WEBVTT - Equities, Geopolitics, and Fires 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.040 us live on YouTube. 0:00:27.640 --> 0:00:31.200 A treat on this special edition of Bloomberg Surveillance. Ed 0:00:31.280 --> 0:00:34.800 Yard Denny for an extended conversation, ed I read your 0:00:34.800 --> 0:00:38.120 note carefully yesterday, folks. I can't say enough about the 0:00:38.240 --> 0:00:42.480 value of subscribing to Yar Denny's Quick Takes. You assessed 0:00:42.560 --> 0:00:47.120 the bond market. Should people that own shares be afraid 0:00:47.320 --> 0:00:48.400 of higher yields? 0:00:49.840 --> 0:00:52.400 I think they should be concerned, But all in all, 0:00:52.440 --> 0:00:56.160 I think bond yields of normalized. I think that's important 0:00:56.200 --> 0:00:59.640 to keep that in mind. They were abnormally low between 0:00:59.680 --> 0:01:03.520 the Great Financial Crisis in the Great Virus Crisis because 0:01:03.560 --> 0:01:06.920 the Fed was manipulating rates, it was rigging the bond 0:01:06.959 --> 0:01:10.200 market with the short term rate, the Federal funds rate 0:01:10.600 --> 0:01:14.240 being down to zero, and then of course quantitative easing, 0:01:14.760 --> 0:01:17.000 and now the bond market has been sort of liberated, 0:01:17.480 --> 0:01:20.480 free to tell us what the supply and demand and 0:01:20.520 --> 0:01:23.200 the credit markets really is, and I think we're back 0:01:23.240 --> 0:01:25.520 to where we were before the Great Financial Crisis, when 0:01:25.560 --> 0:01:28.920 bond yields range between four and five percent. So I 0:01:28.920 --> 0:01:30.840 don't think we should freak out about that. I think 0:01:30.840 --> 0:01:33.280 we should actually welcome it because it's a sign that 0:01:33.319 --> 0:01:35.920 the economy is doing just quite well. 0:01:36.120 --> 0:01:38.520 You think, Pa, there's four people on the planet the 0:01:38.600 --> 0:01:39.600 degree with doc. 0:01:39.480 --> 0:01:43.200 Regard so Ed. I mean, given that backdrop, I mean, 0:01:43.200 --> 0:01:45.280 how do you think this Federal Reserve is going to 0:01:45.840 --> 0:01:47.480 proceed for the remainder of twenty twenty five. 0:01:49.120 --> 0:01:53.040 Well, it's interesting, you know, the FATS, they just won't 0:01:53.080 --> 0:01:57.080 listen to me. I don't understand. I understand why I've 0:01:57.080 --> 0:02:02.080 been Back in August of last year, we were saying, 0:02:02.640 --> 0:02:05.920 my collige, Eric Wallstein, and I were saying that the 0:02:05.960 --> 0:02:10.280 economy is resilient, it's strong, it's demonstrated that it could 0:02:10.520 --> 0:02:14.519 withstand a tightening of monetary policy. And again, I think 0:02:14.520 --> 0:02:18.120 the Fed not only tightened the monetary policy when they 0:02:18.120 --> 0:02:20.799 took the Fed Funds rate zero to five and a 0:02:20.880 --> 0:02:25.240 half percent between twenty twenty two and twenty twenty three, 0:02:25.320 --> 0:02:29.160 I think they also normalized interest rates, both the Federal 0:02:29.160 --> 0:02:31.800 Funds rate and the bond deal. They're kind of back 0:02:32.320 --> 0:02:36.080 to normal. But so in August, we thought there was 0:02:36.120 --> 0:02:39.440 no need for the FED to act, but they didn't listen. 0:02:39.520 --> 0:02:42.600 So they did not just twenty five basis points. They 0:02:42.680 --> 0:02:46.960 did fifty basis points in September eighteenth, and we argued 0:02:46.960 --> 0:02:50.560 that that would probably lead to higher bond yields. And 0:02:50.639 --> 0:02:52.960 that's exactly what's happened. We've had the FED funds rate 0:02:53.000 --> 0:02:54.200 down one hundred basis points. 0:02:54.520 --> 0:02:57.680 This is brilliant. Paul I can't say enough about this. 0:02:58.120 --> 0:03:01.360 Overnight on LinkedIn, Paul done a of ubs and he'll 0:03:01.360 --> 0:03:04.280 be with us folks in the coming days. Like doctor 0:03:04.360 --> 0:03:09.440 Yardnni was collegially scathing by to FED in the recent decisions. 