1 00:00:03,240 --> 00:00:09,200 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 2 00:00:09,200 --> 00:00:13,200 Speaker 1: with Jonathan Ferrell and Lisa Brownowitz Jaily. We bring you 3 00:00:13,280 --> 00:00:18,600 Speaker 1: insight from the best and economics, finance, investment, and international relations. 4 00:00:18,960 --> 00:00:23,799 Speaker 1: Find Bloomberg Surveillance on Apple podcast, Suncloud, Bloomberg dot com, 5 00:00:23,920 --> 00:00:30,040 Speaker 1: and of course, on the Bloomberg terminal. Let's see if 6 00:00:30,040 --> 00:00:32,440 Speaker 1: Matt mainly of Miller Tayback is going to Fish. He 7 00:00:32,520 --> 00:00:34,680 Speaker 1: is the chief market strategist over there and is joining 8 00:00:34,760 --> 00:00:38,240 Speaker 1: us on this Tuesday morning. Matt, thank you so much 9 00:00:38,280 --> 00:00:41,520 Speaker 1: for being here. First things first, fish fan, yes, no, uh, 10 00:00:41,720 --> 00:00:43,640 Speaker 1: fish fan, but I will I will not be attending 11 00:00:43,800 --> 00:00:45,880 Speaker 1: any of the concerts here this year. I'm afraid I 12 00:00:46,040 --> 00:00:47,960 Speaker 1: won't be able to make it down. Let's say, okay, well, 13 00:00:47,960 --> 00:00:51,120 Speaker 1: the attendance that matters is your attendance here on Surveillance 14 00:00:51,120 --> 00:00:53,840 Speaker 1: this morning. So let's get to the actual pertinent market 15 00:00:54,120 --> 00:00:57,319 Speaker 1: conversation we talked about. Matt was talking about how four 16 00:00:57,400 --> 00:01:00,279 Speaker 1: thousand became the consensus. We may or may not actually 17 00:01:00,320 --> 00:01:02,480 Speaker 1: reached that level this year, but obviously that was after 18 00:01:02,560 --> 00:01:05,880 Speaker 1: expectations had to be dramatically reduced from what they were 19 00:01:05,920 --> 00:01:09,400 Speaker 1: at the start of two what we expected this year 20 00:01:09,440 --> 00:01:12,600 Speaker 1: would bring. Does that mean that expectations for three are 21 00:01:12,640 --> 00:01:17,199 Speaker 1: also perhaps overly optimistic. Well, I mean, it's funny because 22 00:01:17,240 --> 00:01:18,880 Speaker 1: one of the things is that that we have heard 23 00:01:18,880 --> 00:01:21,160 Speaker 1: a lot of bearishness around the street in the last 24 00:01:21,400 --> 00:01:23,880 Speaker 1: last couple of weeks, which is uh uh, you know, 25 00:01:23,920 --> 00:01:28,120 Speaker 1: the sentiments She's changed dramatically. But you're right, even though 26 00:01:28,160 --> 00:01:30,679 Speaker 1: people have become much more bearished, they're talking about things 27 00:01:30,720 --> 00:01:32,880 Speaker 1: dipping further. They think, well, don't worry, by the end 28 00:01:32,920 --> 00:01:35,920 Speaker 1: of the year, it'll be fine. Um, I'm a little 29 00:01:35,920 --> 00:01:37,959 Speaker 1: concerned about that. I mean, I do think the worst, 30 00:01:38,000 --> 00:01:39,600 Speaker 1: I mean, what won't happen by the end of the year. 31 00:01:39,600 --> 00:01:41,520 Speaker 1: I have somewhere in the middle of the year. But 32 00:01:41,640 --> 00:01:44,360 Speaker 1: the biggest problem I think that we face is that 33 00:01:44,440 --> 00:01:47,800 Speaker 1: when whenever the market gets to an extremely overvalued level, 34 00:01:48,120 --> 00:01:49,800 Speaker 1: like it did at the end of two thousand twenty 35 00:01:49,800 --> 00:01:53,240 Speaker 1: one this time last year, the uh, the bear market 36 00:01:53,240 --> 00:01:55,480 Speaker 1: always lasts longer than just a year or so. It's 37 00:01:55,560 --> 00:01:58,080 Speaker 1: usually last eighteen months or even a little bit longer. 38 00:01:58,480 --> 00:02:02,640 Speaker 1: That's number one. Number two is that the the evaluation levels. 39 00:02:02,840 --> 00:02:05,200 Speaker 1: I mean again, when you get to extreme valuation levels, 40 00:02:05,240 --> 00:02:07,760 Speaker 1: that we what we have. It takes a lot bigger 41 00:02:07,800 --> 00:02:10,799 Speaker 1: decline for the market to get back in line with 42 00:02:10,800 --> 00:02:13,880 Speaker 1: what what what would be a natural level of evaluations? Okay, 43 00:02:13,880 --> 00:02:17,200 Speaker 1: and so much to reach the bottom. But I don't 44 00:02:17,200 --> 00:02:19,000 Speaker 1: think that's the case. Yet. Give us a number, what 45 00:02:19,160 --> 00:02:21,560 Speaker 1: is fair value in a world of now four and 46 00:02:21,560 --> 00:02:24,639 Speaker 1: a half percent interest rates instead of zero? Well, that's 47 00:02:24,680 --> 00:02:27,440 Speaker 1: the thing. I mean, we have, uh, well to give 48 00:02:27,480 --> 00:02:29,799 Speaker 1: you a number at least thirty five d And that's 49 00:02:29,800 --> 00:02:31,600 Speaker 1: a suming we don't have a recession. That's a suthing 50 00:02:31,639 --> 00:02:34,160 Speaker 1: we don't get a decline uh and and and earnings 51 00:02:34,160 --> 00:02:36,960 Speaker 1: in two thousand twenty two, and every bear markets and 52 00:02:37,040 --> 00:02:41,839 Speaker 1: every recession since World War two has has given I'm sorry, 53 00:02:41,880 --> 00:02:44,600 Speaker 1: every recession, not every bear market, but every recession since 54 00:02:44,639 --> 00:02:47,200 Speaker 1: World War two has given a decline in earning. So 55 00:02:47,240 --> 00:02:49,359 Speaker 1: if we have a decline in earnings that next year, 56 00:02:49,800 --> 00:02:53,800 Speaker 1: that takes us again something below thirty I mean, people 57 00:02:53,840 --> 00:02:56,480 Speaker 1: have to forget that. People have to remember I'm sorry 58 00:02:56,680 --> 00:02:59,800 Speaker 1: that you that when you don't have zero interest rates 59 00:03:00,080 --> 00:03:03,520 Speaker 1: and you don't have qu e uh, you don't have 60 00:03:03,680 --> 00:03:05,960 Speaker 1: eighteen to twenty times forward earnings, you have something more 61 00:03:06,000 --> 00:03:09,079 Speaker 1: like fifteen and sixteen times four durnings. That's the fair value. 