WEBVTT - Surveillance: Recession Risk with Moec 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene, along 0:00:09.200 --> 0:00:13.200 with Jonathan Ferrill and Lisa Brownwitz Jailely. We bring you 0:00:13.280 --> 0:00:18.600 insight from the best and economics, finance, investment and international relations. 0:00:18.960 --> 0:00:23.799 Find Bloomberg Surveillance and Apple Podcast, Suncloud, Bloomberg dot Com 0:00:23.920 --> 0:00:29.840 and of course on the Bloomberg terminals. My left joins 0:00:29.880 --> 0:00:31.920 us now he does come on TV. The chief economist 0:00:31.920 --> 0:00:33.879 acts for investment Managers. He comes to New York too. 0:00:33.920 --> 0:00:36.000 You know, it's great to catch up, sir. As always, 0:00:36.200 --> 0:00:38.760 there is a hugel that things are better in Europe, 0:00:39.000 --> 0:00:41.080 and I'd love a reality check from you. How much 0:00:41.120 --> 0:00:43.519 better are they relative to what we feared late in 0:00:43.560 --> 0:00:47.519 the summer? Well much better. I don't think things have 0:00:47.960 --> 0:00:50.920 changed materially, meaning what we when we knew on the 0:00:51.000 --> 0:00:55.320 energy slide. For instance, without Germany, which is the biggest 0:00:55.320 --> 0:00:58.960 potential victim of the end of of of Russian gas supply, 0:00:59.080 --> 0:01:02.240 the Germany had managed to get its consumption of gas 0:01:02.280 --> 0:01:05.840 significantly down actually in in the summer, which means that 0:01:05.920 --> 0:01:09.000 the inventory position is is better than what we could 0:01:09.000 --> 0:01:11.800 have feared maybe six months ago. But again we knew 0:01:11.840 --> 0:01:14.080 that already at the end of the summer. Nothing has 0:01:14.160 --> 0:01:17.800 changed from from the side on the data flow in general, 0:01:18.120 --> 0:01:21.680 on on the fact that we are sliding into recession. 0:01:22.720 --> 0:01:25.080 All the data flow we've halps still goes in the 0:01:25.120 --> 0:01:27.720 same direction. I mean, if you look at the European 0:01:27.720 --> 0:01:30.600 Commission surveys, if you look at the messages we get 0:01:30.640 --> 0:01:34.240 for for the Bankloning survey, for instance, it is consistent 0:01:34.440 --> 0:01:37.440 with a slide into intercession with the next three two, 0:01:37.480 --> 0:01:39.840 two to six months. So it's not really changed. What 0:01:39.959 --> 0:01:44.280 has changes and that you alluded to this, Uh, there 0:01:44.400 --> 0:01:48.200 was this one lower than expected print for inflation in 0:01:48.240 --> 0:01:52.480 the in the US market scrambles t pricing what it 0:01:52.560 --> 0:01:56.280 expects on the on the FED. Uh, they expected read 0:01:56.320 --> 0:01:59.120 differential for the next six months between the CB and 0:01:59.160 --> 0:02:03.720 the FED train. Um, well, you've got a euro rebounding. 0:02:04.280 --> 0:02:06.640 I would not read much more than that actually into 0:02:07.080 --> 0:02:10.880 the rebound of the euro. For me, it's uh an 0:02:10.880 --> 0:02:13.519 interest red differential play. That's it. So as your walkers 0:02:13.520 --> 0:02:16.040 through your assessment of the inflation backdrop right now and 0:02:16.080 --> 0:02:22.720 how you think it's plays into well, I know it's 0:02:22.760 --> 0:02:25.440 especially two or three months ago, it was very unpopular 0:02:25.520 --> 0:02:28.320 to still use the word transitory, because it was a 0:02:28.440 --> 0:02:33.240 very persistent form of transitory. But it's it's it's what 0:02:33.440 --> 0:02:37.120 we were expecting that we would see some desideration in 0:02:37.320 --> 0:02:40.760 inflation towards the end of tween two and into two, 0:02:40.880 --> 0:02:44.440 she says twenty three. The question is, um how quickly 0:02:44.560 --> 0:02:47.440 we will get closer to the kind of target as 0:02:47.760 --> 0:02:51.240 UH central banks are pursuing. And that's a different question 0:02:51.360 --> 0:02:54.880 from the fact that it is probably already starting to 0:02:54.880 --> 0:03:00.520 to to desiderate. UM. So in the US, it's definitely 0:03:00.840 --> 0:03:03.840 a labor market issue, and for now, let's say that 0:03:03.880 --> 0:03:08.200 the data