WEBVTT - Biden Says US Would Defend Taiwan 0:00:01.840 --> 0:00:04.480 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.519 --> 0:00:07.320 Bloomberg quick takes, Tim Stanivik. We're here every day bringing 0:00:07.360 --> 0:00:09.880 you the latest news from the worlds of business and finance, 0:00:09.880 --> 0:00:13.680 plus technology, politics economics, all purtnising the power of Business 0:00:13.720 --> 0:00:17.640 Week reporters and editors, not to mention our journalists and analyst. 0:00:17.680 --> 0:00:20.439 In more than one twenty countries you can download Bloomberg 0:00:20.480 --> 0:00:23.520 Business Week and Itunes, soundcloud or Bloomberg Dot Com. You 0:00:23.520 --> 0:00:25.479 can also listen to our radio show at two PM 0:00:25.480 --> 0:00:28.440 eastern time on Bloomberg radio or watch us on Youtube. 0:00:28.440 --> 0:00:32.760 Search Bloomberg Glovel News. So let's get to it, everybody, 0:00:32.760 --> 0:00:35.840 and let's talk about what President Biden had to say, 0:00:36.400 --> 0:00:40.440 and this has certainly caught everyone's attention. Uh President Biden 0:00:40.520 --> 0:00:43.479 last night on CBS is sixty minutes saying US military 0:00:43.520 --> 0:00:47.800 forces would defend Taiwan from an unprecedented attack. His latest 0:00:47.800 --> 0:00:50.800 pledge of support as his administration seeks to deter China 0:00:50.840 --> 0:00:55.320 from increasing military pressure on the democratically elected government in Taipei. 0:00:55.400 --> 0:00:58.120 Here's more of what President Biden had to say. There's 0:00:58.240 --> 0:01:01.160 one China policy, tire one and makes their own judgments 0:01:01.160 --> 0:01:05.080 about their independence. We are not moving. We're not encouraging 0:01:05.080 --> 0:01:09.000 their being independent. We're not. That's their decision. But would 0:01:09.040 --> 0:01:12.240 US forces defend the island? Yes, if in fact there 0:01:12.280 --> 0:01:16.200 was an unprecedented an attack. That was President Biden, courtesy 0:01:16.440 --> 0:01:18.920 of sixty minutes. Let's get to it right now, with 0:01:18.959 --> 0:01:21.880 Bloomberg News White House correspondent Josh Wynd Grove joining us 0:01:21.880 --> 0:01:25.000 on the phone from Washington d C. Josh, good to 0:01:25.040 --> 0:01:27.959 have you with us. So President Biden makes these comments 0:01:27.959 --> 0:01:30.759 in an interview on sixty minutes, and then what does 0:01:30.800 --> 0:01:33.240 the White House do in reaction? Does he think, Josh, 0:01:33.280 --> 0:01:36.520 nobody was listening. I mean it's the aftermath that I'm 0:01:36.560 --> 0:01:39.480 interested in too, write the damage control that they do. Yeah, 0:01:39.720 --> 0:01:42.440 I mean, look, the White House messaging on Taiwan is 0:01:42.440 --> 0:01:46.360 the strategic ambiguity, and the president, uh, you know, flips 0:01:46.360 --> 0:01:48.480 back and forth, depending on the day, between the between 0:01:48.600 --> 0:01:50.880 the strategic part and the ambiguous part. I think a 0:01:50.880 --> 0:01:53.240 little bit here and there. Now he's made comments like 0:01:53.360 --> 0:01:55.840 this before, most recently inmate when he made the sort 0:01:55.840 --> 0:01:59.360 of scene signal. At the time, of course, reacted pretty 0:01:59.360 --> 0:02:01.360 strongly to that. The White House tried to put the 0:02:01.360 --> 0:02:03.800 two space back in the two tubes thing. Look, the 0:02:03.840 --> 0:02:07.000 one China policy has not changed. This is all consistent 0:02:07.040 --> 0:02:10.519 with that. But you know, I suppose one or two 0:02:10.560 --> 0:02:14.040 things is happening. One is that the like likes a 0:02:14.040 --> 0:02:16.040 little bit of uncertainty in the mix and he keeps 0:02:16.080 --> 0:02:19.200 injecting it and kind of to keep the Chinese government 0:02:19.240 --> 0:02:20.800 on their toes a bit about what the U S 0:02:20.840 --> 0:02:24.320 response would be. The other, maybe a little less, uh, 0:02:26.000 --> 0:02:28.840 a litt less generous maybe, is that perhaps this is 0:02:28.880 --> 0:02:30.560 just how he feels and you just can't help but 0:02:30.639 --> 0:02:33.680 kind of spurt it out, whether it's neatly into the 0:02:33.720 --> 0:02:36.400 U S policy or not. But what they're saying today 0:02:36.400 --> 0:02:38.800 that that the clean up, if you will, or the 0:02:38.840 --> 0:02:41.119 follow up maybe is just simply that he has said 0:02:41.120 --> 0:02:43.000 this before. We said before that there's no change the 0:02:43.040 --> 0:02:45.280 one China policy. That remains the case. They're trying to 0:02:45.280 --> 0:02:47.680 sort of hit off any Chinese reactions. Well, that's it, Josh. 0:02:47.720 --> 0:02:51.320 Can you, as the president of the United States, say yeah, 0:02:51.600 --> 0:02:54.440 I stand by the one China policy, but if there's 0:02:54.440 --> 0:03:00.840 an unprecedented attack, we can't stand by it depends on 0:03:00.840 --> 0:03:03.920 what one precedented attack me, of course, and you know 0:03:03.960 --> 0:03:07.720 this this comment, of course, does come book ending something 0:03:07.760 --> 0:03:10.280 pretty important that happened between the last time he said 0:03:10.280 --> 0:03:13.360 it and last night, which is, of course, speaker Pelope's visit. 0:03:13.400 --> 0:03:16.360 That really raised tensions in the region. The president went 0:03:16.360 --> 0:03:17.840 so far as to say that he thought the Department 0:03:17.880 --> 0:03:19.840 of Defense thought it was not a great idea for 0:03:19.880 --> 0:03:22.360 the speaker to go when she was not publicly confirming 0:03:22.400 --> 0:03:24.840 that she would. Of course she ultimately did. That led 0:03:24.880 --> 0:03:28.440 to Chinese military exercises, missile launches, sort of Saber rattling 0:03:28.520 --> 0:03:32.079 in and around Taiwan uh and so he's sort of, 0:03:32.200 --> 0:03:34.240 I guess, drawing a line on the sand again now 0:03:34.240 --> 0:03:36.520 with this comment, saying this is where he is. I 0:03:36.520 --> 0:03:39.440 should note, though, that on another part of the interview 0:03:39.440 --> 0:03:41.880 he sort of gave a more of a comming sort 0:03:41.920 --> 0:03:44.200 of view on China when he was asked about Putin 0:03:44.960 --> 0:03:47.880 Uh and uh she Jin Ping's relationship and said that 0:03:47.960 --> 0:03:51.120 as of now there's no indications that China has provided 0:03:51.160 --> 0:03:54.640 weapons or support to Russia in its war in Ukraine. 0:03:55.120 --> 0:03:56.840 And of course he said that he'd warned she jim 0:03:56.920 --> 0:03:59.240 king that there would be consequences in terms of a 0:03:59.320 --> 0:04:01.840 lack of form and that's been an American investment in particular, 0:04:01.880 --> 0:04:05.240 if that happened. So you know, this Taiwan comment is 0:04:05.240 --> 0:04:07.760 getting a lot of attention and should of course, arguably 0:04:07.760 --> 0:04:10.760 the newsiest thing of that interview. But the other sort 0:04:10.800 --> 0:04:13.280 of trappings of the interview were one that thinks that 0:04:13.440 --> 0:04:16.320 right now he's actually kind of optimistic that China is 0:04:16.560 --> 0:04:19.919 fully aligning as of yet with Moscow, and that, of 0:04:19.960 --> 0:04:21.279 course is good news for the West and all the 0:04:21.279 --> 0:04:23.600 countries that are trying to prop up you, Maine, in despight. Well, 0:04:23.640 --> 0:04:25.240 it kind of makes sense to Josh coming off of 0:04:25.279 --> 0:04:27.679 even President g right in that first face to face 0:04:28.360 --> 0:04:31.800 since was a covid with Um President Putin, where he 0:04:31.920 --> 0:04:35.400 too kind of seemed to just maybe put Putin a 0:04:35.400 --> 0:04:36.960 little bit on guard. So I feel like there's some 0:04:37.279 --> 0:04:40.400 perhaps some layering going on here. Can I ask you something, though? 0:04:41.200 --> 0:04:44.200 I always feel like, always, always like I don't know 0:04:44.240 --> 0:04:46.280 that I can make a blanket statement, but he is 0:04:46.320 --> 0:04:48.920 president the United States. He knows what he says something, 0:04:49.320 --> 0:04:52.520 it's going to be taken largely at face value. Is 0:04:52.560 --> 0:04:56.400 that true of this particular president, or do we sometimes say, 0:04:56.600 --> 0:05:02.800 and I just kind of speaks top of mind, no Malarkey, 0:05:02.880 --> 0:05:05.520 that's right. I think Joe Biden's candor is probably pretty 0:05:05.560 --> 0:05:08.160 pricedy and at this point this is not a guy 0:05:08.200 --> 0:05:11.560 that ductor script all that much as vice president and 0:05:11.600 --> 0:05:13.960 he continued as president. You know, he does not do 0:05:14.040 --> 0:05:15.919 a lot of innergy that's what mean the sixty minutes. 0:05:15.960 --> 0:05:19.080 One kind of UH must watch for for those in 0:05:19.160 --> 0:05:21.120 my field of work. The last one he did was 0:05:21.160 --> 0:05:23.640 several months ago, is sit down with the Associated Press. 