Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
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Speaker 1: Search Bloomberg Glovel News. So let's get to it, everybody,
Speaker 1: and let's talk about what President Biden had to say,
Speaker 1: and this has certainly caught everyone's attention. Uh President Biden
Speaker 1: last night on CBS is sixty minutes saying US military
Speaker 1: forces would defend Taiwan from an unprecedented attack. His latest
Speaker 1: pledge of support as his administration seeks to deter China
Speaker 1: from increasing military pressure on the democratically elected government in Taipei.
Speaker 1: Here's more of what President Biden had to say. There's
Speaker 1: one China policy, tire one and makes their own judgments
Speaker 1: about their independence. We are not moving. We're not encouraging
Speaker 1: their being independent. We're not. That's their decision. But would
Speaker 1: US forces defend the island? Yes, if in fact there
Speaker 1: was an unprecedented an attack. That was President Biden, courtesy
Speaker 1: of sixty minutes. Let's get to it right now, with
Speaker 1: Bloomberg News White House correspondent Josh Wynd Grove joining us
Speaker 1: on the phone from Washington d C. Josh, good to
Speaker 1: have you with us. So President Biden makes these comments
Speaker 1: in an interview on sixty minutes, and then what does
Speaker 1: the White House do in reaction? Does he think, Josh,
Speaker 1: nobody was listening. I mean it's the aftermath that I'm
Speaker 1: interested in too, write the damage control that they do. Yeah,
Speaker 1: I mean, look, the White House messaging on Taiwan is
Speaker 1: the strategic ambiguity, and the president, uh, you know, flips
Speaker 1: back and forth, depending on the day, between the between
Speaker 1: the strategic part and the ambiguous part. I think a
Speaker 1: little bit here and there. Now he's made comments like
Speaker 1: this before, most recently inmate when he made the sort
Speaker 1: of scene signal. At the time, of course, reacted pretty
Speaker 1: strongly to that. The White House tried to put the
Speaker 1: two space back in the two tubes thing. Look, the
Speaker 1: one China policy has not changed. This is all consistent
Speaker 1: with that. But you know, I suppose one or two
Speaker 1: things is happening. One is that the like likes a
Speaker 1: little bit of uncertainty in the mix and he keeps
Speaker 1: injecting it and kind of to keep the Chinese government
Speaker 1: on their toes a bit about what the U S
Speaker 1: response would be. The other, maybe a little less, uh,
Speaker 1: a litt less generous maybe, is that perhaps this is
Speaker 1: just how he feels and you just can't help but
Speaker 1: kind of spurt it out, whether it's neatly into the
Speaker 1: U S policy or not. But what they're saying today
Speaker 1: that that the clean up, if you will, or the
Speaker 1: follow up maybe is just simply that he has said
Speaker 1: this before. We said before that there's no change the
Speaker 1: one China policy. That remains the case. They're trying to
Speaker 1: sort of hit off any Chinese reactions. Well, that's it, Josh.
Speaker 1: Can you, as the president of the United States, say yeah,
Speaker 1: I stand by the one China policy, but if there's
Speaker 1: an unprecedented attack, we can't stand by it depends on
Speaker 1: what one precedented attack me, of course, and you know
Speaker 1: this this comment, of course, does come book ending something
Speaker 1: pretty important that happened between the last time he said
Speaker 1: it and last night, which is, of course, speaker Pelope's visit.
Speaker 1: That really raised tensions in the region. The president went
Speaker 1: so far as to say that he thought the Department
Speaker 1: of Defense thought it was not a great idea for
Speaker 1: the speaker to go when she was not publicly confirming
Speaker 1: that she would. Of course she ultimately did. That led
Speaker 1: to Chinese military exercises, missile launches, sort of Saber rattling
Speaker 1: in and around Taiwan uh and so he's sort of,
Speaker 1: I guess, drawing a line on the sand again now
Speaker 1: with this comment, saying this is where he is. I
Speaker 1: should note, though, that on another part of the interview
Speaker 1: he sort of gave a more of a comming sort
Speaker 1: of view on China when he was asked about Putin
Speaker 1: Uh and uh she Jin Ping's relationship and said that
Speaker 1: as of now there's no indications that China has provided
Speaker 1: weapons or support to Russia in its war in Ukraine.
Speaker 1: And of course he said that he'd warned she jim
Speaker 1: king that there would be consequences in terms of a
Speaker 1: lack of form and that's been an American investment in particular,
Speaker 1: if that happened. So you know, this Taiwan comment is
Speaker 1: getting a lot of attention and should of course, arguably
Speaker 1: the newsiest thing of that interview. But the other sort
Speaker 1: of trappings of the interview were one that thinks that
Speaker 1: right now he's actually kind of optimistic that China is
Speaker 1: fully aligning as of yet with Moscow, and that, of
Speaker 1: course is good news for the West and all the
Speaker 1: countries that are trying to prop up you, Maine, in despight. Well,
Speaker 1: it kind of makes sense to Josh coming off of
Speaker 1: even President g right in that first face to face
Speaker 1: since was a covid with Um President Putin, where he
Speaker 1: too kind of seemed to just maybe put Putin a
Speaker 1: little bit on guard. So I feel like there's some
Speaker 1: perhaps some layering going on here. Can I ask you something, though?
Speaker 1: I always feel like, always, always like I don't know
Speaker 1: that I can make a blanket statement, but he is
Speaker 1: president the United States. He knows what he says something,
Speaker 1: it's going to be taken largely at face value. Is
Speaker 1: that true of this particular president, or do we sometimes say,
Speaker 1: and I just kind of speaks top of mind, no Malarkey,
Speaker 1: that's right. I think Joe Biden's candor is probably pretty
Speaker 1: pricedy and at this point this is not a guy
Speaker 1: that ductor script all that much as vice president and
Speaker 1: he continued as president. You know, he does not do
Speaker 1: a lot of innergy that's what mean the sixty minutes.
Speaker 1: One kind of UH must watch for for those in
Speaker 1: my field of work. The last one he did was
Speaker 1: several months ago, is sit down with the Associated Press.
Speaker 1: He does kind of want off things, like he did
Speaker 1: something with Jay Lena recently, that sort of thing, but
Speaker 1: he's done far fewer TV and print interviews then, for instance,
Speaker 1: Barack Obama did at this point in his president. So
Speaker 1: as to why that is, you know, who's to say?
Speaker 1: We live in a different environment. You know, maybe they
Speaker 1: think they can get their message out other ways, other channels,
Speaker 1: more direct channels, don't have to go through the mainstream
Speaker 1: press as much. Of course trump spoke to the press
Speaker 1: all the time. On the flip side, towards the end
Speaker 1: didn't hold any press briefings by the females press briefings
Speaker 1: all the time. So it sort of like picked your
Speaker 1: path a little bit. But he does these so rarely.