is ambiguous. Our contention is that we will 0:03:08.240 --> 0:03:11.880 see slow down in wages and that will help take 0:03:11.960 --> 0:03:14.639 core inflation down by the second half of twenty three, 0:03:14.680 --> 0:03:17.200 even if the first month of the next raging to 0:03:17.240 --> 0:03:20.880 be to be tough. But it's a sort of you know, UH, 0:03:21.040 --> 0:03:25.160 traditional usual macrical behavior, and you've had a very very 0:03:25.160 --> 0:03:28.239 tense labor market. Labor markets to soften, the wages goes 0:03:28.480 --> 0:03:32.079 go down inflation. There in Europe it's much more complicated 0:03:32.639 --> 0:03:35.360 because you still have a very very significant share of 0:03:35.400 --> 0:03:38.640 our inflation which is completely ex genous, which is completely 0:03:38.760 --> 0:03:42.800 driven by external factors. At the depreciation in the Europe 0:03:42.800 --> 0:03:45.880 that we've had until very very recently, and gas prices 0:03:45.960 --> 0:03:51.160 which remain extraordinarily volati. We also expect the slowdown inflation 0:03:51.200 --> 0:03:56.200 next year in Europe based on mechanical behaviors, the fact 0:03:56.200 --> 0:03:58.680 that you know these effects should play in the wrong 0:03:59.040 --> 0:04:02.400 in the right direction in twenty three, um, but it's 0:04:02.600 --> 0:04:05.560 much harder to assess. It's simply because it is not 0:04:05.680 --> 0:04:10.040 the usual traditional behavior of of microcomic patterns. We are 0:04:10.080 --> 0:04:12.480 completely dependent on where gas prices are going to be 0:04:12.840 --> 0:04:15.880 in six months time, and we've been disappointed before. But 0:04:16.240 --> 0:04:18.400 on the basis of what we know right now, on 0:04:18.480 --> 0:04:21.960 the basis of forward gas prices, for instance, we should 0:04:21.960 --> 0:04:24.599 see the seration inflation in twenty three as well in Europe. 0:04:24.720 --> 0:04:26.800 So you just to sort of put that all together. 0:04:26.839 --> 0:04:29.240 Are you basically saying you're willing to push against the 0:04:29.240 --> 0:04:32.279 stagflation case in the United States, but that Europe looks 0:04:32.360 --> 0:04:35.080 much more likely to be admired in stagflationary types of 0:04:35.160 --> 0:04:38.520 environments for a longer period of time. Yeah for me. 0:04:38.680 --> 0:04:40.920 For me, a key difference between the US and Europe 0:04:41.000 --> 0:04:45.600 is that, to some extent um, the the US, especially 0:04:45.640 --> 0:04:49.479 the FED, is too large extent in control the situation. 0:04:49.640 --> 0:04:53.039 If if the economy tanks in twenty twenty three UH 0:04:53.120 --> 0:04:56.600 and normally inflation that goes down more more harshly than 0:04:56.640 --> 0:04:58.800 what the market was is currently expecting, then you know 0:04:58.839 --> 0:05:00.960 the Fed can act. It is slow down its base 0:05:01.040 --> 0:05:04.560 of titling and even cut rates. So there's a measure 0:05:04.560 --> 0:05:07.360 of control if you want, on the on the state 0:05:07.360 --> 0:05:10.160 of the economy in the US. In Europe, we don't 0:05:10.200 --> 0:05:13.599 have that level of control because it is it is 0:05:13.600 --> 0:05:17.520 not in our hands. And for all the activism of 0:05:17.520 --> 0:05:19.960 of of the c D, the fact that it's talking 0:05:19.960 --> 0:05:22.640 about a lot of these it's acting, it is normalizing, 0:05:22.680 --> 0:05:26.520 it's it's mijory policy. Truth is, and they've acknowledged it themselves. 0:05:26.560 --> 0:05:29.040 They have very very little impact and they know it 0:05:29.560 --> 0:05:32.480 on on the inflation in in twenty three in in Europe. 