1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,119 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen and always I'm Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,480 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. Jeffrey Curry 11 00:00:47,560 --> 00:00:51,120 Speaker 2: joins US, Professor of price theory at the University of Chicago, 12 00:00:51,520 --> 00:00:54,720 Speaker 2: Acts a small firm downtown. Great interview yesterday, John Farrell, 13 00:00:54,800 --> 00:00:57,320 Speaker 2: mister Solomon. It was like, you know, it was like 14 00:00:57,360 --> 00:01:01,840 Speaker 2: piercing is like you know, I mean, I mean, you 15 00:01:01,880 --> 00:01:05,399 Speaker 2: know Curry Lip Versailles with his energy Now. Yes, Jeff 16 00:01:05,440 --> 00:01:09,160 Speaker 2: Curry joins US now Energy Pathways, the Carlisle groupie roots 17 00:01:09,160 --> 00:01:13,000 Speaker 2: for the Baltimore Orioles. Jeff Copper, I got to rip 18 00:01:13,080 --> 00:01:14,920 Speaker 2: up the script here. We're not doing oil, We're doing 19 00:01:15,000 --> 00:01:21,360 Speaker 2: Copper twenty eleven twenty two, and now another surge way 20 00:01:21,400 --> 00:01:25,399 Speaker 2: out over three standard deviations. What's different this time with 21 00:01:25,520 --> 00:01:27,119 Speaker 2: a surging copper. 22 00:01:28,720 --> 00:01:31,959 Speaker 3: One the investors have finally bought into the view that 23 00:01:32,319 --> 00:01:35,280 Speaker 3: China is not the only game in town for copper. 24 00:01:35,400 --> 00:01:38,199 Speaker 3: That's the main thing is people finally wrapped their heads 25 00:01:38,240 --> 00:01:41,560 Speaker 3: around yes, the property market in China can sync and 26 00:01:41,640 --> 00:01:45,240 Speaker 3: you can still be long copper, and positioning is full 27 00:01:45,319 --> 00:01:48,160 Speaker 3: force right now. And I think that if you look 28 00:01:48,200 --> 00:01:53,919 Speaker 3: at what's different now, it's the willingness of the investor 29 00:01:54,480 --> 00:01:57,920 Speaker 3: to embrace this market despite the fact that there's a 30 00:01:57,920 --> 00:02:01,320 Speaker 3: weak property market. And that's what happened in twenty one 31 00:02:01,760 --> 00:02:04,520 Speaker 3: in those other time periods that you were talking about, 32 00:02:04,680 --> 00:02:06,920 Speaker 3: as people started buying into it, then all of a sudden, 33 00:02:06,960 --> 00:02:11,240 Speaker 3: the property market weakened, They got too scared and you know, 34 00:02:11,800 --> 00:02:14,040 Speaker 3: pulled out of the position. I think there's a couple 35 00:02:14,160 --> 00:02:17,040 Speaker 3: things that make this different. It's one they've now seen 36 00:02:17,160 --> 00:02:20,560 Speaker 3: that copper demand can rise in the face of a 37 00:02:20,680 --> 00:02:23,440 Speaker 3: declining property market. It's up six percent right now in 38 00:02:23,480 --> 00:02:26,640 Speaker 3: a very weak property market. But also they've seen that 39 00:02:26,680 --> 00:02:30,680 Speaker 3: the government's willing to spend infrastructure on green gapbacks, so 40 00:02:30,760 --> 00:02:31,800 Speaker 3: there's a lot different. 41 00:02:32,000 --> 00:02:37,240 Speaker 2: Is there a utility overlay? As we see utility surge 42 00:02:37,320 --> 00:02:41,040 Speaker 2: because of electricity buildout, does copper go up with the 43 00:02:41,120 --> 00:02:43,240 Speaker 2: AI enthusiasm. 44 00:02:43,680 --> 00:02:47,000 Speaker 3: One hundred percent? You know? And you know, I'd like 45 00:02:47,040 --> 00:02:49,880 Speaker 3: to say, you know, AIS, you know, chips and copper. 46 00:02:49,919 --> 00:02:52,120 Speaker 3: You need the chips, but then you need the electrical 47 00:02:52,160 --> 00:02:54,480 Speaker 3: wiring to be able to power those chips. In one 48 00:02:54,480 --> 00:02:57,840 Speaker 3: of those chips, the video chips, the GPUs consume as 49 00:02:58,000 --> 00:03:01,360 Speaker 3: much power as the average American household. So you're gonna 50 00:03:01,400 --> 00:03:03,640 Speaker 3: need a lot of grid connection to be able to 51 00:03:03,720 --> 00:03:06,880 Speaker 3: accommodate that type of growth. And you know what is 52 00:03:06,880 --> 00:03:11,040 Speaker 3: the bottleneck for that? It's copper. So all roads lead 53 00:03:11,080 --> 00:03:14,720 Speaker 3: to copper, whether if it's military, spin, AI, data centers, 54 00:03:14,840 --> 00:03:16,840 Speaker 3: Green Capex, they all point to copper. 55 00:03:17,040 --> 00:03:19,680 Speaker 4: I mean, you couldn't have copper in a million years. 56 00:03:19,680 --> 00:03:21,040 Speaker 5: I would have guessed it. So what do I know? 57 00:03:21,080 --> 00:03:23,560 Speaker 4: But so there's the demand side of the equation. Jeff, 58 00:03:23,919 --> 00:03:27,240 Speaker 4: you just highlighted a number of sources of demand. Can 59 00:03:27,280 --> 00:03:29,720 Speaker 4: you explain to us kind of the supply side of copper. 60 00:03:29,800 --> 00:03:31,880 Speaker 4: I don't know anything about this. Where does copper come from? 61 00:03:32,080 --> 00:03:32,919 Speaker 5: And how's the supply? 62 00:03:34,320 --> 00:03:37,920 Speaker 3: It's one of the last of the good old fashioned commodities. 63 00:03:37,920 --> 00:03:39,840 Speaker 3: You got to dig out of the ground. You know, 64 00:03:40,000 --> 00:03:44,360 Speaker 3: think about oil, with shale manufacturing, aluminum manufacturing. You know, 65 00:03:44,520 --> 00:03:49,480 Speaker 3: you got to go out to very remotely located, geographically 66 00:03:49,520 --> 00:03:54,960 Speaker 3: restricted places like Chile, Peru, the DRC, Mongolia. It's only 67 00:03:55,040 --> 00:03:58,040 Speaker 3: located in a few places around the world, throwing Zombia 68 00:03:58,240 --> 00:04:01,720 Speaker 3: in that and a lot of those places are incredibly 69 00:04:01,720 --> 00:04:05,400 Speaker 3: difficult to get into. Then you got to dig and 70 00:04:05,680 --> 00:04:08,320 Speaker 3: dig deep. Your or grades have come down. It can 71 00:04:08,360 --> 00:04:11,280 Speaker 3: be anywhere from twelve you know, you take you know, 72 00:04:11,400 --> 00:04:14,440 Speaker 3: ivan Ho's big mine in the DRC. It took twenty 73 00:04:14,520 --> 00:04:17,560 Speaker 3: six years to bring online, so you know, there is 74 00:04:17,640 --> 00:04:21,760 Speaker 3: a big commitment to be able to get the supply online, 75 00:04:21,880 --> 00:04:25,599 Speaker 3: and you have strong demand. And everybody's been sleep walking 76 00:04:25,640 --> 00:04:28,000 Speaker 3: into this, even though they've been told about it. You know, 77 00:04:28,120 --> 00:04:30,799 Speaker 3: we started calling copper the new oil back in twenty 78 00:04:30,839 --> 00:04:34,560 Speaker 3: twenty one and it rang on daf ears. You know, 79 00:04:34,680 --> 00:04:37,120 Speaker 3: now it's finally people are perking up to the story. 