Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
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Speaker 2: with US stocks posting four consecutive quarters of games, the
Speaker 2: longest streak since twenty twenty one. Seema Sharp of Principal
Speaker 2: Aid Management, writing this, the attractiveness of cash has declined.
Speaker 2: There is some six point four trillion dollars currently in
Speaker 2: money market funds, potentially representing an important tailwind for risk assets.
Speaker 2: Seema joins us. Now for more, Seema, you sound bullish.
Speaker 2: Walk me through why and where that cash is going
Speaker 2: to go?
Speaker 3: Sure, so, yes, we are bullish.
Speaker 4: I don't want to say overly bullish. We're very cognizant
Speaker 4: of the number of risks out there, but I think
Speaker 4: what we're really basing it on is you have a
Speaker 4: global montri stimular cycle in play. You have a Federal
Speaker 4: Reserve which yes, very very cloud and very difficult to
Speaker 4: navigate its way with all the uncertainties that you've been
Speaker 4: talking about with regards to their data, but they are
Speaker 4: very much committed to soft landing. So that's the one
Speaker 4: thing that we are hang our hats on is you're
Speaker 4: very unlikely to see a recession materializing over the next
Speaker 4: eighteen months. So that is a good backdrop. It doesn't
Speaker 4: necessarily mean that you're going to see enormous security gains.
Speaker 4: I actually doubt that you're going to see the same
Speaker 4: kind of pace of gains that we've already seen in
Speaker 4: the first first three quarters of the year extending through
Speaker 4: to twenty twenty five. But you have a growth backdrop.
Speaker 4: You have a FED munthre easing program in play. That
Speaker 4: should be positive for stocks, it should be positive for
Speaker 4: credit as well. So from our perspective, why being cash
Speaker 4: when you know that rates are coming down and there's
Speaker 4: so many other games to be had on risk assets.
Speaker 2: The story you describe is precisely why we've had this
Speaker 2: massive US overweight and it's been building over the last
Speaker 2: few years relative to the rest of the world, because
Speaker 2: the relative story around the world has not been great.
Speaker 2: Seeming with that in mind, is it time to rejig
Speaker 2: some of that story, cut some of that overweight, redeploy
Speaker 2: some capital abroad, look internationally and a question I think
Speaker 2: a lot of people are asking themselves this morning is well,
Speaker 2: I've seen this movie a few times. This has been
Speaker 2: head fake after headfake. I know how this ends. Is
Speaker 2: it different this time?
Speaker 3: So I don't want to use those words.
Speaker 4: I'll get told off by or by colleagues for saying that,
Speaker 4: But I do think that this is a time to
Speaker 4: be thinking about global diversification.
Speaker 3: It's not necessarily pulling away from the US.
Speaker 4: So you know, with all those all that casually there,
Speaker 4: you need to deploy it somewhere.
Speaker 3: It's about whatever you're going to add.
Speaker 4: Try and think about where the global diversification is because
Speaker 4: valuations around the world in some pockets, not everywhere, but
Speaker 4: they are quite attractive.
Speaker 3: And as I said, it's not just a fur.
Speaker 4: That it's easying, but you're seeing other central banks around
Speaker 4: the world moving.
Speaker 3: I think China is an interesting story.
Speaker 4: We have a lot of I think skepticisn't about how
Speaker 4: much it's going to be sustained, how significant STEMAS.
Speaker 3: Is going to be, how it's going to be implemented.
Speaker 3: But we do think that there will.
Speaker 4: Be positive benefits from a risk sentiment perspective for other
Speaker 4: parts of ages. So I think that there are places
Speaker 4: outside of the US that we can think about, but
Speaker 4: also within the US, you know, we will become very
Speaker 4: accustomed to having that exposure to the MAC seven. We
Speaker 4: are maintaining that, but I think there is also some
Speaker 4: space for some tactical opportunities within the small gap space.
Speaker 1: I want to understand the bullish case and what's been
Speaker 1: priced in already, especially when it comes to the relationship
Speaker 1: of Starks and Bards, Stacks and the Federal Reserve. How
Speaker 1: much of the rally and your bullish sentiment really hinges
Speaker 1: on this recutting cycle that will pick up steam even
Speaker 1: if we don't necessarily get really negative employment data.
