WEBVTT - Inflation Data Tops Estimates, Markets React (Correct) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.400 at Bloomberg dot com slash podcast. We had some Peco 0:00:21.560 --> 0:00:23.439 data today. Of the story of the day is the 0:00:23.520 --> 0:00:27.760 inflation came in really much hotter than expected, pretty much 0:00:27.800 --> 0:00:31.800 across the board, and we're seeing reflected here in the markets. Today. 0:00:32.080 --> 0:00:35.200 Let's bring in our expert in all things on interest rates, 0:00:35.200 --> 0:00:36.720 in the curve and all that kind of good stuff. 0:00:36.760 --> 0:00:41.120 Iro Jersey, chief US interest rate strategist and chief soccer 0:00:41.159 --> 0:00:45.800 strategist for Bloomberg Intelligence. I are a big print here today. 0:00:45.840 --> 0:00:49.320 What's your takeaway as as to how we'll see the 0:00:49.320 --> 0:00:52.640 Federal Reserve react next week? Yea, So, our our focus 0:00:52.680 --> 0:00:56.720 really has been on the core services numbers UM, and 0:00:56.800 --> 0:01:00.440 those continue to accelerate across the board. Like you said, Matt, uh, 0:01:00.480 --> 0:01:03.680 you know that the the issue is if core inflation 0:01:03.800 --> 0:01:06.760 really takes hold UM, it tends to trend for a 0:01:06.880 --> 0:01:10.240 very long period of time. So, um so, given that 0:01:10.280 --> 0:01:13.280 you have wages continuing to go up, you still have 0:01:13.520 --> 0:01:16.639 very significant um, you know or very tight labor markets 0:01:16.640 --> 0:01:19.920 in general that should help, you know, cause wages to 0:01:19.959 --> 0:01:22.600 continue to climb. Um. You know that those two things 0:01:22.600 --> 0:01:26.720 wanted to increase costs and therefore um therefore prices for 0:01:26.720 --> 0:01:29.560 for goods and services. But but too, and I think 0:01:29.560 --> 0:01:32.839 this is important. Um, those higher wages allow the consumer 0:01:32.959 --> 0:01:35.000 to be able to absorb at least a portion of 0:01:35.040 --> 0:01:39.440 those higher higher prices. So um so that that's how 0:01:39.480 --> 0:01:43.800 this becomes sustainable and why inflation being you know, going 0:01:43.880 --> 0:01:46.280 up is a real worry for the Fed, it is, 0:01:46.360 --> 0:01:49.160 and they've been very clear, iras as you've been explaining 0:01:49.160 --> 0:01:51.120 to us over the last several weeks and months about 0:01:51.160 --> 0:01:54.200 their focus on inflation. Here when we do here from 0:01:54.200 --> 0:01:56.520 the Fed next week, given this print we just had, 0:01:56.960 --> 0:01:59.840 will we get any body language, any inkling of what 0:02:00.080 --> 0:02:01.960 they may want to do going forward, Because you could 0:02:02.040 --> 0:02:04.680 look at these numbers today and say, hey, maybe they 0:02:04.800 --> 0:02:08.560 don't pause here in September. What do you think? Yeah, so, 0:02:08.560 --> 0:02:10.400 so I think you know, seventy five is a given 0:02:10.480 --> 0:02:13.400 we were actually pricing some uh, you know, modest chance 0:02:13.400 --> 0:02:15.880 of even a hundred basis point increased. Although I don't 0:02:15.880 --> 0:02:19.200 think that they they'll take go that route and increase 0:02:19.200 --> 0:02:21.080 a hundred. I think they're more likely to do seventy 0:02:21.080 --> 0:02:24.600 five followed by another seventy five if the September number 0:02:24.840 --> 0:02:28.320 is uh is you know, as bad as this one 0:02:28.480 --> 0:02:32.040 was in terms of inflation going up um so so 0:02:32.040 --> 0:02:33.880 so I don't think that they'll do a hundred. But 0:02:33.880 --> 0:02:35.600 but but I think importantly, you know, we do get 0:02:35.639 --> 0:02:37.640 the top plot. I know that some people don't like 0:02:37.680 --> 0:02:39.919 the top plot, but I think it is in terms of, 0:02:40.280 --> 0:02:42.240 you know, what a lot of the members are thinking 0:02:42.520 --> 0:02:45.520 is how far will they go into three? So we've 0:02:45.600 --> 0:02:48.280 we've been pretty consistent in our view that there would 