0:03:09.480 --> 0:03:13.080 Exactly, so, Ed, I mean, how you let me just 0:03:13.160 --> 0:03:13.920 answer your question. 0:03:13.960 --> 0:03:17.240 The bottom line is I think they're definitely on pause. 0:03:17.400 --> 0:03:19.840 That's the message we're getting from the FED. And I 0:03:19.880 --> 0:03:22.560 think it maybe none and done, or maybe one or 0:03:22.560 --> 0:03:27.000 two and done. But I think the Fed is doesn't 0:03:27.000 --> 0:03:29.120 have to lower interest rates anymore. 0:03:29.200 --> 0:03:32.240 As we just complete two years twenty twenty three, twenty 0:03:32.240 --> 0:03:34.920 twenty four of north of twenty percent returns in s 0:03:34.960 --> 0:03:37.760 and P five hundred indext And how do you think 0:03:37.760 --> 0:03:40.880 about twenty twenty five, stocks, bonds, all that kind of stuff. 0:03:41.160 --> 0:03:43.080 How are you talking to your clients this year? 0:03:44.040 --> 0:03:51.160 Well, I go terms Roaring twenty twenties. Baby yeah, I 0:03:51.200 --> 0:03:54.840 mean so far, so good. Back in twenty nineteen, we 0:03:55.600 --> 0:03:58.760 suggested that the decade ahead, the twenty twenties, could be 0:03:58.800 --> 0:04:01.760 the Roaring twenty twenties. That we've noticed that there's a 0:04:01.760 --> 0:04:06.000 shortage of labor, skilled labor especially, and that there was 0:04:06.600 --> 0:04:13.560 a tremendous plethora of technological innovations that were actually useful, 0:04:13.720 --> 0:04:19.000 that actually work, and are relatively inexpensive to implement, and 0:04:19.120 --> 0:04:22.520 that these technologies would lead to a productivity growth boom 0:04:22.520 --> 0:04:25.480 we've had before. This one seems to be much more 0:04:25.480 --> 0:04:28.560 sustainable and potentially much more significant. 0:04:28.880 --> 0:04:31.920 Edgyard Denny with us folks a special edition of Bloomberg Savannance. 0:04:31.920 --> 0:04:34.240 We're with you till nine o'clock, where am Marie Horden 0:04:34.320 --> 0:04:38.520 and David Gura will join from Washington with the services 0:04:38.560 --> 0:04:43.280 at the National Cathedral for James Earl Carter. Thrilled to 0:04:43.360 --> 0:04:45.640 dann Marie Horden and David Gurrow will give us their 0:04:45.680 --> 0:04:49.040 perspective on that. We are thrilled as well to give 0:04:49.040 --> 0:04:51.560 you ed Yard Denny this morning. I can't say enough 0:04:52.080 --> 0:04:55.400 about in October. I think it was two years ago 0:04:56.000 --> 0:04:57.800 ed Yard Denny and Ed I'm going to give credit 0:04:57.839 --> 0:05:01.159 to the great technician Ralph Enco Poor as well said 0:05:01.160 --> 0:05:06.360 climb on board equities, my friend, you maintain your enthusiasm, 0:05:06.440 --> 0:05:09.480 doctor your Denny. I looked at the lineup of hedge 0:05:09.560 --> 0:05:14.320 fund performance, and everybody hedged last year. Very few people 0:05:14.480 --> 0:05:21.159 were full Yard Denny. Describe full Yard Denny well fully. 0:05:21.160 --> 0:05:25.280 Our Denny right now is stay invested. It's hard for 0:05:25.320 --> 0:05:27.599 me to tell people who've been in cash to jump 0:05:27.600 --> 0:05:31.680 in here because the market isn't cheap. But if you've 0:05:31.720 --> 0:05:37.120 been fully invested, particularly in technology, communication services, industrials, financials, 0:05:37.120 --> 0:05:39.960 which is the sectors we favored, we would actually stay 0:05:40.000 --> 0:05:42.880 with them. I know they're not cheap, but on the 0:05:42.920 --> 0:05:46.520 other hand, their earnings outlook is really quite quite good 0:05:47.600 --> 0:05:48.120 for the year. 0:05:48.279 --> 0:05:50.360 For the current year, we have two hundred and eighty 0:05:50.400 --> 0:05:53.320 five dollars a share for the S and P five hundred. 