1 00:00:02,440 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,240 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,080 Speaker 2: Terminal and the Bloomberg Business app. Black Rocks Kate Moore 10 00:00:37,120 --> 00:00:40,320 Speaker 2: saying this, after a healthy pullback inequities over the last 11 00:00:40,320 --> 00:00:43,479 Speaker 2: few weeks, the pressure on earnings and constructive guidance is 12 00:00:43,520 --> 00:00:46,640 Speaker 2: particularly high. The biggest right tail risk for twenty twenty 13 00:00:46,680 --> 00:00:50,880 Speaker 2: four is that earnings come in much stronger than current forecast. 14 00:00:50,960 --> 00:00:52,120 Speaker 2: Kate is with us around the table. 15 00:00:52,200 --> 00:00:53,680 Speaker 3: Kate, good mornch Good morning. 16 00:00:53,720 --> 00:00:55,160 Speaker 2: It's been too long. It's great to see you in 17 00:00:55,160 --> 00:00:57,360 Speaker 2: person here in New York. Let's talk about that upside 18 00:00:57,360 --> 00:01:00,000 Speaker 2: potential on the big tech names over the next week. 19 00:01:00,000 --> 00:01:00,840 Speaker 2: Ac count great is it? 20 00:01:01,600 --> 00:01:01,720 Speaker 4: So? 21 00:01:01,920 --> 00:01:04,000 Speaker 5: I think the big thing to watch here is not 22 00:01:04,040 --> 00:01:06,560 Speaker 5: what happened in the first quarter. I mean, we want 23 00:01:06,560 --> 00:01:09,320 Speaker 5: to see some monetization on AI, We want to see 24 00:01:09,360 --> 00:01:12,320 Speaker 5: constructive guidance on AI. But I really think it's going 25 00:01:12,360 --> 00:01:13,920 Speaker 5: to be the tone for a management. You guys were 26 00:01:13,920 --> 00:01:16,000 Speaker 5: talking about Tesla a moment ago, and I think this 27 00:01:16,080 --> 00:01:19,120 Speaker 5: was the critical thing turning the stock price there is 28 00:01:19,160 --> 00:01:21,720 Speaker 5: that it sounds like there's a plan, and I think 29 00:01:21,760 --> 00:01:23,720 Speaker 5: there's been a lot of good news priced into a 30 00:01:23,760 --> 00:01:25,800 Speaker 5: lot of the big tech companies. But this is a 31 00:01:25,880 --> 00:01:27,520 Speaker 5: chance to really kind of show me what does the 32 00:01:27,520 --> 00:01:29,640 Speaker 5: rest of twenty twenty four look like, how are we 33 00:01:29,680 --> 00:01:32,800 Speaker 5: thinking about AI spending, what does customer demands look like? 34 00:01:33,160 --> 00:01:34,280 Speaker 3: And then we can go from there. 35 00:01:34,319 --> 00:01:36,200 Speaker 2: Do you say we need a c sweet therapy session 36 00:01:36,360 --> 00:01:37,560 Speaker 2: on anix cos Yeah, we. 37 00:01:37,520 --> 00:01:40,319 Speaker 5: Need to see a constructive happy face from all of 38 00:01:40,360 --> 00:01:41,000 Speaker 5: these leaders. 39 00:01:41,240 --> 00:01:42,520 Speaker 3: By the way, a funny bit. 40 00:01:43,160 --> 00:01:45,840 Speaker 5: We've talked about this before, but we always want to 41 00:01:45,840 --> 00:01:48,720 Speaker 5: listen to CEOs and say they're kind of the strategists, 42 00:01:48,720 --> 00:01:51,320 Speaker 5: are the ones thinking big picture. But it's also really 43 00:01:51,360 --> 00:01:53,920 Speaker 5: really important to listen to the CFOs who tend to 44 00:01:53,960 --> 00:01:56,800 Speaker 5: get really down into the dirt. And so I'm going 45 00:01:56,800 --> 00:01:59,040 Speaker 5: to be listening to both for both the strategy as 46 00:01:59,040 --> 00:02:01,040 Speaker 5: well as the hard data well happy talk. 47 00:02:00,920 --> 00:02:03,480 Speaker 1: Work for the likes of Meta or even Alphabet. 48 00:02:03,520 --> 00:02:05,800 Speaker 5: Given how much the shares have gained so far this year, 49 00:02:06,320 --> 00:02:08,640 Speaker 5: I think we've taken some pressure off of those stocks 50 00:02:08,639 --> 00:02:11,079 Speaker 5: in recent weeks, as you know, some prices have come down, 51 00:02:11,120 --> 00:02:12,880 Speaker 5: and we've seen kind of growth in general as a 52 00:02:12,919 --> 00:02:15,640 Speaker 5: factor fade a little bit since the end of the 53 00:02:15,680 --> 00:02:19,440 Speaker 5: first quarter. That said, they really do need to deliver. 54 00:02:19,720 --> 00:02:21,839 Speaker 3: I think these are well owned names. They are well 55 00:02:21,919 --> 00:02:22,480 Speaker 3: loved names. 56 00:02:22,520 --> 00:02:24,800 Speaker 5: They are names that are expected to really lead the market, 57 00:02:25,120 --> 00:02:27,480 Speaker 5: not just through twenty twenty twenty four, but through the rest. 58 00:02:27,240 --> 00:02:27,960 Speaker 3: Of this cycle. 59 00:02:28,400 --> 00:02:31,520 Speaker 5: So I think it's possible for them to get people excited, 60 00:02:31,600 --> 00:02:34,400 Speaker 5: but we recognize that they're well held, well owned going 61 00:02:34,480 --> 00:02:35,120 Speaker 5: into reporting. 62 00:02:35,440 --> 00:02:38,040 Speaker 1: Moving outside of big tech, your idea here is a 63 00:02:38,040 --> 00:02:40,920 Speaker 1: really fascinating one that the biggest risk is upside risk, 64 00:02:40,960 --> 00:02:43,560 Speaker 1: right that we actually get better than expected earnings data 65 00:02:43,600 --> 00:02:46,480 Speaker 1: and that could fuel a rally among a lot of 66 00:02:46,480 --> 00:02:49,320 Speaker 1: pessimism still out there. Why do you think that's the 67 00:02:49,320 --> 00:02:51,760 Speaker 1: biggest upside risk at a time where it seems like 68 00:02:52,160 --> 00:02:53,960 Speaker 1: there's still a lot of bullish sentiment right now. 69 00:02:54,360 --> 00:02:56,240 Speaker 5: So I think it's about the mechanics of how we 70 00:02:56,280 --> 00:02:58,560 Speaker 5: get to the bottom line that really matter here, and 71 00:02:58,639 --> 00:03:01,519 Speaker 5: in this case, I want everyone to have some confidence 72 00:03:01,560 --> 00:03:04,760 Speaker 5: in US companies doing the right thing, continuing to manage 73 00:03:04,800 --> 00:03:08,160 Speaker 5: their cost continuing to manage their labor force, thinking really 74 00:03:08,520 --> 00:03:10,919 Speaker 5: long and hard about where they're putting their dollars in 75 00:03:10,960 --> 00:03:13,960 Speaker 5: each businesses, so that they can really deliver on earnings 76 00:03:14,240 --> 00:03:17,040 Speaker 5: even an environment where revenue growth is just okay. And 77 00:03:17,040 --> 00:03:18,680 Speaker 5: I think we've heard that from some of the companies 78 00:03:18,680 --> 00:03:21,399 Speaker 5: that have reported so far. It's really the bottom line 79 00:03:21,400 --> 00:03:23,760 Speaker 5: I want to see companies deliver on. And we saw 80 00:03:23,960 --> 00:03:28,040 Speaker 5: actually since the earnings recession ended that this focus on 81 00:03:28,120 --> 00:03:31,560 Speaker 5: cost control and this focus on delivering earnings has been 82 00:03:31,600 --> 00:03:32,200 Speaker 5: front and center. 