62 00:03:09,560 --> 00:03:12,840 Speaker 1: So do we need then to come down? I'm interested 63 00:03:12,880 --> 00:03:16,480 Speaker 1: really in the in the uh, the pees, the valuations, 64 00:03:16,520 --> 00:03:19,560 Speaker 1: because it's something I actually understand. So, um, you look 65 00:03:19,600 --> 00:03:23,639 Speaker 1: at forward pees right and we're trading at seventeen three 66 00:03:23,840 --> 00:03:27,080 Speaker 1: right now? Do we need to come down to fifteen 67 00:03:27,160 --> 00:03:30,160 Speaker 1: before this bear market can end? Is that also something 68 00:03:30,200 --> 00:03:34,079 Speaker 1: we've seen in every bear market exactly every single bear 69 00:03:34,200 --> 00:03:37,280 Speaker 1: market since since basically since World War Two. It certainly 70 00:03:37,280 --> 00:03:40,640 Speaker 1: over the last forty years you've seen at least fifteen 71 00:03:40,680 --> 00:03:43,360 Speaker 1: times forward earnings, if not lower. I mean, but that's 72 00:03:43,400 --> 00:03:45,880 Speaker 1: the very best we've note as fifteen times earnings. And 73 00:03:46,120 --> 00:03:49,040 Speaker 1: again the the the But when you get to all 74 00:03:49,280 --> 00:03:52,280 Speaker 1: these all time valuation levels, we certainly had it, uh 75 00:03:52,320 --> 00:03:54,880 Speaker 1: you know, stream valuations in two thousand seven and in 76 00:03:55,000 --> 00:03:57,720 Speaker 1: two thousand at the very beginning of two thousand. The 77 00:03:57,760 --> 00:04:00,240 Speaker 1: problem is you get all this addition of level reach 78 00:04:00,720 --> 00:04:02,960 Speaker 1: and so when the de risking process and the de 79 00:04:03,120 --> 00:04:06,320 Speaker 1: leveraging process takes longer than just one year, and people 80 00:04:06,320 --> 00:04:09,120 Speaker 1: like well Jesus come down so much, that's enough. It's like, actually, 81 00:04:09,120 --> 00:04:12,560 Speaker 1: not until we get those valuation levels, because the the 82 00:04:12,560 --> 00:04:15,520 Speaker 1: the the leverage gets so far to one side, it 83 00:04:15,520 --> 00:04:18,360 Speaker 1: has to swing to the other one as people de leverage, 84 00:04:18,400 --> 00:04:19,920 Speaker 1: and they have to I hate to say it, but 85 00:04:19,960 --> 00:04:22,520 Speaker 1: they get forced selling. They sell even though they've reached 86 00:04:22,520 --> 00:04:24,800 Speaker 1: fairly value. They sell because even when they don't have to, 87 00:04:24,880 --> 00:04:27,479 Speaker 1: because they're getting margin calls and such. And that's why 88 00:04:27,520 --> 00:04:29,479 Speaker 1: the market swings to the other action. It's not just 89 00:04:29,560 --> 00:04:32,480 Speaker 1: a thing. There's a ra actual reason why we get 90 00:04:33,080 --> 00:04:35,400 Speaker 1: a swing to the other extreme. And so we'll probably 91 00:04:35,400 --> 00:04:38,040 Speaker 1: get something below fifteen times there before we actually bottom. 92 00:04:38,120 --> 00:04:39,839 Speaker 1: So how long will it take? I always think of 93 00:04:39,839 --> 00:04:42,200 Speaker 1: the age of de leveraging by Gary Shilling, which was 94 00:04:42,240 --> 00:04:45,640 Speaker 1: a financial crisis thing right, took us a decade to 95 00:04:45,680 --> 00:04:48,760 Speaker 1: get through that. Um, are we looking at that kind 96 00:04:48,800 --> 00:04:51,320 Speaker 1: of leverage again or is it not nearly as serious? 97 00:04:51,320 --> 00:04:53,680 Speaker 1: So we could be done with it in three the 98 00:04:53,760 --> 00:04:56,920 Speaker 1: de leveraging that is well, I mean, it certainly could 99 00:04:56,920 --> 00:04:59,240 Speaker 1: happen a bottom out in two twenty three, but I 100 00:04:59,279 --> 00:05:01,000 Speaker 1: just think it happens at a lower level. I mean, 101 00:05:01,000 --> 00:05:03,839 Speaker 1: what I guess the question is how much does does 102 00:05:03,960 --> 00:05:06,160 Speaker 1: does the FED willing to to to let it the 103 00:05:06,480 --> 00:05:09,159 Speaker 1: leveraging take place? I mean, when I always put back 104 00:05:09,480 --> 00:05:11,800 Speaker 1: point back to its two thousand and eighteen you know, 105 00:05:11,839 --> 00:05:14,600 Speaker 1: everybody says, well Jesus, stock markets started to crumble so 106 00:05:14,600 --> 00:05:17,000 Speaker 1: bad that the FED was forced to pivot, But wasn't 107 00:05:17,000 --> 00:05:19,200 Speaker 1: the stock market. They actually in the middle of December 108 00:05:19,279 --> 00:05:20,960 Speaker 1: that year, right in the middle, they said, hey, the 109 00:05:20,960 --> 00:05:23,600 Speaker 1: markets get down a lot, We don't care. We're gonna 110 00:05:23,680 --> 00:05:27,520 Speaker 1: keep keep tightening. Then two to three weeks later, the 111 00:05:27,680 --> 00:05:31,320 Speaker 1: fixed income market, the jump farm market, just imploded, and 112 00:05:31,400 --> 00:05:34,800 Speaker 1: that's when they pivoted. So they're much more concerned that 113 00:05:34,920 --> 00:05:37,120 Speaker 1: what's what's going on in the fixed income market. And 114 00:05:37,200 --> 00:05:39,640 Speaker 1: right now, even though it's down quite a bit, it's 115 00:05:39,640 --> 00:05:42,800 Speaker 1: still running fine. So we may get a pivot later 116 00:05:42,839 --> 00:05:44,840 Speaker 1: on this year from the from the from the from 117 00:05:44,839 --> 00:05:47,400 Speaker 1: the Federal Reserve where they actually start cutting rates. But 118 00:05:47,480 --> 00:05:50,200 Speaker 1: that's gonna be happened when something, when the situation is 119 00:05:50,240 --> 00:05:52,280 Speaker 1: gonna become much more dire than it is now. If 120 00:05:52,320 --> 00:05:55,880 Speaker 1: we just have this slow grind lower, the Fed's gonna 121 00:05:55,920 --> 00:05:58,680 Speaker 1: keep interest rates at high levels, even if they stopped 122 00:05:58,680 --> 00:06:01,880 Speaker 1: cutting i'm sorry, stopped races in any kind of any 123 00:06:01,920 --> 00:06:04,720 Speaker 1: kind of way. Not finally, well, none of us probably 124 00:06:04,760 --> 00:06:07,360 Speaker 1: could have seen what the FED did this year coming 125 00:06:07,480 --> 00:06:08,800 Speaker 1: at the start of it, we couldn't have seen the 126 00:06:08,839 --> 00:06:10,760 Speaker 1: war in Ukraine, so many things. I think also many 127 00:06:10,800 --> 00:06:13,800 Speaker 1: of us weren't anticipating that in two we would see 128 00:06:13,839 --> 00:06:17,159 Speaker 1: essentially the full reopening of the Chinese economy. Many of 129 00:06:17,200 --> 00:06:18,599 Speaker 1: us thought it was just something that was going to 130 00:06:18,680 --> 00:06:22,160 Speaker 1: take much longer. If you have unleashing of commodity demand 131 00:06:22,240 --> 00:06:25,880 Speaker 1: from China, how does that fuel back into those prices, 132 00:06:25,880 --> 00:06:28,599 Speaker 1: and frankly the energy sector, which has already run so 133 00:06:28,680 --> 00:06:32,880 Speaker 1: far this year, how much more upside could there be? Well? 134 00:06:32,920 --> 00:06:35,560 Speaker 1: I think that can it can be more upside. I mean, 135 00:06:35,600 --> 00:06:37,680 Speaker 1: as you say, with what China reopen, you see the 136 00:06:37,760 --> 00:06:42,240 Speaker 1: commodities bouncing back, and that could continue, especially if the 137 00:06:42,360 --> 00:06:45,200 Speaker 1: dollar continues to move lower. If there's one thing that 138 00:06:45,560 --> 00:06:48,720 Speaker 1: we've been a good uh correlation or inverse correlation has 139 00:06:48,760 --> 00:06:51,279 Speaker 1: been the dollar and over time has been the dollar 140 00:06:51,760 --> 00:06:55,000 Speaker 1: and commodity prices, especially with oil and gold for that matter. 