0:05:32.520 --> 0:05:36.440 So yes, on the basis the balance of risks, we 0:05:36.560 --> 0:05:39.440 have more than some risks in Europe than in the US, 0:05:39.720 --> 0:05:42.320 I think, or to be more precise, we have less 0:05:42.320 --> 0:05:47.040 capacity in Europe to get us out of a recession 0:05:47.040 --> 0:05:49.839 in in in twenty three and that I think should 0:05:50.200 --> 0:05:52.920 remain reflected in our exchange rate. And for now we 0:05:53.000 --> 0:05:56.520 have this sort of knee jerk reaction to this Loan 0:05:56.680 --> 0:05:59.479 October inflection print in the US. I hope it continues, 0:05:59.560 --> 0:06:03.240 but we had accidents before. Well, fundamentally, the problem is 0:06:03.279 --> 0:06:05.520 that you know, Europe doesn't look as as as as 0:06:05.520 --> 0:06:07.920 in control. It just makes me wonder when you're doing 0:06:08.000 --> 0:06:10.480 or your head outlook if you basically have a meteorologist 0:06:10.480 --> 0:06:13.680 there several of them showing you satellite pictures of what 0:06:13.760 --> 0:06:15.000 the weather is going to be like and what the 0:06:15.040 --> 0:06:17.720 trends are of al Ninia or La nina um in 0:06:18.160 --> 0:06:20.599 just in general, to get a better sense Gill, you're 0:06:20.600 --> 0:06:23.000 saying that there isn't much that Europe can do. Is 0:06:23.040 --> 0:06:25.720 there anything that you are looking for, maybe not this year, 0:06:25.760 --> 0:06:27.680 but next to you to determine whether they've gotten the 0:06:28.000 --> 0:06:31.159 gotten a little bit more control over the energy situation 0:06:31.279 --> 0:06:34.480 so that they're not just susceptible to the next energy 0:06:34.560 --> 0:06:39.400 import There's one one. Well, energy importance is still the 0:06:39.480 --> 0:06:41.760 key in the sun starts. What we need to see 0:06:41.760 --> 0:06:46.800 in twenty three is the emergence of energy importing capacity 0:06:47.160 --> 0:06:49.640 in Germany. Now, as you know, at the moment, you 0:06:49.720 --> 0:06:53.560 have energy importing capacity in Italy, France, in Belgium, et cetera, 0:06:53.600 --> 0:06:55.839 et cetera. You don't have it in Germany. They have 0:06:55.880 --> 0:07:00.400 a project to have the terminal coming out that needs 0:07:00.440 --> 0:07:03.520 to come out. We need to have this energy capacity 0:07:03.520 --> 0:07:06.400 in Germany to make us sure that twenty three twenty 0:07:06.400 --> 0:07:08.880 four is not going to be a replication of what 0:07:09.040 --> 0:07:11.760 we're going through through right now. So that would be 0:07:11.800 --> 0:07:16.840 definitely positive. Another point, which is probably less UH discussed 0:07:17.120 --> 0:07:22.720 is um the capacity of the French nuclup power generation 0:07:23.400 --> 0:07:27.000 UH to really reach it's it's potential in twenty three. 0:07:27.560 --> 0:07:30.520 That adds actually to the difficulties we have right now. 0:07:30.880 --> 0:07:32.960 As you know, you've got lots of new club power 0:07:33.560 --> 0:07:38.120 stations in France which haven't a restarted. There's a plan 0:07:38.200 --> 0:07:40.880 to restart them gradually over the next of the next 0:07:40.880 --> 0:07:45.160 few months. We need to see that plan UH complete 0:07:45.640 --> 0:07:48.560 by the end of this winter again to give us 0:07:48.600 --> 0:07:52.440 a measure of comfort in terms of electric generation for 0:07:52.440 --> 0:07:55.320 for for twenty three. So that that is less discussed, 0:07:55.320 --> 0:07:58.000 but I think it's almost as important. Your wonderful to 0:07:58.040 --> 0:08:00.280 hear from is a bit of a ranny to check 0:08:00.320 --> 0:08:02.760 around the European story from Showmabak. There of acts for 0:08:02.880 --> 0:08:12.480 investment managers joining senior recordy strategist to Federated Hermis, Linda, 0:08:12.520 --> 0:08:13.960 I'll make it simple for you. Do you want to 0:08:14.000 --> 0:08:17.000 chase this rally? No, we had Federated Hermes, do not 0:08:17.080 --> 0:08:19.720 want to chase this rally. This was a predictable rally, 0:08:20.080 --> 0:08:22.800 and we've been bouncing up and down all year long, 0:08:23.000 --> 0:08:25.520 pretty much in two month increments, if you remember the 0:08:25.600 --> 0:08:27.240 June low, and then bounced uff for a couple of 0:08:27.240 --> 0:08:29.320 months later and then bounced right back down. And what 0:08:29.400 --> 0:08:31.480 we saw last week was that great day I think 0:08:31.560 --> 0:08:35.120 was on Thursday. We saw money flowing into tech stocks 0:08:35.920 --> 0:08:38.840 um into an outsized degree. So there's still a lot 0:08:38.880 --> 0:08:42.160 of money out there slashing about looking for where to invest. 