Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. One point nine trillion
Speaker 1: dollar fiscal stimulus about to be signed into law tomorrow
Speaker 1: by President Biden. Seems to be a lot of things
Speaker 1: in this package for a lot of folks. Let's break
Speaker 1: it down. We can do that with Michael zzas Uh.
Speaker 1: He is the chief US public Policy and municipal strategists
Speaker 1: for Morgan Stanley based in New York. Michael, thanks so
Speaker 1: much for joining us here. I want to look at
Speaker 1: initially the amount of money that is going to states
Speaker 1: and local municipalities. Is it enough and how do you
Speaker 1: think it will be utilized? Yeah, I think it's enough.
Speaker 1: I think it's enough. We had estimated back in May
Speaker 1: that state and local governments would be short of their
Speaker 1: budget estimates through the end of calendar one by about
Speaker 1: two hundred and seventy billion dollars. This is three fifty
Speaker 1: billion dollars in our two hundred and seventy billion dollars
Speaker 1: probably now is actually too high of an estimate because
Speaker 1: we we were looking at an SMP level that was
Speaker 1: lower back than UM. We did not account for unemployment
Speaker 1: being skewed towards lower income workers so that the tax
Speaker 1: base didn't suffer nearly as much as we thought. So
Speaker 1: three d fifty billion we think will will relatively well
Speaker 1: cover the revenue that state and local officials UM expect
Speaker 1: should have been there. So what does that money get
Speaker 1: used for at the end of the day, Well, you know,
Speaker 1: it will depend on a state by state basis, but
Speaker 1: ultimately it replaces lost revenue from lost economic activity. UH.
Speaker 1: Probably enables operating budgets to stay intact, UM capital budgets
Speaker 1: to continue to flow UH. And it basically just it
Speaker 1: ensures that thing governments can undertake the normal amount of
Speaker 1: economic activity they otherwise would have. So does it change
Speaker 1: UM issuance plans? Were they changed before the bill came along?
Speaker 1: Does it change rates? Has it already been priced in well?
Speaker 1: With regard to the MUNI market, I mean, the muni
Speaker 1: market is pricing in a way that I think reflects
Speaker 1: a substantial amount of optimism, and I think well placed
Speaker 1: optimism about the strength of credit quality, which is to
Speaker 1: say that if you're providing three fifty billion dollars of
Speaker 1: grant money when the amount of revenue LASS was going
Speaker 1: to be less than that, then the credit quality of
Speaker 1: the asset class is more or less what it was
Speaker 1: before the pandemic, which is not to say it didn't
Speaker 1: have its flaws, but UM certainly UM not nearly experienced
Speaker 1: the weakness that it was perceived too. So I don't
Speaker 1: think this as an impact on yields per se that
Speaker 1: the muni yields will go down relative to treasury yields,
Speaker 1: but it sort of justifies where market pricing is with
Speaker 1: regard to supply. I think potentially a transform supply, Whereas
Speaker 1: without this aid you might have looked at municipalities doing
Speaker 1: some refunding activity to create budget savings. Now they're probably
Speaker 1: more likely to be aggressive in their capital plans and
Speaker 1: and borrow money to UM match the money they would
Speaker 1: have used on I pay as you go basis to
Speaker 1: pay for roads and bridges, etcetera. Alright, so, Michael, this
Speaker 1: UH bill passed strictly along partisan lines. Party lines. That
Speaker 1: does not bode well. I wouldn't think for the next
Speaker 1: round of stimiles that presumably would have some bigger ticket items,
Speaker 1: some you know, some infrastructure. How are you guys thinking
Speaker 1: about that? Well, I think the way that I think
Speaker 1: you're right that there there's nothing in this process that
Speaker 1: suggests that infrastructure can be done in a bipartisan way,
Speaker 1: at least easily, and so I think that sets up
Speaker 1: a process that is long and arduous, uh and probably
Speaker 1: one that we think will ultimately be a bill that
Speaker 1: has to be mostly deficit financed. So if you're going
Speaker 1: to have an infrastructure bill that approaches the ambition of
Speaker 1: what the Biden administration has laid out, there are just
Speaker 1: aspects of that bill are probably nonstarters for Republicans, starting
Speaker 1: with some of the tax increases uh that they want
Speaker 1: to be adjacent to it, as well as many of
Speaker 1: the environmental standards that they want to be adjacent to it.
