1 00:00:05,120 --> 00:00:08,480 Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene, along 2 00:00:08,520 --> 00:00:12,360 Speaker 1: with Jonathan Farrell and Lisa Abramowitz. Join us each day 3 00:00:12,400 --> 00:00:16,840 Speaker 1: for insight from the best an economics, geopolitics, finance and investment. 4 00:00:17,280 --> 00:00:22,119 Speaker 1: Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and 5 00:00:22,320 --> 00:00:26,600 Speaker 1: anywhere you get your podcasts, and always on Bloomberg dot Com, 6 00:00:26,640 --> 00:00:30,440 Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. Why don't 7 00:00:30,480 --> 00:00:32,440 Speaker 1: we move on to what doctor Olrium. 8 00:00:32,000 --> 00:00:35,240 Speaker 2: Cares Mohammed, We've got to sit on crude, the idea 9 00:00:35,360 --> 00:00:38,800 Speaker 2: that crude has essentially collapsed into a bear market, down 10 00:00:38,840 --> 00:00:41,680 Speaker 2: more than twenty percent from the September highs. We spent 11 00:00:41,720 --> 00:00:44,839 Speaker 2: this week talking about soft lending, hopes and dreams. Do 12 00:00:44,920 --> 00:00:47,600 Speaker 2: we have to start thinking about an economic downturn in 13 00:00:47,640 --> 00:00:49,239 Speaker 2: the not too distant future. 14 00:00:49,400 --> 00:00:51,519 Speaker 3: Well some of them. Some people are talking about this. 15 00:00:51,680 --> 00:00:53,960 Speaker 3: I mean to see oil prices down more than twenty 16 00:00:53,960 --> 00:00:56,320 Speaker 3: percent from the highs at the time that there's a 17 00:00:56,400 --> 00:00:59,200 Speaker 3: conflict going on in the Middle East. It's quite quite 18 00:01:00,160 --> 00:01:04,800 Speaker 3: and that's feeding into the soft landing. And we're going 19 00:01:04,800 --> 00:01:06,680 Speaker 3: to talk a lot about this. But the market has 20 00:01:06,760 --> 00:01:10,800 Speaker 3: now fully embraced not just that the fat has finished 21 00:01:10,800 --> 00:01:13,319 Speaker 3: this hiking cycle, which I think is correct, but that 22 00:01:13,360 --> 00:01:15,880 Speaker 3: we're going to see deeper and deeper cuts next year 23 00:01:16,440 --> 00:01:20,319 Speaker 3: without a recession, and that's the critical assumption that's now 24 00:01:20,319 --> 00:01:21,720 Speaker 3: built in across markets. 25 00:01:21,760 --> 00:01:23,080 Speaker 1: I want to get the money question out of the 26 00:01:23,120 --> 00:01:25,600 Speaker 1: way right away. As CEO of a major two million 27 00:01:25,680 --> 00:01:28,680 Speaker 1: employee company in America called Walmart, yesterday brought up a 28 00:01:28,760 --> 00:01:32,920 Speaker 1: d word deflation seared into the fabric of Cambridge, Oxford 29 00:01:32,959 --> 00:01:35,840 Speaker 1: in the London School of Economics as a study a 30 00:01:35,880 --> 00:01:39,240 Speaker 1: British deflation of the thirties and forties. America has never 31 00:01:39,280 --> 00:01:40,000 Speaker 1: faced that have. 32 00:01:40,000 --> 00:01:42,800 Speaker 3: They They haven't, and we've had Japan recently. And the 33 00:01:42,840 --> 00:01:46,680 Speaker 3: problem with deflation is it discourages people from buying today. However, 34 00:01:46,680 --> 00:01:49,920 Speaker 3: I want to stress the US is deflation in certain products, 35 00:01:50,240 --> 00:01:53,880 Speaker 3: food being the primary example, and that's why Walmart we 36 00:01:53,920 --> 00:01:57,240 Speaker 3: decited it. We don't have general deflation, and I doubt 37 00:01:57,240 --> 00:01:58,600 Speaker 3: we're going to have general deflation. 38 00:01:58,920 --> 00:02:01,200 Speaker 1: I mean, I look at the an inflation question and 39 00:02:01,240 --> 00:02:04,640 Speaker 1: it is a vector of disinflation in place. Clearly we 40 00:02:04,880 --> 00:02:08,120 Speaker 1: see that. What is your optimism of getting back to 41 00:02:08,200 --> 00:02:12,399 Speaker 1: John Williams two point zero percent? Richard claired is two 42 00:02:12,400 --> 00:02:13,440 Speaker 1: point x percent. 43 00:02:13,680 --> 00:02:17,360 Speaker 3: I think Richard is more likely to be right than John. 44 00:02:17,400 --> 00:02:19,919 Speaker 3: I think we're going to get stuck in the high twos, 45 00:02:20,080 --> 00:02:21,400 Speaker 3: and the FED is going to have to make a 46 00:02:21,520 --> 00:02:26,080 Speaker 3: very difficult decision. Does it live with inflation higher than 47 00:02:26,240 --> 00:02:29,840 Speaker 3: target because the target itself is too low, or alternatively, 48 00:02:30,200 --> 00:02:34,400 Speaker 3: does it acknowledge that two percent is the right target 49 00:02:34,440 --> 00:02:36,720 Speaker 3: and then crushes the economy. I think that's the choice 50 00:02:36,760 --> 00:02:37,680 Speaker 3: the FED is going to have to make. 51 00:02:37,800 --> 00:02:39,360 Speaker 4: What's your best guess right now? 52 00:02:39,600 --> 00:02:40,959 Speaker 3: I think it's going to go for the format. I 53 00:02:41,000 --> 00:02:44,880 Speaker 3: think the FED will understand that pressing two percent inflation 54 00:02:45,000 --> 00:02:49,240 Speaker 3: in a world where there's insufficient structural supply is not 55 00:02:49,320 --> 00:02:49,960 Speaker 3: the right thing to do. 56 00:02:50,080 --> 00:02:51,440 Speaker 4: So where do you think it leaves this bond market? 57 00:02:51,520 --> 00:02:52,640 Speaker 4: Let's go through this course right now. 58 00:02:52,639 --> 00:02:54,040 Speaker 2: We've got a two year at the moment at about 59 00:02:54,080 --> 00:02:57,360 Speaker 2: four eighty, a ten year at about four forty. Think 60 00:02:57,400 --> 00:02:59,840 Speaker 2: about where we've been in the last month of Summerhammet 61 00:03:00,080 --> 00:03:02,919 Speaker 2: had a two year pushing five twenty five high set 62 00:03:02,960 --> 00:03:06,080 Speaker 2: of cycle, ten year through five percent high set of cycle. 63 00:03:06,360 --> 00:03:08,200 Speaker 2: How are you thinking about what we come back down to, 64 00:03:08,680 --> 00:03:11,359 Speaker 2: bearing in mind what we're pricing for right cuts next year. 65 00:03:11,880 --> 00:03:13,800 Speaker 3: I think we've come down too far to tell your truth. 66 00:03:13,919 --> 00:03:16,720 Speaker 3: I understand why some people think that we're going further, 67 00:03:17,080 --> 00:03:21,040 Speaker 3: but if you look at the inflation dynamics, that's harder 68 00:03:21,080 --> 00:03:23,880 Speaker 3: to get unless we go into recession. If we go 69 00:03:23,919 --> 00:03:26,920 Speaker 3: into a recession, then the stock market is mispriced, so 70 00:03:26,960 --> 00:03:28,440 Speaker 3: you can't have both at the same time. 71 00:03:28,680 --> 00:03:30,639 Speaker 2: Has something changed? I think this is what it goes 72 00:03:30,639 --> 00:03:33,560 Speaker 2: back to. Has something changed post pandemic? That means we 73 00:03:33,600 --> 00:03:36,080 Speaker 2: don't go back to the pre pandemic world. That debate, 74 00:03:36,120 --> 00:03:37,760 Speaker 2: I think is still on going. Mohammed, where'd you come 75 00:03:37,800 --> 00:03:40,840 Speaker 2: down on it? I think the pre pandemic world was exceptional. 76 00:03:41,240 --> 00:03:43,360 Speaker 2: It was a world of qui. It was a world 77 00:03:43,400 --> 00:03:47,120 Speaker 2: of insufficient aggregate demand. And when you have insufficient aggregate demand, 78 00:03:47,160 --> 00:03:50,200 Speaker 2: you can push into the economy as much liquidity as 79 00:03:50,200 --> 00:03:51,680 Speaker 2: you want because you won't get inflation. 80 00:03:52,120 --> 00:03:54,960 Speaker 3: That world is gone. We're in a world now of efficient, 81 00:03:55,120 --> 00:03:57,880 Speaker 3: inflexible supply, and that's a very different world. 82 00:03:58,160 --> 00:04:00,920 Speaker 1: Sometimes talk about over the two hours with doctor Olian 83 00:04:01,320 --> 00:04:03,800 Speaker 1: is growth economics. I've been telling a lot of people 84 00:04:03,800 --> 00:04:06,920 Speaker 1: to remind themselves of a guy named Solo at MIT 85 00:04:07,040 --> 00:04:10,760 Speaker 1: in nineteen fifty six and the near religious experience of 86 00:04:10,880 --> 00:04:14,080 Speaker 1: trusting and growth. Can you state that we have a 87 00:04:14,120 --> 00:04:18,000 Speaker 1: new American growth economics of what some people are indicating 88 00:04:18,440 --> 00:04:21,160 Speaker 1: is improved productivity, improved efficiency. 89 00:04:21,560 --> 00:04:25,279 Speaker 3: So you know, I listened carefully to our friend Mike Spence, 90 00:04:25,600 --> 00:04:27,680 Speaker 3: the Nobel Prize winner, because he spent so much of 91 00:04:27,680 --> 00:04:29,000 Speaker 3: his career studying. 