Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane along
Speaker 1: with Jonathan Ferrell and Lisa Brownwitz Jaily. We bring you
Speaker 1: insight from the best and economics, finance, investment, and international relations.
Speaker 1: To find Bloomberg Surveillance on Apple Podcasts, sun Cloud, Bloomberg
Speaker 1: dot Com and of course on the Bloomberg terminal. This
Speaker 1: is a joy, particularly for September. Edward Morris is its
Speaker 1: city group working with a team of very smart people
Speaker 1: and they're working on the definitive deck for petroleum that
Speaker 1: will become widely tweaked and available into September. Ed Morris,
Speaker 1: your deck, which we've taken a glance at, is a
Speaker 1: bombshell document. You say there's going to be over supply,
Speaker 1: that there will be many regime changes. What's the regime
Speaker 1: change in oil? I need to focus on. Well, I
Speaker 1: think there are three bits of of a fundamental change.
Speaker 1: The first one is still just look at home at
Speaker 1: the US, where for the last decade of the US
Speaker 1: production was growing at a remarkable rate. In fact, the
Speaker 1: US in that ten year period supplied seventy of the
Speaker 1: total world energy incremental supply, and that's just not going
Speaker 1: to happen again. I'm tempted to say ever again, but
Speaker 1: really not again. Um, and that's going to change things
Speaker 1: a bit. The US has had a really significant impact
Speaker 1: on the world. Uh. It put OPEC plus into a
Speaker 1: defensive mode. Uh. They are still in a defensive mode,
Speaker 1: and I think they'll remain in a defensive mode. And
Speaker 1: there's a second issue that I think is a bit
Speaker 1: of a regime change, namely that OPEC was really flourishing
Speaker 1: because of the ability of the OPEC producers to say,
Speaker 1: we don't have to worry about today so much. It's
Speaker 1: tomorrow that we will have our day because demand is
Speaker 1: going to be rising for a and uh and the
Speaker 1: supply will be our. So now both on the supply
Speaker 1: side and on the demand side that's being challenged. And
Speaker 1: on this day of U N Action on climate three
Speaker 1: thousand plus plages is well, we've observed that China has
Speaker 1: coal that's got to get fixed. But also the US
Speaker 1: needs to step up some form of cogent policy. What
Speaker 1: is the morse efficacious policy for the United States on
Speaker 1: climate change in linking it into your world? Well, I
Speaker 1: think we're getting a head start on it. I think
Speaker 1: we need the government there to create a framework. Governments
Speaker 1: didn't have any framework before the Paris Agreement UH, and
Speaker 1: they got a framework and the bond market simply skyrocketed
Speaker 1: for sustainability. Right after that, the Paris Agreement said hey,
Speaker 1: we need three to five trillion dollars of investment. UH
Speaker 1: in the bond market only gave two hundred and fifty
Speaker 1: billion dollars worth of issuance of sustainability bonds. Twenty twenty
Speaker 1: was a half a trillion, and this year we're on
Speaker 1: our way to a trillion. We need more government framework
Speaker 1: to get the infrastructure build that we need. We need
Speaker 1: infrastructure build to see quest of carbon dioxide. We need
Speaker 1: the infrastructure build to get hydrogen from where it's produced
Speaker 1: to where it's needed. And I think that's the challenge
Speaker 1: to decarbonize in the country. Do devetail this at into
Speaker 1: your call on oil? Have we seen peak oil demand
Speaker 1: already or do you foresee that upcoming in the next
Speaker 1: few years. We don't think that there's a peak oil
Speaker 1: demand yet, but we think it's coming. There's a bit
Speaker 1: of a debate on it. The question to us is
Speaker 1: really a question of when we were on a track
Speaker 1: to hit a hundred and ten million barrels a day
Speaker 1: of demand all else sequels by UM and because of
Speaker 1: policy is already put in place, not because of the pandemic,
Speaker 1: but because really off the policy is put in place
Speaker 1: by China, the US, and Europe that will be at
Speaker 1: at the most probably a hundred and seven million a day,
Speaker 1: and we think that the policies that are unfolding, we'll
Speaker 1: get it to a hundred and war So the pace
Speaker 1: of growth of oil demand, the elasticity of demand for
Speaker 1: oil to GDP is really falling much more rapidly than
Speaker 1: people thought, which puts us really into getting to that
Speaker 1: peak oil demand period UH into the early part of
Speaker 1: the next decade. This is part of the confusing backdrop,
Speaker 1: the list of unknowns that you lay out as we
Speaker 1: look at oil prices currently w W T I sixty
Speaker 1: five dollars and sixty one sends the path of change.
