Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along
Speaker 1: with Jonathan Ferrell and Lisa Abramowitz. Daily we bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: To find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot Com,
Speaker 1: and of course on the Bloomberg Terminal. What we've tried
Speaker 1: to do is inform you about the commodity crisis you're
Speaker 1: living out front. First was Francisco Blanche and I remember
Speaker 1: the day a number of quarters ago where he shocked
Speaker 1: the world over a hundred dollars of barrel. He's provided
Speaker 1: real intellectual leadership on trying to figure out where the
Speaker 1: next galon of gas is going to be. Price. Francisco,
Speaker 1: thank you for joining this morning. I want to go
Speaker 1: to the heart of your note, Francisco. You've got to
Speaker 1: buy us upward in price, and you are looking at
Speaker 1: the price responsiveness, the price elasticity of demand. Are we
Speaker 1: going to see demand destruction? Is oil moves up or
Speaker 1: is it in elastic Uh? Look, Tomman, high prices always
Speaker 1: fix high prices, so we are certainly going to see
Speaker 1: some demand destruction. One of the challenges and You may
Speaker 1: remember this from back back in the eight when we're
Speaker 1: talking about the issues, is that as prices go up,
Speaker 1: governments tend to use fuel subsidies as a tool to
Speaker 1: keep people happy. So we are seeing a curtailment of
Speaker 1: fuel taxes across much of Europe. We've also seen some
Speaker 1: U S States doing the same thing, Mexico, many emerging markets.
Speaker 1: So as prices go up, government strive to reduce that elasticity,
Speaker 1: and they all let prices work very much, and therefore
Speaker 1: you end up getting bigger movements on the wholesale market,
Speaker 1: which is kind of what we've seen so far. Um
Speaker 1: So that's being a big issue. And the other big issue,
Speaker 1: obviously is that we we have, as I like to say,
Speaker 1: the Mother Russia full supply shooks. Uh is just a
Speaker 1: very very big shot. Francisco, I gotta go here because
Speaker 1: Brian moynihan and Davos was exceptionally positive and the resiliency
Speaker 1: of the American consumer. Do you care about the price
Speaker 1: elasticity and demand destruction as gasoline goes to seven dollars
Speaker 1: a gallon? I do care, But but I will say
Speaker 1: that if you look across the world, and this is
Speaker 1: probably one of the One of our most popular piece
Speaker 1: of work, which is the energy share of GDP across
Speaker 1: the world, is actually quite high. We're almost back to
Speaker 1: the run revolutional levels for the entire planet in terms
Speaker 1: of the amount of income that we're spending our energy.
Speaker 1: I'm talking about quantities of oil, gas, and coal multiplied
Speaker 1: by the price and divided by a nominal GDP. But
Speaker 1: in the US you have a twist, and the twist
Speaker 1: this that you haven't had the global gas and power
Speaker 1: prices that we've seen in Europe, that we've seen in Asia.
Speaker 1: So the US is something during record high not your
Speaker 1: gas or power prices. And I know Henry hops up,
Speaker 1: but at the end of the day, the US not
Speaker 1: facing the same kind of energy prices in aggregate that
Speaker 1: the rest of the world's suffering from. So I think
Speaker 1: the US is a lot less exposed. Plus also remember
Speaker 1: um the dollar is very very strong, so that means
Speaker 1: America's has been insulated also more so than other countries
Speaker 1: um that are facing this incredibly a strong dollar and
Speaker 1: strong commodity prices. And perhaps the third fact here is
Speaker 1: that the US is energy independent on its past to
Speaker 1: become energy dominant, which which in my mind also shields
Speaker 1: the US from the vagaries of global energy prices. So
Speaker 1: so I think, yes, we're gonna see recessions, but the
Speaker 1: question is where and when, And the US is probably,
Speaker 1: in my mind at the bottom of the list in
Speaker 1: the countries that we've impacted by this skyrocketing energy prices,
Speaker 1: so forsas because there's a lot to impact there. I
Speaker 1: want to just first get your sense of how close
Speaker 1: we are to a full blown, as you call it,
Speaker 1: nine style oil crisis. We're not dot far. I mean,
Speaker 1: I think we've seen the global gas empower crisis already.
Speaker 1: Uh in the past twelve months. It started with thermal
Speaker 1: coal in China. I remember, the most expensive energy commodity
Speaker 1: ain't oil. It's really been a thermal coal and natural gas.