92 00:04:28,760 --> 00:04:32,600 Speaker 1: Studying with John Hicks, I mean correct majesty of that alone. 93 00:04:32,279 --> 00:04:35,200 Speaker 3: And he is incredible and his insights are really valuable. 94 00:04:35,200 --> 00:04:38,240 Speaker 3: And his bottom line is that most countries have to 95 00:04:38,279 --> 00:04:41,000 Speaker 3: evolve to a new growth model. The US is the 96 00:04:41,040 --> 00:04:45,200 Speaker 3: most advanced in that evolution. I think the three important 97 00:04:45,200 --> 00:04:48,480 Speaker 3: piece of legislation that the administration passed last year were 98 00:04:48,480 --> 00:04:51,159 Speaker 3: critical in that perspective. So if you look around the world, 99 00:04:51,320 --> 00:04:55,040 Speaker 3: whether it is the US, Europe, or China, all three 100 00:04:55,200 --> 00:04:58,119 Speaker 3: have the challenge of evolving the growth model, and only 101 00:04:58,120 --> 00:05:00,599 Speaker 3: the US is doing it seriosly right now, too gloomy? 102 00:05:03,040 --> 00:05:05,080 Speaker 3: We no, Lisa isn't here, so we're not too blooming. 103 00:05:06,920 --> 00:05:06,960 Speaker 5: No. 104 00:05:07,120 --> 00:05:09,720 Speaker 3: I think we recognize that the world is evolving. This 105 00:05:09,760 --> 00:05:13,080 Speaker 3: is a different global economy, this is a different domestic economy, 106 00:05:13,240 --> 00:05:15,160 Speaker 3: and policies have to evolve accordingly. 107 00:05:15,440 --> 00:05:16,920 Speaker 2: What worries me and I think the concern of a 108 00:05:16,920 --> 00:05:18,880 Speaker 2: lot of people listening to this conversation on going at 109 00:05:18,880 --> 00:05:20,760 Speaker 2: home is you just have to go about forty eight 110 00:05:20,760 --> 00:05:24,520 Speaker 2: hours and we're talking about disinflation, soft landing, hopes and dreams, 111 00:05:24,920 --> 00:05:27,400 Speaker 2: and then twenty four hours, forty eight hours later, you 112 00:05:27,440 --> 00:05:30,560 Speaker 2: look to Burberry a collapse in luxury. You look to 113 00:05:30,640 --> 00:05:33,400 Speaker 2: Walmart a warning about the US consumer. You look to 114 00:05:33,480 --> 00:05:35,640 Speaker 2: Crew entering a bear market, and all of a sudden, 115 00:05:35,680 --> 00:05:38,080 Speaker 2: we're talking about a slowdown and maybe even recession. 116 00:05:38,240 --> 00:05:38,680 Speaker 4: Mohammed. 117 00:05:38,760 --> 00:05:40,960 Speaker 2: The bond market is stuck between all of this. We're 118 00:05:40,960 --> 00:05:43,640 Speaker 2: seeing double digit moves day after day in either direction. 119 00:05:44,160 --> 00:05:46,360 Speaker 2: You've written about this extensively in the last few months, 120 00:05:46,360 --> 00:05:49,120 Speaker 2: about a bond market that's lost its anchors. Is an 121 00:05:49,160 --> 00:05:53,040 Speaker 2: economic slowdown sufficient to regain some stability in fixed incoming 122 00:05:53,080 --> 00:05:54,080 Speaker 2: treasury specifically? 123 00:05:54,600 --> 00:05:56,720 Speaker 3: No, I mean I was really struck yesterday. I was 124 00:05:56,760 --> 00:06:00,400 Speaker 3: watching you when you said, guess what, we had the 125 00:06:00,440 --> 00:06:02,520 Speaker 3: same level of the tenure as we were a week ago, 126 00:06:02,720 --> 00:06:05,640 Speaker 3: and my reaction is, how could that be? So I 127 00:06:05,640 --> 00:06:07,880 Speaker 3: looked it up and you were right. 128 00:06:08,000 --> 00:06:08,200 Speaker 1: Now. 129 00:06:08,240 --> 00:06:10,840 Speaker 3: Most people feel that this week is very different from 130 00:06:10,920 --> 00:06:14,240 Speaker 3: last week because of the inflation print that we've had. 131 00:06:15,160 --> 00:06:18,000 Speaker 3: We still lack one of the three anchors. You either 132 00:06:18,040 --> 00:06:21,159 Speaker 3: need an economic anchor, or a policy anchor, or a 133 00:06:21,240 --> 00:06:24,560 Speaker 3: technical anchor to the bond market, and we've lost all three. 134 00:06:24,720 --> 00:06:27,600 Speaker 3: So these moves are going to continue. The thing that 135 00:06:27,640 --> 00:06:30,920 Speaker 3: has really impressed me is that nothing has broken. If 136 00:06:30,960 --> 00:06:32,400 Speaker 3: you had told me a year ago we're going to 137 00:06:32,440 --> 00:06:35,840 Speaker 3: see this incredible volatility and the most important market in 138 00:06:35,880 --> 00:06:38,800 Speaker 3: the world is the benchmark for so much else, and 139 00:06:38,880 --> 00:06:41,400 Speaker 3: yet nothing will break, I would have said that's impossible. 140 00:06:41,680 --> 00:06:45,000 Speaker 3: So the resilience of the functioning of the market has 141 00:06:45,040 --> 00:06:45,760 Speaker 3: really impressed me. 142 00:06:46,080 --> 00:06:48,080 Speaker 1: The financial system, and of course we had the shock 143 00:06:48,120 --> 00:06:50,520 Speaker 1: and the United Kingdom off a derivative structure in the 144 00:06:50,560 --> 00:06:53,320 Speaker 1: pension plans, but to lead to this and measured in 145 00:06:53,360 --> 00:06:56,680 Speaker 1: standard deviations, which is how fancy people like Alarian think. 146 00:06:57,040 --> 00:07:00,839 Speaker 1: We had a six seven eighth standard deviation and thereat moderation. 147 00:07:01,400 --> 00:07:03,599 Speaker 1: There's a hope in prayer we get back to that 148 00:07:03,880 --> 00:07:07,560 Speaker 1: trend line that's in years. How many years are do 149 00:07:07,640 --> 00:07:10,680 Speaker 1: you think we heal this great bond tobacco. 150 00:07:11,160 --> 00:07:13,440 Speaker 3: I think it's going to take time. Remember we've had 151 00:07:13,960 --> 00:07:17,480 Speaker 3: ten exceptional years where the bond market was distorted, so I. 152 00:07:17,520 --> 00:07:19,840 Speaker 1: Must say back to vulgar We've had, you know, thirty 153 00:07:20,000 --> 00:07:20,960 Speaker 1: exceptional years. 154 00:07:21,000 --> 00:07:25,320 Speaker 3: But the shift to an artificially low interest rate and 155 00:07:25,760 --> 00:07:30,120 Speaker 3: ample and predictable injections of liquidity fundamentally changed the bond 156 00:07:30,160 --> 00:07:33,440 Speaker 3: market and that is going to take time to recover from. 157 00:07:33,520 --> 00:07:35,640 Speaker 1: Did you and Bill Gross get a free ride because 158 00:07:35,680 --> 00:07:38,360 Speaker 1: you were within the Great Moderation? Was that such a 159 00:07:38,400 --> 00:07:43,320 Speaker 1: structural like a free life? But the PIMCO when you 160 00:07:43,360 --> 00:07:46,320 Speaker 1: build it, you invented it with Bill? Was it? Was 161 00:07:46,360 --> 00:07:49,120 Speaker 1: it easier because you had the Great Moderation? 162 00:07:49,320 --> 00:07:54,240 Speaker 3: Or just just think of investor. Investors care about three things, returns, volatility, 163 00:07:54,360 --> 00:07:57,800 Speaker 3: and correlations. And we went through a period that because 164 00:07:57,880 --> 00:08:01,640 Speaker 3: liquidity was being injected into the economy over and over again, 165 00:08:01,920 --> 00:08:06,480 Speaker 3: we got high returns, we got virtually no volatility, and 166 00:08:06,520 --> 00:08:08,880 Speaker 3: the correlations broke down. But in your favor, you made 167 00:08:08,880 --> 00:08:10,760 Speaker 3: money on your risky assets and you made money on 168 00:08:10,800 --> 00:08:13,560 Speaker 3: your risk free acids. At the same time, there was 169 00:08:13,640 --> 00:08:16,280 Speaker 3: a great time. We took it to be normal, but 170 00:08:16,360 --> 00:08:18,480 Speaker 3: it was truly exceptional. And we're going back to a 171 00:08:18,560 --> 00:08:21,480 Speaker 3: world that I think is more like what we had 172 00:08:21,560 --> 00:08:23,240 Speaker 3: before the Global financial crisis. 173 00:08:23,320 --> 00:08:25,160 Speaker 2: It's going to be so hard to shake this, Mohammed, 174 00:08:25,160 --> 00:08:27,200 Speaker 2: because we've got a whole generation, in fact, a couple 175 00:08:27,240 --> 00:08:31,360 Speaker 2: of generations conditioned by two major shocks, the financial crisis 176 00:08:31,600 --> 00:08:34,079 Speaker 2: and the pandemic. And we know how the FED response 177 00:08:34,120 --> 00:08:36,960 Speaker 2: to major shocks. What we've all forgotten is how it 178 00:08:37,000 --> 00:08:40,360 Speaker 2: responds to just normal economic downturns and upside pressure on inflation. 179 00:08:40,880 --> 00:08:42,880 Speaker 2: How do we start to get into that all over again? 