Speaker 1: That's why all eyes are on them my kind maybe
Speaker 1: his eye at the beholder on when when he goes
Speaker 1: off script a little bit, whether that's part of a Cacus,
Speaker 1: and whether they do these or not. Then you know
Speaker 1: anyone to do. What Else Josh did six and Scott
Speaker 1: Kelly get out of the president last night, especially when
Speaker 1: it comes to Ukraine, but also second term idea? Yeah, they're.
Speaker 1: I mean we there are a bunch of stories that
Speaker 1: came out of that. On you on Ukraine, I mean
Speaker 1: it just he said that they would do whatever it
Speaker 1: takes to defend Lensky's government and defend the country against
Speaker 1: Russian attacks. That's consistent with what he said before four
Speaker 1: he said they haven't really had an explicit conversation. Remember,
Speaker 1: Joe Biden, if he runs for re election, will be
Speaker 1: the oldest president to do it. As of now, he
Speaker 1: says regularly he's intending on running for re election, but
Speaker 1: he's said something to the effective face. He has intervened
Speaker 1: in his life uh many times and he's sort of
Speaker 1: not ruling out the fact that things go sideways. The
Speaker 1: last night shure sounded like a guy that thought as
Speaker 1: of now he'll be running. The other thing that really
Speaker 1: caught on was the pandemic. He said the pandemic is over.
Speaker 1: Walking on with Mr Kelly at the Detroit auto shot
Speaker 1: was on that strip, and you know he's right in
Speaker 1: the sense that like there was virtually no mass that
Speaker 1: sort of thing, because of course it's not. The COVID
Speaker 1: isn't over. But I gotta tell you, Josh, presidents, tell
Speaker 1: that to my mask, which was on my face on
Speaker 1: the same way this morning, Josh Wyn Grove, Love You,
Speaker 1: love you. White House correspondent Bloomberg News joining us on
Speaker 1: the phone from Washington D C. You are listening in
Speaker 1: watching Bloomberg Business Week, and this is Bloomberg. This is
Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg radio. Let's get to the store.
Speaker 1: That is the Bloomberg big take today. It's also among
Speaker 1: our most read on the Bloomberg Terminal and it will
Speaker 1: be in the upcoming issue of Bloomberg Business Week, do
Speaker 1: out later this week. It has to do with what
Speaker 1: Tim many would argue is our biggest story the day,
Speaker 1: certainly for the Bloomberg audience, and it has to do
Speaker 1: with the global race to hike interest rates and how
Speaker 1: that is tilting economies toward recession. Yeah, this a piece
Speaker 1: by rich Miller. It is Bloomberg, the Bloomberg big take
Speaker 1: as well. It's about the global race hike rates tilting
Speaker 1: economies to recession. Carol, as you mentioned, it's not just
Speaker 1: the United States, Joel Webber and rich that is the
Speaker 1: entire world dealing with this right now. Rich Miller is
Speaker 1: economics reporter for Bloomberg News. He joins us on the
Speaker 1: phone from our Washington D C Bureau. Joel Weber is
Speaker 1: the editor of Bloomberg Business Week. He's with us in
Speaker 1: the Bloomberg Interactive Broker Studio. So, Joel, we were talking
Speaker 1: a little bit earlier about Um, President Biden on sixty
Speaker 1: minutes last night. He was also asked about inflation, UH
Speaker 1: and Um. You know, one thing that I thought of
Speaker 1: when I was listening to his answer is that this
Speaker 1: is not just something that's happening in the United States,
Speaker 1: that the US is dealing with. You've got pretty much
Speaker 1: every central bank trying to get interest rates to a
Speaker 1: place where inflation comes down. Yeah, and it's almost become
Speaker 1: as as rich rates here, Um, a competition and let's
Speaker 1: see who can hike these rates faster. Rich. Remember when
Speaker 1: money was cheap? That was fun. Um, it's gonna get
Speaker 1: more expensive. And you're in the US and elsewhere, right. Uh.
Speaker 1: And and among everything that's happening, I think it's uh,
Speaker 1: you know, one thing that's really interesting here is like
Speaker 1: it does seem like with interest rates, central bankers are
Speaker 1: just becoming myopically focused on taming recession, taming inflation at
Speaker 1: all costs, and that increasingly starts to look like recession. Right,
Speaker 1: but it is a global one, not just a U
Speaker 1: S story. So, even though you know we're gonna hear
Speaker 1: from J earlier this week, how is this manifesting itself elsewhere? Yeah, well,
Speaker 1: as you say, I mean it's you know, it's incredible
Speaker 1: when you look through it. It's like nineties central banks
Speaker 1: of you know, hiked and you know, like more than
Speaker 1: half of them have hiked by pre courters, some of
Speaker 1: them more more than that, as you say, like everybody's
Speaker 1: trying to outhaulk each other. Right now, I'll compete each other.
Speaker 1: And Uh, there are some people worried, you know, with
Speaker 1: everybody going in the same direction, the boat's going to
Speaker 1: tip over into global recession. Right, Um, uh. So that's
Speaker 1: one thing, and the other thing is when you go
Speaker 1: the you know, Milton Friedman, monetary policy affects the economy
Speaker 1: with long and variable legs. Um, Um, you know the
Speaker 1: raised rates. You first see it in the stock market,
Speaker 1: stock market weekends. Then you sort of see it in,
Speaker 1: you know, the housing market, the Housing Market Solce, and
Speaker 1: it comes at the very end, it comes into inflation. But,
Speaker 1: as you say, if they're myopically, you know, focusing on inflation,
Speaker 1: that means they're probably going to Overdo it and that's
Speaker 1: gonna push us into a recession, maybe your recession, you know,
Speaker 1: all all around the globe, Richard, we're talking millions of
Speaker 1: jobs here. As you write in your piece, analysts at
Speaker 1: black rock reckon that bringing inflation back to the feds
Speaker 1: two goal would mean a deep recession and three million
Speaker 1: more unemployed, and then also hitting the ECB's target would
Speaker 1: require an even bigger contraction. All that, right now is
Speaker 1: is spelling out a global recession, something that affects the
Speaker 1: entire globe. So what does this look like when it
Speaker 1: comes to economic growth? Well, I mean basically no growth.