83 00:03:32,360 --> 00:03:35,480 Speaker 1: This doesn't speak of some sort of screaming hot economy though. 84 00:03:35,760 --> 00:03:37,840 Speaker 5: Yeah, I don't think we want a screaming hot economy 85 00:03:37,840 --> 00:03:40,720 Speaker 5: for a variety of different reasons. We want a solid economy, 86 00:03:40,840 --> 00:03:44,280 Speaker 5: we want solid demand, we want rates and to be stable, 87 00:03:44,280 --> 00:03:46,720 Speaker 5: and we want certainty or a light least lack of 88 00:03:46,840 --> 00:03:50,200 Speaker 5: uncertainty when it comes to policy. I think that's an 89 00:03:50,280 --> 00:03:53,920 Speaker 5: environment that corporates are looking to kind of capitalize on 90 00:03:54,040 --> 00:03:55,840 Speaker 5: and that they do well on and one thing we're 91 00:03:55,840 --> 00:03:57,720 Speaker 5: not mentioning here is the election year, and of course 92 00:03:57,760 --> 00:04:00,360 Speaker 5: the uncertainty around the election outcome and what that might 93 00:04:00,360 --> 00:04:03,200 Speaker 5: mean for policy is weighing on companies a little bit. 94 00:04:03,440 --> 00:04:05,480 Speaker 5: So if we have stability in these other areas and 95 00:04:05,560 --> 00:04:09,200 Speaker 5: growth and demand and policy rates are relatively stable, I 96 00:04:09,240 --> 00:04:11,240 Speaker 5: think that gives them some confidence to continue to do 97 00:04:11,280 --> 00:04:13,360 Speaker 5: these cost cutting and really managing their margins. 98 00:04:13,400 --> 00:04:16,159 Speaker 6: How are CEOs thinking about the election? Imagine on these 99 00:04:16,240 --> 00:04:18,280 Speaker 6: earnings call they get asked about it, and we have 100 00:04:18,320 --> 00:04:21,440 Speaker 6: to really walk a very fine line, be very careful. 101 00:04:21,720 --> 00:04:25,719 Speaker 5: Yeah, I mean, I think that they're being deliberately evasive 102 00:04:26,120 --> 00:04:28,359 Speaker 5: because they don't really know what to expect. And we 103 00:04:28,440 --> 00:04:31,520 Speaker 5: know that there's a huge amount of different policy outcomes 104 00:04:31,640 --> 00:04:35,279 Speaker 5: for both administrations depending on who wins in November, because 105 00:04:35,279 --> 00:04:37,680 Speaker 5: a lot is going to depend on Congress. So they 106 00:04:37,680 --> 00:04:39,599 Speaker 5: don't want to bank too much one way or another 107 00:04:40,000 --> 00:04:43,880 Speaker 5: on support or on challenges. They're just trying to kind 108 00:04:43,880 --> 00:04:45,479 Speaker 5: of manage over the next few quarters. 109 00:04:45,520 --> 00:04:47,280 Speaker 6: But given the fact that we do know who these 110 00:04:47,279 --> 00:04:51,360 Speaker 6: two individuals are, Yeah, they're basically two incumbents up against 111 00:04:51,400 --> 00:04:54,120 Speaker 6: each other. Does that help executives plan for the future. 112 00:04:54,720 --> 00:04:57,360 Speaker 5: I think we understand big picture some of the main 113 00:04:57,520 --> 00:05:01,279 Speaker 5: tenets of each of these policy programs. That said, it's 114 00:05:01,360 --> 00:05:03,200 Speaker 5: really hard to say what the details are going to be, 115 00:05:03,200 --> 00:05:05,320 Speaker 5: what the timing of any changes might be. And I'm 116 00:05:05,360 --> 00:05:07,479 Speaker 5: going to go back to this Congress point again. There's 117 00:05:07,480 --> 00:05:10,159 Speaker 5: a limitation to how much an executive can get done, 118 00:05:10,320 --> 00:05:13,039 Speaker 5: a chief executive in this case, without. 119 00:05:12,760 --> 00:05:13,919 Speaker 3: Support from Congress. 120 00:05:14,040 --> 00:05:16,400 Speaker 5: So I'm going to be watching, frankly, the Senate and 121 00:05:16,440 --> 00:05:19,400 Speaker 5: House races very closely going into the fall. 122 00:05:19,200 --> 00:05:20,479 Speaker 1: Which is the reason why a lot of people are 123 00:05:20,480 --> 00:05:23,320 Speaker 1: looking for some sort of split in terms of Republican 124 00:05:23,480 --> 00:05:26,400 Speaker 1: and Democrat on the different sides of the government. I 125 00:05:26,400 --> 00:05:28,120 Speaker 1: am curious about what you said, which is at least 126 00:05:28,120 --> 00:05:29,200 Speaker 1: stable rates. 127 00:05:29,480 --> 00:05:30,640 Speaker 3: Which raises this question. 128 00:05:30,920 --> 00:05:33,880 Speaker 1: If the Fed holds rates at this level, is that 129 00:05:33,960 --> 00:05:36,839 Speaker 1: fine as long as there isn't any volatility, that that's 130 00:05:36,880 --> 00:05:40,039 Speaker 1: going to be enough to potentially fuel a pretty significant 131 00:05:40,080 --> 00:05:40,960 Speaker 1: rally in equities. 132 00:05:41,400 --> 00:05:45,000 Speaker 5: I think stability and certainty are things that equity markets love, 133 00:05:45,320 --> 00:05:47,200 Speaker 5: right and when it comes to rates, would be nice 134 00:05:47,200 --> 00:05:49,200 Speaker 5: if we saw some raycots, sure, but we also know 135 00:05:49,279 --> 00:05:52,760 Speaker 5: that eighty percent of US large cap debt is long 136 00:05:52,839 --> 00:05:53,479 Speaker 5: term fixed. 137 00:05:53,520 --> 00:05:55,320 Speaker 3: We don't really have to worry about this. 138 00:05:55,200 --> 00:05:57,119 Speaker 5: In twenty twenty four or even the beginning of twenty 139 00:05:57,160 --> 00:05:59,839 Speaker 5: twenty five. Well, we do want to kind of, you know, 140 00:05:59,880 --> 00:06:03,120 Speaker 5: be able to incorporate is you expectations for the next 141 00:06:03,120 --> 00:06:06,800 Speaker 5: couple quarters and if we're constantly adjusting and it's will 142 00:06:06,839 --> 00:06:09,240 Speaker 5: the FED be cutting or will they not? I think 143 00:06:09,240 --> 00:06:12,120 Speaker 5: that holds back some decisions that corporate leaders need to 144 00:06:12,120 --> 00:06:15,279 Speaker 5: make which would be supportive for growth. So stability is 145 00:06:15,360 --> 00:06:17,720 Speaker 5: better than any outcome, I would. 