WEBVTT - PCE and the US Economic Outlook 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 --> 0:00:26.920 us live on YouTube. 0:00:27.000 --> 0:00:29.560 And we begin strong with Sarah Wolf, thrilled that she 0:00:29.600 --> 0:00:33.360 could join us this morning for briefing into this economic 0:00:33.440 --> 0:00:35.640 data and PC. Sarah, I want to get back to 0:00:35.720 --> 0:00:41.200 first principles CPI inflation course CPI, there's business inflation. What 0:00:41.400 --> 0:00:45.519 is PC? Why do I need a PCE index if 0:00:45.560 --> 0:00:47.959 I already have a CPI index. 0:00:49.360 --> 0:00:51.880 I love that question. You're really getting down to the basics. 0:00:51.920 --> 0:00:54.760 So CPI, if we remember from econ one oh one, 0:00:54.880 --> 0:00:57.320 is everything that you pay out of your own pocket. 0:00:57.360 --> 0:01:00.320 It's your basket of goods that comes out of your wallet. 0:01:00.680 --> 0:01:04.640 PCE is a more encompassing measure, so it incorporates everything 0:01:04.680 --> 0:01:06.319 you pay out of pocket, and. 0:01:06.280 --> 0:01:08.360 Then things that get paid on behalf of you. 0:01:08.600 --> 0:01:12.280 So think about healthcare insurance, so PC would capture a 0:01:12.319 --> 0:01:13.800 larger weight for health care insurance. 0:01:14.120 --> 0:01:16.080 Or think about it if you're in the military. 0:01:15.640 --> 0:01:18.479 The clothing that's purchased for you, and so the FED 0:01:18.680 --> 0:01:20.919 does like to look at PC as the preferred measure 0:01:21.000 --> 0:01:24.000 because it is a broader measure of inflation. 0:01:24.520 --> 0:01:29.839 Is the disinflationary vector broken? Has it snapped to where 0:01:29.880 --> 0:01:32.759 we're leveling or can you dare say, give me an 0:01:32.800 --> 0:01:35.280 inflationary vector before this report? 0:01:36.840 --> 0:01:38.839 I mean, we're just at the early days of getting 0:01:38.840 --> 0:01:41.600 the reacceleration and inflation. 0:01:41.720 --> 0:01:43.080 I think that we could agree that. 0:01:43.400 --> 0:01:45.399 You know, when we thought back to April, when we 0:01:45.440 --> 0:01:48.080 thought inflation data would start to accelerate off terraffs, we 0:01:48.120 --> 0:01:48.840 all thought, oh. 0:01:48.720 --> 0:01:50.480 The summer and then and then it'll be over. 0:01:50.880 --> 0:01:53.520 The reality is is that what we've heard from from 0:01:53.560 --> 0:01:56.240 earnings from companies is that inventory building was actually a 0:01:56.320 --> 0:01:59.320 lot stronger in the second quarter and that's helped keep 0:01:59.360 --> 0:02:02.240 prices low or through the summer, and that the price 0:02:02.280 --> 0:02:03.800 pressures are just starting to. 0:02:03.760 --> 0:02:04.760 Trickle through right now. 0:02:04.760 --> 0:02:06.800 We're really going to be getting more of that pressure 0:02:07.320 --> 0:02:09.240 in the coming month. So we're looking for a point 0:02:09.280 --> 0:02:12.880 three percent, which is an acceleration relative to the recent trend, 0:02:12.919 --> 0:02:15.600 but it's fairly mild. Uh, We're going to see that 0:02:15.639 --> 0:02:19.000 pick up and trend in that three month annualized pace, which. 0:02:18.800 --> 0:02:20.640 Is going to start to accelerate higher. 0:02:20.960 --> 0:02:22.760 Sarah, All morning, We've been talking to me or Chanda 0:02:22.800 --> 0:02:25.640 and JP Morgan win Thin, We've been talking to Katie 0:02:25.720 --> 0:02:27.760 Kati Kaminsky of Appa Simplex. We've all been talking about 0:02:27.800 --> 0:02:30.360 the potential for inflation in the US to diverge between 0:02:30.480 --> 0:02:32.520 Europe or let's just call it the rest of the world. 0:02:32.880 --> 0:02:34.240 You know, I'd like to hear your thoughts on that. 0:02:34.280 --> 0:02:37.920 I mean, should I be buying Oba glacio? Should I 0:02:37.960 --> 0:02:41.520 be buying basically French show it's on, you know, some 0:02:41.639 --> 0:02:43.720 of the things we're seeing between Germany and France here. 0:02:46.360 --> 0:02:50.520 What do you say, Sarah, excuse me, he's out of control. 