WEBVTT - Bloomberg Surveillance TV: April 29th, 2026 0:00:02.360 --> 0:00:06.720 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.640 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.840 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.320 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:38.080 Terminal and the Bloomberg Business App. George Concrvis of MUFG writing, 0:00:38.120 --> 0:00:39.960 It's one thing to climb the wall of worry, it's 0:00:40.040 --> 0:00:42.760 yet another to be in denial of the reality still 0:00:42.800 --> 0:00:45.840 to come. We think broader financial markets have overshot again 0:00:46.159 --> 0:00:50.000 and are at risk of serious disappointment. George joins us 0:00:50.000 --> 0:00:51.959 now from More. George, Good morning, Good morning. Good that's 0:00:51.960 --> 0:00:53.639 a bearish way to start this morning, sir. 0:00:54.160 --> 0:00:57.000 It's a bearis way to start you potentially Powell's last 0:00:57.000 --> 0:00:58.960 FED day, and we'll see if you can change that 0:00:59.000 --> 0:01:01.160 kind of bears us into some sort of optimism here. 0:01:01.200 --> 0:01:02.880 But I think it's the right call. 0:01:03.000 --> 0:01:04.560 What do you think we're going to be disappointed by. 0:01:04.959 --> 0:01:07.160 I think we're gonna be disappointed by a number of things. One, 0:01:07.640 --> 0:01:09.360 if you go back in the analogs of history and 0:01:09.400 --> 0:01:11.360 if you look at again, people don't like to go 0:01:11.400 --> 0:01:13.320 back to two distinct periods two thousand and eight and 0:01:13.360 --> 0:01:16.039 two thousand. People just don't like those two years. And 0:01:16.080 --> 0:01:18.240 you can have good news, and you can have markets 0:01:18.480 --> 0:01:20.280 and then a high note and then kind of top 0:01:20.319 --> 0:01:23.039 tick things, and so earnings really do have to deliver today, 0:01:23.120 --> 0:01:25.240 and you have a lot of optimism already priced in. 0:01:25.360 --> 0:01:28.600 We have valuations again back to streaming high levels. It's 0:01:28.600 --> 0:01:30.240 all about the equity market. It's all about the tech 0:01:30.280 --> 0:01:33.720 sector within the equity market, and one could argue that 0:01:33.720 --> 0:01:35.880 that makes the economy much more fragile each time we 0:01:35.959 --> 0:01:38.960 do this. We are so dependent on stocks never going down. 0:01:38.920 --> 0:01:42.360 A protiate A Giants legendary investor speaking Saint Patrick hashonas 0:01:42.360 --> 0:01:44.360 say in a podcast and saying this two thousand was 0:01:44.400 --> 0:01:47.480 the easiest band market I've ever seen in my whole life, 0:01:47.640 --> 0:01:50.680 went on to say, it's got so many similarities to 0:01:50.840 --> 0:01:53.600 right now. What are the similarities to right now? 0:01:53.880 --> 0:01:56.440 The similarities are a concentrated kind of view, the four 0:01:56.520 --> 0:02:01.640 year around a new new technology like AI. Again, the 0:02:02.160 --> 0:02:07.680 sort of kind of liquidity that created meme stock like investing. 0:02:07.720 --> 0:02:09.800 All of this is kind of very similar. We use 0:02:09.880 --> 0:02:12.120 different ways of expressing what was happening back then, but 0:02:12.160 --> 0:02:13.880 it was bubble like conditions and there's I think a 0:02:13.919 --> 0:02:14.919 repeat of that happening now. 0:02:15.040 --> 0:02:17.840 You said something that I find really interesting, which is 0:02:18.440 --> 0:02:21.200 this market going up is one of the big reasons 0:02:21.200 --> 0:02:24.320 why people keep being bullish. It's almost like a Ponzi 0:02:24.360 --> 0:02:26.799 scheme of bullishness, Right, the market goes up, so you 0:02:26.840 --> 0:02:28.600 feel bullish, so you put your money in the market 0:02:28.600 --> 0:02:31.359 and it goes up. How big of a pillar is 0:02:31.400 --> 0:02:34.120 that to the overall recovery, to the resilience in the 0:02:34.240 --> 0:02:38.359 US economic data, to really underpin the justification to keep 0:02:38.400 --> 0:02:40.120 going into stocks that they can keep going up, that 0:02:40.120 --> 0:02:41.919 then propping up the economic condition. 