180 00:08:42,960 --> 00:08:45,600 Speaker 3: Yeah, And this is where FED credibility and better communication 181 00:08:45,720 --> 00:08:49,520 Speaker 3: is better. John, It's really striking that the market is 182 00:08:49,559 --> 00:08:52,120 Speaker 3: willing to take on the FED on a price that 183 00:08:52,200 --> 00:08:56,200 Speaker 3: the FED controls. The FED totally controls the policy rate, 184 00:08:56,480 --> 00:08:59,199 Speaker 3: and yet the market does not believe what the FED 185 00:08:59,800 --> 00:09:03,240 Speaker 3: is is telling us. And it is really striking because 186 00:09:03,440 --> 00:09:06,720 Speaker 3: we have got to restore FED credibility otherwise we're going 187 00:09:06,760 --> 00:09:08,400 Speaker 3: to continue with this enormous volatility. 188 00:09:08,640 --> 00:09:11,680 Speaker 1: Your thoughts on what's percolating into the end of the 189 00:09:11,760 --> 00:09:15,280 Speaker 1: year in the Q one twenty twenty four. Are there 190 00:09:15,400 --> 00:09:19,679 Speaker 1: shadows in private equity? Are there shadows in the new 191 00:09:19,760 --> 00:09:21,760 Speaker 1: non traditional finance? Yeah? 192 00:09:21,760 --> 00:09:24,280 Speaker 3: So, one thing that I don't think is pricing enough 193 00:09:24,360 --> 00:09:28,240 Speaker 3: is that when you move from the banking system to 194 00:09:28,280 --> 00:09:32,160 Speaker 3: the non banks, you change the lags in the system. 195 00:09:32,400 --> 00:09:35,360 Speaker 3: So you see this with commercial real estate. Everybody recognizes 196 00:09:35,840 --> 00:09:41,520 Speaker 3: that the re financing of a trillion plus of assets 197 00:09:41,640 --> 00:09:43,840 Speaker 3: is going to be tricky, but because it's over time, 198 00:09:43,880 --> 00:09:46,240 Speaker 3: we don't worry about it. Everybody recognizes it as a 199 00:09:46,280 --> 00:09:49,000 Speaker 3: maturity wall in the corporates out there, but because it's 200 00:09:49,040 --> 00:09:50,760 Speaker 3: over time, we don't worry about it. If it were 201 00:09:50,800 --> 00:09:53,400 Speaker 3: all within the banking system, we would have worried about 202 00:09:53,400 --> 00:09:55,839 Speaker 3: it really quickly. So the move from the banks to 203 00:09:55,920 --> 00:09:59,040 Speaker 3: the non banks has extended this. 204 00:10:00,120 --> 00:10:02,920 Speaker 1: Michael Spencer's shore. The regulatory lag here is tangible. 205 00:10:03,040 --> 00:10:05,520 Speaker 2: This is the uncomfortable calm note as well, just to 206 00:10:05,520 --> 00:10:07,680 Speaker 2: borrow that phrase from a long time ago from the 207 00:10:07,720 --> 00:10:10,880 Speaker 2: Bank of International Settlements, This maturity wall is out there 208 00:10:10,880 --> 00:10:13,120 Speaker 2: in twenty twenty five, and it's just this feeling mohammed 209 00:10:13,160 --> 00:10:14,199 Speaker 2: that we don't have to think about it. 210 00:10:14,360 --> 00:10:16,480 Speaker 4: But at some point we have to start thinking about it, don't. 211 00:10:16,280 --> 00:10:16,800 Speaker 5: We, right? 212 00:10:16,920 --> 00:10:18,800 Speaker 3: But you know what, you enjoyed the journey before you 213 00:10:18,800 --> 00:10:19,560 Speaker 3: get to a destination. 214 00:10:19,640 --> 00:10:21,800 Speaker 1: Oh, here we go, and you want to give us 215 00:10:21,840 --> 00:10:23,840 Speaker 1: some good news bad news, bradmos out here. 216 00:10:23,960 --> 00:10:26,440 Speaker 3: No, no, I totally understand, you know, because momentum is 217 00:10:26,440 --> 00:10:29,319 Speaker 3: really important, and you want to be exposed to this market. 218 00:10:29,720 --> 00:10:31,640 Speaker 3: And I think most people have much more of a 219 00:10:31,760 --> 00:10:36,040 Speaker 3: tactical mindset than they do of a strategic or structural mindset, 220 00:10:36,280 --> 00:10:38,680 Speaker 3: and investment has become very tactical. 221 00:10:39,000 --> 00:10:41,000 Speaker 2: Mohammed's set in the Town's great to have you with us, 222 00:10:41,000 --> 00:10:44,240 Speaker 2: by the way. 223 00:10:52,160 --> 00:10:55,280 Speaker 1: It is without questions, through the pandemic and literally over 224 00:10:55,280 --> 00:10:59,160 Speaker 1: the last five years she has had a greater influence 225 00:10:59,240 --> 00:11:03,120 Speaker 1: on the debate of our American economics and anyone out there. 226 00:11:03,120 --> 00:11:06,120 Speaker 1: Out of Sacramento, Cambridge and a tour of duty at 227 00:11:06,160 --> 00:11:10,240 Speaker 1: the very liberal New School of Social Research, Stephanie Kelton 228 00:11:10,360 --> 00:11:13,640 Speaker 1: joins us now from Stonybrook University. The book is a 229 00:11:13,679 --> 00:11:17,840 Speaker 1: deficit myth. In the three letters, are MMT professor honored 230 00:11:17,880 --> 00:11:21,599 Speaker 1: to have you on Bloomberg's surveillance? Are we unraveled? Stephanie? 231 00:11:21,679 --> 00:11:25,680 Speaker 1: The worry here of the annual interest expense the return 232 00:11:25,760 --> 00:11:29,800 Speaker 1: of a real interest rate? Are we unraveling as we 233 00:11:29,920 --> 00:11:31,880 Speaker 1: roll into twenty twenty four? 234 00:11:33,840 --> 00:11:37,960 Speaker 6: No, I mean we are. The Fed is effectively in 235 00:11:38,000 --> 00:11:41,240 Speaker 6: a sense, putting fiscal policy, a big part of the 236 00:11:41,280 --> 00:11:46,320 Speaker 6: federal government's budget on autopilot. And it's really tantamount to running, 237 00:11:46,880 --> 00:11:51,200 Speaker 6: you know, a pretty regressive fiscal stimulus. That's what the 238 00:11:51,280 --> 00:11:54,960 Speaker 6: rate hikes are actually doing. If we don't like it, Tom, 239 00:11:55,000 --> 00:11:58,680 Speaker 6: there's a pretty easy way out of it, which is 240 00:11:58,720 --> 00:12:01,520 Speaker 6: to say, if the rate high are pushing up the 241 00:12:01,520 --> 00:12:04,880 Speaker 6: amount of money the federal government is spending to service 242 00:12:04,920 --> 00:12:08,360 Speaker 6: the debt, interest expenditure up by hundreds of billions and 243 00:12:08,440 --> 00:12:12,840 Speaker 6: trillions of dollars over time, remittances from the Fed to 244 00:12:12,880 --> 00:12:15,920 Speaker 6: the treasury have collapsed. All of this is adding to 245 00:12:15,960 --> 00:12:20,240 Speaker 6: the deficit, which triggers more issuance of treasuries, which puts 246 00:12:20,280 --> 00:12:24,040 Speaker 6: you in what is essentially just a cycle now of 247 00:12:24,520 --> 00:12:28,160 Speaker 6: higher rates, higher deficits, higher debt, and it will continue 248 00:12:28,240 --> 00:12:31,280 Speaker 6: for as long as the Federal Reserve holds in this 249 00:12:31,440 --> 00:12:32,840 Speaker 6: position with a deficit. 250 00:12:32,960 --> 00:12:34,959 Speaker 1: The debt and the deficit is from the new school 251 00:12:35,080 --> 00:12:39,920 Speaker 1: Heilbrunner and Bernstein classically talked about years ago. But the 252 00:12:40,080 --> 00:12:45,360 Speaker 1: arch MMT criticism is, you're handing monetary decision making from 253 00:12:45,400 --> 00:12:49,600 Speaker 1: the acuity and date driven data dependency of a FED 254 00:12:50,240 --> 00:12:54,679 Speaker 1: over to the legislative branch. Can we trust the legislative 255 00:12:54,720 --> 00:12:59,720 Speaker 1: branch to prosecute MMT given where we are right now? 256 00:13:01,080 --> 00:13:03,599 Speaker 6: Well, okay, I'm glad you mentioned hal Brunner. He was 257 00:13:03,840 --> 00:13:05,720 Speaker 6: a professor of mine when I was there in a 258 00:13:05,840 --> 00:13:12,800 Speaker 6: really terrifically bright person Tom. MMT is a description of 259 00:13:13,040 --> 00:13:16,200 Speaker 6: the monetary system that we have today. It is a 260 00:13:16,240 --> 00:13:19,440 Speaker 6: floating exchange rate fiat currency. Love it or hate it, 261 00:13:19,440 --> 00:13:23,200 Speaker 6: it's what we have. MMT describes the monetary system that 262 00:13:23,280 --> 00:13:26,600 Speaker 6: we have and the mechanics of government finance. It's not 263 00:13:26,679 --> 00:13:31,360 Speaker 6: a policy proposal. It doesn't propose changing anything. It's describing 264 00:13:31,480 --> 00:13:34,800 Speaker 6: how things already work. So think about what Congress did 265 00:13:34,880 --> 00:13:38,240 Speaker 6: with the onset of the pandemic, drafting first the Cares 266 00:13:38,280 --> 00:13:40,640 Speaker 6: Act that two point two trillion and then the big 267 00:13:40,679 --> 00:13:43,679 Speaker 6: Omnibus Bill, a nine hundred billion dollar package, and then 268 00:13:43,760 --> 00:13:46,440 Speaker 6: the Democrats came in and did their one point nine 269 00:13:46,840 --> 00:13:50,560 Speaker 6: trillion dollar American Rescue Plan Act. All of that was 270 00:13:50,800 --> 00:13:55,720 Speaker 6: deficit spending. We didn't give Congress any new permission to 271 00:13:55,800 --> 00:13:58,800 Speaker 6: do anything. We just described how it all works. And 272 00:13:58,840 --> 00:14:02,000 Speaker 6: it helps to unders stand why Congress was able to 273 00:14:02,120 --> 00:14:06,520 Speaker 6: muster that kind of fiscal firepower when so many economists 274 00:14:06,520 --> 00:14:09,920 Speaker 6: had previously said that when the next crisis came, we 275 00:14:10,040 --> 00:14:13,400 Speaker 6: would be unable to act. People like Larry Summers said 276 00:14:13,679 --> 00:14:17,360 Speaker 6: because of the Republican tax cuts in twenty seventeen, that 277 00:14:17,640 --> 00:14:20,600 Speaker 6: we would be living on a shoe string for decades 278 00:14:20,640 --> 00:14:23,520 Speaker 6: to come. Those were his words. That we wouldn't have 279 00:14:23,600 --> 00:14:26,520 Speaker 6: the ability to spend money because of the deficits, because 280 00:14:26,520 --> 00:14:26,960 Speaker 6: of the debt. 281 00:14:27,240 --> 00:14:28,280 Speaker 5: That was wrong. 