1 00:00:02,480 --> 00:00:06,840 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:13,680 --> 00:00:17,120 Speaker 2: An absolutely fascinating news conference with Chairman Powell. 3 00:00:17,280 --> 00:00:19,000 Speaker 3: Where do we start? Where do we end? 4 00:00:19,040 --> 00:00:21,520 Speaker 2: A twenty five basis point reduction for the Federal Reserve 5 00:00:21,800 --> 00:00:25,160 Speaker 2: as anticipated, but some drama over the last forty five 6 00:00:25,200 --> 00:00:25,840 Speaker 2: minutes or so. 7 00:00:26,200 --> 00:00:28,080 Speaker 3: Let's start with the equity market. 8 00:00:28,280 --> 00:00:29,880 Speaker 2: On the S and P five hundred, we look a 9 00:00:29,880 --> 00:00:31,880 Speaker 2: little something like this at all time highs up eight 10 00:00:31,960 --> 00:00:34,639 Speaker 2: tenths of one percent. On the NASDAG we're up by 11 00:00:34,680 --> 00:00:36,520 Speaker 2: one point six at the moment. 12 00:00:36,560 --> 00:00:37,000 Speaker 3: Looking at the. 13 00:00:37,000 --> 00:00:40,199 Speaker 2: Russell, we're up, down by about a tenth of one percent. 14 00:00:40,479 --> 00:00:42,240 Speaker 2: Let's switch it up and get to the bond market 15 00:00:42,360 --> 00:00:44,560 Speaker 2: and we'll go through these yields. Let's look at yields 16 00:00:44,560 --> 00:00:46,680 Speaker 2: at the moment, down six basis points on twoes and 17 00:00:46,720 --> 00:00:49,279 Speaker 2: down about eleven on tens. On a thirty year, we're 18 00:00:49,320 --> 00:00:52,600 Speaker 2: down about eight basis points of the moment. On policy, 19 00:00:52,880 --> 00:00:56,440 Speaker 2: this was really really subtle. Did they drop their easing bias? 20 00:00:56,800 --> 00:00:59,320 Speaker 2: Not quite? Did they find a way to find some 21 00:00:59,400 --> 00:01:03,400 Speaker 2: optionality without a doubt, effectively endorsing a view that we've 22 00:01:03,400 --> 00:01:05,479 Speaker 2: had around this table over the last few hours. As 23 00:01:05,480 --> 00:01:08,800 Speaker 2: times goes by, these decisions get a whole lot harder 24 00:01:09,200 --> 00:01:13,400 Speaker 2: reluctance to endorse the September forecast, acknowledgment that downside risks 25 00:01:13,400 --> 00:01:17,560 Speaker 2: have diminished. Awareness the White House policy could redefine the 26 00:01:17,640 --> 00:01:20,479 Speaker 2: outlook as anticipated. A lot of questions on one thing, 27 00:01:20,920 --> 00:01:22,639 Speaker 2: this week's election. Take a listen. 28 00:01:23,720 --> 00:01:26,720 Speaker 4: In the near term, the election will have no effects 29 00:01:26,760 --> 00:01:29,840 Speaker 4: on our policy decisions. Here, we don't know what the 30 00:01:29,880 --> 00:01:33,120 Speaker 4: timing and substance of any policy changes will be. We 31 00:01:33,160 --> 00:01:36,400 Speaker 4: therefore don't know what the effects on the economy would be, specifically, 32 00:01:36,760 --> 00:01:39,240 Speaker 4: whether and to what extent those policies would matter for 33 00:01:39,280 --> 00:01:42,600 Speaker 4: the achievement of our goal variables maximum employment and price stability. 34 00:01:44,000 --> 00:01:46,720 Speaker 4: We don't guess, we don't speculate, and we don't assume. 35 00:01:47,760 --> 00:01:49,000 Speaker 3: That's the take awaund the election. 36 00:01:49,880 --> 00:01:52,600 Speaker 2: The obvious follow up to that question, are the September 37 00:01:52,680 --> 00:01:54,160 Speaker 2: forecasts still valid? 38 00:01:54,440 --> 00:01:55,040 Speaker 3: Take a listen. 39 00:01:55,960 --> 00:01:59,400 Speaker 4: I think you take away a sense of some of 40 00:01:59,440 --> 00:02:03,800 Speaker 4: the downside risks to economic activity having having been diminished 41 00:02:04,560 --> 00:02:09,200 Speaker 4: with the Nipper revisions in particular, and so overall feeling 42 00:02:09,240 --> 00:02:13,400 Speaker 4: good about economic activity. I think really the question is December, 43 00:02:13,400 --> 00:02:16,200 Speaker 4: and you know by December we'll have we'll have more data. 44 00:02:16,840 --> 00:02:19,960 Speaker 4: I guess one more employment report, two more inflation reports, 45 00:02:20,000 --> 00:02:21,560 Speaker 4: and lots of other data. And you know we'll make 46 00:02:21,560 --> 00:02:23,679 Speaker 4: a decision as we get to December. 47 00:02:24,080 --> 00:02:27,600 Speaker 2: So obviously that decision in December will be totally data dependent. 48 00:02:27,639 --> 00:02:30,600 Speaker 2: But that sounds you heard just the door slowly opening 49 00:02:30,639 --> 00:02:33,040 Speaker 2: to a pause if they need to. Now that's policy. 50 00:02:33,400 --> 00:02:35,720 Speaker 2: Let's talk about leadership. You want some tension in this 51 00:02:35,800 --> 00:02:39,000 Speaker 2: news conference. Take a listen to this exchange from about 52 00:02:39,000 --> 00:02:40,160 Speaker 2: twenty minutes ago. 53 00:02:41,000 --> 00:02:44,359 Speaker 4: Some of the president's alex advisors have suggested that you 54 00:02:44,480 --> 00:02:45,280 Speaker 4: should resign. 55 00:02:45,880 --> 00:02:48,680 Speaker 1: If he asked you to leave, would you go? No? 56 00:02:50,280 --> 00:02:53,560 Speaker 4: Can you follow up on do you think that legally 57 00:02:54,240 --> 00:02:57,480 Speaker 4: you're not required to leave? No? 58 00:02:57,480 --> 00:03:00,000 Speaker 2: No, and then no again, and a follow up question 59 00:03:00,120 --> 00:03:01,960 Speaker 2: a little bit later in the news conference. The answer 60 00:03:02,040 --> 00:03:05,000 Speaker 2: to that follow up Lisa, not permitted under the law. 61 00:03:05,200 --> 00:03:09,400 Speaker 5: Even demotion is not necessarily permitted under law. The interesting 62 00:03:09,440 --> 00:03:12,600 Speaker 5: aspect of this Number one, he was very definitive. Number two, 63 00:03:12,639 --> 00:03:14,280 Speaker 5: he had a clear answer. It was clear that he 64 00:03:14,360 --> 00:03:16,800 Speaker 5: had looked at that law ahead of this meeting and 65 00:03:16,800 --> 00:03:18,920 Speaker 5: that it was fresh on his mind. It seems like 66 00:03:19,400 --> 00:03:21,600 Speaker 5: this is going to be a very interesting transcript that 67 00:03:21,639 --> 00:03:22,680 Speaker 5: we get in five years. 68 00:03:23,080 --> 00:03:25,919 Speaker 6: There's two press conferences today, genis smiled at Colby Smiths 69 00:03:25,919 --> 00:03:29,200 Speaker 6: de Lisman and all asking adult questions about the economics. 70 00:03:29,400 --> 00:03:31,920 Speaker 6: I went to Craig Trres after his question, our great 71 00:03:32,000 --> 00:03:35,640 Speaker 6: historian and economics, and I said, Craig finally, and with 72 00:03:35,760 --> 00:03:38,800 Speaker 6: Craig Trus launching off John, we got into the emotion 73 00:03:39,080 --> 00:03:43,240 Speaker 6: of this election and fed independence into twenty twenty five. 74 00:03:43,400 --> 00:03:45,800 Speaker 2: We've got to separate these two issues, haven't we policy 75 00:03:45,840 --> 00:03:49,800 Speaker 2: for December, which seems highly dependent on recent data and 76 00:03:49,880 --> 00:03:53,200 Speaker 2: incoming data between now and then. Then the projections around 77 00:03:53,240 --> 00:03:56,080 Speaker 2: policy which still feels some way off at the moment. 78 00:03:56,280 --> 00:03:58,600 Speaker 2: There's nothing to model. I think it's basically what Sham 79 00:03:58,680 --> 00:04:01,040 Speaker 2: and Pause said in that news conference. So let's park 80 00:04:01,040 --> 00:04:03,120 Speaker 2: the politics just for a while. Just park the policy 81 00:04:03,680 --> 00:04:06,240 Speaker 2: based on the data we've had since that September meeting 82 00:04:07,000 --> 00:04:09,840 Speaker 2: and basically depending on the data we get when we. 83 00:04:09,800 --> 00:04:12,520 Speaker 3: Go into December. That sounds like a feder reserve. 84 00:04:12,520 --> 00:04:14,440 Speaker 2: That's t and us up for something that the former 85 00:04:14,520 --> 00:04:16,720 Speaker 2: vice chair Richard Clara talked about in this program before 86 00:04:16,760 --> 00:04:19,240 Speaker 2: that news conference started, that we could see Chair and 87 00:04:19,240 --> 00:04:22,080 Speaker 2: Powell look to find some optionality going into December. 88 00:04:22,320 --> 00:04:24,640 Speaker 5: That is what the market was looking at, and what 89 00:04:24,680 --> 00:04:27,279 Speaker 5: I was looking at was a FED fund's futures, which actually, 90 00:04:27,360 --> 00:04:30,920 Speaker 5: after pricing in a ninety ninety five percent chance of 91 00:04:30,960 --> 00:04:33,280 Speaker 5: a FED rate cut in December as recently as the 92 00:04:33,360 --> 00:04:36,880 Speaker 5: end of October, was pricing in a sixty percent chance 93 00:04:37,040 --> 00:04:38,240 Speaker 5: as recently as a. 94 00:04:38,160 --> 00:04:40,400 Speaker 1: Few minutes ago, as j. Powell was talking. 