Speaker 1: So if the Democrats have to go it alone, then
Speaker 1: they're probably going to follow this budget reconciliation process. Again,
Speaker 1: that probably means that you're looking at October passage the earliest,
Speaker 1: because that has to the next fiscal year, and then
Speaker 1: the Party amongst themselves, has to develop a kind of
Speaker 1: unanimous view on the nitty gritty of what's in the
Speaker 1: bill in terms of labor standards, environmental standards, not just
Speaker 1: how much more they want to spend on roads and bridges.
Speaker 1: It's a complicated negotiation, it will take much of the year. Ultimately,
Speaker 1: we think it will get over the finish line, But
Speaker 1: this one is a much harder lift than the COVID
Speaker 1: relief package. Do you think it'll be more than four
Speaker 1: trillion dollar bill coming over the finish line? That's not
Speaker 1: in our base case, And I think it's important to
Speaker 1: defind time frames here too, So yeah, I mean the
Speaker 1: COVID relief bill is one point nine trillion. The CBO
Speaker 1: says one point two will be spent this calendar year.
Speaker 1: The numbers quoted on infrastructure bills, they tend to be
Speaker 1: either five or ten year numbers. So um, in our view, yeah,
Speaker 1: you could look at a multi trillion dollar number over
Speaker 1: ten years. Um, it's entirely possible that the first proposals
Speaker 1: are five year numbers. So there's a little bit of
Speaker 1: apples and orange comparisons here. At the end of the day,
Speaker 1: we think you'll see something that is at least one
Speaker 1: and a half trillion dollars spread out over five years
Speaker 1: or more. What else are you looking for? What else
Speaker 1: are you guys looking at? What are you working on
Speaker 1: right now that we should be focusing on. Well, I
Speaker 1: think the the tax debate inside of this legislative debate
Speaker 1: on infrastructure is critical. We're assuming at the end of
Speaker 1: the day that there's only fifty Democratic Senate votes for
Speaker 1: about five to six hundred billion dollars worth of tax
Speaker 1: increases over a ten year period, and that's out of
Speaker 1: a menu of over three trillion dollars of tax increases
Speaker 1: that the by administrations proposed. But but we would expect
Speaker 1: that the initial proposal here will probably include almost all
Speaker 1: of those tax increases. So there's there's a It's it's
Speaker 1: important to understanding diffence between the two because that could
Speaker 1: affect markets in the short term. Alright, tough to do
Speaker 1: a bipartisan bill on big tax increases. Americans much prefer
Speaker 1: free money. Michael zesus, Thanks very much, Cheek us public
Speaker 1: policy and municipal strategists at Morgan Stanley. Well, it's Thursday,
Speaker 1: so we had another jobless claims number hit today. The
Speaker 1: news is it was the lowest since November. Came in
Speaker 1: a little bit better and expected. It's a hundred and
Speaker 1: twelve thousand, But that's still a stubbornly, stubbornly high number.
Speaker 1: And it's against it that backdrop that President Biden will
Speaker 1: sign tomorrow. I believe the UH one point nine trillion
Speaker 1: dollar fiscal stimulus UH plans. Let's bring that all together.
Speaker 1: We can do that with Chris Lewis, a senior fellow
Speaker 1: at the University of Virginia Miller Center. UH. He's former
Speaker 1: Deputy Secretary of Labor under President Obama, joining us on
Speaker 1: the phone from Charlottesville. Chris, thanks so much for joining
Speaker 1: us here. Let's start with the jobs claims. I love
Speaker 1: to get your thoughts, as a former deputy secretary of
Speaker 1: labor about how you view this labor market today. Are
Speaker 1: you concerned about some of this permanent unemployment that we
Speaker 1: may be seeing out there? Yeah, you know, I really am.