0:05:53.800 --> 0:05:56.919 That beats all the other strategists on the street. And 0:05:56.960 --> 0:05:59.599 that's consistent with the Roaring twenty twenties idea of a 0:05:59.640 --> 0:06:03.840 product that he led economic boom. 0:06:03.279 --> 0:06:05.280 And it seems like for twenty twenty five, you know, 0:06:05.320 --> 0:06:07.560 given where the FED is ie, probably a little bit, 0:06:08.800 --> 0:06:10.599 you know, maybe a couple of cuts at most. For 0:06:10.600 --> 0:06:12.840 twenty twenty five, it sounds like it's a year where 0:06:12.839 --> 0:06:16.560 earnings really have to push this market higher. Earnings have 0:06:16.600 --> 0:06:18.800 to come through it. Do you have concerns about some 0:06:18.839 --> 0:06:20.560 of the earnings estments out there for this market? 0:06:21.520 --> 0:06:24.359 Well, look, not only does the Fed not listen to me, 0:06:24.480 --> 0:06:28.200 but the market doesn't listen to me. I would love 0:06:28.279 --> 0:06:33.840 to have a nice, civilized, gradual bull market from here 0:06:33.880 --> 0:06:38.400 that's driven just by earnings and not valuations. Valuations are 0:06:38.440 --> 0:06:40.720 not cheap. The buffet ratio is at an all time 0:06:40.800 --> 0:06:46.880 record high. The forward pe is around twenty two. Back 0:06:47.279 --> 0:06:50.240 right before the tech wreck of two thousand, it was 0:06:50.720 --> 0:06:52.960 twenty five, so we're not far from that. I mean, 0:06:53.160 --> 0:06:57.760 information technology and communication services account for a hopping forty 0:06:58.720 --> 0:07:00.960 of the S and P five hundred, and we know 0:07:01.040 --> 0:07:03.200 the thirty percent of the S and P five hundred 0:07:03.520 --> 0:07:05.919 is the magnificent seven. Look, I don't think these stocks 0:07:05.960 --> 0:07:08.159 are going to Magnificent seven are going to go away. 0:07:08.200 --> 0:07:10.280 I think they're here to stay. I think they're going 0:07:10.320 --> 0:07:12.680 to continue to account for a high valuation multiple. I 0:07:12.680 --> 0:07:15.560 think they're going to continue to perform. But I'm also 0:07:15.560 --> 0:07:18.280 accounting on a SMP four hundred and ninety three to 0:07:18.720 --> 0:07:21.640 do well. So year in target is seven thousand on 0:07:21.680 --> 0:07:25.440 the s and P five hundred, which I think can 0:07:25.480 --> 0:07:28.200 be driven mostly up by earnings. 0:07:28.640 --> 0:07:33.760 Tell us about the linkashire of nominal GDP into revenue, 0:07:33.800 --> 0:07:37.040 which supports your earnings, call the margin called the development 0:07:37.040 --> 0:07:39.560 of free cash flow. Do we have a buoyancy of 0:07:39.680 --> 0:07:42.880 five percent nominal GDP sustained? 0:07:44.200 --> 0:07:48.840 I think so. I think again, consistent with the roaring 0:07:48.880 --> 0:07:53.679 twenty twenties scenario, I think the productivity, which is currently 0:07:53.760 --> 0:07:57.800 quadrupled from zero point five percent at an annual rate 0:07:57.880 --> 0:08:01.240 on a five year trailing basis. It was zero point 0:08:01.280 --> 0:08:04.560 five percent back at the end of twenty fifteen, and 0:08:04.640 --> 0:08:06.680 now we're at two percent, so we've already seen a 0:08:06.760 --> 0:08:10.320 significant productivity growth boom. But two percent is kind of 0:08:10.440 --> 0:08:14.400 average for the historical average. So what we're counting on 0:08:14.880 --> 0:08:17.880 is productivity to do a bit better than that, maybe three, 0:08:17.960 --> 0:08:20.640 three and a half even four percent, which to some 0:08:20.640 --> 0:08:23.240 people might sound delusional, but if you look at previous 0:08:23.280 --> 0:08:28.000 productivity growth booms, that's what we get to and we 0:08:28.080 --> 0:08:30.320 think we're going to get to that handily by the 0:08:30.400 --> 0:08:33.160 end of the decade because of the technologies that are 0:08:33.200 --> 0:08:39.400 available out there. So yeah, I think three percent growth 0:08:39.480 --> 0:08:41.280 is kind of what we're at right now, maybe a 0:08:41.280 --> 0:08:43.720 little less than that. On a year over your basis, 0:08:44.040 --> 0:08:47.280 three and a half to four percent real GDP is possible. 