Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Lots of interesting news
Speaker 1: coming out of the UK. Prime Minister Boris Johnson steps down,
Speaker 1: so of course my question is what's next? And I
Speaker 1: honestly don't know, but our next guest does. John Author's
Speaker 1: senior editor for Bloomberg Opinion. John. It's not like they
Speaker 1: got a vice premiere just sitting there waiting to take over.
Speaker 1: They do. Do they have a vice premiere? And what
Speaker 1: does this vice premiere? Do you want me to answer
Speaker 1: that question that there's a there is a title of
Speaker 1: depty prime Minister which has no constitutional significance. Okay, well,
Speaker 1: given in the PA, there's a stop too disappointed office seekers.
Speaker 1: In this case, Dominic rob who at one point got
Speaker 1: as far as in the Foreign Secretary, was named as
Speaker 1: his deputy by Boris two or three years ago and
Speaker 1: then did actually formally act up when, as he remembered,
Speaker 1: U Boris had to go to the ICU with COVID.
Speaker 1: He has says he's not running. He really wouldn't, Dominic
Speaker 1: rob has, and he would have very little chance of
Speaker 1: winning anyway. So there is this availability of he is
Speaker 1: a convenient guy that they can tap to be a
Speaker 1: caretaker prime minister, given that a lot of Conservatives now
Speaker 1: one Boris out of swift leest by the way it possible, John,
Speaker 1: at this point we should make clear to those who
Speaker 1: aren't Brits or political scientists that it's a system where
Speaker 1: you vote for the party, not the person. Right. So um, yes,
Speaker 1: someone asked me earlier, how can Boris leave and be
Speaker 1: replaced by a Tory leader. Doesn't the opposition get to
Speaker 1: step in now or don't they have a general election?
Speaker 1: And that's not the case. No, no, no, he's been arguing,
Speaker 1: And I think this shows personally who chose that he
Speaker 1: really doesn't quite understand the ways his own country's political
Speaker 1: way of doing things. That he has a mandate. Certainly,
Speaker 1: his popularity his personality helped the Conservatives win the nineteen
Speaker 1: general election. That's true, but no, he does not have
Speaker 1: a personal mandate each individual MP has a mandate to
Speaker 1: vote for somebody to be prime minister as they see fixed.
Speaker 1: There's plenty of examples in British history of prime ministers resigning,
Speaker 1: standing down between elections and their the MP's in their party.
Speaker 1: Tuesday somebody, it was one of the most famous ones,
Speaker 1: Blair and pretty Blair standing there for Gordon Brown and
Speaker 1: then both the last two Conservative prime ministers took over
Speaker 1: in mid term without general electure, both to reason and
Speaker 1: and Boris himself. So there's nothing there's nothing unusual about
Speaker 1: about about a prime minister standing down and being replaced
Speaker 1: by his party. How about the whole concept of the
Speaker 1: caretaker prime minister? Is that just a function of what
Speaker 1: popularity you have left whether you can remain a caretaker
Speaker 1: p m ntil there's another election. I know he's Rob
Speaker 1: is not going to be a leader to to go
Speaker 1: into the election. No, I think Paul means Johnson wants
Speaker 1: to stay as the prime minister Protram until yes he does.
Speaker 1: And I my opinion, my judgment from you know, from Afar,
Speaker 1: but I don't think he's going to be allowed to
Speaker 1: do that. UM. Basically the problem for him and the
Speaker 1: fact that he showed really no contrition. Never used the
Speaker 1: word sorry in his speech earlier. The problem for him
Speaker 1: is that this isn't about some policy disagreement or some
Speaker 1: political defeat. It's about the over majority of his colleagues saying,
Speaker 1: we don't trust you. You are not personally honest enough
Speaker 1: to be our leader. It's not even the economy is stupid.