0:05:23.680 --> 0:05:25.080 He does kind of want off things, like he did 0:05:25.120 --> 0:05:27.359 something with Jay Lena recently, that sort of thing, but 0:05:27.400 --> 0:05:30.920 he's done far fewer TV and print interviews then, for instance, 0:05:30.920 --> 0:05:34.080 Barack Obama did at this point in his president. So 0:05:34.360 --> 0:05:36.640 as to why that is, you know, who's to say? 0:05:36.640 --> 0:05:38.200 We live in a different environment. You know, maybe they 0:05:38.240 --> 0:05:41.600 think they can get their message out other ways, other channels, 0:05:41.640 --> 0:05:46.160 more direct channels, don't have to go through the mainstream 0:05:46.200 --> 0:05:48.200 press as much. Of course trump spoke to the press 0:05:48.279 --> 0:05:50.560 all the time. On the flip side, towards the end 0:05:50.600 --> 0:05:52.960 didn't hold any press briefings by the females press briefings 0:05:53.040 --> 0:05:54.640 all the time. So it sort of like picked your 0:05:54.640 --> 0:05:57.320 path a little bit. But he does these so rarely. 0:05:57.360 --> 0:06:00.800 That's why all eyes are on them my kind maybe 0:06:00.800 --> 0:06:02.920 his eye at the beholder on when when he goes 0:06:02.960 --> 0:06:05.600 off script a little bit, whether that's part of a Cacus, 0:06:05.680 --> 0:06:08.240 and whether they do these or not. Then you know 0:06:08.520 --> 0:06:12.239 anyone to do. What Else Josh did six and Scott 0:06:12.320 --> 0:06:15.040 Kelly get out of the president last night, especially when 0:06:15.040 --> 0:06:20.160 it comes to Ukraine, but also second term idea? Yeah, they're. 0:06:20.200 --> 0:06:21.360 I mean we there are a bunch of stories that 0:06:21.400 --> 0:06:24.240 came out of that. On you on Ukraine, I mean 0:06:24.240 --> 0:06:25.719 it just he said that they would do whatever it 0:06:25.760 --> 0:06:29.160 takes to defend Lensky's government and defend the country against 0:06:29.200 --> 0:06:32.920 Russian attacks. That's consistent with what he said before four 0:06:32.960 --> 0:06:36.159 he said they haven't really had an explicit conversation. Remember, 0:06:36.200 --> 0:06:37.880 Joe Biden, if he runs for re election, will be 0:06:37.880 --> 0:06:40.880 the oldest president to do it. As of now, he 0:06:40.920 --> 0:06:44.320 says regularly he's intending on running for re election, but 0:06:44.400 --> 0:06:47.040 he's said something to the effective face. He has intervened 0:06:47.080 --> 0:06:49.560 in his life uh many times and he's sort of 0:06:49.560 --> 0:06:52.000 not ruling out the fact that things go sideways. The 0:06:52.080 --> 0:06:54.240 last night shure sounded like a guy that thought as 0:06:54.240 --> 0:06:56.360 of now he'll be running. The other thing that really 0:06:56.360 --> 0:06:59.479 caught on was the pandemic. He said the pandemic is over. 0:06:59.560 --> 0:07:02.480 Walking on with Mr Kelly at the Detroit auto shot 0:07:02.520 --> 0:07:04.159 was on that strip, and you know he's right in 0:07:04.200 --> 0:07:05.760 the sense that like there was virtually no mass that 0:07:05.880 --> 0:07:08.839 sort of thing, because of course it's not. The COVID 0:07:08.880 --> 0:07:11.040 isn't over. But I gotta tell you, Josh, presidents, tell 0:07:11.080 --> 0:07:12.920 that to my mask, which was on my face on 0:07:12.960 --> 0:07:15.240 the same way this morning, Josh Wyn Grove, Love You, 0:07:15.280 --> 0:07:17.600 love you. White House correspondent Bloomberg News joining us on 0:07:17.640 --> 0:07:19.680 the phone from Washington D C. You are listening in 0:07:19.720 --> 0:07:24.880 watching Bloomberg Business Week, and this is Bloomberg. This is 0:07:24.920 --> 0:07:28.840 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:07:28.960 --> 0:07:33.880 Tim Stinovic on Bloomberg radio. Let's get to the store. 0:07:33.960 --> 0:07:36.280 That is the Bloomberg big take today. It's also among 0:07:36.280 --> 0:07:38.720 our most read on the Bloomberg Terminal and it will 0:07:38.760 --> 0:07:40.800 be in the upcoming issue of Bloomberg Business Week, do 0:07:40.840 --> 0:07:43.560 out later this week. It has to do with what 0:07:43.680 --> 0:07:46.040 Tim many would argue is our biggest story the day, 0:07:46.080 --> 0:07:48.280 certainly for the Bloomberg audience, and it has to do 0:07:48.320 --> 0:07:50.920 with the global race to hike interest rates and how 0:07:50.960 --> 0:07:54.080 that is tilting economies toward recession. Yeah, this a piece 0:07:54.120 --> 0:07:57.000 by rich Miller. It is Bloomberg, the Bloomberg big take 0:07:57.040 --> 0:07:59.400 as well. It's about the global race hike rates tilting 0:07:59.400 --> 0:08:02.440 economies to recession. Carol, as you mentioned, it's not just 0:08:02.520 --> 0:08:06.480 the United States, Joel Webber and rich that is the 0:08:06.680 --> 0:08:08.960 entire world dealing with this right now. Rich Miller is 0:08:09.000 --> 0:08:11.120 economics reporter for Bloomberg News. He joins us on the 0:08:11.120 --> 0:08:13.800 phone from our Washington D C Bureau. Joel Weber is 0:08:13.840 --> 0:08:15.880 the editor of Bloomberg Business Week. He's with us in 0:08:15.920 --> 0:08:19.040 the Bloomberg Interactive Broker Studio. So, Joel, we were talking 0:08:19.040 --> 0:08:21.440 a little bit earlier about Um, President Biden on sixty 0:08:21.440 --> 0:08:25.800 minutes last night. He was also asked about inflation, UH 0:08:25.800 --> 0:08:28.160 and Um. You know, one thing that I thought of 0:08:28.160 --> 0:08:30.040 when I was listening to his answer is that this 0:08:30.120 --> 0:08:32.079 is not just something that's happening in the United States, 0:08:32.120 --> 0:08:33.760 that the US is dealing with. You've got pretty much 0:08:33.800 --> 0:08:36.880 every central bank trying to get interest rates to a 0:08:36.920 --> 0:08:40.200 place where inflation comes down. Yeah, and it's almost become 0:08:40.280 --> 0:08:43.680 as as rich rates here, Um, a competition and let's 0:08:43.679 --> 0:08:46.719 see who can hike these rates faster. Rich. Remember when 0:08:46.760 --> 0:08:49.760 money was cheap? That was fun. Um, it's gonna get 0:08:49.760 --> 0:08:53.480 more expensive. And you're in the US and elsewhere, right. Uh. 0:08:53.480 --> 0:08:56.720 And and among everything that's happening, I think it's uh, 0:08:56.760 --> 0:08:58.600 you know, one thing that's really interesting here is like 0:08:59.280 --> 0:09:02.559 it does seem like with interest rates, central bankers are 0:09:02.600 --> 0:09:07.640 just becoming myopically focused on taming recession, taming inflation at 0:09:07.760 --> 0:09:11.120 all costs, and that increasingly starts to look like recession. Right, 0:09:11.360 --> 0:09:13.280 but it is a global one, not just a U 0:09:13.320 --> 0:09:15.120 S story. So, even though you know we're gonna hear 0:09:15.120 --> 0:09:19.800 from J earlier this week, how is this manifesting itself elsewhere? Yeah, well, 0:09:19.840 --> 0:09:21.680 as you say, I mean it's you know, it's incredible 0:09:21.720 --> 0:09:24.079 when you look through it. It's like nineties central banks 0:09:24.080 --> 0:09:26.400 of you know, hiked and you know, like more than 0:09:26.440 --> 0:09:28.240 half of them have hiked by pre courters, some of 0:09:28.280 --> 0:09:30.720 them more more than that, as you say, like everybody's 0:09:30.760 --> 0:09:34.920 trying to outhaulk each other. Right now, I'll compete each other. 0:09:35.600 --> 0:09:39.160 And Uh, there are some people worried, you know, with 0:09:39.240 --> 0:09:41.599 everybody going in the same direction, the boat's going to 0:09:41.679 --> 0:09:46.800 tip over into global recession. Right, Um, uh. So that's 0:09:46.840 --> 0:09:48.600 one thing, and the other thing is when you go 0:09:49.679 --> 0:09:53.920 the you know, Milton Friedman, monetary policy affects the economy 0:09:53.960 --> 0:09:59.079 with long and variable legs. Um, Um, you know the 0:09:59.600 --> 0:10:01.880 raised rates. You first see it in the stock market, 0:10:02.040 --> 0:10:04.520 stock market weekends. Then you sort of see it in, 0:10:04.880 --> 0:10:07.520 you know, the housing market, the Housing Market Solce, and 0:10:07.559 --> 0:10:10.080 it comes at the very end, it comes into inflation. But, 0:10:10.080 --> 0:10:14.120 as you say, if they're myopically, you know, focusing on inflation, 0:10:14.480 --> 0:10:16.960 that means they're probably going to Overdo it and that's 0:10:16.960 --> 0:10:20.599 gonna push us into a recession, maybe your recession, you know, 0:10:20.679 --> 0:10:24.040 all all around the globe, Richard, we're talking millions of 0:10:24.120 --> 0:10:26.200 jobs here. As you write in your piece, analysts at 0:10:26.200 --> 0:10:28.640 black rock reckon that bringing inflation back to the feds 0:10:28.720 --> 0:10:32.199 two goal would mean a deep recession and three million 0:10:32.280 --> 0:10:35.320 more unemployed, and then also hitting the ECB's target would 0:10:35.320 --> 0:10:38.480 require an even bigger contraction. All that, right now is 0:10:38.480 --> 0:10:42.560 is spelling out a global recession, something that affects the 0:10:42.720 --> 0:10:44.480 entire globe. So what does this look like when it 0:10:44.520 --> 0:10:49.320 comes to economic growth? Well, I mean basically no growth. 