Speaker 3: So I think some of it is hinged on it.
Speaker 4: But as I said, we're not expecting the gains to
Speaker 4: continue at the same kind of pace we've had. I
Speaker 4: actually think that it's quite difficult in this market with
Speaker 4: these kind of valuations unless you're to have some kind
Speaker 4: of clean out at this point to have another twenty
Speaker 4: twenty five percent high. So we're thinking more about in
Speaker 4: the single digits for returns. There is a lot of
Speaker 4: uncertainty about how much the FED is going to come
Speaker 4: within the next few months. Are they going to front
Speaker 4: load or are we going to be looking at a
Speaker 4: more extended cycle.
Speaker 3: But as I said.
Speaker 4: Before, the thing that we're thinking about is, look, the
Speaker 4: FED we know is committed to that soft landing. They
Speaker 4: started to cut rates against the backdrop of still positive
Speaker 4: growth where there is no financial crisis Simmery. That is
Speaker 4: a very very pastive, positive backdrop which shoul assure soft landing,
Speaker 4: and against that perspective then you should have continued earnings
Speaker 4: growth and equities moving higher. But we do think that
Speaker 4: instead of just focusing on the MAC seven, it's really
Speaker 4: time to think about other parts of the US market
Speaker 4: and the global complex.
Speaker 1: I feel a bit whipside Seema because we've been talking
Speaker 1: about all of these catastrophic situations around the world and
Speaker 1: how it could potentially affect employment, how it could affect inflation,
Speaker 1: how it could affect growth over the short and potentially
Speaker 1: longer terms, how could disrupt supply chains, and yet Marcus
Speaker 1: have shrugged it off, don't seem to be pricing it
Speaker 1: in at all, which I guess makes because in the
Speaker 1: past it hasn't come to fruition as a tangible risk.
Speaker 1: Of the potential issues that we see on the four
Speaker 1: whether it's the storm, or whether it's the strike we're
Speaker 1: talking about the US, whether it's what's going on in
Speaker 1: the Middle East, what do you have your eye on
Speaker 1: potentially as the most disruptive event.
Speaker 4: I should think that the disruptive event is the Of course,
Speaker 4: this is from market perspective. The most disruptive event is
Speaker 4: really what it does to the data. We know that
Speaker 4: this is effect which is very date to depend. This
Speaker 4: is the market, which is also very data dependent. So
Speaker 4: as much as the data becomes more and more muddied,
Speaker 4: I think that you're going to see a lot of whips.
Speaker 4: And we've already seen abol atilty pick up that there's
Speaker 4: a risk that continues or even exacerbates over the coming months.
Speaker 4: And of course there's always the chance that you take
Speaker 4: the wrong turn because you're so clarded and blinded.
Speaker 5: When it comes to China. I know you mentioned that earlier,
Speaker 5: but you talked about that this week was a pivotal
Speaker 5: moment for it, and it all comes down to the details.
Speaker 5: So far, do you like the details that are coming
Speaker 5: out of Beijing.
Speaker 3: Yeah, we do.
Speaker 4: We are quite encouraged by what we're hearing. We really
Speaker 4: need to see clear numbers. We need to see a
Speaker 4: little more information about the consumption drive. Are we seeing
Speaker 4: kind of direct injections to consumers or is it done
Speaker 4: through subsidies? So there are different ways which is going
Speaker 4: to make it a little bit more impactful or less so.
Speaker 4: But overall, I think the positive thing that we're hearing
Speaker 4: from the government is that they recognize that something needs
Speaker 4: to be done, and it needs to be done in
Speaker 4: conjunction with Mounty Stimmus. It's not enough just for the
Speaker 4: Montreal Mountreal policy cuts. That has to be some kind
Speaker 4: of spending coming in play. I think that is positive.
Speaker 4: It should have a good impact and risk sentiment in
Speaker 4: terms of how much further we think about China GDP
Speaker 4: growth going, Does it hit the five percent level or not?
Speaker 3: That really comes down to those specific details.
Speaker 4: But at least from this point in time, we're hearing
Speaker 4: all the right things from the government and that should
Speaker 4: have some positive externalities across outside from China as well.