Speaker 1: They just think he's a liar. Exactly we we we
Speaker 1: don't trust you, You're a liar. Go And in these circumstances,
Speaker 1: if the basis f you're saying, Theresa May can carry
Speaker 1: on until they chosen a new leader. If she's resigned
Speaker 1: because they know people don't trust her to to make
Speaker 1: a Brexit deal, so she's a terribly weakened position, but
Speaker 1: she can carry on being the Prime minister until the
Speaker 1: new guy gets David Cameron can announce his resigning as
Speaker 1: soon as the referendum happens, but not actually stand down
Speaker 1: until they've chosen somebody new. But in this case it's
Speaker 1: not clear that you can do that because it's nothing
Speaker 1: about politics per se. It's about you personally shouldn't be
Speaker 1: the Prime minister. You are not for this job, and
Speaker 1: we don't trust you, which is a remarkable state of affairs,
Speaker 1: but it does make it difficult for conservative in peace
Speaker 1: to serve answer and for the for a matter of months,
Speaker 1: especially if THEE doesn't want to step up. Now you've
Speaker 1: got to figure out who. So it leaves a lot
Speaker 1: of questions, um unanswered, John, just quickly on the market.
Speaker 1: We've only got about thirty seconds, are we Is this
Speaker 1: rally like a reverse ferret here? What's going on? But
Speaker 1: rally in the pounds or no? No? In in markets?
Speaker 1: I mean do we just don't. We don't believe the
Speaker 1: FED is going to fight inflation more than a recession.
Speaker 1: I think basically there was an immense shock created by
Speaker 1: the pandemic, which has created a much shorter economic cycle
Speaker 1: than usual, And there is an immense shock created by
Speaker 1: the fact that at this point nobody is sure they
Speaker 1: really do believe the feds guidance after two reverse ferrets
Speaker 1: by the FED uh in quick succession. Therefore, it's a
Speaker 1: natural consequence of the market will gine call over the place?
Speaker 1: All right? I don't. I don't think there is any
Speaker 1: clear cut reason to think that, yeah, the FED will
Speaker 1: fold any more than there was for respect. I recommend
Speaker 1: to listeners who are wondering what the heck a reverse
Speaker 1: faret is. Yes, to go on Bloomberg dot com and
Speaker 1: read John's column. Or if you have a Bloomberg terminal
Speaker 1: in front of you, type ni authors and you can
Speaker 1: read a reverse ferret gets up markets trousers by John Authors.
Speaker 1: Now we're bringing Massa Takeda. He's a portfolio manager for
Speaker 1: the Hennessy Japan Fund and this has been, uh, to
Speaker 1: my mind, one of the most interesting stories that doesn't
Speaker 1: get the coverage it deserves. Let's give it. The Bank
Speaker 1: of Japan is insistent that it's gonna hold rates to
Speaker 1: a quarter percent or lower, and the market mr market
Speaker 1: is testing them out. Now traditionally this trade is called
Speaker 1: the widow maker. You short jgbs, you short the end,
Speaker 1: and so many investors have gotten burned that it's earned
Speaker 1: that moniker Massa Takeda, Are you one of those investors
Speaker 1: that's trying this again? Uh No, I'm just make fenty
Speaker 1: vibes to conclupanies. Well, what do you think about the
Speaker 1: Bank of Japan's will to hold out against the market?
Speaker 1: I mean, can they keep it uh pegged it a
Speaker 1: quarter percent? Or will they have to let it slide
Speaker 1: like the Swiss National Ank did a couple of years ago.
Speaker 1: Um well, it's hard to tell, but it seems like
Speaker 1: a plank of plan is they're very much committed to
Speaker 1: the zero right policy and we have to control um.
Speaker 1: Now they're in a dilemma. Obviously, if they choose to
Speaker 1: raise rates, then of course it's going to hurt the economy.
Speaker 1: We're just you know, coming out of the pandemic. Um.