0:10:49.480 --> 0:10:55.240 You know, the the economies are contracting right so, Um, 0:10:55.760 --> 0:10:58.720 I would think you know that translating that three million 0:10:59.240 --> 0:11:02.560 on employed into like growth, and you probably have two, 0:11:02.600 --> 0:11:06.120 two and a half contraction in the economy, in the 0:11:06.200 --> 0:11:11.679 US economy. Um, Um uh, an actual contraction as opposed 0:11:11.720 --> 0:11:14.000 to sort of, you know, the sort of phony contraction 0:11:14.040 --> 0:11:16.600 that we got earlier this year when it was mainly 0:11:16.640 --> 0:11:19.000 because we were importing more. But you know, this would 0:11:19.040 --> 0:11:21.320 be actual contraction and you know pain. The pain would 0:11:21.320 --> 0:11:23.560 be in the labor market. And you know one of 0:11:23.559 --> 0:11:27.839 the questions is, you know, uh, you know the politicians 0:11:27.880 --> 0:11:31.719 now with the most part except for uh, Senator War, 0:11:31.840 --> 0:11:34.360 and they're sort of cheering the Fed on. Yeah, inflation 0:11:34.440 --> 0:11:36.800 is bad, go ahead fed, race the rates. But you know, 0:11:36.960 --> 0:11:41.280 once once you start seeing some pain, j Powell has 0:11:41.280 --> 0:11:44.080 promised us, you you wonder whether the politicians will change 0:11:44.120 --> 0:11:46.760 their tune, which were already seeing pain. We were just 0:11:46.760 --> 0:11:48.920 talking about the housing market with Patrick Clark, right those 0:11:48.920 --> 0:11:51.400 five mortgage rates, and it made me want to ask 0:11:51.440 --> 0:11:54.160 you about lag effect. What is it really I mean, 0:11:54.600 --> 0:11:57.840 we're seeing it already on housing, but the successive and 0:11:57.960 --> 0:12:01.679 cumulative interest rate high exp global central banks right all 0:12:01.679 --> 0:12:03.560 of a sudden, I feel like it's like when you 0:12:03.559 --> 0:12:06.560 know you've got a clag and you're pushing through, nothing's 0:12:06.600 --> 0:12:08.600 happening and then all of a sudden it comes flying through. 0:12:08.760 --> 0:12:10.679 I'm waiting for that. Is that what's going to happen? 0:12:11.360 --> 0:12:14.520 I mean that is the danger and Um, that's in 0:12:14.559 --> 0:12:16.959 the past. Why the central banks would when they did 0:12:17.080 --> 0:12:19.840 raise rates, they'd go in small steps, like twenty five 0:12:19.880 --> 0:12:23.040 basis points. So you go, you go slowly and you see, 0:12:23.240 --> 0:12:26.240 you know what, you have a little more time to 0:12:26.280 --> 0:12:29.480 see what. You know what impact your rates were having. 0:12:29.559 --> 0:12:31.920 You know so, but when you're going and when you're 0:12:31.960 --> 0:12:36.000 galloping ahead in like seventy five basis point chunks, you 0:12:36.040 --> 0:12:38.520 know you don't have as much time to sort of 0:12:39.200 --> 0:12:43.120 gauge how how the earlier hikes were are affecting growth. And, 0:12:43.120 --> 0:12:45.760 as you say, housing is kind of in the crosshairs here. 0:12:46.320 --> 0:12:50.240 But you know, off housing, if housing uh weekends and 0:12:50.320 --> 0:12:55.960 you know, people are buying lesser appliances. You know, Um, if, if, 0:12:56.000 --> 0:13:01.360 if people Um uh feel that their house prices are 0:13:01.360 --> 0:13:04.360 going down and they were gonna save more and then 0:13:05.040 --> 0:13:07.920 and that just has a ripple. So it just takes time. 0:13:08.200 --> 0:13:11.560 But you know, as you say, it could sort of 0:13:11.600 --> 0:13:16.200 be like, you know, an exploding toilet right, could splash 0:13:16.360 --> 0:13:18.520 right into our faces. Didn't I didn't want to get 0:13:18.679 --> 0:13:21.840 graphic here. That wasn't that a cover of bloom purposiness. 0:13:23.760 --> 0:13:28.960 Joe was known for some the bar bag was a favorite. 0:13:29.320 --> 0:13:31.160 Might need to dust that one off. Look for the 0:13:31.360 --> 0:13:33.760 you know, your you know passenger next to you. You 0:13:33.800 --> 0:13:36.880 can get there. Back to Um rich. One of the 0:13:36.920 --> 0:13:40.040 things that um I thought was a little bit frightening, 0:13:40.080 --> 0:13:44.760 that I hadn't totally appreciated was the growth forecast charts 0:13:44.920 --> 0:13:48.280 in your story. US goes down pretty dramatically. When you 0:13:48.280 --> 0:13:52.120 start to look out euro area, worse, UK man, that 0:13:52.160 --> 0:13:56.520 looks really Bade Um, just from a sense of Um, 0:13:56.640 --> 0:13:58.520 you know, the folks that you talked to in the 0:13:58.600 --> 0:14:00.760 daddy that you're looking at it is it starting to 0:14:00.800 --> 0:14:02.840 feel like there's that pit in the stomach that's like, 0:14:02.880 --> 0:14:05.200 Oh God, this is going to get really bad. Yeah, 0:14:05.240 --> 0:14:09.360 I mean, truth be told, the U S we you know, 0:14:09.440 --> 0:14:12.800 we've held up surprisingly well. The Labor markets held up 0:14:12.800 --> 0:14:16.280 pretty well and it's, you know, most of the concern 0:14:16.440 --> 0:14:18.400 right at the moment is it faced on Europe where, 0:14:18.440 --> 0:14:20.200 you know, in the UK, where they're getting hit with 0:14:20.240 --> 0:14:24.200 you know, this incredible uh, getting that not guess, uh, 0:14:24.520 --> 0:14:27.360 price shock and you know, at the same time you 0:14:27.440 --> 0:14:31.720 have the central banks raising rates and you know. But 0:14:32.640 --> 0:14:34.880 the problem in the US is we've got this you know, 0:14:35.000 --> 0:14:40.040 embedded inflation problem, and the strongest the economy is, it 0:14:40.080 --> 0:14:41.920 means probably the Fed's going to have to work that 0:14:42.040 --> 0:14:44.560 much harder to slow things down. And that's when you 0:14:44.560 --> 0:14:47.040 know you get risk that they slow it down too 0:14:47.160 --> 0:14:50.000 much and we go slipping into a recession rich real quickly. 0:14:50.040 --> 0:14:55.120 Just got abouts here. Is Inflation still a supply problem 0:14:55.400 --> 0:14:59.000 or is it now kind of more demand problem? And 0:14:59.000 --> 0:15:03.120 that's where the Fed can do something. I think in 0:15:03.480 --> 0:15:06.280 the US it's probably becoming more and more demand problem, 0:15:06.280 --> 0:15:08.560 particularly in the labor market. With the you know, wages 0:15:08.560 --> 0:15:11.920 are going up about five six percent a year and 0:15:11.960 --> 0:15:14.440 to be consistent with the feds target they have to 0:15:14.480 --> 0:15:16.960 be going up three and a half percent. So I 0:15:17.160 --> 0:15:19.680 got a long way Togo. That's why people think unemployment's 0:15:19.680 --> 0:15:21.280 gonna have to go up a lot so workers finally 0:15:21.280 --> 0:15:23.960 get a break. And now it's like, yeah, I'm sorry 0:15:24.000 --> 0:15:26.880 about that, it's not a good thing. We won't blame you, 0:15:27.000 --> 0:15:31.160 rich or we can. It's all started here because the 0:15:31.320 --> 0:15:34.720 rich Miller is excellent reporting. He's in DC, so there's 0:15:34.720 --> 0:15:38.120 nothing you can do comment directly. All right, this story, 0:15:38.160 --> 0:15:39.920 as we mentioned, it's going to be the upcoming issue 0:15:39.960 --> 0:15:42.840 of Bloomberg Business Week do later this week. It's also 0:15:42.960 --> 0:15:45.400 already on the Bloomberg terminal and Bloomberg dot com slash 0:15:45.440 --> 0:15:48.400 business weeker, thanks to Bloomberg News Economics reporter Rich Miller and, 0:15:48.400 --> 0:15:50.800 of course, the editor of business week, Jill Weber. This 0:15:50.880 --> 0:15:56.800 is Bloomberg radio. You're listening to Bloomberg Business Week with 0:15:56.880 --> 0:16:01.680 Carol Masser and Bloomberg Quick Takes Tim Stintov on Bloomberg radio. 0:16:02.320 --> 0:16:05.000 It is the second busiest port in North America, generating 0:16:05.040 --> 0:16:07.720 some two point six million jobs across the US. Some 0:16:07.800 --> 0:16:10.800 one seventy five shipping lines connecting long beach to two 0:16:10.880 --> 0:16:14.480 hundred seventeen ports and this past August it's second busiest 0:16:14.520 --> 0:16:17.000 August on record, following the busiest talcust on records at 0:16:17.000 --> 0:16:19.960 the previous year back in August one. So we're going 0:16:20.000 --> 0:16:22.680 to get a great state of our shipping and cargo industry. 0:16:22.800 --> 0:16:25.320 For that we turned to Mario Cordero, executive director of 0:16:25.360 --> 0:16:27.120 the port of Long Beach. He joins US right now 0:16:27.160 --> 0:16:29.920 in the Bloomberg Interactive Broker Studio. Mario, it's great to 0:16:29.960 --> 0:16:32.760 have you back with us, uh, in in person too. 0:16:32.800 --> 0:16:34.720 Welcome to New York. Well, thank you. Thank you for 0:16:34.720 --> 0:16:36.760 the CON invitation. So, Carol just mentioned some of the 0:16:36.800 --> 0:16:38.120 data that we have, and we have a ton of 0:16:38.160 --> 0:16:41.400 it thanks to you and the team, uh. But second busiest. 