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Speaker 2: Investors are waiting a slew of jobs data this week
Speaker 2: that could determine the fence path forward. Neil Data of
Speaker 2: Renmeg has been saying the fedest late on cunning rates,
Speaker 2: and he's worried about the labor market. He joins us. Now, Neil,
Speaker 2: welcome to it. Back to the program, buddy. I want
Speaker 2: to start with Friday and ask a question I've already
Speaker 2: asked this morning, So I'll ask you twice. How bad
Speaker 2: does that number need to be on Friday to open
Speaker 2: the door for you to make it your base case.
Speaker 2: They're going fifty.
Speaker 3: Well the way the rest of the street is talking.
Speaker 3: It sounds like it needs to be pretty weak. But
Speaker 3: you know, I think that that's part of the problem, right,
Speaker 3: because you're almost talking yourself out of going fifty when
Speaker 3: the data up to this point are already consistent with fifty.
Speaker 3: So I think, you know, I thought the FED didn't
Speaker 3: want to be data point dependent, and that seems like
Speaker 3: what they're doing right here.
Speaker 4: So you know, I don't have a good sense.
Speaker 3: I mean, I think if you get another uptick in
Speaker 3: the unemployment rate, it's probably a lot. But you know,
Speaker 3: at the same time, you know, we tend to overweight
Speaker 3: the establishment.
Speaker 4: Survey to begin with anyway, so it's hard to know.
Speaker 4: You know, we'll see how it comes out.
Speaker 3: But I think even if the number does come in better,
Speaker 3: because you know, let's say there were some one off
Speaker 3: factors in the last month that kind of unwine, what's
Speaker 3: the overall slope of the data, we already know what
Speaker 3: that is. It's weaker, right, I mean, if you look
Speaker 3: at the Conference Boorts labor differential, which was released last week,
Speaker 3: consumer attitudes about the labor market are deteriorating full stop,
Speaker 3: and consumers tend to spot changes in their local economies
Speaker 3: before the data. They know when the pink slips are
Speaker 3: going out, they know when factories are hiring people, they
Speaker 3: know when they're help wanted signs in their neighborhoods. But
Speaker 3: the fact that consumers are telling you that the labor
Speaker 3: market situation is getting worse suggests that there's still probably
Speaker 3: a pipeline of weakness that's still in front of us
Speaker 3: with respect to the labor market.
Speaker 2: No, you mentioned the Establishment survey. I just wander this
Speaker 2: Friday for you and from the clients you speak to,
Speaker 2: are you more likely to put more weight on the
Speaker 2: household survey given the difficulties that we've been ha ac.
Speaker 3: Well, I think one of the benefits right now of
Speaker 3: the Household survey relative to the Establishment Survey is that
Speaker 3: you know it's about revisions. We just got a fairly
Speaker 3: significant down revision to the Establishment Survey up to March
Speaker 3: twenty twenty four. We sort of knew that was coming.
Speaker 3: But what does that tell you about whatever the peril
Speaker 3: number prints at in the coming week. Whatever the number is,
Speaker 3: it's probably going to be weaker in reality, even irrespective
Speaker 3: of whatever is published. The good thing about the household
Speaker 3: surveys that the ratios in the job surveyed aren't really revised, right.
Speaker 3: I mean, maybe there are changes to population estimates, but
Speaker 3: ultimately it's those ratios, the unemployment rate, prime age employment.
Speaker 4: Those ratios don't really change.
Speaker 3: So I think there's a signal in the fact that
Speaker 3: the unemployment rate has been going up for five of
Speaker 3: the last six months. It tells you that there's a
Speaker 3: slackening in the labor market.
Speaker 5: Yeah.
Speaker 6: I got to say, there's this question about whether we've
Speaker 6: overly gotten confident about the soft landing, And I look
Speaker 6: back at history, and there are only three soft landings
Speaker 6: where the FED is orchestrated a rate cut coming down
Speaker 6: from high rates, where you haven't seen a recession. That
Speaker 6: was not the case in two thousand and eight, two
Speaker 6: thousand and one, nineteen eighty nine, nineteen eighty one, nineteen
Speaker 6: eighty nineteen seventy, nineteen sixty, nineteen fifty seven, even though
Speaker 6: it looked like it was going to be a soft landing.
