WEBVTT - Breaking Down Big Tech and the US Jobs Report 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.960 --> 0:00:15.560 This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 0:00:15.600 --> 0:00:18.960 with Paul Sweeney. Join us each day for insight from 0:00:18.960 --> 0:00:23.119 the best in economics, finance, investment, and international relations. You 0:00:23.160 --> 0:00:26.520 can also watch the show live on YouTube. Visit the 0:00:26.520 --> 0:00:31.280 Bloomberg Podcast channel on YouTube to see the show weekday 0:00:31.280 --> 0:00:34.320 mornings from seven to ten am Eastern from our global 0:00:34.360 --> 0:00:39.000 headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 0:00:39.360 --> 0:00:42.920 or anywhere else you listen and always I'm Bloomberg Radio, 0:00:43.080 --> 0:00:47.239 the Bloomberg Terminal, and the Bloomberg Business App. From Chicago. 0:00:47.360 --> 0:00:50.639 Anderra Gar and it joins us Bloomberg Intelligence Anrok, Thank 0:00:50.680 --> 0:00:52.960 you so much for joining us. Is this a tech 0:00:53.120 --> 0:00:56.240 pullback or is that just one part of the equation 0:00:56.360 --> 0:00:57.360 you see in the market. 0:00:58.720 --> 0:01:00.520 Yeah, I mean it is a minor tech pull back, 0:01:00.760 --> 0:01:03.040 but that's sometimes a healthy thing because if you look 0:01:03.080 --> 0:01:05.440 at it, over the last one and a half two years, 0:01:05.480 --> 0:01:08.200 we have seen a massive rally in all these technology 0:01:08.200 --> 0:01:11.040 stocks because of AI and right now we are a 0:01:11.120 --> 0:01:14.080 face of consolidation where the companies are spending a lot 0:01:14.120 --> 0:01:16.959 of money to expand capacity with the hope that they 0:01:17.000 --> 0:01:19.240 get more AI workloads down the road. So I think 0:01:19.280 --> 0:01:21.240 that's where we are right now. We're going to see 0:01:21.240 --> 0:01:24.840 this for a few quotos and see we think it's 0:01:24.840 --> 0:01:26.240 going to be a good twenty twenty five. 0:01:26.440 --> 0:01:29.000 I went to the inner Agrana FA screen today on 0:01:29.200 --> 0:01:31.800 Apple and I noticed that Apple in the last ten 0:01:31.880 --> 0:01:37.000 years has retired thirty seven percent of their diluted shares. 0:01:37.880 --> 0:01:41.800 I think historically, I can say anarag it's never happened before. 0:01:42.200 --> 0:01:44.360 Are we going to see this trend of massive free 0:01:44.440 --> 0:01:47.160 cash flow from these companies where all the noise of 0:01:47.200 --> 0:01:50.720 AI and all really doesn't matter. Yeah. 0:01:50.800 --> 0:01:52.800 When you see you know, all the tech companies, I 0:01:52.800 --> 0:01:55.640 think Apple really stands out because their AI policy or 0:01:55.760 --> 0:01:59.360 strategy is different than the other tech firms. Last night, 0:01:59.440 --> 0:02:03.280 they actually brought back about twenty six billion and shares 0:02:03.320 --> 0:02:05.800 that quarter. This is the highest we have seen. And 0:02:05.880 --> 0:02:07.920 this is a company that's not going to be spending 0:02:07.960 --> 0:02:11.000 billions in terms of expanding their data centers because they're 0:02:11.000 --> 0:02:13.320 rented from others. They're going to rent a large language 0:02:13.320 --> 0:02:16.119 model from everybody else, so they're tent to free cash 0:02:16.120 --> 0:02:17.959 flow is not going to be as much as it's. 0:02:17.800 --> 0:02:19.480 Going to be for Microsoft and Amazon. 0:02:19.760 --> 0:02:22.200 And you're only a five and a half percent pullback 0:02:22.200 --> 0:02:23.799 in the S and P I T index over the 0:02:23.880 --> 0:02:26.600 last week, So you're right, not so strong. But you know, 0:02:26.680 --> 0:02:28.440 talk to me about you know what we're seeing here? 0:02:28.480 --> 0:02:30.920 I mean, is this is this the beginning of I mean, 0:02:30.960 --> 0:02:33.200 should we be doubling down on growth? Should we shifting 0:02:33.200 --> 0:02:35.840 into quality here? I mean, what are your thoughts, so. 0:02:35.840 --> 0:02:37.480 Daman, when you look at it, there are two things 0:02:37.480 --> 0:02:39.240 that are played right now. Right now, we are at 0:02:39.280 --> 0:02:41.519 a phase when these companies are spending so much money 0:02:41.720 --> 0:02:44.040 and they cannot show a lot of the air revenue, 0:02:44.120 --> 0:02:46.720 so to investors are questioning whether that's going to happen. 