80 00:04:37,600 --> 00:04:39,120 Speaker 3: But it's going to take years to bring this up. 81 00:04:39,160 --> 00:04:41,520 Speaker 2: I've been medicated. Paul, ask one more question, and then 82 00:04:41,560 --> 00:04:43,960 Speaker 2: I got to do microeconomics with Professor Kurr. 83 00:04:44,440 --> 00:04:47,279 Speaker 4: All right, So while we have you, Jeff here, it 84 00:04:47,320 --> 00:04:49,880 Speaker 4: talked to us about oil here. I mean, I'm looking 85 00:04:49,920 --> 00:04:52,200 Speaker 4: at I like to quote WTI crew to oil. 86 00:04:52,200 --> 00:04:52,760 Speaker 5: I'm an American. 87 00:04:52,839 --> 00:04:55,040 Speaker 4: I love the guys down in Texas and Oklahoma and 88 00:04:55,080 --> 00:04:57,960 Speaker 4: all those crazy people seventy nine dollars a barrel here. 89 00:04:58,920 --> 00:05:02,320 Speaker 4: What's driving oil these days? Is it supply? Is a demand? 90 00:05:02,440 --> 00:05:03,280 Speaker 5: What are you focusing on? 91 00:05:05,040 --> 00:05:07,919 Speaker 3: You know, all the commodities are being driven by the 92 00:05:07,920 --> 00:05:13,320 Speaker 3: same demand for uces. It's late cycle business cycle in 93 00:05:13,320 --> 00:05:15,800 Speaker 3: the sense that you can think of twenty twenty two 94 00:05:15,800 --> 00:05:18,080 Speaker 3: and twenty twenty three as being your classic mid cycle 95 00:05:18,160 --> 00:05:22,080 Speaker 3: pause where your raise rates, higher energy prices, the system 96 00:05:22,160 --> 00:05:26,679 Speaker 3: slowed down, a regathered scheme consolidated around the higher rates, 97 00:05:26,760 --> 00:05:29,160 Speaker 3: and now we're chugging back off into the second half 98 00:05:29,160 --> 00:05:31,320 Speaker 3: of the business cycle. That's when you want to own 99 00:05:31,400 --> 00:05:34,520 Speaker 3: oil and commodities. And it's about the level of demand 100 00:05:34,680 --> 00:05:37,560 Speaker 3: stressing the inability to supply. That's why all of these 101 00:05:37,560 --> 00:05:39,680 Speaker 3: markets are going up. You know, the vast majority of 102 00:05:39,760 --> 00:05:42,719 Speaker 3: them are in backwardation. You know, it's all your typical, 103 00:05:43,080 --> 00:05:47,800 Speaker 3: you know, into cycle type of bullish structure that's playing 104 00:05:47,839 --> 00:05:50,000 Speaker 3: out here. And I don't see this oil being any 105 00:05:50,040 --> 00:05:51,360 Speaker 3: different than copper or some of. 106 00:05:51,279 --> 00:05:54,440 Speaker 2: The base medals. And now folks Drivetime America early in 107 00:05:54,480 --> 00:05:58,479 Speaker 2: the morning, your microeconomics segment, Jeff Curry, we just were 108 00:05:58,520 --> 00:06:02,400 Speaker 2: honored to have Richard portis a giant of English economics 109 00:06:02,480 --> 00:06:06,560 Speaker 2: in London Business School in our and you know, he 110 00:06:06,640 --> 00:06:08,880 Speaker 2: was kind enough to give us a story about studying 111 00:06:08,960 --> 00:06:12,240 Speaker 2: under John Hicks a few years ago. I want to 112 00:06:12,279 --> 00:06:15,560 Speaker 2: talk about going back to copper into China and all 113 00:06:15,600 --> 00:06:19,560 Speaker 2: the emotion, Jeff Curry, is this a shift in demand 114 00:06:19,880 --> 00:06:24,320 Speaker 2: along the curve or an outright shift of the curve 115 00:06:24,400 --> 00:06:26,040 Speaker 2: that has a permanence. 116 00:06:26,880 --> 00:06:30,480 Speaker 3: The outright shift in the curves permanence, and think about 117 00:06:30,560 --> 00:06:33,600 Speaker 3: how much of that's occurred since twenty twenty one? Military 118 00:06:33,960 --> 00:06:37,159 Speaker 3: the military spin, you know, whether if it is munitions 119 00:06:37,160 --> 00:06:39,240 Speaker 3: in the US to the two to ninety five billion 120 00:06:39,279 --> 00:06:42,760 Speaker 3: dollars one hundred billion dollars in places like Germany, and 121 00:06:42,800 --> 00:06:45,360 Speaker 3: then you throw in the AI data centers on top 122 00:06:45,400 --> 00:06:47,800 Speaker 3: of that. That's on all an outward shift in the 123 00:06:47,839 --> 00:06:50,479 Speaker 3: demand curve. So you know that's going to lead to 124 00:06:50,600 --> 00:06:53,920 Speaker 3: structurally higher prices. And I think the question is why 125 00:06:53,960 --> 00:06:56,960 Speaker 3: will it lead to structurally higher prices because somebody's going 126 00:06:57,040 --> 00:06:59,039 Speaker 3: to have to be crowded out here. There's not enough 127 00:06:59,080 --> 00:07:01,640 Speaker 3: supply to go around to everyone, and so we're going 128 00:07:01,720 --> 00:07:04,080 Speaker 3: to find out where demand destruction actually occurs. 129 00:07:04,279 --> 00:07:08,320 Speaker 2: Jeff Curry, thank you so much. That segment of microeconomics 130 00:07:08,320 --> 00:07:12,560 Speaker 2: with Bloomberg Surveillance, brought to you by the George Stiegler Foundation, Chicago. 131 00:07:12,640 --> 00:07:26,800 Speaker 2: Jeff Curry, thank you so much. With Carlisle there squeeze 132 00:07:26,800 --> 00:07:30,720 Speaker 2: a three hour conversation into eight minutes with Adam Posen 133 00:07:30,960 --> 00:07:35,080 Speaker 2: the Peterson Institute. Adam, thank you wonderful to catch up 134 00:07:35,080 --> 00:07:37,400 Speaker 2: with you. And I've got to go to an essay 135 00:07:37,920 --> 00:07:42,360 Speaker 2: off of one of my heroes, Maurice Obsfeld, writing about 136 00:07:42,400 --> 00:07:48,240 Speaker 2: Trump's plan for the FED would revive nineteen seventies style inflation. 137 00:07:48,760 --> 00:07:51,760 Speaker 2: Are we close to returning to the ugly inflation of 138 00:07:51,800 --> 00:07:52,440 Speaker 2: our ute? 139 00:07:53,680 --> 00:07:56,400 Speaker 6: We may be only a year away from our ute? 140 00:07:56,560 --> 00:08:00,520 Speaker 6: Tom joking aside. I think Mariy has it right that 141 00:08:00,960 --> 00:08:04,440 Speaker 6: if they talk about driving down the dollar for reasons 142 00:08:04,440 --> 00:08:07,520 Speaker 6: of a trade episode which doesn't matter, or putting on 143 00:08:07,680 --> 00:08:11,960 Speaker 6: import surcharges, all this Nixon economic policy channeling from the 144 00:08:12,080 --> 00:08:17,280 Speaker 6: early seventies and making the US undependable in global markets 145 00:08:17,320 --> 00:08:21,440 Speaker 6: and in global institutions, that's inflationary. Maria is right, and 146 00:08:21,480 --> 00:08:23,680 Speaker 6: we're going to be following that up for Peterson with 147 00:08:23,760 --> 00:08:24,320 Speaker 6: other studies. 