Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: Jai Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg Jim
Speaker 1: Glassman jointing us now as he always does ahead of
Speaker 1: Payrolls JP Morgan Chase Commercial Banking Head economist, Jim. Great
Speaker 1: to catch you out. Good morning. How are you. We've
Speaker 1: gotta stop the try story, hown't we? Jim? Yeah? The
Speaker 1: most interesting story, isn't it? How do you keep up
Speaker 1: every single morning? You know, you have to step back
Speaker 1: and ask. I think what we're watching is this is
Speaker 1: not the way to get people to the table. I
Speaker 1: think what we're learning and maybe the administration didn't really
Speaker 1: know this that China has a lot of options also,
Speaker 1: and they've got a more much more managed economy so
Speaker 1: they can manage the disruptions from this. And by the way,
Speaker 1: they say they're not going to weaponize the currency, but
Speaker 1: when the currency goes down eight or nine percent, that
Speaker 1: lowers the cost of merchandise we buy from China by
Speaker 1: fifty to sixty. But so you you could fit into
Speaker 1: this story, it's hard to tell. Just to push back
Speaker 1: a bit, the move today doesn't seem completely controlled by China.
Speaker 1: Their currency is weakening a little bit faster than that
Speaker 1: they would like, clearly because they're trying to stem some
Speaker 1: of those two clines. Uh, it's not clear thing about
Speaker 1: China's controlled. And that's why this is not a market currency. Uh.
Speaker 1: It is where it is because the People's Nank of
Speaker 1: China wants it that way. And now you know, and
Speaker 1: the capital flows are very controlled, right, the capital counts
Speaker 1: very control. Is very tough to take money in and
Speaker 1: out of China's So I think everything about China's works traded,
Speaker 1: and I think this is what you know, what they're
Speaker 1: going through is an industrial industrialization of their economy. If
Speaker 1: they were to do what the Trump administration wants to
Speaker 1: do would be very disruptive for them. So it's not
Speaker 1: so much that they're trying that they're fighting trumpets. That
Speaker 1: they've got to manage the how their own economy is
Speaker 1: developing in the middle of this tension with the Trump administration.
Speaker 1: So honestly, I think this is totally unconstructive attempting to control.
Speaker 1: Something doesn't mean you have control. It doesn't necessarily look
Speaker 1: like they have control. But I think they had more
Speaker 1: control than anybody in the world on their on their
Speaker 1: financial instruments, on their currencies. So it's hard to know.
Speaker 1: I mean, I know there are pressures, but the thing is,
Speaker 1: it's very difficult for people to you know, normally you
Speaker 1: would worry that this is a sign of capital outflows,
Speaker 1: people panicking they're moving capital. You can't move capital out
Speaker 1: I mean, there are limits on what you can do,
Speaker 1: and you can be threatened to go to jail or
Speaker 1: whatever you want to do. Quite clearly, there's a difference
Speaker 1: between the pain that the Chinese are experiencing currently in
Speaker 1: the pain the experience in the summer of fifteen and
Speaker 1: early six. You know, I'm not sure that was pain
Speaker 1: they were they were trying. They were trying to get
Speaker 1: into the basket of the SDR basket, right, So they
Speaker 1: were the I m F had issues with their currency
Speaker 1: was not looking like a market currency. So they were
Speaker 1: trying to go through a process of liberalizing. And the
Speaker 1: thing is they've it's it's they've got tremendous control. I
Speaker 1: think a lot of people would describe the equity market
Speaker 1: bursting is pain Jim, Well, not many people own This
Speaker 1: is not like America. A very small percentage of people
Speaker 1: stand the composition of the owners ship, but quite created.
Speaker 1: There was some serious concern amidst the collapse that we
Speaker 1: saw in the equity market fifteen gone through sixteen economy. Honestly,
Speaker 1: I remember these worries we had about hard landing in
Speaker 1: China back in two and sixteen, right, and our market
Speaker 1: went down, And then you would if you stood back
Speaker 1: and you said, now, wait a minute, China can turn
Speaker 1: lots of dials here. And then with six months later
Speaker 1: we we no longer worry about that, and we find
Speaker 1: out that car sales have doubled. So I really think
Speaker 1: it's very difficult to sessing. China's very managed, all right,
Speaker 1: So difficult to assess China. Some people are saying their
Speaker 1: signs that it is getting affected, but unclear. Let's turn
Speaker 1: to the US. We are expecting that job's number at
Speaker 1: eight thirty Eastern time today. Are we going to see
Speaker 1: some bleeds through from this too? For that's escalating between
Speaker 1: the US and frankly the rest of the world. In
Speaker 1: the jobs number, I doubt it in the aggregate numbers.