0:02:47.080 --> 0:02:50.200 The second thing that you just mentioned is the rotation 0:02:50.320 --> 0:02:53.320 into value and rotation into small caps. And I think 0:02:53.360 --> 0:02:55.919 that's another play that's going to happen over the next 0:02:56.400 --> 0:02:59.800 several quarters because the disparity between the large cap in 0:02:59.840 --> 0:03:01.880 the hech world and the small companies in the deck 0:03:01.919 --> 0:03:03.480 world is massive at this point. 0:03:03.639 --> 0:03:05.520 I got to leave it there. Anerog I'm so sorry 0:03:05.520 --> 0:03:08.040 to short you this morning. The news flow just exceptional. 0:03:08.400 --> 0:03:12.560 He is a definitive on the cloud. Look for aniog 0:03:12.760 --> 0:03:27.160 Rana at Bloomberg Intelligence writing up Cloud Forward a couple 0:03:27.120 --> 0:03:32.680 of years ago. Here's the abstract. This chapter proposes a 0:03:32.760 --> 0:03:37.040 direct payment to individuals that would automatically be paid out 0:03:37.080 --> 0:03:41.080 early in a recession and then continue annually when the 0:03:41.160 --> 0:03:45.360 recession is severe. The outcome of this paper direct stimulus 0:03:45.360 --> 0:03:49.320 payments to individuals will be she will be hounded forever 0:03:49.800 --> 0:03:52.560 about the samb rule. We are honored on this job 0:03:52.640 --> 0:03:56.040 today to have Claudia Sum join us out of Michigan, 0:03:56.200 --> 0:04:01.040 off the Fed, of course, with new Sentry advisor definitive, 0:04:01.120 --> 0:04:06.680 and with a question the most followed economist in America today, Claudia, 0:04:06.720 --> 0:04:08.760 I don't want to get into cute, trite stuff. I'm 0:04:08.760 --> 0:04:11.760 not going to do the usual media interview. But what 0:04:12.080 --> 0:04:17.200 is the use of your rule? The wiggle room that 0:04:17.279 --> 0:04:19.599 it has. I think of DSGE, which you can go 0:04:19.680 --> 0:04:22.920 eight ways. How many ways can the sum rule go? 0:04:23.680 --> 0:04:26.320 Or is it ultra rigorous? 0:04:27.839 --> 0:04:30.479 It's it's a tool. It was part of a policy 0:04:30.680 --> 0:04:36.320 proposal and an idea to do more fiscal policy. Put 0:04:36.360 --> 0:04:38.680 it up, put it together ahead of time, design it 0:04:38.720 --> 0:04:42.880 well tied economic conditions, take some of the politics out 0:04:42.920 --> 0:04:46.039 in the crisis, and hit go right. This it was 0:04:46.080 --> 0:04:48.159 a tool to solve a problem. In the past, we 0:04:48.240 --> 0:04:52.159 haven't fought receptions as vigorously. It was developed before COVID 0:04:52.800 --> 0:04:56.000 and and so that's that's the idea of it. It's 0:04:56.160 --> 0:05:00.200 not and it's a tool. It needed to be simp well. 0:05:00.240 --> 0:05:02.279 It needed to summarize a lot that was going on 0:05:02.279 --> 0:05:04.160 in the economy. Frankly, we have an economy right now 0:05:04.160 --> 0:05:07.400 that's extremely hard to summarize. So it's having a rough 0:05:07.480 --> 0:05:11.280 go of it. And yet I'm glad it's help being 0:05:11.279 --> 0:05:13.560 helpful I think useful to some extent in the conversation 0:05:13.680 --> 0:05:14.080 right now. 0:05:14.160 --> 0:05:18.160 Let us look now at the jobs report of America 0:05:18.640 --> 0:05:21.960 coming out now, and it is a whoa huge depression. 