146 00:06:17,480 --> 00:06:19,560 Speaker 1: Say, Well, to Enry's point, it's hard to talk about 147 00:06:19,600 --> 00:06:21,440 Speaker 1: stability at a time where we can't really come up 148 00:06:21,440 --> 00:06:23,600 Speaker 1: with any clear narrative. When we're talking about the potential 149 00:06:23,600 --> 00:06:26,000 Speaker 1: for tariffs and we're talking about geopolitical risk. I mean, 150 00:06:26,279 --> 00:06:29,080 Speaker 1: how much does that sort of give you some pause 151 00:06:29,160 --> 00:06:31,360 Speaker 1: in terms of the degree of bullishness and where you're 152 00:06:31,400 --> 00:06:33,640 Speaker 1: looking to hedge just on the margins. 153 00:06:33,760 --> 00:06:35,680 Speaker 5: Well, I think the thing I'm watching in regards to 154 00:06:35,760 --> 00:06:39,000 Speaker 5: that uncertainty, the geopolitical uncertainty, and perhaps the policy the 155 00:06:39,040 --> 00:06:42,400 Speaker 5: government policy uncertainty is what happens to capital expenditure, and 156 00:06:42,440 --> 00:06:46,600 Speaker 5: particularly if companies just go through with regular maintenance necessary 157 00:06:46,640 --> 00:06:50,680 Speaker 5: capex and hold off on real expansionary Capex until they 158 00:06:50,680 --> 00:06:52,800 Speaker 5: get through the US election, But of course we know 159 00:06:52,839 --> 00:06:55,000 Speaker 5: it's not just the US election. They're elections all over 160 00:06:55,040 --> 00:06:57,960 Speaker 5: the world of this year, and frankly, you know, US 161 00:06:58,080 --> 00:07:01,960 Speaker 5: companies are mostly or many of the large cab ones 162 00:07:02,240 --> 00:07:05,840 Speaker 5: are geographically dispersed, right, So they have big businesses in 163 00:07:05,920 --> 00:07:08,599 Speaker 5: many different regions, so policies in each of those regions 164 00:07:08,640 --> 00:07:11,080 Speaker 5: will affect their decisions. So I'm kind of waiting to 165 00:07:11,080 --> 00:07:13,480 Speaker 5: see how do they talk about capital expenditure. Are they 166 00:07:13,520 --> 00:07:16,720 Speaker 5: waiting to get more clarity on the political side, or 167 00:07:16,760 --> 00:07:19,680 Speaker 5: do they see such a long term secular tailwind to 168 00:07:19,720 --> 00:07:22,360 Speaker 5: whatever this project is that they're willing to spend despite 169 00:07:22,400 --> 00:07:23,560 Speaker 5: the uncertainty. 170 00:07:23,440 --> 00:07:27,600 Speaker 1: Or international companies better hedged or worse hedged right now, 171 00:07:27,840 --> 00:07:30,880 Speaker 1: given the fact that they do face different political regimes 172 00:07:31,200 --> 00:07:34,239 Speaker 1: and frankly different economic realities, well, it's. 173 00:07:34,160 --> 00:07:38,640 Speaker 5: Very very challenging to manage a global multinational corporation. Regulations here, 174 00:07:38,760 --> 00:07:42,320 Speaker 5: political change, there, change in demand, consumer behavior. 175 00:07:42,640 --> 00:07:43,600 Speaker 3: So I get all of that. 176 00:07:43,760 --> 00:07:47,920 Speaker 5: I like the geographic diversity though of these multinationals. I 177 00:07:47,960 --> 00:07:49,960 Speaker 5: think that's going to really lend strength to them through 178 00:07:50,040 --> 00:07:52,680 Speaker 5: multiple parts of the business cycle and through all these elections. 179 00:07:52,760 --> 00:07:54,559 Speaker 2: You like Japan. Can we finish on Japan? 180 00:07:54,720 --> 00:07:55,160 Speaker 3: We can? 181 00:07:55,480 --> 00:07:58,120 Speaker 2: Does the effects market matter? Sort of preoccupied with the 182 00:07:58,160 --> 00:08:00,440 Speaker 2: prospect of breaking through one point fifty five, which with 183 00:08:00,880 --> 00:08:02,880 Speaker 2: about that far away from doing Does that matter? 184 00:08:03,640 --> 00:08:06,280 Speaker 5: I mean it matters, But I think there's more on 185 00:08:06,320 --> 00:08:09,040 Speaker 5: the ground that we like about the Japanese. 186 00:08:08,760 --> 00:08:10,760 Speaker 2: Most so we hear can you come for the details? 187 00:08:10,840 --> 00:08:12,280 Speaker 3: Yeah, I mean I think that we're seeing a change 188 00:08:12,280 --> 00:08:13,560 Speaker 3: in consumption. I think, for the. 189 00:08:13,520 --> 00:08:15,920 Speaker 5: First time in a very long time, over ten years, 190 00:08:16,080 --> 00:08:19,160 Speaker 5: a real shift, and how corporates are being forced to 191 00:08:20,120 --> 00:08:23,040 Speaker 5: behave which is much more shareholder friendly, you know what. 192 00:08:23,160 --> 00:08:26,640 Speaker 5: I like to see more Japanese individual investors buy into 193 00:08:26,640 --> 00:08:27,080 Speaker 5: the market. 194 00:08:27,160 --> 00:08:28,880 Speaker 3: Absolutely, we don't want this just to. 195 00:08:28,800 --> 00:08:32,320 Speaker 5: Be a market that's participated in by international investors. But 196 00:08:32,440 --> 00:08:34,800 Speaker 5: I think both the macro side and some of the 197 00:08:34,840 --> 00:08:37,079 Speaker 5: structural bits in the market are quite supportive. 198 00:08:37,520 --> 00:08:39,520 Speaker 3: The currency could be supportive as well, but. 199 00:08:39,480 --> 00:08:42,040 Speaker 5: I don't want to base my thesis on that because frankly, 200 00:08:42,400 --> 00:08:44,840 Speaker 5: I don't have a great track record on FX trading. 201 00:08:45,120 --> 00:08:47,240 Speaker 2: Yeah, FX is difficult, but what I hear from you 202 00:08:47,360 --> 00:08:48,959 Speaker 2: is this is not just some sort of short term 203 00:08:49,000 --> 00:08:51,880 Speaker 2: tactical trade. This is fundamental that's longer term. 204 00:08:51,920 --> 00:08:54,680 Speaker 5: We believe it's fundamental, and so we're buying really high 205 00:08:54,760 --> 00:08:57,960 Speaker 5: quality companies that benefit both from things like you know, 206 00:08:58,000 --> 00:09:01,360 Speaker 5: the the macro demand global So this is where geographic 207 00:09:01,360 --> 00:09:04,280 Speaker 5: diversity really helps, as well as companies that are going 208 00:09:04,360 --> 00:09:06,559 Speaker 5: to kind of come up in the market as they 209 00:09:06,559 --> 00:09:07,920 Speaker 5: make these big corporate changes. 210 00:09:07,960 --> 00:09:19,600 Speaker 2: Okay, this was awesome on the dates of this morning, 211 00:09:19,640 --> 00:09:21,800 Speaker 2: the dates of tomorrow and going into the FED next week, 212 00:09:21,800 --> 00:09:23,600 Speaker 2: and please to say that with us is Tiffany Wildeck 213 00:09:23,760 --> 00:09:26,120 Speaker 2: of Pimco. Tiffany, wonderful to catch up with you again. 