1 00:00:00,320 --> 00:00:04,160 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:04,200 --> 00:00:07,640 Speaker 1: their trust in independent registered investment advisors to the tune 3 00:00:07,640 --> 00:00:12,240 Speaker 1: of four trillion dollars. Why learn more and find your 4 00:00:12,240 --> 00:00:27,960 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:28,360 --> 00:00:32,040 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,120 --> 00:00:37,120 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:37,560 --> 00:00:42,120 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:42,200 --> 00:00:48,400 Speaker 1: of course, on the Bloomberg. It says Bloomberg Surveillance on 9 00:00:48,400 --> 00:00:50,600 Speaker 1: a Wednesday morning, the twelfth of October. Good morning to 10 00:00:50,640 --> 00:00:53,120 Speaker 1: everyone around the world listening on Bloomberg Radio. I'm David 11 00:00:53,159 --> 00:00:56,040 Speaker 1: Gurrow with Tom Keene in New York. Today the Federalserve 12 00:00:56,080 --> 00:00:58,279 Speaker 1: releases minutes from its September meeting. We'll look for more 13 00:00:58,320 --> 00:01:01,560 Speaker 1: detail on that seven to three decision not to raise 14 00:01:01,640 --> 00:01:03,840 Speaker 1: rights and will continue to keep close eye on currencies. 15 00:01:03,880 --> 00:01:06,600 Speaker 1: This morning, the pound strengthening from what was close to 16 00:01:06,640 --> 00:01:09,680 Speaker 1: a three decade low. UK Prime Minister Theresa May, signaling 17 00:01:09,720 --> 00:01:11,520 Speaker 1: more of a willingness to work with Parliament on a 18 00:01:11,600 --> 00:01:14,560 Speaker 1: plan for Brexit. As I mentioned, FED minutes out today 19 00:01:14,600 --> 00:01:17,120 Speaker 1: at two pm in Washington, and Steven Stanley is going 20 00:01:17,160 --> 00:01:18,800 Speaker 1: to be paying attention to that. He is AMers Pierrepont's 21 00:01:18,840 --> 00:01:21,039 Speaker 1: chief Economy is kind enough to join us now in 22 00:01:21,080 --> 00:01:23,520 Speaker 1: the studio in New York. And Stephen, let me just 23 00:01:23,520 --> 00:01:25,080 Speaker 1: start by asking what you're gonna be looking for when 24 00:01:25,080 --> 00:01:27,279 Speaker 1: those notes come out from the Ecoles building this afternoon. 25 00:01:27,280 --> 00:01:29,880 Speaker 1: What's the first thing you're gonna be looking for? Good morning? Well, 26 00:01:29,920 --> 00:01:31,880 Speaker 1: I think the first thing I'm gonna be looking for 27 00:01:32,080 --> 00:01:34,959 Speaker 1: is just how wide was the sentiment for a move? 28 00:01:35,000 --> 00:01:37,200 Speaker 1: I mean, we know that three voters chose to dissent, 29 00:01:38,040 --> 00:01:39,840 Speaker 1: but I think we also have a sense that there 30 00:01:39,840 --> 00:01:43,200 Speaker 1: were others who wanted to move as well. So, um, 31 00:01:43,280 --> 00:01:45,560 Speaker 1: just how close were they? You know? Vice Chair Fisher 32 00:01:45,600 --> 00:01:48,000 Speaker 1: said it was a pretty close call, So I think 33 00:01:48,120 --> 00:01:49,960 Speaker 1: how close was it? And how does that set up 34 00:01:49,960 --> 00:01:51,880 Speaker 1: for for a move in December. I'm sure you've been 35 00:01:51,880 --> 00:01:54,040 Speaker 1: paying attention to what Eric Rosen, going to the Boston Fed, 36 00:01:54,320 --> 00:01:57,880 Speaker 1: has been saying. Talk about the prominent role he's playing. 37 00:01:57,920 --> 00:02:00,240 Speaker 1: Now is someone here advocating for a rate rye sooner 38 00:02:00,320 --> 00:02:03,160 Speaker 1: rather than later? Sure? Well, I think the main significance 39 00:02:03,200 --> 00:02:06,560 Speaker 1: of that is see someone that's traditionally been very dubbish um. 40 00:02:06,680 --> 00:02:09,720 Speaker 1: And the reasoning that he's using is one that I 41 00:02:09,720 --> 00:02:12,280 Speaker 1: think resonates with more than a few of the people 42 00:02:12,280 --> 00:02:14,720 Speaker 1: in the FED, which is that he's concerned that a 43 00:02:14,760 --> 00:02:17,760 Speaker 1: long stretch of very easy monetary policy is leading to 44 00:02:18,000 --> 00:02:21,280 Speaker 1: excessive asset prices, and in particular he's looking at commercial 45 00:02:21,280 --> 00:02:23,320 Speaker 1: real estate and the effect that could have on the 46 00:02:23,360 --> 00:02:26,280 Speaker 1: banking sector if in fact prices get a little too 47 00:02:26,320 --> 00:02:28,799 Speaker 1: inflated and then start to head the other way. Sure, 48 00:02:28,880 --> 00:02:32,600 Speaker 1: Yellen has had a great record of fostering and having 49 00:02:32,720 --> 00:02:35,400 Speaker 1: unanimity among the ranks at the f o MC. We're 50 00:02:35,400 --> 00:02:37,520 Speaker 1: seeing that start to erode a little bit. How much 51 00:02:37,520 --> 00:02:39,480 Speaker 1: of it concern do you think that is to her 52 00:02:39,760 --> 00:02:42,399 Speaker 1: in terms of just management of that committee. Well, I mean, 53 00:02:42,840 --> 00:02:45,440 Speaker 1: you know, she is more devilish, I think than the 54 00:02:45,480 --> 00:02:47,960 Speaker 1: consensus of the committee. So there's a tension there where 55 00:02:48,040 --> 00:02:51,520 Speaker 1: she certainly wants to represent the committee and and to 56 00:02:51,600 --> 00:02:53,760 Speaker 1: bring the committee along, but at the same time I 57 00:02:53,760 --> 00:02:58,639 Speaker 1: think she feels very strongly in pursuing an easier monetary policy. 58 00:02:58,840 --> 00:03:02,720 Speaker 1: This just came across the screen David Gura, n Nate Lanson, 59 00:03:03,840 --> 00:03:09,440 Speaker 1: the Royal Mail of the United Kingdom will not allow 60 00:03:09,680 --> 00:03:15,920 Speaker 1: Samsung's Galaxy Notes seven smartphones to be returned to Samsung 61 00:03:16,639 --> 00:03:20,799 Speaker 1: through its postal network. That is remarkable. Yeah, I read 62 00:03:20,800 --> 00:03:22,560 Speaker 1: that Korean Air was not allowing them to be on 63 00:03:22,600 --> 00:03:25,480 Speaker 1: their planes turned on. But I guess you put it 64 00:03:25,480 --> 00:03:28,000 Speaker 1: on a ship, right. I don't mean to interrupt Steve 65 00:03:28,040 --> 00:03:31,320 Speaker 1: Stanley from uh, did you just Steve Stanley help us here? 66 00:03:31,520 --> 00:03:34,520 Speaker 1: Do you have a sallexy a Galaxy seven? Don't? And 67 00:03:34,560 --> 00:03:36,880 Speaker 1: if I did, I think you'd have to evacuate me. Right, 68 00:03:37,000 --> 00:03:40,760 Speaker 1: ken fellow, do you have a Galaxy seven? We're open 69 00:03:40,840 --> 00:03:44,680 Speaker 1: column of the twins? He has a Galaxy seven. If 70 00:03:45,160 --> 00:03:47,400 Speaker 1: you had a Galaxy seven column, we're gonna let you 71 00:03:47,440 --> 00:03:50,920 Speaker 1: go home. So there it is. Seriously, folks, that's an 72 00:03:51,000 --> 00:03:54,840 Speaker 1: important note on the challenges. It's Samson. Has Steve Stanley 73 00:03:54,880 --> 00:03:57,000 Speaker 1: helped me with the minutes? How do you read the minutes? 74 00:03:57,040 --> 00:04:01,240 Speaker 1: I mean I've seen them several, some many a few. 75 00:04:01,560 --> 00:04:05,560 Speaker 1: How does a pro like you read Janet Yellin's minutes? Well, 76 00:04:05,600 --> 00:04:07,920 Speaker 1: I think that those words that you mentioned are the 77 00:04:08,000 --> 00:04:10,160 Speaker 1: ones that you do have to pay attention to because 78 00:04:10,520 --> 00:04:14,360 Speaker 1: they are often um dueling perspectives. So you'll have a 79 00:04:14,360 --> 00:04:16,400 Speaker 1: hawkish view and a dovish view, and you have to 80 00:04:16,440 --> 00:04:18,839 Speaker 1: pay attention to how many you know, what those words 81 00:04:18,880 --> 00:04:20,880 Speaker 1: suggest about how many are in each camp. And I 82 00:04:20,920 --> 00:04:23,800 Speaker 1: think what we've seen over most of this year is 83 00:04:23,800 --> 00:04:27,120 Speaker 1: that the Hawks have been, um, you know, pushing for 84 00:04:27,200 --> 00:04:29,760 Speaker 1: a move and but they've always been in the minority. 85 00:04:29,960 --> 00:04:33,080 Speaker 1: And it feels to me like the balance of power 86 00:04:33,080 --> 00:04:35,559 Speaker 1: on the committee, at least for the moment, has changed 87 00:04:35,560 --> 00:04:37,800 Speaker 1: a little bit. And it's it's a it's a somewhat 88 00:04:37,839 --> 00:04:42,400 Speaker 1: more um open to a hike. U. Certainly before the 89 00:04:42,520 --> 00:04:44,400 Speaker 1: end of the year, you always learned something new. I 90 00:04:44,440 --> 00:04:46,599 Speaker 1: mean I I look at them, look at how people 91 00:04:46,640 --> 00:04:49,600 Speaker 1: process them. It's looking at word count, it's looking for instance, 92 00:04:49,640 --> 00:04:52,640 Speaker 1: of certain words. How much new or novel do you 93 00:04:52,640 --> 00:04:55,040 Speaker 1: get in the minutes each time? Well, I think it's 94 00:04:55,040 --> 00:04:57,799 Speaker 1: it's not the same every time. Sometimes the minutes aren't 95 00:04:57,839 --> 00:04:59,960 Speaker 1: really all that helpful. Um. And then there are other 96 00:05:00,120 --> 00:05:03,240 Speaker 1: times where there's a there's a paragraph about a conversation 97 00:05:03,320 --> 00:05:06,719 Speaker 1: that you know, a topic was discussed extensively that you 98 00:05:06,800 --> 00:05:10,000 Speaker 1: may not have expected. UM. So I think there's the 99 00:05:10,000 --> 00:05:13,120 Speaker 1: there's the little breadcrumbs that are dropped, you know, the 100 00:05:13,200 --> 00:05:15,880 Speaker 1: explicit policy signals that are sent in the minutes. But 101 00:05:15,920 --> 00:05:19,560 Speaker 1: I think there's also sometimes uh I as an economist, 102 00:05:19,600 --> 00:05:22,520 Speaker 1: I get an insight into things that they're looking at 103 00:05:22,520 --> 00:05:24,520 Speaker 1: on a broader scale rather than just what's going to 104 00:05:24,600 --> 00:05:26,479 Speaker 1: happen at the next meeting. And how about what the 105 00:05:26,520 --> 00:05:29,479 Speaker 1: non voting members