Speaker 1: We are at four hundred dollars a ton a thermal coal.
Speaker 1: That's twice the level of what we saw back in
Speaker 1: the financial crisis, you know eight when oil went to
Speaker 1: a hundred and forty seven doors of barrow. We again
Speaker 1: four hundred dollars in town. That's about hundred dollars barrel
Speaker 1: of oil equivalent. Uh So oil at a hundred and
Speaker 1: ten hundred and fifteen ain't expensive. When calls almost the
Speaker 1: same price level. Um. The natural gas has also been
Speaker 1: at record levels in Europe. We've seen nearly five hundred
Speaker 1: dollars a barrel of natural gas prices about eighty bucks
Speaker 1: and mmbtu at the highest back in March. So so
Speaker 1: that's where the real issue is. Oil is is yet
Speaker 1: not in crisis. It could go into a crisis, and
Speaker 1: I think I think that's the real problem here with
Speaker 1: with the way that sanctions may be implemented, how much
Speaker 1: Russians supply do we end up lossing and how how
Speaker 1: can that impact the supply man balances here. That's what
Speaker 1: I'm worried about. Francisco, ID love some real time analysis
Speaker 1: from you on the headlines we're getting from opaque class
Speaker 1: delicates indicating that they could be discussing an addition of
Speaker 1: six hundred thous and barrels a day against the scheduled
Speaker 1: four hundred and thirty thousand. Also some indication they might
Speaker 1: decide today on July and August hikes. Francisco, I'll tell
Speaker 1: you what the market is doing off the back of this,
Speaker 1: it's a raising losses cruised down about six tenths of
Speaker 1: one percent. W T I back to would fourteen fifty.
Speaker 1: What's your read on those kind of headlines, Well, my
Speaker 1: reader is that opec opic class collectively does not want
Speaker 1: to be blamed for oil prices skyrocketing here on the
Speaker 1: back of the European silections on Russia. So we're trying
Speaker 1: to increase production and litigate the upper price pressures. But
Speaker 1: remember one of the biggest challenge of the opencasts in
Speaker 1: this market is that it doesn't have a spare refining capacity.
Speaker 1: Russia has not all of the world's second largest crude
Speaker 1: oil exporter, it's also the second largest refined patrolling product exporter,
Speaker 1: and of the diesel that goes into the ICE contract,
Speaker 1: into the GASOW contract, the most important diesel contract in
Speaker 1: the world ICE gas oil is actually Russian. So you're
Speaker 1: taking a lot of supply out of out of a
Speaker 1: very tight market. And and and unfortunately, when you don't
Speaker 1: have the refining capacity available in Europe's sanction both crude
Speaker 1: and controlling products, um, there's not that much that Ope
Speaker 1: can do. They can try to keep a little on
Speaker 1: crude oil, but that's not necessarily going to help the
Speaker 1: price of diesel. The price of gasoline, which is sualtamately
Speaker 1: what people buy at the top. Well, Francisco, just to
Speaker 1: found a word from you then on that celpic ope
Speaker 1: can't do anything seemingly to influence the price of things
Speaker 1: that the gascon into what you just said because of
Speaker 1: revigning capacity. Where does it leave the administration here in
Speaker 1: the United States? As the president, according to our reporting,
Speaker 1: gears up from mating with the Crown Prince. What can
Speaker 1: the president do here in America? Well, look, I mean,
Speaker 1: I think I think we continue to do what we've seen,
Speaker 1: release a little bit of SPR. The SPR has some
Speaker 1: barrels of the trolley product available which are are being
Speaker 1: being released into the market. I think I think the challenges,
Speaker 1: honestly is that that we are we are tied on
Speaker 1: every front. Commercial inventories are very low as our government
Speaker 1: inventories because we're growing up quickly. So I think I
Speaker 1: think perhaps, you know, we should be started thinking about
Speaker 1: demand rationing measures, maybe stop subsidizing fuels, but more importantly,
Speaker 1: maybe think about limiting speed on highways and doing things.
Speaker 1: Actually do you think, Francisco, and that's where this could
Speaker 1: go in this country? Demand Rahan, Well, maybe maybe not
Speaker 1: in the US, maybe having enough to pass in the US,
Speaker 1: but crowly other parts of the world. I think we're
Speaker 1: gonna have to end up seeing some demand Rasian ng um, Yeah, tectic.