Speaker 1: I mean, we have with these weekly numbers. This is
Speaker 1: now the fifty one week in a row that has
Speaker 1: exceeded the worst of the Great Recession. So while the
Speaker 1: numbers are kind of inching down very slowly, there's still
Speaker 1: at a really elevated level. And I think what I'm
Speaker 1: as concerned about is, you know, the four million people
Speaker 1: who UH who have lost their jobs permanently, about six
Speaker 1: million people who are working part time but would rather
Speaker 1: be working full time. We've got a long term unemployment
Speaker 1: at rates that um, you know, we haven't seen really
Speaker 1: since the Great Recession at this point. And what we
Speaker 1: know is that the longer people are out of work,
Speaker 1: the harder is to get them back. And I think
Speaker 1: what we've also seen over the pandemic is a lot
Speaker 1: of the broader changes in the economy, like the shift
Speaker 1: to online retail, have been accelerated, so a lot of
Speaker 1: the jobs that people have left probably aren't there anymore.
Speaker 1: Right now. You know, the uh the automation UM, which
Speaker 1: isn't the same as on shifting to online, but it's
Speaker 1: similar UM. And the shift of manufacturing label to four
Speaker 1: labor to foreign insurers was something that Donald Trump was
Speaker 1: working to turn around in some ways. He wanted to
Speaker 1: bring jobs back to America. President Biden thinks he can
Speaker 1: do a better job of it. Do you see that too,
Speaker 1: You know, Look, I I am confident that the plan
Speaker 1: they're going to put forward will do that, and I
Speaker 1: am hopeful that if we can get an infrastructure bill,
Speaker 1: a real infrastructure bill, that can bring back some of
Speaker 1: those jobs as well. But you know, as you said,
Speaker 1: they're broader globalization trends that make this very challenging, you know,
Speaker 1: And so I think we need to understand that the
Speaker 1: manufacturing jobs, many of them that have gone overseas, probably
Speaker 1: aren't going back because labor costs are just too high
Speaker 1: in the United States. But when you move to things
Speaker 1: like advanced manufacturing, that is a place that we can
Speaker 1: continue to dominate here in the United States. But it's
Speaker 1: going to require a level of training of workers that
Speaker 1: exceeds what we have right now. Chris, you know, we've
Speaker 1: talked about the uh, the bigger fiscal stimulus plan, maybe
Speaker 1: one that focuses on infrastructure. Um that see used to
Speaker 1: be something that is on the ad Biden's plate right now.
Speaker 1: Are you concerned that there's just been no bipartisan support
Speaker 1: of the this one point nine trained dollar plan that
Speaker 1: really would call in the question ability to do anything
Speaker 1: bigger down the line. You know, I am concerned, and
Speaker 1: I think in part because look, we can we can,
Speaker 1: you know, quibble about some of the things in the bill,
Speaker 1: but there's so many other things that are just wildly popular.