141 00:06:55,240 --> 00:06:58,280 Speaker 1: But the thing is, though, is that you know, if 142 00:06:58,320 --> 00:07:00,799 Speaker 1: you look at the way the valuations are are trading 143 00:07:01,040 --> 00:07:03,960 Speaker 1: for the energy sector, it's still trading for for oil, 144 00:07:04,000 --> 00:07:07,040 Speaker 1: trading out like sixties sixty five dollars UH, and it 145 00:07:07,080 --> 00:07:09,040 Speaker 1: seems like, oh, pick wants to keep it at seventy 146 00:07:09,040 --> 00:07:11,440 Speaker 1: dollars are higher, and now with the reopening of China, 147 00:07:11,800 --> 00:07:13,400 Speaker 1: you know we could get you know, pushed back towards 148 00:07:13,600 --> 00:07:16,240 Speaker 1: the hundred dollar level. That's gonna be bullish for these equities. 149 00:07:16,240 --> 00:07:17,920 Speaker 1: They still have, believe it or not, they still have 150 00:07:18,040 --> 00:07:20,040 Speaker 1: ways to go to play catch up to the price 151 00:07:20,080 --> 00:07:22,440 Speaker 1: of oil, even though it's rallied, even though they've rallied 152 00:07:22,480 --> 00:07:24,720 Speaker 1: so much this year. So I still I still remain 153 00:07:24,760 --> 00:07:27,880 Speaker 1: bullish on the energy sector throughout most most of this year. 154 00:07:28,080 --> 00:07:30,080 Speaker 1: All Right, Matt, thanks so much for joining us. Matt 155 00:07:30,080 --> 00:07:32,120 Speaker 1: Mailli there of Miller tay Back, he has been bullish 156 00:07:32,120 --> 00:07:34,600 Speaker 1: on the energy detector. And if you ever decide to 157 00:07:34,880 --> 00:07:37,080 Speaker 1: cash out of some of those deals, we can buy 158 00:07:37,080 --> 00:07:40,080 Speaker 1: some nosebleed seats at Madison Square Gardens and will stub 159 00:07:40,200 --> 00:07:43,360 Speaker 1: down to the floor for the fifth show this New 160 00:07:43,440 --> 00:07:56,400 Speaker 1: Year's even Let's get over to Julia Coronado. She is 161 00:07:56,480 --> 00:08:00,000 Speaker 1: president at Macro Policy Perspectives, joining us from a very 162 00:08:00,160 --> 00:08:03,680 Speaker 1: chili Austin, Texas this morning. Juliet, great to see you. 163 00:08:03,960 --> 00:08:06,600 Speaker 1: We were speaking with Steve Sasnake of Interactive Brokers at 164 00:08:06,600 --> 00:08:08,400 Speaker 1: the top of the hour and he was talking about 165 00:08:08,480 --> 00:08:12,480 Speaker 1: markets now that are still fighting the Fed. How hard 166 00:08:12,560 --> 00:08:14,720 Speaker 1: is the Fed going to have to fight back in 167 00:08:14,760 --> 00:08:18,920 Speaker 1: the new year. Well, the Fed has sort of shifted 168 00:08:19,000 --> 00:08:23,760 Speaker 1: its strategy. It's sort of signaled both hawkish stance at 169 00:08:23,760 --> 00:08:27,200 Speaker 1: the December meeting in the sense that the consensus on 170 00:08:27,200 --> 00:08:30,480 Speaker 1: the committee is higher race than the market is currently pricing. 171 00:08:30,760 --> 00:08:33,520 Speaker 1: But they also sort of signaled a down shift in 172 00:08:33,600 --> 00:08:37,560 Speaker 1: the pace, another down shift to twenty five basis points 173 00:08:37,559 --> 00:08:41,120 Speaker 1: per meeting, and that allows them, i think, to both 174 00:08:41,200 --> 00:08:43,760 Speaker 1: proceed with caution and feel their way to what is 175 00:08:43,840 --> 00:08:47,720 Speaker 1: the right sort of restrictive degree of restriction to put 176 00:08:47,760 --> 00:08:51,600 Speaker 1: in place, and also hold the threat of rate hikes 177 00:08:51,720 --> 00:08:55,360 Speaker 1: over the market for longer. Share Powell has been frustrated 178 00:08:55,400 --> 00:08:58,880 Speaker 1: by some of these rallies in the market, these undesirable 179 00:08:58,960 --> 00:09:02,319 Speaker 1: rallies that ease financial conditions, when they're trying to slow 180 00:09:02,360 --> 00:09:06,880 Speaker 1: the economy down by by holding a longer string of 181 00:09:06,960 --> 00:09:09,760 Speaker 1: rate hikes over the market. I think that they hope 182 00:09:09,800 --> 00:09:13,360 Speaker 1: to kind of prevent that relief rally that you're sort 183 00:09:13,360 --> 00:09:17,400 Speaker 1: of alluding to, Uh, that that they can hold markets 184 00:09:17,440 --> 00:09:19,960 Speaker 1: in check for a little bit longer and make sure 185 00:09:20,080 --> 00:09:23,680 Speaker 1: that the economy really does cool down enough to cool 186 00:09:23,679 --> 00:09:27,320 Speaker 1: those underlying inflation pressures. Well, on that note, Julie, if 187 00:09:27,320 --> 00:09:29,000 Speaker 1: it really all is going to come down to the 188 00:09:29,040 --> 00:09:31,280 Speaker 1: trajectory of inflation. I love the way that our team 189 00:09:31,280 --> 00:09:33,720 Speaker 1: at Bloombrick Economics put it when they release their inflation 190 00:09:33,720 --> 00:09:36,760 Speaker 1: outlook for three uh this morning, saying, the story of 191 00:09:36,800 --> 00:09:41,079 Speaker 1: two was how fast inflation rose. The story of three 192 00:09:41,120 --> 00:09:44,640 Speaker 1: will be how fast it falls. What is your expectation 193 00:09:44,760 --> 00:09:48,520 Speaker 1: on that speed? Yeah, so I think it's going to 194 00:09:48,640 --> 00:09:51,160 Speaker 1: really gather steam in the latter part of the year, 195 00:09:51,160 --> 00:09:53,720 Speaker 1: and we sort of all know that there's these leading 196 00:09:53,760 --> 00:09:59,400 Speaker 1: indicators of housing of rental inflation that have really rolled over, 197 00:09:59,440 --> 00:10:01,480 Speaker 1: but we know it's a lag from the time that 198 00:10:01,600 --> 00:10:04,640 Speaker 1: happens to when it feeds into the official inflation metrics 199 00:10:04,640 --> 00:10:08,320 Speaker 1: that the FED is targeting, and that leg should should 200 00:10:08,320 --> 00:10:11,720 Speaker 1: be kicking in sort of towards the latter part of three. 