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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along

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Speaker 2: with Tom Keen. Join us each day for insight from

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Speaker 2: the best in economics, geopolitics, finance, and investment. You can

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Speaker 2: also watch the show live on YouTube. Visit the Bloomberg

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Speaker 2: Podcast channel on YouTube to see the show weekday mornings

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Speaker 2: anywhere else you listen, and as always on Bloomberg Radio,

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Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Let's check

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Speaker 2: in with Zanne Saunders. We need some help here, chief

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Speaker 2: investment strategist for Charles Schwab Lizan. I mean, I'm looking

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Speaker 2: at the S and p NASDAC both up double digits

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Speaker 2: this year. We had a real scare. I guess almost

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Speaker 2: three weeks ago on that crazy Monday. Where do we

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Speaker 2: go here? For the remainder of the year, We're all

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Speaker 2: gonna be paying attention to fed Truman Pale today, Let's

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Speaker 2: think a little bit beyond that. How are you feeling

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Speaker 2: about these markets going forward?

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Speaker 3: Well, you talk about the big scare, and it really

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Speaker 3: was just concentrated in that one week, and in particular

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Speaker 3: on August fifth, and that had a lot to do

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Speaker 3: with the unwinding of the year Yan Carriy tret But

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Speaker 3: even before that, the calm really was only on the surface.

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Speaker 3: Even before the pullback that brought the Nasdaq into correction territory,

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Speaker 3: you had had no more than a seven percent draw

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Speaker 3: down in the Nasdaq, but the average member maximum draw

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Speaker 3: down just here to date was negative forty percent. That's

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Speaker 3: now negative forty three percent, alongside at the index level

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Speaker 3: the Nasdaq being down thirteen percent. So there has already

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Speaker 3: been a tremendous amount of churn and rotation and even

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Speaker 3: turmoil under the surface, maybe more reflective of all of

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Speaker 3: these uncertainties that were still dealing with and what you

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Speaker 3: would pick up if you just looked at the index level.

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Speaker 3: Jackson Hole is important. Obviously, the September FOMC meeting, we're

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Speaker 3: thinking twenty five, not fifty, barring a more significant surprise

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Speaker 3: in some combination of the PCE that's coming up and

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Speaker 3: the jobs report. But at this point we're penciling in

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Speaker 3: twenty five is the start point.

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Speaker 4: The zan Tom's going to be so sorry that he

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Speaker 4: missed you. I just got to say, if we see

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Speaker 4: those cuts not in a recession, oh hello, not in

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Speaker 4: a recession, does that change the leadership profile like no

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Speaker 4: financial stay with tech? Does it change how you think

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Speaker 4: about it?

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Speaker 5: Yeah?

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Speaker 3: What does tend to happen is if you look at

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Speaker 3: past cycles and you see the FED operating more slowly,

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Speaker 3: ostensibly because they're not combating a recession or a financial

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Speaker 3: crisis or some combination thereof. Not only do you see

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Speaker 3: milder maximum draw downs within say the six months or

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Speaker 3: up to a year following the initial cut, you tend

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Speaker 3: to see more of a cyclical bias in terms of

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Speaker 3: what does well at the factor level, at the sector level.

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Speaker 3: In contrast the fast cutting cycles where sensibly they are

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Speaker 3: combating a recession and or financial crisis, like was the

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Speaker 3: case when the FED started cutting in six we all

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Speaker 3: know what was still ahead of us. That was those

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Speaker 3: were backdrops where there were greater maximum drawdowns and more

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Speaker 3: defensiveness in terms of factor and sector based leadership. So

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Speaker 3: I actually say to people who are looking for or

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Speaker 3: hoping for an aggressive FED, be careful what you wish for.

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Speaker 3: It's the why behind the FED starts a cutting cycle

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Speaker 3: and the level of aggressiveness that defines how markets behave.

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Speaker 2: Lizanne, what did you learn from this earning cycle that

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Speaker 2: we just pretty much closing up this week?

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Speaker 3: So you know, the beat rate and the percent by

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Speaker 3: which companies beat was about in line with recent averages,

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Speaker 3: better than long term averages. However, the same cannot be

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Speaker 3: set on the top line growth, So you had a

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Speaker 3: below average beat rate on revenue growth, you had a

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Speaker 3: below average percent by which companies beat. Not to mention

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Speaker 3: the fact that third quarter estimates trend to down even

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Speaker 3: though second quarter ended up being loftier than expected. Within

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Speaker 3: the sort of AI theme, I think part of the

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Speaker 3: reason why you went into correction mode for call it

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Speaker 3: the Magnificent seven, et cetera, that group of megacap names,

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Speaker 3: is because there was a lot more emphasis on the

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Speaker 3: maybe the timing gap between the expenses associated with AI

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Speaker 3: and the revenue generation associated with AI. The last thing

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Speaker 3: I'd say is, I think there's increasing attention on the

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Speaker 3: revenue side of the equation because revenues in general tend

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Speaker 3: to correlate more with what decisions made about the labor

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Speaker 3: market more so than bottom line growth. So I think

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Speaker 3: those weren't focus in the second quarter will continue to

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Speaker 3: be as we approach the end of the third quarter.

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Speaker 4: Do you think Nvidia next week is going to be

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Speaker 4: a market event or an in video event?