0:08:47.320 --> 0:08:50.800 Add two percent inflation and you get five to six percent. 0:08:51.040 --> 0:08:56.000 I can't emphasize enough. Paul how alone, Yard Denny is 0:08:56.600 --> 0:08:59.600 on this. There's some bulls out there. John Stolfis, I'm alone, 0:09:00.280 --> 0:09:04.640 but I don't feel lonely. Don't feel lonely. But the 0:09:04.760 --> 0:09:07.439 idea that we're going to sustain three percent real GDP, 0:09:08.160 --> 0:09:09.000 how many guests. 0:09:08.800 --> 0:09:12.280 Are telling it's pretty loan call exactly. Hey, Ed, what 0:09:12.360 --> 0:09:14.280 are you suggesting folks doing a fixed and can market 0:09:14.320 --> 0:09:16.160 Because a lot of folks feel pretty comfortable at four 0:09:16.200 --> 0:09:19.400 point twenty five percent into your treasury. Do they need 0:09:19.480 --> 0:09:20.199 to take credit risk? 0:09:22.120 --> 0:09:24.199 They don't really need to take credit risk, and I 0:09:24.360 --> 0:09:27.280 welcome that. I think that's again normalization. We should have 0:09:27.360 --> 0:09:30.880 an economy where if investors don't want to take risk, 0:09:31.000 --> 0:09:35.800 they shouldn't be punished with zero to two percent yields 0:09:35.840 --> 0:09:39.240 on their money market funds. I think they should be 0:09:39.320 --> 0:09:42.400 getting a reasonable return, and four four and a half 0:09:42.480 --> 0:09:46.839 percent is certainly a reasonable return on a two year 0:09:46.960 --> 0:09:48.800 On the other hand, people who want to lock it 0:09:48.920 --> 0:09:52.160 in can certainly go for the four and a half 0:09:53.440 --> 0:09:57.000 and higher percents that are available in the capital markets, 0:09:57.600 --> 0:10:00.800 so you don't have to take risk, but there's greater 0:10:00.960 --> 0:10:04.719 reward obviously if you're willing to go extend into the 0:10:04.760 --> 0:10:07.480 bond market, going to the corporates, maybe even into the 0:10:07.559 --> 0:10:08.120 high yields. 0:10:09.200 --> 0:10:12.000 Edgar Denny, thank you so much, greatly, greatly appreciate it. 0:10:12.120 --> 0:10:14.640 This morning, Edward Jardanney there with a call of seven 0:10:14.720 --> 0:10:15.760 thousand XPX. 0:10:21.040 --> 0:10:24.600 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:10:24.679 --> 0:10:27.800 weekday afternoons from seven to ten am Eastern Listen on 0:10:27.920 --> 0:10:31.559 Applecarplay and Android Otto with the Bloomberg Business app, or 0:10:31.760 --> 0:10:33.199 watch us live on YouTube. 0:10:33.480 --> 0:10:37.320 This was the first name I asked for on James 0:10:37.520 --> 0:10:42.120 Earl Carter. If you come out of Oberlin, you get 0:10:42.240 --> 0:10:45.000 parchment from Oxford is a Rhodes scholar. 0:10:45.559 --> 0:10:47.839 The first thing you do is sit in the mailroom 0:10:47.880 --> 0:10:51.560 in the bottom of the Pentagon right and open mail. 0:10:51.800 --> 0:10:55.880 Richard Os did this for Jimmy Carter in nineteen seventy nine. 0:10:56.280 --> 0:11:00.880 What was it like, Ambassador has to be a young 0:11:01.040 --> 0:11:04.880 buck at the Department of Defense? Is Jimmy Carter turned 0:11:05.080 --> 0:11:06.480 Washington upside down? 0:11:08.679 --> 0:11:11.840 Like? On one hand, Tom, it was an unbelievable opportunity. 0:11:12.320 --> 0:11:14.640 I had just finished working on my doctorate where I 0:11:14.720 --> 0:11:17.360 was writing about what was called East of Suez, what 0:11:17.480 --> 0:11:19.839 we would call the Persian Gulf and the like, And 0:11:20.080 --> 0:11:22.880 in seventy nine the two biggest crises happened to be 0:11:23.040 --> 0:11:26.319 in Iran and Afghanistan. So there I was in my 0:11:26.480 --> 0:11:29.680 late twenties and suddenly I was getting invited to meetings 0:11:29.760 --> 0:11:33.240 with the Secretary of Defense and others. It was crazy, 0:11:33.880 --> 0:11:36.000 but I also learned the limits of my role. At 0:11:36.040 --> 0:11:38.599 one point, I was pressing on the tenant colonel to 0:11:38.800 --> 0:11:41.840 allow me and some other civilians in on the details 0:11:41.880 --> 0:11:44.480 of the contingency planning for what we might do in 0:11:44.559 --> 0:11:46.760 that part of the world. And he sat me down 0:11:46.840 --> 0:11:50.480 and he said, son, you're here for what another year 0:11:50.600 --> 0:11:53.520 or two. I'm here for my whole career. You're what 0:11:53.640 --> 0:11:57.600 we call Christmas health. No way let you see these plans. 