Speaker 6: Can we talk about the limits of that positive fallout.
Speaker 6: Let's talk about that right now.
Speaker 2: Pitter Cheer of Academy was on the program about an
Speaker 2: hour ago, and he made the point that Orienta China
Speaker 2: is a story for China, Chinese brands, Chinese companies, and
Speaker 2: the spillover, the positive spillover, is limited to the rest
Speaker 2: of the world, particularly to European companies.
Speaker 6: Sima, what do you make of that argument.
Speaker 3: I wouldn't necessarily agree.
Speaker 4: You know, when we've done the charting, that's actually a
Speaker 4: pretty clear correlation. You have China credit steamulus or whatever
Speaker 4: comes stembus measure that you want to use. There is
Speaker 4: a clear impact on the USICM Manufacturing.
Speaker 3: Survey, for example.
Speaker 4: So we do think that there is a positive impact,
Speaker 4: and in fact for European companies you could actually actually
Speaker 4: see some beluxury companies benefiting.
Speaker 3: So China's consumption has.
Speaker 4: Been limited within China up to now, we could see
Speaker 4: that's streaming outs other parts, particularly in Europe. Now I
Speaker 4: don't exaggerate this because we're actually quite negative on Europe
Speaker 4: as a whole, but in terms of what the impact
Speaker 4: could be outside of China. I don't think it's huge,
Speaker 4: but I think it certainly could be quite positive, particularly
Speaker 4: the time for the rest of the world when expectations
Speaker 4: have been quite low outside of the US.
Speaker 6: Rock bottom over the last few years.
Speaker 2: Samoth, thank you as always, Semushan There of principle, Plis
Speaker 2: and Golfer. The only vice presidential debate of the election.
Speaker 2: We're going to get nine pm Eastern Time without a
Speaker 2: studio audience. The candidates will have two minutes to answer
Speaker 2: questions and two minutes to react. Both Walts and Vans
Speaker 2: will have hot Mike's Republican Congresswoman Lisa McLain from the
Speaker 2: Swiss state of Michigan joined us now for more congresswomen.
Speaker 6: It's going to see you. It's good to be here.
Speaker 6: Thank yousome to New York. Yeah, thanks, welcome. What are
Speaker 6: you hoping to get from the save, Nick Well.
Speaker 7: I hope to get a contrast, right, And what I
Speaker 7: think I'm really hoping for is what exactly the American
Speaker 7: people are hoping for, and that's answers to the questions
Speaker 7: of the issues that everybody's worried about, the economic issues.
Speaker 7: What are we doing about the hurricane, what are we
Speaker 7: doing to bring inflation down? What are we doing about
Speaker 7: the ev mandates? What are we doing about crime? They
Speaker 7: want answers to the issues, and I can share with you.
Speaker 7: In Michigan, there are three issues that matter economy, economy,
Speaker 7: and economy. That's the bottom line.
Speaker 2: When's your economy right now in the set of Michigan.
Speaker 2: And what couldn't the federal government do to have these automakas.
Speaker 7: Our economy in Michigan. We're struggling. Families are struggling. We're
Speaker 7: struggling to put food on the table, put you know, uh,
Speaker 7: put put our gas in our cars and whatnot. What
Speaker 7: the government can do is stay out of the way.
Speaker 7: I mean, seriously, just have some faith in the people.
Speaker 7: We don't need more regulation. We don't need the government
Speaker 7: to tell us what to do, when to do it,
Speaker 7: how to do it, what cars to buy. Have a
Speaker 7: little faith in the American people.
Speaker 5: Even very critical of this administration when it comes to
Speaker 5: the transition to electric vehicles. At the same time, you're
Speaker 5: also very critical of China. But China is absolutely dominating
Speaker 5: the entire world when it comes to electric vehicles as
Speaker 5: well as the processing to make the batteries to get
Speaker 5: to that electric vehicle. So how do you suggest the
Speaker 5: US compete given this is so critical to your district.
Speaker 7: The biggest thing that we can do to compete is
Speaker 7: stop the mandates. Let the consumer buy the product they
Speaker 7: want to buy. Listen with the seventy percent EV mandates
Speaker 7: by twenty thirty, we don't have the infrastructure. I mean,
Speaker 7: I'm not telling you guys everything anything you don't already know.