282 00:14:28,720 --> 00:14:32,040 Speaker 6: Congress has the power of the purse. MMT recognizes that, 283 00:14:32,120 --> 00:14:36,040 Speaker 6: and MMT says, listen, this is an extraordinary power they have. 284 00:14:36,320 --> 00:14:40,240 Speaker 6: They need to use it responsibly, and that means thinking 285 00:14:40,400 --> 00:14:44,840 Speaker 6: before you move forward with bold spending programs about the 286 00:14:44,880 --> 00:14:49,200 Speaker 6: inflation risk that's associated with those spending proposals. And that's 287 00:14:49,240 --> 00:14:51,040 Speaker 6: the piece that was missing. The one thing you didn't 288 00:14:51,080 --> 00:14:54,920 Speaker 6: mention in you know, my tour of going through my 289 00:14:55,080 --> 00:14:57,200 Speaker 6: education and so forth, was the time I spent in 290 00:14:57,240 --> 00:15:00,400 Speaker 6: the US Senate as the chief economist for the Demomocrats. 291 00:15:00,400 --> 00:15:03,480 Speaker 6: And I'll just say very quickly and i'll stop that. 292 00:15:03,520 --> 00:15:06,280 Speaker 6: When I was in the Senate, my great frustration was 293 00:15:06,320 --> 00:15:09,760 Speaker 6: being surrounded by members of the Senate on both the 294 00:15:09,840 --> 00:15:14,200 Speaker 6: Republican and the Democratic side, who were drafting bills trillion 295 00:15:14,280 --> 00:15:17,200 Speaker 6: dollars of infrastructure, talking about medicare for all and all 296 00:15:17,240 --> 00:15:22,280 Speaker 6: these other things without ever mentioning inflation risk, I couldn't 297 00:15:22,280 --> 00:15:26,640 Speaker 6: believe it. So MMT would have us do things very 298 00:15:26,680 --> 00:15:29,000 Speaker 6: differently when it comes to the way we approach the 299 00:15:29,040 --> 00:15:32,520 Speaker 6: federal budgeting process. It's inflation that you have to watch. 300 00:15:32,560 --> 00:15:36,880 Speaker 7: For, Stephanie, it's Mike McKee. If wishes were horses, then 301 00:15:36,880 --> 00:15:39,560 Speaker 7: beggars would ride. The idea that Congress is going to 302 00:15:39,600 --> 00:15:42,960 Speaker 7: think about anything before these start passing bills is probably 303 00:15:42,960 --> 00:15:45,760 Speaker 7: not going to happen. So I'm wondering, after all this 304 00:15:47,000 --> 00:15:50,040 Speaker 7: is there a limit in the sense that at some 305 00:15:50,280 --> 00:15:53,920 Speaker 7: point we aren't going to be able to respond fiscally, 306 00:15:54,640 --> 00:15:57,960 Speaker 7: for one reason or another, to some sort of crisis 307 00:15:58,000 --> 00:16:02,440 Speaker 7: because all the money is going into debt payment instead 308 00:16:02,560 --> 00:16:07,800 Speaker 7: of instead of going into additional spending, and the way 309 00:16:07,840 --> 00:16:10,400 Speaker 7: we're set up now, we got to pay those bills. 310 00:16:11,720 --> 00:16:14,320 Speaker 6: Okay, So two things I'll say. One, I've been hearing 311 00:16:14,360 --> 00:16:17,920 Speaker 6: this my entire life. You'll remember that Chairman Volker had 312 00:16:17,920 --> 00:16:21,280 Speaker 6: into straights up pretty high. And meanwhile, you know Ronald 313 00:16:21,360 --> 00:16:25,640 Speaker 6: Reagan did two massive tax cuts and massively built up 314 00:16:25,960 --> 00:16:30,360 Speaker 6: the military. So again, if Congress has the will to 315 00:16:30,600 --> 00:16:33,280 Speaker 6: pass legislation, the votes are there, the money is there, 316 00:16:33,320 --> 00:16:36,080 Speaker 6: and I'll just say I don't think it's right to say, 317 00:16:36,280 --> 00:16:39,960 Speaker 6: actually that we can't trust Congress to rein it in. Remember, 318 00:16:40,000 --> 00:16:45,760 Speaker 6: the so called Inflation Reduction Act was Congress's effort to say, listen, 319 00:16:46,000 --> 00:16:51,080 Speaker 6: we don't want to continue passing legislation given the inflationary environment. 320 00:16:51,280 --> 00:16:53,760 Speaker 6: So we want to get revenues up, we want to 321 00:16:53,840 --> 00:16:57,520 Speaker 6: control costs. We're going to negotiate prescription drug prices. That 322 00:16:57,640 --> 00:17:02,040 Speaker 6: was all Congress taking, you know, careful steps. I think 323 00:17:02,560 --> 00:17:03,800 Speaker 6: are you would. 324 00:17:03,560 --> 00:17:06,920 Speaker 1: You suggest, Stephanie, whether it's a Republican or Democratic, to 325 00:17:07,200 --> 00:17:11,359 Speaker 1: houses that we can have budget responsibility. Do you see 326 00:17:11,359 --> 00:17:16,399 Speaker 1: displayed budget responsibility in the modern Congress and Senate? 327 00:17:17,680 --> 00:17:20,120 Speaker 6: Well, Tom, what I'm saying is that if we were 328 00:17:20,160 --> 00:17:22,320 Speaker 6: doing things the way I'd like to see them done, 329 00:17:22,600 --> 00:17:26,600 Speaker 6: instead of handing proposed spending bills to let's say, the 330 00:17:26,600 --> 00:17:30,200 Speaker 6: Congressional Budget Office and saying, give me feedback on this 331 00:17:30,480 --> 00:17:32,679 Speaker 6: legislation I have drafted. Tell me if it's going to 332 00:17:32,720 --> 00:17:35,520 Speaker 6: increase the deficit, tell me whether it adds to the debt. 333 00:17:35,760 --> 00:17:38,879 Speaker 6: I don't think that is the most important feedback. I 334 00:17:38,920 --> 00:17:42,399 Speaker 6: think it would be much better to have CBO and 335 00:17:42,720 --> 00:17:47,399 Speaker 6: or other agencies evaluate proposed legislation on the basis of 336 00:17:47,480 --> 00:17:50,400 Speaker 6: inflation risk. But we don't do it that way, right, 337 00:17:50,520 --> 00:17:54,440 Speaker 6: So I think that that would put us much closer 338 00:17:54,560 --> 00:17:59,160 Speaker 6: to having a Congress that operates with fiscal responsibility, i e. 339 00:17:59,320 --> 00:18:01,720 Speaker 6: Inflation risk at the heart of what it is. 340 00:18:01,720 --> 00:18:04,879 Speaker 1: Okay, can you and say a critic of yours, John Cochrane, 341 00:18:05,000 --> 00:18:08,240 Speaker 1: the great conservative economists, Can you and John Cochrane get 342 00:18:08,280 --> 00:18:10,400 Speaker 1: on the same page and say we need a Simpson 343 00:18:10,480 --> 00:18:15,280 Speaker 1: Bulls reducts where in the initiation of that panel we 344 00:18:15,560 --> 00:18:18,320 Speaker 1: actually demand that we get something done. 345 00:18:19,640 --> 00:18:19,680 Speaker 5: No? 346 00:18:20,760 --> 00:18:24,439 Speaker 6: Uh, sorry, sorry, but no is the answer to the question. 347 00:18:24,800 --> 00:18:27,560 Speaker 6: You would have to first convince me that there is 348 00:18:27,600 --> 00:18:31,760 Speaker 6: some sort of looming crisis that necessitates the formulation of 349 00:18:31,800 --> 00:18:35,160 Speaker 6: a fiscal commission. And I don't believe that we are 350 00:18:35,240 --> 00:18:39,480 Speaker 6: facing that kind of crisis. Inflation is coming down. So 351 00:18:39,720 --> 00:18:42,480 Speaker 6: if you approach things the way I do, which is 352 00:18:42,520 --> 00:18:45,040 Speaker 6: to say, you know, are we at risk? Is the 353 00:18:45,080 --> 00:18:49,680 Speaker 6: budget posing and inflation problem, then let's get at it 354 00:18:49,760 --> 00:18:52,600 Speaker 6: and let's figure out what adjustments need to be made 355 00:18:52,920 --> 00:18:55,520 Speaker 6: to ensure that we aren't putting ourselves at risk of 356 00:18:56,119 --> 00:18:59,080 Speaker 6: trenched inflation well above the Fed's target. I don't think 357 00:18:59,119 --> 00:19:00,120 Speaker 6: that's the future. 