say? How much credence do you give 106 00:05:29,640 --> 00:05:31,640 Speaker 1: what they're saying at the meeting with what's recorded from 107 00:05:31,640 --> 00:05:33,800 Speaker 1: them in the minutes. Well, you know, you look at 108 00:05:33,839 --> 00:05:36,839 Speaker 1: this committee as it's currently constituted, and the board is 109 00:05:36,839 --> 00:05:40,919 Speaker 1: is very debbish in general. And also over the years 110 00:05:40,960 --> 00:05:44,000 Speaker 1: we've gotten to a point where the board basically governors 111 00:05:44,040 --> 00:05:47,680 Speaker 1: just aren't going to dissent, right, So the chair basically 112 00:05:47,720 --> 00:05:50,400 Speaker 1: has the votes to get whatever she wants done. There 113 00:05:50,440 --> 00:05:52,520 Speaker 1: is this inner orbit in the outer order, the order 114 00:05:52,560 --> 00:05:55,480 Speaker 1: the banks, right. So then the non voters, I think 115 00:05:56,040 --> 00:05:58,599 Speaker 1: as a rule, are typically more hawkish than the norm 116 00:05:59,240 --> 00:06:01,080 Speaker 1: or the or the enter of the committee because the 117 00:06:01,120 --> 00:06:04,719 Speaker 1: center is so dubbish. Um. So again it's a question 118 00:06:04,760 --> 00:06:07,919 Speaker 1: of are they frustrated because they know they're not going 119 00:06:07,960 --> 00:06:11,400 Speaker 1: to get what they want? Are they eager to move 120 00:06:11,480 --> 00:06:13,919 Speaker 1: and and and feel like we're moving in the right direction, 121 00:06:13,960 --> 00:06:15,800 Speaker 1: and they just like like to go a little more, 122 00:06:16,480 --> 00:06:18,240 Speaker 1: or they just feel like they're just totally butting their 123 00:06:18,240 --> 00:06:20,000 Speaker 1: heads up against the wall. And you do get a 124 00:06:20,040 --> 00:06:22,000 Speaker 1: little bit of a sense of that sometimes In a minute. 125 00:06:22,600 --> 00:06:25,280 Speaker 1: I just did on the dots chart, folks, I may 126 00:06:25,360 --> 00:06:27,200 Speaker 1: do this on television tomorrow and I'll send it out 127 00:06:27,200 --> 00:06:31,120 Speaker 1: on Bloomberg Radio. Plus a linear regression of a dots 128 00:06:31,279 --> 00:06:37,800 Speaker 1: chart translated, we get to two percent FED funds target 129 00:06:38,680 --> 00:06:44,120 Speaker 1: in about February of two thousand eighteen. That seems almost preposterous. 130 00:06:45,000 --> 00:06:48,680 Speaker 1: Where do those dots migrate too? Well, I think the 131 00:06:48,760 --> 00:06:52,320 Speaker 1: question really is about inflation going forward. We've had a 132 00:06:52,400 --> 00:06:54,799 Speaker 1: we've had an economy where the labor market has improved 133 00:06:54,800 --> 00:06:58,040 Speaker 1: a lot, but inflation is kind of stubbornly held below 134 00:06:58,040 --> 00:07:01,600 Speaker 1: two percent. So uh, I think things change a little 135 00:07:01,600 --> 00:07:03,640 Speaker 1: bit as we move into two thousand and seventeen, because 136 00:07:03,680 --> 00:07:05,400 Speaker 1: I think we're going to start to see those inflation 137 00:07:05,480 --> 00:07:07,920 Speaker 1: numbers get very close to two percent and by the 138 00:07:08,040 --> 00:07:10,520 Speaker 1: end of this year, and probably move above it next year. 139 00:07:10,600 --> 00:07:13,880 Speaker 1: So that would be the case for something like the dots. 140 00:07:14,280 --> 00:07:16,760 Speaker 1: And as you say, the market doesn't expect that at all, 141 00:07:16,920 --> 00:07:20,480 Speaker 1: but do the market doesn't expect it even though there 142 00:07:20,600 --> 00:07:25,120 Speaker 1: is language from adults like Stan Fisher of an overshoot. 143 00:07:25,520 --> 00:07:28,080 Speaker 1: So we get near two percent, that's a big So 144 00:07:28,280 --> 00:07:30,640 Speaker 1: what the chair yell and, isn't it? I think so. 145 00:07:30,720 --> 00:07:33,520 Speaker 1: I think they'd be very happy to see inflation a 146 00:07:33,560 --> 00:07:37,000 Speaker 1: few ticks above two percent. The question is, really, um, 147 00:07:37,520 --> 00:07:40,200 Speaker 1: that's not a problem if you're fairly close to a 148 00:07:40,320 --> 00:07:43,440 Speaker 1: neutral policy. But if you're very far away from that, 149 00:07:44,040 --> 00:07:49,760 Speaker 1: um and, and you're and you're not moving closer at 150 00:07:49,760 --> 00:07:53,600 Speaker 1: a at a decent pace, when inflation is already above 151 00:07:53,680 --> 00:07:56,360 Speaker 1: your target, then I think I think it becomes a problem. 152 00:07:56,400 --> 00:07:58,400 Speaker 1: There is a quote from torstens Lock in a Bloomberg 153 00:07:58,400 --> 00:08:01,000 Speaker 1: News piece this morning, talking about the whites of their 154 00:08:01,000 --> 00:08:03,000 Speaker 1: eyes when it comes to inflation. He begs the question, 155 00:08:03,040 --> 00:08:05,200 Speaker 1: what what does that mean in this day and age? 156 00:08:05,240 --> 00:08:07,280 Speaker 1: Is at one point seven? Is it too? How do 157 00:08:07,280 --> 00:08:08,800 Speaker 1: you define the term what's their eyes when it comes 158 00:08:08,840 --> 00:08:11,200 Speaker 1: to to inflation? Well? I think it's it's got to 159 00:08:11,240 --> 00:08:14,720 Speaker 1: be two percent. I mean, the Fed is is even 160 00:08:14,760 --> 00:08:17,160 Speaker 1: now we've on the core pc deflator, which is their 161 00:08:17,200 --> 00:08:19,840 Speaker 1: preferred measure. Of course, that we've moved on a year 162 00:08:19,880 --> 00:08:22,760 Speaker 1: over your basis from one three to one seven, and 163 00:08:22,880 --> 00:08:25,800 Speaker 1: the year to date pace is very close to two percent. 164 00:08:26,080 --> 00:08:28,560 Speaker 1: And yet you know, you've got prominent people in the 165 00:08:28,560 --> 00:08:31,160 Speaker 1: committee who are still talking about that it's a problem 166 00:08:31,200 --> 00:08:34,080 Speaker 1: that inflation is too low. Why are they saying that 167 00:08:34,120 --> 00:08:37,640 Speaker 1: if you and I see the same vectors, higher vectors 168 00:08:37,640 --> 00:08:40,559 Speaker 1: don't matter anymore. Well, it's interesting. You know. Charlie Evans 169 00:08:40,640 --> 00:08:43,640 Speaker 1: was out over the over the long weekend, and his 170 00:08:43,720 --> 00:08:46,400 Speaker 1: view is simply, he's just skeptical. You know, we've spent 171 00:08:46,480 --> 00:08:50,240 Speaker 1: so long below two percent. He's concerned about inflation expectations 172 00:08:50,240 --> 00:08:53,280 Speaker 1: having moved down. I don't necessarily agree with him about that, 173 00:08:53,600 --> 00:08:55,720 Speaker 1: but I think he's just skeptical that we're gonna make 174 00:08:55,720 --> 00:08:58,080 Speaker 1: it to two percent. So there's just disagreement about where 175 00:08:58,080 --> 00:09:01,280 Speaker 1: we're headed very quickly. Here, one of the things I've noticed, David, 176 00:09:01,280 --> 00:09:03,560 Speaker 1: I don't know if you've noticed this in Brooklyn, but 177 00:09:03,640 --> 00:09:06,640 Speaker 1: the basic idea is, all of a sudden, businesses are 178 00:09:06,640 --> 00:09:11,880 Speaker 1: having trouble keeping people and retaining people. Are I looked 179 00:09:11,880 --> 00:09:15,880 Speaker 1: at the Jolts Survey, Michael McKee's favorite series. I'm sorry 180 00:09:15,920 --> 00:09:18,480 Speaker 1: I got a jolt out of it. It's it's above 181 00:09:19,120 --> 00:09:22,640 Speaker 1: the last peak of like seven years ago, isn't it absolutely, 182 00:09:22,640 --> 00:09:26,319 Speaker 1: the labor markets getting tight, and there's Mr the brilliant 183 00:09:26,440 --> 00:09:29,559 Speaker 1: Mr Evans of Carnegie Mellon in Chicago, the land of 184 00:09:29,559 --> 00:09:32,480 Speaker 1: the Chicago Cubs. Does he know that? Well? I think 185 00:09:32,520 --> 00:09:35,160 Speaker 1: again that's where the kind of the hawk ish and 186 00:09:35,200 --> 00:09:38,040 Speaker 1: the dovish predilections come in. I'm I tend to be 187 00:09:38,080 --> 00:09:40,880 Speaker 1: more of a hawk. He's certainly very dubbish. And I 188 00:09:40,920 --> 00:09:43,280 Speaker 1: think where I see the glass half full, he sometimes 189 00:09:43,320 --> 00:09:45,720 Speaker 1: sees the glass half empty. So he's looking at things 190 00:09:45,760 --> 00:09:50,040 Speaker 1: like low labor force participation and elevated you six, and 191 00:09:50,080 --> 00:09:52,680 Speaker 1: he's saying, hey, there's still some slash here, Michael Barr. 192 00:09:52,720 --> 00:09:54,800 Speaker 1: Should we have a drinking game that whenever a guest 193 00:09:54,840 --> 00:09:58,120 Speaker 1: comes in and says glass half full, glass empty, we 194 00:09:58,240 --> 00:10:03,000 Speaker 1: take a shot half empty. We can just have the drinking. 195 00:10:03,080 --> 00:10:05,720 Speaker 1: It's just amazing. Glass half That was Steve. That was 196 00:10:05,800 --> 00:10:08,800 Speaker 1: just outstanding. Next, we're gonna do the Truman one hand 197 00:10:09,120 --> 00:10:11,760 Speaker 1: in this pocket, one hand in that pocket. A lot, 198 00:10:11,760 --> 00:10:14,000 Speaker 1: it's more said to the great song of that David 199 00:10:14,040 --> 00:10:17,240 Speaker 1: gurn Tom King. We're here with Stephen Stanley of Amir's 200 00:10:17,280 --> 00:10:20,640 Speaker 1: pier Pond to remind you he was brilliant on a 201 00:10:20,720 --> 00:10:24,000 Speaker 1: more subdued g DP call than consensus a year at 202 00:10:24,000 --> 00:10:29,240 Speaker 1: a half or so uh ago, let's expand. I love 203 00:10:29,280 --> 00:10:34,400 Speaker 1: the phrase proxy productivity. It's something you and Bob since 204 00:10:34,440 --> 00:10:37,800 Speaker 1: you talk about it, the Amir's pierpont help us with productivity. 