WEBVTT - Surveillance: We Need To Fix The Trade Issue, OECD's Boone Says 0:00:00.120 --> 0:00:13.040 Yeah. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jay Lee. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:27.160 Bloomberg dot Com, and of course, on the Bloomberg Want 0:00:27.160 --> 0:00:28.640 to us here in New York City. A special good 0:00:28.680 --> 0:00:32.400 morning for Brian Levitt Oppenheimer Funds is senior investment strategist. 0:00:32.400 --> 0:00:34.479 How you doing, Brian, I'm good, good morning. Is this 0:00:34.560 --> 0:00:39.080 a scenario I've heard so many people debating that in 0:00:39.120 --> 0:00:41.320 the market over the last couple of days. I think 0:00:41.320 --> 0:00:45.360 it does have some similarities to seen if we remember 0:00:45.800 --> 0:00:48.720 the beginning of the idea was that the US was 0:00:48.760 --> 0:00:51.760 decoupling from the rest of the world. The Federal Reserve 0:00:51.880 --> 0:00:53.920 was going to proceed with a number of interest rate 0:00:54.000 --> 0:00:57.160 hikes that strengthen the dollar, that sucked money out of 0:00:57.160 --> 0:01:00.640 the emerging economies, and ultimately what how up in Jonathan 0:01:00.720 --> 0:01:03.720 was the Federal Reserve essentially said, okay, just kidding, right, 0:01:03.760 --> 0:01:07.840 they backed off the dollars, stabilized, commodity prices stabilized. Now 0:01:07.880 --> 0:01:12.000 what's different than then then? Now? Was you also had 0:01:12.280 --> 0:01:15.800 Chinese stimulus about to come on board in a significant way. 0:01:15.920 --> 0:01:20.480 I don't think we're gonna see the Buzuka Chinese stimulus, 0:01:20.480 --> 0:01:23.240 but you'll see a drip strategy and and that should 0:01:23.240 --> 0:01:25.920 stabilize growth globally as the U S slows. And this 0:01:25.959 --> 0:01:27.399 for me is the big point. So we had a 0:01:27.440 --> 0:01:30.320 growth scamp in early seen it was very much made 0:01:30.319 --> 0:01:33.360 in China. Then the European Central Bank through the Kitchen 0:01:33.400 --> 0:01:36.720 sick sink at it, the Federal Reserve backed away, and 0:01:36.760 --> 0:01:40.480 the Chinese pumped a load of credit into the system. Right, 0:01:40.600 --> 0:01:42.240 does the e C be in the Federal Reserve have 0:01:42.319 --> 0:01:44.000 the same game plan? Do they have the capacity to 0:01:44.040 --> 0:01:47.119 do the same thing? Again, most people are gonna say no, Well, 0:01:47.160 --> 0:01:50.560 the Feds certainly, the European Central Bank definitely does. The 0:01:50.600 --> 0:01:53.280 Federal Reserve does um. You know, even though it's a 0:01:53.320 --> 0:01:55.440 tight labor market and you look at the Phillips curve, 0:01:55.480 --> 0:01:57.960 it's still basically as flat as the table that we're 0:01:57.960 --> 0:02:00.800 sitting at, So you don't see the wage inflation. Sure, 0:02:00.800 --> 0:02:03.600 wages are up some, but in a healthy way. Core 0:02:03.680 --> 0:02:07.760 personal consumption expenditure just got to two percent. It's there's 0:02:07.800 --> 0:02:11.760 nothing worrisome about the inflation backdrop. So so long as 0:02:11.800 --> 0:02:18.080 the dollar remains persistently strong and the yield curve relatively flattish, 0:02:18.240 --> 0:02:21.320 the Federal Reserve can certainly back off, and I suspect 0:02:21.320 --> 0:02:24.040 they will. Let's talk about what's happening right now that 0:02:24.080 --> 0:02:26.120 will spark the interest of the Federal Reserve to the 0:02:26.160 --> 0:02:28.639 degree that they back away. What is happening in the 0:02:28.680 --> 0:02:30.560 market right now, that's going to be of the most 0:02:30.600 --> 0:02:33.720 concerned to them. I think what the biggest concern to 0:02:33.800 --> 0:02:36.760 them is what's going on in the housing sector. And so, 0:02:37.200 --> 0:02:40.480 you know, what we're finding out in case people were wondering, 0:02:40.720 --> 0:02:43.880 is the US still an interest rate sensitive economy? We 0:02:43.919 --> 0:02:47.200 are still an interest rate sensitive economy. So when rates 0:02:47.240 --> 0:02:50.800 go up to you know, three twenty, the economy slows. 