0:16:41.440 --> 0:16:43.320 It may not be the best thing for, you know, 0:16:43.480 --> 0:16:46.640 a port to see, you know, the business come down 0:16:46.720 --> 0:16:49.480 year over year, but can we argue that it actually 0:16:49.600 --> 0:16:51.480 is a good thing because it's not as backed up 0:16:51.520 --> 0:16:54.160 as it was a year ago? Well, certainly, when you 0:16:54.160 --> 0:16:56.960 look at the metrics here. Currently we have in the 0:16:57.000 --> 0:17:00.320 San Peter Bury Complex twelve vessels backed up trying to 0:17:00.360 --> 0:17:03.560 get into the ports. So if you go back to January, 0:17:03.560 --> 0:17:06.040 that number was a hundred and nine. So just on 0:17:06.040 --> 0:17:08.760 that alone it's a tremendous progress being made. Is Any 0:17:08.760 --> 0:17:11.400 of that seasonal? Part me, is any of that seasonal? 0:17:11.720 --> 0:17:13.679 You know, we're in peak season right now and I 0:17:13.720 --> 0:17:17.040 think we're at the peak, so to speak. Again you're 0:17:17.040 --> 0:17:20.080 looking at the numbers of the consumer demand or some 0:17:20.200 --> 0:17:22.720 softening on that. So for the third and fourth quarter 0:17:22.720 --> 0:17:25.480 of the year I think we're looking to diminish demand 0:17:25.520 --> 0:17:27.720 in turns on the consumer front. Well, that's what we 0:17:27.760 --> 0:17:29.359 wanted to I mean, I feel like you have such 0:17:29.400 --> 0:17:31.199 a great vantage point when it comes to what's going 0:17:31.200 --> 0:17:33.200 on on an economy. We're all kind of on pins 0:17:33.200 --> 0:17:35.320 and needles trying to figure out what comes next as 0:17:35.359 --> 0:17:37.880 we wait for, certainly the Fed decision. What is your 0:17:37.960 --> 0:17:40.680 read on the state of the U S economy right now? 0:17:41.359 --> 0:17:43.440 I think we have a strong economy. We certainly have 0:17:43.480 --> 0:17:46.760 a strong labor market and keep in mind where we 0:17:46.760 --> 0:17:50.080 were two years ago. I think part of the two 0:17:50.160 --> 0:17:53.840 years was terrible. Right the outlier. So are we pre 0:17:53.920 --> 0:17:57.119 pandemic levels? Are Like? How do you in terms of 0:17:57.240 --> 0:17:59.200 in terms of the job market, I think we're approaching 0:17:59.240 --> 0:18:01.240 pre pandemic doubles in terms of the jaws. I have 0:18:01.280 --> 0:18:04.600 been added since then. But I think the point is 0:18:04.640 --> 0:18:07.440 we've had a very fast recovery from a worse scenario 0:18:07.480 --> 0:18:10.760 that we experience. So in that regard, the economy was 0:18:10.800 --> 0:18:13.159 real hot and now, of course, what we're trying to 0:18:13.200 --> 0:18:16.200 do as a nation is kind of softened that. So 0:18:16.560 --> 0:18:20.520 I think again, the dollar question is, you know, words 0:18:20.600 --> 0:18:23.200 inflation going to go. So I think that's the outlier. 0:18:23.560 --> 0:18:25.800 In terms of what's to come. Well, when you look 0:18:25.840 --> 0:18:27.960 at the activity at the port, and it's really just 0:18:28.040 --> 0:18:31.880 fascinating about just the the amount of flow through there 0:18:31.920 --> 0:18:36.439 and what the imports of the exports moving through your 0:18:36.480 --> 0:18:40.480 ports largest trading partner country is China, which accounts for 0:18:40.920 --> 0:18:44.680 so much of it. Um does recession come to your 0:18:44.720 --> 0:18:48.480 mind a lot, which is certainly something we are worried about, 0:18:48.560 --> 0:18:51.359 especially as global central banks are increasingly doing everything in 0:18:51.440 --> 0:18:54.840 anything in terms of hiking rates to stem off global inflation. 0:18:55.200 --> 0:18:57.600 So do you think a lot about recession in terms 0:18:57.600 --> 0:19:00.760 of the activity you're seeing? Well, Carol, a good friend 0:19:00.760 --> 0:19:03.840 of mine, economist Paul Bingham, who has been following this 0:19:03.920 --> 0:19:06.520 industry for many, many years, once said tell me how 0:19:06.520 --> 0:19:08.600 many containers go through the poor Long Beach and I'll 0:19:08.600 --> 0:19:11.639 tell you how good the economy is. So, so far good. 0:19:12.080 --> 0:19:16.640 Is Inflation a concern? Yes, however, again, if you look 0:19:16.640 --> 0:19:20.280 at the latest plan of action by the Federal Reserve UH, 0:19:20.359 --> 0:19:22.360 they believe they may be able to control this. Will 0:19:22.400 --> 0:19:24.919 wait to see what that decision is uh in the 0:19:24.960 --> 0:19:28.440 coming week, whether that's point seven, five or one oh increase, 0:19:28.880 --> 0:19:32.080 but I think it's safe to say that again, we 0:19:32.119 --> 0:19:35.720 went through an unusual quick recovery. The consumer demand has 0:19:36.000 --> 0:19:38.280 really been extraordinary in the last year and a half. 0:19:38.680 --> 0:19:42.480 Energy prices have gone down. Admittedly, grocery prices have gone up. 0:19:42.920 --> 0:19:46.159 So I think what we're looking to is again a 0:19:46.280 --> 0:19:51.919 very good job market, good consumer demand, considerably considerable in 0:19:52.000 --> 0:19:54.880 terms of what we experienced previously. But again we are 0:19:55.040 --> 0:19:58.400 looking at some economic growth, certainly in the global arena, 0:19:58.600 --> 0:20:00.800 and after the United States, think we're gonna feel some 0:20:00.840 --> 0:20:03.440 of that also. So it sounds like you're saying we're 0:20:03.440 --> 0:20:06.800 not in a recession right now. Today, we're not. I mean, 0:20:07.200 --> 0:20:11.000 you know, is it removing towards your recession? Fore? I 0:20:11.000 --> 0:20:15.480 mean there's a debate. I know that all this is uh, highlights. 0:20:15.760 --> 0:20:18.159 How many like do people book? Help me out with 0:20:18.200 --> 0:20:21.040 like the shipping. Understanding Shipping, having recently been at the 0:20:21.080 --> 0:20:23.879 Panama Canal fascinating to just understand it. Same thing with 0:20:23.920 --> 0:20:27.800 your report. Do our companies booking for December? Are they 0:20:27.800 --> 0:20:31.280 booking for November? Like, how much visibility or how much 0:20:31.359 --> 0:20:33.919 forward looking visibility do you actually have to get an 0:20:33.960 --> 0:20:36.560 idea of? Wow, things are going to slow down. Well, 0:20:36.560 --> 0:20:38.720 what I can tell you is part of the problem 0:20:38.760 --> 0:20:42.959 that we experience here in the nation's largest monstrategic gateway 0:20:43.200 --> 0:20:46.280 is the advancing of that inventory. So, looking forward, some 0:20:46.320 --> 0:20:48.800 of these companies were advancing the inventory, but they certainly 0:20:48.840 --> 0:20:50.960 didn't want to put us back to where we were 0:20:51.000 --> 0:20:55.600 in the second half of uh so I think, uh, 0:20:56.280 --> 0:20:59.040 it's interesting to watch. You know, there's some bigger company 0:20:59.080 --> 0:21:02.400 to start looking at their labor force. Uh. But at 0:21:02.400 --> 0:21:04.920 this point I will say that in terms of the 0:21:05.000 --> 0:21:09.840 coming holiday Christmas season, we're gonna be very well established 0:21:09.880 --> 0:21:11.960 in terms of that inventory because much of that has 0:21:12.000 --> 0:21:15.600 been advanced already. It's already it's already where it needs 0:21:15.680 --> 0:21:17.480 to be right I mean for the poor lawmas. If 0:21:17.480 --> 0:21:19.160 you look at the first eight months of this year, 0:21:20.040 --> 0:21:22.840 we've superseded the numbers of our record year last year 0:21:23.480 --> 0:21:26.400 at this point by four point six percent. So that's 0:21:26.480 --> 0:21:28.879 kind of an indicator in terms out a continued volume. 0:21:29.160 --> 0:21:31.440 But again, it's gonna be interesting to see how we 0:21:32.000 --> 0:21:34.040 end the third and approach to fourth quarter, because it 0:21:34.080 --> 0:21:35.679 does make me feel like people are pulling a lot 0:21:35.680 --> 0:21:37.280 of stuff forward because they just don't want to be 0:21:37.280 --> 0:21:39.480 caught off guard, like things can get it more expensive, 0:21:39.520 --> 0:21:41.800 so they're buying it now. Yeah, our empty shelves and 0:21:41.840 --> 0:21:44.159 you don't want that in Christmas rights, but especially if 0:21:44.160 --> 0:21:47.359 you're a retailer. Correct, and I firmly believe we're not 0:21:47.359 --> 0:21:49.600 going to see that scenario for sure. Hey, tell us 0:21:49.600 --> 0:21:52.200 a little bit about what you're saying based on where 0:21:52.440 --> 0:21:54.920 port traffic is coming from and what that says about 0:21:54.960 --> 0:21:58.000 economies around the world. I mean, we saw Fedex loose 0:21:58.640 --> 0:22:01.919 of its market value on Friday after it pulled its 0:22:01.920 --> 0:22:04.959 earnings forecast because if weakness specifically in Europe and in Asia. 0:22:05.000 --> 0:22:08.320 I know you guys have a really good view on Asia. Um, 0:22:08.400 --> 0:22:11.840 is there any softness there? Well, first of all, for 0:22:11.920 --> 0:22:14.680 fed x, you saw that because a lot of the 0:22:15.520 --> 0:22:18.160 numbers for fed x in terms with the CEO indicated 0:22:18.760 --> 0:22:22.640 here this past week that component in terms of what 0:22:22.680 --> 0:22:26.280 their loss were in earnings was in the Asia market. 