0:02:48.280 --> 0:02:51.440 be a couple of hikes into three, um, you know, 0:02:51.520 --> 0:02:53.639 after a number like this, which was even higher than 0:02:53.639 --> 0:02:56.440 what we thought quite frankly, and we were above consensus 0:02:56.440 --> 0:02:59.400 in terms of of how how what the number would 0:02:59.440 --> 0:03:02.800 be UM. But the the idea that that the Fed is, 0:03:03.320 --> 0:03:07.000 you know, basically firstly going to high ease interest rates 0:03:07.000 --> 0:03:09.880 anytime in has I think has to be taken off 0:03:09.880 --> 0:03:12.840 the table. Although the markets still pricing for a cut 0:03:12.919 --> 0:03:15.360 late in the year. Um, so it's number one and 0:03:15.360 --> 0:03:18.320 the number two we still have to find what is 0:03:18.360 --> 0:03:20.760 the terminal rate? Right? Do do they go to Bloomberg 0:03:20.760 --> 0:03:24.519 Economics five percent? They go higher than that even and 0:03:24.600 --> 0:03:26.919 with a number like this, if you get another another 0:03:27.000 --> 0:03:29.079 number two like this, I think two things happened. I 0:03:29.120 --> 0:03:31.000 think one, the Fed is going to go higher than 0:03:31.000 --> 0:03:34.200 to inflation. Expectations in the market are gonna wind up 0:03:34.200 --> 0:03:37.200 shooting significantly higher, which is what you're seeing today with 0:03:37.320 --> 0:03:40.360 two year yields up fifteen basis for that's where I 0:03:40.360 --> 0:03:42.400 wanted to go next, Ira, kind of just looking at 0:03:42.400 --> 0:03:44.680 the yield curve as people like you and Lisa Bramwins 0:03:44.680 --> 0:03:46.800 has been schooling me over the years to focus on 0:03:46.800 --> 0:03:49.160 this yield curve. I've got a thirty basis point in 0:03:49.280 --> 0:03:51.400 version between a two year and tenure, not quite the 0:03:51.440 --> 0:03:56.240 fifty basis points we had recently, but still notably inverted. Here. 0:03:56.800 --> 0:03:59.960 What's your takeaway what we're seeing the price action today? Yeah, 0:04:00.040 --> 0:04:02.800 so I do think that we'll continue what we'll retest. 0:04:03.280 --> 0:04:05.440 I think that negative fifty basis point level on the 0:04:05.440 --> 0:04:09.640 two's tense curve and driven primarily by two year yields 0:04:09.640 --> 0:04:12.240 going up significantly faster than than ten year yields. You know, 0:04:12.280 --> 0:04:14.480 ten year yields are going to take into account, you know, 0:04:14.560 --> 0:04:17.280 the coming recession. We will have a recession, right, it's 0:04:17.320 --> 0:04:20.680 a matter of of how deep and how long it lasts, right, 0:04:20.720 --> 0:04:22.400 So those are the kind of the two factors in it. 0:04:22.480 --> 0:04:26.599 And when it starts. Obviously um so so so the 0:04:26.640 --> 0:04:29.239 ten year yield. I think, well, ultimately what we'll retest 0:04:29.240 --> 0:04:31.320 the three and a half percent level, but but might 0:04:31.400 --> 0:04:33.680 actually hover somewhere in that range where you can see 0:04:33.720 --> 0:04:37.039 two year yields um. Even though our forecast is for 0:04:37.040 --> 0:04:39.640 for three ninety as the peak and two year yields, 0:04:39.640 --> 0:04:43.160 there's the possibility that it could go significantly higher, and 0:04:43.480 --> 0:04:46.520 particularly with UM, with with data like we had today, 0:04:46.560 --> 0:04:48.520 if if we continue to get another one or two 0:04:49.040 --> 0:04:51.280 UM inflation prints that are as strong as today is, 0:04:51.320 --> 0:04:53.640 and then we definitely have to rethink, uh, you know 0:04:53.680 --> 0:04:56.960 where we think two year yields can go. I want 0:04:56.960 --> 0:05:00.359 to ask you about the timeline here. If we're talking 0:05:00.400 --> 0:05:03.279 about inflation that we think has peaked and it's in 0:05:03.320 --> 0:05:05.719 the rare view mirror, the deceleration seems to be taking 0:05:05.839 --> 0:05:09.000 way longer than expected, what does that mean for break 0:05:09.040 --> 0:05:13.880 events and for inflation expectations. Uh yeah, so