358 00:19:00,119 --> 00:19:04,240 Speaker 1: Facing fascinating and controversial Professor Calton. Thank you so much, 359 00:19:04,280 --> 00:19:07,800 Speaker 1: Stephanie Calton. I can't say enough about how refreshing to 360 00:19:07,880 --> 00:19:10,960 Speaker 1: any and all her book. The deficit myth is she 361 00:19:11,160 --> 00:19:13,800 Speaker 1: is at Stonybrook and you know her from the phrase 362 00:19:14,520 --> 00:19:21,560 Speaker 1: MMT right now with us and Mohammedalarian with us is 363 00:19:21,600 --> 00:19:24,159 Speaker 1: a great thrill today. He is at Queen's College in 364 00:19:24,240 --> 00:19:28,280 Speaker 1: Cambridge and he's interested in the asset allocation of their endowment. 365 00:19:28,400 --> 00:19:31,960 Speaker 1: That's the campus that Steve chiveron had a multi Asset 366 00:19:32,000 --> 00:19:34,879 Speaker 1: Solutions that federated him as Steve. This is a lonely 367 00:19:34,960 --> 00:19:37,720 Speaker 1: bull market. How do you reallocate into the end of 368 00:19:37,720 --> 00:19:38,080 Speaker 1: the year. 369 00:19:40,160 --> 00:19:42,119 Speaker 5: Well, you had to get ahead of it a little bit. 370 00:19:43,080 --> 00:19:45,080 Speaker 8: We were adding over the course of the summer when 371 00:19:45,119 --> 00:19:49,480 Speaker 8: it was uncomfortable on the idea that markets like FED 372 00:19:49,560 --> 00:19:53,240 Speaker 8: pauses and they price in soft landings even if a 373 00:19:53,240 --> 00:19:57,320 Speaker 8: soft landing doesn't materialize, because when the FED pauses, invariably 374 00:19:57,800 --> 00:20:01,360 Speaker 8: it's on suspicion they've gone too far, not on confirmation. 375 00:20:01,920 --> 00:20:04,159 Speaker 8: And so the data that's available to you is a 376 00:20:04,160 --> 00:20:07,240 Speaker 8: FED that's no longer hiking and an unemployment rate that's 377 00:20:07,240 --> 00:20:10,159 Speaker 8: still low, and that's been the case throughout history and 378 00:20:10,240 --> 00:20:13,440 Speaker 8: it's the case today. And so finally, with the bond 379 00:20:13,480 --> 00:20:17,000 Speaker 8: market having broken, we're getting that FED pause rally and 380 00:20:17,040 --> 00:20:19,679 Speaker 8: that can be powerful, Tom. You know, historically those are 381 00:20:19,760 --> 00:20:22,400 Speaker 8: nine month events, and you can see the equity market 382 00:20:22,480 --> 00:20:26,320 Speaker 8: up fifteen twenty percent. And interestingly enough, and this is 383 00:20:26,359 --> 00:20:29,119 Speaker 8: something that's been on our mind, the equity market has 384 00:20:29,160 --> 00:20:30,520 Speaker 8: hit an all time high. 385 00:20:30,480 --> 00:20:32,840 Speaker 5: Each of the last five times that the FED has paused. 386 00:20:33,200 --> 00:20:36,080 Speaker 8: Now four of those ended in tiers, but it still 387 00:20:36,080 --> 00:20:38,880 Speaker 8: happened either way, and we think this rally has legs. 388 00:20:38,960 --> 00:20:41,560 Speaker 8: I think the jury on whether or not, you know, 389 00:20:41,680 --> 00:20:44,040 Speaker 8: how soft this landing is next year, is still very 390 00:20:44,119 --> 00:20:46,080 Speaker 8: much out or for the time being, we think this 391 00:20:46,160 --> 00:20:46,960 Speaker 8: rally continues. 392 00:20:47,880 --> 00:20:52,399 Speaker 3: Steve, what are you looking at to determine this whole 393 00:20:52,440 --> 00:20:55,520 Speaker 3: macro question of has the FED not just paused, but 394 00:20:55,520 --> 00:20:57,879 Speaker 3: it's going to stop cutting and kind to do so 395 00:20:58,920 --> 00:21:02,480 Speaker 3: within a soft What are the key variables you look at. 396 00:21:03,760 --> 00:21:06,680 Speaker 8: We're calling them the five Games of Chicken, and it's 397 00:21:06,920 --> 00:21:10,320 Speaker 8: that corporate refinancing wall. You're going to have about sixty 398 00:21:10,359 --> 00:21:13,239 Speaker 8: percent of corporate debt come due between twenty four and 399 00:21:13,280 --> 00:21:15,760 Speaker 8: twenty eight, So what percentage of that is going to 400 00:21:15,760 --> 00:21:17,919 Speaker 8: face materially higher rates, and what does that do to 401 00:21:17,960 --> 00:21:21,920 Speaker 8: company earnings? That's number one. Number two for small businesses, 402 00:21:21,920 --> 00:21:24,640 Speaker 8: they've already seen their debt repriced because it's variable rate 403 00:21:24,680 --> 00:21:26,959 Speaker 8: bank debt. So how many quarters of high rates can 404 00:21:27,000 --> 00:21:31,200 Speaker 8: they survive? On the consumer negative or I'm sorry, real 405 00:21:31,200 --> 00:21:34,600 Speaker 8: income growth is finally turned positive, But how positive does 406 00:21:34,640 --> 00:21:36,560 Speaker 8: it get? And does it allow a consumer to de 407 00:21:36,720 --> 00:21:41,399 Speaker 8: lever again, rebuild savings and continue to spend eight hundred 408 00:21:41,400 --> 00:21:44,160 Speaker 8: and seventy seven billion dollars of bank deposit outflow? 409 00:21:44,240 --> 00:21:46,000 Speaker 5: What does that do to restrict lending? 410 00:21:46,400 --> 00:21:48,600 Speaker 8: And then what percentage of the federal debt, a third 411 00:21:48,640 --> 00:21:52,800 Speaker 8: of which becomes due this year reprices to a significantly 412 00:21:52,880 --> 00:21:53,400 Speaker 8: higher rate. 413 00:21:53,840 --> 00:21:55,440 Speaker 5: Those five things we. 414 00:21:55,400 --> 00:21:57,600 Speaker 8: Think, if they were to all go perfectly, you'd get 415 00:21:57,600 --> 00:22:00,520 Speaker 8: this immaculate soft landing. I think that's unlike we think 416 00:22:00,560 --> 00:22:03,360 Speaker 8: what's more likely is a kind of rocky landing where 417 00:22:03,400 --> 00:22:06,800 Speaker 8: inflation stays stuck at three rates, stay hi, there's some 418 00:22:06,880 --> 00:22:09,879 Speaker 8: slow down, and it's a kind of malaise. It's a 419 00:22:09,880 --> 00:22:13,160 Speaker 8: single digit equity environment with a real risk that something 420 00:22:13,200 --> 00:22:13,639 Speaker 8: breaks and. 421 00:22:13,640 --> 00:22:15,080 Speaker 5: You get into a classic recession. 422 00:22:15,119 --> 00:22:17,760 Speaker 8: So it's really between that rocky landing and then a 423 00:22:17,880 --> 00:22:21,439 Speaker 8: kind of a classic recession break that we think is 424 00:22:21,520 --> 00:22:22,560 Speaker 8: most likely to happen. 425 00:22:22,640 --> 00:22:24,600 Speaker 5: We're in the rocky landing camp at least for now. 426 00:22:24,800 --> 00:22:26,439 Speaker 3: And what do you say to those who say, of 427 00:22:26,480 --> 00:22:29,680 Speaker 3: your five factors, it's one in five. It's all about supply. 428 00:22:30,200 --> 00:22:32,879 Speaker 3: It's all about who's going to buy all the supply. 429 00:22:34,880 --> 00:22:37,480 Speaker 5: I think that's big. But where I would focus more. 430 00:22:37,320 --> 00:22:40,840 Speaker 8: Acutely is on the nexus between banks and small businesses. 431 00:22:41,840 --> 00:22:42,360 Speaker 5: The banks. 432 00:22:42,400 --> 00:22:45,560 Speaker 8: Again, if there's eight hundred and seventy billion dollars less 433 00:22:45,560 --> 00:22:48,440 Speaker 8: of deposits, that's eight hundred and seventy seven billion less. 434 00:22:48,240 --> 00:22:49,400 Speaker 5: Of loans that can be made. 435 00:22:49,880 --> 00:22:52,520 Speaker 8: And small businesses are reliant on that, and they're not 436 00:22:52,600 --> 00:22:55,679 Speaker 8: facing a maturity wall. They've already seen it, and so 437 00:22:55,800 --> 00:22:58,399 Speaker 8: if something's going to break, we would look there. So 438 00:22:58,400 --> 00:23:00,960 Speaker 8: we're spending a lot of time focused there. It also 439 00:23:01,000 --> 00:23:04,800 Speaker 8: has a bias towards larger cap companies within our asset allocation. 440 00:23:04,920 --> 00:23:06,480 Speaker 2: Steve, let's get to the quote that shook up this 441 00:23:06,600 --> 00:23:08,760 Speaker 2: market in the last twenty four hours. TK talked about 442 00:23:08,760 --> 00:23:10,159 Speaker 2: it at the start of the program. It came from 443 00:23:10,200 --> 00:23:13,200 Speaker 2: the Walmart CEO. We may be managing through a period 444 00:23:13,240 --> 00:23:15,679 Speaker 2: of deflation in the months to come. Steve, when you 445 00:23:15,680 --> 00:23:17,800 Speaker 2: heard those words yesterday, what was your response. 