Speaker 1: Leaving aside the stimulus checks, uh, you know, the extension
Speaker 1: of unemployment benefits, which really needs to happen otherwise eleven
Speaker 1: million people are going to start to lose uh their
Speaker 1: check starting next week. But it's the rental assistance, it's
Speaker 1: the assistance to small businesses, UM money that goes for
Speaker 1: vaccines and opening school So all of those things there
Speaker 1: should be consensus on. And I think it's an unfortunate
Speaker 1: sign of where partisanship is in Washington right now. That
Speaker 1: being said, look, we've talked now for for the entire
Speaker 1: Trump administration and now the beginning of the Biden administration,
Speaker 1: is that maybe the sweet spot when it comes to
Speaker 1: buy parsonship is infrastructural. So we'll have to see whether
Speaker 1: that happens or not. How do you think Republicans on
Speaker 1: Capitol Hill are going to UM are going to react
Speaker 1: to the infrastructure bill because you know, they didn't vote
Speaker 1: for this bill, but the Republican base was overwhelmingly in
Speaker 1: favor of it. So even though none of the representatives
Speaker 1: UM we're able to cast a vote for it, the
Speaker 1: people they represent want it past. Yeah, and I think
Speaker 1: that's obviously one of the contradictions here right now. I mean,
Speaker 1: I think with infrastructure, as with everything else, the question
Speaker 1: is going to be how to pay for it. We've
Speaker 1: kind of tossed the settle depth sit out the window
Speaker 1: over the last couple of administrations. You're not an M
Speaker 1: M T guy. You don't like the magic money tree. Look,
Speaker 1: I'm not one of these people who think that inflation
Speaker 1: is going to be a problem. But uh, you know,
Speaker 1: once we got that cut done, we've kind of stopped
Speaker 1: talking about the debt of that being said. Look, you know,
Speaker 1: how you pay for infrastructure will be a critical issue.
Speaker 1: And obviously one of the things that the President President
Speaker 1: Biden has talked about is rolling back some of those
Speaker 1: two tax cuts. So that will be an area where
Speaker 1: I think Republicans are gonna have a hard time swallowing that.
Speaker 1: But I do think when it comes to you know,
Speaker 1: the nuts and bolts of infrastructure like roads and bridges
Speaker 1: and airports, Uh, there is broad agreement. So hopefully we
Speaker 1: will come to that, Chris, we hope. Look, Chris lou
Speaker 1: from the University of Virginia went to Harvard with UM.
Speaker 1: Barack Obama worked at Sidney with the Obamas, went to
Speaker 1: Washington with Obama, and we we're guessing that the Biden
Speaker 1: team brings you back to d C very quickly. So
Speaker 1: please come back and talk to us after you get
Speaker 1: hired by the Biden administration. Chris Leu there a senior
Speaker 1: fellow at the University of Virginia Miller Center. Now I
Speaker 1: want to get straight over to Gaby Coppola. She covers
Speaker 1: UM well, she covers cars for us, and today we're
Speaker 1: going to talk to her about Apple because we're all
Speaker 1: excited once again about the possibility of an Apple car.
Speaker 1: I feel like Gabby, we've been we've been pretty stoked
Speaker 1: about this possibility for well on a decade. Now, is
Speaker 1: it ever going to happen? I think we're seeing very
Speaker 1: clear signals that it is going to happen. Um. I
Speaker 1: mean just the talk, you know with automakers that have
Speaker 1: been leaking. My colleagues and I did a story a
Speaker 1: couple of weeks ago about you know, they're in talks
Speaker 1: trying to find um lighter, which is sort of sensors
Speaker 1: for self driving car features. UM. I think it is good.
Speaker 1: It really does look like it's going to happen. This time,
Speaker 1: I think that it's still a few years away. Are
Speaker 1: reporting suggest that we're still several years away from seeing
Speaker 1: an actual product? Why would Apple want to get into
Speaker 1: the auto business, Gabby? What's kind of their strategy? Yeah, well,
Speaker 1: I think, um it's almost become a cliche in my world,
Speaker 1: but thinking of a of a car as an iPhone
Speaker 1: on wheels, especially when the cars do you have, um,
Speaker 1: do have autonomous capabilities? Think about it. I mean, think
Speaker 1: about what you're going to do in your car if
Speaker 1: you don't have to pay attention to the road. I mean,
Speaker 1: probably I'm going to be taking work email, but you
Speaker 1: could also be you know, watching TV, or you know,
Speaker 1: playing video games or basically all the kind of data
Speaker 1: and services and things shop taking a selfie for the
Speaker 1: Graham exactly, you'll be Graham and all of that. Apple
Speaker 1: wants to own that space. And so if this is
Speaker 1: the future, and I think even though it's you know,
Speaker 1: still pretty far away, if the future is cars that
Speaker 1: can drive themselves, then you're going to basically be living
Speaker 1: inside your phone when you're commuting, and Apple wants to
Speaker 1: be able to kind of provide you all the services
Speaker 1: and that. Let's let's try and guess how far away
Speaker 1: it is from your experience reporting on UM, you know,
Speaker 1: the traditional automakers. How long does it take from start
Speaker 1: to finish when somebody at GM or somebody at Ford
Speaker 1: UH comes up with a concept for a new car
Speaker 1: to you know, design it, to organize production, to figure
Speaker 1: out the supply chain, They get the prototype, then they
Speaker 1: you know, start testing it. I mean, what does that
Speaker 1: process take and cost? Gabby um billions of dollars? UH
Speaker 1: costs billions of dollars. And I mean a lot of
Speaker 1: that depends on if you're doing something brand new, which
Speaker 1: obviously Apple would be doing. So that means everything you
Speaker 1: just talked about, design, engineering, UH, testing for safety, you know,
Speaker 1: things like that, that takes years. So I think that
Speaker 1: whole process, I mean, I think you probably know as
Speaker 1: well as I do, but I want to say, like
Speaker 1: five years, you know, UM, And that's exactly that's UM.