0:02:51.120 --> 0:02:52.799 Well, I'm somebody's talking about you know, I'm trying to 0:02:52.800 --> 0:02:53.960 pronounce them. 0:02:53.960 --> 0:02:55.079 Sarah, I think you. 0:02:56.680 --> 0:02:59.360 I think you bring up a good point that what's 0:02:59.400 --> 0:03:03.480 happening with tears is twofold. First of all, businesses in 0:03:03.520 --> 0:03:05.200 the US are having to pay for a lot of 0:03:05.200 --> 0:03:08.360 these cares. So instead of businesses overseas that are exporting 0:03:08.400 --> 0:03:10.480 to the US taking the burden of the cost, a 0:03:10.520 --> 0:03:12.919 lot of that is hitting US businesses and in turn 0:03:12.960 --> 0:03:14.400 getting passed through to consumers. 0:03:14.639 --> 0:03:16.800 So more of that price effect showing up in the US. 0:03:17.080 --> 0:03:19.639 Add on top of that that we've seen a devaluation 0:03:19.720 --> 0:03:22.679 in the dollars appreciation and so that's. 0:03:22.440 --> 0:03:24.880 Not helping with the inflation story in the US. 0:03:24.960 --> 0:03:27.880 And actually that's appreciation and the dollar is keeping prices 0:03:27.919 --> 0:03:31.359 lower among our trading partners relative to the US. 0:03:31.480 --> 0:03:34.320 What's your twelve months forward inflation number, CPI, before we 0:03:34.400 --> 0:03:37.600 do PCE, what's your statistic twelve months forward? 0:03:39.080 --> 0:03:41.720 So twelve months forward, we're looking at inflation that's probably 0:03:41.720 --> 0:03:43.920 still somewhere around two and a half to three percent. 0:03:44.360 --> 0:03:47.040 So we're getting that reacceleration, but it's going to be sticky, 0:03:47.080 --> 0:03:50.720 I think coming back down. It's really also going to 0:03:50.760 --> 0:03:53.040 depend on how much weakening we see in the economy. 0:03:53.080 --> 0:03:55.680 If we see persistent weakening through twenty twenty six, we 0:03:55.720 --> 0:03:59.440 could get that downward drag coming through the services. 0:03:58.920 --> 0:04:01.080 Channel, say more likely than now. 0:04:01.120 --> 0:04:04.120 We're actually going to be getting some reacceleration and growth 0:04:04.160 --> 0:04:06.560 going into twenty twenty six, just as these prices are 0:04:06.560 --> 0:04:09.440 picking up because you're getting the one big beautiful bill stimulus, 0:04:09.560 --> 0:04:11.280 you're getting the AI backstory. 0:04:11.480 --> 0:04:15.160 But I don't think i've ever seen the survey that 0:04:15.280 --> 0:04:18.680 matches the excuse a study that matches a survey like 0:04:18.720 --> 0:04:21.560 we've just seen Sarah Wolf with us here. Sarah, I 0:04:21.600 --> 0:04:23.920 don't know if you saw this. Thank you to Bloomberg 0:04:23.960 --> 0:04:28.080 Television for alerting me on it. But folks, Canada GDP 0:04:28.320 --> 0:04:33.680 came in with stunning, stunning statistics. There's no other way 0:04:33.680 --> 0:04:38.640 to put it. Second quarter Canadian GDP, the forecast was 0:04:38.680 --> 0:04:42.720 a negative zero point seven and they came in at 0:04:42.960 --> 0:04:47.960 negative one point six. They came in with a lesser inflation. 0:04:48.360 --> 0:04:52.680 Sarah Wolf, this is a global US inflation report. How 0:04:52.680 --> 0:04:56.480 does Morgan Stanley see this mixing out in the next 0:04:56.480 --> 0:04:59.280 tour or three quarters? Is going to be a global 0:04:59.640 --> 0:05:03.320 slow down combined with in America that's resilient. 