148 00:08:24,320 --> 00:08:25,880 Speaker 2: I want to get this in because Paul's got a 149 00:08:25,920 --> 00:08:28,640 Speaker 2: bunch of questions. I can't say enough about what Fred 150 00:08:28,640 --> 00:08:32,720 Speaker 2: Bergston invented and what Adam Posen has driven forward. Obviously 151 00:08:32,760 --> 00:08:35,720 Speaker 2: Olivier Blanchard there with all of his good work, But 152 00:08:35,800 --> 00:08:38,439 Speaker 2: there's a guy that wrote a paper that was hugely 153 00:08:38,520 --> 00:08:42,840 Speaker 2: influential for me decades ago. His name is William Klein, 154 00:08:43,640 --> 00:08:52,199 Speaker 2: and his basic message, folks, was stop worrying about China, US, Japan, US, Australia, US, 155 00:08:52,440 --> 00:08:56,600 Speaker 2: in that it's a diffuse system of currency movements off 156 00:08:56,640 --> 00:09:01,160 Speaker 2: of William Klein Adam Posen. As we ax about Japan 157 00:09:01,520 --> 00:09:05,880 Speaker 2: and their depreciation or devaluation, how does it diffuse in 158 00:09:05,920 --> 00:09:08,960 Speaker 2: a William Klein way across a Pacific. 159 00:09:08,600 --> 00:09:12,240 Speaker 6: Rim Well, I think what Bill Klin was saying years 160 00:09:12,240 --> 00:09:15,440 Speaker 6: ago is even more true now. The dollar is dominant 161 00:09:15,440 --> 00:09:18,600 Speaker 6: in reserves, the dollar is dominant for so many things, 162 00:09:18,880 --> 00:09:21,920 Speaker 6: but in terms of the effect of any bilateral exchange 163 00:09:21,960 --> 00:09:25,280 Speaker 6: weight on real outcomes, it's very small. For anyone who's 164 00:09:25,360 --> 00:09:29,640 Speaker 6: not the US. I mean putting it this day. Sorry 165 00:09:29,679 --> 00:09:32,640 Speaker 6: I phrase that badly. But if Japan depreciates by a 166 00:09:32,720 --> 00:09:36,640 Speaker 6: huge amount, which there's no particular reason it should, then 167 00:09:37,200 --> 00:09:39,520 Speaker 6: it actually doesn't matter that much to the US. What 168 00:09:39,720 --> 00:09:43,920 Speaker 6: starts causing concern is in a situation like now, where 169 00:09:43,960 --> 00:09:48,280 Speaker 6: the FED is tipped to keep hiking potentially, where US 170 00:09:48,360 --> 00:09:53,120 Speaker 6: growth is tipped to outperform potentially, and Europe, Japan, China, 171 00:09:53,840 --> 00:09:58,679 Speaker 6: others are all go lower, then you've got an overall 172 00:09:59,000 --> 00:10:01,520 Speaker 6: appreciation of the And that's a different story. 173 00:10:01,600 --> 00:10:03,960 Speaker 2: I bring this up, Paul. It's so crucial because the 174 00:10:04,040 --> 00:10:08,600 Speaker 2: media is so fixated on US this, US that, and 175 00:10:08,640 --> 00:10:12,280 Speaker 2: it's a much more complex economics than what's portrayed in 176 00:10:12,280 --> 00:10:13,040 Speaker 2: the modern media. 177 00:10:13,160 --> 00:10:14,400 Speaker 5: Paul, Adam. 178 00:10:14,600 --> 00:10:17,360 Speaker 4: We had this PPI data today, Adam came in, you know, 179 00:10:17,480 --> 00:10:20,040 Speaker 4: hotter than expected, which is kind of goes to that 180 00:10:20,120 --> 00:10:22,640 Speaker 4: narrative that inflation is not whipped. 181 00:10:22,679 --> 00:10:23,880 Speaker 5: Inflation is still out there. 182 00:10:23,880 --> 00:10:27,360 Speaker 4: How do you think about inflation in this US economy 183 00:10:27,360 --> 00:10:28,079 Speaker 4: these days? 184 00:10:28,720 --> 00:10:32,040 Speaker 6: Well, Paul, I've been and you've heard had me on before. 185 00:10:32,160 --> 00:10:35,680 Speaker 6: I've been in the camp suggesting that the inflation was 186 00:10:35,720 --> 00:10:38,680 Speaker 6: going to be moving sideways on a multi month average 187 00:10:38,800 --> 00:10:41,880 Speaker 6: this year, once you got down into the low threes, 188 00:10:41,920 --> 00:10:45,440 Speaker 6: and that's what's happening. One month's PPI one way or 189 00:10:45,440 --> 00:10:49,600 Speaker 6: the other doesn't really tell you anything. More importantly, the 190 00:10:49,600 --> 00:10:52,360 Speaker 6: Fed needs to talk about what its forecast is and 191 00:10:52,400 --> 00:10:56,000 Speaker 6: what its goals are. And but for people trying to 192 00:10:56,000 --> 00:11:00,079 Speaker 6: assess inflation, yeah, we're stuck it around three percent inflation. 193 00:11:00,320 --> 00:11:03,800 Speaker 6: I would expect headline CPI to go down a bit 194 00:11:03,880 --> 00:11:05,720 Speaker 6: more in the next few months and then come back 195 00:11:05,800 --> 00:11:06,280 Speaker 6: up a bit. 196 00:11:07,000 --> 00:11:10,720 Speaker 4: So given that backdrop, Adam, what do you think our 197 00:11:10,760 --> 00:11:13,800 Speaker 4: Federal Reserve should do over the. 198 00:11:13,679 --> 00:11:15,960 Speaker 5: Coming months here as we head into an election. 199 00:11:16,920 --> 00:11:19,800 Speaker 6: I think they should hold off on any rate cuts 200 00:11:19,840 --> 00:11:23,320 Speaker 6: until at least November, barring something strange happening like a 201 00:11:23,360 --> 00:11:27,280 Speaker 6: financial problem or a cratering of the really Connie, which 202 00:11:27,280 --> 00:11:30,960 Speaker 6: I find extremely unlikely. I think they should be prepared 203 00:11:31,000 --> 00:11:34,400 Speaker 6: and laying the groundwork for raising rates in twenty twenty five. 204 00:11:34,920 --> 00:11:37,160 Speaker 6: And I think they should be looking at and arguably 205 00:11:37,280 --> 00:11:40,480 Speaker 6: talking about the fact that either they're going to change 206 00:11:40,480 --> 00:11:42,640 Speaker 6: the inflation target and move it up, or if they 207 00:11:42,640 --> 00:11:44,680 Speaker 6: don't want to do that, they need to explain why 208 00:11:44,679 --> 00:11:47,880 Speaker 6: they're comfortable with inflation staying around where it is for 209 00:11:47,920 --> 00:11:51,200 Speaker 6: a while. They can't just keep hoping that someday they'll 210 00:11:51,200 --> 00:11:53,559 Speaker 6: get to change the target. But they don't have to 211 00:11:53,600 --> 00:11:54,400 Speaker 6: talk about. 212 00:11:54,160 --> 00:11:57,880 Speaker 4: It now, So all right, Adam. So one of the 213 00:11:57,920 --> 00:12:00,120 Speaker 4: key drivers, obviously for the Federal Reserve is just. 214 00:12:00,120 --> 00:12:01,040 Speaker 5: The US consumer. 215 00:12:01,320 --> 00:12:03,360 Speaker 4: Here. We had some home depot results today that were 216 00:12:03,880 --> 00:12:07,000 Speaker 4: a little bit weaker than expected. Of course, we'll hear 217 00:12:07,040 --> 00:12:11,240 Speaker 4: from Walmart tomorrow Thursday after the Thursday with their earnings. 218 00:12:11,640 --> 00:12:14,080 Speaker 5: How do you view the US consumer here? 219 00:12:15,160 --> 00:12:18,160 Speaker 6: I mean, the US consumer is continuing to be quite strong. 