so the 0:05:14.000 --> 0:05:16.920 uh so firstly, it's it's things are actually playing out 0:05:16.920 --> 0:05:19.120 the way that we thought because the market we we 0:05:19.160 --> 0:05:23.160 had always thought, had um expected the inflation to decelerate 0:05:23.200 --> 0:05:26.159 too quickly. And and you know again I I point 0:05:26.200 --> 0:05:28.800 to the core inflation measures that we look at, which 0:05:28.800 --> 0:05:33.120 are of the of the uh C, p I and 0:05:33.360 --> 0:05:36.719 the PC and and those data continue to climb right 0:05:36.760 --> 0:05:39.480 And and even though oil and gasoline prices have come 0:05:39.520 --> 0:05:42.680 down quite significantly, um, even if they come down further, 0:05:42.920 --> 0:05:45.440 it'll still be more elevated than than the Fed wants. 0:05:45.440 --> 0:05:48.160 In fact, we put out a piece yesterday that's available 0:05:48.200 --> 0:05:51.080 on the on the terminal UM noting that if you 0:05:51.160 --> 0:05:55.719 just exclude energy prices from inflation of two year inflation 0:05:55.760 --> 0:05:58.839 brake even you'll see that that UM that x energy. 0:05:58.839 --> 0:06:01.480 We're still talking about cornflation being at over four percent 0:06:01.560 --> 0:06:04.560 in a year. And you know that's way higher than 0:06:04.600 --> 0:06:06.680 than what the Fed really wants. All right, I read 0:06:06.720 --> 0:06:09.560 great stuff as always, always appreciate getting your perspective. Here. 0:06:10.040 --> 0:06:13.560 I our Jersey chief US interest rate strategist for Bloomberg Intelligence. 0:06:13.960 --> 0:06:19.080 He's based down in Princeton, New Jersey. The rough rough 0:06:19.279 --> 0:06:22.040 day in the markets, no doubt. Let's check in with 0:06:22.160 --> 0:06:25.680 Shaun Cruz, Senior Manager, Trade Services and Client Advocacy for 0:06:25.800 --> 0:06:27.960 td A Merrit Trade. The good folks at td A 0:06:27.960 --> 0:06:31.200 Merrit Trade. They have their investor Movement Index and we 0:06:31.200 --> 0:06:32.680 always like to check in with them to get a 0:06:32.680 --> 0:06:34.920 sense of kind of what the TD and Merrit Trade 0:06:35.320 --> 0:06:38.840 customers out there, the individual traders and investors out there, 0:06:38.880 --> 0:06:40.800 what are they saying about these markets? Sean, thanks so 0:06:40.839 --> 0:06:43.720 much for joining us here. What's your i MX index 0:06:43.760 --> 0:06:46.800 really kind of showing us these days? So you know what, 0:06:46.880 --> 0:06:50.279 Actually it was interesting was the iMX index, which is 0:06:50.320 --> 0:06:55.159 sort of gives us the relative sentiment of how investors 0:06:55.240 --> 0:06:57.520 are are putting their money to work work whenever they 0:06:57.560 --> 0:07:01.920 make a trading decision, had been trending down pretty much 0:07:02.120 --> 0:07:05.520 since the last November. This past month in August was 0:07:05.560 --> 0:07:08.560 the first time we actually saw it tick up and 0:07:08.640 --> 0:07:11.440 move higher. So I think that to me shows that, 0:07:11.520 --> 0:07:15.480 you know, the negative sentiment or just some of that 0:07:15.600 --> 0:07:19.160 cautious behavior as markets sort of mark lower and lower 0:07:19.200 --> 0:07:22.320 throughout the year, UM finally started to reverse itself and 0:07:22.440 --> 0:07:25.800 we saw some some inflows in some pretty interesting areas 0:07:25.800 --> 0:07:31.120 of the market. Are people worried? Are they taking their cash, 0:07:31.640 --> 0:07:35.360 stuffing it on their mattress, running towards buying more dollars? 