Speaker 1: What people are saying is when you look at employment
Speaker 1: at very large companies, you're seeing a little bit of
Speaker 1: a slow down. That's where you might see it, but
Speaker 1: I think it's so subtle you won't you won't see it.
Speaker 1: I think we're going to see something a two thousand
Speaker 1: jobs claims, which are the most reliable indicator we have
Speaker 1: on the US, are telling us that the labor market
Speaker 1: strengthen further in the last six months, and it seems
Speaker 1: like we're still running very strong. And I think the
Speaker 1: mystery in the US is where all these people coming from?
Speaker 1: If we're at low if we're at low levels of unemployment,
Speaker 1: where are all these people coming from. Well, it's a
Speaker 1: reminder that there was a lot of hidden unemployment during
Speaker 1: the recession, and mob, bet you anything, we're gonna find
Speaker 1: out that just some flows of new immigration coming in. Yeah.
Speaker 1: How much do you think that the tariffs are sort
Speaker 1: of the trade tensions are going to lead too much
Speaker 1: higher inflation? I think pretty marginal, because, first of all,
Speaker 1: what is the impact of tariffs. It's not just harriffs
Speaker 1: themselves that matters it. What matters is what's the cost
Speaker 1: of merchandise. So if you ask Walmart, what does the
Speaker 1: cost of your merchandise that you're purchasing from China while
Speaker 1: the currency is down eight or nine? UM. My guess
Speaker 1: is they would tell you not much. When you add
Speaker 1: the tariffs to the lower cost of merchandise. The story
Speaker 1: is much more complicated than just tariffs. It also depends
Speaker 1: on where the currency is doing. Um. Is this disruptive
Speaker 1: to the economy. I think it would be really marginal
Speaker 1: impact on inflation. You'll see it more in the PPI
Speaker 1: level and the cost of steel and aluminum, where where
Speaker 1: it already has gotten into place. But I think in
Speaker 1: terms of uh things that we're buying from China, I
Speaker 1: bet we don't see much of it, and you'll see
Speaker 1: it in the import price trends. Jim Klassman, great, tap
Speaker 1: you with the syste Morning Champ, Morgan Shanks Commercial Bank
Speaker 1: and head economists. So I want to bring up Mike
Speaker 1: Darta am Key m Holdings chief economists and Cheap Market
Speaker 1: strategist to get some more reaction on what Jonathan Farrow
Speaker 1: called a snooze fest before running out the door and
Speaker 1: leaving it in my hands. Michael, what's your take on
Speaker 1: this report? Thanks for having me on and I think
Speaker 1: it's pretty you know, pretty much in line with consensus.
Speaker 1: If we look at the fifty thousand upward revision to
Speaker 1: the previous two months, then you know, the actual headline
Speaker 1: figure came, you know, right in line with consensus expectations. Importantly,
Speaker 1: I would remind viewers much better to look at moving
Speaker 1: averages because these monthly figures do bounce around, and we
Speaker 1: do see pretty significant revisions two previous months. So if
Speaker 1: you look at a three month moving average, we're still
Speaker 1: running over two, you know, to twenty, where I think
Speaker 1: to be exact. So that's well above the pace the
Speaker 1: FED thinks that we can sustain over a long period
Speaker 1: of time. As a result, you know, you mentioned the
Speaker 1: bond market not really moving, so you know, these data
Speaker 1: would be consistent with the Fed still on track probably
Speaker 1: to do two more rate rises this year. All right,
Speaker 1: So two more rate rises this year? You know, I
Speaker 1: gotta say, are we moving past the paradigm where every
Speaker 1: payrolls report is you know, parsed in detail and people
Speaker 1: are trying to understand things, and people are saying, you
Speaker 1: know what, we know that things are good. We know
Speaker 1: that in general the job market is strong on the margins.