Speaker 1: People were talking just two months ago of hundred dollars
Speaker 1: a barrel of oil foreseeable the next few months. Could
Speaker 1: we still be there or has the scenario changed now?
Speaker 1: I think the scenario has not changed. What we're seeing
Speaker 1: is a lumpy reaction to UH. Two things that might
Speaker 1: happen UH we just look at the supply and demand balances.
Speaker 1: Inventories are drawing at a record rate, uh that, And
Speaker 1: and they're drawing at a higher rate this month than
Speaker 1: they were last month, and we think that next month
Speaker 1: it will still be at a higher rate. So inventories
Speaker 1: are really tight. They're tighter than where the price of
Speaker 1: oil is today. And that's because financial flows have gotten
Speaker 1: a little bit short, a little bit prematurely, partly because
Speaker 1: of the discussion you were having a little earlier, partly
Speaker 1: on the basis of an assumption that rates are going
Speaker 1: to go up and growth is going to go down.
Speaker 1: But really the market, if you look at a snapshot
Speaker 1: of the here and now, is a very tight market.
Speaker 1: So we think prices are going to go up again
Speaker 1: to the to the mid to high seventies before before
Speaker 1: we have the regime he was talking about coming in.
Speaker 1: At eight years ago, you and Anthony u and wrote
Speaker 1: a really important, widely acclaimed document on China and coal,
Speaker 1: and you said, look, at some point this ends, give
Speaker 1: us an update right now on what to me seems
Speaker 1: to be the global elephant in the room in commodities,
Speaker 1: China and coal. What's two thousand twenty five look like. Well,
Speaker 1: we still think that it's gonna look better. I mean,
Speaker 1: the China issue has never been of climate change. It's
Speaker 1: been one of pollution, and under social policies, the government
Speaker 1: has to deliver clean air and clean water UM and
Speaker 1: they're going about as fast as you can go to
Speaker 1: use every means possible to electrify the country to move
Speaker 1: off the fossil fuels. But they just can't do it
Speaker 1: fast enough. And that's given rise to UH to more
Speaker 1: coal demand. That coal demand vote recognize as higher BTU content,
Speaker 1: lower sulfur emission content UH coal. So it's not not
Speaker 1: all that bad. But yes, the China push in the
Speaker 1: post pandemic revival has put a great stress on the
Speaker 1: growth of power generation and you can see it not
Speaker 1: only in coal but in UH but in other fossil
Speaker 1: fuels and natural gas in particular that will slow down
Speaker 1: as the economy changes and more exchanges. So much greatly,
Speaker 1: greatly appreciate it. Really look forward to an important definitive
Speaker 1: deck from City Group on commodities UH in oil here
Speaker 1: in September Israel, let's turn out to Bill Lee Milkins,
Speaker 1: the chief chief economist. Bill, let's stand right here, how
Speaker 1: much progress. Have we just made towards substantial progress at
Speaker 1: the Federal Reserve. Everyone's trying to figure out how much
Speaker 1: pressure there is in that labor market, and those good
Speaker 1: numbers on Priday really went a long way to giving
Speaker 1: a positive picture. One thing that I should point out,
Speaker 1: and maybe Leasa has already pointed out, is that most
Speaker 1: of the wage gains that we're worried about really go
Speaker 1: into the low wage workers. The Atlanta Wage Tracker has
Speaker 1: shown that the first quartile is getting all the wage gains,
Speaker 1: but the fourth quartile, the higher paid workers, are actually
Speaker 1: having a very steady uh set of wage increases. And
Speaker 1: the job gains are really in those entry level jobs
Speaker 1: where they're missing people because people have actually upgraded themselves.
Speaker 1: So when you actually look at how much prgress we've
Speaker 1: made in the land market, we've done a lot to
Speaker 1: restore the hospitality and leisure industry, yes, but those are
Speaker 1: the low wage sectors and they should be getting higher wages.