0:07:35.880 --> 0:07:38.040 Are people worried right now? Where do you think there's 0:07:38.040 --> 0:07:41.040 a little bit of a change in sentiment UM. I 0:07:41.120 --> 0:07:44.800 think there's there's still some some cautiousness, but I think 0:07:44.880 --> 0:07:48.800 that sentiment is starting to shift. So although it did 0:07:48.880 --> 0:07:52.400 kick higher, I would say just where the index reading 0:07:52.520 --> 0:07:55.280 came out was still a little bit at the lower 0:07:55.440 --> 0:07:57.880 end of where we had seen it compared to previous 0:07:58.360 --> 0:08:02.280 periods where they were very bullish and very optimistic. So 0:08:02.520 --> 0:08:05.240 I think they're I don't think they're they're necessarily stuffing 0:08:05.240 --> 0:08:09.720 cash in their matches. They're finding opportunities. But I would 0:08:09.800 --> 0:08:12.800 say the the other interesting data point that's out there, 0:08:12.920 --> 0:08:16.000 and this is put out by Center for the Industry 0:08:16.000 --> 0:08:18.000 at Large, is that you're still seeing the use of 0:08:18.200 --> 0:08:23.880 leverage UM fairly low. So they're not necessarily stuffing cash 0:08:23.920 --> 0:08:26.640 and their mattresses, but they're also not levering up to 0:08:26.760 --> 0:08:29.920 get market exposure. Sean, you guys at t D and 0:08:29.960 --> 0:08:33.080 Merritrade have a great, great vantage point to see what 0:08:33.360 --> 0:08:36.080 you know retail investors they're buying, they're selling. What are 0:08:36.080 --> 0:08:38.800 some of the names that they were buying during this period, 0:08:38.800 --> 0:08:40.800 Because a lot of folks are aren't sure that boy, 0:08:40.800 --> 0:08:42.280 if this is kind of the bottom and I want 0:08:42.320 --> 0:08:44.760 to mix some some stock purchase, I'm not sure whether 0:08:44.840 --> 0:08:47.079 good to might tried and true tech names or maybe 0:08:47.160 --> 0:08:50.320 go more cyclical. What did you guys see? So there 0:08:50.480 --> 0:08:53.880 was you know, if you look, there was consumer discretionary. 0:08:54.080 --> 0:09:00.559 Was had a pretty strong um influence into that actor, 0:09:00.679 --> 0:09:03.160 and I think a lot of that was primarily driven 0:09:03.240 --> 0:09:07.319 by interest in Amazon, um Shopify. I think some of 0:09:07.360 --> 0:09:11.280 the electric vehicle makers UM Amazon in particular, I think 0:09:11.320 --> 0:09:14.920 they're had a little bit of a breakout above you know, 0:09:15.200 --> 0:09:17.719 what had been a pretty significant residence level, and it 0:09:17.960 --> 0:09:21.679 had some pretty strong upward momentum out of that. But 0:09:21.800 --> 0:09:26.559 that's one thing where Amazon is technically a consumer discretionary company, 0:09:26.640 --> 0:09:29.040 but people looking to get some sort of a tech 0:09:29.280 --> 0:09:32.360 allocation because of the Amazon web servers in their portfolio 0:09:32.720 --> 0:09:36.760 could also be going into Amazon for that reason as well, 0:09:36.880 --> 0:09:39.959 because we also saw them going out their purchasing names 0:09:40.000 --> 0:09:44.280 like Google and uh in meta as well. But on 0:09:44.320 --> 0:09:46.840 that tech trade, I mean, what's interesting to me is 0:09:46.840 --> 0:09:48.800 that I think the story of one that I think 0:09:48.800 --> 0:09:53.199 people still say is seeping into two, although I very 0:09:53.240 --> 0:09:56.640 aggressively disagree, is that tech is only responding to rates, 0:09:56.720 --> 0:10:00.440 and I personally feel that tech has more to do 0:10:00.840 --> 0:10:03.360 with fun flows that you're seeing from around the world 0:10:03.520 --> 0:10:06.120 Asian investors, European investors saying, you know what, we want 0:10:06.120 --> 0:10:08.400 to buy defensive tech that are still, by the way, 0:10:08.400 --> 0:10:11.560 the fastest growing companies in the SMP five hundred. What 0:10:11.600 --> 0:10:14.720 do you think, from a cross asset perspective, is driving 0:10:14.720 --> 0:10:18.199 the trade? Um? I do think it one is there's 0:10:18.200 --> 0:10:22.120 a little bit of a rotational trade. Into your point, 0:10:22.520 --> 0:10:27.000 it's not necessarily we're going all in on defensives or 0:10:27.679 --> 0:10:30.960 we're piling the cyclicals. I think the view is just 0:10:31.080 --> 0:10:36.000 looking at companies that maybe have positive earnings, a little 0:10:36.040 --> 0:10:40.160 bit more of a solid fundamental underpinnion in terms of 0:10:40.280 --> 0:10:43.000 they can write out anything that's going to