95 00:04:40,680 --> 00:04:42,320 Speaker 5: Key question is how much does this turn up the 96 00:04:42,400 --> 00:04:45,159 Speaker 5: volume on CPI that we get next Wednesday, especially given 97 00:04:45,440 --> 00:04:49,200 Speaker 5: that he pinpointed just some stickiness in the latest inflation. 98 00:04:49,279 --> 00:04:51,080 Speaker 2: This is something you said when the news conference is on. 99 00:04:51,160 --> 00:04:53,040 Speaker 2: Lisa and I were talking about this, and you said, 100 00:04:53,480 --> 00:04:55,560 Speaker 2: this is a Federal Reserve that prepared for this moment. 101 00:04:56,040 --> 00:04:58,360 Speaker 2: The very fact that he responded in this fashion, that 102 00:04:58,400 --> 00:05:01,440 Speaker 2: he responded to the questions in such direct way coming 103 00:05:01,480 --> 00:05:03,880 Speaker 2: into next year, it sets up some real tension for 104 00:05:03,920 --> 00:05:06,240 Speaker 2: twenty twenty five and perhaps even beyond. 105 00:05:06,080 --> 00:05:08,159 Speaker 5: Because this is not a FED that is just being 106 00:05:08,240 --> 00:05:10,760 Speaker 5: passive and hoping people don't ask the questions. This is 107 00:05:10,800 --> 00:05:12,880 Speaker 5: a FED that's very prepared. They were prepared in how 108 00:05:12,920 --> 00:05:14,760 Speaker 5: they were going to answer it. They were prepared even 109 00:05:14,800 --> 00:05:16,880 Speaker 5: for the yield move question, saying that we only take 110 00:05:16,880 --> 00:05:18,719 Speaker 5: it into consideration when it has been that way for 111 00:05:18,800 --> 00:05:21,600 Speaker 5: a prolonged period of time. Again, this is setting up 112 00:05:21,640 --> 00:05:24,280 Speaker 5: tests for the market to take a consideration into consideration 113 00:05:24,360 --> 00:05:27,400 Speaker 5: at a time when they are saying they're opening the 114 00:05:27,480 --> 00:05:29,800 Speaker 5: door to responding by not necessarily cutting. 115 00:05:29,600 --> 00:05:30,799 Speaker 3: Intocember equity markets. 116 00:05:30,880 --> 00:05:32,840 Speaker 2: Right now, session highs, record highs on the S and 117 00:05:32,880 --> 00:05:35,520 Speaker 2: P five hundred up by nine tens of one percent yesterday, 118 00:05:35,520 --> 00:05:38,760 Speaker 2: a big sell off and fixed income TK this afternoon. 119 00:05:38,880 --> 00:05:41,159 Speaker 2: We're seeing a bit of a rally Yield Stowa across the. 120 00:05:41,160 --> 00:05:42,560 Speaker 6: Camp, a bit of a rally. John, Do you have 121 00:05:42,600 --> 00:05:45,359 Speaker 6: your six thousand banner ready? I mean you don't have 122 00:05:45,400 --> 00:05:47,599 Speaker 6: an SBX six thousand bannerred. 123 00:05:47,160 --> 00:05:50,119 Speaker 3: Now TK seventeen points away. Yeah, we're far away. 124 00:05:50,600 --> 00:05:52,880 Speaker 6: We can't do Dow forty four thousand banner, but we 125 00:05:52,920 --> 00:05:54,239 Speaker 6: can do SBX six thousand. 126 00:05:54,320 --> 00:05:55,240 Speaker 3: I'm sure they get that. 127 00:05:55,320 --> 00:05:57,520 Speaker 2: The present elect will be very interested in doing now. 128 00:05:57,960 --> 00:05:58,919 Speaker 2: He wouldn't have one thousand. 129 00:05:59,000 --> 00:06:00,320 Speaker 3: He will be through next time year. 130 00:06:00,560 --> 00:06:02,839 Speaker 2: I said earlier on in the program this morning, it's 131 00:06:02,839 --> 00:06:05,360 Speaker 2: funny you mentioned this. Stewart Kaiser City was sitting right 132 00:06:05,360 --> 00:06:07,560 Speaker 2: there this morning and he said, you know, TK likes 133 00:06:07,560 --> 00:06:09,279 Speaker 2: to down, and I said, I'm trying to change that, 134 00:06:09,880 --> 00:06:12,880 Speaker 2: and going into next year, I'm trying to change President 135 00:06:12,920 --> 00:06:14,880 Speaker 2: elect as well, to make sure that maybe he shifts 136 00:06:14,880 --> 00:06:16,880 Speaker 2: away from that to the S and P five hundred. 137 00:06:16,920 --> 00:06:18,760 Speaker 1: I think that you have an equal chance at both. 138 00:06:20,440 --> 00:06:20,800 Speaker 3: Exactly. 139 00:06:22,120 --> 00:06:23,120 Speaker 6: Here's my response. 140 00:06:23,560 --> 00:06:26,200 Speaker 3: No, but what about him? 141 00:06:26,560 --> 00:06:30,279 Speaker 2: No, And I'm sure the President elect would say the 142 00:06:30,279 --> 00:06:32,400 Speaker 2: same thing. Rick Reader joined us now from black Rot, 143 00:06:32,480 --> 00:06:34,680 Speaker 2: one of the very best in global fixed income and 144 00:06:34,720 --> 00:06:37,800 Speaker 2: cross asset in markets worldwide. Rick, welcome to the program. 145 00:06:37,839 --> 00:06:39,920 Speaker 2: You followed that news conference. Let's just start with your 146 00:06:39,920 --> 00:06:41,800 Speaker 2: first takeaway, Rick, what's your big one? 147 00:06:43,200 --> 00:06:45,640 Speaker 7: So, first of all, say, there's some drama there, and 148 00:06:45,680 --> 00:06:46,840 Speaker 7: I thought that was interesting. 149 00:06:46,880 --> 00:06:47,159 Speaker 8: Listen. 150 00:06:47,200 --> 00:06:50,479 Speaker 7: I think I agree with that comments that they have 151 00:06:50,560 --> 00:06:53,800 Speaker 7: to introduce some balance. I think in December, listen, I 152 00:06:53,839 --> 00:06:57,440 Speaker 7: think the takeaway is they still think readers restrictive. I 153 00:06:57,520 --> 00:06:59,479 Speaker 7: still think you got to get that fronds rate down 154 00:06:59,760 --> 00:07:02,680 Speaker 7: four or ish. I think that you got it. You're 155 00:07:02,720 --> 00:07:04,480 Speaker 7: going to go in December. I think you got to 156 00:07:04,480 --> 00:07:06,000 Speaker 7: get the you know, you gotta be really careful about 157 00:07:06,000 --> 00:07:08,039 Speaker 7: the mortgage rate in this country. We could talk about, 158 00:07:08,880 --> 00:07:10,280 Speaker 7: but I think they're going to go in December. I 159 00:07:10,320 --> 00:07:12,200 Speaker 7: think he's got that that that's part of the plan. 160 00:07:12,320 --> 00:07:15,200 Speaker 7: But then as you get into next year, listen, I mean, 161 00:07:15,200 --> 00:07:17,119 Speaker 7: you got it. You've got what could be a pretty 162 00:07:17,120 --> 00:07:20,960 Speaker 7: significant policy change setup policy changes, and I think the 163 00:07:21,040 --> 00:07:24,000 Speaker 7: dots when you go back to the September forecast, I 164 00:07:24,000 --> 00:07:26,680 Speaker 7: think you gotta, you know, really think about that and evaluate. 165 00:07:26,720 --> 00:07:27,920 Speaker 7: I think that's going to be one of the most 166 00:07:27,920 --> 00:07:31,360 Speaker 7: fascinating things going forward is how do they adjust terminal 167 00:07:31,440 --> 00:07:34,800 Speaker 7: rate from here? How do they adjust where they project 168 00:07:34,840 --> 00:07:36,320 Speaker 7: growth to be when you're going to go through it 169 00:07:36,360 --> 00:07:38,400 Speaker 7: could be some pretty significant evolution from here. 170 00:07:38,520 --> 00:07:40,160 Speaker 2: So, Rick, because I go through the cannon drove the 171 00:07:40,160 --> 00:07:42,840 Speaker 2: FEDERASERF there's two dates with some asterisks over the next 172 00:07:43,040 --> 00:07:45,240 Speaker 2: six months or so, and those little stars in the 173 00:07:45,240 --> 00:07:47,800 Speaker 2: corner of those dates mean you get some projections at 174 00:07:47,800 --> 00:07:50,840 Speaker 2: those meetings. So the next one is December eighteenth, and 175 00:07:50,880 --> 00:07:53,600 Speaker 2: then as we work forward into the following year, we're 176 00:07:53,640 --> 00:07:56,280 Speaker 2: going to get a decision from the federaserv in twenty 177 00:07:56,320 --> 00:07:59,640 Speaker 2: twenty five in the spring a March nineteenth, a March 178 00:07:59,760 --> 00:08:02,720 Speaker 2: nineth teenth, Rick, we'll have a new president who may 179 00:08:02,720 --> 00:08:07,600 Speaker 2: be already coming forward with some policies and some big tariffs. Rick, 180 00:08:07,680 --> 00:08:10,560 Speaker 2: do you think it's still too early on March nineteenth 181 00:08:10,640 --> 00:08:13,440 Speaker 2: to expect this veneras f to bank in some policy 182 00:08:13,520 --> 00:08:16,800 Speaker 2: from DJT the former president and President elect Donald Trump. 183 00:08:17,960 --> 00:08:21,080 Speaker 7: Can I can I also say that we'll wait and see. 184 00:08:21,640 --> 00:08:21,960 Speaker 8: Listen. 185 00:08:22,000 --> 00:08:24,880 Speaker 7: I think that. I think that. 186 00:08:25,400 --> 00:08:25,720 Speaker 1: Listen. 187 00:08:25,720 --> 00:08:28,000 Speaker 7: I think you're going to have to evaluate that policy. 