Speaker 1: That a lot of productivity gains, though, have come about
Speaker 1: where companies have really eliminated a lot of these jobs,
Speaker 1: and we're gonna find a lot of people not getting jobs.
Speaker 1: And the FED is really concerned with not maximum employment,
Speaker 1: but the maximum extent of employment. And that's where we're
Speaker 1: going to see the tension at the FED. The hawks
Speaker 1: are gonna say a lot of progres has been made,
Speaker 1: but I think the chair and law brainer, the possible
Speaker 1: next chair is going to be saying, you know, we
Speaker 1: still have a lot way to go to maximize the
Speaker 1: extent of employment gains. You nail the zeitgeist right now.
Speaker 1: Greg Valier writes it up in This Morning No where
Speaker 1: nothing else matters but perceived or future wage inflation. And
Speaker 1: then you go to productivity. Could we observe productivity in
Speaker 1: real time? Don't we have to wait to see if
Speaker 1: it happened? Well, tom As you know, it's the hardest
Speaker 1: thing to measure, especially in the service sector, which the
Speaker 1: largest sectors in our economy. But one thing to keep
Speaker 1: in mind is that the federal government has decided to
Speaker 1: balance is budget or or come raised revenues by corporate taxes.
Speaker 1: What's that gonna do. Cut back on investment and cut
Speaker 1: back on these prouctivity enhancing investments. We need to keep
Speaker 1: inflation in check. So I think the real danger is
Speaker 1: that we'll look at where prices are going and we
Speaker 1: see these low wage, low proctivity jobs dominate the wage increases,
Speaker 1: and we don't have the offset coming in from the
Speaker 1: high prouctivity kind of investments that that balance off the
Speaker 1: the the high pressure from wages. So what does this
Speaker 1: mean in terms of FED policy and what you think
Speaker 1: it will be in the months ahead versus what you
Speaker 1: think it should be. I think Chair poll And and
Speaker 1: most of the fom C is still concerned that once
Speaker 1: we get past these bottleneck price increases, where to come
Speaker 1: back to the world Where is deflationary pressure? If we
Speaker 1: have the kind of productivity games we've seen in the
Speaker 1: last two or three years, but if the corporate tax
Speaker 1: increases that being put in place, not just the US
Speaker 1: but around the world start to cut into the kind
Speaker 1: of investments we need to keep productivity up, then we're
Speaker 1: going to have a serious inflation problem. And as you mentioned,
Speaker 1: a stagflation problem where growth it starts to to to
Speaker 1: hit that that uproad bound of it maybe half a
Speaker 1: percent to one percent, and we start to see price
Speaker 1: continue to rise. But we got to talk about China then,
Speaker 1: how big is China and what's got gone right now
Speaker 1: effect and what you're discussing. I think that's absolutely critical
Speaker 1: because everyone is looking at China as leading indicator for
Speaker 1: where we're going. China came out of COVID fairly early,
Speaker 1: but right now they're suffering the consequences of their policies,
Speaker 1: which is, every time they see a rise in cases,
Speaker 1: they shut down the economy, and that kills any kind
Speaker 1: of growth. And right now the fear is that the
Speaker 1: delta variant is going to cause China to shut down
Speaker 1: yet again and and cause growth to fall away below
Speaker 1: where their plan targets are. You see the Central Bank
Speaker 1: and the fiscal authorities putting in place a lot of
Speaker 1: insurance policies to bolster any kind of fault fallback in consumption,
Speaker 1: which is really the weakest sector in China right now.
Speaker 1: Is there a track record that shows they can do that.
Speaker 1: Can they succeed in policy to boost and sustain consumption.
Speaker 1: One advantage of a command economy is they'll be able
Speaker 1: to boost public consumption, But the disadvantage is that people
Speaker 1: don't have the contents that it's really safe to go
Speaker 1: back to work, and people will not be going out
Speaker 1: to the restaurants. The people in the cities of Shanghai, Kwandong,
Speaker 1: and shen jen are going to say at home and
Speaker 1: say it's not safe to go out. So so we
Speaker 1: have a split in China where public consumption public investment
Speaker 1: is pushing like crazy there they're financing with a lot
Speaker 1: of debt, but the private sector really isn't following through.