446 00:23:19,760 --> 00:23:21,919 Speaker 8: I think the word deflation is probably a little strong, 447 00:23:22,000 --> 00:23:23,880 Speaker 8: But I do think that there could be a lot 448 00:23:23,920 --> 00:23:27,359 Speaker 8: more disinflation than what we've what we're expecting. If you 449 00:23:27,400 --> 00:23:29,520 Speaker 8: look at the areas of the economy where you've seen 450 00:23:29,560 --> 00:23:33,960 Speaker 8: disinflation so far, it's goods prices, it's food prices, its 451 00:23:34,080 --> 00:23:37,240 Speaker 8: energy prices, It's a lot of stuff that quite frankly, 452 00:23:37,359 --> 00:23:42,120 Speaker 8: can be explained by COVID normalization. Big interest rate sensitive 453 00:23:42,119 --> 00:23:45,280 Speaker 8: purchases have not really seen the big deflation that you'd 454 00:23:45,280 --> 00:23:48,360 Speaker 8: expect r. I mean, home prices are still relatively buoyant. 455 00:23:49,040 --> 00:23:51,000 Speaker 5: Go and try to buy a car. It's not exactly 456 00:23:51,000 --> 00:23:52,720 Speaker 5: a value exercise these days. 457 00:23:53,040 --> 00:23:54,880 Speaker 8: And so I think as the rate heights filter through 458 00:23:54,920 --> 00:23:58,840 Speaker 8: the economy, there is more disinflation in the pipeline, and 459 00:23:58,880 --> 00:24:00,840 Speaker 8: I think you could see a at some point in 460 00:24:00,880 --> 00:24:05,400 Speaker 8: twenty four go very quickly from worrying primarily about inflation 461 00:24:05,880 --> 00:24:08,359 Speaker 8: to worrying very much about growth and the employment markets. 462 00:24:08,400 --> 00:24:10,880 Speaker 8: And that could switch on a dime. And it's something 463 00:24:10,920 --> 00:24:13,520 Speaker 8: that keeps us in a kind of humble position. 464 00:24:13,640 --> 00:24:16,720 Speaker 2: Well states is the same true for investors just to 465 00:24:16,800 --> 00:24:19,719 Speaker 2: jump in. You mentioned that as a federal reserve can 466 00:24:19,800 --> 00:24:22,359 Speaker 2: make that switch. I just wonder how quickly investor start 467 00:24:22,680 --> 00:24:24,280 Speaker 2: to make that switch, and whether we can get some 468 00:24:24,359 --> 00:24:27,920 Speaker 2: divergence between what's happening with bonds and what's happening with stocks. 469 00:24:29,359 --> 00:24:30,800 Speaker 5: I think what you do is you pull up some 470 00:24:30,880 --> 00:24:31,800 Speaker 5: charts and you look at them. 471 00:24:31,920 --> 00:24:35,920 Speaker 8: Historically, you know, unemployment takes stares down and elevators up. 472 00:24:36,080 --> 00:24:39,720 Speaker 8: The equity market takes stairs up and elevators down. Particularly 473 00:24:40,119 --> 00:24:43,520 Speaker 8: if you are headed towards a recession. You don't gradually 474 00:24:43,640 --> 00:24:46,280 Speaker 8: shift your view in the late part of a cycle. 475 00:24:46,320 --> 00:24:48,879 Speaker 8: It happens very, very swiftly, and that's. 476 00:24:48,760 --> 00:24:50,640 Speaker 5: Why as an investor you have to prepare for that. 477 00:24:50,680 --> 00:24:54,800 Speaker 8: You start to lengthen duration, you start to upgrade the quality. 478 00:24:54,440 --> 00:24:55,200 Speaker 5: Of your equities. 479 00:24:55,200 --> 00:24:57,959 Speaker 8: We like companies right now that have strong balance sheets, 480 00:24:58,240 --> 00:25:02,320 Speaker 8: strong cash flow generation, low external financing, and you move 481 00:25:02,359 --> 00:25:04,840 Speaker 8: in that direction so that if it does move on 482 00:25:04,880 --> 00:25:08,000 Speaker 8: a dime, which historically it does, you know you're you're 483 00:25:08,040 --> 00:25:09,600 Speaker 8: not left out in the coal stave. 484 00:25:09,720 --> 00:25:11,240 Speaker 4: What if I get you thoughts, it's going to catch up. 485 00:25:11,280 --> 00:25:15,200 Speaker 2: Have a good weekend, my stave Chevron the Federated terms. 486 00:25:24,920 --> 00:25:27,960 Speaker 9: Stephen Schory, So principle of the short group saves us. 487 00:25:28,000 --> 00:25:33,560 Speaker 1: Now, oil disinflation, Stephen, how does New York Harbor adjust 488 00:25:33,840 --> 00:25:40,600 Speaker 1: to oil deflation? All the little idy busy things jet fuel, diesel, distillate, 489 00:25:40,920 --> 00:25:43,560 Speaker 1: how do they adjust as collapse in oil. 490 00:25:44,680 --> 00:25:46,919 Speaker 10: Yeah, it's a really interesting question, Tom. We're trying to 491 00:25:46,920 --> 00:25:50,000 Speaker 10: figure it out as we speak right now. When you 492 00:25:50,040 --> 00:25:53,720 Speaker 10: look at the spread action between gasoline on the flub 493 00:25:53,760 --> 00:25:58,520 Speaker 10: with curb and inventories, seemingly there is enough oil power, 494 00:25:58,640 --> 00:26:01,640 Speaker 10: enough gasoline in your harbor. The neok Carver just want 495 00:26:01,640 --> 00:26:04,480 Speaker 10: to point out is important because that is the delivery 496 00:26:04,560 --> 00:26:10,160 Speaker 10: hub for the mercantiles, diesel and gasoline contracts. Now, when 497 00:26:10,200 --> 00:26:14,000 Speaker 10: we look at overall supplies relative to demand, we're looking 498 00:26:14,000 --> 00:26:17,960 Speaker 10: at about twenty four days worth of supply of gasoline. Now. 499 00:26:18,080 --> 00:26:21,320 Speaker 10: That is normal, That is spot on to the five 500 00:26:21,400 --> 00:26:24,760 Speaker 10: year average, and it's slightly above a year ago. The 501 00:26:24,840 --> 00:26:28,880 Speaker 10: problem now is that traders are skeptical. They are pricing 502 00:26:29,080 --> 00:26:31,440 Speaker 10: in a premium on the front end of the curve, 503 00:26:31,520 --> 00:26:34,080 Speaker 10: which is a clear signal that someone out there is 504 00:26:34,240 --> 00:26:37,439 Speaker 10: concerned about these supplies, regardless of the fact that we 505 00:26:37,480 --> 00:26:40,639 Speaker 10: do have all of this space worth to supply? The 506 00:26:40,720 --> 00:26:43,520 Speaker 10: other big issue here is jet fuel. Right now, we 507 00:26:43,640 --> 00:26:47,640 Speaker 10: don't have enough jet fuel stocks are extremely low and 508 00:26:47,720 --> 00:26:50,480 Speaker 10: as we look forward to next week, we expect this 509 00:26:50,680 --> 00:26:52,760 Speaker 10: or I should say Triple A expects us to be 510 00:26:52,800 --> 00:26:55,480 Speaker 10: one of the busiest travel seasons for Thanksgiving of the 511 00:26:55,520 --> 00:26:58,240 Speaker 10: past twenty odd years. So when we look at the 512 00:26:58,320 --> 00:27:01,719 Speaker 10: rising demand, when we look at the spread action, something 513 00:27:01,800 --> 00:27:04,840 Speaker 10: here is afoot. It doesn't line up that the spreads 514 00:27:04,840 --> 00:27:09,240 Speaker 10: are saying one thing, ie, there's not enough supply, regardless 515 00:27:09,280 --> 00:27:12,320 Speaker 10: of what we're actually seeing in a weekly inventory reports 516 00:27:12,320 --> 00:27:13,200 Speaker 10: from the EIA. 517 00:27:13,520 --> 00:27:15,760 Speaker 2: So Stephen, the SANDI is a frustrated with the price section, 518 00:27:16,080 --> 00:27:18,120 Speaker 2: as you can imagine. I just wonder if they're frustrated 519 00:27:18,200 --> 00:27:20,600 Speaker 2: enough to change policy again, do you think they are? 520 00:27:22,000 --> 00:27:26,159 Speaker 10: It's really interesting and it is really conundrum that, to 521 00:27:26,160 --> 00:27:29,960 Speaker 10: be honest, I am perplexed that the market never really 522 00:27:30,680 --> 00:27:33,600 Speaker 10: priced in any sort of risk premium with regard to 523 00:27:33,640 --> 00:27:36,359 Speaker 10: what is happening now in the Middle East. And let's 524 00:27:36,400 --> 00:27:39,080 Speaker 10: be clear on this. This is a war not between 525 00:27:39,240 --> 00:27:42,080 Speaker 10: Israel and Hamas, but it is effectively a war between 526 00:27:42,200 --> 00:27:46,280 Speaker 10: Israel and Iran. Given that we're fighting that is to say, 527 00:27:46,480 --> 00:27:50,240 Speaker 10: Israel's fighting Amas has Blah and the Huti's all backed 528 00:27:50,240 --> 00:27:54,119 Speaker 10: by Iran. Now that is a pretty scary proposition with 529 00:27:54,640 --> 00:27:57,640 Speaker 10: Iran's ability to halt the flow of oil coming out 530 00:27:57,680 --> 00:28:00,800 Speaker 10: of the Persian go free straight her moves. So yes, 531 00:28:00,880 --> 00:28:04,720 Speaker 10: there clearly is a head scratcher here that we have 532 00:28:04,800 --> 00:28:08,280 Speaker 10: this huge risk on supply, but the market refuses the 533 00:28:08,280 --> 00:28:12,199 Speaker 10: price that in regardless, we're focusing now on the demand picture. 