188 00:08:28,080 --> 00:08:30,640 Speaker 7: I mean, we're going to get more data on tariffs, 189 00:08:30,640 --> 00:08:32,560 Speaker 7: We're going to get more data on how we deal 190 00:08:32,600 --> 00:08:36,120 Speaker 7: with spending deficits. Listen. I think there are some extremes 191 00:08:36,120 --> 00:08:39,040 Speaker 7: that gets said in a when you go through an 192 00:08:39,040 --> 00:08:42,600 Speaker 7: election campaign like this, how aggressive will be on tariffs, 193 00:08:42,640 --> 00:08:45,800 Speaker 7: how aggressive will be uncutting spending? And then I think 194 00:08:45,840 --> 00:08:47,840 Speaker 7: you're going to start to see some clarity. You're going 195 00:08:47,840 --> 00:08:49,679 Speaker 7: to see by the way, and you're going to see 196 00:08:49,679 --> 00:08:51,240 Speaker 7: what a cabinet looks like. You're going to see who 197 00:08:51,280 --> 00:08:53,400 Speaker 7: the people are. You're going to have a sense for 198 00:08:53,480 --> 00:08:57,040 Speaker 7: those personalities and they you know what their disposition is 199 00:08:57,040 --> 00:08:59,200 Speaker 7: with regard to policy. So yes, I think in March 200 00:08:59,679 --> 00:09:01,840 Speaker 7: then you are going to have you're going to have 201 00:09:01,880 --> 00:09:03,960 Speaker 7: to evaluate that and nine and have to evaluate what 202 00:09:04,000 --> 00:09:06,920 Speaker 7: it means for the forward growth forecast that's Edrica. 203 00:09:07,040 --> 00:09:09,080 Speaker 5: One thing really stood out to me in the press conference, 204 00:09:09,120 --> 00:09:12,320 Speaker 5: and yes, it was the no and the preparation for 205 00:09:12,400 --> 00:09:15,920 Speaker 5: that question, but also this focus on inflation being a 206 00:09:15,920 --> 00:09:19,480 Speaker 5: little bit stickier than in prior readings, and to me 207 00:09:19,559 --> 00:09:21,559 Speaker 5: that was notable because it seemed like they had left 208 00:09:21,720 --> 00:09:22,800 Speaker 5: inflation for dead. 209 00:09:22,880 --> 00:09:24,280 Speaker 1: That wasn't even part of the mandate. 210 00:09:24,320 --> 00:09:27,520 Speaker 5: It was, you know, sort of autopilot cutting until you 211 00:09:27,600 --> 00:09:29,160 Speaker 5: sort of get to a certain place and then you 212 00:09:29,200 --> 00:09:31,720 Speaker 5: wait and see how much does this turn the volume 213 00:09:31,800 --> 00:09:33,840 Speaker 5: up on CPI that comes out on Wednesday? 214 00:09:35,360 --> 00:09:35,800 Speaker 1: It does. 215 00:09:35,880 --> 00:09:39,120 Speaker 7: I mean, it's gonna listen, I think one man's opinion 216 00:09:39,480 --> 00:09:42,559 Speaker 7: or more our team's forecast. Listen, we think most of 217 00:09:42,600 --> 00:09:45,320 Speaker 7: the descent and inflation has happened. You know, we think 218 00:09:45,360 --> 00:09:48,720 Speaker 7: you've got tremendous goods deflation. Now you've got base effects 219 00:09:48,720 --> 00:09:52,320 Speaker 7: that aren't a tailwind going forward. What does service inflation 220 00:09:52,480 --> 00:09:55,520 Speaker 7: do from here? I mentioned it earlier. I think shelters 221 00:09:55,559 --> 00:09:57,280 Speaker 7: a really big deal and part of why I think 222 00:09:57,320 --> 00:09:59,440 Speaker 7: you got to get that rate down. You know, you 223 00:09:59,520 --> 00:10:01,080 Speaker 7: have you see you know what you've seen over the 224 00:10:01,120 --> 00:10:03,360 Speaker 7: last month. You look at housing affordability still a problem. 225 00:10:03,360 --> 00:10:06,400 Speaker 7: Housing starts are low, building permits are low, existing home 226 00:10:06,440 --> 00:10:09,760 Speaker 7: sales are low. You have a problem today, chilters. You're 227 00:10:09,760 --> 00:10:11,320 Speaker 7: not getting enough home building. You look at all the 228 00:10:11,320 --> 00:10:15,040 Speaker 7: home builder earnings, you know, pretty rough because they're subsidizing 229 00:10:15,559 --> 00:10:20,720 Speaker 7: mortgages or subsidizing houses through through their bottom line. Listen, 230 00:10:20,760 --> 00:10:22,040 Speaker 7: I think you're going to get the rate down. You 231 00:10:22,120 --> 00:10:25,560 Speaker 7: got to get housing moving more efficiently, and that, by 232 00:10:25,559 --> 00:10:27,800 Speaker 7: the way, that'll bring shelter inflation down. But that's been 233 00:10:27,840 --> 00:10:30,120 Speaker 7: the thing that's sticky. But yeah, I think we're going 234 00:10:30,160 --> 00:10:32,840 Speaker 7: to focus on what these in particularly I focus on 235 00:10:32,920 --> 00:10:35,160 Speaker 7: service inflation. Where are we going to be over the 236 00:10:35,200 --> 00:10:36,600 Speaker 7: next couple of months, And I think it's going to 237 00:10:36,600 --> 00:10:38,679 Speaker 7: be pretty important. I think most of the benefit you've 238 00:10:38,720 --> 00:10:39,760 Speaker 7: seen it play out already. 239 00:10:40,000 --> 00:10:42,200 Speaker 6: Rick, it's away from your rema. I was talking with 240 00:10:42,240 --> 00:10:46,800 Speaker 6: Derek Belchunis are et face BlackRock's got an interesting bitcoin 241 00:10:47,200 --> 00:10:52,960 Speaker 6: moments from printing seventy seven thousand, equities are moving, bonds 242 00:10:52,960 --> 00:10:56,160 Speaker 6: are moving in the way we've discussed what does bitcoin 243 00:10:56,200 --> 00:11:00,960 Speaker 6: at seventy seven thousand signal to fixed income into equities 244 00:11:01,080 --> 00:11:02,520 Speaker 6: and for that matter, to the dollar. 245 00:11:04,840 --> 00:11:06,559 Speaker 7: These are good questions, hard questions. 246 00:11:06,880 --> 00:11:07,160 Speaker 8: Listen. 247 00:11:07,200 --> 00:11:09,960 Speaker 7: I will say one thing. I mean, obviously, what bitcoing 248 00:11:10,000 --> 00:11:14,360 Speaker 7: is reflecting is a change, potential change in policy and 249 00:11:14,440 --> 00:11:17,720 Speaker 7: a more favorable disposition towards crypto. I think that's point 250 00:11:17,720 --> 00:11:20,800 Speaker 7: one and that's clearly the big driver. Second one that 251 00:11:20,840 --> 00:11:24,400 Speaker 7: I'll throw out there that I think is robust. Listen, 252 00:11:24,440 --> 00:11:27,160 Speaker 7: we got to deal with debt and deficits and what 253 00:11:27,160 --> 00:11:30,320 Speaker 7: does it mean for currency going forward? And listen, I 254 00:11:30,360 --> 00:11:32,680 Speaker 7: mean it's a scarce asset. It's becoming more scarce. And 255 00:11:32,720 --> 00:11:34,559 Speaker 7: I think, and I will tell you from doing a 256 00:11:34,640 --> 00:11:37,840 Speaker 7: lot of client meetings, people more and more thinking about 257 00:11:37,880 --> 00:11:41,280 Speaker 7: real assets. People are thinking about, gosh in a different world. 258 00:11:41,760 --> 00:11:43,040 Speaker 7: You know, what does it mean? You know, we got 259 00:11:43,040 --> 00:11:45,320 Speaker 7: to get our spending down because our debt is too large. 260 00:11:45,920 --> 00:11:49,480 Speaker 7: Do I own some scarce assets, some harp some real assets? 261 00:11:49,880 --> 00:11:52,600 Speaker 7: And I think that's playing through obviously, alongside the bigger 262 00:11:52,600 --> 00:11:56,679 Speaker 7: one being a more favorable disposition from policy in terms 263 00:11:56,720 --> 00:11:58,920 Speaker 7: of where that is. But Gosh, I hear more and 264 00:11:59,000 --> 00:12:01,280 Speaker 7: more about real assets. It's not just crypto, but in 265 00:12:01,280 --> 00:12:01,880 Speaker 7: other places. 266 00:12:02,040 --> 00:12:03,120 Speaker 3: Rick, I've got to follow on that. 267 00:12:03,559 --> 00:12:05,559 Speaker 2: I really want to understand from your perspective, whether you 268 00:12:05,600 --> 00:12:07,720 Speaker 2: see signs at the moment of people pushing back because 269 00:12:07,720 --> 00:12:10,880 Speaker 2: of the deficits. So let's take yesterday's price action as 270 00:12:10,920 --> 00:12:13,360 Speaker 2: just a snapshot of where things are out. So we 271 00:12:13,440 --> 00:12:16,720 Speaker 2: saw a big self and fixed income. And typically if 272 00:12:16,720 --> 00:12:19,440 Speaker 2: this was EMSA and we saw moves like that and 273 00:12:19,480 --> 00:12:22,440 Speaker 2: I was worried about the fiscal position of that country, 274 00:12:22,559 --> 00:12:23,920 Speaker 2: we'd see the currency weakness too. 275 00:12:24,280 --> 00:12:26,000 Speaker 3: But you didn't see that yesterday. You saw a lot 276 00:12:26,000 --> 00:12:26,680 Speaker 3: of dollar strength. 277 00:12:26,960 --> 00:12:29,120 Speaker 2: So I'm wondering, from your perspective outside of that, whether 278 00:12:29,120 --> 00:12:32,080 Speaker 2: you are already seeing signs of pushback and whether you'd 279 00:12:32,080 --> 00:12:33,800 Speaker 2: expect to see it pop up in the US dollar 280 00:12:33,840 --> 00:12:34,560 Speaker 2: anytime soon. 281 00:12:34,720 --> 00:12:35,520 Speaker 3: If it's all. 282 00:12:37,120 --> 00:12:39,240 Speaker 7: So, I think the first thing people react to is 283 00:12:39,240 --> 00:12:43,800 Speaker 7: you got a change in policy, tariffs, stronger dollar generally, 284 00:12:43,840 --> 00:12:45,920 Speaker 7: and I think that's a market tends to knee jerk market. 