Speaker 1: That's if you're an automaker who's been doing this for
Speaker 1: a hundred years or exactly exactly. I was thinking five
Speaker 1: years and and a couple of billion dollars. But that's
Speaker 1: if you already have factories. That's if you're already designing
Speaker 1: and making cars. So Apple. We know, it was just
Speaker 1: talking with Day and a couple of others. Chances are
Speaker 1: they're gonna need to do a whole lot of that
Speaker 1: footwork themselves. Yeah. Although the story I did today with
Speaker 1: my colleague Mark German in in l A, who's our
Speaker 1: stellar Apple reporter, UM talked about how, you know, Apple
Speaker 1: may want to take its iPhone handbook and kind of
Speaker 1: trying to transfer that to the auto industry and UM,
Speaker 1: you know, they're very used to managing supply chains, and
Speaker 1: fox Con, who we all know is supplier to Apple,
Speaker 1: UM is trying to get into the electric vehicle manufacturing business.
Speaker 1: So that's why people are looking at them. UM. But
Speaker 1: I think you know, Apple, as many Silicon Valley UH
Speaker 1: companies that have tried to get into the auto industry
Speaker 1: have realized it's really not fun making a car. I mean,
Speaker 1: maybe it's fun to design it, but the money involved,
Speaker 1: the thin margins that you get for it is very
Speaker 1: different from um, you know, writing some software and then
Speaker 1: charging huge margins on it. So I don't think they
Speaker 1: want to get their hands dirty with the manufacturing stuff.
Speaker 1: That's not what they do. UM. So that's why we
Speaker 1: think that you know, it would make a lot of
Speaker 1: sense for them to go after a contract manufacturer, which
Speaker 1: you know in our story we talked about Magna, which
Speaker 1: is a Canadian global. This Dyer built my truck, the
Speaker 1: truck I drive today. Yeah, yeah, yeah, So they can
Speaker 1: do stup to nuts car manufacturing and they've got a
Speaker 1: really long track record and a good reputation. Fox Cott
Speaker 1: already has a good um. Obviously they're already in deep
Speaker 1: with that. Well, it's just a question that can they
Speaker 1: really make cards? Can they make cars? Bending metal? That's
Speaker 1: the tough part, is Kevin Tyne from Bloomberg Intelligence always says,
Speaker 1: Gabby Coppla, thank you so much for joining us. Gabby Copple,
Speaker 1: as the auto reporter for Bloomberg News, joining us on
Speaker 1: the phone from Detroit. European Central Bank President Christine Lagar
Speaker 1: discussed her monetary policy decision at a news conference this
Speaker 1: morning and had this to say about inflation. Inflation hospited
Speaker 1: over recent months, mainly on account of some transitory factors
Speaker 1: and an increase in energy price inflation. At the same time,
Speaker 1: underlying price pressures remain subdued in the context of weak
Speaker 1: demand and significance luck in labor and product markets, so
Speaker 1: with that, the e c B also upped its inflation
Speaker 1: forecast not UM to an absolute level that is scary
Speaker 1: at all, one percent to one point five percent. And
Speaker 1: of course Europe has had a much more difficult time
Speaker 1: bringing about inflation than has the US. Right Um, the
Speaker 1: e c B just simply hasn't been able to move
Speaker 1: the needle UM the way the Federal Reserve had UM.