220 00:12:18,200 --> 00:12:21,000 Speaker 6: The idea that it's tapering off some versus a year 221 00:12:21,040 --> 00:12:24,680 Speaker 6: ago is not a surprise, given the real income growth 222 00:12:24,679 --> 00:12:27,760 Speaker 6: hasn't been that high, and that people are saving less now. 223 00:12:28,280 --> 00:12:30,960 Speaker 6: So we're coming to a point at which US households 224 00:12:31,000 --> 00:12:34,920 Speaker 6: are probably on average, not going to keep decreasing their savings, 225 00:12:35,000 --> 00:12:38,960 Speaker 6: right and so fine, But the Fed isn't supposed to 226 00:12:39,000 --> 00:12:43,520 Speaker 6: be trying to fine tune the economy, to use an 227 00:12:43,520 --> 00:12:47,760 Speaker 6: old phrase, to we'll recognize and so a little bit 228 00:12:47,800 --> 00:12:49,959 Speaker 6: of slow down in consumption is okay. 229 00:12:51,400 --> 00:12:53,240 Speaker 2: You know, I look at them posing at the real 230 00:12:53,360 --> 00:12:55,040 Speaker 2: yield here, and I think we need to frame it 231 00:12:55,080 --> 00:12:58,439 Speaker 2: with a nominal GDP. The great miscall of the last 232 00:12:58,480 --> 00:13:01,640 Speaker 2: twenty four months. Maybe posts and Bluntchard wrote about this 233 00:13:01,920 --> 00:13:06,160 Speaker 2: are brilliantly calling the third stimulus the Biden stimulus. We've 234 00:13:06,200 --> 00:13:11,840 Speaker 2: all misjudged real GDP, and certainly we've all misjudged nominal 235 00:13:12,240 --> 00:13:15,920 Speaker 2: GDP with a sustained inflation that we've had. You have 236 00:13:15,960 --> 00:13:21,000 Speaker 2: in your head where the real yield needs to migrate 237 00:13:21,040 --> 00:13:25,480 Speaker 2: to to assist business, to assist a belieged housing market. 238 00:13:25,760 --> 00:13:27,720 Speaker 2: Where does a real yield need get to head? 239 00:13:28,840 --> 00:13:31,320 Speaker 6: I think the real yield needs to head where it 240 00:13:31,360 --> 00:13:34,480 Speaker 6: has to hit irrespective of business, and then we'll get 241 00:13:34,520 --> 00:13:38,120 Speaker 6: to and that is flat to up. I think our star, 242 00:13:38,320 --> 00:13:41,600 Speaker 6: the neutral interest rate is going up because we've got 243 00:13:42,000 --> 00:13:47,800 Speaker 6: productivity rising, we've got risk aversion down, we've got division 244 00:13:48,200 --> 00:13:51,559 Speaker 6: in the world with China so less capital inflowing here, 245 00:13:52,120 --> 00:13:55,920 Speaker 6: we've got growth prospects up, we've got fiscal discipline. 246 00:13:56,120 --> 00:13:58,679 Speaker 2: Okay, I got to rip up the scripture because we 247 00:13:58,800 --> 00:14:00,800 Speaker 2: just got time. This is so because we just had 248 00:14:00,840 --> 00:14:04,120 Speaker 2: Vice chair McClaren in here as well, and he agrees 249 00:14:04,200 --> 00:14:07,240 Speaker 2: with that. Imposing that there's a new hour start. How 250 00:14:07,280 --> 00:14:11,839 Speaker 2: do you presume the messaging of the FED teaches us 251 00:14:12,000 --> 00:14:13,600 Speaker 2: that two percent is history. 252 00:14:15,520 --> 00:14:18,839 Speaker 6: So the way they're doing it for now is Paul 253 00:14:18,920 --> 00:14:21,400 Speaker 6: and a couple others are starting to sort of float 254 00:14:21,440 --> 00:14:24,440 Speaker 6: the idea that maybe our star is up for good 255 00:14:24,440 --> 00:14:28,160 Speaker 6: and bad reason. It's mostly good, they claim, And they 256 00:14:28,200 --> 00:14:31,640 Speaker 6: start redoing the dots every couple months, every few months, 257 00:14:31,640 --> 00:14:34,160 Speaker 6: and time, moving up bit by bet that ten year 258 00:14:34,280 --> 00:14:38,520 Speaker 6: projection in your raid projection. But I think it would 259 00:14:38,560 --> 00:14:42,480 Speaker 6: be helpful for them to talk more bluntly about why 260 00:14:42,560 --> 00:14:45,920 Speaker 6: our star might be up, and if our star is up, 261 00:14:45,960 --> 00:14:50,480 Speaker 6: how far that would be. And then additionally they then 262 00:14:50,560 --> 00:14:53,200 Speaker 6: have to confront the fact that if our star is up, 263 00:14:53,320 --> 00:14:55,960 Speaker 6: then their policy isn't as tight as they think it is. 264 00:14:56,080 --> 00:14:59,720 Speaker 2: Have we ever done this before? Have we ever job boned. 265 00:14:59,480 --> 00:15:02,960 Speaker 6: Two point as it was flight of hand in the 266 00:15:03,040 --> 00:15:08,080 Speaker 6: late nineties, didn't really admit it right, So no, there 267 00:15:08,080 --> 00:15:11,480 Speaker 6: hasn't been a public situation because once Bernanki comes in 268 00:15:11,520 --> 00:15:15,560 Speaker 6: and starts talking transparent exactly our stars on the week. 269 00:15:15,440 --> 00:15:18,080 Speaker 2: It Adam, is it Old Testament or New Testament? I mean, 270 00:15:18,720 --> 00:15:22,200 Speaker 2: what's a gospel here? And I don't know, We've never 271 00:15:22,280 --> 00:15:24,280 Speaker 2: done this before, have we? Doctor Posen? 272 00:15:25,600 --> 00:15:30,200 Speaker 6: Probably not doctor Keane, but the fact for means that 273 00:15:30,280 --> 00:15:33,080 Speaker 6: it has to be done. If the Fed just keeps 274 00:15:33,120 --> 00:15:37,760 Speaker 6: telling people that policy is close to write or or tight, 275 00:15:38,280 --> 00:15:41,240 Speaker 6: when financial conditions are loose and our star is rising, 276 00:15:41,280 --> 00:15:44,200 Speaker 6: we're gonna end up with a mistake or a huge surprise, 277 00:15:44,320 --> 00:15:44,960 Speaker 6: one or the other. 278 00:15:45,480 --> 00:15:49,080 Speaker 2: Adam, thank you, Adam posing a Peterson Institute. I can't 279 00:15:49,480 --> 00:15:56,760 Speaker 2: say enough about the importance of their website. Why are 280 00:15:56,840 --> 00:15:58,440 Speaker 2: you one far away? He was at a bank in 281 00:15:58,520 --> 00:16:02,560 Speaker 2: little Rocket, He was daytrich The means the mean stocks 282 00:16:03,360 --> 00:16:05,120 Speaker 2: just we don't have time for this. Joining us in 283 00:16:05,200 --> 00:16:08,280 Speaker 2: studio Congressman Hill of Arkansas, who is one of the 284 00:16:08,360 --> 00:16:12,840 Speaker 2: same voices. Whatever your politics in Washington, the arch matter 285 00:16:12,920 --> 00:16:16,960 Speaker 2: here is Gensler do something. Is it healthy in America 286 00:16:17,000 --> 00:16:21,680 Speaker 2: to have day trading of these stocks? Like Reminiscence of 287 00:16:21,680 --> 00:16:24,000 Speaker 2: a stock Operator in nineteen twenty three. 