201 00:10:12,160 --> 00:10:14,040 Speaker 1: In the first half of the year, they're going to 202 00:10:14,160 --> 00:10:18,640 Speaker 1: be dealing with stickiness, those second round effects from higher 203 00:10:18,679 --> 00:10:22,040 Speaker 1: wages and higher prices and the pipeline that sometimes ripple 204 00:10:22,120 --> 00:10:25,199 Speaker 1: through into services. So they've kind of broken inflation into 205 00:10:25,240 --> 00:10:29,319 Speaker 1: three buckets. The goods inflation that was disrupted by the pandemic. 206 00:10:29,920 --> 00:10:34,440 Speaker 1: Rental housing inflation the single biggest component of core inflation, 207 00:10:34,840 --> 00:10:38,040 Speaker 1: and then sort of all other services inflation. And that's 208 00:10:38,040 --> 00:10:42,000 Speaker 1: really where they're taking the temperature of the labor market, 209 00:10:42,360 --> 00:10:47,080 Speaker 1: of consumer price sensitivity. Uh, that really hasn't it's sort 210 00:10:47,080 --> 00:10:50,600 Speaker 1: of stabilized at a high rate. Uh. They'd like to 211 00:10:50,640 --> 00:10:53,320 Speaker 1: see that come down, and that that probably is going 212 00:10:53,360 --> 00:10:56,400 Speaker 1: to take some time. Isn't the third bucket the hardest, Julie. 213 00:10:56,440 --> 00:11:00,440 Speaker 1: I mean, from my understanding, services is the hardest uh, 214 00:11:00,840 --> 00:11:04,920 Speaker 1: piece of inflation for the FED to effect because you know, 215 00:11:05,160 --> 00:11:09,240 Speaker 1: with goods um certainly with something like you know, car 216 00:11:09,320 --> 00:11:12,760 Speaker 1: sales or home sales, they can easily raise rates and 217 00:11:12,840 --> 00:11:15,439 Speaker 1: limit the number of buyers who can afford to come in. 218 00:11:15,440 --> 00:11:18,080 Speaker 1: In terms of services, do they have to just cause 219 00:11:18,240 --> 00:11:21,240 Speaker 1: real economic pain to bring those prices down? Do they 220 00:11:21,280 --> 00:11:23,760 Speaker 1: have to you know, knock mom and dad out of 221 00:11:23,800 --> 00:11:26,360 Speaker 1: work today to put people on the unemployment line in 222 00:11:26,440 --> 00:11:30,240 Speaker 1: order to get services inflation down? You know that there 223 00:11:30,400 --> 00:11:34,560 Speaker 1: that's one possible outcome. We don't really know for sure, 224 00:11:34,640 --> 00:11:38,480 Speaker 1: but I will say this, the pandemic disrupted services inflation 225 00:11:38,520 --> 00:11:42,760 Speaker 1: as well as goods inflation. Think about hotel rates, airfares. 226 00:11:43,080 --> 00:11:46,520 Speaker 1: They've done a lot of busting and booming through the 227 00:11:46,640 --> 00:11:51,439 Speaker 1: various opening closing waves um and we've seen that. Actually, 228 00:11:51,960 --> 00:11:55,120 Speaker 1: one of the key tests here is that when will 229 00:11:55,200 --> 00:11:59,920 Speaker 1: consumers become more price sensitive like they were before the pandemic. 230 00:12:00,120 --> 00:12:03,160 Speaker 1: For the pandemic, it was notorious that there was no 231 00:12:03,280 --> 00:12:07,160 Speaker 1: pricing power. Consumers were budget conscious, they wanted deals, and 232 00:12:07,200 --> 00:12:09,439 Speaker 1: then that all went away when all they could buy 233 00:12:09,600 --> 00:12:12,760 Speaker 1: was good in the in the lockdowns during the pandemic. 234 00:12:13,200 --> 00:12:15,880 Speaker 1: Now and then reopening, there was this sort of revenge 235 00:12:15,960 --> 00:12:19,760 Speaker 1: travel idea. Uh, now we're sort of settling into a 236 00:12:19,800 --> 00:12:23,400 Speaker 1: more normal consumer. I think we saw that this holiday season. 237 00:12:23,720 --> 00:12:27,800 Speaker 1: Consumers do want deals. They are aware of the limitations 238 00:12:27,880 --> 00:12:30,720 Speaker 1: of this boom that we've been in in the last 239 00:12:30,800 --> 00:12:33,719 Speaker 1: year and a half. They're more aware that there are 240 00:12:33,760 --> 00:12:37,880 Speaker 1: clouds on the economic horizon, and they're responding accordingly with 241 00:12:38,000 --> 00:12:41,760 Speaker 1: being price sensitive. And that's really key to cooling inflation 242 00:12:41,960 --> 00:12:46,480 Speaker 1: without a deep recession, is that consumers start demanding deals 243 00:12:46,520 --> 00:12:49,840 Speaker 1: again and that companies are going to have to you know, 244 00:12:50,160 --> 00:12:53,200 Speaker 1: meet them in the middle. But they haven't had to 245 00:12:53,320 --> 00:12:56,000 Speaker 1: think about these passed through of of of car costs 246 00:12:56,000 --> 00:13:00,679 Speaker 1: that you just mentioned unimaginable a couple of years that 247 00:13:00,760 --> 00:13:04,280 Speaker 1: consumers would simply accept a fifty percent increase and used 248 00:13:04,320 --> 00:13:07,680 Speaker 1: car prices. Uh So. But consumers now they've got a 249 00:13:07,720 --> 00:13:10,800 Speaker 1: broader basket of goods and services they can spend on. 250 00:13:11,160 --> 00:13:14,120 Speaker 1: We saw that with air affairs, Matt. We saw that 251 00:13:14,280 --> 00:13:18,320 Speaker 1: somewhere around the fall, consumers started canceling trips if they 252 00:13:18,320 --> 00:13:21,560 Speaker 1: couldn't find the right airfairs. They were deal hunting, uh 253 00:13:21,600 --> 00:13:24,280 Speaker 1: and airlines had to respond accordingly. So I think we're 254 00:13:24,320 --> 00:13:29,000 Speaker 1: getting back into a more normal zone of consumer price sensitivity, 255 00:13:29,040 --> 00:13:32,560 Speaker 1: and that's that's really key because that would allow the 256 00:13:32,600 --> 00:13:37,280 Speaker 1: Fed to cool that services inflation without a very deep recession. 257 00:13:37,520 --> 00:13:40,079 Speaker 1: What about people waiting because consumers go back to their 258 00:13:40,120 --> 00:13:43,440 Speaker 1: old bargain hunting ways, Julia, You know a lot of 259 00:13:43,440 --> 00:13:47,679 Speaker 1: people in the housing market currently are on the sidelines 260 00:13:47,760 --> 00:13:52,520 Speaker 1: because they're looking at six seven percent, eight percent mortgages. 