Speaker 6: How confident are you that this time the soft landing
Speaker 6: thing isn't a headfake?
Speaker 4: Well, I still think.
Speaker 3: I mean, I think part of what's happened in markets
Speaker 3: is that we went from pricing in no risk of
Speaker 3: recession to some risk or recession, and it happened very quickly,
Speaker 3: which is why we got that sort of hig up
Speaker 3: in markets, you know, maybe a month.
Speaker 4: Or so ago.
Speaker 3: I think I still think soft landing is the overall
Speaker 3: sort of base.
Speaker 4: Case, but I do think that the FED has a
Speaker 4: role to play.
Speaker 3: I mean, you know, when when I hear people saying that, well,
Speaker 3: maybe they should string out a bunch of twenty five
Speaker 3: basis point moves between now and the summer, I think
Speaker 3: that's kind of ridiculous. I mean, the fact that core
Speaker 3: inflation is running below two percent. Frankly, if you look
Speaker 3: at it since last summer, we've been below two percent
Speaker 3: annualized on a monthly basis most of the time, believe
Speaker 3: it or not.
Speaker 4: To me, that suggests that they're already too tight.
Speaker 3: So going fifty on the first go is not a
Speaker 3: particularly big risk because we you know that they're way
Speaker 3: above neutral, and if you string out a bunch of
Speaker 3: twenty fives, getting back to neutral will take a long time, okay,
Speaker 3: And that puts the economy at risk in the process
Speaker 3: because it'd be mean it would mean that you'd be
Speaker 3: running a restrictive policy stance.
Speaker 4: In the interim period.
Speaker 6: Just quickly here, Neil, does this mean that if the
Speaker 6: FED were to cut fifty basis points and every analyst
Speaker 6: that I've read says that probably risk assets would sell
Speaker 6: off immediately on the knee jerk reaction of a fifty
Speaker 6: basis point rate cut, You'd be saying this is the time.
Speaker 3: To go buy, absolutely, because it tells you the Fed's
Speaker 3: trying to get in front of the eight ball. I mean,
Speaker 3: there's nothing about the economy that the FED knows that
Speaker 3: the rest of us don't.
Speaker 4: They don't have an edge like that significantly.
Speaker 3: This is more about them coming to recognize that's something
Speaker 3: the rest of us already do, namely that the unemployment
Speaker 3: rate's gone up and that inflation slow.
Speaker 2: No dutsa making it easy, nod'sa of remmac Noil, It's
Speaker 2: never that easy. But we appreciate your take, Sat, Thank
Speaker 2: you very much. This is complex stuff.
Speaker 4: It's difficult.
Speaker 7: It is vital for our nation to maintain strong American
Speaker 7: steel companies, and I couldn't agree more with President Biden.
Speaker 7: US steel should remain American owned, an American operators, and
Speaker 7: I will always have the back of America steel workers.
Speaker 2: So here's the latest Kamala Harris alone with Joe Biden
Speaker 2: and her opponent Donald Trump in opposing the proposed takeover
Speaker 2: of US Steel by Japan's Nippon Steel. Harris catering to
Speaker 2: the union vote over Labor Day weekend, just one week
Speaker 2: shy of the first presidential debate set to air on ABC.
Speaker 2: Henrota Trees, a vader partner's writing, Harris is ahead and
Speaker 2: the polling nationally, but the electoral college remains extremely tight
Speaker 2: and continues to favor Trump and the Republican Party in
Speaker 2: our view, Henrotta joined us now for more. Henrietta, welcome back.
Speaker 2: We'll turn to the polling in just a moment. I
Speaker 2: want to start with the Steale issue. First of all,
Speaker 2: on this issue, is there any daylight whatsoever between the
Speaker 2: two candidates.