0:02:50.840 --> 0:02:55.040 That was always the risk of late cycle stimulus, this 0:02:55.160 --> 0:02:58.520 idea that the United States is decoupling from the rest 0:02:58.560 --> 0:03:01.799 of the world. There was the belief. I never believed that, 0:03:01.919 --> 0:03:03.359 but the US was going to go to a new, 0:03:03.440 --> 0:03:06.560 higher sustained level of growth. It's not true. What it's 0:03:06.600 --> 0:03:10.040 done is it brought rates higher. That's slowing the economy, 0:03:10.080 --> 0:03:12.600 and the US is moving back towards trend And and 0:03:12.639 --> 0:03:14.799 the FED can back off in that Brian Levit, John 0:03:14.840 --> 0:03:17.800 Fair and I really try, and we fail. I fail 0:03:17.840 --> 0:03:22.160 more than John John's perfect, but we fail in avoiding 0:03:22.200 --> 0:03:25.919 the hysteria of the moment. I'm not seeing the hysteria 0:03:25.960 --> 0:03:28.880 that's with Catharsis or true correction or true bear market. 0:03:29.320 --> 0:03:32.160 But I'm thunderstruck by some of the headlines saying two 0:03:32.200 --> 0:03:36.160 thousand and eighteen was a horrific equity year. If you 0:03:36.200 --> 0:03:39.600 have double digit returns x years in a row, you 0:03:39.760 --> 0:03:42.960 gotta go single digit at some point, right right, and 0:03:42.960 --> 0:03:45.520 and right now. What you're seeing is what NASDAC up 0:03:45.520 --> 0:03:48.640 a percent, SMP five hundred up three percent. So it's 0:03:48.680 --> 0:03:51.520 not a disastrous year. It's a tough October and a 0:03:51.560 --> 0:03:55.640 tough November. Through all the hysteria, investors really need to 0:03:55.680 --> 0:03:57.680 think about what their goals are and what their time 0:03:57.720 --> 0:04:00.880 horizons are. We can look back over very long periods 0:04:00.880 --> 0:04:03.200 of times and show that over any ten year period, 0:04:03.480 --> 0:04:07.000 stocks are positive of the time over any one year 0:04:07.000 --> 0:04:10.880 period at the time. So you know, investors are always 0:04:10.880 --> 0:04:14.720 trying to get the next trade, get the next data point, right. Yeah, 0:04:14.720 --> 0:04:16.839 we need to pay attention to the cycle. Yeah, we 0:04:16.880 --> 0:04:20.640 need to pay attention to policy. But for long term investors, 0:04:20.680 --> 0:04:23.200 they need to see through this and look at these 0:04:23.279 --> 0:04:26.160 moves as buying opportunities because to me and John and 0:04:26.200 --> 0:04:30.880 I think this is really important. Corrections are normal, at 0:04:30.960 --> 0:04:34.560 least that's what the textbooks say. And I would say, Brian, 0:04:34.600 --> 0:04:37.160 we've moved on from that. Well, we've had directions or 0:04:37.200 --> 0:04:40.200 a media event. I mean, we've had a greater than 0:04:40.240 --> 0:04:43.440 five percent correction in every year but two in the 0:04:43.520 --> 0:04:46.080 last four years. Someone guys that, but it's very very rare, 0:04:46.200 --> 0:04:48.400 and for what the SMP five I believe is now 0:04:48.440 --> 0:04:50.599 down on the year. It is very very rare to 0:04:50.680 --> 0:04:54.039 have a market cross asset which has delivered negative returns 0:04:54.080 --> 0:04:58.200 across pretty much every single asset class within the equity market, 0:04:58.240 --> 0:05:01.320 to have a couple of corrections within a single year, 0:05:01.760 --> 0:05:04.160 and on top of that, have a g d P 0:05:04.400 --> 0:05:07.560 print with a three handle, with a full handle without 0:05:07.600 --> 0:05:10.240 a real deceleration in US growth. We have had all 0:05:10.240 --> 0:05:14.800 those things. Credits disappointed softeigns have had equities have had 0:05:14.880 --> 0:05:20.640 negative returns. There's something going on here. Thank So he's 0:05:20.680 --> 0:05:23.600 like he's like filming like four properties today. Are you 0:05:23.600 --> 0:05:25.840 gonna do equities on the real yield. No. We we 0:05:25.960 --> 0:05:28.480 recorded really yesterday for the did you for the show 0:05:28.520 --> 0:05:30.599 to play out through the weekend and through the holiday. 