0:02:42.040 --> 0:02:43.920 Yeah, it is kind of a vicious kind of cycle 0:02:44.040 --> 0:02:45.960 up the question. We haven't really felt the vicious cycle 0:02:45.960 --> 0:02:48.200 on the way down, largely because there's really no net 0:02:48.360 --> 0:02:51.639 sellers or real sellers, and most large investors have to 0:02:51.639 --> 0:02:54.040 be fully invested to kind of participate with the upside, 0:02:54.120 --> 0:02:55.560 and when they do try to head they use they 0:02:55.639 --> 0:02:57.880 use the options market, which then creates these sort of 0:02:57.919 --> 0:03:00.840 squeezes on gamma on options like so it creates this 0:03:00.880 --> 0:03:03.600 weird dynamic that's kind perpetual until one day it's not. 0:03:03.840 --> 0:03:04.639 We haven't felt that yet. 0:03:04.680 --> 0:03:07.679 I guess the biggest counterpoint to that is potentially we've 0:03:07.680 --> 0:03:11.480 seen every single potential puncture point to that. I mean, well, 0:03:11.480 --> 0:03:15.320 you name it, high oil prices, high bond prices, uncertainty 0:03:15.360 --> 0:03:19.480 at the Federal Reserve, political uncertainty, hot wars, I mean, 0:03:20.480 --> 0:03:23.480 all sorts of concerns. Why hasn't any of that been enough? 0:03:24.240 --> 0:03:26.480 I mean, like they think the market structure has clearly changed. 0:03:26.480 --> 0:03:29.120 I mean, there's been well documented the passive flow. That's 0:03:29.160 --> 0:03:31.040 why I've always looked at the jobs market as the 0:03:31.040 --> 0:03:33.480 most critical component. People have jobs that contribute to the 0:03:33.520 --> 0:03:35.880 four to one case. It keeps them the system going right. 0:03:36.280 --> 0:03:38.440 I think that's why it's so critical that we're at 0:03:38.480 --> 0:03:41.440 this interesting inflection point potentially that if AI is really 0:03:41.440 --> 0:03:43.400 that good, it's going to hurt the jobs market over time, 0:03:43.440 --> 0:03:45.400 at least in the short term I think will meetium 0:03:45.400 --> 0:03:48.280 shortter meeting term, and as you retool the economy around that, 0:03:48.560 --> 0:03:49.960 you might lose like AI is not going to be 0:03:50.000 --> 0:03:51.880 contributing to four to one case. You know, they're going 0:03:51.920 --> 0:03:54.600 to be replacing, Like if you start like doing windfall 0:03:54.640 --> 0:03:59.480 taxes at corporations. This is a really interesting crossroads. And 0:03:59.520 --> 0:04:01.920 I mean, you're the totality of all these things will 0:04:01.920 --> 0:04:04.160 start to be like a burden on the economy at 0:04:04.200 --> 0:04:06.440 some point. It's that last straw that brings the camels. 0:04:06.480 --> 0:04:08.360 Bet aren't we already doing some of that when the 0:04:08.360 --> 0:04:11.080 President comes out and says tech companies need to basically 0:04:11.120 --> 0:04:12.800 subsidize consumer's energy bills. 0:04:14.000 --> 0:04:16.320 Look, I mean, I think there's a there's going to 0:04:16.320 --> 0:04:18.800 be a need for it's kind of cost sharing load 0:04:18.800 --> 0:04:20.200 sharing for sure in the future, And. 0:04:20.160 --> 0:04:22.120 You think it's going to be more of a burden 0:04:22.279 --> 0:04:24.120 on corporate America to check that out. 0:04:24.160 --> 0:04:27.400 Look, ultimately, you know how this all shapes out. I 0:04:27.440 --> 0:04:28.920 really don't know. No one knows the future on how 0:04:28.960 --> 0:04:31.320 this works out. It's going to depend on future administrations 0:04:31.320 --> 0:04:34.279 more so than anything else. But I feel pretty confident 0:04:34.360 --> 0:04:36.400 both in this election cycle and in twenty twenty eight, 0:04:36.680 --> 0:04:38.360 AI is going to be on the ballot box. 0:04:38.760 --> 0:04:40.520 What do you think it is this year before we 0:04:40.560 --> 0:04:42.919 get to twenty eight, the shape this market out of 0:04:42.960 --> 0:04:44.279 what you believe is denial. 