Speaker 1: And it's very interesting also the comparison, because here in Europe,
Speaker 1: I would say inflation is probably considered more of an evil.
Speaker 1: Certainly in Germany it's the last thing that people want
Speaker 1: to see. UM. Memories of the memories are are are
Speaker 1: are very long here and the Weimar Republic, although very
Speaker 1: few people alive now lived through it, UM still uh
Speaker 1: still leaves a serious scar in the German psyche. It's
Speaker 1: not nearly as bad I think in the US, Paul,
Speaker 1: do you think that's the case, you know? And it's
Speaker 1: been a while since we've had real inflation here, the
Speaker 1: kind that hurts UM, you know, so there's a discussion of,
Speaker 1: you know, kind of good inflation versus bad inflation. UM.
Speaker 1: And I think we saw the ten year spike a
Speaker 1: couple of weeks ago matt to one point six percent.
Speaker 1: That kind of got people's attention, um, and caused them
Speaker 1: to say, Okay, do we have some inflation creeping into
Speaker 1: uh this economy more so than maybe we were forecasting,
Speaker 1: and maybe quicker than we were forecasting. And boy, when
Speaker 1: you to take a look at some of the commodities
Speaker 1: out there, you can certainly get some confirmation. Um. But
Speaker 1: you know, I was talking about this with Lisa Bramwitz,
Speaker 1: and you know she's of the opinion that and you know,
Speaker 1: unless you get real wage inflation, you're not gonna get
Speaker 1: real inflation in this country. Well, I mean then the
Speaker 1: kind of inflation that isn't real is still going to
Speaker 1: leave a lot of people hungry and unable to drive. Right. So,
Speaker 1: even if you don't get real inflation in the eyes
Speaker 1: of an economist or Lisa who is close enough to
Speaker 1: be an economist, um, it's still going to be the
Speaker 1: kind of inflation that that makes it hard for people
Speaker 1: to do grocery shopping and get to work and back
Speaker 1: if they still have a job. And the other thing
Speaker 1: I think is interesting is I'll never forget watching Ben
Speaker 1: bernanke on sixty Minutes when he said, look, deflation is
Speaker 1: the big scare. Um, that's what we need to worry about.
Speaker 1: Inflation we can deal with, no problem. And you can
Speaker 1: understand where he's coming from. We heard it from Janet
Speaker 1: Yellen recently as well, who of course no longer at
Speaker 1: the FED but now in charge of Treasury said, inflation
Speaker 1: is something that we have the tools to deal with.
Speaker 1: But Um, you and I were talking to someone recently
Speaker 1: who pointed out that, yeah, Um, the FED can stop inflation,
Speaker 1: no problem. Um. The only issue that they is that
Speaker 1: they crushed the economy when they do it. The last
Speaker 1: time we saw it happened was Paul Volker Um, and
Speaker 1: he was practically assaulted by members of the public as
Speaker 1: he raised rate to try and stop double digit inflation.
Speaker 1: Let's bring in John Author's who wrote a Bloomberg opinion
Speaker 1: piece about um. The only problem basically with the inflation
Speaker 1: scare being that he doesn't see any inflation. John, Um,
Speaker 1: are you saying that, yeah, the opportunity word yet? But
Speaker 1: yes there is. There is very little clear inflation showing
Speaker 1: up in official numbers yet, so we've seen it so far.