288 00:16:24,640 --> 00:16:26,520 Speaker 7: You know, Tom's good to be with you and Paul 289 00:16:26,800 --> 00:16:29,200 Speaker 7: when we had this first come up and we had 290 00:16:29,520 --> 00:16:34,040 Speaker 7: Roaring Kitty at his height, I asked, the question, is 291 00:16:34,240 --> 00:16:36,520 Speaker 7: the bulletin bar when you subscribe to a bulletin bar 292 00:16:36,600 --> 00:16:38,960 Speaker 7: on Reddit and people put information out there, is that 293 00:16:39,040 --> 00:16:42,720 Speaker 7: stock research? Is that a recommendation is that is that 294 00:16:42,840 --> 00:16:45,160 Speaker 7: evidence of front running? And I never got an answer 295 00:16:45,240 --> 00:16:46,320 Speaker 7: from the SEC on that. 296 00:16:46,600 --> 00:16:48,960 Speaker 2: Okay, I've got to turn We got got a long 297 00:16:49,000 --> 00:16:52,200 Speaker 2: agenda to talk. It's a two hour interview. Margaret Brennan 298 00:16:52,200 --> 00:16:57,240 Speaker 2: would make it three hours. French Hill in Arkansas. There 299 00:16:57,320 --> 00:17:02,480 Speaker 2: is the idea of terraff of China saying we don't 300 00:17:02,520 --> 00:17:07,640 Speaker 2: want your chicken, or China doesn't want Brazilian chicken. They 301 00:17:07,680 --> 00:17:12,200 Speaker 2: have teriffs that discourage the import of Tyson's Food chicken, 302 00:17:12,359 --> 00:17:16,400 Speaker 2: Arkansas chicken into China. So we're going to turn around 303 00:17:16,440 --> 00:17:19,800 Speaker 2: into one hundred percent tariff on an ev that we 304 00:17:19,840 --> 00:17:22,720 Speaker 2: won't let into the country as well. You're not in 305 00:17:22,720 --> 00:17:23,600 Speaker 2: a swing state. 306 00:17:23,760 --> 00:17:26,560 Speaker 7: Explain this, boy, that's such a good question. This is 307 00:17:26,600 --> 00:17:28,479 Speaker 7: so concerning to me that when we get into this 308 00:17:28,520 --> 00:17:31,000 Speaker 7: across the board tariff approach by either the Biden or 309 00:17:31,080 --> 00:17:34,600 Speaker 7: Trump administration, we recognize that we have an economy that 310 00:17:34,640 --> 00:17:38,119 Speaker 7: we're deeply integrated with China, and the United States have 311 00:17:38,200 --> 00:17:41,240 Speaker 7: deeply integrated economy, so as to use tariff policy really 312 00:17:41,320 --> 00:17:44,960 Speaker 7: backfires ultimately on both countries. I think you're much better 313 00:17:45,000 --> 00:17:50,119 Speaker 7: identifying the technologies you have concerns about in foreign direct 314 00:17:50,160 --> 00:17:53,200 Speaker 7: investment in China and then handle it that way. 315 00:17:53,320 --> 00:17:57,440 Speaker 2: Paul, I remember years ago a lunch where senior officer 316 00:17:57,480 --> 00:18:00,480 Speaker 2: of Tyson's Food explained to me that they figured out 317 00:18:00,480 --> 00:18:02,560 Speaker 2: where they could send the dark meat, and they would 318 00:18:02,600 --> 00:18:05,199 Speaker 2: send the dark meat to China. It's old news. But 319 00:18:05,320 --> 00:18:08,960 Speaker 2: the answer is is the congresstance says, we have relationships 320 00:18:08,960 --> 00:18:10,400 Speaker 2: across many commodities. 321 00:18:10,440 --> 00:18:13,840 Speaker 7: Beaks and claws, beaks and claus go to China. 322 00:18:13,920 --> 00:18:14,360 Speaker 2: Is that right? 323 00:18:14,480 --> 00:18:14,840 Speaker 6: Yes? 324 00:18:15,400 --> 00:18:18,719 Speaker 4: How big is tyson Foods in Arkansas? 325 00:18:18,880 --> 00:18:23,000 Speaker 7: Well, it's one of our biggest corporate partners because Walmart, 326 00:18:23,040 --> 00:18:26,400 Speaker 7: Ties and food Ja behind are three big Northwest Arkansas 327 00:18:26,440 --> 00:18:29,359 Speaker 7: anchor enterprises and their global reach. 328 00:18:29,480 --> 00:18:32,360 Speaker 4: Yeah, it's just extreme. So it is an election year. 329 00:18:32,520 --> 00:18:35,000 Speaker 4: What does that mean for the day to day workings 330 00:18:35,119 --> 00:18:35,760 Speaker 4: of Congress? 331 00:18:35,800 --> 00:18:37,600 Speaker 5: Do you guys have it? I assume you have a 332 00:18:37,640 --> 00:18:40,159 Speaker 5: to do list? How does that impact it? 333 00:18:40,200 --> 00:18:42,280 Speaker 4: By the fact that a lot of it's an election 334 00:18:42,720 --> 00:18:44,320 Speaker 4: year and there's a lot of noise in Washington. 335 00:18:44,359 --> 00:18:45,960 Speaker 7: Well, a couple of weeks ago, Mike Johnson got to 336 00:18:45,960 --> 00:18:50,159 Speaker 7: celebrate his first day as speaker because after passing the Ukraine, 337 00:18:50,240 --> 00:18:54,280 Speaker 7: Israel and Taiwan package, the Foreign Intelligence Surveillance Act, reform 338 00:18:54,400 --> 00:18:57,159 Speaker 7: and reauthorization, and twenty four spending. Those were all things 339 00:18:57,240 --> 00:18:59,800 Speaker 7: we were supposed to do in twenty twenty three. So 340 00:19:00,160 --> 00:19:02,920 Speaker 7: having cleared the decks of those, Paul, I think you'll 341 00:19:02,960 --> 00:19:05,200 Speaker 7: see us move into a campaign mode, which is really 342 00:19:05,240 --> 00:19:08,160 Speaker 7: messaging bills to show the sharp contrast between the Biden 343 00:19:08,160 --> 00:19:11,120 Speaker 7: administration and how Republicans would govern. But there are things 344 00:19:11,119 --> 00:19:13,720 Speaker 7: we have to do. A Farm Bill every five years, 345 00:19:13,760 --> 00:19:15,560 Speaker 7: we authorize the agriculture programs. 346 00:19:15,600 --> 00:19:15,959 Speaker 3: That's up. 347 00:19:15,960 --> 00:19:17,919 Speaker 7: I expect to see that be marked up in the 348 00:19:17,920 --> 00:19:21,639 Speaker 7: House Ad Committee this month, National Defense Authorization Committee, and 349 00:19:21,680 --> 00:19:25,280 Speaker 7: then of course the most important is debating fiscal twenty 350 00:19:25,320 --> 00:19:27,400 Speaker 7: five spending. So those are all on the plate even 351 00:19:27,480 --> 00:19:28,440 Speaker 7: during an election year. 352 00:19:28,560 --> 00:19:31,119 Speaker 4: And of course we have geopolitical issues all over the 353 00:19:31,160 --> 00:19:35,040 Speaker 4: world that has everyone's attention. What's your current thinking or 354 00:19:35,080 --> 00:19:38,000 Speaker 4: what's the current thinking within your house as to what's 355 00:19:38,000 --> 00:19:40,520 Speaker 4: going on in the Middle East and our policy towards Israel, 356 00:19:40,720 --> 00:19:42,280 Speaker 4: policy towards that whole situation. 357 00:19:42,840 --> 00:19:44,800 Speaker 7: Well, our policy towards the Middle East, I think has 358 00:19:44,840 --> 00:19:47,960 Speaker 7: been off track as the Biden administration has really taken 359 00:19:47,960 --> 00:19:50,560 Speaker 7: a page out of the Obama administration, which was to 360 00:19:50,560 --> 00:19:53,080 Speaker 7: coddle Iran. And when you look at this, Iran is 361 00:19:53,119 --> 00:19:55,840 Speaker 7: a partner and everything bad going on in the world today, 362 00:19:56,359 --> 00:20:00,679 Speaker 7: including the invasion of Hamas from Gaza into Israel, and 363 00:20:00,720 --> 00:20:02,720 Speaker 7: they're at the heart of it. And we freed up money, 364 00:20:02,720 --> 00:20:05,480 Speaker 7: we freed them up from sanctions all under the Biden administration. 