0:05:22.320 --> 0:05:25.400 It is a woe statistic as well. I'm going to 0:05:25.440 --> 0:05:27.440 go through this for a bit before we go to 0:05:27.520 --> 0:05:31.599 Claudia Sam, and we're going to see major major market 0:05:32.160 --> 0:05:36.800 moves here. S ANDP down seventy five points right now, 0:05:36.960 --> 0:05:43.000 Nastack down one, three eighty two. The tenure yield off 0:05:43.040 --> 0:05:45.440 of the numbers, which I'll give you in a moment, folks, 0:05:45.440 --> 0:05:49.400 the ten years in seventeen basis points for Global Wall Street, 0:05:50.000 --> 0:05:53.720 I'm not kidding. Ginormous fits the Friday morning tone three 0:05:53.760 --> 0:05:56.880 point eight zero percent. Here are the numbers, and I 0:05:56.920 --> 0:05:59.960 have the revisions. Now. The revision is a weaker statistic 0:06:00.000 --> 0:06:03.400 stick from two oh six down to one seventy nine. 0:06:03.839 --> 0:06:07.560 The summed revision is negative twenty nine thousand. The non 0:06:07.600 --> 0:06:12.040 farm payrolls is one hundred and fourteen thousand below doctor 0:06:12.080 --> 0:06:15.919 Wong statistic below the survey of one seventy five. The 0:06:16.120 --> 0:06:19.880 unemployment rate explodes is too much, but I am in 0:06:19.920 --> 0:06:23.440 the media four point one percent to a higher level 0:06:23.520 --> 0:06:26.719 four point three percent. We'll have Claudiusom speak on this 0:06:26.839 --> 0:06:30.920 here in a moment. Tepe earnings on a month over 0:06:31.040 --> 0:06:33.960 month basis, which is what IRA Jersey looks at, it 0:06:34.000 --> 0:06:38.840 comes in weaker point three becomes point two weekly earnings, 0:06:39.080 --> 0:06:43.839 a revision weaker, the actual statistic three point seven becomes 0:06:43.880 --> 0:06:46.479 three point six. You get the tone that we see 0:06:46.520 --> 0:06:51.680 out there. Labor participation actually is somewhat constructive. The underemployment rate, 0:06:51.760 --> 0:06:56.240 Alan green SPAN's favorite statistic explodes is the correct word, 0:06:56.880 --> 0:07:00.159 seven point four percent to seven point eight percent. The 0:07:00.240 --> 0:07:04.000 vics out two big figures two point twenty nine. That's 0:07:04.000 --> 0:07:07.280 some p futures at negative eighty seven Claudia Sam I've 0:07:07.279 --> 0:07:10.640 got to ask the media question, is this some rule 0:07:11.520 --> 0:07:13.440 in a force at this. 0:07:13.440 --> 0:07:16.080 Moment get triggered? 0:07:16.680 --> 0:07:17.080 Yeah? 0:07:17.320 --> 0:07:19.800 Wow, Yeah, So that puts it up over it's half 0:07:19.840 --> 0:07:24.160 a percentage point threshold. Noting that comes off of historical experience. 0:07:24.160 --> 0:07:26.640 That doesn't necessarily tell us where you know, we are 0:07:27.120 --> 0:07:31.400 right at this moment saying a recession. This has seen 0:07:31.720 --> 0:07:36.320 way too much momentum in the unemployment rate in recent months, 0:07:36.600 --> 0:07:39.280 I mean four point three percent. Right, this is not 0:07:40.120 --> 0:07:43.520 so whether we are at that moment of a recession 0:07:43.640 --> 0:07:47.280 or not. This is your build into substantial weakening in 0:07:47.320 --> 0:07:50.960 the labor market, right like we have seen. Potentially all 0:07:51.040 --> 0:07:53.160 is not lost. We are you know, the bottom's offing out. 0:07:53.160 --> 0:07:55.360 We should never panic. There are policy tools, there are 0:07:55.440 --> 0:07:58.440 levers and and you know, again I don't overread one 0:07:58.520 --> 0:08:02.440 data point, but this isn't one data point. So I 0:08:02.480 --> 0:08:05.960 think the case now for hey, we're normalizing. We didn't 0:08:05.960 --> 0:08:09.640 need to slow things down some probably generally speaking. But 0:08:09.800 --> 0:08:13.360 now the question is, okay, so we've had enough slowing here, 0:08:13.680 --> 0:08:17.239 what levels this out? And that I think I don't 0:08:17.240 --> 0:08:18.040 have the answer for that. 0:08:18.240 --> 0:08:22.520 Claudius big One, an economist of Merit Claudia Sam by 0:08:22.520 --> 0:08:26.880 the name of Stanley Fisher once lectured me and otherworthies 0:08:27.400 --> 0:08:32.280 that the percentage move is