Speaker 1: I was just looking at beef prices and they have
Speaker 1: been steadily rising. Paul noted that UM, it costs now
Speaker 1: three dollars a gallon to fill up his tank with gas,
Speaker 1: which is certainly a rising price. And I noticed that
Speaker 1: the kids think rent is gonna cost nine percent more
Speaker 1: next year. So some things are definitely starting to scare people.
Speaker 1: Oh yes, definitely. What what is interesting and the thing
Speaker 1: is we have always known, UM, people have been braced
Speaker 1: for months for an inflation scare in the early months
Speaker 1: of this year because the big lockdown and also the
Speaker 1: big fall in the oil price for March last year,
Speaker 1: are going to drop out of year on your year comparisons, uh,
Speaker 1: and you're suddenly going to have headline inflation figures that
Speaker 1: look not like a return to the seventies but sharply worse.
Speaker 1: So a lot of people have been nervous about what
Speaker 1: that psychology, psychological effect will have. What is intriguing to me,
Speaker 1: just UM writing up the My latest piece is that
Speaker 1: it's not really new pieces of evidence about inflation of
Speaker 1: that is really truly scaring the market. It's um nerves
Speaker 1: about bond deals because so much is running on also
Speaker 1: leveraged trading, on on on, you know, as we all know,
Speaker 1: very low interest rates, and so the great concern is
Speaker 1: that we's not so much that or the great content
Speaker 1: for the time being, which explains these incredible rotations and
Speaker 1: moves within the market for the last week or two.
Speaker 1: Isn't about the long term prospect of you know, secular
Speaker 1: extent of inflation. It's about, Oh, you're gonna have an
Speaker 1: accident in the bond market, and is that going to
Speaker 1: bring us all crashing down? Um? And somehow are there
Speaker 1: We've just about avoided that more by luck and judgments probably.
Speaker 1: What are some of the areas if we do, in
Speaker 1: fact get some troubling inflation, Where do you think we're
Speaker 1: going to see it first? And what kind of where
Speaker 1: where where are you paying attention? Well, other than other
Speaker 1: than oil, which isn't strictly part of what the Fed
Speaker 1: can try to try to cover, but that's obviously an
Speaker 1: important part of it. The area you just mentioned as
Speaker 1: well of rents, that the fact that the low rates
Speaker 1: have led to very sharp increases in house prices that
Speaker 1: might well logically lead to a rise in rents in
Speaker 1: its wake. Other than that, it's all these areas that
Speaker 1: might be affected by supply bottlenecks, which is much of
Speaker 1: much of the economy. UM. Yeah, well, cars, it is
Speaker 1: one thing. I mean, I've noticed, John, that dealers are
Speaker 1: marking up cars to an incredibly high margin because you
Speaker 1: just can't get them on a lot due to the
Speaker 1: chip shortage. Yes, and well, and I'm trying to I'm
Speaker 1: trying to buy a laptop for my for my daughter
Speaker 1: at the moment. Since yes, that that chip shortage also
Speaker 1: has an effect on computer prices, So you know those
Speaker 1: are those are big. It's it's it's those supply shortages.
Speaker 1: You know, the piggies working its way through the python,
Speaker 1: and we're now at the stage where their really affecting
Speaker 1: prices here. And so if you then add that to
Speaker 1: the base effects and the worries about it change in
Speaker 1: psychology with all the money around, that's why people think
Speaker 1: a serious rising inflation could be ahead of us. But
Speaker 1: I don't think. But what is interesting is the true
Speaker 1: serious inflation in the measures that we normally look at
Speaker 1: hasn't really got starting yet. Hey, John, thank you so
Speaker 1: much for joining us. We always appreciate getting your thoughts.
Speaker 1: John author's senior editor Bloomberg Markets, also a bloomberket opinion,
Speaker 1: comments that joining us on the phone, thanks for listening
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
Speaker 1: to interviews of Apple Podcasts or whatever podcast platform you prefer.
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.
Speaker 1: Pet On Ball Sweeney I'm on Twitter at pt Sweeney.
Speaker 1: Before the podcast, you can always catch us worldwide at
Speaker 1: Bloomberg Radio