534 00:28:12,240 --> 00:28:14,520 Speaker 10: And yes, if you're Sali Radio, if hey, if you're 535 00:28:14,520 --> 00:28:17,400 Speaker 10: a Texas and you are trying to produce and you're 536 00:28:17,400 --> 00:28:20,439 Speaker 10: looking at this price action, yeah you are frustrated at 537 00:28:20,480 --> 00:28:23,439 Speaker 10: this point. But I want to say here, based on 538 00:28:23,480 --> 00:28:26,560 Speaker 10: our modeling, we're likely at the bottom of the market 539 00:28:26,640 --> 00:28:31,720 Speaker 10: right now, given this situation around the globe and the 540 00:28:32,200 --> 00:28:34,040 Speaker 10: inbalance now between supply and demand. 541 00:28:34,640 --> 00:28:37,800 Speaker 3: So, Stephen, do you think that the Saudis will weight 542 00:28:37,920 --> 00:28:40,160 Speaker 3: this out or do you think the Saudis will be 543 00:28:40,200 --> 00:28:42,720 Speaker 3: on the phone to the Russians and any other ORPAC 544 00:28:42,800 --> 00:28:47,040 Speaker 3: plus member that's willing to participate in another cut in production. 545 00:28:48,320 --> 00:28:51,960 Speaker 10: Yeah, I do think that there is a concern that 546 00:28:52,440 --> 00:28:56,480 Speaker 10: we'll see further cuts Already the Saudis, Russia, have extended 547 00:28:56,520 --> 00:28:59,480 Speaker 10: their cuts of volunteer cuts to the end of the year. 548 00:29:00,080 --> 00:29:04,600 Speaker 10: We've seen now in oil prices, unlike the product prices, 549 00:29:05,120 --> 00:29:07,880 Speaker 10: we've seen an absolute collapse in the front end of 550 00:29:07,920 --> 00:29:10,920 Speaker 10: the curve. So we've now actually on the noomics. We've 551 00:29:10,920 --> 00:29:14,720 Speaker 10: moved into a situation called contango, meaning that prices for 552 00:29:14,840 --> 00:29:17,880 Speaker 10: nearer term delivery are now below that of prices for 553 00:29:17,960 --> 00:29:21,680 Speaker 10: longer term delivery. So this is a clear takeaway that 554 00:29:22,320 --> 00:29:26,600 Speaker 10: right now from an oil standpoint, fundamentals are extremely weak, 555 00:29:26,960 --> 00:29:30,880 Speaker 10: and I would suspect that we'll see the chances are 556 00:29:30,960 --> 00:29:35,360 Speaker 10: going into the quarter OPEC plus either extending the cuts 557 00:29:35,480 --> 00:29:38,440 Speaker 10: or increasing those cuts into the new year. 558 00:29:38,720 --> 00:29:42,200 Speaker 1: Steven Shark over the arc of Bloomberg surveillance twenty years. 559 00:29:43,160 --> 00:29:46,320 Speaker 1: One of the great shocks has been America's success with 560 00:29:46,520 --> 00:29:50,760 Speaker 1: hydrocarbons into the new year. Are we energy independent? 561 00:29:52,560 --> 00:29:53,880 Speaker 10: No, not at this point. 562 00:29:53,920 --> 00:29:54,040 Speaker 5: Now. 563 00:29:54,080 --> 00:29:57,160 Speaker 10: I want to point out that we were energy independent 564 00:29:57,520 --> 00:30:00,640 Speaker 10: a few years ago. In keeping in mind, energy independence 565 00:30:00,720 --> 00:30:02,880 Speaker 10: does not mean we do not have to import a 566 00:30:02,960 --> 00:30:06,160 Speaker 10: BTU from anywhere around the world. We wore a fluid 567 00:30:06,160 --> 00:30:09,320 Speaker 10: trader in the world. We wore the dominant krudeoil producer 568 00:30:09,480 --> 00:30:12,160 Speaker 10: in the world, and we wore the swing producer. That 569 00:30:12,360 --> 00:30:15,720 Speaker 10: is so for all intents and purposes, we wore an 570 00:30:15,840 --> 00:30:18,680 Speaker 10: energy independent when it comes to hydrocarbons, and that is 571 00:30:18,840 --> 00:30:22,640 Speaker 10: just a shout out to how well how efficient the 572 00:30:22,680 --> 00:30:26,160 Speaker 10: industry has grown over the past fifteen to twenty years. 573 00:30:26,360 --> 00:30:29,760 Speaker 10: But given current policy right now, no, we're not energy 574 00:30:29,760 --> 00:30:32,680 Speaker 10: independent and going into the new year, big risk is 575 00:30:32,760 --> 00:30:36,280 Speaker 10: that we are playing a zero sum game. That is 576 00:30:36,280 --> 00:30:41,640 Speaker 10: to say that we are taking off dispatchable BTUs natural gas, nukes, 577 00:30:41,760 --> 00:30:46,560 Speaker 10: coal faster than we can replace them renewables. That's not opinion, 578 00:30:46,800 --> 00:30:50,240 Speaker 10: that is fact. The regulators are telling the government this 579 00:30:50,440 --> 00:30:54,400 Speaker 10: is so, and yet the government is still going ahead 580 00:30:54,840 --> 00:30:58,760 Speaker 10: enforcing these retirements where we don't have enough power. So 581 00:30:58,880 --> 00:31:01,560 Speaker 10: everyone out there get used to this and get ready. 582 00:31:01,560 --> 00:31:04,320 Speaker 10: There's going to be a huge jump in volatility over 583 00:31:04,360 --> 00:31:07,640 Speaker 10: the next two years, a huge jump in pricing for 584 00:31:07,800 --> 00:31:11,480 Speaker 10: electricity and for other alternative BTUs because we're quite not 585 00:31:11,800 --> 00:31:14,640 Speaker 10: ready for the transition that the government is forced in 586 00:31:14,720 --> 00:31:15,640 Speaker 10: upon the industry. 587 00:31:15,880 --> 00:31:18,080 Speaker 2: Stephen with a big one is Stephen Schork at the 588 00:31:18,080 --> 00:31:24,040 Speaker 2: Short Group. A lot of happy talk this week. Jeanette 589 00:31:24,040 --> 00:31:26,720 Speaker 2: low Strtigas wrang in on this meeting between Biden and Jain, 590 00:31:26,800 --> 00:31:29,920 Speaker 2: saying this the meeting does not change the trajectory of 591 00:31:30,080 --> 00:31:33,040 Speaker 2: US Chinese relations. Tom the US will continue to push 592 00:31:33,480 --> 00:31:36,520 Speaker 2: for de risking or decoupling with China in order to 593 00:31:36,520 --> 00:31:39,720 Speaker 2: protect this national security interest, and China will continue to 594 00:31:39,760 --> 00:31:44,600 Speaker 2: push to develop a multi polar world against US interest. 595 00:31:44,680 --> 00:31:46,800 Speaker 4: Janet Low there join us. 596 00:31:46,720 --> 00:31:50,200 Speaker 1: Now from strtigis MS Lord, Jeannette. I look at where 597 00:31:50,200 --> 00:31:52,960 Speaker 1: we are, and of course the major question is what's 598 00:31:52,960 --> 00:31:55,320 Speaker 1: the next step. What is the next step. Should we 599 00:31:55,320 --> 00:31:57,680 Speaker 1: look for President Biden to visit China. 600 00:31:59,240 --> 00:32:03,440 Speaker 11: Yeah, that's probably, to somewhat extent unlikely. I think maybe 601 00:32:03,480 --> 00:32:05,360 Speaker 11: if we look back at last year, we had a 602 00:32:05,400 --> 00:32:09,560 Speaker 11: meeting between Biden and She in November of twenty twenty two, 603 00:32:09,880 --> 00:32:10,800 Speaker 11: and you know. 604 00:32:10,800 --> 00:32:12,400 Speaker 6: Not much occurred out of that. 605 00:32:12,560 --> 00:32:14,720 Speaker 11: After that, a couple months later, we had that spy 606 00:32:14,760 --> 00:32:19,160 Speaker 11: balloon flying over Montana, which then ruptured relations again. So 607 00:32:19,240 --> 00:32:21,840 Speaker 11: I don't necessarily think that there's going to be a 608 00:32:21,840 --> 00:32:25,040 Speaker 11: lot more steps moving forward. It was also very interesting 609 00:32:25,080 --> 00:32:27,720 Speaker 11: to have the Defense Secretary at the exact same time 610 00:32:27,800 --> 00:32:31,800 Speaker 11: in the Philippines talking about continued coordination while this APEC 611 00:32:31,880 --> 00:32:35,000 Speaker 11: and the Biden She summit was happening in San Francisco. 612 00:32:35,280 --> 00:32:37,120 Speaker 6: So I think this is going to be about. 613 00:32:36,840 --> 00:32:39,560 Speaker 11: Trying to lower the temperature, trying to make sure we 614 00:32:39,600 --> 00:32:43,960 Speaker 11: have continued communications. As you guys have mentioned, having she 615 00:32:44,400 --> 00:32:47,600 Speaker 11: he wanted to he's having some domestic issues. This is 616 00:32:47,640 --> 00:32:49,560 Speaker 11: also a good opportunity for him to kind of have 617 00:32:49,640 --> 00:32:52,520 Speaker 11: a reset. But ultimately, I think that the two sides 618 00:32:52,560 --> 00:32:55,240 Speaker 11: are going to continue on their trajectories and this is 619 00:32:55,280 --> 00:32:58,160 Speaker 11: not going to change the overall path. What it is 620 00:32:58,160 --> 00:33:00,160 Speaker 11: going to do is just make things a little bit 621 00:33:00,200 --> 00:33:01,440 Speaker 11: easier in the short term. 622 00:33:01,520 --> 00:33:03,280 Speaker 6: We have an election coming up in the US. 623 00:33:03,360 --> 00:33:05,840 Speaker 11: We don't want to continue tensions with the China. But 624 00:33:05,880 --> 00:33:08,280 Speaker 11: at the same time, if Biden was to be too 625 00:33:08,320 --> 00:33:11,680 Speaker 11: conciliatory towards China, we have a whole lot of hawks 626 00:33:11,680 --> 00:33:13,560 Speaker 11: in Congress who would then pounce him on that. 627 00:33:14,360 --> 00:33:17,120 Speaker 3: So Janetta, I very much agree with your analysis. Can 628 00:33:17,160 --> 00:33:20,000 Speaker 3: you take it one step further? How easy is it 629 00:33:20,520 --> 00:33:22,680 Speaker 3: to de risk without decoupling? 