0:22:26.800 --> 0:22:30.480 So I think on that respect, certainly what we see 0:22:30.480 --> 0:22:34.360 in Asia, more specifically China. You are seeing a slowdown there. UH, 0:22:34.400 --> 0:22:37.640 in China. So that is the domino effect. But is that? 0:22:37.800 --> 0:22:40.960 Is that based on lockdowns in China? Is it based 0:22:41.000 --> 0:22:43.119 on the covid zero policy, or is it is it 0:22:43.160 --> 0:22:46.840 all tied to that? It's all tied to what precipitated 0:22:46.960 --> 0:22:50.080 these times, that is the covid nineteen pandemic. So I 0:22:50.119 --> 0:22:53.840 think again, Um, we'll see how China handles this. I 0:22:53.840 --> 0:22:55.199 mean the good news is I don't think you're going 0:22:55.240 --> 0:22:57.000 to see the kind of lockdowns in China and we 0:22:57.040 --> 0:22:59.960 saw in the past because they're also watching their numbers 0:23:00.040 --> 0:23:04.760 in terms of their economic growth. So there'll be a softening. Uh, 0:23:04.800 --> 0:23:07.840 and as we approach three I believe that the good 0:23:07.880 --> 0:23:11.280 news the supply change. Certain United States. I think we're 0:23:11.280 --> 0:23:16.040 now seeing some semblance of normalization and moderation and supply change. 0:23:16.040 --> 0:23:19.320 So that's very good news. So okay, and that's the thing. 0:23:19.359 --> 0:23:21.240 I mean that was obviously the problem right during the 0:23:21.280 --> 0:23:24.280 pandemic and stuff. You feel like that has has calmed 0:23:24.320 --> 0:23:28.680 down completely, or close to it. It's calmed down substantially. 0:23:28.840 --> 0:23:31.479 So I think again, at least for the West Coast, 0:23:31.680 --> 0:23:35.840 that car continues to move. I think the delays have diminished, uh, 0:23:35.880 --> 0:23:38.719 and certainly the backups have substantially diminished. Now there is 0:23:38.760 --> 0:23:41.199 one asterisk to this and that's the state of the 0:23:41.280 --> 0:23:44.800 rail equipment. Uh, the ongoing issue with the class one 0:23:44.920 --> 0:23:47.800 railroads and for the West Coast, the imbalance of the 0:23:47.840 --> 0:23:52.560 eastbound westbound equipment issues. So for the poor law reach, 0:23:52.800 --> 0:23:54.920 we're a little bit better on the rail goal, which 0:23:54.960 --> 0:23:58.240 is eleven days. Nothing to brag about because in normal 0:23:58.280 --> 0:24:00.879 times that's about three point five days, but it's certainly 0:24:00.920 --> 0:24:03.080 better than the thirdeen twelve days we were seeing in 0:24:03.119 --> 0:24:06.000 recent months. So incremental progress is that? Why is it 0:24:06.080 --> 0:24:09.199 still such a lag or such a problem and not 0:24:09.320 --> 0:24:11.400 back to what it should be? I think a lot 0:24:11.480 --> 0:24:13.840 has to do at the congestion in the inland in 0:24:13.880 --> 0:24:17.000 the modal yards. I mean this goes back to Chicago 0:24:17.600 --> 0:24:20.280 in the hubs there. I think the class one railroads 0:24:20.280 --> 0:24:23.240 have been rather challenge uh, they have their own challenges. 0:24:23.280 --> 0:24:26.119 Would Be Lard to shortage of labor and equipment issues. 0:24:26.160 --> 0:24:29.040 So I think unfortunately we've been the victims of the 0:24:29.119 --> 0:24:32.240 lack of that rail car which in my view should 0:24:32.240 --> 0:24:36.480 not happen at the world's most strategic, significant gateway. I 0:24:36.520 --> 0:24:39.360 am disappointed on that point that it's happened. We're talking 0:24:39.400 --> 0:24:41.639 with Mario Cordero. He's executive director of the port of 0:24:41.680 --> 0:24:44.360 Long Beach. As we said, it is the second busiest 0:24:44.400 --> 0:24:46.680 port in North America and so a great way to 0:24:46.720 --> 0:24:48.800 get a feel of what's going on in the economy. 0:24:49.000 --> 0:24:52.199 Do you feel like, based on what happened and the 0:24:52.240 --> 0:24:56.440 supply chain problems and just it wasn't just port issues, 0:24:56.480 --> 0:24:58.320 but it was trucking, it was just kind of all 0:24:58.359 --> 0:25:00.600 along the line, that we will ultimately se in some 0:25:00.640 --> 0:25:04.640 ways more automation potentially come into this industry? Or does 0:25:04.640 --> 0:25:07.600 it need to? Well, I mean those are two very 0:25:07.600 --> 0:25:09.439 good questions, but let me let me first of all 0:25:09.480 --> 0:25:11.760 address the first one. In terms of what we experience. 0:25:12.640 --> 0:25:14.280 I think the good news for those of us in 0:25:14.280 --> 0:25:19.560 this industry people finally uh saw the importance and witness 0:25:19.640 --> 0:25:22.680 the importance of a supply chain. We all found out 0:25:22.800 --> 0:25:25.240 that the supply chain is not as resilient as some 0:25:25.280 --> 0:25:27.159 people may have thought. We took it for granted. We 0:25:27.200 --> 0:25:30.160 took it for granted. So you know, the essential workforce, 0:25:30.560 --> 0:25:33.280 which includes obviously our safety officers, are people in the 0:25:33.359 --> 0:25:36.120 health industry during this pandemic, but also are people who 0:25:36.160 --> 0:25:38.240 work in goods movement, people who work, men and women 0:25:38.240 --> 0:25:41.280 who work on the docks, the truckers, the railroad workers, 0:25:41.800 --> 0:25:45.440 essential workers who move commerce, which has a great impact, obviously, 0:25:45.440 --> 0:25:50.840 on our GPU, our our GDP, our economy. So I 0:25:50.880 --> 0:25:53.239 think the good news for us is it's not just 0:25:53.320 --> 0:25:56.720 about talk of how importance this industry is. We've seen it, 0:25:56.760 --> 0:25:59.720 particularly from this administration, in terms of the investment, the 0:26:00.080 --> 0:26:03.080 ending in this industry in America. Sports, uh, you know, 0:26:03.200 --> 0:26:06.399 for the Poor Long Beach. We've had the secretary of 0:26:06.440 --> 0:26:09.720 transportation come to the San Peter Bay Complex already three 0:26:09.760 --> 0:26:12.080 times this year. And it's not just about visiting her 0:26:12.119 --> 0:26:15.879 talking is also funded. Port Lombas received the most significant 0:26:16.200 --> 0:26:18.800 funding by way of the P D I P grants 0:26:19.119 --> 0:26:21.320 almost to the two of fifty three million, the largest 0:26:21.320 --> 0:26:23.280 of any port authority in the country. So we're very 0:26:23.320 --> 0:26:26.840 pleased that not only people are recognizing the importance. But, 0:26:27.160 --> 0:26:30.760 like the secretary said, it's not about no longer disinvestment, 0:26:31.200 --> 0:26:33.560 it's about investments. To shame, it takes a crisis there 0:26:33.600 --> 0:26:35.720 for all that to happen. Right. Hey, let's talk a 0:26:35.760 --> 0:26:37.639 little bit about Labor and I want to draw your 0:26:37.640 --> 0:26:40.680 attention to a number that our colleagues scarlet food sent 0:26:40.760 --> 0:26:43.159 us earlier today when she knew that we were working 0:26:43.160 --> 0:26:50.160 with you later today. UH, so, last year, January, September, sixteenth. 0:26:50.200 --> 0:26:52.240 This is according to Dowd Jones. There were a hundred 0:26:52.280 --> 0:26:56.640 and fifty strikes. The Cornell strike tracker has this January 0:26:56.680 --> 0:26:59.440 one this year. To the past Friday, there's been two 0:26:59.480 --> 0:27:02.480 hundred seventy three strikes. How do you look at the 0:27:02.520 --> 0:27:04.600 power of the worker right now, especially in the context 0:27:04.600 --> 0:27:07.080 of strikes that could happen at the port at any time, 0:27:07.119 --> 0:27:09.760 given that you don't have a contract? Well, number one, 0:27:09.800 --> 0:27:11.359 I don't believe it. You're going to see a strike 0:27:11.400 --> 0:27:14.720 at the port or even slow down, at least not 0:27:14.800 --> 0:27:17.320 in the west coast. So I'm very optimistic that the 0:27:17.359 --> 0:27:20.199 parties will come to a meeting of the mines. Uh, 0:27:20.600 --> 0:27:22.000 you thought it was going to happen by Labor Dai, 0:27:22.040 --> 0:27:24.680 didn't you? Well, I mean we're still in September. Slim 0:27:24.720 --> 0:27:27.240 in a few weeks off. I'm not wearing white anymore. 0:27:27.400 --> 0:27:31.639 Put My spectator pumps away. It fall outside. But, but, but, 0:27:31.680 --> 0:27:35.960 I think that clearly there's no slow down, uh, much 0:27:36.040 --> 0:27:38.320 less a strike. and the volume numbers that I was 0:27:38.400 --> 0:27:41.919 just referencing down. Yeah, the volume knows how it's just 0:27:42.000 --> 0:27:45.040 referencing earlier signifies that the productivity continues at a very 0:27:45.119 --> 0:27:48.480 high pace in terms of the overall labor issue throughout 0:27:48.480 --> 0:27:51.520 the country. Keep in mind that you know the average wages. 0:27:52.359 --> 0:27:54.199 At least a couple of months ago you saw a 0:27:54.200 --> 0:27:57.280 fine point, five point three increase in wages. I think 0:27:57.320 --> 0:27:59.560 that number now is six point three across the board. 