0:05:30.760 --> 0:05:34.159 I think what you're describing, Jonathan, is an environment where 0:05:34.240 --> 0:05:38.000 policy uncertainty is creating a lot of market volatility, and 0:05:38.040 --> 0:05:40.479 that's that's what tends to happen. I mean, it's been 0:05:40.560 --> 0:05:45.159 a prolonged period for companies that's been about this increase 0:05:45.200 --> 0:05:48.560 in profit margins. And when we start to talk about 0:05:48.600 --> 0:05:51.240 tariffs and we start to get tighter on trade policy, 0:05:51.600 --> 0:05:54.640 you have to be concerned about where growth goes and 0:05:54.680 --> 0:05:57.719 what that means for profit margins. Now you hear from 0:05:57.760 --> 0:06:00.599 those who are inside the Trump at Minute station or 0:06:00.600 --> 0:06:04.000 of contacts within the Trump administration who say Trump wants 0:06:04.000 --> 0:06:07.800 a deal, Cudlow wants a deal. We shall see UM. 0:06:07.839 --> 0:06:11.400 I suspect that that Trump doesn't want a a very 0:06:11.520 --> 0:06:15.080 weak UM equity market in the year leading up to 0:06:15.360 --> 0:06:19.840 the elections. How does Oppenheimer Funds express Asia investment? I mean, 0:06:19.960 --> 0:06:22.520 short of you know, buying shang send what how do 0:06:22.520 --> 0:06:25.360 you pronounce? I think is what you wanted to say, 0:06:25.400 --> 0:06:29.719 but you're about to say something a whole Oh look, 0:06:29.720 --> 0:06:33.680 an email from mail from New Jersey. Uh No, But seriously, Brian, 0:06:34.440 --> 0:06:37.359 how do you express Asia investment in a rational and 0:06:37.480 --> 0:06:40.400 intelligent way? Right now? I think Al's my neighbor actually 0:06:40.400 --> 0:06:43.359 in New Jersey. Really, I think he is interesting. You know, 0:06:43.400 --> 0:06:47.320 we're excited about UM over the long term. The Chinese 0:06:47.360 --> 0:06:50.599 consumer it is UM. You know, we talked about seventy 0:06:50.640 --> 0:06:53.320 eighty millennials in the United States. There's four hundred and 0:06:53.320 --> 0:06:58.279 fifteen millennials, four fifteen million millennials in China. The labor 0:06:58.360 --> 0:07:02.159 forces over seven hundred and fifty million people, and the 0:07:02.320 --> 0:07:05.640 consumption patterns are likely to continue to be strong. So 0:07:05.920 --> 0:07:08.360 you know, I think that investors need to be selective 0:07:08.640 --> 0:07:11.880 within UM. Investing in Asia needs to be a bottom 0:07:11.920 --> 0:07:16.080 up process. But that consumer growth story, that growing middle class, 0:07:16.400 --> 0:07:19.480 does not change the The expectation is a hundred and 0:07:19.520 --> 0:07:22.280 sixty million new people will be added to the middle 0:07:22.320 --> 0:07:27.480 class in Asia over the next fifteen years. Let me 0:07:27.520 --> 0:07:30.440 bring in uh someone And I was so happy to 0:07:30.480 --> 0:07:33.560 see her appointment. After Catherine man at O E c 0:07:33.680 --> 0:07:38.440 D with Marylynch years ago, it was must read John 0:07:38.760 --> 0:07:42.440 on the synthesis of politics and economics and France, and 0:07:42.480 --> 0:07:45.280 you only did that with Laurence Boon and it was 0:07:45.320 --> 0:07:47.520 just I told I know Guria when I saw him 0:07:47.560 --> 0:07:51.440 that this was just an inspired selection to take over 0:07:51.480 --> 0:07:55.000 this really important report. What's great about it is there's 0:07:55.040 --> 0:07:57.400 not a lot of chit chat. O E c D 0:07:57.560 --> 0:08:01.040 gets right to the point when they talk about the slowdown. 0:08:01.040 --> 0:08:03.800 They see there's a headline, so let's talk about the slowdown. 