0:08:42.240 --> 0:08:44.120 And you know, I travel all the time in my job. 0:08:44.400 --> 0:08:46.280 The most common question the last three months was what 0:08:46.320 --> 0:08:49.160 should I buy now? There is not the fear out there. 0:08:49.200 --> 0:08:51.520 So as much as a hundred percent of people thought 0:08:51.520 --> 0:08:53.760 we're going to have a recession next year, maybe a 0:08:53.840 --> 0:08:56.480 hundred percent of people thought you need to buy into 0:08:56.520 --> 0:08:58.800 this rally. We've seen a lot of cuts from big 0:08:58.840 --> 0:09:03.280 tech Mezza eleven thousand, Twitter, potentially half the workforce is 0:09:03.320 --> 0:09:05.480 set to go. The reports from the New York Times 0:09:05.520 --> 0:09:08.199 on Amazon yesterday. The week before it was the Journal 0:09:08.280 --> 0:09:10.880 talking about a cost cutting review under Andy Jess. Does 0:09:10.920 --> 0:09:14.120 that bring you confidence, Linda, about these tech companies making 0:09:14.120 --> 0:09:17.480 the required counts removing the excess that they've built up. Well, yes, 0:09:17.520 --> 0:09:19.920 and of course that's where the big increases word during 0:09:19.920 --> 0:09:22.560 the COVID shutdown or in the tech stocks hundreds of 0:09:22.559 --> 0:09:25.560 thousands I think, UH added onto Amazon, so of course 0:09:25.600 --> 0:09:28.520 they're going to cut. What we're watching is is this 0:09:28.640 --> 0:09:30.599 the beginning of you know, is this the tip of 0:09:30.600 --> 0:09:33.360 an iceberg in terms of layoffs? And of course we 0:09:33.400 --> 0:09:35.920 think layoffs will increase next year, but what I expeag 0:09:35.920 --> 0:09:40.240 will happen in three is really a slow motion realization 0:09:40.679 --> 0:09:44.040 that we are going into recession and that earnings are 0:09:44.040 --> 0:09:46.199 going to come off. And as much as we're talking 0:09:46.200 --> 0:09:48.960 in these last couple of weeks about lots of issues, 0:09:49.000 --> 0:09:50.920 there's not a lot of talk in our view and 0:09:51.000 --> 0:09:54.720 federated hermes about what is likely to happen to earnings 0:09:54.840 --> 0:09:58.400 estimates coming down in through next year. But it will 0:09:58.440 --> 0:10:01.920 be slow motion because of all cash out there. Linda 0:10:01.920 --> 0:10:03.800 wish sector of the market right now do you think 0:10:03.920 --> 0:10:06.640 is most overpriced based on the expectation that you put 0:10:06.640 --> 0:10:10.680 out there of downgrades to earning estimates next year. Uh, well, 0:10:10.720 --> 0:10:13.080 you know, the most expensive sector out there right now 0:10:13.120 --> 0:10:16.040 if you look at forward pees versus like thirty years 0:10:16.080 --> 0:10:19.920 of history, is actually utilities because people just poured into utilities. 0:10:19.920 --> 0:10:22.679 And that's not because of people getting earnings wrong. It's 0:10:22.679 --> 0:10:26.640 because people massively going into the defensive sector. Indeed, what 0:10:26.720 --> 0:10:29.679 happened in these last few months was that the tech sector, 0:10:29.720 --> 0:10:32.840 which was the most expensive sector all year long, and 0:10:32.920 --> 0:10:36.120 pockets still are very expensive, other pockets not as much, 0:10:36.840 --> 0:10:39.520 was really brought down to earth a lot, so people 0:10:39.559 --> 0:10:42.280 feel comfortable in getting back in. So it's really a 0:10:42.840 --> 0:10:46.000 motion moving all back and forth. Right now. It's that 0:10:46.200 --> 0:10:50.400 one sector, utilities that was really overbought that's coming back 0:10:50.400 --> 0:10:54.240 down now. But in general, those high quality dividends sectors 0:10:54.240 --> 0:10:57.800 are in expensive versus history, and that's what we're focused at. 0:10:57.840 --> 0:11:01.040 Federated Herman's that's where you're focused and order to buy 0:11:01.240 --> 0:11:03.839 or in order to sell, Linda, do you look at 0:11:03.840 --> 0:11:07.120 that area as accurately pricing in stagflation that other areas 0:11:07.160 --> 0:11:10.400 of the market perhaps are not. Now we're looking to buy, okay, 0:11:10.440 --> 0:11:13.120 think to buy the defensive sectors. We're looking for income. 