285 00:12:45,920 --> 00:12:47,680 Speaker 7: You usually can only focus on one thing at a time, 286 00:12:47,960 --> 00:12:50,640 Speaker 7: and I think it was focused on that. I don't 287 00:12:50,640 --> 00:12:52,839 Speaker 7: do a client meeting today. We're not The first or 288 00:12:52,880 --> 00:12:54,880 Speaker 7: second question is about the debt. It isn't about the 289 00:12:54,880 --> 00:12:58,040 Speaker 7: debt of the country. The deficits were running. I think 290 00:12:58,080 --> 00:13:00,880 Speaker 7: this administration is going to have to this Congress is 291 00:13:00,920 --> 00:13:03,160 Speaker 7: going to have to address there's too much debt coming do. 292 00:13:03,200 --> 00:13:05,720 Speaker 7: If you said to me next year, like Lisa said, 293 00:13:05,720 --> 00:13:08,880 Speaker 7: We're going to be laser focused on inflation. We're also 294 00:13:08,880 --> 00:13:11,960 Speaker 7: going to be laser focused on auctions because we're issuing 295 00:13:12,040 --> 00:13:16,280 Speaker 7: so much debt every single week. Every client wants to 296 00:13:16,280 --> 00:13:18,000 Speaker 7: know and I think gets to that question of why 297 00:13:18,000 --> 00:13:19,920 Speaker 7: people are buying real assets. How the thing about, by 298 00:13:19,920 --> 00:13:23,960 Speaker 7: the way, equities are an operating leverage machine on GDP 299 00:13:24,640 --> 00:13:27,480 Speaker 7: and car fank you think about what does well in 300 00:13:27,520 --> 00:13:31,200 Speaker 7: this environment. Equities still do well. But I gosh, every 301 00:13:31,280 --> 00:13:33,480 Speaker 7: client meeting I go to, people want to talk about 302 00:13:33,480 --> 00:13:35,559 Speaker 7: the debt. And I think it is definitely going to 303 00:13:35,640 --> 00:13:40,360 Speaker 7: become much much more of the regular dialogue in everything 304 00:13:40,400 --> 00:13:43,280 Speaker 7: we do. Investor, by the way, not just financial investors, 305 00:13:43,640 --> 00:13:46,920 Speaker 7: corporate CEOs, CFOs, how they think about cap x, R 306 00:13:47,000 --> 00:13:48,559 Speaker 7: and D. I think it's going to be a big 307 00:13:48,559 --> 00:13:49,440 Speaker 7: deal going forward. 308 00:13:49,640 --> 00:13:52,080 Speaker 5: Can you just elaborate on that in terms of when 309 00:13:52,120 --> 00:13:55,200 Speaker 5: we'll actually see it in a more dramatic fashion, because 310 00:13:55,240 --> 00:13:57,079 Speaker 5: you can make a lot of arguments for why yilts 311 00:13:57,120 --> 00:13:58,240 Speaker 5: have gone up, and frankly J. 312 00:13:58,360 --> 00:14:00,800 Speaker 1: Powell said, I'm not going to parse out. 313 00:14:00,679 --> 00:14:02,680 Speaker 5: What's what, but some of it could be deficits, some 314 00:14:02,720 --> 00:14:04,560 Speaker 5: of it could be the political regime, some of it 315 00:14:04,559 --> 00:14:06,480 Speaker 5: could be better than expected growth. I don't even know. 316 00:14:06,559 --> 00:14:08,719 Speaker 5: I don't care it's going to stop anyway. At what 317 00:14:08,760 --> 00:14:11,320 Speaker 5: point do you say this is real and this is 318 00:14:11,400 --> 00:14:13,920 Speaker 5: actually a risk premium that's being put on for the 319 00:14:13,960 --> 00:14:14,520 Speaker 5: first time. 320 00:14:14,400 --> 00:14:15,120 Speaker 1: In a long time. 321 00:14:16,000 --> 00:14:19,000 Speaker 7: Yeah, you know, we'd say a couple of things that, 322 00:14:19,080 --> 00:14:22,080 Speaker 7: you know, Listen, it's hard to parse any individual movement 323 00:14:22,480 --> 00:14:25,840 Speaker 7: that takes place in markets. But I think more and more, 324 00:14:25,920 --> 00:14:27,400 Speaker 7: you know, by the way you look at what's happened 325 00:14:27,400 --> 00:14:30,400 Speaker 7: to the credit markets. Spreads keep tightening, spreads keep tightening. 326 00:14:30,960 --> 00:14:33,040 Speaker 7: You know, I've said this before. If you go through 327 00:14:33,120 --> 00:14:35,720 Speaker 7: some of the companies today, high free cash flow, don't 328 00:14:35,720 --> 00:14:38,400 Speaker 7: borrow on the front end of the curve, don't have 329 00:14:38,480 --> 00:14:40,800 Speaker 7: any financing, don't have a maturity wall. I then think 330 00:14:40,800 --> 00:14:43,280 Speaker 7: about the US government. We threaten a default every couple 331 00:14:43,280 --> 00:14:45,160 Speaker 7: of years. We borrow at the front end. And the 332 00:14:45,200 --> 00:14:50,480 Speaker 7: immense size of bill COUPONSI bill auctions we do every week, 333 00:14:50,640 --> 00:14:53,560 Speaker 7: coupon auctions we do every week. Listen, I think it 334 00:14:53,600 --> 00:14:56,200 Speaker 7: is you know, it's part of why every auction you 335 00:14:56,280 --> 00:14:58,320 Speaker 7: got to watch, you know, is the particularly in the 336 00:14:58,360 --> 00:15:00,240 Speaker 7: back end of the curve. Listen, I think there's going 337 00:15:00,280 --> 00:15:03,320 Speaker 7: to continue to be a strong bid to you know. 338 00:15:03,360 --> 00:15:05,400 Speaker 7: And by the way, part of why I like portfolios 339 00:15:05,680 --> 00:15:07,240 Speaker 7: clip a lot of yield in the front end. Just 340 00:15:07,320 --> 00:15:09,960 Speaker 7: keep clipping that yield, clipping that yield, you know, the 341 00:15:10,000 --> 00:15:11,360 Speaker 7: back end. I think it's going to be a big 342 00:15:11,400 --> 00:15:14,200 Speaker 7: focus going forward. Like you said, you know, we've never 343 00:15:14,280 --> 00:15:17,080 Speaker 7: had I would argue in the US, it's not just 344 00:15:17,120 --> 00:15:19,640 Speaker 7: the amount of debt, it's the debt service. We're talking 345 00:15:19,640 --> 00:15:23,000 Speaker 7: about interest rates. We used to print treasury bills at 346 00:15:23,080 --> 00:15:26,320 Speaker 7: zero percent, one percent, you know. Now we're printing huge 347 00:15:26,360 --> 00:15:28,920 Speaker 7: size treasury bills every week at high level. So it's 348 00:15:28,920 --> 00:15:31,280 Speaker 7: going to be it's going to be a big focus. 349 00:15:31,360 --> 00:15:33,920 Speaker 7: And you know, is there one event listen, I think 350 00:15:33,920 --> 00:15:35,840 Speaker 7: auctions are going to be are going to be worth watching, 351 00:15:35,880 --> 00:15:37,800 Speaker 7: and I listen to the shape of the curve, you 352 00:15:37,840 --> 00:15:39,840 Speaker 7: know what. I would say one last thing, and I 353 00:15:39,880 --> 00:15:42,440 Speaker 7: think JPO was very clear and right. In this markets 354 00:15:42,440 --> 00:15:44,520 Speaker 7: can be wrong a lot. You know, we had we 355 00:15:44,600 --> 00:15:47,160 Speaker 7: priced two hard landings already this year. Markets can get 356 00:15:47,200 --> 00:15:49,440 Speaker 7: crazy extreme one way or the other. But I think 357 00:15:49,440 --> 00:15:52,480 Speaker 7: you've got to watch over time the premium we're paying 358 00:15:52,480 --> 00:15:54,720 Speaker 7: in this country for the amount of debt that we're 359 00:15:54,720 --> 00:15:56,240 Speaker 7: going to issue, what it means for the currency, and 360 00:15:56,240 --> 00:15:58,720 Speaker 7: what it means, you know, for how much how much 361 00:15:58,720 --> 00:16:01,360 Speaker 7: will people absorb, not justically but internationally. 362 00:16:01,600 --> 00:16:03,440 Speaker 2: Rick, I've had a couple of whispers, and I'd love 363 00:16:03,480 --> 00:16:06,440 Speaker 2: your response to this. From a couple of banks, they're 364 00:16:06,440 --> 00:16:10,720 Speaker 2: anticipated that maybe credit trades through treasuries, investment grade US 365 00:16:10,720 --> 00:16:14,600 Speaker 2: corporate credit trading through treasuries. I'd love your view on that. 366 00:16:15,080 --> 00:16:18,120 Speaker 2: Is that possible because for some companies, we're not that 367 00:16:18,240 --> 00:16:20,240 Speaker 2: far away. Do you think we could see that in 368 00:16:20,240 --> 00:16:21,400 Speaker 2: the next twelve months. 369 00:16:23,320 --> 00:16:25,080 Speaker 7: Sir Jonathan, I never thought if you go back a 370 00:16:25,120 --> 00:16:26,960 Speaker 7: few years ago, I never thought. We've talked about it 371 00:16:27,040 --> 00:16:29,720 Speaker 7: years ago. Remember we were funding companies a negative yield, 372 00:16:29,800 --> 00:16:31,320 Speaker 7: Like I never thought that would happen. Do you remember that 373 00:16:31,320 --> 00:16:33,600 Speaker 7: in Europe? Like we're lending company and I remember it 374 00:16:33,600 --> 00:16:35,160 Speaker 7: explaining to my kids, like I'm lending money to the 375 00:16:35,160 --> 00:16:37,120 Speaker 7: companies that negative I'm paying them to take my money. 376 00:16:37,120 --> 00:16:39,000 Speaker 7: But then, you know, explaining why bons where they are 377 00:16:39,120 --> 00:16:42,240 Speaker 7: starting to hard to explain anyway. So is it possible. 