0:05:05.120 --> 0:05:07.080 I mean, the reality is is that there's going to 0:05:07.120 --> 0:05:10.840 be certain economies that are way more affected by US 0:05:10.960 --> 0:05:13.280 terriffs and the spillover from the slowdown we're seen in 0:05:13.320 --> 0:05:17.520 the US. Canada being one of the number one countries 0:05:17.560 --> 0:05:19.200 that are going to be affected. As one of our 0:05:19.200 --> 0:05:23.080 closest trading partners, you know, over twenty percent of our 0:05:23.080 --> 0:05:26.280 exports go to Canada and way more of Canadian exports 0:05:26.279 --> 0:05:28.400 go to the US, I think somewhere around eighty percent, 0:05:29.240 --> 0:05:31.279 and so we're seeing that that spillover is going to 0:05:31.880 --> 0:05:35.279 global growth, but I think largely a big hit of 0:05:35.279 --> 0:05:37.919 it is going to be felt within the US that 0:05:38.040 --> 0:05:40.120 we are going to bear the brunt of the terraffs 0:05:40.120 --> 0:05:44.400 slow down because as I mentioned earlier, businesses in the 0:05:44.520 --> 0:05:48.520 US are pushing that price through to US consumers. 0:05:48.520 --> 0:05:51.440 And other consumers. So think about in Europe, they're actually 0:05:51.440 --> 0:05:54.880 getting a deflationary impulse from the slow down. 0:05:55.440 --> 0:05:58.000 And so I do think that that's worth noting that 0:05:58.040 --> 0:06:00.160 the US is going to slow down and it's to 0:06:00.240 --> 0:06:03.800 take Canada and Mexico probably with it in this in 0:06:03.839 --> 0:06:05.520 this economic deceleration. 0:06:05.720 --> 0:06:06.960 Well, Sarah, I think you hit the nail on the 0:06:06.960 --> 0:06:10.120 head here. Listen to this one. Experts on annualized from 0:06:10.120 --> 0:06:13.760 the US into Canada fell twenty seven percent on the quarter. 0:06:13.839 --> 0:06:15.160 That is a huge, huge miss. 0:06:15.160 --> 0:06:17.400 And you're seeing dollar CAD rise off the back of this, 0:06:17.440 --> 0:06:19.320 although not so much a little bit of spike here. 0:06:19.320 --> 0:06:21.080 But you know, talk to us about what this means 0:06:21.080 --> 0:06:23.719 for the dollar narrative. If you start seeing GDP in 0:06:23.760 --> 0:06:26.320 some of the US's largest trading partners coming off to 0:06:26.360 --> 0:06:28.720 that extent, you know, do you expect the dollar to 0:06:28.800 --> 0:06:30.080 rally or falling that news. 0:06:31.200 --> 0:06:33.040 I mean, it's all about how we are relative to 0:06:33.120 --> 0:06:37.040 cern economy. So the US pad might appreciate, but if we. 0:06:37.000 --> 0:06:39.240 Think about the trade that investors are. 0:06:39.080 --> 0:06:41.400 Going to be putting on the US euro for example, 0:06:41.400 --> 0:06:44.800 that we're still seeing a relatively better situation in Europe 0:06:44.839 --> 0:06:46.240 and so there's going to be a little bit more 0:06:46.279 --> 0:06:50.640 of a diversified trade. There's still room for the dollar 0:06:50.720 --> 0:06:54.680 to depreciate further as the tear story starts to materialize. 0:06:55.160 --> 0:06:57.120 So I wouldn't discount the fact that just because we're 0:06:57.120 --> 0:06:58.800 getting a bit of a rally and the dollar off 0:06:58.839 --> 0:07:02.599 of this weeker using Canada, that that's going to be 0:07:02.640 --> 0:07:04.400 the new up trend. I think as we start to 0:07:04.400 --> 0:07:07.160 get the slower numbers, the weaker numbers coming in from. 0:07:07.279 --> 0:07:11.120 The US paired with a better situation coming in from Europe, 0:07:11.120 --> 0:07:13.080 so they're going to be able to cut interest rates more, 0:07:13.240 --> 0:07:14.960 we could get further dollar depreciation. 0:07:15.280 --> 0:07:17.600 So you guys do brilliant work. I mean, the legacy 0:07:17.600 --> 0:07:21.800 here of Stephen Roach and Richard Berners has been identified, 0:07:21.840 --> 0:07:25.760 and the Morgan Stanley excellence of Seth Carpenter and all great. 0:07:26.400 --> 0:07:29.840 Do you guys care what the price of beef is 0:07:30.160 --> 0:07:31.400 at the grocery store. 0:07:33.320 --> 0:07:36.040 It matters to the extent that it's hitting consumer wallets. 0:07:36.080 --> 0:07:38.080 Of course, we like to strip out food and energy, 0:07:38.080 --> 0:07:39.920 and Corea. 