Speaker 1: So it's there's still their fragile um if they don't
Speaker 1: choose to raise rates. But then um, the yam will
Speaker 1: continue to depreciate on lightening interest rate differential, and that's
Speaker 1: going to also drive inflation for the so and that
Speaker 1: that inflation isn't going to be good for the equality either.
Speaker 1: So a BAN, I think it is a very tricky
Speaker 1: situation right now. Um So that's that's that's my take
Speaker 1: on just just pointing out right now we're at a
Speaker 1: hundred thirty five seventy two, which is we're having around
Speaker 1: the low. The last time we saw this was you know,
Speaker 1: long term capital management, yep, exactly. I'm looking at the
Speaker 1: one year chart for the Japanese end. We started the
Speaker 1: year are year ago twelve months ago. What about one
Speaker 1: ten UH now are one thirty five such as significant weakening?
Speaker 1: Must I love to get just your overview based upon
Speaker 1: your experience of the folks you talked to in Japan.
Speaker 1: How has the pandemic impacted Japan just broadly defined, and
Speaker 1: how has it impacted the economy and and how are
Speaker 1: folks they're dealing um. Obviously economy was severely damaged and UM.
Speaker 1: And also it has been not as resilient as as
Speaker 1: we hoped it as we hoped UM and still enhanced.
Speaker 1: The economy is in a very fraudule the state. So
Speaker 1: as a call photo manager, I mean I'm a I'm
Speaker 1: a japan UM photo manager. But my UH investment style
Speaker 1: is to invest in great companies that have global footprints.
Speaker 1: So trying not to put all our eggs in one basket, um,
Speaker 1: you know, one geography UM and they loven't great companies
Speaker 1: out there in Japan that have a strong presence UM worldwide.
Speaker 1: And if if there's going to be you know, a
Speaker 1: strong uptake in Japan, our port companies should also benefit
Speaker 1: from it. So that's my sort of defensive investment strategy
Speaker 1: at the moment. So talk to us about maybe some
Speaker 1: names that might fit that. Uh, you know the kind
Speaker 1: of framework that you're you and your team are doing
Speaker 1: some work on right now. Yeah. So you know, our
Speaker 1: our investment mantra is to invest in great business with
Speaker 1: exceptional management attractive class. So, um, you know we uh
Speaker 1: growth growth manager. We're in the growth management bucket. And
Speaker 1: obviously a market rotation from growth of value has been
Speaker 1: has taken a toll on us. Um that we continuously
Speaker 1: remain invested in in our long term holdings and growth needs.
Speaker 1: But at the same time, we've been actively searching for
Speaker 1: what I would call growth names in disguise, and what
Speaker 1: I mean by that is companies whose growth prospects are
Speaker 1: just as strong as any pure growth name. We're talking
Speaker 1: about learning, throw a Group, Campus and plus, but they're
Speaker 1: trading out of value stuff about multiples due to its
Speaker 1: perceptions in the market. And I would highlight the Touch
Speaker 1: as an example. And then there's another example, another type
Speaker 1: of growth in disguise where growth growth earn if growth
Speaker 1: rate might be in the med single digits, but they
Speaker 1: come with significant ability to buy back shares and sub
Speaker 1: division news and if you add am all up, you
Speaker 1: can plus return as a showholder. And I would highlight
Speaker 1: general insurance companies as as as primary example. I just
Speaker 1: want to quickly ask you about the election House of
Speaker 1: Counselor's election on Sunday. What are the market implications of that? Uh?
Speaker 1: What could they be? Well, it seems like the ruling
Speaker 1: party is going to win the majority ships um and UM.
