Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Single best idea. Holidays shortens single best idea. Usually we
Speaker 2: keep it six minutes. We're going to try to do
Speaker 2: this in five minutes so you can get on with
Speaker 2: your Fourth of July weekend, and all of you worldwide,
Speaker 2: particularly in France and the United Kingdom, you just must
Speaker 2: be exhausted by the political debate. I can't imagine, of course,
Speaker 2: everything that we had in Washington today. Thank you to
Speaker 2: Joe Matthew Balance of Power with Robert Costa of CBS.
Speaker 2: It was great to have Robert Costa and Joe Matthew
Speaker 2: together on all going on in Washington and many many
Speaker 2: other good guests today. When we invented surveillance in Bloomberg
Speaker 2: on the economy just a few years ago, don't look
Speaker 2: at me like that, Eric, just a few years ago.
Speaker 2: The basic idea was to engender a constructive debate where
Speaker 2: really smart people agree to disagree. We had that in
Speaker 2: Spade yesterday in a strong thirty minutes with Lindsay Pegs
Speaker 2: of Stifel and Neil Dutta of Renaissance Macro. Lindsay Pegs
Speaker 2: of believes inflation is more persistent if declining a bit.
Speaker 2: She suggests the FED will take its time even into
Speaker 2: twenty twenty five.
Speaker 3: I think the FEDS on the sideline through the end
Speaker 3: of the year. I think there's no motivation for the
Speaker 3: FED to rush, given the fact that we saw an
Speaker 3: extreme amount of head bakes at the start of the year,
Speaker 3: with three months of acceleration, and even when we strip
Speaker 3: out a lot of that noise and we look at
Speaker 3: core services excluding housing, so a measure the FED calls
Speaker 3: the supercore. We're talking double that two percent intended target.
Speaker 3: So a number of key metrics are still saying there's
Speaker 3: not enough indications that we're on a sustainable path two percent.
Speaker 3: So we need that ongoing message of patients reinforced by
Speaker 3: FED officials so we don't see them get ahead of
Speaker 3: themselves as they did at the start of the year.
Speaker 2: I'm going to editorialized Lindsay pigs as Stifel. That's a
Speaker 2: lonely outpost. I'm sure there's people that agree with They're
Speaker 2: out there and I don't have them in front of
Speaker 2: me right now, but boy, is that against a consensus call.
Speaker 2: Consensus call has been some form of vector of disinflation.
Speaker 2: Allen Zettner and her team published an hour ago at
Speaker 2: Morgan Stanley and say disinflation is in place, and there'll
Speaker 2: be many other people. I think you're going to see
Speaker 2: a ton of publications over this fourth of July weekend
Speaker 2: with all that's going on in Washington and of course
Speaker 2: the French results. I should say look to Alan Katz
Speaker 2: and our Paris Newsboro, Carolyn Conan and others for very,
Speaker 2: very good coverage of the French election. We will do
Speaker 2: that on Bloomberg on Sunday. But within the turmoil and
Speaker 2: all this, there is this sense and it is consensus
Speaker 2: that we're getting there and maybe, as the cliche as
Speaker 2: the last mile, it may be hard to get to
Speaker 2: two point zero percent. Neil Dutta has been an optimist,
Speaker 2: but when the facts change, Neil Doutta changes. And it's
Speaker 2: not that he's calling for disinflation. He said, there's just
Speaker 2: been a shift out there where the Fed has to
Speaker 2: get out in front of the data. Here's Neil Dutta,
Speaker 2: Renaissance Macro.
Speaker 4: The story for the year is that the trade offs
Speaker 4: are shifting. You know, last year it was all about
Speaker 4: inflationary boom like dynamics. There's just simply no way the
Speaker 4: FED should or could even think about cutting in that environment.
Speaker 4: But this year things have changed. You know, ultimately the
Speaker 4: economy is growing, you know, maybe two percent for the
Speaker 4: first half of the year. If you look at total
Speaker 4: hours worked over the last six months, it rose about
Speaker 4: one percent. So if you assume around one percent productivity
Speaker 4: growth you're talking about, you're looking at about a two
Speaker 4: percent economy. And I think what's important is that the
Speaker 4: unemployment rate is rising. So even though we've been growing
Speaker 4: two percent, it hasn't been enough to keep the unemployment
Speaker 4: rate from going up. And you're basically growing below potential.
Speaker 4: And at the same time, the momentum for inflation is lower, right,
Speaker 4: I mean, we're seeing that come out in the data.
Speaker 4: It's really about it's about balance of risk. Tell me
Speaker 4: what is the right tail for GDP growth. It's really
Speaker 4: hard to come up with. The unemployment has already been rising.
Speaker 4: That means the risk is that it keeps right right.
Speaker 2: Going back to economic growth, I really can't say this enough.
Speaker 2: Most economists looking at inflation adjusted growth the US calculates
Speaker 2: it in a different way than they do in Europe.
Speaker 2: It gets very confusing. But this whole debate about two
Speaker 2: percent real GDP growth being below that, which is sort
Speaker 2: of where everybody is now, including Atlanta. GDP is a
Speaker 2: guestimate or does it surprise once again to a more
Speaker 2: robust economic growth is maybe part of the debate in
Speaker 2: the Q three of this year. It is an extraordinary weekend,
Speaker 2: looked our Washington News Bureau Balance of Power, Joe Matthew
Speaker 2: and Kaylee Lines and others, a vast team here looking
Speaker 2: at all that's going on with the Biden administration. Mister
Speaker 2: Trump is a presumptive Republican candidate, and others in Washington.
Speaker 2: Again in London the pageantry. Thank you to Tom McKenzie
Speaker 2: for being outside ten Downing Street today as we minted
Speaker 2: a new prime minister, his greeting with the King of England.
Speaker 2: And I don't think I've said this yet Prime Minister Starmer.
Speaker 2: I've got to get used to that. But that's where
Speaker 2: we are. And then we go to the French elections
Speaker 2: this weekend to try to stagger into a holiday normal
Speaker 2: work week next week. We are on YouTube. Search and
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