0:11:58.360 --> 0:12:02.679 Was the president Carter her Christmas help? EJ. Dione in 0:12:02.760 --> 0:12:06.200 the Post this morning with an essay on a one 0:12:06.400 --> 0:12:10.959 term president. When was it the hostage crisis, which you 0:12:11.120 --> 0:12:14.679 lived directly it ended the presidency? Or was it more 0:12:14.760 --> 0:12:17.640 than that to that landslide Reagan victory. 0:12:18.640 --> 0:12:21.560 I think it was more than that. The Carter himself 0:12:21.600 --> 0:12:24.439 thought if he had maybe ordered one more helicopter to 0:12:24.559 --> 0:12:27.280 Desert one and we had rescued the hostages, he might 0:12:27.360 --> 0:12:30.360 well have been re elected. Well, it's one of the 0:12:30.440 --> 0:12:33.480 many things will we'll never know, But I think it 0:12:33.600 --> 0:12:36.880 was more than that. Carter was not a good communicator. 0:12:36.920 --> 0:12:38.640 There was a little bit of an eat your vegetables 0:12:38.760 --> 0:12:43.360 quality to his presidency. He was telling us, maybe at 0:12:43.440 --> 0:12:45.920 times Tom what we needed to hear. But we met, 0:12:46.040 --> 0:12:48.360 but we certainly didn't want it here, whether it was 0:12:48.360 --> 0:12:52.960 about the energy crisis and over. But the actual accomplishments 0:12:53.040 --> 0:12:56.800 of the administration were many. But also though probably did 0:12:56.880 --> 0:12:59.880 him in was high double digit inflation. You really can 0:13:00.080 --> 0:13:04.360 had survived that, you know, politically, but that's said. He 0:13:04.640 --> 0:13:07.240 accomplished more in one term than most presidents doing too. 0:13:08.080 --> 0:13:10.319 Richard, given the hindsight that we do now have the 0:13:10.400 --> 0:13:13.040 perspective that we do now have. From your perspective, what 0:13:13.080 --> 0:13:14.439 do you think the Carter legacy is. 0:13:16.760 --> 0:13:18.559 I think it's pretty impressive. I mean, if you think 0:13:18.600 --> 0:13:22.319 about it. And I'll focus on foreign policy. It was 0:13:22.360 --> 0:13:26.320 an interesting mixture of idealism and realism. He put human 0:13:26.440 --> 0:13:30.880 rights squarely on the foreign policy agenda, something that Reagan 0:13:30.960 --> 0:13:35.040 obviously continued. But he also negotiated arts controlled agreements with 0:13:35.400 --> 0:13:39.880 Soviet Union. He normalized relations with communist China. He was 0:13:39.920 --> 0:13:43.880 a realist about what the United States had accept in 0:13:44.000 --> 0:13:46.360 terms of the nationalism and rights of others. So he 0:13:47.200 --> 0:13:50.319 returned the Panama Canal, by the way, on terms that 0:13:50.400 --> 0:13:56.559 have allowed us to use it ever ever since. He 0:13:56.720 --> 0:13:59.000 wasn't the pacifist, but he was a great believer in peace. 0:13:59.040 --> 0:14:03.439 He negotiated these David Agreements, the Egypt Egyptian Peace Treaty. 0:14:03.720 --> 0:14:07.040 So I think I'll be seen as a president an 0:14:07.040 --> 0:14:08.440 awful lot done in four years. 0:14:09.360 --> 0:14:12.040 Ambassadors, when you were at the Council on Foreign Relations, 0:14:12.160 --> 0:14:15.719 let me make clear with Centerview partners now, and I'm 0:14:15.760 --> 0:14:18.760 going to say emeritis at Council in Foreign Relations is 0:14:18.840 --> 0:14:21.920 he built the modern institution. You had the advantage of 0:14:21.960 --> 0:14:26.280 Shannon O'Neill and others with terrific Latin coverage. Does President 0:14:26.440 --> 0:14:31.040 Trump want to move us back to hey Buno Vanilla 0:14:31.120 --> 0:14:35.000 Treaty of nineteen oh three with Panama? I mean, I 0:14:35.080 --> 0:14:40.240 get Greenlands joke. Panama is not a joke after September seventh, 0:14:40.400 --> 0:14:43.800 nineteen seventy seven. Does he simply want to move us 0:14:43.880 --> 0:14:46.360 back to a treaty of nineteen oh three? 