378 00:16:42,280 --> 00:16:45,400 Speaker 7: It's definitely possible. You know, the supply demand dynamics are 379 00:16:45,480 --> 00:16:48,240 Speaker 7: quite different, and it's definitely possible. I mean the spread 380 00:16:48,240 --> 00:16:52,040 Speaker 7: tightening you're seeing across the board is pretty powerful. Listen, 381 00:16:53,040 --> 00:16:55,960 Speaker 7: one thing, ultimately, taxing authority is a really big deal. 382 00:16:56,320 --> 00:16:58,760 Speaker 7: And there's one thing that I think is usually important 383 00:16:58,760 --> 00:17:02,160 Speaker 7: for the next couple of years. There's been a massive 384 00:17:02,160 --> 00:17:04,280 Speaker 7: transfer of money from the public sector of the private Chector. 385 00:17:04,359 --> 00:17:06,199 Speaker 7: The private sector has got I think the numbers two 386 00:17:06,280 --> 00:17:10,080 Speaker 7: hundred and twenty trillion of net worth. The asset coverage 387 00:17:10,119 --> 00:17:12,480 Speaker 7: in the United States is pretty darn good. How do 388 00:17:12,560 --> 00:17:14,480 Speaker 7: you get at that asset coverage? How do you get 389 00:17:14,480 --> 00:17:16,919 Speaker 7: at that net worth to send some of that money 390 00:17:16,960 --> 00:17:19,280 Speaker 7: back to the government versus what they've transferred to the 391 00:17:19,280 --> 00:17:21,560 Speaker 7: private sector. And that's going to be the evolution that 392 00:17:21,600 --> 00:17:23,680 Speaker 7: I think this administration is going to have to navigate. 393 00:17:23,720 --> 00:17:27,080 Speaker 6: John, your insight there is critical. At least thirty five 394 00:17:27,160 --> 00:17:29,800 Speaker 6: years ago, I had the privilege of hearing John Templeton 395 00:17:30,359 --> 00:17:34,240 Speaker 6: say the same idea the credit would trade through full 396 00:17:34,240 --> 00:17:38,560 Speaker 6: faith and credit. Then it was unbelievable. Now it's unbelievable, 397 00:17:38,680 --> 00:17:40,120 Speaker 6: but it's a critical insight. 398 00:17:40,240 --> 00:17:41,840 Speaker 2: Yeah, but you heard what Rick said there, and it's 399 00:17:41,880 --> 00:17:45,560 Speaker 2: really important. Through the pandemic, there was a massive transfer 400 00:17:45,920 --> 00:17:47,960 Speaker 2: of money top and it was from the self righn 401 00:17:48,359 --> 00:17:51,600 Speaker 2: to corporate America to individuals, the households, Which is why 402 00:17:51,640 --> 00:17:54,399 Speaker 2: what we've seen ultimately because of policy coming out of 403 00:17:54,400 --> 00:17:56,880 Speaker 2: the pandemic is the balance sheets the corporates are better. 404 00:17:57,359 --> 00:18:00,600 Speaker 2: Balance sheets from households were rock solid. And what got weaker? 405 00:18:00,680 --> 00:18:03,960 Speaker 2: Where is the leverage the sovereign? Now, Rick, you followed 406 00:18:03,960 --> 00:18:06,320 Speaker 2: that up and said that ultimately that's going to have 407 00:18:06,359 --> 00:18:07,440 Speaker 2: to be a source of revenue. 408 00:18:07,480 --> 00:18:09,000 Speaker 3: But that's not the policy proposal. 409 00:18:09,520 --> 00:18:11,800 Speaker 2: The policy proposal, as you know, is to drop corporate 410 00:18:11,840 --> 00:18:14,360 Speaker 2: tax rates from twenty one to fifteen with conditions, which 411 00:18:14,480 --> 00:18:17,320 Speaker 2: is domestic manufacturing. I get all of that, Rick, Are 412 00:18:17,359 --> 00:18:18,960 Speaker 2: you basically saying that at some point we need to 413 00:18:19,040 --> 00:18:21,040 Speaker 2: understand that that's what we need to do, even if 414 00:18:21,040 --> 00:18:23,080 Speaker 2: it's not what we want to do. And Rick, for 415 00:18:23,119 --> 00:18:25,800 Speaker 2: that to happen, you need guardrails, You need constraining forces, 416 00:18:25,840 --> 00:18:27,240 Speaker 2: and I don't see any sign of that from many 417 00:18:27,240 --> 00:18:30,040 Speaker 2: policy makers in Washington. And ultimately, it means it needs 418 00:18:30,040 --> 00:18:32,080 Speaker 2: to come from the market. And the question is, Rick, 419 00:18:32,080 --> 00:18:34,320 Speaker 2: it's the question we've asked for a decade plus. Will 420 00:18:34,320 --> 00:18:38,159 Speaker 2: the market actually provide those forces? Will they constrain the 421 00:18:38,320 --> 00:18:43,080 Speaker 2: hopes of fiscal policy? Makers the tax cut hopes from campaigning. 422 00:18:43,240 --> 00:18:45,040 Speaker 2: Do you think the market will be a constraining factor 423 00:18:45,119 --> 00:18:45,320 Speaker 2: or not? 424 00:18:48,000 --> 00:18:52,480 Speaker 7: The answer is yes. Listen, I think policy generally doesn't react. 425 00:18:52,600 --> 00:18:54,640 Speaker 7: You know, hopefully I'm wrong in this case, but generally 426 00:18:54,640 --> 00:18:57,160 Speaker 7: policy doesn't react to the sharks right next to the boat. 427 00:18:57,640 --> 00:18:57,840 Speaker 8: Yeah. 428 00:18:57,840 --> 00:19:00,159 Speaker 7: And I think you know, the markets will usually and 429 00:19:00,200 --> 00:19:02,600 Speaker 7: to anticipate things, and by the way, I often anticipate 430 00:19:02,600 --> 00:19:06,720 Speaker 7: them too early or wrong. But I think the markets 431 00:19:06,760 --> 00:19:10,200 Speaker 7: are going to be a great barometer for what policy 432 00:19:10,240 --> 00:19:12,800 Speaker 7: needs to adjust to. So you know, I'm hoping it's 433 00:19:12,800 --> 00:19:15,000 Speaker 7: not egregious in terms of how that manifests itself. And 434 00:19:15,000 --> 00:19:17,080 Speaker 7: I will say one thing and we get debate tax policy, 435 00:19:17,160 --> 00:19:21,000 Speaker 7: marginal tax rates. Listen, I think the US economy, there's 436 00:19:21,000 --> 00:19:23,000 Speaker 7: only one way that you bring the debt down. You 437 00:19:23,040 --> 00:19:26,200 Speaker 7: got to outrun it and nominal GDP. We have to grow. 438 00:19:26,680 --> 00:19:29,240 Speaker 7: Economy's got to grow. There's a series of initiatives you 439 00:19:29,280 --> 00:19:31,240 Speaker 7: can have. You can have fiscal spend as long as 440 00:19:31,240 --> 00:19:34,280 Speaker 7: it's got velocity to it and that the economy is growing. 441 00:19:34,520 --> 00:19:36,280 Speaker 7: And then the cost of the debt has to come down, 442 00:19:36,320 --> 00:19:38,000 Speaker 7: and the shear size of the debt has to come down. 443 00:19:38,320 --> 00:19:41,840 Speaker 7: And then we slowly bring the debt problem down in 444 00:19:41,880 --> 00:19:43,679 Speaker 7: this country. But I think it has to be a 445 00:19:43,680 --> 00:19:47,159 Speaker 7: whole series of initiatives and quite frankly, policy needs to 446 00:19:47,200 --> 00:19:52,120 Speaker 7: create confidence of investors of the general populace that they're 447 00:19:52,160 --> 00:19:54,760 Speaker 7: moving the boat in that direction. And by the way, 448 00:19:54,920 --> 00:19:58,200 Speaker 7: confidence is hugely powerful. You can do a tremendous amount. 449 00:19:58,240 --> 00:20:01,160 Speaker 7: Your comment or it's comment about emerging markets the one 450 00:20:01,160 --> 00:20:03,280 Speaker 7: thing US has, and you look at the faith in 451 00:20:03,320 --> 00:20:05,359 Speaker 7: the fat and the faith in the in the confidence 452 00:20:05,720 --> 00:20:08,440 Speaker 7: that will ultimately do the right thing. But I think 453 00:20:08,480 --> 00:20:10,679 Speaker 7: you think that's going to be really critical going forward. 454 00:20:10,880 --> 00:20:13,080 Speaker 2: Rick, you're a money manager. Can we finish there on 455 00:20:13,119 --> 00:20:15,160 Speaker 2: what you've been doing? Were selling bonds yesterday? 456 00:20:17,000 --> 00:20:21,320 Speaker 7: No? The uh no, not yesterday. But you listen to me, 457 00:20:21,600 --> 00:20:25,000 Speaker 7: you know, I would just say, if you know, listen 458 00:20:25,040 --> 00:20:27,680 Speaker 7: there without getting specific in terms of things we're doing. 459 00:20:27,960 --> 00:20:29,840 Speaker 7: You know, I think there was regulatory change, or I 460 00:20:29,840 --> 00:20:33,080 Speaker 7: think there's potential regulatory change. The financials are interesting. I 461 00:20:33,080 --> 00:20:37,080 Speaker 7: think fixed income products like mortgages are interesting. When you 462 00:20:37,240 --> 00:20:40,359 Speaker 7: change the regulatory dynamic around banks and their ability to 463 00:20:40,359 --> 00:20:43,080 Speaker 7: buy different things, so you know, those assets have become 464 00:20:43,359 --> 00:20:47,240 Speaker 7: more interesting. Listen, I think equities are rightly moving in 465 00:20:47,280 --> 00:20:49,879 Speaker 7: the direction they should move with with a series of 466 00:20:49,920 --> 00:20:54,639 Speaker 7: initiatives that could stimulate growth here going forward. So you know, 467 00:20:54,680 --> 00:20:57,560 Speaker 7: I like, I like parts of the equity market, and 468 00:20:57,600 --> 00:20:59,240 Speaker 7: that's so that's been And then you know the other 469 00:20:59,280 --> 00:21:00,640 Speaker 7: side of it is that you know something that I'm 470 00:21:00,680 --> 00:21:03,760 Speaker 7: just going to keep persisting on the front to the 471 00:21:03,760 --> 00:21:09,320 Speaker 7: belly of the curve, yielding assets, credit, securitized assets Europe 472 00:21:09,640 --> 00:21:12,080 Speaker 7: where you buy credit, et cetera. Like, if you just 473 00:21:12,160 --> 00:21:14,960 Speaker 7: keep clipping this yield it is I mean, even if 474 00:21:15,080 --> 00:21:17,879 Speaker 7: rates move up somewhat, you're still able to build portfolios. 