0:08:03.840 --> 0:08:06.480 They see Lawrence Boon joining us now O e c 0:08:06.600 --> 0:08:08.880 D Chief Economists. Good morning, You've been great to have 0:08:08.920 --> 0:08:11.360 you with us on the program. Good morning to you too, 0:08:11.360 --> 0:08:15.000 and thanks for the fantastic intradiction. Tom is like that. 0:08:15.320 --> 0:08:19.119 He's very kind, especially ahead of Thanksgiving, which only because 0:08:19.120 --> 0:08:23.920 of Thanksgiving, Lawrence, Thanksgiving as an American holiday, which is 0:08:23.960 --> 0:08:27.760 the beginning of our separation from the mother country. That's 0:08:27.760 --> 0:08:32.160 where the French just you letting me know that, isn't it. Yes, 0:08:32.240 --> 0:08:35.840 So the French build us out like fifteen times along 0:08:35.840 --> 0:08:37.480 the way. So let's talk about it, Lawrence. What is 0:08:37.520 --> 0:08:40.160 happening not with that, but with the global economy. Are 0:08:40.200 --> 0:08:42.840 we seeing a growth scare because some people in the 0:08:42.840 --> 0:08:45.680 market think we are. What do you see right now? Well, 0:08:45.720 --> 0:08:50.200 we are seeing both effectively slowing down, and it's slowing 0:08:50.240 --> 0:08:53.960 down primarily because tradees are being hurted by all the 0:08:54.080 --> 0:08:57.680 tentions that are going on. If you if you look 0:08:57.720 --> 0:09:00.800 at it, just let me give you one number. Last year, 0:09:01.360 --> 0:09:05.160 you know, container port traffic, which is about eighty percent 0:09:05.640 --> 0:09:11.160 of the global trade, was growing at six percent. Now 0:09:11.200 --> 0:09:14.320 it's down to two percent. And to give you an image, 0:09:14.400 --> 0:09:17.160 if we were still growing as fast as last year, 0:09:17.400 --> 0:09:21.720 we would have twenty five million more container navigating on 0:09:21.800 --> 0:09:26.200 the seas. That's a big, big number, Lawrence. So what 0:09:26.240 --> 0:09:28.520 does it tell us that we've seen a deceleration from 0:09:28.600 --> 0:09:31.440 last year and lost momentum or entering a cyclical downturn. 0:09:33.280 --> 0:09:37.680 We are seeing a significant deterioration for last year. The 0:09:37.760 --> 0:09:40.679 message we have is, you know, things are slowing down. 0:09:40.800 --> 0:09:45.880 Growth has peaked, and it's always difficult to challenge to 0:09:46.240 --> 0:09:49.720 navigate to two engineers areas soft lending. When when you 0:09:49.760 --> 0:09:53.559 have such two attention, it's even more difficult. So what 0:09:53.600 --> 0:09:57.160 we're saying is, you know, we need to fix this 0:09:57.280 --> 0:09:59.880 trade issue, and then looking ahead, we need to be 0:10:00.080 --> 0:10:03.400 really to address a shoppers throw down if if it 0:10:03.559 --> 0:10:05.920 was to happen. Laurent is one of the differences in 0:10:05.920 --> 0:10:09.280 your economics is your econometrics out of writing your dynamics. 0:10:09.280 --> 0:10:14.200 Your mathematical dynamics have always been world class. Within that is, 0:10:14.240 --> 0:10:18.680 how does currency fit into this? Because the release veil 0:10:18.800 --> 0:10:21.320 for this can be that we're in a hugely floating 0:10:21.480 --> 0:10:26.800 fixed floating currency environment and that can help us with 0:10:26.880 --> 0:10:30.040 these pressures. Can the dollar in the euro in the end, 0:10:30.080 --> 0:10:34.920 can their dynamics come to the rescue of a global slowdown? Well, 0:10:34.960 --> 0:10:37.679 I'm not sure actually they can, because as you know, 0:10:37.960 --> 0:10:42.679 monetary policy in the US is normalizing ahead of other 0:10:42.880 --> 0:10:48.240 advanced economies. You up well like behind and appropriately so. 0:10:48.920 --> 0:10:53.720 And we are seeing outflows from emerging economies going back 0:10:53.800 --> 0:10:56.560 toward the US as the US is raising rights. So 0:10:56.640 --> 0:11:01.000 I think it will not be every balancing engine. So 0:11:01.040 --> 0:11:03.400 I get into work a little bit later than Tom King, 0:11:03.640 --> 0:11:05.480 and Tom doesn't like that. But when I came down 0:11:05.480 --> 0:11:08.800 the escalator this morning, I saw Lawrence on with you, Tom, 0:11:08.840 --> 0:11:10.599 and there was a headline and it said the O E. 0:11:10.679 --> 0:11:13.400 C D says something along the lines to get ready 0:11:13.400 --> 0:11:16.120 for some fiscal stimulus to respond to a growth slow down. 0:11:16.280 --> 0:11:18.400 And Alas, I thought that was really interesting because right 0:11:18.400 --> 0:11:20.480 now the Italians are in a battle with the European 0:11:20.520 --> 0:11:23.800 Commission to introduce some fiscal stimulus. What is the O 0:11:24.000 --> 0:11:27.920 c D stand on that battle as it currently plays out, Well, 0:11:27.960 --> 0:11:29.840 the O E c D doesn't do one size fifth 0:11:29.880 --> 0:11:32.559 of all policies and them And there are two things 0:11:32.559 --> 0:11:35.160 in what you're saying. The first one is the physical 0:11:35.200 --> 0:11:39.000 stimulus that we're calling for is if it thinks we're 0:11:39.120 --> 0:11:42.640 to worsen more than what we have in our central scenario. 