Speaker 7: We don't have the infrastructure, and people don't want to
Speaker 7: buy the cars. Not to mention, where are we getting
Speaker 7: all the batteries from? Oh, our biggest adversary, China? And
Speaker 7: for those of us who really care about the Green
Speaker 7: New Deal, right, Okay, that was a little bit of
Speaker 7: sarcasm there. But for those of us who care, where
Speaker 7: are we getting the batteries from China? What does it
Speaker 7: take to produce those batteries coal and coal plants? It's
Speaker 7: counterproductive and counterintuitive on what we're doing with these EV mandates.
Speaker 5: When you say mandate, there's not an explicit mandate. It's
Speaker 5: just the pollution controls. So just the question I have
Speaker 5: is the Inflation Reduction Act, which I know you're critical of.
Speaker 6: You called the Three New Deals.
Speaker 5: You clearly are critical of it, but a lot of
Speaker 5: that money actually went to Michigan for clean tech. So,
Speaker 5: say there is a change in the composition of Congress
Speaker 5: or change in the White House, are you going to
Speaker 5: be one of those individuals that wants to repeal some
Speaker 5: of those provisions that are in the Inflation Reduction Act.
Speaker 6: Yes?
Speaker 7: And I say that because I have faith in people
Speaker 7: and in the Inflation Reduction Act. With these mandates, right,
Speaker 7: I think everyone wants a cleaner planet, right, But who's
Speaker 7: going to give us that cleaner planet. I'm going to
Speaker 7: share with you it's going to be business, and it's
Speaker 7: going to be industry, the people that do it for
Speaker 7: a living every day. The government's not going to be
Speaker 7: able to legislate that because of all the unintended consequences.
Speaker 7: Let's leave it to the business owners and industry that
Speaker 7: actually know what they're doing and how to do it.
Speaker 5: So let's talk about what's going on in Michigan. I'm
Speaker 5: sure you saw the report about slock In, who's going
Speaker 5: for the Senate seat. She's telling her donors, according to
Speaker 5: scoop from Axios, that she is underwater because Kamala Harris
Speaker 5: isn't polling well in Michigan. Are you expecting a red
Speaker 5: wave in your state.
Speaker 7: I don't want to predict a red wave. Last time
Speaker 7: we did that, it didn't turn out exactly like a
Speaker 7: red wave. I want to predict a win, right, And
Speaker 7: I think I'm cautiously optimistic that we are going to
Speaker 7: get a win in Michigan. And I think we're going
Speaker 7: to get a win for three reasons and I said
Speaker 7: them earlier. The economy. The economy, the economy. People in
Speaker 7: Michigan are hurting. We're a manufacturing state, right, We're an
Speaker 7: auto state. We need to be able to do business.
Speaker 7: And with the inflation and the layoffs and the mandates,
Speaker 7: people in Michigan are hurting in it's because of the
Speaker 7: policies that this administration and the Democrats are cramming down
Speaker 7: our throats.
Speaker 1: You said the best thing the government can do is
Speaker 1: to stay out of your way. You talk about how
Speaker 1: business really needs to just be left to their own devices,
Speaker 1: and yet Donald Trump is talking about tariffs, extensive tariffs
Speaker 1: that could potentially increase inflation and potentially put up gates
Speaker 1: to the concept of free trade and businesses making those decisions.
Speaker 6: Why is that a good option?
Speaker 7: Well, I think if you look at the tariffs that
Speaker 7: Donald Trump is proposing. He's proposing tariffs as a reaction
Speaker 7: to unfair trade practices. What Donald Trump wants and why
Speaker 7: he's using tariffs as a tool that he has in
Speaker 7: his tool belt, is to make sure that we are
Speaker 7: playing on a level playing field. Right now, we're not
Speaker 7: playing on a level playing field, and he wants to
Speaker 7: make sure that we have a level playing field for
Speaker 7: our businesses and for American companies. If our adversaries like
Speaker 7: China would like to plan a level playing field, I
Speaker 7: don't think there's a need for tariffs, but if they're
Speaker 7: not going to play fairly, your dog on right, He's
Speaker 7: going to put tariffs in place, and I agree with them.