Speaker 1: You know, the the economies are contracting right so, Um,
Speaker 1: I would think you know that translating that three million
Speaker 1: on employed into like growth, and you probably have two,
Speaker 1: two and a half contraction in the economy, in the
Speaker 1: US economy. Um, Um uh, an actual contraction as opposed
Speaker 1: to sort of, you know, the sort of phony contraction
Speaker 1: that we got earlier this year when it was mainly
Speaker 1: because we were importing more. But you know, this would
Speaker 1: be actual contraction and you know pain. The pain would
Speaker 1: be in the labor market. And you know one of
Speaker 1: the questions is, you know, uh, you know the politicians
Speaker 1: now with the most part except for uh, Senator War,
Speaker 1: and they're sort of cheering the Fed on. Yeah, inflation
Speaker 1: is bad, go ahead fed, race the rates. But you know,
Speaker 1: once once you start seeing some pain, j Powell has
Speaker 1: promised us, you you wonder whether the politicians will change
Speaker 1: their tune, which were already seeing pain. We were just
Speaker 1: talking about the housing market with Patrick Clark, right those
Speaker 1: five mortgage rates, and it made me want to ask
Speaker 1: you about lag effect. What is it really I mean,
Speaker 1: we're seeing it already on housing, but the successive and
Speaker 1: cumulative interest rate high exp global central banks right all
Speaker 1: of a sudden, I feel like it's like when you
Speaker 1: know you've got a clag and you're pushing through, nothing's
Speaker 1: happening and then all of a sudden it comes flying through.
Speaker 1: I'm waiting for that. Is that what's going to happen?
Speaker 1: I mean that is the danger and Um, that's in
Speaker 1: the past. Why the central banks would when they did
Speaker 1: raise rates, they'd go in small steps, like twenty five
Speaker 1: basis points. So you go, you go slowly and you see,
Speaker 1: you know what, you have a little more time to
Speaker 1: see what. You know what impact your rates were having.
Speaker 1: You know so, but when you're going and when you're
Speaker 1: galloping ahead in like seventy five basis point chunks, you
Speaker 1: know you don't have as much time to sort of
Speaker 1: gauge how how the earlier hikes were are affecting growth. And,
Speaker 1: as you say, housing is kind of in the crosshairs here.
Speaker 1: But you know, off housing, if housing uh weekends and
Speaker 1: you know, people are buying lesser appliances. You know, Um, if, if,
Speaker 1: if people Um uh feel that their house prices are
Speaker 1: going down and they were gonna save more and then
Speaker 1: and that just has a ripple. So it just takes time.
Speaker 1: But you know, as you say, it could sort of
Speaker 1: be like, you know, an exploding toilet right, could splash
Speaker 1: right into our faces. Didn't I didn't want to get
Speaker 1: graphic here. That wasn't that a cover of bloom purposiness.
Speaker 1: Joe was known for some the bar bag was a favorite.
Speaker 1: Might need to dust that one off. Look for the
Speaker 1: you know, your you know passenger next to you. You
Speaker 1: can get there. Back to Um rich. One of the
Speaker 1: things that um I thought was a little bit frightening,
Speaker 1: that I hadn't totally appreciated was the growth forecast charts
Speaker 1: in your story. US goes down pretty dramatically. When you
Speaker 1: start to look out euro area, worse, UK man, that
Speaker 1: looks really Bade Um, just from a sense of Um,
Speaker 1: you know, the folks that you talked to in the
Speaker 1: daddy that you're looking at it is it starting to
Speaker 1: feel like there's that pit in the stomach that's like,
Speaker 1: Oh God, this is going to get really bad. Yeah,
Speaker 1: I mean, truth be told, the U S we you know,
Speaker 1: we've held up surprisingly well. The Labor markets held up
Speaker 1: pretty well and it's, you know, most of the concern
Speaker 1: right at the moment is it faced on Europe where,
Speaker 1: you know, in the UK, where they're getting hit with
Speaker 1: you know, this incredible uh, getting that not guess, uh,
Speaker 1: price shock and you know, at the same time you
Speaker 1: have the central banks raising rates and you know. But
Speaker 1: the problem in the US is we've got this you know,
Speaker 1: embedded inflation problem, and the strongest the economy is, it
Speaker 1: means probably the Fed's going to have to work that
Speaker 1: much harder to slow things down. And that's when you
Speaker 1: know you get risk that they slow it down too
Speaker 1: much and we go slipping into a recession rich real quickly.
Speaker 1: Just got abouts here. Is Inflation still a supply problem
Speaker 1: or is it now kind of more demand problem? And
Speaker 1: that's where the Fed can do something. I think in
Speaker 1: the US it's probably becoming more and more demand problem,
Speaker 1: particularly in the labor market. With the you know, wages
Speaker 1: are going up about five six percent a year and
Speaker 1: to be consistent with the feds target they have to
Speaker 1: be going up three and a half percent. So I
Speaker 1: got a long way Togo. That's why people think unemployment's
Speaker 1: gonna have to go up a lot so workers finally
Speaker 1: get a break. And now it's like, yeah, I'm sorry
Speaker 1: about that, it's not a good thing. We won't blame you,
Speaker 1: rich or we can. It's all started here because the
Speaker 1: rich Miller is excellent reporting. He's in DC, so there's
Speaker 1: nothing you can do comment directly. All right, this story,
Speaker 1: as we mentioned, it's going to be the upcoming issue
Speaker 1: of Bloomberg Business Week do later this week. It's also
Speaker 1: already on the Bloomberg terminal and Bloomberg dot com slash
Speaker 1: business weeker, thanks to Bloomberg News Economics reporter Rich Miller and,
Speaker 1: of course, the editor of business week, Jill Weber. This
Speaker 1: is Bloomberg radio. You're listening to Bloomberg Business Week with
Speaker 1: Carol Masser and Bloomberg Quick Takes Tim Stintov on Bloomberg radio.
Speaker 1: It is the second busiest port in North America, generating
Speaker 1: some two point six million jobs across the US. Some
Speaker 1: one seventy five shipping lines connecting long beach to two
Speaker 1: hundred seventeen ports and this past August it's second busiest
Speaker 1: August on record, following the busiest talcust on records at
Speaker 1: the previous year back in August one. So we're going
Speaker 1: to get a great state of our shipping and cargo industry.
Speaker 1: For that we turned to Mario Cordero, executive director of
Speaker 1: the port of Long Beach. He joins US right now
Speaker 1: in the Bloomberg Interactive Broker Studio. Mario, it's great to
Speaker 1: have you back with us, uh, in in person too.
Speaker 1: Welcome to New York. Well, thank you. Thank you for
Speaker 1: the CON invitation. So, Carol just mentioned some of the
Speaker 1: data that we have, and we have a ton of
Speaker 1: it thanks to you and the team, uh. But second busiest.
Speaker 1: It may not be the best thing for, you know,
Speaker 1: a port to see, you know, the business come down
Speaker 1: year over year, but can we argue that it actually
Speaker 1: is a good thing because it's not as backed up
Speaker 1: as it was a year ago? Well, certainly, when you
Speaker 1: look at the metrics here. Currently we have in the
Speaker 1: San Peter Bury Complex twelve vessels backed up trying to
Speaker 1: get into the ports. So if you go back to January,
Speaker 1: that number was a hundred and nine. So just on
Speaker 1: that alone it's a tremendous progress being made. Is Any
Speaker 1: of that seasonal? Part me, is any of that seasonal?