261 00:13:52,600 --> 00:13:54,360 Speaker 1: Maybe a lot of people, you know, I want to 262 00:13:54,400 --> 00:13:57,040 Speaker 1: buy um this year. Next year, I want to buy 263 00:13:57,120 --> 00:14:01,360 Speaker 1: the last Dodge Challenger Hellcat. They'll never make one again, 264 00:14:02,559 --> 00:14:06,520 Speaker 1: I think the fifteenth year then building that gigantic muscle 265 00:14:06,559 --> 00:14:09,640 Speaker 1: car and they'll never build one again. But Chrysler right 266 00:14:09,679 --> 00:14:12,600 Speaker 1: now is offering me seven point to nine percent. I'm 267 00:14:12,600 --> 00:14:15,040 Speaker 1: not going to finance at that rate if I wait 268 00:14:15,160 --> 00:14:18,040 Speaker 1: till the end of three. Are those borrowing costs gonna 269 00:14:18,080 --> 00:14:20,840 Speaker 1: come back down by the end of twenty three? But 270 00:14:20,880 --> 00:14:25,560 Speaker 1: remember we have to go through the soft pat or 271 00:14:25,720 --> 00:14:30,040 Speaker 1: recession first before we get to that relief. The rates 272 00:14:30,040 --> 00:14:33,920 Speaker 1: are high right now to cause the pain that you're describing, 273 00:14:33,960 --> 00:14:36,280 Speaker 1: to cause the reaction of you know what, I'm not 274 00:14:36,320 --> 00:14:38,640 Speaker 1: going to buy this car because rates are too high. 275 00:14:38,640 --> 00:14:41,800 Speaker 1: I'm not going to buy this house because rates are 276 00:14:41,880 --> 00:14:44,560 Speaker 1: too high. That is the demand cooling the FED is 277 00:14:44,680 --> 00:14:48,000 Speaker 1: looking for, and we are seeing it. We have seen, 278 00:14:48,080 --> 00:14:53,160 Speaker 1: despite better production of new cars, more better availability, car 279 00:14:53,240 --> 00:14:56,440 Speaker 1: sales have been kind of languishing still because the right 280 00:14:56,760 --> 00:15:00,400 Speaker 1: rates of financing a car loan have shot up oh much. 281 00:15:00,440 --> 00:15:04,120 Speaker 1: Consumers are looking at a big jump in payments uh 282 00:15:04,160 --> 00:15:07,720 Speaker 1: for for a new car or or any car, and 283 00:15:07,800 --> 00:15:12,320 Speaker 1: so they're responding accordingly. We're seeing used car prices fall 284 00:15:12,480 --> 00:15:16,320 Speaker 1: pretty consistently in the last few months after soaring in 285 00:15:16,360 --> 00:15:19,200 Speaker 1: the last couple of years, and we first saw some 286 00:15:19,360 --> 00:15:23,880 Speaker 1: softness in new car pricing in the last inflation report. 287 00:15:24,000 --> 00:15:26,440 Speaker 1: We would expect that to follow through into the first 288 00:15:26,440 --> 00:15:29,800 Speaker 1: half of the year. Some actual discounts on M S 289 00:15:29,920 --> 00:15:33,480 Speaker 1: R P imagine that if you will, all right, Julia 290 00:15:33,480 --> 00:15:36,880 Speaker 1: Coronado of Macro Policy Perspectives, thank you so much for 291 00:15:37,040 --> 00:15:44,000 Speaker 1: joining us. Let's bring in Dr Bakti Hansatti. She's Associate 292 00:15:44,040 --> 00:15:47,480 Speaker 1: professor of Emergency Medicine at Johns Hopkins. Great to see you. 293 00:15:47,480 --> 00:15:50,440 Speaker 1: It has been a while since we've spoken. If we 294 00:15:50,480 --> 00:15:53,120 Speaker 1: could just think about China in particular in terms of 295 00:15:53,160 --> 00:15:56,640 Speaker 1: the remaining COVID story, What is your expectation for what 296 00:15:56,840 --> 00:15:59,520 Speaker 1: is going to happen there given the vaccination rates that 297 00:15:59,560 --> 00:16:01,880 Speaker 1: they have, even now that there's been practically an entire 298 00:16:01,960 --> 00:16:06,600 Speaker 1: removal of restrictions, When could China reach a peak in cases? 299 00:16:08,080 --> 00:16:10,440 Speaker 1: I think it's really hard to say onto your question 300 00:16:10,480 --> 00:16:12,320 Speaker 1: when can they reach a peak? Because we just don't 301 00:16:12,360 --> 00:16:15,840 Speaker 1: have accurate reporting data from the National Health Commission UM 302 00:16:15,880 --> 00:16:19,160 Speaker 1: side is trying to stop reporting cases. We're relied on 303 00:16:19,200 --> 00:16:23,240 Speaker 1: the China CDC, who traditionally does monthly reporting um and 304 00:16:23,280 --> 00:16:25,800 Speaker 1: we have not seen numbers coming out of China. So 305 00:16:26,080 --> 00:16:29,160 Speaker 1: when can they heat get a peak? I honestly don't know, 306 00:16:29,360 --> 00:16:31,800 Speaker 1: but what we're seeing is that it's been a rapid 307 00:16:31,800 --> 00:16:35,400 Speaker 1: surge similar to the delta and the omicron waves in 308 00:16:35,480 --> 00:16:37,600 Speaker 1: most countries. When we went through delta and omicron, we 309 00:16:37,680 --> 00:16:40,320 Speaker 1: sort of peak at six weeks. So I'm praying for 310 00:16:40,360 --> 00:16:43,960 Speaker 1: them that this is fast and rapid and resolve soon. 311 00:16:44,760 --> 00:16:47,400 Speaker 1: We also do know that China has high vaccination rates, 312 00:16:47,440 --> 00:16:51,240 Speaker 1: so over ninety two of individuals fully vaccinated, and we 313 00:16:51,280 --> 00:16:54,160 Speaker 1: have also heard that Chinese have access to all anti 314 00:16:54,200 --> 00:16:58,280 Speaker 1: virals that will decrease hospitalizations and depths. So you know, 315 00:16:58,320 --> 00:17:00,880 Speaker 1: they are similar to the US in that there is 316 00:17:01,240 --> 00:17:05,639 Speaker 1: innate immune protection available to individuals, and that we know 317 00:17:05,720 --> 00:17:09,280 Speaker 1: that they're likely sick with the newer variants which have 318 00:17:09,400 --> 00:17:12,680 Speaker 1: a much much more much more transmissible and so much 319 00:17:12,680 --> 00:17:15,560 Speaker 1: more likely to peak early. So this newer variant, it's 320 00:17:15,560 --> 00:17:17,439 Speaker 1: not delta, it's not O macron. Do we have a 321 00:17:17,440 --> 00:17:20,199 Speaker 1: new name for it? And what else do we know 322 00:17:20,240 --> 00:17:24,480 Speaker 1: about it? Besides the transmissibility. We have lumbas and lettas, 323 00:17:24,560 --> 00:17:26,600 Speaker 1: so we have moved away from names. We have be 324 00:17:26,760 --> 00:17:30,200 Speaker 1: A one point