0:07:39.160 --> 0:07:42.480 Strives me nuts. Lisa, Can you set out food and 0:07:42.600 --> 0:07:46.600 energy over the next month? Come on, Sarah, Nobody except 0:07:46.600 --> 0:07:49.600 fancy people like you strip out food and energy. 0:07:50.880 --> 0:07:53.800 As a consumer economist, I agree with you. The food and. 0:07:53.840 --> 0:07:56.640 Energy are the most important components that go into the 0:07:56.680 --> 0:07:59.560 basket when you think about the everyday consumer and how 0:07:59.640 --> 0:08:02.160 they prices. Right, So, if you actually look at what 0:08:02.240 --> 0:08:05.280 drives inflation expectations, which seems to be the only thing 0:08:05.280 --> 0:08:08.440 that the FED really is focused on right now, the 0:08:08.560 --> 0:08:12.200 number one driver of inflation expectations is retail gas prices 0:08:12.600 --> 0:08:15.320 and the price of a carton of eggs and a 0:08:15.360 --> 0:08:19.000 box of milk, because those are the most salient prices, 0:08:19.040 --> 0:08:20.840 and so you could add on to that other things, 0:08:20.920 --> 0:08:23.720 other stables people like to buy, like the price of beef. 0:08:24.520 --> 0:08:27.480 And so if we see an acceleration in these other components, 0:08:27.520 --> 0:08:30.040 that does start to feed through into inflation expectations and 0:08:30.080 --> 0:08:31.480 become a real concern for the FED. 0:08:31.600 --> 0:08:34.480 We're commercial free for you into the top of the arm. 0:08:34.520 --> 0:08:36.760 Michael McKee will join us here in a bit, you 0:08:36.840 --> 0:08:38.760 lend us show the table, will join us as well. 0:08:38.800 --> 0:08:41.120 But right now we're looking it's not a cart and 0:08:41.160 --> 0:08:44.280 the milk. It's like, give me some one percent. Come on, 0:08:44.720 --> 0:08:47.320 Danian Larry Kudlow became famous. 0:08:47.040 --> 0:08:49.920 Tom Sarah and I both strip out tomatoes, onions, and 0:08:49.920 --> 0:08:52.040 potatoes when we're looking at inflation. In India, you have 0:08:52.080 --> 0:08:54.040 to do it. They call them top. It's often referred 0:08:54.040 --> 0:08:56.160 to as top tomatoes, onions, potatoes get stripped right out. 0:08:56.160 --> 0:08:58.559 But Sarah, I have to ask you absolutely. 0:08:58.520 --> 0:09:01.400 You're you're a font of with Oh we have seris, 0:09:04.360 --> 0:09:06.760 we can. Why don't you bring in Elena. 0:09:07.559 --> 0:09:11.000 Elena show you tel a former Bloomberg colleague of mine. Elena, 0:09:11.080 --> 0:09:13.840 Welcome to Bloomberg Surveillance. Let's talk a little bit about 0:09:13.840 --> 0:09:16.520 the inflationary pressures that are emanating from China to the 0:09:16.559 --> 0:09:17.040 rest of the world. 0:09:17.080 --> 0:09:17.880 What are your thoughts there? 0:09:18.960 --> 0:09:23.000 Well, I think that we can just quickly cover it 0:09:23.040 --> 0:09:27.120 and all go home, because that was largely as expected 0:09:27.200 --> 0:09:31.600 write this report. But seriously speaking, I think that today's 0:09:31.600 --> 0:09:35.440 report doesn't add much in terms of the new information. 0:09:36.040 --> 0:09:40.240 We already knew that consumers are still holding up. They 0:09:40.240 --> 0:09:45.440 are spending on goods, So goods spending increased by zero 0:09:45.520 --> 0:09:49.640 point nine percent in July, and we spend lesson services. 0:09:49.920 --> 0:09:52.760 So that is telling me that consumers are getting. 0:09:52.520 --> 0:09:56.920 Becoming more choosy in what they need to spend one. 0:09:56.840 --> 0:09:58.360 They are stocking up again. 0:09:58.800 --> 0:10:02.280 Look at the advanced report that also came out along 0:10:02.280 --> 0:10:06.360 with the data on inflation, we saw a huge increase 0:10:06.360 --> 0:10:09.600 in imports. So I think we have some kind of 0:10:09.600 --> 0:10:13.280 a dija here, because you know, we're talking up again 0:10:13.320 --> 0:10:15.200 ahead of the set of times. 