play out 0:10:43.400 --> 0:10:45.600 um here for the remainder of the year and end 0:10:45.600 --> 0:10:47.880 the next year. Those are the kind of companies that 0:10:47.920 --> 0:10:50.840 I think has really been driving the traded and driving 0:10:50.840 --> 0:10:55.720 the investment dollars um, not not necessarily going into the 0:10:55.760 --> 0:10:58.680 you know whatever is the the in vogue as a 0:10:58.760 --> 0:11:01.600 service company that is and expected to be profitable for 0:11:01.679 --> 0:11:04.920 three to five years, shunning those names, but going into 0:11:05.080 --> 0:11:08.280 names like Amazon, who you know, may have some bumps 0:11:08.320 --> 0:11:10.559 along the way, but I don't think anyone is expecting 0:11:10.600 --> 0:11:14.720 the Amazon to go anywhere anytime soon. All right, John, 0:11:14.720 --> 0:11:18.040 that's good stuff. Appreciate it as always. Sean Cruz, he's 0:11:18.040 --> 0:11:21.600 the senior manager of Trader Services and Client Advocacy at 0:11:21.600 --> 0:11:24.319 TD A Merrior Trade. They have their Investor Movement Index, 0:11:24.360 --> 0:11:27.040 gets a good sense of kind of what the average 0:11:27.040 --> 0:11:29.440 retail trader out there for TD and merrit Trade, how 0:11:29.440 --> 0:11:32.000 they're feeling about the markets where they're putting money to work. 0:11:32.040 --> 0:11:34.000 So it's always good checking in with Shawn to get 0:11:34.040 --> 0:11:38.360 a good sense of what's going on there. Pretty one 0:11:38.360 --> 0:11:41.079 of my first jobs in equity research on wallst it 0:11:41.200 --> 0:11:46.600 was covering the transportation sector, the railroads, the trucking stocks. UM, 0:11:46.640 --> 0:11:49.560 good stuff. Um. There's a few of them left actually 0:11:49.600 --> 0:11:52.760 in the public market's Norfolk, Southern, CSX, Union Pacific for 0:11:52.800 --> 0:11:56.480 the US, they're all down about nine to sevent year 0:11:56.600 --> 0:11:59.960 to date. This is an industry that's really really consolidate 0:12:00.040 --> 0:12:02.240 into just a handful of names, But the big issue 0:12:02.280 --> 0:12:05.760 for them is a potential strike coming up, and that 0:12:05.960 --> 0:12:08.840 can't be good for the old supply chain and the 0:12:08.880 --> 0:12:11.440 economy in general. Let's get the latest. We can do 0:12:11.480 --> 0:12:14.559 that with Bloomberg laws. Rebecca Rainey, Rebecca, where are we 0:12:14.640 --> 0:12:16.720 in this process? Just frame out for me what the 0:12:16.840 --> 0:12:19.600 issues are between the railroads and and some of these 0:12:19.679 --> 0:12:21.679 unions and kind of how it might play out. Are 0:12:21.679 --> 0:12:23.320 we gonna have a strike? Are we are we gonna 0:12:23.360 --> 0:12:25.640 have a strike? And what's it about? Yeah, so the 0:12:25.760 --> 0:12:31.160 chances of us seeing a strike on Friday are much 0:12:31.280 --> 0:12:35.640 higher than they were last week. UM. You know, when 0:12:35.640 --> 0:12:38.760 we were coming into Monday, we had you heard that 0:12:38.840 --> 0:12:42.000 most of the twelve railroad unions who were involved in 0:12:42.040 --> 0:12:45.880 the dispute, how reached over close to UM, you know 0:12:46.000 --> 0:12:49.360 what is known as a tenative agreement UM with these 0:12:49.440 --> 0:12:54.120 brake carriers. UM. So you know, as of last night 0:12:54.320 --> 0:12:57.720 there was one union that said, you know, that kind 0:12:57.840 --> 0:13:00.080 of agreement we had, we don't think we can bring 0:13:00.080 --> 0:13:02.679 it to our members for ratification. I think that's another 0:13:02.720 --> 0:13:05.079 piece we need to talk about here too. Even though 0:13:05.120 --> 0:13:08.880 these agreements are you know, kind of said for UM, 0:13:08.920 --> 0:13:14.240 it's still requires the membership of the unions to vote 0:13:14.240 --> 0:13:18.520 to ratify them. So with that change late last night, 0:13:18.760 --> 0:13:21.920 and then the two uh largest unions involved in this 0:13:22.000 --> 0:13:26.480 dispute still not at a deal yet. Um, I think 