Speaker 1: I'm curious just more in the immediate aftermath of the strike,
Speaker 1: just to sort of go to the next couple of weeks,
Speaker 1: not just the longer term. We are talking about the
Speaker 1: biggest strike of dock workers going back to nineteen seventy seven.
Speaker 1: There are a lot of auto parts it could potentially
Speaker 1: be coming through. How are you preparing your manufacturers in
Speaker 1: Michigan for the potential of production being stopped.
Speaker 6: Or delayed because of this.
Speaker 7: Listen, we're very concerned, and they've been preparing up to
Speaker 7: this point because they had an inkling that this would happen. Right,
Speaker 7: This isn't something that's just happened yesterday. Right, We've been
Speaker 7: able to prepare a little bit.
Speaker 6: But make no.
Speaker 7: Mistake, this will be devastating for Michigan manufacturing, for trucking industries,
Speaker 7: for grocery stores. But the biggest people who will be
Speaker 7: affected by this will be the consumer. Right on top
Speaker 7: of record inflations, the people of Michigan are going to
Speaker 7: be hurt drastically.
Speaker 6: Do you think that why has should get involved?
Speaker 7: You know, I think you should have never gotten to
Speaker 7: this point, right. The White House touts itself as you know,
Speaker 7: mister Joe Union, Right, why did it get to this point?
Speaker 7: There's no reason it would it should have gotten to
Speaker 7: this point. But again, like many other issues, here we
Speaker 7: are today and now we're in a crisis situation. We've
Speaker 7: got to do better and be more proactive so that
Speaker 7: we don't get to this position.
Speaker 2: This is why we are the congresswoman, So I'm wondering
Speaker 2: there is an act that he can activate that would
Speaker 2: initiate an eighty day code and off perage.
Speaker 6: You think you should do.
Speaker 7: So, Yeah, I think you should take a long hard
Speaker 7: look at it. Right, we have to bring both parties
Speaker 7: back to the table. It couldn't be a worse timing, right,
Speaker 7: you have inflation, record high inflation, but also let's not
Speaker 7: forget about the devastating hurricane we had.
Speaker 2: High inflation, it's come down a little bit, price, it
Speaker 2: still elevates it.
Speaker 7: Well, places are still elevated. But it's the bottom line
Speaker 7: that counts, provided you know how to count. Right, if
Speaker 7: inflation's at one point four percent, it goes up to
Speaker 7: nine and it comes down to four four, still higher
Speaker 7: than one point.
Speaker 6: People are still struggling.
Speaker 7: People are still struggling, but also on the backs of
Speaker 7: the hurricane that we're just we've got to be able
Speaker 7: to get supplies in the necessary aid. This dock strike
Speaker 7: is not going to help that at all. So I
Speaker 7: think we should take a long hard look at it. Well,
Speaker 7: you know, and to your point, here we are, Yes,
Speaker 7: we should have never gotten here, but here we are.
Speaker 7: So we have to take a look at all the
Speaker 7: options to protect the American people.
Speaker 2: Well, we appreciate your time, thanks for being able to
Speaker 2: star in New York City. Thank you, Thank you, come
Speaker 2: back again.
Speaker 8: Soon.
Speaker 6: Republican Congresswoman Lisa McLain of Michigan.
Speaker 2: Marcus digesting fed Shad Jay Poal's message that he's in
Speaker 2: no hurry to move ahead with more rate cuts, but
Speaker 2: Noil Duatta of renomass one hundred more basis points off
Speaker 2: Easy before year end, citing the fact that unemployment is
Speaker 2: likely to continue rising and inflation continues to slow. Neil
Speaker 2: joins us now for more, Neil, welcome to the program.
Speaker 2: As always, I've written a note yesterday, just one very
Speaker 2: short line. I think captured everything. Why take the chance
Speaker 2: with inflation resolved? Neil, can you ask your own question?