205 00:10:38,080 --> 00:10:40,640 Speaker 1: And I love this idea of the demographic dynamics and 206 00:10:40,760 --> 00:10:45,520 Speaker 1: proxy productivity. What is that? Well, you know, I think 207 00:10:45,880 --> 00:10:48,600 Speaker 1: what we're saying is obviously and this is not just 208 00:10:48,679 --> 00:10:50,920 Speaker 1: in the US, but all around the world, we're saying low, 209 00:10:51,120 --> 00:10:55,480 Speaker 1: very low productivity in this cycle, and so um if 210 00:10:55,480 --> 00:10:57,520 Speaker 1: you look at the implications of that, as it has 211 00:10:57,520 --> 00:11:01,600 Speaker 1: really important implications for GDP uh potential GDP growth, as 212 00:11:01,600 --> 00:11:03,880 Speaker 1: the San Francisco FED put out a piece yesterday saying 213 00:11:03,880 --> 00:11:06,079 Speaker 1: that potential GDP growth maybe one and a half to 214 00:11:06,200 --> 00:11:08,360 Speaker 1: one and three quarters. I think that's really important. Is 215 00:11:08,400 --> 00:11:09,960 Speaker 1: something that I've been talking about for a long time. 216 00:11:10,520 --> 00:11:12,600 Speaker 1: I think the other piece of that that that maybe 217 00:11:12,600 --> 00:11:16,800 Speaker 1: people haven't caught onto quite yet, is the implications of 218 00:11:16,880 --> 00:11:20,560 Speaker 1: productivity for wage growth, because people are still even at 219 00:11:20,600 --> 00:11:22,240 Speaker 1: the FED, are still saying, well, we got to get 220 00:11:22,280 --> 00:11:24,280 Speaker 1: back to three percent wage growth because that's what we 221 00:11:24,280 --> 00:11:27,680 Speaker 1: had in the last cycle. Well, if productivity slower businesses 222 00:11:27,720 --> 00:11:30,520 Speaker 1: are not going to pay workers for productivity that doesn't 223 00:11:30,559 --> 00:11:34,280 Speaker 1: exist and beautifully framed. And the idea here, and this 224 00:11:34,360 --> 00:11:38,600 Speaker 1: is so important, folks, is how things mesh in. If 225 00:11:38,640 --> 00:11:41,080 Speaker 1: I get a stronger dollar, if we go to the 226 00:11:41,120 --> 00:11:44,120 Speaker 1: top of the recent range, or if I even breaks 227 00:11:44,120 --> 00:11:49,040 Speaker 1: through that, is that an implied austerity for Janet yelling? 228 00:11:49,160 --> 00:11:52,360 Speaker 1: And is that is something that diminishes growth and diminishes 229 00:11:52,760 --> 00:11:56,080 Speaker 1: our ability to get productivity up. Does a dollar play 230 00:11:56,120 --> 00:11:58,559 Speaker 1: into it even if it's a little bit right? Well, 231 00:11:58,600 --> 00:12:02,520 Speaker 1: I think where yes, it definitely is a dragged growth 232 00:12:02,920 --> 00:12:07,000 Speaker 1: and it's also a a negative factor for inflation. And 233 00:12:07,040 --> 00:12:09,600 Speaker 1: I think that was the bigger issue for the Fed 234 00:12:09,640 --> 00:12:12,920 Speaker 1: in that fourteen fifteen period when the dollar strengthened so much, 235 00:12:13,040 --> 00:12:15,880 Speaker 1: is that it helped to hold down inflation at a 236 00:12:15,880 --> 00:12:17,839 Speaker 1: time when they were hoping to get it up. I'm 237 00:12:17,840 --> 00:12:20,160 Speaker 1: gonna try to get you to be prescriptive here, So 238 00:12:20,720 --> 00:12:22,480 Speaker 1: you know, with this, with this negative time, with the 239 00:12:22,600 --> 00:12:26,600 Speaker 1: US UH wage growth, real wage growth slowing UH and 240 00:12:26,800 --> 00:12:29,360 Speaker 1: your forecast continuing to slow, what's gonna kickstart that? What's 241 00:12:29,360 --> 00:12:31,960 Speaker 1: going to change things? Do you think? Well? I think 242 00:12:32,160 --> 00:12:34,920 Speaker 1: on the wage side will probably be okay, because the 243 00:12:35,000 --> 00:12:37,439 Speaker 1: labor market is tight, right, so if firms want to 244 00:12:37,520 --> 00:12:39,600 Speaker 1: hire workers, they're gonna have to pay more. And we're 245 00:12:39,600 --> 00:12:43,240 Speaker 1: seeing more and more anecdotal evidence of that, and we've 246 00:12:43,240 --> 00:12:45,960 Speaker 1: started to see some movement on the on the wage 247 00:12:45,960 --> 00:12:49,679 Speaker 1: statistics average generally earning z C I whatnot. So I 248 00:12:49,760 --> 00:12:52,319 Speaker 1: think that that real wage growth will be okay as 249 00:12:52,320 --> 00:12:55,839 Speaker 1: long as inflation is only gradually moving higher um. And 250 00:12:56,240 --> 00:12:58,680 Speaker 1: as a result, I think the consumers should be in 251 00:12:58,840 --> 00:13:01,199 Speaker 1: pretty good shape here for the foreseeable future as well. 252 00:13:01,200 --> 00:13:04,240 Speaker 1: Why are demographics something more people aren't talking about. We 253 00:13:04,280 --> 00:13:06,200 Speaker 1: talked about in the context of Japan, we talked about 254 00:13:06,200 --> 00:13:08,200 Speaker 1: in the context of many other economies, but it isn't 255 00:13:08,240 --> 00:13:10,439 Speaker 1: something that we talked about that much here in the US, 256 00:13:10,800 --> 00:13:15,720 Speaker 1: probably because it moves very slow, um, which is actually 257 00:13:15,760 --> 00:13:18,160 Speaker 1: good for someone like myself who's trying to forecast things, 258 00:13:18,200 --> 00:13:24,160 Speaker 1: because demographics is one thing I can forecast pretty well. Um. 259 00:13:24,200 --> 00:13:27,480 Speaker 1: It's good for me because I'm never going to return. Um. 260 00:13:28,400 --> 00:13:31,760 Speaker 1: Steve Stanley, how do you respond to very good charts 261 00:13:31,760 --> 00:13:34,400 Speaker 1: and evidence? And I think of the Zero Edge team 262 00:13:34,400 --> 00:13:37,360 Speaker 1: that have been great on this of part time full 263 00:13:37,400 --> 00:13:41,560 Speaker 1: time America, and I get it. In some job categories, 264 00:13:41,559 --> 00:13:44,000 Speaker 1: there is wage growth and there's a tightness of the 265 00:13:44,080 --> 00:13:48,640 Speaker 1: labor market, but that doesn't speak to the part timization 266 00:13:49,640 --> 00:13:52,560 Speaker 1: of the United States of America. Do you think that's 267 00:13:52,559 --> 00:13:55,880 Speaker 1: just wrong analysis or can you say there's two Americas 268 00:13:56,200 --> 00:13:58,680 Speaker 1: and one of them is a part time America. Well, 269 00:13:58,720 --> 00:14:01,800 Speaker 1: I think there's no question and that um that we're 270 00:14:01,800 --> 00:14:05,400 Speaker 1: gonna see more part time jobs. Uh. And this is 271 00:14:05,440 --> 00:14:07,880 Speaker 1: not a cyclical issue. This is a structural issue. And 272 00:14:07,880 --> 00:14:10,520 Speaker 1: and I've kind of argued against the view coming out 273 00:14:10,559 --> 00:14:13,240 Speaker 1: of chair Yelling and others at the FED that a 274 00:14:13,240 --> 00:14:15,320 Speaker 1: lot of the you know that there's a lot of 275 00:14:15,360 --> 00:14:20,120 Speaker 1: slack in the labor market, as demonstrated by higher part 276 00:14:20,160 --> 00:14:23,880 Speaker 1: time involuntary part timers, or by the U six unemployment rate. UM. 277 00:14:23,920 --> 00:14:25,680 Speaker 1: I think a lot of that is structural, and I 278 00:14:25,680 --> 00:14:28,200 Speaker 1: think it reflects a couple of things. One is that 279 00:14:28,280 --> 00:14:30,960 Speaker 1: the economy itself, the structure the economy has changed. If 280 00:14:31,000 --> 00:14:33,280 Speaker 1: you look at the sectors of the economy where we've 281 00:14:33,280 --> 00:14:37,760 Speaker 1: seen job growth in this cycle, retail, restaurants, temp workers, 282 00:14:37,800 --> 00:14:40,840 Speaker 1: a lot of places where zero hudges just kills us 283 00:14:40,880 --> 00:14:43,600 Speaker 1: after the job's day. Zero hudge does like four or 284 00:14:43,680 --> 00:14:46,440 Speaker 1: five charts on this. I mean, come on, they're not 285 00:14:46,520 --> 00:14:50,440 Speaker 1: hamburger flippers, but they're not the jobs that give us 286 00:14:50,440 --> 00:14:53,440 Speaker 1: an aspiration do that. Yeah? Well, I will say I 287 00:14:53,440 --> 00:14:55,600 Speaker 1: think over the last year or two we have seen 288 00:14:55,640 --> 00:14:58,760 Speaker 1: a little more broad based UM job growth. Certainly early 289 00:14:58,760 --> 00:15:01,160 Speaker 1: in the expansion, I think that was the case. Um. 290 00:15:01,280 --> 00:15:03,720 Speaker 1: But but the point, my point would be that you 291 00:15:03,760 --> 00:15:05,960 Speaker 1: can't look at the U six rate and say, oh, well, 292 00:15:06,000 --> 00:15:08,440 Speaker 1: this is higher than it was in the in the 293 00:15:08,560 --> 00:15:11,680 Speaker 1: you know, ten years ago, and conclude from that that 294 00:15:11,720 --> 00:15:14,640 Speaker 1: there's more cyclical slack. I think that's a structural change 295 00:15:14,680 --> 00:15:17,080 Speaker 1: in our economy. What about this new group of workers 296 00:15:17,120 --> 00:15:20,560 Speaker 1: that Alan Kruegery Princeton talks about, those who elect to 297 00:15:20,640 --> 00:15:23,160 Speaker 1: do contract work or part time work through Uber, through 298 00:15:23,200 --> 00:15:27,360 Speaker 1: other on demand services like that, Yeah, the gig it. Yeah, well, 299 00:15:27,400 --> 00:15:29,440 Speaker 1: I think it's it's great for folks who are looking 300 00:15:29,440 --> 00:15:32,800 Speaker 1: for more flexibility. Um. You know, if it's the only 301 00:15:32,880 --> 00:15:35,040 Speaker 1: thing you can find and you'd like to have a 302 00:15:35,080 --> 00:15:38,360 Speaker 1: forty hour week, full time job, then obviously that's that's 303 00:15:38,360 --> 00:15:40,720 Speaker 1: an issue. UM. But I think for a lot of folks, 304 00:15:40,960 --> 00:15:42,640 Speaker 1: they would like to be able to move in and 305 00:15:42,680 --> 00:15:45,760 Speaker 1: out of of of employment at their leisure to work 306 00:15:45,800 --> 00:15:48,840 Speaker 1: whatever hours they'd like to work. And so for folks 307 00:15:48,840 --> 00:15:52,600 Speaker 1: like that, it's a it's a great opportunity. I'm skeptical. 308 00:15:52,800 --> 00:15:54,920 Speaker 1: To me, it's a lot of people forced into the gig. 309 00:15:55,960 --> 00:15:59,040 Speaker 1: I hate the phrase the gig economy, John Tucker, is 310 00:15:59,040 --> 00:16:01,120 Speaker 1: that what we're doing? Are we part of the gig economy? 