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Speaker 3: Tell me what they report, it's, I mean, certainly going

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Speaker 3: to be incredibly important to either affirm what has been

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Speaker 3: valuation expansion, not just there, but in in the broader space.

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Speaker 3: I don't cover the stock, I don't cover any individual stocks.

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Speaker 3: I don't want to say it's make or break, but

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Speaker 3: these days a name like that can be make or

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Speaker 3: break in terms of the importance of that report as

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Speaker 3: a feeder into the narratives that have sat behind where

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Speaker 3: leadership has resided, where valuation expansion has been most robust,

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Speaker 3: and the opposite.

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Speaker 2: And so that kind of goes to I guess a

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Speaker 2: question I ask a lot zandwich. Is it seems like

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Speaker 2: for the longest time this market has been driven by

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Speaker 2: technology and for good reason. I mean, and technology has

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Speaker 2: been a leading driver of this market. Is that still

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Speaker 2: the case?

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Speaker 3: It's not recently? You know, so far this quarter, the

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Speaker 3: Magnificent seven is underperforming the rest of the market. If

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Speaker 3: you look at the past month or so, and you

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Speaker 3: look at where fun flows have been concentrated in the

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Speaker 3: ETF space, it's actually been in areas like utilities and

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Speaker 3: in real estate. So I think it's that anticipation of

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Speaker 3: a FED finally moving into cutting mode that is given

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Speaker 3: a lift to those more sensitive areas, and you've commensurately

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Speaker 3: seen outflows and tech. I don't know that that persists

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Speaker 3: in any kind of linear way. I think what's been

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Speaker 3: shown over the past month or two is that there's

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Speaker 3: not only money looking for opportunities outside of the Magnificent seven,

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Speaker 3: but there's also still a lot of interest in better

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Speaker 3: entry points in some of those names. So I would

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Speaker 3: expect more of a choppy pattern, but you clearly have

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Speaker 3: seen a shift in leadership more toward those interest sensitive

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Speaker 3: areas as we await the September FOMAC meeting.

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Speaker 4: Yeah, and from that top that we hit in July,

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Speaker 4: the socks the semi index is down like thirteen percent,

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Speaker 4: so I mean they've definitely rolling over quite a bit.

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Speaker 4: Last we question LEZAN is today going to be a

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Speaker 4: market event?

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Speaker 2: I doubt it.

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Speaker 3: I think given the emphasis on data dependency and the

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Speaker 3: fact that we still have PCE and the jobs report

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Speaker 3: in front of us, Powell may touch on the BLS

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Speaker 3: benchmark revisions, but I can't imagine he has the data

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Speaker 3: that would suggest a significantly more dubbish shift than what's

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Speaker 3: built into expectations. So status quo for the most.

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Speaker 2: Part, Right, Lezanne, thank you so much for joining us.

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Speaker 2: Always appreciate getting a few minutes of your time. Listen Sanders.

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Speaker 2: She's a chief investment strategist for Charles Schwab. We've got

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Speaker 2: the Democratic Convention done in the book, same for the Republicans.

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Speaker 2: So now I guess both candidates hit the campaign trail

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Speaker 2: and they go hard until early November and November five

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Speaker 2: when we get this election going. Tita Fordham joins us.

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Speaker 2: She's a founder and geopolitical strategist for Fordham Global Insight. Tina,

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Speaker 2: what do you make of the week that the Democrats

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Speaker 2: had in Chicago? What do your takeaways?

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Speaker 6: Well, what our high energy event?

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Speaker 5: There wasn't a lot there for investors or business leaders

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Speaker 5: to really grab on to, but that wasn't the point

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Speaker 5: of this exercise. It was an interesting kind of romp

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Speaker 5: through Democratic Party leaders from the past, with the Obamas

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Speaker 5: and the Clinton's.

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Speaker 6: The future with Buddhajdge and AOC.

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Speaker 5: And then Harris's acceptance speech last night, so you know,

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Speaker 5: quite an endeavor.

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Speaker 4: It was truly historic, honestly, I mean even my ten

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Speaker 4: year old daughter asked to watch her speech. Yeah, like

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Speaker 4: maybe maybe she was also trying to stay up later,

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Speaker 4: but she genuinely seemed to want to watch her acceptance speech.

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Speaker 4: It was definitely an historic moment. As Paul pointed out

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Speaker 4: earlier Tina, she also Kamala Harris moved away a little

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Speaker 4: bit from some of the leftter policies that we've seen

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Speaker 4: for the Democratic Party, particularly in climate What does that

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Speaker 4: tell you about where she's headed and what her messaging

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Speaker 4: and policy will be over the next three months.

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Speaker 6: If she wants to win, she has to move to

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Speaker 6: the center.

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Speaker 5: What we saw last night and the messaging that was

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Speaker 5: coming through this past week at the DNC was a

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Speaker 5: clear shift away from the Bernie Sanders, the hard left,

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Speaker 5: and from candidate Harris from twenty twenty right.

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Speaker 6: She has walked back a.

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Speaker 5: Number of those positions, a bit of economic populism in

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Speaker 5: the little that we've seen on that front, but she

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Speaker 5: was very much campaigning on being a president for all Americans,

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Speaker 5: for the middle class, and also not othering herself by

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Speaker 5: talking about gender or race. That's a big contrast compared

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Speaker 5: to Hillary Clinton's approach.