important. The fact is we've 0:08:32.280 --> 0:08:35.600 gone up zero point nine percent from a three point 0:08:35.720 --> 0:08:40.200 four percent unemployment to a four point three percent, and 0:08:40.240 --> 0:08:42.800 that percentage change is ginormous. I'm going to give that 0:08:42.840 --> 0:08:45.000 to you folks in a moment. This is something you 0:08:45.040 --> 0:08:48.040 can do on the Bloomberg. It's actually way way cool, 0:08:48.640 --> 0:08:51.360 to say the least. We've had a twenty six percent 0:08:51.480 --> 0:08:55.920 increase in the unemployment rate pandemic adjusted. I get it. 0:08:56.400 --> 0:08:59.600 How does that fit into your historical perspective, doctor somem 0:09:00.200 --> 0:09:02.880 on a move in the unemployment rate. 0:09:05.200 --> 0:09:09.680 We have had a lot of disruptions in the labor force, 0:09:09.960 --> 0:09:12.000 so the supply of workers even go back to beginning 0:09:12.000 --> 0:09:14.160 of the pandemic, millions of people dropping out, and then 0:09:14.160 --> 0:09:18.439 we had labor shortages, and then we had larger immigration 0:09:18.600 --> 0:09:20.240 coming in. Like this has just been a lot and 0:09:20.320 --> 0:09:22.800 we all know personally, and then also in the economy, 0:09:22.840 --> 0:09:25.280 adjustments can be hard if they are big and sunny, 0:09:25.320 --> 0:09:27.160 and we've had a lot of that, and so this 0:09:27.320 --> 0:09:31.360 is absolutely in there. In these increases in the unemployment rate, 0:09:31.440 --> 0:09:34.880 we are still working through disruptions, and yet it's some 0:09:35.559 --> 0:09:40.920 like underneath that is also a much more typical, pernicious, 0:09:41.320 --> 0:09:44.680 not good increase in the unemployment rate of just there's 0:09:44.760 --> 0:09:47.680 less demand for workers, and if workers don't have paychecks, 0:09:47.720 --> 0:09:51.240 they can't spend, and then that's the momentum that gets going. 0:09:51.280 --> 0:09:54.320 So it's you know, there's it's it's the volume is 0:09:54.360 --> 0:09:57.800 turned up louder than usual on them rule. So I 0:09:57.840 --> 0:10:00.160 don't look at this and big pictures say we or 0:10:00.200 --> 0:10:03.080 in a recession. But I look at this and I say, 0:10:03.200 --> 0:10:06.040 we're We're not in a good We're not headed in 0:10:06.080 --> 0:10:06.480 a good drug. 0:10:06.559 --> 0:10:08.520 Does you mean get one more question in here? She 0:10:08.559 --> 0:10:10.199 has to speak to President Biden. 0:10:10.080 --> 0:10:11.280 Or no, Claudia. 0:10:11.320 --> 0:10:12.920 You know, I'm a huge Guns and Roses fan, and 0:10:12.960 --> 0:10:15.040 I love the song Patients, But I mean, waiting for 0:10:15.080 --> 0:10:17.240 waiting sake is no way to conduct policy. That's not me, 0:10:17.320 --> 0:10:19.840 that's Neil Dudda. Talk to us about what happens in September. Now, 0:10:19.880 --> 0:10:21.120 is this enough for the FED to move. 0:10:22.800 --> 0:10:25.040 That should have moved, should have moved already. 0:10:25.920 --> 0:10:28.520 Yeah, this was a discussion. It's a discussion I have 0:10:28.640 --> 0:10:31.440 been in. The FED needs to start the rest of 0:10:31.440 --> 0:10:33.560 the economy was normalizing, the rest of the economy was 0:10:33.559 --> 0:10:35.360 cooling off. The FED needed to do the same thing. 0:10:35.600 --> 0:10:37.680 Okay, but Claudia, Okay, I'm gonna go Claudia. 0:10:38.080 --> 0:10:38.680 But they can. 0:10:39.559 --> 0:10:41.520 It's not lost and they have a lot of life. 0:10:42.040 --> 0:10:46.439 Claudia got Neil Dudda coming up. Okay, Damien nailed it. Okay, 0:10:47.679 --> 0:10:52.360 let's just forget process. We're out of a pandemic. Everybody. 0:10:52.440 --> 0:10:55.640 Krugman's going now now, now, dud is going now now, now, 0:10:55.840 --> 0:10:58.760 Sim's going now now now. Do they have to save 0:10:58.920 --> 0:11:01.480 face and wait till something Chember twenty one, or can 0:11:01.520 --> 0:11:03.800 they come out and go you know, when the facts change, 0:11:03.880 --> 0:11:07.080 we change, like Bill Dudley and I'm sorry, make the 0:11:07.120 --> 0:11:11.360 adjustment at four point thirty pm this afternoon. Why not, 0:11:11.559 --> 0:11:14.600 doctor Somem. 