Speaker 1: So I think we're going into demand rationing on the
Speaker 1: back of the smashers against Russian. Well, Francisco great to
Speaker 1: catch up along. The conversation needs to be had. Francisco
Speaker 1: of Bank America truly to celebrate for Bloomberg surveillance. And
Speaker 1: we do this, of course with miss Sandberg out the
Speaker 1: door it Facebook. I refused, David to call it meta.
Speaker 1: David Kirkpatrick joins us live in our studios here in
Speaker 1: New York. And you were with me the day of
Speaker 1: the Facebook I p O with Paul Kadrowski, and you
Speaker 1: had truly one of the greatest calls in the history
Speaker 1: of surveillance. Everybody was in a complete lather about this
Speaker 1: future of this clown out of a dorm room in Harvard,
Speaker 1: and you said, would everybody calm down? I wrote the
Speaker 1: Facebook effect, and this kid will make it. And they've
Speaker 1: done very well. They've done on balance, you can hardly
Speaker 1: play say they haven't done beautifully. What a hundred and
Speaker 1: twelve billion in revenue last year or something like that.
Speaker 1: Page one fifty nine, the Facebook Effect, the CEO. How
Speaker 1: did they meet? How did Zuckerberg choose Sandberg or did
Speaker 1: she choose herself? No, I don't think she did choose herself.
Speaker 1: And thank you for having me, Tom. They met at
Speaker 1: a party that and Rosenswade was hosting UH out of
Speaker 1: Silicon Valley. He was at Yeahoo at the time. UM
Speaker 1: and Zuckerberg pulled her aside and and it was sort
Speaker 1: of like riveted. She was riveted by that. And then
Speaker 1: Um Roger mcnabie, ironically, who has become a massive Facebook critic,
Speaker 1: really helped broker their relationship because he was a long
Speaker 1: time friend of Cheryl's and advised Mark that she would
Speaker 1: be a really great person to do it and interesting
Speaker 1: and helped convince her that she should consider it seriously. David,
Speaker 1: you know, I was a big fan of the hiring
Speaker 1: of Cheryl Sandberg because you know, I viewed Facebook at
Speaker 1: its basis just simply an advertising company, and they didn't
Speaker 1: really have a big time advertising person there, someone who
Speaker 1: could sit down with the likes of Coca Cola and
Speaker 1: Procter and Gamble. Cheryl certainly could. And given all that,
Speaker 1: and we've got a hundred and twenty billion dollars of revenue,
Speaker 1: so I mean, she certainly did her job extraordinarily. Well
Speaker 1: what's her legacy, Well, her legacy is an extraordinary advertising
Speaker 1: business which she built from really literally almost nothing to
Speaker 1: become the clear number two to Google as the dominant
Speaker 1: advertising player in the world. Uh at e. Extraordinary profitability,
Speaker 1: I mean more profitability per dollar of revenue during most
Speaker 1: of its history than Google, so you know, and she
Speaker 1: also built that business largely too, So you know, she
Speaker 1: is kind of the primary architect of the advertising based
Speaker 1: business model of the Internet. You could even go that
Speaker 1: far and that, but that is a mixed legacy because,
Speaker 1: let's face it, as Roger McNamee, who I just mentioned,
Speaker 1: would be the first to tell you it, ad based
Speaker 1: internet is intrinsically a dangerous medium because of the tendency
Speaker 1: of platforms to want to put anything into it that
Speaker 1: generates page views and eyeballs, and that has in turn
Speaker 1: led to extraordinary disinformation flows uh anti democratic behavior, hate speech,
Speaker 1: which is all hypnotic to the user and keeps them
Speaker 1: engaged since turning you know, clicking, clicking, clicking. But in
Speaker 1: the end, so that's a it's a really in and
Speaker 1: yang story with Caryl Sandberg. So I guess one of
Speaker 1: the questions I think we're all gonna be asking for
Speaker 1: many years is what is her responsibility in that aspect
Speaker 1: of the growth of Facebook visa VI Mark Zuckerberg, who
Speaker 1: one could argue, not just as the controlling shareholder, he
Speaker 1: is the autocrat of this book. I love calling him
Speaker 1: the autocrat of Facebook because it absolutely is true. I
Speaker 1: think that's where it's harder to say, because even though
Speaker 1: there have been some reports, including in the book, uh
Speaker 1: the Ugly truth that came out last year, that she
Speaker 1: really did try to push back against some of Suckerberg's
Speaker 1: decisions regarding speech and how Facebook ought to be governed,
Speaker 1: you know, she really clearly didn't do enough. She also
Speaker 1: really has a tendency if whenever she's in public, to
Speaker 1: sound ridiculously Pollyanna ish and not to acknowledge, not to
Speaker 1: acknowledge any potential problems, which is really, I think magic,
Speaker 1: because if she had been more honest with the public,
Speaker 1: at least people might have forgiven the company a little bit.