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Speaker 2: Tina, what do you expect the strategy to be from

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Speaker 2: former President Donald Trump? Here over the next three months?

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Speaker 6: He is going to have to catch up a lot

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Speaker 6: quicker than we've seen so far.

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Speaker 5: Democrats are playing offense, which is something they haven't necessarily

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Speaker 5: done well. They're not historically a terribly disciplined party, which

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Speaker 5: is why I think these last few days have been

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Speaker 5: so effective. In September, the rubber hits the road with

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Speaker 5: the polling, we'll see if there's been a convention bounce.

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Speaker 5: But Trump is on the defensive and none of his

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Speaker 5: lines of attack seem to have.

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Speaker 6: Really stuck just yet.

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Speaker 5: The debate on September tenth is going to be where

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Speaker 5: all of this comes into focus, and I think it's

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Speaker 5: going to be a tough night for Donald Trump.

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Speaker 4: What do you think? What do you think Independence and

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Speaker 4: modern Republicans are making of this race right now?

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Speaker 5: Well, we're just starting to see that data coming in.

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Speaker 5: Frank Luntz, the Polster, has talked about some of his

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Speaker 5: focus groups where there is some evidence that Independence are

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Speaker 5: moving toward Harris. Harris is still struggling though, with non

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Speaker 5: college educated voters and.

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Speaker 6: A number of men. But it's really early days.

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Speaker 5: Remember that, you know, most people have a life and

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Speaker 5: aren't political junkies who are glued to political conventions, let

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Speaker 5: alone and watching them in the middle of the night

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Speaker 5: as I am here in London, So it will take

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Speaker 5: time to filter through. Americans don't tend to really pay

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Speaker 5: attention to elections until September or October. Of course, Trump

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Speaker 5: is a known quantity and Biden was a known quantity.

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Speaker 5: But this past week has been Kamala Harris really introducing

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Speaker 5: herself to the American people and Tim Walls alongside her,

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Speaker 5: and we need to wait and see what the reception

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Speaker 5: has been.

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Speaker 2: Tina, how do we get to the point where these

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Speaker 2: elections come down to six or seven swing states and

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Speaker 2: that it? How do we get here?

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Speaker 6: Well, we've been in this place for quite a while now.

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Speaker 5: This is the fifth US election that I've covered as

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Speaker 5: a professional political analyst. Was ever thus, as long as

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Speaker 5: I can remember that these swing states hold so much sway,

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Speaker 5: be careful saying that ten times fast, and it means

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Speaker 5: that we're gonna be on a knife edge right going

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Speaker 5: into this campaign. Harris can take nothing for granted, and

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Speaker 5: Trump can't make any missteps the fundraising, the.

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Speaker 6: The appearances, the messaging.

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Speaker 5: I'd argue that Trump needs to come up with some

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Speaker 5: other messages. What happens with our f K Junior stepping

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Speaker 5: aside and potentially, you know, casting his support for Trump.

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Speaker 5: We're talking about splitting the difference on one point five,

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Speaker 5: you know, percentage points, but that's how close it's going

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Speaker 5: to be.

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Speaker 4: Yeah, there was a John Oliver piece on our f

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Speaker 4: K Junior saying like we can write them off as

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Speaker 4: like being crazy or whatever, but he actually has a

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Speaker 4: lot of votes, and a lot of them are in

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Speaker 4: swing states, and their percentage of they're very small percentages,

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Speaker 4: like let's say one percent, but that could, as Tina

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Speaker 4: just pointed out, swing the election. On that point, when

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Speaker 4: do you think we're going to get more policy from

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Speaker 4: Kamala Harris? That then CEOs in Wall Street can kind

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Speaker 4: of understand her a little bit better. And when is

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Speaker 4: she going to sit down with a journalist she.

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Speaker 5: Promised to to dis interviews at the end of the month.

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Speaker 5: I mean, let's remember what a world when in timing

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Speaker 5: this has been I'd say she used the convention exactly

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Speaker 5: the right way, which is unify the party. Democrats are

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Speaker 5: not very disciplined, and we didn't see you know, kind

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Speaker 5: of eruptions into protests of pragaza and the things that

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Speaker 5: were feared. How many columns did we all read about

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Speaker 5: whether this would be a replay of nineteen sixty eight Chicago.

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Speaker 4: Many of many of them, Tina, Yes.

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Speaker 5: Many, many, many, and nothing like that transpired. So you

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Speaker 5: know that box is ticked, the party is united behind

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Speaker 5: her and in mainstream message. The next stage, I would argue,

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Speaker 5: is more detail on policies. We see both Harris and

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Speaker 5: Trump being pretty heterodox in their economic policies in their

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Speaker 5: different ways. How much Harris will provide detail, You know,

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Speaker 5: there's not a lot of upside for candidates in doing that,

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Speaker 5: as much as of course corporate leaders, business leaders, investors

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Speaker 5: are looking for more detail. Providing that is likely to

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Speaker 5: see her lose votes, and so it's going to be

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Speaker 5: very careful balancing act.

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Speaker 6: I do think she'll say more.

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Speaker 5: She's already walked back the kind of poor reception that

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Speaker 5: the price gouging on goods saw.

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Speaker 6: Her policy on that didn't land very well.