0:04:45.080 --> 0:04:46.760 I mean, I think look, I mean the front and 0:04:46.800 --> 0:04:48.839 center is the oil price, and I think just the 0:04:48.880 --> 0:04:51.279 fact that we've been into denial. The biggest denial is 0:04:51.279 --> 0:04:54.440 that somehow we can turn on and get production back, 0:04:54.480 --> 0:04:57.080 that we can kind of replace all this inventory that's 0:04:57.120 --> 0:04:59.400 been depleted. And as we're going through that process, I 0:04:59.440 --> 0:05:01.600 think it's going to really be a kind of rude 0:05:01.600 --> 0:05:03.440 awakening for markets, that it's going to be a drag 0:05:03.480 --> 0:05:04.720 on growth in the second half. 0:05:04.880 --> 0:05:06.560 We speak to shoe A Kaiser said, Hey, this is 0:05:06.600 --> 0:05:08.720 something he's been talking about coming into this week, that 0:05:08.880 --> 0:05:11.800 the slow moving risk just keep on building, keep on building, 0:05:12.000 --> 0:05:14.160 keep on building, and then you break, you reach a 0:05:14.279 --> 0:05:16.240 hipping point. I have no idea if we're close to 0:05:16.279 --> 0:05:17.880 one of those, but some people think we are. 0:05:17.960 --> 0:05:21.040 And what people are watching is that long dated oil 0:05:21.080 --> 0:05:23.520 contract and the fact that it's reaching almost ninety dollars 0:05:23.520 --> 0:05:26.760 on Brent crude for December. People are watching that and saying, 0:05:27.040 --> 0:05:29.960 hold on, it's going to cross some bogie where suddenly 0:05:30.000 --> 0:05:32.600 the stock market's going to wake up and say we're broken. 0:05:32.760 --> 0:05:34.839 We don't think we like this very much. And right 0:05:34.839 --> 0:05:37.080 now you aren't seeing that. Part of it is because 0:05:37.080 --> 0:05:40.320 the earnings keep giving that forward look that is more positive. 0:05:40.520 --> 0:05:42.359 And at what point do you start to have to 0:05:42.360 --> 0:05:44.360 see some of this reflected in some of the rhetoric 0:05:44.400 --> 0:05:45.200 coming from the C suite. 0:05:45.279 --> 0:05:47.680 George Yale's high now for different reasons or the same 0:05:47.680 --> 0:05:50.080 reasons we made those highs just a month or so ago. 0:05:51.040 --> 0:05:53.679 I think yields are higher for a number of different reasons, 0:05:53.960 --> 0:05:57.000 and they've not participated in the broader risk rally because 0:05:57.000 --> 0:05:59.440 it is a pure macro kind of expression. So it 0:05:59.520 --> 0:06:01.640 is capture, you know, a longer kind of wait and 0:06:01.680 --> 0:06:03.599 see mode for central banks, not just in the US, 0:06:03.640 --> 0:06:05.880 because like the hawkish rhetoric that's been coming out from 0:06:05.920 --> 0:06:08.279 overseas is also kind of pushed up US rates. The 0:06:08.279 --> 0:06:11.480 global kind of rate connection is there, and it's clearly 0:06:12.080 --> 0:06:14.359 an issue for the US bot market, and you know, 0:06:14.360 --> 0:06:16.160 fiscal concerns because I mean, we all know at some 0:06:16.200 --> 0:06:18.960 point if something does break, the government's going to come 0:06:19.000 --> 0:06:20.360 to the rescue. So I think there's a lot of 0:06:20.360 --> 0:06:21.960 different factors that are kind of at play. 0:06:22.040 --> 0:06:24.840 But to John's point, earlier in the conflict, people were 0:06:24.880 --> 0:06:27.560 looking at higher yields as a result of rate hikes 0:06:27.839 --> 0:06:30.719 in direct response to oil prices, which was absolutely negative. 0:06:31.200 --> 0:06:34.119 Now suddenly it's because the economy is doing just fine. 0:06:34.160 --> 0:06:36.839 The consumer can keep spending. It's almost like yields are 0:06:36.920 --> 0:06:39.880 rising for the right reason. At what point, even if 0:06:39.880 --> 0:06:42.479 they're rising for the right reasons, does it become a 0:06:42.520 --> 0:06:44.640 breaking point for equity valuations. 