Speaker 1: You're going to get some variations just month to month,
Speaker 1: but on the whole, unless there's something really dramatic, we
Speaker 1: don't really care, I think. So, you know, it's interesting
Speaker 1: the FED spent a few years telling us that they
Speaker 1: weren't on a preset course, but now it looks pretty
Speaker 1: much like a preset course and less something radical happens
Speaker 1: to the macro data. So I don't think, you know,
Speaker 1: one month of you know, above or below really throws
Speaker 1: the FED much off track based on you know, what
Speaker 1: their current intentions are. And this number was you know,
Speaker 1: pretty much right in line. So I think you'd need
Speaker 1: a streak of surprises on on payrolls either much lower
Speaker 1: than expected or you know, if they're much hotter, especially
Speaker 1: at this stage of the recovery, then that would certainly
Speaker 1: reinforce the idea of a more hawkish FED relative to
Speaker 1: you know, what's currently priced in. So, Mike, given given
Speaker 1: that backdrop, given the fact that the U s economy
Speaker 1: by all accounts is pretty strong right now, the focus
Speaker 1: moves more to trade, and we're getting sort of the
Speaker 1: retaliation from China to President Trump's additional tariffs on Chinese goods.
Speaker 1: China saying that it's going to levy tariffs between five
Speaker 1: and sixty billion dollars of additional US goods coming into
Speaker 1: the country. Uh, you know, in retaliation. How much does
Speaker 1: that sort of dominate the whole picture at this point
Speaker 1: as this backdrop this sort of unknown about wage growth, etcetera, etcetera.
Speaker 1: It's pretty much unknown right now. I'm glad you brought
Speaker 1: that up. I mean, it's an important issue. So far,
Speaker 1: at least as it relates to the macro data and
Speaker 1: frankly the financial markets, it doesn't seem to be having
Speaker 1: much of an impact at all. But you know, if
Speaker 1: you continue to see this ratcheting effect where tariffs are
Speaker 1: going up and then you retaliation, you know, we could
Speaker 1: start to see more harmful effects eventually impacting the macro
Speaker 1: data and financial markets were not there. But you know,
Speaker 1: the way we've been advising our clients to think about
Speaker 1: more restrictive trade policies is essentially like an adverse supply
Speaker 1: side shock and economics one oh one. So if you're
Speaker 1: applying tariffs or taxes, price of a good goes up,
Speaker 1: output falls. You know, it's a headwind to efficiency. You know,
Speaker 1: your previous guest was talking about wages and productivity in
Speaker 1: the key to faster wage growth being through faster productivity. Well,
Speaker 1: a trade war certainly isn't going to help on efficiency
Speaker 1: and productivity. And so you know, if we look at
Speaker 1: fiscal policy, we see some positives but also some negatives,
Speaker 1: and frankly, trade I think would have to go in
Speaker 1: the negative column. Mike, is a trade war inflationary or deflationary? Well,
Speaker 1: it is inflationary. So an adverse supply side shock, if
Speaker 1: you're shifting the supply curve to the left, prices go up,
Speaker 1: output falls um, so different than the demand shock, where
Speaker 1: they tend to go in the same direction. For the FED,
Speaker 1: they do try to look beyond supply side shocks. So
Speaker 1: you know, supply shocks will tend to impact inflation in
Speaker 1: a temporary way, and it's you know, it's unclear how
Speaker 1: the FED would, you know, would really respond if this
Speaker 1: gets severe, But you know that what they're telling us
Speaker 1: is that they're going to try to look beyond it.
Speaker 1: So if you think about the feds dual mandate, what
Speaker 1: would a dual mandate tell the FED to do in
Speaker 1: the event of an adverse supply shock. While on the
Speaker 1: one hand, you get higher inflation, so that would translate
Speaker 1: into more hawkish policy. But on the other you get
Speaker 1: weaker real growth and probably some disruptions in the labor market,
Speaker 1: which would cut the other way easing policy. So on net,
Speaker 1: you know, an adverse supply shock isn't good for the
Speaker 1: US economy, probably doesn't carry significant implications for monetary policy
Speaker 1: one way or the other. Mike Tarta, thank you so
Speaker 1: much for being with us. Michael Darda is m k
Speaker 1: m's chief economists and market strategistic Thank you so much
Speaker 1: for we're spending time with those on this Perrolls Friday.
Speaker 1: It's great to see in front of the White House again.