Speaker 8: Well, I think when I look ahead, I do think
Speaker 8: there's additional awkward pressure here on the unemployment rate. I mean,
Speaker 8: if you look at what consumers are telling you about
Speaker 8: the jobs market, it's not like they're telling you that
Speaker 8: things are getting better. It's not even like they're telling
Speaker 8: you that things are stabilizing. So the distribution of risks
Speaker 8: with respect to the labor market are clearly skewed to
Speaker 8: the downside. Still, even after this fifty basis point move.
Speaker 8: I mean, there is some inertia in the labor market data,
Speaker 8: and so the fact that things have been weak is
Speaker 8: probably a good reason why they'll stay that way. But
Speaker 8: if you look at the Conference Board labor differential example,
Speaker 8: for example, it's clearly telling you that there might be
Speaker 8: that the unemployment rate probably keeps going up. How much
Speaker 8: of I think remain to be seen, but I do
Speaker 8: think it's probably still higher. And at the same time,
Speaker 8: core inflation has been running below two percent since May,
Speaker 8: and that's happened despite very little help from housing rental inflation. Now,
Speaker 8: I think that there's probably still additional downside with respect
Speaker 8: to rents, you know, based on what we see with
Speaker 8: things like new leases and new tenant rents, for example.
Speaker 8: But if rents begin to cooperate, then you can see
Speaker 8: continued downward pressure on inflation. So you know, my sense
Speaker 8: is that, you know, the Fed's forecasts are conditional, and
Speaker 8: you know, it's interesting to see Powell kind of toe
Speaker 8: the party line after basically exerting his will in September,
Speaker 8: you know, But my sense is, if you get a
Speaker 8: clunker on the employment report between now and the November meeting,
Speaker 8: you know, I think he'll have the ammunition that he
Speaker 8: needs to push through another fifty basis point grade.
Speaker 2: Cut and nails you said, the Chairman yesterday sounded somewhat
Speaker 2: confident of the back of recent data, as you indicated
Speaker 2: in your note earlier on today reiterating the Fed's baseline,
Speaker 2: and as you've alluded to, where you think that baseline
Speaker 2: is vulnerable is when it comes to unemployment and the
Speaker 2: labor market.
Speaker 6: Can we just push your head to Friday?
Speaker 2: What kind of numbers do you think we need to
Speaker 2: see to enable chair and pal to really assert some
Speaker 2: authority again on the committee and get them to go
Speaker 2: another fifty.
Speaker 8: Well, let's be clear. I mean, if you look at
Speaker 8: the three month trend in private peril employment, it's already
Speaker 8: running below one hundred thousand. So you know, I think
Speaker 8: it's possible with those kinds of numbers, particularly with you know,
Speaker 8: we've seen state local governments kind of slow down a
Speaker 8: little bit. I do think it's possible you get additional
Speaker 8: upward pressure on the unemployment rate, and then when you
Speaker 8: look forward to the October jobs number, I mean there's
Speaker 8: just a lot of just potential kits that that report's
Speaker 8: going to take. I mean, you have the Boeing strike,
Speaker 8: you have obviously the port strike, and then you have
Speaker 8: this natural disaster Hurricane Heleen, that's you know, displacing a
Speaker 8: lot of workers at a very sensitive time for that area.
Speaker 8: I mean, if you know Ashville, I mean their tourism
Speaker 8: industry revolves around the fall season, right, so you know,
Speaker 8: I think it's you can't rule out a really really
Speaker 8: bad number going into that. And again, yeah, does Powell
Speaker 8: want to get up there after a really weak number
Speaker 8: at the November press conference and look at the cameras
Speaker 8: and explain away the job's number based on special factors
Speaker 8: at a time when they may well be revising down
Speaker 8: their expectations of inflation.
Speaker 1: Neil Key question here, a lot of people pushing back
Speaker 1: pretty aggressively against the fact that the economy is slowing
Speaker 1: down really substantially. Torchon slock. Where is the slowdown? A
Speaker 1: lot of people pointing to Atlanta Fed's GDP now, which
Speaker 1: points to three point one percent growth in the third quarter.
Speaker 1: How does that cohere with what you're seeing, especially at
Speaker 1: a time where we're not seeing an increase in jobless
Speaker 1: claims and a lot of the other potential ancillary kinds
Speaker 1: of information are not pointing to that real negative downdraft.