Speaker 1: You know, we're in peak season right now and I
Speaker 1: think we're at the peak, so to speak. Again you're
Speaker 1: looking at the numbers of the consumer demand or some
Speaker 1: softening on that. So for the third and fourth quarter
Speaker 1: of the year I think we're looking to diminish demand
Speaker 1: in turns on the consumer front. Well, that's what we
Speaker 1: wanted to I mean, I feel like you have such
Speaker 1: a great vantage point when it comes to what's going
Speaker 1: on on an economy. We're all kind of on pins
Speaker 1: and needles trying to figure out what comes next as
Speaker 1: we wait for, certainly the Fed decision. What is your
Speaker 1: read on the state of the U S economy right now?
Speaker 1: I think we have a strong economy. We certainly have
Speaker 1: a strong labor market and keep in mind where we
Speaker 1: were two years ago. I think part of the two
Speaker 1: years was terrible. Right the outlier. So are we pre
Speaker 1: pandemic levels? Are Like? How do you in terms of
Speaker 1: in terms of the job market, I think we're approaching
Speaker 1: pre pandemic doubles in terms of the jaws. I have
Speaker 1: been added since then. But I think the point is
Speaker 1: we've had a very fast recovery from a worse scenario
Speaker 1: that we experience. So in that regard, the economy was
Speaker 1: real hot and now, of course, what we're trying to
Speaker 1: do as a nation is kind of softened that. So
Speaker 1: I think again, the dollar question is, you know, words
Speaker 1: inflation going to go. So I think that's the outlier.
Speaker 1: In terms of what's to come. Well, when you look
Speaker 1: at the activity at the port, and it's really just
Speaker 1: fascinating about just the the amount of flow through there
Speaker 1: and what the imports of the exports moving through your
Speaker 1: ports largest trading partner country is China, which accounts for
Speaker 1: so much of it. Um does recession come to your
Speaker 1: mind a lot, which is certainly something we are worried about,
Speaker 1: especially as global central banks are increasingly doing everything in
Speaker 1: anything in terms of hiking rates to stem off global inflation.
Speaker 1: So do you think a lot about recession in terms
Speaker 1: of the activity you're seeing? Well, Carol, a good friend
Speaker 1: of mine, economist Paul Bingham, who has been following this
Speaker 1: industry for many, many years, once said tell me how
Speaker 1: many containers go through the poor Long Beach and I'll
Speaker 1: tell you how good the economy is. So, so far good.
Speaker 1: Is Inflation a concern? Yes, however, again, if you look
Speaker 1: at the latest plan of action by the Federal Reserve UH,
Speaker 1: they believe they may be able to control this. Will
Speaker 1: wait to see what that decision is uh in the
Speaker 1: coming week, whether that's point seven, five or one oh increase,
Speaker 1: but I think it's safe to say that again, we
Speaker 1: went through an unusual quick recovery. The consumer demand has
Speaker 1: really been extraordinary in the last year and a half.
Speaker 1: Energy prices have gone down. Admittedly, grocery prices have gone up.
Speaker 1: So I think what we're looking to is again a
Speaker 1: very good job market, good consumer demand, considerably considerable in
Speaker 1: terms of what we experienced previously. But again we are
Speaker 1: looking at some economic growth, certainly in the global arena,
Speaker 1: and after the United States, think we're gonna feel some
Speaker 1: of that also. So it sounds like you're saying we're
Speaker 1: not in a recession right now. Today, we're not. I mean,
Speaker 1: you know, is it removing towards your recession? Fore? I
Speaker 1: mean there's a debate. I know that all this is uh, highlights.
Speaker 1: How many like do people book? Help me out with
Speaker 1: like the shipping. Understanding Shipping, having recently been at the
Speaker 1: Panama Canal fascinating to just understand it. Same thing with
Speaker 1: your report. Do our companies booking for December? Are they
Speaker 1: booking for November? Like, how much visibility or how much
Speaker 1: forward looking visibility do you actually have to get an
Speaker 1: idea of? Wow, things are going to slow down. Well,
Speaker 1: what I can tell you is part of the problem
Speaker 1: that we experience here in the nation's largest monstrategic gateway
Speaker 1: is the advancing of that inventory. So, looking forward, some
Speaker 1: of these companies were advancing the inventory, but they certainly
Speaker 1: didn't want to put us back to where we were
Speaker 1: in the second half of uh so I think, uh,
Speaker 1: it's interesting to watch. You know, there's some bigger company
Speaker 1: to start looking at their labor force. Uh. But at
Speaker 1: this point I will say that in terms of the
Speaker 1: coming holiday Christmas season, we're gonna be very well established
Speaker 1: in terms of that inventory because much of that has
Speaker 1: been advanced already. It's already it's already where it needs
Speaker 1: to be right I mean for the poor lawmas. If
Speaker 1: you look at the first eight months of this year,
Speaker 1: we've superseded the numbers of our record year last year
Speaker 1: at this point by four point six percent. So that's
Speaker 1: kind of an indicator in terms out a continued volume.
Speaker 1: But again, it's gonna be interesting to see how we
Speaker 1: end the third and approach to fourth quarter, because it
Speaker 1: does make me feel like people are pulling a lot
Speaker 1: of stuff forward because they just don't want to be
Speaker 1: caught off guard, like things can get it more expensive,
Speaker 1: so they're buying it now. Yeah, our empty shelves and
Speaker 1: you don't want that in Christmas rights, but especially if
Speaker 1: you're a retailer. Correct, and I firmly believe we're not
Speaker 1: going to see that scenario for sure. Hey, tell us
Speaker 1: a little bit about what you're saying based on where
Speaker 1: port traffic is coming from and what that says about
Speaker 1: economies around the world. I mean, we saw Fedex loose
Speaker 1: of its market value on Friday after it pulled its
Speaker 1: earnings forecast because if weakness specifically in Europe and in Asia.
Speaker 1: I know you guys have a really good view on Asia. Um,
Speaker 1: is there any softness there? Well, first of all, for
Speaker 1: fed x, you saw that because a lot of the
Speaker 1: numbers for fed x in terms with the CEO indicated
Speaker 1: here this past week that component in terms of what
Speaker 1: their loss were in earnings was in the Asia market.
Speaker 1: So I think on that respect, certainly what we see
Speaker 1: in Asia, more specifically China. You are seeing a slowdown there. UH,
Speaker 1: in China. So that is the domino effect. But is that?