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Speaker 5: But right right now, she's got to make sure people

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Speaker 5: know her and feel safe with her. I mean, well,

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Speaker 5: if I can carry ongoing just for a moment in

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Speaker 5: our business.

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Speaker 6: We talked to global investors.

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Speaker 5: Especially here in Europe, and the remarks that she made

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Speaker 5: on the US not abdicating its global authority is actually

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Speaker 5: the number one question that we have from international business.

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Speaker 5: Is the US going to remain part of the global

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Speaker 5: security architecture? So that was quite an important point for

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Speaker 5: an international business audience.

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Speaker 2: Tina, what role, if any, do you expect President Biden

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Speaker 2: to play in this campaign?

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Speaker 4: Good question.

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Speaker 5: I suspect it will be a subdued role, and again

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Speaker 5: we need to see how the numbers evolve.

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Speaker 6: He was treated as a conquering hero. A lot of

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Speaker 6: love for Joe Biden at the convention. It's not clear

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Speaker 6: necessarily whether he would be an.

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Speaker 5: Asset on the campaign trail or for fundraising. I mean,

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Speaker 5: Harris's fundraising numbers have been through the roof. She's out

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Speaker 5: fund raising Trump by you know, a couple of times over.

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Speaker 5: But what Biden can do with his time, you know, yes,

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Speaker 5: he's lame doc until January twentieth, twenty twenty five, might

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Speaker 5: be quite interesting to watch. So for example, the fact

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Speaker 5: that he's not campaigning, might free him up to do

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Speaker 5: more on the Middle East.

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Speaker 6: I think we haven't heard the last from Joe Biden.

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Speaker 2: Hi very good, Tina, Thank you so much for joining us.

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Speaker 2: Tina Fordham joining us here, founder and geopolitical strategist for

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Speaker 2: Fordham Global Insight. We have the FED. They're in Jackson Hole,

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Speaker 2: FED Chairman J Powell, A lot of economists out there

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Speaker 2: is a whole world looking at Jackson Hold head aches.

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Speaker 4: Do you think I don't know? I mean I think

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Speaker 4: that all the economists are looking at it. Do I

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Speaker 4: think my mom is tuning in? I highly doubt that.

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Speaker 2: Yeah, But if I'm an economist sitting in London.

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Speaker 7: I'm probably you're into it.

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Speaker 2: If I'm a professor of economics, say the London Business School,

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Speaker 2: like doctor Funny and Starve Rokova is, she's probably paying

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Speaker 2: attention to Jackson Hall. Doctor Stvakova, thanks so much for

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Speaker 2: joining us. I think I'm getting your name right with

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Speaker 2: a little help. What are you looking for from FED

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Speaker 2: Chairman J Powell today? Is you try to frame out

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Speaker 2: what it means for the global economy.

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Speaker 8: Thank you so much for having me.

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Speaker 9: Always a pleasure to be here, so I.

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Speaker 8: Don't believe it's going to be a speech in which

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Speaker 8: power we will want.

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Speaker 10: To store financial markets by surprising them in either direction.

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Speaker 10: So we have the elections around the corner, and he

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Speaker 10: wouldn't want to appe overly political, even more so given

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Speaker 10: Trumps threats to the FED independence. So it might be

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Speaker 10: one of those instances where Powell essentially puts much more

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Speaker 10: weight on average market expectations than normal. So the average

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Speaker 10: expectations at twenty five basis points, so if he says anything,

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Speaker 10: probably will.

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Speaker 8: Because it's done with just twenty five basis points.

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Speaker 9: Now this brings me to forecasts.

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Speaker 10: What are we going to learn if anything, in terms

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Speaker 10: of forecasts for guidance GDP grow of inflation. Again, unfortunately,

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Speaker 10: I don't think he's going to review that much on

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Speaker 10: the one hand, and he do not want effectively to

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Speaker 10: make markets revise their expectations in terms of the policy

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Speaker 10: rate path up or down in order to not generate

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Speaker 10: massive movements. But at the same time, there is a

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Speaker 10: lot of concertainty of pots coming forward. Right, so we

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Speaker 10: have elections, we have two candidates with quite different policies

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Speaker 10: on the agenda, so it is hard for the FED

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Speaker 10: as well as anyone else to forecast what is going

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Speaker 10: to happen over the next year. Now he has to

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Speaker 10: talk about something, right, So if you want to avoid

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Speaker 10: expressing a concrete view on where the economy is headed,

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Speaker 10: what do you talk about?

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Speaker 8: So my prior and my guess is that he's going.

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Speaker 10: To try to essentially focus on insights related to the

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Speaker 10: topic of this year Jackson's COPE conference, which is reassessing

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Speaker 10: the effectiveness and transmission of MOUNTI policy.

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Speaker 9: So he can touch upon many issues.

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Speaker 10: But my prior is that there should be hopefully something

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Speaker 10: on the fiscal monitary policy and access, especially in times

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Speaker 10: that fiscal.

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Speaker 9: Policy going forward will continue playing a central stage for

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Speaker 9: the FED optimal montary policy debates.

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Speaker 10: So if don't get intuition on okay, what is the

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Speaker 10: forecast for you know, any commitments on the policy rate,

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Speaker 10: then might understand a little bit better what would be

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Speaker 10: the trade off the fact we will keep a close

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Speaker 10: eye on going forward.