Speaker 1: I think you know right now Prime Minister Kishi Daum
Speaker 1: he's been promoting the so called Japan's New capitalism and
Speaker 1: the market was once in spooks by the prospects of
Speaker 1: Kishida potentially introducing not to shareholder not extridly. Um. Policing
Speaker 1: is just like higher how about the games tax ridge
Speaker 1: and middle on bridge hikes. Um. So depending on what
Speaker 1: policy imagers will will come out going forward, they may
Speaker 1: have some many percussions in the market, but I would
Speaker 1: look at it more positively. There. You know, this is
Speaker 1: really a mark to shift from showhold of friendly capitalism
Speaker 1: to sustainable growth capitalism. So um, you know we should
Speaker 1: take it as a positive movement. All right, Massa, thank
Speaker 1: you so much for joining us there. Massa takeda portfolio
Speaker 1: manager for the Hennessy Japan Fund, getting an update on
Speaker 1: the developments out of Japan, and again elections matches pointed
Speaker 1: out coming up out in sun Valley, Idaho at this
Speaker 1: time of year. Every year, the good friends at Allen
Speaker 1: and Company, the investment bank hold their conference. Were all
Speaker 1: the big tech media, telecom, really cool kids gather uh
Speaker 1: to just talk deals, talk business, talk, what's going on
Speaker 1: in the world, and of course we send out our
Speaker 1: ace reporter. Ed Ludlow is a West Coast correspondent for
Speaker 1: Bloomberg News. Ed, you're in sun Valley. You probably went
Speaker 1: to the Soul last night for a couple of cocktails.
Speaker 1: Hopefully you bumped into some media moguls. But what are
Speaker 1: you hearing out there in beautiful sun Valley? What's the
Speaker 1: theme kind of this year? Yeah, you know, Tom Keating
Speaker 1: just framed it as the Ludlow Humility Meter there television,
Speaker 1: and at first I thought, oh goodness, here we go.
Speaker 1: But then you know, that is pretty appropriate that all
Speaker 1: the conversations I'm having on the record on boom Bow
Speaker 1: Television and in the corridors behind the scenes, is that
Speaker 1: there's kind of dis acceptance of the world is very
Speaker 1: different from twelve months ago and pre pandemic. There's public
Speaker 1: market volatility, you know, there's zeroed in on the inflation story, recession.
Speaker 1: But you know, everyone is quite bullish here. You know,
Speaker 1: there's a lot of optimism. They're clearly enjoying each other's company.
Speaker 1: But remember this is a TMT conference where the focus
Speaker 1: is deals and meeting your clients, your customers, your bankers,
Speaker 1: and everyone is kind of acknowledging the problems out in
Speaker 1: the world but saying there are real opportunities in these
Speaker 1: sectors to deploy capital. And I think that's really interesting.
Speaker 1: So what are the biggest deals that we're looking at
Speaker 1: right now? What are people talking about there? You know,
Speaker 1: I think the valuations have come down a lot, particular
Speaker 1: in media and telecoms companies, right you know, the big
Speaker 1: king of the hill is the phrase I used this
Speaker 1: year is is Warner Brow's Discovery CEO David Doust laugh,
Speaker 1: you know that merger was successful. Um, he is kind
Speaker 1: of point and optimistic. And it's funny because last year Netflix,
Speaker 1: Read Hasting S Sanda Rose were kind of those star
Speaker 1: people that everyone wanted to be too. But there's this
Speaker 1: idea that valuations have come down. The consumer has so
Speaker 1: much choice on the streaming side, and you do wonder
Speaker 1: whether there will be further consolidation. One really interesting point
Speaker 1: some sources made me last night, and by the way,
Speaker 1: I did go to the Pioneer Saloon. It was excellent. Saturday,
Speaker 1: according to sources, is the day that a lot of
Speaker 1: the smallest startups and interesting founders have been invited present.
Speaker 1: And one source, a long time attendy and investor, said
Speaker 1: to me that he actually invested, has invested over the
Speaker 1: years in many of those startups that present on the Saturday.