one, B A five b A five 325 00:17:30,240 --> 00:17:33,600 Speaker 1: point one is cute, so we know in trans and transmissive, 326 00:17:33,720 --> 00:17:36,240 Speaker 1: I know, right, but we run out of names A 327 00:17:36,240 --> 00:17:39,920 Speaker 1: long time ago. So we know that in terms of transmissibility, 328 00:17:40,040 --> 00:17:42,720 Speaker 1: within two to three days of individuals come in contact 329 00:17:42,800 --> 00:17:45,280 Speaker 1: on this COVID positive that they'll be symptomatic. We know 330 00:17:45,400 --> 00:17:49,240 Speaker 1: that at five days, individuals will get sicker, requiring hospitalization 331 00:17:49,640 --> 00:17:52,919 Speaker 1: and needing therapeutic treatment. We know that as quickly as 332 00:17:52,960 --> 00:17:55,520 Speaker 1: it comes on, it goes off, So individuals are most 333 00:17:55,520 --> 00:17:59,480 Speaker 1: likely to be symptom free within ten days. I don't 334 00:17:59,480 --> 00:18:01,040 Speaker 1: want to wear a mask. Do we have to wear 335 00:18:01,119 --> 00:18:04,560 Speaker 1: masks again? I don't think I'm going to. It defends 336 00:18:04,600 --> 00:18:07,159 Speaker 1: who you are, right, I don't know you. But if 337 00:18:07,200 --> 00:18:10,040 Speaker 1: I did know you, and I knew you were immun compromise, 338 00:18:10,520 --> 00:18:14,840 Speaker 1: Oh you had a disease that made you vulnerable to 339 00:18:14,920 --> 00:18:17,600 Speaker 1: getting really really sick from COVID, or you're an individual 340 00:18:17,680 --> 00:18:21,920 Speaker 1: in whom the oral anti virals were unavailable, I would 341 00:18:21,920 --> 00:18:25,200 Speaker 1: say where a mosque um. I will say, though wearing 342 00:18:25,200 --> 00:18:28,119 Speaker 1: a mosque is tough, we are exhausted as a nation. 343 00:18:28,880 --> 00:18:31,240 Speaker 1: M that you need to assess your own risk, and 344 00:18:31,320 --> 00:18:35,520 Speaker 1: every American has agency to make those decisions. I was 345 00:18:35,800 --> 00:18:38,080 Speaker 1: speaking with Matt earlier about how so many people I 346 00:18:38,119 --> 00:18:40,960 Speaker 1: know are sick right now. Some of them are COVID positive. 347 00:18:40,960 --> 00:18:43,199 Speaker 1: It seems like I know more COVID positive people than 348 00:18:43,240 --> 00:18:45,680 Speaker 1: I have in probably a year. But there are also 349 00:18:45,720 --> 00:18:48,680 Speaker 1: a number of people who are just ill, whether that's 350 00:18:48,720 --> 00:18:51,840 Speaker 1: the flu or sinus infections. I myself feel like I 351 00:18:51,880 --> 00:18:54,360 Speaker 1: have been getting sick way more often than I ever 352 00:18:54,480 --> 00:18:58,960 Speaker 1: did pre pandemic. I'm just wondering, like long term health ramifications, 353 00:18:59,560 --> 00:19:01,840 Speaker 1: if people are getting more sick, whether because that we've 354 00:19:01,840 --> 00:19:04,760 Speaker 1: suppressed our immune systems by wearing masks and not interacting 355 00:19:04,760 --> 00:19:07,679 Speaker 1: with people and we're getting just are we going to 356 00:19:07,720 --> 00:19:10,200 Speaker 1: be more sick more often, especially now that COVID is 357 00:19:10,240 --> 00:19:12,920 Speaker 1: probably going to be circulating in the population some time 358 00:19:12,960 --> 00:19:14,760 Speaker 1: to come as a seasonal virus. Maybe Doc, you can 359 00:19:14,800 --> 00:19:17,359 Speaker 1: solve something that an argument that we have at the 360 00:19:17,400 --> 00:19:21,720 Speaker 1: Miller household. My wife wears masks all the time and constantly, 361 00:19:22,520 --> 00:19:25,800 Speaker 1: uh what do you call this? No? Not what She's 362 00:19:25,880 --> 00:19:31,679 Speaker 1: using hand sanitizer all the time right, like it's an addiction. 363 00:19:32,240 --> 00:19:35,800 Speaker 1: I never use it and don't wear masks. I never 364 00:19:35,840 --> 00:19:39,760 Speaker 1: get sick, and she constantly does. Have have people who 365 00:19:39,760 --> 00:19:44,040 Speaker 1: are overprotective of their immune systems allowed them to weaken 366 00:19:44,359 --> 00:19:46,040 Speaker 1: so that they get sick so much? Or is this 367 00:19:46,160 --> 00:19:51,240 Speaker 1: just coincidence and coincidence in my anecdotal um home life. 368 00:19:52,320 --> 00:19:55,800 Speaker 1: So again the easy clounces here and I in my house, 369 00:19:55,840 --> 00:19:59,000 Speaker 1: so we joke I've had more viruses and pumpkin spice lattees. 370 00:19:59,080 --> 00:20:01,040 Speaker 1: But I'm the mom with young kids. I have a 371 00:20:01,080 --> 00:20:02,840 Speaker 1: five year old and a two year old, right, and 372 00:20:02,840 --> 00:20:06,359 Speaker 1: they're bringing stuff from home. So I think what's really 373 00:20:06,359 --> 00:20:09,120 Speaker 1: going on here is, yes, we have not been as 374 00:20:09,160 --> 00:20:12,600 Speaker 1: exposed in the last two years um as we should 375 00:20:12,600 --> 00:20:17,640 Speaker 1: have been to common household colds two different entraviruses, coronaviruses 376 00:20:17,680 --> 00:20:21,480 Speaker 1: and colds. Also, however, if you look at the current 377 00:20:21,560 --> 00:20:24,959 Speaker 1: strains of RSP and flu, they are more virulent than 378 00:20:25,000 --> 00:20:28,200 Speaker 1: they have been previously. This happens with the flu. Every 379 00:20:28,240 --> 00:20:30,760 Speaker 1: five to seven years, you get a flu variant that 380 00:20:30,960 --> 00:20:34,359 Speaker 1: is more aggressive than previous. So I think it's a 381 00:20:34,400 --> 00:20:37,399 Speaker 1: combination of two. Right, last year we weren't exposed. We 382 00:20:37,480 --> 00:20:40,320 Speaker 1: don't have any animate community. On top of that, we 383 00:20:40,359 --> 00:20:43,399 Speaker 1: have a flu in an RSB season that is also 384 00:20:43,480 --> 00:20:46,520 Speaker 1: hitting us really hard. Are we about to become a 385 00:20:46,600 --> 00:20:50,080 Speaker 1: nation that's constantly sick? I don't think so. Um, does 386 00:20:50,119 --> 00:20:52,600 Speaker 1: your wife of a week immune system compared to you 387 00:20:53,160 --> 00:20:56,320 Speaker 1: probably not. She's probably just exposed. Maybe she's at home 388 00:20:56,359 --> 00:20:59,439 Speaker 1: looking after kids. Maybe she's out there doing things in 389 00:20:59,440 --> 00:21:02,719 Speaker 1: the community, see going grocery shopping. Um, and