311 00:16:01,760 --> 00:16:04,160 Speaker 1: You've always been part of the gig. It's just a 312 00:16:04,240 --> 00:16:09,920 Speaker 1: great gig. Steven Sally, brilliant. Thank you so much for Amerson. 313 00:16:10,040 --> 00:16:12,960 Speaker 1: Go out there with Bob. Send your gig through the 314 00:16:13,000 --> 00:16:16,840 Speaker 1: gig economy, the gig job economy of Amberson. This has 315 00:16:16,880 --> 00:16:36,920 Speaker 1: been fabulous, without any uh delay. Craig Moffatt joins us 316 00:16:36,920 --> 00:16:41,120 Speaker 1: from moffat day. Craig, I'm watching Bob Costas kill it 317 00:16:41,760 --> 00:16:45,720 Speaker 1: on MLB on cable, and one day they had Spanish 318 00:16:46,160 --> 00:16:50,720 Speaker 1: Baseball on MLB channel. I couldn't find where the other 319 00:16:50,800 --> 00:16:54,240 Speaker 1: games are because they're spread out all over. It just 320 00:16:54,280 --> 00:16:59,160 Speaker 1: seems almost like sports chaos in your cable world. Where 321 00:16:59,200 --> 00:17:01,720 Speaker 1: are we going to be in five years if I 322 00:17:01,760 --> 00:17:06,360 Speaker 1: want to watch Red Sox Cubs World Series? Well, hey, 323 00:17:06,400 --> 00:17:08,200 Speaker 1: good morning time you know that. Look, there's a lot 324 00:17:08,280 --> 00:17:15,720 Speaker 1: of talk about uh exclusivity for sports and things like that. UM. 325 00:17:15,760 --> 00:17:18,040 Speaker 1: And and obviously there's been a lot of talk about 326 00:17:18,400 --> 00:17:24,400 Speaker 1: key sports leagues and games moving to online media. My 327 00:17:24,520 --> 00:17:27,960 Speaker 1: best guests and um, and this is really more my 328 00:17:28,080 --> 00:17:32,400 Speaker 1: partner Michael's Baileywick than mine. But our best guess is that, um, 329 00:17:32,520 --> 00:17:36,199 Speaker 1: you're gonna see things stay the same more than they change. 330 00:17:36,600 --> 00:17:40,560 Speaker 1: That sports are so central to the value proposition of 331 00:17:41,160 --> 00:17:44,160 Speaker 1: live television and the cable package. They represent only about 332 00:17:45,040 --> 00:17:49,200 Speaker 1: of viewers I say only, um is an enormous number 333 00:17:49,200 --> 00:17:54,200 Speaker 1: about of viewing points. Um. But in key demos, Fox 334 00:17:54,280 --> 00:17:57,920 Speaker 1: just said last week what was it of their viewership 335 00:17:58,040 --> 00:18:00,960 Speaker 1: or something was? Live sports and live sports are so 336 00:18:01,040 --> 00:18:05,840 Speaker 1: central to the value proposition that uh, that the traditional 337 00:18:05,840 --> 00:18:07,680 Speaker 1: media companies are going to continue to pay up and 338 00:18:07,760 --> 00:18:11,120 Speaker 1: keep them in the traditional venues for a while longer. Well, 339 00:18:11,119 --> 00:18:12,920 Speaker 1: the number one question I get cred I want David 340 00:18:12,920 --> 00:18:16,320 Speaker 1: Gore to jump in here, is Apple TVs trying so 341 00:18:16,440 --> 00:18:20,080 Speaker 1: hard it ain't working. Mr Moffatt, I can tell you 342 00:18:20,119 --> 00:18:24,320 Speaker 1: that from actual use, does Apple TV have any chance 343 00:18:24,400 --> 00:18:28,040 Speaker 1: to be part of live sports? Well, I guess the 344 00:18:28,040 --> 00:18:30,439 Speaker 1: the The obvious retort would be, are they really trying 345 00:18:30,440 --> 00:18:32,879 Speaker 1: that hard? Um? I mean they're certainly trying hard to 346 00:18:33,000 --> 00:18:37,240 Speaker 1: make Apple TV compelling device, but they haven't really tried 347 00:18:37,280 --> 00:18:40,080 Speaker 1: all that hard to make it a compelling service. For 348 00:18:40,160 --> 00:18:44,520 Speaker 1: all the talk of of Steve jobs Um having this 349 00:18:44,680 --> 00:18:49,160 Speaker 1: deathbed revelation about how to crack the code for television, Um, 350 00:18:49,200 --> 00:18:52,000 Speaker 1: not much has happened on the Apple front um. They 351 00:18:52,119 --> 00:18:56,679 Speaker 1: spent a lot of time trying to create a video 352 00:18:56,720 --> 00:19:00,800 Speaker 1: bundle that they thought would be compelling and for intensive purposes. 353 00:19:00,840 --> 00:19:03,680 Speaker 1: They dropped the exercise, whether it was over the lack 354 00:19:03,720 --> 00:19:07,200 Speaker 1: of broadcast television or whatever it was. They don't seem 355 00:19:07,240 --> 00:19:10,560 Speaker 1: to be presuing it anymore, David, So you understand, Craig 356 00:19:10,600 --> 00:19:13,520 Speaker 1: Moffat is single handedly been trying to fix a lousy 357 00:19:13,600 --> 00:19:18,359 Speaker 1: Apple remote control of Apple TV has failed. So forth, 358 00:19:18,440 --> 00:19:21,640 Speaker 1: Mr Gura jumping yeah, Craig. You talk about the importance 359 00:19:21,680 --> 00:19:25,000 Speaker 1: of live sports right now to these broadcasters, and I 360 00:19:25,080 --> 00:19:27,159 Speaker 1: wonder how you react to what we've seen when it 361 00:19:27,200 --> 00:19:30,920 Speaker 1: comes to professional football in particular, over these last few weeks, 362 00:19:31,240 --> 00:19:35,080 Speaker 1: viewership has been diminished, advertisers not getting the bang for 363 00:19:35,119 --> 00:19:38,240 Speaker 1: their buck that they wanted. How much of a warning 364 00:19:38,280 --> 00:19:41,960 Speaker 1: sign is that about the importance of live sports? You know, 365 00:19:42,040 --> 00:19:45,560 Speaker 1: it's a great question, David and and um my partner 366 00:19:45,600 --> 00:19:49,720 Speaker 1: Michael just yesterday published a report, the conclusion of which 367 00:19:49,920 --> 00:19:53,679 Speaker 1: was the jury still out that it's been a funny 368 00:19:53,840 --> 00:19:57,119 Speaker 1: start to the season for the NFL in in that 369 00:19:57,160 --> 00:20:01,040 Speaker 1: you've had a combination of very high profile injury UM 370 00:20:01,359 --> 00:20:05,240 Speaker 1: those injuries in turn and suspensions obviously with Tom Brady, 371 00:20:05,359 --> 00:20:10,360 Speaker 1: the loss of to retirement of Peyton Manning, and that 372 00:20:10,440 --> 00:20:13,880 Speaker 1: combination of things made it difficult for schedulers to put 373 00:20:13,920 --> 00:20:16,879 Speaker 1: the best games on television because they didn't know which 374 00:20:16,880 --> 00:20:19,320 Speaker 1: teams were actually going to be interesting. You know, it 375 00:20:19,359 --> 00:20:22,520 Speaker 1: turned out that injuries really changed which teams were going 376 00:20:22,560 --> 00:20:25,800 Speaker 1: to capture the imagination. And then add to that the 377 00:20:26,960 --> 00:20:30,080 Speaker 1: presidential debates that have come on one Sunday night and 378 00:20:30,119 --> 00:20:33,240 Speaker 1: one Monday night, UM that have taken huge ratings, and 379 00:20:34,359 --> 00:20:37,320 Speaker 1: it's hard to say whether there's something really endemic going 380 00:20:37,359 --> 00:20:41,639 Speaker 1: on here. If this continues and we see for the 381 00:20:41,680 --> 00:20:44,199 Speaker 1: balance of this season or certainly in the beginning of 382 00:20:44,280 --> 00:20:47,960 Speaker 1: next season, UM that ratings aren't coming back, then there 383 00:20:48,000 --> 00:20:51,639 Speaker 1: really is a reason to panic because football is the 384 00:20:51,800 --> 00:20:54,000 Speaker 1: lynch pin. It's not just sports in general. It is 385 00:20:54,040 --> 00:20:57,240 Speaker 1: football and one league against the NFL and if the 386 00:20:57,320 --> 00:20:59,600 Speaker 1: NFL does crack, it's a huge problem. But I think 387 00:20:59,600 --> 00:21:01,600 Speaker 1: it's two early to say that it really is. Let 388 00:21:01,600 --> 00:21:03,679 Speaker 1: me ask you about Twitter's ten million dollar bed. I 389 00:21:03,680 --> 00:21:05,760 Speaker 1: put down my moff at Nathan's notes the other night, 390 00:21:05,800 --> 00:21:09,920 Speaker 1: pick up the phone. They're on Twitter is an NFL game. 391 00:21:10,600 --> 00:21:12,880 Speaker 1: This was characterized as an experiment, but I must say 392 00:21:13,400 --> 00:21:16,240 Speaker 1: clarity of the game easy to watch. There is the 393 00:21:16,240 --> 00:21:18,080 Speaker 1: conversation going on beneath to take it or leave it? 394 00:21:18,119 --> 00:21:21,119 Speaker 1: But how successful has this been for Twitter? And is 395 00:21:21,119 --> 00:21:22,960 Speaker 1: it more than experiment? Is the experiment paying off? Is 396 00:21:22,960 --> 00:21:24,919 Speaker 1: that's something we're going to see more of? Well, it 397 00:21:24,920 --> 00:21:29,119 Speaker 1: certainly isn't paying off financially, although you can't really judge 398 00:21:29,119 --> 00:21:31,560 Speaker 1: it based on a single game. But it was a 399 00:21:31,640 --> 00:21:38,720 Speaker 1: Jets Bills game. The viewership was middling at best, I suppose, 400 00:21:38,920 --> 00:21:42,760 Speaker 1: and you're right. While technologically it worked reasonably well, and 401 00:21:42,800 --> 00:21:44,480 Speaker 1: I say worked reasonably well, that you had a good 402 00:21:44,480 --> 00:21:48,159 Speaker 1: picture and what have you, it operated with a fairly 403 00:21:48,240 --> 00:21:51,760 Speaker 1: significant delay, and the delay got longer and longer as 404 00:21:51,800 --> 00:21:56,159 Speaker 1: the game continued, um which created some jarring moments. Right, 405 00:21:56,200 --> 00:21:58,080 Speaker 1: I mean, at the beginning of the game, you were 406 00:21:58,119 --> 00:22:01,560 Speaker 1: about forty twonds delayed, and so part of the point 407 00:22:01,600 --> 00:22:04,680 Speaker 1: of the exercise was to run tweets alongside the game. 408 00:22:05,119 --> 00:22:08,080 Speaker 1: The tweets were forty seconds into the future versus what 409 00:22:08,160 --> 00:22:09,600 Speaker 1: you were watching, and by the end of the game 410 00:22:09,600 --> 00:22:14,320 Speaker 1: they were you might be hearing tweets about or seeing 411 00:22:14,320 --> 00:22:18,359 Speaker 1: tweets about the next possession by the other team while 412 00:22:18,400 --> 00:22:23,159 Speaker 1: you're watching UM Drive. So I would say it was 413 00:22:23,240 --> 00:22:26,960 Speaker 1: a roughly a success but um but certainly not a 414 00:22:26,960 --> 00:22:29,440 Speaker 1: resounding one. And they didn't come close to making money 415 00:22:29,440 --> 00:22:32,840 Speaker 1: on it, you know, they it was a tiny, tiny 416 00:22:32,880 --> 00:22:35,040 Speaker 1: pool of viewers compared to what you would need for 417 00:22:35,160 --> 00:22:38,960 Speaker 1: advertising revenue. You've written a lot about the transition from 418 00:22:39,480 --> 00:22:43,120 Speaker 1: wired to wireless, the that will no longer use those 419 00:22:43,200 --> 00:22:45,200 Speaker 1: terms in the pretty near term. Here we're gonna be 420 00:22:45,240 --> 00:22:46,760 Speaker 1: talking about the network and we're not gonna be making 421 00:22:46,760 --> 00:22:49,359 Speaker 1: the distinction between the two of those things that as 422 00:22:49,800 --> 00:22:52,680 Speaker 1: big cable operators get into the to the wireless space, 423 00:22:52,720 --> 00:22:56,119 Speaker 1: how far out are we from that happening? You know, 424 00:22:56,240 --> 00:22:59,080 Speaker 1: we're not as far away as you might think. Um. 425 00:22:59,680 --> 00:23:02,440 Speaker 1: If you think about where the world is going with 426 00:23:02,520 --> 00:23:05,320 Speaker 1: five G wireless, which is the next generation of wireless, 427 00:23:05,480 --> 00:23:08,760 Speaker 1: when do we see that another upgrade. Yeah, that's right, 428 00:23:08,800 --> 00:23:13,120 Speaker 1: another upgrade. The technology UM is going to start to appear, 429 00:23:13,520 --> 00:23:16,120 Speaker 1: at least in fixed applications, meaning you won't be able 430 00:23:16,119 --> 00:23:17,960 Speaker 1: to use it on your handset, but you'll be able 431 00:23:18,000 --> 00:23:22,320 Speaker 1: to use it for wireless broadband for your home. UM 432 00:23:22,359 --> 00:23:27,199 Speaker 1: probably as early as en Morison seems to be the 433 00:23:27,240 --> 00:23:31,359 Speaker 1: most aggressive in doing it. Yeah, I'm just trying to 434 00:23:31,400 --> 00:23:34,639 Speaker 1: get my new iPhone seven in the mail, you know, 435 00:23:37,400 --> 00:23:43,920 Speaker 1: started interrupt. No, look, it's so here. Here's here's what's 436 00:23:43,920 --> 00:23:47,879 Speaker 1: going to happen. Right. In order to support those new 437 00:23:48,359 --> 00:23:52,080 Speaker 1: five G networks, you have to push wires deeper and 438 00:23:52,160 --> 00:23:55,679 Speaker 1: deeper and deeper into neighborhoods because the nature of the 439 00:23:55,880 --> 00:23:58,720 Speaker 1: of the new technologies is smaller and smaller cell sites 440 00:23:58,800 --> 00:24:01,160 Speaker 1: that each of which sir of fewer and fewer people, 441 00:24:01,200 --> 00:24:04,920 Speaker 1: in order to support higher and higher capacity. The problem is, 442 00:24:04,960 --> 00:24:07,359 Speaker 1: as you do that, you become more and more like 443 00:24:07,400 --> 00:24:10,600 Speaker 1: a wired network and less and less like a wireless network. 444 00:24:10,640 --> 00:24:14,080 Speaker 1: You know, if the old adage is that any wireless 445 00:24:14,080 --> 00:24:17,840 Speaker 1: network is wires and ten percent wireless, well, in the 446 00:24:17,880 --> 00:24:21,920 Speaker 1: future wireless networks are going to wires and five percent wireless, 447 00:24:22,040 --> 00:24:26,879 Speaker 1: and if you take it to its logical conclusion UM, 448 00:24:27,440 --> 00:24:32,880 Speaker 1: the ultimately competitive advantage in the wireless network comes from 449 00:24:32,920 --> 00:24:35,359 Speaker 1: the most wires, and who has the most wires, it's 450 00:24:35,400 --> 00:24:38,560 Speaker 1: actually the wired operators, say, it's the cable operators who 451 00:24:38,600 --> 00:24:42,879 Speaker 1: are best positioned for next generation wireless UM. At the 452 00:24:42,920 --> 00:24:45,159 Speaker 1: same time, when you think about how you connect to 453 00:24:45,240 --> 00:24:48,240 Speaker 1: your cable network today, you don't connect with a wire 454 00:24:48,359 --> 00:24:51,400 Speaker 1: you connect with WiFi. Right you're watching on your iPad, 455 00:24:51,440 --> 00:24:54,520 Speaker 1: you're watching on your or you're using your your wireless 456 00:24:54,560 --> 00:24:58,680 Speaker 1: device in your home, your your iPhone UM. So these 457 00:24:58,720 --> 00:25:01,240 Speaker 1: distinctions between network are going to go away. You're not 458 00:25:01,240 --> 00:25:04,600 Speaker 1: going to say, in the future do I want wireless 459 00:25:04,640 --> 00:25:07,479 Speaker 1: from the same company as I want my my TV from. 460 00:25:07,520 --> 00:25:09,199 Speaker 1: You're just gonna say, I have a network and I 461 00:25:09,280 --> 00:25:13,120 Speaker 1: use it. Thrilled to have craigna craig, let me start 462 00:25:13,119 --> 00:25:16,640 Speaker 1: in buy hoed cell. Verizon is in a state of flux. 463 00:25:16,800 --> 00:25:20,560 Speaker 1: Is a dividends solid for I think Verizon's dividend is 464 00:25:20,680 --> 00:25:23,760 Speaker 1: very solid, but the wireless business in general is going 465 00:25:23,760 --> 00:25:25,640 Speaker 1: through a state of flux. And that's why you see 466 00:25:25,760 --> 00:25:31,359 Speaker 1: Verizon UM trying new things, trying to to uh to 467 00:25:31,480 --> 00:25:35,000 Speaker 1: change the business by buying first day oh well and 468 00:25:35,080 --> 00:25:38,760 Speaker 1: now buying Yahoo. They aren't big transactions for a company 469 00:25:38,800 --> 00:25:42,280 Speaker 1: like Verizon, but they they I think point to the 470 00:25:42,359 --> 00:25:46,040 Speaker 1: challenges of of operating in a wireless business that's just 471 00:25:46,080 --> 00:25:49,680 Speaker 1: not growing anymore. And their business, their their dividend is 472 00:25:49,680 --> 00:25:53,000 Speaker 1: a safe dividend. They have very good dividend coverage. But 473 00:25:53,040 --> 00:25:54,920 Speaker 1: it's a tough business that there is. I'm glad that 474 00:25:54,960 --> 00:25:58,000 Speaker 1: you brought up that Yahoo deal, wondering in light of 475 00:25:58,000 --> 00:25:59,840 Speaker 1: what Verizon has said here how it wants that one 476 00:26:00,240 --> 00:26:02,360 Speaker 1: billion dollar reduction on what it said it would pay 477 00:26:02,840 --> 00:26:04,280 Speaker 1: for you all. If you think that deal is a 478 00:26:04,320 --> 00:26:07,800 Speaker 1: done deal, well, at first, I would say Verizon hasn'tformally 479 00:26:07,840 --> 00:26:11,160 Speaker 1: confirmed UM that they're looking for that one billion dollar 480 00:26:11,200 --> 00:26:14,760 Speaker 1: reduction that was reported, but Verizon has has not commented 481 00:26:14,800 --> 00:26:18,960 Speaker 1: formally on it. UM that said, I my sense is 482 00:26:19,000 --> 00:26:23,879 Speaker 1: there's another issue here UM, separate and apart from the emails, 483 00:26:23,920 --> 00:26:29,040 Speaker 1: and that is that the FCC UM has has said 484 00:26:29,119 --> 00:26:33,800 Speaker 1: that they are going to impose privacy restrictions on i 485 00:26:34,080 --> 00:26:37,560 Speaker 1: sp s like Verizon and cable operators and what have you, 486 00:26:38,040 --> 00:26:40,800 Speaker 1: UM that are much stricter than the privacy restrictions that 487 00:26:40,840 --> 00:26:45,960 Speaker 1: are used for companies like Google. And and edge providers 488 00:26:45,960 --> 00:26:48,879 Speaker 1: as they're called. That difference is a really big difference, 489 00:26:48,920 --> 00:26:52,640 Speaker 1: including the difference of opt in versus opt out. If 490 00:26:52,720 --> 00:26:56,040 Speaker 1: Verizon is subject to those much stricter privacy rules that 491 00:26:56,119 --> 00:26:59,000 Speaker 1: limit how it can use the information that it has 492 00:26:59,119 --> 00:27:04,359 Speaker 1: for selling average, then the whole strategy of advertising on 493 00:27:04,480 --> 00:27:08,240 Speaker 1: the ad inventory of of Yahoo um is called into 494 00:27:08,320 --> 00:27:11,320 Speaker 1: question is to can you really do what you wanted 495 00:27:11,359 --> 00:27:15,040 Speaker 1: to do? If the FCC effectively says Yahoo is not 496 00:27:15,119 --> 00:27:17,840 Speaker 1: going to be worth as much to a company that's 497 00:27:17,840 --> 00:27:19,280 Speaker 1: an I s P as it would be to a 498 00:27:19,320 --> 00:27:21,520 Speaker 1: company that's not. Thank you. Thank you for pointing out 499 00:27:21,520 --> 00:27:23,240 Speaker 1: to you that was the New York Post that reported 500 00:27:23,240 --> 00:27:26,159 Speaker 1: about that one billion dollar reduction. Will see how Verizon 501 00:27:26,320 --> 00:27:28,920 Speaker 1: responds to that. Let let me ask you about something 502 00:27:28,960 --> 00:27:30,520 Speaker 1: I put to Tim Armstrong when I was at the 503 00:27:30,520 --> 00:27:34,440 Speaker 1: Island Company conference a few months ago in Idaho. So 504 00:27:34,480 --> 00:27:37,800 Speaker 1: many of these companies getting into content now investing large 505 00:27:37,800 --> 00:27:40,120 Speaker 1: sums of money and creating their own content. Tom kicking 506 00:27:40,160 --> 00:27:42,000 Speaker 1: things off a few minutes ago saying how difficult it 507 00:27:42,040 --> 00:27:44,720 Speaker 1: is to find the ball game giving given so much 508 00:27:44,760 --> 00:27:47,720 Speaker 1: that's that's out there, Do you worry about saturation that 509 00:27:47,760 --> 00:27:50,080 Speaker 1: there's too much content that there are companies here coming 510 00:27:50,320 --> 00:27:51,960 Speaker 1: late to the party, spending a lot of money, and 511 00:27:52,280 --> 00:27:54,920 Speaker 1: maybe some of that's going to get lost. Well, look, 512 00:27:54,920 --> 00:27:58,640 Speaker 1: there's there's I think the fragmentation and amount of new 513 00:27:58,720 --> 00:28:01,920 Speaker 1: content is a problem. Are lots of reasons, um And 514 00:28:03,320 --> 00:28:06,120 Speaker 1: you know, one of the unique things about the content 515 00:28:06,200 --> 00:28:10,080 Speaker 1: business in