0:14:47.760 --> 0:14:49.320 Tom, I don't take this as a joke. And I'm 0:14:49.360 --> 0:14:51.360 not sure what his motives are who spoke to him, 0:14:51.360 --> 0:14:55.240 because these issues were not raised during the campaign. But 0:14:55.360 --> 0:14:58.720 I think it's unfortunate in terms of the hemisphere. I 0:14:58.840 --> 0:15:01.480 also think it communicat it's the larger point that major 0:15:01.600 --> 0:15:03.360 powers have the right to do what they want in 0:15:03.360 --> 0:15:06.720 their own neighborhoods, which is music to the years of 0:15:07.040 --> 0:15:10.160 Russia in Ukraine and China dealing with the South China 0:15:10.240 --> 0:15:14.280 Sea and Taiwan. So again, if we have serious concerns 0:15:14.320 --> 0:15:18.000 about Mexico or Canada or the Canal, there's something called diplomacy, 0:15:18.720 --> 0:15:22.320 and use your diplomats and raise these issues. But don't 0:15:22.360 --> 0:15:26.040 walk around the region as though you're entitled, because again 0:15:26.160 --> 0:15:28.840 that set and not only puts everybody in the region 0:15:29.120 --> 0:15:32.320 and alienates them, but it also sends a terrible message 0:15:32.840 --> 0:15:35.400 again to Russia and China others that this is now 0:15:35.480 --> 0:15:37.280 an acceptable way of doing business. 0:15:38.280 --> 0:15:41.040 Richard, In terms of foreign relations, what do you expect 0:15:41.880 --> 0:15:44.320 the first one hundred days of this incoming Trump administration? 0:15:44.400 --> 0:15:45.520 Where do you think the focus will be. 0:15:46.800 --> 0:15:49.480 I think it's got to be on Ukraine as much 0:15:49.600 --> 0:15:52.560 as anything. And then secondly, what I'm hoping it is, 0:15:52.560 --> 0:15:54.880 and I just wrote a long piece on it, is Iran. 0:15:55.440 --> 0:15:58.240 And in terms of Ukraine, it's got to be coming 0:15:58.320 --> 0:16:01.239 to a real meeting of the minds with mister Zelenski 0:16:01.600 --> 0:16:05.880 and then presenting essentially an approach to Putin, putting pressure 0:16:05.920 --> 0:16:08.200 on Putin to accept the peace fire, the cease fire, 0:16:08.640 --> 0:16:11.560 and then with Iran, we inherit a situation where Iron's 0:16:11.600 --> 0:16:14.240 on its heels. And what I've been advocating for is 0:16:14.280 --> 0:16:17.080 the United States should offer a grand bargain to Iran. 0:16:17.440 --> 0:16:20.120 Get out of the business of military support for proxies, 0:16:20.160 --> 0:16:23.920 get out of the nuclear weapons business, and we'll ease 0:16:24.000 --> 0:16:27.080 sanctioned so this regime of yours can survive. And that's 0:16:27.360 --> 0:16:29.720 a big approach. But I hope we take it. 0:16:30.040 --> 0:16:33.520 Investator US, thank you so much for perspective on Jimmy Carter. 0:16:33.680 --> 0:16:36.160 Richard has of course a cent of your partners and 0:16:36.640 --> 0:16:40.720 always associated with the Council on Foreign Relations. 0:16:41.200 --> 0:16:45.080 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:16:45.120 --> 0:16:48.120 starting at seven am Eastern on Apple Coarplay and Android 0:16:48.160 --> 0:16:51.160 Auto with the Bloomberg Business App. You can also listen 0:16:51.280 --> 0:16:54.480 live on Amazon Alexa from our flagship New York station, 0:16:55.080 --> 0:16:57.720 Just say Alexa play Bloomberg eleven thirty. 0:16:57.920 --> 0:17:03.240 In my ute. Sat. Gabriel Mountains north of La were 0:17:03.320 --> 0:17:08.280 basically invisible in the pollution like Mexico City of La. 0:17:09.040 --> 0:17:12.000 And one of the miracles of this nation, including the 0:17:12.080 --> 0:17:16.920 work of President Carter, was crystal clear St. Gabriel Mountains. 