0:11:13.160 --> 0:11:15.719 Cash is king. That's sort of an idea, remembering to 0:11:15.760 --> 0:11:19.319 remain deface defensive. In fact, when you go into recession, 0:11:19.360 --> 0:11:22.479 if we really think you're going into recession, cyclicals historically 0:11:22.559 --> 0:11:28.920 underperform the defensive by so far only seven percent, earnings 0:11:29.040 --> 0:11:31.960 estimates only down four percent now from the peak in 0:11:32.080 --> 0:11:34.960 June for this entire market, and it's likely to go 0:11:35.040 --> 0:11:39.680 down we think ten anyway. So we're staying defensive here, 0:11:39.760 --> 0:11:42.960 and we're selling what looks expensive into this rally. And 0:11:43.000 --> 0:11:45.760 that is some tech, for sure, some tech. But Linda, 0:11:46.120 --> 0:11:48.240 wonderful to hear from you. It always is, Linda to 0:11:48.360 --> 0:12:00.720 so the Offederates at hermits go ahead down to Washington, 0:12:00.800 --> 0:12:03.600 d C. And just a warning going into this conversation, 0:12:03.720 --> 0:12:06.640 there's a lot of noise behind Andy Bark, the Republican 0:12:06.640 --> 0:12:09.000 from Kentucky and ranking member of the House Subcommittee on 0:12:09.000 --> 0:12:11.839 Oversight and Investigations. Congressman, you and I were joking in 0:12:11.880 --> 0:12:13.960 the commercial break, is the chaos of Washington, of the 0:12:13.960 --> 0:12:16.200 case of Washington returns and that noise comes back. I'll 0:12:16.240 --> 0:12:18.880 let you go, sir, for sure. You made easy work 0:12:19.240 --> 0:12:23.160 of Kentucky sixth congressional district. Other Republicans struggled, let's start 0:12:23.200 --> 0:12:26.000 their congressman. What went wrong with the party at these 0:12:26.000 --> 0:12:30.040 mid terms. Well, I'm a I'm an optimist, I'm a 0:12:30.080 --> 0:12:33.280 bit of a have a positive attitude. And so however 0:12:33.440 --> 0:12:36.839 you cut it, uh, And no doubt Republicans are disappointed 0:12:36.880 --> 0:12:39.920 that the red wave did not materialize. But however you 0:12:40.000 --> 0:12:42.520 cut it, we made material gains in the House, and 0:12:42.559 --> 0:12:45.000 it looks like we're on track to taking the majority. 0:12:45.000 --> 0:12:47.000 In fact, so many outlets have already said we have 0:12:47.200 --> 0:12:50.760 in fact taking the majority. That was the principal objective, 0:12:51.040 --> 0:12:54.840 even not taking the Senate. Uh. What does that mean? 0:12:55.800 --> 0:12:58.760 It means that they don't give out small, medium, and 0:12:58.840 --> 0:13:02.439 large sized gabbles. They just give out gabbles. And by 0:13:02.520 --> 0:13:05.120 retiring Nancy Pelosias Speaker of the House, by having a 0:13:05.160 --> 0:13:09.160 news speaker, by having Republicans in charge of the gabbles 0:13:09.160 --> 0:13:11.720 and the committees, it means we set the agenda. We 0:13:11.840 --> 0:13:14.920 have the ability to exercise oversight. We can put the 0:13:15.000 --> 0:13:18.680 brakes on the overspending and the threat of higher taxes, 0:13:18.960 --> 0:13:23.120 and we can exercise oversight over the regulatory assault on 0:13:23.160 --> 0:13:26.200 the free enterprise system. That's what the market should take 0:13:26.960 --> 0:13:29.760 encouragement by in this election is that we do have 0:13:29.840 --> 0:13:32.320 divided government, even though it's going to be a thin majority. 0:13:32.559 --> 0:13:34.480 So who would you like to see be the leader 0:13:34.679 --> 0:13:37.079 of the House of Representatives? Is that Kevin McCarthy. Who 0:13:37.080 --> 0:13:38.839 would you like to see to be the leader of 0:13:38.920 --> 0:13:42.839 the Republican Party. Is it for a President Trump? No, 0:13:42.960 --> 0:13:45.760 it's Kevin McCarthy. Kevin Kevin McCarthy. There no one has 0:13:45.800 --> 0:13:49.479 done more for the House Republican Conference than Kevin McCarthy 0:13:49.520 --> 0:13:53.760 in terms of raising money, helping recruit candidates, helping members 0:13:54.200 --> 0:13:59.439 represent their districts, moving their legislation, assisting them understanding their districts. 