365 00:20:06,160 --> 00:20:09,440 Speaker 7: House Republicans and a large portion of House Democrats opposed 366 00:20:09,440 --> 00:20:11,800 Speaker 7: that policy. And I think it's at the heart of 367 00:20:11,880 --> 00:20:16,639 Speaker 7: rearming Russia in Ukraine, partnering with China because China buys 368 00:20:16,960 --> 00:20:21,080 Speaker 7: eighty or ninety percent of energy from Iran and therefore 369 00:20:21,119 --> 00:20:23,919 Speaker 7: sending them money, and then they're arming the Houthis that 370 00:20:24,000 --> 00:20:26,720 Speaker 7: have disrupted rid sea trade. So at the heart of 371 00:20:26,760 --> 00:20:29,160 Speaker 7: this axis new access of evil, I think you find 372 00:20:29,160 --> 00:20:30,240 Speaker 7: iron at every step. 373 00:20:30,840 --> 00:20:34,720 Speaker 2: Is there a politeness in Congress right now? Things improved 374 00:20:34,760 --> 00:20:36,600 Speaker 2: from the madness of twelve months ago. 375 00:20:37,520 --> 00:20:40,480 Speaker 7: Well, we have people who are performance artists in Congress, 376 00:20:40,520 --> 00:20:42,240 Speaker 7: and then we have people who are there to help 377 00:20:42,280 --> 00:20:45,720 Speaker 7: govern and drive the agenda and counter the Biden agenda 378 00:20:45,760 --> 00:20:46,320 Speaker 7: if you're rou now. 379 00:20:46,320 --> 00:20:48,919 Speaker 2: But the performance artist just had a boofest. It sounded 380 00:20:48,960 --> 00:20:52,080 Speaker 2: like the British, sounded like Parliament for a way, So 381 00:20:52,240 --> 00:20:54,639 Speaker 2: is there a sea change here. Maybe I think people. 382 00:20:54,920 --> 00:20:58,480 Speaker 7: Look, I think Republicans in Congress want Mike Johnson to 383 00:20:58,520 --> 00:21:00,879 Speaker 7: continue in the speakership. He's doing a good job. And 384 00:21:00,960 --> 00:21:03,240 Speaker 7: let's get through the as you say, Paul, the national 385 00:21:03,280 --> 00:21:05,679 Speaker 7: election in November, let's focus on that. Let's have a 386 00:21:05,720 --> 00:21:09,120 Speaker 7: contrast between what Republicans would do if we expanded our 387 00:21:09,160 --> 00:21:11,960 Speaker 7: majority of the House, took the Senate with or without 388 00:21:11,960 --> 00:21:14,000 Speaker 7: a Biden presidency. I think that's what we should be 389 00:21:14,040 --> 00:21:14,520 Speaker 7: focused on. 390 00:21:14,720 --> 00:21:16,760 Speaker 2: Okay, and we got a problem here. First of all, 391 00:21:16,760 --> 00:21:20,679 Speaker 2: we got Purdue October twenty eighth, and you know, we 392 00:21:20,760 --> 00:21:24,399 Speaker 2: got the Red White Showcase October fourth. But this year 393 00:21:25,320 --> 00:21:29,760 Speaker 2: Arkansas basketball has a different character to it as well. 394 00:21:30,119 --> 00:21:33,520 Speaker 2: They're popping seven million dollars to the guy from Kentucky. 395 00:21:33,600 --> 00:21:37,320 Speaker 2: I mean, Arkansas's playing large year. What's the impact of 396 00:21:37,440 --> 00:21:42,040 Speaker 2: John Calapari coming down and changing Arkansas athletics. 397 00:21:42,080 --> 00:21:43,960 Speaker 7: Well, we're fired up to have him, and we're glad 398 00:21:43,960 --> 00:21:46,360 Speaker 7: he's going to keep his shirt on. Our previous coach 399 00:21:46,400 --> 00:21:48,440 Speaker 7: would always rip his shirt off when we had a victory, 400 00:21:48,480 --> 00:21:50,720 Speaker 7: didn't have enough victories. But we're glad to have him, 401 00:21:50,760 --> 00:21:52,720 Speaker 7: looking forward to him rebuilding our program. But you know, 402 00:21:52,760 --> 00:21:55,800 Speaker 7: my concern about NCAA Sports is where's it going? Yeah, 403 00:21:55,920 --> 00:22:00,119 Speaker 7: with name, image and lightness and paying players and they 404 00:22:00,160 --> 00:22:01,919 Speaker 7: can enter the portal at any time. How do you 405 00:22:01,960 --> 00:22:04,280 Speaker 7: have a relationship if you don't have a contract with people. 406 00:22:04,359 --> 00:22:08,240 Speaker 2: Do you have any understanding that the money that Caliperry 407 00:22:08,320 --> 00:22:12,920 Speaker 2: brings in pays for history professors or banking professors? 408 00:22:13,520 --> 00:22:16,560 Speaker 7: Well? I think I think we know NCAA Sports that 409 00:22:16,640 --> 00:22:20,000 Speaker 7: football does cover a lot of operating expenses at big universities, 410 00:22:20,000 --> 00:22:22,120 Speaker 7: There's no doubt, and sports plays an important role there. 411 00:22:22,160 --> 00:22:23,840 Speaker 7: But I think we're on the cusp of a really 412 00:22:24,800 --> 00:22:27,760 Speaker 7: turning point in college sports when we tried to figure 413 00:22:27,760 --> 00:22:31,080 Speaker 7: out we have these huge contracts with coaches, right, yep, 414 00:22:31,400 --> 00:22:33,359 Speaker 7: but do we have how do we get them the 415 00:22:33,400 --> 00:22:36,440 Speaker 7: players they need to play to deliver on that contract? 416 00:22:36,920 --> 00:22:37,120 Speaker 5: Yep? 417 00:22:38,720 --> 00:22:43,240 Speaker 2: Arkansas Duke November twenty Ninsol. I mean there's a road 418 00:22:43,320 --> 00:22:46,320 Speaker 2: trip that will go down Congress and Hill could join 419 00:22:46,400 --> 00:22:48,120 Speaker 2: us there for our play by play. Yep. 420 00:22:48,600 --> 00:22:52,399 Speaker 7: Yeah, that'll be a play by play, will be the 421 00:22:52,520 --> 00:22:54,120 Speaker 7: ticket to admission exactly. 422 00:22:54,520 --> 00:22:58,159 Speaker 4: Congresstan talked us about the economy in Arkansas. How are 423 00:22:58,200 --> 00:22:59,920 Speaker 4: the people in Arkansas doing? 424 00:23:00,680 --> 00:23:03,320 Speaker 7: You know, the numbering number one thing I hear when 425 00:23:03,359 --> 00:23:06,520 Speaker 7: I'm at home every week is inflation and the impact 426 00:23:06,560 --> 00:23:10,000 Speaker 7: on inflation on small business and families. The second thing, 427 00:23:10,080 --> 00:23:12,440 Speaker 7: which you've picked up on a national basis on your 428 00:23:12,440 --> 00:23:15,640 Speaker 7: show is people are still looking for the talent they 429 00:23:15,720 --> 00:23:19,400 Speaker 7: need in their workplace. So this is one of those 430 00:23:19,440 --> 00:23:23,320 Speaker 7: economies like we don't see very often. And so inflation's 431 00:23:23,359 --> 00:23:25,080 Speaker 7: number one though, there's no doubt about that. 432 00:23:25,119 --> 00:23:29,960 Speaker 2: One minute you have new legislation that you're initiating. Do 433 00:23:30,000 --> 00:23:32,120 Speaker 2: you have a Democrat who's lined up with that? Tell 434 00:23:32,200 --> 00:23:33,880 Speaker 2: us quickly about that new legislation. 