general is try to think of another business 516 00:28:10,320 --> 00:28:13,959 Speaker 1: where you don't just compete with all the other content 517 00:28:14,080 --> 00:28:16,800 Speaker 1: that's being created today, you compete with all the content 518 00:28:16,880 --> 00:28:22,120 Speaker 1: that's ever been created in history. Um. And the that 519 00:28:22,240 --> 00:28:26,720 Speaker 1: creates a real deflationary issue for for the industry. And 520 00:28:26,800 --> 00:28:29,040 Speaker 1: at first it was a real positive. It it meant 521 00:28:29,040 --> 00:28:32,320 Speaker 1: that everybody could start mining their libraries and and selling 522 00:28:32,359 --> 00:28:35,000 Speaker 1: it to places like Netflix and what I do. But 523 00:28:35,080 --> 00:28:38,360 Speaker 1: now suddenly that that temporal competition, I guess you would 524 00:28:38,360 --> 00:28:41,000 Speaker 1: call it, is starting to be a real concern because 525 00:28:41,040 --> 00:28:43,760 Speaker 1: it's it's hard for any piece of content to really 526 00:28:43,760 --> 00:28:46,880 Speaker 1: break out today, um and certainly at anything like the 527 00:28:46,960 --> 00:28:49,880 Speaker 1: levels we used to see. And you still get hits, 528 00:28:49,920 --> 00:28:51,840 Speaker 1: but um, but it hit is now a couple of 529 00:28:51,840 --> 00:28:55,880 Speaker 1: million viewers, not not tens of millions of viewers. Craig quickly, here, 530 00:28:56,200 --> 00:28:59,160 Speaker 1: where is the best value in the land of Moffatt 531 00:28:59,360 --> 00:29:04,400 Speaker 1: or in the intent land of Nathanson. I have said 532 00:29:04,480 --> 00:29:07,400 Speaker 1: for many, many years, every time you hear the phrase 533 00:29:07,480 --> 00:29:11,520 Speaker 1: content is king go by distribution UM. And I think 534 00:29:11,560 --> 00:29:16,000 Speaker 1: we're still in one of those cycles where where everybody 535 00:29:16,080 --> 00:29:18,320 Speaker 1: loves the idea that there's going to be all these 536 00:29:18,360 --> 00:29:22,200 Speaker 1: new distribution pathways and therefore it will drive up the 537 00:29:22,280 --> 00:29:25,760 Speaker 1: value of content. UM. I suspect that, as it has 538 00:29:25,800 --> 00:29:29,000 Speaker 1: been for the last twenty years, that the opposite is true. 539 00:29:29,120 --> 00:29:33,440 Speaker 1: And remember, all of these supposed new distribution pathways are 540 00:29:33,480 --> 00:29:37,560 Speaker 1: not really distribution pathways, their new aggregators UM. And the 541 00:29:37,600 --> 00:29:41,400 Speaker 1: aggregation layer isn't the core issue where the real value 542 00:29:41,440 --> 00:29:44,200 Speaker 1: comes from is the physical layer of distribution where there 543 00:29:44,200 --> 00:29:48,320 Speaker 1: are really scared assets. That's the cable pipe, to some extent, 544 00:29:48,360 --> 00:29:50,720 Speaker 1: the wireless pipe. But there are just so many competitors 545 00:29:50,720 --> 00:29:52,960 Speaker 1: and wireless or players that are hard for them to 546 00:29:52,960 --> 00:29:55,840 Speaker 1: make money. UM. But the content players, as I said, 547 00:29:55,840 --> 00:29:58,920 Speaker 1: are struggling with the fact that they've had a really 548 00:29:58,920 --> 00:30:01,320 Speaker 1: beautiful industry that it over earned. But it's hard to 549 00:30:01,320 --> 00:30:03,320 Speaker 1: see how it keeps doing that at the same level. 550 00:30:03,400 --> 00:30:06,000 Speaker 1: Craig never enough time. Thank you so much, Craig Moffatt 551 00:30:06,080 --> 00:30:15,520 Speaker 1: with Moffatt Naked worldwide. This is Bloomberg. Who you put 552 00:30:15,520 --> 00:30:19,280 Speaker 1: your trust in matters. Investors have put their trust in 553 00:30:19,440 --> 00:30:23,680 Speaker 1: independent registered investment advisors to the tune of four trillion dollars. 554 00:30:24,400 --> 00:30:28,240 Speaker 1: Why they see their role is to serve, not sell. 555 00:30:29,080 --> 00:30:31,440 Speaker 1: That's why Charles Schwab is committed to the success of 556 00:30:31,480 --> 00:30:36,640 Speaker 1: over seven thousand independent financial advisors who passionately dedicate themselves 557 00:30:36,960 --> 00:30:40,840 Speaker 1: to helping people achieve their financial goals. Learn more and 558 00:30:41,000 --> 00:30:51,200 Speaker 1: find your independent advisor dot com accel work. We get 559 00:30:51,200 --> 00:30:53,560 Speaker 1: a ton of mail on he is not so much 560 00:30:53,600 --> 00:30:58,080 Speaker 1: an Austrian manager looking at Austrian economics. That would be 561 00:30:58,080 --> 00:31:04,200 Speaker 1: an unfair uh agorization. But nevertheless he's someone that really questions, UM, 562 00:31:04,280 --> 00:31:07,280 Speaker 1: a lot of the modern economics wrapped around the US 563 00:31:07,360 --> 00:31:11,560 Speaker 1: dollar is with MRK Investments and actually want to congratulate you. 564 00:31:11,560 --> 00:31:15,360 Speaker 1: You've got a long short currency fund, the MURK Absolute 565 00:31:15,360 --> 00:31:19,920 Speaker 1: Return Fund, which has had a spectacular two thousand sixteen, 566 00:31:20,440 --> 00:31:23,600 Speaker 1: challenging performance over the years. Why is why is that 567 00:31:23,720 --> 00:31:28,520 Speaker 1: portfolio done so well over the last eight months. Well, 568 00:31:28,880 --> 00:31:32,040 Speaker 1: it's great to be with you. When I am talking 569 00:31:32,080 --> 00:31:34,400 Speaker 1: to you, I always talked talked about that reification and 570 00:31:34,440 --> 00:31:37,600 Speaker 1: whatnot and and a long short strategy and in our 571 00:31:37,640 --> 00:31:40,440 Speaker 1: case we do it with long short currencies. Provides the 572 00:31:40,480 --> 00:31:43,560 Speaker 1: opportunity to really provide on coal it returns, which on 573 00:31:43,640 --> 00:31:46,000 Speaker 1: a day like yesterday for example, might be quite valuable. 574 00:31:46,400 --> 00:31:51,040 Speaker 1: And they specifically, um many long short strategies have struggled 575 00:31:51,560 --> 00:31:54,960 Speaker 1: when the markets were boring and volatility is low. When 576 00:31:54,960 --> 00:31:58,520 Speaker 1: there's dispersion of risk, that sort of strategy does well. 577 00:31:58,880 --> 00:32:01,520 Speaker 1: And if you've been eve that volatility is bound to 578 00:32:01,600 --> 00:32:04,080 Speaker 1: rise at some point um and that's going to hurt 579 00:32:04,200 --> 00:32:06,440 Speaker 1: risk gasses. In general, you want to be in something 580 00:32:06,720 --> 00:32:09,440 Speaker 1: like that. And obviously we we love that Strategy's just 581 00:32:09,440 --> 00:32:11,840 Speaker 1: this one oddball thing. And this is what's great about 582 00:32:11,840 --> 00:32:14,120 Speaker 1: talking to excel work David is is he's the king 583 00:32:14,160 --> 00:32:20,480 Speaker 1: of oddball pieces. You have a Swedish regional two coupon 584 00:32:21,680 --> 00:32:25,840 Speaker 1: KO M I N S piece that makes up a 585 00:32:25,880 --> 00:32:31,080 Speaker 1: big chunk of that portfolio. Like probably it matures tomorrow. 586 00:32:31,160 --> 00:32:33,120 Speaker 1: Give us a leg up. What are you gonna do 587 00:32:33,160 --> 00:32:37,400 Speaker 1: with all that money? Goodness? You are gonna ask me 588 00:32:37,480 --> 00:32:41,560 Speaker 1: about regulatory intricacies. I mean, the the after Ton currency 589 00:32:41,560 --> 00:32:44,320 Speaker 1: strategy is one where we go long short currencies. And 590 00:32:44,560 --> 00:32:47,280 Speaker 1: what happens in those sort of strategies is we are 591 00:32:47,520 --> 00:32:51,640 Speaker 1: by regulation required to invest in underlying securities such as 592 00:32:51,720 --> 00:32:54,400 Speaker 1: a Swedish short term security, and this happens to be 593 00:32:54,440 --> 00:32:59,160 Speaker 1: a concentrated position, but ultimately one uses forward currency contracts 594 00:32:59,160 --> 00:33:01,960 Speaker 1: to be very partically Indeed, this this fund getting rebounce 595 00:33:02,000 --> 00:33:04,560 Speaker 1: on a daily basis, and and so yes we hold 596 00:33:04,600 --> 00:33:06,720 Speaker 1: the fixed income security. In the long run, we we 597 00:33:06,760 --> 00:33:10,680 Speaker 1: generate income from those things. But that's really only because 598 00:33:10,720 --> 00:33:12,240 Speaker 1: we have this online cash. I mean, one of the 599 00:33:12,240 --> 00:33:16,160 Speaker 1: beauties about the the the currency spaces that you can 600 00:33:16,280 --> 00:33:19,640 Speaker 1: use forward contracts to be very agile and and and so. 601 00:33:19,760 --> 00:33:21,760 Speaker 1: But at the end of the day, because it's a 602 00:33:21,840 --> 00:33:24,160 Speaker 1: muture funstructure, we've got to do something with the cash, 603 00:33:24,200 --> 00:33:26,400 Speaker 1: and the regulators don't want to stroll t bills, so 604 00:33:26,440 --> 00:33:28,320 Speaker 1: we do go out and buy those sort of securities. 