you are 390 00:21:02,720 --> 00:21:05,399 Speaker 1: in the studio and you're more protected. I think it 391 00:21:05,480 --> 00:21:07,639 Speaker 1: all depends on what our lives look like and what 392 00:21:07,680 --> 00:21:11,040 Speaker 1: our exposures are and thus what we are likely to 393 00:21:11,080 --> 00:21:14,399 Speaker 1: be inflicted with. All right, Doc, thanks so much for 394 00:21:14,520 --> 00:21:17,840 Speaker 1: joining us. Pleasure talking to you again, although hopefully it's 395 00:21:17,840 --> 00:21:21,120 Speaker 1: not too often, right because um, when we're all healthier, 396 00:21:21,240 --> 00:21:24,760 Speaker 1: we see we see you less often. Dr Vaki Hans 397 00:21:24,760 --> 00:21:27,399 Speaker 1: Hottie there of Johns Hopkins talking to us about this 398 00:21:27,440 --> 00:21:31,480 Speaker 1: wave that we're seeing, and it's I don't think it's anecdotal, right, 399 00:21:31,520 --> 00:21:33,800 Speaker 1: We have the data to backup that we really do 400 00:21:33,920 --> 00:21:36,440 Speaker 1: see it coming back in a pretty serious way, and 401 00:21:36,480 --> 00:21:41,600 Speaker 1: hopefully it's just more transmissible and not as that as fatal. 402 00:21:53,119 --> 00:21:56,040 Speaker 1: Let's talk about what to expect in terms of policy 403 00:21:56,240 --> 00:22:00,159 Speaker 1: in this divided Congress that we will see sworn to 404 00:22:00,280 --> 00:22:04,159 Speaker 1: kick off three. Isaac Boltanski joins US policy research director 405 00:22:04,200 --> 00:22:08,119 Speaker 1: at b T I G. And Isaac, you've looked deeply 406 00:22:08,320 --> 00:22:11,520 Speaker 1: into what's happening in terms of the legislative agenda for 407 00:22:11,600 --> 00:22:15,080 Speaker 1: next year, even before we're finished with the legislative agenda 408 00:22:15,160 --> 00:22:19,760 Speaker 1: for two Do we finish everything here? Does the Congress 409 00:22:19,800 --> 00:22:22,919 Speaker 1: just call it quits and start afresh? Um, what are 410 00:22:22,920 --> 00:22:27,720 Speaker 1: you concerned about business that hasn't been done yet? Well, 411 00:22:27,760 --> 00:22:31,600 Speaker 1: this was actually a very busy Congress, and despite all 412 00:22:31,680 --> 00:22:34,040 Speaker 1: of the headline volatility that all of us had to 413 00:22:34,040 --> 00:22:37,000 Speaker 1: live through, they actually accomplished a fair amount, from the 414 00:22:37,000 --> 00:22:40,960 Speaker 1: infrastructure bill to the i r A to this massive 415 00:22:41,200 --> 00:22:45,120 Speaker 1: one point seven trillion dollars spending bill that just came through. 416 00:22:45,160 --> 00:22:50,240 Speaker 1: And look, we're still coming through that document. And it 417 00:22:50,320 --> 00:22:54,000 Speaker 1: reminds me Matt of old saying that Campbell is just 418 00:22:54,080 --> 00:22:57,199 Speaker 1: a horse that's gone through the legislative process. There are 419 00:22:57,240 --> 00:22:59,320 Speaker 1: lots of things that are crammed in there that we're 420 00:22:59,359 --> 00:23:02,439 Speaker 1: still figure ring out. But that is the last and 421 00:23:02,600 --> 00:23:05,920 Speaker 1: final part of business of this Congress, and they get 422 00:23:05,960 --> 00:23:09,200 Speaker 1: to start again next year, and it's gonna be materially 423 00:23:09,280 --> 00:23:11,919 Speaker 1: different next year given the composition, which is what I 424 00:23:11,920 --> 00:23:15,240 Speaker 1: think we're all now focused on. So next year, I mean, 425 00:23:15,240 --> 00:23:18,640 Speaker 1: there are a number of smaller issues. I'm focused on. 426 00:23:18,720 --> 00:23:21,359 Speaker 1: What's going to happen with cannabis and the safe Banking Act, 427 00:23:22,000 --> 00:23:24,399 Speaker 1: maybe bigger for a lot of people in this state. 428 00:23:24,680 --> 00:23:26,840 Speaker 1: What's going to happen with the state and local tax deduction? 429 00:23:26,880 --> 00:23:28,840 Speaker 1: Will we get that back at any point? But there's 430 00:23:28,880 --> 00:23:32,239 Speaker 1: also the crypto regulation we have to look forward to, 431 00:23:32,800 --> 00:23:37,320 Speaker 1: other financial industry regulation, energy policy that we have to 432 00:23:37,359 --> 00:23:39,920 Speaker 1: focus on. Are we going to be able to drill more? 433 00:23:39,960 --> 00:23:42,479 Speaker 1: Is this administration will be more friendly to that sector 434 00:23:42,480 --> 00:23:46,520 Speaker 1: as we need more stock? What are you most focused on, 435 00:23:46,600 --> 00:23:51,360 Speaker 1: Isaac fore? Yeah, Look, I think with a divided government, 436 00:23:51,400 --> 00:23:55,120 Speaker 1: we're not going to have these big, massive legislative vehicles 437 00:23:55,119 --> 00:23:57,040 Speaker 1: that we've seen over the past two years. So it 438 00:23:57,160 --> 00:23:59,720 Speaker 1: is going to be the equivalent of a legislative grab 439 00:23:59,800 --> 00:24:03,960 Speaker 1: that what can be attached to the Appropriations bill in 440 00:24:04,000 --> 00:24:07,320 Speaker 1: the fall on page nine hundred, right, And so here's 441 00:24:07,320 --> 00:24:09,679 Speaker 1: how I think about it. On the energy side, we 442 00:24:09,720 --> 00:24:12,439 Speaker 1: are still optimistic that we will get some degree of 443 00:24:12,480 --> 00:24:15,600 Speaker 1: permitting reform in the first quarter UM. It remains to 444 00:24:15,640 --> 00:24:19,400 Speaker 1: be seen exactly what shape that legislation takes, but there 445 00:24:19,560 --> 00:24:22,400 Speaker 1: is clearly enough political will for that, and that's something 446 00:24:22,400 --> 00:24:25,479 Speaker 1: that I'm optimistic about. I also think that we should 447 00:24:25,520 --> 00:24:29,600 Speaker 1: expect some crypto legislation now here. I don't think you're 448 00:24:29,600 --> 00:24:33,719 Speaker 1: going to get the massive comprehensive bill that some want. Instead, 449 00:24:33,760 --> 00:24:36,240 Speaker 1: I think it's going to be more narrowly targeted to 450 00:24:36,560 --> 00:24:40,520 Speaker 1: stable coins because that's something that Congress understands, kind of 451 00:24:40,520 --> 00:24:43,640 Speaker 1: like a money market fund, kind of like a deposit account. 