Speaker 1: You know, they're all kinds of people from healthcare, biotech, transport, mobility, tech,
Speaker 1: and they get an opportunity to stand in front of
Speaker 1: this just incredible room of people and make their pitch
Speaker 1: behind closed doors. And I'm told with absolute certainty that
Speaker 1: the twelve months that follow a lot of those guys
Speaker 1: do receive investments, you know. And one of the speakers
Speaker 1: that I think a lot of folks are in participating
Speaker 1: hearing from, assuming he shows up as Elon Musk because
Speaker 1: there's a big, big m and a trade out there
Speaker 1: that he's involved in with Twitter, that is really you know,
Speaker 1: nobody knows whether this thing is going to go through
Speaker 1: or not, and nobody really knows what he's thinking anywhere.
Speaker 1: I mean, I don't know, So we'd love to hear
Speaker 1: from Mr musk Is that's still the plan to as
Speaker 1: a former m and a banker in the TMT space,
Speaker 1: if someone if the richest man in the world made
Speaker 1: an offer for a company at would you expect it
Speaker 1: to be trading at thirty nine? No? Absolutely not, And
Speaker 1: so that kind of tells you the market's telling you're
Speaker 1: right there that it's they don't view it as a
Speaker 1: credible deal. But what do you expect to hear ed
Speaker 1: from Elon musk Iffen when he shows up? So sources
Speaker 1: tell me that he is showing up. We're not sure
Speaker 1: when we thought it would be today Thursday. Sources also
Speaker 1: tell me that he is making the Saturday prime time
Speaker 1: address and now that's that's a slot usually reserved for
Speaker 1: one Warren Buffett traditionally at the Allen and Co. Conference.
Speaker 1: So I thought that was interesting. Um, wait, Warren Buffett
Speaker 1: like always does it. Warren Buffett traditionally speaks on the
Speaker 1: Saturday and you know the Oracle of Omaha, it's his
Speaker 1: moment where he gives his world view behind closed doors.
Speaker 1: You know a lot of Allen and Co. Attendees I've
Speaker 1: spoken to in private say, you know, this is why
Speaker 1: people stay through the weekend. You know this is this year.
Speaker 1: By the way attendees are allows bring their families. You
Speaker 1: have the extra added issue of childcare and keeping people
Speaker 1: entertained in one of the most beautiful spots on Earth.
Speaker 1: It's very hard. It's a serious issue for Elon Musk,
Speaker 1: now right with nine childious issue. We'll get to that
Speaker 1: that basically, you know, I have spoken to people about it.
Speaker 1: They are talking about it in the corridors. Ned SEAgel
Speaker 1: Twitter CFO is here. I asked him. I shouted at him, frankly,
Speaker 1: are you going to meet with Elon? And he smiled
Speaker 1: and put his index finger in the air showing one digit.
Speaker 1: But and you know I took that to mean one
Speaker 1: time he'll meet with him. I have no idea what
Speaker 1: he was saying. We haven't seen Tara Gagl who's the
Speaker 1: Twitter CEO. I have had a number of conversations people
Speaker 1: that say Elon Musk can't get out of this. The
Speaker 1: reverse termination fee is a distraction. You can't bank on
Speaker 1: him just being able to pay a billions dollars to
Speaker 1: walk away. One source made a really interesting point. If
Speaker 1: your Twitter and you want to fight this. To Belon
Speaker 1: Musk walks away, you really going to go to court
Speaker 1: for a decade, you know, because that's how long it
Speaker 1: could take. So I think the consensus here is that
Speaker 1: he could come in with a lower offer price. And
Speaker 1: if your Twitter share if you're an existing Twitter shareholder,
Speaker 1: you would bite somebody's hand off for that deal any
Speaker 1: time in the last two years, right, you just would
Speaker 1: like So I think that a lower price for those involved,
Speaker 1: just to get it done would be a good outcome
Speaker 1: based on what you know, the conversations I'm having. So,
Speaker 1: Elon Musk has another set of twins that we didn't
Speaker 1: know about, and apparently one of his kids has like
Speaker 1: disowned him. Really, so how many I guess nine unless
Speaker 1: you don't count um his one of his kids just
Speaker 1: changed her name you know, and gender and said she
Speaker 1: wants nothing to do with her father. Probably is this
Speaker 1: getting to no? Okay, So a lot to back here,
Speaker 1: But there was a business inside a report that Elon
Speaker 1: Musk had twins who are now eight months old, with
Speaker 1: the Neuralink employee, and that was discovered through court filings
Speaker 1: where the NEURALNK employee and Masque wanted to have the
Speaker 1: names changed so that it reflected the Musque name as well.