Speaker 1: Belt gret ahead from you as always William Lea, There
Speaker 1: Milk and Institute chief Economists. Let's bringing Brian Levitt, invest
Speaker 1: Go Global Market strategist. Brian. I'll characterize your view for
Speaker 1: you just briefly, and then you can give me the latest.
Speaker 1: I understand you're looking for that return to trend growth
Speaker 1: through next year, we'll make that progress towards trend, and
Speaker 1: you're looking for growth to take over in terms of leadership.
Speaker 1: Any challenge to that from the data over the past Wait, Brian,
Speaker 1: I think maybe over some weeks, but not necessarily over
Speaker 1: some years. So, Jonathan, when you think of where the
Speaker 1: tenure was at one twelve, that and a move back
Speaker 1: up to I wouldn't be surprised to see further improvements
Speaker 1: in this economy as we get more American adults vaccinated
Speaker 1: and so should rates be at probably not um could
Speaker 1: they be somewhat higher than here? Yeah? And in that
Speaker 1: environment than cyclicals and value oriented parts of the market
Speaker 1: will do well. My point is to say that we're
Speaker 1: ultimately going to stabilize to a more modest growth rate.
Speaker 1: It's nothing structural change. We had a disastrous coronavirus driven recession,
Speaker 1: we recovered from it, and we're navigating around getting back
Speaker 1: to a more stable level of growth. So my view is,
Speaker 1: as you're looking out beyond the next week, so the
Speaker 1: next couple of quarters, start to contemplate what the structural
Speaker 1: picture looks like, and it should continue to be a
Speaker 1: modest growth environment. Okay, fine, it's a modest growth environment.
Speaker 1: Michael Darter agrees with your A M Camp partners in
Speaker 1: this morning. Note great, Brian, what's it mean for corporations?
Speaker 1: I mean life goes on state where the gloom crew
Speaker 1: has it wrong. So what it means is that grow
Speaker 1: very similar Tom to what you saw from the middle
Speaker 1: of eleven through the end of is that growth is
Speaker 1: strong enough to be supportive of corporate earnings, but it's
Speaker 1: not so strong that it leads to big excess significant inflation,
Speaker 1: you know, meaningful fed tightening. So it creates a cycle
Speaker 1: that could go on for some time now, some corporations
Speaker 1: will be better position for this than others. If you're
Speaker 1: a structurally advantage growth business in order what we saw
Speaker 1: in the last cycle, you're likely to benefit from it.
Speaker 1: If you're the type of business that requires higher sustained
Speaker 1: economic activity, then you're unlikely to receive a fancy multiple
Speaker 1: on the type of earnings that you're able to generate.
Speaker 1: As an investor. Do you like this kind of chart
Speaker 1: that liz Ane Saunders of Charles Schwab put out this
Speaker 1: morning showing that share buybacks in the United States, if
Speaker 1: the SMP five hundred are running it near the fastest
Speaker 1: pace ever, almost eclipsing two thousand and eighteen. Is that
Speaker 1: a good thing from your perspective? Well, it certainly tells
Speaker 1: us that businesses are flushed with cash, and it it
Speaker 1: certainly tells us that, um, you know, it's certainly a
Speaker 1: tail wind to markets. Now would I would I rather
Speaker 1: see you know, more businesses use that money to put
Speaker 1: into productive use. Sure, but it's indicative of a corporate
Speaker 1: environment that's probably thinking similarly along the same lines that
Speaker 1: I'm thinking. Is that you know, there's we're not going
Speaker 1: into a robust growth environment and and they're deploying cash
Speaker 1: in a way that they think is appropriate. As a
Speaker 1: result of that, I do want to rosa brant to
Speaker 1: what degree those bond backs were delayed from last year
Speaker 1: into this year. Trip Absolutely, I agree with that that's
Speaker 1: going to be initially, Lisa. Going forward from here, how
Speaker 1: can we really take this year's dated for things like
Speaker 1: buy backs and capital returns after the year that we've
Speaker 1: just had. Yeah, but why do they have money now
Speaker 1: from after a year like last year? They have it
Speaker 1: because they borrowed all this money and they're using some
Speaker 1: of that borrowed money to do the shared buyback. So
Speaker 1: I agree with you it is deferred. However, the fact
Speaker 1: that we can just go right back to our old
Speaker 1: plans for a huge gap in the middle of what
Speaker 1: we missed, you know a better the most that a
Speaker 1: lot of the money that's been raised in the market
Speaker 1: has been for refinancing in credit, that the debt pounds
Speaker 1: of some of these companies they've pushed the maturities out,
Speaker 1: the lower rates and leverage ratios aren't moving in the
Speaker 1: wrong direction. They're moving in the right direction, all right.