0:11:14.920 --> 0:11:17.719 They have an ability to do whatever they think is appropriate. 0:11:17.840 --> 0:11:19.959 In no way, shape or form. Do I think panic 0:11:20.040 --> 0:11:22.800 should be the theme for today or for any day 0:11:22.840 --> 0:11:26.720 of the Federal Reserve? Frankly, and they will need to 0:11:26.720 --> 0:11:30.840 assess the situation. And this was not this was not 0:11:30.920 --> 0:11:35.160 good data in the let's wait. But again, this is 0:11:36.040 --> 0:11:38.880 again not overreacting. Not you can't go back and redo 0:11:38.960 --> 0:11:41.360 policy decisions. They have a lot of tools at their disposal, 0:11:41.400 --> 0:11:44.120 and we should be very thankful that there are these 0:11:44.160 --> 0:11:48.640 policy adjustments that can be made that will help Claudia. 0:11:48.880 --> 0:11:51.120 Thank you so much, honored you could attend this morning. 0:11:51.160 --> 0:11:55.920 Doctor Somem without question the most influential economist in America 0:11:56.080 --> 0:11:58.800 right now. With New Century Advisors. We turned to Neil 0:11:58.840 --> 0:12:01.640 Dudda who's lost patient. He has an optimism on the 0:12:01.679 --> 0:12:05.040 American economy, and he's really pulled back and said, let's go, 0:12:05.440 --> 0:12:08.960 how where is the dota optimism this morning? NEI help 0:12:09.040 --> 0:12:11.920 me out here. I need to be optimistic. Where are 0:12:11.960 --> 0:12:14.760 you optimistic on the American economy? 0:12:15.400 --> 0:12:18.600 Well, if you wanted me to say something optimistic, guy, 0:12:18.679 --> 0:12:23.400 that go what Paul Claudia said, So thankful to be 0:12:23.440 --> 0:12:26.880 on after her. Quite an act to follow, Thanks Tom. 0:12:26.880 --> 0:12:29.760 But you know I would just I would just say 0:12:29.880 --> 0:12:34.640 that we don't need a troubled asset relief program, we 0:12:34.720 --> 0:12:38.319 don't need a resolution Trust Corporation. I mean, the problem 0:12:38.520 --> 0:12:42.440 with the economy is that monetary policy is too tight, 0:12:43.200 --> 0:12:46.520 and that means the looser monetary policy can help resolve 0:12:46.559 --> 0:12:51.040 the problem. And so you know, from my perspective, the 0:12:51.080 --> 0:12:54.320 Fed can just keep cutting until the economy turns, and 0:12:54.360 --> 0:12:56.400 there's a lot of room for them to do so. 0:12:56.400 --> 0:13:00.280 So I think that would be the optimistic sort of 0:13:00.320 --> 0:13:02.559 spin on things, is that, you know, the FED has 0:13:02.600 --> 0:13:07.680 plenty of ammunition to kind of you know, course correct here. 0:13:08.120 --> 0:13:11.560 I think they'll use it. And you know, this isn't 0:13:11.600 --> 0:13:16.319 about household balance sheet deflation. This isn't about corporate balance 0:13:16.360 --> 0:13:19.079 sheet recessions like oh one, This isn't about an asset 0:13:19.679 --> 0:13:23.800 bubble bursting. This is just about monetary policy being too tight. 0:13:24.200 --> 0:13:29.120 You know, the writing has been on the wall for months. Okay, 0:13:29.160 --> 0:13:32.640 I mean this sort of let's wait, you know, we 0:13:32.760 --> 0:13:36.240 get you know, spooked by first quarter data and waiting 0:13:36.280 --> 0:13:38.760 for the sake of waiting. I mean, this is what 0:13:38.880 --> 0:13:43.600 happens when you play that game. Okay, And look, I 0:13:43.600 --> 0:13:45.960 mean I agree that it's not worth panicking. And I 0:13:45.960 --> 0:13:47.959 don't think that this means that the feed should move 0:13:48.000 --> 0:13:51.319 inter meeting or anything like that. But let's be absolutely 0:13:51.400 --> 0:13:53.760 clear about why this is happening. The writing has been 0:13:53.800 --> 0:13:55.640 on the wall for months. They