Speaker 1: But why didn't they just put that on the birth certificate.
Speaker 1: I don't get that. Usually when the kid's born, you
Speaker 1: just put the father's name down. And well, two things.
Speaker 1: I'm yet to be a father, But I also don't
Speaker 1: pretend to know what is going on inside. Elon must
Speaker 1: mind and the actions that he takes at any time. Um.
Speaker 1: But according if this report is to be believed them,
Speaker 1: you know, we've asked Musque about it. He hasn't replied.
Speaker 1: We've asked Neural Link about it, they haven't replied. Then
Speaker 1: Musk does currently technically have nine children? All right, We've
Speaker 1: got to keep up to date on that stuff. But
Speaker 1: that just came across. I mean, we don't, Actually we don't.
Speaker 1: It's silly, gossipy stuff. And I guess CEOs can have
Speaker 1: as many children as they want, just like a normal person. Um.
Speaker 1: And he has certainly got the money to support them. Well,
Speaker 1: he's got a he's got a policy. It's just fun
Speaker 1: to keep up with Elon. He thinks there needs to
Speaker 1: be more people on the planet, right, he says, yeah,
Speaker 1: Yet I saw a tweet from him today that said
Speaker 1: the US has been underpopulated for like fifty years, so
Speaker 1: it's against consensus. I think. All right, all right, Ed Ludlow,
Speaker 1: West Coast, corresponding Bloomberg News. He is our reporter on
Speaker 1: the ground in sun Valley. We get talked about Rivivian.
Speaker 1: Next time we get on, we gotta talk about Rivian.
Speaker 1: Yesterday they boosted their UH production target for the second quarter. Right,
Speaker 1: stop us up? Not good stuff, ed Lolo out there
Speaker 1: at sun Valley, Idaho. Let's get right to it. Danielle
Speaker 1: DeMartino Booth, CEO of Quill Intelligence, also at the Dallas
Speaker 1: FED for a while. So when we talk interest rates,
Speaker 1: when we talk FED, boom our go to choice here
Speaker 1: and daniel nothing says that we're getting back to normal
Speaker 1: than Danielle DeMartino Booth in our Bloomberg, in our actor
Speaker 1: broker studio. So what is the Fed? Wait? How was
Speaker 1: the flight? First of all, how is you travel? Because
Speaker 1: last time Paul came here from Texas, his flight was canceled.
Speaker 1: He was forced to stay at a water park all day. Yes, well,
Speaker 1: knock on wood because I've got to get on another
Speaker 1: flight tomorrow. But it was seamless now, but one in
Speaker 1: front of me was canceled because of no crew. That's
Speaker 1: the thing's all right. So what let's assume that there's
Speaker 1: a crew at the Federal Reserve. Are they going to
Speaker 1: raise fifty basis points? Seventy five basis points? What are
Speaker 1: you thinking? So two days after the FED announces, we're
Speaker 1: probably going to get our second negative print on personal consumption, expenditures,
Speaker 1: personal income, and spending comes out the Friday. At it's important,
Speaker 1: it's very important for it. In fact, they're likely to
Speaker 1: have that data in hand when they announced, and if
Speaker 1: it's negative, I would argue, counterintuitively that they're gonna go
Speaker 1: for seventy five basis points to get it into the can. Yeah.