630 00:33:24,200 --> 00:33:24,360 Speaker 5: Right? 631 00:33:24,400 --> 00:33:26,280 Speaker 6: And I think that this is part of the issue too. 632 00:33:26,360 --> 00:33:28,560 Speaker 11: I mean, you have the US has been trying to 633 00:33:28,640 --> 00:33:32,200 Speaker 11: make strides to de risk from China, but it's going 634 00:33:32,240 --> 00:33:34,200 Speaker 11: to take quite a bit of time. Obviously, We're quite 635 00:33:34,280 --> 00:33:37,720 Speaker 11: reliant on China for supply chains, for critical minerals, for 636 00:33:37,760 --> 00:33:39,440 Speaker 11: a whole host of things, and so it's going to 637 00:33:39,440 --> 00:33:42,560 Speaker 11: be very difficult to actually move those pieces away. And 638 00:33:42,640 --> 00:33:45,320 Speaker 11: so I think that trend is in place and you're 639 00:33:45,320 --> 00:33:47,480 Speaker 11: going to see it continue over the next couple of years. 640 00:33:47,720 --> 00:33:50,120 Speaker 11: But that also means that to some extent, you almost 641 00:33:50,240 --> 00:33:53,600 Speaker 11: need a daytunt at the highest level so that you 642 00:33:53,640 --> 00:33:56,880 Speaker 11: can build these pieces out from the bottom and ultimately 643 00:33:56,920 --> 00:33:59,440 Speaker 11: get to that de risking. I don't think decoupling is 644 00:33:59,520 --> 00:34:02,320 Speaker 11: probably where the ultimate goal is, but it is really 645 00:34:02,320 --> 00:34:05,760 Speaker 11: about trying to protect US national security interests and making 646 00:34:05,760 --> 00:34:09,120 Speaker 11: sure there is reduced dependency on China. And I do 647 00:34:09,200 --> 00:34:11,799 Speaker 11: think that you are seeing that you regardless of the 648 00:34:11,800 --> 00:34:14,080 Speaker 11: fact that you have to make choices between how you 649 00:34:14,160 --> 00:34:17,200 Speaker 11: align with US and China, there is an effort or 650 00:34:17,200 --> 00:34:20,359 Speaker 11: there is a realization across the globe that having too 651 00:34:20,400 --> 00:34:22,919 Speaker 11: much dependency on China is not a good thing either. 652 00:34:23,320 --> 00:34:27,560 Speaker 3: And from Chrona's perspective, de risking involves building little pipes 653 00:34:28,040 --> 00:34:31,439 Speaker 3: around the US at the core of the system. How 654 00:34:31,520 --> 00:34:36,360 Speaker 3: far can they go into building basically an alternative global system. 655 00:34:36,960 --> 00:34:39,360 Speaker 11: So this is obviously something that they have been working on, 656 00:34:39,400 --> 00:34:41,880 Speaker 11: and they would like to continue to accelerate that. I 657 00:34:41,880 --> 00:34:44,879 Speaker 11: think the one thing that is important is I think 658 00:34:44,920 --> 00:34:47,120 Speaker 11: the fact that the US is not doing this alone 659 00:34:47,760 --> 00:34:50,880 Speaker 11: is important that they will actually be more successful and 660 00:34:50,960 --> 00:34:53,640 Speaker 11: actually trying to at least move supply chains. China is 661 00:34:53,680 --> 00:34:55,279 Speaker 11: still going to be involved, China is still going to 662 00:34:55,320 --> 00:34:57,839 Speaker 11: try to work with their partners in Asia to get 663 00:34:57,880 --> 00:34:59,280 Speaker 11: around some of those pieces. 664 00:35:00,000 --> 00:35:02,040 Speaker 6: But the other thing is that is if you look at. 665 00:35:01,960 --> 00:35:05,120 Speaker 11: China trying to build this multipolar world, they have been 666 00:35:05,120 --> 00:35:07,200 Speaker 11: doing that over the course of a couple of years. 667 00:35:07,800 --> 00:35:10,120 Speaker 11: They're trying to obviously move away from the US dollar, 668 00:35:10,160 --> 00:35:12,080 Speaker 11: They're trying to get other countries to do the same. 669 00:35:12,520 --> 00:35:15,120 Speaker 11: But if you are looking at China also being in 670 00:35:15,160 --> 00:35:19,279 Speaker 11: a place of having economic weakness, that also is not 671 00:35:19,360 --> 00:35:23,600 Speaker 11: necessarily conducive to them actually being the leader of that movement. 672 00:35:23,680 --> 00:35:25,319 Speaker 11: So there's a lot of things that have to be 673 00:35:25,360 --> 00:35:27,719 Speaker 11: worked out on both sides to actually reach their ultimately 674 00:35:27,960 --> 00:35:29,759 Speaker 11: ultimate goal. And I think that's why we're going to 675 00:35:29,840 --> 00:35:31,840 Speaker 11: kind of see a I don't want us to use the 676 00:35:31,920 --> 00:35:34,240 Speaker 11: term muddle through, but kind of a muddle through scenario 677 00:35:34,320 --> 00:35:37,760 Speaker 11: where they continue down their path but there is obviously 678 00:35:37,920 --> 00:35:40,480 Speaker 11: some need to be conciliatory in the interim. 679 00:35:40,280 --> 00:35:42,759 Speaker 1: Quickly, here Jin ed and I've been guilty of this 680 00:35:42,880 --> 00:35:47,160 Speaker 1: all week. I have failed and taken my eye off Ukraine, 681 00:35:47,840 --> 00:35:51,600 Speaker 1: Ukraine in this cold December. What will that debate, that 682 00:35:51,840 --> 00:35:52,880 Speaker 1: study look like. 683 00:35:54,400 --> 00:35:56,960 Speaker 11: Right, So this is the US does not have a 684 00:35:57,000 --> 00:36:00,399 Speaker 11: lot of military aid left to provide to Ukraine at 685 00:36:00,400 --> 00:36:05,520 Speaker 11: the moment unless Congress appropriates more funding. And so the 686 00:36:05,680 --> 00:36:09,360 Speaker 11: spring offensive has not necessarily produced the results that the 687 00:36:09,560 --> 00:36:12,120 Speaker 11: both sides were looking for. We're going into the winter, 688 00:36:12,200 --> 00:36:14,760 Speaker 11: which makes it more difficult for there to be progress 689 00:36:14,800 --> 00:36:17,440 Speaker 11: on the battlefield. Think that you will see an effort 690 00:36:17,440 --> 00:36:19,799 Speaker 11: in Congress to try to come back from a Thanksgiving 691 00:36:19,800 --> 00:36:24,440 Speaker 11: holiday and pass Biden's National Security Supplemental, which would provide 692 00:36:24,480 --> 00:36:27,839 Speaker 11: aid for Ukraine as well as Israel and Taiwan and 693 00:36:27,880 --> 00:36:30,160 Speaker 11: the border. But that is something that they still are 694 00:36:30,160 --> 00:36:32,400 Speaker 11: trying to find a solution on. They need to figure 695 00:36:32,400 --> 00:36:34,960 Speaker 11: out whether or not they can add border policy changes 696 00:36:35,120 --> 00:36:37,960 Speaker 11: in order to get Republican support for that bill. But 697 00:36:38,120 --> 00:36:40,879 Speaker 11: if we don't get aid to Ukraine over the next 698 00:36:40,960 --> 00:36:45,120 Speaker 11: couple of weeks, there is probably going to be a 699 00:36:45,360 --> 00:36:49,480 Speaker 11: strong hole put into Ukraine's defenses because they really do 700 00:36:49,560 --> 00:36:52,719 Speaker 11: need more money. You obviously have Europe also supporting them, 701 00:36:52,880 --> 00:36:56,240 Speaker 11: but Europe has been struggling to get some aid packages passed, 702 00:36:56,239 --> 00:37:00,120 Speaker 11: some munitions given to them as well, so it's it's 703 00:37:00,120 --> 00:37:01,680 Speaker 11: been put on the back burner. But I think you 704 00:37:01,760 --> 00:37:04,200 Speaker 11: might start to see more discussion over over the next 705 00:37:04,280 --> 00:37:05,240 Speaker 11: month in Congress. 706 00:37:05,280 --> 00:37:06,960 Speaker 4: At least this is a fine We're going to seek 707 00:37:06,960 --> 00:37:09,240 Speaker 4: out it to the new year. Jeanette low A shatigas Jeanette, 708 00:37:09,239 --> 00:37:09,520 Speaker 4: thank you. 709 00:37:09,640 --> 00:37:13,480 Speaker 1: Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify and 710 00:37:13,600 --> 00:37:17,800 Speaker 1: anywhere else you get your podcasts. Listen live every weekday 711 00:37:18,080 --> 00:37:21,560 Speaker 1: starting at seven am Easter. I'm Bloomberg dot Com, the 712 00:37:21,680 --> 00:37:26,200 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 713 00:37:26,239 --> 00:37:30,319 Speaker 1: can watch us live on Bloomberg Television and always I'm 714 00:37:30,320 --> 00:37:34,319 Speaker 1: the Bloomberg Terminal. Thanks for listening. I'm Tom Keen, and 715 00:37:34,440 --> 00:37:36,000 Speaker 1: this is Bloomberg