214 00:09:26,280 --> 00:09:28,040 Speaker 2: Just had a bit of economic datesa this morning. Going 215 00:09:28,040 --> 00:09:30,680 Speaker 2: get into GDP tomorrow. What are you expecting from the 216 00:09:30,679 --> 00:09:32,720 Speaker 2: first quarter and how do you think everything we've seen 217 00:09:32,760 --> 00:09:34,800 Speaker 2: in the first quarter of this year will shape the 218 00:09:34,840 --> 00:09:36,000 Speaker 2: conversation next week. 219 00:09:38,080 --> 00:09:40,719 Speaker 7: Yeah, so we're looking for a pretty strong report. I 220 00:09:40,760 --> 00:09:43,040 Speaker 7: think the Bloomberg consensus, as you mentioned, is two and 221 00:09:43,080 --> 00:09:45,439 Speaker 7: a half, but our lene as well is on the 222 00:09:45,480 --> 00:09:47,520 Speaker 7: higher side of that. And I think the more important 223 00:09:47,559 --> 00:09:49,520 Speaker 7: thing that we'll be focused on, you know, is just 224 00:09:49,600 --> 00:09:52,760 Speaker 7: the core measure of GDP final domestic demand growth which 225 00:09:52,800 --> 00:09:53,719 Speaker 7: economists call it. 226 00:09:54,080 --> 00:09:55,439 Speaker 3: That's going to be incredibly strong. 227 00:09:55,520 --> 00:10:00,280 Speaker 7: That strips out the volatyle trade in inventories categories, and 228 00:10:00,320 --> 00:10:02,160 Speaker 7: that looks like that's going to be above three, you know. 229 00:10:02,200 --> 00:10:05,000 Speaker 7: And the thing that we've been really highlighting and focusing 230 00:10:05,000 --> 00:10:06,600 Speaker 7: in is that will be the third quarter in a 231 00:10:06,679 --> 00:10:10,319 Speaker 7: row that we've gotten core GDP growth of above three, 232 00:10:10,679 --> 00:10:14,000 Speaker 7: and that's something that we haven't seen since twenty fourteen, 233 00:10:14,200 --> 00:10:17,400 Speaker 7: absent the pandemic related rebounds. So all of this is 234 00:10:17,400 --> 00:10:19,920 Speaker 7: to say is that GDP in the United States is 235 00:10:19,960 --> 00:10:25,040 Speaker 7: incredibly strong, and that strength has continued after twenty twenty three. 236 00:10:25,080 --> 00:10:28,240 Speaker 7: We've seen strong momentum going into twenty twenty four. All 237 00:10:28,240 --> 00:10:32,040 Speaker 7: of that suggests that inflationary pressures in the economy, you know, 238 00:10:32,080 --> 00:10:34,520 Speaker 7: we're running, we're running at a hot economy here, and 239 00:10:34,520 --> 00:10:38,000 Speaker 7: it's not really consistent with inflationary pressures further moderating. 240 00:10:38,120 --> 00:10:39,600 Speaker 2: Do you think that we'll shape the language and the 241 00:10:39,600 --> 00:10:42,360 Speaker 2: statement next Wednesday when we open that up at two 242 00:10:42,360 --> 00:10:44,200 Speaker 2: pm Eastern time, It's that going to look any different? 243 00:10:45,800 --> 00:10:46,040 Speaker 8: Yeah? 244 00:10:46,120 --> 00:10:47,960 Speaker 7: I mean, I certainly I think you could see some 245 00:10:48,040 --> 00:10:50,280 Speaker 7: changes to the statement, But I think what markets will 246 00:10:50,320 --> 00:10:52,400 Speaker 7: be more focused on is what Powell says in the 247 00:10:52,440 --> 00:10:55,960 Speaker 7: press conference and his you know, in the past. At 248 00:10:56,040 --> 00:11:01,600 Speaker 7: least Powell has made reference to the SEP projections prior 249 00:11:01,760 --> 00:11:05,240 Speaker 7: SEP projections at a non SUP meeting and given us 250 00:11:05,280 --> 00:11:07,400 Speaker 7: some hints on how he thinks they could change. And 251 00:11:07,400 --> 00:11:10,439 Speaker 7: we think that's potentially what he could do now set 252 00:11:10,480 --> 00:11:13,400 Speaker 7: the stage for more revisions to the SEP that we're 253 00:11:13,400 --> 00:11:15,240 Speaker 7: going to get in June, you know, say that the 254 00:11:15,280 --> 00:11:18,319 Speaker 7: inflation forecasts are likely going to have to be revised up, 255 00:11:18,640 --> 00:11:19,719 Speaker 7: and then as a result of. 256 00:11:19,679 --> 00:11:21,000 Speaker 3: That sort of hint at the. 257 00:11:20,880 --> 00:11:23,760 Speaker 7: Fact that you could take out maybe one or even 258 00:11:23,800 --> 00:11:27,000 Speaker 7: two cuts in the forecast for twenty twenty four. 259 00:11:27,320 --> 00:11:29,000 Speaker 1: Tiffany, I hate to do this. 260 00:11:29,280 --> 00:11:32,199 Speaker 3: I feel kind of a little bit dirty doing this, but. 261 00:11:32,400 --> 00:11:34,800 Speaker 1: Is this a pivot to the pivot that we got 262 00:11:34,800 --> 00:11:35,439 Speaker 1: in December? 263 00:11:37,920 --> 00:11:40,160 Speaker 7: Well, it does seem like in some sense the pivot 264 00:11:40,240 --> 00:11:43,640 Speaker 7: party from December is over, you know, and I think 265 00:11:43,640 --> 00:11:46,199 Speaker 7: that'says a result of the inflation prints that we've seen, 266 00:11:46,920 --> 00:11:49,560 Speaker 7: you know, and again, just the economy is just incredibly strong, 267 00:11:49,640 --> 00:11:52,000 Speaker 7: you know. We have argued you know that, you know, 268 00:11:52,040 --> 00:11:55,080 Speaker 7: the so called last mile on the inflation in the 269 00:11:55,080 --> 00:11:57,800 Speaker 7: inflation race is going to be the toughest, you know, 270 00:11:57,800 --> 00:12:00,360 Speaker 7: and that's just because we have a strong economy, labor 271 00:12:00,400 --> 00:12:03,120 Speaker 7: markets are tight, and that and that just is likely 272 00:12:03,160 --> 00:12:05,719 Speaker 7: to result in inflation hanging above their target. And really 273 00:12:05,800 --> 00:12:08,520 Speaker 7: the question is is, you know, are they okay with that? 274 00:12:08,920 --> 00:12:11,640 Speaker 7: And it seems like, you know, there is some threshold 275 00:12:12,280 --> 00:12:14,840 Speaker 7: maybe we think it's three percent where they won't be 276 00:12:14,920 --> 00:12:17,439 Speaker 7: okay with that, but you know, above three it's okay. 277 00:12:18,080 --> 00:12:20,040 Speaker 7: But again, you know, it's it's a bit you know, 278 00:12:20,120 --> 00:12:21,760 Speaker 7: monetary policy is a bit of an art and a 279 00:12:21,840 --> 00:12:24,600 Speaker 7: science here, so you know, I think the art is 280 00:12:24,640 --> 00:12:26,560 Speaker 7: that you know, they don't really need to be cutting, 281 00:12:26,559 --> 00:12:29,120 Speaker 7: they shouldn't be in a rush, and so really it's 282 00:12:29,160 --> 00:12:31,520 Speaker 7: up to them to choose when they start to do it. 283 00:12:31,600 --> 00:12:33,559 Speaker 1: You said, the pivot party is over, and when people 284 00:12:33,559 --> 00:12:36,240 Speaker 1: were talking about the pivot party, it was including. 285 00:12:36,040 --> 00:12:37,800 Speaker 3: A real rally in risk assets. 