Speaker 8: There's no daylight between the two candidates, and frankly, there
Speaker 8: really can't be. I have some really fantastic clients who
Speaker 8: were asking this question a year ago, where the presidential
Speaker 8: good candidate is going to be on the yah X
Speaker 8: versus Nippon Steel deal, And the answer is, effectively, they're
Speaker 8: going to stay. They're against it for the duration of
Speaker 8: this election cycle. If anything, you should expect for none
Speaker 8: of this to be concluded.
Speaker 9: Until after the election.
Speaker 8: There's no reason for a rush, and there's no other
Speaker 8: alternative for any presidential candidate. The alternative of saying yes,
Speaker 8: I think demand should come in and buy one of
Speaker 8: the most American brand companies in the Rust Belt before
Speaker 8: an election cycle is sort of unthinkable. So this should
Speaker 8: have been well understood and predicted many months ago, if
Speaker 8: not a year ago.
Speaker 10: Henrietta though this time next year or January twenty first,
Speaker 10: after the inauguration. If one of these individuals is becomes
Speaker 10: inaugurative and then.
Speaker 5: Bax tracks, how is that.
Speaker 10: Going to affect them in the future.
Speaker 8: Well, I think what you need to think about is
Speaker 8: that the regulatory agencies have the option to go in
Speaker 8: and study the issue, whether it's DJ or some of
Speaker 8: the other administration agencies, go in and say, look, what
Speaker 8: are the cost benefits here, and then either give it
Speaker 8: it's blessing or not. During that interim, they're going to
Speaker 8: have to go a long way towards given the unions
Speaker 8: what they need to the point where they get unions
Speaker 8: on board.
Speaker 9: That's the only way that this progresses.
Speaker 8: So that burden and the onus is really on the
Speaker 8: company on the pond Steel to make sure that the
Speaker 8: unions are behind them, and once that occurs, then you
Speaker 8: have a situation where the deal can go proceed.
Speaker 9: But it's never going to be you have my blessing.
Speaker 9: It's either going to be there.
Speaker 8: Haven't had enough issues to derail this or proceed in
Speaker 8: the free market society that we live in, Henriette.
Speaker 10: In Pennsylvania, Kamala Harris said, let's not pay too much
Speaker 10: attention to those polls. You were one individual that thinks
Speaker 10: Trump has the edge when it comes to the swing
Speaker 10: states in Pennsylvania specifically, Why do you think he has
Speaker 10: that edge even though she is doing the work there
Speaker 10: and going to places like Beaver County.
Speaker 8: Pennsylvania has slowly become more and more of Republican leaning,
Speaker 8: And a big part of my bias towards Biden in
Speaker 8: that state early in the year was mostly because he's
Speaker 8: scranted Joe.
Speaker 9: He was, you know, raised in the state, and I
Speaker 9: think that carries a lot of weight.
Speaker 8: Kama Harris is deploying Joe Biden in that area, and
Speaker 8: I think Tim Wallace goes a long way towards speaking
Speaker 8: to that demographic.
Speaker 9: But it's an.
Speaker 8: Issue where we see the unions play out with the
Speaker 8: top of the union structure, for example, has strong support
Speaker 8: for Kamala Harris as the Democratic candidate who has you know,
Speaker 8: minimum wage issues in mind and is fighting for unions.
Speaker 9: Joe Biden famously went on the picket line. Kamala Harris
Speaker 9: has been on the picket line.
Speaker 8: But then you have the members themselves of you know,
Speaker 8: the million persons strong Teamsters union, for example, who are
Speaker 8: very conflicted and they personally support Donald Trump and his
Speaker 8: brand of politics. So I think it's a harsh disparity
Speaker 8: between people at the top of the unions and then
Speaker 8: their rank and file members who may prefer about a
Speaker 8: different direction. And it's slowly been trending more and more red,
Speaker 8: getting closer to Ohio, which consistently has voted for Trump
Speaker 8: plus eight plus nine and is now plus twelve in
Speaker 8: that state, which is just right next.
Speaker 10: Door trending read especially in western Pennsylvania. But it has
Speaker 10: a very popular Democratic governor. Does that not favor Harris.
Speaker 9: It does have a very popular governor and that's great.