Speaker 1: Is that based on lockdowns in China? Is it based
Speaker 1: on the covid zero policy, or is it is it
Speaker 1: all tied to that? It's all tied to what precipitated
Speaker 1: these times, that is the covid nineteen pandemic. So I
Speaker 1: think again, Um, we'll see how China handles this. I
Speaker 1: mean the good news is I don't think you're going
Speaker 1: to see the kind of lockdowns in China and we
Speaker 1: saw in the past because they're also watching their numbers
Speaker 1: in terms of their economic growth. So there'll be a softening. Uh,
Speaker 1: and as we approach three I believe that the good
Speaker 1: news the supply change. Certain United States. I think we're
Speaker 1: now seeing some semblance of normalization and moderation and supply change.
Speaker 1: So that's very good news. So okay, and that's the thing.
Speaker 1: I mean that was obviously the problem right during the
Speaker 1: pandemic and stuff. You feel like that has has calmed
Speaker 1: down completely, or close to it. It's calmed down substantially.
Speaker 1: So I think again, at least for the West Coast,
Speaker 1: that car continues to move. I think the delays have diminished, uh,
Speaker 1: and certainly the backups have substantially diminished. Now there is
Speaker 1: one asterisk to this and that's the state of the
Speaker 1: rail equipment. Uh, the ongoing issue with the class one
Speaker 1: railroads and for the West Coast, the imbalance of the
Speaker 1: eastbound westbound equipment issues. So for the poor law reach,
Speaker 1: we're a little bit better on the rail goal, which
Speaker 1: is eleven days. Nothing to brag about because in normal
Speaker 1: times that's about three point five days, but it's certainly
Speaker 1: better than the thirdeen twelve days we were seeing in
Speaker 1: recent months. So incremental progress is that? Why is it
Speaker 1: still such a lag or such a problem and not
Speaker 1: back to what it should be? I think a lot
Speaker 1: has to do at the congestion in the inland in
Speaker 1: the modal yards. I mean this goes back to Chicago
Speaker 1: in the hubs there. I think the class one railroads
Speaker 1: have been rather challenge uh, they have their own challenges.
Speaker 1: Would Be Lard to shortage of labor and equipment issues.
Speaker 1: So I think unfortunately we've been the victims of the
Speaker 1: lack of that rail car which in my view should
Speaker 1: not happen at the world's most strategic, significant gateway. I
Speaker 1: am disappointed on that point that it's happened. We're talking
Speaker 1: with Mario Cordero. He's executive director of the port of
Speaker 1: Long Beach. As we said, it is the second busiest
Speaker 1: port in North America and so a great way to
Speaker 1: get a feel of what's going on in the economy.
Speaker 1: Do you feel like, based on what happened and the
Speaker 1: supply chain problems and just it wasn't just port issues,
Speaker 1: but it was trucking, it was just kind of all
Speaker 1: along the line, that we will ultimately se in some
Speaker 1: ways more automation potentially come into this industry? Or does
Speaker 1: it need to? Well, I mean those are two very
Speaker 1: good questions, but let me let me first of all
Speaker 1: address the first one. In terms of what we experience.
Speaker 1: I think the good news for those of us in
Speaker 1: this industry people finally uh saw the importance and witness
Speaker 1: the importance of a supply chain. We all found out
Speaker 1: that the supply chain is not as resilient as some
Speaker 1: people may have thought. We took it for granted. We
Speaker 1: took it for granted. So you know, the essential workforce,
Speaker 1: which includes obviously our safety officers, are people in the
Speaker 1: health industry during this pandemic, but also are people who
Speaker 1: work in goods movement, people who work, men and women
Speaker 1: who work on the docks, the truckers, the railroad workers,
Speaker 1: essential workers who move commerce, which has a great impact, obviously,
Speaker 1: on our GPU, our our GDP, our economy. So I
Speaker 1: think the good news for us is it's not just
Speaker 1: about talk of how importance this industry is. We've seen it,
Speaker 1: particularly from this administration, in terms of the investment, the
Speaker 1: ending in this industry in America. Sports, uh, you know,
Speaker 1: for the Poor Long Beach. We've had the secretary of
Speaker 1: transportation come to the San Peter Bay Complex already three
Speaker 1: times this year. And it's not just about visiting her
Speaker 1: talking is also funded. Port Lombas received the most significant
Speaker 1: funding by way of the P D I P grants
Speaker 1: almost to the two of fifty three million, the largest
Speaker 1: of any port authority in the country. So we're very
Speaker 1: pleased that not only people are recognizing the importance. But,
Speaker 1: like the secretary said, it's not about no longer disinvestment,
Speaker 1: it's about investments. To shame, it takes a crisis there
Speaker 1: for all that to happen. Right. Hey, let's talk a
Speaker 1: little bit about Labor and I want to draw your
Speaker 1: attention to a number that our colleagues scarlet food sent
Speaker 1: us earlier today when she knew that we were working
Speaker 1: with you later today. UH, so, last year, January, September, sixteenth.
Speaker 1: This is according to Dowd Jones. There were a hundred
Speaker 1: and fifty strikes. The Cornell strike tracker has this January
Speaker 1: one this year. To the past Friday, there's been two
Speaker 1: hundred seventy three strikes. How do you look at the
Speaker 1: power of the worker right now, especially in the context
Speaker 1: of strikes that could happen at the port at any time,
Speaker 1: given that you don't have a contract? Well, number one,
Speaker 1: I don't believe it. You're going to see a strike
Speaker 1: at the port or even slow down, at least not
Speaker 1: in the west coast. So I'm very optimistic that the
Speaker 1: parties will come to a meeting of the mines. Uh,
Speaker 1: you thought it was going to happen by Labor Dai,
Speaker 1: didn't you? Well, I mean we're still in September. Slim
Speaker 1: in a few weeks off. I'm not wearing white anymore.
Speaker 1: Put My spectator pumps away. It fall outside. But, but, but,
Speaker 1: I think that clearly there's no slow down, uh, much
Speaker 1: less a strike. and the volume numbers that I was
Speaker 1: just referencing down. Yeah, the volume knows how it's just
Speaker 1: referencing earlier signifies that the productivity continues at a very
Speaker 1: high pace in terms of the overall labor issue throughout
Speaker 1: the country. Keep in mind that you know the average wages.
Speaker 1: At least a couple of months ago you saw a
Speaker 1: fine point, five point three increase in wages. I think
Speaker 1: that number now is six point three across the board.
Speaker 1: So you know from my perspective, I mean I think,
Speaker 1: particularly with the American workforce, many of these industries for
Speaker 1: the past few years were rather styming would regard to
Speaker 1: the wage increases. So it's no surprise that, given that
Speaker 1: how good the economy has been. UH, there's those sectors
Speaker 1: that want a piece of the piece of the Pie. Right,
Speaker 1: you'll get to be in the driver's seat very much
Speaker 1: when it comes to wages. Hey, just got about a
Speaker 1: minute or so left here. I want to go back, though,
Speaker 1: to the economy and you said that there you know,
Speaker 1: it sounds like we're not going to see empty shelves,
Speaker 1: that there's been a lot of kind of pre advanced buying.