0:11:43.120 --> 0:11:46.439 You know, in two thousand nine, central banks gathered together 0:11:46.520 --> 0:11:50.720 and cutch rate together by point five percentage point at 0:11:50.720 --> 0:11:53.959 the same time, and this I think was the shock 0:11:54.120 --> 0:11:58.840 that actually started afterwards a lot of policies and the recovery. 0:11:59.280 --> 0:12:03.000 Now they don't have the luxury of doing as big 0:12:03.040 --> 0:12:06.320 things as what they've done. They've rescued that once, but 0:12:06.440 --> 0:12:09.040 next time it has to be governments. And what we're 0:12:09.080 --> 0:12:13.080 saying here is it would be incredibly powerful if, in 0:12:13.120 --> 0:12:16.880 the case officer down governments with sitting together, I don't 0:12:16.880 --> 0:12:20.080 know seeing that they're going to boost their fiscals, they're 0:12:20.120 --> 0:12:23.760 going to boost fiscal spending by upon five percent of GDP, 0:12:23.920 --> 0:12:27.040 because that would benefit all even more than if they 0:12:27.040 --> 0:12:30.320 had done it individually, and it would relieve central banks 0:12:30.320 --> 0:12:36.160 from the burden of always rescuing us. Within this slowdown, 0:12:36.440 --> 0:12:40.880 there's this big part of each economic consumption within always 0:12:40.960 --> 0:12:44.880 c D work is China becoming a more consumer nation. 0:12:46.640 --> 0:12:50.040 China is indeed becoming a consumer nation. As you know, 0:12:50.280 --> 0:12:54.080 the excess current to conserve plus as quas I vanished, 0:12:54.559 --> 0:12:59.640 but China still is a needs export to continue to grow. 0:13:00.000 --> 0:13:02.679 And what we've seen so far is that trade tension 0:13:02.880 --> 0:13:06.880 have shaken confidence in China. You've seen the stock market 0:13:06.960 --> 0:13:11.960 collapsing and the government trying to once again stimulate the 0:13:12.000 --> 0:13:15.120 economy and response not so much with the currency that 0:13:15.160 --> 0:13:18.920 we were discussing earlier, but with the usual traditional, the 0:13:19.080 --> 0:13:24.160 traditional tool of supporting infrastructure investment. Now that's not really 0:13:24.200 --> 0:13:28.960 good because they're filing up debt on existing that unless 0:13:29.000 --> 0:13:32.800 you know that is really high in China. Lawrence Wood, 0:13:32.840 --> 0:13:35.200 thank you so much, greatly appreciated with the o E 0:13:35.280 --> 0:13:38.680 c D in pairs with their important report and report 0:13:39.400 --> 0:13:42.560 and not gloom and doom, decidedly not, but just looking 0:13:42.679 --> 0:13:47.520 at um a weight to the global economy as well. Now, 0:13:47.559 --> 0:13:49.840 let's find out where the U s economy is headed 0:13:50.040 --> 0:13:54.600 with Michael Faroli. Mike Faroli is JP Morgan's chief economist. 0:13:54.880 --> 0:13:59.200 He's been putting together his twenty nineteen outlook release, but 0:13:59.320 --> 0:14:01.880 just to give you a more current information, orders to 0:14:02.040 --> 0:14:06.559 US factories for big ticket manufactured goods fell by the 0:14:06.760 --> 0:14:12.360 largest amount in fifteen months. Michael Faroli, great to have 0:14:12.440 --> 0:14:17.480 you with us. What do you attribute this decline to. Well, 0:14:17.520 --> 0:14:20.680 we did have a big decline um in in aircraft 0:14:20.680 --> 0:14:23.680 wars in particular, which can be really volatile month to month. 