Speaker 8: And I think Shapiro has been an exemplary speaker on
Speaker 8: the trail. His speech at the DNC was notable in
Speaker 8: terms of getting support.
Speaker 9: But you really have to just keep that trajectory open.
Speaker 8: What the comp the Hiris campaign is trying to do
Speaker 8: right now is turnout youth voters. We saw a one
Speaker 8: hundred and seventy eight percent voter registration uptick amongst Black
Speaker 8: women in America in the last three weeks or five
Speaker 8: weeks since Kamala Harris has been the campaign front runner.
Speaker 8: We saw a one hundred and forty eight percent increase
Speaker 8: in Latino females registering to vote in.
Speaker 9: The United States.
Speaker 8: So it's all about voter turnout in these high urban
Speaker 8: density areas where Kamala Harris is going to try to
Speaker 8: run up the numbers and get it on par with
Speaker 8: two thousand and eight with Barack Obama, who won the
Speaker 8: state overwhelmingly. So that the trajectory that they're trying to pursue,
Speaker 8: and you're not going to see that translated to the polls.
Speaker 9: For reference, all.
Speaker 8: These new voter registrations, those are not going to be
Speaker 8: taken up in the polls because polsters are not reaching
Speaker 8: those new voters. So they also have a higher propensity
Speaker 8: to vote than somebody who's.
Speaker 9: Been on the roles for years or decades.
Speaker 8: So I think that there could be a sleeper voter
Speaker 8: in Pennsylvania and other states nationwide, which is these new registrants.
Speaker 9: That Kamala Harris has turned on in the last couple
Speaker 9: of weeks.
Speaker 6: When you look at the polls, Henriette, what's the main
Speaker 6: campaign issue of this campaign cycle.
Speaker 9: Right now? It's immigration and abortion. Those are the two
Speaker 9: top issues.
Speaker 8: When you look at voters and they say it's the
Speaker 8: economy or inflation, those are no longer reliable data sets
Speaker 8: because they skew partisan one way or the other. If
Speaker 8: you like Donald Trump, you think the economy is trash
Speaker 8: and we're going to a recession.
Speaker 9: If you like Joe Biden or Kamala Harris, you think
Speaker 9: the economy is improving.
Speaker 8: You feel good about your own personal finances, you feel
Speaker 8: good about your state's personal finances, and you feel like
Speaker 8: the inflation issue is coming.
Speaker 9: Down, which it is at two point nine percent.
Speaker 8: I think that the Federal Reserve lowering interest rates in
Speaker 8: a couple of weeks is going to be really powerful
Speaker 8: for that message as well. But you keep having these
Speaker 8: upticks and fears about recession that keep being unproven and unnarrative,
Speaker 8: and that is something that needs to resonate with the
Speaker 8: American voter, but they don't receive that information due to
Speaker 8: partisan leanings. As a result, the most reliable data that
Speaker 8: you can look at as an investor watching the polling
Speaker 8: is where do you stand on immigration and where do
Speaker 8: you stand on abortion? And that's really what's driving the
Speaker 8: gender divide, which is outrageous and so big this year.
Speaker 8: It really is becoming men versus women in this election cycle.
Speaker 6: So let's put abortion aside for one second. With immigration,
Speaker 6: what is the daylight between people who are for much
Speaker 6: more stringent types of rules and those who would like
Speaker 6: to see a more measured approach. I mean, how much
Speaker 6: is this really dividing between Republicans and Democrats? And how
Speaker 6: much does it really room to negotiate.
Speaker 8: You know, it's interesting, there's not really that much of
Speaker 8: a Democrats have come very far to the right in
Speaker 8: their latest bill that was rejected by Republicans in the
Speaker 8: early part of this year at the request of Donald
Speaker 8: Trump to say, you know, let's keep this issue front
Speaker 8: of mine.
Speaker 9: But Joe Biden has.
Speaker 8: Introduced and signed on the most extreme executive orders that
Speaker 8: have more than had a legal immigration since the beginning
Speaker 8: of this year, and we're now down to twenty twenty
Speaker 8: levels when he took office. So I think that the
Speaker 8: Democratic Party has gone far to the right on this issue.
