:51.600 --> 0:20:52.560 And so again I. 0:20:52.520 --> 0:20:55.480 Think, you know, housing was a steady tailwin for GDP 0:20:55.600 --> 0:20:58.480 growth over the last several quarters. That's unlikely to be 0:20:58.520 --> 0:21:01.640