286 00:12:37,840 --> 00:12:40,760 Speaker 1: So I wonder, okay, pivot party is over, the earnings 287 00:12:40,760 --> 00:12:43,319 Speaker 1: party just getting started. Is this basically an economy that 288 00:12:43,400 --> 00:12:45,720 Speaker 1: can handle where we're at right now? And that's basically 289 00:12:45,760 --> 00:12:47,840 Speaker 1: what we're hearing from a lot of people around this table. 290 00:12:49,600 --> 00:12:51,920 Speaker 7: Yeah, I mean it's certainly if you not only obviously, 291 00:12:51,960 --> 00:12:54,440 Speaker 7: if you the equity market. We look at equity risk 292 00:12:54,520 --> 00:12:56,520 Speaker 7: premiums and even though you've seen some weakness in the 293 00:12:56,520 --> 00:13:00,840 Speaker 7: equity market, you know, the additional yield over treasuries, earning 294 00:13:00,920 --> 00:13:03,160 Speaker 7: ziel that you get over treasuries is still looking okay. 295 00:13:03,840 --> 00:13:07,000 Speaker 7: There are still looking rather narrow in the equity market. 296 00:13:07,520 --> 00:13:11,720 Speaker 7: So from evaluation perspective, you know, equities you know, still look. 297 00:13:11,720 --> 00:13:12,480 Speaker 8: Somewhat rich here. 298 00:13:13,160 --> 00:13:14,640 Speaker 7: But but nevertheless, I would just say, if we look 299 00:13:14,679 --> 00:13:17,079 Speaker 7: at the GDP data, the data that I focus on more, 300 00:13:17,800 --> 00:13:21,679 Speaker 7: we're seeing a reacceleration in cyclical sectors of the economy, 301 00:13:21,760 --> 00:13:26,480 Speaker 7: that is, residential investment, you know, even in cap backs 302 00:13:26,520 --> 00:13:30,280 Speaker 7: and things like that. Corporate profits, Nippu corporate profits have 303 00:13:30,280 --> 00:13:33,280 Speaker 7: have reaccelerated as well. And this is at these high 304 00:13:33,360 --> 00:13:35,720 Speaker 7: level of interest rates. So it does seem like the 305 00:13:35,760 --> 00:13:38,320 Speaker 7: peak effects of the monetary policy drags, you know, they 306 00:13:38,360 --> 00:13:41,560 Speaker 7: are increasingly behind us. And that suggests that, yeah, maybe 307 00:13:41,559 --> 00:13:45,280 Speaker 7: the economy can withstand rates at these higher levels. 308 00:13:45,000 --> 00:13:48,840 Speaker 1: Which raises this question how much do financial conditions frankly, 309 00:13:49,160 --> 00:13:52,600 Speaker 1: how rich stocks are, how well bid credit markets are, 310 00:13:52,840 --> 00:13:56,200 Speaker 1: how much does that influence how long inflation can be 311 00:13:56,280 --> 00:13:57,960 Speaker 1: persistently above the FEDS target. 312 00:13:59,600 --> 00:14:02,000 Speaker 7: Yeah, I think I think overall, you know, the federal 313 00:14:02,040 --> 00:14:05,360 Speaker 7: reserve where monetary policy works through not only the policy rate, 314 00:14:05,400 --> 00:14:08,040 Speaker 7: but but a broader context of financial. 315 00:14:07,640 --> 00:14:08,800 Speaker 3: Conditions, you know. 316 00:14:09,000 --> 00:14:11,760 Speaker 7: And the point that we've been making lately is that 317 00:14:11,920 --> 00:14:15,000 Speaker 7: you need financial conditions to tighten here in order to 318 00:14:15,040 --> 00:14:17,560 Speaker 7: cool the economy down. And the question is how does 319 00:14:17,600 --> 00:14:20,920 Speaker 7: the FED engineer that. Now, partly they can engineer that 320 00:14:20,960 --> 00:14:23,240 Speaker 7: through just staying on hold. The bond market is still 321 00:14:23,280 --> 00:14:26,440 Speaker 7: pricing in cuts, So the longer they push that out 322 00:14:26,480 --> 00:14:29,000 Speaker 7: stay on hold, you know, that should sort of mechanically 323 00:14:29,040 --> 00:14:31,920 Speaker 7: tighten financial conditions. And I think that's what the FED 324 00:14:32,000 --> 00:14:34,440 Speaker 7: will try to do and just see if that's enough, 325 00:14:34,600 --> 00:14:36,920 Speaker 7: you know, and maybe rates on hold longer will get 326 00:14:36,920 --> 00:14:39,720 Speaker 7: them that financial conditions tightening that they need in order 327 00:14:39,720 --> 00:14:41,960 Speaker 7: to cool things down a bit here, you know. But 328 00:14:42,200 --> 00:14:43,800 Speaker 7: of course if not, then they'll have to find other 329 00:14:43,840 --> 00:14:45,800 Speaker 7: ways to try to tighten a little bit more. 330 00:14:46,080 --> 00:14:47,840 Speaker 6: I know we're all focused on inflation this week, but 331 00:14:47,840 --> 00:14:49,600 Speaker 6: I want to ask you about the jobs market because 332 00:14:49,600 --> 00:14:52,280 Speaker 6: in your note you talk about elevated immigration boosting boats 333 00:14:52,280 --> 00:14:55,400 Speaker 6: supply and demand. What happens if we still don't have 334 00:14:55,480 --> 00:14:58,000 Speaker 6: those same levels of immigration, Whether or not it's executive 335 00:14:58,080 --> 00:15:00,600 Speaker 6: order that Henrietta Trace says to be coming out of 336 00:15:00,600 --> 00:15:04,200 Speaker 6: the Biden administration or a whole new paradigm next year, 337 00:15:04,240 --> 00:15:06,600 Speaker 6: if we get an entire different administration. 338 00:15:08,320 --> 00:15:11,960 Speaker 7: Yeah, so that will result in growth slowing for sure, 339 00:15:12,760 --> 00:15:16,800 Speaker 7: because you know, because immigration boosts both supply and demand, 340 00:15:17,240 --> 00:15:21,040 Speaker 7: the effects on inflation are are more nuanced, we would argue, 341 00:15:21,200 --> 00:15:23,880 Speaker 7: and they're they're less clear. So you know, what we 342 00:15:23,920 --> 00:15:27,880 Speaker 7: could see is if you have immigration that is falling 343 00:15:27,920 --> 00:15:30,880 Speaker 7: without a lot of asylum seekers cross you know, across 344 00:15:30,880 --> 00:15:34,240 Speaker 7: our borders over the last couple of years, we estimate 345 00:15:34,320 --> 00:15:38,160 Speaker 7: that that's contributed around point five fifty basis points to 346 00:15:38,240 --> 00:15:41,160 Speaker 7: Hunter basis points to GDP growth. So if you don't 347 00:15:41,200 --> 00:15:45,040 Speaker 7: get that, we will absolutely see growth slowing. But in 348 00:15:45,120 --> 00:15:48,000 Speaker 7: terms of the inflationary effects, you know, that's certainly less clear. 