0:28:00.119 --> 0:28:03.560 So you know from my perspective, I mean I think, 0:28:03.600 --> 0:28:08.439 particularly with the American workforce, many of these industries for 0:28:08.640 --> 0:28:11.840 the past few years were rather styming would regard to 0:28:11.840 --> 0:28:14.840 the wage increases. So it's no surprise that, given that 0:28:15.080 --> 0:28:18.560 how good the economy has been. UH, there's those sectors 0:28:18.600 --> 0:28:20.560 that want a piece of the piece of the Pie. Right, 0:28:20.560 --> 0:28:22.160 you'll get to be in the driver's seat very much 0:28:22.160 --> 0:28:24.040 when it comes to wages. Hey, just got about a 0:28:24.040 --> 0:28:26.000 minute or so left here. I want to go back, though, 0:28:26.040 --> 0:28:29.040 to the economy and you said that there you know, 0:28:29.119 --> 0:28:31.040 it sounds like we're not going to see empty shelves, 0:28:31.080 --> 0:28:33.040 that there's been a lot of kind of pre advanced buying. 0:28:33.440 --> 0:28:37.040 Could we, though, start to see, or how quickly can 0:28:37.119 --> 0:28:40.120 things kind of start to slow down in terms of shipments? 0:28:40.200 --> 0:28:43.840 Does in your industry how often do you maybe like wow, 0:28:43.880 --> 0:28:45.360 all of a sudden things can slow down, that you 0:28:45.400 --> 0:28:49.920 didn't see it coming? Well, we're starting to see that. 0:28:50.000 --> 0:28:52.720 Let me qualify that, because we always thought that the 0:28:52.760 --> 0:28:56.120 surge that we experienced, particularly last year, was an unusual 0:28:56.240 --> 0:28:59.000 surge because of the reasons we've stated. So we're going 0:28:59.040 --> 0:29:01.720 to get back to some realization. So when you compare 0:29:01.720 --> 0:29:05.920 our number for August, we moved the poort Lombers, moved 0:29:05.960 --> 0:29:07.840 the most, had the most container volume of any port 0:29:07.880 --> 0:29:11.880 in the country. However, we were still minus point one 0:29:11.960 --> 0:29:15.479 percent compared to August, which is a record yere. So 0:29:15.880 --> 0:29:19.880 are we in the minus? Technically, yes. Is it bad? No? No, 0:29:20.000 --> 0:29:23.000 but okay, and never session, you would say, at this point? 0:29:23.400 --> 0:29:25.520 Not at this point, but again, we'll see what the 0:29:25.560 --> 0:29:28.200 Fed does in the coming week and we will go 0:29:28.280 --> 0:29:30.800 from there. I mean the numbers right now are we're 0:29:30.800 --> 0:29:32.120 trying to get to a point where we have a 0:29:32.160 --> 0:29:36.760 soft landing, and that's the kind of tricky points across 0:29:36.800 --> 0:29:39.240 the what's the word for soft landing for a ship 0:29:39.280 --> 0:29:43.280 coming into court? Well, any landing where you don't hit 0:29:43.800 --> 0:29:47.360 hit the dock and you stay in one piece. Very Cordero. 0:29:47.440 --> 0:29:49.360 Thank you so much. Thank you so much, really gracious 0:29:49.440 --> 0:29:51.520 and so much time executive director port of Long Beach 0:29:51.680 --> 0:29:54.920 joining us here in our interactive broker studio. This is 0:29:54.960 --> 0:29:58.920 Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes 0:29:58.960 --> 0:30:02.280 Tim Stinovic on Bloomberg radio. All right, I want to 0:30:02.280 --> 0:30:05.920 get to another story that is on the Bloomberg terminal. 0:30:05.920 --> 0:30:08.520 It's part of the Bloomberg Tech Newsletter. Has To do 0:30:08.840 --> 0:30:11.160 with the merge, the CRYPTO merge that we were all 0:30:11.160 --> 0:30:13.959 talking about last week. We've got Hannah Miller right now. 0:30:14.000 --> 0:30:17.240 She's Bloomberg News digital currencies and VC reporter, joining us 0:30:17.240 --> 0:30:20.240 on the phone from San Francisco. Hannah, how was your weekend? 0:30:21.920 --> 0:30:24.200 It was a lot of fun. Yeah, it was nice 0:30:24.240 --> 0:30:27.160 to relax that you're doing some major merge coverage. Okay, 0:30:27.160 --> 0:30:29.400 are you joking? Because of them? The reason I ask 0:30:29.520 --> 0:30:32.480 is because we don't see a ether and Bitcoin stop 0:30:32.520 --> 0:30:35.200 trading on the weekends, and it was a down weekend 0:30:35.200 --> 0:30:37.040 for the cryptocurrency. So I don't know if you were 0:30:37.040 --> 0:30:40.280 being facetious there and you had to work the whole time. No, 0:30:40.520 --> 0:30:45.800 luckily I didn't have to tekend duty. Ok, okay, what happened? 0:30:46.000 --> 0:30:48.080 You know, the merge was priced in. What's going on? 0:30:48.440 --> 0:30:50.960 I feel like it's like y two K, two point. Oh, 0:30:51.000 --> 0:30:53.280 it's my two point. Oh Day right, remember we thought 0:30:53.320 --> 0:30:55.640 everything was going to fall apar could have fallen apart 0:30:55.680 --> 0:30:57.320 and we thought the merge could have. Like you know, 0:30:57.480 --> 0:30:59.600 I feel like if something got wrong, it would have 0:30:59.600 --> 0:31:03.120 been a really big story. It would have been we 0:31:03.120 --> 0:31:07.160 would have seen huge disruption to trading, to the market, uh, 0:31:07.200 --> 0:31:11.480 really see startups flounder. But actually everything went really smoothly. 0:31:12.280 --> 0:31:14.640 So what's the significance of it? You know, Hannah, I 0:31:14.680 --> 0:31:16.920 feel like we continue to learn more and more about 0:31:16.920 --> 0:31:20.080 this crypto world and many would argue, certainly those within 0:31:20.120 --> 0:31:22.040 the world, that there's still a lot more to become. 0:31:22.080 --> 0:31:24.360 But what was the significance of this? Because it's really 0:31:24.360 --> 0:31:27.320 tapped into to some extent the use of energy as well. 0:31:28.560 --> 0:31:31.280 It's a really big deal because the theorium migrated to 0:31:31.560 --> 0:31:34.840 prove a bake, which is a different way to validate 0:31:34.840 --> 0:31:38.400 and a transaction to the blockchain. Previously, ethereum relied on 0:31:38.440 --> 0:31:42.360 coupe of work, which is very energy intensive uses large 0:31:42.360 --> 0:31:47.080 amounts of electricity. So it's supposedly will reduce etherium's energy 0:31:47.200 --> 0:31:53.120 usage by so when is the Bitcoin merch that is 0:31:53.280 --> 0:31:57.240 very unlikely to happen. You have really, you know, strong 0:31:57.280 --> 0:32:00.280 proponents of Bitcoin who believe doing such a switch would 0:32:00.400 --> 0:32:03.640 undermine bitcoin's core principles and that we would actually be 0:32:03.680 --> 0:32:07.640 a less secure, less um the centralized way of running 0:32:07.640 --> 0:32:10.040 the blockchain. So Hannah raises the question why does something 0:32:10.080 --> 0:32:13.800 like this work for ethereum's blockchain but not for Bitcoins blockchain? 0:32:15.040 --> 0:32:17.000 You know, ethereum, it's it's pretty interesting. We do have 0:32:17.040 --> 0:32:20.080 the ethereum foundation, which is really active and educating people 0:32:20.080 --> 0:32:23.560 about this blockchain. Um, we have the Tali Puteran who 0:32:23.640 --> 0:32:26.520 is just a huge force within the industry. He is 0:32:26.560 --> 0:32:29.280 the creator of ethereum. So there's a little bit more 0:32:29.800 --> 0:32:33.120 coordinated effort. I guess with ethereum that we don't see 0:32:33.120 --> 0:32:36.400 what's Bitcoin, which has, as we know, a studonymous founder 0:32:36.480 --> 0:32:38.840 into total Nakamoto. You know, one other thing I wondered 0:32:38.880 --> 0:32:41.160 to Hannah is proof of work versus proof of steak. 0:32:41.240 --> 0:32:43.240 So now it's a proof of steak proof of work. 0:32:43.280 --> 0:32:46.040 To me it's like, I don't know, maybe being old fascions, 0:32:46.080 --> 0:32:47.800 like all right, show me a proof of work, right, 0:32:47.840 --> 0:32:51.360 in terms of the reliability, the security of it? Is 0:32:51.400 --> 0:32:54.200 there a difference in terms of the security of your, 0:32:54.360 --> 0:33:00.320 you know, ethereum ownership steak? Yeah, so the argument years 0:33:00.400 --> 0:33:03.000 that with proof of stake it's a bit more it's 0:33:03.000 --> 0:33:06.520 a bit more centralized in terms of WHO's validating transactions 0:33:06.520 --> 0:33:09.560 on the blockchain. So if you have fewer parties involved, 0:33:10.000 --> 0:33:13.520 you know something that affects one of those parties would have, overall, 0:33:13.560 --> 0:33:16.480 a bigger impact on the blockchain. So that's that's where 0:33:16.520 --> 0:33:20.160 that concern is. Um and people see bitcoin is as 0:33:20.200 --> 0:33:23.640 being much more decentralized and having a wider network of 0:33:23.720 --> 0:33:26.840 minors versus ethereums taking network. Okay, so it kind of 0:33:26.880 --> 0:33:30.200 raises the question about why we saw such a precipitous 0:33:30.200 --> 0:33:33.200 decline over the weekend in and I'll just focus on 0:33:33.640 --> 0:33:36.400 ether right now because we also saw it on in 0:33:36.760 --> 0:33:40.040 Bitcoin Um. But was it about the merger? Is it 0:33:40.120 --> 0:33:42.160 completely unrelated to the merge? I mean, I would say 0:33:42.640 --> 0:33:45.080 we knew the merger was coming. So isn't this just 0:33:45.200 --> 0:33:47.960 a sort of you know, stocks are going down, cryptos 0:33:48.000 --> 0:33:51.920 going down to yeah, when I talk to people, uh, 0:33:52.040 --> 0:33:54.520 it's they really bring up the macro condition that we're 0:33:54.520 --> 0:33:57.560 seeing here that dragging down on