435 00:23:33,960 --> 00:23:36,600 Speaker 7: So FIT twenty one. This is creating a regulatory framework 436 00:23:36,640 --> 00:23:39,680 Speaker 7: for digital assets. This would tell the CFTC and the 437 00:23:39,720 --> 00:23:44,160 Speaker 7: SEC how to manage, regulate, and exchange digital assets out 438 00:23:44,160 --> 00:23:46,240 Speaker 7: there in the marketplace. We want America to be top 439 00:23:46,720 --> 00:23:49,160 Speaker 7: in innovation there and right here in New York. Richie 440 00:23:49,160 --> 00:23:51,840 Speaker 7: Torres is a great leader on designing that legislation. Jim 441 00:23:51,920 --> 00:23:54,000 Speaker 7: Hymes and Connecticut has been very helpful. So those are 442 00:23:54,000 --> 00:23:55,480 Speaker 7: both Democrats that have worked hard on it. 443 00:23:55,520 --> 00:23:57,560 Speaker 2: Do you support ETF for bitcoin? 444 00:23:58,280 --> 00:24:01,320 Speaker 7: You know I do, because I think the SEC did 445 00:24:01,359 --> 00:24:03,879 Speaker 7: the story and I think the cash market in alignment 446 00:24:04,320 --> 00:24:07,600 Speaker 7: with the bitcoin market's been demonstrated, so we'll see what 447 00:24:07,640 --> 00:24:08,240 Speaker 7: happens there. 448 00:24:08,320 --> 00:24:11,920 Speaker 2: Congressman Hill, thank you so much. He's a Republican from Arkansas. 449 00:24:11,960 --> 00:24:15,160 Speaker 4: There, ninth generation Arkins visit. 450 00:24:15,440 --> 00:24:17,080 Speaker 5: That is amazing. I can go back. 451 00:24:17,320 --> 00:24:19,800 Speaker 2: Davy Crockett used to come over for dinner, I mean 452 00:24:21,200 --> 00:24:35,280 Speaker 2: Ireland with you to Frendchhill. Thank you so much. Always 453 00:24:35,280 --> 00:24:37,720 Speaker 2: looking for the next challenge here in the Dow up 454 00:24:37,840 --> 00:24:43,280 Speaker 2: thirty six. Julian Emmanuel joined some evercoorp Isi this morning. 455 00:24:43,600 --> 00:24:48,760 Speaker 2: Readjust the bull call right now. Two October's ago death bullmarket, 456 00:24:48,840 --> 00:24:53,720 Speaker 2: the Yardinny move, the Incorpora move October five, six, seven, 457 00:24:53,760 --> 00:24:56,399 Speaker 2: eight months ago, another bull market. Are we still in 458 00:24:56,440 --> 00:24:58,720 Speaker 2: a bull market? We are still in a bull market. 459 00:24:58,800 --> 00:25:02,520 Speaker 1: So if you go back to October twenty two, the 460 00:25:02,720 --> 00:25:07,560 Speaker 1: entire down draft in twenty twenty two, and really the 461 00:25:07,600 --> 00:25:12,359 Speaker 1: other side in twenty twenty three, it was very valuation driven. Okay, 462 00:25:12,480 --> 00:25:16,199 Speaker 1: we understand that the earnings have migrated towards for the 463 00:25:16,240 --> 00:25:19,000 Speaker 1: most part, that's select seven, But at the index level 464 00:25:19,160 --> 00:25:22,600 Speaker 1: the earnings have stayed roughly the same. The thing about 465 00:25:22,920 --> 00:25:25,919 Speaker 1: twenty twenty four, which convinces us that even though we 466 00:25:25,960 --> 00:25:27,960 Speaker 1: think you have a correction in front of you, is 467 00:25:28,000 --> 00:25:30,359 Speaker 1: that the bullmarket has further legs. Is you're actually going 468 00:25:30,400 --> 00:25:33,440 Speaker 1: to see earnings growth for the first time in two years. 469 00:25:33,880 --> 00:25:37,040 Speaker 4: So what did you see in this earning cycle that 470 00:25:37,080 --> 00:25:38,119 Speaker 4: we're just kind of finishing up. 471 00:25:38,119 --> 00:25:41,040 Speaker 5: Now we'll get some retailers this week. It seemed pretty 472 00:25:41,080 --> 00:25:41,399 Speaker 5: good to me. 473 00:25:41,560 --> 00:25:43,200 Speaker 4: There's good earness growth out there. 474 00:25:43,520 --> 00:25:44,800 Speaker 5: It was a bit odd. 475 00:25:44,920 --> 00:25:48,280 Speaker 1: So basically what happened was is that the surprises were 476 00:25:48,359 --> 00:25:53,639 Speaker 1: much larger than expected because revisions went down prior to 477 00:25:53,720 --> 00:25:57,000 Speaker 1: the start of the quarter. There isn't really an explanation 478 00:25:57,400 --> 00:25:59,919 Speaker 1: other than perhaps the message of what was a subpar 479 00:26:00,040 --> 00:26:04,640 Speaker 1: our GDP first quarter. But you're basically on track five 480 00:26:04,680 --> 00:26:08,240 Speaker 1: and a half maybe six percent earnings growth, and from 481 00:26:08,280 --> 00:26:12,760 Speaker 1: our view, that's good. We expect roughly that rate of 482 00:26:12,800 --> 00:26:15,480 Speaker 1: growth throughout the year. But the problem for the markets 483 00:26:15,600 --> 00:26:18,480 Speaker 1: is the market expects that number to be upwards of 484 00:26:18,520 --> 00:26:19,080 Speaker 1: ten percent. 485 00:26:19,119 --> 00:26:23,919 Speaker 2: Has the wall of money moved into support stocks or 486 00:26:23,960 --> 00:26:27,280 Speaker 2: with a five percent money market fun is yet to happen. 487 00:26:27,480 --> 00:26:32,439 Speaker 1: So for us, it has yet to happen. However, the 488 00:26:32,560 --> 00:26:37,320 Speaker 1: key factor here is you've had a revision of behavior. Okay, 489 00:26:37,400 --> 00:26:40,159 Speaker 1: if you can just sit there and get upwards of 490 00:26:40,200 --> 00:26:42,920 Speaker 1: five percent risk free. 491 00:26:43,200 --> 00:26:44,040 Speaker 4: That's not bad. 492 00:26:44,840 --> 00:26:48,200 Speaker 1: And particularly as the debate goes on and the FED 493 00:26:48,320 --> 00:26:50,160 Speaker 1: seems more and more hamstring. 494 00:26:49,720 --> 00:26:51,320 Speaker 5: Can we rip up the script please? 495 00:26:51,800 --> 00:26:54,399 Speaker 2: Rich, thanks so much for this plug. Power. That's a 496 00:26:54,440 --> 00:26:58,919 Speaker 2: Dow JONN stock up seventy percent, game Stop up one 497 00:26:59,040 --> 00:27:04,040 Speaker 2: hundred and thirteen percent, AMC Entertainment up one hundred and 498 00:27:04,040 --> 00:27:07,399 Speaker 2: twenty nine percent. This is not anathema, but the opposite 499 00:27:07,520 --> 00:27:11,000 Speaker 2: of the Edheimen culture. Are you telling me all this 500 00:27:11,240 --> 00:27:16,000 Speaker 2: meme stuff is healthy for our confidence in our financial system? 501 00:27:16,160 --> 00:27:18,800 Speaker 2: Now it's not healthy? 502 00:27:19,200 --> 00:27:24,200 Speaker 1: And frankly, what it is is something the FED looks 503 00:27:24,200 --> 00:27:28,040 Speaker 1: at this and this disturbs them because what it's saying 504 00:27:28,200 --> 00:27:31,920 Speaker 1: is that unbalanced financial conditions are probably still too loose 505 00:27:32,240 --> 00:27:33,520 Speaker 1: to get inflation. 