0:14:24.280 --> 0:14:26.720 Uh So we often look at the ex transportation numbers 0:14:26.760 --> 0:14:31.040 which were up a tenth. That was obviously a lot 0:14:31.080 --> 0:14:33.480 better than the headline, but still somewhat disappointing. So when 0:14:33.520 --> 0:14:35.320 we kind of cut through the details of report and 0:14:35.320 --> 0:14:38.080 there are a lot of you know, subcategories that we 0:14:38.120 --> 0:14:41.400 tend to look at, it was it was not disastrous, 0:14:41.640 --> 0:14:45.600 but it was definitely on the softer side of expectations. Well, 0:14:45.640 --> 0:14:48.640 this does raise the issue, Michael, about corporate spending and 0:14:48.680 --> 0:14:51.120 just spending by a lot of businesses in general. We 0:14:51.120 --> 0:14:53.800 were really sort of expecting a bumping capex and I'm 0:14:53.800 --> 0:14:57.920 wondering that as we go into t whether we'll see 0:14:58.360 --> 0:15:00.200 a little bit more capex or whether we're going to 0:15:00.240 --> 0:15:03.920 see a pullback. Well, we did get a bump. We 0:15:04.000 --> 0:15:06.200 got a bump in the first first half of the 0:15:06.280 --> 0:15:10.320 year when capex UM grew around ten percent, then third 0:15:10.400 --> 0:15:15.480 quarter softened pretty considerably, UM almost flat in the third quarter. 0:15:15.520 --> 0:15:17.880 We do expect it will do better as we go 0:15:18.000 --> 0:15:23.160 into not looking for blowout numbers on capex UM. So 0:15:23.200 --> 0:15:26.720 we think capital spending may real. Capital spending maybe up 0:15:26.720 --> 0:15:31.200 around four percent next year, which is uh, it's okay, 0:15:31.240 --> 0:15:33.480 but it definitely is not enough. I don't think to 0:15:33.640 --> 0:15:37.000 change the picture when it comes to things like productivity. 0:15:37.000 --> 0:15:38.840 I think there had been hopes that do you get 0:15:38.840 --> 0:15:41.880 this big investment boom more you know, more investment, more 0:15:41.920 --> 0:15:46.040 capital means more productivity. Uh. I don't have high hopes 0:15:46.080 --> 0:15:49.040 for that actually, um, And I think today's number is 0:15:49.080 --> 0:15:52.640 consistent with uh, you know, just kind of okay. Capital 0:15:52.680 --> 0:15:55.920 spending grows, but nothing that's really changes the narrative of 0:15:55.960 --> 0:15:59.080 what we've seen over the past few years. Michael Faroli, 0:15:59.240 --> 0:16:01.600 does this mean that you're putting lumps of coal in 0:16:01.640 --> 0:16:05.920 your Christmas stockings for as you prepare? What is the 0:16:05.960 --> 0:16:09.560 outlook for So? I think we have to keep in 0:16:09.600 --> 0:16:14.280 mind that eighteen was um, you know, somewhat exceptional in 0:16:14.320 --> 0:16:16.800 the degree of policy support we had. Right, so you 0:16:16.880 --> 0:16:20.600 had not only a big tax cut which everyone knows about, 0:16:20.720 --> 0:16:22.760 which was signing a law late last year, we also 0:16:22.840 --> 0:16:25.760 had a big increase in federal spending, signing a lot 0:16:25.800 --> 0:16:28.360 earlier this year, and so you were really kind of 0:16:28.400 --> 0:16:30.880 firing on all gears. Obviously, the FED was tightening, but 0:16:31.000 --> 0:16:34.200 not getting tight in an absolute sense. So you know, 0:16:34.200 --> 0:16:35.960 this year you were kind of in the sweet spot 0:16:36.000 --> 0:16:40.200 where the economy was, you know, comming along. There wasn't 0:16:40.240 --> 0:16:43.600 too much of a headwind from the global economy like 0:16:43.680 --> 0:16:46.880 you had seen in years past. Uh, So we really 0:16:46.880 --> 0:16:49.600 had all all the stars were kind of aligned this year. 0:16:49.640 --> 0:16:53.760 And so next year we do think things slow, not 0:16:53.800 --> 0:16:57.320 because we um you know, are putting ups of coal. 0:16:57.320 --> 0:16:59.240 We're trying to be particularly downbeat, but I think what 0:16:59.280 --> 0:17:01.840 we're seeing as of a reversion to the mean after 0:17:01.920 --> 0:17:05.920 what had been some unusual but also temporary support. So 0:17:06.600 --> 0:17:09.199 uh but you know, in round numbers, this year we 0:17:09.240 --> 0:17:11.679 have growth around three percent. Next year we see it 0:17:12.480 --> 0:17:15.679 uh heading back down to round