prices. Another thing to 0:33:57.640 --> 0:34:01.640 keep in mind is the merge to not immediately fixed 0:34:02.040 --> 0:34:06.400 problems with ethereum like congestion, uh, and high transaction fees. 0:34:06.800 --> 0:34:09.440 It's paving the way for later upgrades that will help 0:34:09.440 --> 0:34:13.600 with those things. But, for example, the first NFP minted 0:34:13.719 --> 0:34:15.960 on the ethereum network after the switch to proof of 0:34:16.000 --> 0:34:19.200 stake at a transaction fee of more than sixty dollars, 0:34:19.280 --> 0:34:22.759 which is massive. You know, I've got to, you know, 0:34:22.840 --> 0:34:25.360 assume that regulators are watching this closely. I'M gonna be 0:34:25.440 --> 0:34:28.440 a little Um physicious here, but I'm assuming. So the 0:34:28.480 --> 0:34:30.920 merge happens and our regulators are like, okay, everything's okay 0:34:30.920 --> 0:34:33.719 with ether and like, and it's okay with ethereum and 0:34:33.760 --> 0:34:36.719 it's okay with crypto. Not even close. Right. Regulators to 0:34:36.800 --> 0:34:41.759 have a lot of issues when it comes to cryptocurrencies overall. Yes, 0:34:42.200 --> 0:34:46.080 we've already had Gary Gensler call out proof of state 0:34:46.239 --> 0:34:49.759 stake networks and saying that they have qualities that could 0:34:49.880 --> 0:34:54.560 make the crypto on those networks classified as securities. So 0:34:54.680 --> 0:34:58.239 this is just another example of regulators homing in, you know, 0:34:58.400 --> 0:35:02.879 really just looking forward to tightening oversight of the digital 0:35:02.960 --> 0:35:06.440 asset industry. So what are you looking for? Has Somebody 0:35:06.440 --> 0:35:09.200 who reports on digital currencies and venture capital, because you've 0:35:09.239 --> 0:35:12.280 you've got this sort of really interesting position. Venture capitalists 0:35:12.280 --> 0:35:15.040 are looking for. What the next big thing is, and 0:35:15.160 --> 0:35:18.080 they're talking like the next generation right there, talking years 0:35:18.120 --> 0:35:21.440 away from big returns, finding that next next facebook or 0:35:21.600 --> 0:35:25.080 finding Bitcoin, you know, ten years ago. Um, what has 0:35:25.120 --> 0:35:28.600 their conversation shifted at all when it comes to how 0:35:28.640 --> 0:35:31.120 they're thinking about digital currencies or how they're thinking about 0:35:31.160 --> 0:35:34.919 web three, given that it's been so brutal in terms 0:35:34.960 --> 0:35:38.319 of a sell off? Yeah, when I speak to DC as, 0:35:38.360 --> 0:35:40.960 many of them are still bullish on the space. They're 0:35:41.000 --> 0:35:43.360 in it for the long haul. They believe this is 0:35:43.640 --> 0:35:46.759 a great time to build, that amazing founders will come 0:35:46.800 --> 0:35:50.000 out of the scripto winter and that this is only temporary. 0:35:50.440 --> 0:35:53.240 We've seen huge interest in N F T S and gaming, 0:35:53.520 --> 0:35:56.640 despite slumping N F T sale. Uh so that's been 0:35:56.640 --> 0:36:00.040 really interesting. Vcs are looking to really tap into to 0:36:00.680 --> 0:36:06.439 mainstream ways to have crypto appeal to consumers and they want, 0:36:06.480 --> 0:36:08.359 you know, just average people on board. They don't want 0:36:08.360 --> 0:36:10.680 to just stick with a crypto native audience, right, which 0:36:10.719 --> 0:36:12.600 is why you've heard some of the big fun houses, right, 0:36:12.640 --> 0:36:16.480 you know, thinking about or starting to offer a fund 0:36:16.520 --> 0:36:19.120 house or Fun House. No, not fun I'm like, what 0:36:19.200 --> 0:36:25.400 fund what's going on to fun house play for you, 0:36:25.440 --> 0:36:29.399 Amusement Park Games Um, Hannah. Thank you so much. I'm 0:36:29.400 --> 0:36:30.759 really glad that we got to check in with you, 0:36:30.760 --> 0:36:33.920 Hannah Miller. She's Bloomberg News digital currencies and VC reporter 0:36:34.560 --> 0:36:36.920 joining us there on the phone. Just look at what 0:36:37.000 --> 0:36:38.759 I'm just going to say a little preview for what 0:36:38.880 --> 0:36:41.080 we've got coming. One of my decliners coin base today, 0:36:41.200 --> 0:36:43.520 because when you see big moves in Crypto, you see 0:36:43.520 --> 0:36:45.560 big moves and the platforms that help trade them. I'm 0:36:45.560 --> 0:36:48.600 looking at the CRYPTO currency monitor on the Bloomberg terminal. 0:36:48.640 --> 0:36:51.759 Bitcoin down one point two percent. You've got X RP 0:36:51.880 --> 0:36:53.839 down one point four percent. Of Theory, I'm just down 0:36:53.840 --> 0:36:55.960 about three quarters of a percent, but you know, you 0:36:56.000 --> 0:36:58.000 go down polka dot. What the heck is that? To 0:36:58.040 --> 0:36:59.719 stamp out five and a half percent, and that's one 0:36:59.760 --> 0:37:04.040 that you've made it into the cryptocurrency monitor. Unbelievable. I'm 0:37:04.160 --> 0:37:10.919 ro Mac Journal. Yeah, but you let me drive. Oh No, 0:37:10.920 --> 0:37:17.319 no, no no, no, Oh right, please, I'll do. I want 0:37:17.320 --> 0:37:25.960 to dry. It's good question. This is the drive to 0:37:26.040 --> 0:37:34.120 the clothes on Bluebird radio. All right, TIKTOK's everybody. TIKTOK. 0:37:34.239 --> 0:37:36.840 It is just about ten minutes left in today's trading session. 0:37:36.920 --> 0:37:39.200 Having some fun with our guest in Studio. Jake Dolly, 0:37:39.360 --> 0:37:41.440 is with US senior investment strategist at B and y 0:37:41.480 --> 0:37:44.960 mail and investment management. Here in our interactive broker studio, 0:37:45.160 --> 0:37:48.160 we're since in buying here in the last half hour video. 0:37:48.560 --> 0:37:50.680 I gotta say it even caught you off guard, Jake. 0:37:50.719 --> 0:37:52.319 You walked in here, you looked up at the TV 0:37:52.920 --> 0:37:55.359 you said, oh my goodness, stocks are up today. What's 0:37:55.400 --> 0:37:57.560 up with that? I think it's going to be pretty 0:37:57.600 --> 0:38:01.279 choppy this week. Right. We're all eating for Wednesday. We're 0:38:01.320 --> 0:38:04.960 all very attentive to you know, what's going to be 0:38:04.960 --> 0:38:07.160 coming uh, most notably, I think, in the summary of 0:38:07.200 --> 0:38:10.680 economic projections. Um, that's what we're all, you know, fed watchers, 0:38:10.680 --> 0:38:13.640 and I think everybody feels like a fed watcher these days. Um, 0:38:13.719 --> 0:38:15.920 but we're definitely looking there. I think we're we're going 0:38:15.960 --> 0:38:19.600 to see a higher mediant on the dot plot. Um. 0:38:19.640 --> 0:38:21.920 So I think we're we're all waiting for that. But Um, 0:38:22.000 --> 0:38:23.959 until then I think it's going to be a little 0:38:23.960 --> 0:38:26.680 bit choppy. It's I think it's interesting that yes, this 0:38:26.719 --> 0:38:28.160 has been a year of a lot of elatility and 0:38:28.160 --> 0:38:29.759 here we have the vixed down a little bit today 0:38:29.760 --> 0:38:31.200 and it's still at like twenty five. It's not like 0:38:31.200 --> 0:38:33.760 we've seen any big move up to thirty or forty 0:38:33.800 --> 0:38:37.000 in particular. Um. Do you think, based on what we 0:38:37.080 --> 0:38:39.120 get from the Fed, that it will be then potentially 0:38:39.160 --> 0:38:42.040 a major reset for some of your valuation models? It's 0:38:42.040 --> 0:38:45.280 definitely possible. Um. I think there there are risks, uh, 0:38:45.320 --> 0:38:49.080 if the you know so called economic economic pain that 0:38:49.160 --> 0:38:51.320 Charepal was mentioning at Jackson Hole, if we start to 0:38:51.360 --> 0:38:54.759 see that in a big way, uh, in the Sep Um, 0:38:54.800 --> 0:38:57.040 I think that's where we start to see the potential 0:38:57.120 --> 0:39:02.200 for a rerating higher. Um. I think I wouldn't say that's, AH, 0:39:02.600 --> 0:39:05.680 you know, highest likelihood. Um. I think more likely we're 0:39:05.680 --> 0:39:07.600 gonna see an SP that, Hugh's very close to what 0:39:07.680 --> 0:39:14.799 the market is currently pricing in, okay, which is coming Um, 0:39:14.880 --> 0:39:17.640 and then, you know, getting pretty close to four, a 0:39:17.680 --> 0:39:20.400 little north of four percent by the end of the 0:39:20.480 --> 0:39:22.640 year on the Fed funds rate. Um. I think you 0:39:22.680 --> 0:39:26.040 could see it a negative reaction in the market if 0:39:26.080 --> 0:39:29.239 we see something that is notably higher than sort of 0:39:29.280 --> 0:39:31.200 what is being currently priced in, which is, you know, 0:39:31.320 --> 0:39:34.040 just a little bit above four percent, Um, and then 0:39:34.080 --> 0:39:36.520 peeking out by mid next year. So the move up 0:39:36.520 --> 0:39:38.279 that we've seen in yields, particularly on the shorter end 0:39:38.320 --> 0:39:39.600 of the yield car. But you know, right now we've 0:39:39.600 --> 0:39:41.320 got the ten year at three point forty eight, that 0:39:41.360 --> 0:39:43.359 two year note with three nine four, so just below 0:39:43.400 --> 0:39:45.000 four percent and off its highs. That we saw a 0:39:45.040 --> 0:39:47.560 little bit earlier in today's session. You know, we