349 00:15:48,400 --> 00:15:50,240 Speaker 7: You know, now there are folks that are in the 350 00:15:50,280 --> 00:15:54,040 Speaker 7: economy now, they have workers permits, they're waiting for their 351 00:15:54,080 --> 00:15:56,720 Speaker 7: asylum hearings. You know, I guess if there's policies to 352 00:15:56,760 --> 00:15:59,120 Speaker 7: try to you know, make them wait in Mexico or 353 00:15:59,320 --> 00:16:01,920 Speaker 7: other places like that, you know that that growth drag 354 00:16:01,960 --> 00:16:04,560 Speaker 7: will be even more you know, but it'll just we'll 355 00:16:04,600 --> 00:16:05,840 Speaker 7: just have to see how that plays out. 356 00:16:05,960 --> 00:16:07,800 Speaker 2: It's infinity. As we were talking and we're talking about 357 00:16:07,880 --> 00:16:10,520 Speaker 2: US strength, how pronounced there is, how much longer it 358 00:16:10,560 --> 00:16:12,600 Speaker 2: could last. I was just thinking of your sycl care 359 00:16:12,600 --> 00:16:15,120 Speaker 2: outlook that you helped lead and readies through that note, 360 00:16:15,200 --> 00:16:17,600 Speaker 2: the amount of divergence that we can expect. What about 361 00:16:17,600 --> 00:16:20,240 Speaker 2: everybody else? What is the growth back drop going to 362 00:16:20,320 --> 00:16:22,600 Speaker 2: look like the US versus the rest of the world. 363 00:16:24,760 --> 00:16:27,760 Speaker 7: Yeah, well, well, ultimately, you know, we we still think that, 364 00:16:27,880 --> 00:16:31,880 Speaker 7: you know, there is some durability in this US exceptionalism story. 365 00:16:32,400 --> 00:16:34,840 Speaker 7: You know that started in twenty twenty three, you know, 366 00:16:34,840 --> 00:16:38,080 Speaker 7: and really the factors that we believe contributed to that 367 00:16:38,720 --> 00:16:41,960 Speaker 7: was just the fact that the US government fiscal stimulus 368 00:16:42,000 --> 00:16:44,040 Speaker 7: during the pandemic was much larger than it was in 369 00:16:44,080 --> 00:16:46,480 Speaker 7: other developed markets. We've also seen you know what I 370 00:16:46,520 --> 00:16:49,920 Speaker 7: call less mean reversion in our federal government fiscal deficits. 371 00:16:49,960 --> 00:16:52,640 Speaker 7: Since then, they've been kind of structurally hanging around six 372 00:16:52,720 --> 00:16:56,040 Speaker 7: to seven percent. Everybody else has managed to get, you know, 373 00:16:56,120 --> 00:16:58,880 Speaker 7: more fiscal retrenchment. The other thing for the United States 374 00:16:58,920 --> 00:17:02,440 Speaker 7: is that we've seen less passed through of monetary policy, 375 00:17:02,880 --> 00:17:05,280 Speaker 7: you know, via the interest rates that people actually pay. 376 00:17:05,440 --> 00:17:08,119 Speaker 7: We have a large stock of mortgages that are you know, 377 00:17:08,200 --> 00:17:12,640 Speaker 7: low duration, low interest pay, long duration, low interest paying. 378 00:17:12,720 --> 00:17:15,119 Speaker 7: That's just not you know, the consumer is not feeling 379 00:17:15,160 --> 00:17:17,840 Speaker 7: really the effects of higher mortgage rates in the United States. 380 00:17:17,920 --> 00:17:18,760 Speaker 3: They are elsewhere. 381 00:17:19,320 --> 00:17:21,639 Speaker 7: So we think these things can can continue, you know, 382 00:17:21,680 --> 00:17:24,080 Speaker 7: at least through our cyclical horizon. You know. I think 383 00:17:24,240 --> 00:17:28,360 Speaker 7: structurally the US economy is also just delivering better productivity 384 00:17:28,400 --> 00:17:31,240 Speaker 7: growth than some of our peers, and I think that 385 00:17:31,359 --> 00:17:34,640 Speaker 7: can certainly continue, you know, versus Europe, for example, where 386 00:17:34,640 --> 00:17:37,600 Speaker 7: they've had you know, a pretty big energy shock that's 387 00:17:37,600 --> 00:17:40,439 Speaker 7: made them somewhat less competitive. Obviously, you know, weakness in 388 00:17:40,560 --> 00:17:43,760 Speaker 7: China's also had a bigger impact on Europe. You know. 389 00:17:43,760 --> 00:17:45,960 Speaker 7: But all of these things in our minds can you know, 390 00:17:46,000 --> 00:17:49,399 Speaker 7: can contribute to this US exceptionalism story, and eventually, you know, 391 00:17:49,440 --> 00:17:51,920 Speaker 7: that's also going to create divergence and monetary policy. 392 00:17:51,960 --> 00:17:52,240 Speaker 1: We think. 393 00:17:52,480 --> 00:17:54,879 Speaker 2: Tiffinitely enjoyed this and enjoyed the not as well. Tiffany 394 00:17:54,920 --> 00:18:07,720 Speaker 2: Wolding there of Pincott to trace a Veder Parmas joined 395 00:18:07,760 --> 00:18:09,960 Speaker 2: us now to break this down head before we race 396 00:18:10,000 --> 00:18:11,720 Speaker 2: off into the detail. I just want to sit on 397 00:18:11,760 --> 00:18:14,119 Speaker 2: this just for a moment. We've talked so much about 398 00:18:14,119 --> 00:18:16,800 Speaker 2: the division down in Washington. Only a few months ago, 399 00:18:16,920 --> 00:18:19,800 Speaker 2: some people thought the prospect of this happening was almost unthinkable. 400 00:18:20,119 --> 00:18:23,119 Speaker 2: Just how united did Washington become on this issue in 401 00:18:23,160 --> 00:18:23,960 Speaker 2: the last few months. 402 00:18:25,280 --> 00:18:28,160 Speaker 4: They gained i want to say, eight votes since February 403 00:18:28,160 --> 00:18:31,200 Speaker 4: from the Republican Party who had been so opposed providing 404 00:18:31,240 --> 00:18:34,919 Speaker 4: the A to Ukraine, Israel, and Taiwan. This is really 405 00:18:34,960 --> 00:18:36,800 Speaker 4: a case of members wanted to be on the right 406 00:18:36,840 --> 00:18:39,880 Speaker 4: side of history. You know, last week when Speaker Johnson said, Hey, 407 00:18:40,280 --> 00:18:43,639 Speaker 4: go into the sitroom, look at all of the foreign intel, 408 00:18:43,680 --> 00:18:45,359 Speaker 4: look at the data that we have backing this up, 409 00:18:45,400 --> 00:18:46,920 Speaker 4: and why we need A to Ukraine. 410 00:18:47,520 --> 00:18:50,000 Speaker 8: We need America to be strong against Putin and she 411 00:18:50,800 --> 00:18:51,320 Speaker 8: and Iran. 412 00:18:51,520 --> 00:18:55,440 Speaker 4: And that is exactly what the members decided to ultimately deliver. 413 00:18:55,560 --> 00:18:57,760 Speaker 4: I think this is a testament to the foreign policy 414 00:18:57,840 --> 00:19:00,720 Speaker 4: arm of Joe Biden's career in the Senate as President. 415 00:19:00,720 --> 00:19:02,240 Speaker 8: Obviously Chuck Schumer. 416 00:19:02,040 --> 00:19:04,560 Speaker 4: But in no small account it's Mitch McConnell who wants 417 00:19:04,600 --> 00:19:06,679 Speaker 4: this to be his legacy, which is something we've been 418 00:19:06,720 --> 00:19:11,000 Speaker 4: hearing from staff for seven months since the October seventh 419 00:19:11,040 --> 00:19:14,480 Speaker 4: attacks in Israel and well before that in Ukraine. 