0:10:15.520 --> 0:10:18.000 Elina show Tavy whether us with the conference board, the 0:10:18.040 --> 0:10:21.320 senior economists there, Elena, let me ask you dumb. It's 0:10:21.320 --> 0:10:24.240 sound like Damien Woods us. I'll ask a dumb question. 0:10:24.840 --> 0:10:28.120 On a scale of zero to one hundred, where we 0:10:28.200 --> 0:10:32.400 say the tariffs have been passed on to the consumer 0:10:32.480 --> 0:10:36.880 in America. Where are we on that continuum from zero 0:10:36.920 --> 0:10:39.720 to one hundred. Are we like a ten where it's 0:10:39.760 --> 0:10:43.800 barely in effect or fifty midpoint or is there now 0:10:43.840 --> 0:10:48.080 becoming a huge effect of tariffs on our listeners and viewers. 0:10:49.120 --> 0:10:51.840 I think we're in the early stages of that, and 0:10:52.040 --> 0:10:54.839 Sarah was referring to that as well earlier. I think 0:10:54.880 --> 0:10:58.360 we're in kind of like a twenty to thirty percent 0:10:59.000 --> 0:11:03.680 on that scale probably, you know, look at what is happening. 0:11:03.760 --> 0:11:07.680 So today we get an expiration of the Deminimus text 0:11:08.040 --> 0:11:12.600 tariff exemption. So that alone, according to the Conference Board 0:11:12.640 --> 0:11:16.000 research we published earlier this year, will add a few 0:11:16.120 --> 0:11:20.880 tenths of a percent to PC inflation later on this year. 0:11:21.280 --> 0:11:24.360 I think that is an important thing as well. So 0:11:24.559 --> 0:11:29.640 I think that, yeah, we stalked up inventory with cheaper 0:11:29.720 --> 0:11:34.280 inventories earlier this year, and now it's just the time 0:11:34.360 --> 0:11:38.200 when we're going to start seeing inflationary pressure. So I 0:11:38.200 --> 0:11:40.559 think they will continue to build into the end of 0:11:40.600 --> 0:11:42.599 the year and going into the next. 0:11:42.960 --> 0:11:45.679 Lena, Sorry about that, Elena. You know, I know you 0:11:46.080 --> 0:11:47.480 we could stick to the US here, but I'm going 0:11:47.520 --> 0:11:49.599 to talk about Canada here because this GDP print was 0:11:49.640 --> 0:11:51.560 pretty surprising to the downside that we just got at 0:11:51.600 --> 0:11:53.680 eight thirty this morning, and you know, we're seeing growth 0:11:53.760 --> 0:11:56.200 kind of you know, coming in a little bit across 0:11:56.200 --> 0:11:58.640 the board, and I'm seeing central banks literally across the 0:11:58.679 --> 0:12:01.360 board from Mexico to the UK, poland perhaps next week, 0:12:01.400 --> 0:12:04.200 the Philippines this week they're cutting rates. Are we missing 0:12:04.240 --> 0:12:07.160 something that other countries are seeing. Is growth slowing more 0:12:07.240 --> 0:12:08.840 quickly in some of these other nations and is that 0:12:08.840 --> 0:12:11.000 why the central banks are acting so aggressively. 0:12:12.200 --> 0:12:16.520 Well, you have to like when you disrupt the system, 0:12:16.800 --> 0:12:19.720 and that's what we see, right with all the new 0:12:19.800 --> 0:12:25.240 policies and the policy actions, something will break somewhere, right, 0:12:25.360 --> 0:12:28.320 so and you have to react to that. I just 0:12:28.400 --> 0:12:32.000 don't think that in terms of the US, we are, 0:12:32.720 --> 0:12:35.839 you know, heading into some kind of a downturn at 0:12:35.880 --> 0:12:38.400 this point. I think growth in the US is still 0:12:38.520 --> 0:12:43.600 solid despite all the disruptions, and it's a very tough 0:12:43.679 --> 0:12:46.800 choice for the FED what to do the next meeting 0:12:46.840 --> 0:12:48.160 and going forward. 