Speaker 1: Could we, though, start to see, or how quickly can
Speaker 1: things kind of start to slow down in terms of shipments?
Speaker 1: Does in your industry how often do you maybe like wow,
Speaker 1: all of a sudden things can slow down, that you
Speaker 1: didn't see it coming? Well, we're starting to see that.
Speaker 1: Let me qualify that, because we always thought that the
Speaker 1: surge that we experienced, particularly last year, was an unusual
Speaker 1: surge because of the reasons we've stated. So we're going
Speaker 1: to get back to some realization. So when you compare
Speaker 1: our number for August, we moved the poort Lombers, moved
Speaker 1: the most, had the most container volume of any port
Speaker 1: in the country. However, we were still minus point one
Speaker 1: percent compared to August, which is a record yere. So
Speaker 1: are we in the minus? Technically, yes. Is it bad? No? No,
Speaker 1: but okay, and never session, you would say, at this point?
Speaker 1: Not at this point, but again, we'll see what the
Speaker 1: Fed does in the coming week and we will go
Speaker 1: from there. I mean the numbers right now are we're
Speaker 1: trying to get to a point where we have a
Speaker 1: soft landing, and that's the kind of tricky points across
Speaker 1: the what's the word for soft landing for a ship
Speaker 1: coming into court? Well, any landing where you don't hit
Speaker 1: hit the dock and you stay in one piece. Very Cordero.
Speaker 1: Thank you so much. Thank you so much, really gracious
Speaker 1: and so much time executive director port of Long Beach
Speaker 1: joining us here in our interactive broker studio. This is
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stinovic on Bloomberg radio. All right, I want to
Speaker 1: get to another story that is on the Bloomberg terminal.
Speaker 1: It's part of the Bloomberg Tech Newsletter. Has To do
Speaker 1: with the merge, the CRYPTO merge that we were all
Speaker 1: talking about last week. We've got Hannah Miller right now.
Speaker 1: She's Bloomberg News digital currencies and VC reporter, joining us
Speaker 1: on the phone from San Francisco. Hannah, how was your weekend?
Speaker 1: It was a lot of fun. Yeah, it was nice
Speaker 1: to relax that you're doing some major merge coverage. Okay,
Speaker 1: are you joking? Because of them? The reason I ask
Speaker 1: is because we don't see a ether and Bitcoin stop
Speaker 1: trading on the weekends, and it was a down weekend
Speaker 1: for the cryptocurrency. So I don't know if you were
Speaker 1: being facetious there and you had to work the whole time. No,
Speaker 1: luckily I didn't have to tekend duty. Ok, okay, what happened?
Speaker 1: You know, the merge was priced in. What's going on?
Speaker 1: I feel like it's like y two K, two point. Oh,
Speaker 1: it's my two point. Oh Day right, remember we thought
Speaker 1: everything was going to fall apar could have fallen apart
Speaker 1: and we thought the merge could have. Like you know,
Speaker 1: I feel like if something got wrong, it would have
Speaker 1: been a really big story. It would have been we
Speaker 1: would have seen huge disruption to trading, to the market, uh,
Speaker 1: really see startups flounder. But actually everything went really smoothly.
Speaker 1: So what's the significance of it? You know, Hannah, I
Speaker 1: feel like we continue to learn more and more about
Speaker 1: this crypto world and many would argue, certainly those within
Speaker 1: the world, that there's still a lot more to become.
Speaker 1: But what was the significance of this? Because it's really
Speaker 1: tapped into to some extent the use of energy as well.
Speaker 1: It's a really big deal because the theorium migrated to
Speaker 1: prove a bake, which is a different way to validate
Speaker 1: and a transaction to the blockchain. Previously, ethereum relied on
Speaker 1: coupe of work, which is very energy intensive uses large
Speaker 1: amounts of electricity. So it's supposedly will reduce etherium's energy
Speaker 1: usage by so when is the Bitcoin merch that is
Speaker 1: very unlikely to happen. You have really, you know, strong
Speaker 1: proponents of Bitcoin who believe doing such a switch would
Speaker 1: undermine bitcoin's core principles and that we would actually be
Speaker 1: a less secure, less um the centralized way of running
Speaker 1: the blockchain. So Hannah raises the question why does something
Speaker 1: like this work for ethereum's blockchain but not for Bitcoins blockchain?
Speaker 1: You know, ethereum, it's it's pretty interesting. We do have
Speaker 1: the ethereum foundation, which is really active and educating people
Speaker 1: about this blockchain. Um, we have the Tali Puteran who
Speaker 1: is just a huge force within the industry. He is
Speaker 1: the creator of ethereum. So there's a little bit more
Speaker 1: coordinated effort. I guess with ethereum that we don't see
Speaker 1: what's Bitcoin, which has, as we know, a studonymous founder
Speaker 1: into total Nakamoto. You know, one other thing I wondered
Speaker 1: to Hannah is proof of work versus proof of steak.
Speaker 1: So now it's a proof of steak proof of work.
Speaker 1: To me it's like, I don't know, maybe being old fascions,
Speaker 1: like all right, show me a proof of work, right,
Speaker 1: in terms of the reliability, the security of it? Is
Speaker 1: there a difference in terms of the security of your,
Speaker 1: you know, ethereum ownership steak? Yeah, so the argument years
Speaker 1: that with proof of stake it's a bit more it's
Speaker 1: a bit more centralized in terms of WHO's validating transactions
Speaker 1: on the blockchain. So if you have fewer parties involved,
Speaker 1: you know something that affects one of those parties would have, overall,
Speaker 1: a bigger impact on the blockchain. So that's that's where
Speaker 1: that concern is. Um and people see bitcoin is as
Speaker 1: being much more decentralized and having a wider network of
Speaker 1: minors versus ethereums taking network. Okay, so it kind of
Speaker 1: raises the question about why we saw such a precipitous
Speaker 1: decline over the weekend in and I'll just focus on
Speaker 1: ether right now because we also saw it on in
Speaker 1: Bitcoin Um. But was it about the merger? Is it
Speaker 1: completely unrelated to the merge? I mean, I would say
Speaker 1: we knew the merger was coming. So isn't this just
Speaker 1: a sort of you know, stocks are going down, cryptos
Speaker 1: going down to yeah, when I talk to people, uh,
Speaker 1: it's they really bring up the macro condition that we're
Speaker 1: seeing here that dragging down on prices. Another thing to
Speaker 1: keep in mind is the merge to not immediately fixed
Speaker 1: problems with ethereum like congestion, uh, and high transaction fees.