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Speaker 4: Funny, when you take a look at the at the

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Speaker 4: balancing between inflation and the labor data, it does seem

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Speaker 4: like there are still many FED officials who are genuinely

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Speaker 4: worried about the inflationary trajectory that we need to continue

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Speaker 4: to see more data to know the disinflation is taking hold.

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Speaker 4: On the other hand, we clearly see some members who

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Speaker 4: are willing to cut in July that are worried that

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Speaker 4: a little move in the labor market data can translate

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Speaker 4: into a big move into the unemployment rate. Where do

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Speaker 4: you think that Ja Powell is going to tread that line?

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Speaker 6: Again?

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Speaker 1: I think twenty five basis points is nothing in terms

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Speaker 1: of real effects on the economy, right, So I think

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Speaker 1: he is going to try, really try to position himself

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Speaker 1: in terms of not moving markets before the elections.

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Speaker 10: So consensus expectations of twenty five basis points, is he

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Speaker 10: going to come and do something drastic relatively what markets expect,

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Speaker 10: endangering potential swings because, for example, if the cut is higher,

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Speaker 10: trumping Video is going to blame him. You know, if

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Speaker 10: there is no cut, you might Ria is going in

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Speaker 10: the other direction. So I think they're just going to wait.

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Speaker 8: I don't think the current data necessitates any you know,

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Speaker 8: particularly big movements.

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Speaker 10: Twenty five basis points cut is perfectly reasonable based on.

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Speaker 8: The data that we have right now.

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Speaker 9: It's what markets expect.

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Speaker 10: It's pretty much safe to stick to that and just

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Speaker 10: wait and see the data coming ahead, and of course

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Speaker 10: the outcome.

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Speaker 9: Of the elections.

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Speaker 10: Now, one thing that's very interesting is and usually when

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Speaker 10: we have elections, right this is this works in economics.

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Speaker 9: It's uncertainty shock.

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Speaker 10: And you know the before Biden and the moment Mawa,

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Speaker 10: Harris and Trump.

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Speaker 8: They have very different policies in terms of fiscal policies.

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Speaker 9: But also regulatary policies.

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Speaker 10: So you would expect that, you know, forums are going

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Speaker 10: to postpone investment waiting in order to see who is

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Speaker 10: going to get elected, put the inter generating Organization, which

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Speaker 10: would have made the FED cut sooner. But we don't

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Speaker 10: see that in the investment numbers, and that is something

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Speaker 10: quite interesting. I mean, corporate tax proposals are very differently

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Speaker 10: across the two campaigns. That for me is a bit

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Speaker 10: puzzling that we don't see much action on the investment

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Speaker 10: numbers in the US in terms of you know, essentially

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Speaker 10: people delaying.

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Speaker 8: Investment in order to see the resolution of the uncertainty

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Speaker 8: of the elections.

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Speaker 2: So, Professor, I guess one of the rests that some

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Speaker 2: investors have here in the US is that this federal

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Speaker 2: reserve is already behind the curve that in fact, we

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Speaker 2: are already in a recession or dangerously close to one.

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Speaker 2: Do you think that argument has merit?

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Speaker 10: No, I would disagree in the sense that so first

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Speaker 10: of all, I don't think that the lacks that big

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Speaker 10: in terms of how quickly multi policy can impact the

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Speaker 10: real economy. So the perspective of the FED is probably yes,

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Speaker 10: if we try, if we start to see, you know,

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Speaker 10: a sequence of announcements of mutful news that May is

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Speaker 10: concerned about reization, we can act quickly enough to offset that.

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Speaker 8: So I don't think preemptive actions and needed.

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Speaker 10: Particularly if you think about the outcome of the elections

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Speaker 10: on both sides of the two campaigns.

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Speaker 8: So like if you take, of course, on Kamala Harris

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Speaker 8: following what.

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Speaker 10: Biden is doing, fiscal policy is based passionary, which generates inflation.

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Speaker 8: Right, So at the same time, Trump might increase sanctions.

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Speaker 10: And tariffs, which is going to increase the private import goods.

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Speaker 9: Which also my generate information. So rushing to.

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Speaker 10: Cut now and having to increase after, I think it's

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Speaker 10: more dangerous for the fact, based on you know, they

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Speaker 10: don't know what's coming in terms of physical policies which

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Speaker 10: clearly are going to.

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Speaker 9: Fit into multi policy or regulatary policies.

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Speaker 10: So it's much more dangerous to have a lot of

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Speaker 10: butts now and then to have to justify increases because

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Speaker 10: this is going to increase even further stock market voltility

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Speaker 10: and bond voltility. And we've seen how voatile essentially asset

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Speaker 10: prices are to even a single anatos, Right, So I

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Speaker 10: think the courses of.

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Speaker 4: This volatility at the moment before I let you go.

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Speaker 4: You also do a lot of work on the Russian economy,

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Speaker 4: and the IM published a forecast back in April the

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Speaker 4: Russian economy will grow by three point two percent this year,

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Speaker 4: really contrary to many others beliefs. What do you think

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Speaker 4: about that resilience of the Russian economy.

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Speaker 8: Well, so the higher growth is associated also with high

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Speaker 8: inflation because of fiscal expansion, right, So essentially they're investing.