Speaker 1: So Brian, can you weigh in on that, because right
Speaker 1: now we're seeing that. Certainly in the investment rate universe.
Speaker 1: It's a little bit different though in the hig yield universe,
Speaker 1: isn't it. Well Yeah, but again, for the most part,
Speaker 1: these businesses are borrowing this money at very low interest rates.
Speaker 1: And the Jonathan's point, they've pushed these maturities out, so
Speaker 1: you're not looking at a wall of maturity. Um, you're
Speaker 1: not looking at a very onerous interest burden for a
Speaker 1: lot of these businesses. I mean, it's pretty similar to
Speaker 1: households for those of us that refinanced. Um. You know,
Speaker 1: you you take advantage of these opportunities when they come
Speaker 1: to you. Brian the f A mode I'm Bloomberg tells
Speaker 1: you a lot about use of cash, about or buy
Speaker 1: back just as one example. And I don't mean to
Speaker 1: pick on Amazon other than that their capex is. You know,
Speaker 1: nobody can get a handle on the amount of money
Speaker 1: Amazon is spending to grow, grow, grow. But from two
Speaker 1: thousand nineteen is the last normal year, there's something on
Speaker 1: the order of published free cash flow of twenty two
Speaker 1: billion growing out to twenty five billion, and then you
Speaker 1: skip eighteen months or whatever because of the pandemic and
Speaker 1: the new working number. In the future is forty five
Speaker 1: billion and now Amazon's Amazon. But that permeates through the
Speaker 1: invest system, doesn't it. It does, And again it's back
Speaker 1: to talking about these advantage businesses and these businesses that
Speaker 1: can generate cash flow and these types of an environment.
Speaker 1: And and if you think about where we are, Yeah,
Speaker 1: corporations have used the low um interest rate environment to
Speaker 1: borrow money. But also think about what's going on in
Speaker 1: the earnings picture. It's not as if this hasn't been
Speaker 1: a good fundamental story for businesses. We're coming through a
Speaker 1: very robust earnings quarter um as pent up, the man
Speaker 1: came back into the economy. I don't think that we
Speaker 1: don't continue to see earnings and grow at these at
Speaker 1: these levels. But you know, back to my original point,
Speaker 1: a more stable growth environment can still be very supportive
Speaker 1: of corporate earnings. It can still be very supportive of
Speaker 1: those businesses that can generate cash flo Brian gotta cash
Speaker 1: out with you as Oise. Brian left invest Global Markets
Speaker 1: Stratagistic Claudia sam joins us now at Jane Family Institute.
Speaker 1: With exceptionally important Twitter flow, you can really learn a lot,
Speaker 1: a lot, particularly on the micro economic foundations of all
Speaker 1: this blather we talk about each and every day, Claudia,
Speaker 1: I want to go to the heart of the matter
Speaker 1: right now, shock and awe. If you raise wages, good
Speaker 1: things happen, like consumption sustains. Tell us where we are
Speaker 1: now in the to raise wages. Yeah, So I think
Speaker 1: we've seen a lot of encouraging progress, frankly surprising. I mean,
Speaker 1: after years and years of low wage growth and really
Speaker 1: tough conduct like, we're seeing it so we know it
Speaker 1: is possible. What I want to underscore is we do
Speaker 1: not have the headwinds to keep this going. Right. We've
Speaker 1: had reopening, the vaccination starting, we had people wanting to
Speaker 1: get back outside and see family. Government put money in
Speaker 1: people's pockets like that. Relief is running out. That low
Speaker 1: hanging fruit of opening up is running out, so or
Speaker 1: at least soften right, So then it's a big question
Speaker 1: do we keep these wage gains? How do we do
Speaker 1: it from a policy basis? I mean, you know, we're
Speaker 1: we're warning the death of Richard Trump at E. J.