0:13:26.559 --> 0:13:30.600 it's safe to say the chances are rather you know, 0:13:31.200 --> 0:13:35.040 concerning that there may be um a strike this So 0:13:35.520 --> 0:13:37.880 would that mean all the freight railroads in this country 0:13:37.920 --> 0:13:41.000 will just stop on Friday? What does that actually mean 0:13:41.040 --> 0:13:45.080 if they go on strike? Yes? So, while not again 0:13:45.200 --> 0:13:47.600 as I mentioned earlier, you know, while not all of 0:13:47.640 --> 0:13:51.439 these twelve unions involved in this dispute have reached an agreement, 0:13:52.200 --> 0:13:55.480 all of the unions have agreed to honor the strike line. 0:13:55.600 --> 0:13:58.760 If you know, the remaining unions that haven't reached a 0:13:58.800 --> 0:14:02.000 deal don't reach it you all by Friday. So that means, 0:14:02.040 --> 0:14:05.200 you know, roughly a hundred and twenty five thousand rail 0:14:05.240 --> 0:14:09.920 works could be on strike as soon as Friday, UM, 0:14:10.000 --> 0:14:12.679 And that would you know their industry leaders are warning, 0:14:13.080 --> 0:14:19.200 you know, shut down the entire system. You know, Rebecca, Um, 0:14:19.240 --> 0:14:21.200 I'm reading about this right now, trying to figure out 0:14:21.200 --> 0:14:23.040 how we're going to be covering this later in the week. 0:14:23.120 --> 0:14:25.120 And some of the issues here are really crucial. It's 0:14:25.160 --> 0:14:27.440 not just about pay and the wage increases, which, by 0:14:27.440 --> 0:14:29.880 the way, uh, the agreement on the table, get this 0:14:29.960 --> 0:14:35.760 call increase by that is a huge alley. It's the 0:14:35.760 --> 0:14:40.400 biggest wage increase I believe in about forty years according 0:14:40.440 --> 0:14:42.200 to some analyst notes that I'm reading Rebecca. But that's 0:14:42.240 --> 0:14:44.520 not the only issue on the table here. It's also 0:14:44.520 --> 0:14:47.840 about sick days, medical leaf, health coverage. Talk to us 0:14:47.840 --> 0:14:52.320 about that aspect, yeah, yeah, And you know, in regards 0:14:52.440 --> 0:14:55.080 to the wage increases as well, I know the unions 0:14:55.080 --> 0:14:58.480 would say a lot of these workers haven't seen increases, 0:14:58.720 --> 0:15:02.120 haven't seen any radis is over the past couple of years, 0:15:02.200 --> 0:15:04.840 especially through the pandemic. So you know, they say this 0:15:04.880 --> 0:15:07.320 is a long time coming. Um. But when it comes 0:15:07.360 --> 0:15:11.440 to sick leave, um. You know, these two major unions 0:15:11.640 --> 0:15:15.520 say that whenever, even when it comes to taking time 0:15:15.520 --> 0:15:19.360 off routine medical appointments, they can receive you know, kind 0:15:19.360 --> 0:15:24.360 of uh negative points or um get you know, negative 0:15:25.480 --> 0:15:30.440 demerits towards their their scheduling. UM. So it's really important, 0:15:30.520 --> 0:15:33.960 they say, for their workers to be able to take 0:15:34.040 --> 0:15:36.280 time off without you know, fear of getting in trouble 0:15:36.320 --> 0:15:39.200 at work or with their standing, um, with their employer. 0:15:39.760 --> 0:15:42.760 You know, the train companies say that rail employees get 0:15:42.800 --> 0:15:45.560 you know, five weeks of vacation in addition to fourteen 0:15:45.600 --> 0:15:50.160 paid holidays. UM. But you know, union members say that's 0:15:50.160 --> 0:15:54.600 not enough. They want you know, dedicated sick time. UM. 0:15:54.640 --> 0:15:57.760 As part of this you know emergency board that came 0:15:57.840 --> 0:16:01.120 up with recommendations to kind of help resolve this UM, 0:16:01.160 --> 0:16:03.880 they had initially asked for fifteen days of paid sick 0:16:04.000 --> 0:16:07.880 leave each year. You know, if I'm just thinking of 0:16:08.000 --> 0:16:09.920 you know, we're just starting to try to get out 0:16:10.160 --> 0:16:12.600 from the supply chain issues throughout the U. S economy 0:16:12.640 --> 0:16:15.280 and the global economy quite quite frankly, and there's still 