Speaker 1: I actually have a bet right now with Paul and
Speaker 1: Ira Jersey. If they do seventy five, Paul has to
Speaker 1: drive me down to Princeton and Ira has to buy
Speaker 1: us dinner. I started feeling, honestly a little bit nervous
Speaker 1: about that bet yesterday reading these fedman it's that everyone
Speaker 1: said we're hawkish, and I got this feeling in my
Speaker 1: stomach like I could lose this bet. I don't know why,
Speaker 1: but it's not a sure thing. It's nothing is a
Speaker 1: sure thing, and I think that markets interpreted the minutes
Speaker 1: as being a time stamp, which sometimes markets don't. Sometimes
Speaker 1: markets read in that the Fed is massage the minutes
Speaker 1: after the fact if they have a reason to do so.
Speaker 1: But I think a lot of people said, you know
Speaker 1: what those minutes were time stamp before the Atlanta Fed
Speaker 1: printed negative two point one percent for the second quarter,
Speaker 1: before SMP Global said the second quarter was gonna be
Speaker 1: negative one point five um. And that's telling you something actually,
Speaker 1: because the Atlanta Fed GDP now model kind of broke
Speaker 1: down during COVID, and now that we've got all the
Speaker 1: COVID noise out of the data, it's coming right back
Speaker 1: up to where some of the best models on the
Speaker 1: street are and they're converging. And that that tells you
Speaker 1: that a lot of it tells you why a lot
Speaker 1: of cell side, if it's economist right now, are saying
Speaker 1: it's going to be a technical recession but not a
Speaker 1: real one. I mean, it would have to be really
Speaker 1: far off for there to be growth though, right We're
Speaker 1: very likely to see two quarters of contraction, right, I mean,
Speaker 1: I'm saying that's a recession, but it's a it's a
Speaker 1: technical one, but not not a real one, everybody argues
Speaker 1: with the Gary Shillings. No, no, NBR has to come
Speaker 1: out and say it's a recession. And I think nb
Speaker 1: ER will come out and say it's a recession like
Speaker 1: in twelve months or so, because there's a typical twelve
Speaker 1: to eighteen month leg. That's when they timestamped these puppies.
Speaker 1: But again, we've had credit card spending very strong, We've
Speaker 1: had we've had consumers blow through their savings, so we've
Speaker 1: propped up consumption some would say somewhat artificially, and now
Speaker 1: we're heading for a consumption cliff that's just now starting,
Speaker 1: so that that can prolong the recession. I have a listener,
Speaker 1: writes in I think he's watched you speak a few times,
Speaker 1: so he's a big fan. And he points out that
Speaker 1: are forecasts have been all over the map about what
Speaker 1: the Fed is gonna do, about whether we're gonna have
Speaker 1: a recession, how shallow it's going to be, how short,
Speaker 1: And he points out we haven't see seeing a quantitative
Speaker 1: tightening yet, which is a huge question mark. We haven't
Speaker 1: seen the downward revisions and earnings right analysts on the
Speaker 1: sales side have still left um their revisions are their
Speaker 1: forecast sky high. We haven't seen inflation come down, we
Speaker 1: haven't really seen job losses. This is all too comma,
Speaker 1: it is, and it's all building up in this system.
Speaker 1: And yet when you follow every Friday after the close,
Speaker 1: the Federal Reserve publishes the highth eight and in in
Speaker 1: there there is a very good, reliable gauge of liquidity
Speaker 1: and it has been negative for three months in a
Speaker 1: row prior to QT, and that people need to understand.