0:13:59.480 --> 0:14:02.280 So Kevin McCarthy is gonna have the votes not only 0:14:02.320 --> 0:14:07.120 to win his leadership election today but also become speaker. Now, look, 0:14:07.440 --> 0:14:10.640 there's competition. And the great thing about the Republican Party, 0:14:10.720 --> 0:14:14.480 both in these leadership elections in Congress and I anticipate 0:14:14.520 --> 0:14:18.319 in is there will be competition. There is no coronation 0:14:18.480 --> 0:14:21.280 in the Republican Party. That's the great thing about the 0:14:21.320 --> 0:14:23.920 Republican Party. We are not an authoritarian party. We are 0:14:23.920 --> 0:14:27.000 on libertarian party. We believe in free enterprise, we believe 0:14:27.000 --> 0:14:29.640 in competition, choice. We don't believe in top down, we 0:14:29.720 --> 0:14:33.320 believe in bottom up, and so competition, iron Sharpen's iron, 0:14:33.400 --> 0:14:36.480 that's what makes us better leaders. How important is it 0:14:36.520 --> 0:14:39.920 to you, Congressman for President Trump, former President Trump not 0:14:40.040 --> 0:14:42.640 to run again in order for Republicans to kind of 0:14:43.080 --> 0:14:47.000 reclaim that mantel given the turnout what recently was the 0:14:47.160 --> 0:14:50.680 vote in the previous two elections. Well, I think we 0:14:50.800 --> 0:14:52.560 have to do some soul searching in our party and 0:14:52.600 --> 0:14:57.480 recognize that certain candidates for Congress underperformed other candidates, and 0:14:57.520 --> 0:14:59.400 what do those candidates look like? What were the features 0:14:59.400 --> 0:15:02.600 of those candida It's again, We're the party of competition 0:15:02.600 --> 0:15:05.840 and choice. So I'm not one to say, Uh, this 0:15:06.200 --> 0:15:09.480 candidate shouldn't run or the former president shouldn't run. Um. 0:15:09.520 --> 0:15:11.680 I think there will be a robust competition. I do 0:15:11.720 --> 0:15:15.119 not believe there will be a core nation for the nomination. 0:15:15.320 --> 0:15:18.280 But I want to say this too about we're getting 0:15:18.320 --> 0:15:20.680 ahead of ourselves a little bit. The the crises that 0:15:20.720 --> 0:15:23.760 are facing us right now have not changed since Tuesday. 0:15:24.040 --> 0:15:28.080 Inflation continues to be a massive forty year problem for 0:15:28.120 --> 0:15:32.000 our country. Uh, the crime problem is significant. That's why 0:15:32.200 --> 0:15:36.000 a lot of Republicans did well in places where you've 0:15:36.040 --> 0:15:39.560 got a crime problem. The border crisis is significant, the 0:15:39.640 --> 0:15:44.240 energy crisis, the attack on American energy independence, it continues 0:15:44.280 --> 0:15:46.280 to be a big problem, and the president's approval rating 0:15:46.280 --> 0:15:50.360 continues to be so. Even while uh, the American people 0:15:50.400 --> 0:15:53.600 didn't give a mandate to Republicans, they certainly didn't give 0:15:53.640 --> 0:15:56.920 a mandate to the Democrats when they gave Republicans control 0:15:56.920 --> 0:16:00.400 of the House. So it's it's dissatisfact and all the 0:16:00.440 --> 0:16:04.560 way around, and it means that Republicans and Democrats alike 0:16:04.920 --> 0:16:08.120 need to do a better job responding to the problems 0:16:08.120 --> 0:16:11.520 facing the American people. Republicans in the majority are going 0:16:11.560 --> 0:16:14.720 to be laser focused on this inflation crisis, and I 0:16:14.720 --> 0:16:17.280 will I want to say this to your audience in particular, 0:16:17.760 --> 0:16:21.240 no amount of federal reserve tightening is going to solve 0:16:21.280 --> 0:16:25.000 this inflation crisis. There is a supply side problem as 0:16:25.080 --> 0:16:27.760 much as there is a demand side or excess demand 0:16:27.840 --> 0:16:31.000 issue in the economy, and we need to produce and 0:16:31.120 --> 0:16:34.440 supply more American made energy in this country. To fix 0:16:34.480 --> 0:16:36.760 the supply side, we need to take off the table 0:16:36.800 --> 0:16:40.440 the threat of higher taxes and over regulation, which impedes 0:16:40.480 --> 0:16:43.520 business investment, impedes the repairs that need to take place 0:16:43.720 --> 0:16:46.840 in the supply chain. If we don't do that, we 0:16:46.880 --> 0:16:49.160 