Speaker 1: It's paving the way for later upgrades that will help
Speaker 1: with those things. But, for example, the first NFP minted
Speaker 1: on the ethereum network after the switch to proof of
Speaker 1: stake at a transaction fee of more than sixty dollars,
Speaker 1: which is massive. You know, I've got to, you know,
Speaker 1: assume that regulators are watching this closely. I'M gonna be
Speaker 1: a little Um physicious here, but I'm assuming. So the
Speaker 1: merge happens and our regulators are like, okay, everything's okay
Speaker 1: with ether and like, and it's okay with ethereum and
Speaker 1: it's okay with crypto. Not even close. Right. Regulators to
Speaker 1: have a lot of issues when it comes to cryptocurrencies overall. Yes,
Speaker 1: we've already had Gary Gensler call out proof of state
Speaker 1: stake networks and saying that they have qualities that could
Speaker 1: make the crypto on those networks classified as securities. So
Speaker 1: this is just another example of regulators homing in, you know,
Speaker 1: really just looking forward to tightening oversight of the digital
Speaker 1: asset industry. So what are you looking for? Has Somebody
Speaker 1: who reports on digital currencies and venture capital, because you've
Speaker 1: you've got this sort of really interesting position. Venture capitalists
Speaker 1: are looking for. What the next big thing is, and
Speaker 1: they're talking like the next generation right there, talking years
Speaker 1: away from big returns, finding that next next facebook or
Speaker 1: finding Bitcoin, you know, ten years ago. Um, what has
Speaker 1: their conversation shifted at all when it comes to how
Speaker 1: they're thinking about digital currencies or how they're thinking about
Speaker 1: web three, given that it's been so brutal in terms
Speaker 1: of a sell off? Yeah, when I speak to DC as,
Speaker 1: many of them are still bullish on the space. They're
Speaker 1: in it for the long haul. They believe this is
Speaker 1: a great time to build, that amazing founders will come
Speaker 1: out of the scripto winter and that this is only temporary.
Speaker 1: We've seen huge interest in N F T S and gaming,
Speaker 1: despite slumping N F T sale. Uh so that's been
Speaker 1: really interesting. Vcs are looking to really tap into to
Speaker 1: mainstream ways to have crypto appeal to consumers and they want,
Speaker 1: you know, just average people on board. They don't want
Speaker 1: to just stick with a crypto native audience, right, which
Speaker 1: is why you've heard some of the big fun houses, right,
Speaker 1: you know, thinking about or starting to offer a fund
Speaker 1: house or Fun House. No, not fun I'm like, what
Speaker 1: fund what's going on to fun house play for you,
Speaker 1: Amusement Park Games Um, Hannah. Thank you so much. I'm
Speaker 1: really glad that we got to check in with you,
Speaker 1: Hannah Miller. She's Bloomberg News digital currencies and VC reporter
Speaker 1: joining us there on the phone. Just look at what
Speaker 1: I'm just going to say a little preview for what
Speaker 1: we've got coming. One of my decliners coin base today,
Speaker 1: because when you see big moves in Crypto, you see
Speaker 1: big moves and the platforms that help trade them. I'm
Speaker 1: looking at the CRYPTO currency monitor on the Bloomberg terminal.
Speaker 1: Bitcoin down one point two percent. You've got X RP
Speaker 1: down one point four percent. Of Theory, I'm just down
Speaker 1: about three quarters of a percent, but you know, you
Speaker 1: go down polka dot. What the heck is that? To
Speaker 1: stamp out five and a half percent, and that's one
Speaker 1: that you've made it into the cryptocurrency monitor. Unbelievable. I'm
Speaker 1: ro Mac Journal. Yeah, but you let me drive. Oh No,
Speaker 1: no, no no, no, Oh right, please, I'll do. I want
Speaker 1: to dry. It's good question. This is the drive to
Speaker 1: the clothes on Bluebird radio. All right, TIKTOK's everybody. TIKTOK.
Speaker 1: It is just about ten minutes left in today's trading session.
Speaker 1: Having some fun with our guest in Studio. Jake Dolly,
Speaker 1: is with US senior investment strategist at B and y
Speaker 1: mail and investment management. Here in our interactive broker studio,
Speaker 1: we're since in buying here in the last half hour video.
Speaker 1: I gotta say it even caught you off guard, Jake.
Speaker 1: You walked in here, you looked up at the TV
Speaker 1: you said, oh my goodness, stocks are up today. What's
Speaker 1: up with that? I think it's going to be pretty
Speaker 1: choppy this week. Right. We're all eating for Wednesday. We're
Speaker 1: all very attentive to you know, what's going to be
Speaker 1: coming uh, most notably, I think, in the summary of
Speaker 1: economic projections. Um, that's what we're all, you know, fed watchers,
Speaker 1: and I think everybody feels like a fed watcher these days. Um,
Speaker 1: but we're definitely looking there. I think we're we're going
Speaker 1: to see a higher mediant on the dot plot. Um.
Speaker 1: So I think we're we're all waiting for that. But Um,
Speaker 1: until then I think it's going to be a little
Speaker 1: bit choppy. It's I think it's interesting that yes, this
Speaker 1: has been a year of a lot of elatility and
Speaker 1: here we have the vixed down a little bit today
Speaker 1: and it's still at like twenty five. It's not like
Speaker 1: we've seen any big move up to thirty or forty
Speaker 1: in particular. Um. Do you think, based on what we
Speaker 1: get from the Fed, that it will be then potentially
Speaker 1: a major reset for some of your valuation models? It's
Speaker 1: definitely possible. Um. I think there there are risks, uh,
Speaker 1: if the you know so called economic economic pain that
Speaker 1: Charepal was mentioning at Jackson Hole, if we start to
Speaker 1: see that in a big way, uh, in the Sep Um,
Speaker 1: I think that's where we start to see the potential
Speaker 1: for a rerating higher. Um. I think I wouldn't say that's, AH,
Speaker 1: you know, highest likelihood. Um. I think more likely we're
Speaker 1: gonna see an SP that, Hugh's very close to what
Speaker 1: the market is currently pricing in, okay, which is coming Um,
Speaker 1: and then, you know, getting pretty close to four, a
Speaker 1: little north of four percent by the end of the
Speaker 1: year on the Fed funds rate. Um. I think you
Speaker 1: could see it a negative reaction in the market if
Speaker 1: we see something that is notably higher than sort of
Speaker 1: what is being currently priced in, which is, you know,
Speaker 1: just a little bit above four percent, Um, and then
Speaker 1: peeking out by mid next year. So the move up
Speaker 1: that we've seen in yields, particularly on the shorter end
Speaker 1: of the yield car. But you know, right now we've
Speaker 1: got the ten year at three point forty eight, that
Speaker 1: two year note with three nine four, so just below
Speaker 1: four percent and off its highs. That we saw a
Speaker 1: little bit earlier in today's session. You know, we keep
Speaker 1: talking about, you know, where it where is the high
Speaker 1: end yields like? Where does it settle down? where the
Speaker 1: low when it comes to the equity side of things,
Speaker 1: this move up in yields that we've seen, is it
Speaker 1: just volatility or it seeking at a new high level? Yeah, well,
Speaker 1: if you look historically, what we see is that rates
Speaker 1: continue to move higher while the Fed is hiking Um,
Speaker 1: and that's where so much of this uncertainty comes in,
Speaker 1: is that the market has been continually this year having
Speaker 1: to increase those expectations of where the terminal rate's gonna sit.