two, which would be 0:17:15.680 --> 0:17:18.639 more in line with the trend that had prevailed for 0:17:18.800 --> 0:17:21.640 much of the expansion up until last year. But this year, 0:17:21.640 --> 0:17:24.119 I'm sorry, yeah, Michael, you talk about temporary support, do 0:17:24.160 --> 0:17:28.640 you see any prospect of maybe some additional fiscal stimulus, uh, 0:17:28.680 --> 0:17:31.920 if not even a second type of tax cut, whether 0:17:31.960 --> 0:17:36.000 it's for the middle class or for corporations. Yes, I think, uh, 0:17:36.640 --> 0:17:38.680 you know, tax cut two point oh I some people 0:17:38.680 --> 0:17:41.160 have called it. Uh, it's gonna be a little, well 0:17:41.240 --> 0:17:44.560 a fair bit tougher, I think in in the upcoming Congress, 0:17:45.000 --> 0:17:47.720 given that, you know, we don't see a whole lot 0:17:47.720 --> 0:17:53.040 of areas of commonality on on tax policy between um 0:17:53.320 --> 0:17:55.960 uh Democrats and Republicans. That there are as these days, 0:17:56.000 --> 0:17:59.760 some aspects uh middle class tax cuts which will expire, 0:18:00.640 --> 0:18:04.400 um are set to expire in a few years. Perhaps 0:18:04.440 --> 0:18:07.280 you could get something there. But even if that happens, 0:18:07.520 --> 0:18:10.280 we don't think it will really matter much for because 0:18:10.280 --> 0:18:15.640 a lot of these provisions expire and like so, UM, 0:18:15.760 --> 0:18:18.520 you'd really have to have very forwar looking behavior for 0:18:18.560 --> 0:18:21.000 that kind of uh change in the task codes to 0:18:21.080 --> 0:18:26.159 really matter for um uh for the outlook, I do 0:18:26.240 --> 0:18:29.639 think it's things get a little interesting when it comes 0:18:29.680 --> 0:18:34.920 to infrastructure. UM. You know some headlines that the president 0:18:34.960 --> 0:18:39.000 would like to do a deal with Democrats in Congress 0:18:39.080 --> 0:18:42.240 to get something done on infrastructure. UM, I just said 0:18:42.240 --> 0:18:45.480 it's interesting, but we're not so far we haven't sort 0:18:45.520 --> 0:18:48.800 of ten filed that into our forecast, in part because 0:18:50.200 --> 0:18:52.560 so what so, Michael, we only have about thirty seconds 0:18:52.600 --> 0:18:57.520 what have you penciled in for bonds for so we 0:18:57.640 --> 0:19:00.080 do think the FEDS UH is going to con in 0:19:00.160 --> 0:19:03.760 you hiking interest rates obviously that um, you know, we're 0:19:03.840 --> 0:19:06.040 kind of on our back feed on that or given 0:19:06.080 --> 0:19:09.080 some of the recent UH commentary and some of the 0:19:09.080 --> 0:19:11.080 market moves, but we still have them hiking once a 0:19:11.200 --> 0:19:15.520 quarter uh every quarter next year, which would uh, um, 0:19:15.640 --> 0:19:17.399 you know, get tenure rates up to around three and 0:19:17.400 --> 0:19:20.440 a half percent by as you get into like, uh 0:19:20.520 --> 0:19:22.639 well into the second half of next year. All Right, 0:19:22.680 --> 0:19:25.280 we gotta leave it there, Thanks very much, Michael Faroli. 0:19:25.640 --> 0:19:30.520 He is the chief US economist for JP Morgan Securities 0:19:32.560 --> 0:19:35.879 and the Triple A. The Federation of Motor Clubs throughout 0:19:35.960 --> 0:19:42.120 North America estimates that nearly fifty five million Americans will 0:19:42.200 --> 0:19:46.440 journey fifty miles or more away from home this Thanksgiving. 0:19:46.440 --> 0:19:51.199 That is nearly a five increase over last year. And 0:19:51.240 --> 0:19:54.040 when you travel, typically use a credit card or a 0:19:54.040 --> 0:19:56.600 debit card or a charge card. Of some kind, and 0:19:56.640 --> 0:19:59.400 here to help us understand what is the best way 0:19:59.440 --> 0:20:03.320 to make that travel affordable is Brian Kelly. He is 0:20:03.680 --> 0:20:07.879 the points guy. Alright, points guy. Have the deal's gotten 0:20:07.960 --> 0:20:11.680 better or worse for travelers? Well, when it comes to 0:20:11.760 --> 0:20:14.280 credit cards, the credit card market is hot. You know. 0:20:14.359 --> 0:20:17.160 For for anyone listening who