Speaker 1: I've got about ten trillion dollars of assets under management
Speaker 1: with me around the table, and they're keen to get
Speaker 1: your insights on the job's report, a really solid jobs
Speaker 1: report over the last few months. And around the panel, Lowry,
Speaker 1: we've been talking about whether there's more slack in this
Speaker 1: labor market. Do you think there is, Larry, Well, look,
Speaker 1: you know, depending on the measurements and so forth, I
Speaker 1: think there's a lot of people who are still outside
Speaker 1: of you know, what what i'd call the prime age workforce,
Speaker 1: which is what five to fifty four or some such
Speaker 1: CAPSUL economic advisors. My Great Power cabin hasn't has looked
Speaker 1: at this um. The estimates are wide ranging, but the
Speaker 1: high end is twenty million. I'm a twenty two million
Speaker 1: people are outside of the prime age workforce. Now you
Speaker 1: might dispute that number. On the low side, I think
Speaker 1: their estimate was about ten to twelve million. So all
Speaker 1: labor markets have certainly firmed up, and the unemployment rate
Speaker 1: is down. I think it ticked down to three nine today,
Speaker 1: and you had a good jobs report today, including revisions,
Speaker 1: it was two hundred and fifteen thousand. There are still
Speaker 1: a lot of Americans out there who could come back
Speaker 1: into the labor force. So I like that. I think
Speaker 1: our potential to grow is very strong, and with the
Speaker 1: right incentives, I think we'll get them back working. Yeah,
Speaker 1: and so continued speaking into Kevin Hassett previously. Nowtry it
Speaker 1: just seems that the administration is waiting for this supply
Speaker 1: side response. Has that been you'll rather nuw wance message
Speaker 1: over to the federal reserve as well? Well? Let me
Speaker 1: stay with the supply side response and simply indicate it
Speaker 1: looks to me like we are in an investment boom,
Speaker 1: a capital goods boom, a cap X boom. Those numbers
Speaker 1: are ring in recent quarters, and I noticed the monthly
Speaker 1: is on you know, durables and factory orders are very
Speaker 1: very strong. You know. That was the key intention, the
Speaker 1: primary thrust thrust of our tax cut plan for businesses, UH,
Speaker 1: corporate rate, full expensing, easy repatriation. I think it's working now.
Speaker 1: It's only been in what six seven months, but the
Speaker 1: early returns on that, just the last couple of quarters
Speaker 1: are very very very strong. That will elevate the whole
Speaker 1: growth rate and health of the economy. So I like
Speaker 1: that part a lot. And some analysts, probably not everybody,
Speaker 1: but some analysts are already making some calculations that the
Speaker 1: productivity rate, output per hour, output per person is now
Speaker 1: starting to creep up again. I think it's probably too
Speaker 1: soon to um to say anything conclusively, but I've seen
Speaker 1: these uh, I've seen these views, and it looks like
Speaker 1: we may be moving back to say, one and a
Speaker 1: half to two percent productivity. We were virtually zero for
Speaker 1: quite some time. This is all good, This is all good, Larry.
Speaker 1: I know, over the last couple of weeks we've had
Speaker 1: a real discussion around this table about whether trend growth
Speaker 1: in the United States has picked up, and it looks like,
Speaker 1: relatively speaking, the US is in a position of strength.
Speaker 1: Looking into China, Larry have sat around the table with
Speaker 1: the Chinese many many times. What is your opinion, your
Speaker 1: inside into what is happening with the Chinese economy currently? Well, look,
Speaker 1: I'm not an expert. I do try to follow it,
Speaker 1: and it looks to me, I don't know, you all
Speaker 1: may disagree. It looks to me like the China economy
Speaker 1: is declining and growth it's weaken it almost across the board,
Speaker 1: and it looks like the people's value of China is
Speaker 1: trying to pump it up by you know, adding high
Speaker 1: powered money and and and new credit and so forth.
Speaker 1: The currency fall, the currency fall, I think is partly
Speaker 1: they've stopped defending the U on they think it's going
Speaker 1: to help offset the us UH effort to get rid
Speaker 1: of their unfair trading. Some of the currency fall, though,
Speaker 1: I think it's just money leaving China because it allows
Speaker 1: the investment, and if that continues, that will really damage
Speaker 1: the Chinese economy. If money leaves China, and the currency
Speaker 1: could be a leading indicator they're gonna be in a
Speaker 1: heap of trouble, and so I'm gonna make the case
Speaker 1: that they are in a weak economic position. That's not
Speaker 1: a good place for them to be visa VI the
Speaker 1: trade negotiations. First point. Second point, they better not underestimate
Speaker 1: President's Trump's President Trump's determination to follow through on our asks. Okay,
Speaker 1: I p theft, no go force, transcript technology, no go uh,
Speaker 1: non reciprocal trading, on tariffs and non tariff barriers. You know,
Speaker 1: the presidentcy's a trade reformer. We said many times, no tariffs,
Speaker 1: no tariff barriers, no subsidies. We want to see trade reforms.