Speaker 1: But we we cannot forgive them because they have caused
Speaker 1: serious harm to society. Your bookends with Zuckerberg bedazzled at
Speaker 1: the end of a driveway, almost in shock over the
Speaker 1: initial Facebook a month that. Okay, but now, what what
Speaker 1: kind of CEO does Mr Zuckerberg? Does he have a
Speaker 1: gray hair yet? I don't know? Okay, what kind of
Speaker 1: CEO does he need? Well? Does he need? You mean
Speaker 1: instead of himself? You think he should hire somebody else
Speaker 1: he can do it, needs somebody to run the I
Speaker 1: am worried that he with Saryl leaving, he has nobody
Speaker 1: really to push back exactly, so she's pushed back ineffectively.
Speaker 1: It would be my guess. But the fact is he
Speaker 1: is an autocrat with all power who has bad judgment.
Speaker 1: He's a brilliant engineer, a brilliant product strategist, but he
Speaker 1: doesn't understand how to consider the impact of his company
Speaker 1: in society nearly enough. And he needs somebody who really,
Speaker 1: You know, when they hired Nick Clegg, before that, I
Speaker 1: used to say, I wrote a past one. I wrote it, No,
Speaker 1: Nick Clegg is not going to be the CEO one
Speaker 1: or CEO. But I argued in a piece before that
Speaker 1: happened that they should hire Barack Obama. The scale of
Speaker 1: Facebook's challenge is so huge, and their role in society
Speaker 1: and every country in the world is so massive, they
Speaker 1: need the most sophisticated political, sociological, you know, humane judgment,
Speaker 1: because that's a chairman. They don't have that. That's a
Speaker 1: that's a chairman position. It could be, but every time
Speaker 1: anybody on the board starts to push back against Zuckerberg,
Speaker 1: he clears them off the board. Where have you been?
Speaker 1: How come you haven't been into tuck to us? Well,
Speaker 1: you haven't asked me man pandemic. I was when do
Speaker 1: we get a new book out? Not to Facebook effect,
Speaker 1: but the world, the Elon effect. No, I'm not writing that.
Speaker 1: If you talking about when do we get a new book?
Speaker 1: I don't, don't don't don't, don't, don't pressure me. I
Speaker 1: got a company to run. I run Techonomy. I'm really
Speaker 1: enjoying that. And how's that doing coming out of the pandemic? Seriously, Well,
Speaker 1: we're actually, you know, we're really working hard on climate.
Speaker 1: That's our big issue now, climate tech. And we had
Speaker 1: a Techonomy Climate conference in March in Mountain View, which
Speaker 1: was extraordinarily successful. We just had two Techonomy climate events
Speaker 1: in Davos last week. And I feel like this is
Speaker 1: the issue that I have to work on. So I
Speaker 1: honestly care about that more than Facebook's crime flying around.
Speaker 1: The tech guys flying around in their golf streams care
Speaker 1: about the energy crisis. They climate you got, They pretend to,
Speaker 1: but they don't care. Anybody who flies in a gulf
Speaker 1: stream doesn't care about the climate. I think that. I
Speaker 1: hate to say it, but I wouldn't be surprised at that.
Speaker 1: And they're lined up like forty two. I counted forty
Speaker 1: two golf streams, including the surveilance golf stream. Of course, no, Francene, okay, okay,
Speaker 1: you didn't have your own though, No, no, we share it,
Speaker 1: and they would let me upgrade to the four. I've
Speaker 1: got the three. It's little I can't stand. I feel
Speaker 1: guilty when I fly across the Atlantic from Oh, stop
Speaker 1: stop with this shame. This is stuff of flying. I
Speaker 1: don't feel that guilty not to do it. But the
Speaker 1: reality is we have to reconsider our behavior. Society has
Speaker 1: to reconsider. It's the bad newses around the time. David Kirkpatrick,
Speaker 1: thank you so much. Reader's book Folks is dated, but
Speaker 1: fresh is all go out. Kathy Jones joins us now
Speaker 1: she fixed and comes strategist at the Swap Center for
Speaker 1: Financial Research Kathy once Sweeny on a German tenure this morning.