0:17:17.560 --> 0:17:20.800 This is up buttressed with Elta Dina and this has 0:17:20.880 --> 0:17:23.000 been one of the two major fires that we've seen 0:17:23.040 --> 0:17:26.160 the last couple days. And if you migrate from Elta 0:17:26.240 --> 0:17:32.680 Dina southwest across Lake Avenue beneath Lincoln Avenue, you're run 0:17:32.720 --> 0:17:36.560 into Pasadena and Paul. This is where Ohio State wins 0:17:36.640 --> 0:17:39.080 every year in the Rose Bowl. Seems like they win, 0:17:39.320 --> 0:17:40.840 you know, I mean, that's the way it is. It's 0:17:40.880 --> 0:17:43.520 four and a half miles a short distance to the 0:17:43.640 --> 0:17:47.280 Rose Bowl from this horrific fire. We would speak to 0:17:47.400 --> 0:17:51.280 James Glassman of JP Morgan, now retired in his glory, 0:17:51.760 --> 0:17:54.840 about this job economy. He is definitive with his work 0:17:54.920 --> 0:17:58.160 at North at Western, but we must speak to him 0:17:58.560 --> 0:18:02.000 about what he's witnessed the last couple of days. Jim Glassman, 0:18:02.359 --> 0:18:05.800 where you are a distance from the Altadena fires, do 0:18:05.920 --> 0:18:07.120 you have smoke damage? 0:18:09.359 --> 0:18:11.920 Yeah, you don't want to look at the air quality index, 0:18:12.080 --> 0:18:15.760 which is normally good is thirty to fifty. It was 0:18:16.160 --> 0:18:18.880 three hundred and twenty five yesterday. They call it unhealthy, 0:18:19.600 --> 0:18:22.320 and it's very it's very thick. It reminds me, actually, 0:18:22.960 --> 0:18:24.720 what you were saying reminds me I lived here when 0:18:24.760 --> 0:18:28.160 I was in first grade long ago, and it looks 0:18:28.359 --> 0:18:30.560 just like I remember. You couldn't see them. 0:18:30.480 --> 0:18:35.200 Out, Yeah, yeah, absolutely couldn't see that, Jim Glassman. Just 0:18:35.240 --> 0:18:38.000 one more question on this. Do you have a sense 0:18:38.160 --> 0:18:42.880 within the Glassman zeitgeist of Los Angeles that it's all 0:18:43.119 --> 0:18:48.080 clear this morning or are people still stealed for more 0:18:48.160 --> 0:18:49.359 winds and fire. 0:18:50.359 --> 0:18:52.600 I think the winds seem to have settled down, but 0:18:52.720 --> 0:18:54.880 the fire is going to take some time to get 0:18:54.920 --> 0:18:57.159 a grip. When I looked at the review of all 0:18:57.160 --> 0:18:58.840 the different fires, they said that none of it was 0:18:59.040 --> 0:19:01.640 under control. Really, we've been kind of looking to see 0:19:02.400 --> 0:19:05.480 when that's going to happen. But it's pretty it's going 0:19:05.560 --> 0:19:07.879 to take a while. It's pretty devastating, and you know, 0:19:08.000 --> 0:19:10.560 normally these stories are kind of remote to all of us. 0:19:10.640 --> 0:19:12.840 We look, we know there's an issue going on somewhere, 0:19:13.720 --> 0:19:16.240 and we calculate what is this going to do to 0:19:16.280 --> 0:19:18.119 the economy. This is a real personal thing for me 0:19:18.280 --> 0:19:21.280 because people had this. It's a I've got people living 0:19:21.359 --> 0:19:24.280 in my house because they had to vacate from Brentwood 0:19:24.960 --> 0:19:29.680 and Palisades. Uh, you know, they know half the you know, 0:19:30.160 --> 0:19:34.159 big large community been disrupted, no home, nothing, nothing to 0:19:34.240 --> 0:19:34.480 live in. 0:19:34.840 --> 0:19:38.600 Doctors a little while to turn to the economy, and 0:19:38.760 --> 0:19:42.400 with your brilliant work, particularly on teenage unemployment years ago, 0:19:43.000 --> 0:19:44.960 are we a fully employed America? 