Speaker 1: China is not delivering. Okay. Their economy is weak, their
Speaker 1: currency is weak. People leaving the kind tree Um. Don't
Speaker 1: underestimate President Trump's determination to follow through. I'm just telling you.
Speaker 1: I can't speak for the Communist Party in China. I
Speaker 1: can't speak for our president. Do not underestimate his determination
Speaker 1: to change trading practices on a fair reciprocal plane. One
Speaker 1: thing you can definitely speak to, Larry is the strategy
Speaker 1: of the president. It just seems to me that the
Speaker 1: strategy of the administration at the moment is to exert
Speaker 1: maximum pain on the Chinese economy. Is that the direction
Speaker 1: of travel for you guys, Larry, I'm sorry, what was
Speaker 1: the end question? It is the direction of travel for
Speaker 1: you guys to exert maximum plain pain on the Chinese
Speaker 1: economy to get them to come to the table and
Speaker 1: change their trade regime. Well, look, I would maybe rephrase
Speaker 1: it a bit um. I think what we're saying is
Speaker 1: that we are serious and in trade. As you well
Speaker 1: know and your your guests, no negotiations often include the
Speaker 1: use of terrors and us in And has said time
Speaker 1: and time again that targeted tariffs are going to be
Speaker 1: part of the game plan with China unless until they
Speaker 1: begin to meet our requests, which so far they have not.
Speaker 1: In fact, in recent month or so, we've had hardly
Speaker 1: any conversations with them at all. There is some hints
Speaker 1: now that they may wish to talk, although I can't
Speaker 1: say that with certainty. Look, I think the biggest news
Speaker 1: on the trade front, away from the transigent Chinese is
Speaker 1: our progress of the European Union that occurred last week.
Speaker 1: President had great meetings with President Younker. I was involved
Speaker 1: in that. We're breaking ground. We will have a number
Speaker 1: of announcements coming up by hope in the next thirty
Speaker 1: years so days with respect to transactions and market opening
Speaker 1: and increase investments. With the European Union, the EU, as
Speaker 1: you know, turned down a China effort to make a deal.
Speaker 1: The U S EO said no, And so you've got
Speaker 1: now a better story with the U S and the EU.
Speaker 1: We're probably gonna have some positive news on Mexico. And
Speaker 1: I think the alliance what I sometimes called the trade
Speaker 1: Coalition of the willing to change China's unfair and illegal
Speaker 1: practices EU, Mexico, China, I'm sorry, uh, Japan, Australia, perhaps
Speaker 1: Canada will eventually join us as we negotiate an after.
Speaker 1: I like the position we are in, and I think
Speaker 1: the President has played as cards very wisely. Larry, Just
Speaker 1: as a final question, the President has often gone off
Speaker 1: on his own and talks very high level with an
Speaker 1: individual leader. What is the prospect you think that we
Speaker 1: could see President Trump sit down with President she again
Speaker 1: and address these issues together. You know he President Trump
Speaker 1: liked bilaterals and he likes to go head to head.
Speaker 1: You're quite right, that's a good insight. So if the
Speaker 1: opportunity present to itself, UM, I don't want to speak
Speaker 1: for the President. I don't want to get ahead of
Speaker 1: him on this tricky question you asked. But all I
Speaker 1: know is if the past is any prologue to the future.
Speaker 1: President Trump enjoys bilateral discussions. Look, we just had one
Speaker 1: with the EU. President Younker and President Trump got together
Speaker 1: and probably probably did what nobody thought possible, which is
Speaker 1: not only to have a respectful, peaceable meeting, but to
Speaker 1: actually begin the process of making a grand deal to
Speaker 1: open up, tear down barriers, and open up markets. So
Speaker 1: there's your head to head model. Uh, you may well
Speaker 1: see it with China, We'll have to see. I don't know,
Speaker 1: Larry cud Look, it's great to see a healthy and
Speaker 1: fit in front of the White House again. It's thank
Speaker 1: you so much to Jonathan Pharaoh. That was a tremendous
Speaker 1: interview with Larry Cutler of the U. S. Council of
Speaker 1: Economics advising President Trump. Now here were the preview of
Speaker 1: Sunday's Face the Nation is CBS is Margaret Brennan. Of
Speaker 1: course you can listen to Face the Nation Sunday two
Speaker 1: pm in New York, Washington, d C. And now Bloomberg
Speaker 1: one oh six one Boston, Newburyport face the nation this Sunday,
Speaker 1: two pm on Bloomberg Radio. Margaret, with all of the
Speaker 1: back and forth this week, we've got the President who
Speaker 1: is seems to be in full campaign mode. Yes, three
Speaker 1: rallies this week. We had the one in Pennsylvania last night.