475 00:21:17,880 --> 00:21:20,320 Speaker 7: We have the CTF bink you're still able to create 476 00:21:20,320 --> 00:21:24,360 Speaker 7: this portfolio six and a half percent yield. That's pretty spectacular. 477 00:21:24,400 --> 00:21:27,399 Speaker 7: With inflation running at two you can be two point 478 00:21:27,440 --> 00:21:30,560 Speaker 7: three percent. So that's my key is like, just let's 479 00:21:30,600 --> 00:21:32,480 Speaker 7: keep buying this yield and hold this yield in the 480 00:21:32,480 --> 00:21:34,520 Speaker 7: front of the belly and then let people take the 481 00:21:34,600 --> 00:21:35,920 Speaker 7: risk further out the yield curve. 482 00:21:36,320 --> 00:21:37,320 Speaker 3: Rick, this was awesome. 483 00:21:37,359 --> 00:21:39,439 Speaker 2: It's going to catch have this appreciate it, Rick Rater 484 00:21:39,520 --> 00:21:42,160 Speaker 2: with black Rock, when do you begin with that conversation? 485 00:21:42,320 --> 00:21:43,120 Speaker 3: So let's at chew over. 486 00:21:43,359 --> 00:21:45,520 Speaker 5: Yeah, Well, First of all, he was talking about inflation 487 00:21:45,600 --> 00:21:50,080 Speaker 5: possibly being sticky even before what it transpired in Washington, DC. 488 00:21:50,640 --> 00:21:54,000 Speaker 5: I love his response to you about were you selling bonds? 489 00:21:55,280 --> 00:21:57,040 Speaker 3: We like Morgatis well on banks. 490 00:21:57,200 --> 00:21:58,880 Speaker 1: We like banks, we like stocks. 491 00:21:58,960 --> 00:22:00,680 Speaker 5: But this to me is really the key to pay, 492 00:22:00,960 --> 00:22:03,400 Speaker 5: which is how much can you buy the front end 493 00:22:03,560 --> 00:22:06,120 Speaker 5: clip the coupon? Is this making cash great again essentially 494 00:22:06,119 --> 00:22:08,680 Speaker 5: for people who want to sort of get some income 495 00:22:09,040 --> 00:22:11,560 Speaker 5: on their margins but then go into asset classes that 496 00:22:11,600 --> 00:22:14,600 Speaker 5: are going to be less vulnerable to a potential inflationary shops. 497 00:22:14,640 --> 00:22:16,840 Speaker 2: Just a guess, and I haven't hunt directly. I'm not 498 00:22:16,880 --> 00:22:18,920 Speaker 2: sure if the Trump administration is looking to make cash 499 00:22:18,920 --> 00:22:20,240 Speaker 2: great again, but we'll see. 500 00:22:20,240 --> 00:22:21,200 Speaker 3: I guess maybe that is a go. 501 00:22:21,440 --> 00:22:23,600 Speaker 5: Well, maybe it's make crypto gritty, And actually I think 502 00:22:23,600 --> 00:22:26,280 Speaker 5: that it's make dollar less great so that it's weaker, 503 00:22:26,480 --> 00:22:28,720 Speaker 5: although it seems like that's somewhat contradictor. 504 00:22:28,440 --> 00:22:29,199 Speaker 3: Let's get to Mima kay. 505 00:22:29,320 --> 00:22:31,440 Speaker 2: My mckaby was in that room in that news conference, 506 00:22:31,440 --> 00:22:33,879 Speaker 2: and Mike McKay at some point there was some tension 507 00:22:33,920 --> 00:22:34,600 Speaker 2: with Sham and Pow. 508 00:22:34,640 --> 00:22:38,400 Speaker 9: Were you surprised, No, I don't think anybody was surprised 509 00:22:38,760 --> 00:22:40,520 Speaker 9: we got about as much out of him as we 510 00:22:40,560 --> 00:22:43,200 Speaker 9: thought we would get. On the issue of Donald Trump 511 00:22:43,240 --> 00:22:46,240 Speaker 9: and the elections, he just answered with one word and 512 00:22:46,560 --> 00:22:50,120 Speaker 9: then one sentence. No, he's not going to resign if asked, 513 00:22:50,200 --> 00:22:55,240 Speaker 9: and it's not permitted by law for the president to 514 00:22:55,280 --> 00:22:59,000 Speaker 9: demote anybody on the FED. And there wasn't as many 515 00:22:59,080 --> 00:23:01,760 Speaker 9: questions along those lines as maybe we thought there would 516 00:23:01,760 --> 00:23:05,200 Speaker 9: be because he was so definitive on those two answers. 517 00:23:05,320 --> 00:23:08,960 Speaker 9: I think what you got today was two different news 518 00:23:09,000 --> 00:23:12,200 Speaker 9: conference messages. One was to the people inside the beltwigh 519 00:23:12,359 --> 00:23:16,359 Speaker 9: here in Washington about his relationship with Donald Trump, and 520 00:23:16,440 --> 00:23:18,560 Speaker 9: the other is to the markets. And that Rick picked 521 00:23:18,640 --> 00:23:21,439 Speaker 9: up on this very well. The FED does not know 522 00:23:21,480 --> 00:23:23,000 Speaker 9: what it's going to do. There are a lot of 523 00:23:23,040 --> 00:23:25,320 Speaker 9: cross currents coming in twenty twenty five. 524 00:23:25,640 --> 00:23:28,520 Speaker 3: So if you think that the FED. 525 00:23:28,440 --> 00:23:30,439 Speaker 9: Is on some sort of path because of the last 526 00:23:30,480 --> 00:23:33,320 Speaker 9: sep in the last dot plot, you're going to probably 527 00:23:33,440 --> 00:23:35,560 Speaker 9: be wrong. The FED has a lot to keep an 528 00:23:35,600 --> 00:23:38,320 Speaker 9: eye on, not just with the president, but with everything 529 00:23:38,359 --> 00:23:39,600 Speaker 9: else going on in the world. 530 00:23:39,800 --> 00:23:42,280 Speaker 5: With respect to the message to the market, he was 531 00:23:42,359 --> 00:23:44,720 Speaker 5: asked about the fact that the Federal moved the reference 532 00:23:44,760 --> 00:23:47,520 Speaker 5: to gaining confidence on inflation, and he basically said, there's 533 00:23:47,520 --> 00:23:50,000 Speaker 5: nothing to see here. It was just a semantic issue 534 00:23:50,359 --> 00:23:52,040 Speaker 5: that we already said that and we're not going to 535 00:23:52,080 --> 00:23:52,680 Speaker 5: repeat it. 536 00:23:52,760 --> 00:23:53,320 Speaker 1: Do you buy that? 537 00:23:54,720 --> 00:23:55,040 Speaker 3: I do? 538 00:23:55,160 --> 00:23:57,640 Speaker 9: And that was the conclusion that not only I came 539 00:23:57,640 --> 00:23:59,760 Speaker 9: to when I read this statement in the lock up, 540 00:23:59,800 --> 00:24:02,760 Speaker 9: but all the other reporters basically came to as well, 541 00:24:02,920 --> 00:24:06,120 Speaker 9: We've seen this before. When they start changing policy, they 542 00:24:06,119 --> 00:24:09,000 Speaker 9: give a rationale for that, we're moving in the direction 543 00:24:09,080 --> 00:24:10,800 Speaker 9: or we're getting close to where we need to be, 544 00:24:11,119 --> 00:24:13,480 Speaker 9: and then after that they're already there, so they don't 545 00:24:13,560 --> 00:24:16,680 Speaker 9: need to keep repeating that. They just took it out, 546 00:24:16,760 --> 00:24:18,480 Speaker 9: as he said, for clarity. 547 00:24:18,960 --> 00:24:21,159 Speaker 2: Mike McKay, I'm the latest in that news conference. Might 548 00:24:21,200 --> 00:24:23,680 Speaker 2: we'll have a longer conversation tomorrow when you get back 549 00:24:23,720 --> 00:24:26,720 Speaker 2: to New York City. What a news conference with chem 550 00:24:26,760 --> 00:24:28,919 Speaker 2: and Pound, Tom Constant with us now of Miszoo. 551 00:24:29,119 --> 00:24:30,119 Speaker 3: Tom, welcome to the program. 552 00:24:30,119 --> 00:24:32,000 Speaker 2: We'll just give you the opportunity to share your initial 553 00:24:32,040 --> 00:24:33,919 Speaker 2: takes from that news conference and then we'll get into it. 554 00:24:33,960 --> 00:24:34,760 Speaker 3: What's that for you? 555 00:24:36,400 --> 00:24:38,800 Speaker 10: It was pretty much as expected in the sense that 556 00:24:39,600 --> 00:24:42,359 Speaker 10: he's still committing to the easing cycle. I think this 557 00:24:42,520 --> 00:24:46,280 Speaker 10: sort of new news might be, where might they pause 558 00:24:46,600 --> 00:24:49,280 Speaker 10: in the context of the new policy regime that we'll 559 00:24:49,320 --> 00:24:51,199 Speaker 10: be getting with a change in the administration. 560 00:24:51,560 --> 00:24:52,840 Speaker 8: But the idea is, I think. 561 00:24:52,680 --> 00:24:55,360 Speaker 10: There are you know, are subjects of the data really shocking. 562 00:24:55,520 --> 00:24:57,639 Speaker 10: They're kind of on an auto pilot to get rates 563 00:24:57,680 --> 00:24:59,840 Speaker 10: down to around four percent and the early part of 564 00:24:59,880 --> 00:25:01,760 Speaker 10: that next year, and then we take it from there. 