Speaker 8: I mean, if things are so strong, why is the
Speaker 8: unemployment rate. Of it's a pretty simple I mean, I
Speaker 8: thought it was very interesting that Powell talked about, you know,
Speaker 8: GDP and GDI revisions, and admittedly they've been they've been positive,
Speaker 8: but one thing that's not really revised is the unemployment rate,
Speaker 8: and the unemployment rate's been climbing. And I would just
Speaker 8: point out that the unemployment rate has been rising despite
Speaker 8: this seemingly strong economy, and consumer attitudes about the labor
Speaker 8: market have been getting worse despite strong headlines on GDP.
Speaker 8: So you know, if you take that all at face value,
Speaker 8: it basically means that the economy is not growing below potential,
Speaker 8: is growing below potential, and Powell admitted that you know, look,
Speaker 8: I mean growth may not be strong enough to keep
Speaker 8: the unemployment rate from rising. If that's the case, that
Speaker 8: means that the labor markets are exerting downward pressure on
Speaker 8: the wages of those that are already working, which is disinflationary.
Speaker 8: So that's another reason for the FED to be easy.
Speaker 1: You know, Neil, I'm not disagreeing or agreeing, because ultimately
Speaker 1: we cannot know.
Speaker 6: What I find really.
Speaker 1: Interesting, and I mean this sincerely is the conviction and
Speaker 1: the idea to have the conviction to say to cut
Speaker 1: by one hundred bass points at a time where there
Speaker 1: is a huge debate over whether we could see a
Speaker 1: reacceleration of the impact of say, some of these strikes
Speaker 1: on data, making it really messy at the same time
Speaker 1: that it's potentially inflationary, at the same time that we're
Speaker 1: on the cost of potentially inflationary policies that could get
Speaker 1: implemented in the United States early next year. How easy
Speaker 1: for it is? How easy is it for you to
Speaker 1: have conviction at a time where there seems to be
Speaker 1: really bifurcated tail risks.
Speaker 8: Well, I mean, I think that every outlook is fraught
Speaker 8: with uncertainty, but I certainly don't believe the FED should
Speaker 8: be front running potential fiscal outcomes based on you know,
Speaker 8: and applying that to today's reaction function. I mean, this
Speaker 8: is about the data as it's been coming in, so
Speaker 8: you know, look, I mean conviction. I mean, I guess
Speaker 8: this is sort of tongue in cheek, but I'm I'm
Speaker 8: paid to have an opinion, and i'm and i'm you know,
Speaker 8: I'm paid to kind of give people a coherent view
Speaker 8: of the world that I think ultimately will pay dividends
Speaker 8: for them, and so you know, I think that that's
Speaker 8: that's part of where the conviction comes from. But you know,
Speaker 8: for me, it's really about what are the markets pricing
Speaker 8: in and what do I think where do I think
Speaker 8: the distribution of risks are. And to me right now,
Speaker 8: I think the idea that the Fed's just going to
Speaker 8: deliver two twenty five basis point grade cuts I think
Speaker 8: is a problem because that is conditional on a forecast
Speaker 8: that assumes you know, the unemployment rates what at four
Speaker 8: point four percent by year end, and that you see
Speaker 8: two point six percent core inflation your every year. If
Speaker 8: you get inflation prints like you did over the last
Speaker 8: few months, they'll be revising down those estimates for core PCE.
Speaker 8: And we're at four point two percent unemployment, and the
Speaker 8: things that I see, whether that be job openings coming down,
Speaker 8: whether that be hiring rates remaining weak, whether that be
Speaker 8: the conference board labor differential, all of those things kind
Speaker 8: of nudge me in the direction to say that we
Speaker 8: may be at four point four percent before you're in
Speaker 8: And like the Fed's forecasts are conditional, so to me,
Speaker 8: it's not an especially big lead. So if I'm looking
Speaker 8: at the way the markets are priced, I think it
Speaker 8: makes sense to bet that they'll end up doing a
Speaker 8: little bit more than what's priced into the full.
Speaker 2: One thing we can all agree on November seventh, Box Office,
Speaker 2: No datta.
Speaker 6: Of run mac neil, Thank you.
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