0:16:15.320 --> 0:16:18.000 a lot of you know, kind of challenges out there 0:16:18.000 --> 0:16:21.240 as it relates to the transportation system. I think arguably 0:16:21.280 --> 0:16:24.040 the last thing, uh, this country, this economy needs is 0:16:24.480 --> 0:16:27.600 a railroad strike. So given that background, what's the White 0:16:27.640 --> 0:16:29.720 House said? What is their position? Because you know, you 0:16:29.760 --> 0:16:32.600 see in past the White House would maybe uh kind 0:16:32.600 --> 0:16:34.280 of step in and try to, you know, kind of 0:16:34.760 --> 0:16:37.160 help get things moving, whether it's the airline industry, the 0:16:37.480 --> 0:16:41.680 railroad industry, the shipping industry. What's the White House position? Definitely? 0:16:41.760 --> 0:16:44.880 And you know, um My colleagues are at Bloomberg did 0:16:44.920 --> 0:16:48.920 report yesterday that Biden and Labor Secretary Marty Walsh have 0:16:49.080 --> 0:16:52.920 been in contact with the parties UM in this dispute. 0:16:53.000 --> 0:16:55.520 And you know, Labor Secretary Marty Walsh was supposed to 0:16:55.520 --> 0:16:58.920 travel to Ireland this week, UM, and he postponed that 0:16:58.960 --> 0:17:02.640 trip to help gave full attention to this issue. UM. 0:17:02.720 --> 0:17:05.280 You know, we've been hearing that the White House is 0:17:05.320 --> 0:17:09.159 emphasizing that a shutdown of the freight rail system is 0:17:09.200 --> 0:17:13.119 just not an acceptable option at this time. So it's 0:17:13.280 --> 0:17:17.800 very interesting because we have a very pro labor administration 0:17:17.880 --> 0:17:21.480 that is unabashedly pro union and nearly all of the 0:17:21.560 --> 0:17:26.760 policies it proposes. UM. But it would be very UM. 0:17:26.760 --> 0:17:28.800 It would put the White House in a tough position 0:17:28.840 --> 0:17:32.000 to have to go against these two unions who are saying, hey, 0:17:32.080 --> 0:17:34.760 we want some more stick time. But for you know, 0:17:34.880 --> 0:17:36.840 the White House or President Biden to say, hey, you 0:17:36.880 --> 0:17:40.080 need to accept what we have on the table now. UM. 0:17:40.119 --> 0:17:42.440 It's going to be very interesting to see if this 0:17:42.520 --> 0:17:45.680 White House and the Biden administration will have to kind 0:17:45.680 --> 0:17:49.080 of stand up to unions UM in in this juncture. 0:17:50.119 --> 0:17:52.760 You Know what's interesting to me is also the regionality 0:17:52.840 --> 0:17:55.040 of this. Yere, you mentioned a hundred and fifteen thousand 0:17:55.040 --> 0:17:59.119 potentially going on strike. Where in the country are we 0:17:59.160 --> 0:18:02.520 going to see the biggest effects? Um? I think you 0:18:02.560 --> 0:18:05.159 can definitely. I know there's a lot of concern among 0:18:05.280 --> 0:18:09.359 agricultural employers about how this will affect their shipments ahead 0:18:09.400 --> 0:18:12.320 of harvest season. So if you look in those areas, 0:18:12.400 --> 0:18:15.160 you know, the bread basket areas, I would say they're 0:18:15.160 --> 0:18:18.320 going to be feeling this more acutely. Um, when you're 0:18:18.800 --> 0:18:23.320 thinking too, just about the broader economy. You know, officials 0:18:23.440 --> 0:18:27.040 and rail executives are warning that this could touch every 0:18:27.080 --> 0:18:31.399 piece of our economy. Um. You know, if shippers aren't 0:18:31.440 --> 0:18:34.040 able to get products out, this is also going to 0:18:34.119 --> 0:18:38.040 lead to even bottlenecks or delays that could last, you know, 0:18:38.080 --> 0:18:41.240 for weeks. Um. We're especially ahead of you know, the 0:18:41.280 --> 0:18:45.720 retail holiday season and harvest season. Right, All right, good stuff, 0:18:45.880 --> 0:18:48.160 Rebecca Rainey, thank you so much for bringing us up 0:18:48.160 --> 0:18:51.040 to date. Rebecca Rainy from Bloomberg Law giving us an 0:18:51.119 --> 0:18:55.000 update on what could become a big economic issue. Again, 0:18:55.040 --> 0:18:57.320 I guess the drop dead date in terms of getting 0:18:57.320 --> 0:19:02.600 a negotiation done and setting a strike this coming Friday railroads. 