Speaker 1: We got another one coming up Saturday night in Ohio,
Speaker 1: which undoubtedly will provide fodder for US Sunday morning. Um,
Speaker 1: we know the President last night, even though he had
Speaker 1: all of his top national security officials from the podium
Speaker 1: at the White House issuing stark warnings to Russia to
Speaker 1: knock it off and to stop interfering in the upcoming
Speaker 1: November elections, which they continue to do to oocracies in
Speaker 1: the crosshairs, according to the Homeland Security Secretary of the
Speaker 1: President didn't echo that language at Israeli and said once
Speaker 1: again using terms like which hunt to describe the ongoing
Speaker 1: investigations into election meddling in t So, Margaret, who's your
Speaker 1: guest this week? We'll talk about some of that with
Speaker 1: familiar phase. Adam Shift, Democratic congressman's from California has been
Speaker 1: involved in some of those investigations. Well. Also, because we're
Speaker 1: headed towards September sooner than you might think, and back
Speaker 1: to school season, be taking a look at what's going
Speaker 1: on with the state of education in America. Will bring
Speaker 1: in Arnie Duncan, the former education secretary from the Obama administration,
Speaker 1: has got a new book out, and talk to him
Speaker 1: about some of what the Trump administration is trying to
Speaker 1: do now and some of the track record of the
Speaker 1: Obama administration and what they attempted to do to help
Speaker 1: educate our kids. Just a little bit on Representative Adam
Speaker 1: Shift of California. Is that going to also focus on
Speaker 1: the ongoing investigation into Russian meddling in the US presidential election,
Speaker 1: because the president, of course this week tweeting out that
Speaker 1: he wants Attorney General Jeff Sessions to push to conclude
Speaker 1: that investigation. The President did say that, which of course
Speaker 1: the Attorney General cannot do because he's refused himself from
Speaker 1: the investigation, which further muddies the waters here. Uh. Some
Speaker 1: talking about this is really just a political tweet to
Speaker 1: um draw support of some of the President's uh you know,
Speaker 1: the most devoted supporters who are seeing this through political lens,
Speaker 1: which is what the President claims it is. All of
Speaker 1: which hunt Um, but with Adam Schiff, we will talk
Speaker 1: more about what Congress is doing or not doing to
Speaker 1: actually secure facilities. Last of what happened in sixteen, what
Speaker 1: is happening right now? You have a head of cyber
Speaker 1: Command standing up at the White House podium saying we
Speaker 1: are going to take active measures against hackers who now
Speaker 1: are trying to interfere and divide America. You know, Margaret,
Speaker 1: I wonder just as a as a journalist when you're
Speaker 1: questioning people on either side. Adam Schiff obviously has very
Speaker 1: strong views. Is it ever difficult to try to find
Speaker 1: I don't know, some kind of I don't want to
Speaker 1: say middle ground, but a place that feels more constructive
Speaker 1: than how heated the rhetoric has gotten on all sides.
Speaker 1: I think you're right. I think this is something that
Speaker 1: is very frustrating for those of us who want to
Speaker 1: focus on policy substance, on what is being done now
Speaker 1: to America versus getting people to to who are divided,
Speaker 1: to be less divided, to focus on the facts rather
Speaker 1: than the opinions here. And that is something that if
Speaker 1: if you believe exactly what the intelligence community is telling you,
Speaker 1: that the aim is to have divide America when we
Speaker 1: only hear things through partisan lenses or see them that way, UM,
Speaker 1: it only helps that attempt to bide, and I think
Speaker 1: that's really frustrating. I think it is also very frustrating
Speaker 1: for me UM in trying to lead conversations when you
Speaker 1: do have everything put through the political uh filter once again,
Speaker 1: and you rightly indicate their uh. The congressman from California
Speaker 1: has been involved with the House Intelligence Committee investigation, but
Speaker 1: he's also out there fundraising for the Democratic Party at
Speaker 1: the very same time. Can you separate those things? Um And?
Speaker 1: What he would say, what others would say, is when
Speaker 1: it comes to American security, they can Will the public
Speaker 1: listen to the facts rather than the filter? I think
Speaker 1: is the challenge for us as journalists to keep it
Speaker 1: focused on that, um And, And that's why I think
Speaker 1: it was important for the White House to put out
Speaker 1: some of the national security professionals to make these arguments
Speaker 1: yesterday and say they're not out there for political reasons.