506 00:27:33,760 --> 00:27:36,560 Speaker 2: Respect so far he remembers when they were fruit on 507 00:27:36,600 --> 00:27:39,680 Speaker 2: the buttonwood tree. I mean, he goes back that far. 508 00:27:40,119 --> 00:27:43,560 Speaker 2: Who's a police officer here, Julian Emmanuel. 509 00:27:45,080 --> 00:27:49,040 Speaker 1: As it probably is for the most part, you're you're broker, 510 00:27:49,160 --> 00:27:53,640 Speaker 1: and frankly, there's no stop, there's no problems anymore. 511 00:27:54,080 --> 00:27:57,879 Speaker 2: Good morning, Commonwealth. We thank Commonwealth for their support. Show 512 00:27:59,040 --> 00:28:02,960 Speaker 2: come on list some Mateo's kids are day trading game. 513 00:28:03,080 --> 00:28:05,680 Speaker 2: Stop up? What one hundred and come on, Paul. 514 00:28:05,480 --> 00:28:08,199 Speaker 4: Help, here's tough out there if you're not nimble out 515 00:28:08,240 --> 00:28:09,800 Speaker 4: there on some of these names. All right, let's just 516 00:28:09,840 --> 00:28:12,960 Speaker 4: brought it out a little bit there at Julian small 517 00:28:12,960 --> 00:28:15,240 Speaker 4: Caps standouts. What's a small cap standout on? Why do 518 00:28:15,280 --> 00:28:15,919 Speaker 4: you like them? So? 519 00:28:16,160 --> 00:28:19,719 Speaker 1: What's very interesting, and we were kidding about this before 520 00:28:19,840 --> 00:28:24,760 Speaker 1: the camera turned red, is the concept of quantum analysis. 521 00:28:24,880 --> 00:28:27,840 Speaker 1: And what we found very much is that you have 522 00:28:27,960 --> 00:28:31,440 Speaker 1: a shift around the concept of momentum. Okay, two things 523 00:28:31,440 --> 00:28:33,960 Speaker 1: are going on. Number One, we all know because of 524 00:28:34,000 --> 00:28:37,399 Speaker 1: the mag seven that basically small caps have been for 525 00:28:37,440 --> 00:28:40,040 Speaker 1: the most part of the last two years a funding 526 00:28:40,160 --> 00:28:44,840 Speaker 1: short for active managers. And you know the the is 527 00:28:44,880 --> 00:28:48,440 Speaker 1: it different this time given the fact that the entirety 528 00:28:48,440 --> 00:28:51,800 Speaker 1: of the Russell two thousand market cap is below the 529 00:28:51,920 --> 00:28:54,719 Speaker 1: highest market cap in the S and P five hundred, 530 00:28:55,320 --> 00:28:58,760 Speaker 1: and what we would say is it really isn't different 531 00:28:58,800 --> 00:29:01,760 Speaker 1: this time. And frankly, what you have is a case 532 00:29:02,000 --> 00:29:05,320 Speaker 1: where momentum is starting to shine. So the Rustle two 533 00:29:05,320 --> 00:29:08,720 Speaker 1: thousand is an index peaked believe it or not in 534 00:29:08,760 --> 00:29:11,720 Speaker 1: twenty twenty one. But there's a lot of stocks that 535 00:29:11,760 --> 00:29:14,680 Speaker 1: have made new highs since then, whose earnings are moving 536 00:29:14,720 --> 00:29:17,120 Speaker 1: in the right way. Those in the names we want 537 00:29:17,160 --> 00:29:19,840 Speaker 1: to own, putting a toe hold into our view that 538 00:29:20,000 --> 00:29:23,360 Speaker 1: long term small cap is likely to have a sustained 539 00:29:23,680 --> 00:29:25,959 Speaker 1: multi year period about performance ahead of it. 540 00:29:26,440 --> 00:29:30,040 Speaker 5: What's a momentum miser? Page forty of your decks. 541 00:29:29,920 --> 00:29:33,320 Speaker 1: There we go. So the essentially the opposite of what 542 00:29:33,360 --> 00:29:33,600 Speaker 1: I do. 543 00:29:33,920 --> 00:29:37,200 Speaker 2: I see you laughing at me. Sweeney actually reads the decks. 544 00:29:37,280 --> 00:29:37,680 Speaker 2: I don't. 545 00:29:39,280 --> 00:29:42,800 Speaker 1: There we go, There we go. We'll see eighty pages 546 00:29:43,080 --> 00:29:45,200 Speaker 1: the client's tire by like page sixty or so. 547 00:29:47,040 --> 00:29:48,200 Speaker 2: What's a momentumizer? 548 00:29:48,920 --> 00:29:53,040 Speaker 1: They are stocks that have not made new highs since 549 00:29:53,080 --> 00:29:57,080 Speaker 1: this latest bull market cycle and have downward earnings revisions, 550 00:29:57,120 --> 00:30:01,160 Speaker 1: and it's all a matter of expectations, and if expectations 551 00:30:01,160 --> 00:30:04,120 Speaker 1: are coming down, those are the kind of stocks you 552 00:30:04,200 --> 00:30:08,240 Speaker 1: want to under own, sell short that type of thing. 553 00:30:08,280 --> 00:30:11,080 Speaker 2: Well, I mean, what does Edheimen say about materials? Copper? 554 00:30:11,640 --> 00:30:14,320 Speaker 2: I mean, you know Edheimen remembers an anacon of copper 555 00:30:14,520 --> 00:30:17,320 Speaker 2: was in video of the day? Are we back? Are 556 00:30:17,320 --> 00:30:18,880 Speaker 2: we back to materials? 557 00:30:19,800 --> 00:30:22,160 Speaker 1: I think that's a more mixed view. Right, So the 558 00:30:22,240 --> 00:30:27,240 Speaker 1: question is the question is Is this a result of, you know, 559 00:30:27,520 --> 00:30:31,479 Speaker 1: a supply drag over the course of years. There's certainly 560 00:30:31,520 --> 00:30:33,960 Speaker 1: an element to that. Is it a result of the 561 00:30:34,000 --> 00:30:36,320 Speaker 1: fact that the rest of the world seems to be 562 00:30:36,360 --> 00:30:40,680 Speaker 1: stabilizing economically, perhaps more than we thought. There's an element 563 00:30:40,720 --> 00:30:43,440 Speaker 1: to that. We don't see this sort of woosh type 564 00:30:43,440 --> 00:30:47,760 Speaker 1: reacceleration that justifies this in increase in prices. But then 565 00:30:47,800 --> 00:30:51,600 Speaker 1: there's also the idea that assets are moving to hedge 566 00:30:51,600 --> 00:30:55,320 Speaker 1: and inflation that appears to be more persistent than perhaps 567 00:30:55,320 --> 00:30:56,600 Speaker 1: we thought six months ago. 568 00:30:57,080 --> 00:30:58,480 Speaker 5: So what do we do here? 569 00:31:00,000 --> 00:31:01,840 Speaker 4: How do we think about valuation here? Because we've had 570 00:31:01,880 --> 00:31:05,080 Speaker 4: such a move off those October levels, you know, twenty 571 00:31:05,160 --> 00:31:08,719 Speaker 4: five percent of the sp and more and some other indexes. 572 00:31:09,280 --> 00:31:11,400 Speaker 4: Earnings are good, but I'm not sure they're that good. 573 00:31:11,640 --> 00:31:13,880 Speaker 4: Are we pushing the envelope on evaluation here? 574 00:31:14,160 --> 00:31:17,200 Speaker 1: We are pushing the velope on valuation, which is why 575 00:31:17,240 --> 00:31:20,600 Speaker 1: for us we think the indexes move a little lower 576 00:31:20,800 --> 00:31:21,560 Speaker 1: in the near term. 577 00:31:21,800 --> 00:31:24,240 Speaker 2: Julian, thank you. Let's do it again. This is too 578 00:31:24,240 --> 00:31:28,480 Speaker 2: short a visit. Julian Emmanuel with evercore Isi. 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