0:19:03.119 --> 0:19:06.160 Many of the unions have some issues with the big 0:19:06.280 --> 0:19:09.680 railroads in this country and again threatening to strike Friday. Hopefully, 0:19:10.160 --> 0:19:12.919 you know, we'll get some type of resolution before them, 0:19:12.920 --> 0:19:16.280 because that would just be another challenge for this economy 0:19:16.280 --> 0:19:22.040 in terms of supply chain challenges. Brent Donley, he's a 0:19:22.040 --> 0:19:25.600 president of Spectr Markets. He's been doing this currency thing 0:19:25.760 --> 0:19:28.000 on the street for a long time, so he knows 0:19:28.040 --> 0:19:30.439 what's going on. Brand I'm just gonna start off with 0:19:30.480 --> 0:19:34.680 my kind of my stock f X question, which is 0:19:34.680 --> 0:19:39.280 is there a bear case for the green back. Well, 0:19:39.320 --> 0:19:41.359 the funny thing is we had a bear case for 0:19:41.400 --> 0:19:44.480 the last week or two. We had PBOC and the 0:19:44.520 --> 0:19:47.000 Bank of Japan pushing back on dollar strength. He had 0:19:47.040 --> 0:19:49.520 some good news out of Ukraine. You had the ECB 0:19:49.720 --> 0:19:51.480 kind of stepping up a little bit, and then you 0:19:51.560 --> 0:19:53.840 had like a big pocket of demand for euros around 0:19:53.840 --> 0:19:57.800 one double o. And then today just everything onlines in 0:19:57.840 --> 0:20:00.960 two seconds. Because the problem is so b O J 0:20:01.160 --> 0:20:03.199 and p BOC can push back all they want, but 0:20:03.200 --> 0:20:05.920 they're running the loosest monetary policy in the world, so 0:20:06.320 --> 0:20:08.080 they need help from the data and they're just not 0:20:08.160 --> 0:20:10.280 getting it. So now again, if b o J is 0:20:10.320 --> 0:20:12.879 peggy yields at twenty five basis points in the tenure. 0:20:13.520 --> 0:20:15.239 You know, Delian is just gonna go up. They can 0:20:15.280 --> 0:20:17.439 say whatever they want, Delian is just gonna keep on 0:20:17.480 --> 0:20:22.040 going up. But how long does that last? Because it 0:20:22.080 --> 0:20:24.760 feels like the bear case for the dollar that you 0:20:24.880 --> 0:20:27.480 just reference, a lot of that came from interest rate differentials, 0:20:27.480 --> 0:20:29.879 the idea that if the e C b UH surprises 0:20:29.880 --> 0:20:32.040 the market in some way, that ends up creating a 0:20:32.080 --> 0:20:34.720 bowl case for the euro, and therefore you sell the 0:20:34.760 --> 0:20:36.879 dollar off the back of that. But even that was 0:20:36.960 --> 0:20:40.760 a temporary scenario. So how long does the bear case 0:20:40.800 --> 0:20:45.520 for the dollar really last? Well, that's kind of my 0:20:45.640 --> 0:20:47.760 point is that it doesn't last very long. We get 0:20:47.760 --> 0:20:50.440 these quick little moves for maybe a week or two 0:20:50.480 --> 0:20:52.560 and there's a ray of hope for dollar bears, but 0:20:52.680 --> 0:20:55.240 then then you know, one other one side, either on 0:20:55.280 --> 0:20:57.720 the energy side in Europe or on the right side 0:20:57.720 --> 0:20:59.879 in the US, the hammer just comes down again on 0:20:59.920 --> 0:21:02.800 the euro. And that's what we're seeing again today. So 0:21:02.880 --> 0:21:06.440 to me, it's very reminiscent of two thousand, two thousand one, 0:21:06.560 --> 0:21:10.280 where it's just an impulsive move and really nothing's going 0:21:10.320 --> 0:21:12.080 to stand in the way until you get like a 0:21:12.160 --> 0:21:16.320 fundamental turn in US rates, which obviously we keep waiting 0:21:16.359 --> 0:21:21.320 for and sometimes pricing but never actually is delivered. So 0:21:21.640 --> 0:21:24.439 it's you know, Tom Keane and the surveillance, radio and 0:21:24.480 --> 0:21:28.479 TV team. They're over in London covering the Queen's upcoming funerals, 0:21:28.520 --> 0:21:31.760 so they're benefiting from this strong dollar. But dos you 0:21:31.800 --> 0:21:35.920