605 00:33:28,560 --> 00:33:35,800 Speaker 1: Is that okay, David, Inside people drove off the road, 606 00:33:36,200 --> 00:33:41,560 Speaker 1: including me right now, let me let me get your 607 00:33:41,600 --> 00:33:43,680 Speaker 1: react to what we saw out of London. This warning 608 00:33:44,280 --> 00:33:46,800 Speaker 1: the UK Prime Minister here indicating a willingness to work 609 00:33:46,800 --> 00:33:49,200 Speaker 1: with the Parliament. We saw movement in sterling on on 610 00:33:49,440 --> 00:33:51,520 Speaker 1: the heels of that, take us, Take us through what 611 00:33:51,600 --> 00:33:53,120 Speaker 1: you're thinking in light of what she had to say 612 00:33:53,160 --> 00:33:55,920 Speaker 1: to that. I am shocked that she's going to work 613 00:33:55,920 --> 00:33:59,040 Speaker 1: with Parliament. I mean, it's a we have a currency 614 00:33:59,080 --> 00:34:01,320 Speaker 1: that's been pounded and now the market was looking for 615 00:34:01,360 --> 00:34:03,479 Speaker 1: an excuse to to let it bounce back a little bit. 616 00:34:03,520 --> 00:34:06,440 Speaker 1: Of course you have to consult with Parliament, but none 617 00:34:06,440 --> 00:34:08,959 Speaker 1: of that changes, of course what's ahead. It doesn't change 618 00:34:08,960 --> 00:34:11,200 Speaker 1: that things are going to be difficult. And the ultimate 619 00:34:11,239 --> 00:34:12,880 Speaker 1: reason why the sterling, in my view, is going to 620 00:34:12,920 --> 00:34:15,479 Speaker 1: continue to weaken in the medium term independent what's gonna 621 00:34:15,800 --> 00:34:18,200 Speaker 1: going to be doing today is that the the these 622 00:34:18,239 --> 00:34:21,560 Speaker 1: structural issues aren't being fixed. Um, they have a serious 623 00:34:21,640 --> 00:34:24,160 Speaker 1: issue with the budget. They're gonna be spending more money, 624 00:34:24,520 --> 00:34:27,200 Speaker 1: they're gonna have an inflation issue because they're going to 625 00:34:27,320 --> 00:34:30,120 Speaker 1: kick out the phone workers. They they're gonna be having 626 00:34:30,120 --> 00:34:32,520 Speaker 1: a weaker currency. They're gonna have all kinds of challenges 627 00:34:33,040 --> 00:34:35,360 Speaker 1: and and we just don't have a good plan of 628 00:34:35,400 --> 00:34:37,960 Speaker 1: how it's gonna embrace those sort of things. And and 629 00:34:38,040 --> 00:34:40,400 Speaker 1: yes they'll chat with with Parliament, and maybe they're going 630 00:34:40,440 --> 00:34:42,360 Speaker 1: to soften some things. I mean, the same thing always 631 00:34:42,360 --> 00:34:44,160 Speaker 1: happens you you put up a tough stance, they're going 632 00:34:44,200 --> 00:34:46,759 Speaker 1: to soften, um and and and the the UK is 633 00:34:46,760 --> 00:34:49,480 Speaker 1: going to continue. But it doesn't mean everything is going 634 00:34:49,560 --> 00:34:51,600 Speaker 1: to be great in the UK. And I see them 635 00:34:51,600 --> 00:34:54,239 Speaker 1: slipping down the slope like Italy used to have um 636 00:34:54,400 --> 00:34:57,000 Speaker 1: where they're going to have big deficits and gonna finance 637 00:34:57,040 --> 00:34:59,800 Speaker 1: them with a with a weaker currency. Is the word 638 00:35:00,000 --> 00:35:04,920 Speaker 1: party crossing axel marks lips I. I was quoted on that. 639 00:35:04,960 --> 00:35:06,759 Speaker 1: I think during the breaks of talk that that might 640 00:35:06,800 --> 00:35:10,000 Speaker 1: be might be getting there that set. Of course, the 641 00:35:10,040 --> 00:35:11,920 Speaker 1: moment I say it, the sterling is probably going to 642 00:35:12,000 --> 00:35:14,400 Speaker 1: reach the bottom for a few months um and so 643 00:35:14,400 --> 00:35:17,040 Speaker 1: so to me, the risk of parody is certainly they 644 00:35:17,040 --> 00:35:19,200 Speaker 1: are um am I betting on parody in the coming 645 00:35:19,239 --> 00:35:22,400 Speaker 1: weeks and months, No um and so to me, the 646 00:35:22,520 --> 00:35:25,360 Speaker 1: sterling is structurally weak. If we're gonna look for a 647 00:35:25,400 --> 00:35:28,040 Speaker 1: place in the world where where we're going to have 648 00:35:28,080 --> 00:35:30,520 Speaker 1: a challenge that the central banks are not going to 649 00:35:30,560 --> 00:35:33,839 Speaker 1: be able to keep control on the markets, the UK 650 00:35:34,040 --> 00:35:36,520 Speaker 1: may well be a candidate because the markets are just 651 00:35:36,680 --> 00:35:40,160 Speaker 1: much smaller. The UK continues to ride on its imperialistic 652 00:35:40,239 --> 00:35:42,680 Speaker 1: vision that there are some grand nation and and can 653 00:35:42,760 --> 00:35:45,839 Speaker 1: manage all of this, and the markets are showing them 654 00:35:45,840 --> 00:35:49,600 Speaker 1: that no, you guys are a just yet another country 655 00:35:49,719 --> 00:35:52,040 Speaker 1: and you're going to be subject to market forces. And 656 00:35:52,120 --> 00:35:54,319 Speaker 1: that's something that the UK will have to get used 657 00:35:54,360 --> 00:35:56,640 Speaker 1: over time. We've been focusing on sterling here, but let 658 00:35:56,640 --> 00:35:59,239 Speaker 1: me ask you about the rand force. The news yesterday 659 00:35:59,280 --> 00:36:03,000 Speaker 1: that the Finance minister is going to be charged with fraud, 660 00:36:03,520 --> 00:36:09,960 Speaker 1: the the background, the backdrop of political instability there gets larger. Yeah, well, 661 00:36:10,000 --> 00:36:11,799 Speaker 1: I mean the difference between South Africa and the UK 662 00:36:11,960 --> 00:36:14,799 Speaker 1: is everybody expects South Africa every week. Everybody has been 663 00:36:14,920 --> 00:36:17,480 Speaker 1: looking at this from kind from far away here anyway 664 00:36:17,680 --> 00:36:20,400 Speaker 1: and saying, oh, it's it's really sad, how kind of 665 00:36:20,440 --> 00:36:24,520 Speaker 1: the structurally South Africa is not getting his act together. 666 00:36:24,719 --> 00:36:26,839 Speaker 1: And and yes year today the round is actually up, 667 00:36:26,880 --> 00:36:28,719 Speaker 1: but only because it was so extremely weak at the 668 00:36:28,800 --> 00:36:31,480 Speaker 1: end of last year. It's just that South Africa has 669 00:36:31,520 --> 00:36:34,480 Speaker 1: a lot of homework cut out for itself and unfortunately 670 00:36:34,560 --> 00:36:36,200 Speaker 1: things are not always going in the right direction. And 671 00:36:36,239 --> 00:36:38,680 Speaker 1: that's what you're see reflected in the week around. Yeah, excell, 672 00:36:38,760 --> 00:36:40,840 Speaker 1: let me frame currencies as we come back to you 673 00:36:40,880 --> 00:36:43,480 Speaker 1: in our next section. What you're calling euro right now. 674 00:36:43,800 --> 00:36:47,040 Speaker 1: I've noticed all week not only Sterling worker but euro 675 00:36:47,160 --> 00:36:50,040 Speaker 1: one tense sixteen. Where do you put the euro year out? 676 00:36:50,920 --> 00:36:54,799 Speaker 1: Oh I love the euro UM and I think that's 677 00:36:54,840 --> 00:36:58,040 Speaker 1: an overstatement. But but the UM I happen to think 678 00:36:58,080 --> 00:37:00,400 Speaker 1: that this this, this, this idea in that we're going 679 00:37:00,480 --> 00:37:02,120 Speaker 1: to go through the status fee on interest rates. And 680 00:37:02,120 --> 00:37:04,040 Speaker 1: that's why the NOMA has to be so strong, just 681 00:37:04,239 --> 00:37:06,759 Speaker 1: as in recent years it was completely overblown. I think 682 00:37:06,760 --> 00:37:08,640 Speaker 1: we actually close at the top of the interest rates 683 00:37:08,640 --> 00:37:11,040 Speaker 1: cycle in the US and close at the bottom and Eurozone. 684 00:37:11,160 --> 00:37:13,120 Speaker 1: And the reason I say that is because in the 685 00:37:13,160 --> 00:37:16,799 Speaker 1: Eurozone UM there is just no good way to continue 686 00:37:16,800 --> 00:37:19,440 Speaker 1: to ease, Whereas in the US, yes, we're going to 687 00:37:19,520 --> 00:37:23,239 Speaker 1: high rates, but nominal rates are going up, whereas real 688 00:37:23,320 --> 00:37:27,680 Speaker 1: rates meaning net of inflation, raising rates at is going 689 00:37:27,719 --> 00:37:31,960 Speaker 1: to get real rates of one explainer. Within interest rates 690 00:37:32,080 --> 00:37:35,040 Speaker 1: and within g d P, you've got the actual growth 691 00:37:35,080 --> 00:37:37,560 Speaker 1: of the underlying rate, and then you've got the inflation 692 00:37:37,719 --> 00:37:41,520 Speaker 1: overlay on top of that. David Gurrl bringing Axel Murk 693 00:37:41,640 --> 00:37:44,160 Speaker 1: as we talk about the idea, if we get a 694 00:37:44,280 --> 00:37:48,480 Speaker 1: burgeoning inflation, do you get real growth with that or not? 695 00:37:48,880 --> 00:37:50,759 Speaker 1: I gotta just let Axel respond to that as John 696 00:37:50,840 --> 00:37:53,359 Speaker 1: Tucker pumps his fist with excitement at that second quick take. 697 00:37:54,440 --> 00:37:57,480 Speaker 1: I don't think people. People get real and nominal and 698 00:37:57,640 --> 00:38:01,960 Speaker 1: then actually you have to explain that act. Yes, well, 699 00:38:02,320 --> 00:38:04,440 Speaker 1: I mean we live in this world where we supposedly 700 00:38:04,480 --> 00:38:06,680 Speaker 1: don't have any inflation. If you if you look at 701 00:38:06,760 --> 00:38:10,239 Speaker 1: the the core c core inflation indicator that the FED 702 00:38:10,320 --> 00:38:13,000 Speaker 1: looks at, I mean, anytime there's inflation popping up, but 703 00:38:13,120 --> 00:38:15,759 Speaker 1: it has substitution effects. So you're not going to see 704 00:38:15,880 --> 00:38:18,600 Speaker 1: inflation in the kind of the things that Fed looks 705 00:38:18,600 --> 00:38:20,800 Speaker 1: at until it really steals you in the face. But 706 00:38:20,920 --> 00:38:23,440 Speaker 1: if you look at the labor market, the inflation precures 707 00:38:23,520 --> 00:38:27,640 Speaker 1: are seeping through the system. Now, um, ultimately the FED 708 00:38:27,840 --> 00:38:30,000 Speaker 1: wants to have inflation. I think you had felts find 709 00:38:30,040 --> 00:38:33,120 Speaker 1: on the Hobbit professor who has said the FED wants 710 00:38:33,160 --> 00:38:35,719 Speaker 1: to be behind the curve. I I couldn't agree more. 711 00:38:35,760 --> 00:38:38,759 Speaker 1: I mean, um, BERNANKI used to phrase it that when 712 00:38:38,800 --> 00:38:40,800 Speaker 1: you're faced with the credit bust, you want to be 713 00:38:41,000 --> 00:38:43,279 Speaker 1: late in in in raising rates. The worst thing you 714 00:38:43,320 --> 00:38:45,479 Speaker 1: can do is hike race early. No, I don't agree 715 00:38:45,520 --> 00:38:49,000 Speaker 1: with much of what the FED does, but the fed clearly, UM, 716 00:38:49,360 --> 00:38:52,040 Speaker 1: in my view, wants to be behind the curve. UM. 717 00:38:52,360 --> 00:38:54,239 Speaker 1: I just chat with somebody who says, oh, I think 718 00:38:54,280 --> 00:38:56,200 Speaker 1: inflation that is going to go up about five basis 719 00:38:56,239 --> 00:38:58,600 Speaker 1: points at quarter. I think inflation is going to go 720 00:38:58,680 --> 00:39:01,400 Speaker 1: up more than that. And if you now hike interest 721 00:39:01,520 --> 00:39:05,200 Speaker 1: rates by your point to a year, you're going to 722 00:39:05,320 --> 00:39:08,880 Speaker 1: be behind the curve. And so all this hoopla about tightening, 723 00:39:09,080 --> 00:39:11,600 Speaker 1: we don't have tightening. We have tightening because of library 724 00:39:11,680 --> 00:39:13,520 Speaker 1: is growing up. That's where we have tightening. But the 725 00:39:13,600 --> 00:39:16,319 Speaker 1: FETE doesn't do tightening these days. UM going up at 726 00:39:16,320 --> 00:39:18,239 Speaker 1: twenty five basis point in December. If we do it, 727 00:39:18,560 --> 00:39:20,600 Speaker 1: UM is not going to make the world much tide up. 728 00:39:20,680 --> 00:39:22,239 Speaker 1: But there will be days in the market where the 729 00:39:22,280 --> 00:39:24,279 Speaker 1: dollar surges and the media is gonna write, oh my god, 730 00:39:24,280 --> 00:39:25,840 Speaker 1: the feed is going to high grate. We've had that 731 00:39:25,920 --> 00:39:28,719 Speaker 1: so many times over recent years. Ultimately, the FETE and 732 00:39:28,800 --> 00:39:32,560 Speaker 1: my view, cannot hike real interest rates because they have 733 00:39:32,719 --> 00:39:36,000 Speaker 1: inflated air surprises so much and based the recovery on that. 734 00:39:36,480 --> 00:39:38,800 Speaker 1: UM I once chatted with a form of FT president 735 00:39:39,040 --> 00:39:42,080 Speaker 1: who who told me that the only time the feed 736 00:39:42,160 --> 00:39:46,120 Speaker 1: would be concerned about deflating assetprises if if they created 737 00:39:46,160 --> 00:39:49,080 Speaker 1: a bubble, and then he pauses, and you can make 738 00:39:49,160 --> 00:39:52,640 Speaker 1: your interpretation whether they've created an asset bubble or not. Actually, 739 00:39:52,640 --> 00:39:55,319 Speaker 1: you've written a lot about dollar dominance. I'm looking at 740 00:39:55,320 --> 00:39:58,239 Speaker 1: the u N. It's been weak getting weaker here. We've 741 00:39:58,280 --> 00:40:01,160 Speaker 1: seen the government, Chinese government allowing that to happen. Seemingly 742 00:40:01,280 --> 00:40:03,480 Speaker 1: a few weeks back, the un was welcomed into the 743 00:40:03,560 --> 00:40:06,399 Speaker 1: i m F Special Drawing Rights basket. There are people 744 00:40:06,440 --> 00:40:10,200 Speaker 1: here who are uh flagging the the end of dollar dominance. 745 00:40:10,239 --> 00:40:14,040 Speaker 1: That's something that you've written about yourself. Give us, give 746 00:40:14,120 --> 00:40:15,920 Speaker 1: us your sense of where things are headed. I know 747 00:40:15,960 --> 00:40:18,280 Speaker 1: you've been looking at a new rule, a money markets 748 00:40:18,360 --> 00:40:20,200 Speaker 1: rule that's supposed to go into effect on on Friday, 749 00:40:20,200 --> 00:40:23,480 Speaker 1: and the fact that maybe having yes, well, the SDR 750 00:40:23,640 --> 00:40:26,839 Speaker 1: changes I think are mostly symbolic. Very few nations, none, 751 00:40:26,920 --> 00:40:29,520 Speaker 1: none that are relevant really managed to reserve based on SDR. 752 00:40:29,640 --> 00:40:32,440 Speaker 1: So that's really a symbolic move. Much more relevant is 753 00:40:32,480 --> 00:40:34,600 Speaker 1: what what you're alluding to, these money market fund changes 754 00:40:34,640 --> 00:40:37,040 Speaker 1: for institution money market funds that are are coming into 755 00:40:37,080 --> 00:40:38,759 Speaker 1: effect at the end of the week. Now that said 756 00:40:39,200 --> 00:40:42,000 Speaker 1: money market funds have been getting ready for that. And basically, 757 00:40:42,160 --> 00:40:45,200 Speaker 1: if you go back to eleven, for example, half the 758 00:40:45,520 --> 00:40:49,760 Speaker 1: prime money market fund positions were in commercial papers issued 759 00:40:49,880 --> 00:40:52,480 Speaker 1: by European banks UM. So there was one firm that 760 00:40:52,560 --> 00:40:54,440 Speaker 1: we found that had three quarters of its paper that 761 00:40:54,840 --> 00:40:58,560 Speaker 1: UM and just just indication that US money market funds 762 00:40:58,600 --> 00:41:02,480 Speaker 1: are a major source of funding for everybody, UM be 763 00:41:02,680 --> 00:41:06,440 Speaker 1: that US corporate unity, US municipal but also European banks, 764 00:41:06,560 --> 00:41:10,200 Speaker 1: point sovereigns. And now what's happening is that US money 765 00:41:10,239 --> 00:41:13,520 Speaker 1: market funds are encouraged or discouraged from holding that sort 766 00:41:13,520 --> 00:41:18,000 Speaker 1: of paper holding more government paper holdings in institution, money 767 00:41:18,040 --> 00:41:20,879 Speaker 1: market funds have been have been plunging, and that means 768 00:41:20,920 --> 00:41:23,319 Speaker 1: that there's going to be less funding available. We see 769 00:41:23,400 --> 00:41:25,640 Speaker 1: that now in the in the cost of funding going 770 00:41:25,719 --> 00:41:28,120 Speaker 1: up for European banks, and what that means is the 771 00:41:28,320 --> 00:41:31,000 Speaker 1: US is a less attractive place to get funding. And 772 00:41:31,239 --> 00:41:35,399 Speaker 1: over time that's going to make the US currency less 773 00:41:35,440 --> 00:41:38,400 Speaker 1: of a riginal currency because they've had this implicit guaranteed 774 00:41:38,440 --> 00:41:40,200 Speaker 1: that was assumed that money market funds are safe, and 775 00:41:40,239 --> 00:41:43,399 Speaker 1: that's no longer the case. Your critics, with respects say 776 00:41:43,800 --> 00:41:48,320 Speaker 1: it's a great theory, but we're waiting. When do we 777 00:41:48,440 --> 00:41:52,040 Speaker 1: begin to see the exorbitant privilege slip away of the 778 00:41:52,200 --> 00:41:56,360 Speaker 1: US dollar. What's a gradual process. It's it's like a 779 00:41:56,480 --> 00:41:59,840 Speaker 1: frog in a boiling pot. I mean you see starting 780 00:42:00,080 --> 00:42:02,960 Speaker 1: is that fraud trade weighted sterling? The f TV day 781 00:42:03,000 --> 00:42:05,720 Speaker 1: working off Bank of England has sterling at a hundred 782 00:42:05,760 --> 00:42:10,160 Speaker 1: and sixty eight year low. Is that an example? What? What? Now? 783 00:42:10,239 --> 00:42:13,800 Speaker 1: The example is the US corporates issuing you already nominated 784 00:42:13,840 --> 00:42:17,239 Speaker 1: debt for example. Um, the Euro is becoming a real 785 00:42:17,320 --> 00:42:19,320 Speaker 1: competitor with all the trouble in the Eurozone. And I 786 00:42:19,640 --> 00:42:21,560 Speaker 1: certainly don't dismiss those sort of issues that they have, 787 00:42:22,000 --> 00:42:24,080 Speaker 1: but the Euro has become a funding currency. And that's 788 00:42:24,080 --> 00:42:27,360 Speaker 1: not just for traders, UM, it is a real funding currency. 789 00:42:27,800 --> 00:42:30,520 Speaker 1: US business is funding itself in the Euro these days. 790 00:42:30,760 --> 00:42:33,440 Speaker 1: There will be more Euro based funding. And that's the 791 00:42:33,520 --> 00:42:35,600 Speaker 1: sort of competition that is going to get. That's the sterling. 792 00:42:35,680 --> 00:42:38,000 Speaker 1: They have a bunch of issues obviously, um. And if 793 00:42:38,040 --> 00:42:40,040 Speaker 1: anything that the sterling has been on the long term 794 00:42:40,080 --> 00:42:42,680 Speaker 1: decline is going to continue. But there's going to be 795 00:42:42,760 --> 00:42:45,160 Speaker 1: more local funding. The prime competitor to the dollar is 796 00:42:45,200 --> 00:42:47,760 Speaker 1: going to be more local funding. We we hadn't tempted 797 00:42:47,760 --> 00:42:49,799 Speaker 1: of that in the last decade. It didn't work as 798 00:42:49,840 --> 00:42:51,719 Speaker 1: well as it could. I think the wake up call 799 00:42:51,760 --> 00:42:54,000 Speaker 1: has been there again. Clearly it takes a little bit 800 00:42:54,040 --> 00:42:57,080 Speaker 1: more than than than just a um that that just 801 00:42:57,200 --> 00:42:59,840 Speaker 1: a decision to do local funding. But the us IS 802 00:43:00,160 --> 00:43:03,520 Speaker 1: is obviously going to be relevant. But the there is 803 00:43:03,880 --> 00:43:07,200 Speaker 1: a gradual path that funding is taking place more in 804 00:43:07,280 --> 00:43:09,320 Speaker 1: local currency. And the key reason for that is that 805 00:43:09,680 --> 00:43:12,520 Speaker 1: there had been this implicit subsidy that you has. Money 806 00:43:12,560 --> 00:43:15,200 Speaker 1: market funds were kind of this free piggybank for for 807 00:43:15,320 --> 00:43:17,919 Speaker 1: everybody where they could get funding. That's no longer the case. 808 00:43:18,000 --> 00:43:20,399 Speaker 1: So why would you do dollar funding if you don't 809 00:43:20,440 --> 00:43:22,719 Speaker 1: have the this implicit advantage anymore. It's not a god 810 00:43:22,760 --> 00:43:24,920 Speaker 1: given right, it's something that has to be earned, and 811 00:43:25,040 --> 00:43:28,200 Speaker 1: it was kind of um subsidized with those money market 812 00:43:28,239 --> 00:43:30,560 Speaker 1: funding works that happened in place Excel. Thank you so much, 813 00:43:30,600 --> 00:43:42,759 Speaker 1: Jackson Markets with this on currency. Thanks for listening to 814 00:43:42,840 --> 00:43:48,880 Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, 815 00:43:49,360 --> 00:43:53,560 Speaker 1: or whichever podcast platform you prefer. I'm out on Twitter 816 00:43:53,680 --> 00:43:57,440 Speaker 1: at Tom Keene. David Gura is at David Gura before 817 00:43:57,480 --> 00:44:00,960 Speaker 1: the podcast. You can always catch us World Why at 818 00:44:01,000 --> 00:44:18,080 Speaker 1: Bloomberg Radio. Who you put your trust in matters. Investors 819 00:44:18,120 --> 00:44:21,440 Speaker 1: have put their trust in independent registered investment advisors to 820 00:44:21,520 --> 00:44:25,960 Speaker 1: the tune of four trillion dollars Why. Learn more and 821 00:44:26,120 --> 00:44:28,000 Speaker 1: find your independent advisor dot com.