Speaker 1: And Muhammadarian has done a very good job of articulating
Speaker 1: where we are right now in the cycle, that we're
Speaker 1: heading from recession shock to a liquidity shock, and that
Speaker 1: really changes the game. So right now I think that
Speaker 1: we're still in the midst of yet another bearer market rally. Alright,
Speaker 1: So is this Federal Reserve. I've always thought of it
Speaker 1: as kind of a balancing act between fighting and inflation,
Speaker 1: yet not pushing it into a action. But now some
Speaker 1: people are saying they're really focused on inflation, but yet
Speaker 1: some people say they're really focused on keeping us out
Speaker 1: of a recession. Is it a balancing act or do
Speaker 1: you feel like they have a bias. It is a
Speaker 1: balancing act, but it's a less balanced act headed into
Speaker 1: this close to an election, and so federals are officials
Speaker 1: are really there's an existential crisis going on as it
Speaker 1: pertains to September because it's so close to the election.
Speaker 1: But surely this independent body for Heaven won't risk its
Speaker 1: credibility for the political status quo rights not. It's only
Speaker 1: been politicized since Greenspan started leaking information on TERMP to
Speaker 1: bond trading desk. But other than that, the play, the
Speaker 1: play was great, Mrs Lincoln, I uh, yeah, it's pretty crazy.
Speaker 1: By the way, why isn't Mohammed running the Fed? Why
Speaker 1: isn't somebody he made the right calls for the last
Speaker 1: couple of years and no one was listening. Apparently he's
Speaker 1: in England, He's not that far away, and his voice
Speaker 1: is pretty loud and his point. He's had some pretty
Speaker 1: important as well, and he's had some great calls, and
Speaker 1: he really has lined up the domino as well and
Speaker 1: warned us one step after another. We've got an inflation shock.
Speaker 1: Now we're gonna have a recession shock. Now we're gonna
Speaker 1: have a liquidity shock. He's been there the whole time,
Speaker 1: and actually because j Powell founded the Industrials Group at
Speaker 1: the Carlisle. He speaks to people in this world. He
Speaker 1: speaks to people in private equity. He knows that banks
Speaker 1: are sitting on north of fifty billion dollars of loans
Speaker 1: that they can't get priced. J. Powe speaks to these people.
Speaker 1: He knows that liquidity in the system is seizing up.
Speaker 1: And I think that's why they treat quantitative tightening like
Speaker 1: the boldem word. It's like, don't talk about it, just
Speaker 1: don't don't, don't talk, don't bring it up. So don't
Speaker 1: we see it's Bruno, It's Bruno. Now we don't talk
Speaker 1: about Bruno. We don't know, no, no, what does Liudo
Speaker 1: look like to every day folks like me? Liquidity shocks
Speaker 1: looks like four out of five people saying they're afraid
Speaker 1: of losing their job. They start to see bankruptcies, and
Speaker 1: we are starting to see bankruptcies. We're starting to see
Speaker 1: some of the vestiges of the industrial recession that we're in.
Speaker 1: In fact, if you looked at today's jobless claims, the
Speaker 1: state with the fastest rising and the greatest extent is Michigan. Michigan,
Speaker 1: we've and you know what there's apparently a semiconductor glut
Speaker 1: in the making, So we're gonna have tell that to
Speaker 1: my Chevy Silverado sitting in I have ordered a Shelvy Silverado.
Speaker 1: I've been waiting months and months for it. It's built
Speaker 1: at a factory in Mexico, but they won't ship it
Speaker 1: to me because it doesn't have the right chips. They're coming,
Speaker 1: They're coming, and we're gonna be talking about life, housing
Speaker 1: and oversupply of cars in a year. All right, Danielle,
Speaker 1: thank you so much for joining us. Daniel DeMartino Booth
Speaker 1: should let's take a picture and we'll tweet that. We'll
Speaker 1: do that. CEO Chief Strategist Quill Intelligence, also form advisor
Speaker 1: at the Federal Reserve Bank of Dallas. Thanks for listening
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
Speaker 1: to interviews of Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Leer in
Speaker 1: nineteen seventy three and on ball Sweeney I'm on Twitter
Speaker 1: at pt Sweeney. Before the podcast, you can always catch
Speaker 1: us worldwide at Bloomberg Radio