452 00:24:43,840 --> 00:24:46,840 Speaker 1: They can get their arms around that. Beyond that, I 453 00:24:46,880 --> 00:24:48,960 Speaker 1: think I'm mostly going to be focused on how does 454 00:24:49,000 --> 00:24:52,800 Speaker 1: Congress interact with, you know, the regulatory state here in 455 00:24:52,880 --> 00:24:55,399 Speaker 1: d C and the We have some acronyms that I 456 00:24:55,440 --> 00:24:58,400 Speaker 1: think are going to play a big role in such 457 00:24:58,440 --> 00:25:03,800 Speaker 1: as FTC, cfpb UM. A lot of these regulatory entities 458 00:25:03,800 --> 00:25:05,679 Speaker 1: are going to get far more active, which is going 459 00:25:05,720 --> 00:25:08,720 Speaker 1: to have real repercussions for the market. Okay, so those 460 00:25:08,760 --> 00:25:11,960 Speaker 1: are a lot of very specific policy areas, Isaac. If 461 00:25:12,040 --> 00:25:15,040 Speaker 1: we can talk about just macro economic policy for a second. 462 00:25:15,040 --> 00:25:17,800 Speaker 1: Matt and I were talking about the dynamics between monetary 463 00:25:17,800 --> 00:25:20,720 Speaker 1: and fiscal policy, how both were so common in data, 464 00:25:20,760 --> 00:25:23,200 Speaker 1: there was so much stimulus a few years ago. Obviously 465 00:25:23,240 --> 00:25:25,080 Speaker 1: this is a very different story now, and when you 466 00:25:25,119 --> 00:25:28,359 Speaker 1: have a Republican House, the likelihood of getting any further 467 00:25:28,440 --> 00:25:32,800 Speaker 1: fiscal spending through is probably pretty small. So if we 468 00:25:32,840 --> 00:25:35,880 Speaker 1: do indeed get a US recession next year, what would 469 00:25:35,880 --> 00:25:39,160 Speaker 1: you expect the reaction from Washington, d C to look like? 470 00:25:40,000 --> 00:25:42,280 Speaker 1: I think I think it's gonna sound like crickets, Gaily, 471 00:25:42,359 --> 00:25:44,679 Speaker 1: I really do. I think you know. I'm I'm a 472 00:25:44,720 --> 00:25:47,359 Speaker 1: fan of that saying that history doesn't repeat itself, but 473 00:25:47,400 --> 00:25:50,359 Speaker 1: it often rhymes. And the last time that we had 474 00:25:50,520 --> 00:25:54,359 Speaker 1: a Republican House and a Democrat in the White House 475 00:25:54,800 --> 00:25:59,440 Speaker 1: was then time period. And during that time period, we 476 00:25:59,520 --> 00:26:05,320 Speaker 1: had legislative law jam, fiscal brakesmanship, fights over the debt ceiling, 477 00:26:05,480 --> 00:26:08,280 Speaker 1: and what passed for fiscal austerity here in d C 478 00:26:08,640 --> 00:26:13,040 Speaker 1: was something called the Budget Control Act, which had mandatory sequestration. 479 00:26:13,480 --> 00:26:15,720 Speaker 1: And so look, just as we have talked about the 480 00:26:16,080 --> 00:26:20,960 Speaker 1: FED put disappearing, I firmly believe that the Fiscal Congressional 481 00:26:21,040 --> 00:26:24,359 Speaker 1: put expires the minute the new Congress is sworn in 482 00:26:24,359 --> 00:26:27,120 Speaker 1: in a couple of days. Well, speaking of who's getting 483 00:26:27,119 --> 00:26:28,760 Speaker 1: sworn in in a couple of days, I do want 484 00:26:28,800 --> 00:26:32,200 Speaker 1: to get your take, Isaac on one of those elected congressman, 485 00:26:32,200 --> 00:26:35,280 Speaker 1: in particular George Santos, the Republican here in New York 486 00:26:35,320 --> 00:26:39,119 Speaker 1: who has now admitted essentially to embellishing his resume, about 487 00:26:39,200 --> 00:26:42,720 Speaker 1: his college degree, about working at two major Wall Street 488 00:26:42,760 --> 00:26:45,760 Speaker 1: first left something out as well, right, there were many 489 00:26:45,760 --> 00:26:49,240 Speaker 1: based and he was previously married. There's just a lot 490 00:26:49,280 --> 00:26:52,399 Speaker 1: of different points of contention here. Yet he says he 491 00:26:52,560 --> 00:26:54,959 Speaker 1: still plans to take the oath of office on January three. 492 00:26:55,040 --> 00:26:58,159 Speaker 1: I'm just wondering what your reaction to these revelations is 493 00:26:59,359 --> 00:27:02,800 Speaker 1: it shot being It's disappointing, and it's not at all surprising. 494 00:27:03,320 --> 00:27:07,200 Speaker 1: I think as we've wintled away what what the truth 495 00:27:07,320 --> 00:27:09,920 Speaker 1: is when it comes to our political discourse, these things 496 00:27:09,920 --> 00:27:13,080 Speaker 1: are going to continue to happen. I'd be interested to 497 00:27:13,080 --> 00:27:15,919 Speaker 1: see if he actually makes it um. I think that 498 00:27:16,119 --> 00:27:18,480 Speaker 1: part of the strategy now is to just hope that 499 00:27:18,520 --> 00:27:21,280 Speaker 1: the story dies down over the next few days. I 500 00:27:21,560 --> 00:27:25,160 Speaker 1: struggled to see that happening. But once he gets into Congress, 501 00:27:25,359 --> 00:27:26,960 Speaker 1: I would tell you I think that it's gonna be 502 00:27:27,000 --> 00:27:30,320 Speaker 1: very difficult for him to actually legislate effectively because he 503 00:27:30,400 --> 00:27:33,600 Speaker 1: will carry a degree of toxicity with him from these stories. 504 00:27:34,000 --> 00:27:36,680 Speaker 1: But this is, in a lot of ways the new normal, 505 00:27:36,720 --> 00:27:39,880 Speaker 1: given where our political discourse is. He uttered the words 506 00:27:39,960 --> 00:27:42,120 Speaker 1: I am not a criminal in an interview with The Post. 507 00:27:42,119 --> 00:27:44,679 Speaker 1: Those are never good words to have to say, Isaac, 508 00:27:44,680 --> 00:27:47,359 Speaker 1: thanks so much for joining us. Isaac Boltanski B T 509 00:27:47,520 --> 00:27:49,680 Speaker 1: I G. Talking to us about what to expect for 510 00:27:50,560 --> 00:27:53,479 Speaker 1: three out of Washington, d C. Thanks very much. This 511 00:27:53,560 --> 00:27:57,320 Speaker 1: is the Bloomberg Surveillance Podcast. Thanks for listening. Join us 512 00:27:57,400 --> 00:28:00,240 Speaker 1: live weekdays from seven to ten a m. He's Stern 513 00:28:00,480 --> 00:28:04,560 Speaker 1: on Bloomberg Radio and on Bloomberg Television each day from 514 00:28:04,600 --> 00:28:09,840 Speaker 1: six to nine am for insight from the best in economics, finance, investment, 515 00:28:10,000 --> 00:28:15,000 Speaker 1: and international relations. And subscribe to the Surveillance podcast on 516 00:28:15,119 --> 00:28:18,920 Speaker 1: Apple podcast, SoundCloud, Bloomberg dot com, and of course on 517 00:28:19,040 --> 00:28:23,159 Speaker 1: the terminal. I'm Tom Keene and this is Bloomberg