565 00:25:01,880 --> 00:25:04,720 Speaker 10: If they have to respond to policies that adjust the 566 00:25:04,840 --> 00:25:07,720 Speaker 10: balance of risks, for example, then you know they'll. 567 00:25:07,560 --> 00:25:08,920 Speaker 8: They'll they'll figure that out then. 568 00:25:09,160 --> 00:25:12,440 Speaker 10: But the election itself isn't really affecting what we thought 569 00:25:12,480 --> 00:25:13,760 Speaker 10: any way they were going to do. 570 00:25:13,760 --> 00:25:17,440 Speaker 6: Donickive's the theme of a Trump administration has growth at 571 00:25:17,480 --> 00:25:20,760 Speaker 6: any cost, pushing against all this is going to be 572 00:25:20,800 --> 00:25:24,520 Speaker 6: a nominal GDP left When you sum things together with 573 00:25:24,600 --> 00:25:28,160 Speaker 6: Steve Rashudo, do you just assume a run rate five 574 00:25:28,280 --> 00:25:31,520 Speaker 6: percent nominal GDP or can I even look for an 575 00:25:31,520 --> 00:25:34,040 Speaker 6: animal spirit towards six percent? 576 00:25:35,400 --> 00:25:37,639 Speaker 10: Well, I definitely think there's a there's an animal spirit 577 00:25:37,680 --> 00:25:40,840 Speaker 10: sing out there. That's pretty interesting. I Mean, the the 578 00:25:40,840 --> 00:25:44,480 Speaker 10: only caveat is when we went through tarifs before, you know, 579 00:25:44,480 --> 00:25:46,399 Speaker 10: when they started to sort of hit it wasn't clear 580 00:25:46,600 --> 00:25:49,600 Speaker 10: in twenty nineteen that the animal spirits were exactly kicking in, 581 00:25:49,800 --> 00:25:51,920 Speaker 10: and the fact had to get into extra easing mode 582 00:25:52,000 --> 00:25:54,320 Speaker 10: by then. So I think there is certainly some definitely 583 00:25:54,359 --> 00:25:57,439 Speaker 10: uncertainty around the whole thing right now. Though you know 584 00:25:57,480 --> 00:26:00,000 Speaker 10: the issue is a lad market. You know it's not great. 585 00:26:00,160 --> 00:26:03,600 Speaker 10: I mean, employment growth is sort of stagnating. I would 586 00:26:03,600 --> 00:26:07,040 Speaker 10: say the economy has been bifurcated. You've had some very 587 00:26:07,040 --> 00:26:09,919 Speaker 10: strong sectors, some weak sectors, and you know, if it 588 00:26:10,000 --> 00:26:13,640 Speaker 10: wasn't for the latest, you know that the election, we'd 589 00:26:13,680 --> 00:26:15,440 Speaker 10: still be in the mode whereby the FED would be 590 00:26:15,560 --> 00:26:19,480 Speaker 10: preemptively trying to cut rates quite quickly to stop unemployment 591 00:26:19,480 --> 00:26:21,919 Speaker 10: going up. So we can't forget that, and we're going 592 00:26:22,000 --> 00:26:24,439 Speaker 10: to have a few more months whereby, if animal spirits 593 00:26:24,480 --> 00:26:28,400 Speaker 10: don't kick up, you might still well see unemployment rising 594 00:26:29,160 --> 00:26:32,479 Speaker 10: above where the FED expects it to be. And therefore, 595 00:26:32,520 --> 00:26:34,800 Speaker 10: you know, some disappointment. I mean, growth itself is a 596 00:26:34,800 --> 00:26:37,600 Speaker 10: bit of a lagging indicator, and it really reflects the 597 00:26:37,640 --> 00:26:40,439 Speaker 10: average of the economy, doesn't reflect the underlying weaknesses and 598 00:26:40,480 --> 00:26:41,320 Speaker 10: some of the sectors. 599 00:26:41,359 --> 00:26:44,120 Speaker 6: If we expect the unexpected is a year go through 600 00:26:44,160 --> 00:26:46,800 Speaker 6: parody or dare I say one on three maybe and 601 00:26:46,880 --> 00:26:50,199 Speaker 6: you answer one sixty will signal a new resilient and 602 00:26:50,280 --> 00:26:51,119 Speaker 6: stronger dollar. 603 00:26:52,400 --> 00:26:53,840 Speaker 8: Well, I mean it really should do. 604 00:26:53,960 --> 00:26:55,760 Speaker 10: I mean, you know, if, especially if you're going to 605 00:26:55,760 --> 00:26:58,400 Speaker 10: start pricing for the tariff. So again, what we don't 606 00:26:58,440 --> 00:27:00,800 Speaker 10: know is whether the tariff threat it's just a threat, 607 00:27:00,920 --> 00:27:02,439 Speaker 10: whether it's going to be enacted. If you are going 608 00:27:02,480 --> 00:27:04,680 Speaker 10: to enact taris, then you know there is obviously the 609 00:27:04,760 --> 00:27:07,440 Speaker 10: risk the dollar is going to basically go up, and 610 00:27:07,720 --> 00:27:10,440 Speaker 10: that's a big part of that. And then you get 611 00:27:10,440 --> 00:27:12,600 Speaker 10: into the you know, the instance of the tariff is 612 00:27:12,600 --> 00:27:16,399 Speaker 10: obviously falling onto the exporters. The consumer is going to 613 00:27:16,440 --> 00:27:18,600 Speaker 10: be somewhat protected. You know, that's where we might end 614 00:27:18,680 --> 00:27:21,199 Speaker 10: up getting. But you know, Trump is Trump, and so 615 00:27:21,560 --> 00:27:23,680 Speaker 10: you know it could well be just a big bargaining 616 00:27:23,720 --> 00:27:25,320 Speaker 10: chip and we might not get the full force of 617 00:27:25,359 --> 00:27:27,280 Speaker 10: the tariffs. I would say one thing about tarast so 618 00:27:27,560 --> 00:27:29,720 Speaker 10: is we do actually need them if he's genuine about 619 00:27:29,760 --> 00:27:34,000 Speaker 10: his tax cuts and the modification to the tax law, 620 00:27:34,240 --> 00:27:36,280 Speaker 10: and next year, you do need the tariffs to actually 621 00:27:36,320 --> 00:27:38,879 Speaker 10: pay for that. So you know, I'm guessing we're going 622 00:27:38,920 --> 00:27:39,720 Speaker 10: to get the tariffs in the. 623 00:27:39,800 --> 00:27:42,159 Speaker 5: End, I'm just putting the policy aside. And there have 624 00:27:42,200 --> 00:27:44,760 Speaker 5: been other changes that have happened in the past three 625 00:27:44,920 --> 00:27:48,080 Speaker 5: four weeks that also were addressed here. Yields have gone 626 00:27:48,119 --> 00:27:51,359 Speaker 5: up because of economic surprises to the upside, Inflation on 627 00:27:51,440 --> 00:27:54,359 Speaker 5: the margins has been slightly stickier. There have been questions 628 00:27:54,359 --> 00:27:57,080 Speaker 5: about why long term yals are so high, and frankly, 629 00:27:57,359 --> 00:28:00,320 Speaker 5: my risk assets don't care because there are basically treating 630 00:28:00,320 --> 00:28:04,000 Speaker 5: it like it's for the right reason. At what point 631 00:28:04,200 --> 00:28:06,679 Speaker 5: do these yields force the FED to take notice in 632 00:28:06,680 --> 00:28:08,800 Speaker 5: a way that they don't have to now they can 633 00:28:08,880 --> 00:28:10,680 Speaker 5: just dismiss it as a blit. 634 00:28:10,800 --> 00:28:12,720 Speaker 1: Potentially, well, I. 635 00:28:12,680 --> 00:28:15,400 Speaker 10: Do think a lot of the moving yields is obviously 636 00:28:15,520 --> 00:28:17,960 Speaker 10: being driven by term premium, what we call term premium, 637 00:28:18,119 --> 00:28:21,359 Speaker 10: and they're good reasons for why term premium is rising. 638 00:28:21,400 --> 00:28:24,119 Speaker 10: One of them is taris, but another one is obviously 639 00:28:24,119 --> 00:28:26,399 Speaker 10: the fiscal supply, So that means you kind of get 640 00:28:26,440 --> 00:28:30,480 Speaker 10: this sort of steepening pressure through the yield market, and 641 00:28:30,520 --> 00:28:34,680 Speaker 10: it's obviously consistent with the deficit concerns that are being 642 00:28:35,480 --> 00:28:40,600 Speaker 10: coming out of the new policy regime forthcoming. In terms 643 00:28:40,640 --> 00:28:43,600 Speaker 10: of how that affects risk ass is really a balancing act. 644 00:28:43,840 --> 00:28:47,160 Speaker 10: If you have term premium going up normally, all else equal, 645 00:28:47,360 --> 00:28:50,280 Speaker 10: risk ass would suffer. However, if on the other side 646 00:28:50,320 --> 00:28:52,760 Speaker 10: of that, you're getting a sort of higher level of growth, 647 00:28:52,880 --> 00:28:56,320 Speaker 10: let's say because of the fiscal stimulus coming through, then 648 00:28:56,360 --> 00:28:59,320 Speaker 10: that really does kind of easily overwhelm the impact of 649 00:28:59,400 --> 00:29:02,200 Speaker 10: term premium. So premium has been very low, so to 650 00:29:02,280 --> 00:29:04,600 Speaker 10: expect it to sort of go up is not unreasonable. 