0:06:45.000 --> 0:06:48.760 I think markets, you know, get enamored around clear lines 0:06:48.760 --> 0:06:51.400 in the sand, five percent on the thirty year. If 0:06:51.400 --> 0:06:53.640 that breaks, you got above four to fifty on the 0:06:53.680 --> 0:06:56.120 ten year, and if you were to ever go back 0:06:56.120 --> 0:06:58.279 to four percent on the two year treasury, then the 0:06:58.320 --> 0:07:00.880 market I think the broader markets, like stocks, actually well careful. 0:07:00.920 --> 0:07:02.840 What business does the two year have at four percent? 0:07:03.160 --> 0:07:05.680 So we asked that question repeatedly back in March. I 0:07:05.720 --> 0:07:07.680 think we have to ask it once again at three 0:07:07.720 --> 0:07:10.040 eighty five. What business does the two year have of 0:07:10.160 --> 0:07:13.200 four percent? When we, as far as we understand, the 0:07:13.240 --> 0:07:16.200 bar to hike at the federal reserve is incredibly high. 0:07:16.600 --> 0:07:18.760 What business does the two year year have treading above 0:07:18.800 --> 0:07:19.400 Fed funds? 0:07:19.840 --> 0:07:21.960 I really think has very little business. So we're actually 0:07:22.240 --> 0:07:24.000 relatively constructor of the front end. We think that's the 0:07:24.000 --> 0:07:27.320 best sweet spot, highest risk reward for the bomb market 0:07:27.600 --> 0:07:30.360 is being long positive carry treasuries in the front end. 0:07:30.560 --> 0:07:33.840 So right now, looking forward, what's the best hedge to 0:07:33.920 --> 0:07:37.560 something potentially breaking although it hasn't yet and could potentially 0:07:37.640 --> 0:07:38.080 keep going. 0:07:39.080 --> 0:07:42.560 So unfortunately, it's been the trade that's been the hardest 0:07:42.640 --> 0:07:44.080 to kind of keep in place, which is when the 0:07:44.160 --> 0:07:47.960 curve steepener, you know, And that's the best macro expression 0:07:48.040 --> 0:07:49.960 that has to get reset every so often because it 0:07:50.320 --> 0:07:51.280 doesn't deliver until it. 0:07:51.200 --> 0:07:55.520 Does stay with us. More Blindberg surveillance coming up after this. 0:08:04.800 --> 0:08:07.080 So here's the lakes. This this morning, the Defense Secretary 0:08:07.080 --> 0:08:09.640 PTE hagg Seth Handing's a Capitol Hill to defend President 0:08:09.680 --> 0:08:13.320 Trump's one point five trillion dollar defense budget as it 0:08:13.360 --> 0:08:16.880 faces bipartisan pushback down in Washington, d C. Joining us 0:08:16.880 --> 0:08:18.960 around a table. Good friend of this program, Libby control 0:08:19.200 --> 0:08:21.960 of Pimco. Libby, good morning, and Bernie, we've lost all 0:08:22.000 --> 0:08:25.320 appreciation for how big these numbers are. What's their record 0:08:25.360 --> 0:08:27.720 of understanding whether one trillion goes never mind at one 0:08:27.720 --> 0:08:28.240 point five. 0:08:28.720 --> 0:08:30.760 Yeah, I mean, I think, as Tyler said, I mean 0:08:30.800 --> 0:08:33.880 this is basically sort of reflective of the president's wish list. 0:08:34.400 --> 0:08:37.640 This is an opening bid, if you will. The budget 0:08:37.960 --> 0:08:41.800 is you know, kind of suggests what the president's priorities are. 0:08:42.240 --> 0:08:44.960 But we should also realize that it is going to 0:08:45.200 --> 0:08:48.719 the actual spend, the actual appropriation for defense come for 0:08:48.920 --> 0:08:52.480 FY twenty seven is going to be much smaller. Historically 0:08:52.840 --> 0:08:55.199 this has been as amrino sort of eight hundred billion 0:08:55.240 --> 0:08:58.559 dollar you know, up to a trillion dollars of defense spending. 0:08:58.640 --> 0:09:02.320 As of last year, one and a half trillion dollars spent. Again, 0:09:02.400 --> 0:09:04.480 this is like pie in the sky kind of things. 