Speaker 1: Because how many times have we talked about, okay, it
Speaker 1: looks like we're settling in exactly Um and right now,
Speaker 1: you know, I think last time I looked, we're sort of,
Speaker 1: you know, close to four and a half at the
Speaker 1: peak for next year. Um, but we'll see if if
Speaker 1: the SEP comes out with something that is pretty close
Speaker 1: to that or if they go above it. That's where
Speaker 1: I think we get a negative reaction. But on the
Speaker 1: flip side of that, I think if we see something
Speaker 1: much lower and we hear from chair pal some confidence
Speaker 1: that four percent is the right place to kind of
Speaker 1: do this hike and hold tactic, Um we may see,
Speaker 1: you know, a bit of a relief rally there, because
Speaker 1: we're kind of there right. Yeah, exactly how long is
Speaker 1: the hold if it's a hike and hold strategy from
Speaker 1: J Powell? That's you know, we wish we would get
Speaker 1: some four guidance on that, but we're probably not going to. Um.
Speaker 1: So I think the Fed is in the position that
Speaker 1: they know they've done a lot of tightening. They've they've
Speaker 1: really tightened screws on this economy. So they need to
Speaker 1: see how the economy holds up and I think so
Speaker 1: far the jury is still out. But when they look
Speaker 1: at the labor market, they're just not seeing the kind
Speaker 1: of slack, the softness that they would expect with so
Speaker 1: much tightening so far this year. So what what gives there?
Speaker 1: Because we're starting to see softness in other areas. I mean,
Speaker 1: I think Carol today specifically, we've been talking a lot
Speaker 1: about the housing market. Of the days got earlier today.
Speaker 1: I mean nine months, like nine month declines for certain
Speaker 1: indicators for the housing market. Uh. So we're seeing it
Speaker 1: play out in some places. When do we start to
Speaker 1: see that play out in the labor market? That's the problem.
Speaker 1: The labor market is oftentimes the last thing to move Um,
Speaker 1: and I think that one of the big debates out
Speaker 1: there is just that, the fact that the labor market
Speaker 1: is so unprecedentedly tight right now that you know, trying
Speaker 1: to forecast when you're going to see that softening. It
Speaker 1: might be further out, and that's what I was kind
Speaker 1: of referring to there, is that the Fed, you know,
Speaker 1: it's probably happy with the financial conditions tightening, but when
Speaker 1: they look at the labor market, they really haven't seen
Speaker 1: sort of the softness that they would have expected. Now,
Speaker 1: at the same time, they wanted to be gradual, right,
Speaker 1: they won't. Don't want a very fast, rapid deterioration in
Speaker 1: labor market conditions. Um. So there's some positives there, UM,
Speaker 1: you know. But our view is that if you're going
Speaker 1: to get sort of the so called softish landing. Um,
Speaker 1: you need the data to go in the Fed's favor,
Speaker 1: and relatively quickly, because we don't think that rates can
Speaker 1: really go much higher than what is currently being priced
Speaker 1: in without things getting, Um, you know, slowing down, quite significant.
Speaker 1: When you've got headlines like the tenure. You know, we've
Speaker 1: talked about three and a half percent, first time since
Speaker 1: so more than a decade. I mean is that kind
Speaker 1: of a you know, causes you to to kind of
Speaker 1: pause for a moment? Is that? How do you see
Speaker 1: it in terms of what that potentially means? Yeah, I mean,
Speaker 1: finding the right level is certainly difficult. And then, and
Speaker 1: I know that all the brains at the Fed are
Speaker 1: thinking about this, looking at history, trying to figure out
Speaker 1: where that right rate is. Um. I guess just to
Speaker 1: sort of point out one you know level is that
Speaker 1: if you look at where core pc inflation is, you know,
Speaker 1: I think the last Peron was about four point six.
Speaker 1: So taking the Fed funds rate close to that level
Speaker 1: is when you start to see, at least by one measure,
Speaker 1: a positive real fed funds rate. Um. So I think
Speaker 1: that that's there is, you know, some rational at that
Speaker 1: level for why they would want to hike and hold.
Speaker 1: What are the problems created for investors in this environment
Speaker 1: where we continue to try and figure it out? But
Speaker 1: to be fair, Um, you know, I keep saying it
Speaker 1: over and over again, we're coming out of a pandemic.
Speaker 1: We're coming out of unprecedented global stimulus. We don't exactly
Speaker 1: know how this plays out. And here we are talking recession,
Speaker 1: yet we've got a strong labor market. We would normally
Speaker 1: not do that. Yeah, it's a very challenging environment. It
Speaker 1: has been for most of this year. Um. I think,
Speaker 1: you know, to put an optimistic spin on it, the
Speaker 1: fact that we are getting the yields that we are
Speaker 1: now on the fixed income side, it certainly makes the
Speaker 1: repetive exactly. The relative attractiveness looks a lot better outcums.
Speaker 1: Was that it said? Finally, finally, exactly, it's it's a
Speaker 1: new regime. Um. And, although we are still in an
Speaker 1: inverted yield curve, so you know, there isn't really that
Speaker 1: that compensation for moving out the curve, we are seeing
Speaker 1: much better opportunities relative to equities. Um. And I think
Speaker 1: you know, even if you believe that a softish landing is,
Speaker 1: is kind of potentially going to happen. You have to
Speaker 1: be very cautious in this type of market because we
Speaker 1: think that there is still downside risk in equities right now.
Speaker 1: Swings can happen, but it does make you wonder. Is
Speaker 1: it an anomaly when we get, you know, put this
Speaker 1: all of the textbooks, or is it the beginning of
Speaker 1: some kind of new trend going forward? Um Jake, great
Speaker 1: to catch up with you. Thanks for having really appreciate it.
Speaker 1: Jake Jolly. He's senior investment strategies at B and y
Speaker 1: mail and investment management here in our interactive brokers studio.
Speaker 1: Thanks for listening to Bloomberg Business Week. Download the podcast
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