hasn't changed their credit card 0:20:17.200 --> 0:20:19.480 in years, you're missing out on some of the biggest 0:20:19.520 --> 0:20:23.159 bonuses we've ever seen. The Capital one Venture card now 0:20:23.200 --> 0:20:26.240 has a seventy five thousand point bonus and the fee 0:20:26.240 --> 0:20:28.800 has waived the first year. Uh. They also announced that 0:20:28.800 --> 0:20:31.200 you do have to spend five grand in the first 0:20:31.240 --> 0:20:34.720 three months. Who listening here doesn't spend five thousand within 0:20:34.880 --> 0:20:39.359 I'm just you know, so the total the disclaimer. But 0:20:39.359 --> 0:20:42.080 but Brian, maybe just step back a second. Because the 0:20:42.119 --> 0:20:46.800 way you compute the value of the card, it is 0:20:46.840 --> 0:20:49.960 a combination of the miles that are being offered. After 0:20:50.000 --> 0:20:53.800 a certain spending amount, you get a perks value, then 0:20:53.840 --> 0:20:56.159 there's the annual fee, and then you get a total value. Right, 0:20:56.160 --> 0:20:58.800 So there a couple of different pieces that go into this. Yeah, 0:20:58.800 --> 0:21:01.080 and not everyone's gonna get maximum value, but at a 0:21:01.160 --> 0:21:04.520 very minimum. You know, most credit card points uh AMEX, 0:21:04.720 --> 0:21:07.160 Chase kept one. They're gonna be worth like one cent 0:21:07.480 --> 0:21:10.160 a piece, give or take when you redeem for travel. 0:21:10.480 --> 0:21:12.920 But what you know, the points guy we obsess over 0:21:13.119 --> 0:21:15.040 is how to get more value out of that and 0:21:15.560 --> 0:21:18.560 with all of these major credit card points, and that 0:21:18.560 --> 0:21:22.600 that's by transferring to partners. So, um, you know, you 0:21:22.640 --> 0:21:26.040 can fly first class leftons of by transferring your MX 0:21:26.160 --> 0:21:30.160 points to they have a new transfer partner, Avianca Life Miles, 0:21:30.320 --> 0:21:32.800 you know, the the South American Airline, which even if 0:21:32.800 --> 0:21:34.239 you don't want to go to South America, all these 0:21:34.280 --> 0:21:37.840 airlines have alliances and uh Avianca's and star Lines and 0:21:37.880 --> 0:21:41.879 you can. It's an arbitrage opportunity to transfer to a 0:21:41.960 --> 0:21:44.879 partner and then redeem it on their partner. So it 0:21:44.920 --> 0:21:47.800 gets really how many So how many points are miles 0:21:47.840 --> 0:21:49.439 or whatever you want to call them? How many do 0:21:49.480 --> 0:21:56.399 you have to transfer to the Avianca? Yeah, seventy thousand 0:21:56.400 --> 0:21:58.440 and you can fly liftons of first class one way 0:21:58.440 --> 0:22:00.560 in New York to Frankfurt. Let's a that's a ten 0:22:00.560 --> 0:22:03.200 thousand dollar ticket. To think about that, seventy thousand points 0:22:03.200 --> 0:22:05.520 would normally get your seven hundred bucks, but instead you 0:22:05.520 --> 0:22:08.600 can get ten thousand in value by transferring and redeeming 0:22:08.600 --> 0:22:12.040 on a partner for first class. You have to fly anything. 0:22:12.840 --> 0:22:14.280 Hope you never have to step foot on an al 0:22:14.320 --> 0:22:17.199 Bianca plane. That's the beauty of these airline alliances. So 0:22:17.400 --> 0:22:19.080 no matter what miles you have, even if you have 0:22:19.080 --> 0:22:21.440 American Airlines miles you got to go to Hong Kong, 0:22:21.640 --> 0:22:25.119 don't fly American through l a flight cast a NonStop 0:22:25.200 --> 0:22:28.040 JFK to Hong Kong and get this. Not only is 0:22:28.040 --> 0:22:31.520 it a better airline with better service and food, it's 0:22:31.600 --> 0:22:34.720 less miles. But the thing is American won't show cast 0:22:34.760 --> 0:22:36.959 a award availability online, so you have to pick up 0:22:36.960 --> 0:22:38.800 the phone and call. So that's why there's all these 0:22:38.840 --> 0:22:41.159 little tricks. But once you learn them, and I know 0:22:41.160 --> 0:22:44.000 people always say stop sharing the secrets when when we 0:22:44.040 --> 0:22:47.520 talk about this, because you know, most people will go 0:22:47.640 --> 0:22:50.520