didn't have a story 0:13:55.640 --> 0:13:58.720 to tell for why inflation would pick up. Every single 0:13:58.760 --> 0:14:01.320 monetary policy ruled that they look at. That's in their 0:14:01.360 --> 0:14:04.600 Monetary Policy report every time they go before Congress has 0:14:04.640 --> 0:14:07.200 been saying the same thing for months, which is a 0:14:07.280 --> 0:14:10.600 less restrictive policy stances required. Now we're going to act 0:14:10.640 --> 0:14:13.520 all surprised when you know the labor markets slong in 0:14:13.559 --> 0:14:15.800 a more material way. And I will say, I mean, 0:14:15.840 --> 0:14:18.720 I do think it's going to get worse before it 0:14:18.760 --> 0:14:20.800 gets better, because when you look at some of the 0:14:20.840 --> 0:14:26.680 details within this report, you know, goods producing industries saw 0:14:26.680 --> 0:14:30.560 a pickup over the month, tom construction employment rose over 0:14:30.600 --> 0:14:33.000 the month. What do we know about residential investment over 0:14:33.040 --> 0:14:37.640 the summer. It's going nowhere. So the Fed's been kind 0:14:37.640 --> 0:14:39.960 of playing this game of chicken with the corporate sector, 0:14:40.000 --> 0:14:43.320 where you know, the data has been strong, and so 0:14:43.440 --> 0:14:45.640 the FED feels like they don't need to move, but 0:14:45.680 --> 0:14:48.080 the data has also been strong because the corporate sector 0:14:48.120 --> 0:14:49.240 thinks it's going to move. 0:14:49.600 --> 0:14:51.200 Let me get it, let me know, let me get 0:14:51.200 --> 0:14:53.160 a data check in here. And Damien wants to crush you. 0:14:53.560 --> 0:14:55.960 The VICS folks at twenty level up to a twenty 0:14:55.960 --> 0:14:59.040 one point twenty six Anileti's aged off that two point 0:14:59.080 --> 0:15:03.160 sixty seven full points here on the VICS were now 0:15:03.280 --> 0:15:07.320 negative ninety seven on the Standard Ports five hundred eight 0:15:07.360 --> 0:15:11.840 percent down, Nasdaq down two point five seven up percent. 0:15:12.120 --> 0:15:14.040 Damien says, I don't care about the equity market. 0:15:14.120 --> 0:15:16.520 I'm looking at that's right, that's right, ten year yield. 0:15:16.280 --> 0:15:19.320 For three point I'm looking at the thirty year bond 0:15:19.400 --> 0:15:20.400 thinking it's a ten yere. 0:15:20.520 --> 0:15:22.320 You're missing the big one here, You're missing the big 0:15:22.360 --> 0:15:24.880 one here. Dollar yen down two and a half, big 0:15:24.920 --> 0:15:28.520 figures to one forty, a stronger yen, dollar. 0:15:28.320 --> 0:15:30.400 Weaker because they think the Fed's gonna cut. 0:15:30.480 --> 0:15:33.200 So, Neil, I have to ask you this traditional seave havens. 0:15:33.240 --> 0:15:35.520 No one likes bonds, no one likes gold, no one 0:15:35.600 --> 0:15:37.520 likes the end. But look at what's happening here in 0:15:37.560 --> 0:15:40.320 this market. But some of these moves are pretty pretty big, 0:15:40.360 --> 0:15:42.080 and it is obviously an illiquid summer. 0:15:42.480 --> 0:15:43.920 Are some of these moves over done or is then 0:15:43.920 --> 0:15:44.280 more to go? 0:15:46.880 --> 0:15:49.160 I mean, I think it's probably overdone for now. But 0:15:49.200 --> 0:15:53.640 I wouldn't be like selling a fixed income here just 0:15:53.680 --> 0:15:55.560 because we had a sharp move. I mean, I think 0:15:56.040 --> 0:15:59.320 you know, you probably take opportunities with yields going up 0:15:59.360 --> 0:16:01.880 to kind of build on your on your position. I 0:16:02.160 --> 0:16:04.000 do think that, like I said, I think the data 0:16:04.040 --> 0:16:06.120 is going to dictate a lot of these sort of 0:16:06.680 --> 0:16:09.160 you know, high frequency lows. And like I said, I 0:16:09.160 --> 0:16:11.840 think that data is going to look worse before it 0:16:12.240 --> 0:16:14.640 looks better. And so I think for me that means, 0:16:15.360 --> 0:16:17.240 you know, there's