0:12:48.360 --> 0:12:51.880 We continue with you, Lena show TeV at the conference board, 0:12:52.000 --> 0:12:55.000 bandmarkets showing higher yields ten yure up a solid three 0:12:55.040 --> 0:12:58.000 basis points four point twenty three percent, thirty year one 0:12:58.080 --> 0:13:02.600 nine at five percent four point ninety one percent. Equities 0:13:02.640 --> 0:13:06.400 do better than before before the eight to thirty report, 0:13:06.520 --> 0:13:11.439 moving from negative twenty five futures about now negative eighteen futures. 0:13:11.480 --> 0:13:16.240 The Vics fourteen point five six with Julina Schilitzeva, Damian 0:13:16.320 --> 0:13:17.600 Sasor Damien. 0:13:17.360 --> 0:13:18.120 Yes, Elena. 0:13:18.160 --> 0:13:19.800 I mean, look, we've been talking all morning about the 0:13:19.800 --> 0:13:22.280 impact of inflation on growth, the impact of inflation on 0:13:22.320 --> 0:13:24.760 pretty much, you know, some of these local economies, not 0:13:24.800 --> 0:13:26.240 just in the US but abroad. But what I really 0:13:26.240 --> 0:13:28.439 want to get a sense of what are you seeing 0:13:28.480 --> 0:13:31.040 on the ground here, you know, I mean just real economy, 0:13:31.120 --> 0:13:33.720 is the real purses in the pocketbooks that are being 0:13:33.840 --> 0:13:37.080 you know, I mean, do you see consumer discretionary spend 0:13:37.080 --> 0:13:39.200 coming down here in the US or is there potential 0:13:39.200 --> 0:13:40.440 for surprise to the upside? 0:13:40.480 --> 0:13:40.800 Still? 0:13:42.920 --> 0:13:46.920 I think we are we see a slowdown, and based 0:13:46.960 --> 0:13:52.560 on our conference board consumer confidence data, you do hear 0:13:53.080 --> 0:13:56.960 a lot of concerns about inflation and how that will 0:13:57.000 --> 0:13:59.920 impact consumers going forward. 0:14:00.200 --> 0:14:05.480 So look at this report again this morning. So services were. 0:14:05.679 --> 0:14:12.160 Pretty weak, even though goods spending rebounded from its tep 0:14:12.200 --> 0:14:16.320 it pace based in the second quarter of this year. 0:14:16.800 --> 0:14:21.480 So that tells me that, you know, consumers are really 0:14:21.520 --> 0:14:27.320 facing tough choices. They have to spend more on food 0:14:27.400 --> 0:14:30.400 and things like that that are necessities, and you know, 0:14:30.560 --> 0:14:35.000 they have to forego what could be a discretionary spending 0:14:35.120 --> 0:14:37.920 like going to Disney World or other things. 0:14:38.040 --> 0:14:39.960 EULENUS, thank you so much. Let me show the tab 0:14:40.000 --> 0:14:43.240 at the conference point with this office key economic data. 0:14:43.280 --> 0:14:45.720 I do want a reviewer. We really focused on PCE 0:14:45.880 --> 0:14:49.560 Lisa Matteyo with that great effort at eight thirty. Personal 0:14:49.560 --> 0:14:51.960 income came out on plan. I don't have a revise 0:14:52.360 --> 0:14:55.560 number of personal spending. I do have a revision. It 0:14:55.560 --> 0:14:58.240 came in on plans zero point five percent, but a 0:14:58.280 --> 0:15:01.800 more buoyant prior eating of zero point three moves to 0:15:01.880 --> 0:15:05.160 zero point four. So again it's that tendency to that 0:15:05.280 --> 0:15:09.720 word solid economy dealing. You know, I was on the 0:15:09.720 --> 0:15:13.880 horse out with Joe and Tracy at Jackson Hole. They 0:15:13.920 --> 0:15:16.520 got me one of the Clydesdale trigger was great. I 0:15:16.560 --> 0:15:20.000 didn't fall off, which was half the battle. Somebody who 0:15:20.240 --> 0:15:23.240 actually rides a horse at Jackson Hole and is like gifted. 0:15:23.720 --> 0:15:27.040 Michael mckeey, Michael McKee head of all of our economics, 0:15:27.120 --> 0:15:30.080 before we dance into what we're doing right now, your 0:15:30.160 --> 0:15:34.720 single vision, your summary of your effort out west this summer. 0:15:35.760 --> 0:15:40.200 It was quite interesting and also somewhat unnerving because there 0:15:40.280 --> 0:15:45.640 was this palpable sense of worry about what's going on 0:15:45.720 --> 0:15:48.200 with an independence and then of course Tom as you saw, 0:15:48.480 --> 0:15:52.040 there was a massive security presence there, massive. 