Speaker 1: They're out there telling you what they're finding right now. Well, market,
Speaker 1: I guess there's no love lost between Adam Schiff and
Speaker 1: fellow California Congressman Devin Newness now that's always part of
Speaker 1: the the infighting there. They are two partisans and they
Speaker 1: very much are in disagreement with each other. That House
Speaker 1: Committee investigation concluded, and I will point out that the
Speaker 1: that trade Goudy, who has let his own investigations and
Speaker 1: House oversights himself, called these things really more of a
Speaker 1: circus than a fact finding mission when Congress leads an investigation. Um.
Speaker 1: That aside, the reason that it will ultimately come down
Speaker 1: in many ways to what Congress believes or what they
Speaker 1: are able to turn up is because if we do
Speaker 1: get into a situation post November, post these congressional races
Speaker 1: where it comes down to not a procedure in court,
Speaker 1: but rather a political uh task here of impeachment, what
Speaker 1: is it, how is it that people will be uh,
Speaker 1: what is the fact that they are looking at? And
Speaker 1: how will they be voted? Which is why this does
Speaker 1: come down to politics in terms of how it could
Speaker 1: damage the president in the long run. If if the
Speaker 1: Special Council doesn't have a case to bring to court,
Speaker 1: does he but will he bring to Congress. We'll be listening,
Speaker 1: Thanks very much, Margaret Brennan, host of Face the Nation.
Speaker 1: Remember to listen to Face the Nation Sunday two pm
Speaker 1: in New York, Washington, d C. And now Bloomberg one
Speaker 1: oh six one Boston New report that's Face the Nation
Speaker 1: this Sunday at two pm on Bloomberg Radio, Governor Countie
Speaker 1: throwing himself back into the thick end of the Brexit debate,
Speaker 1: saying the chance of the UK dropping out of the
Speaker 1: European Union without a deal is uncomfortably high. A little
Speaker 1: bit of tension. There also some tension in the news
Speaker 1: conference following a decision to high interest rates. Mr Cannie
Speaker 1: was asked about what our guest Danny blanche Flower thought
Speaker 1: about the labor market. Take a listen to this exchange.
Speaker 1: Given that Professor blanch flowers predictions for labor market and
Speaker 1: particularly earn his growth have been yeah, recently a lot
Speaker 1: more accurate in the banks, why is he wrong? And
Speaker 1: you're right? Yeah, Where do I begin? Um? Um, Great
Speaker 1: respect for Professor blanch Flower, but his time in the
Speaker 1: MPC has passed, and this is the judgment of this
Speaker 1: MPC first point. Second is that I think one bigger
Speaker 1: point of context in terms of wages, which is not
Speaker 1: precisely go on your question. I'll get to your question,
Speaker 1: but going precisely is that um A, you know, given
Speaker 1: how low productivity is, um wage growth that is in
Speaker 1: the upper twos, low threes is actually wage growth. It's
Speaker 1: consistent today with a two percent inflation target. Governor County there,
Speaker 1: speaking in the news conference following that interest rate high,
Speaker 1: Danny blanche Fled joining us now Dartmouth professor and former
Speaker 1: bo WE Monetary Policy Committee member, Danny, good morning too,
Speaker 1: and thank you for coming back your opportunity to Governor.
Speaker 1: Please Danny respond, Yeah, I like the great respect it.
Speaker 1: I mean, I think I think I think the answer was,
Speaker 1: I mean disingenuous in the suggestion. And they continue to
Speaker 1: make the suggestion that wage growth is in the threes
Speaker 1: and the three and a half. Well that's what they
Speaker 1: have been forecasting to the last eighteen forecasts in a row.