Speaker 1: For all this talk of peak inflation, peak, heel t
Speaker 1: state side on the other side of the Atlantic. Can
Speaker 1: you make that cool yet? Yeah, I don't think we're
Speaker 1: quite there, just because Europe has been lagging the US
Speaker 1: in terms of this cycle. But I don't think they're
Speaker 1: far behind either. You know, we're starting to see that catchup.
Speaker 1: We're starting to see the market building the expectation for
Speaker 1: a tighter policy in Europe. So I think they're lagging
Speaker 1: us by don't think you're quite there yet, Cathy. The
Speaker 1: yields that we see are are complete mystery at the
Speaker 1: third quarter, how what does your top end look like?
Speaker 1: How far up do you frame yields could go to?
Speaker 1: So when we're looking at the short end, you know,
Speaker 1: we're still looking at the FED tightening UH fifty basis
Speaker 1: points the next two meetings and probably then switching to
Speaker 1: about the quarter point increases in the fall UH and
Speaker 1: we see them topping out, you know, probably in that
Speaker 1: two and three quarters area. We're a little bit under
Speaker 1: sort of the consensus and what's built into the market.
Speaker 1: When we look out to the tenure, our expectation is
Speaker 1: the upper end is that three to three in a
Speaker 1: quarter area. You know, as we get into a tightening cycle,
Speaker 1: yields converge across the current. We're already seeing a little
Speaker 1: bit of inversion from fives to tens. So we think
Speaker 1: three to three quarters the upper end of what we're
Speaker 1: going to see. Kathy, we're talking this morning about the
Speaker 1: two sided argument within each of these houses at banks
Speaker 1: and beyond of whether we're too gloomy or whether we're
Speaker 1: too optimistic. And the data is coming out strong, does
Speaker 1: this mean that the FED has to go much harder
Speaker 1: that Basically, yes, you could take that three and three
Speaker 1: to quarter percent ten ure yield, but the path to
Speaker 1: get there is one paved by a FED that essentially
Speaker 1: has to end this cycle, has to create a downturn. Yeah,
Speaker 1: it certainly is the way that, Um, you know they're
Speaker 1: talking right now and have to take them seriously. It's
Speaker 1: pretty much across the board, from Daily to Bullard, you're
Speaker 1: hearing the need for tighter policy. And I think that
Speaker 1: this this cycle reminds me of the early eighties. Um,
Speaker 1: you know Tom might remember this, but you know you
Speaker 1: had high inflation, relatively healthy economy, and the idea was
Speaker 1: just to really get that inflation down, and Vulcar at
Speaker 1: the time came in and just jacked up rates until
Speaker 1: we tipped into recession. We had too back to back
Speaker 1: very sharp recessions. So that's kind of the risk I
Speaker 1: think if the FED go is really hard here. But
Speaker 1: that certainly sounds like the intention that they have, Kathy,
Speaker 1: how achievable at least forecasts over the Federal Reserve unemployment
Speaker 1: at three point five percent this year, three point five
Speaker 1: percent next year, three point six percent the year after that.
Speaker 1: How a chief bull is that. I'd say that aspirational um.
Speaker 1: It would be surprising to me if you could have
Speaker 1: the kind of monetary policy we're getting with higher rates
Speaker 1: and QT along with the global tightening cycle, and still
Speaker 1: keep unemployment here at three and a half. Do you
Speaker 1: think they should rename the Summary of Economic Projections Federal
Speaker 1: Reserve aspirations? I think so. You know, they're never going
Speaker 1: to forecast failure, right, so they have to they have
Speaker 1: to forecast, you know, what they hope happens. Kathy, Thank you.
Speaker 1: Kathy Jones had a swap sense for financial research joining
Speaker 1: us right now, Megan Green, Global chief Economist, are Cruel
Speaker 1: Institute and Senior Fellow, Harvard County School, and very importantly DIRR.
Speaker 1: Green is the idea here of using the Queen's English.
Speaker 1: And you do that, Megan with the word awkward, You say,
Speaker 1: are awkward response to inflation on a global basis is
Speaker 1: really interesting? How awkward is the fellow Reserve and Chairman
Speaker 1: Powell right now? Well, the Fed's in a tough spot,
Speaker 1: right you know, we're facing indicators suggesting that growth is
Speaker 1: really slowing. At the same time, inflation is way too
Speaker 1: high by the FED standards, by everyone's standards, and so
Speaker 1: the FED is stuck knowing that a lot of the
Speaker 1: drivers of inflation are our supply side and that the
Speaker 1: FED can't really do much about it. So the Fed's
Speaker 1: having to high grates uh and will high grates to
Speaker 1: neutral very quickly, which is around two and a half percent.