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Speaker 10: In the military, which not surprisingly is fitting into inflation

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Speaker 10: and higher growth. But what's interesting on the Russian front

443
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Speaker 10: is the recent expansion on the sanctions from the US side,

444
00:23:36,359 --> 00:23:41,720
Speaker 10: So the secondary essentially sanctions where now Chinese banks, Turkish banks,

445
00:23:41,720 --> 00:23:45,880
Speaker 10: India banks are not willing to facilitate trade between Russia

446
00:23:45,920 --> 00:23:48,159
Speaker 10: and China. Russia and Turkey, et cetera, because they're going

447
00:23:48,200 --> 00:23:53,520
Speaker 10: to lose access to effectively the US dollar market. Right,

448
00:23:53,640 --> 00:23:57,399
Speaker 10: so now we expect that these things are going to bite.

449
00:23:57,480 --> 00:24:00,800
Speaker 10: I mean, they are discussions that Russia is looking into

450
00:24:01,240 --> 00:24:03,280
Speaker 10: bartered transactions with China.

451
00:24:03,840 --> 00:24:05,440
Speaker 8: Essentially, we give you oil.

452
00:24:05,560 --> 00:24:09,280
Speaker 10: You give us inputs for our military production that it's

453
00:24:09,480 --> 00:24:12,199
Speaker 10: not so easy to implement, granted that a lot of

454
00:24:12,200 --> 00:24:15,600
Speaker 10: the producers are private. Having said that, the Chinese government

455
00:24:15,720 --> 00:24:18,560
Speaker 10: can potentially facilitated transaction.

456
00:24:17,800 --> 00:24:21,320
Speaker 8: So we will wait and see how binding and restrictive.

457
00:24:21,680 --> 00:24:22,720
Speaker 9: Essentially, these new.

458
00:24:22,640 --> 00:24:25,800
Speaker 10: Round of sanctions are moreover now the door can be

459
00:24:25,840 --> 00:24:27,520
Speaker 10: treated only at s so there are a lot of

460
00:24:27,520 --> 00:24:31,960
Speaker 10: interesting developments there. So hopefully they will have a bigger

461
00:24:31,960 --> 00:24:34,320
Speaker 10: bite than what we've seen so far. I mean, the

462
00:24:34,400 --> 00:24:37,639
Speaker 10: robo hasn't appreciated as much as we would like it

463
00:24:38,119 --> 00:24:41,160
Speaker 10: in order to factor in the severity of the sanctions.

464
00:24:41,200 --> 00:24:42,919
Speaker 2: All right, doctor, thank you so much for joining us.

465
00:24:42,960 --> 00:24:45,240
Speaker 2: Really appreciate getting some of your time here today. Doctor

466
00:24:45,280 --> 00:24:49,920
Speaker 2: Vania stuff Rakeva, President of Economics at the London Business School.

467
00:25:00,400 --> 00:25:02,280
Speaker 2: If there's any ever any place in a world where

468
00:25:02,280 --> 00:25:05,520
Speaker 2: you could probably lose the suit and bow tie, it

469
00:25:05,520 --> 00:25:09,840
Speaker 2: would be Jackson holwayan totally. However, Tom's chosen not to

470
00:25:09,880 --> 00:25:12,160
Speaker 2: do that, so he is in full Tom Keen regalia.

471
00:25:12,240 --> 00:25:15,080
Speaker 2: Tom Keen. He is a host of Bloomberg Surveillance on

472
00:25:15,160 --> 00:25:17,520
Speaker 2: radio on YouTube. Tom, give us a sense of kind

473
00:25:17,560 --> 00:25:19,240
Speaker 2: of how your stay has been out there. What are

474
00:25:19,280 --> 00:25:22,200
Speaker 2: you hearing from all those smart economists out there.

475
00:25:23,920 --> 00:25:26,639
Speaker 7: It's a really interesting year here. I think two or

476
00:25:26,680 --> 00:25:30,159
Speaker 7: three weeks ago, Alex and Paul this was maybe a

477
00:25:30,200 --> 00:25:32,920
Speaker 7: non event or at least something more subdued, and now

478
00:25:32,960 --> 00:25:37,159
Speaker 7: it's taken on a renewed urgency. The world of economics, finance,

479
00:25:37,200 --> 00:25:40,120
Speaker 7: and investment. It is going to stop for the Powell

480
00:25:40,240 --> 00:25:42,119
Speaker 7: speech this morning. And where do you see it. You

481
00:25:42,160 --> 00:25:45,199
Speaker 7: see it in the data check that Lisa Mateo just

482
00:25:45,480 --> 00:25:48,720
Speaker 7: gave us. We still got real rates range bound, the

483
00:25:48,720 --> 00:25:52,320
Speaker 7: two year yields four percent. But that equity market just says,

484
00:25:52,840 --> 00:25:56,639
Speaker 7: screams soft landing ready to go. A lot of the

485
00:25:56,680 --> 00:26:00,000
Speaker 7: interest today paragraph to paragraph in the speech will be

486
00:26:00,240 --> 00:26:04,040
Speaker 7: how Chairman Powell frames the path to that hope for

487
00:26:04,160 --> 00:26:04,840
Speaker 7: soft landing.

488
00:26:05,240 --> 00:26:06,800
Speaker 4: I have heard, and I have it on good authority,

489
00:26:06,840 --> 00:26:09,080
Speaker 4: that Tom Keen is the only one wearing a suit.