Speaker 8: It's really a question of whether voters are prioritizing immigration
Speaker 8: or not. Everybody is pretty much in favor of increasing
Speaker 8: drones at the southern border, boots on the ground, expanding
Speaker 8: you know, judges in the area, having a more streamlined
Speaker 8: asylum process so we can process illegal immigrants more quickly,
Speaker 8: and certainly compelling Mexico and southern border country nations to
Speaker 8: improve economic situations in their regions so that they do
Speaker 8: not have this surge of immigration at the US Mexico border.
Speaker 8: So I think it's really about who talks about it
Speaker 8: in what kind of a way as opposed to what
Speaker 8: functionally do we want to see.
Speaker 2: Two months ago, Henritta, thank you, Henritta Trece of Vader Partners.
Speaker 2: The comdown to the US election continues. Let's take the
Speaker 2: opportunity to get you some morning calls. First up, ever,
Speaker 2: Core Issi of Granning Southwest to outperform with a thirty
Speaker 2: five dollars price target the amlyss citing new revenue initiatives
Speaker 2: said to be outline of the company's investor day of
Speaker 2: September twenty six. Your second call from Morgan Stanley, lowering
Speaker 2: his price target on Alphabet to one ninety from two
Speaker 2: to five, keeping an overweight rating the alyst weighing potential
Speaker 2: fallout after a judge rule of the company illegally monopolized
Speaker 2: the search market. We're down there by zero point six percent.
Speaker 2: And finally Wells Fargo down, grounding Boeing to underweight with
Speaker 2: a street low price target of one nineteen. The ambless
Speaker 2: seeing the company's free cash flow peaking by twenty twenty
Speaker 2: seven as aircraft development costs offset production growth. That's stark.
Speaker 2: That name is down by almost three point eight percent
Speaker 2: in early training. That's one to watch at the opening
Speaker 2: bout Turning to streaming DirecTV customers losing access to ABC
Speaker 2: and ESPN after the pay TV service and Disney failed
Speaker 2: to come to terms on a new contract. Matt Delgan
Speaker 2: of morning Star, who maintains a by rating on Disney,
Speaker 2: expecting the blackout to be resolved by the weekend, writing,
Speaker 2: Disney is in the stronger position as it can more
Speaker 2: easily withstand the loss of DirecTV than DirecTV could withstand.
Speaker 2: The family of Disney Networks. Matt joins us now for more.
Speaker 5: Matt.
Speaker 2: Not the first time we've seen this, and what we
Speaker 2: do see this is typically around this time of the year.
Speaker 2: What's different about it this time around, Well.
Speaker 1: There's not too much different in this one. As you said,
Speaker 1: we see this pretty frequently. It seems to follow the
Speaker 1: same playbook, and eventually these things get resolved. The thing
Speaker 1: that is becoming different is that with the cable bundle
Speaker 1: is going to change. So although this one might not
Speaker 1: look different than the past ones, and we expect it
Speaker 1: to get resolved in the same way, we think coming
Speaker 1: up pretty soon there is going to be a bigger
Speaker 1: change to the pay TV packages that these distributors, the
Speaker 1: cable companies, the directvs of the world get and are
Speaker 1: allowed to put out there. So although this might not
Speaker 1: be the one where we see the big change, we
Speaker 1: do think that's coming.
Speaker 2: So let's talk about that a little bit more. What
Speaker 2: would that change as we look like in practice in
Speaker 2: us to come.
Speaker 1: Well, right now, what direct TV is looking for is
Speaker 1: the ability to offer a skinnier bundle, basically not having
Speaker 1: to put in in this case, all of the Disney
Speaker 1: family of channels into their stream packages. So they can
Speaker 1: offer their customers and packages for a lower price.
Speaker 5: The network providers.