0:09:04.600 --> 0:09:07.200 It's really to frame the negotiation. I think it does 0:09:07.240 --> 0:09:11.800 emphasize that what underscores how important the defense component is 0:09:11.880 --> 0:09:15.120 maybe surprisingly to this administration. So again I think we 0:09:15.200 --> 0:09:17.360 should take this with a grain of salt. Our view 0:09:17.400 --> 0:09:20.000 is that we probably see maybe a small tick up 0:09:20.040 --> 0:09:22.360 in terms of defense spending that would land around a 0:09:22.360 --> 0:09:24.760 trillion dollars, obviously much short of the one and a 0:09:24.760 --> 0:09:25.240 half trillion. 0:09:25.360 --> 0:09:27.199 Do they have to get this done before the midterms. 0:09:28.600 --> 0:09:31.120 Yeah, it means look, as you know, the end of 0:09:31.160 --> 0:09:36.120 the fiscal year is as September thirtieth. Oftentimes they're operating 0:09:36.120 --> 0:09:38.520 in or something called a continuing resolution as we all know, 0:09:38.800 --> 0:09:41.960 which is basically just a stopgap funding bill. Does this 0:09:42.040 --> 0:09:44.360 get a lot harder and maybe they get to do 0:09:44.400 --> 0:09:46.520 it in the lame Duck, which is of course the 0:09:46.559 --> 0:09:49.160 period after the election, before the end of this Congress. 0:09:49.520 --> 0:09:52.160 But look, I think that just in general, after the 0:09:52.160 --> 0:09:54.320 midterm elections, things are just going to get much more 0:09:54.320 --> 0:09:57.240 difficult for the Republican So any of these things that 0:09:57.600 --> 0:10:00.720 feel pretty ambitious, they should be trying to get done. 0:10:00.920 --> 0:10:02.920 The real story I think on Capitol Hill right now 0:10:03.120 --> 0:10:05.880 is just the lack of real progress in anything. Even 0:10:05.880 --> 0:10:09.240 though Republicans control both chambers of Congress, there is just, 0:10:09.520 --> 0:10:12.960 as you, very little movement on things that are faza 0:10:13.120 --> 0:10:14.599 the Farm Bill. I mean, things are kind of like 0:10:14.640 --> 0:10:17.040 the blocking and tackling of Congress, but I think does 0:10:17.120 --> 0:10:20.080 represent the fact that it's really difficult to get things 0:10:20.120 --> 0:10:23.720 done with small majorities even when one party controls both chambers. Well. 0:10:23.720 --> 0:10:26.440 Also, what's interesting about today is not just the defense 0:10:26.520 --> 0:10:28.880 budget request, but also Pete Haigseth is going to be 0:10:28.960 --> 0:10:30.600 really in the hot seat, and I've heard rumors that 0:10:30.640 --> 0:10:33.240 he's been kind of on thin ice. There's been mixed 0:10:33.280 --> 0:10:37.000 feelings about how Republicans in Congress feel about him. Do 0:10:37.040 --> 0:10:39.839 you think this is potentially a huge moment for him 0:10:39.840 --> 0:10:41.600 on whether or not the President decides to keep him 0:10:41.679 --> 0:10:43.240 on as his Defense secretary. 0:10:43.320 --> 0:10:45.319 Well, look, I think you're absolutely right. He is going 0:10:45.360 --> 0:10:47.200 to get a lot of pressure. I think a lot 0:10:47.240 --> 0:10:51.840 of Republicans, while publicly they're supporting this Iranian conflict, privately 0:10:52.440 --> 0:10:56.120 there's some growing skepticism about how long we're in this, 0:10:56.200 --> 0:10:58.720 what the strategic objectives are, what the sort of framework 0:10:58.760 --> 0:11:02.320 for successes, And as you know, there's this War Powers 0:11:02.400 --> 0:11:06.160 Act that could require Congress to actually authorize this conflict 0:11:06.200 --> 0:11:07.360 in Iran. So I think you're going to get a 0:11:07.400 --> 0:11:09.880 lot of pushback on him more just trying to get 0:11:09.920 --> 0:11:13.360 details about what the strategy is in terms of, you know, 0:11:13.400 --> 0:11:16.160 his future in the cabinet. I mean, it's it's an 0:11:16.200 --> 0:11:19.800 open question for anybody and any administration. I will say, though, 0:11:19.840 --> 0:11:22.120 as you get closer to the midterms, and as we're 0:11:22.160 --> 0:11:25.040 looking at potentially either a narrow Republican margin in the 0:11:25.080 --> 0:11:29.000 Senate or even potentially the Senate flipping to Democratic control, 0:11:29.320 --> 0:11:31.680 there will be pressure for folks to go so the 0:11:31.679 --> 0:11:34.960 President can renominate people while the Republicans still you know, 0:11:35.400 --> 0:11:37.440 have the existing majority in the Senate still. 