Speaker 1: Dione with that wonderful essay today in the Washington Post,
Speaker 1: and there's talk about labor share finally regrabbing something from
Speaker 1: the era from Ronald Reagan forward. Do you buy a
Speaker 1: policy shift or not? So I've argued that we are
Speaker 1: seeing a sea change in monetary and fiscal policy. I
Speaker 1: really do feel the Fed as well, on its way
Speaker 1: to its new framework, thinking harder about its dual mandate
Speaker 1: jobs too. I am more concerned about what's happening on
Speaker 1: the hill right We're seeing an infrastructure packet, which is amazing.
Speaker 1: We've had years of waiting for infrastructure week. It's really happening.
Speaker 1: And yet that's not We have an over twenty trillion
Speaker 1: dollar economy, one trillion dollars over ten years in our
Speaker 1: like productive capacity. That's not much. And what I really
Speaker 1: want to see, and what we learn from putting money
Speaker 1: in people's pockets is if we extend the child allowance,
Speaker 1: if we invest in our next generation, that's where the
Speaker 1: payoffs will come. And it's really not guaranteed that we're
Speaker 1: going to see that. Well, that's what we need for
Speaker 1: long term growth and long term support of workers, Claudia.
Speaker 1: In the meantime, it is countdown to Wednesday, where we
Speaker 1: get the latest Consumer price index, the read on how
Speaker 1: much prices for the average consumer are going up, and
Speaker 1: they are going up, and staples and aspects and things
Speaker 1: that people buy every day. Can you give us a
Speaker 1: sense of what you think the Fed's response should be
Speaker 1: of this, because frankly, it is the most onerous for
Speaker 1: the lowest income Americans, right. So I think the FED
Speaker 1: has been right about this from the start. I think
Speaker 1: the data is coming in in terms of team transitory
Speaker 1: is winning here. We know that the factors if you
Speaker 1: look under the hood, the factors of this extraordinary jump
Speaker 1: in prices, like I don't want to underscore the pain
Speaker 1: that this cost, but these are not things that are
Speaker 1: staying with us. I mean, just the use motor vehicles,
Speaker 1: Like those prices are coming back down, right, we should
Speaker 1: not change course and abandon the millions of workers who
Speaker 1: are not back to work just because we're going to
Speaker 1: have six months of prices that moved up faster than
Speaker 1: we expected. So I think it's just it would be
Speaker 1: so wrong to change course on some CPI numbers, and
Speaker 1: a lot of people would agree with you, Claudia, But
Speaker 1: then they pair that with this increase, this divergence between
Speaker 1: UH the wealthiest individuals and the lowest income individuals, especially
Speaker 1: because asset prices have been one of the most inflated
Speaker 1: areas of the economy, and so frankly, a lot of
Speaker 1: people say the Fed's policies have only widened this divide.
Speaker 1: How can you say, Okay, well maybe so, but it's
Speaker 1: worth it. Yeah, I am extremely frustrated with how much
Speaker 1: focus the FED is getting right now. We need Congress
Speaker 1: to act. There are ways to address wealth inequality and
Speaker 1: the FED does not have them right. And there there's taxes,
Speaker 1: there are transfers. The FED cannot go this alone. And
Speaker 1: the idea that raising interest rates a couple you know,
Speaker 1: basis points quarter basis points is going to fix a
Speaker 1: longstanding problem in the US economy. It's ludicrous, right, Like
Speaker 1: we're just to think that could really move the ball.
Speaker 1: It's frightening to me that we've put that much power
Speaker 1: in the FED. Clad you've always been equal opportunity. You
Speaker 1: go after conservatives, and frankly, folks, Claudio pam is fearless
Speaker 1: about going after liberals. Is claudiusan. There's a conservative angst
Speaker 1: out there. They're worried about the debt, they're worried about
Speaker 1: the deficit. You know, there's an institutional conservative thrust that says,
Speaker 1: wait a minute, how do you respond to an inbred
Speaker 1: American conservative ethos. They're really worried about the size of government.