420 00:19:14,560 --> 00:19:18,080 Speaker 6: But Henrietta, this got through with our border policy, which 421 00:19:18,320 --> 00:19:21,919 Speaker 6: Republicans are basically promising their caucus that we would make 422 00:19:21,920 --> 00:19:24,080 Speaker 6: sure we would do. Where does that leave that potential 423 00:19:24,160 --> 00:19:26,800 Speaker 6: legislation or is this just one hundred percent become an 424 00:19:26,800 --> 00:19:29,359 Speaker 6: election issue and no one in Congress is going to 425 00:19:29,400 --> 00:19:30,960 Speaker 6: work on it until maybe next year. 426 00:19:32,040 --> 00:19:33,560 Speaker 4: Congress is definitely not going to be able to do 427 00:19:33,600 --> 00:19:36,600 Speaker 4: anything on the border. Republicans had their chance, they decided 428 00:19:36,640 --> 00:19:39,320 Speaker 4: it wasn't good enough. They let the perfect be the 429 00:19:39,440 --> 00:19:41,240 Speaker 4: enemy of the good and all the cliches that we 430 00:19:41,240 --> 00:19:44,199 Speaker 4: hear from Lindsay Graham repeatedly on issues like this, and 431 00:19:44,240 --> 00:19:47,600 Speaker 4: we haven't passed immigration reform in decades. I still remember 432 00:19:47,600 --> 00:19:49,679 Speaker 4: twenty thirteen when we came so close. They do not 433 00:19:49,800 --> 00:19:52,879 Speaker 4: have the ability to get to yes on immigration. But 434 00:19:53,080 --> 00:19:56,119 Speaker 4: the administration is planning a series of executive orders on 435 00:19:56,240 --> 00:19:59,800 Speaker 4: border policy, which we'll see potentially as early as next week. 436 00:20:00,160 --> 00:20:01,639 Speaker 4: So I expect that to be the bulk of what 437 00:20:01,640 --> 00:20:04,800 Speaker 4: we do on foreign policy, excuse me, on border security 438 00:20:05,040 --> 00:20:07,120 Speaker 4: in this Congress, and. 439 00:20:07,119 --> 00:20:09,080 Speaker 6: Of course that's going into the election. We have a 440 00:20:09,119 --> 00:20:11,919 Speaker 6: new poll out this morning which shows that Biden bumpy 441 00:20:12,000 --> 00:20:14,800 Speaker 6: head following the state of the Union has evaporated. He 442 00:20:14,920 --> 00:20:17,240 Speaker 6: really only has control right now with Michigan. And it 443 00:20:17,320 --> 00:20:21,000 Speaker 6: continuously comes back to the economy, especially inflation. What is 444 00:20:21,040 --> 00:20:23,359 Speaker 6: the messaging from the White House going to be because 445 00:20:23,560 --> 00:20:25,080 Speaker 6: it's not landing on voters. 446 00:20:26,119 --> 00:20:28,399 Speaker 4: You know, the economy has been a weak point for 447 00:20:28,560 --> 00:20:32,560 Speaker 4: President Biden for many years now. He one thing I'd 448 00:20:32,600 --> 00:20:34,879 Speaker 4: really point into into your polls, which I think have 449 00:20:35,080 --> 00:20:38,240 Speaker 4: an incredible margin of error just one percent, you know, 450 00:20:38,280 --> 00:20:40,880 Speaker 4: speaking to the testament of how thorough your polls are 451 00:20:40,920 --> 00:20:41,200 Speaker 4: of the. 452 00:20:41,160 --> 00:20:44,120 Speaker 8: Swing states, Michigan is an interesting one. Obviously. 453 00:20:44,160 --> 00:20:47,000 Speaker 4: President Biden has made huge efforts to get with the 454 00:20:47,080 --> 00:20:49,960 Speaker 4: Union groups on that. He got another endorsement today, But 455 00:20:50,080 --> 00:20:52,520 Speaker 4: Kennedy did get on the ballot in Michigan, which is 456 00:20:52,560 --> 00:20:54,600 Speaker 4: potentially going to be a problem for the Biden team 457 00:20:54,960 --> 00:20:58,480 Speaker 4: and the Trump team. But when it comes to the economy, 458 00:20:58,840 --> 00:21:03,520 Speaker 4: the president has had an underwater darth with women voters. 459 00:21:03,560 --> 00:21:05,280 Speaker 8: Female voters specifically because. 460 00:21:05,000 --> 00:21:07,760 Speaker 4: Of their exposure to inflation and the cost of household 461 00:21:07,800 --> 00:21:11,720 Speaker 4: goods and gas prices, which are a disproportionate share of 462 00:21:11,760 --> 00:21:15,159 Speaker 4: where money is spent in America from the women of 463 00:21:15,200 --> 00:21:20,160 Speaker 4: the household, and that delta is potentially being superseded by 464 00:21:20,160 --> 00:21:22,520 Speaker 4: the abortion issue, which for the first time in your poll, 465 00:21:22,840 --> 00:21:25,560 Speaker 4: is now a major issue of very important to a 466 00:21:25,640 --> 00:21:29,159 Speaker 4: majority of voters in those swing states that includes Democrats, independence, 467 00:21:29,320 --> 00:21:30,920 Speaker 4: and what we saw from twenty twenty two. If we 468 00:21:30,960 --> 00:21:33,359 Speaker 4: want to learn from something beyond just the polls, the 469 00:21:33,480 --> 00:21:37,560 Speaker 4: actual boots on the ground, that issue has a history 470 00:21:37,640 --> 00:21:41,560 Speaker 4: of superseding even the economic issues and inflation, as we 471 00:21:41,560 --> 00:21:43,960 Speaker 4: saw in twenty twenty two when inflation was even higher 472 00:21:44,000 --> 00:21:46,600 Speaker 4: at nine point one percent. So I do think that 473 00:21:46,760 --> 00:21:49,200 Speaker 4: it is going to be a situation where Biden keeps 474 00:21:49,240 --> 00:21:51,880 Speaker 4: having to tout the state of the US economy, which 475 00:21:51,880 --> 00:21:53,880 Speaker 4: is by all accounts strong, which is why the Fed 476 00:21:54,119 --> 00:21:57,240 Speaker 4: is struggling to cool it enough to bring inflation down, 477 00:21:57,840 --> 00:22:00,520 Speaker 4: but really getting that message across I think something that's 478 00:22:00,520 --> 00:22:03,879 Speaker 4: occurring as they're trying to two step it with abortion. 479 00:22:03,960 --> 00:22:06,119 Speaker 4: I'd like to see where immigration falls in the polls 480 00:22:06,119 --> 00:22:08,040 Speaker 4: when I get a chance to read a little deeper 481 00:22:08,040 --> 00:22:10,240 Speaker 4: into it. That's also something Republicans a lot of season, 482 00:22:10,520 --> 00:22:12,400 Speaker 4: But the economy continues to be paramount. 483 00:22:12,640 --> 00:22:14,920 Speaker 1: Henry, we were saying that now that this ninety five 484 00:22:14,960 --> 00:22:18,480 Speaker 1: billion dollar bill was passed, there's a question of what next, 485 00:22:18,640 --> 00:22:21,960 Speaker 1: what gets done before the election? Anne Marie Well said 486 00:22:22,119 --> 00:22:23,720 Speaker 1: electioning will probably get done, not. 487 00:22:23,720 --> 00:22:24,480 Speaker 3: A whole lot else. 488 00:22:24,520 --> 00:22:27,639 Speaker 1: You talked about the potential for some sort of single 489 00:22:27,960 --> 00:22:32,119 Speaker 1: executive actions on the border issues, What about tariffs? 