0:11:37.280 --> 0:11:38.960 Trying to wrap ahead around one and a half trillion dollars, 0:11:38.960 --> 0:11:41.319 so forty four percent increase in the defense spending P. 0:11:41.480 --> 0:11:44.440 I mean, this to me highlights just how high the 0:11:44.480 --> 0:11:46.439 bar is to get anyone get scerned about fiscal issues. 0:11:46.520 --> 0:11:48.080 I mean, given the fact that our debt to GDP 0:11:48.400 --> 0:11:52.080 is right there behind Maldives, Bahrain, Greece and Sudan, here 0:11:52.120 --> 0:11:54.199 we are. So it just raises this issue. At what 0:11:54.240 --> 0:11:56.760 point where people start actually pushing back and saying, wait 0:11:56.760 --> 0:11:58.600 a second, we're supposed to care about the deficit. When 0:11:58.640 --> 0:11:59.640 are we going to do that again. 0:12:00.280 --> 0:12:01.880 I love the fact that you care about the deficit 0:12:01.880 --> 0:12:02.440 as much as we do. 0:12:02.480 --> 0:12:03.199 It can go yeah. 0:12:03.360 --> 0:12:05.320 I mean we talk about the deficits a lot, and 0:12:05.720 --> 0:12:07.439 we're talking about to our clients, of course, a lot 0:12:07.480 --> 0:12:07.840 about it. 0:12:08.200 --> 0:12:08.360 You know. 0:12:08.480 --> 0:12:10.720 I think, as we have said many times before, the 0:12:10.760 --> 0:12:14.920 treasuries benefit, Treasury bonds benefit from this idea of like 0:12:14.960 --> 0:12:17.760 the cleanest dirty shirt that like all of the you know, 0:12:17.760 --> 0:12:19.400 all of your shirts are dirty, and the sort of 0:12:19.440 --> 0:12:23.400 sovereign bond closet. But the treasuries continue to be the 0:12:23.400 --> 0:12:26.280 cleanest dirty shirt. And that is still true, right. The 0:12:26.920 --> 0:12:31.120 US still has the most mobile most dynamic, most innovative economy. 0:12:31.440 --> 0:12:35.360 It's the most liquid and deep bond market. However, you know, 0:12:35.400 --> 0:12:38.559 we're hearing from clients both in the US and overseas 0:12:39.040 --> 0:12:41.520 of these sort of continued worries, not only in the US, 0:12:41.520 --> 0:12:44.360 of course, but in other developed countries. But in the US, 0:12:44.480 --> 0:12:46.760 you know, and as I've been saying, sort of Congress 0:12:46.800 --> 0:12:49.240 will keep on dancing as long as the music is playing. 0:12:49.679 --> 0:12:52.000 And if the bond market is not a constraint, then 0:12:52.040 --> 0:12:54.480 what is a constraint. Not to get too wonky here, 0:12:54.520 --> 0:12:56.080 but I think one thing just to have on your 0:12:56.160 --> 0:12:58.520 radar is I would assume this would be an issue 0:12:58.559 --> 0:13:01.680 in twenty twenty eight because Social Security Trust Fund is 0:13:01.679 --> 0:13:04.360 supposed to go bankrupt, meaning will pay out less, and 0:13:04.400 --> 0:13:07.040 it brings in in twenty thirty three. That may feel 0:13:07.120 --> 0:13:10.040 like far away, it's really not, and so policy makers 0:13:10.040 --> 0:13:11.959 are going to have to start talking about this. I 0:13:11.960 --> 0:13:13.920 would be surprised if this is not a presidential election. 0:13:14.080 --> 0:13:16.080 We still are heart that we actually start talking about deficits. 