490
00:26:09,280 --> 00:26:13,639
Speaker 4: But maybe maybe this changes by the end of the day, Tom,

491
00:26:13,720 --> 00:26:17,520
Speaker 4: is there any feeling on the ground as to where

492
00:26:17,560 --> 00:26:20,520
Speaker 4: the FED is leaning more? Is it the inflation concerns

493
00:26:20,760 --> 00:26:22,280
Speaker 4: or the labor concerns.

494
00:26:23,960 --> 00:26:27,119
Speaker 7: They've got a dual mandate, as we all know, and

495
00:26:27,160 --> 00:26:30,080
Speaker 7: that dual mandate goes back and forth. I would say,

496
00:26:30,119 --> 00:26:34,399
Speaker 7: typically it is an inflation guess on the ISLM theory.

497
00:26:34,440 --> 00:26:37,960
Speaker 7: It's on the LM curve. Recently we've really come over

498
00:26:38,080 --> 00:26:40,640
Speaker 7: to a look at the real economy. What's going on

499
00:26:40,680 --> 00:26:44,119
Speaker 7: with GDP. The unspoken here, and frankly, part of the

500
00:26:44,160 --> 00:26:47,800
Speaker 7: research papers that will be given is the mystery of

501
00:26:47,840 --> 00:26:52,159
Speaker 7: the new technology and the productivity and what it's doing

502
00:26:52,280 --> 00:26:56,720
Speaker 7: to the economy and the labor force. And the immediate thing, Paul,

503
00:26:56,760 --> 00:27:01,119
Speaker 7: the absolute immediate emotion here was that stunning eight hundred

504
00:27:01,160 --> 00:27:04,320
Speaker 7: thousand job revision that we saw a few days ago.

505
00:27:04,680 --> 00:27:07,359
Speaker 7: Was that because of technology or was that because of

506
00:27:07,400 --> 00:27:09,320
Speaker 7: a cratering economy?

507
00:27:09,680 --> 00:27:09,920
Speaker 9: Tom?

508
00:27:09,920 --> 00:27:12,640
Speaker 2: To what extent are the folks out there in jacksonvill

509
00:27:12,680 --> 00:27:15,080
Speaker 2: Are they paying attention to what has been happening in

510
00:27:15,200 --> 00:27:18,800
Speaker 2: Chicago over the past few days with the Democratic National Convention.

511
00:27:20,200 --> 00:27:23,440
Speaker 7: A little bit, I would have everyone go to gregyp

512
00:27:23,480 --> 00:27:25,840
Speaker 7: the wonderful Greg Up writing in the Wall Street Journal,

513
00:27:26,080 --> 00:27:29,280
Speaker 7: who sort of summed up the non economics of our

514
00:27:29,359 --> 00:27:33,199
Speaker 7: political moment. I would say they're really not focused on

515
00:27:33,320 --> 00:27:37,600
Speaker 7: Milwaukee or Chicago, but very much they're focused on November fifth.

516
00:27:37,600 --> 00:27:40,720
Speaker 7: There will be an election I would like to see today.

517
00:27:40,880 --> 00:27:43,480
Speaker 7: I'm not sure we'll see it, but it would be

518
00:27:43,520 --> 00:27:47,760
Speaker 7: good to see a sentence or to reaffirming the Fed

519
00:27:47,960 --> 00:27:52,920
Speaker 7: independence that's been there really since nineteen fifty one, tested

520
00:27:52,960 --> 00:27:57,239
Speaker 7: by Truman, tested by LBJ. To see a reaffirmation of that,

521
00:27:57,320 --> 00:28:00,399
Speaker 7: as we saw in the Powell press conference wouldn't be

522
00:28:00,400 --> 00:28:00,920
Speaker 7: a surprise.

523
00:28:01,520 --> 00:28:03,479
Speaker 4: So Tom, I also, I don't know if you heard

524
00:28:03,520 --> 00:28:05,639
Speaker 4: it earlier. I had a dream that you were in

525
00:28:05,760 --> 00:28:08,679
Speaker 4: last night that you were like, Hey, Alex, should I

526
00:28:08,720 --> 00:28:11,879
Speaker 4: go to the million dollar Cowboy bar before my hits

527
00:28:11,960 --> 00:28:13,840
Speaker 4: on Friday? And I was like, I don't know, Tom,

528
00:28:13,880 --> 00:28:15,639
Speaker 4: how do you feel about that? And You're like, I

529
00:28:15,720 --> 00:28:18,760
Speaker 4: don't know, And then eventually you wound up going did

530
00:28:18,840 --> 00:28:19,280
Speaker 4: that happen?

531
00:28:20,160 --> 00:28:20,280
Speaker 10: Now?

532
00:28:20,359 --> 00:28:23,800
Speaker 7: The romance of it, and this is true almost every year,

533
00:28:24,160 --> 00:28:26,800
Speaker 7: is we need to get back from Monday Morning. Paul

534
00:28:26,840 --> 00:28:28,960
Speaker 7: and I got to do the Monday Morning Show, which

535
00:28:29,040 --> 00:28:31,560
Speaker 7: means you get on the airplane and go. So this

536
00:28:31,680 --> 00:28:35,919
Speaker 7: year we are a million dollar cowboy bar free very Oh.

537
00:28:35,680 --> 00:28:38,120
Speaker 4: Okay, so my dream was a total misnomer.