651 00:29:04,920 --> 00:29:07,920 Speaker 10: It's almost if you like normalizing by some models we 652 00:29:07,960 --> 00:29:10,000 Speaker 10: look at, and if you can take a quid pro 653 00:29:10,080 --> 00:29:12,760 Speaker 10: quo and say, well, look, we're going to have higher 654 00:29:12,920 --> 00:29:15,040 Speaker 10: growth coming out of all of this, then there's no 655 00:29:15,160 --> 00:29:18,440 Speaker 10: reason for risk asses to perform badly. And I think 656 00:29:18,440 --> 00:29:19,920 Speaker 10: that's kind of where we are. So we're in the 657 00:29:19,920 --> 00:29:22,000 Speaker 10: sort of, you know, best of all possible worlds in 658 00:29:22,040 --> 00:29:24,120 Speaker 10: the sense where risk acids are okay. 659 00:29:24,440 --> 00:29:26,120 Speaker 8: And yes, long term yields are. 660 00:29:26,160 --> 00:29:29,240 Speaker 10: Rising, but they're not rising so much that they're going 661 00:29:29,280 --> 00:29:32,600 Speaker 10: to unravel the story for riskases. And bear in mind 662 00:29:32,640 --> 00:29:36,040 Speaker 10: the FED is in restrictive mode, so by the fact 663 00:29:36,080 --> 00:29:38,600 Speaker 10: that they can reduce their short term rates, it will 664 00:29:38,600 --> 00:29:41,120 Speaker 10: help anchor the curve lower. So you may well have 665 00:29:41,200 --> 00:29:43,520 Speaker 10: higher term premium, but if short rates are still falling 666 00:29:43,560 --> 00:29:45,640 Speaker 10: at the other end, then the whole curve is somewhat 667 00:29:45,640 --> 00:29:49,040 Speaker 10: getting anchored, which is actually quite good news, and it 668 00:29:49,080 --> 00:29:50,120 Speaker 10: does avoid one. 669 00:29:49,960 --> 00:29:51,280 Speaker 8: Of the problems we had last year. 670 00:29:51,320 --> 00:29:53,200 Speaker 10: If you recall, I used to I call it the 671 00:29:53,200 --> 00:29:56,360 Speaker 10: Liz Trust moment, where when if the FED threatens higher 672 00:29:56,440 --> 00:29:58,640 Speaker 10: yields at the front end and you have a term 673 00:29:58,680 --> 00:30:01,680 Speaker 10: premium a rising in terms of hurting the long end, 674 00:30:01,800 --> 00:30:04,360 Speaker 10: that's really bad news for risk assets because that kind 675 00:30:04,360 --> 00:30:07,560 Speaker 10: of unravels, you know, both sides of the equation, so 676 00:30:07,640 --> 00:30:08,040 Speaker 10: to speak. 677 00:30:08,120 --> 00:30:10,400 Speaker 5: You said a number of things there, or one aspect 678 00:30:10,400 --> 00:30:13,560 Speaker 5: as you said that the FED is clearly in restrictive 679 00:30:13,760 --> 00:30:17,040 Speaker 5: territory at this point and it will be easing J. 680 00:30:17,240 --> 00:30:17,480 Speaker 10: Tup. 681 00:30:17,480 --> 00:30:21,240 Speaker 5: Powell actually maybe casts a little bit of question around 682 00:30:21,320 --> 00:30:24,080 Speaker 5: just how restrictive they were, saying that they're trying to 683 00:30:24,160 --> 00:30:25,920 Speaker 5: get down to a place and then adjust that they 684 00:30:25,960 --> 00:30:28,600 Speaker 5: can figure out what that neutral rate is. Do you 685 00:30:28,680 --> 00:30:31,400 Speaker 5: think that he was opening the door to pausing in 686 00:30:31,480 --> 00:30:34,240 Speaker 5: December to not necessarily cutting more for the rest of 687 00:30:34,280 --> 00:30:34,680 Speaker 5: this year. 688 00:30:35,960 --> 00:30:38,040 Speaker 10: I for a feel that they're pretty much an auto 689 00:30:38,120 --> 00:30:40,920 Speaker 10: pilot for a December cut. I definitely think he's opening 690 00:30:40,960 --> 00:30:43,560 Speaker 10: the door to a pause, let's say within the next 691 00:30:43,880 --> 00:30:45,719 Speaker 10: six months. So they're not going to sort of run 692 00:30:45,760 --> 00:30:47,480 Speaker 10: all the way down to three percent, which is where 693 00:30:47,520 --> 00:30:50,240 Speaker 10: they have that neutral rate, but they could definitely pause 694 00:30:50,240 --> 00:30:52,280 Speaker 10: around four percent. Pausing around four and a half is 695 00:30:52,320 --> 00:30:55,520 Speaker 10: a little premature, particularly since they haven't even seen wouldn't 696 00:30:55,560 --> 00:30:58,440 Speaker 10: have seen the new administration come in, So you know, 697 00:30:58,560 --> 00:31:00,920 Speaker 10: to my mind, you know, not yes is the pause, 698 00:31:01,320 --> 00:31:03,800 Speaker 10: and therefore they can sort of plow through, you know, 699 00:31:03,840 --> 00:31:06,320 Speaker 10: into a Q one easing and then pause, pause. Then 700 00:31:06,640 --> 00:31:08,840 Speaker 10: in terms of neutral and where it is, obviously no 701 00:31:08,840 --> 00:31:11,280 Speaker 10: one really knows where it is, but you know, we've 702 00:31:11,280 --> 00:31:14,360 Speaker 10: done some interesting work to suggest that if interest rates 703 00:31:14,400 --> 00:31:17,800 Speaker 10: don't come down, employment in certain sectors will continue to 704 00:31:17,880 --> 00:31:21,200 Speaker 10: slow and go negative. And that's this kind of preemptive 705 00:31:21,240 --> 00:31:24,040 Speaker 10: aspect of why they want to bring down rates, and 706 00:31:24,080 --> 00:31:26,160 Speaker 10: that's kind of where, you know, why I feel that 707 00:31:26,280 --> 00:31:28,959 Speaker 10: neutral is not here. It's probably not a four percent 708 00:31:29,120 --> 00:31:31,800 Speaker 10: and it's probably close to three percent, but we'll see 709 00:31:31,840 --> 00:31:32,280 Speaker 10: in the end. 710 00:31:32,440 --> 00:31:32,880 Speaker 8: So what a. 711 00:31:32,880 --> 00:31:35,560 Speaker 6: Constant and Rashido say about a run rate of non 712 00:31:35,640 --> 00:31:38,440 Speaker 6: firm payrolls? I mean, can you get non firm payrolls 713 00:31:38,880 --> 00:31:41,280 Speaker 6: permanent under one hundred thousand, or can you even go 714 00:31:41,320 --> 00:31:42,440 Speaker 6: to a negative statistic? 715 00:31:43,320 --> 00:31:46,120 Speaker 10: Well, I think, I mean clearly you can, and I 716 00:31:46,120 --> 00:31:48,600 Speaker 10: think that's that's the problem. I mean, Powell himself said, 717 00:31:48,840 --> 00:31:51,240 Speaker 10: the lad market has eased enough, you can't. You don't 718 00:31:51,280 --> 00:31:54,719 Speaker 10: really want to have payrolls running one hundred thousand or so. 719 00:31:54,920 --> 00:31:57,960 Speaker 10: And the reason or less the reason is because layoffs 720 00:31:58,440 --> 00:32:00,959 Speaker 10: are still very low. The layoff rate is still running 721 00:32:01,040 --> 00:32:04,960 Speaker 10: below one point two percent of the employed workforce, the idea. 722 00:32:05,320 --> 00:32:07,680 Speaker 10: Before COVID, the layoff rate was in a range of 723 00:32:07,720 --> 00:32:10,480 Speaker 10: one point two to one point four percent. So adjusting 724 00:32:10,600 --> 00:32:13,120 Speaker 10: layoffs higher, which will be reflected, for example, in the 725 00:32:13,200 --> 00:32:16,800 Speaker 10: claims data going higher and normalizing if you like, with 726 00:32:16,880 --> 00:32:19,800 Speaker 10: employment growth down in around one hundred thousand or so, 727 00:32:20,040 --> 00:32:24,120 Speaker 10: you will see unemployment rate rising well above the FED forecast. 728 00:32:24,240 --> 00:32:28,040 Speaker 10: So you have to have basically pay rolls accelerating or 729 00:32:28,120 --> 00:32:32,120 Speaker 10: somehow cross your fingers and hope layoffs never actually go up. 730 00:32:32,280 --> 00:32:34,400 Speaker 8: And we're in a new world where companies just won't 731 00:32:34,800 --> 00:32:35,480 Speaker 8: fire people. 732 00:32:35,800 --> 00:32:38,600 Speaker 10: And in a way, that comes back to the animal spirits, 733 00:32:38,640 --> 00:32:41,760 Speaker 10: animal spirits to either not lay off or animal spirits 734 00:32:41,760 --> 00:32:45,320 Speaker 10: to hire more people and get pay rolls accelerating. Just 735 00:32:45,400 --> 00:32:48,080 Speaker 10: keep the unemployment rates where it is in line with 736 00:32:48,120 --> 00:32:49,920 Speaker 10: where the FED would like to see it in the 737 00:32:50,040 --> 00:32:50,560 Speaker 10: medium term. 738 00:32:50,760 --> 00:32:52,600 Speaker 2: Heydan, this was great. It's going to hear from you, sir. 739 00:32:52,640 --> 00:32:55,280 Speaker 2: It's been too long. Don constant there of miszoo on 740 00:32:55,320 --> 00:32:57,840 Speaker 2: a federal reserve. We'll do this all over again in December. 741 00:32:58,040 --> 00:32:59,640 Speaker 2: But the key one, I think circle it on the 742 00:32:59,640 --> 00:33:03,640 Speaker 2: calendar for twenty twenty five March nineteenth March nineteenth, Spring 743 00:33:03,640 --> 00:33:05,840 Speaker 2: of twenty twenty five when they have to produce some 744 00:33:05,920 --> 00:33:08,360 Speaker 2: new forecasts with some new policies in mind. 745 00:33:08,160 --> 00:33:11,280 Speaker 5: Maybe especially as the third finishes out the first one 746 00:33:11,360 --> 00:33:13,840 Speaker 5: hundred DS. It raises this real question how many of 747 00:33:13,840 --> 00:33:18,000 Speaker 5: the policy implementations have really affected the trajectory of the economy. 748 00:33:18,320 --> 00:33:20,280 Speaker 5: And they can't use this as a punt. We'll see 749 00:33:20,320 --> 00:33:22,640 Speaker 5: what we see, they'll have seen, and they'll have to react. 750 00:33:22,720 --> 00:33:26,680 Speaker 2: The Fed is reactionary, The market is anticipatory. The Fed 751 00:33:26,760 --> 00:33:29,680 Speaker 2: is reacting to the data. This market is anticipating changes 752 00:33:29,760 --> 00:33:32,120 Speaker 2: to policy, and a lot of that right now hinges 753 00:33:32,120 --> 00:33:34,280 Speaker 2: on what happens with the House and whether we get 754 00:33:34,480 --> 00:33:36,800 Speaker 2: this GOP suite from New York City that does it 755 00:33:36,880 --> 00:33:39,160 Speaker 2: for us. Thank you very much, reducing Bloomberg TV and 756 00:33:39,280 --> 00:33:42,240 Speaker 2: radio