490 00:22:32,280 --> 00:22:33,280 Speaker 3: What about other. 491 00:22:33,200 --> 00:22:35,720 Speaker 1: Issues that might come to the four including from the 492 00:22:35,800 --> 00:22:38,520 Speaker 1: FTC that very much are in line. 493 00:22:38,320 --> 00:22:39,840 Speaker 3: With what Biden has been talking about. 494 00:22:40,760 --> 00:22:43,800 Speaker 4: Oh yeah, I'm finally expecting for tariffs and trade to 495 00:22:43,840 --> 00:22:46,680 Speaker 4: be front and center. Ambassador Tie was on Capitol Hill 496 00:22:46,800 --> 00:22:50,160 Speaker 4: yesterday last week in the House on the Senate side, 497 00:22:50,240 --> 00:22:54,000 Speaker 4: and there were some major announcements. Three times higher steel tariffs, 498 00:22:54,080 --> 00:22:56,080 Speaker 4: which is only about two percent of US imports, so 499 00:22:56,160 --> 00:22:58,080 Speaker 4: don't expect that to be a major mover for steel 500 00:22:58,119 --> 00:23:01,280 Speaker 4: prices in the US, But directionally and from a sort 501 00:23:01,320 --> 00:23:05,080 Speaker 4: of messaging standpoint on China, very important in a new 502 00:23:05,119 --> 00:23:08,119 Speaker 4: section three oh one investigation into shipbuilding, which is an 503 00:23:08,119 --> 00:23:10,040 Speaker 4: area that the United States is way behind on in 504 00:23:10,119 --> 00:23:13,600 Speaker 4: China dominates with and then a coordinated effort with Mexico 505 00:23:13,680 --> 00:23:17,160 Speaker 4: potentially also Canada via the new USMCA that inveastamdor Tie 506 00:23:17,320 --> 00:23:21,080 Speaker 4: was integral and getting past during the last administration, could 507 00:23:21,119 --> 00:23:24,400 Speaker 4: be used to look into electric vehicles, their import from 508 00:23:24,480 --> 00:23:28,359 Speaker 4: China on the components side, and sort of preemptively getting 509 00:23:28,359 --> 00:23:31,119 Speaker 4: in front of that entire sector. So I think a 510 00:23:31,160 --> 00:23:33,320 Speaker 4: lot of activity on trade. And then of course we 511 00:23:33,359 --> 00:23:36,080 Speaker 4: are eagerly awaiting a conclusion of the Section three oh 512 00:23:36,160 --> 00:23:38,800 Speaker 4: one review, which covers the three hundred and seventy billion 513 00:23:38,840 --> 00:23:41,479 Speaker 4: dollars worth of tires that are currently in place, and 514 00:23:41,520 --> 00:23:43,840 Speaker 4: by the end of next month, Investment Tide will announce 515 00:23:44,080 --> 00:23:47,040 Speaker 4: which and whether any exclusions that we're agreed to in 516 00:23:47,080 --> 00:23:50,080 Speaker 4: the last year will be extended. So lots of movement 517 00:23:50,119 --> 00:23:52,480 Speaker 4: on the trade front. But to your point on Congress, 518 00:23:52,840 --> 00:23:53,720 Speaker 4: don't expect anything. 519 00:23:53,760 --> 00:23:55,400 Speaker 8: They're going to be gone campaigning. 520 00:23:55,000 --> 00:23:56,080 Speaker 6: For the rest of the year when it comes to 521 00:23:56,200 --> 00:23:58,880 Speaker 6: trade front. You know, you mentioned steel. I think Pennsylvania. 522 00:23:59,000 --> 00:24:01,920 Speaker 6: You mentioned potential evs on Chinese terror, So I think 523 00:24:01,960 --> 00:24:05,680 Speaker 6: of Michigan. What lever could Biden pull before the election 524 00:24:06,080 --> 00:24:08,800 Speaker 6: to short votes in Wisconsin if he has to keep 525 00:24:09,119 --> 00:24:12,240 Speaker 6: the blue wall, which Mario Parker colleague in Washington says, 526 00:24:12,440 --> 00:24:15,160 Speaker 6: he has to keep the blue wall to win, you. 527 00:24:15,160 --> 00:24:16,040 Speaker 8: Have to keep the blue wall. 528 00:24:16,040 --> 00:24:18,000 Speaker 4: You really want to see the heartening part of the 529 00:24:18,080 --> 00:24:21,800 Speaker 4: data for the Biden team in your poll this morning 530 00:24:22,040 --> 00:24:25,000 Speaker 4: is Michigan, where he continues to maintain his lead even 531 00:24:25,040 --> 00:24:27,480 Speaker 4: though he's underwater everywhere else. I would also say the 532 00:24:27,520 --> 00:24:32,159 Speaker 4: primary vote in Pennsylvania last night is really interesting. Nikki Haley, 533 00:24:32,160 --> 00:24:34,480 Speaker 4: who hasn't been on the ticket for months now, got 534 00:24:34,520 --> 00:24:36,879 Speaker 4: seventeen percent of the vote. So I think what Biden 535 00:24:36,960 --> 00:24:39,439 Speaker 4: is going to do is try to continue moving forward 536 00:24:39,480 --> 00:24:40,280 Speaker 4: with the steel workers. 537 00:24:40,280 --> 00:24:40,520 Speaker 8: Again. 538 00:24:40,560 --> 00:24:43,639 Speaker 4: That three times higher steel tire is something that he 539 00:24:43,760 --> 00:24:45,160 Speaker 4: is calling for that speaks. 540 00:24:44,840 --> 00:24:45,960 Speaker 8: Directly to the steel workers. 541 00:24:46,000 --> 00:24:48,639 Speaker 4: And what we know about the unions the team stirs 542 00:24:48,680 --> 00:24:51,200 Speaker 4: the steel workers and all those groups is that they 543 00:24:51,200 --> 00:24:53,760 Speaker 4: will go to the mat to get their two hundred 544 00:24:53,760 --> 00:24:56,960 Speaker 4: and fifty thousand members in any individual union to. 545 00:24:57,040 --> 00:24:59,200 Speaker 8: Vote in the direction that they're advocating for. 546 00:24:59,600 --> 00:25:01,919 Speaker 4: So I think that Biden is really taking that labor 547 00:25:01,960 --> 00:25:05,840 Speaker 4: message to heart, which is an integral in Pennsylvania, Wisconsin, 548 00:25:05,960 --> 00:25:07,479 Speaker 4: Michigan and the whole Ross belt. 549 00:25:07,560 --> 00:25:09,120 Speaker 2: Hen reader, you are one of the best. It's great 550 00:25:09,119 --> 00:25:10,920 Speaker 2: a cat show with you. Hen read a trace there. 551 00:25:11,680 --> 00:25:15,240 Speaker 2: This is the Bloomberg Surveillance podcast, bringing you the best 552 00:25:15,280 --> 00:25:18,840 Speaker 2: in markets, economics, angiopolitics. You can watch the show live 553 00:25:18,920 --> 00:25:21,920 Speaker 2: on Bloomberg TV weekday mornings from six am to nine 554 00:25:21,960 --> 00:25:25,680 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify, or 555 00:25:25,760 --> 00:25:28,360 Speaker 2: anywhere else you listen, and as always, on the Bloomberg 556 00:25:28,400 --> 00:25:30,320 Speaker 2: Terminal and the Bloomberg Business app.