538
00:28:38,400 --> 00:28:38,640
Speaker 7: Thanks.

539
00:28:38,760 --> 00:28:42,040
Speaker 4: That's highly disturbing. I have actual another real question for you, though,

540
00:28:43,200 --> 00:28:47,120
Speaker 4: How much is a conversation about Japan and the Bank

541
00:28:47,160 --> 00:28:50,760
Speaker 4: of Japan showing up this year in the conversations.

542
00:28:52,440 --> 00:28:55,960
Speaker 7: It's a really important question, Alex, made more so by

543
00:28:55,960 --> 00:29:00,160
Speaker 7: the inflation report. Inflation won't go away in Japan, and

544
00:29:00,920 --> 00:29:03,240
Speaker 7: that puts a pressure on them to bring those fiction

545
00:29:03,800 --> 00:29:06,080
Speaker 7: of an interest rates higher. They need to go higher

546
00:29:06,080 --> 00:29:08,880
Speaker 7: in interest rates, of course, which means all of their

547
00:29:08,880 --> 00:29:13,800
Speaker 7: fixed income prices go down. Japan has not overtly discussed,

548
00:29:13,800 --> 00:29:17,640
Speaker 7: but it's on everyone's mind. Is not so much being

549
00:29:17,640 --> 00:29:21,880
Speaker 7: a dysfunctional theory, but to be kind, being an original theory.

550
00:29:21,920 --> 00:29:25,480
Speaker 7: I see the sun just coming out here at Jackson Hall.

551
00:29:25,760 --> 00:29:27,680
Speaker 7: When we're done with this, I'm going to turn around

552
00:29:28,000 --> 00:29:31,080
Speaker 7: and look where the deer in the antelope play exactly.

553
00:29:31,080 --> 00:29:33,200
Speaker 2: We were just actually talking about that here in New York.

554
00:29:33,240 --> 00:29:35,280
Speaker 2: Ti'm I said, boy, it's stark out there in Jackson

555
00:29:35,360 --> 00:29:38,720
Speaker 2: Hall for six twenty in the morning. Tom, is there

556
00:29:38,800 --> 00:29:44,240
Speaker 2: talk out there about the I guess the economic exceptionalism

557
00:29:44,280 --> 00:29:47,800
Speaker 2: of the US versus other parts of the world, because

558
00:29:47,840 --> 00:29:50,520
Speaker 2: I'm guessing there are folks out there from other parts

559
00:29:50,520 --> 00:29:51,000
Speaker 2: of the world.

560
00:29:52,800 --> 00:29:53,200
Speaker 4: There is.

561
00:29:53,240 --> 00:29:56,160
Speaker 7: It's written about Ambrose Evans. Pritchard had a sharp essay

562
00:29:56,160 --> 00:29:59,240
Speaker 7: in the Telegraph in the last twenty four hours asking

563
00:29:59,280 --> 00:30:02,959
Speaker 7: what does the world when the American exceptionalism ends? And

564
00:30:03,000 --> 00:30:06,320
Speaker 7: that's one of the worries about recession and GDP slowdown

565
00:30:06,960 --> 00:30:09,640
Speaker 7: and the rest. What I would suggest is, and particularly

566
00:30:09,880 --> 00:30:12,080
Speaker 7: you know, you come out to Wyoming, You come into

567
00:30:12,080 --> 00:30:15,680
Speaker 7: the airport here, Alex and there's forty seven golf streams

568
00:30:15,720 --> 00:30:19,840
Speaker 7: lined up. You know, the prosperity of the West, the

569
00:30:19,880 --> 00:30:23,680
Speaker 7: prosperity of technology is substantial in America. It's in your

570
00:30:23,680 --> 00:30:26,960
Speaker 7: face in Wyoming. And there's a real understanding that we

571
00:30:27,080 --> 00:30:30,479
Speaker 7: lead it that you just had on Dan Ives at

572
00:30:30,480 --> 00:30:33,880
Speaker 7: webbush lifting up as in Vidia estimate, and of course

573
00:30:33,920 --> 00:30:37,000
Speaker 7: at Vidia I believe it's August twenty eighth. Maybe I

574
00:30:37,040 --> 00:30:40,240
Speaker 7: don't think in Nvidia is more important than Chairman Paul's speech,

575
00:30:40,280 --> 00:30:41,240
Speaker 7: but maybe it's close.

576
00:30:41,640 --> 00:30:43,480
Speaker 2: Yeah, all right, we'll see. Yeah, we're gonna be all

577
00:30:43,520 --> 00:30:46,000
Speaker 2: locked in on that next week. Tom King, Thanks so

578
00:30:46,080 --> 00:30:49,320
Speaker 2: much for joining us. Appreciate your reporting out there. Tom Tompkin,

579
00:30:49,440 --> 00:30:52,440
Speaker 2: Bloomerg Surveillance. This is the Bloomberg Surveillance Podcast, bringing you

580
00:30:52,480 --> 00:30:55,960
Speaker 2: the best economics, geopolitics, finance, and investment. You can also

581
00:30:56,080 --> 00:30:59,560
Speaker 2: watch the show live on YouTube. Visit the Bloomberg Podcast

582
00:30:59,640 --> 00:31:02,680
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583
00:31:02,680 --> 00:31:05,120
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584
00:31:05,200 --> 00:31:08,440
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585
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586
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