Speaker 1: Like Disney have been resistant to that because the business
Speaker 1: model for these companies has been get people forced essentially
Speaker 1: to subscribe to all of your networks, and that's their
Speaker 1: best way forward. The thing that's going to be different, however,
Speaker 1: is that with streaming, there are becoming other ways to
Speaker 1: see this content content other than through a PATV package,
Speaker 1: and that's going to actually next year become even more
Speaker 1: and probably the greatest extent once ESPN, the linear the
Speaker 1: flagship service the people watch on only TV right now
Speaker 1: becomes offered to consumers also, So that's the biggest thing
Speaker 1: again right now it's going out with DirecTV.
Speaker 5: The other thing that we think.
Speaker 1: Is a good way forward is what we've seen Charter
Speaker 1: do the cable company.
Speaker 5: They did it with Disney last year. They subsequently did
Speaker 5: it with.
Speaker 1: Paramount, where they're offering a similar type of bundle, but
Speaker 1: their subscribers get the stream.
Speaker 5: Packages of these companies along.
Speaker 1: With their cable subscriptions or their PATV subscriptions. So those
Speaker 1: are the couple of ways we think the changes will
Speaker 1: come and we expect them to happen, even if again
Speaker 1: not necessarily in this deal and not quickly.
Speaker 6: Can you zoom out and give us a sense of
Speaker 6: where this dispute, which is a couple of years running,
Speaker 6: now sits in this overall shift away from cable to
Speaker 6: what purportedly should be the new future, which is, we
Speaker 6: don't know what, maybe another bundle. It just looks a
Speaker 6: little bit different, but something that excludes the cable companies.
Speaker 1: Yeah, and that's the thing is, we do think that
Speaker 1: another bundle is the way to go.
Speaker 5: The question is who is it that offers it.
Speaker 1: Is it these traditional PATV providers or do the streaming
Speaker 1: companies do it themselves? As I mentioned with the Charter deal,
Speaker 1: we think that the cable companies and the PayTV distributors
Speaker 1: are the ones's best position to do it. But as
Speaker 1: far as why it's happening, that is the point is
Speaker 1: the companies that rely on PayTV, so the cable companies,
Speaker 1: the directvs, their businesses are shrinking drastically as we see
Speaker 1: more cord cutting and they need to be able to
Speaker 1: do something different. One of the reasons we think DirecTV
Speaker 1: isn't necessarily the company that's going to be able to
Speaker 1: cause the biggest change is because it has less leverage,
Speaker 1: in part because it relies on PayTV a lot more,
Speaker 1: and so it's in a bad position. Like the rest,
Speaker 1: It's subscriber base is coming down very much, and there's
Speaker 1: really nothing these companies can do about it because consumers
Speaker 1: have the ability to go through streaming and they're preferring
Speaker 1: it in many cases. The difference though with the cable
Speaker 1: companies versus DirecTV is that they rely much more on
Speaker 1: broadband revenue than PayTV revenue is certainly for profits, and
Speaker 1: they also have bigger, more diverse side businesses Otherwise, in
Speaker 1: many cases, certainly with compact cast, so they would have
Speaker 1: better bargaining power to drive that change. But ultimately what's
Speaker 1: happening is PayTV as we knew it or cable subscriptions
Speaker 1: as we knew them have I mean for many they've
Speaker 1: gone away.
Speaker 5: They are changing very much, and so that's what.
Speaker 1: This ultimately will be about, is that this can't be
Speaker 1: the same thing year after year where all each side
Speaker 1: is trying to get the best rates for themselves in
Speaker 1: an industry that goes on. This industry is different now
Speaker 1: and it will be much more different in the future,
Speaker 1: and the business model has to adjust for both sides,
Speaker 1: we think, and so that's what will happen again, even
Speaker 1: if we don't think this deal that we expect to
Speaker 1: be resolved, most likely a boy the time the NFL
Speaker 1: season serves, which is what we often see, might not
Speaker 1: be the one to drive the major change that we
Speaker 1: expect again, probably beginning more in twenty twenty five when
Speaker 1: ESPN does become available for subscribers through streaming.
Speaker 2: And then was all over again and again and again. Matt,
Speaker 2: Thank you, sir Matt Delaghan and bones style just keeps
Speaker 2: going random, random ramp. This is the Bloomberg Surveillance Podcast,
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Speaker 2: bits this out.
Speaker 1: Yeah,