WEBVTT - Single Best Idea with Tom Keene: Kelsey Berro & Gautam Mukunda

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, single.

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<v Speaker 2>Bust Idea on a Monday before an eventful week. Of

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<v Speaker 2>course Chicago, Amory Horden having trouble getting Chicago. Terrible storms

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<v Speaker 2>in New York, and I would say hundreds, if not

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<v Speaker 2>thousands of people in the greater New York, Boston Washington

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<v Speaker 2>area couldn't get to Chicago. So it's going to be

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<v Speaker 2>a really eventful Monday Tuesday to get out there. Chris

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<v Speaker 2>President Biden speaking with all the emotion to his Democratic Party,

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<v Speaker 2>and then on we will go and then Jackson Hole

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<v Speaker 2>after that, Lisa Bramwots and I really looking forward to that.

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<v Speaker 2>We just had to stand up meeting here at Bloomberg

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<v Speaker 2>on Jackson Hall. Excited about being with you seven a m.

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<v Speaker 2>Eastern time on Friday. Is where we're focused on for that,

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<v Speaker 2>and of course Chairman speech and we'll have all that coverage,

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<v Speaker 2>here's no question about that. On bonds price up, yield

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<v Speaker 2>down as a basic belief, we've seen that JPM Morgan,

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<v Speaker 2>Bob Michael and Kelsey Barrow have really led the charge

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<v Speaker 2>of the big banks, saying you will see a bid

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<v Speaker 2>price up, yield down. Kelsey Barrow on where we are

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<v Speaker 2>at the end of the summer in bonds.

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<v Speaker 3>I mean, I don't think you really need to say

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<v Speaker 3>that much. I mean, it's really interesting you think about

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<v Speaker 3>the price action this year, and it's really not been

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<v Speaker 3>driven by the Fed speak. It's been driven by the data.

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<v Speaker 3>Right The market has reacted to the data. When the

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<v Speaker 3>data suggests that there's risk of upside on inflation, the

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<v Speaker 3>market reduces the amount of rate cuts for this year.

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<v Speaker 3>When that unwinds, the market prices in more rate cuts.

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<v Speaker 3>So I actually don't think that Chair Pawell needs to

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<v Speaker 3>say that much. That being said, though, I think it

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<v Speaker 3>should be clear that if you look at simple policy rules,

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<v Speaker 3>they would suggest and this is regardless of your view

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<v Speaker 3>on the labor market, simple policy rules would suggest that

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<v Speaker 3>the appropriate policy rate right now is probably about one

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<v Speaker 3>hundred basis points lower than it is today. And that's

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<v Speaker 3>just onfletion coming down alone. Because the Fed, they don't

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<v Speaker 3>see the Fed Funds rate static for the last thirteen months.

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<v Speaker 3>They actually see the real Fed Funds rate has risen

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<v Speaker 3>one hundred and fifty basis points in the last thirteen months.

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<v Speaker 3>That's equivalent to five more rate hikes. So policy has

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<v Speaker 3>been getting incrementally tighter for the last year, and they

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<v Speaker 3>recognize it. It's time to kind of start to move

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<v Speaker 3>away from that regime.

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<v Speaker 2>Kelsey Barrow of JPTE Morgan. There a lot of discussion

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<v Speaker 2>on yield and of course how yield folds into the

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<v Speaker 2>equity markets as well. After what we saw last week,

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<v Speaker 2>best weeks since Nixon was president. I'm kidding, but what

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<v Speaker 2>we saw on the stock market last week, it's amazing

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<v Speaker 2>how the two aur correlated here into the end of

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<v Speaker 2>August and of course our first look into Q four

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<v Speaker 2>of twenty twenty four. One of the joys of August

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<v Speaker 2>is fancy people maybe have time in their schedule to

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<v Speaker 2>want under into the building at our world headquarters. Today

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<v Speaker 2>got Amkunda Legendary at Harvard Business School. We talked about that,

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<v Speaker 2>his relationship with Clay Christensen, who was hugely helpful to

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<v Speaker 2>me over the years. He's missed. Professor Christensen's missed each

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<v Speaker 2>and every day and we lost him way too young

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<v Speaker 2>an age. Mccundu was in, of course, in his wonderful

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<v Speaker 2>terse books on presidential politics. He's now lecturing at Yale

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<v Speaker 2>University among other duties, and he said something that was

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<v Speaker 2>like a third rail. To me, I really really agree

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<v Speaker 2>with this strongly, and that there's this wistful belief that

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<v Speaker 2>we should take our politics back to the normal of

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<v Speaker 2>post World War two American polity the fifties and sixties,

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<v Speaker 2>maybe even into Vietnam in the post Vietnam seventies, where

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<v Speaker 2>I would say, and this was what Professor mccunda was saying,

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<v Speaker 2>is that that wasn't normal, and normal was the span

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<v Speaker 2>of two hundred and fifty years of amony and polarization.

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<v Speaker 2>Got to Macunda of Yale.

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<v Speaker 4>It's actually gone back to the past. Right. What we're

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<v Speaker 4>seeing is an ideological slant toward the slant to media

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<v Speaker 4>that is not we sort of say it's it was

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<v Speaker 4>actually cyclical. It's come back to what it was a newspaper.

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<v Speaker 4>If you read newspapers from the late nineteenth century early

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<v Speaker 4>twentieth century, they were just as partisan as Fox News

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<v Speaker 4>is today. And so what I think what we're seeing

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<v Speaker 4>is people have to relearn the media consumption reflexes that

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<v Speaker 4>they had in that era, and you know, many of

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<v Speaker 4>them won't. What we sort of see if most people

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<v Speaker 4>vote the party line, most people who say their independence

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<v Speaker 4>vote their party line. So the idea that we have

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<v Speaker 4>all ever existed in this kind of sort of socratic

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<v Speaker 4>state where we're having rational discussions about politics. I'm not

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<v Speaker 4>sure that was ever true. I think it's actually the

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<v Speaker 4>job of our system to kind of figure out ways

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<v Speaker 4>to make it work without asking people to do something

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<v Speaker 4>that there's just no historical events they've ever done.

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<v Speaker 2>Professor mccundam, he's at Yale University. We begin an eventful

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<v Speaker 2>we and of course part of it is our study

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<v Speaker 2>of technology. We are just blown away by the YouTube

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<v Speaker 2>development over the summer. Can't wait to get the ending

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<v Speaker 2>August statistics. Got a couple more weeks to go on that.

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<v Speaker 2>We're out at Apple car play, out at Android Auto,

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<v Speaker 2>and on YouTube. We're really featuring the coverage in the

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<v Speaker 2>evening our live show in the evening of the Pacific

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<v Speaker 2>rim and over to India. Today I featured Bangalore is

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<v Speaker 2>the tech center of India. Every day we're featuring somebody

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<v Speaker 2>different within the YouTube world. Please stay with us on

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<v Speaker 2>Apple Podcasts. This is single best idea