Speaker 1: There's a ways to go before the end of the year.
Speaker 1: And then I think the Fed's really stuck. They're gonna pause,
Speaker 1: recognize that, you know, another two hundred basis points and
Speaker 1: heights is a lot for the economy to orb in
Speaker 1: a short period of time, and see where the data is.
Speaker 1: So I think it's absolute consensus that the FED they'll
Speaker 1: just go straight to neutral and then I think they're
Speaker 1: gonna wait and see as the rest of us will
Speaker 1: have to do as well. I have to say, in
Speaker 1: all of my conversations with investors, there's been a real
Speaker 1: shift in focus away from just talking about inflation to
Speaker 1: just talking about growth. Over the past two weeks. The
Speaker 1: concerns about a recession are are really intense among investors,
Speaker 1: and actually I think premature. I don't think we're going
Speaker 1: into recession in the next twelve months. It's the twelve
Speaker 1: months after that that I'm worried about. Mike, and we
Speaker 1: sent the same thing Overwhelmeny. The focuses on some of
Speaker 1: the output dates, So what did you make of them
Speaker 1: for manufacturing yesterday? Because not exactly in line with what
Speaker 1: we've seen from some of the regional FED indicators. Yeah,
Speaker 1: and this is happening. I had an investor sort of
Speaker 1: ranted me yesterday that all the data is contradictory and
Speaker 1: they don't know what to what signal to read out
Speaker 1: of the noise, and I think we're all feeling that way.
Speaker 1: But I think the I s M data was fairly positive. Actually,
Speaker 1: it surprised me on the upside and suggest that we're
Speaker 1: not carvening towards the recession. Look, you know, the consumer
Speaker 1: accounts for seventy of our growth in the US, and
Speaker 1: consumer balance sheets are looking pretty healthy inaggregate. Of course,
Speaker 1: the bottom quartile by income doesn't look that great. They've
Speaker 1: burned through their cash buffer. But the rest of Americans
Speaker 1: have a big cash cushion. Companies also have a huge
Speaker 1: cash cash position built up, So even as rates go
Speaker 1: up and earning, the risk is all on the downside.
Speaker 1: It's gonna take a while to burn through all of
Speaker 1: that cash before we really start to see individuals and
Speaker 1: companies retrench and and that is what drives us into recession.
Speaker 1: And it's also worth pointing out with the job stated
Speaker 1: coming up on Friday, we've eleven and a half million
Speaker 1: unfilled jobs take up, and unemployment is the best indicator
Speaker 1: of a recession. I just don't see unemployment taking up
Speaker 1: significantly anytime soon, given how many unfilled jobs there are.
Speaker 1: MiG and given all of this, why won't the FED
Speaker 1: be more aggressive than people think? Why do they? Why
Speaker 1: will they potentially be more patient and high rates enough?
Speaker 1: And then pause? Uh, you know, I think that the
Speaker 1: fed knows that their history in terms of engineering a
Speaker 1: soft landing is pretty poor, and in the past, every
Speaker 1: time they have actually engineered a soft landing, unemployment was
Speaker 1: actually much higher when they started. So it's much more
Speaker 1: likely that unemployment will take up this time around, just
Speaker 1: given that it's around three and a half percent. It's
Speaker 1: it's near historic blows um as opposed to in the
Speaker 1: past where unemployment was already higher. They don't want to
Speaker 1: cause a recession, and that's why they're fine going to neutral.
Speaker 1: That's just taking their foot off the gas pedal of it.
Speaker 1: But once they get to neutral and I have to
Speaker 1: get into actual significant tightening, I think they're going to
Speaker 1: be a lot more cautious. Of the Crawl Institute Megan
Speaker 1: sank Cute. This is the Bloomberg Surveillance Podcast. Thanks for listening.
Speaker 1: Join us live weekdays from seven to ten am Eastern
Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from
Speaker 1: six to nine am for insight from the best in economics, finance, investment,
Speaker 1: and international relations. And subscribe to the Surveillance podcast on
Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on
Speaker 1: the terminal. I'm Tom keene In, This is Bloomberg,