keep 0:39:47.600 --> 0:39:50.959 talking about, you know, where it where is the high 0:39:51.040 --> 0:39:53.680 end yields like? Where does it settle down? where the 0:39:53.760 --> 0:39:55.880 low when it comes to the equity side of things, 0:39:56.200 --> 0:39:58.759 this move up in yields that we've seen, is it 0:39:58.840 --> 0:40:02.319 just volatility or it seeking at a new high level? Yeah, well, 0:40:02.360 --> 0:40:05.000 if you look historically, what we see is that rates 0:40:05.040 --> 0:40:08.439 continue to move higher while the Fed is hiking Um, 0:40:08.480 --> 0:40:10.560 and that's where so much of this uncertainty comes in, 0:40:10.640 --> 0:40:13.839 is that the market has been continually this year having 0:40:13.880 --> 0:40:16.799 to increase those expectations of where the terminal rate's gonna sit. 0:40:16.960 --> 0:40:18.400 Because how many times have we talked about, okay, it 0:40:18.440 --> 0:40:21.200 looks like we're settling in exactly Um and right now, 0:40:21.320 --> 0:40:23.200 you know, I think last time I looked, we're sort of, 0:40:23.239 --> 0:40:25.279 you know, close to four and a half at the 0:40:25.320 --> 0:40:28.759 peak for next year. Um, but we'll see if if 0:40:28.800 --> 0:40:31.080 the SEP comes out with something that is pretty close 0:40:31.120 --> 0:40:33.040 to that or if they go above it. That's where 0:40:33.040 --> 0:40:34.799 I think we get a negative reaction. But on the 0:40:34.800 --> 0:40:37.000 flip side of that, I think if we see something 0:40:37.120 --> 0:40:40.759 much lower and we hear from chair pal some confidence 0:40:40.800 --> 0:40:43.600 that four percent is the right place to kind of 0:40:44.040 --> 0:40:47.040 do this hike and hold tactic, Um we may see, 0:40:47.200 --> 0:40:49.720 you know, a bit of a relief rally there, because 0:40:49.719 --> 0:40:51.759 we're kind of there right. Yeah, exactly how long is 0:40:51.800 --> 0:40:54.200 the hold if it's a hike and hold strategy from 0:40:54.239 --> 0:40:56.759 J Powell? That's you know, we wish we would get 0:40:56.800 --> 0:41:00.000 some four guidance on that, but we're probably not going to. Um. 0:41:00.040 --> 0:41:02.319 So I think the Fed is in the position that 0:41:02.360 --> 0:41:04.440 they know they've done a lot of tightening. They've they've 0:41:04.440 --> 0:41:06.799 really tightened screws on this economy. So they need to 0:41:06.800 --> 0:41:09.359 see how the economy holds up and I think so 0:41:09.440 --> 0:41:11.960 far the jury is still out. But when they look 0:41:12.000 --> 0:41:14.319 at the labor market, they're just not seeing the kind 0:41:14.320 --> 0:41:17.520 of slack, the softness that they would expect with so 0:41:17.600 --> 0:41:20.839 much tightening so far this year. So what what gives there? 0:41:20.840 --> 0:41:23.040 Because we're starting to see softness in other areas. I mean, 0:41:23.080 --> 0:41:25.279 I think Carol today specifically, we've been talking a lot 0:41:25.320 --> 0:41:27.479 about the housing market. Of the days got earlier today. 0:41:27.520 --> 0:41:31.760 I mean nine months, like nine month declines for certain 0:41:31.760 --> 0:41:34.560 indicators for the housing market. Uh. So we're seeing it 0:41:34.560 --> 0:41:36.560 play out in some places. When do we start to 0:41:36.600 --> 0:41:39.360 see that play out in the labor market? That's the problem. 0:41:39.360 --> 0:41:43.000 The labor market is oftentimes the last thing to move Um, 0:41:43.080 --> 0:41:45.520 and I think that one of the big debates out 0:41:45.560 --> 0:41:47.880 there is just that, the fact that the labor market 0:41:47.960 --> 0:41:52.040 is so unprecedentedly tight right now that you know, trying 0:41:52.080 --> 0:41:54.400 to forecast when you're going to see that softening. It 0:41:54.480 --> 0:41:56.239 might be further out, and that's what I was kind 0:41:56.239 --> 0:41:58.360 of referring to there, is that the Fed, you know, 0:41:58.440 --> 0:42:02.120 it's probably happy with the financial conditions tightening, but when 0:42:02.120 --> 0:42:04.680 they look at the labor market, they really haven't seen 0:42:04.760 --> 0:42:07.399 sort of the softness that they would have expected. Now, 0:42:07.840 --> 0:42:10.120 at the same time, they wanted to be gradual, right, 0:42:10.200 --> 0:42:13.799 they won't. Don't want a very fast, rapid deterioration in 0:42:13.880 --> 0:42:18.080 labor market conditions. Um. So there's some positives there, UM, 0:42:18.120 --> 0:42:20.279 you know. But our view is that if you're going 0:42:20.320 --> 0:42:23.399 to get sort of the so called softish landing. Um, 0:42:23.480 --> 0:42:26.240 you need the data to go in the Fed's favor, 0:42:26.480 --> 0:42:29.640 and relatively quickly, because we don't think that rates can 0:42:29.719 --> 0:42:32.280 really go much higher than what is currently being priced 0:42:32.320 --> 0:42:35.760 in without things getting, Um, you know, slowing down, quite significant. 0:42:35.760 --> 0:42:37.759 When you've got headlines like the tenure. You know, we've 0:42:37.760 --> 0:42:39.600 talked about three and a half percent, first time since 0:42:40.200 --> 0:42:42.480 so more than a decade. I mean is that kind 0:42:42.520 --> 0:42:45.759 of a you know, causes you to to kind of 0:42:45.800 --> 0:42:48.399 pause for a moment? Is that? How do you see 0:42:48.440 --> 0:42:51.439 it in terms of what that potentially means? Yeah, I mean, 0:42:51.920 --> 0:42:54.120 finding the right level is certainly difficult. And then, and 0:42:54.160 --> 0:42:56.160 I know that all the brains at the Fed are 0:42:56.160 --> 0:42:58.399 thinking about this, looking at history, trying to figure out 0:42:58.440 --> 0:43:00.560 where that right rate is. Um. I guess just to 0:43:00.600 --> 0:43:03.600 sort of point out one you know level is that 0:43:03.640 --> 0:43:06.840 if you look at where core pc inflation is, you know, 0:43:06.920 --> 0:43:08.680 I think the last Peron was about four point six. 0:43:08.760 --> 0:43:11.720 So taking the Fed funds rate close to that level 0:43:12.280 --> 0:43:14.760 is when you start to see, at least by one measure, 0:43:14.880 --> 0:43:18.000 a positive real fed funds rate. Um. So I think 0:43:18.040 --> 0:43:21.120 that that's there is, you know, some rational at that 0:43:21.239 --> 0:43:23.439 level for why they would want to hike and hold. 0:43:24.080 --> 0:43:27.040 What are the problems created for investors in this environment 0:43:27.080 --> 0:43:29.640 where we continue to try and figure it out? But 0:43:29.800 --> 0:43:32.600 to be fair, Um, you know, I keep saying it 0:43:32.640 --> 0:43:34.480 over and over again, we're coming out of a pandemic. 0:43:34.480 --> 0:43:37.600 We're coming out of unprecedented global stimulus. We don't exactly 0:43:37.640 --> 0:43:40.080 know how this plays out. And here we are talking recession, 0:43:40.160 --> 0:43:42.520 yet we've got a strong labor market. We would normally 0:43:42.560 --> 0:43:45.560 not do that. Yeah, it's a very challenging environment. It 0:43:45.600 --> 0:43:48.359 has been for most of this year. Um. I think, 0:43:48.480 --> 0:43:50.840 you know, to put an optimistic spin on it, the 0:43:50.880 --> 0:43:52.920 fact that we are getting the yields that we are 0:43:53.000 --> 0:43:56.080 now on the fixed income side, it certainly makes the 0:43:56.920 --> 0:44:00.440 repetive exactly. The relative attractiveness looks a lot better outcums. 0:44:02.280 --> 0:44:05.920 Was that it said? Finally, finally, exactly, it's it's a 0:44:05.920 --> 0:44:09.640 new regime. Um. And, although we are still in an 0:44:09.640 --> 0:44:13.480 inverted yield curve, so you know, there isn't really that 0:44:13.480 --> 0:44:16.360 that compensation for moving out the curve, we are seeing 0:44:16.440 --> 0:44:19.719 much better opportunities relative to equities. Um. And I think 0:44:19.920 --> 0:44:22.520 you know, even if you believe that a softish landing is, 0:44:22.800 --> 0:44:25.560 is kind of potentially going to happen. You have to 0:44:25.560 --> 0:44:28.040 be very cautious in this type of market because we 0:44:28.080 --> 0:44:30.719 think that there is still downside risk in equities right now. 0:44:30.719 --> 0:44:33.000 Swings can happen, but it does make you wonder. Is 0:44:33.000 --> 0:44:34.960 it an anomaly when we get, you know, put this 0:44:35.000 --> 0:44:36.640 all of the textbooks, or is it the beginning of 0:44:36.680 --> 0:44:39.600 some kind of new trend going forward? Um Jake, great 0:44:39.600 --> 0:44:41.480 to catch up with you. Thanks for having really appreciate it. 0:44:41.520 --> 0:44:43.600 Jake Jolly. He's senior investment strategies at B and y 0:44:43.640 --> 0:44:46.920 mail and investment management here in our interactive brokers studio. 0:44:48.160 --> 0:44:51.040 Thanks for listening to Bloomberg Business Week. Download the podcast 0:44:51.080 --> 0:44:54.040 on Itunes, soundcloud or Bloomberg Dot Com, and you can 0:44:54.040 --> 0:44:56.200 also listen to our radio show at two PM Eastern 0:44:56.239 --> 0:44:58.920 on Bloomberg radio or watch us on Youtube. Search to 0:44:58.920 --> 0:44:59.920 Bloomberg Global News.