Speaker 1: I mean, we saw really massive tax cuts under Trump
Speaker 1: that had incredible increases in the deficit, and now to
Speaker 1: be saying we can't, we can't raise taxes. This is
Speaker 1: not about the deficit, which I mean we should be
Speaker 1: concerned about, right like you should watch these numbers. That
Speaker 1: debate right now is do we want to set up
Speaker 1: social programs that are going to be wildly popular, like
Speaker 1: the child benefit when it gets working. That's putting government
Speaker 1: more in a role whereas conservatives have really looked to
Speaker 1: the private sector, look to individuals, and it's just not enough. God,
Speaker 1: this is just incredibly important to me. If we have
Speaker 1: a natural disaster do like a pandemic, we can't get
Speaker 1: any kind of shift in our childcare policy relative to
Speaker 1: other equivalent nations. I think a lot of people are
Speaker 1: questioning this, which goes to the fierce debate that's happening
Speaker 1: in Washington and the reason why, frankly, there's this agreement
Speaker 1: even among the Democrats about how big that that infrastructure plan,
Speaker 1: the human infrastructure plan, should be. Uh. And then the
Speaker 1: pushback that you were talking about from the conservative stance. Claudia,
Speaker 1: you did raise a really important point that you are
Speaker 1: frustrated with how much power people have seemed to have
Speaker 1: given the FED. The question is going forward, do they
Speaker 1: take that power or do they actively fight against it?
Speaker 1: Because right now, especially with a balance sheet that's eight
Speaker 1: trillion dollars and poised to expand further, a lot of
Speaker 1: people say, well, look, you might say you don't hold
Speaker 1: a lot of power, but for all intents and purposes,
Speaker 1: you're subsidizing the US debtload. That is a political act, right,
Speaker 1: it is they are taking a rip esk, right, But
Speaker 1: what they are trying to do is stay out of
Speaker 1: the way of Congress. Right. We know after the Great Recession,
Speaker 1: too much weight was I mean really responsibility was put
Speaker 1: on the FED to do it alone and get us
Speaker 1: back to full employment. And the FED doesn't have the
Speaker 1: tools to do it alone. It knows that it can
Speaker 1: play a supporting role, it can play an important one,
Speaker 1: and it has during the pandemic. J pals at over
Speaker 1: and over again. Congress do more, and they have not
Speaker 1: backed off on that narrative. So I think that's what
Speaker 1: the FED understands. And as long as we get both
Speaker 1: pieces that's good, but without Congress and long term investments,
Speaker 1: we're not going to see this sustained in a way
Speaker 1: that we so could. Right, we're in this moment we
Speaker 1: could do this. Let's broaden out. One thing that we
Speaker 1: talk about every week is the as we get the
Speaker 1: inditial jobless claims, is this worker mismatch? And about ten
Speaker 1: am Eastern time, we're gonna be getting the job openings,
Speaker 1: the JOLTS data for the month of June. And there
Speaker 1: is this question of why there are so many people
Speaker 1: who are out of work, and then you have all
Speaker 1: of these employers saying we can't find any workers. What
Speaker 1: is the why behind this? What are we missing? Right?
Speaker 1: I think we really have to keep our eye on
Speaker 1: who is in the labor force, who is coming back.
Speaker 1: What was really unprecedented in this labor market was the
Speaker 1: fact that we had millions of workers just leave jobs,
Speaker 1: right and what was a very severe recession. So a
Speaker 1: lot of this our parents who needed to help stay
Speaker 1: home with their kids for homeschooling. But if it was
Speaker 1: older workers who are afraid of dying, right, so we
Speaker 1: need to bring them back. And on Friday, there was
Speaker 1: a lot of good news in a million jobs like
Speaker 1: that is great news. A lot of that were people
Speaker 1: being recalled from temporary layoff. We didn't see the needle
Speaker 1: move enough on the out of the labor force and
Speaker 1: the long term unemployed. And we know historically long term
Speaker 1: unemployed or tough to get back because that it's the
Speaker 1: longer you're out, the harder it is to match you
Speaker 1: back up. So I think that's what we're seeing and
Speaker 1: the last mile is going to be the hardest. Here, Claudie,
Speaker 1: we gotta leave it there, Claudia Son, Thank you so much.
Speaker 1: Jaye Family Institute and just always interesting, uh, linking in
Speaker 1: our actual market economics into academics in the policy. This
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