are not going to get out of this inflation spiral, 0:16:49.400 --> 0:16:51.920 and you're gonna continue to see aggressive tightening that will 0:16:51.960 --> 0:16:54.880 disrupt the financial markets. The Congressman, you said it, We've 0:16:54.880 --> 0:16:57.440 got an approval writing for the president in the falties, 0:16:57.560 --> 0:17:00.640 We've got inflation at a forty year high, and still 0:17:00.680 --> 0:17:03.200 this is the position that the Republican Party finds itself fit. 0:17:03.240 --> 0:17:05.679 And most people think that speaks to the failure of 0:17:05.760 --> 0:17:08.159 this party not to secure a bigger majority in the 0:17:08.200 --> 0:17:11.400 House or any majority whatsoever in the Senate. You talked 0:17:11.400 --> 0:17:14.639 about self searching, So can you be more specific about 0:17:14.680 --> 0:17:17.040 what that actually means? What do you think And I'll 0:17:17.040 --> 0:17:19.160 go back to the question we started the conversation with, 0:17:19.640 --> 0:17:22.840 what went wrong? What needs to change? What is that 0:17:22.920 --> 0:17:28.480 soul searching actually involved? Well, look, again, I'm an optimist. 0:17:28.520 --> 0:17:30.879 I think to say, when you take the majority, what 0:17:30.960 --> 0:17:32.560 went wrong? I think you have to give a little 0:17:32.560 --> 0:17:35.040 bit of credit to the candidates, the excellent candidates who 0:17:35.080 --> 0:17:37.880 did win and who did be incumbent Democrats, and look 0:17:37.920 --> 0:17:41.640 at those candidates. What what was the characteristics of those candidates. 0:17:41.640 --> 0:17:45.359 Those candidates were optimistic, They believed in America, They were patriotic, 0:17:45.359 --> 0:17:49.200 They believed in free enterprise as the solution, not the problem. 0:17:49.240 --> 0:17:53.520 They believed they recognized that the government and fiscal policies 0:17:53.880 --> 0:17:58.560 and and policy errors are why we have this inflation crisis. 0:17:58.920 --> 0:18:02.119 And they have so Lucians, and they offered solutions in 0:18:02.119 --> 0:18:04.760 the form of the commitment to America to stop the overspending, 0:18:05.080 --> 0:18:09.199 to produce American energy again, to fund, not defund the police, 0:18:09.240 --> 0:18:10.679 to make sure we have law and order in our 0:18:10.720 --> 0:18:13.960 country again, and to secure our southern border, and to say, look, 0:18:14.119 --> 0:18:16.280 we are a nation of immigrants, but we're also a 0:18:16.359 --> 0:18:20.200 nation of laws. And I think the candidates that had 0:18:20.240 --> 0:18:24.760 that positive uh message, or the candidates the one candidates 0:18:24.800 --> 0:18:28.120 that had a more divisive message um uh and we're 0:18:28.160 --> 0:18:32.560 only about opposition as opposed to policy solutions, those candidates struggled. 0:18:32.920 --> 0:18:36.000 So I believe in a Republican Party that presents a 0:18:36.080 --> 0:18:40.399 positive message about free enterprise, freedom, liberty, limited government, and 0:18:40.600 --> 0:18:43.480 upward mobility. That's how we're going to win the majorities 0:18:43.520 --> 0:18:45.520 for the years the years to come. The congressmen, we're 0:18:45.520 --> 0:18:47.720 gonna have a longer conversation about your rolled on the 0:18:47.720 --> 0:18:50.280 House sub Committee on Oversigned Investigation in the next couple 0:18:50.280 --> 0:18:52.479 of weeks, and I'm looking forward to that conversation. And 0:18:52.520 --> 0:18:59.679 he bound That Republican from Kentucky, A MX, joined us 0:18:59.680 --> 0:19:01.719 now from Valley with the special guest to A Marie. 