0:13:16.240 --> 0:13:19.480 But in between, then sixty seven percent deficits, you know, 0:13:19.520 --> 0:13:22.240 sixty seven six seven percent deficits is a percentage of GDP. 0:13:22.600 --> 0:13:24.480 I mean, this is very high, and we're not even 0:13:24.520 --> 0:13:27.040 in a recession and we're really not at war. So yes, 0:13:27.120 --> 0:13:30.360 I mean, we hear you, we share your concerns. I 0:13:30.440 --> 0:13:32.760 feel hard, but again, I just don't think that unless 0:13:32.760 --> 0:13:34.680 the bomb market is going to be the constraint, and 0:13:34.800 --> 0:13:36.560 like you know, there's some concerns at the long end, 0:13:36.679 --> 0:13:38.960 but it really has not been that kind of that constrain. 0:13:39.080 --> 0:13:41.160 How much is this a big point in the Kevin 0:13:41.160 --> 0:13:44.560 Worsh nomination and any kind of Fed Treasury accord, especially 0:13:44.559 --> 0:13:47.280 given the fact that the Treasury is shifting away from 0:13:47.280 --> 0:13:50.400 long term issuance issuing more on the front end and 0:13:50.440 --> 0:13:54.080 we're talking about ways to potentially lower rates on the 0:13:54.120 --> 0:13:54.560 front end. 0:13:55.240 --> 0:13:57.199 Yeah, look, I mean, you know, I think we will 0:13:57.320 --> 0:14:00.240 be I think we'll just we'll have to wait and see. 0:14:00.320 --> 0:14:03.160 In terms of this accord, there's only so much, of course, 0:14:03.200 --> 0:14:06.840 that Kevin Worsh can do as chair. The chair is important, 0:14:06.960 --> 0:14:11.120 but not omnipotent, meaning like the power persuasion is important 0:14:11.160 --> 0:14:13.880 in terms of the chair position. But he's only one vote, 0:14:13.920 --> 0:14:15.840 and as it relates to the balance sheet, he's only 0:14:15.880 --> 0:14:18.280 one vote of twelve, and he's obvious course only one 0:14:18.360 --> 0:14:20.960 vote of twelve on rates as well, so you know, 0:14:21.120 --> 0:14:23.280 we'll just sort of see what he can do in 0:14:23.360 --> 0:14:25.320 terms of the balance sheet. And then you know, the 0:14:25.360 --> 0:14:28.240 Treasury is increasing their buy back program. That is something 0:14:28.280 --> 0:14:31.160 that they have been doing. But there's also a limit there, right, 0:14:31.200 --> 0:14:32.800 they do not have a balance sheet. It has to 0:14:32.800 --> 0:14:35.280 be balance sheet neutral, So there's only so much they 0:14:35.280 --> 0:14:38.000 can do in terms of you know, buybacks and what 0:14:38.080 --> 0:14:41.000 have you without really affecting the weighted average maturity of 0:14:41.200 --> 0:14:44.440 Treasury buck. So we're getting really walky here, you bis kist, just. 0:14:44.360 --> 0:14:48.000 The basic question middle of May, does channel Pound step away? 0:14:48.960 --> 0:14:52.400 You know, again open question. I think the Key will 0:14:52.400 --> 0:14:55.800 need to have every confidence in the world that this investigation, 0:14:55.920 --> 0:14:57.760 I think both at the FED in terms of the 0:14:57.800 --> 0:15:00.720 ig investigation and then also the do jay is put 0:15:00.760 --> 0:15:01.160 to bed. 0:15:01.640 --> 0:15:01.800 You know. 0:15:01.880 --> 0:15:05.520 My view, my guess, my speculation is it would make 0:15:05.600 --> 0:15:08.440 sense if he were to stay beyond the midterms just 0:15:08.480 --> 0:15:12.280 to sort of see what that. Again, I'm not I'm 0:15:12.320 --> 0:15:14.680 not trying to make news here. This is just this 0:15:14.760 --> 0:15:15.600 is just a guess. 0:15:15.800 --> 0:15:16.800 Okay, but it. 0:15:16.800 --> 0:15:20.840 Would But but but you think if you're worried about 0:15:21.240 --> 0:15:24.320 FED independence, you're going to really want to see what 0:15:24.360 --> 0:15:27.680 that Senate majority looks like and of course then it 0:15:27.720 --> 0:15:30.320 also gives you some time with Kevin worsh as well. 0:15:30.400 --> 0:15:33.040 So I just think that that the big point here 0:15:33.120 --> 0:15:35.160 is does it really matter? And I just that the 0:15:35.200 --> 0:15:37.720 FED is boxed in here in terms of the macroeconomic 0:15:37.760 --> 0:15:41.360 conditions and Kevin Warsh Fed a Powell Fed, I guess 0:15:41.520 --> 0:15:44.120 in the next few months will look that different. I'm 0:15:44.120 --> 0:15:46.040 just not sure if the inflation numbers and the growth 0:15:46.080 --> 0:15:48.800 numbers will really allow them to do, you know, to 0:15:48.800 --> 0:15:50.200 just take too much of a different posture. 