0:19:48.240 --> 0:19:50.480 I think we could be more fully employed. I think 0:19:50.520 --> 0:19:53.360 we were prior to the pandemic, and then we kind 0:19:53.400 --> 0:19:57.239 of got back there. It's it's loosening up a little bit. 0:19:57.359 --> 0:20:00.919 But I think the problem really the labor market. It's 0:20:01.000 --> 0:20:05.480 not so much we are by the standard metrics, we're 0:20:05.520 --> 0:20:08.760 fully employed. But the problem really in America is that 0:20:08.960 --> 0:20:12.200 the share of income that goes to the various things 0:20:12.280 --> 0:20:16.840 that we use to produce GDB workers have been getting 0:20:16.840 --> 0:20:19.720 a smaller share. And this has been going on since 0:20:19.760 --> 0:20:23.200 the late nineteen nineties. And I think if you keep 0:20:23.680 --> 0:20:25.840 I think if you keep an eye on the evolution 0:20:26.000 --> 0:20:28.840 of what's going on in the labor market, the politics 0:20:28.920 --> 0:20:32.080 makes a little more sense. The disruption that's going on 0:20:32.840 --> 0:20:36.320 in the labor market has been really stunning. And you know, 0:20:36.440 --> 0:20:39.040 that's kind of to me what this shrinking share of 0:20:39.160 --> 0:20:44.560 income going to workers has meant. And it's got massive 0:20:45.200 --> 0:20:48.360 implications for all kinds of thing news. And by the way, 0:20:48.880 --> 0:20:50.720 you know, we grew up in school. I grew up 0:20:51.080 --> 0:20:53.160 learning that, oh, keep your eye on are we fully 0:20:53.200 --> 0:20:55.000 employed or not? And that's going to tell you whether 0:20:55.040 --> 0:20:59.440 it's inflation danger. What we're learning in this millennium, the 0:20:59.560 --> 0:21:02.080 last point five years, we're learning that that story doesn't 0:21:02.160 --> 0:21:05.800 really make sense. A tight labor market is not really 0:21:05.920 --> 0:21:08.880 the danger for inflation. And I think the FED people 0:21:09.000 --> 0:21:12.680 have been slowly abandoning that view, as you hear from J. 0:21:12.880 --> 0:21:14.760 Powell, and that's kind of where I want to go. 0:21:14.880 --> 0:21:18.840 Jim just kind of the concern about inflation here is this, 0:21:19.080 --> 0:21:20.720 are we in a new normal here where maybe that 0:21:20.760 --> 0:21:23.160 two percent number that the Fed once isn't really where 0:21:23.160 --> 0:21:23.600 we need to be. 0:21:26.840 --> 0:21:29.600 Well, you know, I've heard Janet Yellen once say, you 0:21:29.720 --> 0:21:32.000 know what if we if we could do it all 0:21:32.040 --> 0:21:34.480 over again, maybe we would have picked a different target. 0:21:35.480 --> 0:21:38.920 Because but I think I think the problem is once 0:21:39.000 --> 0:21:41.320 you decide all the central banks around the world started 0:21:41.320 --> 0:21:44.119 with Bank in New Zealand, when once I embrace the 0:21:44.200 --> 0:21:46.960 idea that they should have as explicit target two percent, 0:21:48.119 --> 0:21:51.600 the market bought it, and it's reflected in inflation expectations, 0:21:51.640 --> 0:21:54.320 and it's really been anchory. It's an important anchor for 0:21:54.400 --> 0:21:58.120 the bond market. I think I don't hear anymore people 0:21:58.200 --> 0:22:01.040 worrying about what's the long run strategy of the central bank. 0:22:01.480 --> 0:22:03.160 That we used to think about that all the time, 0:22:03.320 --> 0:22:06.000 the politics of the central bank, of the monetary policy. 0:22:06.680 --> 0:22:09.280 And I think the I think the advantage of picking 0:22:09.440 --> 0:22:11.719 some number, whatever it is, you you could we can 0:22:11.840 --> 0:22:15.239 quarrel about whether too is too low. But I think 0:22:15.359 --> 0:22:19.600 once you do it, it's it's unwise to changing the. 0:22:19.640 --> 0:22:23.000 Rules of Jim Glastan, thank you so much for joining us. 0:22:23.040 --> 0:22:25.280 Too short an interview on the economy at hand. Thank 0:22:25.320 --> 0:22:29.000 you for the perspective on your rose bowl in Southern 0:22:29.080 --> 0:22:31.800 California and Los Angeles as well. 0:22:37.520 --> 0:22:41.399 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:22:41.440 --> 0:22:44.439 starting at seven am Eastern on Apple Corplay and Android 0:22:44.480 --> 0:22:47.480 Auto with the Bloomberg Business app. You can also watch 0:22:47.560 --> 0:22:50.480