0:19:01.760 --> 0:19:03.600 Thanks so much, Seoan. The fact that this guest is 0:19:03.640 --> 0:19:06.160 with me, So it sounds like things are looking hopeful 0:19:06.240 --> 0:19:08.440 for the joint Communicate leaders we're going to sign off 0:19:08.480 --> 0:19:13.480 for I'm joined now by the President's Deputy National Security Advisor, 0:19:13.600 --> 0:19:16.160 Mike Pyle. Mike, thanks so much for joining me. You're 0:19:16.280 --> 0:19:18.720 the representative at the table what they call and twenty 0:19:18.800 --> 0:19:21.159 speak the sherpa. And the fact that you're here at 0:19:21.160 --> 0:19:24.119 a fifteen BALI now before the leaders signed off in 0:19:24.160 --> 0:19:26.840 it sounds like it's hopeful that all twenty leaders will 0:19:26.880 --> 0:19:29.480 sign this communicate. How are we able to get Russia 0:19:29.520 --> 0:19:31.720 on board? So I don't want to get ahead of 0:19:31.800 --> 0:19:36.240 our leaders. Obviously they will speak collectively uh coming out 0:19:36.280 --> 0:19:39.680 of the summit, but I think we're constructive that there's 0:19:39.680 --> 0:19:41.600 going to be a statement from the G twenty that 0:19:42.040 --> 0:19:45.240 accomplishes what the President set out as his priorities coming 0:19:45.240 --> 0:19:48.840 in number one, to rally the world to speak in 0:19:49.080 --> 0:19:55.440 strong UH language around Russia's war in Ukraine, to condemn Russia, 0:19:55.480 --> 0:20:00.359 to condemn the consequences of Russia's behavior and terms of 0:20:00.400 --> 0:20:02.840 its stresses on the global economy, but then also to 0:20:02.880 --> 0:20:05.840 present to the world an affirmative vision for what an 0:20:05.880 --> 0:20:09.360 action plan could look like to address those stresses, particularly 0:20:09.400 --> 0:20:12.199 on vulnerable countries in the emerging world. How crucial was 0:20:12.359 --> 0:20:15.040 Jing Pain in China to getting this communicate over the 0:20:15.040 --> 0:20:18.919 finish line. So I think I think you know what 0:20:18.960 --> 0:20:21.439 I would say is, you know President Biden and his 0:20:21.560 --> 0:20:24.200 vision was very essential to getting this communicate over the 0:20:24.240 --> 0:20:28.840 vision line finish line again one coming in and working 0:20:28.840 --> 0:20:33.280 hard to rally a broad stretch of the G twenty. 0:20:33.359 --> 0:20:35.960 I think what you'll see in the communicate when it's 0:20:36.000 --> 0:20:38.960 released is that most of the G twenty came together 0:20:39.200 --> 0:20:44.400 to strongly condemn Russia's war, to strongly condemn those actions 0:20:44.400 --> 0:20:47.159 and the consequences that's had for the global economy. And 0:20:47.160 --> 0:20:49.600 you you're also going to see reflected in that a 0:20:49.640 --> 0:20:52.720 lot of the priority priorities of the residents articulated, whether 0:20:52.760 --> 0:20:56.080 it's the need for reform at the multilateral development banks 0:20:56.119 --> 0:20:58.240 like the World Bank, whether that's the need to stand 0:20:58.320 --> 0:21:02.280 up UH and and effort to be more prepared for 0:21:02.480 --> 0:21:06.959 future pandemics, whether that's an issue like that relief where again, 0:21:07.000 --> 0:21:09.439 like what we saw in October, one country out of 0:21:09.440 --> 0:21:11.920 the twenty was isolated while the rest of the nineteen 0:21:12.320 --> 0:21:14.040 stood up and said this is something we need to 0:21:14.040 --> 0:21:16.480 do to help vulnerable countries. I think you're going to 0:21:16.480 --> 0:21:18.160 see those priorities in the communic A, and I think 0:21:18.200 --> 0:21:21.080 that's a reflection of US leadership. We're hearing a growing 0:21:21.160 --> 0:21:24.720 chorus on the margins or out in the front about 0:21:24.760 --> 0:21:27.320 some actions the United States has taken, one the Inflation 0:21:27.320 --> 0:21:30.840 Reduction Act giving subsidies to American companies, but also the 0:21:30.880 --> 0:21:34.959 curves on chips to China, where potentially a European company 0:21:35.000 --> 0:21:37.280 like a SML in the Netherlands might get caught in 0:21:37.320 --> 0:21:39.439 the cross fires between what the United States does not 0:21:39.520 --> 0:21:42.159 want to happen. We've been selling to China. How have 0:21:42.280 --> 0:21:44.720 you been able to deal with your allies and these 0:21:44.760 --> 0:21:47.960 two critical issues that are going to help the U 0:21:48.040 --> 0:21:51.919 s domestically and it's going to hurt them. So with 0:21:51.960 --> 0:21:54.200 respect to the ira A, I mean I think the 0:21:54.600 --> 0:21:58.440 core point is we have a shared challenge globally around 0:21:58.520 --> 0:22:01.280 climate change, and that we have heard from the rest 0:22:01.320 --> 0:22:03.680