additional moment I mean like something like 0:16:17.280 --> 0:16:19.960 downward revision, something Time's been talking about. You know, we 0:16:20.000 --> 0:16:22.600 know that downward revisions have a momentum to them, right, 0:16:22.640 --> 0:16:24.800 So the fact that the numbers are being revised down 0:16:25.120 --> 0:16:27.120 kind of sets the table for the sort of direction 0:16:27.400 --> 0:16:28.600 travel data. 0:16:28.680 --> 0:16:30.840 Yeah, we heard that from Claudia Sama as well and 0:16:31.120 --> 0:16:33.560 Sam and Dudda with us is great. Let me tell you, folks, 0:16:33.760 --> 0:16:36.520 we are commercial free across the nation to the end 0:16:36.680 --> 0:16:39.520 of the hour. Ira Jersey will join us now he's 0:16:39.560 --> 0:16:43.760 publishing Bloomberg Intelligence. They're interest rate outlook. We are thrilled 0:16:43.880 --> 0:16:46.760 in moments all the m Moletti with us, from all 0:16:46.800 --> 0:16:50.240 Spring Global Investments on the value that's out there is 0:16:50.320 --> 0:16:54.320 we see a dearth of growthiness this morning and with 0:16:54.480 --> 0:16:57.400 us right now Neil Dutta futures at negative one hundred 0:16:57.480 --> 0:17:01.280 on the standard reports down futures at negative five an 0:17:01.400 --> 0:17:04.880 give the VIC twenty one point fourth Street. Damien to mister. 0:17:04.720 --> 0:17:07.360 Dutter, I'd like to ask you about that dearth of growthiness, Neil. 0:17:07.400 --> 0:17:08.800 I mean, that's a great way of putting at the 0:17:08.840 --> 0:17:11.720 ten year real yield down to one point six nine percent, 0:17:11.760 --> 0:17:14.439 off another seven basis points on this news. Talk to 0:17:14.480 --> 0:17:16.680 us a little bit about I mean, it's sticky here 0:17:16.680 --> 0:17:19.440 in New York, right, it's hot outside, but sticky inflation 0:17:19.480 --> 0:17:20.840 seems like it's the thing of the past. 0:17:20.840 --> 0:17:21.000 Now. 0:17:21.000 --> 0:17:23.520 If I never hear sticky again, that might be too soon. 0:17:23.560 --> 0:17:25.639 Talk to us about inflation. Is that something we have 0:17:25.920 --> 0:17:28.600 just no interest in anymore? Is it all about growth 0:17:28.600 --> 0:17:29.240 in this market? 0:17:30.240 --> 0:17:32.440 Well, I don't have any interest in inflation anymore. I 0:17:32.480 --> 0:17:35.040 think that was that was last year's story. It's a 0:17:35.040 --> 0:17:38.840 bit ridiculous again, Damien. It has to do with what's 0:17:38.880 --> 0:17:42.120 the mechanism, right, unit labor costs have been below one 0:17:42.160 --> 0:17:43.240 percent for the last. 0:17:43.000 --> 0:17:43.760 Couple of quarters. 0:17:43.840 --> 0:17:46.399 I mean, for crying out loud, where the where's the 0:17:46.400 --> 0:17:50.199 inflationary impulse? The inflationary impulse from the labor market has 0:17:50.240 --> 0:17:54.200 been non existence, in my opinion, for at least three 0:17:54.280 --> 0:17:57.520 quarters two to three quarters. Okay, the Fed is just 0:17:57.680 --> 0:18:01.520 now saying that, So you know, I think this is 0:18:01.560 --> 0:18:04.320 really a function of number one. They were spooked by 0:18:04.359 --> 0:18:06.760 the first quarter data, even though data, they didn't understand 0:18:06.800 --> 0:18:09.280 why it rose. It rose, and they kind of they 0:18:09.320 --> 0:18:11.879 sort of took more signal from that than they should have. 0:18:12.000 --> 0:18:17.159 It was more noise than signal. And they're allowing, you know, 0:18:17.280 --> 0:18:20.399 the specter of the nineteen seventies to haunt them. But 0:18:20.480 --> 0:18:23.359 the difference, the key distinction between this period and that 0:18:23.400 --> 0:18:26.040 period is that was a period of falling productivity growth. 0:18:26.040 --> 0:18:28.520 This has been one where productivity has largely been normalizing. 