0:15:50.520 --> 0:15:53.200 Appreciate your time, Thanks, thank you for the deficit therapy 0:15:53.240 --> 0:15:56.720 as well. Stay with us mult Bloomberg surveillance coming up 0:15:57.000 --> 0:16:08.560 off to this. So here's the liceis this morning investors 0:16:08.560 --> 0:16:10.680 looking for signals on how long the Central Bank will 0:16:10.720 --> 0:16:13.840 stay on hold what is likely to be Japowe's final 0:16:13.880 --> 0:16:16.640 meeting as chair, joining us now to discuss as former 0:16:16.720 --> 0:16:19.520 Kansas City FED president as the George esther warm welcome 0:16:19.560 --> 0:16:22.840 back to the program. As always, at two pm Eastern time, 0:16:22.920 --> 0:16:25.640 we get a decision thirteen minutes later a news conference. 0:16:25.720 --> 0:16:26.800 What are you expecting to hear? 0:16:28.480 --> 0:16:31.800 Well, good morning, Jonathan. I think it's clear the table 0:16:31.880 --> 0:16:34.760 is set for today's meeting, And the real question is 0:16:34.800 --> 0:16:38.200 not will they move rates. It seems likely they will 0:16:38.280 --> 0:16:41.040 remain on hold. But I think the question is how 0:16:41.040 --> 0:16:46.160 will they describe the outlook in this time of high uncertainty. 0:16:46.800 --> 0:16:50.440 Will they lean into the inflation issues that we've heard 0:16:50.760 --> 0:16:55.000 a number of the FMC members talk about, will they 0:16:55.240 --> 0:16:59.880 think about two sided risks if you will, to their mandates? 0:17:00.440 --> 0:17:02.840 And of course the other part of the discussion, people 0:17:02.840 --> 0:17:05.760 are leaning in very heavily on trying to understand how 0:17:05.800 --> 0:17:09.200 the Chairman might be thinking about his future. 0:17:08.960 --> 0:17:11.760 Role as the None of that is normal. That particular, 0:17:11.920 --> 0:17:14.520 that last point in particular is not normal. You know 0:17:14.560 --> 0:17:16.920 how this works. Typically they move aside, someone else comes 0:17:16.960 --> 0:17:19.159 on board, we move on with life. Why is this 0:17:19.240 --> 0:17:22.240 moment so different, Well. 0:17:22.080 --> 0:17:25.560 Because it's been wrapped up in a bit of political fury, 0:17:25.640 --> 0:17:28.680 if you will. The chairman has. 0:17:28.520 --> 0:17:31.440 Had I think we've lost that night to as the 0:17:31.480 --> 0:17:33.760 George the former Kansas City Fed President, on an important 0:17:33.800 --> 0:17:36.720 moment for the future of the Chairman of the Federal Reserve. 0:17:36.800 --> 0:17:38.280 That's some way she doesn't want to talk about it. 0:17:38.320 --> 0:17:40.359 I mean, I think no one wants to talk about it. 0:17:40.720 --> 0:17:42.600 We should do that next time you ask me about it. 0:17:45.119 --> 0:17:46.200 Maybe you guys will too. 0:17:46.560 --> 0:17:48.240 Ultimately, it's a difficult moment. 0:17:48.000 --> 0:17:51.200 Because people are used to talking about a difficult economic 0:17:51.240 --> 0:17:53.680 moment that we're in, and instead we're having to sell 0:17:53.720 --> 0:17:56.080 us out exactly whether it is going to be important 0:17:56.320 --> 0:17:58.520 for him to stay on, whether it'll matter to markets. 0:17:58.640 --> 0:18:00.919 Right now, the market seems to be incredibly calm. 0:18:01.000 --> 0:18:03.639 She stopped and the shot was frozen. It was a 0:18:03.680 --> 0:18:06.280 technical issue, but when she was talking about political fury 0:18:06.320 --> 0:18:07.879 when it comes to j Powell and you know what 0:18:07.920 --> 0:18:11.600 this is going to do, right the conspiracy theorists out 0:18:11.600 --> 0:18:14.399 there in financial markets are going to be seeing that 0:18:14.560 --> 0:18:16.200