0:15:51.680 --> 0:15:56.040 Security presence, but the unnerving part into September October November. 0:15:56.080 --> 0:15:59.360 What are you watching in the data that leads to 0:15:59.440 --> 0:16:01.400 a stuff body of that unnerving. 0:16:02.080 --> 0:16:05.080 Well, if we're talking about it in that sense, we're 0:16:05.120 --> 0:16:10.280 talking about what the FED is going to do a September, October, November, September, November, 0:16:10.320 --> 0:16:13.840 December meetings. And in this case we're looking at the 0:16:13.880 --> 0:16:15.920 inflation numbers and the jobs numbers. 0:16:16.160 --> 0:16:17.520 And it was interesting to hear. 0:16:17.560 --> 0:16:22.240 Chris Waller last night suggests a footnote that they're also 0:16:22.360 --> 0:16:26.800 following the ADP numbers and they have shown deterioration. They 0:16:26.800 --> 0:16:29.800 get the ADP numbers on a weekly basis and use 0:16:29.840 --> 0:16:32.360 them to form their own okay index, and they have 0:16:32.440 --> 0:16:35.760 been deteriorating since the last job's report. 0:16:35.840 --> 0:16:39.880 And this is Waller's Reelhouse started Damien with this was 0:16:39.880 --> 0:16:43.280 a question about mister Waller. Now he's popping fifty beeps. 0:16:43.280 --> 0:16:46.280 Talk back down to twenty five basis point. With this 0:16:46.480 --> 0:16:51.240 economic study this morning, it screams moderation by the Fed, 0:16:51.400 --> 0:16:51.840 doesn't it? 0:16:53.440 --> 0:16:54.560 Not? Necessarily? 0:16:54.800 --> 0:16:57.360 I got that wrung, Damian. Please. 0:16:58.840 --> 0:17:03.840 What we do see is is some spending increase on 0:17:04.000 --> 0:17:09.280 automobiles drove much of the increase overall, and automobiles, spending 0:17:09.440 --> 0:17:12.920 is expected to drop off some because the tariffs are 0:17:12.960 --> 0:17:15.440 going to affect and the auto companies have said they're 0:17:15.480 --> 0:17:17.920 going to be raising prices once we get to the 0:17:17.920 --> 0:17:20.880 twenty twenty six model year. Now I don't know exactly 0:17:20.920 --> 0:17:23.439 what that means, but you two are old enough like 0:17:23.560 --> 0:17:25.399 me to know that it was always when the football 0:17:25.560 --> 0:17:28.919 season started, they started the new car ads for the 0:17:29.000 --> 0:17:32.280 new year. So somewhere around this time or. 0:17:32.359 --> 0:17:33.960 Well, you know what, Mike, here's the thing. I'm looking 0:17:34.000 --> 0:17:36.280 at the PC data. I'm looking at soondy A's GDP data, 0:17:36.320 --> 0:17:38.160 and it's all on the screws. There's no news here. 0:17:38.200 --> 0:17:40.159 There's nothing really here. When I want to ask you 0:17:40.240 --> 0:17:42.520 is let's look forward one week from today when NFP 0:17:42.640 --> 0:17:45.040 comes out, and I want to ask your humble opinion here, 0:17:45.040 --> 0:17:47.400 your gut check here. You know, just a few months back, 0:17:47.400 --> 0:17:49.280 we were looking at peril prints of the one fifty 0:17:49.320 --> 0:17:51.320 one to seventy elk. Now we're looking at a consensus 0:17:51.400 --> 0:17:54.960 estimate of what seventy four thousand added last scored last month. 0:17:55.240 --> 0:17:57.879 Talk to us about that shift, that change, and are 0:17:57.920 --> 0:18:00.399 the market suggesting that properly? Is that you know a 0:18:00.440 --> 0:18:02.760 precursor to something more notorious here in these markets. 0:18:02.960 --> 0:18:05.440 Well, there's two numbers that the FED has got to watch. 