0:18:28.720 --> 0:18:31.320 That's the key. That's that's you know, I gotta interrupt 0:18:31.320 --> 0:18:34.840 because that's the absolute key insight right now. I don't 0:18:34.840 --> 0:18:37.920 know which war they're reliving, but they're reliving a new 0:18:37.960 --> 0:18:41.000 war because we have new productivity. We talked to Clarida. 0:18:41.560 --> 0:18:45.679 It's pretty good. You have Richard Clarida, Bill Dudley, Claudius, 0:18:45.720 --> 0:18:48.200 Sam and Neil Dudda. I mean that's a group of 0:18:48.280 --> 0:18:50.639 well anymous give one more to Duddy here before he 0:18:50.680 --> 0:18:51.480 goes and works. Well. 0:18:51.560 --> 0:18:53.639 No, it's a new beta regime for sure, but you know, 0:18:53.680 --> 0:18:55.880 the old playbook seems to be kind of working here. 0:18:56.040 --> 0:18:59.120 Investment Grade credit just crushing on this move in US 0:18:59.160 --> 0:19:01.320 treasury yields. And if you're right and there's you know, 0:19:01.440 --> 0:19:03.320 not that much wrong with the corporate sector here in 0:19:03.359 --> 0:19:05.360 the US, is that is that a fixed in comassa 0:19:05.359 --> 0:19:06.600 class that you want to own right now? 0:19:08.400 --> 0:19:11.600 Yeah? I mean, look like I said, I think just 0:19:11.640 --> 0:19:14.959 to take it back, it's we have a period of 0:19:15.040 --> 0:19:17.840 pain I think ahead of us. I mean, the next 0:19:17.960 --> 0:19:20.159 few weeks could get bumpy unless there's some kind of 0:19:20.200 --> 0:19:22.800 surprise FED meeting. I don't think they'll do that because 0:19:22.840 --> 0:19:25.800 I think that might invite more panic than than it's worth. 0:19:26.520 --> 0:19:29.840 But the FED is going to get eventually on the 0:19:29.920 --> 0:19:33.199 right side of the eight ball here. This is this, 0:19:33.560 --> 0:19:36.960 there's absolutely no reason to worry about inflation at the moment, 0:19:37.280 --> 0:19:41.000 with the unemployment rate rising, unit labor costs slowing, oil 0:19:41.040 --> 0:19:44.080 prices collapsing. I mean, it's just a ridiculous thing to 0:19:44.119 --> 0:19:48.359 be even considering. So that means I think the FED 0:19:48.480 --> 0:19:51.479 is going to you know, start to you know, unload 0:19:51.520 --> 0:19:54.000 the cannon a little bit. And you know, for for 0:19:54.080 --> 0:19:57.240 Wall Street, I think what I'll be telling my clients 0:19:57.320 --> 0:20:01.119 is fifty twenty five, twenty five, one hundred basis points 0:20:01.119 --> 0:20:03.480 of rape cuts straight out the gate I think the 0:20:03.560 --> 0:20:05.160 FED has the space to do it, and I think 0:20:05.200 --> 0:20:06.680 that's the prudent approach at the moment. 0:20:06.720 --> 0:20:10.000 That's the prude twenty seconds, Neil data because the Mledi's 0:20:10.040 --> 0:20:11.600 going to walk out of the studio if I don't 0:20:11.600 --> 0:20:14.160 get to her. When you say fifty, you're the first 0:20:14.200 --> 0:20:17.480 person to say this. Do they signal fifty, Neil Datta 0:20:17.840 --> 0:20:20.160 or do they keep it a surprise and shock us? 0:20:20.359 --> 0:20:21.440 September twenty one. 0:20:21.680 --> 0:20:25.080 I say they signal, I mean they should signal it, 0:20:25.400 --> 0:20:27.920 and but I think more importantly is the guidance they said, 0:20:28.000 --> 0:20:29.919 say that they're willing to do what it takes to 0:20:29.920 --> 0:20:33.359 stabilize the count right provide that inflation continues to slow. 0:20:33.480 --> 0:20:35.640 Neil, thank you so much. It's great to have Claudius 0:20:35.680 --> 0:20:38.280 sim and Neil Dudda with us with this report and again, 0:20:38.400 --> 0:20:41.760 futures at negative ninety three down, futures negative four sixty six. 0:20:42.600 --> 0:20:45.359 Mletti with us here. She wanted to go. You know, 0:20:45.400 --> 0:20:48.560 she's in Milwaukee. Did you survive the convention in Milwaukee? 0:20:48.600 --> 0:20:48.920 I did. 0:20:48.920 --> 0:20:51.640 I stayed kind of far away from it, so far for. 0:20:52.160 --> 0:20:53.880 Like you couldn't even get to your offices right. 0:20:54.480 --> 0:20:57.639