Speaker 1: And they got all excited in December when they got
Speaker 1: a read of three and they said, yippee, here we are,
Speaker 1: We're completely right. And then wage growth deterior rated them,
Speaker 1: fell and slowed. So the forecasts, the forecast, they may
Speaker 1: have been terrible. Everything in this basically in this decision
Speaker 1: to raise was essentially based on their forecast for wages,
Speaker 1: which I think I've shown have been completely terrible, and
Speaker 1: there was nothing in the data, so I really didn't
Speaker 1: buy it. And I thought the data this morning, the
Speaker 1: slowing of the services p M I sort of added
Speaker 1: added to the sort of r of groups think they
Speaker 1: made yesterday. And there's been a lot of people like
Speaker 1: me saying, you know, this was a major mistake. The
Speaker 1: FD editorial this morning it says this is a major mistake,
Speaker 1: and I think I think it has been. I think
Speaker 1: the fundamental thing is about wages, as it will be
Speaker 1: in the Job's report this morning, and I've worked on
Speaker 1: I wrote my PhD thesis on it over maybe forty
Speaker 1: years ago, so I know about this stuff, and I
Speaker 1: think I think it was just they've just gone on
Speaker 1: and on and on saying, you know, it's all going
Speaker 1: to explode. And the answer that listeners should have is, well,
Speaker 1: why today if in the last seven team forecast it happens,
Speaker 1: you're saying today it's gonna why should we ever believe you? Right? Well, Danny,
Speaker 1: I guess that. Then the question is how much harm
Speaker 1: did the Bank of England do with this rate hike?
Speaker 1: I mean, couldn't you say it's just innocuous and it
Speaker 1: gives them a little more ammunition to take care of
Speaker 1: another downturn well, and already slowing housing and chrome commercial
Speaker 1: property markets are going to be impacted. And the way
Speaker 1: that I sort of think of it is, you've got
Speaker 1: three choices. You can punch yourself hard in the face,
Speaker 1: you can punch yourself gently in the face, or not
Speaker 1: punch yourself in the face. So I would choose option three. Um,
Speaker 1: and you said to me, is not is punching yourself
Speaker 1: in the face a little bit when you don't have
Speaker 1: too Is that a good idea? The answer is no,
Speaker 1: it's not a good idea. So, yes, they've made a
Speaker 1: small mistake, better than making a big mistake. But I
Speaker 1: personally would have preferred them to not make a mistake
Speaker 1: at So and I was on yesterday without imposing both,
Speaker 1: he was on the MPC two and our views were
Speaker 1: the data was much more balanced than you would have thought,
Speaker 1: and there were clear arguments actually for a cut. So
Speaker 1: if there are arguments are strong arguments for a cut,
Speaker 1: and you say, well, it doesn't really hurt they've made
Speaker 1: an error, well, okay, it's better than making a really
Speaker 1: big error. But it looks for our listeners that weren't
Speaker 1: with us yesterday. I just want to give the other
Speaker 1: end of the argument so you have a chance to
Speaker 1: respond to it. What do you make of the comment
Speaker 1: from Governor Carney where he basically says that you used
Speaker 1: to be on the MPC, this is today's MPC, And
Speaker 1: I don't think it was an insult. I think it
Speaker 1: was a suggestion that times were different back then. There
Speaker 1: was an expectation of a productivity rebound that we probably
Speaker 1: won't get now that's the expectation from this MPC. What
Speaker 1: do you make of that kind of theory, Danny Well,
Speaker 1: I certainly have written about the fact that the world
Speaker 1: has changed, and I think it's fundamentally all to the
Speaker 1: labor market characteristics of altered. But I think my analysis
Speaker 1: of the labor market has actually got better and there's
Speaker 1: has got worse. So I think that obviously that the
Speaker 1: world has changed. Clearly we're at low rates for a
Speaker 1: for a set of reasons. Um, I mean just because,
Speaker 1: I mean I remember being on there and being a
Speaker 1: lone voice then, so I guess I'm a lone voice now. Um.
Speaker 1: But we will see. But it looks it looked to
Speaker 1: me like this isn't an error. The market didn't receive
Speaker 1: it that well. But I literally think today that today
Speaker 1: we suddenly got a really bad services p M. I
Speaker 1: came in immediately afterwards. So you have very weak growth,
Speaker 1: no data is to sustain it, and the first piece
Speaker 1: of data you get is bad. So yeah, maybe he
Speaker 1: can say that, but you know, I think that their
Speaker 1: analysis and their forecasts have been disastrous. Jenny blinch Flower,
Speaker 1: thank you so much for being with us. I'm gonna
Speaker 1: go ahead tonight. I'm gonna tell my son. You know,
Speaker 1: I have some advice for you from don't just if
Speaker 1: you're going to punch yourself in your face, don't do it.
Speaker 1: You don't want to do it hard, you don't want
Speaker 1: to do it soft. You could just avoid it. Um.
Speaker 1: This from Dartmouth professor Jenny blanch Fly is great to
Speaker 1: catch up with Danny to one such an interesting exchange
Speaker 1: in the news conference at the Bank of England. M
Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and
Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast
Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before
Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg Radio,