0:18:05.480 --> 0:18:07.480 One is the number of jobs created, and that has 0:18:07.480 --> 0:18:11.440 slowed tremendously, and the expectation is that it will continue 0:18:11.480 --> 0:18:15.760 to do so. But they are also following the unemployment rate, 0:18:15.880 --> 0:18:21.200 and that is the sign they have for what's happening 0:18:21.520 --> 0:18:24.960 to the overall economy. If people start losing jobs, they're 0:18:25.040 --> 0:18:27.840 much more worried. And at this point, to this point, 0:18:28.000 --> 0:18:31.720 it hasn't moved very much or very quickly. The issue is, 0:18:33.119 --> 0:18:37.159 and Waller brought this up last night, is where what 0:18:37.320 --> 0:18:41.119 is causing this? Is it because we're seeing no entrance 0:18:41.119 --> 0:18:43.680 into the labor force because immigration has been cut off, 0:18:44.200 --> 0:18:47.720 or is it because companies are holding on to workers, 0:18:47.760 --> 0:18:50.760 which is sort of the It's kind of a combination too, 0:18:50.840 --> 0:18:52.000 is the general consensus. 0:18:52.000 --> 0:18:54.720 But Waller thinks it's not so much immigration. You have 0:18:54.760 --> 0:18:55.400 two questions. 0:18:55.400 --> 0:18:59.479 First, one is important, Okay, the unemployment rate right now 0:19:00.160 --> 0:19:03.399 geist on global Wall Street and particularly Manhattan and Wall Street. 0:19:04.240 --> 0:19:07.440 Is anybody modeling out over five percent out there somewhere? 0:19:08.040 --> 0:19:09.719 I have not seen over five percent. 0:19:09.800 --> 0:19:12.960 I have seen four point five to four point six 0:19:13.760 --> 0:19:15.400 and that would be considered. 0:19:15.480 --> 0:19:17.560 And this is because it's all immigration influenced. 0:19:17.680 --> 0:19:21.919 Well, yeah, your denominator would change, and that would make 0:19:21.960 --> 0:19:25.040 the unemployment rate hold steady if there's nobody entering the 0:19:25.119 --> 0:19:27.960 labor force. So that's the question is what's going to 0:19:28.000 --> 0:19:30.960 happen with the labor force size there? But the Fed 0:19:31.080 --> 0:19:34.199 is less concerned tom with an overall level than they 0:19:34.200 --> 0:19:38.320 are with how fast it goes up, because it's when 0:19:38.440 --> 0:19:41.360 unemployment starts to rise, it starts to rise much more 0:19:41.440 --> 0:19:44.240 quickly because lots of companies are going to be laying 0:19:44.280 --> 0:19:47.120 off people because they see a problem in the economy. 0:19:47.160 --> 0:19:48.720 And that's what we have to keep an eye on. 0:19:48.800 --> 0:19:51.720 Okay, nobody cares. All they care about is this is 0:19:51.840 --> 0:19:54.920 like make a movie like we need like Kevin Costner 0:19:55.040 --> 0:19:59.040 tonight at Fenway. We need James Earl Jones in the stands, right, 0:19:59.080 --> 0:20:01.439 you know, with the with the if you build it, 0:20:01.440 --> 0:20:04.119 They'll come or whatever feel the dreams. I mean, are 0:20:04.160 --> 0:20:06.320 you kidding me? Mike? We got the number one pitcher 0:20:06.359 --> 0:20:10.160 in baseball showing up in the Red Sox have joined 0:20:10.160 --> 0:20:12.199 the Hollywood trade. I don't know how to pronounce his 0:20:12.280 --> 0:20:16.720 last name. Peyton Coyle am I close to the picture. 0:20:16.800 --> 0:20:17.080 Close. 0:20:17.280 --> 0:20:22.400 Yeah, I'm somewhat close. He's the second round pick out 0:20:22.400 --> 0:20:27.840 of TCUs. It's like he was playing rookie league earlier 0:20:27.920 --> 0:20:31.159 in the season. A ball double, a ball triple A. 0:20:31.760 --> 0:20:34.920 The kid comes in tonight. It's got to be sold out. 0:20:35.400 --> 0:20:37.639 He's going up against the stud I mean, it's like 0:20:37.680 --> 0:20:38.520 the movies, Mike. 0:20:39.840 --> 0:20:40.840 I suppose it is. 0:20:40.960 --> 0:20:45.800 But this is one of the most interesting times of 0:20:45.840 --> 0:20:49.439 the year for stuff like this. What you're he's actually 0:20:49.480 --> 0:20:51.760 coming up a little early because it's September one when 0:20:51.800 --> 0:20:55.760 they can expand their rosters, so they're gonna. 0:20:55.560 --> 0:20:58.800 See what they got here, Damien. Here's the quote from 0:20:59.280 --> 0:21:03.159